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Exhibit 10.19    
    

 
 

SEVERANCE AGREEMENT AND RELEASE OF CLAIMS    
    

        This Severance Agreement and Release of Claims ("Agreement") is entered into by and between Christine Bucklin ("Employee"), and Internet Brands, Inc. ("IB"
or the "Company") (collectively, the "Parties"), on April 6, 2007 (the "Effective Date"). 

        WHEREAS,
Employee was employed by IB as Chief Operating Officer; 

        WHEREAS,
IB and Employee are parties to a Severance Payment Agreement that provides for certain monies to be paid to Employee upon termination of her employment with IB, provided said
termination is without cause; 

        WHEREAS,
on December 6, 1999, IB and Employee entered into an Employment, Confidential Information, And Invention Assignment Agreement attached hereto as Exhibit A, in
which Employee, among other things, agreed to maintain the confidentiality of IB's confidential information and to refrain from solicitation of IB's employees for a period of 12-months
following Employee's termination of employment with IB; 

        WHEREAS,
IB terminated Employee's employment effective March 9, 2007; 

        WHEREAS,
a good faith dispute has arisen between IB and Employee regarding the applicability of the Severance Payment Agreement to Employee's termination; and 

        WHEREAS,
IB wishes to lessen any financial hardship occasioned by Employee's termination and to settle fully and finally now all actual or potential differences between IB and Employee
regarding Employee's employment and the termination of Employee's employment with IB. In addition, IB wishes to continue to safeguard its proprietary and confidential information; 

        THEREFORE,
in consideration of the promises and mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are expressly
acknowledged, the Parties agree as follows: 

        1.    Severance Payment.    In consideration for Employee's (a) release of any and all claims she may have
against the Company, if any, and (b) adherence to each of the terms and conditions of this Agreement, and provided that Employee has signed this Agreement and has not later revoked it, the
Parties agree as follows: 

        a)    Severance Payment.    After the date on which Employee has signed this Agreement and returned it to the Company,
and provided that Employee has not revoked this Agreement pursuant to Section 1p, below, the Company agrees to deliver to Employee payments totaling Two-hundred and Twenty-eight
thousand and Three-hundred and Ninety dollars ($228,390.00) as follows: 

        (1)    Initial Payments.    Within twelve (12) days after Employee has signed this Agreement and returned it to
the Company, the Company shall issue two checks to Employee, as follows: (i) one check in the amount of One-hundred and Twenty-nine thousand, Nine-hundred
and Seventy-five dollars ($129,975) in wages, including bonuses, less all legally required withholdings and authorized deductions ("Initial Wages and Bonus Payment"); and (ii) one
check in the amount of Forty-six thousand dollars ($46,000)(the "Finders Fees") for finders fees earned as an independent consultant as described in section 1b below (collectively,
the "Initial Payments"). Prior to the withholding of taxes from the payment amount in section 1a(1)(i), the Company shall deduct $11,900 from this check and place it in Employee's 401k account
on behalf of Employee. Prior to the monies being deducted and placed in Employee's 401k account, Employee shall execute a 401k Enrollment/Change Form reflecting the change in Employee's 401k
contribution election. 

        (2)    Installment Payments.    The Company shall issue five (5) checks to Employee in the amount of
Ten-thousand dollars ($10,000) each on the last business days of April, May, June, July, and August 2007, respectively (collectively, the "Installment Payments") for transition
services during such periods as an independent consultant as described in Section 1(b) below; and 

        (3)    Insurance Premium & Expense Reimbursement.    Concurrent with the tender of the Initial Payments, the
Company shall issue Employee a check in the amount of $2,415 representing (1) $1,873 for nine months of premiums for Employee's life and accidental death and disability insurance, and nine
months of the Company's contributions to Employee's dental and vision insurance for which Employee is selecting continuation of coverage under COBRA; and (2) $542 for reimbursement for a
business expense incurred by Employee on March 6, 2007. 

        b)    Consulting and Transition Services.    In consideration for independent consulting services provided by Employee
in relation to the acquisition of two websites, Company has agreed to pay the Finders Fees as part of the Initial Payments. In further consideration for the Installment Payments to which Employee
agrees she would not otherwise be entitled but for this Agreement, Employee shall make herself reasonably available and shall exercise reasonable efforts to respond diligently to inquiries by or on
behalf of the Company related to the business of the Company (the "Transition Assistance"). The Company shall pay Employee, at a rate of $150 per hour, for all time expended by Employee at Company's
request and prior authorization in connection with Transition Assistance other than time incurred in responding to telephonic or written inquiries that are addressed by Employee in twenty minutes or
less ("Brief Inquiries"), provided that Brief Inquiries do not to exceed one hour in the aggregate on any given day (the "Transition Fees"). Nothing herein is intended to create an employment
relationship between the Company and Employee. 

        c)    Tax Reporting and No Tax Advice.    The Company shall issue to Employee a W-2 with respect to the
portion of Initial Wages and Bonuses Payment, and a 1099 to Employee for the Finders Fees and Installment Payments paid to Employee. Employee agrees that the foregoing payments shall constitute the
entire amount of monetary consideration provided to her under this Agreement, and for all monies allegedly owed for wages earned and penalties, restitution, and/or interest and that she is not
entitled to and will not seek any further compensation of any kind either monetary or otherwise for any other claimed damage, costs or attorneys' fees in connection with the matters encompassed in
this Agreement. Employee acknowledges and agrees that IB and its counsel have not made representations to her regarding the tax consequences of any amounts received by her pursuant to this Agreement.
Employee agrees to pay federal and/or state taxes, if any, which are required by law to be paid by Employee with respect to the payments received under this Agreement. 

        d)    Employee's Job Title.    Until April 15, 2007, the Company shall continue to reflect on its website
Internetbrands.com, that Employee is the Chief Operating Officer of the Company. 

        e)    Stock Options.    The Parties acknowledge that Employee has 60,500 vested stock options with the Company. Any
other stock options Employee may have had with the Company at the date of her termination were forfeited as unvested upon Employee's termination with the Company. 

        f)    Use of Company Communications Medium:    Until May 31, 2007, Employee shall continue to have access to
the Company e-mail addresses assigned to Employee during her employment, through which Employee may send and receive e-mail messages, provided that such use is in compliance
with the Company's electronic communications policy. The Company also shall continue to pay for Employee's cellular phone service until May 31, 2007, up to the preexisting limits related to
Employee's use thereof, and thereafter shall take such steps as are necessary to facilitate Employee, if Employee elects to do so, acquiring the right to continue using, for her personal account, the
same cellular telephone number she has been using as an employee of the Company. Until May 31, 2007, the Company will exercise reasonable efforts to retrieve voice mail 

messages
left on Employee's former telephone voice mail with the Company, and Employee may telephone Jacki Redeker at (310) 280-4354 to retrieve such messages. 

        g)    No Other Compensation or Benefits.    Except as provided in this Agreement, Employee shall not be entitled to
receive any other compensation or benefits of any sort from the Company, its affiliates, or their officers, directors, employees, agents, insurance companies, attorneys, shareholders, or subsidiaries
for, without limitation, salary, vacation, bonuses, stock, stock options, health care continuation coverage or any other compensation or benefits. 

        h)    No Claims or Lawsuits.    Employee represents that she has not filed or asserted any complaints, claims, or
actions against IB and its parent companies, subsidiaries, divisions, affiliates, joint venturers, predecessors, successors, and their past and present officers, directors, shareholders, owners,
assigns, agents, employees, attorneys, representatives, insurers, reinsurers, including, but not limited to Idealab (collectively referred to herein as "IB Released Parties") with any state, federal,
or local governmental agency or court or arbitrator arising out of or relating to any act or omission that occurred prior to Employee's execution of this Agreement ("IB Prior Conduct Action") and that
she will not file or assert any IB Prior Conduct Action at any time hereafter, and that if any agency, court, or arbitrator assumes jurisdiction of any such complaint, claim, or action against IB
Released Parties, Employee will direct that agency, court, or arbitrator to withdraw from or dismiss with prejudice the matter. IB represents that it has not filed or asserted any complaints, claims,
or actions against Employee, her spouse, heirs, and/or attorneys ("Employee Released Parties") with any state, federal, or local governmental agency or court or arbitrator arising out of or relating
to any act or omission that occurred prior to IB's execution of this Agreement ("Employee Prior Conduct Action"), and that it will not file or assert any Employee Prior Conduct Action at any time
hereafter, and that if any agency, court, or arbitrator assumes jurisdiction of any such complaint, claim, or action against Employee Released Parties, IB will direct that agency, court, or arbitrator
to withdraw from or dismiss with prejudice the matter. 

        i)    No Assistance.    Employee understands that if this Agreement were not signed, she would have the right to
voluntarily assist other individuals or entities in bringing claims against the Company. Employee further understands and agrees that she waives such right and she shall not aid or assist others in
their pursuit of claims against the Company unless (1) Employee is required to provide such assistance pursuant to a court order, valid subpoena or other legal process, or (2) Employee's
assistance is sought by the EEOC or any other federal, state or local governmental entity. 

        j)    No Admission.    This Agreement and compliance with this Agreement shall not be construed as an admission by the
Parties of any liability whatsoever, or as an admission by the Parties of any violation of the rights of the other or any person, or any violation of any order, law, statute, duty, or contract
whatsoever against the other Party. The Parties specifically deny and disclaim any liability to the other or any other person for any alleged violation of the rights of Employee, the Company, or any
person, or for any alleged violation of any order, law, statute, duty, or contract on the part of the Parties, or either of them, including the Company's employees or agents or affiliated entities or
their employees or agents. 

        k)    No Future Employment and Limitation on Board Contact.    Employee agrees that in the future, IB and its parent
companies, subsidiaries and divisions (collectively, "IB Entities") are entitled to reject, with or without cause, any application for employment or agreement for independent contractor status with IB
Entities made by Employee. Employee further agrees that any rejection of any application or offer made to IB Entities by Employee is not for discriminatory or any other illegal purpose. Employee
further agrees to refrain from contacting the Company's board of directors regarding her employment, the separation of her employment, or the terms thereof except to the extent that such contact
relates to her interest as a shareholder of IB or to her actual or prospective future employment, or is in response to a request for information solicited by a member of the board of directors. 

        l)    Employment Verification.    Should Employee wish to provide to any current or future employer(s) verification of
her prior employment with the Company, she shall arrange for a request for confirmation to be submitted directly to IB's Vice-President, Human Resources, who will then only verify
Employee's dates of employment with IB, position held, final salary, and the fact that Employee was eligible throughout her employment for a performance bonus. Concurrent with its execution of this
Agreement, the Company shall provide to Employee a letter of introduction, in the form of Exhibit B hereto, executed on IB letterhead by Robert Brisco in his capacity as Chief Executive
Officer. The Company agrees that in response to any request for a reference concerning Employee that is received by Mr. Brisco, Mr. Brisco will provide no information, in writing or
orally, that contradicts, in substance, the information contained in Exhibit B. 

        m)    Rights Under Promissory Note Survive.    Employee's Promissory Note with the Company, executed on
November 20, 2003 (the "Promissory Note"), shall remain outstanding and self-executing in accordance with its terms. No release contained herein shall extinguish or limit the
Parties' rights to enforce their respective rights pursuant to the terms of the Promissory Note. 

        n)    Employee's Release of IB Released Parties.    As a material inducement for IB to enter into this Agreement, and
except with respect to any executory obligation of IB set forth in this Agreement, and except as set forth in section 1m above, Employee hereby waives all rights under section 1542 of
the California Civil Code with respect to IB Released Parties, which section Employee acknowledges has
been fully explained to her by her attorneys and which she fully understands. Section 1542 provides as follows: 

A
general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor. 

        Notwithstanding
the provisions of Section 1542 of the California Civil Code, as a material inducement for IB Released Parties to enter into this Agreement, except with respect to
any executory obligation of IB set forth in this Agreement, and except as set forth in section 1m above, Employee hereby irrevocably and unconditionally cancels, terminates, abrogates,
discharges, waives, fully releases and forever discharges IB Released Parties from any and all claims, debts, liabilities, demands, obligations, guarantees, costs, expenses, attorneys' fees, damages,
action or causes of action of any kind, whether known or unknown including any claims for relief, charges, complaints, causes of action, disputes, liens, demands, damages, costs and liabilities of any
nature whatsoever, known or unknown, suspected or unsuspected, which she at any time heretofore had or claimed to have had or which she may have or claim to have regarding events that have occurred as
of the date of this Agreement, arising out of or relating in any way to Employee's hiring by, employment with, or separation of employment from IB Released Parties, or otherwise relating to Employee's
interactions, involvement or employment with IB Released Parties, from the beginning of time through the Effective Date. This release specifically extends to, without limitation, claims or causes of
action arising from or related to breach of an express or implied contract, breach of the covenant of good faith and fair dealing, breach of fiduciary duty, fraud, misrepresentation, defamation,
slander, retaliation, discrimination, harassment, wrongful termination, infliction of emotional distress, loss of future earnings or profits, and claims under the California Constitution, any other
applicable State Constitution, the United States Constitution, and applicable state and federal fair employment laws, federal equal employment opportunity laws, and federal and state labor statutes
and regulations, including, but not limited to, the Civil Rights Act of 1964, as amended, the Fair Labor Standards Act, as amended, the Worker Adjustment Retraining and Notification Act of 1988, as
amended, the Americans With Disabilities Act of 1990, as amended, the Rehabilitation Act of 1973, as amended, the Age Discrimination in Employment Act of 1967, as amended, the Employee Retirement
Income Security Act of 1974, as amended, the California Fair Employment and Housing Act, as amended, the California Business and Professions Code, as amended, the California Labor Code, as amended,
and all other applicable state and federal laws. Employee acknowledges and agrees that to the extent not previously paid, the Severance Payment 

compensates
her for all wages and all other monies due and owing to her arising from her employment with IB, including payment for all hours worked, any penalties and/or interest owed, and that she
otherwise has been paid for all accrued leave and vacation time. However, notwithstanding the foregoing, nothing in this Agreement shall be construed to waive any right that is not subject to waiver
by private agreement, including without limitation any claims arising under state unemployment insurance or workers compensation laws or California Labor Code section 2802. 

        o)    Nothing
in this Agreement shall affect the EEOC's rights and responsibilities to enforce the Civil Rights Act of 1964, as amended, the Age Discrimination in Employment
Act of 1967, as amended, or
any other applicable law, nor shall anything in this Agreement be construed as a basis for interfering with Employee's protected right to file a timely charge with, or participate in an investigation
or proceeding conducted by, the EEOC, or any other state, federal or local government entity; provided, however, if the EEOC or any other state, federal or local government entity commences an
investigation on Employee's behalf, Employee specifically waives and releases her right, if any, to recover any monetary or other benefits of any sort whatsoever arising from any such investigation or
otherwise, nor will Employee seek or accept reinstatement to her former position with IB. 

        p)    Review
and Revocation Period. 

        (1)   Employee
acknowledges that IB has advised her that she may consult with an attorney of her choosing prior to signing this Agreement and that she has no less than
twenty-one (21) days during which to consider the provisions of this Agreement, although she may sign and return it sooner. 

        (2)   Employee
has carefully read and fully understands all of the provisions of this Agreement, which is written in a manner that she clearly understands. 

        (3)   Employee
is, through this Agreement, releasing IB Released Parties from any and all claims she may have against IB Released Parties arising before the execution of this
Agreement. 

        (4)   Employee
knowingly and voluntarily agrees to all of the terms in this Agreement. 

        (5)   Employee
knowingly and voluntarily intends to be legally bound by this Agreement. 

        (6)   Employee
was advised and hereby is advised in writing to consider the terms of this Agreement and consult with an attorney of her choice prior to signing this Agreement. 

        (7)   Employee
understands that rights or claims under the Age Discrimination in Employment Act of 1967 (29 U.S.C. §§ 621-634) that
may arise after the date this Agreement is signed, are not waived. 

        (8)   Employee
understands that she has a period of seven (7) calendar days after the date that she signs this Agreement to revoke her acceptance of the terms of this
Agreement by delivering a written notification in person, by messenger, by Federal Express, or by facsimile addressed to Internet
Brands, Inc. c/o Lynn Tokeshi, 909 N. Sepulveda Blvd., 11th Floor, El Segundo, CA 90245; facsimile (310) 280-4752. 

        q)    IB's Release of Employee Released Parties.    As a material inducement for Employee to enter into this
Agreement, and except as set forth in section 1m above, IB hereby waives all rights under section 1542 of the California Civil Code with respect to Employee Released Parties, which
section IB acknowledges has been fully explained to it by its attorneys and which it fully understands. Section 1542 provides as follows: 

A
general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have
materially affected his or her settlement with the debtor. 

        Notwithstanding
the provisions of Section 1542 of the California Civil Code, as a material inducement for Employee to enter into this Agreement, and except as set forth in
section 1m above, IB hereby irrevocably and unconditionally cancels, terminates, abrogates, discharges, waives, fully releases and forever discharges Employee Released Parties from any and all
claims, debts, liabilities, demands, obligations, guarantees, costs, expenses, attorneys' fees, damages, action or causes of action of any kind, whether known or unknown including any claims for
relief, charges, complaints, causes of action, disputes, liens, demands, damages, costs and liabilities of any nature whatsoever, known or unknown, suspected or unsuspected, which they, at any time
heretofore had or claimed to have had or which they may have or claim to have regarding events that have occurred as of the date of this Agreement, matters, including, but not limited to, claims or
causes of action for misrepresentation, breach of contract, conversion, defamation, slander, and libel, from the beginning of time through the Effective Date. 

        2.    Confidentiality.    Employee and her attorneys will keep completely confidential and will not disclose to any
person or entity the amount or terms of the Parties' settlement, this Agreement, previous settlement negotiations or any understandings, agreements, provisions or information contained herein except
as required or authorized by law or pursuant to court order. However, Employee may disclose this Agreement and its terms in her tax returns and to her accountants, tax advisors, attorneys and spouse.
Employee agrees to inform anyone to whom disclosure is permitted under this Agreement of the existence of this Confidentiality Agreement and they must agree to be bound by these confidentiality
provisions. Notwithstanding the foregoing, Employee may disclose this Agreement and all its terms to the extent necessary to prosecute or defend any action related to either Party's rights or
obligations under this Agreement, and such disclosure shall not be deemed a breach of this paragraph 2 or any other provision of this Agreement. 

        3.    Liquidated Damages re Confidentiality.    The Parties agree that it would be impossible, impractical or
extremely difficult to fix the actual damages suffered by reason of a breach of paragraph 2 above, and accordingly hereby agree that five thousand dollars ($5,000) shall be presumed to be the
amount of damages sustained by reason of each such breach by Employee that is found, by clear and convincing evidence and pursuant to the terms and conditions of paragraph 10 herein, to have
occurred, without prejudice to the right of IB to also seek injunctive or other equitable relief. 

        4.    Non-Disparagement.    The Parties agree that they will not make any derogatory statements, either
oral or written, or otherwise disparage each other, their products, employees, services, work and/or employment, and will take all reasonable steps to prevent others from making derogatory or
disparaging statements on their behalf. The Parties further agree that neither shall disclose her or its obligation of non-disparagement under this Agreement. 

        5.    Liquidated Damages re Non-Disparagement.    The Parties agree that it would be impossible,
impractical or extremely difficult to fix the actual damages suffered by reason of a breach of paragraph 4 above, and accordingly hereby agree that five thousand dollars ($5,000) shall be
presumed to be the amount of damages sustained by reason of each such breach by the other that is found, by clear and convincing evidence and pursuant to the terms and conditions of
paragraph 10 herein, to have occurred, without prejudice to the right any Party to also seek injunctive or other equitable relief. 

        6.    Return Of Company Property.    Immediately upon the Effective Date, Employee shall return to IB, unless
expressly excluded under this paragraph 6, all of its property, equipment, credit cards, documents, records, lists, files and any and all other IB materials including, without limitation,
computerized or electronic information that is in Employee's possession as of the Effective Date (the "Company Property"). The Company Property shall be delivered to IB at its offices in El Segundo,
California (or at such other reasonable location designated by IB). Employee shall not retain any Company Property other than the laptop computer, cellular telephone and related accessories used by
Employee during her employment at the Company, the ownership of which the Company hereby conveys to Employee. 

        7.    Binding on Assigns.    This Agreement is binding upon and inures to the benefit of the respective heirs,
successors, assigns, personal representatives, executors and administrators of Employee and IB. 

        8.    No Assignments.    Employee warrants and represents that she has not assigned or transferred any of Employee's
Claims in whole or in part to any other person or entity. 

        9.    Integration.    This instrument contains the entire agreement between the Parties relating to the rights herein
granted and the obligations herein assumed and supersedes any previous negotiations, agreements or understandings of any kind relating to the subject matter hereof. Any oral representations or
modifications concerning this instrument will be of no force or effect. Any representation not expressly contained in this Agreement was not material to any Party's decision to enter into this
Agreement. This Agreement can be modified only in the form of a writing signed by the Parties hereto and specifically identified as an amendment to this Agreement. 

        10.    Interpretation.    This Agreement shall be interpreted in accordance with the plain meaning of its terms and
not strictly for or against either of the Parties. This Agreement is entered into in California, shall be enforceable in California Superior Court in the County of Los Angeles and shall be governed by
the laws of the State of California. In any legal action brought by either Party hereto to enforce, or for breach of, any provision of this Agreement, the prevailing party shall be entitled to recover
her or its costs and expenses incurred in prosecuting and or defending such action and any appeal thereof, including, but not limited to, reasonable attorneys' fees. 

        11.    Severability.    If any terms or provisions of this Agreement are determined to be invalid or unenforceable by
a court of law of competent jurisdiction, the Parties hereto agree that such a determination will not affect the validity or enforceability of the remaining terms and provisions of this Agreement,
which will remain in full force and effect. 

        12.    Counterparts.    This Agreement may be executed in two or more counterparts, transmitted via facsimile in a pdf
via e-mail, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement. 

        Having
read the foregoing, having fully understood and agreed to the terms and provisions of this Agreement including Exhibits A and B hereto, having been advised by independent legal
counsel and intending to be bound hereby, the Parties voluntarily and of their own free will execute this Agreement as follows: 

PLEASE READ CAREFULLY. THIS SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS.

	DATED:	 	4-9-07
	 	By	 	/s/ CHRISTINE B. BUCKLIN
 CHRISTINE BUCKLIN
	
[Signatures continued on following page]
	 	 	 	 	 	 	 

	

Approved as to form:	

 	

KELLMAN HOFFER LLP
	

DATED:	
 	

4-9-07
	
 	

By	
 	

/s/ BARRY KELLMAN
 BARRY KELLMAN

Attorneys for CHRISTINE BUCKLIN
	

 	
 	

 	
 	

INTERNET BRANDS, INC.
	

DATED:	
 	

    
	
 	

By	
 	

    
 B. LYNN WALSH,

Exec. VP And General Counsel,

INTERNET BRANDS, INC.
	

Approved as to form:	
 	

LITTLER MENDELSON P.C.
	

DATED:	
 	

    
	
 	

By	
 	

    
 STEVEN A. GROODE

Attorneys for INTERNET BRANDS, INC.

QuickLinks

Exhibit 10.19

SEVERANCE AGREEMENT AND RELEASE OF CLAIMSExhibit 10.20

 

OFFICE LEASE

 

KILROY REALTY

 

 

909  NORTH
SEPULVEDA

 

 

KILROY
REALTY, L.P.,

 

 

a Delaware limited partnership,

 

as Landlord,

 

and

 

CARSDIRECT.COM, INC.,

 

a Delaware corporation,

 

as Tenant.

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 1

  	
  PREMISES, BUILDING, PROJECT, AND COMMON AREAS

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2

  	
  INITIAL LEASE TERM; OPTION TERM

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3

  	
  BASE RENT

  	
   

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4

  	
  ADDITIONAL RENT

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5

  	
  USE OF PREMISES

  	
   

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6

  	
  SERVICES AND UTILITIES

  	
   

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 7

  	
  REPAIRS

  	
   

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8

  	
  ADDITIONS AND ALTERATIONS

  	
   

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9

  	
  COVENANT AGAINST LIENS

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10

  	
  INSURANCE

  	
   

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11

  	
  DAMAGE AND DESTRUCTION

  	
   

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12

  	
  NONWAIVER

  	
   

  	
  31

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 13

  	
  CONDEMNATION

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 14

  	
  ASSIGNMENT AND SUBLETTING

  	
   

  	
  32

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 15

  	
  SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF
  TRADE FIXTURES

  	
   

  	
  36

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 16

  	
  HOLDING OVER

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 17

  	
  ESTOPPEL CERTIFICATES

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 18

  	
  SUBORDINATION AND ATTORNMENT

  	
   

  	
  37

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 19

  	
  DEFAULTS; REMEDIES

  	
   

  	
  39

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 20

  	
  COVENANT OF QUIET ENJOYMENT

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 21

  	
  LETTER OF CREDIT

  	
   

  	
  42

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 22

  	
  INTENTIONALLY DELETED

  	
   

  	
  43

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 23

  	
  SIGNS

  	
   

  	
  44

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 24

  	
  COMPLIANCE WITH LAW

  	
   

  	
  45

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 25

  	
  LATE CHARGES

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 26

  	
  LANDLORD’S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT

  	
   

  	
  46

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 27

  	
  ENTRY BY LANDLORD

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 28

  	
  TENANT PARKING

  	
   

  	
  47

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 29

  	
  MISCELLANEOUS PROVISIONS

  	
   

  	
  48

  

 

i

 

	
  EXHIBITS:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT A

  	
  OUTLINE OF PREMISES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT A-1

  	
  SITE PLAN

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT B

  	
  TENANT WORK LETTER

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT C

  	
  NOTICE OF LEASE TERM DATES

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT D

  	
  RULES AND REGULATIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT E

  	
  FORM OF TENANT’S ESTOPPEL CERTIFICATE

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT F

  	
  RECOGNITION OF COVENANTS, CONDITIONS, AND
  RESTRICTIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT G

  	
  INTENTIONALLY DELETED

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT H

  	
  FORM OF LETTER OF CREDIT

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT I

  	
  PARKING RULES AND REGULATIONS

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBIT J

  	
  BUILDING TOP SIGNAGE

  	
   

  	
   

  

 

ii

 

	
  AAA

  	
   

  	
  55

  
	
  Abatement Event

  	
   

  	
  41

  
	
  Actual Cost

  	
   

  	
  21

  
	
  Additional Rent

  	
   

  	
  10

  
	
  Affiliate

  	
   

  	
  35

  
	
  Alterations

  	
   

  	
  25

  
	
  Applicable Laws

  	
   

  	
  45

  
	
  Arbitration Award

  	
   

  	
  55

  
	
  Arbitration Fair Market
  Rental Values

  	
   

  	
  8

  
	
  Arbitration Notice

  	
   

  	
  54

  
	
  Arbitrator

  	
   

  	
  54

  
	
  Bank Prime Loan

  	
   

  	
  24

  
	
  Base Building

  	
   

  	
  25

  
	
  Base Rent

  	
   

  	
  9

  
	
  Base Year

  	
   

  	
  10

  
	
  Base Year Electrical
  Costs

  	
   

  	
  12

  
	
  Brokers

  	
   

  	
  52

  
	
  BS/BS Exception

  	
   

  	
  23

  
	
  Builder’s All Risk

  	
   

  	
  26

  
	
  Building

  	
   

  	
  4

  
	
  Building Common Areas

  	
   

  	
  5

  
	
  Building Hours

  	
   

  	
  20

  
	
  Building Structure

  	
   

  	
  23

  
	
  Building Systems

  	
   

  	
  23

  
	
  Building Top Signage

  	
   

  	
  44

  
	
  CC&Rs

  	
   

  	
  20

  
	
  Claims and Expenses

  	
   

  	
  27

  
	
  Common Areas

  	
   

  	
  4

  
	
  Comparable Buildings

  	
   

  	
  5

  
	
  Comparable Transactions

  	
   

  	
  7

  
	
  Consistent Alterations

  	
   

  	
  25

  
	
  Control

  	
   

  	
  36

  
	
  Cosmetic Alterations

  	
   

  	
  25

  
	
  Cost Pools

  	
   

  	
  17

  
	
  Design Problem

  	
   

  	
  25

  
	
  Determined Rent Rate

  	
   

  	
  6

  
	
  Direct Expenses

  	
   

  	
  10

  
	
  Downtime Start Date

  	
   

  	
  34

  
	
  Eligibility Period

  	
   

  	
  41

  
	
  Environmental Laws

  	
   

  	
  57

  
	
  Estimate

  	
   

  	
  18

  
	
  Estimate Statement

  	
   

  	
  18

  
	
  Estimated Excess

  	
   

  	
  18

  
	
  Excepted Matters

  	
   

  	
  58

  
	
  Excess

  	
   

  	
  17

  
	
  Existing Rent

  	
   

  	
  6

  
	
  Expense Year

  	
   

  	
  10

  
	
  Fair Market Rent Rate

  	
   

  	
  6, 7

  
	
  First Offer
  Commencement Date

  	
   

  	
  6

  
	
  First Offer Notice

  	
   

  	
  5

  
	
  First Offer Rent

  	
   

  	
  6

  
	
  First Offer Space

  	
   

  	
  5

  
	
  First Option Rent

  	
   

  	
  7

  
	
  Force Majeure

  	
   

  	
  50

  
	
  hazardous substance(s)

  	
   

  	
  57

  
	
  Holidays

  	
   

  	
  20

  
	
  HVAC

  	
   

  	
  20

  
	
  Interest Rate

  	
   

  	
  24

  
	
  Intervening Leases

  	
   

  	
  5

  
	
  JAMS

  	
   

  	
  54

  
	
  Landlord

  	
   

  	
  1

  
	
  Landlord Parties

  	
   

  	
  27

  

 

iii

 

	
  Landlord Repair
  Notice

  	
   

  	
  30

  
	
  L-C

  	
   

  	
  42

  
	
  L-C Amount

  	
   

  	
  42

  
	
  L-C Security
  Deposit

  	
   

  	
  42

  
	
  Lease

  	
   

  	
  1

  
	
  Lease
  Commencement Date

  	
   

  	
  7

  
	
  Lease Expiration
  Date

  	
   

  	
  7

  
	
  Lease Term

  	
   

  	
  7

  
	
  Lease Year

  	
   

  	
  7

  
	
  Lines

  	
   

  	
  53

  
	
  Mail

  	
   

  	
  51

  
	
  Monument

  	
   

  	
  45

  
	
  New Name

  	
   

  	
  45

  
	
  Nondisturbance
  Agreement

  	
   

  	
  38

  
	
  Notices

  	
   

  	
  50

  
	
  Objectionable
  Name

  	
   

  	
  45

  
	
  Operating
  Expenses

  	
   

  	
  10

  
	
  Option Rent
  Notice

  	
   

  	
  8

  
	
  Option Term

  	
   

  	
  7

  
	
  Option Term TI
  Allowance

  	
   

  	
  8

  
	
  Option Terms

  	
   

  	
  7

  
	
  Original
  Improvements

  	
   

  	
  28

  
	
  Other
  Improvements

  	
   

  	
  53

  
	
  Outside
  Agreement Date

  	
   

  	
  9

  
	
  Premises

  	
   

  	
  4

  
	
  Prevailing Party

  	
   

  	
  55

  
	
  Project

  	
   

  	
  4

  
	
  Project Common
  Areas

  	
   

  	
  5

  
	
  Proposition 13

  	
   

  	
  16

  
	
  Provider

  	
   

  	
  55

  
	
  Renovations

  	
   

  	
  52

  
	
  Rent Payments

  	
   

  	
  6

  
	
  Rent

  	
   

  	
  10

  
	
  Right Holders

  	
   

  	
  7

  
	
  Rules and
  Regulations

  	
   

  	
  56

  
	
  Second Option
  Rent

  	
   

  	
  7

  
	
  Statement

  	
   

  	
  17

  
	
  Storage Space

  	
   

  	
  43

  
	
  Subject Space

  	
   

  	
  33

  
	
  Subleasing Costs

  	
   

  	
  34

  
	
  Subsequent Year
  Electrical Costs

  	
   

  	
  12

  
	
  Summary

  	
   

  	
  1

  
	
  Superior Right
  Holders

  	
   

  	
  5

  
	
  Supplemental
  Statement

  	
   

  	
  18

  
	
  Tax Expenses

  	
   

  	
  16

  
	
  Telecommunications
  Equipment

  	
   

  	
  58

  
	
  Tenant

  	
   

  	
  1

  
	
  Tenant Parties

  	
   

  	
  27

  
	
  Tenant Work
  Letter

  	
   

  	
  4

  
	
  Tenant’s
  Security System

  	
   

  	
  22

  
	
  Tenant’s Share

  	
   

  	
  17

  
	
  Transaction
  Costs

  	
   

  	
  35

  
	
  Transfer Notice

  	
   

  	
  33

  
	
  Transfer Premium

  	
   

  	
  34

  
	
  Transferee

  	
   

  	
  33

  
	
  Transfers

  	
   

  	
  33

  
	
  Unusable Area

  	
   

  	
  41

  

 

iv

 

909 NORTH SEPULVEDA

 

OFFICE LEASE

 

This Office Lease
(the “Lease”), dated as of the
date set forth in Section 1 of the Summary of Basic Lease Information
(the “Summary”), below, is made by
and between KILROY REALTY, L.P., a Delaware limited partnership (“Landlord”), and CARSDIRECT.COM, INC., a
Delaware corporation (“Tenant”).

 

SUMMARY OF BASIC LEASE
INFORMATION

 

	
  TERMS OF LEASE

  	
   

  	
  DESCRIPTION

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  1.

  	
   

  	
  Date

  	
   

  	
  June 25, 2004.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Building, Premises and Project

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.1

  	
  Building:

  	
   

  	
  909 North Sepulveda Boulevard, El Segundo,
  California (consisting of approximately 248,465 rentable square feet of
  space)

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.2

  	
  Premises:

  	
   

  	
  45,276 rentable (42,012 usable) square feet of space
  located in the Building, as further set forth below and in Exhibit A to this Lease.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Suite No.(s): 1000 and 1100.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Floors: 10th and 11th.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  2.3

  	
  Project:

  	
   

  	
  The Building is part of an office project as further
  set forth in Section 1.1.2 of this Lease.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Lease Term

  (Article 2):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.1

  	
  Length of Term:

  	
   

  	
  Approximately sixty-nine (69) months.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.2

  	
  Lease Commencement Date:

  	
   

  	
  Subject to the occurrence of any “Landlord Caused
  Delays,” as such term is defined in Section 5.6 of the Tenant Work
  Letter attached hereto as Exhibit B,
  the earlier to occur of (i) the date upon which Tenant first commences to
  conduct business in the Premises, and (ii) October 1, 2004.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  3.3

  	
  Lease Expiration Date:

  	
   

  	
  The last day of the sixty-ninth (69th)
  month to occur after the Lease Commencement Date.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Base Rent (Article 3):

  	
   

  	
   

  

 

	
  Months during the

  Lease Term

  	
   

  	
  Annual

  Base Rent

  	
   

  	
  Monthly

  Installment

  of Base Rent

  	
   

  	
  Monthly

  Rental Rate

  per Rentable

  Square Foot

  	
   

  
	
  1-9

  	
   

  	
  N/A

  	
   

  	
  $

  	
  0.00

  	
   

  	
  $

  	
  0.00

  	
   

  
	
  10-12

  	
   

  	
  N/A

  	
   

  	
  $

  	
  87,156.30

  	
   

  	
  $

  	
  1,925

  	
   

  
	
  13-24

  	
   

  	
  $

  	
  1,071,954.60

  	
   

  	
  $

  	
  89,329.55

  	
   

  	
  $

  	
  1,973

  	
   

  
	
  25-36

  	
   

  	
  $

  	
  1,098,848.52

  	
   

  	
  $

  	
  91,570.71

  	
   

  	
  $

  	
  2,0225

  	
   

  
	
  37-48

  	
   

  	
  $

  	
  1,126,285.80

  	
   

  	
  $

  	
  93,857.15

  	
   

  	
  $

  	
  2,0730

  	
   

  
	
  49-60

  	
   

  	
  $

  	
  1,154,429.28

  	
   

  	
  $

  	
  96,202.44

  	
   

  	
  $

  	
  2,1248

  	
   

  
	
  61-69

  	
   

  	
  $

  	
  1,183,279.20

  	
   

  	
  $

  	
  98,606.60

  	
   

  	
  $

  	
  2,1779

  	
   

  

 

 

	
  5.

  	
   

  	
  Base Year

  (Article 4):

  	
   

  	
  Calendar year 2005.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Tenant’s Share

  (Article 4):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  6.1

  	
  Tenant’s Share of the Building:

  	
   

  	
  18.2223%

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Permitted Use

  (Article 5):

  	
   

  	
  General office use and computer or online and
  telephone call center, all of which shall be consistent with the character of
  a first-class office building.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  Letter of Credit

  (Article 21):

  	
   

  	
  Initially in the amount of $1,577,135.00.

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Parking Passes

  (Article 28):

  	
   

  	
  Four (4) parking permits for every 1,000 rentable
  square feet of the Premises of which ten (10) permits shall be for the use of
  reserved parking spaces along the eastern boundary line and closest to the
  Project parking facility elevator within the areas designated by Landlord for
  reserved parking on the second level of the Project parking structure. The
  remainder of Tenant’s parking permits shall be for unreserved parking. Tenant
  shall have the right, however, to convert up to five (5) of its unreserved
  parking permits to permits for use of additional reserved parking spaces
  (subject to availability of reserved parking, as designated by Landlord, upon
  thirty (30) days notice to Landlord and revocable at Landlord’s reasonable
  discretion from time to time (based upon Landlord’s reasonable need for such
  parking spaces for provision to another tenant of the Project or otherwise)
  upon thirty (30) days notice to Tenant (in which case such five (5) permits
  or portion thereof designated by Landlord shall revert to unreserved parking
  permits)). All of the above parking permits shall be provided at no charge
  during the initial Lease Term and at prevailing rates for parking in the
  Project parking facility thereafter. Tenant shall initially have the right to
  rent from Landlord up to an additional 1.5 unreserved parking permits per
  1,000 rentable square feet of the Premises at the below rates; provided,
  however, in the event that Tenant elects to reduce the number of additional
  unreserved parking permits rented by Tenant, future increases of such
  additional unreserved parking permits shall be subject to availability and
  subject to the foregoing maximum of 1.5 unreserved parking permits per 1,000
  rentable square feet of the Premises as further set forth in Article 28 of this Lease. Rates for
  such additional parking permits shall be $20 per month per unreserved parking
  permit and $60 per month per reserved parking permit during the second year
  after Tenant takes occupancy of the Premises with annual increases of two
  percent (2%) thereafter during the initial Lease

  

 

2

 

	
   

  	
   

  	
   

  	
   

  	
  Term and at prevailing rates for parking in the
  Project parking facility thereafter. Except as provided in Article 28 of this
  Lease, there shall be no fees for the above additional parking permits during
  the first twelve (12) months following Tenant’s taking occupancy of the
  Premises.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Notice Address of Tenant

  (Section 29.18):

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Prior to the Lease Commencement Date:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  CarsDirect.Com

  10567 Jefferson Boulevard

  Culver City, California 90232

  Attention: Lynn Walsh

  Phone: (310) 280-4361

  Facsimile: (310) 280-4335

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  and

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  After the Lease Commencement Date:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  at the Premises

  Attention: Lynn Walsh

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  with, both prior to and after the Lease Commencement
  Date, a copy to:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Thomas R. Sestanovich, Esq.

  Rein, Evans & Sestanovich LLP

  1925 Century Park East, 16th Floor

  Los Angeles, California 90067

  Phone: (310) 551-3100

  Facsimile: (310) 551-0238

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Notice Address of Landlord

  	
   

  	
  Kilroy Realty, L.P.

  12200 W. Olympic Blvd.,

  Suite 200

  Los Angeles, California 90064

  Phone: (310) 481-8400

  Facsimile: (310) 481-6520

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  With a copy to:

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Allen Matkins Leck Gamble & Mallory LLP

  1901 Avenue of the Stars

  Suite 1800

  Los Angeles, California 90067

  
	
   

  	
   

  	
   

  	
   

  	
  Attention:

  	
  Anton N. Natsis, Esq. and

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Delmar L. Nehrenberg, Esq.

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Broker(s)

  (Section 29.24):

  	
   

  	
  For Landlord:

  CB RICHARD ELLIS/MADISON

  PARTNERS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  For Tenant:

  CB RICHARD ELLIS

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Tenant Improvement Allowance

  (Section 2 of Exhibit B):

  	
   

  	
  $45.00 per usable square foot of the Premises for a
  total of $1,890,540.00.

  

 

3

 

ARTICLE 1

 

PREMISES, BUILDING,
PROJECT, AND COMMON AREAS;

 

RIGHT OF FIRST OFFER 

 

1.1                 Premises,
Building, Project and Common Areas.

 

1.1.1                 The Premises.
Landlord hereby leases to Tenant and Tenant hereby leases from Landlord the
premises set forth in Section 2.2 of the Summary (the “Premises”).
The outline of the Premises is  set
forth  in Exhibit A  attached hereto and has the
number of rentable square feet as set forth in Section 2.2 of the
Summary. The outline of the Premises, the “Building” and the “Project,” as
those terms are defined in Section 1.1.2 below, are  further depicted on the Site Plan
attached hereto as Exhibit A-1.
The parties hereto agree that the lease of the Premises is upon and subject to
the terms, covenants and conditions herein set forth, and Landlord and Tenant
each covenant, as a material part of the consideration for this Lease, to keep
and perform each and all of such terms, covenants and conditions by them,
respectively, to be kept and performed under this Lease. The parties hereto
hereby acknowledge that the purpose of Exhibit
A is to show the approximate location of the Premises in the
“Building,” as that term is defined in Section 1.1.2. below, only, and
such Exhibit is not meant to constitute an agreement, representation or
warranty as to the construction of the Premises, the precise area thereof or
the specific location of the “Common Areas,” as that term is defined in Section
1.1.3, below, or the elements thereof or of the accessways to the Premises
or the Project as that term is
defined in Section 1.1.2, below. Except as specifically set forth in
this Lease and in the Tenant Work Letter attached hereto as Exhibit B (the  “Tenant
Work Letter”), Landlord
shall not be obligated to provide or pay for any improvement work or services
related to the improvement of the Premises. Tenant also acknowledges that
neither Landlord nor any agent of Landlord has made any representation or
warranty regarding the condition of the Premises, the Building or the Project
or with respect to the suitability of any of the foregoing for the conduct of
Tenant’s business, except as specifically set forth in this Lease and the Tenant
Work Letter.

 

1.1.1.1                                  Outside
Delivery Date. Landlord anticipates that the Premises shall be
delivered to Tenant in the “Delivery Condition” on or before the “Delivery
Date,” as such terms are defined in the Tenant Work Letter. Except as otherwise
provided below, Landlord shall not be subject to any liability for its failure
to deliver the Premises (or any portion thereof), and such failure shall not
affect the validity of this Lease or the obligations of Tenant hereunder with
respect to the Premises. Landlord agrees that it shall use its good faith,
commercially reasonable efforts to deliver the Premises in the Delivery
Condition to Tenant on or before the Delivery Date, however, if Landlord does
not deliver the Premises in the Delivery Condition by the “Outside Delivery
Date,” as that term is defined below, then, upon written notice (which written
notice must be given to Landlord on or before the date which occurs ten (10)
business days following the occurrence of the Outside Delivery Date), Tenant
shall have the right to immediately terminate this Lease and upon such
termination Landlord and Tenant shall be relieved of their obligations under
this Lease. Tenant’s right to terminate this Lease shall be Tenant’s sole and
exclusive remedy at law or in equity for damages or termination for the failure
of Landlord to deliver the  Premises
by the Outside Delivery Date. The “Outside Delivery Date” shall be the date
which occurs forty-five (45) days after the Delivery Date. The Outside Delivery
Date shall be extended on a day-for-day basis for any delays resulting in whole
or in part from the acts or omissions of the “Tenant Parties,” as such term is
defined in Section 10.1 of this Lease and/or for “Force Majeure,” as such term
is defined in Section 29.16 of this Lease. Notwithstanding anything contained
in this Section 1.1.1.1 to the contrary, Tenant’s termination notice due to a
failure of delivery by the Outside Delivery Date shall be null and void (but
only in connection with the first notice sent by Tenant with respect to such
failure) if Landlord provides written notice to Tenant within five (5) business
days of receipt of such termination notice from Tenant that Landlord will cause
the delivery of the Premises to Tenant in the Delivery Condition to occur within
thirty (30) days in which case the Outside Delivery Date shall be deemed
extended to such date specified by Landlord.

 

1.1.2                 The Building and the Project. The Premises are a part of the building set
forth in Section 2.1 of the Summary (the “Building”).  The
Building is part of the “Project,” defined below. The term “Project,”
as used in this Lease, shall mean (i) the Building and the “Common
Areas,” as that term is defined in Section 1.1.3, below (ii) the land
(which is improved with landscaping, subterranean parking facilities and other
improvements) upon which

 

4

 

the Building and the Common Areas are located, (iii)
the parking structure located at 955 North Sepulveda Boulevard (iv) the
building located adjacent to the Building at 999 North Sepulveda Boulevard, and
(v) at Landlord’s discretion, any additional real property, areas, land,
buildings or other improvements added thereto adjacent to the Project.

 

1.1.3                 Common Areas. Tenant shall have the non-exclusive right to
use in common with other tenants in the Project, and subject to the rules and
regulations referred to in Article 5 of this Lease, those portions of
the Project which are provided, from time to time, for use in common by
Landlord, Tenant and any other tenants of the Project (such areas, together
with such other portions of the Project designated by Landlord, in its
reasonable discretion, including certain de minimus areas designated for the
exclusive use of certain tenants, or to be shared by Landlord and certain
tenants, are collectively referred to herein as the “Common Areas”). The
Common Areas shall consist of the “Project Common Areas” and the “Building
Common Areas.” The term “Project Common Areas,”  as used in this Lease, shall mean the
portion of the Project designated as such by Landlord. The term “Building Common Areas,”  as used in this Lease, shall mean the
portions of the Common Areas located within the Building designated as such by
Landlord. The manner in which the Common Areas are maintained and operated
shall be at the reasonable discretion of Landlord and the use thereof shall be
subject to such rules, regulations and restrictions as Landlord may make from
time to time provided the same are enforced in a nondiscriminatory manner. Landlord
reserves the right to close temporarily, make alterations or additions to, or
change the location of elements of the Project and the Common Areas. Except
when and where Tenant’s right of access is specifically excluded or restricted
as the result of (i) an emergency, (ii) a requirement by Applicable Laws, or
(iii) a specific provision set forth in this Lease, Tenant shall have the right
of access to the Premises, the Building, and the Project parking facility
twenty-four (24) hours per day, seven (7) days per week, every calendar day
during the Lease Term. Notwithstanding anything above to the contrary, Landlord
shall manage, maintain and operate the Project in a manner materially
consistent with other first-class, mid-rise or high-rise office buildings in El
Segundo, California, which are comparable in terms of size (from 100,000 to
500,000 square feet), age or date and extent of renovation, quality of
construction, appearance, and quality of common area improvements (the “Comparable Buildings”).

 

1.2                  Rentable Square Feet of
Premises, Building and Protect. For
purposes of this Lease, the rentable and usable square footages set forth in
the Summary and all percentages based thereupon shall be deemed accurate and
neither the Premises, Building or Project shall be subject to remeasurement.

 

1.3                  Right of First Offer. Tenant shall have an ongoing right of first
offer with respect to any space on the ninth (9th) floors of the
Building which becomes available for lease by third parties after initial
leasing (the “First Offer Space”).  Notwithstanding the foregoing, such first
offer right of Tenant shall commence only following the expiration or earlier
termination of the first leases of the First Offer Space (including renewals)
of the First Offer Space to be executed subsequent to the date of this Lease,
and such right of first offer shall be subordinate to (i) all rights granted to
any present or future occupants of the First Offer Space and all rights of all
existing tenants at the Building to lease the First Offer Space (whether
pursuant to rights of first offer, expansion options, must-take requirements,
renewal options or otherwise) and (ii) any rights granted under any
“Intervening Leases,” as defined below (collectively, (i) and (ii) comprise the
“Superior Right Holders”)  with respect to such First Offer Space.
Tenant’s right of first offer shall be on the terms and conditions set forth in
this Section 1.3. The term “Intervening
Leases” shall mean any lease entered into by Landlord following
Tenant’s failure to lease any applicable First Offer Space, including any
renewal or extension of any such leases and/or any rights of expansion granted
therein, and regardless of whether such renewal or extension is pursuant to an
express written provision in such lease or whether such renewal, extension or
expansion is consummated pursuant to a lease amendment or a new lease.

 

1.3.1                 Procedure for Offer. In the event that Tenant is interested in
leasing any First Offer Space, Tenant shall provide written notice (the “Expansion Request”)  expressing its interest in leasing
additional space on. the ninth (9th)
floor of the Building. Landlord shall within thirty (30) days of
receipt of such Expansion Request, notify Tenant (the “First Offer Notice”)  if any First Offer Space or any portion
thereof is then available for lease to third parties, provided that no Superior
Right Holder wishes to lease such space. Pursuant to such First Offer Notice,
Landlord shall offer to lease to Tenant the then available First Offer

 

5

 

Space.
The First Offer Notice shall describe the space so offered to Tenant and shall
set forth the “First Offer Rent,” as that term is defined below, and the other
economic terms upon which Landlord is willing to lease such space to Tenant.
Notwithstanding anything to the contrary contained herein, Tenant may not
deliver an Expansion Request more than one (1) time during any twelve (12)
consecutive month period. Notwithstanding anything to the contrary contained
herein, First Offer Space shall be deemed not available for lease if, as of
delivery of any Expansion Request, Landlord has commenced preparation and
negotiation of a lease therefor.

 

1.3.2                 Procedure for Acceptance. If Tenant wishes to exercise Tenant’s right of
first offer with respect to the space described in the First Offer Notice, then
within seven (7) business days of delivery of the First Offer Notice to Tenant,
Tenant shall deliver notice to Landlord of Tenant’s intention to exercise its
right of first offer with respect to the entire space described in the First
Offer Notice on the terms contained in such notice. If Tenant does not so
notify Landlord within the seven (7) business day period, then Landlord shall
be free to lease the space described in the First Offer Notice to anyone whom
Landlord desires on any terms Landlord desires; provided, however, if, within
six (6) months of delivery of any First Offer Notice, Landlord materially
changes the configuration of the space being offered, Landlord shall again
offer the space to Tenant as First Offer Space pursuant to this Section 8.1
if no Superior Right Holder desires to lease such space. Notwithstanding
anything to the contrary contained herein, Tenant must elect to exercise its
right of first offer, if at all, with respect to all of the space offered by
Landlord to Tenant at any particular time, and Tenant may not elect to lease
only a portion thereof.

 

1.3.3                 First Offer Space Rent.  The rent payable by Tenant for the First Offer
Space (the; “First Offer Rent”)  shall be equal to the “Determined Rent
Rate,” as defined below. The “Determined Rent
Rate”  payable by Tenant
shall be equal to the “Fair Market Rent Rate,”  as that term is defined in Section
2.2.2.1 of this Lease. However, when calculating the Determined Rent Rate
for the First Offer Space, the Fair Market Rent Rate (as determined on an
average annual per rentable square foot net effective basis, spreading all
monetary concessions equally throughout the term for the First Offer Space)
over the term of the First Offer Space shall in no event be less than the “Existing Rent”.  The Existing Rent shall be the average annual “Rent Payments”
calculated per rentable square foot on a net effective (spreading the Tenant
Improvement Allowance throughout the initial Lease Term) basis for the initial
Premises. The “Rent Payments”  shall be the sum of (i) the then current  Base Rent for the initial Premises and
(ii) the amount of Tenant’s Share of Direct Expenses payable by Tenant on an
annual, per rentable square foot basis for the Premises then due for the
initial Premises, which Rent Payments shall be deemed to be increased by two
and one-half percent (2.5%) on the first day of each new year of the term for
the First Offer Space.

 

1.3.4                 Construction In First Offer
Space. Any allowances for construction of
improvements for the First Offer Space Shall be determined as a component of
the First Offer Rent pursuant to Section 1.3.3, above, and the
construction of improvements in the First Offer Space shall comply with the terms
of Article 8 of the Lease.

 

1.3.5                 Amendment to Lease. If Tenant timely exercises Tenant’s right to
lease the First Offer Space as set forth herein, Landlord and Tenant shall
within thirty (30) days thereafter execute an amendment adding such First Offer
Space to the Lease upon the terms and conditions as set forth in the First
Offer Notice and this Section 1.3. Tenant shall commence payment of Rent
for the First Offer Space, and the term of the First Offer Space shall commence
upon the date of delivery of the First Offer Space to Tenant (the “First Offer Commencement Date”)  and terminate on the date set forth in the
First Offer Notice.

 

1.4                  Termination of Right of
First_Offer.  The rights contained
in this Section 1.3 shall be personal to the “Right Holders,” as such
term is defined in Section 2.2 of this Lease, and may only be exercised
by the Right Holders (and not any other assignee, sublessee or other transferee
of Tenant’s interest in this Lease) if they occupy at least eighty percent 80%)
of the Premises. As to any particular First Offer Space, the right of first
offer granted herein shall terminate upon the failure by Tenant to exercise its
right of first offer with respect to such First Offer Space as offered by
Landlord. Tenant shall not have the right to lease First Offer Space, as
provided in this Section 1.3, if as of the date of the attempted
exercise of any right of first offer by Tenant, or as of the scheduled date of
delivery of such First Offer Space to Tenant, Tenant is in “Default,” as defined
in Article 19 of the Lease, beyond any applicable notice and cure
periods set forth herein.

 

6

 

ARTICLE 2

 

INITIAL LEASE TERM;
OPTION TERM

 

2.1                  Initial Lease
Term. The terms and provisions of this Lease shall be effective as of
the date of this Lease. The term of this Lease (the “Lease Term”) shall be as set forth in Section 3.1 of
the Summary, shall commence on the date set forth in Section 3.2 of the
Summary (the “Lease Commencement Date”),
and shall terminate on the date set forth in Section 3.3 of the Summary
(the “Lease Expiration Date”)
unless this Lease is sooner terminated or extended as herein provided. For
purposes of this Lease, the term “Lease Year”
shall mean each consecutive twelve (12) month period during the Lease Term;
provided, however, that the first Lease Year shall commence on the Lease
Commencement Date and end on the last day of the eleventh month thereafter and
the second and each succeeding Lease Year shall commence on the first day of
the next calendar month; and further provided that the last Lease Year shall
end on the Lease Expiration Date. Within six (6) months following the Lease
Commencement Date, Landlord shall deliver to Tenant a Notice of Lease Term
Dates in the form as set forth in  Exhibit
C, attached hereto, or a reasonably comparable form, as a
confirmation of the information set forth therein, which Tenant shall execute
and return to Landlord within ten (10) days of receipt thereof, provided that
if said notice is not factually correct, then Tenant shall make such changes as
are necessary to make the notice factually correct and shall thereafter execute
and return such notice to Landlord within such ten (10) day period. Once the
Notice of Lease Term Dates is executed and delivered by Landlord and Tenant,
the same shall be binding upon Landlord and Tenant.

 

2.2                  Option Terms.

 

2.2.1                 Option Right.
Landlord hereby grants the Original Tenant, any assignee of Tenant permitted
under Article 14 of this Lease, and any “Affiliate” (as that term is
defined in Section 14.8 below) (collectively, the “Right Holders”), two (2) options to extend
the Lease Term for a period of five (5) years each (each an “Option Term” and collectively, the “Option Terms”), which options shall be
exercisable only by written notice delivered by Tenant to Landlord as provided
below, provided that, as of the date of delivery of such notice, Tenant is not
in Default under this Lease beyond any applicable notice and cure periods set
forth herein. Upon the proper exercise of each such option to extend, and
provided that, as of the end of the initial Lease Term or the first Option
Term, as the case may be, Tenant is not in Default under this Lease beyond any
applicable notice and cure periods set forth herein, the Lease Term, as it
applies to the Premises, shall be extended for a period of five (5) years. The
rights contained in this Section 2.2 shall be personal to the Right
Holders, and may only be exercised by such Right Holders (and not any other
assignee, sublessee or other transferee of Tenant’s interest in this Lease) if
such entities occupy at least one (1) full floor of the Premises.

 

2.2.2                 Option
Rent/Parking. The rent payable by Tenant during the first Option Term
(the “First Option Rent”) shall be
equal to ninety-five percent (95%) of the Fair Market Rent Rate and the rent
payable by Tenant during the second Option Term (the “Second Option Rent”) shall be equal to one
hundred percent (100%) of the Fair Market Rent Rate. During the Option Terms,
notwithstanding anything to the contrary contained in this Lease, all parking
privileges of Tenant under this Lease (including visitor parking) shall be
provided at then prevailing rates for  parking
in the Project parking facility.

 

2.2.2.1                                  Fair
Market Rent Rate. The “Fair Market
Rent Rate” shall be equal to the rent (including additional rent and
considering any “base year” or “expense stop” applicable thereto), including
all escalations, at which tenants, as of the commencement of the applicable
Option Term or term for the applicable First Offer Space, are leasing
non-sublease, non-encumbered, non-equity, non-renewal, non-expansion space
comparable in size, location and quality to the Premises or First Offer Space,
as applicable, for a similar term and for a similar use, in an arms length
transaction, which comparable space is located in the Project and in the
Comparable Buildings (the “Comparable
Transactions”), taking into consideration the following concessions:
(a) rental abatement concessions, if any, being granted such tenants in
connection with such comparable space, (b) tenant improvements or allowances
provided or to be provided for such comparable space, taking into account, and
deducting the value of, the existing improvements in the Premises or First Offer
Space, as applicable, such value to be based upon the age, design, quality of
finishes, and layout of the improvements and the extent to which the same could
be utilized by a general office user, and (c) all other monetary and
non-monetary

 

7

 

concessions, if any,
being granted such tenants in connection with such comparable space; provided,
however, that notwithstanding anything to the contrary herein, no consideration
shall be given to (x) the fact that Landlord is or is not required to pay a
real estate brokerage commission in connection with the applicable term or the
fact that the comparable transactions do or do not involve the payment of real
estate brokerage commissions, and (y) any period of rental abatement, if any,
granted to tenants in Comparable Transactions in connection with the design,
permitting and construction of tenant improvements in such comparable space.
The Fair Market Rent Rate shall additionally include a determination as to
whether, and if so to what extent, Tenant must provide Landlord with financial
security, such as a letter of credit or guaranty, for Tenant’s Rent obligations
during the term of any lease of First Offer Space or any Option Term. Such
determination shall be made by reviewing the extent of financial security then
generally being imposed in Comparable Transactions from tenants of comparable
financial condition and credit history to the then existing financial condition
and credit history of Tenant (with appropriate adjustments to account for
differences in the then-existing financial condition of Tenant and such other
tenants). If in determining the Fair Market Rent Rate for an Option Term,
Tenant is deemed to be entitled to a tenant improvement or comparable allowance
for the improvement of the Premises (the total dollar value of such allowance,
the “Option Term TI Allowance”),
Landlord may, at Landlord’s sole option, elect any or a portion of the
following: (A) to grant some or all of the excess Option Term TI Allowance to
Tenant as a lump sum payment to Tenant, and/or (B in lieu of making a lump sum
payment (or portion thereof) to Tenant, to reduce the rental rate component of
the Fair Market Rent Rate to be an effective rental rate which take into
consideration that Tenant will not receive a payment of such excess Option Term
TI Allowance, or portion thereof (in which case the excess Option Term TI
Allowance, or portion thereof, evidenced in the effective rental rate shall not
be paid to Tenant).

 

2.2.3                 Exercise of
Options. The options contained in this Section 2.2 shall be
exercised by Tenant, if at all, only in the  following
manner: (i) Tenant shall deliver written notice to Landlord not more than
twelve (12) months nor less than nine (9) months prior to the expiration of the
initial Lease Term, 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 thirty (30) days after receipt of Tenant’s notice, setting forth the First
Option Rent or Second Option Rent, each as applicable; and (iii) if Tenant
wishes to exercise such option, Tenant may, by written notice to Landlord, on
or before the date occurring thirty (30) days after Tenant’s receipt of the
Option Rent Notice, request Landlord’s determination of the Fair Market Rent
Rate which Landlord would submit to arbitration, if arbitration were to occur
under Section 2.2.4, below, and within ten (10) business days of such
request, Landlord and Tenant shall each simultaneously deliver to the other
their determinations of the Fair Market Rent Rate (provided that the
determination of the Fair Market Rent Rate submitted by Landlord shall not
exceed the Option Rent set forth in the Option Rent Notice) that each would
submit to arbitration if arbitration were to occur under Section 2.2.4,
below (the “Arbitration Fair Market Rental
Values”) (provided that if Tenant has requested an exchange of
Arbitration Fair Market Rental Values and Landlord fails to provide Landlord’s
Arbitration Fair Market Rental Value, then the Option Rent contained in the
Option Rent Notice shall be deemed Landlord’s Arbitration Fair Market Rental
Value, and, so long as Tenant has delivered to Landlord its Arbitration Fair
Market Rental Value, the Arbitration Fair Market Rental Values shall be deemed
determined and exchanged); and (iv) whether or not Arbitration Fair Market
Rental Values were determined and exchanged pursuant to Section 2.2.3(iii),  above, if Tenant wishes to exercise such option,
Tenant shall, on or before the date occurring thirty (30) days after Tenant’s
receipt of the Option Rent Notice, exercise the option by delivering written
notice thereof to Landlord, and upon, and concurrent with, such exercise,
Tenant shall, at its option, either (A) accept the Option Rent contained in the
Option Rent Notice, in which case the Option Rent shall be the amount set forth
in the Option Rent Notice, (B) accept Landlord’s Arbitration Fair Market Rental
Value (to the extent the same has been previously provided pursuant to the
terms hereof), in which case the Option Rent shall be Landlord’s Arbitration
Fair Market Rental Value, or  (C)
object to both the Option Rent contained in the Option Rent Notice, and, if
applicable, Landlord’s Arbitration Fair Market Rental Value, in which case the
parties shall follow the procedure, and the Option Rent shall be determined, as
set forth in Section 2.2.4 below, but subject to the terms and
conditions, when appropriate, of Section 2.2.2  above.

 

2.2.4                 Determination
of First Option Rent or Second Option Rent. In the event Tenant timely
and appropriately objects to the First  Option
Rent or the Second Option Rent, Landlord and Tenant shall attempt to agree upon
the same using their best good-faith

 

8

 

efforts. If Landlord and
Tenant fail to reach agreement within ten (10) business days following Tenant’s
objection to the First Option Rent or the Second Option Rent (the “Outside Agreement Date”), then (i) if Arbitration
Fair Market Rental Values have been determined and exchanged pursuant to item
(iii) of Section 2.2.3, above, each party’s Arbitration Fair Market
Rental Values shall be submitted to arbitration without modification in
accordance with Sections 2.2.4.1 through 2.2.4.7 below or (ii) if
Arbitration Fair Market Rental Values have not been determined and exchanged
pursuant to item (iii) of Section 2.2.3, above, each, party shall make a
separate determination of the Option Rent within ten (10) business days, and
such determination and the Option Rent shall be submitted to arbitration in
accordance with Sections 2.2.4.1 through 2.2.4.7 below.

 

2.2.4.1                                  Landlord
and Tenant shall each appoint one arbitrator who shall by profession be a real
estate broker or appraiser who shall have been active over the five (5) year
period ending on the date of such appointment in the leasing (or appraisal, as
the case may be) of commercial mid or high-rise properties in the E1 Segundo,
California area. The determination of the arbitrators shall be limited solely
to the issue area of whether Landlord’s or Tenant’s submitted First Option Rent
or the Second Option Rent is the closest to the actual Option Rent as
determined by the arbitrators, taking into account the requirements of Section
2.2.2 of this Lease. Each such arbitrator shall be appointed within fifteen
(15) days after the applicable Outside Agreement Date.

 

2.2.4.2                                  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.

 

2.2.4.3                                  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.

 

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

 

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

 

2.2.4.6                                  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 2.2.4.

 

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

 

ARTICLE 3

 

BASE RENT

 

Tenant shall pay,
without prior notice or demand, to Landlord or Landlord’s agent at the
management office of the Project, or, at Landlord’s option, at such other place
as Landlord may from time to time designate in writing, by a check for currency
which, at the time of payment, is legal tender for private or public debts in
the United States of America, base rent (“Base
Rent”) as set forth in Section 4 of the Summary, payable in
equal monthly installments as set forth in Section 4 of the Summary in
advance on or before the first day of each and every calendar month during the
Lease Term, without any setoff or deduction whatsoever (except as otherwise
specifically set forth in this Lease). If any Rent 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 payment of Rent is for a period which is shorter than
one month, the Rent for any such fractional month shall accrue on a daily basis
during such fractional month and shall total an amount equal to the product of
(i) a fraction, the numerator of which is the number of days in such fractional

 

9

 

month and the denominator
of which is the actual number of days occurring in such calendar month, and
(ii) the then-applicable Monthly Installment of 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                  General Terms.
In addition to paying the Base Rent specified in Article 3 of this
Lease, Tenant shall pay “Tenant’s Share” of the annual “Direct Expenses,” as
those terms are defined in Sections 4.2.6 and 4.2.2 of this
Lease, respectively, which are in excess of the amount of Direct Expenses
applicable to the “Base Year,” as that term is defined in Section 4.2.1,
below; provided, however, that in no event shall any decrease in Direct
Expenses for any Expense Year below Direct Expenses for the Base Year entitle
Tenant to any decrease in Base Rent or any credit against sums due under this
Lease. Such payments by Tenant, together with any and all other amounts payable
by Tenant to Landlord pursuant to the terms of this Lease, are hereinafter
collectively referred to as the “Additional
Rent”, and the Base Rent and the Additional Rent are herein
collectively referred to as “Rent.”
All amounts due under this Article 4 as Additional Rent shall be payable
for the same periods and in the same manner as the Base Rent. Without
limitation on other obligations of Tenant and Landlord which survive the
expiration of the Lease Term, the obligations of Tenant to pay the Additional
Rent attributable to the period of time prior to the Lease Expiration Date, as
may be extended pursuant to the terms of Section 2.2 of this  Lease,
or earlier termination of this Lease, and Landlord’s obligation to refund to
Tenant any overpayments of such Additional Rent, shall survive the expiration
of the Lease Term. Notwithstanding anything to the contrary contained herein,
Tenant shall not be required to pay Tenant’s Share of increases in Direct
Expenses over the Direct Expenses for the Base Year until expiration of the
Base Year.

 

4.2                  Definitions
of Key Terms Relating to Additional Rent. 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 5 of the Summary.

 

4.2.2                 “Direct Expenses” shall mean “Operating
Expenses” and “Tax Expenses.”

 

4.2.3                 “Expense Year” shall mean each full or
partial 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
expenses, costs and amounts of every kind and nature which Landlord pays or
accrues during any Expense Year because of or in connection with the ownership,
management, maintenance, security, repair, replacement or operation of the
Project, or any portion thereof.

 

4.2.4.1                                  Operating
Expenses; Inclusions. Without limiting the generality of Article 4 and/or
Landlord’s right to include other items therein (except those items
specifically excluded in this Section 4.2.4 or elsewhere in this Lease),
Operating Expenses shall specifically include any and all of the following: (i)
the cost of supplying all utilities, the cost of operating, repairing,
maintaining, and renovating the utility, telephone, mechanical, sanitary, storm
drainage, and elevator systems, and the cost of maintenance and service
contracts in connection therewith; (ii) the cost of licenses, certificates,
permits and inspections and the cost of contesting any governmental enactments
which are reasonably anticipated to reduce Operating Expenses, and the costs
incurred in connection with a transportation system management program or
similar program; (iii) the cost of all insurance carried by Landlord in
connection with the Project; (iv) the cost of landscaping, relamping, and all
supplies, tools, equipment and materials used in the operation, repair and
maintenance of the Project, or any portion thereof; (v) costs incurred in
connection with the parking areas servicing the Project (including costs of
painting, restriping and resurfacing the parking areas servicing the Project);
(vi) fees and other costs reasonably incurred, including management fees,
consulting fees, legal fees and accounting fees, of all contractors and
consultants in connection with the management, operation,

 

10

 

maintenance and repair of
the Project; (vii) payments under any equipment rental agreements and the fair
rental value of any management office space; (viii) wages, salaries and other
compensation and benefits, including taxes levied thereon, of all persons
engaged in the operation, maintenance and security of the Project (including,
but not limited to, all fringe benefits, workers’ compensation, insurance
premiums and payroll taxes); (ix) costs under any instrument pertaining to the
sharing of costs by the Project; (x) operation, repair, maintenance and
replacement of all systems and equipment and components thereof of the
Building; (xi) the cost of janitorial, alarm, security and other services,
replacement of wall and floor coverings, ceiling tiles and fixtures in common
areas, maintenance and replacement of curbs and walkways, repair to roofs and
re-roofing, repairs to the floors slabs and all paved areas; (xii) amortization
over its reasonable useful life (including interest 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 Project, or any portion thereof;
(xiii) the cost (but as to each Expense Year, only the amortized portion of
such costs as set forth herein) of capital repairs, replacements or other
capital improvements or other capital costs incurred in connection with the
Project (A) which are intended to effect economies in the operation, cleaning
or maintenance of the Project, or any portion thereof, to the extent of cost
savings reasonably anticipated by Landlord at the time of such expenditure to
be incurred in connection therewith, or (B) that are required under any
governmental law or regulation, except for capital repairs, replacements or
other improvements to remedy a condition existing prior to the Lease
Commencement Date which any applicable governmental authority, if it had
knowledge of such condition prior to the Lease Commencement Date and if such
condition was not subject to a variance or a grandfathered/grandmothered code
waiver exception, would have then required to be remedied pursuant to
then-current “Applicable Law,” as that term is defined in Article 24 of this
Lease, in their form existing as of the Lease Commencement Date; provided,
however, that any such capital expenditure shall be  amortized (including interest at the Amortization Interest
Rate on the amortized cost) over its reasonable useful life; (xvi) window cleaning;
(xvii) services and amenities of the Project which are available to all tenants
of the Project at the same charge or at no charge; (xviii) costs of any
additional services not provided to the Building as of the Lease Commencement
Date but which are thereafter provided by Landlord in the prudent management of
the Building or the Project. Any of the services which may be included in the
computation of the Operating Expenses of the Building may be performed by
divisions, subsidiaries or affiliates of Landlord, provided that the contracts
for the performance of such services shall be competitive with and at
comparable rates found in similar contracts and transactions with unaffiliated
entities for the performance of such services in comparable office buildings
within the greater Los Angeles metropolitan area. Operating Expenses under this
Section 4.2.4 shall be calculated using the accrual method of accounting and
shall be performed in the Base Year and the Expense Years in a reasonably
consistent manner. Only as provided hereinafter in this Section 4.2.4, below in
items [i] and [ii], in the event Landlord incurs costs or expenses associated
with or relating to separate items or categories or subcategories of Operating
Expenses which were not part of Operating Expenses during the entire Base Year,
Operating Expenses for the Base Year shall be deemed increased by the amounts
Landlord would have incurred during the Base Year with respect to such costs
and expenses had such separate items or categories or subcategories of
Operating Expenses been included in Operating Expenses during the entire Base
Year. The foregoing shall only apply as follows: [i] in the event and to the
extent any portion of the Project is covered by a warranty or service agreement
which provides warranty-type protection at any time during the Base Year and is  not covered by such warranty or such
warranty-type protection under such service agreement in a subsequent Expense
Year to the same extent, Operating Expenses for the Base Year shall be deemed
increased by the amount Landlord would have incurred during the Base Year with
respect to the items or matters covered by the subject warranty or
warranty-type protection, had such warranty or such service agreement not been
in effect during the Base Year; and [ii] any insurance premium resulting from
any new forms of insurance, including earthquake insurance, flood insurance or
insurance as to terrorist acts or acts of war shall be deemed to be included in
Operating Expenses for the Base Year.

 

4.2.4.2                                  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. If the Project is not at least
ninety-five percent (95%) occupied during all or a portion of the Base Year

 

11

 

or any Expense Year, with
all tenants/occupants paying full Rent (as opposed to full rent, half rent,
partial rent, and the like), Landlord shall make an appropriate adjustment to
the components of Operating Expenses that vary with occupancy levels for such
year to determine the amount of Operating Expenses that would have been
incurred had the Project been ninety-five percent (95%)  occupied with all tenants/occupants
paying full Rent (as opposed to full rent, half rent, partial rent, and  the like); and the amount so determined
shall be deemed to have been the amount of Operating Expenses for such year.
Operating Expenses for the Base Year shall not include market-wide labor-rate
increases due to extraordinary circumstances, including, but not limited to,
boycotts and strikes, and utility rate increases due to extraordinary
circumstances including, but not limited to, conservation surcharges, boycotts,
embargoes or other shortages, or amortized costs relating to extraordinary
capital improvements. The component of Operating Expenses related to electrical
costs for the Base Year shall be referred to as the “Base Year Electrical Costs,” and the component of Operating
Expenses related to electrical costs for each Expense Year after the Base Year
shall be referred to as the “Subsequent Year
Electrical Costs.” To the extent that Landlord obtains a reduction
in electrical costs such that the Subsequent Year Electrical Costs any Expense
Year or the second calendar year to occur after the Base Year are less than
Base Year Electrical Costs, then the Base Year Electrical Costs shall be deemed
for such Expense Year only to be equal to the Subsequent Year Electrical Costs
for such Expense Year.

 

4.2.4.3                                  Operating
Expenses: Exclusions. Notwithstanding anything to the contrary contained in
this Lease, the following shall be excluded from Operating Expenses:

 

(i)                                Costs
incurred in connection with the original construction of the Project or in
connection with any major change in the Building, such as adding or deleting
floors;

 

(ii)                            Costs
of alterations or improvements to the Premises or the premises of other tenants
as a part of any lease to Tenant or other tenants:

 

(iii)                        Depreciation
or interest on debt or amortization payments on any mortgage or mortgages, and
rental under any ground or underlying leases or lease (except to the extent the
same may be made to pay or reimburse, or may be measured by, ad valorem taxes);

 

(iv)                           Costs
of correcting defects in or inadequacy of the initial design or construction of
the Building or the Project;

 

(v)                               Expenses
directly resulting from the gross negligence of Landlord, its agents, servants
or employees;

 

(vi)                           Marketing
costs, legal fees, space planners’ fees, real estate brokers’ leasing
commissions, and advertising and promotional expenses incurred in connection
with the original development, subsequent development, or original leasing or
future leasing of the Building or the Project;

 

(vii)                       Costs
for which Landlord is reimbursed, or would have been reimbursed if Landlord had
carried the insurance Landlord is required to carry pursuant to this Lease or
would have been reimbursed if Landlord had used commercially reasonably efforts
to collect such amounts, by any tenant or occupant of the Project or by
insurance from its insurance carrier or any insurance carrier of any tenant;

 

(viii)                   Any bad
debt loss, rent loss, or reserves for bad debts or rent loss;

 

(ix)                          Expenses
in connection with services (including sub-metered utilities) or other benefits
of a type which are not standard for the Building or the Project, and which are
not available to Tenant without specific charge therefor, but which are
provided to another tenant or occupant of the Building or the Project whether
or not such other tenant or occupant is specifically charged therefor by
Landlord;

 

(x)                              Costs
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 or the Project, including partnership accounting and
legal matters, costs

 

12

 

of defending any lawsuits
with any mortgagee (except as the actions of Tenant may be in issue), costs
incurred in connection with selling, syndicating, financing, mortgaging or
hypothecating any of Landlord’s interest in the Building or the Project, costs
of any disputes between Landlord and its employees, disputes of Landlord with
Building or the Project management, or between Landlord and other tenants or
occupants of the Project;

 

(xi)                          The
wages and benefits of any employee who does not devote substantially all of his
or her employed time to the Building or the Project, unless such wages and
benefits are prorated to reflect time spent on operating and managing the
Building or the Project vis-a-vis time spent on matters unrelated to operating
and managing the Building or the Project; provided that, in no event shall
Operating Expenses for purposes of this Lease include wages and/or benefits
attributable to personnel above the level of Project manager or Project
engineer;

 

(xii)                      Fines,
penalties or interest on delinquent payments (interest included on real
property taxes as a part of a bonded assessment included in real property taxes
shall be included as a part of Tax Expenses (hereafter defined));

 

(xiii)                  Costs
incurred due to the violation by Landlord of the terms and conditions of any
underlying ground lease pertaining to the Building or the Project;

 

(xiv)                     Any
damage or loss resulting from any casualty insured against by Landlord, or if
not so insured, then excluding any damage or loss resulting from the type of
casualty which is normally insured against by owners of first-class
retail/office buildings in Los Angeles County, except to the extent of
customary deductibles;

 

(xv)                         All
costs in connection with the ownership, operation and maintenance of any garage
facilities not located within and as a part of and available for use by the
tenants of the Building or the Project;

 

(xvi)                     Costs,
including permit, license and inspection costs, incurred with respect to the
installation of tenant improvements made for new tenants or other occupants in
the Project or incurred in renovating or otherwise improving, decorating,
painting or redecorating vacant space for tenants or other occupants of the
Project (excluding, however, such costs relating to any common areas of the
Project or parking facilities);

 

(xvii)                 Any amount
paid by Landlord or to the parent organization or a subsidiary or affiliate of
the Landlord for supplies and/or services in the Project to the extent the same
exceeds the costs of such supplies and/or services rendered by qualified,
first-class unaffiliated third parties on a competitive basis;

 

(xviii)             Any compensation
paid to clerks, attendants or other persons in commercial concessions operated
by or on behalf of the Landlord;

 

(xix)                    Rentals
and other related expenses incurred in leasing air conditioning systems,
elevators or other equipment which if purchased the cost of which would be
excluded from Operating Expenses as a capital cost, except equipment not
affixed to the Project which is used in providing janitorial or similar
services and, further excepting from this exclusion such equipment rented or
leased to remedy or ameliorate an emergency condition in the Project but only,
to the extent reasonably required in connection with such emergency;

 

(xx)                        Electric
power costs for which any tenant directly contracts with a public service
company;

 

(xxi)                    Costs,
other than those incurred in ordinary maintenance and repair, for sculpture,
paintings, fountains or other objects of art;

 

(xxii)                Tax penalties;

 

(xxiii)            Any costs expressly
excluded from Operating Expenses elsewhere in this Lease;

 

(xxiv)               Landlord’s
general corporate overhead and general and administrative expenses;

 

13

 

(xxv)                   All
assessments and premiums which are not specifically charged to Tenant because
of what Tenant has done, which can be paid by Landlord in installments, shall
be paid by Landlord in the maximum number of installments permitted by law
(except to the extent inconsistent with the general practice of the Comparable
Buildings) and shall be included as Operating Expenses in the year in which the
assessment or premium installment is actually paid;

 

(xxvi)               Costs arising
from the negligence or willful misconduct of Landlord or “Landlord Parties,” as
that term is defined in Section l0.l of this Lease;

 

(xxvii)           Costs incurred to
comply with Applicable Law with respect to “hazardous material,” as that term
is defined in Section 29.40 of this Lease, (including, without
limitation, with respect to the monitoring, testing and reporting relating
thereto) which was in existence in the Building or on the Project prior to the
Lease Commencement Date, and was of such a nature that a federal, state or
municipal governmental or quasi-governmental authority, if it had then had
knowledge of the presence of such hazardous material, in the state, and under
the conditions that it then existed in the Building or on the Project, would
have then required the removal, remediation or other action with respect to
such hazardous material; and costs incurred with respect to hazardous material
(including, without limitation, with respect to the monitoring, testing and
reporting relating thereto), which hazardous material is brought into the
Building or onto the Project after the date hereof by Landlord or any other
tenant of the Project or by anyone other than Tenant or its partners,
subpartners and their respective officers, agents, servants, employees, and
independent contractors and is of such a nature, at that time, that a federal, state
or municipal governmental or quasi-governmental authority, if it had then had
knowledge of the presence of such hazardous material, in the state, and under
the conditions, that it then exists in the Building or on the Project, would
have then required the removal, remediation or other action with respect to
such hazardous material;

 

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

 

(xxix)              Any finders
fees, brokerage commissions, job placement costs or job advertising cost, other
than with respect to a receptionist or secretary in the Project office, once
per year;

 

(xxx)                  Costs of any
training or incentive programs, other than for tenant life safety information
services;

 

(xxxi)              In-house legal
and/or accounting (as opposed to office building bookkeeping) fees;

 

(xxxii)          Legal fees and
costs, settlements, judgments or awards paid or incurred because of disputes
between Landlord and Tenant, Landlord and other tenants or prospective
occupants or prospective tenants/occupants or providers of goods and services
to the Project;

 

(xxxiii)      Legal fees and costs
concerning the negotiation and preparation of this Lease or any litigation
between Landlord and Tenant;

 

(xxxiv)         Costs for extra or
after-hours HVAC, utilities or services which are provided to Tenant and or any
occupant of the Building and as to which either (x) Tenant is separately
charged, or (y) the same is not offered or made available to Tenant at no
charge;

 

(xxxv)             Depreciation,
interest, points, fees or other costs, and principal payments on mortgages and
other debt costs, if any (except as set forth in item 4.2.4.1 (xii) and (xiii),
above);

 

(xxxvi)         Late charges,
penalties, liquidated damages, and interest incurred as a result of Landlord’s
gross negligence, inability or unwillingness to make payments or file returns
when due;

 

(xxxvii)     Costs of capital repairs
and alterations, capital improvements and equipment and other capital expenses
determined pursuant to sound real

 

14

 

estate management
principals consistently applied except as set forth in items 4.2.4.1 (xii) and
(xiii), above;

 

(xxxviii)                           Costs
of any tenant relations parties, events or promotions, except to the extent the
cost of comparable events are included in the Base Year calculation of
Operating Expenses;

 

(xxxix)        Any costs in
connection with any portion of the ground floor or any mezzanine levels, or any
other floor in the Building or the Project devoted primarily to retail
operations for the general public, except normal electrical current and other
services supplied by Landlord as if such retail premises were offices; and

 

(xl)                          any
costs incurred in connection with any violations of “Applicable Law,” as that
term is defined in Article 24 of this Lease, applicable to the Project
or any portion thereof which exists and is being enforced as of the Lease
Commencement Date.

 

4.2.4.4                                  It
is understood that Operating Expenses shall be reduced by all cash discounts,
trade discounts, or quantity discounts taken by Landlord or Landlord’s managing
agent in the purchase of any goods, utilities, or services in connection with
the operation of the Building or the Project. If capital items which are
customarily purchased by landlords of first-class retail/office buildings in
Los Angeles County are leased by Landlord, rather than purchased, the decision
by Landlord to lease the item in question shall not serve to increase Tenant’s
Share of Operating Expenses beyond that which would have applied had the item
in question been purchased. In the calculation of any expenses hereunder, it is
understood that no specific expense shall be charged more than once. Where
services rendered to the Building are also rendered to other buildings in the
Project and/or to other properties owned or managed by Landlord, Landlord shall
equitably prorate the bills for such services based on the portion of such
services allocable to the Building. Landlord agrees to keep books and records
showing the Operating Expenses in accordance with a system of accounts  and accounting practices consistently
maintained by Landlord on a year-to-year basis in accordance with sound real
estate management principles and in compliance with such provisions of this
Lease as may affect such accounts.

 

4.2.4.5                                  Adjustments
to Tenant’s Share. Should additional office or commercial rentable areas or
any additional buildings be constructed or incorporated by Landlord into and as
a part of the Building or the Project, as Landlord may reasonably elect,
whether at date of completion of construction, date of substantial occupancy,
or at a later date, or should the Building or the Project be joined with or
subsequently severed from an adjacent office building or buildings and/or any
parking areas or a parking structure also owned or operated by Landlord or any
of its related entities, as Landlord may reasonably elect at Landlord’s sole
discretion, then Tenant’s Share shall be appropriately adjusted upon such
incorporation or severance by Landlord of the additional office or commercial
or parking area or areas into or with or from the Building or the Project.
Furthermore, in the event that one tenant occupying all or a substantial
portion of the Building should be required or elect (for example, in instances
where governmental security clearances are required), with Landlord’s
permission, to perform all of its own janitorial and/or interior maintenance
services, and/or pay directly its own utility consumption, then there may be
two (2) or more separate Tenant’s Shares applicable to Tenant, which Landlord
shall determine at Landlord’s reasonable discretion from time to time based
upon all facts then existing, so that all tenants shall be obligated on a
equitable basis for their respective tenant’s shares of all Operating Expenses
for the Building, and the portion of the Operating Expenses for the Common
Areas allocated to the Building. For example, one of such Tenant’s Shares could
relate to the rentable square feet of all tenants who receive janitorial,
maintenance and other similar services, and/or who pay directly their own
utilities, and one of which could relate to the balance of interior services
and all Building common area services (landscaping, window washing, exterior
maintenance, etc.) and insurance costs and real properly taxes. Landlord shall
give notice to Tenant and other affected tenants of Landlord’s election to use
either one or more Tenant’s Shares applicable to Tenant from time to time for
the Building or the Project, or both, promptly after any such election, and the
resultant change in Tenant’s Share thereafter shall be binding upon Tenant. The
allocation of Operating Expenses and Common Areas may be adjusted from time to
time by Landlord, as the facts and circumstances reasonably require, without
prior notice to Tenant.

 

15

 

4.2.4.6                                  Proration of Operating
Expenses. Should this Lease
commence or terminate at any time other than the first or last day of the
calendar year, respectively, the amounts due as Additional Rent pursuant to Article
4  for the commencement or
termination year only shall be prorated pursuant to the method provided in
Article 3.

 

4.2.5                 Taxes.

 

4.2.5.1                                  “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 Project, or any portion thereof), which shall be paid or accrued 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 Project, or any portion thereof. For
purposes of this Lease, Tax Expenses shall be calculated as if the tenant
improvements in the Building were fully constructed and the Project, the
Building, and all tenant improvements in the Building were fully assessed for
real estate tax purposes, and accordingly, during the portion of any Expense
Year, Tax Expenses shall be deemed to be increased appropriately.

 

4.2.5.2                                  Tax Expenses shall include, without
limitation: (i) Any tax on the rent, right to rent or other income from the
Project, or any portion thereof, or as against the business of leasing the
Project, or any portion thereof; (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 Project’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; (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 business or gross income tax or
excise 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; and (iv) 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.

 

4.2.5.3                                  Any costs and expenses (including, without
limitation, reasonable attorneys’ fees) incurred in attempting to protest,
reduce or minimize Tax Expenses (excluding, however, those costs and expenses
incurred by Landlord in securing any Proposition 8 reduction as set forth in
Section 4.2.5.4, below) shall be included in Tax Expenses in the Expense
Year such expenses are paid. Except as set forth in Section 4.2.5.4, below,
refunds of Tax Expenses shall be credited against Tax Expenses and refunded to
Tenant regardless of when received, based on the Expense Year to which the
refund is applicable, provided that in no event shall the amount to be refunded
to Tenant for any such Expense Year exceed the total amount paid by Tenant as
Additional Rent under this Article 4  for
such Expense Year. If Tax Expenses for any period during the Lease Term or any
extension thereof are increased or decreased (except as otherwise provided
herein) after payment thereof for any reason, including, without limitation,
error or reassessment by applicable governmental or municipal authorities,
Tenant shall pay Landlord upon demand or be refunded within thirty (30) days
Tenant’s Share of any such increased Tax Expenses included by Landlord as
Building Tax Expenses pursuant to the terms of this Lease. Notwithstanding
anything to the contrary contained in this Section 4.2.5 (except as set forth
in Section 4.2.5.1, above), there shall be excluded from Tax Expenses (i) all
excess profits taxes, franchise taxes, gift taxes, capital stock taxes,
inheritance and succession taxes, estate taxes, federal and state income taxes,
and other

 

16

 

taxes
to the extent applicable to Landlord’s general or net income (as opposed to
rents, receipts or income attributable to operations at the Project), (ii) any
items included as Operating Expenses, and (iii) any items paid by Tenant under
Section 4.5 of this Lease.

 

4.2.5.4                                  Notwithstanding anything to the contrary set
forth in this Lease, the amount of Tax Expenses for the Base Year and any
Expense Year shall be calculated without taking into account any decreases in
real estate taxes obtained in connection with Proposition 8, and, therefore,
the Tax Expenses in the Base Year and/or an Expense Year may  be greater than those actually incurred
by Landlord, but shall, nonetheless, be the Tax Expenses due under this Lease;
provided that (i) any costs and expenses incurred by Landlord in securing any
Proposition 8 reduction shall not be included in Direct Expenses for purposes
of this Lease, and (ii) tax refunds under Proposition 8 shall not be deducted
from Tax Expenses, but rather shall be the sole property of Landlord. Landlord
and Tenant acknowledge that this Section 4.2.5.4 is not intended to in any way
affect (A) the inclusion in Tax Expenses of the statutory two percent (2.0%)
annual increase in Tax Expenses (as such statutory increase may be modified by
Subsequent legislation), or (B) the inclusion or exclusion of Tax Expenses
pursuant to the terms of Proposition 13, which shall be governed pursuant to
the terms of Sections 4.2.5.1 through 4.2.5.3, above. The Tax Expenses for the
Base Year shall not include increases due to extraordinary circumstances,
including, but not limited to amortized costs relating to capital improvements.

 

4.2.6         “Tenant’s
Share” shall mean the percentage set forth in Section 6 of
the Summary.

 

4.3                  Allocation of Direct Expenses.

 

4.3.1                 Method of Allocation. The parties acknowledge that the Building is a
part of a multi-building project and that the costs and expenses incurred in
connection with the  Project (i.e.
the Direct Expenses) should be shared between the tenants of the Building and
the tenants of the other buildings in the Project. Accordingly, as set forth in
Section 4.2 above, Direct Expenses (which consists of Operating Expenses
and Tax Expenses) are determined annually for the Project as a whole, and a
portion of the Direct Expenses, which portion shall be determined by Landlord
on an equitable basis, shall be equitably allocated to the tenants of the
Building (as opposed to the tenants of any other buildings in the Project) and
such portion shall be the Direct Expenses for purposes of this Lease. Such portion
of Direct Expenses allocated to the tenants of the Building shall include all
Direct Expenses attributable solely to the Building and an equitable portion of
the Direct Expenses attributable to the Project as a whole.

 

4.3.2                 Cost  Pools. Landlord shall have the right, from time to
time, to equitably allocate some or all of the Direct Expenses for the Project
among different portions or occupants of the Project (the “Cost Pools”), in Landlord’s reasonable
discretion; provided that any such Cost Pools shall be employed by Landlord
reasonably consistently in the Base Year and any applicable Expense Year(s).
Such Cost Pools may include, but shall not be limited to, the office space
tenants of a building of the Project or of the Project, and the retail space tenants
of a building of the Project or of the Project. The Direct Expenses within each
such Cost Pool shall be allocated and charged to the tenants within such Cost
Pool in an equitable manner.

 

4.4                  Calculation and Payment of
Additional Rent. 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 Direct Expenses
applicable to the Base Year, then Tenant shall pay to Landlord, in the manner
set forth in Section 4.4.1, below, and as Additional Rent, an amount
equal to the excess (the “Excess”).

 

4.4.1                 Statement of Actual Direct
Expenses and Payment by
Tenant. Landlord shall use commercially reasonable
efforts to give to Tenant within one hundred fifty (150) days following the end
of the Base Year and each Expense Year, a statement (the “Statement”) itemized on a line-item by
line-item basis, which shall state on a line-item by line-item basis and in a
reasonably consistent manner from year to year, the Direct Expenses incurred or
accrued for such preceding Expense Year, and which shall indicate the amount of
the Excess. Upon receipt of the Statement for each Expense Year commencing or
ending during the Lease Term, if an Excess is present, Tenant shall pay, with
it’s the next installment of Base Rent due which is at least thirty (30) days
following receipt of such Statement, the full amount of the Excess for such
Expense Year, less the amounts, if any, paid during such Expense Year as

 

17

 

“Estimated
Excess,” as that term is defined in Section 4.4.2, below. In the event,
however, that the Estimated Excess paid by Tenant for any Expense Year exceeds
the actual Excess for such Expense Year. Landlord shall, within thirty (30) days
after its delivery of the Statement for such Expense Year, return to Tenant the
amount of its overpayment. The failure of Landlord to timely furnish the
Statement for any Expense Year shall not prejudice Landlord (provided that in
the event that such failure continues for a period of six (6) months following
receipt of Notice from Tenant, Tenant may elect to seek specific performance)
or Tenant 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 Direct Expenses for the Expense Year
in which this Lease terminates, if an Excess if present, Tenant shall
immediately pay to Landlord such amount, and if Tenant shall have overpaid, Landlord
shall refund the overpayment within thirty (30) days of delivery of the
Statement. The provisions of this Section 4.4.1 shall survive the
expiration or earlier termination of the Lease Term. Notwithstanding the
immediately preceding sentence, Tenant shall not be responsible for Tenant’s
Share of any Direct Expenses attributable to any Expense Year which are first
billed to Tenant more than two (2) calendar years after the earlier of the
expiration of the applicable Expense Year or the Lease Expiration Date,
provided that in any event Tenant shall be responsible for Tenant’s Share of
Direct Expenses levied by any governmental authority or by any public utility
companies at any time following the Lease Expiration Date which are
attributable to any Expense Year (provided that Landlord delivers Tenant a bill
(a “Supplemental Statement”) for
such amounts within two (2) year following Landlord’s receipt of the bill
therefor).

 

4.4.2                 Statement of Estimated Direct
Expenses. In addition, Landlord
shall use commercially reasonable efforts to give Tenant a yearly expense
estimate statement (the “Estimate Statement”)
itemized on a line-item by line-item basis, which shall set forth Landlord’s
reasonable good faith 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 the Direct Expenses for such
Expense Year, which shall be based upon the Estimate, to the amount of Direct
Expenses for 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
(provided that in the event that such failure continues for a period of six (6)
months following receipt of Notice from Tenant, Tenant may elect to seek
specific performance), nor shall Landlord be prohibited from revising any
Estimate Statement or Estimated Excess theretofore delivered to the extent
necessary; provided however, any such subsequent revision shall set forth on a
reasonably specific basis any particular expense increase. Upon receipt of an
Estimate Statement, Tenant shall thereafter 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 next to last sentence of this
Section 4.4.2). Such fraction shall have as its numerator the number of
months which have elapsed in such current Expense Year, including the month of
such payment, and twelve (12) as its denominator. Until a new Estimate
Statement is furnished (which Landlord shall have the right to deliver to
Tenant at any time), 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.

 

4.5                  Taxes and Other Charges for
Which Tenant Is Directly Responsible.

 

4.5.1                 Tenant shall be liable for and shall pay ten
(10) days before delinquency, taxes levied against Tenant’s equipment,
furniture, fixtures and any other personal property located in or about the
Premises. If any such taxes on Tenant’s equipment, furniture, fixtures and any
other personal property are levied against Landlord or Landlord’s property or
if the assessed value of Landlord’s properly is increased by the inclusion
therein of a value placed upon such equipment, furniture, fixtures or any other
personal property and if Landlord pays the taxes based upon such increased
assessment, which Landlord shall have the right to do regardless of the
validity thereof but only under proper protest if requested by Tenant, Tenant
shall upon demand repay to Landlord the taxes so levied against Landlord or the
proportion of such taxes resulting from such increase in the assessment, as the
case may be.

 

4.5.2                 If the tenant improvements in the Premises,
whether installed and/or paid for by Landlord or Tenant and whether or not
affixed to the real property so as to become a part thereof, are assessed (as
evidenced by reasonable back-up supplied by Landlord) for real property tax
purposes at a valuation higher than the valuation at which tenant improvements
conforming to Landlord’s “building standard” in other space in the Building are
assessed, then

 

18

 

the Tax Expenses levied
against Landlord or the property by reason of such excess assessed valuation
shall be deemed to be taxes levied against personal property of Tenant and
shall be governed by the provisions of Section 4.5.1 above.

 

4.5.3                 Notwithstanding
any contrary provision herein, Tenant shall pay prior to delinquency any (i)
rent tax or sales tax, service tax, transfer tax or value added tax, or any
other applicable tax on the rent or services herein or otherwise respecting
this Lease, (ii) taxes 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 Project, including
the Project parking facility; or (iii) taxes 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
Audit Rights. Notwithstanding anything to the contrary contained in
this Lease, if Tenant reasonably disputes any amounts set forth in any
Statement described above in this Article 4. Tenant will have the right
to cause Landlord’s general ledger of accounts and directly relevant back-up
information with respect to such disputed Statement only to be audited, at no
cost or expense to Landlord (except as set forth below), by a certified public
accountant mutually acceptable to Landlord and Tenant and which has prior experience
in the review of financial statements and which shall not have provided Project
operating expense review accounting services to Tenant or any other tenant in
the Project within the last three (3) years and which shall not be retained by
Tenant on a contingency fee basis; provided, however, Tenant shall not have the
right to perform any such audit more than one (1) time for any calendar year
during the Lease Term. Any audit conducted by or on behalf of Tenant shall be
completed within one year of its receipt of the relevant Statement and shall be
conducted in an expeditious and diligent manner and timely completed at
Landlord’s office in Los Angeles County during Landlord’s normal business hours
and in the manner so as to minimize interference with Landlord’s business
operations. Landlord shall have no obligation and Tenant shall have no right to
make photocopies of any of Landlord’s ledgers, invoices or other items.
Tenant’s audit shall be limited to an on-site review of Landlord’s general
ledger of accounts. The amounts payable under this Section 4.7 by
Landlord to Tenant or to Tenant to Landlord, as the case may be, will be
appropriately adjusted on the basis of such audit. If such audit discloses an
overstatement of Direct Expenses in excess of seven percent (7%) for such
calendar year, Landlord will reimburse Tenant for the reasonable cost of the
audit; otherwise the cost of such audit including Landlord’s costs incurred in
complying with such audit shall be borne by Tenant. Tenant agrees to keep, and
to cause in its account and employee to keep, all information revealed by any
audit of Landlord’s books and records strictly confidential and not to disclose
any such information or permit any such information to be disclosed to anyone
other than Landlord, unless compelled to do so by a court of law.

 

ARTICLE 5

 

USE OF PREMISES

 

5.1                  Permitted Use.
Tenant shall use the Premises solely for the Permitted Use set forth in Section
7 of the Summary and only in accordance with the uses permitted under
applicable zoning and other municipal regulations, and Tenant shall not use or
permit the Premises or the Project to be used for any other purpose or purposes
whatsoever without the prior written consent of Landlord, which may be withheld
in Landlord’s sole discretion.

 

5.2                  Prohibited Uses. The uses prohibited under this Lease shall
include, without limitation, use of the Premises or a portion thereof for (i)
offices of any agency or bureau of the United States or any state or political
subdivision thereof; (ii) offices or agencies of any foreign governmental or
political subdivision thereof; (iii) offices of any health care professionals
or service organization; (iv) schools or other training facilities which are
not ancillary to corporate, executive or professional office use; (v) retail or
restaurant uses; or (vi) communications firms such as radio and/or television
stations. Tenant shall not allow occupancy density of use of the Premises which
is materially greater than the average density of the other tenants of the
Comparable Buildings using their premises under lease for uses comparable to
the Permitted Use. Tenant further covenants and agrees that Tenant shall not
use, or suffer or permit any person or persons to use, the Premises or any part
thereof for any use or purpose contrary to the provisions of the Rules and
Regulations set forth in Exhibit D,
attached hereto, or in violation of the laws of the United States of America,
the State of California, or the ordinances, regulations

 

19

 

or requirements of the
local municipal or county governing body or other lawful authorities having
jurisdiction over the Project) including, without limitation, any such laws,
ordinances, regulations or requirements relating to hazardous materials or
substances, as those terms are defined by applicable laws now or hereafter in
effect. Tenant shall not do or permit anything to be done in or about the
Premises which will in any way damage the reputation of the Project or obstruct
or interfere with the rights of other tenants or occupants of the Building, or
injure or annoy them or use or allow the Premises to be used for any improper,
unlawful or objectionable purpose, nor shall Tenant cause, maintain or permit
any nuisance in, on or about the Premises. Tenant shall not commit or suffer to
be committed any waste in or upon the Premises.

 

5.3                  CC&Rs.
Tenant shall comply with all recorded covenants, conditions, and restrictions
currently affecting the Project. Additionally, Tenant acknowledges that the
Project may be subject to any future covenants, conditions, and restrictions
(the “CC&Rs”) which Landlord,
in Landlord’s discretion, deems reasonably necessary or desirable, and Tenant
agrees that, so long as such CC&Rs do not materially diminish Tenant’s
rights under this Lease and/or increase Tenant’s obligations or costs under
this Lease, this Lease shall be subject and subordinate to such CC&Rs.
Subject to the foregoing, Landlord shall have the right to require Tenant to
execute and acknowledge, within fifteen (15) business days of a request by
Landlord, a “Recognition of Covenants, Conditions, and Restriction,” in a form
substantially similar to that attached hereto as Exhibit F, agreeing to and acknowledging the CC&Rs.

 

ARTICLE 6

 

SERVICES AND UTILITIES

 

6.1                  Standard Tenant Services. Landlord shall provide the following services
on all days (unless otherwise stated below) during the Lease Term.

 

6.1.1                 Subject to limitations imposed by all
governmental rules, regulations and guidelines applicable thereto, Landlord
shall provide heating, ventilation and air conditioning (“HVAC”) when necessary for reasonable
comfort, for normal office use in the Premises from 8:00 A.M. to 7:00 P.M.
Monday through Friday, and on Saturdays from 9:00 A.M. to 1:00 P.M.
(collectively, the “Building Hours”),
except for the date of observation of New Year’s Day, Presidents’ Day, Memorial
Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and, at
Landlord’s discretion, other nationally recognized holidays (collectively, the
“Holidays”).

 

6.1.2                 Subject to the other terms of this Lease,
Landlord shall provide electrical wiring, facilities and capacity for
connection to, and use by Tenant of, Tenant’s lighting fixtures and incidental
use equipment, provided that (i) the connected electrical load of the
incidental use equipment does not exceed (on an average watts per usable square
foot of the Premises basis) two and five-tenths (2.5) watts per usable square
foot of the Premises during the Building Hours on a monthly basis, and the
electricity so furnished for incidental use equipment will be at a nominal one
hundred twenty (120)/two hundred eight (208) volts and no electrical circuit
for the supply of such incidental use equipment will require a current capacity
exceeding twenty (20) amperes (except as otherwise reasonably approved by
Landlord), and (ii) the connected electrical load of Tenant’s lighting fixtures
does not exceed (on an average watts per usable square foot of the Premises
basis) one and five-tenths (1.5) watts per usable square foot of the Premises
during the Building Hours on a monthly basis, and the electricity so furnished
for Tenant’s lighting will be at a nominal two hundred seventy-seven (277)
volts, which electrical usage shall be subject to applicable laws and
regulations, including Title 24. Tenant will design Tenant’s electrical system
serving any equipment producing nonlinear electrical loads to accommodate such
nonlinear electrical loads, including, but not limited to, oversizing neutral
conductors, derating transformers and/or providing power-line filters.
Engineering plans shall include a calculation of Tenant’s fully connected
electrical design load with and without demand factors and shall indicate the
number of watts of unmetered and submetered loads. Tenant shall bear the cost
of replacement of lamps, starters and ballasts for non-Building standard
lighting fixtures within the Premises.

 

6.1.3                 Landlord shall provide unlimited potable city
water from the regular Building outlets for drinking, lavatory and toilet
purposes in the Building Common Areas, and to Tenant outlets installed by
Tenant from core stub-out locations for drinking and dishwashing, lavatory and
toilet purposes.

 

20

 

6.1.4                 Landlord shall provide Building standard
janitorial services to the Premises Monday through Friday of each week, except
the date of observation of the Holidays, in and about the Premises.

 

6.1.5                 Landlord shall provide nonexclusive,
non-attended automatic passenger elevator service during the Building Hours,
and, subject to emergencies shall have at least one elevator available at all
other times to provide service to the Building.

 

6.1.6                 Landlord shall provide nonexclusive,
non-attended freight elevator service subject to scheduling with Landlord and
Landlord’s reasonable rules and regulations regarding use thereof.

 

Tenant shall cooperate fully with Landlord at all times and abide by all
regulations and requirements that Landlord may reasonably prescribe for the
proper functioning and protection of the HVAC, electrical, mechanical and
plumbing systems.

 

6.2                  Overstandard Tenant Use.  Tenant
shall not, without Landlord’s prior written consent, use heat-generating
machines, machines other than normal fractional horsepower office machines, or
equipment or lighting other than Building standard lights in the Premises,
which may affect the temperature otherwise maintained by the air conditioning
system or increase 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, shall be paid by Tenant to Landlord within
thirty (30) days following receipt of billing. If Tenant uses water,
electricity, heat or air conditioning in excess of that supplied by Landlord
pursuant to Section 6.1 of this Lease, Tenant shall pay to Landlord,
within thirty (30) days following receipt of billing, the cost of such excess
consumption, the 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, at the rates charged by the public utility company
furnishing the same, including the cost of such additional metering devices.
Tenant’s use of electricity shall never exceed the capacity of the feeders to
the Project or the risers or wiring installation, and subject to the terms of Section
29.32, below, Tenant shall not install or use or permit the installation or
use of any computer or electronic data processing equipment other than desktop
or portable personal computers and related portable or semi-portable computer
equipment in the Premises, without the prior written consent of Landlord, which
consent shall not be unreasonably withheld, conditioned or delayed. If Tenant
desires to use heat, ventilation or air conditioning during hours other than
Building Hours, Tenant shall give Landlord such prior notice, if any, as
Landlord shall from time to time establish as appropriate, of Tenant’s desired
use in order to supply such utilities, and Landlord shall supply such utilities
to Tenant at fifty dollars ($50.00) per hour per floor of the Premises (which
shall be treated as Additional Rent), which cost may be increased only to the
extent that Landlord’s Actual Cost of providing the same increases from time to
time. The minimum time period for after hours HVAC usage shall be one (1) hour.
For purpose of this Lease, “Actual Cost”
shall mean the actual cost incurred by Landlord, as reasonably determined by
Landlord but without charge for depreciation, profit, overhead or
administration.

 

6.3                  Interruption of Use. Except as provided in Section 19.6.2,
below, or elsewhere in this Lease, Tenant agrees that 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 breakage,
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 or Project after reasonable effort to do so, by any riot or other
dangerous condition, emergency, accident or casualty whatsoever, by acts of war
or terrorism or by act or Default of Tenant; 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 (except as provided in Section
19.6.2 below) 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, property or for injury to, or interference with,

 

21

 

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; provided, however, Tenant
shall retain the right to pursue and in no event shall the foregoing waiver
prohibit Tenant from pursuing any separate causes of action outside of the
terms of this Lease against Landlord which relate to Landlord’s negligence,
willful misconduct or other tortious conduct. Landlord may comply with
voluntary controls or guidelines promulgated by any governmental entity
relating to the use or conservation of energy, water, gas, light or electricity
or the reduction of automobile or other emissions without creating any
liability of Landlord to Tenant under this Lease, provided that the Premises
are not thereby rendered untenantable and/or unfit for the Permitted Use.

 

6.4                  Metered
Utilities. Notwithstanding any contrary provision of this Lease, Tenant
agrees to bear no less than that portion of the cost of the services provided
by Landlord described in this Article 6, which clearly reflects the use
by Tenant upon or with respect to the Premises and the services provided by
Landlord with respect thereto, such as computer utility costs and unusual
electricity, air conditioning, heat or water requirements; and Landlord may, in
its reasonable discretion, based upon Tenant’s above standard office use,
increase or decrease, from time to time during the Term of this Lease, the
portion of such costs of such services to be paid by Tenant, which reasonably
approximates Tenant’s use thereof in excess of the building standards
established by Landlord from time to time for normal office use. If not already
installed as part of the Tenant Improvements to be constructed pursuant to the
terms of the Tenant Work Letter, Landlord may, in its sole discretion, install
separate meters or submeters to measure, or Landlord’s engineering department
may estimate using industry standards, the consumption by Tenant of utility
resources in excess of the building standards established by Landlord from time
to time for normal office use. Landlord shall provide Tenant with reasonable
prior notice of Landlord’s installation of such meters and/or submeters. The
cost of any such meters and of the installation, maintenance, and repair
thereof shall be paid for by Tenant, and Tenant agrees to pay Landlord as
Additional Rent for all such water, electric current or other resource
consumed, as shown by said meters, or as Landlord’s engineering department may
estimate using industry standards, at the rates charged by the local public
utility furnishing the same, plus any additional expense incurred in keeping
account of the water, electric current or other utility service or resource
consumed or used by Tenant outside of normal business hours or normal business
days (including heat, air conditioning or elevator use) at the rates and
pursuant to the advance notice requirements and the procedures therefor
established by Landlord from time to time. Landlord shall bill Tenant
periodically for utility usage upon or with respect to the Premises, in excess of
the building standards established by Landlord from time to time for normal
office use, together with a reasonable administration charge, and
the amount of the bill shall be payable on the later to occur of ten (10) days
after receipt of such bill or the first (1st) day of the following month.

 

6.5                  Tenant’s
Obligations. Tenant shall pay for, prior to delinquency, all telephone
and all other materials and services not expressly required to be paid by
Landlord, which may be furnished to or used in, on or about the Premises during
the term of this Lease. Tenant shall also pay, prior to delinquency, all
charges and fees required to be paid by Tenant by the Rules and Regulations.

 

6.6                  Tenant’s Security System. Tenant may, at its own expense, install its
own security system (“Tenant’s Security
System”) in the Premises as part of Tenant’s initial construction of
the Tenant Improvements or afterward pursuant to the terms of Article 8, below; provided, however,
that Tenant shall coordinate the installation and operation of Tenant’s
Security System with Landlord to assure that Tenant’s Security System does not
interfere with any Landlord’s security system in place as of the Lease
Commencement Date and the Building systems and equipment and to the extent that
Tenant’s Security System unreasonably interferes with any Landlord’s security
system or the Building systems and equipment, Tenant shall not be entitled to
install or operate it and shall promptly remove it at Tenant’s sole cost and
expense. Tenant shall be solely responsible, at Tenant’s sole cost and expense,
for the monitoring, operation and removal of Tenant’s Security System. Subject
to the above, Landlord’s reasonable specific requirements in connection
therewith and compliance with all Applicable .Laws in connection therewith,
Tenant’s Security System may include the installation of key-card readers in
the Building stairwell allowing Tenant’s access by key-card to the different
floors of the Building on which the Premises is located and installation of
key-card readers in the Building elevators restricting access to the floors on
which the Premises is located. In addition to any other indemnities provided
for herein, and excluding any negligence and/or willful misconduct

 

22

 

of
Landlord or any Landlord Party, Tenant shall indemnify, defend and hold the
Landlord and Landlord Parties harmless for, from and against any Claims and
Expenses arising out of or relating to Landlord’s allowing Tenant to use the
Building stairwell to access the different floors of the Premises and Tenant’s
installation of the key-card readers in the Building stairwells and/or
elevators. In the event that Tenant uses the Building stairwells as provided
above (which Landlord hereby agrees that Tenant is entitled to do, in
accordance with Tenant’s Permitted Use but subject to this Section 6.6),
Tenant shall, except in the event of an emergency, use the stairwells solely
for access between floors of the Premises and for no other purposes. Tenant
shall not allow any persons to loiter or create any nuisance or disturbance
within the Building stairwells. Landlord shall have the right to promulgate
from time to time, and Tenant agrees to abide by, any reasonable special rules,
regulations and requirements regarding use of the Building stairwells pursuant
to the above. If Tenant or any person using the Building stairwells pursuant to
the above fails to abide by such rules, regulations and requirements, Landlord
shall have the right upon notice to Tenant to immediately terminate Tenant’s
use of the Building stairwells for access between floors of the Premises.

 

ARTICLE 7

 

REPAIRS

 

7.1                  Generally. Landlord shall maintain in good condition,
operating order and repair the structural portions of the Building, including,
without limitation, the foundation, floor/ceiling slabs, roof, curtain wall,
exterior glass and mullions, columns, beams, shafts (including elevator
shafts), stairs, parking areas, landscaping, fountains, water falls, exterior
Project signagc, stairwells, elevator cabs, plazas, art work, sculptures, men’s
and women’s washrooms, building mechanical, electrical and telephone closets,
and all common and public area (collectively, “Building Structure”) and the mechanical, electrical, life
safety, plumbing, sprinkler systems and HVAC systems which were not constructed
by Tenant, its partners, subpartners and their respective officers, agents,
servants, employees, and independent contractors, are not located in the
Premises, and/or do not exclusively service the Premises (collectively, the “Building Systems”). Notwithstanding any
provision in this Lease to the contrary, Tenant shall be required to pay
Landlord directly for the cost of any repair to the Building Structure and/or
the Building Systems to the extent required because of Tenant’s use of the
Premises for other than the normal and customary business office operations,
unless and to the extent such damage is covered by insurance carried or
required to be carried by Landlord pursuant to Article 10 and to which
the waiver of subrogation is applicable, or to the extent such damage is the
result of structural or latent defects of the Building in connection with its
original construction (such obligation to the extent applicable to Tenant as
qualified and conditioned will hereinafter be defined as the “BS/BS Exception”). Tenant shall, at
Tenant’s own expense, pursuant to the terms of this Lease, including without
limitation Article 8 hereof, keep the Premises (but such obligation
shall not extend to the Building Structure and the Building System except
pursuant to the BS/BS Exception), including all improvements, fixtures and
furnishings therein, all systems and equipment installed by Tenant therein, and
the floor or floors of the Building on which the Premises are located
(collectively, the “Maintenance Items”),
in good order, repair and condition at all times during the Lease Term, except
to the except to the extent any such repair is required due to the gross
negligence or willful misconduct of Landlord or the “Landlord Parties,” as that
term is defined in Article 10.1, below (unless and to the extent such
damage is covered by insurance carried or required to be carried by Tenant
pursuant to Article 10 and to which the waiver of subrogation is
applicable), ordinary wear and tear excepted. Subject to the terms of Articles
8, 11 and 13 of this Lease, Tenant agrees to repair any damage to
the Premises Building or Project caused by or in connection with Tenant’s use
thereof, or the use of Tenant’s agents or employees, or the removal of any
articles of personal property, business or trade fixtures, machinery,
equipment, cabinetwork, furniture, movable partitions or permanent improvements
or additions, including repairing the floor and patching and painting the walls
where required by Landlord to Landlord’s reasonable satisfaction, all at the
Tenant’s sole cost and expense.

 

In addition, Tenant shall, at Tenant’s own expense, but under the
supervision and subject to the prior 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,
broken, on worn fixtures and appurtenances and/or Maintenance Items, except for
damage caused by ordinary wear and tear. In addition, Tenant covenants and
agrees that Tenant shall, at Tenant’s sole cost, maintain all Maintenance Items
in accordance with specifications set forth, in

 

23

 

their
respective then currently updated operating manuals and shall, upon request
from Landlord, provide certifications of other documentation acceptable to
Landlord that the such Maintenance Items have been and are being maintained to
such operating manual specifications; provided however, that, at Landlord’s
option, or if Tenant fails to make such repairs and/or maintain any Maintenance
Items as required herein, Landlord may, but need not, make such repairs and
replacements or perform such maintenance and/or contract with a service
provider to perform such maintenance on a regular basis, and Tenant shall pay
Landlord the cost thereof. Landlord may, but shall not be required to, enter
the Premises at all reasonable times to perform maintenance, make such repairs,
alterations, improvements or additions to the Premises, or to the Project or to
any equipment located in the Project as Landlord shall desire or deem necessary
or  as Landlord may be required to do by governmental or
quasi-governmental authority or court order or decree. Tenant hereby waives the
right to make repairs at Landlord’s expense under the provisions of any laws
permitting repairs by a tenant at the expense of Landlord to the extent allowed
by law, in that Landlord and Tenant have by this Lease made specific provision
for such repairs and have defined their respective obligations relating thereto
and Tenant expressly waives any and all rights under and benefits of subsection
1 of Section 1932 and 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’s Right to Make
Repairs. Notwithstanding any
of the terms, conditions and covenants set forth in this Lease to the contrary,
if Tenant provides written notice to Landlord of a “Self-Help Event,” as that
term is defined below, which Self-Help Event materially or adversely affects
the conduct of Tenant’s business from the Premises, and Landlord fails to
commence corrective action (or to commence any process required to commence
corrective action (such as, but not limited to, the ordering of materials
required to commence corrective action)) within a reasonable period of time,
given the circumstances, after the receipt of such written notice, but in any
event not later than ten (10) business days after receipt of such written
notice, then Tenant may proceed to take the required action upon delivery of an
additional ten (10) business days, written notice to Landlord specifying that
Tenant is taking such required action and if such action was required under the
terms, conditions and covenants of this Lease to be taken by Landlord and was
not commenced by Landlord within such ten (10) business day period and
thereafter diligently pursued to completion, then Tenant shall be entitled to
prompt reimbursement by Landlord of Tenant’s reasonable costs and expenses in
taking such action. In the event Tenant takes such action, Tenant shall use
only those contractors used by Landlord in the Building for work unless such
contractors are unwilling or unable to perform, or timely perform, such work,
in which event Tenant may utilize the services of any other qualified
contractor which normally find regularly performs similar work in Comparable
Buildings. Promptly following completion of any work taken by Tenant pursuant
to the terms of this Section 7.2, Tenant shall deliver a detailed
invoice of the work completed, the materials used and the costs relating
thereto. If Landlord does not deliver a detailed written objection to Tenant
within thirty (30) days after receipt of an invoice from Tenant, then Tenant
shall be entitled to deduct from Rent payable by Tenant under this Lease or, at
Tenant’s option, require cash, reimbursement from Landlord within thirty (30)
days after notice, the amount set forth in such invoice. If, however, Landlord
delivers to Tenant, within thirty (30) days after receipt of Tenant’s invoice,
a written objection to the payment of such invoice, setting forth with reasonable
particularity Landlord’s reasons for its claim that such action did not have to
be taken by Landlord pursuant to the terms, conditions and covenants of this
Lease 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 then
be entitled to such deduction from Rent, but Tenant may proceed to claim a
default by Landlord or, if elected by either Landlord or Tenant, the matter
shall proceed to resolution by the selection of an arbitrator to resolve the
dispute, which arbitrator shall be selected and qualified pursuant to the
procedures set forth in Section 29.34 of this Lease. If Tenant prevails
in the arbitration, the amount of the Award (which shall include interest at
the “Interest Rate” (defined below) from the time of each expenditure by Tenant
until the date Tenant receives such amount by payment or offset and attorneys’
fees and related costs) may be deducted by Tenant from the Rent next due and
owing under this Lease or, at Tenant’s option, be reimbursed from Landlord
within thirty (30) days after notice. For purposes of this Section 7.2,
a “Self-Help Event” shall mean an event or circumstance which requires the
action of Landlord with respect to repair and/or maintenance that is required
within the Premises. The term “Interest Rate”
shall mean a rate per annum equal to the lesser of (i) the annual “Bank Prime Loan” rate cited in the Federal
Reserve Statistical Release Publication G.13(415), published on the first
Tuesday of each calendar month (or such other comparable index as

 

24

 

Landlord
and Tenant shall reasonably agree upon if such rate ceases to be published)
plus four (4) percentage points, and (ii) the highest rate permitted by
applicable law.

 

ARTICLE 8

 

ADDITIONS AND ALTERATIONS

 

8.1                  Landlord’s Consent to
Alterations. Tenant shall have the
have the right, without Landlord’s consent but upon at least five (5) business
days prior Notice to Landlord, to do the following: make strictly cosmetic,
non-structural additions and alterations (“Cosmetic Alterations”) to the Premises that
do not (i) involve the expenditure of more than $50,000.00 in the aggregate in
any Lease Year; (ii) affect the exterior appearance of the Building or (iii)
affect the Building Systems or the Building Structure. Except in connection
with Cosmetic Alterations, Tenant may make improvements, alterations, additions
or changes to the Premises (collectively, the “Alterations”) only upon first procuring the prior written
consent of Landlord to such Alterations, which consent shall be requested by
Tenant in accordance with the terms and conditions of this Article 8,
and which consent shall not be withheld, conditioned or delayed by Landlord
unless a Design Problem exists. A “Design
Problem” is defined as, and will be deemed to exist if and to the
extent such Alterations (I) affect the exterior appearance of the Building;
(II) affect the Building Structure; (III) affect the Building Systems; (IV) unreasonably
interfere with any other occupant’s normal and customary operations or (V) fail
to comply with Applicable Laws. The construction of the “Tenant Improvements,”
as that term is defined in Section 1 of the Tenant Work Letter, shall be
governed by the terms of the Tenant Work Letter and not the terms of this Article
8 (except as provided in Section 8.5 below).

 

8.2                  Manner of Construction. Landlord may impose, as a condition of its
consent to any and all Alterations or repairs of the Premises or  about the Premises, reasonable
requirements, including, but not limited to, the requirement that Tenant
utilize for such purposes only contractors, subcontractors, materials,
mechanics and materialmen selected by Tenant from a list provided and approved
by Landlord, the requirement that upon Landlord’s request, Tenant shall, at
Tenant’s expense, remove such Alterations upon the expiration or any early
termination of the Lease Term (but only as provided in Section 8.5
below). Landlord may further condition its approval of any proposed Alteration
requested by Tenant upon some of all of the following requirements: (a) that
such Alteration shall comply with Landlord’s then existing building standards
for tenant improvement work (unless such Alteration is otherwise consistent
(including without limitation, with respect to materials utilized), as
reasonably determined by Landlord, with the Tenant Improvements (“Consistent Alterations”); (b) that Landlord
shall supervise the performance of such Alteration; and (c) that subcontractor
and/or consultants specified by Landlord shall be utilized to insure the
integrity of the Building mechanical and electrical systems. If Landlord shall
give its consent, the consent shall be deemed conditioned upon Tenant acquiring
applicable permits to do the work from appropriate governmental agencies, the
furnishing of a copy of such permit to Landlord prior to the commencement of
the work, and the compliance by Tenant with all conditions of said permit in a
prompt and expeditious manner. If any Alterations will involve the use of or
disturb hazardous materials or substances existing in the Premises, Tenant
shall comply with Landlord’s rules and regulations concerning such hazardous
materials or substances. Tenant shall construct such Alterations and perform
such repairs in a good and workmanlike manner, in Conformance with any and all
applicable federal, state, county or municipal laws, rules and regulations and
pursuant to a valid building permit, issued by appropriate governmental officials
or agencies, all in conformance with Landlord’s construction rules and
regulations. In the event Tenant performs any Alterations in the Premises which
require or give rise to governmentally required changes to the “Base Building,”
as that term is defined below, then Landlord shall, at Tenant’s expense, make
such changes to the Base Building. The “Base
Building” shall include the structural portions of the Building, and
the public restrooms and the systems and equipment located in the internal core
of the Building on the floor or floors on which the Premises are located as
further set forth in Section 1 of the Tenant Work Letter. In performing
the work of any such Alterations, Tenant shall have the work performed in such
manner so as not to materially and adversely obstruct access to the Project or
any portion thereof, by any other tenant of the Project, and so as not to
materially and adversely obstruct the business of Landlord or other tenants in
the Project. Tenant shall not use (and upon Notice from Landlord shall cease
using) contractors, services, workmen, labor, materials or equipment that, in
Landlord’s reasonable judgment, would disturb labor harmony with the workforce
or trades engaged in performing other work, labor or services in or about the
Building or the Common Areas. In addition to Tenant’s obligations under Article
9 of this Lease, upon

 

25

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 management office for
the Project a reproducible copy of the “as built” drawings of the Alterations
as well as all permits, approvals and other documents issued by any
governmental agency in connection with such Alterations.

 

8.3                  Payment for Improvements. If payment is made directly to contractors,
Tenant shall comply with Landlord’s reasonable requirements for final lien
releases and waivers in connection with Tenant’s payment for work to
contractors. Whether or not Tenant orders any work directly from Landlord,
there shall be included within the cost of such work and Tenant shall pay to
Landlord a fee for Tenant’s use of Landlord’s personnel involved with the
supervision, coordination, inspection and the like pertaining to such
Alterations. Said fee shall be two and one-half percent (21⁄2%)  of the cost of the Alterations, and such
fee shall be paid by Tenant within ten (10) days after rendition of an invoice
therefor.

 

8.4                  Construction Insurance. In addition to the requirements of Article
10 of this Lease, in the event that Tenant makes any Alterations, prior to
the commencement of such Alterations, Tenant or Tenant’s contractor shall
provide Landlord with evidence that Tenant carries “Builder’s All Risk” insurance in an amount reasonably approved
by Landlord covering the construction of such Alterations, and such other
insurance as Landlord may require, it being understood and agreed that all of
such Alterations shall be insured by Tenant pursuant to Article 10 of
this Lease immediately upon completion thereof. In addition, Landlord may, in
its discretion, require Tenant to obtain a lien and completion bond or some
alternate form of security satisfactory to Landlord in an amount sufficient to
ensure the lien-free completion of such Alterations and naming Landlord as a
co-obligee.

 

8.5                  Landlord’s Property. All Alterations, improvements, fixtures,
equipment and/or appurtenances which may be installed or placed in or about the
Premises, from time to time, shall be at the sole cost of Tenant and shall be
and become the property of Landlord, except that Tenant may remove any
Alterations, improvements, fixtures and/or equipment which Tenant can
substantiate to Landlord have not been paid for with any Tenant improvement
allowance funds provided to Tenant by Landlord, provided Tenant repairs any
damage to the Premises and Building caused by such removal and returns the
affected portion of the Premises to a Building standard tenant improved
condition as determined by Landlord. Furthermore, Landlord may, by written
notice to Tenant given at the time of Landlord’s approval thereof, require
Tenant, at Tenant’s expense, to remove any Alterations or improvements in the
Premises (including, without limitation, the “Tenant Improvements” (as that term
is defined in the Tenant Work Letter)) prior to the end of the Lease Term or
upon any earlier termination of this Lease, and to repair any damage to the
Premises and Building caused by such removal and return the affected portion of
the Premises to a Building standard tenant improved condition as determined by
Landlord. If Tenant fails to complete such removal and/or to repair any damage
caused by the removal of any Alterations or improvements in the Premises, and
return the affected portion of the Premises to a Building standard tenant
improved condition as determined by Landlord, then at Landlord’s option, either
(A) Tenant shall be deemed to be holding over in the Premises and Rent shall
continue to accrue in accordance with the terms of Article 16, below,
until such work shall be completed, and/or (B) Landlord may do so and may
charge the cost thereof to Tenant. Tenant hereby protects, defends, indemnifies
and holds Landlord harmless from any liability, cost, obligation, expense or
claim of lien in any manner relating to the installation, placement, removal or
financing of any such Alterations, improvements, fixtures and/or equipment in,
on or about the Premises, which obligations of Tenant shall survive the
expiration or earlier termination of this Lease.

 

8.6                  Recognition of Landlords
Notice of Nonresponsibility.
Before commencing any such work or construction in or about the Premises
(provided Tenant has theretofore obtained any required Landlord’s consent to
the particular Alteration, which shall exclude any Cosmetic Alterations),
Tenant shall notify Landlord at least ten (10) days in advance in writing of
the expected date of commencement thereof. Landlord shall have the right at any
time and from time to time to post and maintain on the Premises such notices as
Landlord deems necessary to protect the Premises and Landlord from the liens of
mechanics, laborers, materialmen, suppliers or vendors. In the event that any
liens are filed against the Premises by any mechanics, laborers, materialmen,
suppliers or vendors, Tenant shall execute and/or cause the necessary parties
to execute such lien releases as may be requested by Landlord to clear such

 

26

 

liens
from the Premises. In addition, Tenant covenants and agrees that it shall cause
any and all contractors or other parties engaged by Tenant in connection with
the construction of any Alterations, improvements, maintenance, repairs or
other items to timely execute and deliver to Landlord a written acknowledgment
in Landlord’s standard form waiving, to the fullest extent permitted by law,
any rights granted under any applicable owner’s participation doctrine or
related doctrines, rules, laws, ordinances, etc. and to further acknowledge
that Landlord’s Notice of Nonresponsibility (in Landlord’s standard form) in
connection therewith has been verified, has been properly posted, is valid and
enforceable against such party. Tenant shall indemnify, defend and hold
harmless Landlord in connection with any failure of Tenant to comply, or
failure to cause any such contractors or other parties to comply, with the
terms of this Section 8.6 of this Lease.

 

ARTICLE 9

 

COVENANT AGAINST LIENS

 

Tenant shall keep the Project and Premises free from any liens or
encumbrances arising out of the work performed, materials furnished or
obligations incurred by or on behalf of Tenant, and shall protect, defend,
indemnify and hold Landlord harmless from and against any claims, liabilities,
judgments or costs (including, without limitation, reasonable attorneys’ fees
and costs) arising out of same or in connection therewith. Tenant shall give
Landlord notice at least fifteen (15) days prior to the commencement of any
such work on the Premises (or such additional time as may be necessary under
Applicable Laws) to afford Landlord the opportunity of posting and recording
appropriate notices of non-responsibility. Landlord shall have the right at all
reasonable times to post and keep posted on the Premises any notices which it
deems necessary for protection from such liens. Tenant shall remove any such
lien or encumbrance by bond or otherwise within ten (10) days after Notice by
Landlord, and if Tenant shall fail to do so, Landlord may pay the amount
necessary to remove such lien or encumbrance, without being responsible for
investigating the validity thereof. The amount so paid shall be deemed
Additional Rent under this Lease payable upon demand, without limitation as to
other remedies available to Landlord under this Lease. Nothing contained in
this Lease shall authorize Tenant to do any act which shall subject Landlord’s
title to the Building or Premises to any liens or encumbrances whether claimed
by operation of law or express or implied contract.

 

ARTICLE 10

 

INSURANCE

 

10.1           Mutual Indemnification and
Waiver.

 

10.1.1          Except to the extent resulting from or arising
out of any negligence or willful misconduct of Landlord or any Landlord Party,
Tenant hereby assumes all risk of damage to property or injury to persons in,
upon or about the Premises from any cause whatsoever and agrees that Landlord,
its partners, subpartners and their respective officers, agents, servants,
employees, and independent contractors (collectively, “Landlord Parties”) shall not be liable for,
any damage either to person or property or resulting from the loss of use
thereof, which damage is sustained by Tenant or by other persons claiming
through Tenant. Subject to the provisions of Section 10.1.2. Tenant
shall indemnify, defend, protect, and hold harmless the Landlord Parties from
any and all loss, cost, damage, expense and liability (including without
limitation court costs and reasonable attorneys’ fees) (collectively, “Claims and Expenses”) incurred in
connection with or arising from (i) any cause in, on or about the Premises, or
(ii) any negligence or willful misconduct of Tenant or of any sublessee or
occupant claiming by, through or under Tenant, or of the partners, officers,
contractors, agents, servants or employees of Tenant or any such person
(collectively, “Tenant Parties”),
in, on or about the Project prior to, during, or after the expiration of the
Lease Term, provided, however, that the terms of the foregoing indemnity shall
not apply to the extent such Claims and Expenses arise or result front the
negligence or willful misconduct of Landlord or of any Landlord Party.

 

10.1.2          Landlord shall
indemnify, defend, protect, and hold harmless Tenant and each of the Tenant
Parties from any and all Claims and Expenses arising from the negligence or
willful misconduct of Landlord and each of the Landlord Parties in, on or about
the Project, except to the extent such Claims and Expenses arise or result
from  the negligence or willful
misconduct of the Tenant Parties. Notwithstanding anything to the contrary set
forth in this

 

27

 

Lease,
either party’s agreement to indemnify the other party as set forth in this Section
10.1 shall be ineffective to the extent the matters for which such party
agreed to indemnify the other party are covered by all-risk insurance required
to be carried by the non-indemnifying party pursuant to this Lease. Further,
Tenant’s agreement to indemnify Landlord and Landlord’s agreement to indemnify
Tenant pursuant to this Section 10.1 are not intended to and shall not
relieve any insurance carrier of its obligations under policies required to be
carried pursuant to the provisions of this Lease, to the extent such policies
cover, or if carried, would have covered the matters, subject to the parties’
respective indemnification obligations; nor shall they supersede any
inconsistent agreement of the parties set forth in any other provision of this
Lease.

 

10.1.3          The provisions of this Section 10.1
shall survive the expiration or sooner termination of this Lease with respect
to any claims or liabilities arising in connection with any event occurring
prior to such expiration or termination.

 

10.2           Landlord’s Insurance. Landlord shall insure the Building (including
the Building Structure and Building Systems) and the Project during the Lease
Term 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. Such
coverage shall be in such amounts, from such companies, and on such other
terms, as Landlord may from time to time reasonably determine. Additionally, at
the sole 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 endorsements in favor of the holders of
any mortgages or deeds of trust encumbering the interest of Landlord in the
Building or the ground or underlying lessors of the Building, or any portion
thereof. Notwithstanding the foregoing terms of this Section 10.2, the
coverage and amounts of insurance carried by Landlord in connection with the
Building shall at a minimum be reasonably comparable to the coverage and amounts
of insurance which are generally carried by landlords of Comparable Buildings
(but in no event shall Landlord be required to carry earthquake insurance), and
Worker’s Compensation and Employee’s Liability coverage as required by
Applicable Law. Tenant shall, at Tenant’s expense, comply with all insurance
company requirements pertaining to the use of the Premises. If Tenant’s conduct
or use of the Premises for other than the Permitted Use 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.

 

10.3           Tenant’s Insurance. Tenant shall maintain the following coverages
in the following amounts.

 

10.3.1          Commercial General Liability Insurance
covering the insured against claims of bodily injury, personal injury and
property damage (including loss of use thereof) arising out of Tenant’s
operations, and contractual liabilities (covering the performance by Tenant of
its indemnity agreements) including a Broad Form 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 Liabilily

  	
   

  	
  $5,000,000 each occurrence

  $5,000,000 annual aggregate

  
	
   

  	
   

  	
   

  
	
  Personal Injury Liability

  	
   

  	
  $5,000,000 each occurrence

  $5,000,000 annual aggregate

  0% Insured’s participation

  

 

10.3.2          Physical Damage Insurance covering (i) all
office furniture, business and trade fixtures, office equipment, free-standing
cabinet work, movable partitions, merchandise and all other items of Tenant’s
property on the Premises installed by, for, or at the expense of Tenant, (ii)
the “Tenant Improvements,” as that term is defined in Section 2.1 of the
Tenant Work Letter, and any other improvements which exist in the Premises as
of the Lease Commencement Date (excluding the Building Structure and Building
Systems) (the “Original Improvements”),
and (iii) all other improvements, alterations and additions to the Premises
which do not constitute the Building Structure or Building Systems. Such
insurance shall be

 

28

 

written
on an “all risks” of physical loss or damage basis, for the full replacement
cost value (subject to reasonable deductible amounts) 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 coverage for damage or
other loss caused by fire or other peril including, but not limited to,
vandalism and malicious mischief, theft and explosion, and providing business
interruption coverage for a period of at least nine (9) months.

 

10.3.3          Worker’s Compensation and Employer’s Liability
or other similar insurance pursuant to all applicable state and local statutes
and regulations.

 

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 the Landlord so specifics, as an additional insured, including Landlord’s
managing agent, if any; (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 acceptable
to Landlord and licensed to do business in the State of California; (iv) be
primary insurance as to all claims thereunder and provide that any insurance
carried by Landlord is excess and is non-contributing with any insurance
requirement of Tenant; (v) be in form and content reasonably approved by
Landlord prior to the execution of this Lease; and (vi) provide that said
insurance shall not be canceled or coverage changed unless thirty (30) days’
prior written notice shall have been given by Tenant to Landlord and any
mortgage of Landlord. No insurance required to be maintained by Tenant by this Article
10 will be subject to any deductible greater than $50,000 without
Landlord’s prior written consent. 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 dates thereof.
Notwithstanding the above, Tenant may fulfill (a) up to $4,000,000 of its
insurance obligations under Section 10.3.1 above and (b) its insurance
obligations under Section 10.3.2 above, through “blanket” or “umbrella”
insurance coverages and/or policies subject to Landlord’s reasonable
requirements in connection therewith. In the event Tenant shall fail to procure
such insurance, or to deliver such policies or certificate, Landlord may, at
its option, procure such policies for the account of Tenant, and the cost
thereof shall be paid to Landlord within five (5) days after delivery to Tenant
of bills therefor.

 

10.5           Subrogation. Landlord and Tenant intend that their
respective property loss risks shall be borne by reasonable insurance carriers
to the extent above provided, and Landlord and Tenant hereby agree to look
solely to, and seek recovery only from, their respective insurance carriers in
the event of a property loss to the extent that such coverage is agreed to be
provided hereunder. The parties each hereby waive all rights and claims against
each other for such losses, and waive all rights of subrogation of their
respective insurers, provided such waiver of subrogation shall not affect the
right to the insured to recover thereunder. The parties agree that their respective
insurance policies are now, or shall be, endorsed such that the waiver of
subrogation shall not affect the right of the insured to recover thereunder, so
long as no material additional premium is charged therefor. Tenant will cause
all other occupants of the Premises claiming by, under, or through Tenant to
execute and deliver to Landlord a waiver of claims similar to the waiver in
this Section 10.5 and to obtain such waiver of subrogation rights
endorsements.

 

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 and in such reasonable amounts covering the Premises and Tenant’s
operations therein, as may be reasonably requested by Landlord, but in no event
shall such increased amounts of insurance or such other reasonable types of
insurance be in excess of that generally required by landlords of Comparable
Buildings and in no event may Landlord increase Tenant’s insurance obligations
hereunder more than once during the initial Lease Term and once during each
Option Term.

 

29

 

ARTICLE 11

 

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, the Building Structure, the Building Systems, or any
Common Areas 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 (inclusive of the Building Structure and Building
Systems) and such Common Areas. Such restoration shall be to substantially the
same condition of the Base Building and the Common Areas prior to the casualty,
except for modifications required by zoning and building codes and other
Applicable Laws or by the holder of a mortgage on the Building or Project or
any other modifications to the Common Areas deemed desirable by Landlord, provided
that access to the Premises and any common restrooms serving the Premises shall
not be materially impaired. Upon the occurrence of any damage to the Premises,
upon notice (the “Landlord Repair Notice”)
to Tenant from Landlord, 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
repair any injury or damage to the Tenant Improvements and the Original
Improvements installed in the Premises and shall return such Tenant
Improvements and Original Improvements 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 prior to
Landlord’s commencement of repair of the damage. In the event that Landlord
does not deliver the Landlord Repair Notice within sixty (60) days following
the date the casualty becomes known to Landlord, Tenant shall, at its sole cost
and expense, repair any injury or damage to the Tenant Improvements and the
Original Improvements installed in the Premises and shall return such Tenant
Improvements and Original Improvements to their original condition. Whether or
not Landlord delivers a Landlord Repair Notice, prior to the commencement of
construction, Tenant shall submit to Landlord, for Landlord’s review and
approval, all plans, specifications and working drawings relating thereto, and
Landlord shall select the contractors to perform such improvement work.
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, Landlord shall allow Tenant a proportionate abatement of Rent to the
extent Landlord is reimbursed from the proceeds of rental interruption
insurance purchased by Landlord as part of Operating Expenses, 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;
unless Landlord shall make available to Tenant, during the period of such
repair, other space in the Building or the Project which is reasonably suitable
for the temporary conduct of Tenant’s business; provided, further, however,
that if the damage or destruction is due to the negligence or willful
misconduct of Tenant or any of its agents, employees, contractors, invitees or
guests, Tenant shall be responsible for any reasonable, applicable insurance
deductible (which shall be payable to Landlord upon demand) and there shall be
no rent abatement. In the event that Landlord shall not deliver the Landlord
Repair Notice, Tenant’s right to rent abatement pursuant to the preceding
sentence shall terminate as of the date which is reasonably determined by
Landlord to be the date Tenant should have completed repairs to the Premises
assuming Tenant used reasonable due diligence in connection therewith. Landlord
shall not be liable for any inconvenience or annoyance to Tenant or injury to the
business of Tenant resulting in any way from such damage or the undertaking of
such repair, reconstruction or restoration. Landlord shall have no obligation
to carry insurance of any kind on Tenant’s Alterations or upon Tenant’s goods,
furniture or furnishings or on Tenant’s property, and Landlord shall not be
obligated to repair any damage thereto or to replace the same. Tenant hereby
waives the provisions of any California law which is in conflict with the
provisions of this Article 11.

 

11.2           Landlord’s Option to Repair. Notwithstanding the terms of Section 11.1
of this Lease, if twenty percent (20%) or more of the Building is damaged.
Landlord may elect not to rebuild and/or restore the Premises, Building and/or
Project, and instead terminate this Lease, by notifying Tenant in writing of
such termination within thirty (30) days after the date of discovery of the
damage, such notice to include a termination date giving Tenant ninety (90)
days to vacate

 

30

 

the Premises, but
Landlord may so elect only if the Building or Project shall be damaged by fire
or other casualty or cause, whether or not the Premises are affected, and one
or more of the following conditions is present: (i) in Landlord’s reasonable judgment,
repairs cannot reasonably be completed within one hundred eighty (180) days
after the date of discovery of the damage (when such repairs are made without
the payment of overtime or other premiums); (ii) the holder of any mortgage on
the Building or Project or ground lessor with respect to the Building or
Project shall require that the insurance proceeds or any portion thereof be
used to retire the mortgage debt, or shall terminate the ground lease, as the
case may be; (iii) the damage is not fully covered by Landlord’s insurance
policies; (v) the damage occurs during the last twelve (12) months of the Lease
Term; or (vi) any owner of any other portion of the Project, other than
Landlord, does not intend to repair the damage to such portion of the Project.
It is hereby understood that if Landlord is obligated to or elects to repair or
restore as herein provided, Landlord shall be obligated to make repairs or
restoration only of those portions of the Building and the Premises which were
originally provided at Landlord’s expense, and the repair and restoration of
items not provided at Landlord’s expense shall be the obligation of Tenant. If
it is determined that the repairs will require material and sustained
interruption of Tenant’s use of twenty percent (20%) or more of the Premises or
of Tenant’s access to the Premises or the parking facilities servicing the
Premises, in any such event for a period in excess of one hundred eighty (180)
days after the date the damage is discovered, Tenant may elect, no earlier than
forty-five (45) days after the date of the damage and not later than ninety
(90) days after the date of such damage, to terminate this Lease by Notice to
Landlord effective as of the date specified in the Notice.

 

11.3           Mutual Release.
Upon any termination of this Lease under any of the provisions of this Article
11, the parties shall be released thereby without further obligation to the
other from the date possession of the Premises is surrendered to Landlord,
except for items which have theretofore accrued and are then unpaid or for the
return of any Security Deposit or prepaid Rent.

 

11.4           Delay in Restoration.
Tenant shall not be released from any of its obligations under this Lease by
reason of fire or other casualty, except to the extent and upon the conditions
expressly stated in this Article 11. Notwithstanding anything to the
contrary contained herein, should Landlord be delayed or prevented from
repairing or restoring the damaged Premises by reason of acts of God, war,
governmental restrictions, inability to procure the necessary labor or
materials, delays in effecting insurance recovery, or any other cause beyond
the reasonable control of Landlord, Landlord shall be relieved of its
obligation to make such repairs or restoration for a period equal to such delay
or prevention.

 

11.5           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 the Project, 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 the Project.

 

ARTICLE 12

 

NONWAIVER

 

No provision of
this Lease shall be deemed waived by either party hereto unless expressly
waived in a writing signed thereby. The waiver by either party hereto of any
breach of any term, covenant or condition herein contained shall not be deemed
to be a waiver of any subsequent breach of same or any other term, covenant or
condition herein contained. The subsequent acceptance of Rent hereunder by
Landlord or payment of Rent by Tenant shall not be deemed to be a waiver of any
preceding breach by Landlord or Tenant of any term, covenant or condition of
this Lease, other than the failure of Tenant to pay the particular Rent so
accepted, regardless of Landlord’s or Tenant’s knowledge of such preceding
breach at the time of acceptance or payment of such Rent. No acceptance of a
lesser amount than the Rent herein stipulated shall be deemed a waiver of
Landlord’s right to receive the full amount due, nor shall any endorsement or
statement on any check or payment or any letter accompanying such check or
payment be deemed an accord and/or satisfaction, and Landlord may accept such
check or payment without prejudice to Landlord’s right to recover the full
amount due. No receipt of

 

31

 

monies by Landlord from
Tenant or by Tenant from Landlord 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. Tenant’s payment of
any Rent hereunder shall not constitute a waiver by Tenant of any breach or
default by Landlord under this Lease nor shall Landlord’s payment of monies due
Tenant hereunder constitute a waiver by Landlord of any breach or Default by
Tenant under this Lease.

 

ARTICLE 13

 

CONDEMNATION

 

If the whole or
any material portion of the Premises, Building or Project 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 any adjacent property or street shall be
so taken or condemned, or reconfigured or vacated by such authority in such
manner as to require the use, reconstruction or remodeling of any part of the
Premises, Building or Project, 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 effective as of the date
possession is required to be surrendered to the authority. If more than twenty
percent (20%) of the rentable square feet of the Premises is taken, or if
access to the Premises is substantially impaired, in each case for a period in excess
of one hundred eighty (180) days, Tenant shall have the option to terminate
this Lease effective as of the date possession is required to be surrendered to
the authority and Tenant’s Rent shall abate from such time of taking. No taking
of a portion of the Building not including the Premises, no taking of another
building within the Project, no taking of Project common area and no taking of
Building common area shall permit Tenant to terminate this Lease, unless Tenant
is thereby prevented for a period in excess of one hundred eighty (180) days
from obtaining access to the Premises. If any material portion of the Building
other than the Premises shall be so taken or appropriated, Landlord shall have
the right at its option to terminate this Lease. Tenant shall not because of
such taking assert any claim against Landlord or the authority for any
compensation because of such taking and Landlord shall be entitled to 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 is payable separately to Tenant.
All Rent shall be apportioned as of the date of such termination. 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 rights
it might otherwise have pursuant to Section 1265.130 of The California Code of
Civil Procedure. 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, or in the event of a
longer temporary taking if this Lease is not terminated in accordance with the
foregoing, 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 amount 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.

 

ARTICLE 14

 

ASSIGNMENT AND SUBLETTING

 

14.1           Transfers.
Tenant shall not, without the prior written consent (except as provided in Section
14.8 below) of Landlord, which consent will not be unreasonably withheld, conditioned
or delayed, 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 transfer of this Lease or any interest
hereunder by operation of law, sublet the Premises or any part thereof, or
enter into any license or concession agreements or otherwise permit the
occupancy or use of the Premises or any part thereof by any persons other than
Tenant and its employees and contractors, guests, customers and invitees (to
the extent not designated as such as a subterfuge to avoid Tenant’s obligations
under this Article 14) (all of the foregoing are

 

32

 

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 desires 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 thirty (30) 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 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 executed 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, provided that Landlord shall
have the right to require Tenant to utilize Landlord’s standard Transfer
documents in connection with the documentation of such Transfer, (iv) current
financial statements of the proposed Transferee certified by an officer, partner
or owner thereof, business credit and personal references and history of the
proposed Transferee and any other information reasonably required by Landlord
which will enable Landlord to determine the financial responsibility,
character, and reputation of the proposed Transferee, nature of such
Transferee’s business and proposed use of the Subject Space and (v) an executed
estoppel certificate from Tenant in the form attached hereto as Exhibit E. Any Transfer made without
Landlord’s prior written consent shall, at Landlord’s option, be null, void and
of no effect, and shall constitute a Default by Tenant under this Lease.
Whether or not Landlord consents to any proposed Transfer, Tenant shall pay
Landlord’s review and processing fees, as well as any reasonable professional
fees (including, without limitation, attorneys’, accountants, architects’,
engineers, and consultants’ fees) incurred by Landlord in connection therewith,
within thirty (30) days after written request by Landlord, provided that the foregoing
attorneys’ fees shall not exceed $1,500.00 for a Transfer in the ordinary
course of business.

 

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. Without limitation as to other reasonable grounds for withholding
consent, 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:

 

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 the Project, as reflected by the then existing
tenants of the Project;

 

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;

 

14.2.4          The Transfer occurs
during the period from the Lease Commencement Date until the earlier of (i) the
second (2nd) anniversary of the Lease Commencement Date, or (ii) the
date at least ninety-five percent (95%) of the rentable square feet of the
Building is leased, and the rent charged by Tenant to such Transferee during
the term of such Transfer (the “Transferee’s
Rent”), calculated using a present value analysis, is less than
ninety percent (90%) of the rent being quoted by Landlord at the time of such
Transfer for comparable space in the Building for a comparable term (the “Quoted Rent”), calculated using a present
value analysis but this Section 14.2.4 shall only apply to the extent
that Landlord has suitable space available for lease to such Transferee;

 

14.2.5          The Transferee is
not a party of reasonable financial worth and/or financial stability in light
of the responsibilities to be undertaken in connection with the Transfer on the
date consent is requested;

 

14.2.6          The proposed
Transfer would cause a violation of another lease for space in the Project, or
would give an occupant of the Project a right to cancel its lease;

 

33

 

14.2.7          The terms of the proposed Transfer will allow
the Transferee to exercise a right of renewal, right of expansion, right of
first offer, or other similar right held by Tenant (or will allow the
Transferee to occupy space leased by Tenant pursuant to any such right); or

 

14.2.8          Either the proposed Transferee, or any person
or entity which directly or indirectly, controls, is controlled by, or is under
common control with, the proposed Transferee, (i) occupies space in the Project
at the time of the request for consent, or (ii) is negotiating with Landlord to
lease space in the Project at such time, or (iii) has negotiated with Landlord
during the six (6)-month period immediately preceding the Transfer Notice (but
as to items (i) through (iii), only to the extent that Landlord has space
available for lease in the Project which is reasonably suitable for the
proposed Transferee);

 

If Landlord consents to any Transfer pursuant to the terms of this Section
14.2, 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 (i) such that Landlord would initially have been entitled to
refuse its consent to such Transfer under this Section 14.2, or (ii)
which would cause the proposed Transfer to be more favorable to the Transferee
than the terms set forth in Tenant’s original Transfer Notice, Tenant shall
again submit the Transfer to Landlord for its approval and other action under
this Article 14. Notwithstanding anything to the contrary in this Lease,
if Tenant or any proposed Transferee claims that Landlord has unreasonably
withheld or delayed its consent under Section 14.2 or otherwise has
breached or acted unreasonably under this Article 14, their sole
remedies shall be a declaratory judgment and an injunction for the relief
sought without any monetary damages, and Tenant hereby waives all other
remedies, including, without limitation, any right at law or equity to
terminate this Lease, on its own behalf and, to the extent permitted under all
applicable laws, on behalf of the proposed Transferee. Tenant shall indemnify,
defend and hold harmless Landlord from any and all liability, losses, claims,
damages, costs, expenses, causes of action and proceedings involving any third
party or parties (including without limitation Tenant’s proposed subtenant or
assignee) who claim they were damaged by Landlord’s wrongful withholding or
conditioning of Landlord’s consent, except as a result of Landlord’s negligence
and/or willful misconduct.

 

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 any “Transfer Premium,” as that term is
defined in this Section 14.3, received by Tenant from such Transferee;
provided, however, that Tenant shall not be required to pay to Landlord any
Transfer Premium until such time as Tenant has recovered from payments or other
consideration made by the Transferee in consideration of the Transfer all
applicable “Tenant’s Subleasing Costs,” as that term is defined in this Section
14.3. “Transfer Premium” shall
mean all rent, additional rent or other consideration payable by such
Transferee for all or any applicable portion of the Premises in connection with
the Transfer in excess of the Rent and Additional Rent payable (in lieu of or
in addition to rent) by Tenant under this Lease during the term of the Transfer
on a per rentable square foot basis if less than all of the Premises is
transferred, after deducting the reasonable expenses incurred by Tenant for (i)
any changes, alterations and improvements to the Premises in connection with
the Transfer; (ii) any free base rent reasonably provided to the Transferee;
(iii) any brokerage commissions and/or marketing fees in connection with the
Transfer; (iv) any key money, bonus money or other cash consideration paid by
Tenant to Transferee for furniture, fixtures, equipment and/or similar items;
(v) any attorneys’ fees actually incurred by Tenant in connection with such
Transfer; (vi) the aggregate amount of Base Rent and Additional Rent paid by
Tenant during the period prior to the commencement of the term of the Transfer
during which Tenant does not occupy the Subject Space, commencing on and after
the “Downtime Start Date” (as defined below); (vii) any lease takeover incurred
by Tenant in connection with the Transfer for all or any applicable portion of
the Premises; and (viii) out-of-pocket costs of advertising the space subject
to the Transfer (collectively, “Subleasing
Costs”). The “Downtime Start
Date”  shall mean the later of (A) the date which Tenant vacates and
does not reoccupy the Subject Space and delivers notice of the same to
Landlord, and (B) the date Tenant enters into a listing agreement for the
Subject Space with a reputable broker, and provides Landlord with notice
thereof. “Transfer Premium” shall also include, but not be limited to, key
money, bonus money or other cash consideration paid by Transferee to Tenant in
connection with such Transfer, and any payment in excess of fair market

 

34

 

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 for all or any applicable portion of the Premises;
provided, however, under no circumstances shall Landlord be paid any Transfer
Premium until Tenant has recovered all applicable Tenant’s Subleasing Costs for
each applicable Transferred Space, it being understood that if in any year the
gross revenues, less the deductions set forth and included in Tenant’s
Subleasing Costs, are less than any and all costs actually paid in assigning or
subletting the affected space (collectively “Transaction
Costs”), the amount of the excess Transaction Costs shall be carried
over to the next year and then deducted from net revenues with the procedure
repeated until a Transfer Premium is achieved.

 

14.4           Intentionally Deleted.

 

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 (but not more than
once every twelve (12) months of the Lease Term) a complete statement,
certified by an independent certified public accountant, or Tenant’s chief
financial officer, setting forth in detail the computation of any Transfer
Premium Tenant has derived and shall derive from such Transfer, and (v) no
Transfer relating to this Lease or agreement entered into with respect thereto,
whether with or without Landlord’s consent, shall relieve Tenant from any
liability under this Lease, including, without limitation, in connection with
the Subject Space. 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 thirty (30) days after demand, pay the deficiency, and if
understated by more than seven percent (7%). Tenant shall pay Landlord’s
reasonable costs of such audit, otherwise the cost shall be borne by Landlord.

 

14.6           Intentionally Omitted.

 

14.7           Occurrence of Default. Any Transfer hereunder shall be subordinate
and subject to the provisions of this Lease, and if this Lease shall be
terminated during the term of any Transfer, Landlord shall have the right to:
(i) treat such Transfer as canceled and repossess the Subject Space by any
lawful means, or (ii) require that such Transferee attorn to and recognize
Landlord as its landlord under any such Transfer. If Tenant shall be in Default
under this Lease, Landlord is hereby irrevocably authorized, as Tenant’s agent
and attorney-in-fact, to direct any Transferee to make all payments under or in
connection with the Transfer directly to Landlord (which Landlord shall apply
towards Tenant’s obligations under this Lease) until such Default is cured.
Such Transferee shall rely on any representation by Landlord that Tenant is in
Default hereunder, without any need for confirmation thereof by Tenant. Upon
any assignment, the assignee shall assume in writing all obligations and
covenants of Tenant thereafter to be performed or observed under this Lease. No
collection or acceptance of rent by Landlord from any Transferee shall be
deemed a waiver of any provision of this Article 14 or the approval of
any Transferee or a release of Tenant from any obligation under this Lease, whether
theretofore or thereafter accruing. In no event shall Landlord’s enforcement of
any provision of this Lease against any Transferee be deemed a waiver of
Landlord’s right to enforce any term of this Lease against Tenant or any other
person.

 

14.8           Non-Transfers. Notwithstanding anything to the contrary
contained in this Article 14, neither (i) an assignment of the Premises
to a transferee which is the resulting entity of a merger or consolidation of
Tenant with another entity, (ii) a sale by Tenant of all or substantially all
of its assets to another entity, (iii) transfers of shares of Tenant or any
affiliate of Tenant if Tenant or such affiliate is a publicly-held company, nor
(iv) an assignment or subletting of all or a portion of the Premises to an affiliate
of Tenant (an “Affiliate”) (an
entity which is controlled by, controls, or is
under common control with, Tenant), shall be deemed a Transfer under
this Article 14, provided that, with respect to item (iv) above only,
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, to the extent
such documents and /or information is required to prove that such assignment or
sublease is not a subterfuge by Tenant to avoid its obligations under this

 

35

 

Lease.
In no event shall any Transfer Premium be payable to Landlord for any transfer
described in items (i) through (iv) of this Section 14.8. “Control,”
as used in this Section 14.8, shall mean the ownership,
directly or indirectly, of at least fifty-one percent (51%) of the voting securities of, or
possession of the right to vote, in the ordinary direction of its affairs, of
at least fifty-one percent (51%) of the voting interest in, any person or
entity.

 

14.9           Assumption by Trustee in
Bankruptcy. In the event that
Tenant files any type of petition in bankruptcy or has such petition filed
against it, and Landlord cannot elect to terminate this Lease pursuant to law,
and in the event that the trustee or receiver appointed by the bankruptcy court
assumes or adopts or fails to disaffirm this Lease and fails or refuses to give
Landlord adequate assurance of compliance with this Lease pursuant to law, then
Landlord shall have the right to terminate this Lease within thirty (30) days
after gaining knowledge of such  failure
to give such adequate assurances, or within thirty (30) days after receipt of
written notice from said trustee or receiver of refusal to give such adequate
assurances, whichever is earlier.

 

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 writing 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 or terminate any or all such
sublessees or subtenancies.

 

15.2           Removal of Tenant 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 Sections 8.2
and 8.5, quit and surrender possession of the Premises to Landlord in
good order and condition of this Lease, reasonable wear and tear, casualty, and
repairs which are specifically made the responsibility of Landlord hereunder
excepted. Upon such expiration or termination, subject to the terms of Sections
8.2 and 8.5 of this Lease, and subject to the last sentence of this Section
15.2, Tenant shall, without expense to Landlord, remove or cause to be
removed from the Premises, any Tenant Improvements or Alterations designated by
Landlord in accordance with the terms of this Lease (to be so designated by
Landlord at or prior to the time of their installation if approved by
Landlord), all debris and rubbish, and such items of furniture, equipment,
business and trade fixtures, free-standing cabinet work, movable partitions,
all signs and placards, 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, as Landlord may, in its reasonable discretion, require to be
removed, and Tenant shall repair at its own expense all damage to the Premises,
and Building resulting from such removal. Landlord may elect to retain or
dispose of, in any manner, any Alterations or Tenant’s personal property that
Tenant does not remove (and was not directed by Landlord to remove) from the
Premises on the expiration or termination of the Term. Except as otherwise
provided in this Lease, title to any such Alterations or Tenant’s personal
property that Landlord elects to retain or dispose of on expiration of the Term
shall vest in Landlord. Except as otherwise provided in this Lease, Tenant
waives all claims against Landlord for any damage to Tenant resulting from
Landlord’s retention or disposition of any such Alterations or Tenant’s
personal property. Tenant shall be liable to Landlord for Landlord’s reasonable
and actual costs for storing, removing and disposing of any Alterations or
Tenant’s personal property and shall indemnify and hold Landlord harmless from
the claim of any third party to an interest in said personal property.

 

36

 

ARTICLE 16

 

HOLDING OVER

 

If Tenant holds over after the expiration of the Lease Term or earlier
termination thereof, 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 in such
case, for the first sixty (60) days of such holdover by Tenant, Rent shall be
payable at a monthly rate equal to one hundred twenty-five percent (125%) of
the Rent applicable during the last rental period of the Lease Term under this
Lease. Following the expiration of such 60-day period, Tenant shall pay Rent at
a monthly rate equal to one hundred fifty percent (150%) of the Rent applicable
during the last rental period of the Lease Term under this Lease. Such
month-to-month tenancy shall be subject to every other applicable term,
covenant and agreement contained herein. For purposes of this Article 16,
a holding over shall include, without limitation, (i) Tenant’s remaining in the
Premises after the expiration or earlier termination of the Lease Term, as
required pursuant to the terms of Section 8.5, above, to remove any
Alterations or improvements located within the Premises (including, without
limitation, the Tenant Improvements) and replace the same as requested by
Landlord with building standard tenant improvements, or (ii) Tenant’s failure
to remove items and restore the Premises as required in Article 15,
above. 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. A termination or non-renewal of this Lease is not intended
to be and shall not be deemed to be a breach of the covenant of good faith and
fair dealing.

 

ARTICLE 17

 

ESTOPPEL CERTIFICATES

 

Within ten (10) business days following a request in writing by
Landlord, Tenant shall execute, acknowledge 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 reasonable form as may be required by any prospective
mortgagee or purchaser of the Project, 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. Any such certificate may be relied upon by
any prospective mortgagee or purchaser of all or any portion of the Project. At
any time during the Lease Term (but not more than twice during any calendar
year), Landlord may require Tenant to provide Landlord with a current financial
statement and financial statements of the last completed two (2) years prior to
the current financial statement year (each, a “Financial Statement”). Tenant’s annual Financial Statements
shall be prepared in accordance with generally accepted accounting principles,
audited by an independent certified public accountant (to the extent consistent
with Tenant’s normal business practices) and certified by an officer of Tenant
as being true and correct.

 

ARTICLE 18

 

SUBORDINATION AND
ATTORNMENT

 

18.1           Subordination.
This Lease shall be subject and subordinate to all present and future ground or
underlying leases of the Building or Project and to the lien of any mortgage,
trust deed or other encumbrances now or hereafter in force against the Building
or Project or any part thereof, 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, trust deeds or other

 

37

 

encumbrances,
or the lessors under such ground lease or underlying leases, require in writing
that this Lease be superior thereto. Landlord’s delivery to Tenant of
commercially reasonable non-disturbance agreement(s) (the “Nondisturbance Agreement”) in favour of Tenant
from any ground lessors, mortgage holders or lien holders of Landlord who come
into existence following the date hereof but prior to the expiration of the
Lease Term shall be in consideration of, and a condition precedent to, Tenant’s
agreement to be bound by the terms of this Article 18 with respect
thereto. Tenant covenants and agrees in the event any proceedings are brought
for the foreclosure of any such mortgage or deed in lieu thereof (or if any
ground lease is terminated), to attorn, without any deductions or set-offs
whatsoever, to the lienholder or purchaser or any successors thereto upon any
such foreclosure sale or deed in lieu thereof (or to the ground lessor), if so
requested to do so by such purchaser or lienholder or ground lessor, and to recognize
such purchaser or lienholder or ground lessor as the lessor under this Lease,
provided such lienholder or purchaser or ground lessor shall agree to accept
this Lease and not disturb Tenant’s occupancy, so long as Tenant timely pays
the rent and observes and performs the terms, covenants and conditions of this
Lease to be observed and performed by Tenant. Landlord’s interest herein may be
assigned as security at any time to any lienholder. 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. Subject to Tenant’s receipt of the
Nondisturbance Agreement described herein, Tenant waives the provisions of any
current or future statute, rule or law which may give or purport to give Tenant
any right or election to terminate or otherwise adversely affect this Lease and
the obligations of the Tenant hereunder in the event of any foreclosure
proceeding or sale.

 

18.2           Attornment by Tenant. If any holder of any mortgage, indenture, deed
of trust, or other similar instrument succeeds to Landlord’s interest in the
Premises, Tenant will pay to such successor all Rent subsequently payable under
this Lease when due. Tenant will, upon request of any one so succeeding to the
interest of Landlord, automatically become the tenant of, and attorn to, such
successor in interest without change in this Lease. Such successor in interest
will not be bound by: (a) any payment of Rent for more than one (1) month in
advance; or (b) any amendment or modification of this Lease made without its
written consent; or (c) any claim against Landlord arising prior to the date on
which such successor succeeded to Landlord’s interest; or (d) any claim or
offset of Rent against the Landlord. Upon request by such successor in interest
and without cost to Landlord or such successor in interest, Tenant will
execute, acknowledge, and deliver an instrument or instruments confirming the
attornment. The instrument of attornment will also provide that such successor
in interest will not disturb Tenant in its use of the Premises in accordance
with this Lease.

 

18.3           Conditions for Tenant’s
Termination. No act or failure to
act on the part of Landlord which would entitle Tenant under the terms of this
Lease, or by law, to be relieved of Tenant’s obligations hereunder or to
terminate this Lease, shall result in a release or termination of such
obligations or a termination of this Lease unless: (a) Tenant shall have first
given written notice of Landlord’s act or failure to act to Landlord’s
mortgagees of record, if any, specifying the act or failure to act on the part
of Landlord which could or would give basis to Tenant’s rights, provided that
Tenant has been given written notice of such mortgagee’s address; and (b) such
mortgagees, after receipt of such notice, have failed or refused to correct or
cure the condition complained of within a “reasonable time” thereafter; but
nothing contained in this Section 18.3 shall be deemed to impose any
obligation on any such mortgagee to correct or cure any condition. “Reasonable
time” as used above means (i) with respect to monetary defaults, thirty (30)
days, (ii) with respect to non-monetary defaults that are susceptible to cure
by a mortgagee without obtaining possession of the mortgaged premises, sixty
(60) days, and (iii) with respect to non-monetary defaults that require
possession of the mortgaged premises by a mortgagee in order to effect a cure,
a reasonable time to obtain possession of the mortgaged premises if the
mortgagee elects to do so, and a reasonable time to correct or cure the
condition if such condition is determined to exist, but in no event greater
than one hundred eighty (180) days longer than Landlord would have to cure such
default.

 

18.4           Non-merger of Fee  and Leasehold Estate. If both Landlord’s and Tenant’s estates in
the real property, or the improvements or the Premises become vested in the
same owner, this Lease shall nevertheless not be destroyed by application of
the doctrine of merger except at the express election of the Landlord and the
consent of each and every lender whose loan is secured in whole or in part by
all or any portions of the Premises.

 

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18.5           Non-merger of Subleases. The surrender of this Lease by Tenant or the
cancellation of this Lease by agreement of Tenant and Landlord or the
termination of this Lease on account of Tenant’s Default will not work a
merger, and will, at Landlord’s option, terminate any subleases or operate as
an assignment to Landlord of any subleases. Landlord’s option under this
paragraph will be exercised by notice to Tenant and all known subtenants in the
Premises.

 

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, when
due unless such failure is cured within ten (10) days after written notice; or

 

19.1.2          Except where a specific time period is
otherwise set forth for Tenant’s performance in this Lease, in which event the
failure to perform by Tenant within such time period shall be a Default by
Tenant under this Section 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 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 lo be in Default if it diligently
commences such cure within such period and thereafter diligently proceeds to
rectify and cure such Default, but in no event exceeding a period of time in
excess of ninety (90) days after written notice thereof from Landlord to
Tenant; or

 

19.1.3          To the extent permitted by law, a general
assignment by Tenant or any guarantor of this Lease for the benefit of
creditors, or the taking of any corporate action in furtherance of bankruptcy
or dissolution whether or not there exists any proceeding under an insolvency
or bankruptcy law, 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          Intentionally omitted; or

 

19.1.5          The failure by Tenant to observe or perform
according to the provisions of Articles 5,  14,  17 or 18
of this Lease where such failure continues for more than five (5) business days
after notice from Landlord; or

 

19.1.6          Intentionally omitted.

 

The notice periods provided herein are in lieu of, and not in addition
to, any notice periods provided by law.

 

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 (all of which remedies shall be distinct, separate
and cumulative), 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:

 

39

 

(i)        The worth at the time 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, specifically including but not limited to, brokerage commissions and
advertising expenses incurred, expenses of remodeling the Premises or any
portion thereof for a new tenant, whether for the same or a different use, and
any special concessions made to obtain a new tenant; and

 

(v)        At Landlord’s election, such other amounts in
addition to or in lieu of the foregoing as may be permitted from time to time
by applicable law.

 

The term “rent” as used in this Section 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 rate set forth in Article 25 of this Lease,
but in no case greater than the maximum amount of such interest permitted by
law. 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
(1%).

 

19.2.2          Intentionally omitted.

 

19.2.3          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 limitations).
Accordingly, if Landlord does not elect to terminate this Lease on account of
any Default by Tenant, Landlord may, from time to time, without terminating
this Lease, enforce all of its rights and remedies under this Lease, including
the right to recover all rent as it becomes due.

 

19.2.4          Landlord shall at all times have the rights
and remedies (which shall be cumulative with each other and cumulative and in
addition to those rights and remedies available under Sections 19.2.1
through 19.2.3, above, or any law or other provision of this Lease),
without prior demand or notice except as required by applicable law, to seek
any declaratory, injunctive or other equitable relief, and specifically enforce
this Lease, or restrain or enjoin a violation or breach of any provision
hereof.

 

19.3           Subleases of  Tenant. Whether or not Landlord elects to terminate
this Lease on account of any Default by Tenant, as set forth in this Article
19, Landlord (except as otherwise provided in this Lease) shall have the
right to terminate any and all subleases, licenses, concessions or other
consensual arrangements for possession entered into by Tenant and affecting the
Premises or may, in Landlord’s sole discretion, succeed to Tenant’s interest in
such subleases, licenses, concessions or arrangements. In the event of
Landlord’s election to succeed to Tenant’s interest in any such subleases,
licenses, concessions or arrangements, Tenant shall, as of the date of notice
by Landlord of such election, have no further right to or interest in the rent
or other consideration receivable thereunder.

 

19.4           Form of Payment After Default. Following the occurrence of an event of
Default by Tenant, Landlord shall have the right to require that any or all
subsequent amounts paid by Tenant to Landlord hereunder, whether to cure the
Default in question or otherwise, be paid in the form of cash, money order,
cashier’s or certified check drawn on an institution acceptable to Landlord, or
by other means approved by Landlord, notwithstanding any prior practice of
accepting payments in any different form.

 

40

 

19.5           Efforts to Relet. No re-entry or repossession, repairs,
maintenance, changes, alterations and additions, reletting, appointment of a
receiver to protect Landlord’s interests hereunder, or any other action or
omission by Landlord shall be construed as an election by Landlord to terminate
this Lease or Tenant’s right to possession, or to accept a surrender of the
Premises, nor shall same operate to release Tenant in whole or in part from any
of Tenant’s obligations hereunder, unless express written notice of such
intention is sent by Landlord to Tenant. Tenant hereby irrevocably waives any
right otherwise available under any law to redeem or reinstate this Lease.

 

19.6           Landlord Default.

 

19.6.1          General. Landlord shall not be deemed to be in default
in the performance of any obligation required by it under this Lease, or under
any agreement executed in connection herewith, unless and until it has failed
to perform such obligation within thirty (30) days after receipt of written
notice by Tenant to Landlord, specifying wherein Landlord has failed to perform
such obligation; provided, however, that if the nature of Landlord’s obligation
is such that more than thirty (30) days are required for its performance, then
Landlord shall not be deemed to be in default if it shall commence such
performance within such thirty (30) day period and thereafter diligently
prosecute the same to completion. Nothing in this Article 19 shall be
interpreted to mean that Tenant shall have the right to terminate this Lease or
that Tenant is excused from paying any Rent due hereunder.

 

19.6.2          Abatement of Rent. In the event that Tenant is prevented from
using, and does not use, the Premises or any portion thereof, as a result of
(i) any repair, maintenance or alteration performed by Landlord, or which
Landlord failed to perform, after the Lease Commencement Date and required by
this Lease, which substantially interferes with Tenant’s use of or ingress to
or egress from the Building, Project, or Premises or the parking facility; (ii)
any failure to provide services, utilities or ingress to and egress from the
Building, Project, or Premises as required by this Lease; or (iii) damage and
destruction of or eminent domain proceedings in connection with the Premises,
Building, the Project or the parking facility servicing the Project, (any such
set of circumstances as set forth in items (i) through (iii), above, to be
known as an “Abatement Event”),
then Tenant shall give Landlord Notice of such Abatement Event, and if such
Abatement Event continues for five (5) consecutive business days after
Landlord’s receipt of any such Notice (provided Landlord is sent a Notice
pursuant to Article 29 of this Lease of each of such Abatement Event)
(the “Eligibility Period”), then
the Base Rent and Tenant’s Share of Building Direct Expenses and charges for
Tenant’s parking passes (to the extent not utilized by Tenant) shall be abated
or reduced, as the case may be, after the expiration of the Eligibility Period
for such period of time (commencing from the first day of the Eligibility
Period) that Tenant continues to be so prevented from using, and does not use,
the Premises, or a portion thereof, in the proportion that the rentable area of
the portion of the Premises that Tenant is prevented from using, and does not
use (“Unusable Area”), bears to
the total rentable area of the Premises; provided, however, in the event that
Tenant is prevented from using, and does not use, the Unusable Area for a
period of time in excess of the Eligibility Period and the remaining portion of
the Premises is not sufficient to allow Tenant to effectively conduct its
business therein, and if Tenant does not conduct its business from such
remaining portion, then for such time after expiration of the Eligibility
Period during which Tenant is so prevented from effectively conducting its
business therein, the Base Rent and Tenant’s Share of Building Direct Expenses
and charges for Tenant’s parking passes (to the extent not utilized by Tenant)
for the entire Premises shall be abated for such time as Tenant continues to be
so prevented from using, and does not use, the Premises. If, however, Tenant
reoccupies any portion of the Premises during such period, the Rent allocable
to such reoccupied portion, based on the proportion that the rentable area of
such reoccupied portion of the Premises bears to the total rentable area of the
Premises, shall be payable by Tenant from the date Tenant reoccupies such
portion of the Premises. Such right to abate Base Rent and Tenant’s Share of
Building Direct Expenses and charges for Tenant’s parking passes (to the extent
not utilized by Tenant) shall be Tenant’s sole and exclusive remedy at law or
in equity for an Abatement Event; provided, however, that nothing in this Section
19.6.2, shall impair Tenant’s rights under Section 19.6.1, above. If
Tenant’s right to abatement occurs because of an eminent domain taking,
condemnation and/or because of damage or destruction to the Premises, the
Project’s parking facility, and/or the Project, Tenant’s abatement period shall
continue until Tenant has been given sufficient time, and sufficient ingress
to, and egress from the Premises, to rebuild such portion it is required to
rebuild, to install its property, furniture, fixtures, and equipment to the
extent the same shall have been removed as a result of such damage or
destruction or temporary taking and

 

41

 

to move in over a
weekend. To the extent Tenant is entitled to abatement because of an event
covered by Articles 11 or 13 of this Lease, then the Eligibility
Period shall not be applicable.

 

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 Landlord or any persons lawfully claiming by or through
Landlord. The foregoing covenant is in lieu of any other covenant express or
implied, except for those covenants expressly set forth in this Lease. Landlord
hereby warrants that it has full authority to enter into this Lease.

 

ARTICLE 21

 

LETTER OF CREDIT

 

21.1           General Terms. Tenant shall deliver to Landlord concurrently
with Tenant’s execution of this Lease, an unconditional, clean, irrevocable
letter of credit (the “L-C”) in
the initial amount of One Million Five Hundred Seventy-Seven Thousand One
Hundred Thirty-Five and No/100 Dollars ($1,577,135.00) (the “L-C Amount”), which L-C shall be issued by
a money-center bank (a bank which accepts deposits, maintains accounts, has a
local Los Angeles office which will negotiate a letter of credit, and whose
deposits are insured by the FDIC) reasonably acceptable to Landlord, and which
L-C shall be in a form and content as set forth in Exhibit H, attached hereto. Tenant
shall pay all expenses, points and/or fees incurred by Tenant in Obtaining the
L-C.

 

21.1.1          Application of the L-C. The L-C 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 initial
Lease Term. The L-C shall not be mortgaged, assigned or encumbered in any
manner whatsoever by Tenant without the prior written consent of Landlord. If
Tenant defaults with respect to any provisions of this Lease, including, but
not limited to, the provisions relating to the payment of Rent, or if Tenant
fails to renew the L-C at least thirty (30) days before its expiration,
Landlord may, but shall not be required to, draw upon all or any portion of the
L-C for payment of any Rent or any other sum in default, or for the payment of
any amount that Landlord may reasonably spend or may 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. The use,
application or retention of the L-C, 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 L-C, nor (b) operate as a limitation on any
recovery to which Landlord may otherwise be entitled. Any amount of the L-C
which is drawn upon by Landlord, but is not used or applied by Landlord shall
be held by Landlord and deemed a security deposit (the “L-C Security Deposit”). If any portion of
the L-C is drawn upon, Tenant shall, within five (5) days after written demand
therefor, either (i) deposit cash with Landlord (which cash shall be applied by
Landlord to the L-C Security Deposit) in an amount sufficient to cause the sum
of the L-C Security Deposit and the amount of the remaining L-C to be
equivalent to the amount of the L-C then required under this Lease or (ii)
reinstate the L-C to the amount then required under this Lease, and if any
portion of the L-C Security Deposit is used or applied, Tenant shall, within
five (5) days after written demand therefor, either (x) deposit cash with
Landlord (which cash shall be applied by Landlord to the L-C Security Deposit)
in an amount sufficient to restore the L-C Security Deposit to the amount then
required under this Lease or (y) reinstate the L-C to the amount then required
under this Lease, and Tenant’s failure to do so shall be a default under this
Lease. Tenant acknowledges that Landlord has the right to transfer or mortgage
its interest in the Project 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 (without payment of any transfer or other fees) to transfer or assign
the L-C Security Deposit and/or the L-C to the transferee or mortgage, and in
the event of such transfer, Tenant shall look solely to such transferee or
mortgage for the return of the L-C Security Deposit and/or the L-C.

 

42

 

Notwithstanding any
contrary provision contained herein or the L-C, all expenses, points, and/or
fees incurred in connection with any transfer or assignment of the L-C by
Landlord as provided in this Section 21.1.1 shall be shared equally between
Landlord and Tenant. In connection with the foregoing, Landlord shall initially
pay any such costs and Tenant shall reimburse Landlord for one-half of such
costs within thirty (30) days of invoicing.

 

21.1.2          Reduction of L-C
Amount. If following June 15, 2006 and June 15, 2007, each as
applicable, Tenant has (i) not previously been in monetary default under this
Lease or failed to cure a non-monetary default within the applicable cure
period under this Lease, (ii) not, during the previous twelve (12) month
period, either failed to pay any amount of Rent as and when due hereunder and
(iii) then satisfies the “Financial Threshold,” as defined below, the L-C
Amount may be reduced by Tenant no sooner than ten (10) business days following
delivery of a valid “Reduction Notice,” as defined below, from Tenant to
Landlord as follows: after June 15, 2006, the L-C Amount may be reduced to One
Million Sixty-Eight Thousand Eight Hundred Two and No/100 Dollars
($1,068,802.00); after June 15, 2007, the L-C Amount may be reduced to Five
Hundred Forty-Seven Thousand Seven Hundred Sixty-One and No/100 Dollars
($547,76l.00). Landlord shall have the right, from time to time, to require
Financial Statements from Tenant as provided in Article 17 to verify
whether Tenant satisfies or continues to satisfy the Financial Threshold and
Tenant shall promptly notify Landlord if at any time after Tenant delivers a
Reduction Notice, Tenant fails to meet the Financial Threshold. Notwithstanding
the above scheduled reductions in the L-C Amount, in the event that at any time
subsequent to the any reduction of the L-C Amount pursuant to the above (a)
Tenant shall be in monetary default under this Lease, have failed to cure a
non-monetary default within the applicable cure period under this Lease, or (b)
Tenant fails to satisfy the Financial Threshold ((a) and (b) each being
referred to herein as a “Reinstatement Event”),
then the L-C Amount shall revert back to the original L-C Amount of One Million
Five Hundred Seventy-Seven Thousand One Hundred Thirty-Five and No/100 Dollars
($1,577,135.00) and shall remain at such amount for the remainder of the Lease
Term. In such event, within five (5) days of notice from Landlord that a
Reinstatement Event has occurred, Tenant shall either (i) provide an additional
L-C which, when combined with the L-C then being held by Landlord totals One
Million Five Hundred Seventy-Seven Thousand One Hundred Thirty-Five and No/100
Dollars ($1,577,135.00) or (ii) provide an entirely new L-C in the amount of
One Million Five Hundred Seventy-Seven Thousand One Hundred Thirty-Five and
No/100 Dollars ($1,577,135.00). Such obligation shall continue for the
remainder of the Lease Term and, notwithstanding anything to the contrary
contained herein, there shall be no subsequent reductions of the L-C amount. If
Tenant shall fully and faithfully perform every provision of this Lease to be
performed by it, the L-C Security Deposit and/or the L-C, or any balance
thereof, shall be returned to Tenant within thirty (30) days following the
expiration of the Lease Term. For purposes hereof, the term “Reduction Notice”
shall mean a written notice from Tenant given after June 15, 2006 or June 15,
2007, as applicable, of Tenant’s desire to reduce the L-C Amount as provided in
this Article 21 accompanied by a current Financial Statement
demonstrating that Tenant satisfies the Financial Threshold. For purposes
hereof the “Financial Threshold” shall mean
that Tenant has (i) cash or cash equivalents and marketable securities
(including short and long term debt investments) of $50,000,000 (including debt
and equity securities); (ii) a net worth (as total consolidated assets less
total consolidated liabilities) of $100,000,000; and (iii) an annual (trailing
twelve months) operating cash flow of $12,000,000.

 

ARTICLE 22

 

STORAGE SPACE

 

Tenant shall have
the right to lease up to approximately 500 square feet of storage space (the
“Storage Space”) in the Project parking facility; provided, however, if, after
the first twelve (12) months of the Lease Term, Tenant has not commenced
leasing or ceases to lease the Storage Space, as applicable, any subsequent
leasing of the Storage Space by Tenant shall be subject to availability. The
exact size of the Storage Space and the location thereof shall be reasonably
determined by Landlord. Tenant shall not be required to pay rent with respect
to the Storage Space; provided, however, Tenant shall pay for, or reimburse
Landlord for any Landlord provided utilities used in connection with the
Storage Space. Tenant shall comply with such rules and regulations as
promulgated by Landlord from time to time pertaining to the use of such Storage
Space and, in connection therewith, Tenant agrees that Tenant’s obligations
under this Lease, including, but without limitation thereof, Article 10 will specifically
apply to the Storage

 

43

 

Space as if the Storage
Space were a part of the Premises. Tenant agrees not to store any flammable,
combustible or other materials in the Storage Space that would increase the
cost of Landlord’s insurance, and not to store any toxic, hazardous or odorous
materials or waste in the Storage Space. Tenant also agrees not to store excess
or highly concentrated weight in the Storage Space. Tenant agrees to use the
Storage Space solely for storage purposes of dry goods and not as office or
other space. Tenant agrees that Landlord and its agents may enter and inspect
the Storage Space and any goods stored therein during normal business hours, on
not less than one (1) business day’s prior notice (except in an emergency in
which case no prior notice shall be required). Tenant shall deliver to Landlord
a key for any locks installed by Tenant for Landlord’s emergency entry
purposes. Notwithstanding anything to the contrary contained in this Lease,
Tenant accepts the Storage Space in its presently existing “as is”, “with all
faults”, “without any warranties or representations” condition and Landlord
shall not be obligated perform any improvement or other work in connection with
the Premises. No obligations of Landlord under this Lease with respect to the
Premises or Base Building shall apply to the Storage Space. Tenant may make
interior, non-structural modifications to the Storage Space only in accordance
with the terms of Article 8 of the Lease. If Landlord so elects, Tenant shall
execute and deliver to Landlord, Landlord’s standard form Storage Space Lease
within thirty (30) days after Tenant’s receipt thereof. Landlord shall have the
right, upon not less than sixty (60) days prior written notice to Tenant, to
substitute for the Storage Space comparable storage area within the Project
having reasonably comparable access to and reasonably equivalent usable area as
the Storage Space, provided that Landlord shall pay all expenses reasonably incurred
in moving Tenant’s property to such new location; and upon the expiration of
such 60-day written notice, the new storage space shall be deemed to be the
Storage Space covered by this terms of this Article 22. Tenant agrees
to, at all times, maintain the Storage Space in neat and orderly condition and
repair. Tenant acknowledges that Landlord shall have no obligation to provide
any security, services, maintenance, work or improvements whatsoever for the
Storage Space. Subject to the terms and conditions hereof, Tenant may terminate
any such lease of Storage Space upon thirty (30) days written notice to
Landlord.

 

ARTICLE 23

 

SIGNS

 

23.1           Full Floors.
Subject to Landlord’s prior written approval, in its reasonable discretion, and
provided all signs are in keeping with the quality, design and style of the
Building and Project, Tenant, as to those portion of the Premises comprising an
entire floor of the Building, at its sole cost and expense, may install
identification signage anywhere in such portions of 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           Prohibited Signage
and Other Items. Except as expressly set forth in this Lease, any
signs, notices, logos, pictures, names or advertisements which are installed
and that have not been separately approved by Landlord may be removed (with
prior written notice to Tenant) by Landlord at the sole expense of Tenant.
Tenant may not install any signs on the exterior or roof of the Project or the
Common Areas. Any signs, window coverings, or blinds (even 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, shall be subject
to the prior approval of Landlord, in its reasonable discretion.

 

23.3           Building Directory.
Tenant shall have the right, as part of the initial Tenant Improvements, to
cause Tenant’s business name to be displayed on the building directory in
building standard font and size. Any changes to the initial strip containing
Tenant’s name on the Building directory shall be at Tenant’s sole cost and
expense.

 

23.4           Building Top Signage.
Tenant shall be entitled to display Tenant’s name (as identified in this Lease)
and logo (as approved by Landlord) in the form of non-exclusive, illuminated
exterior Building top signage on the top of the northeasterly portion of the
East elevation of the Building (the “Building
Top Signage”) as depicted on Exhibit J
attached hereto and incorporated herein (and as such Exhibit J
has already been approved by Landlord); provided, however, as such Exhibit J does not provide specific
information as to the Building Top Signage, Landlord retains the right to
reasonably approve certain other specifications not identified in Exhibit J for such Building Top
Signage such as quality, details, manner of attachment, color, intensity of
illumination and related aspects of the Building Top Sign. The

 

44

 

Building Top Signage
shall be non-exclusive to Tenant except as set forth below. Notwithstanding the
foregoing, Landlord agrees that during the Lease Term, not more than one (1)
additional sign (limited to a company or product logo) shall be placed upon the
top exterior of the East elevation of the Building (and any such sign shall be
on the southeasterly portion of the East elevation of the Building) and that
any such additional logo sign shall not have a surface area exceeding one
hundred fifty (150) square feet. Landlord shall, however, have the right to
grant other tenants of the Building the right to install identification signage
on the Building anywhere other than the top exterior of the East side of the
Building in its sole discretion. Upon the expiration or earlier termination of
this Lease, Tenant shall, at Tenant’s sole cost and expense, remove Tenant’s
Building Top Signage from the Building and repair any resulting damage.

 

23.5           Monument Signage.
So long as Landlord has not granted rights to monument signage to four (4)  or
more retail tenants leasing space on the ground floor of the Building, Tenant
shall be entitled to install and maintain identification signage (the “Monument Signage”) on the multi-tenant
Building monument sign (the “Monument”).
The Monument Signage shall be non-exclusive to Tenant and Landlord shall have
the right to designate which position on the Monument shall be occupied by
Tenant’s Monument Signage. Landlord shall have the right to grant other tenants
of the Building the right to install identification signage on the Monument.
Furthermore, Landlord shall have the right to enter into retail leases for
space on the ground floor of the Building and rights to signage on the Monument
in connection therewith in its sole and absolute discretion. If at any time
Landlord has granted four (4) or more retail tenants leasing space on the
ground floor of the Building rights to signage on the Monument, Tenant’s
Monument Signage may be removed by Landlord in its sole and absolute discretion,
at it’s sole cost and expense, without any liability to Tenant whatsoever in
connection therewith following ten (10) business days’ written notice to
Tenant. In such event, Tenant’s rights under this Article 23  regarding the Monument Signage shall terminate and be of no
further force or effect.

 

23.6           Special Terms
Relating to Tenant’s Signage. For purposes this Section 23.6,
the Building Top Signage and the Monument Signage shall be collectively
referred to as the “Tenant’s Signage.” All aspects of Tenant’s Signage,
including, but not limited to, name displayed, quality, location, design,
style, lighting, intensity of illumination, presentation and size, as
applicable, shall be (a) consistent with Landlord’s Building standard signage
program, (b) subject to Landlord’s prior written approval, in Landlord’s
reasonable discretion, and (c) subject to and in compliance with all applicable
governmental laws and regulations. Further, Tenant shall be responsible, at its
sole cost and expense, for the installation, maintenance, repair and
replacement of Tenant’s Signage (provided, however, to the extent such funds
remain unused, Tenant may apply Tenant Improvement Allowance funds toward
installation and fabrication costs of Tenant’s Signage). Should the name of Tenant
be changed to another name (the “New Name”), Tenant shall be entitled to
modify, at Tenant’s sole cost and expense, Tenant’s name on Tenant’s Signage to
reflect Tenant’s New Name, so long as Tenant’s New Name is not an
“Objectionable Name.” The term “Objectionable Name” shall mean any name which
relates to an entity which is of a character or reputation, or is associated
with a political orientation or faction, which is inconsistent with the quality
of the Project, or which would otherwise reasonably offend a prudent landlord
of the Comparable Buildings. The rights to Tenant’s Signage granted herein
shall be deemed personal to the Original Tenant (and not any assignee,
sublessee or transferee of Tenant’s interest in this Lease) and shall apply
only so long as the Original Tenant and/or its Affiliates occupy the Premises
in its entirety. Upon the expiration or earlier termination of this Lease,
Tenant shall be responsible, at Tenant’s sole cost and expense, for the removal
of the Tenant’s Signage and the repair of any damage resulting therefrom to the
Project, Building or the Monument, as applicable, to the satisfaction of
Landlord. Any changes to Tenant’s Signage shall be subject to this Article
23, and at Tenant’s sole cost and expense.

 

ARTICLE 24

 

COMPLIANCE WITH LAW

 

Tenant shall not
do anything or suffer anything to be done in or about the Premises or the
Project which will in any material way conflict with any law, statute,
ordinance or other governmental rule, regulation or requirement now in force or
which may hereafter be enacted or promulgated (collectively, “Applicable Laws”). At its sole cost and
expense, Tenant shall promptly comply with all such Applicable Laws which
relate to (i) Tenant’s use of the Premises for non-general office use, (ii) the
Alterations or “Tenant Improvements,” as that term is defined

 

45

 

in the Tenant Work
Letter, in the Premises, (iii) the “Base Building,” as that term is defined in Section
8.2 of this Lease and further described in Section 1 of the Tenant
Work Letter, but, as to the Base Building, only to the extent such obligations
are triggered by Tenant’s Alterations, the Tenant Improvements, or use of the
Premises for non-general office use or (iv) Tenant’s use of the. Should any
standard or regulation now or hereafter be imposed on Landlord or Tenant 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, then Tenant agrees, at its sole
cost and expense, to comply promptly with such standards or regulations. 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. Landlord shall comply
with all Applicable Laws relating to the Base Building, provided that compliance
with such Applicable Laws is not the responsibility of Tenant under this Lease,
and provided further that Landlord’s failure to comply therewith would prohibit
Tenant from obtaining or maintaining a certificate of occupancy for the
Premises, or would unreasonably and materially affect the safety of Tenant’s
employees or create a significant health hazard for Tenant’s employees.
Landlord shall be permitted to include in Operating Expenses any costs or
expenses incurred by Landlord under this Article 24 to the extent
consistent with the terms of Section 4.2.4.1, above. Should any standard
or regulation now or hereafter be imposed on Landlord or Tenant 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, then Tenant agrees, at its sole cost and
expense, to comply promptly with such standards or regulations. Tenant shall be
responsible, at its sole cost and expense, to make all alterations to the
Premises as are required to comply with the governmental rules, regulations,
requirements or standards described in this Article 24.

 

ARTICLE 25

 

LATE CHARGES

 

Tenant hereby
acknowledges that late payment by Tenant to Landlord of Rent or Additional Rent
due hereunder will cause Landlord to incur costs not contemplated by this
Lease, the exact amount of which will be extremely difficult to ascertain. Such
costs include, but are not limited to, processing, administration and accounting
charges and late charges which may be imposed on Landlord by the terms of any
encumbrance 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) business days after receipt of a Notice from Landlord
that such amount was not paid when said amount is due, then Tenant shall pay to
Landlord a late charge equal to the greater of (i) five percent (5%) of the
overdue amount, or (ii) Two Hundred Fifty Dollars ($250.00) plus any attorneys’
fees incurred by Landlord by reason of Tenant’s failure to pay Rent and/or
other charges when due 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 ten (10) days after the date they are due
shall bear interest from the date when due until paid at a rate per annum equal
to the lesser of (i) the annual “Bank Prime Loan”
rate cited in the Federal Reserve Statistical Release Publication G.13(415),
published on the first Tuesday of each calendar month (or such other comparable
index as Landlord and Tenant shall reasonably agree upon if such rate ceases to
be published) plus two (2) percentage points, and (ii) the highest rate
permitted by applicable law.

 

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 to the extent,
if any, otherwise expressly provided herein. If Tenant shall fail to perform
any obligation under this Lease, and such failure shall continue in excess of
the time allowed under Section 19.1.2, above, then upon an additional
ten (10) days’ Notice from Landlord, Landlord may, but shall not be obligated
to, make any such payment or perform any such act on Tenant’s part without
waiving its rights based upon any Default of

 

46

 

Tenant
and without releasing Tenant from any obligations hereunder. Landlord shall
provide Tenant with five (5) days written notice of its intent to pay any of
Tenant’s obligation.

 

26.2           Tenant’s
Reimbursement. Except as may be specifically provided to the contrary
in this Lease, Tenant shall pay to Landlord, within thirty (30) days of
delivery by Landlord to Tenant of statements therefor: (i) sums equal to
expenditures reasonably made and obligations incurred by Landlord in connection
with the remedying by Landlord of Tenant’s Default pursuant to the provisions
of Section 26.1; (ii) sums equal to all losses, costs, liabilities,
damages and expenses referred to in Article 10 of this Lease; and (iii)
sums equal to all expenditures made and obligations incurred by Landlord in
collecting or attempting to collect the Rent or in enforcing or attempting to
enforce any rights of Landlord under this Lease or pursuant to law, including,
without limitation, all legal fees and other amounts so expended. Tenant’s
obligations under this Section 26.2 shall survive the expiration or
sooner termination of the Lease Term.

 

ARTICLE 27

 

ENTRY BY LANDLORD

 

Landlord reserves the right at all reasonable times and upon reasonable
notice to Tenant (except in the case of an emergency) to enter the Premises to
(i) inspect them; (ii) show the Premises to prospective purchasers, mortgagees
or tenants, or to current or prospective mortgagees, ground or underlying
lessors or insurers (but as to prospective tenants, only during the last twelve
(12) months of the Lease Term (as the same may be extended pursuant to Section
2.2 of this Lease); (iii) post notices of nonresponsibility; or (iv) alter,
improve or repair the Premises or the Building, or for structural alterations,
repairs or improvements to the Building or the Building’s systems and
equipment; provided, however, Landlord shall enter the Premises only after
normal business hours to the extent reasonably practicable in connection with
the foregoing. 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, including janitorial service; (B) take possession due to
any breach of this Lease in the manner provided herein; and (C) perform any
covenants of Tenant which Tenant fails to perform. Landlord may make any such
entries without the abatement of Rent and may take such reasonable steps as
required to accomplish the stated purposes. Tenant hereby waives any claims for
damages or 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, all claims for such damage
being hereby released. 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. No provision of this Lease shall be construed as obligating Landlord
to perform any repairs, alterations or decorations except as otherwise
expressly agreed to be performed by Landlord herein. No reentry into or taking
of possession of the Premises by Landlord pursuant to this Article 27
shall be construed as an election to terminate this Lease unless a written
notice of such intention be given to Tenant or unless the termination thereof
be decreed by a court of competent jurisdiction. No notice from Landlord under
this Lease or under a forcible entry and detainer statute or similar law will
constitute an election by Landlord to terminate this Lease unless such notice
specifically says so. Landlord reserves the right following any such reentry or
re-letting, or both, to exercise its right to terminate this Lease by giving
Tenant such written notice, and, in that event the Lease will terminate as
specified in such notice.

 

ARTICLE 28

 

TENANT
PARKING

 

Commencing on the
Lease Commencement Date, Tenant may use parking permits as set forth in Section
9 of the Summary and provided below, on a monthly basis throughout the
Lease Term, which parking permits shall pertain to the Project parking facility
or surface lot adjacent to the Building as further set forth in the Summary (as
designated by Landlord). With respect to Tenant’s additional unreserved parking
permits as identified in Section 9 of the Summary, Tenant

 

47

 

shall notify Landlord on
or before the date that Tenant takes occupancy of the Premises of the number of
additional unreserved parking passes Tenant desires to rent from Landlord and
Tenant shall rent such passes from Landlord in accordance with the terms of
this Lease. Subsequent to Tenant’s initial allocation of additional unreserved
parking permits pursuant to the above, Tenant may increase (subject to
availability and the maximum allocation of additional unreserved parking permits
as provided in Section 9 of the Summary) or decrease the number of
passes used or rented, as the case may be, by Tenant upon not less than thirty
(30) days notice to Landlord. Notwithstanding anything to the contrary
contained herein, even though Tenant may not be required to pay any fees or
rent during the initial Lease Term in connection with Tenant’s parking permits,
Tenant shall be responsible during the initial Lease Term and any Option Terms
for the full amount of any taxes imposed by any governmental authority in
connection with the renting of all parking permits by Tenant or the use of the
parking facility by Tenant. At Landlord’s option, Tenant’s unreserved parking
permits, or any portion thereof, shall be for the use of unreserved tandem parking
spaces in the Project parking facility, although such parking spaces are not
presently used by Landlord for tandem parking spaces. Similarly, at Landlord’s
option all or any portion of any visitor parking which may be provided in the
Project parking facility, may be unreserved tandem parking spaces. Tenant’s
continued right to use the parking permits is conditioned upon Tenant abiding
by the “Parking Rules and Regulations” attached hereto as Exhibit I, as the same may be
reasonably modified from time to time by Landlord, and all other rules and
regulations prescribed by Landlord for the orderly operation and use of the
parking facility where the parking permits are located, including any sticker
or other identification system established by Landlord, Tenant’s cooperation in
seeing that Tenant’s employees and visitors also comply with the foregoing, and
Tenant not being in Default under this Lease. Landlord specifically reserves
the right to change the size, configuration, design, layout and all other aspects
of the Project parking facility at any time and Tenant acknowledges and agrees
that Landlord may, without incurring any liability to Tenant and without any
abatement of Rent under this Lease, from time to time, close-off or restrict
access to the Project parking facility for purposes of permitting or
facilitating any such construction, alteration or improvements, provided that
Landlord uses commercially reasonable efforts to ensure that at all times
Tenant shall have adequate parking for its employees and customers at the
ratios stated herein. Landlord may delegate its responsibilities hereunder to a
parking operator in which case such parking operator shall have all the rights
of control attributed hereby to the Landlord. Tenant hereby acknowledges that
the parking license privileges provided for herein are personal to Tenant and
for the exclusive use of Tenant, its  officers
and employees; and, notwithstanding anything to the contrary contained in this
Lease, Tenant shall not assign or sublease any parking license privileges or
permits provided to Tenant herein or by a separate license or other agreement,
and any attempted assignment of parking privileges and/or parking permits by
Tenant shall be null and void and without effect, unless done pursuant to a
Landlord approved Transfer under Article 14, above. Landlord shall
provide visitor parking for Tenant’s customers, invitees or licensees in those
parking areas located in the Project which may from time to time be designated
by Landlord for patrons of the Project. At Landlord’s option, during the
initial Lease Term (i) such visitor parking shall be provided free of charge or
(ii) Tenant may validate visitor parking by such method or methods as the
Landlord may reasonably establish, free of charge. Landlord assumes no
responsibility whatsoever for loss or damage due to fire, theft, vandalism,
malicious mischief or otherwise to any automobiles parked in the parking areas
of the Project, or any personal property therein, except to the extent that
such loss or damage is due to the willful act or gross negligence of Landlord,
and Tenant agrees, upon request from Landlord from time to time, to notify
Tenant’s officers, employees and agents then using any of the parking
privileges provided for in this Lease of such limitation of liability. It is
the intention of the parties hereto that a license only is hereby granted to
Tenant for the parking permit privileges provided herein and no bailment is
intended or shall be created hereby.

 

ARTICLE 29

 

MISCELLANEOUS PROVISIONS

 

29.1           Terms; Captions. The words “Landlord” and “Tenant” as used
herein shall include the plural as well as the singular. 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.
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.

 

48

 

29.2           Binding Effect. Subject to all other provisions of this
Lease, each of the covenants, conditions and 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 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 Project, the
same shall be without liability to Landlord and without any reduction or
diminution of Tenant’s obligations under this Lease.

 

29.4           Intentionally Omitted.

 

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 Project or Building and in this Lease, and Tenant agrees that in the event
of any such transfer, so long as such transferee expressly agrees in writing to
assume Landlord’s obligations hereunder, Landlord shall automatically he
released from all liability under this Lease and Tenant agrees to look solely
to such transferee for the performance of Landlord’s obligations hereunder after
the date of transfer and such transferee shall be deemed to have fully assumed
and be liable for all obligations of this Lease to be performed by Landlord,
including the return of any Security Deposit, and Tenant shall attorn to such
transferee. 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           Prohibition Against Recording. Except as provided in Section 29.4 of
this Lease, neither this Lease, nor any memorandum, affidavit or other writing
with respect thereto, shall be recorded by Tenant or by anyone acting through,
under or on behalf of Tenant.

 

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           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
association between Landlord and Tenant.

 

29.9           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.

 

29.10    Time of Essence. Time is of the essence with respect to the
performance of every provision of this Lease in which time of performance is a
factor.

 

29.11     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.

 

29.12     No Warranty. Except as expressly set forth in this Lease,
in executing and delivering this Lease, Tenant has not relied on any
representations, including, but not limited to, any representation 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. Tenant agrees that, except as expressly set forth in
this Lease, neither Landlord nor any agent of Landlord has made any
representation or warranty as to the suitability of the Premises for the
conduct of

 

49

 

Tenant’s
business, that any specific tenant or number of tenants shall occupy any space
in the Project, nor has Landlord agreed to undertake any modification,
alteration or improvement to the Premises except as provided in this Lease.
Tenant further agrees that, except as expressly set forth in this Lease,
neither Landlord nor any agent of Landlord has made any representation or
warranty with respect to the physical condition of the Building, the Project,
the land upon which the Building or the Project are located, or the Premises,
or the expenses of operation of the Premises, the building or the Project, or
any other matter or thing affecting or related to the Premises.

 

29.13      Landlord Exculpation. The liability of Landlord or the Landlord
Parties to Tenant for any default by Landlord under this Lease or arising in
connection herewith or with Landlord’s operation, management, leasing, repair,
renovation, alteration or any other matter relating to the Project or the
Premises shall be limited solely and exclusively to an amount which is equal to
the equity interest of Landlord in the Building. Neither Landlord, nor any of
the Landlord Parties 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. The limitations of
liability contained in this Section 29.13 shall inure to the benefit of
Landlord’s and the Landlord Parties’ present and future partners,
beneficiaries, officers, directors, trustees, shareholders, agents and
employees, and their respective partners, heirs, successors and assigns. Under
no circumstances shall any present or future partner of Landlord (if Landlord
is a partnership), or trustee or beneficiary (if Landlord or any partner of
Landlord is a trust), have any liability for the performance of Landlord’s
obligations under this Lease. Notwithstanding any contrary provision herein,
neither Landlord nor the Landlord Parties shall be liable under any circumstances
for injury or damage to, or interference with, Tenant’s business, including but
not limited to, loss of profits, loss of rents or other revenues, loss of
business opportunity, loss of goodwill or loss of use, in each case, however
occurring.

 

29.14      Entire Agreement. It is understood and acknowledged that there
are no oral agreements between the parties hereto affecting this Lease and this
Lease constitutes the parties’ entire agreement with respect to the leasing of
the Premises and 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 thereof, and none thereof shall be used to interpret or construe this
Lease. 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.

 

29.15      Right to Lease. Landlord reserves the absolute right to
effect such other tenancies in the Project as Landlord in the exercise of its
sole business judgment shall determine to best promote the interests of the
Building or Project, so long as those tenancies are consistent with a first
class office 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 or Project.

 

29.16      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 therefore, 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, except as to Tenant’s obligations under Articles
5 and 24 of this Lease, and except as to Landlord’s obligations to
pay Tenant the Tenant Improvement Allowance (collectively, a “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.

 

29.17      Waiver of Redemption by Tenant. Tenant hereby waives, for Tenant and for all
those claiming under Tenant, any and all rights 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.

 

29.18      Notices. All notices, demands, statements,
designations, approvals or other communications (collectively, “Notices”) given or required to be given by either party to
the

 

50

 

other
hereunder or by law shall be in writing, shall be (A) sent by United Slates
certified or registered mail, postage prepaid, return receipt requested (“Mall”), (B) transmitted by telecopy, if
such telecopy is promptly followed by a Notice sent by Mail, (C) delivered by a
nationally recognized overnight courier, or (D) delivered personally. If any
Notice is sent by telecopy, the transmitting party may as a courtesy send a
duplicate copy of the Notice to the other party by regular mail. In all events,
however, any Notice sent by telecopy transmission shall govern all matters
dealing with delivery of the Notice, including the date on which the Notice is
deemed to have been received by the other party. Any Notice shall be sent,
transmitted, or delivered, as the case may be, to Tenant at the appropriate
address set forth in Section 10 of the Summary, or to such other place
as Tenant may from time to time designate in a Notice to Landlord. Any Notice
will be deemed given (i) three (3) days after the date it is posted if Sent by
Mail, (ii) the date the telecopy is transmitted, (iii) the date the overnight
courier delivery is made, or (iv) the date personal delivery is made or
attempted to be made. If Notice is tendered under the provisions of this Lease
and is refused by the intended recipient of the Notice, the Notice shall
nonetheless be considered to have been given and shall be effective as of the
date provided in this Lease. 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, and
such mortgagee or ground or underlying lessor shall be given a reasonable
opportunity to cure such default prior to Tenant’s exercising any remedy
available to Tenant. As of the date of this Lease, any Notices to Landlord must
be sent, transmitted, or delivered, as the case may be, to the addresses stated
in Section 11 of the Summary of Basic Lease Information.

 

29.19      Joint and Several. If there is more than one Tenant, the
obligations imposed upon Tenant under this Lease shall be joint and several.

 

29.20      Authority. Each of the persons executing this Lease on
behalf of Tenant warrants to Landlord that Tenant is a duly authorized and
existing corporation, that Tenant is qualified to do business in the state in
which the Premises are located, that Tenant has full right and authority to
enter into this Lease, and that each person signing this Lease on behalf of
Tenant has full authority to do so. Each person signing this Lease for Landlord
represents and warrants that he has full authority to sign for the partnership
and that this Lease binds the partnership.

 

29.21      Attorneys’ Fees. In the event that either Landlord or Tenant
brings any action or proceeding against the other for possession of the
Premises or for the recovery of any sum due hereunder, or because of the breach
of any covenant, condition, or provision hereof, or for any other relief
against the other, declaratory or otherwise, including appeals therefrom, and
whether being an action based upon a tort, or contract or this Lease, then the
prevailing party to this Lease in any such proceeding shall be paid by the
other party to this Lease in any such proceeding reasonable attorneys’ fees and
all costs of such action or proceeding which shall be enforceable, whether or
not such action or proceeding is prosecuted to final judgment, and including an
allowance for attorneys’ fees for appeals and rehearings. Should Landlord be
made a party to any suit or proceeding brought by any third party, arising by
reason of Tenant’s use or occupancy of the Premises and not being a dispute
essentially between Landlord and Tenant, then Tenant shall defend the same and
Landlord therein, at Tenant’s sole cost and expense, and shall hold Landlord
free and harmless from any liability, duty or obligation therein, including all
attorneys’ fees of Landlord.

 

29.22      Governing
Law; WAIVER OF TRIAL BY JURY. This Lease shall be construed and enforced in accordance with the laws
of the State of California. IN ANY ACTION OR PROCEEDING ARISING HEREFROM,
LANDLORD AND TENANT HEREBY CONSENT TO (I) THE JURISDICTION OF ANY COMPETENT
COURT WITHIN THE STATE OF CALIFORNIA, (II) SERVICE OF PROCESS BY ANY MEANS
AUTHORIZED BY CALIFORNIA LAW, AND (III) IN THE INTEREST OF SAVING TIME AND
EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT
BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR SUCCESSORS IN
RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE
RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE OR OCCUPANCY OF THE PREMISES,
AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY.

 

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29.23      Submission of
Lease. Submission of this instrument for examination of signature by
Tenant does not constitute a reservation of, option for or option to lease, and
it is not effective as a lease or otherwise until execution and delivery by
both Landlord and Tenant.

 

29.24      Brokers. Landlord
and Tenant hereby warrant to each other that they have had no dealings with any
real estate broker or agent in connection with the negotiation of this Lease,
excepting only the real estate brokers or agents specified in Section 12
of the Summary (the “Brokers”),
and that they know of no other real estate broker or agent who is entitled to a
commission in connection with this Lease. Each party agrees to indemnify and
defend the other party against and hold the other party harmless from any and
all claims, demands, losses, liabilities, lawsuits, judgments, costs and
expenses (including without limitation reasonable attorneys’ fees) with respect
to any leasing commission or equivalent compensation alleged to be owing on
account of any dealings with any real estate broker or agent, other than the
Brokers, occurring by, through, or under the indemnifying party. Commissions
payable to the Brokers in connection with this Lease shall be paid by Landlord
pursuant to separate agreements with the Brokers.

 

29.25      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.

 

29.26      Project or
Building Name and Signage. Landlord shall have the right at any time to
change the name of the Project or Building and to install, affix and maintain
any and all signs on the exterior and on the interior of the Project or
Building as Landlord may, in Landlord’s sole discretion, desire. Tenant shall
not use the name of the Project or Building or use pictures or illustrations of
the Project or Building in advertising or other publicity or for any purpose
other than as the address of the business to be conducted by Tenant in the
Premises, without the prior written consent of Landlord.

 

29.27      Counterparts.
This Lease may be executed in counterparts with the same effect as if both
parties hereto had executed the same document. Both counterparts shall be
construed together and shall constitute a single lease.

 

29.28      Confidentiality.
Tenant shall keep the terms of this Lease strictly confidential and shall not
disclose such confidential information to any person or entity other than
Tenant’s financial, legal, and space planning consultants; provided, however,
that Tenant may disclose such information as may be required by law (including
securities laws disclosures) or as ordered by a court of competent
jurisdiction.

 

29.29      Transportation
Management. Tenant shall fully comply with all present or 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 directly with Landlord, any
governmental transportation management organization or any other transportation-related
committees or entities.

 

29.30      Building
Renovations. It is specifically understood and agreed that Landlord has
made no representation or warranty to Tenant and has no obligation and has made
no promises to alter, remodel, improve, renovate, repair or decorate the
Premises, Building, or any part thereof and that no representations respecting
the condition of the Premises or the Building have been made by Landlord to
Tenant except as specifically set forth herein or in the Tenant Work Letter.
However, Tenant hereby acknowledges that Landlord is currently renovating or
may during the LeaseTerm renovate, improve, alter, or modify (collectively, the
“Renovations”) the Project, the
Building and/or the Premises including without limitation the parking
structure, common areas, systems and equipment, roof, and structural portions
of the same, which Renovations may include, without limitation, (i) installing
sprinklers in the Building common areas and tenant spaces, (ii) modifying the
common areas and tenant spaces to comply with applicable laws and regulations,
including regulations relating to the physically disabled, seismic conditions,
and building safety and security, and (iii) installing new floor covering,
lighting, and wall coverings in the Building common areas, and in connection
with any Renovations, Landlord may, among

 

52

 

other things, erect
scaffolding or other necessary structures in the Building, limit or eliminate
access to portions of the Project, including portions of the common areas, or
perform work in the Building, which work may create noise, dust or leave debris
in the Building. Tenant hereby agrees that such Renovations and Landlord’s
actions in connection with such Renovations shall in no way constitute a
constructive eviction of Tenant nor entitle Tenant to any abatement of Rent.
Landlord shall have no responsibility or for any reason be liable to Tenant for
any direct or indirect injury to or interference with Tenant’s business arising
from the Renovations, nor shall Tenant be entitled to any compensation or
damages from Landlord for loss of the use of the whole or any part of the
Premises or of Tenant’s personal property or improvements resulting from the
Renovations or Landlord’s actions in connection with such Renovations, or for
any inconvenience or annoyance occasioned by such Renovations or Landlord’s
actions. Notwithstanding anything in this Section 29.30 to the contrary,
Landlord shall perform all Renovations in a commercially reasonable manner and
such that the same do not materially impair Tenant’s access to the Premises and
in a manner, whenever reasonably possible, to minimize material, adverse or
unreasonable interference with Tenant’s business operations and Permitted Use.

 

29.31      No Violation.
Landlord and Tenant hereby warrant and represent that neither their execution
of nor their performance under this Lease shall cause such party to be in
violation of any agreement, instrument, contract, law, rule or regulation by
which such party is bound, and Landlord and Tenant shall protect, defend,
indemnify and hold the other party harmless against any claims, demands,
losses, damages, liabilities, costs and expenses, including, without
limitation, reasonable attorneys’ fees find costs, arising from such party’s
breach of this warranty and representation.

 

29.32      Communications
and Computer Lines. Tenant may install, maintain, replace, remove or
use any communications or computer wires and cables (collectively, the “Lines”) at the Project in or serving the
Premises, provided that (i) Tenant shall obtain Landlord’s prior written
consent, which consent shall not be withheld unreasonably, use an experienced
and qualified contractor approved in writing by Landlord, and comply with all
of the other provisions of Articles 7 and 8 of this Lease, (ii)
an acceptable number of spare Lines and space for additional Lines shall be
maintained for existing and future occupants of the Project, as determined in
Landlord’s reasonable opinion, (iii) the Lines therefor (including riser
cables) shall be appropriately insulated to prevent excessive electromagnetic
fields or radiation, and shall be surrounded by a protective conduit reasonably
acceptable to Landlord, (iv) any new or existing Lines servicing the Premises
shall comply with all applicable governmental laws and regulations, (v) as a
condition to permitting the installation of new Lines, Landlord may require
that Tenant remove existing Lines located in or serving the Premises and repair
any damage in connection with such removal, and (vi) Tenant shall pay at costs
in connection therewith. Landlord reserves the right to require that Tenant
remove any Lines located in or serving the Premises prior lo the expiration or
any earlier termination of the Lease Term, or, at any time, any Lines which are
installed in violation of these provisions, or which are at any time in
violation of any laws or represent a dangerous or potentially dangerous
condition.

 

29.33      Development of
the Project.

 

29.33.1                       Subdivision.
Tenant acknowledges that the Project has been subdivided. Landlord reserves the
right to further subdivide all or a portion of the buildings and Common Areas
in the Project. Tenant agrees to execute and deliver, within twenty (20) days
after Landlord’s written demand, and in the form reasonably requested by
Landlord, any additional documents needed to conform this Lease to the
circumstances resulting from a subdivision and any all maps in connection
therewith. Notwithstanding anything to the contrary set forth in this Lease,
the separate ownership of any buildings and/or Common Areas of the Project by
an entity other than Landlord shall not affect the calculation of Direct
Expenses or Tenant’s payment of Tenant’s Share of Direct Expenses.

 

29.33.2                       The
Other Improvements. If portions of the Project or property adjacent to
the Project (collectively, the “Other
Improvements”) are owned by an entity other than Landlord, Landlord,
at its option, may enter into an agreement with the owner or owners of any or
all of the Other Improvements to provide (i) for reciprocal rights of access
and/or use of the Project and the Other Improvements, (ii) for the common
management, operation, maintenance, improvement and/or repair of all or any
portion of the Project and the Other Improvements, (iii) for the allocation of
a portion of the Direct Expenses to the Other

 

53

 

Improvements and the
operating expenses and taxes for the Other Improvements to the Project, and (iv)
for the use or improvement of the Other Improvements and/or the Project in
connection with the improvement, construction, and/or excavation of the Other
Improvements and/or the Project. Nothing contained herein shall be deemed or
construed to limit or otherwise affect Landlord’s right to convey all or any
portion of the Project or any other of Landlord’s rights described in this
Lease.

 

29.33.3                       Construction
of Protect and Other Improvements. Tenant acknowledges that portions of
the Project and/or the Other Improvements may be under construction following
Tenant’s occupancy of the Premises, and that such construction may result in
levels of noise, dust, obstruction of access, etc. which are in excess of that
present in a fully constructed project. Tenant hereby waives tiny and all rent
offsets or claims of constructive eviction which may arise in connection with
such construction. Notwithstanding anything in this Section 29.33.3 to
the contrary, (i) Landlord shall perform such construction in a commercially
reasonable manner and use commercially reasonable efforts to minimize
interference with Tenant’s business operations and Permitted Use and (ii) in no
event shall such construction by Landlord materially increase Tenant’s
obligations or decrease Tenant’s rights under the terms and conditions of this
Lease

 

29.34      Arbitration.

 

29.34.1                       General
Submittals to Arbitration. The submittal of all matters to arbitration
in accordance with the provisions of this Section 29.34 is the sole and
exclusive method, means and procedure to resolve any and all claims, disputes
or disagreements arising under this Lease, including, but not limited to any
matter relating to Landlord’s failure to approve an assignment, sublease or
other transfer of Tenant’s interest in the Lease under Article 14 of
this Lease, any other defaults by Landlord, or any Tenant Default, except for
(i) all claims by either party which (A) seek anything other than enforcement
of rights under this Lease, or (B) are primarily founded upon matters of fraud,
willful misconduct, bad faith or any other allegations of tortious action, and
seek the award of punitive or exemplary damages, (ii) all claims by either
party arising from the determination of Fair Market Rental Rate, and (iii)
claims relating to Landlord’s exercise of any unlawful detainer rights pursuant
to California law or rights or remedies used by Landlord to gain possession of
the Premises or terminate Tenant’s right of possession to the Premises, which
disputes shall be resolved by suit filed in the Superior Court of Los Angeles
County, California, the decision of which court, shall be subject to appeal
pursuant to Applicable Laws. 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 provisions of this Section
29.34 and all attempts to circumvent the terms and conditions of this Section
29.34 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 or Landlord 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 Section 29.34.

 

29.34.2                       JAMS.
Any dispute to be arbitrated pursuant to the provisions of this Section
29.34 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 Notice (the “Arbitration Notice”) of a demand to arbitrate to the other
party and to JAMS. The Arbitration Notice shall contain a description of the
subject matter of the arbitration, the dispute with respect thereto, the amount
involved, if any, and the remedy or determination sought. The parties may agree
on a retired judge from the JAMS panel. If they are unable to promptly agree,
JAMS will provide a list of three available judges who, to the extent
available, have had extensive experience in handling real estate commercial
lease transactions as practitioners and each party may strike one.

 

54

 

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.

 

29.34.3                              Arbitration
Procedure.

 

29.34.3.1                    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.

 

29.34.3.2                    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 and procedural laws of the State of California and the 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 any determination, and/or grant any remedy
or relief (an “Arbitration Award”)
that is just and equitable. The decision must be based on, and accompanied by,
a written statement of decision explaining the factual and legal basis for the
decision as to each of the principal controverted issues. The decision shall be
conclusive and binding, and it may thereafter be confirmed as a judgment by the
Superior Court of the State of California, subject only to challenge on the
grounds set forth in the California Code of Civil Procedure Section 1286.2. The
validity and enforceability of the Arbitrator’s decision is to be determined
exclusively by the California courts pursuant to the terms and conditions of
this Lease. The Arbitrator shall award costs, including without limitation
attorneys’ fees, and expert and witness costs, to the prevailing party as
defined in California Code of Civil Procedure Section 1032 (“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.

 

29.35      Office and
Communications Services.

 

29.35.1                       The Provider. Landlord has advised Tenant that certain
office and communications services may be offered to tenants of the Building by
a concessionaire under contract to Landlord (“Provider”).
Tenant shall be permitted to contract with Provider for the provision of any or
all of such services on such terms and conditions as Tenant and Provider may
agree.

 

29.35.2                       Other Terms. Tenant acknowledges and agrees that: (i)
Landlord has made no warranty or representation to Tenant with respect to the
availability of any such services, or the quality, reliability or suitability
thereof; (ii) the Provider is not acting as the agent or representative of
Landlord in the provision of such services, and Landlord shall have no
liability or responsibility for any failure or inadequacy of such services, or
any equipment or facilities used in the furnishing thereof, or any act or
omission of Provider, or its agents, employees, representatives, officers or
contractors; (iii) Landlord shall have no responsibility or liability for the
installation, alteration, repair, maintenance, furnishing, operation,
adjustment or removal of any such services, equipment or facilities; and (iv)
any contract or other agreement between Tenant and Provider shall be
independent of this Lease, the obligations of Tenant hereunder, and the rights
of Landlord hereunder, and, without limiting the foregoing, no default or
failure of Provider with respect to any such services, equipment or facilities,
or under any contract or agreement relating thereto, shall have any effect on
this Lease or give to Tenant any offset or defense to the full and timely
performance of its obligations hereunder, or entitle Tenant to any abatement of
rent or additional rent or any other payment required to be made by Tenant
hereunder, or constitute any accrual or constructive eviction of Tenant, or
otherwise give rise to any other claim of any nature against Landlord.

 

55

 

 

29.36      Landlord’s Reserved Rights. Landlord reserves to itself and shall at any
and all times have the right to perform the following, except to the extent the
same would be in contravention of other express terms and/or conditions of this
Lease:

 

29.36.1                       Change of Name or Address. Change the name or street address of the
Premises or the Building or any other portion of the Project.

 

29.36.2                       Installation of Signs. Install and maintain signs on the exterior
and interior of the Building and any place within the Project, except within
the Premises.

 

29.36.3                       Re-work of Premises if Tenant
Vacates. Decorate, remodel,
alter or otherwise repair the Premises for reoccupancy during the last six (6)
months of the Term hereof if, during or prior to such time, Tenant has vacated
the Premises, or any time after Tenant abandons the Premises.

 

29.36.4                       Work on Exterior and Service
Equipment. Do or permit to be
done any work in or about the exterior of the Premises, Building or the
Project, including changing the size, shape, location, number and extent of any
or all of the improvements in the Project and the right to install, use,
maintain and replace equipment, machinery, pipes, conduits, and wiring below
the floor or above the ceiling of the Premises which serve other parts of the
Building.

 

29.36.5                       Grant Right to Conduct
Business. Grant to anyone
the exclusive right to conduct any business or render any service in the
Building or the Project, provided such exclusive right shall not operate to
exclude Tenant from the use of the Premises expressly permitted by this Lease.

 

29.37      Performance of Tenant’s Obligations by
Landlord. If Tenant fails
to pay when due amounts payable under this Lease or to perform any of its other
obligations under this Lease within the time permitted for its performance,
then Landlord, after ten (10) days’ prior written notice to Tenant (or, in case
of any emergency, upon such notice or without notice, as may be reasonable
under the circumstances) and without waiving any of Landlord’s rights under this
Lease, may (but will not be required to) pay such amount or perform such
obligation. All amounts so paid by Landlord and all costs and expenses incurred
by Landlord in connection with the performance of any such obligations will be
payable by Tenant to Landlord on demand. In the proof of any damages which
Landlord may claim against Tenant arising out of Tenant’s failure to maintain
insurance, Landlord will not be limited to the amount of the unpaid insurance
premium but rather Landlord will also be entitled to recover as damages for
such breach, the amount of any uninsured loss (to the extent of any deficiency
in the insurance required by the provisions of this Lease), damages, costs and
expenses of suit, including attorneys’ fees, arising out of damage to, or
destruction of, the Premises occurring during any period for which Tenant has
failed to provide such insurance.

 

29.38      Rules and Regulations. The “Rules and Regulations” attached to this
Lease as Exhibit D, as well
as such reasonable rules und regulations as may be hereafter adopted by
Landlord for the safety, care, utilization and cleanliness of the Premises, the
Building and the Project and the preservation of good order thereon, are hereby
expressly made a part hereof, and Tenant agrees to comply with such rules and
regulations and the violation of any of them shall constitute a Default by
Tenant under this Lease. If there is a conflict between the rules and
regulations and any of the provisions of this Lease, the provisions of this
Lease shall prevail. The Rules and Regulations shall be enforced by Landlord in
a non-discriminatory manner, and Landlord shall provide written notice to
Tenant of any changes in the Rules and Regulations prior to Tenant’s obligation
to comply with such changes.

 

29.39      Waiver.

 

29.39.1                       Delay by Landlord Not Waiver. No delay or omission in the exercise of any
right or remedy of Landlord or Tenant on any Default by the other party shall
impair such right of remedy or be construed as a waiver.

 

29.39.2                       Partial Payment or Writing by
Tenant Not Waiver or An Accord. The
receipt and acceptance by Landlord of delinquent Rent shall not constitute a
waiver of any other Default, it shall constitute only waiver of timely payment
for the particular Rent payment involved. No payment by Tenant or receipt by
Landlord of a lesser amount than the Rent herein

 

56

 

stipulated
shall be deemed to be other than on account of the earliest stipulated Rent or
partial Rent so received, nor shall any endorsement or statement on any check
or any letter or other writing accompanying any check or payment as Rent be
deemed an accord and satisfaction, and Landlord may accept such check or
payment without prejudice to Landlord’s right to recover the balance of such
Rent or to pursue any other right or remedy provided herein or at law or in
equity.

 

29.39.3                       No Surrender Unless in
Writing. No act or
conduct of Landlord,
including, without limitation, the acceptance of keys to the Premises, shall
constitute an acceptance of the surrender of the Premises by Tenant before the
expiration of the Lease Term. Only a notice in writing from Landlord to Tenant
shall constitute acceptance of the surrender of the Premises and accomplish a
termination of the Lease.

 

29.39.4                       Waiver Must be in Writing. Any waiver by Landlord or Tenant of any
default must be in writing. One or more waivers by Landlord or Tenant of a
breach by the other party of any covenant, term or condition of this Lease
shall not be construed as a waiver by such waiving party of a subsequent breach
by the other party of the same covenant, term or condition. The consent or
approval of Landlord to or of any act by Tenant of a nature requiring consent
or approval shall not the deemed to waive or render unnecessary consent to or
approval of any subsequent similar act.

 

29.40      Hazardous Substances.

 

29.40.1                       Definitions. For purposes of this Lease, the following
definitions shall apply: “hazardous substance(s)” and/or “hazardous materials”
shall mean any solid, liquid or gaseous substance or material that is described
or characterized as a toxic or hazardous substance, waste, material, pollutant,
contaminant or infectious waste, or any matter that in certain specified
quantities would be injurious to the public health or welfare, or words of
similar import, in any of the “Environmental Laws,” as that term is defined
below, or any other words which are intended to define, list or classify
substances by reason of deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, toxicity or reproductive toxicity and includes,
without limitation, asbestos, petroleum (including crude oil or any fraction
thereof, natural gas, natural gas liquids, liquefied natural gas, or synthetic
gas usable for fuel, or any mixture thereof), petroleum products,
polychlorinated biphenyls, urea formaldehyde, radon gas, nuclear or radioactive
matter, medical waste, soot, vapors, fumes, acids, alkalis, chemicals,
microbial matters (such as molds, fungi or other bacterial matters), biological
agents and chemicals which may cause adverse health effects, including but not
limited to, cancers and /or toxicity. “Environmental Laws” shall mean any and
all federal, state, local or quasi-governmental laws (whether under common law,
statute or otherwise), ordinances, decrees, codes, rulings, awards, rules,
regulations or guidance or policy documents now or hereafter enacted or
promulgated and as amended from time to time, in any way relating to a) the
protection of the environment, the health and safety of persons (including
employees), property or the public welfare from actual or potential release,
discharge, escape or emission (whether past or present) of any hazardous
materials or b) the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of any hazardous materials.

 

29.40.2                       Compliance with Environmental
Laws.
Landlord covenants that
during the Lease Term, Landlord shall comply with all Environmental Laws in
accordance with, and as required by, the terms covenants and conditions of Article
24 of this Lease. Tenant represents and warrants that, except as herein set
forth, it will not use, store or dispose of any hazardous materials in or on
the Premises. However, notwithstanding the preceding sentence, Landlord agrees
that Tenant may use, store and properly dispose of commonly available household
cleaners and chemicals to maintain the Premises and Tenant’s routine office
operations (such as printer toner and copier toner) (hereinafter the “Permitted
Chemicals”). Landlord and Tenant acknowledge that any or all of the Permitted
Chemicals described in this paragraph may constitute hazardous materials.
However, Tenant may use, store and dispose of same, provided that in doing so,
Tenant fully complies with all Environmental Laws.

 

29.40.3                       Landlord’s Right of
Environmental Audit. Landlord
may, upon reasonable notice to Tenant, be granted access to and enter the
Premises no more than once annually to perform or cause to have performed an
environmental inspection, site assessment or audit. Such environmental
inspector or auditor may be chosen by Landlord, in its sole discretion, and be
performed at Landlord’s sole expense. To the extent that the report prepared
upon such

 

57

 

inspection, assessment or
audit, indicates the presence of hazardous materials in violation of
Environmental Laws, or provides recommendations or suggestions to prohibit the
release, discharge, escape or emission of any hazardous materials at, upon,
under or within the Premises, or to comply with any Environmental Laws, Tenant,
shall promptly, at Tenant’s sole expense, comply with such recommendations or
suggestions, including, but not limited to performing such additional investigative
or subsurface investigations or remediation(s) as recommended by such inspector
or auditor. Notwithstanding the above, if at any time Landlord has actual
notice or reasonable cause to believe that Tenant has violated, or permitted
any violations of any Environmental Law, then Landlord will be entitled to
perform its environmental inspection, assessment or audit at any time,
notwithstanding the above mentioned annual limitation, and Tenant must
reimburse Landlord for the cost or fees incurred for such as Additional Rent.

 

29.40.4                       Indemnifications.
Tenant agrees to indemnify, defend, protect and hold harmless the Landlord
Parties from and against any liability, obligation, damage or costs, including
without limitation, attorneys’ fees and costs, resulting directly or indirectly
from any use, presence, removal or disposal of any hazardous materials or
breach of any provision of this section, to the extent such liability,
obligation, damage or costs was a result of actions caused or permitted by
Tenant or a Tenant Party, Landlord shall protect, defend, indemnify and hold
Tenant free and harmless from and against any liability relating to Hazardous
Materials brought onto the Project by Landlord or the Landlord Parties or,
through no fault of Tenant or any Tenant Party, existing at the Project prior
to delivery of the Premises to Tenant.

 

29.41      “And/or”.
Whenever the words and symbols “and/or” are used in this Lease, it is intended
that this Lease be interpreted find the sentence, phrase or other part be considered
in both its conjunctive and disjunctive sense, and as having been written
twice, once with the word “and” inserted, and once with the word “or” inserted,
in the place of said words and symbol “and/or.”

 

29.42      Good Faith.
Except for (i) matters for which there is a standard of consent or discretion
specifically set forth in this Lease; (ii) matters which could have an adverse
effect on the Building Structure or the Building Systems, or which could affect
the exterior appearance of the Building; or (iii) matters covered by Article 4
(Additional Rent), Article 10 (Insurance), or Article 19 (Defaults; Remedies)
of this Lease (collectively, the “Excepted
Matters”), any time the consent of Landlord or Tenant is required
under this Lease, such consent shall not be unreasonably withheld or delayed,
and, except with regard to the Excepted Matters, whenever this Lease grants
Landlord or Tenant the right to take action, exercise discretion, establish
rules and regulations or make an allocation or other determination. Landlord
and Tenant shall act reasonably and in good faith.

 

29.43      Compliance With
“Americans With Disabilities Act.” For purposes of this Lease, disabled
persons’ access and related laws and regulations (including the Americans with
Disabilities Act, to the extent applicant), shall be deemed an Applicable Law.
Accordingly, Landlord’s and Tenant’s obligations with respect to any such laws
and regulations shall be governed by the terms of Article 24 of this
Lease.

 

29.44      Intentionally
Omitted.

 

29.45      “Including”
Defined. The use of the word “including,” or “include,” when followed
by any general statement, term or matter, shall not be construed to limit such
statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items, statements, terms or
matters, whether or not non-limiting language (such as “without limitation,” or
“but not limited to,” or words of similar import) is used with reference
thereto, but rather, will be deemed to refer to all other items, statements,
terms or matters that could reasonably fall within the broadest possible scope
of such general statement, term, item or matter.

 

29.46      Telecommunications
Equipment. At any time during the Lease Term, subject to the terms of
this Section 29.46, Tenant may install, at Tenant’s sole cost and
expense, one (1) one (1) meter satellite or microwave dish or other related
communications equipment (the “Telecommunications Equipment”) upon the roof of
the Building. The physical appearance and the size of the Telecommunications
Equipment shall be subject to Landlord’s reasonable approval, the location of
any such installation of the Telecommunications Equipment shall be designated
by Landlord subject to Tenant’s reasonable approval and Landlord may require

 

58

 

Tenant to install
screening around such Telecommunications Equipment, at Tenant’s sole cost and
expense, as reasonably designated by Landlord. Tenant shall maintain such
Telecommunications Equipment, at Tenant’s sole cost and expense. In the event
Tenant elects to exercise its right to install the Telecommunication Equipment,
then Tenant shall give Landlord prior written notice thereof and Landlord and
Tenant shall execute an amendment to this Lease covering the payment for
installation costs, if any, the Telecommunications Equipment, the installation
and maintenance of such Telecommunications Equipment, Tenant’s indemnification
of Landlord with respect thereto, Tenant’s obligation to remove such
Telecommunications Equipment upon the expiration or earlier termination of this
Lease, and other related matters; provided that other than the foregoing
matters, in no event shall Tenant be required to pay Landlord for the use of
the roof of the Building in connection with the Telecommunications Equipment.
Tenant may only use the Telecommunications Equipment for its own usage.

 

[The remainder of the page is intentionally left
blank. Signatures on next page.]

 

59

 

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

 

 

	
   

  	
   

  	
   

  	
  “LANDLORD”:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  KILROY REALTY, L.P.,

  
	
   

  	
   

  	
   

  	
  a Delaware limited
  partnership

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Kilroy Realty
  Corporation, 

  
	
   

  	
   

  	
   

  	
   

  	
  a Maryland corporation,

  
	
   

  	
   

  	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Jeffrey C. Hawken

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  JEFFREY C. HAWKEN

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
  EXECUTIVE VICE
  PRESIDENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  CHIEF OPERATING OFFICER

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ John T. Fucci

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Name:

  	
  JOHN T. FUCCI

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
  SR. VICE PRESIDENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  ASSET MANAGEMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  “TENANT”:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  CARSDIRECT.COM, INC.,

  
	
   

  	
   

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  	
  /s/ B. Lynn Walsh

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
  Executive Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  	
  /s/ James W. Brusch

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
  Chief Financial Officer

  	
   

  

 

60

 

FIRST AMENDMENT TO OFFICE LEASE

 

This FIRST AMENDMENT TO OFFICE LEASE (“First
Amendment”) is made and entered into as of the 11th day of November,
2005 by and between KILROY REALTY L.P., a Delaware limited partnership (“Landlord”), and INTERNET BRANDS, INC., a
Delaware corporation, d/b/a CarsDirect.Com (and formerly known as
CarsDirect.Com) (“Tenant”).

 

R  E  C  I  T  A  L
S:

 

A.                      Landlord and Tenant entered into that certain
Office Lease dated June 25, 2004 (as
may have been previously amended, collectively, the “Lease”), whereby Landlord leased to Tenant and Tenant leased
from Landlord those certain premises (the “Original
Premises”) identified as Suites 1000 and 1100, located on the tenth
(10th) and eleventh (11th) floors of the building located
at 909 North Sepulveda Boulevard, El Segundo, California (the “Building”), and containing a total of
45,276 rentable square feet.

 

B.                        Tenant desires to expand the Original Premises
to include an additional 8,366 rentable square feet of space, commonly known as
Suite 940, located on the ninth (9th) floor of the Building (the “Expansion Premises”), as more specifically
set forth on Exhibit A
attached hereto and made a part hereof, on the terms and conditions set forth
in this First Amendment, and to make other modifications to the Lease, and in
connection therewith, Landlord and Tenant desire to amend the Lease on such
terms and conditions as are hereinafter provided.

 

A  G  R  E  E  M  E
N  T

 

NOW, THEREFORE, in consideration of the foregoing Recitals, each of
which arc incorporated herein by this reference, and the mutual covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereby agree as
follows.

 

1.                          Capitalized Terms. All capitalized but undefined terms used
herein shall have the same respective meanings as are given such terms in the
Lease unless expressly provided otherwise in this First Amendment.

 

2.                          Delivery of the Expansion
Premises. Not later than
December 15, 2005, Landlord shall deliver possession of the Expansion Premises
to Tenant in the “Expansion Delivery Condition,” as defined below, and at such
time (the “Delivery Date”) Tenant
shall have the right to enter (provided that all of the terms and conditions of
the Lease, as amended hereby, shall apply (other than Tenant’s obligation to
pay Rent), as though the “Expansion Premises Commencement Date,” as defined
below, had occurred, although the Expansion Premises Commencement Date shall
not actually occur until May 1, 2006) the Expansion Premises for purposes of
constructing the Tenant Improvements therein; provided that Tenant shall not be
required to accept delivery of the Expansion Premises prior to February 1,
2006. For purposes hereof, the “Expansion
Delivery Condition,” shall mean that the Expansion Premises are
demised with “Demising Walls,” as defined below, and in broom clean and
unimproved “shell” condition to the extent necessary for the Contractor to
commence construction of the Tenant Improvements therein pursuant to the terms
of this First Amendment. Landlord shall design, permit (if necessary) and
construct or install the demising partitions between the Premises and other
tenants’ premises which shall include studs, acoustical insulation and dry wall
ready for finish on the Tenant side only and any necessary penetrations, fire
dampers and sound traps (collectively, the “Demising
Walls”).

 

3.                          Incorporation of Expansion
Premises. Effective as of May
1, 2006 (the “Expansion Premises Commencement
Date”), Tenant shall lease from Landlord and Landlord shall lease to
Tenant the Expansion Premises. Effective upon the Expansion Premises
Commencement Date, the “Premises,” as that term is defined in the Lease, shall
be deemed to consist of the Original Premises and the Expansion Premises.
Landlord and Tenant hereby acknowledge and agree that the rentable square
footage of the Expansion Premises shall be as set

 

 

forth herein and shall
not be subject to re-measurement or modification, except as otherwise provided
or permitted in the Lease.

 

3.1                     Pre-Occupancy Right. If the date of
“Substantial Completion of the Tenant Improvements,” as that term is defined in
Section 5.5 of the Tenant Work Letter, for the Expansion Premises
precedes the Expansion Premises Commencement Date, then Tenant shall have the
right to occupy and conduct Tenant’s business in the Expansion Premises
commencing on such date through and including the day immediately preceding the
Expansion Premises Commencement Date (the “Pre-Occupancy
Period”) without payment of Base Rent for such period, provided that
all of the terms and conditions of the Lease, as amended hereby, shall apply
(other than Tenant’s obligations to pay Base Rent), as though the Expansion
Premises Commencement Date had occurred upon such occupancy of the Expansion
Premises by Tenant, although the Expansion Premises Commencement Date shall not
actually occur until May 1, 2006.

 

3.2                     Expansion Term. The term of Tenant’s
lease of the Expansion Premises (the “Expansion
Term”) shall commence on the Expansion Premises Commencement Date
and shall expire coterminously with Tenant’s Lease of the Original Premises on
the Lease Expiration Date (or as such date may be extended in accordance with
the terms and conditions set forth in the Section 2.2  of the Lease), unless sooner terminated
as provided in the Lease.

 

4.                          Rent.

 

4.1                     Base Rent. Notwithstanding any
provision to the contrary contained in the Lease, commencing on the Expansion
Premises Commencement Date and continuing throughout the Expansion Term, Tenant
shall pay Landlord monthly installments of Base Rent for the Expansion Premises
pursuant to the terms and conditions of Article 3 of the Lease, in the
amounts set forth below:

 

	
  Period Following

  Expansion Premises

  Commencement Date

  	
   

  	
  Annual

  Base Rent

  	
   

  	
  Monthly

  Installment

  of Base Rent

  	
   

  	
  Monthly Base Rental Rate Per

  Rentable Square Foot of the

  Expansion Premises

  	
   

  
	
  Months 1-12

  	
   

  	
  $

  	
  185,725.20

  	
   

  	
  $

  	
  15,477.10

  	
   

  	
  $

  	
  1.85

  	
   

  
	
  Months 13-24

  	
   

  	
  $

  	
  190,744.80

  	
   

  	
  $

  	
  15,895.40

  	
   

  	
  $

  	
  1.90

  	
   

  
	
  Months 25-36

  	
   

  	
  $

  	
  195,764.40

  	
   

  	
  $

  	
  16,313.70

  	
   

  	
  $

  	
  1.95

  	
   

  
	
  Months 37-48

  	
   

  	
  $

  	
  200,784.00

  	
   

  	
  $

  	
  16,732.00

  	
   

  	
  $

  	
  2.00

  	
   

  
	
  Month 49 - Lease Expiration Date

  	
   

  	
  $

  	
  205,803.60

  	
   

  	
  $

  	
  17,150.30

  	
   

  	
  $

  	
  2.05

  	
   

  

 

4.2                     Additional Rent. Commencing as of the
earlier of (a) the occupancy by Tenant of the Expansion Premises for the conduct
of Tenant’s business pursuant to Section 3.1, above and (b) the Expansion
Premises Commencement Date, and continuing throughout the Expansion Term,
Tenant shall pay Additional Rent with respect to the entire Premises (i.e. the Original Premises and the Expansion
Premises) in accordance with the terms of Article 4 of the Lease, except
that, notwithstanding Section 6 of the Summary, Tenant’s Share shall
equal 21.5894%.

 

5.                          Condition of Expansion Premises. Except
as to Landlord’s obligations set forth in the Lease regarding the condition of
the Project, Building and Premises, and except as otherwise set forth below or
in Section 2, above, Tenant shall accept the Expansion Premises in its
presently existing, “as is” condition upon delivery thereof to Tenant in
accordance with Section 2, above. Notwithstanding the foregoing, (a)
Landlord shall construct the multi-tenant corridor adjacent to the Expansion
Premises and the Demising Walls, each with Building standard materials, and (b)
the Expansion Premises shall be improved by Tenant with Tenant Improvements in
accordance with the terms and procedures of the Tenant Work Letter attached as Exhibit
B to the Lease, except that, as to the improvement of the Expansion
Premises, the provisions and modifications specific to the Expansion Promises
shall supersede any contrary provisions contained in the Lease, including Exhibit
B  thereof.

 

2

 

5.1                     The Tenant
Improvement Allowance for the improvement of the Expansion Premises (the “Expansion Premises Improvement Allowance”)
shall be a total of Three Hundred Twenty-Six Thousand Two Hundred Seventy-Four
and No/100 Dollars ($326,274.00) (i.e.,  $39.00 per rentable square foot of the
Expansion Premises), which shall be used for Tenant Improvement Allowance Items
to be constructed by Tenant in the Expansion Premises only. The Expansion
Premises Improvement Allowance shall be available for use by Tenant commencing
as of the Delivery Date and ending as of the Expansion Premises Commencement
Date, at which time any unused portion thereof shall revert to Landlord;

 

5.2                     All
references to the “Premises” shall be deemed to refer to the Expansion
Premises;

 

5.3                     All
references to the “Tenant Improvement Allowance” shall be deemed to refer to the
Expansion Premises Improvement Allowance;

 

5.4                     All
references to the “Lease Commencement Date” shall be deemed to refer to the
Expansion Premises Commencement Date;

 

5.5                     Section
2.2.1.8 of the Tenant Work Letter is replaced with the following: “The cost
of Tenant’s furniture, fixtures and equipment and cabling; provided, however,
in no event shall more than $7.50 per usable square foot of the Expansion
Premises be used for the foregoing items.”

 

5.6                     Section
1.2 of the Tenant Work Letter shall not apply with respect to the Expansion
Premises;

 

5.7                     Tenant shall
be responsible for one-half (1/2) of Landlord’s reasonable cost of the Demising
Walls (provided that the Tenant Improvement Allowance may be allocated by
Tenant to such costs); and

 

5.8                     Section
1.1.1.1 of the Lease shall not apply with respect to the Expansion
Premises.

 

6.                          Use. Tenant shall use the Expansion
Premises in accordance with the terms and conditions of Section 7 of the
Summary and Article 5 of the Lease.

 

7.                          Parking. In connection with Tenant’s
lease of the Expansion Premises and commencing on the Expansion Premises
Commencement Date and continuing throughout the remainder of the Expansion
Term, Tenant shall have the right to use, without charge, an additional
thirty-three (33) unreserved parking permits (i.e.,
four (4) parking permits per 1,000 rentable square feet of the Expansion
Premises) for use in the Project parking facility. Additionally,
notwithstanding any provision to the contrary contained in the Lease, subject
to availability, Tenant shall have the right to rent up to an additional
thirteen (13) unreserved parking permits (i.e.,
1.5 parking permits per 1,000 rentable square feet of the Expansion Premises)
on a month-to-month basis, at rate of Twenty and No/100 Dollars ($20.00) per
permit per month. Tenant’s right to use all of the above parking permits shall
be subject to all of the terms and conditions of Article 23 of the
Lease.

 

8.                          Brokers. Landlord and Tenant hereby
warrant to each other that they have had no dealings with any real estate
broker or agent in connection with the negotiation of this First Amendment
other than The Staubach Company and CB Richard Ellis (collectively, the “Broker”), and that they know of no real
estate broker or agent other than Broker who is entitled to a commission in
connection with this First Amendment. Each party agrees to indemnify and defend
the other party against and hold the other party harmless from any and all
claims, demands, losses, liabilities, lawsuits, judgments, and costs and expenses
(including, without limitation, reasonable attorneys’ fees) with respect to any
leasing commission or equivalent compensation alleged to be owing on account of
the indemnifying party’s dealings with any real estate broker or agent other
than Broker. The terms of this Section 8 shall survive the expiration or
earlier termination of this First Amendment.

 

9.                          No Further Modification. Except as
specifically set forth in this First Amendment, all of the terms and provisions
of the Lease shall remain unmodified and in full force and effect. In the event
of any conflict between the terms and conditions of the Lease and

 

3

 

the terms and conditions
of this First Amendment, the terms and conditions of this First Amendment shall
prevail.

 

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

 

	
   

  	
   

  	
   

  	
  “LANDLORD”:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  KILROY REALTY, L.P.,

  
	
   

  	
   

  	
   

  	
  a Delaware limited
  partnership

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  Kilroy Realty
  Corporation,

  
	
   

  	
   

  	
   

  	
   

  	
  a Maryland corporation,

  
	
   

  	
   

  	
   

  	
   

  	
  General Partner

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
  /s/ Jeffrey C. Hawken

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  JEFFREY C. HAWKEN

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
  EXECUTIVE VICE
  PRESIDENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  CHIEF OPERATING OFFICER

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  By:

  	
  /s/ John T. Fucci

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  JOHN T. FUCCI

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
  SR. VICE PRESIDENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  ASSET MANAGEMENT

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  “TENANT”:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  INTERNET BRANDS, INC.,

  
	
   

  	
   

  	
   

  	
  a Delaware corporation
  d/b/a CarsDirect.Com

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  	
  /s/ B. Lynn Walsh

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
  Exec VP and General
  Counsel

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  	
  /s/ Stacy Peterson

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
  Its:

  	
  CFO

  	
   

  

 

4

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