Document:

Exhibit 10.101

 

STANDARD
OFFICE LEASE

 

This Standard Office Lease (“Lease”)
is made and entered into as of this             
day of                   ,
2009, by and between “Landlord” (as
defined below), and Kennedy-Wilson, Inc., a Delaware corporation (“Tenant”).

 

As used herein, “Landlord”
shall mean 9701-HEMPSTEAD PLAZA, LLC, a Delaware limited liability company,
9701-CAROLINA GARDENS LLC, a Delaware limited liability company, 9701-WEST
POINT REALTY LLC, a Delaware limited liability company, 9701-DAKOTA LEASING
LLC, a Delaware limited liability company and 9701-IOWA LEASING LLC, a Delaware
limited liability company, as Tenants-in-Common.

 

Landlord hereby leases to Tenant and Tenant hereby
leases from Landlord the premises described as the entire seventh floor (the “Seventh Floor Premises”) and that portion of the sixth floor
(the “Sixth Floor Premises”) designated on
the plan attached hereto and incorporated herein as Exhibit “A”
(collectively, the “Premises”), of
the project (“Project”) located at 9701 Wilshire
Boulevard, Beverly Hills, California 90212, for the Term and upon the terms and
conditions hereinafter set forth, and Landlord and Tenant hereby agree as
follows:

 

ARTICLE
1

 

BASIC
LEASE PROVISIONS

 

	
  A.

  	
  Term:

  	
  Seven (7) years.

  
	
   

  	
   

  	
   

  
	
   

  	
  Commencement Date:

  	
  January 1, 2010.

  
	
   

  	
   

  	
   

  
	
   

  	
  Expiration Date:

  	
  December 31, 2016

  
	
   

  	
   

  	
   

  
	
  B.

  	
  Square Footage:

  	
  12,947 rentable square
  feet for the Seventh Floor Premises. 
  3,085 rentable square feet for the Sixth Floor Premises.

  
	
   

  	
   

  	
   

  
	
  C.

  	
  Basic Rental:

  	
   

  

 

	
   

  	
  Lease Year

  	
   

  	
  Monthly Basic Rental

  Per Rentable Square Foot

  	
   

  	
   

  
	
   

  	
  1

  	
   

  	
  $

  	
  4.50

  	
   

  	
   

  
	
   

  	
  2

  	
   

  	
  $

  	
  4.65

  	
   

  	
   

  
	
   

  	
  3

  	
   

  	
  $

  	
  4.82

  	
   

  	
   

  
	
   

  	
  4

  	
   

  	
  $

  	
  4.99

  	
   

  	
   

  
	
   

  	
  5

  	
   

  	
  $

  	
  5.16

  	
   

  	
   

  
	
   

  	
  6

  	
   

  	
  $

  	
  5.34

  	
   

  	
   

  
	
   

  	
  7

  	
   

  	
  $

  	
  5.53

  	
   

  	
   

  

 

	
  D.

  	
  Base Year:

  	
  Calendar year 2010

  
	
   

  	
   

  	
   

  
	
  E.

  	
  Tenant’s Proportionate Share:

  	
  To be calculated based
  upon the Project containing 111,165 rentable square feet after measurement of
  Sixth Floor Premises.

  
	
   

  	
   

  	
   

  
	
  F.

  	
  Security Deposit:

  	
  None

  
	
   

  	
   

  	
   

  
	
  G.

  	
  Permitted Use:

  	
  General office use
  consistent with the character of the Project as a first-class office project.

  
	
   

  	
   

  	
   

  
	
  H.

  	
  Brokers:

  	
  Kennedy-Wilson (for
  Tenant) Madison Partners (for Landlord)

  

 

 

	
  I.

  	
  Parking Passes:

  	
  Tenant shall rent three
  and seven-tenths (3.7)  parking passes
  for each 1,000 rentable square feet contained in the Premises (the “Total
  Passes”).  Of the Total Passes, Tenant
  shall rent eight (8) reserved parking passes and the remainder shall be
  unreserved passes, upon the terms and conditions and at the rates provided in
  Article 23 hereof. 

  
	
   

  	
   

  	
   

  
	
  J.

  	
  Initial Installment of Basic
  Rental:

  	
  The first full month’s
  Basic Rental shall be due and payable by Tenant to Landlord upon Tenant’s
  execution of this Lease.

  

 

ARTICLE
2

 

TERM/PREMISES

 

The Term of this Lease shall commence on the
Commencement Date as set forth in Article 1.A. of the Basic Lease
Provisions and shall end on the Expiration Date set forth in Article 1.A.
of the Basic Lease Provisions.  For
purposes of this Lease, the term “Lease Year”
shall mean each consecutive twelve (12) month period during the Term, with the
first (1st) Lease Year commencing on the
Commencement Date; however, (a) if the Commencement Date falls on a day
other than the first (1st) day of a calendar month, the first (1st) Lease Year shall end on the last day of the eleventh
(11th) month after the Commencement Date and
the second (2nd) and each succeeding Lease Year shall
commence on the first (1st) day of the next calendar month, and (b) the
last Lease Year shall end on the Expiration Date.  If Landlord does not deliver possession of
the Premises to Tenant on or before January 1, 2009 (the “Estimated
Delivery Date”), Landlord shall not be subject to any liability for its failure
to do so, and such failure shall not affect the validity of this Lease nor the
obligations of Tenant hereunder; provided, however, the Commencement Date and
the Expiration Date shall be delayed one (1) day for each one (1) day
after the Estimated Delivery Date that occurs prior to the date that Landlord
delivers possession of the Premises to Tenant. 
Landlord and Tenant hereby stipulate that the Seventh Floor Premises
contains the number of square feet specified in Article 1.B. of the Basic
Lease Provisions.   It is anticipated
that the Sixth Floor Premises shall be approximately 3,000 rentable square
feet; provided, however, Landlord and Tenant shall each have the right, upon
notice (the “Remeasurement Notice”) delivered to the other party within ninety
(90) days following the date of this Lease, to measure the usable square feet
of the Sixth Floor Premises, which shall then be multiplied by the 19.00% load
factor used by Landlord for the Building in order to determine the rentable
square feet of the Sixth Floor Premises. 
In the event that any measurement pursuant to the terms of this Section,
all amounts, percentages and figures appearing or referred to in this Lease
based upon an incorrect amount (including, without limitation, the amount of
the Base Rent, Tenant’s Pro Rata Share, the Tenant Improvement Allowance, the
Termination Fee, the number of parking spaces and any other item based upon the
Premises’ or Building’s rentable square footage) shall be modified in
accordance with such determination.  If
either party disagrees with the other party’s measurement and if a dispute
occurs regarding the final accuracy of the measurement of any space, such
dispute will be resolved pursuant to binding arbitration by (and in accordance
with the rules of) the American Arbitration Association.  In the event that Landlord’s architect/space
planner determines that the amounts thereof shall be different from those set
forth in this Lease, all amounts, percentages and figures appearing or referred
to in this Lease based upon such incorrect amount (including, without
limitation, the amount of the Basic Rental, Tenant’s Proportionate Share, the
Termination Fee and the Tenant Improvement Allowance) shall be modified in
accordance with such determination.  If
such determination is made, it will be confirmed in writing by Landlord to
Tenant.  Landlord may deliver to Tenant a
Commencement Letter in a form substantially similar to that attached hereto as Exhibit “C”,
which Tenant shall execute and return to Landlord within five (5) days of
receipt thereof.  Failure of Tenant to
timely execute and deliver the Commencement Letter shall constitute
acknowledgment by Tenant that the statements included in such notice are true
and correct, without exception.

 

Tenant
may enter into the Premises upon the delivery of possession of the Premises to
Tenant by Landlord for the purpose of installing the Tenant Improvements, the
furniture, trade fixtures, telephones, computers, photocopy equipment, and
other business equipment. Such early 

 

2

 

entry will not advance the Commencement Date. All of
the provisions of this Lease shall apply to Tenant during any early entry,
including, without limitation, the indemnities set forth in this Lease, but
excluding the obligation to pay Basic Rental only. Landlord may revoke its
permission for Tenant’s early entry if Tenant’s activities or workers interfere
with the completion of the Landlord’s Work. If Tenant is granted early entry,
Landlord shall not be responsible for any loss, including theft, damage or
destruction to any work or material installed or stored by Tenant at the
Premises or for any injury to Tenant or its agents, employees, contractors,
subcontractors, subtenants, subtenants, assigns, licensees or invitees.
Landlord shall have the right to post appropriate notices of non-responsibility
and to require Tenant to provide Landlord with evidence that Tenant has
fulfilled its obligation to provide insurance pursuant to the provisions of
this Lease.

 

ARTICLE
3

 

RENTAL

 

(a)                                  Basic Rental.  Tenant agrees to pay to Landlord during the
Term hereof, at Landlord’s office or to such other person or at such other
place as directed from time to time by written notice to Tenant from Landlord,
the monthly and annual sums as set forth in Article 1.C. of the Basic
Lease Provisions, payable in advance on the first (1st) day
of each calendar month, without demand, setoff or deduction, and in the event
this Lease commences or the date of expiration of this Lease occurs other than
on the first (1st) day
or last day of a calendar month, the rent for such month shall be
prorated.  Notwithstanding the foregoing,
the first full month’s Basic Rental shall be paid to Landlord in accordance
with Article 1.J. of the Basic Lease Provisions and, if the Commencement
Date is not the first day of a month, Basic Rental for the partial month
commencing as of the Commencement Date shall be prorated based upon the actual
number of days in such month and shall be due and payable upon the Commencement
Date.  Any and all amounts due and
payable by Tenant pursuant to this Lease (other than Basic Rental and the
Security Deposit) shall be deemed “Additional Rent”
and Landlord shall be entitled to exercise the same rights and remedies upon
default in these payments as Landlord is entitled to exercise with respect to
defaults in monthly Basic Rental payments. 
Basic Rental and Additional Rental are sometimes herein collectively
referred to as “Rental”.

 

(b)                                 Increase in Direct Costs.  The term “Base Year”
means the calendar year set forth in Article 1.D. of the Basic Lease
Provisions.  In the event either the
Premises and/or the Project is expanded or reduced, then Tenant’s Proportionate
Share shall be appropriately adjusted, and as to the calendar year in which
such change occurs, Tenant’s Proportionate Share for such calendar year shall
be determined on the basis of the number of days during that particular
calendar year that such Tenant’s Proportionate Share was in effect.  In the event this Lease shall terminate on
any date other than the last day of a calendar year, the additional sum payable
hereunder by Tenant during the calendar year in which this Lease terminates
shall be prorated on the basis of the relationship which the number of days
which have elapsed from the commencement of said calendar year to and including
said date on which this Lease terminates bears to three hundred sixty five
(365).

 

I                                            Definitions.  As used herein the term “Direct Costs”
shall mean the sum of the following:

 

(i)            “Tax Costs”, which shall mean any
and all real estate taxes and other similar charges on real property or
improvements, assessments, water and sewer charges, and all other charges
assessed, reassessed or levied upon the Project and appurtenances thereto and
the parking or other facilities thereof, or the real property thereunder
(collectively the “Real Property”)
or attributable thereto or on the rents, issues, profits or income received or
derived therefrom which are assessed, reassessed or levied by the United
States, the State of California or any local government authority or agency or
any political subdivision thereof, and shall include Landlord’s reasonable
legal fees, costs and disbursements incurred in connection with proceedings for
reduction of Tax Costs or any part thereof; provided, however, if at any time
after the date of this Lease the methods of taxation now prevailing shall be
altered so that in lieu of or as a supplement to or a substitute for the whole
or any part of any Tax Costs, there shall be assessed, reassessed or levied (a) a
tax, assessment, reassessment, levy, imposition or charge wholly or partially
as a net income, capital or franchise levy or otherwise on the rents, issues,
profits or income derived therefrom, or (b) a tax, assessment,
reassessment, levy (including but not limited to any municipal, state or
federal levy), imposition or charge measured by or based in

 

3

 

whole or in part upon the Real Property and imposed
upon Landlord, then except to the extent such items are payable by Tenant under
Article 6 below, such taxes, assessments, reassessments or levies or the
part thereof so measured or based, shall be deemed to be included in the term “Direct
Costs.”  In no event shall Tax Costs
included in Direct Costs for any year subsequent to the Base Year be less than
the amount of Tax Costs included in Direct Costs for the Base Year.  In addition, when calculating Tax Costs for
the Base Year, special assessments shall only be deemed included in Tax Costs
for the Base Year to the extent that such special assessments are included in
Tax Costs for the applicable subsequent calendar year during the Term.  Despite any other provision of this Lease,
the amount of Tax Costs for the Base Year and any comparison year after the
Base Year shall be calculated without taking into account any decreases in real
estate taxes obtained in connection with Revenue and Taxation Code section 51
(Proposition 8 reduction). Therefore, the Tax Costs in the Base Year or any
comparison year after the Base Year may be greater than those actually incurred
by Landlord but shall, nonetheless, be the Tax Costs due under this Lease.
Despite the foregoing, on a reassessment the component of Base Year Tax Costs
attributable to the assessed value of the Real Property under Proposition 13
(as adopted by the voters of the State of California in the June 1978
election) before the reassessment (without taking into account any Proposition
8 reductions) shall be reduced for purposes of comparison to all subsequent
comparison years (beginning with the subsequent comparison year in which the
reassessment took place) to an amount equal to the real estate taxes based on
that reassessment.

 

(ii)           “Operating
Costs”, which shall mean all costs and expenses paid or incurred by Landlord in
connection with the maintenance, operation, replacement, ownership and repair
of the Project, the equipment, the intrabuilding cabling and wiring, adjacent
walks, malls and landscaped and common areas and the parking structure, areas
and facilities of the Project.  Operating
Costs shall include but not be limited to, salaries, wages, medical, surgical
and general welfare benefits and pension payments, payroll taxes, fringe
benefits, employment taxes, workers’ compensation, uniforms and dry cleaning
thereof for all persons who perform duties connected with the operation,
maintenance and repair of the Project, its equipment, the intrabuilding cabling
and wiring and the adjacent walks and landscaped areas, including janitorial,
gardening, security, parking, operating engineer, elevator, painting, plumbing,
electrical, carpentry, heating, ventilation, air conditioning and window
washing; hired services; a reasonable allowance for depreciation of the cost of
acquiring or the rental expense of personal property used in the maintenance,
operation and repair of the Project; accountant’s fees incurred in the
preparation of rent adjustment statements (including, without limitation,
bookkeeping and other property accounting costs); legal fees; real estate tax
consulting fees; personal property taxes on property used in the maintenance
and operation of the Project; fees, costs, expenses or dues payable pursuant to
the terms of any covenants, conditions or restrictions or owners’ association
pertaining to the Project; capital expenditures incurred to effect economies of
operation of, or stability of services to, the Project or otherwise incurred in
order to enhance or upgrade the safety, security, fire/life/safety or other
operating systems of the Project, and capital expenditures required by
government regulations, laws, or ordinances including, but not limited to the
Americans with Disabilities Act; provided however that any such permitted
capital expenditure shall be amortized (with interest at ten percent (10%) per
annum) over its useful life and only the amortized portion (together with
accrued interest thereon) shall be included in Operating Costs for such year; costs
incurred (capital or otherwise) on a regular recurring basis every three (3) or
more years for certain maintenance projects (e.g., parking lot slurry coat or
replacement of lobby and elevator cab carpeting); the cost of all charges for
electricity, gas, water and other utilities furnished to the Project, including
any taxes thereon; the cost of all charges for fire and extended coverage,
liability and all other insurance in connection with the Project carried by
Landlord; the cost of all building and cleaning supplies and materials; the
cost of all charges for cleaning, maintenance and service contracts and other
services with independent contractors and administration fees; a property
management fee (which fee may be imputed if Landlord has internalized
management or otherwise acts as its own property manager) and license, permit
and inspection fees relating to the Project. 
In the event, during any calendar year, the Project is less than
ninety-five percent (95%) occupied at all times, Operating Costs shall be
adjusted to reflect the Operating Costs of the Project as though ninety-five
percent (95%) were occupied at all times, and the increase or decrease in the
sums owed hereunder shall be based upon such Operating Costs as so adjusted.  In no event shall costs for any item of
utilities included in Direct Costs for any year subsequent to the Base Year be
less than the amount included in Direct Costs for the Base Year for such
utility item.  Notwithstanding anything
to the contrary set forth in this Article 3, when calculating Operating
Costs for the Base

 

4

 

Year, Operating Costs shall exclude (a) increases
due to extraordinary circumstances including, but not limited to, labor-related
boycotts and strikes, utility rate hikes, utility conservation surcharges, or
other surcharges, insurance premiums resulting from terrorism coverage,
catastrophic events and/or the management of environmental risks, and (b) amortization
of any capital items including, but not limited to, capital improvements,
capital repairs and capital replacements (including such amortized costs where
the actual improvement, repair or replacement was made in prior years).  Furthermore, if a category or categories of
services are provided or an unexpected increase in services are provided by
Landlord in the Base Year, but not in “subsequent” calendar year(s), the Base
Year shall be retroactively adjusted to reflect the Direct Costs which would
have been incurred during the Base Year had such category or categories of
services or unexpected increase in services not been provided during the Base
Year.

 

Operating
Costs shall not include:

 

(A)          Any ground lease or master lease
rental;

 

(B)           Depreciation,
amortization and interest payments, except as provided herein and except on
materials, tools, supplies and vendor-type equipment purchased by Landlord to
enable Landlord to supply services Landlord might otherwise contract for with a
third party where such depreciation, amortization and interest payments would
otherwise have been included in the charge for such third party’s services, and
when depreciation or amortization is permitted or required, the item shall be
amortized over its reasonably anticipated useful life;

 

(C)           Advertising
and promotional expenditures, including but not limited to, tenant newsletters
and Project promotional gifts, events or parties for future occupants, and the
costs of signs (other than the Project directory) in on the Project identifying
the owner of the Project or any other building in the Project or other tenants’
signs;

 

(D)          The
cost of any electric power for which any tenant directly contracts with the
local public service company or of which any tenant is separately metered or
submetered and pays Landlord directly; provided, however, that if any tenant in
the Project contracts directly for electric power service or is separately
metered or submetered during any portion of the relevant period, the total
electric power costs for the Project shall be “grossed up” to reflect what
those costs would have been had each tenant in the Project used the
Project-standard amount of electric power;

 

(E)           Costs
arising from Landlord’s charitable or political contributions;

 

(F)           Costs
for the acquisition and insurance of (as contrasted with the maintenance of)
sculptures, paintings or other objects of art;

 

(G)           Capital
improvements, except for those (i) acquired to reduce Operating Expenses,
and/or (ii) incurred in order to comply with any governmental law, rule,
regulation and/or ordinance (and/or interpretation thereof), provided that such
capital costs shall be amortized over their useful lives, as reasonably
determined by Landlord, together with interest at 10% per annum.

 

(H)          Reserves
of any kind, including, but not limited to, bad debts or lost rent or for
future improvements, repairs, replacements or additions;

 

(I)            Except
as expressly provided hereinabove, costs incurred in connection with any
governmental laws and regulations applicable to the Project if such costs are
incurred because the Project was not compliant with such governmental laws and
regulations applicable to the Project on the date of this Lease (with the
applicability determined based on the condition and occupancy of the Project on
the date of this Lease), including, but not limited to, life, fire and safety
codes, and federal, state or local laws or regulations related to disabled
access, including, but not limited to, the Americans With Disabilities Act;
provided, however, that nothing contained herein shall be construed to restrict
Landlord from passing through to the tenants as part of Direct Costs, costs
incurred in connection with any change in any life, fire and safety code, and
federal state or local laws or regulations after the date of this Lease;

 

(J)            Costs
penalties, fines or awards and interest incurred as a result of Landlord’s
gross negligence in Landlord’s operation of the Project, violations of law
(except to the extent that the violation of law arise due to a change in the
law rather than a change in

 

5

 

Landlord’s
actions or inactions or a change in the Project), negligence or inability or
unwillingness to make payments and/or to file any income tax, other tax or
informational returns when due;

 

(K)          Costs
arising from the gross negligence, recklessness or intentional misconduct of
Landlord or its employees, contractors or agents, or of any other tenant, or
any vendors, contractors, or providers of materials or services selected, hired
or engaged by Landlord or its agents; and

 

(L)           Costs
(including in connection therewith all attorneys’ fees and costs of settlement
judgments and payments in lieu thereof) arising from claims, disputes or
potential disputes in connection with potential or actual claims, litigation or
arbitrations pertaining to Landlord and/or the Project or any part thereof.

 

(d)                                 Determination of Payment.

 

(i)                                     If for
any calendar year ending or commencing within the Term, Tenant’s Proportionate
Share of Direct Costs for such calendar year exceeds Tenant’s Proportionate
Share of Direct Costs for the Base Year, then Tenant shall pay to Landlord, in
the manner set forth in Sections 3(d)(ii) and (iii), below, and as
Additional Rent, an amount equal to the excess (the “Excess”).

 

(ii)                                  Landlord
shall give Tenant a yearly expense estimate statement (the “Estimate Statement”) which shall set forth Landlord’s
reasonable estimate (the “Estimate”) of
what the total amount of Direct Costs for the then-current calendar year shall
be and the estimated Excess (the “Estimated Excess”)
as calculated by comparing Tenant’s Proportionate Share of Direct Costs for
such calendar year, which shall be based upon the Estimate, to Tenant’s
Proportionate Share of Direct Costs for the Base Year.  The failure of Landlord to timely furnish the
Estimate Statement for any calendar year shall not preclude Landlord from
subsequently enforcing its rights to collect any Estimated Excess under this Article 3,
once such Estimated Excess has been determined by Landlord.  If pursuant to the Estimate Statement an
Estimated Excess is calculated for the then-current calendar year, Tenant shall
pay, with its next installment of Monthly Basic Rental due, a fraction of the
Estimated Excess for the then-current calendar year (reduced by any amounts
paid pursuant to the last sentence of this Section 3(d)(ii)).  Such fraction shall have as its numerator the
number of months which have elapsed in such current calendar year to the month
of such payment, both months inclusive, and shall have twelve (12) as its
denominator.  Until a new Estimate
Statement is furnished, Tenant shall pay monthly, with the Monthly Basic Rental
installments, an amount equal to one-twelfth (1/12) of the total Estimated
Excess set forth in the previous Estimate Statement delivered by Landlord to
Tenant.

 

(iii)                               In
addition, Landlord shall endeavor to give to Tenant as soon as reasonably
practicable following the end of each calendar year, a statement (the “Statement”) which shall state the Direct Costs incurred or
accrued for such preceding calendar year, and which shall indicate the amount,
if any, of the Excess.  Upon receipt of
the Statement for each calendar year during the Term, if amounts paid by Tenant
as Estimated Excess are less than the actual Excess as specified on the
Statement, Tenant shall pay, with its next installment of monthly Basic Rental
due, the full amount of the Excess for such calendar year, less the amounts, if
any, paid during such calendar year as Estimated Excess.  If, however, the Statement indicates that
amounts paid by Tenant as Estimated Excess are greater than the actual Excess
as specified on the Statement, such overpayment shall be credited against
Tenant’s next installments of Estimated Excess. 
The failure of Landlord to timely furnish the Statement for any calendar
year shall not prejudice Landlord from enforcing its rights under this Article 3,
once such Statement has been delivered. 
Even though the Term has expired or been terminated and Tenant has
vacated the Premises, when the final determination is made of Tenant’s
Proportionate Share of the Direct Costs for the calendar year in which this
Lease terminates, if an Excess is present, Tenant shall immediately pay to
Landlord an amount as calculated pursuant to the provisions of this Section 3(d).  The provisions of this Section 3(d)(iii) shall
survive the expiration or earlier termination of the Term.

 

6

 

(iv)          If
the Project is a part of a multi-building development (the “Development”), those Direct Costs
attributable to such development as a whole (and not attributable solely to any
individual building therein) shall be allocated by Landlord to the Project and
to the other buildings within such development on an equitable basis, as
reasonably determined by Landlord.

 

(e)           Audit
Right.  Within one hundred twenty
(120) days after receipt of a Statement by Tenant (“Review Period”), if Tenant disputes the amount set forth in
the Statement, Tenant’s employees or an independent certified public accountant
(which accountant is a member of a nationally or regionally recognized
accounting firm and is not retained on a contingency fee basis), designated by
Tenant, may, after reasonable notice to Landlord (“Review Notice”) and at reasonable times, inspect Landlord’s
records at Landlord’s offices, provided that Tenant is not then in default
after expiration of all applicable cure periods and provided further that
Tenant and such accountant or representative shall, and each of them shall use
their commercially reasonable efforts to cause their respective agents and
employees to, maintain all information contained in Landlord’s records in
strict confidence.  Notwithstanding the
foregoing, Tenant shall only have the right to review Landlord’s records one
(1) time during any twelve (12) month period.  If after such inspection, but within thirty
(30) days after the Review Period, Tenant notifies Landlord in writing (“Dispute Notice”) that Tenant still disputes
such amounts, a certification as to the proper amount shall be made in
accordance with Landlord’s standard accounting practices, at Tenant’s expense,
by an independent certified public accountant selected by Landlord and who is a
member of a nationally or regionally recognized accounting firm.  Tenant’s failure to deliver the Review Notice
within the Review Period or to deliver the Dispute Notice within thirty (30)
days after the Review Period shall be deemed to constitute Tenant’s approval of
such Statement and Tenant, thereafter, waives the right or ability to dispute
the amounts set forth in such Statement. 
If Tenant timely delivers the Review Notice and the Dispute Notice,
Landlord shall cooperate in good faith with Tenant and the accountant to show
Tenant and the accountant the information upon which the certification is to be
based.  However, if such certification by
the accountant proves that the Direct Costs charged to Tenant, as set forth in
the Statement were overstated by more than ten percent (10%), then the cost of
the accountant and the cost of such certification shall be paid for by
Landlord, provided that in no event shall Landlord be responsible for costs
hereunder in excess of the amount of such overstatement.  Promptly following the parties receipt of
such certification, the parties shall make such appropriate payments or
reimbursements, as the case may be, to each other, as are determined to be
owing pursuant to such certification. Tenant agrees that this section shall be
the sole method to be used by Tenant to dispute the amount of any Direct Costs
payable by Tenant pursuant to the terms of this Lease, and Tenant hereby waives
any other rights at law or in equity relating thereto.

 

(f)                                    Controllable CAM Cap. 
Landlord shall cap the increase in “Controllable CAM” (as defined below)
at five percent (5%) per year, determined on a cumulative and compounding
basis.  As used herein, the term “Controllable
CAM”  shall mean all Common Area
Expenses, except for the following:  (i) the
cost of all charges for electricity, gas, water and other utilities; (ii) 
the cost of all charges for all insurance for the Project carried by Landlord; (iii) the
cost of all charges for labor that is subject to collective bargaining
agreements; and (iv) all Tax Costs.

 

ARTICLE
4

 

INTENTIONALLY
OMITTED

 

 

ARTICLE
5

 

HOLDING
OVER

 

Should Tenant, without Landlord’s written consent,
hold over after termination of this Lease, Tenant shall, at Landlord’s option,
become either a tenant at sufferance or a month-to-month tenant upon each and
all of the terms herein provided as may be applicable to such a tenancy and any
such holding over shall not constitute an extension of this Lease.

 

Tenant may elect to delay the Expiration Date of this
Lease by up to three (3) months (the “Holdover Period”) by delivering
written notice of its election to extend the Expiration Date no later than
twelve (12) months prior to the then existing Expiration Date of the Term of
the Lease.

 

7

 

During such Holdover
Period, Tenant shall pay in advance, monthly, Basic Rental at a rate equal to
one hundred twenty-five percent (125%) of the rate in effect for the last month
of the Term of this Lease, in addition to, and not in lieu of, all other
payments required to be made by Tenant hereunder including but not limited to
Tenant’s Proportionate Share of any increase in Direct Costs.

 

Nothing contained in this Article 5 shall be
construed as consent by Landlord to any holding over of the Premises by Tenant,
and Landlord expressly reserves the right to require Tenant to surrender
possession of the Premises to Landlord as provided in this Lease upon the
expiration or earlier termination of the Term. 
If Tenant fails to surrender the Premises upon the expiration or
termination of this Lease, Tenant agrees to indemnify, defend and hold Landlord
harmless from all costs, loss, expense or liability, including without
limitation, claims made by any succeeding tenant and real estate brokers claims
and attorney’s fees and costs.

 

ARTICLE
6

 

OTHER
TAXES

 

Tenant shall pay, prior to delinquency, all taxes
assessed against or levied upon trade fixtures, furnishings, equipment and all
other personal property of Tenant located in the Premises.  In the event any or all of Tenant’s trade
fixtures, furnishings, equipment and other personal property shall be assessed
and taxed with property of Landlord, or if the cost or value of any leasehold
improvements in the Premises exceeds the cost or value of a Project-standard
buildout as determined by Landlord and, as a result, real property taxes for the
Project are increased, Tenant shall pay to Landlord, within ten (10) days
after delivery to Tenant by Landlord of a written statement setting forth such
amount, the amount of such taxes applicable to Tenant’s property or
above-standard improvements.  Tenant
shall assume and pay to Landlord at the time Basic Rental next becomes due (or
if assessed after the expiration of the Term, then within ten (10) days),
any excise, sales, use, rent, occupancy, garage, parking, gross receipts or
other taxes (other than net income taxes) which may be assessed against or
levied upon Landlord on account of the letting of the Premises or the payment
of Basic Rental or any other sums due or payable hereunder, and which Landlord
may be required to pay or collect under any law now in effect or hereafter
enacted.  In addition to Tenant’s
obligation pursuant to the immediately preceding sentence, Tenant shall pay
directly to the party or entity entitled thereto all business license fees,
gross receipts taxes and similar taxes and impositions which may from time to
time be assessed against or levied upon Tenant, as and when the same become due
and before delinquency.  Notwithstanding
anything to the contrary contained herein, any sums payable by Tenant under
this Article 6 shall not be included in the computation of “Tax Costs.”

 

ARTICLE
7

 

USE

 

Tenant shall use and occupy the Premises only for the
use set forth in Article 1.G. of the Basic Lease Provisions and shall not
use or occupy the Premises or permit the same to be used or occupied for any
other purpose without the prior written consent of Landlord, which consent may
be given or withheld in Landlord’s sole and absolute discretion, and Tenant
agrees that it will use the Premises in such a manner so as not to interfere
with or infringe upon the rights of other tenants or occupants in the
Project.  Tenant shall, at its sole cost
and expense, promptly comply with all laws, statutes, ordinances, governmental
regulations or requirements now in force or which may hereafter be in force
relating to or affecting (i) the condition, use or occupancy of the
Premises or the Project (excluding structural changes to the Project not
related to Tenant’s particular use of the Premises), and/or (ii) improvements
installed or constructed in the Premises by or for the benefit of Tenant.  Tenant shall not permit more than six (6) people
per one thousand (1,000) rentable square feet of the Premises to occupy the
Premises at any time.  Tenant shall not
do or permit to be done anything which would invalidate or increase the cost of
any fire and extended coverage insurance policy covering the Project and/or the
property located therein and Tenant shall comply with all rules, orders,
regulations and requirements of any organization which sets out standards,
requirements or recommendations commonly referred to by major fire insurance
underwriters, and Tenant shall promptly upon demand reimburse Landlord for any
additional premium charges for any such insurance policy assessed or increased
by reason of Tenant’s failure to comply with the provisions of this Article.

 

8

 

ARTICLE
8

 

CONDITION
OF PREMISES

 

Tenant hereby agrees that except as provided in the Tenant Work Letter attached hereto as Exhibit “D”
and made a part hereof and the Landlord’s Work to be constructed by Landlord  pursuant to the second paragraph of this Article 8,
the Premises shall be taken “as is”, “with all faults”, “without any
representations or warranties”, and Tenant hereby agrees and warrants that it
has investigated and inspected the condition of the Premises and the
suitability of same for Tenant’s purposes, and Tenant does hereby waive and
disclaim any objection to, cause of action based upon, or claim that its
obligations hereunder should be reduced or limited because of the condition of
the Premises or the Project or the suitability of same for Tenant’s
purposes.  Tenant acknowledges that
neither Landlord nor any agent nor any employee of Landlord has made any
representations or warranty with respect to the Premises or the Project or with
respect to the suitability of either for the conduct of Tenant’s business and
Tenant expressly warrants and represents that Tenant has relied solely on its
own investigation and inspection of the Premises and the Project in its
decision to enter into this Lease and let the Premises in the above-described
condition.  The Premises shall be
initially improved as provided in, and subject to, the Tenant Work Letter
attached hereto as Exhibit “D” and made a part hereof and in
accordance with the second paragraph of this Article 8.  The existing leasehold improvements in the
Premises as of the date of this Lease, together with the Improvements (as
defined in the Tenant Work Letter) may be collectively referred to herein as
the “Tenant Improvements.”  The taking of
possession of the Premises by Tenant shall conclusively establish that the
Premises and the Project were at such time in satisfactory condition.  Tenant hereby waives subsection 1 of Section 1932
and Sections 1941 and 1942 of the Civil Code of California or any successor
provision of law.  Any dispute concerning
the delivery condition of the Premises shall be decided by binding arbitration
as set forth in Article 35.

 

Notwithstanding the foregoing, prior to the
Commencement Date, Landlord shall at Landlord’s sole expense, on a one-time
basis only, using building standard materials, guidelines, specifications and
procedures, (i) upgrade the restrooms on the sixth and seventh floors of
the Project, and (ii) upgrade the lobby on the sixth floor of the Project
(collectively, the “Landlord Work”). 
Tenant shall not (and Tenant shall ensure that its agents, employees and
contractors do not) interfere with the performance of the Landlord Work and
shall cooperate with Landlord in connection with the performance of the
Landlord Work, including, without limitation, by moving any equipment and other
property which Landlord or its contractor may request be moved.  Landlord shall be permitted to perform the
Landlord Work during Tenant’s occupancy of the Premises, during normal business
hours (or any other hours), without any obligation to pay overtime or other
premiums.  Tenant hereby agrees that the
performance of the Landlord Work shall in no way constitute a constructive
eviction of Tenant, entitle Tenant to any abatement of rent payable pursuant to
the Lease.  Landlord shall have no
responsibility for, or for any reason be liable to, Tenant for any direct or
indirect injury to or interference with Tenant’s business arising from the
performance of the Landlord Work, nor shall Tenant be entitled to any
compensation or damages from Landlord for loss of the use of the whole or any
part of the Premises or of Tenant’s personal property or improvements resulting
from the performance of the Landlord Work or Landlord’s or Landlord’s
contractor’s or agent’s actions in connection with the performance of the
Landlord Work, or for any inconvenience or annoyance occasioned by the
performance of the Landlord Work or Landlord’s or Landlord’s contractor’s or
agent’s actions in connection with the performance of the Landlord Work.

 

ARTICLE
9

 

REPAIRS
AND ALTERATIONS

 

(a)           Landlord’s Obligations.  Landlord shall, as part of Operating Costs, (i) maintain
the structural portions of the Project, including the foundation, floor/ceiling
slabs, roof, curtain wall, exterior glass, columns, beams, shafts, stairs,
stairwells and elevator cabs and common areas, and (ii) maintain and
repair the basic mechanical, electrical, life safety, plumbing, sprinkler
systems and heating, ventilating and air-conditioning systems including any
distribution of such systems throughout the Premises.

 

(b)           Tenant’s Obligations.  Except as expressly provided as Landlord’s
obligation in this Article 9, Tenant shall keep the Premises in good
condition and repair.  All damage or
injury

 

9

 

to the Premises or the Project resulting from the act
or negligence of Tenant, its employees, agents or visitors, guests, invitees or
licensees or by the use of the Premises, shall be promptly repaired by Tenant
at its sole cost and expense, to the satisfaction of Landlord; provided,
however, that for damage to the Project as a result of casualty or for any
repairs that may impact the mechanical, electrical, plumbing, heating,
ventilation or air-conditioning systems of the Project, Landlord shall have the
right (but not the obligation) to select the contractor and oversee all such
repairs.  Landlord may make any repairs
which are not promptly made by Tenant after Tenant’s receipt of written notice
and the reasonable opportunity of Tenant to make said repair within five (5) business
days from receipt of said written notice, and charge Tenant for the cost
thereof, which cost shall be paid by Tenant within five (5) days from
invoice from Landlord.  Tenant shall be
responsible for the design and function of all non-standard improvements of the
Premises, whether or not installed by Landlord at Tenant’s request.  Tenant waives all rights to make repairs at
the expense of Landlord, or to deduct the cost thereof from the rent.

 

(c)           Alterations.  Tenant shall make no alterations,
installations, changes or additions in or to the Premises or the Project
(collectively, “Alterations”) without Landlord’s
prior written consent.  Any Alterations
approved by Landlord must be performed in accordance with the terms hereof,
using only contractors or mechanics approved by Landlord in writing and upon
the approval by Landlord in writing of fully detailed and dimensioned plans and
specifications pertaining to the Alterations in question, to be prepared and
submitted by Tenant at its sole cost and expense.  Tenant shall at its sole cost and expense
obtain all necessary approvals and permits pertaining to any Alterations
approved by Landlord.  Tenant shall cause
all Alterations to be performed in a good and workmanlike manner, in conformance
with all applicable federal, state, county and municipal laws, rules and
regulations, pursuant to a valid building permit, and in conformance with
Landlord’s construction rules and regulations.  If Landlord, in approving any Alterations,
specifies a commencement date therefor, Tenant shall not commence any work with
respect to such Alterations prior to such date. 
Tenant hereby agrees to indemnify, defend, and hold Landlord free and
harmless from all liens and claims of lien, and all other liability, claims and
demands arising out of any work done or material supplied to the Premises by or
at the request of Tenant in connection with any Alterations.

 

(d)           Insurance; Liens.  Prior to the commencement of any Alterations,
Tenant shall provide Landlord with evidence that Tenant carries “Builder’s All
Risk” insurance in an amount approved by Landlord covering the construction of
such Alterations, and such other insurance as Landlord may reasonably require,
it being understood that all such Alterations shall be insured by Tenant
pursuant to Article 14 of this Lease immediately upon completion
thereof.  In addition, Landlord may, in
its discretion, require Tenant to obtain a lien and completion bond or some
alternate form of security satisfactory to Landlord in an amount sufficient to
ensure the lien free completion of such Alterations and naming Landlord as a
co-obligee.

 

(e)           Costs and Fees;
Removal.  If permitted Alterations are made, they shall
be made at Tenant’s sole cost and expense and shall be and become the property
of Landlord, except that Landlord may, by written notice to Tenant given at the
time of Landlord’s consent to a particular Improvement or Alteration, require
Tenant at Tenant’s expense to remove all partitions, counters, railings, cabling,
Improvements and other Alterations from the Premises, and to repair any damage
to the Premises and the Project caused by such removal.  Any and all costs attributable to or related
to the applicable building codes of the city in which the Project is located
(or any other authority having jurisdiction over the Project) arising from
Tenant’s plans, specifications, improvements, Alterations or otherwise shall be
paid by Tenant at its sole cost and expense. 
With regard to repairs, Alterations or any other work arising from or
related to this Article 9, Landlord shall not receive an
administrative/coordination fee.  The
construction of initial improvements to the Premises shall be governed by the
terms of the Tenant Work Letter and not the terms of this Article 9.

 

ARTICLE
10

 

LIENS

 

Tenant shall keep the Premises and the Project free
from any mechanics’ liens, vendors liens or any other liens arising out of any
work performed, materials furnished or obligations incurred by Tenant, and
Tenant agrees to defend, indemnify and hold Landlord harmless from and against
any such lien or claim or action thereon, together with costs of suit and
reasonable attorneys’ fees and costs incurred by Landlord in connection with
any such claim or action.

 

10

 

Before commencing any
work of alteration, addition or improvement to the Premises, Tenant shall give
Landlord at least ten (10) business days’ written notice of the proposed
commencement of such work (to afford Landlord an opportunity to post
appropriate notices of non-responsibility). 
In the event that there shall be recorded against the Premises or the
Project or the property of which the Premises is a part any claim or lien
arising out of any such work performed, materials furnished or obligations
incurred by Tenant and such claim or lien shall not be removed or discharged
within ten (10) days of filing, Landlord shall have the right but not the
obligation to pay and discharge said lien without regard to whether such lien
shall be lawful or correct (in which event Tenant shall reimburse Landlord for
any such payment made by Landlord within three (3) business days following
written demand therefor), or to require that Tenant promptly deposit with
Landlord in cash, lawful money of the United States, one hundred fifty percent
(150%) of the amount of such claim, which sum may be retained by Landlord until
such claim shall have been removed of record or until judgment shall have been
rendered on such claim and such judgment shall have become final, at which time
Landlord shall have the right to apply such deposit in discharge of the
judgment on said claim and any costs, including attorneys’ fees and costs
incurred by Landlord, and shall remit the balance thereof to Tenant.

 

ARTICLE
11

 

PROJECT
SERVICES

 

(a)           Basic Services. 
Landlord agrees to furnish to the Premises, at a cost to be included in
Operating Costs, from 8:00 a.m. to 6:00 p.m. Mondays through Fridays
and 9:00 a.m. to 1:00 p.m. on Saturdays, excepting local and national
holidays, air conditioning and heat all in such reasonable quantities as in the
judgment of Landlord is reasonably necessary for the comfortable occupancy of
the Premises.  In addition, Landlord, at
a cost to be included in Operating Costs, shall provide electric current for
normal lighting and normal office machines, elevator service and water on the
same floor as the Premises for lavatory and drinking purposes in such
reasonable quantities as in the judgment of Landlord is reasonably necessary
for general office use and in compliance with applicable codes.  Janitorial and maintenance services shall be
furnished as part of Operating Costs, five (5) days per week, excepting
local and national holidays, in accordance with the specifications set forth on
Exhibit “E”.  Tenant shall
comply with all rules and regulations which Landlord may establish for the
proper functioning and protection of the common area air conditioning, heating,
elevator, electrical, intrabuilding cabling and wiring and plumbing
systems.  Except as otherwise provided in
this Lease, Landlord shall not be liable for, and there shall be no rent
abatement as a result of, any stoppage, reduction or interruption of any such
services caused by governmental rules, regulations or ordinances, riot, strike,
labor disputes, breakdowns, accidents, necessary repairs or other cause.  Except as specifically provided in this Article 11,
Tenant agrees to pay for all utilities and other services utilized by Tenant
and any additional building services furnished to Tenant which are not
uniformly furnished to all tenants of the Project, at the rate generally
charged by Landlord to tenants of the Project for such utilities or services.

 

(b)           Excess Usage. 
Tenant will not, without the prior written consent of Landlord, use any
apparatus or device in the Premises which will in any way increase the amount
of electricity or water usually furnished or supplied for use of the Premises
as general office space; nor connect any apparatus, machine or device with
water pipes or electric current (except through existing electrical outlets in
the Premises), for the purpose of using electric current or water.

 

(c)           Additional
Electrical Service.  If Tenant shall require electric current in
excess of that which Landlord is obligated to furnish under Section 11(a) above,
Tenant shall first obtain the written consent of Landlord, which Landlord may
refuse in its sole and absolute discretion. 
Additionally, Landlord may cause an electric current meter or submeter
to be installed in or about the Premises to measure the amount of any such
excess electric current consumed by Tenant in the Premises.  The cost of any such meter and of
installation, maintenance and repair thereof shall be paid for by Tenant and
Tenant agrees to pay to Landlord, promptly upon demand therefor by Landlord,
for all such excess electric current consumed by any such use as shown by said
meter at the rates charged for such service by the city in which the Project is
located or the local public utility, as the case may be, furnishing the same,
plus any additional expense incurred by Landlord in keeping account of the
electric current so consumed.

 

11

 

(d)           HVAC Balance.  If any lights, machines or equipment
(including but not limited to computers and computer systems and appurtenances)
are used by Tenant in the Premises which materially affect the temperature
otherwise maintained by the air conditioning system, or generate substantially
more heat in the Premises than would be generated by the building standard
lights and usual office equipment, Landlord shall have the right to install any
machinery and equipment which Landlord reasonably deems necessary to restore
temperature balance, including but not limited to modifications to the standard
air conditioning equipment, and the cost thereof, including the cost of
installation and any additional cost of operation and maintenance occasioned
thereby, shall be paid by Tenant to Landlord upon demand by Landlord.

 

(e)           Telecommunications. 
Upon request from Tenant from time to time, Landlord will provide Tenant
with a listing of telecommunications and media service providers serving the
Project, and Tenant shall have the right to contract directly with the
providers of its choice.  If Tenant
wishes to contract with or obtain service from any provider which does not
currently serve the Project or wishes to obtain from an existing carrier
services which will require the installation of additional equipment, such
provider must, prior to providing service, enter into a written agreement with
Landlord setting forth the terms and conditions of the access to be granted to
such provider.  In considering the
installation of any new or additional telecommunications cabling or equipment
at the Project, Landlord will consider all relevant factors in a reasonable and
non-discriminatory manner, including, without limitation, the existing
availability of services at the Project, the impact of the proposed
installations upon the Project and its operations and the available space and
capacity for the proposed installations. 
Landlord may also consider whether the proposed service may result in
interference with or interruption of other services at the Project or the business
operations of other tenants or occupants of the Project.  In no event shall Landlord be obligated to
incur any costs or liabilities in connection with the installation or delivery
of telecommunication services or facilities at the Project.  All such installations shall be subject to
Landlord’s prior approval and shall be performed in accordance with the terms
of Article 9.  If Landlord approves
the proposed installations in accordance with the foregoing, Landlord will
deliver its standard form agreement upon request and will use commercially
reasonable efforts to promptly enter into an agreement on reasonable and
non-discriminatory terms with a qualified, licensed and reputable carrier
confirming the terms of installation and operation of telecommunications
equipment consistent with the foregoing.

 

(f)            After-Hours Use.  If
Tenant requires heating, ventilation and/or air conditioning during times other
than the times provided in Section 11(a) above, Tenant shall give
Landlord such advance notice as Landlord shall reasonably require and shall pay
Landlord’s standard charge for such after-hours use.

 

(g)           Reasonable Charges.  Landlord may impose a reasonable charge for
any utilities or services (other than electric current and heating, ventilation
and/or air conditioning which shall be governed by Sections 11I and (f) above)
utilized by Tenant in excess of the amount or type that Landlord reasonably
determines is typical for general office use.

 

(h)           Sole Electrical Representative.  Tenant agrees that Landlord shall be the sole
and exclusive representative with respect to, and shall maintain exclusive
control over, the reception, utilization and distribution of electrical power,
regardless of point or means of origin, use or generation.  Tenant shall not have the right to contract
directly with any provider of electrical power or services.

 

(i)            Rent Abatement.  Except as set forth in this Article 11(i),
Landlord shall in no case be liable or in any way be responsible for damages or
loss to Tenant arising from the failure of, diminution of or interruption in
electrical power, natural gas, fuel, telecommunications services, sewer, water,
or garbage collection services, other utility service or building service of
any kind to the Premises.  If Tenant is
unable to use the Premises as contemplated under this Lease, and does not use,
the Premises or a substantial portion thereof as a result of a failure of
utility services to the Premises, and such failure did not result from a
casualty covered by Article 16 below (an “Abatement Event”), then Tenant
shall give written notice of such Abatement Event to Landlord.  If the Abatement Event continues for three (3) consecutive
business days (the “Abatement Period”) after the date of Tenant’s written
notice to Landlord, then Base Rent and Additional Rent shall be abated or
reduced after expiration of the Abatement Period, for such time that Tenant
continues (as a result of the Abatement Event) to be so unable to use, and does
not use, the Premises or a substantial portion thereof, in the proportion that
the rentable area of 

 

12

 

the portion of the Premises that Tenant is prevented
from using, and does not use, bears to the total rentable area of the Premises,
provided that, subject to the foregoing provisions of this subsection, Base
Rent and Additional Rent shall be abated completely if the portion of the
Premises that Tenant is prevented from using as a result of the Abatement
Event, and does not use, is so significant as to make it impractical for Tenant
to conduct its business in the Premises and Tenant does not, in fact, for that
reason, conduct its business in the Premises.

 

ARTICLE
12

 

RIGHTS
OF LANDLORD

 

(a)           Right of Entry.  Landlord and its agents shall have the right
to enter the Premises at all reasonable times for the purpose of cleaning the
Premises, examining or inspecting the same, serving or posting and keeping
posted thereon notices as provided by law, or which Landlord deems necessary
for the protection of Landlord or the Project, showing the same to prospective
tenants, lenders or purchasers of the Project, in the case of an emergency, and
for making such alterations, repairs, improvements or additions to the Premises
or to the Project as Landlord may deem necessary or desirable.  If Tenant shall not be personally present to
open and permit an entry into the Premises at any time when such an entry by
Landlord is necessary or permitted hereunder, Landlord may enter by means of a
master key, or may forcibly enter in the case of an emergency, in each event without
liability to Tenant and without affecting this Lease.

 

(b)           Maintenance Work. 
Landlord reserves the right from time to time, but subject to payment by
and/or reimbursement to Tenant as otherwise provided herein: (i) to
install, use, maintain, repair, replace, relocate and control for service to
the Premises and/or other parts of the Project pipes, ducts, conduits, wires,
cabling, appurtenant fixtures, equipment spaces and mechanical systems,
wherever located in the Premises or the Project, (ii) to alter, close or
relocate any facility in the Premises or the common areas or otherwise conduct
any of the above activities for the purpose of complying with a general plan
for fire/life safety for the Project or otherwise, and (iii) to comply
with any federal, state or local law, rule or order.  Landlord shall attempt to perform any such
work with the least inconvenience to Tenant as is reasonably practicable, but
in no event shall Tenant be permitted to withhold or reduce Basic Rental or
other charges due hereunder as a result of same, make any claim for
constructive eviction or otherwise make any claim against Landlord for
interruption or interference with Tenant’s business and/or operations.

 

(c)           Rooftop.  If
Tenant desires to use the rooftop of the Project for any purpose, including the
installation of communication equipment to be used from the Premises, such
rights will be granted in Landlord’s sole discretion and Tenant must negotiate
the terms of any rooftop access with Landlord or the rooftop management company
or lessee holding rights to the rooftop from time to time.  Any rooftop access granted to Tenant will be
at prevailing rates and will be governed by the terms of a separate written
agreement or an amendment to this Lease.

 

ARTICLE
13

 

INDEMNITY;
EXEMPTION OF LANDLORD FROM LIABILITY

 

(a)           Indemnity. 
Tenant shall indemnify, defend and hold Landlord, its subsidiaries,
partners, parental and other affiliates and their respective members,
shareholders, officers, directors, employees and contractors (collectively, “Landlord Parties”) harmless from any and
all claims arising from Tenant’s use of the Premises or the Project or from the
conduct of its business or from any activity, work or thing which may be
permitted or suffered by Tenant in or about the Premises or the Project and
shall further indemnify, defend and hold Landlord and the Landlord Parties
harmless from and against any and all claims, liabilities, damages, expenses
and losses arising from any breach or default in the performance of any obligation
on Tenant’s part to be performed under this Lease or arising from any
negligence or willful misconduct of Tenant or any of its agents, contractors,
employees or invitees, patrons, customers or members in or about the Project
and from any and all costs, attorneys’ fees and costs, expenses and liabilities
incurred in the defense of any claim or any action or proceeding brought
thereon, including negotiations in connection therewith.  Tenant hereby assumes all risk of damage to
property or injury to persons in or about the Premises from any cause, and
Tenant hereby waives all claims in respect thereof against Landlord and the
Landlord Parties, excepting where the damage is caused by the gross negligence
or willful misconduct of Landlord or the Landlord Parties.

 

13

 

(b)           Exemption of
Landlord from Liability.  Notwithstanding anything to the contrary set
forth in this Lease, Landlord and the Landlord Parties shall not be liable for
injury to Tenant’s business, or loss of income, loss of opportunity or loss of
goodwill therefrom, or any consequential, punitive, special or exemplary
damages, however occurring (including, without limitation, from any failure or
interruption of services or utilities or as a result of Landlord’s
negligence).  Without limiting the
foregoing, except in connection with damage or injury resulting from the gross
negligence or willful misconduct of Landlord or the Landlord Parties, Landlord
and the Landlord Parties shall not be liable for damage that may be sustained
by the person, goods, wares, merchandise or property of Tenant, its employees,
invitees, customers, agents, or contractors, or any other person in, on or
about the Premises directly or indirectly caused by or resulting from any cause
whatsoever, including, but not limited to, fire, steam, electricity, gas,
water, or rain which may leak or flow from or into any part of the Premises, or
from the breakage, leakage, obstruction or other defects of the pipes,
sprinklers, wires, appliances, plumbing, air conditioning, light fixtures, or
mechanical or electrical systems, or from intrabuilding cabling or wiring,
whether such damage or injury results from conditions arising upon the Premises
or upon other portions of the Project or from other sources or places and
regardless of whether the cause of such damage or injury or the means of
repairing the same is inaccessible to Tenant. 
Landlord and the Landlord Parties shall not be liable to Tenant for any
damages arising from any willful or negligent action or inaction of any other
tenant of the Project.

 

(c)           Security. 
Tenant acknowledges that Landlord’s election whether or not to provide
any type of mechanical surveillance or security personnel whatsoever in the
Project is solely within Landlord’s discretion; Landlord and the Landlord
Parties shall have no liability in connection with the provision, or lack, of
such services, and Tenant hereby agrees to hold Landlord and the Landlord
Parties harmless with regard to any such potential claim.  Landlord and the Landlord Parties shall not
be liable for losses due to theft, vandalism, or like causes.  Tenant shall defend, indemnify, and hold
Landlord and the Landlord Parties harmless from any such claims made by any
employee, licensee, invitee, contractor, agent or other person whose presence
in, on or about the Premises or the Project is attendant to the business of
Tenant.

 

ARTICLE
14

 

INSURANCE

 

(a)           Tenant’s
Insurance.  Tenant, shall at all times during the Term of
this Lease, and at its own cost and expense, procure and continue in force the
following insurance coverage:  (i) Commercial
General Liability Insurance, written on an occurrence basis, with a combined
single limit for bodily injury and property damages of not less than Three
Million Dollars ($3,000,000) per occurrence and Five Million Dollars
($5,000,000) in the annual aggregate, including products liability coverage if
applicable, owners and contractors protective coverage, blanket contractual
coverage including both oral and written contracts, and personal injury
coverage, covering the insuring provisions of this Lease and the performance of
Tenant of the indemnity and exemption of Landlord from liability agreements set
forth in Article 13 hereof; (ii) a policy of standard fire, extended
coverage and special extended coverage insurance (all risks), including a
vandalism and malicious mischief endorsement, sprinkler leakage coverage and
earthquake sprinkler leakage where sprinklers are provided in an amount equal
to the full replacement value new without deduction for depreciation of all (A)
Tenant Improvements, Alterations, fixtures and other improvements in the
Premises, including but not limited to all mechanical, plumbing, heating,
ventilating, air conditioning, electrical, telecommunication and other
equipment, systems and facilities, and (B) trade fixtures, furniture, equipment
and other personal property installed by or at the expense of Tenant; (iii) Worker’s
Compensation coverage as required by law; and (iv) business interruption,
loss of income and extra expense insurance covering any failure or interruption
of Tenant’s business equipment (including, without limitation,
telecommunications equipment) and covering all other perils, failures or
interruptions sufficient to cover a period of interruption of not less than
twelve (12) months.  Tenant shall carry
and maintain during the entire Term (including any option periods, if
applicable), at Tenant’s sole cost and expense, increased amounts of the
insurance required to be carried by Tenant pursuant to this Article 14 and
such other reasonable types of insurance coverage and in such reasonable
amounts covering the Premises and Tenant’s operations therein, as may be
reasonably required by Landlord.

 

14

 

(b)           Form of
Policies.  The aforementioned minimum limits of policies
and Tenant’s procurement and maintenance thereof shall in no event limit the
liability of Tenant hereunder.  The
Commercial General Liability Insurance policy shall name Landlord, the Landlord
Parties, Landlord’s property manager, Landlord’s lender(s) and such other
persons or firms as Landlord specifies from time to time, as additional
insureds with an appropriate endorsement to the policy(s).  All such insurance policies carried by Tenant
shall be with companies having a rating of not less than A-VIII in Best’s
Insurance Guide.  Tenant shall furnish to
Landlord, from the insurance companies, or cause the insurance companies to
furnish, certificates of coverage.  The
deductible under each such policy shall be reasonably acceptable to Landlord.
No such policy shall be cancelable or subject to reduction of coverage or other
modification or cancellation except after thirty (30) days prior written notice
to Landlord by the insurer.  All such
policies shall be endorsed to agree that Tenant’s policy is primary and that
any insurance carried by Landlord is excess and not contributing with any
Tenant insurance requirement hereunder. 
Tenant shall, at least twenty (20) days prior to the expiration of such
policies, furnish Landlord with renewals or binders.  Tenant agrees that if Tenant does not take
out and maintain such insurance or furnish Landlord with renewals or binders in
a timely manner, Landlord may (but shall not be required to) procure said
insurance on Tenant’s behalf and charge Tenant the cost thereof, which amount
shall be payable by Tenant upon demand with interest (at the rate set forth in Section 20(e) below)
from the date such sums are expended. 
Tenant shall have the right to provide such insurance coverage pursuant
to blanket policies obtained by Tenant, provided such blanket policies
expressly afford coverage to the Premises and to Tenant as required by this
Lease.

 

(c)           Landlord’s
Insurance.  Landlord may, as a cost to be included in
Operating Costs, procure and maintain at all times during the Term of this
Lease, a policy or policies of insurance covering loss or damage to the Project
in the amount of the full replacement costs without deduction for depreciation
thereof, providing protection against all perils included within the
classification of fire and extended coverage, vandalism coverage and malicious
mischief, sprinkler leakage, water damage, and special extended coverage on the
building.  Additionally, Landlord may
carry:  (i) Bodily Injury and
Property Damage Liability Insurance and/or Excess Liability Coverage Insurance;
and (ii) Earthquake and/or Flood Damage Insurance; and (iii) Rental
Income Insurance; and (iv) any other forms of insurance Landlord may deem appropriate
or any lender may require.  The costs of
all insurance carried by Landlord shall be included in Operating Costs.

 

(d)           Waiver of
Subrogation.  Landlord and Tenant each agree to require
their respective insurers issuing the insurance described in Sections 14(a)(ii),
14(a)(iv) and the first sentence of Section 14(c), waive any rights
of subrogation that such companies may have against the other party.  Tenant hereby waives any right that Tenant
may have against Landlord and Landlord hereby waives any right that Landlord
may have against Tenant as a result of any loss or damage to the extent such
loss or damage is insurable under such policies.

 

(e)           Compliance with
Law.  Tenant agrees that it will not, at any time,
during the Term of this Lease, carry any stock of goods or do anything in or
about the Premises that will in any way tend to increase the insurance rates
upon the Project.  Tenant agrees to pay
Landlord forthwith upon demand the amount of any increase in premiums for
insurance that may be carried during the Term of this Lease, or the amount of
insurance to be carried by Landlord on the Project resulting from the
foregoing, or from Tenant doing any act in or about the Premises that does so
increase the insurance rates, whether or not Landlord shall have consented to
such act on the part of Tenant.  If
Tenant installs upon the Premises any electrical equipment which causes an
overload of electrical lines of the Premises, Tenant shall at its own cost and
expense, in accordance with all other Lease provisions (specifically including,
but not limited to, the provisions of Article 9, 10 and 11 hereof), make
whatever changes are necessary to comply with requirements of the insurance
underwriters and any governmental authority having jurisdiction thereover, but
nothing herein contained shall be deemed to constitute Landlord’s consent to
such overloading.  Tenant shall, at its
own expense, comply with all insurance requirements applicable to the Premises
including, without limitation, the installation of fire extinguishers or an
automatic dry chemical extinguishing system.

 

15

 

ARTICLE
15

 

ASSIGNMENT
AND SUBLETTING

 

Tenant shall have no power to, either voluntarily,
involuntarily, by operation of law or otherwise, sell, assign, transfer or
hypothecate this Lease, or sublet the Premises or any part thereof, or permit
the Premises or any part thereof to be used or occupied by anyone other than
Tenant or Tenant’s employees without the prior written consent of Landlord,
which consent shall not be unreasonably withheld.  If Tenant is a corporation, unincorporated
association, partnership or limited liability company, the sale, assignment,
transfer or hypothecation of any class of stock or other ownership interest in such
corporation, association, partnership or limited liability company in excess of
fifty percent (50%) in the aggregate shall be deemed a “Transfer” within the
meaning and provisions of this Article 15. 
Tenant may transfer its interest pursuant to this Lease only upon the
following express conditions, which conditions are agreed by Landlord and
Tenant to be reasonable:

 

(a)                                  That
the proposed Transferee (as hereafter defined) shall be subject to the prior
written consent of Landlord, which consent will not be unreasonably withheld
but, without limiting the generality of the foregoing, it shall be reasonable
for Landlord to deny such consent if:

 

(i)            The use to be made of the Premises by the
proposed Transferee is (a) not generally consistent with the character and
nature of all other tenancies in the Project, or (b) a use which conflicts
with any so-called “exclusive” then in favor of, or for any use which might
reasonably be expected to diminish the rent payable pursuant to any percentage
rent lease with another tenant of the Project or any other buildings which are
in the same complex as the Project, or (c) a use which would be prohibited
by any other portion of this Lease (including but not limited to any Rules and
Regulations then in effect);

 

(ii)           The financial responsibility of the proposed
Transferee is not reasonably satisfactory to Landlord;

 

(iii)          The proposed Transferee is either a
governmental agency or instrumentality thereof;

 

(iv)          Either
the proposed Transferee or any person or entity which directly or indirectly
controls, is controlled by or is under common control with the proposed
Transferee (A) occupies space in the Project at the time of the request
for consent, or (B) is negotiating with Landlord or has negotiated with
Landlord during the six (6) month period immediately preceding the date of
the proposed Transfer, to lease space in the Project;

 

(v)           As to
lease assignments (but not to subleases), the rent charged by Tenant to such
Transferee during the term of such Transfer, calculated using a present value
analysis, is less than the rent being quoted by Landlord at the time of such
Transfer for comparable space in the Project for a comparable term, calculated
using a present value analysis.

 

(b)                                 Upon
Tenant’s submission of a request for Landlord’s consent to any such Transfer,
Tenant shall pay to Landlord Landlord’s then standard processing fee and
reasonable attorneys’ fees and costs incurred in connection with the proposed
Transfer, which the parties hereby stipulate to be $1,500.00, unless Landlord
provides to Tenant evidence that Landlord has incurred greater costs in
connection with the proposed Transfer. 
Tenant agrees to submit its request for Landlord’s consent no less than
fifteen (15) days prior to the date of the Transfer.  Landlord’s failure to respond to the request
for consent within the fifteen (15) day period shall be deemed Landlord’s
approval of such Transfer;

 

(c)                                  That
the proposed Transferee shall execute an agreement pursuant to which it shall
agree to perform faithfully and be bound by all of the terms, covenants,
conditions, provisions and agreements of this Lease applicable to that portion
of the Premises so transferred; and

 

(d)                                 That
an executed duplicate original of said assignment and assumption agreement or
other Transfer on a form reasonably approved by Landlord, shall be delivered to
Landlord within five (5) days after the execution thereof, and that such
Transfer shall not be binding upon 

 

16

 

Landlord until the delivery thereof to Landlord and
the execution and delivery of Landlord’s consent thereto.  It shall be a condition to Landlord’s consent
to any subleasing, assignment or other transfer of part or all of Tenant’s
interest in the Premises (“Transfer”) that
(i) any sublessee of part or all of Tenant’s interest in the Premises shall
agree that in the event Landlord gives such sublessee notice that Tenant is in
default under this Lease, such sublessee shall thereafter make all sublease or
other payments directly to Landlord, which will be received by Landlord without
any liability whether to honor the sublease or otherwise (except to credit such
payments against sums due under this Lease), and any sublessee shall agree to
attorn to Landlord or its successors and assigns at their request should this
Lease be terminated for any reason, except that in no event shall Landlord or
its successors or assigns be obligated to accept such attornment; (ii) any
such Transfer and consent shall be effected on forms supplied by Landlord
and/or its legal counsel; (iii) Landlord may require that Tenant not then be in
default hereunder in any respect; and (iv) Tenant or the proposed
subtenant or assignee (collectively, “Transferee”)
shall agree to pay Landlord, upon demand, as Additional Rent, a sum equal to
the additional costs, if any, incurred by Landlord for maintenance and repair
as a result of any change in the nature of occupancy caused by such subletting
or assignment.    Any Transfer of this
Lease which is not in compliance with the provisions of this Article 15
shall be voidable by written notice from Landlord and shall, at the option of
Landlord, terminate this Lease.  In no
event shall the consent by Landlord to any Transfer be construed as relieving
Tenant or any Transferee from obtaining the express written consent of Landlord
to any further Transfer, or as releasing Tenant from any liability or
obligation hereunder whether or not then accrued and Tenant shall continue to
be fully liable therefor.  No collection
or acceptance of rent by Landlord from any person other than Tenant shall be
deemed a waiver of any provision of this Article 15 or the acceptance of
any Transferee hereunder, or a release of Tenant (or of any Transferee of
Tenant).  Notwithstanding anything to the
contrary in this Lease, if Tenant or any proposed Transferee claims that
Landlord has unreasonably withheld or delayed its consent under this Article 15
or otherwise has breached or acted unreasonably under this Article 15,
their sole remedies shall be a declaratory judgment and an injunction for the
relief sought without any monetary damages, and Tenant hereby waives all other
remedies, including, without limitation, any right at law or equity to
terminate this Lease, on its own behalf and, to the extent permitted under all
applicable laws, on behalf of the proposed Transferee.

 

Notwithstanding anything to the contrary contained in
this Article 15, Landlord shall have the option, by giving written notice
to Tenant (“Landlord’s Recapture Notice”)
within ten (10) days after Landlord’s receipt of a request for consent to
a proposed Transfer, to terminate this Lease as to the portion of the Premises
that is the subject of the proposed Transfer (hereinafter, the “Recapture Space”).  If this Lease is so terminated with respect
to less than the entire Premises, (i) the Basic Rental and Tenant’s
Proportionate Share shall be prorated based on the number of rentable square
feet retained by Tenant as compared to the total number of rentable square feet
previously contained in the Premises, and this Lease as so amended shall
continue thereafter in full force and effect, and upon the request of either
party, the parties shall execute written confirmation of the same, and (ii) Tenant
shall be responsible for all costs incurred by Landlord in connection with
separately demising the Recapture Space separate and apart from the balance of
the Premises, including without limitation, all ductwork, systems work,
demising wall installation and compliance with governmental requirements
relating thereto (“Landlord’s Recapture Costs”).  Tenant shall reimburse Landlord for Landlord’s
Recapture Costs within three (3) business days following written demand
therefor from Landlord.  The effective
date of any such termination shall be set forth in Landlord’s Recapture Notice.

 

Any dispute regarding whether the Landlord was
reasonable in denying consent to a proposed Transfer shall be decided by
binding arbitration as set forth in Article 35.

 

ARTICLE
16

 

DAMAGE
OR DESTRUCTION

 

If the Project is damaged by fire or other insured
casualty and the insurance proceeds have been made available therefor by the
holder or holders of any mortgages or deeds of trust covering the Premises or
the Project, the damage shall be repaired by Landlord to the extent such
insurance proceeds are available therefor and provided such repairs can, in
Landlord’s sole opinion, be completed within two hundred seventy (270) days
after the necessity for repairs as a result of such damage becomes known to
Landlord, without the payment of overtime or other premiums, and until such
repairs are completed rent shall be abated in proportion to the part of

 

17

 

the Premises which is
unusable by Tenant in the conduct of its business (but there shall be no
abatement of rent by reason of any portion of the Premises being unusable for a
period equal to one (1) day or less). 
Upon the occurrence of any damage to the Premises, Tenant shall assign
to Landlord (or to any party designated by Landlord) all insurance proceeds
payable to Tenant under Section 14(a)(ii)(A) above; provided,
however, that if the cost of repair of improvements within the Premises by
Landlord exceeds the amount of insurance proceeds received by Landlord from
Tenant’s insurance carrier, as so assigned by Tenant, such excess costs shall
be paid by Tenant to Landlord prior to Landlord’s repair of such damage.  If repairs cannot, in Landlord’s opinion, be
completed within two hundred seventy (270) days after the necessity for repairs
as a result of such damage becomes known to Landlord without the payment of
overtime or other premiums, Landlord and Tenant may, at their option, either (i) make
such repairs in a reasonable time and in such event this Lease shall continue
in effect and the Basic Rental shall be abated, if at all, in the manner
provided in this Article 16, or (ii) elect not to effect such repairs
and instead terminate this Lease, by notifying Tenant in writing of such
termination within sixty (60) days after Landlord learns of the necessity for
repairs as a result of damage, such notice to include a termination date giving
Tenant sixty (60) days to vacate the Premises. 
In addition, Landlord may elect to terminate this Lease if the Project
shall be damaged by fire or other casualty or cause, whether or not the
Premises are affected, if the damage is not fully covered, except for
deductible amounts, by Landlord’s insurance policies.  Finally, if the Premises or the Project is
damaged to any substantial extent during the last twelve (12) months of the
Term, then notwithstanding anything contained in this Article 16 to the
contrary, Landlord and Tenant shall have the option to terminate this Lease by
giving written notice to Tenant of the exercise of such option within sixty
(60) days after Landlord learns of the necessity for repairs as the result of
such damage.  A total destruction of the
Project shall automatically terminate this Lease.  Except as provided in this Article 16,
there shall be no abatement of rent and no liability of Landlord by reason of
any injury to or interference with Tenant’s business or property arising from
such damage or destruction or the making of any repairs, alterations or
improvements in or to any portion of the Project or the Premises or in or to
fixtures, appurtenances and equipment therein. 
Tenant understands that Landlord will not carry insurance of any kind on
Tenant’s furniture, furnishings, trade fixtures or equipment, and that Landlord
shall not be obligated to repair any damage thereto or replace the same.  Tenant acknowledges that Tenant shall have no
right to any proceeds of insurance carried by Landlord relating to property
damage.  With respect to any damage which
Landlord is obligated to repair or elects to repair, Tenant, as a material
inducement to Landlord entering into this Lease, irrevocably waives and
releases its rights under the provisions of Sections 1932 and 1933 of the
California Civil Code.

 

ARTICLE
17

 

SUBORDINATION

 

This Lease is subject to and Tenant agrees to comply with
all matters of record affecting the Real Property.  This Lease is also subject and subordinate to
all ground or underlying leases, mortgages and deeds of trust which affect the
Real Property, as well as all renewals, modifications, consolidations, replacements
and extensions thereof; provided, however, if the lessor under any such lease
or the holder or holders of any such mortgage or deed of trust shall advise
Landlord that they desire or require this Lease to be prior and superior
thereto, upon written request of Landlord to Tenant, Tenant agrees to promptly
execute, acknowledge and deliver any and all documents or instruments which
Landlord or such lessor, holder or holders deem necessary or desirable for
purposes thereof.  Landlord shall have
the right to cause this Lease to be and become and remain subject and
subordinate to any and all ground or underlying leases, mortgages or deeds of
trust which may hereafter be executed covering the Premises, the Project or the
property or any renewals, modifications, consolidations, replacements or
extensions thereof, for the full amount of all advances made or to be made
thereunder and without regard to the time or character of such advances,
together with interest thereon and subject to all the terms and provisions
thereof; provided, however, that Landlord obtains from the lender or other
party in question a written undertaking in favor of Tenant to the effect that
such lender or other party will not disturb Tenant’s right of possession under
this Lease if Tenant is not then or thereafter in breach of any covenant or
provision of this Lease.  Tenant agrees,
within ten (10) days after Landlord’s written request therefor, to
execute, acknowledge and deliver upon request any and all commercially
reasonable documents or instruments requested by Landlord or necessary or
proper to assure the subordination of this Lease to any such mortgages, deed of
trust, or leasehold estates.  Tenant
agrees that in the event any proceedings are brought for the

 

18

 

foreclosure of any
mortgage or deed of trust or any deed in lieu thereof, to attorn to the
purchaser or any successors thereto upon any such foreclosure sale or deed in
lieu thereof as so requested to do so by such purchaser and to recognize such
purchaser as the lessor under this Lease; Tenant shall, within five (5) days
after request execute such further instruments or assurances as such purchaser
may reasonably deem necessary to evidence or confirm such attornment.  Tenant agrees to provide copies of any
notices of Landlord’s default under this Lease to any mortgagee or deed of
trust beneficiary whose address has been provided to Tenant and Tenant shall
provide such mortgagee or deed of trust beneficiary a commercially reasonable
time after receipt of such notice within which to cure any such default.  Tenant waives the provisions of any current
or future statute, rule or law which may give or purport to give Tenant
any right or election to terminate or otherwise adversely affect this Lease and
the obligations of the Tenant hereunder in the event of any foreclosure
proceeding or sale.

 

ARTICLE
18

 

EMINENT
DOMAIN

 

If the whole of the Premises or the Project or so much
thereof as to render the balance unusable by Tenant shall be taken under power
of eminent domain, or is sold, transferred or conveyed in lieu thereof, this
Lease shall automatically terminate as of the date of such condemnation, or as
of the date possession is taken by the condemning authority, at Landlord’s
option.  No award for any partial or
entire taking shall be apportioned, and Tenant hereby assigns to Landlord any
award which may be made in such taking or condemnation, together with any and
all rights of Tenant now or hereafter arising in or to the same or any part
thereof; provided, however, that nothing contained herein shall be deemed to
give Landlord any interest in or to require Tenant to assign to Landlord any
award made to Tenant for the taking of personal property and trade fixtures
belonging to Tenant and removable by Tenant at the expiration of the Term
hereof as provided hereunder or for the interruption of, or damage to, Tenant’s
business.  In the event of a partial
taking described in this Article 18, or a sale, transfer or conveyance in
lieu thereof, which does not result in a termination of this Lease, the rent
shall be apportioned according to the ratio that the part of the Premises
remaining useable by Tenant bears to the total area of the Premises.  Tenant hereby waives any and all rights it
might otherwise have pursuant to Section 1265.130 of the California Code
of Civil Procedure.

 

ARTICLE
19

 

DEFAULT

 

Each of the following acts or omissions of Tenant or
of any guarantor of Tenant’s performance hereunder, or occurrences, shall
constitute an “Event of Default”:

 

(a)           Failure or refusal to pay Basic Rental,
Additional Rent or any other amount to be paid by Tenant to Landlord hereunder
within three (3) calendar days after notice that the same is due or
payable hereunder; said three (3) day period shall be in lieu of, and not
in addition to, the notice requirements of Section 1161 of the California
Code of Civil Procedure or any similar or successor law;

 

(b)           Except as set forth in items (a) above
and (c) through and including (g) below, failure to perform or
observe any other covenant or condition of this Lease to be performed or
observed within thirty (30) days following written notice to Tenant of such
failure.  Such thirty (30) day notice
shall be in lieu of, and not in addition to, any required under Section 1161
of the California Code of Civil Procedure or any similar or successor law;

 

(c)           Abandonment or vacating or failure to accept
tender of possession of the Premises or any significant portion thereof;

 

(d)           The taking in execution or by similar
process or law (other than by eminent domain) of the estate hereby created;

 

(e)           The filing by Tenant or any guarantor
hereunder in any court pursuant to any statute of a petition in bankruptcy or
insolvency or for reorganization or arrangement for the appointment of a
receiver of all or a portion of Tenant’s property; the filing against Tenant or
any guarantor hereunder of any such petition, or the commencement of a
proceeding for the 

 

19

 

appointment of a trustee, receiver or liquidator for
Tenant, or for any guarantor hereunder, or of any of the property of either, or
a proceeding by any governmental authority for the dissolution or liquidation
of Tenant or any guarantor hereunder, if such proceeding shall not be dismissed
or trusteeship discontinued within thirty (30) days after commencement of such
proceeding or the appointment of such trustee or receiver; or the making by
Tenant or any guarantor hereunder of an assignment for the benefit of
creditors.  Tenant hereby stipulates to
the lifting of the automatic stay in effect and relief from such stay for
Landlord in the event Tenant files a petition under the United States
Bankruptcy laws, for the purpose of Landlord pursuing its rights and remedies
against Tenant and/or a guarantor of this Lease;

 

(f)            Tenant’s failure to cause to be released any
mechanics liens filed against the Premises or the Project within twenty (20)
days after the date the same shall have been filed or recorded; or

 

(g)           Tenant’s failure to observe or perform according
to the provisions of Articles 7, 14, 17, 25 or 28 within two (2) business
days after notice from Landlord.

 

All defaults by Tenant of any covenant or condition of
this Lease shall be deemed by the parties hereto to be material.

 

ARTICLE
20

 

REMEDIES

 

(a)           Upon the occurrence of an Event of Default
under this Lease as provided in Article 19 hereof, Landlord may exercise
all of its remedies as may be permitted by law, including but not limited to
the remedy provided by Section 1951.4 of the California Civil Code, and
including without limitation, terminating this Lease, reentering the Premises
and removing all persons and property therefrom, which property may be stored
by Landlord at a warehouse or elsewhere at the risk, expense and for the
account of Tenant.  If Landlord elects to
terminate this Lease, Landlord shall be entitled to recover from Tenant the
aggregate of all amounts permitted by law, including but not limited to (i) the
worth at the time of award of the amount of any unpaid rent which had been
earned at the time of such termination; plus (ii) the worth at the time of
award of the amount by which the unpaid rent which would have been earned after
termination until the time of award exceeds the amount of such rental loss that
Tenant proves could have been reasonably avoided; plus (iii) the worth at
the time of award of the amount by which the unpaid rent for the balance of the
Term after the time of award exceeds the amount of such rental loss that Tenant
proves could have been reasonably avoided; plus (iv) any other amount
necessary to compensate Landlord for all the detriment proximately caused by
Tenant’s failure to perform its obligations under this Lease or which in the
ordinary course of things would be likely to result therefrom, specifically
including but not limited to, tenant improvement expenses, brokerage
commissions and advertising expenses incurred, expenses of remodeling the
Premises or any portion thereof for a new tenant, whether for the same or a
different use, and any special concessions made to obtain a new tenant; and (v) at
Landlord’s election, such other amounts in addition to or in lieu of the
foregoing as may be permitted from time to time by applicable law.  The term “rent” as used in this Section 20(a) shall
be deemed to be and to mean all sums of every nature required to be paid by
Tenant pursuant to the terms of this Lease, whether to Landlord or to
others.  As used in items (i) and
(ii), above, the “worth at the time of award” shall be computed by allowing
interest at the rate set forth in item (e), below, but in no case greater than
the maximum amount of such interest permitted by law.  As used in item (iii), above, the “worth at
the time of award” shall be computed by discounting such amount at the discount
rate of the Federal Reserve Bank of San Francisco at the time of award plus one
percent (1%).

 

(b)           Nothing in this Article 20 shall be
deemed to affect Landlord’s right to indemnification for liability or
liabilities arising prior to the termination of this Lease for personal
injuries or property damage under the indemnification clause or clauses
contained in this Lease.

 

(c)           Notwithstanding anything to the contrary set
forth herein, Landlord’s re-entry to perform acts of maintenance or
preservation of or in connection with efforts to relet the Premises or any
portion thereof, or the appointment of a receiver upon Landlord’s initiative to
protect Landlord’s interest under this Lease shall not terminate Tenant’s right
to possession of the 

 

20

 

Premises or any portion thereof and, until Landlord
does elect to terminate this Lease, this Lease shall continue in full force and
effect and Landlord may enforce all of Landlord’s rights and remedies hereunder
including, without limitation, the remedy described in California Civil Code Section 1951.4
(lessor may continue lease in effect after lessee’s breach and abandonment and
recover rent as it becomes due, if lessee has the right to sublet or assign,
subject only to reasonable limitations). 
Accordingly, if Landlord does not elect to terminate this Lease on
account of any default by Tenant, Landlord may, from time to time, without
terminating this Lease, enforce all of its rights and remedies under this
Lease, including the right to recover all rent as it becomes due.

 

(d)           All rights, powers and remedies of Landlord
hereunder and under any other agreement now or hereafter in force between
Landlord and Tenant shall be cumulative and not alternative and shall be in
addition to all rights, powers and remedies given to Landlord by law, and the
exercise of one or more rights or remedies shall not impair Landlord’s right to
exercise any other right or remedy.

 

(e)           Any amount due from Tenant to
Landlord hereunder which is not paid when due shall bear interest at the lower
of eighteen percent (18%) per annum or the maximum lawful rate of interest from
the due date until paid, unless otherwise specifically provided herein, but the
payment of such interest shall not excuse or cure any default by Tenant under
this Lease.  In addition to such
interest:  (i) if Rental is not paid
on or before the fifth (5th) day
of the calendar month for which the same is due, a late charge equal to five
percent (5%) of the amount overdue or $100, whichever is greater, shall be
immediately due and owing and shall accrue for each calendar month or part
thereof until such rental, including the late charge, is paid in full, which
late charge Tenant hereby agrees is a reasonable estimate of the damages
Landlord shall suffer as a result of Tenant’s late payment and (ii) an
additional charge of $25 shall be assessed for any check given to Landlord by
or on behalf of Tenant which is not honored by the drawee thereof; which
damages include Landlord’s additional administrative and other costs associated
with such late payment and unsatisfied checks and the parties agree that it
would be impracticable or extremely difficult to fix Landlord’s actual damage
in such event.  Such charges for interest
and late payments and unsatisfied checks are separate and cumulative and are in
addition to and shall not diminish or represent a substitute for any or all of
Landlord’s rights or remedies under any other provision of this Lease.

 

(f)            Landlord shall not be in default
under this Lease unless Landlord fails to perform obligations required of
Landlord within sixty (60) days after written notice is delivered by Tenant to
Landlord and to the holder of any mortgages or deeds of trust (collectively, “Lender”)
covering the Premises whose name and address shall have theretofore been
furnished to Tenant in writing, specifying the obligation which Landlord has
failed to perform; provided, however, that if the nature of Landlord’s
obligation is such that more than sixty (60) days are required for performance,
then Landlord shall not be in default if Landlord or Lender commences
performance within such sixty (60) day period and thereafter diligently
prosecutes the same to completion.  All
obligations of Landlord hereunder shall be construed as covenants, not
conditions.  In the event of any default,
breach or violation of Tenant’s rights under this Lease by Landlord, Tenant’s
exclusive remedy shall be either an action for specific performance or an
action for actual damages.  Tenant hereby
waives the benefit of any laws granting it the right to perform Landlord’s
obligation, a lien upon the property of Landlord and/or upon Rent due Landlord,
or the right to terminate this Lease or withhold Rent on account of any
Landlord default.  Notwithstanding the
foregoing, if Landlord fails to perform the obligations required of Landlord
within the required cure period after receipt of written notice from Tenant, or
commence its performance within such cure period , and if Landlord fails to
deliver notice (the “Obligation Notice”) to Tenant within such twenty (20)
Business Day period stating Landlord’s basis for not performing the obligation,
then Tenant may elect to deliver a second notice (the “Second Notice”) to
Landlord requesting Landlord’s performance of its obligations under this Lease.
If Landlord fails to perform its obligations within five (5) days after
its receipt of the Second Notice (or fails to commence performance within such
five (5) days period if more than five (5) days are required for
performance), or fails to deliver an Obligation Notice, then Tenant may
perform, or cause its contractors to perform, Landlord’s obligation and Tenant
may seek reimbursement from Landlord for all costs and expenses of Tenant in
performing the obligations together with interest at the prime rate plus two
percent (2%) per annum; provided, however, that in no event shall Tenant be
able to offset or deduct any amounts owed by Landlord to Tenant from any
payments of Base Rent or Direct Costs, and Tenant’s remedies shall be limited
to an action for actual damages.

 

21

 

(g)           In the event of any default, breach or
violation of Tenant’s rights under this Lease by Landlord, Tenant’s exclusive
remedies shall be an action for specific performance or action for actual
damages. Without limiting any other waiver by Tenant which may be contained in
this Lease, Tenant hereby waives the benefit of any law granting it the right
to perform Landlord’s obligation, or the right to terminate this Lease on
account of any Landlord default.

 

ARTICLE
21

 

TRANSFER
OF LANDLORD’S INTEREST

 

In the event of any transfer or termination of
Landlord’s interest in the Premises or the Project by sale, assignment,
transfer, foreclosure, deed-in-lieu of foreclosure or otherwise whether
voluntary or involuntary, Landlord shall be automatically relieved of any and
all obligations and liabilities on the part of Landlord from and after the date
of such transfer or termination, including furthermore without limitation, the
obligation of Landlord under Article 4 and California Civil Code 1950.7
above to return the security deposit, provided said security deposit is
transferred to said transferee.  Tenant
agrees to attorn to the transferee upon any such transfer and to recognize such
transferee as the lessor under this Lease and Tenant shall, within five (5) days
after request, execute such further instruments or assurances as such
transferee may reasonably deem necessary to evidence or confirm such
attornment.

 

ARTICLE
22

 

BROKER

 

In connection with this Lease, Tenant warrants and
represents that it has had dealings only with firm(s) set forth in Article 1.H.
of the Basic Lease Provisions and that it knows of no other person or entity
who is or might be entitled to a commission, finder’s fee or other like payment
in connection herewith and does hereby indemnify and agree to hold Landlord,
its agents, members, partners, representatives, officers, affiliates,
shareholders, employees, successors and assigns harmless from and against any
and all loss, liability and expenses that Landlord may incur should such
warranty and representation prove incorrect, inaccurate or false.

 

ARTICLE
23

 

PARKING

 

Tenant shall rent from Landlord, commencing on the
Commencement Date, the number of reserved and unreserved parking passes set
forth in Article 1.I. of the Basic Lease Provisions, which parking passes
shall pertain to the Project parking facility. 
Tenant shall pay to Landlord for parking passes the prevailing rate
charged from time to time at the location of such parking passes.  In addition, Tenant shall be responsible for
the full amount of any taxes imposed by any governmental authority in
connection with the renting of such parking passes by Tenant or the use of the
parking facility by Tenant.  Tenant’s
continued right to use the parking passes is conditioned upon Tenant abiding by
all rules and regulations which are prescribed from time to time for the
orderly operation and use of the parking facility where the parking passes are
located, including any sticker or other identification system established by
Landlord, Tenant’s cooperation in seeing that Tenant’s employees and visitors
also comply with such rules and regulations, and Tenant not being in
default under this Lease.  Landlord
specifically reserves the right to change the size, configuration, design,
layout and all other aspects of the Project parking facility at any time and
Tenant acknowledges and agrees that Landlord may, without incurring any
liability to Tenant and without any abatement of rent under this Lease, from
time to time, close-off or restrict access to the Project parking facility for
purposes of permitting or facilitating any such construction, alteration or
improvements.  Landlord may, from time to
time, relocate any reserved parking spaces (if any) rented by Tenant to another
location in the Project parking facility. 
Landlord may delegate its responsibilities hereunder to a parking
operator or a lessee of the parking facility in which case such parking operator
or lessee shall have all the rights of control attributed hereby to the
Landlord.  The parking passes rented by
Tenant pursuant to this Article 23 are provided to Tenant solely for use
by Tenant’s own personnel and such passes may not be transferred, assigned,
subleased or otherwise alienated by Tenant without Landlord’s prior
approval.  Tenant may validate visitor
parking by such method or methods as the Landlord may establish, at the
validation rate from time to time generally applicable to visitor parking.

 

22

 

ARTICLE
24

 

WAIVER

 

No waiver by Landlord of any provision of this Lease
shall be deemed to be a waiver of any other provision hereof or of any
subsequent breach by Tenant of the same or any other provision.  No provision of this Lease may be waived by
Landlord, except by an instrument in writing executed by Landlord.  Landlord’s consent to or approval of any act
by Tenant requiring Landlord’s consent or approval shall not be deemed to
render unnecessary the obtaining of Landlord’s consent to or approval of any
subsequent act of Tenant, whether or not similar to the act so consented to or
approved.  No act or thing done by
Landlord or Landlord’s agents during the Term of this Lease shall be deemed an acceptance
of a surrender of the Premises, and no agreement to accept such surrender shall
be valid unless in writing and signed by Landlord.  The subsequent acceptance of rent hereunder
by Landlord shall not be deemed to be a waiver of any preceding breach by
Tenant of any term, covenant or condition of this Lease, other than the failure
of Tenant to pay the particular rent so accepted, regardless of Landlord’s
knowledge of such preceding breach at the time of acceptance of such rent.  Any payment by Tenant or receipt by Landlord
of an amount less than the total amount then due hereunder shall be deemed to
be in partial payment only thereof and not a waiver of the balance due or an
accord and satisfaction, notwithstanding any statement or endorsement to the
contrary on any check or any other instrument delivered concurrently therewith
or in reference thereto.  Accordingly,
Landlord may accept any such amount and negotiate any such check without
prejudice to Landlord’s right to recover all balances due and owing and to
pursue its other rights against Tenant under this Lease, regardless of whether
Landlord makes any notation on such instrument of payment or otherwise notifies
Tenant that such acceptance or negotiation is without prejudice to Landlord’s
rights.

 

ARTICLE
25

 

ESTOPPEL
CERTIFICATE

 

Tenant shall, at any time and from time to time, upon
not less than ten (10) days’ prior written notice from Landlord, execute,
acknowledge and deliver to Landlord a statement in writing (the “Estoppel Certificate”) certifying the
following information, (but not limited to the following information in the
event further information is requested by Landlord): (i) that this Lease
is unmodified and in full force and effect (or, if modified, stating the nature
of such modification and certifying that this Lease, as modified, is in full
force and effect); (ii) the dates to which the rental and other charges
are paid in advance, if any; (iii) the amount of Tenant’s security
deposit, if any; and (iv) acknowledging that there are not, to Tenant’s
knowledge, any uncured defaults on the part of Landlord hereunder, and no
events or conditions then in existence which, with the passage of time or
notice or both, would constitute a default on the part of Landlord hereunder,
or specifying such defaults, events or conditions, if any are claimed.  It is expressly understood and agreed that
any such statement may be relied upon by any prospective purchaser or
encumbrancer of all or any portion of the Real Property.  Tenant’s failure to deliver such statement
within such time shall constitute an admission by Tenant that all statements
contained therein are true and correct. 
Furthermore, if Tenant fails to timely deliver an Estoppel Certificate
to Landlord pursuant to the terms of this Article 25, then without
limiting any other rights and remedies of Landlord, Landlord shall have the
right to charge Tenant an amount equal to $500 per day for each day thereafter
until Tenant delivers to Landlord an Estoppel Certificate pursuant to the terms
hereof.  Tenant acknowledges and agrees
that (A) such charge compensates Landlord for the administrative costs
caused by the delinquency, and (B) Landlord’s damage would be difficult to
compute and the amount stated in this paragraph represents a reasonable estimate
of such damage.  Tenant hereby
irrevocably appoints Landlord as Tenant’s attorney-in-fact and in Tenant’s
name, place and stead to execute any and all documents described in this Article 25
if Tenant fails to do so within the specified time period.

 

ARTICLE
26

 

LIABILITY
OF LANDLORD

 

Notwithstanding anything in this Lease to the
contrary, any remedy of Tenant for the collection of a judgment (or other
judicial process) requiring the payment of money by Landlord in the event of
any default by Landlord hereunder or any claim, cause of action or obligation,
contractual, statutory or otherwise by Tenant against Landlord or the Landlord
Parties 

 

23

 

concerning, arising out
of or relating to any matter relating to this Lease and all of the covenants
and conditions or any obligations, contractual, statutory, or otherwise set
forth herein, shall be limited solely and exclusively to an amount which is
equal to the lesser of (i) the interest of Landlord in and to the Project,
and (ii) the interest Landlord would have in the Project if the Project
were encumbered by third party debt in an amount equal to seventy percent (70%)
of the then current value of the Project (as such value is reasonably
determined by Landlord).  No other
property or assets of Landlord or any Landlord Party shall be subject to levy,
execution or other enforcement procedure for the satisfaction of Tenant’s
remedies under or with respect to this Lease, Landlord’s obligations to Tenant,
whether contractual, statutory or otherwise, the relationship of Landlord and
Tenant hereunder, or Tenant’s use or occupancy of the Premises.

 

ARTICLE
27

 

INABILITY
TO PERFORM

 

This Lease and the obligations of Tenant hereunder
shall not be affected or impaired because Landlord is unable to fulfill any of
its obligations hereunder or is delayed in doing so, if such inability or delay
is caused by reason of any prevention, delay, stoppage due to strikes,
lockouts, acts of God, acts of terrorism, or any other cause previously, or at
such time, beyond the reasonable control or anticipation of Landlord
(collectively, a “Force Majeure”)
and Landlord’s obligations under this Lease shall be forgiven and suspended by
any such Force Majeure.

 

ARTICLE
28

 

HAZARDOUS
WASTE

 

(a)           Tenant shall not cause or permit any
Hazardous Material (as defined in Section 28(d) below) to be brought, kept
or used in or about the Project by Tenant, its agents, employees, contractors,
or invitees, other than Universal Waste (as defined in Section 28(f) below)
on the Premises with respect to which Tenant is a Generator (as defined in Section 28(g)
below) or Producer (as defined in Section 28(g) below). Tenant shall be
responsible, at its sole expense, for disposing of or causing to be disposed of
all Universal Waste in accordance with Chapter 23 of Title 22 of the California
Code of Regulations.  Tenant indemnifies
Landlord and the Landlord Parties from and against any breach by Tenant of the
obligations stated in the preceding two sentences, and agrees to defend and
hold Landlord and the Landlord Parties harmless from and against any and all
claims, judgments, damages, penalties, fines, costs, liabilities, or losses
(including, without limitation, diminution in value of the Project, damages for
the loss or restriction or use of rentable or usable space or of any amenity of
the Project, damages arising from any adverse impact or marketing of space in
the Project, and sums paid in settlement of claims, attorneys’ fees and costs,
consultant fees, and expert fees) which arise during or after the Term of this
Lease as a result of such breach.  This
indemnification of Landlord and the Landlord Parties by Tenant includes,
without limitation, costs incurred in connection with any investigation of site
conditions or any cleanup, remedial, removal, or restoration work required by
any federal, state, or local governmental agency or political subdivision
because of Hazardous Material present in the soil or ground water on or under
the Project.  Without limiting the foregoing,
if the presence of any Hazardous Material on the Project caused or permitted by
Tenant results in any contamination of the Project, then subject to the
provisions of Articles 9, 10 and 11 hereof, Tenant shall promptly take all
actions at its sole expense as are necessary to return the Project to the
condition existing prior to the introduction of any such Hazardous Material and
the contractors to be used by Tenant for such work must be approved by
Landlord, which approval shall not be unreasonably withheld so long as such
actions would not potentially have any material adverse long-term or short-term
effect on the Project and so long as such actions do not materially interfere
with the use and enjoyment of the Project by the other tenants thereof; provided
however, Landlord shall also have the right, by written notice to Tenant, to
directly undertake any such mitigation efforts with regard to Hazardous
Materials in or about the Project due to Tenant’s breach of its obligations
pursuant to this Section 28(a), and to charge Tenant, as Additional Rent,
for the costs thereof.

 

(b)           Landlord and Tenant acknowledge that
Landlord may become legally liable for the costs of complying with Laws (as
defined in Section 28(e) below) relating to Hazardous Material which
are not the responsibility of Landlord or the responsibility of Tenant,
including the following:  (i) Hazardous
Material present in the soil or ground water on the Project of which 

 

24

 

Landlord has no knowledge as of the effective date of
this Lease; (ii) a change in Laws which relate to Hazardous Material which
make that Hazardous Material which is present on the Real Property as of the
effective date of this Lease, whether known or unknown to Landlord, a violation
of such new Laws; (iii) Hazardous Material that migrates, flows,
percolates, diffuses, or in any way moves on to, or under, the Project after
the effective date of this Lease; or Hazardous Material present on or under the
Project as a result of any discharge, dumping or spilling (whether accidental
or otherwise) on the Project by other lessees of the Project or their agents,
employees, contractors, or invitees, or by others.  Accordingly, Landlord and Tenant agree that
the cost of complying with Laws relating to Hazardous Material on the Project
for which Landlord is legally liable and which are paid or incurred by Landlord
shall be an Operating Cost (and Tenant shall pay Tenant’s Proportionate Share
thereof in accordance with Article 3) unless the cost of such compliance
as between Landlord and Tenant, is made the responsibility of Tenant pursuant
to Section 28(a) above.  To the
extent any such Operating Cost relating to Hazardous Material is subsequently
recovered or reimbursed through insurance, or recovery from responsible third
parties or other action, Tenant shall be entitled to a proportionate
reimbursement to the extent it has paid its share of such Operating Cost to
which such recovery or reimbursement relates.

 

(c)           It shall not be unreasonable for Landlord to
withhold its consent to any proposed Transfer if (i) the proposed
transferee’s anticipated use of the Premises involves the generation, storage,
use, treatment, or disposal of Hazardous Material; (ii) the proposed
Transferee has been required by any prior landlord, lender, or governmental
authority to take remedial action in connection with Hazardous Material
contaminating a property if the contamination resulted from such Transferee’s
actions or use of the property in question; or (iii) the proposed
Transferee is subject to an enforcement order issued by any governmental
authority in connection with the use, disposal, or storage of a Hazardous
Material.

 

(d)           As used herein, the term “Hazardous Material” means any hazardous or toxic substance,
material, or waste which is or becomes regulated by any local governmental
authority, the State of California or the United States Government.  The term “Hazardous Material” includes,
without limitation, any material or substance which is (i) defined as “Hazardous
Waste,” “Extremely Hazardous Waste,” or “Restricted Hazardous Waste” under
Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, of
the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous
Waste Control Law), (ii) defined as a “Hazardous Substance” under Section 25316
of the California Health and Safety Code, Division 20, Chapter 6.8
(Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined
as a “Hazardous Material,” “Hazardous Substance,” or “Hazardous Waste” under Section 25501
of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous
Materials Release Response Plans and Inventory), (iv) defined as a “Hazardous
Substance” under Section 25281 of the California Health and Safety Code,
Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum,
(vi) asbestos, (vii) regulated by Section 26100 et seq. of the
California Health and Safety Code, Division 20, Chapter 18 (Toxic Mold
Protection Act of 2001), (viii) listed under Article 9 or defined as
Hazardous or extremely hazardous pursuant to Article 11 of Title 22 of the
California Administrative Code, Division 4, Chapter 20, (ix) designated as
a “Hazardous Substance” pursuant to Section 311 of the Federal Water
Pollution Control Act (33 U.S.C. § 1317), (x) defined as a “Hazardous
Waste” pursuant to Section 1004 of the Federal Resource Conservation and
Recovery Act, 42 U.S.C. § 6901 et seq. (42 U.S.C. § 6903), or (xi)
defined as a “Hazardous Substance” pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
§ 9601 et seq. (42 U.S.C. § 9601).

 

(e)           Landlord represents
and warrants that (i) to the best of Landlord’s knowledge, the Project
does not contain and is (and will be) free from all Hazardous Materials as of
the date that the Premises are delivered to the Tenant that are in excess of
what is permitted by Laws, and (ii) Landlord has not received any
notification from any governmental or quasi-governmental agency or authority
relating to Hazardous Materials, in, on or under the Project.

 

(f)            In the event of (I) a
breach by Landlord of Section 28(e) during the Term of this Lease or (II) in
the event of the release or generation of Hazardous Material within the
Premises in violation of Laws that are caused by the default by Landlord
(following the expiration of all applicable notice and cure periods) in the
performance of its repair and maintenance obligations expressly set forth as
Landlord’s responsibility to repair and maintain under the terms of this Lease
(and specifically excluding, however, any Hazardous Material released,
disturbed, 

 

25

 

transported,
stored, generated or used by Tenant, or any of its employees, invitees,
successors, assigns, or subtenants), then Landlord shall (A) commence,
within ninety (90) days after Landlord receives notice of such breach or
discovery and verifies the accuracy of such claim, the removal, encapsulation
or other containment program relating to the breach in question to the extent
required by the applicable governmental agency in order to comply with Laws,
and (B) pursue the diligent prosecution of such program to completion.

 

(g)           As used herein, the term “Laws” means any applicable federal, state or local law,
ordinance, or regulation relating to any Hazardous Material affecting the
Project, including, without limitation, the laws, ordinances, and regulations
referred to in Section 28(d) above.

 

(h)           As used herein, the term “Universal Waste” means any substance defined as Universal
Waste pursuant to Section 66273.9 of Title 22 of the California Code of
Regulations.

 

(i)            As used herein, the term “Generator” or “Producer” of
Universal Waste is defined pursuant to Section 66273.9 of Title 22 of the
California Code of Regulations.

 

ARTICLE
29

 

SURRENDER
OF PREMISES; REMOVAL OF PROPERTY

 

(a)           The voluntary or other surrender of this
Lease by Tenant to Landlord, or a mutual termination hereof, shall not work a
merger, and shall at the option of Landlord, operate as an assignment to it of
any or all subleases or subtenancies affecting the Premises.

 

(b)           Upon the expiration of the Term of this
Lease, or upon any earlier termination of this Lease, Tenant shall quit and
surrender possession of the Premises to Landlord in good order and condition,
reasonable wear and tear and repairs which are Landlord’s obligation excepted,
and shall, without expense to Landlord, remove or cause to be removed from the
Premises all debris and rubbish, all furniture, equipment, business and trade
fixtures, free-standing cabinet work, moveable partitioning, telephone and data
cabling and other articles of personal property in the Premises except to the
extent Landlord elects by notice to Tenant to exercise its option to have any
subleases or subtenancies assigned to it), and Tenant shall repair all damage
to the Premises resulting from the removal of such items from the Premises.

 

(c)           Whenever Landlord shall reenter the Premises
as provided in Article 20 hereof, or as otherwise provided in this Lease,
any property of Tenant not removed by Tenant upon the expiration of the Term of
this Lease (or within forty-eight (48) hours after a termination by reason of
Tenant’s default), as provided in this Lease, shall be considered abandoned and
Landlord may remove any or all of such items and dispose of the same in any
manner or store the same in a public warehouse or elsewhere for the account and
at the expense and risk of Tenant, and if Tenant shall fail to pay the cost of
storing any such property after it has been stored for a period of thirty (30)
days or more, Landlord may sell any or all of such property at public or
private sale, in such manner and at such times and places as Landlord, in its
sole discretion, may deem proper, without notice to or demand upon Tenant, for
the payment of all or any part of such charges or the removal of any such
property, and shall apply the proceeds of such sale as follows:  first, to the cost and expense of such sale,
including reasonable attorneys’ fees and costs for services rendered; second,
to the payment of the cost of or charges for storing any such property; third,
to the payment of any other sums of money which may then or thereafter be due
to Landlord from Tenant under any of the terms hereof; and fourth, the balance,
if any, to Tenant.

 

(d)           All fixtures, Tenant Improvements,
Alterations and/or appurtenances attached to or built into the Premises prior
to or during the Term, whether by Landlord or Tenant and whether at the expense
of Landlord or Tenant, or of both, shall be and remain part of the Premises and
shall not be removed by Tenant at the end of the Term unless otherwise
expressly provided for in this Lease. 
Such fixtures, Tenant Improvements, Alterations and/or appurtenances
shall include but not be limited to:  all
floor coverings, drapes, paneling, built-in cabinetry, molding, doors, vaults
(including vault doors), plumbing systems, security systems, electrical systems,
lighting systems, communication systems, all fixtures and outlets for the
systems mentioned above and for all telephone, radio and television purposes,
and any special flooring or ceiling installations.

 

26

 

ARTICLE
30

 

MISCELLANEOUS

 

(a)           SEVERABILITY; ENTIRE AGREEMENT.  ANY
PROVISION OF THIS LEASE WHICH SHALL PROVE TO BE INVALID, VOID, OR ILLEGAL SHALL
IN NO WAY AFFECT, IMPAIR OR INVALIDATE ANY OTHER PROVISION HEREOF AND SUCH
OTHER PROVISIONS SHALL REMAIN IN FULL FORCE AND EFFECT.  THIS LEASE AND THE EXHIBITS AND ANY ADDENDUM
ATTACHED HERETO CONSTITUTE THE ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH
REGARD TO TENANT’S OCCUPANCY OR USE OF ALL OR ANY PORTION OF THE PROJECT, AND
NO PRIOR AGREEMENT OR UNDERSTANDING PERTAINING TO ANY SUCH MATTER SHALL BE
EFFECTIVE FOR ANY PURPOSE.  NO PROVISION
OF THIS LEASE MAY BE AMENDED OR SUPPLEMENTED EXCEPT BY AN AGREEMENT IN
WRITING SIGNED BY THE PARTIES HERETO OR THEIR SUCCESSOR IN INTEREST.  THE PARTIES AGREE THAT ANY
DELETION OF LANGUAGE FROM THIS LEASE PRIOR TO ITS MUTUAL EXECUTION BY LANDLORD
AND TENANT SHALL NOT BE CONSTRUED TO HAVE ANY PARTICULAR MEANING OR TO RAISE
ANY PRESUMPTION, CANON OF CONSTRUCTION OR IMPLICATION INCLUDING, WITHOUT
LIMITATION, ANY IMPLICATION THAT THE PARTIES INTENDED THEREBY TO STATE THE
CONVERSE, OBVERSE OR OPPOSITE OF THE DELETED LANGUAGE.

 

(b)           Attorneys’
Fees; Waiver of Jury Trial.

 

(i)            In any action to enforce the terms of this
Lease, including any suit by Landlord for the recovery of rent or possession of
the Premises, the losing party shall pay the successful party a reasonable sum
for attorneys’ fees and costs in such suit and such attorneys’ fees and costs shall be deemed to have accrued prior to the
commencement of such action and shall be paid whether or not such action is
prosecuted to judgment. Tenant shall also reimburse Landlord for all costs
incurred by Landlord in connection with enforcing its rights under this Lease
against Tenant following a bankruptcy by Tenant or otherwise, including without
limitation, legal fees, experts’ fees and expenses, court costs and consulting
fees.

 

(ii)           Should Landlord, without fault on Landlord’s
part, be made a party to any litigation instituted by Tenant or by any third
party against Tenant, or by or against any person holding under or using the
Premises by license of Tenant, or for the foreclosure of any lien for labor or
material furnished to or for Tenant or any such other person or otherwise
arising out of or resulting from any act or transaction of Tenant or of any
such other person, Tenant covenants to save and hold Landlord harmless from any
judgment rendered against Landlord or the Premises or any part thereof and from
all costs and expenses, including reasonable attorneys’ fees and
costs incurred by Landlord in
connection with such litigation.

 

(iii)          TO THE EXTENT PERMITTED BY LAW, EACH PARTY HEREBY
WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION SEEKING SPECIFIC PERFORMANCE
OF ANY PROVISION OF THIS LEASE, FOR DAMAGES FOR ANY BREACH UNDER THIS LEASE, OR
OTHERWISE FOR ENFORCEMENT OF ANY RIGHT OR REMEDY HEREUNDER.

 

(c)           Time of Essence. 
Each of Tenant’s covenants herein is a condition and time is of the
essence with respect to the performance of every provision of this Lease.

 

(d)           Headings; Joint
and Several.  The article headings contained in this Lease
are for convenience only and do not in any way limit or amplify any term or
provision hereof.  The terms “Landlord”
and “Tenant” as used herein shall include the plural as well as the singular,
the neuter shall include the masculine and feminine genders and the obligations
herein imposed upon Tenant shall be joint and several as to each of the
persons, firms or corporations of which Tenant may be composed.

 

(e)           Reserved Area. 
Tenant hereby acknowledges and agrees that the exterior walls of the
Premises and the area between the finished ceiling of the Premises and the slab
of the floor of the Project thereabove have not been demised hereby and the use
thereof together with the right 

 

27

 

to install, maintain, use, repair and replace pipes,
ducts, conduits, wiring and cabling leading through, under or above the
Premises or throughout the Project in locations which will not materially
interfere with Tenant’s use of the Premises and serving other parts of the
Project are hereby excepted and reserved unto Landlord.

 

(f)            NO OPTION.  THE SUBMISSION OF THIS
LEASE BY LANDLORD, ITS AGENT OR REPRESENTATIVE FOR EXAMINATION OR EXECUTION BY
TENANT DOES NOT CONSTITUTE AN OPTION OR OFFER TO LEASE THE PREMISES UPON THE
TERMS AND CONDITIONS CONTAINED HEREIN OR A RESERVATION OF THE PREMISES IN FAVOR
OF TENANT, IT BEING INTENDED HEREBY THAT THIS LEASE SHALL ONLY BECOME EFFECTIVE
UPON THE EXECUTION HEREOF BY LANDLORD AND TENANT AND DELIVERY
OF A FULLY EXECUTED LEASE TO TENANT.

 

(g)           Use of Project
Name; Improvements.  Tenant shall not be allowed to use the name,
picture or representation of the Project, or words to that effect, in
connection with any business carried on in the Premises or otherwise (except as
Tenant’s address) without the prior written consent of Landlord.  In the event that Landlord undertakes any
additional improvements on the Real Property including but not limited to new
construction or renovation or additions to the existing improvements, Landlord
shall not be liable to Tenant for any noise, dust, vibration or interference
with access to the Premises or disruption in Tenant’s business caused thereby.

 

(h)           Rules and
Regulations.  Tenant shall observe faithfully and comply
strictly with the rules and regulations (“Rules and Regulations”) attached to this Lease as Exhibit “B”
and made a part hereof, and such other Rules and Regulations as Landlord
may from time to time reasonably adopt for the safety, care and cleanliness of
the Project, the facilities thereof, or the preservation of good order
therein.  Landlord shall not be liable to
Tenant for violation of any such Rules and Regulations, or for the breach
of any covenant or condition in any lease by any other tenant in the
Project.  A waiver by Landlord of any Rule or
Regulation for any other tenant shall not constitute nor be deemed a waiver of
the Rule or Regulation for this Tenant.

 

(i)            Quiet Possession. 
Upon Tenant’s paying the Basic Rental, Additional Rent and other sums
provided hereunder and observing and performing all of the covenants,
conditions and provisions on Tenant’s part to be observed and performed
hereunder, Tenant shall have quiet possession of the Premises for the entire
Term hereof, subject to all of the provisions of this Lease.

 

(j)            Rent.  All
payments required to be made hereunder to Landlord (other than the Security
Deposit) shall be deemed to be rent, whether or not described as such.

 

(k)           Successors and
Assigns.  Subject to the provisions of Article 15
hereof, all of the covenants, conditions and provisions of this Lease shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns.

 

(l)            Notices.  Any
notice required or permitted to be given hereunder shall be in writing and may
be given by personal service evidenced by a signed receipt or sent by
registered or certified mail, return receipt requested, or via overnight
courier, and shall be effective upon proof of delivery, addressed to Tenant at
the Premises or to Landlord at the management office for the Project, with a
copy to Landlord, c/o Kennedy-Wilson, 9601 Wilshire Boulevard, Suite 220,
Beverly Hills, California 90212, Attention: CFO.  Either party may by notice to the other
specify a different address for notice purposes except that, upon Tenant’s
taking possession of the Premises, the Premises shall constitute Tenant’s
address for notice purposes.  A copy of
all notices to be given to Landlord hereunder shall be concurrently transmitted
by Tenant to such party hereafter designated by notice from Landlord to
Tenant.  Any notices sent by Landlord
regarding or relating to eviction procedures, including without limitation
three (3) day notices, may be sent by regular mail.

 

(m)          Persistent
Delinquencies.  In the event that Tenant shall be delinquent
by more than fifteen (15) days in the payment of rent on three (3) separate
occasions in any twelve (12) month period, Landlord shall have the right to
terminate this Lease by thirty (30) days written notice given by Landlord to
Tenant within thirty (30) days of the last such delinquency.

 

28

 

(n)           Right of Landlord to Perform.  All covenants and agreements to be performed
by Tenant under any of the terms of this Lease shall be performed by Tenant at
Tenant’s sole cost and expense and without any abatement of rent.  If Tenant shall fail to pay any sum of money,
other than rent, required to be paid by it hereunder or shall fail to perform
any other act on its part to be performed hereunder, and such failure shall
continue beyond any applicable cure period set forth in this Lease, Landlord
may, but shall not be obligated to, without waiving or releasing Tenant from
any obligations of Tenant, make any such payment or perform any such other act
on Tenant’s part to be made or performed as is in this Lease provided.  All sums so paid by Landlord and all
reasonable incidental costs, together with interest thereon at the rate
specified in Section 20(e) above from the date of such payment by
Landlord, shall be payable to Landlord on demand and Tenant covenants to pay
any such sums, and Landlord shall have (in addition to any other right or
remedy of Landlord) the same rights and remedies in the event of the nonpayment
thereof by Tenant as in the case of default by Tenant in the payment of the
rent.

 

(o)           Access, Changes in Project, Facilities,
Name.

 

(i)            Every
part of the Project except the inside surfaces of all walls, windows and doors
bounding the Premises (including exterior building walls, the rooftop, core
corridor walls and doors and any core corridor entrance), and any space in or
adjacent to the Premises or within the Project used for shafts, stacks, pipes,
conduits, fan rooms, ducts, electric or other utilities, sinks or other
building facilities, and the use thereof, as well as access thereto through the
Premises for the purposes of operation, maintenance, decoration and repair, are
reserved to Landlord.

 

(ii)           Landlord
reserves the right, without incurring any liability to Tenant therefor, to make
such changes in or to the Project and the fixtures and equipment thereof, as
well as in or to the street entrances, halls, passages, elevators, stairways
and other improvements thereof, as it may deem necessary or desirable.

 

(iii)          Landlord may adopt any name for the
Project and Landlord reserves the right, from time to time, to change the name
and/or address of the Project at any time.

 

(p)           Signing Authority.  If Tenant is a corporation, partnership or
limited liability company, each individual executing this Lease on behalf of
said entity represents and warrants that he or she is duly authorized to
execute and deliver this Lease on behalf of said entity in accordance with: (i) if
Tenant is a corporation, a duly adopted resolution of the Board of Directors of
said corporation or in accordance with the By-laws of said corporation, (ii) if
Tenant is a partnership, the terms of the partnership agreement, and (iii) if
Tenant is a limited liability company, the terms of its operating agreement,
and that this Lease is binding upon said entity in accordance with its
terms.  Concurrently with Tenant’s
execution of this Lease, Tenant shall provide to Landlord a copy of: (A) if
Tenant is a corporation, such resolution of the Board of Directors authorizing
the execution of this Lease on behalf of such corporation, which copy of
resolution shall be duly certified by the secretary or an assistant secretary
of the corporation to be a true copy of a resolution duly adopted by the Board
of Directors of said corporation and shall be in a form reasonably acceptable
to Landlord, (B) if Tenant is a partnership, a copy of the provisions of
the partnership agreement granting the requisite authority to each individual
executing this Lease on behalf of said partnership, and (C) if Tenant is a
limited liability company, a copy of the provisions of its operating agreement
granting the requisite authority to each individual executing this Lease on
behalf of said limited liability company. 
In the event Tenant fails to comply with the requirements set forth in
this subparagraph (p), then each individual executing this Lease shall be
personally liable, jointly and severally along with Tenant, for all of Tenant’s
obligations in this Lease.

 

(q)           Identification of Tenant.

 

(i)            If
Tenant constitutes more than one person or entity, (A) each of them shall
be jointly and severally liable for the keeping, observing and performing of
all of the terms, covenants, conditions and provisions of this Lease to be
kept, observed and performed by Tenant, (B) the term “Tenant” as used in
this Lease shall mean and include each of them jointly and severally, and (C) the
act of or notice from, or notice or refund to, or the signature of, any one or
more of them, with respect to the tenancy of this Lease, including, but not
limited to, any renewal, extension, expiration, termination or modification of
this Lease, shall be binding upon each and all of the persons or entities
executing this Lease as Tenant with the same force and 

 

29

 

effect as if each and all
of them had so acted or so given or received such notice or refund or so
signed.

 

(ii)           If
Tenant is a partnership (or is comprised of two or more persons, individually
and as co-partners of a partnership) or if Tenant’s interest in this Lease
shall be assigned to a partnership (or to two or more persons, individually and
as co-partners of a partnership) pursuant to Article 15 hereof (any such
partnership and such persons hereinafter referred to in this Section 30(q)(ii) as
“Partnership Tenant”), the following
provisions of this Lease shall apply to such Partnership Tenant:

 

(A)          The liability of each of the
parties comprising Partnership Tenant shall be joint and several.

 

(B)           Each of the parties
comprising Partnership Tenant hereby consents in advance to, and agrees to be
bound by, any written instrument which may hereafter be executed, changing,
modifying or discharging this Lease, in whole or in part, or surrendering all
or any part of the Premises to the Landlord, and by notices, demands, requests
or other communication which may hereafter be given, by the individual or
individuals authorized to execute this Lease on behalf of Partnership Tenant
under Subparagraph (p) above.

 

(C)           Any bills, statements,
notices, demands, requests or other communications given or rendered to
Partnership Tenant or to any of the parties comprising Partnership Tenant shall
be deemed given or rendered to Partnership Tenant and to all such parties and
shall be binding upon Partnership Tenant and all such parties.

 

(D)          If Partnership Tenant admits
new partners, all of such new partners shall, by their admission to Partnership
Tenant, be deemed to have assumed performance of all of the terms, covenants
and conditions of this Lease on Tenant’s part to be observed and performed.

 

(E)           Partnership Tenant shall give
prompt notice to Landlord of the admission of any such new partners, and, upon
demand of Landlord, shall cause each such new partner to execute and deliver to
Landlord an agreement in form satisfactory to Landlord, wherein each such new
partner shall assume performance of all of the terms, covenants and conditions
of this Lease on Partnership Tenant’s part to be observed and performed (but
neither Landlord’s failure to request any such agreement nor the failure of any
such new partner to execute or deliver any such agreement to Landlord shall
terminate the provisions of clause (D) of this Section 30(q)(ii) or
relieve any such new partner of its obligations thereunder).

 

(r)            Survival of Obligations.  Any obligations of Tenant under this Lease
shall survive the expiration or earlier termination of this Lease.

 

(s)           Confidentiality.  Tenant acknowledges that the content of this
Lease and any related documents are confidential information.  Tenant shall keep such confidential
information strictly confidential and shall not disclose such confidential
information to any person or entity other than Tenant’s financial, legal and
space planning consultants and any proposed Transferees.

 

(t)            Governing Law.  This Lease shall be governed by and construed
in accordance with the laws of the State of California.  No conflicts of law rules of any state
or country (including, without limitation, California conflicts of law rules)
shall be applied to result in the application of any substantive or procedural
laws of any state or country other than California.  All controversies, claims, actions or causes
of action arising between the parties hereto and/or their respective successors
and assigns, shall be brought, heard and adjudicated by the courts of the State
of California, with venue in the County of Los Angeles.  Each of the parties hereto hereby consents to
personal jurisdiction by the courts of the State of California in connection
with any such controversy, claim, action or cause of action, and each of the
parties hereto consents to service of process by any means authorized by
California law and consent to the enforcement of any judgment so obtained in
the courts of the State of California on the same terms and conditions as if
such controversy, claim, action or cause of action had been originally heard and
adjudicated to a final judgment in such courts. 
Each of the parties hereto further acknowledges that the laws and courts
of California were freely and voluntarily chosen to govern this Lease and to
adjudicate any claims or disputes hereunder.

 

30

 

(u)           Office of Foreign Assets Control.  Tenant certifies to Landlord that (i) Tenant
is not entering into this Lease, nor acting, for or on behalf of any person or
entity named as a terrorist or other banned or blocked person or entity
pursuant to any law, order, rule or regulation of the United States
Treasury Department or the Office of Foreign Assets Control, and (ii) Tenant
shall not assign this Lease or sublease to any such person or entity or anyone
acting on behalf of any such person or entity. 
Landlord shall have the right to conduct all reasonable searches in
order to ensure compliance with the foregoing. 
Tenant hereby agrees to indemnify, defend and hold Landlord and the
Landlord Parties harmless from any and all claims arising from or related to
any breach of the foregoing certification.

 

(v)           Financial Statements.  Within ten (10) days after Tenant’s
receipt of Landlord’s written request, Tenant shall provide Landlord with
current financial statements of Tenant and financial statements for the two (2) calendar
or fiscal years (if Tenant’s fiscal year is other than a calendar year) prior
to the current financial statement year. 
Any such statements shall be prepared in accordance with generally
accepted accounting principles and, if the normal practice of Tenant, shall be
audited by an independent certified public accountant.

 

(w)          Exhibits.  The Exhibits attached hereto are incorporated
herein by this reference as if fully set forth herein.

 

(x)            Independent Covenants.  This Lease shall be construed as though the
covenants herein between Landlord and Tenant are independent (and not
dependent) and Tenant hereby expressly waives the benefit of any statute to the
contrary and agrees that if Landlord fails to perform its obligations set forth
herein, Tenant shall not be entitled to make any repairs or perform any acts
hereunder at Landlord’s expense or to set off of any of the rent or other
amounts owing hereunder against Landlord.

 

(y)           Counterparts.  This Lease may be executed in counterparts,
each of which shall be deemed an original, but such counterparts, when taken
together, shall constitute one agreement.

 

(z)            Non-Discrimination.  Tenant herein covenants by and for himself or
herself, his or her heirs, executors, administrators and assigns, and all
persons claiming under or through him or her, and this Lease is made and
accepted upon and subject to the following conditions:

 

“That there shall be no
discrimination against or segregation of any person or group of persons on
account of race, color, creed, religion, sex, marital status, national origin
or ancestry, in the leasing, subleasing, transferring, use, occupancy, tenure
or enjoyment of the Premises, nor shall Tenant himself or herself, or any
person claiming under or through him or her, establish or permit any such
practice or practices of discrimination or segregation with reference to the
selection, location, number, use or occupancy of tenants, subtenants or vendees
in the Premises.”

 

ARTICLE 31

 

OPTION TO EXTEND

 

(a)           Option Right.  Landlord hereby grants the Tenant named in
this Lease (the “Original Tenant”) one (1) option
(“Option”) to extend the Term for the
entire Premises for a period of five (5) years (each, an “Option Term”), which Option shall be exercisable only by
written notice delivered by Tenant to Landlord as set forth below.  The rights contained in this Article 31
may only be exercised by the Original Tenant and any assignee or other
transferee of the Original Tenant’s interest in this Lease.

 

(b)           Option Rent. The Basic Rental payable by Tenant during the Option
Term (“Option Rent”) shall be equal to the “Market
Rent” (defined below), but in no event shall the Option Rent be less than
Tenant is paying under the Lease on the month immediately preceding the Option
Term for Monthly Basic Rental, including all escalations, Direct Costs,
additional rent and other charges.  “Market Rent” shall mean the applicable Monthly Basic Rental,
at which tenants, as of the commencement of the Option Term, are leasing
non-sublease space which is not encumbered by expansion rights and which is
comparable in size, location and quality to the Premises in renewal
transactions for a term comparable to the Option Term, which comparable space
is located in the Project and office
buildings comparable to the Project in Beverly Hills, California (as reasonably
determined by Landlord), taking into consideration the 

 

31

 

value of the existing improvements in the Premises to
Tenant, as compared to the value of the existing improvements in such
comparable space, with such value to be based upon the age, quality and layout
of the improvements and the extent to which the same could be utilized by
Tenant with consideration given to the fact that the improvements existing in
the Premises are specifically suitable to Tenant..

 

(c)           Exercise of Option.  The Option
shall be exercised by Tenant only in the following manner:  (i) Tenant shall not be in default, and
shall not have been in default under the Lease more than once; (ii) Tenant
shall deliver written notice (“Interest Notice”) to Landlord not more than
fifteen (15) months nor less than nine (9) months prior to the expiration
of the Term, stating that Tenant is interested in exercising the Option, (iii) within
fifteen (15) business days of Landlord’s receipt of Tenant’s written notice,
Landlord shall deliver notice (“Option Rent Notice”)
to Tenant setting forth the Option Rent; and (iv) Tenant shall provide
Landlord written notice (“Tenant’s Rent Notice”)
within five (5) business days after receipt of the Option Rent Notice, in
which Tenant may, at its option, object to the Option Rent contained in the
Option Rent Notice.  Tenant’s failure to
deliver the Interest Notice on or before the dates specified above shall be
deemed to constitute Tenant’s election not to exercise the Option.  Tenant’s failure to deliver the Tenant’s Rent
Notice on or before the date specified above shall be deemed to constitute
Tenant’s approval of the Option Rent set forth in the Option Rent Notice.  If Tenant timely and properly exercises its
Option, the Term shall be extended for the Option Term upon all of the terms
and conditions set forth in the Lease, except that the rent for the Option Term
shall be as indicated in the Option Rent Notice unless Tenant objects in Tenant’s
Rent Notice to the Option Rent contained in the Option Rent Notice, in which event Landlord and Tenant shall use their
best good faith efforts to agree upon the Market Rent.  If Landlord and Tenant fail to reach
agreement within fifteen (15) days following Tenant’s Acceptance (the “Outside Agreement Date”), then three (3) arbitrators
shall be selected pursuant to Section 31(d) below and within three (3) business
days following such selection, each party shall submit to each other and to the
arbitrators a separate determination of the Market Rent.  Tenant’s failure to timely submit its
determination of Market Rent shall be deemed acceptance of Landlord’s submitted
determination of Market Rent.  If Tenant’s
and Landlord’s submitted Market Rent are within five percent (5%) of each
other, the Market Rent shall be deemed to be Landlord’s submitted Market
Rent.  If Landlord’s submitted Market
Rent is more than 5% higher than Tenant’s submitted Market Rent, then the
parties shall follow the procedure and the Option Rent shall be determined, as
set forth in Section 31(d) below.

 

(d)           Determination of Market Rent. 
If Tenant timely and appropriately objects to the Market Rent in Tenant’s
Rent Notice, Landlord and Tenant fail to reach agreement on the Market Rent
prior to the Outside Agreement Date, then each party shall make a separate
determination of the Market Rent which shall be submitted to each other and to
arbitration in accordance with the following items (i) through (vii):

 

(i)            Landlord and Tenant shall each appoint, within ten (10) days
of the Outside Agreement Date, one arbitrator who shall by profession be a
current real estate broker or appraiser of comparable commercial properties in
the immediate vicinity of the Project, and who has been active in such field
over the last five (5) years.  The
determination of the arbitrators shall be limited solely to the issue of
whether Landlord’s or Tenant’s submitted Market Rent is the closest to the actual
Market Rent as determined by the arbitrators, taking into account the
requirements of item (b), above (i.e.,
the arbitrators may only select Landlord’s or Tenant’s determination of Market
Rent and shall not be entitled to make a compromise determination).

 

(ii)           The two (2) arbitrators so appointed shall within
five (5) business days of the date of the appointment of the last
appointed arbitrator agree upon and appoint a third arbitrator who shall be
qualified under the same criteria set forth hereinabove for qualification of
the initial two (2) arbitrators.

 

(iii)          The three (3) arbitrators shall within fifteen
(15) days of the appointment of the third arbitrator reach a decision as to
whether the parties shall use Landlord’s or Tenant’s submitted Market Rent, and
shall notify Landlord and Tenant thereof.

 

(iv)          The decision of the majority of the three (3) arbitrators
shall be binding upon Landlord and Tenant.

 

32

 

(v)           If either Landlord or Tenant fails to appoint an
arbitrator within ten (10) days after the applicable Outside Agreement
Date, the arbitrator appointed by one of them shall reach a decision, notify
Landlord and Tenant thereof, and such arbitrator’s decision shall be binding
upon Landlord and Tenant.

 

(vi)          If the two arbitrators fail to agree upon and appoint
a third arbitrator, or both parties fail to appoint an arbitrator, then the
appointment of the third arbitrator or any arbitrator shall be dismissed and
the matter to be decided shall be forthwith submitted to arbitration under the
provisions of the American Arbitration Association, but subject to the
instruction set forth in this item (d).

 

(vii)         The cost of arbitration shall be paid by Landlord and
Tenant equally.

 

(e)           No Defaults.  All Option
rights of Tenant under this Article 31 shall terminate and be of no
further force or effect, notwithstanding Tenant’s due and timely exercise of an
Option, if, after such exercise, (i) Tenant fails to pay to Landlord a
monetary obligation of Tenant for a period of five (5) days after written
notice that such obligation is due, or (ii) Tenant fails to commence to
cure any other default under this Lease within thirty (30) days after the date
that Landlord gives notice to Tenant of such default and/or Tenant fails
thereafter to diligently prosecute said cure to completion within thirty (30)
days after the date of such notice, or (iii) Tenant has committed any
incurable breach, or is otherwise in default of any of the terms, covenants and
conditions of this Lease.

 

(f)            No Other Option.  Except for
the Option granted pursuant to this Section 31, Tenant acknowledges
that it shall have no additional option to extend the term of the Lease.

 

ARTICLE 32

 

RIGHT OF FIRST OFFER

 

(a)           Right of First Offer.  Landlord hereby grants to Tenant a right of
first offer with respect to that space on the sixth (6th) floor of the Project
outlined on Exhibit “A” attached hereto and made a part hereof (“First Offer Space”). 
Notwithstanding the foregoing (i) such first offer right of Tenant
shall commence only following the expiration or earlier termination of (A) any
existing lease pertaining to the First Offer Space, and (B) as to any
First Offer Space which is vacant as of the date of this Lease, the first lease
pertaining to any portion of such First Offer Space entered into by Landlord
after the date of this Lease (collectively, the “Superior
Leases”), including any renewal or extension of such existing or
future lease, whether or not such renewal or extension is pursuant to an express
written provision in such lease, and regardless of whether any such renewal or
extension is consummated pursuant to a lease amendment or a new lease, (ii) such
first offer right shall be subordinate and secondary to all rights of
expansion, first refusal, first offer or similar rights granted to (A) the
tenants of the Superior Leases and (B) any other tenant of the Project
(the rights described in items (i) and (ii), above to be known
collectively as “Superior Rights”), and (iii) such
right of first offer shall not be triggered by the lease of space in the
Project by Landlord to an existing tenant in the Project in connection with the
relocation of such existing tenant’s premises in the Project. Tenant’s right of
first offer shall be on the terms and conditions set forth in this Section 32(b).

 

(i)            Procedure for Offer.  Landlord shall notify Tenant (the “First Offer Notice”) from time to time when Landlord
determines that Landlord shall commence the marketing of any First Offer Space
because such space shall become available for lease to third parties, where no
holder of a Superior Right desires to lease such space.  The First Offer Notice shall describe the
space so offered to Tenant and shall set forth Landlord’s proposed material
economic terms and conditions applicable to Tenant’s lease of such space
(collectively, the “Economic Terms”),
including the proposed term of lease and the proposed rent payable for the
First Offer Space.  Notwithstanding the
foregoing, Landlord’s obligation to deliver the First Offer Notice shall not
apply during the last nine (9) months of the initial Term unless Tenant
has delivered an Interest Notice to Landlord pursuant to Section 31 above
nor shall Landlord be obligated to deliver the First Offer Notice during the
last eight (8) months of the initial Term unless Tenant has timely
delivered Tenant’s Acceptance to Landlord pursuant to Section 31(c) above.

 

33

 

(ii)           Procedure for Acceptance.  If Tenant wishes to exercise Tenant’s right
of first offer with respect to the space described in the First Offer Notice,
then within five (5) business days after delivery of the First Offer
Notice to Tenant, Tenant shall deliver an unconditional irrevocable notice to
Landlord of Tenant’s exercise of its right of first offer with respect to the
entire space described in the First Offer Notice and the Economic Terms shall
be as set forth in the First Offer Notice. 
If Tenant does not unconditionally exercise its right of first offer
within the five (5) business day period, then Landlord shall be free to
lease the space described in the First Offer Notice to anyone to whom Landlord
desires on any terms Landlord desires and Tenant’s right of first offer shall
terminate as to the First Offer Space described in the First Offer Notice.  Notwithstanding anything to the contrary
contained herein, Tenant must elect to exercise its right of first offer, if at
all, with respect to all of the space offered by Landlord to Tenant at any
particular time, and Tenant may not elect to lease only a portion thereof.

 

(iii)          Construction
of First Offer Space. 
Tenant shall take the First Offer Space in its “as-is” condition, and
Tenant shall be entitled to construct improvements in the First Offer Space in
accordance with the provisions of Article 9 of this Lease; provided,
however, that Landlord shall provide to Tenant such tenant improvement
allowance as Landlord is then offering to new tenants for comparably sized
space in the Project for a comparable term.

 

(iv)          Lease of First Offer Space.  If Tenant timely and properly exercises
Tenant’s right to lease the First Offer Space as set forth herein, Landlord and
Tenant shall execute an amendment adding such First Offer Space to this Lease
upon the same non-economic terms and conditions as applicable to the initial
Premises, and the economic terms and conditions as provided in this Section 32(b).  Unless otherwise specified in Landlord’s
Economic Terms, Tenant shall commence payment of rent for the First Offer Space
and the Term of the First Offer Space shall commence upon the date of delivery
of such space to Tenant.

 

(v)           No Defaults.  The rights contained in this Section 32(b) shall
be personal to the Original Tenant, and may only be exercised by the Original
Tenant (and not any assignee, sublessee or other transferee of the Original
Tenant’s interest in this Lease) if Original Tenant occupies the entire
Premises as of the date of the First Offer Notice.  Tenant shall not have the right to lease
First Offer Space as provided in this Section 32(b) if, as of the
date of the First Offer Notice, or, at Landlord’s option, as of the scheduled
date of delivery of such First Offer Space to Tenant, Tenant is in default
under this Lease or Tenant has previously been in default under this Lease more
than once.

 

ARTICLE 33

 

SIGNAGE/DIRECTORY

 

(a)           Provided Tenant is not in default
hereunder, Tenant, at Landlord’s sole cost and expense, shall have the right to
its proportionate share of the lobby directory during the Term.  Provided Tenant is not in default hereunder,
Tenant shall have the right, at Tenant’s sole cost and expense, to install a
strip on the Project’s “monument” sign (“Tenant’s Signage”).

 

(b)           Right of First Offer for Building Top
Signage.  Landlord hereby grants to Tenant a right of
first offer with respect to “eyebrow” or building top signage (“Signage Right”);
provided, however, such Signage Right shall only be effective if Tenant has
delivered a written notice to Landlord, stating that tenant is interested in
installing “eyebrow” or building top signage (the “Building Top Signage”)
during the three (3) month period immediately preceding the date that
Landlord determines that the Building Top Signage is available for lease to
third parties.  Notwithstanding the
foregoing (i) such Signage Right of Tenant shall commence only following
the expiration or earlier termination of any existing lease pertaining to the
Building Top Signage (the “Superior Leases”), including any renewal or
extension of such existing or future lease, whether or not such renewal or
extension is pursuant to an express written provision in such lease, and
regardless of whether any such renewal or extension is consummated pursuant to
a lease amendment or a new lease, (ii) such Signage Right shall be subordinate
and secondary to all rights of first refusal, first offer or similar rights
granted to the tenants of the Superior Lease, and (iii) such Signage Right
shall be subordinate and secondary to the right of the Landlord to install an
Building Top Signage for its own behalf or on behalf of its affiliates.  Tenant’s Signage Right shall be on the terms
and conditions set forth in this Section 33.

 

34

 

(i)            Procedure for Offer.  Landlord
shall notify Tenant (the “Signage Notice”) from time to time when Landlord
determines that Landlord shall commence the marketing of the Building Top
Signage because such space shall become available for lease to third
parties.  The Signage Notice shall set forth
Landlord’s proposed material economic terms and conditions applicable to the
Building Top Signage (collectively, the “Signage Terms”), including the
proposed term of lease and the proposed rent payable for the Building Top
Signage.  Notwithstanding the foregoing,
Landlord’s obligation to deliver the Signage Notice shall not apply during the
last nine (9) months of the initial Term unless Tenant has delivered an
Interest Notice to Landlord pursuant to Section 31 above nor shall
Landlord be obligated to deliver the Signage Notice during the last eight (8) months
of the initial Term unless Tenant has timely delivered Tenant’s Acceptance to
Landlord pursuant to Section 31(c) above.

 

(ii)           Procedure for Acceptance. 
If Tenant wishes to exercise Tenant’s Signage Right with respect to the
Building Top Signage, then within five (5) business days after delivery of
the Signage Notice to Tenant, Tenant shall deliver an unconditional irrevocable
notice to Landlord of Tenant’s exercise of its Signage Right and the Economic
Terms shall be as set forth in the Signage Notice.  If Tenant does not unconditionally exercise
its Signage Right within the five (5) business day period, then Landlord
shall be free to lease the Building Top Signage space to anyone to whom
Landlord desires on any terms Landlord desires and Tenant’s Signage Right shall
terminate.

 

(iii)          Lease of First Offer Space. 
If Tenant timely and properly exercises Tenant’s Signage Right as set
forth herein, Landlord and Tenant shall execute an amendment to this Lease.

 

(c)           Tenant’s Signage and any Building Top
Signage to be installed upon the proper exercise of the Signage Right, shall be
subject to Landlord’s approval as to, without limitation, size, design,
location, graphics, materials, colors and similar specifications and shall be
consistent with the exterior design, materials and appearance of the Project
and the Project’s signage program and shall be further subject to all matters
of record and all applicable governmental laws, rules, regulations, codes and
Tenant’s receipt of all permits and other governmental approvals and any
applicable covenants, conditions and restrictions.  All of tenant’s signage rights set forth in
this Article 33 shall be personal to the Original Tenant and may not be
assigned to any assignee or sublessee, or any other person or entity.  Landlord has the right, but not the
obligation, to oversee the installation of Tenant’s Signage and any Building
Top Signage.  The cost to maintain and
operate, if any, Tenant’s Signage and any Building Top Signage shall be paid
for by Tenant, and Tenant shall be separately metered for such expense (the
cost of separately metering any utility usage shall also be paid for by
Tenant).  Upon the expiration of the
Term, or other earlier termination of this Lease, Tenant shall, at Tenant’s
sole cost, cause the removal of Tenant’s Signage and the Building Top Signage
(provided that Landlord shall have the right, at its election, to perform such
removal on behalf of Tenant, at Tenant’s expense).  Such costs shall (i) be payable within
three (3) business days following written demand therefor from Landlord,
and (ii) include, without limitation, the cost to repair and restore the
Project to its original condition, normal wear and tear excepted.

 

ARTICLE 34

 

TERMINATION RIGHT

 

Subject to the terms and conditions set forth in this Article 34,
effective as of first day of the sixty-first (61st) month of the initial Lease
Term only (the “Termination Date”), Tenant shall have the one-time option (the “Termination
Option”) to terminate the entire Lease (but not any portion of the Lease), upon
the following terms and conditions; if the following terms and conditions are
not timely and completely satisfied, then the Termination Option shall be null
and void with no further force and effect:

 

(a)           Tenant shall give Landlord written notice
(the “Termination Notice”) of Tenant’s election to exercise the Termination
Option at least 180 days prior to the Termination Date;

 

(b)           There shall exist no material monetary or
material nonmonetary default under the Lease (beyond any applicable notice and
cure period) on the date Landlord receives the Termination Notice or on the
Termination Date; and

 

35

 

(c)           Tenant shall pay to Landlord an amount
equal to the sum of (i) the unamortized Tenant Improvement Allowance and (ii) the
unamortized leasing commissions paid or payable by Landlord in connection with
this Lease, which each shall be amortized over the initial Term of the Lease
beginning on the Commencement Date and ending on the originally scheduled
Expiration Date, plus interest accruing at ten percent (10%) beginning on the
date of disbursement (the “Termination Fee”). 
The Termination Fee shall be payable by Tenant to Landlord within ten (10) days
of Tenant’s delivery of the Termination Notice to Landlord, in immediately
available funds.  If Tenant does not
timely pay any portion of the Termination Fee to Landlord as set forth herein,
then, at Landlord’s option, in addition to all other rights and remedies of
Landlord, (i) the Termination Option (and Termination Notice) shall be
null and void with no force and effect, and this Lease shall continue in full
force and effect as if Tenant had not elected to terminate this Lease and as if
this Article 34 did not exist, and/or (ii) Tenant shall be in
material default under this Lease, without any notice and/or cure period, and
Landlord may pursue all of its available rights and remedies in connection
therewith.

 

In the event Tenant timely and properly exercises the
Termination Option, the term of this Lease shall terminate effective as of the
Termination Date, Basic Rental and all other monetary obligations under this
Lease shall be paid through and apportioned as of the Termination Date, and
neither Landlord nor Tenant shall have any rights, liabilities or obligations
accruing under the Lease after the Termination Date, except for such rights and
liabilities which, by the terms of the Lease are obligations of the Tenant or
Landlord which expressly survive the expiration of this Lease.  The Termination Option shall automatically
terminate and become null and void upon (X) the failure of Tenant to
timely or properly exercise the Termination Option; or (Y) Tenant’s right
to possession of the Premises being terminated prior to the exercise of the
Termination Option.  The Termination
Option shall be personal to the Original Tenant, and shall only be applicable
during the initial Lease Term (i.e., the Termination Option shall not exist during
any extension or renewal of the lease Term). 
Time is of the essence with respect to every deadline set forth in this Article 34.

 

ARTICLE 35

 

ARBITRATION

 

The parties agree that in the event of a good faith
dispute over (i) the condition of the Premises upon delivery, (ii) a
consent to a proposed Transfer, or (iii) the construction of the Tenant
Improvements, either Landlord or Tenant shall have the right to resolve the
dispute by filing for binding arbitration before a retired judge of the
Superior Court of the State of California (the “Arbitrator”) under the auspices
of Judicial Arbitration & Mediation Services, Inc. (“JAMS”).  Such arbitration shall be initiated by the
parties, or either of them, within ten (10) days after either party sends
notice (the “Arbitration Notice”) of a demand to arbitrate to the other party
and to JAMS.  The Arbitration Notice
shall contain a description of the subject matter of the arbitration, the
dispute with respect thereto, the amount involved, if any, and the remedy or
determination sought.  The parties may
agree on a retired judge from the JAMS panel. 
If they are unable to promptly agree, JAMS will provide a list of three
available judges and each party may strike one. 
The remaining judge (or if there are two, the one selected by JAMS) will
serve as the Arbitrator.  In the event
that JAMS shall no longer exist or if JAMS fails or refuses to accept
submission of such dispute, then the dispute shall be resolved by binding
arbitration before the American Arbitration Association (“AAA”) under the AAA’s
commercial arbitration rules then in effect.

 

The Arbitrator shall schedule a pre-hearing conference
to resolve procedural matters, arrange for the exchange of information, obtain
stipulations, and narrow the issues.  The
parties shall be entitled to conduct discovery, including a pre-hearing
exchange of information by the parties, and also including, without limitation,
production of requested documents and exchange of summaries of testimony of
proposed witnesses, and examination by deposition of parties and third-party
witnesses.  This discretion shall be
exercised in favor of discovery reasonable under the circumstances.

 

The arbitration shall be conducted in Los Angeles,
California.  Any party may be represented
by counsel or other authorized representative. 
In rendering a decision(s), the Arbitrator shall determine the rights
and obligations of the parties according to the substantive and procedural laws
of the State of California and the provisions of the Lease.  The Arbitrator’s decision shall be based on
the evidence introduced at the hearing, including all logical and 

 

36

 

reasonable inferences
therefrom.  The Arbitrator may make any
determination, and/or grant any remedy or relief (an “Arbitration Award”) that
is just and equitable.  The decision must
be based on, and accompanied by, a written statement of decision explaining the
factual and legal basis for the decision as to each of the principal
controverted issues.  The decision shall
be conclusive and binding, and it may thereafter be confirmed as a judgment by
the Superior Court of the State of California, subject only to challenge on the
grounds set forth in the California Code of Civil Procedure Section 1286.2
and correction on the grounds set forth in California Code of Civil Procedure Section 1286.6.  The validity and enforceability of the
Arbitrator’s decision is to be determined exclusively by the California courts
pursuant to the terms and conditions of this Agreement.  The Arbitrator’s fees and costs shall be paid
by the non-prevailing party as determined by the Arbitrator in his or her
discretion.  A party shall be determined
by the Arbitrator to be the prevailing party if its proposal for the resolution
of dispute is the closer to that adopted by the Arbitrator.

 

[The rest of this page intentionally
left blank.  Signatures on the next
page.]

 

37

 

IN WITNESS WHEREOF, the parties have executed this
Lease, consisting of the foregoing provisions and Articles, including all
exhibits and other attachments referenced therein, as of the date first above
written.

 

 

	
  “LANDLORD”

  	
   

  
	
   

  	
   

  
	
  9701-HEMPSTEAD PLAZA,
  LLC,

  	
   

  
	
  a Delaware limited
  liability company

  	
   

  
	
   

  	
   

  
	
  By:

  	
  9701 WILSHIRE
  MANAGEMENT LLC,

  	
   

  
	
   

  	
  a Delaware limited
  liability company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ JAMES T. LeFRAK

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  VICE PRESIDENT

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  9701-CAROLINA GARDENS
  LLC,

  	
   

  
	
  a Delaware limited liability
  company

  	
   

  
	
   

  	
   

  
	
  By:

  	
  9701 WILSHIRE
  MANAGEMENT LLC,

  	
   

  
	
   

  	
  a Delaware limited
  liability company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JAMES T. LeFRAK

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  VICE PRESIDENT

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  9701-WEST POINT REALTY
  LLC,

  	
   

  
	
  a Delaware limited
  liability company

  	
   

  
	
   

  	
   

  
	
  By:

  	
  9701 WILSHIRE
  MANAGEMENT LLC,

  	
   

  
	
   

  	
  a Delaware limited
  liability company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ JAMES T. LeFRAK

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  VICE PRESIDENT

  	
   

  

 

[Signatures continued on the next page.]

 

38

 

	
  9701-DAKOTA LEASING
  LLC,

  	
   

  
	
  a Delaware limited
  liability company

  	
   

  
	
   

  	
   

  
	
  By:

  	
  9701 WILSHIRE
  MANAGEMENT LLC,

  	
   

  
	
   

  	
  a Delaware limited
  liability company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  s/s James LeFrak

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  JAMES LeFRAK

  	
   

  
	
   

  	
  Its:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9701-IOWA LEASING LLC,

  	
   

  
	
  a Delaware limited
  liability company

  	
   

  
	
   

  	
   

  
	
  By:

  	
  9701 WILSHIRE
  MANAGEMENT LLC,

  	
   

  
	
   

  	
  a Delaware limited
  liability company

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  s/s James LeFrak

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name: 

  	
  JAMES LeFRAK

  	
   

  
	
   

  	
  Its:

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  “TENANT”

  	
   

  
	
   

  	
   

  
	
  KENNEDY-WILSON, INC.,

  	
   

  
	
  a Delaware corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Freeman Lyle

  	
   

  
	
   

  	
   

  	
   

  
	
  Name: 

  	
  FREEMAN LYLE

  	
   

  
	
   

  	
   

  	
   

  
	
  Its:

  	
  EVP/CFO

  	
   

  

 

39

 

EXHIBIT
“A”

 

PREMISES

 

	
  *

  	
  This Exhibit “A”
  is provided for informational purposes only and is intended to be only an
  approximation of the layout of the Premises and shall not be deemed to
  constitute any representation by Landlord as to the exact layout or
  configuration of the Premises.

  

 

1

 

EXHIBIT
“B”

 

RULES
AND REGULATIONS

 

1.             No sign, advertisement or notice shall be displayed,
printed or affixed on or to the Premises or to the outside or inside of the
Project or so as to be visible from outside the Premises or Project without
Landlord’s prior written consent.  Landlord
shall have the right to remove any non-approved sign, advertisement or notice,
without notice to and at the expense of Tenant, and Landlord shall not be
liable in damages for such removal.  All
approved signs or lettering on doors and walls shall be printed, painted,
affixed or inscribed at the expense of Tenant by Landlord or by a person
selected by Landlord and in a manner and style acceptable to Landlord.

 

2.             Tenant shall not obtain for use on the Premises ice,
waxing, cleaning, interior glass polishing, rubbish removal, towel or other
similar services, or accept barbering or bootblackening, or coffee cart
services, milk, soft drinks or other like services on the Premises, except from
persons authorized by Landlord and at the hours and under regulations fixed by
Landlord.  No vending machines or
machines of any description shall be installed, maintained or operated upon the
Premises without Landlord’s prior written consent.

 

3.             The sidewalks, halls, passages, exits, entrances,
elevators and stairways shall not be obstructed by Tenant or used for any
purpose other than for ingress and egress from Tenant’s Premises.  Under no circumstances is trash to be stored
in the corridors.  Notice must be given
to Landlord for any large deliveries. 
Furniture, freight and other large or heavy articles, and all other
deliveries may be brought into the Project only at times and in the manner
designated by Landlord, and always at Tenant’s sole responsibility and
risk.  Landlord may impose reasonable
charges for use of freight elevators after or before normal business
hours.  All damage done to the Project by
moving or maintaining such furniture, freight or articles shall be repaired by
Landlord at Tenant’s expense.  Tenant
shall not take or permit to be taken in or out of entrances or passenger
elevators of the Project, any item normally taken, or which Landlord otherwise
reasonably requires to be taken, in or out through service doors or on freight
elevators.  Tenant shall move all
supplies, furniture and equipment as soon as received directly to the Premises,
and shall move all waste that is at any time being taken from the Premises
directly to the areas designated for disposal.

 

4.             Toilet rooms, toilets, urinals, wash bowls and other
apparatus shall not be used for any purpose other than for which they were
constructed and no foreign substance of any kind whatsoever shall be thrown
therein.

 

5.             Tenant shall not overload the floor of the Premises or
mark, drive nails, screw or drill into the partitions, ceilings or floor or in
any way deface the Premises.  Tenant
shall not place typed, handwritten or computer generated signs in the corridors
or any other common areas.  Should there
be a need for signage additional to the Project standard tenant placard, a
written request shall be made to Landlord to obtain approval prior to any
installation.  All costs for said signage
shall be Tenant’s responsibility.

 

6.             In no event shall Tenant place a load upon any floor
of the Premises or portion of any such flooring exceeding the floor load per
square foot of area for which such floor is designed to carry and which is
allowed by law, or any machinery or equipment which shall cause excessive
vibration to the Premises or noticeable vibration to any other part of the
Project.  Prior to bringing any heavy
safes, vaults, large computers or similarly heavy equipment into the Project,
Tenant shall inform Landlord in writing of the dimensions and weights thereof
and shall obtain Landlord’s consent thereto. 
Such consent shall not constitute a representation or warranty by
Landlord that the safe, vault or other equipment complies, with regard to
distribution of weight and/or vibration, with the provisions of this Rule 6
nor relieve Tenant from responsibility for the consequences of such noncompliance,
and any such safe, vault or other equipment which Landlord determines to
constitute a danger of damage to the Project or a nuisance to other tenants,
either alone or in combination with other heavy and/or vibrating objects and
equipment, shall be promptly removed by Tenant, at Tenant’s cost, upon Landlord’s
written notice of such determination and demand for removal thereof.

 

1

 

7.             Tenant shall not use or keep in the Premises or
Project any kerosene, gasoline or inflammable, explosive or combustible fluid
or material, or use any method of heating or air-conditioning other than that
supplied by Landlord.

 

8.             Tenant shall not lay linoleum, tile, carpet or other
similar floor covering so that the same shall be affixed to the floor of the
Premises in any manner except as approved by Landlord.

 

9.             Tenant shall not install or use any blinds, shades,
awnings or screens in connection with any window or door of the Premises and
shall not use any drape or window covering facing any exterior glass surface
other than the standard drapes, blinds or other window covering established by
Landlord.

 

10.           Tenant shall cooperate with Landlord in obtaining
maximum effectiveness of the cooling system by closing window coverings when
the sun’s rays fall directly on windows of the Premises.  Tenant shall not obstruct, alter, or in any
way impair the efficient operation of Landlord’s heating, ventilating and
air-conditioning system.  Tenant shall
not tamper with or change the setting of any thermostats or control valves.

 

11.           The Premises shall not be used for manufacturing or
for the storage of merchandise except as such storage may be incidental to the
permitted use of the Premises.  Tenant
shall not, without Landlord’s prior written consent, occupy or permit any
portion of the Premises to be occupied or used for the manufacture or sale of
liquor or tobacco in any form, or a barber or manicure shop, or as an
employment bureau.  The Premises shall
not be used for lodging or sleeping or for any improper, objectionable or
immoral purpose.  No auction shall be
conducted on the Premises.

 

12.           Tenant shall not make, or permit to be made, any
unseemly or disturbing noises, or disturb or interfere with occupants of
Project or neighboring buildings or premises or those having business with it
by the use of any musical instrument, radio, phonographs or unusual noise, or
in any other way.

 

13.           No bicycles, vehicles or animals of any kind shall be
brought into or kept in or about the Premises, and no cooking shall be done or
permitted by any tenant in the Premises, except that the preparation of coffee,
tea, hot chocolate and similar items for tenants, their employees and visitors
shall be permitted.  No tenant shall
cause or permit any unusual or objectionable odors to be produced in or
permeate from or throughout the Premises. 
The foregoing notwithstanding, Tenant shall have the right to use a
microwave and to heat microwavable items typically heated in an office.  No hot plates, toasters, toaster ovens or
similar open element cooking apparatus shall be permitted in the Premises.

 

14.           The sashes, sash doors, skylights, windows and doors
that reflect or admit light and air into the halls, passageways or other public
places in the Project shall not be covered or obstructed by any tenant, nor
shall any bottles, parcels or other articles be placed on the window sills.

 

15.           No additional locks or bolts of any kind shall be
placed upon any of the doors or windows by any tenant, nor shall any changes be
made in existing locks or the mechanisms thereof unless Landlord is first
notified thereof, gives written approval, and is furnished a key therefor.  Each tenant must, upon the termination of his
tenancy, give to Landlord all keys and key cards of stores, offices, or toilets
or toilet rooms, either furnished to, or otherwise procured by, such tenant,
and in the event of the loss of any keys so furnished, such tenant shall pay
Landlord the cost of replacing the same or of changing the lock or locks opened
by such lost key if Landlord shall deem it necessary to make such change.  If more than two keys for one lock are
desired, Landlord will provide them upon payment therefor by Tenant.  Tenant shall not key or re-key any
locks.  All locks shall be keyed by
Landlord’s locksmith only.

 

16.           Landlord shall have the right to prohibit any
advertising by any tenant which, in Landlord’s opinion, tends to impair the
reputation of the Project or its desirability as an office building and upon
written notice from Landlord any tenant shall refrain from and discontinue such
advertising.

 

2

 

17.           Landlord reserves the right to control access to the
Project by all persons after reasonable hours of generally recognized business
days and at all hours on Sundays and legal holidays and may at all times
control access to the equipment areas of the Project outside the Premises.  Each tenant shall be responsible for all
persons for whom it requests after hours access and shall be liable to Landlord
for all acts of such persons.  Landlord
shall have the right from time to time to establish reasonable rules pertaining
to freight elevator usage, including the allocation and reservation of such
usage for tenants’ initial move-in to their premises, and final departure
therefrom.  Landlord may also establish
from time to time reasonable rules for accessing the equipment areas of
the Project, including the risers, rooftops and telephone closets.

 

18.           Any person employed by any tenant to do janitorial
work shall, while in the Project and outside of the Premises, be subject to and
under the control and direction of the Office of the Project or its designated
representative such as security personnel (but not as an agent or servant of
Landlord, and the Tenant shall be responsible for all acts of such persons).

 

19.           All doors opening on to public corridors shall be kept
closed, except when being used for ingress and egress.  Tenant shall cooperate and comply with any
reasonable safety or security programs, including fire drills and air raid
drills, and the appointment of “fire wardens” developed by Landlord for the
Project, or required by law.  Before
leaving the Premises unattended, Tenant shall close and securely lock all doors
or other means of entry to the Premises and shut off all lights and water
faucets in the Premises.

 

20.           The requirements of tenants will be attended to only
upon application to the Office of the Project.

 

21.           Canvassing, soliciting and peddling in the Project are
prohibited and each tenant shall cooperate to prevent the same.

 

22.           All office equipment of any electrical or mechanical
nature shall be placed by tenants in the Premises in settings approved by
Landlord, to absorb or prevent any vibration, noise or annoyance.

 

23.           No air-conditioning unit or other similar apparatus
shall be installed or used by any tenant without the prior written consent of
Landlord.  Tenant shall pay the cost of
all electricity used for air-conditioning in the Premises if such electrical
consumption exceeds normal office requirements, regardless of whether
additional apparatus is installed pursuant to the preceding sentence.

 

24.           There shall not be used in any space, or in the public
halls of the Project, either by any tenant or others, any hand trucks except
those equipped with rubber tires and side guards.

 

25.           All electrical ceiling fixtures hung in offices or
spaces along the perimeter of the Project must be fluorescent and/or of a
quality, type, design and bulb color approved by Landlord.  Tenant shall not permit the consumption in
the Premises of more than 21⁄2 watts per net usable square foot in the Premises
in respect of office lighting nor shall Tenant permit the consumption in the
Premises of more than 2 1⁄2 watts per net usable square foot of space in the
Premises in respect of the power outlets therein, at any one time.  In the event that such limits are exceeded,
Landlord shall have the right to require Tenant to remove lighting fixtures and
equipment and/or to charge Tenant for the cost of the additional electricity
consumed.

 

26.           Parking.

 

(a)           Project parking facility hours shall be determined by
Landlord from time to time.

 

(b)           Automobiles must be parked entirely within the stall
lines on the floor.

 

(c)           All directional signs and arrows must be observed.

 

(d)           The speed limit shall be 5 miles per hour.

 

(e)           Parking is prohibited in areas not striped for
parking.

 

3

 

(f)            Parking cards or any other device or form of
identification supplied by Landlord (or its operator) shall remain the property
of Landlord (or its operator).  Such
parking identification device must be displayed as requested and may not be
mutilated in any manner.  The serial
number of the parking identification device may not be obliterated.  Devices are not transferable or assignable
and any device in the possession of an unauthorized holder will be void.  There will be a replacement charge to the
Tenant or person designated by Tenant of $25.00 for loss of any parking
card.  There shall be a security deposit
of $25.00 due at issuance for each card key issued to Tenant.

 

(g)           The monthly rate for parking is payable one (1) month
in advance and must be paid by the third business day of each month.  Failure to do so will automatically cancel
parking privileges and a charge at the prevailing daily rate will be due.  No deductions or allowances from the monthly
rate will be made for days parker does not use the parking facilities.

 

(h)           Tenant may validate visitor parking by such method or methods
as the Landlord may approve, at the validation rate from time to time generally
applicable to visitor parking.

 

(i)            Landlord (and its operator) may refuse to permit any
person who violates the within rules to park in the Project parking
facility, and any violation of the rules shall subject the automobile to
removal from the Project parking facility at the parker’s expense.  In either of said events, Landlord (or its
operator) shall refund a prorata portion of the current monthly parking rate
and the sticker or any other form of identification supplied by Landlord (or
its operator) will be returned to Landlord (or its operator).

 

(j)            Project parking facility managers or attendants are
not authorized to make or allow any exceptions to these Rules and Regulations.

 

(k)           All responsibility for any loss or damage to
automobiles or any personal property therein is assumed by the parker.

 

(l)            Loss or theft of parking identification devices from
automobiles must be reported to the Project parking facility manager
immediately, and a lost or stolen report must be filed by the parker at that
time.

 

(m)          The parking facilities are for the sole purpose of
parking one automobile per space. 
Washing, waxing, cleaning or servicing of any vehicles by the parker or
his agents is prohibited.

 

(n)           Landlord (and its operator) reserves the right to
refuse the issuance of monthly stickers or other parking identification devices
to any Tenant and/or its employees who refuse to comply with the above Rules and
Regulations and all City, State or Federal ordinances, laws or agreements.

 

(o)           Tenant agrees to acquaint all employees with these Rules and
Regulations.

 

(p)           No vehicle shall be stored in the Project parking
facility for a period of more than one (1) week.

 

27.           The Project is a non-smoking
Project.  Smoking or carrying lighted
cigars or cigarettes in the Premises or the Project, including the elevators in
the Project, is prohibited.

 

28.           Tenant shall not, without Landlord’s
prior written consent (which consent may be granted or withheld in Landlord’s
absolute discretion), allow any employee or agent to carry any type of gun or
other firearm in or about any of the Premises or Project.

 

4

 

EXHIBIT
“C”

 

NOTICE OF TERM DATES

AND TENANT’S PROPORTIONATE SHARE

 

	
  TO:

  	
   

  	
   

  	
  DATE:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

RE:                           Lease dated                 ,
20    , between                                           (“Landlord”), and                                                    
(“Tenant”), concerning Suite                 ,
located at                                   
.

 

Ladies and Gentlemen:

 

In accordance with the Lease, Landlord wishes to
advise and/or confirm the following:

 

1.                                       That the Premises have been accepted
herewith by the Tenant as being substantially complete in accordance with the
Lease and that there is no deficiency in construction.

 

2.                                       That the Tenant has taken possession of
the Premises and acknowledges that under the provisions of the Lease the Term
of said Lease shall commence as of                         
for a term of                                             
ending on                             .

 

3.                                       That in accordance with the Lease, Basic
Rental commenced to accrue on                                              .

 

4.                                       If the Commencement Date of the Lease is
other than the first day of the month, the first billing will contain a prorata
adjustment.  Each billing thereafter
shall be for the full amount of the monthly installment as provided for in said
Lease.

 

5.                                       Rent is due and payable in advance on the
first day of each and every month during the Term of said Lease.  Your rent checks should be made payable to                               
at                                                                     
.

 

6.                                       The exact number of rentable square feet
within the Premises is                     
square feet.

 

7.                                       Tenant’s Proportionate Share, as adjusted
based upon the exact number of rentable square feet within the Premises is               %.

 

8.                                       The Tenant Improvement Allowance is                                                   .

 

9.                                       The number of reserved parking passes
rented by Tenant is                             
and the number of unreserved parking passes rented by Tenant is                                   .

 

 

AGREED AND ACCEPTED:

 

TENANT:

 

	
   

  	
  ,

  

 

	
   

  	
   

  	
   

  

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
				

 

EXHIBIT ONLY

***DO NOT SIGN – INITIAL ONLY***

 

 

EXHIBIT “D”

 

TENANT WORK LETTER

 

This Tenant Work Letter shall set forth the terms and conditions relating
to the construction of the Premises. 
This Tenant Work Letter is essentially organized chronologically and
addresses the issues of the construction of the Premises, in sequence, as such
issues will arise during the actual construction of the Premises.  All references in this Tenant Work Letter to
Articles or Sections of “this Lease” shall mean the relevant portions of
Articles 1 through 34 of this Lease to which this Tenant Work Letter is
attached as Exhibit D, and all references in this Tenant Work Letter to
Sections of “this Tenant Work Letter” shall mean the relevant portions of
Sections 1 through 5 of this Tenant Work Letter.

 

SECTION 1

 

DELIVERY OF THE PREMISES AND BASE BUILDING

 

Upon the full execution and delivery of this Lease by Landlord and
Tenant, Landlord shall deliver the Premises and “Base Building”, as that term
is defined below, to Tenant, and Tenant shall accept the Premises and Base
Building from Landlord in their presently existing “as-is” condition. The “Base
Building” shall consist of those portions of the Premises which were in
existence prior to the construction of tenant improvements in the Premises.

 

SECTION 2

 

TENANT IMPROVEMENTS

 

2.1                              Tenant Improvement Allowance.  Tenant shall be entitled to
a one-time tenant improvement allowance (“Tenant Improvement Allowance”) in the
amount of $50.00 per rentable square feet of space in the Premises, for the
cost relating to the initial design and the actual cost of constructing the
Tenant’s improvements, which are permanently affixed to the Premises (“Improvements”).  In no event shall Landlord be obligated to
make disbursements pursuant to this Tenant Work Letter in a total amount which
exceeds the Tenant Improvement Allowance.

 

2.2                              Disbursement of
the Tenant Improvement Allowance

 

2.2.1                     Tenant
Improvement Allowance Items.  Except as otherwise set forth in this Tenant
Work Letter, the Tenant Improvement Allowance shall be disbursed by Landlord
only for the following items and costs (collectively the “Tenant Improvement
Allowance Items”):

 

2.2.1.1               Notwithstanding anything to the contrary set
forth herein, costs for the payment of the fees of the “Architect” and the “Engineers,”
as those terms are defined in Section 3.1 of this Tenant Work Letter,
shall not exceed an aggregate amount equal to $5.00 for each usable square foot
of space in the Premises;

 

2.2.1.2               The payment of plan check, permit and license
fees relating to construction of the Improvements;

 

2.2.1.3               The cost of construction of the Improvements,
including, without limitation, testing and inspection costs and trash removal
costs, and contractors’ fees and general conditions;

 

2.2.1.4               The cost of any changes in the Base Building
when such changes are required by the Construction Drawings (including if such
changes are due to the fact that such work is prepared on an unoccupied basis),
such cost to include all direct architectural and/or engineering fees and
expenses incurred in connection therewith;

 

2.2.1.5               The cost of any changes to the Construction
Drawings or Improvements required by any applicable building code(s) (the “Code”);

 

2.2.1.6               Sales and use taxes and Title 24 fees; and

 

1

 

2.2.1.7               [Reserved].

 

2.2.1.8               All other costs to be expended by Tenant and
reasonably approved Landlord in connection with the construction of the
Improvements.

 

2.2.2                     Disbursement of
Tenant Improvement Allowance.  During the construction of the Improvements,
Landlord shall make monthly disbursements of the Tenant Improvement Allowance
for Tenant Improvement Allowance Items for the benefit of Tenant and shall
authorize the release of monies for the benefit of Tenant as follows:

 

2.2.2.1               Monthly Disbursements.  On or before the twenty-fifth (25th) day of
each calendar month, during the construction of the Improvements, Tenant shall
deliver to Landlord: (i) a request for payment of the “Contractor,” as
that term is defined in Section 4.1 of this Tenant Work Letter, approved
by Tenant, in a form to be provided by Landlord, showing the schedule, by
trade, of percentage of completion of the Improvements in the Premises,
detailing the portion of the work completed and the portion not completed; (ii) invoices
from all of “Tenant’s Agents,” as that term is defined in Section 4.1.2 of
this Tenant Work Letter, for labor rendered and materials delivered to the
Premises; (iii) executed mechanic’s lien releases from all of Tenant’s
Agents which shall comply with the appropriate provisions, as reasonably
determined by  Landlord, of California
Civil Code Section 3262(d); and (iv) all other information reasonably
requested by Landlord.  Tenant’s request
for payment shall be deemed Tenant’s acceptance and approval of the work
furnished and/or the materials supplied as set forth in Tenant’s payment
request.  On or before the last day of
the following month, Landlord shall deliver a check to Tenant made jointly
payable to Contractor and Tenant in payment of the lesser of: (A) the
amounts so requested by Tenant, as set forth in this Section 2.2.2.1,
above, less a ten percent (10%) retention (the aggregate amount of such
retentions to be known as the “Final Retention”), and (B) the balance of
any remaining available portion of the Tenant Improvement Allowance (not
including the Final Retention), provided that Landlord does not dispute any
request for payment based on a non-compliance of any work with the “Approved
Working Drawings,” as that term is defined in Section 3.4 below, or due to
any substandard work.  Landlord’s payment
of such amounts shall not be deemed Landlord’s approval or acceptance of the
work furnished or materials supplied as set forth in Tenant’s payment request.

 

2.2.2.2               Final Retention.  Subject to the provisions of this Tenant Work
Letter, a check for the Final Retention payable jointly to Tenant and
Contractor shall be delivered by Landlord to Tenant following the completion of
construction of the Premises, provided that (i) Tenant delivers to
Landlord a waiver and release in accordance with the terms of California Civil
Code Section 3262(d)(2) and a waiver and release in accordance with either
California Civil Code Section 3262(d)(3) or Section 3262(d)(4), (ii) Landlord
has determined that no substandard work exists which adversely affects the
mechanical, electrical, plumbing, heating, ventilating and air conditioning,
life-safety or other systems of the Project, the curtain wall of the Project,
the structure or exterior appearance of the Project, or any other tenant’s use
of such other tenant’s leased premises in the Project and (iii) Architect
delivers to Landlord a certificate, in a form reasonably acceptable to
Landlord, certifying that the construction of the Improvements in the Premises
has been substantially completed.

 

2.2.2.3               Other Terms.  Landlord shall only be obligated to make
disbursements from the Tenant Improvement Allowance to the extent costs are
incurred by Tenant for Tenant Improvement Allowance Items.  All Tenant Improvement Allowance Items for
which the Tenant Improvement Allowance has been made available shall be deemed
Landlord’s property under the terms of this Lease.

 

SECTION 3

 

CONSTRUCTION DRAWINGS

 

3.1                              Selection of
Architect/Construction Drawings.  Tenant shall retain an architect approved by
Landlord (the “Architect”) to prepare the Construction Drawings.  Tenant shall retain the engineering
consultants designated by Landlord (the “Engineers”) to prepare all plans and
engineering working drawings relating to the structural, mechanical,
electrical, plumbing, HVAC, life-safety, and sprinkler work in the Premises,
which work is not part of the Base Building. 
The plans and drawings to be prepared by Architect and the Engineers
hereunder shall be known collectively as the “Construction Drawings”.  All Construction Drawings shall comply 

 

2

 

with the drawing format and specifications acceptable to Landlord.  Tenant and Architect shall verify, in the
field, the dimensions and conditions as shown on the relevant portions of the
base building plans, and Tenant and Architect shall be solely responsible for
the same, and Landlord shall have no responsibility in connection
therewith.  Landlord’s review of the
Construction Drawings as set forth in this Section 3, shall be for its
sole purpose and shall not imply Landlord’s review of the same, or obligate
Landlord to review the same, for quality, design, Code compliance or other like
matters.  Accordingly, notwithstanding
that any Construction Drawings are reviewed by Landlord or its space planner,
architect, engineers and consultants, and notwithstanding any advice or
assistance which may be rendered to Tenant by Landlord or Landlord’s space
planner, architect, engineers, and consultants, Landlord shall have no
liability whatsoever in connection therewith and shall not be responsible for
any omissions or errors contained in the Construction Drawings, and Tenant’s
waiver and indemnity set forth in this Lease shall specifically apply to the
Construction Drawings.

 

3.2                              Approved
Working Drawings.  Landlord
shall approve (or disapprove) working drawings prepared by Architect within
five (5) days after Landlord receives the final Working Drawings (the “Approved
Working Drawings”).  Tenant shall submit
the same to the City of Los Angeles (and Beverly Hills) and diligently pursue
its receipt of all applicable building permits. 
Tenant hereby agrees that neither Landlord nor Landlord’s consultants
shall be responsible for obtaining any building permit or certificate of
occupancy for the Premises and that obtaining the same shall be Tenant’s
responsibility; provided, however, that Landlord shall cooperate with Tenant in
executing permit applications and performing other ministerial acts reasonably
necessary to enable Tenant to obtain any such permit or certificate of
occupancy.  No changes, modifications or
alterations in the Approved Working Drawings may be made without the prior
written consent of Landlord, which consent may not be unreasonably withheld.

 

SECTION 4

 

CONSTRUCTION OF THE TENANT
IMPROVEMENTS

 

4.1                              Tenant’s
Selection of Contractors.

 

4.1.1                     The
Contractor.  A general contractor shall
be retained by Tenant to construct the Improvements and Tenant shall contract
directly with such “Contractor”. 
Landlord shall file a Notice of Non-Responsibility regarding payments
under Tenant’s contract with the Contractor. 
Such general contractor (“Contractor”) shall be selected by Tenant from
a list of general contractors supplied by Tenant and approved by Landlord.

 

4.1.2                     Tenant’s Agents.  All subcontractors, laborers, materialmen,
and suppliers used by Tenant (such subcontractors, laborers, materialmen, and
suppliers, and the Contractor to be known collectively as “Tenant’s Agents”)
must be approved in writing by Landlord, which approval shall not be
unreasonably withheld or delayed.  If
Landlord does not approve any of Tenant’s proposed subcontractors, laborers,
materialmen or suppliers, Tenant shall submit other proposed subcontractors,
laborers, materialmen or suppliers for Landlord’s written approval.

 

4.2                              Construction of
Improvements by Tenant’s Agency.

 

4.2.1                     Construction
Contract; Cost Budget.  Prior
to Tenant’s execution of the construction contract and general conditions with
Contractor (the “Contract”), Tenant shall submit the Contract to Landlord for
its approval with regard to proper insurance and licensing requirements and any
other areas which may adversely affect Landlord’s interest in the Project,  and which approval shall not be unreasonably
withheld or delayed by more than five (5) business days after Landlord’s
receipt of the Contract.  Prior to the
commencement of the construction of the Improvements, and after Tenant has
accepted all bids for the Improvements, Tenant shall provide Landlord with a
detailed breakdown, by trade, of the final costs to be incurred or which have
been incurred in connection with the design and construction of the
Improvements to be performed by or at the direction of Tenant or the
Contractor, which costs form a basis for the amount of the Contract (the “Final
Costs”).  Prior to the commencement of
construction of the Improvements, Tenant shall supply Landlord with cash equal
to one-half of the amount (the “Over-Allowance Amount”) equal to the difference
between the amount of the Final Costs and the amount of the Tenant Improvement
Allowance (less any portion thereof already disbursed by Landlord, or in the
process of being disbursed by Landlord, on or before the commencement of
construction of the Improvements). 
Tenant shall advance to Landlord the balance of the Over-

 

3

 

Allowance Amount in cash as needed to pay Final Costs.  The Over-Allowance Amount shall be disbursed
by Landlord prior to the disbursement of any of the then remaining portion of
the Tenant Improvement Allowance, and such disbursement shall be pursuant to the
same procedure as the Tenant Improvement Allowance.  In the event that, after the Final Costs have
been delivered by Tenant to Landlord, the costs relating to the design and
construction of the Improvements shall change, any additional costs necessary
to such design and construction in excess of the Final Costs, shall be paid by
Tenant to Landlord immediately as an addition to the Over-Allowance Amount or
at Landlord’s option, Tenant shall make payments for such additional costs out
of its own funds, but Tenant shall continue to provide Landlord with the
documents described in Section 2.2.2.1 (i), (ii), (iii) and (iv) of
this Tenant Work Letter, above, for Landlord’s approval, prior to Tenant paying
such costs.

 

4.2.2                     Tenant’s Agents.

 

4.2.2.1               Landlord’s General Conditions for Tenant’s
Agents and Tenant Improvement Work.  Tenant’s and Tenant’s Agent’s construction of
the Improvements shall comply with the following: (i) the Improvements
shall be constructed in strict accordance with the Approved Working Drawings; (ii) Tenant’s
Agents shall submit schedules of all work relating to the Tenant’s Improvements
to Contractor and Contractor shall, within five (5) business days of
receipt thereof, inform Tenant’s Agents of any changes which are necessary
thereto, and Tenant’s Agents shall adhere to such corrected schedule; and (iii) Tenant
shall abide by all rules made by Landlord’s Project manager with respect
to the use of freight, loading dock and service elevators, storage of
materials, coordination of work with the contractors of other tenants, and any
other matter in connection with this Tenant Work Letter, including, without
limitation, the construction of the Improvements.

 

4.2.2.2               Indemnity.  Tenant’s indemnity of Landlord as set forth
in this Lease shall also apply with respect to any and all costs, losses,
damages, injuries and liabilities related in any way to any act or omission of
Tenant or Tenant’s Agents, or anyone directly or indirectly employed by any of
them, or in connection with Tenant’s non-payment of any amount arising out of
the Improvements and/or Tenant’s disapproval of all or any portion of any
request for payment.  Such indemnity by
Tenant, as set forth in this Lease, shall also apply with respect to any and
all costs, losses, damages, injuries and liabilities related in any way to
Landlord’s performance of any ministerial acts reasonably necessary (i) to
permit Tenant to complete the Improvements, and (ii) to enable Tenant to
obtain any Project permit or certificate of occupancy for the Premises.

 

4.2.2.3               Requirements of Tenant’s Agents.  Each of Tenant’s Agents shall guarantee to
Tenant and for the benefit of Landlord that the portion of the Improvements for
which it is responsible shall be free from any defects in workmanship and
materials for a period of not less than one (1) year from the date of
completion thereof.  Each of Tenant’s
Agents shall be responsible for the replacement or repair, without additional
charge, of all work done or furnished in accordance with its contract that
shall become defective within one (1) year after the later to occur of (i) completion
of the work performed by such contractor or subcontractors and (ii) the
Commencement Date.  The correction of
such work shall include, without additional charge, all additional expenses and
damages incurred in connection with such removal or replacement of all or any
part of the Improvements, and/or the Project and/or common areas that may be
damaged or disturbed thereby.  All such
warranties or guarantees as to materials or workmanship of or with respect to
the Improvements shall be contained in the Contract or subcontract and shall be
written such that such guarantees or warranties shall inure to the benefit of
both Landlord and Tenant, as their respective interests may appear, and can be
directly enforced by either.  Tenant
covenants to give to Landlord any assignment or other assurances which may be
necessary to effect such right of direct enforcement.

 

4.2.2.3.1                         Lien-Free Basis.  Tenant’s Contractor and agents shall perform
all work on a lien-free basis.  If a lien
is filed or recorded against the Project due to, or in any way associated with,
the construction of the Improvements, Tenant agrees to have such lien released
of record (in a manner and form approved by Landlord) within five (5) days
of Landlord’s notice to Tenant regarding same. 
If Tenant fails to cause the release of such lien within such five (5) day
period to Landlord’s satisfaction, Landlord may cause the removal of such lien,
and Tenant agrees to repay Landlord for all costs and expenses incurred by
Landlord to release the lien (including, but not limited to, the payment of the
amount stated in the lien, any filing, processing, recording and attorneys’
fees) within ten (10) days of Landlord’s request 

 

4

 

therefor, and such amount shall be considered Additional Rent due under
the Lease.  If Tenant fails to pay
Landlord as aforesaid, such failure shall be deemed an uncured noticed material
default under the Lease, and Landlord may pursue any remedy provided for under
the Lease, at law or in equity.

 

4.2.2.4               Insurance
Requirements.

 

4.2.2.4.1                         General Coverages.  All of Tenant’s Agents shall carry worker’s
compensation insurance covering all of their respective employees, and shall
also carry public liability insurance, including property damage, all with
limits, in form and with companies as are required to be carried by Tenant as
set forth in this Lease.

 

4.2.2.4.2                         Special Coverages.  Tenant shall carry “Builder’s All Risk”
insurance in an amount approved by Landlord covering the construction of the
Improvements, and such other insurance as Landlord may require, it being
understood and agreed that the Improvements shall be insured by Tenant pursuant
to this Lease immediately upon completion thereof.  Such insurance shall be in amounts and shall
include such  extended coverage
endorsements as may be reasonably required by Landlord including, but not
limited to, the requirement that all of Tenant’s Agents shall carry excess
liability and Products and Completed Operating Coverage insurance, each in
amounts not less than $500,000 for each incident, $1,000,000 in aggregate, and
in form and with companies as are required to be carried by Tenant as set forth
in this Lease.

 

4.2.2.4.3                         General Terms.  Certificates for all insurance carried
pursuant to this Section 4.2.2.4 shall be delivered to Landlord before the
commencement of construction of the Improvements and before the Contractor’s
equipment is moved onto the site.  All
such policies of insurance must contain a provision that the company writing
said policy will give Landlord thirty (30) days prior written notice of any
cancellation or lapse of the effective date or any reduction in the amounts of
such insurance.  In the event that the
Improvements are damaged by any cause during the course of the construction
thereof, Tenant shall immediately repair the same at Tenant’s sole cost and
expense.  Tenant’s Agents shall maintain
all of the foregoing insurance coverage in force until the Improvements are
fully completed and accepted by Landlord, except for any Products and Completed
Operation Coverage insurance required by Landlord, which is to be maintained
for ten (10) years following completion of the work and acceptance by
Landlord and Tenant.  All policies
carried under this Section 4.2.2.4 shall insure Landlord and Tenant, as
their interests may appear, as well as Contractor and Tenant’s Agents.  All insurance, except Workers’ Compensation,
maintained by Tenant’s Agents shall preclude subrogation claims by the insurer
against anyone insured thereunder.  Such
insurance shall provide that it is primary insurance as respects the owner and
that any other insurance maintained by owner is excess and noncontributing with
the insurance required hereunder.  The
requirements for the foregoing insurance shall not derogate from the provisions
for indemnification of Landlord by Tenant under Section 4.2.2.2 of this
Tenant Work Letter.

 

4.2.3                     Governmental
Compliance.  The
Improvements shall comply in all respects with the following: (i) the Code
and other state, federal, city or quasi-governmental laws, codes, ordinances
and regulations, as each may apply according to the rulings of the controlling
public official, agent or other person; (ii) applicable standards of the
American Insurance Association (formerly, the National Board of Fire
Underwriters) and the National Electrical Code; and (iii) Project material
manufacturer’s specifications.

 

4.2.4                     Inspection by
Landlord.  Landlord
shall have the right to inspect the Improvements at all times, provided
however, that Landlord’s failure to inspect the Improvements shall in no event
constitute a waiver of any of Landlord’s rights hereunder nor shall Landlord’s
inspection of the Improvements constitute Landlord’s approval of the same.  Should Landlord disapprove any portion of the
Improvements, Landlord shall notify Tenant in writing of such disapproval and
shall specify the items disapproved.  Any
defects or deviations in, and/or disapproval by Landlord of, the Improvements
shall be rectified by Tenant at no expense to Landlord, provided however, that
in the event Landlord determines that a defect or deviation exists or
disapproves of any matter in connection with any portion of the Improvements
and such defect, deviation or matter might adversely affect the mechanical,
electrical, plumbing, heating, ventilating and air conditioning or life-safety
systems of the Project, the structure or exterior appearance of the Project or
any other tenant’s use of such other 

 

5

 

tenant’s leased premises, Landlord may, take such action as Landlord
deems necessary, at Tenant’s expense and without incurring any liability on
Landlord’s part, to correct any such defect, deviation and/or matter,
including, without limitation, causing the cessation of performance of the
construction of the Improvements until such time as the defect, deviation
and/or matter is corrected to Landlord’s satisfaction.

 

4.2.5                     Meetings.  Commencing upon the execution of this Lease,
Tenant and Landlord shall hold meetings as required at a reasonable time, with
the Architect and the Contractor regarding the progress of the preparation of
Construction Drawings and the construction of the Improvements, which meetings
shall be held at a location designated by Landlord, and Landlord and/or its
agents shall receive prior notice of, and shall have the right to attend, all
such meetings, and, upon Landlord’s request, certain of Tenant’s Agents shall
attend such meetings.  One such meeting
each month shall include the review of Contractor’s current request for
payment.

 

4.3                        Notice of
Completion; Copy of “As Built” Plans.  Within ten (10) days after completion of
construction of the Improvements, Tenant shall cause a Notice of Completion to
be recorded in the office of the Recorder of the County of Los Angeles in
accordance with Section 3093 of the Civil Code of the State of California
or any successor statute, and shall furnish a copy thereof to Landlord upon
such recordation.  If Tenant fails to do
so, Landlord may execute and file the same on behalf of Tenant as Tenant’s
agent for such purpose, at Tenant’s sole cost and expense.  At the conclusion of construction, (i) Tenant
shall cause the Architect and Contractor (A) to update the Approved
Working Drawings as necessary to reflect all changes made to the Approved
Working Drawings during the course of construction, (B) to certify to the
best of their knowledge that the “record-set” of as-built drawings are true and
correct, which certification shall survive the expiration or termination of
this Lease, and (C) to deliver to Landlord two (2) sets of copies of
such as-built drawings within ninety (90) days following issuance of a
certificate of occupancy for the Premises, and (ii) Tenant shall deliver
to Landlord a copy of all warranties, guaranties, and operating manuals and
information relating to the improvements, equipment, and systems in the
Premises.

 

SECTION 5

 

MISCELLANEOUS

 

5.1                              Tenant’s
Representative.  Tenant has
designated John Prabhu as its sole representative with respect to the matters
set forth in this Tenant Work Letter, who shall have full authority and
responsibility to act on behalf of the Tenant as required in this Tenant Work
Letter.

 

5.2                              Landlord’s
Representative.  Landlord
shall designate an individual as its sole representative with respect to the
matters set forth in this Tenant Work Letter, who, until further notice to
Tenant, shall have full authority and responsibility to act on behalf of the
Landlord as required in this Tenant Work Letter.

 

5.3                              Time of the
Essence in This Tenant Work Letter.  Time is of the essence with respect to the
performance by Tenant of every provision of this Tenant Work Letter.  Unless otherwise indicated, all references
herein to a “number of days” shall mean and refer to calendar days.  If any item requiring approval is timely
disapproved by Landlord, the procedure for preparation of the document and
approval thereof shall be repeated until the document is approved by Landlord.

 

5.4                              Tenant’s Lease
Default.  Notwithstanding any provision to
the contrary contained in this Lease, if an event of default as described in
the Lease or this Tenant Work Letter has occurred at any time on or before the
Substantial Completion of the Premises, then (i) in addition to all other
rights and remedies granted to Landlord pursuant to this Lease, Landlord shall
have the right to withhold payment of all or any portion of the Tenant
Improvement Allowance and/or Landlord may cause Contractor to cease the
construction of the Premises (in which case, Tenant shall be responsible for
any delay in the substantial completion of the Premises caused by such work
stoppage), and (ii) all other obligations of Landlord under the terms of
this Tenant Work Letter shall be forgiven until such time as such default is
cured pursuant to the terms of this Lease (in which case, Tenant shall be
responsible for any delay in the substantial completion of the Premises caused
by such inaction by Landlord).

 

6

 

5.5                              Freight
Elevators, Utilities and Parking.  During the period of construction of the
Improvements, Landlord shall allow Tenant and Tenant’s Agents nonexclusive
freight elevator service at no cost to Tenant, subject to reasonable scheduling
by Landlord, use of Project utilities during normal Project hours without
charge, and free parking in the Project parking facility.

 

5.6                              Additional
Services.  If the
construction of the Improvements shall require that additional services or
facilities (including, but not limited to, hoisting, cleanup or other cleaning
services, trash removal, field supervision, or ordering of materials) be
provided by Landlord, then Tenant shall pay Landlord for such items at Landlord’s
cost or at a reasonable charge if the item involves time of Landlord’s
personnel only.  Electrical power and
heating, ventilation and air conditioning shall be available to Tenant during
normal business hours for construction purposes at no charge to Tenant.

 

5.7                              Construction
Defects.  Landlord shall have no
responsibility for the Improvements and Tenant will remedy, at Tenant’s own
expense, and be responsible for any and all defects in the Improvements that
may appear during or after the completion thereof whether the same shall affect
the Improvements in particular or any parts of the Premises in general.  Tenant shall indemnify, hold harmless and
reimburse Landlord for any costs or expenses incurred by Landlord by reason of
any defect in any portion of the Improvements constructed by Tenant or Tenant’s
contractor or subcontractors, or by reason of inadequate cleanup following
completion of the Improvements.

 

5.8                              Coordination of
Labor.  All of Tenant’s contractors,
subcontractors, employees, servants and agents must work in harmony with and
shall not interfere with any labor employed by Landlord, or Landlord’s
contractors or by any other tenant or its contractors with respect to any
portion of the Project.

 

5.9                              Work in
Adjacent Areas.  Any work to
be performed in areas adjacent to the Premises shall be performed only after
obtaining Landlord’s express written permission, which shall not be
unreasonably withheld, conditioned or delayed, and shall be done only if an
agent or employee of Landlord is present; Tenant will reimburse Landlord for
the expense of any such employee or agent.

 

5.10                        HVAC Systems.  Tenant agrees to be entirely responsible for
the maintenance or the balancing of any heating, ventilating or air
conditioning system installed by Tenant and/or maintenance of the electrical or
plumbing work installed by Tenant and/or for maintenance of lighting fixtures,
partitions, doors, hardware or any other installations made by Tenant.

 

5.11                        Approval of
Plans.  Landlord will not check Tenant
drawings for building code compliance. 
Approval of the Construction Drawings by Landlord is not a
representation that the drawings are in compliance with the requirements of
governing authorities, and it shall be Tenant’s responsibility to meet and
comply with all federal, state, and local code requirements.  Approval of the Construction Drawings does
not constitute assumption of responsibility by Landlord or its architect for
their accuracy, sufficiency or efficiency, and Tenant shall be solely
responsible for such matters.

 

5.12                        Substantial
Completion.  For
purposes of this Lease, “Substantial Completion” of the Improvements in the
Premises shall occur upon (i) the completion of construction of the
Improvements in the Premises pursuant to the Approved Working Drawings, with
the exception of any punch list items and any tenant fixtures, work-stations,
built-in furniture or equipment to be installed by Tenant; and (ii) issuance
of a temporary certificate of occupancy.

 

7

 

EXHIBIT “E”

 

JANITORIAL
SPECIFICATIONS

 

1

 

STANDARD OFFICE
LEASE

 

BY AND BETWEEN

 

9701-HEMPSTEAD
PLAZA, LLC, a Delaware limited liability company, 9701-CAROLINA GARDENS LLC, a
Delaware limited liability company, 9701-WEST POINT REALTY LLC, a Delaware
limited liability company, 9701-DAKOTA LEASING LLC, a Delaware limited
liability company and 9701-IOWA LEASING LLC, a Delaware limited liability
company

 

 

COLLECTIVELY, AS
LANDLORD,

 

AND

 

 

KENNEDY-WILSON,
INC.,

a                                                   ,

 

AS TENANT

 

 

SUITES           
AND 700

 

 

9701 Wilshire
Boulevard, Beverly Hills, California

 

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  1 BASIC LEASE PROVISIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  2 TERM/PREMISES

  	
   

  	
  2

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  3 RENTAL

  	
   

  	
  3

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  4 INTENTIONALLY OMITTED

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  5 HOLDING OVER

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  6 OTHER TAXES

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  7 USE

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  8 CONDITION OF PREMISES

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  9 REPAIRS AND ALTERATIONS

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  10 LIENS

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  11 PROJECT SERVICES

  	
   

  	
  11

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  12 RIGHTS OF LANDLORD

  	
   

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  13 INDEMNITY; EXEMPTION OF LANDLORD FROM LIABILITY

  	
   

  	
  13

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  14 INSURANCE

  	
   

  	
  14

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  15 ASSIGNMENT AND SUBLETTING

  	
   

  	
  16

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  16 DAMAGE OR DESTRUCTION

  	
   

  	
  17

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  17 SUBORDINATION

  	
   

  	
  18

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  18 EMINENT DOMAIN

  	
   

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  19 DEFAULT

  	
   

  	
  19

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  20 REMEDIES

  	
   

  	
  20

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  21 TRANSFER OF LANDLORD’S INTEREST

  	
   

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  22 BROKER

  	
   

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  23 PARKING

  	
   

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  24 WAIVER

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  25 ESTOPPEL CERTIFICATE

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  26 LIABILITY OF LANDLORD

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  27 INABILITY TO PERFORM

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  28 HAZARDOUS WASTE

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  29 SURRENDER OF PREMISES; REMOVAL OF PROPERTY

  	
   

  	
  26

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  30 MISCELLANEOUS

  	
   

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  31 OPTION TO EXTEND

  	
   

  	
  31

  
	
   

  	
   

  	
   

  
	
  ARTICLE
  32 RIGHT OF FIRST OFFER

  	
   

  	
  33

  

 

i

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE 33
  SIGNAGE/DIRECTORY

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  ARTICLE 34 TERMINATION
  RIGHT

  	
   

  	
  35

  
	
   

  	
   

  	
   

  
	
  ARTICLE 35 ARBITRATION

  	
   

  	
  36

  

 

	
  Exhibit “A”

  	
  Premises

  	
   

  	
   

  
	
  Exhibit “B”

  	
  Rules and
  Regulations

  	
   

  	
   

  
	
  Exhibit “C”

  	
  Notice of Term Dates
  and Tenant’s Proportionate Share

  	
   

  	
   

  
	
  [Exhibit “D”

  	
  Tenant Work Letter]

  	
   

  	
   

  
	
  Exhibit “E”

  	
  Guaranty of Lease

  	
   

  	
   

  

 

ii

 

INDEX

 

	
   

  	
   

  	
  Page(s)

  
	
   

  	
   

  	
   

  
	
  Additional
  Rent

  	
   

  	
  3

  
	
  Alterations

  	
   

  	
  10

  
	
  Base
  Year

  	
   

  	
  1

  
	
  Basic
  Rental

  	
   

  	
  1

  
	
  Brokers

  	
   

  	
  1

  
	
  Commencement
  Date

  	
   

  	
  1

  
	
  Development

  	
   

  	
  6

  
	
  Direct
  Costs

  	
   

  	
  3

  
	
  Dispute
  Notice

  	
   

  	
  7

  
	
  Economic
  Terms

  	
   

  	
  34

  
	
  Estimate

  	
   

  	
  6

  
	
  Estimate
  Statement

  	
   

  	
  6

  
	
  Estimated
  Excess

  	
   

  	
  6

  
	
  Estoppel
  Certificate

  	
   

  	
  23

  
	
  Event
  of Default

  	
   

  	
  19

  
	
  Excess

  	
   

  	
  6

  
	
  Expansion
  Interest Notice

  	
   

  	
  33

  
	
  Expiration
  Date

  	
   

  	
  1

  
	
  First
  Offer Notice

  	
   

  	
  33

  
	
  First
  Offer Space

  	
   

  	
  33

  
	
  Force
  Majeure

  	
   

  	
  24

  
	
  Generator

  	
   

  	
  26

  
	
  Hazardous
  Material

  	
   

  	
  25

  
	
  Initial Installment of Basic Rental

  	
   

  	
  2

  
	
  Landlord

  	
   

  	
  1

  
	
  Landlord
  Parties

  	
   

  	
  13

  
	
  Landlord’s
  Recapture Costs

  	
   

  	
  17

  
	
  Landlord’s
  Recapture Notice

  	
   

  	
  17

  
	
  Laws

  	
   

  	
  26

  
	
  Lease

  	
   

  	
  1

  
	
  Lease
  Year

  	
   

  	
  2

  
	
  Operating
  Costs

  	
   

  	
  4

  
	
  Option
  Term

  	
   

  	
  31

  
	
  Options

  	
   

  	
  31

  
	
  Original
  Tenant

  	
   

  	
  31

  
	
  Outside
  Agreement Date

  	
   

  	
  32

  
	
  Parking
  Passes

  	
   

  	
  2

  
	
  Partnership
  Tenant

  	
   

  	
  30

  
	
  Permitted
  Use

  	
   

  	
  1

  
	
  Premises

  	
   

  	
  1

  
	
  Producer

  	
   

  	
  26

  
	
  Project

  	
   

  	
  1

  
	
  Real
  Property

  	
   

  	
  3

  
	
  Recapture
  Space

  	
   

  	
  17

  
	
  Review
  Notice

  	
   

  	
  7

  
	
  Review
  Period

  	
   

  	
  6

  
	
  Rules and
  Regulations

  	
   

  	
  28

  
	
  Security
  Deposit

  	
   

  	
  1

  
	
  Square
  Footage

  	
   

  	
  1

  
	
  Statement

  	
   

  	
  6

  
	
  Superior
  Leases

  	
   

  	
  33

  
	
  Superior
  Rights

  	
   

  	
  33

  
	
  Tax
  Costs

  	
   

  	
  3

  
	
  Tenant

  	
   

  	
  1

  
	
  Tenant
  Improvements

  	
   

  	
  9

  
	
  Tenant’s
  Proportionate Share

  	
   

  	
  1

  
	
  Tenant’s
  Signage

  	
   

  	
  34

  
	
  Term

  	
   

  	
  1

  
	
  Transfer

  	
   

  	
  16

  

 

iii

 

	
   

  	
   

  	
  Page(s)

  
	
   

  	
   

  	
   

  
	
  Transferee

  	
   

  	
  17

  
	
  Universal Waste

  	
   

  	
  26

  

 

ivExhibit 10.102

 

SECOND AMENDED AND RESTATED
GUARANTY OF PAYMENT

 

This SECOND AMENDED AND RESTATED GUARANTY OF PAYMENT (“Guaranty”)
is entered in as of November 4, 2008, by ARTHUR S. LEVINE, as Trustee of
the RAY J. RUTTER TRUST uta 3/24/81, ARTHUR S. LEVINE, as Trustee of the SUSAN
RAYE RUTTER TRUST uta 3/24/81, and ARTHUR S. LEVINE, as Trustee of the ROBERT
JONATHAN RUTTER TRUST uta 12/10/84, all having an address at c/o Sonnenschein
Nath & Rosenthal, 601 South Figueroa, Suite 1500, Los Angeles,
California 90017, and KENNEDY-WILSON INC. a Delaware corporation, having an
address at 9601 Wilshire Blvd., Suite 220, Beverly Hills, California 90210
(collectively referred to in the singular as “Guarantor”),
to BANK MIDWEST N.A., having an office at 1100 Main Street, Kansas City,
Missouri 64105-2105 (together with its successors and assigns herein called “Lender”);

 

RECITALS

 

A.            RUTTER SANTIAGO, LP, a California Limited
Partnership (“Borrower”) has borrowed the
current maximum sum of Five Million Dollars ($5,000,000.00) (“Loan”) from Lender in order to finance the acquisition and
development of real property located in Orange County, California (“Premises”), which loan is evidenced by that certain Fourth
Amended and Restated Promissory Note dated February 13, 2006, executed by
Borrower in favor of Lender (as the same has been or may be modified from time
to time, “Note”).  The Note and all other
documents evidencing or relating to the Loan shall be collectively referred to
as the “Loan Documents.”

 

B.            Borrower has requested and Lender has
agreed to modify certain terms of the Loan pursuant to that certain Sixth
Agreement to Modify Loan Documents and Amendment to Deed of Trust of even date
herewith (“Modification Agreement”).  As
part of the consideration for the modifications of the Loan, Borrower has
agreed to procure and deliver this Guaranty.

 

C.            Guarantor is an affiliate of Borrower and
will derive an indirect benefit from the making of the Loan from Lender to
Borrower.

 

D.            Lender has declined to modify the Loan unless
this Guaranty is executed by Guarantor and duly delivered to Lender.

 

AGREEMENT

 

In consideration of the making of certain
modifications to the Loan and of other valuable consideration, the receipt and
sufficiency of which are acknowledged, Guarantor hereby certifies, represents
and warrants to Bank, and agrees as follows:

 

1

 

1.          GUARANTY.  Guarantor
hereby unconditionally and independently of any liability of Borrower
guarantees and agrees as follows:

 

1.1           Payment Guaranty. 
Subject to the provisions of Section 1.4 below, Guarantor hereby
irrevocably, absolutely and unconditionally guarantees and promises to pay to
or for the benefit of Lender, its successors and assigns, on demand after the
occurrence or existence of an “Event of Default”
(as defined in the Note), in lawful money of the United States of America, the
Loan and all indebtedness and obligations that may now or hereafter be owing
from Borrower to Lender thereunder (whether or not Borrower has any personal
liability for the payment of such indebtedness or obligations because of the
so-called “one-action” rule and the “anti-deficiency” statutes in
California Code of Civil Procedure Sections 726 and 580), including not only
debts voluntarily contracted, but also every debt, obligation or liability
however arising, whether absolute or contingent, joint or several, matured or
unmatured, direct or indirect, primary or secondary, and whether or not the
same is represented by a writing, and any and all extensions, renewals or
modifications of any such indebtedness or obligation, including, without
limitation, interest at the rate provided in the Note as the “Default Interest Rate,” late charges, yield maintenance
payments (if any), attorneys’ fees, expenses and court costs (whether incurred
in connection with any enforcement activities by Lender or otherwise, in any
appeal proceedings or in any bankruptcy proceedings involving Borrower or any
Guarantor) (all of the foregoing shall be referred to as the “Guaranteed Obligations”).

 

1.2           Failure To Pay. 
If Guarantor fails to pay all such Guaranteed Obligations within fifteen
(15) days following Lender’s demand, Lender may elect, without having any
obligation to do so, and without further notice to Guarantor, to take any
action it reasonably believes necessary to protect its interests, but with the
further right to suspend or terminate such actions at any time.  No such actions by Lender shall release or
limit the liability of Guarantor, and Guarantor agrees to repay Lender all sums
expended by it, including any sums expended in excess of the principal amount
of the Loan.

 

1.3           No Waiver.  Nothing
contained in this Section 1 shall be deemed to be a waiver of any right
which Lender may have under Section 506(a), 506(b), 1111(b), or any other
provisions of the U.S. Bankruptcy Code, or any other provision of applicable
law (including without limitation California Civil Code Section 3054), as
the same may be amended from time to time, to file a claim for the full amount
of the Guaranteed Obligations or to require that the Property and all other
collateral for the payment and performance of all of the Loan obligations shall
continue to secure the payment and performance of all of the Loan obligations
in accordance with the terms of the Loan Documents.

 

1.4           Recourse Limitations.

 

1.4.1        Notwithstanding
any other provision of this Agreement to the contrary and subject to the
provisions of Section 10 below, Lender and Guarantor 

 

2

 

agree that
Guarantor’s total liability, jointly and severally, hereunder shall not exceed
an amount in excess of One Million Two Hundred Fifty Thousand Dollars
($1,250,000.00) (“Reduced Repayment Guaranteed Obligations”).

 

1.4.2                The provisions of this Section 1.4 concerning the Reduced
Repayment Guaranteed Obligations shall not (a) impair the right of Lender
to name Borrower or Guarantor as a party defendant in any action or suit for
foreclosure and sale under the Loan Documents, (b) impair the right of
Lender to obtain the appointment of a receiver for the Property, (c) impair
the right of Lender to bring suit with respect to fraud or intentional
misrepresentation by Borrower or Guarantor, (d) impair the right of Lender
to obtain the rents and other income from the Property received by Borrower or
Guarantor after the occurrence and during the continuance of an Event of
Default which are not applied to the operation of the Property or the payment
of the Loan, (e) impair the right of Lender to obtain insurance proceeds
or condemnation awards due to Lender under the Loan Documents, (f) impair
the right of Lender to enforce the provisions of the Loan Documents and the
Environmental Indemnity relating to “Hazardous Substances” (as defined in said
indemnity), against Borrower or any other person allegedly responsible
therefor, or (g) impair the right to sue Borrower under the Loan
Documents.

 

2.          PERFORMANCE BY GUARANTOR.

 

2.1           Failure to Perform. 
If Borrower fails to perform the Guaranteed Obligations on or before the
times such matters are to be done by Borrower, Guarantor shall do, at Guarantor’s
expense, any such matter which Borrower has failed to do within the time
periods set forth herein.

 

2.2           Failure To Take Action. 
If Guarantor fads to take any such action within the time periods set
forth herein, Lender may pursue any remedies at law or in equity against
Guarantor, without having to proceed first against Borrower, and may itself
take such action, and Guarantor shall be liable to Lender for all expenses,
including attorneys’ fees incurred by Lender, and all amounts paid by Lender in
taking any such action, subject to Section 1.4 above.

 

2.3           Multiple Guarantors. 
If there is more than one (1) Guarantor executing this Agreement,
the obligations of all Guarantors hereunder shall be joint and several, and all
words used herein in the singular shall be deemed to have been used in the
plural when the context and construction so require.

 

3.          CERTAIN RIGHTS OF LENDER. 
Lender may, without the consent of Guarantor, at any time and from time
to time, either before or after the maturity of the Note:

 

3.1           amend any provision of the Note and the
Deed of Trust or any other documents evidencing or securing the Loan from
Lender, including any change in the interest rate therein or any change in the
time or manner of payment thereunder,

 

3

 

3.2           make any agreement with Borrower for the
extension, payment, compounding, compromise, discharge or release of any
provision of the Note, the Deed of Trust or any other terms thereof, without
notice to or the consent of Guarantor, and

 

3.3           without limiting the generality of the
foregoing, Lender is expressly authorized to surrender to Borrower or to deal
with or modify the form of, any security which Lender may at any time hold to
secure the performance of any obligation hereby guaranteed, and the guaranties
herein made by Guarantor shall not be impaired or affected by any of the
foregoing.

 

4.          WAIVERS BY GUARANTOR.

 

4.1           Legal Requirements. 
Guarantor hereby waives any and all legal requirements that Lender shall
institute any action or proceedings at law or in equity against Borrower or
anyone else with respect to the breach of the Guaranteed Obligations or with
respect to any other security held by Lender, as a condition precedent to
bringing an action against Guarantor pursuant to this Agreement.  All remedies afforded to Lender by reason of
this Agreement are separate and cumulative remedies and none of such remedies,
whether exercised by Lender or not, shall be deemed to be in exclusion of any
one of the other remedies available to Lender, and shall not in any way limit
or prejudice any other legal or equitable remedy available to Lender.

 

4.2           Presentment For Payment. 
Guarantor hereby waives presentment for payment, demand, protest, notice
of protest and of dishonor, notice of acceptance hereof, notices of default and
all other notices now or hereafter provided by law.

 

4.3           Requirement To Proceed. 
Guarantor waives all right to require Lender to proceed against the
Borrower or any other person, firm or corporation or to apply any security
Lender may hold at any time or to pursue any judicial, nonjudicial and/or
provisional remedy. Lender may proceed against Guarantor with respect to the Guaranteed
Obligations without taking any action against Borrower or any other person,
firm or corporation and without proceeding against or applying any security
Lender holds.

 

4.4           Right of Subrogation. 
Until the Guaranteed Obligations have been fully satisfied, Guarantor
shall not have any right of subrogation. 
Guarantor waives any benefit of and any right to participate in any
collateral or security held by Lender for the performance of the Guaranteed
Obligations.  Guarantor hereby authorizes
and empowers Lender, at Lender’s sole discretion, without any notice to
Guarantor whatsoever, to exercise any right or remedy which Lender may have,
including without limitation judicial foreclosure, exercise of rights of power
of sale, or taking of a deed or an assignment in lieu of foreclosure, as to any
collateral or security in real property or personal property which Lender may
hold for the performance of the Guaranteed Obligations.  Guarantor shall be liable to Lender for any
deficiency resulting subject to Section 1.4 above from the exercise by
Lender of any such judicial or nonjudicial remedy, even though any rights,
including, without limitation, any rights of subrogation, contribution and/or
indemnity, which the Guarantor may have against Borrower or other 

 

4

 

parties might be destroyed or dismissed by the exercise of any such
judicial or nonjudicial remedy.

 

4.5           Release From Liability. 
Guarantor specifically agrees that Guarantor shall not be released from
liability hereunder by any action taken by Lender including, without
limitation, a nonjudicial sale under the Deed of Trust, that would afford
Borrower a defense based on California’s anti-deficiency laws, in general, and
Code of Civil Procedure Section 580d, in specific.  Without limiting the foregoing, Guarantor
expressly understands, acknowledges and agrees as follows:

 

4.5.1        In
the event of a nonjudicial foreclosure (through the exercise of the power of
sale under the Deed of Trust):

 

(a)           Borrower would not be liable for any
deficiency on the Note under California Code of Civil Procedure Section 580d,

 

(b)           Guarantor’s subrogation rights against
the Borrower would thereby be destroyed,

 

(c)           Guarantor would be solely liable for any
deficiency to Lender (without recourse against Borrower) subject to Section 1.4
above, and

 

(d)           Guarantor would thereby be deprived of
the anti-deficiency protections of said Section 580d.

 

4.5.2        Were
it not for Guarantor’s knowing and intentional waivers contained herein, the
destruction of Guarantor’s subrogation rights and anti-deficiency protections
would afford Guarantor a defense to an action against Guarantor hereunder; and

 

4.5.3        Notwithstanding
the foregoing, Guarantor expressly waives any such defense to any action against
Guarantor hereunder following a nonjudicial foreclosure sale or in any other
circumstance under which Guarantor’s subrogation rights against Borrower have
been destroyed.

 

4.6           Action Upon Event of Default. 
In the event of any default hereunder, Lender may maintain an action
upon this Guaranty whether or not action is brought against Borrower and
whether or not Borrower is joined in any such action.  Lender may maintain successive actions for
other defaults, and Lender’s rights hereunder shall not be exhausted or waived,
and Lender shall not be estopped to proceed against Guarantor pursuant to this
Guaranty, by the exercise of any of Lender’s rights or remedies or by any such
action or by any number of successive actions, until and unless the Guaranteed
Obligations have been fully satisfied and each of Guarantor’s obligations
hereunder has been fully performed or otherwise satisfied.

 

5

 

4.7           Civil Code Waivers. 
Guarantor expressly waives any and all benefits, rights and/or defenses
which might otherwise be available to Guarantor under California Civil Code
Sections 2787 to 2855, inclusive, and 2899, 2953 and 3433.

 

4.8           Code of Civil Procedure Waivers. 
Guarantor expressly waives any and all benefits, rights and/or defenses
which might otherwise be available to Guarantor under California Code of Civil
Procedure Sections 580a, 580b, 580d and 726. 
In specific, but not by way of limitation, Guarantor expressly waives
any and all fair value rights under California Code of Civil Procedure Section 580a
as set forth in Bank of Southern California v. Dombrow,
39 Cal.App.4th 1457, 46 Cal.Rptr.2d 656 (4th Dist., Div. 1, 1995)
(decertified).

 

4.9           Judicial or Noniudicial Actions. 
Any action, whether judicial or nonjudicial or in pursuit of any
provisional remedy, taken by Lender against Borrower or against any collateral
or security held by Lender which shall impair or destroy any rights Guarantor
may have against Borrower shall not act as a waiver or an estoppel of Lender’s
rights to proceed against and initiate any action against Guarantor to enforce
the terms of this Guaranty and until the Guaranteed Obligations have been fully
satisfied.

 

4.10         United States Bankruptcy Code Waivers. 
Guarantor expressly waives any defense or benefits arising out of any
federal or state bankruptcy, insolvency, or debtor relief laws, including,
without limitation, under Sections 364 or 1111(b)(2) of the United States
Bankruptcy Code.

 

4.11         Civil Code Section 2856. 
Guarantor acknowledges that Guarantor has been made aware of the
provisions of California Civil Code Section 2856, has read and understand
the provisions of that statute, has been advised by its counsel as to the
scope, purpose and effect of that statute, and based thereon, and without
limiting the foregoing waivers, Guarantor agrees to waive all suretyship rights
and defenses described in Civil Code Sections 2856(a)-(d).  Without limiting any other waivers herein,
Guarantor hereby gives the following waiver pursuant to Section 2856(d) of
the California Civil Code.

 

5.          REMEDIES BY LENDER.  Guarantor
waives all rights and defenses arising out of an election of remedies by
Lender, even though that election of remedies, such as a nonjudicial
foreclosure with respect to security for a guaranteed obligation, has destroyed
Guarantor’s rights of subrogation and reimbursement against Borrower by the
operation of Section 580d of the Code of Civil Procedure or otherwise.

 

5.1           Civil Code Section 2856(c). 
As provided in Civil Code Section 2856(c), Guarantor makes the
following waivers of specific rights afforded under California law:

 

“Guarantor waives all rights and defenses that
Guarantor may have because Borrower’s debt is secured by real property.  This means, among other things:

 

6

 

(1)           Lender may collect from Guarantor without
first foreclosing on any real or personal property collateral pledged by
Borrower.

 

(2)           If Lender forecloses on any real property
collateral pledged by Borrower:

 

(A)          The amount of the debt may be reduced
only by the price for which that collateral is sold at the foreclosure sale,
even if the collateral is worth more than the sale price.

 

(B)           Lender may collect from Guarantor even if
Lender, by foreclosing on the real property collateral, has destroyed any right
Guarantor may have to collect from Borrower.”

 

This
is an unconditional and irrevocable waiver of any rights and defenses Guarantor
may have because Borrower’s debt is secured by real property.  These rights and defenses include, but are
not limited to, any rights or defenses based on Section 580a, 580b, 580d,
or 726 of the Code of Civil Procedure.

 

6.          ACKNOWLEDGMENT OF WAIVERS. 
Guarantor acknowledges that it has relied on the advice of its own
counsel in making this Guaranty and has reviewed the waivers of rights
contained herein with its counsel. 
Guarantor further acknowledges that it understands and accepts as a
necessary part of this Guaranty the waivers of rights set forth above, after
reviewing the extent and effect of the waivers in this Guaranty with its
counsel.

 

7.          GUARANTOR’S WARRANTIES.

 

7.1           Warranties and Acknowledgments. 
Guarantor warrants and acknowledges that:

 

7.1.1                there are no conditions precedent to the effectiveness of this
Guaranty, and this Guaranty shall be in full force and effect and binding on
Guarantor regardless of whether Lender obtains other collateral or any
guarantees from others or takes any other action contemplated by Guarantor;

 

7.1.2                Guarantor has established adequate means of obtaining from sources
other than Lender, on a continuing basis, financial and other information
pertaining to Borrower’s financial condition and Borrower’s activities relating
thereto and the status of Borrower’s performance of obligations imposed by the
Loan Documents, and Guarantor agrees to keep adequately informed from such
means of any facts, events or circumstances which might in any way affect
Guarantor’s risks hereunder, and Lender has made no representation to Guarantor
as to any such matters; and

 

7.1.3                the most recent financial statements of Guarantor previously delivered
to Lender are true and correct in all material respects, have been 

 

7

 

prepared in a manner which fairly presents the financial condition of
Guarantor as of the respective dates thereof, and no material adverse change
has occurred in the financial condition of Guarantor since the respective dates
thereof; and

 

7.1.4                Guarantor has not and will not, without prior written consent of Lender,
sell, lease, assign, encumber, hypothecate, transfer or otherwise dispose of
all or substantially all of Guarantor’s assets, other than in the ordinary
course of Guarantor’s business.

 

7.2           Acknowledgment of Financial Interest
and/or Relationship.  Each Guarantor warrants and acknowledges a
financial interest in and relationship to Borrower such that Guarantor agrees
to enter into this Guaranty to induce Lender to modify the Loan described in
the Note.  Guarantor further warrants and
acknowledges that it will receive substantial benefit from the making of such
Loan.

 

7.3           Guarantor’s Representations, Warranties
and Affirmative Covenant.

 

7.3.1                Guarantor:

 

(a)           is not required to file reports under Section 15(d) of
the Securities Exchange Act of 1934; and

 

(b)           has no securities registered under Section 12
of the Securities Exchange Act of 1934.

 

7.3.2                Guarantor will notify Lender promptly upon the Guarantor:

 

(a)           being required to tile reports under Section 1.5(d) of
the Securities Exchange Act of 1934, or

 

(b)           registering securities under Section 12
of the Securities Exchange Act of 1934.

 

8.          NO RELEASE.  Until the
Guaranteed Obligations have been fully satisfied, and until all of the terms,
covenants and conditions of this Agreement are fully performed, Guarantor shall
not be released by any act or thing which might, but for this paragraph, be
deemed a legal or equitable discharge of a surety (including any act by Lender
which might have the effect of destroying Guarantor’s rights of subrogation
against Borrower, such as in the case of foreclosure), or by reason of any
waiver, extension, modification, forbearance or delay of Lender or its failure
to proceed promptly or otherwise, or by reason of any further obligation or
agreement between any then owner of the subject property and the then holder of
the Deed of Trust, and/or the Note relating to the payment of any sum secured
thereby, or to any of the other terms, covenants and conditions contained
therein, and Guarantor hereby expressly waives and 

 

8

 

surrenders any defense to this liability under this
Agreement based upon any of the foregoing acts, things, agreements or waivers.

 

9.             NOTICES.  Except as
expressly provided herein to the contrary, any notice, demand or request by
Lender to Guarantor shall be in writing and shall be duly given or made to
Guarantor if either delivered personally or if mailed by U.S. registered or
certified mail to Borrower at the address for Borrower appearing in the Note.

 

10.           TERMINATION. 
Notwithstanding anything herein contained, this Guaranty shall terminate
and Guarantor shall have no further liability under this Guaranty upon the
earlier of (i) payment in full of the amount of principal and interest
then owing to Lender, or its successors or assigns, and all other sums and
payments which may be or become owing under the Deed of Trust, and the Note,
and (ii) full and satisfactory performance of the Guaranteed Obligations.

 

11.           GOVERNING LAW.  This
Agreement shall be governed by and construed in accordance with California law,
without regard to conflicts of law principles.

 

12.           BINDING EFFECT.  This
Agreement shall inure to the benefit of Lender and its successors and assigns
and shall be binding upon the heirs, personal representatives, successors and
assigns of Guarantor.

 

13.           JURY TRIAL WAIVER.  Guarantor
irrevocably waives and agrees not to assert, by way of motion, as a defense or
otherwise, any right which it may have to a trial by jury in connection with
any suit, action or proceeding arising out of or relating to this Agreement,
all to the fullest extent permissible under applicable law.

 

14.           SEVERABILITY.  Every
provision of this Agreement is intended to be severable.  If any term, provision, section or subsection
of this Agreement is declared to be illegal or invalid, for any reason
whatsoever, by a court of competent jurisdiction, such illegality or invalidity
shall not affect the other terms, provisions, sections or subsections of this
Agreement, which shall remain binding and enforceable.

 

15.           FEES AND EXPENSES.  Guarantor
agrees to pay all of the Lender’s costs and expenses, including reasonable
attorneys’ fees, which may be incurred in any effort to enforce any term of
this agreement, including all such costs and expenses which may be incurred by
Lender in any legal action, reference or arbitration proceeding.

 

16.           Intentionally Omitted.

 

17.           CURRENCY INDEMNITY.  Guarantor
agrees to indemnify Lender against any loss incurred by it as a result of any
judgment or order being given or made for the payment of any amount due under
this Guaranty and such judgment or order being expressed in a currency other
than United States dollars and as a result of any variation having occurred in
the rates of exchange between the date of any such amount 

 

9

 

becoming due under this Guaranty and the date of
actual payment thereof.  The foregoing
indemnity shall constitute a separate and independent obligation of Guarantor
and shall apply irrespective of any indulgence granted to Guarantor from time
to time and shall continue in full force and effect notwithstanding any such
judgment or order as aforesaid.

 

18.        SUBORDINATION OF CERTAIN INDEBTEDNESS.

 

18.1         Subordination of All Guarantor Claims. 
As used herein, the term “Guarantor Claims”
shall mean all debts and liabilities of Borrower to Guarantor, whether such
debts and liabilities now exist or are hereafter incurred or arise, or whether
the obligations of Borrower thereon be direct, contingent, primary, secondary,
several, joint and several, or otherwise, and irrespective of whether such
debts or liabilities be evidenced by note, contract, open account, or
otherwise, and irrespective of the person or persons in whose favor such debts
or liabilities may, at their inception, have been, or may hereafter be created,
or the manner in which they have been or may hereafter be acquired by
Guarantor.  The Guarantor Claims shall
include without limitation all rights and claims of Guarantor against Borrower (arising
as a result of subrogation or otherwise) as a result of Guarantor’s payment of
all or a portion of the Guaranteed Obligations. 
Upon the occurrence of an Event of Default or the occurrence of an event
which would, with the giving of notice or the passage of time, or both,
constitute an Event of Default, Guarantor shall not receive or collect,
directly or indirectly, from Borrower or any other party any amount upon
Guarantor Claims.

 

18.2         Claims in Bankruptcy. 
In the event of receivership, bankruptcy, reorganization, arrangement,
debtor’s relief, or other insolvency proceedings involving Guarantor as debtor,
Lender shall have the right to prove its claim in any such proceeding so as to
establish its rights hereunder and receive directly from the receiver, trustee
or other court custodian dividends and payments which would otherwise be
payable upon Guarantor Claims.  Guarantor
hereby assigns such dividends and payments to Lender.  Should Lender receive, for application upon
the Guaranteed Obligations, any such dividend or payment which is otherwise
payable to Guarantor, and which, as between Borrower and Guarantor, shall
constitute a credit upon the Guarantor Claims, then upon payment to Lender in
full of the Guaranteed Obligations, Guarantor shall become subrogated to the
rights of Lender to the extent that such payments to Lender on the Guarantor
Claims have contributed toward the liquidation of the Guaranteed Obligations,
and such subrogation shall be with respect to that proportion of the Guaranteed
Obligations which would have been unpaid if Lender had not received dividends
or payments upon the Guarantor Claims.

 

18.3         Payments Held in Trust. 
In the event that, notwithstanding anything to the contrary in this
Guaranty, Guarantor should receive any funds, payment, claim or distribution
which is prohibited by this Guaranty, Guarantor agrees to hold in trust for
Lender an amount equal to the amount of all funds, payments, claims or
distributions so received, and agrees that it shall have absolutely no dominion
over the 

 

10

 

amount of such funds, payments, claims or distributions so received
except to pay them promptly to Lender, and Guarantor covenants promptly to pay
the same to Lender.

 

18.4         Liens Subordinate. 
Guarantor agrees that any liens, security interests, judgment liens,
charges or other encumbrances upon Borrower’s assets securing payment of the
Guarantor Claims shall be and remain inferior and subordinate to any liens,
security interests, judgment liens, charges or other encumbrances upon Borrower’s
assets securing payment of the Guaranteed Obligations, regardless of whether
such encumbrances in favor of Guarantor or Lender presently exist or are
hereafter created or attach.  Without the
prior written consent of Lender, Guarantor shall not (a) exercise or
enforce any creditor’s right it may have against Borrower, or (b) foreclose,
repossess, sequester or otherwise take steps or institute any action or
proceedings (judicial or otherwise, including without limitation the
commencement of, or joinder in, any liquidation, bankruptcy, rearrangement,
debtor’s relief or insolvency proceeding) to enforce any liens, mortgages,
deeds of trust, security interest, collateral rights, judgments or other
encumbrances on assets of Borrower held by Guarantor.

 

18.5         Preference.  If all or any
portion of the Guaranteed Obligations are paid or performed, said Guaranteed
Obligations shall nonetheless continue and shall remain in full force and
effect in the event that all or any part of such payment or performance is
avoided or recovered directly or indirectly from Lender as a preference,
fraudulent transfer or otherwise under the Bankruptcy Code or other similar
laws, irrespective of (a) any notice of revocation given by Guarantor
prior to such avoidance or recovery, and (b) full payment and performance
of all of the indebtedness and obligations evidenced and secured by the Loan
Documents.

 

19.           CAPACITY OF TRUSTEE.  Arthur S.
Levine is executing this Guaranty in his capacity as Trustee of the undersigned
trusts.  Notwithstanding anything herein
to the contrary, Arthur S. Levine shall have no personal liability for any
obligation arising out of or under this Guaranty and all other documents
executed in connection with this Guaranty but the trusts and their assets shall
be responsible for all obligations arising out of or under this Guaranty and
all other documents executed in connection with this Guaranty.

 

[The balance of this page is intentionally left
blank.]

 

11

 

20.        AMENDED AND RESTATED.  This Guaranty
amends, restates and supersedes in its entirety that certain Amended and
Restated Guaranty of Payment dated as of December 20, 2007, executed by
Borrower in favor of Lender (“Prior Guaranty”).  Any inconsistency between the terms of this
Guaranty and the Prior Guaranty shall be controlled by the terms hereof.  Notwithstanding any provision herein to the
contrary, this Guaranty shall not be effective until such time as Lender has
received the “Principal Paydown” (as defined in
the Modification Agreement) in the amount of Sixteen Million Four Hundred
Eighteen Thousand Twenty-Seven and 99/100 Dollars (16,418,027.99).  The term “Guaranty”
as used in the Loan Agreement and the other Loan Documents shall mean and refer
to this Guaranty.

 

IN WITNESS WHEREOF, Guarantor has executed this Agreement as of the
date first above written.

 

 

	
   

  	
  /s/ Arthur S. Levine 

  
	
   

  	
  ARTHUR S. LEVINE, as Trustee of the Ray J. RUTTER TRUST uta 3/24/81

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Arthur S. Levine 

  
	
   

  	
  ARTHUR S. LEVINE, as Trustee of the SUSAN RAYE RUTTER TRUST uta
  3/24/81

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Arthur S. Levine 

  
	
   

  	
  ARTHUR S. LEVINE, as Trustee of the ROBERT JONATHAN RUTTER TRUST uta
  12/10/84

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KENNEDY-WILSON INC., a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ unknown

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Its:

  	
   

  

 

12

 

21.        AMENDED AND RESTATED. This Guaranty amends, restates and supersedes in its
entirety that certain Amended and Restated Guaranty of Payment dated as of December 20,
2007, executed by Borrower in favor of Lender (“Prior Guaranty”) Any
inconsistency between the terms of this Guaranty and the Prior Guaranty shall
be controlled by the terms hereof. 
Notwithstanding any provision herein to the contrary, this Guaranty
shall not be effective until such time as Lender has received the “Principal
Paydown” (as defined in the Modification Agreement) in the amount of Sixteen
Million Four Hundred Eighteen Thousand Twenty-Seven and 99/100 Dollars
($16,418,027.99). The term “Guaranty” as used in the Loan Agreement and the
other Loan Documents shall mean and refer to this Guaranty.

 

IN WITNESS WHEREOF, Guarantor has executed this
Agreement as of the date first above written.

 

 

	
   

  	
  /s/ Arthur S. Levine

  
	
   

  	
  ARTHUR S. LEVINE, as Trustee of the Ray J. RUTTER TRUST uta 3/24/81

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Arthur S. Levine

  
	
   

  	
  ARTHUR S. LEVINE, as Trustee of the SUSAN RAYE RUTTER TRUST uta
  3/24/81

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Arthur S. Levine 

  
	
   

  	
  ARTHUR S. LEVINE, as Trustee of the ROBERT JONATHAN RUTTER TRUST uta
  12/10/84

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  KENNEDY-WILSON INC., a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ unknown

  
	
   

  	
  Title:

  	
   

  
	
   

  	
  Its:

  	
   

  

 

13

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