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                                                                    EXHIBIT 10.4

                      SECOND AMENDMENT TO CREDIT AGREEMENT

        THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated as
of April 13, 2001, is entered into by and among:

                (1) NOVELLUS SYSTEMS, INC., a California corporation
        ("Borrower");

                (2) Each of the financial institutions listed in Schedule I to
        the Credit Agreement referred to in Recital A below (collectively, the
        "Lenders"); and

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

                                    RECITALS

        A. Borrower, Lenders and Agent are parties to a Credit Agreement dated
as of June 9, 1997 (as amended by a First Amendment thereto dated as of August
28, 1997, the "Credit Agreement"), pursuant to which Lenders have provided to
Borrower a certain credit facility.

        B. Borrower now has requested Lenders and Agent to amend the Credit
Agreement to make certain changes thereto.

        C. Lenders and Agent are willing so to amend the Credit Agreement upon
the terms and subject to the conditions set forth in this Amendment.

                                    AGREEMENT

        NOW, THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Borrower, the Lenders and Agent hereby agree as follows:

        1. DEFINITIONS, INTERPRETATION. All capitalized terms defined above and
elsewhere in this Amendment shall be used herein as so defined. Unless otherwise
defined herein, all other capitalized terms used herein shall have the
respective meanings given to those terms in the Credit Agreement, as amended by
this Amendment. The rules of construction set forth in Schedule 1.02 to the
Credit Agreement shall, to the extent not inconsistent with the terms of this
Amendment, apply to this Amendment and are hereby incorporated by reference.

        2. AMENDMENTS TO CREDIT AGREEMENT. Subject to the satisfaction of the
conditions set forth in Paragraph 4 below, the Credit Agreement is hereby
amended as follows:

                (a) Paragraph 1.01 is amended by changing the definitions of the
        following terms appearing therein to read in their entireties as
        follows:

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

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                                (a) The net income or net loss of Borrower 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 Borrower and its
                        Subsidiaries accruing during such period, (ii) all
                        depreciation and amortization expenses of Borrower and
                        its Subsidiaries accruing during such period, and (iii)
                        all rental expenses of Borrower and its Subsidiaries
                        accruing during such period (excluding any rental
                        expenses that are capitalized by the lessor during such
                        period);

                                      minus

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

                        "Agent's Fee Letter" shall mean collectively the letter
                agreement dated as of May 9, 1997 between Borrower and Agent
                regarding certain fees payable by Borrower to Agent and the
                letter agreements dated as of October 11, 2000 and December 5,
                2000 between Borrower and Agent regarding certain other fees
                payable by Borrower to Agent.

                        "Credit Documents" shall mean and include this
                Agreement, the Notes and the Agent's Fee Letter; all other
                notices, requests, certificates, documents, instruments and
                agreements delivered to Agent or any Lender pursuant to
                Paragraph 3.01; all other notices, requests, certificates,
                documents, instruments and agreements required to be delivered
                to Agent or any Lender in connection with any of the foregoing
                on or after the date of this Agreement; and all Rate Contracts
                provided to Borrower by any Lender to hedge against fluctuations
                in the LIBO Rate. (Without limiting the generality of the
                preceding definition, the term "Credit Documents" shall include
                all written waivers, amendments and modifications to any of the
                notices, requests, certificates, documents, instruments and
                agreements referred to therein.)

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

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

                                       to

                                (b) The sum of (i) all Interest Expenses of
                        Borrower and its Subsidiaries accruing during such
                        period, (ii) all rental expenses of Borrower and its
                        Subsidiaries accruing during such period (excluding any
                        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

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                        Synthetic Lease Obligations) paid or scheduled to be
                        paid by Borrower and its Subsidiaries due within one
                        year.

                        "EBITDA" shall mean, with respect to Borrower 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 Borrower 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 Borrower and its
                        Subsidiaries accruing during such period and (ii) all
                        depreciation and amortization expenses of Borrower and
                        its Subsidiaries accruing during such period.

                        "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);

                                (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 borrower
                        under or with respect to Capital Leases.

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

                        "Quick Ratio" shall mean, with respect to Borrower 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

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                        receivable of Borrower 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 Borrower and its
                        Subsidiaries at such time.

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

                (b) Paragraph 1.01 is further amended by adding thereto, in the
        appropriate alphabetical order, the definitions of the following terms
        to read in their entireties as follows:

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

                        "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 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 a 100%
                participation interest in the "Tranche A" portion of such
                leases.

                        "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).

                (c) Subparagraph 4.01(g) is amended to read in its entirety as
        follows:

                        (g) Litigation. Except as set forth in the most recent
                Form 10-Q and 10-K reports filed by Borrower with the Securities
                and Exchange Commission, no

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                actions (including, without limitation, derivative actions),
                suits, proceedings or investigations are pending or, to the
                knowledge of Borrower, threatened against Borrower 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 Borrower of the Operative
                Documents or the transactions contemplated thereby.

                (d) Subparagraph 4.01(k) is amended to read in its entirety as
        follows:

                        (k) No Agreements to Sell Assets; Etc. Neither Borrower
                nor any of its Subsidiaries has any legal obligation, absolute
                or contingent, to any Person to sell the assets of Borrower or
                any of its Subsidiaries (other than sales in the ordinary course
                of business), or to effect any merger, consolidation or other
                reorganization of Borrower 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).

                (e) Subparagraph 4.01(l) is amended by changing clause (i) to
        read in its entirety as follows:

                        (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 Borrower
                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.

                (f) Subparagraph 4.01(n) is amended to read in its entirety as
        follows:

                        (n) Patent and Other Rights. Borrower 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.

                (g) Subparagraph 4.01(q) is amended to read in its entirety as
        follows:

                        (q) Subsidiaries, etc. Set forth in Schedule 4.01(q) (as
                supplemented by Borrower from time to time in a written notice
                to Agent) is a complete list of all of Borrower's Subsidiaries,
                the jurisdiction of incorporation of each, the

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                classes of Equity Securities of each and the percentages of
                shares of each such class owned directly or indirectly by
                Borrower.

                (h) Subparagraph 5.01(a) is amended by (i) changing clauses
        (iii), (iv) and (v) to read in their entireties as follows:

                        (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 Borrower which (A) states that no Default
                has occurred and is continuing, or, if any such Default has
                occurred and is continuing, a statement as to the nature thereof
                and what action Borrower 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 available and in no event later than
                fifty (50) days after the last day of each fiscal quarter of
                Borrower, a certificate of the chief financial officer of
                Borrower which sets forth the calculation of the Funded
                Indebtedness/EBITDA Ratio for the consecutive four-quarter
                period ending on such day;

                        (v) As soon as possible and in no event later than five
                (5) Business Days after any Senior Officer of Borrower 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
                Borrower or any of its Subsidiaries involving potential monetary
                damages payable by Borrower 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 Borrower setting forth details of
                such event, condition or Default and the action which Borrower
                proposes to take with respect thereto;

        (ii) deleting clause (vii) and (iii) changing the designations of
        clauses (viii), (ix) and (x) to "(vii)", "(viii)" and "(ix)",
        respectively.

                (i) Subparagraph 5.01(e) is amended to read in its entirety as
        follows:

                        (e) Governmental Charges and Other Indebtedness.
                Borrower 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 Borrower 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

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                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.

                (j) Subparagraph 5.02(a) is amended by changing clauses (ii) and
        (iii) to read in their entireties as follows:

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

                        (iii) Indebtedness of Borrower and its Subsidiaries
                listed in Schedule 5.02(a) and existing on April 13, 2001
                (including committed but undrawn amounts);

                (k) Subparagraph 5.02(b) is amended by changing clauses (ii) and
        (x) to read in their entireties as follows:

                        (ii) Liens securing the Synthetic Lease Obligations;

                        (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;

                (l) Subparagraph 5.02(c) is amended by changing clause (vi) to
        read in its entirety as follows:

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

                (m) Subparagraph 5.02(d) is amended by changing clause (iii)(C)
        thereof to read in its entirety as follows:

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

                (n) Subparagraph 5.02(e) is amended to read in its entirety as
        follows:

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

                                (i) Investments permitted by the investment
                        policy of Borrower duly approved by the Board of
                        Directors of Borrower 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 Borrower;

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

                                (iv) Investments by Borrower 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
                        Borrower and its Subsidiaries, determined on a
                        consolidated basis in accordance with GAAP, on the last
                        day of the immediately preceding fiscal year; and

                                (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 Borrower pursuant to Subparagraph
                        5.02(d) (excluding Borrower'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 Borrower (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.

                (o) Paragraph 5.02 is further amended by (i) deleting
        Subparagraph 5.02(i) and (ii) changing the designation of Subparagraph
        5.02(j) to "(i)".

                (p) Paragraph 5.03 is amended to read in its entirety as
        follows:

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

                                (a) Funded Indebtedness/Capital Ratio. Borrower
                        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.

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                                (b) Quick Ratio. Borrower 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. Borrower 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, Borrower 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 Borrower's Tangible Net Worth on
                                December 31, 1999);

                                      plus

                                        (ii) Seventy-five percent (75%) of the
                                sum of (A) Borrower's consolidated annual net
                                income for its fiscal year ending December 31,
                                2000 (ignoring any annual loss); plus (B) the
                                sum of Borrower'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
                                Borrower and its Subsidiaries (to Persons other
                                than Borrower 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
                                Borrower and its Subsidiaries converted into
                                Equity Securities of Borrower and its
                                Subsidiaries during the period commencing on
                                December 31, 1999 and ending on the
                                determination date.

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

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                                (e) Minimum Cash Balances. Borrower 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 Borrower 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 Borrower
                                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
                                Borrower 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.)

                (q) Subparagraphs 6.01(e) and 6.01(h) are amended by changing
        the amount "$2,500,000" wherever it appears therein to "$10,000,000".

                (r) Paragraph 8.01 is amended by changing the notice addresses,
        etc. for Borrower and Agent set forth therein to read in their
        entireties as follows:

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

                      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

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                                    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

                (s) Schedules 4.01(g) and 5.02(e) are deleted.

                (t) Schedule 5.02(a) is amended to read in its entirety as set
        forth in the counterpart schedule hereto.

                (u) Exhibits A and B are hereby amended by changing the notice
        address appearing therein to the following:

                      ABN AMRO Bank N.V.,
                            as Agent
                      Agency Services
                      208 South LaSalle Street, Suite 1500
                      Chicago, IL  60604
                      Attn:  Josephine O'Brien

        3. REPRESENTATIONS AND WARRANTIES. Borrower hereby represents and
warrants to Agent and the Lenders that the following are true and correct on the
date of this Amendment and that, after giving effect to the amendments set forth
in Paragraph 2 above, the following will be true and correct on the Effective
Date (as defined below):

                (a) The representations and warranties of Borrower set forth in
        Paragraph 4.01 of the Credit Agreement and in the other Credit 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 Credit Documents are in full force and effect.

(Without limiting the scope of the term "Credit Documents," Borrower expressly
acknowledges in making the representations and warranties set forth in this
Paragraph 3 that, on and after the date hereof, such term includes this
Amendment.)

        4. EFFECTIVE DATE. Borrower shall deliver to Agent a written notice
specifying the effective date for this Amendment ("Effective Date"), which date
shall be a Business Day prior to April 27, 2001. Borrower shall deliver such
notice to Agent at least five (5) Business Days

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prior to the Effective Date. The amendments effected by Paragraph 2 above shall
then become effective on the Effective Date, subject to receipt by , Agent and
Required Lenders, on or prior to such date, of the following, each in form and
substance satisfactory to Agent, Required Lenders and their respective counsel:

                (a) This Amendment duly executed by Borrower, Required Lenders
        and Agent;

                (b) A certificate of the Chief Financial Officer or Treasurer of
        Borrower, addressed to Agent and dated the Effective Date, certifying
        that:

                        (1) The representations and warranties set forth in
                Paragraph 4.01 of the Credit Agreement and in the other Credit
                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);

                        (2) No Default has occurred and is continuing as of such
                date;

                        (3) All of the Credit Documents are in full force and
                effect on such date;

                (c) A favorable written opinion of Morrison & Foerster, LLP,
        counsel to Borrower, dated the Effective Date, addressed to Agent for
        the benefit of , Agent and the Lenders, covering such legal matters as
        Agent may reasonably request and otherwise in form and substance
        satisfactory to Agent;

                (d) An amendment fee for each Lender that executes this
        Amendment on or prior to April 13, 2001 equal to 0.125% of such Lender's
        Commitment on the Effective Date;

                (e) All fees and expenses payable to the Parties on or prior to
        the Effective Date (including all Agent's Fees);

                (f) All fees and expenses of Agent's counsel through the
        Effective Date, to the extent set forth in statements of such counsels
        delivered to Borrower one or more days prior to the Effective Date; and

                (g) Such other evidence as , Agent or any Lender may reasonably
        request to establish the accuracy and completeness of the
        representations and warranties and the compliance with the terms and
        conditions contained in this Amendment and the other Credit Documents.

        5. EFFECT OF THIS AMENDMENT. On and after the Effective Date, each
reference in the Credit Agreement and the other Credit Documents to the Credit
Agreement shall mean the Credit Agreement as amended hereby. Except as
specifically amended above, (a) the Credit Agreement and the other Credit
Documents shall remain in full force and effect and are hereby ratified and
affirmed and (b) the execution, delivery and effectiveness of this Amendment
shall not, except as expressly provided herein, operate as a waiver of any
right, power, or remedy of the Lenders or Agent, nor constitute a waiver of any
provision of the Credit Agreement or any other Credit Document.

                                       12
<PAGE>   13

        6. MISCELLANEOUS.

                (a) Counterparts. This Amendment 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.

                (b) Headings. Headings in this Amendment are for convenience of
        reference only and are not part of the substance hereof.

                (c) Governing Law. This Amendment shall be governed by and
        construed in accordance with the laws of the State of California without
        reference to conflicts of law rules.

                            [Signature pages follow]

                                       13
<PAGE>   14

        IN WITNESS WHEREOF, Borrower, Agent and Lenders have caused this
Amendment to be executed as of the day and year first above written.

BORROWER:                                   NOVELLUS SYSTEMS, INC.

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

AGENT:                                      ABN AMRO BANK N.V.

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

LENDERS:                                    ABN AMRO BANK N.V.

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                            KEYBANK NATIONAL ASSOCIATION

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                            THE SUMITOMO BANK, LIMITED

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                       S-1
<PAGE>   15

                                            THE INDUSTRIAL BANK OF JAPAN,
                                            LIMITED, SAN FRANCISCO AGENCY

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                            THE BANK OF NOVA SCOTIA

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                            UNION BANK OF CALIFORNIA, N.A.

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                            COMERICA BANK-CALIFORNIA

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                            FLEET NATIONAL BANK

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                            BANQUE NATIONALE DE PARIS

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                      S-2
<PAGE>   16

                                            CREDIT LYONNAIS LOS ANGELES BRANCH

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                            THE FUJI BANK, LIMITED

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                            GENERAL ELECTRIC CAPITAL CORPORATION

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                            THE MITSUBISHI TRUST AND BANKING
                                            CORPORATION, LOS ANGELES AGENCY

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                            SOCIETE GENERALE

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                            CALIFORNIA BANK & TRUST, formerly
                                            known as "The Sumitomo Bank of
                                            California"

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                      S-3
<PAGE>   17

                                            WELLS FARGO BANK, N.A.

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                            SANWA BANK CALIFORNIA

                                            By:
                                               ---------------------------------
                                               Name:
                                                    ----------------------------
                                               Title:
                                                     ---------------------------

                                      S-4
<PAGE>   18

                                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>   1
                                                                    EXHIBIT 10.5

                                                                   [NOVELLUS IV]

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                             PARTICIPATION AGREEMENT

                                      AMONG

                             NOVELLUS SYSTEMS, INC.

                                       AND

                         LEASE PLAN NORTH AMERICA, INC.

                                       AND

                             ABN AMRO LEASING, INC.

                                       AND

                          THE PARTICIPANTS NAMED HEREIN

                                       AND

                               ABN AMRO BANK N.V.,

                          AS AGENT FOR THE PARTICIPANTS

                                 APRIL 13, 2001

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   2
                                TABLE OF CONTENTS

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

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

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

SECTION 2.    LEASE FACILITIES..........................................................................    3

     2.01.    Acquisition, Lease, Amount Limitations, Etc...............................................    3

     2.02.    Participation Agreement...................................................................    6

     2.03.    Advance Requests..........................................................................    7

     2.04.    Fees......................................................................................    9

     2.05.    Funding of Advances.......................................................................    9

     2.06.    Sharing of Payments.......................................................................   11

     2.07.    Other Payment Terms.......................................................................   14

     2.08.    Commitment Reductions.....................................................................   15

     2.09.    Extensions................................................................................   15

     2.10.    Nature of the Transactions................................................................   16

     2.11.    Security..................................................................................   18

     2.12.    Change of Circumstances...................................................................   20

     2.13.    Taxes on Payments.........................................................................   22

     2.14.    Funding Loss Indemnification..............................................................   24

     2.15.    Replacement of Participants...............................................................   24

SECTION 3.    CONDITIONS PRECEDENT......................................................................   25

     3.01.    Initial Advances..........................................................................   25

     3.02.    Subsequent Advances.......................................................................   25

     3.03.    Other Conditions Precedent................................................................   25

     3.04.    Covenant to Deliver.......................................................................   26

SECTION 4.    REPRESENTATIONS AND WARRANTIES............................................................   26

     4.01.    Lessee's Representations and Warranties...................................................   26

     4.02.    Lessor's Representations and Warranties...................................................   31

     4.03.    Participants' Representations and Warranties..............................................   32

SECTION 5.    COVENANTS.................................................................................   33

     5.01.    Lessee's Affirmative Covenants............................................................   33

     5.02.    Lessee's Negative Covenants...............................................................   37
</TABLE>

                                      -i-
<PAGE>   3
                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                                          PAGE
<S>                                                                                                       <C>
     5.03.    Lessee's Financial Covenants..............................................................   43

     5.04.    Lessor's Covenants........................................................................   46

     5.05.    Participants' Covenants...................................................................   46

SECTION 6.    LESSOR, AGENT AND THEIR RELATIONS WITH PARTICIPANTS.......................................   46

     6.01.    Appointment of Agent......................................................................   46

     6.02.    Powers and Immunities.....................................................................   46

     6.03.    Reliance..................................................................................   47

     6.04.    Defaults..................................................................................   47

     6.05.    Indemnification...........................................................................   47

     6.06.    Non-Reliance..............................................................................   48

     6.07.    Resignation or Removal of Agent...........................................................   48

     6.08.    Authorization.............................................................................   49

     6.09.    Lessor and Agent in their Individual Capacities...........................................   49

SECTION 7.    MISCELLANEOUS.............................................................................   49

     7.01.    Notices...................................................................................   49

     7.02.    Expenses..................................................................................   50

     7.03.    Indemnification...........................................................................   51

     7.04.    Waivers; Amendments.......................................................................   51

     7.05.    Successors and Assigns....................................................................   52

     7.06.    Setoff....................................................................................   56

     7.07.    No Third Party Rights.....................................................................   56

     7.08.    Partial Invalidity........................................................................   57

     7.09.    JURY TRIAL................................................................................   57

     7.10.    Counterparts..............................................................................   57

     7.11.    No Joint Venture, Etc.....................................................................   57

     7.12.    Usury Savings Clause......................................................................   57

     7.13.    Confidentiality...........................................................................   57

     7.14.    Governing Law.............................................................................   58

     7.15.    Termination of Novellus I Participation Agreement and Novellus I Operative Documents......   58
</TABLE>

                                      -ii-
<PAGE>   4
SCHEDULES

   I                  Participants (Preamble, 7.01, Schedule 1.01)
   II                 Pricing Grid (Schedule 3.01)
   1.01               Definitions
   1.02               Rules of Construction
   3.01               Initial Conditions Precedent
   4.01(q)            Subsidiaries
   4.01(t)            Individual Property Representations
   5.02(a)            Existing Indebtedness
   5.02(b)            Existing Liens

EXHIBITS

   A                 Land (2.01(b), 2.01(c))
   B(1)              Facility 1 Lease Agreement (2.01(b))
   B(2)              Facility 2 Lease Agreement (2.01(c))
   C(1)              Facility 1 Purchase Agreement (2.01(b))
   C(2)              Facility 2 Purchase Agreement (2.01(c))
   D                 Facility 2 Construction Agency Agreement (2.01(c))
   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                 [RESERVED]
   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(1)              Facility 1 Head Lease Agreement (2.01(b)
   M(2)              Facility 2 Head Lease Agreement (2.01(c)

                                      -iii-
<PAGE>   5
                             PARTICIPATION AGREEMENT

         THIS PARTICIPATION AGREEMENT (this "Agreement" herein), dated as of
April 13, 2001, is entered into by and among:

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

                  (2)      LEASE PLAN NORTH AMERICA, INC., an Illinois
         corporation ("Head Lessor");

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

                  (4)      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

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

                                    RECITALS

         A.       Lessee, Head Lessor, certain financial institutions as
"Participants" (the "Novellus I Participants") and ABN AMRO Bank N.V., as agent
for the Novellus I Participants, are parties to a Participation Agreement dated
as of August 31, 1998 (as amended, the "Novellus I Participation Agreement").
Pursuant to the Novellus I Participation Agreement, Lessor and the Novellus I
Participants have provided to Lessee two lease facilities (the "Novellus I
Facilities") as follows:

                  (1)      Pursuant to the first facility ("Novellus I Facility
         1"), Lessor (a) leased from Head Lessor certain land designated by
         Lessee (the "Novellus I Facility 1 Property"), (b) subleased the
         Novellus I Facility 1 Property to Lessee, (c) made advances to finance
         certain related expenses and (d) granted to Lessee the right to
         purchase the Novellus I Facility 1 Property.

                  (2)      Pursuant to the second facility ("Novellus I Facility
         2"), Lessor (a) leased from Head Lessor certain land, improvements
         (including improvements to the Novellus I Facility 1 Property) and
         other property designated by Lessee (the "Novellus I Facility 2
         Property"), (b) subleased the Novellus I Facility 2 Property to Lessee,
         (c) appointed Lessee as Lessor's agent to make certain improvements to
         the Novellus I Facility 2 Property and certain of the Novellus I
         Facility 1 Property, (d) made advances to finance such improvements and
         to pay certain related expenses and (e) granted to Lessee the right to
         purchase the Novellus I Facility 2 Property.
<PAGE>   6
                  (3)      The Novellus I Participants participated in the
         Novellus I Facilities by (a) funding the advances made by Lessor and
         (b) acquiring participation interests in the rental and certain other
         payments made by Lessee.

         B.       Lessee, Head Lessor, Lessor, Participants and Agent now wish
to restructure the Novellus I Facilities by (x) removing certain of the Novellus
I Facility 2 Property from Novellus I Facility 2 (such removed property, as more
fully defined in Schedule 1.01, to be referred to as the "Property") and (z)
entering into this Agreement and related agreements to create two new lease
facilities as follows:

                  (1)      Pursuant to the first new facility ("Facility 1"),
         Lessor will (a) lease certain of the Property (as more fully defined in
         Schedule 1.01, the "Facility 1 Property") from Head Lessor, (b)
         sublease such property to Lessee, (c) make advances to finance certain
         related expenses and (d) grant to Lessee the right to purchase such
         property.

                  (2)      Pursuant to the second new facility ("Facility 2"),
         Lessor will (a) lease the remainder of the Property (as more fully
         defined in Schedule 1.01, the "Facility 2 Property") from Head Lessor,
         (b) sublease such property to Lessee, (c) appoint Lessee as Lessor's
         agent to make certain improvements to such property, (d) make advances
         to finance such improvements and to pay certain related expenses and
         (e) grant to Lessee the right to purchase such property.

                  (3)      Participants will participate in Facility 1 and
         Facility 2 (collectively, the "Facilities") 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.

(The Novellus I Participation Agreement and all related documents, instruments
and agreements shall remain in full force and effect with respect to the
Novellus I Facility 1 Property and all of the Novellus I Facility 2 Property not
removed and covered by Facility 1 and Facility 2 hereunder.)

                                    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, 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.

                                       2
<PAGE>   7
         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 FACILITIES.

         2.01.    Acquisition, Lease, Amount Limitations, Etc.

                  (a)      Removal of Property from Novellus I Agreements. On
         the date specified by Lessee pursuant to Subparagraph 2.03(a) for the
         Initial Advances hereunder (the "Closing Date"):

                           (i)      Lessee, Head Lessor, Lessor, the Novellus I
                  Participants and ABN AMRO, as agent for the Novellus I
                  Participants, shall (A) execute such amendments and other
                  documents, instruments and agreements as are necessary to
                  remove the Property from Facility 2 under the Novellus I
                  Participation Agreement and the other Novellus I Operative
                  Documents; and (B) where appropriate, cause such amendments
                  and other documents, instruments and agreements, or memoranda
                  thereof (collectively the "Novellus I Amendments"), to be
                  properly notarized and recorded in the Official Records of the
                  County of Santa Clara, California.

                           (ii)     Lessee shall pay to Head Lessor, the
                  Novellus I Participants and ABN AMRO, as agent for the
                  Novellus I Participants, all amounts due and payable to such
                  Persons under the Novellus I Participation Agreement and the
                  other Novellus I Operative Documents, other than the
                  "Outstanding Lease Amount" (as defined in the Novellus I
                  Participation Agreement) under each of the Novellus I
                  Facilities. Lessor shall pay to Agent (with funds provided by
                  Participants hereunder), for the benefit of the Novellus I
                  Participants, $44,813,000 (the "Novellus I Lease Reduction
                  Payment"), in payment of the portion of the "Outstanding Lease
                  Amount" (as defined in the Novellus I Participation Agreement)
                  under Novellus I Facility 2 attributable to the Property and
                  the portion of each Participant's respective "Outstanding
                  Participation Amount" (as defined in the Novellus I
                  Participation Agreement) under Novellus I Facility 2
                  attributable to the Property, the rent payable by Lessor under
                  the Head Lease Agreements on the Closing Date; provided,
                  however, that the "Outstanding Lease Amount" (as defined in
                  the Novellus I Participation Agreement") under Novellus I
                  Facility 2 and each Participant's respective "Outstanding
                  Participation Amount" (as defined in the Novellus I
                  Participation Agreement) under Novellus I Facility 2 shall be
                  deemed paid and then funded hereunder to the extent provided
                  in Subparagraph 2.05(d) for each Novellus I Participant that
                  is continuing as a Participant under this Agreement. (Of the
                  total Novellus I Lease Reduction Payment to be paid by Lessor
                  on the Closing Date, (A) $10,119,000 is attributable to the
                  Land Portion of the Facility 1 Property and $24,214,000 is
                  attributable to the Improvement Portion of the Facility 1
                  Property and shall be treated as part of the Initial Advance
                  under

                                       3
<PAGE>   8
                  Facility 1, and (B) $6,198,000 is attributable to the Land
                  Portion of the Facility 2 Property (the "Facility 2 Land
                  Portion Cost") and $4,282,000 is attributable to the
                  Improvement Portion of the Facility 2 Property and shall be
                  treated as part of the Initial Advance under Facility 2.) In
                  the event that a Novellus I Participant is owed additional
                  amounts under the Novellus I Participation Agreement and the
                  other Novellus I Operative Documents that is not to be deemed
                  paid and funded pursuant to Subparagraph 2.05(d), such
                  additional amounts shall be paid directly to such Novellus I
                  Participant in accordance with the Novellus I Participation
                  Agreement.

                  (b)      Facility 1 Lease, Etc. Subject to the terms and
         conditions of this Agreement (including the limitations set forth in
         Subparagraph 2.01(d)):

                           (i)      Lessor and Head Lessor shall, on the Closing
                  Date, execute a Facility 1 Head Lease Agreement in the form of
                  Exhibit M(1) (the "Facility 1 Head Lease Agreement"), pursuant
                  to which Lessor will acquire a leasehold interest in (A) the
                  Tract of land described in Part 1 of Exhibit A as the Tract 2
                  Land (as more fully defined in Schedule 1.01, the "Facility 1
                  Land"), together with any Appurtenant Rights thereto, (B) all
                  existing and new Improvements to the Facility 1 Land, and (C)
                  certain other related property (collectively, as more fully
                  defined in Schedule 1.01, the "Facility 1 Property"); and

                           (ii)     Immediately upon the execution by Lessor and
                  Head Lessor of the Facility 1 Head Lease Agreement, Lessor and
                  Lessee shall, on the Closing Date, execute (A) a Facility 1
                  Lease Agreement in the form of Exhibit B(1) (the "Facility 1
                  Lease Agreement"), pursuant to which Lessor will lease to
                  Lessee the Facility 1 Property and (B) a Facility 1 Purchase
                  Agreement in the form of Exhibit C(1) (the "Facility 1
                  Purchase Agreement"), pursuant to which Lessor will grant to
                  Lessee the right to purchase the Facility 1 Property.

                  (c)      Facility 2 Lease, Etc. Subject to the terms and
         conditions of this Agreement (including the limitations set forth in
         Subparagraph 2.01(d)):

                           (i)      Lessor and Head Lessor shall, on the Closing
                  Date, execute a Facility 2 Head Lease Agreement in the form of
                  Exhibit M(2) (the "Facility 2 Head Lease Agreement"), pursuant
                  to which Lessor will acquire a leasehold interest (A) the
                  Tract of land described in Part 2 of Exhibit A as the Tract 5
                  Land (as more fully defined in Schedule 1.01, the "Facility 2
                  Land"), together with any Appurtenant Rights thereto, (B) all
                  existing and new Improvements to the Facility 2 Land, and (C)
                  certain other related property (collectively, as more fully
                  defined in Schedule 1.01, the "Facility 2 Property")

                           (ii)     Immediately upon the execution by Lessor and
                  Head Lessor of the Facility 2 Head Lease Agreement, Lessor and
                  Lessee shall, on the Closing Date, execute (A) a Facility 2
                  Lease Agreement in the form of Exhibit B(2) (the "Facility 2
                  Lease Agreement"), pursuant to which Lessor will lease to
                  Lessee the

                                       4
<PAGE>   9
                  Facility 2 Property, (B) a Facility 2 Purchase Agreement in
                  the form of Exhibit C(2) (the "Facility 2 Purchase
                  Agreement"), pursuant to which Lessor will grant to Lessee the
                  right to purchase the Facility 2 Property and (C) a Facility 2
                  Construction Agency Agreement in the form of Exhibit D (the
                  "Facility 2 Construction Agency Agreement"), pursuant to which
                  Lessee will agree to construct certain improvements to the
                  Facility 2 Property; and

                           (iii)    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 Facility 2 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 additional advances
                  (with funds provided by the Participants) to pay Permitted
                  Improvement Costs and Permitted Transaction Expenses under
                  Facility 2.

                  (d)      Amount Limitations. The amount of all advances made
         by Lessor hereunder (the "Advances") shall be subject to the following
         limitations:

                           (i)      The aggregate amount of all Advances made by
                  Lessor for the Land Portion under Facility 1 shall not exceed
                  the lesser of (A) Ten Million Two Hundred Ninety-Three
                  Thousand Dollars ($10,293,000) (the "Total Facility 1 Land
                  Portion Commitment") and (B) the Expiration Date Appraisal for
                  the Land Portion of the Facility 1 Property;

                           (ii)     The aggregate amount of all Advances made by
                  Lessor for the Improvement Portion under Facility 1 shall not
                  exceed the lesser of (A) Twenty-Four Million Six Hundred
                  Twenty Thousand Dollars ($24,620,000) (the "Total Facility 1
                  Improvement Portion Commitment") and (B) the Expiration Date
                  Appraisal for the Improvement Portion of the Facility 1
                  Property;

                           (iii)    The aggregate amount of all Advances made by
                  Lessor under Facility 1 shall not exceed Thirty-Four Million
                  Nine Hundred Thirteen Thousand Dollars ($34,913,000) (the
                  "Total Facility 1 Commitment");

                           (iv)     The aggregate amount of all Advances made by
                  Lessor under Facility 2 shall not exceed the lesser of (A)
                  Fifty-Four Million Eighty-Seven Thousand Dollars ($54,087,000)
                  (the "Total Facility 2 Commitment") and (B) the Expiration
                  Date Appraisal for the Facility 2 Property; and

                           (v)      The aggregate amount of all Advances made by
                  Lessor under both Facilities shall not exceed Eighty-Nine
                  Million Dollars ($89,000,000) (the "Total Commitment").

                                       5
<PAGE>   10
                  (e) 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:

                           (i)      The aggregate amount of each Participant's
                  Proportionate Share of all Advances made under Facility 1
                  shall not exceed such Participant's Facility 1 Commitment;

                           (ii)     The aggregate amount of each Participant's
                  Proportionate Share of all Advances made under Facility 2
                  shall not exceed such Participant's Facility 2 Commitment; and

                           (iii)    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 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

                                       6
<PAGE>   11
                  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 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 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.

         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 Facility under which such
                           Advance is to be made;

                                    (B)      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, and,
                           if such Advance is under Facility 1, the portions
                           thereof attributable to the Land Portion and
                           Improvement Portion;

                                    (C)      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 Advances (which day
                           shall also be the same for both of the Initial
                           Advances) and (2) the first Business Day of a
                           calendar month in the case of all other Advances; and

                                    (D)      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
                           Facility 2 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

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

                                       7
<PAGE>   12
         Lessee shall not request more than one (1) Advance under each Facility
         in any calendar month. (For the purposes of calculating each
         Participant's Proportionate Share of each Advance, Outstanding
         Participation Amount, Outstanding Tranche A Participation Amount,
         Outstanding Tranche B Participation Amount, and Outstanding Tranche C
         Participation Amount, Tranche A Portion, Tranche B Portion, and Tranche
         C Portion under Facility 1, the Land Portion and Improvement Portion of
         each Advance shall be treated as separate Advances.)

                  (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 under Facility 2 pursuant to
                  the terms of the Operative Documents:

                                    (A)      Any Base Rent payable by Lessee
                           during the Construction Period under the Facility 2
                           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
                           attributable to the Facility 2 Lease Agreement; and

                                    (C)      Any increased costs or reduced
                           amounts that would be payable by Lessee during the
                           Construction Period on account of Facility 2 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 under Facility 2 and shall be included in the
                  Outstanding Lease Amount under Facility 2 for all purposes,
                  including the calculation of the Base Rent payable by Lessee
                  under the Facility 2 Lease Agreement after the Construction
                  Period and the calculation of the Residual Value Guaranty
                  Amount under the Facility 2 Purchase Agreement.

                                       8
<PAGE>   13
                           (ii)     Lessee also shall not be required to pay the
                  following amounts unless Lessee purchases the Facility 2
                  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 on account of Facility
                           2 pursuant to Paragraph 7.03 but for the proviso to
                           such paragraph;

                                    (B)      Any losses or liabilities not
                           constituting Project Costs and not covered by
                           insurance that would be payable by Lessee during the
                           Construction Period on account of Facility 2 pursuant
                           to Paragraph 3.02 of the Facility 2 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 under Facility 2, 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 Facility 2
                           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 under Facility 2 and shall be
                  included in the Outstanding Lease Amount; provided, however,
                  that, if Lessee exercises the Marketing Option in accordance
                  with the applicable 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 Facility 2
                  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.

                                       9
<PAGE>   14
         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 "Commitment Fees") equal to:

                           (i)      For Facility 1, the Commitment Fee
                  Percentage (as such percentage shall change from time to time
                  for each Pricing Period) of the daily average Unused Total
                  Facility 1 Commitment for the entire Commitment Period; and

                           (ii)     For Facility 2, the Commitment Fee
                  Percentage (as such percentage shall change from time to time
                  for each Pricing Period) of the daily average Unused Total
                  Facility 2 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. Except as
         otherwise provided in Subparagraph 2.05(d) relating to the Initial
         Advances, each Participant shall, before 12:00 noon (Central time) 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 follows:

                                       10
<PAGE>   15
                           (i)      Agent shall disburse to Head Lessor such
                  portion of the Initial Advance under each Facility as is
                  necessary to pay the rent payable under the Head Lease
                  Agreement for such Facility.

                           (ii)     Agent shall disburse the remainder of the
                  Initial Advances and all other Advances as directed by Lessee
                  in the Advance Requests for such Advances.

                  (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 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.

                  (d)      Funding of Initial Advances. For each Participant
         under this Agreement that is a Novellus I Participant on the Closing
         Date, such Participant shall be deemed to have satisfied its funding
         obligation under Subparagraph 2.05(a) with respect to the Initial
         Advance under each Facility to the extent of such Participant's
         "Outstanding Participation Amount" (as defined in the Novellus I
         Participation Agreement) in the Novellus I Facility 2 on the Closing
         Date by treating the amount of such "Outstanding Participation Amount"
         on the Closing Date as (i) having been paid to such Participant, as a
         Novellus I Participant, under the Novellus I Participation Agreement
         and (ii) then having been made available by such Participant pursuant
         to Subparagraph 2.05(a) as its Proportionate Share

                                       11
<PAGE>   16
         of such Initial Advance. All such amounts shall in turn be deemed to
         have been (A) provided by Lessor to Lessee as a part of the respective
         Initial Advances hereunder and (B) disbursed to Head Lessor in payment
         of the rent payable under the respective Head Lease Agreements.

         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 of a Facility (or the portion thereof
         attributable to the Land Portion or Improvement Portion in the case of
         Facility 1) as follows:

                           (i)      Each payment of the Outstanding Lease Amount
                  under a Facility (or the applicable portion thereof in the
                  case of Facility 1) derived from the purchase price paid by
                  Lessee (or an Assignee Purchaser) to purchase the Property
                  under such Facility (or the applicable portion thereof in the
                  case of Facility 1) pursuant to the Purchase Agreement for
                  such Facility shall be shared by the Participants pro rata
                  according to their respective Outstanding Participation
                  Amounts under such Facility (or the applicable portions
                  thereof in the case of Facility 1) at the time of such
                  payment.

                           (ii)     Each payment of the Outstanding Lease Amount
                  under a Facility (or the applicable portion thereof in the
                  case of Facility 1) derived from:

                                    (A)      The Residual Value Guaranty Amount
                           paid by Lessee pursuant to the Purchase Agreement for
                           such Facility (or the applicable portion thereof in
                           the case of Facility 1); or

                                    (B)      The Principal Component of Base
                           Rent under such Facility (or the applicable portion
                           thereof in the case of Facility 1);

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

                           (iii)    Each payment of the Outstanding Lease Amount
                  under a Facility (or the applicable portion thereof in the
                  case of Facility 1) derived from:

                                       12
<PAGE>   17
                                    (A)      the purchase price paid by a
                           Designated Purchaser to purchase the Property under
                           such Facility (or the applicable portion thereof in
                           the case of Facility 1) pursuant to the Purchase
                           Agreement for such Facility;

                                    (B)      the Indemnity Amount paid by Lessee
                           pursuant to the Purchase Agreement for such Facility
                           (or the applicable portion thereof in the case of
                           Facility 1);

                                    (C)      Casualty Proceeds or Condemnation
                           Proceeds related to any of the Property under such
                           Facility (or the applicable portion thereof in the
                           case of Facility 1); or

                                    (D)      the purchase price paid by any
                           Person (except as otherwise provided in clause (i)
                           above) to purchase the Property under such Facility
                           (or the applicable portion thereof in the case of
                           Facility 1), whether after the retention of such
                           Property by Lessor following the Expiration Date of
                           the Lease Agreement for such Facility, upon
                           foreclosure or otherwise;

                  Shall be shared first by the Tranche B Participants pro rata
                  according to their respective applicable Outstanding Tranche B
                  Participation Amounts at the time of such payment; second, if
                  any amounts remain after all such Outstanding Tranche B
                  Participation Amounts are paid in full, by the Tranche A
                  Participants pro rata according to their respective applicable
                  Outstanding Tranche A Participation Amounts at the time of
                  such payment; and third, if any amounts remain after all such
                  Outstanding Tranche B Participation Amounts and all such
                  Outstanding Tranche A Participation Amounts are paid in full,
                  by the Tranche C Participants pro rata according to their
                  respective applicable 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 (or the applicable portion thereof in the
                  case of Facility 1) is sold to a Designated Purchaser pursuant
                  to the Marketing Option in the Purchase Agreement, any
                  proceeds of Cash Collateral shall be applied only in
                  satisfaction of the obligations of Lessee in respect of the
                  Residual Value Guaranty Amount applicable to such Property (or
                  the applicable portion thereof in the case of Facility 1) 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

                                       13
<PAGE>   18
                  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 under
         either Facility among the Participants which funded the Outstanding
         Lease Amount under such Facility (or the applicable portion thereof in
         the case of Facility 1) 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 under either Facility 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:

                                    (A)      Commitment Fees under Facility 1
                           shall be shared by the Facility 1 Participants pro
                           rata according to (1) their respective Proportionate
                           Shares under Facility 1 and (2) in the case of each
                           Facility 1 Participant which becomes a Facility 1
                           Participant hereunder after the date hereof, the date
                           upon which such Facility 1 Participant so became a
                           Facility 1 Participant; and

                                    (B)      Commitment Fees under Facility 2
                           shall be shared by the Facility 2 Participants pro
                           rata according to (1) their respective Proportionate
                           Shares under Facility 2 and (2) in the case of each
                           Facility 2 Participant which becomes a Facility 2
                           Participant hereunder after the date hereof, the date
                           upon which such Facility 2 Participant so became a
                           Facility 2 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.

                                       14
<PAGE>   19
                           (vi)     All other payments under this Agreement and
                  the other Operative Documents shall be for the benefit of the
                  Person or Persons specified.

         (All amounts payable by Lessee under the Operative Documents shall be
         attributable to Facility 1 or Facility 2 and, in the case of amounts
         attributable to Facility 1, the Land Portion or Improvement Portion of
         Facility 1. If any amounts are not clearly on account of either
         Facility (or a portion thereof in the case of Facility 1), Lessor may
         attribute such amounts to either Facility (or either portion thereof in
         the case of Facility 1) using reasonable methods of allocation;
         provided, however, that Lessee may direct Lessor to attribute such
         amounts to the Facility (or portion thereof in the case of Facility 1)
         designated by Lessee if no Default has occurred and is continuing.)

                  (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 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

                                       15
<PAGE>   20
         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 on account of either
         Facility (or the Land Portion or Improvement Portion thereof in the
         case of Facility 1) 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 on account of such Facility
         (or the applicable portion thereof in the case of Facility 1), second
         to the accrued Interest Component of Base Rent then due and payable
         under this Agreement or any other Operative Document on account of such
         Facility (or the applicable portion thereof in the case of Facility 1)
         and finally to the Principal Component of Base Rent or otherwise to
         reduce the Outstanding Lease Amount under such Facility(or the
         applicable portion thereof in the case of Facility 1). If any payments
         are not clearly on account of either Facility (or a portion thereof in
         the case of Facility 1), Lessor may apply such payments to either
         Facility (or either portion thereof in the case of Facility 1) in its
         discretion; provided, however, that Lessee may direct Lessor to apply
         such payments to the Facility (or portion thereof in the case of
         Facility 1) designated by Lessee if no Default has occurred and is
         continuing.

                  (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 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.

                                       16
<PAGE>   21
         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
         Facility 1 Land Portion Commitment, the Total Facility 1 Improvement
         Portion Commitment or the Total Facility 2 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
         Facility 1 Land Portion Commitment, the Total Facility 1 Improvement
         Portion Commitment or the Total Facility 2 Commitment in its entirety.

                  (b)      Effect of Commitment Reductions. From the effective
         date of any reduction of the Total Facility 1 Land Portion Commitment,
         the Total Facility 1 Improvement Portion Commitment or the Total
         Facility 2 Commitment, the Commitment Fees shall be computed on the
         basis of the Total Facility 1 Commitment or Total Facility 2 Commitment
         as reduced. The Total Commitment shall be automatically reduced by the
         amount of each reduction in the Total Facility 1 Land Portion
         Commitment, the Total Facility 1 Improvement Portion Commitment or the
         Total Facility 2 Commitment. Once reduced or cancelled, the Total
         Facility 1 Land Portion Commitment, the Total Facility 1 Improvement
         Portion Commitment or the Total Facility 2 Commitment and the Total
         Commitment may not be increased or reinstated without the prior written
         consent of Lessor and all Participants. Any reduction of the Total
         Facility 1 Land Portion Commitment, the Total Facility 1 Improvement
         Portion Commitment or the Total Facility 2 Commitment pursuant to this
         Paragraph 2.08 shall be applied ratably to reduce each Participant's
         Facility 1 Land Portion Commitment, Facility 1 Improvement Portion
         Commitment or Facility 2 Commitment, as the case may be, and its
         Commitment pro rata in accordance with its respective 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 Subparagraph 2.09(a), then not later than
         ten (10) Business Days prior to the original

                                       17
<PAGE>   22
         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 each 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 three (3) copies of each Lease Extension
         Request received by Agent. If Lessor or a Participant, 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 for the applicable Lease Agreement.
         Any failure by Lessor or any Participant 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 for the applicable Lease Agreement,
         Agent shall notify Lessee, Lessor and the Participants in writing
         whether (i) Agent has received a copy of the Lease Extension Request
         executed by Lessor and each Participant, in which case the definition
         of "Scheduled Expiration Date" set forth in Subparagraph 2.02(a) of the
         applicable 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,
         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 for either Lease Agreement at any time.

         2.10.    Nature of the Transactions. Lessee and the Lessor Parties
intend that the transactions evidenced by this Agreement and the other Operative
Documents constitute operating leases pursuant to FASB 13 for accounting
purposes and loans secured by the Property

                                       18
<PAGE>   23
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 transactions evidenced by the Operative
         Documents shall be treated as loans 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 transactions evidenced by the
         Operative Documents shall be treated as loans 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 applicable Expiration Date only the Residual Value Guaranty
         Amount, the Indemnity Amount and the other amounts required by
         Subparagraph 4.06(b) of the applicable Purchase Agreement (or
         Subparagraph 4.06(c) if Lessor is retaining the Property) if Lessee
         exercises the Marketing Option in accordance with the applicable
         Purchase Agreement; and (v) Lessee be required to pay on the applicable
         Expiration Date the applicable 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
         applicable Purchase Agreement) if the applicable Lease Agreement is
         terminated prior to its Scheduled Expiration Date after an Event of
         Default occurs under such Lease Agreement or if Lessee fails to or is
         otherwise not entitled to exercise the Marketing Option in accordance
         with the applicable Purchase Agreement.

                  (c)      No Reliance by Lessee. Lessee acknowledges and agrees
         that no Lessor Party 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.

                                       19
<PAGE>   24
         2.11.    Security.

                  (a)      Lessee Obligations.

                           (i)      To the extent that the transaction evidenced
                  by the Lease Agreement, Purchase Agreement and other Operative
                  Documents for either Facility is treated as a loan by the
                  Participants (through Lessor) to Lessee secured by the
                  Property for such Facility, with Lessee as owner of such
                  Property pursuant to Paragraph 2.10, the Lessee Obligations
                  under such Facility shall be secured by such Property and the
                  other Real Property Collateral for such Facility and, in the
                  case of Facility 2, Personal Property Collateral for such
                  Facility (collectively, the "Property Collateral") as provided
                  in Subparagraphs 2.07(a) and 2.07(b) of the applicable Lease
                  Agreement and, in the case of Facility 2, in an Assignment of
                  Construction Agreements in the form of Exhibit G, duly
                  executed by Lessee (the "Assignment of Construction
                  Agreements").

                           (ii)     If, at any time, Lessee elects, pursuant to
                  Subparagraph 3.02(l) of the Purchase Agreement for either
                  Facility, to exercise the Marketing Option after Lessor
                  notifies Lessee that Lessor is terminating the Lease Agreement
                  for such Facility on a Termination Date that is prior to the
                  Scheduled Expiration Date and the only basis for such early
                  termination is the occurrence of a Non-Marketing Option Event
                  of Default, Lessee shall deliver to Agent (A) Cash Collateral
                  in an amount not less than 105% of the total Tranche A
                  Proportionate Share of the Outstanding Lease Amount under such
                  Facility at such time, (B) a security agreement in form and
                  substance reasonably satisfactory to Lessor and Agent (a "Cash
                  Collateral Agreement") that grants to Agent a security
                  interest in such Cash Collateral to secure the Lessee
                  Obligations under such Facility and (C) 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. Lessee may not
                  withdraw any Cash Collateral required to be delivered pursuant
                  to this clause (ii) until the Expiration Date of the
                  applicable Lease Agreement and the satisfaction in full of all
                  Lessee Obligations thereunder. After the Expiration Date of
                  the applicable Lease Agreement and the satisfaction in full of
                  all Lessee Obligations thereunder, Lessor shall return to
                  Lessee any Cash Collateral then held by Lessor.

                           (iii)    Lessee shall deliver to Lessor and 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 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 the
                  Cash Collateral prior to the Liens or other interests of

                                       20
<PAGE>   25
                  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 Head Lease
                           Agreements, Sublease Agreements and Purchase
                           Agreements 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.

                  (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

                                       21
<PAGE>   26
         such Rental Period and Portion does not adequately and fairly reflect
         the cost to such Participants of funding their shares of such Portions
         under the applicable Facility, 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 under either Facility 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
         under both Facilities 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 under either Facility, 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 under either Facility; or

                           (iii)    Shall impose on Lessor or any Participant
                  any other condition related to the Outstanding Lease Amount
                  under either Facility, Base Rent under either Facility or
                  Lessor's or such Participant's commitments hereunder;

                                       22
<PAGE>   27
         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 under either Facility 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 under Facility 2 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 under Facility 2 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 under Facility 2 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 computation of any such increased costs, delivered by such
         Person to Lessee shall

                                       23
<PAGE>   28
         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 under either Facility 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 under either Facility 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 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.

                                       24
<PAGE>   29
                  (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.

                                       25
<PAGE>   30
                  (d)      Tax Returns. Nothing contained in this Paragraph 2.13
         shall require any Lessor Party 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 under either Facility 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 under the applicable Facility. 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 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 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.

                                       26
<PAGE>   31
SECTION 3. CONDITIONS PRECEDENT.

         3.01.    Initial Advances. The obligation of Lessor to enter into the
Head Lease Agreements and to make the Initial Advances (and the obligations of
the Participants to fund their respective Proportionate Shares of the Initial
Advances) 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.

         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; and (c) receipt by Agent of
date-down endorsements to Agent's and Lessor's title insurance policies covering
such Tract or binders acceptable to Agent and Lessor.

         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.

                                       27
<PAGE>   32
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 Facility 2 Construction Agency Agreement.

                                       28
<PAGE>   33
                  (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.

                  (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 filed by

                                       29
<PAGE>   34
         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

                                       30
<PAGE>   35
                  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

                                       31
<PAGE>   36
         presently subject to grievance procedure, arbitration or litigation
         under any of 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. The representations and warranties
         relating to each Tract set forth in Schedule 4.01(t) are true and
         correct. The following representations and warranties apply to all of
         the Property:

                           (i)      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. 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. 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
                  Authority or any other Person relating to Hazardous Materials
                  or pursuant to any Environmental Laws.

                           (ii)     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.

                           (iii)    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.

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

                                       32
<PAGE>   37
                  (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 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

                                       33
<PAGE>   38
         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 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 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
         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

                                       34
<PAGE>   39
         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.

                  (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:

                                       35
<PAGE>   40
                  (a)      Financial Statements, Reports, etc. Lessee shall
         furnish to Agent, with sufficient copies for Lessor and each
         Participant, 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 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 available and in no event later
                  than fifty (50) days after the last day of each fiscal quarter
                  of Lessee, a certificate of the chief financial officer of
                  Lessee which sets forth the calculation of the Funded
                  Indebtedness/EBITDA Ratio for the consecutive four-quarter
                  period ending on such day;

                           (v)      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

                                       36
<PAGE>   41
                  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;

                           (vi)     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;

                           (vii)    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;

                           (viii)   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

                           (ix)     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.

         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.

                                       37
<PAGE>   42
                  (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 Agreements 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 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

                                       38
<PAGE>   43
         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 Amounts 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);

                           (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

                                       39
<PAGE>   44
                  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
                  Participants 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;

                           (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;

                                       40
<PAGE>   45
                           (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 such Permitted
                  Indebtedness and (C) such rights do not secure any
                  Indebtedness other than such Permitted Indebtedness;

                                       41
<PAGE>   46
                           (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 Participants 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;

                           (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;

                                       42
<PAGE>   47
                           (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:

                           (i)      Any Subsidiary of Lessee may merge or
                  consolidate with any other Subsidiary of Lessee;

                                       43
<PAGE>   48
                           (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

                                       44
<PAGE>   49
                           (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

                                       45
<PAGE>   50
         of the IRC or section 302 of ERISA), (v) fail to make full payment when
         due of all 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

                                       46
<PAGE>   51
                           (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

                                       47
<PAGE>   52
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 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 either Purchase Agreement 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

                                       48
<PAGE>   53
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 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. 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.

         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

                                       49
<PAGE>   54
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 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,
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, 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

                                       50
<PAGE>   55
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.

         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.

                                       51
<PAGE>   56
                           c/o ABN AMRO Bank N.V.
                           135 South LaSalle Street, Suite 740
                           Chicago, IL 60603
                           Attn: David M. Shipley
                           Telephone: (312) 904-2183
                           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

                                       52
<PAGE>   57
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 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 in the enforcement or attempted enforcement of any of the Lessee
Obligations or in exercising or preserving any of the Lessor Parties' 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' 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 attorney's 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 under Facility 2 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 under Facility 2 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 under Facility 2 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

                                       53
<PAGE>   58
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 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 under
         either Lease Agreement, (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 any 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 either Purchase Agreement in accordance with Paragraph
         2.02 of such Purchase Agreement, Lessee, Head Lessor 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,
         Head Lessor 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 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.

                                       54
<PAGE>   59
         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.

                  (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; or

                                    (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); or

                                    (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 or its
                           Outstanding Tranche B Participation Amount under
                           either Facility which does not assign and delegate an
                           equal pro rata interest in (1) such Participant's
                           Outstanding Tranche A Participation Amount and its
                           Outstanding Tranche B Participation Amount under both
                           Facilities, (2) such Participant's Tranche A
                           Percentage and its Tranche B Percentage under both
                           Facilities, and (3) such Participant's other rights,
                           duties and obligations relating to the Tranche A
                           Portion and the Tranche B Portion of

                                       55
<PAGE>   60
                           both Facilities under this Agreement and the other
                           Operative Documents; or

                                    (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
                           Tranche C Participant may make any Assignment of its
                           Outstanding Tranche C Participation Amount under
                           either Facility which does not assign and delegate an
                           equal pro rata interest in (1) such Participant's
                           Outstanding Tranche C Participation Amount under both
                           Facilities, (2) such Participant's Tranche C
                           Percentage under both Facilities, and (3) such
                           Participant's other rights, duties and obligations
                           relating to the Tranche C Portion of both Facilities
                           under this Agreement and the other Operative
                           Documents.

                  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 under
                  each Facility 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 under each Facility 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% under both Facilities, 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% under both Facilities 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 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

                                       56
<PAGE>   61
                  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 under
                  each Facility 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 may at
         any time sell to one or more Persons ("Subparticipants")
         subparticipation interests in the rights and interests of such
         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

                                       57
<PAGE>   62
         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 transactions evidenced by this Agreement and the
                  other Operative Documents to lose their treatment as operating
                  leases 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, 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

                                       58
<PAGE>   63
         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.

                                       59
<PAGE>   64
         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 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. Unless otherwise provided in any Operative
Document, this Agreement and each of the other 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.

                       [The first signature page follows.]

                                       60
<PAGE>   65
      IN WITNESS WHEREOF, Lessee, Head Lessor, 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:_____________________

HEAD LESSOR:                        LEASE PLAN NORTH AMERICA, INC.

                                    By:___________________________
                                       Name:______________________
                                       Title:_____________________

LESSOR:                             ABN AMRO LEASING, INC.

                                    By:___________________________
                                       Name:______________________
                                       Title:_____________________

AGENT:                              ABN AMRO BANK N.V.

                                    By:___________________________
                                       Name:______________________
                                       Title:_____________________

                                    By:___________________________
                                       Name:______________________
                                       Title:_____________________

                                       61
<PAGE>   66
PARTICIPANTS:                       ABN AMRO BANK N.V.

                                    By:___________________________
                                       Name:______________________
                                       Title:_____________________

                                    By:___________________________
                                       Name:______________________
                                       Title:_____________________

                                    CREDIT LYONNAIS

                                    By:___________________________
                                       Name:______________________
                                       Title:_____________________

                                    BNP-PARIBAS

                                    By:___________________________
                                       Name:______________________
                                       Title:_____________________

                                    DAI-ICHI KANGYO BANK, LTD.

                                    By:___________________________
                                       Name:______________________
                                       Title:_____________________

                                    FLEET BOSTON

                                    By:___________________________
                                       Name:______________________
                                       Title:_____________________

                                    UNION BANK OF CALIFORNIA, N.A.

                                    By:___________________________
                                       Name:______________________

                                       62
<PAGE>   67
                                       Title:_____________________

                                    KEYBANK NATIONAL ASSOCIATION

                                    By:___________________________
                                       Name:______________________
                                       Title:_____________________

                                    BANK OF NOVA SCOTIA

                                    By:___________________________
                                       Name:______________________
                                       Title:_____________________

                                    COMERICA BANK-CALIFORNIA

                                    By:___________________________
                                       Name:______________________
                                       Title:_____________________

                                    ABN AMRO LEASING, INC.

                                    By:___________________________
                                       Name:______________________
                                       Title:_____________________

                                       63
<PAGE>   68
                                   SCHEDULE I

                                  PARTICIPANTS

                       PART A(1) - TRANCHE PERCENTAGES AND
                    PROPORTIONATE SHARES FOR THE LAND PORTION
                                UNDER FACILITY 1

<TABLE>
<CAPTION>
                        TRANCHE A      TRANCHE B      TRANCHE C     PROPORTIONATE
     PARTICIPANT        PERCENTAGE     PERCENTAGE     PERCENTAGE        SHARE
--------------------   ------------   ------------   ------------   -------------
<S>                    <C>             <C>            <C>           <C>
ABN AMRO Bank N.V.     12.16853933%    0.00000000%    0.00000000%    12.16853933%
Credit Lyonnais        14.04494382%    0.00000000%    0.00000000%    14.04494382%
BNP-Paribas            11.23595506%    0.00000000%    0.00000000%    11.23595506%
Dai-Ichi Kangyo Bank   11.23595506%    0.00000000%    0.00000000%    11.23595506%
Fleet Boston           11.23595506%    0.00000000%    0.00000000%    11.23595506%
Union Bank of
California             11.23595506%    0.00000000%    0.00000000%    11.23595506%
KeyBank                 8.98876404%    0.00000000%    0.00000000%     8.98876404%
Scotia Capital          8.98876404%    0.00000000%    0.00000000%     8.98876404%
Comerica Bank           7.86516854%    0.00000000%    0.00000000%     7.86516854%

ABN AMRO Leasing,
Inc.                             0%             0%    3.00000000%     3.00000000%
--------------------   ------------   ------------   ------------   -------------
TOTAL                  97.00000000%    0.00000000%    3.00000000%   100.00000000%
</TABLE>

                                      I-1
<PAGE>   69
                       PART A(2) - TRANCHE PERCENTAGES AND
               PROPORTIONATE SHARES FOR THE IMPROVEMENT PORTION
                                UNDER FACILITY 1

<TABLE>
<CAPTION>
                        TRANCHE A      TRANCHE B      TRANCHE C     PROPORTIONATE
     PARTICIPANT        PERCENTAGE     PERCENTAGE     PERCENTAGE        SHARE
--------------------   ------------   ------------   ------------   -------------
<S>                    <C>            <C>             <C>           <C>
ABN AMRO Bank N.V.     10.66315302%    1.50538631%    0.00000000%    12.16853933%
Credit Lyonnais        12.30742500%    1.73751882%    0.00000000%    14.04494382%
BNP-Paribas             9.84594000%    1.39001506%    0.00000000%    11.23595506%
Dai-Ichi Kangyo Bank    9.84594000%    1.39001506%    0.00000000%    11.23595506%
Fleet Boston            9.84594000%    1.39001506%    0.00000000%    11.23595506%
Union Bank of
California              9.84594000%    1.39001506%    0.00000000%    11.23595506%
KeyBank                 7.87675200%    1.11201205%    0.00000000%     8.98876404%
Scotia Capital          7.87675200%    1.11201205%    0.00000000%     8.98876404%
Comerica Bank           6.89215800%    0.97301054%    0.00000000%     7.86516854%

ABN AMRO Leasing,
Inc.                             0%             0%    3.00000000%     3.00000000%
--------------------   ------------   ------------   ------------   -------------
TOTAL                  85.00000000%   12.00000000%    3.00000000%   100.00000000%
</TABLE>

                                      I-2
<PAGE>   70
         PART A(3) - TRANCHE PERCENTAGES AND PROPORTIONATE SHARES UNDER
                    FACILITY 2 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.     11.27785243%    0.89068690%    0.00000000%    12.16853933%
Credit Lyonnais        13.01691185%    1.02803197%    0.00000000%    14.04494382%
BNP-Paribas            10.41352948%    0.82242558%    0.00000000%    11.23595506%
Dai-Ichi Kangyo Bank   10.41352948%    0.82242558%    0.00000000%    11.23595506%
Fleet Boston           10.41352948%    0.82242558%    0.00000000%    11.23595506%
Union Bank of
California             10.41352948%    0.82242558%    0.00000000%    11.23595506%
KeyBank                 8.33082358%    0.65794046%    0.00000000%     8.98876404%
Scotia Capital          8.33082358%    0.65794046%    0.00000000%     8.98876404%
Comerica Bank           7.28947064%    0.57569790%    0.00000000%     7.86516854%

ABN AMRO Leasing,
Inc                              0%             0%    3.00000000%     3.00000000%
--------------------   ------------   ------------   ------------   -------------
TOTAL                  89.90000000%    7.10000000%    3.00000000%   100.00000000%
</TABLE>

                                      I-3
<PAGE>   71
         PART A(4) - TRANCHE PERCENTAGES AND PROPORTIONATE SHARES UNDER
                  FACILITY 2 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.     10.91405074%    1.25448859%    0.00000000%    12.16853933%
Credit Lyonnais        12.59701147%    1.44793235%    0.00000000%    14.04494382%
BNP-Paribas            10.07760917%    1.15834588%    0.00000000%    11.23595506%
Dai-Ichi Kangyo Bank   10.07760917%    1.15834588%    0.00000000%    11.23595506%
Fleet Boston           10.07760917%    1.15834588%    0.00000000%    11.23595506%
Union Bank of
California             10.07760917%    1.15834588%    0.00000000%    11.23595506%
KeyBank                 8.06208734%    0.92667671%    0.00000000%     8.98876404%
Scotia Capital          8.06208734%    0.92667671%    0.00000000%     8.98876404%
Comerica Bank           7.05432642%    0.81084212%    0.00000000%     7.86516854%

ABN AMRO Leasing,
Inc.                             0%             0%    3.00000000%     3.00000000%
--------------------   ------------   ------------   ------------   -------------
TOTAL                  87.00000000%   10.00000000%    3.00000000%   100.00000000%
</TABLE>

                                      I-4
<PAGE>   72
                            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.
San Francisco International Branch
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

Wiring Instructions:

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 IV

                                      I-5
<PAGE>   73
CREDIT LYONNAIS

MS. RITA RAYCHAUDHURI
CREDIT LYONNAIS
515 SOUTH FLOWER STREET, 22ND FLOOR
LOS ANGELES, CA  90071

Operations Contact:   Daphne  Chen
                      Telephone No. (212) 261-7638
                      Fax No. (917) 849-5439

Wiring Instructions:  Credit Lyonnais
                      ABA No.
                      026008073
                      New York,  NY
                      Credit Account of:  Credit Lyonnais, LA
                      Branch
                      Account No.0100687000100
                      Ref:  Novellus Systems Inc

                                      I-6
<PAGE>   74
BNP-PARIBAS

Credit Contact:
MR. STUART DARBY
BNP PARIBAS
180 MONTGOMERY STREET, 3rd  FLOOR
SAN FRANCISCO, CA 94104

Operations Contact:    Don
                       Hart
                       Telephone No. (415) 956-2511
                       Fax No. (415) 989-9041

Wiring Instructions:   BNP - Paribas
                       New York,  NY
                       ABA No.
                       026007689
                       Account No. 14334000176
                       BNP - Paribas,  San Francisco
                       agency
                       Attn:  Peggy  T.
                       Ref:  Novellus Systems Inc

                                      I-7
<PAGE>   75
DAI-ICHI KANGYO BANK

MR. NELSON CHANG
DAI-ICHI KANGYO BANK
CORPORATE FINANCE DEPARTMENT I
ONE WORLD TRADE CENTER, SUITE 4911
NEW YORK, NY  10048

Operations Contact:   Adolfo  Aguirre
                      Telephone No. (212) 432-8330
                      Fax No. (212) 524-0049

Wiring Instructions:  Dai-Ichi Kangyo Bank
                      New York,  NY
                      ABA No. 026004307
                      Credit Account: H10740014132
                      Attn: Loan Operations Department
                      Ref: Novellus Systems Inc'

                                      I-8
<PAGE>   76
FLEET BOSTON

MS. LEE MERKLE-RAYMOND
FLEET NATIONAL BANK
435 TASSO  STREET,  SUITE 250
PALO, CA  94301

Operations Contact:     James Snyder
                        Telephone No. (617) 434-6371
                        Fax No. (617) 434-1709

Wiring Instructions:    Fleet National Bank
                        Boston,  MA
                        ABA  011000138
                        Commercial Loans Services
                        Account No. 01035103156
                        Ref: Novellus Systems Inc

                                      I-9
<PAGE>   77
UNION BANK OF CALIFORNIA

MS. SARABELLE HITCHNER
UNION BANK OF CALIFORNIA
99 ALMADEN BLVD., SUITE 200
SAN JOSE, CA  95113

Operations Contact:      Ruby Gonzales
                         Fax No. (323) 724-6198

Wiring Instructions:     Union Bank of California,  Los Angeles
                         ABA No. 122000496
                         Credit Account No. 070196431
                         Union Bank of California
                         Attn:  192 Note Center
                         Ref:  Novellus systems Inc

                                      I-10
<PAGE>   78
KEYBANK

MS. MARY YOUNG
KEY BANK NATIONAL ASSOCIATION
700 FIFTH AVENUA, 48th FLOOR
SEATTLE, WA  98104

Operations Contact:     Specialty Services Division
                        Seattle,  WA
                        Telephone No. (800) 297-5518
                        Fax No. 800-297-5495

Wiring Instructions:    Key Bank National, Seattle,  WA
                        ABA No. 125000574
                        NW Region Specialty Services
                        Account No. 01500163
                        Ref: Novellus Systems Inc.

                                      I-11
<PAGE>   79
BANK OF NOVA SCOTIA

MS. LISA  BEARD
THE BANK  OF NOVA SCOTIA
580 CALIFORNIA STREET, SUITE 2100
SAN  FRANCISCO, CA 94104

Operations Contact:     Arnetta Wilford
                        Telephone No. (404) 877-1563
                        Fax No. (404) 888-8998

Wiring Instructions:    Bank of Nova Scotia, New York,  NY
                        ABA No. 026002532
                        Credit:  Bank of Nova Scotia, San Francisco Service
                        Account
                        No. 0610135
                        Ref:  Novellus Systems Inc

                                      I-12
<PAGE>   80
COMERICA BANK

MS. SARAH LEWIS
COMERICA BANK
800 OAKGROVE AVENUE.
MENLO PARK, CA  94025

Operations Contact:     Rob  Ways
                        Telephone No.  (650) 462-6056
                        Fax No. (650) 462-6058

Wiring Instructions:    Comerica Bank,  San Jose,  CA
                        ABA No. 121137522
                        Credit Account No.:  5692209284
                        Ref: Novellus Systems Inc

                                      I-13
<PAGE>   81
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.:  071000505
Account Name:  ABN AMRO Leasing, Inc.
Account No.:  2226951
Reference:  Novellus Systems, Inc. Synthetic Lease IV

                                      I-14
<PAGE>   82
                                   SCHEDULE II

                                  PRICING GRID

              (For LIBOR Rental Rate and Commitment Fee Percentage)

<TABLE>
<CAPTION>
                                         APPLICABLE
                                         MARGIN FOR     APPLICABLE
          FUNDED                            LIBOR       MARGIN FOR
      INDEBTEDNESS/           PRICING    RENTAL RATE       LIBOR       COMMITMENT
          EBITDA              PERIOD      /TRANCHES     RENTAL RATE       FEE
          RATIO*               LEVEL       A AND B      /TRANCHE C     PERCENTAGE
---------------------------   -------      -------      ----------     ----------
<S>                           <C>        <C>            <C>            <C>
less than or equal to 0.60       1         1.125%         2.375%         0.250%

         greater than 0.60,
less than or equal to 1.20       2         1.250%         2.500%         0.300%

         greater than 1.20,
less than or equal to 1.40       3         1.500%         2.750%         0.375%

         greater than 1.40       4         2.000%         3.000%         0.500%
</TABLE>

      *     For preceding consecutive four-quarter period.

                                   EXPLANATION

1.    The Applicable Margin with respect to the LIBOR Rental Rate for any period
      and the Commitment Fee Percentage will be set for each Pricing Period and
      will vary depending upon whether such period is a Level 1 Period, a Level
      2 Period, a Level 3 Period or a Level 4 Period.

2.    The first Pricing Period, which commences on the date of this Agreement
      and ends on May 31, 2001, will be a Level 2 Period.

3.    The second pricing period, which commences on June 1, 2001 and ends on
      August 31, 2001, will be a Level 1 Period, a Level 2 Period, a Level 3
      Period or a Level 4 Period depending upon Lessee's Funded
      Indebtedness/EBITDA Ratio for the consecutive four-fiscal quarter period
      ending on March 31, 2001.

4.    Each Pricing Period thereafter will be a Level 1 Period, a Level 2 Period,
      a Level 3 Period or a Level 4 Period depending upon Lessee's Funded
      Indebtedness/EBITDA Ratio for the most recent consecutive four-fiscal
      quarter period ending prior to the first day of such Pricing Period.

                                      II-1
<PAGE>   83
5.    Examples:

      (a)   Lessee's Funded Indebtedness/EBITDA Ratio is 0.75 for the
            consecutive four-fiscal quarter period ending on March 31, 2001. The
            Pricing Period June 1, 2001 - August 31, 2001 will be a Level 2
            Period.

      (b)   Lessee's Funded Indebtedness/EBITDA Ratio is 1.30 for the
            four-fiscal quarter period ending on June 30, 2001. The Pricing
            Period of September 1, 2001 - November 30, 2001 will be a Level 3
            Period.

                                      II-2
<PAGE>   84
                                  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(d) 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 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.

      "Agent" shall mean ABN AMRO, acting in its capacity as Agent for the
Participants under the Operative Documents.

                                     1.01-1
<PAGE>   85
      "Agent's Fee Letter" shall mean the letter agreement dated as of December
5, 2000 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 and Tranche B.  With respect to the Outstanding
      Tranche A Participation Amounts and Outstanding Tranche B Participation
      Amounts under either Facility:

                  (i)   The per annum rate which is determined pursuant to the
            Pricing Grid with respect to the LIBOR Rental Rate under the
            applicable Lease Agreement; or

                  (ii)  Zero percent (0%) per annum with respect to the
            Alternate Rental Rate under the applicable Lease Agreement; and

            (b)   Tranche C.  With respect to the Outstanding Tranche C
      Participation Amounts under either Facility:

                  (i)   The per annum rate which is determined pursuant to the
            Pricing Grid with respect to the LIBOR Rental Rate under the
            applicable Lease Agreement; or

                  (ii)  Two percent (2.0%) per annum with respect to the
            Alternate Rental Rate under the applicable Lease Agreement;

provided, however, that each Applicable Margin set forth in subparagraphs (a)
and (b) 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)
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.

                                     1.01-2
<PAGE>   86
      "Appraisal" shall mean an appraisal of any Tract of 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, with respect to each Purchase Agreement,
the meaning given to that term in Subparagraph 5.03(b) of such 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, with respect to each Purchase Agreement,
the meaning given to that term in Subparagraph 3.02(h) of such 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%).

      "Base Rent" shall have, with respect to either Lease Agreement, the
meaning given to that term in Subparagraph 2.03(a) of such Lease Agreement. Such
term, when used without reference to either Lease Agreement, shall mean all Base
Rent under both Lease Agreements.

                                     1.01-3
<PAGE>   87
      "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)   In the case of any "Cash Collateral" required to be delivered
      by Lessee under Facility 2 during the Construction Period as security for
      the Lessee Obligations under Facility 2 pursuant to Subparagraph 2.11(a)
      of the Participation Agreement, United States Treasury Securities with
      maturities not exceeding the Termination Date of the Facility 2 Lease
      Agreement that are delivered to and held by Agent as security for such
      Lessee Obligations; or

            (b)   In the case of any "Cash Collateral" required to be delivered
      by Lessee in all other cases as security for the Lessee Obligations under
      a Facility pursuant to Subparagraph 2.11(a) of the Participation
      Agreement, lawful currency of the United States of America in same day or
      immediately available funds that is delivered to and held by Agent in an
      interest-bearing deposit account as security for such Lessee Obligations.

                                     1.01-4
<PAGE>   88
      "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>   89
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 has a Lien to secure any of the
Lessee Obligations.

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

      "Commitment" shall mean, with respect to any Participant at any time, the
sum of such Participant's Facility 1 Commitment and Facility 2 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 the per annum rate determined
pursuant to the Pricing Grid.

      "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(c) of the Participation Agreement.

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

                                     1.01-6
<PAGE>   90
      "Completion" shall have the meaning given to that term in Subparagraph
3.05(c) of the Facility 2 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 Facility 2 Construction Agency
Agreement are satisfied for all Tracts of Property covered by the Facility 2
Construction Agency Agreement.

      "Completion Date Appraisal" shall mean, with respect to the Facility 2
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 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 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, with respect to either Purchase Agreement,
the meaning given to that term in Subparagraph 3.02(c) of such Purchase
Agreement.

      "Construction Agreements" shall have the meaning given to that term in
Paragraph 3.01 of the Facility 2 Construction Agency Agreement.

      "Construction Period" shall mean, with respect to any building to be
constructed or improved as part of the New Improvement, the period that begins
on the Closing Date and ends on the earlier of (a) the first date on which
Substantial Completion of such construction or improvement for such building
occurs and (b) the Outside Completion Date.

      "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

                                     1.01-7
<PAGE>   91
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 either 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 Facility 2 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 Facility 2 Commitment and (ii)
      the fair market value of the Facility 2 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 Facility 2 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
Facility 2 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 Completion of the New Improvements
at such time will exceed the Unused Total Facility 2 Commitment at such time.

                                     1.01-8
<PAGE>   92
      "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 either Purchase Agreement.

      "Current Appraisal" shall have, with respect to a Purchase Agreement, the
meaning given to that term in Subparagraph 3.02(h) of such 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 both Lease Agreements 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 either Lease Agreement or
any event or circumstance not yet constituting an Event of Default under either
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 either 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.

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

      "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.

      "EBITDA" 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

                                     1.01-9
<PAGE>   93
            (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, and (ii) all depreciation and
      amortization expenses of Lessee and its Subsidiaries accruing during such
      period.

      "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).

      "Eligible Project Costs" shall mean, with respect to either Facility on
any date, the remainder of:

            (a)   The sum of (i) the Outstanding Lease Amount under such
      Facility 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>   94
Such term, when used without reference to either Facility, shall mean the
aggregate Eligible Project Costs under both Facilities.

      "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, with respect to a Lease Agreement, the
meaning given to that term in Paragraph 5.01 of such Lease Agreement.

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

      "Existing Improvements" shall mean (a) with respect to a particular Tract
of Land, all Improvements existing on such Land on the Closing Date and (b) with
respect to all the Land, all such Improvements. Each reference to "Existing
Improvements" shall refer collectively to Existing Improvements with respect to
all the Land unless such reference specifically indicates that it applies to a
particular Tract.

                                    1.01-11
<PAGE>   95
      "Existing Improvement Property" shall mean all of the Property that is not
New Improvement Property.

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

      "Expiration Date Appraisal" shall mean (a) with respect to the Facility 1
Property (or any portion thereof) as of any date, an Appraisal that assesses at
such time the Fair Market Value of such Property on the Scheduled Expiration
Date and (b) with respect to the Facility 2 Property (or any portion thereof) as
of any date, an Appraisal that assesses at such time the Fair Market Value of
such Property on the Scheduled Expiration Date and as improved in accordance
with the Plans and Specifications for the New Improvements.

      "Expiration Date Purchase Option" shall have, with respect to either
Purchase Agreement, the meaning given to that term in Subparagraph 3.01(b) of
such Purchase Agreement.

      "Facilities" shall have the meaning given to that term in Recital B to the
Participation Agreement.

      "Facility 1" shall have the meaning given to that term in Recital B to the
Participation Agreement.

      "Facility 1 Commitment" shall mean, with respect to any Participant at any
time, the sum of such Participant's Facility 1 Land Portion Commitment and
Facility 1 Improvement Portion Commitment at such time.

      "Facility 1 Head Lease Agreement" shall have the meaning given to that
term in Subparagraph 2.01(b) of the Participation Agreement.

      "Facility 1 Improvement Portion Commitment" shall mean, with respect to
any Participant at any time, such Participant's Proportionate Share of the Total
Facility 1 Improvement Portion Commitment at such time.

      "Facility 1 Land" shall mean all lots, pieces, tracts or parcels of land
described in Exhibit A to the Facility 1 Lease Agreement and leased by Lessee
pursuant to the Facility 1 Lease Agreement.

      "Facility 1 Land Portion Commitment" shall mean, with respect to any
Participant at any time, such Participant's Proportionate Share of the Total
Facility 1 Land Portion Commitment at such time.

      "Facility 1 Lease Agreement" shall have the meaning given to that term in
Subparagraph 2.01(b) of the Participation Agreement.

                                    1.01-12
<PAGE>   96
      "Facility 1 Property" shall have the meaning given to that term in
Paragraph 2.01 of the Facility 1 Lease Agreement.

      "Facility 1 Purchase Agreement" shall have the meaning given to that term
in Subparagraph 2.01(b) of the Participation Agreement.

      "Facility 2" shall have the meaning given to that term in Recital B to the
Participation Agreement.

      "Facility 2 Commitment" shall mean, with respect to any Participant at any
time, such Participant's Facility 2 Proportionate Share of the Total Facility 2
Commitment at such time.

      "Facility 2 Construction Agency Agreement" shall have the meaning given to
that term in Subparagraph 2.01(c) of the Participation Agreement.

      "Facility 2 Head Lease Agreement" shall have the meaning given to that
term in Subparagraph 2.01(c) of the Participation Agreement.

      "Facility 2 Land" shall mean all lots, pieces, tracts or parcels of land
described in Exhibit A to the Facility 2 Lease Agreement and leased by Lessee
pursuant to the Facility 2 Lease Agreement.

      "Facility 2 Land Portion Cost" shall have the meaning given to that term
in Subparagraph 2.01(a) of the Participation Agreement.

      "Facility 2 Lease Agreement" shall have the meaning given to that term in
Subparagraph 2.01(c) of the Participation Agreement.

      "Facility 2 Property" shall have the meaning given to that term in
Paragraph 2.01 of the Facility 2 Lease Agreement.

      "Facility 2 Purchase Agreement" shall have the meaning given to that term
in Subparagraph 2.01(c) of the Participation 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

                                    1.01-13
<PAGE>   97
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);

            (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

                                    1.01-14
<PAGE>   98
            (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.

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

            (a)   The Funded Indebtedness of Lessee and its Subsidiaries on
      the last day of such period;

                                       to

            (b)   The EBITDA of Lessee and its Subsidiaries for such period.

      "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.

      "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

                                    1.01-15
<PAGE>   99
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.

      "Head Lease Agreements" shall mean collectively the Facility 1 Head Lease
Agreement and the Facility 2 Head Lease Agreement.

      "Head Lease Commencement Date" shall have, with respect to either Head
Lease Agreement, the meaning given to that term in Paragraph 2.02 of such Head
Lease Agreement.

      "Head Lease Event of Default" shall have, with respect to either Head
Lease Agreement, the meaning given to that term in Paragraph 5.01 of such Head
Lease Agreement.

      "Head Lease Expiration Date" shall have, with respect to either Head Lease
Agreement, the meaning given to that term in Paragraph 4.02 of such Head Lease
Agreement.

      "Head Lease Scheduled Expiration Date" shall have, with respect to either
Head Lease Agreement, the meaning given to that term in Paragraph 2.02 of such
Head Lease Agreement.

      "Head Lessee" shall mean ABN AMRO Leasing, Inc., acting in its capacity as
Head Lessee under the Head Lease Agreements.

      "Head Lessor" shall mean Lease Plan North America, Inc., acting in its
capacity as Head Lessor under the Head Lease Agreements and the other Operative
Documents.

      "Improvement Portion" shall mean, with respect to either Facility, the
portion of the Property under such Facility other than the Land Portion.

      "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

                                    1.01-16
<PAGE>   100
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 applicable 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:

                                    1.01-17
<PAGE>   101
            (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 either 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.

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

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

      "Initial Advance" shall mean, with respect to each Facility, the initial
Advance under such Facility.

      "Initial Bid" shall have, with respect to either Lease Agreement, the
meaning given to that term in Subparagraph 3.02(b) of such Purchase Agreement.

      "Initial Marketing Period" shall have, with respect to either Purchase
Agreement, the meaning given to that term in Subparagraph 3.02(b) of such
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, with respect to either Lease Agreement,
the meaning given to that term in Subparagraph 2.03(a) of such 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.

                                    1.01-18
<PAGE>   102
      "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 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 collectively the Facility 1 Land and the Facility 2
Land.

      "Land Portion" shall mean, with respect to either Facility, the portion of
the Property under such Facility consisting of the Land covered by such
Facility; all Appurtenant Rights belonging, relating or pertaining to such Land;
all Related Permits and Related Agreements related to such Land or Appurtenant
Rights; and all accessions and accretions to and replacements and substitutions
for the foregoing.

      "Lease Agreements" shall mean collectively the Facility 1 Lease Agreement
and the Facility 2 Lease 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, with respect to either Head Lease
Agreement, the meaning given to that term in Subparagraph 3.07(c) of such Head
Lease Agreement.

      "Leasehold Mortgages" shall have, with respect to either Head Lease
Agreement, the meaning given to that term in Subparagraph 3.07(a) of such Head
Lease Agreement.

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

            (a)   The Principal Component of Base Rent paid under such Facility;

            (b)   Casualty and Condemnation Proceeds with respect to such
      Facility;

                                    1.01-19
<PAGE>   103
            (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 for such Facility;

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

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

            (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 for such Facility; and

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

      "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 Amounts, Indemnity Amounts and/or Outstanding Lease
Amounts and to pay all interest, fees, charges, expenses, attorneys' fees and
accountants' fees chargeable to Lessee or payable by Lessee under the Operative
Documents. Such term, when used with reference to either Facility, shall mean
all Lessee Obligations under the Lease Agreement, Purchase Agreement and, in the
case of Facility 2, the Facility 2 Construction Agency Agreement for such
Facility and all other Lessee Obligations related to such Facility or to both
Facilities. Such term, when used without reference to either Facility, shall
mean all Lessee Obligations under all Operative Documents.

      "Lessee Security Documents" shall mean and include the Lease Agreements,
any Cash Collateral Agreement, the Assignment of Construction Agreements 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.

                                    1.01-20
<PAGE>   104
      "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 Head Lessor, 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.

      "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.

                                    1.01-21
<PAGE>   105
      "Major Casualty" shall mean, with respect to any Property, any Casualty
affecting such Property where (a) the damage to such Property is treated by any
insurer of such Property as a total loss; (b) such Property cannot reasonably be
repaired and restored prior to the expiration of the Term of the lease
applicable to such Property to the condition in which it existed immediately
prior to such Casualty; or (c) the reasonably anticipated cost to repair and
restore such Property to the condition in which it existed immediately prior to
such Casualty would exceed forty percent (40%) of the Outstanding Lease Amount
applicable to such Property.

      "Major Condemnation" shall mean, with respect to any Property, any
Condemnation affecting such Property where (a) all or substantially all of such
Property is taken by such Condemnation; (b) such 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
such Property to the condition in which it existed immediately prior to such
Condemnation would exceed forty percent (40%) of the Outstanding Lease Amount
applicable to such Property.

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

      "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, with respect to either Purchase Agreement,
the meaning given to that term in Subparagraph 3.01(a) of such Purchase
Agreement.

      "Marketing Option Event of Default" shall mean, with respect to either
Lease Agreement, any Event of Default thereunder 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 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 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 any Property that alone, or
in combination with any prior Casualties to such Property for which repairs to
restore such Property to its prior condition have not been completed, will
require repairs costing (a) during the Construction Period, $500,000 or more to
restore such Property to its prior condition, or (b) after the Construction
Period, $2,500,000 or more to restore such Property to its prior condition.

                                    1.01-22
<PAGE>   106
      "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, with respect to a Lease Agreement, the meaning
given to that term in Subparagraph 3.01(c) of such 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 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 all new Improvements under Facility 2
contemplated by the Plans and Specifications therefor.

      "New Improvement Property" shall mean the New Improvements, the buildings
in which the New Improvements are constructed and the footprint of the Land on
which the New Improvements or such buildings are located.

      "Non-Marketing Option Event of Default" shall mean:

            (a)   With respect to the Facility 1 Lease Agreement, an Event of
      Default under Subparagraph 5.01(l) of such Lease Agreement; or

            (b)   With respect to the Facility 2 Lease Agreement, an Event of
      Default under Subparagraph 5.01(l), 5.01(m) or 5.01(n) of such Lease
      Agreement;

If, in each case, 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, with
respect to either Purchase Agreement, the meaning given to that term in
Paragraph 3.01 of such Purchase Agreement.

                                    1.01-23
<PAGE>   107
      "Notice of Marketing Option Exercise" shall have, with respect to either
Purchase Agreement, the meaning given to that term in Paragraph 3.01 of such
Purchase Agreement.

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

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

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

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

      "Novellus I Facilities" shall have the meaning given to that term in
Recital A of the Participation Agreement.

      "Novellus I Facility 1" shall have the meaning given to that term in
Recital A of the Participation Agreement.

      "Novellus I Facility 1 Property" shall have the meaning given to that term
in Recital A of the Participation Agreement.

      "Novellus I Facility 2" shall have the meaning given to that term in
Recital A of the Participation Agreement.

      "Novellus I Facility 2 Property" shall have the meaning given to that term
in Recital A of the Participation Agreement.

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

      "Novellus I Operative Documents" shall mean the "Operative Documents" as
defined in the Novellus I Participation Agreement.

      "Novellus I Participants" shall have the meaning given to that term in
Recital A.

      "Novellus I Participation Agreement" shall have the meaning given to that
term in Recital A.

      "Operative Documents" shall mean and include the Participation Agreement,
the Head Lease Agreements, the Lease Agreements, the Facility 2 Construction
Agency Agreement, the Purchase Agreements, 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,

                                    1.01-24
<PAGE>   108
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 to hedge against fluctuations in the LIBOR Rental Rate under either
or both Lease Agreements. (Without limiting the generality of the preceding
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.)

      "Outside Completion Date" shall mean the date sixteen (16) months 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 Facility 2
Construction Agency Agreement, that date to which so extended.

      "Outstanding Lease Amount" shall mean, with respect to either Facility (or
the Land Portion or Improvement Portion thereof in the case of Facility 1) on
any date, the remainder of (a) the sum of all Advances made by Lessor on or
prior to such date under such Facility (or the applicable portion thereof in the
case of Facility 1), minus (b) the sum of all Lease Reduction Payments applied
by Lessor on or prior to such date under such Facility (or the Land Portion or
Improvement Portion applicable portion thereof in the case of Facility 1). Such
term, when used without reference to either Facility, shall mean the aggregate
Outstanding Lease Amount under both Facilities.

      "Outstanding Participation Amount" shall mean, with respect to any
Participant and any Facility (or the Land Portion or Improvement Portion thereof
in the case of Facility 1) on any date, the remainder of (a) the sum of the
portions of all Advances under such Facility (or the applicable portion thereof
in the case of Facility 1) 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 under such Facility (or the applicable
portion thereof in the case of Facility 1) on or prior to such date. Such term,
when used without reference to either Facility, shall mean the aggregate
Outstanding Participation Amounts of the applicable Participant under both
Facilities.

      "Outstanding Tranche A Participation Amount" shall mean, with respect to
any Tranche A Participant under any Facility (or the Land Portion or Improvement
Portion thereof in the case of Facility 1) on any date, the remainder of (a)
such Participant's Tranche A Portion of all Advances made by Lessor under such
Facility (or the applicable portion thereof in the case of Facility 1) 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 under such Facility
(or the applicable portion thereof in the case of Facility 1) on or prior to
such date.

      "Outstanding Tranche B Participation Amount" shall mean, with respect to
any Tranche B Participant under any Facility (or the Land Portion or Improvement
Portion thereof in the case of Facility 1) on any date, the remainder of (a)
such Participant's Tranche B Portion of all Advances made by Lessor under such
Facility (or the applicable portion thereof in the case of Facility 1) on or
prior to such date, minus (b) such Participant's share of all Lease Reduction

                                    1.01-25
<PAGE>   109
Payments applied to the Tranche B Portion of the Advances under such Facility
(or the applicable portion thereof in the case of Facility 1) on or prior to
such date.

      "Outstanding Tranche C Participation Amount" shall mean, with respect to
any Tranche C Participant under any Facility (or the Land Portion or Improvement
Portion thereof in the case of Facility 1) on any date, the remainder of (a)
such Participant's Tranche C Portion of all Advances made by Lessor under such
Facility (or the applicable portion thereof in the case of Facility 1) 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 under such Facility
(or the applicable portion thereof in the case of Facility 1) on or prior to
such date.

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

      "Partial Purchase Option" shall have, with respect to either Purchase
Agreement, the meaning given to that term in Paragraph 2.02 of such 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.

      "Participation Agreement" shall mean the Participation Agreement, dated as
of April 13, 2001 among Lessee and the Lessor Parties.

      "PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.

      "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 and the acquisition of
the Property under Facility 2 (other than the Existing Improvements), 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.

                                    1.01-26
<PAGE>   110
      "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)   The Novellus I Lease Reduction Payment and all rent, if any,
      payable under the Head Lease Agreements during the Commitment Period;

            (c)   All Commitment 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;

            (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
      $400,000; 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.

                                    1.01-27
<PAGE>   111
      "Personal Property Collateral" shall have, with respect to the Facility 2
Lease Agreement, the meaning given to that term in Subparagraph 2.07(b) of such
Lease Agreement.

      "Plans and Specifications" shall mean the architectural, engineering and
construction plans, specifications and drawings for the New Improvements, if
any, for each Tract of Land, as delivered to Agent on or prior to the Closing
Date pursuant to Paragraph 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 Facility 2 Construction Agency Agreement. Each
reference to "Plans and Specifications" shall refer collectively to the Plans
and Specifications with respect to all the Land unless such reference
specifically indicates that it applies to a particular Tract.

      "Portion" shall mean a portion of the Outstanding Lease Amount under any
Facility. 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 under such Facility.

      "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.

      "Pricing Grid" shall mean Schedule II to the Participation Agreement.

      "Pricing Period" shall mean (a) the period commencing on the date of this
Agreement and ending on May 31, 2001, (b) the three-calendar month period
commencing June 1, 2001 and ending September 30, 2001 and (c) each consecutive
three-calendar month period thereafter which commences on the day following the
last day of the immediately preceding three-calendar month period and ends on
the last day of that time period.

      "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 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 mean collectively the Facility 1 Property and the
Facility 2 Property.

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

                                    1.01-28
<PAGE>   112
      "Proportionate Share" shall mean:

            (a)   With respect to each Participant and the Land Portion of
      Facility 1 (including any Advance thereunder) at any time, the percentage
      set forth under the caption "Proportionate Share" opposite such
      Participant's name in Part A(1) of Schedule I;

            (b)   With respect to each Participant and the Improvement Portion
      of Facility 1 (including any Advance thereunder) at any time, the
      percentage set forth under the caption "Proportionate Share" opposite such
      Participant's name in Part A(2) of Schedule I;

            (c)   With respect to each Participant and Facility 2 (including any
      Advance thereunder) 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(3) of Schedule I;

            (d)   With respect to each Participant and Facility 2 (including any
      Advance thereunder) 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(4) of Schedule I; and

            (e)   With respect to each Participant without reference to either
      Facility (or any Advance under either Facility) at any time, a fraction
      (expressed as a percentage rounded to the eighth digit to the right of the
      decimal point), the numerator of which is such Participant's Commitment at
      such time and the denominator of which is the Total Commitment at such
      time;

or, in the case of any percentage referred to in clause (a), (b) or (c), if
changed, such percentage as may be set forth for such Participant in the
Register. The Proportionate Share of each Participant under a Facility at any
time shall equal the sum of such Participant's Tranche A Percentage, Tranche B
Percentage and Tranche C Percentage under such Facility at such time.

      "Purchase Agreements" shall mean collectively the Facility 1 Purchase
Agreement and the Facility 2 Purchase Agreement.

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

      "Purchaser" shall have, with respect to either Purchase Agreement, the
meaning given to that term in Subparagraph 4.01(a) of such 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

                                    1.01-29
<PAGE>   113
      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.)

      "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, with respect to either Lease
Agreement, the meaning given to that term in Subparagraph 2.07(a) of such Lease
Agreement. Such term, when used without reference to either Lease Agreement,
shall mean collectively the Real Property Collateral under both Lease
Agreements.

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

                                    1.01-30
<PAGE>   114
      "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 Facility 2 Lease Agreement and in each Exhibit B
      Supplement delivered by Lessee; and

            (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 either 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, with respect to either Facility, Base Rent
and Supplemental Rent payable in connection with such Facility. Such term, when
used without reference to either Facility, shall mean all Rent under both
facilities.

      "Rental Period" shall mean, with respect to any Facility:

            (a)   With respect to the entire Outstanding Lease Amount during the
      period beginning on the Commencement Date for any 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 such Lease Agreement; and

                                    1.01-31
<PAGE>   115
            (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 such 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 such Lease Agreement.

Each Rental Period with respect to each Facility 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 each Lease Agreement.

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

      "Reportable Event" shall have the meaning given to that term in ERISA and
applicable regulations thereunder.

      "Required Participants" shall mean (a) at any time the aggregate
Outstanding Lease Amount under both Facilities is greater than $0, Participants
whose aggregate Outstanding Participation Amounts under both Facilities equal or
exceed sixty-six and two-thirds percent (66-2/3%) or more of the aggregate
Outstanding Lease Amount under both Facilities at such time and (b) at any time
the aggregate Outstanding Lease Amount under both Facilities is $0, Participants
whose Proportionate Shares equal or exceed sixty-six and two-thirds percent
(66-2/3%).

      "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, with respect to either
Purchase Agreement, the meaning given to that term in Subparagraph 3.02(g) of
such Purchase Agreement.

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

                                    1.01-32
<PAGE>   116
      "Scheduled Rent Payment Date" shall have, with respect to either Lease
Agreement, the meaning given to that term in Subparagraph 2.03(a) of such Lease
Agreement.

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

      "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 Facility 2 Construction Agency Agreement.

                                    1.01-33
<PAGE>   117
      "Supplemental Rent" shall have, with respect to either Lease Agreement,
the meaning given to such term in Subparagraph 2.03(b) of such 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).

      "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, with respect to either Lease Agreement, the period
beginning on the Commencement Date of such Lease Agreement and ending on the
Expiration Date of such Lease Agreement.

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

      "Term Purchase Option" shall have, with respect to either Purchase
Agreement, the meaning given to that term in Paragraph 2.01 of such Purchase
Agreement.

      "Total Commitment" shall mean the amount set forth as such in clause (iii)
of Subparagraph 2.01(d) 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.

                                    1.01-34
<PAGE>   118
      "Total Facility 1 Commitment" shall mean the amount set forth as such in
clause (iii) of Subparagraph 2.01(d) of the Participation Agreement or, if the
Total Facility 1 Land Portion Commitment or Total Facility 1 Improvement Portion
Commitment is reduced pursuant to Subparagraph 2.08(a) of the Participation
Agreement, the sum of the Total Facility 1 Land Portion Commitment or Total
Facility 1 Improvement Portion Commitment as so reduced.

      "Total Facility 1 Improvement Portion Commitment" shall mean the amount
set forth as such in clause (ii) of Subparagraph 2.01(d) 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.

      "Total Facility 1 Land Portion Commitment" shall mean the amount set forth
as such in clause (i) of Subparagraph 2.01(d) 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.

      "Total Facility 2 Commitment" shall mean the amount set forth as such in
clause (iv) of Subparagraph 2.01(d) 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 described in Exhibit A to each 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.

      "Tract 2 Land" and "Tract 5 Land" shall mean the lots, pieces, parcels and
tracts of land described as such, respectively, in Exhibit A to the
Participation Agreement.

      "Tranche A Participant" shall mean, with respect to any Facility at any
time, any Participant having an Outstanding Tranche A Participation Amount under
such Facility at such time.

      "Tranche A Percentage" shall mean (a) with respect to each Participant and
the Land Portion of Facility 1 at any time, the percentage set forth under the
caption "Tranche A Percentage" opposite such Participant's name in Part A(1) of
Schedule I; (b) with respect to each Participant and the Improvement Portion of
Facility 1 at any time, the percentage set forth under the caption "Tranche A
Percentage" opposite such Participant's name in Part A(2) of Schedule I; (c)
with respect to each Participant and Facility 2 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(3) of Schedule I; and (d)
with respect to each Participant and Facility 2 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(4) of Schedule I; or in
the case of any such percentage, if changed, such percentage as may be set forth
for such Participant in the Register.

                                    1.01-35
<PAGE>   119
      "Tranche A Portion" shall mean, (a) with respect to any Advance under a
Facility (or the Land Portion or Improvement Portion thereof in the case of
Facility 1) without reference to any Participant, the portion of such Advance
equal to the applicable Tranche A Proportionate Share of such Advance and (b)
with respect to any Advance under a Facility (or the Land Portion or Improvement
Portion thereof in the case of Facility 1) with reference to any Participant,
the portion of such Advance equal to such Participant's applicable Tranche A
Percentage of such Advance.

      "Tranche A Proportionate Share" shall mean:

            (a)   With respect to Facility 1, (i) ninety-seven percent (97.0%)
      for the Land Portion and (ii) eighty-five percent (85.0%) for the
      Improvement Portion; and

            (b)   With respect to Facility 2, (i) 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-seven percent (87.0%).

      "Tranche B Participant" shall mean, with respect to any Facility at any
time, any Participant having an Outstanding Tranche B Participation Amount under
such Facility at such time.

      "Tranche B Percentage" shall mean (a) with respect to each Participant and
the Land Portion of Facility 1 at any time, the percentage set forth under the
caption "Tranche B Percentage" opposite such Participant's name in Part A(1) of
Schedule I; (b) with respect to each Participant and the Improvement Portion of
Facility 1 at any time, the percentage set forth under the caption "Tranche B
Percentage" opposite such Participant's name in Part A(2) of Schedule I; (c)
with respect to each Participant and Facility 2 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(3) of Schedule I; and (d)
with respect to each Participant and Facility 2 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(4) of Schedule I; or in
the case of any 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 under a
Facility (or the Land Portion or Improvement Portion thereof in the case of
Facility 1) without reference to any Participant, the portion of such Advance
equal to the applicable Tranche B Proportionate Share of such Advance and (b)
with respect to any Advance under a Facility (or the Land Portion or Improvement
Portion thereof in the case of Facility 1) with reference to any Participant,
the portion of such Advance equal to such Participant's applicable Tranche B
Percentage of such Advance.

      "Tranche B Proportionate Share" shall mean:

            (a)   With respect to Facility 1, (i) zero percent (0%) for the Land
      Portion and (ii) twelve percent (12%) for the Improvement Portion; and

                                    1.01-36
<PAGE>   120
            (b)   With respect to Facility 2, (i) at any time prior to the
      Completion Date, seven and one tenth percent (7.1%) and (ii) at any time
      on or after the Completion Date, ten percent (10.0%).

      "Tranche C Participant" shall mean, with respect to any Facility at any
time, any Participant having an Outstanding Tranche C Participation Amount under
such Facility at such time.

      "Tranche C Percentage" shall mean (a) with respect to each Participant and
the Land Portion of Facility 1 at any time, the percentage set forth under the
caption "Tranche C Percentage" opposite such Participant's name in Part A(1) of
Schedule I; (b) with respect to each Participant and the Improvement Portion of
Facility 1 at any time, the percentage set forth under the caption "Tranche C
Percentage" opposite such Participant's name in Part A(2) of Schedule I; (c)
with respect to each Participant and Facility 2 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(3) of Schedule I; and (d)
with respect to each Participant and Facility 2 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(4) of Schedule I; or in
the case of any 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 under a
Facility (or the Land Portion or Improvement Portion thereof in the case of
Facility 1) without reference to any Participant, the portion of such Advance
equal to the applicable Tranche C Proportionate Share of such Advance and (b)
with respect to any Advance under a Facility (or the Land Portion or Improvement
Portion thereof in the case of Facility 1) with reference to any Participant,
the portion of such Advance equal to such Participant's applicable Tranche C
Percentage of such Advance.

      "Tranche C Proportionate Share" shall mean:

            (a)   With respect to Facility 1, (i) three percent (3.0%) for the
      Land Portion and (ii) three percent (3.0%) for the Improvement Portion;
      and

            (b)   With respect to Facility 2, at all times (whether before, on
      or after the Completion Date) three percent (3.00%).

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

      "UCC" shall mean the California Uniform Commercial Code.

      "Unused" shall mean:

            (a)   With respect to the Total Commitment at any time, the
      remainder of (i) the Total Commitment at such time minus (ii) the
      aggregate amount of all Advances made prior to such time; or

                                    1.01-37
<PAGE>   121
            (b)   With respect to the Total Facility 1 Commitment or Total
      Facility 2 Commitment at any time, the remainder of (i) the Total Facility
      1 Commitment or Total Facility 2 Commitment, as the case may be, at such
      time minus (ii) the aggregate amount of all Advances made under the
      applicable Facility prior to such time; or

            (c)   With respect to any Participant's Commitment at any time, the
      remainder of (i) such Participant's Commitment at such time minus (ii) the
      aggregate amount of all Advances funded by such Participant prior to such
      time.

                                    1.01-38
<PAGE>   122
                                  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. Accordingly,

                                     1.02-1
<PAGE>   123
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 (including the commitment letter dated as
of October 11, 2000 between Lessee and Agent 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

                                     1.02-2
<PAGE>   124
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.

                                     1.02-3
<PAGE>   125
                                  SCHEDULE 3.01

                          INITIAL CONDITIONS PRECEDENT

A.    PRINCIPAL OPERATIVE DOCUMENTS.

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

            (2)   The Head Lease Agreements, each duly executed by Lessor and
      Head Lessor;

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

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

            (5)   The Facility 2 Construction Agency Agreement, duly executed by
      Lessee and Lessor;

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

            (7)   The Assignment of Lease, duly executed by Lessor and
      appropriately notarized;

            (8)   The Lessor Deed of Trust, duly executed by Lessor and
      appropriately notarized; and

            (9)   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
      Operative Documents executed or to be executed by Lessee and the
      consummation of the

                                     3.01-1
<PAGE>   126
      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 certificates)
      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;

            (3)   A certificate of the chief financial officer of Lessee which
      sets forth the calculation of the Funded Indebtedness/EBITDA Ratio for the
      consecutive four-quarter period ending on December 31, 2000; and

            (4)   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 Head Lease Agreement for each Facility,
      appropriately completed and duly executed by Lessor and Head Lessor and
      appropriately notarized for recording;

            (2)   A Memorandum of Purchase Agreement for each Facility,
      appropriately completed and duly executed by Lessee and Lessor and
      appropriately notarized for recording;

                                     3.01-2
<PAGE>   127
            (3)   Evidence that the Lease Agreements, the Assignment of Lease,
      the Lessor Deed of Trust, the Memoranda of Head Lease Agreement and the
      Memoranda of Purchase Agreement delivered pursuant to items A(3), A(7),
      A(8), D(1) and D(2) have been properly recorded in the Official Records of
      the County of Santa Clara, California;

            (4)   An ALTA extended coverage owner's policy or binder of title
      insurance (or a commitment therefor) for the Facility 1 Property and
      Facility 2 Property insuring Lessor's leasehold estate to the Property
      (subject to the Novellus I Operative Documents which will be released upon
      receipt of $44,813,000 by Agent on behalf of the Novellus I Participants
      and 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 Facility 1 Property and Facility 2
      Property insuring the validity and priority of the Lease Agreements
      (subject to the Novellus I Operative Documents which will be released upon
      receipt of $44,813,000 by Agent on behalf of the Novellus I Participants
      and 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 Facility 1 Property and Facility 2
      Property insuring the validity and priority of the Lessor Deed of Trust
      (subject to the Novellus I Operative Documents which will be released upon
      receipt of $44,813,000 by Agent on behalf of the Novellus I Participants
      and 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 Facility 1 Property and Facility
      2 Property and all other documents, instruments and agreements recorded
      against or otherwise affecting such 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 Facility 1 Property and
      Facility 2 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;

                                     3.01-3
<PAGE>   128
            (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 by the Operative Documents to be prior or (b) for
      which Agent has received a termination statement pursuant to item D(11)
      above;

            (13)  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

            (14)  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
      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 each
      of the Initial Advances, each duly executed by Lessee;

            (2)   Bills of sale for all Related Goods to be acquired with the
      Initial Advances, each reflecting Lessor as the purchaser of such Related
      Goods;

            (3)   An Expiration Date Appraisal for the Land Portion of the
      Facility 1 Property, dated as of a recent date prior to the Closing Date,
      that appraises the Land

                                     3.01-4
<PAGE>   129
      Portion of the Facility 1 Property at not less than the Total Facility 1
      Land Portion Commitment;

            (4)   An Expiration Date Appraisal for the Improvement Portion of
      the Facility 1 Property, dated as of a recent date prior to the Closing
      Date, that appraises the Improvement Portion of the Facility 1 Property at
      not less than the Total Facility 1 Improvement Portion Commitment;

            (5)   An Expiration Date Appraisal for the Facility 2 Property,
      dated as of a recent date prior to the Closing Date, that appraises the
      Facility 2 Property at not less than the Total Facility 2 Commitment;

            (6)   A Completion Date Appraisal for the Facility 2 Property, dated
      as of a recent date prior to the Closing Date, that appraises the Facility
      2 Property at not less than the Total Facility 2 Commitment;

            (7)   A copy of the Plans and Specifications for the New
      Improvements, together with a certificate of the architect for the New
      Improvements certifying that such Plans and Specifications are complete;

            (8)   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 $45,000,000 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;

            (9)   An as-built survey of each of the Facility 1 Property and the
      Facility 2 Property (a) prepared and dated not more than two (2) months
      prior to the Initial 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;

            (10)  If requested by Lessor, Agent or any Participant, a list of
      and copies of all Construction Agreements;

                                     3.01-5
<PAGE>   130
            (11)  Environmental reports and assessments satisfactory to Agent
      issued by environmental consultants acceptable to Agent with respect to
      the Facility 1 Property and the Facility 2 Property;

            (12)  Certificates of insurance evidencing the insurance Lessee is
      required to maintain pursuant to Paragraph 3.03 of each Lease Agreements;

            (13)  Copies of the Novellus I Amendments, duly executed by the
      appropriate parties and where appropriate properly notarized for
      recording;

            (14)  Evidence that all amounts due and payable by Lessee under the
      Novellus I Participation Agreement and the other Novellus I Operative
      Documents have been paid;

            (15)  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;

                  (c)   All of the Operative Documents are in full force and
            effect on such date;

            (16)  All fees and expenses payable to the Lessor Parties, which
      shall be paid on the funding of the Initial Advance;

            (17)  All fees and expenses of Lessor's and Agent's counsels through
      the Closing Date, which shall be paid on the funding of the Initial
      Advance; and

            (18)  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>   131
                                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>   132
<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>   133
                                SCHEDULE 4.01(t)

                       INDIVIDUAL PROPERTY REPRESENTATIONS

                                   4.01(t)-1
<PAGE>   134
                                SCHEDULE 4.01(t)

                          TRACT 2 LAND AND IMPROVEMENTS

      (i)   The Tract 2 Land consists of approximately 7.384 acres located at
3940 and 3950 North First Street, San Jose, California, more particularly
described in Part 1 to Exhibit A.

      (ii)  On the date of this Agreement, the Existing Improvements on the
Tract 2 Land consist of (1) a one story building consisting of approximately
59,904 square feet used for office and warehouse purposes (3940 North First
Street); and (2) a one story building consisting of approximately 42,624 square
feet used for office, warehouse and manufacturing purposes (3950 North First
Street).

      (iii) The Existing Improvements to Tract 2 are in good working condition
and fit for use as described above. All utilities required to adequately service
the Existing 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). Access to the Existing Improvements for
pedestrians and motor vehicles from publicly dedicated streets and public
highways is available.

      (iv)  No portion of the Tract 2 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 Facility 2 Lease
Agreement and the National Flood Insurance Act of 1968.

                                   4.01(t)-2
<PAGE>   135
                                SCHEDULE 4.01(t)

                          TRACT 5 LAND AND IMPROVEMENTS

      (i)   The Tract 5 Land consists of approximately 4.497 acres located at 90
Headquarters Drive, San Jose, California, more particularly described in Part 2
to Exhibit A.

      (ii)  On the date of this Agreement, the Existing Improvements on the
Tract 5 Land consist of a building consisting of approximately 82,944 square
feet used for office, research and development, and manufacturing purposes.

      (iii) To Lessee's knowledge, the Existing Improvements to Tract 5 are in
good working condition and fit for use as described above. To Lessee's
knowledge, all utilities required to adequately service the Existing
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). Access to the Existing Improvements for
pedestrians and motor vehicles from publicly dedicated streets and public
highways is available.

      (iv)  No portion of the Tract 5 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 Facility 2 Lease
Agreement and the National Flood Insurance Act of 1968.

                                   4.01(t)-3
<PAGE>   136
                                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>   137
                                SCHEDULE 5.02(b)

                                 EXISTING LIENS

                                     [None]

                                   5.02(b)-1
<PAGE>   138
                                    EXHIBIT A

                                      LAND

                                      A-1
<PAGE>   139
                                    EXHIBIT A

                                     PART 1

                                  TRACT 2 LAND

                                LEGAL DESCRIPTION

                3940 NORTH FIRST STREET, 3950 NORTH FIRST STREET

The land situated in the City of San Jose, County of Santa Clara, State of
California, and described as follows:

PARCEL ONE:

Parcel 2 as shown on that certain Parcel Map filed in the office of the Recorder
of the County of Santa Clara, State of California on August 18, 1983 in Book 516
of Maps, page(s) 34 and 35, Santa Clara County Records.

And, in addition thereto, the following area:

Beginning at the Southeasterly corner of said Parcel 2, thence North 52 degrees
27' 12" West, 409.24 feet along the common line of Parcel 1 and Parcel 2 as
shown on said Parcel Map to a common corner thereof; thence leaving said common
line, along the Southerly prolongation of a common line of said Parcels, South
19 degrees 40' 54" West, 32.25 feet; thence South 52 degrees 22' 44" East,
399.34 feet to a point on the Southeasterly line of said Parcel 1; thence North
37 degrees 32' 59" East, 31.22 feet along said Southeasterly line to the Point
of Beginning.

PARCEL ONE-A:

A non-exclusive easement for ingress and egress over PCL. 1, as said parcel is
shown on the Parcel Map recorded in Book 516 of Maps, at pages 34 and 35, Santa
Clara County Records, as granted in an instrument recorded May 23, 1985 in Book
J353, page 1565 and being more particularly described as follows:

                                     Strip 1

A strip of land 26.00 feet wide extending entirely across said PCL. 1 and lying
13.00 feet on each side of a line as follows:

Beginning at the Southerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
N. 52 degrees 27' 12" W., 34.00 feet to the true point of beginning of said
strip of land; thence N. 37 degrees 32' 59" E., 540.00 feet to the Northeasterly
line of said PCL. 1.

(LEGAL DESCRIPTION CONTINUED NEXT PAGE)

                                      A-2
<PAGE>   140
LEGAL DESCRIPTION:  (Continued)

                                     Strip 2

A strip of land 40.00 feet wide extending entirely across said PCL. 1 and lying
contiguous to and Southeasterly of a line described as follows:

Beginning at the most Southerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
N. 52 degrees 27' 12" W., 429.25 feet to the true point of beginning of said
strip of land; thence N. 37 degrees 32' 48" E., 600.00 feet to the Northeasterly
line of said PCL. 1; the Northerly terminus of said 40 foot wide strip of land
being the Northeasterly line of said PCL. 1.

                                     Strip 3

A strip of land 26.00 feet wide, extending Northeasterly from the Southwesterly
line of said PCL. 1 to the Northwesterly line of the above described and
designated Strip 2 and lying 13.00 feet on each side of a line described as
follows:

Beginning at the Westerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
S. 52 degrees 27' 12" E., 34.00 feet to the true point of beginning of said
strip of land; thence N. 37 degrees 32' 48" E. 566.00 feet; thence S. 52 degrees
27' 12" E., 355.25 feet to said Northwesterly line of said Strip 2.

                                     Strip 4

A strip of land 13.00 feet wide lying contiguous to and Northwesterly of the
Northwesterly line of the above described and designated Strip 2 and extending
Southwesterly from the Northeasterly line of said PCL. 1 approximately 21.00
feet to the Northeasterly line of the above described and designated Strip 3.

PARCEL ONE-B:

The right from time to time to construct, install, maintain, replace, remove,
and use storm drain sewers, together with a right of way therefor, over a
portion of PCL. 1 as said parcel is shown on the Parcel Map recorded in Book 516
of Maps, at pages 34 and 35, Santa Clara County Records, as granted in an
instrument recorded May 23, 1985 in Book J353, page 1565 and being more
particularly described as follows:

                                     Strip 1

A strip of land 10.00 feet wide extending entirely across said PCL. 1 and lying
5.00 feet on each side of a line described as follows:

Beginning at the most Westerly corner of said PCL. 1 said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
S. 52 degrees 27' 12" E., 402.75 feet to the true point of beginning of said
strip of land; thence along the centerline of a existing storm drain line the
following courses: thence N. 37 degrees 32' 48" E., 28.00 feet to a point herein
designated Point A; thence N. 52 degrees 27' 12" W., 278.00 feet; thence N. 00
degrees 51' 00" E., 198.30 feet; thence N. 37 degrees 32' 33" E., 279.75 feet;
thence S. 51 degrees 19' 51" E., 89.02 feet; thence N. 50 degrees 06' 47" E.,
133.18 feet; thence N. 37 degrees 32' 48" E., 5.00 feet to the Northeasterly
line of said PCL 1.

(LEGAL DESCRIPTION CONTINUED NEXT PAGE)

                                      A-2
<PAGE>   141
LEGAL DESCRIPTION:  (Continued)

                                     Strip 2

A strip of land 10 feet wide extending Northeasterly from the Northeasterly line
of the above described and designated Strip 1 and lying 5.00 feet on each side
of a line which begins at said Point A; thence along the centerline of an
existing storm drain line the following courses: thence N. 26 degrees 55' 37"
E., 154.65 feet; thence N. 32 degrees 55' 53" E., 96.31 feet; thence N. 43
degrees 21' 28" E., 113.58 feet; thence N. 54 degrees 44' 21" E., 105.72 feet to
a point herein designated as Point B; thence S. 41 degrees 57' 14" E., 65.85
feet; thence N. 37 degrees 32' 48" E., 62.00 feet to the Northeasterly line of
said PCL 2.

                                     Strip 3

A strip of land 5.00 feet wide lying contiguous to and Southwesterly of the
Northeasterly line of said PCL. 1 and extending Southeasterly from the
Southeasterly line of the above described and designated Strip 2 approximately
225 feet.
                                     Strip 4

A strip of land 10.00 feet wide extending Northeasterly from the Northeasterly
line of the above described and designated Strip 2 to the Northeasterly line of
said PCL. 1 and lying 5.00 feet on each side of a line that begins at said Point
B; thence along the centerline of an existing storm drain line N. 37 degrees 32'
48" E., 50.00 feet to the Northeasterly line of said PCL. 1.

PARCEL ONE-C:

The right from time to time to construct, install, inspect, maintain, replace,
remove and use any and all Public Service Facilities necessary or useful,
together with a right of way therefor, over a portion of PCL. 1 as said parcel
is shown on the Parcel Map recorded in Book 516 of Maps, at pages 34 and 35,
Santa Clara County Records, as granted in an instrument recorded May 23, 1985 in
Book J353, page 1565 and being more particularly described as follows:

                                     Strip 5

A strip of land 15.00 feet wide extending entirely across said PCL. 1 and lying
7.50 feet on each side of a line described as follows:

Beginning at the most Southerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
N. 52 degrees 27' 12" W., 60.50 feet to the true point of beginning of said
strip of land; thence N. 37 degrees 32' 59" E., 394.80 feet to a point herein
designated Point C; thence N. 37 degrees 32' 59" E., 105.20 feet; thence N. 7
degrees 27' 01" W., 56.57 feet to the Northeasterly line of said PCL. 1.

                                     Strip 6

A strip of land 15.00 feet wide extending Northerly from the Northerly line of
the above described and designated Strip 5 to the Northeasterly line of said
PCL. 1 and lying 7.5 feet on each side of a line that begins at said Point C;
thence N. 30 degrees 01' 00" E., 59.5 feet; thence N. 8 degrees 41' 00" E.,
98.44 feet to the Northeasterly line of said PCL. 1.

(LEGAL DESCRIPTION CONTINUED NEXT PAGE)

                                      A-2
<PAGE>   142
LEGAL DESCRIPTION:  (Continued)

                                     Strip 7

A strip of land 15.00 feet wide extending entirely across said PCL. 1 and lying
7.5 feet and each side of a line described as follows:

Beginning at the most Westerly corner of said PCL. 1 said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
S. 52 degrees 27' 12" E., 30.00 feet to the true point of beginning of said
strip of land; thence N. 37 degrees 32' 33" E., 600.00 feet to the Northeasterly
line of said PCL 1.

                                     Strip 8

That area located within those portions of PCL.1, of the Parcel Map mentioned
hereinabove, lying within the easements designated as "P.S.E.", as shown on said
Parcel Map.

PARCEL ONE-D:

A non-exclusive easement for Landscaping, Lighting and Irrigation Facilities
over PCL. 1, as said parcel is shown on the Parcel Map recorded in Book 516 of
Maps, at pages 34 and 35, Santa Clara County Records, as granted in an
instrument recorded May 23, 1985 in Book J353, page 1565 and being more
particularly described as follows:

A strip of land 10.00 feet wide extending Southeasterly from the Northwesterly
line of said PCL. 1 and PCL. 2 and lying 5.00 feet on each side of a line that
begins at the most Northerly corner of said PCL. 1 and runs thence along the
Northeasterly line of said PCL. 1, S. 52 degrees 27' 12" E. 375.00 feet.

Excepting therefrom that portion lying within the bounds of Parcel 2 mentioned
hereinabove.

APN: 097-79-004
ARB: 97-3-x4

                                      A-2
<PAGE>   143
                                    EXHIBIT A

                                     PART 2

                                  TRACT 5 LAND

                                LEGAL DESCRIPTION

                              90 HEADQUARTERS DRIVE

The land situated in the City of San Jose, County of Santa Clara, State of
California, and described as follows:

Parcel 3, as shown on Parcel Map filed July 13, 1984 in Book 531 of Maps at
pages 41 and 42, Santa Clara County Records.

APN: 097-79-003
ARB: 097-03-005.02

                                      A-3
<PAGE>   144
                                  EXHIBIT B(1)

                           FACILITY 1 LEASE AGREEMENT

                                     B(1)-1
<PAGE>   145

Recording requested by and
when recorded return to:

Orrick, Herrington & Sutcliffe
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California  94111
Attn: John Rivers
================================================================================

                           FACILITY 1 LEASE AGREEMENT

                     DEED OF TRUST WITH ASSIGNMENT OF RENTS,

                      SECURITY AGREEMENT AND FIXTURE FILING

                                     BETWEEN

                             NOVELLUS SYSTEMS, INC.

                                       AND

                             ABN AMRO LEASING, INC.

                                 APRIL 13, 2001

================================================================================

<PAGE>   146

<TABLE>
<CAPTION>
                                                                                          PAGE
                                                                                          ----
<S>                                                                                       <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 Facility 1 Property.............................................2

        2.02.  Term.........................................................................2

        2.03.  Rent.........................................................................3

        2.04.  Use..........................................................................5

        2.05.  As Is Lease..................................................................5

        2.06.  Nature of Transaction........................................................5

        2.07.  Security, Etc................................................................5

SECTION 3.  OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS..................................8

        3.01.  Maintenance, Repair, Etc.....................................................8

        3.02.  Risk of Loss.................................................................8

        3.03.  Insurance....................................................................9

        3.04.  Casualty and Condemnation...................................................11

        3.05.  Taxes.......................................................................14

        3.06.  Environmental Matters.......................................................15

        3.07.  Liens, Easements, Etc.......................................................16

        3.08.  Subletting..................................................................17

        3.09.  Utility Charges.............................................................17

        3.10.  Removal of Facility 1 Property..............................................17

        3.11.  Compliance with Governmental Rules and Insurance Requirements...............17

        3.12.  Permitted Contests..........................................................18

        3.13.  Lessor Obligations; Right to Perform Lessee Obligations.....................18

        3.14.  Inspection Rights...........................................................19

SECTION 4.  EXPIRATION DATE................................................................19

        4.01.  Termination by Lessee Prior to Scheduled Expiration Date....................19

        4.02.  Surrender of Facility 1 Property............................................19

        4.03.  Holding Over................................................................19

SECTION 5.  DEFAULT........................................................................19

        5.01.  Events of Default...........................................................19

        5.02.  General Remedies............................................................22
</TABLE>

                                      -i-
<PAGE>   147

<TABLE>
<CAPTION>
                                                                                          PAGE
                                                                                          ----
<S>                                                                                       <C>
        5.03.  Lease Remedies..............................................................23

        5.04.  Loan Remedies...............................................................24

        5.05.  Remedies Cumulative.........................................................27

        5.06.  No Cure or Waiver...........................................................27

        5.07.  Exercise of Rights and Remedies.............................................27

SECTION 6.  MISCELLANEOUS..................................................................27

        6.01.  Notices.....................................................................27

        6.02.  Waivers; Amendments.........................................................27

        6.03.  Successors and Assigns......................................................27

        6.04.  No Third Party Rights.......................................................27

        6.05.  Partial Invalidity..........................................................28

        6.06.  Governing Law...............................................................28

        6.07.  Counterparts................................................................28

        6.08.  Nature of Lessee's Obligations..............................................28
</TABLE>

SCHEDULE

3.03    Insurance Requirements

EXHIBITS

A       Facility 1 Land (2.01(a))
B       Related Goods (2.01(d))
C       Notice of Rental Period Selection (2.03(a))

                                      -ii-
<PAGE>   148

                           FACILITY 1 LEASE AGREEMENT
                     DEED OF TRUST WITH ASSIGNMENT OF RENTS,
                      SECURITY AGREEMENT AND FIXTURE FILING

        THIS FACILITY 1 LEASE AGREEMENT, CONSTRUCTION DEED OF TRUST WITH
ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this "Agreement"
herein), dated as of April 13, 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").

                                    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 certain property designated by Lessee,
        (b) sublease such property to Lessee, (c) make advances to finance
        certain related expenses, and (d) grant to Lessee the right to purchase
        such property; 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, Lease Plan North America, Inc.
("Head Lessor"), 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:

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>   149

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 acquisition thereof by
Lessor pursuant to the Participation Agreement and the Facility 1 Head Lease
Agreement, Lessor agrees to lease to Lessee and Lessee agrees to lease from
Lessor the following property (the "Facility 1 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 "Facility 1 Land");

               (b) All Improvements to the Facility 1 Land;

               (c) All Appurtenant Rights belonging, relating or pertaining to
        the Facility 1 Land or the Improvements thereto;

               (d) All Related Goods (including those described in Exhibit B),
        Related Permits and Related Agreements related to the Facility 1 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
Facility 1 Land and certain of the other Facility 1 Property is through the
Facility 1 Head Lease Agreement 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").

               (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 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

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<PAGE>   150

        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 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

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<PAGE>   151

                      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) If any Rental Period is less than one (1)
                      month, the Rental Rate for such Rental Period shall be the
                      Alternate Rental Rate; or

                             (B) If the LIBOR Rental Rate is unavailable for any
                      Rental Period pursuant to Subparagraph 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 Facility 1 Head Lease Agreement; and

                      (ii) All amounts (other than Base Rent, the purchase price
               payable by Lessee for any purchase of the Facility 1 Property by
               Lessee pursuant to the Facility 1 Purchase Agreement and the
               Residual Value Guaranty Amount payable

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<PAGE>   152

                under the Facility 1 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.

                                       5
<PAGE>   153

        2.04. Use. Lessee may use the Facility 1 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
Facility 1 Property.

        2.05. As Is Lease. Lessee has conducted, or will conduct from time to
time with regard to Facility 1 Property that may be added hereto after the date
hereof, all due diligence which it deems appropriate regarding the Facility 1
Property and agrees that no Lessor Party has any obligation to conduct any such
due diligence. Lessee is leasing the Facility 1 Property "as is, with all
faults" without any representation, warranty, indemnity or undertaking by any
Lessor Party regarding any aspect of the Facility 1 Property, including (a) the
condition of the Facility 1 Property (including any Improvements to the Facility
1 Property made prior to the Commencement Date or during the Term); (b) title to
the Facility 1 Property (including possession of the Facility 1 Property by any
Person or the existence of any Lien or any other right, title or interest in or
to any of the Facility 1 Property in favor of any Person); (c) the value,
habitability, usability, design, operation or fitness for use of the Facility 1
Property; (d) the availability or adequacy of utilities and other services to
the Facility 1 Property; (e) any latent, hidden or patent defect in the Facility
1 Property; (f) the zoning or status of the Facility 1 Property or any other
restrictions on the use of the Facility 1 Property; (g) the economics of the
Facility 1 Property; (h) any Casualty or Condemnation; or (i) the compliance of
the Facility 1 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 Facility 1 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 under Facility 1, Lessee hereby irrevocably and
        unconditionally grants, conveys, transfers and assigns to Lessor, 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
        hereafter acquired, (collectively, the "Real Property Collateral"):

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<PAGE>   154

                      (i) The Facility 1 Land (including Lessor's leasehold
               interest under the Facility 1 Head Lease Agreement);

                      (ii) All Improvements now or hereafter located on the
               Facility 1 Land;

                      (iii) All Appurtenant Rights belonging, relating or
               pertaining to any of the Facility 1 Land or Improvements thereto;

                      (iv) All Subleases and Issues and Profits accruing from
               the Facility 1 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 Facility 1 Land or any of the
               foregoing Improvements or Appurtenant Rights to the extent that
               such Related Goods, Related Agreements and Related Permits
               constitute real property;

                      (vi) All other Facility 1 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 under Facility 1, 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
               Facility 1 Land or any of the Improvements or Appurtenant Rights
               to the extent such 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 Facility 1 Land or any of the 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 in connection with this Agreement or any other Operative
               Document (including any Repair and Restoration Account);

                      (iv) All other Facility 1 Property to the extent such
               Facility 1 Property constitutes personal property; and

                      (v) All proceeds of the foregoing, including Casualty and
               Condemnation Proceeds.

                                       7
<PAGE>   155

        This Agreement constitutes a fixture filing for purposes of the
        California Commercial Code with respect to the Related Goods which are
        or are to become fixtures on the Facility 1 Land or Facility 1
        Improvements.

               (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, not an
        assignment for security purposes only, and Lessor's right to the
        Subleases and Issues and Profits is not contingent upon, and may be
        exercised without possession of, the Facility 1 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 Facility 1 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 to be (A) a mortgagee in possession; (B)
               responsible or liable for (1) the control, care, management or
               repair of the Facility 1 Property or for performing any of
               Lessee's obligations or duties under the Subleases, (2) any waste
               committed on the Facility 1 Property by the sublessees under any
               of the Subleases or by any other Persons, (3) any dangerous or
               defective condition of the Facility 1 Property, or (4) any
               negligence in the management, upkeep, repair or control of the
               Facility 1 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 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>   156

SECTION 3. OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS.

        3.01. Maintenance, Repair, Etc.

               (a) General. Lessee shall not permit any waste of the Facility 1
        Property, except for ordinary wear and tear, and shall, at its sole cost
        and expense, maintain the Facility 1 Property in good working order,
        mechanical condition and repair and shall 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 Facility 1 Property and in compliance with
        prudent industry practice.

               (c) Modifications. Lessee, at its sole cost and expense, may from
        time to time make alterations, renovations, improvements and additions
        to the Facility 1 Property and substitutions and replacements therefor
        (collectively, "Modifications"); provided that:

                      (i) No Modification impairs the value, utility or useful
               life of the Facility 1 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 $1,000,000, Lessee
               shall deliver to Lessor, with sufficient copies for Agent and
               each Participant, a brief written description of such
               Modifications; and

                      (vi) All Modifications otherwise comply with this
               Agreement and the other Operative Documents.

                                       9
<PAGE>   157

               (c) Abandonment. Lessee shall not abandon the Facility 1 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.

               (d) Maintenance. Lessee shall maintain the Facility 1 Property
        and each material portion thereof in a manner consistent with other
        similar properties in the same area, except as a part of any
        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 Facility 1 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 Facility 1 Property which arises or
occurs prior to the Expiration Date or while Lessee is in possession of the
Facility 1 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. 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 Facility 1 Property as a result of any such event.

        3.03. Insurance.

               (a) Coverage. Lessee, at its sole cost and expense, shall at all
        times carry and maintain insurance coverage 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 Facility 1 Property in the same
        geographic area as the Facility 1 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 and flood 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:

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<PAGE>   158

                      (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 Facility 1 Property while under contract with Lessee to
               perform maintenance, repair, alteration or similar work on the
               Facility 1 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 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 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.

                      (vi) The insurance shall be primary without right of
               contribution from any other insurance that may be carried by any
               Lessor Party with respect to its interest in the Facility 1
               Property.

                      (vii) The insurer shall waive any right of subrogation
               against any Lessor Party.

                      (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

                                       11
<PAGE>   159

               negligence of any Lessor Party or Lessee, as the case may be, or
               any other Person having any interest in the Facility 1 Property.

                      (x) 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 Facility 1
               Property 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 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.

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<PAGE>   160

        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 Facility 1 Property or any
        portion thereof.

               (b) Repair Obligations. If any Material Casualty or Condemnation
        affecting the Facility 1 Property or any portion thereof occurs, Lessee
        shall, at its election, either (i) repair and restore the Facility 1
        Property as required by Subparagraph 3.04(c) or (ii) exercise the Term
        Purchase Option and purchase the Facility 1 Property pursuant to the
        Purchase Agreement; provided, however, that Lessee may not elect to
        repair and restore the Facility 1 Property if such casualty or
        condemnation is a Major Casualty or 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 Facility 2 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 Casualty or any Condemnation, Lessee
        shall deliver to Lessor a written notice indicating whether it elects to
        repair and restore or purchase the Facility 1 Property.

               (c) Repair and Restoration. If Lessee elects to repair and
        restore the Facility 1 Property following any Material Casualty or any
        Condemnation, Lessee shall diligently proceed to repair and restore the
        Facility 1 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.
        Lessee shall make such repairs and restoration 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") of 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).

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<PAGE>   161

                      (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 Facility 1 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 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 Facility 1 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 Facility 1 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 Facility
               1 Property. To the extent that the funds in a Repair and
               Restoration Account include both Casualty and Condemnation
               Proceeds and other funds

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<PAGE>   162

               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 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
               Facility 1 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

                                       15
<PAGE>   163

               the completion of such restoration of the Facility 1 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
               Facility 1 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 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 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 Facility 1 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

                                       16
<PAGE>   164

        present on or released or discharged from the Facility 1 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 Facility 1 Property does not comply with any
        Environmental Laws; and (ii) any claims against Lessee or the Facility 1
        Property relating to Hazardous Materials or pursuant to Environmental
        Laws. In response to the presence of any Hazardous Materials on, under
        or about the Facility 1 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 Facility 1 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 Facility 1 Property.

               (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 Facility
        1 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 Facility 1
        Property which is required by any Governmental Authority or is otherwise
        necessary to render the Facility 1 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 (i) 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 Facility 1

                                       17
<PAGE>   165

        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 Facility 1
        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;

                      (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 Facility 1 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
        Facility 1 Property and (B) discharge, at its sole cost and expense, any
        Lien on the Facility 1 Property which is not a Permitted Facility 1
        Property Lien.

               (b) No Consents. Nothing contained in this Agreement shall be
        construed as constituting the consent or request of any Lessor Party,
        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 Facility 1
        Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NO LESSOR
        PARTY IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS
        FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO ANYONE HOLDING THE
        FACILITY 1 PROPERTY OR ANY PART THEREOF THROUGH OR UNDER LESSEE, AND
        THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES

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<PAGE>   166

        OR MATERIALS SHALL ATTACH TO OR AFFECT THE INTEREST OF ANY LESSOR PARTY
        IN AND TO THE FACILITY 1 PROPERTY.

        3.08. Subletting. Lessee may, in the ordinary course of business,
sublease the Facility 1 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 Facility 1 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 Facility 1 Property on the Expiration Date pursuant to the
Purchase Agreement); (e) each sublease prohibits the sublessee from engaging in
any activities on the Facility 1 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.

        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 Facility 1 Property
during the Term.

        3.10. Removal of Facility 1 Property. Lessee shall not remove any
Improvements from the Facility 1 Land or any other Facility 1 Property from the
Facility 1 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 Facility 1 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 Facility 1 Property to comply, with all Governmental Rules and Insurance
Requirements relating to the Facility 1 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 Facility 1
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 Facility 1 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 Facility 1 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 Facility 1 Property, provided
that (a) each such contest is diligently pursued in good faith by appropriate

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<PAGE>   167

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, 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; (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 shall have any obligation to (a) maintain, repair or make any improvements
to the Facility 1 Property, (b) maintain any insurance on the Facility 1
Property, (c) perform any other obligation of Lessee under this Agreement or any
other Lessee Obligation, (d) make any expenditure on account of the Facility 1
Property (except to make Advances as required by the Participation Agreement) or
(e) take any other action in connection with the Facility 1 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 Facility 1 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 Facility 1 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 Facility 1 Property pursuant to Section II of
the Purchase Agreement. Lessee shall notify Lessor of Lessee's election so to
terminate this Agreement and purchase the Facility 1 Property by

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<PAGE>   168

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 Facility 1 Property. Unless Lessee purchases the
Facility 1 Property on the Expiration Date pursuant to the Purchase Agreement,
Lessee shall vacate and surrender the Facility 1 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, without limitation, the completion of 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 Facility 1 Property
on the Expiration Date pursuant to the Purchase Agreement but continues in
possession of any portion of the Facility 1 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.

        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(b), Paragraph 3.03 or
        Subparagraph 3.07(a) hereof or in Paragraph 5.02 or Paragraph 5.03 of
        the Participation 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

                                       21
<PAGE>   169

        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 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

                                       22
<PAGE>   170

               (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

               (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) Change of Control. Any Change of Control shall occur; or

               (l) 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.

                                       23
<PAGE>   171

        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.

               (b) Appointment of a Receiver. Lessor may apply to any court of
        competent jurisdiction for, and obtain appointment of, a receiver for
        the Facility 1 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 Facility 1 Property. Lessor may enter, take
        possession of, manage and operate all or any part of the Facility 1
        Property or take any other actions which it reasonably determines are
        necessary to protect the Facility 1 Property and the rights and remedies
        of the Lessor Parties under this Agreement and the other Operative
        Documents, including (i) taking and possessing all of Lessee's books and
        records relating to the Facility 1 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

                                       24
<PAGE>   172

which time Lessee may exercise the Purchase Option, and provided the Purchase
Option is thereafter 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 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 California Civil Code Section 1951.4, 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 Facility 1 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 Facility 1 Property. Lessor may enter
        the Facility 1 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 California 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.

                                       25
<PAGE>   173

               (b) Uniform Commercial Code Remedies. Lessor may exercise any or
        all of the remedies granted to a secured party under the California
        Uniform Commercial Code.

               (c) Judicial Foreclosure. Lessor may bring an action in any court
        of competent jurisdiction to foreclose the security interest in the
        Facility 1 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 Facility 1
        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 Division 9 of the
               California Uniform Commercial Code, including any public or
               private sale, or in any manner permitted by any other applicable
               Governmental Rule. Any proceeds of any such disposition shall not
               cure any Event of Default or reinstate any Lessee Obligation for
               purposes of Section 2924c of the California Civil Code. 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 Facility 1 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
                      Facility 1 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 Facility 1 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 California
                      Uniform Commercial Code Section 9505.

               The foregoing procedures do not constitute the only procedures
               that may be commercially reasonable.

                                       26
<PAGE>   174

                      (ii) Lessor's Sales of Real Property or Mixed Collateral.
               Lessor may choose to dispose of some or all of the Facility 1
               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 pursuant to
               California Civil Code Sections 2924 et seq. In its discretion,
               Lessor may also or alternatively choose to dispose of some or all
               of the Facility 1 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 California Uniform Commercial Code. 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 California Uniform
               Commercial Code Section 9501(4), will sometimes be referred to as
               a "Lessor's Sale.")

                             (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 Facility 1
                      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 Facility 1 Property
               consists of more than one lot, parcel or item of property, Lessor
               may:

                                       27
<PAGE>   175

                             (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 Facility 1 Property by this Agreement on any part
               of the Facility 1 Property which has not been sold, until all of
               the Lessee Obligations have been paid in full.

                      (ii) Credit Bids. At any Foreclosure Sale, any Person,
               including any Lessor Party, may bid for and acquire the Facility
               1 Property or any part of it to the extent permitted by then
               applicable Governmental Rules. Instead of paying cash for the
               Facility 1 Property, Lessor may settle for the purchase price by
               crediting the sales price of the Facility 1 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.

                                       28
<PAGE>   176

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 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.

        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 under this
        Agreement and the other Operative Documents and all other events and
        circumstances, including the events and circumstances set forth in
        Subparagraph 6.08(c).

                                       29
<PAGE>   177

               (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 Facility 1 Property (including any
        Improvements to the Facility 1 Property made prior to the Commencement
        Date or during the Term); (ii) title to the Facility 1 Property
        (including possession of the Facility 1 Property by any Person or the
        existence of any Lien or any other right, title or interest in or to any
        of the Facility 1 Property in favor of any Person); (iii) the value,
        habitability, usability, design, operation or fitness for use of the
        Facility 1 Property; (iv) the availability or adequacy of utilities and
        other services to the Facility 1 Property; (v) any latent, hidden or
        patent defect in the Facility 1 Property; (vi) the zoning or status of
        the Facility 1 Property or any other restrictions on the use of the
        Facility 1 Property; (g) the economics of the Facility 1 Property; (vii)
        any Casualty or Condemnation; (viii) the compliance of the Facility 1
        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
Facility 1 Property under this Agreement is granted to Lessee reserving to
Lessor and its agents a temporary construction license to enter upon the
Facility 1 Property for purposes of constructing the New Improvements.

                          [The signature page follows.]

                                       30
<PAGE>   178

        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:_____________________________

                                       31
<PAGE>   179

STATE OF CALIFORNIA          )
                             )       ss
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 on behalf of which the person(s) acted,
executed the instrument.

               Witness my hand and official seal.

[SEAL]

<PAGE>   180

STATE OF CALIFORNIA          )
                             )       ss
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 on behalf of which the person(s) acted,
executed the instrument.

               Witness my hand and official seal.

[SEAL]

<PAGE>   181

                                  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; and

        (iii) At all times during the Term, "all risk" property insurance
covering loss or damage in amounts approved by Lessor, Agent and Required
Participants, including (A) loss or damage by flood in an amount of not less
than the then current Outstanding Lease Amount under Facility 1, and (B) loss or
damage by earthquake in an amount of not less than 20.0% of the replacement
value of the Improvements.

                                     3.03-1
<PAGE>   182

                                    EXHIBIT A

                                 FACILITY 1 LAND

                3940 NORTH FIRST STREET, 3950 NORTH FIRST STREET
                                  (FACILITY 1)

The land situated in the City of San Jose, County of Santa Clara, State of
California, and described as follows:

PARCEL ONE:

Parcel 2 as shown on that certain Parcel Map filed in the office of the Recorder
of the County of Santa Clara, State of California on August 18, 1983 in Book 516
of Maps, page(s) 34 and 35, Santa Clara County Records.

And, in addition thereto, the following area:

Beginning at the Southeasterly corner of said Parcel 2, thence North 52
(degrees) 27' 12" West, 409.24 feet along the common line of Parcel 1 and Parcel
2 as shown on said Parcel Map to a common corner thereof; thence leaving said
common line, along the Southerly prolongation of a common line of said Parcels,
South 19 (degrees) 40' 54" West, 32.25 feet; thence South 52 (degrees) 22' 44"
East, 399.34 feet to a point on the Southeasterly line of said Parcel 1; thence
North 37 (degrees) 32' 59" East, 31.22 feet along said Southeasterly line to the
Point of Beginning.

PARCEL ONE-A:

A non-exclusive easement for ingress and egress over PCL. 1, as said parcel is
shown on the Parcel Map recorded in Book 516 of Maps, at pages 34 and 35, Santa
Clara County Records, as granted in an instrument recorded May 23, 1985 in Book
J353, page 1565 and being more particularly described as follows:

                                     Strip 1

A strip of land 26.00 feet wide extending entirely across said PCL. 1 and lying
13.00 feet on each side of a line as follows:

Beginning at the Southerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
N. 52 (degrees) 27' 12" W., 34.00 feet to the true point of beginning of said
strip of land; thence N. 37 (degrees) 32' 59" E., 540.00 feet to the
Northeasterly line of said PCL. 1.

(LEGAL DESCRIPTION CONTINUED NEXT PAGE)

                                      A-1
<PAGE>   183

LEGAL DESCRIPTION: (Continued)

                                     Strip 2

A strip of land 40.00 feet wide extending entirely across said PCL. 1 and lying
contiguous to and Southeasterly of a line described as follows:

Beginning at the most Southerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
N. 52 (degrees) 27' 12" W., 429.25 feet to the true point of beginning of said
strip of land; thence N. 37 (degrees) 32' 48" E., 600.00 feet to the
Northeasterly line of said PCL. 1; the Northerly terminus of said 40 foot wide
strip of land being the Northeasterly line of said PCL. 1.

                                     Strip 3

A strip of land 26.00 feet wide, extending Northeasterly from the Southwesterly
line of said PCL. 1 to the Northwesterly line of the above described and
designated Strip 2 and lying 13.00 feet on each side of a line described as
follows:

Beginning at the Westerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
S. 52 (degrees) 27' 12" E., 34.00 feet to the true point of beginning of said
strip of land; thence N. 37 (degrees) 32' 48" E. 566.00 feet; thence S. 52
(degrees) 27' 12" E., 355.25 feet to said Northwesterly line of said Strip 2.

                                     Strip 4

A strip of land 13.00 feet wide lying contiguous to and Northwesterly of the
Northwesterly line of the above described and designated Strip 2 and extending
Southwesterly from the Northeasterly line of said PCL. 1 approximately 21.00
feet to the Northeasterly line of the above described and designated Strip 3.

PARCEL ONE-B:

The right from time to time to construct, install, maintain, replace, remove,
and use storm drain sewers, together with a right of way therefor, over a
portion of PCL. 1 as said parcel is shown on the Parcel Map recorded in Book 516
of Maps, at pages 34 and 35, Santa Clara County Records, as granted in an
instrument recorded May 23, 1985 in Book J353, page 1565 and being more
particularly described as follows:

                                     Strip 1

A strip of land 10.00 feet wide extending entirely across said PCL. 1 and lying
5.00 feet on each side of a line described as follows:

Beginning at the most Westerly corner of said PCL. 1 said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
S. 52 (degrees) 27' 12" E., 402.75 feet to the true point of beginning of said
strip of land; thence along the centerline of a existing storm drain line the
following courses: thence N. 37 (degrees) 32' 48" E., 28.00 feet to a point
herein designated Point A; thence N. 52 (degrees) 27' 12" W., 278.00 feet;
thence N. 00 (degrees) 51' 00" E., 198.30 feet; thence N. 37 (degrees) 32' 33"
E., 279.75 feet; thence S. 51 (degrees) 19' 51" E., 89.02 feet; thence N. 50
(degrees) 06' 47" E., 133.18 feet; thence N. 37 (degrees) 32' 48" E., 5.00 feet
to the Northeasterly line of said PCL 1.

(LEGAL DESCRIPTION CONTINUED NEXT PAGE)

                                      A-2
<PAGE>   184

LEGAL DESCRIPTION: (Continued)

                                     Strip 2

A strip of land 10 feet wide extending Northeasterly from the Northeasterly line
of the above described and designated Strip 1 and lying 5.00 feet on each side
of a line which begins at said Point A; thence along the centerline of an
existing storm drain line the following courses: thence N. 26 (degrees) 55' 37"
E., 154.65 feet; thence N. 32 (degrees) 55' 53" E., 96.31 feet; thence N. 43
(degrees) 21' 28" E., 113.58 feet; thence N. 54 (degrees) 44' 21" E., 105.72
feet to a point herein designated as Point B; thence S. 41 (degrees) 57' 14" E.,
65.85 feet; thence N. 37 (degrees) 32' 48" E., 62.00 feet to the Northeasterly
line of said PCL 2.

                                     Strip 3

A strip of land 5.00 feet wide lying contiguous to and Southwesterly of the
Northeasterly line of said PCL. 1 and extending Southeasterly from the
Southeasterly line of the above described and designated Strip 2 approximately
225 feet.

                                     Strip 4

A strip of land 10.00 feet wide extending Northeasterly from the Northeasterly
line of the above described and designated Strip 2 to the Northeasterly line of
said PCL. 1 and lying 5.00 feet on each side of a line that begins at said Point
B; thence along the centerline of an existing storm drain line N. 37 (degrees)
32' 48" E., 50.00 feet to the Northeasterly line of said PCL. 1.

PARCEL ONE-C:

The right from time to time to construct, install, inspect, maintain, replace,
remove and use any and all Public Service Facilities necessary or useful,
together with a right of way therefor, over a portion of PCL. 1 as said parcel
is shown on the Parcel Map recorded in Book 516 of Maps, at pages 34 and 35,
Santa Clara County Records, as granted in an instrument recorded May 23, 1985 in
Book J353, page 1565 and being more particularly described as follows:

                                     Strip 5

A strip of land 15.00 feet wide extending entirely across said PCL. 1 and lying
7.50 feet on each side of a line described as follows:

Beginning at the most Southerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
N. 52 (degrees) 27' 12" W., 60.50 feet to the true point of beginning of said
strip of land; thence N. 37 (degrees) 32' 59" E., 394.80 feet to a point herein
designated Point C; thence N. 37 (degrees) 32' 59" E., 105.20 feet; thence N. 7
(degrees) 27' 01" W., 56.57 feet to the Northeasterly line of said PCL. 1.

                                     Strip 6

A strip of land 15.00 feet wide extending Northerly from the Northerly line of
the above described and designated Strip 5 to the Northeasterly line of said
PCL. 1 and lying 7.5 feet on each side of a line that begins at said Point C;
thence N. 30 (degrees) 01' 00" E., 59.5 feet; thence N. 8 (degrees) 41' 00" E.,
98.44 feet to the Northeasterly line of said PCL. 1.

(LEGAL DESCRIPTION CONTINUED NEXT PAGE)

                                      A-3
<PAGE>   185

LEGAL DESCRIPTION: (Continued)

                                     Strip 7

A strip of land 15.00 feet wide extending entirely across said PCL. 1 and lying
7.5 feet and each side of a line described as follows:

Beginning at the most Westerly corner of said PCL. 1 said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
S. 52 (degrees) 27' 12" E., 30.00 feet to the true point of beginning of said
strip of land; thence N. 37 (degrees) 32' 33" E., 600.00 feet to the
Northeasterly line of said PCL 1.

                                     Strip 8

That area located within those portions of PCL.1, of the Parcel Map mentioned
hereinabove, lying within the easements designated as "P.S.E.", as shown on said
Parcel Map.

PARCEL ONE-D:

A non-exclusive easement for Landscaping, Lighting and Irrigation Facilities
over PCL. 1, as said parcel is shown on the Parcel Map recorded in Book 516 of
Maps, at pages 34 and 35, Santa Clara County Records, as granted in an
instrument recorded May 23, 1985 in Book J353, page 1565 and being more
particularly described as follows:

A strip of land 10.00 feet wide extending Southeasterly from the Northwesterly
line of said PCL. 1 and PCL. 2 and lying 5.00 feet on each side of a line that
begins at the most Northerly corner of said PCL. 1 and runs thence along the
Northeasterly line of said PCL. 1, S. 52 (degrees) 27' 12" E. 375.00 feet.

Excepting therefrom that portion lying within the bounds of Parcel 2 mentioned
hereinabove.

APN: 097-79-004
ARB: 97-3-x4

                                       A-4
<PAGE>   186

                                   SCHEDULE 1

                 HAZARDOUS MATERIALS USED ON THE FACILITY 1 LAND

        As set forth in that certain Hazardous Materials Business Plan (HMBP)
for Novellus Systems, Inc. dated 4/1/97 prepared by Environmental Quality
Solutions.

                                     A(1)-1
<PAGE>   187

                                    EXHIBIT B

                                  RELATED GOODS

                                      NONE

                                      B-1
<PAGE>   188

                                    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 13, 2001 (the "Participation Agreement"), among Novellus Systems,
Inc. ("Lessee"), Lease Plan North America, Inc. ("Head Lessor"), 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 13, 2001 (the "Facility 1 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 Facility 1 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 Facility 1 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>   189

               (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 Facility 1 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 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>   190
Recording requested by and when recorded return to:

Orrick, Herrington & Sutcliffe
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California  94111
Attn: John Rivers

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                           FACILITY 2 LEASE AGREEMENT

              CONSTRUCTION DEED OF TRUST WITH ASSIGNMENT OF RENTS,

                      SECURITY AGREEMENT AND FIXTURE FILING

                                     BETWEEN

                             NOVELLUS SYSTEMS, INC.

                                       AND

                             ABN AMRO LEASING, INC.

                                 APRIL 13, 2001

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>   191
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                             PAGE
<S>                                                                                          <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 Facility 2 Property...............................................2

         2.02.  Term...........................................................................2

         2.03.  Rent...........................................................................3

         2.04.  Use............................................................................5

         2.05.  As Is Lease....................................................................5

         2.06.  Nature of Transaction..........................................................5

         2.07.  Security, Etc..................................................................6

SECTION 3      OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS..................................8

         3.01.  Maintenance, Repair, Etc.......................................................8

         3.02.  Risk of Loss...................................................................9

         3.03.  Insurance.....................................................................10

         3.04.  Casualty and Condemnation.....................................................12

         3.05.  Taxes.........................................................................15

         3.06.  Environmental Matters.........................................................16

         3.07.  Liens, Easements, Etc.........................................................17

         3.08.  Subletting....................................................................18

         3.09.  Utility Charges...............................................................18

         3.10.  Removal of Facility 2 Property................................................18

         3.11.  Compliance with Governmental Rules and Insurance Requirements.................18

         3.12.  Permitted Contests............................................................19

         3.13.  Lessor Obligations; Right to Perform Lessee Obligations.......................19

         3.14.  Inspection Rights.............................................................19

SECTION 4      EXPIRATION DATE................................................................20

         4.01.  Termination by Lessee Prior to Scheduled Expiration Date......................20

         4.02.  Surrender of Facility 2 Property..............................................20

         4.03.  Holding Over..................................................................20

SECTION 5      DEFAULT........................................................................20

         5.01.  Events of Default.............................................................20

         5.02.  General Remedies..............................................................23
</TABLE>

                                      -i-
<PAGE>   192
                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                             PAGE
<S>                                                                                          <C>
         5.03.  Lease Remedies................................................................24

         5.04.  Loan Remedies.................................................................24

         5.05.  Remedies Cumulative...........................................................27

         5.06.  No Cure or Waiver.............................................................28

         5.07.  Exercise of Rights and Remedies...............................................28

SECTION 6      MISCELLANEOUS..................................................................28

         6.01.  Notices.......................................................................28

         6.02.  Waivers; Amendments...........................................................28

         6.03.  Successors and Assigns........................................................28

         6.04.  No Third Party Rights.........................................................28

         6.05.  Partial Invalidity............................................................28

         6.06.  Governing Law.................................................................29

         6.07.  Counterparts..................................................................29

         6.08.  Nature of Lessee's Obligations................................................29
</TABLE>

SCHEDULE

3.03     Insurance Requirements

EXHIBITS

A        Facility 2 Land (2.01(a))
B        Related Goods (2.01(d))
C        Notice of Rental Period Selection (2.03(a))

                                      -ii-
<PAGE>   193
                           FACILITY 2 LEASE AGREEMENT
              CONSTRUCTION DEED OF TRUST WITH ASSIGNMENT OF RENTS,
                      SECURITY AGREEMENT AND FIXTURE FILING

         THIS FACILITY 2 LEASE AGREEMENT, CONSTRUCTION DEED OF TRUST WITH
ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING (this "Agreement"
herein), dated as of April 13, 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").

                                    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 certain property designated by
         Lessee, (b) sublease such property to Lessee, (c) appoint Lessee as
         Lessor's agent to make certain improvements to such property, (d) make
         advances to finance such improvements and to pay certain related
         expenses and (e) grant to Lessee the right to purchase such parcels of
         property; 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, Lease Plan North America, Inc.
("Head Lessor"), 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:

                                       1
<PAGE>   194
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 acquisition thereof by
Lessor pursuant to the Participation Agreement and the Facility 2 Head Lease
Agreement, Lessor agrees to lease to Lessee and Lessee agrees to lease from
Lessor the following property (the "Facility 2 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 "Facility 2 Land");

                  (b) All Improvements to the Facility 2 Land;

                  (c) All Appurtenant Rights belonging, relating or pertaining
         to the Facility 2 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 Facility 2 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
Facility 2 Land and certain of the other Facility 2 Property is through the
Facility 2 Head Lease Agreement 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").

                  (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,

                                       2
<PAGE>   195
         as provided in Subparagraph 2.09(b) of the Participation Agreement. If
         Lessor and each Participant 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 written notice in the
                  form of Exhibit C, appropriately completed (a "Notice of
                  Rental Period Selection"), subject to the following:

                                       3
<PAGE>   196
                                    (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) If any Rental Period is less than one
                           (1) month, the Rental Rate for such Rental Period
                           shall be the Alternate Rental Rate; or

                                    (B) If the LIBOR Rental Rate is unavailable
                           for any Rental Period pursuant to Subparagraph
                           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 Facility 2 Head Lease Agreement; and

                                       4
<PAGE>   197
                           (ii) All amounts (other than Base Rent, the purchase
                  price payable by Lessee for any purchase of the Facility 2
                  Property by Lessee pursuant to the Facility 2 Purchase
                  Agreement and the Residual Value Guaranty Amount payable under
                  the Facility 2 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.

                                       5
<PAGE>   198
         2.04. Use. Lessee may use the Facility 2 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
Facility 2 Property.

         2.05. As Is Lease. Lessee has conducted, or will conduct from time to
time with regard to Facility 2 Property that may be added hereto after the date
hereof, all due diligence which it deems appropriate regarding the Facility 2
Property and agrees that no Lessor Party has any obligation to conduct any such
due diligence. Lessee is leasing the Facility 2 Property "as is, with all
faults" without any representation, warranty, indemnity or undertaking by any
Lessor Party regarding any aspect of the Facility 2 Property, including (a) the
condition of the Facility 2 Property (including any Improvements to the Facility
2 Property made prior to the Commencement Date or during the Term); (b) title to
the Facility 2 Property (including possession of the Facility 2 Property by any
Person or the existence of any Lien or any other right, title or interest in or
to any of the Facility 2 Property in favor of any Person); (c) the value,
habitability, usability, design, operation or fitness for use of the Facility 2
Property; (d) the availability or adequacy of utilities and other services to
the Facility 2 Property; (e) any latent, hidden or patent defect in the Facility
2 Property; (f) the zoning or status of the Facility 2 Property or any other
restrictions on the use of the Facility 2 Property; (g) the economics of the
Facility 2 Property; (h) any Casualty or Condemnation; or (i) the compliance of
the Facility 2 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 Facility 2 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 under Facility 2, Lessee hereby irrevocably and
         unconditionally grants, conveys, transfers and assigns to Lessor, 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 hereafter acquired, (collectively, the "Real Property
         Collateral"):

                                       6
<PAGE>   199
                           (i) The Facility 2 Land (including Lessor's leasehold
                  interest under the Facility 2 Head Lease Agreement);

                           (ii) All Improvements now or hereafter located on the
                  Facility 2 Land;

                           (iii) All Appurtenant Rights belonging, relating or
                  pertaining to any of the Facility 2 Land or Improvements
                  thereto;

                           (iv) All Subleases and Issues and Profits accruing
                  from the Facility 2 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 Facility 2 Land or any of the
                  foregoing Improvements or Appurtenant Rights to the extent
                  that such Related Goods, Related Agreements and Related
                  Permits constitute real property;

                           (vi) All other Facility 2 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 under Facility 2, 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 Facility 2 Land or any of the 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 Facility 2 Land or any of the
                  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 in connection with this Agreement or any
                  other Operative Document (including any Repair and Restoration
                  Account);

                           (iv) All other Facility 2 Property to the extent such
                  Facility 2 Property constitutes personal property; and

                           (v) All proceeds of the foregoing, including Casualty
                  and Condemnation Proceeds.

                                       7
<PAGE>   200
         This Agreement constitutes a fixture filing for purposes of the
         California Commercial Code with respect to the Related Goods which are
         or are to become fixtures on the Facility 2 Land or Facility 2
         Improvements.

                  (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,
         not an assignment for security purposes only, and Lessor's right to the
         Subleases and Issues and Profits is not contingent upon, and may be
         exercised without possession of, the Facility 2 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 Facility 2
                  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 to be (A) a mortgagee in possession;
                  (B) responsible or liable for (1) the control, care,
                  management or repair of the Facility 2 Property or for
                  performing any of Lessee's obligations or duties under the
                  Subleases, (2) any waste committed on the Facility 2 Property
                  by the sublessees under any of the Subleases or by any other
                  Persons, (3) any dangerous or defective condition of the
                  Facility 2 Property, or (4) any negligence in the management,
                  upkeep, repair or control of the Facility 2 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 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>   201
SECTION 3. OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS.

         3.01. Maintenance, Repair, Etc.

                  (a) General. Lessee shall not permit any waste of the Facility
         2 Property, except for ordinary wear and tear, and shall, at its sole
         cost and expense, maintain the Facility 2 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 Facility 2 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 Facility 2
         Construction Agency Agreement in accordance with the Facility 2
         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
         Facility 2 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 Facility 2 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

                                       9
<PAGE>   202
                  during the previous twelve month period to exceed an aggregate
                  cost of $1,000,000, Lessee shall deliver to Lessor, with
                  sufficient copies for Agent and each Participant, 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 Facility 2
         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 Facility 2 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 Facility 2 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 Facility 2 Property which arises or
occurs prior to the Expiration Date or while Lessee is in possession of the
Facility 2 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 under Facility 2
during the Construction Period except as follows:

                  (a) Lessee shall be liable under this Paragraph 3.02 for all
         such losses and liabilities arising under Facility 2 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 under Facility 2 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.

                                       10
<PAGE>   203
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 Facility 2 Property as a result of any such event.

         3.03. Insurance.

                  (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 $25,000 for flood coverage, $-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 Facility 2 Property in the same geographic area
                  as the Facility 2 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 and flood 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 Facility 2 Property while under contract
                  with

                                       11
<PAGE>   204
                  Lessee to perform maintenance, repair, alteration or similar
                  work on the Facility 2 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 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 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.

                           (vi) The insurance shall be primary without right of
                  contribution from any other insurance that may be carried by
                  any Lessor Party with respect to its interest in the Facility
                  2 Property.

                           (vii) The insurer shall waive any right of
                  subrogation against any Lessor Party.

                           (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 Facility 2 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 Facility 2 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

                                       12
<PAGE>   205
                  loss or occurrence with respect to the Facility 2 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 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.

         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 Facility 2 Property or
         any portion thereof.

                  (b) Repair Obligations.

                                       13
<PAGE>   206
                           (i) If any Material Casualty or Condemnation
                  affecting the Facility 2 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 Facility 2 Property as required by
                  Subparagraph 3.04(c).

                           (ii) If any Material Casualty or Condemnation
                  affecting the Facility 2 Property or any portion thereof
                  occurs after the Construction Period, Lessee shall, at its
                  election, either (A) repair and restore the Facility 2
                  Property as required by Subparagraph 3.04(c) or (B) exercise
                  the Term Purchase Option and purchase the Facility 2 Property
                  pursuant to the Purchase Agreement; provided, however, that
                  Lessee may not elect to repair and restore the Facility 2
                  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 Facility 2 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 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 Facility 2
                  Property.

                  (c) Repair and Restoration. If Lessee is required to repair
         and restore the Facility 2 Property following any Material Casualty or
         any Condemnation, Lessee shall diligently proceed to repair and restore
         the Facility 2 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

                                       14
<PAGE>   207
                  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 Facility 2 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 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 Facility 2
                           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
                           Facility 2 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.

                                       15
<PAGE>   208
                  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
                  Facility 2 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 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

                                       16
<PAGE>   209
                  pursuant to Subparagraph 3.04(c); then Lessor shall release
                  any Casualty and Condemnation Proceeds to Lessee for repair or
                  restoration of the Facility 2 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 Facility 2 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 Facility 2 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 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 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.

                                       17
<PAGE>   210
         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 Facility 2 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 Facility 2 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 Facility 2 Property does not comply with any Environmental
         Laws; and (ii) any claims against Lessee or the Facility 2 Property
         relating to Hazardous Materials or pursuant to Environmental Laws. In
         response to the presence of any Hazardous Materials on, under or about
         the Facility 2 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 Facility 2 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 Facility 2
         Property.

                  (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 Facility
         2 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 Facility 2 Property which is required by any Governmental
         Authority or is otherwise necessary to render the Facility 2 Property
         in compliance with all Environmental Laws; (B) all other direct or
         indirect consequential damages (including

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<PAGE>   211
         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 (i) 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 Facility 2 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 Facility 2
         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;

                           (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
                  Facility 2 Property in the ordinary course of business, in
                  each case as approved by Lessor; and

                           (vi) Lessor Liens.

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<PAGE>   212
         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
         Facility 2 Property and (B) discharge, at its sole cost and expense,
         any Lien on the Facility 2 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,
         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 Facility 2
         Property or any part thereof. NOTICE IS HEREBY GIVEN THAT NO LESSOR
         PARTY IS OR SHALL BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS
         FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO ANYONE HOLDING THE
         FACILITY 2 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 FACILITY 2 PROPERTY.

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<PAGE>   213
         3.08. Subletting. Lessee may, in the ordinary course of business,
sublease the Facility 2 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 Facility 2 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 Facility 2 Property on the Expiration Date pursuant to the
Purchase Agreement); (e) each sublease prohibits the sublessee from engaging in
any activities on the Facility 2 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.

         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 Facility 2 Property
during the Term.

         3.10. Removal of Facility 2 Property. Lessee shall not remove any
Improvements from the Facility 2 Land or any other Facility 2 Property from the
Facility 2 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 Facility 2 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 Facility 2 Property to comply, with all Governmental Rules and Insurance
Requirements relating to the Facility 2 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 Facility 2
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 Facility 2 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 Facility 2 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 Facility 2 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

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<PAGE>   214
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, 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; (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 shall have any obligation to (a) maintain, repair or make any
improvements to the Facility 2 Property, (b) maintain any insurance on the
Facility 2 Property, (c) perform any other obligation of Lessee under this
Agreement or any other Lessee Obligation, (d) make any expenditure on account of
the Facility 2 Property (except to make Advances as required by the
Participation Agreement) or (e) take any other action in connection with the
Facility 2 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 Facility 2 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 Facility 2 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 Facility 2 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 Facility 2 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 Facility 2 Property. Unless Lessee purchases the
Facility 2 Property on the Expiration Date pursuant to the Purchase Agreement,
Lessee shall vacate and surrender

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<PAGE>   215
the Facility 2 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 Facility 2 Property
on the Expiration Date pursuant to the Purchase Agreement but continues in
possession of any portion of the Facility 2 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.

         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
         Facility 2 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,

                                       23
<PAGE>   216
         (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 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

                                       24
<PAGE>   217
         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

                  (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) Change of Control. Any Change of Control shall occur; or

                  (l) Construction Termination Event. Any Construction
         Termination Event shall occur or exist; or

                  (m) Material Casualty or Condemnation. Any Material Casualty
         or Material Condemnation affecting the Facility 2 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
         Facility 2 Property following such Casualty or Condemnation pursuant to
         clause (i) of Subparagraph 3.04(b); or

                  (n) 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

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<PAGE>   218
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.

                  (b) Appointment of a Receiver. Lessor may apply to any court
         of competent jurisdiction for, and obtain appointment of, a receiver
         for the Facility 2 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 Facility 2 Property. Lessor may enter, take
         possession of, manage and operate all or any part of the Facility 2
         Property or take any other actions which it reasonably determines are
         necessary to protect the Facility 2 Property and the rights and
         remedies of the Lessor Parties under this Agreement and the other
         Operative Documents, including (i) taking and possessing all of
         Lessee's books and records relating to the Facility 2 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

                                       26
<PAGE>   219
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 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 California Civil Code Section 1951.4, 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 Facility 2 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 Facility 2 Property. Lessor may
         enter the Facility 2 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 California 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.

                                       27
<PAGE>   220
                  (b) Uniform Commercial Code Remedies. Lessor may exercise any
         or all of the remedies granted to a secured party under the California
         Uniform Commercial Code.

                  (c) Judicial Foreclosure. Lessor may bring an action in any
         court of competent jurisdiction to foreclose the security interest in
         the Facility 2 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
         Facility 2 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 Division
                  9 of the California Uniform Commercial Code, including any
                  public or private sale, or in any manner permitted by any
                  other applicable Governmental Rule. Any proceeds of any such
                  disposition shall not cure any Event of Default or reinstate
                  any Lessee Obligation for purposes of Section 2924c of the
                  California Civil Code. 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 Facility 2 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 Facility 2 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
                           Facility 2 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 California Uniform
                           Commercial Code Section 9505.

                  The foregoing procedures do not constitute the only procedures
                  that may be commercially reasonable.

                                       28
<PAGE>   221
                           (ii) Lessor's Sales of Real Property or Mixed
                  Collateral. Lessor may choose to dispose of some or all of the
                  Facility 2 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 pursuant to California Civil Code
                  Sections 2924 et SEq. In its discretion, Lessor may also
                  or alternatively choose to dispose of some or all of the
                  Facility 2 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 California Uniform Commercial Code.
                  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 California Uniform Commercial Code Section
                  9501(4), will sometimes be referred to as a "Lessor's Sale.")

                                    (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 Facility 2
                           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 Facility 2 Property
                  consists of more than one lot, parcel or item of property,
                  Lessor may:

                                       29
<PAGE>   222
                                    (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 Facility 2 Property by this
                  Agreement on any part of the Facility 2 Property which has not
                  been sold, until all of the Lessee Obligations have been paid
                  in full.

                           (ii) Credit Bids. At any Foreclosure Sale, any
                  Person, including any Lessor Party, may bid for and acquire
                  the Facility 2 Property or any part of it to the extent
                  permitted by then applicable Governmental Rules. Instead of
                  paying cash for the Facility 2 Property, Lessor may settle for
                  the purchase price by crediting the sales price of the
                  Facility 2 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>   223
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 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.

         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 under this
         Agreement and the other Operative Documents and all other events and
         circumstances, including the events and circumstances set forth in
         Subparagraph 6.08(c).

                                       31
<PAGE>   224
                  (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 Facility 2 Property
         (including any Improvements to the Facility 2 Property made prior to
         the Commencement Date or during the Term); (ii) title to the Facility 2
         Property (including possession of the Facility 2 Property by any Person
         or the existence of any Lien or any other right, title or interest in
         or to any of the Facility 2 Property in favor of any Person); (iii) the
         value, habitability, usability, design, operation or fitness for use of
         the Facility 2 Property; (iv) the availability or adequacy of utilities
         and other services to the Facility 2 Property; (v) any latent, hidden
         or patent defect in the Facility 2 Property; (vi) the zoning or status
         of the Facility 2 Property or any other restrictions on the use of the
         Facility 2 Property; (g) the economics of the Facility 2 Property;
         (vii) any Casualty or Condemnation; (viii) the compliance of the
         Facility 2 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
Facility 2 Property under this Agreement is granted to Lessee reserving to
Lessor and its agents a temporary construction license to enter upon the
Facility 2 Property for purposes of constructing the New Improvements.

                          [The signature page follows.]

                                       32
<PAGE>   225
         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:__________________________

                                       33
<PAGE>   226
STATE OF CALIFORNIA                 )
                                    )        ss
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 on behalf of which the person(s) acted,
executed the instrument.

                  Witness my hand and official seal.

[SEAL]
<PAGE>   227
STATE OF CALIFORNIA                 )
                                    )        ss
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 on behalf of which the person(s) acted,
executed the instrument.

                  Witness my hand and official seal.

_________________________________

[SEAL]
<PAGE>   228
                                  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, flood and earthquake, in an amount of not less than the value of the
Facility 2 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 (A) loss or damage by flood in an
amount of not less than the then current Outstanding Lease Amount, and (B) loss
or damage by earthquake in an amount of not less than 20.0% of the replacement
value of the Improvements.

                                     3.03-1
<PAGE>   229
                                    EXHIBIT A

                                 FACILITY 2 LAND

                              90 HEADQUARTERS DRIVE
                                  (FACILITY 2)

The land situated in the City of San Jose, County of Santa Clara, State of
California, and described as follows:

Parcel 3, as shown on Parcel Map filed July 13, 1984 in Book 531 of Maps at
pages 41 and 42, Santa Clara County Records.

APN: 097-79-003
ARB: 097-03-005.02

                                      A-1
<PAGE>   230
                                    EXHIBIT B

                                  RELATED GOODS

                                      NONE

                                      B-1
<PAGE>   231
                                  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 13, 2001 (the "Participation Agreement"), among Novellus Systems,
Inc. ("Lessee"), Lease Plan North America, Inc. ("Head Lessor"), 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 13, 2001 (the "Facility 2 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 Facility 2 Property subject to the Lease Agreement.

         IN WITNESS WHEREOF, Lessee has executed this Supplement to Exhibit B on
the date set forth above.

LESSEE:                                NOVELLUS SYSTEMS, INC.

                                       By: ___________________________________
                                              Name: __________________________
                                              Title: _________________________

LESSOR:                                ABN AMRO LEASING, INC.

                                       By: ___________________________________
                                              Name: __________________________
                                              Title: _________________________

                                     B(1)-1
<PAGE>   232
                                  ATTACHMENT 1
                                       TO
                             SUPPLEMENT TO EXHIBIT B

                                     B(1)-2
<PAGE>   233
                                   SCHEDULE 1

               HAZARDOUS MATERIALS USED ON THE FACILITY 2 PROPERTY

                  As set forth in that certain Hazardous Materials Business Plan
(HMBP) for Novellus Systems, Inc. dated 4/1/97 prepared by Environmental Quality
Solutions.

                                   B (Sch-1)-1
<PAGE>   234
                                    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 13, 2001 (the "Participation Agreement"), among Novellus Systems,
Inc. ("Lessee"), Lease Plan North America, Inc. ("Head Lessor"), 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 13, 2001 (the "Facility 2 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 Facility 2 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 Facility 2 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>   235
                  (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:

                              Portion                  Rental Period

                           $___________               _______ month[s]
                           $___________               _______ month[s]
                           $___________               _______ month[s]
                           $___________               _______ month[s]]

                  [Pursuant to Subparagraph 2.03(a) of the Facility 2 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 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>   236
                                  EXHIBIT C(1)

                           FACILITY 1 LEASE AGREEMENT

                                     C(1)-1
<PAGE>   237
================================================================================

                          FACILITY 1 PURCHASE AGREEMENT

                                     BETWEEN

                             NOVELLUS SYSTEMS, INC.

                                       AND

                             ABN AMRO LEASING, INC.

                                 APRIL 13, 2001

================================================================================

<PAGE>   238

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                          PAGE
                                                                                          ----
<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.....................................................12

        4.05.  Costs.......................................................................12

        4.06.  Lessee's Expiration Date Payment Obligations................................12

        4.07.  Lessor Liens................................................................12

        4.08.  Transfer Documents..........................................................13

        4.09.  Casualty and Condemnation Proceeds..........................................13

        4.10.  Payments....................................................................13

        4.11.  Environmental Reports.......................................................13

        4.12.  Further Assurances..........................................................14

SECTION 5.        MISCELLANEOUS............................................................14

        5.01.  Notices.....................................................................14

        5.02.  Waivers; Amendments.........................................................14

        5.03.  Successors and Assigns......................................................14

        5.04.  No Third Party Rights.......................................................14

        5.05.  Partial Invalidity..........................................................15

        5.06.  Governing Law...............................................................15

        5.07.  Counterparts................................................................15
</TABLE>

                                       i
<PAGE>   239

                                TABLE OF CONTENTS
                                  (CONTINUED)

<TABLE>
<CAPTION>
                                                                                          PAGE
                                                                                          ----
<S>     <C>                                                                               <C>
        5.08.  Nature of Lessee's Obligations..............................................15
</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 (3.01)

     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>   240

                          FACILITY 1 PURCHASE AGREEMENT

      THIS FACILITY 1 PURCHASE AGREEMENT (this "Agreement" herein), dated as of
April 13, 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 certain property designated by Lessee,
      (b) sublease such property to Lessee, (c) make advances to finance certain
      related expenses, and (d) grant to Lessee the right to purchase such
      property; 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, Lease Plan North America, Inc. ("Head
Lessor"), 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 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
<PAGE>   241

      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 Facility 1 Lease Agreement,
terminate the Facility 1 Lease Agreement and purchase all of the Facility 1
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 Facility
      1 Lease Agreement prior to the Scheduled Expiration Date thereof pursuant
      to Paragraph 4.01 of the Facility 1 Lease Agreement and purchase all of
      the Facility 1 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 Facility 1
      Lease Agreement and Lessee's purchase of the Facility 1 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
      Facility 1 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 Facility 1 Lease Agreement,
without terminating the Facility 1 Lease Agreement, purchase one or more Tracts
(but not less than all of any such Tract) of the Facility 1 Property (the
"Partial Purchase Option").

            (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

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<PAGE>   242

      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 Facility 1
      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 Facility 1 Property to be purchased on such date, an amount equal to
      the portion of the Outstanding Lease Amount under Facility 1 on such date
      attributable to such Tract of Facility 1 Property.

            (c) Conditions to Exercise of Partial Purchase Option. The purchase
      by Lessee on any Partial Purchase Date of any Tract of Facility 1 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
                  Facility 1 Property that are to remain subject to the Facility
                  1 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
                  Facility 1 Property at not less than the Outstanding Lease
                  Amount under Facility 1 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 Facility 1 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.

      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 Facility 1 Lease Agreement, Lessee shall either:

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<PAGE>   243

            (a) Marketing Option. Cause another Person to complete the purchase
      of the Facility 1 Property pursuant to Paragraph 3.02 (the "Marketing
      Option"); or

            (b) Expiration Date Purchase Option. Purchase the Facility 1
      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 Facility 1 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 Facility 1 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 Facility 1
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 Facility 1 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
      Paragraph 3.2(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 Land Portion of the Facility 1 Property on the
      Expiration Date for a purchase price which is not less than the lesser of
      (A) the Outstanding Lease Amount under Facility 1 attributable to the Land
      Portion of the Facility 1 Property, and (B) the Fair Market Value of the
      Land Portion of the Facility 1 Property, (iii) arrange for such purchaser
      to purchase the Improvement Portion of the Facility 1 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 under Facility 1 attributable to the Improvement Portion
      of the Facility 1 Property, and (B) the Fair Market Value of the
      Improvement Portion of the Facility 1 Property and (iv) 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.

                                       4
<PAGE>   244

                  (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 Facility 1 Lease Agreement (the "Initial Marketing
            Period"), Lessee shall use reasonable efforts to solicit Conforming
            Bids from potential purchasers of the Facility 1 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 (A) the portion of the purchase price
            attributable to the Land Portion of the Facility 1 Property
            specified in the Initial Bid is equal to or greater than the
            Outstanding Lease Amount under Facility 1 attributable to the Land
            Portion of the Facility 1 Property and (B) the portion of the
            purchase price attributable to the Improvement Portion of the
            Facility 1 Property specified in the Initial Bid is equal to or
            greater than the difference between the Outstanding Lease Amount and
            Residual Value Guaranty Amount under Facility 1 attributable to the
            Improvement Portion of the Facility 1 Property, 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 either the Land Portion or Improvement Portion of
            the purchase price specified in the Initial Bid is less than the
            applicable amount required in the immediately preceding clause (i),
            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 Facility
            1 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 copies of all bids and
                  otherwise provide each Lessor Party with such information
                  relating to the marketing of the Facility 1 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
                  Facility 1 Property (including the title to, except for Lessor
                  Liens, and condition of the Facility 1 Property);

                        (D) Furnish to each Lessor Party 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 Facility 1
                  Lease Agreement;

                        (E) Permit any Lessor Party or potential purchaser to
                  inspect the Facility 1 Property and the maintenance records
                  for the Property upon reasonable prior written notice and
                  during normal business hours and

                                       5
<PAGE>   245

                  provide to each such Person all information regarding the
                  Facility 1 Property reasonably requested by such Person in
                  writing;

                        (F) Take all other commercially reasonable steps to
                  secure the best price for the Facility 1 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 meets the Land Portion and Improvement
                  Portion amount requirements of the immediately preceding
                  clause (i) or, if no such Conforming Bid was received by
                  Lessee, the highest Conforming Bid for each portion received
                  by Lessee during the Secondary Marketing Period.

            During the Secondary Marketing Period, any Lessor Party 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 Facility 1 Property;

                  (ii) The bidder must agree in writing to purchase the Facility
            1 Property on the Expiration Date of the Facility 1 Lease Agreement
            for a purchase price to be paid in cash, that is not less than (A)
            in the case of the portion of the purchase price attributable to the
            Land Portion of the Facility 1 Property, the lesser of (1) the
            Outstanding Lease Amount under Facility 1 attributable to the Land
            Portion of the Facility 1 Property and (2) the Fair Market Value of
            the Land Portion of the Facility 1 Property; and (B) in the case of
            the portion of the purchase price attributable to the Improvement
            Portion of the Facility 1 Property, the lesser of (1) the difference
            between the Outstanding Lease Amount and Residual Value Guaranty
            Amount under Facility 1 attributable to the Improvement Portion of
            the Facility 1 Property and (2) the Fair Market Value of the
            Improvement Portion of the Facility 1 Property;

                  (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.

                                       6
<PAGE>   246

            (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 meets the Land Portion and Improvement Portion amount requirements
      set forth in clause (i) of Subparagraph 3.02(b), Lessor shall accept such
      bid. If Lessee submits to Lessor a Conforming Bid under this Paragraph
      3.02 with a purchase price which does not meet such amount requirements,
      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 Facility 1 Property after the Expiration Date of the
      Facility 1 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 Facility 1 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 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 Facility 1 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 Facility 1 Property by delivering to Lessee, at least ten (10)
      days prior to the Expiration Date of the Facility 1 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 Facility 1 Lease Agreement, as the purchase price for the
      Property, the amounts set forth in such bid as the purchase prices for the
      Land Portion and the Improvement Portion of the Facility 1 Property. The
      Designated Purchaser shall pay the amount for the Land Portion and the
      amount for the Improvement Portion separately, and Lessor shall keep such
      amounts separate and not commingle them.

            (f) Termination of the Marketing Option. Lessee's right to exercise
      the Marketing Option shall immediately terminate and Lessee shall purchase
      the Facility 1 Property on the Expiration Date of the Facility 1 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 Facility 1 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 Facility 1 Lease Agreement
      (unless the only event or condition causing such conditions not to be so
      satisfied is the occurrence of a Non-Marketing

                                       7
<PAGE>   247

      Option Event of Default under the Facility 1 Lease Agreement); or (iv) the
      Designated Purchaser fails to consummate the purchase of the Facility 1
      Property on the Expiration Date of the Facility 1 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 Facility 1 Property on the Expiration Date of
      the Facility 1 Lease Agreement pursuant to Paragraph 3.03, Lessee shall
      pay to Lessor on such Expiration Date the Residual Value Guaranty Amounts
      and the Indemnity Amounts attributable to the Land Portion and Improvement
      Portion of the Facility 1 Property calculated as follows:

                  (i) The "Residual Value Guaranty Amount" shall be (A) with
            respect to the Land Portion of the Facility 1 Property, an amount
            equal to the total Outstanding Lease Amount under Facility 1
            attributable to the Land Portion on the Expiration Date, and (B)
            with respect to the Improvement Portion of the Facility 1 Property,
            an amount equal to the total Tranche A Proportionate Share (for the
            Improvement Portion) of the Outstanding Lease Amount under Facility
            1 attributable to the Improvement Portion on the Expiration Date.

                  (ii) The "Indemnity Amount" shall be, with respect to the Land
            Portion or Improvement Portion of the Facility 1 Property, an amount
            equal to the decrease, if any, between the Commencement Date and the
            Expiration Date of the Facility 1 Lease Agreement in the Fair Market
            Value of such portion caused by (A) any representation or warranty
            of Lessee or any of its Affiliates regarding the Facility 1 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 Facility 1 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 Facility 1 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 does not meet the Land Portion
      and Improvement Portion amount requirements set forth in clause (i) of
      Subparagraph 3.02(b), 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 that meets such
      requirements), deliver to Lessee a written notice of Lessor's

                                       8
<PAGE>   248

      determination of the current Fair Market Value of the Land Portion and
      Improvement Portion of the Facility 1 Property and the Indemnity Amount
      attributable to the Land Portion and Improvement Portion of the Facility 1
      Property. To determine such amounts, Lessor shall obtain Appraisals of
      each portion of the Facility 1 Property which set forth:

                  (i) A current Appraisal of the Fair Market Value of each such
            portion in its then existing condition (the "Current Appraisal");
            and

                  (ii) An Appraisal of the Fair Market Value of each such
            portion which assumes that (A) all representations and warranties
            regarding the Facility 1 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 Facility 1 Property in
            compliance with all applicable Governmental Rules, Insurance
            Requirements and the Operative Documents; (C) Lessee has completed
            all Modifications and any other New Improvements in a good and
            workmanlike manner and otherwise as required by the Operative
            Documents; (D) Lessee has repaired the Facility 1 Property as
            required by the Operative Documents following any Casualty; (E)
            Lessee has restored the Facility 1 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 Facility 1 Property; (G) Lessee has removed all Liens on the
            Facility 1 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 Facility 1 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 Facility 1 Property. No
      Lessor Party shall be bound by any acts of Lessee.

            (j) Excess Proceeds.

                  (i) If, on the Expiration Date of the Facility 1 Lease
            Agreement, after the application by Lessor of all amounts received
            by Lessor on such date that are attributable to the Land Portion of
            the Facility 1 Property to the Outstanding Lease Amount attributable
            to the Land Portion of the Facility 1 Property, all unpaid Rent
            attributable to the Land Portion of the Facility 1 Property accrued
            through or due and payable on or prior to such date and all other
            amounts attributable to the Land Portion of the Facility 1 Property,
            if any, due and payable by Lessee under the Operative Documents on
            or prior to such date, any excess amount remains, Lessor promptly
            shall pay such excess amount to Lessee.

                                       9
<PAGE>   249

                  (ii) If, on the Expiration Date of the Facility 1 Lease
            Agreement, after the application by Lessor of all amounts received
            by Lessor on such date that are attributable to the Improvement
            Portion of the Facility 1 Property to the Outstanding Lease Amount
            attributable to the Improvement Portion of the Facility 1 Property,
            all unpaid Rent attributable to the Improvement Portion of the
            Facility 1 Property accrued through or due and payable on or prior
            to such date and all other amounts attributable to the Improvement
            Portion of the Facility 1 Property, if any, due and payable by
            Lessee under the Operative Documents on or prior to such date, any
            excess amount remains, Lessor promptly shall pay such excess amount
            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, 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 Facility 1 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) 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. 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 Facility
      1 Lease Agreement shall, if the conditions to the exercise of the
      Marketing Option set forth in Paragraph 3.01 are satisfied, be extended to
      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. 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>   250

      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 Facility 1 Property on the Expiration Date of the
      Facility 1 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 Facility 1 Property
      pursuant to the Expiration Date Purchase Option, Lessee shall pay to
      Lessor on the Expiration Date of the Facility 1 Lease Agreement, as the
      purchase price for the Facility 1 Property, an amount equal to the
      Outstanding Lease Amount under Facility 1 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 Facility 1 Property, whether Lessee, an Assignee Purchaser or a
      Designated Purchaser ("Purchaser"), shall represent and warrant to Lessor
      on the Expiration Date of the Facility 1 Lease Agreement (or, in the case
      of a purchase of a portion of the Facility 1 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
            Facility 1 Property (or, in the case of a purchase of a portion of
            the Facility 1 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 Facility 1
            Property (or, in the case of a purchase of a portion of the Facility
            1 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

                                       11
<PAGE>   251

            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.

                  (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
      Facility 1 Property) on the Expiration Date of the Facility 1 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 Facility 1
      Property) on the Expiration Date

                                       12
<PAGE>   252

      of the Facility 1 Lease Agreement that no Liens are attached to the
      Facility 1 Property, except for Permitted Property Liens, and (B) Lessor
      shall represent and warrant to Purchaser on the Expiration Date of the
      Facility 1 Lease Agreement (or, in the case of a purchase of a portion of
      the Facility 1 Property pursuant to the Partial Purchase Option, on the
      applicable Partial Purchase Date) that no Lessor Liens are attached to the
      Facility 1 Property (or, in the case of a purchase of a portion of the
      Facility 1 Property pursuant to the Partial Purchase Option, the portion
      to be purchased). Except for the foregoing representations and warranties
      to be made by Lessor on the Expiration Date of the Facility 1 Lease
      Agreement (or, in the case of a purchase of a portion of the Facility 1
      Property pursuant to the Partial Purchase Option, on the applicable
      Partial Purchase Date), no Lessor Party shall make any representation or
      warranty regarding the Facility 1 Property or the sale of the Facility 1
      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 Facility 1 Lease
      Agreement (or, in the case of a purchase of a portion of the Facility 1
      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 Facility 1 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 Facility 1 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, its agents, or brokers as
to any matters concerning the Facility 1 Property (except for any
representations and warranties provided by Lessor pursuant to Subparagraph
4.01(b)), including (a) the condition of the Facility 1 Property (including any
Improvements to the Facility 1 Property made prior to the Commencement Date or
during the Term of the Facility 1 Lease Agreement); (b) title to the Facility 1
Property (including possession of the Facility 1 Property by any Person or the
existence of any Lien or any other right, title or interest in or to any of the
Facility 1 Property in favor of any Person); (c) the value, habitability,
usability, design, operation or fitness for use of the Facility 1 Property; (d)
the availability or adequacy of utilities and other services to the Facility 1
Property; (e) any latent, hidden or patent defect in the Facility 1 Property;
(f) the zoning or status of the Facility 1 Property or any other restrictions on
the use of the Facility 1 Property; (g) the economics of the Facility 1
Property; (h) any Casualty or Condemnation; or (i) the compliance of the
Facility 1 Property with any applicable Governmental Rule or Insurance
Requirement.

                                       13
<PAGE>   253

      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 physical condition of the Facility 1 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
Facility 1 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
Facility 1 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 Facility 1 Lease
      Agreement, Lessee shall pay to Lessor the following:

                  (i) Purchase by Lessee. If the Facility 1 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 Facility 1
            Property is to be purchased by a Designated Purchaser on such date,
            (A) the Residual Value Guaranty Amounts, (B) the Indemnity Amounts,
            (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 Facility 1 Property is to be
            retained by Lessor on such date pursuant to Subparagraph 3.02(d),
            (A) the Residual Value Guaranty Amounts, (B) the Indemnity Amounts,
            (C) all unpaid Rent accrued through or due and payable on or prior
            to such date and (D) all other amounts, if

                                       14
<PAGE>   254

            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 Facility 1
      Property to be purchased on such date, (ii) all unpaid Rent attributable
      to such Tracts of Facility 1 Property accrued through or due and payable
      on or prior to such date and (iii) all other amounts attributable to such
      Tracts of Facility 1 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 Facility
1 Property before the Expiration Date of the Facility 1 Lease Agreement (or, in
the case of a purchase of a portion of the Facility 1 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 Facility 1 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 Facility 1 Property to
            Purchaser on the Expiration Date of the Facility 1 Lease Agreement
            (unless Lessor is to retain the Facility 1 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 Facility 1
            Property as provided in Section 6 of the Facility 1 Head Lease
            Agreement.

                  (ii) Lessee. On the Expiration Date of the Facility 1 Lease
            Agreement, unless Lessee is to purchase the Facility 1 Property,
            Lessee shall transfer its interest in the Facility 1 Property to the
            Designated Purchaser or an Assignee Purchaser (or Lessor if Lessor
            is to retain the Facility 1 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.

                                       15
<PAGE>   255

            (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 Facility 1
      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 Facility
      1 Property as provided in Section 6 of the Facility 1 Head Lease
      Agreement, and such other documents, instruments and agreements as Lessee
      may reasonably request.

      4.09. Casualty and Condemnation Proceeds. If, on the Expiration Date of
the Facility 1 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 Facility 1 Property on the Expiration Date of the
Facility 1 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 Facility 1 Property pursuant
to the Partial Purchase Option, prior to the applicable Partial Purchase Date),
environmental reports with respect to the Facility 1 Property (or, in the case
of a purchase of a portion of the Facility 1 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.

                                       16
<PAGE>   256

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 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 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 Facility 1
      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, 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.

                                       17
<PAGE>   257

      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. 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 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 Facility 1 Property (including any Improvements to the
      Facility 1 Property made prior to the Commencement Date or during the Term
      of the Facility 1 Lease Agreement); (ii) title to the Facility 1 Property
      (including possession of the Facility 1 Property by any Person or the
      existence of any Lien or any other right, title or interest in or to any
      of the Facility 1 Property in favor of any Person); (iii) the value,
      habitability, usability, design, operation or fitness for use of the
      Facility 1 Property; (iv) the availability or adequacy of utilities and
      other services to the Facility 1 Property; (v) any latent, hidden or
      patent defect in the Facility 1 Property; (vi) the zoning or status of the
      Facility 1 Property or any other restrictions on the use of the Facility 1
      Property; (g) the economics of the Facility 1 Property; (vii) any Casualty
      or Condemnation; (viii) the compliance of the Facility 1 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.

                          [The signature page follows.]

                                       18
<PAGE>   258

      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>   259

                                  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 13, 2001 (the
      "Participation Agreement"), among Novellus Systems, Inc. ("Lessee"), Lease
      Plan North America, Inc. ("Head Lessor"), 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 Facility 1 Lease Agreement, dated as of April 13, 2001 (the
      "Lease Agreement"), between Lessee and Lessor; and

            (c) The Facility 1 Purchase Agreement, dated as of April 13, 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. Pursuant to Paragraph 4.01 of the Facility 1 Lease Agreement and
Paragraph 2.01 of the Facility 1 Purchase Agreement, Lessee hereby irrevocably
notifies Lessor that Lessee is exercising its right to terminate the Facility 1
Lease Agreement prior to the Scheduled Expiration Date of the Facility 1 Lease
Agreement and purchase the Facility 1 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 Facility 1 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)-1
<PAGE>   260

                                  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 13, 2001 (the
      "Participation Agreement"), among Novellus Systems, Inc. ("Lessee"), Lease
      Plan North America, Inc. ("Head Lessor"), 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 Facility 1 Purchase Agreement, dated as of April 13, 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. Pursuant to Paragraph 2.02 of the Facility 1 Purchase Agreement, Lessee
hereby irrevocably notifies Lessor that Lessee is exercising its right to
purchase a portion of the Facility 1 Property as follows:

            (a) The Tract[s] of Facility 1 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

                                     A(2)-1
<PAGE>   261

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

      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>   262

                                    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 13, 2001 (the
      "Participation Agreement"), among Novellus Systems, Inc. ("Lessee"), Lease
      Plan North America, Inc. ("Head Lessor"), 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 Facility 1 Purchase Agreement, dated as of April 13, 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 Facility 1 Lease Agreement of [_____, ____].

      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 (other than a Non-Marketing Option Event of Default
      under the Facility 1 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>   263

      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>   264

                                    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 13, 2001 (the
      "Participation Agreement"), among Novellus Systems, Inc. ("Lessee"), Lease
      Plan North America, Inc. ("Head Lessor"), 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 Facility 1 Purchase Agreement, dated as of April 13, 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 Facility 1 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>   265

                                  EXHIBIT D(1)

RECORDING REQUESTED BY
WHEN RECORDED RETURN TO
AND MAIL TAX STATEMENTS TO:

[Purchaser]

----------------------------------------

----------------------------------------

----------------------------------------

Documentary Transfer Tax is not of public record and is shown on a separate
sheet attached to this deed.

--------------------------------------------------------------------------------

                                 QUITCLAIM DEED

      FOR VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged,
ABN AMRO LEASING, INC. ("Grantor"), hereby releases, remises and forever
quitclaims to [PURCHASER], a _____________ ("Grantee"), the real property
located in the City of [__________], State of California, described on EXHIBIT A
attached hereto and made a part hereof (the "Property").

      Executed as of _____, ____.

                                        ABN AMRO LEASING, INC.,

                                        By:
                                            ------------------------------------

                                        Its:
                                             -----------------------------------

                                     D(1)-1
<PAGE>   266

                                    EXHIBIT A

                                LEGAL DESCRIPTION

Assessor's Parcel No.:
                       ------------------------------

                                   D(1)[A]-1
<PAGE>   267

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.

                                 -----------------------------------------------

                                     D(1)-2
<PAGE>   268

                                                          ,
                                            --------------  ---

Santa Clara County Recorder

           Re: Request That Statement of Documentary
               Transfer Tax Not be Recorded

Dear Sir:

      Request is hereby made in accordance with Section 11932 of the Revenue and
Taxation Code that this statement of tax due not be recorded with the attached
deed but be affixed to the deed after recordation and before return as directed
on the deed.

      The attached deed names ABN AMRO Leasing, Inc., as grantor, and
[PURCHASER], a _________________, as grantee.

      The property being transferred and described in the attached deed is
located in the City of San Jose and County of [__________], State of California.

      The amount of Documentary Transfer Tax due on the attached deed is
$__________, computed on full value of the property conveyed.

                                        ABN AMRO LEASING, INC.,

                                        By:
                                            ------------------------------------

                                        Its:
                                             -----------------------------------

                                     D(1)-3

<PAGE>   269

                                  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 Facility 1
Purchase Agreement dated as of April 13, 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 13, 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>   270

      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 N.A. is entitled to rely and is relying on this
Certificate.

      EXECUTED as of ____________, _______.

                                        [PURCHASER]

                                        By:

                                            Name:

                                            Title:

                                     D(2)-2

<PAGE>   271

                                    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 _______________, San Jose, California,
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:                                  SELLER:
       -----------, ----------
                                        ABN AMRO LEASING, INC.,

                                        By:
                                            ------------------------------------

                                        Its:
                                             -----------------------------------

                                        PURCHASER:

                                        [PURCHASER]

                                        a
                                          --------------------------------------

                                        By:
                                            ------------------------------------

                                        Its:
                                             -----------------------------------

                                      E-1
<PAGE>   272

                                   SCHEDULE 1
                                    PROPERTY

                                     E(1)-1
<PAGE>   273

                                    EXHIBIT F

RECORDING REQUESTED BY
WHEN RECORDED RETURN TO
AND MAIL TAX STATEMENTS TO:

----------------------------------------

----------------------------------------

Attention:
           -----------------------------

Documentary Transfer Tax is not of public record and is shown on a separate
sheet attached to this deed.

--------------------------------------------------------------------------------

                                   GRANT DEED

      FOR VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged,
NOVELLUS SYSTEMS, INC., a California corporation ("Grantor"), hereby releases,
remises and forever grants to [PURCHASER] ("Grantee"), the real property located
in the City of San Jose, County of Santa Clara, State of California, described
on EXHIBIT A attached hereto and made a part hereof (the "Property").

      Executed as of __________, ___.

                                        NOVELLUS SYSTEMS, INC.,
                                        a California corporation

                                        By:
                                            ------------------------------------

                                        Its:
                                             -----------------------------------

                                      F-1

<PAGE>   274

                                    EXHIBIT A

                                LEGAL DESCRIPTION

Assessor's Parcel No.:
                       ----------------------------

                                     F(A)-1
<PAGE>   275

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.

--------------------------------------------------------------------------------

                                     F(A)-2
<PAGE>   276

                                                        ,
                                            -----------   ----

Santa Clara County Recorder

           Re: Request That Statement of Documentary
               Transfer Tax Not be Recorded

Dear Sir:

      Request is hereby made in accordance with Section 11932 of the Revenue and
Taxation Code that this statement of tax due not be recorded with the attached
deed but be affixed to the deed after recordation and before return as directed
on the deed.

      The attached deed names NOVELLUS SYSTEMS, INC., a California corporation,
as grantor, and [PURCHASER], as grantee.

      The property being transferred and described in the attached deed is
located in the City of San Jose and County of Santa Clara, State of California.

      The amount of Documentary Transfer Tax due on the attached deed is
$__________, computed on full value of the property conveyed.

                                        NOVELLUS SYSTEMS, INC.,
                                        a __________________

                                        By:
                                            ------------------------------------

                                        Its:
                                             -----------------------------------

                                     F(A)-3

<PAGE>   277

                                    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 _______________, San Jose, California, 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 __________, ____.

                         SELLER:        Novellus Systems, Inc.,
                                        a California corporation

                                        By:
                                            ------------------------------------

                                        Its:
                                             -----------------------------------

                                      G-1
<PAGE>   278

                                   SCHEDULE 1
                                    PROPERTY
<PAGE>   279

                          FACILITY 2 PURCHASE AGREEMENT

                                     BETWEEN

                             NOVELLUS SYSTEMS, INC.

                                       AND

                             ABN AMRO LEASING, INC.

                                 APRIL 13, 2001
<PAGE>   280
                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                              PAGE
<S>                                                                                          <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.....................................................    12
        4.05.  Costs.......................................................................    12
        4.06.  Lessee's Expiration Date Payment Obligations................................    12
        4.07.  Lessor Liens................................................................    12
        4.08.  Transfer Documents..........................................................    13
        4.09.  Casualty and Condemnation Proceeds..........................................    13
        4.10.  Payments....................................................................    13
        4.11.  Environmental Reports.......................................................    13
        4.12.  Further Assurances..........................................................    14

SECTION 5.        MISCELLANEOUS............................................................    14

        5.01.  Notices.....................................................................    14
        5.02.  Waivers; Amendments.........................................................    14
        5.03.  Successors and Assigns......................................................    14
        5.04.  No Third Party Rights.......................................................    14
        5.05.  Partial Invalidity..........................................................    15
        5.06.  Governing Law...............................................................    15
        5.07.  Counterparts................................................................    15
        5.08.  Nature of Lessee's Obligations..............................................    15

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 (3.01)
        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))
</TABLE>

                                      -i-
<PAGE>   281
                          FACILITY 2 PURCHASE AGREEMENT

      THIS FACILITY 2 PURCHASE AGREEMENT (this "Agreement" herein), dated as of
April 13, 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 certain property designated by Lessee,
      (b) sublease such property to Lessee, (c) appoint Lessee as Lessor's agent
      to make certain improvements to such property, (d) make advances to
      finance such improvements and to pay certain related expenses and (e)
      grant to Lessee the right to purchase such property; 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, Lease Plan North America, Inc. ("Head
Lessor"), 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>   282
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 Facility 2 Lease Agreement,
terminate the Facility 2 Lease Agreement and purchase all of the Facility 2
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 Facility
      2 Lease Agreement prior to the Scheduled Expiration Date thereof pursuant
      to Paragraph 4.01 of the Facility 2 Lease Agreement and purchase all of
      the Facility 2 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 Facility 2
      Lease Agreement and Lessee's purchase of the Facility 2 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 Facility 2 Lease Agreement,
without terminating the Facility 2 Lease Agreement, purchase one or more Tracts
(but not less than all of any such Tract) of the Facility 2 Property (the
"Partial Purchase Option").

                                       2
<PAGE>   283
            (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 Facility 2 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 Facility 2 Property to be purchased on such date, an amount equal to
      the portion of the Outstanding Lease Amount under Facility 2 on such date
      attributable to such Tract of Facility 2 Property.

            (c) Conditions to Exercise of Partial Purchase Option. The purchase
      by Lessee on any Partial Purchase Date of any Tract of Facility 2 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
                  Facility 2 Property that are to remain subject to the Facility
                  2 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
                  Facility 2 Property at not less than the Outstanding Lease
                  Amount under Facility 2 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 Facility 2 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>   284
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 Facility 2 Lease Agreement, Lessee shall either:

            (a) Marketing Option. Cause another Person to complete the purchase
      of the Facility 2 Property pursuant to Paragraph 3.02 (the "Marketing
      Option"); or

            (b) Expiration Date Purchase Option. Purchase the Facility 2
      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 Facility 2 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 Facility 2 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 Facility 2
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 Facility 2 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
      Section 3.2(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 Facility 2 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
      under Facility 2 and (B) the Fair Market Value of the Facility 2 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

                                       4
<PAGE>   285
            which is four (4) months prior to the Expiration Date of the
            Facility 2 Lease Agreement (the "Initial Marketing Period"), Lessee
            shall use reasonable efforts to solicit Conforming Bids from
            potential purchasers of the Facility 2 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 under Facility 2, 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 under Facility 2, 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 Facility 2 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 copies of all bids and
                  otherwise provide each Lessor Party with such information
                  relating to the marketing of the Facility 2 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
                  Facility 2 Property (including the title to, except for Lessor
                  Liens, and condition of the Facility 2 Property);

                        (D) Furnish to each Lessor Party 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 Facility 2
                  Lease Agreement;

                        (E) Permit any Lessor Party or potential purchaser to
                  inspect the Facility 2 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 Facility 2 Property reasonably
                  requested by such Person in writing;

                        (F) Take all other commercially reasonable steps to
                  secure the best price for the Facility 2 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

                                       5
<PAGE>   286
                  to or greater than the difference between the Outstanding
                  Lease Amount and Residual Value Guaranty Amount under Facility
                  2 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 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 Facility 2 Property;

                  (ii) The bidder must agree in writing to purchase the Facility
            2 Property on the Expiration Date of the Facility 2 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 under Facility 2 on such date and
            (B) the Fair Market Value of the Facility 2 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 under Facility 2, 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 under Facility 2, 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 Facility 2 Property
      after the Expiration Date of the Facility 2 Lease Agreement; provided,
      however, that Lessee's payment obligations on

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<PAGE>   287
      such Expiration Date shall be limited to the amounts payable pursuant to
      clause (iii) of Subparagraph 4.06(a) if (i) Lessor retains the Facility 2
      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 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
      Facility 2 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
      Facility 2 Property by delivering to Lessee, at least ten (10) days prior
      to the Expiration Date of the Facility 2 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 Facility 2 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 Facility 2 Property on the Expiration Date of the Facility 2 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 Facility 2 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 Facility 2 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 Facility 2 Lease Agreement); or (iv) the Designated Purchaser
      fails to consummate the purchase of the Facility 2 Property on the
      Expiration Date of the Facility 2 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 Facility 2 Property on the Expiration Date of
      the Facility 2 Lease Agreement

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<PAGE>   288
      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 under Facility 2 on the Expiration Date; provided,
            however, that:

                        (A) If Lessee has paid any Prepaid Rent or if the
                  Outstanding Lease Amount under Facility 2 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 sum of (1) 100% of the Facility 2 Land
                  Portion Cost, plus (2) the remainder of (y) the total Tranche
                  A Proportionate Share of the Eligible Project Costs (other
                  than the Facility 2 Land Portion Cost included in Eligible
                  Project Costs), minus (z) 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 under Facility 2 on the Completion
                  Date includes any Ineligible Project Costs, then the Tranche A
                  Proportionate Share under Facility 2 after the Completion Date
                  shall be recomputed and set at the maximum percentage such
                  that the (1) Lessee is not deemed under GAAP to be the owner
                  of the Facility 2 Property prior to the Completion Date, and
                  (2) from the Lessee's perspective, the Facility 2 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 under Facility 2 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 under Facility 2 after the Completion Date (such
                  that the sum of the Tranche A Proportionate Shares and the
                  Tranche B Proportionate Shares and percentages 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
            Facility 2 Lease Agreement in the Fair Market Value of the Facility
            2 Property caused by (A) any representation or warranty of Lessee or
            any of its Affiliates regarding the Facility 2 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 Facility 2 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 Facility
            2 Property set forth in any of the Operative Documents.

                                       8
<PAGE>   289
            (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
      under Facility 2, 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 under Facility 2), deliver to Lessee a written notice of
      Lessor's determination of the current Fair Market Value of the Facility 2
      Property and the Indemnity Amount. To determine such amounts, Lessor shall
      obtain Appraisals of the Facility 2 Property which set forth:

                  (i) A current Appraisal of the Fair Market Value of the
            Facility 2 Property in its then existing condition (the "Current
            Appraisal"); and

                  (ii) An Appraisal of the Fair Market Value of the Facility 2
            Property which assumes that (A) all representations and warranties
            regarding the Facility 2 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 Facility 2 Property in
            compliance with all applicable Governmental Rules, Insurance
            Requirements and the Operative Documents; (C) Lessee has completed
            all Modifications and any other New Improvements in a good and
            workmanlike manner and otherwise as required by the Operative
            Documents; (D) Lessee has repaired the Facility 2 Property as
            required by the Operative Documents following any Casualty; (E)
            Lessee has restored the Facility 2 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 Facility 2 Property; (G) Lessee has removed all Liens on the
            Facility 2 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 Facility 2 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 Facility 2 Property. No
      Lessor Party 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 under Facility 2 not constituting
            Ineligible Project

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<PAGE>   290
            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 under
            Facility 2 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
            account of Facility 2 on or prior to such date not constituting
            Ineligible Project Costs to the extent necessary to pay such portion
            of the unpaid amounts;

                  (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, 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 Facility 2 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

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<PAGE>   291
      by clause (ii) 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. 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 Facility 2 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 Facility 2
      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.

      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 Facility 2 Property on the Expiration Date of the
      Facility 2 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 Facility 2 Property
      pursuant to the Expiration Date Purchase Option, Lessee shall pay to
      Lessor on the Expiration Date of the Facility 2 Lease Agreement, as the
      purchase price for the Facility 2 Property, an amount equal to the
      Outstanding Lease Amount under Facility 2 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 Facility 2 Property, whether Lessee, an Assignee Purchaser or a
      Designated Purchaser ("Purchaser"), shall represent and warrant to Lessor
      on the Expiration Date of the Facility 2 Lease Agreement (or, in the case
      of a purchase of a portion of the Facility 2 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
            Facility 2 Property (or, in the case of a

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<PAGE>   292
            purchase of a portion of the Facility 2 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 Facility 2
            Property (or, in the case of a purchase of a portion of the Facility
            2 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.

                  (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
      Facility 2 Property) on the Expiration Date of the Facility 2 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

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<PAGE>   293
            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 Facility 2
      Property) on the Expiration Date of the Facility 2 Lease Agreement that no
      Liens are attached to the Facility 2 Property, except for Permitted
      Property Liens, and (B) Lessor shall represent and warrant to Purchaser on
      the Expiration Date of the Facility 2 Lease Agreement (or, in the case of
      a purchase of a portion of the Facility 2 Property pursuant to the Partial
      Purchase Option, on the applicable Partial Purchase Date) that no Lessor
      Liens are attached to the Facility 2 Property (or, in the case of a
      purchase of a portion of the Facility 2 Property pursuant to the Partial
      Purchase Option, the portion to be purchased). Except for the foregoing
      representations and warranties to be made by Lessor on the Expiration Date
      of the Facility 2 Lease Agreement (or, in the case of a purchase of a
      portion of the Facility 2 Property pursuant to the Partial Purchase
      Option, on the applicable Partial Purchase Date), no Lessor Party shall
      make any representation or warranty regarding the Facility 2 Property or
      the sale of the Facility 2 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 Facility 2 Lease
      Agreement (or, in the case of a purchase of a portion of the Facility 2
      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 Facility 2 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 Facility 2 Property on an "as is, with all faults" basis and that such
Purchaser is not relying

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<PAGE>   294
on any representations or warranties of any kind whatsoever, express or implied,
from any Lessor Party, its agents, or brokers as to any matters concerning the
Facility 2 Property (except for any representations and warranties provided by
Lessor pursuant to Subparagraph 4.01(b)), including (a) the condition of the
Facility 2 Property (including any Improvements to the Facility 2 Property made
prior to the Commencement Date or during the Term of the Facility 2 Lease
Agreement); (b) title to the Facility 2 Property (including possession of the
Facility 2 Property by any Person or the existence of any Lien or any other
right, title or interest in or to any of the Facility 2 Property in favor of any
Person); (c) the value, habitability, usability, design, operation or fitness
for use of the Facility 2 Property; (d) the availability or adequacy of
utilities and other services to the Facility 2 Property; (e) any latent, hidden
or patent defect in the Facility 2 Property; (f) the zoning or status of the
Facility 2 Property or any other restrictions on the use of the Facility 2
Property; (g) the economics of the Facility 2 Property; (h) any Casualty or
Condemnation; or (i) the compliance of the Facility 2 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 physical condition of the Facility 2 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
Facility 2 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
Facility 2 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 Facility 2 Lease
      Agreement, Lessee shall pay to Lessor the following:

                  (i) Purchase by Lessee. If the Facility 2 Property is to be
            purchased by Lessee or an Assignee Purchaser on such date, (A) the
            purchase price payable

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<PAGE>   295
            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 Facility 2
            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 Facility 2 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 Facility 2
      Property to be purchased on such date, (ii) all unpaid Rent attributable
      to such Tracts of Facility 2 Property accrued through or due and payable
      on or prior to such date and (iii) all other amounts attributable to such
      Tracts of Facility 2 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 Facility
2 Property before the Expiration Date of the Facility 2 Lease Agreement (or, in
the case of a purchase of a portion of the Facility 2 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 Facility 2 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 Facility 2 Property to
            Purchaser on the Expiration Date of the Facility 2 Lease Agreement
            (unless Lessor is to retain the

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<PAGE>   296
            Facility 2 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 Facility 2 Property as provided in Section 6 of
            the Facility 2 Head Lease Agreement.

                  (ii) Lessee. On the Expiration Date of the Facility 2 Lease
            Agreement, unless Lessee is to purchase the Facility 2 Property,
            Lessee shall transfer its interest in the Facility 2 Property to the
            Designated Purchaser or an Assignee Purchaser (or Lessor if Lessor
            is to retain the Facility 2 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 Facility 2
      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 Facility
      2 Property as provided in Section 6 of the Facility 2 Head Lease
      Agreement, and such other documents, instruments and agreements as Lessee
      may reasonably request.

      4.09. Casualty and Condemnation Proceeds. If, on the Expiration Date of
the Facility 2 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 Facility 2 Property on the Expiration Date of the
Facility 2 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 Facility 2 Property pursuant
to the Partial Purchase Option, prior to the applicable Partial Purchase Date),
environmental reports with respect to the Facility 2 Property (or, in the case
of a purchase of a portion of the Facility 2 Property pursuant to the Partial
Purchase Option, with respect to the applicable portion thereof) prepared by
environmental consultants acceptable to Lessor.

                                       16
<PAGE>   297
      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 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 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
        Facility 2 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, 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

                                       17
<PAGE>   298
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. 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 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 Facility 2 Property (including any Improvements to the
      Facility 2 Property made prior to the Commencement Date or during the Term
      of the Facility 2 Lease Agreement); (ii) title to the Facility 2 Property
      (including possession of the Facility 2 Property by any Person or the
      existence of any Lien or any other right, title or interest in or to any
      of the Facility 2 Property in favor of any Person); (iii) the value,
      habitability, usability, design, operation or fitness for use of the
      Facility 2 Property; (iv) the availability or adequacy of utilities and
      other services to the Facility 2 Property; (v) any latent, hidden or
      patent defect in the Facility 2 Property; (vi) the zoning or status of the
      Facility 2 Property or any other restrictions on the use of the Facility 2
      Property; (g) the economics of the Facility 2 Property; (vii) any Casualty
      or Condemnation; (viii) the compliance of the Facility 2 Property with any
      applicable Governmental Rule or

                                       18
<PAGE>   299
      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.

                          [The signature page follows.]

                                       19
<PAGE>   300
        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:_______________________

                                       20
<PAGE>   301
                                  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 13, 2001 (the
      "Participation Agreement"), among Novellus Systems, Inc. ("Lessee"), Lease
      Plan North America, Inc. ("Head Lessor"), 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 Facility 2 Lease Agreement, dated as of April 13, 2001 (the
      "Lease Agreement"), between Lessee and Lessor; and

            (c) The Facility 2 Purchase Agreement, dated as of April 13, 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 Facility 2 Lease Agreement and
Paragraph 2.01 of the Facility 2 Purchase Agreement, Lessee hereby irrevocably
notifies Lessor that Lessee is exercising its right to terminate the Facility 2
Lease Agreement prior to the Scheduled Expiration Date of the Facility 2 Lease
Agreement and purchase the Facility 2 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 Facility 2 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)-1
<PAGE>   302
                                  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 13, 2001 (the
      "Participation Agreement"), among Novellus Systems, Inc. ("Lessee"), Lease
      Plan North America, Inc. ("Head Lessor"), 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 Facility 2 Purchase Agreement, dated as of April 13, 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 Facility 2 Purchase Agreement, Lessee
hereby irrevocably notifies Lessor that Lessee is exercising its right to
purchase a portion of the Facility 2 Property as follows:

            (a) The Tract[s] of Facility 2 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

                                     A(2)-1
<PAGE>   303
            (c) All of the Operative Documents are in full force and effect.

      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>   304
                                    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 13, 2001 (the
      "Participation Agreement"), among Novellus Systems, Inc. ("Lessee"), Lease
      Plan North America, Inc. ("Head Lessor"), 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 Facility 2 Purchase Agreement, dated as of April 13, 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 Facility 2 Lease Agreement of [_____, ____].

      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 (other than a Non-Marketing Option Event of Default
      under the Facility 2 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>   305
        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>   306
                                    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 13, 2001 (the
      "Participation Agreement"), among Novellus Systems, Inc. ("Lessee"), Lease
      Plan North America, Inc. ("Head Lessor"), 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 Facility 2 Purchase Agreement, dated as of April 13, 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 Facility 2 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>   307

                                  EXHIBIT D(1)

RECORDING REQUESTED BY
WHEN RECORDED RETURN TO
AND MAIL TAX STATEMENTS TO:

[Purchaser]

___________________

___________________

___________________

Documentary Transfer Tax is not of public record and is shown on a separate
sheet attached to this deed.

_____________________________________________________________________________

                                 QUITCLAIM DEED

               FOR VALUABLE CONSIDERATION, the receipt of which is hereby
acknowledged, ABN AMRO Leasing, Inc. ("Grantor"), hereby releases, remises and
forever quitclaims to [PURCHASER], a _____________ ("Grantee"), the real
property located in the City of [__________], State of California, described on
EXHIBIT A attached hereto and made a part hereof (the "Property").

                                 [See Next Page]

                                     D(1)-1
<PAGE>   308
               Executed as of _____, ____.

                                   ABN AMRO LEASING, INC.,

                                       By:  _________________________

                                       Its: _________________________

                                     D(1)-2
<PAGE>   309
                                    EXHIBIT A

                                LEGAL DESCRIPTION

Assessor's Parcel No.:  _______________

                                     D(1)(A)-1
<PAGE>   310
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.

                        _________________________________________________

                                     D(1)(A)-2
<PAGE>   311
                                ________, ______

Santa Clara County Recorder

           Re:   Request That Statement of Documentary
                 Transfer Tax Not be Recorded

Dear Sir:

      Request is hereby made in accordance with Section 11932 of the Revenue and
Taxation Code that this statement of tax due not be recorded with the attached
deed but be affixed to the deed after recordation and before return as directed
on the deed.

      The attached deed names ABN AMRO Leasing, Inc., as grantor, and
[PURCHASER], a _________________, as grantee.

      The property being transferred and described in the attached deed is
located in the City of San Jose and County of [__________], State of California.

      The amount of Documentary Transfer Tax due on the attached deed is
$__________, computed on full value of the property conveyed.

                                            ABN AMRO LEASING, INC.,

                                            By:___________________________

                                            Its: ___________________________

                                     D(1)(A)-3
<PAGE>   312
                                  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 Facility 2
Purchase Agreement dated as of April 13, 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 13, 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>   313
      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 N.A. is entitled to rely and is relying on this
Certificate.

        EXECUTED as of ____________, _______.

                              [PURCHASER]

                               By:___________________________________

                                  Name:______________________________

                                  Title: ____________________________

                                     D(2)-2
<PAGE>   314
                                    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 _______________, San Jose, California,
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:  ________, ____              SELLER:

                                            ABN AMRO LEASING, INC.,

                                            By:___________________________

                                            Its:   ___________________________

                                            PURCHASER:

                                            [PURCHASER]
                                            a __________________________

                                            By:___________________________

                                            Its:   ___________________________

                                      E-1
<PAGE>   315
                                   SCHEDULE 1
                                    PROPERTY

                                     E(1)-2
<PAGE>   316
                                    EXHIBIT F

RECORDING REQUESTED BY
WHEN RECORDED RETURN TO
AND MAIL TAX STATEMENTS TO:

_________________________

_________________________

Attention:  _____________

Documentary Transfer Tax is not of public record and is shown on a separate
sheet attached to this deed.

______________________________________________________________________________

                                   GRANT DEED

      FOR VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged,
NOVELLUS SYSTEMS, INC., a California corporation ("Grantor"), hereby releases,
remises and forever grants to [PURCHASER] ("Grantee"), the real property located
in the City of San Jose, County of Santa Clara, State of California, described
on EXHIBIT A attached hereto and made a part hereof (the "Property").

               Executed as of __________, ____.

                                    NOVELLUS SYSTEMS, INC.,
                                    a California corporation

                                    By: _______________________________________

                                    Its:_______________________________________

                                      F-1
<PAGE>   317
                                    EXHIBIT A

                                LEGAL DESCRIPTION

Assessor's Parcel No.:  ____________________

                                     F(A)-1
<PAGE>   318
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.

                        ___________________________________

                                     F(A)-2
<PAGE>   319
                                ________, _______

Santa Clara County Recorder

           Re:   Request That Statement of Documentary
                 Transfer Tax Not be Recorded

Dear Sir:

      Request is hereby made in accordance with Section 11932 of the Revenue and
Taxation Code that this statement of tax due not be recorded with the attached
deed but be affixed to the deed after recordation and before return as directed
on the deed.

      The attached deed names NOVELLUS SYSTEMS, INC., a California corporation,
as grantor, and [PURCHASER], as grantee.

      The property being transferred and described in the attached deed is
located in the City of San Jose and County of Santa Clara, State of California.

      The amount of Documentary Transfer Tax due on the attached deed is
$__________, computed on full value of the property conveyed.

                                            NOVELLUS SYSTEMS, INC.,
                                            a __________________

                                            By: __________________________

                                            Its:__________________________

                                     F(A)-3
<PAGE>   320
                                    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 _______________, San Jose, California, 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 __________, ____.

                             SELLER:        Novellus Systems, Inc.,
                                            a California corporation

                                       By:_____________________________

                                      Its:_____________________________

                                      G-1
<PAGE>   321
                                   SCHEDULE 1
                                    PROPERTY

                                     G(1)-1

<PAGE>   322

  ============================================================================

                    FACILITY 2 CONSTRUCTION AGENCY AGREEMENT

                                     BETWEEN

                             NOVELLUS SYSTEMS, INC.

                                       AND

                             ABN AMRO LEASING, INC.

                                 APRIL 13, 2001

   ==========================================================================

<PAGE>   323

                                TABLE OF CONTENTS

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

         1.01.    Definitions....................................................................................     1
         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 and Other Construction Agreements.....................................     2
         3.02.    Modification to Construction Agreements........................................................     3
         3.03.    Permits, Approvals, Etc........................................................................     3
         3.04.    Material and Supplies..........................................................................     3
         3.05.    Construction...................................................................................     4
         3.06.    Insurance......................................................................................     6
         3.07.    Fees, Costs and Expenses.......................................................................     6
         3.08.    Books and Records..............................................................................     6
         3.09.    Additional Obligations and Duties..............................................................     7

SECTION 4.            MISCELLANEOUS..............................................................................     7

         4.01.    Notices........................................................................................     7
         4.02.    Waivers; Amendments............................................................................     7
         4.03.    Successors and Assigns.........................................................................     7
         4.04.    No Third Party Rights..........................................................................     7
         4.05.    Partial Invalidity.............................................................................     7
         4.06.    Governing Law..................................................................................     7
         4.07.    Counterparts...................................................................................     8
         4.08.    Nature of Lessee's Obligations.................................................................     8
</TABLE>

                                      -i-
<PAGE>   324

EXHIBITS

         A        Lessee's Completion Certificate (3.05(c))
         B        Architect's Completion Certificate (3.05(c))

<PAGE>   325

                    FACILITY 2 CONSTRUCTION AGENCY AGREEMENT

         THIS FACILITY 2 CONSTRUCTION AGENCY AGREEMENT (this "Agreement"
herein), dated as of April 13, 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 certain property designated by
         Lessee, (b) sublease such property to Lessee, (c) appoint Lessee as
         Lessor's agent to make certain improvements to such property, (d) make
         advances to finance such improvements and to pay certain related
         expenses and (e) grant to Lessee the right to purchase such parcels of
         property; 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, Lease Plan North America, Inc.
("Head Lessor"), 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>   326

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 Facility 2 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
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 to pay
any such fees, costs or expenses or otherwise impose upon any Lessor Party 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 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

                                       2
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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 Facility 2
         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 Facility 2 Commitment and (ii) the
         Expiration Date Appraisal for the Facility 2 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 Facility 2 Property to
         be less than the Expiration Date Appraisal for the Facility 2 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
applicable Land under 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

                                       3
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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 for each Tract of Land for which New Improvements are
         contemplated 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;

                                    (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;

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<PAGE>   329

                                    (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 Facility 2 Lease Agreement that Lessor is
                  terminating the Facility 2 Lease Agreement on a Termination
                  Date which is prior to the Scheduled Expiration Date of the
                  Facility 2 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 Facility 2 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 Facility 2 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 Facility 2 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

                                       5
<PAGE>   330

                  specified by Lessee in the notice delivered by Lessee to
                  Lessor pursuant clause (i); provided, however, that neither
                  the Termination Date nor the Outside Completion Date shall be
                  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 Facility 2 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 Facility 2
                  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 Facility 2 Lease Agreement.

                                       6
<PAGE>   331

         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 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 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

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<PAGE>   332

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.

         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 as
         and when required, without regard to any event or circumstances
         whatsoever,

                                       8
<PAGE>   333

         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>   334

         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>   335

                                    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 13, 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 Facility 2 Construction Agency Agreement, dated as of
         April 13, 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, 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 Schedule
         4.01(t) to 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 Facility 2 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 Facility 2 Construction Agency Agreement.

                  (d) The representations and warranties relating to the
         Property set forth in Subparagraph 4.01(t) of and Schedule 4.01(t) to
         the Participation Agreement and the

                                      A-1
<PAGE>   336

         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>   337

                                    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.

                                      B-1
<PAGE>   338

         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: __________________________

                                      B-2
<PAGE>   339

                                    EXHIBIT D

                    FACILITY 2 CONSTRUCTION AGENCY AGREEMENT

                                      D-1
<PAGE>   340

                                    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 13, 2001 (the "Participation Agreement"), among Novellus Systems, Inc.
("Lessee"), Lease Plan North America, Inc. ("Head Lessor"), 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"). 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 under Facility [_]
as follows:

                  (a) Such Advance shall be in the aggregate amount of
         $________[, of which amount, $__________ is for the Land Portion and
         $________ is for the Improvement Portion][insert and complete preceding
         bracketed clause if Advance is under Facility 1] ; and

                  (b) The date of such Advance shall be ____________, ____ (the
         "Advance Date").

[Add the following language for each of the Initial Advances: This Advance
Request is for the Initial Advance under Facility [_], and the Advance Date
shall be the Closing Date. Lessee hereby requests Lessor to enter into the
Facility [_] Head Lease Agreement on the Closing Date and to disburse to Head
Lessor such portion of the Initial Advance as is necessary to pay the rent
payable under the Facility [_] Head Lease Agreement 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

                                      E-1
<PAGE>   341

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:

                  (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:]

[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 Facility 2 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
Facility 2 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>   342

                                  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 13, 2001 (the "Participation Agreement"), among Novellus Systems, Inc.
("Lessee"), Lease Plan North America, Inc. ("Head Lessor"), 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"). 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>   343

         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>   344

                                  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 13, 2001 (the "Participation Agreement"), among Novellus Systems, Inc.
("Lessee") Lease Plan North America, Inc. ("Head Lessor"), 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"). 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>   345

         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>   346

                                    EXHIBIT G

                      ASSIGNMENT OF CONSTRUCTION AGREEMENTS

                                       G-1
<PAGE>   347

================================================================================

                      ASSIGNMENT OF CONSTRUCTION AGREEMENTS

                                       BY

                             NOVELLUS SYSTEMS, INC.

                                   IN FAVOR OF

                             ABN AMRO LEASING, INC.

                                 APRIL 13, 2001

================================================================================

<PAGE>   348

                     ASSIGNMENT OF CONSTRUCTION AGREEMENTS

        THIS ASSIGNMENT OF CONSTRUCTION AGREEMENTS (this "Agreement" herein),
dated as of April 13, 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 lease facilities pursuant to which:

               (1) Lessor would (a) lease from Head Lessor (as defined below)
        certain land, (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 facilities 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 13, 2001 (the
"Participation Agreement") among Lessee, Lease Plan North America, Inc. ("Head
Lessor"), 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 facilities upon the terms and subject to the conditions
set forth therein.

        C. One of the conditions to the effectiveness of the Participation
Agreement is the execution and delivery of this Agreement by the parties hereto
setting forth the terms of the assignment by Lessee to Lessor of certain
construction agreements and contracts.

                                    AGREEMENT

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

<PAGE>   349

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. 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 Facility
2 Land, 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

                                       2
<PAGE>   350

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 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 Facility 2 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.

                                       3
<PAGE>   351

        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.

        4.07. Termination. After the expiration of both Sublease Agreements 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>   352

        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>   353

                                    EXHIBIT A
                             CONSTRUCTION AGREEMENTS

                                      A-1
<PAGE>   354

                                    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 13, 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 the Construction
        Agreements 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>   355

               (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.
                                            135 South LaSalle Street, Suite 740
                                            Chicago, Illinois 60603
                                            Attn:  David M. Shipley

                                      B-2

<PAGE>   356

                                    EXHIBIT H

                                   [RESERVED]

                                       H-1
<PAGE>   357

                                    EXHIBIT I

                               ASSIGNMENT OF LEASE

                                       I-1
<PAGE>   358
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:

John Rivers, Esq.
Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California 94111

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                      ASSIGNMENT OF HEAD LEASE AGREEMENTS,
                               SUBLEASE AGREEMENTS
                             AND PURCHASE AGREEMENTS

                                       BY

                             ABN AMRO LEASING, INC.

                                   IN FAVOR OF

                               ABN AMRO BANK N.V.,
                                    AS AGENT

                                 April 13, 2001

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<PAGE>   359

          ASSIGNMENT OF HEAD LEASE AGREEMENTS, SUBLEASE AGREEMENTS AND
                               PURCHASE AGREEMENTS

        THIS ASSIGNMENT OF HEAD LEASE AGREEMENTS, SUBLEASE AGREEMENTS AND
PURCHASE AGREEMENTS (this "Assignment" herein), dated as of April 13, 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 essor 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 lease facilities pursuant to which:

           (1) Lessor would (a) lease from Head Lessor (as defined below)
        certain land currently leased 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 facilities 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 as of April 13, 2001 (the
"Participation Agreement") among Lessee, Lease Plan North America, Inc. ("Head
Lessor"), 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.

        C. One of the conditions to the effectiveness of the Participation
Agreement is the execution and delivery by the parties thereto of (1) the
Facility 1 Head Lease Agreement and the Facility 2 Head Lease Agreement, each
dated as of April 13, 2001, between Head Lessor and Lessor (collectively, the
"Head Lease Agreements"), pursuant to which Lessor has leased from Head Lessor
the lots, pieces, tracts and parcels of land described in Exhibit A (the "Land")
and the other property described in the Head Lease Agreements, (2) the Facility
1 Lease Agreement, Deed of Trust with Assignment of Rents, Security Agreement
and Fixture Filing and the Facility 2 Lease Agreement, Construction Deed of
Trust with Assignment of Rents, Security Agreement and Fixture Filing, each
dated as of April 13, 2001, between Lessee and Lessor (collectively, the

<PAGE>   360

"Sublease Agreements"), pursuant to which Lessor has subleased to Lessee the
Land and the other property described in the Sublease Agreements (the
"Property"), (3) the Facility 1 Purchase Agreement and the Facility 2 Purchase
Agreement, each dated as of April 13, 2001, between Lessee and Lessor
(collectively, the "Purchase Agreements"), pursuant to which Lessee may purchase
the Property from Lessor under certain circumstances, and (4) this Assignment.

        D. Lessee has consented to this Assignment and executed Lessee's Consent
to Assignment of Head Lease Agreements, Sublease Agreements and Purchase
Agreements in the form of Exhibit B hereto.

                                    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 each Head Lease
Agreement, each Sublease Agreement and each 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
or Head Lessor under the Head Lease Agreements, the Sublease Agreements and the
Purchase Agreements. 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 and Head Lessor, in making such payments to
Agent pursuant to the directions contained

                                       2
<PAGE>   361

in this Assignment and in reliance on such directions shall be deemed to have
satisfied its obligation for such payments under the Head Lease Agreements, the
Sublease Agreements or the Purchase Agreements, as applicable.

        2.03. Irrevocability; Supplemental Instruments. Lessor agrees that (a)
this Assignment is irrevocable, (b) Lessor will not take any action under the
Head Lease Agreements, the Sublease Agreements or the Purchase Agreements 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.

        2.04. 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
Head Lease Agreements, the Sublease Agreements or the Purchase Agreements 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 Head Lease Agreements,
the Sublease Agreements or the Purchase Agreements or (b) obligate Agent (or its
designee) or any Participant to perform any of the obligations of Lessor under
the Head Lease Agreements, the Sublease Agreements or the Purchase Agreements.
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 Head Lease Agreements, the Sublease
Agreements or the Purchase Agreements shall be amended, they 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 Sublease Agreements and the
Purchase Agreements, 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 Sublease Agreements, 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
California law to allow Agent to continue to collect the Rents and other amounts
payable by Lessee under the Sublease Agreements or the Purchase Agreements, 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 Sublease Agreements or
the Purchase

                                       3
<PAGE>   362

Agreements 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
California 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.

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.

        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>   363

        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>   364

                                    EXHIBIT A

                                      LAND

                                LEGAL DESCRIPTION

                       3940 NORTH FIRST STREET, 3950 NORTH FIRST STREET

                                  (FACILITY 1)

The land situated in the City of San Jose, County of Santa Clara, State of
California, and described as follows:

PARCEL ONE:

Parcel 2 as shown on that certain Parcel Map filed in the office of the Recorder
of the County of Santa Clara, State of California on August 18, 1983 in Book 516
of Maps, page(s) 34 and 35, Santa Clara County Records.

And, in addition thereto, the following area:

Beginning at the Southeasterly corner of said Parcel 2, thence North 52 degrees
27' 12" West, 409.24 feet along the common line of Parcel 1 and Parcel 2 as
shown on said Parcel Map to a common corner thereof; thence leaving said common
line, along the Southerly prolongation of a common line of said Parcels, South
19 degrees 40' 54" West, 32.25 feet; thence South 52 degrees 22' 44" East,
399.34 feet to a point on the Southeasterly line of said Parcel 1; thence North
37 degrees 32' 59" East, 31.22 feet along said Southeasterly line to the Point
of Beginning.

PARCEL ONE-A:

A non-exclusive easement for ingress and egress over PCL. 1, as said parcel is
shown on the Parcel Map recorded in Book 516 of Maps, at pages 34 and 35, Santa
Clara County Records, as granted in an instrument recorded May 23, 1985 in Book
J353, page 1565 and being more particularly described as follows:

                                     Strip 1

A strip of land 26.00 feet wide extending entirely across said PCL. 1 and lying
13.00 feet on each side of a line as follows:

Beginning at the Southerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
N. 52 degrees 27' 12" W., 34.00 feet to the true point of beginning of said
strip of land; thence N. 37 degrees 32' 59" E., 540.00 feet to the Northeasterly
line of said PCL. 1.

(LEGAL DESCRIPTION CONTINUED NEXT PAGE)

                                      A-1
<PAGE>   365

LEGAL DESCRIPTION:  (Continued)

                                     Strip 2

A strip of land 40.00 feet wide extending entirely across said PCL. 1 and lying
contiguous to and Southeasterly of a line described as follows:

Beginning at the most Southerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
N. 52 degrees 27' 12" W., 429.25 feet to the true point of beginning of said
strip of land; thence N. 37 degrees 32' 48" E., 600.00 feet to the Northeasterly
line of said PCL. 1; the Northerly terminus of said 40 foot wide strip of land
being the Northeasterly line of said PCL. 1.

                                     Strip 3

A strip of land 26.00 feet wide, extending Northeasterly from the Southwesterly
line of said PCL. 1 to the Northwesterly line of the above described and
designated Strip 2 and lying 13.00 feet on each side of a line described as
follows:

Beginning at the Westerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
S. 52 degrees 27' 12" E., 34.00 feet to the true point of beginning of said
strip of land; thence N. 37 degrees 32' 48" E. 566.00 feet; thence S. 52 degrees
27' 12" E., 355.25 feet to said Northwesterly line of said Strip 2.

                                     Strip 4

A strip of land 13.00 feet wide lying contiguous to and Northwesterly of the
Northwesterly line of the above described and designated Strip 2 and extending
Southwesterly from the Northeasterly line of said PCL. 1 approximately 21.00
feet to the Northeasterly line of the above described and designated Strip 3.

PARCEL ONE-B:

The right from time to time to construct, install, maintain, replace, remove,
and use storm drain sewers, together with a right of way therefor, over a
portion of PCL. 1 as said parcel is shown on the Parcel Map recorded in Book 516
of Maps, at pages 34 and 35, Santa Clara County Records, as granted in an
instrument recorded May 23, 1985 in Book J353, page 1565 and being more
particularly described as follows:

                                     Strip 1

A strip of land 10.00 feet wide extending entirely across said PCL. 1 and lying
5.00 feet on each side of a line described as follows:

Beginning at the most Westerly corner of said PCL. 1 said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
S. 52 degrees 27' 12" E., 402.75 feet to the true point of beginning of said
strip of land; thence along the centerline of a existing storm drain line the
following courses: thence N. 37 degrees 32' 48" E., 28.00 feet to a point herein
designated Point A; thence N. 52 degrees 27' 12" W., 278.00 feet; thence N. 00
degrees 51' 00" E., 198.30 feet; thence N. 37 degrees 32' 33" E., 279.75 feet;
thence S. 51 degrees 19' 51" E., 89.02 feet; thence N. 50 degrees 06' 47" E.,
133.18 feet; thence N. 37 degrees 32' 48" E., 5.00 feet to the Northeasterly
line of said PCL 1.

(LEGAL DESCRIPTION CONTINUED NEXT PAGE)

                                      A-2
<PAGE>   366

LEGAL DESCRIPTION:  (Continued)

                                     Strip 2

A strip of land 10 feet wide extending Northeasterly from the Northeasterly line
of the above described and designated Strip 1 and lying 5.00 feet on each side
of a line which begins at said Point A; thence along the centerline of an
existing storm drain line the following courses: thence N. 26 degrees 55' 37"
E., 154.65 feet; thence N. 32 degrees 55' 53" E., 96.31 feet; thence N. 43
degrees 21' 28" E., 113.58 feet; thence N. 54 degrees 44' 21" E., 105.72 feet to
a point herein designated as Point B; thence S. 41 degrees 57' 14" E., 65.85
feet; thence N. 37 degrees 32' 48" E., 62.00 feet to the Northeasterly line of
said PCL 2.

                                     Strip 3

A strip of land 5.00 feet wide lying contiguous to and Southwesterly of the
Northeasterly line of said PCL. 1 and extending Southeasterly from the
Southeasterly line of the above described and designated Strip 2 approximately
225 feet.

                                     Strip 4

A strip of land 10.00 feet wide extending Northeasterly from the Northeasterly
line of the above described and designated Strip 2 to the Northeasterly line of
said PCL. 1 and lying 5.00 feet on each side of a line that begins at said Point
B; thence along the centerline of an existing storm drain line N. 37 degrees 32'
48" E., 50.00 feet to the Northeasterly line of said PCL. 1.

PARCEL ONE-C:

The right from time to time to construct, install, inspect, maintain, replace,
remove and use any and all Public Service Facilities necessary or useful,
together with a right of way therefor, over a portion of PCL. 1 as said parcel
is shown on the Parcel Map recorded in Book 516 of Maps, at pages 34 and 35,
Santa Clara County Records, as granted in an instrument recorded May 23, 1985 in
Book J353, page 1565 and being more particularly described as follows:

                                     Strip 5

A strip of land 15.00 feet wide extending entirely across said PCL. 1 and lying
7.50 feet on each side of a line described as follows:

Beginning at the most Southerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
N. 52 degrees 27' 12" W., 60.50 feet to the true point of beginning of said
strip of land; thence N. 37 degrees 32' 59" E., 394.80 feet to a point herein
designated Point C; thence N. 37 degrees 32' 59" E., 105.20 feet; thence N. 7
degrees 27' 01" W., 56.57 feet to the Northeasterly line of said PCL. 1.

                                     Strip 6

A strip of land 15.00 feet wide extending Northerly from the Northerly line of
the above described and designated Strip 5 to the Northeasterly line of said
PCL. 1 and lying 7.5 feet on each side of a line that begins at said Point C;
thence N. 30 degrees 01' 00" E., 59.5 feet; thence N. 8 degrees 41' 00" E.,
98.44 feet to the Northeasterly line of said PCL. 1.

(LEGAL DESCRIPTION CONTINUED NEXT PAGE)

                                      A-3
<PAGE>   367

LEGAL DESCRIPTION:  (Continued)

                                     Strip 7

A strip of land 15.00 feet wide extending entirely across said PCL. 1 and lying
7.5 feet and each side of a line described as follows:

Beginning at the most Westerly corner of said PCL. 1 said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
S. 52 degrees 27' 12" E., 30.00 feet to the true point of beginning of said
strip of land; thence N. 37 degrees 32' 33" E., 600.00 feet to the Northeasterly
line of said PCL 1.

                                     Strip 8

That area located within those portions of PCL.1, of the Parcel Map mentioned
hereinabove, lying within the easements designated as "P.S.E.", as shown on said
Parcel Map.

PARCEL ONE-D:

A non-exclusive easement for Landscaping, Lighting and Irrigation Facilities
over PCL. 1, as said parcel is shown on the Parcel Map recorded in Book 516 of
Maps, at pages 34 and 35, Santa Clara County Records, as granted in an
instrument recorded May 23, 1985 in Book J353, page 1565 and being more
particularly described as follows:

A strip of land 10.00 feet wide extending Southeasterly from the Northwesterly
line of said PCL. 1 and PCL. 2 and lying 5.00 feet on each side of a line that
begins at the most Northerly corner of said PCL. 1 and runs thence along the
Northeasterly line of said PCL. 1, S. 52 degrees 27' 12" E. 375.00 feet.

Excepting therefrom that portion lying within the bounds of Parcel 2 mentioned
hereinabove.

APN: 097-79-004
ARB: 97-3-x4

                                      A-4
<PAGE>   368

                                LEGAL DESCRIPTION

                              90 HEADQUARTERS DRIVE

                                  (FACILITY 2)

The land situated in the City of San Jose, County of Santa Clara, State of
California, and described as follows:

Parcel 3, as shown on Parcel Map filed July 13, 1984 in Book 531 of Maps at
pages 41 and 42, Santa Clara County Records.

APN: 097-79-003
ARB: 097-03-005.02

                                      A-5
<PAGE>   369

                                    EXHIBIT B

            LESSEE'S CONSENT TO ASSIGNMENT OF HEAD LEASE AGREEMENTS,
                   SUBLEASE AGREEMENTS AND PURCHASE AGREEMENTS

                                     [Date]

ABN AMRO Leasing, Inc.
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 13, 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 Facility 1 Lease Agreement, Deed of Trust with Assignment
        of Rents, Security Agreement and Fixture Filing and the Facility 2 Lease
        Agreement, Construction Deed of Trust with Assignment of Rents, Security
        Agreement and Fixture Filing, each dated as of April 13, 2001
        (collectively, the "Sublease Agreements"), between Lessee and Lessor;

               (c) The Facility 1 Purchase Agreement and the Facility 2 Purchase
        Agreement, each dated as of April 13, 2001 (collectively, the "Purchase
        Agreements"), between Lessee and Lessor; and

               (d) The Assignment of Head Lease Agreements, Sublease Agreements
        and Purchase Agreements, dated as of April 13, 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 Sublease Agreements and
the Purchase Agreements in accordance with the terms thereof. Lessee will not,
for any reason whatsoever,

                                      B-1
<PAGE>   370

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 Agreements.

        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 Sublease Agreements,
        the Purchase Agreements or the Assignment of Lease; (ii) that any notice
        delivered or declaration made to Lessee by Agent (or its designee)
        pursuant to the Sublease Agreements or the Purchase Agreements 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 Sublease
        Agreements or the Purchase Agreements except as set forth in the
        Assignment of Lease; and (iv) that any waiver, consent or approval by
        Lessor under the Sublease Agreements or the Purchase Agreements shall
        not be valid unless approved in writing by Agent (or its designee).

               (b) Lessee agrees to remain obligated under the Sublease
        Agreements and the Purchase Agreements 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 Sublease
        Agreements, the Purchase Agreements 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 Sublease Agreements, which shall be
        effective for all purposes under the Sublease Agreements 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 Sublease Agreements
        and agrees that no such default shall entitle Lessee to terminate (other
        than in accordance with the terms of the Sublease Agreements), annul,
        rescind or avoid the Sublease Agreements, 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 accordance with the terms thereof) the Sublease
Agreements, the Purchase Agreements or this Consent without Agent's prior
written consent, and that any attempted subordination,

                                      B-2
<PAGE>   371

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 Sublease Agreements or the Purchase Agreements shall be
amended or supplemented as herein permitted, the Sublease Agreements or the
Purchase Agreements, 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
Sublease Agreements or the Purchase Agreements, 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 Sublease Agreements, the
Purchase Agreements 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>   372

        IN WITNESS WHEREOF, Lessee has executed this Consent on the date set
forth above.

LESSEE:                             NOVELLUS SYSTEMS, INC.

                                            By: _____________________________
                                                Name: _______________________
                                                Title: ______________________

                                      B-4
<PAGE>   373

                                    EXHIBIT J

                              LESSOR DEED OF TRUST

                                       J-1
<PAGE>   374

RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:

John Rivers, Esq.
Orrick, Herrington & Sutcliffe LLP
Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, California  94111

================================================================================

                           CONSTRUCTION DEED OF TRUST

                                       BY

                             ABN AMRO LEASING, INC.,
                                   AS TRUSTOR

                                       TO

                     FIRST AMERICAN TITLE INSURANCE COMPANY,
                                   AS TRUSTEE

                               FOR THE BENEFIT OF

                          ABN AMRO BANK N.V., AS AGENT,
                                 AS BENEFICIARY

                                 APRIL 13, 2001

                        Relating to Property situated in:
                        County of Santa Clara, California

================================================================================

THIS CONSTRUCTION DEED OF TRUST IS JUNIOR AND SUBORDINATE TO THAT CERTAIN
FACILITY 1 LEASE AGREEMENT, 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., AND THAT CERTAIN FACILITY 2 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>   375

                           CONSTRUCTION DEED OF TRUST

        THIS CONSTRUCTION DEED OF TRUST (this "Deed of Trust" herein), dated as
of April 13, 2001, is executed by:

                (1) ABN AMRO LEASING, INC., an Illinois corporation, as trustor
        ("Lessor") with an address at 135 South LaSalle Street, Suite 740,
        Chicago, IL 60603;

                                       to

                (2) FIRST AMERICAN TITLE INSURANCE 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, IL 60604, in its capacity as
        Agent, as beneficiary (in such capacity, "Agent"), under the
        Participation Agreement, dated as of April 13, 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 California
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 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

<PAGE>   376

(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 (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 (the "Secured Obligations"):

                (a) Full and punctual payment, performance and observance by
        Lessor of the Lessor Obligations; 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 the 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.

                (c) Lessor's chief executive office is located at 135 South
        LaSalle Street, Suite 740, Chicago, IL 60603.

                                       2
<PAGE>   377

        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 Agreements.

                (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 any
        conflict, the insurance and condemnation provisions as provided in the
        Lease Agreement shall govern.

                                       3
<PAGE>   378

        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 Agreements, 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 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.

                                       4
<PAGE>   379

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. Agent may apply to any court of
        competent jurisdiction for, and obtain appointment of, a receiver for
        the Property.

                (b) Specific Performance. Agent may 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. Agent may collect Issues
        and Profits.

                (d) Protection of Property. Agent may enter, take possession of,
        manage and operate all or any part of the Property or take any other
        actions which they reasonably determine 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. Agent may exercise any or
        all of the remedies granted to a secured party under the UCC.

                (f) Judicial Foreclosure. Agent may 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.

                                       5
<PAGE>   380

                (g) Power of Sale. Agent 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. Agent may dispose of any
                Personal Property Collateral separately from the sale of Real
                Property Collateral, in any manner permitted by Division 9 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 9505.

                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 pursuant to California
                Civil Code Sections 2924 et seq. 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 procedures
                applicable to real property, as permitted by Section 9501(4) of
                the UCC. Lessor agrees that such a sale of Personal Property
                Collateral together with Real Property Collateral constitutes a
                commercially reasonable sale of the Personal Property

                                       6
<PAGE>   381

                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 UCC Section 9501(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 Agent may deem
                        to be in its best interests (any such sale or
                        disposition, a "Foreclosure Sale;" any two or more,
                        "Foreclosure Sales").

                                       7
<PAGE>   382

                        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 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,

                                       8
<PAGE>   383

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.

        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.

                          [The signature page follows.]

                                       9
<PAGE>   384

        IN WITNESS WHEREOF, Lessor has executed this Construction Deed of Trust
as of the day and year set forth above.

                                       ABN AMRO LEASING, INC.

                                       By:
                                          --------------------------------------
                                          Name:
                                               ---------------------------------
                                          Title:
                                                --------------------------------

                     (ALL SIGNATURES MUST BE ACKNOWLEDGED)

                                       10
<PAGE>   385

STATE OF CALIFORNIA          )
                             )
COUNTY OF SAN FRANCISCO      )

        On April ____, 2001 before me, Mary K. Olson, 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>   386

                                    EXHIBIT A

                          LEGAL DESCRIPTION OF THE LAND

                                LEGAL DESCRIPTION

                3940 NORTH FIRST STREET, 3950 NORTH FIRST STREET

                                  (FACILITY 1)

The land situated in the City of San Jose, County of Santa Clara, State of
California, and described as follows:

PARCEL ONE:

Parcel 2 as shown on that certain Parcel Map filed in the office of the Recorder
of the County of Santa Clara, State of California on August 18, 1983 in Book 516
of Maps, page(s) 34 and 35, Santa Clara County Records.

And, in addition thereto, the following area:

Beginning at the Southeasterly corner of said Parcel 2, thence North 52~ 27' 12"
West, 409.24 feet along the common line of Parcel 1 and Parcel 2 as shown on
said Parcel Map to a common corner thereof; thence leaving said common line,
along the Southerly prolongation of a common line of said Parcels, South 19~ 40'
54" West, 32.25 feet; thence South 52~ 22' 44" East, 399.34 feet to a point on
the Southeasterly line of said Parcel 1; thence North 37~ 32' 59" East, 31.22
feet along said Southeasterly line to the Point of Beginning.

PARCEL ONE-A:

A non-exclusive easement for ingress and egress over PCL. 1, as said parcel is
shown on the Parcel Map recorded in Book 516 of Maps, at pages 34 and 35, Santa
Clara County Records, as granted in an instrument recorded May 23, 1985 in Book
J353, page 1565 and being more particularly described as follows:

                                     Strip 1

A strip of land 26.00 feet wide extending entirely across said PCL. 1 and lying
13.00 feet on each side of a line as follows:

Beginning at the Southerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
N. 52~ 27' 12" W., 34.00 feet to the true point of beginning of said strip of
land; thence N. 37~ 32' 59" E., 540.00 feet to the Northeasterly line of said
PCL. 1.

(LEGAL DESCRIPTION CONTINUED NEXT PAGE)

                                      A-1
<PAGE>   387

LEGAL DESCRIPTION: (Continued)

                                     Strip 2

A strip of land 40.00 feet wide extending entirely across said PCL. 1 and lying
contiguous to and Southeasterly of a line described as follows:

Beginning at the most Southerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
N. 52~ 27' 12" W., 429.25 feet to the true point of beginning of said strip of
land; thence N. 37~ 32' 48" E., 600.00 feet to the Northeasterly line of said
PCL. 1; the Northerly terminus of said 40 foot wide strip of land being the
Northeasterly line of said PCL. 1.

                                     Strip 3

A strip of land 26.00 feet wide, extending Northeasterly from the Southwesterly
line of said PCL. 1 to the Northwesterly line of the above described and
designated Strip 2 and lying 13.00 feet on each side of a line described as
follows:

Beginning at the Westerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
S. 52~ 27' 12" E., 34.00 feet to the true point of beginning of said strip of
land; thence N. 37~ 32' 48" E. 566.00 feet; thence S. 52~ 27' 12" E., 355.25
feet to said Northwesterly line of said Strip 2.

                                     Strip 4

A strip of land 13.00 feet wide lying contiguous to and Northwesterly of the
Northwesterly line of the above described and designated Strip 2 and extending
Southwesterly from the Northeasterly line of said PCL. 1 approximately 21.00
feet to the Northeasterly line of the above described and designated Strip 3.

PARCEL ONE-B:

The right from time to time to construct, install, maintain, replace, remove,
and use storm drain sewers, together with a right of way therefor, over a
portion of PCL. 1 as said parcel is shown on the Parcel Map recorded in Book 516
of Maps, at pages 34 and 35, Santa Clara County Records, as granted in an
instrument recorded May 23, 1985 in Book J353, page 1565 and being more
particularly described as follows:

                                     Strip 1

A strip of land 10.00 feet wide extending entirely across said PCL. 1 and lying
5.00 feet on each side of a line described as follows:

Beginning at the most Westerly corner of said PCL. 1 said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
S. 52~ 27' 12" E., 402.75 feet to the true point of beginning of said strip of
land; thence along the centerline of a existing storm drain line the following
courses: thence N. 37~ 32' 48" E., 28.00 feet to a point herein designated Point
A; thence N. 52~ 27' 12" W., 278.00 feet; thence N. 00~ 51' 00" E., 198.30 feet;
thence N. 37~ 32' 33" E., 279.75 feet; thence S. 51~ 19' 51" E., 89.02 feet;
thence N. 50~ 06' 47" E., 133.18 feet; thence N. 37~ 32' 48" E., 5.00 feet to
the Northeasterly line of said PCL 1.

(LEGAL DESCRIPTION CONTINUED NEXT PAGE)

                                      A-2
<PAGE>   388

LEGAL DESCRIPTION: (Continued)

                                     Strip 2

A strip of land 10 feet wide extending Northeasterly from the Northeasterly line
of the above described and designated Strip 1 and lying 5.00 feet on each side
of a line which begins at said Point A; thence along the centerline of an
existing storm drain line the following courses: thence N. 26~ 55' 37" E.,
154.65 feet; thence N. 32~ 55' 53" E., 96.31 feet; thence N. 43~ 21' 28" E.,
113.58 feet; thence N. 54~ 44' 21" E., 105.72 feet to a point herein designated
as Point B; thence S. 41~ 57' 14" E., 65.85 feet; thence N. 37~ 32' 48" E.,
62.00 feet to the Northeasterly line of said PCL 2.

                                    Strip 3

A strip of land 5.00 feet wide lying contiguous to and Southwesterly of the
Northeasterly line of said PCL. 1 and extending Southeasterly from the
Southeasterly line of the above described and designated Strip 2 approximately
225 feet.

                                     Strip 4

A strip of land 10.00 feet wide extending Northeasterly from the Northeasterly
line of the above described and designated Strip 2 to the Northeasterly line of
said PCL. 1 and lying 5.00 feet on each side of a line that begins at said Point
B; thence along the centerline of an existing storm drain line N. 37~ 32' 48"
E., 50.00 feet to the Northeasterly line of said PCL. 1.

PARCEL ONE-C:

The right from time to time to construct, install, inspect, maintain, replace,
remove and use any and all Public Service Facilities necessary or useful,
together with a right of way therefor, over a portion of PCL. 1 as said parcel
is shown on the Parcel Map recorded in Book 516 of Maps, at pages 34 and 35,
Santa Clara County Records, as granted in an instrument recorded May 23, 1985 in
Book J353, page 1565 and being more particularly described as follows:

                                     Strip 5

A strip of land 15.00 feet wide extending entirely across said PCL. 1 and lying
7.50 feet on each side of a line described as follows:

Beginning at the most Southerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
N. 52~ 27' 12" W., 60.50 feet to the true point of beginning of said strip of
land; thence N. 37~ 32' 59" E., 394.80 feet to a point herein designated Point
C; thence N. 37~ 32' 59" E., 105.20 feet; thence N. 7~ 27' 01" W., 56.57 feet to
the Northeasterly line of said PCL. 1.

                                     Strip 6

A strip of land 15.00 feet wide extending Northerly from the Northerly line of
the above described and designated Strip 5 to the Northeasterly line of said
PCL. 1 and lying 7.5 feet on each side of a line that begins at said Point C;
thence N. 30~ 01' 00" E., 59.5 feet; thence N. 8~ 41' 00" E., 98.44 feet to the
Northeasterly line of said PCL. 1.

(LEGAL DESCRIPTION CONTINUED NEXT PAGE)

                                      A-3
<PAGE>   389

LEGAL DESCRIPTION: (Continued)

                                     Strip 7

A strip of land 15.00 feet wide extending entirely across said PCL. 1 and lying
7.5 feet and each side of a line described as follows:

Beginning at the most Westerly corner of said PCL. 1 said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
S. 52~ 27' 12" E., 30.00 feet to the true point of beginning of said strip of
land; thence N. 37~ 32' 33" E., 600.00 feet to the Northeasterly line of said
PCL 1.

                                     Strip 8

That area located within those portions of PCL.1, of the Parcel Map mentioned
hereinabove, lying within the easements designated as "P.S.E.", as shown on said
Parcel Map.

PARCEL ONE-D:

A non-exclusive easement for Landscaping, Lighting and Irrigation Facilities
over PCL. 1, as said parcel is shown on the Parcel Map recorded in Book 516 of
Maps, at pages 34 and 35, Santa Clara County Records, as granted in an
instrument recorded May 23, 1985 in Book J353, page 1565 and being more
particularly described as follows:

A strip of land 10.00 feet wide extending Southeasterly from the Northwesterly
line of said PCL. 1 and PCL. 2 and lying 5.00 feet on each side of a line that
begins at the most Northerly corner of said PCL. 1 and runs thence along the
Northeasterly line of said PCL. 1, S. 52~ 27' 12" E. 375.00 feet.

Excepting therefrom that portion lying within the bounds of Parcel 2 mentioned
hereinabove.

APN: 097-79-004

ARB: 97-3-x4

                                      A-4
<PAGE>   390

                                LEGAL DESCRIPTION

                              90 HEADQUARTERS DRIVE

                                  (FACILITY 2)

The land situated in the City of San Jose, County of Santa Clara, State of
California, and described as follows:

Parcel 3, as shown on Parcel Map filed July 13, 1984 in Book 531 of Maps at
pages 41 and 42, Santa Clara County Records.

APN: 097-79-003

ARB: 097-03-005.02

                                      A-5
<PAGE>   391

                                    EXHIBIT B

                      RELATED GOODS, PERMITS AND AGREEMENTS

                                      NONE

<PAGE>   392

                                    EXHIBIT K

                            LESSOR SECURITY AGREEMENT

                                       K-1
<PAGE>   393
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                            LESSOR SECURITY AGREEMENT

                                       BY

                             ABN AMRO LEASING, INC.

                                   IN FAVOR OF

                               ABN AMRO BANK N.V.,
                                    AS AGENT

                                 APRIL 13, 2001

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<PAGE>   394

                            LESSOR SECURITY AGREEMENT

        THIS LESSOR SECURITY AGREEMENT (this "Agreement" herein), dated as of
April 13, 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 lease facilities pursuant to which:

               (1) Lessor would (a) lease from Head Lessor (as defined below)
        certain land, (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 facilities 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 13, 2001 (the
"Participation Agreement") among Lessee, Lease Plan North America, Inc. ("Head
Lessor"), Lessor, the Participants and Agent, Lessor and the Participants have
agreed to provide such facilities upon the terms and subject to the conditions
set forth therein.

        C. One of the conditions to the effectiveness of the Participation
Agreement is the execution and delivery of this Agreement by the parties hereto
setting forth the terms of the grant by Lessor to Agent of a security interest
in certain of Lessor's property.

                                    AGREEMENT

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

<PAGE>   395

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. 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).

                                       2
<PAGE>   396

               (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.

               (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 Agreements.

               (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,

                                       3
<PAGE>   397

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 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.

                                       4
<PAGE>   398

        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.

                          [The signature page follows.]

                                       5
<PAGE>   399

        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>   400

                                    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 13, 2001, among Novellus Systems, Inc. ("Lessee"),
Lease Plan North America, Inc. ("Head Lessor"), 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 under each Facility set forth under the captions
"Tranche Percentages and Proportionate Shares Assigned" opposite such Assignee
Participant's name on Part A of 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

                                       L-1
<PAGE>   401

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 under each Facility 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>   402

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

                                       L-3
<PAGE>   403

         terms thereof, together with such powers as are reasonably incidental
         thereto, all in accordance with Section VI of the Participation
         Agreement.

                  (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 under each Facility as set forth under the caption "Tranche
Percentages and Proportionate Shares 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 under each Facility as set forth under the
caption "Tranche Percentages and Proportionate Shares 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>   404

         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>   405

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>   406

                                  ATTACHMENT 1

                             TO ASSIGNMENT AGREEMENT

 PART A(1) - TRANCHE PERCENTAGES AND PROPORTIONATE SHARES FOR LAND PORTION UNDER
                                   FACILITY 1

<TABLE>
<CAPTION>
                                                     Tranche Percentages and
                                                  Proportionate Shares Assigned
                              -------------------------------------------------------------------
                                 Tranche A         Tranche B        Tranche C       Proportionate
                                 Percentage       Percentage        Percentage          Share
                                 ----------       ----------        ----------          -----
<S>                           <C>               <C>              <C>               <C>
Assignor Participant:
--------------------
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
Assignee Participants:
---------------------
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
</TABLE>

<TABLE>
<CAPTION>
                                                      Tranche Percentages and
                                               Proportionate Shares After Assignment
                                -------------------------------------------------------------------------
                                    Tranche A          Tranche B          Tranche C         Proportionate
                                    Percentage        Percentage         Percentage             Share
                                    ----------        ----------         ----------             -----
<S>                             <C>                 <C>              <C>                  <C>
Assignor Participant:
--------------------
---------                       --. -------%        --. -------%     --. --------%        --. --------%
---------                       --. -------%        --. -------%     --. --------%        --. --------%
---------                       --. -------%        --. -------%     --. --------%        --. --------%
Assignee Participants:
---------------------
---------                       --. -------%        --. -------%     --. --------%        --. --------%
---------                       --. -------%        --. -------%     --. --------%        --. --------%
---------                       --. -------%        --. -------%     --. --------%        --. --------%
---------                       --. -------%        --. -------%     --. --------%        --. --------%
</TABLE>

                                                  L(1)-1

<PAGE>   407

                                  ATTACHMENT 1

                             TO ASSIGNMENT AGREEMENT

PART A(2) - TRANCHE PERCENTAGES AND PROPORTIONATE SHARES FOR IMPROVEMENT PORTION
                                UNDER FACILITY 1

<TABLE>
<CAPTION>
                                                     Tranche Percentages and
                                                  Proportionate Shares Assigned
                              -------------------------------------------------------------------
                                 Tranche A         Tranche B        Tranche C       Proportionate
                                 Percentage       Percentage        Percentage          Share
                                 ----------       ----------        ----------          -----
<S>                           <C>               <C>              <C>               <C>
Assignor Participant:
--------------------
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
Assignee Participants:
---------------------
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
</TABLE>

<TABLE>
<CAPTION>
                                                        Tranche Percentages and
                                                 Proportionate Shares After Assignment
                                  -------------------------------------------------------------------------
                                      Tranche A          Tranche B          Tranche C         Proportionate
                                      Percentage        Percentage         Percentage             Share
                                      ----------        ----------         ----------             -----
<S>                               <C>                 <C>              <C>                  <C>
Assignor Participant:
--------------------
---------                         --. -------%        --. -------%     --. --------%        --. --------%
---------                         --. -------%        --. -------%     --. --------%        --. --------%
---------                         --. -------%        --. -------%     --. --------%        --. --------%
Assignee Participants:
---------------------
---------                         --. -------%        --. -------%     --. --------%        --. --------%
---------                         --. -------%        --. -------%     --. --------%        --. --------%
---------                         --. -------%        --. -------%     --. --------%        --. --------%
---------                         --. -------%        --. -------%     --. --------%        --. --------%
</TABLE>

                                                  L(1)-2
<PAGE>   408

                                  ATTACHMENT 1

                             TO ASSIGNMENT AGREEMENT

PART A(3) - TRANCHE PERCENTAGES AND PROPORTIONATE SHARES UNDER FACILITY 2 PRIOR
                               TO COMPLETION DATE

<TABLE>
<CAPTION>
                                                     Tranche Percentages and
                                                  Proportionate Shares Assigned
                              -------------------------------------------------------------------
                                 Tranche A         Tranche B        Tranche C       Proportionate
                                 Percentage       Percentage        Percentage          Share
                                 ----------       ----------        ----------          -----
<S>                           <C>               <C>              <C>               <C>
Assignor Participant:
--------------------
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
Assignee Participants:
---------------------
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
</TABLE>

<TABLE>
<CAPTION>
                                                         Tranche Percentages and
                                                  Proportionate Shares After Assignment
                                   -------------------------------------------------------------------------
                                       Tranche A          Tranche B          Tranche C         Proportionate
                                       Percentage        Percentage         Percentage             Share
                                       ----------        ----------         ----------             -----
<S>                                <C>                 <C>              <C>                  <C>
Assignor Participant:
--------------------
---------                          --. -------%        --. -------%     --. --------%        --. --------%
---------                          --. -------%        --. -------%     --. --------%        --. --------%
---------                          --. -------%        --. -------%     --. --------%        --. --------%
Assignee Participants:
---------------------
---------                          --. -------%        --. -------%     --. --------%        --. --------%
---------                          --. -------%        --. -------%     --. --------%        --. --------%
---------                          --. -------%        --. -------%     --. --------%        --. --------%
---------                          --. -------%        --. -------%     --. --------%        --. --------%
</TABLE>

                                                  L(1)-3

<PAGE>   409

                                  ATTACHMENT 1

                             TO ASSIGNMENT AGREEMENT

  PART A(4) - TRANCHE PERCENTAGES AND PROPORTIONATE SHARES UNDER FACILITY 2 ON
                           AND AFTER COMPLETION DATE

<TABLE>
<CAPTION>
                                                     Tranche Percentages and
                                                  Proportionate Shares Assigned
                                 ----------------------------------------------------------------
                                 Tranche A         Tranche B        Tranche C       Proportionate
                                 Percentage       Percentage        Percentage          Share
                                 ----------       ----------        ----------          -----
<S>                           <C>               <C>              <C>               <C>
Assignor Participant:
--------------------
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
Assignee Participants:
---------------------
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
---------                     --. -------%      --. -------%     --. -------%      --. -------%
</TABLE>

<TABLE>
<CAPTION>
                                                       Tranche Percentages and
                                                Proportionate Shares After Assignment
                                     ---------------------------------------------------------------------
                                     Tranche A          Tranche B          Tranche C         Proportionate
                                     Percentage        Percentage         Percentage             Share
                                     ----------        ----------         ----------             -----
<S>                              <C>                 <C>              <C>                  <C>
Assignor Participant:
--------------------
---------                        --. -------%        --. -------%     --. --------%        --. --------%
---------                        --. -------%        --. -------%     --. --------%        --. --------%
---------                        --. -------%        --. -------%     --. --------%        --. --------%
Assignee Participants:
---------------------
---------                        --. -------%        --. -------%     --. --------%        --. --------%
---------                        --. -------%        --. -------%     --. --------%        --. --------%
---------                        --. -------%        --. -------%     --. --------%        --. --------%
---------                        --. -------%        --. -------%     --. --------%        --. --------%
</TABLE>

                                                  L(1)-4
<PAGE>   410

                                     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)-5
<PAGE>   411

                  PART C

ASSIGNMENT EFFECTIVE DATE  ________, ____

                                     L(1)-6
<PAGE>   412

                                  ATTACHMENT 2
                             TO ASSIGNMENT AGREEMENT

                                     FORM OF
                           ASSIGNMENT EFFECTIVE NOTICE

         Reference is made to the Participation Agreement, dated as of April 13,
2001, among Novellus Systems, Inc. ("Lessee"), Lease Plan North America, Inc.
("Head Lessor"), ABN AMRO Leasing, Inc. ("Lessor"), the institutions 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>   413

                                  EXHIBIT M(1)

                         FACILITY 1 HEAD LEASE AGREEMENT

                                     M(1)-1
<PAGE>   414

================================================================================

                         FACILITY 1 HEAD LEASE AGREEMENT

                                     BETWEEN

                         LEASE PLAN NORTH AMERICA, INC.

                                       AND

                             ABN AMRO LEASING, INC.

                                 APRIL 13, 2001

================================================================================
<PAGE>   415

                                TABLE OF CONTENTS

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

        1.01.  Definitions..................................................................1

        1.02.  Rules of Construction........................................................1

SECTION 2.     BASIC PROVISIONS.............................................................2

        2.01.  Lease of the Property........................................................2

        2.02.  Term.........................................................................2

        2.03.  Rent.........................................................................2

        2.04.  Use..........................................................................2

        2.05.  Title; Quiet Enjoyment.......................................................2

SECTION 3.     OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS...............................3

        3.01.  Maintenance, Repair, Etc. ...................................................3

        3.02.  Risk of Loss.................................................................3

        3.03.  Insurance....................................................................3

        3.04.  Casualty and Condemnation....................................................3

        3.05.  Property Taxes and Other Governmental Charges................................4

        3.06.  Liens, Easements, Etc........................................................4

        3.07.  Leasehold Mortgages..........................................................4

        3.08.  Assignments and Subletting...................................................5

        3.09.  Utility Charges..............................................................5

        3.10.  Removal of Property..........................................................5

        3.11.  Estoppel Certificates........................................................5

        3.12.  Recordation of Agreement.....................................................6

SECTION 4.     TERMINATION..................................................................6

        4.01.  Termination Date.............................................................6

        4.02.  Surrender of Facility 1 Property.............................................6

SECTION 5.     DEFAULT......................................................................6

        5.01.  Head Lease Events of Default.................................................6

        5.02.  Remedies.....................................................................7

        5.03.  Limited Recourse.............................................................7
</TABLE>

                                      -i-
<PAGE>   416

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                          PAGE
<S>            <C>                                                                        <C>
SECTION 6.     PURCHASE OPTION..............................................................7

        6.01.  Grant of Option..............................................................7

        6.02.  Terms........................................................................7

SECTION 7.     MISCELLANEOUS................................................................8

        7.01.  Notices......................................................................8

        7.02.  Waivers; Amendments..........................................................8

        7.03.  Successors and Assigns.......................................................8

        7.04.  No Third Party Rights........................................................9

        7.05.  Partial Invalidity...........................................................9

        7.06.  Governing Law................................................................9

        7.07.  Counterparts.................................................................9
</TABLE>

                                      -ii-
<PAGE>   417

                         FACILITY 1 HEAD LEASE AGREEMENT

        THIS FACILITY 1 HEAD LEASE AGREEMENT (this "Agreement" herein), dated as
of April 13, 2001 is entered into by and between:

               (1)    LEASE PLAN NORTH AMERICA, INC., an Illinois corporation
        ("Head Lessor"); and

               (2)    ABN AMRO LEASING, INC., an Illinois corporation ("Head
        Lessee").

                                    RECITALS

        A.     Pursuant to a Participation Agreement dated as of June 6, 1997
(the "Original Participation Agreement") among Novellus Systems, Inc.
("Lessee"), Head Lessor, the Participants thereto and AMRO Bank N.V., as agent
for such Participants, Head Lessor acquired certain property and leased such
property to Lessee pursuant to two Lease Agreements dated as of June 9, 1997
between Lessee and Head Lessor (the "Original Lease Agreements").

        B.     Pursuant to a Participation Agreement dated as of August 31, 1998
(as amended, the "Novellus I Participation Agreement") among Lessee, Head
Lessor, Head Lessee, the Participants thereto and AMRO Bank N.V., as agent for
such Participants, (1) Head Lessor and Lessee terminated the Original Lease
Agreements and (2) Head Lessor leased the property to Head Lessee pursuant to
(a) a Facility 1 Head Lease Agreement dated as of August 31, 1998 between Head
Lessor and Head Lessee and (b) a Facility 2 Head Lease Agreement dated as of
August 31, 1998 between Head Lessor and Head Lessee (the "Novellus I Facility 2
Head Lease Agreement").

        C.     Pursuant to a Participation Agreement dated as of April 13, 2001
(the "Participation Agreement") among Lessee, Head Lessor, Head Lessee, the
Participants thereto and AMRO Bank N.V., as agent for such Participants (in such
capacity, "Agent"), (1) Head Lessor and Head Lessee have agreed to remove
certain property from the Novellus I Facility 2 Head Lease Agreement and (2)
Head Lessor has agreed to lease such removed property to Head Lessee pursuant to
this agreement and a Facility 2 Head Lease Agreement of even date herewith.

                                    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 that

<PAGE>   418

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, Head Lessor agrees to
lease to Head Lessee and Head Lessee agrees to lease from Head Lessor the
following property (the "Facility 1 Property") to the extent of Head 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 "Facility 1 Land");

               (b)    All Improvements to the Facility 1 Land;

               (c)    All Appurtenant Rights belonging, relating or pertaining
        to the Facility 1 Land or the Improvements thereto;

               (d)    All Related Goods (including those described in Exhibit
        B), Related Permits and Related Agreements related to the Facility 1
        Land or any of the foregoing Improvements or Appurtenant Rights; and

               (e)    All accessions and accretions to and replacements and
        substitutions for the foregoing.

        2.02.  Term. The original term of this Agreement shall commence on the
Closing Date (the "Head Lease Commencement Date") and shall end on the first
Business Day of April 2035 (the "Head Lease Scheduled Expiration Date"), subject
to the terms of Subparagraph 4.01(a) below.

        2.03.  Rent. Head Lessor hereby acknowledges that it has already been
paid in full for the rent hereunder for the entire term of this Agreement in
connection with the Novellus I Facility 2 Head Lease Agreement.

        2.04.  Use. Head Lessee may use the Facility 1 Property for any lawful
purpose.

        2.05.  Title; Quiet Enjoyment.

               (a)    Title. Head Lessor represents and warrants to Head Lessee
        that, except as contemplated by the Existing Participation Agreement,
        Head Lessor has not previously sold, leased, transferred or otherwise
        disposed of any right, title or interest of Head Lessor in the Facility
        1 Property. Head Lessor shall not sell, lease, transfer or otherwise
        dispose

                                       2
<PAGE>   419

        of its right, title and interest in the Facility 1 Property or this
        Agreement prior to the Head Lease Expiration Date.

               (b)    No Merger. The leasehold estate in the Facility 1 Property
        created by this Agreement shall not be merged with the fee estate or any
        other interest in the Facility 1 Property as a result of the same Person
        acquiring, owning or holding, directly or indirectly, in whole or in
        part, (i) the leasehold estate in the Facility 1 Property created hereby
        or any interest in such leasehold estate and (ii) the fee estate in the
        Facility 1 Property or any interest in such fee estate, unless all
        parties with an interest in the Facility 1 Property that would be
        adversely affected by any such merger specifically agree in writing that
        such a merger shall occur.

               (c)    Quiet Enjoyment. Neither Head Lessor nor any other Person
        lawfully claiming any right or interest in the Facility 1 Property
        through Head Lessor shall, prior to the Head Lease Expiration Date,
        disturb Head Lessee's peaceable and quiet enjoyment of the Facility 1
        Property; provided, however, that such enjoyment shall be subject to the
        terms of this Agreement.

SECTION 3. OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS.

        3.01.  Maintenance, Repair, Etc. Head Lessee, at its sole cost and
expense, may from time to time make alterations, renovations, additions and
other Improvements to the Facility 1 Property and substitutions and replacements
therefor.

        3.02.  Risk of Loss. Head Lessee 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 Facility 1 Property, except that Head Lessor assumes such
risks of loss and such liability to the extent any such loss or liability is
primarily caused by the gross negligence or willful misconduct of Head Lessor.

        3.03.  Insurance. Until the Expiration Date of the Facility 1 Lease
Agreement, Head Lessee shall cause to be carried and maintained liability
insurance coverage for the Facility 1 Property as provided in Paragraph 3.03 of
the Facility 1 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. Head Lessor hereby absolutely and
irrevocably assigns to Head Lessee all Casualty and Condemnation Proceeds and
all claims relating thereto. Head Lessor agrees that all Casualty and
Condemnation Proceeds are to be paid to Head Lessee and Head Lessor 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 Head Lessee alone, and not to Head Lessor and Head Lessee
jointly. If Head Lessor receives any Casualty and Condemnation Proceeds payable
to Head Lessee hereunder, Head Lessor shall promptly pay over such Casualty and
Condemnation Proceeds to Head Lessee. Head Lessor hereby covenants that until
such Casualty and Condemnation Proceeds are so paid

                                       3
<PAGE>   420

over to Head Lessee, Head Lessor shall hold such Casualty and Condemnation
Proceeds in trust for the benefit of Head Lessee and shall not commingle such
Casualty and Condemnation Proceeds with any other funds or assets of Head Lessor
or any other Person. Head Lessee 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 Head Lessee, but shall not be
responsible for any failure to collect any such right, claim or action,
regardless of the cause of the failure.

        3.05.  Property Taxes and Other Governmental Charges. Head Lessee shall
pay or cause to be paid all taxes and other Governmental Charges imposed on or
payable by Head Lessee in connection with the Facility 1 Property, this
Agreement or any of the transactions contemplated hereby or thereby.

        3.06.  Liens, Easements, Etc. During the term of this Agreement, Head
Lessor shall not create, incur, assume or permit to exist any Lien or easement
on or with respect to any of the Facility 1 Property of any character, whether
now owned or hereafter acquired, without the prior written approval of Head
Lessee. During the term of this Agreement, and provided a Head Lease Event of
Default has not occurred and is continuing, Head Lessor agrees that Head Lessee
may, and Head Lessor hereby consents in each instance to the following actions
by Head Lessee for the following purposes, but at Head Lessee's sole cost and
expense: (a) the granting of licenses and other rights and privileges reasonably
necessary or desirable for the use, repair, or maintenance of the Facility 1
Property; (b) the release of existing easements or other rights in the nature of
easements which are for the benefit of the Facility 1 Property; (c) the seeking
of any zoning variances or modifications to existing zoning; and (d) the
imposition of and the execution of amendments to, or waivers or releases of any
covenants, easements, licenses, and restrictions affecting the Facility 1
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 Facility 1 Property or materially and adversely
affect Head 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 Facility 1 Property, (3)
such grant, release, dedication, transfer or amendment will not cause the
Facility 1 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) Head Lessee shall remain obligated under this Agreement as
though such grant, release, dedication, transfer or amendment had not been
effected, and (6) Head Lessee shall pay and perform any obligations of Head
Lessor under such grant, release, dedication, transfer or amendment. Head Lessor
shall, upon the request of Head Lessee, and at Head 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 3.06.

                                       4
<PAGE>   421

        3.07.  Leasehold Mortgages.

               (a)    Head Lessor hereby consents to the transactions
        contemplated by the Participation Agreement, including all Liens granted
        to Agent, as security for the Lessor Obligations, in the Facility 1
        Property, this Agreement or any of the other Operative Documents. After
        the Expiration Date of the Facility 1 Lease Agreement, Head Lessee may,
        as security for any indebtedness of Head Lessee, grant to any holder of
        such indebtedness a Lien in its leasehold interest in the Facility 1
        Property (any such Liens, together with the Liens granted to Agent
        pursuant to the Operative Documents, to be referred to herein as
        "Leasehold Mortgages").

               (b)    Any Person may become the legal owner and holder of the
        leasehold interest in the Facility 1 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 Head Lessee hereunder with the rights and
        obligations thereof.

               (c)    Head Lessor shall notify each holder of a Leasehold
        Mortgage (a "Leasehold Mortgagee") of any default by Head Lessee
        hereunder. No notice of a default by Head 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 Head Lessee under this Agreement
        to correct or cure defaults, plus an additional period of thirty (30)
        days thereafter. Head Lessor will accept performance by any Leasehold
        Mortgagee of any covenant, condition or agreement on Head Lessee's part
        to be performed hereunder with the same force and effect as though
        performed by Head Lessee.

               (d)    If this Agreement should terminate by reason of a
        disaffirmance or rejection of this Agreement by Head Lessee or any
        receiver, liquidator or trustee for the property of Head Lessee, or by
        any Governmental Authority that has taken possession of the business or
        property of Head Lessee by reason of the insolvency or alleged
        insolvency of Head Lessee, then:

                      (i)    Head Lessor shall give notice thereof to each
               Leasehold Mortgagee and, upon request of any Leasehold Mortgagee
               made within sixty (60) days after Head Lessor has given such
               notice, Head Lessor shall enter into a new lease of the Facility
               1 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
               Head Lessor to enter into a new lease, Head Lessor shall enter
               into such a new lease with the requesting Leasehold Mortgagee
               holding the highest priority Leasehold Mortgage. If two or more
               requesting Leasehold Mortgagees share the highest priority, the
               new lease shall name all such Leasehold Mortgagees as co-tenants
               thereunder.)

                      (ii)   The estate of any Leasehold Mortgagee, as lessee
               under such a new lease, shall have the same priority as the
               estate of Head Lessee created under this

                                       5
<PAGE>   422

               Agreement. If the Facility 1 Lease Agreement or Facility 1
               Purchase Agreement are in effect at the time of execution of such
               new lease, such new lease shall be made subject to Lessee's
               rights under the Facility 1 Lease Agreement and the Facility 1
               Purchase Agreement.

               (e)    No modification or early termination of this Agreement
        shall be effective without the consent of a Leasehold Mortgagee if (A)
        Head 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) Head Lessor has been notified of such agreement.

               (f)    No Leasehold Mortgagee will assume any liability under
        this Agreement either by virtue of its Leasehold Mortgage or by any
        subsequent receipt or collection of rents or profits generated from the
        Facility 1 Property, unless and until the Leasehold Mortgagee acquires
        Head Lessee's leasehold interest in the Facility 1 Property at
        foreclosure or by deed in lieu of foreclosure.

        3.08.  Assignments and Subletting. Head Lessee may sublease the
Facility 1 Property and sell or assign its rights under this Agreement at any
time during the term of this Agreement.

        3.09.  Utility Charges. Head Lessee shall pay or cause to be paid 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
Facility 1 Property during the term of this Agreement.

        3.10.  Removal of Property. All Improvements to the Facility 1 Property
and all other Property (other than the Facility 1 Land) may be removed by Head
Lessee at any time at or prior to the termination of this Agreement.

        3.11.  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 this Agreement is unmodified and in full force
and effect, and any other matters that may reasonably be requested.

        3.12.  Recordation of Agreement. Neither Head Lessor nor Head 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, Head Lessee shall promptly execute, acknowledge and deliver to
Head Lessor any quitclaim deed or other document required by Head Lessor or a
title company to evidence the termination of Head Lessee's interests in the
Facility 1 Property.

                                       6
<PAGE>   423

SECTION 4. TERMINATION.

        4.01.  Termination Date.

               (a)    Early Termination. This Agreement shall continue in full
        force and effect until the Head Lease Scheduled Expiration Date, except
        that Head Lessee may terminate this Agreement at any time upon one (1)
        month's prior written notice to Head Lessor; provided, however, in no
        event shall Head Lessee exercise the right of termination prior to the
        Expiration Date of the Facility 1 Lease Agreement unless an Event of
        Default has occurred and is continuing under the Facility 1 Lease
        Agreement and Lessee's right to remain in possession is terminated.

               (b)    No Other Early Termination Date. Except as provided in
        Subparagraph 4.01(a), this Agreement shall not terminate prior to the
        Head Lease Scheduled Expiration Date for any reason including, without
        limitation, (i) any Casualty to or Condemnation of all or any part of
        the Facility 1 Property, (ii) the occurrence of any Head Lease Event of
        Default or any other default by Head 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
        Head 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 Head Lessor hereunder shall be separate and independent
        of the covenants and agreements of Head Lessee.

        4.02.  Surrender of Facility 1 Property. Unless Head Lessee (or an
assignee of Head Lessee) purchases the Facility 1 Property prior thereto, Head
Lessee shall vacate and surrender the Facility 1 Property to Head Lessor in its
then-current condition on the date (the "Head Lease Expiration Date") that is
the earlier of (a) the Head Lease Scheduled Expiration Date and (b) any earlier
date on which this Agreement is terminated pursuant to Subparagraph 4.01(a).

SECTION 5. DEFAULT.

        5.01.  Head Lease Events of Default. The occurrence or existence of any
one or more of the following shall constitute a "Head Lease Event of Default"
hereunder:

               (a)    Non-Payment. Head Lessee shall fail to pay the rent
        payable hereunder within sixty (60) days after the Head Lease
        Commencement Date; or

               (b)    Other Defaults. Head 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 Head 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 Head 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
        Head

                                       7
<PAGE>   424

        Lease Scheduled Expiration Date and (ii) one hundred and eighty days
        (180) days after Head Lessor's notice thereof.

        5.02.  Remedies. Upon the occurrence or existence of any Head Lease
Event of Default and at any time thereafter unless such Head Lease Event of
Default is waived, Head Lessor may sue Head Lessee for the collection of any
amount due under this Agreement or to enjoin the continuation of the Head Lease
Event of Default; provided, however, that such remedies are the sole and
exclusive remedies of Head Lessor hereunder. Head Lessor may not terminate this
Agreement or Head Lessee's right to possession under this Agreement except as
expressly provided herein.

        5.03.  Limited Recourse. Neither a Head 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 Head Lessee under this
Agreement. Any judgment which Head Lessor may obtain against a Head Lessee that
is a Lessor Party for amounts due under this Agreement may be collected only
through resort to a judgment lien against Head Lessee's interest in the
Facility 1 Property.

SECTION 6. PURCHASE OPTION.

        6.01.  Grant of Options

               (a)    All of the Property. Head Lessor hereby grants to Head
        Lessee (or its assignee) the right to purchase all of the Facility 1
        Property at any time upon one (1) month's prior written notice following
        the occurrence of any one of the following events:

                      (i)    Lessee exercises the Term Purchase Option, the
               Expiration Date Purchase Option or the Marketing Option pursuant
               to the Facility 1 Purchase Agreement; or

                      (ii)   An Event of Default occurs under the Facility 1
               Lease Agreement.

        Head Lessee (or its assignee) shall pay a purchase price for the
        Facility 1 Property under this Subparagraph 6.01(a) in an amount of
        $1,000.00 (the "Head Lease Option Price").

               (b)    Partial Purchase. Head Lessor hereby grants to Head Lessee
        (or its assignee) the right to purchase a portion of the Facility 1
        Property at any time upon one (1) months' prior written notice following
        any exercise by Lessee of the Partial Purchase Option pursuant to the
        Facility 1 Purchase Agreement. If Head Lessee exercises the purchase
        option under this Subparagraph 6.01(b), (i) Head Lessee may purchase the
        portion of the Facility 1 Property for which Lessee is exercising the
        Partial Purchase Option and (ii) Head Lessee shall pay a purchase price
        for such portion in an amount (the "Head Lease Partial Purchase Option
        Price") equal to the product of (A) $1,000.00 times (B) a fraction, the
        numerator of which is the amount to be paid by Lessee for such portion
        under the Facility 1 Purchase Agreement and the denominator of which is
        the Outstanding Lease Amount under Facility 1 immediately prior to such
        payment.

                                       8
<PAGE>   425

        6.02.  Terms.

               (a)    Upon Head Lessee's (or its assignee's) tender of the Head
        Lease Option Price or the Head Lease Partial Purchase Option Price, as
        the case may be, to Head Lessor, Head Lessor will convey and assign good
        and marketable title to the Facility 1 Property or the applicable
        portion thereof, as the case may be, to Head Lessee (or its assignee)
        subject only to the Permitted Property Liens of the types described in
        clauses (i), (ii), (iii) and (v) of Subparagraph 3.07(a) of the Facility
        1 Lease Agreement.

               (b)    Head Lessee's (or its assignee's) obligation to close the
        purchase shall be subject to the following terms and conditions, all of
        which are for the benefit of Head Lessee (or its assignee):

                      (i)    Head Lessee (or its assignee) shall have been
               furnished with evidence satisfactory to Head Lessee (or its
               assignee) that Head Lessor can convey title as required by the
               preceding subparagraph.

                      (ii)   Nothing shall have occurred or been discovered
               after Head Lessee exercised the Head Lease Purchase Option that
               could adversely affect the title to or value of the Facility 1
               Property or the applicable portion thereof, as the case may be,
               or the Head Lessee's (or its assignee's) use thereof.

SECTION 7. MISCELLANEOUS.

        7.01.  Notices. Except as otherwise specified herein, (a) all notices,
requests, demands, consents, instructions or other communications to or upon
Head Lessee or Head Lessor under this Agreement given on or prior to the
Expiration Date of the Facility 1 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 Head Lessee or Head Lessor under this Agreement given after the
Expiration Date of the Facility 1 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 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.

        7.02.  Waivers; Amendments. Until the Expiration Date of the Facility 1
Lease Agreement and the satisfaction in full of all Lessee Obligations or, if
earlier, the date on which Head 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 Head Lessor and Head
Lessee.

                                       9
<PAGE>   426

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.

        7.03.  Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Head Lessor and Head Lessee and their permitted
successors and assigns; provided, however, that Head Lessor and Head Lessee
shall not sell, assign or delegate their respective rights and obligations
hereunder except as provided in this Agreement or the Participation Agreement.

        7.04.  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 Head Lessor, Head Lessee and the Lessor Parties 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.

        7.05.  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.

        7.06.  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.

        7.07.  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.]

                                       10
<PAGE>   427

        IN WITNESS WHEREOF, Head Lessor and Head Lessee have caused this
Agreement to be executed as of the day and year first above written.

HEAD LESSOR:                            LEASE PLAN NORTH AMERICA, INC.

                                        By:___________________________________

                                           Name:______________________________

                                           Title:_____________________________

HEAD LESSEE:                            ABN AMRO LEASING, INC.

                                        By:___________________________________

                                           Name:______________________________

                                           Title:_____________________________

                                       11
<PAGE>   428

                                    EXHIBIT A

                                 FACILITY 1 LAND

                                LEGAL DESCRIPTION

                3940 NORTH FIRST STREET, 3950 NORTH FIRST STREET
                                  (FACILITY 1)

The land situated in the City of San Jose, County of Santa Clara, State of
California, and described as follows:

PARCEL ONE:

Parcel 2 as shown on that certain Parcel Map filed in the office of the Recorder
of the County of Santa Clara, State of California on August 18, 1983 in Book 516
of Maps, page(s) 34 and 35, Santa Clara County Records.

And, in addition thereto, the following area:

Beginning at the Southeasterly corner of said Parcel 2, thence North 52(Degree)
27' 12" West, 409.24 feet along the common line of Parcel 1 and Parcel 2 as
shown on said Parcel Map to a common corner thereof; thence leaving said common
line, along the Southerly prolongation of a common line of said Parcels, South
19(Degree) 40' 54" West, 32.25 feet; thence South 52(Degree) 22' 44" East,
399.34 feet to a point on the Southeasterly line of said Parcel 1; thence North
37(Degree) 32' 59" East, 31.22 feet along said Southeasterly line to the Point
of Beginning.

PARCEL ONE-A:

A non-exclusive easement for ingress and egress over PCL. 1, as said parcel is
shown on the Parcel Map recorded in Book 516 of Maps, at pages 34 and 35, Santa
Clara County Records, as granted in an instrument recorded May 23, 1985 in Book
J353, page 1565 and being more particularly described as follows:

                                     Strip 1

A strip of land 26.00 feet wide extending entirely across said PCL. 1 and lying
13.00 feet on each side of a line as follows:

Beginning at the Southerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
N. 52(Degree) 27' 12" W., 34.00 feet to the true point of beginning of said
strip of land; thence N. 37(Degree) 32' 59" E., 540.00 feet to the Northeasterly
line of said PCL. 1.

(LEGAL DESCRIPTION CONTINUED NEXT PAGE)

                                    B(1)-12
<PAGE>   429

LEGAL DESCRIPTION:  (Continued)

                                     Strip 2

A strip of land 40.00 feet wide extending entirely across said PCL. 1 and lying
contiguous to and Southeasterly of a line described as follows:

Beginning at the most Southerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
N. 52(Degree) 27' 12" W., 429.25 feet to the true point of beginning of said
strip of land; thence N. 37(Degree) 32' 48" E., 600.00 feet to the Northeasterly
line of said PCL. 1; the Northerly terminus of said 40 foot wide strip of land
being the Northeasterly line of said PCL. 1.

                                     Strip 3

A strip of land 26.00 feet wide, extending Northeasterly from the Southwesterly
line of said PCL. 1 to the Northwesterly line of the above described and
designated Strip 2 and lying 13.00 feet on each side of a line described as
follows:

Beginning at the Westerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
S. 52(Degree) 27' 12" E., 34.00 feet to the true point of beginning of said
strip of land; thence N. 37(Degree) 32' 48" E. 566.00 feet; thence S. 52(Degree)
27' 12" E., 355.25 feet to said Northwesterly line of said Strip 2.

                                     Strip 4

A strip of land 13.00 feet wide lying contiguous to and Northwesterly of the
Northwesterly line of the above described and designated Strip 2 and extending
Southwesterly from the Northeasterly line of said PCL. 1 approximately 21.00
feet to the Northeasterly line of the above described and designated Strip 3.

PARCEL ONE-B:

The right from time to time to construct, install, maintain, replace, remove,
and use storm drain sewers, together with a right of way therefor, over a
portion of PCL. 1 as said parcel is shown on the Parcel Map recorded in Book 516
of Maps, at pages 34 and 35, Santa Clara County Records, as granted in an
instrument recorded May 23, 1985 in Book J353, page 1565 and being more
particularly described as follows:

                                     Strip 1

A strip of land 10.00 feet wide extending entirely across said PCL. 1 and lying
5.00 feet on each side of a line described as follows:

Beginning at the most Westerly corner of said PCL. 1 said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
S. 52(Degree) 27' 12" E., 402.75 feet to the true point of beginning of said
strip of land; thence along the centerline of a existing storm drain line the
following courses: thence N. 37(Degree) 32' 48" E., 28.00 feet to a point herein
designated Point A; thence N. 52(Degree) 27' 12" W., 278.00 feet; thence N.
00(Degree) 51' 00" E., 198.30 feet; thence N. 37(Degree) 32' 33" E., 279.75
feet; thence S. 51(Degree) 19' 51" E., 89.02 feet; thence N. 50(Degree) 06' 47"
E., 133.18 feet; thence N. 37(Degree) 32' 48" E., 5.00 feet to the Northeasterly
line of said PCL 1.

(LEGAL DESCRIPTION CONTINUED NEXT PAGE)

                                    B(1)-13

<PAGE>   430

LEGAL DESCRIPTION:  (Continued)

                                     Strip 2

A strip of land 10 feet wide extending Northeasterly from the Northeasterly line
of the above described and designated Strip 1 and lying 5.00 feet on each side
of a line which begins at said Point A; thence along the centerline of an
existing storm drain line the following courses: thence N. 26(Degree) 55' 37"
E., 154.65 feet; thence N. 32(Degree) 55' 53" E., 96.31 feet; thence N.
43(Degree) 21' 28" E., 113.58 feet; thence N. 54(Degree) 44' 21" E., 105.72 feet
to a point herein designated as Point B; thence S. 41(Degree) 57' 14" E., 65.85
feet; thence N. 37(Degree) 32' 48" E., 62.00 feet to the Northeasterly line of
said PCL 2.

                                     Strip 3

A strip of land 5.00 feet wide lying contiguous to and Southwesterly of the
Northeasterly line of said PCL. 1 and extending Southeasterly from the
Southeasterly line of the above described and designated Strip 2 approximately
225 feet.

                                     Strip 4

A strip of land 10.00 feet wide extending Northeasterly from the Northeasterly
line of the above described and designated Strip 2 to the Northeasterly line of
said PCL. 1 and lying 5.00 feet on each side of a line that begins at said Point
B; thence along the centerline of an existing storm drain line N. 37(Degree) 32'
48" E., 50.00 feet to the Northeasterly line of said PCL. 1.

PARCEL ONE-C:

The right from time to time to construct, install, inspect, maintain, replace,
remove and use any and all Public Service Facilities necessary or useful,
together with a right of way therefor, over a portion of PCL. 1 as said parcel
is shown on the Parcel Map recorded in Book 516 of Maps, at pages 34 and 35,
Santa Clara County Records, as granted in an instrument recorded May 23, 1985 in
Book J353, page 1565 and being more particularly described as follows:

                                     Strip 5

A strip of land 15.00 feet wide extending entirely across said PCL. 1 and lying
7.50 feet on each side of a line described as follows:

Beginning at the most Southerly corner of said PCL. 1, said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
N. 52(Degree) 27' 12" W., 60.50 feet to the true point of beginning of said
strip of land; thence N. 37(Degree) 32' 59" E., 394.80 feet to a point herein
designated Point C; thence N. 37(Degree) 32' 59" E., 105.20 feet; thence N.
7(Degree) 27' 01" W., 56.57 feet to the Northeasterly line of said PCL. 1.

                                     Strip 6

A strip of land 15.00 feet wide extending Northerly from the Northerly line of
the above described and designated Strip 5 to the Northeasterly line of said
PCL. 1 and lying 7.5 feet on each side of a line that begins at said Point C;
thence N. 30(Degree) 01' 00" E., 59.5 feet; thence N. 8(Degree) 41' 00" E.,
98.44 feet to the Northeasterly line of said PCL. 1.

(LEGAL DESCRIPTION CONTINUED NEXT PAGE)

                                    B(1)-14
<PAGE>   431

LEGAL DESCRIPTION:  (Continued)

                                     Strip 7

A strip of land 15.00 feet wide extending entirely across said PCL. 1 and lying
7.5 feet and each side of a line described as follows:

Beginning at the most Westerly corner of said PCL. 1 said corner being on the
Northeasterly line of North First Street; thence along said Northeasterly line
S. 52(Degree) 27' 12" E., 30.00 feet to the true point of beginning of said
strip of land; thence N. 37(Degree) 32' 33" E., 600.00 feet to the Northeasterly
line of said PCL 1.

                                     Strip 8

That area located within those portions of PCL.1, of the Parcel Map mentioned
hereinabove, lying within the easements designated as "P.S.E.", as shown on said
Parcel Map.

PARCEL ONE-D:

A non-exclusive easement for Landscaping, Lighting and Irrigation Facilities
over PCL. 1, as said parcel is shown on the Parcel Map recorded in Book 516 of
Maps, at pages 34 and 35, Santa Clara County Records, as granted in an
instrument recorded May 23, 1985 in Book J353, page 1565 and being more
particularly described as follows:

A strip of land 10.00 feet wide extending Southeasterly from the Northwesterly
line of said PCL. 1 and PCL. 2 and lying 5.00 feet on each side of a line that
begins at the most Northerly corner of said PCL. 1 and runs thence along the
Northeasterly line of said PCL. 1, S. 52(Degree) 27' 12" E. 375.00 feet.

Excepting therefrom that portion lying within the bounds of Parcel 2 mentioned
hereinabove.

APN: 097-79-004
ARB: 97-3-x4

                                    B(1)-15
<PAGE>   432

                                    EXHIBIT B

                                  RELATED GOODS

                                      NONE

                                      B-1
<PAGE>   433

                                  EXHIBIT B(1)

                   SUPPLEMENT TO EXHIBIT B TO LEASE AGREEMENT

                                     [Date]

Lease Plan North America, 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 Facility 1 Head Lease
Agreement, dated as of April 13, 2001 (the "Lease Agreement"), between Lease
Plan North America, Inc. ("Head Lessor") and ABN AMRO Leasing, Inc. ("Head
Lessee").

        2.     Head 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. Head Lessee hereby
accepts all such Related Goods and agrees that such Related Goods constitute
part of the Facility 1 Property subject to the Lease Agreement.

        IN WITNESS WHEREOF, Head Lessee has executed this Supplement to Exhibit
B on the date set forth above.

LESSEE:                                 LEASE PLAN NORTH AMERICA, INC.

                                        By: ___________________________________

                                            Name: _____________________________

                                            Title: ____________________________

LESSOR:                                 ABN AMRO LEASING, INC.

                                        By: ___________________________________

                                            Name: _____________________________

                                            Title: ____________________________

                                     B(1)-1
<PAGE>   434

                                  ATTACHMENT 1
                                       TO
                             SUPPLEMENT TO EXHIBIT B

                                     B(1)-2
<PAGE>   435

                                   SCHEDULE 1

               HAZARDOUS MATERIALS USED ON THE FACILITY 1 PROPERTY

               As set forth in that certain Hazardous Materials Business Plan
(HMBP) for Novellus Systems, Inc. dated 4/1/97 prepared by Environmental Quality
Solutions.

                                     B(1)-1

<PAGE>   436

                                  EXHIBIT M(2)

                         FACILITY 2 HEAD LEASE AGREEMENT

                                     M(2)-1

<PAGE>   437

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

                         FACILITY 2 HEAD LEASE AGREEMENT

                                     BETWEEN

                         LEASE PLAN NORTH AMERICA, INC.

                                       AND

                             ABN AMRO LEASING, INC.

                                 APRIL 13, 2001

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

<PAGE>   438

                                TABLE OF CONTENTS

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

        1.01.  Definitions..................................................................1

        1.02.  Rules of Construction........................................................1

SECTION 2.      BASIC PROVISIONS............................................................2

        2.01.  Lease of the Property........................................................2

        2.02.  Term.........................................................................2

        2.03.  Rent.........................................................................2

        2.04.  Use..........................................................................2

        2.05.  Title; Quiet Enjoyment.......................................................2

SECTION 3.      OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS..............................3

        3.01.  Maintenance, Repair, Etc.....................................................3

        3.02.  Risk of Loss.................................................................3

        3.03.  Insurance....................................................................3

        3.04.  Casualty and Condemnation....................................................3

        3.05.  Property Taxes and Other Governmental Charges................................4

        3.06.  Liens, Easements, Etc........................................................4

        3.07.  Leasehold Mortgages..........................................................4

        3.08.  Assignments and Subletting...................................................5

        3.09.  Utility Charges..............................................................5

        3.10.  Removal of Property..........................................................5

        3.11.  Estoppel Certificates........................................................5

        3.12.  Recordation of Agreement.....................................................6

SECTION 4.      TERMINATION.................................................................6

        4.01.  Termination Date.............................................................6

        4.02.  Surrender of Facility 2 Property.............................................6

SECTION 5.      DEFAULT.....................................................................6

        5.01.  Head Lease Events of Default.................................................6

        5.02.  Remedies.....................................................................7

        5.03.  Limited Recourse.............................................................7
</TABLE>

                                      -i-

<PAGE>   439

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<CAPTION>
                                                                                          PAGE
<S>                                                                                       <C>
SECTION 6.      PURCHASE OPTION.............................................................7

        6.01.  Grant of Option..............................................................7

        6.02.  Terms........................................................................7

SECTION 7.      MISCELLANEOUS...............................................................8

        7.01.  Notices......................................................................8

        7.02.  Waivers; Amendments..........................................................8

        7.03.  Successors and Assigns.......................................................8

        7.04.  No Third Party Rights........................................................9

        7.05.  Partial Invalidity...........................................................9

        7.06.  Governing Law................................................................9

        7.07.  Counterparts.................................................................9
</TABLE>

                                      -ii-

<PAGE>   440

                         FACILITY 2 HEAD LEASE AGREEMENT

        THIS FACILITY 2 HEAD LEASE AGREEMENT (this "Agreement" herein), dated as
of April 13, 2001 is entered into by and between:

               (1) LEASE PLAN NORTH AMERICA, INC., an Illinois corporation
        ("Head Lessor"); and

               (2) ABN AMRO LEASING, INC., an Illinois corporation ("Head
        Lessee").

                                    RECITALS

        A. Pursuant to a Participation Agreement dated as of June 6, 1997 (the
"Original Participation Agreement") among Novellus Systems, Inc. ("Lessee"),
Head Lessor, the Participants thereto and AMRO Bank N.V., as agent for such
Participants, Head Lessor acquired certain property and leased such property to
Lessee pursuant to two Lease Agreements dated as of June 9, 1997 between Lessee
and Head Lessor (the "Original Lease Agreements").

        B. Pursuant to a Participation Agreement dated as of August 31, 1998 (as
amended, the "Novellus I Participation Agreement") among Lessee, Head Lessor,
Head Lessee, the Participants thereto and AMRO Bank N.V., as agent for such
Participants, (1) Head Lessor and Lessee terminated the Original Lease
Agreements and (2) Head Lessor leased the property to Head Lessee pursuant to
(a) a Facility 1 Head Lease Agreement dated as of August 31, 1998 between Head
Lessor and Head Lessee and (b) a Facility 2 Head Lease Agreement dated as of
August 31, 1998 between Head Lessor and Head Lessee (the "Novellus I Facility 2
Head Lease Agreement").

        C. Pursuant to a Participation Agreement dated as of April 13, 2001 (the
"Participation Agreement") among Lessee, Head Lessor, Head Lessee, the
Participants thereto and AMRO Bank N.V., as agent for such Participants (in such
capacity, "Agent"), (1) Head Lessor and Head Lessee have agreed to remove
certain property from the Novellus I Facility 2 Head Lease Agreement and (2)
Head Lessor has agreed to lease such removed property to Head Lessee pursuant to
this agreement and a Facility 1 Head Lease Agreement of even date herewith.

                                    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 that

<PAGE>   441

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, Head Lessor agrees to
lease to Head Lessee and Head Lessee agrees to lease from Head Lessor the
following property (the "Facility 2 Property") to the extent of Head 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 "Facility 2 Land");

               (b) All Improvements to the Facility 2 Land;

               (c) All Appurtenant Rights belonging, relating or pertaining to
        the Facility 2 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 Facility 2 Land or any of the foregoing Improvements or
        Appurtenant Rights; and

               (e) All accessions and accretions to and replacements and
        substitutions for the foregoing.

        2.02. Term. The original term of this Agreement shall commence on the
Closing Date (the "Head Lease Commencement Date") and shall end on the first
Business Day of April 2035 (the "Head Lease Scheduled Expiration Date"), subject
to the terms of Subparagraph 4.01(a) below.

        2.03. Rent. Head Lessor hereby acknowledges that it has already been
paid in full for the rent hereunder for the entire term of this Agreement in
connection with the Novellus I Facility 2 Head Lease Agreement.

        2.04. Use. Head Lessee may use the Facility 2 Property for any lawful
purpose.

        2.05. Title; Quiet Enjoyment.

               (a) Title. Head Lessor represents and warrants to Head Lessee
        that, except as contemplated by the Existing Participation Agreement,
        Head Lessor has not previously sold, leased, transferred or otherwise
        disposed of any right, title or interest of Head Lessor in the Facility
        2 Property. Head Lessor shall not sell, lease, transfer or otherwise
        dispose

                                       2
<PAGE>   442

        of its right, title and interest in the Facility 2 Property or this
        Agreement prior to the Head Lease Expiration Date.

               (b) No Merger. The leasehold estate in the Facility 2 Property
        created by this Agreement shall not be merged with the fee estate or any
        other interest in the Facility 2 Property as a result of the same Person
        acquiring, owning or holding, directly or indirectly, in whole or in
        part, (i) the leasehold estate in the Facility 2 Property created hereby
        or any interest in such leasehold estate and (ii) the fee estate in the
        Facility 2 Property or any interest in such fee estate, unless all
        parties with an interest in the Facility 2 Property that would be
        adversely affected by any such merger specifically agree in writing that
        such a merger shall occur.

               (c) Quiet Enjoyment. Neither Head Lessor nor any other Person
        lawfully claiming any right or interest in the Facility 2 Property
        through Head Lessor shall, prior to the Head Lease Expiration Date,
        disturb Head Lessee's peaceable and quiet enjoyment of the Facility 2
        Property; provided, however, that such enjoyment shall be subject to the
        terms of this Agreement.

SECTION 3. OTHER LESSEE AND LESSOR RIGHTS AND OBLIGATIONS.

        3.01. Maintenance, Repair, Etc. Head Lessee, at its sole cost and
expense, may from time to time make alterations, renovations, additions and
other Improvements to the Facility 2 Property and substitutions and replacements
therefor.

        3.02. Risk of Loss. Head Lessee 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 Facility 2 Property, except that Head Lessor assumes such
risks of loss and such liability to the extent any such loss or liability is
primarily caused by the gross negligence or willful misconduct of Head Lessor.

        3.03. Insurance. Until the Expiration Date of the Facility 2 Lease
Agreement, Head Lessee shall cause to be carried and maintained liability
insurance coverage for the Facility 2 Property as provided in Paragraph 3.03 of
the Facility 2 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. Head Lessor hereby absolutely and
irrevocably assigns to Head Lessee all Casualty and Condemnation Proceeds and
all claims relating thereto. Head Lessor agrees that all Casualty and
Condemnation Proceeds are to be paid to Head Lessee and Head Lessor 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 Head Lessee alone, and not to Head Lessor and Head Lessee
jointly. If Head Lessor receives any Casualty and Condemnation Proceeds payable
to Head Lessee hereunder, Head Lessor shall promptly pay over such Casualty and
Condemnation Proceeds to Head Lessee. Head Lessor hereby covenants that until
such Casualty and Condemnation Proceeds are so paid

                                       3
<PAGE>   443

over to Head Lessee, Head Lessor shall hold such Casualty and Condemnation
Proceeds in trust for the benefit of Head Lessee and shall not commingle such
Casualty and Condemnation Proceeds with any other funds or assets of Head Lessor
or any other Person. Head Lessee 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 Head Lessee, but shall not be
responsible for any failure to collect any such right, claim or action,
regardless of the cause of the failure.

        3.05. Property Taxes and Other Governmental Charges. Head Lessee shall
pay or cause to be paid all taxes and other Governmental Charges imposed on or
payable by Head Lessee in connection with the Facility 2 Property, this
Agreement or any of the transactions contemplated hereby or thereby.

        3.06. Liens, Easements, Etc. During the term of this Agreement, Head
Lessor shall not create, incur, assume or permit to exist any Lien or easement
on or with respect to any of the Facility 2 Property of any character, whether
now owned or hereafter acquired, without the prior written approval of Head
Lessee. During the term of this Agreement, and provided a Head Lease Event of
Default has not occurred and is continuing, Head Lessor agrees that Head Lessee
may, and Head Lessor hereby consents in each instance to the following actions
by Head Lessee for the following purposes, but at Head Lessee's sole cost and
expense: (a) the granting of licenses and other rights and privileges reasonably
necessary or desirable for the use, repair, or maintenance of the Facility 2
Property; (b) the release of existing easements or other rights in the nature of
easements which are for the benefit of the Facility 2 Property; (c) the seeking
of any zoning variances or modifications to existing zoning; and (d) the
imposition of and the execution of amendments to, or waivers or releases of any
covenants, easements, licenses, and restrictions affecting the Facility 2
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 Facility 2 Property or materially and adversely
affect Head 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 Facility 2 Property, (3)
such grant, release, dedication, transfer or amendment will not cause the
Facility 2 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) Head Lessee shall remain obligated under this Agreement as
though such grant, release, dedication, transfer or amendment had not been
effected, and (6) Head Lessee shall pay and perform any obligations of Head
Lessor under such grant, release, dedication, transfer or amendment. Head Lessor
shall, upon the request of Head Lessee, and at Head 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 3.06.

                                       4
<PAGE>   444

        3.07. Leasehold Mortgages.

               (a) Head Lessor hereby consents to the transactions contemplated
        by the Participation Agreement, including all Liens granted to Agent, as
        security for the Lessor Obligations, in the Facility 2 Property, this
        Agreement or any of the other Operative Documents. After the Expiration
        Date of the Facility 2 Lease Agreement, Head Lessee may, as security for
        any indebtedness of Head Lessee, grant to any holder of such
        indebtedness a Lien in its leasehold interest in the Facility 2 Property
        (any such Liens, together with the Liens granted to Agent pursuant to
        the Operative Documents, to be referred to herein as "Leasehold
        Mortgages").

               (b) Any Person may become the legal owner and holder of the
        leasehold interest in the Facility 2 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 Head Lessee hereunder with the rights and
        obligations thereof.

               (c) Head Lessor shall notify each holder of a Leasehold Mortgage
        (a "Leasehold Mortgagee") of any default by Head Lessee hereunder. No
        notice of a default by Head 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 Head Lessee under this Agreement to correct or
        cure defaults, plus an additional period of thirty (30) days thereafter.
        Head Lessor will accept performance by any Leasehold Mortgagee of any
        covenant, condition or agreement on Head Lessee's part to be performed
        hereunder with the same force and effect as though performed by Head
        Lessee.

               (d) If this Agreement should terminate by reason of a
        disaffirmance or rejection of this Agreement by Head Lessee or any
        receiver, liquidator or trustee for the property of Head Lessee, or by
        any Governmental Authority that has taken possession of the business or
        property of Head Lessee by reason of the insolvency or alleged
        insolvency of Head Lessee, then:

                      (i) Head Lessor shall give notice thereof to each
               Leasehold Mortgagee and, upon request of any Leasehold Mortgagee
               made within sixty (60) days after Head Lessor has given such
               notice, Head Lessor shall enter into a new lease of the Facility
               2 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
               Head Lessor to enter into a new lease, Head Lessor shall enter
               into such a new lease with the requesting Leasehold Mortgagee
               holding the highest priority Leasehold Mortgage. If two or more
               requesting Leasehold Mortgagees share the highest priority, the
               new lease shall name all such Leasehold Mortgagees as co-tenants
               thereunder.)

                      (ii) The estate of any Leasehold Mortgagee, as lessee
               under such a new lease, shall have the same priority as the
               estate of Head Lessee created under this

                                       5
<PAGE>   445

               Agreement. If the Facility 2 Lease Agreement or Facility 2
               Purchase Agreement are in effect at the time of execution of such
               new lease, such new lease shall be made subject to Lessee's
               rights under the Facility 2 Lease Agreement and the Facility 2
               Purchase Agreement.

               (e) No modification or early termination of this Agreement shall
        be effective without the consent of a Leasehold Mortgagee if (A) Head
        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) Head Lessor has been notified of such agreement.

               (f) No Leasehold Mortgagee will assume any liability under this
        Agreement either by virtue of its Leasehold Mortgage or by any
        subsequent receipt or collection of rents or profits generated from the
        Facility 2 Property, unless and until the Leasehold Mortgagee acquires
        Head Lessee's leasehold interest in the Facility 2 Property at
        foreclosure or by deed in lieu of foreclosure.

        3.08. Assignments and Subletting. Head Lessee may sublease the Facility
2 Property and sell or assign its rights under this Agreement at any time during
the term of this Agreement.

        3.09. Utility Charges. Head Lessee shall pay or cause to be paid 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
Facility 2 Property during the term of this Agreement.

        3.10. Removal of Property. All Improvements to the Facility 2 Property
and all other Property (other than the Facility 2 Land) may be removed by Head
Lessee at any time at or prior to the termination of this Agreement.

        3.11. 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 this Agreement is unmodified and in full force
and effect, and any other matters that may reasonably be requested.

        3.12. Recordation of Agreement. Neither Head Lessor nor Head 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, Head Lessee shall promptly execute, acknowledge and deliver to
Head Lessor any quitclaim deed or other document required by Head Lessor or a
title company to evidence the termination of Head Lessee's interests in the
Facility 2 Property.

                                       6
<PAGE>   446

SECTION 4. TERMINATION.

        4.01. Termination Date.

               (a) Early Termination. This Agreement shall continue in full
        force and effect until the Head Lease Scheduled Expiration Date, except
        that Head Lessee may terminate this Agreement at any time upon one (1)
        month's prior written notice to Head Lessor; provided, however, in no
        event shall Head Lessee exercise the right of termination prior to the
        Expiration Date of the Facility 2 Lease Agreement unless an Event of
        Default has occurred and is continuing under the Facility 2 Lease
        Agreement and Lessee's right to remain in possession is terminated.

               (b) No Other Early Termination Date. Except as provided in
        Subparagraph 4.01(a), this Agreement shall not terminate prior to the
        Head Lease Scheduled Expiration Date for any reason including, without
        limitation, (i) any Casualty to or Condemnation of all or any part of
        the Facility 2 Property, (ii) the occurrence of any Head Lease Event of
        Default or any other default by Head 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
        Head 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 Head Lessor hereunder shall be separate and independent
        of the covenants and agreements of Head Lessee.

        4.02. Surrender of Facility 2 Property. Unless Head Lessee (or an
assignee of Head Lessee) purchases the Facility 2 Property prior thereto, Head
Lessee shall vacate and surrender the Facility 2 Property to Head Lessor in its
then-current condition on the date (the "Head Lease Expiration Date") that is
the earlier of (a) the Head Lease Scheduled Expiration Date and (b) any earlier
date on which this Agreement is terminated pursuant to Subparagraph 4.01(a).

SECTION 5. DEFAULT.

        5.01. Head Lease Events of Default. The occurrence or existence of any
one or more of the following shall constitute a "Head Lease Event of Default"
hereunder:

               (a) Non-Payment. Head Lessee shall fail to pay the rent payable
        hereunder within sixty (60) days after the Head Lease Commencement Date;
        or

               (b) Other Defaults. Head 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 Head 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 Head 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 Head

                                       7
<PAGE>   447

        Lease Scheduled Expiration Date and (ii) one hundred and eighty days
        (180) days after Head Lessor's notice thereof.

        5.02. Remedies. Upon the occurrence or existence of any Head Lease Event
of Default and at any time thereafter unless such Head Lease Event of Default is
waived, Head Lessor may sue Head Lessee for the collection of any amount due
under this Agreement or to enjoin the continuation of the Head Lease Event of
Default; provided, however, that such remedies are the sole and exclusive
remedies of Head Lessor hereunder. Head Lessor may not terminate this Agreement
or Head Lessee's right to possession under this Agreement except as expressly
provided herein.

        5.03. Limited Recourse. Neither a Head 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 Head Lessee under this Agreement. Any
judgment which Head Lessor may obtain against a Head Lessee that is a Lessor
Party for amounts due under this Agreement may be collected only through resort
to a judgment lien against Head Lessee's interest in the Facility 2 Property.

SECTION 6. PURCHASE OPTION.

        6.01. Grant of Options

               (a) All of the Property. Head Lessor hereby grants to Head Lessee
        (or its assignee) the right to purchase all of the Facility 2 Property
        at any time upon one (1) month's prior written notice following the
        occurrence of any one of the following events:

                      (i) Lessee exercises the Term Purchase Option, the
               Expiration Date Purchase Option or the Marketing Option pursuant
               to the Facility 2 Purchase Agreement; or

                      (ii) An Event of Default occurs under the Facility 2 Lease
               Agreement.

        Head Lessee (or its assignee) shall pay a purchase price for the
        Facility 2 Property under this Subparagraph 6.01(a) in an amount of
        $1,000.00 (the "Head Lease Option Price").

               (b) Partial Purchase. Head Lessor hereby grants to Head Lessee
        (or its assignee) the right to purchase a portion of the Facility 2
        Property at any time upon one (1) months' prior written notice following
        any exercise by Lessee of the Partial Purchase Option pursuant to the
        Facility 2 Purchase Agreement. If Head Lessee exercises the purchase
        option under this Subparagraph 6.01(b), (i) Head Lessee may purchase the
        portion of the Facility 2 Property for which Lessee is exercising the
        Partial Purchase Option and (ii) Head Lessee shall pay a purchase price
        for such portion in an amount (the "Head Lease Partial Purchase Option
        Price") equal to the product of (A) $1,000.00 times (B) a fraction, the
        numerator of which is the amount to be paid by Lessee for such portion
        under the Facility 2 Purchase Agreement and the denominator of which is
        the Outstanding Lease Amount under Facility 2 immediately prior to such
        payment.

                                       8
<PAGE>   448

        6.02. Terms.

               (a) Upon Head Lessee's (or its assignee's) tender of the Head
        Lease Option Price or the Head Lease Partial Purchase Option Price, as
        the case may be, to Head Lessor, Head Lessor will convey and assign good
        and marketable title to the Facility 2 Property or the applicable
        portion thereof, as the case may be, to Head Lessee (or its assignee)
        subject only to the Permitted Property Liens of the types described in
        clauses (i), (ii), (iii) and (v) of Subparagraph 3.07(a) of the Facility
        2 Lease Agreement.

               (b) Head Lessee's (or its assignee's) obligation to close the
        purchase shall be subject to the following terms and conditions, all of
        which are for the benefit of Head Lessee (or its assignee):

                      (i) Head Lessee (or its assignee) shall have been
               furnished with evidence satisfactory to Head Lessee (or its
               assignee) that Head Lessor can convey title as required by the
               preceding subparagraph.

                      (ii) Nothing shall have occurred or been discovered after
               Head Lessee exercised the Head Lease Purchase Option that could
               adversely affect the title to or value of the Facility 2 Property
               or the applicable portion thereof, as the case may be, or the
               Head Lessee's (or its assignee's) use thereof.

SECTION 7. MISCELLANEOUS.

        7.01. Notices. Except as otherwise specified herein, (a) all notices,
requests, demands, consents, instructions or other communications to or upon
Head Lessee or Head Lessor under this Agreement given on or prior to the
Expiration Date of the Facility 2 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 Head Lessee or Head Lessor under this Agreement given after the
Expiration Date of the Facility 2 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 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.

        7.02. Waivers; Amendments. Until the Expiration Date of the Facility 2
Lease Agreement and the satisfaction in full of all Lessee Obligations or, if
earlier, the date on which Head 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 Head Lessor and Head
Lessee.

                                       9
<PAGE>   449

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.

        7.03. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Head Lessor and Head Lessee and their permitted
successors and assigns; provided, however, that Head Lessor and Head Lessee
shall not sell, assign or delegate their respective rights and obligations
hereunder except as provided in this Agreement or the Participation Agreement.

        7.04. 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 Head Lessor, Head Lessee and the Lessor Parties 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.

        7.05. 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.

        7.06. 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.

        7.07. 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.]

                                       10
<PAGE>   450

        IN WITNESS WHEREOF, Head Lessor and Head Lessee have caused this
Agreement to be executed as of the day and year first above written.

HEAD LESSOR:                            LEASE PLAN NORTH AMERICA, INC.

                                        By:_____________________________________
                                           Name:________________________________
                                           Title:_______________________________

HEAD LESSEE:                            ABN AMRO LEASING, INC.

                                        By:_____________________________________
                                           Name:________________________________
                                           Title:_______________________________

                                       11
<PAGE>   451

                                    EXHIBIT A

                                 FACILITY 2 LAND

                                LEGAL DESCRIPTION

                              90 HEADQUARTERS DRIVE
                                  (FACILITY 2)

The land situated in the City of San Jose, County of Santa Clara, State of
California, and described as follows:

Parcel 3, as shown on Parcel Map filed July 13, 1984 in Book 531 of Maps at
pages 41 and 42, Santa Clara County Records.

APN: 097-79-003
ARB: 097-03-005.02

                                      A-1

<PAGE>   452

                                    EXHIBIT B

                                  RELATED GOODS

                                      NONE

                                      B-1

<PAGE>   453

                                  EXHIBIT B(1)

                   SUPPLEMENT TO EXHIBIT B TO LEASE AGREEMENT

                                     [Date]

Lease Plan North America, 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 Facility 2 Head Lease Agreement,
dated as of April 13, 2001 (the "Lease Agreement"), between Lease Plan North
America, Inc. ("Head Lessor") and ABN AMRO Leasing, Inc. ("Head Lessee").

        2. Head 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. Head Lessee hereby
accepts all such Related Goods and agrees that such Related Goods constitute
part of the Facility 2 Property subject to the Lease Agreement.

        IN WITNESS WHEREOF, Head Lessee has executed this Supplement to Exhibit
B on the date set forth above.

LESSEE:                                 LEASE PLAN NORTH AMERICA, INC.

                                        By:_____________________________________
                                           Name:________________________________
                                           Title:_______________________________

LESSOR:                                 ABN AMRO LEASING, INC.

                                        By:_____________________________________
                                           Name:________________________________
                                           Title:_______________________________

                                     B(1)-1

<PAGE>   454

                                  ATTACHMENT 1
                                       TO
                             SUPPLEMENT TO EXHIBIT B

                                     B(1)-2

<PAGE>   455

                                   SCHEDULE 1

               HAZARDOUS MATERIALS USED ON THE FACILITY 2 PROPERTY

               As set forth in that certain Hazardous Materials Business Plan
(HMBP) for Novellus Systems, Inc. dated 4/1/97 prepared by Environmental Quality
Solutions.

                                     B(1)-1

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