Document:

<PAGE>   1
                                                                    EXHIBIT 10.6

                                                                  EXECUTION COPY
                                                                    [Novellus V]

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                             PARTICIPATION AGREEMENT

                                      AMONG

                             NOVELLUS SYSTEMS, INC.

                                       AND

                             ABN AMRO LEASING, INC.

                                       AND

                          THE PARTICIPANTS NAMED HEREIN

                                       AND

                               ABN AMRO BANK N.V.,

                          AS AGENT FOR THE PARTICIPANTS

                                 APRIL 18, 2001

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<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
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                                                                            PAGE
<S>                                                                         <C>
SECTION 1.  INTERPRETATION................................................    2

1.01.    Definitions......................................................    2

1.02.    Rules of Construction............................................    2

SECTION 2.  LEASE FACILITY................................................    2

2.01.    Acquisition, Lease, Amount Limitations, Etc......................    2

2.02.    Participation Agreement..........................................    3

2.03.    Advance Requests.................................................    4

2.04.    Fees.............................................................    6

2.05.    Funding of Advances..............................................    7

2.06.    Sharing of Payments..............................................    8

2.07.    Other Payment Terms..............................................   10

2.08.    Commitment Reductions............................................   11

2.09     Extensions.......................................................   12

2.10.    Nature of the Transaction........................................   13

2.11.    Security.........................................................   14

2.12.    Change of Circumstances..........................................   16

2.13.    Taxes on Payments................................................   19

2.14.    Funding Loss Indemnification.....................................   20

2.15.    Replacement of Participants......................................   21

SECTION 3.  CONDITIONS PRECEDENT..........................................   21

3.01.    Initial Advance..................................................   21

3.02.    Subsequent Advances..............................................   22

3.03.    Other Conditions Precedent.......................................   22

3.04.    Covenant to Deliver..............................................   22

SECTION 4.  REPRESENTATIONS AND WARRANTIES................................   22

4.01.    Lessee's Representations and Warranties..........................   22

4.02.    Lessor's Representations and Warranties..........................   28

4.03.    Participants' Representations and Warranties.....................   29

SECTION 5.  COVENANTS.....................................................   31
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                                TABLE OF CONTENTS
                                   (CONTINUED)

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<S>                                                                         <C>
5.01.    Lessee's Affirmative Covenants...................................   31

5.02.    Lessee's Negative Covenants......................................   34

5.03.    Lessee's Financial Covenants.....................................   40

5.04.    Lessor's Covenants...............................................   42

5.05.    Participants' Covenants..........................................   43

SECTION 6.  LESSOR, AGENT AND THEIR RELATIONS WITH PARTICIPANTS...........   43

6.01.    Appointment of Agent.............................................   43

6.02.    Powers and Immunities............................................   43

6.03.    Reliance.........................................................   44

6.04.    Defaults.........................................................   44

6.05.    Indemnification..................................................   44

6.06.    Non-Reliance.....................................................   44

6.07.    Resignation or Removal of Agent..................................   45

6.08.    Authorization....................................................   45

6.09.    Lessor and Agent in their Individual Capacities..................   45

SECTION 7.  MISCELLANEOUS.................................................   46

7.01.    Notices..........................................................   46

7.02.    Expenses.........................................................   47

7.03.    Indemnification..................................................   48

7.04.    Waivers; Amendments..............................................   48

7.05.    Successors and Assigns...........................................   49

7.06.    Setoff...........................................................   54

7.07.    No Third Party Rights............................................   54

7.08.    Partial Invalidity...............................................   54

7.09.    JURY TRIAL.......................................................   54

7.10.    Counterparts.....................................................   54

7.11.    No Joint Venture, Etc. ..........................................   54

7.12.    Usury Savings Clause.............................................   54

7.13.    Confidentiality..................................................   55
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                                TABLE OF CONTENTS
                                   (CONTINUED)

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<S>                                                                         <C>
7.14.    Governing Law....................................................   55

7.15.    Consent to Jurisdiction..........................................   55
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                                TABLE OF CONTENTS
                                   (CONTINUED)

                                                                            PAGE

SCHEDULES

I         Participants
1.01      Definitions
1.02      Rules of Construction
3.01      Conditions Precedent to Initial Advance
4.01(g)   Litigation
4.01(q)   Subsidiaries
4.01(t)   Hazardous Materials
5.02(a)   Existing Indebtedness
5.02(b)   Existing Liens
5.02(e)   Existing Investments

EXHIBITS

A         Land (Recital A; 4.01(t); Schedule 1.01))
B         Lease Agreement (2.01(a))
C         Purchase Agreement (2.01(a))
D         Construction Agency Agreement (2.01(a))
E         Advance Request (2.03(a))
F(1)      Commitment Extension Request (2.09(a))
F(2)      Lease Extension Request (2.09(b))
G         Assignment of Construction Agreements (2.11(a))
H         Cash Collateral Agreement (2.11(a))
I         Assignment of Lease (2.11(b))
J         Lessor Deed of Trust (2.11(b))
K         Lessor Security Agreement (2.11(b))
L         Assignment Agreement (7.05(b))
M         Ground Lease Agreement (2.01(a))

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                             PARTICIPATION AGREEMENT

         THIS PARTICIPATION AGREEMENT (this "Agreement" herein), dated as of
April 18, 2001, is entered into by and among:

                  (1)      NOVELLUS SYSTEMS, INC., a California corporation
         ("Lessee" or "Novellus");

                  (2)      ABN AMRO LEASING, INC., an Illinois corporation
         ("Lessor");

                  (3)      Each of the Persons from time to time listed in
         Schedule I hereto, as amended from time to time (such Persons to be
         referred to collectively as the "Participants"); and

                  (4)      ABN AMRO BANK N.V., as agent for the Participants (in
         such capacity, "Agent").

                                    RECITALS

         A.       Lessee currently owns the land described in Exhibit A (as more
fully defined in Schedule 1.01, the "Land").

         B.       Lessee has requested Lessor and the Participants to provide to
Lessee a lease facility pursuant to which:

                  (1)      Lessor would (a) lease the Land from Lessee, (b)
         sublease back to Lessee the Land and lease to Lessee certain
         improvements to be constructed on the Land, (c) appoint Lessee as
         Lessor's agent to make such improvements (which improvements will be
         owned by Lessor), (d) make advances to finance such improvements and to
         pay certain related expenses and (e) grant to Lessee the right to
         purchase Lessor's leasehold interest in the Land and Lessor's interest
         in such improvements; and

                  (2)      The Participants would participate in such lease
         facility by (a) funding the advances to be made by Lessor and (b)
         acquiring participation interests in the rental and certain other
         payments to be made by Lessee.

         C.       Lessor and the Participants are willing to provide such lease
facility upon the terms and subject to the conditions set forth herein.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:

                                       1
<PAGE>   7
SECTION 1. INTERPRETATION.

         1.01.    Definitions. Unless otherwise indicated in this Agreement or
any other Operative Document, each term set forth in Schedule 1.01, when used in
this Agreement or any other Operative Document, shall have the respective
meaning given to that term in Schedule 1.01 or in the provision of this
Agreement or other document, instrument or agreement referenced in Schedule
1.01.

         1.02.    Rules of Construction. Unless otherwise indicated in this
Agreement or any other Operative Document, the rules of construction set forth
in Schedule 1.02 shall apply to this Agreement and the other Operative
Documents.

SECTION 2. LEASE FACILITY.

         2.01.    Acquisition, Lease, Amount Limitations, Etc.

                  (a)      Acquisition, Lease, Etc. Subject to the terms and
         conditions of this Agreement (including the limitations set forth in
         Subparagraph 2.01(b)):

                           (i)      On the date specified by Lessee pursuant to
                  Subparagraph 2.03(a) for the initial advance hereunder (the
                  "Closing Date"):

                                    (A)      Lessor and Lessee shall execute a
                           ground lease in the form of Exhibit M (the "Ground
                           Lease"), pursuant to which Lessee leases to Lessor
                           the Land; and

                                    (B)      Immediately upon the execution by
                           Lessor and Lessee of the Ground Lease, Lessor and
                           Lessee shall execute (1) a Lease Agreement in the
                           form of Exhibit B (the "Lease Agreement"), pursuant
                           to which Lessor subleases back to Lessee Lessor's
                           leasehold interest in the Land and leases to Lessee
                           Lessor's rights in the improvements to the Land; (2)
                           a Purchase Agreement in the form of Exhibit C (the
                           "Purchase Agreement"), pursuant to which Lessor
                           grants to Lessee the right to purchase such
                           improvements to the Land together with Lessor's
                           leasehold interest in the Land, and (3) a
                           Construction Agency Agreement in the form of Exhibit
                           D (the "Construction Agency Agreement"), pursuant to
                           which Lessee agrees to construct such improvements to
                           the Land; and

                           (ii)     During the period (the "Commitment Period")
                  beginning on the date of this Agreement and ending on the
                  Outside Completion Date or, if earlier, the first Business Day
                  of the first full calendar month immediately succeeding the
                  earlier of (A) the Completion Date and (B) the date on which
                  the Unused Total Commitment is $0 (the earlier of the Outside
                  Completion Date and such first Business Day to be referred to
                  as the "Commitment Termination Date"), Lessor shall, at the
                  request of Lessee, make advances to Lessee (with funds
                  provided by the Participants) to pay Permitted Improvement
                  Costs and Permitted Transaction Expenses ("Advances").

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<PAGE>   8
                  (b)      Amount Limitations. The aggregate amount of all
         Advances made by Lessor shall not exceed the lesser of (A) One Hundred,
         Seventy Million Dollars ($170,000,000) (the "Total Commitment") and (B)
         the Expiration Date Appraisal for the Property.

                  (c)      Tranches. Each Advance shall consist of a Tranche A
         Portion, a Tranche B Portion and a Tranche C Portion. For accounting
         purposes, the Tranche A Portion and Tranche B Portion of each Advance
         shall constitute debt and the Tranche C Portion shall constitute
         equity.

         2.02.    Participation Agreement.

                  (a)      Advances. Each Participant severally, unconditionally
         and irrevocably agrees with Lessor to participate in each Advance made
         by Lessor in an amount equal to such Participant's Proportionate Share
         of such Advance; provided, however, that the aggregate amount of each
         Participant's Proportionate Share of all Advances shall not exceed such
         Participant's Commitment. Each Participant shall fund its Proportionate
         Share of each Advance as provided in Subparagraph 2.05(a). Each
         Participant's Proportionate Share of each Advance shall consist of such
         Participant's Tranche A Portion, Tranche B Portion and Tranche C
         Portion of such Advance.

                  (b)      Payments. In consideration of each Participant's
         participation in each Advance made by Lessor, such Participant shall
         participate in the payments made by Lessee under this Agreement and the
         other Operative Documents as provided in Paragraph 2.06.

                  (c)      Other Rights of Participants and Agent.

                           (i)      Until all amounts payable to Agent and
                  Participants under this Agreement and the other Operative
                  Documents are paid in full, Lessee shall deliver all notices
                  for Lessor under this Agreement and the other Operative
                  Documents to Agent at the office or facsimile number and
                  during the hours specified in Paragraph 7.01. Agent shall
                  promptly furnish to Lessor and each Participant (other than
                  Novellus) copies of each such notice and, in the case of each
                  request for an Advance, shall notify each Participant of the
                  amount of such Participant's Proportionate Share of the
                  Advance requested thereby. (Lessee shall not be liable for,
                  and no Event of Default shall occur upon, Agent's failure to
                  provide copies of notices delivered to Agent by Lessee to
                  Lessor and/or the Participants.)

                           (ii)     Lessor is not an agent for Participants or
                  Agent and may exercise or refrain from exercising its rights
                  under this Agreement and the other Operative Documents in its
                  discretion; provided, however that, until all amounts payable
                  to Agent and Participants under this Agreement and the other
                  Operative Documents are paid in full, (A) Lessor shall,
                  subject to the limitations set forth in Section VI, be
                  required to act or to refrain from acting upon instructions of
                  the Required Participants as provided in Paragraph 6.03 and
                  (B) Agent may exercise any or all

                                       3
<PAGE>   9
                  of the rights and remedies of Lessor, and shall be entitled to
                  the other benefits afforded Lessor, under this Agreement and
                  the other Operative Documents.

                           (iii)    Neither Agent nor any Participant shall have
                  any right, title or interest in the Property except for (A)
                  the Lien therein granted to Agent, for the benefit of the
                  Participants, in the Lessor Deed of Trust, the Assignment of
                  Lease and the Lessor Security Agreement and (B) any right,
                  title or interest held by Lessee in its capacity as such and
                  not by Novellus as a Participant.

                  (d)      Participation by Novellus. On the Completion Date,
         ABN AMRO shall sell and assign and Novellus shall purchase and assume
         pursuant to Subparagraph 7.05(b) ABN AMRO's Outstanding Tranche A
         Participation Amount and all of ABN AMRO's other rights and obligations
         under this Agreement and the other Operative Documents relating
         thereto, and the Tranche A Percentage and Tranche A Portion. Except as
         otherwise expressly provided in this Agreement or the other Operative
         Documents, Novellus, upon such purchase, shall become a Participant
         with the rights, duties and obligations thereof as provided in
         Subparagraph 7.05(b) and, in its capacity as such, shall be included in
         the term "Participant," "Tranche A Participant" and "Lessor Party."

         2.03.    Advance Requests.

                  (a)      Advance Requests. Lessee shall request Lessor to make
         each Advance by delivering to Lessor:

                           (i)      An irrevocable written request in the form
                  of Exhibit E, appropriately completed (an "Advance Request"),
                  which specifies, among other things:

                                    (A)      The amount of such Advance, which
                           shall be in the minimum amount of $10,000 or an
                           integral multiple of $10,000 in excess thereof;

                                    (B)      The date of such Advance, which
                           shall be (1) a Business Day on or prior to May 2,
                           2001 in the case of the initial Advance and (2) the
                           first Business Day of a calendar month in the case of
                           all other Advances; and

                                    (C)      The Permitted Improvement Costs and
                           Permitted Transaction Expenses to be paid by such
                           Advance; and

                           (ii)     If the proceeds of such Advance are to be
                  used to purchase Related Goods:

                                    (A)      A Supplement to Exhibit B to the
                           Lease Agreement in the form of Exhibit B(1) to the
                           Lease Agreement (an "Exhibit B Supplement"), which
                           contains a detailed description of such Related
                           Goods; and

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<PAGE>   10
                                    (B)      Bills of sale for all such Related
                           Goods showing Lessor as the purchaser.

         Lessee shall not request more than one (1) Advance in any calendar
month.

                  (b)      Delivery of Advance Requests. Etc. Lessee shall
         deliver each Advance Request to Lessor at least three (3) Business Days
         before the date of such Advance by first-class mail or facsimile as
         required by Subparagraph 2.02(c) and Paragraph 7.01; provided, however,
         that Lessee shall promptly deliver to Lessor the original of any
         Advance Request initially delivered by facsimile.

                  (c)      Capitalization of Certain Amounts.

                           (i)      Lessee shall not be required to pay during
                  the Construction Period the following amounts that would
                  otherwise be payable by Lessee pursuant to the terms of the
                  Operative Documents:

                                    (A)      Any Base Rent payable by Lessee
                           during the Construction Period under the Lease
                           Agreement; provided, however, that Lessee may pay any
                           such Base Rent due on a Scheduled Rent Payment Date
                           (and such Base Rent shall not be capitalized as
                           provided below) if, not later than three (3) Business
                           Days prior to such Scheduled Rent Payment Date,
                           Lessee notifies Lessor in writing that Lessee will
                           pay such Base Rent;

                                    (B)      Any fees payable by Lessee pursuant
                           to Paragraph 2.04 during the Construction Period; and

                                    (C)      Any increased costs or reduced
                           amounts that would be payable by Lessee during the
                           Construction Period pursuant to Subparagraph 2.12(c)
                           but for the proviso to such subparagraph.

                  Lessor shall capitalize all such amounts by automatically
                  treating each such amount as an Advance made on the date such
                  amount would be payable by Lessee but for this clause (i). All
                  such amounts so capitalized shall be added to the Outstanding
                  Lease Amount and shall be included in the Outstanding Lease
                  Amount for all purposes, including the calculation of the Base
                  Rent payable by Lessee under the Lease Agreement after the
                  Construction Period and the calculation of the Residual Value
                  Guaranty Amount under the Purchase Agreement.

                           (ii)     Lessee also shall not be required to pay the
                  following amounts unless Lessee purchases the Property:

                                    (A)      Any liabilities, losses, damages or
                           expenses not constituting Project Costs and not
                           covered by insurance that would be payable by Lessee
                           during the Construction Period pursuant to Paragraph
                           7.03 but for the proviso to such paragraph;

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                                    (B)      Any losses or liabilities not
                           constituting Project Costs and not covered by
                           insurance that would be payable by Lessee during the
                           Construction Period pursuant to Paragraph 3.02 of the
                           Lease Agreement but for the proviso to such
                           paragraph;

                                    (C)      Any Cost Overrun not constituting
                           Project Costs and not covered by insurance that
                           Lessor and Participants fund, except any Cost Overrun
                           that is caused by or arises from any failure by
                           Lessee to comply with any of its obligations under
                           the Operative Documents (including its insurance
                           obligations), any representation by Lessee in any of
                           the Operative Documents not being true, any
                           negligence or willful misconduct of Lessee, or any
                           claim by any third-party against Lessee (or against
                           any Lessor Party) based upon any alleged action or
                           inaction by Lessee; or

                                    (D)      Any portion of Base Rent that is
                           attributable to the inclusion in the Outstanding
                           Lease Amount of the amounts of (1) any liabilities,
                           losses, damages or expenses referred to in clause
                           (ii)(A) above, (2) any losses or liabilities referred
                           to in clause (ii)(B) above or (3) any Cost Overruns
                           referred to in clause (ii)(C) above.

                  Lessor shall capitalize all such amounts by automatically
                  treating each such amount as an Advance made on the date such
                  amount would be payable by Lessee but for this clause (ii).
                  All such amounts so capitalized shall be added to the
                  Outstanding Lease Amount and shall be included in the
                  Outstanding Lease Amount; provided, however, that, if Lessee
                  exercises the Marketing Option in accordance with the Purchase
                  Agreement and the other Operative Documents, Lessee shall have
                  no obligation to pay any such amounts and Lessor Parties may
                  recover such amounts only to the extent provided in
                  Subparagraph 3.02(j) of the Purchase Agreement. If any amounts
                  referred to in clauses (ii)(A), (ii)(B), (ii)(C) or (ii)(D)
                  above (collectively, "Ineligible Project Costs") are
                  capitalized and included in the Outstanding Lease Amount, all
                  Lessee payments and other amounts applied to the Outstanding
                  Lease Amount shall be applied first to all other amounts
                  included in the Outstanding Lease Amount and then to pay the
                  Ineligible Project Costs. All payments applied to Ineligible
                  Project Costs shall be shared by the Lessor Parties that
                  funded such Ineligible Project Costs pro rata based on the
                  amounts so funded by and owed to such Lessor Parties.

         Agent shall notify Lessee, Lessor and each Participant of each amount
         capitalized and treated as an Advance under this Subparagraph 2.03(c).

         2.04.    Fees.

                  (a)      Agent's Fees. Lessee shall pay to Agent, for its own
         account, agent's fees in the amounts and at the times set forth in the
         Agent's Fee Letter (the "Agent's Fees").

                  (b)      Commitment Fees. Lessee shall pay to Agent, for the
         ratable benefit of the Participants as provided in clause (ii) of
         Subparagraph 2.06(c), commitment fees (the

                                       6
<PAGE>   12
         "Commitment Fees") equal to the Commitment Fee Percentage of the daily
         average Unused Total Commitment for the entire Commitment Period.
         Lessee shall pay the Commitment Fees in arrears on the first Business
         Day in each January, April, July and October (commencing July 2, 2001)
         and on the Commitment Termination Date (or if the Total Commitment is
         cancelled on a date prior to such day, on such prior date).

                  (c)      Commitment Extension Fee. If Lessor and the
         Participants consent to any extension of the Commitment Termination
         Date requested by Lessee pursuant to Subparagraph 2.09(a), Lessee shall
         pay to Agent, for the ratable benefit of the Participants as provided
         in clause (v) of Subparagraph 2.06(c), an extension fee (the
         "Commitment Extension Fee") equal to ten hundredths of one percent
         (0.10%) of the Unused Total Commitment on the date Lessee is notified
         by Agent of such consent. Lessee shall pay the Commitment Extension Fee
         on or prior to the Business Day immediately preceding the original
         Commitment Termination Date.

         2.05.    Funding of Advances.

                  (a)      Participant Funding and Disbursement. Each
         Participant shall, before 11:00 a.m. on the date of each Advance, make
         available to Agent at its office specified in Paragraph 7.01, in same
         day or immediately available funds, such Participant's Proportionate
         Share of such Advance. After Agent's receipt of such funds and upon
         fulfillment of the applicable conditions set forth in Section 3, Agent
         will promptly disburse such funds on behalf of Lessor, in same day or
         immediately available funds, as directed by Lessee in the Advance
         Request for such Advance.

                  (b)      Participant Failure to Fund. Unless Agent shall have
         received notice from a Participant prior to the date of any Advance
         that such Participant will not make available to Agent such
         Participant's Proportionate Share of such Advance, Agent may assume
         that such Participant has made such portion available to Agent on the
         date of such Advance in accordance with Subparagraph 2.05(a), and Agent
         may, in reliance upon such assumption, disburse the full amount of such
         Advance on such date; provided, however, that neither Agent nor Lessor
         shall have any obligation to make an Advance requested hereunder in an
         amount which exceeds the aggregate amount of funds actually received by
         Agent from the Participants on account of their respective
         Proportionate Shares of such Advance. If any Participant does not make
         the amount of its Proportionate Share of any Advance available to Agent
         on or prior to the date such Advance is made, Agent promptly shall
         notify such Participant of such failure and such Participant shall pay
         to Agent, on demand, interest which shall accrue on such amount until
         made available to Agent at rates equal to (i) the daily Federal Funds
         Rate during the period from the date of such Advance through the third
         Business Day thereafter and (ii) the Base Rate plus two percent (2.0%)
         thereafter. A certificate of Agent submitted to any Participant with
         respect to any amounts owing under this Subparagraph 2.05(b) shall be
         conclusive absent manifest error. If any Participant's Proportionate
         Share of any Advance is not in fact made available to Agent by such
         Participant within three (3) Business Days after the date of such
         Advance, Lessee shall pay to Agent, on demand, an amount equal to such
         Proportionate Share together with interest thereon, for each day from
         the date such

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<PAGE>   13
         amount was made available to Lessee until the date such amount is
         repaid to Agent, at a per annum rate equal to the Base Rate.

                  (c)      Participants' Obligations Several. The failure of any
         Participant to fund its Proportionate Share of any Advance shall not
         relieve any other Participant of its obligation hereunder to fund its
         Proportionate Share of such Advance, and no Participant shall be
         responsible for the failure of any other Participant to fund its
         Proportionate Share of any Advance on the date of such Advance.

         2.06.    Sharing of Payments.

                  (a)      Outstanding Lease Amount. Subject to clause (ii) of
         Subparagraph 2.03(c) in the event any amount is capitalized pursuant to
         such clause, Lessor shall share payments applied to reduce the
         Outstanding Lease Amount as follows:

                           (i)      Each payment of the Outstanding Lease Amount
                  derived from the purchase price paid by Lessee (or an Assignee
                  Purchaser) to purchase the Property pursuant to the Purchase
                  Agreement shall be shared by the Participants pro rata
                  according to their respective Outstanding Participation
                  Amounts at the time of such payment.

                           (ii)     Each payment of the Outstanding Lease Amount
                  derived from:

                                    (A)      the Residual Value Guaranty Amount
                           paid by Lessee pursuant to the Purchase Agreement; or

                                    (B)      the Principal Component of Base
                           Rent;

                  Shall be shared first by the Tranche A Participants pro rata
                  according to their respective Outstanding Tranche A
                  Participation Amounts at the time of such payment; second, if
                  any amounts remain after all Outstanding Tranche A
                  Participation Amounts are paid in full, by the Tranche B
                  Participants pro rata according to their respective
                  Outstanding Tranche B Participation Amounts at the time of
                  such payment; and third, if any amounts remain after all
                  Outstanding Tranche A Participation Amounts and all
                  Outstanding Tranche B Participation Amounts are paid in full,
                  by the Tranche C Participants pro rata according to their
                  respective Outstanding Tranche C Participation Amounts at the
                  time of such payment.

                           (iii)    Each payment of the Outstanding Lease Amount
                  derived from:

                                    (A)      the purchase price paid by a
                           Designated Purchaser to purchase the Property
                           pursuant to the Purchase Agreement;

                                    (B)      the Indemnity Amount paid by Lessee
                           pursuant to the Purchase Agreement;

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<PAGE>   14
                                    (C)      Casualty Proceeds or Condemnation
                           Proceeds related to any of the Property; or

                                    (D)      the purchase price paid by any
                           other Person (except as otherwise provided in clause
                           (i) above) to purchase the Property (whether after
                           the retention of such Property by Lessor following
                           the Expiration Date of the Lease Agreement, upon
                           foreclosure or otherwise);

                  Shall be shared first by the Tranche B Participants pro rata
                  according to their respective Outstanding Tranche B
                  Participation Amounts at the time of such payment; second, if
                  any amounts remain after all Outstanding Tranche B
                  Participation Amounts are paid in full, by the Tranche A
                  Participants pro rata according to their respective
                  Outstanding Tranche A Participation Amounts at the time of
                  such payment; and third, if any amounts remain after all
                  Outstanding Tranche B Participation Amounts and all
                  Outstanding Tranche A Participation Amounts are paid in full,
                  by the Tranche C Participants pro rata according to their
                  respective Outstanding Tranche C Participation Amounts at the
                  time of such payment.

                           (iv)     Notwithstanding anything to the contrary set
                  forth in this Paragraph 2.06, the proceeds from the
                  foreclosure, application, setoff, withdrawal or other
                  collection or disposition of any Cash Collateral shall be
                  shared in accordance with the other provisions of this
                  Paragraph 2.06 based upon the Lessee Obligations to which such
                  proceeds of Cash Collateral are applied; provided, however,
                  that if the Property is sold to a Designated Purchaser
                  pursuant to the Marketing Option in the Purchase Agreement,
                  any proceeds of Cash Collateral shall be applied as follows:

                                    (A)      prior to the Completion Date, such
                           proceeds shall be applied only in satisfaction of the
                           obligations of Lessee in respect of the Residual
                           Value Guaranty Amount applicable to such Property and
                           such other Lessee Obligations as may then be due and
                           owing in accordance with the Operative Documents, and
                           such proceeds (as so applied) shall be shared in
                           accordance with the other provisions of this
                           Paragraph 2.06 which govern the sharing of proceeds
                           which are applied to the Residual Value Guaranty
                           Amount and such other Lessee Obligations as are then
                           due and owing. Any remaining Cash Collateral after
                           such Lessee Obligations have been paid shall be
                           remitted to Lessee or to such other Person as may be
                           entitled thereto; and

                                    (B)      following the Completion Date, such
                           proceeds shall be applied only in satisfaction of the
                           obligations of Lessee in respect of the Residual
                           Value Guaranty Amount and such other Lessee
                           Obligations as may then be due and owing in
                           accordance with the Operative Documents, and such
                           proceeds (as so applied) shall be shared in
                           accordance with the other provisions of this
                           Paragraph 2.06 which govern the sharing of proceeds
                           which are applied to the Residual Value Guaranty
                           Amount and

                                       9
<PAGE>   15
                           such other Lessee Obligations as are then due and
                           owing; provided that any portion of such proceeds
                           which are applied to the Residual Value Guaranty
                           Amount shall be shared only among the Tranche A
                           Participants, if any, other than Novellus, pro rata
                           in accordance with their respective Tranche A
                           Outstanding Amounts. Any remaining Cash Collateral
                           after such Lessee Obligations have been paid shall be
                           remitted to Lessee or to such other Person as may be
                           entitled thereto.

                  (b)      Interest Component of Base Rent. Lessor shall share
         each payment applied to the Interest Component of Base Rent among the
         Participants which funded the Outstanding Lease Amount pro rata within
         the Tranche A Portion, Tranche B Portion and the Tranche C Portion,
         respectively, according to (i) the respective Outstanding Participation
         Amounts so funded by such Participants and (ii) the dates on which such
         Participants so funded such amounts.

                  (c)      Supplemental Rent. Lessor shall share each payment
         applied to Supplemental Rent among the Lessor Parties as follows:

                           (i)      Each payment applied to Agent's Fees shall
                  be solely for the account of Agent.

                           (ii)     Each payment applied to Commitment Fees
                  shall be shared by the Participants pro rata according to (A)
                  their respective Proportionate Shares and (B) in the case of
                  each Participant which becomes a Participant hereunder after
                  the date hereof, the date upon which such Participant so
                  became a Participant.

                           (iii)    Each payment applied to reimburse any Lessor
                  Party for any fees, costs and expenses incurred by such Lessor
                  Party shall be solely for the account of such Lessor Party.

                           (iv)     Each payment of interest (other than Base
                  Rent) shall be shared among the Lessor Parties owed the amount
                  upon which such interest accrues pro rata according to (A) the
                  respective amounts so owed such Lessor Parties and (B) the
                  dates on which such amounts became owing to such Lessor
                  Parties.

                           (v)      Each payment applied to the Commitment
                  Extension Fee shall be shared by the Participants pro rata
                  according to the Unused amounts of their Commitments on the
                  date of such payment.

                           (vi)     All other payments under this Agreement and
                  the other Operative Documents shall be for the benefit of the
                  Person or Persons specified.

                  (d)      Disproportionate Payments, Etc. If any Participant
         shall obtain any payment (whether voluntary, involuntary, through the
         exercise of any right of setoff, or otherwise) on account of amounts
         owed to it in excess of its ratable share of payments on account of
         such amounts obtained by all Participants entitled to such payments,
         such Participant shall forthwith purchase from the other Participants
         such participations in the payments to be made under the Operative
         Documents as shall be necessary to cause such

                                       10
<PAGE>   16
         purchasing Participant to share the excess payment ratably with each of
         them; provided, however, that if all or any portion of such excess
         payment is thereafter recovered from such purchasing Participant, such
         purchase shall be rescinded and each other Participant shall repay to
         the purchasing Participant the purchase price to the extent of such
         recovery together with an amount equal to such other Participant's
         ratable share (according to the proportion of (i) the amount of such
         other Participant's required repayment to (ii) the total amount so
         recovered from the purchasing Participant) of any interest or other
         amount paid or payable by the purchasing Participant in respect of the
         total amount so recovered. Lessee agrees that any Participant so
         purchasing a participation from another Participant pursuant to this
         Subparagraph 2.06(d) may, to the fullest extent permitted by law,
         exercise all its rights of payment (including the right of setoff) with
         respect to such participation as fully as if such Participant were the
         direct creditor of Lessee in the amount of such participation.

         2.07.    Other Payment Terms.

                  (a)      Place and Manner of Payments by Lessee. Lessee shall
         make all payments due to any Lessor Party under this Agreement and the
         other Operative Documents by payments to Agent, for the account of such
         Person, at Agent's office, located at the address specified in
         Paragraph 7.01, with each payment due to a Participant to be for the
         account of such Participant's Applicable Participating Office. Lessee
         shall make all payments in lawful money of the United States and in
         same day or immediately available funds not later than 11:00 a.m. on
         the date due. Agent shall promptly disburse to the appropriate Person
         each such payment received by Agent for such Person.

                  (b)      Date. Whenever any payment due under this Agreement
         or any other Operative Document shall fall due on a day other than a
         Business Day, such payment shall be made on the next succeeding
         Business Day, and such extension of time shall be included in the
         computation of Rent, interest or fees, as the case may be.

                  (c)      Late Payments. If any amounts required to be paid by
         Lessee under this Agreement or any other Operative Document (including
         Rent, interest, fees or other amounts) remain unpaid after such amounts
         are due, Lessee shall pay interest on the aggregate, outstanding
         balance of such amounts from the date due until those amounts are paid
         in full at a per annum rate equal to the Base Rate plus two percent
         (2.0%), such rate to change from time to time as the Base Rate shall
         change.

                  (d)      Application of Payments. All payments under this
         Agreement and the other Operative Documents shall be applied first to
         unpaid fees, costs and expenses and other Supplemental Rent then due
         and payable under this Agreement or any other Operative Document,
         second to the accrued Interest Component of Base Rent then due and
         payable under this Agreement or any other Operative Document and
         finally to the Principal Component of Base Rent or otherwise to reduce
         the Outstanding Lease Amount.

                  (e)      Failure to Pay Agent. Unless Agent shall have
         received notice from Lessee at least one (1) Business Day prior to the
         date on which any payment is due to

                                       11
<PAGE>   17
         Lessor or the Participants under this Agreement or the other Operative
         Documents that Lessee will not make such payment in full, Agent may
         assume that Lessee has made such payment in full to Agent on such date
         and Agent may, in reliance upon such assumption, cause to be
         distributed to the appropriate Persons on such due date an amount equal
         to the amount then due such Persons. If and to the extent Lessee shall
         not have so made such payment in full to Agent, each such Person shall
         repay to Agent forthwith on demand such amount distributed to such
         Person together with interest thereon, for each day from the date such
         amount is distributed to such Person until the date such Person repays
         such amount to Agent, at (i) the Federal Funds Rate for the first three
         (3) days and (ii) the Base Rate plus two percent (2.0%) thereafter,
         such rate to change from time to time as the Base Rate shall change. A
         certificate of Agent submitted to any Person with respect to any
         amounts owing by such Person under this Subparagraph 2.07(e) shall be
         conclusive absent manifest error.

         2.08.    Commitment Reductions.

                  (a)      Reduction or Cancellation of Commitments. Lessee may,
         at any time prior to the Commitment Termination Date, upon five (5)
         Business Days written notice to Lessor, permanently reduce the Total
         Commitment by the amount of Five Million Dollars ($5,000,000) or an
         integral multiple of One Million Dollars ($1,000,000) in excess thereof
         or cancel the Total Commitment in its entirety.

                  (b)      Effect of Commitment Reductions. From the effective
         date of any reduction of the Total Commitment, the Commitment Fees
         shall be computed on the basis of the Total Commitment as so reduced.
         Once reduced or cancelled, the Total Commitment may not be increased or
         reinstated without the prior written consent of Lessor and all
         Participants. Any reduction of the Total Commitment pursuant to this
         Paragraph 2.08 shall be applied ratably to reduce each Participant's
         Commitment pro rata in accordance with its Proportionate Share.

         2.09     Extensions.

                  (a)      Commitment Extension. Lessee may request Lessor to
         extend the Outside Completion Date for an additional period of one (1),
         two (2), three (3), four (4), five (5) or six (6) months by
         appropriately completing, executing and delivering to Agent a written
         request in the form of Exhibit F(1) (a "Commitment Extension Request").
         Lessee shall deliver the Commitment Extension Request to Agent not more
         than three (3) months and not less than two (2) months before the
         original Outside Completion Date. Agent shall promptly deliver to
         Lessor and each Participant three (3) copies of each Commitment
         Extension Request received by Agent. If Lessor or a Participant, in its
         sole and absolute discretion, consents to the Commitment Extension
         Request, such Person shall evidence such consent by executing and
         returning two (2) copies of the Commitment Extension Request to Agent
         not later than the last Business Day which is not less than twelve (12)
         Business Days prior to the original Outside Completion Date. Any
         failure by Lessor or any Participant so to execute and return a
         Commitment Extension Request shall be deemed a denial thereof. If
         Lessee shall deliver a Commitment Extension Request to Lessor pursuant
         to the first sentence of this

                                       12
<PAGE>   18
         Subparagraph 2.09(a), then not later than ten (10) Business Days prior
         to the original Outside Completion Date, Agent shall notify Lessee,
         Lessor and the Participants in writing whether (i) Agent has received a
         copy of the Commitment Extension Request executed by Lessor and each
         Participant, in which case the definition of "Outside Completion Date"
         set forth in Schedule 1.01 shall be deemed extended to the date which
         is the requested extension period after the original Outside Completion
         Date (subject to receipt by Agent of the Commitment Extension Fee), or
         (ii) Agent has not received a copy of the Commitment Extension Request
         executed by Lessor and each Participant, in which case such Commitment
         Extension Request shall be deemed denied. Lessee acknowledges that
         neither Lessor nor any Participant has promised (either expressly or
         implicitly), or has any obligation or commitment, to extend or consent
         to the extension of the Outside Completion Date at any time.

                  (b)      Lease Extensions. Lessee may, as provided herein but
         not more than three (3) times, request Lessor to extend the Scheduled
         Expiration Date of the Lease Agreement for an additional period of one
         (1) year by appropriately completing, executing and delivering to Agent
         a written request in the form of Exhibit F(2), together with an
         attachment thereto setting forth the terms upon which Lessee would
         propose for the requested extension (a "Lease Extension Request").
         Lessee shall deliver each Lease Extension Request to Agent not more
         than twelve (12) months and not less than nine (9) months before the
         then current Scheduled Expiration Date. Agent shall promptly deliver to
         Lessor and each Participant (other than Novellus) three (3) copies of
         each Lease Extension Request received by Agent. If Lessor or a
         Participant (other than Novellus), in its sole and absolute discretion,
         consents to a Lease Extension Request, such Person shall evidence such
         consent by executing and returning two (2) copies of such Lease
         Extension Request to Agent not later than the last Business Day which
         is not less than seven (7) months prior to the then current Scheduled
         Expiration Date. Any failure by Lessor or any Participant (other than
         Novellus) so to execute and return a Lease Extension Request shall be
         deemed a denial thereof. If Lessee shall deliver a Lease Extension
         Request to Lessor pursuant to the first sentence of this Subparagraph
         2.09(b), then not later than the last Business Day which is not less
         than six (6) months prior to the then current Scheduled Expiration
         Date, Agent shall notify Lessee, Lessor and the Participants (other
         than Novellus) in writing whether (i) Agent has received a copy of the
         Lease Extension Request executed by Lessor and each Participant (other
         than Novellus), in which case the definition of "Scheduled Expiration
         Date" set forth in Subparagraph 2.02(a) of the Lease Agreement shall be
         deemed extended to the date which is one (1) year after the then
         current Scheduled Expiration Date (subject to the receipt by Agent of
         any amounts payable by Lessee in connection with such extension), or
         (ii) Agent has not received a copy of the Lease Extension Request
         executed by Lessor and each Participant (other than Novellus), in which
         case such Lease Extension Request shall be deemed denied. Lessee
         acknowledges that neither Lessor nor any Participant has promised
         (either expressly or implicitly), or has any obligation or commitment,
         to extend or consent to the extension of the Scheduled Expiration Date
         at any time.

         2.10.    Nature of the Transaction. Lessee and the Lessor Parties
intend that the transaction evidenced by this Agreement and the other Operative
Documents constitute an operating lease pursuant to FASB 13 for accounting
purposes and a loan secured by the Property

                                       13
<PAGE>   19
for other purposes, including federal, state and local income tax purposes and
commercial, real estate and bankruptcy law purposes. To the extent that this
Agreement and the other Operative Documents reflect the lease form alone, they
do so for convenience only. Lessee and the Lessor Parties intend that the
Operative Documents have the dual form referred to in the first sentence of this
paragraph, notwithstanding the use of the lease form alone.

                  (a)      Tax Treatment. For purposes of all income, franchise
         and other taxes imposed upon or measured by income, Lessee and Lessor
         Parties intend that the transaction evidenced by the Operative
         Documents shall be treated as a loan by the Participants (through
         Lessor) to Lessee secured by the Property, with Lessee as owner of the
         Property. Lessee and the Lessor Parties may only take deductions,
         credits, allowances and other reporting positions on their respective
         returns, reports and statements which are consistent with such
         treatment, unless required to do otherwise by an appropriate taxing
         authority or after a clearly applicable change in applicable
         Governmental Rules; provided, however, that if an appropriate taxing
         authority or a clearly applicable change in applicable Governmental
         Rules requires any Lessor Party to take such an inconsistent position,
         such Lessor Party shall promptly notify Lessee.

                  (b)      Other Legal Treatment. For purposes of commercial,
         real estate and bankruptcy law and other applicable laws, Lessee and
         Lessor Parties also intend that the transaction evidenced by the
         Operative Documents shall be treated as a loan by the Participants
         (through Lessor) to Lessee secured by the Property, with Lessee as
         owner of the Property. Consistent with such treatment, Lessee and the
         Lessor Parties intend that, among other things for such purposes, (i)
         the Advances be treated as loans to Lessee by the Participants (through
         Lessor); (ii) the Advances be secured by the Property and the Lessor
         Parties have the rights and remedies of secured lenders; (iii) Base
         Rent be treated as interest on the Advances; (iv) Lessee be required to
         pay on the Expiration Date only the Residual Value Guaranty Amount, the
         Indemnity Amount and the other amounts required by Subparagraph 4.06(b)
         of the Purchase Agreement (or Subparagraph 4.06(c) if Lessor is
         retaining the Property) if Lessee exercises the Marketing Option in
         accordance with the Purchase Agreement; and (v) Lessee be required to
         pay on the Expiration Date the Outstanding Lease Amount and all other
         amounts outstanding under this Agreement and the other Operative
         Documents (including amounts required by Subparagraph 4.06(a) of the
         Purchase Agreement) if the Lease Agreement is terminated prior to its
         Scheduled Expiration Date after an Event of Default occurs under the
         Lease Agreement or if Lessee fails to or is otherwise not entitled to
         exercise the Marketing Option in accordance with the Purchase
         Agreement.

                  (c)      No Reliance by Lessee. Lessee acknowledges and agrees
         that no Lessor Parties has made any representations or warranties to
         Lessee concerning the tax, accounting or legal characteristics of the
         Operative Documents and that Lessee has obtained and relied upon such
         tax, accounting and legal advice concerning the Operative Documents as
         it deems appropriate.

         2.11.    Security.

                  (a)      Lessee Obligations.

                                       14
<PAGE>   20
                           (i)      To the extent that the transaction evidenced
                  by the Lease Agreement, Purchase Agreement and other Operative
                  Documents is treated as a loan by the Participants (through
                  Lessor) to Lessee secured by the Property, with Lessee as
                  owner of the Property pursuant to Paragraph 2.10, the Lessee
                  Obligations shall be secured by the Real Property Collateral
                  and the Personal Property Collateral (collectively, the
                  "Property Collateral") as provided in Subparagraphs 2.07(a)
                  and 2.07(b) of the Lease Agreement and in an Assignment of
                  Construction Agreements in the form of Exhibit G, duly
                  executed by Lessee (the "Assignment of Construction
                  Agreements").

                           (ii)     In addition to the Property Collateral, the
                  Lessee Obligations shall be secured by a Cash Collateral
                  Agreement in the form of Exhibit H duly executed by Lessee
                  (the "Cash Collateral Agreement") and Cash Collateral as
                  provided below:

                                    (A)      Until the purchase by Novellus of
                           ABN AMRO's Outstanding Tranche A Participation Amount
                           pursuant to Subparagraph 2.02(d), Lessee shall, as
                           security for the Lessee Obligations, maintain with a
                           third-party custodian (which is not an Affiliate of
                           Lessee, Lessor or any of the Participants) pursuant
                           to the Cash Collateral Agreement Cash Collateral in
                           the form of United States Treasury Securities that
                           have an aggregate market value not less at any time
                           than 111% of the Outstanding Lease Amount at such
                           time.

                                    (B)      After the purchase by Novellus of
                           ABN AMRO's Outstanding Tranche A Participation Amount
                           pursuant to Subparagraph 2.02(d) and until the
                           Expiration Date of the Lease Agreement and the
                           satisfaction in full by Lessee of all Lessee
                           Obligations, Lessee shall, as security for the
                           Outstanding Tranche B Participation Amounts and
                           Outstanding Tranche C Participation Amounts, maintain
                           with Agent, Tranche B Participants and Lessor
                           pursuant to the Cash Collateral Agreement Cash
                           Collateral that has an aggregate market value not
                           less at any time than 100% of the sum of the
                           Outstanding Tranche B Participation Amounts and
                           Outstanding Tranche C Participation Amounts at such
                           time.

                  At the time Lessee first delivers any Cash Collateral to Agent
                  or Participants pursuant to this clause (ii) and as a
                  condition precedent to the obligation of Lessor to make any
                  subsequent Advance following the initial Advance set forth in
                  Paragraph 3.01, Lessee also shall deliver to Lessor a written
                  opinion of its counsel, in form and substance reasonably
                  satisfactory to Lessor and Agent but subject to customary
                  qualifications and assumptions, to the effect that the Cash
                  Collateral Agreement is a legal, valid and binding agreement
                  of Lessee, enforceable in accordance with its terms, and that
                  Lessor has a perfected security interest in the Cash
                  Collateral.

                           (iii)    Lessee shall deliver to Lessor and Agent
                  such additional mortgages, deeds of trust, security
                  agreements, pledge agreements, control

                                       15
<PAGE>   21
                  agreements, lessor consents and estoppels (containing
                  appropriate mortgagee and lender protection language) and
                  other instruments, agreements, certificates, opinions and
                  documents (including Uniform Commercial Code financing
                  statements and fixture filings and landlord waivers) as Lessor
                  or Agent may reasonably request to (A) grant, perfect,
                  maintain, protect and evidence security interests in favor of
                  Lessor or Agent in the Property Collateral and Cash Collateral
                  prior to the Liens or other interests of any Person, except in
                  the case of the Property Collateral for Permitted Property
                  Liens; and (B) otherwise establish, maintain, protect and
                  evidence the rights provided to Lessor and Agent in the
                  Property Collateral and the Cash Collateral. Lessee shall
                  fully cooperate with Lessor and Agent and perform all
                  additional acts reasonably requested by Lessor or Agent to
                  effect the purposes of this Subparagraph 2.11(a).

                  (b)      Lessor Obligations.

                           (i)      The Lessor Obligations shall be secured by
                  the following:

                                    (A)      An Assignment of Ground Lease,
                           Lease Agreement and Purchase Agreement in the form of
                           Exhibit I, duly executed by Lessor (the "Assignment
                           of Lease");

                                    (B)      A Construction Deed of Trust with
                           Assignment of Rents, Security Agreement and Fixture
                           Filing in the form of Exhibit J, duly executed by
                           Lessor (the "Lessor Deed of Trust"); and

                                    (C)      A Security Agreement in the form of
                           Exhibit K, duly executed by Lessor (the "Lessor
                           Security Agreement").

                           (ii)     Lessor shall deliver to Agent such
                  additional mortgages, deeds of trust, security agreements,
                  pledge agreements, lessor consents and estoppels (containing
                  appropriate mortgagee and lender protection language) and
                  other instruments, agreements, certificates, opinions and
                  documents (including Uniform Commercial Code financing
                  statements and fixture filings and landlord waivers) as Agent
                  may reasonably request to (A) grant, perfect, maintain,
                  protect and evidence security interests in favor of Agent in
                  Lessor's rights in the Property Collateral and the Cash
                  Collateral; and (B) otherwise establish, maintain, protect and
                  evidence the rights provided to Agent in the Property
                  Collateral and the Cash Collateral. Lessor shall fully
                  cooperate with Agent and perform all additional acts
                  reasonably requested by Agent to effect the purposes of this
                  Subparagraph 2.11(b).

                           (iii)    Lessee hereby consents to the Assignment of
                  Lease, the Lessor Deed of Trust and the Lessor Security
                  Agreement; the Liens granted to Agent therein; and all other
                  Liens granted to Agent in any of the Operative Documents and
                  the Property to secure the Lessor Obligations.

         2.12.    Change of Circumstances.

                                       16
<PAGE>   22
                           (a)      Inability to Determine Rates. If, on or
                  before the first day of any Rental Period for any Portion, (i)
                  any Participant shall advise Agent that the LIBOR Rental Rate
                  for such Rental Period and Portion cannot be adequately and
                  reasonably determined due to the unavailability of funds in or
                  other circumstances affecting the London interbank market or
                  (ii) Majority Participants shall advise Agent that the LIBOR
                  Rental Rate for such Rental Period and Portion does not
                  adequately and fairly reflect the cost to such Participants of
                  funding their shares of such Portion, Agent shall immediately
                  give notice of such condition to Lessee, Lessor and the other
                  Participants. After the giving of any such notice (and until
                  Agent shall otherwise notify Lessee and Lessor that the
                  circumstances giving rise to such condition no longer exist),
                  the LIBOR Rental Rate shall be unavailable and the Rental Rate
                  for each new Rental Period shall be the Alternate Rental Rate.

                           (b)      Illegality. If, after the date of this
                  Agreement, the adoption of any Governmental Rule, any change
                  in any Governmental Rule or the application or requirements
                  thereof (whether such change occurs in accordance with the
                  terms of such Governmental Rule as enacted, as a result of
                  amendment or otherwise), any change in the interpretation or
                  administration of any Governmental Rule by any Governmental
                  Authority, or compliance by Lessor or any Participant with any
                  request or directive (whether or not having the force of law)
                  of any Governmental Authority (a "Change of Law") shall make
                  it unlawful or impossible for any Participant to fund or
                  maintain its portion of the Outstanding Lease Amount at the
                  LIBOR Rental Rate, such Participant shall immediately notify
                  Agent and Agent shall immediately notify Lessee, Lessor and
                  the other Participants of such Change of Law. After the giving
                  of any such notice (and until Agent shall otherwise notify
                  Lessee and Lessor that such Change of Law is no longer in
                  effect), the LIBOR Rental Rate shall be unavailable and the
                  Rental Rate for each Rental Period shall be the Alternate
                  Rental Rate.

                           (c)      Increased Costs. If, after the date of this
                  Agreement, any Change of Law:

                                    (i)      Shall subject Lessor or any
                           Participant to any tax, duty or other charge with
                           respect to the Outstanding Lease Amount, or shall
                           change the basis of taxation of Base Rent payments by
                           Lessee to Lessor or any Participant under this
                           Agreement or any other Operative Document (except for
                           changes in the rate of taxation on the overall net
                           income of Lessor or any Participant imposed by its
                           jurisdiction of incorporation or, in the case of any
                           Participant, the jurisdiction in which its Applicable
                           Participating Office is located); or

                                    (ii)     Shall impose, modify or hold
                           applicable any reserve (excluding any Reserve
                           Requirement or other reserve to the extent included
                           in the calculation of the LIBOR Rental Rate), special
                           deposit or similar requirement against assets held
                           by, deposits or other liabilities in or for the
                           account of, advances or loans by, or any other
                           acquisition of funds by Lessor or any Participant for
                           its portion of the Outstanding Lease Amount; or

                                       17
<PAGE>   23
                                    (iii)    Shall impose on Lessor or any
                           Participant any other condition related to the
                           Outstanding Lease Amount, Base Rent or Lessor's or
                           such Participant's commitments hereunder;

         And the effect of any of the foregoing is to increase the cost to
         Lessor or such Participant of funding or maintaining its portion of the
         Outstanding Lease Amount or commitments or to reduce any amount
         receivable by Lessor or such Participant hereunder; then Lessee shall,
         from time to time within five (5) Business Days after demand by such
         Person, pay to such Person additional amounts sufficient to reimburse
         such Person for any such increased costs of such Person or to
         compensate such Person for any such reduced amounts of such Person;
         provided, however, that Lessee shall have no obligation to pay any
         additional amounts under this Subparagraph 2.12(c) on account of any
         increased costs or reduced amounts arising during the Construction
         Period except as follows:

                                    (A)      Lessee shall pay any such
                           additional amounts under this Subparagraph 2.12(c) on
                           account of any increased costs or reduced amounts
                           arising during the Construction Period if caused by
                           or arising from any failure by Lessee to comply with
                           any of its obligations under the Operative Documents
                           (including its insurance obligations), any
                           representation by Lessee in any of the Operative
                           Documents not being true, any negligence or willful
                           misconduct of Lessee, or any claim by any third-party
                           against Lessee (or against any Lessor Party) based
                           upon any alleged action or inaction by Lessee.

                                    (B)      If any Lessor Party incurs any such
                           increased costs or reduced amounts during the
                           Construction Period for which Lessee is not obligated
                           to pay additional amounts pursuant to clause (A)
                           above, the amount of such increased costs and reduced
                           amounts shall, if such Lessor Party shall so request
                           by a written notice to Lessor, be capitalized
                           pursuant to clause (i) of Subparagraph 2.03(c).

         A certificate setting forth in reasonable detail the amount of any
         increased costs or reduced amounts submitted by any Lessor Party shall
         constitute prima facie evidence of such costs or amounts. The
         obligations of Lessee under this Subparagraph 2.12(c) shall survive the
         payment and performance of the Lessee Obligations and the termination
         of this Agreement.

                  (d)      Capital Requirements. If, after the date of this
         Agreement, Lessor or any Participant determines that (i) any Change of
         Law affects the amount of capital required or expected to be maintained
         by such Person or any other Person controlling such Person (a "Capital
         Adequacy Requirement") and (ii) the amount of capital maintained by
         such Person or such other Person which is attributable to or based upon
         the Advances, the commitments or this Agreement must be increased as a
         result of such Capital Adequacy Requirement (taking into account such
         Person's or such other Person's policies with respect to capital
         adequacy), Lessee shall pay to such Person or such other Person, within
         five (5) Business Days after demand of such Person, such amounts as
         such Person or such other Person shall determine are necessary to
         compensate such Person or such other Person for the increased costs to
         such Person or such other Person of such increased capital. A
         certificate of Lessor or any Participant setting forth in reasonable
         detail the

                                       18
<PAGE>   24
         computation of any such increased costs, delivered by such Person to
         Lessee shall constitute prima facie evidence of such costs. The
         obligations of Lessee under this Subparagraph 2.12(d) shall survive the
         payment and performance of the Lessee Obligations and the termination
         of this Agreement.

                  (e)      Mitigation. If Lessor or any Participant becomes
         aware of (i) any Change of Law which will make it unlawful or
         impossible for such Person to fund or maintain its portion of the
         Outstanding Lease Amount at the LIBOR Rental Rate or (ii) any Change of
         Law or other event or condition which will obligate Lessee or Lessor to
         pay any amount pursuant to Subparagraph 2.12(c) or Subparagraph
         2.12(d), such Person shall notify Lessee and Lessor thereof as promptly
         as practical. If any Person has given notice of any such Change of Law
         or other event or condition and thereafter becomes aware that such
         Change of Law or other event or condition has ceased to exist, such
         Person shall notify Lessee and Lessor thereof as promptly as practical.
         Each Person affected by any Change of Law which makes it unlawful or
         impossible for such Person to fund or maintain its portion of the
         Outstanding Lease Amount at the LIBOR Rental Rate or to which Lessee or
         Lessor is obligated to pay any amount pursuant to Subparagraph 2.12(c)
         or Subparagraph 2.12(d) shall use reasonable commercial efforts
         (including changing the jurisdiction of its Applicable Participating
         Office) to avoid the effect of such Change of Law or to avoid or
         materially reduce any amounts which Lessee or Lessor is obligated to
         pay pursuant to Subparagraph 2.12(c) or Subparagraph 2.12(d) if, in the
         reasonable opinion of such Person, such efforts would not be
         disadvantageous to such Person.

         2.13.    Taxes on Payments.

                  (a)      Payments Free of Taxes. All payments made by Lessee
         under this Agreement and the other Operative Documents shall be made
         free and clear of, and without deduction or withholding for or on
         account of, any present or future Indemnified Taxes, now or hereafter
         imposed, levied, collected, withheld or assessed by any Governmental
         Authority, except as otherwise provided in the last sentence of
         Subparagraph 2.13(b). If any Indemnified Taxes are required to be
         withheld from any amounts payable by Lessee to any Lessor Party
         hereunder or under the other Operative Documents, the amounts so
         payable to such Lessor Party shall be increased to the extent necessary
         to yield to such Lessor Party (after payment of all Indemnified Taxes)
         the Base Rent or any such other amounts payable hereunder at the rates
         or in the amounts specified in this Agreement and the other Operative
         Documents. Whenever any Indemnified Taxes are payable by Lessee, as
         promptly as possible thereafter, Lessee shall send to Agent for its own
         account or for the account of Lessor or such Participant, as the case
         may be, a certified copy of an original official receipt received by
         Lessee showing payment thereof. If Lessee fails to pay any Indemnified
         Taxes when due to the appropriate taxing authority or fails to remit to
         Agent the required receipts or other required documentary evidence,
         Lessee shall indemnify the Lessor Parties for any incremental taxes,
         interest or penalties that may become payable by the Lessor Parties as
         a result of any such failure. The obligations of Lessee under this
         Subparagraph 2.13(a) shall survive the payment and performance of the
         Lessee Obligations and the termination of this Agreement.

                                       19
<PAGE>   25
                  (b)      Withholding Exemption Certificates. On or prior to
         the Closing Date or, if such date does not occur within thirty (30)
         days after the date of this Agreement, by the end of such 30-day
         period, Lessor, if it is not incorporated under the laws of the United
         States of America or a state thereof, and each Participant which is not
         incorporated under the laws of the United States of America or a state
         thereof shall deliver to Lessee and Lessor two duly completed copies of
         United States Internal Revenue Service Form 1001 or 4224 (or successor
         applicable form), as the case may be, certifying in each case that
         Lessor or such Participant, as the case may be, is entitled to receive
         payments under this Agreement and the other Operative Documents without
         deduction or withholding of any United States federal income taxes.
         Each Person which delivers to Lessee and Lessor a Form 1001 or 4224
         pursuant to the immediately preceding sentence further undertakes to
         deliver to Lessee and Lessor two further copies of Form 1001 or 4224
         (or successor applicable forms), or other manner of certification or
         procedure, as the case may be, on or before the date that any such form
         expires or becomes obsolete or after the occurrence of any event
         requiring a change in the most recent form previously delivered by it
         to Lessee and Lessor, and such extensions or renewals thereof as may
         reasonably be requested by Lessee or Lessor, certifying in the case of
         a Form 1001 or 4224 that such Person is entitled to receive payments
         under this Agreement and the other Operative Documents without
         deduction or withholding of any United States federal income taxes,
         unless in any such cases an event (including without limitation any
         change in treaty, law or regulation) has occurred prior to the date on
         which any such delivery would otherwise be required which renders all
         such forms inapplicable or which would prevent Lessor or a Participant
         from duly completing and delivering any such form with respect to it
         and Lessor or such Participant advises Lessee and Lessor that it is not
         capable of receiving payments without any deduction or withholding of
         United States federal income tax. If Lessor or any Participant fails to
         provide to Lessee or Lessor pursuant to this Subparagraph 2.13(b) (or,
         in the case of an Assignee Participant, Subparagraph 7.05(b)) any
         certificates or other evidence required by such provision to establish
         that such Lender is, at the time it becomes a Lender hereunder,
         entitled to receive payments under this Agreement and the other
         Operative Documents without deduction or withholding of any United
         States federal income taxes, Lessor or such Participant, as the case
         may be, shall not be entitled to any indemnification under Subparagraph
         2.13(a) for any Indemnified Taxes imposed on such Lender primarily as a
         result of such failure.

                  (c)      Mitigation. If any Lessor Party claims any additional
         amounts to be payable to it pursuant to this Paragraph 2.13, such
         Lessor Party shall use reasonable commercial efforts to file any
         certificate or document requested in writing by Lessee or Lessor
         (including copies of Internal Revenue Service Form 1001 (or successor
         forms) reflecting a reduced rate of withholding) or to change the
         jurisdiction of its Applicable Participating Office if the making of
         such a filing or such change in the jurisdiction of its Applicable
         Participating Office would avoid the need for or materially reduce the
         amount of any such additional amounts which may thereafter accrue and
         if, in the reasonable opinion of a Participant, in the case of a change
         in the jurisdiction of its Applicable Participating Office, such change
         would not be disadvantageous to such Person.

                                       20
<PAGE>   26
                  (d)      Tax Returns. Nothing contained in this Paragraph 2.13
         shall require any Lessor Party (in its capacity as such) to make
         available any of its tax returns (or any other information relating to
         its taxes which it deems to be confidential).

         2.14.    Funding Loss Indemnification. If Lessee shall (a) pay all or
any Portion of the Outstanding Lease Amount on any day other than the last day
of a Rental Period therefor (whether an optional payment, a mandatory payment or
otherwise) or (b) cancel or otherwise fail to consummate any Advance Request
which has been delivered to Agent (whether as a result of the failure to satisfy
any applicable conditions or otherwise), then Lessee shall, within five (5)
Business Days after demand by Lessor or any Participant, reimburse such Person
for and hold such Person harmless from all costs and losses incurred by such
Person as a result of such payment, cancellation or failure. Lessee understands
that such costs and losses may include, without limitation, losses incurred by
Lessor or a Participant as a result of funding and other contracts entered into
by such Person to fund its portion of the Outstanding Lease Amount. Each Person
demanding payment under this Paragraph 2.14 shall deliver to Lessee, with a copy
to Agent, a certificate setting forth the amount of costs and losses for which
demand is made, which certificate shall set forth in reasonable detail the
calculation of the amount demanded. Such a certificate so delivered to Lessee
shall constitute prima facie evidence of such costs and losses. The obligations
of Lessee under this Paragraph 2.14 shall survive the payment and performance of
the Lessee Obligations and the termination of this Agreement.

         2.15.    Replacement of Participants. If any Participant (other than
Novellus) shall (a) become a Defaulting Participant more than once in a period
of twelve (12) consecutive months, (b) continue as a Defaulting Participant for
more than five (5) Business Days at any time, (c) deliver, pursuant to
Subparagraph 2.12(b), a notice of a Change of Law which does not affect any
other Participant, or (d) demand any payment under Subparagraph 2.12(c), 2.12(d)
or 2.13(a) for a reason which is not applicable to any other Participant, then
Agent may (or upon the written request of Lessee if no Event of Default has
occurred and is continuing, shall) replace such Participant (the "affected
Participant"), or cause such affected Participant to be replaced, with another
Person (the "replacement Participant") satisfying the requirements of an
Eligible Assignee under Subparagraph 7.05(b), by having the affected Participant
sell and assign all of its rights and obligations under this Agreement and the
other Operative Documents to the replacement Participant pursuant to
Subparagraph 7.05(b); provided, however, that if Lessee seeks to exercise such
right, it must do so within sixty (60) days after it first knows of the event,
condition or demand giving rise to such right, and no Lessor Party (other than
Novellus) shall have any obligation to identify or locate a replacement
Participant for Lessee. Upon receipt by any affected Participant of a written
notice from Agent stating that Agent is exercising the replacement right set
forth in this Paragraph 2.15, such affected Participant shall sell and assign
all of its rights and obligations under this Agreement and the other Operative
Documents to the replacement Participant pursuant to an Assignment Agreement and
Subparagraph 7.05(b) for a purchase price equal to the sum of its portion of the
Outstanding Lease Amount, the accrued and unpaid portion of the Base Rent
relating to such portion and its ratable share of all fees to which it is
entitled.

                                       21
<PAGE>   27
SECTION 3. CONDITIONS PRECEDENT.

         3.01.    Initial Advance. The obligation of Lessor to enter into the
Ground Lease and to make the initial Advance hereunder (and the obligations of
the Participants to fund their respective Proportionate Shares of the initial
Advance on the Closing Date) is (are) subject to receipt by Agent, on or prior
to the Closing Date, of each item listed in Schedule 3.01, each in form and
substance satisfactory to Lessor, Agent and each Participant, and with
sufficient copies for, Lessor, Agent and each Participant. The amount of the
initial Advance shall be limited to the amount of costs incurred by Lessee on or
prior to the Closing Date which are described in clauses (c), (e), (f), (g) and
(i) of the definition of Permitted Transaction Expenses set forth in Schedule
1.01.

         3.02.    Subsequent Advances. The obligation of Lessor to make each
subsequent Advance (and the obligations of the Participants to fund their
respective Proportionate Shares of such Advance) is (are) subject to (a)
satisfaction of the conditions set forth in Paragraph 3.01; (b) receipt by Agent
pursuant to Paragraph 2.03 of the Advance Request for such Advance,
appropriately completed and duly executed by Lessee; (c) receipt by Agent of
date-down endorsements to Agent's and Lessor's title insurance policies or
binders acceptable to Agent and Lessor; and (d) delivery by Lessee of Cash
Collateral as required by Subparagraph 2.11(a) and the Cash Collateral Agreement
(and, if appropriate, any necessary Securities Account Control Agreement or
Deposit Account Control Agreement, duly executed by the appropriate parties).

         3.03.    Other Conditions Precedent. The occurrence of each Credit
Event (including the making of each Advance by Lessor and the funding of each
Advance by the Participants) is subject to the further conditions that, on the
date such Credit Event is to occur and after giving effect to such Credit Event,
the following shall be true and correct:

                  (a)      The representations and warranties of Lessee set
         forth in Paragraph 4.01 and in the other Operative Documents are true
         and correct in all material respects as if made on such date (except
         for representations and warranties expressly made as of a specified
         date, which shall be true as of such date);

                  (b)      No Default has occurred and is continuing or will
         result from such Credit Event; and

                  (c)      All of the Operative Documents are in full force and
         effect.

The submission by Lessee to Lessor and Agent of each Advance Request, each
Notice of Rental Period Selection and a Notice of Marketing Option Exercise
shall be deemed to be a representation and warranty by Lessee that each of the
statements set forth above in this Paragraph 3.03 is true and correct as of the
date of such request and notice.

         3.04.    Covenant to Deliver. Lessee agrees (not as a condition but as
a covenant) to deliver to Lessor and Agent each item required to be delivered to
Lessor and Agent as a condition to each Advance if such Advance is made. Lessee
expressly agrees that the making of any Advance prior to the receipt by Lessor
and Agent of any such item shall not constitute a waiver by Lessor, Agent or any
Participant of Lessee's obligation to deliver such item, unless expressly waived
in writing.

                                       22
<PAGE>   28
SECTION 4. REPRESENTATIONS AND WARRANTIES.

         4.01.    Lessee's Representations and Warranties. In order to induce
the Lessor Parties to enter into this Agreement and the other Operative
Documents to which they are parties, Lessee hereby represents and warrants to
the Lessor Parties as follows:

                  (a)      Due Incorporation, Qualification, etc. Each of Lessee
         and Lessee's Subsidiaries (i) is a corporation duly organized, validly
         existing and in good standing under the laws of its state of
         incorporation; (ii) has the power and authority to own, lease and
         operate its properties and carry on its business as now conducted; and
         (iii) is duly qualified, licensed to do business and in good standing
         as a foreign corporation in each jurisdiction where the failure to be
         so qualified or licensed is reasonably likely to have a Material
         Adverse Effect.

                  (b)      Authority. The execution, delivery and performance by
         Lessee of each Operative Document executed, or to be executed, by
         Lessee and the consummation of the transactions contemplated thereby
         (i) are within the power of Lessee and (ii) have been duly authorized
         by all necessary actions on the part of Lessee.

                  (c)      Enforceability. Each Operative Document executed, or
         to be executed, by Lessee has been, or will be, duly executed and
         delivered by Lessee and constitutes, or will constitute, a legal, valid
         and binding obligation of Lessee, enforceable against Lessee in
         accordance with its terms, except as limited by bankruptcy, insolvency
         or other laws of general application relating to or affecting the
         enforcement of creditors' rights generally and general principles of
         equity.

                  (d)      Non-Contravention. The execution and delivery by
         Lessee of the Operative Documents executed by Lessee and the
         performance and consummation of the transactions contemplated thereby
         do not (i) violate any Requirement of Law applicable to Lessee; (ii)
         violate any provision of, or result in the breach or the acceleration
         of, or entitle any other Person to accelerate (whether after the giving
         of notice or lapse of time or both), any Contractual Obligation of
         Lessee; or (iii) result in the creation or imposition of any Lien (or
         the obligation to create or impose any Lien) upon any property, asset
         or revenue of Lessee (except such Liens as may be created in favor of
         Lessor or Agent pursuant to this Agreement or the other Operative
         Documents).

                  (e)      Approvals. No consent, approval, order or
         authorization of, or registration, declaration or filing with, any
         Governmental Authority or other Person (including, without limitation,
         the shareholders of any Person) is required in connection with the
         execution and delivery of the Operative Documents executed by Lessee
         and the performance and consummation by Lessee of the transactions
         contemplated thereby, except (i) such as have been made or obtained and
         are in full force and effect and (ii) those construction-related
         permits and approvals which will be obtained as and when necessary in
         compliance with the Construction Agency Agreement.

                                       23
<PAGE>   29
                  (f)      No Violation or Default. Neither Lessee nor any of
         its Subsidiaries is in violation of or in default with respect to (i)
         any Requirement of Law applicable to such Person; (ii) any Contractual
         Obligation of such Person (nor is there any waiver in effect which, if
         not in effect, would result in such a violation or default), where, in
         each case, such violation or default is reasonably likely to have a
         Material Adverse Effect. Without limiting the generality of the
         foregoing, neither Lessee nor any of its Subsidiaries (A) has violated
         any Environmental Laws, (B) has any liability under any Environmental
         Laws or (C) has received notice or other communication of an
         investigation or is under investigation by any Governmental Authority
         having authority to enforce Environmental Laws, where such violation,
         liability or investigation is reasonably likely to have a Material
         Adverse Effect. No Default has occurred and is continuing.

                  (g)      Litigation. Except as set forth in the most recent
         Form 10-Q and 10-K reports filed by Lessee with the Securities and
         Exchange Commission, no actions (including, without limitation,
         derivative actions), suits, proceedings or investigations are pending
         or, to the knowledge of Lessee, threatened against Lessee or any of its
         Subsidiaries at law or in equity in any court or before any other
         Governmental Authority which (i) is reasonably likely (alone or in the
         aggregate) to have a Material Adverse Effect or (ii) seeks to enjoin,
         either directly or indirectly, the execution, delivery or performance
         by Lessee of the Operative Documents or the transactions contemplated
         thereby. The representations and warranties set forth in Schedule
         4.01(g) are true and correct.

                  (h)      Title; Possession Under Leases. Except as set forth
         in Schedule 4.01(g), Lessee and its Subsidiaries own and have good and
         marketable title, or a valid leasehold interest in, all their
         respective properties and assets as reflected in the most recent
         Financial Statements delivered to Agent (except those assets and
         properties disposed of in the ordinary course of business or otherwise
         in compliance with this Agreement since the date of such Financial
         Statements) and all respective assets and properties acquired by Lessee
         and its Subsidiaries since such date (except those disposed of in the
         ordinary course of business or otherwise in compliance with this
         Agreement), except in any case where the failure so to own or to have
         such title is not reasonably likely to have a Material Adverse Effect.
         Such assets and properties are subject to no Lien, except for Permitted
         Liens. Each of Lessee and its Subsidiaries has complied with all
         material obligations under all material leases to which it is a party
         and all such leases are in full force and effect. Each of Lessee and
         its Subsidiaries enjoys peaceful and undisturbed possession under such
         leases.

                  (i)      Financial Statements. The Financial Statements of
         Lessee and its Subsidiaries which have been delivered to Agent, (i) are
         in accordance with the books and records of Lessee and its
         Subsidiaries, which have been maintained in accordance with good
         business practice; (ii) have been prepared in conformity with GAAP; and
         (iii) fairly present the financial conditions and results of operations
         of Lessee and its Subsidiaries as of the date thereof and for the
         period covered thereby. Neither Lessee nor any of its Subsidiaries has
         any Contingent Obligations, liability for taxes or other outstanding
         obligations which are material in the aggregate, except as disclosed
         (A) in the audited Financial Statements of Lessee dated December 31,
         1999, or the 10-Q reports

                                       24
<PAGE>   30
         filed by Lessee with the Securities and Exchange Commission for the
         quarters ended March 31, 2000, June 30, 2000 and September 30, 2000
         furnished by Lessee to Agent prior to the date hereof, or (B) in the
         Financial Statements delivered to Agent pursuant to clause (i) or (ii)
         of Subparagraph 5.01(a).

                  (j)      Equity Securities. All outstanding Equity Securities
         of Lessee are duly authorized, validly issued, fully paid and
         non-assessable. All Equity Securities of Lessee have been offered and
         sold in compliance with all federal and state securities laws and all
         other Requirements of Law.

                  (k)      No Agreements to Sell Assets; Etc. Neither Lessee nor
         any of its Subsidiaries has any legal obligation, absolute or
         contingent, to any Person to sell the assets of Lessee or any of its
         Subsidiaries (other than sales in the ordinary course of business), or
         to effect any merger, consolidation or other reorganization of Lessee
         or any of its Subsidiaries or to enter into any agreement with respect
         thereto, except for sales, mergers, consolidations or reorganizations
         permitted by Subparagraph 5.02(c), 5.02(d) or 5.02(e).

                  (l)      Employee Benefit Plans.

                           (i)      Based on the most recent valuation date for
                  any Pension Plan, the amount of unfunded benefit liabilities
                  (as defined in Section 4001(a)(18) of ERISA), individually or
                  in the aggregate for all Pension Plans (excluding for purposes
                  of such computation any Pension Plans with respect to which
                  assets exceed benefit liabilities) does not exceed an amount
                  equal to $10,000,000. No Pension Plan has failed to meet the
                  minimum funding standard of Code Section 412 (whether or not
                  waived under Code Section 412(d)) or failed to make by its due
                  date a required installment under Code Section 412(m). Neither
                  Lessee nor any ERISA Affiliate has any liability with respect
                  to any post-retirement benefit under any Employee Benefit Plan
                  which is a welfare plan (as defined in section 3(1) of ERISA)
                  that is reasonably likely to have a Material Adverse Effect.

                           (ii)     Each Employee Benefit Plan complies, in both
                  form and operation, in all material respects, with its terms,
                  ERISA and the IRC, and no condition exists or event has
                  occurred with respect to any such plan which would result in
                  the incurrence by either Lessee or any ERISA Affiliate of any
                  material liability, fine or penalty. Each Employee Benefit
                  Plan, related trust agreement, arrangement and commitment of
                  Lessee or any ERISA Affiliate is legally valid and binding and
                  in full force and effect. No Employee Benefit Plan is being
                  audited or investigated by any government agency or is subject
                  to any pending or threatened claim or suit. Neither Lessee nor
                  any ERISA Affiliate nor any fiduciary of any Employee Benefit
                  Plan has engaged in a prohibited transaction under section 406
                  of ERISA or section 4975 of the IRC.

                           (iii)    Neither Lessee nor any ERISA Affiliate
                  contributes to or has any material contingent obligations to
                  any Multiemployer Plan. Neither Lessee nor

                                       25
<PAGE>   31
                  any ERISA Affiliate has incurred any material liability
                  (including secondary liability) to any Multiemployer Plan as a
                  result of a complete or partial withdrawal from such
                  Multiemployer Plan under Section 4201 of ERISA or as a result
                  of a sale of assets described in Section 4204 of ERISA.
                  Neither Lessee nor any ERISA Affiliate has been notified that
                  any Multiemployer Plan is in reorganization or insolvent under
                  and within the meaning of Section 4241 or Section 4245 of
                  ERISA or that any Multiemployer Plan intends to terminate or
                  has been terminated under Section 4041A of ERISA.

                  (m)      Other Regulations. Lessee is not subject to
         regulation under the Investment Company Act of 1940, the Public Utility
         Holding Company Act of 1935, the Federal Power Act, the Interstate
         Commerce Act, any state public utilities code or to any other
         Governmental Rule limiting its ability to incur indebtedness.

                  (n)      Patent and Other Rights. Except as set forth in
         Schedule 4.01(g), Lessee and its Subsidiaries own, license or otherwise
         have the right to use, under validly existing agreements, all patents,
         licenses, trademarks, trade names, trade secrets, service marks,
         copyrights and all rights with respect thereto, which are required to
         conduct their businesses as now conducted, except where the failure to
         have any such rights, either individually or collectively, is not
         reasonably likely to have a Material Adverse Effect.

                  (o)      Governmental Charges. Lessee and its Subsidiaries
         have filed or caused to be filed all tax returns which are required to
         be filed by them. Lessee and its Subsidiaries have paid, or made
         provision for the payment of, all taxes and other Governmental Charges
         which have or may have become due pursuant to said returns or otherwise
         and all other indebtedness, except such Governmental Charges or
         indebtedness, if any, which are being contested in good faith and as to
         which adequate reserves (determined in accordance with GAAP) have been
         provided or which are not reasonably likely to have a Material Adverse
         Effect if unpaid.

                  (p)      Margin Stock. Lessee owns no Margin Stock which, in
         the aggregate, would constitute a substantial part of the assets of
         Lessee, and no proceeds of any Loan will be used to purchase or carry,
         directly or indirectly, any Margin Stock or to extend credit, directly
         or indirectly, to any Person for the purpose of purchasing or carrying
         any Margin Stock.

                  (q)      Subsidiaries, etc. Set forth in Schedule 4.01(q) (as
         supplemented by Lessee from time to time in a written notice to Agent)
         is a complete list of all of Lessee's Subsidiaries, the jurisdiction of
         incorporation of each, the classes of Equity Securities of each and the
         percentages of shares of each such class owned directly or indirectly
         by Lessee.

                  (r)      Catastrophic Events. Neither Lessee nor any of its
         Subsidiaries and none of their properties is or has been affected by
         any fire, explosion, accident, strike, lockout or other labor dispute,
         drought, storm, hail, earthquake, embargo, act of God or other casualty
         that is reasonably likely to have a Material Adverse Effect. There are
         no disputes presently subject to grievance procedure, arbitration or
         litigation under any of

                                       26
<PAGE>   32
         the collective bargaining agreements, employment contracts or employee
         welfare or incentive plans to which Lessee or any of its Subsidiaries
         is a party, and there are no strikes, lockouts, work stoppages or
         slowdowns, or, to the best knowledge of Lessee, jurisdictional disputes
         or organizing activities occurring or threatened which alone or in the
         aggregate are reasonably likely to have a Material Adverse Effect.

                  (s)      No Material Adverse Effect. No event has occurred and
         is continuing and no condition exists which is reasonably likely to
         have a Material Adverse Effect.

                  (t)      The Property.

                           (i)      The Land consists of approximately 23.018
                  acres located in the City of Tualatin, Washington County,
                  Oregon, more particularly described in Exhibit A.

                           (ii)     Upon the completion of the New Improvements
                  on the Land, the Improvements on the Land will consist of a
                  two-story, 154,459 square foot manufacturing building, a
                  two-story, 68,660 square foot engineering/R&D/applications
                  building, a four-story, 129,095 square foot technical site
                  services building, a 26,752 square foot CUB mechanical
                  building, and a bulk gas storage area, together with parking,
                  landscaping, recreational and related facilities, amenities
                  and improvements.

                           (iii)    Access to the Land for pedestrians and motor
                  vehicles from publicly dedicated streets and public highways
                  is available.

                           (iv)     No portion of the Property is located in an
                  area identified as a special flood hazard area by the Federal
                  Emergency Management Agency or other applicable Governmental
                  Authority, or if any portion of the Property is located in
                  such an area, flood insurance has been obtained for the
                  Property or such portion thereof in accordance with Paragraph
                  3.03 of the Lease Agreement and the National Flood Insurance
                  Act of 1968.

                           (v)      All of the Property complies and will comply
                  at all times (whether before commencement of any construction,
                  during any construction or after completion of construction of
                  any New Improvements) with all applicable Governmental Rules
                  (including Title III of the Americans with Disabilities Act;
                  Environmental Laws; and zoning, land use, building, planning
                  and fire laws, rules, regulations and codes) and Insurance
                  Requirements, except for violations which could not have a
                  Material Adverse Effect. Except as set forth in Schedule 4.01
                  (t)(v), no Hazardous Materials have been used, generated,
                  manufactured, stored, treated, disposed of, transported or are
                  present on or released or discharged from the Property in any
                  manner that could have a Material Adverse Effect. All listed
                  Hazardous Materials were used, stored, and transported in
                  accordance with Applicable Laws. Other than as listed on
                  Schedule 4.01(t), there are no claims or actions which could
                  have a Material Adverse Effect pending or, to Lessee's
                  knowledge, threatened against any of the Property by any
                  Governmental

                                       27
<PAGE>   33
                  Authority or any other Person relating to Hazardous Materials
                  or pursuant to any Environmental Laws.

                           (vi)     None of the Improvements (whether before
                  commencement of any construction, during any construction or
                  after completion of construction of any New Improvements)
                  encroach or will at any time encroach in any manner onto any
                  adjoining land, except as permitted by express written and
                  recorded encroachment agreements approved by Agent or as
                  affirmatively insured against by appropriate title insurance.

                           (vii)    All licenses, approvals, authorizations,
                  consents, permits, easements and rights-of-way required for
                  the use of any of the Property have been obtained or, if not
                  yet required, will be obtained before required.

                           (viii)   Lessee has a good and valid fee simple title
                  to the Property, subject to no Liens except for Permitted
                  Property Liens. After the execution by Lessor and Lessee of
                  the Ground Lease on the Closing Date, Lessor will have good
                  and valid leasehold interest in the Property, subject to no
                  Liens except for Permitted Property Liens.

                  (u)      Chief Executive Office. Lessee's chief executive
         office is located at 4000 North First Street, San Jose, California.

                  (v)      Accuracy of Information Furnished. None of the
         Operative Documents and none of the other certificates, statements or
         information furnished to any Lessor Party by or on behalf of Lessee or
         any of its Subsidiaries in connection with the Operative Documents or
         the transactions contemplated thereby contains or will contain any
         untrue statement of a material fact or omits or will omit to state a
         material fact necessary to make the statements therein, in light of the
         circumstances under which they were made, not misleading.

Lessee shall be deemed to have reaffirmed, for the benefit of the Lessor
Parties, each representation and warranty contained in this Paragraph 4.01 on
and as of the date of each Credit Event (except for representations and
warranties expressly made as of a specified date, which shall be true as of such
date).

         4.02.    Lessor's Representations and Warranties. In order to induce
Lessee, Agent and the Participants to enter into this Agreement and the other
Operative Documents to which they are parties, Lessor hereby represents and
warranties to Lessee, Agent and the Participants as follows:

                  (a)      Due Incorporation, Qualification, etc. Lessor (i) is
         a corporation duly organized, validly existing and in good standing
         under the laws of its state of incorporation and (ii) has the power and
         authority to own, lease and operate its properties and carry on its
         business as now conducted.

                  (b)      Authority. The execution, delivery and performance by
         Lessor of each Operative Document executed, or to be executed, by
         Lessor and the consummation of the

                                       28
<PAGE>   34
         transactions contemplated thereby (i) are within the power of Lessor
         and (ii) have been duly authorized by all necessary actions on the part
         of Lessor.

                  (c)      Enforceability. Each Operative Document executed, or
         to be executed, by Lessor has been, or will be, duly executed and
         delivered by Lessor and constitutes, or will constitute, a legal, valid
         and binding obligation of Lessor, enforceable against Lessor in
         accordance with its terms, except as limited by bankruptcy, insolvency
         or other laws of general application relating to or affecting the
         enforcement of creditors' rights generally and general principles of
         equity.

                  (d)      Non-Contravention. The execution and delivery by
         Lessor of the Operative Documents executed by Lessor and the
         performance and consummation of the transactions contemplated thereby
         do not (i) violate any Requirement of Law applicable to Lessor; (ii)
         violate any provision of, or result in the breach or the acceleration
         of, or entitle any other Person to accelerate (whether after the giving
         of notice or lapse of time or both), any Contractual Obligation of
         Lessor; or (iii) result in the creation or imposition of any Lien (or
         the obligation to create or impose any Lien) upon any property, asset
         or revenue of Lessor (except such Liens as may be created in favor of
         Agent pursuant to this Agreement or the other Operative Documents).

                  (e)      Approvals. No consent, approval, order or
         authorization of, or registration, declaration or filing with, any
         Governmental Authority or other Person (including, without limitation,
         the shareholders of any Person) is required in connection with the
         execution and delivery of the Operative Documents executed by Lessor
         and the performance and consummation of the transactions contemplated
         thereby, except such as have been made or obtained and are in full
         force and effect.

                  (f)      Litigation. No actions (including, without
         limitation, derivative actions), suits, proceedings or investigations
         are pending or, to the knowledge of Lessor, threatened against Lessor
         at law or in equity in any court or before any other Governmental
         Authority which (i) is reasonably likely (alone or in the aggregate) to
         materially and adversely affect the ability of Lessor to perform its
         obligations under the Operative Documents to which it is a party or
         (ii) seeks to enjoin, either directly or indirectly, the execution,
         delivery or performance by Lessor of the Operative Documents or the
         transactions contemplated thereby.

                  (g)      Other Regulations. Lessor is not subject to
         regulation under the Investment Company Act of 1940, the Public Utility
         Holding Company Act of 1935, the Federal Power Act, the Interstate
         Commerce Act, any state public utilities code or to any other
         Governmental Rule limiting its ability to incur indebtedness.

                  (h)      Chief Executive Office. Lessor's chief executive
         office is located at 135 South LaSalle Street, Suite 740, Chicago,
         Illinois, 60603.

         4.03.    Participants' Representations and Warranties. In order to
induce Lessee, Lessor and Agent to enter into this Agreement and the other
Operative Documents to which they are

                                       29
<PAGE>   35
parties, each Participant hereby represents and warranties to Lessee, Lessor and
Agent as follows:

                  (a)      Due Incorporation, Qualification, etc. Such
         Participant (i) is a corporation duly organized, validly existing and
         in good standing under the laws of its jurisdiction of organization and
         (ii) has the power and authority to own, lease and operate its
         properties and carry on its business as now conducted.

                  (b)      Authority. The execution, delivery and performance by
         such Participant of each Operative Document executed, or to be
         executed, by such Participant and the consummation of the transactions
         contemplated thereby (i) are within the power of such Participant and
         (ii) have been duly authorized by all necessary actions on the part of
         such Participant.

                  (c)      Enforceability. Each Operative Document executed, or
         to be executed, by such Participant has been, or will be, duly executed
         and delivered by such Participant and constitutes, or will constitute,
         a legal, valid and binding obligation of such Participant, enforceable
         against such Participant in accordance with its terms, except as
         limited by bankruptcy, insolvency or other laws of general application
         relating to or affecting the enforcement of creditors' rights generally
         and general principles of equity.

                  (d)      Non-Contravention. The execution and delivery by such
         Participant of the Operative Documents executed by such Participant and
         the performance and consummation of the transactions contemplated
         thereby do not (i) violate any Requirement of Law applicable to such
         Participant; (ii) violate any provision of, or result in the breach or
         the acceleration of, or entitle any other Person to accelerate (whether
         after the giving of notice or lapse of time or both), any Contractual
         Obligation of such Participant; or (iii) result in the creation or
         imposition of any Lien (or the obligation to create or impose any Lien)
         upon any property, asset or revenue of such Participant (except such
         Liens as may be created in favor of Lessor or Agent pursuant to this
         Agreement or the other Operative Documents).

                  (e)      Approvals. No consent, approval, order or
         authorization of, or registration, declaration or filing with, any
         Governmental Authority or other Person (including, without limitation,
         the shareholders of any Person) is required in connection with the
         execution and delivery of the Operative Documents executed by such
         Participant and the performance and consummation of the transactions
         contemplated thereby, except such as have been made or obtained and are
         in full force and effect.

                  (f)      Litigation. No actions (including, without
         limitation, derivative actions), suits, proceedings or investigations
         are pending or, to the knowledge of such Participant, threatened
         against such Participant at law or in equity in any court or before any
         other Governmental Authority which (i) is reasonably likely (alone or
         in the aggregate) to materially and adversely affect the ability of
         such Participant to perform its obligations under the Operative
         Documents to which it is a party or (ii) seeks to enjoin, either
         directly or indirectly, the execution, delivery or performance by such
         Participant of the Operative Documents or the transactions contemplated
         thereby.

                                       30
<PAGE>   36
                  (g)      Own Account. Such Participant is acquiring its
         participation interest hereunder for its own account for investment and
         not with a view to any distribution (as such term is used in Section
         2(11) of the Securities Act of 1933) thereof, and, if in the future it
         should decide to dispose of its participation interest, it understands
         that it may do so only in compliance with the Securities Act of 1933
         and the rules and regulations of the Securities and Exchange Commission
         thereunder and any applicable state securities laws.

SECTION 5. COVENANTS.

         5.01.    Lessee's Affirmative Covenants. Until the termination of this
Agreement and the satisfaction in full by Lessee of all Lessee Obligations,
Lessee will comply, and will cause compliance, with the following affirmative
covenants, unless Lessor and Required Participants shall otherwise consent in
writing:

                  (a)      Financial Statements, Reports, etc. Lessee shall
         furnish to Agent, with sufficient copies for Lessor and each
         Participant (other than Novellus), the following, each in such form and
         such detail as Agent, Lessor or the Required Participants shall
         reasonably request:

                           (i)      As soon as available and in no event later
                  than fifty (50) days after the last day of each fiscal quarter
                  of Lessee (other than the last quarter in any fiscal year), a
                  copy of the Financial Statements of Lessee and its
                  Subsidiaries (prepared on a consolidated basis) for such
                  quarter and for the fiscal year to date, certified by the
                  president or chief financial officer of Lessee to present
                  fairly the financial condition, results of operations and
                  other information reflected therein and to have been prepared
                  in accordance with GAAP (subject to normal year-end audit
                  adjustments);

                           (ii)     As soon as available and in no event later
                  than one hundred (100) days after the close of each fiscal
                  year of Lessee, (A) copies of the audited Financial Statements
                  of Lessee and its Subsidiaries (prepared on a consolidated
                  basis) for such year, prepared by Ernst & Young or by other
                  independent certified public accountants of recognized
                  national standing acceptable to Agent, (B) copies of the
                  unqualified opinions (or qualified opinions reasonably
                  acceptable to Required Participants) and management letters
                  delivered by such accountants in connection with all such
                  Financial Statements and (C) certificates of such accountants
                  to Agent stating that in making the examination necessary for
                  their opinion they have reviewed this Agreement and have
                  obtained no knowledge of any Default which has occurred and is
                  continuing, or if, in the opinion of such accountants, a
                  Default has occurred and is continuing, a statement as to the
                  nature thereof;

                           (iii)    Contemporaneously with the quarterly and
                  year-end Financial Statements required by the foregoing
                  clauses (i) and (ii), a compliance certificate of the
                  president or chief financial officer of Lessee which (A)
                  states that no Default has occurred and is continuing, or, if
                  any such Default has occurred and is

                                       31
<PAGE>   37
                  continuing, a statement as to the nature thereof and what
                  action Lessee proposes to take with respect thereto; and (B)
                  sets forth, for the quarter or year covered by such Financial
                  Statements or as of the last day of such quarter or year (as
                  the case may be), the calculation of the financial ratios and
                  tests provided in Paragraph 5.03;

                           (iv)     As soon as possible and in no event later
                  than five (5) Business Days after any Senior Officer of Lessee
                  knows of the occurrence or existence of (A) any Reportable
                  Event (excluding any Reportable Event for which the provision
                  of a 30-day notice to the PBGC has been waived by regulation)
                  under any Employee Benefit Plan or Multiemployer Plan; (B) any
                  actual or threatened litigation, suits, claims or disputes
                  against Lessee or any of its Subsidiaries involving potential
                  monetary damages payable by Lessee or its Subsidiaries of
                  $10,000,000 or more (alone or in the aggregate); (C) any other
                  event or condition which is reasonably likely to have a
                  Material Adverse Effect; or (D) any Default; the statement of
                  the president or chief financial officer of Lessee setting
                  forth details of such event, condition or Default and the
                  action which Lessee proposes to take with respect thereto;

                           (v)      As soon as available and in no event later
                  than five (5) Business Days after they are sent, made
                  available or filed, copies of (A) all registration statements
                  and reports filed by Lessee or any of its Subsidiaries with
                  any securities exchange or the Securities and Exchange
                  Commission (including, without limitation, all 10-Q, 10-K and
                  8-Q reports); (B) all reports, proxy statements and financial
                  statements sent or made available by Lessee or any of its
                  Subsidiaries to its security holders; and (C) all press
                  releases and other similar public concerning any material
                  developments in the business of Lessee or any of its
                  Subsidiaries made available by Lessee or any of its
                  Subsidiaries to the public generally;

                           (vi)     As soon as available and in no event later
                  than ten (10) days before the first day of each fiscal year of
                  Lessee, the consolidated plan and forecast of Lessee and its
                  Subsidiaries for such fiscal year, including quarterly cash
                  flow projections and quarterly projections of Lessee's
                  compliance with each of the covenants set forth in Paragraph
                  5.03;

                           (vii)    As soon as possible and in no event later
                  than (A) ten (10) days prior to the acquisition by Lessee or
                  any of its Subsidiaries of any new Subsidiary or all or
                  substantially all of the assets of any other Person, written
                  notice thereof; and

                           (viii)   Such other instruments, agreements,
                  certificates, opinions, statements, documents and information
                  relating to the operations or condition (financial or
                  otherwise) of Lessee or its Subsidiaries, and compliance by
                  Lessee with the terms of this Agreement and the other
                  Operative Documents as Lessor or Agent may from time to time
                  reasonably request.

                                       32
<PAGE>   38
         For the purposes of this Subparagraph 5.01(a), (1) the timely delivery
         by Lessee to Agent pursuant to clause (vi) of a copy of the Form 10-Q
         report filed by Lessee with the Securities and Exchange Commission for
         any quarter shall satisfy the requirements of clause (i) for such
         quarter and (2) the timely delivery by Lessee to Agent pursuant to
         clause (vi) of a copy of the Form 10-K report filed by Lessee with the
         Securities and Exchange Commission for any year shall satisfy the
         requirements of clause (ii)(A) for such year, provided that such
         reports are required to contain the same information as required by
         clause (i) and clause (ii)(A), respectively.

                  (b)      Books and Records. Lessee and its Subsidiaries shall
         at all times keep proper books of record and account in which full,
         true and correct entries will be made of their transactions in
         accordance with GAAP.

                  (c)      Inspections. Lessee and its Subsidiaries shall permit
         any Person designated by any Participant, upon reasonable notice and
         during normal business hours, to visit and inspect any of the
         properties and offices of Lessee and its Subsidiaries, to examine the
         books and records of Lessee and its Subsidiaries and make copies
         thereof and to discuss the affairs, finances and business of Lessee and
         its Subsidiaries with, and to be advised as to the same by, their
         officers, auditors and accountants, all at such times and intervals as
         any Participant may reasonably request.

                  (d)      Insurance. In addition to the insurance requirements
         set forth in the Lease Agreement with respect to the Property, Lessee
         and its Subsidiaries shall:

                           (i)      Carry and maintain insurance of the types
                  and in the amounts customarily carried from time to time
                  during the term of this Agreement by others engaged in
                  substantially the same business as such Person and operating
                  in the same geographic area as such Person, including, but not
                  limited to, fire, public liability, property damage and
                  worker's compensation; and

                           (ii)     Carry and maintain each policy for such
                  insurance with financially sound insurers.

                  (e)      Governmental Charges and Other Indebtedness. Lessee
         and its Subsidiaries shall promptly pay and discharge when due (i) all
         taxes and other Governmental Charges prior to the date upon which
         penalties accrue thereon, (ii) all indebtedness which, if unpaid, could
         become a Lien upon the property of Lessee or its Subsidiaries and (iii)
         subject to any subordination provisions applicable thereto, all other
         indebtedness; except where (A) the failure to pay any such taxes, other
         Governmental Charges or indebtedness, either alone or collectively, is
         not reasonably likely to have a Material Adverse Effect and (B) any
         such taxes, other Governmental Charges or indebtedness as may in good
         faith be contested or disputed, or for which arrangements for deferred
         payment have been made, provided that in each such case appropriate
         reserves as required by GAAP are maintained.

                  (f)      Use of Proceeds. Lessee shall not use any part of the
         proceeds of any Advance, directly or indirectly, for the purpose of
         purchasing or carrying any Margin

                                       33
<PAGE>   39
         Stock or for the purpose of purchasing or carrying or trading in any
         securities under such circumstances as to involve Lessee or any Lessor
         Party in a violation of Regulations T, U or X issued by the Federal
         Reserve Board.

                  (g)      General Business Operations. Each of Lessee and its
         Subsidiaries shall (i) preserve and maintain its corporate existence
         and all of its rights, privileges and franchises reasonably necessary
         to the conduct of its business, (ii) conduct its business activities in
         compliance with all Requirements of Law and Contractual Obligations
         applicable to such Person, the violation of which is reasonably likely
         to have a Material Adverse Effect and (iii) keep all property useful
         and necessary in its business in good working order and condition,
         ordinary wear and tear excepted; provided, however, that Lessee and its
         Subsidiaries may dissolve or liquidate any Subsidiary if such
         Subsidiary is not a Material Subsidiary and such dissolution or
         liquidation is not reasonably likely to have a Material Adverse Effect.
         Lessee shall maintain its chief executive office and principal place of
         business in the United States and shall not relocate its chief
         executive office or principal place of business outside of California
         except upon not less than thirty (30) days prior written notice to
         Agent.

                  (h)      Related Credit Agreement. If at any time the
         financial covenants set forth in Paragraph 5.03 (or any applicable
         definition used therein) differs from the financial covenants set forth
         in the Related Credit Agreement (or any applicable definition used
         therein), Lessee shall execute such amendments to this Agreement as
         Lessor or Required Participants may reasonably request to conform the
         financial covenants set forth in Paragraph 5.03 (or any applicable
         definition used therein) with such financial covenants set forth in the
         Related Credit Agreement.

         5.02.    Lessee's Negative Covenants. Until the termination of this
Agreement and the satisfaction in full by Lessee of all Lessee Obligations,
Lessee will comply, and will cause compliance, with the following negative
covenants, unless Lessor and Required Participants shall otherwise consent in
writing:

                  (a)      Indebtedness. Neither Lessee nor any of its
         Subsidiaries shall create, incur, assume or permit to exist any
         Indebtedness except for the following ("Permitted Indebtedness"):

                           (i)      The Lessee Obligations under the Operative
                  Documents;

                           (ii)     The Related Credit Obligations, provided
                  that the aggregate principal amount thereof outstanding at any
                  time does not exceed $125,000,000;

                           (iii)    Synthetic Lease Obligations, provided that
                  the aggregate principal amount thereof (including the
                  Outstanding Lease Amount hereunder) outstanding at any time
                  does not exceed $595,000,000;

                           (iv)     Indebtedness of Lessee and its Subsidiaries
                  listed in Schedule 5.02(a) and existing on the date of this
                  Agreement (including committed but undrawn amounts);

                                       34
<PAGE>   40
                           (v)      Indebtedness of Lessee and its Subsidiaries
                  arising from the endorsement of instruments for collection in
                  the ordinary course of Lessee's or a Subsidiary's business;

                           (vi)     Indebtedness of Lessee and its Subsidiaries
                  for trade accounts payable, provided that (A) such accounts
                  arise in the ordinary course of business and (B) no material
                  part of any such account is more than ninety (90) days past
                  due (unless subject to a bona fide dispute and for which
                  adequate reserves as required by GAAP have been established);

                           (vii)    Indebtedness of Lessee and its Subsidiaries
                  under Rate Contracts, provided that all such Rate Contracts
                  are entered into in connection with bona fide hedging
                  operations and not for speculation;

                           (viii)   Indebtedness of Lessee and its Subsidiaries
                  under purchase money loans and Capital Leases incurred by
                  Lessee or any of its Subsidiaries to finance the acquisition
                  by such Person of real property, fixtures or equipment
                  provided that in each case, (A) such Indebtedness is incurred
                  by such Person at the time of, or not later than thirty (30)
                  days after, the acquisition by such Person of the property so
                  financed, (B) such Indebtedness does not exceed the purchase
                  price of the property so financed, and (C) no Default has
                  occurred and is continuing at the time such Indebtedness is
                  incurred or will occur after giving effect to such
                  Indebtedness;

                           (ix)     Indebtedness of Lessee and its Subsidiaries
                  under initial or successive refinancings of any Indebtedness
                  permitted by clause (ii) or (iv) above, provided that (A) the
                  principal amount of any such refinancing does not exceed the
                  principal amount of the Indebtedness being refinanced (except
                  to the extent otherwise permitted by clause (xi) below) and
                  (B) the material terms and provisions of any such refinancing
                  (including maturity, redemption, prepayment, default and
                  subordination provisions) are no less favorable to the Lessor
                  Parties (other than Novellus) than the Indebtedness being
                  refinanced;

                           (x)      Indebtedness of Lessee and its Subsidiaries
                  with respect to surety, appeal, indemnity, performance or
                  other similar bonds in the ordinary course of business; and

                           (xi)     Other Indebtedness of Lessee and its
                  Subsidiaries, provided that the aggregate principal amount of
                  all such other Indebtedness does not exceed $25,000,000 at any
                  time.

                  (b)      Liens. Neither Lessee nor any of its Subsidiaries
         shall create, incur, assume or permit to exist any Lien on or with
         respect to any of its assets or property of any character, whether now
         owned or hereafter acquired, except for the following ("Permitted
         Liens"):

                           (i)      Liens in favor of Lessor, Agent or any
                  Participant securing the Lessee Obligations;

                                       35
<PAGE>   41
                           (ii)     Liens securing the Related Credit
                  Obligations or Synthetic Lease Obligations;

                           (iii)    Liens listed in Schedule 5.02(b) and
                  existing on the date of this Agreement;

                           (iv)     Liens for taxes or other Governmental
                  Charges not at the time delinquent or thereafter payable
                  without penalty or being contested in good faith, provided
                  that adequate reserves for the payment thereof as required by
                  GAAP have been established;

                           (v)      Liens of carriers, warehousemen, mechanics,
                  materialmen, vendors, and landlords and other similar Liens
                  imposed by law incurred in the ordinary course of business for
                  sums not overdue or being contested in good faith, provided
                  that adequate reserves for the payment thereof as required by
                  GAAP have been established;

                           (vi)     Deposits under workers' compensation,
                  unemployment insurance and social security laws or to secure
                  the performance of bids, tenders, contracts (other than for
                  the repayment of borrowed money) or leases, or to secure
                  statutory obligations of surety or appeal bonds or to secure
                  indemnity, performance or other similar bonds in the ordinary
                  course of business;

                           (vii)    Zoning restrictions, easements,
                  rights-of-way, title irregularities and other similar
                  encumbrances, which alone or in the aggregate are not
                  substantial in amount and do not materially detract from the
                  value of the property subject thereto or interfere with the
                  ordinary conduct of the business of Lessee or any of its
                  Subsidiaries;

                           (viii)   Banker's Liens and similar Liens (including
                  set-off rights) in respect of bank deposits;

                           (ix)     Liens on property or assets of any
                  corporation which becomes a Subsidiary of Lessee or on any
                  property or assets acquired by Lessee or any of its
                  Subsidiaries after the date of this Agreement, provided that
                  (A) such Liens exist at the time the stock of such corporation
                  or such assets or property is or are acquired by Lessee and
                  (B) such Liens were not created in contemplation of such
                  acquisition by Lessee;

                           (x)      Judgement Liens, provided that such Liens do
                  not have a value in excess of $10,000,000 or such Liens are
                  released, stayed, vacated or otherwise dismissed within twenty
                  (20) days after issue or levy and, if so stayed, such stay is
                  not thereafter removed;

                           (xi)     Rights of vendors or lessors under
                  conditional sale agreements, Capital Leases or other title
                  retention agreements, provided that, in each case, (A) such
                  rights secure or otherwise relate to Permitted Indebtedness,
                  (B) such rights do not extend to any property other than
                  property acquired with the proceeds of

                                       36
<PAGE>   42
                  such Permitted Indebtedness and (C) such rights do not secure
                  any Indebtedness other than such Permitted Indebtedness;

                           (xii)    Liens in favor of customs and revenue
                  authorities arising as a matter of law to secure payment of
                  customs duties and in connection with the importation of goods
                  in the ordinary course of Lessee's and its Subsidiaries'
                  businesses;

                           (xiii)   Liens securing Indebtedness which
                  constitutes Permitted Indebtedness under clause (viii) of
                  Subparagraph 5.02(a) provided that, in each case, such Lien
                  (A) covers only those assets, the acquisition of which was
                  financed by such Permitted Indebtedness, and (B) secures only
                  such Permitted Indebtedness;

                           (xiv)    Liens on the property or assets of any
                  Subsidiary of Lessee in favor of Lessee or any other
                  Subsidiary of Lessee;

                           (xv)     Liens incurred in connection with the
                  extension, renewal or refinancing of the Indebtedness secured
                  by the Liens described in clause (iii) above, provided that
                  any extension, renewal or replacement Lien (A) is limited to
                  the property covered by the existing Lien and (B) secures
                  Indebtedness which is no greater in amount and has material
                  terms no less favorable to the Lessor Parties (other than
                  Novellus) than the Indebtedness secured by the existing Lien;

                           (xvi)    Liens on insurance proceeds in favor of
                  insurance companies with respect to the financing of insurance
                  premiums;

                           (xvii)   Permitted Property Liens in the Property;
                  and

                           (xviii)  Other Liens on the property of Lessee and
                  its Subsidiaries, provided that the aggregate principal amount
                  of all Indebtedness secured by such other Liens does not
                  exceed at any time ten percent (10%) of the consolidated total
                  assets of Lessee and its Subsidiaries at such time;

         Provided, however, that the foregoing exceptions shall not be construed
         to permit any Liens, except for Permitted Property Liens, in any of the
         Property.

                  (c)      Asset Dispositions. Neither Lessee nor any of its
         Subsidiaries shall sell, lease, transfer or otherwise dispose of any of
         its assets or property, whether now owned or hereafter acquired, except
         for the following:

                           (i)      Sales of inventory by Lessee and its
                  Subsidiaries in the ordinary course of their businesses;

                           (ii)     Sales of surplus, damaged, worn or obsolete
                  equipment or inventory for not less than fair market value;

                                       37
<PAGE>   43
                           (iii)    Sales or other dispositions of Investments
                  permitted by clauses (i) and (iii) of Subparagraph 5.02(e) for
                  not less than fair market value;

                           (iv)     Sales or assignments of defaulted
                  receivables to a collection agency in the ordinary course of
                  business;

                           (v)      Licenses by Lessee or its Subsidiaries of
                  its patents, copyrights, trademarks, trade names and service
                  marks in the ordinary course of its business provided that, in
                  each case, the terms of the transaction are terms which then
                  would prevail in the market for similar transactions between
                  unaffiliated parties dealing at arm's length;

                           (vi)     Sales or other dispositions of assets and
                  property by Lessee to any of Lessee's Subsidiaries or by any
                  of Lessee's Subsidiaries to Lessee or any of its other
                  Subsidiaries, provided the terms of any such sales or other
                  dispositions by or to Lessee (other than sales or other
                  dispositions by Lessee to any of Lessee's wholly owned
                  Subsidiaries or by any of Lessee's wholly owned subsidiaries
                  to Lessee, except for sales or dispositions by Lessee which,
                  either singly or in the aggregate with respect to all such
                  sales or dispositions, would involve all or substantially all
                  of the assets or property of Lessee or which would render
                  Lessee incapable of performing its obligations under the
                  Operative Documents) are on terms which are no less favorable
                  to Lessee than would prevail in the market for similar
                  transactions between unaffiliated parties dealing at arms
                  length;

                           (vii)    Sales of accounts receivable of Lessee and
                  its Subsidiaries, provided that (A) each such sale is (1) for
                  not less than fair market value and (2) for cash, and (B) the
                  aggregate book value of all such accounts receivable so sold
                  in any consecutive four-quarter period does not exceed ten
                  percent (10%) of the consolidated total accounts receivable of
                  Lessee and its Subsidiaries on the last day immediately
                  preceding such four-quarter period; and

                           (viii)   Other sales, leases, transfers and disposals
                  of assets and property for not less than fair market value,
                  provided that the aggregate book value of all such assets and
                  property so sold, leased, transferred or otherwise disposed of
                  in any consecutive four-quarter period does not exceed five
                  percent (5%) of the consolidated total assets of Lessee and
                  its Subsidiaries on the last day immediately preceding such
                  four-quarter period;

         Provided, however, that the foregoing exceptions shall not be construed
         to permit any sales, leases, transfers or disposals of any of the
         Property, except as expressly permitted by the Lease Agreement or
         Purchase Agreement.

                  (d)      Mergers, Acquisitions, Etc. Neither Lessee nor any of
         its Subsidiaries shall consolidate with or merge into any other Person
         or permit any other Person to merge into it, establish any new
         Subsidiary, acquire any Person as a new Subsidiary or acquire all or
         substantially all of the assets of any other Person, except for the
         following:

                                       38
<PAGE>   44
                           (i)      Any Subsidiary of Lessee may merge or
                  consolidate with any other Subsidiary of Lessee;

                           (ii)     Any Subsidiary of Lessee may merge or
                  consolidate with Lessee, provided that Lessee is the surviving
                  corporation; and

                           (iii)    Lessee may merge or consolidate with any
                  other corporation, establish a new Subsidiary, acquire any
                  Person as a new Subsidiary or acquire all or substantially all
                  of the assets of any other Person, provided that:

                                    (A)      In the case of any merger or
                           consolidation, either (1) Lessee is the surviving
                           corporation or (2) the surviving corporation (y) is a
                           Solvent United States corporation with a financial
                           condition equal to or better than the financial
                           condition of Lessee immediately prior to such merger
                           or consolidation and (z) assumes all of the Lessee
                           Obligations in a manner reasonably acceptable to the
                           Required Participants;

                                    (B)      No Default has occurred and is
                           continuing at the time of such merger, consolidation,
                           establishment or acquisition or will occur after
                           giving effect to such merger, consolidation or
                           acquisition; and

                                    (C)      The aggregate cost of any such
                           merger, consolidation, establishment or acquisition
                           does not exceed the amounts permitted under clause
                           (vi) of Subparagraph 5.02(e) (except for Lessee's
                           cost of acquiring Gasonics International Corporation,
                           which shall not be subject to such limitation).

                  (e)      Investments. Neither Lessee nor any of its
         Subsidiaries shall make any Investment except for Investments in the
         following:

                           (i)      Investments permitted by the investment
                  policy of Lessee duly approved by the Board of Directors of
                  Lessee and in effect at the time of such Investment;

                           (ii)     Investments held by Gasonics International
                  Corporation on the date Gasonics International Corporation is
                  acquired by Lessee;

                           (iii)    Any transaction permitted by Subparagraph
                  5.02(a);

                           (iv)     Investments by Lessee in the "Tranche A"
                  portion of synthetic leases in which it is the lessee and
                  which constitute Economically Defeased Synthetic Lease
                  Obligations;

                           (v)      Investments in joint ventures and strategic
                  alliances, provided that the aggregate amount of such
                  Investments does not exceed in any fiscal year two and
                  one-half percent (2 1/2%) of the tangible assets of Lessee and
                  its Subsidiaries, determined on a consolidated basis in
                  accordance with GAAP, on the last day of the immediately
                  preceding fiscal year; and

                                       39
<PAGE>   45
                           (vi)     Other Investments, provided that the
                  aggregate amount of such other Investments plus the aggregate
                  cost of all mergers and consolidations consummated,
                  Subsidiaries established and Subsidiaries and assets acquired
                  by Lessee pursuant to Subparagraph 5.02(d) (excluding Lessee's
                  acquisition of Gasonics International Corporation) does not
                  exceed in any fiscal year (A) $100,000,000 for any amounts
                  paid in cash and (B) $500,000,000 for any amounts paid with
                  shares of common stock of Lessee (as determined according to
                  the stock price of such shares on the date of transfer) and
                  accounted for on a pooling basis in accordance with GAAP.

                  (f)      Dividends, Redemptions, Etc. Neither Lessee nor any
         of its Subsidiaries shall pay any dividends or make any distributions
         on its Equity Securities; purchase, redeem, retire, defease or
         otherwise acquire for value any of its Equity Securities; return any
         capital to any holder of its Equity Securities as such; make any
         distribution of assets, Equity Securities, obligations or securities to
         any holder of its Equity Securities as such; or set apart any sum for
         any such purpose; except as follows:

                           (i)      Either Lessee or any of its Subsidiaries may
                  pay dividends on its capital stock payable solely in such
                  Person's own capital stock;

                           (ii)     Any Subsidiary of Lessee may pay dividends
                  to Lessee;

                           (iii)    Lessee may purchase shares of its capital
                  stock for its employee stock option plans, provided that (A)
                  the aggregate amount of such purchases does not exceed
                  $50,000,000 in any fiscal year and (B) no Default has occurred
                  and is continuing at the time of such purchase or will occur
                  after giving effect to such purchase; and

                           (iv)     Lessee may purchase shares of its capital
                  stock with the proceeds received by it from a substantially
                  concurrent issue of new shares of its capital stock

                  (g)      Change in Business. Neither Lessee nor any of its
         Subsidiaries shall engage, either directly or indirectly through
         Affiliates, in any material line of business other than the
         semiconductor capital equipment business and other businesses
         incidental or reasonably related thereto.

                  (h)      ERISA. Neither Lessee nor any ERISA Affiliate shall
         (i) adopt or institute any Employee Benefit Plan that is an employee
         pension benefit plan within the meaning of Section 3(2) of ERISA, (ii)
         take any action which will result in the partial or complete
         withdrawal, within the meanings of sections 4203 and 4205 of ERISA,
         from a Multiemployer Plan, (iii) engage or permit any Person to engage
         in any transaction prohibited by section 406 of ERISA or section 4975
         of the IRC involving any Employee Benefit Plan or Multiemployer Plan
         which would subject either Lessee or any ERISA Affiliate to any tax,
         penalty or other liability including a liability to indemnify, (iv)
         incur or allow to exist any accumulated funding deficiency (within the
         meaning of section 412 of the IRC or section 302 of ERISA), (v) fail to
         make full payment when due of all

                                       40
<PAGE>   46
         amounts due as contributions to any Employee Benefit Plan or
         Multiemployer Plan, (vi) fail to comply with the requirements of
         section 4980B of the IRC or Part 6 of Title I(B) of ERISA, or (vii)
         adopt any amendment to any Employee Benefit Plan which would require
         the posting of security pursuant to section 401(a)(29) of the IRC,
         where singly or cumulatively, the above would have a Material Adverse
         Effect.

                  (i)      Accounting Changes. Neither Lessee nor any of its
         Subsidiaries shall change (i) its fiscal year (currently January 1
         through December 31) or (ii) its accounting practices except as
         permitted by GAAP.

         5.03.    Lessee's Financial Covenants. Until the termination of this
Agreement and the satisfaction in full by Lessee of all Lessee Obligations,
Lessee will comply, and will cause compliance, with the following financial
covenants, unless Lessor and Required Participants shall otherwise consent in
writing:

                  (a)      Funded Indebtedness/Capital Ratio. Lessee shall not
         permit its Funded Indebtedness/Capital Ratio on any day set forth below
         to be greater than the ratio set forth opposite such day below:

                  The last day of any

                           fiscal quarter                     0.40 to 1.00.

                  (b)      Quick Ratio. Lessee shall not permit its Quick Ratio
         on any day set forth below to be less than the ratio set forth opposite
         such day below:

                  The last day of any

                           fiscal quarter                     1.50 to 1.00.

                  (c)      Debt Service Coverage Ratio. Lessee shall not permit
         its Debt Service Coverage Ratio for any fiscal quarter ending on any
         day set forth below to be less than the ratio set forth opposite such
         day below:

                  The last day of any

                           fiscal quarter                     3.50 to 1.00.

                  (d)      Tangible Net Worth. Commencing on December 31, 2000,
         Lessee shall not permit its Tangible Net Worth on the last day of any
         fiscal quarter (such date to be referred to herein as a "determination
         date") to be less than the sum on such determination date of the
         following:

                           (i)      $664,477,000.00 (the approximate amount of
                  Lessee's Tangible Net Worth on December 31, 1999);

                                                      plus

                                       41
<PAGE>   47
                           (ii)     Seventy-five percent (75%) of the sum of (A)
                  Lessee's consolidated annual net income for its fiscal year
                  ending December 31, 2000 (ignoring any annual loss); plus (B)
                  the sum of Lessee's consolidated quarterly net income
                  (ignoring any quarterly losses) for each fiscal quarter ending
                  after December 31, 2000 through and including the fiscal
                  quarter ending on the determination date;

                                                      plus

                           (iii)    One hundred percent (100%) of the Net
                  Proceeds of all Equity Securities issued by Lessee and its
                  Subsidiaries (to Persons other than Lessee or its
                  Subsidiaries) during the period commencing on December 31,
                  1999 and ending on the determination date;

                                                      plus

                           (iv)     One hundred percent (100%) of the principal
                  amount of all debt securities of Lessee and its Subsidiaries
                  converted into Equity Securities of Lessee and its
                  Subsidiaries during the period commencing on December 31, 1999
                  and ending on the determination date;

         provided, however, that in no case shall Lessee permit its Tangible Net
         Worth on December 31, 2000 to be less than $1,260,000,000.00.

                  (e)      Minimum Cash Balances. Lessee shall not permit its
         Cash Balances on any date to be less than the remainder of:

                           (i)      The aggregate amount on such date of all
                  Synthetic Lease Obligations of Lessee and its Subsidiaries
                  that (A) would be attributable to principal if such
                  obligations were treated as loan obligations and (B) become
                  due within one (1) year of such date;

                                                      minus

                           (ii)     The sum of (A) all cash of Lessee and its
                  Subsidiaries on such date and (B) the market value of Cash
                  Equivalents and short-term marketable securities (that are
                  classified as current assets in accordance with GAAP) of
                  Lessee and its Subsidiaries on such date to the extent such
                  cash, Cash Equivalents and short-term marketable securities
                  secure payment of the current Synthetic Lease Obligations
                  referred to in clause (i) above.

         (In calculating the market value of Cash Equivalents and short-term
         marketable securities under this subparagraph, Cash Equivalents and
         short-term marketable securities shall be marked to market quarterly.)

         5.04.    Lessor's Covenants. Until the termination of this Agreement
and the satisfaction in full by Lessor of all Lessor Obligations, Lessor will
comply, and will cause compliance, with

                                       42
<PAGE>   48
the following covenants, unless Lessee and Required Participants shall otherwise
consent in writing:

                  (a)      Use of Proceeds. Lessor shall use the proceeds of all
         amounts delivered to Lessor by Participants pursuant to Subparagraph
         2.05(a) solely to fund Advances.

                  (b)      Lessor Liens. Lessor shall not create, incur, assume
         or permit to exist any Lessor Lien (other than any Lien granted to
         Agent or any Participant pursuant to the Operative Documents to secure
         the Lessor Obligations) and shall promptly discharge, at its sole cost
         and expense, any Lessor Lien on the Property (other than any Liens
         granted to Agent or any Participant pursuant to the Operative Documents
         to secure the Lessor Obligations); provided, however, that Lessor shall
         not be required so to discharge any such Lessor Lien if the same is
         being (or promptly will be) contested in good faith by appropriate
         proceedings diligently prosecuted, provided that any such contest is
         completed and all Lessor Liens are discharged on or prior to the
         Expiration Date.

                  (c)      Property Disposition. Lessor shall not sell, lease,
         transfer or otherwise dispose of its right, title and interest in the
         Property and the Operative Documents except as provided in Subparagraph
         2.11(b) or Subparagraph 7.05(d) or in the Purchase Agreement or after
         retaining the Property following the Expiration Date.

                  (d)      Chief Executive Office. Lessor shall not change its
         chief executive office without giving Agent prompt written notice.

         5.05.    Participants' Covenants. Each Participant covenants that it
will not fund its portion of any Advance with the assets of any "employee
benefit plan" (as defined in Section 3(3) of ERISA) which is subject to Title I
of ERISA or any "plan" (as defined in Section 4975(e)(1) of the IRC.

SECTION 6. LESSOR, AGENT AND THEIR RELATIONS WITH PARTICIPANTS.

         6.01.    Appointment of Agent. Each Participant hereby appoints and
authorizes Agent to act as its agent hereunder and under the other Operative
Documents with such powers as are expressly delegated to Agent by the terms of
this Agreement and the other Operative Documents, together with such other
powers as are reasonably incidental thereto. Lessor is not an agent for the
Participants or Agent, and neither this Agreement nor any other Operative
Document shall be construed to constitute or evidence a partnership among the
Lessor Parties or otherwise to impose upon Lessor or Agent any fiduciary duty.

         6.02.    Powers and Immunities. Neither Lessor nor Agent shall have any
duties or responsibilities except those expressly set forth in this Agreement or
in any other Operative Document, be a trustee for any Participant or have any
fiduciary duty to any Participant. Notwithstanding anything to the contrary
contained herein, neither Lessor nor Agent shall be required to take any action
which is contrary to this Agreement or any other Operative Document or any
applicable Governmental Rule. Neither Lessor nor Agent nor any Participant shall
be responsible to any Participant for any recitals, statements, representations
or warranties made by Lessee or any of its Subsidiaries contained in this
Agreement or in any other Operative

                                       43
<PAGE>   49
Document, for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Operative Document or for any failure
by Lessee or any of its Subsidiaries to perform their respective obligations
hereunder or thereunder. Lessor and Agent may employ agents and
attorneys-in-fact and shall not be responsible to any Participant for the
negligence or misconduct of any such agents or attorneys-in-fact selected by it
with reasonable care. Neither Lessor nor Agent nor any of their respective
directors, officers, employees, agents or advisors shall be responsible to any
Participant for any action taken or omitted to be taken by it or them hereunder
or under any other Operative Document or in connection herewith or therewith,
except for its or their own gross negligence or willful misconduct. Except as
otherwise provided under this Agreement, Lessor and Agent shall take such action
with respect to the Operative Documents as shall be directed by the Required
Participants.

         6.03.    Reliance. Lessor or Agent shall be entitled to rely upon any
certificate, notice or other document (including any cable, telegram, facsimile
or telex) believed by it in good faith to be genuine and correct and to have
been signed or sent by or on behalf of the proper Person or Persons, and upon
advice and statements of legal counsel, independent accountants and other
experts selected by Lessor or Agent with reasonable care. As to any other
matters not expressly provided for by this Agreement, neither Lessor nor Agent
shall be required to take any action or exercise any discretion, but shall be
required to act or to refrain from acting upon instructions of the Required
Participants and shall in all cases be fully protected by the Participants in
acting, or in refraining from acting, hereunder or under any other Operative
Document in accordance with the instructions of the Required Participants, and
such instructions of the Required Participants and any action taken or failure
to act pursuant thereto shall be binding on all of the Participants.

         6.04.    Defaults. Neither Lessor nor Agent shall be deemed to have
knowledge or notice of the occurrence of any Default unless Lessor and Agent
have received a written notice from a Participant or Lessee, referring to this
Agreement, describing such Default and stating that such notice is a "Notice of
Default". If Lessor and Agent receive such a notice of the occurrence of a
Default, Agent shall give prompt notice thereof to the Participants (other than
Novellus). Lessor and Agent shall take such action with respect to such Default
as shall be reasonably directed by the Required Participants; provided, however,
that until Lessor and Agent shall have received such directions, Lessor or Agent
may (but shall not be obligated to) take such action, or refrain from taking
such action, with respect to such Default as it shall deem advisable in the best
interest of the Participants (other than Novellus).

         6.05.    Indemnification. Without limiting the obligations of Lessee
hereunder, each Participant agrees to indemnify Lessor and Agent, ratably in
accordance with such Participant's Proportionate Share, for any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may at
any time be imposed on, incurred by or asserted against Lessor or Agent in any
way relating to or arising out of this Agreement or any documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby or the enforcement of any of the terms hereof or thereof; provided,
however, that no Participant shall be liable for any of the foregoing to the
extent they arise from Lessor's or Agent's gross negligence or willful
misconduct. Lessor or Agent shall be fully justified in refusing to take or in
continuing to take any action hereunder unless it shall first be indemnified to
its satisfaction by the Participants against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any

                                       44
<PAGE>   50
such action. The obligations of each Participant under this Paragraph 6.05 shall
survive the payment and performance of the Lessee Obligations, the termination
of this Agreement and any Participant ceasing to be a party to this Agreement
(with respect to events which occurred prior to the time such Participant ceased
to be a Participant hereunder).

         6.06.    Non-Reliance. Each Participant represents that it has,
independently and without reliance on Lessor, Agent, or any other Participant
(other than Novellus), and based on such documents and information as it has
deemed appropriate, made its own appraisal of the business, prospects,
management, financial condition and affairs of Lessee and the Subsidiaries and
its own decision to enter into this Agreement and agrees that it will,
independently and without reliance upon Lessor, Agent or any other Participant
(other than Novellus), and based on such documents and information as it shall
deem appropriate at the time, continue to make its own appraisals and decisions
in taking or not taking action under this Agreement or any other Operative
Document. Neither Lessor nor Agent nor any of their respective affiliates nor
any of their respective directors, officers, employees, agents or advisors shall
(a) be required to keep any Participant informed as to the performance or
observance by Lessee or any of its Subsidiaries of the obligations under this
Agreement or any other document referred to or provided for herein or to make
inquiry of, or to inspect the properties or books of Lessee or any of its
Subsidiaries; (b) have any duty or responsibility to provide any Participant
with any credit or other information concerning Lessee or any of its
Subsidiaries which may come into the possession of Lessor or Agent, except for
notices, reports and other documents and information expressly required to be
furnished to the Participants by Lessor or Agent hereunder; or (c) be
responsible to any Participant for (i) any recital, statement, representation or
warranty made by Lessee or any officer, employee or agent of Lessee in this
Agreement or in any of the other Operative Documents, (ii) the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any Operative Document, (iii) the value or sufficiency of the Property or the
validity or perfection of any of the liens or security interests intended to be
created by the Operative Documents, or (iv) any failure by Lessee to perform its
obligations under this Agreement or any other Operative Document.

         6.07.    Resignation or Removal of Agent. Agent may resign at any time
by giving thirty (30) days prior written notice thereof to Lessee and the
Participants, and Agent may be removed at any time with or without cause by the
Required Participants, provided, however, that Agent shall not resign and may
not be removed without cause prior to the expiration of the Commitment Period
without the consent of Lessee unless a Change of Law makes it unlawful or
unreasonably burdensome for Agent to continue to act in such capacity. Upon any
such resignation or removal, the Required Participants shall have the right to
appoint a successor Agent, which Agent, if not a Participant, shall be
reasonably acceptable to Lessee; provided, however, that Lessee shall have no
right to approve a successor Agent if a Default has occurred and is continuing.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from the duties and obligations thereafter arising
hereunder. After any retiring Agent's resignation or removal hereunder as Agent,
the provisions of this Section VI and any other provision of this Agreement or
any other Operative Document which by its terms survives the termination of this
Agreement shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Agent.

                                       45
<PAGE>   51
         6.08.    Authorization. Agent is hereby authorized by the Participants
to execute, deliver and perform, each of the Operative Documents to which Agent
is or is intended to be a party and each Participant agrees to be bound by all
of the agreements of Agent contained in the Operative Documents.

         6.09.    Lessor and Agent in their Individual Capacities. Lessor, Agent
and their respective affiliates may make loans to, accept deposits from and
generally engage in any kind of banking or other business with Lessee and its
Subsidiaries and affiliates as though Lessor were not Lessor hereunder and Agent
were not Agent hereunder. With respect to Advances, if any, made by Agent in its
capacity as a Participant, Agent in its capacity as a Participant shall have the
same rights and powers under this Agreement and the other Operative Documents as
any other Participant and may exercise the same as though it were not Agent, and
the terms "Participant" or "Participants" shall include Agent in its capacity as
a Participant.

SECTION 7. MISCELLANEOUS

         7.01.    Notices. Except as otherwise provided herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Lessor, Lessee, any Participant or Agent under this Agreement or the other
Operative Documents shall be in writing and faxed, mailed or delivered, if to
Lessor, Lessee or Agent, at its respective facsimile number or address set forth
below or, if to any Participant, at the address or facsimile number specified
beneath the heading "Address for Notices" under the name of such Participant in
Part B of Schedule I (or to such other facsimile number or address for any party
as indicated in any notice given by that party to the other parties). All such
notices and communications shall be effective (a) when sent by Federal Express
or other overnight service of recognized standing, on the Business Day following
the deposit with such service; (b) when mailed, first class postage prepaid and
addressed as aforesaid through the United States Postal Service, upon receipt;
(c) when delivered by hand, upon delivery; and (d) when faxed, upon confirmation
of receipt; provided, however, that any Advance Request, Notice of Rental Period
Selection, Extension Request, Notice of Term Purchase Option Exercise, Notice of
Marketing Option Exercise or Notice of Expiration Date Purchase Option Exercise
delivered to Lessor or Agent shall not be effective until received by Lessor or
Agent.

         Lessee:           Novellus Systems, Inc.
                           4000 North First Street
                           San Jose, CA 95134
                           Attn:  Treasurer
                           Telephone:  (408) 432-5339
                           Fax No: (408) 545-3009

         Lessor:           ABN AMRO Leasing, Inc.
                           c/o ABN AMRO Bank N.V.
                           135 South LaSalle Street, Suite 740
                           Chicago, IL 60603
                           Attn: David M. Shipley
                           Telephone: (312) 904-2183

                                       46
<PAGE>   52
                           Fax No: (312) 904-6217

         Agent:            ABN AMRO Bank N.V.
                           Agency Services
                           208 South LaSalle Street, Suite 1500
                           Chicago, IL  60604
                           Attn:  Josephine O'Brien
                           Telephone:  (312) 992-5091
                           Fax: (312) 992-5157

                           with copies to:

                           ABN AMRO Bank N.V.
                           101 California Street, Suite 4550
                           San Francisco, CA  94111-5812
                           Attn:  Joe Endoso
                           Telephone:  (415) 984-3718
                           Fax:  (415) 362-3524

                                      and

                           ABN AMRO Bank N.V.
                           Credit Administration
                           208 South LaSalle Street, Suite 1500
                           Chicago, IL 60604
                           Attn:  Gregory Miller
                           Telephone:  (312) 992-5116
                           Fax:  (312) 992-5111

Each Advance Request, Notice of Rental Period Selection, Extension Request,
Notice of Term Purchase Option Exercise, Notice of Marketing Option Exercise and
Notice of Expiration Date Purchase Option Exercise shall be given by Lessee to
Agent's office located at its address referred to above during its normal
business hours; provided, however, that any such notice received by Agent after
10:00 a.m. on any Business Day shall be deemed received by Agent on the next
Business Day. In any case where this Agreement authorizes notices, requests,
demands or other communications by Lessee to any Lessor Party to be made by
telephone or facsimile, any Lessor Party may conclusively presume that anyone
purporting to be a person designated in any incumbency certificate or other
similar document received by such Lessor Party is such a person.

         7.02.    Expenses. Lessee shall pay within five (5) Business Days after
demand, whether or not any Advance is made hereunder, (a) all reasonable fees
and expenses, including reasonable attorneys' fees and expenses, incurred by
Lessor and Agent in connection with the preparation, negotiation, execution and
delivery of, the consummation of the transactions contemplated by and the
exercise of their duties under, this Agreement and the other Operative
Documents, and the preparation, negotiation, execution and delivery of
amendments and waivers hereunder and thereunder (which fees and expenses shall
be treated as Permitted Transaction

                                       47
<PAGE>   53
Expenses if incurred prior to the Commitment Termination Date), and (b) all
reasonable fees and expenses, including reasonable attorneys' fees and expenses,
incurred by the Lessor Parties (other than Novellus) in the enforcement or
attempted enforcement of any of the Lessee Obligations or in exercising or
preserving any of the Lessor Parties' (other than Novellus') rights and remedies
(including all such fees and expenses incurred in connection with any "workout"
or restructuring affecting the Operative Documents or the Lessee Obligations or
any bankruptcy or similar proceeding involving Lessee or any of its
Subsidiaries). As used herein, the term "reasonable attorneys' fees and
expenses" shall include, without limitation, allocable costs and expenses of
Agent's and Participants' (other than Novellus) in-house legal counsel and
staff. The obligations of Lessee under this Paragraph 7.02 shall survive the
payment and performance of the Lessee Obligations and the termination of this
Agreement.

         7.03.    Indemnification. To the fullest extent permitted by law,
Lessee agrees to protect, indemnify, defend and hold harmless, on an after-tax
basis, the Lessor Parties and the other Indemnitees from and against any and all
liabilities, losses, damages or expenses of any kind or nature (including
Indemnified Taxes) and from any suits, claims or demands (including in respect
of or for reasonable attorneys' fees and other expenses) arising on account of
or in connection with any matter or thing or action or failure to act by
Indemnitees, or any of them, arising out of or relating to the Operative
Documents, any transaction contemplated thereby or the Property, including any
use by Lessee of the Property or the Advances, except to the extent such
liability arises from the willful misconduct or gross negligence of such
Indemnitee; provided, however, that Lessee shall have no obligation to indemnify
any Lessor Party for any such liabilities, losses, damages or expenses under
this Paragraph 7.03 arising during the Construction Period, except as follows:

                  (a)      Lessee shall indemnify the Lessor Parties as provided
         in this Paragraph 7.03 from and against any and all such liabilities,
         losses, damages and expenses arising during the Construction Period if
         caused by or arising from any failure by Lessee to comply with any of
         its obligations under the Operative Documents (including its insurance
         obligations), any representation by Lessee in any of the Operative
         Documents not being true, any negligence or willful misconduct of
         Lessee, or any claim by any third-party against Lessee (or against any
         Lessor Party) based upon any alleged action or inaction by Lessee.

                  (b)      If any Lessor Party incurs any such liabilities,
         losses, damages or expenses arising during the Construction Period for
         which Lessee is not obligated to indemnify such Lessor Party pursuant
         to Subparagraph 7.03(a), such liabilities, losses, damages and expenses
         shall, if such Lessor Party shall so request by a written notice to
         Lessor, be capitalized pursuant to clause (ii) of Subparagraph 2.03(c).

Upon receiving knowledge of any suit, claim or demand asserted by a third party
that any Lessor Party believes is covered by this indemnity, such Lessor Party
shall give Lessee notice of the matter and an opportunity to defend it, at
Lessee's sole cost and expense, with legal counsel reasonably satisfactory to
such Lessor Party. Such Lessor Parties may also require Lessee to defend the
matter. Any failure or delay of any Lessor Party to notify Lessee of any such
suit, claim or demand shall not relieve Lessee of its obligations under this
Paragraph 7.03. The

                                       48
<PAGE>   54
obligations of Lessee under this Paragraph 7.03 shall survive the payment and
performance of the Lessee Obligations and the termination of this Agreement.

         7.04.    Waivers; Amendments. Any term, covenant, agreement or
condition of this Agreement or any other Operative Document may be amended or
waived if such amendment or waiver is in writing and is signed by Lessor, Lessee
and the Required Participants; provided, however that:

                  (a)      Any amendment, waiver or consent which (i) increases
         the Total Commitment, (ii) extends the Scheduled Expiration Date, (iii)
         reduces the Rental Rate or any fees or other amounts payable for the
         account of the Participants hereunder, (iv) postpones any date
         scheduled for any payment of Base Rent or any fees or other amounts
         payable for the account of the Participants hereunder or thereunder,
         (v) amends Paragraph 2.06 or this Paragraph 7.04, (vi) amends the
         definition of Required Participants or (vii) releases Lessor's interest
         in any substantial part of the Property, must be in writing and also
         signed or approved in writing by all Participants;

                  (b)      Any amendment, waiver or consent which increases or
         decreases the Proportionate Share of any Participant must be in writing
         and also signed by such Participant;

                  (c)      Any amendment, waiver or consent which affects the
         rights or obligations of Agent must be in writing and also signed by
         Agent;

                  (d)      Upon the exercise by Lessee of the Partial Purchase
         Option under the Purchase Agreement in accordance with Paragraph 2.02
         of such Purchase Agreement, Lessee and/or Lessor alone may execute such
         documents, instruments and agreements (including releases and/or
         amendments to the Operative Documents) as may be reasonably necessary
         to release the Property to be purchased pursuant to such Partial
         Purchase Option; and

                  (e)      If any property is to be added to the Property in
         connection with a lot line adjustment or other similar action, Lessee
         and/or Lessor alone may execute such documents, instruments and
         agreements (including amendments to the Operative Documents) as may be
         reasonably necessary to add such property.

No failure or delay by any Lessor Party (other than Novellus) in exercising any
right hereunder shall operate as a waiver thereof or of any other right nor
shall any single or partial exercise of any such right preclude any other
further exercise thereof or of any other right. Unless otherwise specified in
such waiver or consent, a waiver or consent given hereunder shall be effective
only in the specific instance and for the specific purpose for which given.

         7.05.    Successors and Assigns.

                  (a)      Binding Effect. This Agreement and the other
         Operative Documents shall be binding upon and inure to the benefit of
         Lessee, Lessor, the Participants, Agent and their respective permitted
         successors and assigns. All references in this Agreement to any Person
         shall be deemed to include all successors and assigns of such Person.

                                       49
<PAGE>   55
                  (b)      Participant Assignments.

                           (i)      Any Participant may, at any time, sell and
                  assign to any other Participant or any Eligible Assignee
                  (individually, an "Assignee Participant") all or a portion of
                  its rights and obligations under this Agreement and the other
                  Operative Documents (such a sale and assignment to be referred
                  to herein as an "Assignment") pursuant to an assignment
                  agreement in the form of Exhibit L (an "Assignment
                  Agreement"), executed by each Assignee Participant and such
                  assignor Participant (an "Assignor Participant") and delivered
                  to Agent for its acceptance and recording in the Register;
                  provided, however, that:

                                    (A)      Without the written consent of
                           Lessor, Agent and, if no Default has occurred and is
                           continuing, Lessee (which consent of Lessor, Agent
                           and Lessee shall not be unreasonably withheld), no
                           Participant may make any Assignment to any Assignee
                           Participant which is not, immediately prior to such
                           Assignment, a Participant hereunder or an Affiliate
                           thereof (except that ABN AMRO may make an Assignment
                           to Novellus pursuant to Subparagraph 2.02(d)).

                                    (B)      Without the written consent of
                           Lessor, Agent and, if no Default has occurred and is
                           continuing, Lessee (which consent of Lessor, Agent
                           and Lessee shall not be unreasonably withheld), no
                           Participant may make any Assignment to any Assignee
                           Participant if, after giving effect to such
                           Assignment, the Commitment of such Participant or
                           such Assignee Participant would be less than Two
                           Million Dollars ($2,000,000) (except that a
                           Participant may make an Assignment which reduces its
                           Commitment to zero without the written consent of
                           Lessor, Agent or Lessee).

                                    (C)      Without the written consent of
                           Lessor, Agent and, if no Default has occurred and is
                           continuing, Lessee (which consent of Lessor, Agent
                           and Lessee shall not be unreasonably withheld), no
                           Participant may make any Assignment of its
                           Outstanding Tranche A Participation Amount which does
                           not assign and delegate an equal pro rata interest in
                           (1) such Participant's Tranche A Percentage, and (2)
                           such Participant's other rights, duties and
                           obligations relating to the Tranche A Portion under
                           this Agreement and the other Operative Documents.

                                    (D)      Without the written consent of
                           Lessor, Agent and, if no Default has occurred and is
                           continuing, Lessee (which consent of Lessor, Agent
                           and Lessee shall not be unreasonably withheld), no
                           Participant may make any Assignment of its
                           Outstanding Tranche B Participation Amount which does
                           not assign and delegate an equal pro rata interest in
                           (1) such Participant's Tranche B Percentage, and (2)
                           such Participant's other rights, duties and
                           obligations relating to the Tranche B Portion under
                           this Agreement and the other Operative Documents.

                                       50
<PAGE>   56
                                    (E)      Without the written consent of
                           Lessor, Agent and, if no Default has occurred and is
                           continuing, Lessee (which consent of Lessor, Agent
                           and Lessee shall not be unreasonably withheld), no
                           Tranche C Participant may make any Assignment of its
                           Outstanding Tranche C Participation Amount which does
                           not assign and delegate an equal pro rata interest in
                           (1) such Participant's Tranche C Percentage, and (2)
                           such Participant's other rights, duties and
                           obligations relating to the Tranche C Portion under
                           this Agreement and the other Operative Documents.

                                    (F)      Without the written consent of
                           Lessor and Agent (which consent of Lessor and Agent
                           shall not be unreasonably withheld), Novellus may not
                           make any Assignment of its Outstanding Tranche A
                           Participation Amount, its Tranche A Percentage or its
                           other rights, duties and obligations relating to the
                           Tranche A Portion under this Agreement and the other
                           Operative Documents. In the event of such a permitted
                           Assignment, the assignee shall acquire such interest
                           without being subject to any of the limitations which
                           may have applied to the rights of the holder thereof
                           while such holder was Novellus.

                  Upon such execution, delivery, acceptance and recording of
                  each Assignment Agreement, from and after the Assignment
                  Effective Date determined pursuant to such Assignment
                  Agreement, (y) each Assignee Participant thereunder shall be a
                  Participant hereunder with a Tranche A Percentage, Tranche B
                  Percentage, Tranche C Percentage and Proportionate Share as
                  set forth on Attachment 1 to such Assignment Agreement (under
                  the caption "Tranche Percentages and Proportionate Shares
                  After Assignment") and shall have the rights, duties and
                  obligations of such a Participant under this Agreement and the
                  other Operative Documents, and (z) the Assignor Participant
                  thereunder shall be a Participant with a Tranche A Percentage,
                  Tranche B Percentage, Tranche C Percentage and Proportionate
                  Share as set forth on Attachment 1 to such Assignment
                  Agreement (under the caption "Tranche Percentages and
                  Proportionate Shares After Assignment") , or, if the
                  Proportionate Share of the Assignor Participant has been
                  reduced to 0%, the Assignor Participant shall cease to be a
                  Participant and to have any obligation to fund any portion of
                  any Advance; provided, however, that any such Assignor
                  Participant which ceases to be a Participant shall continue to
                  be entitled to the benefits of any provision of this Agreement
                  which by its terms survives the termination of this Agreement.
                  Each Assignment Agreement shall be deemed to amend Schedule I
                  to the extent, and only to the extent, necessary to reflect
                  the addition of each Assignee Participant, the deletion of
                  each Assignor Participant which reduces its Proportionate
                  Share to 0% and the resulting adjustment of Tranche A
                  Percentages, Tranche B Percentages, Tranche C Percentages and
                  Proportionate Shares arising from the purchase by each
                  Assignee Participant of all or a portion of the rights and
                  obligations of an Assignor Participant under this Agreement
                  and the other Operative Documents. Each Assignee Participant
                  which was not previously a Participant hereunder and which is
                  not incorporated under the laws of the United States of
                  America or a state thereof shall, within three (3) Business
                  Days of becoming a Participant, deliver to

                                       51
<PAGE>   57
                  Lessee and Agent two duly completed copies of United States
                  Internal Revenue Service Form 1001 or 4224 (or successor
                  applicable form), as the case may be, certifying in each case
                  that such Participant is entitled to receive payments under
                  this Agreement without deduction or withholding of any United
                  States federal income taxes. (Without limiting the generality
                  of any of the preceding provisions of this clause (i) of
                  Subparagraph 7.05(b), no Participant may, if no Default has
                  occurred and is continuing and Lessee shall object in writing,
                  make any Assignment to any Assignee Participant that, at the
                  time of such Assignment, (1) has a basis for demanding any
                  payment under Subparagraph 2.12(c) or Subparagraph 2.12(d) in
                  excess of the pro rata amount that then could be demanded
                  thereunder by the Participant proposing to make such
                  Assignment or (2) would require Lessee to make any payment
                  under Subparagraph 2.13(a) on account of payments to such
                  Assignee Participant in excess of the pro rata amount that
                  Lessee was then required to make thereunder on account of
                  payments to the Participant proposing to make such
                  Assignment.)

                           (ii)     Agent shall maintain at its address referred
                  to in Paragraph 7.01 a copy of each Assignment Agreement
                  delivered to it and a register (the "Register") for the
                  recordation of the names and addresses of the Participants and
                  the Tranche A Percentage, Tranche B Percentage, Tranche C
                  Percentage and Proportionate Share of each Participant from
                  time to time. The entries in the Register shall be conclusive
                  in the absence of manifest error, and Lessee, Agent and the
                  Participants may treat each Person whose name is recorded in
                  the Register as the owner of the interests recorded therein
                  for all purposes of this Agreement. The Register shall be
                  available for inspection by Lessee or any Participant at any
                  reasonable time and from time to time upon reasonable prior
                  notice.

                           (iii)    Upon its receipt of an Assignment Agreement
                  executed by an Assignor Participant and an Assignee
                  Participant (and, to the extent required by clause (i) of this
                  Subparagraph 7.05(b), by Lessor, Agent and Lessee), together
                  with payment to Agent by Assignor Participant of a
                  registration and processing fee of $3,000, Agent shall (A)
                  promptly accept such Assignment Agreement and (B) on the
                  Assignment Effective Date determined pursuant thereto record
                  the information contained therein in the Register and give
                  notice of such acceptance and recordation to Lessor, the
                  Participants and Lessee. Agent may, from time to time at its
                  election, prepare and deliver to Lessor, the Participants and
                  Lessee a revised Schedule I reflecting the names, addresses
                  and respective Proportionate Shares of all Participants then
                  parties hereto.

                           (iv)     Subject to Subparagraph 7.13(g), the Lessor
                  Parties may disclose the Operative Documents and any financial
                  or other information relating to Lessee or any Subsidiary to
                  each other or to any potential Assignee Participant.

                  (c)      Participant Subparticipations. Any Participant (other
         than Novellus except in compliance with Subparagraph 7.05(b)(F)) may at
         any time sell to one or more Persons ("Subparticipants")
         subparticipation interests in the rights and interests of such

                                       52
<PAGE>   58
         Participant under this Agreement and the other Operative Documents. In
         the event of any such sale by a Participant of subparticipation
         interests, such Participant's obligations under this Agreement and the
         other Operative Documents shall remain unchanged, such Participant
         shall remain solely responsible for the performance thereof and Lessee
         and the other Lessor Parties shall continue to deal solely and directly
         with such Participant in connection with such Participant's rights and
         obligations under this Agreement. Any agreement pursuant to which any
         such sale is effected may require the selling Participant to obtain the
         consent of the Subparticipant in order for such Participant to agree in
         writing to any amendment, waiver or consent of a type specified in
         clause (i), (ii), (iii) or (iv) of Subparagraph 7.04(a) but may not
         otherwise require the selling Participant to obtain the consent of such
         Subparticipant to any other amendment, waiver or consent hereunder.
         Lessee agrees that any Participant which has transferred any
         subparticipation interest shall, notwithstanding any such transfer, be
         entitled to the full benefits accorded such Participant under Paragraph
         2.12, Paragraph 2.13, and Paragraph 2.14, as if such Participant had
         not made such transfer.

                  (d)      Lessor Assignments. Lessor may, upon one (1) month's
         prior written notice to Lessee and Agent, sell and assign all of its
         right, title and interest in the Property and its rights, powers,
         privileges, duties and obligations under this Agreement and the other
         Operative Documents, provided that:

                           (i)      If such sale and assignment is effected
                  after either (A) the occurrence of a Change of Law which makes
                  it unlawful or unreasonably burdensome for Lessor to hold
                  legal or beneficial title to the Property or to perform its
                  obligations and duties under this Agreement and the other
                  Operative Documents or (B) the resignation or removal of the
                  Agent which was the Agent at the time Lessor became the
                  Lessor, the purchaser/assignee (the "successor Lessor") shall
                  be either (1) a Participant or an Eligible Assignee that will
                  not cause the transaction evidenced by this Agreement and the
                  other Operative Documents to lose its treatment as an
                  operating lease under FASB 13 or (2) a Person approved as
                  provided in clause (ii) below; or

                           (ii)     If such sale and assignment is effected in
                  any other circumstance, the successor Lessor shall be a Person
                  that is (A) a financial institution or a Person controlled by
                  a financial institution and (B) approved in writing by Agent,
                  Required Participants and, if no Default has occurred and is
                  continuing, Lessee (which consents of Agent, Required
                  Participants and Lessee shall not be unreasonably withheld);
                  provided that Lessee shall have no obligation to consent to
                  any such sale and assignment prior to the Commitment
                  Termination Date; and

                           (iii)    The successor Lessor executes such
                  documents, instruments and agreements as may reasonably be
                  necessary to evidence its agreement to assume all of the
                  obligations and duties of the Lessor under this Agreement and
                  the other Operative Documents.

         Upon the consummation of any such sale and assignment, (A) the
         successor Lessor shall become the "Lessor" and shall succeed to and
         become vested with all the rights, powers,

                                       53
<PAGE>   59
         privileges, duties and obligations of the Lessor under this Agreement
         and the other Operative Documents and (B) the retiring Lessor shall be
         discharged from the duties and obligations of the Lessor thereafter
         arising under this Agreement and the other Operative Documents. After
         any retiring Lessor's discharge as the Lessor, the provisions of
         Section 6 and any other provision of this Agreement or any other
         Operative Document which by its terms survives the termination of this
         Agreement shall continue in effect for its benefit in respect of any
         actions taken or omitted to be taken by it while it was acting as the
         Lessor. Unless a sale and assignment by Lessor of its right, title and
         interest in the Property under this subparagraph is made by Lessor at
         Lessee's request or pursuant to clause (i) above, Lessor shall pay any
         real property transfer taxes payable as a result of such sale and
         assignment.

         7.06.    Setoff. In addition to any rights and remedies of the
Participants provided by law, each Participant shall have the right, with the
prior written consent of Agent, but without prior notice to or consent of
Lessee, any such notice and consent being expressly waived by Lessee to the
extent permitted by applicable law, upon the occurrence and during the
continuance of an Event of Default, to set-off and apply against the Lessee
Obligations, whether matured or unmatured, any amount owing from such
Participant to Lessee, at or at any time after, the occurrence of such Event of
Default. The aforesaid right of set-off may be exercised by such Participant
against Lessee or against any trustee in bankruptcy, debtor in possession,
assignee for the benefit of creditors, receiver or execution, judgment or
attachment creditor of Lessee or against anyone else claiming through or against
Lessee or such trustee in bankruptcy, debtor in possession, assignee for the
benefit of creditors, receiver, or execution, judgment or attachment creditor,
notwithstanding the fact that such right of set-off shall not have been
exercised by such Participant prior to the occurrence of an Event of Default.
Each Participant agrees promptly to notify Lessee after any such set-off and
application made by such Participant, provided that the failure to give such
notice shall not affect the validity of such set-off and application.

         7.07.    No Third Party Rights. Nothing expressed in or to be implied
from this Agreement is intended to give, or shall be construed to give, any
Person, other than the parties hereto and their permitted successors and assigns
hereunder, any benefit or legal or equitable right, remedy or claim under or by
virtue of this Agreement or under or by virtue of any provision herein.

         7.08.    Partial Invalidity. If at any time any provision of this
Agreement or any other Operative Document is or becomes illegal, invalid or
unenforceable in any respect under the law or any jurisdiction, neither the
legality, validity or enforceability of the remaining provisions of this
Agreement or the other Operative Documents nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.

         7.09.    JURY TRIAL. EACH OF LESSEE AND THE LESSOR PARTIES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY AS TO ANY ISSUE RELATING TO THE OPERATIVE DOCUMENTS IN ANY
ACTION, PROCEEDING, OR COUNTERCLAIM ARISING OUT OF OR RELATING TO ANY OPERATIVE
DOCUMENT.

                                       54
<PAGE>   60
         7.10.    Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.

         7.11.    No Joint Venture, Etc. Neither this Agreement nor any other
Operative Document nor any transaction contemplated hereby or thereby shall be
construed to (a) constitute a partnership or joint venture between Lessee and
any Lessor Party or (b) impose upon any Lessor Party any agency relationship
with or fiduciary duty to Lessee.

         7.12.    Usury Savings Clause. Nothing contained in this Agreement or
any other Operative Documents shall be deemed to require the payment of interest
or other charges by Lessee in excess of the amount the applicable Lessor Parties
may lawfully charge under applicable usury laws. In the event any Lessor Party
shall collect monies which are deemed to constitute interest which would
increase the effective interest rate to a rate in excess of that permitted to be
charged by applicable law, all such sums deemed to constitute excess interest
shall, upon such determination, at the option of Lessor, be returned to Lessee
or credited against other Lessee Obligations.

         7.13.    Confidentiality. No Lessor Party (other than Novellus) shall
disclose to any Person any information with respect to Lessee or any of its
Subsidiaries which is furnished pursuant to this Agreement or under the other
Operative Documents, except that any Lessor Party may disclose any such
information (a) to its own directors, officers, employees, auditors, counsel and
other advisors and to its Affiliates; (b) to any other Lessor Party; (c) which
is otherwise available to the public; (d) if required or appropriate in any
report, statement or testimony submitted to any Governmental Authority having or
claiming to have jurisdiction over such Lessor Party; (e) if required or
appropriate in response to any summons or subpoena; (f) in connection with any
litigation relating to the Operative Documents or the transactions contemplated
thereby; (g) to comply with any Requirement of Law applicable to such Lessor
Party; (h) to any Assignee Participant or Subparticipant or any prospective
Assignee Participant or Subparticipant, provided that such Assignee Participant
or Subparticipant or prospective Assignee Participant or Subparticipant agrees
to be bound by this Paragraph 7.13; or (i) otherwise with the prior consent of
Lessee; provided, however, that any disclosure made in violation of this
Agreement shall not affect the obligations of Lessee and its Subsidiaries under
this Agreement and the other Operative Documents.

         7.14.    Governing Law. This Agreement and the other Operative
Documents were accepted by the Lessor Parties in the state of California, which
state the parties agree has a substantial relationship to the parties and to the
underlying transaction embodied hereby. Accordingly, in all respects, including,
without limiting the generality of the foregoing, matters of construction,
validity, enforceability and performance, this Agreement and the other Operative
Documents and the obligations arising hereunder and thereunder shall be governed
by, and construed in accordance with, the laws of the state of California
applicable to contracts made and performed in such state and any applicable law
of the United States of America, except that at all times the provisions for
enforcement of Lessor's STATUTORY POWER OF SALE granted under the Lease
Agreement and the creation, perfection and enforcement of the real property and
security interests created pursuant thereto and pursuant to the other Operative
Documents shall be governed by and construed according to the law of the state
where the Property is located.

                                       55
<PAGE>   61
Except as provided in the immediately preceding sentence, Lessee hereby
unconditionally and irrevocably waives, to the fullest extent permitted by law,
any claim to assert that the law of any jurisdiction other than California
governs this Agreement and the other Operative Documents.

         7.15.    Consent to Jurisdiction. Lessee irrevocably submits to the
jurisdiction of: (a) any state or federal court sitting in the state of
California over any suit, action, or proceeding, brought by Lessee against
Lessor Parties, arising out of or relating to this Agreement or the other
Operative Documents; (b) any state or federal court sitting in the state where
the Property is located or the state in which Lessee's principal place of
business is located over any suit, action or proceeding, brought by Lessor
Parties against Lessee, arising out of or relating to this Agreement or the
other Operative Documents; and (c) any state court sitting in the county of the
state where the Property is located over any suit, action, or proceeding,
brought by Lessor Parties to exercise their STATUTORY POWER OF SALE under this
Agreement or any action brought by Lessor Parties to enforce their rights with
respect to the Collateral. Lessee irrevocably waives, to the fullest extent
permitted by law, any objection that Lessee may now or hereafter have to the
laying of venue of any such suit, action, or proceeding brought in any such
court and any claim that any such suit, action, or proceeding brought in any
such court has been brought in an inconvenient forum.

         UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY A
LENDER AFTER OCTOBER 3, 1989, CONCERNING LOANS AND OTHER CREDIT EXTENSIONS THAT
ARE NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE
BORROWER'S RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY
THE LENDER TO BE ENFORCEABLE.

                       [The first signature page follows.]

                                       56
<PAGE>   62
        IN WITNESS WHEREOF, Lessee, Lessor, the Participants and Agent have
caused this Agreement to be executed as of the day and year first above written.

LESSEE:                             NOVELLUS SYSTEMS, INC.

                                    By:______________________________________
                                          Name:______________________________
                                          Title:_____________________________

LESSOR:                             ABN AMRO LEASING, INC.

                                    By:______________________________________
                                          Name:______________________________
                                          Title:_____________________________

AGENT:                              ABN AMRO BANK N.V.

                                    By:______________________________________
                                          Name:______________________________
                                          Title:_____________________________

                                    By:______________________________________
                                          Name:______________________________
                                          Title:_____________________________

PARTICIPANTS:                       ABN AMRO BANK N.V.

                                    By:______________________________________
                                          Name:______________________________
                                          Title:_____________________________

                                    By:______________________________________
                                          Name:______________________________
                                          Title:_____________________________

                                       57
<PAGE>   63
                                   SCHEDULE I

                                  PARTICIPANTS

                                    PART A(1)

                  TRANCHE PERCENTAGES AND PROPORTIONATE SHARES
                          PRIOR TO THE COMPLETION DATE

<TABLE>
<CAPTION>
                              TRANCHE A          TRANCHE B         TRANCHE C       PROPORTIONATE
 PARTICIPANT                  PERCENTAGE         PERCENTAGE        PERCENTAGE           SHARE
 -----------                  ----------         ----------        ----------           -----
<S>                          <C>                 <C>               <C>             <C>
ABN AMRO Bank N.V.(1)         89.90000000%        7.10000000%               0%       97.00000000%
ABN AMRO Leasing, Inc.                  0%                 0%      3.00000000%        3.00000000%
TOTAL                         89.90000000%        7.10000000%      3.00000000%      100.00000000%
</TABLE>

                                    PART A(2)

                  TRANCHE PERCENTAGES AND PROPORTIONATE SHARES
                        ON AND AFTER THE COMPLETION DATE

<TABLE>
<CAPTION>
                              TRANCHE A          TRANCHE B         TRANCHE C       PROPORTIONATE
 PARTICIPANT                  PERCENTAGE         PERCENTAGE        PERCENTAGE           SHARE
 -----------                  ----------         ----------        ----------           -----
<S>                          <C>                 <C>               <C>             <C>
ABN AMRO Bank N.V.            86.00000000%       11.00000000%               0%       97.00000000%
ABN AMRO Leasing, Inc.                  0%                 0%      3.00000000%        3.00000000%

TOTAL                         86.00000000%       11.00000000%      3.00000000%      100.00000000%
</TABLE>

--------

(1) On the Completion Date, ABN AMRO shall sell and assign the Outstanding
Tranche A Participation Amount, Tranche A Percentage and Tranche A Portion to
Novellus in accordance with Paragraph 2.02(d) of this Agreement.

                                      I-1
<PAGE>   64
                            PART B - ADDRESSES, ETC.

ABN AMRO BANK N.V.

Applicable Participating Office:

ABN AMRO Bank N.V.
101 California Street, Suite 4550
San Francisco, CA 94111

Address for Notices:

ABN AMRO Bank N.V.
101 California Street, Suite 4550
San Francisco, CA 94111
Attention:  Sean Cutting
Telephone:  (415) 984-3718
Fax:  (415) 362-3524

ABN AMRO Bank N.V.
Agency Services
208 South LaSalle Street, Suite 1500
Chicago, IL  60604
Attn:  Josephine O'Brien
Telephone:  (312) 992-5091
Fax: (312) 992-5157

ABN AMRO Bank N.V.
101 California Street, Suite 4550
San Francisco, CA 94111
Attn: Joe Endoso
Tel. No: (415) 984-3718
Fax No: (415) 362-3524

ABN AMRO North America, Inc.
Capital Markets-Syndications Group
1325 Avenue of the Americas, 9th Floor
New York, NY 10019
Attn: Linda Boardman
Tel. No: (212) 314-1724
Fax No: (212) 314-1709

Wiring Instructions:

                                      I-2
<PAGE>   65
ABN AMRO Bank N.V.
New York, New York
RT/ABA No.:  026009580
Account Name:  ABN AMRO Bank N.V. - CPU
Account No.:  650-001-1789-41
Reference:  Novellus Systems, Inc. Synthetic Lease V

                                      I-3
<PAGE>   66
ABN AMRO LEASING, INC.

Applicable Participating Office:

ABN AMRO Leasing, Inc.
c/o ABN AMRO Bank N.V.
135 South LaSalle Street, Suite 740
Chicago, IL 60603

Address for Notices:

ABN AMRO Leasing, Inc.
c/o ABN AMRO Bank N.V.
135 South LaSalle Street, Suite 740
Chicago, IL 60603
Attention:  David M. Shipley
Telephone:     (312) 904-2183
Fax:           (312) 904-6217

ABN AMRO Bank N.V.
Agency Services
208 South LaSalle Street, Suite 1500
Chicago, IL  60604
Attn:  Josephine O'Brien
Telephone:     (312) 992-5091
Fax:           (312) 992-5157

Wiring Instructions:

ABN AMRO Leasing, Inc.

Bank Name:  LaSalle Bank, NA
RT/ABA No.:  071-000-505
Account Name:  ABN AMRO Leasing, Inc.
Account No.:  2226951
Reference:  Novellus Systems, Inc. Synthetic Lease V

                                      I-4
<PAGE>   67
                                  SCHEDULE 1.01

                                   DEFINITIONS

        "ABN AMRO" shall mean ABN AMRO Bank N.V.

        "Adjusted Net Income" shall mean, with respect to Lessee for any period,
the sum, determined on a consolidated basis in accordance with GAAP, of the
following:

                (a) The net income or net loss of Lessee and its Subsidiaries
        for such period before provision for income taxes;

                                                 plus

                (b) The sum (to the extent deducted in calculating net income or
        loss in clause (a) above) of (i) all Interest Expenses of Lessee and its
        Subsidiaries accruing during such period, (ii) all depreciation and
        amortization expenses of Lessee and its Subsidiaries accruing during
        such period, and (iii) all rental expenses of Lessee and its
        Subsidiaries accruing during such period (including Base Rent under both
        Lease Agreements but excluding any Base Rent or other rental expenses
        that are capitalized by the lessor during such period);

                                                minus

                (c) Fifty percent (50%) of all Capital Expenditures of Lessee
        and its Subsidiaries accruing during such period.

        "Advances" shall have the meaning given to that term in Subparagraph
2.01(a) of the Participation Agreement and shall include all amounts capitalized
pursuant to Subparagraph 2.03(c) of the Participation Agreement or otherwise.

        "Advance Request" shall have the meaning given to that term in
Subparagraph 2.03(a) of the Participation Agreement.

        "Affiliate" shall mean, with respect to any Person, (a) each Person
that, directly or indirectly, owns or controls, whether beneficially or as a
trustee, guardian or other fiduciary, five percent (5%) or more of any class of
Equity Securities of such Person, (b) each Person that controls, is controlled
by or is under common control with such Person or any Affiliate of such Person
or (c) each of such Person's officers, directors, joint venturers and partners;
provided, however, that in no case shall Lessor, Agent or any Participant (other
than Novellus) be deemed to be an Affiliate of Lessee or any of its Subsidiaries
for purposes of the Operative Documents. For the purpose of this definition,
"control" of a Person shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of its management or policies, whether
through the ownership of voting securities, by contract or otherwise.

                                     1.01-1
<PAGE>   68
        "Agent" shall mean ABN AMRO, acting in its capacity as Agent for the
Participants under the Operative Documents.

        "Agent's Fee Letter" shall mean the letter agreement dated as of April
11, 2001, between Lessee and Agent regarding certain fees payable by Lessee to
Agent.

        "Agent's Fees" shall have the meaning given to that term in Subparagraph
2.04(a) of the Participation Agreement.

        "Alternate Rental Rate" shall mean, for any Rental Period (or portion
thereof), the per annum rate equal to the Base Rate in effect from time to time
during such period plus the Applicable Margin, such rate to change from time to
time during such period as the Base Rate or Applicable Margin shall change.

        "Applicable Margin" shall mean:

                (a) Tranche A. With respect to the Outstanding Tranche A
        Participation Amounts:

                        (i) During all periods on or prior to the Completion
                Date, (A) 0.20% per annum with respect to the LIBOR Rental Rate,
                or (B) 0% per annum with respect to the Alternate Rental Rate;

                        (ii) During all periods after the Completion Date, 0%
                per annum;

                (b) Tranche B. With respect to the Outstanding Tranche B
        Participation Amounts:

                        (i) During all periods on or prior to the Completion
                Date, (A) 0.35% per annum with respect to the LIBOR Rental Rate,
                or (B) 0% per annum with respect to the Alternate Rental Rate;

                        (ii) During all periods after the Completion Date, 0.35%
                per annum;

                (c) Tranche C. With respect to the Outstanding Tranche C
        Participation Amounts, during all periods, whether prior to, on or after
        the Completion Date, (i) 1.80% per annum with respect to the LIBOR
        Rental Rate, or (ii) 0% per annum with respect to the Alternate Rental
        Rate;

provided, however, that each Applicable Margin set forth in subparagraphs
(a)(i), (b) and (c) of this definition shall be increased by two percent (2.0%)
per annum on the date an Event of Default occurs and shall continue at such
increased rate unless and until such Event of Default is waived in accordance
with the Operative Documents.

        "Applicable Participating Office" shall mean, with respect to any
Participant, (a) initially, its office designated as such in Part B of Schedule
I (or, in the case of any Participant which becomes a Participant by an
assignment pursuant to Subparagraph 7.05(b) of the Participation Agreement, its
office designated as such in the applicable Assignment Agreement) and (b)

                                     1.01-2
<PAGE>   69
subsequently, such other office or offices as such Participant may designate to
Agent as the office at which such Participant's interest in the Lease Agreement
will thereafter be maintained and for the account of which all payments of Rent
and other amounts payable to such Participant under the Operative Documents will
thereafter be made.

        "Appraisal" shall mean an appraisal of an interest in the Property or a
portion thereof in a form satisfactory to Lessor, Agent and the Required
Participants, prepared by an independent MAI appraiser that (a) complies with
the Financial Institutions Reform, Recovery and Enforcement Act of 1989 and all
other applicable Governmental Rules and (b) is approved by Lessor, Agent and the
Required Participants (at the time such appraiser is selected).

        "Appurtenant Rights" shall mean all easements and rights-of-way, strips
and gores of land, streets, ways, alleys, passages, sewer rights, water, water
courses, water rights and powers, air rights and development rights, liberties,
tenements, hereditaments and appurtenances of any nature whatsoever, in any way
belonging, relating or pertaining to any Land or the Improvements thereto and
the reversions, remainders, and all the estates, rights, titles, interests,
property, possession, claim and demand whatsoever, both in law and in equity,
of, in and to such Land and Improvements and every part and parcel thereof, with
the appurtenances thereto.

        "Assignee Participant" shall have the meaning given to that term in
Subparagraph 7.05(b) of the Participation Agreement.

        "Assignee Purchaser" shall have the meaning given to that term in
Subparagraph 5.03(b)of the Purchase Agreement.

        "Assignment" shall have the meaning given to that term in Subparagraph
7.05(b) of the Participation Agreement.

        "Assignment Agreement" shall have the meaning given to that term in
Subparagraph 7.05(b) of the Participation Agreement.

        "Assignment Effective Date" shall have, with respect to each Assignment
Agreement, the meaning set forth therein.

        "Assignment of Construction Agreements" shall have the meaning given to
that term in Subparagraph 2.11(a) of the Participation Agreement.

        "Assignment of Lease" shall have the meaning given to that term in
Subparagraph 2.11(b) of the Participation Agreement.

        "Assignor Participant" shall have the meaning given to that term in
Subparagraph 7.05(b) of the Participation Agreement.

        "Assumed Appraisal" shall have the meaning given to that term in
Subparagraph 3.02(h) of the Purchase Agreement.

        "Base Rate" shall mean, on any day, the greater of (a) the Prime Rate in
effect on such date and (b) the Federal Funds Rate for such day plus one-half
percent (0.50%).

                                     1.01-3
<PAGE>   70
        "Base Rent" shall have the meaning given to that term in Subparagraph
2.03(a) of the Lease Agreement.

        "Budget" shall mean the budget for the New Improvements delivered by
Lessee to Lessor pursuant to Paragraph 3.01 and Schedule 3.01 of the
Participation Agreement.

        "Business Day" shall mean any day on which (a) commercial banks are not
authorized or required to close in San Francisco, California, Chicago, Illinois
or New York, New York and (b) if such Business Day is related to a LIBOR Rental
Rate, dealings in Dollar deposits are carried out in the London interbank
market.

        "Capital Adequacy Requirement" shall have the meaning given to that term
in Subparagraph 2.12(d) of the Participation Agreement.

        "Capital Asset" shall mean, with respect to any Person, any tangible
fixed or capital asset owned or leased (in the case of a Capital Lease) by such
Person, or any expense incurred by such Person that is required by GAAP to be
reported as a non-current asset on such Person's balance sheet.

        "Capital Expenditures" shall mean, with respect to any Person and any
period, all expenses accrued by such Person during such period for the
acquisition of Capital Assets (including all indebtedness incurred or assumed in
connection with Capital Leases).

        "Capital Leases" shall mean any and all lease obligations that, in
accordance with GAAP, are required to be capitalized on the books of a lessee.

        "Cash Balances" shall mean, with respect to Lessee and its Subsidiaries
at any time, the sum, determined on a consolidated basis in accordance with
GAAP, of (a) the unrestricted, unencumbered cash of Lessee and its Subsidiaries
at such time and (b) the market value of unrestricted, unencumbered Cash
Equivalents and short-term marketable securities (that are classified as current
assets in accordance with GAAP) of Lessee and its Subsidiaries at such time. (In
calculating Cash Balances, Cash Equivalents and short-term marketable securities
shall be marked to market quarterly.)

        "Cash Collateral" shall mean:

                (a) United States Treasury Securities that mature not later than
        one year from the date of acquisition; and

                (b) Deposit accounts held or maintained by a commercial bank
        located in the United States and otherwise reasonably acceptable to
        Lessor and Agent with cash balances in the lawful currency of the United
        States and immediately available funds and that mature not later than
        the earlier of (i) one year from the date of acquisition and (ii) the
        Scheduled Expiration Date;

to the extent such securities and accounts are held and maintained in accordance
with the Cash Collateral Agreement and Lessor has a first priority perfected
security interest therein securing the Lessee Obligations.

                                     1.01-4
<PAGE>   71
        "Cash Collateral Agreement" shall have the meaning given to that term in
Subparagraph 2.11(a) of the Participation Agreement.

        "Cash Equivalents" shall mean:

                (a) Direct obligations of, or obligations the principal and
        interest on which are unconditionally guaranteed by, the United States
        of America or obligations of any agency of the United States of America
        to the extent such obligations are backed by the full faith and credit
        of the United States of America, in each case maturing within one year
        from the date of acquisition thereof;

                (b) Certificates of deposit maturing within one year from the
        date of acquisition thereof issued by a commercial bank or trust company
        organized under the laws of the United States of America or a state
        thereof or that is a Participant, provided that (A) such deposits are
        denominated in Dollars, (B) such bank or trust company has capital,
        surplus and undivided profits of not less than $100,000,000 and (C) such
        bank or trust company has certificates of deposit or other debt
        obligations rated at least A-1 (or its equivalent) by Standard and
        Poor's Ratings Group or P-1 (or its equivalent) by Moody's Investors
        Service, Inc.;

                (c) Open market commercial paper maturing within 270 days from
        the date of acquisition thereof issued by a corporation organized under
        the laws of the United States of America or a state thereof, provided
        such commercial paper is rated at least A-1 (or its equivalent) by
        Standard and Poor's Ratings Group or P-1 (or its equivalent) by Moody's
        Investors Service, Inc.; and

                (d) Any repurchase agreement entered into with a commercial bank
        or trust company organized under the laws of the United States of
        America or a state thereof or that is a Participant, provided that (A)
        such bank or trust company has capital, surplus and undivided profits of
        not less than $100,000,000, (B) such bank or trust company has
        certificates of deposit or other debt obligations rated at least A-1 (or
        its equivalent) by Standard and Poor's Ratings Group or P-1 (or its
        equivalent) by Moody's Investors Service, Inc., (C) the repurchase
        obligations of such bank or trust company under such repurchase
        agreement are fully secured by a perfected security interest in a
        security or instrument of the type described in clause (a), (b) or (c)
        above and (D) such security or instrument so securing the repurchase
        obligations has a fair market value at the time such repurchase
        agreement is entered into of not less than 100% of such repurchase
        obligations.

        "Casualty" shall mean any damage to, destruction of or decrease in the
value of all or any portion of any of the Property as a result of fire, flood,
earthquake or other natural cause; the actions or inactions of any Person or
Persons (whether willful or unintentional and whether or not constituting
negligence); or any other cause.

        "Casualty and Condemnation Proceeds" shall mean all awards, damages,
compensation, reimbursement and other payments made or to be made to Lessee,
Lessor or Agent from any

                                     1.01-5
<PAGE>   72
insurer, Governmental Authority or other Person (other than Lessee or any Lessor
Party) on account of any Casualty or Condemnation.

        "Change of Control" shall mean, with respect to Lessee, (a) the
acquisition by any person or group of persons (within the meaning of Section 13
or 14 of the Securities Exchange Act of 1934 (as amended, the "Exchange Act"))
of (i) beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under the Exchange Act) of twenty-five
percent (25%) or more of the outstanding Equity Securities of Lessee entitled to
vote for members of the board of directors, or (ii) all or substantially all of
the assets of Lessee and its Subsidiaries taken as a whole; or (b) during any
period of twelve (12) consecutive calendar months, individuals who are directors
of Lessee on the first day of such period ("Initial Directors") and any
directors of Lessee who are specifically approved by two-thirds of the Initial
Directors and previously-approved Directors shall cease to constitute a majority
of the Board of Directors of Lessee before the end of such period.

        "Change of Law" shall have the meaning given to that term in
Subparagraph 2.12(b) of the Participation Agreement.

        "Closing Date" shall have the meaning given to that term in Subparagraph
2.01(a) of the Participation Agreement.

        "Collateral" shall mean the Property Collateral, the Cash Collateral and
all other property in which any Lessor Party (other than Novellus) has a Lien to
secure any of the Lessee Obligations.

        "Commencement Date" shall have the meaning given to that term in
Subparagraph 2.02(a) of the Lease Agreement.

        "Commitment" shall mean, with respect to any Participant at any time,
such Participant's Proportionate Share of the Total Commitment at such time.

        "Commitment Extension Fee" shall have the meaning given to that term in
Subparagraph 2.04(c) of the Participation Agreement.

        "Commitment Extension Request" shall have the meaning given to that term
in Subparagraph 2.09(a) of the Participation Agreement.

        "Commitment Fee Percentage" shall mean 0.30% per annum.

        "Commitment Fees" shall have the meaning given to that term in
Subparagraph 2.04(b) of the Participation Agreement.

        "Commitment Period" shall have the meaning given to that term in
Subparagraph 2.01(a) of the Participation Agreement.

        "Commitment Termination Date" shall have the meaning given to that term
in Subparagraph 2.01(a) of the Participation Agreement.

                                     1.01-6
<PAGE>   73
        "Completion" shall have the meaning given to that term in Subparagraph
3.05(c) of the Construction Agency Agreement. "Complete", "Completed" and
"Completion" shall have comparable meanings.

        "Completion Date" shall mean the first date on which all of the
conditions set forth in Subparagraph 3.05(c) of the Construction Agency
Agreement are satisfied.

        "Completion Date Appraisal" shall mean, with respect to the Property or
any portion thereof on or as of a recent date prior to the Closing Date, an
Appraisal that assesses at such time the Fair Market Value of Lessor's interest
in such Property on the Completion Date and as improved in accordance with the
Plans and Specifications for the New Improvements.

        "Completion Delay Event" shall mean (a) the occurrence of any event or
the existence of any condition that causes the likely Completion Date to be
later than the Outside Completion Date and (b) the delivery by Lessee to any
Lessor Party (other than Novellus) at any time of any notice, certificate or
other writing which indicates that the likely Completion Date will be later than
the Outside Completion Date.

        "Compliance Certificate" shall have the meaning given to that term in
Subparagraph 5.01(a) of the Participation Agreement.

        "Condemnation" shall mean any condemnation, requisition, confiscation,
seizure or other taking or sale of the use, access, occupancy or other right in
or to all or any portion of any of the Property (whether wholly or partially,
temporarily or permanently), by or on account of any actual or threatened
eminent domain proceeding or other taking of action by any Governmental
Authority or other Person having the power of eminent domain, including an
action by any such Governmental Authority or Person to change the grade of, or
widen the streets adjacent to, such Property or alter the pedestrian or
vehicular traffic flow to such Property so as to result in change in access to
such Property, or by or on account of an eviction by paramount title or any
transfer made in lieu of any such proceeding or action. A "Condemnation" shall
be deemed to have occurred on the earliest of the dates that use, access,
occupancy or other right is taken.

        "Conforming Bid" shall have the meaning given to that term in
Subparagraph 3.02(c) of the Purchase Agreement.

        "Construction Agency Agreement" shall have the meaning given to that
term in Subparagraph 2.01(a) of the Participation Agreement.

        "Construction Agreements" shall have the meaning given to that term in
Paragraph 3.01 of the Construction Agency Agreement.

        "Construction Period" shall mean the period that begins on the Closing
Date and ends on the earlier of (a) the first date on which Substantial
Completion occurs and (b) the Outside Completion Date.

        "Construction Period Ground Lease Fair Market Rent" shall have the
meaning given to that term in Subparagraph 2.03(a) of the Ground Lease.

                                     1.01-7
<PAGE>   74
        "Construction Termination Event" shall mean (a) the occurrence or
existence of any Cost Overrun Event or Completion Delay Event, (b) the
incurrence by any Lessor Party of any liabilities, losses, damages or expenses
excluded from Lessee's obligations under Paragraph 7.03 of the Participation
Agreement by the proviso to such paragraph, (c) the incurrence by any Lessor
Party of any increased costs or reduced amounts excluded from Lessee's
obligations under Subparagraph 2.12(c) of the Participation Agreement by the
proviso to such subparagraph or (d) the occurrence or existence of any loss or
liability excluded from Lessee's obligations under Paragraph 3.02 of the Lease
Agreement by the proviso to such paragraph.

        "Contingent Obligation" shall mean, with respect to any Person, (a) any
Guaranty Obligation of that Person; and (b) any direct or indirect obligation or
liability, contingent or otherwise, of that Person (i) in respect of any Surety
Instrument issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments, (ii) as a partner or
joint venturer in any partnership or joint venture, (iii) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever
performed or tendered, or (iv) in respect to any Rate Contract that is not
entered into in connection with a bona fide hedging operation that provides
offsetting benefits to such Person. The amount of any Contingent Obligation
shall (subject, in the case of Guaranty Obligations, to the last sentence of the
definition of "Guaranty Obligation") be deemed equal to the maximum reasonably
anticipated liability in respect thereof, and shall with respect to item (b)(iv)
of this definition be marked to market on a current basis.

        "Contractual Obligation" of any Person shall mean, any indenture, note,
lease, loan agreement, security, deed of trust, mortgage, security agreement,
guaranty, instrument; contract, agreement or other form of contractual
obligation or undertaking to which such Person is a party or by which such
Person or any of its property is bound.

        "Cost Overrun" shall mean the amount, if any, by which:

                (a) The aggregate cost to acquire the Property and Complete the
        New Improvements, less that portion of such cost that is payable or
        reimbursable by an insurer, contractor or other party (other than
        Lessor, Lessee or Participants);

                                                   exceeds

                (b) The greater of (i) the Total Commitment and (ii) the fair
        market value of the Property on the Completion Date.

        "Cost Overrun Event" shall mean (a) the delivery by Lessee of an Advance
Request for any Advance that will reduce the Unused Total Commitment to $0 prior
to the Completion Date, (b) the occurrence of any event or the existence of any
condition that causes the likely aggregate remaining cost for Completion of the
New Improvements at any time to exceed the Unused Total Commitment at such time
or (c) the delivery by Lessee to any Lessor Party at any time of any notice,
certificate or other writing which indicates that the likely aggregate remaining
cost for

                                     1.01-8
<PAGE>   75
Completion of the New Improvements at such time will exceed the Unused Total
Commitment at such time.

        "Credit Event" shall mean the making of each Advance, the selection of a
new Rental Period or the exercise of the Partial Purchase Option or Marketing
Option under the Purchase Agreement.

        "Current Appraisal" shall have the meaning given to that term in
Subparagraph 3.02(h) of the Purchase Agreement.

        "Debt Service Coverage Ratio" shall mean, with respect to Lessee for any
period, the ratio, determined on a consolidated basis in accordance with GAAP,
of:

                (a) The Adjusted Net Income of Lessee for such period;

                                       to

                (b) The sum of (i) all Interest Expenses of Lessee and its
        Subsidiaries accruing during such period, (ii) all rental expenses of
        Lessee and its Subsidiaries accruing and during such period (including
        Base Rent under the Lease Agreement but excluding any Base Rent or other
        rental expenses that are capitalized by the lessor during such period),
        and (iii) 25% of all payments of principal (or, in the case of Capital
        Leases, amounts attributable to principal) of Funded Indebtedness
        (excluding Synthetic Lease Obligations) paid or scheduled to be paid by
        Lessee and its Subsidiaries due within one year.

        "Default" shall mean any Event of Default under the Lease Agreement or
any event or circumstance not yet constituting an Event of Default under the
Lease Agreement which, with the giving of any notice or the lapse of any period
of time or both, would become an Event of Default under the Lease Agreement.

        "Defaulting Participant" shall mean a Participant which has failed to
fund its portion of any Advance which it is required to fund under the
Participation Agreement and has continued in such failure for three (3) Business
Days after written notice from Agent.

        "Deposit Account Control Agreement" shall have the meaning given to that
term in Subparagraph 2.01(b) of the Cash Collateral Agreement.

        "Deposit Accounts" shall have the meaning given to that term in
Subparagraph 2.01(a) of the Cash Collateral Agreement.

        "Depositary Bank" shall have the meaning given to that term in Paragraph
2.02 of the Cash Collateral Agreement.

        "Designated Purchaser" shall have the meaning given to that term in
Subparagraph 3.02(e) of the Purchase Agreement.

                                     1.01-9
<PAGE>   76
        "Dollars" and "$" shall mean the lawful currency of the United States of
America and, in relation to any payment under the Operative Documents, same day
or immediately available funds.

        "Economically Defeased Portion of Synthetic Lease Obligations" shall
mean the remainder of (a) the sum of the "Tranche A" portions, "Tranche B"
portions and "Tranche C" portions of leases constituting Economically Defeased
Synthetic Lease Obligations, minus (b) the aggregate amount of the "Tranche A"
portions of such leases that the lessee has sold, assigned or otherwise
transferred to any other Person.

        "Economically Defeased Synthetic Lease Obligations" shall mean Synthetic
Lease Obligations under synthetic leases in which the lessee has secured Lessee
Obligations in respect of the "Tranche B" portion of such leases and the
"Tranche C" portion of such leases with cash and/or Cash Equivalents and
initially has purchased (or fully secured with treasury securities, cash or Cash
Equivalents, with an obligation to purchase the same upon completion of
construction of the leased property) a 100% participation interest in the
"Tranche A" portion of such leases.

        "Eligible Assignee" shall mean (a) a commercial bank organized under the
laws of the United States, or any state thereof, and having a combined capital
and surplus of at least $100,000,000; (b) a commercial bank organized under the
laws of any other country which is a member of the Organization for Economic
Cooperation and Development (the "OECD"), or a political subdivision of any such
country, and having a combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or agency located in the
United States; (c) a Person that is (i) a Subsidiary of a Participant, (ii) a
Subsidiary of a Person of which a Participant is a Subsidiary, or (iii) a Person
of which a Participant is a Subsidiary; or (d) any other Person (other than a
natural person) that is approved by Lessor, Agent and, if no Default has
occurred and is continuing, Lessee (which consent of Lessor, Agent and Lessee
shall not be unreasonably withheld). Notwithstanding the foregoing, Novellus is
an Eligible Assignee of the Tranche A Percentage, Tranche A Proportionate Share
and Outstanding Tranche A Participation Amount.

        "Eligible Project Costs" shall mean, on any date, the remainder of:

                (a) The sum of (i) the Outstanding Lease Amount on such date,
        plus (ii) all Prepaid Rent on such date;

                                                minus

                (b) All amounts included in such sum that do not constitute
        Project Costs, except for the amounts of any costs, expenses,
        liabilities or losses caused by or arising from any failure by Lessee to
        comply with any of its obligations under the Operative Documents
        (including its insurance obligations), any representation by Lessee in
        any of the Operative Documents not being true, any negligence or willful
        misconduct of Lessee, or any claim by any third-party against Lessee (or
        against any Lessor Party) based upon any alleged action or inaction by
        Lessee.

                                    1.01-10
<PAGE>   77
        "Employee Benefit Plan" shall mean any employee benefit plan within the
meaning of section 3(3) of ERISA maintained or contributed to by Lessee or any
ERISA Affiliate, other than a Multiemployer Plan.

        "Environmental Laws" shall mean the Clean Air Act, 42 U.S.C. Section
7401 et seq.; the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et
seq.; the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Section 6901
et seq.; the Comprehensive Environment Response, Compensation and Liability Act
of 1980 (including the Superfund Amendments and Reauthorization Act of 1986,
"CERCLA"), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control Act, 15
U.S.C. Section 2601 et seq.; the Occupational Safety and Health Act, 29 U.S.C.
Section 651; the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. Section 11001 et seq.; the Mine Safety and Health Act of 1977, 30 U.S.C.
Section 801 et seq.; the Safe Drinking Water Act, 42 U.S.C. Section 300f et
seq.; and all other Governmental Rules relating to the protection of human
health and the environment, including all Governmental Rules pertaining to
reporting, licensing, permitting, transportation, storage, disposal,
investigation, and remediation of emissions, discharges, releases, or threatened
releases of Hazardous Materials into the air, surface water, groundwater, or
land, or relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of Hazardous Materials.

        "Equity Securities" of any Person shall mean (a) all common stock,
preferred stock, participations, shares, partnership interests or other equity
interests in and of such Person (regardless of how designated and whether or not
voting or non-voting) and (b) all warrants, options and other rights to acquire
any of the foregoing.

        "ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as the same may from time to time be amended or supplemented, including any
rules or regulations issued in connection therewith.

        "ERISA Affiliate" shall mean any Person which is treated as a single
employer with Lessee under Section 414 of the IRC.

        "Event of Default" shall have the meaning given to that term in
Paragraph 5.01 of the Lease Agreement.

        "Exhibit B Supplement" shall have the meaning given to that term in
Subparagraph 2.03(a) of the Participation Agreement.

        "Expiration Date" shall mean the earlier of (a) the Scheduled Expiration
Date under the Lease Agreement, as such date may be extended pursuant to this
Agreement, and (b) the Termination Date for the Lease Agreement, if the Lease
Agreement is terminated prior to its Scheduled Expiration Date in accordance
with its terms.

        "Expiration Date Appraisal" shall mean, with respect to the Property or
any portion thereof on a recent date prior to the Closing Date, an Appraisal
that assesses at such time the Fair Market Value of Lessor's interest in such
Property on the Scheduled Expiration Date and as improved in accordance with the
Plans and Specifications for the New Improvements.

                                    1.01-11
<PAGE>   78
        "Expiration Date Purchase Option" shall have the meaning given to that
term in Subparagraph 3.01(b) of the Purchase Agreement.

        "Fair Market Value" shall mean, with respect to any of the Property or
any portion thereof, the maximum reasonable amount (not less than zero) that
would be paid in cash in an arm's-length transaction between an informed and
willing purchaser and an informed and willing seller, neither of whom is under
any compulsion to purchase or sell, for the ownership of the Property or such
portion.

        "FASB 13" shall mean Financial Accounting Standards Board Statement No.
13.

        "Federal Funds Rate" shall mean, for any day, the rate per annum set
forth in the weekly statistical release designated as H.15(519), or any
successor publication, published by the Federal Reserve Board (including any
such successor publication, "H.15 (519)") for such day opposite the caption
"Federal Funds (Effective)". If on any relevant day, such rate is not yet
published in H.15 (519), the rate for such day shall be the rate set forth in
the daily statistical release designated as the Composite 3:30 p.m. Quotations
for U.S. Government Securities, or any successor publication, published by the
Federal Reserve Bank of New York (including any such successor publication, the
"Composite 3:30 p.m. Quotations") for such day under the caption "Federal Funds
Effective Rate". If on any relevant day, such rate is not yet published in
either H.15 (519) or the Composite 3:30 p.m. Quotations, the rate for such day
shall be the arithmetic means, as determined by Agent, of the rates quoted to
Agent for such day by three (3) Federal funds brokers of recognized standing
selected by Agent.

        "Federal Reserve Board" shall mean the Board of Governors of the Federal
Reserve System.

        "Financial Statements" shall mean, with respect to any accounting period
for any Person, statements of income, shareholders' equity and cash flows of
such Person for such period, and a balance sheet of such Person as of the end of
such period, setting forth in each case in comparative form figures for the
corresponding period in the preceding fiscal year if such period is less than a
full fiscal year or, if such period is a full fiscal year, corresponding figures
from the preceding annual audit, all prepared in reasonable detail and in
accordance with GAAP.

        "Force Majeure Events" shall mean any Acts of God, riots, civil
commotions, insurrections, wars, strikes, lockouts or other events beyond the
control of Lessee, except for (a) any such events that are known to or should be
known to Lessee on the Closing Date; (b) any such events that are caused by the
financial condition of Lessee or the failure of Lessee to make any payments
under any Construction Agreements, any Operative Documents or any related
agreements or (c) any events that could be remedied through the payment of money
or the exercise of other commercially reasonable efforts.

        "Funded Indebtedness" of any Person shall mean, without duplication:

                (a) All obligations of such Person evidenced by notes, bonds,
        debentures or other similar instruments and all other obligations of
        such Person for borrowed money (including obligations to repurchase
        receivables and other assets sold with recourse);

                                    1.01-12
<PAGE>   79
                (b) All obligations of such Person for the deferred purchase
        price of property or services (including obligations under letters of
        credit and other credit facilities which secure or finance such purchase
        price but excluding trade payables incurred by such Person in the
        ordinary course of its business on ordinary terms and not overdue) and
        all Synthetic Lease Obligations of such Person (excluding the
        Economically Defeased Portion of Synthetic Lease Obligations);

                (c) All obligations of such Person under conditional sale or
        other title retention agreements with respect to property acquired by
        such Person (to the extent of the value of such property if the rights
        and remedies of the seller or lender under such agreement in the event
        of default are limited solely to repossession or sale of such property);
        and

                (d) All obligations of such Person as lessee under or with
        respect to Capital Leases.

        "Funded Indebtedness/Capital Ratio" shall mean, with respect to Lessee
at any time, the ratio, determined on a consolidated basis in accordance with
GAAP, of:

                (a) The Funded Indebtedness of Lessee and its Subsidiaries at
        such time;

                                       to

               (b) The sum of (i) the Funded Indebtedness of Lessee and its
        Subsidiaries at such time, plus (ii) the Tangible Net Worth of Lessee
        and its Subsidiaries at such time.

        "GAAP" shall mean generally accepted accounting principles and practices
as in effect in the United States of America from time to time, consistently
applied.

        "Governmental Authority" shall mean any domestic or foreign national,
state or local government, any political subdivision thereof, any department,
agency, authority or bureau of any of the foregoing, or any other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including, without limitation, the
Federal Deposit Insurance Corporation, the Federal Reserve Board, the
Comptroller of the Currency, any central bank or any comparable authority.

        "Governmental Charges" shall mean taxes, levies, assessments, fees,
imposts, duties, licenses, recording charges, claims or other charges imposed by
any Governmental Authority.

        "Governmental Rule" shall mean any law, rule, regulation, ordinance,
order, code, interpretation, judgment, decree, directive, guidelines, policy or
similar form of decision of any Governmental Authority.

        "Ground Lease" shall have the meaning given to that term in Subparagraph
2.01(a) of the Participation Agreement.

        "Ground Lease Commencement Date" shall have the meaning given to that
term in Paragraph 2.02 of the Ground Lease.

                                    1.01-13
<PAGE>   80
        "Ground Lease Event of Default" shall have the meaning given to that
term in Paragraph 5.01 of the Ground Lease.

        "Ground Lease Expiration Date" shall have the meaning given to that term
in Paragraph 4.02 of the Ground Lease.

        "Ground Lease Property" shall have the meaning given to that term in
Paragraph 2.01 of the Ground Lease.

        "Ground Lease Scheduled Expiration Date" shall have the meaning given to
that term in Paragraph 2.02 of the Ground Lease.

        "Ground Lessee" shall have the meaning given to that term in the
introductory paragraph of the Ground Lease.

        "Ground Lessor" shall have the meaning given to that term in the
introductory paragraph of the Ground Lease.

        "Guaranty Obligation" shall mean, with respect to any Person, any direct
or indirect liability of that Person with respect to any indebtedness, lease,
dividend, letter of credit or other obligation (the "primary obligations") of
another Person (the "primary obligor"), including any obligation of that Person,
whether or not contingent, (a) to purchase, repurchase or otherwise acquire such
primary obligations or any property constituting direct or indirect security
therefor, or (b) to advance or provide funds (i) for the payment or discharge of
any such primary obligation, or (ii) to maintain working capital or equity
capital of the primary obligor or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
the primary obligor, or (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation, or (d) otherwise to assure or hold harmless the holder of any such
primary obligation against loss in respect thereof. The amount of any Guaranty
Obligation shall be deemed equal to the stated or determinable amount of the
primary obligation in respect of which such Guaranty Obligation is made or, if
not stated or if indeterminable, the maximum reasonably anticipated liability in
respect thereof.

        "Hazardous Materials" shall mean all chemical substances, pollutants,
contaminants or hazardous or toxic substances, materials or wastes, whether
solid, liquid, or gaseous in nature, and all other materials, substances and
wastes which are classified or regulated as "hazardous," "toxic" or similar
descriptions under any Environmental Law or which are hazardous, toxic, harmful
or dangerous to the environment or human health.

        "Improvements" shall mean all buildings, structures, facilities,
fixtures and other improvements of every kind and description now or hereafter
located on any of the Land, including (a) all parking areas, roads, driveways,
walks, fences, walls, drainage facilities and other site improvements; (b) all
water, sanitary and storm sewer, drainage, electricity, steam, gas, telephone
and other utility equipment and facilities, all plumbing, lighting, heating,
ventilating, air-conditioning, refrigerating, incinerating, compacting, fire
protection and sprinkler, surveillance and security, public address and
communications equipment and systems, partitions, elevators, escalators, motors,
machinery, pipes, fittings and other items of equipment of every

                                    1.01-14
<PAGE>   81
kind and description now or hereafter located on such Land or attached to the
Improvements thereto which by the nature of their location thereon or attachment
thereto are real property under applicable law; and (c) all Modifications to
such Land or its Improvements, except for any Modifications removed by Lessee
from the Property pursuant to Subparagraph 3.10 of the Lease Agreement.

        "Indebtedness" of any Person shall mean, without duplication:

                (a) All obligations of such Person evidenced by notes, bonds,
        debentures or other similar instruments and all other obligations of
        such Person for borrowed money (including obligations to repurchase
        receivables and other assets sold with recourse);

                (b) All obligations of such Person for the deferred purchase
        price of property or services (including obligations under letters of
        credit and other credit facilities which secure or finance such purchase
        price and obligations under "synthetic" leases);

                (c) All obligations of such Person under conditional sale or
        other title retention agreements with respect to property acquired by
        such Person (to the extent of the value of such property if the rights
        and remedies of the seller or lender under such agreement in the event
        of default are limited solely to repossession or sale of such property);

                (d) All obligations of such Person as lessee under or with
        respect to Capital Leases;

                (e) All non-contingent payment or reimbursement obligations of
        such Person under or with respect to Surety Instruments;

                (f) All net obligations of such Person, contingent or otherwise,
        under or with respect to Rate Contracts;

                (g) All Guaranty Obligations of such Person with respect to the
        obligations of other Persons of the types described in clauses (a) - (f)
        above and all other Contingent Obligations of such Person; and

                (h) All obligations of other Persons of the types described in
        clauses (a) - (f) above to the extent secured by (or for which any
        holder of such obligations has an existing right, contingent or
        otherwise, to be secured by) any Lien in any property (including
        accounts and contract rights) of such Person, even though such Person
        has not assumed or become liable for the payment of such obligations.

        "Indemnified Taxes" shall mean all income taxes, stamp taxes, sales
taxes, use taxes, rental taxes, gross receipts taxes, property (tangible and
intangible) taxes, franchise taxes, excise taxes, value added taxes, turnover
taxes, withholding taxes and other taxes and Governmental Charges, together with
any and all assessments, penalties, fines, additions and interest thereon,
except:

                                    1.01-15
<PAGE>   82
                (a) Net income taxes and franchise taxes in lieu of net income
        taxes imposed on any Lessor Party by its jurisdiction of incorporation
        or, in the case of any Participant, the jurisdiction in which its
        Applicable Participating Office is located (provided, however, that this
        definition shall not be construed to prevent a payment from being made
        on an after-tax basis);

                (b) Any tax or other Governmental Charge that has not become a
        Lien on any of the Property and that Lessee is contesting pursuant to
        Paragraph 3.12 of the Lease Agreement (but only while Lessee is so
        contesting such tax or Governmental Charge); or

                (c) Any tax or other Governmental Charge that is imposed upon an
        Indemnitee primarily as a result of the gross negligence or willful
        misconduct of such Indemnitee itself (as opposed to gross negligence or
        willful misconduct imputed to such Indemnitee), but not taxes or other
        Governmental Charges imposed as a result of ordinary negligence of such
        Indemnitee.

        "Indemnitees" shall mean the Lessor Parties and their Affiliates and
their respective directors, officers, employees, agents, attorneys and advisors.

        "Indemnity Amount" shall have the meaning given to that term in
Subparagraph 3.02(g) of the Purchase Agreement.

        "Ineligible Project Costs" shall have the meaning given to that term in
Subparagraph 2.03(c) of the Participation Agreement.

        "Initial Bid" shall have the meaning given to that term in Subparagraph
3.02(b) of the Purchase Agreement.

        "Initial Marketing Period" shall have the meaning given to that term in
Subparagraph 3.02(b) of the Purchase Agreement.

        "Insurance Requirements" shall mean all terms, conditions and
requirements imposed by the policies of insurance which Lessee is required to
maintain by the Operative Documents.

        "Interest Component" shall have the meaning given to that term in
Subparagraph 2.03(a) of the Lease Agreement.

        "Interest Expenses" shall mean, with respect to any Person for any
period, the sum, determined on a consolidated basis in accordance with GAAP, of
(a) all interest accruing on the Indebtedness of such Person during such period
(including, without limitation, interest attributable to Capital Leases) plus
(b) all fees in respect of outstanding letters of credit payable by such Person
and accruing during such period.

        "Investment" of any Person shall mean any loan or advance of funds by
such Person to any other Person (other than advances to employees of such Person
for moving and travel expenses, drawing accounts and similar expenditures in the
ordinary course of business), any purchase or other acquisition of any Equity
Securities or Indebtedness of any other Person, any capital contribution by such
Person to or any other investment by such Person in any other

                                    1.01-16
<PAGE>   83
Person (including any Guaranty Obligations of such Person and any indebtedness
of such Person of the type described in clause (h) of the definition of
"Indebtedness" on behalf of any other Person); provided, however, that
Investments shall not include (a) accounts receivable or other indebtedness owed
by customers of such Person which are current assets and arose from sales of
inventory in the ordinary course of such Person's business or (b) prepaid
expenses of such Person incurred and prepaid in the ordinary course of business.

        "IRC" shall mean the Internal Revenue Code of 1986.

        "Issues and Profits" shall mean all present and future rents, royalties,
issues, profits, receipts, revenues, income, earnings and other benefits
accruing from any of the Land, Improvements or Appurtenant Rights (whether in
the form of accounts, chattel paper, instruments, documents, investment
property, general intangibles or otherwise) including all rents and other
amounts payable pursuant to any Subleases.

        "Land" shall mean all lots, pieces, tracts or parcels of land described
in Exhibit A to the Lease Agreement and leased by Lessee pursuant to the Lease
Agreement.

        "Lease Agreement" shall have the meaning given to that term in
Subparagraph 2.01(a) of the Participation Agreement.

        "Lease Extension Request" shall have the meaning given to that term in
Subparagraph 2.09(b) of the Participation Agreement.

        "Leasehold Mortgagee" shall have the meaning given to that term in
Paragraph 3.07 of the Ground Lease.

        "Leasehold Mortgages" shall have the meaning given to that term in
Paragraph 3.07 of the Ground Lease.

        "Lease Reduction Payments" shall mean each of the following to the
extent applied to reduce the Outstanding Lease Amount pursuant to the Operative
Documents:

                (a) The Principal Component of Base Rent;

                (b) Casualty and Condemnation Proceeds;

                (c) The purchase price paid for the Property (or any portion
        thereof) by Lessee, an Assignee Purchaser or a Designated Purchaser
        pursuant to the Purchase Agreement;

                (d) The Residual Value Guaranty and Indemnity Amount paid by
        Lessee pursuant to the Purchase Agreement;

                (e) Any proceeds received by Lessee from any sale of the
        Property after the Expiration Date if such Property is retained by
        Lessor after such Expiration Date pursuant to the Purchase Agreement;

                                    1.01-17
<PAGE>   84
                (f) Any proceeds received by any Lessor Party from the exercise
        of any of its remedies under the Operative Documents after the
        occurrence of an Event of Default under the Lease Agreement; and

                (g) Any other amount received by Lessor that Lessee, Lessor and
        Agent agree shall be applied to reduce the Outstanding Lease Amount.

        "Lessee" shall mean Novellus Systems, Inc., acting in its capacity as
Lessee under the Operative Documents.

        "Lessee Obligations" shall mean and include all liabilities and
obligations owed by Lessee to any Lessor Party under any of the Operative
Documents of every kind and description and however arising (whether direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising), including the obligation of Lessee to pay Rent, to pay the
Residual Value Guaranty Amount, Indemnity Amount and/or Outstanding Lease Amount
and to pay all interest, fees, charges, expenses, attorneys' fees and
accountants' fees chargeable to Lessee or payable by Lessee under the Operative
Documents.

        "Lessee Security Documents" shall mean and include the Lease Agreement,
the Cash Collateral Agreement, the Assignment of Construction Agreements, the
Ground Lease and all other instruments, agreements, certificates, opinions and
documents (including Uniform Commercial Code financing statements and fixture
filings and landlord waivers) delivered to any Lessor Party in connection with
any Collateral or to secure the Lessee Obligations.

        "Lessor" shall mean ABN AMRO Leasing, Inc., acting in its capacity as
Lessor under the Operative Documents.

        "Lessor Deed of Trust" shall have the meaning given to that term in
Subparagraph 2.11(b) of the Participation Agreement.

        "Lessor Liens" shall mean any Liens or other interests in any of the
Property of any Person other than Lessee or a Lessor Party arising as a result
of (a) any transfer or assignment by Lessor to such Person of any of Lessor's
interests in such Property in violation of any of the Operative Documents or (b)
any claim against Lessor by any such Person unrelated to any of the Operative
Documents or the transactions contemplated thereby.

        "Lessor Obligations" shall mean and include all liabilities and
obligations owed by Lessor to Agent or any Participant under any of the
Operative Documents of every kind and description and however arising (whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter arising), including the obligation of Lessor to share payments made
by Lessee to Lessor under the Operative Documents as provided in Paragraph 2.06
of the Participation Agreement.

        "Lessor Parties" shall mean Lessor, the Participants and Agent.

        "Lessor Security Agreement" shall have the meaning given to that term in
Subparagraph 2.11(b) of the Participation Agreement.

                                    1.01-18
<PAGE>   85
        "LIBO Rate" shall mean, with respect to any Rental Period, a rate per
annum equal to the quotient of (a) the arithmetic mean (rounded upward if
necessary to the nearest 1/16 of one percent) of the rates per annum appearing
on the Telerate Page 3750 (or any successor publication) on the second Business
Day prior to the first day of such Rental Period at or about 11:00 A.M. (London
time) (for delivery on the first day of such Rental Period) for a term
comparable to such Rental Period (or of one (1) month for any Rental Period of
less than one (1) month duration), divided by (b) one minus the Reserve
Requirement in effect from time to time. If for any reason rates are not
available as provided in clause (a) of the preceding sentence, the rate to be
used in clause (a) shall be, the arithmetic mean (rounded upward if necessary to
the nearest 1/16 of one percent) of the rates per annum at which Dollar deposits
are offered by each of the Reference Banks to prime banks in the London
interbank market on the second Business Day prior to the first day of such
Rental Period at or about 11:00 A.M. (London time) (for delivery on the first
day of such Rental Period) in an amount substantially equal to such Reference
Bank's Proportionate Share of the Outstanding Lease Amount or Advance, as the
case may be, and for a term comparable to such Rental Period. The LIBO Rate
shall be adjusted automatically as of the effective date of any change in the
Reserve Requirement.

        "LIBOR Rental Rate" shall mean, for any Rental Period and Portion, the
per annum rate equal to the LIBO Rate for such Rental Period and Portion, plus
the Applicable Margin, such rate to change from time to time during such period
as the Applicable Margin shall change.

        "Lien" shall mean, with respect to any property, any security interest,
mortgage, pledge, lien, charge or other encumbrance in, of, or on such property
or the income therefrom, including the interest of a vendor or lessor under a
conditional sale agreement, Capital Lease, "synthetic" lease or other title
retention agreement, or any agreement to provide any of the foregoing, and the
filing of any financing statement or similar instrument under the Uniform
Commercial Code or comparable law of any jurisdiction.

        "Major Casualty" shall mean, with respect to the Property, any Casualty
affecting the Property where (a) the damage to the Property is treated by any
insurer of the Property as a total loss; (b) the Property cannot reasonably be
repaired and restored prior to the expiration of the Term of the Lease to the
condition in which it existed immediately prior to such Casualty; or (c) the
reasonably anticipated cost to repair and restore the Property to the condition
in which it existed immediately prior to such Casualty would exceed forty
percent (40%) of the Outstanding Lease Amount.

        "Major Condemnation" shall mean, with respect to the Property, any
Condemnation affecting the Property where (a) all or substantially all of the
Property is taken by such Condemnation; (b) the Property cannot reasonably be
repaired and restored to the condition in which it existed immediately prior to
such Condemnation; or (c) the reasonably anticipated cost to repair and restore
the Property to the condition in which it existed immediately prior to such
Condemnation would exceed forty percent (40%) of the Outstanding Lease Amount.

        "Majority Participants" shall mean (a) at any time the aggregate
Outstanding Lease Amount is greater than $0, Participants (other than Novellus)
whose aggregate Outstanding Participation Amounts exceed fifty percent (50%) of
the aggregate Outstanding Participation Amounts of all Participants (other than
Novellus) at such time and (b) at any time the aggregate

                                    1.01-19
<PAGE>   86
Outstanding Lease Amount is $0, Participants (other than Novellus) whose
Proportionate Shares exceed fifty percent (50%) of the aggregate Proportionate
Shares of all Participants (other than Novellus) at such time.

        "Margin Stock" shall have the meaning given to that term in Regulation U
issued by the Federal Reserve Board, as amended from time to time, and any
successor regulation thereto.

        "Marketing Option" shall have the meaning given to that term in
Subparagraph 3.01(a) of the Purchase Agreement.

        "Marketing Option Event of Default" shall mean any Event of Default
other than a Non-Marketing Option Event of Default.

        "Material Adverse Effect" shall mean a material adverse effect on (a)
the business, assets, operations, prospects or financial or other condition of
Lessee and its Subsidiaries, taken as a whole; (b) the ability of Lessee to pay
or perform the Lessee Obligations in accordance with the terms of the Operative
Documents; (c) the ability of any Lessor Party (other than Novellus) to exercise
any of its rights or remedies under the Operative Documents or any related
document, instrument or agreement; or (d) the value of the Property and the
Collateral, any Lessor Party's (other than Novellus') security interests, Liens
or other rights in the Property and the Collateral or the perfection or priority
of such security interests, Liens or rights.

        "Material Casualty" shall mean any Casualty to the Property that alone,
or in combination with any prior Casualties to the Property for which repairs to
restore the Property to its prior condition have not been completed, will
require repairs costing (a) during the Construction Period, $500,000 or more to
restore the Property to its prior condition, or (b) after the Construction
Period, $2,500,000 or more to restore the Property to its prior condition .

        "Material Subsidiary" shall mean, as of any date, each Subsidiary of
Lessee whose assets on the last day of the immediately preceding fiscal year
equaled or exceeded five percent (5%) of the consolidated total assets of Lessee
and all of its Subsidiaries on such day. As used herein, "assets" shall mean the
net book value of assets calculated in accordance with GAAP.

        "maturity" shall mean, with respect to any Rent, interest, fee or other
amount payable by Lessee under the Operative Documents, the date such Rent,
interest, fee or other amount becomes due, whether upon the stated maturity or
due date, upon acceleration or otherwise.

        "Modifications" shall have the meaning given to that term in
Subparagraph 3.01(c) of the Lease Agreement.

        "Multiemployer Plan" shall mean any multiemployer plan within the
meaning of section 3(37) of ERISA maintained or contributed to by Lessee or any
ERISA Affiliate.

        "Net Proceeds" shall mean, with respect to any sale or issuance of any
Equity Security or any other security by any Person, the aggregate consideration
received by such Person from such sale or issuance less the sum of the actual
amount of the customary fees and commissions payable to Persons other than such
Person or any Affiliate of such Person, the reasonable legal

                                    1.01-20
<PAGE>   87
expenses and the other customary costs and expenses directly related to such
sale or issuance that are to be paid by such Person.

        "New Improvements" shall mean, with respect to the Land, all new
Improvements to the Land contemplated by the Plans and Specifications.

        "Non-Marketing Option Event of Default" shall mean an Event of Default
under Subparagraph 5.01(m), 5.01(n) or 5.01(o) of the Lease Agreement if such
Event of Default was not caused by any failure by Lessee to comply with any of
its obligations under the Operative Documents (including its insurance
obligations), any representation by Lessee in any of the Operative Documents not
being true, any negligence or willful misconduct of Lessee, or any claim by any
third-party against Lessee (or against any Lessor Party) based upon any alleged
action or inaction by Lessee.

        "Notice of Expiration Date Purchase Option Exercise" shall have the
meaning given to that term in Paragraph 3.01 of the Purchase Agreement.

        "Notice of Ground Lease Purchase Option Exercise" shall have the meaning
given to that term in Paragraph 6.01 of the Ground Lease.

        "Notice of Ground Lease Rent Increase" shall have the meaning given to
that term in Paragraph 2.03 of the Ground Lease.

        "Notice of Marketing Option Exercise" shall have the meaning given to
that term in Paragraph 3.01 of the Purchase Agreement.

        "Notice of Partial Purchase Option Exercise" shall have the meaning
given to that term in Subparagraph 2.02(a) of the Purchase Agreement.

        "Notice of Rental Period Selection" shall have the meaning given to that
term in Subparagraph 2.03(a) of the Lease Agreement.

        "Notice of Term Purchase Option Exercise" shall have the meaning given
to that term in Subparagraph 2.01(a) of the Purchase Agreement.

        "Novellus" shall mean Novellus Systems, Inc., acting in its capacity as
a Participant under the Operative Documents.

        "Operative Documents" shall mean and include the Participation
Agreement, the Ground Lease, the Lease Agreement, the Construction Agency
Agreement, the Purchase Agreement, the Lessee Security Documents, the Lessor
Deed of Trust, the Lessor Security Agreement, the Assignment of Lease and the
Agent's Fee Letter; all other notices, requests, certificates, documents,
instruments and agreements delivered to any Lessor Party pursuant to Paragraph
3.01 of the Participation Agreement; all notices, requests, certificates,
documents, instruments and agreements required to be delivered to any Lessor
Party in connection with any of the foregoing on or after the date of the
Participation Agreement; and all Rate Contracts provided to Lessee by any
Participant (other than Novellus) to hedge against fluctuations in the LIBOR
Rental Rate under either or both Lease Agreements. (Without limiting the
generality of the preceding

                                    1.01-21
<PAGE>   88
definition, the term "Operative Documents" shall include all written waivers,
amendments and modifications to any of the notices, requests, certificates,
documents, instruments and agreements referred to therein.)

        "Option Exercise Notification Date" shall have the meaning given to that
term in Paragraph 6.01 of the Ground Lease.

        "Outside Completion Date" shall mean the date that is one (1) year after
the Closing Date or, if such date is extended pursuant to Subparagraph 2.09(a)
of the Participation Agreement or Subparagraph 3.05(d) of the Construction
Agency Agreement, the date to which so extended.

        "Outstanding Lease Amount" shall mean, on any date, the remainder of (a)
the sum of all Advances made by Lessor on or prior to such date, minus (b) the
sum of all Lease Reduction Payments applied by Lessor on or prior to such date.

        "Outstanding Participation Amount" shall mean, with respect to any
Participant on any date, the remainder of (a) the sum of the portions of all
Advances funded by such Participant on or prior to such date, minus (b) the sum
of such Participant's share of all Lease Reduction Payments applied to the
Outstanding Lease Amount on or prior to such date.

        "Outstanding Tranche A Participation Amount" shall mean, with respect to
any Tranche A Participant on any date, the remainder of (a) such Participant's
Tranche A Portion of all Advances made by Lessor on or prior to such date, minus
(b) such Participant's share of all Lease Reduction Payments applied to the
Tranche A Portion of the Advances on or prior to such date.

        "Outstanding Tranche B Participation Amount" shall mean, with respect to
any Tranche B Participant on any date, the remainder of (a) such Participant's
Tranche B Portion of all Advances made by Lessor on or prior to such date, minus
(b) such Participant's share of all Lease Reduction Payments applied to the
Tranche B Portion of the Advances on or prior to such date.

        "Outstanding Tranche C Participation Amount" shall mean, with respect to
any Tranche C Participant on any date, the remainder of (a) such Participant's
Tranche C Portion of all Advances made by Lessor on or prior to such date, minus
(b) such Participant's share of all Lease Reduction Payments applied to the
Tranche C Portion of the Advances on or prior to such date.

        "Partial Purchase Date" shall have the meaning given to that term in
Subparagraph 2.02(a) of the Purchase Agreement.

        "Partial Purchase Option" shall have the meaning given to that term in
Paragraph 2.02 of the Purchase Agreement.

        "Participants" shall mean the Persons from time to time listed in
Schedule I to the Participation Agreement (as amended from time to time pursuant
to Subparagraph 7.05(b) of the Participation Agreement or otherwise), acting in
their capacities as Participants under the Operative Documents.

                                    1.01-22
<PAGE>   89
        "Participation Agreement" shall mean the Participation Agreement, dated
as of April 18, 2001, among Lessee and the Lessor Parties.

        "PBGC" shall mean the Pension Benefit Guaranty Corporation.

        "Pension Plan" shall mean any Employee Benefit Plan subject to Title IV
of ERISA that either Lessee or any ERISA Affiliate maintains or contributes to
or has any obligation under.

        "Permitted Improvement Costs" shall mean all reasonable costs and
expenses necessary for the construction of the New Improvements to the Land and
the acquisition of the Property, including:

                (a) All reasonable costs and expenses of building supplies and
        materials necessary for the construction of the New Improvements;

                (b) All reasonable costs and expenses of architects, engineers,
        contractors and other Persons providing labor and services necessary for
        the construction of the New Improvements; and

                (c) All reasonable costs and expenses of performance and other
        bonds and other insurance necessary for the construction of the New
        Improvements.

        "Permitted Indebtedness" shall have the meaning given to that term in
Subparagraph 5.02(a) of the Participation Agreement.

        "Permitted Liens" shall have the meaning given to that term in
Subparagraph 5.02(b) of the Participation Agreement.

        "Permitted Property Liens" shall have the meaning given to that term in
Subparagraph 3.07(a) of the Lease Agreement.

        "Permitted Transaction Expenses" shall mean the following costs and
expenses to the extent payable by Lessee in connection with and directly related
to the preparation, execution and delivery of the Operative Documents and the
transactions contemplated thereby:

                (a) All Base Rent payable during the Commitment Period;

                (b) All rent payable under the Ground Lease during the
        Commitment Period;

                (c) All Commitment Fees, Agent's structuring fees and Agent's
        annual administrative fees payable during the Commitment Period;

                (d) All other amounts capitalized pursuant to Subparagraph
        2.03(c) of the Participation Agreement;

                (e) The reasonable fees and expenses of counsel for each of
        Lessor and Agent incurred in connection with the Operative Documents;

                                    1.01-23
<PAGE>   90
                (f) The reasonable fees and expenses incurred in recording,
        registering or filing any of the Operative Documents;

                (g) The title fees, premiums and escrow costs and other expenses
        relating to title insurance and the closing of the transactions
        contemplated by the Operative Documents;

                (h) The reasonable fees and expenses of required environmental
        audits and appraisals;

                (i) The reasonable fees and expenses of insurance consultants
        for Lessor and Agent;

                (j) The reasonable fees and expenses for surveys and appraisals;

                (k) The incremental cost of insurance required by Paragraph 3.03
        of the Lease Agreement during the Construction Period not exceeding
        $475,000; and

                (l) The reasonable fees and expenses of the accountants,
        financial advisor and counsel for Lessee incurred in connection with the
        Operative Documents.

        "Person" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, an
unincorporated association, a limited liability company, a joint venture, a
trust or other entity or a Governmental Authority.

        "Personal Property Collateral" shall have the meaning given to that term
in Subparagraph 2.07(b) of the Lease Agreement.

        "Plans and Specifications" shall mean the architectural, engineering and
construction plans, specifications and drawings for the New Improvements to be
constructed on the Land delivered to Agent on or prior to the Closing Date
pursuant to Paragraph 3.01 and Schedule 3.01 of the Participation Agreement, as
such plans, specifications and drawings may thereafter be revised, amended or
modified pursuant to Paragraph 3.02 of the Construction Agency Agreement.

        "Portion" shall mean a portion of the Outstanding Lease Amount. If, at
any time, Lessee has not divided the Outstanding Lease Amount into two or more
portions, any reference to a Portion shall mean the total Outstanding Lease
Amount at such time.

        "Prepaid Rent" shall mean Permitted Improvement Costs and Permitted
Transaction Expenses constituting Cost Overruns that are (i) paid by Lessee and
not reimbursed through Advances and (ii) capitalizable under GAAP by Lessor.

        "Prime Rate" shall mean the per annum rate publicly announced by ABN
AMRO from time to time at its Chicago Office. The Prime Rate is determined by
ABN AMRO from time to time as a means of pricing credit extensions to some
customers and is neither directly tied to any external rate of interest or index
nor necessarily the lowest rate of interest charged by ABN AMRO at any given
time for any particular class of customers or credit extensions. Any change

                                    1.01-24
<PAGE>   91
in the Base Rate resulting from a change in the Prime Rate shall become
effective on the Business Day on which each change in the Prime Rate occurs.

        "Principal Component" shall have, with respect to either Lease
Agreement, the meaning given to that term in Subparagraph 2.03(a) of such Lease
Agreement.

        "Project Costs" shall mean properly capitalizable "project costs" as
that term is used under GAAP.

        "Property" shall have the meaning given to that term in Paragraph 2.01
of the Lease Agreement.

        "Property Collateral" shall have the meaning given to that term in
Subparagraph 2.11(a) of the Participation Agreement.

        "Proportionate Share" shall mean (a) with respect to each Participant at
any time prior to the Completion Date, the percentage set forth under the
caption "Proportionate Share" opposite such Participant's name in Part A(1) of
Schedule I and (b) with respect to each Participant at any time on or after the
Completion Date, the percentage set forth under the caption "Proportionate
Share" opposite such Participant's name in Part A(2) of Schedule I; or in the
case of either such percentage, if changed, such percentage as may be set forth
for such Participant in the Register. The Proportionate Share of each
Participant at any time shall equal the sum of such Participant's Tranche A
Percentage, Tranche B Percentage and Tranche C Percentage at such time.

        "Purchase Agreement" shall have the meaning given to that term in
Subparagraph 2.01(a) of the Participation Agreement.

        "Purchase Documents" shall have the meaning given to that term in
Subparagraph 4.01(a) of the Purchase Agreement.

        "Purchaser" shall have the meaning given to that term in Subparagraph
4.01(a) of the Purchase Agreement.

        "Quick Ratio" shall mean, with respect to Lessee at any time, the ratio,
determined on a consolidated basis in accordance with GAAP, of:

                (a) The remainder of (i) the sum (without duplication) of all
        cash, Cash Equivalents, short-term investments and net accounts
        receivable of Lessee and its Subsidiaries at such time, minus (ii) the
        sum (without duplication) of all such cash, Cash Equivalents, short-term
        investments and net accounts receivable that are subject to a Lien or
        are otherwise restricted;

                                                  to

                (b) The current liabilities of Lessee and its Subsidiaries at
        such time.

(In calculating the Quick Ratio, Cash Equivalents and short-term investments
shall be marked to market quarterly.)

                                    1.01-25
<PAGE>   92
        "Rate Contracts" shall mean swap agreements (as that term is defined in
Section 101 of the Federal Bankruptcy Reform Act of 1978, as amended) and any
other agreements or arrangements designed to provide protection against
fluctuations in interest or currency exchange rates.

        "Real Property Collateral" shall have the meaning given to that term in
Subparagraph 2.07(a) of the Lease Agreement.

        "Reference Banks" shall mean ABN AMRO or, at any time other banks are
Participants, ABN AMRO and an additional bank Participant or additional bank
Participants (but not more than two additional bank Participants) acceptable to
Lessee and Agent.

        "Register" shall have the meaning given to that term in Subparagraph
7.05(b) of the Participation Agreement.

        "Related Agreements" shall mean all chattel paper, accounts,
instruments, documents, investment property and general intangibles relating to
any of the Land, Improvements or Appurtenant Rights or to the present or future
development, construction, operation or use of any of the Land, Improvements or
Appurtenant Rights, including (a) all plans, specifications, construction
agreements, maps, surveys, studies, books of account, records, files, insurance
policies, guarantees and warranties relating to such Land or Improvements or to
the present or future development, construction, operation or use of such Land,
Improvements or Appurtenant Rights (including the Construction Agreements and
the Plans and Specifications); (b) all architectural, engineering, construction
and management contracts, all supply and service contracts for water, sanitary
and storm sewer, drainage, electricity, steam, gas, telephone and other
utilities relating to such Land, Improvements or Appurtenant Rights or to the
present or future development, construction, operation or use of such Land,
Improvements or Appurtenant Rights; and (c) all computer software and
intellectual property, guaranties and warranties, letters of credit, and
documents relating to such Land, Improvements or Appurtenant Rights or to the
present or future development, construction, operation or use of such Land,
Improvements or Appurtenant Rights.

        "Related Credit Agreement" shall mean the Credit Agreement dated as of
June 9, 1997 among Lessee, the financial institutions from time to time parties
thereto, and ABN AMRO, as agent for such financial institutions.

        "Related Credit Documents" shall mean the Related Credit Agreement and
the other "Credit Documents," as such term is defined in the Related Credit
Agreement.

        "Related Credit Obligations" shall mean the "Obligations," as such term
is defined in the Related Credit Agreement.

        "Related Goods" shall mean:

                (a) All machinery, furniture, equipment, fixtures and other
        goods and tangible personal property (including construction materials
        and supplies) financed by any Advance, including all such property
        described in Exhibit B to the Lease Agreement and in each Exhibit B
        Supplement delivered by Lessee; and

                                    1.01-26
<PAGE>   93
                (b) All machinery, equipment, inventory, fixtures and other
        goods and tangible personal property (including construction materials
        and supplies) (i) now or hereafter located on any of the Land,
        Improvements or Appurtenant Rights; (ii) now or hereafter intended for
        the construction, reconstruction, repair, replacement, alteration,
        addition or improvement of or to any of the Improvements or any other
        Related Goods; or (iii) now or hereafter used in connection with the
        present or future operation or occupancy of any of the Land,
        Improvements or Appurtenant Rights;

Except for any trade fixture, machinery, equipment, inventory or other goods
removed by Lessee from the Property pursuant to Paragraph 3.10 of the Lease
Agreement.

        "Related Permits" shall mean all licenses, authorizations, certificates,
variances, consents, approvals and other permits, now or hereafter pertaining to
any of the Land, Improvements or Appurtenant Rights and all tradenames or
business names relating to any of the Land, Improvements or Appurtenant Rights
or the present or future development, construction, operation or use of any of
the Land, Improvements or Appurtenant Rights.

        "Rent" shall mean collectively Base Rent and Supplemental Rent.

        "Rental Periods" shall mean:

                (a) With respect to the entire Outstanding Lease Amount during
        the period beginning on the Commencement Date for the Lease Agreement
        and ending on the Commitment Termination Date, the time period which
        commences on the Commencement Date and each subsequent time period
        through and including the time period ending on the Commitment
        Termination Date as specified in Subparagraph 2.03(a) of the Lease
        Agreement; and

                (b) With respect to any Portion of the Outstanding Lease Amount
        thereafter, the time period selected by Lessee for such Portion pursuant
        to Subparagraph 2.03(a ) of the Lease Agreement which commences on the
        first day of such Portion and each subsequent time period selected by
        Lessee pursuant to Subparagraph 2.03(a) of the Lease Agreement.

Each Rental Period shall commence on the last day of the immediately preceding
Rental Period.

        "Rental Rate" shall have the meaning given to that term in Subparagraph
2.03(a) of the Lease Agreement.

        "Rent Increase Notification Date" shall have the meaning given to that
term in Paragraph 2.03 of the Ground Lease.

        "Repair and Restoration Account" shall have the meaning given to that
term in Subparagraph 3.04(c) of the Lease Agreement.

        "Reportable Event" shall have the meaning given to that term in ERISA.

                                    1.01-27
<PAGE>   94
        "Required Participants" shall mean (a) at any time the aggregate
Outstanding Lease Amount is greater than $0, Participants (other than Novellus)
whose aggregate Outstanding Participation Amounts equal or exceed sixty-six and
two-thirds percent (66-2/3%) of the aggregate Outstanding Participation Amounts
of all Participants (other than Novellus) at such time and (b) at any time the
aggregate Outstanding Lease Amount is $0, Participants (other than Novellus)
whose Proportionate Shares equal or exceed sixty-six and two-thirds percent
(66-2/3%) of the aggregate Proportionate Shares of all Participants (other than
Novellus) at such time.

        "Requirement of Law" applicable to any Person shall mean (a) the
Articles or Certificate of Incorporation and By-laws, Partnership Agreement or
other organizational or governing documents of such Person, (b) any Governmental
Rule applicable to such Person, (c) any license, permit, approval or other
authorization granted by any Governmental Authority to or for the benefit of
such Person or (d) any judgment, decision or determination of any Governmental
Authority or arbitrator, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.

        "Reserve Requirement" shall mean, with respect to any day in any Rental
Period, the aggregate of the reserve requirement rates (expressed as a decimal)
in effect on such day for eurocurrency funding (currently referred to as
"Eurocurrency liabilities" in Regulation D of the Federal Reserve Board)
maintained by a member bank of the Federal Reserve System. As used herein, the
term "reserve requirement" shall include, without limitation, any basic,
supplemental or emergency reserve requirements imposed on any Participant by any
Governmental Authority.

        "Residual Value Guaranty Amount" shall have the meaning given to that
term in Subparagraph 3.02(g) of the Purchase Agreement.

        "Scheduled Expiration Date" shall have the meaning given to that term in
Subparagraph 2.02(a) of the Lease Agreement.

        "Scheduled Rent Payment Date" shall have the meaning given to that term
in Subparagraph 2.03(a) of the Lease Agreement.

        "Secondary Marketing Period" shall have the meaning given to that term
in Subparagraph 3.02(b) of the Purchase Agreement.

        "Securities Account Control Agreement" shall have the meaning given to
that term in Subparagraph 2.01(a) of the Cash Collateral Agreement.

        "Securities Accounts" shall have the meaning given to that term in
Subparagraph 2.01(a) of the Cash Collateral Agreement.

        "Securities Intermediary" shall have the meaning given to that term in
Paragraph 2.02 of the Cash Collateral Agreement.

        "Senior Officer" shall mean, with respect to Lessee, the Chief Executive
Officer, the Chief Financial Officer, the Executive Vice President of
Operations, the Executive Vice President of Sales or the Treasurer of Lessee.

                                    1.01-28
<PAGE>   95
        "Solvent" shall mean, with respect to any Person on any date, that on
such date (a) the fair value of the property of such Person is greater than the
fair value of the liabilities (including, without limitation, contingent
liabilities) of such Person, (b) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature and (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's property would constitute an unreasonably small capital.

        "Subleases" shall mean all leases and subleases of any of the Land,
Improvements and/or Appurtenant Rights by Lessee as lessor or sublessor, now or
hereafter in effect, whether or not of record, including all guaranties and
security therefor and the right to bring actions and proceedings thereunder or
for the enforcement thereof and to do anything which Lessee is or may become
entitled to do thereunder.

        "Subparticipants" shall have the meaning given to that term in
Subparagraph 7.05(c) of the Participation Agreement.

        "Subsidiary" of any Person shall mean (a) any corporation of which more
than 50% of the issued and outstanding Equity Securities having ordinary voting
power to elect a majority of the Board of Directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned or controlled by such
Person, by such Person and one or more of its other Subsidiaries or by one or
more of such Person's other Subsidiaries, (b) any partnership, joint venture, or
other Person of which more than 50% of the equity interest having the power to
vote, direct or control the management of such partnership, joint venture,
business trust or other Person is at the time owned and controlled by such
Person, by such Person and one or more of the other Subsidiaries or by one or
more of such Person's other Subsidiaries or (c) any other Person included in the
Financial Statements of such Person on a consolidated basis.

        "Substantial Completion" shall have the meaning given to such term in
Subparagraph 3.05(c) of the Construction Agency Agreement.

        "Supplemental Rent" shall have the meaning given to such term in
Subparagraph 2.03(b) of the Lease Agreement.

        "Surety Instruments" shall mean all letters of credit (including standby
and commercial), banker's acceptances, bank guaranties, shipside bonds, surety
bonds and similar instruments.

        "Synthetic Lease Obligations" shall mean the monetary obligations of a
Person under (a) a so-called synthetic, off-balance sheet or tax retention
lease, or (b) an agreement for the use or possession of property creating
obligations that do not appear on the balance sheet of such Person but which,
upon the insolvency or bankruptcy of such Person, would be characterized as the
indebtedness of such Person (without regard to accounting treatment).

                                    1.01-29
<PAGE>   96
        "Tangible Net Worth" shall mean, with respect to Lessee at any time, the
remainder at such time, determined on a consolidated basis in accordance with
GAAP, of (a) the total assets of Lessee and its Subsidiaries, minus (b) the sum
(without limitation and without duplication of deductions) of (i) the total
liabilities of Lessee and its Subsidiaries, (ii) all reserves established by
Lessee and its Subsidiaries for anticipated losses and expenses (to the extent
not deducted in calculating total assets in clause (a) above) and (iii) all
intangible assets of Lessee and its Subsidiaries (to the extent included in
calculating total assets in clause (a) above), including, without limitation,
goodwill (including any amounts, however designated on the balance sheet,
representing the cost of acquisition of businesses and investments in excess of
underlying tangible assets), trademarks, trademark rights, trade name rights,
copyrights, patents, patent rights, licenses, unamortized debt discount,
marketing expenses, organizational expenses, non-compete agreements and deferred
research and development.

        "Term" shall mean the period beginning on the Commencement Date of the
Lease Agreement and ending on the Expiration Date of the Lease Agreement.

        "Termination Date" shall mean (a) the date set forth in a Notice of Term
Purchase Option as the Scheduled Rent Payment Date on which the Lease Agreement
will be terminated by Lessee pursuant to Paragraph 4.01 of the Lease Agreement
and the Property will be purchased by Lessee pursuant to Section 2 of the
Purchase Agreement; (b) the date set forth in a written notice delivered by
Lessor to Lessee pursuant to Subparagraph 5.03(a) or 5.04(a) of the Lease
Agreement after the occurrence of an Event of Default thereunder as the date on
which the Lease Agreement will be terminated; or (c) the date determined
pursuant to clause (ii) of Subparagraph 3.05(d) of the Construction Agency
Agreement if Lessee exercises the Marketing Option pursuant to such clause.

        "Term Purchase Option" shall have the meaning given to that term in
Paragraph 2.01 of the Purchase Agreement.

        "Total Commitment" shall mean the amount set forth as such in
Subparagraph 2.01(b) of the Participation Agreement or, if such amount is
reduced pursuant to Subparagraph 2.08(a) of the Participation Agreement, the
amount to which so reduced.

        "Tract" shall mean:

                (a) With respect to any land, the lots, pieces, parcels and
        tracts of land, if any, described as a separate tract in Exhibit A to
        the Lease Agreement or each Part of Exhibit A to the Participation
        Agreement, as the case may be; and

                (b) With respect to any Property, a Tract of land, together with
        all Property related to such Tract of land.

        "Tranche A Participant" shall mean, at any time, any Participant having
an Outstanding Tranche A Participation Amount at such time.

        "Tranche A Percentage" shall mean (a) with respect to each Participant
at any time prior to the Completion Date, the percentage set forth under the
caption "Tranche A Percentage" opposite such Participant's name in Part A(1) of
Schedule I and (b) with respect to each

                                    1.01-30
<PAGE>   97
Participant at any time on or after the Completion Date, the percentage set
forth under the caption "Tranche A Percentage" opposite such Participant's name
in Part A(2) of Schedule I; or in the case of either such percentage, if
changed, such percentage as may be set forth for such Participant in the
Register.

        "Tranche A Portion" shall mean, (a) with respect to any Advance without
reference to any Participant, the portion of such Advance equal to the Tranche A
Proportionate Share of such Advance and (b) with respect to any Advance with
reference to any Participant, the portion of such Advance equal to such
Participant's Tranche A Percentage of such Advance.

        "Tranche A Proportionate Share" shall mean (a) at any time prior to the
Completion Date, eighty-nine and nine-tenths percent (89.9%) and (b) at any time
on or after the Completion Date, eighty-six percent (86.0%).

        "Tranche B Participant" shall mean, at any time, any Participant having
an Outstanding Tranche B Participation Amount at such time.

        "Tranche B Percentage" shall mean (a) with respect to each Participant
at any time prior to the Completion Date, the percentage set forth under the
caption "Tranche B Percentage" opposite such Participant's name in Part A(1) of
Schedule I and (b) with respect to each Participant at any time on or after the
Completion Date, the percentage set forth under the caption "Tranche B
Percentage" opposite such Participant's name in Part A(2) of Schedule I; or in
the case of either such percentage, if changed, such percentage as may be set
forth for such Participant in the Register.

        "Tranche B Portion" shall mean, (a) with respect to any Advance without
reference to any Participant, the portion of such Advance equal to the Tranche B
Proportionate Share of such Advance and (b) with respect to any Advance with
reference to any Participant, the portion of such Advance equal to such
Participant's Tranche B Percentage of such Advance.

        "Tranche B Proportionate Share" shall mean (a) at any time prior to the
Completion Date, seven and one tenth percent (7.1%) and (b) at any time on or
after the Completion Date, eleven percent (11.0%).

        "Tranche C Participant" shall mean, at any time, any Participant having
an Outstanding Tranche C Participation Amount at such time.

        "Tranche C Percentage" shall mean (a) with respect to each Participant
at any time prior to the Completion Date, the percentage set forth under the
caption "Tranche C Percentage" opposite such Participant's name in Part A(1) of
Schedule I and (b) with respect to each Participant at any time on or after the
Completion Date, the percentage set forth under the caption "Tranche C
Percentage" opposite such Participant's name in Part A(2) of Schedule I; or in
the case of either such percentage, if changed, such percentage as may be set
forth for such Participant in the Register.

        "Tranche C Portion" shall mean, (a) with respect to any Advance without
reference to any Participant, the portion of such Advance equal to the Tranche C
Proportionate Share of such

                                    1.01-31
<PAGE>   98
Advance and (b) with respect to any Advance with reference to any Participant,
the portion of such Advance equal to such Participant's Tranche C Percentage of
such Advance.

        "Tranche C Proportionate Share" shall mean, at all times (whether
before, on or after the Completion Date), three percent (3.0%).

        "Trustee" shall have the meaning given to that term in the introductory
paragraph of the Lease Agreement.

        "UCC" shall mean the California Uniform Commercial Code.

        "Unused" shall mean, with respect to the Total Commitment at any time,
the remainder of (a) the Total Commitment at such time minus (b) the aggregate
amount of all Advances made prior to such time.

                                    1.01-32
<PAGE>   99
                                  SCHEDULE 1.02

                              RULES OF CONSTRUCTION

        (a) GAAP. Unless otherwise indicated in any Operative Document, all
accounting terms used in the Operative Documents shall be construed, and all
accounting and financial computations thereunder shall be computed, in
accordance with GAAP. If GAAP changes after the date of the Participation
Agreement such that any covenants contained in the Operative Documents would
then be calculated in a different manner or with different components, Lessee
and the Lessor Parties agree to negotiate in good faith to amend the applicable
Operative Documents in such respects as are necessary to conform those covenants
as criteria for evaluating Lessee's financial condition to substantially the
same criteria as were effective prior to such change in GAAP; provided, however,
that, until Lessee and the Lessor Parties so amend the Operative Documents, all
such covenants shall be calculated in accordance with GAAP as in effect
immediately prior to such change.

        (b) Headings. Headings in each of the Operative Documents are for
convenience of reference only and are not part of the substance thereof.

        (c) Plural Terms. All terms defined in any Operative Document in the
singular form shall have comparable meanings when used in the plural form and
vice versa.

        (d) Time. All references in each of the Operative Documents to a time of
day shall mean San Francisco, California time, unless otherwise indicated. All
references in each of the Operative Documents to a date (the "action date")
which is one month prior to or after another date (the "reference date") shall
mean the date in the immediately preceding or succeeding calendar month (as the
case may be) which numerically corresponds to the reference date; provided,
however, that (i) if such corresponding date in the immediately preceding or
succeeding calendar month (as the case may be) is not a Business Day, the action
date shall be the next succeeding Business Day after such corresponding date
(unless, in the case of a Rental Period, such next Business Day falls in another
calendar month, in which case the action date shall be the immediately preceding
Business Day) and (ii) if the reference date is the last Business Day of a
calendar month (or a day for which there is no numerically corresponding day in
the immediately preceding calendar month) the action date shall be the last
Business Day of the immediately preceding or succeeding calendar month (as the
case may be). All references in each of the Operative Documents to an earlier
date which is two or more months prior to a reference date or to a later date
which is two or more months after a reference date shall be determined in a
comparable manner.

        (e) Governing Law. Unless otherwise provided in any Operative Document,
each of the Operative Documents shall be governed by and construed in accordance
with the laws of the State of California without reference to conflicts of law
rules.

        (f) Construction. The Operative Documents are the result of negotiations
among, and have been reviewed by Lessee and each Lessor Party and their
respective counsel.

                                     1.02-1
<PAGE>   100
Accordingly, the Operative Documents shall be deemed to be the product of all
parties hereto, and no ambiguity shall be construed in favor of or against
Lessee or any Lessor Party.

        (g) Entire Agreement. The Operative Documents, taken together,
constitute and contain the entire agreement of Lessee and the Lessor Parties and
supersede any and all prior agreements, negotiations, correspondence,
understandings and communications among the parties, whether written or oral,
respecting the subject matter thereof (but excluding the Agent's Fee Letter.)

        (h) Calculation of Base Rent, Interest and Fees. All calculations of
Base Rent, interest and fees under the Operative Documents for any period (i)
shall include the first day of such period and exclude the last day of such
period and (ii) shall be calculated on the basis of a year of 360 days for
actual days elapsed, except that during any period that Base Rent or any
interest is to be calculated based upon the Base Rate, such Base Rent or
interest shall be calculated on the basis of a year of 365 or 366 days, as
appropriate, for actual days elapsed.

        (i) References.

                (i) References in any Operative Document to "Recitals,"
        "Sections," "Paragraphs," "Subparagraphs," "Articles," "Exhibits" and
        "Schedules" are to recitals, sections, paragraphs, subparagraphs,
        articles, exhibits and schedules therein and thereto unless otherwise
        indicated.

                (ii) References in any Operative Document to any document,
        instrument or agreement (A) shall include all exhibits, schedules and
        other attachments thereto, (B) shall include all documents, instruments
        or agreements issued or executed in replacement thereof, and (C) shall
        mean such document, instrument or agreement, or replacement or
        predecessor thereto, as amended, modified and supplemented from time to
        time and in effect at any given time.

                (iii) References in any Operative Document to any Governmental
        Rule (A) shall include any successor Governmental Rule, (B) shall
        include all rules and regulations promulgated under such Governmental
        Rule (or any successor Governmental Rule), and (C) shall mean such
        Governmental Rule (or successor Governmental Rule) and such rules and
        regulations, as amended, modified, codified or reenacted from time to
        time and in effect at any given time.

                (iv) References in any Operative Document to any Person in a
        particular capacity (A) shall include any permitted successors to and
        assigns of such Person in that capacity and (B) shall exclude such
        Person individually or in any other capacity.

        (j) Other Interpretive Provisions. The words "hereof," "herein" and
"hereunder" and words of similar import when used in any Operative Document
shall refer to such Operative Document as a whole and not to any particular
provision of such Operative Document. The words "include" and "including" and
words of similar import when used in any Operative Document shall not be
construed to be limiting or exclusive. In the event of any inconsistency between
the terms of the Participation Agreement and the terms of any other Operative
Document, the terms of the Participation Agreement shall govern.

                                     1.02-2
<PAGE>   101
                                  SCHEDULE 3.01

                     CONDITIONS PRECEDENT TO INITIAL ADVANCE

A.      PRINCIPAL OPERATIVE DOCUMENTS.

                (1) The Participation Agreement, duly executed by Lessee,
        Lessor, each Participant and Agent;

                (2) The Ground Lease, duly executed by Lessor and Lessee;

                (3) The Lease Agreement, duly executed by Lessee and Lessor and
        appropriately notarized;

                (4) The Purchase Agreement, duly executed by Lessee and Lessor;

                (5) The Construction Agency Agreement, duly executed by Lessee
        and Lessor;

                (6) The Assignment of Construction Agreements, duly executed by
        Lessee;

                (7) The Cash Collateral Agreement, duly executed by Lessee,
        Lessor and Agent;

                (8) The Assignment of Lease, duly executed by Lessor and
        appropriately notarized;

                (9) The Lessor Deed of Trust, duly executed by Lessor and
        appropriately notarized; and

                (10) The Lessor Security Agreement, duly executed by Lessor.

B.      LESSEE CORPORATE DOCUMENTS.

                (1) The Certificate or Articles of Incorporation of Lessee,
        certified as of a recent date prior to the Closing Date by the Secretary
        of State (or comparable official) of its jurisdiction of incorporation;

                (2) A Certificate of Good Standing (or comparable certificate)
        for Lessee, certified as of a recent date prior to the Closing Date by
        the Secretary of State (or comparable official) of its jurisdiction of
        incorporation;

                (3) A certificate of the Secretary or an Assistant Secretary of
        Lessee, dated the Closing Date, certifying (a) that attached thereto is
        a true and correct copy of the Bylaws of Lessee as in effect on the
        Closing Date; (b) that attached thereto are true and correct copies of
        resolutions duly adopted by the Board of Directors of Lessee and
        continuing in effect, which authorize the execution, delivery and
        performance by Lessee of the

                                     3.01-1
<PAGE>   102
        Operative Documents executed or to be executed by Lessee and the
        consummation of the transactions contemplated thereby; and (c) that
        there are no proceedings for the dissolution or liquidation of Lessee;

                (4) A certificate of the Secretary or an Assistant Secretary of
        Lessee, dated the Closing Date, certifying the incumbency, signatures
        and authority of the officers of Lessee authorized to execute, deliver
        and perform the Operative Documents and all other documents, instruments
        or agreements related thereto executed or to be executed by Lessee; and

                (5) A Certificate of Good Standing (or comparable certificate)
        for Lessee, certified as of a recent date prior to the Closing Date by
        the Secretary of State (or comparable official) of the State of
        California.

C.      FINANCIAL STATEMENTS, FINANCIAL CONDITION, ETC.

                (1) A copy of the audited consolidated Financial Statements of
        Lessee for the fiscal year ended December 31, 2000, prepared by Ernst &
        Young, LLP and a copy of the unqualified opinion delivered by such
        accountants in connection with such Financial Statements;

                (2) The consolidated plan and forecast of Lessee and its
        Subsidiaries for the year ending December 31, 2001, including quarterly
        cash flow projections and quarterly projections of Lessee's compliance
        with each of the covenants set forth in Paragraph 5.03 of this
        Agreement; and

                (3) Such other financial, business and other information
        regarding Lessee, or any of its Subsidiaries as Lessor or Agent may
        reasonably request, including information as to possible contingent
        liabilities, tax matters, environmental matters and obligations for
        employee benefits and compensation.

D.      COLLATERAL DOCUMENTS.

                (1) A Memorandum of Ground Lease, appropriately completed and
        duly executed by Lessor and Lessee and appropriately notarized for
        recording;

                (2) A Memorandum of Purchase Agreement, appropriately completed
        and duly executed by Lessee and Lessor and appropriately notarized for
        recording;

                (3) Evidence that the Lease Agreement, the Assignment of Lease,
        the Lessor Deed of Trust, the Memorandum of Ground Lease and the
        Memorandum of Purchase Agreement delivered pursuant to items A(3), A(8),
        A(9), D(1) and D(2) have been properly recorded in the Official Records
        of the County of Washington, Oregon;

                (4) An ALTA extended coverage owner's policy or binder of title
        insurance (or a commitment therefor) for the Property insuring Lessor's
        leasehold estate to the

                                     3.01-2
<PAGE>   103
        Property (subject to such exceptions as Agent may approve), in such
        amounts and with such endorsements as Agent may reasonably require,
        issued by a title insurer acceptable to Agent, together with such
        policies of co-insurance or re-insurance (or commitments therefor) as
        Agent may require;

                (5) An ALTA extended coverage lender's policy of title insurance
        (or a commitment therefor) for the Property insuring the validity and
        priority of the Lease Agreement (subject to such exceptions as Agent may
        approve), in such amounts and with such endorsements as Agent may
        reasonably require, issued by a title insurer acceptable to Agent,
        together with such policies of co-insurance or re-insurance (or
        commitments therefor) as Agent may require;

                (6) An ALTA extended coverage lender's policy of title insurance
        (or a commitment therefor) for the Property insuring the validity and
        priority of the Lessor Deed of Trust (subject to such exceptions as
        Agent may approve), in such amounts and with such endorsements as Agent
        may reasonably require, issued by a title insurer acceptable to Agent,
        together with such policies of co-insurance or re-insurance (or
        commitments therefor) as Agent may require;

                (7) Copies of all leases for the Property and all other
        documents, instruments and agreements recorded against or otherwise
        affecting the Property, including all amendments, extensions and other
        modifications thereof;

                (8) Subordination, non-disturbance and attornment agreements
        from the lessee under each of the leases for the Property;

                (9) Such consents and estoppels, with appropriate mortgagee
        protection language, as are requested by Agent, each duly executed by
        the appropriate Person;

                (10) Such Uniform Commercial Code financing statements and
        fixture filings (appropriately completed and executed) for filing in
        such jurisdictions as Agent may request to perfect the Liens granted to
        Lessor and Agent in the Lessee Security Documents, the Lessor Security
        Agreement and the other Operative Documents;

                (11) Such Uniform Commercial Code termination statements
        (appropriately completed and executed) for filing in such jurisdictions
        as Agent may request to terminate any financing statement evidencing
        Liens of other Persons in the Collateral which are prior to the Liens
        granted to Lessor and Agent in the Lessee Security Documents, the Lessor
        Security Agreement and the other Operative Documents, except for any
        such prior Liens which are expressly permitted by the Operative
        Documents to be prior;

                (12) Uniform Commercial Code search certificates from the
        jurisdictions in which Uniform Commercial Code financing statements are
        to be filed pursuant to item D(10) above reflecting no other financing
        statements or filings which evidence Liens of other Persons in the
        Collateral which are prior to the Liens granted to Lessor and Agent in
        the Lessee Security Documents, the Lessor Security Agreement and the
        other Operative Documents, except for any such prior Liens (a) which are
        expressly permitted

                                     3.01-3
<PAGE>   104
        by the Operative Documents to be prior or (b) for which Agent has
        received a termination statement pursuant to item D(11) above;

                (13) A Securities Account Control Agreement duly executed by
        Lessee, Lessor and the applicable Securities Intermediary and evidence
        that Cash Collateral in the form of United States Treasury Securities in
        the amounts required by Subparagraph 2.11(a) have been delivered to such
        Securities Intermediary and are subject to the Securities Account
        Control Agreement as required by the Cash Collateral Agreement;

                (14) Such other documents, instruments and agreements as Agents
        may reasonably request to establish and perfect the Liens granted to any
        Lessor Party in the Lessee Security Documents, the Lessor Deed of Trust,
        the Lessor Security Agreement and the other Operative Documents; and

                (15) Such other evidence as Agent may request to establish that
        the Liens granted to Agent or any Participant in the Lessee Security
        Documents, the Lessor Deed of Trust, the Lessor Security Agreement and
        the other Operative Documents are perfected and prior to the Liens of
        other Persons in the Collateral, except for any such Liens which are
        expressly permitted by the Operative Documents to be prior.

E.      OPINIONS.

                (1) A favorable written opinion of Morrison & Foerster, LLP,
        counsel for Lessee, dated the Closing Date and addressed to Agent for
        the benefit of Lessor, Agent and the Participants, covering such legal
        matters (other than the opinions with respect to the perfection of the
        Cash Collateral under the Cash Collateral Agreement which shall be
        delivered as provided in Subparagraph 2.11 (a)(ii)) as Agent may
        reasonably request and otherwise in form and substance satisfactory to
        Agent.

F.      OTHER ITEMS.

                (1) A duly completed and timely delivered Advance Request for
        the initial Advance, duly executed by Lessee;

                (2) Bills of sale for all Related Goods to be acquired with the
        Advance to be made on the Closing Date, each reflecting Lessor as the
        purchaser of such Related Goods;

                (3) A Completion Date Appraisal for the Property, dated as of a
        recent date prior to the Closing Date, that appraises the Property at
        not less than the Total Commitment;

                (4) An Expiration Date Appraisal for the Property, dated as of a
        recent date prior to the Closing Date, that appraises the Property at
        not less than the Total Commitment;

                                     3.01-4
<PAGE>   105
                (5) A copy of the Plans and Specifications for the New
        Improvements;

                (6) A copy of the budget for the New Improvements which (a)
        includes provisions for all hard and soft costs of constructing the New
        Improvements (including, without limitation, all capitalized interest)
        and reasonable allowances for contingencies and (b) budgets the
        aggregate cost of such construction at $ 170,000,000 or less; together
        with a certificate of the Chief Financial Officer of Lessee certifying
        that such budget is a reasonable budget that sets forth the likely
        maximum costs of constructing the New Improvements;

                (7) An as-built survey of the Property (a) prepared and dated
        not more than two (2) months prior to the Closing Date by a registered
        surveyor reasonably satisfactory to Agent, (b) certified as correct and
        as (i) having been made in accordance with the most recent standards for
        "Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys,"
        jointly established and adopted by ALTA and ACSM, and (ii) meeting the
        accuracy requirements of a Class A survey (as defined therein) and
        including items 1-4, 6, 7(a), 7(b)(1), 8-11 and 13 of Table A thereof,
        and (c) disclosing, among other things, (i) the location of the
        perimeter of the Property by courses and distances, (ii) all easements
        and rights-of-way, whether above or underground, (iii) the lines of the
        street abutting the Property and the width thereof, (iv) encroachments,
        if any, and the extent thereof in feet and inches upon the Property, and
        (v) all boundary and lot lines, and all other matters that would be
        disclosed by inspection of the Property and the public records;

                (8) If requested by Lessor, Agent or any Participant, a list of
        and copies of all Construction Agreements;

                (9) Environmental reports and assessments of the Property
        satisfactory to Agent issued by environmental consultants acceptable to
        Agent;

                (10) Certificates of insurance evidencing the insurance Lessee
        is required to maintain pursuant to Paragraph 3.03 of the Lease
        Agreement;

                (11) A certificate of the Chief Financial Officer of Lessee,
        addressed to Lessor and Agent and dated the Closing Date, certifying
        that:

                        (a) The representations and warranties set forth in
                Paragraph 4.01 of the Participation Agreement and in the other
                Operative Documents are true and correct in all material
                respects as of such date (except for such representations and
                warranties made as of a specified date, which shall be true as
                of such date);

                        (b) No Default has occurred and is continuing as of such
                date; and

                        (c) All of the Operative Documents are in full force and
                effect on such date.

                (12) All fees and expenses payable to the Lessor Parties on or
        prior to the Closing Date (including all Agent's Fees);

                                     3.01-5
<PAGE>   106
                (13) All fees and expenses of Lessor's and Agent's counsels
        through the Closing Date; and

                (14) Such other evidence as Agent may reasonably request to
        establish the accuracy and completeness of the representations and
        warranties and the compliance with the terms and conditions contained in
        the Operative Documents.

                                     3.01-6
<PAGE>   107
                                SCHEDULE 4.01(q)

                                  SUBSIDIARIES

<TABLE>
<CAPTION>
SUBSIDIARY                         JURISDICTION                  CLASS        % OWNED
----------                         ------------                  -----        -------
<S>                                <C>                           <C>          <C>
Novellus Systems
International, Inc.                 U.S.A.                       Common         100%

Novellus Malaysia                   Malaysia                     Common         100%

Novellus Systems, Ltd.              U.K.                         Common         100%

Novellus Systems, BV                Netherlands                  Common         100%

Nippon Novellus
Systems, KK                         Japan                        Common         100%

Novellus Systems Korea
Co. Ltd.                            Korea                        Common         100%

Novellus Systems Beijing            Mainland China               Common         100%

Novellus Singapore PTE
Ltd.                                Singapore                    Common         100%

Novellus Systems
Semiconductor Equipment
Shanghai Co., Ltd.                  Mainland China               Common         100%

Novellus Systems
Taiwan Ltd.                         Taiwan                       Common         100%

Novellus Systems GmbH               Germany                      Common         100%

Novellus Systems SARL               France                       Common         100%

Novellus Systems
Ireland, Ltd.                       Ireland                      Common         100%

Novellus Systems                    Israel                       Common         100%
Israel, Ltd.

Novellus Singapore                  Singapore                    Common         100%
Pte. Ltd.
</TABLE>

                                   4.01(q)-1
<PAGE>   108
<TABLE>
<S>                                <C>                           <C>            <C>
GaSonics International              U.S.A.                       Common         100%

GaSonics World Trade, Inc.          U.S.A.                       Common         100% (indirectly)

GaSonics International
Japan, Kabushiki Kaisha             Japan                        Common         100% (indirectly)

GaSonics International              Korea                        Common         100% (indirectly)
Korea Corporation

GaSonics International              U.K.                         Common         100% (indirectly)
Europe, Ltd.

GaSonics International              France                       Common         100% (indirectly)
France

GaSonics International              Ireland                      Common         100% (indirectly)
Ireland, Ltd.

GaSonics International              Israel                       Common         100% (indirectly)
Israel, Ltd.

GaSonics International              Germany                      Common         100% (indirectly)
Germany
</TABLE>

                                   4.01(q)-2
<PAGE>   109
                                SCHEDULE 5.02(a)

                              EXISTING INDEBTEDNESS

<TABLE>
<CAPTION>
FINANCIAL INSTITUTION              CURRENCY                AMOUNT           FACILITY TYPE
---------------------              --------                ------           -------------
<S>                                <C>               <C>                   <C>
Bank of Tokyo Mitsubishi             JPY              1,300,000,000        Line of Credit
Bank of Tokyo Mitsubishi             JPY                520,000,000        Line of Credit
Sanwa Bank                           JPY              2,400,000,000        Line of Credit
Sumitomo Bank                        JPY                500,000,000        Line of Credit
ABN AMRO Bank                        USD                     97,000          Standby L/C
Malayan Banking Berhad                RM                     30,000        Bank Guarantee Facility
</TABLE>

                                   5.02(a)-1
<PAGE>   110
                                SCHEDULE 5.02(b)

                                 EXISTING LIENS

                                      None

                                   5.02(b)-1
<PAGE>   111

                                    EXHIBIT A

                                      LAND

                                  NOVELLUS SITE
                                    PARCEL 2

                              PROPERTY DESCRIPTION

Parcel A:

A parcel of land containing 23.018 Acres, more or less, located in a portion of
the Northeast Quarter of Section 22, Township Two South, Range One West,
Willamette Meridian, City of Tualatin, Washington County, Oregon, being more
particularly described as follows:

Beginning at a 2" Brass Disk in a monument box marking the one-quarter corner
common to Sections 15 and 22; thence South 000 06' 18" West 30.00 feet to a
point on the south right-of-way line of S.W. Tualatin Road; thence following the
East line of that Parcel of land shown as Parcel 2 on Washington County Survey
#23,036 South 000 06' 18" West 451.01 feet to the "TRUE POINT OF BEGINNING" for
this described tract; thence South 890 35' 19" East 1129.99 feet; thence South
000 24' 41 " West 134.46 feet; thence North 890 35' 19" West 162.59 feet; thence
South 000 24' 41" West 311.68 feet; thence South 890 35' 19" East 411.63 feet;
thence South 000 24' 41" West 406.45 feet to a point on the north right-of-way
line (being 30.00 feet from centerline) of S.W. Leveton Drive; thence following
the north right-of-way line of S.W. Leveton Drive North 890 41' 51 " West 48.66
feet to an angle point in the north right-of-way line of said S.W. Leveton
Drive; thence North 890 35' 19" West 1325.84 feet to a found 3/4" brass washer
marked "PLS 2351" per survey #23,991 marking the Southeast corner of that said
Parcel of land shown as Parcel 2 on Washington County Survey #23,036; thence
following the East line of said Parcel 2 as shown on Washington County Survey
#23,036 North 000 06' 18" East 845.79 feet to the "TRUE POINT OF BEGINNING".

Subject to: All easements, restrictions and rights-of-way of record and those
common and apparent on the land.

                                       A-1
<PAGE>   112

                                    EXHIBIT B

                                 LEASE AGREEMENT

                                       B-1
<PAGE>   113
                                                      EXECUTION COPY
                                                      Novellus V

Recording requested by and
when recorded return to:

Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California  94111
Attn: John Rivers, Esq.

                            LINE OF CREDIT INSTRUMENT

                                LEASE AGREEMENT,

              CONSTRUCTION DEED OF TRUST WITH ASSIGNMENT OF RENTS,

                      SECURITY AGREEMENT AND FIXTURE FILING

                                  BY AND AMONG

                             NOVELLUS SYSTEMS, INC.

                                       AND

                             ABN AMRO LEASING, INC.

                                       AND

                              CHICAGO TITLE COMPANY

                                 APRIL 18, 2001

                    THIS LEASE IS NOT INTENDED TO CONSTITUTE
                      A TRUE LEASE FOR INCOME TAX PURPOSES
                              (SEE PARAGRAPH 2.06)

      MATURITY DATE:  APRIL  2006
      MAXIMUM PRINCIPAL AMOUNT TO BE ADVANCED:  $170,000,000 (WHICH MAY BE
      EXCEEDED TO COMPLETE CONSTRUCTION PURSUANT TO ORS 85.155):
<PAGE>   114
                                TABLE OF CONTENTS

                                                                            PAGE

SECTION 1.     INTERPRETATION................................................3

1.01.          Definitions...................................................3

1.02.          Rules of Construction.........................................3

SECTION 2.     BASIC PROVISIONS..............................................3

2.01.          Lease of the Property.........................................3

2.02.          Term..........................................................3

2.03.          Rent..........................................................4

2.04.          Use...........................................................6

2.05.          As Is Lease...................................................6

2.06.          Nature of Transaction.........................................7

2.07.          Security, Etc.................................................7

SECTION 3.     OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS................9

3.01.          Maintenance, Repair, Etc......................................9

3.02.          Risk of Loss.................................................10

3.03.          Insurance....................................................11

3.04.          Casualty and Condemnation....................................15

3.05.          Taxes........................................................18

3.06.          Environmental Matters........................................19

3.07.          Liens, Easements, Etc........................................20

3.08.          Subletting...................................................21

3.09.          Utility Charges..............................................21

3.10.          Removal of Property..........................................21

3.11.          Compliance with Governmental Rules and Insurance
               Requirements.................................................21

3.12.          Permitted Contests...........................................22

3.13.          Lessor Obligations; Right to Perform Lessee Obligations......22

3.14.          Inspection Rights............................................22

SECTION 4.     EXPIRATION DATE..............................................22

4.01.          Termination by Lessee Prior to Scheduled Expiration Date.....22

4.02.          Surrender of Property........................................23

4.03.          Holding Over.................................................23

SECTION 5.     DEFAULT......................................................23

                                      -i-
<PAGE>   115
                                TABLE OF CONTENTS
                                   (CONTINUED)
                                                                            PAGE

5.01.          Events of Default............................................23

5.02.          General Remedies.............................................26

5.03.          Lease Remedies...............................................27

5.04.          Loan Remedies................................................27

5.05.          Remedies Cumulative..........................................30

5.06.          No Cure or Waiver............................................30

5.07.          Exercise of Rights and Remedies..............................30

SECTION 6.     MISCELLANEOUS................................................32

6.01.          Notices......................................................32

6.02.          Waivers; Amendments..........................................32

6.03.          Successors and Assigns.......................................32

6.04.          No Third Party Rights........................................32

6.05.          Partial Invalidity...........................................32

6.06.          Governing Law................................................32

6.07.          Counterparts.................................................32

6.08.          Nature of Lessee's Obligations...............................32

6.09.          Construction License.........................................33

6.10.          Non-Residential Trust Deed...................................33

SCHEDULE
--------

3.03  Insurance Requirements

EXHIBITS
--------

A     Land (2.01(a))
B     Related Goods (2.01(d))
C     Notice of Rental Period Selection (2.03(a))

                                      -ii-
<PAGE>   116
                            LINE OF CREDIT INSTRUMENT

                                LEASE AGREEMENT,
              CONSTRUCTION DEED OF TRUST WITH ASSIGNMENT OF RENTS,
                      SECURITY AGREEMENT AND FIXTURE FILING

      THIS LEASE AGREEMENT, CONSTRUCTION DEED OF TRUST WITH ASSIGNMENT OF RENTS,
SECURITY AGREEMENT AND FIXTURE FILING (this "Agreement" herein), dated as of
April 18, 2001, is entered into by and between:

            (1)   NOVELLUS SYSTEMS, INC., a California corporation ("Lessee");
      and

            (2)   ABN AMRO LEASING, INC., an Illinois corporation, as lessor
      under this Agreement and as trustee under the deed of trust contained
      herein ("Lessor").

           (3)   CHICAGO TITLE COMPANY, as trustee under the deed of trust
      contained herein (in such capacity, "Trustee").

                                    RECITALS

      A.    Lessee has requested Lessor and the Persons which are "Participants"
under the Participation Agreement referred to in Recital B below (such Persons
to be referred to collectively as the "Participants") to provide to Lessee a
lease facility pursuant to which:

            (1)   Lessor would (a) lease from Lessee certain land currently
      owned by Lessee, (b) sublease back to Lessee such land and lease to Lessee
      certain improvements to be constructed on such land, (c) appoint Lessee as
      Lessor's agent to make such improvements (which improvements will be owned
      by Lessor), (d) make advances to finance such improvements and to pay
      certain related expenses and (e) grant to Lessee the right to purchase
      such improvements; and

            (2)   The Participants would participate in such lease facility by
      (a) funding the advances to be made by Lessor and (b) acquiring
      participation interests in the rental and certain other payments to be
      made by Lessee.

      B.    Pursuant to a Participation Agreement dated of even date herewith
(the "Participation Agreement") among Lessee, Lessor, the Participants and ABN
AMRO Bank N.V., as agent for the Participants (in such capacity, "Agent"),
Lessor and the Participants have agreed to provide such lease facility upon the
terms and subject to the conditions set forth therein, including without
limitation the execution and delivery of this Agreement setting forth the terms
of the lease by Lessor to Lessee of the property.

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:
<PAGE>   117
SECTION 1.  INTERPRETATION.

      1.01. Definitions. Unless otherwise indicated in this Agreement or any
other Operative Document, each term set forth in Schedule 1.01 to the
Participation Agreement, when used in this Agreement or any other Operative
Document, shall have the respective meaning given to that term in such Schedule
1.01 or in the provision of this Agreement or other document, instrument or
agreement referenced in such Schedule 1.01.

      1.02. Rules of Construction. Unless otherwise indicated in this Agreement
or any other Operative Document, the rules of construction set forth in Schedule
1.02 to the Participation Agreement shall apply to this Agreement and the other
Operative Documents.

SECTION 2.  BASIC PROVISIONS.

      2.01. Lease of the Property. Subject to the ground lease thereof by Lessor
pursuant to the Participation Agreement and the Ground Lease, Lessor agrees to
lease to Lessee and Lessee agrees to lease (or in the case of the Land,
sublease) from Lessor the following property (the "Property") to the extent of
Lessor's estate, right, title and interest therein, thereto or thereunder:

            (a)   All lots, pieces, tracts and parcels of land described in
      Exhibit A (the "Land");

            (b)   All Improvements now or hereafter located on the Land;

            (c)   All Appurtenant Rights belonging, relating or pertaining to
      the Land or the Improvements thereto;

            (d)   All Related Goods (including those described in Exhibit B and
      in each Exhibit B Supplement), Related Permits and Related Agreements
      related to the Land or any of the foregoing Improvements or Appurtenant
      Rights; and

            (e)   All accessions and accretions to and replacements and
      substitutions for the foregoing.

(Lessee acknowledges that Lessor's only estate, right, title and interest in the
Land and certain of the other Property is through the Ground Lease and is a
leasehold interest only.)

      2.02. Term.

            (a)   Original Term. The original term of this Agreement shall
      commence on the Closing Date (the "Commencement Date") and shall end on
      the date five (5) years after the Closing Date (such date as it may be
      extended pursuant to Subparagraph 2.02(b) to be referred to as the
      "Scheduled Expiration Date"). (For purposes of Oregon law, the Scheduled
      Expiration Date shall be the maturity date if this Agreement is construed
      as the parties intend.)

                                       2
<PAGE>   118
            (b)   Extensions. Lessee may request Lessor to extend the Scheduled
      Expiration Date in effect at any time for three (3) additional periods of
      one (1) year each, as provided in Subparagraph 2.09(b) of the
      Participation Agreement. If Lessor and each Participant (other than
      Novellus) consents to any such a request in accordance with such
      provision, the then current Scheduled Expiration Date shall be deemed
      extended by one (1) year in each instance. Lessee acknowledges that
      neither Lessor nor any Participant has any obligation or commitment
      (either express or implied) to extend, or consent to the extension of, the
      Scheduled Expiration Date at any time.

      2.03. Rent.

            (a)   Base Rent.

                  (i)   Lessee shall pay to Lessor as base rent hereunder ("Base
            Rent") for each Rental Period for each Portion of the Outstanding
            Lease Amount an amount equal to the sum of the Interest Component
            and Principal Component for such Rental Period determined as
            follows:

                        (A)   "Interest Component" shall mean, with respect to
                  any Rental Period and Portion, the product of (1) the Rental
                  Rate for such Rental Period and Portion, times (2) the amount
                  of such Portion on the first day of such Rental Period, times
                  (3) a fraction, the numerator of which is the number of days
                  in such Rental Period and the denominator of which is 360. If
                  the Rental Rate shall change during any Rental Period, the
                  Rental Rate for such Rental Period shall be the weighted
                  average of the Rental Rates in effect from time to time during
                  such Rental Period.

                        (B)   "Principal Component" shall mean, with respect to
                  any Rental Period, zero Dollars ($0.00).

                  (ii)  Prior to the Commitment Termination Date, the
            Outstanding Lease Amount shall consist of a single Portion with the
            following Rental Periods:

                        (A)   A Rental Period which begins on the Commencement
                  Date and ends on the first Business Day in the first calendar
                  month immediately following the month in which the
                  Commencement Date occurs; and

                        (B)   Each successive Rental Period thereafter which
                  begins on the last day of the immediately preceding Rental
                  Period and ends one (1) month thereafter on the first Business
                  Day of a calendar month through and including the Commitment
                  Termination Date.

                  (iii) On and after the Commitment Termination Date, Lessee may
            select the number and amounts of the Portions into which the
            Outstanding Lease Amount is to be divided and the Rental Period for
            each such Portion by delivering to Lessor, at least three (3)
            Business Days prior to the Commitment Termination Date and
            thereafter the last day of each Rental Period for a Portion, an
            irrevocable

                                       3
<PAGE>   119
            written notice in the form of Exhibit C, appropriately completed (a
            "Notice of Rental Period Selection"), subject to the following:

                        (A)   Each Portion shall be in the amount of $5,000,000
                  or an integral multiple of $100,000 in excess thereof;
                  provided, however, that (1) the total number of Portions
                  outstanding at any time shall not exceed three (3), and (2)
                  the Outstanding Lease Amount shall consist of a single Portion
                  in the amount of the Outstanding Lease Amount if the
                  Outstanding Lease Amount is less than $5,000,000).

                        (B)   The initial and each subsequent Rental Period
                  selected by Lessee for each Portion shall be one (1), two (2),
                  three (3) or six (6) months; provided, however, that (1) each
                  Rental Period shall begin and end on the first Business Day of
                  a calendar month, (2) no Rental Period shall end after the
                  Scheduled Expiration Date, (3) no Rental Period shall be
                  longer than one (1) month if a Default has occurred and is
                  continuing on the date three (3) Business Days prior to the
                  first day of such Rental Period and (4) each Rental Period
                  after the initial Rental Period for any Portion for which
                  Lessee fails to make a selection by delivering a Notice of
                  Rental Period Selection in accordance with this clause (iii)
                  shall be one (1) month.

            Lessee shall deliver each Notice of Rental Period Selection by
            first-class mail or facsimile as required by Subparagraph 2.02(a)
            and Paragraph 7.01 of the Participation Agreement; provided,
            however, that Lessee shall promptly deliver the original of any
            Notice of Rental Period Selection initially delivered by facsimile.

                  (iv)  The rental rate for each Rental Period for a Portion
            ("Rental Rate") shall be the LIBOR Rental Rate for such Rental
            Period and Portion, except as follows:

                        (A)   The rental rate for any part of a Portion
                  attributable to Outstanding Tranche A Participation Amounts or
                  Outstanding Tranche B Participation Amounts after the
                  Completion Date shall be the Applicable Margins therefor.

                        (B)   Except as otherwise provided in clause (A) above
                  for Outstanding Tranche A Participation Amounts and
                  Outstanding Tranche B Participation Amounts after the
                  Completion Date, if any Rental Period is less than one (1)
                  month, the Rental Rate for such Rental Period shall be the
                  Alternate Rental Rate; or

                        (C)   Except as otherwise provided in clause (A) above
                  for Outstanding Tranche A Participation Amounts and
                  Outstanding Tranche B Participation Amounts after the
                  Completion Date, if the LIBOR Rental Rate is unavailable for
                  any Rental Period pursuant to Subparagraph

                                       4
<PAGE>   120
                  2.12(a) or Subparagraph 2.12(b) of the Participation
                  Agreement, the Rental Rate for such Rental Period shall be the
                  Alternate Rental Rate

                  (v)   Lessee shall pay Base Rent in arrears (A) for each
            Portion, on the last day of each Rental Period therefor and, in the
            case of any Rental Period which exceeds three (3) months, each day
            occurring every three (3) months after the first day of such Rental
            Period (individually, a "Scheduled Rent Payment Date") and (B) for
            all Portions, on the Expiration Date.

            (b)   Supplemental Rent. Lessee shall pay as supplemental rent
      hereunder ("Supplemental Rent"):

                  (i)   All amounts payable by Lessor as rent or otherwise under
            the Ground Lease; and

                  (ii)  All other amounts (other than Base Rent, the purchase
            price payable by Lessee for any purchase of the Property by Lessee
            pursuant to the Purchase Agreement and the Residual Value Guaranty
            Amount payable under the Purchase Agreement) payable by Lessee under
            this Agreement and the other Operative Documents.

      Lessee shall pay all Supplemental Rent amounts on the dates specified in
      this Agreement and the other Operative Documents for the payment of such
      amounts or, if no date is specified for the payment of any such amount,
      within five (5) Business Days after demand of Lessor or any other Person
      to whom such amount is payable; provided, however, that all Supplemental
      Rent payable pursuant to clause (i) above during the Commitment Period
      shall be capitalized as provided in clause (i) of Subparagraph 2.03(c) of
      the Participation Agreement.

            (c)   Construction Period Ground Lease Fair Market Rent. On the
      first day after the expiration of the Construction Period, Lessor shall
      advance and pay to Lessee the Construction Period Ground Lease Fair Market
      Rent as rental for the Ground Lease Property during the Construction
      Period, such amount to be treated and capitalized as a Project Cost and
      added to the Outstanding Lease Amount. On such date, Lessee shall pay to
      Lessor as Base Rent an amount equal to the Construction Period Ground
      Lease Fair Market Rent, such amount constituting a Principal Component to
      be applied to reduce the Outstanding Lease Amount. If Completion of the
      New Improvements does not occur and this Agreement is terminated prior to
      its Scheduled Expiration Date in accordance with its terms, Lessee shall
      be entitled to offset any accrued and unpaid portion of the Construction
      Period Ground Lease Fair Market Rent owed by Lessor to Lessee against the
      Residual Value Guaranty Amount, unpaid Rent, or any other amounts, if any,
      due and payable by Lessee to Lessor under the Operative Documents.

      2.04. Use.  Lessee may use the Property for office, research and
development, warehouse and manufacturing purposes, and for any other purpose
which is in compliance with applicable zoning laws and ordinances for the
Property.

                                       5
<PAGE>   121
      2.05. As Is Lease. Lessee has conducted, or will conduct from time to time
with regard to property that may be added hereto after the date hereof, all due
diligence which it deems appropriate regarding the Property and agrees that no
Lessor Party (other than Novellus in its capacity as Lessee) has any obligation
to conduct any such due diligence. Lessee is leasing the Property "as is, with
all faults" without any representation, warranty, indemnity or undertaking by
any Lessor Party (other than Novellus) regarding any aspect of the Property,
including (a) the condition of the Property (including any Improvements to the
Property made prior to the Commencement Date or during the Term); (b) title to
the Property (including possession of the Property by any Person or the
existence of any Lien or any other right, title or interest in or to any of the
Property in favor of any Person); (c) the value, habitability, usability,
design, operation or fitness for use of the Property; (d) the availability or
adequacy of utilities and other services to the Property; (e) any latent, hidden
or patent defect in the Property; (f) the zoning or status of the Property or
any other restrictions on the use of the Property; (g) the economics of the
Property; (h) any Casualty or Condemnation; or (i) the compliance of the
Property with any applicable Governmental Rule or Insurance Requirement;
provided, however, that Lessor shall be obligated to remove Lessor Liens to the
extent required in Subparagraph 5.04(b) of the Participation Agreement. Without
limiting the generality of the foregoing, Lessee specifically waives any
covenant of quiet enjoyment except as otherwise provided in Subparagraph 5.04(b)
of the Participation Agreement.

      2.06. Nature of Transaction. As more fully provided in Paragraph 2.10 of
the Participation Agreement, Lessee and the Lessor Parties intend that the
transaction evidenced by this Agreement and the other Operative Documents
constitute an operating lease in accordance with FASB 13 for accounting purposes
and a loan secured by the Property for all other purposes, including federal,
state and local income tax purposes and commercial, real estate and bankruptcy
law purposes.

      2.07. Security, Etc. In order to secure the Lessee Obligations and
otherwise to assure the Lessor Parties the benefits hereof in the event that the
transaction evidenced by this Agreement and the other Operative Documents is,
pursuant to the intent of Lessee and the Lessor Parties, treated as a loan for
certain purposes, Lessee hereby makes the following grants and agrees as
follows:

            (a)   Real Property Security. As security for the Lessee
      Obligations, Lessee hereby irrevocably and unconditionally grants,
      conveys, transfers and assigns to Trustee, as trustee under this deed of
      trust, for the benefit of Lessor, as beneficiary (in trust for the benefit
      of the Lessor Parties), with power of sale and right of entry and
      possession, all estate, right, title and interest of Lessee in the
      following property, whether now owned or leased or hereafter acquired,
      (collectively, the "Real Property Collateral"):

                  (i)   The Land (including Lessor's leasehold interest under
            the Ground Lease);

                  (ii)  All Improvements now or hereafter located on the Land;

                  (iii) All Appurtenant Rights belonging, relating or pertaining
            to any of the Land or Improvements thereto;

                                       6
<PAGE>   122
                  (iv)  All Subleases and Issues and Profits accruing from the
            Land or any of the foregoing Improvements or Appurtenant Rights to
            the extent that such Subleases and Issues and Profits constitute
            real property;

                  (v)   All Related Goods, Related Agreements and Related
            Permits related to any of the Land or foregoing Improvements or
            Appurtenant Rights to the extent that such Related Goods, Related
            Agreements and Related Permits constitute real property;

                  (vi)  All other Property to the extent that such property
            constitutes real property; and

                  (vii) All proceeds of the foregoing, including Casualty and
            Condemnation Proceeds.

            (b)   Personal Property Security. As security for the Lessee
      Obligations, Lessee hereby irrevocably and unconditionally assigns and
      grants to Lessor, for the benefit of the Lessor Parties, a security
      interest in all estate, right, title and interest of Lessee in the
      following property, whether now owned or leased or hereafter acquired,
      (collectively, the "Personal Property Collateral"):

                  (i)   All Subleases and Issues and Profits accruing from the
            Land or any of the foregoing Improvements or Appurtenant Rights to
            the extent that such Subleases and Issues and Profits constitute
            personal property;

                  (ii)  All Related Goods, Related Agreements and Related
            Permits related to the Land or any of the foregoing Improvements or
            Appurtenant Rights to the extent that such Related Goods, Related
            Agreements and Related Permits constitute personal property;

                  (iii) All Cash Collateral and all other deposit accounts,
            instruments, investment property and monies held by any Lessor Party
            (other than Novellus) in connection with this Agreement or any other
            Operative Document (including any Repair and Restoration Account);

                  (iv)  All other Property to the extent such Property
            constitutes personal property; and

                  (v)   All proceeds of the foregoing, including Casualty and
            Condemnation Proceeds.

      For purpose of the provisions of this Agreement related to the creation
      and enforcement of this Agreement as a security agreement and a fixture
      filing with respect to the Related Goods, Lessee is the "debtor" and
      Lessor is the "secured party," acting for the benefit of the Lessor
      Parties. This Agreement constitutes a fixture filing for purposes of the
      Oregon Commercial Code with respect to the Related Goods which are or are
      to become fixtures on the Land or Improvements. The mailing addresses of
      Lessee and of Lessor from which information concerning security interests
      hereunder may be obtained are as set forth on

                                       7
<PAGE>   123
      the signature page of this Agreement. A carbon, photographic or other
      reproduction of this Agreement or of any financing statement related to
      this Agreement shall be sufficient as a financing statement for any of the
      purposes referenced herein.

            (c)   Absolute Assignment of Subleases, Issues and Profits. Lessee
      hereby irrevocably assigns to Lessor, for the benefit of the Lessor
      Parties, all of Lessee's estate, right, title and interest in, to and
      under the Subleases and the Issues and Profits, whether now owned or
      hereafter acquired. This is a present and absolute assignment, for
      security purposes in accordance with Oregon Revised Statute ("ORS")
      Section 93.805, and Lessor's right to the Subleases and Issues and Profits
      is not contingent upon, and may be exercised without possession of, the
      Property.

                  (i)   If no Event of Default has occurred and is continuing,
            Lessee shall have a revocable license to collect and retain the
            Issues and Profits as they become due. Upon the occurrence and
            during the continuance of an Event of Default, such license shall
            automatically terminate, and Lessor may collect and apply the Issues
            and Profits pursuant to Subparagraph 5.02(d) without further notice
            to Lessee or any other Person and without taking possession of the
            Property. All Issues and Profits thereafter collected by Lessee
            shall be held by Lessee as trustee in a constructive trust for the
            benefit of Lessor. Lessee hereby irrevocably authorizes and directs
            the sublessees under the Subleases, without any need on their part
            to inquire as to whether an Event of Default has actually occurred
            or is then existing, to rely upon and comply with any notice or
            demand by Lessor for the payment to Lessor of any rental or other
            sums which may become due under the Subleases or for the performance
            of any of the sublessees' undertakings under the Subleases.
            Collection of any Issues and Profits by Lessor shall not cure or
            waive any default or notice of default hereunder or invalidate any
            acts done pursuant to such notice.

                  (ii)  The foregoing irrevocable assignment shall not cause any
            Lessor Party (other than Novellus in its capacity as Lessee and in
            accordance with the Operative Documents) to be (A) a mortgagee in
            possession; (B) responsible or liable for (1) the control, care,
            management or repair of the Property or for performing any of
            Lessee's obligations or duties under the Subleases, (2) any waste
            committed on the Property by the sublessees under any of the
            Subleases or by any other Persons, (3) any dangerous or defective
            condition of the Property, or (4) any negligence in the management,
            upkeep, repair or control of the Property resulting in loss or
            injury or death to any sublessee, licensee, employee, invitee or
            other Person; or (C) responsible for or impose upon any Lessor Party
            (other than Novellus in its capacity as Lessee and in accordance
            with the Operative Documents) any duty to produce rents or profits.
            No Lessor Party, in the absence of gross negligence or willful
            misconduct on its part, shall be liable to Lessee as a consequence
            of (y) the exercise or failure to exercise any of the rights,
            remedies or powers granted to Lessor hereunder or (z) the failure or
            refusal of Lessor to perform or discharge any obligation, duty or
            liability of Lessee arising under the Subleases.

                                       8
<PAGE>   124
SECTION 3.  OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS.

      3.01. Maintenance, Repair, Etc.

            (a)   General. Lessee shall not permit any waste of the Property,
      except for ordinary wear and tear, and shall, at its sole cost and
      expense, maintain the Property in good working order, mechanical condition
      and repair and make all necessary repairs thereto, of every kind and
      nature whatsoever, whether interior or exterior, ordinary or
      extraordinary, structural or nonstructural or foreseen or unforeseen, in
      each case as required by all applicable Governmental Rules and Insurance
      Requirements and on a basis consistent with the operation and maintenance
      of commercial properties comparable in type and location to the Property
      and in compliance with prudent industry practice.

            (b)   New Improvements. Lessee shall make or cause to be made all of
      the New Improvements authorized and required by the Construction Agency
      Agreement in accordance with the Construction Agency Agreement.

            (c)   Other Modifications. After the Completion of the New
      Improvements, Lessee, at its sole cost and expense, may from time to time
      make alterations, renovations, improvements and additions to the Property
      and substitutions and replacements therefor (collectively,
      "Modifications") in addition to the New Improvements; provided that:

                  (i)   No Modification impairs the value, utility or useful
            life of the Property or any part thereof from that which existed
            immediately prior to such Modification;

                  (ii)  All Modifications are made expeditiously and, in no
            case, unless Lessee currently is exercising either the Term Purchase
            Option or the Expiration Date Purchase Option, shall Modifications
            remain uncompleted later than six (6) months prior to the Scheduled
            Expiration Date;

                  (iii) All Modifications are made in a good and workmanlike
            manner and in compliance with all applicable Governmental Rules and
            Insurance Requirements;

                  (iv)  Subject to Paragraph 3.12 relating to permitted
            contests, Lessee pays all costs and expenses and discharges (or
            cause to be insured or bonded over) any Liens arising in connection
            with any Modification not later than the earlier of (A) sixty (60)
            days after the same shall be filed (or otherwise becomes effective)
            and (B) unless Lessee currently is exercising either the Term
            Purchase Option or the Expiration Date Purchase Option, six (6)
            months prior to the Scheduled Expiration Date;

                  (v)   At least one (1) month prior to the commencement of (A)
            any Modifications which are anticipated to cost $500,000 or more in
            the aggregate, or (B) any Modifications which cause the total of all
            Modifications undertaken during the previous twelve-month period to
            exceed an aggregate cost of

                                       9
<PAGE>   125
            $1,000,000, Lessee shall deliver to Lessor, with sufficient copies
            for Agent and each Participant (other than Novellus), a brief
            written description of such Modifications; and

                  (vi)  All Modifications otherwise comply with this Agreement
            and the other Operative Documents.

            (d)   Abandonment. Lessee shall not abandon the Property or any
      material portion thereof for any period in excess of thirty (30)
      consecutive days during the term hereof, except as a part of any New
      Improvements or Modifications as permitted herein or in the other
      Operative Documents.

            (e)   Maintenance. Lessee shall maintain the Property and each
      material portion thereof in a manner consistent with other similar
      properties in the same area, except as a part of any New Improvements or
      Modifications as permitted herein.

      3.02. Risk of Loss. Lessee assumes all risks of loss arising from any
Casualty or Condemnation which arises or occurs prior to the Expiration Date or
while Lessee is in possession of the Property and all liability for all personal
injuries and deaths and damages to property suffered by any Person or property
on or in connection with the Property which arises or occurs prior to the
Expiration Date or while Lessee is in possession of the Property, except in each
case to the extent any such loss or liability is primarily caused by the gross
negligence or willful misconduct of a Lessor Party; provided, however, that
Lessee shall have no obligation under this Paragraph 3.02 on account of any such
loss or liability arising during the Construction Period except as follows:

            (a)   Lessee shall be liable under this Paragraph 3.02 for all such
      losses and liabilities arising during the Construction Period if caused by
      or arising from any failure by Lessee to comply with any of its
      obligations under the Operative Documents (including its insurance
      obligations), any representation by Lessee in any of the Operative
      Documents not being true, any negligence or willful misconduct of Lessee,
      or any claim by any third-party against Lessee (or against any Lessor
      Party) based upon any alleged action or inaction by Lessee.

            (b)   If any Lessor Party incurs any such loss or liability arising
      during the Construction Period for which Lessee is not liable pursuant to
      Subparagraph 3.02(a), the amount of such loss or liability shall, if such
      Lessor Party shall so request by a written notice to Lessor, be
      capitalized pursuant to clause (ii) of Subparagraph 2.03(c) of the
      Participation Agreement.

Lessee hereby waives the provisions of California Civil Code Sections 1932(1),
1932(2) and 1933(4), and any and all other applicable existing or future
Governmental Rules permitting the termination of this Agreement as a result of
any Casualty or Condemnation, and Lessor shall in no event be answerable or
accountable for any risk of loss of or decrease in the enjoyment and beneficial
use of the Property as a result of any such event.

      3.03. Insurance.

                                       10
<PAGE>   126
            (a)   Coverage.

                  (i)   During the Construction Period, Lessee shall arrange for
            insurance as agent for Lessor and the incremental cost of such
            insurance shall be capitalized as a project cost. Such insurance
            coverage, during the Construction Period, shall be not less than set
            forth in Schedule 3.03 and such additional insurance of the types
            (including the types set forth in Schedule 3.03), in amounts and in
            a form acceptable to Lessor. The deductibles for all such insurance
            shall be limited to $-0- deductible for earthquake coverage and
            $10,000 for all other coverage.

                  (ii)  After the Construction Period, Lessee, at its sole cost
            and expense, shall at all times carry and maintain insurance
            coverage. Such insurance coverage, after the Construction Period,
            shall be not less than set forth in Schedule 3.03 and such
            additional insurance of the types (including the types set forth in
            Schedule 3.03), in amounts, in a form and with deductibles
            customarily carried by a reasonably prudent Person owning or
            operating properties similar to the Property in the same geographic
            area as the Property.

            (b)   Carriers. Any insurance carried and maintained by Lessee
      pursuant to this Paragraph 3.03 shall be underwritten by an insurance
      company which (i) has, at the time such insurance is placed and at the
      time of each renewal thereof, a general policyholder rating of "A" and a
      financial rating of at least VIII from A.M. Best Company or any successor
      thereto (or if there is none, an organization having a similar national
      reputation) or (ii) is otherwise approved by Lessor and Required
      Participants; provided, however, that, any insurance company underwriting
      Lessee's earthquake insurance shall be acceptable as long as each such
      insurance company has a general policyholder rating of "A-" and a
      financial rating of at least VIII from A.M. Best Company on the date such
      insurance is placed.

            (c)   Terms. Each insurance policy maintained by Lessee pursuant to
      this Paragraph 3.03 shall provide as follows, whether through endorsements
      or otherwise:

                  (i)   Lessor and Agent shall be named as additional insureds,
            in the case of each policy of liability insurance, and additional
            loss payees, in the case of each policy of property insurance.

                  (ii)  In respect of the interests of Lessor in the policy, the
            insurance shall not be invalidated by any action or by inaction of
            Lessee or by any Person having temporary possession of the Property
            while under contract with Lessee to perform maintenance, repair,
            alteration or similar work on the Property, and shall insure the
            interests of Lessor regardless of any breach or violation of any
            warranty, declaration or condition contained in the insurance policy
            by Lessee, Lessor or any other additional insured (other than by
            such additional insured, as to such additional insured); provided,
            however, that the foregoing shall not be deemed to (A) cause such
            insurance policies to cover matters otherwise excluded from coverage
            by the terms of such policies or (B) require any insurance to

                                       11
<PAGE>   127
            remain in force notwithstanding non-payment of premiums except as
            provided in clause (iii) below.

                  (iii) If the insurance policy is cancelled for any reason
            whatsoever, or substantial change is made in the coverage that
            affects the interests of Lessor, or if the insurance coverage is
            allowed to lapse for non-payment of premium, such cancellation,
            change or lapse shall not be effective as to Lessor for thirty (30)
            days after receipt by Lessor of written notice from the insurers of
            such cancellation, change or lapse.

                  (iv)  No Lessor Party (other than Novellus in its capacity as
            Lessee and in accordance with the Operative Documents) shall have
            any obligation or liability for premiums, commissions, assessments,
            or calls in connection with the insurance.

                  (v)   The insurer shall waive any rights of set-off or
            counterclaim or any other deduction, whether by attachment or
            otherwise, that it may have against any Lessor Party (other than
            Novellus).

                  (vi)  The insurance shall be primary without right of
            contribution from any other insurance that may be carried by any
            Lessor Party (other than Novellus) with respect to its interest in
            the Property.

                  (vii) The insurer shall waive any right of subrogation against
            any Lessor Party (other than Novellus).

                  (viii) All provisions of the insurance, except the limits of
            liability, shall operate in the same manner as if there were a
            separate policy covering each insured party.

                  (ix)  The insurance shall not be invalidated should Lessee or
            any Lessor Party waive, in writing, prior to a loss, any or all
            rights of recovery against any Person for losses covered by such
            policy, nor shall the insurance in favor of any Lessor Party or
            Lessee, as the case may be, or their respective rights under and
            interests in said policies be invalidated or reduced by any act or
            omission or negligence of any Lessor Party or Lessee, as the case
            may be, or any other Person having any interest in the Property.

                  (x)   All insurance proceeds with a value of less than five
            hundred thousand Dollars ($500,000) payable in respect of any loss
            or occurrence with respect to the Property during the Construction
            Period shall be paid to and adjusted solely by Lessee. All insurance
            proceeds with a value of less than two million five hundred thousand
            Dollars ($2,500,000) payable in respect of any loss or occurrence
            with respect to the Property after the Construction Period shall be
            paid to and adjusted solely by Lessee. All other insurance proceeds
            shall be paid to Lessor and adjusted jointly by Lessor and Lessee,
            except that, from and after the date on which the insurer receives
            written notice from Lessor that an Event of Default has occurred and
            is continuing (and unless and until such insurer receives

                                       12
<PAGE>   128
            written notice from Lessor that all Events of Default have been
            cured), all losses shall be adjusted solely by, and all insurance
            proceeds shall be paid solely to, Lessor.

                  (xi)  Each policy of property insurance shall contain a
            standard form mortgagee endorsement in favor of Lessor.

                  (xii) Each insurance policy shall provide that the coverage to
            be provided thereunder shall not be invalidated in the event Lessee
            or any Lessor Party fails to maintain other insurance covering
            losses of a similar type or types.

                  (xiii) Each insurance policy shall contain a "severability of
            interest" provision.

                  (xiv) Each insurance policy which is written as "excess
            insurance" shall contain a provision that it will drop down in the
            event that any underlying insurance coverage has been reduced or
            exhausted by reason of losses paid thereunder.

            (d)   Evidence of Insurance. Lessee, at its sole cost and expense,
      shall furnish to Lessor (i) not later than the Commencement Date, copies
      of all policies of insurance required by this Paragraph 3.03, certified by
      the insurers, (ii) upon each renewal of insurance and upon any material
      change in the terms thereof, copies of all policies, amendments and/or
      endorsements evidencing such renewal or change, certified by the insurers,
      and (iii) upon the request of Lessor, such other certificates or documents
      as Lessor may reasonably request to evidence Lessee's compliance with the
      insurance requirements set forth in this Paragraph 3.03.

            (e)   Release of Lessor Parties. Lessee hereby waives, releases and
      discharges each Lessor Party and its directors, officers, employees,
      agents and advisors from all claims whatsoever arising out of any loss,
      claim, expense or damage to or destruction covered or coverable by
      insurance required under this Paragraph 3.03, notwithstanding that such
      loss, claim, expense or damage may have been caused by any such Person,
      and, as among Lessee and such Persons, Lessee agrees to look to the
      insurance coverage only in the event of such loss.

            (f)   Forced Placement of Insurance. Pursuant to Oregon Revised
      Statutes Section 746.201, Lessor hereby provides Lessee with the following
      notice:

                                    "WARNING"

                  Unless you provide us with evidence of the insurance coverage
            as required by our contract or loan agreement, we may purchase
            insurance at your expense to protect our interest. This insurance
            may, but need not, also protect your interest. If the collateral
            becomes damaged, the coverage we purchase may not pay any claim you
            make or any claim made against you. You may later cancel this
            coverage by providing evidence that you have obtained property
            coverage elsewhere.

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<PAGE>   129
                  You are responsible for the cost of any insurance purchased by
            us. The cost of this insurance may be added to your contract or loan
            balance. If the cost is added to your contract or loan balance, the
            interest rate on the underlying contract or loan will apply to this
            added amount. The effective date of coverage may be the date your
            prior coverage lapsed or the date you failed to provide proof of
            coverage.

                  The coverage that we purchase may be considerably more
            expensive than insurance you can obtain on your own and may not
            satisfy any need for property damage coverage or any mandatory
            liability insurance requirements imposed by applicable law.

            As used in the above notice, (i) "you" and "your" shall refer to
      Lessee, (ii) "we", "us" and "our" shall refer to Lessor, (iii) "contract
      or loan agreement" shall refer to the Participation Agreement, this
      Agreement and the other Operative Documents, (iv) "collateral" shall refer
      to the Property, (v) "contract or loan balance" shall refer to the
      Outstanding Lease Amount and (vi) "interest rate" shall refer to Rental
      Rate.

      3.04. Casualty and Condemnation.

            (a)   Notice. Lessee shall give Lessor prompt written notice of the
      occurrence of any Material Casualty affecting, or the institution of any
      proceedings for the Condemnation of, the Property or any portion thereof.

            (b)   Repair Obligations.

                  (i)   If any Material Casualty or Condemnation affecting the
            Property or any portion thereof occurs during the Construction
            Period, Lessee shall, if so directed by Lessor and Required
            Participants in writing, repair and restore the Property as required
            by Subparagraph 3.04(c).

                  (ii)  If any Material Casualty or Condemnation affecting the
            Property or any portion thereof occurs after the Construction
            Period, Lessee shall, at its election, either (A) repair and restore
            the Property as required by Subparagraph 3.04(c) or (B) exercise the
            Term Purchase Option and purchase the Property pursuant to the
            Purchase Agreement; provided, however, that Lessee may not elect to
            repair and restore the Property if such casualty or condemnation is
            a Major Casualty or Major Condemnation or if an Event of Default has
            occurred and is continuing unless Lessor and the Required
            Participants shall consent in writing. (If such casualty or
            condemnation is a Major Casualty or Major Condemnation that occurs
            after the Construction Period, Lessee shall exercise the Term
            Purchase Option and purchase the Property pursuant to the Purchase
            Agreement as promptly as possible but not later than two (2) months
            after the occurrence of such Major Casualty or Major Condemnation,
            unless Lessor and the Required Participants shall otherwise consent
            in writing. If an Event of Default has occurred and is continuing,
            Lessor Parties may exercise the rights provided herein.) Not later
            than one (1) month after the occurrence of any Material

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<PAGE>   130
            Casualty or any Condemnation occurring after the Construction
            Period, Lessee shall deliver to Lessor a written notice indicating
            whether it elects to repair and restore or purchase the Property.

            (c)   Repair and Restoration. If Lessee is required to repair and
      restore the Property following any Material Casualty or any Condemnation,
      Lessee shall diligently proceed to repair and restore the Property to the
      condition in which it existed immediately prior to such Material Casualty
      or such Condemnation and shall complete all such repairs and restoration
      as soon as reasonably practicable, but not later than the earlier of (y)
      six (6) months after the occurrence of the Material Casualty or the
      Condemnation, and (z) six (6) months prior to the Scheduled Expiration
      Date unless Lessee currently is exercising either the Term Purchase Option
      or the Expiration Date Purchase Option. In the case of a Casualty or
      Condemnation occurring during the Construction Period, Lessee shall make
      such repairs and restoration using, to the extent available, any Casualty
      and Condemnation Proceeds that are available and are released to Lessee
      for such purpose pursuant to Subparagraph 3.04(f) and Advances. In the
      case of a Casualty or Condemnation occurring after the Construction
      Period, Lessee shall make such repairs using its own funds, except to the
      extent any Casualty and Condemnation Proceeds are available and are
      released to Lessee for such purpose pursuant to Subparagraph 3.04(f).
      Lessee's exercise of the repair and restoration option shall, if Lessor or
      Required Participants direct, be subject to satisfaction of the following
      conditions:

                  (i)   Within one (1) month after the occurrence of the
            Material Casualty or the Condemnation, Lessee shall deposit in a
            deposit account acceptable to and controlled by Lessor (a "Repair
            and Restoration Account") funds (including any Casualty and
            Condemnation Proceeds which are available and are released to Lessee
            pursuant to Subparagraph 3.04(f)) in the amount which Lessor
            determines is needed to complete and fully pay all costs of the
            repair or restoration (including taxes, financing charges, insurance
            and rent during the repair period).

                  (ii)  As soon as reasonably possible and in no event later
            than two (2) months after the occurrence of the Material Casualty or
            the Condemnation, Lessee shall establish an arrangement for lien
            releases and disbursement of funds acceptable to Lessor and in a
            manner and upon such terms and conditions as would be required by a
            prudent interim construction lender.

                  (iii) As soon as reasonably possible and in no event later
            than two (2) months after the occurrence of the Material Casualty or
            the Condemnation, Lessee shall deliver to Lessor the following, each
            in form and substance acceptable to Lessor:

                        (A)   Evidence that the Property can, in Lessor's
                  reasonable judgment, with diligent restoration or repair, be
                  returned to a condition at least equal to the condition
                  thereof that existed prior to the Casualty or partial
                  Condemnation causing the loss or damage within the earlier to
                  occur of (A) six (6) months after the occurrence of the
                  Casualty or Condemnation and (B) unless Lessee currently is
                  exercising either the

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<PAGE>   131
                  Term Purchase Option or the Expiration Date Purchase Option,
                  six (6) months prior to the Scheduled Expiration Date;

                        (B)   Evidence that all necessary governmental approvals
                  can be timely obtained to allow the rebuilding and reoccupancy
                  of the Property;

                        (C)   Copies of all plans and specifications for the
                  work;

                        (D)   Copies of all contracts for the work, signed by a
                  contractor reasonably acceptable to Lessor;

                        (E)   A cost breakdown for the work;

                        (F)   A payment and performance bond for the work or
                  other security satisfactory to Lessor;

                        (G)   Evidence that, upon completion of the work, the
                  size, capacity and total value of the Property will be at
                  least as great as it was before the Casualty or Condemnation
                  occurred; and

                        (H)   Evidence of satisfaction of any additional
                  conditions that Lessor or Required Participants may reasonably
                  establish to protect their rights under this Agreement and the
                  other Operative Documents.

            All plans and specifications for the work must be reasonably
            acceptable to Lessor, except that Lessor's approval shall not be
            required if the restoration work is based on the same plans and
            specifications as were originally used to construct the Property. To
            the extent that the funds in a Repair and Restoration Account
            include both Casualty and Condemnation Proceeds and other funds
            deposited by Lessee, the other funds deposited by Lessee shall be
            used first. Lessee acknowledges that the specific conditions
            described above are reasonable.

            (d)   Prosecution of Claims for Casualty and Condemnation Proceeds.
      Lessee shall proceed promptly and diligently to prosecute in good faith
      the settlement or compromise of any and all claims for Casualty and
      Condemnation Proceeds; provided, however, that any settlement or
      compromise of any such claim shall, except as otherwise provided in clause
      (x) of Subparagraph 3.03(c), be subject to the written consent of Lessor
      and Required Participants, which consents shall not be unreasonably
      withheld. Lessor may participate in any proceedings relating to such
      claims, and, after the occurrence and during the continuance of any Event
      of Default, Lessor is hereby authorized, in its own name or in Lessee's
      name, to adjust any loss covered by insurance or any Casualty or
      Condemnation claim or cause of action, and to settle or compromise any
      claim or cause of action in connection therewith, and Lessee shall from
      time to time deliver to Lessor any and all further assignments and other
      instruments required to permit such participation.

            (e)   Assignment of Casualty and Condemnation Proceeds. Lessee
      hereby absolutely and irrevocably assigns to Lessor all Casualty and
      Condemnation Proceeds

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<PAGE>   132
      and all claims relating thereto, subject to the terms of this Agreement
      which require Lessor to make such proceeds available to Lessee for
      restoration. Except as otherwise provided in clause (x) of Subparagraph
      3.03(c), Lessee agrees that all Casualty and Condemnation Proceeds are to
      be paid to Lessor and Lessee hereby authorizes and directs any insurer,
      Governmental Authority or other Person responsible for paying any Casualty
      and Condemnation Proceeds to make payment thereof directly to Lessor
      alone, and not to Lessor and Lessee jointly. If Lessee receives any
      Casualty and Condemnation Proceeds payable to Lessor hereunder, Lessee
      shall promptly pay over such Casualty and Condemnation Proceeds to Lessor.
      Lessee hereby covenants that until such Casualty and Condemnation Proceeds
      are so paid over to Lessor, Lessee shall hold such Casualty and
      Condemnation Proceeds in trust for the benefit of Lessor and shall not
      commingle such Casualty and Condemnation Proceeds with any other funds or
      assets of Lessee or any other Person. Except as otherwise provided in
      clause (x) of Subparagraph 3.03(c), Lessor may commence, appear in, defend
      or prosecute any assigned right, claim or action, and may adjust,
      compromise, settle and collect all rights, claims and actions assigned to
      Lessor, but shall not be responsible for any failure to collect any such
      right, claim or action, regardless of the cause of the failure.

            (f)   Use of Casualty and Condemnation Proceeds.

                  (i)   If (A) no Event of Default has occurred and is
            continuing, (B) Lessee exercises the repair and restoration option
            pursuant to Subparagraphs 3.04(b) and 3.04(c) and (C) Lessee
            complies with any conditions imposed pursuant to Subparagraph
            3.04(c); then Lessor shall release any Casualty and Condemnation
            Proceeds to Lessee for repair or restoration of the Property, but
            may condition such release and use of the Casualty and Condemnation
            Proceeds upon deposit of the Casualty and Condemnation Proceeds in a
            Repair and Restoration Account. Lessor shall have the option, upon
            the completion of such restoration of the Property, to apply any
            surplus Casualty and Condemnation Proceeds remaining after the
            completion of such restoration to the payment of Rent and/or the
            reduction of the Outstanding Lease Amount, notwithstanding that such
            amounts are not then due and payable or that such amounts are
            otherwise adequately secured.

                  (ii)  If (A) an Event of Default has occurred and is
            continuing, (B) Lessee fails to or is unable to comply with any
            conditions imposed pursuant to Subparagraph 3.04(c) or (C) Lessee
            elects to exercise the Term Purchase Option and purchase the
            Property pursuant to the Purchase Agreement; then, at the absolute
            discretion of Lessor and the Required Participants, regardless of
            any impairment of security or lack of impairment of security, but
            subject to applicable Governmental Rules governing the use of
            Casualty and Condemnation Proceeds, if any, Lessor may (1) apply all
            or any of the Casualty and Condemnation Proceeds it receives to the
            expenses of Lessor Parties (other than Novellus) in obtaining such
            proceeds; (2) apply the balance to the payment of Rent and/or the
            reduction of the Outstanding Lease Amount, notwithstanding that such
            amounts are not then due and payable or that such amounts are
            otherwise adequately

                                       17
<PAGE>   133
            secured and/or (3) release all or any part of such proceeds to
            Lessee upon any conditions Lessor and the Required Participants may
            elect.

                  (iii) Lessor shall apply any Casualty and Condemnation
            Proceeds which are to be used to reduce the Outstanding Lease Amount
            only on the last day of a Rental Period unless an Event of Default
            has occurred and is continuing.

                  (iv)  Application of all or any portion of the Casualty and
            Condemnation Proceeds, or the release thereof to Lessee, shall not
            cure or waive any Default or notice of default or invalidate any
            acts done pursuant to such notice.

      3.05. Taxes. Subject to Paragraph 3.12 relating to permitted contests,
Lessee shall promptly pay when due all Indemnified Taxes imposed on or payable
by Lessee or any Lessor Party in connection with the Property, this Agreement or
any of the other Operative Documents, or any of the transactions contemplated
hereby or thereby. As promptly as possible after any Indemnified Taxes are
payable by Lessee, Lessee shall send to Lessor for the account of the applicable
Lessor Party a certified copy of an original official receipt received by Lessee
showing payment thereof. If Lessee fails to pay any such Indemnified Taxes when
due to the appropriate taxing authority or fails to remit to Lessor the required
receipts or other required documentary evidence, Lessee shall indemnify the
Lessor Parties for any incremental taxes, interest or penalties that may become
payable by the Lessor Parties as a result of any such failure. The obligations
of Lessee under this Paragraph 3.05 shall survive the payment and performance of
the Lessee Obligations and the termination of this Agreement.

      3.06. Environmental Matters.

            (a)   Lessee's Covenants. Lessee shall not cause or permit Hazardous
      Materials to be used, generated, manufactured, stored, treated, disposed
      of, transported or present on or released or discharged from the Property
      in any manner that is reasonably likely to have a Material Adverse Effect.
      Lessee shall immediately notify Lessor in writing of (i) any knowledge by
      Lessee that the Property does not comply with any Environmental Laws; and
      (ii) any claims against Lessee or the Property relating to Hazardous
      Materials or pursuant to Environmental Laws. In response to the presence
      of any Hazardous Materials on, under or about the Property, Lessee shall
      immediately take, at Lessee's sole expense, all remedial action required
      by any Environmental Laws or any judgment, consent decree, settlement or
      compromise in respect to any claim based thereon.

            (b)   Inspection By Lessor. Upon reasonable prior notice to Lessee,
      Lessor, its employees and agents, may from time to time (whether before or
      after the commencement of a nonjudicial or judicial foreclosure
      proceeding), enter and inspect the Property for the purpose of determining
      the existence, location, nature and magnitude of any past or present
      release or threatened release of any Hazardous Materials into, onto,
      beneath or from the Property.

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<PAGE>   134
            (c)   Indemnity. Without in any way limiting any other indemnity
      contained in this Agreement or any other Operative Document, Lessee agrees
      to defend, indemnify and hold harmless the Lessor Parties and the other
      Indemnitees from and against any claim, loss, damage, cost, expense or
      liability directly or indirectly arising out of (i) the use, generation,
      manufacture, storage, treatment, release, threatened release, discharge,
      disposal, transportation or presence of any Hazardous Materials which are
      found in, on, under or about the Property or (ii) the breach of any
      covenant, representation or warranty of Lessee relating to Hazardous
      Materials or Environmental Laws contained in this Agreement or any
      Operative Document. This indemnity shall include (A) the costs, whether
      foreseeable or unforeseeable, of any investigation, repair, cleanup or
      detoxification of the Property which is required by any Governmental
      Authority or is otherwise necessary to render the Property in compliance
      with all Environmental Laws; (B) all other direct or indirect
      consequential damages (including any third party claims, claims by any
      Governmental Authority, or any fines or penalties against the Indemnitees;
      and (C) all court costs and attorneys' fees (including expert witness fees
      and the cost of any consultants) paid or incurred by the Indemnitees.
      Lessee shall pay immediately upon Lessor's demand any amounts owing under
      this indemnity. Lessee shall use legal counsel reasonably acceptable to
      Lessor in any action or proceeding arising under this indemnity. The
      obligations of Lessee under this Subparagraph 3.06(c) shall survive the
      payment and performance of the Lessee Obligations and the termination of
      this Agreement.

            (d)   Legal Effect of Section. Lessee and Lessor agree that (i) this
      Paragraph 3.06 and clause (v) of Subparagraph 4.01(t) of the Participation
      Agreement are intended as Lessor's written request for information (and
      Lessee's response) concerning the environmental condition of the real
      property security as required by California Code of Civil Procedure
      Section 726.5 and (ii) each representation and warranty and covenant
      herein and therein (together with any indemnity applicable to a breach of
      any such representation and warranty) with respect to the environmental
      condition of the Property is intended by Lessor and Lessee to be an
      "environmental provision" for purposes of California Code of Civil
      Procedure Section 736.

      3.07. Liens, Easements, Etc.

            (a)   Lessee's Covenants. Subject to Paragraph 3.12 relating to
      permitted contests, Lessee shall not create, incur, assume or permit to
      exist any Lien or easement on or with respect to any of the Property of
      any character, whether now owned or hereafter acquired, except for the
      following ("Permitted Property Liens"):

                  (i)   Liens in favor of a Lessor Party securing the Lessee
            Obligations and other Lessor Liens;

                  (ii)  Liens and easements in existence on the Commencement
            Date to the extent reflected in the title insurance policies
            delivered to Agent pursuant to Paragraph 3.01 of and Schedule 3.01
            to the Participation Agreement and approved by Lessor;

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<PAGE>   135
                  (iii) Liens for taxes or other Governmental Charges not at the
            time delinquent or thereafter payable without penalty;

                  (iv)  Liens of carriers, warehousemen, mechanics, materialmen
            and vendors and other similar Liens imposed by law incurred in the
            ordinary course of business for sums not overdue;

                  (v)   Easements granted or created in connection with and
            reasonably necessary for the construction of the New Improvements or
            for the operation or maintenance of the Property in the ordinary
            course of business, in each case as approved by Lessor; and

                  (vi)  Lessor Liens.

      Subject to Paragraph 3.12 relating to permitted contests, Lessee shall
      promptly (A) pay all Indebtedness of Lessee and other obligations prior to
      the time the non-payment thereof would give rise to a Lien on the Property
      and (B) discharge, at its sole cost and expense, any Lien on the Property
      which is not a Permitted Property Lien.

            (b)   No Consents. Nothing contained in this Agreement shall be
      construed as constituting the consent or request of any Lessor Party
      (other than Novellus), express or implied, to or for the performance by
      any contractor, mechanic, laborer, materialman, supplier or vendor of any
      labor or services or for the furnishing of any materials for any
      construction, alteration, addition, repair or demolition of or to the
      Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NO LESSOR PARTY
      (OTHER THAN NOVELLUS) IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR
      MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO ANYONE HOLDING THE
      PROPERTY OR ANY PART THEREOF THROUGH OR UNDER LESSEE, AND THAT NO
      MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS SHALL
      ATTACH TO OR AFFECT THE INTEREST OF ANY LESSOR PARTY IN AND TO THE
      PROPERTY.

      3.08. Subletting. Lessee may, in the ordinary course of business, sublease
the Property or any portion thereof to any Person, provided, that (a) Lessee
remains directly and primarily liable for performing its obligations under this
Agreement and all other Lessee Obligations; (b) each sublease is subject to and
subordinated to this Agreement; (c) each sublease expressly provides for the
surrender of the Property (or portion thereof) by the sublessee on the
Expiration Date; (d) each sublease has a term which expires on or prior to the
Scheduled Expiration Date (or, if longer, includes a provision that the sublease
terminates on the Expiration Date if such Expiration Date occurs prior to the
Scheduled Expiration Date unless Lessee purchases the Property on the Expiration
Date pursuant to the Purchase Agreement); (e) each sublease prohibits the
sublessee from engaging in any activities on the Property other than those
permitted by Paragraph 2.04; and (f) no sublease has a Material Adverse Effect.
Any sublease which does not satisfy each of the requirements of the immediately
preceding sentence shall be null and void as to the Lessor Parties and their
successor and assigns. Except for such permitted subleases, Lessee shall not
assign any of its rights or interests under this Agreement to any other Person.

                                       20
<PAGE>   136
      3.09. Utility Charges. Lessee shall pay all charges for electricity,
power, gas, oil, water, telephone, sanitary sewer service and all other
utilities and services to, on or in connection with the Property during the
Term.

      3.10. Removal of Property. Lessee shall not remove any Improvements from
the Land or any other Property from the Land or Improvements, except that,
during the Term, Lessee may remove any Modification or any trade fixture,
machinery, equipment, inventory or other personal property if such Modification
or property (a) was not financed by an Advance, (b) is not required by any
applicable Governmental Rule or Insurance Requirement and (c) is readily
removable without impairing the value, utility or remaining useful life of the
Property.

      3.11. Compliance with Governmental Rules and Insurance Requirements.
Lessee, at its sole cost and expense, shall (a) comply, and cause its agents,
sublessees, assignees, employees, invitees, licensees, contractors and tenants,
and the Property to comply, with all Governmental Rules and Insurance
Requirements relating to the Property (including the construction, use,
operation, maintenance, repair and restoration thereof, whether or not
compliance therewith shall require structural or extraordinary changes in the
Improvements or interfere with the use and enjoyment of the Property), and (b)
procure, maintain and comply with all licenses, permits, orders, approvals,
consents and other authorizations required for the construction, use,
maintenance and operation of the Property and for the use, operation,
maintenance, repair and restoration of the Improvements.

      3.12. Permitted Contests. Lessee, at its sole cost and expense, may
contest any alleged Lien or easement on any of the Property or any alleged
Governmental Charge, Indebtedness or other obligation which is payable by Lessee
hereunder to Persons other than the Lessor Parties or which, if unpaid, would
give rise to a Lien on any of the Property, provided that (a) each such contest
is diligently pursued in good faith by appropriate proceedings; (b) the
commencement and continuation of such proceedings suspends the enforcement of
such Lien or easement or the collection of such Governmental Charge,
Indebtedness or obligation; (c) Lessee has established adequate reserves for the
discharge of such Lien or easement or the payment of such Governmental Charge,
Indebtedness or obligation in accordance with GAAP and, if the failure to
discharge such Lien or easement or the failure to pay such Governmental Charge,
Indebtedness or obligation might result in any civil liability for any Lessor
Party (other than Novellus), Lessee has provided to such Lessor Party a bond or
other security satisfactory to such Lessor Party; (d) the failure to discharge
such Lien or easement or the failure to pay such Governmental Charge,
Indebtedness or obligation could not result in any criminal liability for any
Lessor Party (other than Novellus); (e) the failure to discharge such Lien or
easement or the failure to pay such Governmental Charge, Indebtedness or
obligation is not otherwise reasonably likely to have a Material Adverse Effect;
and (f) unless Lessee currently is exercising the Term Purchase Option or the
Expiration Date Purchase Option, any such contest is completed and such Lien or
easement is discharged (either pursuant to such proceedings or otherwise) or
such Governmental Charge, Indebtedness or obligation is declared invalid, paid
or otherwise satisfied not later than six (6) months prior to the Scheduled
Expiration Date.

      3.13. Lessor Obligations; Right to Perform Lessee Obligations. No Lessor
Party (other than Novellus) shall have any obligation to (a) maintain, repair or
make any improvements to the Property, (b) maintain any insurance on the
Property, (c) perform any other obligation of Lessee

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<PAGE>   137
under this Agreement or any other Lessee Obligation, (d) make any expenditure on
account of the Property (except to make Advances as required by the
Participation Agreement) or (e) take any other action in connection with the
Property, this Agreement or any other Operative Document, except as expressly
provided herein or in another Operative Document; provided however, that Lessor
may, in its sole discretion and without any obligation to do so, after written
notice to Lessee, perform any Lessee Obligation not performed by Lessee when
required. Lessor may enter the Property or exercise any other right of Lessee
under this Agreement or any other Operative Document to the extent Lessor
determines in good faith that such entry or exercise is reasonably necessary for
Lessor to perform any such Lessee Obligation not performed by Lessee when
required. Lessee shall reimburse Lessor and the other Lessor Parties, within
five (5) Business Days after demand and delivery of written evidence of payment,
for all fees, costs and expenses reasonably incurred by them in performing any
such obligation or curing any Default.

      3.14. Inspection Rights. During the Term, Lessee shall permit any Person
designated by Lessor, upon reasonable notice and during normal business hours,
to visit and inspect any of the Property.

SECTION 4.  EXPIRATION DATE.

      4.01. Termination by Lessee Prior to Scheduled Expiration Date. Subject to
the terms and conditions of the Purchase Agreement, Lessee may, on any Scheduled
Rent Payment Date prior to the Scheduled Expiration Date, terminate this
Agreement and purchase the Property pursuant to Section 2 of the Purchase
Agreement. Lessee shall notify Lessor of Lessee's election so to terminate this
Agreement and purchase the Property by delivering to Agent a Notice of Term
Purchase Option Exercise pursuant to and in accordance with the provisions of
Paragraph 2.02 of the Purchase Agreement.

      4.02. Surrender of Property. Unless Lessee purchases the Property on the
Expiration Date pursuant to the Purchase Agreement, Lessee shall vacate and
surrender the Property to Lessor on the Expiration Date in its then-current
condition, subject to compliance by Lessee on or prior to such date of its
obligations under this Agreement and the other Operative Documents (including
the completion of the New Improvements and all Modifications, the completion of
all permitted contests and the removal of all Liens which are not Permitted
Property Liens of the types described in clauses (i), (ii), (iii) or (iv) of
Subparagraph 3.07(a)).

      4.03. Holding Over. If Lessee does not purchase the Property on the
Expiration Date pursuant to the Purchase Agreement but continues in possession
of any portion of the Property after the Expiration Date, Lessee shall pay rent
for each day it so continues in possession, payable upon demand of Lessor, at a
per annum rate equal to the Alternate Rental Rate plus two percent (2.0%) and
shall pay and perform all of its other Lessee Obligations under this Agreement
and the other Operative Documents in the same manner as though the Term had not
ended; provided, however, that this Paragraph 4.03 shall not be interpreted to
permit such holding over or to limit any right or remedy of Lessor for such
holding over.

SECTION 5.  DEFAULT.

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<PAGE>   138
      5.01. Events of Default. The occurrence or existence of any one or more of
the following shall constitute an "Event of Default" hereunder:

            (a)   Non-Payment. Lessee shall (i) fail to pay on the Expiration
      Date any amount payable by Lessee under this Agreement or any other
      Operative Document on such date, (ii) fail to pay within five (5) business
      days after any Scheduled Rent Payment Date any Base Rent payable on such
      Scheduled Rent Payment Date (other than the Base Rent payable on the
      Expiration Date) or (iii) fail to pay within five (5) business days after
      the same becomes due, any Supplemental Rent or other amount required under
      the terms of this Agreement or any other Operative Document (other than
      any such amount payable on the Expiration Date or Base Rent); or

            (b)   Specific Defaults. Lessee or any of its Subsidiaries shall
      fail to observe or perform any covenant, obligation, condition or
      agreement set forth in Subparagraph 3.01(d), Paragraph 3.03 or
      Subparagraph 3.07(a) hereof, in Paragraph 5.02 or Paragraph 5.03 of the
      Participation Agreement or in Paragraph 3.01 or Paragraph 3.02 of the
      Construction Agency Agreement; or

            (c)   Other Defaults. Lessee or any of its Subsidiaries shall fail
      to observe or perform any other covenant, obligation, condition or
      agreement contained in this Agreement or any other Operative Document
      (except for those covenants described in Paragraph 5.01(d) below) and such
      failure shall continue for a period of thirty (30) days after written
      notice thereof from Lessor, provided, however, that in the event that such
      failure cannot reasonably be cured within such thirty (30) day period,
      such failure shall not constitute an Event of Default hereunder so long as
      Lessee shall have commenced to cure such failure within such thirty (30)
      day period and shall thereafter diligently pursue such cure to completion,
      provided further that such failure shall in all events be cured by the
      earlier of (i) the Expiration Date, if Lessee is exercising the Marketing
      Option, (provided that if the Purchase Option is consummated in accordance
      with the terms of the Purchase Agreement all outstanding Defaults shall be
      deemed waived), or (ii) one hundred and eighty days (180) days after
      Lessor's notice thereof; or

            (d)   Representations and Warranties. Any representation, warranty,
      certificate, information or other statement (financial or otherwise) made
      or furnished by or on behalf of Lessee or any of its Subsidiaries to any
      Lessor Party in or in connection with this Agreement or any other
      Operative Document, or as an inducement to any Lessor Party to enter into
      this Agreement or any other Operative Document, shall be false, incorrect,
      incomplete or misleading in any material respect when made or furnished
      and Lessee shall not have cured the facts or circumstances causing such
      representation, warranty, certificate or other statement to be false,
      incorrect, incomplete or misleading within thirty (30) days of notice
      thereof from Lessor; or

            (e)   Cross-Default. (i) Lessee or any of its Subsidiaries shall
      fail to make any payment when due on account of any Indebtedness of such
      Person (other than the Lessee Obligations) and such failure shall continue
      beyond any period of grace provided with respect thereto, if the amount of
      such Indebtedness exceeds $10,000,000 or the effect of such failure is to
      cause, or permit the holder or holders thereof to cause, Indebtedness of

                                       23
<PAGE>   139
      Lessee and its Subsidiaries (other than the Lessee Obligations) in an
      aggregate amount exceeding $10,000,000 to become due or (ii) Lessee or any
      of its Subsidiaries shall otherwise fail to observe or perform any
      agreement, term or condition contained in any agreement or instrument
      relating to any Indebtedness of such Person (other than the Lessee
      Obligations), or any other event shall occur or condition shall exist, if
      the effect of such failure, event or condition is to cause, or permit the
      holder or holders thereof to cause, Indebtedness of Lessee and its
      Subsidiaries (other than the Lessee Obligations) in an aggregate amount
      exceeding $10,000,000 to become due (and/or to be secured by cash
      collateral); or

            (f)   Insolvency, Voluntary Proceedings. Lessee or any of its
      Material Subsidiaries shall (i) apply for or consent to the appointment of
      a receiver, trustee, liquidator or custodian of itself or of all or a
      substantial part of its property, (ii) be unable, or admit in writing its
      inability, to pay its debts generally as they mature, (iii) make a general
      assignment for the benefit of its or any of its creditors, (iv) be
      dissolved or liquidated in full or in part, (v) become insolvent (as such
      term may be defined or interpreted under any applicable statute), (vi)
      commence a voluntary case or other proceeding seeking liquidation,
      reorganization or other relief with respect to itself or its debts under
      any bankruptcy, insolvency or other similar law now or hereafter in effect
      or consent to any such relief or to the appointment of or taking
      possession of its property by any official in an involuntary case or other
      proceeding commenced against it, or (vi) take any action for the purpose
      of effecting any of the foregoing; or

            (g)   Involuntary Proceedings. Proceedings for the appointment of a
      receiver, trustee, liquidator or custodian of Lessee or any of its
      Material Subsidiaries or of all or a substantial part of the property
      thereof, or an involuntary case or other proceedings seeking liquidation,
      reorganization or other relief with respect to Lessee or any of its
      Material Subsidiaries or the debts thereof under any bankruptcy,
      insolvency or other similar law now or hereafter in effect shall be
      commenced and an order for relief entered or such proceeding shall not be
      dismissed or discharged within thirty (30) days of commencement; or

            (h)   Judgments. (i) One or more judgments, orders, decrees or
      arbitration awards requiring Lessee and/or its Subsidiaries to pay an
      aggregate amount of $10,000,000 or more (exclusive of amounts covered by
      insurance issued by an insurer not an Affiliate of Lessee and otherwise
      satisfying the requirements set forth in Subparagraph 3.03(b)) shall be
      rendered against Lessee and/or any of its Subsidiaries in connection with
      any single or related series of transactions, incidents or circumstances
      and the same shall not be satisfied, vacated or stayed for a period of
      thirty (30) consecutive days after the issue or levy; (ii) any judgment,
      writ, assessment, warrant of attachment, tax lien or execution or similar
      process shall be issued or levied against a substantial part of the
      property of Lessee or any of its Subsidiaries and the same shall not be
      released, stayed, vacated or otherwise dismissed within thirty (30) days
      after issue or levy; or (iii) any other judgments, orders, decrees,
      arbitration awards, writs, assessments, warrants of attachment, tax liens
      or executions or similar processes which, alone or in the aggregate, are
      reasonably likely to have a Material Adverse Effect are rendered, issued
      or levied; or

                                       24
<PAGE>   140
            (i)   Operative Documents. Any Operative Document or any material
      term thereof shall cease to be, or be asserted by Lessee or any of its
      Subsidiaries not to be, a legal, valid and binding obligation of Lessee or
      any of its Subsidiaries enforceable in accordance with its terms; or

            (j)   ERISA. Any Reportable Event which constitutes grounds for the
      termination of any Employee Benefit Plan by the PBGC or for the
      appointment of a trustee by the PBGC to administer any Employee Benefit
      Plan shall occur, or any Employee Benefit Plan shall be terminated within
      the meaning of Title IV of ERISA or a trustee shall be appointed by the
      PBGC to administer any Employee Benefit Plan; or

            (k)   Ground Lease. Lessee's failure to observe or perform any
      agreement, term or condition contained in the Ground Lease and such
      failure shall continue for a period of thirty (30) days after written
      notice thereof from Lessor, provided, however, that in the event that such
      failure cannot reasonably be cured within such thirty (30) day period,
      such failure shall not constitute an Event of Default hereunder so long as
      Lessee shall have commenced to cure such failure within such thirty (30)
      day period and shall thereafter diligently pursue such cure to completion;
      or

            (l)   Change of Control.  Any Change of Control shall occur; or

            (m)   Construction Termination Event. Any Construction Termination
      Event shall occur or exist; or

            (n)   Material Casualty or Condemnation. Any Material Casualty or
      Material Condemnation affecting the Property and not fully covered by
      insurance meeting the requirements set forth herein shall occur during the
      Construction Period, unless Required Participants and Lessor direct Lessee
      to repair and restore the Property following such Casualty or Condemnation
      pursuant to clause (i) of Subparagraph 3.04(b); or

            (o)   Material Adverse Effect. Any other event(s) or condition(s)
      which is(are) reasonably likely to have a Material Adverse Effect shall
      occur and be continuing or exist.

      5.02. General Remedies. In all cases, upon the occurrence or existence of
any Event of Default and at any time thereafter unless such Event of Default is
waived, Lessor may, with the consent of the Required Participants, or shall,
upon instructions from the Required Participants, exercise any one or more of
the following rights and remedies (except that the remedy set forth in the first
sentence of Subparagraph 5.02(a) shall be automatic):

            (a)   Termination of Commitments. If such Event of Default is an
      Event of Default of the type described in Subparagraph 5.01(f) or
      Subparagraph 5.01(g) affecting Lessee, immediately and without notice, the
      obligation of Lessor to make Advances and the obligations of the
      Participants to fund Advances shall automatically terminate. If such Event
      of Default is any other Event of Default, Lessor may by written notice to
      Lessee, terminate the obligation of Lessor to make Advances and the
      obligations of the Participants to fund Advances.

                                       25
<PAGE>   141
            (b)   Appointment of a Receiver. Lessor may apply to any court of
      competent jurisdiction for, and obtain appointment of, a receiver for the
      Property.

            (c)   Specific Performance. Lessor may bring an action in any court
      of competent jurisdiction to obtain specific enforcement of any of the
      covenants or agreements of Lessee in this Agreement or any of the other
      Operative Documents.

            (d)   Collection of Issues and Profits. Lessor may collect Issues
      and Profits as provided in Subparagraph 2.07(c) and apply the proceeds to
      pay Lessee Obligations.

            (e)   Protection of Property. Lessor may enter, take possession of,
      manage and operate all or any part of the Property or take any other
      actions which it reasonably determines are necessary to protect the
      Property and the rights and remedies of the Lessor Parties (other than
      Novellus) under this Agreement and the other Operative Documents,
      including (i) taking and possessing all of Lessee's books and records
      relating to the Property; (ii) entering into, enforcing, modifying, or
      canceling subleases on such terms and conditions as Lessor may consider
      proper; (iii) obtaining and evicting tenants; (iv) fixing or modifying
      sublease rents; (v) collecting and receiving any payment of money owing to
      Lessee; (vi) completing any unfinished Improvements; and/or (vii)
      contracting for and making repairs and alterations.

            (f)   Other Rights and Remedies. In addition to the specific rights
      and remedies set forth above in this Paragraph 5.02 and in Paragraph 5.03
      and Paragraph 5.04, Lessor may exercise any other right, power or remedy
      permitted to it by any applicable Governmental Rule, either by suit in
      equity or by action at law, or both.

      5.03. Lease Remedies. If the transaction evidenced by this Agreement and
the other Operative Documents is treated as a lease, upon the occurrence or
existence of any Event of Default and at any time thereafter unless such Event
of Default is waived, Lessor may, with the consent of the Required Participants,
or shall, upon instructions from the Required Participants, exercise any one or
more of the following rights and remedies in addition to those rights and
remedies set forth in Paragraph 5.02, provided that, prior to exercising any
remedies provided by this Paragraph 5.03, Lessor shall give Lessee not less than
three (3) Business Days notice during which time Lessee may exercise the
Purchase Option and, provided the Purchase Option is consummated in accordance
with the terms of the Purchase Agreement, Lessor shall not exercise any of the
remedies under this Paragraph 5.03:

            (a)   Termination of Lease. Lessor may, by written notice to Lessee,
      terminate this Agreement on a Termination Date which is prior to the
      Scheduled Expiration Date, subject to Subparagraph 3.02(1) of the Purchase
      Agreement. Such Termination Date shall be the last day of a Rental Period
      unless Required Participants shall otherwise direct. On such Termination
      Date (which shall then be the Expiration Date), Lessee shall pay all
      unpaid Base Rent accrued through such date, all Supplemental Rent due and
      payable on or prior to such date and all other amounts payable by Lessee
      on the Expiration Date pursuant to this Agreement and the other Operative
      Documents. Lessee also shall pay to Lessor, in addition to all accrued
      Base Rent, the worth at the time of such payment of the amount by which
      the unpaid Base Rent through the Scheduled

                                       26
<PAGE>   142
      Expiration Date exceeds the amount of such rental loss for the same period
      that Lessee proves could reasonably be avoided.

            (b)   Continuation of Lease. Lessor may exercise the rights and
      remedies provided by Oregon law, including the right to continue this
      Agreement in effect after Lessee's breach and abandonment and recover Rent
      as it becomes due. Acts of maintenance or preservation, efforts to relet
      the Property, the appointment of a receiver upon Lessor's initiative to
      protect its interest under this Agreement or withholding consent to or
      terminating a sublease shall not of themselves constitute a termination of
      Lessee's right to possession.

            (c)   Removal and Storage of Property. Lessor may enter the Property
      and remove therefrom all Persons and property, store such property in a
      public warehouse or elsewhere at the cost of and for the account of Lessee
      and sell such property and apply the proceeds therefrom pursuant to
      applicable Oregon law.

      5.04. Loan Remedies. If the transaction evidenced by this Agreement and
the other Operative Documents is treated as a loan, upon the occurrence or
existence of any Event of Default and at any time thereafter unless such Event
of Default is waived, Lessor may, with the consent of the Required Participants,
or shall, upon instructions from the Required Participants, exercise any one or
more of the following rights and remedies in addition to those rights and
remedies set forth in Paragraph 5.02:

            (a)   Acceleration of Lessee Obligations. Lessor may, by written
      notice to Lessee, terminate this Agreement on a Termination Date which is
      prior to the Scheduled Expiration Date, subject to Subparagraph 3.02(1) of
      the Purchase Agreement, and declare all unpaid Lessee Obligations due and
      payable on such Termination Date. Such Termination Date shall be the last
      day of a Rental Period unless Required Participants shall otherwise
      direct. On such Termination Date (which shall then be the Expiration
      Date), Lessee shall pay all unpaid Base Rent accrued through such date,
      all Supplemental Rent due and payable on or prior to such date and all
      other amounts payable by Lessee on the Expiration Date pursuant to this
      Agreement and the other Operative Documents.

            (b)   Uniform Commercial Code Remedies. Lessor may exercise any or
      all of the remedies granted to a secured party under the Oregon Uniform
      Commercial Code.

            (c)   Judicial Foreclosure. Lessor may bring an action in any court
      of competent jurisdiction to foreclose the security interest in the
      Property granted to Lessor by this Agreement or any of the other Operative
      Documents.

            (d)   Power of Sale. Lessor may cause some or all of the Property,
      including any Personal Property Collateral, to be sold or otherwise
      disposed of in any combination and in any manner permitted by applicable
      Governmental Rules.

                  (i)   Sales of Personal Property. Lessor may dispose of any
            Personal Property Collateral separately from the sale of Real
            Property Collateral, in any manner permitted by Chapter 79 of the
            Oregon Uniform Commercial Code, including any public or private
            sale, or in any manner permitted by any other

                                       27
<PAGE>   143
            applicable Governmental Rule. Any proceeds of any such disposition
            shall not cure any Event of Default or reinstate any Lessee
            Obligation. In connection with any such sale or other disposition,
            Lessee agrees that the following procedures constitute a
            commercially reasonable sale:

                        (A)   Lessor shall mail written notice of the sale to
                  Lessee not later than thirty (30) days prior to such sale.

                        (B)   Once per week during the three (3) weeks
                  immediately preceding such sale, Lessor will publish notice of
                  the sale in a local daily newspaper of general circulation.

                        (C)   Upon receipt of any written request, Lessor will
                  make the Property available to any bona fide prospective
                  purchaser for inspection during reasonable business hours.

                        (D)   Notwithstanding, Lessor shall be under no
                  obligation to consummate a sale if, in its judgment, none of
                  the offers received by it equals the fair value of the
                  Property offered for sale.

                        (E)   If Lessor so requests, Lessee shall assemble all
                  of the Personal Property Collateral and make it available to
                  Lessor at the site of the Land. Regardless of any provision of
                  this Agreement or any other Operative Document, Lessor shall
                  not be considered to have accepted any property other than
                  cash or immediately available funds in satisfaction of any
                  Lessee Obligation, unless Lessor has given express written
                  notice of its election of that remedy in accordance with
                  Oregon Uniform Commercial Code Section 9505 (ORS Section
                  79.5050).

            The foregoing procedures do not constitute the only procedures that
            may be commercially reasonable.

                  (ii)  Lessor's Sales of Real Property or Mixed Collateral.
            Lessor may choose to dispose of some or all of the Property which
            consists solely of Real Property Collateral in any manner then
            permitted by applicable Governmental Rules. In its discretion,
            Lessor may also or alternatively choose to dispose of some or all of
            the Property, in any combination consisting of both Real Property
            Collateral and Personal Property Collateral, together in one sale to
            be held in accordance with the law and procedures applicable to real
            property, as permitted by Section 9501(4) of the Oregon Uniform
            Commercial Code (ORS Section 79.510(4)). Lessee agrees that such a
            sale of Personal Property Collateral together with Real Property
            Collateral constitutes a commercially reasonable sale of the
            Personal Property Collateral. (For purposes of this power of sale,
            either a sale of Real Property Collateral alone, or a sale of both
            Real Property Collateral and Personal Property Collateral together
            in accordance with Oregon Uniform Commercial Code Section 9501(4)
            (ORS Section 79.510(4)), will sometimes be referred to as a
            "Lessor's Sale.")

                                       28
<PAGE>   144
                        (A)   Before any Lessor's Sale, Lessor shall give such
                  notice of default and election to sell as may then be required
                  by applicable Governmental Rules.

                        (B)   When all time periods then legally mandated have
                  expired, and after such notice of sale as may then be legally
                  required has been given, Lessor shall sell the property being
                  sold at a public auction to be held at the time and place
                  specified in the notice of sale.

                        (C)   Neither Lessor nor Agent shall have any obligation
                  to make demand on Lessee before any Lessor's Sale.

                        (D)   From time to time in accordance with then
                  applicable law, Lessor may postpone any Lessor's Sale by
                  public announcement at the time and place noticed for that
                  sale.

                        (E)   At any Lessor's Sale, Lessor shall sell to the
                  highest bidder at public auction for cash in lawful money of
                  the United States.

                        (F)   Lessor shall execute and deliver to the
                  purchaser(s) a deed or deeds conveying the Property being sold
                  without any covenant or warranty whatsoever, express or
                  implied. The recitals in any such deed of any matters or
                  facts, including any facts bearing upon the regularity or
                  validity of any Lessor's Sale, shall be conclusive proof of
                  their truthfulness. Any such deed shall be conclusive against
                  all Persons as to the facts recited in it.

            (e)   Foreclosure Sales.

                  (i)   Single or Multiple. If the Property consists of more
            than one lot, parcel or item of property, Lessor may:

                        (A)   Designate the order in which the lots, parcels
                  and/or items shall be sold or disposed of or offered for sale
                  or disposition; and

                        (B)   Elect to dispose of the lots, parcels and/or items
                  through a single consolidated sale or disposition to be held
                  or made under the power of sale granted in Subparagraph
                  5.04(d), or in connection with judicial proceedings, or by
                  virtue of a judgment and decree of foreclosure and sale; or
                  through two or more such sales or dispositions; or in any
                  other manner Lessor may deem to be in its best interests (any
                  such sale or disposition, a "Foreclosure Sale;" any two or
                  more, "Foreclosure Sales").

            If Lessor chooses to have more than one Foreclosure Sale, Lessor at
            its option may cause the Foreclosure Sales to be held simultaneously
            or successively, on the same day, or on such different days and at
            such different times and in such order as it may deem to be in its
            best interests. No Foreclosure Sale shall terminate or affect the
            security interests granted to Lessor in the Property by this
            Agreement

                                       29
<PAGE>   145
            on any part of the Property which has not been sold, until all of
            the Lessee Obligations have been paid in full.

                  (ii)  Third Party Bids and Credit Bids. At any Foreclosure
            Sale, any Person, including any Lessor Party, may bid for and
            acquire the Property or any part of it to the extent permitted by
            then applicable Governmental Rules. Instead of paying cash for the
            Property, Lessor (and no other Lessor Party) may settle for the
            purchase price by crediting the sales price of the Property against
            the Lessee Obligations in any order and proportions as Lessor in its
            sole discretion may choose.

      5.05. Remedies Cumulative. The rights and remedies of Lessor under this
Agreement and the other Operative Documents are cumulative and may be exercised
singularly, successively, or together.

      5.06. No Cure or Waiver. Neither the performance by Lessor of any of
Lessee's obligations pursuant to Paragraph 3.13 nor the exercise by Lessor of
any of its other rights and remedies under this Agreement or any other Operative
Document (including the collection of Issues and Profits and the application
thereof to the Lessee Obligations) shall constitute a cure or waiver of any
Default or nullify the effect of any notice of default or sale, unless and until
all Lessee Obligations are paid in full.

      5.07. Exercise of Rights and Remedies. The rights and remedies provided to
Lessor under this Agreement may be exercised by Lessor itself, by Agent pursuant
to Subparagraph 2.02(c) of the Participation Agreement, by a court-appointed
receiver or by any other Person appointed by any of the foregoing to act on its
behalf. All of the benefits afforded to Lessor under this Agreement and the
other Operative Documents shall accrue to the benefit of Agent to the extent
provided in Subparagraph 2.02(c) of the Participation Agreement.

                                       30
<PAGE>   146
SECTION 6.  MISCELLANEOUS.

      6.01. Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Lessee or Lessor under this Agreement shall be given as provided in Subparagraph
2.02(c) and Paragraph 7.01 of the Participation Agreement.

      6.02. Waivers; Amendments. Any term, covenant, agreement or condition of
this Agreement may be amended or waived only as provided in the Participation
Agreement. No failure or delay by any Lessor Party (other than Novellus) in
exercising any right hereunder shall operate as a waiver thereof or of any other
right nor shall any single or partial exercise of any such right preclude any
other further exercise thereof or of any other right. Unless otherwise specified
in any such waiver or consent, a waiver or consent given hereunder shall be
effective only in the specific instance and for the specific purpose for which
given.

      6.03. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Lessor Parties and Lessee and their permitted
successors and assigns; provided, however, that the Lessor Parties and Lessee
shall not sell, assign or delegate their respective rights and obligations
hereunder except as provided in the Participation Agreement.

      6.04. No Third Party Rights. Nothing expressed in or to be implied from
this Agreement is intended to give, or shall be construed to give, any Person,
other than the Lessor Parties and Lessee and their permitted successors and
assigns, any benefit or legal or equitable right, remedy or claim under or by
virtue of this Agreement or under or by virtue of any provision herein.

      6.05. Partial Invalidity. If at any time any provision of this Agreement
is or becomes illegal, invalid or unenforceable in any respect under the law or
any jurisdiction, neither the legality, validity or enforceability of the
remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.

      6.06. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without reference to
conflicts of law rules, except as otherwise provided in Paragraph 7.14 of the
Participation Agreement.

      6.07. Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.

      6.08. Nature of Lessee's Obligations.

            (a)   Independent Obligation. The obligation of Lessee to pay the
      amounts payable by Lessee under this Agreement and the other Operative
      Documents and to perform the other Lessee Obligation are absolute,
      unconditional and irrevocable obligations which are separate and
      independent of the obligations of the Lessor Parties (other than Novellus)
      under this Agreement and the other Operative Documents and all

                                       31
<PAGE>   147
      other events and circumstances, including the events and circumstances set
      forth in Subparagraph 6.08(c).

            (b)   No Termination or Abatement. This Agreement and the other
      Operative Documents and Lessee's obligation to pay Rent and to pay and
      perform all other Lessee Obligations shall continue in full force and
      effect without abatement notwithstanding the occurrence or existence of
      any event or circumstance, including any event or circumstance set forth
      in Subparagraph 6.08(c).

            (c)   Full Payment and Performance. Lessee shall make all payments
      under this Agreement and the other Operative Documents in the full amounts
      and at the times required by the terms of this Agreement and the other
      Operative Documents without setoff, deduction or reduction of any kind and
      shall perform all other Lessee Obligations as and when required, without
      regard to any event or circumstances whatsoever, including (i) the
      condition of the Property (including any Improvements to the Property made
      prior to the Commencement Date or during the Term); (ii) title to the
      Property (including possession of the Property by any Person or the
      existence of any Lien or any other right, title or interest in or to any
      of the Property in favor of any Person); (iii) the value, habitability,
      usability, design, operation or fitness for use of the Property; (iv) the
      availability or adequacy of utilities and other services to the Property;
      (v) any latent, hidden or patent defect in the Property; (vi) the zoning
      or status of the Property or any other restrictions on the use of the
      Property; (g) the economics of the Property; (vii) any Casualty or
      Condemnation; (viii) the compliance of the Property with any applicable
      Governmental Rule or Insurance Requirement; (ix) any failure by any Lessor
      Party to perform any of its obligations under this Agreement or any other
      Operative Document; or (x) the exercise by any Lessor Party of any of its
      remedies under this Agreement or any other Operative Document; provided,
      however, that this Paragraph 6.08 shall not abrogate any right which
      Lessee may have to recover damages from any Lessor Party for any material
      breach by such Lessor Party of its obligations under this Agreement or any
      other Operative Document to the extent permitted hereunder or thereunder.

      6.09. Construction License. The lease by Lessor to Lessee of the Property
under this Agreement is granted to Lessee reserving to Lessor and its agents a
temporary construction license to enter upon the Property for purposes of
constructing the Improvements.

      6.10. Non-Residential Trust Deed. Lessee as grantor warrants that this
Agreement, as a deed of trust or trust deed under Oregon law, is not and will
not at anytime constitute a residential trust deed, as that term is defined in
ORS 86.705 or its successor statutes. Lessee warrants that it is engaging in
this transaction exclusively for business, commercial or investment purposes.

                          [The signature page follows.]

                                       32
<PAGE>   148
      IN WITNESS WHEREOF, Lessee and Lessor have caused this Agreement to be
executed as of the day and year first above written.

LESSEE:                             NOVELLUS SYSTEMS, INC.

                                    By:______________________________________
                                       Name:_________________________________
                                       Title:________________________________

                                    Novellus Systems, Inc.
                                    4000 North First Street
                                    San Jose, California  95134
                                    Attn: Treasurer
                                    Telephone:  (408) 432-5339
                                    Fax Number: (408) 545-3009

LESSOR:                             ABN AMRO LEASING, INC.

                                    By:______________________________________
                                       Name:_________________________________
                                       Title:________________________________

                                    ABN AMRO Leasing, Inc.
                                    c/o ABN AMRO Bank N.V.
                                    135 South LaSalle Street, Suite 740
                                    Chicago, Illinois 60603
                                    Attn: David Shipley
                                    Telephone:  (312) 904-2183
                                    Fax Number: (312) 904-6217

                                       33
<PAGE>   149
STATE OF CALIFORNIA         )
                            )     ss
COUNTY OF __________________)

      On _____________, 2001, before me, ___________________ a Notary Public in
and for the State of California, personally appeared ___________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s) or the entity on behalf of which the person(s) acted,
executed the instrument.

      Witness my hand and official seal.

[SEAL]

      _____________________________________
<PAGE>   150
STATE OF CALIFORNIA         )
                            )     ss
COUNTY OF __________________)

      On _____________, 2001, before me, ___________________ a Notary Public in
and for the State of California, personally appeared ___________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s) or the entity on behalf of which the person(s) acted,
executed the instrument.

      Witness my hand and official seal.

[SEAL]

      _____________________________________
<PAGE>   151
                                  SCHEDULE 3.03

                             INSURANCE REQUIREMENTS

      (i)   At all times during the Term, commercial general liability
insurance, umbrella insurance and excess liability insurance, each written on an
"occurrence basis", including products and completed operation hazards, covering
claims for bodily injury, personal injury or death sustained by persons or
damage to property, in an amount of not less than $25,000,000 per occurrence and
$25,000,000 annual aggregate;

      (ii)  At all times during the Term, workers' compensation insurance for
statutory limits and employer's liability insurance covering injury, death or
disease sustained by employees, in an amount not less than $1,000,000 for
disease and $1,000,000 for bodily injury or death by accident;

      (iii) At all times during the Construction Period portion of the Term,
"all risk" builders' risk insurance, or equivalent property insurance, covering
course of construction risks (whether on-site or off-site), including risks of
collapse and earthquake, in an amount of not less than the value of the Property
upon the Completion of the New Improvements; and

      (iv)  At all times during the Term after the Construction Period, "all
risk" property insurance covering loss or damage in amounts approved by Lessor,
Agent and Required Participants, including loss or damage by earthquake in an
amount of not less than 20.0% of the replacement value of the Improvements.
Notwithstanding the foregoing, the maximum amount of any casualty insurance
policy required to be maintained after the Construction Period shall not exceed
the Outstanding Lease Amount less the Outstanding Tranche A Participation Amount
held by Novellus.
<PAGE>   152
                                    EXHIBIT A

                                      LAND

                                       A-1
<PAGE>   153
                                    EXHIBIT B

                                  RELATED GOODS

                                      NONE

                                       B-1
<PAGE>   154
                                  EXHIBIT B(1)

                   SUPPLEMENT TO EXHIBIT B TO LEASE AGREEMENT

                                     [Date]

ABN AMRO Leasing, Inc.
c/o ABN AMRO Bank N.V.
   as Agent
Agency Services
208 South LaSalle Street, Suite 1500
Chicago, IL  60604
Attn:  Josephine O'Brien

      1.    Reference is made to (a) that certain Participation Agreement, dated
as of April 18, 2001 (the "Participation Agreement"), among Novellus Systems,
Inc. ("Lessee"), ABN AMRO Leasing, Inc. ("Lessor"), the Persons listed in
Schedule I to the Participation Agreement (the "Participants") and ABN AMRO Bank
N.V., as agent for the Participants (in such capacity, "Agent") and (b) that
certain Lease Agreement, dated as of April 18, 2001 (the "Lease Agreement")
between Lessee and Lessor. Unless otherwise indicated, all terms defined in the
Participation Agreement have the same respective meanings when used herein.

      2.    Lessee hereby agrees that the description of "Related Goods" set
forth in Exhibit B to the Lease Agreement shall be supplemented by adding
thereto the Related Goods described in Attachment 1 hereto. Lessee hereby
accepts all such Related Goods and agrees that such Related Goods constitute
part of the Property subject to the Lease Agreement.

      IN WITNESS WHEREOF, Lessee has executed this Supplement to Exhibit B on
the date set forth above.

                                    NOVELLUS SYSTEMS, INC.

                                    By: _____________________________
                                        Name: _______________________
                                        Title: ______________________

                                     B(1)-1
<PAGE>   155
                                  ATTACHMENT 1
                                       TO
                             SUPPLEMENT TO EXHIBIT B

                                    B(1)(1)-1
<PAGE>   156
                                    EXHIBIT C

                        NOTICE OF RENTAL PERIOD SELECTION

                                     [Date]

ABN AMRO Leasing, Inc.
c/o ABN AMRO Bank N.V.
   as Agent
Agency Services
208 South LaSalle Street, Suite 1500
Chicago, IL  60604
Attn:  Josephine O'Brien

      1.    Reference is made to (a) that certain Participation Agreement, dated
as of April 18, 2001 (the "Participation Agreement"), among Novellus Systems,
Inc. ("Lessee"), ABN AMRO Leasing, Inc. ("Lessor"), the Persons listed in
Schedule I to the Participation Agreement (the "Participants") and ABN AMRO Bank
N.V., as agent for the Participants (in such capacity, "Agent") and (b) that
certain Lease Agreement, dated as of April 18, 2001 (the "Lease Agreement")
between Lessee and Lessor. Unless otherwise indicated, all terms defined in the
Participation Agreement have the same respective meanings when used herein.

      2.    [Insert one of the following as appropriate]

            [Pursuant to Subparagraph 2.03(a) of the Lease Agreement, Lessee
hereby irrevocably selects a new Rental Period for a Portion of the Outstanding
Lease Amount as follows:

            (a)   The Portion for which a new Rental Period is to be selected is
      the Portion in the amount of $__________ with a current Rental Period
      which began on ________, ____ and ends on __________, ____; and

            (b)   The next Rental Period for such Portion shall be __________
      month[s].]

            [Pursuant to Subparagraph 2.03(a) of the Lease Agreement, Lessee
hereby irrevocably elects to divide a Portion of the Outstanding Lease Amount
into further Portions as follows:

            (a)   The Portion which is to be divided is the Portion in the
      amount of $__________ with a current Rental Period which began on
      ________, ____ and ends on __________, ____; and

                                       C-1
<PAGE>   157
            (b)   On the last day of the current Rental Period for such Portion,
      such Portion is to be divided into the following Portions with the
      following initial Rental Periods:

<TABLE>
<CAPTION>
                     Portion                      Rental Period
                  -------------                 -----------------
<S>                                             <C>
                  $___________                  _______ month[s]
                  $___________                  _______ month[s]
                  $___________                  _______ month[s]
                  $___________                  _______ month[s]]
</TABLE>

            [Pursuant to Subparagraph 2.03(a) of the Lease Agreement, Lessee
hereby irrevocably elects to combine into a single Portion certain Portions of
the Outstanding Lease Amount as follows:

            (a)   The Portions which are to be combined are the Portions in the
      amounts of $__________, $_________ and $_______, each with a current
      Rental Period which ends on __________, ____; and

            (b)   The initial Rental Period for such newly created Portion shall
      be __________ month[s].]

      3.    Lessee hereby certifies to the Lessor Parties (other than Novellus)
that, on the date of this Notice of Rental Period Selection and after giving
effect to the selection as described above:

            (a)   The representations and warranties of Lessee set forth in
      Paragraph 4.01 of the Participation Agreement and in the other Operative
      Documents are true and correct in all material respects as if made on such
      date (except for representations and warranties expressly made as of a
      specified date, which shall be true as of such date);

            (b)   No Default has occurred and is continuing; and

            (c)   All of the Operative Documents are in full force and effect on
      such date.

      IN WITNESS WHEREOF, Lessee has executed this Notice of Rental Period
Selection on the date set forth above.

                                    NOVELLUS SYSTEMS, INC.

                                    By: _____________________________
                                        Name: _______________________
                                        Title: ______________________

                                      C-2

<PAGE>   158

                                    EXHIBIT C

                               PURCHASE AGREEMENT

                                      C-1
<PAGE>   159
                                                                  EXECUTION COPY
                                                                      Novellus V

==============================================================================

                               PURCHASE AGREEMENT

                                     BETWEEN

                             NOVELLUS SYSTEMS, INC.

                                       AND

                             ABN AMRO LEASING, INC.

                                 APRIL 18, 2001

==============================================================================
<PAGE>   160
                                TABLE OF CONTENTS

<TABLE>
<S>         <C>                                                        <C>
SECTION 1.  INTERPRETATION..........................................    1

1.01.       Definitions.............................................    1

1.02.       Rules of Construction...................................    2

SECTION 2.  OPTIONAL PURCHASE BY LESSEE DURING THE TERM.............    2

2.01.       Term Purchase Option....................................    2

2.02.       Notice of Term Purchase Option Exercise.................    2

2.03.       Purchase Price..........................................    2

SECTION 3.  OBLIGATIONS OF LESSEE ON THE EXPIRATION DATE............    2

3.01.       Alternative.............................................    2

3.02.       Marketing Option........................................    3

3.03.       Expiration Date Purchase Option.........................    9

SECTION 4.  TERMS OF ALL PURCHASES..................................    9

4.01.       Representations and Warranties of Parties...............    9

4.02.       "As Is" Purchase........................................   11

4.03.       Release.................................................   11

4.04.       Permits, Approvals, Etc.................................   11

4.05.       Costs...................................................   12

4.06.       Lessee's Expiration Date Payment Obligations............   12

4.07.       Lessor Liens............................................   12

4.08.       Transfer Documents......................................   12

4.09.       Casualty and Condemnation Proceeds......................   13

4.10.       Payments................................................   13

4.11.       Environmental Reports...................................   13

4.12.       Further Assurances......................................   13

SECTION 5.  MISCELLANEOUS...........................................   13

5.01.       Notices.................................................   13

5.02.       Waivers, Amendments.....................................   13

5.03.       Successors and Assigns..................................   14

5.04.       No Third Party Rights...................................   14

5.05.       Partial Invalidity......................................   14

5.06.       Governing Law...........................................   14

5.07.       Counterparts............................................   14
</TABLE>

                                      -i-
<PAGE>   161
<TABLE>
<CAPTION>
                                                                      PAGE
<S>         <C>                                                       <C>
5.08.       Nature of Lessee's Obligations..........................   14
</TABLE>

EXHIBITS

    A        Notice of Term Purchase Option Exercise (2.02)
    B        Notice of Marketing Option Exercise (3.01)
    C        Notice of Expiration Date Purchase Option Exercise (3.02)
    D(1)     Deed (Lessor) (4.08(a))
    D(2)     Acknowledgement and Disclaimer of Representations and Warranties
             (4.08(a))
    E        Bill of Sale (Lessor) (4.08(a))
    F        Deed (Lessee) (4.08(b))
    G        Bill of Sale (Lessee) (4.08(b))

                                      -ii-
<PAGE>   162
                               PURCHASE AGREEMENT

         THIS PURCHASE AGREEMENT (this "Agreement" herein), dated as of April
18, 2001, is entered into by and between:

                  (1) NOVELLUS SYSTEMS, INC., a California corporation
         ("Lessee"); and

                  (2) ABN AMRO LEASING, INC., an Illinois corporation
         ("Lessor").

                                    RECITALS

         A. Lessee has requested Lessor and the Persons which are "Participants"
under the Participation Agreement referred to in Recital B below (such Persons
to be referred to collectively as the "Participants") to provide to Lessee a
lease facility pursuant to which:

                  (1) Lessor would (a) lease from Lessee certain land currently
         owned by Lessee, (b) sublease back to Lessee such land and lease to
         Lessee certain improvements to be constructed on such land, (c) appoint
         Lessee as Lessor's agent to make such improvements (which improvements
         will be owned by Lessor), (d) make advances to finance such
         improvements and to pay certain related expenses and (e) grant to
         Lessee the right to purchase such improvements; and

                  (2) The Participants would participate in such lease facility
         by (a) funding the advances to be made by Lessor and (b) acquiring
         participation interests in the rental and certain other payments to be
         made by Lessee.

         B. Pursuant to a Participation Agreement dated of even date herewith
(the "Participation Agreement") among Lessee, Lessor, the Participants and ABN
AMRO Bank N.V., as agent for the Participants (in such capacity, "Agent"),
Lessor and the Participants have agreed to provide such lease facility upon the
terms and subject to the conditions set forth therein, including without
limitation the execution and delivery of this Agreement setting forth the terms
for the purchase of the property by Lessee.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:

SECTION 1. INTERPRETATION.

         1.01. Definitions. Unless otherwise indicated in this Agreement or any
other Operative Document, each term set forth in Schedule 1.01 to the
Participation Agreement, when used in this Agreement or any other Operative
Document, shall have the respective meaning given to
<PAGE>   163
that term in such Schedule 1.01 or in the provision of this Agreement or other
document, instrument or agreement referenced in such Schedule 1.01.

         1.02. Rules of Construction. Unless otherwise indicated in this
Agreement or any other Operative Document, the rules of construction set forth
in Schedule 1.02 to the Participation Agreement shall apply to this Agreement
and the other Operative Documents.

SECTION 2. OPTIONAL PURCHASE BY LESSEE DURING THE TERM.

         2.01. Term Purchase Option. Subject to the terms and conditions of this
Agreement and the other Operative Documents (including those set forth below in
this Paragraph 2.01), Lessee may, at its option on any Scheduled Rent Payment
Date prior to the Scheduled Expiration Date of the Lease Agreement, terminate
the Lease Agreement and purchase all of the Property (the "Term Purchase
Option").

                  (a) Notice of Term Purchase Option Exercise. Lessee shall
         notify Lessor of Lessee's exercise of the Term Purchase Option by
         delivering to Lessor an irrevocable written notice in the form of
         Exhibit A(1), appropriately completed (the "Notice of Term Purchase
         Option Exercise"), which states that Lessee is exercising its right to
         terminate the Lease Agreement prior to the Scheduled Expiration Date
         thereof pursuant to Paragraph 4.01 of the Lease Agreement and purchase
         all of the Property pursuant to this Paragraph 2.01 and specifies the
         Scheduled Rent Payment Date on which such termination and purchase are
         to occur (which date, after the delivery of such notice, shall be the
         Expiration Date). Lessee shall give the Notice of Term Purchase Option
         Exercise to Lessor at least one (1) month prior to the Scheduled Rent
         Payment Date on which such termination and purchase are to occur. The
         Notice of Term Purchase Option Exercise shall be delivered as required
         by Subparagraph 2.02(c) and Paragraph 7.01 of the Participation
         Agreement; provided, however, that Lessee shall promptly deliver the
         original of any Notice of Term Purchase Option Exercise initially
         delivered by facsimile. After delivering to Lessor the Notice of Term
         Purchase Option Exercise, Lessee may, upon not less than ten (10)
         Business Days prior written notice to Lessor, extend the date on which
         the termination of the Lease Agreement and Lessee's purchase of the
         Property is to occur to a Business Day not more than ten (10) Business
         Days after the date specified in the Notice of Term Purchase Option
         Exercise, provided that Lessee may so extend such date only once.

                  (b) Term Purchase Option Purchase Price. Lessee or its
         designee shall pay to Lessor on the Expiration Date, as the purchase
         price for the Property, an amount equal to the Outstanding Lease Amount
         on such date.

         2.02. Partial Purchase Option. Subject to the terms and conditions of
this Agreement and the other Operative Documents (including those set forth
below in this Paragraph 2.02), Lessee may, at its option on any Scheduled Rent
Payment Date prior to the Scheduled Expiration Date of the Lease Agreement,
without terminating the Lease Agreement, purchase one or more Tracts (but not
less than all of any such Tract) of the Property (the "Partial Purchase
Option").

                                       2
<PAGE>   164
                  (a) Notice of Partial Purchase Option Exercise. Lessee shall
         notify Lessor of Lessee's exercise of the Partial Purchase Option by
         delivering to Lessor an irrevocable written notice in the form of
         Exhibit A(2), appropriately completed (a "Notice of Partial Purchase
         Option Exercise"), which states that Lessee is exercising its right to
         purchase one or more Tracts of the Property prior to the Scheduled
         Expiration Date pursuant to this Paragraph 2.02 and specifies (i) the
         Tract(s) so to be purchased and (ii) the Scheduled Rent Payment Date on
         which such purchase is to occur (a "Partial Purchase Date"). Lessee
         shall give each Notice of Partial Purchase Option Exercise to Lessor at
         least two (2) months prior to the Partial Purchase Date on which a
         purchase is to occur. Each Notice of Partial Purchase Option Exercise
         shall be delivered as required by Subparagraph 2.02(c) and Paragraph
         7.01 of the Participation Agreement; provided, however, that Lessee
         shall promptly deliver the original of any Notice of Partial Purchase
         Option Exercise initially delivered by facsimile.

                  (b) Partial Purchase Option Purchase Price. Lessee shall pay
         to Lessor on each Partial Purchase Date, as the purchase price for each
         Tract of Property to be purchased on such date, an amount equal to the
         portion of the Outstanding Lease Amount on such date attributable to
         such Tract of Property.

                  (c) Conditions to Exercise of Partial Purchase Option. The
         purchase by Lessee on any Partial Purchase Date of any Tract of
         Property pursuant to this Paragraph 2.02 is subject to the following
         conditions:

                           (i) Lessor shall have received the Notice of Partial
                  Purchase Option Exercise for such purchase pursuant to
                  Subparagraph 2.02(a);

                           (ii) Lessor shall have received, on or prior to such
                  Partial Purchase Date:

                                    (A) New Expiration Date Appraisals for all
                           Tracts of Property that are to remain subject to the
                           Lease Agreement after such Partial Purchase Date,
                           which appraisals (1) each shall be dated a recent
                           date prior to such Partial Purchase Date and (2)
                           together shall assess the aggregate Fair Market Value
                           of all such remaining Tracts of Property at not less
                           than the Outstanding Lease Amount that will remain
                           after application of all amounts to be applied
                           thereto on such Partial Purchase Date; and

                                    (B) The purchase price payable by Lessee for
                           such Tract of Property pursuant to Subparagraph
                           2.02(b) and any other amounts payable by Lessee
                           pursuant to Subparagraph 4.06(b); and

                           (iii) No Default shall have occurred and be
                  continuing on such Partial Purchase Date or will occur as a
                  result of such purchase by Lessee.

                                       3
<PAGE>   165
SECTION 3. OBLIGATIONS OF LESSEE ON THE EXPIRATION DATE.

         3.01. Alternative. Unless Lessee has exercised the Term Purchase
Option, on the Expiration Date of the Lease Agreement, Lessee shall either:

                  (a) Marketing Option. Cause another Person to complete the
         purchase of the Property pursuant to Paragraph 3.02 (the "Marketing
         Option"); or

                  (b) Expiration Date Purchase Option. Purchase the Property
         itself pursuant to Paragraph 3.03 (the "Expiration Date Purchase
         Option").

Lessee shall elect either the Marketing Option or the Expiration Date Purchase
Option by delivering to Lessor, not more than nine (9) months nor less than six
(6) months prior to the Scheduled Expiration Date for the Lease Agreement,
either (i) a written notice in the form of Exhibit B, appropriately completed
(the "Notice of Marketing Option Exercise"), or (ii) a written notice in the
form of Exhibit C, appropriately completed (the "Notice of Expiration Date
Purchase Option Exercise"); provided, however, that (A) Lessee shall be deemed
to have elected the Expiration Date Purchase Option if it fails to deliver
either notice as required by this sentence; (B) Lessee's election of the
Expiration Date Purchase Option (whether expressly by a notice so delivered or
implicitly by the failure to deliver any notice) shall be irrevocable; and (C)
Lessee may not elect the Marketing Option if (1) the Expiration Date has been
accelerated to an earlier Termination Date following a Marketing Option Event of
Default under the Lease Agreement or (2) the conditions set forth in Paragraph
3.03 of the Participation Agreement are not satisfied on the date Lessee
delivers its election notice or on the Expiration Date of the Lease Agreement
(unless, in each case, the only event or condition causing such conditions not
to be so satisfied is the occurrence of a Non-Marketing Option Event of Default
under the Lease Agreement). The Notice of Marketing Option Exercise or the
Notice of Expiration Date Purchase Option Exercise shall be delivered as
required by Subparagraph 2.02(c) and Paragraph 7.01 of the Participation
Agreement; provided, however, that Lessee shall promptly deliver to Lessor the
original of any such notice initially delivered by facsimile.

         3.02. Marketing Option.

                  (a) General. If Lessee elects to exercise the Marketing Option
         by delivering to Lessor a Notice of Marketing Option Exercise pursuant
         to Paragraph 3.01, Lessee shall use reasonable efforts, in accordance
         with Subparagraph 3.02(b) below, to (i) locate a purchaser which
         satisfies the requirements set forth in this Paragraph 3.02, (ii)
         arrange for such purchaser to purchase the Property on the Expiration
         Date for a purchase price which is not less than the lesser of (A) the
         difference between the Outstanding Lease Amount and Residual Value
         Guaranty Amount and (B) the Fair Market Value of the Property and (iii)
         otherwise comply, or cause compliance with, the requirements of this
         Paragraph 3.02 and the other applicable provisions of this Agreement.

                  (b) Lessee's Marketing Obligations.

                           (i) Initial Marketing Period. During the period
                  beginning on the date Lessee delivers the Notice of Marketing
                  Option Exercise and ending on the date which is four (4)
                  months prior to the Expiration Date of the Lease Agreement
                  (the

                                       4
<PAGE>   166
                  "Initial Marketing Period"), Lessee shall use reasonable
                  efforts to solicit Conforming Bids from potential purchasers
                  of the Property. On or prior to the last day of the Initial
                  Marketing Period, Lessee shall deliver to Lessor any
                  Conforming Bid selected by Lessee (the "Initial Bid"). If the
                  purchase price specified in the Initial Bid is equal to or
                  greater than the difference between the Outstanding Lease
                  Amount and Residual Value Guaranty Amount, Lessor shall accept
                  such bid and Lessee shall have no further obligations to
                  solicit additional bids.

                           (ii) Secondary Marketing Period. If Lessee does not
                  submit an Initial Bid or if the purchase price specified in
                  the Initial Bid is less than the difference between the
                  Outstanding Lease Amount and Residual Value Guaranty Amount,
                  Lessor may reject such bid and Lessee shall, during the period
                  which begins on the day following the Initial Marketing Period
                  and ends on the date two (2) months prior to the Expiration
                  Date of the Lease Agreement (the "Secondary Marketing
                  Period"):

                                    (A) Use its best efforts to solicit
                           additional Conforming Bids, including the engagement
                           of experienced and knowledgeable brokers;

                                    (B) Furnish to each Lessor Party (other than
                           Novellus) copies of all bids and otherwise provide
                           each Lessor Party (other than Novellus) with such
                           information relating to the marketing of the Property
                           as such Person may reasonably request in writing;

                                    (C) Agree to provide to all potential
                           purchasers all customary seller's indemnities
                           (including environmental indemnities),
                           representations and warranties regarding the Property
                           (including the title to, except for Lessor Liens, and
                           condition of the Property);

                                    (D) Furnish to each Lessor Party (other than
                           Novellus) copies of environmental reports,
                           architect's certificates, licenses, permits and other
                           evidence reasonably requested by such Person to
                           establish that no Default has occurred and is
                           continuing under the Lease Agreement;

                                    (E) Permit any Lessor Party or potential
                           purchaser to inspect the Property and the maintenance
                           records for the Property upon reasonable prior
                           written notice and during normal business hours and
                           provide to each such Person all information regarding
                           the Property reasonably requested by such Person in
                           writing;

                                    (F) Take all other commercially reasonable
                           steps to secure the best price for the Property; and

                                    (G) If any Conforming Bids were received by
                           Lessee, submit to Lessor on or prior to the last day
                           of the Secondary Marketing Period any Conforming Bid
                           selected by Lessee with a purchase price which is
                           equal to or greater than the difference between the
                           Outstanding Lease Amount

                                       5
<PAGE>   167
                           and Residual Value Guaranty Amount or, if no such
                           Conforming Bid was received by Lessee, the highest
                           Conforming Bid received by Lessee during the
                           Secondary Marketing Period.

                  During the Secondary Marketing Period, any Lessor Party (other
                  than Novellus) shall have the right to submit one or more bids
                  or solicit bids from other Persons.

                  (c) Conforming Bids. Each bid must meet each of the following
         requirements (each such bid to be referred to herein as a "Conforming
         Bid"):

                           (i) The bid may be submitted by any Person other than
                  (A) a Person which is an Affiliate of Lessee or (B) a Person
                  which has an agreement (whether express or implied) with
                  Lessee or any of its Affiliates to sell, lease or otherwise
                  make available to Lessee or any of its Affiliates any portion
                  of the Property;

                           (ii) The bidder must agree in writing to purchase the
                  Property on the Expiration Date of the Lease Agreement for a
                  purchase price to be paid in cash which is not less than the
                  lesser of (A) the difference between the Outstanding Lease
                  Amount and Residual Value Guaranty Amount on such date and (B)
                  the Fair Market Value of the Property on such date;

                           (iii) The bidder must agree to purchase the Property
                  "as is" without any representations, warranties or
                  indemnities, except for (A) any representations, warranties or
                  indemnities provided by Lessor and Lessee pursuant to
                  Subparagraph 4.01(b) and (B) any representations, warranties
                  or indemnities provided by Lessee pursuant to clause (ii)(C)
                  of Subparagraph 3.02(b); and

                           (iv) The bidder must agree to be bound by the other
                  terms and conditions of this Agreement applicable to bidders.

                  (d) Lessor's Obligation to Accept Bids. If, at any time on or
         prior to the last day of the Secondary Marketing Period, Lessee submits
         to Lessor a Conforming Bid under this Paragraph 3.02 with a purchase
         price which is equal to or greater than the difference between the
         Outstanding Lease Amount and Residual Value Guaranty Amount, Lessor
         shall accept such bid. If Lessee submits to Lessor a Conforming Bid
         under this Paragraph 3.02 with a purchase price which is less than the
         difference between the Outstanding Lease Amount and Residual Value
         Guaranty Amount, Lessor shall not accept such bid unless approved by
         Lessor and Required Participants. If Lessee fails to submit a bid to
         Lessor on or prior to the last day of the Secondary Marketing Period
         which Lessor is so required to accept, Lessor shall (unless it elects
         to accept another bid which it is not required to accept, in which case
         Lessee's obligations shall be limited to the amounts payable pursuant
         to clause (ii) of Subparagraph 4.06(a)) retain the Property after the
         Expiration Date of the Lease Agreement; provided, however, that
         Lessee's payment obligations on such Expiration Date shall be limited
         to the amounts payable pursuant to clause (iii) of Subparagraph 4.06(a)
         if (i) Lessor retains the Property after Lessee submits a Conforming
         Bid on or prior to the last day of the Secondary Marketing Period in
         accordance with clause (ii) of Subparagraph 3.02(b) and (ii) the
         Marketing

                                       6
<PAGE>   168
         Option has not terminated prior to such Expiration Date pursuant to
         Subparagraph 3.02(f). If Lessee fails to obtain a Conforming Bid prior
         to the last day of the Secondary Marketing Period which Lessor is
         required to accept or another bid which Lessor elects to accept
         (notwithstanding that it is not required to do so) despite Lessee's
         timely and complete compliance with Lessee's marketing obligations as
         described in Subparagraph 3.02(a) and Subparagraph 3.02(b), and such
         failure is not caused by any negligence or willful misconduct of
         Lessee, then Lessee's payment obligations on the Expiration Date of the
         Lease Agreement shall be limited to the amounts payable pursuant to
         clause (ii) or clause (iii) of Subparagraph 4.06(a), as applicable.
         Lessor shall notify Lessee of Lessor's election to retain the Property
         by delivering to Lessee, at least ten (10) days prior to the Expiration
         Date of the Lease Agreement, a written notice of such election.

                  (e) Purchase Price. If Lessor accepts any bid by any Person,
         such Person (the "Designated Purchaser") shall pay to Lessor on the
         Expiration Date of the Lease Agreement, as the purchase price for the
         Property, the amount set forth in such bid as the purchase price.

                  (f) Termination of the Marketing Option. Lessee's right to
         exercise the Marketing Option shall immediately terminate and Lessee
         shall purchase the Property on the Expiration Date of the Lease
         Agreement pursuant to Paragraph 3.03 if (i) Lessee fails to comply with
         any of its obligations under this Paragraph 3.02; (ii) a Marketing
         Option Event of Default under the Lease Agreement occurs after Lessee
         delivers the Notice of Marketing Option Exercise; (iii) the conditions
         precedent set forth in Paragraph 3.03 of the Participation Agreement
         are not satisfied on the Expiration Date of the Lease Agreement (unless
         the only event or condition causing such conditions not to be so
         satisfied is the occurrence of a Non-Marketing Option Event of Default
         under the Lease Agreement); or (iv) the Designated Purchaser fails to
         consummate the purchase of the Property on the Expiration Date of the
         Lease Agreement in accordance with its accepted bid and this Agreement,
         without regard to the reason for such failure (except as otherwise
         provided in the following proviso); provided, however, that, if the
         Designated Purchaser fails to consummate the purchase of the Property
         on the Expiration Date solely due to Lessor's failure to remove Lessor
         Liens or deliver the required deed and bill of sale or other documents
         required to be delivered by Lessor hereunder, Lessee's right to
         exercise the Marketing Option shall not terminate, Lessee shall not be
         required to purchase the Property on the Expiration Date and Lessee's
         payment obligations on the Expiration Date shall be limited to the
         amounts set forth in Subparagraph 4.06(b) (determined as if the
         purchase by the Designated Purchaser had been consummated).

                  (g) Residual Value Guaranty Amount and Indemnity Amount.
         Unless Lessee's right to exercise the Marketing Option has terminated
         and Lessee is required to purchase the Property on the Expiration Date
         of the Lease Agreement pursuant to Paragraph 3.03, Lessee shall pay to
         Lessor on such Expiration Date the Residual Value Guaranty Amount and
         the Indemnity Amount calculated as follows:

                           (i) The "Residual Value Guaranty Amount" shall be an
                  amount equal to the total Tranche A Proportionate Share of the
                  Outstanding Lease Amount on the Expiration Date; provided,
                  however, that:

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<PAGE>   169
                                    (A) If Lessee has paid any Prepaid Rent or
                           if the Outstanding Lease Amount on the Expiration
                           Date includes any Ineligible Project Costs, then the
                           Residual Value Guaranty Amount prior to the
                           Completion Date shall be an amount equal to the
                           remainder of (1) the total Tranche A Proportionate
                           Share of the Eligible Project Costs, minus (2) the
                           accreted value of the aggregate amount of all Prepaid
                           Rent; and

                                    (B) If Lessee has paid any Prepaid Rent or
                           if the Outstanding Lease Amount on the Completion
                           Date includes any Ineligible Project Costs, then the
                           Tranche A Proportionate Share after the Completion
                           Date shall be recomputed and set at the maximum
                           percentage such that (1) Lessee is not deemed under
                           GAAP to be the owner of the Property prior to the
                           Completion Date, and (2) from the Lessee's
                           perspective, the Lease Agreement qualifies as an
                           operating lease in accordance with GAAP in effect on
                           the date of the Participation Agreement. If, as a
                           result of such recomputation, the Tranche A
                           Proportionate Share after the Completion Date is
                           changed, corresponding changes shall be made to the
                           Tranche B Proportionate Share, the Tranche A
                           Percentages and the Tranche B Percentages and
                           percentages after the Completion Date (such that the
                           sum of the Tranche A Proportionate Shares and the
                           Tranche B Proportionate Shares after such
                           recomputation equal the sum of such Proportionate
                           Shares and percentages prior to such recomputation).

                           (ii) The "Indemnity Amount" shall be applicable after
                  the Completion Date and shall be an amount equal to the
                  decrease, if any, between the Commencement Date and the
                  Expiration Date of the Lease Agreement in the Fair Market
                  Value of the Property caused by (A) any representation or
                  warranty of Lessee or any of its Affiliates regarding the
                  Property set forth in any of the Operative Documents proving
                  to be false or inaccurate when made, (B) the existence of, or
                  the failure of Lessee to pay any Governmental Charge,
                  Indebtedness or other obligation which might give rise to, any
                  Liens in the Property (other than Permitted Property Liens),
                  (C) the failure of Lessee to complete any New Improvements or
                  any Modifications or (D) any other failure of Lessee to comply
                  with any of its obligations regarding the Property set forth
                  in any of the Operative Documents.

                  (h) Determination of Fair Market Value and Indemnity Amount.
         If the purchase price specified in the Initial Bid is less than the
         difference between the Outstanding Lease Amount and Residual Value
         Guaranty Amount, Lessor may, on or prior to the last day of the
         Secondary Marketing Period (if Lessee has not previously delivered to
         Lessor a Conforming Bid with a purchase price equal to or greater than
         the difference between the Outstanding Lease Amount and Residual Value
         Guaranty Amount), deliver to Lessee a written notice of Lessor's
         determination of the current Fair Market Value of the Property and the
         Indemnity Amount. To determine such amounts, Lessor shall obtain
         Appraisals of the Property which set forth:

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<PAGE>   170
                           (i) A current Appraisal of the Fair Market Value of
                  the Property in its then existing condition (the "Current
                  Appraisal"); and

                           (ii) An Appraisal of the Fair Market Value of the
                  Property which assumes that (A) all representations and
                  warranties regarding the Property made by Lessee or any of its
                  Affiliates in any of the Operative Documents were true and
                  correct when made; (B) Lessee has maintained the Property in
                  compliance with all applicable Governmental Rules, Insurance
                  Requirements and the Operative Documents; (C) Lessee has
                  completed all Modifications and any New Improvements in a good
                  and workmanlike manner and otherwise as required by the
                  Operative Documents; (D) Lessee has repaired the Property as
                  required by the Operative Documents following any Casualty;
                  (E) Lessee has restored the Property as required by the
                  Operative Documents following any Condemnation; (F) Lessee has
                  paid all Governmental Charges, Indebtedness and other
                  obligations which, if unpaid, might give rise to a Lien (other
                  than a Lessor Lien) on the Property; (G) Lessee has removed
                  all Liens on the Property except for Permitted Property Liens
                  and Lessor Liens; and (H) Lessee has performed all of its
                  other obligations as required by the Operative Documents (the
                  "Assumed Appraisal").

         In the absence of manifest error, (A) the Current Appraisal shall
         constitute the current Fair Market Value of the Property and (B) the
         difference between the Current Appraisal and the Assumed Appraisal
         shall constitute the Indemnity Amount if the Current Appraisal is less
         than the Assumed Appraisal.

                  (i) Lessee not an Agent. Lessee shall not be an agent for any
         of the Lessor Parties in arranging for a purchaser of the Property. No
         Lessor Party (other than Novellus) shall be bound by any acts of
         Lessee.

                  (j) Application of Proceeds. After the exercise by Lessee of
         the Marketing Option, Lessor shall apply and distribute all amounts
         received by Lessor on the Expiration Date as follows:

                           (i) First, Lessor shall apply such amounts to the
                  portion of the Outstanding Lease Amount not constituting
                  Ineligible Project Costs to the extent necessary to pay such
                  portion of the Outstanding Lease Amount;

                           (ii) Second, to the extent any amounts then remain,
                  Lessor shall apply such amounts to the portion of all unpaid
                  Rent accrued through or due and payable on or prior to such
                  date not constituting Ineligible Project Costs to the extent
                  necessary to pay such portion of the unpaid Rent;

                           (iii) Third, to the extent any amounts then remain,
                  Lessor shall apply such amounts to the portion of all other
                  amounts, if any, due and payable by Lessee under the Operative
                  Documents on or prior to such date not constituting Ineligible
                  Project Costs to the extent necessary to pay such portion of
                  the unpaid amounts;

                                       9
<PAGE>   171
                           (iv) Fourth, to the extent any amounts then remain,
                  Lessor shall distribute to Lessee (A) such amounts as are
                  necessary to pay all Prepaid Rent paid by Lessee, except for
                  any such Prepaid Rent caused by or arising from any failure by
                  Lessee to comply with any of its obligations under the
                  Operative Documents (including its insurance obligations), any
                  representation by Lessee in any of the Operative Documents not
                  being true, any negligence or willful misconduct of Lessee, or
                  any claim by any third-party against Lessee (or against any
                  Lessor Party) based upon any alleged action or inaction by
                  Lessee, and (B) an amount equal to the Residual Value Guaranty
                  Amount paid by Lessee hereunder.

                           (v) Fifth, to the extent any amounts then remain,
                  Lessor shall apply such amounts to all Ineligible Project
                  Costs paid or incurred by Lessor Parties.

                           (vi) Finally, to the extent any amounts then remain,
                  Lessor shall promptly distribute all such remaining proceeds
                  to Lessee.

                  (k) Creditworthiness of Designated Purchaser. Lessee assumes
         all responsibility for determining the creditworthiness of any
         potential purchaser on any bid submitted by Lessee to Lessor hereunder.
         If, after any purchase by a Designated Purchaser hereunder, the
         purchase price paid by such Designated Purchaser is recovered from any
         Lessor Party (other than Novellus), Lessee shall reimburse such Lessor
         Party for such recovery unless such recovery is due solely to a
         material misrepresentation or covenant breach by such Lessor Party.

                  (l) Exercise of Marketing Option After Non-Marketing Option
         Event of Default. If Lessor notifies Lessee pursuant to Subparagraph
         5.03(a) or Subparagraph 5.04(a) of the Lease Agreement that Lessor is
         terminating the Lease Agreement on a Termination Date which is prior to
         the Scheduled Expiration Date of the Lease Agreement and the only basis
         for such early termination is the occurrence of a Non-Marketing Option
         Event of Default, Lessee may, subject to Paragraph 3.01, elect to
         exercise the Marketing Option if, not later than ten (10) Business Days
         after it receives from Lessor such notice of early termination, it (i)
         delivers to Lessor a Notice of Marketing Option Exercise, (ii) delivers
         to Lessor Cash Collateral in the amount required by clause (ii)(C) of
         Subparagraph 2.11(a) of the Participation Agreement, and (iii) takes
         such other actions as may be required by Subparagraph 2.11(a) of the
         Participation Agreement or the Cash Collateral Agreement. Upon the
         delivery by Lessee to Lessor of a Notice of Marketing Option Exercise
         and satisfaction of the other requirements set forth in the preceding
         sentence of this Subparagraph 3.02(l), the Expiration Date of the Lease
         Agreement shall, if the conditions to the exercise of the Marketing
         Option set forth in Paragraph 3.01 are satisfied, be extended to (A)
         the date determined pursuant clause (ii) of Subparagraph 3.05(d) of the
         Construction Agency Agreement if the Non-Marketing Option Event of
         Default was a Construction Termination Event or (B) the first Business
         Day of the first full calendar month that is six (6) months after the
         date of receipt by Lessor of such Notice of Marketing Option Exercise
         in all other cases. Any exercise by Lessee of the Marketing Option
         pursuant to this Subparagraph 3.02(l) shall be subject to the terms and
         conditions otherwise set forth in this Agreement.

                                       10
<PAGE>   172
         3.03. Expiration Date Purchase Option.

                  (a) General. If (i) Lessee elects to exercise the Expiration
         Date Purchase Option by delivering to Lessor a Notice of Expiration
         Date Purchase Option Exercise pursuant to Paragraph 3.01; (ii) Lessee
         elects to exercise the Marketing Option by delivering to Lessor a
         Notice of Marketing Option Exercise pursuant to Paragraph 3.01 but the
         Marketing Option terminates pursuant to Subparagraph 3.02(f); or (iii)
         Lessee fails to deliver to Lessor either notice as required by
         Paragraph 3.01; Lessee shall purchase the Property on the Expiration
         Date of the Lease Agreement and otherwise comply, or cause compliance
         with, the requirements of this Paragraph 3.03 and the other applicable
         provisions of this Agreement.

                  (b) Purchase Price. If Lessee is purchasing the Property
         pursuant to the Expiration Date Purchase Option, Lessee shall pay to
         Lessor on the Expiration Date of the Lease Agreement, as the purchase
         price for the Property, an amount equal to the Outstanding Lease Amount
         on such date.

SECTION 4. TERMS OF ALL PURCHASES.

         4.01. Representations and Warranties of Parties.

                  (a) Representations and Warranties of Purchaser. The purchaser
         of the Property, whether Lessee, an Assignee Purchaser or a Designated
         Purchaser ("Purchaser") shall represent and warrant to Lessor on the
         Expiration Date of the Lease Agreement (or, in the case of a purchase
         of a portion of the Property pursuant to the Partial Purchase Option,
         on the applicable Partial Purchase Date) as follows:

                           (i) Such Person is a legal entity duly organized,
                  validly existing and in good standing under the laws of its
                  jurisdiction of organization or an individual with legal
                  capacity to purchase the Property (or, in the case of a
                  purchase of a portion of the Property pursuant to the Partial
                  Purchase Option, the portion to be purchased).

                           (ii) The execution, delivery and performance by such
                  Person of each document, instrument and agreement executed, or
                  to be executed, by such Person in connection with its purchase
                  of the Property (or, in the case of a purchase of a portion of
                  the Property pursuant to the Partial Purchase Option, the
                  portion to be purchased) (the "Purchase Documents") and the
                  consummation of the transactions contemplated thereby (A) are
                  within the power of such Person and (B) have been duly
                  authorized by all necessary actions on the part of such
                  Person.

                           (iii) Each Purchase Document executed, or to be
                  executed, by such Person has been, or will be, duly executed
                  and delivered by such Person and constitutes, or will
                  constitute, a legal, valid and binding obligation of such
                  Person, enforceable against such Person in accordance with its
                  terms, except as limited by bankruptcy, insolvency or other
                  laws of general application relating to or affecting the
                  enforcement of creditors' rights generally and general
                  principles of equity.

                                       11
<PAGE>   173
                           (iv) Such Person has not (A) made a general
                  assignment for the benefit of creditors, (B) filed any
                  voluntary petition in bankruptcy or suffered the filing of any
                  involuntary petition by such Person's creditors, (C) suffered
                  the appointment of a receiver to take possession of all, or
                  substantially all, of such Person's assets, (D) suffered the
                  attachment or other judicial seizure of all, or substantially
                  all, of such Person's assets, (E) admitted in writing its
                  inability to pay its debts as they come due, or (F) made an
                  offer of settlement, extension or composition to its creditors
                  generally.

                           (v) Such Person is not a "party in interest" within
                  the meaning of Section 3(14) of the ERISA, with respect to any
                  investor in or beneficiary of Lessor.

                  (b) Representations and Warranties of Lessor and Lessee. Each
         of Lessor and Lessee shall represent and warrant to Purchaser (and
         Lessee also shall represent and warrant to Lessor if Lessor is to
         retain the Property) on the Expiration Date of the Lease Agreement as
         follows:

                           (i) Such Person is a corporation duly organized,
                  validly existing and in good standing under the laws of its
                  jurisdiction of organization.

                           (ii) The execution, delivery and performance by such
                  Person of each Purchase Document executed, or to be executed,
                  by such Person and the consummation of the transactions
                  contemplated thereby (A) are within the power of such Person
                  and (B) have been duly authorized by all necessary actions on
                  the part of such Person.

                           (iii) Each Purchase Document executed, or to be
                  executed, by such Person has been, or will be, duly executed
                  and delivered by such Person and constitutes, or will
                  constitute, a legal, valid and binding obligation of such
                  Person, enforceable against such Person in accordance with its
                  terms, except as limited by bankruptcy, insolvency or other
                  laws of general application relating to or affecting the
                  enforcement of creditors' rights generally and general
                  principles of equity.

                           (iv) Such Person has not (A) made a general
                  assignment for the benefit of creditors, (B) filed any
                  voluntary petition in bankruptcy or suffered the filing of any
                  involuntary petition by such Person's creditors, (C) suffered
                  the appointment of a receiver to take possession of all, or
                  substantially all, of such Person's assets, (D) suffered the
                  attachment or other judicial seizure of all, or substantially
                  all, of such Person's assets, (E) admitted in writing its
                  inability to pay its debts as they come due, or (F) made an
                  offer of settlement, extension or composition to its creditors
                  generally.

         In addition to the foregoing, (A) Lessee shall represent and warrant to
         the Designated Purchaser (or Lessor if Lessor is to retain the
         Property) on the Expiration Date of the Lease Agreement that no Liens
         are attached to the Property, except for Permitted Property Liens, and
         (B) Lessor shall represent and warrant to Purchaser on the Expiration

                                       12
<PAGE>   174
         Date of the Lease Agreement (or, in the case of a purchase of a portion
         of the Property pursuant to the Partial Purchase Option, on the
         applicable Partial Purchase Date) that no Lessor Liens are attached to
         the Property. Except for the foregoing representations and warranties
         to be made by Lessor on the Expiration Date of the Lease Agreement (or,
         in the case of a purchase of a portion of the Property pursuant to the
         Partial Purchase Option, on the applicable Partial Purchase Date), no
         Lessor Party (other than Novellus in its capacity as Lessee in
         accordance with the Operative Documents) shall make any representation
         or warranty regarding the Property or the sale of the Property. Lessee
         shall make such additional representations and warranties as it may be
         required to make pursuant to clause (ii) of Subparagraph 3.02(b).

                  (c) Survival of Representations and Warranties. The
         representations and warranties of Purchaser, Lessor and Lessee shall
         survive for a period of twelve (12) months after the Expiration Date of
         the Lease Agreement (or, in the case of a purchase of a portion of the
         Property pursuant to the Partial Purchase Option, after the applicable
         Partial Purchase Date). Any claim which any such party may have at any
         time against any other such party for a breach of any such
         representation or warranty, whether known or unknown, which is not
         asserted by written notice within such twelve (12) month period shall
         not be valid or effective, and the party shall have no liability with
         respect thereto.

         4.02. "As Is" Purchase. All purchases of the Property hereunder shall
be "as is, with all faults" and without any representations, warranties or
indemnities except for any representations, warranties or indemnities provided
by Lessee pursuant to clause (ii)(C) of Subparagraph 3.02(b) or by Lessor or
Lessee pursuant to Subparagraph 4.01(b). Each Purchaser shall specifically
acknowledge and agree that Lessor is selling and such Purchaser is purchasing
the Property on an "as is, with all faults" basis and that such Purchaser is not
relying on any representations or warranties of any kind whatsoever, express or
implied, from any Lessor Party (other than Novellus in its capacity as Lessee in
accordance with the Operative Documents), its agents, or brokers as to any
matters concerning the Property (except for any representations and warranties
provided by Lessor pursuant to Subparagraph 4.01(b)), including (a) the
condition of the Property (including any Improvements to the Property made prior
to the Commencement Date or during the Term of the Lease Agreement); (b) title
to the Property (including possession of the Property by any Person or the
existence of any Lien or any other right, title or interest in or to any of the
Property in favor of any Person); (c) the value, habitability, usability,
design, operation or fitness for use of the Property; (d) the availability or
adequacy of utilities and other services to the Property; (e) any latent, hidden
or patent defect in the Property; (f) the zoning or status of the Property or
any other restrictions on the use of the Property; (g) the economics of the
Property; (h) any Casualty or Condemnation; or (i) the compliance of the
Property with any applicable Governmental Rule or Insurance Requirement.

         4.03. Release. Without limiting the foregoing, each Purchaser shall, on
behalf of itself and its successors and assigns, waive its right to recover
from, and forever release and discharge, Lessor and the other Indemnitees from
any and all demands, claims, legal or administrative proceedings, losses,
liabilities, damages, penalties, fines, liens, judgments, costs or expenses
whatsoever (including attorneys' fees and costs), whether direct or indirect,
known or unknown, foreseen or unforeseen, that may arise on account of or in any
way be connected with the

                                       13
<PAGE>   175
physical condition of the Property or any Governmental Rule applicable thereto,
including any Environment Law. Each Purchaser shall expressly waive the benefits
of Section 1542 of the California Civil Code, which provides that, "a general
release does not extend to claims which the creditor does not know or expect to
exist in his favor at the time of executing the release, which if known to him
must have materially affected the settlement with the debtor."

         4.04. Permits, Approvals, Etc. Lessee shall obtain all permits,
licenses and approvals from and make all filings with Governmental Authorities
and other Persons, comply and cause compliance with all applicable Governmental
Rules and take all other actions required for the marketing, purchase and sale
of the Property.

         4.05. Costs. Lessee shall pay directly, without deduction from the
purchase price or any other amount payable to Lessor hereunder, all costs and
expenses of Lessee and Lessor associated with the marketing and sale of the
Property, including brokers' fees and commissions; title insurance premiums;
survey charges; utility, tax and other prorations; fees and expenses of
environmental consultants and attorneys; appraisal costs; escrow fees; recording
fees; documentary, transfer and other taxes; and all other fees, costs and
expenses which might otherwise be deducted from the purchase price or any other
amount payable to Lessor hereunder.

         4.06. Lessee's Payment Obligations.

                  (a) Expiration Date. On the Expiration Date of the Lease
         Agreement, Lessee shall pay to Lessor the following:

                           (i) Purchase by Lessee. If the Property is to be
                  purchased by Lessee or an Assignee Purchaser on such date, (A)
                  the purchase price payable by Lessee, (B) all unpaid Rent
                  accrued through or due and payable on or prior to such date
                  and (C) all other amounts, if any, due and payable by Lessee
                  under the Operative Documents on or prior to such date;

                           (ii) Purchase by a Designated Purchaser. If the
                  Property is to be purchased by a Designated Purchaser on such
                  date, (A) the Residual Value Guaranty Amount, (B) the
                  Indemnity Amount, (C) all unpaid Rent accrued through or due
                  and payable on or prior to such date and (D) all other
                  amounts, if any, due and payable by Lessee under the Operative
                  Documents on or prior to such date; or

                           (iii) Retention by Lessor. If the Property is to be
                  retained by Lessor on such date pursuant to Subparagraph
                  3.02(d), (A) the Residual Value Guaranty Amount, (B) the
                  Indemnity Amount, (C) all unpaid Rent accrued through or due
                  and payable on or prior to such date and (D) all other
                  amounts, if any, due and payable by Lessee under the Operative
                  Documents on or prior to such date.

                  (b) Partial Purchase Date. On any Partial Purchase Date,
         Lessee shall pay to Lessor (i) the purchase price for the Tracts of
         Property to be purchased on such date, (ii) all unpaid Rent
         attributable to such Tracts of Property accrued through or due and
         payable on or prior to such date and (iii) all other amounts
         attributable to such Tracts of

                                       14
<PAGE>   176
         Property, if any, due and payable by Lessee under the Operative
         Documents on or prior to such date.

         4.07. Lessor Liens. Lessor shall remove all Lessor Liens from the
Property before the Expiration Date of the Lease Agreement (or, in the case of a
purchase of a portion of the Property pursuant to the Partial Purchase Option,
from the portion to be purchased before the applicable Partial Purchase Date).

         4.08. Transfer Documents.

                  (a) Expiration Date.

                           (i) Lessor. Subject to receipt by Lessor on the
                  Expiration Date of the Lease Agreement of the full amount of
                  the following, without any setoff, deduction or reduction of
                  any kind:

                                    (A) In the case of a transfer to Lessee or
                           an Assignee Purchaser, all amounts payable by Lessee
                           pursuant to clause (i) of Subparagraph 4.06(a); or

                                    (B) In the case of a transfer to a
                           Designated Purchaser, (1) the purchase price payable
                           by the Designated Purchaser and (2) all amounts
                           payable by Lessee pursuant to clause (ii) of
                           Subparagraph 4.06(a);

                  Lessor shall transfer its interest in the Property to
                  Purchaser on the Expiration Date of the Lease Agreement
                  (unless Lessor is to retain the Property) by executing and
                  delivering to Purchaser a Deed in substantially the form of
                  Exhibit D(1), an Acknowledgment of Disclaimer of
                  Representations and Warranties in substantially the form of
                  Exhibit D(2), a Bill of Sale in substantially the form of
                  Exhibit E, and shall assign to Purchaser Lessor's option to
                  purchase its interest in the Property as provided in the
                  Ground Lease.

                           (ii) Lessee. On the Expiration Date of the Lease
                  Agreement, unless Lessee is to purchase the Property, Lessee
                  shall transfer its interest in the Property to the Designated
                  Purchaser or an Assignee Purchaser (or Lessor if Lessor is to
                  retain the Property) by executing and delivering to such
                  Person a Deed in substantially the form of Exhibit F, a Bill
                  of Sale in substantially the form of Exhibit G and such other
                  documents, instruments and agreements as such Person may
                  reasonably request.

                  (b) Partial Purchase Date. Subject to receipt by Lessor on any
         Partial Purchase Date of all amounts payable by Lessee pursuant to
         Subparagraph 4.06(b), without any setoff, deduction or reduction of any
         kind, Lessor shall transfer its interest in the Tracts of Property to
         be purchased on such date to Lessee by executing and delivering to
         Lessee a Deed in substantially the form of Exhibit D(1), a Bill of Sale
         in substantially the form of Exhibit E, shall assign to Lessee Lessor's
         option to purchase its interest in such Tracts of Property as provided
         in the Ground Lease, and such other documents, instruments and
         agreements as Lessee may reasonably request.

                                       15
<PAGE>   177
         4.09. Casualty and Condemnation Proceeds. If, on the Expiration Date of
the Lease Agreement, any Casualty and Condemnation Proceeds are held by Lessor
in a Repair and Restoration Account or otherwise, Lessor shall (a) if Lessee is
to purchase the Property on the Expiration Date of the Lease Agreement and
Lessee shall so direct, apply such proceeds to the purchase price to be paid by
Lessee or (b) in all other cases, release such proceeds to Lessee; provided,
however, that Lessor shall not have any obligation so to apply or release such
proceeds unless Lessee and/or any Designated Purchaser has complied with all of
the terms and conditions of this Agreement.

         4.10. Payments. Purchaser, Lessor and Lessee shall make all payments in
lawful money of the United States and in same day or immediately available funds
not later than 12:00 noon on the date due.

         4.11. Environmental Reports. Lessee shall obtain and deliver to Lessor,
not later than one (1) month prior to the Expiration Date of the Lease Agreement
(or, in the case of a purchase of a portion of the Property pursuant to the
Partial Purchase Option, prior to the applicable Partial Purchase Date),
environmental reports with respect to the Property (or, in the case of a
purchase of a portion of the Property pursuant to the Partial Purchase Option,
with respect to the applicable portion thereof) prepared by environmental
consultants acceptable to Lessor.

         4.12. Further Assurances. Lessee shall, and shall cause any Designated
Purchaser to, execute and deliver such documents, instruments and agreements and
take such other actions as Lessor may reasonably request to effect the purposes
of this Agreement and comply with the terms hereof. Similarly, Lessor shall
execute and deliver such documents, instruments and agreements and take such
other actions as Lessee or a Designated Purchaser may reasonably request to
effect the purposes of this Agreement and comply with the terms hereof.

SECTION 5. MISCELLANEOUS.

         5.01. Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Lessee or Lessor under this Agreement shall be given as provided in Subparagraph
2.02(c) and Paragraph 7.01 of the Participation Agreement.

         5.02. Waivers, Amendments. Any term, covenant, agreement or condition
of this Agreement may be amended or waived only as provided in the Participation
Agreement. No failure or delay by any Lessor Party (other than Novellus) in
exercising any right hereunder shall operate as a waiver thereof or of any other
right nor shall any single or partial exercise of any such right preclude any
other further exercise thereof or of any other right. Unless otherwise specified
in any such waiver or consent, a waiver or consent given hereunder shall be
effective only in the specific instance and for the specific purpose for which
given.

         5.03. Successors and Assigns.

                  (a) General. This Agreement shall be binding upon and inure to
         the benefit of the Lessor Parties and Lessee and their permitted
         successors and assigns; provided, however, that the Lessor Parties and
         Lessee shall not sell, assign or delegate their

                                       16
<PAGE>   178
         respective rights and obligations hereunder except as provided in the
         Participation Agreement and in Subparagraph 5.03(b).

                  (b) Assignment by Lessee of Purchase Rights. Lessee may assign
         to a third party (an "Assignee Purchaser") its right to purchase the
         Property pursuant to the Term Purchase Option, the Partial Purchase
         Option or the Expiration Date Purchase Option; provided, however, that
         (i) such an assignment shall not relieve Lessee of its obligations to
         consummate or cause the consummation of any such purchase in accordance
         with the terms of this Agreement and (ii) Lessee assumes all
         responsibility for determining the creditworthiness of any such
         Assignee Purchaser. If, after any purchase by an Assignee Purchaser
         hereunder, the purchase price paid by such Assignee Purchaser is
         recovered from any Lessor Party (other than Novellus), Lessee shall
         reimburse such Lessor Party for such recovery unless such recovery is
         due solely to a material misrepresentation or covenant breach by such
         Lessor Party.

         5.04. No Third Party Rights. Nothing expressed in or to be implied from
this Agreement is intended to give, or shall be construed to give, any Person,
other than the Lessor Parties and Lessee and their permitted successors and
assigns, any benefit or legal or equitable right, remedy or claim under or by
virtue of this Agreement or under or by virtue of any provision herein.

         5.05. Partial Invalidity. If at any time any provision of this
Agreement is or becomes illegal, invalid or unenforceable in any respect under
the law or any jurisdiction, neither the legality, validity or enforceability of
the remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.

         5.06. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without reference to
conflicts of law rules except as otherwise provided in Paragraph 7.14 of the
Participation Agreement.

         5.07. Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.

         5.08. Nature of Lessee's Obligations.

                  (a) Independent Obligation. The obligation of Lessee to pay
         the amounts payable by Lessee under this Agreement and the other
         Operative Documents and to perform the other Lessee Obligation are
         absolute, unconditional and irrevocable obligations which are separate
         and independent of the obligations of the Lessor Parties under this
         Agreement and the other Operative Documents and all other events and
         circumstances, including the events and circumstances set forth in
         Subparagraph 5.08(c).

                  (b) No Termination or Abatement. This Agreement and the other
         Operative Documents and Lessee's obligation to pay all amounts
         hereunder and to pay and perform all other Lessee Obligations shall
         continue in full force and effect without abatement

                                       17
<PAGE>   179
         notwithstanding the occurrence or existence of any event or
         circumstance, including any event or circumstance set forth in
         Subparagraph 5.08(c).

                  (c) Full Payment and Performance. Lessee shall make all
         payments under this Agreement and the other Operative Documents in the
         full amounts and at the times required by the terms of this Agreement
         and the other Operative Documents without setoff, deduction or
         reduction of any kind and shall perform all other Lessee Obligations as
         and when required, without regard to any event or circumstances
         whatsoever, including (i) the condition of the Property (including any
         Improvements to the Property made prior to the Commencement Date or
         during the Term of the Lease Agreement); (ii) title to the Property
         (including possession of the Property by any Person or the existence of
         any Lien or any other right, title or interest in or to any of the
         Property in favor of any Person); (iii) the value, habitability,
         usability, design, operation or fitness for use of the Property; (iv)
         the availability or adequacy of utilities and other services to the
         Property; (v) any latent, hidden or patent defect in the Property; (vi)
         the zoning or status of the Property or any other restrictions on the
         use of the Property; (g) the economics of the Property; (vii) any
         Casualty or Condemnation; (viii) the compliance of the Property with
         any applicable Governmental Rule or Insurance Requirement; (ix) any
         failure by any Lessor Party to perform any of its obligations under
         this Agreement or any other Operative Document; or (x) the exercise by
         any Lessor Party of any of its remedies under this Agreement or any
         other Operative Document; provided, however, that this Paragraph 5.08
         shall not abrogate any right which Lessee may have to recover damages
         from any Lessor Party for any material breach by such Lessor Party of
         its obligations under this Agreement or any other Operative Document to
         the extent permitted hereunder or thereunder.

         5.09. Oregon Statutory Notice. Pursuant to Oregon Revised Statutes
Section 93.040(2), Lessor hereby provides Lessee with the following notice:

                  THE PROPERTY DESCRIBED IN THIS INSTRUMENT MAY NOT BE WITHIN A
         FIRE PROTECTION DISTRICT PROTECTING STRUCTURES. THE PROPERTY IS SUBJECT
         TO LAND USE LAWS AND REGULATIONS, WHICH, IN FARM OR FOREST ZONES, MAY
         NOT AUTHORIZE CONSTRUCTION OR SITING OF A RESIDENCE AND WHICH LIMIT
         LAWSUITS AGAINST FARMING OR FOREST PRACTICES AS DEFINED IN OREGON
         REVISED STATUTES SECTION 30.930 IN ALL ZONES. BEFORE SIGNING OR
         ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING FEE TITLE TO THE
         PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY PLANNING
         DEPARTMENT TO VERIFY APPROVED USES AND EXISTENCE OF FIRE PROTECTION
         FOR STRUCTURES.

                          [The signature page follows.]

                                       18
<PAGE>   180
         IN WITNESS WHEREOF, Lessee and Lessor have caused this Agreement to be
executed as of the day and year first above written.

LESSEE:                                     NOVELLUS SYSTEMS, INC.

                                            By:___________________________
                                               Name:______________________
                                               Title:_____________________

LESSOR:                                     ABN AMRO LEASING, INC.

                                            By:___________________________
                                               Name:______________________
                                               Title:_____________________

                                       19
<PAGE>   181
                                  EXHIBIT A(1)

                     NOTICE OF TERM PURCHASE OPTION EXERCISE

                                     [Date]

ABN AMRO Leasing, Inc.
c/o ABN AMRO Bank N.V.
  as Agent
Agency Services
208 South LaSalle Street, Suite 1500
Chicago, IL  60604
Attn:  Josephine O'Brien

         1.       Reference is made to the following:

                  (a) The Participation Agreement, dated as of April 18,
         2001(the "Participation Agreement"), among Novellus Systems, Inc.
         ("Lessee"), ABN AMRO Leasing, Inc. ("Lessor"), the Persons listed in
         Schedule I to the Participation Agreement (the "Participants") and ABN
         AMRO Bank N.V., as agent for the Participants (in such capacity,
         "Agent");

                  (b) The Lease Agreement, dated as of April 18, 2001(the "Lease
         Agreement"), between Lessee and Lessor; and

                  (c) The Purchase Agreement, dated as of April 18, 2001(the
         "Purchase Agreement"), between Lessee and Lessor.

Unless otherwise indicated, all terms defined in the Participation Agreement
have the same respective meanings when used herein.

         2.       Pursuant to Paragraph 4.01 of the Lease Agreement and
Paragraph 2.01 of the Purchase Agreement, Lessee hereby irrevocably notifies
Lessor that Lessee is exercising its right to terminate the Lease Agreement
prior to the Scheduled Expiration Date of the Lease Agreement and purchase the
Property on [_________, ____] (which date is a Scheduled Rent Payment Date and
which date, after the delivery of this notice, shall be the Expiration Date of
the Lease Agreement).

         IN WITNESS WHEREOF, Lessee has executed this Notice of Term Purchase
Option Exercise on the date set forth above.

                                            NOVELLUS SYSTEMS, INC.

                                            By:___________________________
                                               Name:______________________
                                               Title:_____________________

                                      A-1
<PAGE>   182
                                  EXHIBIT A(2)

                   NOTICE OF PARTIAL PURCHASE OPTION EXERCISE

                                     [Date]

ABN AMRO Leasing, Inc.
c/o ABN AMRO Bank N.V.
  as Agent
Agency Services
208 South LaSalle Street, Suite 1500
Chicago, IL  60604
Attn:  Josephine O'Brien

         1. Reference is made to the following:

                  (a) The Participation Agreement, dated as of April 18,
         2001(the "Participation Agreement"), among Novellus Systems, Inc.
         ("Lessee"), ABN AMRO Leasing, Inc. ("Lessor"), the Persons listed in
         Schedule I to the Participation Agreement (the "Participants") and ABN
         AMRO Bank N.V., as agent for the Participants (in such capacity,
         "Agent"); and

                  (b) The Purchase Agreement, dated as of April 18, 2001(the
         "Purchase Agreement"), between Lessee and Lessor.

Unless otherwise indicated, all terms defined in the Participation Agreement
have the same respective meanings when used herein.

         2. Pursuant to Paragraph 2.02 of the Purchase Agreement, Lessee hereby
irrevocably notifies Lessor that Lessee is exercising its right to purchase a
portion of the Property as follows:

                  (a) The Tract[s] of Property to be purchased is [are]
         ________________; and

                  (b) The date on which such purchase is to occur is [_________,
         ____] (which date is a Scheduled Rent Payment Date ).

         3. Lessee hereby certifies to Lessor, Agent and the Participants that,
on the date of this notice:

                  (a) The representations and warranties of Lessee set forth in
         Paragraph 4.01 of the Participation Agreement and in the other
         Operative Documents are true and correct in all material respects as if
         made on such date (except for representations and warranties expressly
         made as of a specified date, which shall be true as of such date);

                  (b) No Default has occurred and is continuing; and

                  (c) All of the Operative Documents are in full force and
         effect.

                                     A(2)-1
<PAGE>   183
         IN WITNESS WHEREOF, Lessee has executed this Notice of Partial Purchase
Option Exercise on the date set forth above.

                                            NOVELLUS SYSTEMS, INC.

                                            By:___________________________
                                               Name:______________________
                                               Title:_____________________

                                     A(2)-2
<PAGE>   184
                                    EXHIBIT B

                       NOTICE OF MARKETING OPTION EXERCISE

                                     [Date]

ABN AMRO Leasing, Inc.
c/o ABN AMRO Bank N.V.
  as Agent
Agency Services
208 South LaSalle Street, Suite 1500
Chicago, IL  60604
Attn:  Josephine O'Brien

         1.       Reference is made to the following:

                  (a) The Participation Agreement, dated as of April 18,
         2001(the "Participation Agreement"), among Novellus Systems, Inc.
         ("Lessee"), ABN AMRO Leasing, Inc. ("Lessor"), the Persons listed in
         Schedule I to the Participation Agreement (the "Participants") and ABN
         AMRO Bank N.V., as agent for the Participants (in such capacity,
         "Agent"); and

                  (b) The Purchase Agreement, dated as of April 18, 2001(the
         "Purchase Agreement"), between Lessee and Lessor.

Unless otherwise indicated, all terms defined in the Participation Agreement
have the same respective meanings when used herein.

         2.       Pursuant to Paragraph 3.01 of the Purchase Agreement, Lessee
hereby notifies Lessor that Lessee is electing to exercise the Marketing Option
on the Scheduled Expiration Date of the Lease Agreement of [_____, ____].

         3.       Lessee hereby certifies to Lessor, Agent and the Participants
(other than Novellus) that, on the date of this notice:

                  (a) The representations and warranties of Lessee set forth in
         Paragraph 4.01 of the Participation Agreement and in the other
         Operative Documents are true and correct in all material respects as if
         made on such date (except for representations and warranties expressly
         made as of a specified date, which shall be true as of such date);

                  (b) No Default (other than a Non-Marketing Option Event of
         Default under the Lease Agreement) has occurred and is continuing; and

                  (c) All of the Operative Documents are in full force and
         effect on such date.

                                      B-1
<PAGE>   185
         IN WITNESS WHEREOF, Lessee has executed this Notice of Marketing Option
Exercise on the date set forth above.

                                            NOVELLUS SYSTEMS, INC.

                                            By:___________________________
                                               Name:______________________
                                               Title:_____________________

                                      B-2
<PAGE>   186
                                    EXHIBIT C

               NOTICE OF EXPIRATION DATE PURCHASE OPTION EXERCISE

                                     [Date]

ABN AMRO Leasing, Inc.
c/o ABN AMRO Bank N.V.
  as Agent
Agency Services
208 South LaSalle Street, Suite 1500
Chicago, IL  60604
Attn:  Josephine O'Brien

         1.       Reference is made to the following:

                  (a) The Participation Agreement, dated as of April 18,
         2001(the "Participation Agreement"), among Novellus Systems, Inc.
         ("Lessee"), ABN AMRO Leasing, Inc. ("Lessor"), the Persons listed in
         Schedule I to the Participation Agreement (the "Participants") and ABN
         AMRO Bank N.V., as agent for the Participants (in such capacity,
         "Agent"); and

                  (b) The Purchase Agreement, dated as of April 18, 2001(the
         "Purchase Agreement"), between Lessee and Lessor.

Unless otherwise indicated, all terms defined in the Participation Agreement
have the same respective meanings when used herein.

         2.       Pursuant to Paragraph 3.01 of the Purchase Agreement, Lessee
hereby notifies Lessor that Lessee is electing to exercise the Expiration Date
Purchase Option on the Scheduled Expiration Date of the Lease Agreement of
[_____, ____].

         IN WITNESS WHEREOF, Lessee has executed this Notice of Expiration Date
Purchase Option Exercise on the date set forth above.

                                            NOVELLUS SYSTEMS, INC.

                                            By:___________________________
                                               Name:______________________
                                               Title:_____________________

                                      C-1
<PAGE>   187
                                  EXHIBIT D(1)

After recording return to:                  Until a change is requested, all tax
                                            statements shall be sent to the
                                            following address:

____________________________________        ____________________________________

____________________________________        ____________________________________

____________________________________        ____________________________________

____________________________________        ____________________________________

                         QUITCLAIM DEED - STATUTORY FORM

         __________________, grantor, releases and quitclaims to ______________,
grantee, all of grantor's right, title and interest in and to the real property
in Washington County, Oregon, described in Exhibit A attached hereto and by this
reference made a part hereof.

         The true consideration for this conveyance consists in whole of other
value given.

         REQUIRED NOTICE: THIS INSTRUMENT WILL NOT ALLOW USE OF THE PROPERTY
DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND
REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING
FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY
PLANNING DEPARTMENT TO VERIFY APPROVED USES AND TO DETERMINE ANY LIMITS ON
LAWSUITS AGAINST FARMING OR FOREST PRACTICES AS DEFINED IN ORS 30.930.

         DATED this _______ day of __________________, _______.

                                    ____________________________________________

                                    [Grantor]

                    [Notary acknowledgment on following page]

                                     D(1)-1
<PAGE>   188
                                    EXHIBIT A

                                LEGAL DESCRIPTION

Assessor's Parcel No.:  _______________

                                     D(1)(A)-1
<PAGE>   189
State of _____________
County of _____________________
On ___________________ before me, __________________________,
                  Date              Name, Title of Officer
personally appeared ___________________________________________________________,
                                        Name(s) of signer(s)

( personally known to me -OR- ( proved to me on the basis of satisfactory
                                           evidence to be the person(s) whose
                                           name(s) is/are subscribed to the
                                           within instrument and acknowledged to
                                           me that he/she/they executed the same
                                           in his/her/their authorized
                                           capacity(ies), and that by
                                           his/her/their signature(s) on the
                                           instrument the person(s) or the
                                           entity upon behalf of which the
                                           person(s) acted, executed the
                                           instrument.

                                           WITNESS my hand and official seal.

                                           _____________________________________
<PAGE>   190
                                  EXHIBIT D(2)

         ACKNOWLEDGMENT AND DISCLAIMER OF REPRESENTATIONS AND WARRANTIES

         THIS ACKNOWLEDGMENT OF DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
(this "Certificate") is made as of ___________, ____ by [PURCHASER], a
_____________ ("Grantee").

         Contemporaneously with execution of this Acknowledgement, ABN AMRO
Leasing, Inc., an Illinois corporation ("AALI"), is executing and delivering to
Grantee a Quitclaim Deed and a Bill of Sale (the foregoing documents and any
other documents to be executed and delivered to Grantee in connection therewith
are herein called the "Conveyancing Documents" and any of the properties, rights
or other matters assigned, transferred or conveyed pursuant thereto are herein
collectively called the "Property") pursuant to the terms of a Purchase
Agreement dated as of April 18, 2001, by and between AALI and Novellus Systems,
Inc., a California corporation ("Novellus").

         Notwithstanding any provision contained in the Conveyancing Documents
to the contrary, Grantee acknowledges that AALI is selling and Grantee is
purchasing the Property on an "as is, with all faults" basis and that Grantee is
not relying on any representations or warranties of any kind whatsoever, express
or implied, from AALI, its agents, or brokers as to any matters concerning the
Property including (a) the condition of the Property (including any improvements
to the Property); (b) title to the Property (including possession of the
Property by any individual or entity or the existence of any lien or any other
right, title or interest in or to any of the Property in favor of any person,
but excluding any Lessor Liens as defined in that certain Participation
Agreement dated as of April 18, 2001, among AALI, Novellus, the Participants and
ABN AMRO Bank N.V., as agent for the Participants (in such capacity, "Agent"));
(c) the value, habitability, usability, design, operation or fitness for use of
the Property; (d) the availability or adequacy of utilities and other services
to the Property; (e) any latent, hidden or patent defect in the Property; (f)
the zoning or status of the Property or any other restrictions on the use of the
Property; (g) the economics of the Property; (h) any damage to, destruction or,
or decrease in the value of all or any portion of the Property or any
condemnation or other taking or sale of all or any portion of the Property, by
or on account of any actual or threatened eminent domain proceeding or other
taking of action by any governmental authority or other person have the power of
eminent domain; or (i) the compliance of the Property with any applicable law,
rule, regulation, ordinance, order, code, judgment or similar form of decision
of any governmental authority or any terms, conditions or requirements imposed
by any policies of insurance relating to the Property.

                                 [See next page]

                                     D(2)-1
<PAGE>   191
         The provisions of this Acknowledgement shall be binding on Grantee, its
successors and assigns and any other party claiming through Grantee. Grantee
hereby acknowledges that AALI is entitled to rely and is relying on this
Certificate.

         EXECUTED as of ____________, _______.

                                            [PURCHASER]

                                            By:___________________________
                                               Name:______________________
                                               Title:_____________________

                                     D(2)-2
<PAGE>   192
                                    EXHIBIT E

                                  BILL OF SALE

         FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby
acknowledged, ABN AMRO LEASING, INC., an Illinois corporation ("Seller") does
hereby sell, transfer and convey to [PURCHASER], a _________________________
("Purchaser"), the personal property owned by Seller in connection with that
certain real property commonly known as _______________, _________, Oregon,
including, without limitation, the personal property itemized on SCHEDULE 1
attached hereto and incorporated herein by this reference (the "Property").

         Seller is selling and Purchaser is purchasing the Property on an "as
is, with all faults" basis and Purchaser is not relying on any representations
or warranties of any kind whatsoever, express or implied, from Seller, its
agents, or brokers as to any matters concerning the Property including (a) the
condition of the Property; (b) title to the Property (including possession of
the Property by any individual or entity or the existence of any lien or any
other right, title or interest in or to any of the Property in favor of any
person); (c) the value, habitability, usability, design, operation or fitness
for use of the Property; or (d) any latent, hidden or patent defect in the
Property.

Dated:   ________, ____
                                            ABN AMRO LEASING, INC.

                                            By:___________________________
                                               Name:______________________
                                               Title:_____________________

                                            [PURCHASER]

                                            By:___________________________
                                               Name:______________________
                                               Title:_____________________

                                      E-1
<PAGE>   193
                                   SCHEDULE 1

                                    PROPERTY

                                     E(1)-1
<PAGE>   194
                                    EXHIBIT F

                                      DEED

After recording return to:                  Until a change is requested, all tax
                                            statements shall be sent to the
                                            following address:

____________________________________        ____________________________________

____________________________________        ____________________________________

____________________________________        ____________________________________

____________________________________        ____________________________________

                     BARGAIN AND SALE DEED - STATUTORY FORM

         _________________, grantor, conveys to _____________, grantee, the real
property in Washington County, Oregon, described in Exhibit A attached hereto
and by this reference made a part hereof.

CONSIDERATION: The true and actual consideration for this conveyance is
$_______________.

         REQUIRED NOTICE: THIS INSTRUMENT WILL NOT ALLOW USE OF THE PROPERTY
DESCRIBED IN THIS INSTRUMENT IN VIOLATION OF APPLICABLE LAND USE LAWS AND
REGULATIONS. BEFORE SIGNING OR ACCEPTING THIS INSTRUMENT, THE PERSON ACQUIRING
FEE TITLE TO THE PROPERTY SHOULD CHECK WITH THE APPROPRIATE CITY OR COUNTY
PLANNING DEPARTMENT TO VERIFY APPROVED USES AND TO DETERMINE ANY LIMITS ON
LAWSUITS AGAINST FARMING OR FOREST PRACTICES AS DEFINED IN ORS 30.930.

         DATED this _______ day of __________________, _______.

                                    ____________________________________________

                                    [Grantor]

                                    [Notary acknowledgment on following page]

                                      F-1
<PAGE>   195
                                    EXHIBIT A

                                LEGAL DESCRIPTION

Assessor's Parcel No.:  ____________________

                                     F(A)-1
<PAGE>   196
State of _________________
County of _____________________
On ___________________ before me, _________________________,
         Date                       Name, Title of Officer
personally appeared        ,
         Name(s) of signer(s)

(personally known to me -OR- ( proved to me on the basis of satisfactory
                                           evidence to be the person(s) whose
                                           name(s) is/are subscribed to the
                                           within instrument and acknowledged to
                                           me that he/she/they executed the same
                                           in his/her/their authorized
                                           capacity(ies), and that by
                                           his/her/their signature(s) on the
                                           instrument the person(s) or the
                                           entity upon behalf of which the
                                           person(s) acted, executed the
                                           instrument.

                                           WITNESS my hand and official seal.
<PAGE>   197
                                    EXHIBIT G

                                  BILL OF SALE

         For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Novellus Systems, Inc., a California corporation
("Seller"), does hereby sell, transfer, and convey unto [PURCHASER] ("Buyer"),
the personal property owned by Seller in connection with that certain real
property commonly known as _______________, ________, Oregon, which Seller
warrants to be free and clear of all liens and encumbrances, including, without
limitation, the personal property itemized on SCHEDULE 1 attached hereto and
incorporated herein by this reference.

         Seller does hereby covenant with Buyer that Seller is the lawful owner
of such personal property, and that the undersigned has good right to sell the
same as aforesaid and will warrant and defend the title thereto unto Buyer, its
successors and assigns, against the claims and demands of all persons
whomsoever.

         DATED this ____ day of __________, ____.

                                            NOVELLUS SYSTEMS, INC.

                                            By:___________________________
                                               Name:______________________
                                               Title:_____________________

                                      G-1
<PAGE>   198
                                   SCHEDULE 1

                                    PROPERTY

                                     G(1)-1
<PAGE>   199

                                    EXHIBIT D

                          CONSTRUCTION AGENCY AGREEMENT

                                      D-1
<PAGE>   200
                                                                  EXECUTION COPY
                                                                      Novellus V

================================================================================

                          CONSTRUCTION AGENCY AGREEMENT

                                     BETWEEN

                             NOVELLUS SYSTEMS, INC.

                                       AND

                             ABN AMRO LEASING, INC.

                                 APRIL 18, 2001

================================================================================
<PAGE>   201
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                       PAGE
<S>                                                                    <C>
SECTION 1.  INTERPRETATION...........................................    2

1.01.    Definitions.................................................    2

1.02.    Rules of Construction.......................................    2

SECTION 2.  APPOINTMENT; AUTHORITY...................................    2

2.01.    Appointment.................................................    2

2.02.    Scope of Authority..........................................    2

2.03.    Delegation of Duties........................................    2

SECTION 3.  LESSEE'S OBLIGATIONS AND DUTIES..........................    2

3.01.    Plans and Specifications....................................    2

3.02.    Construction Agreements.....................................    3

3.03.    Permits, Approvals, Etc.....................................    3

3.04.    Material and Supplies.......................................    3

3.05.    Construction................................................    3

3.06.    Insurance...................................................    5

3.07.    Fees, Costs and Expenses....................................    5

3.08.    Books and Records...........................................    7

3.09.    Additional Obligations and Duties...........................    8

SECTION 4.  MISCELLANEOUS............................................    8

4.01.    Notices.....................................................    8

4.02.    Waivers; Amendments.........................................    8

4.03.    Successors and Assigns......................................    8

4.04.    No Third Party Rights.......................................    8

4.05.    Partial Invalidity..........................................    8

4.06.    Governing Law...............................................    8

4.07.    Counterparts................................................    8

4.08.    Nature of Lessee's Obligations..............................    9
</TABLE>

EXHIBITS

       A        Lessee's Completion Certificate (3.05(c))
       B        Architect's Completion Certificate (3.05(c))

                                      -i-
<PAGE>   202
                          CONSTRUCTION AGENCY AGREEMENT

         THIS CONSTRUCTION AGENCY AGREEMENT (this "Agreement" herein), dated as
of April 18, 2001 is entered into by and between:

                  (1) NOVELLUS SYSTEMS, INC., a California corporation
         ("Lessee"); and

                  (2) ABN AMRO LEASING, INC., an Illinois corporation
         ("Lessor").

                                    RECITALS

         A. Lessee has requested Lessor and the Persons which are "Participants"
under the Participation Agreement referred to in Recital B below (such Persons
to be referred to collectively as the "Participants") to provide to Lessee a
lease facility pursuant to which:

                  (1) Lessor would (a) lease from Lessee certain land currently
         owned by Lessee, (b) sublease back to Lessee such land and lease to
         Lessee certain improvements to be constructed on such land, (c) appoint
         Lessee as Lessor's agent to make such improvements (which improvements
         will be owned by Lessor), (d) make advances to finance such
         improvements and to pay certain related expenses and (e) grant to
         Lessee the right to purchase such improvements; and

                  (2) The Participants would participate in such lease facility
         by (a) funding the advances to be made by Lessor and (b) acquiring
         participation interests in the rental and certain other payments to be
         made by Lessee.

         B. Pursuant to a Participation Agreement dated of even date herewith
(the "Participation Agreement") among Lessee, Lessor, the Participants and ABN
AMRO Bank N.V., as agent for the Participants (in such capacity, "Agent"),
Lessor and the Participants have agreed to provide such lease facility upon the
terms and subject to the conditions set forth therein, including without
limitation the execution and delivery of this Agreement setting forth the terms
of Lessee's construction obligations.

                                    AGREEMENT

         NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:

SECTION 1. INTERPRETATION.

         1.01. Definitions. Unless otherwise indicated in this Agreement or any
other Operative Document, each term set forth in Schedule 1.01 to the
Participation Agreement, when used in this Agreement or any other Operative
Document, shall have the respective meaning given to
<PAGE>   203
that term in such Schedule 1.01 or in the provision of this Agreement or other
document, instrument or agreement referenced in such Schedule 1.01.

         1.02. Rules of Construction. Unless otherwise indicated in this
Agreement or any other Operative Document, the rules of construction set forth
in Schedule 1.02 to the Participation Agreement shall apply to this Agreement
and the other Operative Documents.

SECTION 2. APPOINTMENT; AUTHORITY.

         2.01. Appointment. Lessor hereby appoints Lessee and Lessee hereby
agrees to act as Lessor's agent for the construction of the New Improvements to
the Property.

         2.02. Scope of Authority. Lessee shall have the authority to perform
all acts expressly delegated to or undertaken by Lessee under this Agreement and
all other acts reasonably necessary to complete the construction of the New
Improvements in accordance with the Plans and Specifications, the Budget, this
Agreement, the other Operative Documents, all applicable Governmental Rules and
all applicable Insurance Requirements; provided, however, that no Lessor Party
(other than Novellus in its capacity as Lessee and in accordance with the
Operative Documents) shall have any obligation to pay any fees, costs or
expenses related to such construction (except to the extent of Lessor's
obligation to make, and the Participants' obligations to fund, Advances pursuant
to the Participation Agreement) and Lessee shall have no authority to, and shall
not, enter into any agreement which would, directly or indirectly, require any
Lessor Party (other than Novellus in its capacity as Lessee and in accordance
with the Operative Documents) to pay any such fees, costs or expenses or
otherwise impose upon any Lessor Party (other than Novellus in its capacity as
Lessee and in accordance with the Operative Documents) any liability or
obligation. Subject to the terms and conditions of this Agreement and the other
Operative Documents, Lessee shall have sole management and control over the
construction means, methods, sequences and procedures with respect to the
construction of the New Improvements.

         2.03. Delegation of Duties. Lessee may employ such architects,
engineers, contractors, consultants, agents, employees and other Persons as
Lessee determines are necessary or appropriate to construct the New Improvements
and perform its other obligations and duties hereunder and may delegate to such
Persons any or all of such obligations and duties; provided, however, that no
such employment or delegation shall limit or reduce in any way Lessee's
obligations and duties under this Agreement. Lessor understands that Lessee is
not a licensed contractor and that Lessee will engage licensed contractors to
perform any obligations under this Agreement which require a license.

SECTION 3. LESSEE'S OBLIGATIONS AND DUTIES.

         3.01. Plans and Specifications and Other Construction Agreements.
Pursuant to Paragraph 3.01 of the Participation Agreement, Lessee has delivered
to Lessor the Plans and Specifications for all new improvements to be made to
the Property, a certificate of the architect for such new improvements
certifying that such Plans and Specifications are complete and the

                                       2
<PAGE>   204
Budget for the new improvements. Lessee has entered or shall, on a timely basis,
enter into such agreements with architects, engineers, contractors, consultants,
materialmen, suppliers, agents, employees and other Persons as are necessary or
appropriate to complete the construction of the New Improvements in accordance
with the Budget and this Agreement prior to the Outside Completion Date and to
perform Lessee's other obligations and duties hereunder in connection therewith
(together with the Plans and Specifications, the "Construction Agreements").
Each Construction Agreement shall expressly permit (a) the assignment of
Lessee's rights thereunder to Lessor without the consent of the other party(ies)
to such agreement and (b) the termination of such agreement without cause for a
termination payment included in the Budget. Upon Lessor's request, Lessee shall
deliver to Lessor copies of any or all Construction Agreements.

         3.02. Modifications to Construction Agreements. Lessee shall not agree
to or permit any revision, amendment, supplementation or other modification to
the Plans and Specifications or any other Construction Agreement without the
written consent of Lessor if such revision, amendment, supplementation or
modification (either alone or together with all prior revisions, amendments,
supplementations and modifications to the Plans and Specifications and the other
Construction Agreements) is reasonably likely to:

                  (a) Cause the costs and expenses of acquiring the Property and
         constructing all of the New Improvements in accordance with this
         Agreement (including all Permitted Improvement Costs and Permitted
         Transaction Expenses paid or to be paid with Advances) to exceed the
         lesser of (i) the Total Commitment and (ii) the Expiration Date
         Appraisal for the Property;

                  (b) Make it difficult or impossible to Complete the
         construction of all the New Improvements in accordance with this
         Agreement on or prior to the Outside Completion Date; or

                  (c) Cause the Fair Market Value of the Property to be less
         than the Expiration Date Appraisal for the Property or otherwise
         decrease in any material amount.

Lessee shall notify Lessor promptly in writing of any such revision, amendment,
supplementation or other modification to the Plans and Specifications and the
other Construction Agreements.

         3.03. Permits, Approvals, Etc. Prior to the time they are required,
Lessee shall obtain from Governmental Authorities and other Persons all
licenses, approvals, authorizations, consents, permits, easements and
rights-of-way that are necessary for the construction of any New Improvements in
accordance with this Agreement. Upon Lessor's request, Lessee shall deliver to
Lessor copies of any or all such licenses, approvals, authorizations, consents,
permits, easements and rights-of-way.

         3.04. Material and Supplies. Lessee shall obtain all materials and
supplies necessary to construct the New Improvements. Lessee shall cause all
such materials and supplies (a) to be purchased in a manner that will result in
the ownership thereof vesting unconditionally in Lessor, free from all Liens
(other than Liens that attach in favor of the materialmen or subcontractors that
supply and/or install such materials and supplies); (b) to be stored at the Land
under

                                       3
<PAGE>   205
adequate safeguards to minimize the possibility of loss, theft, damage or
commingling with other materials or projects; and (c) to be covered by the
insurance policies required under this Agreement and the other Operative
Documents. Upon Lessor's request, Lessee shall deliver to Lessor copies of any
contracts, bills of sale, statements, receipts, vouchers or agreements for the
materials and supplies used or to be used in the construction of the New
Improvements.

         3.05. Construction.

                  (a) Commencement. Lessee shall commence construction of the
         New Improvements not later than one (1) month after the Closing Date
         and shall diligently proceed with such construction.

                  (b) Manner. Lessee shall construct the New Improvements
         (including all foundations and structural portions thereof; all
         plumbing, heating, air conditioning and electrical systems; and all
         water, sewer, electric, gas, telephone and drainage facilities) in a
         good and workmanlike manner, free from any material defect in design or
         construction, in accordance with the Plans and Specifications, the
         Budget, this Agreement, the other Operative Documents, all applicable
         Governmental Rules and all applicable Insurance Requirements.

                  (c) Completion. Subject to Subparagraph 3.05(d), Lessee shall
         Complete the construction of the New Improvements on or prior to the
         Outside Completion Date. "Completion" shall occur for the New
         Improvements when Substantial Completion occurs pursuant to clause (i)
         below and Lessee delivers to Lessor each item required by clause (ii)
         below:

                           (i) "Substantial Completion" shall occur when the New
                  Improvements have been substantially completed in accordance
                  with this Agreement, are new and in good working condition and
                  are ready for occupancy and use as a facility as described in
                  clause (ii) of Subparagraph 4.01(t) of the Participation
                  Agreement. This shall require, without limiting the generality
                  of the preceding sentence, that (A) all utilities required to
                  adequately service the New Improvements for their intended use
                  are available and "tapped on" and hooked up pursuant to
                  adequate permits (including any that may be required under
                  applicable Environmental Laws) and (B) access to the New
                  Improvements for pedestrians and motor vehicles from publicly
                  dedicated streets and public highways are available.

                           (ii) Lessee shall furnish to Lessor each of the
                  following:

                                    (A) A certificate of Lessee in the form of
                           Exhibit A, duly executed by Lessee;

                                    (B) A certificate of an architect acceptable
                           to Lessor in the form of Exhibit B, duly executed by
                           such architect, together with copies of each of the
                           documents referred to therein;

                                       4
<PAGE>   206
                                    (C) A date-down endorsement to or reissued
                           title insurance policies or binders delivered by
                           Lessee pursuant to Paragraph 3.02 of the
                           Participation Agreement;

                                    (D) Copies of all mechanic's or
                           materialman's lien waivers and releases as required
                           by Lessor; and

                                    (E) Certificate of final occupancy issued by
                           the appropriate Governmental Authority.

                  (d) Construction Termination Events.

                           (i) Notice. As soon as possible and in no event later
                  than five (5) Business Days after learning of any Cost Overrun
                  Event or Completion Delay Event, Lessee shall deliver to
                  Lessor a written notice of such event that sets forth in
                  detail the nature of such event and Lessee's estimate of the
                  effect that such event will have on the costs to Complete the
                  New Improvements and/or the likely Completion Date.

                           (ii) Exercise of Marketing Option. If Lessor notifies
                  Lessee pursuant to Subparagraph 5.03(a) or Subparagraph
                  5.04(a) of the Lease Agreement that Lessor is terminating the
                  Lease Agreement on a Termination Date which is prior to the
                  Scheduled Expiration Date of the Lease Agreement and the only
                  basis for such early termination is the occurrence of a
                  Construction Termination Event, Lessee may elect to exercise
                  the Marketing Option as provided in Subparagraph 3.02(l) of
                  the Purchase Agreement if:

                                    (A) Such Construction Termination Event was
                           not caused by any failure by Lessee to comply with
                           any of its obligations under the Operative Documents
                           (including its insurance obligations), any
                           representation by Lessee in any of the Operative
                           Documents not being true, any negligence or willful
                           misconduct of Lessee, or any claim by any third-party
                           against Lessee (or against any Lessor Party) based
                           upon any alleged action or inaction by Lessee; and

                                    (B) Lessee delivers to Lessor a Notice of
                           Marketing Option Exercise as required by Subparagraph
                           3.02(l) of the Purchase Agreement.

                  If Lessee elects to exercise the Marketing Option pursuant to
                  this clause (ii) and the Construction Termination Event was
                  not a Completion Delay Event, the Termination Date specified
                  by Lessor in the notice of early termination delivered by
                  Lessor to Lessee pursuant to Subparagraph 5.03(a) or
                  Subparagraph 5.04(a) of the Lease Agreement shall be extended
                  to the Outside Completion Date or, if later, the date that is
                  six (6) months after the Termination Date specified by Lessor
                  in its notice of early termination. If Lessee elects to
                  exercise the Marketing Option pursuant to this clause (ii) and
                  the Construction Termination Event was a Completion Delay
                  Event, both the Termination Date specified by Lessor in its
                  notice of early termination and the Outside Completion Date
                  shall be extended to the first Business Day of the first full
                  calendar month after the date specified by Lessee in the
                  notice delivered by Lessee to Lessor pursuant to clause (i);
                  provided, however, that neither the Termination Date nor the
                  Outside Completion Date shall be

                                       5
<PAGE>   207
                  extended to a date that is more than six (6) months after the
                  early Termination Date initially specified by Lessor in its
                  notice of early termination if Lessor directs Lessee to cease
                  construction prior to such date pursuant to clause (iii)
                  below. Notwithstanding the foregoing provisions of this clause
                  (ii), if a Marketing Option Event of Default shall occur,
                  Lessee's right to exercise the Marketing Option pursuant to
                  this clause (ii) shall terminate and Lessor shall have the
                  right to terminate the Lease Agreement on an earlier date. If
                  Lessee delivers to Lessor a Notice of Marketing Option
                  Exercise as provided in this clause (ii), Lessee shall comply
                  with the provisions of the Purchase Agreement and the other
                  Operative Documents governing the Marketing Option.

                           (iii) Continuation of Construction. After the
                  occurrence of a Construction Termination Event (without regard
                  to whether Lessor has notified Lessee that Lessor is
                  terminating the Facility 2 Lease Agreement or whether Lessee
                  has elected to exercise the Marketing Option as provided in
                  clause (ii) above), Lessee shall continue diligently to
                  construct the New Improvements in accordance with this
                  Agreement until the Completion thereof; provided, however,
                  that:

                                    (A) Lessee shall cease such construction as
                           of any date specified by Lessor;

                                    (B) Subject to the amount limitations set
                           forth herein, the right of Lessor and the
                           Participants to terminate their commitments hereunder
                           upon the occurrence of any other Default and the
                           other terms and conditions of the Operative
                           Documents, Lessor shall continue to make (and
                           Participants shall continue to fund) Advances;

                                    (C) If Advances are no longer available
                           under the Participation Agreement, Lessee shall pay
                           Prepaid Rent if the Construction Termination Event
                           was caused by or arose from any failure by Lessee to
                           comply with any of its obligations under the
                           Operative Documents (including its insurance
                           obligations), any representation by Lessee in any of
                           the Operative Documents not being true, any
                           negligence or willful misconduct of Lessee, or any
                           claim by any third-party against Lessee (or against
                           any Lessor Party) based upon any alleged action or
                           inaction by Lessee; and

                                    (D) If Lessee incurs any Prepaid Rent, the
                           Residual Value Guaranty Amount shall be calculated as
                           provided in the proviso to clause (i) of Subparagraph
                           3.02(g) of the Facility 2 Purchase Agreement.

         3.06. Insurance. Lessee (and its general contractor) shall maintain
policies of casualty and liability insurance as required by Paragraph 3.03 of
the Lease Agreement.

                                       6
<PAGE>   208
         3.07. Fees, Costs and Expenses.

                  (a) Limitation of Responsibility. Lessee shall use the
         Advances made by Lessor and funded by Participants under the
         Participation Agreement for Permitted Improvement Costs and Permitted
         Transaction Expenses to pay such costs and expenses. Except for their
         obligations to make and fund Advances pursuant to the Participation
         Agreement, neither Lessor nor any other Lessor Party (other than
         Novellus) shall have any obligation to pay any fees, costs or expenses
         of constructing the New Improvements.

                  (b) Prompt Payment. Lessee shall pay when due all fees, costs
         and expenses of architects, engineers, contractors, materialmen,
         suppliers, consultants, agents, employees and other Persons which
         provide services, materials or supplies in connection with the
         construction of the New Improvements and all other fees, costs and
         expenses related to such construction.

                  (c) No Lessee Fee. Lessee shall not be entitled to any fee for
         the performance of its obligations and duties hereunder or any other
         compensation in connection with this Agreement.

         3.08. Books and Records. Lessee shall maintain accurate books and
records, in reasonable detail, relating to the construction of the New
Improvements and shall permit Lessor to inspect the same and make copies
thereof, at Lessee's expense, upon reasonable notice to Lessee.

         3.09. Additional Obligations and Duties. In addition to the obligations
and duties set forth above in this Section 3, Lessee shall perform all other
acts reasonably necessary to achieve Completion of the construction of the New
Improvements in accordance with the Plans and Specifications, the Budget, this
Agreement, the other Operative Documents, all applicable Governmental Rules and
all applicable Insurance Requirements. Lessee shall, from time to time at the
request of Lessor, deliver to Lessor such evidence as Lessor may reasonably
request to establish that the New Improvements are being constructed in
accordance with the Plans and Specifications, the Budget, this Agreement, the
other Operative Documents, all applicable Governmental Rules and all applicable
Insurance Requirements and that Completion is likely to occur on or prior to the
Outside Completion Date.

SECTION 4. MISCELLANEOUS.

         4.01. Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Lessee or Lessor under this Agreement shall be given as provided in Subparagraph
2.02(c) and Paragraph 7.01 of the Participation Agreement.

         4.02. Waivers; Amendments. Any term, covenant, agreement or condition
of this Agreement may be amended or waived only as provided in the Participation
Agreement. No failure or delay by any Lessor Party (other than Novellus) in
exercising any right hereunder shall operate as a waiver thereof or of any other
right nor shall any single or partial exercise of any such right preclude any
other further exercise thereof or of any other right. Unless otherwise

                                       7
<PAGE>   209
specified in any such waiver or consent, a waiver or consent given hereunder
shall be effective only in the specific instance and for the specific purpose
for which given.

         4.03. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Lessor Parties and Lessee and their permitted
successors and assigns; provided, however, that the Lessor Parties and Lessee
shall not sell, assign or delegate their respective rights and obligations
hereunder except as provided in the Participation Agreement.

         4.04. No Third Party Rights. Nothing expressed in or to be implied from
this Agreement is intended to give, or shall be construed to give, any Person,
other than the Lessor Parties and Lessee and their permitted successors and
assigns, any benefit or legal or equitable right, remedy or claim under or by
virtue of this Agreement or under or by virtue of any provision herein.

         4.05. Partial Invalidity. If at any time any provision of this
Agreement is or becomes illegal, invalid or unenforceable in any respect under
the law or any jurisdiction, neither the legality, validity or enforceability of
the remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.

         4.06. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without reference to
conflicts of law rules, except as otherwise provided in Paragraph 7.14 of the
Participation Agreement.

         4.07. Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.

         4.08. Nature of Lessee's Obligations.

                  (a) Independent Obligation. The obligation of Lessee to
         construct the New Improvements or to cause the construction of the New
         Improvements pursuant to this Agreement and the other Operative
         Documents and to perform the other Lessee Obligations are absolute,
         unconditional and irrevocable obligations which are separate and
         independent of the obligations of the Lessor Parties under this
         Agreement and the other Operative Documents and all other events and
         circumstances, including the events and circumstances set forth in
         Subparagraph 4.08(c).

                  (b) No Termination or Abatement. This Agreement and the other
         Operative Documents and Lessee's obligation to construct the New
         Improvements and to pay and perform all other Lessee Obligations shall
         continue in full force and effect without abatement notwithstanding the
         occurrence or existence of any event or circumstance, including any
         event or circumstance set forth in Subparagraph 4.08(c).

                  (c) Full Payment and Performance. Lessee shall perform all of
         its obligations under this Agreement and the other Operative Documents
         in the manner and at the times required by the terms of this Agreement
         and the other Operative Documents without setoff, deduction or
         reduction of any kind and shall perform all other Lessee Obligations

                                       8
<PAGE>   210
         as and when required, without regard to any event or circumstances
         whatsoever, including (i) the condition of the Property (including any
         Improvements to the Property made prior to the Commencement Date or
         during the Term); (ii) title to the Property (including possession of
         the Property by any Person or the existence of any Lien or any other
         right, title or interest in or to any of the Property in favor of any
         Person); (iii) the value, habitability, usability, design, operation or
         fitness for use of the Property; (iv) the availability or adequacy of
         utilities and other services to the Property; (v) any latent, hidden or
         patent defect in the Property; (vi) the zoning or status of the
         Property or any other restrictions on the use of the Property; (g) the
         economics of the Property; (vii) any Casualty or Condemnation; (viii)
         the compliance of the Property with any applicable Governmental Rule or
         Insurance Requirement; (ix) any failure by any Lessor Party to perform
         any of its obligations under this Agreement or any other Operative
         Document; or (x) the exercise by any Lessor Party of any of its
         remedies under this Agreement or any other Operative Document;
         provided, however, that this Paragraph 4.08 shall not abrogate any
         right which Lessee may have to recover damages from any Lessor Party
         for any material breach by such Lessor Party of its obligations under
         this Agreement or any other Operative Document to the extent permitted
         hereunder or thereunder.

                          [The signature page follows.]

                                       9
<PAGE>   211
         IN WITNESS WHEREOF, Lessee and Lessor have caused this Agreement to be
executed as of the day and year first above written.

LESSEE:                                     NOVELLUS SYSTEMS, INC.

                                            By:_______________________________
                                               Name:__________________________
                                               Title:_________________________

LESSOR:                                     ABN AMRO LEASING, INC.

                                            By:_______________________________
                                               Name:__________________________
                                               Title:_________________________

                                       10
<PAGE>   212
                                    EXHIBIT A

                         LESSEE'S COMPLETION CERTIFICATE

                                     [Date]

ABN AMRO Leasing, Inc.
c/o ABN AMRO Bank N.V.
  as Agent
Agency Services
208 South LaSalle Street, Suite 1500
Chicago, IL  60604
Attn:  Josephine O'Brien

         1.       Reference is made to the following:

                  (a) The Participation Agreement, dated as of April 18,
         2001(the "Participation Agreement"), among Novellus Systems, Inc.
         ("Lessee"), ABN AMRO Leasing, Inc. ("Lessor"), the Persons listed in
         Schedule I to the Participation Agreement (the "Participants") and ABN
         AMRO Bank N.V., as agent for the Participants (in such capacity,
         "Agent"); and

                  (b) The Construction Agency Agreement, dated as of April 18,
         2001(the "Construction Agency Agreement"), between Lessee and Lessor.

Unless otherwise indicated, all terms defined in the Participation Agreement
have the same respective meanings when used herein.

         2.       Lessee hereby certifies to Lessor, for the benefit of all of
the Lessor Parties (other than Novellus), as follows:

                  (a) Lessee has completed all of the New Improvements to the
         Property substantially in accordance with the Plans and Specifications,
         the Budget, the Construction Agency Agreement, the other Operative
         Documents, all applicable Governmental Rules and all applicable
         Insurance Requirements and the New Improvements now are ready for use
         and occupancy as a facility described in clause (ii) of Subparagraph
         4.01(t) of the Participation Agreement.

                  (b) All amounts payable to third parties for the construction
         of such New Improvements have been paid in full (other than amounts
         which Lessee is contesting in accordance with the Lease Agreement).

                  (c) No changes or modifications that have had an adverse
         effect on the value, use or useful life of the Property were made to
         the Plans and Specifications after the Closing Date, except for any
         such changes and modifications as were permitted by Paragraph 3.02 of
         the Construction Agency Agreement.

                                      A-1
<PAGE>   213
                  (d) The representations and warranties relating to the
         Property set forth in Subparagraph 4.01(t) of the Participation
         Agreement and the other representations and warranties of Lessee set
         forth in the Operative Documents are true and correct in all material
         respects on the date hereof (except for representations and warranties
         expressly made as of a specified date, which shall be true as of such
         date).

                  (e) No Default has occurred and is continuing.

         IN WITNESS WHEREOF, Lessee has executed this Lessee's Completion
Certificate on the date set forth above.

                                            NOVELLUS SYSTEMS, INC.

                                            By:_______________________________
                                               Name:__________________________
                                               Title:_________________________

                                      A-2
<PAGE>   214
                                    EXHIBIT B

                       ARCHITECT'S COMPLETION CERTIFICATE

                                     [Date]

ABN AMRO Leasing, Inc.
c/o ABN AMRO Bank N.V.
  as Agent
Agency Services
208 South LaSalle Street, Suite 1500
Chicago, IL  60604
Attn:  Josephine O'Brien

         1.       Reference is made to the following:

                  (a) The [____________] Agreement, dated as of [____] (the
         "Architect's Agreement"), between Novellus Systems, Inc. ("Lessee") and
         [__________] ("Architect"); and

                  (b) The plans and specifications dated as of [_______]
         prepared by Architect for certain improvements to the property located
         at [_______________] (the "Plans and Specifications").

         2.       The undersigned hereby certifies to you as follows:

                  (a) The improvements contemplated by the Plans and
         Specifications (the "Improvements") have been completed substantially
         in accordance with such Plans and Specifications, a final certificate
         of occupancy has been issued by the appropriate governmental agency,
         and the Improvements are ready for use and occupancy.

                  (b) To the best of [my][our] knowledge, the Improvements as so
         completed comply with all applicable laws, rule, regulations and
         ordinances pertaining to the construction and occupancy thereof,
         including applicable building and zoning laws, rule, regulations and
         ordinances, and the Americans with Disabilities Act of 1990, 42 U.S.C.
         Section 1210 et seq.

                  (c) No changes or modifications were made to the Plans and
         Specifications after the date thereof that have had an adverse effect
         on the value, use or useful life of the Property.

                  (d) Attached hereto are true and complete copies of an "as
         built" or "record" set of the plans and specifications for the
         Improvements, and an ALTA survey of the property "as built" showing all
         paving, driveways, fences and exterior improvements.
<PAGE>   215
         IN WITNESS WHEREOF, the undersigned has executed this Architect's
Completion Certificate on the date set forth above.

                                            [Name of Architectural Firm]

                                            By:_______________________________
                                               Name:__________________________
                                               Title:_________________________
<PAGE>   216
                                    EXHIBIT E

                                 ADVANCE REQUEST

                                     [Date]

ABN AMRO Leasing, Inc.
c/o ABN AMRO Bank N.V.
  as Agent
Agency Services
208 South LaSalle Street, Suite 1500
Chicago, IL  60604
Attn:  Josephine O'Brien

         1.       Reference is made to that certain Participation Agreement,
dated as of April 18, 2001(the "Participation Agreement"), among Novellus
Systems, Inc. ("Lessee"), ABN AMRO Leasing, Inc. ("Lessor"), the Person listed
in Schedule I to the Participation Agreement (the "Participants") and ABN AMRO
Bank N.V., as agent for the Participants (in such capacity, "Agent"). Unless
otherwise indicated, all terms defined in the Participation Agreement have the
same respective meanings when used herein.

         2.       Pursuant to Subparagraph 2.03(a) of the Participation
Agreement, Lessee hereby irrevocably requests Lessor to make an Advance as
follows:

                  (a) Such Advance shall be in the aggregate amount of
         $________; and

                  (b) The date of such Advance shall be ____________, ____ (the
         "Advance Date").

[Add the following language for the initial Advance: This Advance Request is for
the initial Advance under the Participation Agreement and the Advance Date shall
be the Closing Date. Lessee hereby requests Lessor to enter into the Ground
Lease on the Closing Date.]

         3.       [Lessee will use $________ of the proceeds of the requested
Advance to pay the costs for the Related Goods described in the Supplement to
Exhibit B to the Lease Agreement which is attached hereto. Bills of sale for all
such Related Goods, each showing Lessor as the purchaser, also are attached
hereto.][Whenever the requested Advance is to be used to pay for Related Goods,
include the preceding two sentences, complete and attach an Exhibit B Supplement
describing the Related Goods and attach the applicable bills of sale.] Lessee
will use the [remaining] proceeds of such Advance to pay the costs and expenses
set forth in Attachment 1 hereto. All such costs and expenses are Permitted
Improvement Costs and/or Permitted Transaction Expenses which are now due and
payable. No prior Advance has been requested to pay any such costs and expenses.

         4.       Lessee hereby certifies to the Lessor Parties that, on the
date of this Advance Request and after giving effect to the requested Advance:

                                      E-1
<PAGE>   217
                  (a) The representations and warranties of Lessee set forth in
         Paragraph 4.01 of the Participation Agreement and in the other
         Operative Documents are true and correct in all material respects as if
         made on such date (except for representations and warranties expressly
         made as of a specified date, which shall be true as of such date);

                  (b) No Default has occurred and is continuing; and

                  (c) All of the Operative Documents are in full force and
         effect on such date.

[Add one of the following, as appropriate, for each Advance to be made after the
date set forth in the Construction Agency Agreement for commencement of
construction of the New Improvements:

[Lessee further certifies to the Lessor Parties that (i) construction of the New
Improvements is proceeding in accordance with the Plans and Specifications, the
Budget, the Construction Agency Agreement, the other Operative Documents, all
applicable Governmental Rules and all applicable Insurance Requirements and (ii)
no Cost Overrun Event or Completion Delay Event has occurred.]

[Lessee further certifies to the Lessor Parties that the New Improvements have
been Completed in accordance with the Plans and Specifications, the Budget, the
Construction Agency Agreement, the other Operative Documents, all applicable
Governmental Rules and all applicable Insurance Requirements.]

         5.       Please disburse the proceeds of the Advance to _______________
___________________________________.

         IN WITNESS WHEREOF, Lessee has executed this Advance Request on the
date set forth above.

                                          NOVELLUS SYSTEMS, INC.

                                          By: ________________________________
                                              Name: __________________________
                                              Title: _________________________

                                      E-2
<PAGE>   218
                                  EXHIBIT F(1)

                          COMMITMENT EXTENSION REQUEST

                                     [Date]

ABN AMRO Leasing, Inc.
c/o ABN AMRO Bank N.V.
  as Agent
Agency Services
208 South LaSalle Street, Suite 1500
Chicago, IL  60604
Attn:  Josephine O'Brien

         1. Reference is made to that certain Participation Agreement, dated as
of April 18, 2001(the "Participation Agreement"), among Novellus Systems, Inc.
("Lessee"), ABN AMRO Leasing, Inc. ("Lessor"), the Person listed in Schedule I
to the Participation Agreement (the "Participants") and ABN AMRO Bank N.V., as
agent for the Participants (in such capacity, "Agent"). Unless otherwise
indicated, all terms defined in the Participation Agreement have the same
respective meanings when used herein.

         2. Pursuant to Subparagraph 2.09(a) of the Participation Agreement,
Lessee hereby irrevocably requests Lessor to extend (and the Participants to
consent to such extension) the Unused Total Commitment ($___________) for an
additional [_____ (_)] month[s] by extending the current Outside Completion Date
from [__________] to [__________].

         3. Lessee hereby certifies to the Lessor Parties that, on the date of
this Commitment Extension Request and after giving effect to the extension
requested hereby:

                  (a) The representations and warranties of Lessee set forth in
         Paragraph 4.01 of the Participation Agreement and in the other
         Operative Documents are true and correct in all material respects as if
         made on such date (except for representations and warranties expressly
         made as of a specified date, which shall be true as of such date);

                  (b) No Default has occurred and is continuing; and

                  (c) All of the Operative Documents are in full force and
         effect.

                                     F(1)-1
<PAGE>   219
         IN WITNESS WHEREOF, Lessee has executed this Commitment Extension
Request on the date set forth above.

                                          NOVELLUS SYSTEMS, INC.

                                          By: ________________________________
                                              Name: __________________________
                                              Title: _________________________

                                     CONSENT

         The undersigned hereby consents to the extension of the Outside
Completion Date requested above upon the terms set forth in the attachment
hereto.

                                          ____________________________________

                                          By: ________________________________
                                              Name: __________________________
                                              Title: _________________________

                                          Date: ________________________

                                     F(1)-2
<PAGE>   220
                                  EXHIBIT F(2)

                             LEASE EXTENSION REQUEST

                                     [Date]

ABN AMRO Leasing, Inc.
c/o ABN AMRO Bank N.V.
  as Agent
Agency Services
208 South LaSalle Street, Suite 1500
Chicago, IL  60604
Attn:  Josephine O'Brien

         1. Reference is made to that certain Participation Agreement, dated as
of April 18, 2001(the "Participation Agreement"), among Novellus Systems, Inc.
("Lessee"), ABN AMRO Leasing, Inc. ("Lessor"), the Person listed in Schedule I
to the Participation Agreement (the "Participants") and ABN AMRO Bank N.V., as
agent for the Participants (in such capacity, "Agent"). Unless otherwise
indicated, all terms defined in the Participation Agreement have the same
respective meanings when used herein.

         2. Pursuant to Subparagraph 2.09(b) of the Participation Agreement,
Lessee hereby irrevocably requests Lessor to extend (and the Participants to
consent to such extension) the Term of the Lease Agreement for an additional one
(1) year by extending the current Scheduled Expiration Date from [__________] to
[__________].

         3. Lessee hereby certifies to the Lessor Parties that, on the date of
this Lease Extension Request and after giving effect to the extension requested
hereby:

                  (a) The representations and warranties of Lessee set forth in
         Paragraph 4.01 of the Participation Agreement and in the other
         Operative Documents are true and correct in all material respects as if
         made on such date (except for representations and warranties expressly
         made as of a specified date, which shall be true as of such date);

                  (b) No Default has occurred and is continuing; and

                  (c) All of the Operative Documents are in full force and
         effect on such date.

                                     F(2)-1
<PAGE>   221
         IN WITNESS WHEREOF, Lessee has executed this Lease Extension Request on
the date set forth above.

                                          NOVELLUS SYSTEMS, INC.

                                          By: ________________________________
                                              Name: __________________________
                                              Title: _________________________

                                     CONSENT

         The undersigned hereby consents to the extension of the Scheduled
Expiration Date requested above upon the terms set forth in the attachment
hereto.

                                          ____________________________________

                                          By: ________________________________
                                              Name: __________________________
                                              Title: _________________________

                                          Date: ________________________

                                     F(2)-2
<PAGE>   222
                                    EXHIBIT G

                      ASSIGNMENT OF CONSTRUCTION AGREEMENTS

                                      G-1
<PAGE>   223
================================================================================

                      ASSIGNMENT OF CONSTRUCTION AGREEMENTS

                                       BY

                             NOVELLUS SYSTEMS, INC.

                                   IN FAVOR OF

                             ABN AMRO LEASING, INC.

                                 APRIL 18, 2001

================================================================================

<PAGE>   224

                      ASSIGNMENT OF CONSTRUCTION AGREEMENTS

      THIS ASSIGNMENT OF CONSTRUCTION AGREEMENTS (this "Agreement" herein),
dated as of April 18, 2001, is executed by

      (1)   NOVELLUS SYSTEMS, INC., a California corporation ("Lessee"),

                                   in favor of

      (2)   ABN AMRO LEASING, INC., an Illinois corporation ("Lessor").

                                    RECITALS

      A. Lessee has requested Lessor and the financial institutions which are
"Participants" under the Participation Agreement referred to in Recital B below
(such financial institutions to be referred to collectively as the
"Participants") to provide to Lessee a certain lease facility pursuant to which:

            (1) Lessor would (a) lease from Lessee certain land currently owned
      by Lessee, (b) sublease to Lessee such land and lease to Lessee certain
      improvements to be constructed on such land, (c) appoint Lessee as
      Lessor's agent to make such improvements (which improvements will be owned
      by Lessor), (d) make advances to finance such improvements and to pay
      certain related expenses and (e) grant to Lessee the right to purchase
      such improvements; and

            (2) The Participants would participate in such lease facility by (a)
      funding the purchase price and other advances to be made by Lessor and (b)
      acquiring participation interests in the rental and certain other payments
      to be made by Lessee.

      B. Pursuant to a Participation Agreement dated as of April 18, 2001 (the
"Participation Agreement") among Lessee, Lessor, the Participants and ABN AMRO
Bank N.V., as agent for the Participants (in such capacity, "Agent"), Lessor and
the Participants have agreed to provide such lease facility upon the terms and
subject to the conditions set forth therein, including, without limitation, the
execution and delivery of this Agreement.

                                   AGREEMENT

      NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:

SECTION 1. INTERPRETATION.

      1.01. Definitions. Unless otherwise indicated in this Agreement or any
other Operative Document, each term set forth in Schedule 1.01 to the
Participation Agreement, when used in

<PAGE>   225

this Agreement or any other Operative Document, shall have the respective
meaning given to that term in such Schedule 1.01 or in the provision of this
Agreement or other document, instrument or agreement referenced in such Schedule
1.01.

      1.02. Rules of Construction. Unless otherwise indicated in this Agreement
or any other Operative Document, the rules of construction set forth in Schedule
1.02 to the Participation Agreement shall apply to this Agreement and the other
Operative Documents.

SECTION 2. ASSIGNMENT.

      2.01. Assignment. Lessee hereby assigns to Lessor all of Lessee's right,
title and interest in, to and under all agreements and contracts between Lessee
and any other Person (collectively, the "Construction Agreements") relating to
the construction of any and all New Improvements on any portion of the Land
described in Exhibit A to the Lease Agreement, including, without limitation,
the agreements and contracts described in Exhibit A and all future Construction
Agreements which may be entered into by Lessee prior to the termination of this
Agreement. Upon execution of any new Construction Agreement, Lessee shall
promptly notify Lessor of such Construction Agreement. Upon Lessor's request,
Lessee shall provide Lessor with copies of the Construction Agreements.

      2.02. Absolute Assignment. This Agreement constitutes a present and
absolute assignment to Lessor; provided, however, that Lessor may not enforce
the terms of the Construction Agreements unless and until an Event of Default
occurs. Upon the occurrence of any Event of Default, Lessor may, in its sole
discretion, give notice to any of the contractors referred to in the
Construction Agreements or any other party to the Construction Agreements
(collectively, the "Contractors") of its intent to enforce the rights of Lessee
under the Construction Agreements and may initiate or participate in any legal
proceedings respecting the enforcement of said rights. Lessee acknowledges that,
by accepting this assignment, Lessor does not assume any of Lessee's obligations
under the Construction Agreements.

      2.03. Contractor's Consent. In connection with the execution and delivery
to Lessor of this Agreement, with respect to each Construction Agreement with an
anticipated cost of $1,000,000.00 or more, Lessee shall obtain and deliver to
Lessor consents from each Contractor under each Construction Agreement in the
form attached hereto as Exhibit B (a "Contractor's Consent to Assignment").
Lessee shall obtain and provide to Lessor a Contractor's Consent to Assignment
for any new Construction Agreements entered into by Lessee after the date
hereof.

SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE.

      3.01. Representations and Warranties. Lessee represents and warrants to
Lessor that (a) all Construction Agreements entered into by Lessee are in full
force and effect and are enforceable in accordance with their terms (subject to
applicable laws regarding insolvency and principles of equity) and no default,
or event which would constitute a default after notice or the passage of time,
or both, exists with respect to said Construction Agreements; (b) all copies of

                                       2
<PAGE>   226

the Construction Agreements delivered to Lessor are complete and correct; and
(c) Lessee has not assigned any of its rights under the Construction Agreements.

      3.02. Covenants. Lessee agrees (a) to pay and perform all obligations of
Lessee under the Construction Agreements; (b) to enforce the payment and
performance of all obligations of any other Person under the Construction
Agreements except as provided in the Construction Agency Agreement; (c) not to
modify the existing Construction Agreements nor to enter into any future
Construction Agreements without Lessor's prior written approval which shall not
be unreasonably withheld, except as otherwise may be permitted by the Operative
Documents; and (d) not to further assign, for security or any other purposes,
its rights under the Construction Agreements without Lessor's prior written
approval.

SECTION 4. MISCELLANEOUS.

      4.01. Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Lessee or Lessor under this Agreement shall be given as provided in Subparagraph
2.02(c) and Paragraph 7.01 of the Participation Agreement.

      4.02. Waivers; Amendments. Any term, covenant, agreement or condition of
this Agreement may be amended or waived only as provided in the Participation
Agreement. No failure or delay by any Lessor Party in exercising any right
hereunder shall operate as a waiver thereof or of any other right nor shall any
single or partial exercise of any such right preclude any other further exercise
thereof or of any other right. Unless otherwise specified in any such waiver or
consent, a waiver or consent given hereunder shall be effective only in the
specific instance and for the specific purpose for which given.

      4.03. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Lessor Parties and Lessee and their permitted
successors and assigns; provided, however, that the Lessor Parties and Lessee
shall not sell, assign or delegate their respective rights and obligations
hereunder except as provided in the Participation Agreement.

      4.04. No Third Party Rights. Nothing expressed in or to be implied from
this Agreement is intended to give, or shall be construed to give, any Person,
other than the Lessor Parties and Lessee and their permitted successors and
assigns, any benefit or legal or equitable right, remedy or claim under or by
virtue of this Agreement or under or by virtue of any provision herein.

      4.05. Partial Invalidity. If at any time any provision of this Agreement
is or becomes illegal, invalid or unenforceable in any respect under the law or
any jurisdiction, neither the legality, validity or enforceability of the
remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.

      4.06. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without reference to
conflicts of law rules, except as otherwise provided in Subparagraph 7.14 of the
Participation Agreement.

                                       3
<PAGE>   227

      4.07. Termination. After the expiration of the Lease Agreement and the
satisfaction in full of all Lessee Obligations, the assignment of the
Construction Agreements set forth herein shall terminate, Lessor shall re-assign
to Lessee its interests in such Construction Agreements and this Agreement shall
terminate.

                          [The signature page follows.]

                                       4
<PAGE>   228

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

LESSEE:                                 NOVELLUS SYSTEMS, INC.

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

                                       5
<PAGE>   229

                                    EXHIBIT A

                             CONSTRUCTION AGREEMENTS

                                      A-1

<PAGE>   230

                                    EXHIBIT B

                       CONTRACTOR'S CONSENT TO ASSIGNMENT

      1. Reference is made to (a) the property located at [___________] (the
"Property") and (b) the agreement[s] described in Attachment 1 hereto between
Novellus Systems, Inc. ("Lessee") and the undersigned ("Contractor").

      2. Lessee has notified Contractor that, pursuant to an Assignment of
Construction Agreements dated as of April 18, 2001 between Lessee and ABN AMRO
Leasing, Inc., an Illinois corporation ("Lessor") (the "Assignment"), Lessee has
assigned to Lessor the agreement[s] described in Attachment 1 hereto and all
future agreements and contracts between Lessee and Contractor relating to the
construction, maintenance or repair of any improvements to the Property
(collectively, the "Construction Agreements").

      3. Contractor hereby consents to the Assignment and agrees as follows for
the benefit of Lessor:

            (a) Except with the prior written approval of Lessor, Contractor
      shall not perform any construction work pursuant to any change in the
      plans and specifications as set forth or attached to the Construction
      Agreements where such change (i) would result in an increase, alone or in
      the aggregate, in the total construction cost under any Construction
      Agreement of more than $250,000.00 or (b) would adversely affect the
      structural integrity, quality of building material or equipment or overall
      efficiency of operating systems or utility systems of the improvements.
      The liens of Lessor's security interests shall have priority over any
      claim of lien of Contractor arising out of or in any way connected with
      any construction work performed by Contractor on the Property.

            (b) If requested by Lessor in the exercise of Lessor's rights under
      the Assignment, Contractor shall continue to perform its obligations under
      the Construction Agreements in accordance with the terms thereof.
      Contractor acknowledges that Lessor may have no means of discovering when
      or if Contractor claims a default under the Construction Agreements and
      agrees that it will give Lessor prior written notice of any default
      claimed by Contractor under the Construction Agreements. Said notice shall
      set forth a description of the default and a request to Lessor to cure the
      same within thirty (30) days. Said notice shall be deemed served upon
      delivery or, if mailed, upon the first to occur of receipt or the
      expiration of seventy-two (72) hours after deposit in United States Postal
      Service certified mail, postage prepaid and addressed to the address of
      Lessor appearing below. No termination of the Construction Agreements by
      Contractor shall be binding upon Lessor unless Lessor has received such
      notice and has failed to cure the described default within said thirty
      (30) days. Contractor further acknowledges that, unless and until Lessor
      elects to exercise its rights under the Assignment and requests
      Contractor's performance under the Construction Agreements in writing,
      Lessor neither undertakes nor assumes any obligations or liability under
      the Construction Agreements.

                                      B-1

<PAGE>   231

            (c) Contractor shall hold in trust all money disbursed to or
      otherwise received by Contractor from or on account of Lessee in
      connection with the construction of the improvements and shall use such
      money solely for the payment of costs incurred in the construction of the
      improvements, including Contractor's fees, and for no other purpose, until
      all bills, claims and demands for such costs have been paid in full.

            IN WITNESS WHEREOF, Contractor has executed this Consent on this
      ___________ day of ____________________, ____.

                                        [______________________________________]

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

                                        Contractor's Address:

                                        [______________________________________]
                                        [______________________________________]
                                        [______________________________________]
                                        [______________________________________]

                                        Lessor's Address:

                                        ABN AMRO Leasing, Inc.
                                        c/o ABN AMRO Bank N.V.
                                        135 South LaSalle Street, Suite 740
                                        Chicago, Illinois 60603
                                        Attn:  David M. Shipley

                                      B-2
<PAGE>   232
                                    EXHIBIT H

                            CASH COLLATERAL AGREEMENT

                                      H-1
<PAGE>   233
================================================================================

                            CASH COLLATERAL AGREEMENT

                                     BETWEEN

                             NOVELLUS SYSTEMS, INC.

                                       AND

                             ABN AMRO LEASING, INC.

                                 APRIL 18, 2001

================================================================================

<PAGE>   234

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                          PAGE
                                                                                          ----
<S>     <C>                                                                               <C>
SECTION 1.        INTERPRETATION............................................................2

        1.01.  Definitions..................................................................2

        1.02.  Rules of Construction........................................................2

SECTION 2.        DELIVERY, MAINTENANCE AND PLEDGE OF CASH COLLATERAL.......................2

        2.01.  Grant of Security Interest...................................................2

        2.02.  Depositary Banks.............................................................3

        2.03.  Delivery and Maintenance of Cash Collateral..................................3

        2.04.  Withdrawal of Cash Collateral................................................4

        2.05.  Obligations of Depositary Banks to Lessor....................................6

        2.06.  Possession by Lessor.........................................................6

        2.07.  Valuation of Cash Collateral.................................................7

SECTION 3.        REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE.......................7

        3.01.  Representations and Warranties...............................................7

        3.02.  Covenants....................................................................7

SECTION 4.        RIGHTS AND REMEDIES OF LESSOR.............................................8

        4.01.  Authorized Actions by Lessor.................................................8

        4.02.  Other Rights and Remedies Upon an Event of Default...........................9

SECTION 5.        MISCELLANEOUS............................................................10

        5.01.  Notices.....................................................................10

        5.02.  Waivers; Amendments.........................................................10

        5.03.  Successors and Assigns......................................................10

        5.04.  No Third Party Rights.......................................................10

        5.05.  Partial Invalidity..........................................................10

        5.06.  Governing Law...............................................................10

        5.07.  Counterparts................................................................10

        5.08.  Cumulative Rights, etc. ....................................................10

        5.09.  Termination.................................................................11
</TABLE>

                                      -i-

<PAGE>   235

                               TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
                                                                                          PAGE
                                                                                          ----
<S>     <C>                                                                               <C>
EXHIBITS

   A      Securities Account Control Agreement (2.01(a))
   B      Deposit Account Control Agreement (2.01(b))
</TABLE>

                                      -ii-
<PAGE>   236

                            CASH COLLATERAL AGREEMENT

      THIS CASH COLLATERAL AGREEMENT (this "Agreement" herein), dated as of
April 18, 2001, is entered into by and between:

            (1)   NOVELLUS SYSTEMS, INC., a California corporation ("Lessee");
                  and

            (2)   ABN AMRO LEASING, INC., an Illinois corporation ("Lessor").

                                    RECITALS

      A. Lessee has requested Lessor and the Persons which are "Participants"
under the Participation Agreement referred to in Recital B below (such Persons
to be referred to collectively as the "Participants") to provide to Lessee a
lease facility pursuant to which:

            (1) Lessor would (a) lease from Lessee certain land currently owned
      by Lessee, (b) sublease back to Lessee such land and lease to Lessee
      certain improvements to be constructed on such land, (c) appoint Lessee as
      Lessor's agent to make such improvements (which improvements will be owned
      by Lessor), (d) make advances to finance such improvements and to pay
      certain related expenses and (e) grant to Lessee the right to purchase
      such improvements; and

            (2) The Participants would participate in such lease facility by (a)
      funding the advances to be made by Lessor and (b) acquiring participation
      interests in the rental and certain other payments to be made by Lessee.

      B. Pursuant to a Participation Agreement dated of April 18, 2001 (the
"Participation Agreement") among Lessee, Lessor, the Participants and ABN AMRO
Bank N.V., as agent for the Participants (in such capacity, "Agent"), Lessor and
the Participants have agreed to provide such lease facility upon the terms and
subject to the conditions set forth therein, including without limitation the
execution and delivery of this Agreement.

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:

SECTION 1. INTERPRETATION.

      1.01. Definitions. Unless otherwise indicated in this Agreement or any
other Operative Document, (a) each term set forth in Schedule 1.01 to the
Participation Agreement, when used in this Agreement or any other Operative
Document, shall have the respective meaning given to that term in such Schedule
1.01 or in the provision of this Agreement or other document, instrument or
agreement referenced in such Schedule 1.01 and (b) each term defined in the

<PAGE>   237

California Uniform Commercial Code (the "UCC"), when used in this Agreement,
shall have the respective meaning given to that term in the UCC.

      1.02. Rules of Construction. Unless otherwise indicated in this Agreement
or any other Operative Document, the rules of construction set forth in Schedule
1.02 to the Participation Agreement shall apply to this Agreement and the other
Operative Documents.

SECTION 2. DELIVERY, MAINTENANCE AND PLEDGE OF CASH COLLATERAL.

      2.01. Grant of Security Interest. As security for the Lessee Obligations,
Lessee hereby pledges and assigns to Lessor (for the ratable benefit of the
Lessor Parties, other than Novellus, as provided in the Participation Agreement)
and grants to Lessor (for the ratable benefit of the Lessor Parties, other than
Novellus, as provided in the Participation Agreement) a security interest in all
right, title and interest of Lessee in and to the following property, whether
now owned or hereafter acquired (collectively and severally, the "Cash
Collateral"):

            (a) Securities Accounts. All securities accounts described in each
      Securities Account Control Agreement in the form of Exhibit A, or other
      control agreement in a form acceptable to Lessor and Agent, executed by
      Lessee, Lessor and a Securities Intermediary (a "Securities Account
      Control Agreement"); all securities (including United States Treasury
      Securities) maintained in or credited to such accounts; all other
      financial assets and property maintained in or credited to such accounts;
      all security entitlements and other investment property relating thereto;
      all documents, instruments and agreements evidencing the foregoing; all
      extensions, renewals, modifications and replacements of the foregoing; all
      interest and other amounts payable in connection therewith; and all
      security entitlements and other rights of Lessee with respect to the
      foregoing (collectively, the "Securities Accounts");

            (b) Deposit Accounts. All deposit accounts described in each Deposit
      Account Control Agreement in the form of Exhibit B, or other control
      agreement in a form acceptable to Lessor and Agent, executed by Lessee,
      Lessor and a Depositary Bank (a "Deposit Account Control Agreement"); all
      certificates of deposit issued by any Depositary Bank for the account or
      credit of Lessee (including without limitation all such certificates of
      deposit described in each Deposit Account Control Agreement); all cash and
      other property maintained in or credited to such accounts and certificates
      of deposit; all documents, instruments and agreements evidencing the
      foregoing; all extensions, renewals, modifications and replacements of the
      foregoing; all interest and other amounts payable in connection therewith;
      and all other rights of Lessee with respect to the foregoing
      (collectively, the "Deposit Accounts"); and

            (c) Proceeds. All proceeds of the foregoing (including, without
      limitation, whatever is receivable or received when Cash Collateral or
      proceeds is sold, collected, exchanged, returned, substituted or otherwise
      disposed of, whether such disposition is voluntary or involuntary,
      including rights to payment and return premiums and insurance proceeds
      under insurance with respect to any Cash Collateral, and all rights to
      payment with respect to any cause of action affecting or relating to the
      Cash Collateral).

                                       2
<PAGE>   238

      2.02. Securities Intermediaries; Depositary Banks. Lessee may maintain
Securities Accounts only with Wells Fargo Bank, National Association and other
securities intermediaries (as defined in the UCC) that are approved by Lessor
and Agent (a "Securities Intermediary") and may maintain Deposit Accounts only
with Wells Fargo Bank, National Association and other banks (as defined in the
UCC) that are approved by Lessor and Agent (a "Depositary Bank").

      2.03. Delivery and Maintenance of Cash Collateral. Lessee shall deliver
and maintain Cash Collateral with Securities Intermediaries and Depositary Banks
to the extent required by Subparagraph 2.11(a) of the Participation Agreement,
subject in each case to the following terms and conditions:

            (a) Advance Dates. On the date of each Advance, and prior to such
      Advance, Lessee shall deliver all Cash Collateral necessary to satisfy the
      Cash Collateral amount requirement set forth in Subparagraph 2.11(a) of
      the Participation Agreement after giving effect to such Advance.

            (b) Other Times. If, at any time, the market value of the Cash
      Collateral is less than the amount requirement therefor set forth in
      Subparagraph 2.11(a) of the Participation Agreement, Lessee shall, within
      five (5) Business Days after demand by Lessor, deliver such additional
      Cash Collateral as is necessary to cure such deficiency.

            (c) Notice to Lessor. Lessee shall deliver to Lessor, at least three
      (3) Business Days prior to Lessee's delivery of any Cash Collateral, a
      written notice of its intention to deliver such Cash Collateral, in a form
      reasonably acceptable to Lessor, setting forth, among other things, (i)
      the total amount of such Cash Collateral to be delivered, (ii) the
      Securities Intermediaries and/or Depositary Banks to which such Cash
      Collateral is to be delivered and the amount to be delivered to each,
      (iii) the proposed date of delivery and (iv) the form in which such Cash
      Collateral is to be delivered. Each such notice shall be delivered as
      required by Subparagraph 2.02(c) and Paragraph 7.01 of the Participation
      Agreement; provided, however, that Lessee shall promptly deliver to Lessor
      the original of any such notice initially delivered by facsimile.

            (d) Control Agreements. No Securities Intermediary or Depositary
      Bank may maintain Cash Collateral unless, at or prior to the time such
      Securities Intermediary or Depositary Bank receives Cash Collateral,
      Lessee, Lessor and such Securities Intermediary or Depositary Bank have
      completed, executed and delivered to Lessor a Securities Account Control
      Agreement or Deposit Account Control Agreement, as appropriate, which
      specifically identifies each Securities Account and Deposit Account,
      respectively, to be maintained by such Securities Intermediary or
      Depositary Bank.

            (e) Control of Accounts. Lessee may not withdraw any Cash Collateral
      from the Securities Intermediaries or Depositary Banks holding the same
      except as provided in Paragraph 2.04. Except as otherwise provided in
      Subparagraph 2.11(a) of the Participation Agreement, if no Default has
      occurred and is continuing, Lessee may direct each Securities Intermediary
      or Depositary Bank maintaining Cash Collateral to hold such Cash
      Collateral in the form of United States Treasury Securities or deposit
      accounts and may elect the term of each such investment; provided,
      however, that all such

                                       3
<PAGE>   239

      investments shall be subject to the term limitations set forth in the
      definition of Cash Collateral. If a Default has occurred and is
      continuing, (i) all new Cash Collateral shall be maintained in time
      deposit accounts with terms not exceeding one (1) week and (ii) any
      existing Cash Collateral shall, at the end of the current terms of all
      investments thereof, be maintained in time deposit accounts with terms not
      exceeding one (1) week.

      2.04. Withdrawal of Cash Collateral. Lessee may not withdraw Cash
Collateral from Depositary Banks, except as follows:

            (a) Interest. If no Default has occurred and is continuing and the
      value of all Cash Collateral then equals or exceeds the amount required by
      Subparagraph 2.11(a) of the Participation Agreement, Lessee shall be
      entitled to receive all interest payable on Cash Collateral as and when
      payable, free and clear of all liens and security interests hereunder.

            (b) Principal. If no Default has occurred and is continuing and the
      market value of all Cash Collateral then exceeds the amount requirement
      set forth in Subparagraph 2.11(a) of the Participation Agreement, Lessee
      shall be entitled to withdraw the principal portion of Cash Collateral to
      the extent of such excess, free and clear of all liens and security
      interests hereunder, provided that:

                  (i) Lessee may not withdraw any required Cash Collateral
            delivered pursuant to clause (ii)(C) of Subparagraph 2.11(a) of the
            Participation Agreement until the Expiration Date of the Lease
            Agreement and the satisfaction in full of all Lessee Obligations,
            except as otherwise permitted by Subparagraph 2.11(a) of the
            Participation Agreement;

                  (ii) Lessee shall request each withdrawal by delivering to
            Lessor, not less than three (3) Business Days prior to the proposed
            date of such withdrawal, a written request in a form acceptable to
            Lessor that specifies (A) the proposed date of withdrawal, (B) the
            Securities Intermediary or Depositary Bank from which such Cash
            Collateral will be withdrawn and (C) the quantity, form and current
            market value of the Cash Collateral to be withdrawn; and

                  (iii) Lessee may not make more than one (1) withdrawal in any
            calendar month.

      Upon Lessee's request and provided that Lessee is entitled to withdraw
      Cash Collateral as provided herein, Lessor shall execute and deliver to
      Securities Intermediaries and Depositary Banks such written instructions
      as Lessee may reasonably request to authorize withdrawals permitted
      hereby.

      2.05. Possession by Lessor. Lessee and Lessor agree that (a) the
possession by a Securities Intermediary or Depositary Bank of any money,
certificated securities, instruments, chattel paper or other property
constituting Cash Collateral or evidencing Cash Collateral shall be deemed to be
possession by Lessor or a person designated by Lessor, for purposes of
perfecting the security interest granted to Lessor hereunder, and (b)
notifications to a Securities Intermediary or Depositary Bank by other Persons
holding any such property, and

                                       4
<PAGE>   240

acknowledgements, receipts or confirmations from any such Persons delivered to a
Securities Intermediary or Depositary Bank, shall be deemed notifications to, or
acknowledgements, receipts or confirmations from, securities intermediaries,
bailees or agents (as applicable) of such Securities Intermediary or Depositary
Bank for the benefit of Lessor for the purposes of perfecting such security
interests under applicable law.

SECTION 3. REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSEE.

      3.01. Representations and Warranties. Lessee represents and warrants to
the Lessor Parties (other than Novellus) as follows:

            (a) Owner, Etc. Lessee is the legal and beneficial owner of the Cash
      Collateral (or, in the case of after-acquired Cash Collateral, at the time
      Lessee acquires rights in the Cash Collateral, will be the legal and
      beneficial owner thereof). No other Person has (or, in the case of
      after-acquired Cash Collateral, at the time Lessee acquires rights
      therein, will have) any right, title, claim or interest (by way of Lien,
      purchase option or otherwise) in, against or to the Cash Collateral.

            (b) First Priority Perfected Security Interest. Lessor has (or in
      the case of after-acquired Cash Collateral, at the time Lessee acquires
      rights therein, will have), upon delivery of the applicable Securities
      Account Control Agreement or Deposit Account Control Agreement, a first
      priority perfected security interest in the Cash Collateral.

            (c) Originals, Etc. Lessee has delivered to Securities
      Intermediaries or Depositary Banks, together with all necessary stock
      powers, endorsements, assignments and other necessary instruments of
      transfer, the originals of all documents, instruments and agreements
      evidencing Cash Collateral.

            (d) Chief Executive Office. Lessee's chief executive office is
      located at the address set forth in Subparagraph 4.01(s) of the
      Participation Agreement.

            (e) Information True and Correct. All information furnished by
      Lessee to any Lessor Party regarding the Cash Collateral is true and
      correct.

      3.02. Covenants. Lessee hereby agrees with the Lessor Parties (other than
Novellus) as follows:

            (a) Further Assurances. Lessee, at Lessee's expense, shall promptly
      procure, execute and deliver to Lessor all documents, instruments and
      agreements and perform all acts which are reasonably necessary or
      desirable, or which Lessor may request, to establish, maintain, preserve,
      protect and perfect the Cash Collateral, the security interest granted to
      Lessor therein and the first priority of such security interest or to
      enable Lessor to exercise and enforce its rights and remedies hereunder
      with respect to any Cash Collateral.

                                       5
<PAGE>   241

            (b) No Violation. Lessee shall not use or permit any Cash Collateral
      to be used in violation of (i) any provision of any Operative Document or
      (B) any applicable Governmental Rule where such use might have a Material
      Adverse Effect.

            (c) Taxes, Etc. Lessee shall pay promptly when due all taxes and
      other Governmental Charges, all Liens and all other charges now or
      hereafter imposed upon, relating to or affecting any Cash Collateral.

            (d) Chief Executive Office. Without thirty (30) days' prior written
      notice to Lessor, Lessee shall not change Lessee's name or place of
      business (or, if Lessee has more than one place of business, its chief
      executive office).

            (e) Liens. Lessee shall not create, incur, assume or permit to exist
      any Lien on or with respect to any of the Cash Collateral other than Liens
      in favor of Agent created hereunder.

            (f) Defense of Title. Lessee shall appear in and defend any action
      or proceeding which may affect its title to or Lessor's interest in the
      Cash Collateral.

            (g) Sale, Etc. Subject to Lessee's withdrawal rights hereunder,
      Lessee shall not surrender or lose possession of (other than to Lessor or
      a Depositary Bank pursuant hereto), sell, encumber, lease, rent, option,
      or otherwise dispose of or transfer any Cash Collateral or right or
      interest therein.

SECTION 4. RIGHTS AND REMEDIES OF LESSOR.

      4.01. Authorized Actions by Lessor. Lessee hereby irrevocably appoints
Lessor as its attorney-in-fact and agrees that Lessor may perform (but Lessor
shall not be obligated to and shall incur no liability to Lessee or any third
party for failure so to do) any act which Lessee is obligated by this Cash
Collateral Agreement to perform, and to exercise such rights and powers as
Lessee might exercise with respect to the Cash Collateral, including the right
to (a) collect by legal proceedings or otherwise and endorse, receive and
receipt for all dividends, interest, payments, proceeds and other sums and
property now or hereafter payable on or on account of the Cash Collateral; (b)
enter into any extension, reorganization, deposit, merger, consolidation or
other agreement pertaining to, or deposit, surrender, accept, hold or apply
other property in exchange for the Cash Collateral; (c) insure, process,
preserve and enforce the Cash Collateral; (d) make any compromise or settlement,
and take any action it deems advisable, with respect to the Cash Collateral; (e)
pay any indebtedness of Lessee relating to the Cash Collateral; and (f) execute
UCC financing statements and other documents, instruments and agreements
required hereunder; provided, however, that Lessor may not exercise such powers
unless an Event of Default has occurred and is continuing. Lessee agrees to
reimburse Lessor upon demand for all reasonable costs and expenses, including
attorneys' fees, Lessor may incur while acting as Lessee's attorney-in-fact
hereunder, all of which costs and expenses are included in the Lessee
Obligations. Lessee agrees that such care as Lessor gives to the safekeeping of
its own property of like kind shall constitute reasonable care of the Cash
Collateral when in Lessor's possession; provided, however, that Lessor shall not
be required to make any presentment, demand or

                                       6
<PAGE>   242

protest, or give any notice and need not take any action to preserve any rights
against any prior party or any other Person in connection with the Lessee
Obligations or with respect to the Cash Collateral.

      4.02. Other Rights and Remedies Upon an Event of Default. In addition to
all other rights and remedies granted to Lessor and the other Lessor Parties
(other than Novellus) by this Agreement, the Participation Agreement, the other
Operative Documents, the UCC and other applicable Governmental Rules, Lessor
may, upon the occurrence and during the continuance of any Event of Default,
exercise any one or more of the following rights and remedies:

            (a) Collection, Foreclosure, Etc. Lessor may collect, receive,
      appropriate or realize upon the Cash Collateral or otherwise foreclose or
      enforce Lessor's security interests in any or all Cash Collateral in any
      manner permitted by applicable Governmental Rules or by this Agreement.

            (b) Delivery by Securities Intermediaries or Depositary Banks.
      Lessor may notify any or all Securities Intermediaries and/or Depositary
      Banks to deliver or pay all or any portion of the Cash Collateral held by
      such Securities Intermediaries and/or Depositary Banks directly to Lessor.

Lessor shall distribute the proceeds of all Cash Collateral received by Lessor
after the occurrence of an Event of Default to the Lessor Parties (other than
Novellus) for application to the Lessee Obligations owed to such Persons
pursuant to the Participation Agreement. If any proceeds of Cash Collateral
remain after all Lessee Obligations have been paid in full, Lessor and any
Securities Intermediaries and/or Depositary Banks holding such proceeds shall
deliver the same to Lessee or other Person entitled thereto. In any case where
notice of any sale or disposition of any Cash Collateral is required, Lessee
hereby agrees that ten (10) days notice of such sale or disposition is
reasonable.

      4.03. Application of Cash Collateral. Lessor may apply Cash Collateral to
pay Lessee Obligations only after the same become due pursuant to the terms of
the Operative Documents, whether by acceleration or otherwise. The parties
hereto do not intend for the Cash Collateral to constitute advance payment of
any of the Lessee Obligations or liquidated damages nor do the parties intend
for the Cash Collateral to increase the Lessee Obligations. Without limiting the
generality of the foregoing, the parties acknowledge and agree that, upon the
exercise by Lessee of the Marketing Option in accordance with the Purchase
Agreement, the Lessee Obligations thereunder shall be limited as provided
therein.

SECTION 5. MISCELLANEOUS.

      5.01. Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or upon the
parties hereto under this Agreement shall be given as provided in Subparagraph
2.02(c) and Paragraph 7.01 of the Participation Agreement.

      5.02. Waivers; Amendments. Any term, covenant, agreement or condition of
this Agreement may be amended or waived only as provided in the Participation
Agreement. No

                                       7
<PAGE>   243

failure or delay by any Lessor Party (other than Novellus) in exercising any
right hereunder shall operate as a waiver thereof or of any other right nor
shall any single or partial exercise of any such right preclude any other
further exercise thereof or of any other right. Unless otherwise specified in
any such waiver or consent, a waiver or consent given hereunder shall be
effective only in the specific instance and for the specific purpose for which
given.

      5.03. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Lessor Parties (other than Novellus) and Lessee and
their permitted successors and assigns; provided, however, that the Lessor
Parties (other than Novellus) and Lessee shall not sell, assign or delegate
their respective rights and obligations hereunder except as provided in the
Participation Agreement.

      5.04. No Third Party Rights. Nothing expressed in or to be implied from
this Agreement is intended to give, or shall be construed to give, any Person,
other than the Lessor Parties (other than Novellus) and Lessee and their
permitted successors and assigns, any benefit or legal or equitable right,
remedy or claim under or by virtue of this Agreement or under or by virtue of
any provision herein.

      5.05. Partial Invalidity. If at any time any provision of this Agreement
is or becomes illegal, invalid or unenforceable in any respect under the law or
any jurisdiction, neither the legality, validity or enforceability of the
remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.

      5.06. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without reference to
conflicts of law rules.

      5.07. Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.

      5.08. Cumulative Rights, etc. The rights, powers and remedies of Lessor
and the Participants (other than Novellus) under this Cash Collateral Agreement
shall be in addition to all rights, powers and remedies given to Lessor and the
Participants by virtue of any Applicable Law, the Participation Agreement, any
other Operative Document or any other agreement, all of which rights, powers,
and remedies shall be cumulative and may be exercised successively or
concurrently without impairing Lessor's rights hereunder. Lessee waives any
right to require Lessor or any Participant to proceed against any Person or to
exhaust any Cash Collateral or to pursue any remedy in Lessor's or such
Participant's power.

                                       8
<PAGE>   244

      5.09. Termination. After the Expiration Date of the Lease Agreement and
the satisfaction in full of all Lessee Obligations, Lessor's security interest
in any Cash Collateral then held by any Securities Intermediaries and/or
Depositary Banks shall terminate, the Securities Intermediaries and/or
Depositary Banks shall return any such Cash Collateral to Lessee and this
Agreement shall terminate.

                          [The signature page follows.]

                                       9
<PAGE>   245

      IN WITNESS WHEREOF, Lessee and Lessor have caused this Agreement to be
executed as of the day and year first above written.

LESSEE:                                 NOVELLUS SYSTEMS, INC.

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

LESSOR:                                 ABN AMRO LEASING, INC.

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

                                       10
<PAGE>   246

                                    EXHIBIT A

                      SECURITIES ACCOUNT CONTROL AGREEMENT

      THIS SECURITIES ACCOUNT CONTROL AGREEMENT, dated as of [________], 2001
(this "Control Agreement") is entered into by and among:

            (1)   NOVELLUS SYSTEMS, INC., a California corporation ("Grantor");

            (2)   ABN AMRO LEASING, INC., an Illinois corporation ("Secured
                  Party"); and

            (3)   [_______________________], a [___________________]
                  ("Securities Intermediary").

                                    RECITALS

      A. Intermediary and Grantor have entered into a customer agreement (as
from time to time amended, modified, supplemented, or restated, the "Customer
Agreement"), pursuant to which Securities Intermediary has established its
securities account number(s) [__________________] in the name of Grantor (such
account(s), together with any all securities maintained in or credited to such
accounts; all other financial assets and property maintained in or credited to
such accounts; all security entitlements and other investment property relating
thereto; all documents, instruments and agreements evidencing the foregoing; all
extensions, renewals, modifications and replacements of the foregoing; all
interest and other amounts payable in connection therewith; and all security
entitlements and other rights of Lessee with respect to the foregoing financial
assets and credit balances from time to time credited thereto and any and all
proceeds thereof, the "Securities Account").

      B. Grantor and Secured Party have entered into a Cash Collateral Agreement
dated as of April 18, 2001 (as from time to time amended, modified,
supplemented, or restated, the "Cash Collateral Agreement"), in which Grantor
has granted Secured Party a security interest in the Securities Account.

      C. Secured Party, Grantor and Securities Intermediary are entering into
this Control Agreement to provide for the control of the Securities Account and
to perfect the security interest of Secured Party in the Securities Account as
more fully described in the Cash Collateral Agreement.

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:

      Section 1. The Securities Account. Securities Intermediary hereby
represents and warrants to Secured Party and Grantor that (a) the Securities
Account has been established in the name of Grantor as recited above, (b) the
Customer Agreement, the security entitlements arising

                                       11
<PAGE>   247

out of the financial assets carried in the Securities Account and any free
credit balances are valid and legally binding obligations of Securities
Intermediary, and (c) except for the claims and interest of Secured Party and of
Grantor in the Securities Account, Securities Intermediary does not know of any
claim to or interest in the Securities Account or in any financial asset carried
therein. Securities Intermediary will treat all property held by it in the
Securities Account as financial assets under Division 8 of the Uniform
Commercial Code of [California].

      Section 2. Control. Securities Intermediary shall comply with all
withdrawal, transfer, payment and redemption instructions and all other
entitlement orders (collectively, "orders") received from Secured Party
concerning the Securities Account without further consent from Grantor. Until
Securities Intermediary receives written notice from Secured Party to the
contrary, Securities Intermediary may comply with any orders it receives from
Grantor to pay to Grantor any interest paid on financial assets in the
Securities Account.

      Section 3. Priority of Lien. Securities Intermediary hereby acknowledges
that it has received notice of the existence of the Cash Collateral Agreement
and of the security interest of Secured Party in the Securities Account and
recognizes the security interest granted therein to Secured Party by Grantor.
Securities Intermediary hereby confirms that the Securities Account is a cash
Securities Account and that it will not advance any margin or other credit to
Grantor therein, either directly or by allowing it to trade in instruments such
as options and commodities contracts that create similar obligations, nor
hypothecate any securities carried in the Securities Account. Securities
Intermediary hereby waives and releases all liens, encumbrances, claims and
rights of setoff it may have against the Securities Account or any financial
asset carried in the Securities Account or any credit balance in the Securities
Account and agrees that, except for payment of its customary fees and
commissions pursuant to the Customer Agreement, it will not assert any such
lien, encumbrance, claim or right against the Securities Account or any
financial asset carried in the Securities Account or any credit balance in the
Securities Account. Securities Intermediary will not agree with any third party
that Securities Intermediary will comply with orders concerning the Securities
Account originated by such third party without the prior written consent of
Secured Party and Grantor.

      Section 4. Statements, Confirmations and Notices of Adverse Claims.
Securities Intermediary will send copies of all statements, confirmations and
other correspondence concerning the Securities Account simultaneously to each of
Grantor and Secured Party at the address set forth below the signature of each
below. If Securities Intermediary acquires knowledge that any person asserts any
lien, encumbrance or adverse claim against the Securities Account or in any
financial asset carried therein, Securities Intermediary will promptly notify
Secured Party and Grantor thereof.

      Section 5. Responsibility of Securities Intermediary. Securities
Intermediary shall have no responsibility or liability to Grantor for complying
with orders concerning the Securities Account originated by Secured Party.
Securities Intermediary shall have no independent duty to investigate or make
any determination as to whether Secured Party is entitled to give any orders
under the Cash Collateral Agreement and shall comply with any orders given by
Secured Party. Neither this Control Agreement nor the Cash Collateral Agreement
imposes or creates any obligation or duty of Securities Intermediary other than
those expressly set forth herein.

                                       2
<PAGE>   248

      Section 6. Indemnity. Grantor shall at all times indemnify and hold
harmless the Securities Intermediary (and Securities Intermediary's directors,
officers, employees and agents) from and against any and all claims, actions and
suits arising out of the terms of this Control Agreement or the Cash Collateral
Agreement, or the compliance of the Securities Intermediary with the terms
thereof, and from and against any and all liabilities, losses, damages, costs,
charges, counsel fees and disbursements and other expenses of every nature and
character arising by reason of same, except to the extent that such arises from
the Securities Intermediary's gross negligence or willful misconduct.

      Section 7. Tax Reporting. All items of income, gain, expense and loss
recognized in the Securities Account shall be reported to the Internal Revenue
Service and all state and local taxing authorities under the name and taxpayer
identification number of Grantor.

      Section 8. Customer Agreement. This Control Agreement supplements the
Customer Agreement between Grantor and Securities Intermediary. In the event of
a conflict between this Control Agreement and the Customer Agreement, the terms
of this Control Agreement will prevail. Regardless of any provision in the
Customer Agreement, the State of [California] shall be deemed to be the
Securities Intermediary's location for the purposes of this Control Agreement
and the perfection and priority of Secured Party's security interest in the
Securities Account.

      Section 9. Termination. The rights and powers granted herein to Secured
Party have been granted in order to perfect its security interest in the
Securities Account, are powers coupled with an interest and will neither be
affected by the dissolution or bankruptcy of Grantor nor by the lapse of time.
The obligations of Securities Intermediary under Sections 2, 3 and 4 above shall
continue in effect until the security interest of Secured Party in the
Securities Account has been terminated pursuant to the terms of the Cash
Collateral Agreement and Secured Party has notified Securities Intermediary of
such termination in writing, which Secured Party agrees to do promptly upon
request of Grantor following such termination. Upon receipt of such notice the
obligations of Securities Intermediary under Sections 2, 3 and 4 above with
respect to the operation and maintenance of the Securities Account after the
receipt of such notice shall terminate, Secured Party shall have no further
right to originate entitlement orders concerning the Securities Account and
Securities Intermediary may take such steps as Grantor may request to vest full
ownership and control of the Securities Account in Grantor, including, but not
limited to, removing the name of Secured Party from the Securities Account or
transferring all of the financial assets and credit balances in the Securities
Account to another securities account in the name of Grantor or its designee.

      Section 10. This Control Agreement. This Control Agreement, the schedules
and exhibits hereto and the agreements and instruments required to be executed
and delivered hereunder set forth the entire agreement of the parties with
respect to the subject matter hereof and supersede and discharge all prior
agreements (written or oral) and negotiations and all contemporaneous oral
agreements concerning such subject matter and negotiations. There are no oral
conditions precedent to the effectiveness of this Control Agreement.

                                       3
<PAGE>   249

      Section 11. Amendments. No amendment, modification or termination of this
Control Agreement or waiver of any right hereunder shall be binding on any party
hereto unless it is in writing and is signed by the party to be charged.

      Section 12. Severability. If any term or provision set forth in this
Control Agreement shall be invalid or unenforceable, the remainder of this
Control Agreement, or the application of such terms or provisions to persons or
circumstances, other than those to which it is held invalid or unenforceable,
shall be construed in all respects if such invalid or unenforceable term or
provision were omitted.

      Section 13. Successors. The terms of this Control Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective corporate successors or heirs and personal representatives.

      Section 14. Rules of Construction. In this Control Agreement, words in the
singular number include the plural, and in the plural include the singular;
words of the masculine gender include the feminine and the neuter, and when the
sense so indicates words of the neuter gender may refer to any gender and the
word "or" is disjunctive but not exclusive. The captions and section numbers
appearing in this Control Agreement are inserted only as a matter of
convenience. They do not define, limit or describe the scope or intent of the
provisions of this Control Agreement.

      Section 15. Notices. Any notice, request or other communication required
or permitted to be given under this Control Agreement shall be in writing and
faxed, mailed or delivered addressed to the party at the address set forth below
its signature below. All such notices, requests and communications shall be
effective (a) when sent by Federal Express or other overnight service of
recognized standing, on the first [California] business day following the
deposit with such service; (b) when mailed, first class postage prepaid and
addressed as aforesaid through the United States Postal Service, upon receipt;
(c) when delivered by hand, upon delivery; and (d) when faxed, upon confirmation
of receipt. Any party may change its address for notices in the manner set forth
above.

      Section 16. Counterparts. This Control Agreement may be executed in any
number counterparts, all of which shall constitute one and the same instrument,
and any party hereto may execute this Control Agreement by signing and
delivering one or more counterparts.

      Section 17. Choice of Law. This Control Agreement shall be governed by and
construed in accordance with the laws of the State of [California] without
reference to any conflicts of law rules.

                                       4
<PAGE>   250

      IN WITNESS WHEREOF, the parties hereto have duly executed this Control
Agreement, as of the date first above written.

                                        NOVELLUS SYSTEMS, INC.

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

                                        Address:

                                       [_______________________________________]

                                       [_______________________________________]

                                       [_______________________________________]

                                       [_______________________________________]

                                        ABN AMRO LEASING, INC.

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

                                        Address:

                                       [_______________________________________]

                                       [_______________________________________]

                                       [_______________________________________]

                                       [_______________________________________]

                                       [_______________________________________]

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

                                        Address:

                                       [_______________________________________]

                                       [_______________________________________]

                                       [_______________________________________]

                                       [_______________________________________]

<PAGE>   251

                                    EXHIBIT B

                        DEPOSIT ACCOUNT CONTROL AGREEMENT

      THIS DEPOSIT ACCOUNT CONTROL AGREEMENT, dated as of [________], 2001 (this
"Control Agreement") is entered into by and among:

            (1)   NOVELLUS SYSTEMS, INC., a California corporation ("Grantor");

            (2)   ABN AMRO LEASING, INC., an Illinois corporation ("Secured
                  Party"); and

            (3)   [_______________________], a [___________________]
                  ("Depositary Bank").

                                    RECITALS

      A. Depositary Bank has established deposit account number(s)
[__________________] in the name of Grantor (such account(s), together with all
cash and other property maintained in or credited to such accounts; all
documents, instruments and agreements evidencing the foregoing; all extensions,
renewals, modifications and replacements of the foregoing; all interest and
other amounts payable in connection therewith; all other rights of Grantor with
respect to the foregoing and any and all proceeds thereof, the "Deposit
Account").

      B. Grantor and Secured Party have entered into a Cash Collateral Agreement
dated as of April 18, 2001 (as from time to time amended, modified,
supplemented, or restated, the "Cash Collateral Agreement"), in which Grantor
has granted Secured Party a security interest in the Deposit Account; and

      C. Secured Party, Grantor and Depositary Bank are entering into this
Control Agreement to provide for the control of the Deposit Account and to
perfect the security interest of Secured Party in the Deposit Account as more
fully described in the Cash Collateral Agreement.

                                    AGREEMENT

      NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:

      Section 1. The Deposit Account. Depositary Bank hereby represents and
warrants to Secured Party and Grantor that (a) the Deposit Account has been
established in the name of Grantor as recited above, (b) any balances in the
Deposit Account are valid and legally binding obligations of Depositary Bank,
and (c) except for the claims and interest of Secured Party and of Grantor in
the Deposit Account, Depositary Bank does not know of any claim to or interest
in the Deposit Account or in any balances maintained therein.

                                      B-1

<PAGE>   252

      Section 2. Control. Depositary Bank shall comply with all withdrawal,
transfer, payment and other instructions (collectively, "instructions") received
from Secured Party concerning the Deposit Account without further consent from
Grantor. Until Depositary Bank receives written notice from Secured Party to the
contrary, Depositary Bank Intermediary may comply with any instructions it
receives from Grantor to pay to Grantor any interest paid on financial assets in
the Deposit Account.

      Section 3. Priority of Lien. Depositary Bank hereby acknowledges that it
has received notice of the existence of the Cash Collateral Agreement and of the
security interest of Secured Party in the Deposit Account and recognizes the
security interest granted therein to Secured Party by Grantor. Depositary Bank
hereby waives and releases all liens, encumbrances, claims and rights of setoff
it may have against the Deposit Account or any balance in the Deposit Account
and agrees that, except for payment of its customary fees and commissions
pursuant to the Customer Agreement, it will not assert any such lien,
encumbrance, claim or right against the Deposit Account or any balance in the
Deposit Account. Depositary Bank will not agree with any third party that
Depositary Bank will comply with instructions concerning the Deposit Account
originated by such third party without the prior written consent of Secured
Party and Grantor.

      Section 4. Statements, Confirmations and Notices of Adverse Claims.
Depositary Bank will send copies of all statements, confirmations and other
correspondence concerning the Deposit Account simultaneously to each of Grantor
and Secured Party at the address set forth below its signature below. If
Depositary Bank acquires knowledge that any person asserts any lien, encumbrance
or adverse claim against the Deposit Account or in any balance maintained
therein, Depositary Bank will promptly notify Secured Party and Grantor thereof.

      Section 5. Responsibility of Depositary Bank. Depositary Bank shall have
no responsibility or liability to Grantor for complying with instructions
concerning the Deposit Account given by Secured Party, including the giving of
stop payment orders for items being presented to the Deposit Account for payment
and instructions to transfer the balances in the Deposit Account to Secured
Party or as Secured Party directs. Depositary Bank shall have no independent
duty to investigate or make any determination as to whether Secured Party is
entitled to give any instructions under the Cash Collateral Agreement, and shall
comply with any instructions given by Secured Party. Neither this Control
Agreement nor the Cash Collateral Agreement imposes or creates any obligation or
duty of Depositary Bank other than those expressly set forth herein.

      Section 6. Indemnity. Grantor shall at all times indemnify and hold
harmless the Depositary Bank (and Depositary Bank's directors, officers,
employees and agents) from and against any and all claims, actions and suits
arising out of the terms of this Control Agreement or the Cash Collateral
Agreement, or the compliance of the Depositary Bank with the terms thereof, and
from and against any and all liabilities, losses, damages, costs, charges,
counsel fees and disbursements and other expenses of every nature and character
arising by reason of same, except to the extent that such arises from the
Depositary Bank's gross negligence or willful misconduct.

                                      B-2

<PAGE>   253
      Section 7. Tax Reporting. All items of income, gain, expense and loss
recognized in the Deposit Account shall be reported to the Internal Revenue
Service and all state and local taxing authorities under the name and taxpayer
identification number of Grantor.

      Section 8. Deposit Account Agreement. This Control Agreement supplements
any other agreement between Grantor and Depositary Bank relating to the Deposit
Account (collectively, the "Deposit Account Agreement"). In the event of a
conflict between this Control Agreement and the Deposit Account Agreement, the
terms of this Control Agreement will prevail. Regardless of any provision in the
Deposit Account Agreement, the State of [California] shall be deemed to be the
Depositary Bank's location for the purposes of this Control Agreement and the
perfection and priority of Secured Party's security interest in the Deposit
Account.

      Section 9. Termination. The rights and powers granted herein to Secured
Party have been granted in order to perfect its security interest in the Deposit
Account, are powers coupled with an interest and will neither be affected by the
dissolution or bankruptcy of Grantor nor by the lapse of time. The obligations
of Depositary Bank under Sections 2, 3 and 4 above shall continue in effect
until the security interest of Secured Party in the Deposit Account has been
terminated pursuant to the terms of the Cash Collateral Agreement and Secured
Party has notified Depositary Bank of such termination in writing, which Secured
Party agrees to do promptly upon request of Grantor following such termination.
Upon receipt of such notice the obligations of Depositary Bank under Sections 2,
3 and 4 above with respect to the operation and maintenance of the Deposit
Account after the receipt of such notice shall terminate, Secured Party shall
have no further right to give instructions concerning the Deposit Account and
Depositary Bank may take such steps as Grantor may request to vest full
ownership and control of the Deposit Account in Grantor, including, but not
limited to, removing the name of Secured Party from the Deposit Account or
transferring all of the balances in the Deposit Account to another Deposit
Account in the name of Grantor or its designee.

      Section 10. This Control Agreement. This Control Agreement, the schedules
and exhibits hereto and the agreements and instruments required to be executed
and delivered hereunder set forth the entire agreement of the parties with
respect to the subject matter hereof and supersede and discharge all prior
agreements (written or oral) and negotiations and all contemporaneous oral
agreements concerning such subject matter and negotiations. There are no oral
conditions precedent to the effectiveness of this Control Agreement.

      Section 11. Amendments. No amendment, modification or termination of this
Control Agreement or waiver of any right hereunder shall be binding on any party
hereto unless it is in writing and is signed by the party to be charged.

      Section 12. Severability. If any term or provision set forth in this
Control Agreement shall be invalid or unenforceable, the remainder of this
Control Agreement, or the application of such terms or provisions to persons or
circumstances, other than those to which it is held invalid or unenforceable,
shall be construed in all respects if such invalid or unenforceable term or
provision were omitted.

                                       B-3
<PAGE>   254

      Section 13. Successors. The terms of this Control Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective corporate successors or heirs and personal representatives.

      Section 14. Rules of Construction. In this Control Agreement, words in the
singular number include the plural, and in the plural include the singular;
words of the masculine gender include the feminine and the neuter, and when the
sense so indicates words of the neuter gender may refer to any gender and the
word "or" is disjunctive but not exclusive. The captions and section numbers
appearing in this Control Agreement are inserted only as a matter of
convenience. They do not define, limit or describe the scope or intent of the
provisions of this Control Agreement.

      Section 15. Notices. Any notice, request or other communication required
or permitted to be given under this Control Agreement shall be in writing and
faxed, mailed or delivered addressed to the party at the address set forth below
its signature below. All such notices, requests and communications shall be
effective (a) when sent by Federal Express or other overnight service of
recognized standing, on the first [California] business day following the
deposit with such service; (b) when mailed, first class postage prepaid and
addressed as aforesaid through the United States Postal Service, upon receipt;
(c) when delivered by hand, upon delivery; and (d) when faxed, upon confirmation
of receipt. Any party may change its address for notices in the manner set forth
above.

      Section 16. Counterparts. This Control Agreement may be executed in any
number counterparts, all of which shall constitute one and the same instrument,
and any party hereto may execute this Control Agreement by signing and
delivering one or more counterparts.

      Section 17. Choice of Law. This Control Agreement shall be governed by and
construed in accordance with the laws of the State of [California] without
reference to any conflicts of law rules.

      IN WITNESS WHEREOF, the parties hereto have duly executed this Control
Agreement, as of the date first above written.

                                        NOVELLUS SYSTEMS, INC.

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

                                        Address:

                                       [_______________________________________]

                                       [_______________________________________]

                                       [_______________________________________]

                                       [_______________________________________]

                                      B-4
<PAGE>   255

                                        ABN AMRO LEASING, INC.

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

                                        Address:

                                       [_______________________________________]

                                       [_______________________________________]

                                       [_______________________________________]

                                       [_______________________________________]

                                       [_______________________________________]

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

                                        Address:

                                       [_______________________________________]

                                       [_______________________________________]

                                       [_______________________________________]

                                       [_______________________________________]

                                      B-5
<PAGE>   256
                                    EXHIBIT I

                               ASSIGNMENT OF LEASE

                                      I-1
<PAGE>   257
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:

Thomas Y. Coleman, Esq.
Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California 94111

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                   ASSIGNMENT OF GROUND LEASE, LEASE AGREEMENT
                             AND PURCHASE AGREEMENT

                                       BY

                             ABN AMRO LEASING, INC.

                                   IN FAVOR OF

                               ABN AMRO BANK N.V.,
                                    AS AGENT

                                 APRIL 18, 2001

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<PAGE>   258

            ASSIGNMENT OF GROUND LEASE, LEASE AGREEMENT AND PURCHASE
                                    AGREEMENT

        THIS ASSIGNMENT OF GROUND LEASE, LEASE AGREEMENT AND PURCHASE AGREEMENT
(this "Assignment" herein), dated as of April 18, 2001 is executed by:

               (1) ABN AMRO LEASING, INC., an Illinois corporation ("Lessor")

                                   in favor of

               (2) ABN AMRO BANK N.V., as agent for the Participants under the
        Participation Agreement referred to in Recital B below (in such
        capacity, "Agent").

                                    RECITALS

        A. Novellus Systems, Inc., a California corporation ("Lessee"), has
requested Lessor and the financial institutions which are "Participants" under
the Participation Agreement referred to in Recital B below (such financial
institutions to be referred to collectively as the "Participants") to provide to
Lessee a certain lease facility pursuant to which:

               (1) Lessor would (a) lease from Lessee certain land currently
        owned by Lessee, (b) sublease to Lessee such land and lease to Lessee
        certain improvements to be constructed on such land, (c) appoint Lessee
        as Lessor's agent to make such improvements (which improvements will be
        owned by Lessor), (d) make advances to finance such improvements and to
        pay certain related expenses and (e) grant to Lessee the right to
        purchase such improvements; and

               (2) The Participants would participate in such lease facility by
        (a) funding the purchase price and other advances to be made by Lessor
        and (b) acquiring participation interests in the rental and certain
        other payments to be made by Lessee.

        B. Pursuant to a Participation Agreement dated as of April 18, 2001 (the
"Participation Agreement") among Lessee, Lessor, the Participants and Agent,
Lessor and the Participants have agreed to provide such lease facility upon the
terms and subject to the conditions set forth therein, including, without
limitation, the execution and delivery of (1) the Ground Lease dated as of April
18, 2001 between Lessee and Lessor (the "Ground Lease"), pursuant to which
Lessor has leased from Lessee the lots, pieces, tracts and parcels of land
described in Exhibit A (the "Land") and the other property described in the
Ground Lease (2) the Lease Agreement dated as of April 18, 2001 between Lessee
and Lessor (the "Lease Agreement"), pursuant to which Lessor has leased back to
Lessee the Land and the other property described in the Lease Agreement (the
"Property"), (3) the Purchase Agreement dated as of April 18, 2001 between
Lessee and Lessor (the "Purchase Agreement"), pursuant to which Lessee may
purchase the Property from Lessor under certain circumstances, and (4) this
Assignment.

<PAGE>   259

                                    AGREEMENT

        NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:

SECTION 1.    INTERPRETATION.

        1.01. Definitions. Unless otherwise indicated in this Assignment or any
other Operative Document, each term set forth in Schedule 1.01 to the
Participation Agreement, when used in this Assignment or any other Operative
Document, shall have the respective meaning given to that term in such Schedule
1.01 or in the provision of this Assignment or other document, instrument or
agreement referenced in such Schedule 1.01.

        1.02. Rules of Construction. Unless otherwise indicated in this
Assignment or any other Operative Document, the rules of construction set forth
in Schedule 1.02 to the Participation Agreement shall apply to this Assignment
and the other Operative Documents.

SECTION 2.    ASSIGNMENT.

        2.01. Assignment. As security for the Lessor Obligations, Lessor hereby
irrevocably and unconditionally grants, conveys, transfers and assigns to Agent,
for the benefit of the Participants and Agent, all estate, right, title and
interest of Lessor, whether now owned or hereafter acquired, in the Ground
Lease, the Lease Agreement and the Purchase Agreement, including all claims and
rights to the payment of money at any time arising in connection with any
repudiation, rejection or breach of either agreement by Lessee or a trustee or
receiver of Lessee in any bankruptcy, insolvency or similar proceeding.

        2.02. Receipt of Rents, Etc. Lessor hereby irrevocably designates Agent
(or its designee) to receive all Rents and other payments to be made by Lessee
under the Ground Lease, the Lease Agreement and the Purchase Agreement. Lessor
shall direct (and hereby directs) Lessee to deliver to Agent (or its designee),
at its address set forth in the Participation Agreement or at such other address
or to such other Person as Agent shall designate, all such payments, and no
delivery thereof by Lessee shall be of any force or effect unless made to Agent
(or its designee), as herein provided. Lessor and Agent agree that Lessee, in
making such payments to Agent pursuant to the directions contained in this
Assignment and in reliance on such directions shall be deemed to have satisfied
its obligation for such payments under the Lease Agreement.

        2.03. Irrevocability; Supplemental Instruments. Lessor agrees that (a)
this Assignment is irrevocable, (b) Lessor will not take any action under the
Ground Lease, the Lease Agreement or the Purchase Agreement or otherwise which
is inconsistent with this Assignment, (c) any action, assignment, designation or
direction inconsistent herewith shall be void and (d) Lessor will from time to
time execute and deliver all instruments of further assurance and do such
further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Assignment.

                                       2
<PAGE>   260

        2.04. Validity. Lessor represents, warrants, covenants and agrees that
(a) Lessor has not assigned or executed any assignment of, and will not assign
or execute any assignment of, Lessor's estate, right, title or interest in the
Ground Lease, the Lease Agreement or the Purchase Agreement to anyone other than
Agent, (b) any such assignment is void, and (c) Lessor has not taken any action
that impairs the rights of Agent hereunder.

        2.05. Lessor Remains Liable. The assignment made hereby is made for the
purpose of securing the Lessor Obligations only and does not (a) impair or
diminish in any way the obligations of Lessor under the Ground Lease, the Lease
Agreement or the Purchase Agreement or (b) obligate Agent (or its designee) or
any Participant to perform any of the obligations of Lessor under the Ground
Lease, the Lease Agreement or the Purchase Agreement. This Assignment shall not
operate to cause Agent (or its designee) to be regarded as a mortgagee in
possession.

        2.06. Effect of Amendments. If the Ground Lease, the Lease Agreement or
the Purchase Agreement shall be amended, it shall continue to be subject to the
provisions hereof without the necessity of any further act by any of the parties
hereto.

        2.07. Absolute Assignment. Lessor has, subject to and in accordance with
the terms and conditions of this Assignment, assigned and transferred unto Agent
all of Lessor's right, title and interest in and to all Rents and other amounts
now or hereafter payable by Lessee under the Ground Lease, the Lease Agreement
and the Purchase Agreement, it being intended to establish an absolute transfer
and assignment, subject to and in accordance with the terms and conditions of
this Assignment, of all such Rents and other amounts to Agent and not merely to
grant a security interest therein. Subject to the Lease Agreement, Agent (or its
designee) may, in Lessor's name and stead, operate the Property and rent, lease
or let all or any portion of the Property to any party or parties at such rental
and upon such terms as Agent (or its designee) shall, in its discretion,
determine.

        2.08. Receivers. If, notwithstanding the terms of this Assignment, a
petition or order for sequestration of rents, or the appointment of a receiver
or some similar judicial action or order is deemed required under applicable
Oregon law to allow Agent to continue to collect the Rents and other amounts
payable by Lessee under the Ground Lease, the Lease Agreement or the Purchase
Agreement, then it is agreed by Lessor that any proof of claim or similar
document filed by Agent in connection with the breach or rejection of the Ground
Lease, the Lease Agreement or the Purchase Agreement by Lessee thereunder or the
trustee of any lessee under any federal or state bankruptcy, insolvency or other
similar law shall, for the purpose of perfecting Agent's rights, be deemed to
constitute action required under such Oregon law. Upon the occurrence and during
the continuance of an Event of Default, Lessor hereby consents to the
appointment of a receiver for Lessor's interest in the Property without regard
to the solvency of Lessor or to the collateral that may be available for the
satisfaction of the Lessor Obligations.

                                       3
<PAGE>   261

SECTION 3.    MISCELLANEOUS.

        3.01. Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Lessor or Agent under this Assignment shall be given as provided in Paragraph
7.01 of the Participation Agreement.

        3.02. Waivers; Amendments. Any term, covenant, agreement or condition of
this Assignment may be amended or waived only as provided in the Participation
Agreement. No failure or delay by Agent in exercising any right hereunder shall
operate as a waiver thereof or of any other right nor shall any single or
partial exercise of any such right preclude any other further exercise thereof
or of any other right. Unless otherwise specified in any such waiver or consent,
a waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which given.

        3.03. Successors and Assigns. This Assignment shall be binding upon and
inure to the benefit of the Lessor Parties and their permitted successors and
assigns; provided, however, that the Lessor Parties shall not sell, assign or
delegate their respective rights and obligations hereunder except as provided in
the Participation Agreement.

        3.04. No Third Party Rights. Nothing expressed in or to be implied from
this Assignment is intended to give, or shall be construed to give, any Person,
other than the Lessor Parties and their permitted successors and assigns, any
benefit or legal or equitable right, remedy or claim under or by virtue of this
Assignment or under or by virtue of any provision herein.

        3.05. Partial Invalidity. If at any time any provision of this
Assignment is or becomes illegal, invalid or unenforceable in any respect under
the law or any jurisdiction, neither the legality, validity or enforceability of
the remaining provisions of this Assignment nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.

        3.06. Governing Law. This Assignment shall be governed by and construed
in accordance with the laws of the State of California without reference to
conflicts of law rules, except as otherwise provided in Subparagraph 7.14 of the
Participation Agreement.

        3.07. Counterparts. This Assignment may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.

                          [The signature page follows.]

                                       4
<PAGE>   262

        IN WITNESS WHEREOF, Lessor has caused this Assignment to be executed as
of the day and year first above written.

LESSOR:                             ABN AMRO LEASING, INC.

                                            By: _____________________________
                                                Name: _______________________
                                                Title: ______________________

                                       5
<PAGE>   263
                                    EXHIBIT A

                                      LAND
                                  NOVELLUS SITE
                                    PARCEL 2

                              PROPERTY DESCRIPTION

Parcel A:

A parcel of land containing 23.018 Acres, more or less, located in a portion of
the Northeast Quarter of Section 22, Township Two South, Range One West,
Willamette Meridian, City of Tualatin, Washington County, Oregon, being more
particularly described as follows:

Beginning at a 2" Brass Disk in a monument box marking the one-quarter corner
common to Sections 15 and 22; thence South 00 degrees 06' 18" West 30.00 feet to
a point on the south right-of-way line of S.W. Tualatin Road; thence following
the East line of that Parcel of land shown as Parcel 2 on Washington County
Survey #23,036 South 00 degrees 06' 18" West 451.01 feet to the "TRUE POINT OF
BEGINNING" for this described tract; thence South 89 degrees 35' 19" East
1129.99 feet; thence South 00 degrees 24' 41" West 134.46 feet; thence North 89
degrees 35' 19" West 162.59 feet; thence South 00 degrees 24' 41" West 311.68
feet; thence South 89 degrees 35' 19" East 411.63 feet; thence South 00 degrees
24' 41" West 406.45 feet to a point on the north right-of-way line (being 30.00
feet from centerline) of S.W. Leveton Drive; thence following the north
right-of-way line of S.W. Leveton Drive North 89 degree 41' 51" West 48.66 feet
to an angle point in the north right-ofway line of said S.W. Leveton Drive;
thence North 89 degrees 35' 19" West 1325.84 feet to a found 3/4" brass washer
marked "PLS 2351" per survey #23,991 marking the Southeast corner of that said
Parcel of land shown as Parcel 2 on Washington County Survey #23,036; thence
following the East line of said Parcel 2 as shown on Washington County Survey
#23,036 North 00 degrees 06' 18" East 845.79 feet to the "TRUE POINT OF
BEGINNING".

Subject to: All easements, restrictions and rights-of-way of record and those
common and apparent on the land.

                                      A-1
<PAGE>   264

                                    EXHIBIT B

                               LESSEE'S CONSENT TO
            ASSIGNMENT OF GROUND LEASE, LEASE AGREEMENT AND PURCHASE
                                    AGREEMENT

                                 April 18, 2001

ABN AMRO Leasing, Inc.
c/o ABN AMRO Bank N.V.
135 South LaSalle Street, Suite 740
Chicago, IL  60603

ABN AMRO Bank N.V.
  as Agent
Agency Services
208 South LaSalle Street, Suite 1500
Chicago, IL  60604

        1.     Reference is made to the following:

               (a) The Participation Agreement, dated as of April 18, 2001 (the
        "Participation Agreement"), among Novellus Systems, Inc. ("Lessee"), ABN
        AMRO Leasing, Inc. ("Lessor"), the financial institutions listed in
        Schedule I to the Participation Agreement (the "Participants") and ABN
        AMRO Bank N.V., as agent for the Participants (in such capacity,
        "Agent");

               (b) The Ground Lease, dated as of April 18, 2001 (the "Ground
        Lease"), between Lessee and Lessor;

               (c) The Lease Agreement, dated as of April 18, 2001 (the "Lease
        Agreement"), between Lessee and Lessor;

               (d) The Purchase Agreement, dated as of April 18, 2001 (the
        "Purchase Agreement"), between Lessee and Lessor; and

               (e) The Assignment of Ground Lease, Lease Agreement and Purchase
        Agreement, dated as of April 18, 2001 (the "Assignment of Lease"),
        executed by Lessor in favor of Agent.

Unless otherwise indicated, all terms defined in the Participation Agreement
have the same respective meanings when used in this consent ("Consent").

        2. Consent. Lessee hereby consents to the Assignment of Lease.

        3. Payments. Lessee agrees to pay and deliver to Agent (or its designee)
all Rents and other amounts payable by Lessee under the Ground Lease, the Lease
Agreement and the Purchase Agreement in accordance with the terms thereof.
Lessee will not, for any reason
                                       B-1

<PAGE>   265
whatsoever, seek to recover from Agent (or its designee) any moneys paid to
Agent (or its designee) by virtue of the Assignment of Lease except for sums due
and payable to Lessee as expressly provided in the Purchase Agreement.

        4. Lessee's Other Agreements. Lessee hereby further agrees with Lessor
and Agent as follows:

           (a) Lessee agrees (i) to deliver to Agent (or its designee) and
        Lessor, at their addresses set forth in the Participation Agreement or
        at such other addresses as Agent or Lessor, as the case may be, may
        designate, duplicate originals or copies of all notices, undertakings,
        demands, statements, documents and other communications which Lessee is
        required or permitted to deliver pursuant to the Ground Lease, the Lease
        Agreement, the Purchase Agreement or the Assignment of Lease; (ii) that
        any notice delivered or declaration made to Lessee by Agent (or its
        designee) pursuant to the Ground Lease, the Lease Agreement or the
        Purchase Agreement shall be effective as a notice given or declaration
        made to Lessee by Lessor; (iii) that Agent (or its designee) shall not
        by reason of the Assignment of Lease be subject to any liability or
        obligation under the Ground Lease, the Lease Agreement or the Purchase
        Agreement except as set forth in the Assignment of Lease; and (iv) that
        any waiver, consent or approval by Lessor under the Ground Lease, the
        Lease Agreement or the Purchase Agreement shall not be valid unless
        approved in writing by Agent (or its designee).

           (b) Lessee agrees to remain obligated under the Ground Lease, the
        Lease Agreement and the Purchase Agreement in accordance with their
        respective terms, and to take no action to terminate (other than in
        accordance with the terms thereof), annul, rescind or avoid the Ground
        Lease, the Lease Agreement, the Purchase Agreement or this Consent or to
        abate, reduce, offset, suspend or defer or make any counterclaim or
        raise any defense (other than the defense of payment to Agent (or its
        designee)) with respect to the Rents or other amounts payable thereunder
        or to cease paying such amounts to Agent (or its designee) as provided
        herein.

           (c) Lessee hereby agrees that upon the occurrence of any Event of
        Default, Agent (or its designee) shall have the right to deliver a
        notice of default under the Lease Agreement, which shall be effective
        for all purposes under the Lease Agreement as if sent by Lessor.

           (d) Lessee shall notify Agent (or its designee) at its address
        specified in the Participation Agreement, or such other address as Agent
        may designate, of any default by Lessor under the Ground Lease or the
        Lease Agreement and agrees that no such default shall entitle Lessee to
        terminate (other than in accordance with the terms of the Ground Lease
        or the Lease Agreement, as the case may be), annul, rescind or avoid the
        Ground Lease or the Lease Agreement, as the case may be, or to reduce or
        abate the Rents or other amounts payable thereunder.

        5. Amendment or Termination; Agent's Designation. Lessee agrees that it
will not, unilaterally or by agreement, subordinate, amend, supplement, modify,
extend (except in accordance with the express terms thereof), discharge, waive
or terminate (other than in

                                      B-2
<PAGE>   266

accordance with the terms thereof) the Ground Lease, the Lease Agreement, the
Purchase Agreement or this Consent without Agent's prior written consent, and
that any attempted subordination, amendment, supplement, modification,
extension, discharge, waiver or termination in violation of this Paragraph 5
without such consent shall be null and void. In the event that the Ground Lease,
the Lease Agreement or the Purchase Agreement shall be amended or supplemented
as herein permitted, the Ground Lease, the Lease Agreement or the Purchase
Agreement, as so amended or supplemented, shall continue to be subject to the
provisions of the Assignment of Lease and this Consent without the necessity of
any further act by any of the parties thereto or hereto.

        6. Continuing Obligations of Lessor and Lessee. Neither the execution
and delivery of the Assignment of Lease, nor any action or inaction on the part
of Agent shall impair or diminish any obligations of Lessor or Lessee under the
Ground Lease, the Lease Agreement or the Purchase Agreement, and shall not
impose on Agent (or its designee) any such obligations, nor shall it impose on
Agent (or its designee) a duty to produce Rents or cause Agent to be a mortgagee
or pledgee in possession for any purpose. Except as specifically set forth in
this Consent, none of the terms of the Assignment of Lease shall impose upon
Lessee any greater obligations than those set forth in the Ground Lease, the
Lease Agreement, the Purchase Agreement and the other Operative Documents.

        7. Partial Invalidity. If at any time any provision of this Consent is
or becomes illegal, invalid or unenforceable in any respect under the law of any
jurisdiction, neither the legality, validity or enforceability of the remaining
provisions of this Consent nor the legality, validity or enforceability of such
provision under the law of any other jurisdiction shall in any way be affected
or impaired thereby.

        8. Governing Law. This Consent shall be governed by and construed in
accordance with the laws of the State of California without reference to
conflicts of law rules.

                          [The signature page follows.]

                                      B-3
<PAGE>   267

        IN WITNESS WHEREOF, Lessee has executed this Consent on the date set
forth above.

LESSEE:                             NOVELLUS SYSTEMS, INC.

                                            By: _____________________________
                                                Name: _______________________
                                                Title: ______________________

                                      B-4

<PAGE>   268
                                    EXHIBIT J

                              LESSOR DEED OF TRUST

                                      J-1
<PAGE>   269

RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:

Thomas Y. Coleman, Esq.
Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California  94111

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                            LINE OF CREDIT INSTRUMENT

                CONSTRUCTION DEED OF TRUST AND SECURITY AGREEMENT

                           DATED AS OF APRIL 18, 2001

                                       BY

                             ABN AMRO LEASING, INC.,
                                   AS GRANTOR

                                       TO

                             CHICAGO TITLE COMPANY,
                                   AS TRUSTEE

                               FOR THE BENEFIT OF

                          ABN AMRO BANK N.V., AS AGENT,
                                 AS BENEFICIARY

                        Relating to Property situated in:
                 City of Tualatin, County of Washington, Oregon

-------------------------------------------------------------------------------
        MATURITY DATE: APRIL, 2006
        MAXIMUM PRINCIPAL AMOUNT TO BE ADVANCED: $170,000,000 (which may be
        exceeded to complete construction pursuant to Oregon Revised Statute
        Section 86.155):
-------------------------------------------------------------------------------

THIS CONSTRUCTION DEED OF TRUST AND SECURITY AGREEMENT IS JUNIOR AND SUBORDINATE
TO THAT CERTAIN LEASE AGREEMENT, CONSTRUCTION DEED OF TRUST WITH ASSIGNMENT OF
RENTS, SECURITY AGREEMENT AND FIXTURE FILING DATED OF EVEN DATE HEREWITH BETWEEN
NOVELLUS SYSTEMS, INC. AND ABN AMRO LEASING, INC.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<PAGE>   270

                            LINE OF CREDIT INSTRUMENT

                      CONSTRUCTION DEED OF TRUST AND SECURITY AGREEMENT

        THIS CONSTRUCTION DEED OF TRUST AND SECURITY AGREEMENT (this "Deed of
Trust" herein), dated as of April 18, 2001, is executed by:

               (1) ABN AMRO LEASING, INC., an Illinois corporation, as
        trustor/grantor ("Lessor") with an address at 135 South LaSalle Street,
        Suite 740, Chicago, IL 60603;

                                       to

               (2) CHICAGO TITLE COMPANY, as trustee ("Trustee");

                                   in favor of

               (3) ABN AMRO BANK N.V., with an address at Agency Services, 208
        South LaSalle Street, Suite 1500, Chicago, Illinois, 60604, in its
        capacity as Agent, as beneficiary (in such capacity, "Agent"), under the
        Participation Agreement, dated as of April 18, 2001 (as amended,
        supplemented or otherwise modified from time to time, the "Participation
        Agreement"), among Novellus Systems, Inc., a California corporation
        ("Lessee"), Lessor, Agent, and the financial institutions that are from
        time to time parties to the Participation Agreement (the
        "Participants").

SECTION 1.    INTERPRETATION.

        1.01. Definitions. Unless otherwise indicated in this Deed of Trust or
any other Operative Document, each term set forth in Schedule 1.01 to the
Participation Agreement, when used in this Deed of Trust or any other Operative
Document, shall have the respective meaning given to that term in such Schedule
1.01 or in the provision of this Deed of Trust or other document, instrument or
agreement referenced in such Schedule 1.01. All terms defined in the Oregon
Uniform Commercial Code ("UCC") shall have the respective meanings given to
those terms in the UCC.

        1.02. Rules of Construction. Unless otherwise indicated in this Deed of
Trust or any other Operative Document, the rules of construction set forth in
Schedule 1.02 to the Participation Agreement shall apply to this Deed of Trust
and the other Operative Documents.

SECTION 2.    GRANT IN TRUST.

        2.01. Property. To secure payment of the Secured Obligations (as defined
below), Lessor does hereby GRANT, CONVEY, SELL, TRANSFER, ASSIGN AND SET OVER
UNTO TRUSTEE, IN TRUST FOR THE BENEFIT OF AGENT, WITH POWER OF SALE

<PAGE>   271

AND RIGHT OF ENTRY AND POSSESSION, all of Lessor's right, title and interest,
whether now owned or hereafter acquired, in or to the following property and
rights listed below (hereinafter collectively referred to as the "Property") to
the extent of Lessor's estate, right, title and interest therein, thereto or
thereunder:

               (a) All lots, pieces, tracts and parcels of land described in
        Exhibit A together with such additional parcels of real property as may
        be added to Exhibit A from time to time during the term hereof
        (including Lessee's leasehold interest in the Property under the Ground
        Lease) (the "Land");

               (b) All Improvements and Appurtenant Rights;

               (c) All Related Goods (including those described in Exhibit B and
        in each Exhibit B Supplement), Related Permits and Related Agreements;
        and

               (d) All accessions and accretions to and replacements and
        substitutions for the foregoing.

SECTION 3.     OBLIGATIONS SECURED.

        3.01. Obligations Secured. Lessor makes this grant and assignment for
the purpose of securing the following obligations (hereinafter, the "Secured
Obligations"):

               (a) Full and punctual payment, performance and observance by
        Lessor of the Lessor Obligations, the final maturity date of which is
        April 23, 2006; and

               (b) All modifications, extensions and renewals of any of the
        obligations secured hereby, however evidenced, including, without
        limitation: (i) modifications of the required payment, deferring or
        accelerating payment dates wholly or partly; or (ii) amendments,
        modifications, extensions or renewals of this Deed of Trust, the
        Participation Agreement or any of the other Operative Documents.

SECTION 4.    REPRESENTATIONS, WARRANTIES, COVENANTS AND DUTIES OF THE PARTIES.

        4.01. Representations and Warranties. Lessor represents and warrants to
Agent as follows:

               (a) Lessor is the legal and beneficial owner of a leasehold
        interest in the Land and the owner of all other Property (or, in the
        case of after-acquired Property, at the time Lessor acquires rights in
        the Property, will be the legal and beneficial owner thereof).

               (b) Lessor has not transferred to any other Person any of its
        right, title or interest in the Property, whether by way of Lien or
        otherwise.

                                       2
<PAGE>   272

               (c) Lessor's chief executive office is located at 135 South
        LaSalle Street, Suite 740, Chicago, IL 60603.

        4.02.  Covenants. Lessor hereby covenants to Agent as follows:

               (a) Lessor shall promptly procure, execute and deliver to Agent
        all documents, instruments and agreements and perform all acts which are
        necessary or desirable, or which Agent may request, to establish,
        maintain, preserve, protect and perfect the Property, the Lien granted
        to Agent therein and the first priority of such Lien or to enable Agent
        to exercise and enforce its rights and remedies hereunder with respect
        to any Property.

               (b) Lessor shall not sell, transfer or assign any of its right,
        title or interest in the Property to any Person (other than Agent),
        whether by way of Lien or otherwise, except in accordance with the
        Purchase Agreement.

               (c) Without prompt written notice to Agent, Lessor shall not
        change Lessor's name or chief executive office.

        4.03.  Damages; Insurance and Condemnation Proceeds.

               (a) Lessor shall give Agent prompt written notice of the
        occurrence of any casualty affecting, or the institution of any
        proceedings for eminent domain or for the condemnation of, the Property
        or any portion thereof. Agent may participate in any such claims or
        proceedings, and Agent is hereby authorized, in its own name or in
        Lessor's name, to adjust any loss covered by insurance or any
        condemnation claim or cause of action, and to settle or compromise any
        claim or cause of action in connection therewith, and Lessor shall from
        time to time deliver to Agent any and all further assignments and other
        instruments required to permit such participation. The provisions
        regarding the adjustment of any loss covered by insurance or any
        condemnation claim or cause of action, and to settlement or compromise
        of any claim or cause of action in connection therewith provided in this
        Subparagraph 4.03(a) are subject to the adjustment, settlement and
        compromise provisions set forth in the Lease Agreement. In the event of
        any conflict, the adjustment, settlement and compromise provisions as
        provided in the Lease Agreement shall govern.

               (b) The following rights, claims and amounts are hereby
        absolutely and irrevocably assigned to and shall be paid to Agent: (i)
        all awards of damages and all other compensation payable directly or
        indirectly by reason of a condemnation or proposed condemnation for
        public or private use affecting all or any part of, or any interest in,
        the Property; (ii) all other claims and awards for damages to or
        decrease in value of all or any part of, or any interest in, the
        Property; (iii) all proceeds of any insurance policies payable by reason
        of loss sustained to all or any part of the Property; and (iv) all
        interest which may accrue on any of the foregoing (collectively, "Loss
        Proceeds"). The provisions regarding Loss Proceeds provided in this
        Subparagraph 4.03(b) are subject to the insurance and condemnation
        provisions set forth in the Lease Agreement. In the event of

                                       3
<PAGE>   273

        any conflict, the insurance and condemnation provisions as provided in
        the Lease Agreement shall govern.

        4.04. Acceptance of Trust; Powers and Duties of Trustee. Trustee accepts
this trust when this Deed of Trust is recorded. From time to time upon written
request of Agent and presentation of this Deed of Trust, or a certified copy
thereof, for endorsement, and without affecting the personal liability of any
person for payment of any indebtedness or performance of any Secured Obligation,
Trustee may, without liability therefor and without notice: (a) reconvey all or
any part of the Property; (b) consent to the making of any map or plat thereof;
(c) join in granting any easement thereon; (d) join in any declaration of
covenants and restrictions; or (e) join in any extension agreement or any
agreement subordinating the lien or charge hereof. Except as may otherwise be
required by applicable law, Trustee or Agent may from time to time apply to any
court of competent jurisdiction for aid and direction in the execution of the
trusts hereunder and the enforcement of the rights and remedies available
hereunder, and Trustee or Agent may obtain orders or decrees directing or
confirming or approving acts in the execution of said trusts and the enforcement
of said remedies. Trustee has no obligation to notify any party of any pending
sale or any action or proceeding (including, without limitation, actions in
which Lessor, Agent or Trustee shall be a party) unless held or commenced and
maintained by Trustee under this Deed of Trust. Trustee shall not be obligated
to perform any act required of it hereunder unless the performance of the act is
requested in writing and Trustee is reasonably indemnified and held harmless
against loss, cost, liability and expense.

        4.05. Substitution of Trustee. From time to time, by a writing signed
and acknowledged by Agent and recorded in the Office of the Recorder of the
County in which the Property is situated, Agent may appoint another trustee to
act in the place and stead of Trustee or any successor. Such writing shall set
forth any information required by law. The recordation of such instrument of
substitution shall discharge Trustee herein named and shall appoint the new
trustee as the trustee hereunder with the same effect as if originally named
trustee herein. A writing recorded pursuant to the provisions of this paragraph
shall be conclusive proof of the proper substitution of such new trustee.

        4.06. Partial and Full Reconveyance. Agent may release, for such
consideration or none, as it may require, any portion of the Property without,
as to the remainder of the Property, in any way impairing or affecting the lien,
security interest and priority herein provided to the Agent as to any other lien
holder or secured party. Further, upon satisfaction in full of the Secured
Obligations, a sale of all or a portion of the Property in accordance with the
terms of the Purchase Agreement, or upon Agent's written request, and upon
surrender of this Deed of Trust or certified copy thereof and any note,
instrument or instruments setting forth all obligations secured hereby to
Trustee for cancellation, Trustee shall reconvey, without warranty, the Property
or that portion thereof then held hereunder. The recitals of any matters or
facts in any reconveyance executed hereunder shall be conclusive proof of the
truthfulness thereof. To the extent permitted by law, the reconveyance may
describe the grantee as "the person or persons legally entitled thereto".
Neither Agent nor Trustee shall have any duty to determine the rights of persons
claiming to be rightful grantees of any reconveyance.

        4.07. Releases, Extensions, Modifications and Additional Security. Agent
may, from time to time, release any person or entity from liability for the
payment or performance of any

                                       4
<PAGE>   274

Secured Obligation, take any action or make any agreement extending the maturity
or otherwise altering the terms or increasing the amount of any Secured
Obligation, or accept additional security or release all or a portion of the
Property and other security for the Secured Obligations. None of the foregoing
actions shall release or impair the priority of the lien of this Deed of Trust
upon the Property.

SECTION 5.     DEFAULT; REMEDIES.

        5.01.  Event of Default. The occurrence of any of the following events
shall be deemed an event of default ("Event of Default") hereunder:

               (a) The occurrence of an Event of Default as defined in the Lease
        Agreement; or

               (b) Lessor shall fail to observe, perform or discharge any of
        Lessor's Obligations, and (i) such failure shall remain uncured for
        thirty (30) days after written notice thereof shall have been given to
        Lessor by Agent, or (ii) if such failure is of such a nature that it
        cannot be cured within such thirty (30) day period, Lessor shall fail to
        commence to cure such failure within such thirty (30) day period or
        shall fail to diligently prosecute such curative action thereafter.

        5.02.  Rights and Remedies. At any time after the occurrence and during
the continuance of an Event of Default, Agent and Trustee shall each have all of
the following rights and remedies:

               (a) Appointment of a Receiver. To apply to any court of competent
        jurisdiction for, and obtain appointment of, a receiver for the
        Property.

               (b) Specific Performance. To bring an action in any court of
        competent jurisdiction to obtain specific enforcement of any of the
        covenants or agreements of Lessor in this Deed of Trust or any of the
        other Operative Documents.

               (c) Collection of Issues and Profits. To collect Issues and
        Profits.

               (d) Protection of Property. To enter, take possession of, manage
        and operate all or any part of the Property or take any other actions
        which it reasonably determines are necessary to protect the Property and
        the rights and remedies of Agent under this Deed of Trust and the other
        Operative Documents, including (i) taking and possessing all of Lessor's
        books and records; (ii) entering into, enforcing, modifying, or
        canceling subleases on such terms and conditions as Agent may consider
        proper; (iii) obtaining and evicting tenants; (iv) fixing or modifying
        sublease rents; (v) collecting and receiving any payment of money owing
        to Lessee; (vi) completing any unfinished Improvements; and/or (vii)
        contracting for and making repairs and alterations.

               (e) Uniform Commercial Code Remedies. To exercise any or all of
        the remedies granted to a secured party under the UCC.

                                       5
<PAGE>   275

               (f) Judicial Foreclosure. To bring an action in any court of
        competent jurisdiction to foreclose the security interest in the
        Property granted to Agent by this Deed of Trust or any of the other
        Operative Documents.

               (g) Power of Sale. To cause some or all of the Property,
        including any Personal Property Collateral, to be sold or otherwise
        disposed of in any combination and in any manner permitted by applicable
        Governmental Rules.

                   (i) Sales of Personal Property. Agent may dispose of any
               Personal Property Collateral separately from the sale of Real
               Property Collateral, in any manner permitted by Chapter 79 of the
               UCC, including any public or private sale, or in any manner
               permitted by any other applicable Governmental Rule. In
               connection with any such sale or other disposition, Lessor agrees
               that the following procedures constitute a commercially
               reasonable sale:

                       (A) Agent shall mail written notice of the sale to Lessor
                   not later than thirty (30) days prior to such sale.

                       (B) Once per week during the three weeks immediately
                   preceding such sale, Agent will publish notice of the sale in
                   a local daily newspaper of general circulation.

                       (C) Upon receipt of any written request, Agent will make
                   the Property available to any bona fide prospective purchaser
                   for inspection during reasonable business hours.

                       (D) Notwithstanding, Agent shall be under no obligation
                   to consummate a sale if, in its judgment, none of the offers
                   received by it equals the fair value of the Property offered
                   for sale.

                       (E) If Agent so requests, Lessor shall assemble all of
                   the Personal Property Collateral and make it available to
                   Agent at the site of the Land. Regardless of any provision of
                   this Deed of Trust or any other Operative Document, Agent
                   shall not be considered to have accepted any property other
                   than cash or immediately available funds in satisfaction of
                   any Lessor Obligation, unless Agent has given express written
                   notice of its election of that remedy in accordance with UCC
                   Section 79505.

               The foregoing procedures do not constitute the only procedures
               that may be commercially reasonable.

                   (ii) Agent's Sales of Real Property or Mixed Collateral.
               Agent may choose to dispose of some or all of the Property which
               consists solely of Real Property Collateral in any manner then
               permitted by applicable Governmental Rules, including, without
               limitation, a nonjudicial trustee's sale. In its discretion,
               Agent may also or alternatively choose to dispose of some or all
               of the Property, in any combination consisting of both Real
               Property Collateral and Personal Property Collateral, together in
               one sale to be held in accordance with the law and

                                       6
<PAGE>   276

               procedures applicable to real property, as permitted by Oregon
               Revised Statute ("ORS") Section 79.5010(4). Lessor agrees that
               such a sale of Personal Property Collateral together with Real
               Property Collateral constitutes a commercially reasonable sale of
               the Personal Property Collateral. (For purposes of this power of
               sale, either a sale of Real Property Collateral alone, or a sale
               of both Real Property Collateral and Personal Property Collateral
               together in accordance with ORS Section 79.5010(4), will
               sometimes be referred to as an "Agent's Sale.")

                       (A) Before any Agent's Sale, Agent shall give such notice
                   of default and election to sell as may then be required by
                   applicable Governmental Rules.

                       (B) When all time periods then legally mandated have
                   expired, and after such notice of sale as may then be legally
                   required has been given, Agent shall sell the Property being
                   sold at a public auction to be held at the time and place
                   specified in the notice of sale.

                       (C) Agent shall have no obligation to make demand on
                   Lessor before any Agent's Sale.

                       (D) From time to time in accordance with then applicable
                   law, Agent may postpone any Agent's Sale by public
                   announcement at the time and place noticed for that sale.

                       (E) At any Agent's Sale, Agent shall sell to the highest
                   bidder at public auction for cash in lawful money of the
                   United States.

                       (F) Agent shall execute and deliver to the purchaser(s) a
                   deed or deeds conveying the Property being sold without any
                   covenant or warranty whatsoever, express or implied. The
                   recitals in any such deed of any matters or facts, including
                   any facts bearing upon the regularity or validity of any
                   Agent's Sale, shall be conclusive proof of their
                   truthfulness. Any such deed shall be conclusive against all
                   Persons as to the facts recited in it.

            (h)    Foreclosure Sales.

                   (i) Single or Multiple. If the Property consists of more than
            one lot, parcel or item of property, Agent may:

                       (A) Designate the order in which the lots, parcels and/or
                   items shall be sold or disposed of or offered for sale or
                   disposition; and

                       (B) Elect to dispose of the lots, parcels and/or items
                   through a single consolidated sale or disposition to be held
                   or made under the power of sale granted under this Deed of
                   Trust, or in connection with judicial proceedings, or by
                   virtue of a judgment and decree of foreclosure and sale; or
                   through two or more such sales or dispositions; or in any
                   other manner

                                       7
<PAGE>   277

                   Agent may deem to be in its best interests (any such sale or
                   disposition, a "Foreclosure Sale;" any two or more,
                   "Foreclosure Sales").

              If Agent chooses to have more than one Foreclosure Sale, Agent at
              its option may cause the Foreclosure Sales to be held
              simultaneously or successively, on the same day, or on such
              different days and at such different times and in such order as it
              may deem to be in its best interests. No Foreclosure Sale shall
              terminate or affect the security interests granted to Agent in the
              Property by this Deed of Trust on any part of the Property which
              has not been sold, until all of the Lessor Obligations have been
              performed in full.

                   (ii) Credit Bids. At any Foreclosure Sale, any Person,
              Participant or Agent may bid for and acquire the Property or any
              part of it to the extent permitted by then applicable
              Governmental Rules. Instead of paying cash for that property,
              Agent may settle for the purchase price by crediting the sales
              price of the Property against the Lessor Obligations in any order
              and proportions as Agent in its sole discretion may choose.

              (i) Other Rights and Remedies. To exercise any other right, power
        or remedy permitted to it by any applicable Governmental Rule, either by
        suit in equity or by action at law, or both.

        5.03. Remedies Cumulative. The rights and remedies of Agent under this
Deed of Trust and the other Operative Documents are cumulative and may be
exercised singularly, successively, or together.

        5.04. No Cure or Waiver. The exercise by Agent of any of its other
rights and remedies under this Deed of Trust or any other Operative Document
(including the collection of Issues and Profits) shall not constitute a cure or
waiver of any Event of Default or nullify the effect of any notice of default or
sale, unless and until all Lessor Obligations are performed in full.

        5.05. Exercise of Rights and Remedies. The rights and remedies provided
to Agent under this Deed of Trust may be exercised by Agent itself, by a
court-appointed receiver or by any other Person appointed by any of the
foregoing to act on its behalf. All of the benefits afforded to Agent under this
Deed of Trust and the other Operative Documents shall accrue to the benefit of
the Participants to the extent provided in Subparagraph 2.02(c) of the
Participation Agreement.

SECTION 6.    MISCELLANEOUS.

        6.01. Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Lessor or Agent under this Deed of Trust shall be given as provided in Paragraph
7.01 of the Participation Agreement.

        6.02. Waivers; Amendments. Any term, covenant, agreement or condition of
this Deed of Trust may be amended or waived only as provided in the
Participation Agreement. No failure or delay by Agent in exercising any right
hereunder shall operate as a waiver thereof or of any

                                       8
<PAGE>   278

other right nor shall any single or partial exercise of any such right preclude
any other further exercise thereof or of any other right. Unless otherwise
specified in any such waiver or consent, a waiver or consent given hereunder
shall be effective only in the specific instance and for the specific purpose
for which given.

        6.03. Successors and Assigns. This Deed of Trust shall be binding upon
and inure to the benefit of the Lessor Parties and their permitted successors
and assigns; provided, however, that the Lessor Parties shall not sell, assign
or delegate their respective rights and obligations hereunder except as provided
in the Participation Agreement.

        6.04. No Third Party Rights. Nothing expressed in or to be implied from
this Deed of Trust is intended to give, or shall be construed to give, any
Person, other than the Lessor Parties and their permitted successors and
assigns, any benefit or legal or equitable right, remedy or claim under or by
virtue of this Deed of Trust or under or by virtue of any provision herein.

        6.05. Partial Invalidity. If at any time any provision of this Deed of
Trust is or becomes illegal, invalid or unenforceable in any respect under the
law or any jurisdiction, neither the legality, validity or enforceability of the
remaining provisions of this Deed of Trust nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.

        6.06. Governing Law. This Deed of Trust shall be governed by and
construed in accordance with the laws of the State of California without
reference to conflicts of law rules, except as otherwise provided in
Subparagraph 7.14 of the Participation Agreement.

        6.07. Counterparts. This Deed of Trust may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.

        6.08. Further Assurances. Lessor shall, upon demand by Agent or Trustee,
execute, acknowledge (if appropriate) and deliver any and all documents and
instruments and do or cause to be done all further acts reasonably necessary or
appropriate to effectuate the provisions hereof.

        6.09. Merger. No merger shall occur as a result of Agent's acquiring any
other estate in, or any other lien on, the Property unless Agent consents to a
merger in writing.

        6.10. Waiver of Marshalling Rights. Lessor, for itself and for all
parties claiming through or under Lessor, and for all parties who may acquire a
lien on or interest in the Property, hereby waives all rights to have the
Property and/or any other property which is now or later may be security for any
Secured Obligation marshalled upon any foreclosure of this Deed of Trust or on a
foreclosure of any other security for any of the Secured Obligations.

        6.11. Exhibits. Exhibit A and Exhibit B are incorporated into this Deed
of Trust by this reference.

        6.12. Oregon Recitals and Provisions.

                                       9
<PAGE>   279

              (a)  Non-residential Trust Deed; Business Purpose. Lessee as
                   grantor warrants that this agreement, as a deed of trust or
                   trust deed under Oregon law, is not and will not at anytime
                   constitute a residential trust deed, as that term is defined
                   in ORS Section 86.705 or its successor statutes. Lessee
                   warrants that it is engaging in t his transaction exclusively
                   for business, commercial or investment purposes.

              (b)  Statutory Notice Concerning Insurance. Effective January 1,
                   1996, Chapter 313 of Oregon Laws 1995 amends ORS Section
                   746.201 to require that in loans in which the lender has the
                   right to purchase insurance in the event the borrower fails
                   to carry insurance, the loan document must contain a warning
                   in substantially the following form in 10-point type:

                                    "WARNING

                   Unless you provide us with evidence of the insurance coverage
                   as required by our contract or loan agreement, we may
                   purchase insurance at your expense to protect our interest.
                   This insurance may, but need not, also protect your interest.
                   If the collateral becomes damaged, the coverage we purchase
                   may not pay any claim you make or any claim made against you.
                   You may later cancel this coverage by providing evidence that
                   you have obtained property coverage elsewhere.

                   You are responsible for the cost of any insurance purchased
                   by us. The cost of this insurance may be added to your
                   contract or loan balance. If the cost is added to your
                   contract or loan balance, the interest rate on the underlying
                   contract or loan will apply to this added amount. The
                   effective date of coverage may be the date your prior
                   coverage lapsed or the date you failed to provide proof of
                   coverage.

                   The coverage we purchase may be considerably more expensive
                   than insurance you can obtain on your own and may not satisfy
                   any need for property damage coverage or any mandatory
                   liability insurance requirements imposed by applicable law."

               (c) Statutory Notice Concerning Written Agreements. UNDER OREGON
                   LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY
                   LENDERS AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER
                   CREDIT EXTENSIONS WHICH ARE NOT FOR PERSONAL, FAMILY OR
                   HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
                   RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE
                   SIGNED BY LENDERS TO BE ENFORCEABLE.

               (d) Security Agreement. For purposes of provisions of this
                   instrument related to the creation and enforcement of this
                   Deed of Trust as a security

                                       10
<PAGE>   280

                   agreement, Lessor is the debtor and Agent is the secured
                   party, and the collateral covered by the security interest in
                   favor of Agent is all or any portion of the Property, the
                   Loss Proceeds and other collateral granted to Trustee or
                   Agent hereunder that may be deemed to be personal property
                   under applicable state law. The mailing address of the debtor
                   (Lessor) and of the secured party (Agent) from whom
                   information can be obtained about such security interest are
                   as set forth on page 1 of this instrument.

                          [The signature page follows.]

                                       11
<PAGE>   281

        IN WITNESS WHEREOF, Lessor has executed this Deed of Trust as of the day
and year set forth above.

                                            ABN AMRO LEASING, INC.

                                            By:___________________________
                                               Name:______________________
                                               Title:_____________________

                      (ALL SIGNATURES MUST BE ACKNOWLEDGED)

                                       12
<PAGE>   282

STATE OF CALIFORNIA   )
                      )
COUNTY OF ____________)

        On _____________, ____ before me, _______________________, a Notary
Public in and for the State of California , personally appeared
_______________________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they
executed the same in his/her/their authorized capacity(ies), and that by
his/her/their signature(s) on the instrument the person(s), or the entity upon
behalf of which the person(s) acted, executed the instrument.

               WITNESS my hand and official seal.

               [SEAL]

<PAGE>   283

                                    EXHIBIT A

                          LEGAL DESCRIPTION OF THE LAND
                                  NOVELLUS SITE
                                    PARCEL 2

Parcel A:

A parcel of land containing 23.018 Acres, more or less, located in a portion of
the Northeast Quarter of Section 22, Township Two South, Range One West,
Willamette Meridian, City of Tualatin, Washington County, Oregon, being more
particularly described as follows:

Beginning at a 2" Brass Disk in a monument box marking the one-quarter corner
common to Sections 15 and 22; thence South 00 degrees 06' 18" West 30.00 feet to
a point on the south right-of-way line of S.W. Tualatin Road; thence following
the East line of that Parcel of land shown as Parcel 2 on Washington County
Survey #23,036 South 00 degrees 06' 18" West 451.01 feet to the "TRUE POINT OF
BEGINNING" for this described tract; thence South 89 degrees 35' 19" East
1129.99 feet; thence South 000 24' 41" West 134.46 feet; thence North 89 degrees
35' 19" West 162.59 feet; thence South 00 degrees 24' 41" West 311.68 feet;
thence South 89 degrees 35' 19" East 411.63 feet; thence South 00 degrees 24'
41" West 406.45 feet to a point on the north right-of-way line (being 30.00 feet
from centerline) of S.W. Leveton Drive; thence following the north right-of-way
line of S.W. Leveton Drive North 89 degrees 41' 51" West 48.66 feet to an angle
point in the north right-ofway line of said S.W. Leveton Drive; thence North 89
degrees 35' 19" West 1325.84 feet to a found 3/4" brass washer marked "PLS 2351"
per survey #23,991 marking the Southeast corner of that said Parcel of land
shown as Parcel 2 on Washington County Survey #23,036; thence following the East
line of said Parcel 2 as shown on Washington County Survey #23,036 North 00
degrees 06' 18" East 845.79 feet to the "TRUE POINT OF BEGINNING".

Subject to: All easements, restrictions and rights-of-way of record and those
common and apparent on the land.

                                       A-1

<PAGE>   284

                                    EXHIBIT B

                      RELATED GOODS, PERMITS AND AGREEMENTS

                                      NONE
<PAGE>   285
                                    EXHIBIT K

                            LESSOR SECURITY AGREEMENT

                                      K-1
<PAGE>   286

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                            LESSOR SECURITY AGREEMENT

                                       BY

                             ABN AMRO LEASING, INC.

                                   IN FAVOR OF

                               ABN AMRO BANK N.V.,
                                    AS AGENT

                                 APRIL 18, 2001

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<PAGE>   287

                            LESSOR SECURITY AGREEMENT

        THIS LESSOR SECURITY AGREEMENT (this "Agreement" herein), dated as of
April 18, 2001, is executed by:

              (1) ABN AMRO LEASING, INC., an Illinois corporation ("Lessor"),

                                   in favor of

              (2) ABN AMRO BANK N.V., as agent for the Participants under the
        Participation Agreement referred to in Recital B below (in such
        capacity, "Agent").

                                    RECITALS

        A. Novellus Systems, Inc., a California corporation ("Lessee"), has
requested Lessor and the financial institutions which are "Participants" under
the Participation Agreement referred to in Recital B below (such financial
institutions to be referred to collectively as the "Participants") to provide to
Lessee a certain lease facility pursuant to which:

           (1) Lessor would (a) lease from Lessee certain land currently owned
        by Lessee, (b) sublease to Lessee such land and lease to Lessee certain
        improvements to be constructed on such land, (c) appoint Lessee as
        Lessor's agent to make such improvements (which improvements will be
        owned by Lessor), (d) make advances to finance such improvements and to
        pay certain related expenses and (e) grant to Lessee the right to
        purchase such improvements; and

           (2) The Participants would participate in such lease facility by (a)
        funding the purchase price and other advances to be made by Lessor and
        (b) acquiring participation interests in the rental and certain other
        payments to be made by Lessee.

        B. Pursuant to a Participation Agreement dated as of April 18, 2001 (the
"Participation Agreement") among Lessee, Lessor, the Participants and Agent,
Lessor and the Participants have agreed to provide such lease facility upon the
terms and subject to the conditions set forth therein, including, without
limitation, the execution and delivery of this Agreement.

                                    AGREEMENT

        NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:

SECTION 1.    INTERPRETATION.

        1.01. Definitions. Unless otherwise indicated in this Agreement or any
other Operative Document, each term set forth in Schedule 1.01 to the
Participation Agreement, when used in

                                       1
<PAGE>   288

this Agreement or any other Operative Document, shall have the respective
meaning given to that term in such Schedule 1.01 or in the provision of this
Agreement or other document, instrument or agreement referenced in such Schedule
1.01. All terms defined in the UCC shall have the respective meanings given to
those terms in the UCC.

        1.02. Rules of Construction. Unless otherwise indicated in this
Agreement or any other Operative Document, the rules of construction set forth
in Schedule 1.02 to the Participation Agreement shall apply to this Agreement
and the other Operative Documents.

SECTION 2.    GRANT OF SECURITY INTEREST.

        2.01. Grant. As security for the Lessor Obligations, Lessor hereby
irrevocably and unconditionally pledges and assigns to Agent, for the benefit of
the Participants and Agent, and grants to Agent, for the benefit of the
Participants and Agent, a security interest in all estate, right, title and
interest of Lessor, whether now owned or hereafter acquired, in and to the
following property (herein, collectively and severally, the "Lessor
Collateral"):

              (a) Operative Documents. The Participation Agreement, the
        Construction Agency Agreement, the Purchase Agreement, the Lessee
        Security Documents and all other Operative Documents; all exhibits,
        schedules and other attachments thereto; and all documents, instruments
        or agreements issued or executed in replacement thereof; each as
        amended, modified and supplemented from time to time and in effect at
        any given time;

              (b) Collateral. All Collateral for the Lessee Obligations under
        the Operative Documents; and

              (c) Proceeds. All proceeds of the foregoing (including, without
        limitation, whatever is receivable or received when Lessor Collateral or
        proceeds is sold, collected, exchanged, returned, substituted or
        otherwise disposed of, whether such disposition is voluntary or
        involuntary, including rights to payment and return premiums and
        insurance proceeds under insurance with respect to any Lessor
        Collateral, and all rights to payment with respect to any cause of
        action affecting or relating to the Lessor Collateral).

SECTION 3.    REPRESENTATIONS, WARRANTIES AND COVENANTS OF LESSOR.

        3.01. Representations and Warranties. Lessor represents and warrants to
Agent and the Participants as follows:

              (a) Lessor is the legal and beneficial owner of the Lessor
        Collateral (or, in the case of after-acquired Lessor Collateral, at the
        time Lessor acquires rights in the Lessor Collateral, will be the legal
        and beneficial owner thereof).

              (b) Lessor has not transferred to any other Person any of its
        right, title or interest in the Lessor Collateral, whether by way of
        Lien or otherwise.

                                       2
<PAGE>   289

              (c) Lessor's chief executive office is located at 135 South
        LaSalle Street, Suite 740, Chicago, Illinois 60603.

        3.02. Covenants. Lessor hereby covenants to Agent and the Participants
as follows:

              (a) Lessor shall promptly procure, execute and deliver to Agent
        all documents, instruments and agreements and perform all acts which are
        necessary or desirable, or which Agent may request, to establish,
        maintain, preserve, protect and perfect the Lessor Collateral, the Lien
        granted to Agent therein and the first priority of such Lien or to
        enable Agent to exercise and enforce its rights and remedies hereunder
        with respect to any Lessor Collateral.

               (b) Lessor shall not sell, transfer or assign any of its right,
        title or interest in the Lessor Collateral to any Person (other than
        Agent), whether by way of Lien or otherwise, except in accordance with
        the Purchase Agreement.

               (c) Without prompt written notice to Agent, Lessor shall not
        change Lessor's name or chief executive office.

SECTION 4.    RIGHTS AND REMEDIES OF AGENT.

        4.01. Authorized Action by Agent. Lessor hereby irrevocably appoints
Agent as its attorney-in-fact and agrees that Agent may perform (but Agent shall
not be obligated to and shall incur no liability to Lessor or any third party
for failure so to do) any act which Lessor is obligated by this Agreement to
perform, and to exercise such rights and powers as Lessor might exercise with
respect to the Lessor Collateral, including, without limitation, the right to
(a) collect by legal proceedings or otherwise and endorse, receive and receipt
for all dividends, interest, payments, proceeds and other sums and property now
or hereafter payable on or on account of the Lessor Collateral; (b) enter into
any extension, reorganization, deposit, merger, consolidation or other agreement
pertaining to, or deposit, surrender, accept, hold or apply other property in
exchange for the Lessor Collateral; (c) insure, process, preserve and enforce
the Lessor Collateral; (d) make any compromise or settlement, and take any
action it deems advisable, with respect to the Lessor Collateral; (e) pay any
Indebtedness of Lessor relating to the Lessor Collateral; and (f) execute UCC
financing statements. Lessor agrees that such care as Agent gives to the
safekeeping of its own property of like kind shall constitute reasonable care of
the Lessor Collateral when in Agent's possession; provided, however, that Agent
shall not be required to make any presentment, demand or protest, or give any
notice and need not take any action to preserve any rights against any prior
party or any other Person in connection with the Lessor Obligations or with
respect to the Lessor Collateral.

        4.02. Other Rights and Remedies Upon Default. In addition to all other
rights and remedies granted to Agent by this Agreement and the other Operative
Documents, the UCC and other applicable Governmental Rules, Agent may, if Lessor
fails to perform any of the Lessor Obligations, exercise any one or more of the
following rights and remedies: (a) collect, receive, appropriate or realize upon
the Lessor Collateral or otherwise foreclose or enforce Agent's security
interests in any or all Lessor Collateral in any manner permitted by applicable

                                       3
<PAGE>   290

Governmental Rules or in this Security Agreement; (b) notify Lessee to make any
or all payments to be made by Lessee under the Operative Documents to Agent; (c)
sell or otherwise dispose of any or all Lessor Collateral at one or more public
or private sales, whether or not such Lessor Collateral is present at the place
of sale, for cash or credit or future delivery, on such terms and in such manner
as Agent may determine; (d) require Lessor to assemble the Lessor Collateral and
make it available to Agent at a place to be designated by Agent; and (e) prior
to the disposition of the Lessor Collateral, store, process, repair or
recondition any Lessor Collateral consisting of goods, perform any obligations
and enforce any rights of Lessor under any Operative Documents or otherwise
prepare and preserve Lessor Collateral for disposition in any manner and to the
extent Agent deems appropriate. In any case where notice of any sale or
disposition of any Lessor Collateral is required, Lessor hereby agrees that
thirty (30) days notice of such sale or disposition is reasonable.

SECTION 5.    MISCELLANEOUS.

        5.01. Notices. Except as otherwise specified herein, all notices,
requests, demands, consents, instructions or other communications to or upon
Lessor or Agent under this Agreement shall be given as provided in Paragraph
7.01 of the Participation Agreement.

        5.02. Waivers; Amendments. Any term, covenant, agreement or condition of
this Agreement may be amended or waived only as provided in the Participation
Agreement. No failure or delay by Agent in exercising any right hereunder shall
operate as a waiver thereof or of any other right nor shall any single or
partial exercise of any such right preclude any other further exercise thereof
or of any other right. Unless otherwise specified in any such waiver or consent,
a waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which given.

        5.03. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Lessor Parties and their permitted successors and
assigns; provided, however, that the Lessor Parties shall not sell, assign or
delegate their respective rights and obligations hereunder except as provided in
the Participation Agreement.

        5.04. No Third Party Rights. Nothing expressed in or to be implied from
this Agreement is intended to give, or shall be construed to give, any Person,
other than the Lessor Parties and their permitted successors and assigns, any
benefit or legal or equitable right, remedy or claim under or by virtue of this
Agreement or under or by virtue of any provision herein.

        5.05. Partial Invalidity. If at any time any provision of this Agreement
is or becomes illegal, invalid or unenforceable in any respect under the law or
any jurisdiction, neither the legality, validity or enforceability of the
remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.

        5.06. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without reference to
conflicts of law rules, except as otherwise provided in Subparagraph 7.14 of the
Participation Agreement.

                                       4
<PAGE>   291

        5.07. Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.

        5.08. Financing Statement. This Agreement will also constitute a
financing statement, under which Lessor is the debtor and Agent is the secured
party. The mailing address of debtor (the Lessor herein) and of the secured
party (the Agent herein) from which information concerning the security interest
hereunder may be obtained is as follows:

        Lessor:

        ABN AMRO Leasing, Inc.
        c/o ABN AMRO Bank N.V.
        135 South LaSalle Street, Suite 740
        Chicago, Illinois 60603
        Attn: David M. Shipley
        Tel:   (312) 904-2183
        Fax:   (312) 904-6217

        Agent:

        ABN AMRO Bank, N.V.
        Agency Services
        208 South LaSalle Street, Suite 1500
        Chicago, Illinois 60604
        Attn: Josephine O'Brien
        Tel: (312) 992-5091
        Fax: (312) 992-5157

        A carbon, photographic or other reproduction of this Agreement or of any
financing statement related to this Agreement shall be sufficient as a financing
statement for any of the purposes referenced herein.

                          [The signature page follows.]

                                       5
<PAGE>   292

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

LESSOR:                             ABN AMRO LEASING, INC.

                                    By:_________________________
                                       Name:____________________
                                       Title:___________________

                                       6

<PAGE>   293
                                    EXHIBIT L

                              ASSIGNMENT AGREEMENT

         THIS ASSIGNMENT AGREEMENT, dated as of the date set forth at the top of
Attachment 1 hereto, by and among:

                  (1) The party designated under item A of Attachment I hereto
         as the Assignor Participant ("Assignor Participant"); and

                  (2) Each party designated under item B of Attachment I hereto
         as an Assignee Participant (individually, an "Assignee Participant").

                                    RECITALS

         A. Assignor Participant is one of the "Participants" in a Participation
Agreement dated as of April 18, 2001, among Novellus Systems, Inc. ("Lessee"),
ABN AMRO Leasing, Inc. ("Lessor"), Assignor Participant and the other
institutions parties thereto as "Participants" (collectively, the
"Participants") and ABN AMRO Bank N.V., as agent for the Participants (in such
capacity, "Agent"). (Such Participation Agreement, as amended, supplemented or
otherwise modified in accordance with its terms from time to time to be referred
to herein as the "Participation Agreement").

         B. Assignor Participant wishes to sell, and each Assignee Participant
wishes to purchase, all or a portion of Assignor Participant's rights under the
Participation Agreement pursuant to Subparagraph 7.05(b) of the Participation
Agreement.

                                    AGREEMENT

         Now, therefore, the parties hereto hereby agree as follows:

         1. Definitions. Except as otherwise defined in this Assignment
Agreement, all capitalized terms used herein and defined in the Participation
Agreement have the respective meanings given to those terms in the Participation
Agreement.

         2. Sale and Assignment. Subject to the terms and conditions of this
Assignment Agreement, Assignor Participant hereby agrees to sell, assign and
delegate to each Assignee Participant and each Assignee Participant hereby
agrees to purchase, accept and assume the rights, obligations and duties of a
Participant under the Participation Agreement and the other Operative Documents
equal to the Tranche A Percentage, Tranche B Percentage, Tranche C Percentage
and Proportionate Share set forth under the captions "Tranche Percentages and
Proportionate Shares Assigned" opposite such Assignee Participant's name on Part
A of

                                      L-1
<PAGE>   294
Attachment I hereto. Such sale, assignment and delegation shall become effective
on the date designated in Part C of Attachment I hereto (the "Assignment
Effective Date"), which date shall be, unless Agent shall otherwise consent, at
least five (5) Business Days after the date following the date counterparts of
this Assignment Agreement are delivered to Agent in accordance with Paragraph 3
hereof.

         3. Assignment Effective Notice. Upon (a) receipt by Agent of five (5)
counterparts of this Assignment Agreement (to each of which is attached a fully
completed Attachment 1), each of which has been executed by Assignor Participant
and each Assignee Participant (and, to the extent required by clause (i) of
Subparagraph 7.05(b) of the Participation Agreement, by Lessor, Lessee and
Agent) and (b) payment to Agent of the registration and processing fee specified
in clause (iii) of Subparagraph 7.05(b) of the Participation Agreement, Agent
will transmit to Lessor, Lessee, Assignor Participant and each Assignee
Participant an Assignment Effective Notice substantially in the form of
Attachment 2 hereto, fully completed (an "Assignment Effective Notice").

         4. Assignment Effective Date. At or before 12:00 noon (local time of
Assignor Participant) on the Assignment Effective Date, each Assignee
Participant shall pay to Assignor Participant, in immediately available or same
day funds, an amount equal to the purchase price, as agreed between Assignor
Participant and such Assignee Participant (the "Assignment Purchase Price"), for
the respective Tranche A Percentage, Tranche B Percentage, Tranche C Percentage
and Proportionate Share purchased by such Assignee Participant hereunder.
Effective upon receipt by Assignor Participant of the Assignment Purchase Price
payable by each Assignee Participant, the sale, assignment and delegation to
such Assignee Participant of such Proportionate Share as described in Paragraph
2 hereof shall become effective.

         5. Payments After the Assignment Effective Date. Assignor Participant
and each Assignee Participant hereby agree that Agent shall, and hereby
authorize and direct Agent to, allocate amounts payable under the Participation
Agreement and the other Operative Documents as follows:

                  (a) All payments applied to reduce the Outstanding Lease
         Amount after the Assignment Effective Date with respect to each Tranche
         A Percentage, Tranche B Percentage, Tranche C Percentage and
         Proportionate Share assigned to an Assignee Participant pursuant to
         this Assignment Agreement shall be payable to such Assignee
         Participant.

                  (b) All Base Rent, interest, fees and other amounts accrued
         after the Assignment Effective Date with respect to each Tranche A
         Percentage, Tranche B Percentage, Tranche C Percentage and
         Proportionate Share assigned to an Assignee Participant pursuant to
         this Assignment Agreement shall be payable to such Assignee
         Participant.

Assignor Participant and each Assignee Participant shall make any separate
arrangements between themselves which they deem appropriate with respect to
payments between them of amounts paid under the Operative Documents on account
of the Tranche A Percentage, Tranche B Percentage, Tranche C Percentage and
Proportionate Share assigned to such Assignee

                                      L-2
<PAGE>   295
Participant, and neither Agent nor Lessee shall have any responsibility to
effect or carry out such separate arrangements.

         6. Delivery of Copies of Operative Documents. Concurrently with the
execution and delivery hereof, Assignor Participant will provide to each
Assignee Participant (if it is not already a party to the Participation
Agreement) conformed copies of all documents delivered to Assignor Participant
on or prior to the Closing Date in satisfaction of the conditions precedent set
forth in the Participation Agreement.

         7. Further Assurances. Each of the parties to this Assignment Agreement
agrees that at any time and from time to time upon the written request of any
other party, it will execute and deliver such further documents and do such
further acts and things as such other party may reasonably request in order to
effect the purposes of this Assignment Agreement.

         8. Further Representations, Warranties and Covenants. Assignor
Participant and each Assignee Participant further represent and warrant to and
covenant with each other, Lessor, Agent and the other Participants as follows:

                  (a) Other than the representation and warranty that it is the
         legal and beneficial owner of the interest being assigned hereby free
         and clear of any adverse claim, Assignor Participant makes no
         representation or warranty and assumes no responsibility with respect
         to any statements, warranties or representations made in or in
         connection with the Participation Agreement or the other Operative
         Documents or the execution, legality, validity, enforceability,
         genuineness, sufficiency or value of the Participation Agreement or the
         other Operative Documents furnished or the Collateral or any security
         interest therein.

                  (b) Assignor Participant makes no representation or warranty
         and assumes no responsibility with respect to the financial condition
         of Lessee or any of its obligations under the Participation Agreement
         or any other Operative Documents.

                  (c) Each Assignee Participant confirms that it has received a
         copy of the Participation Agreement and such other documents and
         information as it has deemed appropriate to make its own credit
         analysis and decision to enter into this Assignment Agreement.

                  (d) Each Assignee Participant will, independently and without
         reliance upon Lessor, Agent, Assignor Participant or any other
         Participant and based upon such documents and information as it shall
         deem appropriate at the time, continue to make its own credit decisions
         in taking or not taking action under the Participation Agreement and
         the other Operative Documents.

                  (e) Each Assignee Participant appoints and authorizes Agent to
         take such action as Agent on its behalf and to exercise such powers
         under the Participation Agreement and the other Operative Documents as
         Agent is authorized to exercise by the terms thereof, together with
         such powers as are reasonably incidental thereto, all in accordance
         with Section VI of the Participation Agreement.

                                      L-3
<PAGE>   296
                  (f) Each Assignee Participant (i) affirms that each of the
         representations and warranties set forth in Paragraph 4.03 of the
         Participation Agreement is true and correct with respect to such
         Participant and (ii) agrees that it will perform in accordance with
         their terms all of the obligations which by the terms of the
         Participation Agreement and the other Operative Documents are required
         to be performed by it as a Participant.

                  (g) Each Assignee Participant represents and warrants that, as
         of the date hereof, it would not have any basis for demanding any
         payment under Subparagraph 2.12(c) or Subparagraph 2.12(d) of the
         Participation Agreement or, to its knowledge, under Subparagraph
         2.13(a) of the Participation Agreement.

                  (h) Part B of Attachment 1 hereto sets forth administrative
         information with respect to each Assignee Participant.

         9. Effect of this Assignment Agreement. On and after the Assignment
Effective Date, (a) each Assignee Participant shall be a Participant with a
Tranche A Percentage, Tranche B Percentage, Tranche C Percentage and
Proportionate Share as set forth under the caption "Tranche Percentages and
Proportionate Share After Assignment" opposite such Assignee Participant's name
in Part A of Attachment 1 hereto and shall have the rights, duties and
obligations of such a Participant under the Participation Agreement and the
other Operative Documents and (b) Assignor Participant shall be a Participant
with a Tranche A Percentage, Tranche B Percentage, Tranche C Percentage and
Proportionate Share as set forth under the caption "Tranche Percentages and
Proportionate Share After Assignment" opposite Assignor Participant's name in
Part A of Attachment 1 hereto and shall have the rights, duties and obligations
of such a Participant under the Participation Agreement and the other Operative
Documents, or, if the Proportionate Share of Assignor Participant has been
reduced to zero, Assignor Participant shall cease to be a Participant and shall
have no further obligation to fund any portion of any Advance.

         10. Miscellaneous. This Assignment Agreement shall be governed by, and
construed in accordance with, the laws of the State of California. Paragraph
headings in this Assignment Agreement are for convenience of reference only and
are not part of the substance hereof.

                                      L-4
<PAGE>   297
         IN WITNESS WHEREOF, the parties hereto have caused this Assignment
Agreement to be executed by their respective duly authorized officers as of the
date set forth in Attachment 1 hereto.

                                          ______________________________, as
                                          Assignor Participant

                                          By: ________________________________
                                              Name: __________________________
                                              Title: _________________________

                                          ____________________________, as an
                                          Assignee Participant

                                          By: ________________________________
                                              Name: __________________________
                                              Title: _________________________

                                          ____________________________, as an
                                          Assignee Participant

                                          By: ________________________________
                                              Name: __________________________
                                              Title: _________________________

                                          ____________________________, as an
                                          Assignee Participant

                                          By: ________________________________
                                              Name: __________________________
                                              Title: _________________________

                                      L-5
<PAGE>   298
CONSENTED TO AND ACKNOWLEDGED BY:
____________________________________
as Lessee

By: ________________________________
    Name: __________________________
    Title: _________________________

___________________________________,
as Agent

By: ________________________________
    Name: __________________________
    Title: _________________________

___________________________________,
As Lessor

By: ________________________________
    Name: __________________________
    Title: _________________________

ACCEPTED FOR RECORDATION IN REGISTER:

___________________________________,
As Agent

By: ________________________________
    Name: __________________________
    Title: _________________________

                                      L-6
<PAGE>   299
                                  ATTACHMENT 1

                             TO ASSIGNMENT AGREEMENT

 PART A(1) TRANCHE PERCENTAGES AND PROPORTIONATE SHARES PRIOR TO COMPLETION DATE

<TABLE>
<CAPTION>
                                        Tranche Percentages and                               Tranche Percentages and
                                     Proportionate Shares Assigned                     Proportionate Shares After Assignment
                         ----------------------------------------------------  ----------------------------------------------------
                         Tranche A    Tranche B    Tranche C    Proportionate  Tranche A    Tranche B    Tranche C    Proportionate
                         Percentage   Percentage   Percentage       Share      Percentage   Percentage   Percentage       Share
                         -----------  -----------  -----------  -------------  -----------  -----------  -----------  -------------
<S>                      <C>          <C>          <C>          <C>            <C>          <C>          <C>          <C>
Assignor Participant:
_________                __. ______%  __. ______%  __. ______%   __. _______%  __. ______%  __. ______%  __. ______%   __. _______%
_________                __. ______%  __. ______%  __. ______%   __. _______%  __. ______%  __. ______%  __. ______%   __. _______%
_________                __. ______%  __. ______%  __. ______%   __. _______%  __. ______%  __. ______%  __. ______%   __. _______%
Assignee Participants:
_________                __. ______%  __. ______%  __. ______%   __. _______%  __. ______%  __. ______%  __. ______%   __. _______%
_________                __. ______%  __. ______%  __. ______%   __. _______%  __. ______%  __. ______%  __. ______%   __. _______%
_________                __. ______%  __. ______%  __. ______%   __. _______%  __. ______%  __. ______%  __. ______%   __. _______%
_________                __. ______%  __. ______%  __. ______%   __. _______%  __. ______%  __. ______%  __. ______%   __. _______%
</TABLE>

                                     L(1)-1
<PAGE>   300
                                  ATTACHMENT 1

                             TO ASSIGNMENT AGREEMENT

         PART A(2) TRANCHE PERCENTAGES AND PROPORTIONATE SHARES ON AND
                             AFTER COMPLETION DATE

<TABLE>
<CAPTION>
                                         Tranche Percentages and                             Tranche Percentages and
                                      Proportionate Shares Assigned                    Proportionate Shares After Assignment
                         ----------------------------------------------------  ----------------------------------------------------
                         Tranche A     Tranche B   Tranche C    Proportionate  Tranche A    Tranche B    Tranche C    Proportionate
                         Percentage   Percentage   Percentage       Share      Percentage   Percentage   Percentage       Share
                         -----------  -----------  -----------  -------------  -----------  -----------  -----------  -------------
<S>                      <C>          <C>          <C>          <C>            <C>          <C>          <C>          <C>
Assignor Participant:
_________                __. ______%  __. ______%  __. ______%   __. _______%  __. ______%  __. ______%  __. ______%   __. _______%
_________                __. ______%  __. ______%  __. ______%   __. _______%  __. ______%  __. ______%  __. ______%   __. _______%
_________                __. ______%  __. ______%  __. ______%   __. _______%  __. ______%  __. ______%  __. ______%   __. _______%
Assignee Participants:
_________                __. ______%  __. ______%  __. ______%   __. _______%  __. ______%  __. ______%  __. ______%   __. _______%
_________                __. ______%  __. ______%  __. ______%   __. _______%  __. ______%  __. ______%  __. ______%   __. _______%
_________                __. ______%  __. ______%  __. ______%   __. _______%  __. ______%  __. ______%  __. ______%   __. _______%
_________                __. ______%  __. ______%  __. ______%   __. _______%  __. ______%  __. ______%  __. ______%   __. _______%
</TABLE>

                                     L(1)-2
<PAGE>   301
                                     PART B

       [Assignee Participant]

Applicable Participating Office:

_______________________________
Address for notices:

Telephone No:
Telecopier No:
Wiring Instructions:

  [Assignee Participant]
Applicable Participating Office:

_______________________________
Address for notices:

Telephone No:
Telecopier No:
Wiring Instructions:

                                     L(1)-3
<PAGE>   302
                                     PART C

                    ASSIGNMENT EFFECTIVE DATE: ________, ____

                                     L(1)-4
<PAGE>   303
                                  ATTACHMENT 2
                             TO ASSIGNMENT AGREEMENT

                                     FORM OF
                           ASSIGNMENT EFFECTIVE NOTICE

         Reference is made to the Participation Agreement, dated as of April 18,
2001, among Novellus Systems, Inc. ("Lessee"), ABN AMRO Leasing, Inc.
("Lessor"), the Person parties thereto as "Participants" (the "Participants")
and ABN AMRO Bank N.V., as agent for the Participants (in such capacity,
"Agent"). Agent hereby acknowledges receipt of five executed counterparts of a
completed Assignment Agreement, a copy of which is attached hereto. [Note:
Attach copy of Assignment Agreement.] Terms defined in such Assignment Agreement
are used herein as therein defined.

         1. Pursuant to such Assignment Agreement, you are advised that the
Assignment Effective Date will be __________.

         2. Pursuant to such Assignment Agreement, each Assignee Participant is
required to pay its Purchase Price to Assignor Participant at or before 12:00
Noon on the Assignment Effective Date in immediately available funds.

                                            Very truly yours,

                                            ABN AMRO Bank N.V.,
                                              as Agent

                                            By: ________________________________
                                                Name: __________________________
                                                Title: _________________________

                                     L(2)-1
<PAGE>   304
                                   EXHIBIT M
                             GROUND LEASE AGREEMENT

                                      M-1
<PAGE>   305
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:

Thomas Y. Coleman, Esq.
Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California  94111

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                             GROUND LEASE AGREEMENT

                                     BETWEEN

                             NOVELLUS SYSTEMS, INC.

                                       AND

                             ABN AMRO LEASING, INC.

                                 APRIL 18, 2001

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<PAGE>   306

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                         PAGE
                                                                         ----
<S>     <C>                                                              <C>
SECTION 1.     INTERPRETATION.............................................2

        1.01.  Definitions................................................2

        1.02.  Rules of Construction......................................2

SECTION 2.     BASIC PROVISIONS...........................................2

        2.01.  Lease of the Property......................................2

        2.02.  Term.......................................................2

        2.03.  Rent.......................................................2

        2.04.  Use........................................................4

        2.05.  Title; Quiet Enjoyment.....................................4

SECTION 3.     OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS.............4

        3.01.  Maintenance, Repair, Etc...................................4

        3.02.  Risk of Loss...............................................5

        3.03.  Insurance..................................................5

        3.04.  Casualty and Condemnation..................................5

        3.05.  Taxes......................................................7

        3.06.  Environmental Matters......................................7

        3.07.  Liens, Easements, Etc......................................7

        3.08.  Assignments and Subletting.................................9

        3.09.  Utility Charges...........................................10

        3.10.  Removal of Property.......................................10

        3.11.  Permitted Contests........................................10

        3.12.  Estoppel Certificates.....................................10

        3.13.  Recordation of Agreement..................................10

SECTION 4.     TERMINATION...............................................13

        4.01.  Termination Date..........................................13

        4.02.  Surrender of Ground Lease Property........................14

SECTION 5.     DEFAULT...................................................14

        5.01.  Ground Lease Events of Default............................14

        5.02.  Remedies..................................................14

        5.03.  Limited Recourse..........................................14

SECTION 6.     MISCELLANEOUS.............................................17

        6.01.  Notices...................................................17

        6.02.  Waivers; Amendments.......................................17

        6.03.  Successors and Assigns....................................17

        6.04.  No Third Party Rights.....................................17

</TABLE>
                                       -i-

<PAGE>   307

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                        PAGE
                                                                        ----
       <S>                                                              <C>
        6.05.  Partial Invalidity........................................18

        6.06.  Governing Law.............................................18

        6.07.  Counterparts..............................................18

</TABLE>

                                      -ii-

<PAGE>   308

                             GROUND LEASE AGREEMENT

        THIS GROUND LEASE AGREEMENT (this "Agreement" herein), dated as of April
18, 2001 is entered into by and between:

               (1) NOVELLUS SYSTEMS, INC., a California corporation ("Ground
        Lessor"); and

               (2) ABN AMRO LEASING, INC., an Illinois corporation ("Ground
        Lessee").

                                    RECITALS

        A. Ground Lessor is the fee owner of the land described in Exhibit A (as
more fully defined below, the "Land").

        B. Ground Lessor has requested Ground Lessee and the financial
institutions which are "Participants" under the Participation Agreement referred
to in Recital C below (such financial institutions to be referred to
collectively as the "Participants") to provide to Ground Lessor a lease facility
pursuant to which:

           (1) Ground Lessee would (a) lease from Ground Lessor the Land, (b)
        sublease back to Ground Lessor the Land and lease to Ground Lessor
        certain improvements to be constructed on the Land, (c) appoint Ground
        Lessor as Ground Lessee's agent to make such improvements (which
        improvements will be owned by Ground Lessee), (d) make advances to
        finance such improvements and to pay certain related expenses, and (e)
        grant to Ground Lessor the right to purchase such improvements; and

           (2) The Participants would participate in such lease facility by (a)
        funding the advances to be made by Ground Lessor and (b) acquiring
        participation interests in the rental and certain other payments to be
        made by Ground Lessor.

        C. Pursuant to a Participation Agreement dated of even date herewith
(the "Participation Agreement") among Ground Lessee, Ground Lessor, the
Participants and ABN AMRO Bank N.V., as agent for the Participants (in such
capacity, "Agent"), Ground Lessee and the Participants have agreed to provide
such lease facility upon the terms and subject to the conditions set forth
therein, including, without limitation, the execution and delivery of this
Agreement setting forth the terms of the lease by Ground Lessor to Ground Lessee
of the Land.

                                    AGREEMENT

        NOW, THEREFORE, in consideration of the above Recitals and the mutual
covenants herein contained, the parties hereto hereby agree as follows:

<PAGE>   309

SECTION 1. INTERPRETATION.

        1.01. Definitions. Unless otherwise indicated in this Agreement or any
other Operative Document, each term set forth in Schedule 1.01 to the
Participation Agreement, when used in this Agreement or any other Operative
Document, shall have the respective meaning given to that term in such Schedule
1.01 or in the provision of this Agreement or other document, instrument or
agreement referenced in such Schedule 1.01.

        1.02. Rules of Construction. Unless otherwise indicated in this
Agreement or any other Operative Document, the rules of construction set forth
in Schedule 1.02 to the Participation Agreement shall apply to this Agreement
and the other Operative Documents.

SECTION 2. BASIC PROVISIONS.

        2.01. Lease of the Property. For good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Ground Lessor agrees
to lease to Ground Lessee and Ground Lessee agrees to lease from Ground Lessor
the following property (the "Ground Lease Property") to the extent of Ground
Lessor's estate, right, title and interest therein, thereto or thereunder:

              (a) All lots, pieces, tracts and parcels of land described in
        Exhibit A (the "Land");

              (b) All Improvements now or hereafter located on the Land;

              (c) All Appurtenant Rights belonging, relating or pertaining to
        the Land or the Improvements thereto;

              (d) All Related Goods (including those described in Exhibit B and
        in each Exhibit B Supplement), Related Permits and Related Agreements
        related to the Land or any of the foregoing Improvements or Appurtenant
        Rights; and

              (e) All accessions and accretions to and replacements and
        substitutions for the foregoing.

Pursuant to the Participation Agreement, Ground Lessee has agreed to make
Advances to construct certain Improvements to the Land and to purchase certain
related property. Ground Lessor and Ground Lessee agree that Ground Lessee will
own the Improvements and such other property and that Ground Lessor's only
interest in the Improvements and such other property is the leasehold interest
granted to Ground Lessor therein in the Lease Agreement.

        2.02. Term. The original term of this Agreement shall commence on the
Closing Date (the "Ground Lease Commencement Date") and shall end on the first
Business Day of May 2051 (the "Ground Lease Scheduled Expiration Date"), subject
to the terms of Subparagraph 4.01(a) below.

                                       2
<PAGE>   310

        2.03. Rent. On or before the Ground Lease Commencement Date, Ground
Lessee shall pay to Ground Lessor as rent hereunder the following amounts:

              (a) During the Construction Period or earlier termination thereof,
        monthly rent equal to the fair market value of the Ground Lease Property
        as of the Closing Date in the amount of $33,333.33 per month (prorated
        for each partial month based on the number of days for such partial
        months) (such total fair market value rent referred to as the
        "Construction Period Ground Lease Fair Market Rent"). The Construction
        Period Ground Lease Fair Market Rent shall accrue and shall be due and
        payable by Ground Lessee to Ground Lessor on the first day after the
        expiration or earlier termination of the Construction Period; and

               (b) For the period commencing after the Construction Period
        through the remaining term of this Agreement the sum of Ten Dollars
        ($10.00); provided, however, that Ground Lessor may, after the
        Expiration Date of the Lease Agreement and the satisfaction in full of
        all Lessee Obligations, increase the rent payable by Ground Lessee for
        the remaining term hereof to the "market rent," by delivering to Ground
        Lessee not less than forty-five (45) days prior to the proposed date of
        such increase, a written notice (a "Notice of Ground Lease Rent
        Increase"). The "market rent" for the remainder of the term shall be the
        rent that would be agreed upon between a willing lessee, under no
        compulsion to lease, and a willing lessor, under no compulsion to lease,
        for unimproved land comparable in size and location to the Land,
        exclusive of any Improvements, at the time of Ground Lessor's exercise
        of its rights under this Subparagraph 2.03(b) and taking into
        consideration, among other relevant factors, the condition of the Land
        and the encumbrances affecting the title to the Land at the time of the
        exercise of such rights and the obligations of the Ground Lessor under
        this Agreement, including its obligation to pay taxes. If Ground Lessor
        and Ground Lessee cannot agree upon such "market rent" within seven (7)
        days after the date Ground Lessor delivers the Notice of Ground Lease
        Rent Increase (the "Rent Increase Notification Date"), the "market rent"
        shall be determined as follows:

               (i) Not later than fourteen (14) days after the Rent Increase
        Notification Date, Ground Lessor and Ground Lessee each shall appoint a
        real estate appraiser familiar with properties in the vicinity of the
        Land and shall notify the other party of its appointment. If the two
        appraisers agree upon the "market rent" within twenty-one (21) days
        after the Rent Increase Notification Date, such rent will be binding
        upon Ground Lessor and Ground Lessee. If the two appraisers cannot agree
        upon the "market rent" within such time period, then, not later than
        twenty-eight (28) days after the Rent Increase Notification Date, such
        appraisers shall appoint a third real estate appraiser familiar with
        properties in the vicinity of the Land. Immediately after such
        appointment (and in no event later than thirty (30) days after the Rent
        Increase Notification Date), each of the first two appraisers will
        submit his/her best estimate of the "market rent", together with a
        written report supporting such estimate, to the third appraiser. Not
        later than thirty-five (35) days after the Rent Increase Notification
        Date, the third appraiser will select the estimate of the "market rent"
        he/she concludes to be the closest to the definition thereof set forth
        above in this Subparagraph 2.03(b) and shall notify Ground Lessor and
        Ground

                                       3
<PAGE>   311
        Lessee of such selection. The estimate so selected by the third
        appraiser will be binding upon Ground Lessor and Ground Lessee.

               (ii) If a third appraiser must be chosen pursuant to Subparagraph
        2.03(b) and the first two appraisers cannot agree upon the third
        appraiser within the prescribed time, either Ground Lessor or Ground
        Lessee may require each of the first two appraisers immediately to
        submit its choice for the third appraiser to the American Arbitration
        Association ("AAA") in San Francisco, California for selection in
        accordance with the then rules of said association within thirty-five
        (35) days after the Rent Increase Notification Date. If such a procedure
        is necessary to appoint the third appraiser, then (i) the deadline for
        the two appraisers to submit to the third appraiser their estimates of
        the "market rent" and supporting report pursuant to Subparagraph 2.03(b)
        shall be not later than thirty-seven (37) days (rather than thirty (30)
        days) after the Rent Increase Notification Date and (ii) the deadline
        for the third appraiser to select one of the two estimates pursuant to
        Subparagraph 2.03(b) shall be not later than forty-two (42) days (rather
        than thirty-five (35) days) after the Rent Increase Notification Date.

               (iii) If either party or its appraiser fails to comply with the
        procedures (including deadlines) set forth above, then the other party's
        appraiser will determine the "market rent".

               (iv) Ground Lessor and Ground Lessee each shall bear the expense
        of the appraiser appointed by it, and the expenses of the third
        appraiser and the AAA will be shared equally by Ground Lessor and Ground
        Lessee.

               (v) All appraisers selected for the appraisal process set out in
        this Subparagraph 2.03(b) will be disinterested, reputable, qualified
        real estate appraisers with the designation of MAI or equivalent and
        with at least five (5) years experience in appraising properties
        comparable to the Land. If a third appraiser must be chosen pursuant to
        Subparagraph 2.03(b), such appraiser will be chosen on the basis of
        objectivity and competence, not on the basis of such appraiser's
        relationship with the other appraisers or the parties to this Agreement.

        2.04. Use. Ground Lessee may use the Ground Lease Property for any
lawful purpose.

        2.05. Title; Quiet Enjoyment.

              (a) Title. Ground Lessor represents and warrants to Ground Lessee
        that Ground Lessor has good and marketable title to the Ground Lease
        Property. Ground Lessor shall not sell, lease, transfer or otherwise
        dispose of its right, title and interest in the Ground Lease Property or
        this Agreement prior to the Expiration Date of the Lease Agreement and
        the satisfaction in full of all Lessee Obligations.

              (b) No Merger. The leasehold estate in the Ground Lease Property
        created by this Agreement shall not be merged with the fee estate or any
        other interest in the Ground Lease Property as a result of the same
        Person acquiring, owning or holding, directly or

                                       4
<PAGE>   312

        indirectly, in whole or in part, (i) the leasehold estate in the Ground
        Lease Property created hereby or any interest in such leasehold estate
        and (ii) the fee estate in the Ground Lease Property or any interest in
        such fee estate, unless all parties with an interest in the Ground Lease
        Property that would be adversely affected by any such merger
        specifically agree in writing that such a merger shall occur.

              (c) Quiet Enjoyment. Neither Ground Lessor nor any other Person
        lawfully claiming any right or interest in the Ground Lease Property
        shall, prior to the Ground Lease Expiration Date, disturb Ground
        Lessee's peaceable and quiet enjoyment of the Ground Lease Property;
        provided, however, that such enjoyment shall be subject to the terms of
        this Agreement.

               (d) Partition of Land. Ground Lessor and Ground Lessee
        acknowledge that the Land currently is a portion of a larger 58-acre
        parcel of land owned by Ground Lessor. Ground Lessor submitted to the
        City of Tualatin, Oregon, on November 29, 2000, a Development
        Application seeking approval of a 3-lot partition of the 58-acre parcel
        (the "Development Application"). In the Development Application, the
        Land is identified as Parcel 1, consisting of approximately 23.018
        acres. On January 22, 2001, the City Council of the City of Tualatin,
        Oregon, adopted Resolution No. 3806-01 (the "Resolution"), granting
        approval of the partition as requested in the Development Application,
        subject to the conditions set forth in the Resolution. Ground Lessor
        covenants and agrees that it shall promptly take all necessary steps,
        including the recording of a final approved plat, and in no event later
        than ninety (90) days after the Closing Date, to complete the partition
        of the 58-acre parcel as approved by the Resolution.

SECTION 3. OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS.

        3.01. Maintenance, Repair, Etc.

              (a) General. Until the Expiration Date of the Lease Agreement,
        Ground Lessor shall maintain the Ground Lease Property in accordance
        with the terms and provisions of the Lease Agreement. Following the
        Expiration Date of the Lease Agreement and until the Ground Lease
        Expiration Date, Ground Lessee shall maintain the Ground Lease Property
        on a basis consistent with the operation and maintenance of commercial
        properties comparable in type and location to the Ground Lease Property
        and in compliance with prudent industry practice.

              (b) Improvements. Ground Lessee, at its sole cost and expense, may
        from time to time make alterations, renovations, additions and other
        Improvements to the Ground Lease Property and substitutions and
        replacements therefor; provided, however, that, unless an Event of
        Default has occurred and is continuing under the Lease Agreement, Ground
        Lessee shall not make any such alterations, renovations, additions or
        other Improvements prior to the Expiration Date of the Lease Agreement,
        except pursuant to the terms of the Construction Agency Agreement.
        Unless purchased by Ground Lessor

                                       5
<PAGE>   313

        pursuant to the Purchase Agreement, all Improvements to the Ground Lease
        Property, whether constructed before or during the term of this
        Agreement, shall be the property of Ground Lessee and may be removed by
        Ground Lessee at any time at or prior to the termination of this
        Agreement; provided, however, that Ground Lessee shall not remove any
        such property prior to the Expiration Date of the Lease Agreement unless
        an Event of Default has occurred and is continuing under the Lease
        Agreement.

        3.02. Risk of Loss. Until the Expiration Date of the Lease Agreement,
Ground Lessor assumes all risks of loss arising from any Casualty or
Condemnation and all liability for all personal injuries and deaths and damages
to property suffered by any Person or property on or in connection with the
Ground Lease Property in accordance with the terms and provisions of the Lease
Agreement. If Ground Lessor exercises the Expiration Date Purchase Option
pursuant to the Purchase Agreement and (b) Ground Lessee elects to retain the
Property pursuant to Subparagraph 3.02(d) of the Purchase Agreement, Ground
Lessee assumes such risks of loss and such liability arising after the Scheduled
Expiration Date, except to the extent any such loss or liability is primarily
caused by the gross negligence or willful misconduct of Ground Lessor or the
breach by Ground Lessor of its obligations under the Operative Documents.

        3.03. Insurance. Until the Expiration Date of the Lease Agreement,
Ground Lessor shall carry and maintain liability insurance coverage for the
Ground Lease Property as provided in Paragraph 3.03 of the Lease Agreement for
the Property upon the same terms as set forth therein and otherwise shall comply
with the provisions of such paragraph.

        3.04. Casualty and Condemnation.

              (a) Repair. Until the Expiration Date of the Lease Agreement,
        Ground Lessor, at its sole cost and expense, shall diligently proceed to
        repair and restore the Ground Lease Property in accordance with the
        terms and provisions of the Lease Agreement. If any Casualty or
        Condemnation affecting the Ground Lease Property (except for any
        Casualty primarily caused by the gross negligence or willful misconduct
        of Ground Lessor or the breach by Ground Lessor of its obligations under
        the Operative Documents) shall occur after the Scheduled Expiration
        Date, Ground Lessee, at its sole cost and expense, shall diligently
        proceed to repair and restore the Ground Lease Property as near as
        practically possible to the condition in which it existed immediately
        prior to such Casualty or Condemnation and shall complete all such
        repairs and restoration not later than six (6) months after the
        occurrence of the Casualty or Condemnation.

              (b) Prosecution of Claims for Casualty and Condemnation Proceeds.
        Until the Expiration Date of the Lease Agreement, Ground Lessor shall
        proceed promptly and diligently to prosecute in good faith the
        settlement or compromise of any and all claims for Casualty and
        Condemnation Proceeds in accordance with the terms and provisions of the
        Lease Agreement. Following the Expiration Date of the Lease Agreement
        and until the Ground Lease Expiration Date, Ground Lessee shall proceed
        promptly and diligently to prosecute in good faith the settlement or
        compromise of any and all claims for Casualty and Condemnation Proceeds
        with respect to the Ground Lease Property and Ground Lessee is hereby
        authorized, in its own name or in Ground Lessor's name, to adjust any

                                       6
<PAGE>   314

        loss covered by insurance or any Casualty or Condemnation claim or cause
        of action, and to settle or compromise any claim or cause of action in
        connection therewith.

              (c) Assignment of Casualty and Condemnation Proceeds. Ground
        Lessor hereby absolutely and irrevocably assigns to Ground Lessee all
        Casualty and Condemnation Proceeds and all claims relating thereto,
        which Casualty and Condemnation Proceeds will be applied to repair and
        restore the Ground Lease Property pursuant to Subparagraph 3.04(a).

        3.05. Taxes. Ground Lessor shall promptly pay when due all taxes and
other Governmental Charges imposed on or payable by Ground Lessee in connection
with the Ground Lease Property, this Agreement or any of the transactions
contemplated hereby or thereby. Upon request of Ground Lessee, as promptly as
possible after any such taxes or other Governmental Charges are payable by
Ground Lessor, Ground Lessor shall send to Ground Lessee a certified copy of an
original official receipt received by Ground Lessor showing payment thereof. If
Ground Lessor fails to pay any such taxes or other Governmental Charges when due
to the appropriate taxing authority or fails to remit to Ground Lessee the
required receipts or other required documentary evidence, Ground Lessor shall
indemnify Ground Lessee for any incremental taxes, interest or penalties that
may become payable by Ground Lessee as a result of any such failure. The
obligations of Ground Lessor under this Paragraph 3.05 shall survive the
termination of this Agreement.

        3.06. Environmental Matters. Ground Lessee shall not cause or permit the
Ground Lease Property to be used as a site for the use, generation, manufacture,
storage, treatment, release, discharge, disposal or transportation of any
Hazardous Materials in a manner that would materially decrease the value of the
Ground Lease Property or that would constitute a material violation of any
Environmental Laws.

                                       7
<PAGE>   315

        3.07. Liens, Easements, Etc.

              (a) Ground Lessor's Covenants. Until the Expiration Date of the
        Lease Agreement and the satisfaction in full of all Lessee Obligations,
        Ground Lessor shall not create, incur, assume or permit to exist any
        Lien or easement on or with respect to any of the Ground Lease Property
        of any character, whether now owned or hereafter acquired, except for
        Permitted Property Liens of the types described in Subparagraph 3.07(a)
        of the Lease Agreement. Following the Expiration Date of the Lease
        Agreement and for the remainder of the term of this Agreement until the
        Ground Lease Expiration Date, Ground Lessor agrees that Ground Lessee
        may, and Ground Lessor hereby consents in each instance to the following
        actions by Ground Lessee for the following purposes: (i) the granting of
        licenses and other rights and privileges reasonably necessary or
        desirable for the use, repair, or maintenance of the Ground Lease
        Property; (ii) the release of existing easements or other rights in the
        nature of easements which are for the benefit of the Ground Lease
        Property; (iii) the seeking of any zoning variances or modifications to
        existing zoning; and (iv) the imposition of and the execution of
        amendments to, or waivers or releases of any covenants, easements,
        licenses, and restrictions affecting the Ground Lease Property;
        provided, however that in each case (1) such grant, release, dedication,
        transfer or amendment does not impair the value, operation or remaining
        useful life of the Ground Lease Property or materially and adversely
        affect Ground Lessee's ability to perform its obligations hereunder,
        except such impairments which are not material, (2) such grant, release,
        dedication, transfer or amendment is reasonably necessary or desirable
        in connection with the use, maintenance, alteration or improvement of
        the Ground Lease Property, (3) such grant, release, dedication, transfer
        or amendment will not cause the Ground Lease Property or any portion
        thereof to fail to comply with the provisions of this Agreement or any
        other Operative Document or any Governmental Rule (including all
        applicable zoning, planning, building and subdivision ordinances, all
        applicable restrictive covenants and all applicable architectural
        approval requirements), (4) all governmental and other consents or
        approvals required prior to such grant, release, dedication, transfer,
        annexation or amendment or other action have been obtained, and all
        filings required prior to such action have been made, (5) Ground Lessee
        shall remain obligated under this Agreement as though such grant,
        release, dedication, transfer or amendment had not been effected, and
        (6) Ground Lessee shall pay and perform, or caused to be paid and
        performed, any obligations of Ground Lessor under such grant, release,
        dedication, transfer or amendment. Ground Lessor shall, upon the request
        of Ground Lessee, and at Ground Lessee's sole cost and expense, execute
        and deliver any instruments necessary or appropriate to confirm any such
        grant, release, dedication, transfer, annexation or amendment to any
        Person permitted under this Paragraph 3.07.

              (b) Ground Lessee's Covenants. Except for Leasehold Mortgages
        permitted by Subparagraph 3.07(c) and subject to Paragraph 3.11 relating
        to permitted contests, Ground Lessee shall not (i) transfer or assign to
        any Person any of Ground Lessee's interests in the Ground Lease Property
        in violation of any of the Operative Documents or (ii) create, incur,
        assume or permit to exist any Lien in the Ground Lease Property arising
        as a result of any claim against Ground Lessee by any Person unrelated
        to any of the Operative Documents or the transactions contemplated
        thereby.

                                       8
<PAGE>   316

              (c) Leasehold Mortgages.

                  (i) Ground Lessor hereby consents to the Assignment of Lease,
              the Lessor Deed of Trust and the Lessor Security Agreement; the
              Liens granted to Agent therein; and all other Liens granted to
              Agent in any of the Operative Documents and the Property to secure
              the Lessor Obligations. After the Expiration Date of the Lease
              Agreement, Ground Lessee may, as security for any indebtedness of
              Ground Lessee, grant to any holder of such indebtedness a Lien in
              its leasehold interest in the Ground Lease Property (any such
              Liens, together with the Liens granted to Agent pursuant to the
              Operative Documents, to be referred to herein as "Leasehold
              Mortgages").

                  (ii) Any Person may become the legal owner and holder of the
              leasehold interest in the Ground Lease Property created by this
              Agreement by foreclosure of a Leasehold Mortgage or as a result of
              an assignment or conveyance in lieu of such foreclosure and, upon
              becoming such an owner, shall become the Ground Lessee hereunder
              with the rights and obligations thereof.

                  (iii) Ground Lessor shall notify each holder of a Leasehold
              Mortgage (a "Leasehold Mortgagee") of any default by Ground Lessee
              hereunder. No notice of a default by Ground Lessee shall be deemed
              effective until so served. Any Leasehold Mortgagee shall have the
              right to correct or cure any such default within the same period
              of time after receipt of such notice as is given to Ground Lessee
              under this Agreement to correct or cure defaults, plus an
              additional period of thirty (30) days thereafter. Ground Lessor
              will accept performance by any Leasehold Mortgagee of any
              covenant, condition or agreement on Ground Lessee's part to be
              performed hereunder with the same force and effect as though
              performed by Ground Lessee.

                  (iv) If this Agreement should terminate by reason of a
              disaffirmance or rejection of this Agreement by Ground Lessee or
              any receiver, liquidator or trustee for the property of Ground
              Lessee, or by any Governmental Authority that has taken possession
              of the business or property of Ground Lessee by reason of the
              insolvency or alleged insolvency of Ground Lessee, then:

                       (A) Ground Lessor shall give notice thereof to each
                  Leasehold Mortgagee and, upon request of any Leasehold
                  Mortgagee made within sixty (60) days after Ground Lessor has
                  given such notice, Ground Lessor shall enter into a new ground
                  lease of the Ground Lease Property with such Leasehold
                  Mortgagee for the remainder of the term hereof on the same
                  terms and conditions as contained in this Agreement. (If more
                  than one Leasehold Mortgagee shall request Ground Lessor to
                  enter into a new ground lease, Ground Lessor shall enter into
                  such a new ground lease with the requesting Leasehold
                  Mortgagee holding the highest priority Leasehold Mortgage. If
                  two or more requesting Leasehold Mortgagees share the

                                       9
<PAGE>   317

                  highest priority, the new ground lease shall name all such
                  Leasehold Mortgagees as co-tenants thereunder.)

                       (B) The estate of any Leasehold Mortgagee, as lessee
                  under such a new ground lease, shall have the same priority as
                  the estate of Ground Lessee created under this Agreement. If
                  the Lease Agreement or Purchase Agreement are in effect at the
                  time of execution of such new ground lease, such new ground
                  lease shall be made subject to the Lease Agreement and the
                  Purchase Agreement.

                  (v) No modification or early termination of this Agreement
              shall be effective without the consent of a Leasehold Mortgagee if
              (A) Ground Lessee has agreed with such Leasehold Mortgagee that
              such Leasehold Mortgagee's consent will be required for any such
              modification or early termination and (B) Ground Lessor has been
              notified of such agreement.

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

        3.08. Assignments and Subletting.

              (a) Permitted Assignments and Subleases.  Ground Lessee may:

                  (i) Prior to the Expiration Date of the Lease Agreement,
              sublease the Ground Lease Property to Ground Lessor pursuant to
              the Lease Agreement; and

                  (ii) On or after the Expiration Date of the Lease Agreement,
              unless Ground Lessor purchases the Property on the Expiration Date
              pursuant to the Term Purchase Option or the Expiration Date
              Purchase Option in the Purchase Agreement and satisfies in full
              all Lessee Obligations, sublease the Ground Lease Property to any
              Person pursuant to a lease agreement that is subject to the terms
              of this Agreement or sell or assign this Agreement to any Person.
              Ground Lessee shall notify Ground Lessor in writing of any such
              sublease, sale or assignment on or after the Expiration Date of
              the Lease Agreement.

        Except as permitted by clause (i) or (ii) above or by Subparagraph
        2.11(b) or Subparagraph 7.05(d) of the Participation Agreement, Ground
        Lessee shall not sell or assign this Agreement or sublease the Ground
        Lease Property.

              (b) Assumption of Ground Lessee Obligation. All obligations of
        Ground Lessee under this Agreement shall be assumed by (i) Ground Lessor
        during the Term of the Lease Agreement and while Ground Lessor is in
        possession of the Ground Lease Property, (ii) each other Person to whom
        Ground Lessee subleases the Ground Lease

                                       10
<PAGE>   318

        Property pursuant to Subparagraph 3.08(a) during the term of such
        sublease and while such Person is in possession of the Ground Lease
        Property and (iii) by any Person to whom Ground Lessee sells or assigns
        this Agreement pursuant to Subparagraph 3.08(a) at all times after such
        sale or assignment, and each such Person shall be deemed so to have
        assumed such obligations by entering into such sublease or by purchasing
        or taking assignment of this Agreement. Ground Lessor agrees that Ground
        Lessee shall have no duty to perform any of its obligations under this
        Agreement and shall be fully released from all such obligations during
        the periods when such obligations are so assumed by other Persons
        pursuant to clauses (i) and (ii) of the first sentence of this
        Subparagraph 3.08(b) and at all times after any sale or assignment of
        this Agreement.

        3.09. Utility Charges. Ground Lessor shall pay all charges for
electricity, power, gas, oil, water, telephone, sanitary sewer service and all
other utilities and services to, on or in connection with the Ground Lease
Property during the term of this Agreement.

        3.10. Removal of Property. Unless purchased by Ground Lessor pursuant to
the Term Purchase Option or the Expiration Date Purchase Option in the Purchase
Agreement, all Improvements to the Ground Lease Property and all other Property
(other than the Land) may be removed by Ground Lessee at any time at or prior to
the termination of this Agreement; provided, however, that Ground Lessee shall
not remove any such property prior to the Expiration Date of the Lease Agreement
unless an Event of Default has occurred and is continuing under the Lease
Agreement.

        3.11. Permitted Contests. Ground Lessee may contest any alleged Lien on
any of the Ground Lease Property in violation of Subparagraph 3.07(b), provided
that any such contest is completed and such Lien is discharged (either pursuant
to such proceedings or otherwise) not later than the Ground Lease Expiration
Date.

        3.12. Estoppel Certificates. Each party shall, within ten (10) Business
Days after receipt of a written request from the other party, deliver a written
statement to the requesting party stating the date to which the rent and other
charges have been paid, whether the Ground Lease is unmodified and in full force
and effect, and any other matters that may reasonably be requested.

        3.13. Recordation of Agreement. Neither Ground Lessor nor Ground Lessee
shall file or record this Agreement without the prior written consent of the
other party, but the parties will execute a good and sufficient memorandum of
lease for purposes of recording. Upon the expiration or earlier termination of
this Agreement, Ground Lessee shall promptly execute, acknowledge and deliver to
Ground Lessor any quitclaim deed or other document required by Ground Lessor or
a title company to evidence the termination of Ground Lessee's interests in the
Ground Lease Property.

SECTION 4. TERMINATION.

                                       11
<PAGE>   319

        4.01. Termination Date.

              (a) Early Termination. This Agreement shall continue in full force
        and effect until the Ground Lease Scheduled Expiration Date except as
        follows:

                  (i) This Agreement may be terminated by Ground Lessee at any
              time upon one (1) month's prior written notice to Ground Lessor;
              provided, however, in no event shall Ground Lessee exercise the
              right of termination prior to the Expiration Date of the Lease
              Agreement unless an Event of Default has occurred and is
              continuing under the Lease Agreement and Ground Lessor's right as
              Lessee thereunder to remain in possession is terminated.

                  (ii) This Agreement may be terminated by Ground Lessor on the
              Expiration Date of the Lease Agreement upon one (1) month's prior
              written notice to Ground Lessee if Ground Lessor purchases the
              Property on such date pursuant to the Term Purchase Option or the
              Expiration Date Purchase Option in the Purchase Agreement and
              satisfies in full all Lessee Obligations on or prior to such date;
              provided, however, that, if this Agreement is so terminated on the
              Expiration Date but any amounts paid by Ground Lessor are
              thereafter recovered, Ground Lessor shall, at the request of
              Ground Lessee, enter a new Ground Lease in the form of this
              Agreement for the remaining term of this Agreement.

              (b) No Other Early Termination Date. Except as provided in
        Subparagraph 4.01(a), this Agreement shall not terminate prior to the
        Ground Lease Scheduled Expiration Date for any reason including, without
        limitation, (i) any Casualty to or Condemnation of all or any part of
        the Ground Lease Property, (ii) the occurrence of any Ground Lease Event
        of Default or any other default by Ground Lessee under this Agreement or
        (iii) any other cause whether similar or dissimilar to the foregoing,
        any existing or future law to the contrary notwithstanding; provided,
        however, that this Subparagraph 4.01(b) shall not abrogate any right
        Ground Lessor may have to recover damages or seek an injunction pursuant
        to Paragraph 5.02. It is the intention of the parties hereto that the
        obligations of Ground Lessor hereunder shall be separate and independent
        of the covenants and agreements of Ground Lessee.

        4.02. Surrender of Ground Lease Property. Ground Lessee shall vacate and
surrender the Ground Lease Property to Ground Lessor in its then-current
condition on the date (the "Ground Lease Expiration Date") that is the earlier
of (a) the Ground Lease Scheduled Expiration Date and (b) any earlier date on
which this Agreement is terminated pursuant to Subparagraph 4.01(a).

                                       12
<PAGE>   320

SECTION 5. DEFAULT.

        5.01. Ground Lease Events of Default. The occurrence or existence of any
one or more of the following shall constitute a "Ground Lease Event of Default"
hereunder:

              (a) Non-Payment. Ground Lessee shall fail to pay any installment
        of rent payable hereunder within sixty (60) days after such installment
        is due; or

              (b) Other Defaults. Ground Lessee shall fail to observe or perform
        any other covenant, obligation, condition or agreement contained in this
        Agreement and such failure shall continue for a period of sixty (60)
        days after written notice thereof from Ground Lessor; provided, however,
        that in the event that such failure cannot reasonably be cured within
        such sixty (60) day period, such failure shall not constitute an Event
        of Default hereunder so long as Ground Lessee shall have commenced to
        cure such failure within such sixty (60) day period and shall thereafter
        diligently pursue such cure to completion, provided further that such
        failure shall in all events be cured by the earlier of (i) the Ground
        Lease Scheduled Expiration Date and (ii) one hundred and eighty days
        (180) days after Ground Lessor's notice thereof.

        5.02. Remedies. Upon the occurrence or existence of any Ground Lease
Event of Default and at any time thereafter unless such Ground Lease Event of
Default is waived, Ground Lessor may sue Ground Lessee for the collection of any
amount due under this Agreement or to enjoin the continuation of the Ground
Lease Event of Default; provided, however, that such remedies are the sole and
exclusive remedies of Ground Lessor hereunder. Ground Lessor may not terminate
this Agreement or Ground Lessee's right to possession under this Agreement
except as expressly provided herein.

        5.03. Limited Recourse. Neither a Ground Lessee that is a Lessor Party
nor any of its Affiliates or any of their respective directors, officers,
employees, agents, attorneys and advisors shall have any personal liability for
the payment of or performance of any obligations of Ground Lessee under this
Agreement. Any judgment which Ground Lessor may obtain against a Ground Lessee
that is a Lessor Party for amounts due under this Agreement may be collected
only through resort to a judgment lien against Ground Lessee's interest in the
Ground Lease Property.

SECTION 6. MISCELLANEOUS.

        6.01. Notices. Except as otherwise specified herein, (a) all notices,
requests, demands, consents, instructions or other communications to or upon
Ground Lessee or Ground Lessor under this Agreement given on or prior to the
Expiration Date of the Lease Agreement shall be given as provided in
Subparagraph 2.02(c) and Paragraph 7.01 of the Participation Agreement and (b)
all notices, requests, demands, consents, instructions or other communications
to or upon Ground Lessee or Ground Lessor under this Agreement given after the
Expiration Date of the Lease Agreement shall be in writing and faxed, mailed or
delivered to its respective facsimile number or address set forth in Paragraph
7.01 of the Participation Agreement (or to such other facsimile number or
address for either party as indicated in any notice given by that party to the

                                       13
<PAGE>   321

other party). All such notices and communications shall be effective (i) when
sent by Federal Express or other overnight service of recognized standing, on
the Business Day following the deposit with such service; (ii) when mailed,
first class postage prepaid and addressed as aforesaid through the United States
Postal Service, upon receipt; (iii) when delivered by hand, upon delivery; and
(iv) when faxed, upon confirmation of receipt.

        6.02. Waivers; Amendments. Until the Expiration Date of the Lease
Agreement and the satisfaction in full of all Lessee Obligations or, if earlier,
the date on which Ground Lessee sells or assigns this Agreement, any term,
covenant, agreement or condition of this Agreement may be amended or waived only
as provided in the Participation Agreement. Thereafter, any term, covenant,
agreement or condition of this Agreement may be amended or waived if such
amendment or waiver is in writing and is signed by Ground Lessor and Ground
Lessee. No failure or delay by either party in exercising any right hereunder
shall operate as a waiver thereof or of any other right nor shall any single or
partial exercise of any such right preclude any other further exercise thereof
or of any other right. Unless otherwise specified in any such waiver or consent,
a waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which given.

        6.03. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Ground Lessor and Ground Lessee and their permitted
successors and assigns; provided, however, that Ground Lessor and Ground Lessee
shall not sell, assign or delegate their respective rights and obligations
hereunder except as provided in this Agreement or the Participation Agreement.

        6.04. No Third Party Rights. Nothing expressed in or to be implied from
this Agreement is intended to give, or shall be construed to give, any Person,
other than Ground Lessor, Ground Lessee, the Lessor Parties, Lessee and each of
their permitted successors and assigns, any benefit or legal or equitable right,
remedy or claim under or by virtue of this Agreement or under or by virtue of
any provision herein.

        6.05. Partial Invalidity. If at any time any provision of this Agreement
is or becomes illegal, invalid or unenforceable in any respect under the law or
any jurisdiction, neither the legality, validity or enforceability of the
remaining provisions of this Agreement nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction shall
in any way be affected or impaired thereby.

        6.06. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California without reference to
conflicts of law rules except as otherwise provided in Paragraph 7.14 of the
Participation Agreement.

        6.07. Counterparts. This Agreement may be executed in any number of
identical counterparts, any set of which signed by all the parties hereto shall
be deemed to constitute a complete, executed original for all purposes.

                          [The signature page follows.]

                                       14
<PAGE>   322

        IN WITNESS WHEREOF, Ground Lessee and Ground Lessor have caused this
Agreement to be executed as of the day and year first above written.

GROUND LESSOR:                      NOVELLUS SYSTEMS, INC.

                                    By:_________________________________
                                       Name:____________________________
                                       Title:___________________________

GROUND LESSEE:                      ABN AMRO LEASING, INC.

                                    By:_________________________________
                                       Name:____________________________
                                       Title:___________________________

                               15
<PAGE>   323
                                    EXHIBIT A

                                LEGAL DESCRIPTION
                                  NOVELLUS SITE
                                    PARCEL 2

Parcel A:

A parcel of land containing 23.018 Acres, more or less, located in a portion of
the Northeast Quarter of Section 22, Township Two South, Range One West,
Willamette Meridian, City of Tualatin, Washington County, Oregon, being more
particularly described as follows:

Beginning at a 2" Brass Disk in a monument box marking the one-quarter corner
common to Sections 15 and 22; thence South 00 degrees 06' 18" West 30.00 feet to
a point on the south right-of-way line of S.W. Tualatin Road; thence following
the East line of that Parcel of land shown as Parcel 2 on Washington County
Survey #23,036 South 00 degrees 06' 18" West 451.01 feet to the "TRUE POINT OF
BEGINNING" for this described tract; thence South 89 degrees 35' 19" East
1129.99 feet; thence South 00 degrees 24' 41" West 134.46 feet; thence North 89
degrees 35' 19" West 162.59 feet; thence South 00 degrees 24' 41" West 311.68
feet; thence South 89 degrees 35' 19" East 411.63 feet; thence South 00 degrees
24' 41" West 406.45 feet to a point on the north right-of-way line (being 30.00
feet from centerline) of S.W. Leveton Drive; thence following the north
right-of-way line of S.W. Leveton Drive North 89 degrees 41' 51" West 48.66 feet
to an angle point in the north right-ofway line of said S.W. Leveton Drive;
thence North 89 degrees 35' 19" West 1325.84 feet to a found 3/4" brass washer
marked "PLS 2351" per survey #23,991 marking the Southeast corner of that said
Parcel of land shown as Parcel 2 on Washington County Survey #23,036; thence
following the East line of said Parcel 2 as shown on Washington County Survey
#23,036 North 00 degrees 06' 18" East 845.79 feet to the "TRUE POINT OF
BEGINNING".

Subject to: All easements, restrictions and rights-of-way of record and those
common and apparent on the land.

                                       A-1<PAGE>   1

                                                                    EXHIBIT 10.7

                             NOVELLUS SYSTEMS, INC.
                            2001 STOCK INCENTIVE PLAN

        1. Purposes of the Plan. The purposes of this Stock Incentive Plan are
to attract and retain the best available personnel, to provide additional
incentive to Employees, Directors and Consultants and to promote the success of
the Company's business.

        2. Definitions. As used herein, the following definitions shall apply:

                (a) "Administrator" means the Board or any of the Committees
appointed to administer the Plan.

                (b) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange
Act.

                (c) "Applicable Laws" means the legal requirements relating to
the administration of stock incentive plans, if any, under applicable provisions
of federal securities laws, state corporate and securities laws, the Code, the
rules of any applicable stock exchange or national market system, and the rules
of any foreign jurisdiction applicable to Awards granted to residents therein.

                (d) "Award" means the grant of an Option, Restricted Stock or
other right or benefit under the Plan.

                (e) "Award Agreement" means the written agreement evidencing the
grant of an Award executed by the Company and the Grantee, including any
amendments thereto.

                (f) "Board" means the Board of Directors of the Company.

                (g) "Code" means the Internal Revenue Code of 1986, as amended.

                (h) "Committee" means any committee appointed by the Board to
administer the Plan.

                (i) "Common Stock" means the common stock of the Company.

                (j) "Company" means Novellus Systems, Inc., a California
corporation.

                (k) "Consultant" means any person (other than an Employee or a
Director, solely with respect to rendering services in such person's capacity as
a Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.

                (l) "Continuous Service" means that the provision of services to
the Company or a Related Entity in any capacity of Employee, Director or
Consultant, is not interrupted or terminated. Continuous Service shall not be
considered interrupted in the case of (i) any

                                       1
<PAGE>   2

approved leave of absence, (ii) transfers among the Company, any Related Entity,
or any successor, in any capacity of Employee, Director or Consultant, or (iii)
any change in status as long as the individual remains in the service of the
Company or a Related Entity in any capacity of Employee, Director or Consultant
(except as otherwise provided in the Award Agreement). An approved leave of
absence shall include sick leave, military leave, or any other authorized
personal leave. For purposes of each Incentive Stock Option granted under the
Plan, if such leave exceeds ninety (90) days, and reemployment upon expiration
of such leave is not guaranteed by statute or contract, then the Incentive Stock
Option shall be treated as a Nonstatutory Stock Option on the day three (3)
months and one (1) day following the expiration of such ninety (90) day period.

                (m) "Corporate Transaction" means any of the following
transactions:

                        (i) a merger or consolidation in which the Company is
not the surviving entity, except for a transaction the principal purpose of
which is to change the state in which the Company is incorporated;

                        (ii) the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the Company's subsidiary corporations);

                        (iii) approval by the Company's shareholders of any plan
or proposal for the complete liquidation or dissolution of the Company; or

                        (iv) any reverse merger in which the Company is the
surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding securities
are transferred to a person or persons different from those who held such
securities immediately prior to such merger.

                (n) "Covered Employee" means an Employee who is a "covered
employee" under Section 162(m)(3) of the Code.

                (o) "Director" means a member of the Board or the board of
directors of any Related Entity.

                (p) "Disability" means a Grantee would qualify for benefit
payments under the long-term disability policy of the Company or the Related
Entity to which the Grantee provides services regardless of whether the Grantee
is covered by such policy. If the Company or the Related Entity to which the
Grantee provides service does not have a long-term disability plan in place,
"Disability" means that a Grantee is permanently unable to carry out the
responsibilities and functions of the position held by the Grantee by reason of
any medically determinable physical or mental impairment. A Grantee will not be
considered to have incurred a Disability unless he or she furnishes proof of
such impairment sufficient to satisfy the Administrator in its discretion.

               (q) "Employee" means any person, including an Officer or
Director, who is an employee of the Company or any Related Entity. The payment
of a director's fee by the Company or a Related Entity shall not be sufficient
to constitute "employment" by the Company.

                                       2
<PAGE>   3

                (r) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

                (s) "Fair Market Value" means, that as of any date, the value of
Common Stock shall be the closing price for a Share for the market trading day
on such date (or, if no closing price was reported on that date, on the last
trading date on which a closing price was reported) on the stock exchange
determined by the Administrator to be the primary market for the Common Stock or
the Nasdaq National Market, whichever is applicable, or if the Common Stock is
not traded on any exchange or national market system, the average of the closing
bid and ask prices of a Share on the Nasdaq Small Cap Market on such date (or,
if no closing prices were reported on that date, on the last trading date on
which closing prices were reported), in each case, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable.

                (t) "Grantee" means an Employee, Director or Consultant who
receives an Award pursuant to an Award Agreement under the Plan.

                (u) "Immediate Family" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
Grantee's household (other than a tenant or employee), a trust in which these
persons have more than fifty percent (50%) of the beneficial interest, a
foundation in which these persons (or the Grantee) control the management of
assets, and any other entity in which these persons (or the Grantee) own more
than fifty percent (50%) of the voting interests.

                (v) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code.

                (w) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option.

                (x) "Officer" means a person who is an officer of the Company or
a Related Entity within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.

                (y) "Option" means an option to purchase Shares pursuant to an
Award Agreement granted under the Plan.

                (z) "Outside Director" means a Director who is not an Employee.

                (aa) "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

                (bb) "Performance - Based Compensation" means compensation
qualifying as "performance-based compensation" under Section 162(m) of the Code.

                (cc) "Plan" means this 2001 Stock Incentive Plan.

                                       3
<PAGE>   4

                (dd) "Related Entity" means any Parent, Subsidiary and any
business, corporation, partnership, limited liability company or other entity in
which the Company, a Parent or a Subsidiary holds a substantial ownership
interest, directly or indirectly.

                (ee) "Related Entity Disposition" means the sale, distribution
or other disposition by the Company, a Parent or a Subsidiary of all or
substantially all of the interests of the Company, a Parent or a Subsidiary in
any Related Entity effected by a sale, merger or consolidation or other
transaction involving that Related Entity or the sale of all or substantially
all of the assets of that Related Entity, other than any Related Entity
Disposition to the Company, a Parent or a Subsidiary.

                (ff) "Restricted Stock" means Shares issued under the Plan to
the Grantee for such consideration, if any, and subject to such restrictions on
transfer, rights of first refusal, repurchase provisions, forfeiture provisions,
and other terms and conditions as established by the Administrator.

                (gg) "Rule 16b-3" means Rule 16b-3 promulgated under the
Exchange Act or any successor thereto.

                (hh) "Share" means a share of the Common Stock.

                (ii) "Subsidiary" means a "subsidiary corporation," whether now
or hereafter existing, as defined in Section 424(f) of the Code.

        3. Stock Subject to the Plan.

                (a) Subject to the provisions of Section 10, below, the maximum
aggregate number of Shares which may be issued pursuant to all Awards (including
Incentive Stock Options) is 6,360,000 Shares. Notwithstanding the foregoing and
subject to the provisions of Section 10 below, the maximum number of Shares
which may be issued pursuant to all Awards of Restricted Stock is ten percent
(10%) of the aggregate number of Shares which may be issued pursuant to all
Awards under the Plan. The Shares to be issued pursuant to Awards may be
authorized, but unissued, or reacquired Common Stock.

                (b) Any Shares covered by an Award (or portion of an Award)
which is forfeited or canceled, expires or is settled in cash, shall be deemed
not to have been issued for purposes of determining the maximum aggregate number
of Shares which may be issued under the Plan. Shares that actually have been
issued under the Plan pursuant to an Award shall not be returned to the Plan and
shall not become available for future issuance under the Plan, except that if
unvested Shares are forfeited, or repurchased by the Company at their original
purchase price, such Shares shall become available for future grant under the
Plan.

        4. Administration of the Plan.

                (a) Plan Administrator.

                        (i) Administration with Respect to Directors and
Officers. With respect to grants of Awards to Directors or Employees who are
also Officers or Directors of the

                                       4
<PAGE>   5

Company, the Plan shall be administered by (A) the Board or (B) a Committee
designated by the Board, which Committee shall be constituted in such a manner
as to satisfy the Applicable Laws and to permit such grants and related
transactions under the Plan to be exempt from Section 16(b) of the Exchange Act
in accordance with Rule 16b-3. Once appointed, such Committee shall continue to
serve in its designated capacity until otherwise directed by the Board.

                        (ii) Administration With Respect to Consultants and
Other Employees. With respect to grants of Awards to Employees or Consultants
who are neither Directors nor Officers of the Company, the Plan shall be
administered by (A) the Board or (B) a Committee designated by the Board, which
Committee shall be constituted in such a manner as to satisfy the Applicable
Laws. Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. The Board may authorize one or
more Officers to grant such Awards and may limit such authority as the Board
determines from time to time.

                        (iii) Administration With Respect to Covered Employees.
Notwithstanding the foregoing, grants of Awards to any Covered Employee intended
to qualify as Performance-Based Compensation shall be made only by a Committee
(or subcommittee of a Committee) which is comprised solely of two (2) or more
Directors eligible to serve on a committee making Awards qualifying as
Performance-Based Compensation. In the case of such Awards granted to Covered
Employees, references to the "Administrator" or to a "Committee" shall be deemed
to be references to such Committee or subcommittee.

                        (iv) Administration Errors. In the event an Award is
granted in a manner inconsistent with the provisions of this subsection (a),
such Award shall be presumptively valid as of its grant date to the extent
permitted by the Applicable Laws.

                (b) Powers of the Administrator. Subject to Applicable Laws and
the provisions of the Plan (including any other powers given to the
Administrator hereunder), and except as otherwise provided by the Board, the
Administrator shall have the authority, in its discretion:

                        (i) to select the Employees, Directors (excluding
Outside Directors) and Consultants to whom Awards may be granted from time to
time hereunder;

                        (ii) to determine whether and to what extent Awards are
granted hereunder;

                        (iii) to determine the number of Shares or the amount of
other consideration to be covered by each Award granted hereunder;

                        (iv) to approve forms of Award Agreements for use under
the Plan;

                        (v) to determine the terms and conditions of any Award
granted hereunder;

                        (vi) to amend the terms of any outstanding Award granted
under the Plan, provided that any amendment that would adversely affect the
Grantee's rights under an

                                       5
<PAGE>   6

outstanding Award shall not be made without the Grantee's written consent and
the reduction of the exercise price of any Option awarded under the Plan shall
be subject to shareholder approval;

                        (vii) to construe and interpret the terms of the Plan
and Awards granted pursuant to the Plan, including without limitation, any
notice of Award or Award Agreement, granted pursuant to the Plan;

                        (viii) to establish additional terms, conditions, rules
or procedures to accommodate the rules or laws of applicable foreign
jurisdictions and to afford Grantees favorable treatment under such laws;
provided, however, that no Award shall be granted under any such additional
terms, conditions, rules or procedures with terms or conditions which are
inconsistent with the provisions of the Plan; and

                        (ix) to take such other action, not inconsistent with
the terms of the Plan, as the Administrator deems appropriate.

        5. Eligibility. Awards other than Incentive Stock Options may be granted
to Employees, Directors and Consultants; provided, however that Outside
Directors shall only be eligible to receive Options pursuant to the provisions
of Section 6(e), Non-Discretionary Automatic Awards to Outside Directors.
Incentive Stock Options may be granted only to Employees of the Company, a
Parent or a Subsidiary. An Employee, Director or Consultant who has been granted
an Award may, if otherwise eligible, be granted additional Awards. Awards may be
granted to such Employees, Directors or Consultants who are residing in foreign
jurisdictions as the Administrator may determine from time to time.

        6. Terms and Conditions of Awards.

                (a) Type of Awards. The Administrator is authorized under the
Plan to award any type of arrangement to an Employee, Director or Consultant
that is not inconsistent with the provisions of the Plan and that by its terms
involves or might involve the issuance of Shares and Options with a fixed or
variable price related to the Fair Market Value of the Shares and with an
exercise or conversion privilege related to the passage of time, the occurrence
of one or more events, or the satisfaction of performance criteria or other
conditions. Such Awards may include Options and sales or bonuses of Restricted
Stock and may be awarded in any combination or alternative.

                (b) Designation of Award. Each Award shall be designated in the
Award Agreement. In the case of an Option, the Option shall be designated as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of Shares subject to Options designated as Incentive Stock Options which
become exercisable for the first time by a Grantee during any calendar year
(under all plans of the Company or any Parent or Subsidiary) exceeds $100,000,
such excess Options, to the extent of the Shares covered thereby in excess of
the foregoing limitation, shall be treated as Nonstatutory Stock Options. For
this purpose, Incentive Stock Options shall be taken into account in the order
in which they were granted, and the Fair Market Value of the Shares shall be
determined as of the date the Option with respect to such Shares is granted.

                                       6
<PAGE>   7

                (c) Conditions of Award. Subject to the terms of the Plan, the
Administrator shall determine the provisions, terms, and conditions of each
Award including, but not limited to, the Award vesting schedule, repurchase
provisions, rights of first refusal, forfeiture provisions, form of payment
(cash, Shares, or other consideration) upon settlement of the Award, payment
contingencies, and satisfaction of any performance criteria. The performance
criteria established by the Administrator may be based on any one of, or
combination of, increase in Share price, earnings per Share, total shareholder
return, return on equity, return on assets, return on investment, net operating
income, cash flow, revenue, economic value added, personal management
objectives, or other measure of performance selected by the Administrator.
Partial achievement of the specified criteria may result in a payment or vesting
corresponding to the degree of achievement as specified in the Award Agreement.

                (d) Acquisitions and Other Transactions. The Administrator may
issue Awards under the Plan in settlement, assumption or substitution for,
outstanding awards or obligations to grant future awards in connection with the
Company or a Related Entity acquiring another entity, an interest in another
entity or an additional interest in a Related Entity whether by merger, stock
purchase, asset purchase or other form of transaction.

                (e) Non-Discretionary Automatic Awards to Outside Directors. On
the day immediately following the annual meeting of shareholders of the Company
held in 2002 and each annual meeting thereafter, each Outside Director shall be
automatically granted an Option to purchase 10,000 Shares (as adjusted in
accordance with Section 10 hereof), provided that at the date of grant of each
Option such Director is an Outside Director; and provided, further, that
sufficient Shares are available under the Plan for the grant of such Option. No
person shall have any discretion to select which Outside Directors shall be
granted Options or to determine the number of Shares to be covered by such
Options; provided, however, that nothing in this Plan shall be construed to
prevent an Outside Director from declining to receive an Option under this Plan.
The terms of Options granted under this Section 6(e) shall be as follows:

                        (i) the term of the Option shall be five (5) years;

                        (ii) the exercise price per Share shall be one hundred
percent (100%) of the Fair Market Value on the date of grant of the Option;

                        (iii) the Option shall be exercisable upon grant.

                (f) Individual Option Limit. The maximum number of Shares with
respect to which Options may be granted to any Grantee in any fiscal year of the
Company shall be 600,000 Shares. In connection with a Grantee's commencement of
Continuous Service, a Grantee may be granted Options for up to an additional
1,200,000 Shares which shall not count against the limit set forth in the
previous sentence. The foregoing limitations shall be adjusted proportionately
in connection with any change in the Company's capitalization pursuant to
Section 10, below. To the extent required by Section 162(m) of the Code or the
regulations thereunder, in applying the foregoing limitations with respect to a
Grantee, if any Option is canceled, the canceled Option shall continue to count
against the maximum number of Shares with respect to which Options may be
granted to the Grantee. For this purpose, the repricing of an Option shall be
treated as

                                       7
<PAGE>   8

the cancellation of the existing Option and the grant of a new Option (if
approved by shareholders).

                (g) Term of Award. The term of each Award shall be the term
stated in the Award Agreement, provided, however, that the term of any Award
shall be no more than ten (10) years from the date of grant thereof. However, in
the case of an Incentive Stock Option granted to a Grantee who, at the time the
Option is granted, owns stock representing more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the term of the Incentive Stock Option shall be five (5) years from the date of
grant thereof or such shorter term as may be provided in the Award Agreement.

                (h) Transferability of Awards. Incentive Stock Options may not
be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Grantee, only by the Grantee; provided,
however, that the Grantee may designate a beneficiary of the Grantee's Incentive
Stock Option in the event of the Grantee's death on a beneficiary designation
form provided by the Administrator. Other Awards may be transferred by gift or
through a domestic relations order to members of the Grantee's Immediate Family
to the extent provided in the Award Agreement or in the manner and to the extent
determined by the Administrator.

                (i) Time of Granting Awards. The date of grant of an Award shall
for all purposes be the date on which the Administrator makes the determination
to grant such Award, or such other date as is determined by the Administrator.
Notice of the grant determination shall be given to each Employee, Director or
Consultant to whom an Award is so granted within a reasonable time after the
date of such grant.

        7. Award Exercise or Purchase Price, Consideration and Taxes.

                (a) Exercise or Purchase Price. The exercise or purchase price,
if any, for an Award shall be as follows:

                        (i) In the case of an Incentive Stock Option granted to
an Employee who, at the time of the grant of such Incentive Stock Option owns
stock representing more than ten percent (10%) of the voting power of all
classes of stock of the Company or any Parent or Subsidiary, the per Share
exercise price shall be not less than one hundred ten percent (110%) of the Fair
Market Value per Share on the date of grant.

                        (ii) In cases other than the case described in the
preceding paragraph, the per Share exercise price of an Option shall be not less
than one hundred percent (100%) of the Fair Market Value per Share on the date
of grant.

                        (iii) In the case of a Restricted Stock grant, such
price, if any, shall be determined by the Administrator.

                        (iv) Notwithstanding the foregoing provisions of this
Section 7(a), in the case of an Award issued pursuant to Section 6(d), above,
the exercise or purchase price for the Award shall be determined in accordance
with the principles of Section 424(a) of the Code.

                                       8
<PAGE>   9

                (b) Consideration. Subject to Applicable Laws, the consideration
to be paid for the Shares to be issued upon exercise or purchase of an Award
including the method of payment, shall be determined by the Administrator (and,
in the case of an Incentive Stock Option, shall be determined at the time of
grant). In addition to any other types of consideration the Administrator may
determine, the Administrator is authorized to accept as consideration for Shares
issued under the Plan the following:

                        (i) cash;

                        (ii) check;

                        (iii) surrender of Shares or delivery of a properly
executed form of attestation of ownership of Shares as the Administrator may
require (including withholding of Shares otherwise deliverable upon exercise of
the Award) which have a Fair Market Value on the date of surrender or
attestation equal to the aggregate exercise price of the Shares as to which said
Award shall be exercised (but only to the extent that such exercise of the Award
would not result in an accounting compensation charge with respect to the Shares
used to pay the exercise price unless otherwise determined by the
Administrator);

                        (iv) with respect to Options, payment through a
broker-dealer sale and remittance procedure pursuant to which the Grantee (A)
shall provide written instructions to a Company designated brokerage firm to
effect the immediate sale of some or all of the purchased Shares and remit to
the Company, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the purchased
Shares and (B) shall provide written directives to the Company to deliver the
certificates for the purchased Shares directly to such brokerage firm in order
to complete the sale transaction; or

                        (v) any combination of the foregoing methods of payment.

                (c) Taxes. No Shares shall be delivered under the Plan to any
Grantee or other person until such Grantee or other person has made arrangements
acceptable to the Administrator for the satisfaction of any foreign, federal,
state, or local income and employment tax withholding obligations, including,
without limitation, obligations incident to the receipt of Shares or the
disqualifying disposition of Shares received on exercise of an Incentive Stock
Option. Upon exercise of an Award, the Company shall withhold or collect from
Grantee an amount sufficient to satisfy such tax obligations.

        8. Exercise of Award.

                (a) Procedure for Exercise; Rights as a Shareholder.

                        (i) Any Award granted hereunder shall be exercisable at
such times and under such conditions as determined by the Administrator under
the terms of the Plan and specified in the Award Agreement.

                        (ii) An Award shall be deemed to be exercised when
written notice of such exercise has been given to the Company in accordance with
the terms of the Award by the person entitled to exercise the Award and full
payment for the Shares with respect to which the

                                       9
<PAGE>   10

Award is exercised, including, to the extent selected, use of the broker-dealer
sale and remittance procedure to pay the purchase price as provided in Section
7(b)(v). Until the issuance (as evidenced by the appropriate entry on the books
of the Company or of a duly authorized transfer agent of the Company) of the
stock certificate evidencing such Shares, no right to vote or receive dividends
or any other rights as a shareholder shall exist with respect to Shares subject
to an Award, notwithstanding the exercise of an Option or other Award. The
Company shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Award. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in the Award Agreement or Section 10, below.

                (b) Exercise of Award Following Termination of Continuous
Service.

                        (i) An Award may not be exercised after the termination
date of such Award set forth in the Award Agreement and may be exercised
following the termination of a Grantee's Continuous Service only to the extent
provided in the Award Agreement.

                        (ii) Where the Award Agreement permits a Grantee to
exercise an Award following the termination of the Grantee's Continuous Service
for a specified period, the Award shall terminate to the extent not exercised on
the last day of the specified period or the last day of the original term of the
Award, whichever occurs first.

                        (iii) Any Award designated as an Incentive Stock Option
to the extent not exercised within the time permitted by law for the exercise of
Incentive Stock Options following the termination of a Grantee's Continuous
Service shall convert automatically to a Nonstatutory Stock Option and
thereafter shall be exercisable as such to the extent exercisable by its terms
for the period specified in the Award Agreement.

        9. Conditions Upon Issuance of Shares.

                (a) Shares shall not be issued pursuant to the exercise of an
Award unless the exercise of such Award and the issuance and delivery of such
Shares pursuant thereto shall comply with all Applicable Laws, and shall be
further subject to the approval of counsel for the Company with respect to such
compliance.

                (b) As a condition to the exercise of an Award, the Company may
require the person exercising such Award to represent and warrant at the time of
any such exercise that the Shares are being purchased only for investment and
without any present intention to sell or distribute such Shares if, in the
opinion of counsel for the Company, such a representation is required by any
Applicable Laws.

        10. Adjustments Upon Changes in Capitalization. Subject to any required
action by the shareholders of the Company, the number of Shares covered by each
outstanding Award, and the number of Shares which have been authorized for
issuance under the Plan but as to which no Awards have yet been granted or which
have been returned to the Plan, the exercise or purchase price of each such
outstanding Award, the maximum number of Shares with respect to which Options
may be granted to any Grantee in any fiscal year of the Company, the number of
Shares granted to Outside Directors under Section 6(e), the total number of
Shares with respect to which Restricted Stock can be granted under the Plan, as
well as any other terms that the Administrator

                                       10
<PAGE>   11

determines require adjustment shall be proportionately adjusted for (i) any
increase or decrease in the number of issued Shares resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Shares, or similar event affecting the Shares, (ii) any other increase or
decrease in the number of issued Shares effected without receipt of
consideration by the Company, or (iii) as the Administrator may determine in its
discretion, any other transaction with respect to Common Stock to which Section
424(a) of the Code applies or any similar transaction; provided, however that
conversion of any convertible securities of the Company shall not be deemed to
have been "effected without receipt of consideration." Such adjustment shall be
made by the Administrator and its determination shall be final, binding and
conclusive. Except as the Administrator determines, no issuance by the Company
of shares of stock of any class, or securities convertible into shares of stock
of any class, shall affect, and no adjustment by reason hereof shall be made
with respect to, the number or price of Shares subject to an Award.

        11. Corporate Transactions and Related Entity Dispositions. Except as
may be provided in an Award Agreement:

                (a) The Administrator shall have the authority, exercisable
either in advance of any actual or anticipated Corporate Transaction or Related
Entity Disposition or at the time of an actual Corporate Transaction or Related
Entity Disposition and exercisable at the time of the grant of an Award under
the Plan or any time while an Award remains outstanding, to provide for the full
or partial automatic vesting and exercisability of one or more outstanding
unvested Awards under the Plan and the full or partial release from restrictions
on transfer and repurchase or forfeiture rights of such Awards in connection
with a Corporate Transaction or Related Entity Disposition, on such terms and
conditions as the Administrator may specify. The Administrator also shall have
the authority to condition any such Award vesting and exercisability or release
from such limitations upon the subsequent termination of the Continuous Service
of the Grantee within a specified period following the effective date of the
Corporate Transaction or Related Entity Disposition. The Administrator may
provide that any Awards so vested or released from such limitations in
connection with a Related Entity Disposition, shall remain fully exercisable
until the expiration or sooner termination of the Award. Effective upon the
consummation of a Corporate Transaction, all outstanding Awards under the Plan
shall terminate unless assumed by the successor company or its parent.

                (e) The portion of any Incentive Stock Option accelerated under
this Section 11 in connection with a Corporate Transaction or Related Entity
Disposition shall remain exercisable as an Incentive Stock Option under the Code
only to the extent the $100,000 dollar limitation of Section 422(d) of the Code
is not exceeded. To the extent such dollar limitation is exceeded, the
accelerated excess portion of such Option shall be exercisable as a Nonstatutory
Stock Option.

        12. Effective Date and Term of Plan. The Plan shall become effective
upon the earlier to occur of its adoption by the Board or its approval by the
shareholders of the Company. It shall continue in effect for a term of ten (10)
years unless sooner terminated. Subject to Section 17, below, and Applicable
Laws, Awards may be granted under the Plan upon its becoming effective.

        13. Amendment, Suspension or Termination of the Plan.

                                       11
<PAGE>   12

                (a) The Board may at any time amend, suspend or terminate the
Plan; provided, however, that no such amendment shall be made without the
approval of the Company's shareholders to the extent such approval is required
by Applicable Laws, or if such amendment would:

                        (i) expand the classes of persons to whom Awards may be
issued under Section 5 of the Plan;

                        (ii) increase the number of Shares authorized for
issuance under Section 3(a) of the Plan excluding such increases pursuant to
Section 10 of the Plan;

                        (iii) increase the number of Shares with respect to
which Options may be granted to any Grantee under Section 6(f) of the Plan
excluding such increases pursuant to Section 10 of the Plan;

                        (iv) increase the percentage of Shares available for
Awards of Restricted Stock under Section 3(a) of the Plan;

                        (v) permit unrestricted Shares to be granted other than
in lieu of cash payments under other incentive plans and programs of the Company
and its Related Entities excluding any such incentive plan or program that is a
"Retirement Plan" or "Welfare Plan" under the Employee Retirement Income
Security Act of 1974, as amended;

                        (vi) allow the creation of additional types of Awards;

                        (vii) permit decreasing the exercise price of any Option
outstanding under the Plan; or

                        (viii) change any of the provisions of this Section
13(a).

                (b) The Administrator may amend the terms of any outstanding
Award, prospectively or retroactively, but no such amendment (i) shall cause
Performance-Based Compensation to cease to qualify as Performance-Based
Compensation, (ii) impair the rights of any Grantee without the Grantee's
consent except such an amendment made to cause the Plan or Award to qualify for
any exemption provided by Rule 16b-3 or (iii) modify the terms of any Award in a
manner inconsistent with the provisions of the Plan. Subject to the above
provisions, the Board shall have authority to amend the Plan to take into
account changes in Applicable Laws and accounting rules as well as other
developments, and to grant Awards which qualify for beneficial treatment under
such rules without shareholder approval.

                (c) No Award may be granted during any suspension of the Plan or
after termination of the Plan.

                (d) Any amendment, suspension or termination of the Plan
(including termination of the Plan under Section 12, above) shall not affect
Awards already granted, and such Awards shall remain in full force and effect as
if the Plan had not been amended, suspended or terminated, unless mutually
agreed otherwise between the Grantee and the Administrator, which agreement must
be in writing and signed by the Grantee and the Company.

                                       12
<PAGE>   13

        14. Reservation of Shares.

                (a) The Company, during the term of the Plan, will at all times
reserve and keep available such number of Shares as shall be sufficient to
satisfy the requirements of the Plan.

                (b) The inability of the Company to obtain authority from any
regulatory body having jurisdiction, which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell such Shares as to which such requisite authority shall not have been
obtained.

        15. No Effect on Terms of Employment/Consulting Relationship. The Plan
shall not confer upon any Grantee any right with respect to the Grantee's
Continuous Service, nor shall it interfere in any way with his or her right or
the Company's right to terminate the Grantee's Continuous Service at any time,
with or without cause.

        16. No Effect on Retirement and Other Benefit Plans. Except as
specifically provided in a retirement or other benefit plan of the Company or a
Related Entity, Awards shall not be deemed compensation for purposes of
computing benefits or contributions under any retirement plan of the Company or
a Related Entity, and shall not affect any benefits under any other benefit plan
of any kind or any benefit plan subsequently instituted under which the
availability or amount of benefits is related to level of compensation. The Plan
is not a "Retirement Plan" or "Welfare Plan" under the Employee Retirement
Income Security Act of 1974, as amended.

        17. Shareholder Approval. The grant of Incentive Stock Options under the
Plan shall be subject to approval by the shareholders of the Company within
twelve (12) months before or after the date the Plan is adopted excluding
Incentive Stock Options issued in substitution for outstanding Incentive Stock
Options pursuant to Section 424(a) of the Code. Such shareholder approval shall
be obtained in the degree and manner required under Applicable Laws. The
Administrator may grant Incentive Stock Options under the Plan prior to approval
by the shareholders, but until such approval is obtained, no such Incentive
Stock Option shall be exercisable. In the event that shareholder approval is not
obtained within the twelve (12) month period provided above, all Incentive Stock
Options previously granted under the Plan shall be exercisable as Nonstatutory
Stock Options.

                                       13
<PAGE>   14

                NOVELLUS SYSTEMS, INC. 2001 STOCK INCENTIVE PLAN

                          NOTICE OF STOCK OPTION AWARD
                          ----------------------------
<TABLE>
<S>                                        <C>
     Grantee's Name and Address:
                                             ___________________________________

                                             ___________________________________

                                             ___________________________________
</TABLE>

     You have been granted an option to purchase shares of Common Stock,
subject to the terms and conditions of this Notice of Stock Option Award (the
"Notice"), the Novellus Systems, Inc. 2001 Stock Incentive Plan, as amended from
time to time (the "Plan") and the Stock Option Award Agreement (the "Option
Agreement") attached hereto, as follows. Unless otherwise defined herein, the
terms defined in the Plan shall have the same defined meanings in this Notice.

<TABLE>
<S>                                        <C>
     Award Number                           ____________________________________

     Date of Award                          ____________________________________

     Vesting Commencement Date              ____________________________________

     Exercise Price per Share               $___________________________________

     Total Number of Shares subject
     to the Option                          ____________________________________

     Total Exercise Price                   $___________________________________

     Type of Option:                        ____ Incentive Stock Option

                                            ____ Non-Qualified Stock Option

     Expiration Date:                       ____________________________________

     Post-Termination Exercise Period:      Three (3) Months
</TABLE>

Vesting Schedule:

     Subject to Grantee's Continuous Service and other limitations set forth in
this Notice, the Plan and the Option Agreement, the Option may be exercised, in
whole or in part, in accordance with the following schedule:

     25% of the Shares subject to the Option shall vest twelve months after the
Vesting Commencement Date, and 1/48 of the Shares subject to the Option shall
vest on each monthly anniversary of the Vesting Commencement Date thereafter.

     During any authorized leave of absence, the vesting of the Option as
provided in this schedule shall cease after the leave of absence exceeds a
period of ninety (90) days. Vesting of the Option shall resume upon the
Grantee's termination of the leave of absence and return to service to the
Company or a Related Entity.

                                       1
<PAGE>   15

     In the event of the Grantee's change in status from Employee to
Consultant or from an Employee whose customary employment is 20 hours or more
per week to an Employee whose customary employment is fewer than 20 hours per
week, vesting of the Option shall continue only to the extent determined by the
Administrator as of such change in status.

     IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice
and agree that the Option is to be governed by the terms and conditions of this
Notice, the Plan, and the Option Agreement.

                                   Novellus Systems, Inc.,
                                   a California corporation

                                   By: _________________________________

                                   Title: ______________________________

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL
VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE'S CONTINUOUS SERVICE (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES
HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
NOTICE, THE OPTION AGREEMENT, OR THE PLAN SHALL CONFER UPON THE GRANTEE ANY
RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF GRANTEE'S CONTINUOUS
SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE'S RIGHT OR THE RIGHT
OF THE GRANTEE'S EMPLOYER TO TERMINATE GRANTEE'S CONTINUOUS SERVICE, WITH OR
WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS
THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY,
GRANTEE'S STATUS IS AT WILL.

     The Grantee acknowledges receipt of a copy of the Plan and the Option
Agreement, and represents that he or she is familiar with the terms and
provisions thereof, and hereby accepts the Option subject to all of the terms
and provisions hereof and thereof. The Grantee has reviewed this Notice, the
Plan, and the Option Agreement in their entirety, has had an opportunity to
obtain the advice of counsel prior to executing this Notice, and fully
understands all provisions of this Notice, the Plan and the Option Agreement.
The Grantee hereby agrees that all disputes arising out of or relating to this
Notice, the Plan and the Option Agreement shall be resolved in accordance with
Section 13 of the Option Agreement. The Grantee further agrees to notify the
Company upon any change in the residence address indicated in this Notice.

<TABLE>
<S>                                  <C>
Dated: ______________________        Signed: ___________________________________
                                                          Grantee
</TABLE>

                                       2

<PAGE>   16

                                                      AWARD NUMBER:  ___________

                NOVELLUS SYSTEMS, INC. 2001 STOCK INCENTIVE PLAN

                          STOCK OPTION AWARD AGREEMENT
                          ----------------------------

     1. Grant of Option. Novellus Systems, Inc., a California corporation (the
"Company"), hereby grants to the Grantee (the "Grantee") named in the Notice of
Stock Option Award (the "Notice"), an option (the "Option") to purchase the
Total Number of Shares of Common Stock subject to the Option (the "Shares") set
forth in the Notice, at the Exercise Price per Share set forth in the Notice
(the "Exercise Price") subject to the terms and provisions of the Notice, this
Stock Option Award Agreement (the "Option Agreement") and the Company's 2001
Stock Incentive Plan, as amended from time to time (the "Plan"), which are
incorporated herein by reference. Unless otherwise defined herein, the terms
defined in the Plan shall have the same defined meanings in this Option
Agreement.

     If designated in the Notice as an Incentive Stock Option, the Option is
intended to qualify as an Incentive Stock Option as defined in Section 422 of
the Code. However, notwithstanding such designation, to the extent that the
aggregate Fair Market Value of Shares subject to Options designated as Incentive
Stock Options which become exercisable for the first time by the Grantee during
any calendar year (under all plans of the Company or any Parent or Subsidiary)
exceeds $100,000, such excess Options, to the extent of the Shares covered
thereby in excess of the foregoing limitation, shall be treated as Non-Qualified
Stock Options. For this purpose, Incentive Stock Options shall be taken into
account in the order in which they were granted, and the Fair Market Value of
the Shares shall be determined as of the date the Option with respect to such
Shares is awarded.

     2. Exercise of Option.

          (a) Right to Exercise. The Option shall be exercisable during its
term in accordance with the Vesting Schedule set out in the Notice and with the
applicable provisions of the Plan and this Option Agreement. The Option shall be
subject to the provisions of Section 11 of the Plan relating to the
exercisability or termination of the Option in the event of a Corporate
Transaction, Change in Control or Related Entity Disposition. The Grantee shall
be subject to reasonable limitations on the number of requested exercises during
any monthly or weekly period as determined by the Administrator. In no event
shall the Company issue fractional Shares.

          (b)  Method of Exercise. The Option shall be exercisable only by
delivery of an Exercise Notice (attached as Exhibit A) which shall state the
election to exercise the Option, the whole number of Shares in respect of which
the Option is being exercised, such other representations and agreements as to
the holder's investment intent with respect to such Shares and such other
provisions as may be required by the Administrator. The Exercise Notice shall be
signed by the Grantee and shall be delivered in person, by certified mail, or by
such other method as determined from time to time by the Administrator to the
Company accompanied by payment of the Exercise Price. The Option shall be deemed
to be exercised upon receipt by the Company

                                       1
<PAGE>   17

of such written notice accompanied by the Exercise Price, which, to the extent
selected, shall be deemed to be satisfied by use of the broker-dealer sale and
remittance procedure to pay the Exercise Price provided in Section 3(d), below.

          (c)  Taxes. No Shares will be delivered to the Grantee or other person
pursuant to the exercise of the Option until the Grantee or other person has
made arrangements acceptable to the Administrator for the satisfaction of
applicable income tax, employment tax, and social security tax withholding
obligations, including, without limitation, obligations incident to the receipt
of Shares or the disqualifying disposition of Shares received on exercise of an
Incentive Stock Option. Upon exercise of the Option, the Company or the
Grantee's employer may offset or withhold (from any amount owed by the Company
or the Grantee's employer to the Grantee) or collect from the Grantee or other
person an amount sufficient to satisfy such tax obligations and/or the
employer's withholding obligations.

     3. Method of Payment. Payment of the Exercise Price shall be by any of
the following, or a combination thereof, at the election of the Grantee;
provided, however, that such exercise method does not then violate any
Applicable Law:

          (a) cash;

          (b) check;

          (c)  surrender of Shares or delivery of a properly executed form of
attestation of ownership of Shares as the Administrator may require (including
withholding of Shares otherwise deliverable upon exercise of the Option) which
have a Fair Market Value on the date of surrender or attestation equal to the
aggregate Exercise Price of the Shares as to which the Option is being exercised
(but only to the extent that such exercise of the Option would not result in an
accounting compensation charge with respect to the Shares used to pay the
exercise price);

          (d)  payment through a broker-dealer sale and remittance procedure
pursuant to which the Grantee (i) shall provide written instructions to a
Company designated brokerage firm to effect the immediate sale of some or all of
the purchased Shares and remit to the Company, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased Shares and (ii) shall provide written
directives to the Company to deliver the certificates for the purchased Shares
directly to such brokerage firm in order to complete the sale transaction.

     4.   Restrictions on Exercise. The Option may not be exercised if the
issuance of the Shares subject to the Option upon such exercise would constitute
a violation of any Applicable Laws. In addition, the Option, if an Incentive
Stock Option, may not be exercised until such time as the Plan has been approved
by the stockholders of the Company.

     5.   Termination or Change of Continuous Service. In the event the
Grantee's Continuous Service terminates, the Grantee may, to the extent
otherwise so entitled at the date of such termination (the "Termination Date"),
exercise the Option during the Post-Termination Exercise Period. In no event
shall the Option be exercised later than the Expiration Date set forth

                                       2
<PAGE>   18

in the Notice. In the event of the Grantee's change in status from Employee,
Director or Consultant to any other status of Employee, Director or Consultant,
the Option shall remain in effect and, except to the extent otherwise determined
by the Administrator, continue to vest; provided, however, that with respect to
any Incentive Stock Option that shall remain in effect after a change in status
from Employee to Director or Consultant, such Incentive Stock Option shall cease
to be treated as an Incentive Stock Option and shall be treated as a
Non-Qualified Stock Option on the day three (3) months and one (1) day following
such change in status. Except as provided in Sections 6 and 7 below, to the
extent that the Grantee is not entitled to exercise the Option on the
Termination Date, or if the Grantee does not exercise the Option within the
Post-Termination Exercise Period, the Option shall terminate.

     6. Disability of Grantee. In the event the Grantee's Continuous Service
terminates as a result of his or her Disability, the Grantee may, but only
within twelve (12) months from the Termination Date (and in no event later than
the Expiration Date), exercise the Option to the extent he or she was otherwise
entitled to exercise it on the Termination Date; provided, however, that if such
Disability is not a "disability" as such term is defined in Section 22(e)(3) of
the Code and the Option is an Incentive Stock Option, such Incentive Stock
Option shall cease to be treated as an Incentive Stock Option and shall be
treated as a Non-Qualified Stock Option on the day three (3) months and one (1)
day following the Termination Date. To the extent that the Grantee is not
entitled to exercise the Option on the Termination Date, or if the Grantee does
not exercise the Option to the extent so entitled within the time specified
herein, the Option shall terminate.

     7. Death of Grantee. In the event of the termination of the Grantee's
Continuous Service as a result of his or her death, or in the event of the
Grantee's death during the Post-Termination Exercise Period or during the twelve
(12) month period following the Grantee's termination of Continuous Service as a
result of his or her Disability, the Grantee's estate, or a person who acquired
the right to exercise the Option by bequest or inheritance, may exercise the
Option, but only to the extent the Grantee could exercise the Option at the date
of termination, within twelve (12) months from the date of death (but in no
event later than the Expiration Date). To the extent that the Grantee is not
entitled to exercise the Option on the date of death, or if the Option is not
exercised to the extent so entitled within the time specified herein, the Option
shall terminate.

     8. Transferability of Option. The Option, if an Incentive Stock Option,
may not be transferred in any manner other than by will or by the laws of
descent and distribution and may be exercised during the lifetime of the Grantee
only by the Grantee; provided, however, that the Grantee may designate a
beneficiary of the Grantee's Incentive Stock Option in the event of the
Grantee's death on a beneficiary designation form provided by the Administrator.
The Option, if a Non-Qualified Stock Option may be transferred to any person by
will and by the laws of descent and distribution. Non-Qualified Stock Options
also may be transferred during the lifetime of the Grantee by gift and pursuant
to a domestic relations order to members of the Grantee's Immediate Family to
the extent and in the manner determined by the Administrator. The terms of the
Option shall be binding upon the executors, administrators, heirs, successors
and transferees of the Grantee.

                                       3
<PAGE>   19

     9. Term of Option. The Option may be exercised no later than the
Expiration Date set forth in the Notice or such earlier date as otherwise
provided herein.

     10. Tax Consequences. Set forth below is a brief summary as of the date of
this Option Agreement of some of the federal tax consequences of exercise of the
Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE,
AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

          (a) Exercise of Incentive Stock Option. If the Option qualifies as an
Incentive Stock Option, there will be no regular federal income tax liability
upon the exercise of the Option, although the excess, if any, of the Fair Market
Value of the Shares on the date of exercise over the Exercise Price will be
treated as income for purposes of the alternative minimum tax for federal tax
purposes and may subject the Grantee to the alternative minimum tax in the year
of exercise.

          (b) Exercise of Incentive Stock Option Following Disability. If the
Grantee's Continuous Service terminates as a result of Disability that is not
total and permanent disability as defined in Section 22(e)(3) of the Code, to
the extent permitted on the date of termination, the Grantee must exercise an
Incentive Stock Option within three (3) months of such termination for the
Incentive Stock Option to be qualified as an Incentive Stock Option.

          (c) Exercise of Non-Qualified Stock Option. On exercise of a
Non-Qualified Stock Option, the Grantee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the Fair Market Value of the Shares on the date of exercise over the
Exercise Price. If the Grantee is an Employee or a former Employee, the Company
will be required to withhold from the Grantee's compensation or collect from the
Grantee and pay to the applicable taxing authorities an amount in cash equal to
a percentage of this compensation income at the time of exercise, and may refuse
to honor the exercise and refuse to deliver Shares if such withholding amounts
are not delivered at the time of exercise.

          (d) Disposition of Shares. In the case of a Non-Qualified Stock
Option, if Shares are held for more than one year, any gain realized on
disposition of the Shares will be treated as long-term capital gain for federal
income tax purposes and subject to tax at a maximum rate of 20%. In the case of
an Incentive Stock Option, if Shares transferred pursuant to the Option are held
for more than one year after receipt of the Shares and are disposed more than
two years after the Date of Award, any gain realized on disposition of the
Shares also will be treated as capital gain for federal income tax purposes and
subject to the same tax rates and holding periods that apply to Shares acquired
upon exercise of a Non-Qualified Stock Option. If Shares purchased under an
Incentive Stock Option are disposed of prior to the expiration of such one-year
or two-year periods, any gain realized on such disposition will be treated as
compensation income (taxable at ordinary income rates) to the extent of the
difference between the Exercise Price and the lesser of (i) the Fair Market
Value of the Shares on the date of exercise, or (ii) the sale price of the
Shares.

                                       4
<PAGE>   20

     11. Entire Agreement: Governing Law. The Notice, the Plan and this Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee's interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice,
the Plan and this Option Agreement (except as expressly provided therein) is
intended to confer any rights or remedies on any persons other than the parties.
The Notice, the Plan and this Option Agreement are to be construed in accordance
with and governed by the internal laws of the State of California (as permitted
by Section 1646.5 of the California Civil Code, or any similar successor
provision) without giving effect to any choice of law rule that would cause the
application of the laws of any jurisdiction other than the internal laws of the
State of California to the rights and duties of the parties. Should any
provision of the Notice, the Plan or this Option Agreement be determined by a
court of law to be illegal or unenforceable, such provision shall be enforced to
the fullest extent allowed by law and the other provisions shall nevertheless
remain effective and shall remain enforceable.

     12. Headings. The captions used in the Notice and this Option Agreement
are inserted for convenience and shall not be deemed a part of the Option for
construction or interpretation.

     13. Dispute Resolution The provisions of this Section 13 shall be the
exclusive means of resolving disputes arising out of or relating to the Notice,
the Plan and this Option Agreement. The Company, the Grantee, and the Grantee's
assignees pursuant to Section 8 (the "parties") shall attempt in good faith to
resolve any disputes arising out of or relating to the Notice, the Plan and this
Option Agreement by negotiation between individuals who have authority to settle
the controversy. Negotiations shall be commenced by either party by notice of a
written statement of the party's position and the name and title of the
individual who will represent the party. Within thirty (30) days of the written
notification, the parties shall meet at a mutually acceptable time and place,
and thereafter as often as they reasonably deem necessary, to resolve the
dispute. If the dispute has not been resolved by negotiation, the parties agree
that any suit, action, or proceeding arising out of or relating to the Notice,
the Plan or this Option Agreement shall be brought in the United States District
Court for the Northern District of California (or should such court lack
jurisdiction to hear such action, suit or proceeding, in a California state
court in the County of Santa Clara) and that the parties shall submit to the
jurisdiction of such court. The parties irrevocably waive, to the fullest extent
permitted by law, any objection the party may have to the laying of venue for
any such suit, action or proceeding brought in such court. THE PARTIES ALSO
EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH
SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 13
shall for any reason be held invalid or unenforceable, it is the specific intent
of the parties that such provisions shall be modified to the minimum extent
necessary to make it or its application valid and enforceable.

     14. Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail (if the parties are within
the United States) or upon deposit for delivery by an internationally recognized
express mail courier service (for international delivery of notice),

                                       5
<PAGE>   21

with postage and fees prepaid, addressed to the other party at its address as
shown beneath its signature in the Notice, or to such other address as such
party may designate in writing from time to time to the other party.

                                       6
<PAGE>   22

                                    EXHIBIT A
                                    ---------

                NOVELLUS SYSTEMS, INC. 2001 STOCK INCENTIVE PLAN

                                 EXERCISE NOTICE
                                ----------------
Novellus Systems, Inc.
4000 North First Street
San Jose, CA  95134

Attention: Secretary

     1.   Exercise of Option. Effective as of today, ______________, ___ the
undersigned (the "Grantee") hereby elects to exercise the Grantee's option to
purchase ___________ shares of the Common Stock (the "Shares") of Novellus
Systems, Inc. (the "Company") under and pursuant to the Company's 2001 Stock
Incentive Plan, as amended from time to time (the "Plan") and the [ ] Incentive
[ ] Non-Qualified Stock Option Award Agreement (the "Option Agreement") and
Notice of Stock Option Award (the "Notice") dated ______________, ________.
Unless otherwise defined herein, the terms defined in the Plan shall have the
same defined meanings in this Exercise Notice.

     2.   Representations of the Grantee. The Grantee acknowledges that the
Grantee has received, read and understood the Notice, the Plan, and the Option
Agreement and agrees to abide by and be bound by their terms and conditions.

     3.   Rights as Stockholder. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Shares, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 10 of the Plan.

     4.   Delivery of Payment. The Grantee herewith delivers to the Company the
full Exercise Price for the Shares, which, to the extent selected, shall be
deemed to be satisfied by use of the broker-dealer sale and remittance procedure
to pay the Exercise Price provided in Section 3(d) of the Option Agreement.

     5. Tax Consultation. The Grantee understands that the Grantee may suffer
adverse tax consequences as a result of the Grantee's purchase or disposition of
the Shares. The Grantee represents that the Grantee has consulted with any tax
consultants the Grantee deems advisable in connection with the purchase or
disposition of the Shares and that the Grantee is not relying on the Company for
any tax advice

                                       1
<PAGE>   23

     6. Taxes. The Grantee agrees to satisfy all applicable federal, state and
local income and employment tax withholding obligations and herewith delivers to
the Company the full amount of such obligations or has made arrangements
acceptable to the Company to satisfy such obligations. In the case of an
Incentive Stock Option, the Grantee also agrees, as partial consideration for
the designation of the Option as an Incentive Stock Option, to notify the
Company in writing within thirty (30) days of any disposition of any shares
acquired by exercise of the Option if such disposition occurs within two (2)
years from the Date of Award or within one (1) year from the date the Shares
were transferred to the Grantee. If the Company is required to satisfy any
federal, state or local income or employment tax withholding obligations as a
result of such an early disposition, the Grantee agrees to satisfy the amount of
such withholding in a manner that the Administrator prescribes.

     7. Successors and Assigns. The Company may assign any of its rights under
this Exercise Notice to single or multiple assignees, and this agreement shall
inure to the benefit of the successors and assigns of the Company. This Exercise
Notice shall be binding upon the Grantee and his or her heirs, executors,
administrators, successors and assigns.

     8. Headings. The captions used in this Exercise Notice are inserted for
convenience and shall not be deemed a part of this agreement for construction or
interpretation.

     9. Dispute Resolution. The provisions of Section 13 of the Option
Agreement shall be the exclusive means of resolving disputes arising out of or
relating to this Exercise Notice.

     10. Governing Law; Severability. This Exercise Notice is to be construed
in accordance with and governed by the internal laws of the State of California
(as permitted by Section 1646.5 of the California Civil Code, or any similar
successor provision) without giving effect to any choice of law rule that would
cause the application of the laws of any jurisdiction other than the internal
laws of the State of California to the rights and duties of the parties. Should
any provision of this Exercise Notice be determined by a court of law to be
illegal or unenforceable, such provision shall be enforced to the fullest extent
allowed by law and the other provisions shall nevertheless remain effective and
shall remain enforceable.

     11. Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery or upon
deposit in the United States mail by certified mail, (if the parties are within
the United States) or upon deposit for delivery by an internationally recognized
express mail courier service (for international delivery of notice) with postage
and fees prepaid, addressed to the other party at its address as shown below
beneath its signature, or to such other address as such party may designate in
writing from time to time to the other party.

     12. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this agreement.

     13. Entire Agreement. The Notice, the Plan, and the Option Agreement are
incorporated herein by reference, and together with this Exercise Notice
constitute the entire

                                       2

<PAGE>   24
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and the
Grantee with respect to the subject matter hereof, and may not be modified
adversely to the Grantee's interest except by means of a writing signed by the
Company and the Grantee. Nothing in the Notice, the Plan, the Option Agreement
and this Exercise Notice (except as expressly provided therein) is intended to
confer any rights or remedies on any persons other than the parties.

<TABLE>
<S>                                         <C>
Submitted by:                                Accepted by:

GRANTEE:                                     NOVELLUS SYSTEMS, INC.

                                             By:
                                                --------------------------------
                                             Title:
-----------------------------------                -----------------------------
            (Signature)
Address:                                     Address:

                                            4000 North First Street
-----------------------------------         San Jose, CA  95134
-----------------------------------
</TABLE>

                                       3

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