Document:

EXHIBIT 10.2

 

OFFICE
LEASE

 

1800
CENTURY PARK EAST

 

STATE
TEACHERS’ RETIREMENT SYSTEM,

A
RETIREMENT SYSTEM CREATED UNDER THE LAWS OF THE STATE OF CALIFORNIA,

 

AS
LANDLORD,

 

AND

 

HERBALIFE
INTERNATIONAL OF AMERICA, INC.,

A
CALIFORNIA CORPORATION,

 

AS
TENANT.

 

1800 CENTURY PARK EAST

 

SUMMARY OF BASIC LEASE INFORMATION

 

The undersigned hereby agree to the
following terms of this Summary of  Basic Lease Information (the
“Summary”).  This Summary is hereby
incorporated into and made a part of the attached Office Lease (this Summary
and the Office Lease to be known collectively as the “Lease”) which pertains to
the office building (the “Building”) which is located at 1800 Century Park
East, Los Angeles, California.  Each
reference in the Office Lease to any term of this Summary
shall have the meaning as set forth in this Summary for such term.  In the event of a conflict between the
terms of this Summary and the Office Lease, the terms of the Office Lease shall
prevail.  Any capitalized terms used
herein and
not otherwise defined herein shall have the meaning as set forth in the Office
Lease.

 

	
  TERMS
  OF LEASE

  (References are to

  The Office Lease)

  	
   

  	
  DESCRIPTION

  
	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
  Date:

  	
   

  	
  July 11, 1995.

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Landlord:

  	
   

  	
  STATE TEACHERS’ RETIREMENT SYSTEM, a
  retirement system created under the laws of the State of California

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Address of Landlord

  	
   

  	
   

  
	
   

  	
  (SECTION 29.19):

  	
   

  	
  c/o TCW Realty Advisors

  865 S. Figueroa Street

  Suite 3500

  Los Angeles, California 90017

  Attention: Mr. Hugh Dirstine

  Facsimile Number: (213) 683-4201

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Tenant:

  	
   

  	
  HERBALIFE INTERNATIONAL OF AMERICA, INC.,
  a California corporation.

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Address of Tenant

  	
   

  	
   

  
	
   

  	
  (SECTION 29.19):

  	
   

  	
  9800 La Cienega Boulevard

  Inglewood, California 90301

  Attention: Mr. Chris Pair and Legal Department

  (Prior to Lease Commencement Date)

  Facsimile Number: (310) 258-7001

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  1800 Century Park East

  Suite 1500

  Los Angeles, California 90067

  Attention: Mr. Chris Pair and Legal Department

  (After Lease Commencement Date)

  Facsimile Number: TO BE SUPPLIED BY TENANT BY NOTICE TO LANDLORD

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  in both cases with a copy to:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Allen, Matkins, Leck, Gamble &
  Mallory

  1999 Avenue Of The Stars, Suite 1800

  Los Angeles, California  90067-6050

  Attention:  Anton N. Natsis, Esq.

  Facsimile Number: (310) 788-2410

  

 

ii

 

	
  6.

  	
  Premises

  	
   

  	
   

  
	
   

  	
  (Article 1):

  	
   

  	
  80,927 rentable square feet of space
  (76,988 usable) in aggregate consisting of (i) 15,989 rentable square feet of
  space (15,209 usable) located on the 15th floor of the Building, (ii) 16,480
  rentable square feet of space (15,681 usable) located on the 14th floor of
  the Building, (iii) 15,989 rentable square feet of space (15,208 usable)
  located on the 13th floor of the Building, (iv) 16,480 rentable square feet
  of space (15,681 usable) located on the 12th floor of the Building, and (v)
  15,989 rentable square feet of space (15,209 usable) located on the 11th
  floor of the Building, all as set forth in Exhibit A attached hereto.

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Term (Article 2).

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.1

  	
  Lease Term:

  	
   

  	
  Ten (10) years.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.2

  	
  Lease Commencement Date:

  	
   

  	
  January 22, 1996 (as may be extended
  pursuant to the terms of the Lease and the Tenant Work Letter).

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  7.3

  	
  Lease Expiration Date:

  	
   

  	
  January 21, 2006 (as may be extended
  pursuant to the terms of the Lease and the Tenant Work Letter).

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Base Rent (Article 3):

  	
   

  	
   

  

 

	
  Lease
  Year

  	
   

  	
  Annual

  Base Rent

  	
   

  	
  Monthly Installment

  of Base Rent

  	
   

  	
  Annual

  Rental Rate per

  Rentable Square Foot

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1 -5

  	
   

  	
  $

  	
  1,748,023.20

  	
   

  	
  $

  	
  145,668.60

  	
   

  	
  $

  	
  21.60

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6-10

  	
   

  	
  $

  	
  2,039,360.40

  	
   

  	
  $

  	
  169,946.70

  	
   

  	
  $

  	
  25.20

  	
   

  

 

	
  9.

  	
  Additional Rent (Article 4).

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.1

  	
  Base Year:

  	
   

  	
  The calendar year 1996.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  9.2

  	
  Tenant’s Share:

  	
   

  	
  33.059%

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Security Deposit

  	
   

  	
   

  
	
   

  	
  (Article 21):

  	
   

  	
  $169,946.70.

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  Parking Pass Ratio

  	
   

  	
   

  
	
   

  	
  (Article 28):

  	
   

  	
  Up to three (3) parking passes for every
  1,000 rentable square feet of the Premises.

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Brokers

  	
   

  	
   

  
	
   

  	
  (SECTION 29.25):

  	
   

  	
  Cushman Realty, Inc.

  601 South Figueroa Street

  47th Floor

  Los Angeles, California  90017

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  CB Commercial Real Estate Group, Inc.

  1840 Century Park East

  Suite 700

  Los Angeles, California  90067

  

 

iii

 

	
  EXHIBITS

  
	
   

  	
   

  	
   

  
	
  A

  	
   

  	
  OUTLINE OF PREMISES

  
	
   

  	
   

  	
   

  
	
  A-1

  	
   

  	
  OUTLINE OF EXPANSION SPACE

  
	
   

  	
   

  	
   

  
	
  B

  	
   

  	
  TENANT WORK LETTER

  
	
   

  	
   

  	
   

  
	
  c

  	
   

  	
  FORM OF NOTICE OF LEASE TERM DATES

  
	
   

  	
   

  	
   

  
	
  D

  	
   

  	
  RULES AND REGULATIONS

  
	
   

  	
   

  	
   

  
	
  E

  	
   

  	
  FORM OF ESTOPPEL CERTIFICATE

  
	
   

  	
   

  	
   

  
	
  F

  	
   

  	
  EXPANSION SPACE - SUPERIOR TENANTS’
  RIGHTS

  
	
   

  	
   

  	
   

  
	
  G

  	
   

  	
  SPECIFICATIONS - BUILDING TOP SIGNAGE AND
  MONUMENT SIGNAGE

  
	
   

  	
   

  	
   

  
	
  H

  	
   

  	
  HVAC SPECIFICATIONS

  
	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  CLEANING SPECIFICATIONS

  
	
   

  	
   

  	
   

  
	
  J

  	
   

  	
  INTENTIONALLY DELETED

  
	
   

  	
   

  	
   

  
	
  K

  	
   

  	
  DETERMINATION OF RENTABLE SQUARE FEET FOR
  PARTIAL FLOORS

  
	
   

  	
   

  	
   

  
	
  L

  	
   

  	
  FORM OF MEMORANDUM OF LEASE

  
	
   

  	
   

  	
   

  
	
  M

  	
   

  	
  OUTLINE OF PARKING AREA

  

 

iv

 

1800 CENTURY PARK EAST

 

INDEX OF MAJOR DEFINED TERMS

 

	
  DEFINED
  TERMS

  	
   

  
	
   

  	
   

  
	
  AAA

  	
   

  
	
  Abatement Event

  	
   

  
	
  Acceptance
  Notice

  	
   

  
	
  Actual Cost

  	
   

  
	
  Additional Rent

  	
   

  
	
  Affected Area

  	
   

  
	
  Affiliate

  	
   

  
	
  Air
  Quality Standards

  	
   

  
	
  Alterations

  	
   

  
	
  Arbitration
  Notice

  	
   

  
	
  Arbitrator

  	
   

  
	
  ASHRAE

  	
   

  
	
  Availability
  Notice

  	
   

  
	
  Availability
  Rent

  	
   

  
	
  Available
  Electricity

  	
   

  
	
  Available Space

  	
   

  
	
  Base Rent

  	
   

  
	
  Base Year

  	
   

  
	
  BOMA

  	
   

  
	
  Brokers

  	
   

  
	
  Building

  	
   

  
	
  Building
  HVAC System

  	
   

  
	
  Building
  Structure

  	
   

  
	
  Building
  Systems

  	
   

  
	
  Building
  Top Signage

  	
   

  
	
  Cleaning
  Specifications

  	
   

  
	
  Code

  	
   

  
	
  Commission
  Agreement

  	
   

  
	
  Common Areas

  	
   

  
	
  Comparable
  Buildings

  	
   

  
	
  Comparable Systems
  Buildings

  	
   

  
	
  Cure Notice

  	
   

  
	
  Cut

  	
   

  
	
  Damage
  Termination Date

  	
   

  
	
  Damage Termination Notice

  	
   

  
	
  Delivery
  Date

  	
   

  
	
  Direct Expenses

  	
   

  
	
  Early Put

  	
   

  
	
  Early Put Dates

  	
   

  
	
  Ed Code

  	
   

  
	
  Emergency
  Cure Period

  	
   

  
	
  Emergency
  Notice

  	
   

  
	
  Essential
  Services

  	
   

  
	
  Estimate

  	
   

  
	
  Estimate
  Statement

  	
   

  
	
  Estimated
  Excess

  	
   

  
	
  Excess

  	
   

  
	
  Excess
  Consumption

  	
   

  
	
  Expansion Rent

  	
   

  
	
  Expansion
  Rent Notice

  	
   

  
	
  Expansion Space

  	
   

  
	
  Expansion Space
  Commencement Date

  	
   

  
	
  Expense Year

  	
   

  
	
  Extended
  Outside Date

  	
   

  
	
  Fair
  Market Rent

  	
   

  
	
  Fair Market Rent
  Expansion Notice

  	
   

  
	
  First Option
  Rent

  	
   

  
	
  First Option
  Term

  	
   

  
	
  Fixed Costs

  	
   

  
	
  Force Majeure

  	
   

  
	
  Hazardous
  Materials

  	
   

  
	
  Holidays

  	
   

  

 

v

 

	
  Initial Audit

  	
   

  
	
  Intention to Transfer
  Notice

  	
   

  
	
  Interest Rate

  	
   

  
	
  JAMS

  	
   

  
	
  Landlord

  	
   

  
	
  Landlord
  Affiliates

  	
   

  
	
  Landlord’s
  Broker

  	
   

  
	
  Landlord’s
  Group

  	
   

  
	
  Landlord’s
  Security

  	
   

  
	
  Lease

  	
   

  
	
  Lease
  Commencement Date

  	
   

  
	
  Lease
  Expiration Date

  	
   

  
	
  Lease Term

  	
   

  
	
  Legal
  Requirements

  	
   

  
	
  Monument
  Signage

  	
   

  
	
  Necessary
  Action

  	
   

  
	
  Nine Month
  Period

  	
   

  
	
  Notice Date

  	
   

  
	
  Notices

  	
   

  
	
  Offset Right

  	
   

  
	
  On

  	
   

  
	
  Operating
  Expenses

  	
   

  
	
  Option Notice

  	
   

  
	
  Option
  Notice Period

  	
   

  
	
  Option Rent

  	
   

  
	
  Option Rent
  Notice

  	
   

  
	
  Option Term

  	
   

  
	
  Passenger Elevator
  Specifications

  	
   

  
	
  Passenger
  Elevators

  	
   

  
	
  Personal
  Property

  	
   

  
	
  Possessory
  Interest Tax

  	
   

  
	
  Pre-Occupancy
  Period

  	
   

  
	
  Pre-Occupancy
  Space

  	
   

  
	
  Premises

  	
   

  
	
  Project

  	
   

  
	
  Proposition 13

  	
   

  
	
  Real
  Property

  	
   

  
	
  Reassessment

  	
   

  
	
  Recognition
  Agreement

  	
   

  
	
  Rent

  	
   

  
	
  Repair Invoice

  	
   

  
	
  Repair Notice

  	
   

  
	
  Request Notice

  	
   

  
	
  Required Action

  	
   

  
	
  Rules
  and Regulations

  	
   

  
	
  Second Notice

  	
   

  
	
  Second
  Option Rent

  	
   

  
	
  Second
  Option Term

  	
   

  
	
  Security Area

  	
   

  
	
  Security
  Deposit

  	
   

  
	
  Services Termination
  Notice

  	
   

  
	
  Sick
  Building

  	
   

  
	
  Single Policy

  	
   

  
	
  Statement

  	
   

  
	
  Subject Space

  	
   

  
	
  Subleasing
  Costs

  	
   

  
	
  Suite 1000

  	
   

  
	
  Suite 1050

  	
   

  
	
  Summary

  	
   

  
	
  Superior
  Right Holders

  	
   

  
	
  Supplemental Parking Area

  	
   

  
	
  Systems
  and Equipment

  	
   

  
	
  Tax Expenses

  	
   

  
	
  Tax Increase

  	
   

  
	
  Telecommunications System

  	
   

  
	
  Tenant

  	
   

  
	
  Tenant
  HVAC System

  	
   

  
	
  Tenant’s Broker

  	
   

  
	
  Tenant’s Group

  	
   

  
	
  Tenant’s
  Property

  	
   

  
	
  Tenant’s
  Security

  	
   

  

 

vi

 

	
  Tenant’s Share

  	
   

  
	
  Termination
  Cure Period

  	
   

  
	
  Third Party
  Lease

  	
   

  
	
  Transfer Notice

  	
   

  
	
  Transfer
  Premium

  	
   

  
	
  Transfer Space

  	
   

  
	
  Transferee

  	
   

  
	
  Transfers

  	
   

  
	
  Variable
  Components

  	
   

  
	
  Ventilation
  for Acceptable Indoor Air Quality

  	
   

  

 

vii

 

1800 CENTURY PARK EAST

 

OFFICE LEASE

 

This Office Lease,
which includes the preceding Summary of Basic Lease Information (the “SUMMARY”) attached hereto and incorporated herein by this
reference (the Office Lease and Summary to be known collectively as the “LEASE”), dated as of the date set forth in SECTION 1 of the
Summary, is made by and between STATE TEACHERS’ RETIREMENT SYSTEM, a retirement
system created under the laws of the State of California (“LANDLORD”),
and HERBALIFE INTERNATIONAL OF AMERICA, INC., a California corporation (“TENANT”).

 

ARTICLE 1

 

REAL PROPERTY, BUILDING AND PREMISES

 

1.1                                 REAL
PROPERTY, BUILDING AND PREMISES.  Upon
and subject to the terms, covenants and conditions hereinafter set forth in
this Lease, Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord the premises set forth in SECTION 6 of the Summary (the “PREMISES”), which Premises are located in the “Building,” as
that term is defined in this SECTION 1.1. The outline of the floor plan of
the Premises is set forth in EXHIBIT A attached hereto.  The Premises are a part of the building (the
“BUILDING”) located at 1800 Century Park East, Los
Angeles, California.  The Building
contains 244,792 rentable square feet. 
Tenant’s rights to the Premises do not include the right to use the
janitorial closet and the fan, electrical, and telephone rooms on the floors of
the Building containing all or a portion of the Premises (provided that Tenant
shall be permitted to use the telephone room on the floor or floors of the
Premises to terminate its telephone cable in the same and install and maintain
Tenant’s telephone equipment but only to the extent such equipment does not
interfere with normal operation of the Building telephone equipment in such
room, and thereafter Tenant shall have access thereto upon prior notice to
Landlord and, except in emergencies, when accompanied by a representative of
Landlord), and do not include the right to use, or access to, any ceilings or space
above the ceilings on the floors of the Building containing the Premises
(provided that Tenant shall be allowed to use such space on the floor or floors
of the Premises as necessary for providing utility services such as the
installation of computer cable conduits, as approved by Landlord, and
thereafter Tenant shall have access to such space upon prior notice to Landlord
and, except in emergencies, when accompanied by a representative of Landlord),
nor do Tenant’s rights to the Premises include the right to use, or access to,
any floors or walls on the floor or floors containing the Premises (with the
exception of the inner surfaces thereof and with the further exception of any
walls which are constructed solely to partition space within the Premises).  The Building, the parking structure beneath
the Building (the “MAIN PARKING AREA”) and the parking structure adjacent to
the Building (the “SUPPLEMENTAL PARKING AREA”)
(collectively, the “ON-SITE PARKING AREA”), the land upon which the Building
stands and the land and improvements surrounding the Building which are common
areas appurtenant to or servicing the Building are herein sometimes
collectively referred to as the “REAL PROPERTY.”

 

1.2                                 COMMON
AREAS.  Tenant is hereby granted the
right to the nonexclusive use of the common corridors and hallways, stairwells,
elevators, restrooms and other public or common areas located on the Real
Property designated by Landlord for the common use of the tenants of the
Building (collectively, the “COMMON AREAS”); provided,
however, that the manner in which such Common Areas are maintained and operated
shall be at the reasonable discretion of Landlord, and the use thereof by
Tenant and other persons and entities shall be subject to the Rules and
Regulations (as the same may be modified from time to time in a reasonable,
non-discriminatory manner) and as required by local governmental and
quasi-governmental authorities.  Landlord
reserves the right to make alterations or additions to or to change the
location of elements of the Real Property and the Common Areas; provided,
however, that, if there is no emergency condition requiring such alteration or
change, Landlord shall provide Tenant with fifteen (15) business days prior
notice of any of the actions set forth in this SECTION 1.2, above, to be
taken by Landlord if such action will substantially interfere with Tenant’s
ability to (i) conduct business in the Premises, (ii) gain access to and from
the On-site Parking Area and adjacent streets, or (iii) use the On-site Parking
Area.  Landlord shall at all times during
the Lease Term, maintain and operate the Common Areas in a first-class manner
customary to Comparable

 

1

 

Buildings. 
Subject to the terms of this Lease (including any provisions hereof
which cover impairment of access), Tenant shall have the right of access to the
Premises, the Building and the On-site Parking Area 24-hours per day, 7-days
per week during the “Lease Term” as that term is defined in SECTION 2.1 of
this Lease.

 

1.3                                 VERIFICATION
OF RENTABLE SQUARE FEET OF PREMISES AND BUILDING. For purposes of this Lease,
“usable square feet” shall be calculated pursuant to Standard Method for
Measuring Floor Area in Office Buildings, ANSI Z65.1 - 1980 (“BOMA”).  Landlord and Tenant agree that the number of
usable and rentable square feet contained in the Premises initially leased by
Tenant pursuant to this Lease are as set forth in SECTION 6 of the Summary
and the number of rentable square feet in the Building is as set forth in
SECTION 1.1, above. Rentable square feet for any full floors leased by
Tenant of any Expansion Space or Available Space shall be the product of (i)
1.051 and (ii) the number of usable square feet contained in such space,
measured pursuant to BOMA.  Rentable
square feet for any partial floors leased by Tenant as Expansion Space or
Available Space shall be the product of (A) the number of usable square feet
contained in such space measured pursuant to BOMA, and (B) the load factor for
the floor such space is located on, as determined in Landlord’s reasonable
discretion.  The current load factors for
the Building are as set forth in EXHIBIT K attached hereto.

 

1.4                                 BASE
BUILDING.  Landlord shall complete or
cause to be completed, at its own cost and expense, the “Base Building,” as
that term is defined in the Tenant Work Letter, attached hereto as EXHIBIT B.
Except as specifically set forth in this Lease and in the Tenant Work Letter,
Landlord shall not provide or pay for any improvement work or services related
to the improvement of the Premises. 
Tenant also acknowledges that Landlord has made no representation or
warranty regarding the condition of the Premises or the Building except as
specifically set forth in this Lease and the Tenant Work Letter.

 

1.5                                 EXPANSION
SPACE.  Landlord hereby grants to Tenant
the option to lease approximately 8758 rentable square feet of space known as
Suite 1000 (“SUITE 1000”) and 6748 rentable square feet
of space known as Suite 1050 (“SUITE 1050”), located on
the tenth (10th) floor of the Building (collectively, the “EXPANSION SPACE”), as set forth in EXHIBIT A-1 attached
hereto, upon the terms and conditions set forth in this SECTION 1.5 and
this Lease. Notwithstanding the foregoing, Tenant’s right to lease Expansion
Space shall be subordinate to, and shall commence only after the expiration of,
the “Existing Tenant’s Rights”, as that term is defined in Section 1.6,
below..

 

1.5.1                        METHOD
OF EXERCISE.  Tenant’s option to lease
any of the Expansion Space shall be exercised in the following manner.  Landlord shall inform Tenant prior to the
date a particular Expansion Space will become available to occupy by Tenant,
which notice in any event may not be delivered before July 31, 1998 as to
Suite 1000 and November 30, 1998 as to Suite 1050. Tenant shall, within
fifteen (15) business days thereafter, deliver written notice to Landlord
stating that Tenant is interested in exercising its right to lease the
applicable Expansion Space.  Landlord,
within fifteen (15) business days after receipt of Tenant’s notice, shall
deliver notice to Tenant (the “EXPANSION RENT
NOTICE”), setting forth the “Expansion Rent”, as that term is defined in
SECTION 1.5.2 hereof. If Tenant wishes to exercise such option, Tenant
shall, on or before the date occurring fifteen (15) business days after
Tenant’s receipt of the Expansion Rent Notice, exercise Tenant’s option to
lease by delivering written notice thereof to Landlord. Concurrent with such
exercise Tenant may object to the Expansion Rent set forth in the Expansion
Rent Notice, in which case Landlord and Tenant shall use good faith efforts to
agree on the Expansion Rent.  In the
event that Landlord and Tenant do not agree to the Expansion Rent within fifteen
(15) days of Tenant’s election to lease any of the Expansion Space, Tenant
shall deliver a notice to Landlord (the “FAIR
MARKET RENT EXPANSION NOTICE”) electing to submit the Expansion Rent to
arbitration, and the Expansion Rent shall be determined as set forth in
SECTION 2.2.2 of this Lease.

 

1.5.1.1               LANDLORD’S
EARLY PUT RIGHT.  If for any reason
Landlord is able to offer Tenant occupancy of the Expansion Space earlier than
November 30, 1997 for Suite 1000, or March 31, 1998 for Suite 1050,
(the “EARLY PUT DATES”), Landlord shall notify Tenant
of such availability (the “EARLY PUT”), and Tenant shall
then have fifteen (15) business days after Tenant’s receipt of Landlord’s
notice to notify Landlord of its interest in exercising its option on the
offered

 

2

 

Expansion Space.  If Tenant elects to exercise its option
pursuant to the Early Put the parties shall follow the procedures set forth in
sentences three, four and five of SECTION 1.5.1 above.

 

1.5.1.2               RIGHTS
FOLLOWING EARLY PUT.  If Tenant declines
to then exercise its rights under SECTION 1.5.1.1 with respect to the
Early Put, or fails to respond within the fifteen (15) business day period,
Landlord shall have the right to lease such Expansion Space to a third party
(the “THIRD PARTY LEASE”) for a term with an
expiration date which occurs on or before the earlier of (i) the last day of
the fifth year of such term and (ii) November 30, 2000, as to Suite 1000
and March 31, 2001, as to Suite 1050. 
Following the expiration of the Third Party Lease, Landlord shall notify
Tenant of the availability of the Expansion Space and Tenant shall then have
fifteen (15) days after Tenant’s receipt of Landlord’s notice to notify
Landlord of its interest in exercising its option on such Expansion Space.  If Tenant elects to exercise its option, the
parties shall follow the procedures set forth in sentences three, four and five
of Section 1.5.1 above.

 

1.5.2                        EXPANSION
RENT.  The Rent payable by Tenant for
Expansion Space leased by Tenant (the “EXPANSION RENT”)
shall be equal to the then “Fair Market Rent,” as that term is defined in
SECTION 2.2.1.1, below, for the applicable Expansion Space.

 

1.5.3                        CONSTRUCTION
OF EXPANSION SPACE.  Except as otherwise
set forth in this SECTION 1.5 or as otherwise agreed to by Landlord and
Tenant, the construction of improvements in the Expansion Space shall be
governed by the applicable terms of the Expansion Rent and the Tenant Work
Letter attached hereto as EXHIBIT B, and for such purposes all references in
the Tenant Work Letter to the “Premises” shall mean and refer to the applicable
Expansion Space. Tenant shall receive an improvement allowance for the
Expansion Space as determined as a component of the applicable Expansion Rent.

 

1.5.4                        AMENDMENT
TO LEASE.  If Tenant timely exercises
Tenant’s right to lease Expansion Space as set forth herein, Landlord and
Tenant shall within a reasonable after determination of the Expansion Rent,
execute an amendment adding such Expansion Space to the Lease upon the same
terms and conditions as the initial Premises, except as other-wise set forth in
this SECTION 1.5. Tenant shall commence payment of Rent for the Expansion
Space and the term of the Expansion Space shall commence upon a date (the “EXPANSION SPACE COMMENCEMENT DATE”)
determined as a component of the applicable Expansion Rent.  The lease term of the Expansion Space shall
expire on the Lease Expiration Date.

 

1.5.5                        TERMINATION
OF EXPANSION SPACE RIGHT.  Tenant shall
not have the right to lease the Expansion, as provided in this SECTION 1.5,
if Tenant, as of the date of the attempted exercise of any right to lease the
Expansion Space by Tenant, or as of the date of delivery of such Expansion
Space to Tenant, is in “Material Default” under this Lease beyond applicable
notice and cure periods. For the purposes of this Lease, a “Material Default”
shall consist of any default under SECTION 19.1.1., or 19.1.5, below, or a
material default under SECTION 19.1.2, below.  The rights contained in this SECTION 1.5
shall be personal to the Tenant named in the Summary and its “Affiliates,” as
that term is defined in SECTION 14.6 of this Lease, and to any assignee
(and not by any sublessee or other Transferee) of the Lease approved by
Landlord pursuant to the terms of ARTICLE 14, and may only be exercised by
such Tenant, an Affiliate, or an assignee (and not any sublessee or other
Transferee) if Tenant and its Affiliates, or the assignee occupies at least
four (4) full floors of the Premises. 
Time is of the essence of the right of exercising Tenant’s option as to
the Expansion.  Failure by Tenant to
exercise its rights in a timely manner shall terminate the right with respect
to the affected space.  In addition, the
right of Tenant’s exercising option as to the Expansion offer shall expire if
Tenant does not exercise the First Option or the Second Option as set forth in
SECTION 2.2.

 

1.6                                 RIGHT OF
AVAILABILITY.  Subject to the terms set
forth in this SECTION 1.6, Landlord hereby grants to Tenant a continuing
right of availability to the “Available Space,” as that term is defined below,
on the terms and conditions set forth in this SECTION 1.6.  Such right of availability shall be subject
to the terms and conditions (including expansion and first offer rights) of leases
existing in the Building as of the date of this Lease as such rights are set
forth in EXHIBIT F attached hereto (the “EXISTING TENANT’S RIGHTS”), and
further subject and subordinate to any and all present and future rights of
other current and future tenants of the Building (collectively the “SUPERIOR RIGHT HOLDERS”) with respect to such
space, other than rights of first offer, first

 

3

 

refusal, first availability or any right to
expand which does not contain the right to expand into a predetermined amount
of space at a predetermined time period benefiting future tenants or
benefitting current tenants (unless contained in leases in existence as of the
date of this Lease).

 

1.6.1                        PROCEDURE
FOR AVAILABILITY RIGHT.  Tenant may
inform Landlord (the “REQUEST NOTICE”), not more than
twice in any Lease Year, that Tenant desires to lease additional space in the
Building.  Landlord shall, within ten
(10) business days of receiving the Request Notice, deliver to Tenant a notice
(the “AVAILABILITY NOTICE”), which Availability
Notice shall describe all space in the Building, other than on the first floor,
which will become available (including space which will become available only
following a tenant’s failure to exercise an option to extend its term or expand
its premises) for lease to Tenant within the three (3) year period commencing
on the date of the Availability Notice, the lease rights relating to such
space, and the projected dates upon which such space will become available to
lease (the “AVAILABLE SPACE”), as well as the
rentable square footage of the Available Space, and Landlord’s determination of
the “Availability Rent,” as that term is defined in SECTION 1.6.3, below,
for each such space,

 

1.6.2                        PROCEDURE
FOR ACCEPTANCE.  If Tenant wishes to
exercise its right of first availability, then within ten (10) business days of
delivery of the Availability Notice to Tenant, Tenant shall deliver notice (the
“ACCEPTANCE NOTICE”) to Landlord exercising
Tenant’s right of availability as to all or any portion of the space described
in the Availability Notice.  If Tenant
timely exercises its right of availability as set forth herein, Landlord and
Tenant shall, within thirty (30) days after Landlord’s receipt of the
Acceptance Notice, execute an amendment to this Lease adding the space
described in the Acceptance Notice to the Premises upon the terms and
conditions as determined as a component of the “Availability Rent” as that term
is defined in Section 1.6.3, BELOW. 
If Tenant does not timely deliver the Acceptance Notice, then Landlord
shall be free to lease any of the space described in the Availability Notice to
anyone to whom Landlord desires and on any terms Landlord desires.
Notwithstanding the foregoing, Tenant shall not have a right to lease less than
an entire portion of Available Space offered to Tenant by Landlord in any
particular Availability Notice except as follows.

 

1.6.2.1               AVAILABLE SPACE ON
MULTI-TENANT FLOORS. In the case of an Available Space which does not consist
of all the space located on a floor, Tenant shall have the right to lease any
or all of the Available Space on such floor, so long as any space remaining on
such floor after Tenant’s lease of the applicable Available Space remains, in
Landlord’s reasonable determination, in a leasable configuration,

 

1.6.2.2               Available Space ON
FULL FLOORS.  In the case where any
Available Space consists of an entire floor of the Building, Tenant shall not
have the right to lease less than the full floor, unless (i) Tenant shall lease
at least 10,000 rentable square feet of such floor, and (ii) Landlord is unable
to deliver to Tenant a comparable amount of space on a multi-tenant floor
within nine (9) months after the date the space on such full floor will be
delivered to Tenant.

 

1.6.3                        AVAILABILITY
RENT.  The Rent payable by Tenant for the
Available Space (the “AVAILABILITY RENT”) shall be
the “Fair Market Rental Value” for such space, as that term is defined in
SECTION 2.2.1.1 of this Lease.  In
the event that, concurrently with Tenant’s delivery of the Acceptance Notice,
Tenant notifies Landlord that it does not accept the Availability Rent set
forth in the Availability Notice, the Availability Rent shall be determined in
accordance with the procedures set forth in SECTION 2.2.2 of this Lease,
otherwise, the Availability Rent shall be as set forth in Landlord’s
Availability Notice.

 

1.6.4                        TERMINATION
OF RIGHT OF AVAILABILITY.  Tenant shall
not have the night to lease Available Space, as provided in this
SECTION 1.6, if Tenant, as of the date of the attempted exercise of such
right by Tenant, or as of the date of delivery of such Available Space to
Tenant, is in Material Default under this Lease beyond applicable notice and
cure periods.  The rights contained in
this SECTION 1.6 shall be personal to the Tenant named in the Summary, its
Affiliates, and to any assignee (but not to any sublessee or other Transferee)
of the Lease approved by Landlord pursuant to the terms of Article 14, and
may only be exercised by such Tenant, an Affiliate or an assignee (and not any
sublessee or other Transferee) if Tenant and its Affiliates, or the assignee
occupies at least four (4) full floors of the Premises.  Time is of the essence of the right of
availability.  Failure by Tenant to
exercise its rights in a timely manner shall terminate the

 

4

 

right with respect to the affected
space.  In addition, the right shall
expire if Tenant does not exercise the First Option or the Second Option as set
forth in SECTION 2.2.

 

ARTICLE 2

 

LEASE TERM

 

2.1                                 INITIAL
TERM.

 

2.1.1                        LEASE
TERM.  The terms and provisions of this
Lease shall be effective as of the date of this Lease except for the provisions
of this Lease relating to the payment of Rent. 
The term of this Lease (the “LEASE TERM”) shall be
as set forth in Section 7.1 of the Summary and shall commence on the date
(the “LEASE COMMENCEMENT DATE”) set forth in
Section 7.2 of the Summary (subject, however, to the terms of
Section 5 of the Tenant Work Letter), and shall terminate on the date (the
“LEASE EXPIRATION DATE”) set forth in
SECTION 7.3 of the Summary, unless this Lease is sooner terminated as
hereinafter provided.  For purposes of
this Lease, the term “Lease Year” shall mean each consecutive twelve (12) month
period during the Lease Term commencing on the Lease Commencement Date;
provided that the last Lease Year shall end on the Lease Expiration Date.  The taking of possession of the Premises by
Tenant shall conclusively establish that the Premises and the Base Building
were in satisfactory condition at such time, provided that Tenant shall have
the right to submit a punch list within thirty (30) days of Landlord’s delivery
of the Base Building to Tenant detailing any Base Building items which fail to
comply with the Tenant Work Letter. 
Landlord shall then complete said punch list items as required in the
Tenant Work Letter.  Notwithstanding the
definition of the Lease Commencement Date for the Premises set forth above, if
Tenant commences business operations from any portion of the Premises prior to
the occurrence of the Lease Commencement Date (each space occupied to be known
as the “PRE-OCCUPANCY SPACE”), all of the terms
and conditions of this Lease shall apply to that portion of the Premises
containing the Pre-Occupancy Space, except that Tenant shall have no obligation
to pay any Base Rent or Direct Expenses during the period commencing on the
date Tenant commences business operations from the applicable Pre-Occupancy
Space and continuing until the Lease Commencement Date (the “PRE-OCCUPANCY PERIOD”).  Tenant shall however be obligated to pay
parking charges during the Pre-Occupancy Period for any parking spaces used by
Tenant other than in connection with the construction of the Premises. Tenant
shall have the right to commence business operations from any portion of the
Premises during the Pre-Occupancy Period, provided that a certificate of
occupancy or its equivalent permitting occupancy shall have been issued by the
appropriate governmental authorities for the Pre-Occupancy Space.

 

2.1.2                        Intentionally
Deleted.

 

2.2                                 OPTION
TERMS.

 

2.2.1                        OPTION
RIGHTS.  Tenant shall have two (2)
options to extend the Lease Term for a period of five (5) years each (the “FIRST OPTION TERM” and the “SECOND OPTION TERM,”
respectively), (the foregoing option terms shall be referred to hereinafter
sometimes individually or collectively as the “OPTION TERM”),
which options shall be exercisable by notice delivered by Tenant to Landlord as
provided below.  Upon the proper exercise
of each such option to extend, the initial Lease Term or First Option Term, as
applicable, shall be extended by the Option Term, subject to every term and
condition of this Lease, except that the applicable “Option Rent,” as that term
is defined in SECTION 2.2. 1. 1, below, shall be determined as set forth
in SECTION 2.2. 1. 1, below. Tenant shall have the right, exercisable
concurrently with Tenant’s delivery of the “OPTION NOTICE,” as that term is
defined below, to reduce the number of rentable square feet of office space which
Tenant shall rent during the ensuing Option Term; provided, however, that
Tenant may only reduce the size of the Premises in full floor increments (or so
much of a floor as shall be leased by Tenant in the event of less that full
floor leasing), and in no event shall Tenant be allowed to reduce the Premises
to less than four (4) full contiguous floors. 
Tenant shall incur no penalty or charge in connection with the reduction
in the size of the Premises during the ensuing Option Term.

 

2.2.1.1               OPTION
RENT.  The rent payable by Tenant during
the First Option Term (the “FIRST OPTION RENT”) or
the Second Option Term ( the “SECOND OPTION RENT”),
as

 

5

 

the case may be (collectively, the “OPTION RENT”), shall be equal to the then “Fair Market
Rent.” “FAIR MARKET RENT,” as used in this Lease, shall be equal to (a)
ninety-five percent (95%) (or, in the case of Expansion Space, Available Space,
or an Option Term for less than all of the Premises, 100%) of the face or stated
rental rate (including all escalations thereto) and (b) one hundred percent
(100%) of the other non-discounted economic terms at which tenants comparable
to Tenant, as of the first day of the applicable Option Term or expansion term,
are leasing for a comparable term, non-sublease, non-encumbered, non-equity
space comparable in size, location and quality to the Premises, Expansion Space
or Available Space, as applicable, from a willing, comparable landlord, at
arm’s length in transactions where the tenant’s were represented by a third
party, arms length broker that received a customary commission from the
landlord, which comparable space is located in the Building or in the
“Comparable Buildings,” as that term is defined in SECTION 29.35 hereof, taking
into consideration (i) a new base year in connection with the payment of
operating and tax expenses, (ii) rental abatement concessions being given such
tenants, if any, in connection with such comparable space and, except with
respect to any Option Term, in connection with the period of construction of
such space, (iii) tenant improvement allowances and the value of tenant
improvement work provided or to be provided for such comparable space taking
into account and deducting the value of the existing improvements in the
Premises, such value to be based upon the age, quality and layout of the
improvements and the extent to which the same can be utilized by Tenant, and in
the case of any Option Term, taking into account the fact that such
improvements were specifically suitable to Tenant at the time they were
constructed, and, (lv) other monetary concessions, if any, paid to such
tenants.

 

2.2.1.2               EXERCISE
OF OPTIONS, Each option shall be exercised by Tenant in the following manner:
(i) Tenant shall deliver notice to Landlord (the “OPTION
NOTICE”) not more than twenty-one (21) months and not less than eighteen
(18) months prior to the expiration of the initial Lease Term or the First
Option Term, as the case may be, stating that Tenant is interested in
exercising its option, (ii) Landlord, after receipt of Tenant’s notice, shall
deliver notice (the “OPTION RENT NOTICE”) to
Tenant not more than eighteen (18) months and not less than sixteen (16) months
prior to the expiration of the initial Lease Term or the First Option Term, as
the case may be (the “OPTION NOTICE PERIOD”),
setting forth the proposed First Option Rent or the proposed Second Option
Rent, as the case may be, which shall be applicable to this Lease during the
applicable Option Term; and (iii) if Tenant elects to exercise the option, then
on or before the later of (A) sixty (60) days after delivery of the Option Rent
Notice, and (B) the date which is fourteen (14) months prior to the expiration
of the initial Lease Term or First Option Term, as applicable, Tenant shall
deliver notice to Landlord’s exercising the option and, concurrent with such
exercise, Tenant may object to the Option Rent contained in the Option Rent
Notice, in which case the parties shall follow the procedure, and the
applicable Option Rent shall be determined, as set forth in SECTION 2.2.2
of this Lease. Notwithstanding the foregoing, if Tenant fails to deliver the
Option Notice during the Option Notice Period, Tenant may nevertheless, on or
before the date which is fourteen (14) months prior to the expiration of the
initial Lease Term or First Option Term, as the case may be, deliver to
Landlord notice that Tenant elects to exercise its option to extend the Lease
Term, in which case the Option Rent shall be determined as set forth in Section 2.2.2,
below,

 

2.2.2                        DETERMINATION
OF OPTION RENT BY ARBITRATION.  In the
event Tenant timely objects to the applicable Option Rent, Landlord and Tenant
shall in good faith attempt to agree upon the applicable Option Rent.  If Landlord and Tenant fail to reach
agreement within ten (10) days following Tenant’s objection to the applicable
Option Rent (the “OUTSIDE AGREEMENT DATE”), then Tenant shall make a separate
determination of the applicable Option Rent (and notify Landlord of such
determination), within ten (10) days, and such determination, together with
Landlord’s determination of the Option Rent (which may or may not be as set
forth in the Option Rent Notice), shall be submitted to arbitration in
accordance with SECTIONS 2.2.2.1 through 2.2.2.7 below.  Failure of Tenant to make a determination of
the applicable Option Rent within the ten-day period shall conclusively be
deemed Tenant’s approval of the applicable Option Rent determined by Landlord
as set forth in the Option Rent Notice.

 

2.2.2.1               Landlord and Tenant
shall each appoint one arbitrator who shall have been active over the five (5)
year period ending on the date of such appointment in the leasing (or appraisal
or investing, as the case may be) of commercial high-rise properties in the

 

6

 

Century City, California area.  Each such arbitrator shall be appointed
within fifteen (15) days after the applicable Outside Agreement Date.

 

2.2.2.2               The two arbitrators
so appointed shall within ten (10) 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 arbitrators.

 

2.2.2.3               The three arbitrators
shall within thirty (30) days of the appointment of the third arbitrator reach
a decision as to whether the parties shall use Landlord’s or Tenant’s submitted
Option Rent, and shall notify Landlord and Tenant thereof The determination of
the arbitrators shall be limited solely to the issue of whether Landlord’s or
Tenant’s submitted Option Rent is the closest to the actual Option Rent as
determined by the arbitrators, taking into account the requirements of
SECTION 2.2.1 of this Lease.

 

2.2.2.4               The decision of the
majority of the three arbitrators shall be binding upon Landlord and Tenant.

 

2.2.2.5               If either Landlord
or Tenant fails to appoint an arbitrator within (15) days after the applicable
Outside Agreement Date, the arbitrator appointed by one of them shall reach a
decision, and notify Landlord and Tenant thereof, and such arbitrator’s
decision shall be binding upon Landlord and Tenant.

 

2.2.2.6               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
SECTION 2.2.3.

 

2.2.2.7               The cost of
arbitration shall be paid by Landlord and Tenant equally.

 

2.2.3                        TERMINATION
OF OPTIONS.  Tenant shall not have the
right to exercise any Option granted in SECTION 2.2 IF Tenant, as of the date
of the attempted exercise of any Option, or as of the date of commencement of
the applicable Option Term, is in Material Default under this Lease beyond
applicable notice and cure periods.  The
rights contained in this SECTION 2.2 are personal to the Tenant named in
the Summary, its Affiliates, and to any assignee (but not to any sublessee or
Transferee) of the Lease approved by Landlord pursuant to the terms of
Article 14, and may only be exercised by such Tenant, an Affiliate, or an
assignee (and not any sublessee or other Transferee) if Tenant and its
Affiliate, or such assignee occupies at least four (4) full floors of the
Premises.  Time is of the essence of the
Options. Failure by Tenant to exercise its rights in a timely manner shall
terminate the Options. In addition, the Second Option shall terminate
immediately if the First Option is not exercised.

 

ARTICLE 3

 

BASE RENT

 

Tenant shall pay,
without notice or demand, to Landlord or Landlord’s agent at the management
office of the Building, or at Landlord’s option, at such other place in the
city of Los Angeles as Landlord may from time to time designate in writing, in
United States currency or a good check for United States currency, base rent (“BASE RENT”) as set forth in Section 8 of the Summary, payable
in equal monthly installments as set forth in Section 8 of the Summary in
advance on or before the first day of each and every month during the Lease
Term, without any setoff or deduction whatsoever, except as otherwise
specifically provided in this Lease.  The
Base Rent for the first full month of the Lease Term, which occurs after the
expiration of any free rent period, shall be paid at the time of Tenant’s
execution of this Lease. If any rental payment date (including the Lease
Commencement Date) falls on a day of the month other than the first day of such
month or if any rental payment is for a period which is shorter than one month,
the rental for any fractional month shall accrue on a daily basis for the
period from the date such payment is due to the end of such calender month or
to the end of the Lease Term at a rate per day which is equal

 

7

 

to 1/365 of the Base Rent.  All other payments or adjustments required to
be made under the terms of this Lease that require proration on a time basis
shall be prorated on the same basis.

 

ARTICLE 4

 

ADDITIONAL RENT

 

4.1                                 ADDITIONAL
RENT.  In addition to paying the Base
Rent specified in Article 3 of this Lease, Tenant shall pay as additional
rent “Tenant’s Share” of the annual “Direct Expenses,” as those terms are
defined in SECTIONS 4.2.7 and 4.2.2 of this Lease, respectively, which are in
excess of the amount of Direct Expenses attributable to the “Base
Year,” as that term is defined in SECTION 4.2.1 of this Lease.  Such additional rent, together with any and
all other amounts payable by Tenant to Landlord pursuant to the terms of this
Lease (other than Base Rent and any Security Deposit), shall be hereinafter
collectively referred to as the “ADDITIONAL RENT.”
The Base Rent and Additional Rent are herein collectively referred to as the
“RENT.” All amounts due under this ARTICLE 4 as Additional Rent shall be
payable for the same periods and in the same manner, time and place as the Base
Rent. Without limitation on other obligations of Tenant which shall survive the
expiration of the Lease Term, the obligations of Landlord and Tenant provided
for in this ARTICLE 4 shall survive the expiration of the Lease Term, to
the extent the same is attributable to the time period prior to the expiration
of the Lease Term.

 

4.2                                 DEFINITIONS.  As used in this Article 4, the following
terms shall have the meanings hereinafter set forth:

 

4.2.1                        “BASE
YEAR” shall mean the period set forth in SECTION 9.1 of the Summary.

 

4.2.2                        “DIRECT EXPENSES” shall mean “Operating Expenses” and
“Tax Expenses.”

 

4.2.3                        “EXPENSE YEAR” shall mean each calendar year in which any
portion of the Lease Term falls, through and including the calendar year in
which the Lease Term expires.

 

4.2.4                        “OPERATING EXPENSES” shall mean all reasonable and
actual expenses, costs and amounts of every kind and nature which Landlord
shall pay during any Expense Year because of or in connection with the
ownership, management, maintenance, repair, replacement, restoration or
operation of the Real Property, including, without limitation, any amounts paid
for (i) the cost of supplying all utilities, the cost of operating,
maintaining, repairing, renovating and managing the utility systems, mechanical
systems, sanitary and storm drainage systems, and escalator and elevator
systems, and the cost of supplies and equipment and maintenance and service
contracts in connection therewith; (ii) the cost of licenses, certificates,
permits and inspections and the cost of contesting the validity or
applicability of any governmental enactments which may affect Operating
Expenses, and the costs incurred in connection with the implementation and
operation of a governmentally mandated transportation system management program
or similar program; (iii) the cost of insurance carried by Landlord, in such
amounts as Landlord may reasonably determine; (iv) the cost of landscaping,
maintenance, relamping, and all supplies, tools, equipment and materials used
in the operation, repair and maintenance of the Building; (v) the cost of
utilities, insurance and normal repairs and maintenance, together with those
items included in item (xiii), below, incurred in connection with the On-Site
Parking Area (provided that, to the extent in any Expense Year following the
Base Year any such expenses are incurred by Landlord which in the Base Year
were not included in Operating Expenses, the Base Year parking costs shall be
deemed to be retroactively adjusted to the amount they would have been had
Landlord included such expenses in the Base Year); (vi) fees, charges and other
costs, including consulting fees, legal fees and accounting fees, of all
contractors engaged by Landlord or otherwise reasonably incurred by Landlord in
connection with the management, operation, maintenance and repair of the
Building and Real Property; (vii) any equipment rental agreements or management
agreements (including the cost of any management fee and the fair rental value
of any office space provided thereunder); (viii) wages, salaries and other
compensation and benefits of all persons engaged in the operation, management,
maintenance or security of the Building, and employer’s Social Security taxes,
unemployment taxes or insurance, and any other taxes which may be levied on
such wages, salaries, compensation and benefits; provided, that if any
employees of Landlord provide services for more than one building of Landlord,
then a prorated portion of such employees’ wages, benefits and taxes shall be
included in Operating Expenses based on the

 

8

 

portion of their working time devoted to
the Building; (xi) payments under any easement, license, operating agreement,
declaration, restrictive covenant, instrument or agreement pertaining to the
Building which comes into existence after the date of this Lease and which is
approved or agreed to by Tenant;(x) operation, repair, replacement and
maintenance of all “Systems and Equipment,” as that term is defined in
SECTION 4.2.5 hereof, and components thereof; (xi) the cost of janitorial
service, alarm and security service, window cleaning, trash removal,
replacement of wall and floor coverings, ceiling tiles and fixtures in lobbies,
corridors, restrooms and other common or public areas or facilities, maintenance
and replacement of curbs and walkways, repair to roofs and re-roofing; (xii)
amortization (including interest at the Interest Rate, on the unamortized cost)
of the cost of acquiring or the rental expense of personal property used in the
maintenance, operation and repair of the Building and Real Property; and (xiii)
cost of capital improvements or other costs incurred in connection with the
Real Property (A) which are reasonably intended to reduce Operating Expenses,
provided that such costs shall be included in Operating Expenses only to the
extent of Landlord’s reasonably anticipated yearly reduction of Operating
Expenses for that particular Expense Year caused by such capital improvement,
or (B) that are required under any governmental law or regulation that was not
enacted prior to the Lease Commencement Date; provided, however, that any
capital expenditure shall be amortized (including interest on the unamortized
cost) over its reasonable useful life. 
If Landlord is not furnishing any particular work or service (the cost
of which, if performed by Landlord, would be included in Operating Expenses) to
a tenant who has undertaken to perform such work or service in lieu of the
performance thereof by Landlord, Operating Expenses shall be deemed to be increased
by an amount equal to the additional Operating Expenses which would reasonably
have been incurred during such period by Landlord if it had at its own expense
furnished such work or service to such tenant. Notwithstanding anything to the
contrary set forth herein, for any Expense Year in which other than one hundred
percent (100%) of the rentable space in the Building is leased during the
entire Expense Year all “Variable Components,” as that term is defined in this
SECTION 4.2.4, below, of Operating Expenses for such Expense Year shall be
grossed-up, employing sound accounting and property management principles, to
the amount such Variable Components would have been in the event the Building
has been one hundred percent (100%) leased during the entire Expense Year and
the adjusted amount of the Variable Components shall be used in determining
Operating Expenses for such Expense Year. 
Such adjustment, however shall not result in Landlord receiving from
Tenant and other tenants in connection with the Variable Components more than
one hundred percent (100%) of the cost of such Variable Components.  “VARIABLE
COMPONENTS” shall be those componenets that vary based upon occupancy
levels and shall specifically exclude Fixed Costs.  “FIXED COSTS” means
(a) premiums incurred by Landlord for liability insurance and property damage
insurance relating to Landlord’s ownership and/or operation of the Building to
the extent such rates are not affected by occupancy rates, (b) landscaping
costs relating to the Building, (c) Building management office rent, (d)
exterior window washing costs and (e) to the extent the same are not affected
by the occupancy level of the Building, costs, including janitorial and utility
costs, relating to portions of the Common Areas located outside the Building
and portions of the Common Area located within the Building, which Common Areas
are not located on floors of the Building above the lobby level of the
Building.

 

Notwithstanding the foregoing provisions of
this SECTION 4.2.4, for purpose of this Lease Operating Expenses shall
not, however, include:

 

(1)                                  any
payments under a ground lease or master lease relating to the Building;

 

(2)                                  except
as provided in item (xiii), above, costs of capital nature (including
amortization payments and depreciation), including but not limited to capital
improvements, replacements, alterations and additions; provided, however, that
whether a cost is capital shall be determined according to the sound real
estate accounting principles consistently applied by Comparable Buildings;

 

(3)                                  rentals
for items which if purchased, rather than rented, would constitute a
non-expensable capital improvement under item (2) above;

 

(4)                                  the
cost of any item (including costs incurred for the repair of damage to the
Building pursuant to the terms of Article 11 of this Lease or otherwise)
to the extent Landlord receives reimbursement from insurance or condemnation
proceeds or which would be

 

9

 

reimbursable from insurance required (but
failed) to be maintained by Landlord under this Lease, (provided that as to any
deductible amount paid by Landlord in connection with damage and destruction,
which deductible amount is not excluded from Operating Expenses under item (2),
above, up to $75,000 of such deductible amount related to any one or more
damage and destruction events may be included as an Operating Expense provided
that in no event shall more than $25,000 in the aggregate relating to
deductible amounts be included in Operating Expenses in any single Expense
Year);

 

(5)                                  costs,
including permit, license and inspection costs, incurred with respect to the
installation of tenants’ or other occupants’ improvements made for tenants or
other occupants in the Building or incurred in renovating or otherwise
improving, decorating, painting or redecorating space for tenants or other
occupants of the Building;

 

(6)                                  except
as otherwise permitted in this Section 4.2.4, depreciation and
amortization;

 

(7)                                  marketing
and promotional costs, including but not limited to leasing commissions, real
estate brokerage commissions, and attorneys’ fees in connection with the
negotiation and preparation of letters, deal memos, letters of intent, leases,
subleases and/or assignments, space planning costs, and other costs and
expenses incurred in connection with lease, sublease and/or assignment
negotiations and transactions with present or prospective tenants or other
occupants of the Building;

 

(8)                                  costs
of services, utilities, or other benefits which are not offered to Tenant or
for which Tenant is charged for directly but which are provided to another
tenant or occupant of the Building free of charge, including, but not limited
to, above Building standard heating, ventilation and air-conditioning and
Janitorial services (but only to the extent Tenant is charged for the identical
benefit);

 

(9)                                  costs
incurred by Landlord due to any violation of the terms and conditions of any
lease of space or occupancy agreement in the Building;

 

(10)                            costs
of overhead or fees paid to Landlord, to affiliates or partners of Landlord,
partners or affiliates of such partners, or affiliates of Landlord for goods
and/or services in the Building to the extent the same exceeds the costs or
fees of such goods and/or services rendered by unaffiliated third parties on a
competitive basis in Comparable Buildings;

 

(11)                            interest,
principal, attorneys’ fees, environmental investigations or reports, points,
fees and other lender costs and closing costs on debts or amortization on any
mortgage or mortgages or any other debt instrument encumbering the Building or
any part thereof or on any unsecured debt;

 

(12)                            Landlord’s
general corporate overhead and general, non-Building related administrative
expenses,

 

(13)                            salaries
of officers, executives or other employees of Landlord, any affiliate of
Landlord, or partners or affiliates of such partners or affiliates, other than
any personnel engaged in the management, operation, maintenance, and repair of
the Building (and only to the extent they are so engaged) who are working in
the Building management office and whose salaries are not typically included in
the management fee being paid and included in Operating Expenses; provided
Operating Expenses shall in no event include salaries of individuals who hold a
position which is generally considered to be higher in rank than the position
of the manager of the Building or the chief engineer of the Building;

 

(14)                            all
items and services for which Tenant or any other tenant in the Building
reimburses Landlord (other than through Tenant’s Share or any other tenant’s
share of Operating Expenses);

 

(15)                            advertising
and promotional expenditures, including but not limited to tenant newsletters
and Building promotional gifts, events or parties for existing or future occupants,
and the costs of signs (other than the Building directory) in or on the
Building

 

10

 

identifying the owner of the Building or
other tenants’ signs and any unreasonable costs related to the celebration or
acknowledgment of Holidays;

 

(16)                            electric
power or other utility costs for which any tenant directly contracts with the
local public service company and pays directly therefore;

 

(17)                            except
as specifically set forth in item number (v) of the inclusions to Operating
Expenses, above, and except as included in Tax Expenses, cost and expenses
relating to the On-Site Parking Area;

 

(18)                            costs
incurred in complying with any governmental laws and regulations applicable to
the Building and enacted prior to Lease Commencement Date, including, but not
limited to life, fire and safety codes, environmental and “Hazardous
Materials,” as that term is defined in Section 29.33, below, laws and
federal, state or local laws or regulations relating to disabled access,
including, but not limited to, the Americans With Disabilities Act;

 

(19) costs,
penalties, fines, or awards and interest incurred as a result of Landlord’s
negligence in Landlord’s operation of the Building, Landlord’s violations of
law, negligence or inability or unwillingness to make payments and/or to file
any income tax, other tax or informational returns when due;

 

(20)                            costs
which are covered by and have been reimbursed under any contractor,
manufacturer or supplier warranty,

 

(21)                            costs
arising from the negligence or intentional acts of Landlord or its 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;

 

(22)                            costs
arising from Landlord’s charitable or political contributions;

 

(23)                            costs
for sculpture, paintings or other objects of art or the insuring, repair or
maintenance thereof,

 

(24)                            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 Building, except that any such
costs directly relating to the operation of the Building for the general
benefit of the tenants may be included in Operating Expenses;

 

(25)                            costs,
including but not limited to attorneys’ fees associated with the operation of
the business of the partnership or entity which constitutes Landlord as the
same are distinguished from the costs of operation of the Building, including
partnership accounting and legal matters, costs of defending any lawsuits with
any mortgagee, costs of selling, syndicating, financing, mortgaging or
hypothecating any of Landlord’s interest in the Building or any part thereof,
costs of any disputes between Landlord and its employees, disputes of Landlord
with Building management or personnel, or outside fees paid in connection with
disputes with other tenants;

 

(26)                            costs
incurred in removing and storing the property of former tenants or occupants of
the Building;

 

(27)                            the
cost of any work or services performed for any tenant (including Tenant) at
such tenant’s cost;

 

(28)                            the
cost of any parties, ceremonies or other events for tenants or third parties
which are not tenants of the Building, whether conducted in the Building or in
any other location, which are in excess of similar costs included in operating
expenses by Comparable Buildings;

 

(29)                            the
cost of installing, operating and maintaining any specialty service,
observatory, broadcasting facilities, luncheon club, museum, athletic or
recreational club, or child care facility;

 

11

 

(30)                            the
cost of furnishing and installing non-Building standard replacement bulbs and
ballasts in tenants’ spaces, provided that at any one time the Building may
have several types of Building standard replacement bulbs;

 

(31)                            the
cost of correcting latent defects in the design, construction or equipping of the
Base Building;

 

(32)                            reserves,
and reserves for bad debts or lost rent or any similar charge;

 

(33)                            costs
incurred by Landlord in connection with rooftop communications equipment of
Landlord which is not generally available to all tenants;

 

(34)                            costs
relating to any management office for the Building, including rent, in excess
of management office charges charged by Comparable Buildings, provided that
Landlord’s management office may contain a maximum of 3,000 usable square feet
and the rent charged for the management office must be comparable to the rent
then being received by Landlord for comparable space in the Building;

 

(35)                            payment
of any management fee, whether paid to Landlord or an outside managing agent,
in excess of the prevailing management fee per rentable square foot charged in
the Comparable Buildings, provided that, regardless of the management fee
percentage used in the Base Year, Landlord shall not increase, during any
Expense Year, the percentage of such fee from the Base Year unless (i) Landlord
adjusts the Base Year to such new percentage or (ii) such increase is limited
to and in accordance with the actual increase in percentage in Comparable
Buildings, and provided further that during the Base Year, Landlord shall
gross-up the gross revenues used to calculate the management fee based on an
occupancy level of one hundred percent (100%) (with all tenants deemed to be
paying full rent);

 

(36)                            any
costs expressly excluded from Operating Expenses or Tax Expenses elsewhere in
this Lease or included as Tax Expenses,

 

(37)                            costs
for services not included in the Base Year and normally provided by a property
manager in return for a management fee;

 

(38)                            “takeover”
expenses, including, but not limited to, the expenses incurred by Landlord with
respect to space located in another building of any kind or nature in
connection with the leasing of space in the Building;

 

(39)                            costs
incurred in connection with the original construction of the Building or any
addition to the Building or in connection with any renovation, alteration or
major change in the Building for which Operating Expense treatment is not
specifically permitted in SECTION 4.2.4(x) or (xii);

 

(40)                            any
costs, fees, dues, contributions or similar expenses for industry associations
or similar organizations;

 

(41)                            any
compensation paid to clerks, attendants or other persons in commercial
concessions operated by Landlord in the Building;

 

(42)                            insurance
costs in excess of the costs incurred in the Base Year of any earthquake
insurance policies caused by (and only to the extent caused by) a material
decrease in the deductible amount of such policy, or by a change from a
so-called “blanket” policy to a single building policy (provided that, in the
event a subsequent purchaser of the Property shall carry a single building
earthquake policy (The “SINGLE POLICY”), increases in
the cost of such single policy, except those relating to a material increase in
the deductible amount of such single policy, may be included in Operating
Expenses provided that the Base Year Operating Expenses are retroactively
adjusted to the amount they would have been had Landlord carried a Single
Policy in the Base Year);

 

(43)                            the
entertainment expenses and travel expenses of Landlord, its employees, agents,
partners and affiliates;

 

12

 

(44)                            costs
of traffic studies, environmental impact reports, transportation system
management plans and reports, and non-governmentally mandated traffic
mitigation measures,

 

(45)                            any
costs recovered by Landlord to the extent such cost recovery allows Landlord to
recover more than 100% of Operating Expenses for the same Expense Year from
tenants of the Building,

 

(46)                            any
costs for which Landlord has been reimbursed or receives a credit, refund or
discount;

 

(47)                            any
cost incurred in Landlord’s compliance with the terms of Los Angeles Municipal
Code Section 91.8908 enacted and approved by the City Council of Los
Angeles on March 1, 1995, as in effect on or before the Lease Commencement
Date; and

 

(48)                            any
costs related to inspections, repairs, improvements, alterations or
modifications made to investigate and/or correct damage to the Building
specifically attributable to and caused by the “Northridge Earthquake” of
January 17, 1994.

 

Operating Expenses
relating to periods of the Lease Term that fall partly within any Expense Year
shall be reasonably allocated when determining Tenant’s Share of Operating
Expenses.  In the event any portion of
the Building is covered by a warranty at any time during the Base Year,
Operating Expenses for the Base Year shall be deemed increased by such amount
as Landlord would have incurred during the Base Year with respect to the items
or matters covered by the subject warranty, had such warranty not been in
effect during the Base Year (provided that no such increase shall be required
if such item or matters are not treated or passed through as Operating Expenses
in subsequent Expense Years).  Any
additional annual premium resulting from any new forms of insurance (which are
not in replacement of previous coverage), any commercially unreasonable
increase in insurance limits or coverage, or any commercially unreasonable
decrease in deductibles in any year after the Base Year, shall be deemed to be
included in Operating Expenses for the Base Year.  The foregoing, however, shall not prevent
Landlord from revising its insurance coverages in the normal course of business
in accordance with Comparable Buildings, and in such event, there shall be no
Base Year adjustment.

 

4.2.5                        “SYSTEMS AND EQUIPMENT” shall mean any plant,
machinery, transformers, elevators, duct work, cable, wires, and other
equipment, facilities, and systems designed to supply heat, ventilation, air
conditioning and humidity or any other services or utilities, or comprising or
serving as any component or portion of the electrical, gas, steam, plumbing,
sprinkler, communications, alarm, security, or fire/life safety systems or
equipment, or any other mechanical, electrical, electronic, computer or other
systems or equipment which serve the Building in whole or in part.

 

4.2.6                        “TAX EXPENSES” shall mean all federal, state, county, or
local governmental or municipal taxes, fees, charges or other impositions of
every kind and nature, whether general, special, ordinary or extraordinary,
(including, without limitation, real estate taxes, general and special
assessments, transit taxes, leasehold taxes or taxes based upon the receipt of
rent, including gross receipts or sales taxes applicable to the receipt of
rent, unless required to be paid by Tenant, personal property taxes imposed
upon the fixtures, machinery, equipment, apparatus, systems and equipment,
appurtenances, furniture and other personal property used in connection with
the Building), which Landlord shall pay during any Expense Year (without regard
to any different fiscal year used by such governmental or municipal authority)
because of or in connection with the ownership, leasing and operation of the
Real Property.  For purposes of this
Lease, Tax Expenses shall be calculated as if the tenant improvements in the
Building were fully constructed and the Real Property, Building, Base, Shell,
and Core, and all tenant improvements in the Building were fully assessed for
real estate tax purposes, and accordingly, during any Expense Year, Tax
Expenses shall be deemed to be increased appropriately.

 

4.2.6.1               Tax Expenses shall
include, without limitation:

 

(i)                                     Any
tax on Landlord’s rent, right to rent or other income from Real Property or as
against Landlord’s business of leasing any of the Real Property;

 

13

 

(ii)                                  Any assessment, tax,
fee, levy or charge in addition to, or in substitution, partially or totally,
of any assessment, tax, fee, levy or charge previously included within the
definition of real property tax, it being acknowledged by Tenant and Landlord
that Proposition 13 was adopted by the voters of the State of California in the
June 1978 election (“PROPOSITION 13”) and that
assessments, taxes, fees, levies and charges may be imposed by governmental
agencies for such services as fire protection, street, sidewalk and road
maintenance, refuse removal and for other governmental services formerly
provided without charge to property owners or occupants, and, in further
recognition of the decrease in the level and quality of governmental services
and amenities as a result of Proposition 13, Tax Expenses shall also include
any Governmental or private assessments or the Building’s contribution towards
a governmental or private cost-sharing agreement for the purpose of augmenting
or improving the quality of services and amenities normally provided by
governmental agencies.  It is the
intention of Tenant and Landlord that all such new and increased assessments,
taxes, fees, levies, and charges and all similar assessments, taxes, fees,
levies and charges be included within the definition of Tax Expenses for
purposes of this Lease;

 

(iii)                               Any
assessment, tax, fee, levy, or charge allocable to or measured by the area of
the Premises or the rent payable hereunder, including, without limitation, any
gross income tax with respect to the receipt of such rent, or upon or with
respect to the possession, leasing, operating-, management, maintenance,
alteration, repair, use or occupancy by Tenant of the Premises, or any portion
thereof;

 

(lv)                              Any
assessment, tax, fee, levy or charge, upon this transaction or any document to
which Tenant is a party, creating or transferring an interest or an estate in
the Premises; and

 

(v)                                 So long as the Building
is owned by the State of California or any local public entity of government,
including, without limitation, a state public retirement system, this Lease and
the Tenant’s interest hereunder may constitute a possessory interest subject to
the payment of property taxes levied on the “full cash value” of that interest
(the “POSSESSORY INTEREST TAX”).  The full cash value, as defined in Sections
110 and 110.1 of the California Revenue and Taxation Code, of the possessory
interest, upon which property taxes will be based will equal the greater of (A)
the full cash value of the possessory interest, or (B) if Tenant has leased
less than all of the Real Property, Tenant’s Proportionate Share of the full
cash value of the Real Property that would have been enrolled if the Real
Property had been subject to property tax upon acquisition by the state public
retirement system; provided, however, that Landlord agrees that the Possessory
Interest Tax allocable to Tenant shall not exceed Tenant’s Proportionate Share
of the ad valorem real property taxes that would have otherwise been payable by
Tenant under this Lease had Landlord not been a governmental entity (the “Ad
Valorem Taxes”).

 

4.2.6.2               With respect to any
assessment that may be levied against, upon, or in connection with, the Real
Property, or any portion thereof, and may be evidenced by improvement or other
bonds, or may be paid in annual installments, there shall be included within
the definition of Tax Expenses with respect to any tax fiscal year only the
amount currently payable on such bonds, including interest, for such tax fiscal
year, or the current annual installment for such tax fiscal year.

 

4.2.6.3               If the method of
taxation of real estate prevailing at the time of execution hereof shall be, or
has been, altered so as to cause the whole or any part of the taxes now,
hereafter or heretofore levied, assessed or imposed on real estate to be
levied, assessed, or imposed upon Landlord, wholly or partially, as a capital
levy or otherwise, or on or measured by the rents received therefrom, then such
new or altered taxes attributable to the Real Property shall be included within
the term “Tax Expenses” except that the same shall not include any enhancement
of said tax attributable to other income of Landlord.

 

4.2.6.4               Any expenses
incurred by Landlord in attempting to protest, reduce or minimize Tax Expenses
shall be included in Tax Expenses in the Expense Year such expenses are paid.

 

4.2.6.5               Tax refund received
by Landlord shall be retroactively deducted from Tax Expenses for the Expense
Year to which they apply.

 

14

 

4.2.6.6               If Tax Expenses for
any period during the Lease Term or any extension thereof are increased after
payment thereof by Landlord for any reason, including, without limitation,
error or reassessment by applicable governmental or municipal authorities,
Tenant shall pay Landlord within thirty (30) days of demand Tenant’s Share of
such increased Tax Expenses.

 

4.2.6.7               Notwithstanding
anything to the contrary set forth in this Lease, Tax Expenses shall not
include (1) any excess profits taxes, franchise taxes, gift taxes, capital
stock taxes, inheritance and succession taxes, estate taxes, federal and state
income taxes, and other taxes to the extent applicable to Landlord’s general or
net income (as opposed to rents or receipts), (ii) taxes on tenant improvements
in any space in the Building based on an assessed level in excess of the
assessed level for which Tenant is individually and directly responsible under
this Lease, (iii) penalties incurred as a result of Landlord’s negligence,
inability or unwillingness to make payments of, and/or to file any tax or
informational returns with respect to, any Tax Expenses, when due, (lv) any
real estate taxes directly payable by Tenant or any other tenant in the
Building under the applicable provisions in their respective leases, (v) any
items included as Operating Expenses or specifically excluded from Operating
Expenses (other than Tax Expenses permitted in Article 4).

 

4.2.6.8               The Tax Expenses
for the Base Year shall be calculated without regard to any reduction to such
taxes pursuant to the terms of Proposition 8, and if the Tax Expenses are
calculated using a Possessory Interest Tax, the Tax Expenses for the Base Year
shall be calculated as if they were Ad Valorem Taxes, without regard to any
reduction to such taxes pursuant to the terms of Proposition 8. Tenant,
however, shall have no right to credits or offsets against Rent, Operating
Expenses or Tax Expenses by reason of Proposition 8 reductions obtained by
Landlord in any other Expense Year.

 

4.2.6.9               During the Base
Year, the amount of Tax Expenses shall be determined using Ad Valorem Taxes as
if the Real Property, the Building, the Base Building and all “Tenant
Improvements,” as that term is defined in Section 2.1 of the Tenant Work
Letter, were fully constructed, occupied and assessed for real estate tax
purposes, and shall be increased to reflect any real estate tax assessments
relating to building renovations commenced or complete prior to the Lease
Commencement Date, and any gross receipts tax which is part of Direct Expenses
for the Base Year shall be grossed up during the Base Year as though the
Building was fully occupied with rent paying tenants.

 

4.2.7                        “TENANT’S SHARE” shall mean the percentage set forth in
Section 9.2 of the Summary. 
Tenant’s Share was calculated by multiplying the number of rentable
square feet of the Premises by 100 and dividing the product by the total rentable
square feet in the Building.  In the
event either the rentable square feet of the Premises and/or the total rentable
square feet of the Building is changed pursuant to the terms of this Lease,
Tenant’s Share shall be appropriately adjusted, and, as to the Expense Year in
which such change occurs, Tenant’s Share for such year shall be determined on
the basis of the number of days during such Expense Year that each such
Tenant’s Share was in effect.

 

4.3                                 CALCULATION
AND PAYMENT OF ADDITIONAL RENT.

 

4.3.1                        CALCULATION
OF EXCESS.  If for any Expense Year
ending or commencing within the Lease Term, Tenant’s Share of Direct Expenses
for such Expense Year exceeds Tenant’s Share of the Direct Expenses
attributable to the Base Year, then Tenant shall pay to Landlord, in the manner
set forth in SECTION 4.3.2, below, and as Additional Rent, an amount equal
to the excess (the “EXCESS”).

 

4.3.2                        STATEMENT
OF ACTUAL DIRECT EXPENSES AND PAYMENT BY TENANT. Landlord shall endeavor to
give to Tenant on or before the first day of April following the end of
April following the end of each Expense Year, a statement (the “STATEMENT”) which shall state the Direct Expenses incurred
or accrued for such preceding Expense Year, and which shall indicate the
amount, if any, of any Excess.  Upon
receipt of the Statement for each Expense Year ending during the Lease Term, if
an Excess is present, Tenant shall pay, with its next installment of Base Rent
due (but not prior to thirty (30) days after Tenant’s receipt of the
Statement), the full amount of the Excess for such Expense Year, less the
amount, if any, paid during such Expense Year as “Estimated Excess”, as

 

15

 

that term is defined in
SECTION 4.3.3., below.  If the
amount of Tenant’s Share of Direct Expenses is less than the amount paid by
Tenant as Estimated Excess during the applicable Expense Year, Landlord shall
credit such amount against the next Rent due or pay the difference to Tenant
within thirty (30) days if this Lease has terminated or expired (other than
pursuant to a default by Tenant).  The
failure of Landlord to timely furnish the Statement for any Expense Year shall
not prejudice Landlord from enforcing its rights under this Article 4.
Even though the Lease Term has expired and Tenant has vacated the Premises,
when the final determination is made of Tenant’s Share of the Direct Expenses
for the Expense Year in which this Lease terminates, if an Excess is present,
Tenant shall within thirty (30) days after Tenant’s receipt of the Statement pay
to Landlord an amount as calculated pursuant to the provisions of
Section 4.3 of this Lease.  The
provisions of THIS SECTION 4.3.2 shall survive the expiration or earlier
termination of the Lease Term.

 

4.3.3                        STATEMENT
OF ESTIMATED DIRECT EXPENSES.  In
addition, 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 Expenses for the then-current Expense Year shall be
and the estimated Excess (the “ESTIMATED EXCESS”)
as calculated by comparing Tenant’s Share of Direct Expenses attributable to
the then-current Expense Year, which shall be based upon the Estimate, to the
amount of Direct Expenses attributable to the Base Year.  The failure of Landlord to timely furnish the
Estimate Statement for any Expense Year shall not preclude Landlord from
enforcing its rights to collect any Estimated Excess under this Article 4.  If pursuant to the Estimate Statement an
Estimated Excess ‘is calculated for the then-current Expense Year, Tenant shall
pay, with its next installment of Base Rent due, a fraction of the Estimated
Excess for the then-current Expense Year (reduced by any amounts paid pursuant
to the last sentence of this Section 4.3.3). Such fraction shall have as
its numerator the number of months which have elapsed in such current Expense
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 Base Rent 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.

 

4.4                                 ALLOCATION
OF DIRECT EXPENSES.  Certain of the
Direct Expenses are determined annually in the aggregate for the Real Property
and the building located at 1840 Century Park East (collectively, the “PROJECT”).  Such Direct
Expenses shall be separately allocated by Landlord to each building.  The portion of Direct Expenses allocated to
the Building shall consist of (i) all Direct Expenses attributable solely to
the Building and (11) an equitable portion (either split evenly among the two
buildings of the Project or divided based upon the ratio of the number of
rentable square feet in the Building to the total number of rentable square
feet in the Project) of Direct Expenses attributable to the Project as a whole
and not attributable solely to either building.

 

4.5                                 TAXES AND
OTHER CHARGES FOR WHICH TENANT IS DIRECTLY RESPONSIBLE. Tenant shall reimburse
Landlord upon demand for any and all taxes required to be paid by Landlord
(except to the extent included in Tax Expenses), excluding state, local and
federal personal or corporate income taxes measured by the net income of
Landlord from all sources and estate and inheritance taxes, whether or not now
customary or within the contemplation of the parties hereto, when-.

 

4.5.1                        Said taxes
are measured by or reasonably attributable to the cost or value of Tenant’s
equipment, furniture, fixtures and other personal property located in the
Premises, or by the cost or value of any leasehold improvements made in or to
the Premises by or for Tenant, to the extent the leasehold improvements
regardless of whether title to such improvements shall be vested in Tenant or
Landlord are assessed for real property tax purposes at a valuation higher than
$40.00 per usable square foot of the Premises (the “CUT-OFF POINT”), provided
that any amount of real estate taxes attributable to tenant improvements made
in or to the Premises or in or to any other premises in the Building paid
directly by Tenant and such other tenants in excess of the Cut-Off Point shall
not be included in Tax Expenses;

 

4.5.2                        Said taxes
are assessed upon or with respect to the possession, leasing, operation,
management, maintenance, alteration, repair, use or occupancy by Tenant of the
Premises or any portion of the Real Property, including Taxes on Tenant’s right
to use the On-site Parking Area; or

 

16

 

4.5.3                        Said taxes
are assessed upon this transaction or any document to which Tenant is a party
creating or transferring an interest or an estate in the Premises.

 

4.6                                 TENANT’S
PAYMENT OF CERTAIN TAX EXPENSES. 
Notwithstanding anything to the contrary contained in this Lease, in the
event that after the commencement of the Lease Term any sale, refinancing, or
change in ownership of the Real Property is consummated, and as a result
thereof, and to the extent that in connection therewith, the Real Property is
reassessed (the “Reassessment”) for real estate tax
purposes by the appropriate governmental authority pursuant to the terms of
Proposition I’) (as adopted by the voters of the State of California in the
June, 1978 election), then the terms of this Section I shall apply.

 

4.6.1                        THE
TAX INCREASE.  For purposes of this
SECTION 4.6, the term “Tax INCREASE” shall mean
that portion of the Tax Expenses, as calculated immediately following the
Reassessment, which is attributable solely to the Reassessment.  Accordingly, the term Tax Increase shall not
include any portion of the Tax Expenses, as calculated immediately following
the Reassessment, which (i) is attributable to the initial assessment of the value
of the Real Property, the base, shell and core of the Building, or the tenant
improvements located in the Building, (11) is attributable to assessments
pending immediately prior to the Reassessment, which assessments were conducted
during, and included in, such Reassessment, or which assessments were otherwise
rendered unnecessary following the Reassessment, or (iii) is attributable to
the annual inflationary increase to real estate taxes.

 

4.6.2                        TENANT’S
Protection.  During the first five (5)
years of the Lease Term, Tenant shall not be obligated to pay any portion of
the Tax Increase relating to any Reassessment.

 

4.7                                 LANDLORD’S
BOOKS AND RECORDS, TENANT AUDIT.

 

4.7.1                        In
connection with each Statement of Direct Expenses, Tenant’s professional audit
or accounting staff shall have the right, after reasonable notice and at
reasonable times, to inspect and photocopy Landlord’s accounting records at the
office in the Building and Landlord shall reasonably cooperate with such staff
to adequately substantiate such expenses. 
If, after such inspection and photocopying, Tenant continues to dispute
the amount due, Tenant shall be entitled to retain, on a non-contingency fee
basis, an independent, certified public accountant of regional or national
prominence, or the real estate audit service known as Kislak, to audit and/or
review Landlord’s records to determine the proper amount of Direct Expenses
(the “INITIAL AUDIT”). Tenant may exercise such audit
night only once per year and any such audit must be completed by Tenant within
one hundred eighty (180) days after commencement thereof If such audit or
review- reveals an overpayment and if Landlord does not reasonably dispute the
result of such audit or review, then Tenant shall provide Landlord a copy of
such audit or review and within thirty (30) days after the results of such
audit or review are made available to Landlord, Landlord shall credit the next
monthly rent payment of Tenant (or if the Term has expired, refund the
overpayment) in the amount of the overpayment. 
If the audit or review (or any other audit or review) reveals an
underpayment, then within thirty (30) days after the results of the audit or
review are made available to Tenant, Tenant shall reimburse Landlord the amount
of such underpayment.  If Landlord or
Tenant disagrees with respect to such audit or review results, and notifies the
other party of such disagreement or dispute within thirty (30) days of receipt
of the results of such audit or review, either party may submit the results of
the audit or review to arbitration pursuant TO ARTICLE 24 hereof Tenant
agrees to pay the costs of such audit or review, provided that, if the audit or
review reveals that Landlord’s determination sent to Tenant was in error in
Landlord’s favor by more than two percent (2%) in the aggregate, Landlord shall
pay the reasonable cost of such audit or review. Landlord shall be required to
maintain records of all Direct Expenses for two (2) years after the completion
of each Lease Year provided that Landlord shall maintain a reasonable Base Year
records (but not invoices) throughout the Lease Term.  The payment by Tenant of any Direct Expenses
shall not preclude Tenant or Landlord from questioning the correctness of any
actual statement provided by Landlord at any time during the period ending two
(2) years after receipt of Landlord’s Statement, but the failure of Tenant to
object thereto within two (2) years after receipt of Landlord Statement for a
particular Expense Year shall be conclusively deemed Tenant’s approval of the
actual Statement.  The failure of
Landlord to question any statement within (2) years after Tenant’s receipt
thereof for a particular Expense Year shall be conclusively deemed Landlord’s
approval of the actual statement.

 

17

 

4.7.2                        Landlord
shall have the right to recover from Tenant the amount of Tenant’s Share of any
Direct Expenses attributable to a Expense Year, but paid in a subsequent
Expense Year; provided, however, that except as set forth below in this
Section 4 7.2, Landlord may only adjust the Direct Expenses for any given
Expense Year within two (2) years after the expiration of such Expense
Year.  Notwithstanding the foregoing,
Landlord may adjust Direct Expenses more than two (2) years after the
expiration of any given Expense Year in connection with Tax Expenses or other
governmental or public sector charges (including, but not limited to utility
charges) first billed to Landlord after such two (2) year period but which
relate to Direct Expenses for such Expense Year.

 

4.7.3                        If
Landlord has acknowledged in writing an error in the computation of Direct
Expenses to another tenant, Landlord shall correct such error to the extent it
appears in Tenant’s Direct Expenses computation for the same Expense Year.

 

ARTICLE 5

 

USE OF PREMISES

 

5.1                                 PERMITTED
USE. Tenant shall use the Premises solely for general business and professional
offices, all as shall be consistent with the character of the Building as a
first-class office building, and Tenant shall not use or permit the Premises to
be used for any other purpose or purposes whatsoever without the prior written
consent of Landlord, which consent may be withheld in Landlord’s sole and
absolute discretion.

 

5.2                                 PROHIBITED
USES.  Tenant further covenants and
agrees that it shall not use, or suffer or pen-nit any person or persons to
use, the Premises or any part thereof for any use or purpose contrary to the
provisions of Exhibit D, attached hereto (the “RULES
AND REGULATIONS”), or in violation of the laws of the United States of
America, the State of California, or the ordinances, regulations or
requirements of the local municipal or county governing body or other lawful
authorities having jurisdiction over the Building.  Tenant shall not at any time use or occupy
knowingly or allow any person to use or occupy the Premises or the Building or
do or knowingly permit anything to be done or kept in the Premises or the
Building or perform any other action in any manner which: (1) violates any
certificate of occupancy in force for the Premises, or the Building; (ii)
causes or is likely to cause damage to the Building, the Premises or any
equipment, facilities or other systems therein; (iii) results in repeated
demonstrations, bomb threats or other events which require evacuation of the
Building or otherwise unreasonably disrupt the use, occupancy or quiet
enjoyment of the Building by other tenants and occupants (provided that this
clause (iii) is not intended to prohibit the customary and foreseeable
practices of Tenant); or (iv) unreasonably interferes (after notice of such
interference) with the transmission or reception of microwave, television,
radio or other communications signals by antennae located on the roof of the
Building or elsewhere in the Building.  Tenant
shall not use or allow another person or entity to use any part of the Premises
for the storage (no matter how temporary), use, treatment, analysis,
manufacture or sale of any Hazardous Materials. 
Landlord acknowledges, however, that Tenant will maintain products in
the Premises which are incidental to the operation of its offices, such as
photocopy supplies, secretarial supplies and limited janitorial supplies, which
products contain chemicals which are categorized as Hazardous Materials.
Landlord agrees that the use of such products in the Premises in compliance
with all applicable laws and in the manner in which such products are designed
to be used shall not be a violation by Tenant of this SECTION 5.2.

 

ARTICLE 6

 

SERVICES AND UTILITIES

 

6.1                                 STANDARD
TENANT SERVICES.  Landlord shall provide
the following services on all days during the lease term, unless otherwise
stated below.

 

6.1.1                        Subject to
all governmental rules, regulations and guidelines applicable thereto, Landlord
shall provide heating, ventilation and air conditioning (“HVAC”) when necessary
for normal comfort for normal office use in the Premises, from Monday through
Friday, during the period from 8 A.M. to 6 P.M. and on Saturday during the
period from 9 A.M. to 1 P.M.,

 

18

 

except for the date of observation of New
Year’s Day, Independence Day, Labor Day, Memorial Day, Thanksgiving Day, and
Christmas Day and other holidays generally recognized by Comparable Buildings
(collectively, the “HOLIDAYS”). The HVAC equipment in the
Building (the “BUILDING HVAC SYSTEM”) is
designed to perform substantially in accordance with the HVAC specifications
attached to this Lease as EXHIBIT H (the “HVAC SPECIFICATIONS”).  Landlord shall maintain and repair the
Building HVAC System in a manner reasonably calculated to conform to the HVAC
Specifications; provided, however, in no event shall Landlord be liable to
Tenant for any failure of the Building HVAC System to conform to the HVAC
Specifications due to (i) any normal wear and tear or obsolescence of the
Building HVAC System, or (ii) Tenant’s particular use of the Premises, or
Tenant’s actions or omissions which causes such non-conformance (including,
without limitation Tenant’s use of heat-generating machines, equipment or
lighting which is not standard for the Building, and/or use of the Premises by
greater than the typical amount of persons commonly using comparable space in
the Building).  Tenant shall have the
right, at Tenant’s sole expense and in accordance with plans and specifications
therefor approved in writing by Landlord, to install, maintain and replace a
private HVAC system or systems (the “TENANT HVAC
SYSTEM”) separate from the Building HVAC System, in Tenant’s computer
rooms, user rooms and other areas contained wholly within the Premises,
provided that (1) such Tenant HVAC System does not interfere with the
operation, maintenance, or replacement of the Building HVAC System and (ii)
Landlord’s contractor (or a contractor approved by Landlord in writing), shall
install the Tenant HVAC System.  Landlord
shall also cause the Building HVAC System and indoor air quality of the Common
Areas within the Building and the Premises to meet, for the entire Lease Term and
the Pre-Occupancy Period, the standards (the “AIR
QUALITY STANDARDS”) which are the lesser of (i) those standards set forth
in Standard 62-1989 (“VENTILATION
FOR ACCEPTABLE INDOOR AIR QUALITY”), including both the requirements of the
Ventilation Rate Procedure and Indoor Air Quality Procedure and the maintenance
requirements, recommendations and guidelines contained therein, promulgated by
the American Society of Heating, Refrigerating and Air Conditioning Engineers
(“ASHRAE”), and any laws, ordinances, rules or regulations
now in effect or hereafter promulgated by any governmental authority having
jurisdiction over the Building or persons occupying or working in the Building
relating to office building indoor air quality, or (ii) the level of indoor air
quality maintained in the buildings located at 2020 and 2040 Century Park East,
1900 and 1901 Avenue of the Stars, 1875 and 1925 Century Park East, and 10100
Santa Monica Boulevard, all in Los Angeles, California (the “COMPARABLE SYSTEMS BUILDINGS”).  In the event the indoor air quality of the Premises
or the Building Common Areas does not meet the Air Quality Standards, such
condition shall be referred to as a “SICK BUILDING.”

 

6.1.2                        Landlord
shall at all times provide electricity to the Premises (including adequate
electrical wiring and facilities for connection to Tenant’s lighting fixtures
and other equipment) for lighting and power suitable for the use of the
Premises up to seven (7) watts per rentable square foot demand load on a
continuous annualized basis (the “AVAILABLE
ELECTRICITY”). Such electrical usage, to the extent the same exceeds four
and one half (4.5) watts per rentable square foot of the Premises demand load
on a continuous, annualized basis shall be known as “EXCESS CONSUMPTION.” The
amount of Excess Consumption used within the Premises shall be verifiable by
meters or submeters, installed at Tenant’s sole cost and expense upon
Landlord’s veri reasonable expectation of Excess Consumption.  Landlord shall charge Tenant for its Excess
Consumption at Landlord’s actual average cost per kilowatt-hour therefor.  Tenant shall pay Landlord, as Additional
Rent, the cost of its Excess Consumption within ten (10) days of billing.  The cost of the Excess Consumption shall not
be charged to Operating Expenses. Landlord shall bear the cost of making the
Available Electricity available at the bus riser on each floor of the
Premises.  Tenant shall bear the cost of
horizontally distributing the Available Electricity to the Premises, including
costs related to transformers and disconnect switches necessitated by Tenant’s
Excess Consumption.  Tenant shall bear
the cost of replacement of nonstandard lamps and/or starters and ballasts for
lighting fixtures within the Premises.

 

6.1.3                        Landlord
shall provide city water from the regular Building outlets for drinking,
lavatory and toilet purposes.

 

6.1.4                        Landlord
shall provide janitorial services five (5) days a week except the days of
observation of the Holidays, in and about the Premises substantially in
accordance with the cleaning specifications attached hereto as EXHIBIT I (the “CLEANING SPECIFICATIONS”) and shall

 

19

 

provide exterior window washing services
not less than two (2) times per year and interior window washing services no
less than one (1) time per year. Landlord shall provide janitorial services in
a manner reasonably calculated to conform to the Cleaning Specifications;
provided, however, Landlord shall have the right to change the Cleaning
Specifications from time to time so long as the janitorial services and window
washing services of the Building remain consistent with that of Comparable
Buildings.  Notwithstanding the
foregoing, Tenant reserves the right to provide, at its own cost and expense,
its own Janitorial service to any part of the premises designated in writing to
Landlord as a high-security area, as determined by Tenant (“SECURITY AREA”).

 

6.1.5                        Except
as otherwise provided in the “Passenger Elevator Specifications,” as that term
is defined below, Landlord shall provide nonexclusive automatic passenger
elevator service.  At least four (4)
passenger elevators serving the Premises shall be operational during normal
business hours (subject to normal servicing and repair) and at least one (1) passenger
elevator shall be operational at all other times.  The passenger elevators located in the
Building (collectively, the “PASSENGER ELEVATORS”)
are designed to substantially comply with the passenger elevator specifications
dated as of August 16, 1993, prepared for Landlord by Lerch, Bates &
Associates, Inc. (the “PASSENGER
ELEVATOR SPECIFICATIONS”).  Landlord
shall maintain and repair the Passenger Elevators in a manner reasonably
calculated to conform to the Passenger Elevator Specifications; provided,
however, in no event shall Landlord be liable to Tenant for any failure of the
Passenger Elevators to conform to the Passenger Elevator Specifications due to
any normal wear and tear or obsolescence of the Passenger Elevators.

 

6.1.6                        Landlord
shall provide, at no charge, nonexclusive freight elevator service during the
normal business hours, subject to reasonable AND nondiscriminatory scheduling
by Landlord.  Tenant shall also be
entitled to non-exclusive use of the freight elevator service, at no charge, at
all times other than normal business hours, subject to reasonable and
nondiscriminatory scheduling by Landlord.

 

6.1.7                        Landlord
shall provide, twenty-four (24) hours per day, seven (7) days per week,
throughout the Lease Term, including the periods of occupancy by Tenant prior
to the Lease Commencement Date, security for the Building, and the On-site
Parking Area, including all pedestrian and vehicular entries thereto in a
manner consistent with the security personnel and equipment maintained at
Comparable Buildings (“LANDLORD’S SECURITY”).
Landlord’s Security shall provide Tenant, upon Tenant’s request and subject to
availability, on weekdays after normal Building hours, with an escort to the
vehicles of Tenant’s employees located in the On-site Parking Area through the
use of Landlord’s Security personnel. 
Tenant may, at its own expense, install its own security system (“TENANT’S SECURITY”) in the Premises and common
stairwells of the Building (which Tenant’s Security shall not include any armed
security personnel); provided, however, that Tenant shall coordinate the
installation and operation of Tenant’s Security with Landlord to assure that
Tenant’s Security is compatible with Landlord’s Security.  Tenant shall be solely responsible for the
monitoring and operation of Tenant’s Security system.  Tenant shall have the right to refuse
admission of persons to the Premises, except for Landlord’s representatives in
the event of an emergency or pursuant to Landlord’s entry fights set forth in
this Lease.

 

6.1.8                        Landlord
shall provide, maintain, and repair during the Lease Term the currently
existing telephone and telecommunications systems and equipment from the
minimum point of entry of the Building through the Building telephone risers to
the Building telephone closets located on each floor of the Building containing
the Premises, as set forth in Section 1. I of the Tenant Work Letter (the
“TELECOMMUNICATIONS SYSTEM”).  Tenant shall have access at all times
(accompanied, except in the case of an emergency, by a representative of
Landlord to the extent such representative is reasonably available) to the
Building telephone closets on the floors of the Building containing the
Premises.  Landlord shall notify Tenant,
except in case of emergency, prior to any work requiring access to any Building
telephone closets located on floors containing the Premises.  Landlord shall allow Tenant to observe any
work performed by Landlord in such telephone closets.

 

6.2                                 OVERSTANDARD
TENANT USE.  Tenant shall not, without
Landlord prior written consent, use heat-generating machines or equipment or
lighting which (i) causes Tenant to use Excess Consumption if such Excess
Consumption affects the temperature maintained

 

20

 

by the air conditioning system or (II)
increases the water normally furnished for the Premises by Landlord pursuant to
the terms of Section 6.1 of this Lease. If such consent is given, Landlord
shall have the right to install supplementary air conditioning units or other
facilities in the Premises, including supplementary or additional metering
devices, and the cost thereof, including the cost of installation, operation
and maintenance, increased wear and tear on existing equipment, and other
similar charges, including the removal thereof upon the expiration or earlier
termination of the Lease Term, shall be paid by Tenant to Landlord within ten
(10) days after Tenant’s receipt of invoice. 
If Tenant uses water in excess of that supplied by Landlord pursuant to
Section 6.1 of this Lease, Tenant shall pay to Landlord, within ten (10)
days after Tenant’s receipt of an invoice therefor, the Actual Cost of such
excess consumption, and the Actual Cost of the installation, operation, and
maintenance of equipment which is installed in order to supply such excess consumption,
and the cost of the increased wear and tear on existing equipment caused by
such Excess Consumption; and Landlord may install devices to separately meter
any increased use and in such event Tenant shall pay the increased cost
directly to Landlord on demand, including the cost of such additional metering
devices and the cost of the removal thereof upon the expiration or earlier
termination of the Lease Term.  If Tenant
desires to use heat, ventilation or air conditioning during hours other than those
for which Landlord is obligated to supply such utilities pursuant to the terms
of Section 6.1 of this Lease (the “AFTER HOURS HVAC”), Tenant shall give
Landlord such prior notice, as Landlord shall from time to time reasonably and
on a non-discriminatory basis establish as appropriate (which may be no prior
notice at all during such times as Landlord may keep in effect an automated
system that requires no prior notice), of Tenant’s desired use and Landlord
shall supply such utilities to Tenant at Landlord’s Actual Cost therefor.  Amounts payable by Tenant to Landlord for
such use of additional utilities shall be deemed Additional Rent hereunder and
shall be billed on a monthly basis, Notwithstanding the foregoing, in no event
shall the amount paid by Tenant for After Hours HVAC exceed $50.00 per hour for
each floor for which After Hours HVAC is ordered by Tenant (the “AFTER HOURS
HVAC CAP”), during the first (1st) through fifth (5th) Lease Years.  On the first day of the sixth (6th) Lease
Year and on the first day of each Lease Year thereafter, the After Hours HVAC
Cap may increase to an amount equal to the product of (1) the After Hours HVAC
Cap for the prior Lease Year, and (ii) 1.05. Landlord may increase the hours or
days during which air conditioning, heating and ventilation are provided to the
Premises and the Building to conform to practices of Comparable Buildings.

 

6.3                                 INTERRUPTION
OF USE.  Tenant agrees that, except as
otherwise provided in this Lease, Landlord shall not be liable for damages, by
abatement of Rent or otherwise, for failure to furnish or delay in furnishing
any service (including telephone and telecommunication services), or for any
diminution in the quality or quantity thereof, when such failure or delay or
diminution is occasioned, in whole or in part, by repairs, replacements, or
improvements, by any strike, lockout or other labor trouble, by inability to
secure electricity, gas, water, or other fuel at the Building after reasonable
effort to do so, by any accident or casualty whatsoever, by act or default of
Tenant or other parties, or by any other cause beyond Landlord’s reasonable
control; and such failures or delays or diminution shall never be deemed to
constitute an eviction or disturbance of Tenant’s use and possession of the
Premises or relieve Tenant from paying Rent or performing any of its
obligations under this Lease. Furthermore, Landlord shall not be liable under
any circumstances for a loss of, or injury to, or interference with, Tenant’s
business, including, without limitation, loss of profits, however occurring,
through or in connection with or incidental to a failure to furnish any of the
services or utilities as set forth in this ARTICLE 6.

 

6.3.1                        Notwithstanding
anything to the contrary contained in this Lease (except for Articles I I and
13 which shall govern and control the rights and remedies of the parties
incident to damage, destruction and condensation), if Tenant IS prevented from
using the Premises or any portion thereof (the “AFFECTED
AREA”) to conduct its normal business operations and Tenant does not, in
fact, use the Affected Area due to any of the following (not caused by the acts
or omissions of Tenant or Tenant’s employees, agents, contractors or subtenants
except to the extent covered by Landlord’s insurance): (i) any service required
to be provided by landlord to Tenant hereunder (including but not limited to
passenger elevator service, the Telecommunications Systems, janitorial service,
HVAC, electricity or water) (collectively, the “ESSENTIAL
SERVICES”) not being provided to the Affected Area as required by the terms
of this Lease, (ii) the presence, in a form or concentration in violation of
applicable law then in effect, of Hazardous Materials (which Hazardous
Materials were not brought onto the Premises by Tenant

 

21

 

or Tenant’s employees, agents, licensees or
invitees), (111) a Sick Building condition, or (iv) Force Majeure, the
following shall apply (collectively, the “Abatement
Event”).

 

6.3.1.1               Tenant
shall promptly deliver to Landlord notice (the “CURE NOTICE”)
of the Abatement Event and if Landlord fails to cure such condition within five
(5) consecutive business days after the subject loss of use of the Affected
Area, then Rent applicable to the Affected krea (and to the extent parking
passes rented by Tenant pursuant to this Lease correspond to the Affected Area
and are not used by Tenant, then fees for such applicable parking passes) shall
be abated from the date which is three (3) days after delivery of the Cure
Notice (the “Abatement Start Date”) until the date when such failure is cured-,
provided, however, that if Tenant has previously paid Rent, including parking
fees to Landlord for a period of time subsequent to the Abatement Start Date,
then Landlord shall, within ten (10) business days following the Abatement
Start Date, reimburse to Tenant the amount of such excess payments.

 

6.3.1.2               If
any Abatement Event shall not be cured within one hundred eighty (I 80) days
after the Abatement Start Date, then Tenant, upon notice to Landlord (the “SERVICES TERMINATION Notice”) delivered
within thirty (30) days after the expiration of such one hundred eighty (180)
day period after the Abatement Start Date (the “TERMINATION
CURE PERIOD”), may terminate this Lease as to the entire Premises, which
termination shall be deemed effective upon Tenant’s vacation of the entire
Premises. Notwithstanding anything to the contrary contained herein, the
Termination Cure Period shall be extended for each day Landlord is delayed by
Force Majeure, for a maximum of ninety (90) days, from curing the event which
gave rise to the rent abatement pursuant to SECTION 6.3.1 hereof

 

6.3.2                        If any
governmental entity promulgates or revises any statute, ordinance, building code,
fire code or other code or imposes mandatory controls on Landlord or the Real
Property or any part thereof, relating to the use or conservation of energy,
water, gas, light or electricity or the reduction of automobile or other
emissions or the provision of any other utility or service provided with
respect to this Lease or if Landlord is required to make alterations to the
Building or any other part of the Real Property in order to comply with such
mandatory or voluntary controls or guidelines, then Landlord shall comply with
such mandatory controls and may, in its sole election, comply with voluntary
controls or make such alterations to the Building or any other part of the Real
Property related thereto without creating any liability of Landlord to Tenant
under this Lease, provided that the Premises are not thereby rendered
untenantable. Such compliance and the making of such permitted alterations
shall, except as provided in SECTION 6.3. 1, not entitle Tenant to any
damages, relieve Tenant of the obligation to pay the full Rent reserved
hereunder or constitute or be construed as a constructive or other eviction of
Tenant. The cost of such compliance and/or alterations (whether mandatory or
voluntary) shall be included in Operating Expenses to the extent allowed
pursuant to Section 4.2.4, above.

 

6.4                                 ADDITIONAL
SERVICES.  Landlord shall also have the
non-exclusive right, but not the obligation, to provide any additional services
which may be required by Tenant, including, without limitation, locksmithing,
lamp replacement, additional ‘anitorial service, and additional repairs and
maintenance, provided that Tenant shall pay to Landlord upon billing,
Landlord’s Actual Costs of such additional services.

 

6.5                                 ACTUAL
COST.  As used herein, “ACTUAL COST” shall be (i) the actual costs paid or incurred
by Landlord (unless such actual costs paid or incurred cannot be readily
ascertained, in which event actual costs shall be the amount reasonably
estimated by Landlord), and (ii) a percentage of the cost thereof, as reasonably
established by Landlord, sufficient to reimburse Landlord for all overhead,
fees and other costs or expenses incurred by third parties that are not paid
for through Operating Expenses, which third parties are involved in such
repairs, replacements, administration, furnishing of goods and material and the
like.  In the event that more than one
tenant orders any extra service or utility, if any cost item is applicable to
more than one tenant, such cost shall be equitably apportioned by
Landlord.  Any Actual Cost, to the extent
reimbursed to Landlord by Tenant and/or other tenants, shall be netted out of
Operating Expenses to the extent previously charged to Operating Expenses or to
the extent that the work was performed by individuals whose entire salaries or
charge for the subject services are included in Operating Expenses.

 

22

 

ARTICLE 7

 

REPAIRS

 

7.1                                 LANDLORD
AND TENANT REPAIR OBLIGATIONS.  Landlord
shall, as part of Operating Expenses to the extent permitted under
Article 4 of this Lease, maintain and repair the structural portions of
the Building in a manner substantially consistent with the Comparable
Buildings, including the foundation, floor/ceiling slabs, roof, curtain wall,
exterior glass and mullions, columns, beams, shafts (including elevator
shafts), stairs, parking garage, stairwells, elevator cabs, plazas, art work,
sculptures, washrooms, Building mechanical, electrical and telephone closets,
and all common and public areas (collectively, “BUILDING
STRUCTURE”) and the Base Building mechanical, electrical, life safety,
plumbing, sprinkler systems and HVAC systems (the “BUILDING
SYSTEMS”).  Notwithstanding anything
in this Lease to the contrary, Tenant shall not be required to make any repair
to, modification of, or addition to the Building Structure and/or the Building
Systems except and to the extent required because of (i) Tenant’s use of the
Premises for other than normal and customary business office operations or (II)
Tenant’s construction or installation of the Tenant Improvements, any
Alterations, or the “Building Top Signage” or “Monument Signage” (as those ten-ns are defined in
SECTION 23.4, below).  Tenant shall,
at Tenant’s own expense, pursuant to the terms of this Lease, including without
limitation Article 8 hereof, keep the Premises, including all
improvements, fixtures and furnishings therein, in good order, repair and
condition at all times during the Lease Term. 
In addition, except as provided as part of Landlord’s repair obligations
set forth above or elsewhere in this Lease, Tenant shall, at Tenant’s own
expense but under the supervision and subject to the prior written approval of
Landlord, and within any reasonable period of time specified by Landlord,
pursuant to the terms of this Lease, including without limitation
Article 8 hereof, promptly and adequately repair all damage to the
Premises and replace or repair all damaged or broken fixtures and
appurtenances; provided however, that, at Landiord’s option, or if Tenant fails
to make such repairs, Landlord may, but need not, make such repairs and
replacements, and Tenant shall pay Landlord the cost thereof, including a
percentage of the cost thereof (to be uniformly established for the Building)
sufficient to reimburse Landlord for all overhead, general conditions, fees and
other costs or expenses arising from Landlord’s involvement with such repairs
and replacements forthwith upon being billed for same.  Landlord may, but shall not be required to,
enter the Preraises at all reasonable times to make such repairs, alterations,
improvements and additions to the Premises or to the Building or to any
equipment located in the Building as Landlord shall desire or deem necessary or
as Landlord may be required to do by governmental or quasi-govemmental
authority or court order or decree; provided, however, except for (i)
emergencies, (ii) repairs, alterations, improvements or additions required by
governmental or quasi-governmental authorities or court order or decree, or
(iii) repairs which are the obligation of Tenant hereunder, any such entry into
the Premises by Landlord shall be performed in a manner so as not to materially
interfere with Tenant’s use of, or access to, the Premises.  Tenant hereby waives and releases its right
to make repairs at Landlord’s expense under Sections 1941 and 1942 of the
California Civil Code or under any similar law, statute, or ordinance now or
hereafter in effect.

 

7.2                                 TENANT
SELF-HELP AND OFFSET RIJZHTS.

 

7.2.1                        If
Tenant provides notice (the “REPAIR NOTICE”) to
Landlord of an event or circumstance which pursuant to the terms of this Lease
requires Landlord to fulfill an obligation, including, without lirm’tation, to
provide services or utilities, or repair, alter, improve and/or maintain the
Premises or to comply with law (a “REQUIRED ACTION”),
and Landlord fails to provide the Required Action within the time period
required by this Lease, or a reasonable period of time, if no specific time
period is specified in this Lease, after the receipt of the Repair Notice (the
“NOTICE DATE”), or, in any event, does not commence the
Required Action within ten (10) davs after the Notice Date and complete the
Required Action within thirty (30) days after the Notice Date (provided that if
the nature of the Required Action is such that the same cannot reasonably be
completed within a thirty (30) day period, Landlord’s time period for
completion shall not be deemed to have expired if Landlord diligently commences
such cure within such period and thereafter diligently proceeds to rectify and
complete the Required Action, as soon as possible), then, provided that the
Required Action is limited to the floors on which full floors of the Premises
are located, Tenant may proceed to take the Required Action, pursuant to and in

 

23

 

accordance with all of the terms of this
Lease, and shall deliver a second notice to Landlord specifying that Tenant is
taking the Required Action (the “SECOND NOTICE”).

 

7.2.2                        Notwithstanding
the foregoing, and except as provided in Articles 11 and 13), below, if there
exists an emergency such that the Premises or a portion thereof are rendered
untenantable and Tenant’s personnel are forced to vacate the Premises or such
portion thereof and if Tenant gives the Building’s management office notice
(the “EMERGENCY NOTICE”) of Tenant’s intention to
take action with respect thereto (the “NECESSARY
ACTION”) and the Necessary Action is also a Required Action, then, provided
that the Necessary Action is limited to the floors on which full floors of the
Premises are located, Tenant may take the Necessary Action if Landlord does not
commence the Necessary Action within two (2) business days after the Emergency
Notice (the “EMERGENCY CURE PERIOD”) and
thereafter use its best efforts and due diligence to complete the Necessary
Action as soon as possible.

 

7.2.3                        If any
Necessary Action will affect the Building Systems, the Building Structure or
the structural integrity of the Building, Tenant shall use only those contractors
used by Landlord in the Building for work on the Building Systems, or its
structure, and Landlord shall provide Tenant (when available and upon Tenant’s
request) with notice identifying such contractors and any changes to the list
of such contractors, unless such contractors are unwilling or unable to perform
such work or the cost of such work is not competitive, in which event Tenant
may utilize the services of any other qualified contractors which normally and
regularly performs similar work in the Comparable Buildings and which Landlord
reasonably approves in writing, provided that Landlord’s failure to approve or
disapprove such contractors within five (5) business days of Landlord’s receipt
of a Repair Notice or within two (2) business days of Landlord’s receipt of an
Emergency Notice such contractors shall be deemed to be approved.

 

7.2.4                        If
any Required Action or Necessary Action is taken by Tenant pursuant to the
terms of this Section 7.2, then Landlord shall reimburse Tenant for its
reasonable and documented actual costs and expenses in taking the Required
Action or Necessary Action within thirty (30) days after receipt by Landlord of
an invoice from Tenant which sets forth a reasonably particularized breakdown
of its costs and expenses in connection with taking the Required Action or
Necessary Action on behalf of Landlord (the “REPAIR
INVOICE”).  In the event Landlord
does not reimburse Tenant for the Repair Invoice within thirty (30) days of
receipt, then Tenant may deduct from the next Rent payable by Tenant under this
Lease, the amount set forth in the Repair Invoice plus interest at the Interest
Rate (the “OFFSET RIGHT”).  Notwithstanding the foregoing, if Landlord
delivers to Tenant within thirty (30) days after receipt of the Repair Invoice,
a written objection to the payment of such invoice, setting forth with
reasonable particularity Landlord’s reason for its claim that the Required
Action or Necessary Action did not have to be taken by Landlord pursuant to the
terms of this Lease or that Tenant breached the terms of this Section 7.2,
or that the charges are excessive (in which case Landlord shall pay the amount
it contends would not have been excessive), then Tenant shall not be entitled
to deduct such amount from Rent, but the dispute may be submitted to
arbitration in accordance with the terms of Section 29.32 of this Lease
for resolution.

 

7.3                                 COMPLIANCE
WITH LAW BY LANDLORD AND TENANT. 
Landlord shall keep and maintain the Building Structure and Building
Systems, the Building (excluding those portions of the Building required to be
maintained by tenants and other occupants), the Base Building and the On-site
Parking Area in compliance with any law, statute, ordinance or other
governmental rule, regulation or requirement now in force or which may
hereafter be enacted or promulgated, including any standard or regulation now
or hereafter imposed on Landlord by a state, federal or local governmental body
charged with the establishment, regulation and enforcement of occupational
health or safety standards for employers, employees, landlords or tenants, that
relates to the operation of the Building (collectively, “LEGAL REQUIREMENTS”); provided, however, that tenant
hereby covenants and agrees that if such compliance is required with respect to
the Tenant Improvements or Alterations or such compliance is required in any
part of the Building or Base Building as a result of any Tenant Improvements,
Alterations or Personal Property of Tenant which are not general office
improvements or as a result of the Building Top Signage, Monument Signage, or
any other Tenant Signage , Tenant shall be responsible for the cost of causing,
and Tenant shall cause, the Premises, the Building and the Base Building, as
the case may be, to comply with such legal requirements.  Without limiting the foregoing, Tenant shall
not do anything or suffer anything to be done in or about the Premises which
will in any way conflict

 

24

 

with any law, statute, ordinance or other
governmental rule, regulation or requirement now in force or which may
hereafter be enacted or promulgated. The judgment of any court of competent
jurisdiction or the admission of Tenant in any judicial action, regardless of
whether Landlord is a party thereto, that Tenant has violated any of said
governmental measures, shall be conclusive of that fact as between Landlord and
Tenant.

 

ARTICLE 8

 

ADDITIONS AND ALTERATIONS

 

8.1                                 LANDLORD’S
CONSENT TO ALTERATIONS.  Tenant may not
make any improvements, alterations, additions or changes to the Premises
(collectively, the “ALTERATIONS”) without first
procuring the prior written consent of Landlord to such Alterations, which
consent shall be requested by Tenant not less than thirty (30) days prior to
the requested commencement thereof, and which consent shall not be unreasonably
withheld by Landlord; provided however, that Tenant may make changes in the
Premises, not requiring any structural modifications to the Premises or any
modifications to the Systems and Equipment upon fifteen (15) days prior notice
to Landlord.  The construction of the
initial improvements to the Premises shall be governed by the terms of the
Tenant Work Letter and not the terms of this ARTICLE 8.

 

8.2                                 MANNER OF
CONSTRUCTION.  Landlord may impose, as a
condition of its consent to all Alterations or repairs of the Premises or about
the Premises, such requirements as Landlord in its reasonable discretion may
deem desirable, including, but not limited to, the requirement that Tenant
perform any work which in Landlord’s judgment is likely to disturb other
tenants of the Building only during non-business hours, and/or the requirement
that Tenant utilize for such purposes only contractors, materials, mechanics
and materialmen reasonably approved by Landlord.  Tenant shall construct such Alterations and
perform such repairs in conformance with any and all applicable rules and
regulations of any federal, state, county or municipal code or ordinance and
pursuant to a valid building permit, issued by the City of Los Angeles, in
conformance with Landlord’s reasonable and nondiscriminatory construction rules
and regulations. All work with respect to any Alterations must be done in a
good and workmanlike manner and diligently prosecuted to completion.  In performing the work of any such
Alterations, Tenant shall have the work performed in such manner as not to
unreasonably obstruct access to the Building or the common areas for any other
tenant of the Building, and as not to unreasonably obstruct the business of Landlord
or other tenants in the Building.  Upon
completion of any Alterations, Tenant agrees to 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 Tenant shall deliver to the Building management
office a reproducible copy of the “as built” drawings of the Alterations, if
any, provided, however, that if Tenant does not cause a timely Notice of Completion
to be recorded, such failure shall not constitute a default under this Lease
but Tenant shall protect, defend, indemnify and hold Landlord harmless from any
loss, cost, damage, claim or expense incurred by Landlord in connection with
Tenant’s failure to record the Notice of Completion.

 

8.3                                 PAYMENT FOR
IMPROVEMENTS.  In the event Tenant orders
any Alteration or repair work directly from Landlord, the charges for such work
shall be deemed Additional Rent under this Lease, payable upon billing
therefor, either periodically during construction or upon the substantial
completion of such work, at Landlord’s option. 
Upon completion of such work not ordered from Landlord, Tenant shall
deliver to Landlord, if payment is made directly to contractors, evidence of payment,
contractors’ affidavits and full and final waivers of all liens for labor,
services or materials.  In the event of
any work ordered directly from Landlord, Tenant shall pay to Landlord a
percentage of the cost of such work (such percentage, which shall vary
depending on whether or not Tenant orders the work directly from Landlord, to
be established by Landlord on a uniform basis for the Building) sufficient to
compensate Landlord for all overhead, general conditions, fees and other costs
and expenses arising from Landlord’s involvement with such work.

 

8.4                                 CONSTRUCTION
INSURANCE.  In the event that Tenant
makes any Alteration, Tenant agrees to carry “Builder’s All Risk” insurance in
an amount reasonably approved by Landlord covering the construction of such
Alterations, and such other as Landlord may reasonably require, it being
understood and agreed that all of such Alterations shall be insured by

 

25

 

Tenant pursuant to ARTICLE 10 of this
Lease immediately upon completion thereof In addition, the original Landlord
under this Lease may, in its discretion, require Tenant or its contractor 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; provided
that no such bond shall be required for the Tenant named in the Summary unless
legally mandated by the California Public Contracts Code.

 

8.5                                 LANDLORD’S
PROPERTY, All Tenant Improvements and Alterations which may be installed or
placed in or about the Premises or the Real Property, and all signs installed
in, on or about the Premises or the Real Property, from time to time, shall be
at the sole cost of Tenant and (except for any signs) shall be and become the
property of Landlord, except that Tenant may remove any signs and any
Improvements and Alterations which Tenant can substantiate to Landlord have not
been paid for with any tenant improvement allowance funds provided to Tenant by
Landlord, (collectively, the “TENANT’S PROPERTY”)
and Tenant may also remove any Personal Property, provided, in each instance,
Tenant repairs any damage to the Premises and Building caused by such
removal.  Furthermore, Landlord may, at
the time of granting Landlord’s consent to any Alteration which is atypical for
normal and customary office purposes, require that Tenant, at Tenant’s expense
(i) remove such Alteration upon the expiration or early termination of the
Lease Term and (11) repair any damage to the Premises and Building caused by
such removal.  If Tenant falls to
complete such removal and/or to repair any damage caused by the removal of such
Alterations, Landlord may do so and may charge the cost thereof to Tenant.

 

ARTICLE 9

 

COVENANT AGAINST LIENS

 

Tenant has no authority or power to cause
or permit any lien or encumbrance of any kind whatsoever, whether created by
act of Tenant, operation of law or otherwise, to attach to or be placed upon
the Real Property, Building or Premises, and any and all liens and encumbrances
created by Tenant shall attach to Tenant’s interest only.  Landlord shall have the right at all times to
post and keep posted on the Premises any notice which it deems necessary for
protection from such liens.  Tenant
covenants and agrees not to suffer or permit any lien of mechanics or
materialmen or others to be placed against the Real Property, the Building or
the Premises with respect to work or services claimed to have been performed
for or materials claimed to have been furnished to Tenant or the Premises, and,
in case of any such lien attaching or notice of any lien, Tenant covenants and
agrees to cause it to be released and removed of record within thirty (30) days
after Tenant’s receipt of notice from Landlord regarding the existence of such
lien.  Notwithstanding anything to the
contrary set forth in this Lease, in the event that such lien is not released
and removed on or before the date occurring thirty (30) days after notice of
such lien is delivered by Landlord to Tenant, Landlord, at its sole option, may
immediately take all reasonable action necessary to release and remove such
lien, without any duty to investigate the validity thereof, and all sums, costs
and expenses, including reasonable attorneys’ fees and costs, incurred by
Landlord in connection with such lien shall be deemed Additional Rent under
this Lease and shall be due and payable by Tenant within ten (10) business days
after Tenant’s receipt of an invoice therefor.

 

ARTICLE 10

 

INSURANCE

 

10.1                           INDEMNIFICATION
AND WAIVER.  To the extent not prohibited
by law, and except to the extent caused by the negligence or willful misconduct
of Landlord, its agents and employees, neither Landlord nor any member of the “Landlord’s
Group” (as defined in this Section 10.1) shall be liable for any damage
either to persons or property or resulting from the loss of use thereof, which
damage is sustained by Tenant or by other persons claiming through Tenant, due
to the Building, the On-site Parking Area, the Real Property or any part of any
of the foregoing or any appurtenances thereof becoming out of repair (including
any improvements, materials, or equipment relating to telephone or
telecommunication systems), or due to the occurrence of any accident or event
in or about the Building, the On-site Parking Area, the Real Property, or any
part of any of the foregoing or any appurtenances thereof or due to any act or
neglect of any tenant or occupant of the Building, including the Premises, or
of any other person.  The provisions of
this

 

26

 

SECTION 10.1 shall apply particularly,
but not exclusively, to damage caused by gas, electricity, steam, sewage, sewer
gas or odors, fire, water or by the bursting or leaking of pipes, faucets,
sprinklers, plumbing fixtures and windows, and shall apply without distinction
as to the person whose act or neglect was responsible for the damage and
whether the damage was due to any of the causes specifically enumerated above
or to some other cause of an entirely different nature.  Tenant further agrees that all Personal
Property upon the Premises, or upon loading docks, receiving and holding areas,
or freight elevators of the Building, shall be at the risk of Tenant only, and
that Landlord shall not be liable for any loss or damage thereto or theft
thereof Tenant shall indemnify, defend, protect, and hold harmless Landlord,
and its parent, subsidiary and affiliate companies, including but not limited
to their respective directors, officers, agents, servants, employees and
independent contractors and other entities constituting “Landlord Affiliates,”
as defined in SECTION 29.33, (both groups, collectively, the “LANDLORD’S GROUP”) from any and all loss, cost, damage,
expense and liability (including without limitation court costs and reasonable
attorneys’ fees) incurred in connection with or arising from any of the
followings (i) any default by Tenant in the observance or performance of any of
the terms, covenants or conditions of this Lease on Tenant’s part to be
observed or performed; (ii) the use or occupancy of the Premises by Tenant or
any person claiming by, through or under Tenant; (iii) the condition of the
Premises or any occurrence or happening on the Premises from any cause
whatsoever; (iv) any acts of Tenant pursuant to Section 7.2, above, and
(v) any acts, omissions or negligence of Tenant or any person claiming by,
through or under Tenant, or of the contractors, agents, servants, employees,
visitors or licensees of Tenant or any such person, in, on or about the
Premises or the Real Property, either prior to, during, or after the expiration
of the Lease Term, including, without limitation, any acts, omissions or
negligence in the making or performance of any Alterations, provided that the
terms of the foregoing indemnity shall not apply to the negligence or willful
misconduct of Landlord or its agents, contractors, employees or licensees
(except for damage to the Tenant Improvements, Alterations and Personal
Property, and damage covered by Tenant’s insurance).  Should Landlord be named as a defendant in
any suit brought against Tenant in connection with or arising out of Tenant’s
occupancy of the Premises, Tenant shall pay to Landlord its costs and expenses
incurred in such suit, including without limitation, its actual professional
fees such as appraisers’, accountants’ and attorneys’ fees.  Landlord shall indemnify, defend, protect,
and hold harmless Tenant and its parent, subsidiary and affiliated companies,
including but not limited to their respective directors, officers, agents,
servants, employees and independent contractors (collectively, the “TENANT’S GROUP”), from any and all loss, cost, damage,
expense and liability (including, without limitation, court costs and
reasonable attorneys’ fees) incurred in connection with or arising from any of
the following: (i) any default by Landlord in the observance or performance of
any of the terms, covenants or conditions of this Lease on Landlord’s part to
be observed or performed; and (ii) any acts, omissions or negligence of
Landlord or of the contractors, agents, servants or employees of Landlord in,
on or about the Building, either prior to, during, or after the expiration of
the Lease Term, provided that the terms of the foregoing indemnity shall not
apply to the negligence or willful misconduct of Tenant (except as to damages
covered by Landlord’s insurance).  Should
Tenant be named as a defendant in any suit brought against Landlord in
connection with the Building, Landlord shall pay to Tenant its costs and
expenses incurred in such suit, including without limitation, its actual
professional fees such as appraisers’, accountants’ and attorneys’ fees if the
claim is one to which Tenant is entitled to be indemnified by Landlord under
this SECTION 10.1. The provisions of this SECTION 10.1 shall survive
the expiration or sooner termination of this Lease with respect to any claims
or liability occurring prior to such expiration or termination.

 

10.2                           LANDLORD’S
INSURANCE.  From and after the date
hereof and throughout the Lease Term, Landlord shall maintain in full force and
effect the policies of insurance set forth below in SECTIONS 10.2.1 THROUGH
10.2.2.

 

10.2.1                  A policy or
policies of insurance insuring the Building and On-site Parking Area against
loss or damage due to fire and other casualties covered within the
classification of fire and extended coverage, vandalism coverage and malicious
mischief, sprinkler leakage, water damage, and special extended coverage on
building.  Such coverage shall be in
amounts as Landlord may from time to time determine, but in no event less than
one hundred percent (100%) of the full insurable value of the Building and the
On-site Parking Area. Additionally, at the option of Landlord, such insurance
coverage may include the risks of earthquakes and/or flood damage and
additional hazards, a rental loss endorsement and one or more loss payee

 

27

 

endorsements in favor of the holders of any
mortgages or deeds of trust encumbering the interest of Landlord in the Real
Property or the ground or underlying lessors of the Real Property, or any
portion thereof. Tenant shall neither use the Premises nor permit the Premises
to be used or acts to be done therein which will (i) increase the premium of
any insurance described in this SECTION 10.2; (ii) cause a cancellation of
or be in conflict with any such insurance policies; (iii) result in a refusal
by insurance companies of good standing to insure the Building or On-site
Parking Area in amounts reasonably satisfactory to Landlord; or (iv) subject
Landlord to any liability or responsibility for injury to any person or
property by reason of any operation being conducted in the Premises.  Tenant shall, at Tenant’s expense, comply as
to the Premises with all reasonable insurance company requirements pertaining
to the use of the Premises.  If Tenant’s
conduct or use of the Premises causes any increase in the premium for such
insurance policies, then Tenant shall reimburse Landlord for any such increase.
Tenant, at Tenant’s expense, shall comply with all rules, orders, regulations
or requirements of the American Insurance Association (formerly the National
Board of Fire Underwriters) and with any similar body.

 

10.2.2                  Commercial
liability in at least those amounts customarily carried by landlords of
Comparable Buildings.

 

10.3                           TENANT’S
INSURANCE.  Tenant shall maintain the
following coverages in the following amounts:

 

10.3.1                  Comprehensive
General Liability Insurance covering the insured against claims of bodily
injury, personal injury and property damage arising out of Tenant’s operations,
assumed liabilities or use of the Premises, including a Broad Form
Comprehensive General Liability endorsement covering the insuring provisions of
this Lease and the performance by Tenant of the indemnity agreements set forth
in SECTION 10.1 of this Lease, for limits of liability not less than:

 

	
  Bodily Injury and Property Damage
  Liability

  	
   

  	
  $3,000,000 each occurrence

  
	
   

  	
   

  	
  $3,000,000 annual aggregate

  
	
   

  	
   

  	
   

  
	
  Personal Injury Liability

  	
   

  	
  $3,000,000 each occurrence

  
	
   

  	
   

  	
  $3,000,000 annual aggregate

  

 

10.3.2                  Physical Damage
Insurance covering (i) the Tenant Improvements, and (ii) all Building Top
Signage and Monument Signage.  Such
insurance shall be written on an “all risks” of physical loss or damage basis,
for the full replacement cost value new without deduction for depreciation of
the covered items and in amounts that meet any co-insurance clauses of the
policies of insurance and shall include a vandalism and malicious mischief
endorsement, sprinkler leakage coverage and earthquake sprinkler leakage
coverage.

 

10.4                           FORM OF
POLICIES.  The minimum limits of policies
of insurance required of Tenant under this Lease shall in no event limit the
liability of Tenant under this Lease. 
Such insurance shall (i) name Landlord, and any other party Landlord may
reasonably specify, as an additional insured; (ii) specifically cover the
liability assumed by Tenant under this Lease, including, but not limited to,
Tenant’s obligations under SECTION 10.1 of this Lease; (iii) be issued by
an insurance company having a rating of not less than A-X in Best’s Insurance
Guide or which is otherwise reasonably acceptable to Landlord and licensed to
do business in the State of California; (iv) be primary insurance as to all
claims thereunder arising within the Premises and provide that any insurance
carried by Landlord with respect to claims arising within the Premises is
excess and is non-contributing with any insurance requirement of Tenant; (v)
provide that said insurance shall not be canceled or coverage changed unless
thirty (30) days’ prior written notice shall have been given to Landlord or any
mortgagee of Landlord whose names and addresses have been provided by Landlord
together with a specific reference to this requirement; and (vi) contain a
cross-liability endorsement or severability of interest clause reasonably
acceptable to Landlord.  Tenant shall
deliver said policy or policies or certificates thereof to Landlord on or
before the Lease Commencement Date and at least thirty (30) days before the
expiration date thereof.  In the event
Tenant shall fail to procure such insurance, or to deliver such policies or
certificate, Landlord may, upon five business days prior notice to Tenant, at
its option, procure such

 

28

 

policies for the account of Tenant, and the
cost thereof shall be paid to Landlord as Additional Rent within ten (10) days
after delivery to Tenant of bills therefor.

 

10.5                           SUBROGATION.  Landlord and Tenant agree to have their
respective insurance companies issuing property damage insurance waive any
rights of subrogation that such companies may have against Landlord or Tenant,
as the case may be, so long as the insurance carried by Landlord and Tenant,
respectively, is not invalidated thereby, As long as such waivers of
subrogation are contained in their respective insurance policies, Landlord and
Tenant hereby waive any right that either may have against the other on account
of any loss or damage to their respective property to the extent such loss or
damage is insurable under policies of insurance for fire and all risk coverage,
theft, public liability, or other similar insurance.  If either party fails to carry the amounts
and types of insurance required to be carried by it pursuant to this
ARTICLE 10, such failure shall be deemed to be a covenant and agreement by
such party to self-insure with respect to the type and amount of insurance
which such party so failed to carry, with full waivers of subrogation with
respect thereto.

 

10.6                           ADDITIONAL
INSURANCE OBLIGATIONS.  Tenant shall
carry and maintain during the entire Lease Term, at Tenant’s sole cost and
expense, increased amounts of the insurance required to be carried by Tenant
pursuant to this Article 10, and such other reasonable types of insurance
coverage which may replace the types currently required to be carried by
Tenant, as may be reasonably requested by Landlord; provided that such types and/or
amounts of insurance are comparable to that being required by other landlords
of their tenants in Comparable Buildings and are also comparable to that being
generally required of other tenants in the Building.

 

ARTICLE II

 

DAMAGE AND DESTRUCTION

 

11.1                           REPAIR
OF DAMAGE TO PREMISES BY LANDLORD. 
Tenant shall promptly notify Landlord of any damage to the Premises
resulting from fire or any other casualty. 
If the Premises or any Common Areas of the Building serving or providing
access to the Premises shall be damaged by fire or other casualty, Landlord
shall promptly and diligently, subject to reasonable delays for insurance
adjustment or other matters beyond Landlord’s reasonable control, and subject
to all other terms of this ARTICLE 11, restore the Base Building, the
Premises, and such Common Areas.  Such
restoration shall at least be to substantially the same condition of the Base
Building, the Premises, and Common Areas prior to the casualty, except for
modifications required by zoning and building codes and other laws.  Notwithstanding any other provision of this
Lease, upon the occurrence of any damage to the Premises, to the extent this
Lease is not terminated, Tenant shall assign to Landlord (or to any party
designated by Landlord) all insurance proceeds payable to Tenant under Tenant’s
insurance required under SECTION 10.3 of this Lease, and Landlord shall
thereupon repair any injury or damage to the Tenant Improvements and
Alterations installed in the Premises and shall return such Tenant Improvements
and Alterations to their original condition; provided that if the cost of such
repair by Landlord exceeds the amount of insurance proceeds received by
Landlord from Tenant’s insurance carrier, as assigned by Tenant, the cost of
such repairs shall be paid by Tenant to Landlord as construction progresses on
a reasonable basis.  In connection with
such repairs and replacements, Tenant shall, prior to the commencement of
construction, submit to Landlord, for Landlord’s review and approval, all
plans, specifications and working drawings relating thereto, and Tenant and
Landlord shall select the contractors to perform such improvement work.  Such submittal of plans and construction of
improvements shall be performed in substantial compliance with the terms of the
Tenant Work Letter as though such construction of improvements were the initial
construction of the Tenant Improvements. 
Landlord shall not be liable for any inconvenience or annoyance to
Tenant or its visitors, or injury to Tenant’s business resulting in any way
from such damage or the repair thereof; provided however, that if such fire or
other casualty shall have damaged the Premises or Common Areas necessary to
Tenant’s occupancy, and if such damage is not the result of the gross
negligence or willful misconduct of Tenant or Tenant’s employees, contractors,
lisencees, or invitees, and is not covered by Tenant’s or Landlord’s insurance,
Landlord shall allow Tenant a proportionate abatement of Rent during the time
and to the extent the Premises are unfit for occupancy for the purposes
permitted under this Lease, and not occupied by Tenant as a result thereof;
provided, however, that if more than 60,000 usable square feet of the Premises
is damaged and the remaining portion of the Premises is not reasonably sufficient
to allow Tenant or

 

29

 

an independent unit of Tenant to conduct
its business operations from such remaining portion and Tenant does not conduct
its business operations therefrom, Landlord shall allow Tenant a total
abatement of Rent during the time and to the extent the Premises are unfit for
occupancy for the purposes permitted under this Lease, and not occupied by
Tenant as a result of the subject damage. 

 

11.2                           LANDLORD’S
OPTION TO REPAIR.  Notwithstanding the
terms of SECTION 11.1 of this Lease, Landlord may elect not to rebuild
and/or restore the Premises and/or Building and instead terminate this Lease by
notifying Tenant in writing of such termination within sixty (60) days after
the date of damage, such notice to include a termination date giving Tenant
ninety (90) days to vacate the Premises, but Landlord may so elect only if the
Building shall be damaged by fire or other casualty or cause and one or more of
the following conditions is present: (i) repairs cannot reasonably be completed
within two hundred seventy (270) days of the date of damage (when such repairs
are made without the payment of overtime or other premiums) certified by a
contractor mutually acceptable to Landlord and Tenant; or (ii) the dollar
amount of the damage or condition arising as a result of such damage not
covered, including deductible amounts, by Landlord’s insurance policies is
equal to or greater than Five Million Dollars ($5,000,000.00); provided,
however, that Landlord shall only have the right to terminate this Lease under
items (i) and (ii), above, if Landlord terminates the leases of tenants
occupying at least seventy-five percent (75%) of the rentable square footage of
the Building (inclusive of the square footage of the Premises) and Landlord
does not, in good faith, intend to relet such space so terminated for a period
of twelve (12) months after the date of such termination; provided, further,
however, that if Landlord’s general contractor within sixty (60) days after the
date of the damage fails to certify in writing to Tenant (after written request
by Tenant to Landlord for such certification) that the Building can be restored
within two hundred seventy (270) days after the date of the damage, Tenant shall
then have the right, to be exercised not later than ninety (90) days after the
date of such damage, to elect to terminate this Lease by written notice to
Landlord on the date specified in the notice, which date shall not be less than
thirty (30) days nor more than sixty (60) days after the date such notice is
given by Tenant. Furthermore, if neither Landlord nor Tenant have terminated
this Lease, and the repairs are not actually completed within such two hundred
seventy (270) day period, Tenant shall have the right to terminate this Lease,
which right if exercised must be exercised by Tenant in writing (the “DAMAGE TERMINATION NOTICE”) within the thirty
(30) day period immediately following the expiration of the foregoing two
hundred seventy (270) day period, and which termination shall be effective as
of a date set forth in the Damage Termination Notice (the “DAMAGE TERMINATION DATE”), which Damage
Termination Date shall not be earlier than thirty (30) days nor more than sixty
(60) days after the sending of such Damage Termination Notice.  Notwithstanding the foregoing, if Tenant
delivers a Damage Termination Notice to Landlord, then Landlord shall have the
right to suspend the occurrence of the Damage Termination Date for a period
ending sixty (60) days after the Damage Termination Date set forth in the
Damage Termination Notice by delivering to Tenant, within five (5) business
days of Landlord’s receipt of the Damage Termination Notice, a certificate of
Landlord’s contractor responsible for the repair of the damage certifying that
it is such contractor’s good faith judgment that the repairs shall be
substantially completed within sixty (60) days after the Damage Termination
Date.  If repairs shall be substantially
completed prior to the expiration of such sixty-day period, then the Damage
Termination Notice shall be of no force or effect, but if the repairs shall not
be substantially completed within such sixty-day period, then this Lease shall
terminate upon the expiration of such sixty-day period.  At any time, from time to time, after the
date of the damage, Tenant may request that Landlord inform Tenant of
Landlord’s reasonable opinion of the date of completion of the repairs and
Landlord shall reasonably respond to such request within ten (10) days.

 

11.3                           WAIVER OF
STATUTORY PROVISIONS.  The provisions of
this Lease, including this ARTICLE 11, constitute an express agreement
between Landlord and Tenant with respect to any and all damage to, or
destruction of, all or any part of the Premises, the Building or any other
portion of the Real Property, and any statute or regulation of the State of
California, including, without limitation, Sections 1932(2) and 1933(4) of the
California Civil Code, with respect to any rights or obligations concerning
damage or destruction in the absence of an express agreement between the
parties, and any other statute or regulation, now or hereafter in effect, shall
have no application to this Lease or any damage or destruction to all or any
part of the Premises, the Building or any other portion of the Real Property.

 

30

 

11.4                           DAMAGE NEAR
END OF TERM.  In the event that the
Premises or the Building is destroyed or damaged to any substantial extent
during the last twenty-four (24) months of the Lease Term, and Tenant has not
previously or within sixty (60) days after the date of the casualty duly
exercised an available option to extend the Lease Term pursuant to
SECTION 2.2 of this Lease, then notwithstanding anything contained in this
ARTICLE 11, either Landlord or Tenant shall have the option to terminate
this Lease by giving written notice to the other party of the exercise of such
option within sixty (60) days after such damage or destruction, in which event
this Lease shall cease and terminate as of the date of such notice.

 

11.5                           TERMINATION.  Except as set forth in Section 11.1,
above, in the event of any termination of this Lease under this
ARTICLE 11, Tenant shall pay the Base Rent and Additional Rent, properly
apportioned up to such date of termination, and both parties hereto shall
thereafter be freed and discharged of all further obligations hereunder, except
as provided for in provisions of this Lease which by their terms survive the
expiration or earlier termination of the Lease Term, and each party shall
retain the insurance proceeds from policies carried by each party.

 

ARTICLE 12

 

NONWAIVER

 

No waiver of any provision of this Lease
shall be implied by (i) any failure of either party to insist in any instance
on the strict keeping, observance or performance of any covenant or agreement
contained in this Lease or to exercise any election contained in this Lease or
(ii) any failure of either party to enforce any remedy on account of the
violation of such provision, even if such violation shall continue or be
repeated subsequently. Any waiver by either party of any provision of this
Lease may only be in writing, and no express waiver shall affect any provision
other than the one specified in such waiver and that one only for the time and
in the manner specifically stated.  No
receipt of monies by Landlord from Tenant after the termination of this Lease
shall in any way alter the length of the Lease Term or of Tenant’s right of
possession hereunder or after the giving of any notice shall reinstate,
continue or extend the Lease Term or affect any notice given Tenant prior to
the receipt of such monies, it being agreed that after the service of notice or
the commencement of a suit or after final judgment for possession of the Premises,
Landlord may receive and collect any Rent due, and the payment of said Rent
shall not waive or affect said notice, suit or judgment.

 

ARTICLE 13

 

CONDEMNATION

 

13.1                           PERMANENT
TAKING.  If ten percent (10%) or more of
any of the Premises or Building shall be taken by power of eminent domain or
condemned by any competent authority for any public or quasi-public use or
purpose, or if Landlord shall grant a deed or other instrument in lieu of such
taking by eminent domain or condemnation, Landlord shall have the option to
terminate this Lease upon ninety (90) days’ notice, provided such notice is
given no later than one hundred eighty (180) days after the date of such
taking, condemnation, reconfiguration, vacation, deed or other instrument.  If so much of the Premises is taken so as to
substantially interfere with the conduct of Tenant’s business from the
Premises, or if access to the Premises is substantially impaired, Tenant shall
have the option to terminate this Lease upon ninety (90) days’ notice, provided
such notice is given no later than one hundred eighty (180) days after the date
of such taking.  Landlord shall be
entitled to receive the entire award or payment in connection therewith, except
that Tenant shall have the right to file any separate claim available to Tenant
for any taking of Tenant’s personal property and fixtures belonging to Tenant
and removable by Tenant upon expiration of the Lease Term pursuant to the terms
of this Lease, and for moving expenses, so long as such claim does not diminish
the award available to Landlord, its ground lessor with respect to the Real
Property or its mortgagee, and such claim is payable separately to Tenant and
Tenant shall be entitled to receive fifty percent (50%) of the “Bonus Value” of
the leasehold estate in connection with this Lease, which Bonus Value shall be
equal to the sum paid by the condemning authority as the award for compensation
for taking the leasehold created by this Lease. 
All Rent shall be apportioned as of the date of such termination, or the
date of such taking, whichever shall first occur.  If any part of the Premises shall be taken,
and this Lease shall not be so terminated, the Rent shall be proportionately
abated.  Tenant hereby waives any and all

 

31

 

rights it might otherwise have pursuant to
Section 1265.130 of The California Code of Civil Procedure.

 

13.2                           TEMPORARY
TAKING,.  Notwithstanding anything to the
contrary contained in this ARTICLE 13, in the event of a temporary taking
of all or any portion of the Premises for a period of one hundred and eighty
(180) days or less, then this Lease shall not terminate but the Base Rent and
the Additional Rent shall be abated for the period of such taking in proportion
to the ratio that the number of rentable square feet of the Premises taken
bears to the total rentable square feet of the Premises.  Landlord shall be entitled to receive the
entire award made in connection with any such temporary taking, except that
Tenant shall have the right to file any separate claim available to Tenant for
claims made by Tenant as a result of the necessity of Tenant’s moving to
temporary space during the period of such temporary taking.

 

ARTICLE 14

 

ASSIGNMENT AND SUBLETTING

 

14.1                           TRANSFERS.  Tenant acknowledges that the economic
concessions and rental rates set forth in this Lease were negotiated by
Landlord and Tenant in consideration of, and would not have been granted by
Landlord but for, the specific nature of the leasehold interest granted to
Tenant hereunder, as such interest is limited and defined by various provisions
throughout this Lease, including, but not limited to, the provisions of this
ARTICLE 14 which define and limit the transferability of such leasehold
interest.  Tenant shall not, without the
prior written consent of Landlord, assign, mortgage, pledge, hypothecate,
encumber, or permit any lien to attach to, or otherwise transfer, this Lease or
any interest hereunder, permit any assignment or other such foregoing transfer
of this Lease or any interest hereunder by operation of law, sublet the
Premises or any part thereof, or permit the use of the Premises by any persons
other than Tenant and its employees (all of the foregoing are hereinafter
sometimes referred to collectively as “TRANSFERS” and any
person to whom any Transfer is made or sought to be made is hereinafter
sometimes referred to as a “TRANSFEREE”).  If Tenant shall desire Landlord’s consent to
any Transfer, Tenant shall notify Landlord in writing, which notice (the “TRANSFER NOTICE”) shall include (i) the proposed
effective date of the Transfer, which shall not be less than 15 business days
nor more than one hundred eighty (180) days after the date of delivery of the
Transfer Notice, (ii) a description of the portion of the Premises to be
transferred (the “SUBJECT SPACE”), (iii) all of the
terms of the proposed Transfer and the consideration therefor, including a
calculation of the “Transfer Premium”, as that term is defined in
SECTION 14.3 below, in connection with such Transfer, the name and address
of the proposed Transferee, and a copy of all existing and/or proposed
documentation pertaining to the proposed Transfer, including all existing
operative documents to be executed to evidence such Transfer or the agreements
incidental or related to such Transfer, and (iv) such other information as
Landlord may reasonably require.  Any
Transfer made without Landlord’s prior written consent shall, at Landlord’s
option, be null, void and of no effect. Tenant shall pay Landlord, in
connection with any request for consent to a Transfer a processing fee of Five
Hundred Dollars ($500.00).

 

14.2                           LANDLORD’S
CONSENT.  Landlord shall not unreasonably
withhold its consent to any proposed Transfer of the Subject Space to the
Transferee on the terms specified in the Transfer Notice.  Landlord shall notify Tenant in writing
within ten (10) business days after Landlord’s receipt of a Transfer Notice as
to whether Landlord consents to the proposed Transfer or withholds its consent
thereto; failure of Landlord to so notify Tenant in writing within five (5)
business days of a second Transfer Notice delivered after the ten (10) business
day period set forth above, which second notice indicates that failure to
respond will be deemed approval, shall be deemed to constitute Landlord’s
consent to the proposed Transfer.  The
parties hereby agree that it shall be reasonable under this Lease and under any
applicable law for Landlord to withhold consent to any proposed Transfer where
one or more of the following apply, without limitation as to other reasonable
ground for withholding consent:

 

14.2.1                  The Transferee
is of a character or reputation or engaged in a business which is not
consistent with the quality of the Building, or would be a significantly less
prestigious occupant of the Building than Tenant;

 

32

 

14.2.2                  The Transferee
intends to use the Subject Space for purposes which are not permitted under
this Lease;

 

14.2.3                  The Transferee
is either a governmental agency or instrumentality thereof of a type which does
not then occupy space in the Building and (i) which is capable of exercising
the power of eminent domain or condemnation, or (ii) which is of a character or
reputation, is engaged in a business, or is of, or is associated with, a
political orientation or faction, which is not consistent with the quality of
the Building, or which would reasonably offend Landlord or a tenant which
leases one or more floors of the Building or which (in Landlord’s reasonable judgment)
may cause or present a possible security threat to the Building (e.g., bomb
threats and the like);

 

14.2.4                  The Transfer
will result in more than a reasonable and safe number of occupants per floor
within the Subject Space; 

 

14.2.5                  Unless Tenant
will continue to occupy at least four (4) full floors of the Building (in which
case this Section 14.2.5 will not apply), the Transferee is not a party of
reasonable financial worth and/or financial stability in light of the
responsibilities involved under the Lease on the date consent is requested; or

 

14.2.6                  The proposed
Transfer would cause Landlord to be in violation of any current or future lease
or agreement for space on the ground floor of the Building to which Landlord is
a party, or would give any current or future tenant of the ground floor of the
Building a right to cancel its lease.

 

If Landlord consents to any Transfer
pursuant to the terms of this SECTION 14.2 (and does not exercise any
recapture rights Landlord may have under SECTION 14.4 of this Lease),
Tenant may within six (6) months after Landlord’s consent, but not later than
the expiration of said six-month period, enter into such Transfer of the
Premises or portion thereof, upon substantially the same terms and conditions
as are set forth in the Transfer Notice furnished by Tenant to Landlord
pursuant to SECTION 14.1 of this Lease, provided that if there are any
changes in the terms and conditions from those specified in the Transfer Notice
such that Landlord would initially have been entitled to refuse its consent to
such Transfer under this SECTION 14.2, Tenant shall again submit the
Transfer to Landlord for its approval and other action under this
ARTICLE 14 (including Landlord’s right of recapture, if any, under
SECTION 14.4 of this Lease).

 

14.3                           TRANSFER
PREMIUM.  If Landlord consents to a
Transfer, as a condition thereto which the parties hereby agree is reasonable,
Tenant shall pay to Landlord fifty percent (50%) of the amount of any “Transfer
Premium,” as that term is defined in this SECTION 14.3, received by Tenant
from such Transferee. Notwithstanding the foregoing, during any period in which
Tenant fails to occupy at least four (4) full floors of the Building, Tenant
shall pay to Landlord one hundred percent (100%) of the amount of any Transfer
Premium received by Tenant during such period. 
“TRANSFER PREMIUM” shall mean all rent,
additional rent or other consideration payable by such Transferee in excess of
the Rent and Additional Rent payable by Tenant under this Lease on a per rentable
square foot basis if less than all of the Premises is transferred, after
deducting the reasonable expenses actually incurred by Tenant for the following
costs (collectively, the “SUBLEASING COSTS”): (i)
any changes, alterations and improvements to the Premises in connection with
the Transfer which comply with the terms of this Lease, (ii) any brokerage
commissions in connection with the Transfer, (iii) reasonable legal fees
incurred in connection with the Transfer, including those fees and costs reimbursed
to Landlord pursuant to the last sentence of SECTION 14.1, (iv) the amount
of any Base Rent and Additional Rent paid by Tenant to Landlord with respect to
the Subject Space during the period commencing on the later of (a) the date
Tenant contracts with a reputable broker to market the Subject Space, or (b)
the date Tenant vacates the Subject Space, until the commencement of the term
of the Transfer, and (v) any other “out-of-pocket” monetary concessions
reasonably provided in connection with the Transfer, including, but not limited
to, tenant improvement or decorating allowances. “TRANSFER PREMIUM” shall also
include, but not be limited to, key money and bonus money paid by Transferee to
Tenant in connection with such Transfer, and any payment in excess of fair
market value for services rendered by Tenant to Transferee or for assets,
fixtures, inventory, equipment, or furniture transferred by Tenant to
Transferee in connection with such Transfer. If part of the Transfer Premium
shall be payable to the Transferee other than in cash, Landlord’s share of such
non-cash consideration shall be in such form as is reasonably satisfactory to
Landlord.  The

 

33

 

determination of the amount of the Transfer
Premium shall be made on an annual basis in accordance with the terms of this
SECTION 14.3.1, but an estimate of the amount of the Transfer Premium
shall be made each month and one-twelfth of such estimated amount shall be paid
to Landlord promptly, but in no event later than the next date for payment of
Base Rent hereunder, subject to an annual reconciliation on each anniversary
date of the Transfer. If the payments to Landlord under this
SECTION 14.3.1 during the twelve (12) months preceding each annual reconciliation
exceed the amount of Transfer Premium determined on an annual basis, then
Landlord shall credit the overpayment against Tenant’s future obligations under
this SECTION 14.3.1 or if the overpayment occurs during the last year of
the Transfer in question, refund the excess to Tenant.  If Tenant has underpaid Landlord’s share of
the Transfer Premium, as determined by such annual reconciliation, Tenant shall
pay the amount of such deficiency to Landlord promptly, but in no event later
than the next date for payment of Base Rent hereunder,

 

14.4                           LANDLORD’S
OPTION AS TO SUBJECT SPACE. 
Notwithstanding anything to the contrary contained in this
ARTICLE 14, if during any Option Term Tenant desires to transfer a portion
of the Premises (the “TRANSFER SPACE”), other than
pursuant to any “Non-Transfer” as that term is defined in Section 14.6,
below, which Non-Transfer shall not be subject to the terms of this
Section 14.4, for all or substantially all of the balance of the Lease
Term, including the Second Option Term if the same shall have been exercised
(I.E., a Transfer so that six (6) months or less of the Lease Term remains
after the expiration of the term of such Transfer), Tenant shall give Landlord
notice (the “INTENTION TO TRANSFER NOTICE”)
of any contemplated Transfer (whether or not the contemplated Transferee or the
terms of such contemplated Transfer have been determined) and the Intention to
Transfer Notice shall specify that the same is delivered pursuant to this
SECTION 14.4 in order to allow Landlord to elect to recapture the Transfer
Space for the remainder of the Lease Term. 
Thereafter, Landlord shall have the option, by giving written notice to
Tenant within thirty (30) days after receipt of the Intention to Transfer
Notice, to recapture the Transfer Space. 
Such recapture notice shall cancel and terminate this Lease with respect
to the Transfer Space as of the expiration of such thirty-day period (or such
later date as Tenant may specify in the Intention to Transfer Notice as the
effective date of the contemplated Transfer). 
In the event of a recapture by Landlord-of less than a full floor,
Landlord shall, at its sole cost and expenses, cause a demising wall to be
erected between the Subject Space and the Premises and shall perform all other
work necessary to separate such spaces in accordance with plans approved by
Tenant, and Tenant shall reimburse Landlord for one-half of its partitioning
costs.  In the event of a recapture by
Landlord, if this Lease shall be canceled with respect to less than the entire
Premises, the Rent reserved herein shall be prorated on the basis of the number
of rentable square feet retained by Tenant in proportion to the number of
rentable square feet contained in the Premises, and this Lease as so amended
shall continue thereafter in full force and effect, and upon request of either
party, the parties shall execute written confirmation of the same.
Notwithstanding the foregoing, any Transfer Space recaptured by Landlord shall,
for the purposes of Section 11 of Exhibit G attached hereto only, be
deemed to be space leased by Tenant.  If
and to the extent Landlord declines, or falls to elect in a timely manner to
recapture under this SECTION 14.4 within such thirty-day period, then, Landlord
shall not have the right to recapture any of the Transfer Space described in
the Intention to Transfer Notice for a period of nine (9) months (the “NINE MONTH PERIOD”) and commencing on the expiration
of such thirty-day period, Tenant shall have the right (subject to all the
terms and conditions of this ARTICLE 14) to consummate a Transfer of the
Transfer Space within the Nine Month Period, and, if a Transfer of all of the
Transfer Space is not consummated within the Nine Month Period (or if a
Transfer is so consummated, then upon the expiration of the term of any such
Transfer), if the provisions of this SECTION 14.4 are applicable, Tenant
shall again be required to submit a new Intention to Transfer Notice to
Landlord with respect to any contemplated Transfer of such Transfer Space.

 

14.5                           EFFECT OF
TRANSFER.  If Landlord consents to a
Transfer, (i) the terms and conditions of this lease shall in no way be deemed
to have been waived or modified, (ii) such consent shall not be deemed consent
to any further Transfer by either Tenant or a Transferee, (iii) Tenant shall
deliver to Landlord, promptly after execution, an original executed copy of all
documentation pertaining to the Transfer in form reasonably acceptable to
Landlord, (iv) tenant shall furnish upon Landlord’s request a complete statement,
certified by an officer of Tenant, setting forth in detail the computation of
any Transfer Premium Tenant has derived and shall derive from such Transfer,
(v) no Transfer relating to this lease or agreement entered into with respect
thereto. whether with or without Landlord’s consent, shall relieve tenant or
any guarantor of the Lease

 

34

 

from liability under this Lease, and (vi)
such Transfer shall at all times be subject and subordinate to the terms of this
Lease.  Landlord or its authorized
representatives shall have the right at all reasonable times to audit the
books, records and papers of Tenant relating to any Transfer, and shall have
the right to make copies thereof. If the Transfer Premium respecting any
Transfer shall be found understated, Tenant shall, within ten (10) days after
demand, pay the deficiency and if understated by more than two percent (2%),
Landlord’s reasonable cost of such audit.

 

14.6                           NON-TRANSFERS.  Notwithstanding anything to the contrary
contained in this ARTICLE 14, an assignment or subletting of all or a
portion of the Premises to an entity which is controlled by, controls, or is
under common control with, Tenant, or to a purchaser of all or substantially
all of the assets of Tenant, or to an entity resulting, by operation of law or
otherwise, from the merger, consolidation or other reorganization of Tenant
(any such entity, an “AFFILIATE”) shall not be deemed a
Transfer (for such purposes, a “NON-TRANSFER”) under this ARTICLE 14,
provided that Tenant notifies Landlord of any such assignment or sublease and
promptly supplies Landlord with any documents or information reasonably
requested by Landlord regarding such assignment or sublease or such affiliate,
and further provided that such assignment or sublease is not a subterfuge by
Tenant to avoid its obligations under this Lease.  “Control,” as used in this SECTION 14.6,
shall mean the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of a person or entity, or
ownership of any sort, whether through the ownership of voting securities, by
contract or otherwise.

 

14.7                           LANDLORD’S
RECOGNITION OF SUBLEASES UPON LEASE TERMINATION. At Tenant’s request, Landlord
shall execute a recognition agreement (the “RECOGNITION
AGREEMENT”) in favor of any sublessee of a sublease, which sublessee is
otherwise approved by Landlord pursuant to the terms of this Article 14,
which Recognition Agreement shall provide that in the event this Lease is terminated,
Landlord shall recognize the Transfer and not disturb such Transferee’s
possession of the Premises, or applicable portion thereof, due to such
termination; provided that: (1) such sublease is made upon the same terms and
conditions set forth in this Lease, subject to equitable modifications based on
the number of rentable square feet contained in the Subject Space-, provided,
however, the economic terms of such sublease may be more favorable to Landlord
than those set forth in this Lease, (ii) the Subject Space shall contain either
(1) one or more contiguous full floors in the Building, or (II) one or more
contiguous floors along with space on any partial floor located immediately
above or below the full floor or floors included in such sublease, (in either
of I or II, above, such Subject Space shall not vertically bisect the initial
Premises) (iii) all Subject Space which is located on the same floor is
contiguous, (iv) Landlord shall not be liable for any act or omission of
Tenant, (v) Landlord shall not be subject to any offsets or defenses which the
sublessee might have as to Tenant or to any claims for damages against Tenant,
nor shall Landlord be obligated to fund to, or for the benefit of, such
sublessee, any undisbursed tenant improvement or refurbishment allowance or
other allowances or monetary concessions, (vi) Landlord shall not be required
or obligated to credit the sublessee with any rent or additional rent or
security deposit paid by the sublessee to Tenant, (vii) Landlord shall not be
bound by any terms or conditions of the sublease which are inconsistent with
the terms and conditions of this Lease, (viii) such recognition shall be
effective upon, and Landlord shall be responsible for performance of only those
covenants and obligations of Tenant pursuant to the sublease accruing after,
the termination of this Lease and the vacation by Tenant of the entire
Premises, (ix) as a condition to Landlord’s obligation to enter into the
Recognition Agreement, Landlord shall have the right to reasonably approve the
creditworthiness and financial strength of the sublessee, which reasonable
approval shall be based upon the creditworthiness and financial strength then
generally required by Landlord and landlords of the Comparable Buildings of new
tenants leasing space of a rentable area comparable to the rentable area of the
Subject Space for a term equal to the remaining Lease Term and at a rental rate
equal to that payable under the sublease, (x) the sublessee shall make full and
complete attornment to Landlord, as lessor, pursuant to a written agreement
executed by Landlord and the sublessee, and (xi) the term of such sublease
shall not be less than eighteen (18) months. Upon Landlord’s written request
given any time after the termination of this Lease, the sublessee shall execute
a lease for the space subject to the applicable sublease upon the same terms
and conditions as set forth in the Recognition Agreement. Tenant agrees to pay
Landlord’s reasonable legal fees incurred in Landlord’s preparation and
approval of such Recognition Agreement.

 

35

 

ARTICLE 15

 

SURRENDER OF PREMISES; OWNERSHIP AND

REMOVAL OF TRADE FIXTURES

 

15.1                           SURRENDER
OF PREMISES.  No act or thing done by
Landlord or any agent or employee of Landlord during the Lease Term shall be
deemed to constitute an acceptance by Landlord of a surrender of the Premises
unless such intent is specifically acknowledged in a writing signed by
Landlord. The delivery of keys to the Premises to Landlord or any agent or
employee of Landlord shall not constitute a surrender of the Premises or effect
a termination of this Lease, whether or not the keys are thereafter retained by
Landlord, and notwithstanding such delivery Tenant shall be entitled to the return
of such keys at any reasonable time upon request until this Lease shall have
been properly terminated.  The voluntary
or other surrender of this Lease by Tenant, whether accepted by Landlord or
not, or a mutual termination hereof, shall not work a merger, and at the option
of Landlord shall operate as an assignment to Landlord of all subleases or
subtenancies affecting the Premises,

 

15.2                           REMOVAL OF
PERSONAL PROPERTY BY TENANT.  Upon the
expiration of the Lease Term, or upon any earlier termination of this Lease,
Tenant shall, subject to the provisions of this ARTICLE 15 and
SECTION 8.5, above, quit and surrender possession of the Premises to
Landlord in as good order and condition as when Tenant took possession and as
thereafter improved by Landlord and/or Tenant, reasonable wear and tear and
repairs which are specifically made the responsibility of Landlord hereunder
excepted.  Upon such expiration or
termination, Tenant shall, without expense to Landlord, remove or cause to be
removed from the Premises all debris and rubbish, and such items of furniture,
equipment, free-standing cabinet work, and other articles of personal property
owned by Tenant or installed or placed by Tenant at its expense in the
Premises, and Tenant shall remove those items of furniture, furnishings,
business machines and equipment, communications equipment and other articles of
personal property owned by Tenant or installed or placed by Tenant at its
expense in the Premises and such similar articles of any other persons or
entities claiming under Tenant (collectively, “PERSONAL
PROPERTY”) and Tenant shall remove Personal Property at times reasonably
acceptable to Landlord and subject to the availability of freight elevator(s),
provided that Landlord shall use good faith efforts to make the freight
elevator(s) reasonably available to Tenant for such removal. Tenant shall
repair at its own expense all damage to the Premises and Building resulting
from such removal.

 

15.3                           REMOVAL OF
TENANT’S PROPERTY BY LANDLORD.  Whenever
Landlord shall re-enter the Premises as provided in this Lease, any Personal
Property not removed by Tenant upon the expiration of the Lease Term, or within
forty-eight (48) hours after a termination by reason of Tenant’s default as
provided in this Lease, shall be deemed, abandoned by Tenant and may be
disposed of by Landlord in accordance with Sections 1980 through 1991 of the
California Civil Code and Section 1 174 of the California Code of Civil
Procedure, or in accordance with any laws or Judicial decisions which may
supplement or supplant those provisions from time to time.

 

15.4                           LANDLORD’S
ACTIONS ON PREMISES.  Tenant hereby
waives all claims for damages or other liability in connection with Landlord’s
reentering and taking possession of the Premises or removing, retaining,
storing or selling the property of Tenant as herein provided, and Tenant hereby
indemnifies and holds Landlord harmless from any such damages or other
liability, and no such re-entry shall be considered or construed to be a
forcible entry.

 

ARTICLE 16

 

HOLDING OVER

 

If tenant holds over after the expiration
of the Lease term hereof, with or without the express or implied consent of
Landlord, such tenancy shall be from month-to-month only, and shall not
constitute a renewal hereof or an extension for any further term, and (i) for
the first two (2) months of such month-to-month tenancy, Base Rent shall be
payable at a monthly rate equal to one hundred ten percent (110%) of the Base
rent applicable during the last rental period of the Lease Term under this
Lease, and (ii) for the remainder of such month-to-month tenancy, Base Rent
shall be payable at a monthly rate equal to one hundred fifty percent (150%) of
the Base rent applicable during the last rental period of the Lease Term under
this Lease. Such month-to-month

 

36

 

tenancy shall be subject to every other
term, covenant and agreement contained herein. 
Nothing contained in this ARTICLE 16 shall be construed as consent
by Landlord to any holding over 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 other termination of this Lease.
The provisions of this ARTICLE 16 shall not be deemed to limit or
constitute a waiver of any other rights or remedies of Landlord provided herein
or at law. If Tenant fails to surrender the Premises upon the termination or
expiration of this Lease, in addition to any other liabilities to Landlord accruing
therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless
from all loss, costs (including reasonable attorneys’ fees) and liability
resulting from such failure, including, without limiting the generality of the
foregoing, any claims made by any succeeding tenant founded upon such failure
to surrender, and any lost profits to Landlord resulting therefrom.

 

ARTICLE 17

 

ESTOPPEL CERTIFICATES

 

Within fifteen (15) days following a
request in writing by Landlord, Tenant shall execute and deliver to Landlord an
estoppel certificate, which, as submitted by Landlord, shall be substantially
in the form of EXHIBIT E, attached hereto, (or such other form as may be
required by any prospective mortgagee or purchaser of the Building, or any
portion thereof, indicating therein any exceptions thereto that may exist at
that time, and shall also contain any other information reasonably requested by
Landlord or Landlord’s mortgagee or prospective mortgagee.  Tenant shall execute and deliver whatever
other instruments may be reasonably required for such purposes. Failure of
Tenant to timely execute and deliver such estoppel certificate or other
instruments shall constitute an acceptance of the Premises and an
acknowledgment by Tenant that statements made in good faith included in the
estoppel certificate are true and correct, without exception.  Landlord hereby agrees to provide to Tenant
an estoppel certificate signed by Landlord, containing the same types of
information, and within the same period of time, as set forth above, with such
changes as are reasonably necessary to reflect that the estoppel certificate is
being granted and signed by Landlord to Tenant, rather than from Tenant to
Landlord or a lender of Landlord.

 

ARTICLE 18

 

SUBORDINATION

 

This Lease is subject and subordinate to
all present and future ground or underlying leases of the Real Property and to
the lien of any mortgages or trust deeds, now or hereafter in force against the
Real Property and the Building, if any, and to all renewals, extensions,
modifications, consolidations and replacements thereof, and to all advances
made or hereafter to be made upon the security of such mortgages or trust
deeds, unless the holders of such mortgages or trust deeds, or the lessors
under such ground lease or underlying leases, require in writing that this
Lease be superior thereto.  In
consideration of, and as a condition precedent to, Tenant’s agreement to permit
its interest pursuant to this Lease to be subordinated to any particular future
ground or underlying lease of the Building or the Real Property or to the lien
of any first mortgage or trust deed hereafter enforced against the Building or
the Real Property and to any renewals, extensions, modifications,
consolidations and replacements thereof, Landlord shall deliver to Tenant a
commercially reasonable non-disturbance agreement executed by the landlord
under such ground lease or underlying lease or the holder of such mortgage or
trust deed, which agreement shall contain a mutually agreeable provision
granting such mortgage holder a right to cure a Landlord default under this
Lease.  Additionally, each such
non-disturbance agreement provided by landlord shall acknowledge that tenant
may offset against Rent next owing under this Lease (i) any improvement
allowance granted pursuant to the Tenant Work Letter or this Lease, including
Sections 1.5 or 1.6 of this Lease, to the extent they have not been paid when
due, (ii) any unpaid commission due and owing to Tenant Broker as set forth in
SECTION 29.95, (iii) any abatements of Rent as allowed pursuant
SECTION 6.3.1 of this Lease, and (iv) any abatements of rent as allowed
pursuant to SECTION 7.2 of this Lease. Tenant covenants and agrees in the
event any proceedings are brought for the foreclosure of any such mortgage, to
attorn, without any deductions or offsets whatsoever, to the purchaser upon any
such foreclosure sale if so requested to do so by such purchaser, and to
recognize such purchaser as lessor under this Lease.

 

37

 

Tenant shall, within ten (10) days of
request by Landlord, execute such further instruments or assurances as Landlord
may reasonably deem necessary to evidence or confirm the subordination or
superiority of this Lease to any such mortgages, trust deeds, ground leases or
underlying leases.

 

ARTICLE 19

 

DEFAULTS; REMEDIES

 

19.1                           EVENTS OF
DEFAULT.  The occurrence of any of the
following shall constitute a default of this Lease by Tenant-.

 

19.1.1                  Any failure by
Tenant to pay any Rent or any other charge required to be paid under this
Lease, or any part thereof, on or before (i) fifteen (15) business days after
notice that the same is overdue, or (ii) where Tenant has failed to pay such
amounts within five (5) business days of notice that the same was overdue on
two prior occasions in any twelve (12) month period, five (5) business days
after notice that the same is over due, which notices shall be in lieu of any
notice required under California Code of Civil Procedure Section 1161 or
any similar or successor law; or

 

19.1.2                  Any failure by
Tenant to observe or perform any other provision, covenant or condition of this
Lease to be observed or performed by Tenant where such failure continues for
thirty (30) days after written notice thereof from Landlord to Tenant; provided
however, that any such notice shall be in lieu of, and not in addition to, any
notice required under California Code of Civil Procedure Section 1161 or
any similar or successor law; and provided further that if the nature of such
default is such that the same cannot reasonably be cured within a thirty
(30)-day period, Tenant shall not be deemed to be in default if it diligently
commences such cure within such period and thereafter diligently proceeds to
rectify and cure said default as soon as possible; or

 

19.1.3                  To the extent
permitted by law, a general assignment by Tenant or any guarantor of the Lease
for the benefit of creditors, or the filing by or against Tenant or any
guarantor of any proceeding under an insolvency or bankruptcy law, unless in
the case of a proceeding filed against Tenant or any guarantor the same is
dismissed within ninety (90) days, or the appointment of a trustee or receiver
to take possession of all or substantially all of the assets of Tenant or any guarantor,
unless possession is restored to Tenant or such guarantor within ninety (90)
days, or any execution or other judicially authorized seizure of all or
substantially all of Tenant’s assets located upon the Premises or.- of Tenant’s
interest in this Lease, unless such seizure is discharged within ninety (90)
days; or

 

19.1.4                  The failure by
Tenant to observe or perform according to the provisions of Article 5 of
this Lease where such failure continues for more than (i) fifteen (15) business
days of notice of such failure, or (ii) where Tenant has failed to cure such
failures within five (5) business days after notice of the same on two prior
occasions in any twelve (12) month period, five (5) business days after notice
of such failure; or

 

19.1.5                  The hypothecation
or assignment of this Lease or subletting of the Premises, or attempts at such
actions, in violation of Article 14 hereof where such violation has not
been cured within five (5) business days after notice from Landlord.

 

19.2                           REMEDIES
UPON DEFAULT.  Upon the occurrence of any
event of default by Tenant, Landlord shall have, in addition to any other
remedies available to Landlord at law or in equity, the option to pursue any
one or more of the following remedies, each and all of which shall be cumulative
and nonexclusive, without any notice or demand whatsoever:

 

19.2.1                  Terminate this
Lease, in which event Tenant shall immediately surrender the Premises to
Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any
other remedy which it may have for possession or arrearages in rent, enter upon
and take possession of the Premises and expel or remove tenant and any other
person who may be occupying the Premises or any part thereof, without being
liable for prosecution or any claim or damages therefor; and Landlord may
recover from Tenant the following:

 

38

 

(i)                                     The
worth at the time of award of any unpaid rent which has 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 Lease 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 (as
allowed by applicable law); 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 19.2 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 Paragraphs 19.2. 1 (i) and (ii), above, the “worth at the time of
award” shall be computed by allowing interest at the Interest Rate.  As used in Paragraph 19.2. 1 (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 (I%).

 

19.2.2                  Landlord shall
have 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 notations). 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.

 

19.3                           SUBLESSEES
OF TENANT.  If Landlord elects to
terminate this Lease on account of any default by Tenant, as set forth in this
ARTICLE 19, Landlord shall have the night to terminate any and all
subleases, licenses, concessions or other consensual arrangements for possession
entered into by Tenant and affecting the Premises except as to a Transfer
subject to a Recognition Agreement pursuant to SECTION 14.7 of this Lease,
Alternately, Landlord may, in Landlord’s sole discretion, except as to a
Transfer subject to a Recognition Agreement pursuant to Section 14.7 of
this Lease, succeed to Tenant’s interest in such subleases, licenses,
concessions or arrangements; provided however, that in such event (i) Landlord
shall not be liable for any previous act or omission of Tenant under such
sublease or agreement, (ii) Landlord shall not be subject to any defense or
offset previously accrued in favor of the Transferee against Tenant, (iii)
Landlord shah not be bound by any previous amendment or modification of any
sublease or agreement made without Landlord’s prior written consent, and (iv)
Landlord shall not be required to acknowledge any prepayment by Transferee of
more than one month’s rent.

 

19.4                           WAIVER OF
DEFAULT.  No waiver by Landlord or Tenant
of any violation or breach of any of the terms, provisions and covenants herein
contained shall be deemed or construed to constitute a waiver of any other or
later violation or breach of the same or any other of the terms, provisions,
and covenants herein contained. 
Forbearance by Landlord or Tenant in enforcement of one or more of the
remedies available to such party upon an event of default shall not be deemed
or construed to constitute a waiver of such default. The acceptance of any Rent
hereunder by Landlord following the occurrence of any default, whether or not
known to Landlord, shall not be deemed a waiver of any such default, except
only a default in the payment of the rent so accepted.

 

19.5                           EFFORTS TO
RELET.  For the purposes of this
ARTICLE 19, Tenant’s right to possession shall not be deemed to have been
terminated by efforts of Landlord to relet the Premises, by its acts of
maintenance or preservation with respect to the Premises, or by appointment of
a receiver

 

39

 

to protect Landlord’s interests
hereunder.  The foregoing enumeration is
not exhaustive, but merely illustrative of acts which may be performed by
Landlord without terminating Tenant’s right to possession.

 

ARTICLE 20

 

COVENANT OF QUIET ENJOYMENT

 

Landlord covenants that Tenant, on paying
the Rent, charges for services and other payments herein reserved and on
keeping, observing and performing all the other terms, covenants, conditions,
provisions and agreements herein contained on the part of Tenant to be kept, observed
and performed, shall, during the Lease Term, peaceably and quietly have, hold
and enjoy the Premises subject to the terms, covenants, conditions, provisions
and agreements hereof without interference by any persons lawfully claiming by
or through Landlord. The foregoing covenant is in lieu of any other covenant
express or implied. 

 

ARTICLE 21

 

SECURITY DEPOSIT

 

Concurrent with
the full execution and delivery of this Lease, Tenant shall deposit with
Landlord a security deposit (the “SECURITY DEPOSIT”)
in the amount set forth in Section 10 of the Summary.  The Security Deposit shall be held by
Landlord as security for the faithful performance by Tenant of all the terms,
covenants, and conditions of this Lease to be kept and performed by Tenant
during the Lease Term.  The Security
Deposit shall not be mortgaged, assigned or encumbered in any manner whatsoever
by either party without the prior written consent of the other.  If Tenant defaults with respect to any
provisions of this Lease, Landlord may, but shall not be required to, use,
apply or retain all or any part of the Security Deposit for the payment of any
Rent or any other sum in default, or for the payment of any amount that
Landlord may spend or become obligated to spend by reason of Tenant’s default,
or to compensate Landlord for any other loss or damage that Landlord may suffer
by reason of Tenant’s default.  If any
portion of the Security Deposit is so used or applied, Tenant shall, within
five (5) days after written demand therefor, deposit cash with Landlord in an
amount sufficient to restore the Security Deposit to its original amount, and
Tenant’s failure to do so shall be a default under this Lease.  The use, application or retention of the
Security Deposit, or any portion thereof, by Landlord shall not (a) prevent
Landlord from exercising any other right or remedy provided by this Lease or by
law, it being intended that Landlord shall not first be required to proceed
against the Security Deposit, nor (b) operate as a limitation on any recovery
to which Landlord may otherwise be entitled. Tenant acknowledges that Landlord
has the right to transfer or mortgage its interest in the Real Property and the
Building and in this Lease and Tenant agrees that in the event of any such
transfer or mortgage, Landlord shall have the right to transfer or assign the
Security Deposit to the transferee or mortgagee.  Upon such transfer or assignment of the
Security Deposit, provided that the transferee acknowledges receipt of the
Security Deposit, Landlord shall thereby be released by Tenant from all
liability or obligation for the return of such Security Deposit and Tenant
shall took solely to such transferee or mortgagee for the return of the
Security Deposit.  Tenant shall earn
interest on the unapplied Security Deposit at the rate of 6% per annum;
provided that, at Landlord’s option, Landlord may elect (which election must be
made, if at all, within thirty (30) business days after Landlord’s receipt of
the Security Deposit) to deposit the Security Deposit in a bank and account
mutually acceptable to Landlord and Tenant, in which case the Security Deposit
shall earn interest at the rate earned in such account.  Within thirty (30) days after the expiration
or earlier termination of this Lease, any unapplied portion of the Security
Deposit plus accrued interest shall be returned to Tenant.

 

40

 

ARTICLE 22

 

INTENTIONALLY DELETED

 

ARTICLE 23

 

SIGNS

 

23.1                           FULL FLOOR
Tenants.  Tenant and its Affiliates, on
each full-floor portion of the Premises, at its sole cost and expense, may
install identification signage anywhere in the Premises including in the
elevator lobby of the Premises, provided that such signs must not be visible
from the exterior of the Building.

 

23.2                           MULTI-TENANT
FLOOR TENANTS.  If other tenants occupy
space on the floor on which the Premises is located, Tenant’s identifying
signage shall be provided by Landlord, at Tenant’s cost, and such signage shall
be comparable to that used by Landlord for other similar floors In the Building
and shall comply with Landlord’s Building standard signage program, or, if no
such program exists, shall be subject to the reasonable approval of Landlord.

 

23.3                           PROHIBITED
SIGN AGE AND OTHER ITEMS.  Any signs,
notices, logos, pictures, names or advertisements which are installed and that
have not been individually approved by Landlord may be removed without notice
by Landlord at the sole expense of Tenant. 
Except to the extent specifically set forth herein, Tenant may not install
any signs on the exterior or roof of the Building or the Common Areas of the
Building or the Real Property.  Any
signs, window coverings, or blinds (except if the same are located behind the
Landlord approved window coverings for the Building), or other items visible
from the exterior of the Premises or Building are subject to the prior approval
of Landlord, in its sole discretion.

 

23.4                           BUILDING
TOP SIGN AGE.  Subject to all the terms
and conditions set forth in Exhibit G. Tenant shall be entitled to design and
install, at Tenant’s sole cost (subject to the Tenant Improvement Allowance),
signage identifying Tenant at the top of the exterior of the Building, with
such signs to be located on the north end of each of the eastern and western
faces of the Building (the “BUILDING TOP SIGN AGE”) and signage identifying
Tenant (the “MONUMENT SIGN AGE”) on each of two (2) of the Building’s seven (7)
existing monument signs.  The first such
sign shall face Santa Monica Boulevard and be located on the existing monument,
situated on the planter, which is closest to the corner of Santa Monica
Boulevard and Century Park East.  The
second sign shall face Century Park East and be located on the existing
monument, situated on the planter, which is the center monument sign of the
three (3) monument signs, situated on the planter, which face Century Park
East.  Landlord reserves the right to
maintain the existing monument signs at the Building, and to install, from time
to time, other monument signs, which are not larger than either of Tenant’s
monument signs (except as needed to accommodate the signage of a tenant with a
longer name than Tenant) and which do not contain signage that identifies an
entity, which signage uses lettering larger than the lettering in Tenant’s Monument
Signage. Except as provided below with respect to the name of the Project,
Landlord will not use the name of another company to identify the Building or
install any exterior tenant identification signs on the Building (other than
signs identifying tenants occupying all or any part of the first floor of the
Building, in which case such signs shall be located on such tenant’s storefront
or on a monument as permitted above) so long as Tenant retains its rights
hereunder to and maintains in existence pursuant to the terms and conditions of
Exhibit G, the Building Top Signage and Monument Signage. Tenant understands
and consents to the fact that the Project is currently referred to as “Northrop
Plaza”.  Landlord reserves the right,
from time to time, to change the name of the Project in Landlord’s sole
discretion.

 

23.5                           DIRECTORY
BOARD SPACE.  A building directory is
located in the lobby of the building. Tenant shall have the right, at no cost
to tenant, to designate names to be displayed under Tenant’s entry in such
directory at the rate of two (2) names per each 1,000 rentable square feet of
the Premises; provided, however, any changes made to such names (which Tenant
may make from time to time) shall be made at Tenant’s cost.

 

41

 

ARTICLE 24

 

ARBITRATION

 

24.1                           SUBMITTALS
TO ARBITRATION.  The parties agree that
disputes between Landlord and Tenant arising under the terms of SECTIONS 1.3
(as to measurement of space not included in initial Premises), 6.3, or 7.2,
ARTICLES 4 (following Tenant’s “Initial Audit,” as that term is defined in
SECTION 4.7, above), 11 or 14, or the Tenant Work Letter shall be settled
by arbitration in accordance with the terms of this ARTICLE 24 and,
therefore, this ARTICLE 24 shall be the sole and exclusive method, means
and procedure to resolve each such dispute. The parties hereby irrevocably
waive any and all rights to the contrary and shall at all times conduct
themselves in strict, full, complete and timely accordance with the terms of
this ARTICLE 24 and all attempts to circumvent the terms of this
ARTICLE 24 shall be absolutely null and void and of no force or effect
whatsoever.  As to any matter submitted
to arbitration (except with respect to the payment of money) to determine whether
a matter would, with the passage of time, constitute a default, such passage of
time shall not commence to run until any such affirmative arbitrated
determination, as long as it is simultaneously determined in such arbitration
that the challenge of such matter as a potential Tenant default was made in
good faith.  As to any matter submitted
to arbitration with respect to the payment of money, to determine whether a
matter would, with the passage of time, constitute a default, such passage of
time shall not commence to run in the event that the party which is obligated
to make the payment does in fact make the payment to the other party. Such
payment can be made “under protest,” which shall occur when such payment is
accompanied by a good faith notice stating the reasons that the party has
elected to make a payment under protest. 
Such protest will be deemed waived unless the subject matter identified
in the protest is submitted to arbitration as set forth in this ARTICLE 24.

 

24.2                           JAMS.  Any dispute to be arbitrated pursuant to the
provisions of this Article 24 shall be determined by 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
written notice (the “ARBITRATION NOTICE”) of a
demand to arbitrate by registered or certified mail 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.

 

24.3                           ARBITRATION
PROCEDURE.

 

24.3.1                  PRE-DECISION
ACTIONS.  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 will submit proposed discovery
schedules to the Arbitrator at the pre-hearing conference.  The scope and duration of discovery will be
within the sole discretion of the Arbitrator. 
The Arbitrator shall have the discretion to order a pre-hearing exchange
of information by the parties, including, without limitation, production of
requested documents, 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.  Discovery as reasonably necessary shall be
permitted, the type and quantity therof to be agreed upon by the parties, or if
the parties fail to so agree, by the Arbitrator.

 

24.3.2                  THE
DECISION  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 procedural laws of the State of California and the terms and
provisions of this Lease. The Arbitrator’s decision shall be based on the
evidence introduced at the hearing, including all logical and reasonable
inferences therefrom. The Arbitrator may make

 

42

 

any determination, and/or grant any remedy
or relief that is just and equitable with respect to the subject dispute.  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. The
validity and enforceability of the Arbitrator’s decision is to be determined
exclusively by the California courts pursuant to the provisions of this
Lease.  The Arbitrator may award costs,
including without limitation attorneys’ fees, and expert and witness costs, to
the prevailing party, if any, as determined by the Arbitrator in his
discretion.  The Arbitrator’s fees and
costs shall be paid by the non-prevailing party as determined by the Arbitrator
in his 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.

 

ARTICLE 25

 

LATE CHARGES

 

Tenant hereby acknowledges that late
payment by Tenant to Landlord of Rent or other sums due hereunder will cause
Landlord to incur costs not contemplated by this Lease, the exact amount of
which is extremely difficult to ascertain. 
Such costs include, but are not limited to, processing and accounting
charges, and late charges which may be imposed upon Landlord by the terms of
any mortgage or deed of trust covering the Premises. Accordingly, if any
installment of Rent or any other sum due from Tenant shall not be received by
Landlord or Landlord’s designee within ten (10) days after Tenant’s receipt of
notice from Landlord that said amount is overdue, then Tenant shall pay to
Landlord a late charge equal to $400; provided, however, that if such failure
of receipt within such time occurs three (3) or more times in any twelve (12)
month period, then for such third and any subsequent occurrence in such twelve
(12) month period the late charge shall be the greater of $1,000 or two percent
(2%) of the amount due.  The parties
hereby agree that such late charge represents a fair and reasonable estimate of
the costs that Landlord will incur by reason of the late payment of Rent by
Tenant.  Acceptance of such late charge
by Landlord shall in no event constitute a waiver of Tenant’s default with
respect to such overdue amount, nor prevent Landlord from exercising any of the
other rights and remedies granted hereunder. 
The late charge shall be deemed Additional Rent and the right to require
it shall be in addition to all of Landlord’s other rights and remedies
hereunder or at law and shall not be construed as liquidated damages or as
limiting Landlord’s remedies in any manner. 
In addition to the late charge described above, any Rent or other
amounts owing hereunder which are not paid within five (5) days after the date
they are due shall thereafter bear interest (commencing as of the date due
notwithstanding the foregoing five (5) day grace period) until paid at the
Interest Rate.

 

ARTICLE 26

 

LANDLORD’S RIGHT TO CURE DEFAULT;
PAYMENTS BY TENANT

 

26.1                           LANDLORD’S
CURE.  All covenants and agreements to be
kept or performed by Tenant under this Lease shall be performed by Tenant at
Tenant’s sole cost and expense and without any reduction of Rent, except as
otherwise expressly provided in this Lease. 
If Tenant shall fail to perform any of its obligations under this Lease,
within a reasonable time after such performance is required by the terms of
this Lease (and after the expiration of any applicable cure period provided for
herein), Landlord may, but shall not be obligated to, after reasonable prior
notice to Tenant (except in the event of an emergency, Landlord shall only give
notice when and if feasible under the circumstances), make any such payment or
perform any such act on Tenant’s part without waiving its right based upon any
default of Tenant and without releasing Tenant from any obligations hereunder.

 

26.2                           TENANT’S
REIMBURSEMENT.  Except as may be
specifically provided to the contrary in this Lease, Tenant shall pay to
Landlord, within ten (10) days after delivery by Landlord to Tenant of
statements therefor; sums equal to expenditures reasonably made and obligations
incurred by Landlord in connection with the remedying by Landlord of Tenant’s
defaults pursuant to the provisions of SECTION 26.1. Tenant’s obligations
under this SECTION 26.2 shall survive expiration or sooner termination of
the Lease Term.

 

43

 

ARTICLE 27

 

ENTRY BY LANDLORD

 

Landlord reserves the right at all
reasonable times, and with reasonable frequency, upon reasonable notice to the
Tenant, and in compliance with all other terms of this Lease, to enter the
Premises to (i) inspect them; (ii) show the Premises to prospective purchasers,
mortgagees or ground or underlying lessors, or during the last twelve (12)
months of the initial Lease Term (or Option Term, as applicable), to
prospective tenants; (iii) post notices of nonresponsibility or (iv) alter,
improve or repair the Premises or the Building if necessary to comply with
current building codes or other applicable laws, or for structural alterations,
repairs or improvements to the Building. Notwithstanding anything to the
contrary contained in this ARTICLE 27, Landlord may enter the Premises at
any time to (A) perform services required of Landlord; (B) take possession due
to any breach of this Lease in the manner provided herein; and (C) perform any
covenants of Tenant which Tenant falls to perform. Landlord may make any such
entries without the abatement of Rent (except as otherwise provided herein) and
may take such reasonable steps as required to accomplish the stated purposes;
provided, however, that any such entry shall be accomplished as expeditiously
as reasonably possible and in a manner so as to cause as little interference to
Tenant as reasonably possible.  Tenant
hereby waives any claims for any injuries or inconvenience to or interference
with Tenant’s business, lost profits, any loss of occupancy or quiet enjoyment
of the Premises, and any other loss occasioned thereby.  For each of the above purposes, Landlord
shall at all times have a key with which to unlock all the doors in the
Premises, excluding Tenant’s vaults, safes and special security areas
designated in advance by Tenant.  In an
emergency, Landlord shall have the right to use any means that Landlord may
deem proper to open the doors in and to the Premises.  Any entry into the Premises by Landlord in
the manner hereinbefore described shall not be deemed to be a forcible or
unlawful entry into, or a detainer of, the Premises, or an actual or
constructive eviction of Tenant from any portion of the Premises.

 

ARTICLE 28

 

TENANT PARKING

 

28.1                           PARKING.  Tenant shall be entitled to rent parking
passes on a monthly basis throughout the Lease Term up to the amount set forth
in SECTION 11 of the Summary, which parking passes shall pertain to the
On-site Parking Area.  Tenant shall be
required to rent, at a minimum, one (1) pass per one thousand (1,000) rentable
square feet of the Premises on a monthly basis throughout the Lease Term.  At Tenant’s option, up to ten (10) of such
parking passes shall be reserved parking passes located within the “Special
Valet” parking area of the Main Building Parking Area as that area is set forth
in Exhibit M attached hereto.  In
addition, also at Tenant’s option, up to twenty-five (25) of the parking passes
shall be designated “Valet” parking passes for parking on Level P-1 of the Main
Building Parking Area.  The remainder of
such parking passes shall provide for non-reserved parking in the Main Building
Parking Area and/or Supplemental Parking Area, as Landlord may designate from
time to time to Tenant.  Tenant shall be
entitled to vary the number of parking passes rented by Tenant (up to the
maximum amount set forth in SECTION 11 of the Summary but in any event no
less than the minimum amount set forth in this ARTICLE 28) upon at least
thirty (30) days notice to Landlord. 
Tenant shall pay to Landlord for automobile parking passes on a monthly
basis the prevailing rate charged for such parking passes; provided, however,
that during the first three (3) Lease Years, the monthly rates for such parking
passes, inclusive of all taxes, shall not exceed, for reserved parking passes,
$250.00; for “Special Valet” and “Valet” parking passes, $160.00; and for
unreserved parking passes, $110.00. 
Commencing in the fourth (4th) Lease Year such rates may be subject to
annual adjustment, but in no event shall such rates be greater than the product
of (i) the applicable rate during the prior Lease Year, and (ii) 1.05.  Tenant shall instruct its employees to abide
by all rules and regulations which are prescribed from time to time for the
orderly operation and use of the On-site Parking Area.  Landlord specifically reserves the right to
reasonably change the size, configuration, design, layout and all other aspects
of the On-site Parking Area 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, temporarily close-off or restrict
access to the On-site Parking Area for purposes of permitting or facilitating
any such construction, alteration or improvements so long as Landlord provides
adequate substitute parking reasonably acceptable to Tenant. Landlord may
delegate its

 

44

 

responsibilities hereunder to a parking
operator in which case such parking operator shall have all the rights of
control attributed hereby to the Landlord. The parking passes rented by Tenant
pursuant to this Article 28 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;
provided, however, Tenant may transfer a reasonable allocation of such spaces
to an assignee or subtenant permitted pursuant to Article 14 of this
Lease.  Landlord shall provide adequate
visitor parking for Tenant’s visitors, subject to their payment of an hourly
rate which shall not exceed the hourly rate generally charged in Comparable
Buildings.  Landlord shall provide Tenant
with parking validations for such visitors at a rate not to exceed ninety
percent (90%) of Landlord’s prevailing rate for such validations.

 

28.2                           PARKING
CREDIT.  Notwithstanding anything to the
contrary set forth in Section 28. 1, above, Landlord hereby grants Tenant
a credit for the parking charges first due Landlord under the terms of this
Lease, which credit shall be in the amount of $31,321.28.

 

ARTICLE 29

 

MISCELLANEOUS PROVISIONS

 

29.1                           TERMS.  The necessary grammatical changes required to
make the provisions hereof apply either to corporations or partnerships or
individuals, men or women, as the case may require, shall in all cases be
assumed as though in each case fully expressed.

 

29.2                           BINDING
EFFECT.  Each of the provisions of this
Lease shall extend to and shall, as the case may require, bind or inure to the
benefit not only of Landlord and of Tenant, but also of their respective
successors or assigns, provided this clause shall not permit any assignment by
Tenant contrary to the provisions of Article 14 of this Lease.

 

29.3                           NO AIR
RIGHTS.  No rights to any view or to
light or air over any property, whether belonging to Landlord or any other
person, are granted to Tenant by this Lease. 
If at any time any windows of the Premises are temporarily darkened or
the light or view therefrom is obstructed by reason of any repairs,
improvements, maintenance or cleaning in or about the Building, the same shall
be without liability to Landlord and without any reduction or diminution of
Tenant’s obligations under this Lease.

 

29.4                           MODIFICATION
OF LEASE.  Should any current or
prospective mortgagee or ground lessor for the Building require a modification
or modifications of this Lease, which modification or modifications will not
cause an increased cost or expense to Tenant or in any other way adversely
change the rights and obligations of Tenant hereunder, or diminish the
obligations of Landlord hereunder, then and in such event, Tenant agrees that
this Lease may be so modified and agrees to execute whatever documents are
required therefor and deliver the same to Landlord within ten (10) days
following the request therefor.  Should
Landlord or any such prospective mortgagee or ground lessor require execution
of a short form of Lease for recording, containing, among other customary
provisions, the names of the parties, a description of the Premises and the
Lease Term, Tenant agrees to execute such short form of Lease and to deliver
the same to Landlord within ten (10) days following the request therefor.

 

29.5                           TRANSFER OF
LANDLORD’S INTEREST.  Tenant acknowledges
that Landlord has the right to transfer all or any portion of its interest in
the Real Property and Building and in this Lease, and Tenant agrees that in the
event of any such transfer, provided and to the extent that the transferee has
agreed to assume liability (subject to the next succeeding sentence), Landlord
shall automatically be released from all further liability under this Lease
arising after the date of such transfer and Tenant agrees to look solely to
such transferee for the performance of Landlord’s obligations hereunder after
the date of transfer.  The liability of
any transferee of Landlord shall be limited as provided in SECTION 29.14
below.  Tenant further acknowledges that
Landlord may assign its interest in this Lease to a mortgage lender as
additional security and agrees that such an assignment shall not release
Landlord from its obligations hereunder and that Tenant shall continue to look
to Landlord for the performance of its obligations hereunder.

 

29.6                           MEMORANDUM
OF LEASE.  Concurrently with the
execution and delivery of this Lease by Landlord and Tenant, Landlord shall
execute and notarize a short form Memorandum of

 

45

 

Lease, in recordable form, and shall
deliver same to Tenant for Tenant’s recording in the form attached hereto as
EXHIBIT L.

 

29.7                           LANDLORD’S
TITLE.  Landlord’s title is and always
shall be paramount to the title of Tenant. 
Nothing herein contained shall empower Tenant to do any act which can,
shall or may encumber the title of Landlord.

 

29.8                           CAPTIONS.  The captions of Articles and Sections are for
convenience only and shall not be deemed to limit, construe, affect or alter
the meaning of such Articles and Sections.

 

29.9                           RELATIONSHIP
OF PARTIES.  Nothing contained in this
Lease shall be deemed or construed by the parties hereto or by any third party
to create the relationship of principal and agent, partnership, joint venturer
or any associations between Landlord and Tenant, it being expressly understood
and agreed that neither the method of computation of Rent nor any act of the
parties hereto shall be deemed to create any relationship between Landlord and
Tenant other than the relationship of landlord and tenant.

 

29.10                     APPLICATION
OF PAYMENTS.  Landlord shall have the
right to apply payments received from Tenant pursuant to this Lease, regardless
of Tenant’s designation of such payments, to satisfy any obligations of Tenant
hereunder, in such order and amounts as Landlord, in its sole discretion, may
elect.

 

29.11                     TIME OF
ESSENCE.  Time is of the essence of this
Lease and each of its provisions.

 

29.12                     PARTIAL
INVALIDITY.  If any term, provision or
condition contained in this Lease shall, to any extent, be invalid or
unenforceable, the remainder of this Lease, or the application of such term,
provision or condition to persons or circumstances other than those with
respect to which it is invalid or unenforceable, shall not be affected thereby,
and each and every other term, provision and condition of this Lease shall be
valid and enforceable to the fullest extent possible permitted by law.

 

29.13                     NO
WARRANTY.  In executing and delivering
this Lease, Tenant has not relied on any representation, including, but not
limited to, any representation whatsoever as to the amount of any item
comprising Additional Rent or the amount of the Additional Rent in the
aggregate or that Landlord is furnishing the same services to other tenants, at
all, on the same level or on the same basis, or any warranty or any statement
of Landlord which is not set forth herein or in one or more of the exhibits
attached hereto.

 

29.14                     LANDLORD
AND TENANT EXCULPATIONS.  It is expressly
understood and agreed that notwithstanding anything in this Lease to the
contrary, and notwithstanding any applicable law to the contrary, neither
Landlord (including any successor landlord) nor any members of Landlord’s Group
shall have any liability whatsoever under this Lease and the liability of
Landlord hereunder and any recourse by Tenant against Landlord shall be limited
solely and exclusively to the interest of Landlord in and to the Real Property
and Building including Landlord’s interests in any proceeds resulting from any
sale or condemnation of the Building or insurance payments made to Landlord in
connection with the Building, and neither Landlord (including any successor
landlord) nor any members of Landlord’s Group shall have any personal liability
therefor, and Tenant hereby expressly waives and releases such personal
liability on behalf of itself and all persons claiming by, through or under
Tenant.  It is further expressly
understood and agreed that, notwithstanding anything in this Lease to the
contrary, and notwithstanding any applicable law to the contrary, the
obligations of the Tenant named in the Summary (the “Original Tenant”) under
this Lease do not constitute personal obligations of the individual partners,
directors, officers or shareholders of Original Tenant, and Landlord will not
seek recourse against the individual partners, directors, officers or
shareholders of Original Tenant or any of their personal assets for
satisfaction of any liability of Original Tenant in respect of this Lease.  This Lease is being executed by Trust Company
of the West on behalf of Landlord.  No
present or future officer, director, employee, trustee, member, retirant,
beneficiary, internal investment contractor, investment manager or agent of
Landlord shall have any personal liability, directly or indirectly, and
recourse shall not be had against any such officer, director, employee,
trustee, member, retirant, beneficiary, internal invest contractor, investment
manager or agent under or in connection with this Lease, or any other document
or instrument heretofore or hereafter executed in connection with this Lease.

 

46

 

Tenant hereby waives and releases any and
all such personal liability and recourse. 
The limitations of liability provided in this SECTION 29.14 are in
addition to, and not in limitation of, any limitation on liability applicable
to Landlord provided by law or in any other contract, agreement or instrument.

 

29.15                     ENTIRE
AGREEMENT.  It is understood and
acknowledged that there are no oral agreements between the parties hereto
affecting this Lease and this Lease supersedes and cancels any and all previous
negotiations, arrangements, brochures, agreements and understandings, if any,
between the parties hereto or displayed by Landlord to Tenant with respect to
the subject matter hereof, and none thereof shall be used to interpret or
construe this Lease.  This Lease and any side
letter or separate agreement executed by Landlord and Tenant in connection with
this Lease and dated of even date herewith contain all of the terms, covenants,
conditions, warranties and agreements of the parties relating in any manner to
the rental, use and occupancy of the Premises, shall be considered to be the
only agreements between the parties hereto and their representatives and
agents, and none of the terms, covenants, conditions or provisions of this
Lease can be modified, deleted or added to except in writing signed by the
parties hereto.  All negotiations and
oral agreements between the parties have been merged into and are included
herein.  There are no other representations
or warranties between the parties, and all reliance with respect to
representations is based totally upon the representations and agreements
contained in this Lease.

 

29.16                     RIGHT TO
LEASE.  Landlord reserves the absolute
right to effect such other tenancies in the Building as Landlord in the
exercise of its sole business judgment shall determine to best promote the
interests of the Building. Tenant does not rely on the fact, nor does Landlord
represent, that any specific tenant or type or number of tenants shall, during
the Lease Term, occupy any space in the Building.

 

29.17                     FORCE
MAJEURE.  Any prevention, delay or
stoppage due to strikes, lockouts, labor disputes, acts of God, inability to
obtain services, labor, or materials or reasonable substitutes therefor,
governmental actions, civil commotions, fire or other casualty, and other
causes beyond the reasonable control of the party obligated to perform, except
with respect to the obligations imposed with regard to Rent and other charges
to be paid by Tenant pursuant to this Lease (collectively, the “FORCE MAJEURE”), notwithstanding anything to the contrary
contained in this Lease, shall excuse the performance of such party for a
period equal to any such prevention, delay or stoppage and, therefore, if this
Lease specifies a time period for performance of an obligation of either party,
that time period shall be extended by the period of any delay in such party’s
performance caused by a Force Majeure. Notwithstanding the foregoing, Force
Majeure shall not extend any time periods set forth in SECTION 2.1.2, 6.3,
7.2 OR 11.2.

 

29.18                     WAIVER OF
REDEMPTION BY TENANT.  Tenant hereby
waives for Tenant and for all those claiming under Tenant all right now or
hereafter existing to redeem by order or judgment of any court or by any legal
process or writ, Tenant’s right of occupancy of the Premises after any
termination of this Lease.

 

29.19                     NOTICES.  All notices, demands, statements or
communications (collectively, “NOTICES”) given or required
to be given by either party to the other hereunder shall be in writing, shall
be sent by United States certified or registered mail, postage prepaid, return
receipt requested, or delivered personally (i) to Tenant at the appropriate
address or addresses, not to exceed two (2), set forth in Section 5 of the
Summary, or to such other place as Tenant may from time to time designate in a
Notice to Landlord; or (ii) to Landlord at the addresses set forth in
SECTION 3 of the Summary, or to such other firm or to such other place as
Landlord may from time to time designate in a Notice to Tenant.  Any Notice will be deemed given on the date
(a) in the case of mailed notice, on the date which is two (2) business days
after the date it is mailed, and (b) in the case of notice personally
delivered, on the date of confirmed delivery of same to Landlord or Tenant, as
applicable.  If Tenant is notified of the
identity and address of Landlord’s mortgagee or ground or underlying lessor,
Tenant shall give to such mortgagee or ground or underlying lessor written
notice of any default by Landlord under the terms of this Lease by registered
or certified mail.  A notice may be sent
by a party or its attorneys.  Any such
notice shall also be delivered via facsimile to the applicable facsimile number
set forth in the Summary.

 

47

 

29.20                     JOINT AND
SEVERAL.  If there is more than one
Tenant, the obligations imposed upon Tenant under this Lease shall be joint and
several.

 

29.21                     AUTHORITY.  If Landlord or Tenant is a corporation or
partnership, each individual executing this Lease on behalf of such party
hereby represents and warrants that such party is a duly formed and existing
entity qualified to do business in California and that such party has full
right and authority to execute and deliver this Lease and that each person signing
on behalf of such party is authorized to do so.

 

29.22                     ATTORNEYS’
FEES.  If either party commences
litigation against the other for the specific performance of this Lease, for
damages for the breach hereof or otherwise for enforcement of any remedy hereunder,
the parties hereto agree to and hereby do waive any right to a trial by jury
and, in the event of any such commencement of litigation, the prevailing party
shall be entitled to recover from the other party such costs and reasonable
attorneys’ fees as may have been incurred.

 

29.23                     GOVERNING
LAW.  This Lease shall be construed and
enforced in accordance with the laws of the State of California.

 

29.24                     SUBMISSION
OF LEASE.  Submission of this instrument
for examination or signature by Tenant does not constitute a reservation of or
an option for lease, and it is not effective as a lease or otherwise until
execution and delivery by both Landlord and Tenant.

 

29.25                     BROKERS.  Landlord shall pay all brokerage commissions
owing to CB Commercial Real Estate Group, Inc. (“LANDLORD’S
BROKER”) and Cushman Realty Corporation (“TENANT’S
BROKER”) in connection with the transaction contemplated by this
Lease.  Landlord’s obligation to pay
Tenant’s Broker shall be pursuant to that certain letter agreement dated
April 24, 1995 (“COMMISSION AGREEMENT”).Landlord’s
Broker and Tenant’s Broker may be collectively referred to herein as the “BROKERS.” Landlord and Tenant each represent and warrant to
the other that other than the Brokers, no broker, agent, or finder negotiated or
was instrumental in negotiating or consummating this Lease on its behalf and
that it knows of no broker, agent, or finder, other than the Brokers, who is,
or might be, entitled to a commission or compensation in connection with this
Lease.  In the event of any such claims
for additional brokers’ or finders’ fees or commissions in connection with the
negotiation, execution or consummation of this Lease, then Landlord shall
indemnify, save harmless and defend Tenant from and against such claims if they
shall be based upon any statement, representation or agreement by Landlord, and
Tenant shall indemnify, save harmless and defend Landlord if such claims shall
be based upon any statement, representation or agreement made by Tenant.

 

29.26                     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 any setoff of the Rent or other
amounts owing hereunder against Landlord; provided, however, that the foregoing
shall in no way impair the right of Tenant to commence a separate action
against Landlord for any violation by Landlord of the provisions hereof so long
as notice is first given to Landlord and any holder of a mortgage or deed of
trust covering the Building, Real Property or any portion thereof, of whose
address Tenant has theretofore been notified, and an opportunity is granted to
Landlord and such holder to correct such violations as provided above.

 

29.27                     BUILDING
NAME AND SIGNAGE.  Subject to Tenant’s
rights pursuant to ARTICLE 23, Landlord shall have the fight at any time
to install, affix and maintain any and all signs on the exterior and on the
interior of the Building as Landlord may, in Landlord’s sole discretion,
desire.  Tenant covenants and agrees that
Tenant shall not use pictures or illustrations of the Building in advertising
or other publicity, without the prior written consent of Landlord.

 

29.28                     TRANSPORTATION
MANAGEMENT.  Tenant shall fully comply
with all present and future governmentally mandated programs intended to manage
parking, transportation or traffic in and around the Building, and in
connection therewith, Tenant shall take responsible action for the
transportation planning and management of all employees located at the Premises
by working

 

48

 

directly with Landlord, any governmental
transportation management organization or any other transportation-related
committees or entities.

 

29.29                     CONFIDENTIALITY.  Landlord and Tenant acknowledge that the
content of this Lease and any related documents are confidential information.
Landlord and Tenant shall keep such confidential information strictly
confidential and shall not disclose such confidential information to any person
or entity other than their financial, legal, and space planning consultants.

 

29.30                     REASONABLENESS
AND GOOD FAITH.  Except for
determinations expressly described as being in the “absolute discretion” of the
applicable party, neither Landlord nor Tenant shall unreasonably withhold or
delay any consent, approval or other determination provided for hereunder, and
determinations subject to absolute discretion shall not be unreasonably
delayed. In the event that either Landlord or Tenant disagrees with any
determination made by the other hereunder (other than a determination in the
absolute discretion of the determining party) and reasonably requests the
reasons for such determination, the determining party shall furnish its reasons
in writing and in reasonable detail within five (5) business days following
such request. Furthermore, in addition to the foregoing, whenever the Lease
grants Landlord or Tenant the right to take action, exercise discretion,
establish rules and regulations, make allocations or other determinations, or
otherwise exercise rights or fulfill obligations, Landlord and Tenant shall act
reasonably and in good faith and take no action which might result in the
frustration of the reasonable expectations of a sophisticated landlord and
sophisticated tenant concerning the benefits to be enjoyed under this Lease.

 

29.31                     MINIMIZATION
OF INTERFERENCE.  Landlord shall exercise
its rights and perform its obligations hereunder, and otherwise operate the
Building, in a manner reasonably calculated to minimize any resulting interference
with Tenant’s use of the Premises, and Tenant shall exercise its rights and
perform its obligations hereunder, and otherwise operate the Premises in a
manner reasonably calculated to minimize any resulting interference with the
operation of the Building.

 

29.32                     HAZARDOUS
MATERIALS.

 

29.32.1            “HAZARDOUS Materials” means any hazardous or toxic
substance, material or waste which is (1) defined as a “hazardous waste,”
“extremely hazardous waste” or “restricted hazardous waste” under Sections
25115, 25117 or 25112.7, 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 25136
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) listed under ARTICLE 9 or defined as hazardous
or extremely hazardous pursuant to ARTICLE 11 of Title 22 of the
California Code of Regulations, Division 4, Chapter 20, (vi) designated as a
“hazardous substance” pursuant to Section 311 of the Federal Water
Pollution Control Act (33 U.S.C. Section 1317), (vii) defined as a
“hazardous waste” pursuant to Section 1004 of the Federal Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 ET SEQ., (viii)
defined as a “hazardous substance” pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 ET SEQ., (ix) defined as a hazardous waste, “hazardous
material”, “hazardous substance”, “toxic chemical”, “toxic air contaminant”, or
“hazardous air pollutant” under the Clean Water Act, 33 U.S.C.
Section 1251 ET SEQ., the Clean Air Act, 42 U.S.C. Section 7901 ET
SEQ., the Toxic Substances Control Act, 15 U.S.C. Section 2601 ET SEQ.,
the Porter-Cologne Water Quality Control Act, California Water Code Section 13000
ET SEQ., or listed as a substance known to cause cancer or reproductive
toxicity pursuant to the Safe Drinking Water and Toxic Enforcement Act of 1986
(Proposition 65), the California Health and Safety Code Section 25249.5 ET
SEQ., Chapter 3.5, Division 26, the California Health and Safety Code (Toxic
Air Contaminants), Superfund Amendments and Reauthorization Act of 1986,
Occupational Safety and Health Act of 1970, or California Occupational Safety
and Health Act of 1973, (x) defined as a hazardous waste, hazardous material or
hazardous substance under any regulations promulgated under any of the
foregoing laws, or (xi) any hazardous or toxic material , substance, chemical,
waste, contaminant, emission, discharge or pollutant or comparable material
listed, identified, or

 

49

 

regulated pursuant to any federal, state or
local law, ordinance or regulation which has as a purpose the protection of
health, safety or the environment, including but not limited to petroleum or petroleum
products or wastes derived therefrom. 
Each reference to a statute, law or regulation herein shall be deemed to
include any amendments or successor statutes thereto which are enacted from
time to time.

 

29.32.2            COMPLIANCE COST.  Tenant acknowledges that Landlord may incur
costs for complying with laws, codes, regulations or ordinances relating to
Hazardous Material, including, without limitation, the following: (1) Hazardous
Materials present in soil or ground water; (ii) Hazardous Materials that migrates,
flows, percolates, diffuses or in any way moves onto or under the Real
Property; (iii) Hazardous Materials present on or under the Real Property as a
result of any discharge, dumping or spilling (whether accidental or otherwise)
on the Real Property by other tenants of the Real Property or their agents,
employees, contractors or invitees, or by others; and (iv) material which
becomes Hazardous Materials due to a change in laws, codes, regulations or
ordinances which relate to hazardous or toxic material, substances or waste.
Notwithstanding the foregoing, the following costs shall not be Operating
Expenses and shall not be the obligation of Tenant: (i) costs incurred to
comply with laws relating to the removal or other abatement of Hazardous Materials
which were in existence on the Real Property prior to the Lease Commencement
Date and which were of such nature that (A) a federal, state or municipal
governmental authority, if it had then had knowledge of the presence of such
Hazardous Materials, in the state and under the conditions that it existed on
the Real Property, would have then required the removal of such Hazardous
Materials or other remedial or containment action with respect thereto, or (B)
reasonably prudent landlords of Comparable Buildings would not include such
compliance costs in operating expenses; (ii) costs incurred to remove, remedy,
contain, or treat Hazardous Materials, which Hazardous Materials are brought
onto the Real Property after the date hereof by Landlord or any other tenant of
the Building and are of such a nature, at that time, that a federal, state or
municipal governmental authority, if it had then had knowledge of the presence
of such Hazardous Materials, in the state and under the conditions that they
exist on the Real Property, would require the removal, remediation, containment
or treatment of such Hazardous Materials; and (iii) costs incurred to remove,
remedy, contain, or treat Hazardous Materials, which Hazardous Materials are
brought onto the Real Property after the date hereof if reasonably prudent
landlords of Comparable Buildings would not include such costs in operating
expenses. To the extent any such Operating Expense relating to Hazardous
Materials is subsequently recovered or reimbursed through insurance, or
recovery from responsible third parties, or other action, Tenant shall be
entitled to a proportionate share of such reimbursement.

 

29.33                     PROHIBITED
TRANSACTIONS.  Tenant hereby acknowledges
that Landlord is a unit of the California State and Consumer Services Agency
established pursuant to Title I, Division 1, Part 13 of the California
Education Code, Sections 22000 et seq., as amended (the “ED CODE”).  As a result, Landlord is prohibited from
engaging in certain transactions with a “school district or other employing
agency” or a “member, retirant or beneficiary” (as those terms are defined in
the Ed Code).  In addition, Landlord may
be subject to certain restrictions and requirements under the Internal Revenue
Code, 26 U.S.C. Section 1 et seq. (the “CODE”).
Accordingly, Tenant represents and warrants to Landlord that (a) Tenant is
neither a school district or other employing agency nor a member, retirant or
beneficiary; (b) has not made any contribution or contributions to Landlord;
(c) neither a school district or other employing agency, nor a member, retirant
or beneficiary, nor any person who has made any contribution to Landlord, nor
any combination thereof, is related to Tenant by any relationship described in
Section 267(b) of the Code; (d) neither Trust Company of the West, its
affiliates, related entities, agents, officers, directors or employees, nor any
State Teachers’ trustee, agent, related entity, affiliate, employee or internal
investment contractor (both groups collectively, “LANDLORD
AFFILIATES”) has received or will receive, directly or indirectly, any
payment, consideration or other benefit from, nor does any Landlord Affiliate
have any agreement or arrangement with Tenant or any person or entity
affiliated with Tenant relating to the transactions contemplated by this Lease;
and (e) no Landlord Affiliate is controlled by, controls, or is under common
control with, Tenant.

 

29.34                     As used
herein, the tem “COMPARABLE BUILDINGS” means
the high-rise commercial office buildings located in Century City, California
which are of comparable size, age and quality as the Building.  For purposes of this Lease, “CENTURY CITY,
CALIFORNIA” shall be

 

50

 

defined as that area of Los Angeles,
California which has as its Northern boundary, the Southern most boundary of
Santa Monica Boulevard, as its Southern boundary, the Northern most boundary of
Pico Boulevard, as its Western Boundary the Eastern most boundary of Century
Park West (as though such street was extended to intersect Pico Boulevard), and
as its Eastern boundary, the Eastern most boundary of the legal lots upon which
all of the buildings and improvements which front onto the Eastern boundary of
Century Park East are located.

 

29.35                     As used
herein, the term “INTEREST RATE” shall mean the lesser
of (i) two percent (2%) over the interest rate publicly announced from time to
time by the Bank of America as its prime rate and if such term is no longer
utilized, the interest rate utilized by the Bank of America (or if the Bank of
America ceases to exist, the largest state chartered bank operating in the
State of California) to replace the prime rate, or (ii) the maximum rate
permitted by law.

 

29.36                     WAIVER OF
CONSEQUENTIAL DAMAGES.  Notwithstanding
anything to the contrary contained in this Lease, and except as set forth in
Article 16, or as to damage caused during Tenant’s exercise of its rights
under SECTION 7.2, Tenant shall not be liable under any circumstances, for
injury or damage to, or interference with, Landlord’s business, including but
not limited to loss of title to the Building or any portion thereof, loss of
profits, loss of rents or other revenues (excluding payments thereof which
Tenant is otherwise obligated to make under this Lease), loss of business
opportunity, loss of goodwill or loss of use, in each case however
occurring.  Likewise, Landlord shall not
be liable under any circumstances, for injury or damage to, or interference
with, Tenant’s business, including but not limited to loss of profits or
revenues, loss of business opportunity, loss of goodwill or loss of use, in
each case however occurring.

 

29.37                     TELECOMMUNICATION
EQUIPMENT.  At any time during the Lease
Term, Tenant may install, at Tenant’s sole cost and expense, telecommunication
equipment reasonably approved by Landlord, upon the roof of the Building in
locations reasonably approved by Landlord, without the payment of Base Rent or
Operating Expenses or any charge for the same except utilities necessary to
Tenant’s operation of the telecommunication equipment. Landlord may require
Tenant to install screening around such equipment, at Tenant’s sole cost and
expense, as reasonably designated by Landlord. 
Tenant shall maintain such equipment at Tenant’s sole cost and
expense.  In the event Tenant elects to
exercise its right to install telecommunication equipment as set forth in this
SECTION 29.37, then Tenant shall give Landlord prior written notice
thereof and Landlord and Tenant shall execute an amendment to this Lease covering
the installation and maintenance of such equipment, Tenant’s indemnification of
Landlord with respect thereto, Tenant’s obligation to remove such equipment
upon the expiration or earlier termination of this Lease, and other related
matters.

 

51

 

IN WITNESS WHEREOF, Landlord and Tenant
have caused this Lease to be executed the day and date first above written.

 

 

	
   

  	
  LANDLORD:

  
	
   

  	
   

  
	
   

  	
  STATE TEACHERS’ RETIREMENT SYSTEM,

  
	
   

  	
  a retirement fund created under the

  laws of the State of California

  
	
   

  	
   

  
	
   

  	
  By:

  	
  TRUST COMPANY OF THE WEST

  
	
   

  	
   

  	
  a California corporation,

  Its Investment Manager

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Hugh Dirstine

  
	
   

  	
   

  	
   

  	
  HUGH DIRSTINE

  
	
   

  	
   

  	
   

  	
  Its Authorized Representative

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Gary Neumeier

  
	
   

  	
   

  	
   

  	
  GARY NEUMEIER

  
	
   

  	
   

  	
   

  	
  Its Authorized Representative

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TENANT:

  
	
   

  	
   

  
	
   

  	
  HERBALIFE INTERNATIONAL OF

  AMERICA, INC.,

  
	
   

  	
  a California corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Conrad Lee Klein

  
	
   

  	
   

  	
  CONRAD LEE KLEIN

  
	
   

  	
   

  	
  Its Authorized
  Agent

  

 

52

 

EXHIBIT A

 

OUTLINE OF FLOOR PLAN OF PREMISES

 

{FLOOR PLAN}

 

A-1

 

EXHIBIT A

OUTLINE OF FLOOR PLAN OF PREMISES

 

{FLOOR PLAN}

 

A-2

 

EXHIBIT A

OUTLINE OF FLOOR PLAN OF PREMISES

 

{FLOOR PLAN}

 

A-3

 

EXHIBIT A

OUTLINE OF FLOOR PLAN OF PREMISES

 

{FLOOR PLAN}

 

A-4

 

EXHIBIT A

OUTLINE OF FLOOR PLAN OF PREMISES

 

{FLOOR PLAN}

 

A-5

 

EXHIBIT A-1

OUTLINE OF EXPANSION SPACE

 

{FLOOR PLAN}

 

A-1-2

 

EXHIBIT B

 

TENANT WORK LETTER

 

This Tenant Work Letter shall set forth the
terms and conditions relating to the construction of the tenant improvements in
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 portion of the
Lease to which this Tenant Work Letter is attached and of which this Tenant Work
Letter forms a part.

 

SECTION I

 

LANDLORD’S INITIAL CONSTRUCTION IN
THE PREMISES

 

Landlord has constructed, at its sole cost
and expense the base building (i) of the Premises and (ii) of the floors of the
Building on which the Premises is located (collectively, the “BASE
BUILDING”).  The Base Building shall be
delivered to Tenant, and Tenant agrees to accept the same, in its currently
existing, “as-is” condition, except as set forth below; provided, however, that
the Base Building shall include the following items.

 

1.1                                 TELEPHONE
ROOM AND ELECTRICAL ROOM.  The telephone
and electrical rooms will include a telephone backboard and electrical
distribution panelboards, respectively. 
Conduit runs from the electrical closet to individual ceiling junction
boxes, as installed.  The 11th and 12th
floor telephone rooms shall each contain 300 pair of telephone capacity.  The 13th floor telephone room shall contain
900 pair, currently configured as 300 pair to be used for each of the 13th,
14th and 15th floors.

 

1.2                                 PUBLIC EXIT
STAIRWAYS.  Stairways in compliance with
applicable laws as of the Lease Commencement Date (“Laws”) to the extent
necessary for Tenant to obtain its certificate of occupancy, assuming a
standard buildout for office space.

 

1.3                                 ACCESS TO
SYSTEMS.  Access to domestic cold water,
drainage and vent systems at readily accessible locations on the 11th, 13th and
15th floors.

 

1.4                                 WINDOW
COVERINGS.  Building Standard draperies,
cleaned and installed on each exterior window.

 

1.5                                 FLOORING.  Concrete floor with trowelled finish designed
to support a minimum live load of 70 pounds per square foot.

 

1.6                                 CHILLED
WATER.  Condenser and chilled water loop
on the 11th, 13th and 15th floors of the Premises.  If Landlord allows any other tenant to tap
into the Building’s condenser and/or chilled water, Landlord shall allow Tenant
to do so on the same terms and conditions, subject to overall restrictions on
capacity, as determined in Landlord’s reasonable discretion.

 

1.7                                 ACOUSTICS.  To Landlord’s best knowledge and belief, the
Building has been constructed in a manner and at a level at least consistent
with the sound production and vibration standards for normal office
requirements maintained in the Comparable Systems Buildings, as that term is
defined in Section 6.1 of the Lease.

 

1.8                                 BASE AND
SHELL IMPROVEMENTS.  The structural frame
of the Building shall be complete including finished slab.

 

1.9                                 DEMOLITION
Prior to Landlord’s delivery of the Premises to Tenant, Landlord, at its sole
cost and expense, shall demolish the improvements currently located in the
Premises in accordance with the demolition plan attached to this Tenant Work
Letter as Schedule 1 (the “DEMOLITION PLAN”).

 

B-1

 

1.10                           EXISTING
STAIRWELLS.  Except as otherwise
described on the Demolition Plan, Landlord shall deliver the internal stairways
currently located in the Premises in their currently existing, “as-is”
condition.

 

SECTION 2

 

TENANT IMPROVEMENTS

 

2.1                                 ALLOWANCES.

 

2.1.1                        TENANT
IMPROVEMENT ALLOWANCE.  Tenant shall be
entitled to a one-time tenant improvement allowance (the “TENANT IMPROVEMENT
ALLOWANCE”) in the amount of $4,155,203.00 (composed of a core and shell
allowance in the amount of $305,803.00, and an additional allowance in the
amount of $3,849,400.00) for the costs relating to the initial design and
construction of Tenant’s improvements (the “TENANT IMPROVEMENTS”).  Tenant agrees that not more than Eleven
Dollars ($11.00) per usable square foot of the Premises of the Tenant Improvement
Allowance (the “Eleven Dollar Amount”) shall be spent on those items set forth
in SECTIONS 2.2.1.1, 2.2.1.2, 2.2.1.7 AND 2.2.1.8, below. Additionally, the
first $80,000.00 spent in connection with items set forth in
SECTION 2.2.1.9, below (the “Signage Costs”), may be included within the
Tenant Improvement Allowance.  Signage
Costs in excess of $80,000.00 may be included in the Tenant Improvement
Allowance to the extent that they, together with the other items listed above,
do not exceed the Eleven Dollar Amount. 
Additionally, Landlord shall have no obligation to disburse any amounts
of the Tenant Improvement Allowance for costs of those items set forth in
SECTION 2.2.1.8, below, until Landlord has first disbursed at least $40.00
per usable square foot of the Premises of the Tenant Improvement Allowance.

 

2.1.2                        SPACE
PLANNING ALLOWANCE.  Landlord shall pay
$0.10 per usable square foot of the Premises (the “DESIGN ALLOWANCE”), in
addition to the Tenant Improvement Allowance, for the cost of the “Architect”
and “Engineers,” as those terms are defined in SECTION 3.1, below, to
prepare the “Final Space Plan,” as those terms are defined in SECTIONS 3.1 and
3.2, below, respectively. Any additional design costs may be deducted from the
Tenant Improvement Allowance.

 

2.1.3                        STAIR
PRESSURIZATION ALLOWANCE.  Landlord
agrees that it shall pay up to $50,000.00 in aggregate (the “Pressurization
Allowance”), as necessary for the pressurization and ventilation of the
existing interior staircases connecting floors 12, 13, 14 and 15, as such
pressurization and ventilation is required by the Laws.  Landlord shall have no obligation to pay any
amounts for such pressurization or ventilation in excess of the Pressurization
Allowance.

 

The Tenant Improvement Allowance and Design
Allowance are sometimes referred to herein collectively as the “ALLOWANCES.”

 

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               Payment of the fees
of the “Architect” and the “Engineers,” as those terms are defined in
SECTION 3.1 of this Tenant Work Letter;

 

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

 

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

 

2.2.1.4               The cost of any
changes in the base building or the floor of the Building on which the Premises
is located, when such changes are requred by the Construction Drawings
(including if such changes are due to the fact that such work is prepared on an

 

B-2

 

unoccupied basis) or to comply with Code,
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
chances to the Construction Drawings or Tenant Improvements required by Code;

 

2.2.1.6               Sales and use taxes
and Title 24 fees;

 

2.2.1.7               Any moving or
relocation costs incurred by Tenant;

 

2.2.1.8               The cost of
free-standing workstations, furniture, fixtures and equipment for the Premises;

 

2.2.1.9               The cost of signs
installed by Tenant in accordance with the provisions of the Lease;

 

2.2.1.10         The cost of cable and
other telecommunications lines installed as part of the Tenant Improvements;
and

 

2.2.1.11         All other costs of labor
and materials approved by or expended by Tenant directly in connection with the
construction of the Tenant Improvements.

 

2.2.2                        DISBURSEMENT
OF TENANT IMPROVEMENT ALLOWANCE.  During
the construction of the Tenant 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 first
day (the “SUBMITTAL DATE”) of each calendar month commencing with the first
calendar month following the execution of the Lease, 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, on
the standard AIA (G702) form showing, by trade, the percentage of completion of
the Tenant Improvements in the Premises (as reasonably extrapolated by Tenant
through the end of the applicable month), and detailing the portion of the work
completed; (ii) invoices from all of “Tenant’s Agents,” as that term is defined
in SECTION 4.1.2 of this Lease, for labor rendered and materials delivered
to the Premises for the applicable payment period; (111) executed conditional
mechianic’s lien releases from all of Tenant’s Agents which shall comply with
the appropriate provisions of California Civil Code Section 3262(d);
provided, however, that with respect to fees and expenses of the Architect or Engineers,
the FF&E Costs items, or any other pre-construction items for which the
payment scheme set forth in items (i) through (iii), above, is not applicable
(collectively, the “NON-CONSTRUCTION ALLOWANCE ITEMS”), Tenant shall only be
required to deliver to Landlord on or before the applicable Submittal Date,
reasonable evidence of having paid the cost for the applicable Non-Construction
Allowance Items (unless Landlord has received a preliminary notice in
connection with such costs in which event conditional lien releases must be
submitted in connection with such costs); and (iv) all other information
reasonably requested in good faith 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 vis-a-vis the Landlord, On or before the twenty-fifth
(25th) day of each such calendar month (the “PAYMENT DATE”), and assuming
Landlord receives the applicable information described in Items (i) through
(iv), above, and unconditional lien releases, as applicable, for all work paid
for from the Tenant Improvement Allowance as of the previous Payment Date,
Landlord shall deliver a check to Tenant made jointly payable to Contractor, or
any other provider of goods and services designated by Tenant to Landlord, 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,” but in no event shall the Final Retention be in excess of ten
percent (10%), inclusive of the retention amount provided pursuant to the
Standard AIA (G702) Form); provided, however, that no such retention shall be applicable
to Non-Construction Allowance Items or, in Landlord’s resonable discretion,
other Tenant Improvement Allowance Items in connection with the payment of
suppliers for materials delivered to the Premises and subcontractors for
completing performance of their work substantially in advance of the
substantial completion of the

 

B-3

 

Tenant Improvements, 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 material non-compliance of any work with the “Approved Working
Drawings”, as that term is defined in SECTION 3.4 below, or due to any
materially substandard work as identified in good faith by Landlord.  In the event that Landlord identifies any
material non-compliance with the Approved Working Drawings or substandard work,
Tenant shall be provided a detailed statement identifying such material
non-compliance or substandard work. 
Landiord’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 (1) Tenant delivers
to Landlord properly executed mechanics lien releases in compliance with both
California Civil Code Section 3262(d)(2) and either
Section 3262(d)(3) or Section 3262(d)(4), and (ii) Landlord has
reasonably determined that no materially substandard work exists which materially
and adversely affects the mechanical, electrical, plumbing, heating,
ventilating and air conditioning, life-safety or other systems of the Building,
the curtain wall of the Building, or the structure or exterior appearance of
the Building.

 

2.2.3                        FAILIURE
TO DISBURSE TENANT IMPROVEMENT ALLOWANCE. 
In the event that Landlord fails to fulfill its obligation to disburse
the Tenant Improvement Allowance in accordance with the terms of
SECTION 2.2.2, above, following five (5) business days notice from Tenant
and Landlord’s failure to cure within such period, Tenant shall have the right,
at Tenant’s option, in addition to any rights or remedies available to Tenant
under this Lease, at law or in equity, to continue to perform the work of the
Tenant Improvements, and offset any unpaid portions of the Tenant Improvement
Allowance plus interest at the Interest Rate against Tenant’s obligation for
Rent next coming due under this Lease.

 

SECTION 3

 

CONSTRUCTION DRAWINGS

 

3.1                                 SELECTION
OF ARCHITECT/CONSTRUCTION DRAWINGS. 
Tenant shall retain an architect/space planner reasonably approved by
Landlord (the “ARCHITECT”) to prepare the Construction Drawings, which approval
shall be granted or denied by Landlord within five (5) business days after
Tenant has submitted the proposed architect to Landlord.  Tenant shall retain an engineering consultant
reasonably approved by Landlord (the “ENGINEER”) to prepare all plans and
engineering working drawings relating to the structural, mechanical, electrical,
plumbing, HVAC, lifesafety, and sprinkler work of the Tenant Improvements.  The plans and drawings to be prepared by
Architect and the Engineer hereunder shall be known collectively as the
“CONSTRUCTION DRAWINGS.” All Construction Drawings shall be subject to
Landlord’s approval pursuant to the terms set forth in SECTIONS 3.2 and 3.3,
below.  Landlord’s review of the
Construction Drawings as set forth in this SECTION 3, shall be for its
sole purpose and shall not imply Landiord’s review of the same, or obligate
Landlord to review the same, for quality, design, Laws compliance or other like
matters.

 

3.2                                 FINAL SPACE
PLAN.  Tenant and the Architect shall
prepare the final space plan for Tenant Improvements in the Premises
(collectively, the “Final Space Plan”), and shall deliver the Final Space Plan
to Landlord for Landlord’s approval. 
Landlord shall, within eight (8) business days after Landlord receives
such Final Space Plan, (i) approve the Final Space Plan, (ii) approve the Final
Space Plan subject to specified conditions to be complied with when the Final
Working Drawings are submitted by Tenant to Landlord, or (iii) disapprove the
final space plan and return the same to Tenant with requested revisions;
provided however that Landlord shall only be entitled to dispprove the Final
Space Plan for the following reasons: (i) an adverse effect on the structural
integrity of the Building; (ii) non-compliance with Laws; (iii) an adverse
effect on the systems and equipment of the Building; or (iv) an adverse effect
on the exterior apperance of the Building (individually or collectively, a
“DESIGN PROBLEM”). If Landlord disapproves the Final Space Plan, Tenant may
resubmit the Final Space Plan to Landlord at any time, and Landlord shall
approve or disapprove of the resubmitted Final Space Plan, based upon the
criteria set forth in this

 

B-4

 

SECTION 3.2, within two (2) business
days after Landlord receives such resubmitted Final Space Plan.

 

3.3                                 FINAL
WORKING DRAWINGS.  Tenant, the Architect
and the Engineer shall complete the architectural and engineering drawings for
the Premises in a form which is complete to allow subcontractors to bid on the
work and to obtain all applicable permits (collectively, the “FINAL WORKING
DRAWINGS”) and shall submit the same to Landlord for Landlord’s approval.  The Final Working Drawings may be submitted
in one or more stages at one or more times, provided that Tenant shall
ultimately supply Landlord with four (4) completed copies signed by Tenant of
such Final Working Drawings.  Landlord
shall, within ten (10) business days after Landlord receives the Final Working
Drawings, either (i) approve the Final Working Drawings, (ii) approve the Final
Working Drawings subject to specified conditions to be satisfied by Tenant
prior to submitting the Approved Working Drawings for permits as set forth in
SECTION 3.4, below, if the Final Working Drawings do not comply with the
Final Space Plan or contain a Design Problem, or (iii) disapprove and return
the Final Working Drawings to Tenant with requested revisions if the Final
Working Drawings do not comply with the Final Space Plan or contain a Design
Problem.  If Landlord disapproves the
Final Working Drawings, Tenant may resubmit the Final Working Drawings to
Landlord at any time, and Landlord shall approve or disapprove of the
resubmitted Final Working Drawings, based upon the criteria set forth in this
SECTION 3.3, within two (2) business days after Landlord receives such
resubmitted Final Working Drawings.

 

3.4                                 PERMITS.  The Final Working Drawings shall be approved
by Landlord (the “APPROVED WORKING DRAWINGS”) prior to the commencement of the
construction of the Tenant Improvements. 
Architect shall submit the Approved Working Drawings to the appropriate
municipal authorities for all applicable building permits necessary to allow
“Contractor,” as that term is defined in SECTION 4.1, below, to commence
and fully complete the construction of the Tenant Improvements.  Tenant shall be responsible for obtaining any
building permit or certificate of occupancy for the Premises; 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.

 

3.5                                 CHANGE
ORDERS.  In the event Tenant desires to
change the Approved Working Drawings, Tenant shall deliver notice (the “DRAWING
CHANGE NOTICE”) of the same to Landlord, setting forth in detail the changes
(the “TENANT CHANGE”) Tenant desires to make to the Approved Working Drawings.
Landlord shall, within three (3) business days of receipt of the Drawing Change
Notice, either (i) approve the Tenant Change, or (ii) disapprove the Tenant
Change and deliver a notice to Tenant specifying in detail the reasons for
Landlord’s disapproval; provided, however, that Landlord may only disapprove of
the Tenant Change if the Tenant Change contains a Design Problem.  Any additional costs which arise in
connection with such Tenant Change shall be paid by Tenant.

 

SECTION 4

 

CONSTRUCTION OF THE TENANT
IMPROVEMENTS

 

4.1                                 TENANT’S
SELECTION OF CONTRACTORS.

 

4.1.1                        THE
CONTRACTOR.  Tenant shall retain a
licensed general contractor (the “CONTRACTOR”), as contractor for the
construction of the Tenant Improvements, which Contractor shall be selected by
Tenant pursuant to a competitive bidding of the general conditions, profit and
overhead fees for construction of the Tenant Improvements, and which Contractor
shall be subject to Landlord’s approval, which approval shall not be
unreasonably withheld or conditioned, and which approval or refusal shall be
granted or denied within five (5) business days after Tenant has submitted the
name of the contractor.

 

4.1.2                        TENANT’S
AGENTS.  Tenant agrees to cause
Contractor to solicit bids from at least three (3) subcontractors for each item
or trade involved in the construction of the Tenant improvements, which
subcontractors shall be subject to Landlord’s approval within five (5) business
days after Tenant has submitted the name of a subcontractor.  All of the subcontractors selected by Tenant,
together with the laborers, materialmen, suppliers and the Contractor shall be
known collectively as “TENANT’S AGENTS.”

 

B-5

 

4.2                                 NOTICE OF
COMPLETION.  Within ten (10) days after
the issuance of the permanent or temporary certificate of occupancy for the
Tenant 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.

 

4.3                                 LIEN AND
COMPLETION BOND.  Prior to the
commencement of construction of the Tenant Improvements, Landlord shall require
that Tenant or Contractor post a lien and completion bond or some alternative
form of security to ensure the lien free completion of the Tenant Improvements.

 

4.4                                 OVER-ALLOWANCE
AMOUNT.  Prior to the commencement of the
construction of the Tenant Improvements, and after Tenant has accepted all bids
for the Tenant Improvements, Tenant shall provide Landlord with a detailed
breakdown, by trade, of the final costs to be incurred or which have been
incurred, as set forth more particularly in SECTIONS 2.2.1.1 THROUGH 2.2.1.11,
above, in connection with the design and construction of the Tenant
Improvements to be performed by or at the direction of Tenant or the
Contractor, which costs form a basis for the amount of Tenant’s contract with
Contractor (the “Final Costs”). Prior to the commencement of construction of
the Tenant Improvements, Tenant shall supply Landlord with cash in an amount
(the “Over-Allowance Amount”) equal to the amount by which the Final Costs
exceed, by more than One Million Dollars ($1,000,000.00), 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 Tenant Improvements). 
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 Tenant 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.

 

SECTION 5

 

MISCELLANEOUS

 

5.1                                 LEASE
COMMENCEMENT DATE DELAYS.  The Lease
Commencement Date shall occur as provided in Article 2 of this Lease,
provided that the Lease Commencement Date shall be delayed by the number of
days of delay of the “substantial completion of the Tenant Improvements,” as
that term ‘is defined below in this SECTION 5, in the Premises to the
extent caused by a “Commencement Date Delay,” provided that a Commencement Date
Delay shall only occur to the extent the substantial completion of the Tenant
Improvements is delayed beyond January 1, 1996.  In addition, the Lease Expiration Date shall
be automatically extended one day for each day the Lease Conunencement Date is
delayed.  As used herein, the term
“COMMENCEMENT DATE DELAY” shall mean only a “Force Majeure Delay” or a
“Landlord Caused Delay,” as those terms are defined below in this
Section 5.1. As used herein, the term “FORCE MAJEURE DELAY” shall mean
only an actual delay resulting from fire, earthquake, explosion, flood,
hurricane, the elements, acts of God or the public enemy, war, invasion,
insurrection, rebellion, riots, industry-wide labor strikes or lockouts (which
objectively preclude Tenant from obtaining from any reasonable source of labor
or substitute materials at a reasonable cost necessary for completing the
Tenant Improvements), or governmental acts, including law changes, changes in
interpretation of laws or the construction rules and regulations, delays
attributable to the acts of third parties not under contract with Tenant in
obtaining the issuance of permits and the obtaining of inspections beyond
customary time periods, which objectively preclude construction of tenant
improvements in the Building by any person. As used in this Tent Work Letter,
“LANDLORD CAUSED DELAY” shall mean actual delays to the extent resulting from the
acts or omissions of Landlord (which acts are not expressly permitted by the
terms of the Lease or this Tenant Work Letter) including, but not limited to,
(i) failure of Landlord to timely approve or disapprove any Construction
Drawings; (ii) subject to Landlord’s reasonable construction rules and
regulations and reasonable notice requirements contained therein, material
interference by Landlord, its agents or contractors with the completion of the
Tenant Improvements and which objectively preclude

 

B-6

 

construction of tenant improvements in the
Building by any person, which interference relates to access by Tenant, its
agents and contractors to the Building or any Building facilities (including
loading docks and freight elevators) or service (including temporary power and
parking areas as provided herein) during normal construction hours, or the use
thereof during normal construction hours; (iii) delays due to the acts or
failures to act of Landlord, its agents or contractors with respect to payment
of the Tenant Improvement Allowance and/or any cessation of work upon the
Tenant Improvements as a result thereof; and (iv) Landlord’s failure to
complete and deliver the Base Building on or before the date which is thirty
(30) days after the full execution and delivery of this Lease.

 

Landlord hereby agrees that,
notwithstanding the occurrence of the Lease Commencement Date, Landlord shall
use commercially reasonable efforts to avoid any Landlord Caused Delay.

 

5.2                                 DETERMINATION
OF COMMENCEMENT DATE DELAY.  If Tenant
contends that a Commencement Date Delay has occurred, Tenant must notify
Landlord in writing (the “DELAY NOTICE”) of the event which constitutes such
Commencement Date Delay, and, assuming such event qualifies as a Commencement
Date Delay, a Commencement Date Delay shall be deemed to have occurred
commencing as of the date of Landlord’s receipt of the Delay Notice.

 

5.3                                 DEFINITION
OF SUBSTANTIAL COMPLETION OF THE TENANT IMPROVEMENTS.  For purposes of this SECTION 5,
“substantial completion of the Tenant Improvements” shall mean completion of
construction of the Tenant Improvements in the Premises pursuant to the
“Approved Working Drawings,” with the exception of any punch list items, but
including any furniture, fixtures, workstations, built-in furniture or
equipment.

 

SECTION 6

 

MISCELLANEOUS

 

6.1                                 TENANT’S
REPRESENTATIVE.  Tenant has designated
Conrad Lee Klein as its sole representative with respect to the matters set
forth in this Tenant Work Letter, who, until further notice to Landlord, shall
have full authority and responsibility to act on behalf of the Tenant as
required in this Tenant Work Letter.

 

6.2                                 LANDLORD’S
REPRESENTATIVE.  Landlord has designated
Hank Metzger 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.

 

6.3                                 TIME OF THE
ESSENCE IN THIS TENANT WORK LETTER. 
Unless otherwise indicated, all references herein to a “number of days”
shall mean and refer to calendar days. 
In all instances where Tenant is required to approve or deliver an item,
if no written notice of approval is given or the item is not delivered within
the stated time period, at the end of such period the item shall automatically
be deemed disapproved by Tenant.

 

6.4                                 MISCELLANEOUS
CHARGES.  Prior to the Lease Commencement
Date, Tenant or Tenant’s agents shall not be charged for, directly or
indirectly, Landlord’s supervision and/or overhead, parking, restrooms, HVAC
usage, electricity, water, elevator usage, hoists, access to loading docks,
freight elevator usage, or security. 
After the Lease Commencement Date, the terms of the Lease shall govern
the payment of such charges.  Parking for
Tenant’s Agents shall be in an area designated by Landlord and subject to
Landlord’s reasonable procedures regarding the same.

 

6.5                                 MOVE-IN
PRIORITY.  Subject to mutually agreeable
scheduling and use procedures, Tenant shall have the exclusive right to use one
passenger elevator and the freight elevator during the weekend days that it
moves into the Building.

 

6.6                                 CLEAN-UP.  Prior to the delivery of the Premises to
Tenant for the commencement of the construction of the Tenant Improvements,
Landlord shall remove all rubbish and debris therefrom and reasonably clean the
premises.

 

B-7

 

6.7                                 PUNCH LIST
ITEMS.  Within thirty (30) days of
Landlord’s delivery of the Base Building to Tenant, Tenant shall Provide
Landlord a punch list (latent and hidden defects excepted), which punch list
shall consist of those mechanical type adjustments which vary materially from
the Demolition Plan and the terms of SECTION I of this Tenant Work
Letter.  Upon receipt of the punch list,
Landlord shall, at Landlord’s sole cost and expense, proceed to diligently
remedy all such items.  Landlord shall
not be responsible for any damage to the Base Building caused by Tenant or its
agents.

 

6.8                                 HAZARDOUS
MATERIALS.  In the event that during
construction of the Tenant Improvements, the Premises and/or the Common Areas
are determined to contain hazardous or toxic materials, and to the extent such
actions are required by Law, Tenant shall have the right to cause Landlord to
remove, encapsulate, contain, or otherwise dispose of such hazardous or toxic
materials, and the cost incurred in connection therewith shall be paid by
Landlord.  The amount of such payment
shall be separate and apart from, and in addition to, the Tenant Improvement
Allowance and shall not be deducted from the Tenant Improvement Allowance.

 

B-8

 

SCHEDULE 1

 

DEMOLITION PLAN

 

TENANT SPACE:

 

Landlord shall demolish and/or remove the
following:

 

1.                                       Gypsum
board partitions and ceilings, including metal studs, black iron, above ceiling
bracing and support of same.

 

2.                                       Doors,
frames and hardware.

 

3.                                       Ceiling
tiles and grid, including suspension, hang wires and bracing.

 

4.                                       Light fixtures,
controls and switching, power and data outlets, and all conduit and cables
which are not a part of the fire-life safety system. All conduit, wiring and
cables shall be removed back to their respective panels, backboards and
punchdown blocks.

 

5.                                       HVAC supply
and return air diffusers, ductwork (excluding main loop), mixing boxes and all
controls.  All mixing boxes shall be held
for possible reuse by tenant.

 

6.                                       All
millwork, cabinetry and paneling, including hand rail at connecting stair.

 

7.                                       All decorative
metals, including stair railing at connecting stair.

 

8.                                       All pluming
fixtures, including supply, waste and vent lines back to their connections with
base building systems.  Cap off all
exposed base building connections.  This
shall include all auxiliary restrooms.

 

9.                                       Kitchen on
12th floor, including fire suppression system, gas lines, exhaust/grease ducts,
and equipment.

 

10.                                 Pre-action
fire sprinkler systems.

 

11.                                 All floor
finishes including raised floors and concrete curbs, leaving floors in a broom
clean condition.

 

12.                                 All wall
finishes on existing core and shell walls.

 

13.                                 All
decorative and functional finishes at connecting stair , including wood
paneling and gypsum board.

 

Additionally, all
electrical work remaining in electrical rooms shall be left in a safe condition
and Landlord shall be responsible for the removal and disposal of all Hazardous
Materials in a safe and approved manner, as required by law.  Landlord shall not encapsulate or contain any
Hazardous Materials.

 

1-1

 

EXHIBIT C

 

NOTICE OF LEASE TERM DATES

 

	
  To:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

Re:                               Office
Lease dated
            ,
19  , between
                      
a                        
(“Landlord”), and
                      ,
a
                       
(“Tenant”) concerning Suite       on floor(s)
       of the office building located at
                    ,
Los Angeles, California.

 

Gentlemen:

 

In accordance with the Office Lease (the
“Lease”), we wish to advise you and/or confirm as follows:

 

That the Substantial Completion of the
Premises has occurred, and that the Lease Term shall commence as of
               
for a term of                 
ending on
                .

 

That in accordance with the Lease, Rent
commenced to accrue on                  .

 

If the Lease Commencement Date is other
than the first day of the month, the first billing will contain a pro rata
adjustment.  Each billing thereafter,
with the exception of the final billing, shall be for the full amount of the
monthly installment as provided for in the Lease.

 

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

 

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

 

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

 

	
   

  	
  “Landlord”:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
					

 

C-1

 

 

Agreed to and Accepted as of
              ,
1995

 

“Tenant”

 

	
  By:

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  
					

 

C-2

 

EXHIBIT D

 

RULES AND REGULATIONS

 

Tenant shall faithfully observe and comply
with the following Rules and Regulations. 
Landlord shall not be responsible to Tenant for the nonperformance of
any of said Rules and Regulations by any other tenants or occupants of the
Building except to the extent such noncompliance unreasonably and materially
interferes with Tenant’s use of the Building, Real Property, or Premises.

 

1.                                       Tenant
shall not alter any lock or install any new or additional locks or bolts on any
doors or windows of the Premises without obtaining Landlord’s prior written
consent.  Tenant shall bear the cost of
any lock changes or repairs required by Tenant. 
Two keys will be furnished by Landlord for the Premises, and any
additional keys required by Tenant must be obtained from Landlord at a
reasonable cost to be established by Landlord.

 

2.                                       All doors
opening to public corridors shall be kept closed at all times except for normal
ingress and egress to the Premises, unless electrical hold backs have been
installed.

 

3.                                       Landlord
reserves the right to close and keep locked all entrance and exit doors of the
Building during such hours as are customary for Comparable Buildings.  Tenant shall cause its employees and agents
(and those holding under or through Tenant) to use their respective reasonable
efforts to ensure that the doors to the Premises are securely closed and locked
when leaving the Premises if it is after the normal hours of business for the
Building.  Any tenant, its employees,
agents or any other persons entering or leaving the Building at any time when
it is so locked, or any time when it is considered to be after normal business
hours for the Building, may be required to sign the Building register when so
doing.  Access to the Building may be
refused unless the person seeking access has proper identification or has a
previously arranged pass for access to the Building.  The Landlord and its agents shall in no case
be liable for damages for any error with regard to the admission to or
exclusion from the Building of any person (unless due to Landlord’s or such
agent’s negligence or intentional misconduct). 
In case of invasion, mob, riot, public excitement, or other commotion,
Landlord reserves the right to prevent access to the Building during the
continuance of same by any means it deems appropriate for the safety and
protection of life and property.

 

4.                                       No
furniture, freight or equipment which requires use of the Building’s freight
elevator shall be brought into or removed from the Building without prior
notice to Landlord.  All moving of the
same into or out of the Building shall be scheduled with Landlord and done only
at such time and in such manner as Landlord shall reasonably designate.  Landlord shall have the right to reasonably
approve the weight, size and position of all safes and other heavy property
brought into the Building and also the times and manner of moving the same in
and out of the Building.  Safes and other
heavy objects shall, if reasonably considered necessary by Landlord, stand on
supports of such thickness as is necessary to properly distribute the
weight.  Landlord will not be responsible
for loss of or damage to any such safe or property in any case.  All damage done to any part of the Building,
its contents, occupants or visitors by moving or maintaining any such safe or
other property of Tenant or its agents, employees or contractors shall be the
sole responsibility of Tenant and any expense of said damage or injury shall be
borne by Tenant.

 

5.                                       No
furniture, packages, supplies, equipment or merchandise will be carried up or
down in the elevators, except between such hours and in such specific elevator
as shall be designated by Landlord.

 

6.                                       Subject to
the terms of the Lease, Landlord shall have the right to control and operate
the public portions of the Building, the public facilities, the heating and air
conditioning, and any other facilities furnished for the common use of tenants,
in such manner as is customary for Comparable Buildings.

 

7.                                       The
requirements of Tenant will be attended to only upon application at the Office
of the Building or at such office location designated by Landlord. Employees of
Landlord shall not perform any work or do anything outside their regular duties
unless under specific instructions from Landlord.

 

D-1

 

8.                                       Tenant
shall not disturb, solicit or canvass any occupant of the Building and shall
cooperate with Landlord or Landlord’s agents to prevent same.

 

9.                                       The toilet
rooms, urinals, wash bowls and other apparatus shall not be used for any
purpose other than that for which they were constructed, and no foreign
substance of any kind whatsoever shall be thrown therein.  The expense of any breakage, stoppage or
damage resulting from the violation of this rule shall be borne by the tenant
who, or whose employees or agents, shall have caused it.

 

10.                                 Tenant
shall not overload the floor of the Premises or in any way deface the Premises
or any part thereof without Landlord’s consent first had and obtained.

 

11.                                 Except for
vending machines intended for the sole use of Tenant’s employees and invitees,
no vending machine or machines of any description other than office machines
shall be installed, maintained or operated upon the Premises without the
written consent of Landlord.

 

12.                                 Tenant
shall not use or keep in or on the Premises or the Building any kerosene,
gasoline or other inflammable or combustible fluid or material.

 

13.                                 Tenant
shall not use any method of heating or air conditioning other than that which
may be supplied by Landlord, without the prior written consent of Landlord.

 

14.                                 Tenant
shall not use, keep or permit to be used or kept, any foul or noxious gas or
substance in or on the Premises, or permit or allow the Premises to be occupied
or used in a manner offensive or objectionable to Landlord or other occupants
of the Building by reason of noise, odors, or vibrations, or interfere in any
way with other tenants or those having business therein.

 

15.                                 Tenant
shall not bring into or keep within the Building or the Premises any animals
(except seeing-eye dogs), birds, bicycles or other vehicles.

 

16.                                 No cooking
shall be done or permitted by any tenant on the Premises, nor shall the
Premises be used for the storage of merchandise, inventory or for lodging.  Notwithstanding the foregoing, Underwriters’
laboratory-approved equipment and microwave ovens may be used in the Premises
for heating food and brewing coffee, tea, hot chocolate and similar beverages,
provided that such use is in accordance with all applicable federal, state and
city laws, codes, ordinances, rules and regulations, and does not cause odors
which are objectionable to Landlord and other tenants.

 

17.                                 Landlord
will reasonably approve where and how telephone and telegraph wires are to be
introduced to the Premises.  No boring or
cutting for wires shall be allowed without the consent of Landlord.  The location of telephone, call boxes and
other office equipment affixed to the Premises shall be subject to the
reasonable approval of Landlord.

 

18.                                 Landlord
reserves the right to exclude or expel from the Building any person who, in the
reasonable judgment of Landlord, is intoxicated or under the influence of
liquor or drugs, or who shall in any manner do any act in violation of any of
these Rules and Regulations.

 

19.                                 Tenant, its
employees and agents shall not loiter in the entrances or common area
corridors, nor in any way obstruct the sidewalks, lobby, common area halls,
stairways or elevators, and shall use the same only as a means of ingress and
egress for the Premises.

 

20.                                 Tenant
shall store all its trash and garbage within the interior of the Premises.  No material shall be placed in the trash
boxes or receptacles if such material is of such nature that it may not be
disposed of in the ordinary and customary manner of removing and disposing of
trash and garbage in the Los Angeles area without violation of any law or
ordinance governing such disposal. All trash, garbage and refuse disposal shall
be made only through entry-ways and elevators provided for such purposes at
such times as Landlord shall designate.

 

21.                                 Tenant
shall comply with all safety, fire protection and evacuation procedures and
regulations reasonably established by Landlord or established by any
governmental agency.

 

D-2

 

EXHIBIT E

 

FORM OF ESTOPPEL CERTIFICATE

 

The undersigned as Tenant under that
certain Office Lease (the “Lease”) made and entered into as of
            ,
19   and between                   
a
                ,
as Landlord, and the undersigned as Tenant, for Premises on the
         floor(s) of the Office
Building located at
                 ,
Los Angeles, California, certifies as follows:

 

1.                                       Attached
hereto as Exhibit A is a true and correct copy of the Lease and all amendments
and modifications thereto.  The documents
contained in Exhibit A represent the entire agreement between the parties as to
the Premises.

 

2.                                       The
undersigned has commenced occupancy of the Premises described in the Lease,
currently occupies the Premises, and the Lease Term commenced on
                 .

 

3.                                       The Lease
is in full force and effect and has not been modified, supplemented or amended
in any way except as provided in Exhibit A.

 

4.                                       Tenant has
not transferred, assigned, or sublet any portion of the Premises nor entered
into any license or concession agreements with respect thereto except as
follows:

 

5.                                       Tenant
shall not modify the documents contained in Exhibit A or prepay any amounts
owing under the Lease to Landlord in excess of thirty (30) days without the
prior written consent of Landlord’s mortgagee.

 

6.                                       Base Rent
became payable on
                 .

 

7.                                       The current
Lease Term (including all exercised options) expires on
                   .

 

8.                                       To the best
of Tenant’s knowledge, all conditions of the Lease to be performed by Landlord
necessary to the enforceability of the Lease have been satisfied and to
Tenant’s actual knowledge, Landlord is not in default thereunder.

 

9.                                       To the best
of Tenant’s knowledge, all initial improvement work required to be performed by
Landlord under the Lease has been performed.

 

10,                                 No rental
has been paid in advance and no security has been deposited with Landlord
except as provided in the Lease.

 

11.                                 As of the
date hereof, to the best of Tenant’s knowledge, there are no existing defenses
or offsets that the undersigned has, which preclude enforcement of the Lease by
Landlord.

 

12.                                 All monthly
installments of Base Rent, all Additional Rent and all monthly installments of
estimated Additional Rent have been paid when due through
                  .  The current monthly installment of Base Rent
is $          .

 

13.                                 The
undersigned acknowledges that this Estoppel certificate may be delivered to
Landlord’s prospective mortgagee, or a prospective purchaser, and acknowledges
that it recognizes that if same is done, said mortgagee, prospective mortgagee,
or prospective purchaser will be relying upon the statements contained herein
in making the loan or acquiring the property of which the Premises are a part,
and in accepting an assignment of the Lease as collateral security, and that
receipt by it of this certificate is a condition of making of the loan or
acquisition of such property.

 

14.                                 If Tenant
is a corporation or partnership, each individual executing this Estoppel
Certificate on behalf of Tenant hereby represents and warrants that Tenant is a
duly formed and existing entity qualified to do business in California and that
Tenant has full right and authority to execute and deliver this Estoppel
Certificate and that each person signing on behalf of Tenant is authorized to
do so.

 

E-1

 

EXHIBIT F

 

EXISTING SUPERIOR TENANTS’ RIGHTS

 

Tenant Option Summary

 

2ND FLOOR:

 

A.                                   YOUNG &
RUBICAM - 10,556 r.s.f. lease with one option to renew at market for one 5 year
period beyond an initial 10 year term that commenced 3/l/95.

 

B.                                     1st offer
on balance of floor - PLUS OR MINUS 6,000 s.f.

 

C.                                     Options to
expand on 1,934 s.f. (NP Building office) at anytime and on 1,000 s.f. after a
lease that will be between 48 and 72 months in length.

 

3RD FLOOR:

 

A.                                   BIERRE
& MILLER - 6,271 r.s.f., expires 5/31/99, plus one 5 year renewal at market
and no expansion rights.

 

B.                                     QUEENSLAND
TOURIST AND TRAVEL CORPORATION - 2,795 r.s.f., expires 4/30/96, plus one 5 year
renewal at market and no expansion rights.

 

C.                                     AFG
SERVICES - 3,336 r.s.f., expires 5/31/99 - no renewal or expansion rights.

 

D.                                    KORN FERRY
INTERNATIONAL - 3,449 r.s.f., see 9th floor for expiration, renewal and
expansion information.

 

4TH FLOOR:

 

A.                                   CHEMICAL
BANK - 10,422 r.s.f., expires 2/29/2000, plus one 5 year renewal at market and
no expansion rights.

 

B.                                     NORMAN
ROBERTS - 2,419 r.s.f., expires 6/30/96, plus one 3 year renewal at market and
no expansion rights.

 

C.                                     HEARST/ABC-NBC
- 3,404 r.s.f., expires 10/31/95, no options to renew or expand.

 

8TH FLOOR:

 

A.                                   WINSFORD
CORPORATION - 5,939 r.s.f., expires 6/30/96, plus one 5 year market renewal, no
expansion rights.

 

B.                                     KORN FERRY
INTERNATIONAL - 10,389 r.s.f., see 9th floor for expansion, renewal and
expansion information.

 

9TH FLOOR:

 

A.                                   KORN FERRY
INTERNATIONAL - 15,989 r.s.f., expires 5/31/2002, plus one 5 year option at
market and First Right of Offer on 8th floor space at market.

 

10TH FLOOR:

 

A.                                   AURORA
CAPITAL PARTNERS (SUITE 1000) - 9,037 r.s.f., expires 1/31/99, no renewal or
expansion rights.

 

B.                                     DRESSLER,
REIN & RAYLE (SUITE 1050)- Expires 5/31/99, plus one 5 year market renewal,
expansion rights are 1st right of offer on balance of floor and 5,871 r.s.f. on
the 11th floor or another space in the building if landlord has a full floor
tenant for the 11th floor.

 

C.                                     DRESSLER,
REIN & RAYLE STORAGE (SUITES 1098 & 1099) - 791 r.s.f., expires
6/30/97, no renewal or expansion rights. 
This space will be offered at the same time as Suite 1000.

 

F-1

 

1ST FLOOR/MEZZANINE:

 

A.                                   CNB - 8,024
r.s.f., expires 6/30/05, plus one 5 year market renewal option.  Right of Offer to expand between 7/l/97 and
6/30/2000 into 2,400-3,600 r.s.f. on either the 2nd, 3rd or 4th floor.  If tenant does not expand at that time,
landlord must reoffer the same size space on one of the same floors between
7/l/2000 and 6/30/2003.

 

B.                                     HAMBURGER
HAMLET - 9,811 r.s.f. expires 10/31/99, plus one 5 year market renewal option.

 

F-2

 

EXHIBIT G

 

SPECIFICATIONS - BUILDING TOP SIGNAGE AND
MONUMENT SIGNAGE

 

1.                                       The
Building Top Signage shall bear the logo and name “Herbalife”, provided that
the Building Top Signage may be changed, subject to Landlord’s approval, upon
Tenant’s assignment of the Lease as set forth below.  The location of the Building Top Signage
shall be at the upper north end of the eastern and western faces of the
Building, or as otherwise reasonably approved by Landlord.  The Building Top Signage may, at Tenant’s
discretion, be up to the lesser of (i) 9 feet or (ii) the distance between the
top two horizontal joints in the masonry columns of the Building, in height,
and of a length to be reasonably agreed upon by the parties.  The color of the Building Top Signage shall
be “Herbalife Green,” or, subject to Landlord’s prior reasonable approval, any
other color as determined by Tenant. 
Tenant’s Monument Signage (on each of the two existing monuments) shall
be in Building standard materials, and shall contain Tenant’s name and logo, in
Tenant’s type style, all as reasonably approved by Landlord.

 

2.                                       Tenant
shall not install the Building Top Signage or thereafter replace or make
alterations to the Building Top Signage until: (a) Landlord has approved in
writing, which approval shall not be unreasonably withheld or delayed, the sign
planner, engineer and installation company and professionally prepared sign
plans submitted by Tenant showing the design, size, content, color,
illumination and quality of materials and placement of the sign, all required
engineering and, as to the Monument Signage, any required modifications to
either of the two existing monuments (which modification, if approved by
Landlord, which approval shall not be unreasonably withheld or delayed, shall
be performed at Tenant’s sole cost and expense), and (b) Tenant has obtained
and submitted to Landlord evidence of the insurance required hereunder and
under the Lease and any permits or approvals required by law.  The original installation work for the Building
Top Signage shall be performed pursuant to a design-build contract between
Tenant and a contractor approved by Landlord, which approval shall not be
unreasonably withheld or delayed.  Such
work shall be performed in a manner so as to minimize damage to the Building
and interference with the operation of the Building or any of its occupants
(including without limitation, minimizing any noise and other disruptions
caused by the construction), Subject to the terms of Sections 6 and 8 of this
Exhibit G, Landlord agrees that Tenant’s contractor may utilize the Building’s
window washing equipment for the installation and maintenance of the Building
Top Signage.  Without limiting the
generality of the foregoing, Landlord shall have the right to approve all
staging and other construction procedures, which approval shall not be
unreasonably withheld or delayed, and Tenant shall be responsible for assuring
that such installation or other work does not affect any of Landlord’s then
existing warranties and does not damage the Building (including, without
limitation, the roof membrane).  All
installation or other work hereunder shall be performed in a good and
workmanlike manner, in accordance with all governmental requirements, and at
Tenant’s sole cost and expense.  If
Tenant is required to remove any glass or other material from the Building,
Tenant will obtain Landlord’s prior written approval to such removal, which
approval shall not be unreasonably withheld or delayed, (unless such removal is
shown on the plans previously approved by Landlord) and shall store all such
material with appropriate care and replace it when the Building Top Signage is
removed.  If the window washing equipment
for the Building or any other Building equipment requires modification to accommodate
installation or repair of the Building Top Signage, Tenant shall perform such
modification at its sole cost and expense, subject to Landlord’s approval of
the nature and scope of such modification. Tenant shall promptly repair, to the
extent reasonably practical, at its sole cost and expense, any and all damage
to the Building and the Real Property (including damage for any landscaping)
caused by the installation or subsequent removal, of the Building Top Signage
and Monument Signage.

 

3.                                       Once installation
of an of the Building Top Signage has commenced it shall be completed as soon
as possible, and (subject to Force Majeure and delays caused by Landlord) in no
event later than (1) month thereafter.

 

4.                                       The
Building Top Signage shall, at all time, be fully and completely illuminated
each night between sunset and sunrise, at Tenant’s sole cost and expense, based
on separate meters (to be installed at Tenant’s sole cost and expense), and
Tenant shall pay any meter-reading charges in connection therewith.  Tenant shall not be permitted to illuminate
the Building Top

 

G-1

 

Signage until the foregoing described
separate meters have been installed. Such illumination shall be in compliance
with applicable governmental requirements.

 

5.                                       Tenant
shall maintain the Building Top Signage in good, sightly and first-class
appearance, condition and repair, and so as not to detract from the appearance
of the Building.  Landlord shall have the
right to reasonably approve the maintenance personnel.  If Tenant shall fail to maintain, repair, or
illuminate Tenant’s Exterior Signs in the condition required hereunder within
three (3) business days after written notice by Landlord, Landlord may so
repair, maintain and illuminate the Building Top Signage, at Tenant’s sole cost
and expense (which Tenant shall pay to Landlord as Additional Rent when billed
by Landlord), without limiting Landlord’s other rights and remedies.

 

6.                                       Landlord
shall permit Tenant reasonable access to the roof and Building window washing
equipment for the purposes permitted hereunder, upon reasonable advance notice
(except in cases of emergency, in which case only such notice as is feasible
under the circumstances shall be given) and scheduling through Landlord’s
management and security personnel. 
Access after normal business hours may be granted or required by
Landlord in its reasonable discretion, and for such reasonable charges as
Landlord shall impose to cover any out-of-pocket costs incurred by Landlord in
connection therewith.  Tenant shall
properly engineer its use of Landlord’s equipment for the installation and
maintenance of the Building Top Signage, and Landlord does not represent or
warrant the condition of such equipment or its suitability for Tenant’s
intended use.

 

7.                                       Landlord
does not represent or warrant that installation of the Building Top Signage
hereunder will comply with any applicable federal, state, county or local law
or ordinances or the regulations of any of their agencies or any
quasi-governmental requirements or any other applicable agreements; however,
Landlord has no actual knowledge (with no duty to investigate) that the
Building Top Signage will violate any such laws, ordinances, regulations or
other agreements.  Landlord shall use its
good faith efforts (without the expenditure of any money unless paid by Tenant
in advance of the required expenditure) to assist Tenant in obtaining such
approvals.  Tenant shall at all times
comply with any applicable laws, ordinances, regulations and requirements
pertaining to the Building Top Signage.

 

8.                                       Except to
the extent arising out of the negligence or willful misconduct of Landlord, its
agents or employees, Tenant shall defend, indemnify and hold Landlord and all
persons and entities comprising Landlord’s Group harmless from and against any
and all loss, cost, claim, damage, liability or expense which Landlord may
incur as a result of the Building Top Signage and Monument Signage or Tenant’s
installation, maintenance or other activities in connection therewith,
including but not limited to Tenant’s use of the roof or Landlord’s
scaffolding, window washing equipment, or other Landlord equipment. Tenant
shall maintain commercial general liability insurance covering risks of bodily
injury, death or property damage arising directly or indirectly out of the
Building Top Signage and Monument Signage or Tenant’s installation, maintenance
or other activities in connection therewith, including but not limited to,
Tenant’s use of the roof or scaffolding or other equipment, as set forth in
Article 10 of the Lease.  Tenant
shall provide a certificate of such insurance to Landlord prior to commencing
the installation work for the Building Top Signage and Monument Signage, and
such insurance policy shall not be cancelable without at least fifteen (15)
days’ written notice to Landlord. Except to the extent arising out of the
negligence or willful misconduct of Landlord, its agents and employees,
Landlord shall not be responsible for the Building Top Signage or Monument
Signage in the event of loss or damage thereto from any cause whatsoever.  Tenant, on behalf of its insurers, hereby
waives any rights of subrogation against Landlord and any persons and entities
comprising Landlord’s Group.

 

9.                                       Landlord shall
have the right to use photographs of the Building, including the Buildings Top
Signage and Monument Signage, in Landlords brochures and or other materials
without compensation to Tenant.

 

10.                                 Upon the
earlier of termination of the Lease or the termination of Tenant’s sign rights
hereunder, by expiration of the Lease or otherwise, Tenant shall (and may at
any time during the Lease Term upon three (3) months’ prior written notice)
disconnect and remove the Building Top Signage and Monument Signage and, to the
extent reasonably practical, repair and restore the building and monuments.
Tenant shall promptly and properly repair (or at Landlord’s

 

G-2

 

option, pay Landlord’s reasonable charges
for repairing) during the Lease Term and upon termination of the Lease or the
sign rights hereunder, any roof leaks or other damage or injury to the roof, or
the Building (or any portion thereof, contents thereof or equipment associated
therewith) caused by the Building Top Signage and Monument Signage or their
installation, use, maintenance or removal, except to the extent arising out of
the negligence or willful misconduct of Landlord, its agents or employees.  If Tenant does not commence to repair any
such leaks, damage or injury, or does not commence to remove (after Tenant’s
sign rights hereunder have terminated) the Building Top Signage and Monument
Signage within seven (7) business days after written request, or if Tenant does
not thereafter proceed to diligently complete such work, Tenant hereby
authorizes Landlord to make such repairs or remove the Building Top Signage and
Monument Signage, and Tenant shall promptly pay Landlord’s reasonable charges
for doing so as Additional Rent.  With
respect to any property so removed by Landlord, Landlord shall comply with
applicable law.

 

11.                                 Tenant may
not assign, sublease, or otherwise transfer such Signage rights to any third
party or transferee or change the name on any of the Building Top Signage or
Monument Signage without the prior written consent of the Landlord, which
consent shall not be unreasonably withheld if the transaction is a permitted
Non-Transfer with an Affiliate of Tenant; in the event of any other transaction
(including a permitted Non-Transfer transaction with an entity not affiliated
with Tenant), Landlord’s consent may be withheld in its sole and absolute
discretion.  In the event Landlord is
subject to a reasonability standard, the parties agree that it shall be reasonable
for Landlord to withhold consent to any transfer or name change where one or
more of the following apply, without limitation as to other reasonable grounds
for withholding consent:

 

(a)                                  The
transfer or name change may have a materially greater detrimental effect on the
Building, its reputation, value, quality or prestige than the Signage existing
on the Building prior to such name change or transfer; or

 

(b)                                 The
transfer is not permitted pursuant to another lease in the Building.

 

In the event of any change of name on any
of the Building Top Signage or Monument Signage: even if Landlord would
otherwise be subject to a reasonability standard, Landlord’s consent to use of
the word “Center” or any other word when used in a manner implying that the
Building is taking on the name of the transferee shall be subject to Landlord’s
sole and absolute discretion.

 

Not withstanding anything to the
contrary in the Lease or this Exhibit G, Tenant’s Building Top Signage rights
and the Signage restrictions on Landlord (contained in Section 23.4 of the
Lease) shall automatically terminate under the following circumstances:

 

(i)                                     Tenant
(or its assignee or sublessee to whom Tenant’s sign rights have been validly
transferred under this Exhibit G) fails, in the aggregate, to occupy at least
three (3) full floors of the Premises, (ii) Tenant (or its assignee or
sublessee to whom Tenant’s sign rights have been validly transferred under this
Exhibit G) fails to maintain the Premises as its world headquarters or (iii)
Tenant (or its assignee or sublessee to whom Tenant’s sign rights have been
validly transferred under this Exhibit G) fails, in the aggregate, to occupy at
least four (4) full floors of the Premises and another tenant in the Building
at such time or any time thereafter occupies (pursuant to a direct lease or a
sublease) more rentable square footage in the Building than Tenant occupies.

 

	
  Landlord

  	
   

  	
  Tenant

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  initials

  	
   

  	
  pp

  	
   

  	
  initials

  	
   

  	
  ck

  	
   

  
	
   

  	
   

  	
  qm

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

12.                                 Except as
expressly set forth in the Lease, including the Tenant Work Letter, or this
Exhibit G, Tenant shall pay all costs directly or indirectly related to the
Building Top Signage and Monument Signage, including, but not limited to their
design, installation, maintenance, replacement, lighting and removal, and
except as expressly set forth in the Lease, including the Tenant Work Letter,
or this Exhibit shall reimburse Landlord for any costs reasonably incurred by
Landlord that Landlord would not have incurred but for Tenant’s exercise of its
rights with respect to the Building Top Signage and Monument Signage.

 

G-3

 

EXHIBIT H

 

HVAC SPECIFICATIONS

 

	
  OUTSIDE
  DESIGN CONDITIONS:

  	
   

  	
  DRY BULB

  	
   

  	
  WET BULB

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Summer
  Outside Air Temperature

  	
   

  	
  95

  	
   

  	
  72

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Winter
  Outside @r Temperature

  	
   

  	
  55

  	
   

  	
  50

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  COOLING
  INSIDE DESIGN CONDITIONS:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Inside
  Temperature (Offices)

  	
   

  	
  73

  	
   

  	
  N/A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Inside
  Temperature (Lobbies)

  	
   

  	
  75

  	
   

  	
  N/A

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  HEATING
  INSIDE DESIGN CONDITIONS:

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Inside
  Temperature (Offices)

  	
   

  	
  73

  	
   

  	
  N/A

  	
   

  
	
  Inside
  Temperature (Lobbies)

  	
   

  	
  73

  	
   

  	
  N/A

  	
   

  

 

H-1

 

	
  {CB LETTERHEAD}

  	
  EXHIBIT I

  	
  {LOGO}

  

 

NORTHROP PLAZA

1800 CENTURY PARK EAST

LOS ANGELES, CALIFORNIA  90067

 

JANITORIAL SPECIFICATIONS

 

I.                                         SCOPE

 

A.                                   COVERAGE

 

The Contractor shall perform the following
specified services throughout the entire premises, including but not limited to
all office space, lobbies, corridors, plaza area, roof areas, stairways,
restrooms, passageways, service and utility areas, elevator cabs, computer
rooms and private restrooms, as requested by Owner.

 

B.                                     QUALITY

 

The intent of this specification is that
the Contractor will provide cleaning services of a character customarily
provided in first class office buildings whether such services are included in
the specifications or are special services required by the Owner or a tenant of
the Owner and that the building be kept neat and clean at all times.  Owner shall be sole judge of said quality and
required frequency of services to be provided. 
These minimum specifications should, therefore, be referred to as a
guide for, rather than a limitation to, the services required to effectively
maintain the building.  The building is
to be staffed to maintain an optimum condition of cleanliness.  If the level of cleaning at any time is
considered to be unacceptable to Owner, then the Contractor will be required to
overcome this unacceptable situation and any additional cost resulting from
actions so taken shall be borne by the Contractor.

 

II.                                     GENERAL

 

A.                                   SCHEDULE

 

All nightly cleaning services shall be
performed five nights per week, Sunday through Thursday (except as stated
below).  Required make up work will be
performed on Saturdays, Sundays or legal holidays, if so directed by
Owner.  Nightly cleaning operations will
begin at 5:30 p.m.  This
schedule may be adjusted by Owner to meet requirements by tenants.

 

B.                                     SUPERVISION

 

1.                                       Contractor
shall employ competent supervisory personnel, and place in the building one a
qualified foreman who will be capable of, and will provide, all reports
required by Owner and will have the authority to immediately execute orders
given by Owner’s representatives.

 

1

 

2.                                       The foreman
shall not leave the premises until all work is completed each night.

 

In addition to the supervision of all
cleaning services, Contractor’s supervisory staff will be responsible for the
following:

 

a.                                       Instruct
personnel and ensure their compliance in shutting off all lighting as soon as
possible each night.

 

b.                                      Instruct
janitorial personnel and assure their compliance in securing all suite
entrances and building entrances in conjunction with the building security
staff.

 

c.                                       Immediate
transmittal of all accident and/or damage reports to the security staff.

 

d.                                      Become
familiar with the emergency, fire and disaster plans for the building.

 

e.                                       Comply with
and assist the building security staff in enforcing the security plan relating
to the activities of the janitorial crew.

 

f.                                         Be
available on request by the Owner during the normal hours of the building to
visit with any tenant to answer complaints of any nature relating to the
janitorial staff.

 

g.                                      Turn in all
“Lost and Found” items to the Office of the Building.

 

3.                                       In addition
to the foreman assigned to the direct supervision of the janitorial crew,
Contractor shall maintain and show evidence of an adequate management level
supervisory staff who shall make periodic scheduled and unscheduled visits to
the building, both during the normal business hours and when the nightly
janitorial services are being performed. 
The purpose of these visits is to insure the maintenance of an optimum
level of cleanliness.

 

C.                                     STAFFING
AND BACK-UP STAFF REQUIREMENTS

 

1.                                       Normal
Working Staff

 

a.                                       Staffing
shall be sufficient to perform the necessary work to maintain the optimum level
of cleanliness as set forth in these specifications (see Section III E).

 

b.                                      Staffing
shall be increased as required to accomplish any periodic maintenance herein
specified without decreasing the nightly janitorial services.  All costs for such increased staffing are
considered to be included in the initial bid submittal.  No allowances will be granted to compensate
for extra personnel required to adequately perform any portion of the work
included in this specification.

 

2

 

MISSING HARDCOPY FOR FOLIO (3)

 

3

 

F.                                      UNIFORMS
AND EQUIPMENT

 

Contractor shall furnish proper cleaning
materials, implements, machinery, supplies and uniforms for the satisfactory
performance of all services.  All
Contractor personnel shall be properly uniformed and display identification of
the Contractor and/or such additional identification badges as the Owner may
specify, at all times.  Owner shall have
the right to select and/or approve uniforms worn by personnel in the
building.  Day personnel shall have at
least five uniform changes per week. 
Night personnel shall have at least three uniform changes per week.  The Contractor shall supply all equipment,
appliances and supplies of every description unless stated otherwise in this
specification.  Cart equipment shall be
approved by Owner.

 

G.                                     INSPECTION

 

At Owner’s direction and in the company of
Owner’s appointed representative, monthly inspections of the premises serviced
hereunder shall be made by the Contractor’s field executive manager with
thorough written reports submitted no more than ten calendar days later.

 

H.                                    RULES

 

Contractor shall at all times maintain good
order among its employees and shall insure compliance with building rules and
regulations, copies of which will be provided by the Owner’s representative
from time-to-time.

 

I.                                         SECURITY

 

While cleaning the building, Contractor’s
personnel will not admit anyone into an area except those authorized by
Contractor or Owner personnel, or employees having keys to the area and proper
identification.  On completion of nightly
chores, all lights will be turned off, doors locked, blinds closed, and offices
left in a neat and orderly condition. 
Contractor and Contractor’s personnel shall abide by all security
regulations of the Owner transmitted by Owner to the Contractor, either orally
or in writing.  The Building Manager will
be promptly notified of any irregularities.

 

J.                                        SAFETY

 

Contractor shall insure that its agents,
employees and operation conform to all Federal, State and Municipal Safety and
Health Regulations (OSHA) and shall assume full responsibility for any
violations and/or non-compliance with such regulations.

 

Contractor shall insure that all of its
employees and or agents shall abide by all safety rules and regulations which
may be promulgated from time-to-time by either party as they pertain to the
Contractor’s operations.

 

4

 

IV.                                 STANDARDS

 

The following standards shall be used in
evaluating custodial services.

 

A.                                   DUSTING - A
properly dusted surface is free of all dirt and dust streaks, lint, cobwebs and
residue (“oily film”).

 

B.                                     PLUMBING
FIXTURE AND DISPENSERS CLEANING - Plumbing fixtures and dispensers are clean
when free of all deposits and stains so that item is left without dust streaks,
film, odor or stains.

 

C.                                     SWEEPING -
A properly swept floor is free of all loose dirt, dust, lint and debris, except
imbedded dirt and grit.

 

D.                                    SPOT-CLEANING
- A surface adequately spot-cleaned is free of all stains, deposits and is
substantially free of cleaning marks.

 

E.                                      DAMP
MOPPING - A satisfactorily damp mopped floor is without dirt, dust, marks,
film, streaks or standing water.

 

F.                                      METAL
CLEANING -  All cleaned metal surfaces
are without deposits or tarnish, and with a uniformly bright appearance.  Cleaner is removed from adjacent surface.

 

G.                                     GLASS
CLEANING - Glass is clean when all glass surfaces are without streaks, film,
deposits and stains, and have a uniformly bright appearance and adjacent
surfaces have been wiped clean.

 

H.                                    WAX REMOVAL
(STRIPPING) - Wax removal is accomplished when surfaces have all wax removed
down to the flooring material, floor is left free of all dirt, stains,
deposits, debris, cleaning solution and standing water and the floor has a
uniform appearance when dry.  Plain water
rinse and pick-up must follow wax removal operation immediately.

 

I.                                         SCRUBBING -
Scrubbing is satisfactorily performed when all surfaces are without imbedded
dirt, cleaning solution, film, debris, stains, marks and standing water, and
floor has a uniformly clean appearance. A plain water rinse must follow the
scrubbing process immediately.

 

J.                                        WALL
WASHING - After cleaning, the surfaces of all walls, ceilings, exposed pipes
and equipment will have a uniformly clean appearance, free of dirt, stains,
streaks, lint and cleaning marks. 
Painted surfaces must not be unduly damaged.  Hard finish wainscot or glazed ceramic tile
surfaces must be bright, free of film, streaks and deposits.

 

K.                                    WAXED
SURFACES - Manager shall determine type of floor finish to be used where
necessary.

 

L.                                      CARPET
CLEANING - Periodic cleaning of carpets shall be accomplished by steam cleaning
or any other method now in use, or which may be developed in the future as
directed by Owner.

 

5

 

V.                                     INSURANCE
REQUIREMENTS

 

A.                                   Contractor
shall, at Contractor’s expense, obtain and keep in force during the term of his
contract, a policy of Comprehensive General Liability (Bodily Injury and
Property Damage) Insurance of $1,000,000 umbrella, insuring Contractor and the
Owner against any liability arising out of the maintenance of the premises and
all areas appurtenant thereto.  Such
insurance shall be in an amount not less than $1,000,000 Combined Single
Limit.  The limits of said insurance
shall not, however, limit the liability of the Contractor hereunder.

 

B.                                     INSURANCE
CERTIFICATES - Contractor shall deliver to Building Office certificates
evidencing the existence and amounts of such insurance with Owner being named
as additional insured.  No such policy
shall be cancellable or subject to reduction of coverage or other modification
except after thirty (30) days prior written notice to Owner and Owner’s
agent.  Contractor shall within ten (10)
days prior to the expiration of such policies furnish Owner with renewals or
binders thereof.  The Contractor shall
not do or permit to be done anything which shall invalidate the insurance
policies.

 

C.                                     WORKERS
COMPENSATION - The Contractor will maintain statutory limits of Workers
Compensation Insurance covering his employees for injuries arising out of and
in the course of their employment. 
Contractor shall provide Owner with copies of said policy or a
certificate of insurance.  No such policy
shall be cancellable except after thirty (30) days prior written notice to
Owner.

 

VI.                                 INDEMNIFICATION

 

The Contractor shall indemnify and hold
harmless the Owner, its agents, servants, and employees from and against all
losses, claims, demands, payments, suits, actions, recoveries, and judgments of
every nature and description brought or recoverable against it or them by
reason of any act or omission of the Contractor, his agents, or employees in the
execution of the work or in consequence of any negligence or carelessness in
guarding the same.

 

The Contractor shall assume all risk and
bear any loss or injury to property or persons occasioned by neglect or
accident during the progress of work until the same shall have been completed
and accepted.  He shall also assume all
blame or loss by reason of neglect or violation of any state or federal law or
municipal rule, regulation or order.  The
Contractor shall give to the proper authorities all required notices relating
to the work, obtaining all official permits and licenses and pay all proper
fees.  He shall make good any injury that
may have occurred to any adjoining buildings, structures, or utilities in
consequence of the work.

 

6

 

VII.                             RATES FOR
HOURLY SERVICE

 

On Exhibit “A”, “B” and “C” Contractor is
to propose wage rates, other costs and hourly billing rates.

 

1.                                       Wage rates
are to be proposed by Contractor, based on Contractor’s labor market knowledge
for current wage and estimates, through December 31, 1990.

2.                                       Payroll
taxes, Workers’ Compensation, an Contractor’s insurance are to be shown as a
cost per hour.

3.                                       Uniform
costs per hour are to be shown. Contractor will not make uniform cleaning, mending,
and replacement an employee responsibility under any circumstances.

4.                                       Employee
benefits provided by the Contractor for its employees are to be shown as a cost
per hour. Contractor must attach full support to justify all cost shown; for
example, if Contractor provides medical insurance, give details of coverage,
deductible amounts, and exclusions, etc.

5.                                       Overhead,
expressed as a cost per hour, is to include all items not charged above but
which are required to fully accomplish all requirements of these
specifications. Examples include field supervision costs; personnel,
accounting, and administrative costs; and general overhead.

6.                                       Contractor’s
profit.

 

VIII.                         VACATION
COST

 

Hourly vacation costs are to be included in
the Employee Benefits section of Exhibit “A” as a separate item.

 

IX.                                INVOICING

 

Contractor shall invoice Manager monthly
for the cost of janitorial services in the preceding calendar month. The
monthly invoice shall be rendered by Contractor no later than the 10th day of
the following month. Payment shall be made by Manager within thirty (30) days
of receipt of invoice. Contractor shall attach as support for the invoice daily
hours worked, the hours attributable to each post, and the total Contractor
hours each day.

 

X.                                    RECORDS

 

Contractor shall retain in his corporate
office, personnel records of each employee assigned to the Project. Such
records shall be made available to Owner and/or Manager or its authorized agent
upon reasonable notice for audit purposes.

 

7

 

1800 Building Specs

Floors 2 through 15

General Services

January 18,1989

 

SPECIFICATION SHEET #1

 

NIGHTLY SERVICES

 

A.                                   Secure all
entry doors from suite to corridor upon entering suite.

 

b.                                      Secure all
lights and drapes as soon as possible each night.

 

c.                                       ALL
UNCARPETED FLOORS - All tile and composition floors, will be dust mopped, using
a treated mop to remove dirt, then wet mopped and dried.

 

d.                                      ALL
CARPETED FLOORS - Will be vacuumed nightly. Vacuuming includes detailing and
moving of small furniture. Vacuuming will be performed with a Eureka 16” #899
vacuum, or comparable machine.

 

e.                                       WOOD FLOORS
- Dust mop all wood floors.

 

f.                                         DOORS AND
WALLS - Remove finger prints, dirt smudges, graffiti, etc., from all doors,
frames, glass partitions/doors, windows, light switches and walls.

 

g.                                      DUSTING -
Using a treated dust cloth, wipe all furniture tops, legs and sides. Move
lamps, ash trays and other accessories. Papers and folders on desks are to be
handled with extreme care.

 

h.                                      WASTE PAPER
BASKETS - Empty all waste paper baskets and other trash containers and replace
liners, wet wipe clean inside and out.

 

i.                                          Return all
chairs, desk accessories and waste baskets to proper positions.

 

j.                                          TELEPHONES
- Sanitize all telephone receivers.

 

k.                                       ASH TRAYS
AND ASH URNS - Empty all ash trays and ash urns. Clean and sanitize inside and
out.

 

l.                                          TRASH
REMOVAL - All trash from wastebaskets, ashtrays, and other debris will be
removed from the premises and deposited in the trash bins. Break down all boxes
before placing in the dumpster or trash compactor.

 

m.                                    DRINKING
FOUNTAINS - Clean and sanitize drinking fountains by washing with mild soap
solution and clean cloths and carefully rinsing with clean water and wiping dry
with soft clean cloths.

 

n.                                      MISCELLANEOUS
METAL WORK - All metal work will be wiped down and polished and left in a
bright condition free of dust and streaks.

 

8

 

o.                                      DOORS AND
JAMBS - All doors and jambs will be spot-cleaned to remove any dirt, debris,
gum and stains. Door edges and jambs will be dusted where necessary. When
completed, doors and jambs shall have a uniformly clean appearance.

 

p.                                      LIGHTS AND
LEAKS - Check for burned out lights and water leaks (kitchens, private rest
rooms, etc.) and report them to Supervisor. Janitorial Supervisor to leave a
list of burned out lights and water leaks in the Janitor’s log, located in
Building Office, on a nightly basis.

 

q.                                      COFFEE
STATIONS - floor/counter tops - spot clean/damp mop.

 

r.                                         FIRE HOSE
CABINETS - Police fire hose cabinets.

 

s.                                       ELEVATOR
EXTERIORS - Damp wipe/dust exterior elevator door and door frames.

 

t.                                         SIDE LIGHTS
- Spot clean all side lights in corridors.

 

WEEKLY SERVICES

 

a.                                       DUSTING -
Dust all LOW REACH areas including, but not limited to structural and furniture
ledges, base boards/carpet cove caps, window sills, door louvers, wood
paneling/molding in elevator lobbies, desks, credenzas, shelves and tables.

 

b.                                      MISCELLANEOUS
METALWORK - All metalwork, such as mail chutes, door hardware, frames and
elevator thresholds will be wiped clean and polished and left in a bright
condition.

 

c.                                       CARPETED
FLOORS - All carpeted areas are to be vacuumed and edged with a small broom or
edging tool, moving all sand urns, furniture and accessories.

 

d.                                      UNCARPETED
FLOORS - All building STANDARD resilient and/or composition flooring are to be
mopped with a treated dust mop. Spot-clean where necessary to remove all spills
and smudges and spray buff.

 

e.                                       INTERIOR
STAIRWELLS - Vacuum the interior of all stairwells. Wet wipe with treated cloth
interior stair railings, wood strips, trims, ledges, etc

 

MONTHLY SERVICES

 

a.                                       HIGH
DUSTING - Dust/remove dirt smudges from all HIGH REACH areas including, but not
limited to tops of doors, door closers, structural and furniture ledges, air
conditioner and light diffusers, return grills, tops of partitions, picture
frames, library shelves, wood paneling/molding in elevator lobbies, etc.

 

b.                                      FURNITURE -
Vacuum upholstered chairs and sofas as well as lampshades with appropriate
attachment.

 

9

 

MISSING HARDCOPY FOR FOLIO (11)

 

10

 

f.                                         TRASH -
Rest room trash to be removed to designated area. All waste receptacles are to
be thoroughly cleaned and washed inside and out and new liners installed.

 

g.                                      WALLS -
Spot clean finger prints, marks and graffiti from walls, partitions, glass,
aluminum and light switches.

 

h.                                      CARPETED
ENTRIES - Vacuum and spot clean all entry carpets.

 

i.                                          Note any water
leaks nightly and report them to the Building Office (flush valves, base of
toilets, aerators/faucet, pipes, etc.).

 

j.                                          FLOOR
DRAINS - Pour clean water down floor drains to prevent sewer gas from escaping
through trap.

 

k.                                       ENTRY DOORS
- Wipe clean door handles, push plates, kick plates, Mens and Womens door signs
and door vent grills. 

 

WEEKLY SERVICES

 

a.                                       DUSTING -
Dust and wet wipe all low reach and high reach areas including, but not limited
to structural ledges, mirror tops, partition tops and edges, air conditioning
diffusers and return air grills, protection around pipes under sinks and light
fixtures.

 

b.                                      TILE FLOORS
- All restroom floors including drains will be machine scrubbed, using a
germicidal solution, detergent and water. After scrubbing, floors will be
rinsed with clear water and dried. All water marks will be removed from walls,
partitions and fixtures. Floor finish will be applied and buffed.

 

c.                                       TOILET
PARTITIONS - Damp wipe all metal toilet partitions and tiled walls, using
approved germicidal solution. All surfaces are to be wiped dry so that all wipe
marks are removed and surface has a uniformly bright appearance.

 

MONTHLY SERVICES

 

a.                                       METAL
FIXTURES - Use scrub brush and cleaning solution (appropriate for stainless
steel) on metal soap dispensers and containers underneath towel holder and
remove build up of soap and paper towel lint/fibers.

 

b.                                      DOORS - Wet
wipe/dust all doors, door jambs and door closers.

 

SEMI ANNUAL SERVICES

 

a.                                       Light
fixtures - Remove light lenses wash throughly, dry and replace.

 

11

 

PASSENGER ELEVATOR LOBBIES

 

NIGHTLY SERVICES

 

a.                                       CARPETS -
All carpets will be vacuumed and spot-cleaned nightly, using particular care to
clean in corners and along edges.

 

b.                                      ASH URNS -
Empty ash urns and wet wipe exterior. Replace unclean sand and wet wipe
interior.

 

c.                                       EXIT SIGNS
- Wipe/clean all exit signs.

 

d.                                      DUSTING -
Dust all evacuation signs, wood paneling and moldings.

 

e.                                       ELEVATORS -
Wet wipe elevator doors, frames and call buttons (water only) leaving free of
streaks.

 

FREIGHT ELEVATOR LOBBIES (EVERY FLOOR)

 

NIGHTLY SERVICES

 

a.                                       FLOORS -
Wet mop including detailing corners, behind doors and removing all spills and
stains on flooring.

 

b.                                      ELEVATOR -
Spot clean and wet wipe elevator doors and frames. Clean elevator cab and
individual elevator thresholds.

 

c.                                       ELEVATOR
FLOOR AND WALLS - Sweep/wet mop cab flooring and wipe down walls.

 

d.                                      ELEVATOR
DOORS - Wet wipe both sides of doors in each elevator landing and door
thresholds.

 

e.                                       ASH URNS -
empty ash urns and wet wipe exterior. Replace and when unclean and wet wipe
interior.

 

MONTHLY SERVICES

 

a.                                       ELEVATOR
FLOORS - Wax and buff floors.

 

12

 

PASSENGER ELEVATOR CLEANING (SIX ELEVATORS)

 

NIGHTLY SERVICES

 

a.                                       ELEVATOR
DOORS - Using ONLY approved method and/or products, spot clean interior and
exterior surfaces of elevators, doors, including door frames, jambs and
elevator tracks.

 

b.                                      CARPETS -
Spot clean elevator cab floor carpeting. Vacuum and thoroughly edge all cab
floor carpeting.

 

c.                                       ELEVATOR
THRESHOLDS - Vacuum and/or clean all debris from elevator thresholds.

 

d.                                      LIGHT AND
CEILING FIXTURES - Wipe/dust cab light lenses and ceiling panels.

 

e.                                       WOOD - Wipe
down wood with approved product.

 

f.                                         ELEVATOR
BUTTONS - Report any/all cab hall button lights out/malfunctions.

 

BI-WEEKLY SERVICES

 

a.                                       ELEVATOR
THRESHOLDS - Will be throughly cleaned (may need to use stiff brush) to remove
all dirt and debris from tracks. Polish all elevator thresholds leave in a
bright condition free of all dust and streaks.

 

b.                                      Wipe clean
all cab lamps.

 

c.                                       Wipe clean
entire cab ceiling fixtures.

 

MONTHLY SERVICES

 

a.                                       clean
elevator exhaust vents.

 

NIGHTLY SERVICES

 

a.                                       TRASH -
Place all building trash and debris into dumpsters located in the Loading Dock
service area. Fill dumpsters to water level only. For all excess trash
(overflow) use the trash compactor at the loading dock. Clean around compactor
after use.

 

13

 

JANITORS STORAGE ROOM AND JANITORS CLOSETS

 

NIGHTLY SERVICES

 

a.                                       All trash
and debris will be removed from these areas.

 

b.                                      Spot clean
walls, doors and frames with disinfectant cleaner.

 

c.                                       Scrub all
sinks and floors with disinfectant cleaners.

 

d.                                      Maintain
orderly arrangement of all janitorial supplies and paper products.

 

e.                                       All
janitorial cleaning equipment and implements are to be cleaned thoroughly
before storing.

 

f.                                         Sweep and
mop clean floor (with disinfectant solution) spot clean walls-corridor (mezzanine).

 

BI-MONTHLY SERVICES

 

a.                                       High
dusting of these areas including any exposed pipes, ducts, vents and grills.

 

14

 

1800 Building specs

Common areas

Specification Sheet #2

 

TRASH AREA, FREIGHT ELEVATOR SERVICE
ENTRANCE BRICK WALKWAY EAST ALLEY

 

NIGHTLY SERVICES

 

a.                                       SWEEPING -
Sweep all areas.

 

b.                                      FLOORS -
Mop and deoderize entire trash and service area (use clean water and a
disinfectant cleaning solution).

 

c.                                       WALLS - All
walls will be spot cleaned to remove all smudges. stains. and handmarks, using
only clean water and a disinfectant cleaning solution.

 

d.                                      FREIGHT
ELEVATOR - Spot clean freight elevator doors and frames in freight trash and
service area, using only clean water and a disinfectant cleaning solution.

 

e.                                       FREIGHT
ELEVATOR THRESHOLDS - Clean freight elevator thresholds (both sides) removing
all dirt and stains and all debris removed from door tracks, using vacuum and
edging tool.

 

WEEKLY SERVICES

 

a.                                       TRASH
DUMPSTER - Check dumpster and make sure it is clean - rinse out.

 

FLOOR AND WALKWAY - Degrease floor and
walkway removing all dirt and stains.

 

ROLLING DOOR - Wet wipe both sides of
rolling door and the casing above.

 

MONTHLY SERVICES

 

a.                                       PRESSURE
CLEAN - Pressure clean freight elevator service area, concrete curb and brick
walkway.

 

b.                                      WALLS -
Wash completely with disinfectant solution in freight elevator services/trash
area.

 

c.                                       LIGHT
LENSES - Wash thoroughly, dry and replace.

 

d.                                      DUSTING -
Dust all high and low reach areas.

 

15

 

P-1 LOBBY

 

NIGHTLY SERVICES

 

a.                                       FLOOR -
Vacuum carpet and spot clean brick flooring.

 

b.                                      ELEVATORS -
Damp wipe (warm water only) with clean cloth exterior elevator doors and
frames. Clean elevator thresholds with vacuum or stiff scrub brush to remove
debris and stains.

 

c.                                       ASH URNS -
Empty and wet wipe inside and out ash trays and trash cans and replace trash
can liners.

 

d.                                      FURNITURE -
Dust furniture, ledges and counter areas.

 

e.                                       CASHIER’S
BOOTH - Clean and vacuum Cashier’s booth, spot clean Cashier’s booth carpet and
sanitize booth telephone. Squeege glass both sides.

 

f.                                         WALLS -
Spot clean walls with approved products and/or method and damp wipe hallcall
button panels.

 

g.                                      ELEVATOR
DOORS - Spot clean botton portion of P-1 elevator doors make sure when P-1
lobby is waxed to remove any excess wax from doors - do not allow buildup.

 

h.                                      NOMAD MAT -
Shake nomad mat (roll up while cleaning area) at Valet parking entrance.

 

i.                                          CONCRETE -
Remove and spot clean concrete around mat area - then replace mat.

 

k.                                       GLASS DOORS
- Spot/clean glass doors, glass partition and aluminum frame (both sides) at
North end of elevator lobby.

 

l.                                          CONCRETE -
Clean concrete side of P-1 lobby - 6 feet and length of core.

 

m.                                    CONCRETE -
Sweep and spot clean concrete around area where parking attendants wait.

 

WEEKLY SERVICE 

 

a.                                       DOORS -
Wipe core doors and frames.

 

b.                                      FLOORS -
Buff floors - spray wax.

 

c.                                       NOMAD MATS
- Hose down nomad mats.

 

d.                                      GLASS DOORS
- Clean all glass (doors and partitions) both sides including aluminum frame at
north end of elevator lobby.

 

16

 

QUARTERLY SERVICE

 

a.                                       FLOORS -
Scrub and rewax P-1 lobby floors with machine.

 

P-1 PARKING ATTENDANTS LOCKER ROOM AREA

 

NIGHTLY SERVICE

 

a.                                       Vacuum
carpet.

 

b.                                      Dust door
and frame and spot clean walls.

 

c.                                       Empty trash
wet wipe trash cans inside and out - replace trash liners.

 

d.                                      Wipe down
counters and ledges.

 

PARKING ATTENDANTS REST ROOM

 

NIGHTLY SERVICES

 

a.                                       Stock rest
room with paper supplies and soap.

 

b.                                      Wash and
scrub rest room floors with disinfectant cleaning solution.

 

c.                                       Wash rest
room partition with disinfectant cleaning solution. Wash and sanitize sink and
toilet with disinfectant cleaner.

 

d.                                      Empty all
trash, wet wipe trash cans both inside and out and replace liners.

 

e.                                       Clean
mirror. Put water down drain.

 

f.                                         Spot clean
walls and around switch plates.

 

g.                                      Sweep
concrete area outside rest room. Clean threshold with vacuum or stiff scrub
brush to remove debris.

 

h.                                      Report all
broken fixtures (water leaks, burned out lights, etc.) to Building Office via
janitorial log book.

 

WEEKLY SERVICES

 

a.                                       Wet wipe
all ledges.

 

b.                                      Clean
exhaust vent.

 

c.                                       Wash down
door (both sides). 

 

d.                                      Sweep and
wet mop concrete area outside of rest room.

 

17

 

MONTHLY SERVICES

 

a.                                       Seal floor
with scuff and stain resistant sealer.

 

b.                                      Clean light
lenses.

 

P-2 & P-3 ELEVATOR LOBBIES

 

NIGHTLY SERVICES

 

a.                                       LOBBY
CARPET - Vacuum carpeted areas.

 

b.                                      ELEVATORS -
Clean elevator thresholds, wipe all doors both sides.

 

c.                                       DUSTING -
Dust all exit signs, hallcall buttons and base coves.

 

d.                                      ASH/TRASH
CANS - Empty ash/trash cans and wipe inside and out.

 

e.                                       WOOD WALLS
- Wipe with clean cloth using Mohawk Woodwash the wood walls.

 

f.                                         LOBBY
FLOORS - Sweep 10 X 25 concrete area each side of carpet.  Spot clean concrete in 10 X 25 concrete area.

 

WEEKLY SERVICES

 

a.                                       EDGES - Wet
wipe rubber edges on carpet.

 

b.                                      LOBBY FLOOR
- Wash 10 X 25 concrete area each side of carpet.

 

c.                                       DOORS - Wet
wipe core doors (both sides) and frames, stairwell doors, parking attendants
access/exit doors.

 

18

 

IV.                                 GROUND
FLOOR LOBBY/ENTRY PLAZA

 

A.                                   NIGHTLY
SERVICES

 

a.                                       MAIN LOBBY
- Brick floor shall be dust mopped, using a treated mop to remove all loose
dirt and grit, and then damp mopped with clear water and dried.  All spills and stains will be removed.  All mop marks and water splashes will be
removed from walls and basesboards.

 

b.                                      LOBBY GLASS
- All glass windows, doors and directory board glass will be wiped clean, using
an approved glass cleaner, and all glass will be left in a bright condition,
free of streaks and dust.

 

c.                                       MISCELLANEOUS
METALWORK - All metalwork, such as door handles and thresholds/kick plates,
etc., will be wiped clean and polished and left in a bright condition, free of
all dust and streaks. 

 

d.                                      ELEVATOR
DOORS AND SADDLES - Elevator doors will be wiped down and polished and left in
a bright condition free of all dust and streaks. Elevator saddles will be wiped
clean and all dirt and debris removed from door tracks, using vacuum crevice
tool.  Spills and smudges will be removed
so that the saddles and tracks are left in a bright, clean condition.

 

e.                                       CIGARETTE
URNS - Clean all cigarette urns, wet wipe clean inside and out, removing all
butts and debris and replace sand as necessary. Materials to be furnished by
Contractor.

 

f.                                         ATM MACHINE
-Damp wipe Wells Fargo ATM Machine area - glass and frame.

 

g.                                      DUSTING -
Dust all low reach areas including furniture, ledges, vases, etc.

 

h.                                      LIGHTS -
Report any light out in ground floor lobby and front and back entrances.

 

i.                                          MISCELLANOUS
CLEANING - Clean mail chute/boxes, lock box, light lenses, hallcall buttons,
directory board glass and ledges.  Damp
wipe lobby security counter top and top of file cabinets.  Clean public telephone with treated cloth,
damp wipe (disinfect) telephone receivers.

 

j.                                          CLEANING OF
MAILROOM - Dust mop and spot clean mail room. 
Wipe with treated cloth mail room doors, (both sides).

 

k.                                       TRASH
DISPOSAL - Empty security trash and trash container by public telephones.
Replace trash liners, wet wipe both inside and out.

 

19

 

B.                                     WEEKLY
SERVICES

 

a.                                       BRICK
FLOORS - Lobby floors will be machine buffed, using an electric rotary buffing
machine to obtain maximum shine, including mail room floor.

 

b.                                      HIGH
DUSTING - Dust all horizontal surfaces and ledges that are not accessible for
normal daily dusting, including lights.

 

c.                                       LOBBY GLASS
- Clean interior lobby glass, excluding Bank doors.

 

C.                                     MONTHLY
SERVICES

 

a.                                       LIGHT
LENSES - Clean ground floor light lenses.

 

b.                                      AIR
DIFFUSERS - Damp wipe ceiling air diffusers.

 

D.                                    QUARTERLY
SERVICES

 

a.                                       WALLS -
Walls in Ground Floor Lobby shall be vacuumed to remove lint and dust.

 

b.                                      AIR
DIFFUSERS AND LIGHT FIXTURES - All air diffusers shall be vacuumed with a brush
attachment to remove dust and lint. 
Light fixtures will be washed as tubes or bulbs are replaced by day
porter.

 

20

 

1800 NORTHROP PLAZA

1800 CENTURY PARK EAST

LOS ANGLES, CALIFORNIA  90067

 

	
  Company:

  	
   

  	
  Phone:

  	
   

  
	
   

  	
   

  
	
  Address: 

  	
   

  	
  City:

  	
   

  

 

	
  I.

  	
  BASE BID

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  A.

  	
  Cost per month to clean the interior of
  Building I.  Tenant floors 2 through
  15. Rentable Square Feet 220,929.  This
  excludes Wells Fargo Bank, Hamburger Hamlet, 12th floor gym, 12 floor
  kitchen. (Fill out Exhibit A)

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  B.

  	
  Cost per month to clean Common Areas:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Ground Lobby:

  	
   

  	
  1,445

  	
  Square Feet

  	
   

  
	
   

  	
   

  	
  Trash Area/Alley

  	
   

  	
  331

  	
  Square Feet

  	
   

  
	
   

  	
   

  	
  P1, P2, P3, Elevator Lobbies

  	
   

  	
  1,422

  	
  Square Feet

  	
   

  
	
   

  	
   

  	
  Freight Elevator/Cashier Booth

  	
   

  	
  187

  	
  Square Feet

  	
   

  
	
   

  	
   

  	
  P1 Restroom

  	
   

  	
  85

  	
  Square Feet

  	
   

  
	
   

  	
   

  	
  Security Room

  	
   

  	
  505

  	
  Square Feet

  	
   

  
	
   

  	
   

  	
  (Fill out Exhibit B)

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  C.

  	
  Amount per square foot to be deducted
  monthly from base bid for uncleaned areas:

  	
   

  	
   

  	
  $

  	
   

  

 

I hereby certify that the above bid
conforms with the specifications provided by Coldwell Banker Real Estate
Management Service and that these prices are firm through February 28,
1990.

 

	
  Date:

  	
   

  	
   

  	
  By:

  	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

21

 

COST BREAKDOWN

JANITORIAL SERVICE

 

	
  Building:

  	
   

  
	
  Bidder:

  	
   

  	
  Date:

  

 

	
  No.

  	
   

  	
  Job Classification

  	
   

  	
  Hours

  Week

  	
   

  	
  Hours

  Month

  	
   

  	
  Rate

  	
   

  	
  Monthly Cost

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Total Monthly Hours

  	
   

  	
  %

  	
   

  	
   

  	
   

  	
  Total Labor A.

  	
   

  	
  $

  	
   

  
	
  Vacations

  	
   

  	
  %

  	
   

  	
  of Labor A.

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  Sick Leave

  	
   

  	
  %

  	
   

  	
  of Labor A.

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  Payroll Taxes

  	
   

  	
  %

  	
   

  	
  of Labor A.

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  Insurance

  	
   

  	
  %

  	
   

  	
  of Labor A.

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  Uniforms

  	
   

  	
   

  	
   

  	
  Per month Labor A.

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Cost

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Supervision and
  Overhead

  	
   

  	
  %

  	
   

  	
  of Total Cost

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  Subtotal

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  Profit

  	
   

  	
  %

  	
   

  	
  of Total Cost

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Charges

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  

 

Exhibit A

 

22

 

COST BREAKDOWN

JANITORIAL SERVICE

 

	
  Building:

  	
   

  
	
  Bidder:

  	
   

  	
  Date:

  

 

	
  No.

  	
   

  	
  Job Classification

  	
   

  	
  Hours

  Week

  	
   

  	
  Hours

  Month

  	
   

  	
  Rate

  	
   

  	
  Monthly Cost

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

	
  Total Monthly Hours

  	
   

  	
  %

  	
   

  	
   

  	
   

  	
  Total Labor B.

  	
   

  	
  $

  	
   

  
	
  Vacations

  	
   

  	
  %

  	
   

  	
  of Labor B.

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  Sick Leave

  	
   

  	
  %

  	
   

  	
  of Labor B.

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  Payroll Taxes

  	
   

  	
  %

  	
   

  	
  of Labor B.

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  Insurance

  	
   

  	
  %

  	
   

  	
  of Labor B.

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  Uniforms

  	
   

  	
   

  	
   

  	
  Per month Labor B.

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Cost

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Supervision and
  Overhead

  	
   

  	
  %

  	
   

  	
  of Total Cost

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  Subtotal

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
  Profit

  	
   

  	
  %

  	
   

  	
  of Total Cost

  	
   

  	
   

  	
   

  	
  $

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total Charges

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  $

  	
   

  

 

Exhibit B

 

23

 

EXHIBIT J

 

INTENTIONALLY DELETED

 

J-1

 

EXHIBIT K

 

DETERMINATION OF RENTABLE SQUARE FEET

 

FOR PARTIAL FLOORS

 

	
  Floor

  	
   

  	
  Load Factor

  
	
   

  	
   

  	
   

  
	
  2nd Floor

  	
   

  	
  1.173 (multi-tenant)

  
	
  3rd Floor

  	
   

  	
  1.172 (multi-tenant)

  
	
  4th Floor

  	
   

  	
  1.177 (multi-tenant)

  
	
  5th Floor

  	
   

  	
  N/A (full floor)

  
	
  6th Floor

  	
   

  	
  N/A (full floor)

  
	
  7th Floor

  	
   

  	
  N/A (full floor)

  
	
  8th Floor

  	
   

  	
  1.184 (multi-tenant)

  
	
  9th Floor

  	
   

  	
  N/A (full floor)

  

 

K-1

 

EXHIBIT L 

 

1800 CENTURY PARK EAST

 

FORM OF MEMORANDUM OF LEASE

 

RECORDING REQUESTED BY

AND WHEN RECORDED RETURN TO:

 

Herbalife International of America, Inc.

c/o Allen, Matkins, Leck, Gamble &
Mallory

1999 Avenue of the Stars

Los Angeles, California  90067

Attention: 
Anton N. Natsis. Esq.

 

MEMORANDUM OF OFFICE LEASE

 

THIS MEMORANDUM OF OFFICE LEASE (this
“Memorandum”) is entered into as of the       day of
July, 1995, by and between STATE TEACHERS’ RETIREMENT SYSTEM, a retirement fund
created under the laws of the State of California (“Landlord”), and HERBALIFE
INTERNATIONAL OF AMERICA, INC., a California corporation (“Tenant”).

 

1.                                       TERMS AND
PREMISES.  Landlord leases to Tenant, and
Tenant leases from Landlord, certain premises (the “Premises”) to be located on
a portion of the real property (the “Property”) legally described on Exhibit
“A” attached hereto (including parking areas) pursuant to the provisions of
that certain Office Lease between the parties hereto, dated of even date (the
“Lease”).  The provisions of the lease
are incorporated herein.

 

2.                                       TERM.  The initial term of the Lease expires
January 21, 2006, unless earlier terminated as set forth in the
Lease.  Tenant also has two (2) options
to extend the Lease for a period of five (5) years each.

 

3.                                       PROVISIONS
BINDING ON PARTIES.  The provisions of
the Lease to be performed by Landlord or Tenant, whether affirmative or
negative in nature, are intended to and shall bind or benefit the respective
parties and their assigns or successors, as applicable, at all times.

 

L-1

 

5.                                       PURPOSE OF
MEMORANDUM OF LEASE.  This Memorandum is
prepared solely for purposes of recordation, and in no way modifies the
provisions of the Lease.

 

	
   

  	
  “Landlord”:

  
	
   

  	
   

  	
   

  
	
   

  	
  STATE TEACHERS’ RETIREMENT SYSTEM,

  
	
   

  	
  a retirement fund created under the laws
  of

  the State of California

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Trust Company of the West,

  a California corporation

  Its Investment Manager

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
						

 

 

	
   

  	
  “Tenant”:

  
	
   

  	
   

  
	
   

  	
  HERBALIFE INTERNATIONAL OF AMERICA,

  INC., a california Corporation

  
	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  
	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Its:

  	
   

  

 

L-2

 

	
  STATE OF

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF

  	
  )

  

 

On
                                ,
before me,                    ,
a Notary Public in and for said state, personally appeared
                   ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument, the person, or the
entity upon behalf of which the person acted, executed the instrument.

 

WITNESS my hand and official seal.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public in and for said State

  

 

 

	
  STATE OF

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF

  	
  )

  

 

On
                                ,
before me,                    ,
a Notary Public in and for said state, personally appeared
                   ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument, the person, or the
entity upon behalf of which the person acted, executed the instrument.

 

WITNESS my hand and official seal.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public in and for said State

  

 

L-3

 

	
  STATE OF

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF

  	
  )

  

 

On
                                ,
before me,                    ,
a Notary Public in and for said state, personally appeared
                   ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument, the person, or the
entity upon behalf of which the person acted, executed the instrument.

 

WITNESS my hand and official seal.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public in and for said State

  

 

 

	
  STATE OF

  	
  )

  
	
   

  	
  ) ss.

  
	
  COUNTY OF

  	
  )

  

 

 

On
                                ,
before me,                    ,
a Notary Public in and for said state, personally appeared
                   ,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized
capacity, and that by his/her signature on the instrument, the person, or the
entity upon behalf of which the person acted, executed the instrument.

 

WITNESS my hand and official seal.

 

	
   

  	
   

  	
   

  
	
   

  	
  Notary Public in and for said State

  

 

L-4

 

EXHIBIT A TO EXHIBIT L

 

LEGAL DESCRIPTION OF PROPERTY

 

THE LAND REFERRED TO HEREIN IS DESCRIBED AS
FOLLOWS:

 

PARCEL 1:

 

PARCEL “A” OF PARCEL MAP L.A. NO. 1483, IN
THE CITY OF LOS ANGELES, IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA,
FILED IN BOOK 16 PAGE 62 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER
OF SAID COUNTY.

 

EXCEPT ALL MINERALS, OIL, GAS, AND
HYDROCARBONS AND RIGHT TO EXPLORE FOR, DEVELOP, PRODUCE AND EXTRACT SAME, BUT
WITHOUT RIGHT OF ENTRY UPON THE SURFACE OR UPPER 500 FEET, MEASURED FORM THE OF
SAID LAND, AS RESERVED BY FOX REALTY CORPORATION OF CALIFORNIA, A CORPORATION,
IN DEED RECORDED APRIL 17, 1961 IN BOOK D-1190 PAGE 104, OFFICIAL RECORDS,
OF SAID COUNTY.

 

THE ABOVE DESCRIBED PARCEL “A”, AS SHOWN ON
SAID PARCEL MAP, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

 

THAT PORTION OF LOT 4 OF TRACT NO. 26196,
IN THE CITY OF LOS ANGELES, IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA,
AS PER MAP RECORDED IN BOOK 684 PAGE 82 OF MISCELLANEOUS RECORDS, IN THE OFFICE
OF THE COUNTY RECORDER OF SAID COUNTY, AS MORE PARTICULARLY DESCRIBED AS
FOLLOWS:

 

BEING AT THE MOST SOUTHERNLY CORNER OF SAID
LOT 4, SAID CORNER BEING ALSO THE MOST WESTERLY CORNER OF LOT 5 OF SAID TRACT;
THENCE NORTH 35 DEGREES 46 MINUTES 43 SECONDS WEST, A DISTANCE OF 1084.39 FEET
ALONG THE WESTERLY LINE OF LOT 4, SAID LINE BEING THE NORTHEASTERLY LINE OF
CENTURY PARK EAST, TO THE TRUE POINT OF BEGINNING; THENCE NORTH 50 DEGREES 30
MINUTES 34 SECONDS EAST, A DISTANCE OF 220.06 FEET TO A POINT; THENCE NORTH 39
DEGREES 30 MINUTES 47 SECONDS WEST 0.75 FEET TO A CORNER OF SAID TRACT; THENCE
ALONG THE NORTHEASTERLY LINE OF SAID TRACT, NORTH 39 DEGREES 30 MINUTES 47
SECONDS WEST, A DISTANCE OF 280.82 FEET TO THE SOUTHEASTERLY LINE OF SANTA
MONICA BOULEVARD SOUTH ROADWAY; THENCE SOUTH 50 DEGREES 28 MINUTES 43 SECONDS
WEST ALONG SAID SOUTHEASTERLY LINE OF SANTA MONICA BOULEVARD SOUTH ROADWAY, A
DISTANCE OF 182.95 FEET, TO THE BEGINNING OF A TANGENT CURVE CONCAVE TO THE
SOUTHEAST HAVING A RADIUS OF 20.00 FEET AND A CENTRAL ANGLE OF 86 DEGREES 15
MINUTES 26 SECONDS; THENCE SOUTHWESTERLY ALONG SAID CURVE, A DISTANCE OF 30.11
FEET TO A POINT OF TANGENCY, SAID POINT BEING ON THE NORTHEASTRLY LINE OF
CENTURY PARK EAST; THENCE ALONG SAID TANGENT LINE OF CENTURY PARK EAST, SOUTH
35 DEGREES 46 MINUTES 43 SECONDS EAST 263.32 FEET TO THE TRUE POINT OF
BEGINNING.

 

PARCEL 2:

 

PARCEL “B” OF PARCEL MAP L.A. NUMBER 1483,
IN THE CITY OF LOS ANGELES, IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA,
FILED IN BOOK 16 PAGE 62 OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER
OF SAID COUNTY.

 

EXCEPT ALL MINERALS, OIL, GAS, AND
HYDROCARBONS AND RIGHT TO EXPLORE FOR, DEVELOP, PRODUCE AND EXTRACT SAME, BUT
WITHOUT RIGHT OF ENTRY UPON THE SURFACE OR UPPER 500 FEET, MEASURED FORM THE OF
SAID LAND, AS RESERVED BY FOX REALTY CORPORATION OF CALIFORNIA, A CORPORATION,
IN DEED RECORDED APRIL 17, 1961 IN BOOK D-1190 PAGE 104, OFFICIAL RECORDS,
OF SAID COUNTY.

 

A-L-1

 

TO ABOVE DESCRIBED PARCEL “B” AS SHOWN ON
SAID PARCEL MAP, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:

 

THAT PORTION OF LOT 4 OF TRACT NO. 26196,
IN THE CITY OF LOS ANGELES, IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA,
AS PER MAP RECORDED IN BOOK 684 PAGE 82 OF MISCELLANEOUS RECORDS, IN THE OFFICE
OF THE COUNTY RECORDER OF SAID COUNTY, AS MORE PARTICULARLY DESCRIBED AS
FOLLOWS:

 

BEGINNING AT THE MOST SOUTHERLY CORNER OF
SAID LOT 4, SAID CORNER BEING ALSO THE MOST WESTERLY CORNER OF LOT 5 OF SAID
TRACT; THENCE NORTH 35 DEGREES 46 MINUTES 43 SECONDS WEST, A DISTANCE 905.11
FEET ALONG THE WESTERLY LINE OF LOT 4, SAID LINE BEING THE NORTHEASTERLY LINE
OF CENTURY PARK EAST, TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING ALONG
SAID NORTHEASTERLY LINE OF CENTURY PARK EAST, NORTH 35 DEGREES 46 MINUTES 43
SECONDS WEST, A DISTANCE OF 179.28 FEET TO A POINT; THENCE NORTH 50 DEGREES 30
MINUTES 34 SECONDS EAST, A DISTANCE OF 220.06 FEET TO A POINT; THENCE NORTH 39
DEGREES 30 MINUTES 47 SECONDS WEST, A DISTANCE OF 0.75 OF A FOOT TO A CORNER OF
SAID TRACT; THENCE ALONG THE NORTHWESTERLY LINE OF SAID TRACT, NORTH 50 DEGREES
30 MINUTES 34 SECONDS EAST, A DISTANCE OF 138.39 FEET TO A CORNER OF SAID
TRACT; THENCE ALONG THE NORTHEASTERLY LINE OF SAID TRACT, SOUTH 30 DEGREES 46
MINUTES 43 SECONDS EAST, A DISTANCE OF 204.01 FEET; THENCE SOUTH 54 DEGREES 13
MINUTES 17 SECONDS WEST, A DISTANCE OF 339.87 FEET TO THE TRUE POINT OF
BEGINNING.

 

A-L-2

 

{FLOOR PLAN}

 

M-1EXHIBIT 10.3

 

HERBALIFE
INTERNATIONAL OF AMERICA, INC.

SENIOR
EXECUTIVE DEFERRED COMPENSATION PLAN

Effective
January 1, 1996

 

TABLE OF CONTENTS

 

	
  ARTICLE 1

  	
  Definitions

  	
   

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
  Selection,
  Enrollment, Eligibility

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Selection by Committee

  	
   

  
	
  2.2

  	
   

  	
  Enrollment Requirements

  	
   

  
	
  2.3

  	
   

  	
  Eligibility;
  Commencement of Participation

  	
   

  
	
  2.4

  	
   

  	
  Termination
  of Participation and/or Deferrals

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
  Deferral
  Commitments/Interest Crediting

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Minimum Deferral

  	
   

  
	
  3.2

  	
   

  	
  Maximum Deferral

  	
   

  
	
  3.3

  	
   

  	
  Election to
  Defer; Effect of Election Form

  	
   

  
	
  3.4

  	
   

  	
  Withholding of Deferral
  Amounts

  	
   

  
	
  3.5

  	
   

  	
  Company Matching
  Contribution

  	
   

  
	
  3.6

  	
   

  	
  Interest
  Crediting Prior to Distribution

  	
   

  
	
  3.7

  	
   

  	
  Interest
  Crediting for Installment Distributions

  	
   

  
	
  3.8

  	
   

  	
  FICA Taxes

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
  Short-Term
  Payout; Unforeseeable Financial Emergencies; Withdrawal Election

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Short-Term Payout

  	
   

  
	
  4.2

  	
   

  	
  Withdrawal
  Payout/Suspensions for Unforeseeable Financial Emergencies

  	
   

  
	
  4.3

  	
   

  	
  Withdrawal Election

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  Retirement Benefit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Retirement Benefit

  	
   

  
	
  5.2

  	
   

  	
  Payment of Retirement
  Benefits

  	
   

  
	
  5.3

  	
   

  	
  Death
  Prior to Completion of Retirement Benefits

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
  Pre-Retirement Survivor
  Benefit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Pre-Retirement Survivor
  Benefit

  	
   

  
	
  6.2

  	
   

  	
  Payment of
  Pre-Retirement Survivor Benefits

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  Termination Benefit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Termination Benefits

  	
   

  
	
  7.2

  	
   

  	
  Payment of Termination
  Benefit

  	
   

  
	
  7.3

  	
   

  	
  Death
  Prior to Completion of Termination Benefits

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
  Disability Waiver and
  Benefit

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Disability Waiver

  	
   

  
	
  8.2

  	
   

  	
  Benefit Eligibility

  	
   

  

 

i

 

	
  ARTICLE 9

  	
  Beneficiary Designation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Beneficiary

  	
   

  
	
  9.2

  	
   

  	
  Beneficiary
  Designation; Change; Spousal Consent

  	
   

  
	
  9.3

  	
   

  	
  Acknowledgment

  	
   

  
	
  9.4

  	
   

  	
  No Beneficiary Designation

  	
   

  
	
  9.5

  	
   

  	
  Doubt as to Beneficiary

  	
   

  
	
  9.6

  	
   

  	
  Discharge of Obligations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
  Leave of Absence

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Paid Leave of Absence

  	
   

  
	
  10.2

  	
   

  	
  Unpaid Leave of Absence

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
  Termination,
  Amendment or Modification

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Termination

  	
   

  
	
  11.2

  	
   

  	
  Amendment

  	
   

  
	
  11.3

  	
   

  	
  Effect
  of Payment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12

  	
  Administration

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Committee Duties

  	
   

  
	
  12.2

  	
   

  	
  Agents

  	
   

  
	
  12.3

  	
   

  	
  Binding
  Effect of Decisions

  	
   

  
	
  12.4

  	
   

  	
  Indemnity of Committee

  	
   

  
	
  12.5

  	
   

  	
  Employer Information

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 13

  	
  Claims Procedures

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  Presentation of Claim

  	
   

  
	
  13.2

  	
   

  	
  Notification of Decision

  	
   

  
	
  13.3

  	
   

  	
  Review of a Denied Claim

  	
   

  
	
  13.4

  	
   

  	
  Decision
  on Review

  	
   

  
	
  13.5

  	
   

  	
  Legal Action

  	
   

  
	
  13.6

  	
   

  	
  Arbitration

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 14

  	
  Trust

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
   

  	
  Establishment of Trust

  	
   

  
	
  14.2

  	
   

  	
  Interrelationship
  of the Plan and the Trust

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 15

  	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  15.1

  	
   

  	
  Unsecured
  General Creditor

  	
   

  
	
  15.2

  	
   

  	
  Employer’s Liability

  	
   

  
	
  15.3

  	
   

  	
  Nonassignability

  	
   

  
	
  15.4

  	
   

  	
  Coordination with Other
  Benefits

  	
   

  
	
  15.5

  	
   

  	
  Not a Contract of
  Employment

  	
   

  

 

ii

 

	
  15.6

  	
   

  	
  Furnishing Information

  	
   

  
	
  15.7

  	
   

  	
  Terms

  	
   

  
	
  15.8

  	
   

  	
  Captions

  	
   

  
	
  15.9

  	
   

  	
  Governing Law

  	
   

  
	
  15.10

  	
   

  	
  Notice

  	
   

  
	
  15.11

  	
   

  	
  Successors

  	
   

  
	
  15.12

  	
   

  	
  Spouse’s Interest

  	
   

  
	
  15.13

  	
   

  	
  Validity

  	
   

  
	
  15.14

  	
   

  	
  Incompetent

  	
   

  
	
  15.15

  	
   

  	
  Distribution in
  the Event of Taxation

  	
   

  
	
  15.16

  	
   

  	
  Legal
  Fees to Enforce Rights After Change in Control

  	
   

  

 

iii

 

PURPOSE

 

The purpose of this Plan is to provide
specified benefits to a select group of management or highly compensated
employees who contribute materially to the continued growth, development and
future business success of HERBALIFE INTERNATIONAL OF AMERICA, INC., a
California corporation, and its subsidiaries.

 

ARTICLE 1

DEFINITIONS

 

For purposes hereof, unless otherwise
clearly apparent from the context, the following phrases or terms shall have
the following indicated meanings:

 

1.1           “Account
Balance” shall mean, with respect to a Participant, the sum of (a) his or her
Elective Deferral Account plus (b) his or her Employer Matching Contribution
Account.  This account shall be a
bookkeeping entry only and shall be utilized solely as a device for the
measurement and determination of the amounts to be paid to or in respect of a
Participant pursuant to the Plan.

 

1.2           “Annual
Bonus” shall mean any compensation, in addition to Base Annual Salary, paid
annually in respect of a Plan Year to a Participant as an employee under the
Company’s Management Incentive Plan.  An
annual Bonus for a Plan Year may, but need not, be paid during such Plan Year.

 

1.3           “Annual
Deferral Amount” shall mean that portion of a Participant’s Base Annual Salary
and/or Annual Bonus that a Participant elects to have and is deferred, in
accordance with Article 3, for any one Plan Year.

 

1.4           “Base
Annual Salary” shall mean the annual compensation (excluding bonuses,
commissions, overtime. incentive payments, non-monetary awards, Directors Fees
and other fees, stock options and grants, and car allowances) paid to a
Participant for services rendered to any Employer, before reduction for
compensation deferred pursuant to all qualified, non-qualified and Code
Section 125 plans (other than compensation deferred under individual
employment Contracts) of any Employer. 
The Committee may, in its discretion, with respect to any one or more
Participants establish for any Plan Year a limit on the amount of Base Annual
Salary to be taken into account under this

 

1

 

Plan. 
Such limitation shall be reflected in the Participant’s Plan Agreement,
as it may be amended from time to time.

 

1.5           “Beneficiary”
shall mean one or more persons, trusts. estates or other entities, designated
in accordance with Article 9, that are entitled to receive benefits under
the Plan upon the death of a Participant.

 

1.6           “Beneficiary
Designation Form” shall mean the form established from time to time by the
Committee that a Participant completes, signs and returns to the Committee to
designate one or more Beneficiaries.

 

1.7           “Board”
shall mean the board of directors of the Company.

 

1.8           “Change in
Control” shall mean the first to occur of any of the following events:

 

(a)           Any
“person” (as that term is used in Section 13 and 14(d)(2) of the
Securities Exchange Act of 1934 (“Exchange Act”)), other than Mark Hughes, the
Hughes Family Trust or any entity with respect to which Mark Hughes has
investment or dispositive power or authority, after the date hereof becomes the
beneficial owner (as that term is used in Section 13(d) of the Exchange
Act), directly or indirectly, of 50 percent or more of the Company’s capital
stock entitled to vote in the election of directors;

 

(b)           During any
period of two consecutive years, individuals who at the beginning of such
period constitute the Board cease for any reason to constitute at least a
majority thereof. unless the election or the nomination for election by the
Company’s shareholders of each new director was approved by a vote of at least
three-quarters of the directors still in office who were directors at the
beginning of the period;

 

(c)           Any
consolidation or merger of the Company, other than a consolidation or merger of
the Company in which the holders of the common stock of the Company immediately
prior to the consolidation or merger hold more than 50 percent of the common
stock of the surviving corporation immediately after the consolidation or
merger;

 

(d)           The
shareholders of the Company approve any plan or proposal for the liquidation or
dissolution of the Company; or

 

(e)           Substantially
all of the assets of the Company are sold or otherwise transferred to parties that
are not within a “controlled group of corporations” (as defined in
Section 1563 of the Code) in which the Company is a member.

 

1.9           “Claimant” shall have the meaning set
forth in Section 13.1.

 

2

 

1.10         “Code”
shall mean the Internal Revenue Code of 1986, as amended.

 

1.11         “Committee”
shall mean the administrative committee appointed to manage and administer the
Plan in accordance with its provisions pursuant to Article 12.

 

1.12         “Company”
shall mean HERBALIFE INTERNATIONAL OF AMERICA, INC., a California corporation.

 

1.13         “Company
Matching Contribution” shall mean any contribution made and credited to
Employer Matching Contribution Accounts by the Company in accordance with
Section 3.5 below.

 

1.14         “Crediting
Rate” shall mean, for each plan year, an interest rate equal to 120 percent of
the “Moody’s Corporate Bond Rate” in effect for September (and published
in the immediately following October) of the prior year.  The “Moody’s Corporate Bond Rate” is an arithmetic
average of yields of representative bonds, including industrials, public
utilities, Aaa, Aa, A and Baa bonds, published by Moody’s Investors Service,
Inc. or any successor to that service.

 

1.15         “Deduction
Limitation” shall mean the following described limitation on the annual benefit
that may be distributed pursuant to the provisions of this Plan.  The limitation shall be applied to
distributions under this Plan as expressly set forth in this Plan.  If the Company determines in good faith prior
to a Change in Control that there is a reasonable likelihood that any
compensation paid to a Participant for a taxable year of the Company would not
be deductible by the Company solely by reason of the limitation under Code
Section 162(m), then to the extent deemed necessary by the Company to
ensure that the entire amount of any distribution to the Participant pursuant
to this Plan prior to the Change in Control is deductible, the Company may
defer all or any portion of the distribution. 
Any amounts deferred pursuant to this limitation shall continue to be
credited with interest in accordance with Section 3.6 below.  The amounts so deferred and interest thereon
shall be distributed to the Participant or his or her Beneficiary (in the event
of the Participant’s death) at the earliest possible date, as determined by the
Company in good faith, on which the deductibility of compensation paid or
payable to the Participant for the taxable year of the Company during which the
distribution is made will not be limited by Section 162(m), or if earlier,
the effective date of a Change in Control.

 

1.16         “Deferral
Amount” shall mean the sum of all of a Participant’s Annual Deferral Amounts.

 

1.17         “Directors
Fees” shall mean the annual cash fees paid by any Employer, including retainer
fees and meetings fees, as compensation for serving on the board of directors
of an Employer.

 

3

 

1.18         “Disability”
shall mean where, because of injury or sickness, a Participant cannot perform each
of the material duties of his or her regular occupation.

 

1.19         “Election
Form” shall mean the form established from time to time by the Committee that a
Participant completes, signs and returns to the Committee to make an election
under the Plan.

 

1.20         “Elective
Deferral Account” shall mean the sum of (a) a Participant’s Deferral Amount,
plus (b) interest thereon credited in accordance with all the applicable
interest crediting provisions of the Plan, net of all distributions from such
Account.  This account shall be a
bookkeeping entry only and shall be utilized solely as a device for the
measurement and determination of the amounts to be paid to the Participant
pursuant to the Plan.

 

1.21         “Employer”
shall mean the Company and/or any of its subsidiaries that have been selected
by the Board to participate in the Plan.

 

1.22         “Employer
Matching Contribution Account” shall mean the sum of (a) Participant’s share of
Company Matching Contributions plus (b) interest thereon credited in accordance
with the applicable interest crediting provisions of the Plan, net of all
distributions from such Account. This Account shall be a bookkeeping entry only
and shall be utilized solely as a device for the measurement and determination
of the amounts to be paid to the Participant pursuant to the Plan.

 

1.23         “Participant”
shall mean any employee (a) who is selected to participate in the Plan, (b) who
elects to participate in the Plan, (c) who signs a Plan Agreement, an Election
Form and a Beneficiary Designation Form, (d) whose signed Plan Agreement,
Election Form and Beneficiary Designation Form are accepted by the Committee,
(e) who commences participation in the Plan, and (f) whose Plan Agreement has
not terminated.

 

1.24         “Plan”shall
mean the Company’s Senior Executive Deferred Compensation Plan. which shall be
evidenced by this instrument and, with respect to each Participant, by his or
her Plan Agreement, as each may be amended from time to time.

 

1.25         “Plan
Agreement” shall mean a written agreement. as may be amended from time to time,
which is entered into by and between one or more Employers and a
Participant.  Each Plan Agreement
executed by a Participant shall provide for the entire benefit to which such
Participant is entitled to under the Plan, and shall specify, the Employer or
Employers liable for the Participant’s benefits hereunder and the magnitude or
extent of such liability.  The Plan
Agreement bearing the latest date of acceptance by the Committee shall govern
such entitlement and each Employer’s liability. 
Upon the complete payment of a Participant’s Account Balance, each
individual’s Plan Agreement and his or her status as a Participant shall
terminate.

 

1.26         “Plan Year”
shall be the calendar year, starting, with 1996.

 

4

 

1.27         “Pre-Retirement
Survivor Benefit” shall mean the benefit set forth in Article 6.

 

1.28         “Retirement,”
“Retire,” “Retires,” or “Retired” shall mean severance from employment or
service with all Employers for any reason other than a leave of absence on or
after the attainment of (a) age fifty (50) and the completion of ten (10) Years
of Service, (b) age fifty-five (55) and the completion of five (5) Years of
Service. (c) age sixty-five (65), whichever is earliest.

 

1.29         “Retirement
Benefit” shall mean the benefit set forth in Article 5.

 

l.30          “Short-Term
Payout” shall mean the payout set forth in Section 4. 1.

 

l.31          “Termination
Benefit” shall mean the benefit set forth in Article 7.

 

1.32         “Termination
of Employment” shall mean the ceasing of employment with all Employers,
voluntarily or involuntarily, for any reason other than Retirement. death or an
authorized leave of absence.

 

1.33         “Trust”
shall mean the trust established pursuant to that certain Trust Agreement.
dated as of January 1, 1996, between the Company and the trustee named
therein. as amended from time to time.

 

l.34          “Unforeseeable
Financial Emergency” shall mean an unanticipated emergency that is caused by an
event beyond the control of the Participant that would result in severe
financial hardship to the Participant resulting from (a) a sudden and
unexpected illness or accident of the Participant or a dependent of the
Participant, (b) a loss of the Participant’s property due to casualty, or (c)
such other extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant, all as determined in the sole and
absolute discretion of the Committee.

 

1.35         “Years of
Service” shall mean the total number of years in which a Participant has been
employed by or in the service of an Employer. 
For purposes of this definition only, a year of employment or service
shall be a 365 day period (or 366 day period in the case of a leap year) that,
for the first year of employment, commences on the Participant’s date of hire
(or engagement) and that, for any subsequent year, commences on an anniversary
of that hiring date.

 

ARTICLE 2

SELECTION, ENROLLMENT. ELIGIBILITY

 

2.1           SELECTION BY COMMITTEE. Participation
in the Plan shall be limited to employees of an Employer who are (a) part of a
select group of management or highly compensated employees and (b) at the rank
of Senior Vice President or higher.  From
the foregoing, the Committee shall select, in its sole and absolute discretion.
employees to participate in the Plan.

 

5

 

2.2           ENROLLMENT REQUIREMENTS. As a
condition to participation. each selected employee shall complete, execute and
return to the Committee a Plan Agreement, an Election Form and a Beneficiary
Designation Form.  In addition, the
Committee shall establish from time to time such other enrollment requirements
as it determines in its sole and absolute discretion are necessary.

 

2.3           ELIGIBILITY: COMMENCEMENT OF
PARTICIPATION. An employee selected to participate herein may commence
participation upon the January 1 or July 1 immediately following or
coinciding with the date he or she has completed all enrollment requirements
set forth herein and required by the Committee, including returning all required
documents to the Committee and the Committee’s acceptance of all submitted
documents.

 

2.4           TERMINATION OF PARTICIPATION AND/OR
DEFERRALS. If the Committee determines in good faith that a Participant no
longer meets the requirement of Sections 2. 1 (a) and (b) hereof. the Committee
shall have the right, in its sole discretion, to (i) terminate any deferral
election the Participant has made for the Plan Year in which the Participant’s
membership status changes, (ii) prevent the Participant from making future
deferral elections and/or (iii) immediately distribute the Participant’s then
Account Balance as a Termination Benefit and terminate the Participant’s
participation in the Plan.  If the
Committee chooses not to terminate the Participant’s participation in the Plan,
the Committee may, it its sole discretion, reinstate the Participant to full
Plan participation at such time in the future as the Participant again meets
the requirements of Sections 2.1(a) and (b).

 

ARTICLE 3

DEFERRAL COMMITMENTS/INTEREST CREDITING.

 

3.1           MINIMUM DEFERRAL.

 

(a)           MINIMUM.
For each Plan Year, a Participant may elect to defer Base Annual Salary and/or
Annual Bonus paid in respect of such Plan Year in the following minimum amounts
for each deferral elected:

 

	
  Deferral

  	
   

  	
  Minimum

  Amount

  	
   

  
	
  Base
  Annual Salary

  	
   

  	
  $

  	
  2,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Annual
  Bonus

  	
   

  	
  $

  	
  2,000

  	
   

  

 

If no election is made, the amount deferred
shall be zero.

 

6

 

(b)           SHORT PLAN
YEAR. If a Participant first becomes a Participant after the first day of a
Plan Year, the minimum Base Annual Salary and/or Annual Bonus deferral shall be
an amount equal to the minimum set forth above, multiplied by a fraction, the
numerator of which is the number of complete months remaining in the Plan Year
and the denominator of which is 12.

 

3.2           MAXIMUM DEFERRAL. For each Plan Year,
a Participant may elect to defer Base Annual Salary and/or Annual Bonus up to
the following maximum amounts for each deferral elected:

 

	
  Deferral

  	
   

  	
  Maximum

  Amount

  	
   

  
	
  Base
  Annual Salary

  	
   

  	
  50

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Annual
  Bonus

  	
   

  	
  100

  	
  %

  

 

3.3           ELECTION TO DEFER; EFFECT OF ELECTION
FORM.  In connection with a Participant’s
commencement of participation in the Plan, the Participant shall make a
deferral election by delivering to the Committee a completed and signed
Election Form, which election and form must be accepted by the Committee for a
valid election to exist.  For each
succeeding Plan Year, a new Election Form must be delivered to the Committee,
in accordance with its rules and procedures, before the end of the Plan Year
preceding the Plan Year for which the election is made. If no Election Form is
timely delivered for a Plan Year, no Annual Deferral Amount shall be withheld
for that Plan Year.

 

3.4           WITHHOLDING OF DEFERRAL AMOUNTS.  For each Plan Year, the Base Annual Salary
portion of the Annual Deferral Amount shall be withheld each payroll period in
equal amounts from the Participant’s Base Annual Salary.  The Annual Bonus portion of the Annual
Deferral Amount shall be withheld at the time the Annual Bonus is or otherwise
would be paid to the Participant.  The
Annual Deferral Amount shall be credited to the Participant’s Elective Deferral
Account.  A Participant shall at all times
have a fully vested and nonforfeitable interest in his or her Elective Deferral
Account.

 

3.5           COMPANY MATCHING CONTRIBUTION.  Each Plan Year, the Company shall make a
Company Matching Contribution on behalf of a Participant.  Such contribution shall be equal to 100
percent of the Participant’s Annual Deferral Amount that does not exceed 10
percent of the sum of the Participant’s Base Annual Salary.  These contributions shall be credited to the
Participant’s Employer Matching Contribution Account.  A Participant will at all times have a fully
vested and nonforfeitable interest in each year’s contribution (including
interest to be credited thereto).

 

7

 

3.6           INTEREST CREDITING PRIOR TO
DISTRIBUTION.  Prior to any distributions
of benefits under Articles 4, 5, 6 or 7, interest shall be credited and
compounded annually on a Participant’s Account Balance as though the Annual
Deferral Amount and the Company Matching Contribution for that Plan Year was
withheld or contributed, as the case may be, at the beginning of the Plan Year
or, in the case of the first year of Plan participation, was withheld as
contributed, as the case may be, on the date that the Participant commenced
participation in the Plan; provided that interest shall be credited on the
portion of the Annual Deferral Amount attributable to the Annual Bonus as of
the last day of the pay period ending closest to the date the Annual Bonus is
actually paid. The rate of interest for crediting shall be the Crediting
Rate.  In the event of Retirement, death
or a Termination of Employment prior to the end of a Plan Year, the basis for
that year’s interest crediting will be a fraction of the full year’s interest,
based on the number of full months that the Participant was employed with the
Employer during the Plan Year prior to the occurrence of such event.  If a distribution is made under this Plan,
for purposes of crediting interest, the Account Balance shall be reduced as of
the first day of the month in which the distribution is made.

 

3.7           INTEREST CREDITING FOR INSTALLMENT
DISTRIBUTIONS.  In the event a benefit is
paid in installments under Article 5 or 6, interest shall be credited and
compounded on the undistributed portion of the Participant’s Account Balance
commencing on the first day of the month in which the Participant terminates
employment, using a fixed interest rate that is determined by using the average
of the Crediting Rates for the Plan Year in which installment payments commence
and the four preceding Plan Years.  If a
Participant has participated in the Plan for less than five Plan Years, this
average shall be determined using the Crediting Rates for the Plan Years during
which the Participant actually participated in the Plan.

 

3.8           FICA TAXES.  For each Plan Year in which an Annual
Deferral Amount is being withheld, the Participant’s Employer(s) shall ratably
withhold from that portion of the Participant’s Base Annual Salary and/or
Annual Bonus that is not being deferred, the Participant’s share of FICA taxes
on deferred amounts.  If necessary, the
Committee shall reduce the Annual Deferral Amount in order to comply with this
Section.

 

8

 

ARTICLE 4

SHORT-TERM PAYOUT; UNFORESEEABLE
FINANCIAL EMERGENCIES;

WITHDRAWAL ELECTION

 

4.1           SHORT-TERM PAYOUT. Subject to the
Deduction Limitation, in connection with each election to defer an Annual
Deferral Amount, a Participant may elect to receive a future “Short-Term
Payout” from the Plan with respect to that Annual Deferral Amount.  The Short-Term Payout shall be a lump sum
payment in an amount that is equal to the Annual Deferral Amount plus interest
credited at the Crediting Rate on that amount. Subject to the other terms and
conditions of this Plan, each Short-Term payout elected shall be paid within 60
days of the first day of the Plan Year that is five or more years after the
first day of the Plan Year in which the Annual Deferral Amount is actually
deferred.  Notwithstanding the foregoing,
should an event occur that triggers a benefit under Article 5, 6. or 7,
any Annual Deferral Amount, plus interest thereon, that is subject to a
Short-Term Payout election under this Section 4.1 shall not be paid in
accordance with Section 4.1, but shall be paid in accordance with the
other applicable Article.

 

4.2           WITHDRAWAL PAYOUT/SUSPENSIONS FOR
UNFORESEEABLE FINANCIAL EMERGENCIES. If the Participant experiences an
Unforeseeable Financial Emergency, the Participant may petition the Committee
to (a) suspend any deferrals required to be made by a Participant and/or (b)
receive partial or full payout from the Plan. 
The payout shall not exceed the lesser of the Participant’s Account
Balance, calculated as if such Participant were receiving a Termination
Benefit, or the amount reasonably needed to satisfy the Unforeseeable Financial
Emergency. If, subject to the sole and absolute discretion of the Committee,
the petition for a suspension and/or payout is approved, suspension shall take
effect upon the date of approval and any payout shall be made within 60 days of
the date of approval.

 

4.3           WITHDRAWAL ELECTION.  A Participant may elect, at any time, to
withdraw all of his or her Account Balance, calculated as if such Participant
were receiving a Termination Benefit, less a 10 percent withdrawal penalty (the
net amount shall be referred to as the “Withdrawal Amount”). No partial
withdrawals of that balance shall be allowed. 
The Participant shall make this election by giving the Committee advance
written notice of the election in a form determined from time to time by the
Committee.  The penalty shall be equal to
10 percent of the Participant’s Account Balance determined immediately prior to
the date of his or her election.  Once
the Withdrawal Amount is paid, the Participant shall be suspended permanently
from further participation in the Plan.

 

9

 

ARTICLE 5

RETIREMENT BENEFIT

 

5.1           RETIREMENT BENEFIT.  Subject to the Deduction Limitation, a
Participant who retires shall receive, as a Retirement Benefit, his or her
Account Balance.

 

5.2           PAYMENT OF RETIREMENT BENEFITS.  A Participant, in connection with his or her
commencement of participation in the Plan, shall elect on an Election Form to
receive the Retirement Benefit in a lump sum or in equal monthly payments over
a period of 60 months.  The Participant
may change this election to an allowable alternative payout period by
submitting a new Election Form to the Committee, provided that any such
Election Form is submitted at least three years prior to the Participant’s
Retirement.  The Election Form most
recently accepted by the Committee shall govern the payout of the Retirement
Benefit.  The lump sum payment shall be
made, or installment payments shall commence, no later than 60 days from the
date the Participant Retires.

 

5.3           DEATH PRIOR TO COMPLETION OF RETIREMENT
BENEFITS.  If a Participant dies after
Retirement but before the Retirement Benefit is paid in full, the Participant’s
unpaid Retirement Benefit payments shall continue and shall be paid to the
Participant’s Beneficiary (a) over the remaining number of months and in the
same amounts as that benefit would have been paid to the Participant had the
Participant survived, or (b) in a lump sum. if requested by the beneficiary and
allowed at the sole and absolute discretion of the Committee.  The lump sum payment will be the
Participant’s Account Balance at the time of his or her death.

 

ARTICLE 6

PRE-RETIREMENT SURVIVOR BENEFIT

 

6.1           PRE-RETIREMENT SURVIVOR BENEFIT.  Subject to the Deduction Limitation, if a
Participant dies before he or she Retires, the Participant’s Beneficiary shall
receive a Pre-Retirement Survivor Benefit equal to the Participant’s Account
Balance.

 

6.2           PAYMENT OF PRE-RETIREMENT SURVIVOR
BENEFITS.  The Pre-Retirement Survivor
Benefit shall be paid in the payment period previously elected by the
Participant for the payment of the Retirement Benefit, or, if no election was
made, monthly for 5 Years.  However, the
Pre-Retirement Survivor Benefit payment may be made as a lump sum at the
request of the Beneficiary and at the sole and absolute discretion of the
Committee. The first (or only payment, if made in lump sum) shall be made
within 60 days of the Committee’s receiving proof of the Participant’s death.

 

10

 

ARTICLE 7

TERMINATION BENEFIT

 

7.1           TERMINATION BENEFITS.  Subject to the Deduction Limitation, if a
Participant experiences a Termination of Employment prior to his or her
Retirement. the Participant shall receive a Termination Benefit, which shall be
equal to the Participant’s Account Balance, with interest credited in the
manner provided in Section 3.6 hereof.

 

7.2           PAYMENT OF TERMINATION BENEFIT.  A Participant’s Termination Benefit shall be
paid in a lump sum no later than 60 days following the date of the
Participant’s Termination of Employment.

 

7.3           DEATH PRIOR TO COMPLETION OF
TERMINATION BENEFITS.  If a Participant
dies after Termination of Employment, but before the Termination Benefit is
paid, the Participant’s unpaid Termination Benefit shall be paid to the
Participant’s Beneficiary.

 

ARTICLE 8

DISABILITY WAIVER AND BENEFIT

 

8.1           DISABILITY WAIVER.

 

(a)           ELIGIBILITY.  By participating in the Plan, all
Participants are eligible for this waiver.

 

(b)           WAIVER OF
DEFERRAL: CREDIT FOR PLAN YEAR OF DISABILITY. A Participant who is determined
by the Committee to be suffering from a Disability shall be excused from
fulfilling that portion of the Annual Deferral Amount commitment that would
otherwise have been withheld from a Participant’s Base Annual Salary and/or
Annual Bonus for the Plan Year during which the Participant first suffers a
Disability.  During the period of
Disability, the Participant shall not be allowed to make any additional
deferral elections.

 

(c)           RETURN TO
WORK.  If a Participant returns to
employment or service as a director with an Employer after a Disability ceases,
the Participant may elect to defer an Annual Deferral Amount for the Plan Year
following his or her return to employment or service and for every Plan Year
thereafter while a Participant in the Plan; provided such deferral elections
are otherwise allowed and an Election Form is delivered to and accepted by the
Committee for each such election in accordance with Section 3.3 above.

 

11

 

8.2           BENEFIT ELIGIBILITY.  A Participant suffering a Disability shall,
for benefit purposes under this Plan but subject to Section 8. 1, above,
continue to be considered to be employed and shall be eligible for the benefits
provided for in Articles 4, 5, 6 and 7 in accordance with the provisions of
those Articles.  Employee shall be
considered an active employee for purposes of Section l.35 hereof during a
Disability. Notwithstanding the above, the Committee shall have the right, in
its sole and absolute discretion and for purposes of this Plan only, to
terminate a Participant’s employment at any time after such Participant is
determined to be permanently and totally disabled under the Participant’s
Employer’s long-term disability plan or would have been determined to be
permanently and totally disabled had he or she participated in such plan.

 

ARTICLE 9

BENEFICIARY DESIGNATION

 

9.1           BENEFICIARY.  Each Participant shall have the right, at any
time, to designate his or her Beneficiary (both primary as well as contingent)
to receive any benefits payable under the Plan to a Beneficiary upon the death
of a Participant.  The Beneficiary
designated under this Plan may be the same as or different from the Beneficiary
designation under any other plan of an Employer in which the Participant participates.

 

9.2           BENEFICIARY DESIGNATION; CHANGE;
SPOUSAL CONSENT.  A Participant shall
designate his or her Beneficiary by completing and signing the Beneficiary
Designation Form, and returning it to the Committee or its designated agent.  A Participant shall have the right to change
a Beneficiary by completing, signing and otherwise complying with the terms of
the Beneficiary Designation Form and the Committee’s rules and procedures, as
in effect from time to time.  Where
required by law or by the Committee, in its sole and absolute discretion, if
the Participant names someone other than his or her spouse as a Beneficiary, a
spousal consent, in the form designated by the Committee. must be signed by
that Participant’s spouse and returned to the Committee.  Upon the acceptance by the Committee of a new
Beneficiary Designation Form, all Beneficiary designations previously filed
shall be canceled.  The Committee shall
be entitled to rely on the last Beneficiary Designation Form filed by the
Participant and accepted by the Committee prior to his or her death.

 

9.3           ACKNOWLEDGMENT.  No designation or change in designation of a
Beneficiary shall be effective until received, accepted and acknowledged in
writing by the Committee or its designated agent.

 

12

 

9.4           NO BENEFICIARY DESIGNATION.  If a Participant fails to designate a
Beneficiary as provided in Sections 9.1, 9.2 and 9.3 above, or, if all
designated Beneficiaries predecease the Participant or die prior to complete distribution
of the Participant’s benefits, then the Participant’s designated Beneficiary
shall be his or her surviving spouse.  If
the Participant has no surviving spouse, the benefits remaining under the Plan
shall be paid to the Participant’s issue upon the principle of representation
and if there is no such issue, to the Participant’s estate.

 

9.5           DOUBT AS TO BENEFICIARY.  If the Committee has any doubt as to the
proper Beneficiary to receive payments pursuant to this Plan, the Committee
shall have the right, exercisable in its sole and absolute discretion, to cause
the Participant’s Employer to withhold such payments until this matter is
resolved to the Committee’s satisfaction.

 

9.6           DISCHARGE OF OBLIGATIONS.  The payment of benefits under the Plan to a
Beneficiary shall fully and completely discharge all Employers and the
Committee from all further obligations under this Plan with respect to the
Participant, and that Participant’s Plan Agreement shall terminate upon such
full payment of benefits.

 

ARTICLE 10

LEAVE OF ABSENCE

 

10.1         PAID LEAVE OF ABSENCE.  If a Participant is authorized by the
Participant’s Employer for any reason to take a paid leave of absence from the
employment of the Employer, the Participant shall continue to be considered
actively employed by the Employer for purposes of Section 1.35 hereof and
the Annual Deferral Amount shall continue to be withheld during such paid leave
of absence in accordance with Section 3.3

 

10.2         UNPAID LEAVE OF ABSENCE.  If a Participant is authorized by the Participant’s
Employer for any reason to take an unpaid leave of absence from the employment
of the Employer, the Participant shall continue to be considered actively
employed by the Employer for purposes of Section l.35 hereof, but the
Participant shall be excused from making deferrals until the earlier of the
date the leave of absence expires or the date the Participant returns to paid
employment status.  Upon such expiration
or return, deferrals shall resume for the remaining portion of the Plan Year in
which the expiration or return occurs, based on the deferral election, if any,
made for that Plan Year.  If no election
was made for that Plan Year, no deferral shall be withheld.

 

13

 

ARTICLE 11

TERMINATION, AMENDMENT OR
MODIFICATION

 

11.1         TERMINATION.  Any Employer reserves the right to terminate
the Plan at any time with respect to Participants employed by the
Employer.  Upon the termination of the
Plan, the Participant’s Account Balance shall be paid out as though the
Participant had experienced a Termination of Employment on the date of Plan
termination, or. if Plan termination occurs after the date upon which the
Participant was eligible to Retire, the Participant had Retired on the date of
Plan termination, or, if Plan termination occurs after the Participant Retired
and commenced (but not completed) distribution hereunder, benefits shall
continue to the Participant pursuant to the terms hereof without regard to the
termination.  Prior to a Change in Control,
an Employer shall have the right, in its sole and absolute discretion, and
notwithstanding any elections made by the Participant to pay all such benefits
in a lump sum.

 

11.2         AMENDMENT.  Any Employer may, at any time, amend or
modify the Plan in whole or in part with respect to that Employer; provided,
however, that no amendment or modification shall be effective to decrease a
Participant’s Account Balance, calculated as though the Participant had
experienced a Termination of Employment as of the effective date of the
amendment or modification, or, if the amendment or modification occurs after
the date upon which the Participant was eligible to Retire, the Participant had
Retired as of the effective date of the amendment or modification.  In addition, no amendment or modification of
the Plan shall affect the right of any Participant or Beneficiary who was
eligible to or did Retire on or before the effective date of such amendment or
modification to receive benefits in the manner he or she elected.

 

11.3         EFFECT OF PAYMENT.  The full payment of the applicable benefit
under Articles 4, 5, 6, or 7 of the Plan shall completely discharge all
obligations to a Participant under this Plan and the Participant’s Plan
Agreement shall terminate.

 

ARTICLE 12

ADMINISTRATION

 

12.1         COMMITTEE DUTIES.  This Plan shall be administered by a
Committee, to be known as the Herbalife Deferred Compensation Plan Committee.
which shall consist of individuals approved by the Board.  Members of the Committee may be Participants
under this Plan.  The Committee shall
also have the discretion and authority to make, amend, interpret, and enforce
all appropriate rules and regulations for the administration of this Plan and
decide or resolve any and all questions including interpretations of this Plan,
as may arise in connection with the Plan. 
Any Committee member must recuse himself or herself on any matter of
personal interest to such member that comes before the Committee.

 

14

 

12.2         AGENTS.  In the administration of this Plan, the
Committee may, from time to time, employ agents and delegate to them such
administrative duties as it sees fit and may from time to time consult with
counsel who may be counsel to any Employer.

 

12.3         BINDING EFFECT OF DECISIONS.  The decision or action of the Committee with
respect to any question arising out of or in connection with the
administration, interpretation and application of the Plan and the rules and
regulations promulgated hereunder shall be final and conclusive and binding
upon all persons having any interest in the Plan.

 

12.4         INDEMNITY OF COMMITTEE.  All Employers shall indemnify and hold
harmless the members of the Committee against any and all claims, losses,
damages, expenses or liabilities arising from any action or failure to act with
respect to this Plan, except in the case of willful misconduct by the Committee
or any of its members.

 

12.5         EMPLOYER INFORMATION.  To enable the Committee to perform its
functions, each Employer shall supply full and timely information to the
Committee on all matters relating to the compensation of its Participants, the
date and circumstances of the Retirement. 
Disability, death or Termination of Employment of its Participants, and
such other pertinent information as the Committee may reasonably require.

 

ARTICLE 13

CLAIMS PROCEDURE

 

13.1         PRESENTATION OF CLAIM.  Any Participant or Beneficiary of a deceased
Participant (such Participant or Beneficiary being referred to below as a
“Claimant”) may deliver to the Committee a written claim for a determination
with respect to the amounts distributable to such Claimant from the Plan.  If such a claim relates to the contents of a
notice received by the Claimant, the claim must be made within 60 days after
such notice was received by the Claimant. 
All other claims must be made within 180 days of the date on which the
event that caused the claim to arise occurred. 
The claim must state with particularity the determination desired by the
Claimant.

 

13.2         NOTIFICATION OF DECISION.  The Committee shall consider a Claimant’s
claim within 60 days of the making of the claim, and shall notify the Claimant
in writing:

 

(a)           that the
Claimant’s requested determination has been made, and that the claim has been
allowed in full; or

 

(b)           that the
Committee has reached a conclusion contrary, in whole or in part, to the
Claimant’s requested determination, and such notice must set forth in a manner
calculated to be understood by the Claimant:

 

(i)            the
specific reason(s) for the denial of the claim. or any part of it:

 

15

 

(ii)           specific
reference(s) to pertinent provisions of the Plan upon which such denial was
based;

 

(iii)          a
description of any additional material or information necessary for the Claimant
to perfect the claim, and an explanation of why such material or information is
necessary; and

 

(iv)          an
explanation of the claim review procedure set forth in Section 13.3 below.

 

13.3         REVIEW OF A DENIED CLAIM.  Within 60 days after receiving a notice from
the Committee that a claim has been denied, in whole or in part, a Claimant (or
the Claimant’s duly authorized representative) may file with the Committee a
written request for a review of the denial of the claim.  Thereafter, but not later than 30 days after
the review procedure begins, the Claimant (or the Claimant’s duly authorized
representative):

 

(a)           may review
pertinent Documents;

 

(b)           may submit
written comments or other Documents; and/or

 

(c)           may request
a hearing, which the Committee, in its sole discretion, may grant.

 

13.4         DECISION ON REVIEW.  The Committee shall render its decision on
review promptly, and not later than 60 days after the filing of a written
request for review of the denial, unless a hearing is held or other special circumstances
require additional time, in which case the Committee’s decision must be
rendered within 120 days after such date. Such decision must be written in a
manner calculated to be understood by the Claimant, and it must contain:

 

(a)           specific
reasons for the decision;

 

(b)           specific
reference(s) to the pertinent Plan provisions upon which the decision was
based; and

 

(c)           such other
matters as the Committee deems relevant.

 

13.5         LEGAL ACTION.  A Claimant’s compliance with the foregoing
provisions of this Article 13 is a mandatory prerequisite to a Claimant’s
right to commence any arbitration under Section 13.6 with respect to any
claim for benefits under this Plan.

 

13.6         ARBITRATION.  If, after the review process, a claimant
seeks further redress, the subject of the dispute shall be submitted to
arbitration in accordance with the procedures hereinafter provided in this
Section 13.6 (the “Procedures”), which arbitration shall be the exclusive
remedy, of the parties hereto.  The
resulting arbitration award shall be

 

16

 

deemed a final order of a court having
jurisdiction over the subject matter and shall not be appealable.

 

(a)           Should any
controversy arise between the parties as to which the parties are unable to
effect a satisfactory resolution, upon demand of any party, such controversy
shall be submitted to arbitration in Los Angeles County, California, in
accordance with the terms and provisions of these Procedures and the rules then
prevailing of the American Arbitration Association (or any successor
organization) to the extent that such rules are not inconsistent with the
provisions of these Procedures.

 

(b)           A party
desiring to submit to arbitration any such controversy shall furnish its demand
for arbitration in writing to the other party, which demand shall contain a
brief statement of the matter in controversy, as well as a list containing the
names of three (3) suggested arbitrators from which list, or from other
sources, the parties shall choose one (1) mutually acceptable arbitrator. If
the parties are unable to agree upon the identity of a single arbitrator within
ten (10) days from the receipt of such demand, then any party, on behalf of and
upon notice to the other party, may request appointment of a single arbitrator
by the American Arbitration Association (or any organization successor thereto)
in accordance with its rules then prevailing. 
If the American Arbitration Association (or any organization successor thereto)
should fail to appoint the arbitrator within fifteen (15) days after such
request is made, then any party, may apply upon notice to the other party, to
the court as provided in California Code of Civil Procedure Section 1281.6
or any successor provision for the appointment of such arbitrator.  The arbitrator chosen or appointed pursuant
to these Procedures (“Arbitrator”) shall not be a past or present officer,
director or employee of any party to the dispute or any of its affiliates.

 

(c)           The parties
shall be entitled to conduct discovery as permitted under Section 1283.05
of the California Code of Civil Procedure.

 

(d)           Each party
shall furnish the Arbitrator and the other party with a written statement of
matters it deems to be in controversy for purposes of the arbitration
procedures.  Such statement shall also
include all arguments, contentions and authorities which it contends
substantiate its position.  Each party
shall also submit a proposed award to the Arbitrator and the other party.

 

(e)           Such
Arbitrator shall render this decision as soon as possible but not later than
thirty (30) days after conclusion of hearings before such Arbitrator.  The decision shall be in writing, and
counterpart copies thereof shall be delivered to each of the parties.  The decision shall adopt, unchanged and in
its entirety, the award proposed by, one of the parties.

 

17

 

ARTICLE 14

TRUST

 

14.1         ESTABLISHMENT OF TRUST.  The Company shall establish the Trust, and
the Employers shall transfer over to the Trust such assets. if any, as the
Committee determines, from time to time and in its sole discretion, are
appropriate.

 

14.2         INTERRELATIONSHIP OF THE PLAN AND THE
TRUST.  The provisions of the Plan shall
govern the rights of a Participant to receive distributions pursuant to the
Plan.  The provisions of the Trust shall
govern the rights of the Participant and the creditors of the Employers to the
assets transferred to the Trust.  The
Employers shall at all times remain liable to carry out their obligations under
the Plan.  The Employers’ obligations
under the Plan may be satisfied with Trust assets distributed pursuant to the
terms of the Trust.

 

ARTICLE 15

MISCELLANEOUS

 

15.1         UNSECURED GENERAL CREDITOR.  Participants and their Beneficiaries, heirs,
successors and assigns shall have no legal or equitable right, interest or
claim in any property or assets of an Employer. 
Any and all of an Employer’s assets shall be, and remain, the general,
unpledged and unrestricted assets of the Employer.  An Employer’s obligation under the Plan shall
be merely that of an unfunded and unsecured promise to pay money in the future.

 

15.2         EMPLOYER’S LIABILITY.  An Employer’s liability for the payment of
benefits shall be defined only by the Plan. 
An Employer shall have no obligation to a Participant under the Plan
except as expressly provided in the Plan.

 

15.3         NONASSIGNABILITY.  Neither a Participant nor any other person
shall have any right to commute, sell, assign, transfer, pledge, anticipate,
mortgage, or otherwise encumber, transfer, hypothecate or convey in advance of
actual receipt, the amounts, if any, payable hereunder, or any part thereof,
which are, and all rights to which are expressly declared to be unassignable
and non-transferable.  No part of the
amounts payable shall, prior to actual payments be subject to seizure or
sequestration for the payment of any debts, judgments, alimony or separate
maintenance owed by a Participant or any other person. nor be transferable by
operation of law in the event of a Participant’s or any other person’s
bankruptcy or insolvency.

 

15.4         COORDINATION WITH OTHER
BENEFITS.  The benefits provided for a
Participant and Participant’s Beneficiary under the Plan are in addition to any
other benefits available to such Participant under any other plan or program
for employees of the Participant’s Employer. 
The Plan shall supplement and shall not supersede, modify, or amend any
other such plan or program except as may otherwise be expressly provided.

 

18

 

15.5         NOT A CONTRACT OF EMPLOYMENT.  The terms and conditions of this Plan shall
not be deemed to constitute a Contract of employment between any Employer and
the Participant.  Such employment is
hereby acknowledged to be an “at will” employment relationship that can be
terminated at any time for any reason, with or without cause, unless expressly
provided in a written employment agreement. 
Nothing in this Plan shall be deemed to give a Participant the right to
be retained in the service of any Employer, either as an employee or a
director, or to interfere with the right of any Employer to discipline or
discharge the Participant at any time.

 

15.6         FURNISHING INFORMATION.  A Participant or his or her Beneficiary will
cooperate with the Committee by furnishing any and all information requested by
the Committee and take such other actions as may be requested in order to
facilitate the administration of the Plan and the payments of benefits
hereunder, including but not limited to taking such physical examinations as
the Committee may deem necessary.

 

15.7         TERMS.  Whenever any words are used herein in the
singular or in the plural, they shall be construed as though they were used in
the plural or the singular, as the case may be, in all cases where they would so
apply.  The masculine pronoun shall be
deemed to include the feminine and VICE VERSA, unless the context clearly
indicates otherwise.

 

15.8         CAPTIONS.  The captions of the articles. sections and
paragraphs of this Plan are for convenience only and shall not control or
affect the meaning or construction of any of its provisions.

 

15.9         GOVERNING LAW.  Subject to ERISA, the provisions of this Plan
shall be construed and interpreted according to the laws of the State of
California.

 

15.10       NOTICE.  Any notice or filing required or permitted to
be given to the Committee under this Plan shall be sufficient if in writing and
hand- delivered, or sent by registered or certified mail. to:

 

	
   

  	
  Mr. Brian Kane

  
	
   

  	
  Senior Vice President of Human Resources

  
	
   

  	
  HERBALIFE INTERNATIONAL OF AMERICA, INC.

  
	
   

  	
  Post Office Box 80210

  
	
   

  	
  Los Angeles, CA 90080-0210

  

 

Such notice shall be deemed given as of the
date of delivery or, if delivery is made by mail, as of the date shown on the
postmark on the receipt for registration or certification.

 

Any notice or filing required or permitted
to be given to a Participant under this Plan shall be sufficient if in writing
and hand-delivered, or sent by, mail, to the last known address of the
Participant.

 

19

 

15.11       SUCCESSORS.  The provisions of this Plan shall bind and
inure to the benefit of the Participant’s Employer and its successors and
assigns and the Participant, the Participant’s Beneficiaries, and their
permitted successors and assigns.

 

15.12       SPOUSE’S INTEREST.  The interest in the benefits hereunder of a
spouse of a Participant who has predeceased the Participant shall automatically
pass to the Participant and shall not be transferable by such spouse in any
manner, including but not limited to such spouse’s will, nor shall such
interest pass under the laws of intestate succession.

 

15.13       VALIDITY.  In case any provision of this Plan shall be
illegal or invalid for any reason, said illegality or invalidity shall not
affect the remaining parts hereof, but this Plan shall be construed and
enforced as if such illegal or invalid provision had never been inserted
herein.

 

15.14       INCOMPETENT.  If the Committee determines in its discretion
that a benefit under this Plan is to be paid to a minor, a person declared
incompetent or to a person incapable of handling the disposition of that
person’s property, the Committee may direct payment of such benefit to the
guardian, legal representative or person having the care and custody of such
minor, incompetent or incapable person. 
The Committee may require proof of minority, incompetency, incapacity or
guardianship, as it may deem appropriate prior to distribution of the
benefit.  Any payment of a benefit shall
be a payment for the account of the Participant and the Participant’s
Beneficiary, as the case may be, and shall be a complete discharge of any
liability under the Plan for such payment amount.

 

15.15       DISTRIBUTION IN THE EVENT OF
TAXATION.  If, for any reason, all or any
portion of a Participant’s benefit under this Plan becomes taxable to the
Participant prior to receipt, a Participant may petition the Committee for a
distribution of assets sufficient to meet the Participant’s tax liability
(including additions to tax, penalties and interest).  Upon the grant of such a petition, which
grant shall not be unreasonably withheld, a Participant’s Employer shall
distribute to the Participant immediately available funds in an amount equal to
that Participant’s federal, state and local tax liability associated with such
taxation (which amount shall not exceed the Participant’s vested Account
Balance), which liability shall be measured by using that Participant’s then
current highest federal, state and local marginal tax rate, plus the rates or
amounts for the applicable additions to tax, penalties and interest.  If the petition is granted, the tax liability
distribution shall be made within 90 days of the date when the Participant’s
petition is granted.  Such a distribution
shall reduce the benefits to be paid under this Plan.

 

20

 

15.16       LEGAL FEES TO ENFORCE RIGHTS AFTER
CHANGE IN CONTROL. The Company is aware that upon the occurrence of a Change in
Control, the Board (which might then be composed of new members) or a shareholder
of the Company, or of any successor corporation might then cause or attempt to
cause the Company or such successor to refuse to comply with its obligations
under the Plan and might cause or attempt to cause the Company to institute, or
may institute, arbitration or litigation seeking to deny Participants the
benefits intended under the Plan.  In
these circumstances, the purpose of the Plan could be frustrated.  Accordingly, if, following a Change in
Control, it should appear to any Participant that the Company or the Committee
has failed to comply with any of its obligations under the Plan or any
agreement thereunder or, if the Company or any other person takes any action to
declare the Plan void or unenforceable or institutes any arbitration, litigation
or other legal action designed to deny, diminish or to recover from any
Participant or Beneficiary the benefits intended to be provided, then the
Company irrevocably authorizes such person to retain counsel of his or her
choice at the expense of the Company to represent such person in connection
with the initiation or defense of any arbitration, litigation or other legal
action, whether by or against the Company, the Committee, or any director,
officer, shareholder or other person affiliated with the Company or any
successor thereto in any jurisdiction.

 

IN WITNESS WHEREOF, the Company has signed
this Plan Document as of 12/29, 1995.

 

	
   

  	
  HERBALIFE INTERNATIONAL OF AMERICA,

  
	
   

  	
  INC.

  
	
   

  	
  a California corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ illegible

  	
   

  
	
   

  	
  Its:

  	
  /s/ Senior Vice President

  	
   

  

 

21

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