10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

     ACT OF 1934

For the quarterly period ended June 30, 2010

OR

(  ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

     EXCHANGE ACT OF 1934

For the transition period fromto

Commission File Number:  1-6314

Tutor Perini Corporation

(Exact name of registrant as specified in its charter)

MASSACHUSETTS	04-1717070
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

15901 OLDEN STREET, SYLMAR, CALIFORNIA 91342-1093

(Address of principal executive offices)

(Zip code)

(818) 362-8391

(Registrant's telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes   X     No ___

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes ___     No ___

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer ___ Accelerated filer  X Non-Accelerated filer  ___ Smaller reporting company  __

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes ___   No  X  

The number of shares of Common Stock, $1.00 par value per share, of the registrant outstanding at August 4, 2010 was 47,047,933.

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TUTOR PERINI CORPORATION AND SUBSIDIARIES

INDEX

			Page Number
Part I. -	Financial Information:
	Item 1.	Financial Statements (Unaudited)
		Consolidated Condensed Balance Sheets – June 30, 2010 and December 31, 2009	3
		Consolidated Condensed Statements of Income – Three Months and Six Months ended June 30, 2010 and 2009	4
		Consolidated Condensed Statement of Stockholders’ Equity – Six Months ended June 30, 2010	5
		Consolidated Condensed Statements of Cash Flows  – Six Months ended June 30, 2010 and 2009	6
		Notes to Consolidated Condensed Financial Statements	7-21
	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22-29
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
	Item 4.	Controls and Procedures	29
Part II. -	Other Information:
	Item 1.	Legal Proceedings	29
	Item 1A.	Risk Factors	30
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
	Item 3.	Defaults Upon Senior Securities	30
	Item 4.	Removed and Reserved	30
	Item 5.	Other Information	30
	Item 6.	Exhibits	30-31
	Signatures		32

2

Part I.  – Financial InformationItem 1.  Financial Statements

TUTOR PERINI CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

JUNE 30, 2010  (UNAUDITED) AND DECEMBER 31, 2009

(In Thousands)

	JUNE 30, 2010			DECEMBER 31, 2009
ASSETS
Cash and Cash Equivalents	$	303,212		$	348,309
Restricted Cash		23,523			-
Accounts Receivable, including retainage		1,193,315			1,088,386
Costs and Estimated Earnings in Excess of Billings		120,280			145,678
Deferred Income Taxes		1,369			1,370
Other Current Assets		37,345			30,811
Total Current Assets		1,679,044			1,614,554
Long-term Investments		100,316			101,201
Property and Equipment (net of Accumulated Depreciation
of $73,045 in 2010 and $67,256 in 2009)		353,506			348,821
Other Assets:
Goodwill		602,471			602,471
Intangible Assets, net		130,051			134,327
Other		17,303			19,280
	$	2,882,691		$	2,820,654
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Maturities of Long-term Debt	$	31,014		$	31,334
Accounts Payable, including retainage		950,492			990,551
Billings in Excess of Costs and Estimated Earnings		259,963			187,714
Accrued Expenses		92,864			101,837
Total Current Liabilities		1,334,333			1,311,436
Long-term Debt, less current maturities included above		82,939			84,771
Deferred Income Taxes		78,150			78,977
Other Long-term Liabilities		50,789			57,044
Contingencies and Commitments		-			-
Stockholders’ Equity:
Common Stock - $1 par value: 75,000,000 shares authorized;
Shares issued and outstanding: 48,595,682 and 48,538,982, respectively		48,596			48,539
Additional Paid-in Capital		1,007,327			1,012,983
Retained Earnings		313,779			260,121
Accumulated Other Comprehensive Loss		(33,222	)		(33,217	)
Total Stockholders' Equity		1,336,480			1,288,426
	$	2,882,691		$	2,820,654

The accompanying notes are an integral part of these consolidated condensed financial statements.

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TUTOR PERINI CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)

(In Thousands, Except Per Share Data)

	THREE MONTHS ENDED						SIX MONTHS ENDED
	JUNE 30,						JUNE 30,
	2010			2009				2010		2009
Revenues	$	914,376		$	1,382,748		$	1,779,451		$	2,901,030
Cost of Operations		815,464			1,274,535			1,604,406			2,685,907
Gross Profit		98,912			108,213			175,045			215,123
General and Administrative Expenses		43,061			44,453			85,037			88,729
INCOME FROM CONSTRUCTION OPERATIONS		55,851			63,760			90,008			126,394
Other Income (Expense), net		(1,102	)		619			(757	)		1,885
Interest Expense		(3,244	)		(2,864	)		(4,765	)		(4,094	)
Income before Income Taxes		51,505			61,515			84,486			124,185
Provision for Income Taxes		(18,780	)		(22,618	)		(30,828	)		(46,307	)
NET INCOME	$	32,725		$	38,897		$	53,658		$	77,878
BASIC EARNINGS PER COMMON SHARE	$	0.67		$	0.80		$	1.09		$	1.61
DILUTED EARNINGS PER COMMON SHARE	$	0.66		$	0.79		$	1.09		$	1.59
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
BASIC		49,001			48,521			49,013			48,518
Effect of Dilutive Stock Options and Restricted
Stock Units Outstanding		535			476			436			490
DILUTED		49,536			48,997			49,449			49,008

The accompanying notes are an integral part of these consolidated condensed financial statements.

4

TUTOR PERINI CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 2010

(In Thousands)

									Accumulated
				Additional					Other
	Common			Paid-in			Retained		Comprehensive
	Stock			Capital			Earnings		Loss			Total
Balance - December 31, 2009	$	48,539		$	1,012,983		$	260,121	$	(33,217	)	$	1,288,426
Net Income		-			-			53,658		-			53,658
Other comprehensive income (loss):
Foreign currency translation		-			-			-		(5	)		(5	)
Total comprehensive income													53,653
Common Stock repurchased under
share repurchase program		(617	)		(10,583	)		-		-			(11,200	)
Tax effect of stock-based compensation		-			(1,939	)		-		-			(1,939	)
Stock-based compensation expense		-			7,477			-		-			7,477
Issuance of Common Stock, net		674			(611	)		-		-			63
Balance - June 30, 2010	$	48,596		$	1,007,327		$	313,779	$	(33,222	)	$	1,336,480

The accompanying notes are an integral part of these consolidated condensed financial statements.

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TUTOR PERINI CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE SIX MONTHS ENDED JUNE 30, 2010 AND 2009

(In Thousands)

	SIX MONTHS ENDED
	June 30,
	2010			2009
Cash Flows from Operating Activities:
Net Income	$	53,658		$	77,878
Adjustments to reconcile Net Income to net cash from operating activities:
Depreciation and amortization		15,889			20,632
Stock-based compensation expense		7,477			4,295
Adjustment of investments to fair value		182			(22	)
Deferred Income Taxes		(2,124	)		(4,685	)
Loss on sale of equipment		434			318
Loss on land held for sale		-			169
Other Long-term Liabilities		(3,077	)		(34,025	)
Changes in other components of working capital		(59,755	)		(105,118	)
NET CASH PROVIDED BY (USED IN)  OPERATING ACTIVITIES	$	12,684		$	(40,558	)
Cash Flows from Investing Activities:
Business acquisition related payments	$	(6,734	)	$	(6,900	)
Acquisition of Property and Equipment		(8,509	)		(19,408	)
Proceeds from sale of Property and Equipment		808			992
Investment in land held for sale		-			(699	)
Proceeds from sale of available-for-sale securities		525			3,600
Increase in Restricted Cash		(23,523	)		-
Investment in other activities		(146	)		520
NET CASH USED IN INVESTING ACTIVITIES	$	(37,579	)	$	(21,895	)
Cash Flows from Financing Activities:
Proceeds from Debt	$	8,724		$	138,182
Repayment of Debt		(16,181	)		(10,602	)
Common Stock repurchased under share  repurchase program		(11,200	)		-
Issuance of Common Stock and effect of cashless exercise		63			139
Deferred debt costs		(1,608	)		(517	)
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	$	(20,202	)	$	127,202
Net (Decrease) Increase in Cash and Cash Equivalents		(45,097	)		64,749
Cash and Cash Equivalents at Beginning of Year		348,309			386,172
Cash and Cash Equivalents at End of Period	$	303,212		$	450,921
Supplemental Disclosure of Cash Paid During the Period For:
Interest	$	2,868		$	4,136
Income taxes	$	20,306		$	44,335
Supplemental Disclosure of Non-cash Transactions:
Property and Equipment acquired through financing arrangements	$	6,054		$	257

The accompanying notes are an integral part of these consolidated condensed financial statements.

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TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(1) Basis of Presentation

The unaudited consolidated condensed financial statements presented herein include the accounts of Tutor Perini Corporation (formerly known as Perini Corporation) and its wholly owned subsidiaries (“Tutor Perini” or the “Company”).  The Company’s interests in construction joint ventures are accounted for using the proportionate consolidation method.  These unaudited consolidated condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and note disclosures required by accounting principles generally accepted in the United States of America.  These statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2009.  In the opinion of management, the accompanying unaudited consolidated condensed financial statements include all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the Company's financial position as of June 30, 2010 and December 31, 2009, results of operations for the three and six month periods ended June 30, 2010 and 2009, and cash flows for the six month periods ended June 30, 2010 and 2009. The results of operations for the six month period ended June 30, 2010 may not be indicative of the results that may be expected for the year ending December 31, 2010 because, among other reasons, such results can vary depending on the timing of progress achieved and changes in estimated profitability of projects being reported.

The Company considers events or transactions that occur after the balance sheet date but before the financial statements are issued to provide additional evidence relative to certain estimates or to identify matters that require additional disclosures.

(2) Significant Accounting Policies

The significant accounting policies followed by the Company and its subsidiaries in preparing its consolidated financial statements are set forth in Note 1 to such financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.  The Company has made no significant changes to these policies during 2010.

In January 2010, the Financial Accounting Standards Board (the “FASB”) issued a staff position amending existing guidance for fair value measurements and disclosures in both interim and annual financial statements.  This update requires new disclosures on significant transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy (including the reasons for these transfers) and the reasons for any transfers in or out of Level 3. It also requires a reconciliation of recurring Level 3 measurements and clarifies certain existing disclosure requirements for reporting fair value disaggregated by class of assets and liabilities rather than each major category of assets and liabilities. This update is effective for the Company with the interim and annual reporting period beginnin g January 1, 2010, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will become effective for the Company with the interim and annual reporting period beginning January 1, 2011. The Company will not be required to provide the amended disclosures for any previous periods presented for comparative purposes. Other than requiring additional disclosures, adoption of this update has not and will not have a material effect on the Company's consolidated financial statements.

(3) Cash, Cash Equivalents and Restricted Cash

Cash and Cash Equivalents as reported in the accompanying Consolidated Condensed Balance Sheets consist of amounts held by the Company that are available for general corporate purposes and the Company’s proportionate share of amounts held by construction joint ventures that are available only for joint venture-related uses, including future distributions to joint venture partners.  Restricted Cash is held to secure insurance-related contingent obligations, such as insurance claim deductibles, in lieu of letters of credit.  At June 30, 2010 and December 31, 2009, Cash and Cash Equivalents and Restricted Cash consisted of the following (in thousands):

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TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(continued)

(3)           Cash, Cash Equivalents and Restricted Cash (continued)

	June 30,		December 31,
	2010		2009
Corporate Cash and Cash Equivalents (1)	$	284,430	$	323,867
Company's share of joint venture Cash and Cash Equivalents (2)		18,782		24,442
Total Cash and Cash Equivalents	$	303,212	$	348,309
Restricted Cash	$	23,523	$	-
(1)  Available for general corporate purposes
(2)  Available for joint venture purposes, including future distributions to joint venture partners

(4) Fair Value Measurements

The Company measures certain financial instruments, including Cash and Cash Equivalents, such as money market funds, at their fair value.  The fair value was determined based on a three-tier valuation hierarchy for disclosure of significant inputs.  These hierarchical tiers are defined as follows:

Level 1 – inputs are unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 – inputs are other than quoted prices in active markets that are either directly or indirectly observable through market corroboration.

Level 3 – inputs are unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions based on the best information available in the circumstances.

8

TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(continued)

(4) Fair Value Measurements (continued)

The following tables provide the assets and liabilities carried at fair value measured on a recurring basis as of June 30, 2010 and December 31, 2009 (in thousands): 

			Fair Value Measurements at June 30, 2010 Using
	Total Carrying Value at June 30, 2010		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs  (Level 3)
Cash and Cash Equivalents (1)	$	303,212	$	303,212	$	-	$	-
Restricted Cash (1)		23,523		23,523		-		-
Short-term Investments (2)		75		75		-		-
Long-term Investments – Auction rate securities (3)		100,316		-		-		100,316
Total	$	427,126	$	326,810	$	-	$	100,316

			Fair Value Measurements at December 31, 2009 Using
	Total Carrying Value at December 31, 2009		Quoted prices in active markets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs  (Level 3)
Cash and Cash Equivalents (1)	$	348,309	$	348,309	$	-	$	-
Restricted Cash (1)		-		-		-		-
Short-term Investments (2)		76		76		-		-
Long-term Investments – Auction rate securities (3)		101,201		-		-		101,201
Total	$	449,586	$	348,385	$	-	$	101,201

(1) Cash, Cash Equivalents and Restricted Cash consist primarily of money market funds with original maturity dates of three months or less, for which fair value is determined through quoted market prices.

(2) Short-term Investments are included in Other Current Assets and consist of an S&P 500 index mutual fund for which fair value is determined through quoted market prices.

(3) At June 30, 2010, the Company had $100.3 million invested in auction rate securities (“ARS”) which the Company considers as available-for-sale.  The majority of the ARS held by the Company at June 30, 2010, are in securities collateralized by student loan portfolios, totaling $74.4 million, which are guaranteed by the U.S. government.  Additional amounts totaling $17.9 million are invested in securities collateralized by student loan portfolios, which are privately insured.  The remainder of the securities, totaling $8.0 million, is invested in tax-exempt bonds.  At December 31, 2009, the Company had $101.2 million invested in ARS which included $93.2 million in securities collateralized by student loan portfolios ($75.3 million guaranteed by the U.S. government and $17.9 million privately insured) and $8.0 million invested in tax-exempt bonds.  Subst antially all of the Company’s ARS are rated AAA or Aaa.  The Company estimated the fair value of its ARS utilizing an income approach valuation model which considered, among other items, the following inputs: (i) the underlying structure of each security; (ii) the present value of future principal and interest payments discounted at rates considered to reflect current market conditions; and (iii) consideration of the probabilities of default or repurchase at par for each period.  As a result of the fair valuation analysis performed, the Company recorded a pre-tax impairment charge of $0.4 million during the three months ended June 30, 2010.  This charge was deemed to be other-than-temporary and was recorded as a charge against income.

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TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(continued)

(4) Fair Value Measurements (continued)

Assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three and six month periods ended June 30, 2010 and 2009 are as follows (in thousands):

	Auction Rate
	Securities
Balance at December 31, 2009	$	101,201
Settlements		(375	)
Balance at March 31, 2010		100,826
Settlements		(150	)
Impairment charge included in Other Income (Expense), net		(360	)
Balance at June 30, 2010	$	100,316

	Auction Rate
	Securities
Balance at December 31, 2008	$	104,779
Settlements		(1,350	)
Balance at March 31, 2009		103,429
Settlements		(2,250	)
Reversal of impairment charge included in Other Income (Expense), net		22
Balance at June 30, 2009	$	101,201

Due to the Company’s belief that the market for both government-backed and privately insured student loans, as well as for tax-exempt municipal bonds, may take in excess of twelve months to fully recover, the Company has classified its $100.3 million investment in these securities as non-current and this amount is included in Long-term Investments in the Consolidated Condensed Balance Sheets at June 30, 2010.

The carrying amount of Cash and Cash Equivalents approximates fair value due to the short-term nature of these items. The carrying value of receivables, payables, long-term debt and other amounts arising out of normal contract activities, including retentions, which may be settled beyond one year, is estimated to approximate fair value.

(5) Goodwill and Other Intangible Assets

There were no changes in the carrying amount of Goodwill during the six month period ended June 30, 2010 as shown in the table below (in thousands):

						Management
	Building			Civil		Services			Total
Gross Goodwill	$	401,744		$	300,987	$	66,638		$	769,369
Accumulated impairment		(146,847	)		-		(20,051	)		(166,898	)
Balance at December 31, 2009	$	254,897		$	300,987	$	46,587		$	602,471
Balance at June 30, 2010	$	254,897		$	300,987	$	46,587		$	602,471

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TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(continued)

(5) Goodwill and Other Intangible Assets (continued)

Other Intangible Assets consist of the following (in thousands):

	As of June 30, 2010
	Cost		Accumulated Amortization			Net Carrying Value
Trade names	$	96,150	$	-		$	96,150
Contractor license		5,320		-			5,320
Customer relationships		31,700		(5,679	)		26,021
Construction contract backlog		33,340		(30,900	)		2,440
Non-compete agreements		2,400		(2,280	)		120
Total	$	168,910	$	(38,859	)	$	130,051

	As of December 31, 2009
	Cost		Accumulated Amortization			Net Carrying Value
Trade names	$	96,150	$	-		$	96,150
Contractor license		5,320		-			5,320
Customer relationships		31,700		(4,243	)		27,457
Construction contract backlog		33,340		(28,300	)		5,040
Non-compete agreements		2,400		(2,040	)		360
Total	$	168,910	$	(34,583	)	$	134,327

Amortization expense for the three and six month periods ended June 30, 2010 was $2.0 million and $4.3 million, respectively.  Amortization expense for the three and six month periods ended June 30, 2009 was $4.9 million and $10.1 million, respectively. As of June 30, 2010, amortization expense is estimated to be $3.6 million for the remainder of 2010, $3.3 million in 2011, $2.9 million in 2012, $2.9 million in 2013, $2.9 million in 2014 and $13.0 million thereafter.

(6) Contingencies and Commitments

The Company and certain of its subsidiaries are involved in litigation and are contingently liable for commitments and performance guarantees arising in the ordinary course of business. The Company and certain of its clients have made claims arising from the performance under its contracts. The Company recognizes certain significant claims for recovery of incurred cost when it is probable that the claim will result in additional contract revenue and when the amount of the claim can be reliably estimated. Several matters are in the litigation and dispute resolution process.  The following discussion provides a background and current status of these matters.

Tutor-Saliba-Perini Joint Venture vs. Los Angeles MTA Matter

Tutor-Saliba-Perini (“Joint Venture”) filed a complaint in the Superior Court of the State of California for the County of Los Angeles against the Los Angeles County Metropolitan Transportation Authority (“LAMTA”), seeking to recover costs for extra work required by LAMTA in connection with the construction of certain tunnel and station projects. In 1999, LAMTA countered with civil claims under the California False Claims Act (“CFCA”) against the Joint Venture, Tutor-Saliba and the Company jointly and severally (together, “TSP”).

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TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(continued)

(6) Contingencies and Commitments (continued)

The court has granted certain Joint Venture motions and LAMTA capitulated on others which reduced the number of false claims LAMTA may seek and limited LAMTA’s claims for damages and penalties.  In 2009, the court ruled that LAMTA could not proceed with its breach of contract claims unless it can prove the contracts are constitutional under a “strict scrutiny” standard. LAMTA has informed the court it will drop the contract claims.  During the second quarter of 2010, the court granted the Joint Venture’s motion against LAMTA regarding witness tampering, issued an order to show cause regarding criminal and civil contempt on the part of LAMTA, and also issued a ruling referring an evidentiary matter to the Attorney General of the State of California relating to a criminal investigation into whe ther or not LAMTA and its attorneys provided false testimony and tampered with a witness. The court has set the remainder of the case to be tried in September 2010.

The ultimate financial impact of the lawsuit is not yet determinable.  Therefore, no provision for loss, if any, has been recorded in the financial statements.

Perini/Kiewit/Cashman Joint Venture-Central Artery/Tunnel Project Matter

Perini/Kiewit/Cashman Joint Venture (“PKC”) a joint venture in which the Company holds a 56% interest and is the managing partner, is currently pursuing a series of claims, instituted at different times over the course of the past ten years, for additional contract time and/or compensation against the Massachusetts Highway Department (“MHD”) for work performed by PKC on a portion of the Central Artery/Tunnel project in Boston, Massachusetts. During construction, MHD ordered PKC to perform changes to the work and issued related direct cost changes with an estimated value, excluding time delay and inefficiency costs, in excess of $100 million. In addition, PKC encountered a number of unforeseen conditions during construction that greatly increased PKC’s cost of performance. MHD has asserted counterclaims for liquidated damages.

Certain of PKC’s claims have been presented to a Disputes Review Board (“DRB”) which consists of three construction experts chosen by the parties. To date, the various DRB panels have issued eight awards and several interim decisions in favor of PKC’s claims, amounting to total binding awards to PKC in excess of $100 million.

It is PKC’s position that the remaining claims to be decided by the DRB on a binding basis have an anticipated value of approximately $28 million, plus interest.  Hearings before the DRB occurred throughout 2009 and are scheduled to continue during 2010.

Management has made an estimate of the total anticipated recovery on this project and it is included in revenue recorded to date.  To the extent new facts become known or the final recovery included in the claim settlement varies from the estimate, the impact of the change will be reflected in the financial statements at that time.

Long Island Expressway/Cross Island Parkway Matter

The Company reconstructed the Long Island Expressway/Cross Island Parkway Interchange for the New York State Department of Transportation (the “NYSDOT”). The $130 million project (the “Project”) was substantially completed in January 2004 and was accepted by the NYSDOT as finally complete in February 2006.

The Company is seeking relief from the NYSDOT for the delay and extra work it experienced on the Project.  In April 2009, the Company made a presentation of its position to the NYSDOT regarding additional relief it seeks from the NYSDOT. In June 2010, the Company requested that NYSDOT close-out the Project, after which the NYSDOT notified the Company that it will conduct an audit of the Company’s costs under the project. To date the parties have been unable to reach a settlement agreement.

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TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(continued)

(6) Contingencies and Commitments (continued)

Management has made an estimate of the total anticipated recovery on this project and it is included in revenue recorded to date.  To the extent new facts become known or the final recovery included in the claim settlement varies from the estimate, the impact of the change will be reflected in the financial statements at that time.

Queensridge Matter

Perini Building Company, Inc. (“PBC”) was the general contractor for the construction of One Queensridge Place, a condominium project in Las Vegas, Nevada. The developer of the project, Queensridge Towers, LLC / Executive Home Builders, Inc. (“Queensridge”), has failed to pay PBC for work which PBC and its subcontractors performed on the project.  Queensridge has alleged that PBC and its subcontractors are not due amounts sought and that it has back charges from incomplete and defective work.

Queensridge filed a motion to stay the arbitration in order to pursue its appeal of the Clark County District Court’s spoliation ruling.  PBC filed its answer to Queensridge’s appeal in the Nevada Supreme Court and the court granted PBC’s motion and ruled that its lien is in technical compliance with state statute.

PBC filed an amended arbitration demand, asserting $35 million in claims against Queensridge for liens, contract and punitive damages.

Management has made an estimate of the total anticipated recovery on this project and it is included in revenue recorded to date.  To the extent new facts become known or the final recovery included in the claim settlement varies from the estimate, the impact of the change will be reflected in the financial statements at that time.

Gaylord Hotel and Convention Center Matter

In 2005, Gaylord National, LLC (“Gaylord”), as Owner, and Perini Building Company, Inc. / Tompkins Builders, Joint Venture (“PTJV”), as Construction Manager, entered into a contract to construct the Gaylord National Resort and Convention Center (the “Project”) in Maryland. PTJV is pursuing an insurance claim related to work performed by Banker Steel Company, Inc. (“Banker Steel”), a subcontractor. In November 2009, PTJV filed suit against Factory Mutual Insurance Co. (“FM”) in the Maryland federal district court alleging FM breached the insurance contracts and for declaratory judgment with respect to the insurance coverage.  Pursuant to a separate agreement with Banker Steel, PTJV will share in any net recovery resulting from Banker Steel’s lawsuit against its suppl ier which was filed in February 2010 and is pending in the Virginia federal court.

Management has made an estimate of the total anticipated recovery on this project and it is included in revenue recorded to date.  To the extent new facts become known or the final recovery included in the claim settlement varies from the estimate, the impact of the change will be reflected in the financial statements at that time.

UCLA Westwood Replacement Hospital Matter

This project, which was undertaken by the joint venture of Tutor-Saliba Corporation and Perini Corporation (“TSP”), involved the construction of a new hospital on the University of California, Los Angeles campus. The project owner is the University of California at Los Angeles (the “Owner”). The project has been completed.

TSP has filed a lawsuit, in Los Angeles Superior Court, against the Owner on behalf of TSP and its subcontractors. TSP is seeking $36 million on behalf of itself and $171 million on behalf of its subcontractors. The Owner has filed a Cross Complaint against TSP, the Company, Tutor-Saliba Corporation, Helix Electric Inc., and others (together “TSP Defendants”)  alleging contract breach and violation of the California False Claims Act. Helix Electric, Inc. (“Helix”) was a subcontractor to TSP.  The Owner is seeking $62.2 million for contract breach from the TSP Defendants; $4.3

13

TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(continued)

(6) Contingencies and Commitments (continued)

million, trebled, for false claims from the TSP Defendants and Helix; and other relief. The subcontractors have filed lawsuits against TSP seeking the aforementioned $171 million in what are essentially pass through claims to the Owner.  Pursuant to the provisions of TSP’s agreements with its subcontractors, TSP is not responsible to pay subcontractors for Owner-caused damages.  All cases have been deemed related and consolidated.  The consolidated cases will be referred to as “In Re UCLA Westwood Replacement Hospital Cases”.  TSP is designated lead plaintiff.

To date this matter has not settled through mediation.  Trial is scheduled for February 2011.

Management has made an estimate of the total anticipated recovery on this project and it is included in revenue recorded to date.  To the extent new facts become known or the final recovery included in the claim settlement varies from the estimate, the impact of the change will be reflected in the financial statements at that time.

Palomar Pomerado Health Matter

Rudolph and Sletten (“R&S”) was construction manager for Palomar Pomerado Health (“PPH”) regarding its capital expansion program commencing in 2003 through the end of 2009.  Portions of the work were terminated for convenience by PPH in 2008.  PPH audited R&S’s books and records and made an unsubstantiated claim for approximately $5 million in alleged inappropriate billings.

On December 10, 2009, PPH filed a lawsuit against R&S in the Superior Court of the State of California for the County of San Diego.  The complaint includes claims for breach of contract, civil fraud and negligent misrepresentation. R&S filed its cross-complaint against PPH in May 2010, alleging breach of contract and implied covenant of good faith and fair dealing, promissory estoppel, violation of the Federal Civil Rights Act, and other causes of action.  The ultimate financial impact of the lawsuit is not yet determinable.  Therefore, no provision for loss, if any, has been recorded in the financial statements.

Fontainebleau Matter

Desert Plumbing & Heating Co. (“DPH”), a wholly owned subsidiary of the Company, was the plumbing and mechanical subcontractor on the Fontainebleau Project in Las Vegas (“Fontainebleau”), a hotel/casino complex with approximately 3,800 rooms.

In June 2009, Fontainebleau filed for bankruptcy protection, under Chapter 11 of the U.S. Bankruptcy Code, in the Southern District of Florida.  Fontainebleau is headquartered in Miami, Florida.

DPH filed liens in Nevada for approximately $42 million, representing its unreimbursed costs to date and lost profits, including anticipated profits.  Other unaffiliated subcontractors have also filed liens. On June 17, 2009, DPH filed suit against Turnberry West Construction, Inc. (“Turnberry”), the general contractor, in the 8th Judicial District Court, Clark County, Nevada, seeking damages based on contract theories. On April 2, 2010, the court entered a default judgment in favor of DPH and against Turnberry for Turnberry’s failure to answer the DPH complaint and on May 27, 2010, the court entered an order on the default judgment in favor of DPH for approximately $45 million.  DPH is uncertain as to Turnberry’s present financial condition.

In January 2010, the Bankruptcy Court approved the sale of the property to Icahn Nevada Gaming Acquisition, LLC and this transaction closed in February 2010.  Approximately $105 million has been set aside from this sale and is available for distribution to satisfy the creditor claims based on seniority. The project lender filed suit against the mechanic’s lien claimants, including DPH, alleging that certain mechanic’s liens are invalid and that all mechanic’s liens are subordinate to the lender's claims against the property. This litigation is pending.

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TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(continued)

(6) Contingencies and Commitments (continued)

Management has made an estimate of the total anticipated recovery on this project and it is included in revenue recorded to date.  To the extent new facts become known or the final recovery included in the claim settlement varies from the estimate, the impact of the change will be reflected in the financial statements at that time.

MGM CityCenter Matter

Perini Building Company, Inc., a wholly owned subsidiary of the Company, contracted with MGM MIRAGE Design Group (“MGM”) on March 9, 2005 to construct the CityCenter project in Las Vegas, Nevada (the “Project”).  The Project, which encompasses nineteen separate contracts, is a 66-acre urban mixed use development consisting of hotels, condominiums, retail space and a casino.

The Company achieved substantial completion of the Project on or about December 16, 2009, and MGM opened the Project to the public on the same date.  Approximately $491 million, recorded as contract receivables, is due and owed to the Company and its subcontractors.  Included in the Company’s receivables are pass throughsubcontractor billings for contract work and retention, and other requests for equitable adjustment for additional work in the amount of $378 million.  On March 24, 2010, the Company filed suit against MGM and certain other property owners in the Clark County District Court alleging (1) breach of contract, (2) breach of the implied covenant of good faith and fair dealing, (3) tortious breach of the implied covenant of good faith and fair dealing, (4) unjust enrichment, (5) fraud and intentional misrepresentation, (6) foreclosure of mechanic’s lien, and (7) claim of priority.  On March 29, 2010, the Company filed a $491 million mechanic’s lien against the Project.

In a Current Report on Form 8-K filed by MGM on March 12, 2010, and in subsequent communications issued, MGM has asserted that it believes it owes substantially less than the claimed amount and that it has claims for losses in connection with the construction of the Harmon Hotel and is entitled to unspecified offsets for other work on the Project. According to MGM, the total of the offsets and the Harmon Hotel claims exceed the amount claimed by the Company.  MGM’s filing and subsequent communications do not specify in any detail the basis for MGM’s belief that it has such claims against the Company.

On May 14, 2010, MGM filed a counterclaim and third party complaint against the Company and its subsidiary Perini Building Company.  On June 24, 2010, MGM filed its First Amended Third Party Complaint in which MGM removed certain causes of actions against the Company.  On June 28, 2010, the court granted the Company and MGM’s joint motion to consolidate all subcontractor initiated actions into the main CityCenter lawsuit. Trial is scheduled for September 2011.

In public statement, MGM asserted its intent to enter into settlement discussions directly with subcontractors under contract with the Company.  The Company disputes MGM’s ability to settle with subcontractors directly without the Company’s approval.  In the event MGM reaches a settlement with subcontractors for amounts less than currently due and the settlement is agreed to by the Company, the Company will reduce amounts included in revenues, cost of construction operations, accounts receivable and accounts payable for the reduction in subcontractor pass through billings, which we would not expect to have an impact on recorded profit.

With respect to alleged losses at the Harmon Hotel, the Company has contractual indemnities from the responsible subcontractor, as well as existing insurance coverage that it expects will be available and sufficient to cover any liability that may be associated with this matter.  The Company is not aware of a basis for other claims that would amount to material offsets against what MGM owes to the Company.

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TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(continued)

(6) Contingencies and Commitments (continued)

Management has made an estimate of the total anticipated recovery on this project and it is included in revenue recorded to date.  To the extent new facts become known or the final recovery included in the claim settlement varies from the estimate, the impact of the change will be reflected in the financial statements at that time.

Honeywell Street/Queens Boulevard Bridges Matter

In 1999, the Company was awarded a contract for reconstruction of the Honeywell Street/Queens Boulevard Bridges (the “Project”) for the City of New York (the “City”).  In June 2003, after substantial completion of the Project, the Company initiated an action to recover $8.75 million in claims from the City on behalf of itself and its subcontractors. In February 2010, the Company initiated a second action in the Supreme Court of the State of New York to recover an additional $0.7 million in claims against the City for unpaid retention.  On March 18, 2010, the City filed counterclaims for $74.6 million and other relief, alleging fraud in connection with the Disadvantaged Business Enterprise (“DBE”) requirements for the Project. On May 18, 2010, the Company served the City with its r esponse to the City’s counterclaims and affirmative defenses.   No trial date has been set.

The Company does not expect this matter to have any material adverse effect on its consolidated financial statements.

Westgate Planet Hollywood Matter

Tutor-Saliba Corporation, a wholly owned subsidiary of the Company, contracted to construct a time share development in Las Vegas (the “Project”) which was substantially completed on December 11, 2009.  The Company’s claims against the owner, Westgate Planet Hollywood Las Vegas, LLC (“WPH”), relate to unresolved owner change orders and other claims.  The Company filed a lien on the project on April 8, 2010 in the amount of $19.3 million, and filed its complaint on May 10, 2010 with the District Court, Clark County, Nevada.  Included in the Company’s receivables are pass throughsubcontractor billings for contract work and retention of approximately $11.2 million. Several subcontractors have also recorded liens, some of which have been released by bonds and some of which have been released as a result of subsequent payment.

Management has made an estimate of the total anticipated recovery on this project and it is included in revenue recorded to date.  To the extent new facts become known or the final recovery included in the claim settlement varies from the estimate, the impact of the change will be reflected in the financial statements at that time.

(7) Common Stock Repurchase Program

On March 19, 2010, the Company’s Board of Directors extended a program to repurchase up to $100 million of the Company’s Common Stock through March 31, 2011.  Under the terms of the program, the Company may repurchase shares in open market purchases or through privately negotiated transactions. The Company expects to use cash on hand to fund repurchases of its Common Stock.  Stock repurchases will be conducted in compliance with the safe harbor provisions of Rule 10b-18 under the Securities Exchange Act of 1934, as amended.  The timing and amount of any repurchase will be based on management’s evaluation of market conditions, business considerations and other factors.  Repurchases also may be made under a 10b5-1 plan which permits Common Stock to be purchased when the Company wo uld otherwise be prohibited from doing so under insider trading laws.

The share repurchase program does not obligate the Company to repurchase any dollar amount or number of shares of its Common Stock and the program may be extended, modified, suspended or discontinued at any time, at the Company’s discretion.  During the three month period ended June 30, 2010 the Company repurchased 617,091 shares under the program for an aggregate purchase price of $11.2 million.  There were no repurchases made during 2009 or the three month

16

TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(continued)

(7) Common Stock Repurchase Program (continued)

period ended March 31, 2010.  There was $57 million remaining under the program as of June 30, 2010. Subsequent to June 30, 2010 and through the date of this report, the Company repurchased 1,547,749 shares under a 10b5-1 plan adopted by the Company on July 18, 2010, for an aggregate purchase price of $28.2 million, leaving $28.8 million remaining under the program.

(8) Stock-Based Compensation

For the three and six month periods ended June 30, 2010, the Company recognized total compensation expense of $3.6 million and $7.5 million, respectively, related to stock-based compensation awards, which is included in General and Administrative Expenses in the Consolidated Condensed Statements of Income.

Restricted Stock Awards

Restricted stock awards generally vest subject to the satisfaction of service requirements or the satisfaction of both service requirements and achievement of certain pre-established pre-tax income performance targets.  Upon vesting, each award is exchanged for one share of the Company’s Common Stock.  As of June 30, 2010, the Compensation Committee has approved the grant of an aggregate of 3,767,500 restricted stock awards to eligible participants.

During the six month period ended June 30, 2010, the Compensation Committee approved the award of 25,000 restricted stock awards, including 16,667 restricted stock awards for which a grant date fair value cannot be determined currently because the related performance targets for future years have not yet been established.  The Compensation Committee also established the respective pre-tax income performance targets for the second tranche of 150,000 restricted stock awards awarded during the second quarter of 2009 and 50,000 restricted stock awards awarded during the third quarter of 2009.  The grant date fair value is determined based on the closing price of the Company’s Common Stock on the date the awards were made by the Compensation Committee or on the date the performance criteria is determined, where app licable.

For the three and six month periods ended June 30, 2010, the Company recognized compensation expense of $2.7 million and $5.5 million, respectively, related to restricted stock awards.  As of June 30, 2010 there was $17.1 million of unrecognized compensation cost related to the unvested awards which, absent significant forfeitures in the future, is expected to be recognized over a weighted average period of approximately 2.9 years. A summary of restricted stock awards activity under the Plan for the six months ended June 30, 2010 is as follows:

				Weighted Average		Aggregate
	Number			Grant Date		Intrinsic
	of Shares			Fair Value		Value
Granted and Unvested - January 1, 2010		1,717,501		$	24.05	$	31,052,418
Vested		(610,001	)		19.09		11,644,919
Granted		208,333			20.44		3,433,328
Forfeited		(25,000	)		26.19		-
Total Granted and Unvested		1,290,833			21.42		21,272,928
Approved for grant		516,667		(a)			8,514,672
Total Awarded and Unvested - June 30, 2010		1,807,500		n.a.			29,787,600

The outstanding unvested awards at June 30, 2010 are scheduled to vest as follows, subject where applicable to the achievement of performance targets.  As described above, certain performance targets are not yet established.

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TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(continued)

(8) Stock-Based Compensation (continued)

(a) Grant date fair value cannot be determined currently because the related performance targets for future years have not yet been established by the Compensation Committee.

	Number
Vesting Date	of Awards
2010	50,000
2011	233,333
2012	233,333
2013	1,140,834
2014	150,000
Total	1,807,500

Approximately 100,000 of the unvested awards will vest based on the satisfaction of service requirements and 1,707,500 will vest based on the satisfaction of both service requirements and the achievement of pre-tax income performance targets.

Stock Options

There were no stock options granted during the six months ended June 30, 2010; however, the Compensation Committee did establish the respective pre-tax income performance target for the second tranche of 150,000 stock options awarded during the second quarter of 2009.  The exercise price of the options previously awarded is equal to the closing price of the Company’s Common Stock on the date the awards were made by the Compensation Committee.  The options expire on May 28, 2019.

For the three and six month periods ended June 30, 2010, the Company recognized compensation expense of $0.9 million and $2.0 million, respectively, related to stock option grants.  As of June 30, 2010, there was $6.6 million of unrecognized compensation expense related to the outstanding options which, absent significant forfeitures in the future, is expected to be recognized over a weighted average period of approximately 3.0 years. A summary of stock option activity under the Plan for the six months ended June 30, 2010 is as follows:

				Weighted Average
	Number			Grant Date		Exercise
	of Shares			Fair Value		Price
Total Awarded and Outstanding - January 1, 2010		935,000		$	11.42	$	20.51
Granted		150,000			9.79		20.44
Forfeited		(25,000	)		14.84		26.19
Total Granted and Outstanding		1,060,000			11.11		20.36
Approved for grant		450,000		(a)			20.33
Total Awarded and Outstanding - June 30, 2010		1,510,000		n.a.			20.35

(a) Grant date fair value cannot be determined currently because the related performance targets for future years have not yet been established by the Compensation Committee.

The outstanding options had an intrinsic value of $1.3 million and a weighted average remaining contractual life of 8.4 years at June 30, 2010.  There were 150,000 options exercisable at June 30, 2010.

The fair value of the second tranche of the 2009 awards was determined using the Black-Scholes-Merton option pricing model using the following key assumptions:

18

TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(continued)

(8) Stock-Based Compensation (continued)

Risk-free interest rate	2.65%
Expected life of options	5.7 years
Expected volatility of underlying stock	48.38%
Expected quarterly dividends (per share)	$0.00

(9) Financial Commitments

On September 8, 2008, the Company entered into a Third Amended and Restated Credit Agreement (the “Credit Agreement”). The Credit Agreement was amended by a Joinder Agreement dated February 13, 2009, executed by Daniel J. Keating Company, by a First Amendment dated as of February 23, 2009 and by a Second Amendment dated January 13, 2010 (collectively, the “Amended Credit Agreement”).   The Amended Credit Agreement allows the Company to borrow up to $205 million on a revolving credit basis (the “Revolving Facility”), with a $50 million sublimit for letters of credit, and an additional $107 million under a supplementary facility (the “Supplementary Facility”) to the extent that the $205 million base facility has been fully drawn.  Subject to certain conditions, the Company has the option to increase the base facility by up to an additional $45 million. In addition, the Amended Credit Agreement provides that the Supplementary Facility shall be reduced upon the sale of all or any portion of the $107 million face value of auction rate securities held in the Company’s investment portfolio as of January 13, 2010.  Subsequent to January 13, 2010 but prior to June 30, 2010, the Company sold auction rate securities with a face value in the amount of $0.5 million.  Subsequent to June 30, 2010 the Company sold $0.4 million.   Any outstanding loans under the Revolving Facility mature on February 22, 2012 unless extended pursuant to the terms of the Amended Credit Agreement.  On July 16, 2010 the Company extended the maturity date of the Supplemental Facility such that any outstanding loans mature on February 22, 2012, coterminous with the Revolving Facility.

The Amended Credit Agreement requires the Company to comply with certain financial and other covenants including minimum net worth, minimum asset coverage, minimum fixed charge coverage and maximum leverage ratios.  The Company was in compliance with the covenants of the Amended Credit Agreement as of June 30, 2010.

In March 2010, the Company obtained three loans totaling $9.4 million, which are collateralized by construction equipment owned by the Company.  The terms of the loans include equal monthly installments inclusive of principal and interest at an interest rate of 4.25% payable over a five-year period, which began in April 2010.

During the second quarter of 2010, the Company obtained a loan for $2.1 million, collateralized by construction equipment.  The terms of the loan include equal monthly installments inclusive of principal and interest at an interest rate of 4.25% payable over a five-year period, which began in May 2010.  The Company obtained a second loan for $3.3 million which was used to finance insurance-related obligations.  The terms of the loan include equal monthly installments inclusive of principal and interest at an interest rate of 3.48% over a 12 month term, which began in June 2010.

The Company had no outstanding borrowings under its available revolving credit facilities as of June 30, 2010 and December 31, 2009.  The Company utilized the revolving credit facility for letters of credit in aggregate amounts of $0.2 million and $20.5 million as of June 30, 2010 and December 31, 2009, respectively.  Accordingly, at June 30, 2010, the Company had $311.4 million available to borrow under the Amended Credit Agreement, including the Supplementary Facility.

19

TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(continued)

(10) Earnings per Common Share

Basic earnings per common share were computed by dividing net income by the weighted average number of common shares outstanding.  Diluted earnings per common share was similarly computed after giving consideration to the dilutive effect of stock options and restricted stock awards outstanding on the weighted average number of common shares outstanding. The computation of diluted earnings per common share for the three and six month periods ended June 30, 2010 excludes the antidilutive effect of 585,000 stock options.  There were 1,467,500 antidilutive securities for the three and six month periods ended June 30, 2009, which consisted of restricted stock awards and stock options.

(11) Business Segments

The following tables set forth certain business segment information relating to the Company’s operations for the three and six month periods ended June 30, 2010 and 2009 (in thousands):

	Three Months Ended June 30, 2010					Three Months Ended June 30, 2009
	Revenues		Income from Construction Operations			Revenues		Income from Construction Operations
Building	$	663,157	$	29,686		$	1,215,982	$	38,153
Civil		197,431		29,720			97,229		21,688
Management Services		53,788		6,848			69,537		14,196
		914,376		66,254			1,382,748		74,037
Corporate *		-		(10,403	)		-		(10,277	)
Total	$	914,376	$	55,851		$	1,382,748	$	63,760

	Six Months Ended June 30, 2010					Six Months Ended June 30, 2009
	Revenues		Income from Construction Operations			Revenues		Income from Construction Operations
Building	$	1,349,441	$	61,996		$	2,558,919	$	81,418
Civil		322,091		38,010			186,574		34,399
Management Services		107,919		9,941			155,537		29,841
		1,779,451		109,947			2,901,030		145,658
Corporate *		-		(19,939	)		-		(19,264	)
Total	$	1,779,451	$	90,008		$	2,901,030	$	126,394

* Consists primarily of corporate general and administrative expenses.

(12) Employee Pension Plans

The Company has a defined benefit pension plan and an unfunded supplemental retirement plan.  Effective June 1, 2004, all benefit accruals under the Company’s pension plan were frozen; however, the current vested benefit was preserved.  The pension disclosure presented below includes aggregated amounts for both of the Company’s plans. The following table sets forth the net periodic benefit cost by component for the three and six month periods ended June 30, 2010 and 2009 (in thousands):

20

TUTOR PERINI CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(continued)

(12) Employee Pension Plans (continued)

	Three Months								Six Months
	Ended June 30,								Ended June 30,
	2010				2009				2010			2009
Interest cost		$	1,139			$	1,162		$	2,279		$	2,324
Expected return on plan assets			(1,241	)			(1,219	)		(2,483	)		(2,438	)
Amortization of net loss			612				473			1,224			946
Net periodic benefit cost		$	510			$	416		$	1,020		$	832

The Company contributed $0.5 million and $0.6 million to its defined benefit pension plan in January 2010 and April 2010, respectively. The Company expects to contribute an additional $2.4 million to its defined benefit pension plan during the remainder of fiscal year 2010.

(13) Related Party Transactions

The Company leases certain facilities from Ronald N. Tutor, the Company’s Chairman and Chief Executive Officer, and an affiliate owned by Mr. Tutor under non-cancelable operating lease agreements with monthly payments of $0.2 million, which increase at 3% per annum beginning August 1, 2009 and expire on July 31, 2016.  Lease expense for these leases, recorded on a straight-line basis, was $1.2 million for each of the six month periods ended June 30, 2010 and June 30, 2009 and $0.6 million for each of the three month periods ended June 30, 2010 and June 30, 2009.

The Vice Chairman of O&G Industries, Inc. (“O&G”) is a director of the Company.  O&G has participated in joint ventures with the Company which have all been substantially completed.  The Company’s share of revenues related to these joint ventures amounted to $6 thousand (or less than 1%) and $0.8 million (or less than 1%) for the six months ended June 30, 2010 and 2009, respectively, and $0 and $0.1 million for the three months ended June 30, 2010 and 2009, respectively. O&G’s cumulative holdings of the Company’s stock as of June 30, 2010 and June 30, 2009 were 600,000 shares, or 1.23% of total common shares outstanding at June 30, 2010.

21

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discusses our financial position at June 30, 2010, and the results of our operations for the three and six month periods ended June 30, 2010, and should be read in conjunction with: (1) the unaudited consolidated condensed financial statements and notes contained herein, and (2) the consolidated financial statements and accompanying notes to our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

Overview

We were incorporated in 1918 as a successor to businesses that had been engaged in providing construction services since 1894.  We provide diversified general contracting, construction management and design-build services to private clients and public agencies throughout the world.  Our construction business is conducted through three basic segments:  Civil, Building, and Management Services.  Our Civil segment specializes in public works construction and the repair, replacement and reconstruction of infrastructure, including highways, bridges, mass transit systems and water and wastewater treatment facilities.  Our Building segment has significant experience providing services to a number of specialized building markets, including the hospitality and gaming, transportation, healthcare, municipal offices, sports and entertainment, educational, correctional facilities, biotech, pharmaceutical and high-tech markets, electrical and mechanical, plumbing and HVAC services.  Our Management Services segment provides diversified construction and design-build services to the U.S. military and federal government agencies, as well as surety companies and multi-national corporations in the United States and overseas.

The contracting and management services that we provide consist of general contracting, pre-construction planning and comprehensive management services, including planning and scheduling the manpower, equipment, materials and subcontractors required for the timely completion of a project in accordance with the terms and specifications contained in a construction contract.  We also offer self-performed construction services including site work, concrete forming and placement, steel erection, electrical and mechanical, plumbing and HVAC.  We provide these services by using traditional general contracting arrangements, such as fixed price, guaranteed maximum price, cost plus fee contracts and construction management or design-build contracting arrangements.  In the ordinary course of our business, we enter in to arrangements with other contractors, referred to as “joint ventures” for certain construction projects.  Each of the joint venture participants is usually committed to supply a predetermined percentage of capital, as required, and to share in a predetermined percentage of the income or loss of the project.  Generally, each joint venture participant is fully liable for the obligations of the joint venture.

Our operating results for the three months ended June 30, 2010 reflect the execution of our strategy to increase focus on higher margin public works projects in our Civil and Building segments.  Operating profit margins during the second quarter of 2010 are up from the same period in 2009, reflecting the shift in  mix of our active projects.  During the second quarter of 2010, we had an increasing number of projects under construction in our Civil segment, which contributed a growing share of income from construction operations. Our Building segment operating results reflect the substantial completion of large hospitality and gaming work in December 2009.  Our Management Services segment continues its focus on new U.S. military work that could enter our backlog this year.

Recent Developments

Extended Maturity Date of Supplemental Facility

On July 16, 2010 we entered into an Extension of the Supplemental Facility under the Third Amended and Restated Credit Agreement (the “Amended Credit Agreement”).  This extension redefines the maturity date of the Supplemental Facility such that any outstanding loans mature on February 22, 2012, coterminous with our revolving credit facility.   For a description of additional material terms of the Amended Credit Agreement, see Note 9 of Notes to Consolidated Condensed Financial Statements entitled “Financial Commitments”.

22

Common Stock Repurchase Program

On March 19, 2010, our Board of Directors extended the Common Stock repurchase program put into place on November 13, 2008.  The program allows us to repurchase up to $100 million of our Common Stock through March 31, 2011. Under the terms of the program, we may repurchase shares in open market purchases or through privately negotiated transactions. The timing and amount of any repurchase will be based on our evaluation of market conditions, business considerations and other factors.  We expect to use cash on hand to fund repurchases of our Common Stock. Stock repurchases will be conducted in compliance with the safe harbor provisions of Rule 10b-18 under the Securities Exchange Act of 1934, as amended. Repurchases also may be made under a 10b5-1 plan, which permits Common Stock to be purchased when we would otherwi se be prohibited from doing so under insider trading laws. The share repurchase program does not obligate us to repurchase any dollar amount or number of shares of our Common Stock, and the program may be extended, modified, suspended or discontinued at any time, at our discretion.  During the three month period ended June 30, 2010 we repurchased 617,091 shares under the program for an aggregate purchase price of $11.2 million. There were no repurchases made during 2009 or the three month period ended March 31, 2010.  There was $57 million remaining under the program as of June 30, 2010. Subsequent to June 30, 2010 and through the date of this report, we repurchased 1,547,749 shares under a 10b5-1 plan adopted by the Company on July 18, 2010, for an aggregate purchase price of $28.2 million, leaving approximately $28.8 million remaining under the program.

Backlog of $4.3 Billion

Our backlog of uncompleted construction work at June 30, 2010 and December 31, 2009 was approximately $4.3 billion. As anticipated, during the second quarter of 2010 we converted a number of pending awards into backlog across all of our business segments.  Additions to new work during the second quarter of 2010 include approximately $1.0 billion in our Building segment, $291 million in our Civil segment and $90 million in our Management Services segment. New awards in the Building segment include a $480 million courthouse in San Diego and a $300 million hospital in northern California. New awards in the Civil segment include the rehabilitation of the Tappan Zee Bridge and the New Irvington Tunnel amounting to $149 million and $91 million, respectively, while new awards in the Management Services segment include $81 million of runway paving work at Andrews Air Force Base in Maryland. In addition, we have pending awards and prospects for both public and private sector customers that could enter backlog in the near future.

(dollars in millions)	Backlog at December 31, 2009		New Business Awarded		Revenues Recognized			Backlog at June 30, 2010
Six months ended
Building	$	3,125.8	$	1,278.4	$	(1,349.4	)	$	3,054.8
Civil		1,001.5		362.7		(322.1	)		1,042.1
Management  Services		182.9		119.6		(107.9	)		194.6
Total	$	4,310.2	$	1,760.7	$	(1,779.4	)	$	4,291.5

Critical Accounting Policies

Our significant accounting policies are described in Note 1 of Notes to Consolidated Condensed Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.  Our critical accounting policies are also identified and discussed in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2009.  We have made no significant changes to these policies during the six month period ended June 30, 2010.

Impairment of Goodwill and Other Intangible Assets – On a quarterly basis we consider whether events or changes in circumstances indicate that assets, including goodwill and intangible assets not subject to amortization, might be impaired.  In conjunction with this analysis, we evaluate whether our current market capitalization is less than our stockholders’ equity and specifically consider (1) the duration and severity of any decline in market capitalization, (2) a reconciliation of the implied control premium to a current market control premium, (3) target price assessments by third party analysts and (4) how current market conditions impact our forecast of future cash flows.  We also update our

23

assessment of the fair value of each of our reporting units, considering whether our current forecast of future cash flows are in line with those used in our most recent annual impairment assessment and whether there are any significant changes in trends or any other material assumption used.  As of June 30, 2010 we have concluded that we do not have an impairment indicator and that the estimated fair value of each reporting unit substantially exceeds its carrying value.

In January 2010, the FASB issued a staff position amending existing guidance for fair value measurements and disclosures in both interim and annual financial statements.  This update requires new disclosures on significant transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy (including the reasons for these transfers) and the reasons for any transfers in or out of Level 3. It also requires a reconciliation of recurring Level 3 measurements and clarifies certain existing disclosure requirements for reporting fair value disaggregated by class of assets and liabilities rather than each major category of assets and liabilities. This update is effective for us with the interim and annual reporting period beginning January 1, 2010, except for the requirement to provide the Level 3 activity of purchases, sales, issuances, and settlements on a gross basis, which will become effective for us with the interim and annual reporting period beginning January 1, 2011. We will not be required to provide the amended disclosures for any previous periods presented for comparative purposes. Other than requiring additional disclosures, adoption of this update has not and will not have a material effect on our consolidated financial statements.

Results of Operations

Our operating results decreased during the first six months of 2010 as a result of the substantial completion of large hospitality and gaming work in 2009 and the continued sluggishness in the overall economy.  The first quarter of 2010 was the first full quarter of operating results following the completion of significant integration and organizational changes, initiated following our merger with Tutor-Saliba Corporation in 2008, which have established a foundation for long-term success as a more diversified general contractor with greater emphasis on public works projects in our Civil segment and self-performing a greater level of work in our Building segment.  The increase in operating profit margins during the second quarter of 2010 reflects the shift in mix of our active projects.

Comparison of the Second Quarter Ended June 30, 2010 with the Second Quarter Ended June 30, 2009

For the three month period ended June 30, 2010, we recorded Revenues of $914.4 million, Income from Construction Operations of $55.9 million and Net Income of $32.7 million. Diluted earnings per common share were $0.66for the secondquarter of 2010, compared to $0.79for the secondquarter of 2009.

	Revenues for the
	Three Months Ended June 30,
(dollars in millions)	2010			2009			$ Change				% Change
Building		$	663.2		$	1,216.0		$	(552.8	)		(45.5	%)
Civil			197.4			97.2			100.2			103.1	%
Management Services			53.8			69.5			(15.7	)		(22.6	%)
Total		$	914.4		$	1,382.7		$	(468.3	)		(33.9	%)

Overall Revenues decreased by $468.3 million (or 33.9%), from $1,382.7 million in 2009 to $914.4 million in 2010. This decrease was due primarily to a $552.8 million (or 45.5%) decrease in our Building segment revenues, from $1,216.0 million in 2009 to $663.2 million in 2010, resulting from the substantial completion of the CityCenter project in December 2009,  which contributed approximately $580 million of revenues to the Building segment during the three month period ended June 30, 2009, as well as other declines in revenues in the hospitality and gaming and private nonresidential building markets due to continued financing challenges facing some of our customers in our Building segment. Civil segment revenues increased by $100.2 million (o r 103.1%), from $97.2 million in 2009 to $197.4 million in 2010, due to an increased number of projects under construction in the metropolitan New York area which were awarded during 2009. Management Services segment revenues decreased by $15.7 million (or 22.6%), from $69.5 million in 2009 to $53.8 million in 2010, due primarily to the completion of several overhead coverage system projects in Iraq and an airport facility in Guam.

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	Income from Construction
	Operations for the
	Three Months Ended June 30,
(dollars in millions)	2010				2009				$ Change				% Change
Building		$	29.7			$	38.2			$	(8.5	)		(22.3	%)
Civil			29.7				21.7				8.0			36.9	%
Management Services			6.9				14.2				(7.3	)		(51.4	%)
Corporate			(10.4	)			(10.3	)			(0.1	)		1.0	%
Total		$	55.9			$	63.8			$	(7.9	)		(12.4	%)

Overall Income from Construction Operations decreased by $7.9 million (or 12.4%), from $63.8 million in the second quarter of 2009 to $55.9 million in the second quarter of 2010, due primarily to decreases in our Building and Management Services segments which were partly offset by an increase in our Civil segment. Building segment income from construction operations decreased by $8.5 million (or 22.3%), from $38.2 million in the second quarter of 2009 to $29.7 million in the second quarter of 2010, due primarily to the substantial completion of the CityCenter project in December 2009, as well as the completion of several other large projects in the hospitality and gaming and private nonresidential building markets in Las Vegas, California and Pennsylvania. However, our Building segment achieved an increase in operating margin due to a higher mix of public works projects in 2010 and by increasing the amount of our self-performed work. Civil segment income from construction operations increased by $8.0 million (or 36.9%), from $21.7 million in the second quarter of 2009 to $29.7 million in the second quarter of 2010, due primarily to the increase in revenues discussed above.  This increase was partially offset by favorable performance in the second quarter of 2009, as compared to the second quarter of 2010, on several projects in metropolitan New York and California that reached substantial completion in 2009.  Management Services income from construction operations decreased by $7.3 million (or 51.4%), from $14.2 million in the second quarter of 2009 to $6.9 million in the second quarter of 2010, due primarily to the decrease in revenues discussed above and favorable performance in the second quarter of 2009 upon substantial completion of several overhead coverage system projects in Iraq and an airport facility in Guam .

Consolidated Other Income, Interest Expense and Provision for Income Taxes

(dollars in millions)	June 30, 2010			June 30, 2009		$ Change			% Change
Three months ended
Other Income (Expense), net	$	(1.1	)	$	0.6	$	(1.7	)	n.a.
Interest Expense		3.2			2.9		0.3			10.3	%
Provision for Income Taxes		18.8			22.6		(3.8	)		(16.8	%)

On a consolidated basis, Other Income (Expense), net decreased by $1.7 million, from income of $0.6 million in 2009 to expense of $1.1 million in 2010. This decrease was primarily due to a decrease in interest income on our cash investments due to a lower average investment balance during 2010 as compared to 2009 and a charge recorded in 2010 to adjust our auction rate securities to their fair value.  In addition, amortization of deferred debt increased due to costs related to the amendment of our credit agreement in January 2010. Consolidated Interest Expense increased by $0.3 million (or 10.3%), from $2.9 million in 2009 to $3.2 million in 2010.  This increase was primarily due to non-cash interest recorded in 2010 associated with adjusting our mineral royalties payable to its present value, offset by a reduc tion in interest expense due to not borrowing under our credit facility during 2010 as compared to 2009 and a non-recurring interest charge recorded in 2009.  Our consolidated Provision for Income Taxes decreased by $3.8 million (or 16.8%), from $22.6 million in 2009 to $18.8 million in 2010, due primarily to the decrease in pretax income between the periods.

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Comparison of the Six Months Ended June 30, 2010 with the Six Months Ended June 30, 2009

For the six month period ended June 30, 2010, we recorded Revenues of $1,779.4 million, Income from Construction Operations of $90.0 million and Net Income of $53.7 million. Diluted earnings per common share were $1.09for the first six months of 2010, compared to $1.59for the first six months of 2009.

	Revenues for the
	Six Months Ended June 30,
(dollars in millions)	2010			2009			$ Change				% Change
Building		$	1,349.4		$	2,558.9		$	(1,209.4	)		(47.3	%)
Civil			322.1			186.6			135.5			72.6	%
Management Services			107.9			155.5			(47.6	)		(30.6	%)
Total		$	1,779.4		$	2,901.0		$	(1,121.5	)		(38.7	%)

Overall Revenues decreased by $1,121.5 million (or 38.7%), from $2,901.0 million in 2009 to $1,779.4 million in 2010. This decrease was due primarily to a $1,209.4 million decrease in our Building segment revenues, from $2,558.9 million in 2009 to $1,349.4 million in 2010, resulting from the substantial completion of the CityCenter project in December 2009, which contributed approximately $1.2 billion of revenues to the Building segment during the six month period ended June 30, 2009, as well as other declines in revenues in the hospitality and gaming and private nonresidential building markets due to continued financing and economic challenges arising from the current state of the global economy. Civil segment revenues increased by $135.5 million (or 72.6%), from $186.6 million in 2009 to $322.1 million in 2010, due to an increased nu mber of projects under construction in the metropolitan New York area which were awarded during 2009. Management Services segment revenues decreased by $47.6 million (or 30.6%), from $155.5 million in 2009 to $107.9 million in 2010, due primarily to the completion of several overhead system projects in Iraq and an airport facility in Guam.

	Income from Construction
	Operations for the
	Six Months Ended June 30,
(dollars in millions)	2010				2009				$ Change				% Change
Building		$	62.0			$	81.4			$	(19.4	)		(23.8	%)
Civil			38.0				34.4				3.6			10.5	%
Management Services			9.9				29.9				(20.0	)		(66.9	%)
Corporate			(19.9	)			(19.3	)			(0.6	)		3.1	%
Total		$	90.0			$	126.4			$	(36.4	)		(28.8	%)

Overall Income from Construction Operations decreased by $36.4 million (or 28.8%), from $126.4 million in 2009 to $90.0 million in 2010, due primarily to decreases in our Building and Management Services segments. Building segment income from construction operations decreased by $19.4 million (or 23.8%), from $81.4 million in 2009 to $62.0 million in 2010, due primarily to the substantial completion of the CityCenter project in December 2009, as well as the completion of several other large projects in the hospitality and gaming and private nonresidential building markets in Las Vegas, California and Pennsylvania. However, our Building segment achieved an increase in operating margin due to a higher mix of public works projects in 2010 and by increasing the amount of our self-performed work.  We are positioned to continue to improve our operating margins through an increased mix of public works projects, which are predominantly performed under fixed price contracts, and through performing a higher level of self-performed work. Civil segment income from construction operations increased by $3.6 million (or 10.5%), from $34.4 million in 2009 to $38.0 million in 2010, due primarily to the increase in revenues discussed above.  This increase was partially offset by favorable performance in the second quarter of 2009, as compared to the second quarter 2010, on several projects in metropolitan New York and California that reached substantial completion in 2009 and an under absorption of general and administrative expenses in the early part of 2010 largely related to timing in the start-up of new work.  Management

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Services income from construction operations decreased by $20.0 million (or 66.9%), from $29.9 million in 2009 to $9.9 million in 2010, due primarily to the decrease in revenues discussed above and favorable performance achieved in 2009 upon substantial completion of several overhead coverage system projects in Iraq and an airport facility in Guam.

Consolidated Other Income, Interest Expense and Provision for Income Taxes

(dollars in millions)	June 30, 2010			June 30, 2009		$ Change			% Change
Six months ended
Other Income (Expense), net	$	(0.7	)	$	1.9	$	(2.6	)	n.a.
Interest Expense		4.8			4.1		0.7			17.1	%
Provision for Income Taxes		30.8			46.3		(15.5	)		(33.5	%)

On a consolidated basis, Other Income (Expense), net decreased by $2.6 million, from income of $1.9 million in 2009 to expense of $0.7 million in 2010, primarily due to a decrease in interest income on our cash investments due to a lower average investment balance during 2010 as compared to 2009 and a charge recorded in 2010 to adjust our auction rate securities to their fair value.  In addition, amortization of deferred debt increased due to costs related to the amendment of our credit agreement in January 2010. Consolidated Interest Expense increased by $0.7 million (or 17.1%), from $4.1 million in 2009 to $4.8 million in 2010, primarily due to non-cash interest recorded in 2010 associated with adjusting our mineral royalties payable to its present value, partly offset by a reduction in interest expense due to not borr owing under our credit facility during 2010 as compared to 2009 and a non-recurring interest charge recorded in 2009.  Our consolidated Provision for Income Taxes decreased by $15.5 million (or 33.5%), from $46.3 million in 2009 to $30.8 million in 2010, due primarily to the decrease in pretax income in the first six months of 2010 as compared to the first six months of 2009.

Liquidity and Capital Resources

Cash and Working Capital

At June 30, 2010 and December 31, 2009, cash held by us and available for general corporate purposes was $284.4 million and $323.9 million, respectively.  Our proportionate share of cash held by joint ventures and available only for joint venture-related uses, including distributions to joint venture partners was $18.8 million and $24.4 million, respectively, and our Restricted Cash was $23.5 million and $0, respectively.

A summary of cash flows for each of the six month periods ended June 30, 2010 and 2009 is set forth below:

	Six Months Ended June 30,
(dollars in millions)	2010			2009
Cash flows from:
Operating activities	$	12.7		$	(40.6	)
Investing activities		(37.6	)		(21.9	)
Financing activities		(20.2	)		127.2
Net (decrease) increase in cash		(45.1	)		64.7
Cash at beginning of year		348.3			386.2
Cash at end of period	$	303.2		$	450.9

During the first six months of 2010, we generated $12.7 million in cash from operating activities as the volume of work under construction in our Civil segment increased, which had a significant positive impact on our cash flow. Our Building segment cash flow from operations was negatively impacted by increased receivables on the CityCenter project. We used $37.6 million in cash to fund investing activities, principally for Restricted Cash of $23.5 million to secure insurance-related contingent obligations, such as insurance claim deductibles, in lieu of utilizing letters of credit. In addition, we used cash to purchase construction equipment and to fund the deferred purchase price of certain acquisitions made in prior years. We also used $20.2 million in cash to fund financing activities, primarily for the repurchase of shares of our Com mon Stock for an aggregate purchase price of $11.2

27

million in accordance with our previously announced share repurchase program, and for the net reduction of $7.5 million in debt.

Working capital increased by $41.6 million, from $303.1 million at the end of 2009 to $344.7 million at June 30, 2010. The current ratio increased from 1.23x at December 31, 2009 to 1.26x at June 30, 2010.

Long-term Investments

At June 30, 2010, we had investments in auction rate securities of $100.3 million, which are reflected at fair value. These investments are considered to be “available-for-sale” and are classified as Long-term Investments. Our investment policy is to manage our assets to achieve our goals of preserving principal, maintaining adequate liquidity at all times, and maximizing returns subject to our investment guidelines. The current overall liquidity concerns in capital markets have affected our ability to liquidate many of our investments in auction rate securities. Based on our ability to access our cash equivalent investments and our available Revolving Facility and Supplementary Facility, we do not expect that the short-term lack of liquidity of our auction rate security investments will materially affect our overall liquid ity position or our ability to execute our current business plan.

Debt

We had no outstanding borrowings under our Revolving Facility or Supplementary Facility at June 30, 2010; however, we utilized the Revolving Facility for letters of credit in the amount of $0.2 million. Accordingly, at June 30, 2010, we had $311.4 million available to borrow under our Amended Credit Agreement, including the Supplementary Facility.

The Amended Credit Agreement requires us to comply with certain financial and other covenants including minimum net worth, minimum asset coverage, minimum fixed charge coverage and maximum leverage ratios.  We were in compliance with the covenants of the Amended Credit Agreement as of June 30, 2010.

Total debt at June 30, 2010 was $114.0 million, a decrease of $2.2 million from December 31, 2009, as an increase in debt due to financing the purchase of certain construction equipment was more than offset by repayments of outstanding borrowings.    As a result, our long-term debt to equity ratio decreased from 0.07 to 1.00 at December 31, 2009 to 0.06 to 1.00 at June 30, 2010.

Forward-looking Statements

The statements contained in this Management’s Discussion and Analysis of the Consolidated Condensed Financial Statements on Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including without limitation, statements regarding our management’s expectations, hopes, beliefs, intentions or strategies regarding the future.  These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effects on us.  There can be no assurance that future developments affecting us will be those that we have anticipated.  These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to:

· our ability to convert backlog into revenue;

· our ability to successfully and timely complete construction projects;

· the potential delay, suspension, termination or reduction in scope of a construction project;

· the continuing validity of the underlying assumptions and estimates of total forecasted project revenues, costs and profits and project schedules;

· the outcomes of pending or future litigation, arbitration or other dispute resolution proceedings;

· the availability of borrowed funds on terms acceptable to us;

· the ability to retain certain members of management;

· the ability to obtain surety bonds to secure our performance under certain construction contracts;

· possible labor disputes or work stoppages within the construction industry;

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· changes in federal and state appropriations for infrastructure projects;

· possible changes or developments in worldwide or domestic political, social, economic, business, industry, market and regulatory conditions or circumstances;

· actions taken or not taken by third parties including our customers, suppliers, business partners, and competitors and legislative, regulatory, judicial and other governmental authorities and officials; and

· other risks and uncertainties discussed under the heading “Risk Factors” in our Annual Report on

Form 10-K for the year ended December 31, 2009 filed with the Securities and Exchange Commission on March 1, 2010.

We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

There has been no material change in our exposure to market risk from that described in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2009.

Item 4.  Controls and Procedures

Disclosure Controls and Procedures

As required by Rule 13a-15(b) under the Securities Exchange Act of 1934 (the “Exchange Act”), as of the end of the period covered by this report, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). In designing and evaluating our disclosure controls and procedures, we recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and our management necessarily was required to apply its judgment in evaluating and implementing possible contr ols and procedures. The effectiveness of our disclosure controls and procedures is necessarily limited by the staff and other resources available to us and, although we have designed our disclosure controls and procedures to address the geographic diversity of our operations, this diversity inherently may limit the effectiveness of those controls and procedures. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decis ions regarding required disclosure.

Changes in Internal Controls Over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II. - Other Information

Item 1. Legal Proceedings

From time to time in the ordinary course of business, we are subject to claims, asserted or unasserted, or named as a party to lawsuits or investigations.  Litigation can be expensive and disruptive to normal business operations.  Moreover, the results of legal proceedings cannot be predicted with any certainty and, in the case of more complex legal proceedings, the results are difficult to predict at all.  We disclosed information about certain of our legal proceedings in Part I, Item 3 of our Annual Report on Form 10-K for the year ended December 31, 2009. For an update to those disclosures, see Note 6 of Notes to Consolidated Condensed Financial Statements.

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Item 1A.  Risk Factors

Information regarding risk factors affecting the Company’s business is discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.  There have been no material changes from those risk factors during 2010.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On March 19, 2010, the Company’s Board of Directors extended a program to repurchase up to $100 million of the Company’s Common Stock through March 31, 2011.  Under the terms of the program, the Company may repurchase shares in open market purchases or through privately negotiated transactions. The Company expects to use cash on hand to fund repurchases of its Common Stock.  Stock repurchases will be conducted in compliance with the safe harbor provisions of Rule 10b-18 under the Securities Exchange Act of 1934, as amended.  The timing and amount of any repurchase will be based on management’s evaluation of market conditions, business considerations and other factors.  Repurchases also may be made under a 10b5-1 plan, which permits Common Stock to be purchased when the Company w ould otherwise be prohibited from doing so under insider trading laws.

The share repurchase program does not obligate the Company to repurchase any dollar amount or number of shares of its Common Stock, and the program may be extended, modified, suspended or discontinued at any time, at the Company’s discretion.  During the three months ended June 30, 2010 the Company repurchased 617,091 shares under the program for an aggregate purchase price of $11.2 million.  There were no repurchases made during 2009 or the three months ended March 31, 2010.  There was $57 million remaining under the program as of June 30, 2010 as detailed in the table below:

				Total Number of		Approximate Dollar
	Total			Shares Purchased		Value of Shares that
	Number	Average		as Part of Publicly		May Yet Be Purchased
	of Shares	Price Paid		Announced Plans		Under the Plans or
Period	Purchased	Per Share		or Programs		Programs
April 1, 2010 – April 30 ,2010	None		-		-		$68,203,997
May 1, 2010 – May 31, 2010	None		-		-		$68,203,997
June 1, 2010 – June 30, 2010	617,091		$18.12		617,091		$57,003,590
Total	617,091		$18.12		617,091		$57,003,590

Item 3. Defaults Upon Senior Securities

 None.

Item 4. Removed and Reserved

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit 2.1 Agreement and Plan of Merger, dated as of April 2, 2008, by and among Perini Corporation, Trifecta Acquisition LLC, Tutor-Saliba Corporation, Ronald N. Tutor and shareholders of Tutor-Saliba Corporation signatory thereto (incorporated by reference to Exhibit 2.1 to Form 8-K filed on April 7, 2008).

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Exhibit 2.2	Amendment No. 1 to the Agreement and Plan of Merger, dated as of May 28, 2008, by and among Perini Corporation, Trifecta Acquisition LLC, Tutor-Saliba Corporation, Ronald N. Tutor and shareholders of Tutor-Saliba Corporation signatory thereto (incorporated by reference to Exhibit 2.2 to Form 10-Q filed on August 8, 2008).
Exhibit 3.1	Restated Articles of Organization (incorporated by reference to Exhibit 4 to Form S-2 (File No. 33-28401) filed on April 28, 1989).
Exhibit 3.2	Articles of Amendment to the Restated Articles of Organization of Perini Corporation (incorporated by reference to Exhibit 3.2 to Form S-1 (File No. 333-111338) filed on December 19, 2003).
Exhibit 3.3	Articles of Amendment to the Restated Articles of Organization of Perini Corporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on April 12, 2000).
Exhibit 3.4	Articles of Amendment to the Restated Articles of Organization of Perini Corporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on September 11, 2008).
Exhibit 3.5	Articles of Amendment to the Restated Articles of Organization of Perini Corporation (incorporated by reference to Exhibit 3.5 to Form 10-Q filed on August 10, 2009).
Exhibit 3.6	Second Amended and Restated By-laws of Tutor Perini Corporation (incorporated by reference to Exhibit 3.1 to Form 8-K filed on November 24, 2009).
Exhibit 10.1	Second Amendment dated January 13, 2010 to the Third Amended and Restated Credit Agreement among Tutor Perini Corporation, the subsidiaries of Tutor Perini identified therein, and Bank of America, N.A., and the other lenders that are parties thereto (incorporated by reference to Exhibit 10.1 to Form 8-K filed on January 21, 2010).
Exhibit 10.2	Extension of Supplemental Facility dated July 16, 2010 to the Third Amended and Restated Credit Agreement among Tutor Perini Corporation, the subsidiaries of Tutor Perini identified therein, and Bank of America, N.A., and the other lenders that are parties thereto – filed herewith.
Exhibit 31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – filed herewith.
Exhibit 31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – filed herewith.
*Exhibit 32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – filed herewith.
*Exhibit 32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – filed herewith.
Exhibit 99.1	Commercial Lease Agreement, dated as of November 1, 2005 by and among Krista Investments, Ltd. And Tutor-Saliba Corporation and applicable amendments – filed herewith.
Exhibit 99.2	Industrial Lease Agreement, dated as of June 10, 1987 by and among Ronald N. Tutor And Tutor-Saliba Corporation and applicable amendments – filed herewith.

* These certifications are being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and are not being filed as part of this Quarterly Report on Form 10-Q or as a separate disclosure document.

31

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Tutor Perini Corporation
	Registrant
Date:  August 5, 2010	/s/Kenneth R. Burk
	Kenneth R. Burk, Executive Vice President and Chief Financial Officer
	Duly Authorized Officer and Principal Financial Officer

32

EX-10.2

BANK OF AMERICA, N.A.

100 Federal Street

Boston, MA 02110

July 16, 2010

Tutor Perini Corporation

15901 Olden Street

Sylmar, CA 91342

Attention: William B. Sparks, Executive Vice President

Re: Third Amended and Restated Credit Agreement dated as of September 8, 2008

Extension of Supplemental Revolver

Dear Bill:

We refer to the Third Amended and Restated Credit Agreement dated as of September 8, 2008 (as amended to date, the "Credit Agreement") among Borrower, Guarantors, Agent and Lenders. Capitalized terms used and not otherwise defined herein shall have the meanings ascribed to such terms in the Credit Agreement.

This letter agreement will confirm our agreement that the defined term "Supplemental Revolver Maturity Date" appearing in Section 1.01 of the Credit Agreement is hereby amended in its entirety to read as follows:

"Supplemental Revolver Maturity" means February 22, 2012.

This letter agreement shall be effective as of the date the Agent receives (1) this letter agreement duly executed and delivered by Agent, the Required Lenders, and the Loan Parties and (2) all accrued fees, costs and expenses (including, without limitation, the reasonable costs and expenses of Agent's counsel) incurred by Arranger, Agent and Lenders in connection with this letter agreement and invoiced to Borrower.

Each Loan Party represents and warrants to Agent and the Lenders that: (a) such Loan Party has the full power and authority to execute, deliver and perform its respective obligations under the Credit Agreement, as amended by this letter agreement, (b) the execution and delivery  of this letter agreement has been duly authorized by all necessary action of the Board of Directors (or equivalent) of such Loan Party; (c) after giving effect to this letter agreement, the  representations and warranties contained or referred to in Article VI of the Credit Agreement are  true and accurate in all material respects as if such representations and warranties were being made as of the date of this letter agreement except to the extent that such representations and

Tutor Perini Corporation

July 16, 2010

Page 2

warranties specifically refer to an earlier date; and (d) after giving effect to the amendments to the Credit Agreement set forth herein, no Default or Event of Default has occurred and is continuing.

This letter agreement is executed as an instrument under seal and shall be governed by and construed in accordance with the laws of The Commonwealth of Massachusetts without regard to its conflicts of law rules. All parts of the Credit Agreement and any other Loan Document not affected by this letter agreement are hereby ratified and affirmed in all respects, provided that if any provision of the Credit Agreement shall conflict or be inconsistent with this  letter agreement, the terms of this letter agreement shall supersede and prevail. Upon the execution of this letter agreement, all references to the Credit Agreement in that document, or in any other Loan Document, shall mean the Credit Agreement as amended by this letter  agreement. Except as expressly provided in this letter agreement, the execution and delive ry of this letter agreement does not and will not amend, modify or supplement any provision of, or constitute a consent to or a waiver of any noncompliance with the provisions of the Credit Agreement, and, except as specifically provided in this letter agreement, the Credit Agreement shall remain in full force and effect. This letter agreement may be executed in one or more counterparts with the same effect as if the signatures hereto and thereto were upon the same instrument.

Sincerely,

BANK OF AMERICA, N.A., as Agent

By:   /s/Roberto Salazar

Name:  Roberto Salazar

Title:  Assistant Vice President

IN WITNESS WHEREOF, each of the undersigned, in accordance with Section 11.01of the Credit Agreement, has agreed to and accepted this letter agreement and caused it to be  executed and delivered by their respective duly authorized officers as of the date first written above.

	BORROWER:
WITNESS:	TUTOR PERINI CORPORATION, f/k/a Perini Corporation, a Massachusetts corporation
/s/John D. Barrett	By:  /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  EVP, Treasurer, Corp Secretary and Clerk

	GUARANTORS:
WITNESS:	PERINI BUILDING COMPANY, INC., an Arizona corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Treasurer, Secretary and Clerk

WITNESS:	PERINI ENVIRONMENTAL SERVICES, INC., a Delaware corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Treasurer, Secretary and Clerk

[Signature Page to Tutor Perini Letter Agreement]

WITNESS:	INTERNATIONAL CONSTRUCTION MANAGEMENT SERVICES, INC., a Delaware corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Treasurer, Secretary and Clerk

WITNESS:	PERINI MANAGEMENT SERVICES, INC., a Massachusetts corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Treasurer, Secretary and Clerk

WITNESS:	BOW EQUIPMENT LEASING COMPANY, INC., a New Hampshire corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Treasurer, Secretary and Clerk

WITNESS:	R.E. DAILEY & CO., a Michigan corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Treasurer, Secretary and Clerk

[Signature Page to Tutor Perini Letter Agreement]

WITNESS:	PERINI LAND AND DEVELOPMENT COMPANY, INC., a Massachusetts corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Treasurer, Secretary and Clerk

WITNESS:	PARAMOUNT DEVELOPMENT ASSOCIATES, INC., a Massachusetts corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Treasurer, Secretary and Clerk

WITNESS:	PERCON CONSTRUCTORS, INC., a Delaware corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Treasurer, Secretary and Clerk

WITNESS:	PERLAND CONSTRUCTION, INC., a West Virginia corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Treasurer, Secretary and Clerk

[Signature Page to Tutor Perini Letter Agreement]

WITNESS:	JAMES A. CUMMINGS, INC., a Florida corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Treasurer, Secretary and Clerk

WITNESS:	CHERRY HILL CONSTRUCTION, INC., a Maryland corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Treasurer, Secretary and Clerk

WITNESS:	RUDOLPH AND SLETTEN, INC., a California corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Treasurer, Secretary and Clerk

WITNESS:	TUTOR-SALIBA, LLC, a California limited liability company
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  SVP, CFO, Treasurer and Secretary

[Signature Page to Tutor Perini Letter Agreement]

WITNESS:	TUTOR-SALIBA CORPORATION, f/k/a Tutor-Saliba Builders, a California corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  SVP, CFO, Treasurer and Secretary

WITNESS:	POWERCO ELECTRIC CORP., a California corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Vice President, CFO and Secretary

WITNESS:	TUTOR HOLDINGS, LLC., a Delaware limited liability company
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Vice President, Secretary and Treasurer

WITNESS:	TUTOR PACIFIC CONSTRUCTION, LLC, a Delaware limited liability company
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Vice President, Secretary and Treasurer

[Signature Page to Tutor Perini Letter Agreement]

WITNESS:	TUTOR MICRONESIA CONSTRUCTION, LLC., a Delaware limited liability company
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Vice President, Secretary and Treasurer

WITNESS:	G.W. MURPHY CONSTRUCTION COMPANY, INC., a Hawaii corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Vice President, Secretary and Treasurer

WITNESS:	E.E. BLACK, LIMITED., a Hawaii corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Vice President, Secretary and Treasurer

WITNESS:	DESERT PLUMBING & HEATING CO., INC., a Nevada corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Vice President and Assistant Secretary

[Signature Page to Tutor Perini Letter Agreement]

WITNESS:	TUTOR INVESTMENTS, INC., a Nevada corporation
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Vice President, Secretary and Treasurer

WITNESS:	TPC AGGREGATES, LLC., a Nevada limited liability company
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Vice President, CFO and Assistant Secretary

WITNESS:	DANIEL J. KEATING CONSTRUCTION COMPANY, LLC., a Delaware limited liability company (successor by conversion to Daniel J. Keating Construction Company, a Pennsylvania corporation)
/s/John D. Barrett	By:   /s/William B. Sparks
John D. Barrett	Name:  William B. Sparks
Print Name	Title:  Treasurer and Corporate Secretary and Clerk

[Signature Page to Tutor Perini Letter Agreement]

LENDERS:

BANK OF AMERICA, N.A., as a Supplemental Revolver Lender and a Revolving Lender

By:  /s/Chris Busconi

Name:  Chris Busconi

Title:  Vice President

[Signature Page to Tutor Perini Letter Agreement]

BMO CAPITAL MARKETS FINANCING, INC., as a Revolving Lender

By:  /s/John Armstrong

Name:  John Armstrong

Title:  Director

[Signature Page to Tutor Perini Letter Agreement]

TD BANK, N.A., as a Revolving Lender

By:

Name:

Title:

[Signature Page to Tutor Perini Letter Agreement]

SOVEREIGN BANK, as a Revolving Lender

By:  /s/Greg Batsevitsky

Name:  Greg Batsevitsky

Title:  Senior Vice President

[Signature Page to Tutor Perini Letter Agreement]

COMERICA BANK, as a Revolving Lender

By:

Name:

Title:

[Signature Page to Tutor Perini Letter Agreement]

UNION BANK, N.A., as a Revolving Lender

By:  /s/Greg Plazula

Name:  Greg Plazula

Title:  Vice President

[Signature Page to Tutor Perini Letter Agreement]

U.S. BANK, NATIONAL ASSOCIATION, as a Revolving Lender

By:

Name:

Title:

[Signature Page to Tutor Perini Letter Agreement]

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Ronald N. Tutor, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Tutor Perini Corporation (the “registrant”);

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)   all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 5, 2010	/s/Ronald N. Tutor
	Ronald N. Tutor
	Chairman and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Kenneth R. Burk, certify that:

1.   I have reviewed this quarterly report on Form 10-Q of Tutor Perini Corporation (the “registrant”);

2.   Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.   Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)   designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)   designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)   evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)   all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  August 5, 2010	/s/Kenneth R. Burk
	Kenneth R. Burk
	Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Tutor Perini Corporation (the “Company”) on Form 10-Q for the period ending June 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ronald N. Tutor, Chairman and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  August 5, 2010	/s/Ronald N. Tutor
	Ronald N. Tutor
	Chairman and Chief Executive Officer

A signed original of this written statement required by Section 906 has been provided to Tutor Perini Corporation and will be retained by Tutor Perini Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Tutor Perini Corporation (the “Company”) on Form 10-Q for the period ending June 30, 2010 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kenneth R. Burk, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)   The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:  August 5, 2010	/s/Kenneth R. Burk
	Kenneth R. Burk
	Executive Vice President and Chief Financial Officer

A signed original of this written statement required by Section 906 has been provided to Tutor Perini Corporation and will be retained by Tutor Perini Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99.1

COMMERCIAL LEASE AGREEMENT

This Commercial Lease Agreement (“Lease”) is made and effective November 1, 2005, by and between Kristra Investments, Ltd. (“Landlord”) and Tutor-Saliba Corporation (“Tenant”).

Landlord is the owner of land and improvements commonly known and numbered as Assessors parcel number 0236-191-25-0-000, located on the northeast corner of Jarupa Avenue and Cherry Avenue in Fontana, California.

Landlord desires to lease the Leased Premises to Tenant, and Tenant desires to lease the Leased Premises from Landlord for the term, at the rental and upon the covenants, conditions and provisions herein set forth.

THEREFORE, in consideration of the mutual promises herein, contained and other good and valuable consideration, it is agreed:

1.    Term.

A.    Landlord hereby leases the Leased Premises to Tenant, and Tenant hereby leases the same from Landlord, for an “Initial Term” beginning November 1, 2005 and ending October 31, 2006. Landlord shall use its best efforts to give Tenant possession as nearly as possible at the beginning of the Lease term. If Landlord is unable to timely provide the Leased Premises, rent shall abate for the period of delay. Tenant shall make no other claim against Landlord for any such delay.

B.    The Term shall automatically be extended at the rental set forth below and otherwise upon the same covenants, conditions and provisions as provided in this Lease unless otherwise agreed upon in writing by the parties to the Lease. After the Initial Term, either party may terminate the lease by providing 90 day notice in writing to the other party of such intent to terminate.

2.    Rental.

A.    Base Rent. Tenant shall pay to Landlord during the Initial Term rental of $480,000 per year, payable in installments of $40,000 per month (the “Base Rent”). Each installment payment shall be due in advance on the first day of each calendar month during the lease term to Landlord at 15901 Olden Street, Sylmar, California 91342 or at such other place designated by written notice from Landlord or Tenant. The rental payment amount for any partial calendar months included in teh lease term shall be prorated on a daily basis.

B.    Additional Rent. As used in this Lease, the term “rent” shall mean the Base Rent and additional rent, and the term “additional rent” shall mean Real Property Taxes, insurance premiums, and all other amounts payable by Tenant to Landlord pursuant to this Lease other than Base Rent. Where no other time is stated herein for payment, payment for any amount due from Tenant to Landlord hereunder shall be made within ten (10) days after Tenant's receipt of Landlord's invoice or statement therefor.

C.    The rental for any renewal lease term, if created as permitted under this Lease, shall be the Base Rent of $480,000 per year payable in installments of $40,000 per month plus any applicable Additional Rent.

     3.    Use.

For equipment storage and vehicular parking in connection with Tenant's operations and related use in connection therewith. Notwithstanding the forgoing, Tenant shall not use the Leased Premises for the purposes of storing, manufacturing or selling any explosives, flammables or other inherently dangerous substance, chemical, thing or device.

     4.    Sublease and Assignment.

Tenant shall have the right without Landlord's consent, to assign this Lease to a corporation with which Tenant may merge or consolidate, to any subsidiary of Tenant, to any corporation under common control with Tenant, or to a purchaser of substantially all of Tenant's assets. Except as set forth above, Tenant shall not sublease all or any part of the Leased Premises, or assign this Lease in whole or in part without Landlord's consent, such consent not to be unreasonably withheld or delayed.

5.    Repairs.

During the Lease term, Tenant shall make, at Tenant's expense, all necessary repairs to the Leased Premises.

6.    Alterations and Improvements.

Tenant, at Tenant's expense, shall have the right following Landlord's consent to make additions, and improvements and replacements of and to all or any part of the Leased Premises from time to time as Tenant may deem desirable, provided the same are made in a workmanlike manner and utilizing good quality materials. Tenant shall have the right to place and install personal property, trade fixtures, equipment and other temporary installations in and upon the Leased Premises, and fasten the same to the premises. All personal property, equipment, machinery, trade fixtures and temporary installations, whether acquired by Tenant at the commencement of the Lease term or placed or installed on the Leased Premises by Tenant thereafter, shall remain Tenant's property free and clear of any claim by Landlord. Tenant shall have the right to remove the same at any time during the term of this Lease provided that all damage to the Leased Premises caused by such removal shall be repaired by Tenant at Tenant's expense.

7.    Insurance.

A.      If the Leased Premises is damaged by fire or other casualty resulting from any act or negligence of Tenant or any of Tenant's agents, employees or invitees, rent shall not be diminished or abated while such damages are under repair, and Tenant shall be responsible for the costs of repair not covered by insurance.

B.      Landlord shall maintain extended coverage insurance on the Leased Premises in such amounts as Landlord shall deem appropriate. Tenant shall be responsible, at its expense, for fire and extended coverage insurance on all of its personal property, including removable trade fixtures, located in the Leased Premises.

C.      Tenant and Landlord shall, each at its own expense, maintain a policy or policies of comprehensive general liability insurance with respect to the respective activities of each on the Leased Premises with the premiums thereon fully paid on or before due date, issued by and binding upon some insurance company approved by Landlord, such insurance to afford minimum protection of not less than $1,000,000 combined single limit coverage of bodily injury, property damage or combination thereof. Landlord shall be listed as an additional insured on Tenant's policy or policies of comprehensive general liability insurance, and Tenant shall provide Landlord with current Certificates of Insurance evidencing Tenant's compliance with this Paragraph. Tenant shall obtain the agreement of Tenant's insurers to notify Landlord that a policy is due to expire at least (10) days prior to such expiration. Landlord shall not be required to maintain insurance against thefts within the Leased Premises.

9.    Utilities.

Tenant shall pay all charges for water, sewer, gas, electricity, telephone and other services and utilities used by Tenant on the Leased Premises during the term of this Lease unless otherwise expressly agreed in writing by Landlord. In the event that any utility or service provided to the Leased Premises is not separately metered, Landlord shall pay the amount due and separately invoice Tenant for Tenant's pro rata share of the charges. Tenant shall pay such amounts within fifteen (15) days of invoice.

10.    Signs.

Following Landlord's consent, Tenant shall have the right to place on the Leased Premises, at locations selected by Tenant, any signs which are permitted by applicable zoning ordinances and private restrictions. Landlord may refuse consent to any proposed signage that is in Landlord's opinion too large, deceptive, unattractive or otherwise inconsistent with or inappropriate to the Leased Premises. Landlord shall assist and cooperate with Tenant in obtaining any necessary permission from governmental authorities or adjoining owners and occupants for Tenant to place or construct the foregoing signs. Tenant shall repair all damage to the Leased Premises resulting from the removal of signs installed by Tenant.

11.    Entry.

Landlord shall have the right to enter upon the Leased Premises at reasonable hours to inspect the same, provided Landlord shall not thereby unreasonably interfere with Tenant's business on the Leased Premises.

12.    Damage and Destruction.

Subject to Section 8 A. above, if the Leased Premises or any part thereof or any appurtenance thereto is so damaged by fire, casualty or structural defects that the same cannot be used for Tenant's purposes, then Tenant shall have the right within ninety (90) days following damage to elect by notice to Landlord to terminate this Lease as of the date of such damage. In the event of minor damage to any part of the Leased Premises, and if such damage does not render the Leased Premises unusable for Tenant's purposes, Landlord shall promptly repair such damage at the cost of the Landlord. In making the repairs called for in this paragraph, Landlord shall not be liable for any delays resulting from strikes, governmental restrictions, inability to obtain necessary materials or labor or other matters which are beyond the reasonable control of Landlord. Tenant shall be relieved from paying rent and other charges during any portion of the Lease term that the Leased Premises are inoperable or unfit for occupancy, or use, in whole or in part, for Tenant's purposes. Rentals and other charges paid in advance for any such periods shall be credited on the next ensuing payments, if any, but if no further payments are to be made, any such advance payments shall be refunded to Tenant. The provisions of this paragraph extend not only to the matters aforesaid, but also to any occurrence which is beyond Tenant's reasonable control and which renders the Leased Premises, or any appurtenance thereto, inoperable or unfit for occupancy or use, in whole or in part, for Tenant's purposes.

15.    Default.

If default shall at any time be made by Tenant in the payment of rent when due to Landlord as herein provided, and if said default shall continue for fifteen (15) days after written notice thereof shall have been given to Tenant by Landlord, or if default shall be made in any of the other covenants or conditions to be kept, observed and performed by Tenant, and such default shall continue for thirty (30) days after notice thereof in writing to Tenant by Landlord without correction thereof then having been commenced and thereafter diligently prosecuted, Landlord may declare the term of this Lease ended and terminated by giving Tenant written notice of such intention, and if possession of the Leased Premises is not surrendered, Landlord may reenter said premises. Landlord shall have, in addition to the remedy above provided, any other rig ht or remedy available to Landlord on account of any Tenant default, either in law or equity. Landlord shall use reasonable efforts to mitigate its damages.

16.   Quiet Possession.

Landlord covenants and warrants that upon performance by Tenant of its obligations hereunder, Landlord will keep and maintain Tenant in exclusive, quiet, peaceable and undisturbed and uninterrupted possession of the Leased Premises during the term of this Lease.

17.   Condemnation.

If any legally, constituted authority condemn the Leased Premises or such part thereof which shall make the Leased Premises unsuitable for leasing, this Lease shall cease when the public authority takes possession, and Landlord and Tenant shall account for rental as of that date. Such termination shall be without prejudice to the rights of either party to recover compensation from the condemning authority for any loss or damage caused by the condemnation. Neither party shall have any rights in or to any award made to the other by the condemning authority.

18.   Subordination.

Tenant accepts this Lease subject and subordinate to any mortgage, deed of trust or other lien presently existing or hereafter arising upon the Leased Premises, and to any renewals, refinancing and extensions thereof, but Tenant agrees that any such mortgagee shall have the right at any time to subordinate such mortgage, deed of trust or other lien to this Lease on such terms and subject to such conditions as such mortgagee may deem appropriate in its discretion. Landlord is hereby irrevocably vested with full power and authority to subordinate this Lease to any mortgage, deed of trust or other lien now existing or hereafter placed upon the Leased Premises, and Tenant agrees upon demand to execute such further instruments subordinating this Lease or attorning to the holder of any such liens as Landlord may request. In the event that Ten ant should fail to execute any instrument of subordination herein required to be executed by Tenant promptly as requested, Tenant hereby irrevocably constitutes Landlord as its attorney-in-fact to execute such instrument in Tenant's name, place and stead, it being agreed that such power is one coupled with an interest. Tenant agrees that it will from time to time upon request by Landlord execute and deliver to such persons as Landlord shall request a statement in recordable form certifying that this Lease is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as so modified), stating the dates to which rent and other charges payable under this Lease have been paid, stating that Landlord is not in default hereunder (or if Tenant alleges a default stating the nature of such alleged default) and further stating such other matters as Landlord shall reasonably require.

19.   Security Deposit.

None.
 

20.   Notice.

Any notice required or permitted under this Lease shall be deemed sufficiently given or served if sent by United States certified mail, return receipt requested, addressed as follows:

If to Landlord to:

Kristra Investments, Ltd.

25085 Ashley Ridge Road

Hidden Hills, California 91302

If to Tenant to:

Tutor-Saliba Corporation

15901 Olden Street

Sylmar, California 91342

Landlord and Tenant shall each have the right from time to time to change the place notice is to be given under this paragraph by written notice thereof to the other party.

21.    Brokers.

Tenant represents that Tenant was not shown the Premises by any real estate broker or agent and that Tenant has not otherwise engaged in, any activity which could form the basis for a claim for real estate commission, brokerage fee, finder's fee or other similar charge, in connection with this Lease.

22.    Waiver.

No waiver of any default of Landlord or Tenant hereunder shall be implied from any omission to take any action on account of such default if such default persists or is repeated, and no express waiver shall affect any default other than the default specified in the express waiver and that only for the time and to the extent therein stated. One or more waivers by Landlord or Tenant shall not be construed as a waiver of a subsequent breach of the same covenant, term or condition.

23.    Memorandum of Lease.

The parties hereto contemplate that this Lease should not and shall not be filed for record,

but in lieu thereof, at the request of either party, Landlord and Tenant shall execute a Memorandum of Lease to be recorded for the purpose of giving record notice of the appropriate provisions of this Lease.

24.    Headings.

The headings used in this Lease are for convenience of the parties only and shall not be considered in interpreting the meaning of any provision of this Lease.

25.    Successors.

The provisions of this Lease shall extend to and be binding upon Landlord and Tenant and their respective legal representatives, successors and assigns.

26.    Consent.

Landlord shall not unreasonably withhold or delay its consent with respect to any matter for which Landlord's consent is required or desirable under this Lease.

27.    Performance.

If there is a default with respect to any of Landlord's covenants, warranties or representations under this Lease, and if the default continues more than fifteen (15) days after notice in writing from Tenant to Landlord specifying the default, Tenant may, at its option and without affecting any other remedy hereunder, cure such default and deduct the cost thereof from the next accruing installment or installments of rent payable hereunder until Tenant shall have been fully reimbursed for such expenditures, together with interest thereon at a rate equal to the lessor of twelve percent (12%) per annum or the then highest lawful rate. If this Lease terminates prior to Tenant's receiving full reimbursement, Landlord shall pay the unreimbursed balance plus accrued interest to Tenant on demand.

28.    Compliance with Law.

Tenant shall comply with all laws, orders, ordinances and other public requirements now or hereafter pertaining to Tenant's use of the Leased Premises. Landlord shall comply with all laws, orders, ordinances and other public requirements now or hereafter affecting the Leased Premises.

29.    Final Agreement.

This Agreement terminates and supersedes all prior understandings or agreements on the subject matter hereof. This Agreement may be modified only by a further writing that is duly executed by both parties.

IN WITNESS WHEREOF, the parties have executed this Lease as of the day and year first above written.

Kristra Investments, Ltd                                                                   Tutor-Saliba Corporation

/s/John D. Barrett                                                                               /s/William B. Sparks

By: John D. Barrett                                                                      By:  William B. Sparks

V.P. Kristra Investments, Inc.                                                            Sr. Vice President

General Partner

 FIRST AMENDMENT TO

 COMMERCIAL LEASE AGREEMENT DATED

 NOVEMBER 1, 2005

This FIRST AMENDMENT TO THE COMMERCIAL LEASE AGREEMENT DATED NOVEMBER 1, 2005, ("Amendment") is made and entered into effective as of the 1st day of June, 2006, by and among Kristra Investments, Ltd. (Lessor) and Tutor-Saliba Corporation, a California corporation, (Lessee).

The parties agree to extend the term of the lease to July 31, 2016.

The monthly lease rate effective June 1, 2006, is One Hundred Thousand Dollars ($40,000) for the period of June 1, 2006 through June 30, 2007 for the property described in the Commercial Lease Agreement and shall increase at the rate of three percent (3%) per annum thereafter.

Unless otherwise stated, all terms and conditions in this Amendment shall remain the same as stated in the Commercial Lease Agreement.

IN WITNESS WHEREOF, the parties have executed this Amendment as of June 1, 2006.

KRISTRA INVESTMENTS, LTD.

Lessor

By:  /s/Ronald N. Tutor

TUTOR-SALIBA CORPORATION

a California corporation

Lessee

By:  /s/William B. Sparks

William B. Sparks

Senior Vice President

SECOND AMENDMENT TO

 COMMERCIAL LEASE AGREEMENT DATED

 NOVEMBER 1, 2005

This SECOND AMENDMENT TO THE COMMERCIAL LEASE AGREEMENT DATED NOVEMBER 1, 2005, ("Amendment") is made and entered into effective as of the 1st day of August, 2008, by and among Kristra Investments, Ltd. (Lessor) and Tutor-Saliba Corporation, a California corporation, (Lessee).

The parties agree to extend the term of the lease to July 31, 2016.

The monthly lease rate effective August 1, 2008, is Sixty Thousand Dollars ($60,000) for the period of August 1, 2008 through July 31, 2009 for the property described in the Commercial Lease Agreement and shall increase at the rate of three percent (3%) per annum thereafter.

Unless otherwise stated, all terms and conditions in this Amendment shall remain the same as stated in the Commercial Lease Agreement.

IN WITNESS WHEREOF, the parties have executed this Amendment as of August 1, 2008.

KRISTRA INVESTMENTS, LTD.

Lessor

By: /s/Ronald N. Tutor

TUTOR-SALIBA CORPORATION

A California corporation

Lessee

By:  /s/William B. Sparks

William B. Sparks

Senior Vice President

EX-99.2

STANDARD INDUSTRIAL LEASE – NET

AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION

1.Parties. This Lease, dated, for reference purposes only, June 10, 1987, is made by and between Ronald N. Tutor, as his sole and separate property (herein called “Lessor”) and Tutor-Saliba Corporation (herein called “Lessee”).

2.Premises. Lessor hereby leases to Lessee and Lessee leases from Lessor for the term, at the rental, and upon all of the conditions set forth herein, the improved real property described on Exhibits A, B and C hereto which are incorporated herein by this reference.  The property described on Exhibit A and B are in Los Angeles County and the property described on Exhibit C is in San Bernardino County.

Said real property including the land and all improvements therein, is herein called “the Premises”.

3.Term.

3.1           Term. The term of this Lease shall be for Five (5) years commencing on July 1, 1987 and ending on June 30, 1992 unless sooner terminated pursuant to any provision hereof.

3.2           Delay in Possession. Notwithstanding said commencement date, if for any reason Lessor cannot deliver possession of the Premises to lessee on said date, Lessor shall not be subject to any liability therefore, nor shall such failure affect the validity of this Lease or the obligations of Lessee hereunder or extend the term hereof, but in such case, Lessee shall not be obligated to pay rent until possession of the Premises is tendered to Lessee; provided, however, that if Lessor shall not have delivered possession of the Premises within sixty (60) days from said commencement date, Lessee may, at Lessee’s option, by notice in writing to Lessor within ten (10) days thereafter, cancel this Lease, in which event the parties shall be discharged from all obligations her eunder; provided further, however, that if such written notice of Lessee is not received by Lessor within said ten (10) day period, Lessee’s right to cancel this Lease hereunder shall terminate and be of no further force or effect.

3.3           Early Possession. If Lessee occupies the Premises prior to said commencement date, such occupancy shall be subject to all provisions hereof, such occupancy shall not advance the termination date, and Lessee shall pay rent for such period at the initial monthly rates set forth below.

4.Rent. Lessee shall pay to Lessor as rent for the Premises, monthly payments of $96,250.00 in advance, on the 1st day of each month of the term hereof.  Lessee shall pay Lessor upon the execution hereof $96,250.00 as rent for July 1987 Rent for any period during the term hereof which is for less than one month shall be a pro rata portion of the monthly installment.  Rent shall be payable in lawful money of the United States to Lessor at the address stated herein or to such other persons or at such other places as Lessor may designate in writing.

5.Security Deposit. Lessee shall deposit with lessor upon execution hereof $96,250.00 as security for Lessor’s faithful performance of Lessee’s obligations hereunder.  If Lessee fails to pay rent or other charges due hereunder, or otherwise defaults with respect to any provision of this Lease, Lessor may use, apply or retain all or any portion of said deposit for the payment of any rent or other charge in default or for the payment of any other sum to which Lessor may become obligated by reason of Lessee’s default, or to compensate Lessor for any loss or damage which Lessor may suffer thereby.  If Lessor so uses or applies all or any portion of said deposit, Lessee shall within ten (10) days afte r written demand therefor deposit cash with Lessor in an amount sufficient to restore said deposit to the full amount hereinabove stated and Lessee’s failure to do so shall be a material breach of this Lease.  If the monthly rent shall, from time to time, increase during the term of this Lease, Lessee shall thereupon deposit with Lessor additional security deposit so that the amount of security deposit held by Lessor shall at all times bear the same proportion to current rent as the original security deposit bears to the originals monthly rent set forth in paragraph 4 hereof.  Lessor shall not be required to keep said deposit separate from its general accounts. If Lessee performs all of Lessee’s obligations hereunder, said deposit, or so much thereof as has not theretofore been applied by Lessor, shall be returned, without payment of interest or other increment for its use, to Lessee (or, at Lessor’s option, to the last assignee, if any, of Lessee’s interest hereun der) at the expiration of the term hereof, and after Lessee has vacated the Premises.  No trust relationship is created herein between Lessor and Lessee with respect to said Security Deposit.

6.Use.

6.1Use. The Premises shall be used and occupied only for offices, shop and equipment storage or any other use which is reasonably comparable and for no other purpose.

6.2Compliance with Law.

(a) Lessor warrants to Lessee that the Premises, in its state existing on the date that the Lease term commences, but without regard to the use for which Lessee will use the Premises, does not violate any covenants or restrictions of record, or any applicable building code, regulation or ordinance in effect on such Lease term commencement date.  In the event it is determined that this warranty has been violated, then it shall be the obligation of the Lessor, after written notice from Lessee, to promptly, at Lessor’s sole cost and expense, rectify any such violation.  In the event Lessee does not give to Lessor written notice of the violation of this warranty within six months from the date that the Lease term commences, the co rrection of same shall be the obligation of the Lessee at Lessee’s sole cost.  The warranty contained in this paragraph 6.2(a) shall be of no force or effect if, prior to the date of this Lease, Lessee was the owner or occupant of the Premises, and, in such event, Lessee shall correct any such violation at Lessee’s sole cost.

(b) Except as provided in paragraph 6.2(a), Lessee shall, at Lessee’s expense, comply promptly with all applicable statutes, ordinances, rules, regulations, orders, covenants and restrictions of record, and requirements in effect during the term or any part of the term hereof, regulating the use by Lessee of the Premises.  Lessee shall not use nor permit the use of the Premises in any manner that will tend to create waste or a nuisance or, if there shall be more than one tenant in the building containing the Premises, shall tend to disturb such other tenants.

6.3Condition of Premises.

(a) Lessor shall deliver the Premises to Lessee clean and free of debris on Lease commencement date (unless Lessee is already in possession) and Lessor further warrants to Lessee that the plumbing, lighting, air conditioning, heating, and loading doors in the Premises shall be in good operating condition on the Lease commencement date. In the event that it is determined that this warranty has been violated, then it shall be the obligation of Lessor, after receipt of written notice from Lessee setting forth with specificity the nature of the violation, to promptly, at Lessor’s sole cost, rectify such violation. Lessee’s failure to give such written notice to Lessor within thirty (30) days after the Lease commencement date shall cause the conclusive presumption that Lessor has complied with all of Lessor’s obligations hereunder. The warranty contained in this paragraph 6.3(a) shall be of no force or effect if prior to the date of this Lease, Lessee was the owner or occupant of the Premises.

(b) Except as otherwise provided in this Lease, Lessee hereby accepts the Premises in their condition existing as of the Lease commencement date or the date that Lessee takes possession of the Premises, whichever is earlier, subject to all applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating the use of the Premises, and any covenants or restrictions of record, and accepts this Lease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto. Lessee acknowledges that neither Lessor nor Lessor’s agent has made any representation or warranty as to the present or future suitability of the Premises for the conduct of Lessee’s business.

7.Maintenance, Repairs and Alterations.

7.1           Lessee’s Obligations. Lessee shall keep in good order, condition and repair the Premises and every part thereof, structural and non structural, (whether or not such portion of the Premises requiring repair, or the means of repairing the same are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessee’s use, any prior use, the elements or the age of such portion of the Premises) including, without limiting the generality of the foregoing, all plumbing, heating, air conditioning, (Lessee shall procure and maintain, at Lessee’s expense, an air conditioning system maintenance contract) ventilating, electrical, lighting facilities and equipment within the Premises, fixtures, walls (interior an d exterior), foundations, ceilings, roofs (interior and exterior), floors, windows, doors, plate glass and skylights located within the Premises, and all landscaping, driveways, parking lots, fences and signs located on the Premises and sidewalks and parkways adjacent to the Premises.

7.2           Surrender. On the last day of the term hereof, or on any sooner termination, Lessee shall surrender the Premises to Lessor in the same condition as when received, ordinary wear and tear excepted, clean and free of debris. Lessee shall repair any damage to the Premises occasioned by the installation or removal of Lessee’s trade fixtures, furnishings and equipment. Notwithstanding anything to the contrary otherwise stated in this Lease. Lessee shall leave the air lines, power panels, electrical distribution systems, lighting fixtures, space heaters, air conditioning, plumbing and fencing on the premises in good operating condition.

7.3           Lessor’s Rights. If Lessee fails to perform Lessee’s obligations under this Paragraph 7, or under any other paragraph of this Lease, Lessor may at its option (but shall not be required to) enter upon the Premises after ten (10) days’ prior written notice to Lessee (except in the case of an emergency, in which case no notice shall be required), perform such obligations on Lessee’s behalf and put the same in good order, condition and repair, and the cost thereof together with interest thereon at the maximum rate then allowable by law shall become due and payable as additional rental to Lessor together with Lessee’s next rental installment.

7.4           Lessor’s Obligations. Except for the obligations of Lessor under Paragraph 6.2(a) and 6.3(a) (relating to Lessor’s warranty), Paragraph 9 (relating to destruction of the Premises) and under Paragraph 14 (relating to condemnation of the Premises), it is intended by the parties hereto that Lessor have no obligation, in any manner whatsoever, to repair and maintain the Premises nor the building located thereon nor the equipment therein, whether structural or non structural, all of which obligations are intended to be that of the Lessee under Paragraph 7.1 hereof. Lessee expressly waives the benefit of any statute now or hereinafter in effect which would otherwise afford Lessee the right to make repairs at Lessor’s expense or to terminate this Lease bec ause of Lessor’s failure to keep the premises in good order, condition and repair.

7.5           Alterations and Additions.

(a) Lessee shall not, without Lessor’s prior written consent make any alterations, improvements, additions, or Utility Installations in, on or about the Premises, except for nonstructural alterations not exceeding $2,500 in cumulative costs during the term of this Lease. In any event, whether or not in excess of $2,500 in cumulative cost, Lessee shall make no change or alteration to the exterior of the Premises nor the exterior of the building(s) on the Premises without Lessor’s prior written consent. As used in this Paragraph 7.5 the term “Utility Installation” shall mean carpeting, window coverings, air lines, power panels, electrical distribution systems, lighting fixtures, space heaters, air conditioning, plumbing, and fenci ng. Lessor may require that Lessee remove any or all of said alterations, improvements, additions or Utility Installations at the expiration of the term, and restore the Premises to their prior condition. Lessor may require Lessee to provide Lessor, at Lessee’s sole cost and expense, a lien and completion bond in an amount equal to one and one – half times the estimated cost of such improvements, to insure Lessor against any liability for mechanic’s and materialmen’s liens and to insure completion of the work. Should Lessee make any alterations, improvements, additions or Utility Installations without the prior approval of Lessor, Lessor may require that Lessee remove any or all of the same.

(b) Any alterations, improvements, additions or Utility Installations in, or about the Premises that Lessee shall desire to make and which requires the consent of the Lessor shall be presented to Lessor in written form, with proposed detailed plans. If Lessor shall give its consent, the consent shall be deemed conditioned upon Lessee acquiring a permit to do so from appropriate governmental agencies, the furnishing of a copy thereof to Lessor prior to the commencement of the work and the compliance by Lessee of all conditions of said permit in a prompt and expeditious manner.

(c) Lessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Lessee at or for use in the Premises, which claims are or may be secured by any mechanics’ or materialmen’s lien against the Premises or any interest therein. Lessee shall give Lessor not less than ten (10) days’ notice prior to the commencement of any work in the Premises, and Lessor shall have the right to post notices of non – responsibility in or on the Premises as provided by law. If Lessee shall, in good faith, contest the validity of such lien, claim or demand, then Lessee shall, at its sole expense defend itself and Lessor against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof against the Lessor or the Premises, upon the condition that if Lessor shall require, Lessee shall furnish to Lessor a surety bond satisfactory to Lesson in an amount equal to such contested lien claim or demand indemnifying Lessor against liability for the same and holding the Premises free from the effect of such lien or claim. In addition, Lessor may require Lessee to pay Lessor’s liability for the same and holding the Premises free from the effect of such lien or claim. In addition, Lessor may require Lessee to pay Lessor’s attorneys fees and costs in participating in such action if Lessor shall decide it is to its best interest to do so.

(d) Unless Lessor requires their removal, as set forth in Paragraph 7.5(a), all alterations, improvements, additions and Utility Installations (whether or not such Utility installations constitute trade fixtures of Lessee), which may be made on the Premises, shall become the property of Lessor and remain upon and be surrendered with the Premises at the expiration of the term. Notwithstanding the provisions of this Paragraph 7.5(d), Lessee’s machinery and equipment, other than that which is affixed to the Premises so that it cannot be removed without material damage to the Premises, shall remain the property of Lessee and may be removed by Lessee subject to the provisions of Paragraph 7.2.

8.           Insurance Indemnity.

8.1           Insuring Party. As used in this Paragraph 8, the term “insuring party” shall mean the party who has the obligation to obtain the Property Insurance required hereunder. The insuring party shall be designated in Paragraph 46 hereof. In the event Lessor is the insuring party, Lessor shall also maintain the liability insurance described in paragraph 8.2 hereof, in addition to, and not in lieu of, the insurance required to be maintained by Lessee under said paragraph 8.2, but Lessor shall not be required to name Lessee as an additional insured on such policy. Whether the insuring party is the Lessor or the Lessee, Lessee shall, as additional rent for the Premises, pay the cost of all insurance required hereunder, except for that portion of the cost attributabl e to Lessor’s liability insurance coverage in excess of $1,000,000 per occurrence. If Lessor is the insuring party Lessee shall, within ten (10) days following demand by Lessor, reimburse Lessor for the cost of the insurance so obtained.

8.2           Liability Insurance. Lessee shall, at Lessee’s expense obtain and keep in force during the term of this Lease a policy of Combined Single Limit, Bodily injury and Property Damage insurance insuring Lessor and Lessee against any liability arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be a combined single limit policy in an amount not less than $500,000 per occurrence. The policy shall insure performance by Lessee of the indemnity provisions of this Paragraph 8. The limits of said insurance shall not, however, limit the liability of Lessee hereunder.

8.3           Property Insurance.

(a) The insuring party shall obtain and keep in force during the term of this Lease a policy or policies of insurance covering loss or damage to the Premises, in the amount of the full replacement value thereof, as the same may exist from time to time, which replacement value is now $3,450,000.00, but in no event less than the total amount required by lenders having liens on the Premises, against all perils included within the classification of fire, extended coverage, vandalism, malicious mischief, flood (in the event same is required by a lender having a lien on the Premises), and special extended perils (“all risk” as such term is used in the insurance industry). Said insurance shall provide for payment of loss thereunder to Lessor or to the holders of mortgages or deeds of trust on the Premises. The insuring party shal l, in addition, obtain and keep in force during the term of this Lease a policy of rental value insurance covering a period of one year, with loss payable to Lessor, which insurance shall also cover all real estate taxes and insurance costs for said period. A stipulated value or agreed amount endorsement deleting the coinsurance provision of the policy shall be procured with said insurance as well as an automatic increase in insurance endorsement causing the increase in annual property insurance coverage by 2% per quarter. If the insuring party shall fail to procure and maintain said insurance the other party may, but shall not be required to; procure and maintain the same, but at the expense of Lessee. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $1,000 per occurrence, and Lessee shall be liable for such deductible amount.

(b) If the Premises are part of a larger building, or if the Premises are part of a group of buildings owned by Lessor which are adjacent to the Premises, then Lessee shall pay for any increase in the property insurance of such other building or buildings if said increase is caused by Lessee’s acts, omissions, use or occupancy of the Premises.

(c) If the Lessor is the insuring party the Lessor will not insure Lessee’s fixtures, equipment or tenant improvements unless the tenant improvements have become a part of the Premises under paragraph 7, hereof. But if Lessee is the insuring party the Lessee shall insure its fixtures, equipment and tenant improvements.

8.4           Insurance Policies. Insurance required hereunder shall be in companies holding a “General Policyholders Rating” of at least B plus, or such other rating as may be required by a lender having a lien on the Premises, as set forth in the most current issue of “Best’s Insurance Guide”. The insuring party shall deliver to the other party copies of policies of such insurance or certificates evidencing the existence and amounts of such insurance with loss payable clauses as required by this paragraph 8. No such policy shall be cancellable or subject to reduction of coverage or other modification except after thirty (30) days’ prior written notice to Lessor. If Lessee is the insuring party Lessee shall, at least thirty (30) days prior to t he expiration of such policies, furnish Lessor with renewals or “binders” thereof, or Lessor may order such insurance and charge the cost thereof to Lessee, which amount shall be payable by Lessee upon demand. Lessee shall not do or permit to be done anything which shall invalidate the insurance policies referred to in Paragraph 8.3. If Lessee does or permits to be done anything which shall increase the cost of the insurance policies referred to in Paragraph 8.3, then Lessee shall forthwith upon Lessor’s demand reimburse Lessor for any additional premiums attributable to any act or omission or operation of Lessee causing such increase in the cost of insurance. If Lessor is the insuring party, and if the insurance policies maintained hereunder cover other improvements in addition to the Premises, Lessor shall deliver to Lessee a written statement setting forth the amount of any such insurance cost increase and showing in reasonable detail the manner in which it has been computed.

8.5           Waiver of Subrogation. Lessee and Lessor each hereby release and relieve the other, and waive their entire right of recovery against the other for loss or damage arising out of or incident to the perils insured against under paragraph 8.3, which perils occur in, on or about the Premises, whether due to the negligence of Lessor or Lessee or their agents, employees, contractors and/or invitees. Lessee and Lessor shall, upon obtaining the policies of insurance required hereunder, give notice to the insurance carrier or carriers that the foregoing mutual waiver of subrogation is contained in this Lease.

8.6           Indemnity. Lessee shall indemnify and hold harmless Lessor from and against any and all claims arising from Lessee’s use of the Premises, or from the conduct of Lessee’s business or from any activity, work or things done, permitted or suffered by Lessee in or about the Premises or elsewhere and shall further indemnify and hold harmless Lessor from and against any and all claims arising from any breach or default in the performance of any obligation on Lessee’s part to be performed under the terms of this Lease, or arising from any negligence of the Lessee, or in the performance of any obligation on Lessee’s part to be performed under the terms of this Lease, or arising from any negligence of the Lessee, or any of Lessee’s agents, contrac tors, or employees, and from and against all costs, attorney’s fees, expenses and liabilities incurred in the defense of any such claim or any action or proceeding brought thereon; and in case any action or proceeding be brought against Lessor by reason of any such claim, Lessee upon notice from Lessor shall defend the same at Lessee’s expense by counsel satisfactory to Lessor. Lessee, as a material part of the consideration to Lessor, hereby assumes all risk of damage to property or injury to persons, in, upon or about the Premises arising from any cause and Lessee hereby waives all claims in respect thereof against Lessor.

8.7           Exemption of Lessor from Liability. Lessee hereby agrees that Lessor shall not be liable for injury to Lessee’s business or any loss of income therefrom or for damage to the goods, wares, merchandise or other property of Lessee. Lessee’s employees, invitees, customers, or any other person in or about the Premises, nor shall Lessor be liable for injury to the person of Lessee. Lessee’s employees, agents or contractors, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, or from the breakage, leakage, obstruction or other defects of pipes, sprinklers, wires, appliances, plumbing, air conditioning or lighting fixtures, or from any other cause, whether the said damage or injury results from conditions arising upon the Premises or upon other portions of the building of which the Premises are a part or from other sources or places and regardless of whether the cause of such damage or injury or the means of repairing the same is inaccessible to Lessee. Lessor shall not be liable for any damages arising from any act or neglect of any other tenant, if any, of the building in which the Premises are located.

9.           Damage or Destruction

9.1           Definitions.

(a) “Premises Partial Damage” shall herein mean damage or destruction to the Premises to the extent that the cost of repair is less than 50% of the then replacement cost of the Premises. “Premises Building Partial Damage” shall herein mean damage or destruction to the building of which the Premises are a part to the extent that the cost of repair is less than 50% of the then replacement cost of such building as a whole.

(b) “Premises Total Destruction” shall herein mean damage or destruction to the Premises to the extent that the cost of repair is 50% or more of the then replacement cost of the Premises. “Premises Building Total Destruction” shall herein mean damage or destruction to the building of which the Premises are a part to the extent that the cost of repair is 50% or more of the then replacement cost of such building as a whole.

(c) “Insured Loss” shall herein mean damage or destruction which was caused by an event required to be covered by the insurance described in paragraph 8.

9.2           Partial Damage – Insured Loss. Subject to the provisions of paragraphs 9.4, 9.5 and 9.6, if at any time during the term of this Lease there is damage which is an insured Loss and which falls into the classification of Premises Partial Damage or Premises Building Partial Damage, then Lessor shall, at Lessor’s expense, repair such damage, but not Lessee’s fixtures, equipment or tenant improvements unless the same have become a part of the Premises pursuant to Paragraph 7.5 hereof as soon as reasonably possible and this Lease shall continue in full force and effect. Notwithstanding the above, if the Lessee is the insuring party, and if the insurance proceeds received by Lessor are not sufficient to affect such repair, Lessor shall give notice to Lessee of the amount required in addition to the insurance proceeds to effect such repair. Lessee shall contribute the required amount to Lessor within ten days after Lessee has received notice from Lessor of the shortage in the insurance. When Lessee shall contribute such amount to Lessor, Lessor shall make such repairs as soon as reasonably possible and this Lease shall continue in full force and effect. Lessee shall in no event have any right to reimbursement for any such amounts so contributed.

9.3           Partial Damage – Uninsured Loss. Subject to the provisions of Paragraphs 9.4, 9.5 and 9.6, if at any time during the term of this Lease there is damage which is not an Insured Loss and which falls within the classification of Premises Partial Damage or Premises Building Partial Damage, unless caused by a negligent or willful act of Lessee (in which event Lessee shall make the repairs at Lessee’s expense), Lessor may at Lessor’s option either (i) repair such damage as soon as reasonably possible at Lessor’s expense, in which event this Lease shall continue in full force and effect, or (ii) give written notice to Lessee within thirty (30) days after the date of the occurrence of such damage of Lessor’s intention to cancel and terminate thi s Lease, as of the date of the occurrence of such damage. In the event Lessor elects to give such notice of Lessor’s intention to cancel and terminate this Lease, Lessee shall have the right within ten (10) days after the receipt of such notice to give written notice to Lessor of Lessee’s intention to repair such damage at Lessee’s expense, without reimbursement from Lessor, in which event this Lease shall continue in full force and effect, and Lessee shall proceed to make such repairs as soon as reasonably possible. If Lessee does not give such notice within such 10-day period this Lease shall be cancelled and terminated as of the date of the occurrence of such damage.

9.4           Total Destruction. If at any time during the term of this Lease there is damage, whether or not an Insured Loss, (including destruction required by any authorized public authority), which falls into the classification of Premises Total Destruction or Premises Building Total Destruction, this Lease shall automatically terminate as of the date of such total destruction.

9.5           Damage Near End of Term.

(a) If at any time during the last six months of the term of this Lease there is damage, whether or not an Insured Loss, which falls within the classification of Premises Partial Damage, Lessor may at Lessor’s option cancel and terminate this Lease as of the date of occurrence of such damage by giving written notice to Lessee of Lessor’s election to do so within 30 days after the date of occurrence of such damage.

(b) Notwithstanding paragraph 9.5(a), in the event that Lessee has an option to extend or renew this Lease, and the time within which said option may be exercised has not yet expired, Lessee shall exercise such option, if it is to be exercised at all, no later than 20 days after the occurrence of an Insured Loss falling within the classification of Premises Partial Damage during the last six months of the term of this Lease. If Lessee duly exercises such option during said 20 day period, Lessor shall, at Lessor’s expense, repair such damage as soon as reasonably possible and this Lease shall continue in full force and effect. If Lessee fails to exercise such option during said 20 day period, then Lessor may at Lessor’s option terminate and cancel this Lease as of the expiration of said 20 day period by giving written notic e to Lessee of Lessor’s election to do so within 10 days after the expiration of said 20 day period, notwithstanding any term or provision in the grant of option to the contrary.

9.6           Abatement of Rent; Lessee’s Remedies.

(a) In the event of damage described in paragraphs 9.2 or 9.3, and Lessor or Lessee repairs or restores the Premises pursuant to the provisions of this Paragraph 9, the rent payable hereunder for the period during which such damage, repair or restoration continues shall be abated in proportion to the degree to which Lessee’s use of the Premises is impaired. Except for abatement of rent, if any, Lessee shall have no claim against Lessor for any damage suffered by reason of any such damage, destruction, repair or restoration.

(b) If Lessor shall be obligated to repair or restore the Premises under the provisions of this Paragraph 9 and shall not commence such repair or restoration within 90 days after such obligations shall accrue, Lessee may at Lessee’s option cancel and terminate this Lease by giving Lessor written notice of Lessee’s election to do so at any time prior to the commencement of such repair or restoration. In such event this Lease shall terminate as of the date of such notice.

9.7           Termination – Advance Payments. Upon termination of this Lease pursuant to this Paragraph 9, an equitable adjustment shall be made concerning advance rent and as any advance payments made by Lessee to Lessor. Lessor shall, in addition, return to Lessee so much of Lessee’s security deposit as has not theretofore been applied by Lessor.

9.8           Waiver.  Lessor and Lessee waive the provisions of any statutes which relate to termination of leases when leased property is destroyed and agree that such event shall be governed by the terms of this Lease.

10.           Real Property Taxes.

10.1           Payment of Taxes. Lessee shall pay the real property tax, as defined in paragraph 10.2, applicable to the Premises during the term of this Lease. All such payments shall be made at least ten (10) days prior to the delinquency date of such payment. Lessee shall promptly furnish Lessor with satisfactory evidence that such taxes shall be equitably prorated to cover only the period of time within the tax fiscal year during which this Lease shall be in effect, and Lessor shall reimburse Lessee to the extent required. If Lessee shall fail to pay any such taxes, Lessor shall have the right to pay the same, in which case Lessee shall repay such amount to Lessor with Lessee’s next rent installment together with interest at the maximum rate then allowable by law.

10.2           Definition of “Real Property Tax”. As used herein, the term “real property tax” shall include any form of real estate tax or assessment, general, special, ordinary or extraordinary, and any license fee, commercial rental tax, improvement bond or bonds, levy or tax (other than inheritance, personal income or estate taxes) imposed on the Premises by any authority having the direct or indirect power to tax, including any city, state or federal government, or any school, agricultural, sanitary, fire, street, drainage or other improvement district thereof, as against any legal or equitable interest of Lessor in the Premises or in the real property of which the Premises are a part, as against Lessor’s right to rent or other income therefrom, and as against Lessor’s business of leasing the Premises. The term “real property tax” shall also include any tax, fee, levy, assessment or charge (i) in substitution of, partially or totally, any tax, fee, levy, assessment or charge hereinabove included within the definition of “real property tax,” or (ii) the nature of which was hereinbefore included within the definition of “real property tax,” or (iii) which is imposed for a service or right not charged prior to June 1, 1978, or, if previously charged, has been increased since June 1, 1978, or (iv) which is imposed as a result of a transfer, either partial or total, of Lessor’s interest in the Premises or which is added to a tax or charge hereinbefore included within the definition of real property tax by reason of such transfer, or (v) which if imposed by reason of this transaction, any modifications or changes hereto, or any transfers hereof.

10.3           Joint Assessment. If the Premises are not separately assessed, Lessee’s liability shall be an equitable proportion of the real property taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be determined by Lessor from the respective valuations assigned in the assessor’s work sheets or such other information as may be reasonably available. Lessor’s reasonable determination thereof, in good faith, shall be conclusive.

10.4           Personal Property Taxes.

(a) Lessee shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Lessee contained in the Premises or elsewhere. When possible, Lessee shall cause said trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor.

(b) If any of Lessee’s said personal property shall be assessed with Lessor’s real property, Lessee shall pay Lessor the taxes attributable to Lessee within 10 days after receipt of a written statement setting forth the taxes applicable to Lessee’s property.

11.           Utilities.  Lessee shall pay for all water, gas, heat, light, power, telephone and other utilities and services supplied to the Premises, together with any taxes thereon. If any such services are not separately metered to Lessee, Lessee shall pay a reasonable proportion to be determined by Lessor of all charges jointly metered with other Premises.

12.           Assignment and Subletting.

12.1           Lessor’s Consent Required. Lessee shall not voluntarily or by operation of law assign, transfer, mortgage, sublet, or otherwise transfer or encumber all or any part of Lessee’s interest in this Lease or in the Premises, without Lessor’s prior written consent, which Lessor shall not unreasonably withhold. Lessor shall respond to Lessee’s request for consent hereunder in a timely manner and any attempted assignment, transfer, mortgage, encumbrance or subletting without such consent shall be void, and shall constitute a breach of this Lease.

12.2           Lessee Affiliate. Notwithstanding the provisions of paragraph 12.1 hereof, Lessee may assignor sublet the Premises, or any portion thereof, without Lessor’s consent, to any corporation which controls, is controlled by or is under common control with Lessee, or to any corporation resulting from the merger or consolidation with Lessee, or to any person or entity which acquires all the assets of Lessee as a going concern of the business that is being conducted on the Premises, provided that said assignee assumes, in full, the obligations of Lessee under this Lease. Any such assignment shall not, in any way, affect or limit the liability of Lessee under the terms of this Lease even if after such assignment or subletting the terms of this Lease are materially chang ed or altered without the consent of Lessee, the consent of whom shall not be necessary.

12.3           No Release of Lessee. Regardless of Lessor’s consent, no subletting or assignment shall release Lessee of Lessee’s obligation or alter the primary liability of Lessee to pay the rent and to perform all other obligations to be performed by Lessee hereunder. The acceptance of rent by Lessor from any other person shall not be deemed to be a waiver by Lessor of any provision hereof. Consent to one assignment or subletting shall not be deemed consent to any subsequent assignment or subletting. In the event of default by any assignee of Lessee or any successor of Lessee, in the performance of any of the terms hereof, Lessor may proceed directly against Lessee without the necessity of exhausting remedies against said assignee. Lessor may consent to subsequent a ssignments or subletting of this Lease or amendments or amendments or modifications to this Lease with assignees of Lessee, without notifying Lessee, or any successor of Lessee, and without obtaining its or their consent thereto and such action shall not relieve Lessee of liability under this Lease.

12.4           Attorney’s Fees. In the event Lessee shall assign or sublet the Premises or request the consent of Lessor to any assignment or subletting or if Lessee shall request the consent of Lessor for any act Lessee proposes to do then Lessee shall pay Lessor’s reasonable attorneys fees incurred in connection therewith, such attorneys fees not to exceed $350.00 to each such request.

13.           Defaults: Remedies.

13.1           Defaults. The occurrence of any one or more of the following events shall constitute a material default and breach of this Lease by Lessee:

(a) The vacating or abandonment of the Premises by Lessee.

(b) The failure by Lessee to make any payment of rent or any other payment required to be made by Lessee hereunder, as and when due, where such failure shall continue for a period of three days after written notice thereof from Lessor to Lessee. In the event that Lessor serves Lessee with a Notice to Pay Rent of Quit pursuant to applicable Unlawful Detainer statutes such Notice to Pay Rent or Quit shall also constitute the notice required by this subparagraph.

(c) The failure by Lessee to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Lessee, other than described in paragraph (b) above, where such failure shall continue for a period of 30 days after written notice thereof from Lessor to Lessee; provided, however, that if the nature of Lessee’s default is such that more than 30 days are reasonably required for its cure, then Lessee shall not be deemed to be in default if Lessee commenced such cure within said 30 – day period and thereafter diligently prosecutes such cure to completion.

(d) (i) The making by Lessee of any general arrangement or assignment for the benefit of creditors; (ii) Lessee becomes a “debtor” as defined in 11 U.S.C. §101 or any successor statute thereto (unless, in the case of a petition filed against Lessee, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where possession is not restored to Lessee within 30 days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where such seizure is not discharged within 30 days. Provided, however, in the event that any provision of this paragraph 13. 1 (d) is contrary to any applicable law, such provision shall be of no force or effect.

(e) The discovery by Lessor that any financial statement given to Lessor by Lessee, any assignee of Lessee, any subtenant of Lessee, any successor in interest of Lessee or any guarantor of Lessee’s obligation hereunder, and any of them, was materially false.

13.2           Remedies. In the event of any such material default or breach by Lessee.  Lessor may at any time thereafter, with or without notice or demand and without limiting Lessor in the exercise of any right or remedy which Lessor may have by reason of such default or breach:

(a) Terminate Lessee’s right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Lessee shall immediately surrender possession of the Premises to Lessor.  In such event Lessor shall be entitled to recover from Lessee all damages incurred by Lessor by reason of Lessee’s default including, but not limited to, the cost of recovering possession of the Premises; expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorney’s fees, and any real estate commission actually paid; the worth at the time of award by the court having jurisdiction thereof of the amount by which the unpaid rent for the balance of the term after the time of such award exceeds the amount of such rental loss for the same period that Lessee proves could be reasonably avoided; that portion of the leasing commission paid by Lessor pursuant to Paragraph 15 applicable to the unexpired term of this Lease.

(b) Maintain Lessee’s right to possession in which case this Lease shall continue in effect whether or not Lessee shall have abandoned the Premises.  In such event Lessor shall be entitled to enforce all of Lessor’s rights and remedies under this Lease, including the right to recover the rent as it becomes due hereunder.

(c) Pursue any other remedy now or hereafter available to Lessor under the laws or judicial decisions of the state wherein the Premises are located. Unpaid installments of rent and other unpaid monetary obligations of Lessee under the terms of this Lease shall bear interest from the date due at the maximum rate then allowable by law.

13.3           Default by Lessor. Lessor shall not be in default unless Lessor fails to perform obligations required of Lessor within a reasonable time, but in no event later than thirty (30) days after written notice by Lessee to Lessor and to the holder of any first mortgage or deed of trust covering the Premises whose name and address shall have theretofore been furnished to Lessee in writing, specifying wherein Lessor has failed to perform such obligation; provided, however, that if the nature of Lessor’s obligation is such that more than thirty (30) days are required for performance then Lessor shall not be in default if Lessor commences performance within such 30-day period and thereafter diligently prosecutes the same to completion.

13.4           Late Charges. Lessee hereby acknowledges that late payment by Lessee to Lessor of rent and other sums due hereunder will cause Lessor 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 and accounting charges, and late charges which may be imposed on Lessor by the terms of any mortgage or trust deed covering the Premises.  Accordingly, if any installment of rent or any other sum due from Lessee shall not be received by Lessor or Lessor’s designee within ten (10) days after such amount shall be due, then, without any requirement for notice to Lessee, Lessee shall pay to Lessor a late charge equal to 6% of such overdue amount .  The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Lessor will incur by reason of late payment by Lessee.  Acceptance of such late charge by Lessor shall in no event constitute a waiver of Lessee’s default with respect to such overdue amount, nor prevent Lessor from exercising any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for three (3) consecutive installments of rent, then rent shall automatically become due and payable quarterly in advance, rather than monthly, notwithstanding paragraph 4 or any other provision of this Lease to the contrary.

13.5           Impounds. In the event that a late charge is payable hereunder, whether or not collected, for three (3) installments of rent or any other monetary obligation of Lessee under the terms of this Lease.  Lessee shall pay to Lessor, if Lessor shall so request, in addition to any other payments required under this Lease, a monthly advance installment, payable at the same time as the monthly rent, as estimated by Lessor, for real property tax and insurance expenses on the Premises which are payable by Lessee under the terms of this Lease.  Such fund shall be established to insure payment when due, before delinquency, of any or all such real property taxes and insurance premiums.  If the amounts paid to Lessor by Lessee under the provisions of this paragraph are insufficient to discharge the obligations of Lessee to pay such real property taxes and insurance premiums as the same become due.  Lessee shall pay to Lessor, upon Lessor’s demand, such additional sums necessary to pay such obligations.  All moneys paid to Lessor under this paragraph may be intermingled with other moneys of Lessor and shall not bear interest.  In the event of a default in the obligations of Lessee to perform under this Lease, then any balance remaining from funds paid to Lessor under the provisions of this paragraph may, at the option of Lessor, be applied to the payment of any monetary default of Lessee in lieu of being applied to the payment of real property tax and insurance premiums.

14.           Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain, or sold under the threat of the exercise of said power (all of which are herein called “condemnation”), this Lease shall terminate as to the part so taken as of the date the condemning authority takes title or possession, whichever first occurs.  If more than 10% of the floor area of the building on the Premises, or more than 25% of the land area of the Premises which is not occupied by any building, is taken by condemnation, Lessee may, at Lessee’s option, to be exercised in writing only within ten (10) days after Lessor shall have given Lessee written notice of such taking (or in the absence of such notice, within ten (10) days after the cond emning authority shall have taken possession) terminate this Lease as of the date the condemning authority takes such possession.  If Lessee does not terminate this Lease in accordance with the foregoing, this Lease shall remain in full force and effect as to the portion of the Premises remaining, except that the rent shall be reduced in the proportion that the floor area of the building taken bears to the total floor area of the building situated on the Premises.  No reduction of rent shall occur if the only area taken is that which does not have a building located thereon. Any award for the taking of all or any part of the Premises under the power of eminent domain or any payment made under threat of the exercise of such power shall be the property of Lessor, whether such award shall be made as compensation for diminution in value of the leasehold or for the taking of the fee, or as severance damages; provided, however, that Lessee shall be entitled to any award for loss of or damage to Lessee’s trade fixtures and removable personal property. In the event that this Lease is not terminated by reason of such condemnation, Lessor shall to the extent of severance damages received by Lessor in connection with such condemnation, repair any damage to the Premises caused by such condemnation except to the extent that Lessee has been reimbursed therefor by the condemning authority. Lessee shall pay any amount in excess of such severance damages required to complete such repair.

15.           Broker’s Fee.

(a) Upon execution of this Lease by both parties, Lessor shall pay to ________________ Licensed real estate broker(s), a fee as set forth in a separate agreement between Lessor and said broker(s), or in the event there is no separate agreement between Lessor and said broker(s), the sum of $__________________, for brokerage services rendered by said broker(s) to Lessor in this transaction.

(b) Lessor further agrees that if Lessee exercises any Option as defined in paragraph 39.1 of this Lease, which is granted to Lessee under this Lease, or any subsequently granted option which is substantially similar to an Option granted to Lessee under this Lease, or if Lessee acquires any rights to the Premises or other premises described in this Lease which are substantially similar to what Lessee would have acquired had an Option herein granted to Lessee been exercised, or if Lessee remains in possession of the Premises after the expiration of the term of this Lease after having failed to exercise an Option, or if said broker(s) are the procuring cause of any other lease or sale entered into between the parties pertaining to the Premises and/or any adjacent property in which Lessor has an interest, then as to any of said transacti ons, Lessor shall pay said broker(s) a fee in accordance with the schedule of said broker(s) in effect at the time of execution of this Lease.

(c) Lessor agrees to pay said fee not only on behalf of Lessor but also on behalf of any person, corporation, association, or other entity having an ownership interest in said real property or any part thereof, when such fee is due hereunder.  Any transferee of Lessor’s interest in this Lease, whether such transfer is by agreement or by operation of law, shall be deemed to have assumed Lessor’s obligation under this Paragraph 15.  Said broker shall be a third party beneficiary of the provisions of this Paragraph 15.

16.           Estoppel Certificate.

(a) Lessee shall at any time upon not less than ten (10) days’ prior written notice from Lessor execute, acknowledge and deliver to Lessor a statement in writing (i) certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying that this Lease, as so modified, is in full force and effect) and the date to which the rent and other charges are paid in advance, if any, and (ii) acknowledging that there are not, to Lessee’s knowledge, any uncured defaults on the part of Lessor hereunder, or specifying such defaults if any are claimed.  Any such statement may be conclusively relied upon by any prospective purchaser or encumbrancer of the Premises.

(b) At Lessor’s option, Lessee’s failure to deliver such statement within such time shall be material breach of this Lease or shall be conclusive upon Lessee (i) that this Lease is in full force and effect, without modification except as may be represent by Lessor, (ii) that there are no uncured defaults in Lessor’s performance, and (iii) that not more than once month’s rent has been paid in advance or such failure may be considered by Lessor as a default by Lessee under this Lease.

(c) If Lessor desires to finance, refinance, or sell the Premises, or any part thereof, Lessee hereby agrees to deliver to any lender or purchaser designated by Lessor such financial statements of Lessee as may be reasonably required by such lender or purchaser.  Such statements shall include the past three years’ financial statements of Lessee.  All such financial statements shall be received by Lessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth.

17.           Lessor’s Liability. The term “Lessor” as used herein shall mean only the owner or owners at the time in question of the fee title or a lessee’s interest in a ground lease of the Premises, and except as expressly provided in Paragraph 15, in the event of any transfer of such title or interest, Lessor herein named (and in case of any subsequent transfers then the grantor) shall be relieved from and after the date of such transfer of all liability as  respects Lessor’s obligations thereafter to be performed, provided that any funds in the hands of Lessor or the then grantor at the time of such transfer, in which Lessee has an interest, shall be delivered to the grantee.  The obligations contained in this Lease to be perfo rmed by Lessor shall, subject as aforesaid, be binding on Lessor’s successors and assigns, only during their respective periods of ownership.

18.           Severability. The invalidity of any provisions of this Lease as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.

19.           Interest on Past-due Obligations. Except as expressly herein provided, any amount due to Lessor not paid when due shall bear interest at the maximum rate then allowable by law from the date due.  Payment of such interest shall not excuse or cure any default by Lessee under this Lease, provided, however, that interest shall not be payable on the late charges incurred by Lessee nor on any amounts upon which late charges are paid by Lessee.

20.           Time of Essence. Time is of the essence.

21.           Additional Rent. Any monetary obligations of Lessee to Lessor under the terms of this Lease shall be deemed to be rent.

22.           Incorporation of Prior Agreements; Amendments. This Lease contains all agreements of the parties with respect to any matter mentioned herein.  No prior agreement or understanding pertaining to any such matter shall be effective.  This Lease may be modified in writing only, signed by the parties in interest at the time of the modification.  Except as otherwise stated in this Lease, Lessee hereby acknowledges that neither the real estate broker listed in Paragraph 15 hereof nor any cooperating broker on this transaction nor the Lessor or any employees or agents of any of said persons has made any oral or written warranties or representations to Lessee relative to the condition or use by Lessee of said Premises and Lessee acknowledges that L essee assumes all responsibility regarding the Occupational Safety Health Act, the legal use and adaptability of the Premises and the compliance thereof with all applicable laws and regulations in effect during the term of this Lease except as otherwise specifically stated in this Lease.

23.           Notices. Any notice required or permitted to be given hereunder shall be in writing and may be given by personal delivery or by certified mail, and if given personally or by mail, shall be deemed sufficiently given if addressed to Lessee or to Lessor at the address noted below the signature of the respective parties, as the case may be. Either party may by notice to the other specify a different address for notice purposes except that upon Lessee’s taking possession of the Premises, the Premises shall constitute Lessee’s address for notice purposes.  A copy of all notices required or permitted to be given to Lessor hereunder shall be concurrently transmitted to such party or parties at such addresses as Lessor may from time to time hereafter desi gnate by notice to Lessee.

24.           Waivers. No waiver by Lessor or any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach by Lessee of the same or any other provision.  Lessor’s consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Lessor’s consent to or approval of any subsequent act by Lessee.  The acceptance of rent hereunder by Lessor shall not be a waiver of any preceding breach by Lessee of any provision hereof, other than the failure of Lessee to pay the particular rent so accepted, regardless of Lessor’s knowledge of such preceding breach at the time of acceptance of such rent.

25.           Recording. Either Lessor or Lessee shall, upon request of the other, execute, acknowledge and deliver to the other a “short form” memorandum of this Lease for recording purposes.

26.           Holding Over. If Lessee, with Lessor’s consent, remains in possession of the Premises or any part thereof after the expiration of the term hereof, such occupancy shall be a tenancy from month to month upon all the provisions of this Lease pertaining to the obligations of Lessee, but all options and rights of first refusal, if any, granted under the terms of this Lease shall be deemed terminated and be of no further effect during said month to month tenancy.

27.           Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.

28.           Covenants and Conditions. Each provision of this Lease performable by Lessee shall be deemed both a covenant and a condition.

29.           Binding Effect; Choice of Law. Subject to any provisions hereof restricting assignment or subletting by Lessee and subject to the provisions of Paragraph 17, this Lease shall bind the parties, their personal representatives, successors and assigns.  This Lease shall be governed by the laws of the State wherein the Premises are located.

30.           Subordination.

(a) This Lease, at Lessor’s option, shall be subordinate to any ground lease, mortgage, deed of trust, or any other hypothecation or security now or hereafter placed upon the real property of which the Premises are a part and to any and all advances made on the security thereof and to all renewals, modifications, consolidations, replacements and extensions thereof.  Notwithstanding such subordination, Lessee’s right to quiet possession of the Premises shall not be disturbed if Lessee is not in default and so long as Lessee shall pay the rent and observe and perform all of the provisions of this Lease, unless this Lease is otherwise terminated pursuant to its terms.  If any mortgagee, trustee or ground lessor shall elect to have this Lease prior to the lien of its mortgage, deed of trust or ground lease, and shall give written notice thereof to Lessee, this Lease shall be deemed prior to such mortgage, deed of trust, or ground lease, whether this Lease is dated prior or subsequent to the date of said mortgage, deed of trust or ground lease or the date of recording thereof.

(b) Lessee agrees to execute any documents required to effectuate an attornment, a subordination or to make this Lease prior to the lien of any mortgage, deed of trust or ground lease, as the case may be. Lessee’s failure to execute such documents within 10 days after written demand shall constitute a material default by Lessee hereunder, or, at Lessor’s option, Lessor shall execute such documents on behalf of Lessee at Lessee’s attorney-in-fact. Lessee does hereby make, constitute and irrevocably appoint Lessor as Lessee’s attorney-in-fact and in Lessee’s name, place and stead, to execute such documents in accordance with this paragraph 30(b).

31.           Attorney’s Fees. If either party or the broker named herein brings an action to enforce the terms hereof or declare rights hereunder, the prevailing party in any such action, on trial or appeal, shall be entitled to his reasonable attorney’s fees to be paid by the losing party as fixed by the court.  The provisions of this paragraph shall inure to the benefit of the broker named herein who seeks to enforce a right hereunder.

32.           Lessor’s Access. Lessor and Lessor’s agents shall have the right to enter the Premises at reasonable times for the purpose of inspecting the same, showing the same to prospective purchasers, lenders, or lessees, and making such alterations, repairs, improvements or additions to the Premises or to the building of which they are a part as Lessor may deem necessary or desirable.  Lessor may at any time place on or about the Premises any ordinary “For Sale” signs and Lessor may at any time during the last 120 days of the term hereof place on or about the Premises any ordinary “For Lease” signs, all without rebate of rent or liability to Lessee.

33.           Auctions. Lessee shall not conduct, nor permit to be conducted, either voluntarily or involuntarily, any auction upon the Premises without first having obtained Lessor’s prior written consent.  Notwithstanding anything to the contrary in this Lease, Lessor shall not be obligated to exercise any standard of reasonableness in determining whether to grant such consent.

34.           Signs. Lessee shall not place any sign upon the Premises without Lessor’s prior written consent except that Lessee shall have the right, without the prior permission of Lessor to place ordinary and usual for rent or sublet signs thereon.

35.           Merger. The voluntary or other surrender of this Lease by Lessee, or a mutual cancellation thereof, or a termination by Lessor, shall not work a merger, and shall, at the option of Lessor, terminate all or any existing subtenancies or may, at the option of Lessor, operate as an assignment to Lessor of any or all of such subtenancies.

36.           Consents. Except for paragraph 33 hereof, wherever in this Lease the consent of one party is required to an act of the other party such consent shall not be unreasonably withheld.

37.           Guarantor. In the event that there is a guarantor of this Lease, said guarantor shall have the same obligations as Lessee under this Lease.

38.           Quiet Possession. Upon Lessee paying the rent for the Premises and observing and performing all of the covenants, conditions and provisions on Lessee’s part to be observed and performed hereunder, Lessee shall have quiet possession of the Premises for the entire term hereof subject to all of the provisions of this Lease.  The individuals executing this Lease on behalf of Lessor represent and warrant to Lessee that they are fully authorized and legally capable of executing this Lease on behalf of Lessor and that such execution is binding upon all parties holding an ownership interest in the Premises.

39.           Options.

39.1           Definition. As used in this paragraph the word “Options” has the following meaning: (1) the right or option to extend the term of this Lease or to renew this Lease or to extend or renew any lease that Lessee has on other property of Lessor; (2) the option or right of first refusal to lease the Premises or the right of first offer to lease the Premises or the right of first refusal to lease other property of Lessor or the right of first offer to lease other property of Lessor; (3) the right or option to purchase the Premises, or the right of first refusal to purchase the Premises, or the right of first offer to purchase the Premises or the right or option to purchase other property of Lessor, or the right of first refusal to purchase other property of Les sor or the right of first offer to purchase other property of Lessor.

39.2           Options Personal. Each Option granted to Lessee in this Lease are personal to Lessee and may not be exercised or be assigned voluntarily or involuntarily, by or to any person or entity other than Lessee, provided, however, the Option may be exercised by or assigned to any Lessee Affiliate as defined in paragraph 12.2 of this Lease The Options herein granted to Lessee are not assignable separate and apart from this Lease.

39.3           Multiple Options. In the event that Lessee has any multiple options to extend or renew this Lease a later option cannot be exercised unless the prior option to extend or renew this Lease has been so exercised.

39.4           Effect of Default on Options.

(a) Lessee shall have no right to exercise an Option, notwithstanding any provision in the grant of Option to the contrary, (i) during the time commencing from the date Lessor give to Lessee a notice of default pursuant to paragraph 13.1(b) or 13.1(c) and continuing until the default alleged in said notice of default is cured, or (ii) during the period of time commencing on the day after a monetary obligation to Lessor is due from Lessee and unpaid (without any necessity for notice thereof to Lessee) continuing until the obligation is paid, or (iii) at any time after an event of default described in paragraphs 13.1(a), 13.1(d), or 13.1(e) (without any necessity of Lessor to give notice of such default to Lessee), or (iv) in the event that Lessor has given to Lessee three or more notices of default under paragraph 13.1(b), where a late charge has become payable under paragraph 13.4 for each of such defaults, or paragraph 13.1(c), whether or not the defaults are cured, during the 12 month period prior to the time that Lessee intends to exercise the subject Option.

(b) The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Lessee’s inability to exercise an Option because of the provisions of paragraph 39.4(a).

(c) All rights of Lessee under the provisions of an Option shall terminate and be of no further force or effect, notwithstanding Lessee’s due and timely exercise of the Option, if, after such exercise and during the term of this Lease, (i) Lessee fails to pay to Lessor a monetary obligation of Lessee for a period of 30 days after such obligation becomes due (without any necessity of Lessor to give notice thereof to Lessee), or (ii) Lessee fails to commence to cure a default specified in paragraph 13.1(c) within 30 days after the date that Lessor gives notice to Lessee of such default and/or Lessee fails thereafter to diligently prosecute said cure to completion, or (iii) Lessee commits a default described in paragraph 13.1 (a), 13.1(d) or 13.1(e) (without any necessity of Lessor to give notice of such default to Lessee), or (iv) Lessor gives to Lessee three or more notices of default under paragraph 13.1(b), where a late charge becomes payable under paragraph 13.4 for each such default, or paragraph 13.1(c), whether or not the defaults are cured.

40.           Multiple Tenant Building. In the event that the Premises are part of a larger building or group of buildings then Lessee agrees that it will abide by, keep and observe all reasonable rules and regulations which Lessor may make from time to time for the management, safety, care, and cleanliness of the building and grounds, the parking of vehicles and the preservation of good order therein as well as for the convenience of other occupants and tenants of the building.  The violations of any such rules and regulations shall be deemed a material breach of this Lease by Lessee.

41.           Security Measures. Lessee hereby acknowledges that the rental payable to Lessor hereunder does not include the cost of guard service or other security measures, and that Lessor shall have no obligation whatsoever to provide same. Lessee assumes all responsibility for the protection of Lessee, its agents and invitees from acts of third parties.

42.           Easements. Lessor reserves to itself the right, from time to time, to grant such easements, rights and dedications that Lessor deems necessary or desirable, and to cause the recordation of Parcel Maps and restrictions, so long as such easements, rights, dedications, Maps and restrictions do not unreasonably interfere with the use of the Premises by Lessee.  Lessee shall sign any of the aforementioned documents upon request of Lessor and failure to do so shall constitute a material breach of this Lease.

43.           Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one party to the other under the provisions hereof, the party against whom the obligation to pay the money is asserted shall have the right to make payment “under protest” and such payment shall not be regarded as a voluntary payment, and there shall survive the right on the part of said party to institute suit for recovery of such sum.  If it shall be adjudged that there was no legal obligation on the part of said party to pay such sum or any part thereof, said party shall be entitled to recover such sum or so much thereof as it was not legally required to pay under the provisions of this Lease.

44.           Authority. If Lessee is a corporation, trust, or general or limited partnership, each individual executing this Lease on behalf of such entity represents and warrants that he or she is duly authorized to execute and deliver this Lease on behalf of said entity.  If Lessee is a corporation, trust or partnership, Lessee shall, within thirty (30) days after execution of this Lease, deliver to Lessor evidence of such authority satisfactory to Lessor.

45.           Conflict. Any conflict between the printed provisions of this Lease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions.

46.           Insuring Party. The insuring party under this lease shall be the Lessee.

47.           Addendum. Attached hereto is an addendum or addenda containing paragraphs 48 through 50 which constitutes a part of this Lease.

48.           See attached.

49.           See attached.

50.           See attached.

LESSOR AND LESSEE HAVE CAREFULLY READ AND REVIEWED THIS LEASE AND EACH TERM AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOW THEIR INFORMED AND VOLUNTARY CONSENT THERETO. THE PARTIES HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LESSOR AND LESSEE WITH RESPECT TO THE PREMISES.

IF THIS LEASE HAS BEEN FILLED IN IT HAS BEEN PREPARED FOR SUBMISSION TO YOUR ATTORNEY FOR HIS APPROVAL. NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY THE REAL ESTATE BROKER OR ITS AGENTS OR EMPLOYEES AS TO THE LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS LEASE OR THE TRANSACTION RELATING THERETO; THE PARTIES SHALL RELY SOLELY UPON THE ADVICE OF THEIR OWN LEGAL COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS LEASE.

The parties hereto have executed this Lease at the place on the dates specified immediately adjacent to their respective signatures.

Executed at:	_____________________	Ronald N. Tutor
On	_____________________	By: /s/Ronald N. Tutor
		“LESSOR” (Corporate seal)
Address:	5395 Round Meadow Road
	Hidden Hills, CA 91302
Executed at:	_____________________	Tutor-Saliba Corporation­
On	_____________________	By:  /s/Naseeb M. Saliba
Address:	15901 Olden Street	“LESSEE” (Corporate seal)
	Sylmar, CA 91342

ATTACHMENT 48

Multiple options.  Unless terminated in writing by Lessee at least thirty (30) days before the end of the term of this Lease, this Lease is automatically extended for an additional five years under the same terms and conditions.  If it is so extended for a second five year term, it will be automatically extended for an additional five year term unless it is terminated in writing by Lessee at least thirty (30) days before the end of such term.  Such extension shall be on the same terms and conditions.

ATTACHMENT 49

 The Lessor and Lessee agree that for a period of three years from the date hereof, any sale or transfer of title to any of the properties leased hereunder must be approve in writing by Lessee and if so approved by Lessee, the following provisions shall apply:

 (i) If such sale is made during the first six months of this lease after payment of the outstanding encumbrances on such property, all additional proceeds shall be paid to Lessee;

 (ii) If such sale is made after six months but within one year of this lease after payment of the outstanding encumbrances, then ninety percent (90%) of the additional proceeds shall be paid to Lessee and ten percent (10%) of  of such additional proceeds retained by Lessor;

 (iii) If such sale is made after the first year and during the second year of this lease after payment of the outstanding encumbrances, then seventy percent (70%) of the additional proceeds shall be paid to Lessee and thirty percent (30%) of said additional proceeds retained by Lessor;

 (iv) If such sale is made after the second year and during the third year of this lease after payment of the outstanding encumbrances, then fifty percent (50%) of the additional proceeds shall be paid to Lessee and fifty percent (50%) of said additional proceeds retained by Lessor.

 After three years from the date hereof, in the event of a proposed sale of all or any one of the properties leased hereunder, the Lessee shall have a right of first refusal to purchase such property or properties under the same terms and conditions as the proposed purchaser.  Lessor shall give Lessee not less than thirty (30) days written notice of any such offer setting forth the proposed terms and conditions thereof.  If it shall notify Lessor of such in writing within thirty (30) days after receipt of the Lessor's notice and shall effect the purchase under said identical terms and conditions within the next thirty (30) days. 

ATTACHMENT 50

In the event that Lessor dies during the term hereof, Lessee shall have an option to purchase one or more of the properties leased hereunder at the appraised value established for such property or properties in Lessor's estate subject to the adjustment during the first three years as set forth below. The executor or administrator of Lessor's estate, shall give to Lessee a complete copy of all appraisals of the properties leased hereunder within thirty (30) days after the filing of an estate tax return for Lessee's estate or the estate inventory if no estate tax return is to be filed. If Lessee desires to purchase one or more of the properties leased hereunder, it shall within (30) days of the receipt of the appraisals of the property, notify the executor or administrator of Lessor's estate of its intention to purchase one or more of such properties and shall complete such purchase or purchases for cash within six (6) months of the date of receipt of said appraisals. The costs including title insurance shall be borne by the Lessor's estate and the Lessee in accordance with the custom and practice for the purchase and sale of real property in Southern California.

If Lessor dies during the first six months of the terms hereof, Lessee shall be entitled to repurchase all or any one of the properties leased hereunder at the Lessor's book value.

If Lessor dies after the first six months of the term of this lease but before one year, then Lessee shall have the right to repurchase all or any one of the properties leased hereunder for an amount equal to Lessor's book value of such property plus an amount equal to ten percent (10%) of the difference between said book value and the appraised value of said property for estate purposes.

If the Lessor dies after the first year of this lease term but before the second year, then Lessee shall have the right to repurchase all or any one of the properties leased hereunder for an amount equal to Lessor's book value of such property plus an amount equal to thirty percent (30%) of the difference between said book value and the appraised value of said property for estate purposes.

If Lessor dies after the second year of this lease but before the third year, then Lessee shall have the right to repurchase all or any one of the properties leased hereunder for an amount equal to Lessee's book value of such property plus an amount equal to fifty percent (50%) of the difference between said book value and the appraised value of said property for estate purposes.

That portion of the Rancho Ex-Mission De San Fernando, in the City of Los Angeles, described as follows:

Beginning at the intersection of the Southerly line of that certain 10 foot wide strip of land conveyed to the City of Los Angeles, for public street purposes by deed recorded in Book 11634 Page 255 of Official Records of said County, with the Southeasterly line of that certain parcel of land convoyed to the City of Los Angeles by deed recorded in Book 3275 Page 212 of Deeds, records of said County; thence Easterly along said Southerly line south 78° 32' 53'' East, 10.05 feet to the true point of beginning; thence leaving said Southerly line South 11° 27' 07'' West, 333.58 feet to the beginning of a tangent curve concave Northwesterly, and having a radius of 400 feet; thence Southwesterly along said curve to the most Northerly corner of Lot 1 of Tract 25695, as per map recorded in Book 663 Pages 25, 26 and 27 of Maps, in the off ice of the County Recorder of said County; thence (on a different basis of bearings), along the Northeasterly line of said Lot 1, South 27° 55' 55'' East to the Northwesterly line of Olden Street, shown on said map of Tract 25695 as Lots 2 and 3, and labeled thereon as “Future Street”; thence Northeasterly, along said Olden Street, to the Southerly line of San Fernando Road, as shown on said map of Tract 25695; thence Westerly along said San Fernando Road to the true point of beginning.

EXCEPTING therefrom all underlying minerals, oil, gas, petroleum and other hydrocarbon substances, without, however, the right of entry on any portion of the surface of said land, to explore for, develop or remove said substance, but with the full right to explore for, develop and remove said substances from any other portion of said land which is 500 feet or more below the surface, and also with the full right to drill under or through said land, from or at any other point or points outside the boundaries of said land at a depth of 500 feet or more below the surface of the ground for the exploration, development and removal of said substances, as excepted and reserved by Robert F. Careyl and wife, in deed recorded November 19, 1959 as Instrument No. 1098 in Book D 668 Page 627, Official Records.

EXHIBIT A

PARCEL 1:

THAT PORTION OF LOT 5 IN RANGE 2 OF THE TEMPLE AND GIBSON TRACT, IN THE CITY OF COMPTON IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 2 PAGES 540 AND 541 OF MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, DESCRIBED AS FOLLOWS:

BEGINNING AT THE INTERSECTION OF THE EASTERLY LINE OF ALAMEDA STREET, 61 FEET WIDE, AS DESCRIBED IN PARCELS 56, 57, AND 58 OF THE DEED TO CITY OF COMPTON, RECORDED JUNE 25, 1943 AS DOCUMENT NO. 1063 IN BOOK 20066 PAGE 205, OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, WITH THE SOUTHERLY LINE OF MYRRH STREET 40 FEET WIDE, AS DESCRIBED IN DEED TO THE CITY OF COMPTON, RECORDED ON SEPTEMBER 19, 1949 AS DOCUMENT NO. 1907, IN BOOK 31026 PAGE 355, OFFICIAL RECORDS; THENCE SOUTHERLY ALONG SAID ALAMEDA STREET A DISTANCE OF 877.50 FEET, MORE OR LESS, TO THE NORTHWESTERLY CORNER OF THE LAND CONVEYED TO PACIFIC TELEPHONE AND TELEGRAPH COMPANY BY DEED RECORDED DECEMBER 31, 1963 AS DOCUMENT NO. 2031 IN BOOK D-2305 PAGE 833, OFFICIAL RECORDS; THENCE EASTERLY ALONG THE NORTHERLY LINE OF SAID LAND A DISTANCE OF 361.28 FEET TO THE NORTHEASTERLY CORNER THEREOF; THENCE NORTHERLY PARALLEL WITH THE WESTERLY LINE OF SANTA FE AVENUE, 100 FEET WIDE, AS SHOWN ON MAP OF TRACT 14906 RECORDED IN BOOK 312 PAGES 41 AND 42 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, A DISTANCE OF 225 FEET, MORE OR LESS, TO A LINE THAT IS PARALLEL WITH AND DISTANT 25 FEET SOUTHERLY, MEASURED AT RIGHT ANGLES, FROM THE SOUTHERLY LINE AND PROLONGATION OF CYPRESS STREET, AS SHOWN ON SAID MAP OF TRACT 14906; THENCE EASTERLY ALONG SAID PARALLEL LINE A DISTRANCE OF 114.33 FEET; THENCE NORTHEASTERLY IN A DIRECT LINE TO THE INTERSECTION OF SAID SOUTHERLY LINE OF CYPRESS STREET WITH THE WESTERLY LINE OF WILLOW STREET AS SHOWN ON SAID MAP OF TRACT NO. 14906; THENCE NORTHERLY ALONG SAID WESTERLY LINE A DISTANCE OF 626.65 FEET, MORE OR LESS, TO SAID SOUTHERLY LINE OF MYRRH STREET; THENCE WESTERLY ALONG SAID STREET A DISTANCE OF 562.89 FEET, MORE OR LESS TO THE POINT OF BEGINNING.

PARCEL 2:

THAT PORTION OF LOT 5 IN RANGE 2 OF THE TEMPLE AND GIBSON TRACT, IN THE CITY OF COMPTON, IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 2 PAGES 540 AND 541 OF MISCELLANEOUS RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, INCLUDED WITHIN A STRIP OF LAND 61 FEET WIDE, KNOWN AS ALAMEDA STREET AS DESCRIBED IN PARCELS 56, 57 AND 58 OF THE DEED TO THE CITY OF COMPTON, RECORDED JUNE 25, 1943 AS INSTRUMENT NO. 1063 IN BOOK 20066 PAGE 205 OF OFFICIAL RECORDS OF SAID COUNTY, BOUNDED AS FOLLOWS:

BOUNDED NORTHERLY BY THE SOUTHERLY LINE OF THE NORTHERLY 40.0 FEET OF SAID LOT 5.

BOUNDED SOUTHERLY BY THE WESTERLY PROLONGATION OF THE NORTHERLY LINE OF THE LAND DESCRIBED IN THE DEED TO PACIFIC TELEPHONE AND TELEGRAPH COMPANY, RECORDED DECEMBER 31, 1963 AS INSTRUMENT NO. 2031 IN BOOK D-2305 PAGE 833, OFFICIAL RECORDS OF SAID COUNTY.

EXHIBIT B

THE LAND REFERRED TO IN THIS POLICY IS SITUATED IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:

THE WEST ONE-HALF OF FARM LOT 968, ACCORDING TO MAP SHOWING SUBDIVISION OF LANDS BELONGING TO SEMI-TROPIC LAND AND WATER COMPANY, IN THE COUNTY OF SAN BERNARDINO, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 11 OF MAPS, PAGE 12, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.

EXHIBIT C

FIRST AMENDMENT TO

LEASE AGREEMENT DATED

JUNE 10, 1987

This FIRST AMENDMENT TO THE LEASE AGREEMENT DATED JUNE 10, 1987, ("Amendment") is made and entered into effective as of the 1st day of January 1990, by and among Ronald N. Tutor, an individual (Lessor) and Tutor-Saliba Corporation, a California corporation, (Lessee).

The parties agree to raise the lease payments to Sixty Three Thousand and No Dollars ($63,000) per month effective January 1, 1990 through June 30, 1992, for the property described in Exhibit “A” and “C” of the Lease Agreement.

The parties also agree that effective March 31,1990, the property described in Exhibit “B” will no longer be leased to Tutor-Saliba Corporation and/or affiliated entities.

Unless otherwise stated, all terms and conditions in this Amendment shall remain the same as stated in the Lease Agreement.

IN WITNESS WHEREOF, the parties have executed this Amendment as of the day and year first above written.

Ronald N. Tutor, an individual

Lessor

By:  /s/Ronald N. Tutor

TUTOR-SALIBA CORPORATION

A California corporation

Lessee

By:   /s/Kenneth R. Burk

       Kenneth R. Burk

       Chief Financial Officer

SECOND AMENDMENT TO

LEASE AGREEMENT DATED

JUNE 10, 1987

This SECOND AMENDMENT TO THE LEASE AGREEMENT DATED JUNE 10, 1987, ("Amendment") is made and entered into effective as of the 1st day of January 1992, by and among Ronald N. Tutor, an individual (Lessor) and Tutor-Saliba Corporation, a California corporation, (Lessee).

The parties agree to extend the term of the lease for five years to June 30, 1997.

The monthly lease rate effective January 1, 1992, is Seventy Nine Thousand Dollars ($79,000) for the period of January 1, 1992 through June 30, 1997 for the property described in Exhibits “A” and “C” of the Lease Agreement.

Unless otherwise stated, all terms and conditions in this Amendment shall remain the same as stated in the Lease Agreement.

IN WITNESS WHEREOF, the parties have executed this Amendment as of January 1, 1992.

Ronald N. Tutor, an individual

Lessor

By:  /s/Ronald N. Tutor

TUTOR-SALIBA CORPORATION

A California corporation

Lessee

By:  /s/Naseeb M. Saliba

       Naseeb M. Saliba

       Secretary

THIRD AMENDMENT TO

LEASE AGREEMENT DATED

JUNE 10, 1987

This THIRD AMENDMENT TO THE LEASE AGREEMENT DATED JUNE 10, 1987, ("Amendment") is made and entered into effective as of the 1st day of January 1997, by and among Ronald N. Tutor, an individual (Lessor) and Tutor-Saliba Corporation, a California corporation, (Lessee).

The parties agree to extend the term of the lease for seven years to June 30, 2004.

The monthly lease rate effective January 1, 1997, is One Hundred Thousand Dollars ($100,000) for the period of January 1, 1997 through June 30, 2004 for the property described in Exhibits "A" and "C" of the Lease Agreement.

Unless otherwise stated, all terms and conditions in this Amendment shall remain the same as stated in the Lease Agreement.

IN WITNESS WHEREOF, the parties have executed this Amendment as of January 1, 1997.

Ronald N. Tutor, an individual

Lessor

By:  /s/Ronald N. Tutor

TUTOR-SALIBA CORPORATION

A California corporation

Lessee

By:  /s/William B. Sparks

       William B. Sparks

        Secretary

FOURTH AMENDMENT TO

LEASE AGREEMENT DATED

JUNE 10, 1987

This FOURTH AMENDMENT TO THE LEASE AGREEMENT DATED JUNE 10, 1987, ("Amendment") is made and entered into effective as of the 1st day of July 2004, by and among Ronald N. Tutor, an individual (Lessor) and Tutor-Saliba Corporation, a California corporation, (Lessee).

The parties agree to extend the term of the lease for five years to June 30, 2009.

The monthly lease rate effective July 1, 2004, is One Hundred Thousand Dollars ($100,000) for the period of July 1, 2004 through June 30, 2009 for the property described in Exhibits "A" and "C" of the Lease Agreement.

Unless otherwise stated, all terms and conditions in this Amendment shall remain the same as stated in the Lease Agreement.

IN WITNESS WHEREOF, the parties have executed this Amendment as of July 1, 2004.

Ronald N. Tutor, an individual

Lessor

By:  /s/Ronald N. Tutor

TUTOR-SALIBA CORPORATION

A California corporation

Lessee

By:  /s/William B. Sparks

       William B. Sparks

        Secretary

FIFTH AMENDMENT TO

LEASE AGREEMENT DATED

JUNE 10, 1987

This FIFTH AMENDMENT TO THE LEASE AGREEMENT DATED JUNE 10, 1987, ("Amendment") is made and entered into effective as of the 1st day of June 2006, by and among Ronald N. Tutor, an individual (Lessor) and Tutor-Saliba Corporation, a California corporation, (Lessee).

The parties agree to extend the term of the lease to July 31, 2016.

The monthly lease rate effective June 1, 2006, is One Hundred Thousand Dollars ($100,000) for the period of June 1, 2006 through June 30, 2007 for the property described in Exhibits "A" and "C" of the Lease Agreement and shall increase at the rate of three percent (3%) per annum thereafter.

Unless otherwise stated, all terms and conditions in this Amendment shall remain the same as stated in the Lease Agreement.

IN WITNESS WHEREOF, the parties have executed this Amendment as of June 1, 2006.

Ronald N. Tutor, an individual

Lessor

By:  /s/Ronald N. Tutor

TUTOR-SALIBA CORPORATION

A California corporation

Lessee

By:  /s/William B. Sparks

       William B. Sparks

        Senior Vice President

SIXTH AMENDMENT TO

LEASE AGREEMEND DATED

JUNE 10, 1987

This SIXTH AMENDMENT TO THE LEASE AGREEMENT DATED JUNE 10, 1987, ("Amendment") is made and entered into effective as of the 1st day of August 2008, by and among Ronald N. Tutor, an individual (Lessor) and Tutor-Saliba Corporation, a California corporation, (Lessee).

The parties agree to extend the term of the lease to July 31, 2016.

The monthly lease rate effective August 1, 2008, is One Hundred-Twenty Thousand Dollars ($120,000) for the period of August 1, 2008 through July 31, 2009 for the property described in Exhibits "A" and "C" of the Lease Agreement and shall increase at the rate of three percent (3%) per annum thereafter.

Unless otherwise stated, all terms and conditions in this Amendment shall remain the same as stated in the Lease Agreement.

IN WITNESS WHEREOF, the parties have executed this Amendment as of August 1, 2008.

Ronald N. Tutor, an individual

Lessor

By:  /s/Ronald N. Tutor

TUTOR-SALIBA CORPORATION

A California corporation

Lessee

By:  /s/William B. Sparks

       William B. Sparks

        Senior Vice President