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Exhibit 10.5  

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

CONSTRUCTION MANAGEMENT AGREEMENT  

BETWEEN  

 BNP PARIBAS LEASING CORPORATION  

 ("BNPPLC")  

 AND  

 SPECIALTY LABORATORIES, INC.  

 ("Specialty Laboratories")  

 March 26, 2002  

 (Santa Clarita, California)  

 
 

TABLE OF CONTENTS    
  

	 
	 	 
	 	 
	 	 
	 	Page

	ENGAGEMENT AND AUTHORIZATION	 	1
	
GENERAL TERMS AND CONDITIONS	
 	

1
	 	1.	 	ADDITIONAL DEFINITIONS	 	1
	 	 	"97-10/Event"	 	1
	 	 	"97-10/Maximum Permitted Prepayment"	 	2
	 	 	"97-10/Prepayment"	 	2
	 	 	"97-10/Project Costs"	 	2
	 	 	"97-10/Pronouncement"	 	3
	 	 	"Affiliate's Contract"	 	3
	 	 	"Arrangement Fee"	 	3
	 	 	"Administrative Agency Fee"	 	3
	 	 	"Capital Adequacy Charges"	 	3
	 	 	"Carrying Costs"	 	3
	 	 	"Commitment Fees"	 	3
	 	 	"Complete Taking"	 	3
	 	 	"Completion Date"	 	3
	 	 	"Completion Notice"	 	3
	 	 	"Construction Advances"	 	3
	 	 	"Construction Advance Request"	 	4
	 	 	"Construction Allowance"	 	4
	 	 	"Construction Budget"	 	4
	 	 	"Construction Project"	 	4
	 	 	"Covered Construction-Period Losses"	 	4
	 	 	"Defective Work"	 	4
	 	 	"Defaulting Participants"	 	4
	 	 	"FOCB Notice"	 	4
	 	 	"Force Majeure Event"	 	4
	 	 	"Funded Construction Allowance"	 	4
	 	 	"Future Work"	 	5
	 	 	"Increased Bank/Cost Charges"	 	5
	 	 	"Increased Commitment"	 	5
	 	 	"Increased Funding Commitment"	 	5
	 	 	"Increased Time Commitment"	 	5
	 	 	"Initial Funding Advance"	 	5
	 	 	"Maximum Construction Allowance"	 	5
	 	 	"Notice of Specialty Laboratories' Intent to Terminate"	 	5
	 	 	"Notice of Specialty Laboratories' Intent to Terminate Because of a Force Majeure Event"	 	5
	 	 	"Notice of Termination By Specialty Laboratories"	 	5
	 	 	"Outstanding Construction Allowance"	 	5
	 	 	"Owner's Election to Continue Construction"	 	5
	 	 	"Participant Default"	 	5
	 	 	"Pre-lease Casualty"	 	5
	 	 	"Pre-lease Force Majeure Delays"	 	5
	 	 	"Pre-lease Force Majeure Event"	 	5
	 	 	"Pre-lease Force Majeure Event Notice"	 	5
	 	 	"Pre-lease Force Majeure Excess Costs"	 	5
	 	 	"Pre-lease Force Majeure Losses"	 	6
	 	 	"Prior Work"	 	6
	 	 	"Projected Cost Overruns"	 	6

	 	 	"Reimbursable Construction-Period Costs"	 	6
	 	 	"Remaining Proceeds"	 	6
	 	 	"Scope Change"	 	6
	 	 	"Specialty Laboratories' Estimate of Force Majeure Delays"	 	7
	 	 	"Specialty Laboratories' Estimate of Force Majeure Excess Costs"	 	7
	 	 	"Target Completion Date"	 	7
	 	 	"Termination of Specialty Laboratories' Work"	 	7
	 	 	"Third Party Contract"	 	7
	 	 	"Third Party Contract/Termination Fees"	 	7
	 	 	"Work"	 	7
	 	 	"Work/Suspension Event"	 	7
	 	 	"Work/Suspension Notice"	 	8
	 	 	"Work/Suspension Period"	 	8
	 	

2.	
 	
CONSTRUCTION AND MANAGEMENT OF THE PROPERTY BY SPECIALTY LABORATORIES	
 	

8
	 	(A)	 	The Construction Project	 	8
	 	 	(1)	 	Construction Approvals by BNPPLC	 	8
	 	 	 	 	(a)	 	Preconstruction Approvals by BNPPLC	 	8
	 	 	 	 	(b)	 	Approval of Scope Changes	 	8
	 	 	(2)	 	Specialty Laboratories' Right to Possession and to Control Construction	 	8
	 	 	 	 	(c)	 	Adequacy of Drawings, Specifications and Budgets	 	9
	 	 	 	 	(d)	 	Existing Condition of the Land and Improvements	 	9
	 	 	 	 	(e)	 	Correction of Defective Work	 	10
	 	 	 	 	(f)	 	Clean Up	 	10
	 	 	 	 	(g)	 	No Damage for Delays	 	10
	 	 	 	 	(h)	 	No Fee For Construction Management	 	10
	 	 	(3)	 	Quality of Work	 	10
	 	(B)	 	Completion Notice	 	10
	 	(C)	 	Status of Improvements and Other Property Acquired With BNPPLC's Funds	 	11
	 	(D)	 	Insurance	 	11
	 	 	(1)	 	Liability Insurance	 	11
	 	 	(2)	 	Property Insurance	 	11
	 	 	(3)	 	Failure of Specialty Laboratories to Obtain Insurance	 	12
	 	 	(4)	 	Waiver of Subrogation	 	12
	 	(E)	 	Condemnation	 	12
	 	(F)	 	Indemnity for Covered Construction-Period Losses	 	12
	 	 	(1)	 	Covenant to Indemnify Against Covered Construction-Period Losses	 	12
	 	 	(2)	 	Express Negligence Protection	 	14
	 	 	(3)	 	Survival of Indemnity	 	14
	 	 	(4)	 	Due Date for Indemnity Payments	 	14
	 	 	(5)	 	Order of Application of Payments	 	14
	 	 	(6)	 	Defense of Indemnified Parties	 	14
	 	 	(7)	 	Notice of Claims to Specialty Laboratories	 	15
	 	 	(8)	 	Exceptions to Indemnity for Excluded Taxes and Established Misconduct	 	15
	 	(G)	 	Additional Representations, Warranties and Covenants of Specialty Laboratories Concerning the Property	 	15
	 	 	(1)	 	Payment of Impositions	 	15
	 	 	(2)	 	Operation and Maintenance	 	16
	 	 	(3)	 	Debts for Construction, Maintenance, Operation or Development	 	16
	 	 	(4)	 	Permitted Encumbrances, Development Documents and the Ground Lease	 	16
	 	 	(5)	 	Books and Records Concerning the Property	 	17
	 	(H)	 	BNPPLC's Right of Access	 	17
	 	 	(1)	 	Access Generally	 	17

	 	 	(2)	 	Failure of Specialty Laboratories to Perform	 	17
	 	

3.	
 	
AMOUNTS TO BE ADDED TO STIPULATED LOSS VALUE (IN ADDITION TO CONSTRUCTION ADVANCES)	
 	

18
	 	(A)	 	Initial Funding Advance	 	18
	 	(B)	 	Carrying Costs	 	18
	 	(C)	 	Commitment Fees	 	18
	 	(D)	 	Future Administrative Agency Fees and Out-of-Pocket Costs	 	19
	 	(E)	 	Increased Bank/Costs Charges and Capital Adequacy Charges	 	19
	 	

4.	
 	
CONSTRUCTION ADVANCES	
 	

20
	 	(A)	 	Costs Subject to Reimbursement Through Construction Advances	 	20
	 	(B)	 	Exclusions From Reimbursable Construction-Period Costs	 	21
	 	(C)	 	Conditions to Specialty Laboratories' Right to Receive Construction Advances	 	21
	 	 	(1)	 	Construction Advance Requests	 	21
	 	 	(2)	 	Amount of the Advances	 	21
	 	 	 	 	(a)	 	Limit Dependent Upon the Maximum Construction Allowance	 	21
	 	 	 	 	(b)	 	Limit Dependent Upon Costs Previously Incurred by Specialty Laboratories	 	21
	 	 	 	 	(c)	 	Limits During any Work/Suspension Period	 	22
	 	 	 	 	(d)	 	Restrictions Imposed for Administrative Convenience	 	22
	 	 	(3)	 	No Advances After Certain Dates	 	22
	 	(D)	 	Breakage Costs for Construction Advances Requested But Not Taken	 	23
	 	(E)	 	No Third Party Beneficiaries	 	23
	 	(F)	 	No Waiver	 	23
	 	(G)	 	Funding by Participants	 	23
	 	

5.	
 	
APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS	
 	

24
	 	(A)	 	Collection and Application of Insurance and Condemnation Proceeds Generally	 	24
	 	(B)	 	Advances of Escrowed Proceeds to Specialty Laboratories	 	25
	 	(C)	 	Status of Escrowed Proceeds After Commencement of the Term of the Lease	 	25
	 	(D)	 	Special Provisions Applicable After a 97-10/Event or Event of Default	 	25
	 	(E)	 	Specialty Laboratories' Obligation to Restore	 	25
	 	(F)	 	Special Provisions Concerning a Complete Taking	 	26
	 	

6.	
 	
NOTICE OF COST OVERRUNS AND PRE-LEASE FORCE MAJEURE EVENTS	
 	

26
	 	(A)	 	Notice of Projected Cost Overruns	 	26
	 	(B)	 	Pre-lease Force Majeure Event Events and Notices	 	26
	 	

7.	
 	
SUSPENSION AND TERMINATION OF SPECIALTY LABORATORIES' WORK	
 	

26
	 	(A)	 	Rights and Obligations of Specialty Laboratories During a Work/Suspension Period	 	26
	 	(B)	 	Specialty Laboratories' Election to Terminate Specialty Laboratories' Work	 	26
	 	(C)	 	BNPPLC's Right to Terminate Specialty Laboratories' Work	 	29
	 	(D)	 	Rights and Obligations Surviving any Termination of Specialty Laboratories' Work	 	29
	 	(E)	 	Cooperation by Specialty Laboratories Following any Termination of Specialty Laboratories' Work	 	29
	 	

8.	
 	
CONTINUATION OF CONSTRUCTION BY BNPPLC	
 	

30
	 	(A)	 	Owner's Election to Continue Construction	 	30
	 	 	(1) Take Control of the Property	 	31
	 	 	(2)	 	Continuation of Construction	 	31
	 	 	(3)	 	Arrange for Turnkey Construction	 	31
	 	 	(4)	 	Suspension or Termination of Construction by BNPPLC	 	31
	 	(B)	 	Powers Coupled With an Interest	 	32
	 	(C)	 	Completion Notice	 	32

	 	

9.	
 	
SPECIALTY LABORATORIES' OBLIGATION FOR 97-10/PREPAYMENTS	
 	

32

Exhibits  

	Exhibit A	 	Legal Description
	

Exhibit B	
 	

Description of the Construction Project and Budget
	

Exhibit C	
 	

Construction Advance Request Form
	

Exhibit D	
 	

Pre-lease Force Majeure Event Notice
	

Exhibit E	
 	

Notice of Termination by Specialty Laboratories' Work
	

Exhibit F	
 	

Notice of Specialty Laboratories' Intent to Terminate
	

Exhibit G	
 	

Notice of Increased Funding Commitment by BNPPLC
	

Exhibit H	
 	

Notice of Increased Time Commitment by BNPPLC
	

Exhibit I	
 	

Notice of Rescission of Specialty Laboratories' Intent to Terminate

 
 

CONSTRUCTION MANAGEMENT AGREEMENT    
  

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

RECITALS  

        Contemporaneously with the execution of this Agreement, BNPPLC and Specialty Laboratories are executing a Common Definitions and Provisions Agreement, dated as of
the Effective Date (the "Common Definitions and Provisions Agreement"), which by this reference is incorporated into and made a part of this Agreement
for all purposes. As used in this Agreement, capitalized terms defined in the Common Definitions and Provisions Agreement and not otherwise defined in this Agreement are
intended to have the respective meanings assigned to them in the Common Definitions and Provisions Agreement.

        Pursuant
to the Lease Agreement executed by BNPPLC and Specialty Laboratories contemporaneously with this Agreement (the "Lease"), which
will cover the Improvements on the Land described in Exhibit A, the parties expect that Specialty Laboratories will lease such Improvements from
BNPPLC. 

        In
anticipation of the construction of new or additional Improvements for Specialty Laboratories' use pursuant to the Lease, BNPPLC and Specialty Laboratories have agreed upon the terms
and conditions upon which BNPPLC is willing to authorize Specialty Laboratories to arrange and manage such construction and upon which BNPPLC is willing to provide funds for such construction, and by
this Agreement BNPPLC and Specialty Laboratories desire to evidence such agreement. 

ENGAGEMENT AND AUTHORIZATION  

        Subject to the terms and conditions set forth in this Agreement, BNPPLC does hereby engage and authorize Specialty Laboratories—and Specialty
Laboratories does hereby accept such engagement and authorization, as an independent contractor for BNPPLC—to construct the Construction Project on the Land and to manage such construction
for BNPPLC. As more particularly provided in subparagraph 2(A)(2) below, Specialty Laboratories shall take possession and control of the Land and all Improvements on the Land to accomplish such
construction. However, the rights and authority granted
to Specialty Laboratories by this Agreement are expressly made subject and subordinate to the terms and condition hereinafter set forth and to the Ground, to the Permitted Encumbrances and to any
other claims or encumbrances affecting the Land or the Property that may be asserted by third parties other than Liens Removable by BNPPLC. 

GENERAL TERMS AND CONDITIONS  

        1.    ADDITIONAL DEFINITIONS.    As used in this Agreement,
capitalized terms defined above shall have the respective meanings assigned to them above; as indicated above, capitalized terms that are defined in the Common Definitions and Provisions Agreement and
that are used but not defined herein shall have the respective meanings assigned to them in the Common Definitions and Provisions Agreement; and, the following terms shall have the following
respective meanings: 

"97-10/Event" means any of the following: 

        (a)  Specialty
Laboratories shall give a Notice of Specialty Laboratories' Intent to Terminate that does not constitute a "Notice of Specialty Laboratories' Intent to
Terminate Because of a Force Majeure Event" as defined in subparagraph 7(B)(5); or 

        (b)  Specialty
Laboratories shall give a Notice of Specialty Laboratories' Intent to Terminate Because of a Force Majeure Event and shall thereafter (i) fail to
rescind the same as described in subparagraph 7(B)(7) within ten days after BNPPLC responds with any Increased Commitment, or (ii) give a Notice of Termination as provided in subparagraph
7(B)(1); or 

 

        (c)  Specialty
Laboratories shall give a notice to terminate its Supplemental Payment Obligation under the Purchase Agreement as described in  subparagraph 5(B) of the Purchase Agreement; or 

        (d)  BNPPLC
shall give notice to Specialty Laboratories as described in subparagraph 7(C) to cause a Termination of Specialty Laboratories' Work; or 

        (e)  Specialty
Laboratories shall fail, for any reason whatsoever (including any reason beyond Specialty Laboratories' control), to substantially complete the Construction
Project and give a Completion Notice to BNPPLC prior to the Target Completion Date; or 

        (f)    for
any reason whatsoever (including the accrual of Carrying Costs or any other reason beyond Specialty Laboratories' control), the Funded Construction Allowance shall
exceed the Maximum Construction Allowance. 

"97-10/Maximum Permitted Prepayment" as of any date means the amount equal to eighty-nine and nine-tenths of one
percent (89.9%) of the aggregate of all 97-10/Project Costs paid or incurred on or prior to such date. 

"97-10/Prepayment" means a payment to BNPPLC, required by Paragraph 9, equal in each case to (A) the 97-10/Maximum
Permitted Prepayment, computed as of the date on which the payment becomes due, less (B) the accreted value of any prior payments actually received by BNPPLC from Specialty Laboratories
constituting 97-10/Prepayments. For purposes of the preceding sentence, "accreted value" of a payment shall mean the amount of the payment plus an amount equal to the interest that would
have accrued on the payment if it bore interest at the Effective Rate plus the Unsecured Spread. 

"97-10/Project Costs" means the following: 

        (a)  costs
incurred for the Work, including not only hard costs incurred for the new Improvements described in Exhibit B, but also the following costs to the extent
reasonably incurred in connection with the Construction Project: 

	•
	soft
costs, such as architectural fees, engineering fees and fees and costs paid in connection with obtaining project permits and approvals required by
governmental authorities or the Development Documents,

	•
	site
preparation costs, and

	•
	costs
of offsite and other public improvements required as conditions of governmental approvals for the Construction Project or required by the Development
Documents; 

        (b)  costs
incurred to maintain insurance required by (and consistent with the requirements of) this Agreement prior to the Completion Date; 

        (c)  Impositions
that have accrued or become due prior to the Completion Date; 

        (d)  ninety-five
percent (95%) of Carrying Costs and Commitment Fees added to the Outstanding Construction Allowance on or prior to such date (it being understood
that the additional amounts BNPPLC must pay to the Participants under the Participation Agreement because of the accrual of Carrying Costs and Commitment Fees as provided in this Agreement effectively
constitute construction period interest on advances the Participants make to BNPPLC under the Participation Agreement); and 

        (e)  any
costs in addition to those described in clauses (a) through (d) preceding that GAAP (as it exists on the Effective Date) would allow BNPPLC to
capitalize as part of the cost of the Property or that the 97-10/Pronouncement would allow BNPPLC to characterize as project costs, including: (1) cancellation or termination fees
or other compensation payable by Specialty 

Construction Management Agreement - Page 2

 

Laboratories or BNPPLC pursuant to any contract concerning the Construction Project made by Specialty Laboratories or BNPPLC with any general contractor, architect, engineer or other third party
because of any election by Specialty Laboratories or BNPPLC to cancel or terminate such contract, and (2) any costs that BNPPLC incurs and is allowed to capitalize to continue or complete the
Construction Project after any Owner's Election to Continue Construction as provided in subparagraph 8(A). 

"97-10/Pronouncement" means the pronouncement issued by the Emerging Issues Task Force of the Financial Accounting Standards Board in 1998
titled "EITF 97-10: The Effect of Lessee Involvement in Construction", which provides that certain kinds of involvement by a lessee in pre-lease commencement construction will
cause the lessee to be considered as the owner of the leased property during the construction period and then will require application of the appropriate sale and leaseback accounting rules. 

"Affiliate's Contract" shall have the meaning indicated in subparagraph 2(A)(2)(b). 

"Arrangement Fee" shall have the meaning indicated in subparagraph 3(A). 

"Administrative Agency Fee" shall have the meanings indicated in subparagraph 3(A) and subparagraph 3(D). 

"Capital Adequacy Charges" shall have the meaning indicated in subparagraph 3(E)(1). 

"Carrying Costs" shall have the meaning indicated in subparagraph 3(B). 

"Commitment Fees" shall have the meaning indicated in subparagraph 3(C). 

"Complete Taking" means a taking by eminent domain prior to the Completion Date over Specialty Laboratories' objection of all of the Land or the
Property, or so much thereof as to make it impossible to complete the Construction Project for its intended uses on the Land regardless of any Scope Changes BNPPLC may be willing to approve or any
Increased Commitment that BNPPLC may be willing to provide. 

"Completion Date" means the earlier of (1) the date upon which Specialty Laboratories gives the notice to BNPPLC which is required by
subparagraph 2(B), after having substantially completed the Construction Project and having obtained any certificate of substantial completion or other permit (temporary or permanent) required for the
commencement of Specialty Laboratories' use of the Improvements, or (2) the date upon which BNPPLC gives a Completion Notice to Specialty Laboratories as described in subparagraph 8(C) after
any Termination of Specialty Laboratories' Work, or (3) the Designated Sale Date. 

"Completion Notice" means (1) the notice required by subparagraph 2(B) from Specialty Laboratories to BNPPLC, advising BNPPLC that Specialty
Laboratories has substantially completed construction of the Construction Project and has obtained any certificate of substantial completion or other permit (temporary or permanent) required for the
commencement of Specialty Laboratories' use of the Improvements, or (2) any of the notices given by BNPPLC to Specialty Laboratories as described in subparagraph 8(C), advising Specialty
Laboratories that (x) after an Owner's Election to Complete Construction, construction of the Construction Project is substantially complete, (y) after an Owner's Election to Complete
Construction, BNPPLC has decided to abandon or indefinitely suspend its efforts to complete the Construction Project, or (z) BNPPLC has made a final determination not to exercise its right to
continue construction as provided in Paragraph 8. 

"Construction Advances" means (1) actual advances of funds made by or on behalf of BNPPLC to or on behalf of Specialty Laboratories as provided
in Paragraph 4, which sets forth Specialty Laboratories' rights to receive advances for Reimbursable Construction-Period Costs, and (2) other 

Construction Management Agreement - Page 3

 

amounts paid or incurred by BNPPLC that subparagraph 8(A) or other provisions of this Agreement allow BNPPLC to characterize as Construction Advances. 

"Construction Advance Request" shall have the meaning indicated in subparagraph 4(C)(1). 

"Construction Allowance" means the allowance to be provided by BNPPLC for the design and construction of the Construction Project, against which and
from which Carrying Cost, Construction Advances and other amounts will be or may be charged and paid as provided in various provisions of this Agreement (including Paragraphs 3, 4 and 8). 

"Construction Budget" means the budget for the Construction Project set forth in Exhibit B. 

"Construction Project" means the new buildings or other substantial Improvements to be constructed, or the alteration of existing Improvements, as
described generally in Exhibit B. 

"Covered Construction-Period Losses" shall have the meaning indicated in subparagraph 2(F)(1). 

"Defective Work" shall have the meaning indicated in subparagraph 2(A)(2)(e). 

"Defaulting Participants" shall have the meaning indicated in subparagraph 4(G). 

"FOCB Notice" means a notice from BNPPLC to Specialty Laboratories advising Specialty Laboratories of any of the following events or circumstances, and
also advising Specialty Laboratories that because of any of the following events or circumstances BNPPLC will be entitled to make the election described in subparagraph 7(C), which will constitute a
Termination of Specialty Laboratories' Work and a 97-10/Event: 

        (1)  Specialty
Laboratories shall have taken any action to cancel or terminate or reduce the coverage available to BNPPLC under the builder's risk insurance obtained for the
Construction Project as required by this Agreement, or Specialty Laboratories shall otherwise have failed to maintain any insurance or to provide insurance certificates to BNPPLC as required by this
Agreement and shall not have cured such failure within ten days after receiving notice thereof, or 

        (2)  Specialty
Laboratories shall have given any Pre-lease Force Majeure Event Notice to BNPPLC, or 

        (3)  an
Event of Default shall have occurred and be continuing; or 

        (4)  a
Work/Suspension Event shall have occurred and continued for more than thirty consecutive days after Specialty Laboratories' receipt of a Work/Suspension Notice
advising Specialty Laboratories of such Work/Suspension Event, and subsequent to such thirty day period the Work/Suspension Event shall not have been rectified by Specialty Laboratories. 

"Force Majeure Event" means (A) any taking of any part of the Property by eminent domain, and (B) any damage to the Improvements or
disruption of the Work that is caused by fire or acts of God (such as flood, lightning, earthquake or hurricane), war, strikes and other labor disputes, or riot or similar civil disturbance, but only
to the extent such damage or disruption (i) is beyond the control of and not caused in whole or in part by negligence, illegal acts or willful misconduct on the part of Specialty Laboratories
or of its employees or of any other party acting under Specialty Laboratories' control or with the approval or authorization of Specialty Laboratories, and (ii) could not have been avoided or
overcome by the exercise of due diligence or foresight on the part of Specialty Laboratories or of any other such party. 

"Funded Construction Allowance" means on any day the Outstanding Construction Allowance on that day, including all Construction Advances and Carrying
Costs added to the Outstanding Construction Allowance on or prior to that day, plus the amount of any Qualified Prepayments deducted on or prior to that day in the calculation of such Outstanding
Construction Allowance. 

Construction Management Agreement - Page 4

 

"Future Work" shall have the meaning indicated in subparagraph 4(C)(2)(b). 

"Increased Bank/Cost Charges" shall have the meaning indicated in subparagraph 3(E)(1). 

"Increased Commitment" shall have the meaning indicated in subparagraph 7(B)(6). 

"Increased Funding Commitment" shall have the meaning indicated in subparagraph 7(B)(6)(a). 

"Increased Time Commitment" shall have the meaning indicated in subparagraph 7(B)(6)(b). 

"Initial Funding Advance" shall have the meaning indicated in subparagraph 3(A). 

"Maximum Construction Allowance" means an amount equal to $60,000,000, less the Initial Funding Advance. 

"Notice of Specialty Laboratories' Intent to Terminate" shall have the meaning indicated in subparagraph 7(B)(2). 

"Notice of Specialty Laboratories' Intent to Terminate Because of a Force Majeure Event" shall have the meaning indicated in subparagraph 7(B)(5). 

"Notice of Termination By Specialty Laboratories" shall have the meaning indicated in subparagraph 7(B)(1). 

"Outstanding Construction Allowance" means, as of any date, the difference (but not less than zero) of (A) the total Construction Advances made
by or on behalf of BNPPLC on or prior to such date in question, plus (B) all Carrying Costs, Commitment Fees, Administrative Agency Fees, Increased Bank/Cost Charges and Capital Adequacy
Charges added on or prior to the date as provided in subparagraph 3, less (C) any funds received and applied as Qualified Prepayments on or prior to such date. 

"Owner's Election to Continue Construction" shall have the meaning indicated in subparagraph 8(A). 

"Participant Default" shall have the meaning indicated in subparagraph 4(G). 

"Pre-lease Casualty" shall have the meaning indicated in subparagraph 2(A)(2)(a). 

"Pre-lease Force Majeure Delays" means delays in the Work to the extent (but only to the extent) such delays (x) are caused solely by
a Pre-lease Force Majeure Event, (y) result in a postponement of the Completion Date beyond the Target Completion Date, and (z) could not have avoided or overcome by an
increased effort (including overtime) from Specialty Laboratories' contractors and subcontractors in such a manner that would not cause or exacerbate Projected Cost Overruns. 

"Pre-lease Force Majeure Event" means a Force Majeure Event that occurs prior to the Completion Date; provided,
however, that if Specialty Laboratories does not notify BNPPLC of any such Force Majeure Event by the delivery of a Pre-lease Force Majeure Event Notice within thirty days after the Force
Majeure Event first occurs or commences, then such Force Majeure Event will not qualify as a "Pre-lease Force Majeure Event" for purposes of this Agreement or the other Operative
Documents.

"Pre-lease Force Majeure Event Notice" shall have the meaning indicated in subparagraph 6(B). 

"Pre-lease Force Majeure Excess Costs" means the amount (if any) by which the increase in the costs of the Work resulting directly and
solely from a Pre-lease Force Majeure Event (such as, for example, the costs of repairing damage to the Improvements caused by a Pre-lease Force Majeure Event) exceed the
amounts available to pay or reimburse Specialty Laboratories for such increased costs. Amounts available to pay or reimburse such increased costs will include (a) insurance proceeds or any
recovery from a third party (including any Escrowed Proceeds held by BNPPLC), 

Construction Management Agreement - Page 5

 

and (b) any part of the Construction Allowance (including any unused contingency amount in the Construction Budget) not used or needed to cover other Reimbursable Construction-Period Costs. 

"Pre-lease Force Majeure Losses" means any of the following Losses that BNPPLC suffers solely by reason of damage to the Improvements caused
by a Pre-lease Force Majeure Event: 

        (a)  the
costs of repairing such damage to the extent that such costs have, as of the date of any required determination of Pre-lease Force Majeure Losses,
(i) been paid or reimbursed from a Construction Advance (and thus are included in Stipulated Loss Value as of that date), to be distinguished from costs of repairs paid or reimbursed from
insurance proceeds or from any recovery from a third party, and (ii) exceeded amounts (if any) available in the original Construction Allowance for contingencies and thus would not have been
covered by the Construction Allowance but for an Increased Funding Commitment; 

        (b)  any
diminution in the value of the Improvements resulting from any such damage that has not, as of the date of the required determination of Pre-lease Force
Majeure Losses, been repaired. 

For
purposes of this definition, the diminution in the value of the Improvements, as described in the preceding clause (b), will not exceed the amount thereof estimated in good faith by any
independent appraiser or insurance adjuster engaged by BNPPLC to determine such amount after BNPPLC has received a Notice of Pre-lease Force Majeure Event as provided in subparagraph 6(B),
nor will it exceed the cost of repairing the damage described in the preceding clause (b) as estimated in good faith by any such independent insurance adjuster or as indicated by any bona fide
written bid to make the repairs that BNPPLC obtains from a reputable contractor capable of making the repairs. 

"Prior Work" shall have the meaning indicated in subparagraph 4(C)(2)(b). 

"Projected Cost Overruns" means the excess (if any), calculated as of the date of each Construction Advance Request, of (1) the total of
projected Reimbursable Construction-Period Costs yet to be incurred or for which Specialty Laboratories has yet to be reimbursed hereunder (including projected Reimbursable Construction-Period Costs
for Future Work), over (2) the balance of the remaining Construction Allowance then projected to be available to cover such costs. The balance of the remaining Construction Allowance then
projected to be available will equal: (i) the amount (if any) by which the Maximum Construction Allowance exceeds the Funded Construction Allowance,  plus (ii) any Escrowed Proceeds then
available or expected to be available to cover costs of repairs and restoration that Specialty Laboratories
will perform as part of the Work after a casualty or condemnation, less (iii) all projected future Carrying Costs, Commitment Fees,
Administrative Agency Fees and other amounts to be added to the Outstanding Construction Allowance as provided in Paragraph 3, and less
(iv) any funds that should have been but were not advanced to BNPPLC by any Defaulting Participants under (and as defined in) the Participation Agreement. 

"Reimbursable Construction-Period Costs" shall have the meaning indicated in subparagraph 4(A). 

"Remaining Proceeds" shall have the meaning indicated in subparagraph 5(A). 

"Scope Change" means a change to the Construction Project that, if implemented, will make the quality, function or capacity of the Improvements
"materially different" (as defined below in this subparagraph) than as described or inferred by site plan, plans and renderings referenced in  Exhibit B. The term "Scope
Change" is not intended to include the mere refinement, correction or
detailing of the site plan, plans or renderings submitted to BNPPLC by Specialty Laboratories. As used in this definition, a "material difference" means a difference that could reasonably be expected
to (a) cause Stipulated Loss Value to exceed the fair market value of the Property when 

Construction Management Agreement - Page 6

 

the Construction Project is completed and all Construction Advances required in connection therewith have been funded, or significantly increase any such excess, (b) change the general
character of the Improvements from that needed to accommodate the uses to be permitted by subparagraph 2(A) of the Lease, or (c) cause or
exacerbate Projected Cost Overruns. 

"Specialty Laboratories' Estimate of Force Majeure Delays" shall have the meaning indicated in subparagraph 7(B)(4). 

"Specialty Laboratories' Estimate of Force Majeure Excess Costs" shall have the meaning indicated in subparagraph 7(B)(3). 

"Target Completion Date" means the last day of the 18th calendar month following the Effective Date. 

"Termination of Specialty Laboratories' Work" means a termination of Specialty Laboratories' rights and obligations to continue the Work because of an
election to terminate made by Specialty Laboratories pursuant to subparagraph 7(B) or because of an election by BNPPLC made pursuant to subparagraph 7(C). 

"Third Party Contract" shall have the meaning indicated in subparagraph 2(A)(2)(b). 

"Third Party Contract/Termination Fees" means any amounts, however denominated, for which Specialty Laboratories will be obligated under a Third Party
Contract as a result of any election or decision by Specialty Laboratories to terminate such Third Party Contract, including demobilization costs; provided, however, amounts payable for Prior Work
[as defined below] as of the date any such termination are not intended to be characterized as Third Party Contract/Termination Fees. If Specialty Laboratories reserves an
absolute express right in a Third Party Contract to terminate such contract at any time, without cause, for a specified U.S. dollar amount, such amount will constitute a Third Party
Contract/Termination Fee. If no such right is reserved in a Third Party Contract, the amount of damages that Specialty Laboratories is required to pay (in addition to payments required for Prior Work)
upon an anticipatory repudiation of the Third Party Contract by Specialty Laboratories will qualify as a "Third Party Contract/Termination Fee" applicable to such contract for purposes of this
Agreement. 

"Work" shall have the meaning indicated in subparagraph 2(A)(2)(a). 

"Work/Suspension Event" means any of the following: 

        (1)  Projected
Cost Overruns shall have become more likely than not, in BNPPLC's good faith judgment (taking into account (i) any failure of a Defaulting Participant
to provide funds to BNPPLC as required by the Participation Agreement and the funding arrangements contemplated by subparagraph 4(G) after any such failure, and (ii) any notices or Construction
Draw Requests from Specialty Laboratories indicating that a Pre-lease Force Majeure Event may result in Projected Cost Overruns), and BNPPLC shall have notified Specialty Laboratories of
such judgement and the reasons therefor. 

        (2)  Delays
in the Work (including any delays resulting from damage to the Property by fire or other casualty or from any taking of any part of the Property by condemnation)
shall have made it substantially unlikely, in BNPPLC's good faith judgment, that Specialty Laboratories will be able to complete the Construction Project in accordance with the requirements of this
Agreement prior to the
Target Completion Date using only the funds available to Specialty Laboratories under this Agreement, and BNPPLC shall have notified Specialty Laboratories of such judgement and the reasons therefor. 

        (3)  BNPPLC
shall have requested, and Specialty Laboratories shall have failed to provide within thirty days after receipt of the request, with respect to any Construction
Advance: 

Construction Management Agreement - Page 7

 

(1) invoices, requests for payment from contractors and other evidence reasonably establishing that the costs and expenses for which Specialty Laboratories has requested or is requesting
reimbursement constitute actual Reimbursable Construction-Period Costs, and (2) canceled checks, lien waivers or other evidence reasonably establishing that all prior Construction Advances paid
to Specialty Laboratories have been used by Specialty Laboratories to pay the Reimbursable Construction-Period Costs for which the prior advances were requested and made. 

"Work/Suspension Notice" means a notice from BNPPLC to Specialty Laboratories advising Specialty Laboratories of any event or circumstances that
constitute a Work/Suspension Event and advising Specialty Laboratories that (1) before the Work/Suspension Event is rectified BNPPLC may limit Construction Advances to Specialty Laboratories as
permitted by this Agreement, and (2) unless Specialty Laboratories does rectify the Work/Suspension Event within thirty days after Specialty Laboratories' receipt of such notice, BNPPLC may
elect to send an FOCB Notice in anticipation of a Termination of Specialty Laboratories' Work. 

"Work/Suspension Period" means any period (1) beginning with the date of any Work/Suspension Notice, FOCB Notice or Notice of Specialty
Laboratories' Intent to Terminate, and (2) ending on the earlier of (a) the first date upon which (i) no Work/Suspension Events shall be continuing, and (ii) no
97-10/Events shall have occurred, or (b) the effective date of any Termination of Specialty Laboratories' Work as described in subparagraph 7(B) or subparagraph 7(C). 

        2.    CONSTRUCTION AND MANAGEMENT OF THE PROPERTY BY SPECIALTY
LABORATORIES.    

	(A)
	The Construction Project.

	(1)
	Construction Approvals by BNPPLC.

        (a)    Preconstruction Approvals by BNPPLC.    Specialty Laboratories submitted and obtained BNPPLC's approval of the
site plan and descriptions of the Construction Project referenced in Exhibit B. Also set forth in  Exhibit B is a general description of the
Construction Project. The Construction Project, as constructed by Specialty Laboratories pursuant to
this Agreement, and all construction contracts and other agreements executed or adopted by Specialty Laboratories in connection therewith, shall be not materially inconsistent with the plans or other
items referenced in Exhibit B, except to the extent otherwise provided by any Scope Change approved by BNPPLC and except as otherwise provided in
subparagraph 8(A) if BNPPLC should make an Owner's Election to Continue Construction after any Termination of Specialty Laboratories' Work. 

        (b)    Approval of Scope Changes.    Before making a Scope Change, Specialty Laboratories shall provide to BNPPLC a
reasonably detailed written description of the Scope Change, a revised Construction Budget and a copy of any changes to the drawings, plans and specifications for the Improvements required in
connection therewith, all of which must be approved in writing by BNPPLC (or by any inspecting architect appointed by BNPPLC from time to time) before the Scope Change is implemented. After receiving
such items, BNPPLC shall endeavor in good faith to promptly respond to any request by Specialty Laboratories for approval of a Scope Change. BNPPLC shall not, however, be liable for any failure to
provide a prompt response. Further, BNPPLC's approval shall not in any event constitute a waiver of subparagraph 2(A)(3) or of any other provision of this Agreement or other Operative Documents. 

        (2)    Specialty Laboratories' Right to Possession and to Control Construction.    Subject to the terms and conditions
set forth in this Agreement, and prior to any Termination of Specialty Laboratories' Work as provided in subparagraphs 7(B) and 7(C), Specialty Laboratories shall have possession of the Land and all
Improvements on the Land to the exclusion of BNPPLC and shall have the sole right to control and the sole responsibility for the design and construction of the Construction Project, including the
means, methods, sequences and procedures implemented to 

Construction Management Agreement - Page 8

 

accomplish such design and construction. Although title to all Improvements will pass directly to BNPPLC (as more particularly provided in subparagraph 2(C)), BNPPLC's obligation with respect to the
Construction Project shall be limited to the making of advances under and subject to the conditions set forth in this Agreement. Without limiting the foregoing, Specialty Laboratories acknowledges and
agrees that: 

        (a)    Performance of the Work.    Except as provided in subparagraphs 7(A) and 7(D), Specialty Laboratories must,
using its best skill and judgment and in an expeditious and economical manner not inconsistent with the interests of BNPPLC, perform or cause to be performed all work required, and will provide or
cause to be provided all supplies and materials required, to design and complete construction of the Construction Project (collectively "Work") no later
than the Target Completion Date. The Work will include obtaining all necessary building permits and other governmental approvals required in connection with the design and construction of the
Construction Project, or required in connection with the use and occupancy thereof (e.g., final certificates of occupancy). The Work will also include
any repairs or restoration required because of damage to Improvements by fire or other casualty prior to the Completion Date (a "Pre-lease
Casualty"); however, the cost of any such repairs or restoration will be subject to reimbursement not only through Construction Advances made to Specialty Laboratories on and
subject to the terms and conditions of this Agreement, but also through the application of Escrowed Proceeds as provided in Paragraph 5. Specialty Laboratories will carefully schedule and
supervise all Work, will check all materials and services used in connection with all Work and will keep full and detailed accounts as may be necessary to document expenditures made or expenses
incurred for the Work. 

        (b)    Third Party Contracts.    

          (i)  Specialty
Laboratories shall not enter into any construction contract or other agreement with a third party concerning the Work or the Construction Project (a
"Third Party Contract") in the name of BNPPLC or otherwise purport to bind BNPPLC to any obligation to any third party. 

        (ii)  In
any Third Party Contract between Specialty Laboratories and any of its Affiliates (an "Affiliate's Contract")
Specialty Laboratories shall reserve the right to terminate such contract at any time, without cause, and without subjecting Specialty Laboratories to liability for any Third Party
Contract/Termination Fee. Further, Specialty Laboratories shall not enter into any Affiliate's Contract that obligates Specialty Laboratories to pay more than would be required under an
arms-length contract or that would require Specialty Laboratories to pay its Affiliate any amount in excess of the sum of actual, out-of-pocket direct costs and
internal labor costs incurred by the Affiliate to perform such contract. 

        (c)    Adequacy of Drawings, Specifications and Budgets.    BNPPLC has not made and will not make any representations
as to the adequacy of the Construction Budget or any other budget or any site plans, renderings, plans, drawings or specifications for the Construction Project, and no modification of any such
budgets, site plans, renderings, plans, drawings or specifications that may be required from time to time will entitle Specialty Laboratories to any adjustment in the Construction Allowance. 

        (d)    Existing Condition of the Land and Improvements.    Specialty Laboratories is familiar with the conditions of
the Land and any existing Improvements on the Land. Specialty Laboratories shall have no claim for damages against BNPPLC or for an increase in the Construction Allowance or for an extension of the
deadline specified in 

Construction Management Agreement - Page 9

 

subparagraph 2(A)(2)(a) for completing the Work by reason of any condition (concealed or otherwise) of or affecting the Land or Improvements. 

        (e)    Correction of Defective Work.    Specialty Laboratories will promptly correct all Work performed prior to any
Termination of Specialty Laboratories' Work that does not comply with the requirements of this Agreement for any reason other than a Pre-lease Casualty ("Defective
Work"). If Specialty Laboratories fails to correct any Defective Work or fails to carry out Work in accordance with this Agreement, BNPPLC may (but will not be required to)
order Specialty Laboratories to stop all Work until the cause for such failure has been eliminated. 

        (f)    Clean Up.    Upon the completion of all Work, Specialty Laboratories will remove all waste material and rubbish
from and about the Land, as well as all tools, construction equipment, machinery and surplus materials. Specialty Laboratories will keep the Land and the Improvements thereon in a reasonably safe and
sightly condition as Work progresses. 

        (g)    No Damage for Delays.    Specialty Laboratories shall have no claim for damages against BNPPLC or for an
increase in the Construction Allowance by reason of any delay in the performance of any Work. Nor shall Specialty Laboratories have any claim for an extension of the deadline specified in subparagraph
2(A)(2)(a) for completing the Work because of any such period of delay, unless, however, such delay has been caused by BNPPLC's intentional interference with Work. In the event (and only to the
extent) that any such intentional interference by BNPPLC continues after Specialty Laboratories provides written notice to cease, Specialty Laboratories shall be entitled to an extension of such
deadline. BNPPLC's exercise of its rights and remedies permitted under this Agreement or the other Operative Documents will not be construed as intentional interference with Specialty Laboratories'
performance of any Work. 

        (h)    No Fee For Construction Management.    Specialty Laboratories shall have no claim under this Agreement for any
fee or other compensation or for any reimbursement of internal administrative or overhead expenses (other than the out-of-pocket overhead expenses properly included in the
Construction Budget), it being understood that Specialty Laboratories is executing this Agreement in consideration of the rights expressly granted to it herein and in the other Operative Documents. 

        (3)    Quality of Work.    Specialty Laboratories shall cause the Work undertaken and administered by it pursuant to
this Agreement to be performed (a) in a safe and good and workmanlike manner, (b) in accordance with Applicable Laws, and (c) in compliance with (i) the provisions of this
Agreement, (ii) the material provisions of the Permitted Encumbrances and (iii) the material provisions of the Development Documents. 

        (B)    Completion Notice.    Within ten Business Days after Specialty Laboratories substantially completes
construction of the Construction Project and obtains any certificate of substantial completion or other permit (temporary or permanent) required for the commencement of Specialty Laboratories' use and
occupancy of the Improvements, Specialty Laboratories must provide a notice (a "Completion Notice") to BNPPLC, advising BNPPLC thereof, and thereby
establish the Completion Date. For purposes of this Agreement and the other Operative Documents, BNPPLC will be entitled to rely without investigation upon any such notice given by Specialty
Laboratories as evidence that Specialty Laboratories has, in fact, substantially completed the Construction Project and has obtained any certificate of substantial completion or other permit
(temporary or permanent) required for the commencement of Specialty Laboratories' use of the Improvements, and after giving any such notice Specialty Laboratories will be estopped from later claiming
that the Completion Date has not occurred. 

Construction Management Agreement - Page 10

 

        (C)    Status of Improvements and Other Property Acquired With BNPPLC's Funds.    All Improvements constructed on the
Land as provided in this Agreement shall constitute "Property" for purposes of the Lease and other Operative Documents. Further, to the extent heretofore or hereafter acquired (in whole or in part)
with any portion of the Initial Funding Advance or with any Construction Advances or with other funds for which Specialty Laboratories receives reimbursement from the Initial Funding
Advance or Construction Advances, all furnishings, furniture, chattels, permits, licenses, franchises, certificates and other personal property of whatever nature shall have been acquired on behalf of
BNPPLC by Specialty Laboratories and shall constitute "Property" for purposes of the Lease and other Operative Documents, as shall all renewals or replacements of or substitutions for any such
Property. The parties do not intend that title to the Improvements or to any other such Property will pass through Specialty Laboratories or Specialty Laboratories' Affiliates before it is transferred
to BNPPLC from contractors, suppliers, vendors or other third Persons, but such Property will be accepted by BNPPLC subject to the terms and conditions of the other Operative Documents, including  subparagraph 4(C)(1)
 of the Lease (concerning the characterization of the Lease and other Operative Documents for tax and certain other
purposes). Although nothing herein shall constitute authorization of Specialty Laboratories by BNPPLC to bind BNPPLC to any construction contract or other agreement with a third Person, any
construction contract or other agreement executed by Specialty Laboratories for the acquisition or construction of Improvements or other components of the Property may provide for the transfer of
title as described in the preceding sentence. 

        (D)    Insurance.    

        (1)    Liability Insurance.    Throughout the period prior to any Termination of Specialty Laboratories' Work,
Specialty Laboratories shall maintain commercial general liability insurance against claims for bodily and personal injury, death and property damage occurring in or upon or resulting from any
occurrence in or upon the Property under one or more insurance policies that satisfy the Minimum Insurance Requirements, which are set forth in an exhibit to the Common Definitions and Provisions
Agreement. Specialty Laboratories shall deliver and maintain with BNPPLC for each liability insurance policy required by this Agreement written confirmation of the policy and the scope of the coverage
provided thereby issued by the applicable insurer or its authorized agent, which confirmation must also satisfy the Minimum Insurance Requirements. 

        (2)    Property Insurance.    Throughout the period prior to any Termination of Specialty Laboratories' Work,
Specialty Laboratories will also keep all Improvements (including all alterations, additions and changes made to the Improvements) insured against fire and other casualty under one or more property
insurance policies that satisfy the Minimum Insurance Requirements. Specialty Laboratories shall deliver and maintain with BNPPLC for each property insurance policy required by this Agreement written
confirmation of the policy and the scope of the coverage provided thereby issued by the applicable insurer or its authorized agent, which confirmation must also satisfy the Minimum Insurance
Requirements. If any of the Property is destroyed or damaged by fire, explosion, windstorm, hail or by any other casualty against which insurance shall have been required hereunder, (i) BNPPLC
may, but shall not be obligated to, make proof of loss if not made promptly by Specialty Laboratories after notice from BNPPLC, (ii) each insurance company concerned is hereby authorized and
directed to make payment for such loss directly to BNPPLC for application as required by Paragraph 5, and (iii) BNPPLC may settle, adjust or compromise any and all claims for loss,
damage or destruction under any policy or policies of insurance (provided, that so long as no 97-10/Event shall have occurred and no Event of Default shall have occurred and be continuing,
BNPPLC must provide Specialty Laboratories with at least forty-five days notice of BNPPLC's intention to settle any such claim before settling it unless Specialty Laboratories shall
already have approved of the settlement by BNPPLC). BNPPLC shall not be in any event or circumstances liable or responsible for failure to collect, or to exercise diligence in the collection of, any
insurance proceeds. If any casualty shall result in 

Construction Management Agreement - Page 11

 

damage to or loss or destruction of the Property, Specialty Laboratories shall give prompt notice thereof to BNPPLC and Paragraph 5 shall apply. 

        (3)    Failure of Specialty Laboratories to Obtain Insurance.    If Specialty Laboratories fails to obtain any
insurance or to provide confirmation of any insurance as required by this Agreement, BNPPLC shall be entitled (but not required) to obtain the insurance that Specialty Laboratories has failed to
obtain or for which Specialty Laboratories has not provided the required confirmation and, without limiting BNPPLC's other remedies under the circumstances, BNPPLC may charge the cost of such
insurance against the Construction Allowance as if it were a Construction Advance paid to Specialty Laboratories as hereinafter provided. 

        (4)    Waiver of Subrogation.    Specialty Laboratories, for itself and for any Person claiming through it (including
any insurance company claiming by way of subrogation), waives any and every claim which arises or may arise in its favor against BNPPLC or any other Interested Party for any and all Losses, to the
extent that Specialty Laboratories is compensated by insurance or would be compensated by the insurance policies contemplated in this Agreement, but for any deductible or self-insured
retention maintained under such insurance or but for a failure of Specialty Laboratories to maintain the insurance as required by this Agreement. Specialty Laboratories agrees to have such insurance
policies properly endorsed so as to make them valid notwithstanding this waiver, if such endorsement is required to prevent a loss of insurance. 

        (E)    Condemnation.    Immediately upon obtaining knowledge of the institution of any proceedings for the
condemnation of the Property or any portion thereof, or any other similar governmental or quasi-governmental proceedings arising out of injury or damage to the Property or any portion thereof, each
party shall promptly notify the other (provided, however, BNPPLC shall have no liability for its failure to provide such notice) of the pendency of such proceedings. Prior to any Termination of
Specialty Laboratories' Work, Specialty Laboratories shall, if requested by BNPPLC, diligently prosecute any such proceedings and shall consult with BNPPLC, its attorneys and experts and cooperate
with them as reasonably requested in the carrying on or defense of any such proceedings. All proceeds of condemnation awards or proceeds of sale in lieu of condemnation with respect to the Property
and all judgments, decrees and awards for injury or damage to the Property shall be paid to BNPPLC as Escrowed Proceeds, and all such proceeds will be applied as provided in Paragraph 5. BNPPLC
is hereby authorized, in its own name or in the name of Specialty Laboratories or in the name of both, to settle and deliver valid acquittances for, or to challenge and to appeal from, any such
judgment, decree or award concerning condemnation of any of the Property (provided, that so long as no 97-10/Event shall have occurred and no Event of Default shall have occurred and be
continuing, BNPPLC must provide Specialty Laboratories with at least forty-five days notice of BNPPLC's intention to settle any such claim before settling it unless Specialty Laboratories
shall already have approved of the settlement by BNPPLC). BNPPLC shall not be in any event or circumstances liable or responsible for failure to collect, or to exercise diligence in the collection of,
any such proceeds, judgments, decrees or awards. 

        (F)    Indemnity for Covered Construction-Period Losses.    

        (1)    Covenant to Indemnify Against Covered Construction-Period Losses.    Except as otherwise provided in
subparagraph 2(F)(8) below, Specialty Laboratories shall indemnify and defend BNPPLC and other Interested Parties from and against all of the following Losses ("Covered
Construction-Period Losses"): 

        (a)  Environmental
Losses incurred or suffered by any Interested Party; 

        (b)  Losses
incurred or suffered by BNPPLC that BNPPLC would not have incurred or suffered but for any act or any omission of Specialty Laboratories or of any Specialty
Laboratories' contractors or subcontractors during the period prior to any Termination of Specialty Laboratories' Work as provided in subparagraphs 7(B) and 7(C) or during any other 

Construction Management Agreement - Page 12

 

period that Specialty Laboratories does, in fact, remain in possession or control of the Construction Project (including any failure by Specialty Laboratories to obtain or maintain insurance as
required by this Agreement during such period; but excluding, however, as described below, certain Losses consisting of claims related to any failure of Specialty Laboratories to complete the
Construction Project); 

        (c)  Losses
incurred or suffered by BNPPLC that would not have been incurred but for any fraud, misapplication of funds (including Construction Advances), illegal acts, or
willful misconduct on the part of the Specialty Laboratories or its employees or of any other party acting under Specialty Laboratories' control or with the approval or authorization of Specialty
Laboratories; and 

        (d)  Losses
incurred or suffered by BNPPLC that would not have been incurred but for any bankruptcy proceeding involving Specialty Laboratories. 

For
purposes of clause (a) of this subparagraph, "Environmental Losses" will not include costs properly incurred in connection with the Work to prevent the occurrence of a violation of
Environmental Laws that did not previously exist. (For example, Environmental Losses will not include the increase in costs resulting from Specialty Laboratories' installation of fire proofing
materials other than asbestos because of Environmental Laws that prohibit the use of asbestos.) In contrast, all costs to correct or answer for any violation of Environmental Laws that has already
occurred or that Specialty Laboratories causes or permits to occur after the Effective Date in connection with the Work or the Property shall constitute Environmental Losses. (Thus, for instance, if
Specialty Laboratories releases Hazardous Materials from the Property in a manner that contaminates ground water in violation of Environmental Laws, the costs of correcting the contamination and any
applicable fines or penalties will constitute Environmental Losses for which Specialty Laboratories must indemnify and defend BNPPLC and the other Interested Parties pursuant to this subparagraph.) 

If
a third party asserts a claim for damages against BNPPLC because of injuries the third party sustained while on the Land as a result of Specialty Laboratories' breach of its obligations under this
Agreement to keep the Land and the Improvements thereon in a reasonably safe condition as Work progresses under Specialty Laboratories' direction and control, then any such claim and other Losses
resulting from such claim will constitute a Covered Construction Losses under clause (b) of this definition. 

It
is understood, however, that following a Termination of Specialty Laboratories' Work as provided in as provided in subparagraphs 7(B) and 7(C), the failure of Specialty Laboratories to complete
construction of the Construction Project will not necessarily constitute a breach of this Agreement. Moreover, additional costs of construction may result from Specialty Laboratories' failure to
complete the Construction Project if a Termination of Specialty Laboratories' Work occurs pursuant to subparagraphs 7(B) and 7(C). Nevertheless, clause (b) of this subparagraph will not be
construed to include any such additional costs of performing the Work or completing the Construction Project. Such additional costs will, however, qualify as 97-10/Project Costs and thus
will increase the 97-10/Maximum Permitted Prepayment. 

For
the purposes of clause (c) of this definition, "fraud" or "willful misconduct" shall include (i) any deliberate decision by Specialty Laboratories to make a Scope Change without
BNPPLC's prior written approval, (ii) any fraud or intentional misrepresentation by Specialty Laboratories, or its vendors, contractors or subcontractors regarding Specialty Laboratories'
ongoing compliance with the requirements of this Agreement, and (iii) the performance by Specialty Laboratories or its vendors, contractors or subcontractors of Defective Work, with Specialty
Laboratories' knowledge that it constitutes Defective Work, prior to any Termination of Specialty Laboratories' Work as provided in subparagraphs 7(B) and 7(C). 

Construction Management Agreement - Page 13

 

        (2)    Express Negligence Protection.    EXCEPT AS OTHERWISE PROVIDED IN SUBPARAGRAPH 2(F)(8)
BELOW, ALL INDEMNITIES AND RELEASES PROVIDED HEREIN FOR THE BENEFIT OF BNPPLC AND OTHER INTERESTED PARTIES, INCLUDING THE INDEMNITY SET FORTH IN THE PRECEDING SUBPARAGRAPH 2(F)(1), SHALL APPLY EVEN IF
AND WHEN THE SUBJECT MATTERS OF THE INDEMNITIES AND RELEASES ARE CAUSED BY OR ARISE OUT OF THE NEGLIGENCE OR STRICT LIABILITY OF BNPPLC OR ANOTHER INTERESTED PARTY. FURTHER, SUCH INDEMNITIES AND
RELEASES WILL APPLY EVEN IF INSURANCE OBTAINED BY SPECIALTY LABORATORIES OR REQUIRED OF SPECIALTY LABORATORIES BY THIS AGREEMENT OR OTHER OPERATIVE DOCUMENTS IS NOT ADEQUATE TO COVER LOSSES AGAINST OR
FOR WHICH THE INDEMNITIES AND RELEASES ARE PROVIDED. SPECIALTY LABORATORIES' LIABILITY, HOWEVER, FOR ANY FAILURE TO OBTAIN INSURANCE REQUIRED BY THIS AGREEMENT OR OTHER OPERATIVE DOCUMENTS WILL NOT BE
LIMITED TO LOSSES AGAINST WHICH INDEMNITIES ARE PROVIDED HEREIN, IT BEING UNDERSTOOD THAT SUCH INSURANCE IS INTENDED TO DO MORE THAN PROVIDE A SOURCE OF PAYMENT FOR LOSSES AGAINST WHICH BNPPLC AND
OTHER INTERESTED PARTIES ARE ENTITLED TO INDEMNIFICATION BY THIS AGREEMENT.

        (3)    Survival of Indemnity.    Specialty Laboratories' obligations under this subparagraph 2(F) shall survive the
termination or expiration of this Agreement and any Termination of Specialty Laboratories' Work. 

        (4)    Due Date for Indemnity Payments.    Any amount to be paid by Specialty Laboratories under this subparagraph
2(F) shall be due fifteen days after a notice requesting such payment is received by Specialty Laboratories. Any such amount not paid by Specialty Laboratories when first due shall bear interest at
the Default Rate in effect from time to time from the date it first became due until paid; provided, that nothing herein contained will be construed as permitting the charging or collection of
interest at a rate exceeding the maximum rate permitted under Applicable Laws. 

        (5)    Order of Application of Payments.    BNPPLC shall be entitled to apply any payments by or on behalf of
Specialty Laboratories against Specialty Laboratories' obligations under this subparagraph or against other amounts owing by Specialty Laboratories and then past due under any of the other Operative
Documents in the order the same became due or in such other order as BNPPLC may elect. 

        (6)    Defense of Indemnified Parties.    If an Interested Party notifies Specialty Laboratories of any claim or
proceeding included in, or any investigation or allegation concerning, Losses for which Specialty Laboratories is responsible pursuant to this subparagraph 2(F), Specialty Laboratories shall assume on
behalf of the Interested Party and conduct with due diligence and in good faith the investigation and defense thereof and the response thereto with counsel selected by Specialty Laboratories, but
reasonably satisfactory to the Interested Party; provided, that the Interested Party shall have the right to be represented by advisory counsel of its own selection and at its own expense; and
provided further, that if any such claim, proceeding, investigation or allegation involves both Specialty Laboratories and the Interested Party and the Interested Party shall have reasonably concluded
that there are legal defenses available to it which are inconsistent with those available to Specialty Laboratories, then the Interested Party shall have the right to select separate counsel to
participate in the investigation and defense of and response to such claim, proceeding, investigation or allegation on its own behalf, and Specialty Laboratories shall pay or reimburse the Interested
Party for all Attorney's Fees incurred by the Interested Party because of the selection of such separate counsel. If Specialty Laboratories fails to assume promptly (and in any event within fifteen
days after being notified of the applicable claim, proceeding, investigation or allegation) the defense of the Interested Party, then the Interested 

Construction Management Agreement - Page 14

 

Party may contest (or settle, with the prior consent of Specialty Laboratories, which consent will not be unreasonably withheld) the claim, proceeding, investigation or allegation at Specialty
Laboratories' expense using counsel selected by the Interested Party. Moreover, if any such failure by Specialty Laboratories continues for thirty days or more after Specialty Laboratories is notified
of any such claim, proceeding, investigation or allegation, then the Interested Party may provide an additional notice of its rights to contest or settle pursuant to this subparagraph. And if such
failure continues for yet another thirty days after such additional notice is given, then the Interested Party may elect not to contest or continue contesting such claim, proceeding, investigation or
allegation and instead, in accordance with the written advice of counsel, settle (or pay in full) any or all claims against the Interested Party related thereto without Specialty Laboratories' consent
and without releasing Specialty Laboratories from any obligations to the Interested Party under this subparagraph 2(F). The right to settle as described in the preceding sentence, however, shall not
be construed as authorization to bind Specialty Laboratories itself to any admission of liability or responsibility or to any settlement agreement or other contract made with a third party claimant.
Further, it is understood that no
Interested Party shall bind or purport to bind Specialty Laboratories to any such admission or settlement agreement or other contract. 

        (7)    Notice of Claims to Specialty Laboratories.    If an Interested Party receives a written notice of claims that
such Interested Party believes are covered by the indemnity in subparagraph 2(F)(1), then such Interested Party will be expected to promptly furnish a copy of such notice to Specialty Laboratories.
The failure to so provide a copy of the notice to Specialty Laboratories shall not excuse Specialty Laboratories from its obligations under subparagraph 2(F)(1); provided, that if such failure
continues for more than fifteen days after the notice is received by such Interested Party and Specialty Laboratories is unaware of the matters described in the notice, with the result that Specialty
Laboratories is unable to assert defenses or to take other actions which could minimize its obligations, then Specialty Laboratories shall be excused from its obligation to indemnify such Interested
Party (and any Affiliate of such Interested Party) against the Losses, if any, which would not have been incurred or suffered but for such failure. For example, if BNPPLC fails to provide Specialty
Laboratories with a copy of a notice of a claim covered by the indemnity set out in subparagraph 2(F)(1) and Specialty Laboratories is not otherwise already aware of such obligation, and if as a
result of such failure BNPPLC becomes liable for penalties and interest covered by the indemnity in excess of the penalties and interest that would have accrued if Specialty Laboratories had been
promptly provided with a copy of the notice, then Specialty Laboratories will be excused from any obligation to BNPPLC (or any Affiliate of BNPPLC) to pay the excess. 

        (8)    Exceptions to Indemnity for Excluded Taxes and Established Misconduct.    Nothing in this subparagraph 2(F) or
other provisions of this Agreement shall be construed to require Specialty Laboratories to reimburse or pay Excluded Taxes or Losses incurred or suffered by any Interested Party that are proximately
caused by (and attributed by any applicable principles of comparative fault to) the Established Misconduct of that Interested Party. 

        (G)    Additional Representations, Warranties and Covenants of Specialty Laboratories Concerning the
Property.    Without limiting the rights granted to Specialty Laboratories by other provisions of this Agreement to be reimbursed from Construction Advances (as
hereinafter provided) for the cost of complying with the following, Specialty Laboratories represents, warrants and covenants as follows: 

        (1)    Payment of Impositions.    Throughout the period prior to any Termination of Specialty Laboratories' Work,
Specialty Laboratories shall pay or cause to be paid prior to delinquency all ad valorem taxes assessed against the Property and other Impositions. If requested by BNPPLC from time to time, Specialty
Laboratories shall furnish BNPPLC with receipts or other appropriate evidence showing payment of all Impositions prior to the applicable delinquency date therefor. 

Construction Management Agreement - Page 15

 

        (2)    Operation and Maintenance.    Throughout the period prior to any Termination of Specialty Laboratories' Work,
Specialty Laboratories shall operate and maintain the Property in a good and
workmanlike manner and substantially in compliance with all Applicable Laws and will pay or cause to be paid all fees or charges of any kind in connection therewith. (If Specialty Laboratories does
not promptly correct any failure of the Property to comply with Applicable Laws that is the subject of a written notice given to Specialty Laboratories or BNPPLC by any governmental authority, then
for purposes of the preceding sentence, Specialty Laboratories shall be considered not to have maintained the Property "substantially in accordance with Applicable Laws" whether or not the
noncompliance would be substantial in the absence of the notice.) Specialty Laboratories shall not use or occupy, or allow the use or occupancy of, the Property in any manner which violates any
Applicable Law or which constitutes a public or private nuisance or which makes void, voidable or cancelable any insurance then in force with respect thereto. Without limiting the generality of the
foregoing, Specialty Laboratories shall not conduct or permit others to conduct Hazardous Substance Activities on the Property, except Permitted Hazardous Substance Use and Remedial Work; and
Specialty Laboratories shall not discharge or permit the discharge of anything (including Permitted Hazardous Substances) on or from the Property that would require any permit under applicable
Environmental Laws, other than (1) storm water runoff, (2) fume hood emissions, (3) waste water discharges through a publicly owned treatment works, (4) discharges that are
a necessary part of any Remedial Work, and (5) other similar discharges consistent with the definition herein of Permitted Hazardous Substance Use which do not significantly increase the risk
of Environmental Losses to BNPPLC, in each case in strict compliance with Environmental Laws. To the extent that any of the following would, individually or in the aggregate, increase the likelihood
of a 97-10/Event or materially and adversely affect the value of the Property or the use of the Property for purposes permitted by this Agreement, Specialty Laboratories shall not, without
BNPPLC's prior consent: (i) initiate or permit any zoning reclassification of the Property; (ii) seek any variance under existing zoning ordinances applicable to the Property;
(iii) use or permit the use of the Property in a manner that would result in such use becoming a nonconforming use under applicable zoning ordinances or similar laws, rules or regulations;
(iv) execute or file any subdivision plat affecting the Property; or (v) consent to the annexation of the Property to any municipality. Specialty Laboratories shall not cause or permit
any drilling or exploration for, or extraction, removal or production of, minerals from the surface or subsurface of the Property, and Specialty Laboratories shall not do anything that could
reasonably be expected to significantly reduce the market value of the Property. If Specialty Laboratories receives a notice or claim from any federal, state or other governmental authority that the
Property is not in compliance with any Applicable Law, or that any action may be taken against BNPPLC because the Property does not comply with any Applicable Law, Specialty Laboratories shall
promptly furnish a copy of such notice or claim to BNPPLC. 

        (3)    Debts for Construction, Maintenance, Operation or Development.    Specialty Laboratories shall promptly pay or
cause to be paid all debts and liabilities incurred it or its contractors or subcontractors in the construction, maintenance, operation or development of the Property. Such debts and liabilities will
include those incurred for labor, material and equipment and all debts and charges for utilities servicing the Property. 

        (4)    Permitted Encumbrances, Development Documents and the Ground Lease.    Specialty Laboratories shall comply with
and will cause to be performed all of the covenants, agreements and obligations imposed upon the owner of any interest in the Property by the Permitted Encumbrances or the Development Documents or the
Ground Lease throughout the period prior to any Termination of Specialty Laboratories' Work. Specialty Laboratories shall not, without the prior consent of BNPPLC, enter into, initiate, approve or
consent to any modification of any Permitted Encumbrance or Development Document that would create or expand or purport to create or expand obligations or restrictions encumbering BNPPLC's interest in
the Property. 

Construction Management Agreement - Page 16

 

        (5)    Books and Records Concerning the Property.    Specialty Laboratories shall keep books and records that are
accurate and complete in all material respects for Specialty Laboratories' construction and management of the Property as contemplated in this Agreement and will permit all such books and records
(including all contracts, statements, invoices, bills and claims for labor, materials and services supplied for the construction and operation of any Improvements) to be inspected and copied by
BNPPLC. 

        (H)    BNPPLC's Right of Access.    

        (1)    Access Generally.    BNPPLC and BNPPLC's representatives may enter the Property at any time for the purpose of
making inspections or performing any work BNPPLC is authorized to undertake by the next subparagraph or for the purpose confirming whether Specialty Laboratories has complied with the requirements of
this Agreement or the other Operative Documents. However, prior to any Termination of Specialty Laboratories' Work, BNPPLC or BNPPLC's representative will, before making any entry upon the Property or
performing any work on the Property authorized by this Agreement, if then requested to do so by Specialty Laboratories in order to maintain Specialty Laboratories' security: (i) sign in at
Specialty Laboratories' security or information desk if Specialty Laboratories has such a desk on the premises, (ii) wear a visitor's badge or other reasonable identification,
(iii) permit an employee of Specialty Laboratories to observe such inspection or work, and (iv) comply with other similar reasonable nondiscriminatory security requirements of Specialty
Laboratories that do not, individually or in the aggregate, significantly interfere with inspections or work of BNPPLC authorized by this Agreement. 

        (2)    Failure of Specialty Laboratories to Perform.    If Specialty Laboratories fails to perform any act or to take
any action required of it by this Agreement or other Operative Documents, or to pay any money which Specialty Laboratories is required by this Agreement or other Operative Documents to pay, and if
such failure or action constitutes an Event of Default or renders BNPPLC or any director, officer, employee or Affiliate of BNPPLC at risk of criminal prosecution or renders BNPPLC's interest in the
Property or any part thereof at risk of forfeiture by forced sale or otherwise, then in addition to any other remedies specified herein or otherwise available, BNPPLC may, perform or cause to be
performed such act or take such action or pay such money. (To the extent that expenses so incurred by BNPPLC, and money so paid by BNPPLC, qualify as a Covered Construction-Period Losses, Specialty
Laboratories must pay the same to BNPPLC upon demand. If any such expenses incurred or money paid do not qualify as Covered Construction-Period Losses, but do constitute 97-10/Project
Costs, BNPPLC may treat them as Construction Advances hereunder. To the extent that any such expenses incurred or money paid do not qualify as Covered Construction-Period Losses and do constitute
97-10/Project Costs, they will be included—with interest—in the Balance of Unpaid Construction Period Losses under and as defined in the Purchase Agreement.)
Further, BNPPLC, upon making such payment, shall be subrogated to all of the rights of the person, corporation or body politic receiving such payment. But nothing herein shall imply any duty upon the
part of BNPPLC to do any work which, under any provision of this Agreement or otherwise, Specialty Laboratories may be required to perform, and the performance thereof by BNPPLC shall not constitute a
waiver of Specialty
Laboratories' default. BNPPLC may during the progress of any such work permitted by BNPPLC hereunder on or in the Property keep and store upon the Property all necessary materials, tools, and
equipment. BNPPLC shall not in any event be liable for inconvenience, annoyance, disturbance, loss of business, or other damage to Specialty Laboratories or the subtenants or invitees of Specialty
Laboratories by reason of BNPPLC's performance of any such work, or on account of bringing materials, supplies and equipment into or through the Property during the course of such work, and the
obligations of Specialty Laboratories under this Agreement and the other Operative Documents shall not thereby be excused in any manner. 

Construction Management Agreement - Page 17

   3.    AMOUNTS TO BE ADDED TO STIPULATED LOSS VALUE (IN ADDITION TO CONSTRUCTION ADVANCES). 

        (A)    Initial Funding Advance.    Upon execution and delivery of this Agreement by BNPPLC, an advance (the
"Initial Funding Advance") shall be made by BNPPLC to cover the cost of certain Transaction Expenses and other amounts described in this subparagraph.
The amount of the Initial Funding Advance, which will be included in Stipulated Loss Value, may be confirmed by a separate closing certificate executed by Specialty Laboratories as of the Effective
Date. An upfront fee (the "Upfront Fee"), an arrangement fee (the "Arrangement Fee") and an initial
administrative agency fee (an "Administrative Agency Fee") will all be paid from the Initial Funding Advance (and thus be included in Stipulated Loss
Value) in the amounts provided in the Term Sheet. To the extent that BNPPLC does not itself use the entire the Initial Funding Advance to pay such fees and Transaction Expenses incurred by BNPPLC, the
remainder thereof will be advanced to Specialty Laboratories, with the understanding that Specialty Laboratories shall use any such amount advanced for one or more of the following purposes:
(1) the payment or reimbursement of Transaction Expenses incurred by Specialty Laboratories; (2) the payment or reimbursement of expenses incurred by Specialty Laboratories in connection
with the Construction Project, including the planning, design, engineering, construction and permitting of thereof; (3) the maintenance of the Property; or (4) the payment of other
amounts due pursuant to the Operative Documents. 

        (B)    Carrying Costs.    For each Construction Period certain charges ("Carrying
Costs") shall accrue and be added to the Outstanding Construction Allowance on the last day of such Construction Period (i.e.,
generally on the Advance Date upon which such Construction Period ends). If, however, for any reason Stipulated Loss Value (and thus the Outstanding Construction Allowance included as a component
thereof) must be determined as of any date between Advance Dates, the Outstanding Construction Allowance determined on such date shall include not only Carrying Costs added on or before the
immediately preceding Advance Date computed as described below, but also Carrying Costs accruing on and after such preceding Advance Date to but not including the date in question. Carrying Costs
accruing for any Construction Period shall be equal to: 

	•
	the
amount equal on the first day of such Construction Period to "Stipulated Loss Value" as defined in the Common Definitions and Provisions Agreement (such
amount being dependent upon BNPPLC's investment in the Property), less Losses (if any) that BNPPLC suffered or incurred on or prior to such day that qualify as Pre-lease Force Majeure
Losses under the definition thereof in Paragraph 1, times

	•
	the
sum of the Effective Rate and the Unsecured Spread for such Construction Period, times

	•
	a
fraction, the numerator of which is the number of days in such Construction Period and the denominator of which is three hundred sixty. 

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

	•
	[***]*
an amount equal to: 

        (1)  the
Maximum Construction Allowance, less 

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

Construction Management Agreement - Page 18

 

        (2)  the
Funded Construction Allowance on the first day of such Construction Period; times 

	•
	the
number of days in such Construction Period; divided by

	•
	three
hundred sixty. 

        (D)    Future Administrative Agency Fees and Out-of-Pocket Costs.    On each anniversary of
the Effective Date prior to the Completion Date, an administrative agency fee (also, an "Administrative Agency Fee") shall be added to the Outstanding
Construction Allowance by BNPPLC in the amount provided in the Term Sheet. Also, to the extent that BNPPLC incurs any out-of-pocket costs prior to the Completion Date with
respect to the administration of or performance of its obligations under this Agreement or other Operative Documents (e.g., any rents required by the
Ground Lease and any Attorneys' Fees or other costs incurred to evaluate lien releases and other information submitted by Specialty Laboratories with requests for Construction Advances), BNPPLC may
add such costs to the Outstanding Construction Allowance from time to time. 

        (E)    Increased Bank/Costs Charges and Capital Adequacy Charges.    

        (1)  If
after the Effective Date there shall be any increase in the cost to BNPPLC's Parent or any other Participant agreeing to make or making, funding or maintaining
advances to BNPPLC in connection with the Property because of any Banking Rules Change, then BNPPLC may agree or become obligated to pay to BNPPLC's Parent or such other Participant, as the case may
be, additional amounts ("Increased Bank/Cost Charges") sufficient to compensate BNPPLC's Parent or the Participant for such increased cost. Any
Increased Bank/Cost Charges paid by BNPPLC or for which BNPPLC becomes obligated to pay, prior to the Completion Date, shall be added to the Outstanding Construction Allowance by BNPPLC. 

        (2)  BNPPLC's
Parent or any other Participant may demand additional payments ("Capital Adequacy Charges") if BNPPLC's Parent
or the other Participant determines that any Banking Rules Change affects the amount of capital to be maintained by it and that the amount of such capital is increased by or based upon the existence
of advances made or to be made to BNPPLC to permit BNPPLC to maintain BNPPLC's investment in the Property or to make Construction Advances. To the extent that BNPPLC's Parent or another Participant
demands Capital Adequacy Charges as compensation for the additional capital requirements reasonably allocable to such investment or advances, and BNPPLC pays or becomes obligated to pay to BNPPLC's
Parent or the other Participant the amount so demanded prior to the Completion Date, such amount shall also be added to the Outstanding Construction Allowance by BNPPLC. 

        (3)  Notwithstanding
the foregoing provisions of this subparagraph 3(E), the Outstanding Construction Allowance will not be increased by Increased Bank/Cost Charges or
Capital Adequacy Charges that arise or accrue more than nine months prior to the date Specialty Laboratories is notified of the intent of BNPPLC's Parent or another Participant to make a claim for
such charges; provided, however, that this provision shall not preclude the addition of any such charges arising or accruing for any period during which such a notice could not be provided to
Specialty Laboratories because of the retroactive application of the statute, regulation or other basis for the claim. Further, BNPPLC shall cause BNPPLC's Parent and any other Participant that is an
Affiliate of BNPPLC to use commercially reasonable efforts to reduce or eliminate any claim for compensation pursuant to this subparagraph 3(E), including a change in the office of such Participant
through which it provides and maintains Funding Advances if such change will avoid the need for, or reduce the amount of, such compensation and will not, in the reasonable judgment of such
Participant, be otherwise disadvantageous to it. It is understood that Specialty Laboratories may also request similar commercial reasonable efforts on the
part of any Participant that is not an Affiliate of BNPPLC, but if a claim for additional compensation by any such 

Construction Management Agreement - Page 19

 

Participant is not eliminated or waived, then Specialty Laboratories may request that BNPPLC replace such Participant under the Participation Agreement. BNPPLC will endeavor in good faith to satisfy
any such request; provided, that no 97-10/Event has occurred and no Event of Default has occurred and is continuing; and, provided further, BNPPLC shall be entitled to impose the same
conditions to any such replacement that subparagraph 4(G)(3)(c) allows BNPPLC to impose in the case of a replacement of a Defaulting Participant. 

4.    CONSTRUCTION ADVANCES. 

        (A)    Costs Subject to Reimbursement Through Construction Advances.    Subject to the terms and conditions set forth
herein, Specialty Laboratories shall be entitled to a Construction Allowance, from which BNPPLC will make Construction Advances on Advance Dates from time to time to pay or reimburse Specialty
Laboratories for the following costs ("Reimbursable Construction-Period Costs") to the extent the following costs are not already included in
Transaction Expenses paid by BNPPLC from the Initial Funding Advance: 

        (1)  the
actual costs and expenses incurred or paid by Specialty Laboratories for the preparation, negotiation and execution of this Agreement and the other Operative
Documents; 

        (2)  costs
of the Work, including not only hard costs incurred for the new Improvements described in Exhibit B, but
also the following costs to the extent reasonably incurred in connection with the Construction Project: 

	•
	soft
costs payable to third parties, such as legal fees, architectural fees, engineering fees, construction management fees, transaction management fees and
fees and costs paid in connection with obtaining project permits and approvals required by governmental authorities or the Development Documents,

	•
	site
preparation costs, and

	•
	costs
of offsite and other public improvements required as conditions of governmental approvals for the Construction Project or as required by the
Development Documents; 

        (3)  the
cost of title insurance in favor of BNPPLC and of maintaining other insurance required by (and consistent with the requirements of) this Agreement prior to the
Completion Date, and costs of repairing any damage to the Improvements caused by a Pre-lease Casualty to the extent such costs are not covered by Escrowed Proceeds made available to
Specialty Laboratories as provided herein prior to the Completion Date; 

        (4)  Impositions
that accrue or become due prior to the Completion Date; 

        (5)  reasonable
and ordinary out-of-pocket costs of operating and maintaining the Property prior to the Completion Date in accordance with the
requirements of this Agreement; 

        (6)  Third
Party Contract/Termination Fees, not to exceed in the aggregate ten percent (10%) of the Maximum Construction Allowance, payable by Specialty Laboratories in
connection with any Third Party Contract between Specialty Laboratories and a Person not an Affiliate of Specialty Laboratories because of any election by Specialty Laboratories to cancel or terminate
such contract during a Work/Suspension Period; and 

        (7)  furniture,
trade fixtures and equipment and other tenant improvements to support Specialty Laboratories' use and occupancy of the Property for the permitted uses
described in subparagraph 2(A) of the Lease, but that are not integral to the Property, the aggregate cost of which does not exceed ten percent (10%) of
the Maximum Construction Allowance; provided, that no Construction Advance for furniture and other items described in this clause will be required of BNPPLC or requested by Specialty Laboratories
before the Construction Project is substantially 

Construction Management Agreement - Page 20

 

complete and substantially all other Reimbursable Construction-Period Costs have been paid or reimbursed from Construction Advances. 

        (B)    Exclusions From Reimbursable Construction-Period Costs.    Notwithstanding anything herein to the contrary,
BNPPLC shall not be required to make any Construction Advance to pay or to reimburse or compensate Specialty Laboratories for Covered Construction-Period Losses paid by Specialty Laboratories as
provided in subparagraph 2(F)(1) or for any of the following Losses which may be incurred by Specialty Laboratories or any other party: 

        (1)  Environmental
Losses; 

        (2)  Losses
that would not have been incurred but for any affirmative act taken by Specialty Laboratories or of any Specialty Laboratories' contractors or subcontractors,
which act is contrary to the other terms
and conditions of this Agreement or to the terms and conditions of the other Operative Documents (e.g., undertaking a Scope Change without prior
authorization of BNPPLC); 

        (3)  Losses
that would not have been incurred but for any fraud, misapplication of Construction Advances or other funds, illegal acts or willful misconduct on the part of the
Specialty Laboratories or its employees or of any other party acting under Specialty Laboratories' control or with the approval or authorization of Specialty Laboratories; and 

        (4)  Losses
that would not have been incurred but for any bankruptcy proceeding involving Specialty Laboratories. 

        (C)    Conditions to Specialty Laboratories' Right to Receive Construction Advances.    BNPPLC's obligation to provide
Construction Advances to Specialty Laboratories from time to time under this Agreement shall be subject to the following terms and conditions, all of which terms and conditions are intended for the
sole benefit of BNPPLC, and none of which shall limit in any way the right of BNPPLC to treat costs or expenditures incurred or paid by or on behalf of BNPPLC as Construction Advances pursuant to
subparagraph 8(A): 

        (1)    Construction Advance Requests.    Specialty Laboratories must make a written request (a
"Construction Advance Request") for any Construction Advance, specifying the amount of such advance, at least five Business Days prior to the Advance
Date upon which the advance is to be paid. To be effective for purposes of this Agreement, a Construction Advance Request must be in substantially the form attached as  Exhibit C. Specialty
Laboratories shall not submit more than one Construction Advance Request in any calendar month. 

        (2)    Amount of the Advances.    

        (a)    Limit Dependent Upon the Maximum Construction Allowance.    Specialty Laboratories shall not be entitled to
require any Construction Advance that would cause the Funded Construction Allowance to exceed the Maximum Construction Allowance or that would increase the amount of such excess. 

        (b)    Limit Dependent Upon Costs Previously Incurred by Specialty Laboratories.    Specialty Laboratories shall not
be entitled to require any Construction Advance that would cause the aggregate of all Construction Advances to exceed the sum of: 

          (i)  Reimbursable
Construction-Period Costs that Specialty Laboratories has, to the reasonable satisfaction of BNPPLC, substantiated as having been paid or incurred by
Specialty Laboratories other than for Work (e.g., Impositions), plus 

        (ii)  the
Reimbursable Construction-Period Costs that Specialty Laboratories has, to the reasonable satisfaction of BNPPLC, substantiated as having been paid or incurred for
Prior Work as of the date of the Construction Advance Request in which Specialty Laboratories requests the advance. 

Construction Management Agreement - Page 21

 

As
used in this Agreement, "Prior Work" means all labor and services actually performed, and all materials actually delivered to the construction site,
in accordance with this Agreement prior to the date in question as part of the Work, and "Future Work" means labor and services performed or to be
performed, and materials delivered or to be delivered, after the date in question as part of the Work. For purposes of this Agreement, Specialty Laboratories and BNPPLC intend to allocate Reimbursable
Construction-Period Costs between Prior Work and Future Work in a manner that is generally consistent with the allocations expressed or implied in construction-related contracts negotiated in good
faith between Specialty Laboratories and third parties not affiliated with Specialty Laboratories (e.g., a general contractor); however, in order to
verify the amount of Reimbursable Construction-Period Costs actually paid or incurred by Specialty Laboratories and the proper allocation thereof between Prior Work and Future Work, BNPPLC shall be
entitled (but not required) to: (x) request, receive and review copies of such agreements between Specialty Laboratories and third parties and of draw requests, budgets or other supporting
documents provided to Specialty Laboratories in connection with or pursuant to such agreements as evidence of the allocations expressed or implied therein, (y) from time to time engage one or
more independent inspecting architects, certified public accountants or other appropriate professional consultants and, absent manifest error, rely without further investigation upon their reports and
recommendations, and (z) without waiving BNPPLC's right to challenge or verify allocations required with respect to future Construction Advances, rely without investigation upon the accuracy of
Specialty Laboratories' own Construction Advance Requests. 

        (c)    Limits During any Work/Suspension Period.    Without limiting the other terms and conditions imposed by this
Agreement for the benefit of BNPPLC with respect all Construction Advances, BNPPLC shall have no obligation to make any Construction Advance during any Work/Suspension Period that would cause the
aggregate of all Construction Advances to exceed the sum of: 

          (i)  Reimbursable
Construction-Period Costs that Specialty Laboratories has, to the reasonable satisfaction of BNPPLC, substantiated as having been paid or incurred by
Specialty Laboratories other than for Work (e.g., Impositions), plus 

        (ii)  the
Reimbursable Construction-Period Costs that Specialty Laboratories has, to the reasonable satisfaction of BNPPLC, substantiated as having been paid or incurred for
Prior Work as of the date the Work/Suspension Period commenced. 

For
purposes of computing the limits described in this subparagraph 4(C)(2)(c), Reimbursable Construction-Period Costs "other than for Work" shall include Third Party Contract/Termination Fees that
qualify as Reimbursable Construction-Period Costs pursuant to subparagraph 4(A)(6). However, as provided in subparagraph 4(A)(6), the amount of such Third Party Contract/Termination Fees subject to
reimbursement shall not in any event exceed ten percent (10%) of the Maximum Construction Allowance. If Specialty Laboratories fails to manage and administer Third Party Contracts as necessary to
ensure that Specialty Laboratories can (at any point in time) terminate all such contracts without becoming liable for Third Party Contract/Termination Fees in excess of ten percent (10%) of the
Maximum Construction Allowance, then the excess shall be the responsibility of Specialty Laboratories. 

        (d)    Restrictions Imposed for Administrative Convenience.    Specialty Laboratories shall not request any
Construction Advance (other than the final Construction Advance Specialty Laboratories intends to request) for an amount less than $1,000,000. 

        (3)    No Advances After Certain Dates.    BNPPLC shall have no obligation to make any Construction Advance
(x) after the last Advance Date, (y) on or after the Designated Sale Date, 

Construction Management Agreement - Page 22

 

or (z) on or after the effective date of any Termination of Specialty Laboratories' Work pursuant to subparagraph 7(B) or subparagraph 7(C). 

        (D)    Breakage Costs for Construction Advances Requested But Not Taken.    If Specialty Laboratories requests but
thereafter declines to accept any Construction Advance, or if Specialty Laboratories requests a Construction Advance that it is not permitted to take because of its failure to satisfy any of the
conditions specified in subparagraph 4(C), BNPPLC shall be entitled to add any resulting Breakage Costs to the Outstanding Construction Allowance and Stipulated Loss Value. 

        (E)    No Third Party Beneficiaries.    No contractor or other third party shall be entitled to require BNPPLC to make
advances as a third party beneficiary of this Agreement, and nothing contained herein or in any of the other Operative Documents shall be construed as an agreement obligating BNPPLC to make advances
to anyone other than Specialty Laboratories itself. 

        (F)    No Waiver.    No funding of Construction Advances and no failure of BNPPLC to object to any Work proposed or
performed by or for Specialty Laboratories shall constitute a waiver by BNPPLC of the requirements contained in this Agreement. 

        (G)    Funding by Participants.    Specialty Laboratories acknowledges that, as provided in the Participation
Agreement, each Participant has agreed to pay to BNPPLC a Percentage (under and as defined in the Participation Agreement) of the Construction Advances required by this Agreement. BNPPLC will not be
responsible to Specialty Laboratories for any failure of any Participant (other than an Affiliate of BNPPLC) to provide advances required by the Participation Agreement, although BNPPLC will
endeavor in good faith to mitigate the impact of any such failure by taking the actions described below in this subparagraph. So long as any Participant (other than an Affiliate of BNPPLC) fails to
provide its Percentage of any requested Construction Advance, then the amount of the Construction Advance for which BNPPLC itself shall be obligated hereunder shall be reduced by the amount that the
Participant should have provided, but failed to provide, in accordance with the Participation Agreement. No such reduction, however, of BNPPLC's obligation hereunder shall release or impair the
obligation of the Participant directly to Specialty Laboratories, created by Specialty Laboratories' status as a third party beneficiary of the Participant's commitment under the Participation
Agreement to provide the Participant's Percentage of Construction Advances. Further, any such failure shall excuse BNPPLC's obligation to provide the requested Construction Advance only to the extent
of the funds that the applicable Participant or Participants should have advanced (but did not advance) to BNPPLC, and in the event of any such failure: 

        (1)  BNPPLC
will endeavor to immediately notify Specialty Laboratories, but BNPPLC will not in any event be liable to Specialty Laboratories for BNPPLC's failure to do so. 

        (2)  BNPPLC
will to the extent possible postpone reductions of Construction Advances because of the failure by any one or more Participants not Affiliates of BNPPLC
("Defaulting Participants") to make required advances under the Participation Agreement (a "Participant
Default") by adjusting (and readjusting from time to time, as required) the funding "Percentages" of other Participants, and by directing the other Participants to make
advances to BNPPLC on the basis of such adjusted Percentages, in each case as provided in the Participation Agreement; however, so long as a Participant Default continues, no Construction Advance
shall be required that would cause the Outstanding Construction Allowance to exceed (1) the Maximum Construction Allowance available under this Agreement, less (2) all amounts that
should have been, but because of a continuing Participant Default have not been, advanced by any one or more of the Participants to BNPPLC under the Participation Agreement with respect to
Construction Advances. 

        (3)  Further,
after a Participant Default, and so long as no 97-10/Event has occurred and no Event of Default has occurred and is continuing, BNPPLC shall do any
or all of the following as 

Construction Management Agreement - Page 23

 

reasonably requested by Specialty Laboratories to the extent that BNPPLC can do so without violating Applicable Laws, without breaching its obligations under the Participation Agreement and without
waiving rights or remedies it has under this Agreement or other Operative Documents: 

        (a)  BNPPLC
shall promptly make a written demand upon the Defaulting Participants for the cure of the Participant Default. 

        (b)  BNPPLC
shall exercise its rights under the Participation Agreement to abate payments to the Defaulting Participants in regard to Commitment Fees and to disregard votes
of Defaulting Participants on matters that require or permit a vote of Participants under the Participation Agreement. 

        (c)  Working
with Specialty Laboratories, BNPPLC shall endeavor in good faith to identify one or more banks that are willing to replace the Defaulting Participant under the
Participation Agreement and that are acceptable to both BNPPLC and to Specialty Laboratories. (In this subparagraph, "New Participants" means such
banks, whether one or more, it being understood that the term New Participants may include new parties to the Participation Agreement and it may include existing Participants that increase their
Percentages [under and as defined in the Participation Agreement] in order to replace a Defaulting Participant.) In any event, BNPPLC shall not unreasonably withhold its
approval for the substitution of any New Participant proposed by Specialty Laboratories. However, nothing herein will be construed to require BNPPLC to provide funding that a Defaulting Participant
agreed to provide, but did not provide, and BNPPLC shall be entitled to impose any or all of the following conditions to any substitution of New Participants for Defaulting Participants:
(A) the proposed substitution shall not include a waiver of rights by BNPPLC against the Defaulting Participants; (B) the New Participants must agree (by executing supplement to the
Participation Agreement as provided in the Participation Agreement) to provide funds to replace the payments that would otherwise be required of the Defaulting Participants with respect to future
Construction Advances; (C) the New Participants must provide the funds (if any) needed to terminate the Defaulting Participants' rights to receive payments of "Net Cash Flow" (as defined in the
Participation Agreement) that BNPPLC will be required to pay to the New Participants after the substitution; (D) the New Participants must provide and agree in writing to provide funds needed
to reimburse BNPPLC for any and all Losses incurred by BNPPLC in connection with or because of the substitution, including any cost of defending and paying any claim asserted by Defaulting
Participants because of the substitution (but not including any liability of BNPPLC to the Defaulting Participants for damages caused by BNPPLC's bad faith or gross negligence in the performance of
BNPPLC's obligations to the Defaulting Participants); (E) the obligations of BNPPLC to the New Participants per dollar of investments by the New Participants (it being understood that such
investments will be computed in a manner consistent with the examples set forth in Exhibit A to the Participation Agreement, but net of reimbursements to BNPPLC under clause (D)
preceding) shall not exceed the obligations per dollar of investment by the Defaulting Participants that BNPPLC would have had to the Defaulting Participants if there had been no Participant Default;
and (F) the New Participants shall be reputable financial institutions, each having a net worth of no less than seven and one half percent (7.5%) of its total assets and total assets of no less
than $10,000,000,000 (all according to then recent audited financial statements). 

5.    APPLICATION OF INSURANCE AND CONDEMNATION PROCEEDS. 

        (A)    Collection and Application of Insurance and Condemnation Proceeds Generally.    This Paragraph 5 shall
govern the application of proceeds received by BNPPLC or Specialty Laboratories from any third party prior to the commencement of the Term of the Lease (1) under any property 

Construction Management Agreement - Page 24

 

insurance policy as a result of damage to the Property (including proceeds payable under any insurance policy covering the Property which is maintained by Specialty Laboratories), (2) as
compensation for any restriction placed upon the use or development of the Property or for the condemnation of the Property or any portion thereof, or (3) because of any judgment, decree or
award for injury or damage to the Property (e.g., damage resulting from a third party's release of Hazardous Materials onto the
Property); excluding, however, any funds paid to BNPPLC by BNPPLC's Parent, by an Affiliate of BNPPLC or by any Participant that is made to compensate BNPPLC for any Losses BNPPLC may suffer or incur
in connection with this Agreement or the Property. Specialty Laboratories will promptly pay over to BNPPLC any insurance, condemnation or other proceeds covered by this Paragraph 5 which
Specialty Laboratories may receive from any insurer, condemning authority or other third party. All proceeds covered by this Paragraph 5, including those received by BNPPLC from Specialty
Laboratories or third parties, shall be applied as follows: 

        (1)  First,
proceeds covered by this Paragraph 5 will be used to reimburse BNPPLC for any costs and expenses, including Attorneys' Fees, that BNPPLC incurred to
collect the proceeds. 

        (2)  Second,
the proceeds remaining after such reimbursement to BNPPLC (the "Remaining Proceeds") will be applied, as
hereinafter more particularly provided, either as a Qualified Prepayment or to pay or reimburse Specialty Laboratories or BNPPLC for the actual out-of-pocket costs of repairing
or restoring the Property. Until any Remaining Proceeds received by BNPPLC are applied by BNPPLC as a Qualified Prepayment or applied by BNPPLC to reimburse costs of repairs to or restoration of the
Property pursuant to this Paragraph 5, BNPPLC shall hold and maintain such Remaining Proceeds as Escrowed Proceeds in an interest bearing account, and all interest earned on such account shall
be added to and made a part of such Escrowed Proceeds. 

        (B)    Advances of Escrowed Proceeds to Specialty Laboratories.    Except as otherwise provided below in this
Paragraph 5, BNPPLC shall hold all such Escrowed Proceeds until they are advanced to reimburse Specialty Laboratories for the actual out-of-pocket cost to Specialty
Laboratories of repairing or restoring the Property in accordance with the requirements of this Agreement. BNPPLC will so advance the Escrowed Proceeds as the applicable repair or restoration,
progresses and upon compliance by Specialty Laboratories with such conditions and requirements as may be reasonably imposed by BNPPLC, including conditions and requirements similar to those that set
forth herein for the payment of Construction Advances. In no event, however, shall BNPPLC be required to pay Escrowed Proceeds to Specialty Laboratories in excess of the actual
out-of-pocket cost to Specialty Laboratories of the applicable repair, restoration or replacement, as evidenced by invoices or other documentation reasonably satisfactory to
BNPPLC. 

        (C)    Status of Escrowed Proceeds After Commencement of the Term of the Lease.    Any Remaining Proceeds governed by
this Paragraph 5 which BNPPLC is continuing to hold as Escrowed Proceeds when the Term of the Lease commences shall be applied in accordance with the terms and conditions of the Lease as if
received by BNPPLC immediately after the Term commenced. 

        (D)    Special Provisions Applicable After a 97-10/Event or Event of Default.    Notwithstanding the
foregoing, after any 97-10/Event, and when any Event of Default shall have occurred and be continuing, BNPPLC shall be entitled to receive and collect all insurance, condemnation or other
proceeds governed by this Paragraph 5 and to apply all Remaining Proceeds, when and in such order and to such extent deemed appropriate by BNPPLC in its sole discretion, either (A) to
the reimbursement of Specialty Laboratories or BNPPLC for the out-of-pocket cost of repairing or restoring the Property, or (B) as Qualified Prepayments. 

        (E)    Specialty Laboratories' Obligation to Restore.    Regardless of the adequacy of any Remaining Proceeds
available to Specialty Laboratories hereunder, if the Property is damaged by fire or other casualty or any part of the Property is taken by condemnation, Specialty Laboratories shall to the maximum
extent possible, as part of the Work, restore the Property or the remainder thereof and 

Construction Management Agreement - Page 25

 

continue construction of the Construction Project on and subject to the terms and conditions set forth in this Agreement. However, Specialty Laboratories' obligation to do so shall be subject to the
other provisions of this Agreement concerning the Work, including the provisions that permit Specialty Laboratories to suspend the Work during any Work/Suspension Period and to elect a Termination of
Specialty Laboratories' Work as provided in subparagraph 7(B). Further, any additional costs required to complete the Construction Project resulting from such a casualty or taking prior to the
Completion Date shall, to the extent not covered by Remaining Proceeds paid to Specialty Laboratories as provided herein, be subject to reimbursement by BNPPLC as Reimbursable Construction-Period
Costs on the same terms and conditions that apply to reimbursements of other costs of the Work hereunder. 

        (F)    Special Provisions Concerning a Complete Taking.    Specialty Laboratories may react to any threat of a
Complete Taking from a governmental authority by exercising Specialty Laboratories' right to accelerate the Designated Sale Date (as provided in the definition thereof) and by exercising the Purchase
Option under the Purchase Agreement. By so doing, Specialty Laboratories will put itself in a position to control condemnation proceedings and to receive all proceeds of the Complete Taking. If,
however, Specialty Laboratories does not buy the Property pursuant to the Purchase Agreement prior to any Complete Taking, then BNPPLC will be entitled to receive and retain all amounts paid for the
Property in connection with the Complete Taking, notwithstanding any contrary provision herein or in the other Operative Documents and notwithstanding that such proceeds may exceed Stipulated Loss
Value. 

6.    NOTICE OF COST OVERRUNS AND PRE-LEASE FORCE MAJEURE EVENTS. 

        (A)    Notice of Projected Cost Overruns.    If, at the time Specialty Laboratories submits any Construction Advance
Request, Specialty Laboratories believes for any reason (including any damage to the Property by fire or other casualty or any taking of any part of the Property by condemnation) that Projected Cost
Overruns are more likely than not, Specialty Laboratories shall state such belief in the Construction Advance Request and, if Specialty Laboratories can reasonably do so, Specialty Laboratories will
estimate the approximate amount of such Projected Cost Overruns. 

        (B)    Pre-lease Force Majeure Event Events and Notices.    Specialty Laboratories may from time to time
provide a notice to BNPPLC in the form attached as Exhibit D (a "Pre-lease Force Majeure Event
Notice"), describing any Pre-lease Force Majeure Event that has occurred or commenced within the 30 days prior to such notice and setting forth Specialty
Laboratories' preliminary good faith estimate of any Pre-lease Force Majeure Delays, Pre-lease Force Majeure Losses and Pre-lease Force Majeure Excess Costs that
are likely to result from such event. BNPPLC shall have the option to respond to any
Pre-lease Force Majeure Event Notice with an FOCB Notice or, alternatively and if applicable, with an Increased Commitment as provided in subparagraph 7(B)(6). 

7.    SUSPENSION AND TERMINATION OF SPECIALTY LABORATORIES' WORK. 

        (A)    Rights and Obligations of Specialty Laboratories During a Work/Suspension Period.    During any Work/Suspension
Period, Specialty Laboratories shall have the right to suspend the Work; provided, however, the obligations of Specialty Laboratories which are to survive any Termination of Specialty Laboratories'
Work shall also continue and survive during any Work/Suspension Period. 

        (B)    Specialty Laboratories' Election to Terminate Specialty Laboratories' Work.    Specialty Laboratories may elect
to terminate its rights and obligations to continue Work at any time prior to the Completion Date if at such time Specialty Laboratories believes in good faith that (i) the remaining available
Construction Allowance will not be sufficient to cover Reimbursable Construction-Period Costs yet to be paid or reimbursed from Construction Advances, whether because the cost of the Work exceeds
budgeted expectations (resulting in Projected Cost Overruns), because of any Pre-lease Force Majeure Event or because Specialty Laboratories can no longer satisfy conditions to BNPPLC's 

Construction Management Agreement - Page 26

 

obligation to provide Construction Advances, or (ii) through no fault of Specialty Laboratories or its employees or any other party acting under Specialty Laboratories' control or with the
approval or authorization of Specialty Laboratories, the Work will not be substantially completed prior to the Target Completion Date. To be effective, however, any such election by Specialty
Laboratories must be made in accordance with the following: 

        (1)  Any
such election by Specialty Laboratories to terminate its rights and obligations to continue the Work must be made by notice to BNPPLC and the Participants in the
form of Exhibit E (a "Notice of Termination by Specialty Laboratories"). 

        (2)  At
least forty-five days before giving any such Notice of Termination by Specialty Laboratories, Specialty Laboratories must give a notice of Specialty
Laboratories' intent to terminate to BNPPLC and the Participants in the form of Exhibit F (a "Notice of Specialty
Laboratories' Intent to Terminate"), and the Notice of Specialty Laboratories' Intent to Terminate must state the reasons why, in Specialty Laboratories' good faith
determination, the remaining available Construction Allowance will not be sufficient to cover Reimbursable Construction-Period Costs yet to be paid or reimbursed from Construction Advances or the Work
will not be substantially complete prior to the Target Completion Date, as applicable. 

        (3)  Without
limiting the forgoing, prior to giving any Notice of Specialty Laboratories"s Intent to Terminate when Specialty Laboratories believes that the remaining
available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs incurred or anticipated as a result of a Pre-lease Force Majeure
Event, Specialty Laboratories must—after having notified BNPPLC of the such event by the delivery of a Notice of Pre-lease Force Majeure Event in accordance with subparagraph
6(B)—expressly set forth such belief in the Notice of Specialty Laboratories' Intent to Terminate as indicated in Exhibit F. In any
such Notice of Specialty Laboratories' Intent to Terminate, Specialty Laboratories must also specify its good faith estimate of the Pre-lease Force Majeure Excess Costs likely to be
incurred ("Specialty Laboratories' Estimate of Force Majeure Excess Costs"). 

        (4)  Similarly,
before giving any Notice of Specialty Laboratories's Intent to Terminate when Specialty Laboratories believes that the Work will not be substantially complete
before the Target Completion Date only because of Pre-lease Force Majeure Delays resulting from a Pre-lease Force Majeure Event, Specialty Laboratories must—after
having notified BNPPLC of such event by the delivery of a Notice of Pre-lease Force Majeure Event in accordance with subparagraph 6(B)—expressly set forth such belief in the
Notice of Specialty Laboratories' Intent to Terminate as indicated in Exhibit F. In any such Notice of Specialty Laboratories' Intent to
Terminate, Specialty Laboratories must also specify its good faith estimate of the Pre-lease Force Majeure Delays likely to occur ("Specialty Laboratories' Estimate
of Force Majeure Delays"). 

        (5)  As
used herein, a "Notice of Specialty Laboratories' Intent to Terminate Because of a Force Majeure Event" means any
Notice of Specialty Laboratories' Intent to Terminate that sets forth Specialty Laboratories' belief, by the optional provisions contemplated in  Exhibit F, that either or both: (a) the
remaining available Construction Allowance will not be sufficient only because of
Pre-lease Force Majeure Excess Costs incurred or anticipated as a result of a Pre-lease Force Majeure Event, or (b) the Work will not be substantially complete before
the Target Completion Date only because of Pre-lease Force Majeure Delays resulting from a Pre-lease Force Majeure Event. Should any Termination of
Specialty Laboratories' Work occur before Specialty Laboratories sends a Notice of Specialty Laboratories' Intent to Terminate Because of a Force Majeure Event in accordance with this subparagraph
(and in the form attached as Exhibit F), such Termination of Specialty Laboratories' Work shall, for purposes of determining whether any 97-10/Prepayment may be required pursuant to
Paragraph 9, be conclusively presumed to have occurred for reasons other than a Pre-lease Force Majeure Event.

Construction Management Agreement - Page 27

 

        (6)  After
receipt of any Notice of Specialty Laboratories' Intent to Terminate Because of a Force Majeure Event and before receipt of a Notice of Termination by Specialty
Laboratories, BNPPLC may, but shall not be obligated to, respond to Specialty Laboratories with certain commitments as follows (such a response being hereinafter called an
"Increased Commitment"): 

        (a)  In
the case of a Notice of Intent to Terminate Because of a Force Majeure Event which expresses Specialty Laboratories' belief that the remaining available Construction
Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs, BNPPLC may respond with a written commitment to increase the Construction Allowance (an
"Increased Funding Commitment") by the
lesser of (i) Specialty Laboratories' Estimate of Force Majeure Excess Costs as set forth in such Notice of Specialty Laboratories' Intent to Terminate, or (ii) the actual
Pre-lease Force Majeure Excess Costs. Any Increased Funding Commitment may be in the form of Exhibit G. 

        (b)  In
the case of a Notice of Intent to Terminate Because of a Force Majeure Event which expresses Specialty Laboratories' belief that the Work will not be substantially
complete before the Target Completion Date only because of Pre-lease Force Majeure Delays, BNPPLC may respond with a written commitment to extend the Target Completion Date (an
"Increased Time Commitment") by the lesser of (i) Specialty Laboratories' Estimate of Force Majeure Delays as set forth in such Notice of
Specialty Laboratories' Intent to Terminate, or (ii) the actual Pre-lease Force Majeure Delays. Any Increased Time Commitment may be in the form of  Exhibit H. 

        (c)  In
the case of a Notice of Intent to Terminate Because of a Force Majeure Event which expresses Specialty Laboratories' belief that both (i) the remaining
available Construction Allowance will not be sufficient only because of Pre-lease Force Majeure Excess Costs and (ii) the Work will not be substantially complete before the Target
Completion Date only because of Pre-lease Force Majeure Delays, BNPPLC may respond with an Increased Funding Commitment and an Increased Time Commitment. 

        (7)  If
BNPPLC does respond to a Notice of Specialty Laboratories' Intent to Terminate Because of a Force Majeure Event with an Increased Commitment, Specialty Laboratories
shall be entitled to rescind such Notice of Specialty Laboratories' Intent to Terminate at any time within ten days after receipt of such Increased Commitment. To be effective, any such rescission
must be by notice to BNPPLC and Participants in the form of Exhibit I. Except as provided in the next subparagraph, any
failure of Specialty Laboratories to so rescind the Notice of Specialty Laboratories' Intent to Terminate within ten days after receipt of an Increased Commitment shall, for purposes of determining
whether any 97-10/Prepayment may be required pursuant to Paragraph 9, create a conclusive presumption that any Termination of Specialty Laboratories' Work after the date of such
response was made for reasons other than a Pre-lease Force Majeure Event.

        (8)  Notwithstanding
the foregoing, in the event of a Complete Taking, Specialty Laboratories may deliver a Notice of Specialty Laboratories' Intent to Terminate Because of a
Force Majeure Event that explains futility of continuing with the Construction Project on the Land regardless of any willingness of BNPPLC to approve or consider Scope Changes or an Increased
Commitment. BNPPLC may respond to such a notice with a request that Specialty Laboratories consider modifications to the Ground Lease and Operative Documents (including a change of the description of
the Land) so as to permit construction of the Construction Project in whole or in part on a different site. Following any such request, Specialty Laboratories must respond by negotiating modifications
reasonably and in good faith. If the parties do agree upon and execute such modifications as are necessary to permit Specialty Laboratories to complete the Construction Project in whole or in part on
a different site, then the Complete Taking will be deemed to no longer exist and Specialty Laboratories's prior Notice of Intent to Terminate Because of a Force 

Construction Management Agreement - Page 28

 

Majeure Event will be deemed rescinded. If, however, despite Specialty Laboratories's participation in any such negotiations reasonably and in good faith, the parties fail to agree upon such
modifications, no offer by BNPPLC of an Increased Commitment after a Complete Taking will preclude a "Termination of Specialty Laboratories' Work because of a Pre-lease Force Majeure
Event" for the purposes of determining whether Specialty Laboratories must pay a 97-10/Prepayment pursuant to Paragraph 9. 

        (C)    BNPPLC's Right to Terminate Specialty Laboratories' Work.    By notice to Specialty Laboratories BNPPLC shall
be entitled to terminate Specialty Laboratories' rights and obligations to continue the Work at any time (x) more than thirty days after BNPPLC has given an FOCB Notice to Specialty
Laboratories, or (y) after BNPPLC's receipt of a Notice of Specialty Laboratories' Intent to Terminate that is not a Notice of Specialty Laboratories' Intent to Terminate Because of a Force
Majeure Event, or (z) BNPPLC's receipt of a Notice of Specialty Laboratories' Intent to Terminate Because of a Force Majeure Event and the failure of Specialty Laboratories to rescind the same
within ten days after BNPPLC responds with any Increased Commitment as defined below) as described in subparagraph 7(B)(7). 

        (D)    Rights and Obligations Surviving any Termination of Specialty Laboratories' Work.    Following any Termination
of Specialty Laboratories' Work as provided in subparagraph 7(B) or in 7(C), Specialty Laboratories shall have no obligation to continue or complete any Work; provided, however, no such Termination of
Specialty Laboratories' Work shall reduce or excuse the following rights and obligations of the parties, it being intended that all such rights and obligations shall survive and continue after any
Termination of Specialty Laboratories' Work: 

        (1)  the
rights and obligations of Specialty Laboratories and BNPPLC under the other Operative Documents; 

        (2)  Specialty
Laboratories' obligations to indemnify BNPPLC and other Interested Parties as set forth in subparagraph 2(F), which concerns Covered Construction-Period
Losses; and 

        (3)  Specialty
Laboratories' obligations described in the next subparagraph 7(E). 

        (E)    Cooperation by Specialty Laboratories Following any Termination of Specialty Laboratories' Work.    After any
Termination of Specialty Laboratories' Work as provided in subparagraph 7(B) or subparagraph 7(C), Specialty Laboratories shall comply with the following terms and conditions, all of which shall
survive notwithstanding any such termination: 

        (1)  Specialty
Laboratories shall promptly deliver copies to BNPPLC of all Third Party Contracts and purchase orders made by Specialty Laboratories in the performance of or
in connection with the Work, together with all plans, drawings, specifications, bonds and other materials relating to the Work in
Specialty Laboratories' possession, including all papers and documents relating to governmental permits, orders placed, bills and invoices, lien releases and financial management under this Agreement.
All such deliveries shall be made free and clear of any liens, security interests, or encumbrances, except such as may be created by the Operative Documents. 

        (2)  Promptly
after any request from BNPPLC made with respect to any Third Party Contract, Specialty Laboratories shall deliver a letter confirming: (i) whether
Specialty Laboratories has performed any act or executed any other instrument which invalidates or modifies such contract in whole or in part (and, if so, the nature thereof); (ii) the extent
to which such contract is valid and subsisting and in full force and effect; (iii) that, to Specialty Laboratories' knowledge, there are no defaults or events of default then existing under
such contract and, to Specialty Laboratories' knowledge, no event has occurred which with the passage of time or the giving of notice, or both, would constitute such a default or event of default (or,
if there is a default or potential default, the nature of such default in detail); (iv) whether the services and construction contemplated by such 

Construction Management Agreement - Page 29

 

contract is proceeding in a satisfactory manner in all material respects (and if not, a detailed description of all significant problems with the progress of the services or construction);
(v) in reasonable detail the then critical dates projected by Specialty Laboratories for work and deliveries required by such contract; (vi) the total amount received by the other party
to such contract for work or services provided by the other party through the date of the letter; (vii) Specialty Laboratories' good faith estimate of the total cost of completing the services
and work contemplated under such contract as of the date of the letter, together with any current draw or payment schedule for the contract; and (viii) any other information BNPPLC may
reasonably request to allow it to decide what steps it should take concerning the contract within BNPPLC's rights under this Agreement and the other Operative Documents. 

        (3)  As
and to the extent requested by BNPPLC, Specialty Laboratories will make every reasonable effort (but without any obligation to incur any expense or liability to do
so, unless BNPPLC agrees to reimburse the same with reasonable promptness) to secure any required consents or approvals for an assignment of any then existing Third Party Contract to BNPPLC or its
designee, upon terms satisfactory to BNPPLC. To the extent assignable, any then existing Third Party Contract will be assigned by Specialty Laboratories to BNPPLC upon request, without charge by
Specialty Laboratories. 

        (4)  If
Specialty Laboratories has canceled any Third Party Contract before and in anticipation of a Termination of Specialty Laboratories' Work, then as and to the extent
requested by BNPPLC, Specialty Laboratories shall make every reasonable effort (but without any obligation to incur any expense or liability to do so, unless BNPPLC agrees to reimburse the same with
reasonable promptness) to secure a reinstatement of such Third Party Contract in favor of BNPPLC and upon terms satisfactory to BNPPLC. 

        (5)  For
a period not to exceed thirty days after the Termination of Specialty Laboratories' Work, Specialty Laboratories shall take such steps as are reasonably necessary to
preserve and protect Work completed and in progress and to protect materials, equipment, and supplies at the Property or in transit. Without regard to the conditions applicable to other payments
required of BNPPLC by this
Agreement, BNPPLC must with reasonable promptness reimburse any reasonable out-of-pocket expenses incurred by Specialty Laboratories to comply with this subparagraph (5);
provided, however, that BNPPLC may at any time or from time to time by notice to Specialty Laboratories limit or terminate such reimbursements as to expenses incurred after Specialty Laboratories'
receipt of such notice, and thereafter Specialty Laboratories shall be excused from any obligation to incur expenses that BNPPLC may decline to reimburse. 

8.    CONTINUATION OF CONSTRUCTION BY BNPPLC. 

        (A)    Owner's Election to Continue Construction.    Without limiting BNPPLC's other rights and remedies under this
Agreement or the other Operative Documents, and without terminating Specialty Laboratories' surviving obligations under this Agreement or Specialty Laboratories' obligations under the other Operative
Documents, after any Termination of Specialty Laboratories' Work as provided in subparagraph 7(B) or subparagraph 7(C), BNPPLC shall be entitled (but not obligated) to take whatever action it deems
necessary or appropriate by the use of legal proceedings or otherwise to continue or complete the Construction Project in a manner not substantially inconsistent (to the extent practicable under
Applicable Laws) with the general description of the Construction Project set forth in Exhibit B. (As used herein,
"Owner's Election to Continue Construction" means any election by BNPPLC to continue or complete the Construction Project pursuant to the preceding
sentence.) After any Owner's Election to Continue Construction, BNPPLC may do any one or more of the following 

Construction Management Agreement - Page 30

 

pursuant to this subparagraph without further notice and regardless of whether any breach of this Agreement by Specialty Laboratories is then continuing: 

        (1)    Take Control of the Property.    BNPPLC may cause Specialty Laboratories and any contractors or other parties
on the Property to vacate the Property until the Construction Project is complete or BNPPLC elects not to continue work on the Construction Project. 

        (2)    Continuation of Construction.    BNPPLC may perform or cause to be performed any work to complete or continue
the construction of the Construction Project. In this regard, so long as work ordered or undertaken by BNPPLC is not substantially inconsistent (to the extent practicable under Applicable Laws) with
the general description of the Construction Project set forth in Exhibit B and the permitted use of the Property set forth in the Lease, BNPPLC
shall have complete discretion to: 

        (a)  proceed
with construction according to such plans and specifications as BNPPLC may from time to time approve; 

        (b)  establish
and extend construction deadlines as BNPPLC from time to time deems appropriate, without obligation to adhere to any deadlines for construction by Specialty
Laboratories set forth in this Agreement; 

        (c)  hire,
fire and replace architects, engineers, contractors, construction managers and other consultants as BNPPLC from time to time deems appropriate, without obligation
to use, consider or compensate architects, engineers, contractors, construction managers or other consultants previously selected or engaged by Specialty Laboratories; 

        (d)  determine
the compensation that any architect, engineer, contractor, construction manager or other consultant engaged by BNPPLC will be paid, and the terms and
conditions that will govern the payment of such compensation (including whether payment will be due in advance, over the course of construction or on some other basis and including whether contracts
will be let on a fixed price basis, a cost plus a fee basis or some other basis), as BNPPLC from time to time reasonably deems appropriate; 

        (e)  pay,
settle or compromise existing or future bills and claims which are or may be liens against the Property or as BNPPLC reasonably considers necessary or desirable for
the completion of the Construction Project or the removal of any clouds on title to the Property; 

        (f)    prosecute
and defend all actions or proceedings in connection with the construction of the Construction Project; 

        (g)  select
and change interior and exterior finishes for the Improvements and landscaping as BNPPLC from time to time deems appropriate; and 

        (h)  generally
do anything that Specialty Laboratories itself might have done if Specialty Laboratories had satisfied or obtained BNPPLC's waiver of the conditions specified
therein. 

        (3)    Arrange for Turnkey Construction.    Without limiting the generality of the foregoing, BNPPLC may engage any
contractor or real estate developer BNPPLC believes to be reputable to take over and complete construction of the Construction Project on a "turnkey" basis. 

        (4)    Suspension or Termination of Construction by BNPPLC.    Notwithstanding any Owner's Election to Continue
Construction, BNPPLC may subsequently elect at any time to suspend or terminate further construction without obligation to Specialty Laboratories. 

For
purposes of the Operative Documents (including the determination of the Outstanding Construction Allowance, Stipulated Loss Value and the Break Even Price), after any Owner's Election to Continue
Construction, all costs and expenditures incurred or paid by or on behalf of BNPPLC to 

Construction Management Agreement - Page 31

 

complete or continue construction as provided in this subparagraph 8(A) shall be considered Construction Advances, regardless of whether they cause the Funded Construction Allowance to exceed the
Maximum Construction Allowance. Further, as used in the preceding sentence, "costs incurred" by BNPPLC will include costs that BNPPLC has become obligated to pay to any third party that is not an
Affiliate of BNPPLC (including any construction contractor), even if the payments for which BNPPLC has become so obligated will constitute prepayments for work or services to be rendered after payment
and notwithstanding that BNPPLC's obligations for the payments may be conditioned upon matters beyond BNPPLC's control. For example, even if a construction contract between BNPPLC and a contractor
excused BNPPLC from making further progress payments to the contractor upon Specialty Laboratories' failure to make any required 97-10/Prepayment under the Purchase Agreement, the
obligation to make a progress payment would nonetheless be "incurred" by BNPPLC, for purposes of determining whether BNPPLC has incurred costs considered to be 97-10/Project Costs and
Construction Advances, when BNPPLC's obligation to pay it became subject only to Specialty Laboratories' payment of a 97-10/Prepayment or other conditions beyond BNPPLC's control. 

        (B)    Powers Coupled With an Interest.    BNPPLC's rights under subparagraph 8(A) are intended to constitute powers
coupled with an interest which cannot be revoked. 

        (C)    Completion Notice.    At any time any after a Termination of Specialty Laboratories' Work, if BNPPLC makes an
Owner's Election to Continue Construction and then substantially completes the Construction Project, BNPPLC will promptly notify Specialty Laboratories of such completion. If BNPPLC makes an Owner's
Election to Continue Construction, but then later decides to abandon or indefinitely suspend efforts to complete the Construction Project, BNPPLC will promptly notify Specialty Laboratories of such
decision. If, after a Termination of Specialty Laboratories' Work, BNPPLC makes a final determination not to exercise its right to continue construction as provided above, then BNPPLC will promptly
notify Specialty Laboratories thereof. Any notice give as provided in this subparagraph will constitute a "Completion Notice" for purposes of this
Agreement and the other Operative Documents. 

        9.    SPECIALTY LABORATORIES' OBLIGATION FOR
97-10/PREPAYMENTS.    After any 97-10/Event Specialty Laboratories must make a 97-10/Prepayment to BNPPLC within three Business
Days after receipt from BNPPLC of any demand for such a payment. Following a 97-10/Event, BNPPLC may demand 97-10/Prepayments pursuant to this Paragraph at any time and from
time to time (as 97-10/Project Costs increase). Specialty Laboratories acknowledges that it is undertaking the obligation to make 97-10/Prepayments as provided in this
Paragraph in consideration of the rights afforded to it by this Agreement, but that such obligation is not contingent upon any exercise by Specialty Laboratories of such rights or upon its rights
under any other Operative Documents. If a 97-10/Event does occur, Specialty Laboratories' obligation to make 97-10/Prepayments as provided in this Paragraph will survive any
Termination of Specialty Laboratories' Work. 

Notwithstanding
the foregoing provisions of this Paragraph 9, if (as provided in subparagraph 7(B)) Specialty Laboratories effectively makes the election for a Termination of Specialty
Laboratories' Work because of a Pre-lease Force Majeure Event that resulted in Pre-lease Force Majeure Excess Repair Costs or Pre-lease Force Majeure Delays, then
Specialty Laboratories shall be excused from the obligation to make 97-10/Prepayments until such time (if ever) that BNPPLC itself completes the Construction Project or causes it to be
completed as BNPPLC is authorized to do by subparagraph 8(A). 

[Signature
pages follow.] 

Construction Management Agreement - Page 32

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

	 	 	"Specialty Laboratories"
	

 	
 	

SPECIALTY LABORATORIES, INC., a California corporation
	

 	
 	

By:	
 	

/s/ Frank J. Spina
	 	 	 	 	

	 	 	 	 	Name:	Frank J. Spina
	 	 	 	 	 	

	 	 	 	 	Title:	Chief Financial Officer
	 	 	 	 	 	

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

	 	 	"BNPPLC"
	

 	
 	

BNP PARIBAS LEASING CORPORATION, a Delaware corporation
	

 	
 	

By:	

/s/ Barry Mendelsohn
	 	 	 	
 Barry Mendelsohn, Vice President

  

 
 

Exhibit A    
    
    LEGAL DESCRIPTION    
  

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

Parcel A: 

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

Parcel B: 

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

Parcel C: 

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

        BEGINNING
AT THE NORTHWESTERLY CORNER OF SAID LOT 2; THENCE 

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

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

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

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

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

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

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

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

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

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

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

Exhibit A - Page 1

 

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

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

Parcel D: 

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

        BEGINNING
AT THE NORTHWESTERLY CORNER OF LOT 4; THENCE 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Exhibit A - Page 2

 

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

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

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

Exhibit A - Page 3

  

Exhibit B  

  
 

    Description of the Construction Project and Construction Budget    
  

        Subject to future Scope Changes, the Construction Project will be substantially consistent with the following general description and with any site plan,
elevations or renderings attached to this Exhibit: 

        The
Specialty Laboratories project is a new medical laboratory and corporate headquarters facility to be built in Valencia, California. Specialty Laboratories is a research-based
clinical laboratory that is primarily focused on esoteric clinical laboratory tests. 

        The
site is a 13.8 acre parcel located on Tourney Road north of Valencia Boulevard. The building is planned to be three stories of approximately 66,000 square feet each, totaling 198,000
square feet. Other components of the project include a central plant to support the building and lab space, approximately 940 surface parking spaces, and site work including landscape, hardscape and
utilities. 

        All
of the buildings will be suitable for uses contemplated in the Lease and of a quality, when complete to be considered first class facilities for such uses. Also included in the
Construction Project will be the construction of appurtenant parking areas, driveways and other facilities on the Land of suitable quality for such buildings. 

        The
budget for the Construction Project is as shown on the attached pages: 

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

Exhibit B - Page 1

 
 
 

Specialty Laboratories
  Build-to-Suit
  SCHEMATIC BUDGET
  January 22, 2002    
  

	DRAFT	 	 	 	 	 	 	 	 	 	 
	Land Area (SF):	 	 	 	 	 	[***]*	 	 	 	Per ALTA Survey 12/21/01 (SD) 13.78 acres
	Laboratory Building (GSF/RSF/USF)	 	 	 	 	 	[***]*	 	 	 	Per HLW 12/21/01 (SD Package)
	Surface Parking (Stalls):	 	 	 	 	 	[***]*	 	 	 	 
	Revision: Increased Financing Fees per mtg. 1/22/02	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	[***]*	 	 
	Cost Code	 	[***]*	 	 	 	[***]*	 	[***]*	 	Remarks
	

1010-0010	
 	

[***]*	
 	

 	
 	

[***]*	
 	

[***]*	
 	
[***]*
	

 	
 	

[***]*	
 	

 	
 	

 	
 	

 	
 	

 
	2900-0010	 	 	 	CUP/Land Due Diligence	 	[***]*	 	[***]*]	 	Actual- ATC (Phase I Report)
	2900-0011	 	 	 	Pre-Design	 	[***]*	 	[***]*	 	Actual- Pre-Design costs thru mid-Nov. 2001
	 	 	[***]*	 	 	 	[***]*	 	[***]*	 	 
	

 	
 	

[***]*	
 	

 	
 	

 	
 	

 	
 	

 
	3010-0010	 	[***]*	 	 	 	[***]*	 	[***]*	 	allowance
	3020-0010	 	[***]*	 	 	 	[***]*	 	[***]*	 	allowance
	3060-0010	 	[***]*	 	 	 	[***]*	 	[***]*	 	.35/SF as of 3/02
	 	 	[***]*	 	 	 	 	 	 	 	 
	3070-0011	 	 	 	Water- CLWA (Castaic Lake Water Authority)	 	[***]*	 	[***]*	 	Per Syska 1/15/02
	3070-0012	 	 	 	Power	 	[***]*	 	[***]*	 	Per Syska 12/20/01
	3070-0013	 	 	 	Sewer	 	[***]*	 	[***]*	 	Per Syska (Industrial Waste Discharger) 1/15/02
	3070-0015	 	 	 	Gas	 	[***]*	 	[***]*	 	allowance
	 	 	 	 	Telephone	 	[***]*	 	[***]*	 	 
	3070-0017	 	 	 	Fire District Fee	 	[***]*	 	[***]*	 	Per Fire Dept. 12/20/01
	3070-0018	 	 	 	Misc. Other	 	[***]*	 	[***]*	 	allowance- AQMD, Health, NPDES, etc.
	 	 	 	 	B&T District Fees (bridge & thoroughfare)	 	[***]*	 	[***]*	 	Paid by Newhall Land
	 	 	 	 	Traffic	 	[***]*	 	[***]*	 	 
	3070-0021	 	 	 	Architectural Review Committee	 	[***]*	 	[***]*	 	Per CC&R
	 	 	[***]*	 	 	 	[***]*	 	[***]*	 	 
	

 	
 	

[***]*	
 	

 	
 	

 	
 	

 	
 	

 

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

Exhibit B - Page 2

 

	5010-0010	 	[***]*	 	 	 	[***]*	 	[***]*	 	Schematic Estimate 1/15/02
	5010-0020	 	[***]*	 	 	 	[***]*	 	[***]*	 	included in Core and Shell
	 	 	[***]*	 	 	 	[***]*	 	[***]*	 	included in Core and Shell
	 	 	[***]*	 	 	 	[***]*	 	[***]*	 	included in Core and Shell
	5040-0010	 	[***]*	 	 	 	[***]*	 	[***]*	 	Schematic Estimate 1/15/02 (some trades in C&S)
	 	 	[***]*	 	 	 	[***]*	 	[***]*	 	surface parking; with On-site
	 	 	[***]*	 	 	 	[***]*	 	[***]*	 	with On-Site
	5080-0010	 	[***]*	 	 	 	[***]*	 	[***]*	 	allowance
	6010-0010	 	[***]*	 	 	 	[***]*	 	[***]*	 	included in Core and Shell
	 	 	[***]*	 	 	 	[***]*	 	[***]*	 	Schematic Estimate 1/15/02
	 	 	[***]*	 	 	 	[***]*	 	[***]*	 	Schematic Estimate 1/15/02
	 	 	[***]*	 	 	 	[***]*	 	[***]*	 	Schematic Estimate 1/15/02
	 	 	[***]*	 	 	 	[***]*	 	[***]*	 	Schematic Estimate 1/15/02
	 	 	[***]*	 	 	 	[***]*	 	[***]*	 	 
	 	 	[***]*	 	 	 	[***]*	 	[***]*	 	 
	7180-0010	 	[***]*	 	 	 	[***]*	 	[***]*	 	[***]*
	 	 	[***]*	 	 	 	[***]*	 	[***]*	 	 
	

 	
 	

[***]*	
 	

 	
 	

 	
 	

 	
 	

 
	7010-0040	 	[***]*	 	 	 	[***]*	 	[***]*	 	[***]*
	 	 	 	 	Structural Engineer	 	[***]*	 	[***]*	 	[***]*
	 	 	 	 	MEP Engineer	 	[***]*	 	[***]*	 	Syska & Hennessy 11/9/01
	 	 	 	 	Landscape Architect	 	[***]*	 	[***]*	 	K Spitz 11/9/01
	 	 	 	 	Elevator	 	[***]*	 	[***]*	 	Syska & Hennessy 11/9/01
	 	 	 	 	Lighting	 	[***]*	 	[***]*	 	Syska & Hennessy 11/9/01
	 	 	 	 	Security	 	[***]*	 	[***]*	 	Excluded
	 	 	 	 	Acoustical	 	[***]*	 	[***]*	 	Martin Newson 11/9/01
	 	 	 	 	Audio/Visual	 	[***]*	 	[***]*	 	Cebola Systems 11/9/01
	 	 	 	 	Graphics	 	[***]*	 	[***]*	 	Included w/HLW
	 	 	 	 	Food Service	 	[***]*	 	[***]*	 	Excluded
	

 	
 	

[***]*	
 	

 	
 	

 	
 	

 	
 	

 
	7020-0010	 	 	 	Civil Engineer	 	[***]*	 	[***]*	 	KPFF 11/6/01 + CO#1 Struct. Peer Review ($2,500)
	7030-0010	 	 	 	Geotechnical Engineer	 	[***]*	 	[***]*	 	Geotechnologies 8/2/01

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

Exhibit B - Page 3

 

	7020-0012	 	 	 	Surveyor	 	[***]*	 	[***]*	 	KPFF- includes cost to upgrade to ALTA 11/9/01
	 	 	[***]*	 	 	 	 	 	 	 	 
	 	 	 	 	Expediter	 	[***]*	 	[***]*	 	 
	 	 	 	 	Insurance	 	[***]*	 	[***]*	 	 
	7010-0180	 	 	 	Traffic	 	[***]*	 	[***]*	 	 
	7010-0240	 	 	 	Miscellaneous	 	[***]*	 	[***]*	 	allowance
	 	 	[***]*	 	 	 	 	 	 	 	 
	 	 	 	 	Curtain Wall mock-up	 	[***]*	 	[***]*	 	 
	7060-0010	 	 	 	Deputy (structural)	 	[***]*	 	[***]*	 	allowance
	7060-0012	 	 	 	Roofing Inspection	 	[***]*	 	[***]*	 	[***]*
	7060-0013	 	 	 	Curtain Wall	 	[***]*	 	[***]*	 	CDC 11/13/01
	7060-0011	 	 	 	Soils testing	 	[***]*	 	[***]*	 	[***]*
	7070-0010	 	[***]*	 	 	 	[***]*	 	[***]*	 	allowance
	 	 	[***]*	 	 	 	 	 	 	 	 
	 	 	[***]*	 	 	 	 	 	 	 	 
	7090-0010	 	 	 	Plan Check Fees	 	[***]*	 	[***]*	 	[***]*
	7090-0030	 	 	 	Permit Fees	 	[***]*	 	[***]*	 	[***]*
	7090-0030	 	 	 	Record Maintenance. Fee	 	[***]*	 	[***]*	 	[***]*
	7090-0030	 	 	 	Strong Motion Fee	 	[***]*	 	[***]*	 	allowance
	7090-0030	 	 	 	Miscellaneous Fees	 	[***]*	 	[***]*	 	allowance
	7090-0032	 	 	 	Grading/Excavation	 	[***]*	 	[***]*	 	allowance
	 	 	 	 	Soils Report	 	[***]*	 	[***]*	 	 
	7090-0033	 	 	 	B-Permit	 	[***]*	 	[***]*	 	allowance
	 	 	[***]*	 	 	 	 	 	 	 	 
	7100-0029	 	 	 	Lease Accounting	 	[***]*	 	[***]*	 	allowance
	7100-0030	 	 	 	Lease Legal	 	[***]*	 	[***]*	 	allowance; incl. financing
	7100-0040	 	 	 	Other Legal	 	[***]*	 	[***]*	 	allowance
	 	 	[***]*	 	 	 	 	 	 	 	 
	7110-0020	 	 	 	General Liability	 	[***]*	 	[***]*	 	[***]*
	7110-0050	 	 	 	Builder's Risk	 	[***]*	 	[***]*	 	[***]*
	 	 	[***]*	 	 	 	[***]*	 	[***]*	 	 
	7140-0030	 	[***]*	 	 	 	[***]*	 	[***]*	 	CRESA
	7160-0020	 	[***]*	 	 	 	[***]*	 	[***]*	 	 
	7140-0040	 	[***]*	 	 	 	[***]*	 	[***]*	 	CRESA
	7150-0010	 	[***]*	 	 	 	[***]*	 	[***]*	 	[***]*
	 	 	[***]*	 	 	 	[***]*	 	[***]*	 	 
	 	 	[***]*	 	 	 	[***]*	 	[***]*	 	 
	

 	
 	

[***]*	
 	

 	
 	

[***]*	
 	

[***]*	
 	

 
	

7990-0010	
 	

[***]*	
 	

 	
 	

[***]*	
 	

[***]*	
 	
5% (Subtotal Before Contingency excl. Land)
	

 	
 	

[***]*	
 	

 	
 	

[***]*	
 	

[***]*	
 	

 
	

 	
 	

[***]*	
 	

 	
 	

 	
 	

 	
 	

 
	8010-0010	 	[***]*	 	 	 	[***]*	 	[***]*	 	Agreed revision 1/22/02
	8020-0010	 	[***]*	 	 	 	[***]*	 	[***]*	 	 
	8050-0010	 	[***]*	 	 	 	[***]*	 	[***]*	 	 

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

Exhibit B - Page 4

 

	8070-0010	 	[***]*	 	 	 	[***]*	 	[***]*	 	[***]*
	

 	
 	

[***]*	
 	

 	
 	

[***]*	
 	

[***]*	
 	

 
	

 	
 	

[***]*	
 	

 	
 	

[***]*	
 	

[***]*	
 	

 
	

7990-0011	
 	

[***]*	
 	

 	
 	

[***]*	
 	

[***]*	
 	
10% (Subtotal Before Contingency)
	

 	
 	

[***]*	
 	

 	
 	

[***]*	
 	

 	
 	

 
	 	 	[***]*	 	 	 	[***]*	 	 	 	 
	

 	
 	

 	
 	

Security Consultant/Equipment	
 	

[***]*	
 	

 	
 	

 
	 	 	 	 	Move Monsultant/Move	 	[***]*	 	 	 	 
	 	 	 	 	Telecom Consultant/Equipment and Cabling	 	[***]*	 	 	 	 
	 	 	 	 	Kitchen Consultant/Equipment	 	[***]*	 	 	 	 
	 	 	 	 	AV Equipment	 	[***]*	 	 	 	 
	 	 	 	 	FF&E	 	 	 	 	 	 
	 	 	 	 	Items paid directly by specialty (other than noted)	 	 	 	 	 	 

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

Exhibit B - Page 5

 
        [Insert
Site Plan] 

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

Exhibit B - Page 6

  

 
 

Exhibit C    
  

Construction Advance Request Form  

[Date] 

BNP
Paribas Leasing Corporation

12201 Merit Drive, Suite 860

Dallas, Texas 75251

Attention: Lloyd G. Cox 

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

Gentlemen:

        Capitalized
terms used in this letter are intended to have the meanings assigned to them in the Construction Management Agreement or in the Common Definitions and Provisions Agreement
referenced in the Construction Management Agreement. This letter shall constitute a Construction Advance Request, requesting a Construction Advance of: 

        $                        ,

on
the Advance Date that will occur on: 

                                ,
20    .

        To
induce BNPPLC to make such Construction Advance, Specialty Laboratories represents and warrants as follows: 

I.    Calculation of limit imposed by Subparagraph 4(C)(2)(b) of the Construction Management Agreement:

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

II.    Projected Cost Overruns:

Specialty
Laboratories [check one:            does /            does not
] believe that Projected Construction Overruns are more likely than not. [If
Specialty Laboratories does believe that Projected Cost Overruns are more likely than not, and if Specialty Laboratories believes that the amount of such Projected Construction Overruns can be
reasonably estimated, Specialty Laboratories estimates the same at $                        .] 

Note:    The Construction Management Agreement defines Projected Construction Overruns as the excess, if any, of (1) the total of
projected Reimbursable Construction-Period Costs yet to be incurred or for which Specialty Laboratories has yet to be reimbursed hereunder (including projected Reimbursable Construction-Period Costs
for Future Work), over (2) the balance of the remaining Construction Allowance projected to be available to cover such costs. 

Exhibit C - Page 1

 

III.    Construction Advances Covering Pre-lease Force Majeure Losses: 

Neither
prior Construction Advances (if any) nor the Construction Advance requested this letter have been used or will be used to cover any costs of repairs that will constitute Pre-lease
Force Majeure Losses, except as follows: (if there are no exceptions, insert "No Exceptions") 

	

	

	

	

IV.    Absence of Certain Work/Suspension Events: 

        A.    The
Construction Project is progressing without significant interruption in a good and workmanlike manner and substantially in accordance with Applicable Laws, with
Permitted Encumbrances, with Development Documents and with the requirements of the Construction Management Agreement, except as follows: (if there are no exceptions, insert
"No Exceptions") 

	

	

	

	

        B.    If
Specialty Laboratories has received notice of any Defective Work, Specialty Laboratories has promptly corrected or is diligently pursuing the correction of such
Defective Work, except as follows: (if there are no exceptions, insert "No Exceptions") 

	

 	
 	
SPECIALTY LABORATORIES, INC.
	

 	

 	

By:	

 	

    

	

 	
 	

 	
 	

Name:	
 	

    

	

 	
 	

 	
 	

Title:	
 	

    

	

[cc all Participants]

	

 	

 	

 	

 	

 	

 

Exhibit C - Page 2

  

 
 

Exhibit D    
  

Pre-lease Force Majeure Event Notice  

[Date] 

BNP
Paribas Leasing Corporation

12201 Merit Drive, Suite 860

Dallas, Texas 75251

Attention: Lloyd G. Cox 

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

Gentlemen:

        Capitalized
terms used in this letter are intended to have the meanings assigned to them in the Construction Management Agreement referenced above or in the Common Definitions and
Provisions Agreement referenced in the Construction Management Agreement. 

        IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel the ramifications of this notice under the Construction Management Agreement and other
Operative Documents.

        This
letter shall constitute a Pre-lease Force Majeure Event Notice, given as provided in subparagraph 6(B) of the Construction Management Agreement to preserve the right of
Specialty Laboratories to assert the occurrence of a Pre-lease Force Majeure Event. 

        Specialty
Laboratories certifies to BNPPLC that the following Pre-lease Force Majeure Event occurred on                        ,
20    : 

        [INSERT DESCRIPTION OF EVENT HERE]

        Specialty
Laboratories' preliminary good faith estimate of the Pre-lease Force Majeure Delays, of the Pre-lease Force Majeure Losses and of the
Pre-lease Force Majeure Excess Costs likely to result from such event are                        days,
$                        and
$                        , respectively. Such amounts, however, are only
estimates. 

        Specialty Laboratories acknowledges that after Specialty Laboratories gives this notice, BNPPLC may at any time deliver an FOCB Notice to Specialty Laboratories
as described in the Construction Management Agreement.

	 	 	SPECIALTY LABORATORIES, INC.
	

 	
 	

By:	
 	

    

	 	 	 	 	Name:	 	    

	 	 	 	 	Title:	 	    

	

[cc all Participants]

	
 	

 	
 	

 	
 	

 

Exhibit D - Page 1

  

 
 

Exhibit E
  
    Notice of Termination of Specialty Laboratories' Work    
  

[Date]

BNP
Paribas Leasing Corporation

12201 Merit Drive, Suite 860

Dallas, Texas 75251

Attention: Lloyd G. Cox 

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

Gentlemen:

        Capitalized
terms used in this letter are intended to have the meanings assigned to them in the Construction Management Agreement referenced above or in the Common Definitions and
Provisions Agreement referenced in the Construction Management Agreement. 

        IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel the ramifications of this notice under the Construction Management Agreement and other
Operative Documents.

        Specialty
Laboratories has determined that the Construction Allowance to be provided to it under the Construction Management Agreement will not be sufficient to cover all Reimbursable
Construction-Period Costs yet to be paid or reimbursed from Construction Advances for the reason or reasons set forth in the Notice of Specialty Laboratories' Intent to Terminate dated
            , 200    , previously delivered to you as provided in subparagraph 7(B) of the Construction Management Agreement. That Notice of Specialty Laboratories'
Intent to Terminate
has not been rescinded by Specialty Laboratories. 

        Specialty
Laboratories hereby irrevocably and unconditionally elects to terminate its rights and obligations to continue the Work under Construction Management Agreement effective as of
the date of this letter (which, as required by subparagraph 7(B) of the Construction Management Agreement, is a date not less than forty-five days after the date the aforementioned Notice
of Specialty Laboratories' Intent to Terminate). This notice will constitute a "Notice of Termination by Specialty Laboratories" as described in subparagraph 7(B) of the Construction Management
Agreement. 

        Specialty Laboratories also acknowledges that a 97-10/Event has under and as defined in the Construction Management Agreement, and that BNPPLC is thus
entitled to demand and receive 97-10/Prepayments under and as provided in Paragraph 9 of that agreement.  

	 	 	Specialty Laboratories, Inc.
	

 	
 	

By:	

    

	 	 	 	Name:	    

	 	 	 	Title:	    

[cc
all Participants] 

Exhibit E - Page 1 

  

 
 

Exhibit F    
  

Notice of Specialty Laboratories' Intent to Terminate  

[Date] 

BNP
Paribas Leasing Corporation

12201 Merit Drive, Suite 860

Dallas, Texas 75251

Attention: Lloyd G. Cox 

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

Gentlemen:

        Capitalized
terms used in this letter are intended to have the meanings assigned to them in the Construction Management Agreement referenced above or in the Common Definitions and
Provisions Agreement referenced in the Construction Management Agreement. 

        IMPORTANT: It is imperative that BNPPLC promptly review with legal counsel the ramifications of this notice under the Construction Management Agreement and other
Operative Documents.

[DRAFTING NOTE: Unless this letter contains the alternative provisions set forth below as being required after a Complete Taking for any "Notice of Specialty
Laboratories' Intent to Terminate Because of a Force Majeure Event," this letter must contain the following paragraph and inserts following such paragraph as indicated:

        Specialty
Laboratories has determined that the Construction Allowance to be provided to it under the Construction Management Agreement will not be sufficient to cover all Reimbursable
Construction-Period Costs yet to be paid or reimbursed from Construction Advances, because: 

[INSERT ANY ONE OR MORE OF THE FOLLOWING REASONS THAT APPLY: (1) THE COST OF THE WORK EXCEEDS BUDGETED
EXPECTATIONS (RESULTING IN PROJECTED COST OVERRUNS), (2) A PRE-LEASE FORCE MAJEURE EVENT, OR (3) SPECIALTY LABORATORIES CAN NO LONGER SATISFY CONDITIONS TO BNPPLC'S
OBLIGATION TO PROVIDE CONSTRUCTION ADVANCES IN THE CONSTRUCTION MANAGEMENT AGREEMENT.]

        The
purpose of this letter is to give notice to BNPPLC and Participants of Specialty Laboratories' intent to terminate Specialty Laboratories' rights and obligations to perform Work
under the Construction Management Agreement. This letter will constitute a "Notice of Specialty Laboratories' Intent to Terminate" given pursuant to subparagraph 7(B) of the Construction Management
Agreement. As provided in that subparagraph, as a condition to any effective Termination of Specialty 

Exhibit F - Page 1

 

Laboratories' Work, Specialty Laboratories must deliver a subsequent notice of termination to BNPPLC and Participants, no less than forty-five days after the date BNPPLC receives this
letter. 

[DRAFTING NOTE: Unless this letter contains the alternative provisions set forth below as being required for any "Notice of Specialty Laboratories' Intent to
Terminate Because of a Force Majeure Event," this letter must contain the following paragraph:

        The
period running from the date of BNPPLC's receipt of this letter to the effective date of any actual Termination of Specialty Laboratories' Work by Specialty Laboratories or BNPPLC
will constitute a Work/Suspension Period under the Construction Management Agreement. During such period BNPPLC's funding obligations will be limited and Specialty Laboratories may suspend the Work to
the extent so provided in the Construction Management Agreement. Moreover, Specialty Laboratories acknowledges that the deliver of this Notice of Intent to Terminate is a 97-10/Event.  Therefore, after receipt of this notice
BNPPLC will have the rights to demand and receive 97-10/Prepayments from Specialty Laboratories as provided in
Paragraph 9 of the Construction Management Agreement.]  

[DRAFTING NOTE: This letter will qualify as a "Notice of Specialty Laboratories' Intent to Terminate Because of a Force Majeure Event" only
if Specialty Laboratories includes one of the following alternative sets of provisions, as applicable.]

[ALTERNATIVE #1 (Applies only if there has been a Complete Taking):

        This
letter shall constitute a "Notice of Specialty Laboratories' Intent to Terminate Because of a Force Majeure Event" as defined in the Construction Management Agreement.  A Complete Taking has occurred.
Thus, regardless of any Scope Changes BNPPLC may be willing to approve or consider, and regardless of any Increased
Commitment BNPPLC may be willing to provide, it would be futile to continue the Construction Project on the Land. 

        BNPPLC
may respond to this notice with a request that Specialty Laboratories negotiate reasonably and in good faith for modifications to the Ground Lease and the Operative Documents to
permit the construction of the Construction Project in whole or in part on a different site. Specialty Laboratories will respond to any such request by negotiating modifications reasonably and in good
faith, and if Specialty Laboratories and BNPPLC do agree upon and execute such modifications as are necessary to permit Specialty Laboratories to complete the Construction Project in whole or in part
on a different site, then the Complete Taking will be deemed to no longer exist and this Notice of Intent to Terminate Because of a Force Majeure Event will be deemed rescinded. If, however, despite
Specialty Laboratories' participation in any such negotiations reasonably and in good faith, BNPPLC and Specialty Laboratories fail to agree upon such modifications, then no offer by BNPPLC of an
Increased Commitment after a Complete Taking will preclude a Termination of Specialty Laboratories' Work
because of a Pre-lease Force Majeure Event" for the purposes of determining whether Specialty Laboratories must pay a 97-10/Prepayment pursuant to Paragraph 9 of the
Construction Management Agreement. 

        Specialty
Laboratories acknowledges and agrees that BNPPLC is entitled to all proceeds of the taking of the Property and all such proceeds must be paid to BNPPLC. Specialty Laboratories
has no right and will not assert any right to share in such proceeds. Specialty Laboratories agrees to cooperate with BNPPLC as BNPPLC may from time to time request in order to maximize BNPPLC's
recovery of such proceeds.] 

[ALTERNATIVE #2 (applies in the event of a Pre-lease Force Majeure Event other than a Complete Taking): Include the next (single sentence) paragraph,
together with one or both (as applicable) of the  

Exhibit F - Page 2

 

 two paragraphs following the next (single sentence) paragraph, and together with the remaining paragraphs after those two paragraphs, all with blanks filled in appropriately:

        This
letter shall constitute a "Notice of Specialty Laboratories' Intent to Terminate Because of a Force Majeure Event" as defined in the Construction Management Agreement. 

        Specialty
Laboratories now believes that the remaining available Construction Allowance will not be sufficient to cover all Reimbursable Construction-Period Costs yet to be paid or
reimbursed from Construction Advances only because of Pre-lease Force Majeure Excess Costs incurred or anticipated as a result of one or more Pre-lease Force Majeure Events.
BNPPLC has previously been notified of such Pre-lease Force Majeure Event(s) by notice(s) dated            , which Specialty Laboratories delivered to BNPPLC in accordance with
subparagraph 6(B) of the Construction Management Agreement. Specialty Laboratories' current good faith estimate of the Pre-lease Force Majeure Excess Costs that are most likely to be
incurred because of such Pre-lease Force Majeure Event(s) is $                        . 

        Specialty
Laboratories now believes that the Work will not be substantially complete before the Target Completion Date only because of Pre-lease Force Majeure Delays
resulting from one or more Pre-lease Force Majeure Events. BNPPLC has previously been notified of such Pre-lease Force Majeure Event(s) by notice(s) dated            ,
which Specialty Laboratories delivered to BNPPLC in accordance with subparagraph 6(B) of the Construction Management Agreement. Specialty Laboratories' current good faith estimate of the
Pre-lease Force Majeure Delays that are most likely to occur because of such Pre-lease Force Majeure Event(s)
is                        days. 

        Also
be advised that, as provided in subparagraph 7(B) of the Construction Management Agreement, BNPPLC is entitled to (but not obligated to) respond to this notice with an Increased
Commitment. Responding with an Increased Commitment will result in a conclusive presumption (for purposes of calculating any 97-10/Prepayment required of Specialty Laboratories under the
Purchase Agreement)
that any Termination of Specialty Laboratories' Work is for reasons other than the Pre-lease Force Majeure Events of which BNPPLC has previously been notified. 

        In the event BNPPLC fails to respond with an Increased Commitment, the failure may excuse Specialty Laboratories from the obligation to make a
97-10/Prepayment under Paragraph 5 of the Purchase Agreement notwithstanding any Termination of Specialty Laboratories' Work, which would constitute a very material adverse
consequence to BNPPLC. Moreover, the Construction Management Agreement grants to Specialty Laboratories a right to cause a Termination of Specialty Laboratories' Work at any
time more than forty-five days after giving this notice, provided that Specialty Laboratories continues to believe that the Construction Allowance is insufficient at that time. Thus, if
BNPPLC intends to respond with an Increased Commitment, BNPPLC would be well advised to do so before the expiration of such forty-five day
period.] 

	 	 	SPECIALTY LABORATORIES, INC.
	

 	
 	

By:	
 	

    

	 	 	 	 	Name:	 	    

	 	 	 	 	Title:	 	    

	

[cc all Participants]

	
 	

 	
 	

 	
 	

 

Exhibit F - Page 3

   Exhibit G  

Notice of Increased Funding Commitment by BNPPLC  

[Date] 

Specialty
Laboratories, Inc.

Attn: Frank J. Spina

2211 Michigan Avenue

Santa Monica, California 90404 

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

Gentlemen: 

        Capitalized
terms used in this letter are intended to have the meanings assigned to them in the Construction Management Agreement or in the Common Definitions and Provisions Agreement
referenced in the Construction Management Agreement. 

        Specialty
Laboratories has delivered a notice to BNPPLC dated            , 20    , which by its terms expressed Specialty Laboratories' intent that it constitute a "Notice
of Specialty Laboratories' Intent to Terminate Because of a Force Majeure Event" as defined in the Construction Management Agreement. In such notice, Specialty Laboratories advised BNPPLC of Specialty
Laboratories' intent to terminate the Construction Management Agreement because of Specialty Laboratories' belief that the Construction Allowance to be provided to it under the Construction Management
Agreement will not be sufficient to cover all Reimbursable Construction-Period Costs yet to be paid or reimbursed from Construction Advances. Such notice also expressed Specialty Laboratories' belief
that, but for the cost of repairing damage to the Improvements caused by a Pre-lease Force Majeure Event, the remaining available Construction Allowance would be sufficient. In addition,
such notice set forth the amount of $                        as Specialty Laboratories' estimate of the Pre-lease Force Majeure
Excess Costs most likely to be incurred because of such
Pre-lease Force Majeure Event. 

        This
response to such notice will constitute an Increased Funding Commitment. BNPPLC hereby commits to increase the amount of the Construction Allowance by the
lesser of (1) $                        (the estimate given by Specialty Laboratories as described above) or (2) the
actual Pre-lease Force Majeure Excess Costs, if
any. Such commitment is made on and subject to all of the same terms and conditions set forth in the Construction Management Agreement and other Operative Documents as being
applicable to the original Construction Allowance and to Construction Advances required thereunder. 

        Please
note that, according to the Construction Management Agreement, Specialty Laboratories will have ten days after the date of any Increased Commitment (which may be comprised of this
Increased Funding Commitment and any separate Increased Time Commitment given contemporaneously herewith) within which Specialty Laboratories may rescind the aforementioned Notice of Specialty
Laboratories' Intent to Terminate Because of a Force Majeure Event by a notice given in the form prescribed by the Construction Management Agreement. Any failure of Specialty Laboratories to so
rescind the notice will constitute a 97-10/Event under and as defined in the Construction Management Agreement and will result in a conclusive presumption (for purposes of calculating any
97-10/Prepayment required of Specialty Laboratories by the Purchase Agreement) that 

Exhibit G - Page 1

 

any Termination of Specialty Laboratories' Work occurred for reasons other than the Pre-lease Force Majeure Events of which BNPPLC has previously been notified. 

	 	 	BNP PARIBAS LEASING CORPORATION
	

 	
 	

By:	
 	

    

	 	 	 	 	Name:	 	    

	 	 	 	 	Title:	 	    

	

[cc all Participants]

	
 	

 	
 	

 	
 	

 

Exhibit G - Page 2

  

 
 

Exhibit H    
  

Notice of Increased Time Commitment by BNPPLC  

[Date] 

Specialty
Laboratories, Inc.

Attn: Frank J. Spina

2211 Michigan Avenue

Santa Monica, California 90404 

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

Gentlemen:

        Capitalized
terms used in this letter are intended to have the meanings assigned to them in the Construction Management Agreement or in the Common Definitions and Provisions Agreement
referenced in the Construction Management Agreement. 

        Specialty
Laboratories has delivered a notice to BNPPLC dated            , 20    , which by its terms expressed Specialty Laboratories' intent that it constitute a "Notice
of Specialty Laboratories' Intent to Terminate Because of a Force Majeure Event" as defined in the Construction Management Agreement. In such notice, Specialty Laboratories advised BNPPLC of Specialty
Laboratories' intent to elect a Termination of Specialty Laboratories' Work because of Specialty Laboratories' belief that the Work will not be substantially complete prior to the Target Completion
Date only because of Pre-lease Force Majeure Delays. Such notice also expressed Specialty Laboratories' belief that Pre-lease Force Majeure Delays are likely to be
                        days in the aggregate. 

        This
response to such notice will constitute an Increased Time Commitment. BNPPLC hereby commits to extend the Target Completion Date by the lesser of
(1)                         days (the estimate given by Specialty Laboratories as described above) or (2) the actual
Pre-lease Force Majeure Delays, if any.

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

	 	 	BNP PARIBAS LEASING CORPORATION
	

 	
 	

By:	
 	

    

	 	 	 	 	Name:	 	    

	 	 	 	 	Title:	 	    

	

[cc all Participants]

	
 	

 	
 	

 	
 	

 

Exhibit H - Page 1

  

 
 

Exhibit I    
  

Rescission of Notice of Specialty Laboratories' Intent to Terminate  

[Date] 

BNP
Paribas Leasing Corporation

12201 Merit Drive, Suite 860

Dallas, Texas 75251

Attention: Lloyd G. Cox 

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

Gentlemen:

        Capitalized
terms used in this letter are intended to have the meanings assigned to them in the Construction Management Agreement referenced above or in the Common Definitions and
Provisions Agreement referenced in the Construction Management Agreement. 

        Specialty
Laboratories has delivered to BNPPLC a Notice of Specialty Laboratories' Intent to Terminate Because of a Force Majeure Event
dated                        , 200    , and
BNPPLC has responded with an Increased Commitment as of                        , 200    . Specialty
Laboratories hereby accepts the Increased Commitment and, as provided in subparagraph 7(B) of the
Construction Management Agreement, rescinds such Notice of Specialty Laboratories' Intent to Terminate Because of a Force Majeure Event. 

        Specialty
Laboratories acknowledges that, because of such rescission, Specialty Laboratories must, as a condition precedent to any exercise of its remaining rights to terminate the
Construction Management Agreement pursuant to subparagraph 7(B) thereof, deliver another Notice of Specialty Laboratories' Intent to Terminate at least forty five days prior to the effective date of
the Termination of Specialty Laboratories' Work. 

	 	 	SPECIALTY LABORATORIES, INC.
	

 	
 	

By:	
 	

    

	 	 	 	 	Name:	 	    

	 	 	 	 	Title:	 	    

	

[cc all Participants]

	
 	

 	
 	

 	
 	

 

Exhibit I - Page 1

QuickLinks

TABLE OF CONTENTS

CONSTRUCTION MANAGEMENT AGREEMENT

Exhibit A LEGAL DESCRIPTION

Description of the Construction Project and Construction Budget

Specialty Laboratories Build-to-Suit SCHEMATIC BUDGET January 22, 2002

Exhibit C

Exhibit D

Exhibit E Notice of Termination of Specialty Laboratories' Work

Exhibit F

Exhibit H

Exhibit IQuickLinks
 -- Click here to rapidly navigate through this document
Exhibit 10.6  

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

PLEDGE AGREEMENT  

AMONG  

 BNP PARIBAS LEASING CORPORATION  

 ("BNPPLC")  

 BNP PARIBAS, AS AGENT  

 ("Agent")  

 SPECIALTY LABORATORIES, INC.  

 ("Specialty Laboratories")  

 AND  

 PARTICIPANTS AS DESCRIBED HEREIN  

 March 26, 2002  

 
 

TABLE OF CONTENTS    
  

	 
	 
	 	Page

	ARTICLE I    DEFINITIONS AND INTERPRETATION	 	1
	 	Section 1.1	Capitalized Terms Used But Not Defined in This Agreement	 	1
	 	Section 1.2	Definitions	 	1
	 	Account	 	1
	 	Account Office	 	1
	 	Agent	 	1
	 	BNPPLC	 	2
	 	BNPPLC's Corresponding Obligations to Participants	 	2
	 	Cash Collateral	 	2
	 	Collateral	 	2
	 	Collateral Imbalance	 	2
	 	Collateral Percentage	 	2
	 	Default	 	2
	 	Deposit Taker	 	2
	 	Deposit Taker Losses	 	2
	 	Deposit Taker's Acknowledgment and Agreement	 	2
	 	Disqualified Deposit Taker	 	2
	 	Event of Default	 	3
	 	Initially Qualified Deposit Taker	 	3
	 	Lien	 	4
	 	Minimum Collateral Value	 	4
	 	Notice of Security Interest	 	4
	 	Other Liable Party	 	4
	 	Participants	 	4
	 	Participation Agreement	 	4
	 	Percentage	 	4
	 	Qualified Pledge	 	4
	 	Secured Obligations	 	5
	 	Specialty Laboratories	 	5
	 	Specialty Laboratories' Purchase Agreement Obligations	 	5
	 	Supplement	 	5
	 	Transition Account	 	5
	 	UCC	 	5
	 	Value	 	5
	 	Section 1.3	Attachments	 	5
	 	Section 1.4	Amendment of Defined Instruments	 	5
	 	Section 1.5	References and Titles	 	5
	

ARTICLE II    SECURITY INTEREST	
 	

5
	 	Section 2.1	Pledge and Grant of Security Interest	 	5
	 	Section 2.2	Return of Collateral After the Secured Obligations are Satisfied in Full	 	6
	

ARTICLE III    REQUIRED COLLATERALAND INITIAL DEPOSIT TAKER	
 	

6
	 	Section 3.1	Collateral Percentage	 	6
	 	Section 3.2	Designation of BNP Paribas as Initial Deposit Taker Prior to Completion Date	 	6
	

ARTICLE IV    PROVISIONS CONCERNING DEPOSIT TAKERS	
 	

6
	 	Section 4.1	Qualification of Deposit Takers Generally	 	6
	 	Section 4.2	Additional Provisions Concerning the Designation of Deposit Takers	 	7
	 	Section 4.3	Replacement of Participants Proposed by Specialty Laboratories	 	7
	 	Section 4.4	Mandatory Substitutions for Disqualified Deposit Takers	 	8
	 	Section 4.5	Voluntary Substitution of Deposit Takers	 	8
	 	Section 4.6	Delivery of Notice of Security Interest by Specialty Laboratories and Agent	 	8

 

	 	Section 4.7	Constructive Possession of Collateral	 	8
	 	Section 4.8	Attempted Setoff by Deposit Takers	 	8
	 	Section 4.9	Deposit Taker Losses	 	9
	 	Section 4.10	Losses Resulting from Failure of Deposit Taker to Comply with this Agreement	 	9
	

ARTICLE V    DELIVERY AND MAINTENANCE OF CASH COLLATERAL	
 	

9
	 	Section 5.1	Delivery of Funds by Specialty Laboratories	 	9
	 	Section 5.2	Transition Account	 	9
	 	Section 5.3	Allocation of Cash Collateral Among Deposit Takers	 	10
	 	Section 5.4	Status of the Accounts Under the Reserve Requirement Regulations	 	10
	 	Section 5.5	Acknowledgment by Specialty Laboratories that Requirements of this Agreement are Commercially Reasonable	 	10
	

ARTICLE VI    WITHDRAWAL OF CASH COLLATERAL	
 	

10
	 	Section 6.1	Withdrawal of Collateral Prior to the Designated Sale Date	 	10
	 	Section 6.2	Withdrawal and Application of Cash Collateral to Reduce or Satisfy the Secured Obligations to the Participants	 	11
	 	Section 6.3	Withdrawal and Application of Cash Collateral to Reduce or Satisfy the Secured Obligations to BNPPLC	 	11
	 	Section 6.4	Withdrawal of Cash Collateral From Accounts Maintained by Disqualified Deposit Takers	 	11
	

ARTICLE VII    REPRESENTATIONS AND COVENANTS OF SPECIALTY LABORATORIES	
 	

12
	 	Section 7.1	Representations of Specialty Laboratories	 	12
	 	Section 7.2	Covenants of Specialty Laboratories	 	12
	

ARTICLE VIII    AUTHORIZED ACTION BY AGENT	
 	

14
	 	Section 8.1	Power of Attorney	 	14
	

ARTICLE IX    DEFAULT AND REMEDIES	
 	

14
	 	Section 9.1	Remedies	 	14
	

ARTICLE X    OTHER RECOURSE	
 	

14
	 	Section 10.1	Recovery Not Limited	 	14
	

ARTICLE XI    PROVISIONS CONCERNING AGENT	
 	

15
	 	Section 11.1	Appointment and Authority	 	15
	 	Section 11.2	Exculpation, Agent's Reliance, Etc	 	15
	 	Section 11.3	Participant's Credit Decisions	 	16
	 	Section 11.4	Indemnity	 	16
	 	Section 11.5	Agent's Rights as Participant and Deposit Taker	 	16
	 	Section 11.6	Investments	 	16
	 	Section 11.7	Benefit of Article XI	 	17
	 	Section 11.8	Resignation	 	17
	

ARTICLE XII    MISCELLANEOUS	
 	

17
	 	Section 12.1	Provisions Incorporated From Other Operative Documents	 	17
	 	Section 12.2	Cumulative Rights, etc	 	17
	 	Section 12.3	Survival of Agreements	 	17
	 	Section 12.4	Other Liable Party	 	17
	 	Section 12.5	Termination	 	18

ii

 
Attachments and Schedules  

	Attachment 1	 	Supplement to Pledge Agreement
	

Attachment 2	
 	

Form of Notice of Security Interest
	

Attachment 3	
 	

Examples of Calculations
	

Attachment 4	
 	

Notice of Specialty Laboratories' Requirement to Withdraw Excess Cash Collateral
	

Attachment 5	
 	

Notice of Specialty Laboratories' Requirement of Direct Payments to Participants
	

Attachment 6	
 	

Notice of Specialty Laboratories' Requirement of Direct Payments to BNPPLC
	

Attachment 7	
 	

Notice of Specialty Laboratories' Requirement of a Withdrawal of Cash Collateral from a Disqualified Deposit Taker

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PLEDGE AGREEMENT    
  

        This PLEDGE AGREEMENT (this "Agreement") is made as of March 26, 2002 (the
"Effective Date"), by SPECIALTY LABORATORIES, INC., a California corporation ("Specialty
Laboratories"); BNP PARIBAS LEASING CORPORATION, a Delaware corporation ("BNPPLC"); BNP PARIBAS
("BNPPLC's Parent"), as a "Participant"; BNP PARIBAS, acting in its capacity as agent for BNPPLC and the
Participants (in such capacity, "Agent"), and each of the other Participants hereto, and is made and dated as of the Effective Date. 

RECITALS  

        A.    Contemporaneously
with the execution of this Agreement, Specialty Laboratories and BNPPLC are executing: (i) a Common Definitions and Provisions Agreement dated as
of the Effective Date (the "Common Definitions and Provisions Agreement"); and (ii) a Purchase Agreement dated as of the Effective Date (the
"Purchase Agreement"), pursuant to which Specialty Laboratories has agreed to make a "Supplemental
Payment" (as defined in the Purchase Agreement) or "97-10/Prepayment" (as defined in the Common Definitions and
Provisions Agreement), in consideration of the rights granted to Specialty Laboratories by the Purchase Agreement. 

        B.    Pursuant
to a Participation Agreement dated the Effective Date (the "Participation Agreement"), BNPPLC's Parent has agreed
with BNPPLC to participate in the risks and rewards to BNPPLC of the Purchase Agreement and other Operative Documents (as defined in the Common Definitions and Provisions Agreement), and if Specialty
Laboratories consents in the future, other financial institutions may become parties to the Participation Agreement as Participants, such that they also participate in the risks and rewards to BNPPLC
of the Purchase Agreement and other Operative Documents. 

        C.    Specialty
Laboratories shall from time to time deliver cash collateral for its obligations to BNPPLC under the Purchase Agreement and for BNPPLC's corresponding
obligations to Participants under the Participation Agreement. This Agreement sets forth the terms and conditions governing such cash collateral. 

AGREEMENT  

        NOW, THEREFORE, in consideration of the above recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows: 

ARTICLE I    DEFINITIONS AND INTERPRETATION  

        Section 1.1    Capitalized Terms Used But Not Defined in This Agreement.    All
capitalized terms used in this Agreement which are defined in Article I of the Common Definitions and Provisions Agreement and not otherwise defined herein shall have the same meanings herein
as set forth in the Common Definitions and Provisions Agreement. All terms used in this Agreement which are defined in the UCC and not otherwise defined herein shall have the
same meanings herein as set forth therein, except where the context otherwise requires. 

        Section 1.2    Definitions.    As used in this Agreement, the following terms shall have the following
respective meanings: 

        "Account" shall mean any deposit account maintained by a Deposit Taker into which Cash Collateral may be deposited at any time, excluding
the Transition Account. 

        "Account Office" shall mean, with respect to any Account maintained by any Deposit Taker, the office of such Deposit Taker in California
or New York at which such Account is maintained as specified in the applicable Deposit Taker's Acknowledgment and Agreement. 

        "Agent" shall have the meaning given to that term in the introductory paragraph hereof. 

 

        "BNPPLC" shall have the meaning given to that term in the introductory paragraph hereof. 

        "BNPPLC's Corresponding Obligations to Participants" shall mean BNPPLC's obligations under the Participation Agreement to pay Participants
their respective Percentages of (or amounts equal to their respective Percentages of) sums "actually received by BNPPLC" (as defined in the Participation Agreement) in satisfaction of Specialty
Laboratories' Purchase Agreement Obligations; provided, however, any modification of the Participation Agreement executed after the Effective Date without Specialty Laboratories' written consent shall
not be considered for purposes of determining BNPPLC's Corresponding Obligations to Participants under this Agreement. 

        "Cash Collateral" shall mean (i) all money of Specialty Laboratories which Specialty Laboratories has delivered to Agent for
deposit with a Deposit Taker pursuant to this Agreement, and (ii) any additional money delivered to Agent as Collateral pursuant to Section 4.9. 

        "Collateral" shall have the meaning given to that term in Section 2.1 hereof. 

        "Collateral Imbalance" shall mean on any date prior to the Designated Sale Date that the Value (without duplication) of Accounts
maintained by the Deposit Taker for any Participant (other than a Disqualified Deposit Taker) does not equal such Participant's Percentage, multiplied by the lesser of (1) the Minimum
Collateral Value in effect on such date, or (2) the aggregate Value of all Collateral subject to this Agreement on such date. For purposes of determining whether a Collateral Imbalance exists,
the Value of any Accounts maintained by a bank that is acting as Deposit Taker for two or more Participants will be deemed to be held for them in proportion to their respective Percentages, and the
Value of any Accounts maintained by a bank as Deposit Taker for both a Participant and BNPPLC (as in the case of BNPPLC's Parent acting as Deposit Taker for itself, as a Participant, and for BNPPLC)
will be deemed to be held for the Participant only to the extent necessary to prevent or mitigate a Collateral Imbalance and otherwise for BNPPLC. 

        "Collateral Percentage" shall mean the following percentages for the following periods during the Term: (a) commencing on the
Effective Date through and including the day preceding the Completion Date, [***]*; (b) commencing on the Completion Date through and
including the day preceding the fifth anniversary of the Effective Date, [***]*; and (c) commencing on the fifth anniversary of the
Effective Date through the remainder of the Term, [***]*. 

        "Default" means any Event of Default and any default, event or condition which would, with the giving of any requisite notices and the
passage of any requisite periods of time, constitute an Event of Default. 

        "Deposit Taker" for BNPPLC shall mean BNPPLC's Parent and for each Participant shall mean the Participant itself; provided, that each of
BNPPLC and the Participants, for itself only, may from time to time designate another Deposit Taker as provided in Sections 3.2, 4.2, 4.4 and 4.5 below. 

        "Deposit Taker Losses" shall mean the Value of any Cash Collateral delivered to a Deposit Taker, but that the Deposit Taker will not
(because of the insolvency of the Deposit Taker, offsets by the Deposit Taker in violation of the Deposit Taker's Acknowledgment and Agreement, or otherwise) return to Specialty Laboratories or return
to Agent for disposition or application as provided herein or as required by applicable law. 

        "Deposit Taker's Acknowledgment and Agreement" shall have the meaning given to that term in subsection 4.1.2 hereof. 

        "Disqualified Deposit Taker" shall mean any Deposit Taker with whom Agent may decline to deposit Collateral pursuant to
Section 4.1. 

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

2

 

        "Event of Default" shall mean the occurrence of any of the following: 

        (a)  the
failure by Specialty Laboratories to pay all or any part of Specialty Laboratories' Purchase Agreement Obligations when due, after giving effect to any applicable
notice and grace periods expressly provided for in the Purchase Agreement; 

        (b)  the
failure by Specialty Laboratories to provide funds as and when required by Section 5.1 of this Agreement, if within seven Business Days after such failure
commences Specialty Laboratories does not (1) cure such failure by delivering the funds required by Section 5.1, and (2) pay to BNPPLC as additional Rent under the Lease an amount
equal to interest at the Default Rate on such funds for the period from which they were first due to the date of receipt by Agent; 

        (c)  the
failure of the pledge or security interest contemplated herein in the Transition Account or any Account or Cash Collateral to be a Qualified Pledge (regardless of
the characterization of the Transition Account or any Accounts or Cash Collateral as deposit accounts, instruments or general intangibles under the UCC), if within five Business Days after Specialty
Laboratories becomes aware of such failure, Specialty Laboratories does not (1) notify Agent, BNPPLC and the Participants of such failure, and (2) cure such failure; 

        (d)  the
failure of any representation herein by Specialty Laboratories to be true (other than a failure described in another clause of this definition of Event of Default),
if such failure is not cured within thirty days after Specialty Laboratories receives written notice thereof from Agent; 

        (e)  the
failure of any representation made by Specialty Laboratories in subsection 7.1.1 to be true, if within fifteen (15) days after Specialty Laboratories becomes
aware of such failure, Specialty Laboratories does not (1) notify Agent, BNPPLC and the Participants of such failure, and (2) cure such failure; 

        (f)    the
failure by Specialty Laboratories timely and properly to observe, keep or perform any covenant, agreement, warranty or condition herein required to be observed, kept
or performed (other than a failure described in another clause of this definition of Event of Default), if such failure is not cured within thirty days after Specialty Laboratories receives written
notice thereof from Agent; and 

        (g)  the
failure by BNPPLC to pay when due on or after the Designated Sale Date any of BNPPLC's Corresponding Obligations to Participants, after giving effect to any
applicable notice and grace periods expressly provided for in the Participation Agreement. 

Notwithstanding
the foregoing, if ever the aggregate Value of Cash Collateral held by Agent and the Deposit Takers exceeds the Minimum Collateral Value
then in effect, a failure of the pledge or security interest contemplated herein in such excess Cash Collateral to be a valid, perfected, first priority
pledge or security interest shall not constitute an Event of Default under this Agreement. Accordingly, to provide a cure as required to avoid an Event of Default under clauses (c) or
(e) of this definition, Specialty Laboratories could deliver additional Cash Collateral—the pledge of which or security interest in which created by this Agreement is a Qualified
Pledge—sufficient in amount to cause the aggregate Value of the Cash Collateral then held by Agent and the Deposit Takers subject to a Qualified Pledge hereunder to equal or exceed the
Minimum Collateral Value. 

        "Initially Qualified Deposit Taker" means (1) BNP Paribas, acting through any branch, office or agency that can lawfully maintain
an Account as a Deposit Taker hereunder, and (2) any of the fifty largest (measured by total assets) U.S. banks, or one of the one hundred largest (measured by total assets) banks in the world,
acting through any branch, office or agency in New York or California that can lawfully maintain an Account as a Deposit Taker hereunder and that has a debt 

3

 

ratings of at least (i) A- (in the case of long term debt) and A-1 (in the case of short term debt) or the equivalent thereof by Standard and Poor's Corporation, and
(ii) A3 (in the case of long term debt) and P-2 (in the case of short term debt) or the equivalent thereof by Moody's Investor Service, Inc. The parties believe it improbable
that the ratings systems used by Standard and Poor's Corporation and by Moody's Investor Service, Inc. will be discontinued or changed, but if such ratings systems are discontinued or changed,
Specialty Laboratories shall be entitled to select and use a comparable ratings systems as a substitute for the S&P Rating or the Moody Rating, as the case may be, for purposes of determining the
status of any bank as an Initially Qualified Deposit Taker. 

        "Lien" shall mean, with respect to any property or assets, any right or interest therein of a creditor to secure indebtedness of any kind
which is owed to him or any other arrangement with such creditor which provides for the payment of such indebtedness out of such property or assets or which allows him to have such indebtedness
satisfied out of such property or assets prior to the general creditors of any owner thereof, including any lien, mortgage, security interest, pledge, deposit, production payment, rights of a vendor
under any title retention or conditional sale agreement or lease substantially equivalent thereto, tax lien, mechanic's or materialman's lien, or any other charge or encumbrance for security purposes,
whether arising by law or agreement or otherwise, but excluding any right of setoff which arises without agreement in the ordinary course of business. "Lien" also means any filed financing statement,
any registration with an issuer of uncertificated securities, or any other arrangement which would serve to perfect a Lien described in the preceding sentence, regardless of whether such financing
statement is filed, such registration is made, or such arrangement is undertaken before or after such Lien exists. 

        "Minimum Collateral Value" shall mean (1) as of the Designated Sale Date or any prior date, an amount equal to the Collateral
Percentage multiplied by the Stipulated Loss Value determined as of that date in accordance with the Lease; and (2) as of any date after the Designated Sale Date, an amount equal to the Break
Even Price plus any unpaid interest accrued on past due amounts payable pursuant to Paragraph 2(A) of the Purchase Agreement. 

        "Notice of Security Interest" shall have the meaning given to that term in subsection 4.1.1 hereof. 

        "Other Liable Party" shall mean any Person, other than Specialty Laboratories, who may now or may at any time hereafter be primarily or
secondarily liable for any of the Secured Obligations or who may now or may at any time hereafter have granted to Agent a pledge of or security interest in any of the Collateral. 

        "Participants" shall mean BNPPLC's Parent and each of the other Participants under the Participation Agreement who have executed this
Agreement, and any other financial institutions which may hereafter become parties to (i) this Agreement by completing, executing and delivering to Specialty Laboratories and Agent a
Supplement, and (ii) the Participation Agreement. 

        "Participation Agreement" shall have the meaning given to such term in Recital B hereof. 

        "Percentage" shall mean with respect to each Participant and the Deposit Taker for such Participant, such Participant's "Percentage" under
and as defined in the Participation Agreement for purposes of computing such Participant's right thereunder to receive payments of (or amounts equal to a percentage of) any sales proceeds or
Supplemental Payment received by BNPPLC under the Purchase Agreement. Percentages may be adjusted from time to time as provided in the Participation Agreement or as provided in supplements thereto
executed as provided in the Participation Agreement. 

        "Qualified Pledge" means a pledge or security interest that constitutes a valid, perfected, first priority pledge or security interest. 

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        "Secured Obligations" shall mean and include both Specialty Laboratories' Purchase Agreement Obligations and BNPPLC's Corresponding
Obligations to Participants. 

        "Specialty Laboratories" shall have the meaning given to that term in the introductory paragraph hereof. 

        "Specialty Laboratories' Purchase Agreement Obligations" shall mean all of Specialty Laboratories' obligations under the Purchase
Agreement, including (i) Specialty Laboratories' obligation to pay any Supplemental Payment as required under subparagraph 2(A) of the Purchase
Agreement, (ii) Specialty Laboratories' obligation to pay any 97-10/Prepayment as required by subparagraph 5(B) of the Purchase Agreement, and (iii) any damages incurred by
BNPPLC because of (A) Specialty Laboratories' breach of the Purchase Agreement or (B) the rejection by Specialty Laboratories of the Purchase Agreement in any bankruptcy or insolvency
proceeding. 

        "Supplement" shall mean a supplement to this Agreement in the form of ATTACHMENT 1. 

        "Transition Account" shall have the meaning given it in Section 5.2. 

        "UCC" shall mean the Uniform Commercial Code as in effect in the State of California from time to time, and the Uniform Commercial Code as
in effect in any other jurisdiction which governs the
perfection or non-perfection of the pledge of and security interests in the Collateral created by this Agreement. 

        "Value" shall mean with respect to any Account or Cash Collateral on any date, a dollar value determined as follows (without duplication): 

        (a)  cash
shall be valued at its face amount on such date; and 

        (b)  an
Account shall be valued at the principal balance thereof on such date. 

        Section 1.3    Attachments.    All attachments to this Agreement are a part hereof for all purposes. 

        Section 1.4    Amendment of Defined Instruments.    Unless the context otherwise requires or unless otherwise
provided herein, references in this Agreement to a particular agreement, instrument or document (including references to the Lease, Purchase Agreement and Participation Agreement) also refer to and
include all valid renewals, extensions, amendments, modifications, supplements or restatements of any such agreement, instrument or document; provided that nothing contained in this Section shall be
construed to authorize any Person to execute or enter into any such renewal, extension, amendment, modification, supplement or restatement. 

        Section 1.5    References and Titles.    All references in this Agreement to Attachments, Articles, Sections,
subsections, and other subdivisions refer to the Attachments, Articles, Sections, subsections and other subdivisions of this Agreement unless expressly provided otherwise. Titles appearing at the
beginning of any subdivision are for convenience only and do not constitute any part of any such subdivision and shall be disregarded in construing the language contained in this Agreement. The words
"this Agreement", "herein", "hereof", "hereby", "hereunder" and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The
phrases "this Article," "this Section" and "this subsection" and similar phrases refer only to the Articles, Sections or subsections hereof in which the phrase occurs. The word "or" is not exclusive,
and the word "including" (in all of its forms) means "including without limitation". Pronouns in masculine, feminine and neuter gender shall be construed to include any other gender, and words in the
singular form shall be construed to include the plural and vice versa unless the context otherwise requires. 

ARTICLE II    SECURITY INTEREST  

        Section 2.1    Pledge and Grant of Security Interest.    As security for the Secured Obligations, Specialty
Laboratories hereby pledges and assigns to Agent (for the ratable benefit of BNPPLC and the 

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Participants) and grants to Agent (for the ratable benefit of BNPPLC and the Participants) a continuing security interest and lien in and against all right, title and interest of Specialty
Laboratories in and to the following property, whether now owned or hereafter acquired by Specialty Laboratories (collectively and severally, the
"Collateral"): 

        (a)  All
Cash Collateral, all Accounts and the Transition Account and general intangibles arising therefrom or relating thereto (however, "general intangibles" as used in
this clause shall not include any general intangibles not related to Cash Collateral, Accounts or the Transition Account, and thus will not include, without limitation, any intellectual property of
Specialty Laboratories); and all documents, instruments and agreements evidencing the same; and all extensions, renewals, modifications and replacements of the foregoing; and any interest or other
amounts payable in connection therewith; and 

        (b)  All
proceeds of the foregoing (including whatever is receivable or received when Collateral or proceeds is invested, 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 Collateral, and
all rights to payment with respect to any cause of action affecting or relating to the Collateral). 

The
pledge, assignment and grant of a security interest made by Specialty Laboratories hereunder is for security of the Secured Obligations only; the parties to this Agreement do not intend that
Specialty Laboratories' delivery of the Collateral to Agent as herein provided will constitute an advance payment of any Secured Obligations or liquidated damages, nor do the parties intend that the
Collateral increase the dollar amount of the Secured Obligations. 

        Section 2.2    Return of Collateral After the Secured Obligations are Satisfied in Full.    If any proceeds of
Collateral remain after all Secured Obligations have been paid in full, Agent will deliver or direct the Deposit Takers to deliver such proceeds to Specialty Laboratories or other Persons entitled
thereto by law. 

ARTICLE III    REQUIRED COLLATERAL

AND INITIAL DEPOSIT TAKER  

        Section 3.1    Collateral Percentage.    Commencing on the Completion Date and at all times thereafter,
Specialty Laboratories shall cause the Collateral to be pledged pursuant to this Agreement and delivered to Agent pursuant to Section 5.1 in an amount equal to or greater than the Collateral
Percentage (as it may change from time to time) multiplied by Stipulated Loss Value. 

        Section 3.2    Designation of BNP Paribas as Initial Deposit Taker Prior to Completion Date.    Prior to the
Completion Date, Agent and Specialty Laboratories shall execute and deliver a properly completed Notice of Security Interest to BNP Paribas in the form attached as  ATTACHMENT 2 to establish BNP
Paribas as the initial Deposit Taker hereunder. 

 
 

ARTICLE IV PROVISIONS CONCERNING DEPOSIT TAKERS    
  

        Section 4.1    Qualification of Deposit Takers Generally.    Agent may decline to deposit or maintain
Collateral hereunder with any Person designated as a Deposit Taker, if such Person has failed to satisfy or no longer satisfies the following requirements: 

        4.1.1    Such
Person must have received from Agent and Specialty Laboratories a completed, executed Notice of Security Interest (a "Notice of Security
Interest"), in the form of ATTACHMENT 2 as described in Section 4.6, which specifically identifies any and all Accounts in which such Person shall hold Cash Collateral
delivered to it pursuant to this Agreement and which designates Account Offices with respect to all such Accounts in New York or California. 

6

 

        4.1.2    Such
Person must have executed the Acknowledgment and Agreement at the end of such Notice of Security Interest (the "Deposit Taker's
Acknowledgment and Agreement") and returned the same to Agent. Further, such Person must have complied with the Deposit Taker's Acknowledgment and Agreement, and the
representations set forth therein with respect to such Person must continue to be true and correct. 

        4.1.3    Such
Person must be a commercial bank, organized under the laws of the United States of America or a state thereof or under the laws of another country which is doing
business in the United States of America; must be authorized to maintain deposit accounts for others through Account Offices in New York or California (as specified in the Deposit Taker's
Acknowledgment and Agreement); and must be an Affiliate of BNPPLC or the Participant for whom such Person will act as Deposit Taker or must have a combined capital, surplus and undivided profits of at
least $500,000,000. 

        4.1.4    Such
Person must have complied with the provisions in this Agreement applicable to Deposit Takers. 

        Section 4.2    Additional Provisions Concerning the Designation of Deposit Takers.    Notwithstanding anything
herein to the contrary, BNPPLC and BNPPLC's Parent may each designate BNPPLC's Parent as its Deposit Taker pursuant to Section 4.5; (2) any other Participant may designate itself as its
Deposit Taker pursuant to Section 4.5, provided that the other Participant is not itself a Disqualified Deposit Taker; and (3) pursuant to Section 4.6, Agent and Specialty
Laboratories must promptly upon request execute and deliver any properly completed Notice of Security Interest requested by BNPPLC or the applicable Participant to facilitate the designations
contemplated in this sentence. 

        Section 4.3    Replacement of Participants Proposed by Specialty Laboratories.    So long as no Event of
Default has occurred and is continuing, BNPPLC shall not unreasonably withhold its approval for a substitution under the Participation Agreement of a new Participant proposed by Specialty Laboratories
for any Participant, the Deposit Taker for whom would no longer meet the requirements for an Initially Qualified Deposit Taker; provided, however, that (A) the proposed substitution can be
accomplished without a release or breach by BNPPLC of its rights and obligations under the Participation Agreement; (B) the new Participant will agree (by executing a Supplement and a
supplement to the Participation Agreement as contemplated therein and by other agreements as may be reasonably required by BNPPLC and Specialty Laboratories) to become a party to the Participation
Agreement and to this Agreement, to designate an Initially Qualified Deposit Taker as the Deposit Taker for it under this Agreement and to accept a Percentage under the Participation Agreement equal
to the Percentage of the Participant to be replaced; (C) the new Participant (or Specialty Laboratories) will provide the funds to pay the termination fee required by  Section 6.4 of the
Participation Agreement to accomplish the substitution; (D) Specialty Laboratories (or the new Participant) agrees in
writing to indemnify and defend BNPPLC for any and all Losses incurred by BNPPLC in connection with or because of the substitution, including the cost of preparing supplements to the Participation
Agreement and this Agreement and including any cost of defending and paying any claim asserted by the Participant to be replaced because of the substitution (but not including any liability of BNPPLC
to such Participant for damages caused by BNPPLC's bad faith or gross negligence in the performance of BNPPLC's obligations under the Participation Agreement prior to the substitution); (E) the
new Participant shall be a reputable financial institution having a net worth of no less than seven and one half percent (7.5%) of total assets and total assets of no less than $10,000,000,000 (all
according to then recent audited financial statements); and (F) in no event will BNPPLC be required to approve a substitution pursuant to this Section 4.3 which will replace a
Participant that is an Affiliate of BNPPLC. BNPPLC shall attempt in good faith to assist (and cause BNPPLC's Parent to attempt in good faith to assist) Specialty Laboratories in identifying a new
Participant that Specialty Laboratories may propose to substitute for an existing Participant pursuant to this Section, as Specialty Laboratories may 

7

 

reasonably request from time to time. However, in no event shall BNPPLC itself, or any of its Affiliates, be required to take the Percentage of any Participant to be replaced. 

        Section 4.4    Mandatory Substitutions for Disqualified Deposit Takers.    

        4.4.1    If
any Deposit Taker shall cease to satisfy the requirements set forth in Section 4.1, the party for whom such Disqualified Deposit Taker has been designated as
Deposit Taker (i.e., BNPPLC or the applicable Participant) shall promptly (1) provide notice thereof to Agent and Specialty Laboratories, and (2) designate a substitute Deposit Taker and
cause the substitute to satisfy the requirements set forth in Section 4.1. 

        4.4.2    Pending
the designation of a substitute Deposit Taker when required by this Section 4.4 and the satisfaction by it of the requirements set forth in
Section 4.1, Agent may withdraw Collateral held by the Deposit Taker to be replaced and deposit such Collateral with other Deposit Takers, subject to Section 5.3 below. If at any time no
Deposit Takers have been designated that meet the requirements of Section 4.1 and, if applicable, Section 4.2, then Agent shall itself select one or more Deposit Takers for BNPPLC and
the Participants meeting such requirements. 

        Section 4.5    Voluntary Substitution of Deposit Takers.    With the written approval of Agent, which approval
will not be unreasonably withheld, BNPPLC or any Participant may at any time designate for itself a new Deposit Taker (in replacement of any prior Deposit Taker acting for it hereunder); provided, the
Person so designated has satisfied the requirements set forth in Section 4.1; and, provided further, unless the designation of a new Deposit Taker is required by Section 4.4, at the time
of the replacement such Person must be an Initially Qualified Deposit Taker. 

        Section 4.6    Delivery of Notice of Security Interest by Specialty Laboratories and Agent.    To the extent
required for the designation of a new Deposit Taker by BNPPLC or any Participant pursuant to Section 4.5, or to permit the substitution or replacement of a Deposit Taker for BNPPLC or any
Participant as provided in Sections 4.4 and 4.5, Specialty Laboratories and Agent shall promptly execute and deliver any properly completed Notice of Security Interest requested by BNPPLC or the
applicable Participant in the form attached as ATTACHMENT 2. 

        Section 4.7    Constructive Possession of Collateral.    The possession by a Deposit Taker of any deposit
accounts, money, instruments, chattel paper or other property constituting Collateral or evidencing Collateral shall be deemed to be possession by Agent or a person designated by Agent, for purposes
of perfecting the security interest granted to Agent hereunder pursuant to the UCC or other Applicable Law; and notifications to a Deposit Taker by other Persons holding any such property, and
Acknowledgments, receipts or confirmations from any such Persons delivered to a Deposit Taker, shall be deemed notifications to, or Acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of such Deposit Taker for the benefit of Agent for the purposes of perfecting such security interests under Applicable Law. 

        Section 4.8    Attempted Setoff by Deposit Takers.    By delivery of a Deposit Taker's Acknowledgment and
Agreement, each Deposit Taker shall be required to agree not to setoff or attempt a setoff, without in each case first obtaining the prior written authorization of
Agent, Secured Obligations owed to it against
any Collateral held by it from time to time. Further, by delivery of a Deposit Taker's Acknowledgment and Agreement, each Deposit Taker shall be required to agree not to setoff or attempt a setoff,  without in each case
first obtaining the prior written authorization of both Specialty Laboratories and Agent, obligations owed to it other than Secured
Obligations against any Collateral held by it from time to time. Any Deposit Taker for BNPPLC or a Participant shall not be permitted by BNPPLC or the applicable Participant, as the case may be, to
violate such agreements. However, Specialty Laboratories acknowledges and agrees (without limiting its right to recover damages from a Deposit Taker that violates such agreements) that Agent shall not
be responsible for, or be deemed to have taken any action against Specialty Laboratories because of, any Deposit Taker's violation of such agreements; and, 

8

 

neither BNPPLC nor any Participant shall be responsible for, or be deemed to have taken any action against Specialty Laboratories because of, any violation of such agreements by a Deposit Taker for
another party. 

        Section 4.9    Deposit Taker Losses.    Agent shall not be responsible for any Deposit Taker Losses. However,
Deposit Taker Losses with respect to a Deposit Taker for a particular Participant shall reduce the amount of BNPPLC's Corresponding Obligations to Participants which are payable to such Participant as
provided in Section 2.2 of the Participation Agreement. Further, when Deposit Taker Losses with respect to a Deposit Taker for a particular
Participant are incurred in excess of the payments of Secured Obligations that such Participant would then have been entitled to receive under the Participation Agreement but for such Deposit Taker
Losses, such Participant must immediately pay the excess to Agent as additional Collateral hereunder, failing which Specialty Laboratories may recover any damages suffered by it because of the Deposit
Taker Losses from such Deposit Taker or such Participant. 

        Section 4.10    Losses Resulting from Failure of Deposit Taker to Comply with this Agreement.    Except as
provided in the next Section, any Participant, the Deposit Taker for whom has failed to comply with the requirements of this Agreement or any Notices of Security Interest and any Deposit Taker's
Acknowledgments and Agreements (the "Responsible Participant") must defend, indemnify, and hold harmless BNPPLC, Agent and the other Participants from
and against any Losses resulting from such failure. Without limiting the foregoing, if the failure of a Deposit Taker for a Responsible Participant to comply strictly with the terms of this Agreement
(including the requirement that any cash deposits be held in a deposit account located in either New York or California) causes, in whole or in part, the security interest of Agent in the Collateral
held by such Deposit Taker to be unperfected, then any and all Losses suffered as a result of such nonperfection shall, except as provided in the next Section, be borne solely by the Responsible
Participant and shall not be shared by BNPPLC, Agent or the other Participants. 

ARTICLE V DELIVERY AND MAINTENANCE OF CASH COLLATERAL  

        Section 5.1    Delivery of Funds by Specialty Laboratories.    On the Completion Date, the Base Rent
Commencement Date and each Base Rent Date, Specialty Laboratories must deliver to Agent, subject to the pledge and security interest created hereby, funds as Cash Collateral then needed (if any) to
cause the Value of the Collateral to be no less than the Minimum Collateral Value. Each delivery of funds required by the preceding sentence must be received by Agent no later than 12:00 noon
(California time) on the date it is required; if received after 12:00 noon it will be considered for purposes of this Agreement and the other Operative Documents as received on the next following
Business Day. At least five Business Days prior to any Base Rent Date upon which it is expected that Specialty Laboratories will be required to deliver additional funds pursuant to this Section,
Specialty Laboratories shall notify BNPPLC, Agent and each of the Participants thereof and of the amount Specialty Laboratories expects to deliver to Agent as Cash Collateral on the applicable Base
Rent Date. In addition to required deliveries of Cash Collateral as provided in the foregoing provisions, Specialty Laboratories may on any date (whether or not a Base Rent Date) deliver additional
Cash Collateral to Agent as necessary to prevent any Default from becoming an Event of Default. Upon receipt of any funds delivered to it by Specialty Laboratories as Cash Collateral, Agent shall
immediately deposit the same with the Deposit Takers in accordance with the requirements of Sections 5.3 and 5.4 below. 

        Section 5.2    Transition Account.    Pending deposit in the Accounts or other application as provided herein,
all Cash Collateral received by Agent shall be credited to and held by Agent in an account (the "Transition Account") styled "Specialty Laboratories
Collateral Account, held for the benefit of BNP Paribas Leasing Corporation and the Participants," separate and apart from all other property and funds of Specialty Laboratories or other Persons, and
no other property or funds shall be deposited in 

9

 

the Transition Account. The books and records of Agent shall reflect that the Transition Account and all Cash Collateral on deposit therein are owned by Specialty Laboratories, subject to a pledge
and security interest in favor of Agent for the benefit of BNPPLC and Participants. 

        Section 5.3    Allocation of Cash Collateral Among Deposit Takers.    Funds received by Agent from Specialty
Laboratories as Cash Collateral will be allocated for deposit among the Deposit Takers as follows: 

first, to the extent possible the funds will be allocated as required to rectify and prevent any Collateral Imbalance; and 

second, the funds will be allocated to the Deposit Taker for BNPPLC, unless the Deposit Taker for BNPPLC has become a Disqualified Deposit Taker, in
which case the funds will be allocated to other Deposit Takers who are not Disqualified Deposit Takers as Agent deems appropriate. 

Further,
if for any reason a Collateral Imbalance is determined by Agent to exist, Agent shall, as required to rectify or mitigate the Collateral Imbalance, promptly reallocate Collateral among
Deposit Takers by withdrawing Cash Collateral from some Accounts and redepositing it in other Accounts. (If any party to this Agreement believes that the Value of the Accounts held by a particular
Deposit Taker
causes a Collateral Imbalance to exist, that party will promptly notify BNPPLC, Specialty Laboratories and Agent.) Subject to the foregoing, and provided that Agent does not thereby create or
exacerbate a Collateral Imbalance, Agent may withdraw and redeposit Cash Collateral in order to reallocate the same among Deposit Takers from time to time as Agent deems appropriate. For purposes of
illustration only, examples of the allocations required by this Section are set forth in ATTACHMENT 3. 

        Section 5.4    Status of the Accounts Under the Reserve Requirement Regulations.    Deposit Takers shall be
permitted to structure the Accounts as nonpersonal time deposits under 12 C.F.R., Part II, Chapter 204 (commonly known as "Regulation D"). Accordingly, each Deposit Taker may require at least
seven days advance notice of any withdrawal or transfer of funds from Accounts it maintains and may limit the number of withdrawals or transfers from such Accounts to no more than six in any calendar
month, notwithstanding anything to the contrary herein or in any deposit agreement that Specialty Laboratories and any Deposit Taker may enter into with respect to any Account. As necessary to satisfy
the seven days notice requirement with respect to withdrawals by Agent when required by Specialty Laboratories pursuant to the provisions below, Agent shall notify Deposit Takers promptly after
receipt of any notice from Specialty Laboratories described in subsection 6.1.2 or 6.2.1 or in Section 6.3. 

        Section 5.5    Acknowledgment by Specialty Laboratories that Requirements of this Agreement are Commercially
Reasonable.    Specialty Laboratories acknowledges and agrees that the requirements set forth herein concerning receipt, deposit, withdrawal, allocation, application
and distribution of Cash Collateral by Agent, including the requirements and time periods set forth in the next Article, are commercially reasonable. 

ARTICLE VI WITHDRAWAL OF CASH COLLATERAL  

        Specialty Laboratories may not withdraw Cash Collateral, except as follows: 

        Section 6.1    Withdrawal of Collateral Prior to the Designated Sale Date.    Specialty Laboratories may
require Agent to withdraw Cash Collateral from Accounts on any date prior to the Designated Sale Date and to deliver such Cash Collateral to Specialty Laboratories (which delivery shall be free and
clear of all liens and security interests hereunder); provided, however, that in each case: 

        6.1.1    Such
withdrawal and delivery of the Cash Collateral to Specialty Laboratories will not cause the Value of the remaining Collateral to be less than the Minimum
Collateral Value. 

10

  

        6.1.2    by
a notice in the form of ATTACHMENT 4, Specialty Laboratories must give Agent, BNPPLC and the Participants
notice of the required withdrawal at least ten days prior to the date upon which the withdrawal is to occur. 

        6.1.3    No
Default or Event of Default shall have occurred and be continuing at the time Specialty Laboratories gives the notice required by the preceding subsection or on the
date upon which the withdrawal is required. 

        6.1.4    Specialty
Laboratories must pay to Agent any and all costs incurred by Agent in connection with the withdrawal. 

        6.1.5    Agent
shall determine the Accounts from which to make any withdrawal required by Specialty Laboratories pursuant to this Section as necessary to prevent or mitigate
any Collateral Imbalance. 

        Section 6.2    Withdrawal and Application of Cash Collateral to Reduce or Satisfy the Secured Obligations to the
Participants.    To reduce the "Break Even Price" or "Supplemental Payment" required under (and as defined in) the Purchase Agreement (and, thus, to reduce the
Secured Obligations), Specialty Laboratories may require Agent to withdraw Cash Collateral then held by or for Agent pursuant to this Agreement on the Designated Sale Date and to deliver the same on
the Designated Sale Date or on any date thereafter prior to an Event of Default (which delivery shall be free and clear of all liens and security interests hereunder) directly to the Participants in
proportion to their respective rights to payment of BNPPLC's Corresponding Obligations to Participants and for application thereto or the reduction thereof pursuant to  Section 2.6 of the
Participation Agreement; provided, that: 

        6.2.1    by
a notice in the form of ATTACHMENT 5, Specialty Laboratories must have notified Agent, BNPPLC and each of the
Participants of the required withdrawal and payment to Participants at least ten days prior to the date upon which it is to occur; 

        6.2.2    the
required withdrawal shall be made as determined by Agent, first, from the Accounts maintained by the Deposit Takers for the Participants, and then (to the extent
necessary) from the Accounts maintained by the Deposit Taker for BNPPLC; and 

        6.2.3    in
any event, no withdrawals or payments directly to Participants shall be required by this Section 6.2 (or permitted over the objection of BNPPLC) in excess of
those required to satisfy BNPPLC's Corresponding Obligations to Participants or to reduce such obligations to zero under the Participation Agreement. 

        Section 6.3    Withdrawal and Application of Cash Collateral to Reduce or Satisfy the Secured Obligations to
BNPPLC.    To satisfy Specialty Laboratories' Purchase Agreement Obligations, Specialty Laboratories may require Agent to withdraw any Cash Collateral held by the
Deposit Taker for BNPPLC pursuant to this Agreement on the Designated Sale Date and to deliver the same on the Designated Sale Date or on any date thereafter prior to an Event of Default (which
delivery shall be free and clear of all liens and security interests hereunder) directly to BNPPLC as a payment on behalf of Specialty Laboratories of amounts due under the Purchase Agreement;
provided, that by a notice in the form of ATTACHMENT 6, Specialty Laboratories must have notified Agent and BNPPLC of the required withdrawal and
payment to BNPPLC at least ten days prior to the date upon which it is to occur. 

        Section 6.4    Withdrawal of Cash Collateral From Accounts Maintained by Disqualified Deposit Takers.
    Specialty Laboratories may from time to time prior to the Designated Sale Date (regardless of the existence of any Default or Event of Default) require Agent to withdraw any or all Cash
Collateral from any Account maintained by a Disqualified Deposit Taker and deposit it, still subject to the pledge and grant of security interest hereunder, with other Deposit Takers who are not
Disqualified Deposit Takers (in accordance with the requirements of Sections 5.3 and 5.4) on any date prior to the 

11

 

Designated Sale Date; provided, that by a notice in the form of ATTACHMENT 7, Specialty Laboratories must have notified Agent, BNPPLC and each
of the Participants of the required withdrawal at least ten days prior to the date upon which it is to occur. 

ARTICLE VII REPRESENTATIONS AND COVENANTS OF SPECIALTY LABORATORIES  

        Section 7.1    Representations of Specialty Laboratories.    Specialty Laboratories represents to BNPPLC, Agent
and the Participants as follows: 

        7.1.1    Specialty
Laboratories is the legal and beneficial owner of the Collateral (or, in the case of after-acquired Collateral, at the time Specialty Laboratories acquires
rights in the Collateral, will be the legal and beneficial owner thereof). No other Person has (or, in the case of after-acquired Collateral, at the time Specialty Laboratories acquires rights
therein, will have) any right, title, claim or interest (by way of Lien, purchase option or otherwise) in, against or to the Collateral, except for rights created hereunder. 

        7.1.2    Agent
has (or in the case of after-acquired Collateral, at the time Specialty Laboratories acquires rights therein, will have) a valid, first priority, perfected
pledge of and security interest in the Collateral, regardless of the characterization of the Collateral as deposit accounts, instruments or general intangibles under the UCC, but assuming that the
representations of each Deposit Taker in its Deposit Taker's Acknowledgment and Agreement are true. 

        7.1.3    Specialty
Laboratories has delivered to Agent, together with all necessary stock powers, endorsements, assignments and other necessary instruments of transfer, the
originals of all documents, instruments and agreements evidencing Accounts or Cash Collateral. 

        7.1.4    Specialty
Laboratories' chief executive office is located at the address of Specialty Laboratories set forth in Article II of the Common Definitions and
Provisions Agreement or at another address in California specified in a notice that Specialty Laboratories has given to Agent as required by Section 7.2.4. 

        7.1.5    To
the knowledge of Specialty Laboratories, neither the ownership or the intended use of the Collateral by Specialty Laboratories, nor the pledge of Accounts or the
grant of the security interest by Specialty Laboratories to Agent herein, nor the exercise by Agent of its rights or remedies hereunder, will (i) violate any provision of (a) Applicable
Law, (b) the articles or certificate of incorporation, charter or bylaws of Specialty Laboratories, or (c) any agreement, judgment, license, order or permit applicable to or binding upon
Specialty Laboratories, or (ii) result in or require the creation of any Lien, charge or encumbrance upon any assets or properties of Specialty Laboratories except as expressly contemplated in
this Agreement. Except as expressly contemplated in this Agreement, to the knowledge of Specialty Laboratories no consent, approval, authorization or order of, and no notice to or filing with any
court, governmental authority or third party is required in connection with the pledge or grant by Specialty Laboratories of the security interest contemplated herein or the exercise by Agent of its
rights and remedies hereunder. 

        Section 7.2    Covenants of Specialty Laboratories.    Specialty Laboratories hereby agrees as follows: 

        7.2.1    Specialty
Laboratories, at Specialty Laboratories' expense, shall promptly procure, execute and deliver to Agent all documents, instruments and agreements and perform
all acts which are necessary, or which Agent may reasonably request, to establish, maintain, preserve, protect and perfect the Collateral, the pledge thereof to Agent or the security interest granted
to Agent therein and the first priority of such pledge or security interest or to enable Agent to exercise and enforce its rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the preceding sentence, Specialty Laboratories shall (A) procure, execute and deliver to Agent all stock powers, endorsements, assignments, financing statements and
other 

12

 

instruments of transfer requested by Agent, (B) deliver to Agent promptly upon receipt all originals of Collateral consisting of instruments, documents and chattel paper, (C) cause the
security interest of Agent in any Collateral consisting of securities to be recorded or registered in the books of any financial intermediary or clearing corporation requested by Agent, and
(D) reimburse Agent any legal opinions Agent may elect to obtain from one or more nationally recognized commercial law firms authorized to practice in California or New York, as applicable,
concerning the enforceability, first priority and perfection of Agent's security interest in any Collateral maintained or to be maintained in California or New York. Specialty Laboratories hereby
authorizes Agent to file any financing statements or financing statement amendment covering all or any portion of the Collateral or relating to the security interest created herein. 

        7.2.2    Specialty
Laboratories shall not use or consent to any use of any Collateral in violation of any provision of the this Agreement or any other Operative Document or any
Applicable Law. 

        7.2.3    Specialty
Laboratories shall pay promptly when due all taxes and other governmental charges, all Liens and all other charges now or hereafter imposed upon, relating to
or affecting any Collateral. 

        7.2.4    Without
thirty days' prior written notice to Agent, Specialty Laboratories shall not change Specialty Laboratories' name or place of business (or, if Specialty
Laboratories has more than one place of business, its chief executive office). 

        7.2.5    Specialty
Laboratories shall appear in and defend, on behalf of Agent, any action or proceeding which may affect Specialty Laboratories' title to or Agent's interest
in the Collateral. 

        7.2.6    Subject
to the express rights of Specialty Laboratories under Article VI, Specialty Laboratories shall not surrender or lose possession of (other than to Agent
or a Deposit Taker pursuant hereto), sell, encumber, lease, rent, option, or otherwise dispose of or transfer any Collateral or right or interest therein, and Specialty Laboratories shall keep the
Collateral free of all Liens. 

        7.2.7    Specialty
Laboratories will not take any action which would in any manner impair the value or enforceability of Agent's pledge of or security interest in any
Collateral, nor will Specialty Laboratories fail to take any action which is required to prevent (and which Specialty Laboratories knows is required to prevent) an impairment of the value or
enforceability of Agent's pledge of or security interest in any Collateral. 

        7.2.8    Specialty
Laboratories shall pay (and shall indemnify and hold harmless Agent from and against) all Losses incurred by Agent in connection with or because of
(A) the interest acquired by Agent in any Collateral pursuant to this Agreement, or (B) the negotiation or administration of this Agreement, whether such Losses are incurred at the time
of execution of this Agreement or at any time in the future. Costs and expenses included in such Losses may include, without limitation, all filing and
recording fees, taxes, UCC search fees and Attorneys' Fees incurred by Agent with respect to the Collateral. 

        7.2.9    Without
limiting the foregoing, within five Business Days after Specialty Laboratories becomes aware of any failure of the pledge or security interest contemplated
herein in the Transition Account or any Account or Cash Collateral to be a valid, perfected, first priority pledge or security interest (regardless of the characterization of the Transition Account or
any Accounts or Cash Collateral as deposit accounts, instruments or general intangibles under the UCC), Specialty Laboratories shall notify Agent, BNPPLC and the Participants of such failure. 

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ARTICLE VIII AUTHORIZED ACTION BY AGENT  

        Section 8.1    Power of Attorney.    Specialty Laboratories hereby irrevocably appoints Agent as Specialty
Laboratories' attorney-in-fact for the purpose of authorizing Agent to perform (but Agent shall not be obligated to and shall incur no liability to Specialty Laboratories or
any third party for failure to perform) any act which Specialty Laboratories is obligated by this Agreement to perform, and to exercise, consistent with the other provisions of this Agreement, such
rights and powers as Specialty Laboratories might exercise with respect to the Collateral during any period in which a Default or Event of Default has occurred and is continuing, including the right
to (a) collect by legal proceedings or otherwise and endorse, receive and receipt for all dividends, interest, payments, proceeds and other sums and property now or hereafter payable on or on
account of the 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 Collateral; (c) insure, process, preserve and enforce the Collateral; (d) make any compromise or settlement, and take any action it deems advisable, with
respect to the Collateral; (e) pay any indebtedness of Specialty Laboratories relating to the Collateral; and (f) execute UCC financing statements and other documents, instruments and
agreements required hereunder. Specialty Laboratories agrees that such care as Agent gives to the safekeeping of its own property of like kind shall constitute reasonable care of the Collateral when
in Agent's possession; provided, however, that Agent shall not be obligated to Specialty Laboratories to give any notice or take any action to preserve
rights against any other Person in connection with the Secured Obligations or with respect to the Collateral. 

ARTICLE IX DEFAULT AND REMEDIES  

        Section 9.1    Remedies.    In addition to all other rights and remedies granted to Agent, BNPPLC or the
Participants by this Agreement, the Lease, the Purchase Agreement, the Participation Agreement, the UCC and other Applicable Laws, Agent may, upon the occurrence and during the continuance of any
Event of Default, exercise any one or more of the following rights and remedies, all of which will be in furtherance of its rights as a secured party under the UCC: 

        (a)  Agent
may collect, receive, appropriate or realize upon the Collateral or otherwise foreclose or enforce the pledge of or security interests in any or all Collateral in
any manner permitted by Applicable Law or in this Agreement; and 

        (b)  Agent
may notify any or all Deposit Takers to pay all or any portion of the Collateral held by such Deposit Taker(s) directly to Agent. 

Agent
shall distribute the proceeds of all Collateral received by Agent after the occurrence of an Event of Default to BNPPLC and the Participants for application to the Secured Obligations. If any
proceeds of Collateral remain after all Secured Obligations have been paid in full, Agent will deliver or direct the Deposit Takers to deliver such proceeds to Specialty Laboratories or other Persons
entitled thereto. In any case where notice of any sale or disposition of any Collateral is required, Specialty Laboratories hereby agrees that seven (7) Business Days notice of such sale or
disposition is reasonable. 

ARTICLE X OTHER RECOURSE  

        Section 10.1    Recovery Not Limited.    To the fullest extent permitted by applicable law, Specialty
Laboratories waives any right to require that Agent, BNPPLC or the Participants proceed against any other Person, exhaust any Collateral or other security for the Secured Obligations, or to have any
Other Liable Party joined with Specialty Laboratories in any suit arising out of the Secured Obligations or this Agreement, or pursue any other remedy in their power. Specialty Laboratories waives any
and all notice of acceptance of this Agreement. Specialty Laboratories further waives notice of the creation, modification, rearrangement, renewal or extension for any period of any of the Secured
Obligations of any Other Liable Party from time to time and any defense arising by reason of any disability or other 

14

 

defense of any Other Liable Party or by reason of the cessation from any cause whatsoever of the liability of any Other Liable Party. Until all of the Secured Obligations shall have been paid in
full, Specialty Laboratories shall have no right to subrogation, reimbursement, contribution or indemnity against any Other Liable Party and Specialty Laboratories waives the right to enforce any
remedy which Agent, BNPPLC or any Participant has or may hereafter have against any Other Liable Party, and waives any benefit of and any right to participate in any other security whatsoever now or
hereafter held by Agent, BNPPLC or any Participant. Specialty Laboratories authorizes Agent, BNPPLC and the Participants, without notice or demand and without any reservation of rights against
Specialty
Laboratories and without affecting Specialty Laboratories' liability hereunder or on the Secured Obligations, from time to time to (a) take or hold any other property of any type from any other
Person as security for the Secured Obligations, and exchange, enforce, waive and release any or all of such other property, (b) after any Event of Default, apply or require the application of
the Collateral (in accordance with this Agreement) or such other property in any order they may determine and to direct the order or manner of sale thereof as they may determine, (c) renew,
extend for any period, accelerate, modify, compromise, settle or release any of the obligations of any Other Liable Party with respect to any or all of the Secured Obligations or other security for
the Secured Obligations, and (d) release or substitute any Other Liable Party. 

ARTICLE XI PROVISIONS CONCERNING AGENT  

        In the event of any conflict between the following and other provisions in this Agreement, the following will control: 

        Section 11.1    Appointment and Authority.    BNPPLC and each Participant hereby irrevocably authorizes Agent,
and Agent hereby undertakes, to take all actions and to exercise such powers under this Agreement as are specifically delegated to Agent by the terms hereof, together with all other powers reasonably
incidental thereto. The relationship of Agent to the Participants is only that of one commercial bank acting as collateral agent for others, and nothing herein shall be construed to constitute Agent a
trustee or other fiduciary for any Participant or anyone claiming through or under a Participant nor to impose on Agent duties and obligations other than those expressly provided for in this
Agreement. With respect to any matters not expressly provided for in this Agreement and any matters which this Agreement places within the discretion of Agent, Agent shall not be required to exercise
any discretion or take any action, and it may request instructions from BNPPLC and Participants with respect to any such matter, in which case it shall be required to act or to refrain from acting
(and shall be fully protected and free from liability to all Participants in so acting or refraining from acting) upon the instructions of the Majority, as defined in the Participation Agreement,
including itself as a Participant and BNPPLC; provided, however, that Agent shall not be required to take any action which exposes it to a risk of personal liability that it considers unreasonable or
which is contrary to this Agreement or the other documents referenced herein or to Applicable Law. 

        Section 11.2    Exculpation, Agent's Reliance, Etc.    Neither Agent nor any of its directors, officers,
agents, attorneys, or employees shall be liable for any action taken or omitted to be taken by any of them under or in connection with this Agreement, INCLUDING THEIR
NEGLIGENCE OF ANY KIND, except that each shall be liable for its own gross negligence or willful misconduct. Without limiting the generality of the foregoing, Agent
(1) may treat the rights of any Participant under its Participation Agreement as continuing until Agent receives written notice of the assignment or transfer of those rights in accordance with
such Participation Agreement, signed by such Participant and in form satisfactory to Agent; (2) may consult with legal counsel (including counsel for Specialty Laboratories), independent public
accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such counsel, accountants or
experts, unless the action taken or omitted constitutes misconduct; (3) makes no warranty or representation and shall not be responsible for any statements, warranties or 

15

 

representations made in or in connection with this Agreement or the other documents referenced herein; (4) shall not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of the Operative Documents on the part of any party thereto, or to inspect the property (including the books and records) of any party thereto;
(5) shall not be responsible to any Participant for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of any Operative Document or any instrument or
document furnished in connection therewith; (6) may rely upon the representations and warranties of Specialty Laboratories, Participants and Deposit Takers in exercising its powers hereunder;
and (7) shall incur no liability under or in respect of the Operative Documents by acting upon any notice, consent, certificate or other instrument or writing (including any telecopy, telegram,
cable or telex) believed by it to be genuine and signed or sent by the proper Person or Persons. 

        Section 11.3    Participant's Credit Decisions.    Each Participant acknowledges that it has, independently and
without reliance upon Agent or any other Participant, made its own analysis of Specialty Laboratories and the transactions contemplated hereby and its own independent decision to enter into the
Operative Documents to which it is a party. Each Participant also acknowledges that it will, independently and without reliance upon 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 credit decisions in taking or not taking action under the Operative Documents. 

        Section 11.4    Indemnity.    Each Participant agrees to indemnify Agent (to the extent not reimbursed by
Specialty Laboratories within ten days after demand) from and against such Participant's Percentage of any and all Losses of any kind or nature whatsoever which to any extent (in whole or in part) may
be imposed on, incurred by, or asserted against Agent growing out of, resulting from or in any other way associated with any of the Collateral, the Operative Documents and the transactions and events
(including the enforcement thereof) at any time associated therewith or contemplated therein. THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH LOSSES ARE IN ANY
WAY OR TO ANY EXTENT OWED, IN WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED, IN WHOLE OR IN PART, BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY AGENT, PROVIDED ONLY
THAT NO PARTICIPANT SHALL BE OBLIGATED UNDER THIS SECTION TO INDEMNIFY AGENT FOR THAT PORTION, IF ANY, OF ANY LOSS WHICH IS PROXIMATELY CAUSED BY AGENT'S OWN INDIVIDUAL GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, AS DETERMINED IN A FINAL JUDGMENT RENDERED AGAINST AGENT. Cumulative of the foregoing, each Participant agrees to reimburse Agent promptly upon demand for such
Participant's Percentage share of any costs and expenses to be paid to Agent by Specialty Laboratories hereunder to the extent that Agent is not timely reimbursed by Specialty Laboratories as provided
in subsection 7.2.8. As used in this Section the term "Agent" shall refer not only to the Person designated as such in the introductory paragraph of this Agreement, but also to each director, officer,
agent, attorney, employee, representative and Affiliate of such Person. 

        Section 11.5    Agent's Rights as Participant and Deposit Taker.    In its capacity as a Participant, BNP
Paribas shall have the same rights and obligations as any Participant and may exercise such rights as though it were not Agent. In its capacity as a Deposit Taker, BNP Paribas shall have the same
rights and obligations as any Deposit Taker and may exercise such rights as though it were not Agent. BNP
Paribas and any of its Affiliates may accept deposits from, lend money to, act as Trustee under indentures of, and generally engage in any kind of business with Specialty Laboratories or its
Affiliates, all as if BNP Paribas were not designated as the Agent hereunder and without any duty to account therefor to any other Participant. 

        Section 11.6    Investments.    Whenever Agent in good faith determines that it is uncertain about how to
distribute any funds which it has received hereunder, or whenever Agent in good faith determines that there is any dispute among BNPPLC and Participants about how such funds should be 

16

 

distributed, Agent may choose to defer distribution of the funds which are the subject of such uncertainty or dispute. If Agent in good faith believes that the uncertainty or dispute will not be
promptly resolved, or if Agent is otherwise required to invest funds pending distribution, Agent shall invest such funds pending distribution, all interest on any such investment shall be distributed
upon the distribution of such investment and in the same proportion and to the same Persons as such investment. All moneys received by Agent for distribution to BNPPLC or Participants shall be held by
Agent pending such distribution solely as Agent hereunder, and Agent shall have no equitable title to any portion thereof. 

        Section 11.7    Benefit of Article XI.    The provisions of this Article (other than the following
Section 11.8) are intended solely for the benefit of Agent, BNPPLC and Participants, and Specialty Laboratories shall not be entitled to rely on any such provision or assert any such provision
in a claim or defense against Agent, BNPPLC or any Participant. Agent, BNPPLC and Participants may waive or amend such provisions as they desire without any notice to or consent of Specialty
Laboratories. 

        Section 11.8    Resignation.    Agent may resign at any time by giving written notice thereof to BNPPLC,
Participants and Specialty Laboratories. Upon any such resignation the Majority (as defined in the Participation Agreement) shall have the right to appoint a successor Agent, subject to Specialty
Laboratories' consent, such consent not to be unreasonably withheld. A successor must be appointed for any retiring Agent, and such Agent's resignation shall become effective when such successor
accepts such appointment. If, within thirty days after the date of the retiring Agent's resignation, no successor Agent has been appointed and has accepted such appointment, then the retiring Agent
may appoint a successor Agent, which shall be a commercial bank organized or licensed to conduct a banking or trust business under the laws of the United States of America or of any state thereof.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent, the retiring Agent shall be discharged from its duties and obligations under this Agreement. After any retiring Agent's
resignation hereunder, the provisions of this Section 11.8 shall continue to inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent. 

ARTICLE XII MISCELLANEOUS  

        Section 12.1    Provisions Incorporated From Other Operative Documents.    Reference is made to the Common
Definitions and Provisions Agreement, to the Purchase Agreement and to the Participation Agreement for a statement of the terms thereof. Without limiting the generality of the foregoing, the
provisions of Article II of the Common Definitions and Provisions Agreement are incorporated into this Agreement for all purposes as if set forth in this Article. 

        Section 12.2    Cumulative Rights, etc.    Except as herein expressly provided to the contrary, the rights,
powers and remedies of Agent, BNPPLC and the Participants under this Agreement shall be in addition to all rights, powers and remedies given to them by virtue of any Applicable Law, any other
Operative Document or any other agreement, all of which rights, powers, and remedies shall be cumulative and may be exercised successively or concurrently without impairing their respective rights
hereunder. Specialty Laboratories waives any right to require Agent, BNPPLC or any Participant to proceed against any Person or to exhaust any Collateral or to pursue any remedy in Agent's, BNPPLC's
or such Participant's power. 

        Section 12.3    Survival of Agreements.    All representations and warranties of Specialty Laboratories herein,
and all covenants and agreements herein shall survive the execution and delivery of this Agreement, the execution and delivery of any other Operative Documents and the creation of the Secured
Obligations and continue until terminated or released as provided herein. 

        Section 12.4    Other Liable Party.    Neither this Agreement nor the exercise by Agent or the failure of Agent
to exercise any right, power or remedy conferred herein or by law shall be construed as relieving any Other Liable Party from liability on the Secured Obligations or any deficiency thereon. 

17

 

This Agreement shall continue irrespective of the fact that the liability of any Other Liable Party may have ceased or irrespective of the validity or enforceability of any other agreement evidencing
or securing the Secured Obligations to which Specialty Laboratories or any Other Liable Party may be a party, and notwithstanding the reorganization, death, incapacity or bankruptcy of any Other
Liable Party, or any other event or proceeding affecting any Other Liable Party. 

        Section 12.5    Termination.    Following the Designated Sale Date, upon satisfaction in full of all Secured
Obligations and upon written request for the termination hereof delivered by Specialty Laboratories to Agent, (i) this Agreement and the pledge and security interest created hereby shall
terminate and all rights to the Collateral shall revert to Specialty Laboratories and (ii) Agent will, upon Specialty Laboratories' request and at Specialty Laboratories' expense execute and
deliver to Specialty Laboratories such documents as Specialty Laboratories shall reasonably request to evidence such termination and release. 

[The
signature pages follow.] 

18

 

        IN
WITNESS WHEREOF, Specialty Laboratories, BNPPLC, Agent and the Participants whose signatures appear below have caused this Pledge Agreement to be executed as of March 26, 2002. 

	 	 	"Specialty Laboratories"
	

 	
 	

SPECIALTY LABORATORIES, INC.
	

 	
 	

By:	

/s/ Frank J. Spina
	 	 	 	

	 	 	Name:	Frank J. Spina
	 	 	 	

	 	 	Title:	Chief Financial Officer
	 	 	 	

19

 

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

	 	 	"BNPPLC"
	

 	
 	

BNP PARIBAS LEASING CORPORATION
	

 	
 	

By:	

/s/ Barry Mendelsohn
	 	 	 	
 Barry Mendelsohn, Vice President

20

 

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

	 	 	"AGENT"
	

 	
 	

BNP PARIBAS
	

 	
 	

By:	

/s/ David C. Schad
	 	 	 	
 Name: David C. Schad

Title: Managing Director
	

 	
 	

By:	

/s/ Henry F. Setina
	 	 	 	
 Name: Henry F. Setina

Title: Director
	

 	
 	
"PARTICIPANT"
	

 	
 	

BNP PARIBAS
	

 	
 	

By:	

/s/ David C. Schad
	 	 	 	
 Name: David C. Schad

Title: Managing Director
	

 	
 	

By:	

/s/ Henry F. Setina
	 	 	 	
 Name: Henry F. Setina

Title: Director

21

 

        [Continuation
of signature pages to Pledge Agreement effective as of March 26, 2002] 

	 	 	"PARTICIPANT"
	

 	
 	

FIRST UNION NATIONAL BANK
	

 	
 	

By:	
 	

/s/ Douglas T. Davis

	 	 	 	 	Name:	Douglas T. Davis
	 	 	 	 	Title:	Director

22

 

        [Continuation
of signature pages to Pledge Agreement effective as of March 26, 2002] 

	 	 	"PARTICIPANT"
	

 	
 	

UNION BANK OF CALIFORNIA, N.A.
	

 	
 	

By:	
 	

/s/ Richard A. Madsen

	 	 	 	 	Name:	Richard A. Madsen
	 	 	 	 	Title:	Regional Vice President

23

 

        [Continuation
of signature pages to Pledge Agreement effective as of March 26, 2002] 

	 	 	"PARTICIPANT"
	

 	
 	

U.S. BANK NATIONAL ASSOCIATION
	

 	
 	

By:	
 	

/s/ Christian E. Stein III

	 	 	 	 	Name:	Christian E. Stein III
	 	 	 	 	Title:	Vice President

24

 

        [Continuation
of signature pages to Pledge Agreement effective as of March 26, 2002] 

	 	 	"PARTICIPANT"
	

 	
 	

ALLIED IRISH BANKS, P.L.C.
	

 	
 	

By:	
 	

/s/ Hilary Patterson

	 	 	 	 	Name:	Hilary Patterson
	

 	
 	

 	
 	

Title:	

Vice President

        
	

 	
 	

By:	
 	

/s/ Tony O'Reilly

	 	 	 	 	Name:	Tony O'Reilly
	 	 	 	 	Title:	Vice President

25

 

        [Continuation
of signature pages to Pledge Agreement effective as of March 26, 2002] 

	 	 	"PARTICIPANT"
	

 	
 	

BANK LEUMI USA
	

 	
 	

By:	
 	

/s/ Jacques V. Delvoye

	 	 	 	 	Name:	Jacques V. Delvoye
	 	 	 	 	Title:	Vice President

26

 

        [Continuation
of signature pages to Pledge Agreement effective as of March 26, 2002] 

	 	 	"PARTICIPANT"
	

 	
 	

MANUFACTURERS BANK, A California Banking Corporation
	

 	
 	

By:	
 	

/s/ Sandy Lee

	 	 	 	 	Name:	Sandy Lee
	 	 	 	 	Title:	Vice President

27

 
 

ATTACHMENT 1
  TO PLEDGE AGREEMENT    
  

 
  SUPPLEMENT TO PLEDGE AGREEMENT    
  

[                        ,        ]

BNP
PARIBAS

3 Ravinia Drive, Suite 1750

Atlanta, Georgia 30346 

Specialty
Laboratories, Inc.

2211 Michigan Avenue

Santa Monica, California 90404 

        1.    Reference
is made to the Pledge Agreement (the "Pledge Agreement") dated as of March 26, 2002 among SPECIALTY
LABORATORIES, INC. ("Specialty Laboratories"), BNP PARIBAS LEASING CORPORATION ("BNPPLC"), BNP
PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement (collectively, the "Participants") and
BNP PARIBAS, acting in its capacity as agent for BNPPLC and the Participants (in such capacity, "Agent"). Unless otherwise defined herein, all
capitalized terms used in this Supplement have the respective meanings given to those terms in the Pledge Agreement. 

        2.    The
undersigned hereby certifies to Agent and Specialty Laboratories that the undersigned has become a party to the Participation Agreement by executing a supplement as
provided therein and that its Percentage thereunder is            %. 

        3.    The
undersigned, by executing and delivering this Supplement to Specialty Laboratories and Agent, hereby agrees to become a party to the Pledge Agreement and agrees to be
bound by all of the terms
thereof applicable to Participants. The Deposit Taker for the undersigned shall be                        , until such time as
another Deposit Taker for the undersigned shall be designated in accordance with
Sections 4.4 or 4.5 of the Pledge Agreement. The undersigned certifies to Agent and Specialty Laboratories that such Deposit Taker is an Initially Qualified Deposit Taker and satisfies the
requirements for a Deposit Taker set forth in Section 4.1 of the Pledge Agreement. 

        IN
WITNESS WHEREOF, the undersigned has executed this Supplement as of the day and year indicated above. 

	 	 	
[                                         
                                       ]
	

 	
 	

By:	

    

	 	 	 	Name:	    

	 	 	 	Title:	    

 
 

ATTACHMENT 2
  TO PLEDGE AGREEMENT    
    
    NOTICE OF SECURITY INTEREST    
    
    
[                        , 20    ]    

       

[Name
of Deposit Taker]

[Address of Deposit Taker] 

        1.    Reference
is made to the Pledge Agreement (the "Pledge Agreement") dated as of March 26, 2002 among SPECIALTY
LABORATORIES, INC. ("Specialty Laboratories"), BNP PARIBAS LEASING CORPORATION ("BNPPLC"), BNP
PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement (collectively, the "Participants") and
BNP PARIBAS, acting in its capacity as agent for BNPPLC and the Participants (in such capacity, "Agent"). Unless otherwise defined herein, all
capitalized terms used in this Notice have the respective meanings given to those terms in the Pledge Agreement. 

        2.    Specialty
Laboratories has informed Agent that Specialty Laboratories has established with the addressee of this Notice ("Deposit
Taker") the following non-interest bearing Account in the name of Agent to be maintained at the following Account Office: 

	Account Type
 
	 	Account Office
	 	Account Number

	Time Deposit	 	 	 	 

        Specialty
Laboratories has further informed Agent that Specialty Laboratories intends to deposit Cash Collateral in such Account. 

        3.    Specialty
Laboratories and Agent hereby notify Deposit Taker that, pursuant to the Pledge Agreement, Specialty Laboratories has granted to Agent, for the ratable benefit
of BNPPLC and the Participants as security for the Secured Obligations, a pledge of and security interest in all Accounts and other Collateral maintained by Specialty Laboratories with Deposit Taker,
including the Account described in Section 2 above. 

        4.    In
furtherance of such grant, Specialty Laboratories and Agent hereby authorize and direct Deposit Taker to: 

        (a)  hold
all Collateral for Agent and as Agent's bailee, separate and apart from all other property and funds of Specialty Laboratories and all other Persons and to permit
no other funds to be deposited or credited to the Account described above; 

        (b)  make
a notation in its books and records of the interest of Agent in the Collateral and that the Account described above and all deposits therein or sums credited
thereto are subject to a pledge and security interest in favor of Agent; 

        (c)  take
such other steps as Agent may request to record, maintain, validate and perfect its pledge of and security interest in the Collateral; 

        (d)  transfer
and deliver to Agent or its nominee, together with any necessary endorsements, all or such portion of the Collateral held by Deposit Taker as Agent shall from
time to time direct; provided, however, that in connection therewith Deposit Taker may impose notice and other requirements expressly authorized by Section 5.5 of the Pledge Agreement
(concerning the characterization of the Accounts as nonpersonal time deposits for bank regulatory purposes); and 

        (e)  disregard
directions from anyone other than Agent (including directions from Specialty Laboratories itself) to transfer or deliver or apply or offset any Collateral held
by Deposit Taker from time to time, it being understood that only Agent shall be authorized to make withdrawals or transfers from any Accounts maintained by Deposit Taker from time to time without
further consent by Specialty Laboratories. 

 

        5.    Specialty
Laboratories and Agent agree that (a) the possession by Deposit Taker of all money, instruments, chattel paper and other property constituting Collateral
shall be deemed to be possession by Agent or a person designated by Agent, for purposes of perfecting the security interest granted to Agent under the Pledge Agreement pursuant to  Division 9313 and
other provisions of the UCC (as applicable), and (b) notifications by Deposit Taker to other Persons holding any such property,
and acknowledgments, receipts or confirmations from such Persons delivered to Deposit Taker, shall be deemed notifications to, or acknowledgments, receipts or confirmations from, financial
intermediaries, bailees or agents (as applicable) of Deposit Taker for the benefit of Agent for the purposes of perfecting such security interests under applicable law. Further, this Notice of
Security Interest and the Acknowledgment and Agreement described in the next paragraph, together, are intended to constritute an agreement granting to Agent "control" (as defined in  Division 9104 of the
UCC) of all deposit accounts or other property comprising Collateral held from time to time by Deposit Taker, and thus are intended
to perfect Agent's security interest in such deposit accounts or any other such property for which perfection is accomplished by "control" as described in Division
9314 or other applicable provisions of the UCC. 

        6.    As
contemplated by the Pledge Agreement, please acknowledge Deposit Taker's receipt of, and consent to, this notice and confirm the representations and agreements set
forth in the Acknowledgment and Agreement attached hereto by executing the same and returning this letter to 

2

 

Agent. For your files, a copy of this letter is enclosed which you may retain. The authorizations and directions set forth herein may not be revoked or modified without the written consent of Agent. 

	 	"AGENT"
	

 	

BNP PARIBAS
	

 	

By:	
 	

 
	 	 	 	

	

 	

Name:	
 	

 
	 	 	 	

	

 	

Title:	
 	

 
	 	 	 	

	

 	

"Specialty Laboratories"
	

 	

SPECIALTY LABORATORIES, INC.
	

 	

By:	
 	

 
	 	 	 	

	

 	

Name:	
 	

 
	 	 	 	

	

 	

Title:	
 	

 
	 	 	 	

3

 
 
 

ACKNOWLEDGMENT AND AGREEMENT
  OF DEPOSIT TAKER    
  

        Deposit Taker hereby acknowledges receipt of, and consents to, the above notice, acknowledges that it will hold the Collateral for Agent and as Agent's bailee,
agrees to comply with the authorizations and directions set forth above and represents to and agrees with Specialty Laboratories and Agent as follows: 

        (a)  Deposit
Taker is a commercial bank, organized under the laws of the United States of America or a state thereof or under the laws of another country which is doing
business in the United States of America. Deposit Taker is authorized to maintain deposit accounts for others through the Account Office specified in the above notice, and Deposit Taker will not move
the accounts described in the above notice to other offices without the prior written authorization of Agent and Specialty Laboratories. 

        (b)  Deposit
Taker has a combined capital, surplus and undivided profits of at least $500,000,000. 

        (c)  The
information set forth above regarding the Account established by Specialty Laboratories with Deposit Taker is accurate. Such Account is currently open and Deposit
Taker has no prior notice of any other pledge, security interest, Lien, adverse claim or interest in such Account. 

        (d)  Deposit
Taker shall promptly notify Specialty Laboratories and Agent if the representations made by Deposit Taker above cease to be true and correct. 

        (e)  Deposit
Taker shall not (i) allow the withdrawal of funds from such Account by any Person other than Agent, or (ii) without in each
case first obtaining the prior written authorization of Agent, setoff or attempt to setoff any amount (including Secured Obligations owed to Deposit Taker, if any) against any
Collateral held from time to time by Deposit Taker. 

	 	[	 	                                        
                                          
    	 	]
	 	 	 	
	 	 
	

 	

By:	
 	

 	
 	

 
	 	 	 	
	 	 
	

 	

Name:	
 	

 	
 	

 
	 	 	 	
	 	 
	

 	

Title:	
 	

 	
 	

 
	 	 	 	
	 	 
	

 	

[Date]	
 	

 

4

 
 

ATTACHMENT 3
  TO PLEDGE AGREEMENT    
  

 
  EXAMPLES OF CALCULATIONS REQUIRED
  TO AVOID A COLLATERAL IMBALANCE    
  

        The examples below are provided to illustrate the calculations required for allocations of Cash Collateral in a manner that will avoid a Collateral Imbalance. The
examples are not intended to reflect actual numbers under this Agreement or actual Percentages of BNPPLC or any of the Participants; nor are the examples intended to provide a formula for the
allocations that would be appropriate in every case. 

 
 

EXAMPLE NO. 1    
  

Assumptions:  

	1.
	Two
Participants ("Participant A" and "Participant B") are parties to the Participation Agreement with BNPPLC. Participant A's Percentage is 50% and Participant B's Percentage is 45%,
leaving BNPPLC with a Percentage of 5%.

	2.
	On
the Completion Date, Funding Advances (including those to cover Carrying Costs under the Lease) totaled $12,000,000, resulting in a Stipulated Loss Value of $12,000,000, allocable
as follows: 

	A.	 	BNPPLC's Parent (providing BNPPLC's share) (5%)	 	$	600,000
	B.	 	Participant A (50%)	 	 	6,000,000
	C.	 	Participant B (45%)	 	 	5,400,000
	 	 	 	 	

	 	 	TOTAL	 	$	12,000,000

	3.
	The
Minimum Collateral Value on the Completion Date was $12,000,000 (reflecting a Collateral Percentage of 100% times Stipulated Loss Value).

	4.
	On
the Completion Date, Specialty Laboratories had delivered to Agent Cash Collateral of $12,000,000, equal to the Minimum Collateral Value, as required by Section 5.1 of this
Agreement. 

        Allocation of Cash Collateral Required:    To avoid a Collateral Imbalance under these assumptions, Agent would be required to
allocate the $12,000,000 to the Deposit Takers for BNPPLC and the Participants as follows: 

	A.	 	BNPPLC's Deposit Taker (5% of Minimum Collateral Value)	 	$	600,000
	B.	 	Participant A's Deposit Taker (50% of Minimum Collateral Value)	 	$	6,000,000
	C.	 	Participant B's Deposit Taker (45% of Minimum Collateral Value)	 	$	5,400,000
	 	 	 	 	

	 	 	TOTAL	 	$	12,000,000

 
 

EXAMPLE NO. 2    
  

        Assumptions:    Assume the same facts as in Example No. 1, and in addition assume that: 

	1.
	Effective
as of the first Base Rent Date, a new Participant approved by Specialty Laboratories ("Participant C") became a party to this Agreement and the Participation Agreement,
taking a Percentage of 20%. Simultaneously, Participant A and Participant B entered into supplements to the Participation Agreement which reduced their Percentages to 40% and 35%, respectively. 

 

        Allocation of Cash Collateral Required:    To avoid a Collateral Imbalance under these assumptions, Agent would be required to
allocate the Cash Collateral as required to leave the Deposit Takers for BNPPLC and the Participants with the following amounts: 

	A.	 	BNPPLC's Deposit Taker (5% of Minimum Collateral Value)	 	$	600,000
	B.	 	Participant A's Deposit Taker (40% of Minimum Collateral Value)	 	$	4,800,000
	C.	 	Participant B's Deposit Taker (35% of Minimum Collateral Value)	 	$	4,200,000
	D.	 	Participant C's Deposit Taker (20% of Minimum Collateral Value)	 	$	2,400,000
	 	 	 	 	

	 	 	TOTAL	 	$	12,000,000

2

 
 

ATTACHMENT 4
  TO PLEDGE AGREEMENT    
  

 
  NOTICE OF SPECIALTY LABORATORIES' REQUIREMENT TO
  WITHDRAW EXCESS CASH COLLATERAL    
  

[                        ,        ] 

BNP
PARIBAS

[address of BNP] 

	Re:
	Pledge Agreement dated as of March 26, 2002 among SPECIALTY LABORATORIES, INC., BNP PARIBAS LEASING CORPORATION, BNP
PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement and BNP PARIBAS, acting in its capacity as agent for BNPPLC and the Participants 

Gentlemen: 

        Capitalized
terms used in this letter are intended to have the meanings assigned to them in the Pledge Agreement referenced above (the "Pledge
Agreement"). This letter constitutes notice to you, as Agent under the Pledge Agreement, that pursuant to Section 6.1 of the Pledge Agreement, Specialty Laboratories
requires you to withdraw from the Accounts and return to Specialty Laboratories the following amount: 

                                        
        Dollars
($            ) 

on
the following date: 

                        ,
            

        To
assure you that Specialty Laboratories has satisfied the conditions to its right to require such withdrawal, and to induce you to comply with this notice, Specialty Laboratories
certifies to you that: 

        1.    Your
withdrawal and delivery of the amount specified above to Specialty Laboratories will not cause the Value of the remaining Collateral to be less than the Minimum
Collateral Value. After giving effect to such withdrawal, the Collateral remaining in the Accounts maintained by the Deposit Takers will be: 

                                        
        Dollars
($            ), 

and
the Minimum Collateral Value on the date specified above will equal: 

                                        
        Dollars
($            ), 

Such
Minimum Collateral Value equals the Collateral Percentage of: 

                  percent
(        %), 

times
the Stipulated Loss Value of: 

                                        
        Dollars
($            ). 

        2.    Specialty
Laboratories is giving this notice to you, BNPPLC and the Participants at least ten days prior to the Base Rent Date specified above. 

        3.    No
Default or Event of Default has occurred and is continuing as of the date of this notice, and Specialty Laboratories does not anticipate that any Default or Event of
Default will have occurred and be continuing on the date upon which the withdrawal is required. 

        4.    Specialty
Laboratories agrees that you may determine the Accounts from which to make any withdrawal required by Specialty Laboratories pursuant to this Section as
necessary to prevent or mitigate any Collateral Imbalance. 

        NOTE: YOU SHALL BE ENTITLED TO DISREGARD THIS NOTICE IF THE STATEMENTS ABOVE ARE NOT CORRECT OR IF THE DATE FOR WITHDRAWAL SPECIFIED ABOVE
IS LESS  

 

 THAN TEN DAYS AFTER YOUR RECEIPT OF THIS NOTICE. HOWEVER, WE ASK THAT YOU NOTIFY SPECIALTY LABORATORIES IMMEDIATELY IF FOR ANY REASON YOU BELIEVE THIS NOTICE IS DEFECTIVE.

        Please
remember that the express terms of the Pledge Agreement permit any Deposit Taker to require notice of withdrawal at least seven days before Cash Collateral is withdrawn from the
Accounts maintained by such Deposit Taker. Accordingly, you must notify Deposit Takers seven days prior to the withdrawal of Cash Collateral required by this notice. For your convenience, we have
attached a letter as Annex 1 to this notice that you might execute and send to Deposit Takers to advise them of your intent to withdraw as required in connection therewith. The attached letter also
sets forth the amounts Specialty Laboratories believes you must withdraw from each Account to avoid a Collateral Imbalance. 

	 	 	Specialty Laboratories, Inc.
	

 	
 	

By:	

    

	 	 	 	Name:	    

	 	 	 	Title:	    

[cc
BNPPLC and all Participants] 

2

 
 
 

Annex 1
  TO SPECIALTY LABORATORIES' NOTICE OF REQUIREMENT TO
  WITHDRAW CASH EXCESS COLLATERAL    
  

[                        ,        ] 

Deposit
Takers on the

Attached Distribution List 

	Re:
	Pledge Agreement dated as of March 26, 2002 among SPECIALTY LABORATORIES, INC., BNP PARIBAS LEASING CORPORATION, BNP
PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement and BNP PARIBAS, acting in its capacity as agent for BNPPLC and the Participants 

Gentlemen: 

        Capitalized
terms used in this letter are intended to have the meanings assigned to them in the Pledge Agreement referenced above (the "Pledge
Agreement"). This letter constitutes notice from the undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.1 of the Pledge Agreement, Specialty
Laboratories requires Agent to withdraw from the Accounts and return to Specialty Laboratories the amounts listed below on the following date: 

                        ,
            

        Accordingly,
on such date, the undersigned intends to withdraw the following amounts from the following Accounts: 

	Deposit Taker
 
	 	Account No.
	 	Amount

	1.	 	 	 	$	 
	2.	 	 	 	$	 
	3.	 	 	 	$	 
	4.	 	 	 	$	 
	 	 	TOTAL WITHDRAWALS:	 	$	 

	

 	
 	

 	

 
	 	 	BNP PARIBAS, AS AGENT
	

 	
 	

Name:	

    

	 	 	Title:	    

[cc
BNPPLC and Specialty Laboratories] 

3

 
 

ATTACHMENT 5
  TO PLEDGE AGREEMENT    
  

 
  NOTICE OF SPECIALTY LABORATORIES' REQUIREMENT OF
  DIRECT PAYMENTS TO PARTICIPANTS    
  

[                        ,            ]

BNP
PARIBAS

[address of BNP] 

	Re:
	Pledge Agreement dated as of March 26, 2002 among SPECIALTY LABORATORIES, INC., BNP PARIBAS LEASING CORPORATION, BNP
PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement and BNP PARIBAS, acting in its capacity as agent for BNPPLC and the Participants 

Gentlemen: 

        Capitalized
terms used in this letter are intended to have the meanings assigned to them in the Pledge Agreement referenced above (the "Pledge
Agreement"). This letter constitutes notice to you, as Agent under the Pledge Agreement, that pursuant to Section 6.2 of the Pledge Agreement, Specialty Laboratories
requires you to withdraw from the Accounts and pay directly to the Participants (in proportion to their respective Percentages) the following amount: 

                        Dollars
($            ) 

on
the following date (which, Specialty Laboratories acknowledges, must be the Designated Sale Date or a date thereafter prior to an Event of Default): 

            ,            

        The
amount specified above equals the following percentage (equal to the aggregate of all Participant's Percentages): 

            percent
(            %), 

times
the total of all Cash Collateral presently pledged under the Pledge Agreement: 

                        Dollars
($            ). 

        To
assure you that Specialty Laboratories has satisfied the conditions to its right to require such withdrawal, and to induce you to comply with this notice, Specialty Laboratories
certifies to you that Specialty Laboratories is giving this notice to you, BNPPLC and the Participants at least ten days prior to the date of required withdrawal and payment specified above. 

        Please
remember that the express terms of the Pledge Agreement allow any Deposit Taker to require notice of withdrawal at least seven days before Cash Collateral is to be withdrawn from
the Accounts maintained by such Deposit Taker. Accordingly, you must notify Deposit Takers seven days prior to the withdrawal of Cash Collateral required by this notice. For your convenience, we have
attached a letter as Annex 1 to this notice that you might execute and send to Deposit Takers to advise them of your intent to withdraw as required in connection therewith. The attached letter also
sets forth the amounts Specialty Laboratories believes you must withdraw from each Account to comply with subsection 6.2.2 of the Pledge Agreement. 

	 	 	Specialty Laboratories, Inc.
	

 	
 	

By:	

    

	 	 	 	Name:	    

	 	 	 	Title:	    

[cc
BNPPLC and all Participants] 

 
 
 

Annex 1
  TO SPECIALTY LABORATORIES' NOTICE OF REQUIREMENT TO
  WITHDRAW CASH COLLATERAL FOR
  DIRECT PAYMENTS TO PARTICIPANTS    
  

[                        ,            ]

Deposit
Takers on the

Attached Distribution List 

	Re:
	Pledge
Agreement dated as of March 26, 2002 among SPECIALTY LABORATORIES, INC., BNP PARIBAS LEASING CORPORATION, BNP PARIBAS and any other financial institutions which
are
from time to time Participants under such Pledge Agreement and BNP PARIBAS, acting in its capacity as agent for BNPPLC and the Participants 

Gentlemen: 

        Capitalized
terms used in this letter are intended to have the meanings assigned to them in the Pledge Agreement referenced above (the "Pledge
Agreement"). This letter constitutes notice from the undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.2 of the Pledge Agreement, Specialty
Laboratories requires Agent to withdraw from the Accounts and pay to the Participants (in proportion to their respective Percentages) the amounts listed below on the following date: 

            ,            

        Accordingly,
on such date, the undersigned intends to withdraw the following amounts from the following Accounts: 

	Deposit Taker
 
	 	Account No.
	 	Amount

	1.	 	 	 	$
	2.	 	 	 	$
	3.	 	 	 	$
	4.	 	 	 	$
	 	 	TOTAL WITHDRAWALS:	 	$

 
 

BNP PARIBAS, AS AGENT    
  

	 	 	Name:	    

	 	 	Title:	    

[cc
BNPPLC and Specialty Laboratories] 

2

 
 

ATTACHMENT 6
  TO PLEDGE AGREEMENT    
    
    NOTICE OF SPECIALTY LABORATORIES' REQUIREMENT OF
  DIRECT PAYMENT TO BNPPLC    
  

[                        ,            ]

BNP
PARIBAS

[address of BNP] 

	Re:
	Pledge Agreement dated as of March 26, 2002 among SPECIALTY LABORATORIES, INC., BNP PARIBAS LEASING CORPORATION, BNP
PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement and BNP PARIBAS, acting in its capacity as agent for BNPPLC and the Participants 

Gentlemen:

        Capitalized
terms used in this letter are intended to have the meanings assigned to them in the Pledge Agreement referenced above (the "Pledge
Agreement"). This letter constitutes notice to you, as Agent under the Pledge Agreement, that pursuant to Section 6.3 of the Pledge Agreement, Specialty Laboratories
requires you to withdraw from the Account maintained by the Deposit Taker for BNPPLC and pay directly to BNPPLC on behalf of Specialty Laboratories as a payment required by the Purchase Agreement the
following amount: 

                                    Dollars
($                ) 

on
the following date (which, Specialty Laboratories acknowledges, must be the Designated Sale Date or a date thereafter prior to an Event of Default): 

[                        ,            ]

        To
assure you that Specialty Laboratories has satisfied the conditions to its right to require such withdrawal, and to induce you to comply with this notice, Specialty Laboratories
certifies to you that Specialty Laboratories is giving this notice to you and BNPPLC at least ten days prior to the date of required withdrawal and payment specified above. 

        Please
remember that the express terms of the Pledge Agreement allow any Deposit Taker to require notice of withdrawal at least seven days before Cash Collateral is to be withdrawn from
the Accounts maintained by such Desposit Taker. Accordingly, you must notify the Deposit Taker for BNPPLC seven days prior to the withdrawal of Cash Collateral required by this notice. For your
convenience, we have attached a letter as Annex 1 to this notice that you might execute and send to the Deposit Taker for BNPPLC to advise it of your
intent to withdraw as required in connection therewith. 

 

The attached letter also sets forth the amount Specialty Laboratories believes you must withdraw to comply with Section 6.3 of the Pledge Agreement. 

	 	Specialty Laboratories, Inc.
	

 	

By:	
 	

 
	 	 	 	

	

 	

Name:	
 	

 
	 	 	 	

	

 	

Title:	
 	

 
	 	 	 	

	[cc BNPPLC]	 	 	 

2

 
 
 

Annex 1
  TO SPECIALTY LABORATORIES' NOTICE OF REQUIREMENT OF
  DIRECT PAYMENT TO BNPPLC    
  

[                        ,            ]

[Name
of the Deposit Taker for BNPPLC]

[Address of such Deposit Taker] 

	Re:
	Pledge Agreement dated as of March 26, 2002 among SPECIALTY LABORATORIES, INC., BNP PARIBAS LEASING CORPORATION, BNP
PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement and BNP PARIBAS, acting in its capacity as agent for BNPPLC and the Participants 

Gentlemen: 

        Capitalized
terms used in this letter are intended to have the meanings assigned to them in the Pledge Agreement referenced above (the "Pledge
Agreement"). This letter constitutes notice from the undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.3 of the Pledge Agreement, Specialty
Laboratories requires Agent to withdraw from the Account maintained by you, as Deposit Taker for BNPPLC, the sum of: 

                                    Dollars
($                ) 

and
pay the same to BNPPLC as a payment required by the Purchase Agreement on the following date: 

[                        ,            ]

        Accordingly,
on such date, the undersigned intends to withdraw such amount from the following Account maintained by you as Deposit Taker for BNPPLC. 

	 	BNP PARIBAS, AS AGENT
	

 	

Name:	
 	

 
	 	 	 	

	

 	

Title:	
 	

 
	 	 	 	

	[cc BNPPLC and Specialty Laboratories]	 	 	 

3

 
 

ATTACHMENT 7
  TO PLEDGE AGREEMENT    
  

 
  NOTICE OF SPECIALTY LABORATORIES= REQUIREMENT OF A WITHDRAWAL
  OF CASH COLLATERAL FROM
  A DISQUALIFIED DEPOSIT TAKER    
  

[                        ,            ]

BNP
PARIBAS

[address of BNP] 

	Re:
	Pledge Agreement dated as of March 26, 2002 among SPECIALTY LABORATORIES, INC., BNP PARIBAS LEASING CORPORATION, BNP
PARIBAS and any other financial institutions which are from time to time Participants under such Pledge Agreement and BNP PARIBAS, acting in its capacity as agent for BNPPLC and the Participants 

Gentlemen: 

        Capitalized
terms used in this letter are intended to have the meanings assigned to them in the Pledge Agreement referenced above (the "Pledge
Agreement"). This letter constitutes notice to you, as Agent under the Pledge Agreement, that pursuant to Section 6.4 of the Pledge Agreement, Specialty Laboratories
requires you to withdraw from the following Account maintained by the following Deposit Taker: 

	Deposit Taker
 
	 	Account No.

	    	 	    

Cash
Collateral in the following amount: 

                                        
        Dollars
($            ) 

and
to deposit such Cash Collateral with other Deposit Takers who are not Disqualified Deposit Takers no later than ten days after the date upon which you receive this notice. 

        To
assure you that Specialty Laboratories has the right to require such withdrawal, and to induce you to comply with this notice, Specialty Laboratories certifies to you that the Deposit
Taker specified above has become a Disqualified Deposit Taker because it no longer satisfies the requirements listed in Section 4.1 of the Pledge Agreement. Specifically, such Deposit Taker no
longer satisfies the following requirements: 

[SPECIALTY LABORATORIES MUST INSERT HERE A DESCRIPTION OF WHICH REQUIREMENTS THE DEPOSIT TAKER NO LONGER SATISFIES AND HOW SPECIALTY LABORATORIES HAS DETERMINED
THAT THE REQUIREMENTS ARE NO LONGER SATISFIED, ALL IN SUFFICIENT DETAIL TO PERMIT THE PARTICIPANT FOR WHOM SUCH DEPOSIT TAKER HAS BEEN MAINTAINING AN ACCOUNT TO RESPOND IF IT BELIEVES THAT SPECIALTY
LABORATORIES IS IN ERROR.]

        Please
remember that the express terms of the Pledge Agreement allow any Despost Taker to require notice of withdrawal at least seven days before Cash Collateral is to be withdrawn from
the Accounts maintained by such Desposit Taker. Accordingly, you must notify the Deposit Takers specified above seven days prior to the withdrawal of Cash Collateral required by this notice. For your
convenience, we have attached a letter as Annex 1 to this notice that you might execute and send to such Deposit Taker to advise it of your intent to withdraw as required in connection therewith. The
attached letter also sets forth the amount Specialty Laboratories believes you must withdraw to comply with Section 6.4 of the Pledge Agreement. 

	 	 	Specialty Laboratories, Inc.
	

 	
 	

By:	

    

	 	 	 	Name:	    

	 	 	 	Title:	    

[cc
BNPPLC] 

 
 
 

Annex 1
  TO SPECIALTY LABORATORIES' NOTICE OF REQUIREMENT OF A WITHDRAWAL
  OF CASH COLLATERAL FROM
  A DISQUALIFIED DEPOSIT TAKER    
  

[                        ,            ]

[Name
of the Deposit Taker for BNPPLC]

[Address of such Deposit Taker] 

	Re:
	Pledge
Agreement dated as of March 26, 2002 among SPECIALTY LABORATORIES, INC., BNP PARIBAS LEASING CORPORATION, BNP PARIBAS and any other financial institutions which
are from time to time Participants under such Pledge Agreement and BNP PARIBAS, acting in its capacity as agent for BNPPLC and the Participants 

Gentlemen: 

        Capitalized
terms used in this letter are intended to have the meanings assigned to them in the Pledge Agreement referenced above (the "Pledge
Agreement"). This letter constitutes notice from the undersigned, as Agent under the Pledge Agreement, that pursuant to Section 6.4 of the Pledge Agreement, Specialty
Laboratories has advised Agent that you are a Disqualified Deposit Taker, and Specialty Laboratories requires Agent to withdraw from the Account maintained by you, as a Deposit Taker under the Pledge
Agreement, the sum of: 

                                        
        Dollars
($            ) 

no
later than the following date: 

                        ,
            

        Accordingly,
on such date, the undersigned intends to withdraw such amount from the Account maintained by you as Deposit Taker (Account
No.                        ). 

	 	 	BNP PARIBAS, AS AGENT
	

 	
 	

Name:	

    

	 	 	Title:	    

[cc
BNPPLC and Specialty Laboratories] 

2

QuickLinks

TABLE OF CONTENTS

PLEDGE AGREEMENT

ARTICLE IV PROVISIONS CONCERNING DEPOSIT TAKERS

ATTACHMENT 1 TO PLEDGE AGREEMENT

SUPPLEMENT TO PLEDGE AGREEMENT

ATTACHMENT 2 TO PLEDGE AGREEMENT NOTICE OF SECURITY INTEREST [ , 20 ]

ACKNOWLEDGMENT AND AGREEMENT OF DEPOSIT TAKER

ATTACHMENT 3 TO PLEDGE AGREEMENT

EXAMPLES OF CALCULATIONS REQUIRED TO AVOID A COLLATERAL IMBALANCE

EXAMPLE NO. 1

EXAMPLE NO. 2

ATTACHMENT 4 TO PLEDGE AGREEMENT

NOTICE OF SPECIALTY LABORATORIES' REQUIREMENT TO WITHDRAW EXCESS CASH COLLATERAL

Annex 1 TO SPECIALTY LABORATORIES' NOTICE OF REQUIREMENT TO WITHDRAW CASH EXCESS COLLATERAL

ATTACHMENT 5 TO PLEDGE AGREEMENT

NOTICE OF SPECIALTY LABORATORIES' REQUIREMENT OF DIRECT PAYMENTS TO PARTICIPANTS

Annex 1 TO SPECIALTY LABORATORIES' NOTICE OF REQUIREMENT TO WITHDRAW CASH COLLATERAL FOR DIRECT PAYMENTS TO PARTICIPANTS

BNP PARIBAS, AS AGENT

ATTACHMENT 6 TO PLEDGE AGREEMENT NOTICE OF SPECIALTY LABORATORIES' REQUIREMENT OF DIRECT PAYMENT TO BNPPLC

Annex 1 TO SPECIALTY LABORATORIES' NOTICE OF REQUIREMENT OF DIRECT PAYMENT TO BNPPLC

ATTACHMENT 7 TO PLEDGE AGREEMENT

NOTICE OF SPECIALTY LABORATORIES= REQUIREMENT OF A WITHDRAWAL OF CASH COLLATERAL FROM A DISQUALIFIED DEPOSIT TAKER

Annex 1 TO SPECIALTY LABORATORIES' NOTICE OF REQUIREMENT OF A WITHDRAWAL OF CASH COLLATERAL FROM A DISQUALIFIED DEPOSIT TAKER

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