Exhibit 10.26

FIRST AMENDMENT TO OFFICE LEASE AGREEMENT
THIS FIRST AMENDMENT TO OFFICE LEASE AGREEMENT (this “Amendment”) is made as of
the 22 day of April, 2020 (the "Execution Date"), by and between Westlake Park
Place, Inc., a Delaware corporation (“Landlord”) and Arcutis Biotherapeutics,
Inc., a Delaware corporation (“Tenant”).
W H E R E A S:
A. Landlord and Tenant are parties to that certain Office Lease Agreement dated
January 31, 2019 (the “Lease”) with respect to 4,741 rentable square feet of
space commonly known as Suite 110 (the “Current Premises”) in the building
located at 2945 Townsgate Road, Thousand Oaks, California (the “Current
Building”), as more particularly described in the Lease.
B.  The parties desire to amend the Lease in certain respects as more
particularly set forth below.
NOW, THEREFORE, in consideration of the execution and delivery of the Lease,
this Amendment and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby further agree
as follows:
1. Amendment Controlling. This Amendment shall be deemed a part of, but shall
take precedence over and supersede any provisions to the contrary contained in
the Lease.
2. Capitalized Terms. All initial capitalized terms used in this Amendment shall
have the same meaning as set forth in the Lease unless otherwise provided
herein.
3. No Default. Tenant hereby certifies that, to Tenant's actual knowledge as of
the Execution Date hereof without any duty to enquire, Landlord is currently in
good standing under the Lease and that Landlord has fulfilled all of its duties
and obligations under the Lease to date. Landlord hereby certifies that, to
Landlord's actual knowledge as of the Execution Date hereof without any duty to
enquire, Tenant is currently in good standing under the Lease and that Tenant
has fulfilled all of its duties and obligations under the Lease to date.
4. Tenant Name. The parties acknowledge and agree that there was a scrivener’s
error in the Tenant entity name in the Lease and that the Tenant entity name
should be, and shall be at all times from and after the date of the Lease,
Arcutis Biotherapeutics, Inc., a Delaware corporation, and not Arcutis, Inc..
Arcutis Biotherapeutics, Inc. hereby assumes all liabilities and
responsibilities of Tenant under the Lease from and after the date of the Lease
and hereby ratifies and confirms all of the terms and conditions of the Lease,
as modified hereby.

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5. Relocation to New Space. Landlord and Tenant hereby acknowledge and agree
that the Tenant shall relocate from the Current Premises in the Current Building
to the New Space in the New Building (both as hereinafter defined) in accordance
with the following terms:
a. As used in this Amendment, the term “New Space” means the approximately
22,643 rentable square feet consisting of the entire third floor (known as Suite
300) of the building located at 3027 Townsgate Road, Thousand Oaks, California
(the “New Building”), as shown on Exhibit A attached hereto. The New Building
contains approximately 60,466 rentable square feet. Tenant shall have the right,
within thirty (30) days after the New Space Commencement Date (defined below),
to have a licensed and insured architect, reasonably approved by Landlord,
remeasure the New Space using the Standard Method for Measuring Floor Area in
Office Buildings ANSI/BOMA Z65.1-2017 using a load factor of 1.1527. In the
event the results of such remeasurement reveal a different rentable square
footage than the figure set forth in this Amendment, the parties shall execute
an amendment adjusting the square footage, Base Rent, Tenant’s Proportionate
Share and any other figure set forth herein or in the Lease to reflect the
remeasurement.
b. Tenant shall have the right to use all balconies located on the third floor
of the New Building (and shall have the right to place outdoor furniture and
fixtures on such balconies at Tenant’s cost and expense), subject to compliance
with the terms and conditions of the Lease and applicable law. Tenant shall be
responsible for the regular cleaning of and keeping all third floor balconies
free of debris; provided, however, Landlord shall be responsible for ongoing
maintenance and necessary repairs of said balconies in a first-class manner
consistent with the other Common Areas (the costs of which shall be reimbursed
to Landlord through Tenant’s payment of its share of Operating Costs as further
set forth in the Lease).
c. The Term of the Lease with respect to the New Space shall begin on the
earlier of (i) the date that is fifteen (15) days after the date that the
Landlord notifies Tenant in writing that Landlord has achieved “Substantial
Completion” of the “Tenant Improvements” as such terms are defined in the Work
Letter attached as Exhibit B hereto (the “Work Letter”) (or the date on which
Substantial Completion of the Tenant Improvements would have occurred but for
the occurrence of any Tenant Delay (as defined in the Work Letter)), and (ii)
the date on which Tenant occupies any portion of the New Space and begins
conducting business therein (the “New Space Commencement Date”). The Term of the
Lease with respect to the Current Premises only shall automatically terminate on
the day that is one (1) day prior to the New Space Commencement Date. Tenant
shall continue to be liable for all Rent (including, without limitation, Base
Rent and, along with Landlord, the reconciliation of Tenant’s Proportionate
Share of Taxes, Insurance Costs and Operating Expenses) and, together with
Landlord, other obligations accruing under the Lease applicable to each party
with respect to the Current Premises until and through the date that is one (1)
day prior to the New Space Commencement Date. Notwithstanding anything to the
contrary contained herein, in the event Substantial Completion of the Tenant
Improvements does not occur
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within eight (8) months following the Execution Date, as such date may be
extended for Force Majeure Events for a maximum of 120 days in the aggregate and
any Tenant Delay (the “Outside Date”), then, as Tenant’s sole and exclusive
remedy, Landlord shall pay Tenant an amount equal to $500.00 per day for each
day that Substantial Completion of the Tenant Improvement fails to occur after
the Outside Date.
d. Upon Substantial Completion of the Tenant Improvements, except as otherwise
set forth herein (including Exhibit B) and subject to Landlord’s ongoing repair
and maintenance obligations expressly set forth in the Lease, Landlord shall
deliver and Tenant shall accept the New Space broom-cleaned and in its AS-IS
condition with all building systems servicing the New Space and the Tenant
Improvements in good working order. Landlord agrees to deliver the Tenant
Improvements in compliance with all applicable laws (including ADA) and shall
obtain a certificate of occupancy or its legal equivalent allowing legal
occupancy of the New Space as a precondition to the occurrence of the
Substantial Completion of the Tenant Improvements. Tenant shall not have any
obligation to remove or restore the New Space at the expiration or earlier
termination of the Lease, including (i) any of the improvements existing in the
New Space as of the New Space Commencement Date including the improvements set
forth in the Final Plans (defined in Exhibit B), and (ii) any alterations in the
New Space made by or on behalf of Tenant during the New Term, as extended, so
long as such alterations are (a) approved by the Landlord, which approval shall
not be unreasonably withheld, delayed or conditioned, (b) typical office
improvements in nature (including cabling) and (c) consistent with the Tenant
Improvements.
e. On or before the date that is seven (7) days after the New Space Commencement
Date (“Surrender Date”), Tenant shall fully vacate the Current Premises and
deliver the same to Landlord with all of Tenant’s furniture, fixtures, equipment
and other items of personal property removed therefrom (but Tenant shall not
have to remove, demolish or modify any leasehold improvements or other
alterations in the Current Premises existing as of the Execution Date hereof).
Tenant’s failure to fully vacate and surrender the Current Premises as required
by this Section 5 on or prior to the Surrender Date shall entitle Landlord to
collect holdover rent from Tenant as set forth in Section 22 of the Lease but
the words “one hundred fifty percent (150%)” shall be deleted and replaced with
the words “one hundred three percent (103%)” for the first thirty (30) days
following the Surrender Date (it being acknowledged and agreed to by Tenant that
the holdover rate after such 30-day period shall be 150% as set forth in the
Lease, not 103%).
f. Landlord shall notify Tenant in writing of when Landlord believes, in
Landlord’s good faith judgment, that Substantial Completion of the Tenant
Improvements will occur in fifteen (15) days (but in no event shall such notice
be deemed a guaranteed delivery date or obligate Landlord to such date but
Substantial Completion of the Tenant Improvements will not occur prior to such
estimated date). Upon its receipt of such notice, Tenant and its employees,
agents, contractors and consultants shall have access to the New Space for the
sole purposes of inspecting, measuring, cabling and
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fixturing same at any time thereafter (including during the fifteen (15) day
period following the Substantial Completion of the Tenant Improvements, as set
forth in Section 5(c)(i) above), so long as such entry does not constitute a
Tenant Delay or otherwise unreasonably interfere with the performance and/or
completion of any aspect of the Tenant Improvements. In addition, commencing
upon the Execution Date, Tenant and its employees, agents, contractors and
consultants shall have access to the New Space pursuant to this Section solely
for purposes of inspecting, measuring and installing all kinds of cabling,
wiring and other similar items to the extent it makes sense to install the same
at different stages of construction, and such access shall be subject to prior
coordination with and approval by the Landlord or the general contractor and
shall not interfere with the construction of the Tenant Improvements. Tenant’s
early access of the New Space shall be subject to the terms and conditions of
the Lease (including, without limitation, the indemnification and insurance
obligations with respect to the New Space), except for Tenant’s obligation to
pay Rent for the New Space (unless Tenant business conducting business within
the New Space and thus triggering the New Space Commencement Date).
g. As of the New Space Commencement Date, any and all references in the Lease to
(i) “Tenant’s Proportionate Share of the Building” shall mean 37.4475%, (ii)
“Tenant’s Proportionate Share of the Project” shall mean 4.8989%, based on the
Project containing 462,205 rentable square feet (iii) the “Premises” shall mean
the New Space, and (iv) the “Building” shall mean the New Building. Furthermore,
as of the New Space Commencement Date, all of the terms of the Lease shall apply
to Tenant’s use and occupancy of the New Space, except as otherwise expressly
provided in this Amendment.
h. Tenant shall be permitted, at its sole cost and expense, to install a
security system within the New Space, subject to Landlord’s prior written
consent, which shall not be unreasonably withheld or conditioned and shall be
granted or denied within ten (10) business days. By the Surrender Date, Tenant
shall, at its sole option and expense, remove its existing security system from
the Current Premises and, if applicable, promptly repair any damage to the
Current Premises or Current Building caused thereby. Tenant shall, at its sole
option and expense, remove the security system from the New Space upon the
expiration or earlier termination of the New Term (defined below) and, if
applicable, promptly repair any damage to the New Space or New Building caused
thereby.
i. Tenant shall accept and Landlord shall deliver all the furniture, fixtures
and equipment existing in the New Space (the “Existing FFE”) as of the Execution
Date hereof, including those items listed in Exhibit E attached hereto, all in
their as-is, where-is condition and Landlord shall assign, at no cost to Tenant,
any and all of Landlord’s interest in and to the Existing FFE to Tenant as of
the New Space Commencement Date without the need for further documentation as if
it were a transfer via bill of sale and Landlord shall have no liability or
responsibility with respect to same. Tenant acknowledges and agrees that
Landlord has made no and does not make any representation, warranty or guaranty,
express or implied, with respect to the condition of
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the Existing FFE or its merchantability or fitness for Tenant’s purposes and
Landlord hereby expressly disclaims same. Landlord shall use commercially
reasonable efforts to preserve the condition of the Existing FFE during the
performance of the Tenant Improvements. Notwithstanding the foregoing, Tenant
may require that Landlord remove some or all of the Existing FFE from the New
Space by the New Space Commencement Date so long as Tenant provides written
notice to Landlord of which items are to be removed within sixty (60) days after
the Execution Date hereof. Tenant shall remove, at its cost, any Existing FFE
that it does not have Landlord remove pursuant to this paragraph on or prior to
the expiration or earlier termination of the New Term.
6. New Term. Landlord and Tenant hereby acknowledge and agree that the Lease
Term with respect to the New Space only shall be extended for 91 months
following the New Space Commencement Date (the “New Term”).
7. Base Rent During the New Term. Beginning on the New Space Commencement Date,
Tenant shall pay Base Rent in the following amounts for the New Space for the
specified period:

MonthsMonthly Base Rent Per RSFMonthly Base Rent1 through 12$3.35*$75,854.05*13
through 24$3.45*$78,118.35*25 through 36$3.55$80,382.6537 through
48$3.66$82,873.3849 through 60$3.77$85,364.1161 through 72$3.88$87,854.8473
through 84$4.00$90,572.0085 through 91$4.12$93,289.16

*Notwithstanding anything to the contrary, provided that Tenant is not then in
default beyond applicable notice and cure periods under the Lease during such
months, Base Rent shall abate (i) 100% for months 1-7 following the New Space
Commencement Date, (ii) by 50% for months 8-12 following the New Space
Commencement Date, and (iii) by 25% for months 13-20 following the New Space
Commencement Date (collectively, the “Abated Rent”); provided, however, upon the
cure of any such default, Tenant shall then be entitled to such Abated Rent. If
Landlord terminates the Lease due to a Tenant default thereunder, then all
unamortized Abated Rent on a straight-line basis over the New Term granted to
Tenant as of such date shall be immediately due and payable to Landlord in one
lump sum.
Tenant shall pay the first month of Base Rent due for the New Space to Landlord
simultaneously with Tenant’s execution and delivery of this Amendment, which
amount shall be applied to Base Rent during the first full calendar month in
which Base Rent is due hereunder following the New Space Commencement Date
(subject to any Abated Rent period).
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8. Base Year During New Term. Beginning on the New Space Commencement Date, any
and all references in the Lease to “Base Year” shall mean the calendar year
2020. Notwithstanding anything to the contrary, Tenant shall have no obligation
to pay any Operating Expenses, Taxes or Insurance Costs for the first twelve
(12) months following the New Space Commencement Date.
9. Termination Right. Provided that Tenant is not then in default of the Lease
beyond applicable notice and cure periods, Tenant shall have a one-time right to
terminate the Lease, which termination shall be effective upon the last day of
the month that is sixty-seven (67) months following the New Space Commencement
Date (the “Termination Date”) by providing written notice of same to Landlord no
more than fifteen (15) months and not less than twelve (12) months prior to the
Termination Date, failing which Tenant’s termination right set forth in this
paragraph shall be deemed waived. Furthermore, Tenant’s termination right set
forth herein shall be conditioned upon Tenant delivering to Landlord, within ten
(10) days after delivery of Tenant’s termination notice, a termination fee equal
to the Total Leasing Costs (defined below). “Total Leasing Costs” shall mean:
(i) two (2) months’ of the total Rent due under the Lease as of the date of
Tenant’s termination notice, plus (ii) the unamortized balance of the New
Allowance (defined in the Work Letter) calculated on a straight-line basis
amortized at eight percent (8%), plus (iii) the unamortized balance (on a
straight line basis over the New Term) seventy-five percent (75%) of the Abated
Rent, plus (iv) the unamortized balance (on a straight-line basis over the New
Term) all brokerage commissions in connection with the Lease and this Amendment.
Tenant’s failure to deliver the foregoing termination fee to Landlord within
said 10-day period shall be deemed a waiver of Tenant’s termination right
hereunder. All Rent and other obligations of Tenant and Landlord under the Lease
shall continue to be due and payable and/or performed as set forth therein until
and through the Termination Date if Tenant exercises the termination right
provided in this paragraph.
10. Option to Extend. Exhibit H of the Lease is hereby deleted in its entirety
and replaced with Exhibit H attached hereto.
11. SNDA. Notwithstanding anything to the contrary in the Lease, in the event
Landlord places a Mortgage on the Building, Landlord shall use commercially
reasonable efforts to deliver to Tenant a subordination, non-disturbance and
attornment agreement from Landlord’s Mortgagee on a commercially reasonable
form. Landlord represents and warrants to Tenant that, as of the Execution Date
hereof, there are no existing lenders or ground lessors with respect to the New
Building.
12. Signage. In addition to the signage rights granted to Tenant in the Lease
(which rights shall apply with respect to the New Space as of the New Space
Commencement Date), Tenant shall have the right, at Tenant’s sole cost and
expense (subject to the New Allowance as set forth in the Work Letter), to
install signage in Tenant’s reception area inside of the New Space and Tenant’s
name and logo in the third (3rd) floor elevator lobby and on the New Building’s
façade, which may be back-lit, at Tenant’s sole cost and expense, only if
permitted by the City of Thousand Oaks, any signage criteria and/or committee
governing the Project and any recorded covenants and/or declarations binding on
the New Building with respect to signage
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(collectively, the “Westlake Signage Program”), in only one (1) of the two (2)
location options shown on Exhibit C attached hereto (“Building Façade Sign”),
and Tenant’s name on the existing monument sign as shown on Exhibit F attached
hereto; provided, however, Exhibit F shows merely the location of the monument
signage as of the Execution Date hereof and Landlord reserves the right to
relocate within close proximity to the Building, redesign or otherwise modify
such monument sign from time to time so long as Tenant shall have the right to
have its name on any monument sign then serving the New Building and any costs
of relocation, redesign or modification shall be borne solely by Landlord
(collectively, “Tenant’s Signage”). Notwithstanding anything to the contrary,
all of Tenant’s Signage shall be subject to applicable law, the Westlake Signage
Program and the prior written approval of Landlord, which approval shall not be
unreasonably withheld, conditioned or delayed. Tenant shall be responsible, at
its sole cost and expense, to obtain all approvals and permits needed from any
governmental authority and/or the Westlake Signage Program in connection with
Tenant’s Signage and to repair, maintenance, replace and remove Tenant’s
Signage, provided, however, Tenant may use a portion of the New Allowance for
the initial installation costs of Tenant’s Signage in accordance with the Work
Letter. Notwithstanding the foregoing, in the event that Tenant installs the
Building Façade Sign in the location shown as “Option A” in Exhibit C attached
hereto, Landlord, at Landlord’s sole cost and promptly after Tenant’s
installation, and if permitted by the City of Thousand Oaks, applicable law, and
the Westlake Signage Program, shall trim the trees in front of such signage to
make the Building Façade Sign reasonably visible from the parking area existing
as of the date hereof. Notwithstanding anything to the contrary contained in the
Lease, Landlord agrees, at Landlord’s sole cost, to provide Tenant with Building
standard signage at the entrance to the New Space and in the New Building lobby
directory. Tenant reserves the right to keep the doors to Tenant’s New Space
open during business hours so long as Tenant complies with applicable laws.
13. Parking. Tenant shall be entitled to four (4) unreserved parking spaces for
every 1,000 rentable square foot of space within the New Space for a total of
ninety-one (91) parking spaces as of the New Premises Commencement Date at no
charge to Tenant during the New Term, as such may be extended. Notwithstanding
the foregoing or anything contained in the Lease or herein, Tenant shall have
the right to convert up to four (4) of the aforementioned ninety-one (91)
parking spaces to reserved parking spaces exclusive for Tenant’s use, at no
charge to Tenant during the New Term, as such may be extended, in the initial
locations shown on Exhibit G attached hereto (it being agreed that Exhibit G
merely shows the locations of the reserved spaces as of the Execution Date
hereof and Landlord reserves the right to relocate any of the four (4) reserved
spaces from time to time to a mutually agreed location in reasonable proximity
to the entrance to the Building upon prior written notice to Tenant). Landlord
will install “reserved” signs at each of the four (4) reserved spaces, at
Tenant’s cost.
14. Security Deposit. Notwithstanding anything in the Lease to the contrary,
Tenant agrees that Landlord shall continue to hold (and/or apply, in accordance
with the Lease) the current Security Deposit in the amount of $78,226.50
pursuant to Section 6 of the Lease through the expiration or earlier termination
of the New Term, which Security Deposit shall be deemed to be security for all
of Tenant’s obligations under the Lease and this Amendment. In addition to the
Security Deposit, Tenant shall, on or prior to the New Space Commencement Date,
deliver to
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Landlord a letter of credit in a form reasonably satisfactory to Landlord in the
amount of $1,542,000.00 (the “Letter of Credit”) for the full and faithful
performance of all obligations of Tenant under the Lease, as amended by this
Amendment. Landlord hereby approves Silicon Valley Bank as the issuing bank if
selected by Tenant, based on the qualifications of said bank existing as of the
Execution Date hereof, and the Letter of Credit form attached as Schedule 1 to
Exhibit D. The Letter of Credit shall be subject to and comply with the terms
and conditions set forth in Exhibit D attached hereto and made a part hereof.
Provided that Tenant is not then in Default of the Lease beyond applicable
notice and cure periods, the amount of the Letter of Credit shall reduce by
$308,400.00 on the first, second, third and fourth anniversary of the New Space
Commencement Date and by $44,835.48 on the fifth anniversary, and the remaining
Letter of Credit amount from said date shall be equal to three (3) months of the
then current Base Rent for a total amount of $263,564.52 and once the Letter of
Credit hits such threshold, no further reductions shall be had; provided,
however, if a default then exists at the time of any scheduled reduction, the
Letter of Credit will not reduce until such time as all defaults are cured.
Landlord agrees, at no cost to Landlord, to execute any documents reasonably
required by Tenant’s approved issuing bank to effectuate a reduction of the
Letter of Credit within ten (10) business days after its receipt of written
request from Tenant, failing which Landlord shall pay a penalty of $250.00 per
day until Landlord delivers such documentation.
15. Brokerage. Landlord and Tenant hereby acknowledge and agree that the only
brokers involved in this transaction are CBRE, representing the Landlord, and
Cresa Los Angeles, representing the Tenant (the “Disclosed Brokers”). Landlord
and Tenant each represent and warrant to the other that neither has had any
dealings or entered into any agreements with any person, entity, broker or
finder other than the Disclosed Brokers in connection with this Amendment, and
no other broker, person or entity is entitled to any commission or finder’s fee
in connection with the negotiation of this Amendment. Tenant and Landlord each
agree to indemnify, defend and hold the other harmless from and against any
claims, damages, costs, expenses, attorneys’ fees or liability for compensation
or charges which may be claimed by any such unnamed broker, finder or other
similar party by reason of any dealings, actions or agreements of the
indemnifying party. Landlord shall pay the Disclosed Brokers pursuant to the
terms of a separate agreement.
16. Effect of Amendment. Except as specifically stated herein, Tenant’s lease of
the New Space shall be subject to all of the terms of the Lease. Tenant
acknowledges and agrees that except as specifically modified hereby, all of the
provisions of the Lease which are not in conflict with the terms of this
Amendment shall remain in full force and effect. In addition, Landlord and
Tenant hereby amend the Lease as follows:
a. Section 26(u) of the Lease is hereby amended to add the following sentence at
the end of such Section: “Notwithstanding anything to the contrary contained in
this Lease, Tenant may share such confidential information (i) with its legal
counsel, leasing broker and/or other consultants hired by Tenant in connection
with the Lease provided that such parties shall agree to be bound by the terms
of this confidentiality provision and Tenant shall be responsible for any breach
of such confidentiality provision caused by such parties, (ii) as required by
applicable law or a court order from a court of competent jurisdiction and (iii)
as required by and/or in order to
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comply with the requirements of the Securities and Exchange Commission (SEC) or
any other agency governing publicly traded companies, including in connection
with Tenant’s public filings.”
b. Section 20 of the Lease is hereby deleted in its entirety.
c. Section 15 of the Lease is hereby deleted in its entirety and replaced with
the following:
Fire or Other Casualty.
(a)Repair Estimate. If the Premises or the Building are damaged by fire or other
casualty (a “Casualty”), Landlord shall use good faith efforts to deliver to
Tenant within sixty (60) days after such Casualty a good faith estimate (the
“Damage Notice”) of the time needed to repair the damage caused by such
Casualty, which estimate shall be based upon consultation with a licensed
contractor.
(b)Tenant’s Rights. If (i) a material portion of the Premises is damaged by
Casualty such that Tenant is prevented from conducting its business in the
Premises in a manner reasonably comparable to that conducted immediately before
such Casualty and Landlord estimates in the Damage Notice that the damage caused
thereby cannot be repaired within one hundred eighty (180) days after the
commencement of repairs or within two hundred seventy (270) days after the
Casualty (the “Repair Period”), or (ii) less than one hundred eighty (180) days
will remain in the Term assuming the damage caused by the Casualty is repaired
within the estimated period set forth in the Damage Notice, then Tenant may
terminate this Lease by delivering written notice to Landlord of its election to
terminate within thirty (30) days after the date the Damage Notice has been
delivered to Tenant.
(c)Landlord’s Rights. If a Casualty damages the Premises or a material portion
of the Building and: (1) Landlord estimates in the Damage Notice that the damage
to the Premises cannot be repaired within the Repair Period; (2) the damage to
the Premises exceeds fifty percent (50%) of the replacement cost of the damaged
portion of the Building (excluding foundations and footings), as estimated by
Landlord in consultation with a licensed contractor, and such Casualty occurs
during the last eighteen (18) months of the Term; (3) regardless of the extent
of damage to the Premises, Landlord makes a good faith determination that
restoring the Building would be uneconomical (provided that Landlord elects to
terminate the majority of all similarly situated tenants in the Building); or
(4) Landlord is required to pay any portion of the insurance proceeds arising
out of the Casualty to a Landlord’s Mortgagee (provided that Landlord elects to
terminate the majority of all similarly situated tenants in the Building), then
Landlord may terminate this Lease by giving written notice of its election to
terminate within thirty (30) days after the Damage Notice has been delivered to
Tenant.
(d)Repair Obligation. If neither party elects to terminate this Lease following
a Casualty, then Landlord shall, within a reasonable time after such Casualty,
begin to repair the Premises and shall proceed with reasonable diligence to
restore the Premises to substantially the same condition as they existed
immediately before such Casualty; however,
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other than Building-standard leasehold improvements and any leasehold
improvements existing in the Premises which were included within the Work
performed by Landlord pursuant to Exhibit D, Landlord shall not be required to
repair or replace any Alterations or betterments within the Premises (which
shall be promptly and with due diligence repaired and restored by Tenant at
Tenant’s sole cost and expense, provided that Tenant’s obligation to so repair
and restore shall be limited to the extent of the sum of the insurance proceeds
actually received by Tenant for the Casualty in question (or which would have
been received by Tenant if Tenant complied with its insurance obligations under
this Lease) plus the amount of any deductible maintained by Tenant under such
insurance) or any furniture, equipment, trade fixtures or personal property of
Tenant or others in the Premises or the Building, and Landlord’s obligation to
repair or restore the Premises shall be limited to the extent of the sum of the
insurance proceeds actually received by Landlord for the Casualty in question
(or which would have been received by Landlord if Landlord complied with its
insurance obligations under this Lease) plus the amount of any deductible
maintained by Landlord under such insurance. If this Lease is terminated under
the provisions of this Section 15, Landlord shall be entitled to the full
proceeds of the insurance policies providing coverage for all Alterations,
improvements and betterments in the Premises (and, if Tenant has failed to
maintain insurance on such items as required by this Lease, Tenant shall pay
Landlord an amount equal to the proceeds Landlord would have received had Tenant
maintained insurance on such items as required by this Lease). If neither party
elects to terminate this Lease following a Casualty and Landlord thereafter
fails to complete the repairs and restoration within one hundred eighty (180)
days after the commencement of such repairs and restoration or within two
hundred seventy (270) days after the Casualty, which deadlines shall be subject
to extension for force majeure (not to exceed sixty (60) days in the aggregate)
and/or Tenant delay, then Tenant shall be entitled to terminate this Lease by
giving written notice thereof to Landlord after such period but prior to
substantial completion of such repairs and restoration; provided, however, if
Landlord thereafter substantially completes such repairs and restoration within
thirty (30) days after Tenant delivers such termination notice, then such
termination notice shall be null and void and this Lease shall continue in full
force and effect.
(e)Abatement of Rent. If the Premises are damaged by Casualty, Rent for the
portion of the Premises rendered untenantable by the damage shall be abated on a
reasonable basis from the date of damage until the completion of Landlord’s
repairs (or until the date of termination of this Lease by Landlord or Tenant as
provided above, as the case may be); provided, however, if less than all of the
Premises is rendered untenantable by the damage and the remaining portion of the
Premises is not sufficient to allow Tenant to reasonably conduct its business
therein, and Tenant does not conduct its business from any portion of the
Premises, then the Rent shall be abated as to the entire Premises until
completion of Landlord’s repairs.
(f)Waiver. The rights contained in this Section 15 shall be Tenant’s sole and
exclusive remedy in the event of a Casualty. Tenant hereby waives the provisions
of Sections 1932(2) and 1933(4) of the California Civil Code and the provisions
of any successor or other law of like import.
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d. The following language shall be added as Section 7(e) of the Lease:
“Notwithstanding the foregoing or anything to the contrary in this Lease, if:
(i) such utility service is interrupted or Tenant is otherwise prevented from
using the Premises or any material portion thereof because of: (A) the negligent
acts or intentional misconduct of Landlord, its employees, agents or
contractors; (B) construction, repair, maintenance or alterations performed by
Landlord after completion of the Tenant Improvements; (C) Landlord’s failure to
perform any repair, maintenance or replacement required by it under this Lease
following the lapse of a reasonable notice and cure period with respect thereto
(but in no event less than any notice and/or cure period expressly given under
this Lease for such obligation); and/or (D) the presence of Hazardous Materials
in, on or around the Project caused by Landlord or Landlord’s agent, employees
or contractors in violation of applicable Laws which poses a material health
risk to occupants of the Premises (each such set of circumstances as set forth
in such items (A)-(D) shall be referred to as an “Interruption Event”); (ii)
Tenant notifies Landlord of such Interruption Event in writing (the
“Interruption Notice”); (iii) such Interruption Event does not arise in whole or
in part as a result of an act or omission of a Tenant Party; (iv) such
Interruption Event is not caused by a fire or other casualty (in which event the
provisions of Section 15 shall apply); (v) the repair or restoration of such
service or the correction of such failure or problem is reasonably within the
control of Landlord; (vi) Landlord actually receives rental interruption
proceeds in connection with the applicable Interruption Event; and (vii) as a
result of such Interruption Event, the Premises or a material portion thereof,
is rendered untenantable (meaning that Tenant is unable to use the Premises in
the normal course of its business) and Tenant in fact ceases to use the
Premises, or material portion thereof, then, Tenant’s sole and exclusive remedy
for such Interruption Event (unless expressly covered elsewhere in the Lease)
shall be as follows: on the fifth (5th) consecutive Business Day following the
latest to occur of the date the Premises (or material portion thereof) becomes
untenantable, the date Tenant ceases to use such space and the date Tenant
provides Landlord with an Interruption Notice, the Rent payable hereunder shall
be abated on a per diem basis for each day after such five (5) Business Day
period based upon the percentage of the Premises so rendered untenantable and
not used by Tenant, and such abatement shall continue until the date the
Premises become tenantable again or, if earlier, the date Tenant reoccupies the
Premises or the relevant part thereof for the Permitted Use. Notwithstanding the
foregoing, however, the Rent abatement granted to Tenant hereunder shall be
limited to the extent of rental interruption insurance proceeds Landlord
actually receives, if any, in connection with such Interruption Event.”
e. Notwithstanding anything to the contrary contained in the Lease, no Landlord
consent shall be required for interior painting or carpeting, or any other
cosmetic alterations costing less than $125,000.00 to the extent such alteration
does not result in a Design Problem (as defined in Exhibit B attached hereto),
provided, however, Tenant shall give Landlord reasonable written notice of any
such alterations prior to the commencement of same. Landlord shall not charge a
construction supervision or coordination fee in excess of four percent (4%), nor
an administrative charge for any costs or expenses due under the Lease in excess
of five
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percent (5%), and any payments due from Tenant to Landlord that are not
recurring payments shall be due within thirty (30) days of receipt of any
invoice from Landlord. In addition, Landlord shall be responsible for making any
alterations or improvements required by Laws with respect to the items which are
Landlord’s responsibility to repair and maintain pursuant to the Lease, except
that Tenant shall reimburse Landlord, within thirty (30) days after invoice, for
the costs of any such alterations and improvements and other compliance costs to
the extent necessitated by or resulting from (i) any alterations, improvements
or other work made by Tenant or at Tenant’s direction (other than the Tenant
Improvements), (ii) the use of the Premises for other than the Permitted Use, or
(iii) the negligence or willful misconduct of Tenant or any Tenant Party, and
(1) Landlord shall be responsible to remedy, at Landlord’s sole cost and
expense, any condition existing prior to the Commencement Date which an
applicable governmental authority, if it had knowledge of such condition prior
to the Commencement Date, would have then required to be remedied pursuant to
then-current Disabilities Acts in their form existing as of the Commencement
Date, and (2) Landlord shall be responsible for making any alterations or
improvements required by Disabilities Acts with respect to the items which are
Landlord’s responsibility to repair and maintain pursuant to the Lease, except
that Tenant shall reimburse Landlord, within thirty (30) days after invoice, for
the costs of any such alterations and improvements and other compliance costs to
the extent necessitated by or resulting from any of the subsections (i) - (iii)
above.
f. The last sentence in Section 1 of Exhibit C of the Lease is hereby deleted in
its entirety.
g. The second paragraph of Section 2 on Exhibit C of the Lease is hereby deleted
and replaced with the following:
“Notwithstanding the foregoing or anything to the contrary in the Lease
(including this Exhibit C), Operating Costs shall not include costs for: (1)
repair, replacements and general maintenance paid by or for which Landlord is
reimbursed by proceeds of insurance (or for which Landlord would have been
reimbursed by proceeds of insurance had Landlord complied with its obligations
under this Lease) or by Tenant or other third parties; (2) interest,
amortization or other payments on loans to Landlord; (3) depreciation; (4)
leasing commissions; (5) legal expenses for services, other than those that
benefit the Project tenants (e.g., tax disputes); (6) renovating or otherwise
improving leased premises of the Project or vacant space in the Project,
including permit, license, inspection costs and allowances therefor; (7) Taxes
(as defined below) and Insurance (as defined below) which are paid separately
pursuant to Sections 3 and 4 below; (8) federal income taxes imposed on or
measured by the income of Landlord from the operation of the Project; (9)
interest, amortization or other payments on loans to Landlord; (10) ground lease
rental; (11) the cost of capital repairs, replacements, capital improvements or
other capital expenditures, other than those expressly permitted under
subsection (c) of the first grammatical paragraph of this Section 2; (12)
marketing, advertising and promotional costs, including, without limitation,
leasing commissions, finders' fees, attorneys' fees in connection with the
negotiation and preparation of letters, deal memos, letters of intent, leases,
subleases and/or assignments, space planning costs, and other
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costs and expenses incurred in connection with lease, sublease and/or assignment
negotiations and transactions with present or prospective tenants or other
occupants of the Project (including, without limitation, this Lease); (13)
expenses in connection with services which are not available to Tenant; (14)
overhead and profit paid to Landlord or to subsidiaries or affiliates of
Landlord for goods and/or services in the Project to the extent the same exceeds
the costs of such goods and/or services rendered by qualified, unaffiliated
third parties on a competitive basis; (15) Landlord's general corporate overhead
and general and administrative expenses not specifically and directly incurred
in the management, maintenance and operation of the Project; (16) costs incurred
in correcting any non-compliance of the Project with applicable Laws where such
non-compliance was existing as of the Commencement Date and which an applicable
governmental authority, if it had knowledge of such condition prior to the
Commencement Date, would have then required to be remedied pursuant to
then-current Laws in their form existing as of the applicable Commencement Date;
(17) costs incurred to remove, remediate or otherwise in connection with or as a
result of any Hazardous Materials which (i) migrate to the Project from other
property after the date hereof, (ii) constitute asbestos containing materials,
(iii) were in existence in, on, under or about the Project (or any portion
thereof) prior to the Commencement Date (not caused by Tenant or any Tenant
Party), and were of such a nature that a federal, state or municipal
governmental or quasi-governmental authority, if it had then had knowledge of
the presence of such Hazardous Materials, in the state, and under the conditions
that they then existed in, on, under or about the Project, would have then
required the removal, remediation or other action with respect thereto, and/or
(iii) are disposed of or otherwise introduced into, on, under or about the
Project after the date hereof by Landlord or Landlord’s agents, employees,
contractors or licensees (including any other tenants of the Project) and are of
such a nature, at time of disposition or introduction, that a federal, state or
municipal governmental or quasi-governmental authority, if it had then had
knowledge of the presence of such Hazardous materials, in the state, and under
the conditions, that they then existed in, on, under or about the Project, would
have then required the removal, remediation or other action with respect
thereto, provided that Operating Costs may include the costs attributable to
removing Hazardous Materials in the ordinary course of cleaning and maintaining
the Project; (18) increased costs of performance arising from the gross
negligence or willful misconduct of Landlord or any Indemnitee; (19) costs
arising from Landlord's charitable or political contributions; (20) costs (other
than ordinary maintenance) for sculpture, paintings, fountains and other objects
of art; (21) any bad debt loss, rent loss, or reserves for bad debts or rent
loss; (22) costs associated with the operation of the business of the
partnership or entity which constitutes the Landlord, as the same are
distinguished from the costs of operation of the Project (which shall
specifically include, but not be limited to, accounting costs associated with
the operation of the Project), including costs of partnership accounting and
legal matters, costs of defending any lawsuits with any mortgagee, costs of
selling, syndicating, financing, mortgaging or hypothecating any of the
Landlord's interest in the Project, and costs incurred in connection with any
disputes between Landlord and its employees, between Landlord and Project
management, or between Landlord and other tenants or occupants; (23) the wages
and benefits of any employee who does not devote
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substantially all of his or her employed time to the Project unless such wages
and benefits are prorated to reflect time spent on operating, maintaining,
repairing and managing the Project vis-à-vis time spent on matters unrelated to
operating, maintaining, repairing and managing the Project; provided, that in no
event shall Operating Costs include wages and/or benefits attributable to
personnel above the level of Project manager or Project engineer; (24) a
management fee to the extent in excess of three percent (3%) of gross revenues
derived from the Project; (25) intentionally deleted; (26) costs incurred in
connection with the original construction of the Project and/or costs of
inspecting and correcting defects in the Project; (27) advertising and
promotional expenses and costs of signs in or on the Building exclusively
identifying the owner of the Building or other signs for the exclusive use of
other tenants; (28) any entertainment, dining or travel expenses for any
purpose; (29) in the event any facilities, services or utilities used in
connection with the Project are provided from another building owned or operated
by Landlord outside of the Project or vice versa, the costs incurred by Landlord
in connection therewith shall be allocated to Operating Costs by Landlord on a
reasonably equitable basis; (30) costs due to violations of Laws by Landlord or
any Indemnitee, including, but not limited to, violations of any covenants,
conditions and restrictions affecting the Project; and (31) costs expressly
excluded from Operating Costs elsewhere in the Lease. In no event shall Landlord
be entitled to collect and retain in excess of one hundred percent (100%) of the
total Operating Costs from all of the tenants in the Project including Tenant.”
h. The words “sixty (60) days” set forth in Section 8 of Exhibit C of the Lease
are hereby deleted and replaced with the words “one (1) year”. In addition,
notwithstanding anything to the contrary in Exhibit C of the Lease, Tenant shall
not be responsible for Tenant’s share of Operating Costs, Taxes or Insurance
attributable to any calendar year which are first billed to Tenant more than
twenty four (24) months after the earlier of the expiration of the applicable
calendar year or the expiration or earlier termination of the Lease, provided
that in any event Tenant shall be responsible for Tenant's share of Operating
Costs, Taxes or Insurance levied by any governmental authority or by any utility
companies at any time regardless of such 24-month cap, provided that Landlord
delivers Tenant a bill for such amounts within twenty-four (24) following
Landlord's receipt of the bill therefor.
17. Execution; Counterparts and Electronic Signatures. This Amendment may be
executed in two or more counterpart copies and each of such counterparts, for
all purposes, shall be deemed to be an original but all of such counterparts
together shall constitute but one and the same instrument, binding upon all
parties hereto, notwithstanding that all of such parties may not have executed
the same counterpart. In addition, Landlord and Tenant further acknowledge and
agree that notwithstanding any law or presumption to the contrary, it is the
express intention of Landlord and Tenant that an electronic signature via
DocuSign or by e-mail in PDF format of either party or of any witness on this
Amendment shall be deemed valid and binding as if the same were an original ink
signature of such party or witness on this Amendment and shall be admissible in
any proceeding by either party against the other as conclusive proof of the
parties’ execution of this Amendment, as if the same were an original ink
signature. The parties hereby agree to be bound by such electronic signatures
and waive any defenses to the enforcement of the
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terms of this Amendment based on the format of signature or delivery method
thereof. The provisions of this paragraph shall survive this Amendment and the
Lease.

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the
date first above written.
LANDLORD:

WESTLAKE PARK PLACE, INC.,
a Delaware corporation
By:/s/ Thomas A HurstName: Thomas A HurstTitle:   Vice President

TENANT:
ARCUTIS BIOTHERAPEUTICS,
a Delaware corporation
By:/s/ Frank WatanabeName: Frank WatanabeTitle:   President and CEO

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EXHIBIT A
Floor Plan of New Space

image01.jpg [image01.jpg]

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EXHIBIT B
WORK LETTER
1. Tenant Improvements. Landlord shall, subject to the provisions of this
Exhibit B, construct and install within the New Space the tenant improvements
(the “Tenant Improvements”) pursuant to the Final Plans. The Tenant Improvements
shall be constructed and installed in accordance with Landlord's building
standards (the "Building Standards") or as otherwise indicated in the Final
Plans.
a) Plans. Landlord shall cause to be prepared by an architect selected by Tenant
and reasonably approved by Landlord (“Landlord’s Architect”) complete, finished,
detailed architectural drawings and specifications for the Tenant Improvements
(the "Plans") which shall be consistent with the space plan attached hereto as
Exhibit B-1 (the “Space Plan”). Landlord hereby approves View Design Studio as
the Landlord’s Architect, if selected by Tenant. Notwithstanding the foregoing,
mechanical, electrical and plumbing and fire life & safety drawings shall be
completed by Simon Wong.
Tenant agrees to be reasonably available and to devote such time in consultation
with Landlord and Landlord’s Architect, as may be reasonably requested, and to
furnish within five (5) business days after any such request is made, such
information as may be necessary so that Landlord’s Architect may promptly
commence and complete preparation of the Plans.
The Plans shall be subject to the prior written approval by Tenant and Landlord,
which shall not unreasonably withhold; provided that any Landlord’s disapproval
of the Plans shall be limited to (i) the Plans not being in accordance with all
applicable laws (including, without limitation, building codes) or not being in
a form or substance to enable Landlord to obtain all required building permits
and approvals, if any, or (ii) the Tenant Improvements affecting the New
Building’s systems, affecting the New Building exterior, and/or affecting the
New Building structural components (each, a “Design Problem”), or (iii) the
Plans being materially inconsistent with the Space Plan. If the Tenant makes any
changes to the Plans that are materially inconsistent with the Space Plan,
unless such changes were required by governmental authorities, any delays
resulting therefrom shall be Tenant Delays.
Upon completion of the Plans, Landlord shall submit the Plans to Tenant for its
review and approval. Tenant shall have ten (10) business days from receipt of
the Plans to review and approve the Plans or state any objections in writing,
failing which such Plans shall be deemed approved. Tenant’s approval shall not
be unreasonably withheld, and any objections shall be reasonable in nature and
stated in sufficient detail so as to allow the necessary modifications by
Landlord.
Once approved by Landlord and Tenant (or deemed approved by Tenant as provided
above), the Plans, as so approved (the “Final Plans”), may only be modified with
Landlord’s and Tenant’s written approval as provided above, and Tenant shall be
liable for any additional costs incurred in connection with such changes that
are requested by Tenant (which may be paid from the New Allowance to the extent
funds then remain to cover such costs). Any
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changes requested by governmental authorities shall be at Landlord’s sole cost
and expense and not deducted from the New Allowance if involving the restrooms,
hallways, elevator lobby or areas not on the New Space floor. Approval by
Landlord of the Final Plans shall not be a representation or warranty of
Landlord that such drawings are adequate for any use, purpose, or condition, but
shall merely be the consent of Landlord to the performance of the Tenant
Improvements.
b) Selection of Contractor. Landlord and Tenant Improvements shall select a
general contractor, to be engaged by Landlord, to perform the Tenant
Improvements through a competitive bidding process consisting of no less than
three (3) general contractor bids based on the general contractor’s profits and
fees, insurance costs, and general conditions. Unless otherwise approved by
Tenant, the general contractor selected by Landlord and Tenant shall
competitively bid all trades to no less than three subcontractors for millwork,
demolition, glass/glazing, flooring, painting, framing and drywall.
Notwithstanding the foregoing, Landlord and the general contractor shall have
sole discretion in selecting the electrical, mechanical, plumbing and fire life
safety and security vendors, so long as such vendors are at competitive market
rates. Landlord and Tenant shall mutually agree regarding constructing the
mechanical, electrical and plumbing portions of the Tenant Improvements on a
“Design-Build” basis. There shall be no requirement to use union labor in
connection with the Tenant Improvements or any of Tenant’s work in the New
Space. Notwithstanding the foregoing, Landlord hereby approves Alpha Omega
Contractors as a general contractor for the construction of the Tenant
Improvements.
2) Performance of Tenant Improvements by Landlord. “Substantial Completion” of
the Tenant Improvements shall mean the issuance of a signed permit card from the
City of Thousand Oaks for the New Space and the substantial completion of the
Tenant Improvements in a good and workmanlike manner and in substantial
conformity with the Final Plans with the exception of minor or insubstantial
details of construction, mechanical adjustment or decoration, the incompletion
of which shall not unreasonably interfere with normal use and occupancy of the
New Space by Tenant as reasonably determined by Landlord’s Architect. Such minor
or insubstantial details are hereinafter referred to as the “Punch List Items”
which shall be mutually identified in writing by Landlord and Tenant within ten
(10) business days after Substantial Completion of the Tenant Improvements and
delivery of the New Space to Tenant. Landlord shall complete all Punch List
Items with due diligence within a reasonable period of time after the creation
of the list of Punch List Items. Landlord shall perform and complete the Tenant
Improvements in a good workmanlike manner and in compliance with all applicable
codes and laws, including, without limitation, the Americans with Disabilities
Act. In no event shall Tenant be required to remove, restore, demolish or
destroy any portion of the Tenant Improvements upon the expiration or earlier
termination of the New Term, as extended. Landlord shall provide a one (1) year
warranty with respect to the Tenant Improvements.
3) Cost of Tenant Improvements. Subject to the terms and conditions hereof,
Landlord shall contribute up to $1,245,365.00 (i.e., $55.00 per rentable square
foot of the New Space) toward the costs and expenses for the design and
construction of the Tenant Improvements in accordance with the Final Plans
(including, Tenant’s Signage, Landlord’s Supervision Fee (as defined below) and
code compliance costs, architecture and engineering
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plans and fees, plan check and permit fees, project management and
telecommunications and computer cabling) (the “New Allowance”). Notwithstanding
anything contained herein, in addition to the New Allowance, Landlord shall pay
the cost of the Space Plan directly to the vendor. Any costs and expenses for
the Tenant Improvements in excess of the New Allowance shall be paid by Tenant
within thirty (30) days after Landlord written demand for same, together with
appropriate back-up. Tenant’s failure to pay for the cost of the Tenant
Improvements in excess of the New Allowance within such 30-day period shall be a
Default by Tenant under the Lease. If the actual costs of the Tenant
Improvements are less than the New Allowance, then Landlord shall retain such
savings and Tenant shall have no claim to or interest in same, together with
appropriate back-up. Landlord reserves the right to charge Tenant a construction
management fee in connection with Landlord’s performance of the Tenant
Improvements, which fee shall be capped at $15,000.00 (and which fee may be paid
from the New Allowance) (“Landlord’s Supervision Fee”). Landlord, or its agents,
shall furnish Tenant with written estimates of the cost of the Tenant
Improvements in the Final Plans (the “Tenant Improvements Budget”). If Tenant
shall fail to approve in writing the Tenant Improvements Budget within seven (7)
business days after receipt thereof, the Tenant Improvements Budget shall be
deemed approved in all respects by Tenant; provided, however, with respect to
the first submittal of the Tenant Improvements Budget, Tenant shall have an
additional five (5) business days (on top of the seven (7) business days) to
value engineer the Tenant Improvements to reduce the budget. Upon the approval
(or deemed approval as provided above) of the Tenant Improvements Budget,
neither party shall change or modify same without the other party’s prior
written approval, not to be unreasonably withheld, conditioned or delayed. If
Tenant fails to respond to any requested modification or change of same within
seven (7) business days after Landlord’s written notice of same, then such
modification or change to the Tenant Improvements Budget shall be deemed
approved. If, however, Tenant approves the Tenant Improvements Budget as
furnished by Landlord or as otherwise modified and approved by the parties
within such 7-business day period (or it is deemed approved as provided above),
Tenant shall pay Landlord within thirty (30) days of said Tenant’s approval (or
deemed approval, as applicable), the cost of the Tenant Improvements that exceed
the New Allowance.
4) Additional Work. Except as set forth in this Exhibit B and except for
Landlord’s express obligations under the Lease and this Amendment, Landlord has
no other agreement or obligation to Tenant to do any build out or other work in
the New Space. Any other work in the New Space that Tenant may request and which
Landlord may permit shall be at Tenant’s sole cost and expense (subject to any
funds then remaining in the New Allowance) and in accordance with the terms and
conditions set forth in the Lease or herein.
If Tenant shall require other work or materials (“Additional Work”) in the New
Space in addition to the Tenant Improvements, Tenant shall deliver to Landlord
for its reasonable approval the necessary additional drawings and specifications
(the “Additional Drawings”) for the Additional Work, which Landlord shall
approve unless a Design Problem exists. If Landlord does not approve of the
Additional Drawings as delivered by Tenant as a result of a Design Problem,
Landlord shall advise Tenant in writing of the changes required in the
Additional Drawings so that they will meet with Landlord’s approval. Tenant
shall cause the Additional Drawings to be revised and delivered to Landlord for
Landlord’s final review and approval
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within seven (7) business days after Tenant’s receipt of such advice or Tenant
shall be deemed to have abandoned its request for such Additional Work.
Landlord, or its agents, shall furnish Tenant with written estimates of the cost
of any Additional Work and shall estimate to what extent such work may cause a
delay in the Substantial Completion of the Tenant Improvements. If Tenant shall
fail to approve in writing such estimates within seven (7) business days after
receipt thereof, the estimates for the Additional Work shall be deemed
disapproved in all respects by Tenant, Landlord shall not be authorized or
required to proceed with the Additional Work, and Tenant shall work in good
faith with Landlord and the general contractor to approve the Additional Work
estimates within ten (10) business days following Tenant’s receipt of the
Additional Work cost estimates. If, however, Tenant approves in writing such
estimates as furnished by Landlord within such seven (7) business day period,
Tenant shall pay Landlord the cost of such Additional Work within thirty (30)
days after Tenant’s receipt of invoices therefor from Landlord and prior to
construction of such Additional Work. Notwithstanding the foregoing, to the
extent the Tenant Improvements are constructed in substantial accordance with
the Final Plans, Landlord shall be responsible, at its sole cost and expense
(separate from and in addition to the New Allowance), for (i) any work outside
of the New Space and in the common areas of the New Building in order to comply
with applicable code and law (including the ADA), (ii) correcting any latent
defects in the New Building systems, shell and/or core, (iii) the removal or
remediation of any Hazardous Materials existing at the New Space as of the New
Space Commencement Date in violation of Environmental Law (except to the extent
such Hazardous Materials were caused by Tenant or its employees, agents,
representatives, consultants or contractors), and (iv) any work to the existing
restrooms in the New Space in order to comply with applicable code and law
(including ADA) (except to the extent such violation arose from Tenant’s
specific use of the New Space for other than the permitted use under the Lease
or any other work performed or requested by Tenant).
5) Tenant Delays. If Substantial Completion of the Tenant Improvements is
actually delayed as a result of any of the following (each, a “Tenant Delay”):
(i)Tenant’s request for Additional Work or Tenant’s failure to furnish the
Additional Drawings for the Additional Work, if any, in accordance with
subparagraph 5 hereof, or Tenant’s failure to approve cost estimates for
Additional Work within the time specified in subparagraph 5; or
(ii)Tenant’s changes in the Tenant Improvements or Additional Work
(notwithstanding Landlord’s approval of such changes); or
(iii)The performance or failure to perform any work or improvements in the New
Space, by Tenant or any person, firm or corporation employed by Tenant;
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(iv)Any act or omission of Tenant or its agents or representatives; or
(v)Any Default by Tenant hereunder or under the Lease beyond applicable notice
and cure periods,
then Tenant shall continue to pay Rent with respect to the Current Premises in
accordance with the Lease (not modified by this Amendment) and the New Space
Commencement Date shall be the date the New Space Commencement Date would have
commenced but for such Tenant Delays. If Landlord contends that a Tenant Delay
has occurred, Landlord shall notify Tenant in writing of the event which
constitutes such Tenant Delay promptly upon Landlord’s discovery of same.  If
such actions, inaction or circumstance described in the notice (the "Delay
Notice") are not cured by Tenant within one (1) business day of Tenant's receipt
of the Delay Notice and if such action, inaction or circumstance otherwise
qualify as a Tenant Delay, then a Tenant Delay shall be deemed to have occurred
commencing as of the date of the Delay Notice and ending as of the date such
delay ends.
6) Miscellaneous Charges. Subject to Landlord's reasonable and
non-discriminatory scheduling requirements and rules and regulations, Landlord
shall permit Tenant to use the New Building's elevators and related facilities
of the New Building to the extent the same is reasonably necessary for Tenant's
initial move into the New Space, including the installation of Tenant's
furniture, fixtures, and equipment. Landlord shall provide, and neither Tenant
nor Tenant's agents nor the contractor or subcontractors shall be charged for
the use of, parking (in areas reasonably designated by Landlord), electricity,
restrooms, HVAC, water or elevators, during the construction of the Tenant
Improvements and Tenant’s move into the New Space up until the New Space
Commencement Date.
7) Tenant’s Equipment. Tenant shall be responsible for the installation of
Tenant’s audio/visual equipment, and telecommunications equipment, wiring and
cabling (“Tenant’s Equipment”), except for certain infrastructure required to
support said Tenant’s Equipment which shall be part of the Tenant Improvements.
Tenant shall be responsible for removal and restoration of Tenant’s Equipment
upon expiration of the Lease Term.
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EXHIBIT B-1
Space Plan

image11.jpg [image11.jpg]

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EXHIBIT C
New Building Façade Signage Location

image21.jpg [image21.jpg]

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EXHIBIT D
Letter of Credit Terms and Conditions
The Letter of Credit shall be, among other things, (i) subject to the
International Standby Practices 1998, International Chamber of Commerce
Publication No. 590, (ii) irrevocable and unconditional, (iii) conditioned for
payment solely upon presentation of the Letter of Credit and a sight draft, (iv)
transferable one or more times by Landlord without the consent of Tenant or the
issuing bank, and (v) shall be issued by an FDIC-insured banking institution
with a branch office in Los Angeles, California, that meets the "financial
standard" and is otherwise reasonably satisfactory to Landlord. As used herein,
the term "financial standard" means that the most recent call report or similar
statement of condition of the subject bank available on the website of the
Federal Financial Institutions Examination Council demonstrates that such bank
satisfies the criteria to be considered "well capitalized" pursuant to 12 C.F.R.
§6.4, as in effect from time to time.
If a Default by Tenant occurs beyond all the applicable notice and cure periods,
Landlord may use, apply or retain the whole or any part of the proceeds of the
Letter of Credit for (i) the payment of any Rent, Additional Rent or any other
sums of money payable to Landlord hereunder, (ii) the payment of any sum
expended by Landlord on Tenant’s behalf in accordance with the provisions of
this Lease or which the Landlord may expend or be required to expend by reason
of such Default, including, without limitation, any damages or deficiency in the
reletting of the Premises and any reasonable attorneys’ fees and costs in
connection with such Default. The use, application or retention of the proceeds
of the Letter of Credit or portion thereof by Landlord shall not prevent
Landlord from exercising any other right or remedy provided for hereunder or at
law and shall not operate as a limitation on any recovery to which Landlord may
otherwise be entitled. In the case of every such application or retention of the
proceeds of the Letter of Credit, Tenant shall, within ten (10) days from
Landlord’s demand, cause the existing Letter of Credit held by Landlord to be
amended to increase its amount to the original amount or deliver to Landlord an
additional Letter of Credit or cash in the amount equal to the sum so applied or
retained by Landlord. If the proceeds of the Letter of Credit are insufficient
to cover any actual damages sustained by Landlord for Default of Tenant, Tenant
shall pay to Landlord within ten (10 business days of demand, in cash, an amount
sufficient to fully compensate Landlord for any and all actual damages sustained
by Landlord.
Tenant shall pay all costs or fees charged in connection with the Letter of
Credit that arise due to the first: (i) Landlord’s sale or transfer of all or a
portion of the New Building and/or Project; or (ii) the addition, deletion, or
modification of any beneficiaries or any other terms of the Letter of Credit,
and, in each case, Landlord shall pay for any subsequent item (i) or (ii)
events.
The Letter of Credit shall expire not earlier than twelve (12) months after the
date of delivery thereof to Landlord and shall provide that same shall be
automatically renewed for successive twelve (12) month periods through a date
which is not earlier than thirty (30) days after the expiration of the New Term,
or any renewal or extension thereof. If the issuing bank does not renew the
Letter of Credit, and if Tenant does not deliver a substitute Letter of Credit
at
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least thirty (30) days prior to the expiration of the current Letter of Credit
term, then Tenant shall be in Default of the Lease and Landlord, in addition to
its other rights under the Lease, shall have the right to draw on the existing
Letter of Credit. Tenant may substitute the Letter of Credit with a new Letter
of Credit from a new bank which satisfies the terms of this Exhibit D at any
time and Landlord shall return the then existing Letter of Credit to Tenant
within five (5) business days after receipt of the substitute Letter of Credit.
Tenant hereby agrees to cooperate, at its expense, with Landlord to promptly
execute and deliver to Landlord any and all modifications, amendments, and
replacements of the Letter of Credit, as Landlord may reasonably request to
carry out the terms and conditions in this Amendment and Exhibit D. The
provisions hereof shall survive expiration or termination of the Lease.
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SCHEDULE 1
FORM OF LETTER OF CREDIT
IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER _____________
ISSUE DATE: April __, 2020
ISSUING BANK:
SILICON VALLEY BANK
3003 TASMAN DRIVE
2ND FLOOR, MAIL SORT HF210
SANTA CLARA, CALIFORNIA 95054
BENEFICIARY:
WESTLAKE PARK PLACE, INC.
C/O INVESCO REAL ESTATE
2001 ROSS AVENUE, SUITE 3400
DALLAS, TEXAS 75201
ATTN: WESTLAKE ASSET MANAGER
APPLICANT:
ARCUTIC BIOTHERAPEUTICS, INC.
2945 TOWNSGATE ROAD, SUITE 110
THOUSAND OAKS, CALIFORNIA 91361
ATTN: FRANK WATANABE
AMOUNT:  US$1,542,000.00 (ONE MILLION FIVE HUNDRED FORTY-TWO AND 00/100 U.S.
DOLLARS)
EXPIRATION DATE:  APRIL __, 2020
PLACE OF EXPIRATION: ISSUING BANK’S COUNTERS AT ITS ABOVE ADDRESS
DEAR SIR/MADAM:
WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVBSF______ IN
YOUR FAVOR AVAILABLE BY PAYMENT AGAINST YOUR PRESENTATION TO US OF THE FOLLOWING
DOCUMENT:
1.BENEFICIARY’S SIGNED AND DATED STATEMENT STATING AS FOLLOWS:
“AN EVENT OF DEFAULT (AS DEFINED IN THE LEASE) HAS OCCURRED UNDER THAT CERTAIN
LEASE AGREEMENT BETWEEN ARCUTIS BIOTHERAPEUTICS, INC., AS TENANT, AND WESTLAKE
PARK PLACE, INC., AS LANDLORD, AS AMENDED, SUPPLEMENTED OR OTHERWISE MODIFIED TO
DATE. THE UNDERSIGNED HEREBY CERTIFIES THAT: (I) THE UNDERSIGNED IS AN
AUTHORIZED REPRESENTATIVE OF LANDLORD; (II) LANDLORD IS THE BENEFICIARY OF
LETTER OF CREDIT NO. SVBSF _______________ ISSUED BY SILICON VALLEY BANK; (III)
LANDLORD HAS GIVEN WRITTEN NOTICE TO TENANT TO CURE THE DEFAULT PURSUANT TO THE
TERMS OF THE LEASE; (IV) SUCH DEFAULT HAS NOT BEEN CURED UP TO THIS DATE OF
DRAWING UNDER THE LETTER OF CREDIT; (V) LANDLORD IS AUTHORIZED TO DRAW DOWN ON
THE LETTER OF CREDIT; AND (VI)
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LANDLORD WILL HOLD THE FUNDS DRAWN UNDER THE LETTER OF CREDIT AS SECURITY
DEPOSIT FOR TENANT OR APPLY SAID FUNDS TO TENANT’S OBLIGATION UNDER THE LEASE.
THE AMOUNT HEREBY DRAWN UNDER THE LETTER OF CREDIT IS US$______________, WITH
PAYMENT TO BE MADE TO THE FOLLOWING ACCOUNT: [INSERT WIRE INSTRUCTIONS (TO
INCLUDE NAME AND ACCOUNT NUMBER OF THE BENEFICIARY)].”
PARTIAL DRAWS AND MULTIPLE PRESENTATIONS ARE ALLOWED.
THIS LETTER OF CREDIT SHALL BE AUTOMATICALLY EXTENDED FOR ADDITIONAL PERIODS OF
ONE YEAR, WITHOUT AMENDMENT, FROM THE PRESENT OR EACH FUTURE EXPIRATION DATE
UNLESS AT LEAST THIRY (30) DAYS PRIOR TO THE THEN CURRENT EXPIRATION DATE WE
SEND TO YOU A NOTICE BY REGISTERED OR CERTIFIED MAIL OR OVERNIGHT COURIER
SERVICE AT THE ABOVE ADDRESS THAT THIS LETTER OF CREDIT WILL NOT BE EXTENDED
BEYOND THE THEN CURRENT EXPIRATION DATE. IN NO EVENT SHALL THIS LETTER OF CREDIT
BE AUTOMATICALLY EXTENDED BEYOND JUNE 30, 2028. IN THE EVENT WE SEND SUCH NOTICE
OF NON-EXTENSION, YOU MAY DRAW HEREUNDER BY YOUR PRESENTATION TO US OF YOUR
SIGNED AND DATED STATEMENT STATING THAT YOU HAVE RECEIVED A NON-EXTENSION NOTICE
FROM SILICON VALLEY BANK IN RESPECT OF LETTER OF CREDIT NO. SVBSF _____________,
YOU ARE DRAWING ON SUCH LETTER OF CREDIT FOR US$_____________, AND YOU HAVE NOT
RECEIVED A REPLACEMENT LETTER OF CREDIT ACCEPTABLE TO YOU.
ALL DEMANDS FOR PAYMENT SHALL BE MADE BY PRESENTATION OF  THE REQUIRED
DOCUMENTS  ON A BUSINESS DAY AT OUR OFFICE (THE “BANK’S OFFICE”) AT: SILICON
VALLEY BANK, 3003 TASMAN DRIVE, MAIL SORT HF 210, SANTA CLARA, CA 95054,
ATTENTION: GLOBAL TRADE FINANCE. AS USED IN THIS LETTER OF CREDIT, "BUSINESS
DAY" SHALL MEAN ANY DAY OTHER THAN A SATURDAY, SUNDAY OR A DAY ON WHICH BANKING
INSTITUTIONS IN THE STATE OF CALIFORNIA ARE AUTHORIZED OR REQUIRED BY LAW TO
CLOSE.
FACSIMILE PRESENTATIONS ARE ALSO PERMITTED. EACH FACSIMILE TRANSMISSION SHALL BE
MADE AT: (408) 496-2418 OR (408) 969-6510; AND UNDER CONTEMPORANEOUS TELEPHONE
ADVICE TO: (408) 450-5001 OR (408) 654-7176, ATTENTION: GLOBAL TRADE FINANCE.
ABSENCE OF THE AFORESAID TELEPHONE ADVICE SHALL NOT AFFECT OUR OBLIGATION TO
HONOR ANY DRAW REQUEST.
THIS LETTER OF CREDIT IS TRANSFERABLE IN WHOLE BUT NOT IN PART ONE OR MORE
TIMES, BUT IN EACH INSTANCE ONLY TO A SINGLE BENEFICIARY AS TRANSFEREE AND for
THE THEN AVAILABLE AMOUNT, ASSUMING SUCH TRANSFER TO SUCH TRANSFEREE WOULD BE IN
COMPLIANCE WITH THEN APPLICABLE LAW AND REGULATION, INCLUDING BUT NOT LIMITED TO
THE REGULATIONS OF THE U.S. DEPARTMENT OF TREASURY AND U.S. DEPARTMENT OF
COMMERCE. AT THE TIME OF TRANSFER, THE ORIGINAL LETTER OF CREDIT AND ORIGINALS
OR COPIES OF ALL AMENDMENTS, IF ANY, TO THIS LETTER OF CREDIT MUST BE
SURRENDERED TO US AT OUR ADDRESS INDICATED IN THIS LETTER OF CREDIT TOGETHER
WITH OUR TRANSFER FORM ATTACHED HERETO AS EXHIBIT A DULY EXECUTED. APPLICANT
SHALL PAY OUR TRANSFER FEE OF ¼ OF 1% OF THE TRANSFER AMOUNT (MINIMUM US$250.00)
UNDER THIS LETTER OF CREDIT IN CONNECTION WITH THE FIRST TRANSFER AND
BENEFICIARY SHALL PAY OUR TRANSFER FEE IN CONNECTION WITH ANY TRANSFER
THEREAFTER. EACH TRANSFER SHALL BE EVIDENCED BY EITHER (1) OUR ENDORSEMENT ON
THE REVERSE OF THE LETTER OF CREDIT AND WE SHALL FORWARD THE ORIGINAL OF THE
LETTER OF CREDIT SO ENDORSED TO THE TRANSFEREE OR (2) OUR ISSUING A REPLACEMENT
LETTER OF CREDIT TO THE TRANSFEREE ON SUBSTANTIALLY THE SAME TERMS AND
CONDITIONS AS THE TRANSFERRED LETTER OF CREDIT (IN WHICH EVENT THE TRANSFERRED
LETTER OF CREDIT SHALL HAVE NO FURTHER EFFECT).
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IF ANY INSTRUCTIONS ACCOMPANYING A DRAWING UNDER THIS LETTER OF CREDIT REQUEST
THAT PAYMENT IS TO BE MADE BY TRANSFER TO YOUR ACCOUNT WITH ANOTHER BANK, WE
WILL ONLY EFFECT SUCH PAYMENT BY FED WIRE TO A U.S. REGULATED BANK, AND WE
AND/OR SUCH OTHER BANK MAY RELY ON AN ACCOUNT NUMBER SPECIFIED IN SUCH
INSTRUCTIONS EVEN IF THE NUMBER IDENTIFIES A PERSON OR ENTITY DIFFERENT FROM THE
INTENDED PAYEE.
THIS LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICES (ISP98),
INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 590.

AUTHORIZED SIGNATUREAUTHORIZED SIGNATURE

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IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER __________________
EXHIBIT A
FORM OF TRANSFER FORM
DATE: ____________________
TO: SILICON VALLEY BANK
       3003 TASMAN DRIVE                                                RE:
IRREVOCABLE STANDBY LETTER OF CREDIT
       SANTA CLARA, CA 95054                                         NO.
_____________ ISSUED BY
       ATTN: GLOBAL TRADE FINANCE                          SILICON VALLEY BANK,
SANTA CLARA
       STANDBY LETTERS OF CREDIT                             L/C AMOUNT:
___________________
GENTLEMEN:
FOR VALUE RECEIVED, THE UNDERSIGNED BENEFICIARY HEREBY IRREVOCABLY TRANSFERS TO:
_________________________________________________________________________________________
(NAME OF TRANSFEREE)
_________________________________________________________________________________________
(ADDRESS)
ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY TO DRAW UNDER THE ABOVE LETTER OF
CREDIT UP TO ITS AVAILABLE AMOUNT AS SHOWN ABOVE AS OF THE DATE OF THIS
TRANSFER.
BY THIS TRANSFER, ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY IN SUCH LETTER OF
CREDIT ARE TRANSFERRED TO THE TRANSFEREE. TRANSFEREE SHALL HAVE THE SOLE RIGHTS
AS BENEFICIARY THEREOF, INCLUDING SOLE RIGHTS RELATING TO ANY AMENDMENTS,
WHETHER INCREASES OR EXTENSIONS OR OTHER AMENDMENTS, AND WHETHER NOW EXISTING OR
HEREAFTER MADE. ALL AMENDMENTS ARE TO BE ADVISED DIRECTLY TO THE TRANSFEREE
WITHOUT NECESSITY OF ANY CONSENT OF OR NOTICE TO THE UNDERSIGNED BENEFICIARY.
THE ORIGINAL OF SUCH LETTER OF CREDIT IS RETURNED HEREWITH, AND WE ASK YOU TO
EITHER (1) ENDORSE THE TRANSFER ON THE REVERSE THEREOF, AND FORWARD IT DIRECTLY
TO THE TRANSFEREE WITH YOUR CUSTOMARY NOTICE OF TRANSFER, OR (2) ISSUE A
REPLACEMENT LETTER OF CREDIT TO THE TRANSFEREE ON SUBSTANTIALLY THE SAME TERMS
AND CONDITIONS AS THE TRANSFERRED LETTER OF CREDIT (IN WHICH EVENT THE
TRANSFERRED LETTER OF CREDIT SHALL HAVE NO FURTHER EFFECT).
SINCERELY,

_____________________________
(BENEFICIARY’S NAME)

_____________________________
(SIGNATURE OF BENEFICIARY)
 
_____________________________
(NAME AND TITLE)
SIGNATURE AUTHENTICATEDThe name(s), title(s), and signature(s) conform to
that/those on file with us for the company and the signature(s) is/are
authorized to execute this instrument.
_________________________________________________
(Name of Bank)
_________________________________________________
(Address of Bank)
_________________________________________________
(City, State, ZIP Code)
_________________________________________________
(Authorized Name and Title)

_________________________________________________
(Authorized Signature)
_________________________________________________
(Telephone number)

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EXHIBIT E
List of Existing FFE

Boardroom:
- 1 large conference table
- 18 chairs
- 1 credenza
Executive Side:
- 3 small round conference tables
- 22 guest chairs
- 2 file cabinets
- 6 executive desks with upper cabinets
- 2 workstations
- 1 executive assistant’s desk
- 3 settees
- 3 end tables
- 1 task chairs
- 1 conference table/8 chairs
- 3 credenzas
- 1 banquette
- 1 long console table
- 2 lounge chairs
Additional Furniture:
- 7 storage hutches

Large Executive Office:
- 1 large executive desk
- 1 large credenza
- 2 side chairs
- 1 sofa
- 2 lounge chairs
- 1 round conference table/2 chairs
- 1 coffee table
- 1 tall credenza
Opposite Side of Suite:
- 31 workstations
- 2 high file cabinets
- 11 “U-shaped” desks
- 5 left return desks
- 5 right return desks
- 37 side chairs
- 1 conference table/6 chairs
- 10 task chairs
- 12 wood bookshelves
- 5 wood file cabinets
- 7 credenzas
- 2 lounge chairs
- 1 round conference table
Breakroom:
- 2 high tables
- 2 square tables
- 1 round table
- 1 high bar
- 12 chairs
- 8 stools
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EXHIBIT F
Existing Monument Sign
image31.jpg [image31.jpg]
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EXHIBIT G
Tenant’s Reserved Parking Spaces
image41.jpg [image41.jpg]
image51.jpg [image51.jpg]
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EXHIBIT H
RENEWAL OPTION
If Tenant is not then in Default beyond applicable notice and cure periods, and
Tenant is occupying no less than seventy-five percent (75%) of the New Space at
the time of such election, Tenant may renew this Lease with respect to the
entire New Space only for one (1) additional period of five (5) years
(“Extension Term”), by delivering written notice of the exercise thereof to
Landlord not earlier than fifteen (15) months nor later than twelve (12) months
before the expiration of the New Term. The Base Rent payable for each month
during such Extension Term shall be the prevailing rental rate including all
relevant business points in comparable transactions, including without
limitation, base rent, base rent increases, operating expenses, operating
expense protections (including new Base Year), tenant improvement allowances or
the approximate value on a rentable per square feet basis for Landlord’s
build-out, rent abatement and any other market monetary concessions (the
“Prevailing Rental Rate”), at the commencement of such Extension Term. Upon the
commencement of the Extension Term, the Base Year shall be adjusted to be the
calendar year in which the first day of the Extension Term occurs. Within thirty
(30) days after receipt of Tenant’s delivery of the notice to renew within the
time periods provided above, Landlord shall deliver to Tenant written notice of
the Prevailing Rental Rate and shall advise Tenant of the required adjustment to
Base Rent, if any (the “Rent Adjustment Notice”). The Prevailing Rental Rate
shall take into account completed lease renewal transactions (including, without
limitation, base rent, base rent increases, operating expenses, base year,
tenant improvement allowances, rent abatement and other monetary concessions) in
comparable second-generation spaces in comparable buildings in Westlake Village
in the 12-month period prior to Tenant’s notice exercising the option set forth
herein. Tenant shall, within fifteen (15) business days after receipt of
Landlord’s notice, notify Landlord in writing whether Tenant accepts or rejects
Landlord’s determination of the Prevailing Rental Rate. If Tenant fails to
respond to Landlord’s Rent Adjustment Notice in such 15-business day period,
time being of the essence, then Tenant’s rights under this Exhibit shall
terminate and Tenant shall have no right to extend or renew this Lease.
If Tenant responds to Landlord’s Rent Adjustment Notice within such 15-business
day period but rejects Landlord’s determination of the Prevailing Rental Rate in
the Rent Adjustment Notice, then Landlord and Tenant shall attempt to agree on
the Prevailing Rental Rate during the Extension Term within thirty (30) days of
Tenant’s rejection of the Rent Adjustment Notice. If Landlord and Tenant are not
able to so agree within such thirty (30) day period, then Landlord and Tenant
each, at its sole cost and by giving written notice to the other party, shall
appoint a competent and impartial commercial real estate broker (hereinafter
“broker”) with at least ten (10) years’ full-time commercial real estate
brokerage experience in the geographical area of the New Space to give its
determination of the Prevailing Rental Rate for the New Space during the
Extension Term. If either Landlord or Tenant does not appoint a broker within
ten (10) business days after the other party has given written notice of the
name of its broker, the single broker appointed shall be the sole broker and
shall conclusively determine the Prevailing Rental Rate during the Extension
Term. If two (2) brokers are appointed by Landlord and Tenant as stated in this
paragraph, they shall meet promptly and attempt to set the Prevailing Rental
Rate. If the two (2) brokers are unable to agree within ten (10) business days
after the second broker has been
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appointed, then the two (2) brokers shall attempt to select a third broker,
meeting the qualifications stated in this paragraph within ten (10) business
days after the last day the two (2) brokers are given to set the Prevailing
Rental Rate. In addition, each of the two (2) brokers shall submit to the other
prior to the end of such second (2nd) ten (10) business day period their
respective good faith estimate of the Prevailing Rental Rate. If the two (2)
brokers are unable to agree on the third broker, either Landlord or Tenant by
giving ten (10) business days’ written notice to the other party, can apply to
the Presiding Judge of the Superior Court of the county in which the New Space
is located for the selection of a third broker who meets the qualifications
stated in this paragraph. If either of the first two (2) brokers fails to submit
their respective opinion of the Prevailing Rental Rate within the time frames
set forth below, then the single Prevailing Rental Rate submitted shall
automatically be the Prevailing Rental Rate for the Extension Term and shall be
binding upon Landlord and Tenant. Landlord and Tenant each shall bear one-half
(½) of the cost of appointing the third broker and of paying the third broker’s
fee. The third broker, however selected, shall be a person who has not
previously acted in any capacity for either Landlord or Tenant. Within fifteen
(15) business days after the selection of the third broker, the third broker
shall select one of the two Prevailing Rental Rates for the Premises, which may
be one or the other of the Prevailing Rental Rates submitted by the first two
(2) brokers, or a different rate not greater than the higher nor lower than the
lesser of the Prevailing Rental Rates submitted by the first two (2) brokers.
The determination of the Prevailing Rental Rate by the third broker shall be
conclusive and binding upon Landlord and Tenant.
Upon agreement or determination of the Prevailing Rental Rate as set forth
herein, on or before the commencement date of the Extension Term, Landlord and
Tenant shall execute an amendment to the Lease extending the Term on the same
terms provided in the Lease, except as follows:
(a) Base Rent shall be adjusted to the Prevailing Rental Rate as determined in
accordance with this Exhibit H;
(b) Base Year shall be the calendar year in which the first day of the Extension
Term occurs;
(c) Tenant shall have no further renewal option unless expressly granted by
Landlord in writing; and
(d) Tenant shall accept the New Space in its then-current condition, and
Landlord shall not provide to Tenant any allowances (e.g., moving allowance,
construction allowance, and the like) or other tenant inducements except as
included and determined as part of the Prevailing Rental Rate.
Tenant’s rights under this Exhibit H shall terminate if (1) the Lease or
Tenant’s right to possession of the New Space is terminated, (2) Tenant assigns
any of its interest in the Lease or sublets any portion of the New Space except
to a Permitted Transferee in accordance with the terms and conditions of the
Lease, or (3) Tenant fails to timely exercise its option under this Exhibit,
time being of the essence with respect to Tenant’s exercise thereof.
35