OFFICE LEASE AGREEMENT

 

BETWEEN

 

CUSHING VENTURES, LLC,
a California limited liability company

 

(“LANDLORD”)

 

AND

 

ONCOCYTE CORPORATION,
a California corporation

(“TENANT”)

 

   

 

 

TABLE OF CONTENTS

 

    Page SECTION 1 LEASE GRANT; LEASE CONTINGENCIES. 1 SECTION 2 CONDITION OF
PREMISES; DELIVERY OF POSSESSION. 1 SECTION 3 RENT. 1 SECTION 4 USE; COMPLIANCE
WITH LAWS; HAZARDOUS MATERIALS; AND SECURITY SERVICES. 6 SECTION 5 SECURITY
DEPOSIT AND LETTER OF CREDIT. 10 SECTION 6 SIGNAGE 14 SECTION 7 LEASEHOLD
IMPROVEMENTS. 15 SECTION 8 MAINTENANCE, REPAIRS AND ALTERATIONS. 16 SECTION 9
UTILITIES 17 SECTION 10 ENTRY BY LANDLORD. 18 SECTION 11 ASSIGNMENT AND
SUBLETTING. 18 SECTION 12 LIENS. 19 SECTION 13 INDEMNITY AND WAIVER OF CLAIMS.
20 SECTION 14 INSURANCE. 20 SECTION 15 SUBROGATION. 21 SECTION 16 CASUALTY
DAMAGE. 21 SECTION 17 CONDEMNATION. 22 SECTION 18

EVENTS OF DEFAULT.

23 SECTION 19 REMEDIES. 23 SECTION 20 LANDLORD’S DEFAULT. 24 SECTION 21 NO
WAIVER OR REDEMPTION. 25 SECTION 22 QUIET ENJOYMENT. 25 SECTION 23
[Intentionally Omitted]. 25 SECTION 24 HOLDING OVER. 25 SECTION 25 SUBORDINATION
TO MORTGAGES; ESTOPPEL CERTIFICATE. 26 SECTION 26 ATTORNEYS’ FEES. 26 SECTION 27
NOTICE. 27 SECTION 28 COMMUNICATIONS LEASE OR EQUIPMENT. 27 SECTION 29 SURRENDER
OF PREMISES. 27 SECTION 30 MISCELLANEOUS. 27 SECTION 31 ENTIRE AGREEMENT. 29

 

ADDENDA AND EXHIBITS:

 

Addendum No. 1 – Option to Extend     Exhibit A Form of Commencement Letter
Exhibit B Work Letter Exhibit C Form of Letter of Credit Exhibit D Approved
Testfit Plans Exhibit E Form of Estoppel Certificate Exhibit F Parking Site Plan

 

 -i- 

 

 

 

OFFICE LEASE AGREEMENT

 

THIS OFFICE LEASE AGREEMENT (“Lease”) is made and entered into as of the
Effective Date, as defined below, by and between CUSHING VENTURES, LLC, a
California limited liability company (“Landlord”), and ONCOCYTE CORPORATION, a
California corporation (“Tenant”).

 

Basic Lease Provisions

 

A.“Date of Lease” as of December 23, 2019, for reference purposes only. The
“Effective Date” of this Lease shall be the date of full execution as evidenced
by the later of the signatures of Landlord and Tenant in the signature block
below. The last party to sign this Lease agrees to deliver to the other party an
executed copy of this Lease in PDF (as defined in Section 30(k) below) format no
later than the same business day after execution of this Lease by such party.

 

B.“Premises” means the building containing approximately 26,800 square feet of
rentable square footage (“Building”), together with all other improvements,
landscaping and parking located at 15 Cushing, in the City of Irvine, County of
Orange, State of California 92618. The Building is deemed to include the
aforementioned rentable square footage and shall not be re-measured.

 

C.“Base Rent”: Commencing on the Commencement Date (as defined in Paragraph I of
the Basic Lease Provisions), Base Rent shall be the following during the
following periods of the Term:

 

Months of Term 

Monthly

Base Rent

  1 - 12  $61,640.00* 13 - 24  $63,797.40  25 - 36  $66,030.31  37 - 48 
$68,341.37  49 - 60  $70,733.32  61 - 72  $73,208.98  73 - 84  $75,771.30  85 -
89  $78,423.29 

 

*Notwithstanding anything in this Lease to the contrary, 50% of the Base Rent
(“Abated Base Rent”) otherwise due and payable for the first ten (10) calendar
months of the Term (“Conditionally Abated Base Rent Period”) shall be
conditionally abated on the following condition: In the event of a premature
termination of this Lease pursuant to Sections 18 and 19 of this Lease, the
unamortized portion of Abated Base Rent shall be immediately and unconditionally
due and payable to Landlord by Tenant. During the Conditionally Abated Base Rent
Period, Tenant shall pay that portion of Base Rent that is not conditionally
abated, which the parties agree is $30,820.00 per month.

 

D.“Tenant’s Share”: Prior to the Commencement Date, Tenant shall initially have
no obligation to pay Expenses (as defined in Section 3(c) below) and Taxes (as
defined in Section 3(d)(i) below) while completing Tenant’s Work (as defined in
Paragraph J of the Basic Lease Provisions); provided, however, that if before
the Commencement Date, Tenant occupies and uses the second floor of the Building
for its business, “Tenant’s Share” of Expenses and Taxes shall be 43.7 percent;
provided that, on the earlier to occur of (i) Tenant’s completion of Tenant’s
Work and opens the ground floor to the public for the operation of Tenant’s
Permitted Use (as defined in Paragraph L of the Basic Lease Provisions), prior
to the Commencement Date, or (ii) the Commencement Date, Tenant’s Share of
Expenses and Taxes will be increased to 100 percent.

 

 BLP – 1 

 

 

E.“Prepaid Rent”: Within three (3) business days of the Effective Date, Tenant
shall prepay the Abated Base Rent for the first two full calendar months of the
Term and Landlord’s estimate of Tenant’s Share of Taxes and Expenses for the
first full calendar month of the Term. Landlord agrees that, in accordance with
Paragraph C of the Basic Lease Provisions, the amount of such Prepaid Rent
applicable to Abated Base Rent is $61,640.00.

 

F.“Security Deposit” means $150,000.00.

 

G.“Letter of Credit Amount” means initially $1,700,000.00, subject to reduction
or release pursuant to Section 5 below.

 

H.“Term” means, commencing on the Commencement Date, a period of eighty-nine
(89) full calendar months, plus any fraction of the calendar month in which the
Commencement Date occurs if the Commencement Date does not occur on the first
day of the month, subject to Tenant’s option to extend the Term pursuant to
Addendum No. 1 to this Lease.

 

I.“Commencement Date” means the date that is 150 days after the Delivery Date
pursuant to Section 2 below.

 

J.“Tenant’s Work” means the work, if any, performed by Tenant in the Premises
pursuant to the work letter agreement attached to this Lease as Exhibit B (“Work
Letter”).

 

K.“Tenant Improvement Allowance” means $1,340,000.00.

 

L.“Permitted Use”: General office and administrative use related to Tenant’s
business as well as CLIA Certified Laboratory Diagnostic Testing of Blood and
Tissue samples for research and development and the commercialization of such
research and development, and for no other use or purpose, without Landlord’s
prior written approval (which will not be unreasonably withheld, conditioned, or
delayed).

 

M.“Notice Addresses”:

 

  Tenant: OncoCyte Corporation     1010 Atlantic Ave., Suite 102     Alameda, CA
94501     Attn: Chief Operating Officer         Landlord: Cushing Ventures, LLC
    Attn: Bill Nicely     4490 Von Karman Avenue     Newport Beach, CA 92660    
      With a concurrent copy to:     Legal@thesmartcircle.com

 

N.“Business Day(s)” are Monday through Friday of each week, exclusive of New
Year’s Day, Martin Luther King, Jr. Day, Cesar Chavez Day, Presidents’ Day,
Memorial Day, Independence Day, Labor Day, Veterans’ Day, Thanksgiving Day, the
day after Thanksgiving Day and Christmas Day (“Holidays”). Landlord may
designate additional Holidays, provided that the additional Holidays are
commonly recognized in the area where the Building is located.

 

 BLP – 2 

 

 

O.“Landlord Related Parties” means Landlord’s agents, employees and contractors,
including without limitation any property manager retained by Landlord to manage
the Premises.

 

P.“Law(s)” means all laws, statutes, codes (including building codes),
ordinances, rules, regulations and orders promulgated or issued by any federal,
state or local governmental entity (whether executive, administrative,
legislative or judicial) with jurisdiction over the Building or the Premises, or
any business, use or operation therein or thereon, including the provisions of
the Disabilities Acts (as defined in Section 4(d) below), as all may be amended,
superseded, supplemented, modified or revised.

 

Q.“Person” means any natural person or persons in individual or representative
capacities and any entity or entities recognized by Law, including, without
limitation, corporations, partnerships, limited liability companies and
associations, or any combination of natural persons and entities.

 

R.“Including” or “includes” (including other conjugations) shall not be
construed to imply or impose any limitations or restrictions.

 

[End of Basic Lease Provisions]

 

 BLP – 3 

 

 

SECTION 1 LEASE GRANT; LEASE CONTINGENCIES.

 

Landlord leases and demises the Premises to Tenant, and Tenant leases and hires
the Premises from Landlord, including without limitation the Building and all
other improvements, landscaping and parking located at the Premises, all on the
terms and conditions of this Lease.

 

SECTION 2 CONDITION OF PREMISES; DELIVERY OF POSSESSION.

 

Upon both parties having entered into this Lease, and Tenant providing Landlord
(i) the Security Deposit as required under Section 5(a) below, (ii) the Letter
of Credit as required by Section 5(b) below, and (iii) such documents or other
information reasonably required in connection with delivering possession of the
Premises, including without limitation evidence that Tenant has obtained the
insurance required hereunder, Landlord shall deliver possession of the Premises
(“Delivery Date”) to Tenant in its current “as is” condition (except for any
latent defects within the Building or existing Hazardous Materials (as defined
in Section 4(b) below)) on, within, or under the Premises and subject to
Landlord’s ongoing maintenance and repair obligations set forth under the terms
of this Lease. Except for the existence of latent defects or existing Hazardous
Materials (if any), Tenant’s taking possession of the Premises to construct
Tenant’s Work (as defined in and pursuant to Exhibit B) shall otherwise (a) be
deemed acceptance of the Premises by Tenant in their current condition, “as is”;
(b) conclusively establish that the Premises is in good and satisfactory
condition as of the date Tenant takes possession; and (c) be deemed Tenant’s
representation that (other than the foregoing latent defects or existing
Hazardous Materials) it has inspected the Premises and is aware of the current
condition of the Premises. Notwithstanding any provision in this Lease to the
contrary, all terms and conditions of this Lease and all obligations of Tenant
hereunder shall be in full force and effect from and after the Effective Date,
except that Tenant’s obligation to pay Base Rent shall become effective upon the
Commencement Date; and Tenant shall pay Tenant’s Share of the Expenses and Taxes
as provided in Paragraph D of the Basic Lease Provisions.

 

SECTION 3 RENT.

 

(a) Payments.

 

(i) Tenant shall pay Landlord, without any setoff or deduction, except as
otherwise permitted under the terms of this Lease, the amount of Base Rent and
Additional Rent due for the Term, with estimated Additional Rent for recurring
Expenses and Taxes payable in twelve (12) equal monthly installments as
hereinafter provided in Section 3(b) below. “Additional Rent” means any and all
sums (exclusive of Base Rent) that Tenant is required to pay Landlord under the
terms of this Lease. Additional Rent and Base Rent are sometimes collectively
referred to hereunder as “Rent”. Tenant shall pay and be liable for any rental,
sales and use taxes (but excluding any income taxes payable by Landlord) imposed
upon or measured by Rent under applicable Law. Base Rent and recurring monthly
charges of Additional Rent shall be due and payable on the first day of each
calendar month without notice or demand; however, Prepaid Rent shall be due and
payable as set forth in Paragraph E of the Basic Lease Provisions and Landlord
shall hold such Prepaid Rent in trust for the benefit of Tenant until the date
that is the first day of the full calendar month of the Term and on which date
Landlord shall apply such Prepaid Rent for that month’s Abated Base Rent. All
other items of Rent shall be due and payable by Tenant within ten (10) business
days after receipt of invoices (including reasonable supporting documentation
therefor) from Landlord. All payments of Rent shall be by good and sufficient
check or by other means (such as automatic debit or electronic transfer)
reasonably acceptable to Landlord. Unless otherwise agreed or required by
applicable Law, Rent will be applied first to any unpaid collection costs and
late charges, then to the earliest Rent due.

 

 -1- 

 

 

(ii) Tenant’s failure to pay any Rent when due may cause Landlord to incur
unanticipated costs. The exact amount of such costs are impractical or extremely
difficult to ascertain. Such costs may include processing and accounting charges
and late charges, which may be imposed on Landlord by assessment or by any
ground lease, mortgage or trust deed encumbering the Premises. Therefore, if
Landlord does not receive any payment of Rent within five (5) business days
after it becomes due, Tenant shall pay Landlord a late charge equal to ten
percent (10%) of the overdue amount, provided that Landlord shall waive the
first late charge, if any, assessed to Tenant. The parties agree that such late
charge represents a fair and reasonable estimate of the costs Landlord will
incur by reason of such late payment.

 

(iii) If any check or other instrument of payment delivered to Landlord by
Tenant is returned by Landlord’s bank for any reason, including without
limitation, insufficient funds, Tenant shall pay to Landlord upon demand the
amount incurred by Landlord in connection with the returned payment plus a
processing fee of One Hundred Dollars ($100) per returned check, in addition to,
if applicable, any late charge due under Section 3(a)(ii). If more than two (2)
of Tenant’s payments are returned due to insufficient funds or paid more than
five (5) business days after such payment is due during any 12-month period,
then without limiting its other rights and remedies, Landlord may require at any
time thereafter that Tenant make all future payments (a) one month in advance of
the due date by cashier’s check or money order, or (b) by ACH (Automated
Clearing House) payment or another electronic payment method reasonably
acceptable to Landlord, and that, in the case of electronic payment, all
regularly scheduled payments be automatically debited.

 

(iv) If the Term commences on a day other than the first day of a calendar month
or terminates on a day other than the last day of a calendar month, monthly Base
Rent and Tenant’s Share of any Taxes or Expenses for the applicable month shall
be prorated based on the number of days in such calendar month and Tenant shall
pay such prorated Rent on the Commencement Date. Landlord’s acceptance of less
than the correct amount of Rent shall be considered a payment on account of the
earliest Rent due. No endorsement or statement on a check or letter accompanying
a check or payment shall be considered an accord and satisfaction, and either
party may accept the check or payment without prejudice to that party’s right to
recover the balance or pursue other available remedies.

 

(b) Tenant’s Share of Expenses and Taxes.

 

(i) The parties intend that, subject only to the specific exceptions set forth
herein, this Lease be absolutely net to Landlord. Accordingly, Tenant shall pay
Tenant’s Share of the Expenses (defined in Section 3(c)) and the Taxes (defined
in Section 3(d)) for each calendar year during the Term.

 

(ii) Landlord shall provide Tenant with a good faith estimate of Expenses and
Taxes for each calendar year during the Term. On or before the first day of each
month, Tenant shall pay to Landlord, as Additional Rent, a monthly installment
equal to one-twelfth of Tenant’s Share of Landlord’s estimate of Expenses and
one-twelfth of Tenant’s Share of Landlord’s estimate of Taxes. If Landlord
determines that its good faith estimate of Expenses or Taxes was incorrect by a
material amount, Landlord may provide Tenant with a revised estimate, but not
more frequently than once in any six (6) month period. After Tenant’s receipt of
the revised estimate, Tenant’s monthly payments of Tenant’s Share of Expenses
and Taxes will be based on the revised estimate. If Landlord does not provide
Tenant with an estimate of Expenses or Taxes before January 1 of a calendar
year, Tenant shall continue to pay monthly installments of Expenses or Taxes
based on the previous year’s estimate(s) until Landlord provides Tenant with the
new estimate. Upon delivery of the new estimate, an adjustment will be made for
any month Tenant paid monthly installments based on the previous year’s
estimate(s). Tenant shall pay Landlord the amount of any underpayment within
thirty (30) days after receipt of the new estimate. Any overpayment shall be
refunded to Tenant within thirty (30) days or credited against the next due
future installment(s) of Additional Rent.

 

 -2- 

 

 

(iii) Within three (3) months following the end of each calendar year, Landlord
will endeavor to provide Tenant with a statement of estimated actual Expenses
and Taxes for the prior calendar year, and in any case shall deliver a statement
of actual Expenses (“Final Statement”) within five (5) months following the end
of each calendar year. If the estimated Expenses and/or estimated Taxes for the
prior calendar year are more than the actual Expenses and/or actual Taxes, as
the case may be, for the prior calendar year, Landlord shall apply any
overpayment by Tenant against Additional Rent due or next becoming due, provided
if this Lease terminates or the Term expires before the determination of the
overpayment, Landlord shall refund any overpayment to Tenant after first
deducting the amount of Rent due. If the estimated Expenses and/or estimated
Taxes for the prior calendar year is less than the actual Expenses and/or actual
Taxes, as the case may be, for such prior year, Tenant shall pay Landlord,
within thirty (30) days after receipt of the statement of Expenses and/or Taxes,
any underpayment for the prior calendar year.

 

(iv) Notwithstanding anything to the contrary contained herein, Controllable
Expenses shall not be increased by more than four percent (4%) annually,
cumulative and compounded. “Controllable Expenses” means all Expenses except
for: (i) commercially reasonable insurance coverage; (ii) utilities serving the
Premises and not directly paid by Tenant; (iii) Taxes, (iv) the cost of changes
or improvements required due to any new Laws or changes in existing Laws in
effect after the Effective Date; (v) assessments levied by any governmental or
quasit-governmental agency on the Premises; and (vi) any amortized capital
improvements (such as by way of example and not limitation, the cost of
re-slurry, re-paving and striping of the parking lot) made and amortized over
their useful life by Landlord, which Tenant is required to pay under the terms
of this Lease.

 

(c) Expenses Defined. “Expenses” means, subject to Expense Exclusions (as
defined below), all costs and expenses incurred in each calendar year in
connection with operating, maintaining, repairing (including replacements if
repairs are not feasible or would not be effective) and managing the Building
and the Premises, including without limitation:

 

(i) Labor costs, including, wages, salaries, social security and employment
taxes, medical and other types of insurance, uniforms, training, and retirement
and pension plans (to the extent that such costs and expenses are attributable
to the Building);

 

(ii) Management fees (which will not exceed 3.5% of the Base Rent and Additional
Rent);

 

(iii) The cost of services, including amounts paid to service providers and the
rental and purchase cost of parts, supplies, tools and equipment, including
without limitation those related to operating, maintaining, and repairing those
areas Landlord is obligated to maintain under Section 8(b) below. Landlord, by
itself or through an affiliate, shall have the right to directly perform or
provide any services under this Lease (including management services), provided
that the cost of any such services shall not exceed the cost that would have
been incurred had Landlord entered into an arms-length contract for such
services with an unaffiliated entity of comparable skill and experience;

 

 -3- 

 

 

(iv) Premiums and deductibles paid by Landlord for insurance, including workers
compensation, fire and extended coverage, earthquake, general liability, rental
loss, elevator, boiler and other insurance customarily carried from time to time
by owners of comparable buildings (other than deductibles for (i) general
liability or earthquake in excess of $25,000 in the aggregate within any
calendar year, or (ii) any general liability deductibles arising from claims for
which Landlord is obligated to indemnify Tenant under Section 13(b));

 

(v) All charges for utilities supplied to the Building and the Premises not paid
directly by Tenant, and assessments levied by any association or governmental or
quasit-governmental agency on the Premises; and

 

(vi) Amortization on a straight-line basis of capital improvements or
replacements over their useful life in accordance with generally accepted
accounting principles to the Building or the Premises as Landlord may install to
comply with Laws effective after the Effective Date or undertaken in good faith
with a reasonable expectation of reducing Expenses or otherwise improving
operating efficiency (distinguished from replacement parts or components
installed in the ordinary course of business when repairs are not feasible or
would not be effective), Tenant being responsible only for Tenant’s Share of the
annual amortized amount in any calendar year.

 

Notwithstanding the foregoing, Expenses shall not include the following
(collectively, “Expense Exclusions”): (i) management fees and administrative
fees charged by Landlord which, together, exceed three and a half percent (3.5%)
of all Rent (including Base Rent and Tenant’s Share of Expenses and Taxes)
payable by Tenant, (ii) ground lease rentals, (iii) marketing-related expenses,
(iv) depreciation, (v) debt service, (vi) tenant improvements for vacant space
of other occupants of the Building (if any), (vii) corporate overhead, (viii)
legal fees (except to the extend expressly payable by Tenant under this Lease),
or (ix) the cost of capital improvements (except as set forth Section 3(c)(vi)).

 

(d) Taxes Defined.

 

(i) “Taxes” means: (A) all general and special real estate taxes and assessments
on the Building and/or Premises, including assessments for special improvement
districts and building improvement districts, special taxes for community
facilities districts, taxes and assessments levied in substitution or
supplementation in whole or in part of any such taxes and assessments; (B) the
Premise’s share of any general and special real estate taxes and assessments
under any reciprocal easement agreement, common area agreement or similar
agreement as to the Premises (A) listed on that certain Title Policy No.
NCS-541349 issued to Landlord by First American Title Insurance Company on July
11, 2012, or (B) imposed after the Effective Date (provided, however, Landlord
shall not consent to any such imposition after the Effective Date without
Tenant’s prior written consent); (C) all personal property taxes for property
that is owned by Landlord and used in connection with the operation, maintenance
and repair of the Premises; and (D) costs and fees incurred in connection with
seeking reductions in any tax liabilities described in “(A)”, “(B)” and “(C)”,
including any fees and costs incurred by Landlord for compliance, review and
appeal of tax liabilities. Landlord shall timely pay all Taxes and Tenant shall
reimburse Landlord for the same subject to the terms of this Lease. Taxes shall
not include any income, capital levy, franchise, capital stock, gift, estate or
inheritance tax applicable to the Landlord.

 

 -4- 

 

 

(ii) Landlord and Tenant acknowledge that there may be changes in the current
real property tax system and that there may be imposed new forms of taxes,
assessments, charges, levies or fees, or there may be an increase in certain
existing taxes, assessments, charges, levies or fees placed on, or levied in
connection with the ownership, leasing, occupancy or operation of the Premises.
All such new or increased taxes, assessments, charges, levies or fees which are
imposed or increased as a result of or arising out of any changes in the
structure of the current real property tax system or any limitations on the real
property taxes which can be assessed on real property, including, but not
limited to, any and all taxes, assessments, charges, levies and fees assessed or
imposed due to the Landlord’s leasing the Premises to Tenant (including any
surcharge on the rent or income from any such leasing other than state and
federal income tax) shall also be included within the meaning of “Taxes” as used
in this Lease.

 

(iii) If an assessment is payable in installments, Taxes for the year shall
include the amount of each installment; provided, however, in no event will
Tenant’s Share of Taxes include any penalty or late fee or any interest due and
payable during that year. For all other real estate taxes, Taxes for that year
shall, at Landlord’s election, include either the amount accrued, assessed or
otherwise imposed for the year or the amount due and payable for that year
(other than any penalty, late fee or any interest due thereon), provided that
Landlord’s election shall be applied consistently throughout the Term.

 

(iv) If a change in the amount of Taxes is established for any year of the Term
during which Tenant paid Tenant’s Share of any Taxes, then Taxes for that year
will be retroactively adjusted. As applicable, Landlord shall provide Tenant
with a credit, if any, based on the adjustment, and Tenant shall pay Landlord
the amount of Tenant’s Share of any increase in the Taxes within thirty (30)
days after Tenant’s receipt of a statement from Landlord, along with reasonable
supporting documentation therefor.

 

(e) Audit Rights. Landlord shall provide, upon written request of Tenant, an
accounting of the Expenses and Taxes for the preceding calendar year and,
provided Tenant is not in default under the terms and conditions of this Lease
(that is continuing after notice and any applicable cure period), Tenant shall
have the right within one hundred twenty (120) days after Landlord delivers the
Final Statement, at Tenant’s sole cost and expense, to conduct an audit of
Landlord’s books and records regarding the Expenses and Taxes reflected in such
accounting (“Eligible Charges”) to confirm the accuracy of Landlord’s
accounting; provided, however: (A) such audit shall be conducted during
Landlord’s regular business hours; (B) a national or regional certified public
accountant or other qualified professional firm not retained on a contingency
fee basis; and (C) Eligible Charges shall not include Expenses and Taxes for
prior periods or reflected in prior accountings. If the audit discloses an
overcharge of Eligible Charges, the amount of the overpayment shall be credited
against the next payment of Rent due to Landlord until such overpayment is
reimbursed to Tenant in full. In the event no Rent is due Landlord, the amount
of any overpayment shall be reimbursed to Tenant within thirty (30) days after
the audit completion date. If the audit discloses an underpayment, then the
total amount of such underpayment shall be paid to Landlord within thirty (30)
days after the audit completion date. If the audit discloses the amount of
Eligible Charges paid by Tenant was overstated by more than five percent (5%),
then, in addition to crediting or repaying such overpayment to Tenant, Landlord
shall also pay the reasonable costs incurred by Tenant in connection with such
audit, but in no event greater than the amount overstated.

 

 -5- 

 

 

SECTION 4 USE; COMPLIANCE WITH LAWS; HAZARDOUS MATERIALS; AND SECURITY SERVICES.

 

(a) Use; Compliance With Laws. The Premises shall be used only for the Permitted
Use and for no other use or purpose, as set forth in Paragraph L of the Basic
Lease Provisions. Notwithstanding the foregoing, as long as Tenant continues to
pay Rent and other sums payable under this Lease in the amounts and at the times
due and payable as set forth in this Lease and continues to perform all of its
other non-monetary obligations hereunder, Tenant has no duty to occupy the
Building or the Premises or conduct its business operations during the Term of
this Lease thereon. Tenant shall not use or permit the use of the Premises for
any purpose which is illegal, dangerous to persons or property or which, in
Landlord’s reasonable opinion, interferes with the operation of the Building.
Tenant shall comply with all Laws, including all applicable Disabilities Acts,
regarding the operation of Tenant’s business and the use, condition,
configuration and occupancy of the Building and the use and occupancy of the
Premises. Tenant, within ten (10) business days after receipt, shall provide
Landlord with copies of any notices it receives regarding a violation or alleged
violation of any Laws. Tenant shall comply with such other reasonable rules and
regulations adopted by Landlord and provided to Tenant in writing from time to
time (“Rules and Regulations”). Tenant shall also cause its agents, contractors,
subcontractors, employees, customers, and subtenants to comply with all such
Rules and Regulations; provided, however, if there is a conflict between the
foregoing Rules and Regulations and the terms of this Lease, the terms of this
Lease will control.

 

(b) Hazardous Materials. Landlord and Tenant, each, hereby makes the following
covenants regarding Hazardous Materials:

 

(i) Landlord and Tenant shall at all times and in all respects comply with all
federal, state and local Laws, including the Federal Water Pollution Control Act
(33 U.S.C. Section 1251, et seq.), Resource Conservation & Recovery Act (42
U.S.C. Section 6901, et seq.), Safe Drinking Water Act (42 U.S.C. Section 3000f,
et seq.), Toxic Substances Control Act (15 U.S.C. Section 2601, et seq.), the
Clean Air Act (42 U.S.C. Section 7401, et seq.), Comprehensive Environmental
Response, Compensation and Liability Act (42 U.S.C. Section 9601, et seq.),
California Health & Safety Code (Section 25100, et seq., Section 39000, et
seq.), California Safe Drinking Water & Toxic Enforcement Act of 1986
(California Health & Safety Code Section 25249.5, et seq.), California Water
Code (Section 13000, et seq.), and other comparable state Laws (“Hazardous
Materials Laws”), relating to industrial hygiene, environmental protection or
the use, analysis, generation, manufacture, storage, disposal or transportation
of any oil, flammable explosives, asbestos, urea formaldehyde, radioactive
materials or waste, or other hazardous, toxic, contaminated or polluting
materials, substances or wastes, including, without limitation, any “hazardous
substances”, “hazardous wastes”, “hazardous materials” or “toxic substances”
under any such Laws (collectively, “Hazardous Materials”).

 

(ii) Tenant shall, at its own expense, procure, maintain in effect and comply
with all conditions of any and all permits, licenses, and other governmental and
regulatory approvals required for Tenant’s use of the Premises, including,
without limitation, discharge of (appropriately treated) materials or wastes
into or through any sanitary sewer serving the Premises. Except as discharged
into the sanitary sewer in strict accordance and conformity with all applicable
Hazardous Materials Laws, Tenant shall cause any and all Hazardous Materials
brought or caused to be brought into or onto the Building or the Premises by or
on behalf of Tenant to be removed from the Premises and transported solely by
duly licensed haulers to duly licensed facilities for final disposal of such
materials and wastes. Tenant shall in all respects handle, treat, deal with and
manage any and all such Hazardous Materials in, on, under or about the Premises
in total conformity with all applicable Hazardous Materials Laws and prudent
industry practices regarding management of such Hazardous Materials. Upon
expiration or earlier termination of the Term, Tenant shall cause all Hazardous
Materials brought or caused to be brought into or onto the Building or the
Premises by or on behalf of Tenant to be removed from the Premises and
transported for use, storage or disposal in accordance with and compliance with
all applicable Hazardous Materials Laws. Tenant shall not take any remedial
action in response to the presence of any Hazardous Materials in or about the
Building or the Premises, nor enter into any settlement agreement, consent
decree or other compromise with respect to any claims relating to any Hazardous
Materials in any way connected with the Building or the Premises, without first
notifying Landlord of Tenant’s intention to do so and affording Landlord ample
opportunity to appear, intervene or otherwise appropriately assert and protect
Landlord’s interest with respect thereto.

 

 -6- 

 

 

(iii) Tenant shall immediately notify Landlord in writing of: (A) any
enforcement, cleanup, removal or other governmental or regulatory action
instituted, completed or threatened pursuant to any Hazardous Materials Laws;
(B) any claim made or threatened by any Person against Tenant, the Building or
the Premises relating to damage, contribution, cost recovery compensation, loss
or injury resulting from or claimed to result from any Hazardous Materials; and
(C) any reports made to any environmental agency arising out of or in connection
with any Hazardous Materials in or removed from the Building or the Premises,
including any complaints, notices, warnings or asserted violations in connection
therewith. Tenant shall also supply to Landlord as promptly as possible, and in
any event within five (5) business days after Tenant first receives or sends the
same, with copies of all claims, reports, complaints, notices, warnings or
asserted violations, relating in any way to the Building or the Premises or
Tenant’s use thereof. Tenant shall promptly deliver to Landlord copies of any
Hazard Communication Safety Data Sheets prepared and submitted by Tenant to OSHA
or other governmental authority reflecting the legal and proper disposal of all
Hazardous Materials removed from the Premises.

 

(iv) Tenant shall indemnify, defend (by counsel reasonably acceptable to
Landlord), protect and hold Landlord and each of the Landlord Related Parties
free and harmless from and against any and all claims, liabilities, penalties,
forfeitures, losses or expenses (including attorney’s fees), or death of or
injury to any Person or damage to any property whatsoever, arising from or
caused in whole or in part, directly or indirectly, by (A) the presence in, on,
under or about the Building or the Premises, or the discharge in or from the
Building or the Premises, of any Hazardous Materials brought or caused to be
brought into or onto the Building or the Premises by or on behalf of Tenant; (B)
Tenant’s use, analysis, storage, transportation, disposal, release, threatened
release, discharge or generation of Hazardous Materials to, in, on, under, about
or from the Building or the Premises; or (C) Tenant’s failure to comply with any
Hazardous Materials Law. Tenant’s obligations hereunder shall include, without
limitation, and whether foreseeable or unforeseeable, all costs of any required
or necessary repair, cleanup or detoxification or decontamination of the
Building or the Premises, or the preparation and implementation of any closure,
remedial action or other required plans in connection therewith, and shall
survive the expiration or earlier termination of the Term. For purposes of the
release and indemnity provisions of this Section 4(b), any acts or omissions of
Tenant, or by employees, agents, assignees, subtenants, contractors or
subcontractors of Tenant or others acting for or on behalf of Tenant (whether or
not they are negligent, intentional, willful or unlawful) shall be strictly
attributable to Tenant.

 

(v) Landlord has no knowledge of any Hazardous Materials present in, on, upon,
or under the Building or the Premises, the soils or groundwater thereunder in
violation of Hazardous Materials Laws or posing any threat to human health,
safety, and the environment, except as disclosed in this Lease. Landlord shall
be solely responsible for the remediation and removal (and all costs associated
therewith, without reimbursement from Tenant as Additional Rent) of all
Hazardous Materials in violation of Hazardous Materials Laws at, within, under,
or on the Building or any other portion of the Premises existing on or before
the Delivery Date or thereafter caused by Landlord or any third party tenant of
Landlord or any other occupant or licensee permitted by Landlord. If at any time
during the Term, Tenant encounters any such Hazardous Materials requiring
abatement or remediation that is not the responsibility of Tenant under this
Lease, Landlord shall, at its sole cost and expense (without reimbursement from
Tenant as Additional Rent), promptly undertake such abatement or remediation in
accordance with all applicable Hazardous Materials Laws, and Tenant shall be
entitled to an equitable abatement of Base Rent for each day and to the extent
Tenant is unable to occupy and use any portion of the Premises, (and would
otherwise be able to occupy and use such portion but for such Hazardous
Materials which Landlord is required to remediate) for the operation of the
Permitted Use within or upon the Premises until such time as Landlord has caused
such Hazardous Materials to be so abated or remediated such that Tenant may
resume such construction, installation, occupancy or use.

 

 -7- 

 

 

(vi) Other than those Hazardous Materials which are Landlord’s responsibility
under Section 4(b)(v) above, there shall be no abatement of Base Rent and Tenant
shall be solely responsible for the remediation and removal of all other
Hazardous Materials brought or caused to be brought into or onto the Building or
the Premises during the Term, in which event Tenant shall be solely responsible
for such costs, as set forth in Section 4(b)(ii) above; provided, however, with
respect any such Hazardous Materials requiring removal and remediation outside
of the Building, Landlord shall timely perform such remediation and removal on
behalf of Tenant, and Tenant shall promptly reimburse Landlord for all costs
incurred in connection therewith.

 

(vii) Landlord has been informed that the El Toro Marine Corps Air Station
(MCAS) has been listed as a Federal Superfund site as a result of chemical
releases occurring over many years of occupancy. Various chemicals including jet
fuel, motor oil and solvents have been discharged in several areas throughout
the MCAS site. A regional study conducted by the Orange County Water District
has estimated that groundwaters beneath more than 2,900 acres have been impacted
by Trichloroethylene (ICE), an industrial solvent. There is a potential that
this substance may have migrated into the ground water underlying the Premises.
The U.S. Environmental Protection Agency, the Santa Ana Regional Water Quality
Control Board, and the Orange County Health Care Agency are overseeing the
investigation/cleanup of this contamination. To Landlord’s knowledge, there is
no practical impediment to the use or occupancy of the Premises due to the El
Toro discharges.

 

(viii) For purposes of this Lease, whenever the phrase “to Landlord’s knowledge”
or the “knowledge” of Landlord or words of similar import are used, they mean
and are limited to the current actual knowledge only of Bill Nicely, without
inquiry, and not any implied, imputed or constructive knowledge of such
individual or of Landlord. The identification of such individual is intended to
create a basis for knowledge and shall not impute any personal liability in any
manner whatsoever hereunder or otherwise related to the transactions
contemplated hereby, which liability will remain with Landlord.

 

(ix) Within thirty (30) days after Landlord’s written request, but not more than
once each calendar year unless the information provided by Tenant has materially
changed, Tenant shall complete and deliver to Landlord an environmental
questionnaire in form and substance reasonably acceptable to Landlord
identifying Hazardous Materials stored or used by Tenant at the Premises.

 

(c) Security Services. Landlord shall not be obligated to provide security
guards, security patrols, private police or any other type of security services
(collectively, “Security Services”) for the Premises. Tenant hereby acknowledges
that Landlord shall not be so obligated and that Landlord will not provide any
Security Services of any type for the Premises. Tenant waives any and all claims
for damages to Persons or property sustained by Tenant, or by any other person
or entity, arising from, out of or in connection with, or alleged to arise from,
out of or in connection with, Landlord’s not providing Security Services for the
Premises. In addition, Tenant assumes the responsibility to provide, at Tenant’s
sole cost and expense, any such Security Services as Tenant may require in
connection with Tenant’s use of the Premises, and Tenant assumes all risk in
connection with any failure to provide or lack of such Security Services in the
Premises.

 

 -8- 

 

 

(d) Compliance with Disabilities Acts. Landlord shall be responsible for
compliance with all Laws, including, but not limited to, the Americans With
Disabilities Act of 1990, and its implementing regulations, as amended or
supplemented from time-to-time, and any state laws governing handicapped access
or architectural barriers, and all rules, regulations, and guidelines
promulgated under such laws, as amended from time to time (the “Disabilities
Acts”) applicable to the exterior path of travel to the primary entrance of the
Premises (including without limitation any requirements related to van
accessible spaces, parking, access ways, slopes, curb cuts, truncated domes, and
signage) (i) as of the Effective Date and (ii) after the Effective Date to the
extent required in connection with Tenant’s Work, provided that such
requirements would apply to general office improvements or use and are not
required due to Tenant’s specific use or improvements to the Premises (“Code
Violation”). Except for such Code Violation, Tenant shall be responsible for at
its sole cost and expense all other compliance with the Disabilities Acts.
Landlord acknowledges and agrees that in the event the temporary or permanent
Certificate of Occupancy (“CofO”) is denied by the governmental agency that
issues Certificates of Occupancy (“CofO Agency”), solely based on the foregoing
Code Violation and, as a consequence, Tenant is unable to operate its Permitted
Use from the Premises as contemplated under the terms of this Lease, Tenant
shall be entitled to an equitable abatement of Base Rent for each day Landlord
fails to cure the Code Violation beyond the date Landlord receives written
notice from Tenant with reasonably sufficient evidence to Landlord that
specifies the Code Violation until Landlord cures such Code Violation. Such
abatement shall only apply to the extent Tenant is unable to occupy and use any
portion of the Premises, and would otherwise be able to occupy and use the
Premises but for the Code Violation).

 

(e) Certified Access Specialist Disclosure. As of the date of this Lease, to
Landlord’s current actual knowledge without investigation, the Premises have not
been inspected by a Certified Access Specialist (“CASp”). Accordingly, Landlord
makes the following disclosure as required by California Civil Code Section
1938: “A Certified Access Specialist can inspect the subject premises and
determine whether the subject premises comply with all of the applicable
construction-related accessibility standards under state law. Although state law
does not require a CASp inspection of the subject premises, the commercial
property owner or lessor may not prohibit lessee or tenant from obtaining a CASp
inspection of the subject premises for the occupancy or potential occupancy of
the lessee or tenant, if requested by the lessee or tenant. The parties shall
mutually agree on the arrangements for the time and manner of the CASp
inspection, the payment of the fee for the CASp inspection and the cost of
making any repairs necessary to correct violations of construction-related
accessibility standards within the premises.” If Tenant requests or otherwise
obtains a CASp inspection of the Premises, then: (i) Tenant shall pay the cost
of such inspection; (ii) such inspection shall occur at a time mutually agreed
upon by Landlord and Tenant; (iii) Tenant shall provide Landlord with a copy of
the CASp report resulting from such inspection within ten (10) days after
Tenant’s receipt thereof; (iv) Tenant shall not disclose and shall keep the CASp
inspection, the nature and circumstances of such inspection, and all information
in the CASp report absolutely confidential, except only to the extent necessary
to comply with any disclosure required by applicable Laws or as otherwise
permitted in this Section; and (v) Tenant shall perform all repairs or other
work necessary to correct violations of construction-related accessibility
standards identified by such CASp inspection within the Building, which repairs
or other work shall be completed at Tenant’s sole cost and expense (other than
required to repair violations of the Disabilities Acts existing as of the
Effective Date applicable to the restrooms, in which case such repairs will be
made at Landlord’s sole cost and expense as set forth in Section 4(d) above)
within 180 days after the date of such CASp inspection (provided Landlord shall
complete any or all such repairs or other work within the Building that affects
the structure of the Building and those portions of the Premises outside the
Building, in which case, Tenant shall pay to Landlord the amortized cost thereof
as Additional Rent). Notwithstanding the foregoing, to the extent reasonably
necessary, Tenant may disclose information in such CASp report to a third-party
assisting with such repairs or other work, provided that such third-party agrees
in writing to keep such information confidential.

 

 -9- 

 

 

(f) Parking. Landlord represents that to its knowledge as of the Effective Date,
the parking area of the Premises includes 114 parking stalls as depicted on the
Site Plan attached hereto as Exhibit F. Tenant shall be entitled to the
exclusive use of all such parking serving the Premises, at no charge to Tenant
or Tenant’s agents, representatives, contractors, employees, customers and
visitors. Landlord shall not be liable for any damage to motor vehicles of
Tenant or the foregoing agents, representatives, contractors, employees,
customers and visitors, for any loss of property from within those motor
vehicles, or for any injury to Tenant, its agents, representatives, contractors,
employees, customers and visitors, unless caused by Landlord’s sole active
negligence or willful misconduct. Landlord shall have the right to establish,
and from time to time amend, and to enforce against all users of the parking
areas reasonable Rules and Regulations, as provided under Section 4(a). Tenant’s
contractors who service Tenant’s Permitted Use shall be permitted to park on a
short-term basis for pick-ups and deliveries only within the parking area;
otherwise, all parking at the Premises shall be for noncommercial passenger
vehicles only.

 

SECTION 5 SECURITY DEPOSIT AND LETTER OF CREDIT.

 

(a) Security Deposit. Tenant shall pay to Landlord, within three (3) business
days following the Effective Date, a Security Deposit in the amount specified in
the Basic Lease Provisions. Said amount shall be held by Landlord as security
for the faithful performance by Tenant of all of the terms, covenants and
conditions of this Lease to be kept and performed by Tenant during the Term. If
Tenant defaults with respect to any provision of this Lease, including the
provisions relating to the payment of Rent, that is continuing beyond the
applicable notice and cure period, Landlord may (but shall not be required to)
use, apply or retain all or any part of the Security Deposit for the payment of
any Rent or any other amount Tenant is obligated to pay; provided, however,
Tenant acknowledges that the Security Deposit is not an advance payment of Rent
or a measure of Tenant’s liability for damages. If any portion of said deposit
is so used or applied, Tenant shall, within three (3) business days of written
demand therefor, deposit cash (which may be made via ACH payment) with Landlord
in an amount sufficient to restore the Security Deposit to its original amount
and Tenant’s failure to do so shall be a material default of this Lease.
Landlord shall not be required to keep the Security Deposit separate from its
general funds, and Tenant shall not be entitled to interest on such deposit. If
Tenant fully and faithfully performs every provision of this Lease to be
performed by it, or cures a default within the applicable notice and cure
period, or timely reimburses Landlord for a default cured by Landlord, the
Security Deposit or any balance thereof shall be returned to Tenant within
thirty (30) days after the Expiration Date or earlier termination of this Lease,
provided that Landlord may retain the Security Deposit until such time as (i)
any amount due (if any) from Tenant under this Lease (including damages under
Civil Code Section 1951.2) has been determined by Landlord in good faith and
paid in full, and (ii) permitted by Law. Tenant also hereby consents to
Landlord’s application of all or part of the Security Deposit to any
post-rejection claims that Landlord may have with respect to Tenant’s
obligations under this Lease in any bankruptcy proceeding involving Tenant.
Tenant hereby waives the provisions of Section 1950.7 of the California Civil
Code, or any successor statute, and all other provisions of law, now or
hereafter in effect, which (i) establish the time frame by which a landlord must
refund a security deposit under a lease, and/or (ii) provide that a landlord may
claim from a security deposit only those sums reasonably necessary to remedy
defaults in the payment of rent, to repair damage caused by a tenant or to clean
the premises, it being agreed that Landlord may, in addition, claim those sums
specified in this Section above and/or those sums reasonably necessary to
compensate Landlord for any loss or damage caused by Tenant’s default of this
Lease, including all damages or rent due upon termination of this Lease pursuant
to Section 1951.2 of the California Civil Code. No trust relationship or
fiduciary duty is created between Landlord and Tenant with respect to the
Security Deposit, only a relationship of debtor and creditor.

 

 -10- 

 

 

Tenant hereby pledges and grants to Landlord a security interest in the Security
Deposit to secure the payment and performance of any and all debts, obligations
and liabilities of Tenant to Landlord arising out of, connected with or related
to this Lease, whether now existing or hereafter arising, voluntary or
involuntary, whether jointly owed with others, direct or indirect, absolute or
contingent, liquidated or unliquidated, and whether from time to time decreased
or extinguished and later increased, created or incurred. Tenant authorizes
Landlord to file such financing or continuation statements, and amendments
thereto, relating to all or any part of the Security Deposit as Landlord deems
necessary. With respect to the Security Deposit, Landlord shall have all the
rights, powers and remedies of a secured party under the Uniform Commercial
Code. All of the rights, powers and remedies of Landlord under this Lease shall
be in addition to all rights, powers and remedies given to Landlord by any
statute or rule of Law, or other agreement, shall be cumulative and may be
exercised successively or concurrently without impairing or in any way affecting
Landlord’s security interest in the Security Deposit.

 

(b) Letter of Credit. Tenant shall deliver to Landlord, within three (3)
business days following the Effective Date, as additional protection and
assurance of the full and faithful performance of Tenant’s obligations under
this Lease and for all losses and damages Landlord may suffer as a result of
Tenant’s breach or default under this Lease, an irrevocable and unconditional
negotiable standby letter of credit (“Letter of Credit”) that is: (1) in the
amount of the Letter of Credit Amount; (2) substantially in the form attached
hereto as Exhibit C; (3) running in favor of Landlord, presentable and payable
in the City of Irvine, California, and otherwise containing the terms required
in this Article and its subsections; and (4) issued by a solvent, nationally
recognized commercial bank (“Bank(s)”) satisfying the Letter of Credit Issuer
Requirements. The “Letter of Credit Issuer Requirements” means a Bank that is
(i) acceptable to Landlord in its sole but reasonable discretion; provided,
however, Landlord agrees that the Banks by way of example and not limitation,
are acceptable to Landlord: JP Morgan Chase, Bank of America, Citibank, Wells
Fargo, or Silicon Valley Bank, (ii) chartered under the laws of the United
States, any State thereof or the District of Columbia, (iii) insured by the
Federal Deposit Insurance Corporation, (iv) has a long term rating of B or
higher as rated by Moody’s Investors Service and/or A or higher as rated by
Standard & Poor’s, and Fitch Ratings Ltd (Fitch), (v) is under the supervision
of the Superintendent of Banks of the State of California, or a national banking
association, and (vi) at all times has a local branch office open in the City of
Irvine, California.

 

(i) Letter of Credit Amount; Release. Provided Tenant is not in default under
any of the terms and conditions of this Lease that is continuing beyond the
applicable notice and cure period, no event then exists which, in Landlord’s
reasonable judgement, would lead to such an event of default: (A) commencing on
the first day of the calendar month that is the 34th full calendar month of the
Term, and continuing on the first day of each calendar month thereafter (each a
“Letter of Credit Reduction Date”) the Letter of Credit Amount shall be reduced
in equal amounts at the rate which would fully reduce the Letter of Credit
Amount to $0.00 at the end of the Term (i.e., fully amortizing the original
Letter of Credit Amount on a straight-line basis over the remaining Term); and
(B) at any time after the first Letter of Credit Reduction Date, Tenant shall
have the right to cancel the Letter of Credit upon Tenant demonstrating that
Tenant has obtained a market capitalization exceeding Two Hundred Million
Dollars ($200,000,000.00) and a cash balance, as reported on Tenant’s balance
sheet, of Forty Million Dollars ($40,000,000.00).

 

 -11- 

 

 

(ii) Additional Requirements. In addition to the requirements set forth above,
the Letter of Credit shall: (1) be “callable” for cash at sight, irrevocable,
and unconditional; (2) be maintained in effect, and automatically renewable or
extendable for the period from the date Landlord and Tenant execute this Lease
and continuing through the date (“LC Expiration Date”) that is ninety (90) days
after the expiration or earlier termination of the Term of this Lease; (3)
require Bank to notify Landlord at least sixty (60) days before the expiration
or termination of the Letter of Credit if not automatically renewed or extended;
(4) be fully assignable by Landlord, its successors, and assigns; (5) permit
partial draws and multiple presentations and drawings; (6) be honored by Bank
without inquiry as to the accuracy thereof and regardless of whether the Tenant
disputes the content of such statement; and (7) be subject to the International
Standby Practices 1998, International Chamber of Commerce Publication No. 590.
The form and all other terms of the Letter of Credit and Bank shall be
acceptable to Landlord, in Landlord’s sole discretion. Tenant shall pay all
expenses, points, or fees incurred by Tenant in obtaining the Letter of Credit.

 

(iii) Renewals. If any Letter of Credit expires earlier than the LC Expiration
Date, Landlord will accept a renewal thereof provided that such renewal letter
of credit is in effect and delivered to Landlord not later than sixty (60) days
before the expiration of the subject Letter of Credit, and is irrevocable and
automatically renewable through the LC Expiration Date, upon the same terms as
the expiring Letter of Credit or such other terms as may be acceptable to
Landlord in its sole discretion. If any Letter of Credit is not renewed at least
sixty (60) days before its expiration, expires or is terminated, or if Tenant
otherwise fails to maintain any Letter of Credit in the amount and in accordance
with the terms set forth in this Article, such failure constitutes an incurable
default by Tenant, and Landlord shall have the right to present the Letter of
Credit to Bank before its expiration, draw down the entire amount of the Letter
of Credit and apply the proceeds in accordance with this Article.

 

(iv) Draws. Landlord shall have the right to draw down an amount up to the face
amount of the Letter of Credit if any of the following shall have occurred or be
applicable: (1) such amount is unpaid and due to Landlord under the terms and
conditions of this Lease; or (2) Bank has notified Landlord that the Letter of
Credit will not be renewed or extended through the LC Expiration Date and Tenant
has not provided a replacement Letter of Credit acceptable to Landlord at least
thirty (30) days before such LC Expiration Date; or (3) there exists an event of
default under this Lease (that is continuing beyond the applicable notice and
cure period); or (4) Tenant has filed a voluntary petition under any chapter of
the U.S. Bankruptcy Code or any similar state law (collectively, Bankruptcy
Code) that is not dismissed within thirty (30) days of such filing; or (5)
Tenant has assigned all of its assets to creditors in accordance with any
federal or state laws; or (6) an involuntary petition has been filed against
Tenant under any chapter of Bankruptcy Code that is not dismissed within thirty
(30) days of such filing. Tenant acknowledges and agrees that Landlord is
entering into this Lease in material reliance on the ability of Landlord to draw
on the Letter of Credit on the occurrence of any breach or default on the part
of Tenant under this Lease that is continuing beyond the applicable notice and
cure period. If Tenant shall breach any provision of this Lease or otherwise be
in default under this Lease that is continuing beyond the applicable notice and
cure period, Landlord may, but without obligation to do so, with notice to
Tenant, draw on the Letter of Credit, in part or in whole, to cure any breach or
default of Tenant and to compensate Landlord for any and all damages of any kind
or nature sustained resulting from Tenant’s breach or default that continue
beyond the applicable notice and cure period, including any damages that accrue
upon termination of this Lease pursuant to California Civil Code § 1951.2 or any
similar provision. Landlord’s use, application, or retention of any proceeds of
the Letter of Credit, or any portion of it, shall not prevent Landlord from
exercising any other right or remedy provided by this Lease or by any applicable
Law, it being intended that Landlord shall not first be required to proceed
against the Letter of Credit, and shall not operate as a limitation on any
recovery to which Landlord may otherwise be entitled.

 

 -12- 

 

 

(v) Restoration. If, as a result of Landlord drawing on the Letter of Credit,
the amount of the Letter of Credit shall be less than the Letter of Credit
Amount, Tenant shall, within five (5) business days after the drawdown, provide
Landlord with additional letter(s) of credit in an amount equal to the
deficiency, and any such additional letter(s) of credit shall comply with all of
the provisions of this Article. Tenant’s failure to comply with this
requirement, despite anything to the contrary contained in this Lease,
constitutes an incurable default by Tenant.

 

(vi) Application. The proceeds of the Letter of Credit may be applied by
Landlord against any Rent payable by Tenant under this Lease that is not paid
when due and to pay for all losses and damages that Landlord has suffered as a
result of any default or breach by Tenant (such amount being in accordance with
any applicable law governing the measure of Landlord’s damages). Landlord shall
pay to Tenant within thirty (30) days after the LC Expiration Date the amount of
any proceeds of the Letter of Credit received by Landlord and not applied
against any Rent payable by Tenant that was not paid when due or used to pay for
any losses and damages suffered by Landlord as a result of any default or breach
by Tenant that is not cured by Tenant within the applicable notice and cure
period; provided, however, if before the LC Expiration Date a voluntary petition
is filed by Tenant, or an involuntary petition is filed against Tenant by any of
Tenant’s creditors, under the Bankruptcy Code that is not dismissed within
thirty (30) days of filing, then Landlord shall not be obligated to make such
payment in the amount of the unused Letter of Credit proceeds until either (1)
all preference issues relating to payments under this Lease have been resolved
in such bankruptcy or reorganization case; or (2) such bankruptcy or
reorganization case has been dismissed.

 

(vii) No Interference. Tenant agrees not to interfere in any way with payment to
Landlord of the proceeds of the Letter of Credit, either before or following a
draw by Landlord of any portion of the Letter of Credit, regardless of whether
any dispute exists between Tenant and Landlord as to Landlord’s right to draw on
the Letter of Credit. No condition or term of this Lease shall be deemed to
render the Letter of Credit conditional to justify the issuer of the Letter of
Credit in failing to honor a draw on such Letter of Credit in a timely manner.

 

(viii) Interest in Letter of Credit. Tenant agrees and acknowledges that (1) the
Letter of Credit constitutes a separate and independent contract between
Landlord and the Bank; (2) Tenant is not a third party beneficiary of such
contract; and (3) if Tenant becomes a debtor under any chapter of the Bankruptcy
Code that is not dismissed within thirty (30) days of filing, neither Tenant,
any trustee, nor Tenant’s bankruptcy estate shall have any right to restrict or
limit Landlord’s claim or rights to the Letter of Credit or the proceeds of it
by application of 11 USC § 502(b)(6) or otherwise.

 

(ix) Not a Security Deposit. In no event or circumstance shall the Letter of
Credit or any renewal thereof or any proceeds thereof (1) be deemed or treated
as a “security deposit” within the meaning of Civil Code Section 1950.7, (2) be
subject to the terms of Civil Code Section 1950.7, or (3) intended to serve as a
“security deposit” within the meaning of Civil Code Section 1950.7. Landlord and
Tenant (i) confirm and agree that the Letter of Credit is not intended to serve
as a security deposit and §1950.7, and any and all other laws, rules, and
regulations applicable to security deposits in the commercial context (“Security
Deposit Laws”), shall have no applicability or relevance to the Letter of
Credit, and (ii) waive any and all rights, duties, and obligations either party
may now or in the future have relating to or arising from the Security Deposit
Laws.

 

 -13- 

 

 

(x) Transfer of Letter of Credit. The Letter of Credit shall also provide that
Landlord, and its successors and assigns, may, at any time and with notice to
Tenant but without first obtaining Tenant’s consent, transfer (including
repeated transfers) all or any portion of its interest in and to the Letter of
Credit to another party, person or entity solely in connection with the
assignment, transfer, encumbrance or financing this Lease, the Premises or the
Project. In the event of a transfer of Landlord’s interest in the Premises,
Landlord shall transfer the Letter of Credit to the transferee and thereupon
Landlord shall, without any further agreement between the parties, be released
by Tenant from all liability therefor, and it is agreed that the provisions of
this Article shall apply to every transfer or assignment of the whole or any
portion of said Letter of Credit to a new landlord. In connection with any such
transfer of the Letter of Credit by Landlord, Tenant shall, at Tenant’s sole
cost and expense, sign and submit to Bank such applications, documents and
instruments as may be necessary to effect such transfer. Tenant shall neither
assign nor encumber the Letter of Credit or any part thereof, and Landlord and
its successors and assigns shall not be bound by any such assignment,
encumbrance, attempted assignment or attempted encumbrance.

 

(xi) Replacement Letter of Credit. Notwithstanding anything to the contrary in
this Lease, if at any time the Letter of Credit Issuer Requirements are not met,
or if the financial condition of such issuer changes in any other materially
adverse way, then Tenant shall, within thirty (30) days after written notice
from Landlord, deliver to Landlord a replacement Letter of Credit which
otherwise meets the requirements of this Lease, including without limitation,
the Letter of Credit Issuer Requirements. In the event Tenant fails to replace
the Letter of Credit and satisfy the Letter of Credit Issuer Requirements within
such 30-day period, Landlord shall provide Tenant with a second written notice
therefor and Tenant’s failure to deliver such replacement Letter of Credit to
Landlord within five (5) business days of delivery of such second notice shall
constitute an incurable default by Tenant. In addition and without limiting the
generality of the foregoing, if the issuer of any letter of credit held by
Landlord is insolvent or is placed in receivership or conservatorship by the
Federal Deposit Insurance Corporation, or any successor or similar entity, or if
a trustee, receiver or liquidator is appointed for the issuer then, effective as
of the date of such occurrence, said Letter of Credit shall be deemed to not
meet the requirements of this Article and Tenant shall, within thirty (30) days
after written notice from Landlord, deliver to Landlord a replacement Letter of
Credit which otherwise meets the requirements of this Article and that meets the
Letter of Credit Issuer Requirements (and Tenant’s failure to do so within such
30-day period, Landlord shall provide Tenant with a written notice therefor and
if Tenant fails to deliver such replacement Letter of Credit to Landlord within
five (5) business days of delivery of Landlord’s notice shall, notwithstanding
anything in this Article or the other terms and provisions of this Lease to the
contrary, constitute an incurable default by Tenant. In addition, Tenant shall
have the right to independently elect to replace any existing Letter of Credit
with a new Letter of Credit if the new Letter of Credit: (1) Becomes effective
at least thirty (30) days before expiration of the Letter of Credit that it
replaces; (2) is in the Letter of Credit Amount, as such amount may have been
reduced as set forth under Section 5(b)(i) of this Lease; (3) is issued by a
bank complying with the Letter of Credit Issuer Requirements, and (4) otherwise
complies with the requirements of this Article.

 

SECTION 6 SIGNAGE. Except for those signs and advertising devices (a) which are
provided for in approved plans and specifications in or a scale drawing
submitted by Tenant and approved in writing by Landlord, and (b) which comply
with governmental requirements, Tenant shall not erect, place, paint or maintain
in or on the Premises, any sign, exterior advertising medium or any other object
of any kind whatsoever, whether an advertising device or not, visible or audible
outside the Premises. Once approved by Landlord and such and governmental
authorities, Tenant may not change the size, composition, or location of any
sign or advertisement on the Premises without the prior written approval (not to
be unreasonably withheld, conditioned or delayed) of Landlord and said
authorities. Tenant shall, at Tenant’s sole cost and expense, maintain and keep
in good repair all installations, signs and advertising devices which it is
permitted by Landlord to install. Within thirty (30) days of the expiration of
the Term or earlier termination of this Lease, Tenant shall, at Tenant’s sole
cost and expense, remove or cause to be removed Tenant’s exterior sign or signs
and restore the Premises to the condition that existed before the installation
of Tenant’s exterior sign or signs. Subject to the foregoing terms, Tenant shall
have the right to install two (2) building top signs, one (1) facing Bake
Parkway and one (1) facing Cushing. Further, subject to Landlord’s prior written
consent, not to be unreasonably withheld, conditioned or delayed, Tenant may
install, at its sole cost and expense, and subject to obtaining all governmental
approvals, an additional monument sign identifying Tenant’s then current brand
name.

 

 -14- 

 

 

SECTION 7 LEASEHOLD IMPROVEMENTS.

 

All improvements to the Premises (other than Tenant’s Property (as defined in
Section 14(a)(i) below) made by or for the benefit of Tenant, including Tenant’s
Work pursuant to the Work Letter and Alterations (as defined in Section 8(c)
below) (collectively, “Leasehold Improvements”), shall, upon the expiration or
earlier termination of this Lease, be owned by Landlord and shall remain upon
the Premises without compensation to Tenant. Notwithstanding the foregoing to
the extent Landlord delivers to Tenant a sixty (60) day written notice, prior to
the expiration or earlier termination of this Lease, instructing Tenant that any
of the following Required Removables (defined below) shall remain upon the
Premises, Tenant shall remove at Tenant’s cost and expense: (a) Cable (defined
in Section 8(a)) installed by or for the exclusive benefit of Tenant, excluding
any Cable installed as part of Tenant’s Work constructed pursuant to Exhibit B
or installed by Tenant in or on the Building or other portions of the Premises
following the Commencement Date (i.e., after Tenant’s initial build-out); and
(b) any Leasehold Improvements that are of a nature that would require removal
and repair costs that are materially in excess of the removal and repair costs
associated with standard office improvements, unless at the time Landlord
provided its consent to such Leasehold Improvements, Landlord expressed in
writing that such Leasehold Improvements may remain upon and after the
expiration or earlier termination of this Lease and surrender of the Premises
(collectively referred to as “Required Removables”). The parties hereto agree
that Required Removables (i) include without limitation the lab improvements
above slab and made within the interior of the first floor of the Building
including the removal of interior walls such that Tenant surrenders the Premises
to Landlord in a “shell” condition, with ceiling grid reasonably intact, and
sealed concrete floors (all excluding ordinary wear and tear and damage by
casualty and condemnation excepted). The Required Removables shall be removed by
Tenant on or before the Expiration Date or earlier termination of this Lease.
Tenant shall be responsible for any repairs required as a result of the removal
of the Required Removables, and if any such damage is not repaired by Tenant,
Tenant shall reimburse Landlord for the reasonable cost to repair damage caused
by the installation or removal of Required Removables. If Tenant fails to remove
any Required Removables in a timely manner, Landlord, at Tenant’s expense, may
remove and dispose of the Required Removables. Tenant, within ten (10) business
days after delivery of an invoice and reasonable supporting documentation
therefor, shall reimburse Landlord for repair and/or removal costs incurred by
Landlord pursuant to this Section.

 

Tenant, within six months before the expiration of the Term of the Lease, may
request in writing that Landlord identify Leasehold Improvements that are not
Required Removals, and Landlord shall respond to such request within thirty (30)
days. Landlord shall not unreasonably withhold its consent to any request by
Tenant that it be permitted to surrender Leasehold Improvements that are
compatible with general office use, i.e., would not interfere with or increase
the cost of the future improvement, use and maintenance of the Premises for
general office purposes, including without limitation any HVAC system installed
by Tenant; provided, however, if the HVAC system or any other Required Removable
that is integral to the use of the Building, is not compatible with general
office use, Tenant shall (i) dampen and decrease the HVAC output of the then
existing HVAC such that HVAC operations are restored to flow rates and energy
usage in line with requirements of a standard office environment; and (ii)
remove and replace the Required Removable with equipment or improvements that
are compatible with general office use, as reasonably approved by Landlord, each
at the expiration or earlier termination of this Lease.

 

 -15- 

 

 

In connection with the Leasehold Improvements, Tenant shall have the right to
install a backup generator, subject to Landlord’s prior written approval (not to
be unreasonably withheld, conditioned or delayed) with respect to the location
and configuration of such generated, and provided that Landlord may require that
Tenant remove the same as a Required Removable.

 

SECTION 8 MAINTENANCE, REPAIRS AND ALTERATIONS.

 

(a) Tenant’s Maintenance Obligations. Tenant shall, at its sole cost and
expense, promptly perform all maintenance and repair to the Premises that are
not Landlord’s express responsibility under this Lease, and shall keep the
Premises in good condition and repair. Tenant’s maintenance and repair
obligations include without limitation: (i) floor coverings; (ii) all interior
walls (other than the structural portion thereof); (iii) doors and windows; (iv)
intentionally omitted; (v) electronic, phone and data cabling and related
equipment (collectively, “Cable”); (vi) the components and elements of the HVAC
systems and all other mechanical, electrical, plumbing and fire/life safety
systems that serve and are located within the Building; (vii) any and all
lighting fixtures that are not Building standard, including replacement of light
bulbs and fluorescent lighting tubes that are not Building standard; (viii)
intentionally omitted; (ix) furnishing janitorial services for the Building, the
provider of which is subject to Landlord’s prior approval (not to unreasonably
withheld, conditioned, or delayed), and (x) termite and pest extermination
within the Building, the provider of which is subject to Landlord’s prior
approval (not to unreasonably withheld, conditioned, or delayed). If Tenant
fails to commence to make any repairs to the Premises, as required under this
Section, for more than thirty (30) days after delivery of notice from Landlord
(although only reasonable notice under the circumstances will be required if
there is an emergency), Landlord may, upon providing Tenant with a second ten
(10) business day notice and Tenant’s failure to commence such repairs within
such 10-business-day period, make the repairs, and Tenant shall pay the
reasonable cost of the repairs to Landlord within ten (10) business days after
delivery of an invoice and reasonable supporting documentation therefor,
together with an administrative charge in an amount equal to 3.5% of the cost of
such repairs.

 

(b) Landlord’s Maintenance Obligations. Landlord shall perform all maintenance
and repairs (and replacements if repairs are not feasible or would not be cost
effective) to the following, and shall keep the following in good condition and
repair: (i) the structural elements of the Building, including, but not limited
to, the roof (including the roof structure, roof membrane, roof cover, and all
other components of the roof, collectively, “Roof”), foundation, structural
supports, footings, and exterior walls, (ii) elevator and fire and life safety
systems, (iii) drainage and sewer systems that serve the Premises (including the
Building but are located outside the Building), (iv) walkways, sidewalks and
related curbs, (v) any and all hardscape or landscaped areas, including
irrigation therefor, (vi) parking areas and driveways and all avenues of ingress
and egress to the public road (including resurfacing and re-striping thereof),
and (vii) lighting within the exterior of the Building, including but not
limited to, the parking area. Landlord shall also perform removal of any
weather-related or other sediment or debris on the exterior of the Building, all
in accordance with the standards of comparable properties in the Orange County
market area. Landlord shall use commercially reasonable efforts to complete any
maintenance in a way that does not adversely affect Tenant’s use of the Premises
for its Permitted Use or access to the Building. The costs incurred by Landlord
in connection with any maintenance, repair, or replacement shall be included in
Expenses (subject to the express limitations or requirement to amortize any
replacement as set forth in this Lease). If Landlord fails to make any repairs
to the Premises that materially and adversely affect Tenant’s use of any portion
of the ground floor of the Building for its Permitted Use for more than three
(3) days after delivery of written notice from Tenant (although only reasonable
notice under the circumstances will be required if there is an emergency),
Tenant may exercise the Self-Help Right set forth in Section 20(c). Further, if
any of the HVAC units and all other mechanical, electrical, plumbing and
fire/life safety systems (collectively, the “Building Systems”) serving the
Premises existing as of the Delivery Date (excluding any HVAC units dedicated to
the server room(s) or any Tenant installed HVAC units) must be replaced during
the Term, Landlord shall promptly replace such Building Systems and may include
in Expenses the amortized portion of the cost of such replacement, being
amortized on a straight-line basis over the greater of fifteen (15) years or the
useful life of the replacement, as acceptable per Generally Accepted Accounting
Principles. Such amortized portion shall not be included in Controllable
Expenses.

 

 -16- 

 

 

(c) Alterations. Tenant shall not make alterations, additions or improvements to
the Premises or install any Cable in the Premises or other portions of the
Building (collectively, “Alterations”) if such proposed Alterations would affect
or involve the Building structure, Roof, the exterior of the Building, the lobby
of the Building (other than superficial changes to the lobby such as by way of
example and not limitation, adding Tenant’s logo or painting the walls), or any
Building Systems, without first obtaining the written consent of Landlord in
each instance, which consent may be granted or withheld in Landlord’s sole but
reasonable discretion; otherwise, Tenant shall have the right at any time to
make any Alterations to the interior of the Building (except for the lobby of
the Building other than the foregoing superficial changes) as Tenant deems
reasonable or appropriate, without the prior written consent of Landlord,
provided that such Alterations, (i) are not visible from the exterior of the
Building, (ii) do not require work to be performed inside the walls or above the
ceiling of the Building, and (iii) will not reduce the value of the Premises,
(iv) do not exceed $100,000 or require a building permit (collectively,
“Cosmetic Alterations”). Notwithstanding that Landlord’s prior consent is not
required for Tenant to commence Cosmetic Alterations, the performance of
Cosmetic Alterations shall be subject to all the other provisions of this
Section 8(c). Tenant agrees to notify Landlord for all Cosmetic Alterations in
excess of $50,000 (in aggregate) within any calendar year. Before starting work,
Tenant shall furnish Landlord with plans and specifications (when applicable to
the work) reasonably acceptable to Landlord; the names of licensed contractors
reasonably acceptable to Landlord (provided that Landlord may designate specific
contractors with respect to Building Systems); copies of necessary permits and
governmental approvals; and evidence of contractor’s and subcontractor’s
insurance in amounts reasonably required by Landlord and designating Landlord
and the Landlord Related Parties as additional insureds (including evidence
thereof). All contractors, contractor’s representatives, and installation
technicians performing work in the Building shall be licensed and insured,
subject to Landlord’s prior approval, and shall be required to comply with
Landlord’s Rules and Regulations, as set forth under Section 4(a). Tenant shall
be solely responsible for complying with all applicable Laws pursuant to which
said work shall be performed. Other than related to Cosmetic Alterations,
material changes to the plans and specifications (when applicable) must be
submitted to Landlord for its approval (not to unreasonably withheld,
conditioned or delayed). Alterations shall be constructed in a good and
workmanlike manner using materials of a quality reasonably acceptable to
Landlord. Tenant shall reimburse Landlord within thirty (30) days after delivery
of an invoice for sums paid by Landlord for third-party examination of Tenant’s
plans for non-Cosmetic Alterations. Upon completion of any Alterations (included
Cosmetic Alterations), Tenant shall furnish “as-built” plans (if applicable),
completion affidavits, and full and final waivers of lien in recordable form.
Tenant shall assure that the Alterations comply with all insurance requirements
and Laws. Landlord’s approval of an Alteration shall not be a representation by
Landlord that the Alteration complies with applicable Laws or will be adequate
for Tenant’s use.

 

SECTION 9 UTILITIES. Upon Landlord delivering possession of the Premises, Tenant
shall promptly establish and maintain accounts in its name with utility
providers required for Tenant’s use and pay, before delinquency, all charges or
assessments for telephone, water, sewer, gas, heat, electricity, garbage
disposal, trash disposal, and all other utilities and services of any kind that
Tenant requires in connection with its use of the Premises.

 

 -17- 

 

 

SECTION 10 ENTRY BY LANDLORD.

 

Landlord, its agents, contractors and representatives, may enter the Building
with not less than 48 hours advance written notice, to show the Building and the
Premises (which may not occur except in the last nine (9) months of the Term of
this Lease), to inspect or clean and make repairs, alterations or additions to
the Building as required or permitted under the terms of this Lease, to post
notices of non-responsibility and to inspect and examine the Building and see
that the covenants of this Lease are being kept and performed. Notwithstanding
anything to the contrary, and so long as it is not an emergency, Tenant hereby
reserves the right to deny access to any and all portions of the first (1st)
floor of the Building, where Landlord acknowledges, Tenant is conducting
laboratory functions. Except in emergencies or to provide other Building
services after normal business hours, Landlord shall provide Tenant with
reasonable prior written notice of entry into the Building, which may be
communicated in writing, via electronic mail or otherwise. Solely if reasonably
necessary for the protection and safety of Tenant and its employees, Landlord
shall have the right to temporarily close all or a portion of the Premises to
perform repairs, alterations and additions. Entry by Landlord shall not
constitute constructive eviction or entitle Tenant to an abatement or reduction
of Rent. Notwithstanding anything to the contrary, Tenant may require Landlord,
Landlord’s agents, employees, vendors or guests (i) to provide sufficient
governmental identification per individual at the time of entry into the
Building, and (ii) to abide by such reasonable rules, regulations and procedures
as Tenant may from time to time establish with respect to entry, including
limitation as to time of entry, purpose of entry, and controls by Tenant with
respect to the conduct of such entry, including accompaniment by designated
representatives of Tenant. In addition, Tenant may limit access to portions of
the Building which, at the time of scheduled entry by any of the foregoing
parties, may disrupt Tenant’s ongoing business activities.

 

SECTION 11 ASSIGNMENT AND SUBLETTING.

 

(a) Tenant shall not assign, sublease, transfer or encumber any interest in this
Lease or allow any third party to use any portion of the Premises (collectively
or individually, a “Transfer(s)”) without the prior written consent of Landlord,
which consent shall not be unreasonably withheld, conditioned or delayed. For
purposes of this Section 11(a), other than to an affiliate of Tenant whether
existing as of or after the Effective Date, any transfer of the majority of the
voting stock in any corporate Tenant, or majority or managing interest in the
partnership of any partnership Tenant, or majority or managing interest in the
limited liability company of any limited liability company Tenant, shall
constitute an assignment hereunder. Without in any way limiting Landlord’s right
to refuse to grant such consent for any other reason or reasons, Landlord
reserves the right to refuse to grant such consent if in Landlord’s reasonable
business judgment: (i) the proposed transferee’s financial condition does not
meet the criteria Landlord uses to select tenants having similar leasehold
obligations; (ii) the proposed transferee’s business is not suitable for the
Building, taking into consideration the Building’s prestige; (iii) Tenant is in
default after the expiration of the notice and cure periods in this Lease; or
(iv) any portion of the Building or the Premises would likely become subject to
additional or different Laws as a consequence of the proposed Transfer. Any
attempted Transfer in violation of this Section shall, at Landlord’s option, be
void and confer no rights upon any third party. Consent by Landlord to one or
more Transfer(s) shall not operate as a waiver of Landlord’s rights to approve
any subsequent Transfers.

 

(b) As part of its request for Landlord’s consent to a Transfer, Tenant shall
provide Landlord with financial statements for the proposed transferee (if such
transferee’s financial statements are not available to the general public), a
complete copy of the proposed assignment, sublease and other contractual
documents and such other information as Landlord may reasonably request.
Landlord shall, by written notice to Tenant within fifteen (15) days after its
receipt of the required information and documentation: (i) terminate this Lease
as to the portion (including all) of the Premises so proposed to be transferred,
with a proportionate reduction in the Base Rent and other amounts payable under
this Lease; (ii) deny its consent to the proposed Transfer based on the criteria
set forth in Section 11(a) above; or (iii) grant its consent to the proposed
Transfer. If Landlord does not respond to Tenant’s request within such 15-day
period by exercising one of the options set forth in items “(i)” through “(iii)”
immediately preceding, then Tenant shall notify Landlord in writing that
Landlord has so failed to respond, and Landlord shall have an additional ten
(10) days following receipt of such notice within which to elect to exercise one
of the options set forth in items “(i)” through “(iii)”. If Landlord does not
exercise one of the options set forth in items “(i)” through “(iii)” within the
foregoing 10-day period, or if Landlord grants its consent to the proposed
Transfer, then Tenant may enter into the Transfer upon the terms and conditions
described, and to the transferee identified, in the information required to be
furnished by Tenant to Landlord pursuant to this Section. Tenant shall pay
Landlord a review fee not to exceed $500.00 for Landlord’s review of any
requested Transfer, and Tenant will reimburse Landlord for any reasonable
attorney’s fees incurred not to exceed $2,500.

 

 -18- 

 

 

(c) Tenant shall pay Landlord fifty percent (50%) of all Excess Rent (as defined
below) for any portion of the Premises and duration covered by the Transfer.
Tenant shall pay Landlord its share of any such Excess Rent within ten (10)
business days after Tenant’s receipt of such rent from the transferee. “Excess
Rent” will mean the amount of rent Tenant receives as a result of a Transfer
that is in excess of the Rent payable to Landlord after deducting from such
excess all reasonable and customary out-of-pocket expenses directly incurred by
Tenant that is attributable to the Transfer (other than Landlord’s review fee),
including brokerage fees, legal fees and construction costs.

 

(d) In no event shall any Transfer release or relieve Tenant from any obligation
under this Lease. If Tenant’s transferee defaults under this Lease that is
continuing beyond the applicable cure period, Landlord may proceed against
Tenant without pursuing remedies against the transferee.

 

(e) Notwithstanding anything to the contrary in this Section 11, no prior
written consent of Landlord shall be required for any assignment or sublease to
(i) any parent, subsidiary or affiliate of Tenant (including a partnership in
which Tenant or an affiliate of Tenant is a partner), which shall include
without limitation an assignment of Tenant’s interest under this Lease by
operation of law, or as the consequence of a merger of or consolidation with
Tenant into or with another entity (a “Merged Entity”); (ii) any subsidiary,
parent company, or affiliate of a Merged Entity; (c) any entity succeeding to
the business and assets of Tenant; or (d) any entity controlling, controlled by,
or under common control with Tenant (each, a “Permitted Transferee”), provided
that as a condition to the effectiveness of any assignment or sublease to a
Permitted Transferee, 1) at least twenty (20) days prior to such assignment or
sublease, Tenant shall deliver to Landlord the financial statements and other
financial and background information of the Permitted Transferee (if such
Permitted Transferee’s financial statements are not available to the general
public), and 2) in the event of an assignment, the Permitted Transferee assumes
in writing, the obligations of Tenant under the Lease.

 

SECTION 12 LIENS.

 

Tenant shall not permit mechanic’s or other liens to encumber the Premises or
Tenant’s leasehold interest in connection with Tenant’s Work, Tenant’s
Alterations, or any other work or service done or purportedly done by or for the
benefit of Tenant. If a lien so encumbers the Premises, Tenant shall, within
thirty (30) days after written notice from Landlord of the filing of the lien,
fully discharge the lien by settling the claim which resulted in the lien or by
bonding or insuring over the lien in the manner prescribed by the applicable
Law. If Tenant fails to discharge such lien, then, in addition to any other
right or remedy of Landlord, Landlord may bond or insure over the lien or
otherwise discharge the lien. Tenant shall reimburse Landlord for any amount
paid by Landlord to bond or insure over the lien or discharge the lien,
including reasonable attorneys’ fees (if and to the extent permitted by Law)
within thirty (30) days after receipt of an invoice from Landlord.

 

 -19- 

 

 

SECTION 13 INDEMNITY AND WAIVER OF CLAIMS.

 

(a) Tenant shall indemnify, defend, protect and hold Landlord and each of the
Landlord Related Parties harmless from and against all liabilities, obligations,
damages, penalties, claims, actions, costs, charges and expenses, including
attorneys’ fees and costs, arising from, out of or in connection with any (i)
act or omission (including violations of Law) of Tenant or any of Tenant’s
transferees, agents, employees or contractors; and (ii) damage or injury
occurring in, on or about the Premises or any part thereof, other than that
caused by (a) the willful act or active negligence of Landlord or Landlord’s
employees, contractors or agents, or (b) Landlord’s failure to perform any of
its express obligations under this Lease with respect to the maintenance or
repair of the Building or other portions of the Premises.

 

(b) Landlord shall indemnify, defend, protect and hold Tenant and each of
Tenant’s agents, employees, and contractors harmless from and against all
liabilities, obligations, damages, penalties, claims, actions, costs, charges
and expenses, including attorneys’ fees and costs, arising from, out of or in
connection with any (i) the active negligence or willful misconduct of Landlord
or any of Landlord Related Parties; and (ii) Landlord’s failure to perform any
of its express obligations under this Lease with respect to the maintenance or
repair of the Building or other portions of the Premises.

 

(c) Tenant shall obtain insurance for, and hereby agrees that Landlord and the
Landlord Related Parties, other than that caused by the willful act or gross
negligence of Landlord or Landlord’s employees, contractors or agents, if
applicable, shall not be liable to Tenant (or any subtenant, assignee, or
licensee of Tenant) and Tenant (for itself and for its employees, agents and
contractors) waives all claims for any injury, loss, or damage that may result
to any person or property by or from (i) wind or weather; (ii) the failure of
any sprinkler or HVAC equipment, any electric wiring or any gas, water or steam
pipes; (iii) the backing up of any sewer pipe or downspout; (iv) the bursting,
leaking or running of any tank, water closet, drain or other pipe; (v) water,
snow or ice upon or coming through the Roof, skylight, stairs, doorways,
windows, walks or any other place upon or near the Building. Tenant shall insure
against such loss or damage pursuant to Section 14.

 

SECTION 14 INSURANCE.

 

(a) Tenant shall carry and maintain the following insurance (“Tenant’s
Insurance”), at its sole cost and expense:

 

(i) Commercial property insurance with a special form cause of loss endorsement
(i.e., special extended coverage formerly known as “all risks”) or its
equivalent, including at least the following perils: fire and extended coverage,
smoke damage, vandalism, malicious mischief, and sprinkler leakage. This
insurance policy shall cover the full replacement cost of all furniture, trade
fixtures, equipment and other personal property owned by Tenant in the Premises
(“Tenant’s Property”).

 

(ii) Commercial General Liability Insurance insuring bodily injury, personal
injury and property damage including the following coverages: Premises and
Operations, blanket contractual liability, products and completed operations,
fire and water damage and legal liability. Such liability insurance shall be in
an amount of not less than $2,000,000 limit per occurrence and $4,000,000 limit
annual aggregate for bodily injury and personal injury and property damage, and
such amounts may be increased annually, in Landlord’s sole but reasonable
discretion, based on any increase recommended by insurance professionals
insuring or potentially insuring the Premises or customary for comparable
properties to the Premises within the County of Orange, California. In addition,
Tenant shall pay for and shall maintain in full force and effect contractual
liability insurance to cover all of the indemnity obligations of Tenant under
this Lease.

 

 -20- 

 

 

(iii) Business Automobile Liability Coverage insuring bodily injury and property
damage arising from any of Tenant’s owned, scheduled, non-owned and hired
vehicles, if any, with a combined single limit of liability of at least
$1,000,000 per occurrence.

 

(iv) Workers’ Compensation Insurance as required by Law.

 

(v) Employer’s Liability Coverage of at least $1,000,000 per occurrence.

 

(b) Tenant’s insurance policies shall (i) designate Landlord, the Landlord
Related Parties, Mortgagees (defined in Section 25) and other designees of
Landlord having a property interest in the Premises as additional insureds, (ii)
provide that the insurance shall not be canceled or altered unless thirty (30)
days prior written notice has been delivered to Landlord, and (iii) be issued by
companies that are licensed to do business in California and have an A.M. Best
rating of not less than A:VIII. Tenant shall deliver to Landlord original
certificates of insurance evidencing that such insurance is in full force and
effect (form Acord 28, without the 2006 revisions), together with a copy of the
additional insured endorsement, prior to the date on which Landlord delivers
possession of the Premises to Tenant, and upon renewals at least fifteen (15)
days before the expiration of the insurance coverage.

 

(c) Landlord shall maintain commercial property insurance with a special form
cause of loss endorsement (i.e., special extended coverage formerly known as
“all risks”) or its equivalent on the Building (including the Leasehold
Improvements) at replacement cost (excluding footings and foundations), as
reasonably estimated by Landlord. The cost of such insurance shall be included
in Expenses.

 

(d) Limits of a party’s insurance shall not limit such party’s liability under
this Lease.

 

SECTION 15 SUBROGATION.

 

Each party waives its right of recovery against the other party, the other
party’s trustees, members, principals, beneficiaries, partners, officers,
directors, employees, Mortgagee(s) and agents with respect to any loss or
damage, including consequential loss or damage, to the waiving party’s property
caused, resulting from or occasioned by any peril or perils (including negligent
acts) covered by any policy or policies carried or required to be carried by the
waiving party.

 

SECTION 16 CASUALTY DAMAGE.

 

(a) If all or any part of the Premises is damaged by fire or other casualty,
Tenant shall immediately notify Landlord in writing. During any period of time
that all or a material portion of the Premises is rendered untenantable as a
result of a fire or other casualty, the Rent shall abate for the portion of the
Premises that is untenantable and not used by Tenant.

 

 -21- 

 

 

(b) Landlord shall have the right to terminate this Lease if: (i) the Building
is damaged so that, in Landlord’s reasonable and good faith judgment,
substantial alteration or reconstruction of the Building is required; (ii)
Landlord is not permitted by Law to rebuild the Building in substantially the
same form as existed before the fire or casualty; (iii) the Building has been
materially damaged (that is, more than 33% of the Buildings square footage) and
there is less than two years of the Term remaining on the date of the casualty
(unless Tenant exercises its option to renew the Term, as provided under Lease
Addendum No. 1); (iv) any Mortgagee requires that all the insurance proceeds be
applied to the payment of the mortgage debt; or (v) an uninsured loss to the
Building occurs, and the cost to repair or restore equals or exceeds ten percent
(10%) of the replacement cost of the Building (unless Tenant agrees, at its sole
option, to reimburse Landlord for the cost to repair or restore the Building).
Landlord may exercise its right to terminate this Lease by notifying Tenant in
writing within sixty (60) days after the date of the casualty. If Landlord does
not terminate this Lease, Landlord shall commence and proceed with reasonable
diligence to repair and restore the Building (excluding any Leasehold
Improvements). Notwithstanding the foregoing, in no event shall Landlord be
required to spend more than the insurance proceeds received by Landlord and the
applicable deductible thereof.

 

(c) Landlord and Tenant acknowledge that certain existing Laws may provide that
upon the complete or partial damage or destruction of a leased premises, the
lease will be terminated, and Landlord and Tenant, wishing instead that this
Lease be terminated only on the terms provided in this Lease following such
damage or destruction, hereby waive the provisions of any such Law, including
without limitation the provisions of California Civil Code Sections 1932(2) and
1933(4), and agree that their respective rights and obligations in connection
with damage or destruction of the Premises shall be governed by this Lease.

 

(d) If all or any portion of the Premises shall be made untenantable by fire or
other casualty, Landlord shall, with reasonable promptness, cause an architect
or general contractor selected by Landlord to provide Landlord and Tenant with a
written estimate of the amount of time required to substantially complete the
repair and restoration of the Premises and make the Premises tenantable again,
using standard working methods (“Completion Estimate”). If the Completion
Estimate indicates that the Premises cannot be made tenantable within 360 days
from the date the repair and restoration is started, then notwithstanding
anything in this Section to the contrary, either party shall have the right to
terminate this Lease by delivering written notice to the other of such election
within 10 days after receipt of the Completion Estimate; provided, however,
Tenant shall not have the right to terminate this Lease pursuant to this Section
16(d) if the fire or casualty was caused by the negligence or intentional
misconduct of Tenant, Tenant related parties, or any of Tenant’s transferees,
contractors or licensees.

 

SECTION 17 CONDEMNATION.

 

Either party may terminate this Lease if the whole or any material part of the
Premises is taken or condemned for any public or quasi-public use under Law, by
eminent domain or private purchase in lieu thereof (“Taking”). Either party
shall also have the right to terminate this Lease if there is a Taking of any
portion of the Building or Premises, which would, in the commercially reasonable
and good faith determination of either party, leave the remainder of the
Building unsuitable for use as comparable to the Building’s use prior to the
Taking. In order to exercise its right to terminate the Lease, Landlord or
Tenant, as the case may be, must provide written notice of termination to the
other within 45 days after the terminating party first receives notice of the
Taking. Any such termination shall be effective as of the date on which title or
physical possession of the Premises occurs, whichever is earlier. If this Lease
is not terminated, Rent for any portion of the Premises taken or condemned shall
be abated during the unexpired Term of this Lease effective when the physical
taking of the portion of the Premises occurs. All compensation or proceeds
awarded or realized for a Taking shall be the property of Landlord, any right to
receive compensation or proceeds being expressly waived by Tenant. However,
Tenant may file a separate claim at its sole cost and expense for Tenant’s
Property and Tenant’s reasonable relocation expenses, provided the filing of the
claim does not diminish the award which would otherwise be receivable by
Landlord.

 

 -22- 

 

 

SECTION 18 EVENTS OF DEFAULT.

 

The occurrence of any of the following shall constitute an “Event of Default”
under this Lease:

 

(a) Tenant’s failure to pay when due all or any portion of the Rent, if the
failure continues for five (5) business days after delivery of written notice to
Tenant (“Monetary Default”).

 

(b) Tenant’s failure (other than a Monetary Default) to perform any obligation
pursuant to this Lease or to comply with any term, provision or covenant of this
Lease, if the failure is not cured within thirty (30) days after delivery of
written notice to Tenant. However, if Tenant’s failure to comply cannot
reasonably be cured within thirty (30) days, Tenant shall be allowed additional
time as is reasonably necessary to cure the failure so long as: (i) Tenant
commences to cure the failure within thirty (30) days, and (ii) Tenant
diligently pursues a course of action that will cure the failure and bring
Tenant back into compliance with the Lease. However, if Tenant’s failure to
perform or comply creates a hazardous condition, the failure must commence such
cure immediately upon written notice to Tenant. In addition, if Landlord
provides Tenant with written notice of Tenant’s failure to perform or to comply
with any particular term, provision or covenant of this Lease relating to three
(3) separate occasions during any 12-month period, Tenant’s subsequent violation
of such term, provision or covenant within the same 12-month period, shall, at
Landlord’s option, be an incurable Event of Default by Tenant.

 

(c) Tenant becomes insolvent, makes a transfer in fraud of creditors, makes an
assignment for the benefit of creditors, enters a general extension agreement
with creditors or admits in writing its inability to pay its debts when due.

 

(d) The leasehold estate is taken by process or operation of Law, including
selling Tenant’s leasehold interest under execution.

 

(e) Tenant abandons the Premises; provided, however, as long as Tenant satisfies
its monetary and non-monetary obligations under the terms of this Lease,
Tenant’s vacation of any portion of the Premises will not be deemed abandonment.

 

SECTION 19 REMEDIES.

 

Upon an Event of Default, whether enumerated in Section 18 or not, Landlord may
pursuant any and all of its rights and remedies without further notice or demand
including without limitation:

 

(a) Terminate Tenant’s right to possession of the Premises because of such Event
of Default and recover from Tenant all damages allowed under §1951.2 of the
California Civil Code, including, without limitation, the worth at the time of
the award of the amount by which the unpaid rent for the balance of the Term
after the time of the award exceeds the amount of such rental loss for the same
period that Tenant proves could be reasonably avoided; or

 

(b) Not terminate Tenant’s right to possession because of such Event of Default,
but continue this Lease in full force and effect; and in that event (i) Landlord
may enforce all rights and remedies under this Lease and under the provisions of
§1951.4 of the California Civil Code, including the right to recover the Rent
and all other amounts due under this Lease as such Rent and other amounts become
due under this Lease; and (ii) Tenant may assign its interest in this Lease with
Landlord’s prior written consent, which consent shall not be unreasonably
withheld.

 

No right or remedy herein conferred upon or reserved to Landlord is intended to
be exclusive of any other right or remedy, and each and every right and remedy
shall be cumulative and in addition to any other right or remedy set forth in
this Lease or now or hereafter existing by agreement, applicable law or in
equity. In addition to other remedies provided in this Lease, Landlord shall be
entitled, to the extent permitted by applicable law, to injunctive relief, or to
a decree compelling performance of any of the covenants, agreements, conditions
or provisions of this Lease, or to any other remedy allowed to Landlord at law
or in equity. Forbearance by Landlord to enforce one or more of the remedies
herein provided upon an event of default shall not be deemed or construed to
constitute a waiver of such default.

 

 -23- 

 

 

SECTION 20 LANDLORD’S DEFAULT.

 

(a) Landlord’s failure to perform any obligation pursuant to this Lease or to
comply with any term, provision or covenant of this Lease shall be a default, if
the failure is not cured by Landlord within thirty (30) days after delivery of
written notice from Tenant specifying the nature of such default; provided that,
if the nature of such default is such that it cannot be cured within said 30-day
period, Landlord shall have such additional time as may be reasonably necessary
to complete its performance so long as Landlord has promptly proceeded with
diligence after receipt of Tenant’s notice and is then proceeding with diligence
to cure such default.

 

(b) Whenever Tenant serves written notice on Landlord of Landlord’s default,
Tenant shall concurrently deliver written to each Mortgagee if Landlord has
notified Tenant in writing of such Mortgagee’s interest in the Premises and the
address to which such notices are to be delivered. Each such Mortgagee shall
have the period of time within which to cure a Landlord default provided in
Section 20(a), provided that such period shall commence to run thirty (30) days
after the commencement of the period within which Landlord must cure its default
under Section 20(a). For the purpose of curing a Landlord default, an authorized
representative of such Mortgagee shall have the right to enter upon the Premises
in accordance with the requirements and conditions set forth in Section 10 of
this Lease. Such Mortgagee shall notify Landlord and Tenant in writing and in
the manner provided by Section 27 and the agreement of Tenant under this Section
20(b) is subject to prior receipt of such notice. If the nature of the default
is such that Mortgagee’s possession is required to cure the default, then Tenant
shall not terminate this Lease so long as such Mortgagee or beneficiary
commences proceedings to obtain possession of the Premises within the period of
time afforded to the Mortgagee to cure such default, and once the Mortgagee has
obtained possession, diligently proceeds to cure the default to completion.
Nothing contained in this Lease shall be construed to impose any obligation on
any Mortgagee to cure any default by Landlord under this Lease.

 

(c) In the event Landlord should be in default of any obligation as set forth
under the terms of this Lease and the applicable cure period has expired, Tenant
shall have the right, but not the obligation, (i) to exercise the Self-Help
Right set forth in this Section or (ii) to pursue any other remedy now or
hereafter permitted or available to Tenant under the laws or judicial decisions
of the State of California (except to the extent waived in this Lease and
provided that in no event shall Landlord be liable for any indirect,
consequential or punitive damages). If after the notice and cure periods set for
in Section 20(a), or such shorter period if expressly set forth in this Lease
with respect to such obligation, Landlord fails to perform any obligation
pursuant to this Lease or to comply with any term, provision or covenant of this
Lease, and such failure materially and adversely impacts Tenant’s use of the
Premises for its Permitted Use, access to the Building, or parking within the
Premises, then, after an additional ten (10) business day written notice to
Landlord stating Tenant’s intent to exercise the following self-help remedy, and
Landlord’s failure to remedy the same within such 10-business-day period, Tenant
shall have the right (but not the obligation) to perform such obligation on
behalf of Landlord, but only to the extent needed to correct the failure so that
Tenant’s use is not materially adversely impacted (“Self-Help Right”), and
Landlord shall reimburse Tenant for all of Tenant’s actual out of pocket costs
incurred in connection with such performance within thirty (30) days of Tenant’s
delivery to Landlord of demand for payment, together with reasonable supporting
documentation and lien waivers (if applicable) therefor. In the event Landlord
fails to reimburse Tenant for such expenses within such 30-day period, Tenant
may proceed to offset the actual costs, which are not (in good faith) in
dispute, thereof against Rent next coming due until Tenant is reimbursed in
full.

 

 -24- 

 

 

SECTION 21 NO WAIVER OR REDEMPTION.

 

Either party’s failure to declare a default immediately upon its occurrence, or
delay in taking action for a default shall not constitute (i) a waiver of the
default, (ii) an estoppel, or (iii) a waiver of its rights regarding any
subsequent default. No waiver by Landlord of any default shall be effective
unless such waiver is in writing and signed by Landlord. Receipt by Landlord of
Tenant’s keys to the Premises shall not constitute an acceptance or surrender of
the Premises. The subsequent acceptance of Rent by Landlord shall not be deemed
to be a waiver of any preceding default by Tenant of any term, covenant or
condition of this Lease, other than the failure of Tenant to pay the particular
Rent so accepted, regardless of Landlord’s knowledge of such preceding default
at the time of acceptance of such Rent. Tenant waives for Tenant and for all
those claiming under Tenant all right now or hereafter existing to redeem by
order or judgment of any court or by any legal process or writ, Tenant’s right
of occupancy of the Premises after any termination of this Lease.

 

SECTION 22 QUIET ENJOYMENT.

 

Tenant shall, and may peacefully have, hold and enjoy the Premises, subject to
the terms of this Lease, provided Tenant pays the Rent and fully performs all of
its covenants and agreements. This covenant and all other covenants of Landlord
shall be binding upon Landlord and its successors only during its or their
respective periods of ownership of the Premises, and shall not be a personal
covenant of Landlord or any of the Landlord Related Parties.

 

SECTION 23 [Intentionally Omitted].

 

SECTION 24 HOLDING OVER.

 

If Tenant fails to surrender the Premises at the expiration or earlier
termination of this Lease, Tenant’s occupancy of the Premises after the
termination or expiration shall be that of a tenancy at sufferance. Tenant’s
occupancy of the Premises during the holdover shall be subject to all the terms
and provisions of this Lease, except that Tenant shall pay an amount equal to
150 percent of the sum of the Base Rent for the first 30 days of the holdover
period, payable one-half of such amount on the first (1st) day of the month in
which the holdover commences and on the sixteen (16th) day of the month in which
the holdover commences and then, for the balance of Tenant’s holdover period,
the greater of: (a) 150 percent of the sum of the Base Rent and Additional Rent
due for the period immediately preceding the holdover; or (b) the fair market
gross rental for the Premises as reasonably determined by Landlord, payable as
stated above. No holdover by Tenant or payment by Tenant after the expiration or
early termination of this Lease shall be construed to extend the Term or prevent
Landlord from recovery of possession of the Premises as permitted by law. In
addition to the payment of the amounts provided above, if (i) Tenant continues
in possession of the Premises beyond the expiration or earlier termination of
this Lease, and (ii) Landlord provides Tenant with a ten (10) business day
written notice (“10 Business Day Notice”) and after providing Tenant with such
10 Business Day Notice, Tenant fails to surrender the Premises to Landlord such
that Landlord is thereafter unable to deliver possession of the Premises to a
new tenant, or to perform improvements for a new tenant, as a result of Tenant’s
holdover, Tenant shall indemnify, protect, defend and hold harmless Landlord and
each of the Landlord Related Parties from loss or liability resulting from such
failure, including any claims made by or liabilities to any such succeeding
tenant arising out of such failure.

 

 -25- 

 

 

SECTION 25 SUBORDINATION TO MORTGAGES; ESTOPPEL CERTIFICATE.

 

(a) As of the Effective Date, the Premises is not subject to a Mortgage;
however, upon Landlord’s request, Tenant shall subordinate its interest in the
Premises to any mortgage(s), deed(s) of trust, ground lease(s) or other lien(s)
subsequently arising upon the Premises, and to renewals, modifications,
refinancings and extensions thereof (collectively referred to as a “Mortgage”),
provided that the party having the benefit of a Mortgage (“Mortgagee”) delivers
a commercially reasonable subordination, non-disturbance and attornment
agreement (“Subordination Agreement”) which subordinates this Lease to the
Mortgage, provides that Tenant’s possession and rights will not be disturbed as
long as Tenant is not in default under this Lease that is continuing beyond the
applicable notice and cure period, and provides that Tenant will attorn to such
Mortgagee or its successor-in-interest. Within fifteen (15) business days after
written request and delivery of the proposed Subordination Agreement from a
Mortgagee or Landlord, Tenant shall execute a Subordination Agreement otherwise
mutually agreed upon by the parties to such Subordination Agreement. For
purposes of this Lease, a “commercially reasonable” Subordination Agreement will
at a minimum provide: (i) as long as Tenant is not then in default under this
Lease (beyond the applicable notice and cure period), Tenant’s leasehold estate,
and Tenant’s rights under this Lease including but not limited to possession,
occupancy, and use of the Premises in accordance with this Lease, shall remain
undisturbed and shall survive any foreclosure, transfer in lieu of foreclosure
or other enforcement of the mortgage; (ii) there will be no change in the terms
of this Lease, no diminution of Tenant’s rights provided for in this Lease, and
no additional liability of Tenant; (iii) Tenant’s Property or other property
otherwise removable from the Premises by Tenant under the terms of this Lease
will not be subject to the lien of such mortgage; and (iv) such Mortgagee shall
not join Tenant as a party defendant in any action or proceeding to foreclose
its mortgage (or to enforce any rights or remedies of Mortgagee under the
mortgage) which would terminate or extinguish this Lease or Tenant’s leasehold
interest in and estate under this Lease. In lieu of having the Mortgage be
superior to this Lease, a Mortgagee shall have the right at any time to
subordinate its Mortgage to this Lease. If requested by a successor-in-interest
to all or a part of Landlord’s interest in the Lease, Tenant shall, without
charge, attorn to the successor-in-interest.

 

(b) Landlord and Tenant shall each, within ten (10) business days after receipt
of a written request from the other, execute and deliver an estoppel
certificate, the form of which is attached hereto as Exhibit E, or in such other
commercially reasonable form requested by Landlord and reasonably approved by
Tenant to those parties as are reasonably requested by the other (including a
Mortgagee or prospective purchaser). The estoppel certificate shall include a
statement certifying that this Lease is unmodified (except as identified in the
estoppel certificate) and in full force and effect, describing the dates to
which Rent and other charges have been paid, representing that, to such party’s
actual knowledge, there is no default (or stating the nature of the alleged
default) and indicating other matters with respect to this Lease that may
reasonably be requested.

 

SECTION 26 ATTORNEYS’ FEES.

 

In case suit shall be brought for any unlawful detainer of the Premises, for the
recovery of any rent due on the provisions of this Lease, or because of the
failure to comply with of any other covenant herein contained on the part of
either party to be kept or performed (including enforcement of an indemnity
provision), or for interpretation or a declaration of rights pursuant to this
Lease, the prevailing party shall recover from the non-prevailing party all
costs and expenses incurred therein, including reasonable attorney’s fees and
costs (including expert witness fees and costs, whether or not the expert is
called to testify), including attorney’s fees and costs incurred in enforcing
any judgment.

 

 -26- 

 

 

SECTION 27 NOTICE.

 

If a demand, request, approval, consent or notice (collectively referred to as a
“notice”) shall or may be delivered to either party by the other, the notice
shall be in writing and delivered by registered or certified mail with return
receipt requested and postage prepaid, or sent by overnight or same day courier
service with delivery charges prepaid at the party’s respective Notice
Address(es) set forth in the Basic Lease Provisions, except that if Tenant has
vacated the Premises (or if the Notice Address for Tenant is other than the
Premises, and Tenant has vacated such address) without providing Landlord a new
Notice Address, Landlord may serve notice in any manner described in this
Section or in any other manner permitted by Law. Each notice shall be deemed to
have been received by the party to which the notice is addressed on the earlier
to occur of actual delivery or the date on which delivery is refused, or, if
Tenant has vacated the Premises or the other Notice Address of Tenant without
providing a new Notice Address, three days after notice is deposited in the U.S.
mail in the manner described above or one business day after notice is deposited
with a courier service in the manner described above. Either party may, at any
time, change its Notice Address by notifying the other party of the new address
in the manner described in this Section.

 

SECTION 28 COMMUNICATIONS LEASE OR EQUIPMENT.

 

Commencing after the date Tenant has obtained its CofO, Landlord may install or
cause to be installed (including by third parties pursuant to telecommunications
or “cell tower” lease) communications equipment on or around the Premises,
provided that (i) the same will not materially change the appearance the
Building, (ii) the same will not adversely affect the visibility of, or access
to, the Building, (iii) the same will not interfere with Tenant’s use of the
Premises or operation of its business from the Premises, and (iv) the same will
not interfere with or delay Tenant’s Work or Alterations. Landlord’s rights
hereunder include the right to grant reasonable access (subject to the
requirements set forth in Section 10 hereunder), by license, easement, lease or
other agreement, to such communications equipment for the purpose of
installation, maintenance, repair and removal, including without limitation
installing separate electrical service, provided that in each case the foregoing
conditions are satisfied.

 

SECTION 29 SURRENDER OF PREMISES.

 

At the expiration or earlier termination of this Lease or Tenant’s right of
possession, Tenant shall remove Tenant’s Property from the Premises, and quit
and surrender the Premises to Landlord, broom clean, and in good order,
condition and repair, ordinary wear and tear excepted. Tenant shall also be
required to remove the Required Removables as set forth in Section 7. If Tenant
fails to remove any of Tenant’s Property within thirty (30) days after the
expiration or earlier termination of this Lease or of Tenant’s right to
possession, Landlord shall be entitled (but not obligated) to remove and store
Tenant’s Property in accordance with Section 1980, et seq. of the California
Civil Code.

 

SECTION 30 MISCELLANEOUS.

 

(a) This Lease and the rights and obligations of the parties shall be
interpreted, construed and enforced in accordance with the Laws of the State of
California and Landlord and Tenant hereby irrevocably consent to the
jurisdiction and proper venue of such State. If any term or provision of this
Lease shall to any extent be invalid or unenforceable, the remainder of this
Lease shall not be affected, and each provision of this Lease shall be valid and
enforced to the fullest extent permitted by Law. The headings and titles to the
Sections of this Lease are for convenience only and shall have no effect on the
interpretation of any part of the Lease.

 

(b) Tenant shall not record this Lease or any memorandum without Landlord’s
prior written consent, which may be granted or withheld in Landlord’s sole,
absolute and unfettered discretion.

 

(c) To the fullest extent permitted by applicable Law, Landlord and Tenant waive
any right to trial by jury in any proceeding based upon or pertaining to this
Lease, including any default of this Lease.

 

 -27- 

 

 

(d) Whenever a period of time is prescribed for the taking of an action by
Landlord or Tenant, the period of time for the performance of such action shall
be extended by the number of days that the performance is actually delayed due
to strikes, acts of God, shortages of labor or materials, war, civil
disturbances and other causes beyond the reasonable control of the performing
party (“Force Majeure”). However, events of Force Majeure shall not extend any
period of time for the payment of Rent or other sums payable by either party,
subject to Paragraph 5 of Exhibit B, or any period of time for the written
exercise of an option or right by either party, and shall not extend the Term.

 

(e) The Premises or Landlord’s interest under this Lease (or both) may be freely
sold or assigned by Landlord and, in the event of any such sale or assignment,
the covenants and obligations of Landlord herein shall be binding on each
successive “landlord” and its successors and assigns, only during their
respective periods of ownership. If during the Term of this Lease, Landlord
conveys its interest in the Premises or this Lease, then (i) Landlord shall
provide Tenant, within ten (10) days after the same, written notice of such
conveyance, which notice shall include the transferee’s name, address, and
telephonic or electronic mail contact information, and (ii) from and after the
effective date of such conveyance, Landlord shall be released and discharged
from any and all further obligations and responsibilities under this Lease
except those already accrued of which Landlord has notice at the time of
conveyance. In addition, if Tenant has a security deposit on deposit with
Landlord at the time Landlord conveys its interest in the Premises or this
Lease, then Landlord shall transfer or deliver such security deposit to the
person to whom Landlord conveys the Premises or this Lease; upon such transfer
or delivery of Tenant’s security deposit, Landlord shall be released and
discharged with respect to any liability for or in connection with Tenant’s
security deposit.

 

(f) Each party warrants and represents to the other that it has not entered into
any agreement under which a brokerage commission or fee would be payable in
connection with this Lease by the other party, other than Jones Lang LaSalle
Brokerage, Inc., representing Tenant, and CBRE Inc., representing Landlord
(together “Brokers”) which shall each be paid a commission pursuant to a
separate written agreement with Landlord. Each party further agrees to
indemnify, protect, defend and hold the other party (including each of the
Landlord Related Parties as indemnitees, but not as indemnitors) harmless from
any loss, cost, liability and expense (including attorney’s fees) which the
other party may incur as the result of any violation of this Section 30(f).
Tenant shall indemnify and hold Landlord and each of the Landlord Related
Parties harmless from any loss, cost, liability and expense (including
attorney’s fees) which Landlord may incur as the result of any actual or alleged
claim that Landlord is or may be obligated to pay any commission in connection
with any assignment or sublease of all or any part of the Premises.

 

(g) Tenant covenants, warrants and represents that: (i) each individual signing,
attesting and/or delivering this Lease on behalf of Tenant is authorized to do
so on behalf of Tenant; (ii) this Lease is binding upon Tenant; and (iii) Tenant
is duly organized and legally existing in the state of its organization and is
qualified to do business in the State of California. If there is more than one
Tenant, or if Tenant is comprised of more than one party or entity, the
obligations imposed upon Tenant shall be joint and several obligations of all
the parties and entities. Notices, payments and agreements delivered to or made
by, with or to any one person or entity shall be deemed to have been delivered
to or made by, with and to all of them.

 

(h) Landlord covenants, warrants and represents that: (i) each individual
signing, attesting and/or delivering this Lease on behalf of Landlord is
authorized to do so on behalf of Landlord; (ii) this Lease is binding upon
Landlord; and (iii) Landlord is duly organized and legally existing in the state
of its organization and is qualified to do business in the State of California.
If there is more than one Landlord, or if Landlord is comprised of more than one
party or entity, the obligations imposed upon Landlord shall be joint and
several obligations of all the parties and entities. Notices, payments and
agreements delivered to or made by, with or to any one person or entity shall be
deemed to have been delivered to or made by, with and to all of them.

 

 -28- 

 

 

(i) Time is of the essence with respect to this Lease. This Lease shall create
only the relationship of landlord and tenant between the parties, and not a
partnership, joint venture or any other relationship. This Lease and the
covenants and conditions in this Lease shall inure only to the benefit of and be
binding only upon Landlord and Tenant and their permitted successors and
assigns.

 

(j) The expiration of the Term, whether by lapse of time or otherwise, shall not
relieve either party of any obligations which accrued prior to or which may
continue to accrue after the expiration or early termination of this Lease.
Without limiting the scope of the prior sentence, it is agreed that Tenant’s
obligations under Sections 3(a), 3(b), 7, 13, 19, 24 and 29 shall survive the
expiration or early termination of this Lease.

 

(k) Landlord has delivered a copy of this Lease to Tenant for Tenant’s review
only, and the delivery of it does not constitute an offer to Tenant or an
option. This Lease may be executed in any number of counterparts with the same
force and effect as if all signatures were appended to one document, each of
which shall be deemed an original. Execution and delivery of this Lease by
scanned signature or DocuSign of any party hereto shall constitute a valid and
binding execution and delivery of this Lease by such party. Such PDF copies
shall constitute enforceable original documents. This Lease shall not be
effective against any party hereto until this Lease has been fully executed and
delivered by the parties hereto.

 

(l) All understandings and agreements previously made between the parties are
superseded by this Lease, and neither party is relying upon any warranty,
statement or representation not contained in this Lease. This Lease may be
modified only by a written agreement signed by Landlord and Tenant.

 

(m) In the event Tenant’s financial statements are not available to the general
public, Tenant, within fifteen (15) days after request, shall provide Landlord
with a current financial statement and such other information as Landlord may
reasonably request in order to create a “business profile” of Tenant and
determine Tenant’s ability to fulfill its obligations under this Lease;
provided, however, Landlord shall not require Tenant to provide such information
unless Landlord is requested to produce the information in connection with a
proposed financing or sale of the Building. Upon written request by Tenant,
Landlord shall enter into a commercially reasonable confidentiality agreement
covering any confidential information that is disclosed by Tenant.

 

(n) In consideration of each covenant made elsewhere under this Lease wherein
one of the parties agrees not to unreasonably withhold its consent or approval,
the requesting party releases the other party and waives all claims for any
damages arising out of or connected with any alleged or claimed unreasonable
withholding of consent or approval. The aggrieved party’s sole remedy shall be
an action to enforce any such provision through specific performance or
declaratory judgment.

 

SECTION 31 ENTIRE AGREEMENT.

 

This Lease and the following exhibits, attachments and addenda constitute the
entire agreement between the parties and supersede all prior agreements and
understandings related to the Premises, including all lease proposals, letters
of intent and other documents:

 

[Balance of Page Intentionally Blank]

 

 -29- 

 

 

Addendum No. 1 – Option to Extend   Exhibit A Form of Commencement Letter
Exhibit B Work Letter Exhibit C Form of Letter of Credit Exhibit D Approved
Testfit Plans Exhibit E Form of Estoppel Certificate Exhibit F Site Plan

 

[SIGNATURES FOLLOW ON NEXT PAGE]

 

 -30- 

 

 

IN WITNESS WHEREOF, Landlord and Tenant hereby enter into this Lease effective
as of the Effective Date.

 

Landlord:

 

  CUSHING VENTURES, LLC,
a California limited liability company        
                                              Date: 12/23/2019   By /s/ William
Nicely                 Name William Nicely                 Title Authorized
Signatory                 Email Address           Tenant:   ONCOCYTE
CORPORATION,
a California corporation                                                      
Date: 12/23/2019   By /s/ Mitch Levine                 Name Mitch Levine        
        Title Chief Financial Officer                 Email Address          
Date: 12/23/2019   By /s/ Albert P. Parker                 Name Al Parker      
          Title Chief Operating Officer                 Email Address

 

 -31- 

 

 

LEASE ADDENDUM NO. 1

 

OPTION TO EXTEND

 

Addendum No. 1 to Lease between CUSHING VENTURES, LLC, a California limited
liability company, as Landlord, as Landlord, and ONCOCYTE CORPORATION, a
California corporation, as Tenant:

 

Provided that Tenant is not in default that is continuing beyond any notice and
cure period at the time Tenant exercises its option to extend the Term, Tenant
shall have one (1) option to extend the Term of this Lease for a period of five
(5) years (“Extended Term”). During the Extended Term, all other terms and
conditions contained in this Lease shall remain the same including but not
limited to the annual Rent Adjustment, except that upon the commencement of the
Extended Term, the Base Rent payable as of the commencement of the Extended Term
shall be increased to the Prevailing Market Rate (as defined below).

 

Tenant must exercise said option by giving written notice to Landlord of its
exercise (“Option Notice”), thereof at least nine (9) months but not more than
twelve (12) months (other than as set forth in Section 16(b) in the event of a
casualty) prior to the expiration of the Term of the Lease, time being of the
essence. It is an express condition of the foregoing option to extend that at
any time during the Lease, if Tenant shall have been in default beyond the
applicable notice and cure period of any material provisions of this Lease on
three (3) or more occasions, then Tenant’s option(s) to extend the Term of the
Lease shall be null, void and totally ineffective without further notice thereof
by Landlord and in such case the Extended Term shall not commence and the Lease
shall expire at the end of the Term in effect at that time prior to such
Extended Term. The Base Rent commencing on the first day of the Extended Term
shall be adjusted to the greater of (i) the Base Rent in effect at the end of
the initial Term or (ii) the Prevailing Market Rate (as hereafter defined).
Landlord shall in response to and within thirty (30) days of Landlord’s receipt
of Tenant’s Option Notice, give Tenant written notice of the applicable
Prevailing Market Rate, as reasonably determined in good faith by Landlord.

 

The term “Prevailing Market Rate” shall mean the then actual (as determined by
actual comparables of arm’s length lease transactions for renewing and
non-renewing, similarly sized tenants) annual rental rate per square foot of
rentable area for space in buildings comparable to the Building in the area in
which the Building is located and otherwise comparable in area and location to
the space for which such rental rate is being determined, being leased for a
duration comparable to the option period for terms commencing on or about the
first day of the Extended Term. The determination of the Prevailing Market Rate
shall take into consideration all concessions and rental abatements, presently
offered to renewing and non-renewing tenants of similar size and credit
worthiness, Expenses and tax expenses, other adjustments to base rental, and
other comparable factors.

 

Not later than sixty (60) days after Landlord’s written notice to Tenant of the
applicable Prevailing Market Rate, Tenant shall timely notify Landlord in
writing of Tenant’s election (i) to have the Prevailing Market Rate determined
by the “appraisal” procedure hereinafter described, or (ii) to accept Landlord’s
determination of the Prevailing Market Rate. If Tenant fails to notify Landlord
within said sixty (60) day period of Tenant’s election, Tenant shall be deemed
to have accepted Landlord’s determination of the then Prevailing Market Rate and
to have waived its rights to an “appraisal” thereof.

 

If Tenant has timely elected to have an “appraisal” of the amount(s) and
component(s) of the then Prevailing Market Rate (based upon the aforesaid
definition), then the following shall be utilized to make and implement such
election: Upon the valid exercise of Tenant’s election to have an “appraisal” of
the then Prevailing Market Rate, then not later than ten (10) days after
Tenant’s written notice to have such an “appraisal” of the then Prevailing
Market Rate, Landlord and Tenant shall each designate, by written notice given
to the other party setting forth the designated person’s address, a qualified
appraiser who shall have had at least ten (10) years’ experience relevant to the
commercial space in the Orange County area (the “Appraisers”). It is expected
that the Appraisers will familiarize themselves with this Lease, the exhibits
and riders hereto, and such other documents as are deemed relevant by the
Appraisers or either or both of them. Each of the Appraisers shall submit to
Landlord and Tenant, within forty-five (45) days after his or her appointment, a
written determination of the then Prevailing Market Rate with respect to the
Premises as of the first day of the Extended Term. If the lower of said two
determinations is not less than ninety-five percent (95%) of the other
determination, then the average of the two determinations shall be deemed to be
the then Prevailing Market Rate and will be conclusive and binding on the
parties. If the foregoing 95% range is not the case, then the Appraisers shall
mutually select a third qualified and impartial Appraiser who shall also have
had at least ten (10) years’ experience relevant to the commercial space in the
Orange County area (the “Third Appraiser”). The Third Appraiser shall issue a
determination of said Prevailing Market Rate within forty-five (45) days of his
or her appointment and the average of the two (2) closest determinations shall
be deemed to be the then Prevailing Market Rate and will be conclusive and
binding on the parties. The cost of such determinations shall be borne equally
by Landlord and Tenant. If Tenant becomes obligated to pay Rent with respect to
the option period prior to when the Prevailing Market Rate has been determined
in accordance with the foregoing, Tenant shall not be deemed a holdover tenant
as set forth in Section 24 of this Lease, and will continue paying the Base
Rent, on a month-to-month basis, that was in effect at the expiration of the
then current Term. Landlord and Tenant shall, by a cash payment within thirty
(30) days of the date of such determination, adjust between themselves the
difference, if any, between the Base Rent paid by Tenant pursuant to the
foregoing sentence and the Base Rent actually due Landlord pursuant to the
Prevailing Market Rate for that time period

 

[End of Addendum]

 

 1 

 

 

OMITTED EXHIBITS TO OFFICE LEASE

 

The following exhibits to the Office Lease have been omitted:

 

Exhibit A: Form of Commencement Letter stating the Commencement Date as defined
in the Office Lease

 

Exhibit B: Work Letter stating the terms and conditions for constructing
Tenant’s Work as defined in the Office Lease

 

Exhibit D: Approved Testfit Plans

 

Exhibit E: Form of Estoppel Certificate

 

Exhibit F Parking Site Plan

 

   

 

 

EXHIBIT C

 

FORM OF LETTER OF CREDIT

 

L/C DRAFT LANGUAGE

 

IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER _____________

 

ISSUE DATE: ______________

 

ISSUING BANK:

SILICON VALLEY BANK

3003 TASMAN DRIVE

2ND FLOOR, MAIL SORT HF210

SANTA CLARA, CALIFORNIA 95054

 

BENEFICIARY:

CUSHING VENTURES, LLC

4490 VON KARMAN AVENUE

NEWPORT BEACH, CA 92660

ATTN: BILL NICELY

 

APPLICANT:

ONCOCYTE CORPORATION

1010 ATLANTIC AVE., SUITE 102

ALAMEDA, CA 94501

 

AMOUNT: US$1,700,000.00 (ONE MILLION SEVEN HUNDRED THOUSAND AND 00/100 U.S.
DOLLARS)

 

EXPIRATION DATE: NOVEMBER 27, 2022     LOCATION: SANTA CLARA, CALIFORNIA

 

DEAR SIR/MADAM:

 

WE, SILICON VALLEY BANK (THE “BANK”) HEREBY ISSUE OUR IRREVOCABLE STANDBY LETTER
OF CREDIT NO. ________ IN BENEFICIARY’S FAVOR FOR THE ACCOUNT OF THE
ABOVE-REFERENCED APPLICANT, IN THE AGGREGATE AMOUNT OF EXACTLY ONE MILLION
SEVEN-HUNDRED THOUSAND 00/100 U.S. DOLLARS ($1,700,000.00).

 

 C-1 

 

 

THIS LETTER OF CREDIT IS AVAILABLE WITH US AT OUR ABOVE OFFICE IN SANTA CLARA,
CALIFORNIA BY PRESENTATION OF YOUR DRAFT DRAWN ON US AT SIGHT (IT BEING AGREED
THAT PRESENTATION MAY BE MADE IN PERSON OR BY OVERNIGHT DELIVERY) BEARING THE
CLAUSE: “DRAWN UNDER SILICON VALLEY _______________ BANK LETTER OF CREDIT NO.
______________ DATED _________” AND ACCOMPANIED BY THE ORIGINAL OF THIS LETTER
OF CREDIT AND AMENDMENT(S), IF ANY AND BY BENEFICIARY’S SIGNED AND DATED
STATEMENT WORDED AS FOLLOWS (WITH THE INSTRUCTIONS IN BRACKETS THEREIN COMPLIED
WITH):

 

“THE UNDERSIGNED, AN AUTHORIZED SIGNATORY OF THE BENEFICIARY UNDER SILICON
VALLEY BANK LETTER OF CREDIT NO. ___________, CERTIFIES THAT THE AMOUNT OF THE
DRAFT ACCOMPANYING THIS STATEMENT REPRESENTS THE AMOUNT BENEFICIARY IS ENTITLED
TO DRAW PURSUANT TO AND IN CONNECTION WITH THAT CERTAIN LEASE AGREEMENT DATED AS
OF __________, 20__ , BETWEEN APPLICANT AND BENEFICIARY OR PURSUANT TO ANY EARLY
TERMINATION AGREEMENT, SETTLEMENT AGREEMENT, OR ANY WORK-OUT AGREEMENT ENTERED
BY AND BETWEEN THE PARTIES TO THE LEASE AGREEMENT.”

 

ANY STATEMENT OR OTHER DOCUMENT DELIVERED TO BANK BY BENEFICIARY ACCORDING TO
THE TERMS HEREOF WILL BE DEEMED BY BANK TO BE SIGNED BY A PERSON DULY AUTHORIZED
BY BENEFICIARY TO SIGN AND DELIVER SUCH STATEMENT OR DOCUMENT WITHOUT ANY DUTY
OF INQUIRY OR DILIGENCE BY BANK INTO SUCH PERSON’S ACTUAL AUTHORITY TO SIGN ON
BEHALF OF BENEFICIARY.

 

SPECIAL CONDITIONS:

 

PARTIAL DRAWS, AS WELL AS MULTIPLE PRESENTATIONS , UNDER THIS LETTER OF CREDIT
ARE PERMITTED.

 

THIS LETTER OF CREDIT SHALL EXPIRE ON NOVEMBER 27, 2022; PROVIDED, HOWEVER, THAT
NOTWITHSTANDING THE ABOVE EXPIRATION OF THIS LETTER OF CREDIT, THIS LETTER OF
CREDIT SHALL BE DEEMED AUTOMATICALLY EXTENDED FOR SUCCESSIVE, ADDITIONAL ONE (1)
YEAR PERIODS, WITHOUT AMENDMENT, FROM THE PRESENT OR EACH FUTURE EXPIRATION
DATE, UNLESS, AT LEAST SIXTY (60) DAYS PRIOR TO ANY EXPIRATION DATE WE NOTIFY
YOU BY REGISTERED MAIL/OVERNIGHT COURIER SERVICE AT THE ABOVE ADDRESS THAT THIS
LETTER OF CREDIT WILL NOT BE EXTENDED BEYOND THE CURRENT EXPIRATION DATE.

 

WE HEREBY AGREE WITH YOU THAT ALL DRAFTS DRAWN UNDER AND IN COMPLIANCE WITH THE
TERMS OF THIS LETTER OF CREDIT WILL BE DULY HONORED UPON PRESENTATION TO US ON
OR BEFORE THE EXPIRATION DATE OF THIS LETTER OF CREDIT, WITHOUT INQUIRY AS TO
THE ACCURACY THEREOF AND REGARDLESS OF WHETHER APPLICANT DISPUTES SUCH
PRESENTATION OR THE CONTENTS OF ANY CONTENT OF ANY DOCUMENTS, STATEMENTS OR
CERTIFICATIONS.

 

FACSIMILE PRESENTATIONS ARE ALSO PERMITTED. SHOULD BENEFICIARY WISH TO MAKE A
PRESENTATION UNDER THIS LETTER OF CREDIT ENTIRELY BY FACSIMILE TRANSMISSION IT
NEED NOT TRANSMIT THE ORIGINAL OF THIS LETTER OF CREDIT AND AMENDMENTS, IF ANY.
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.

 

 C-2 

 

 

THIS LETTER OF CREDIT IS TRANSFERABLE ONE OR MORE TIMES, BUT IN EACH INSTANCE
ONLY TO A SINGLE BENEFICIARY AS TRANSFEREE AND ONLY UP TO 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 ORIGINAL AMENDMENT(S), IF
ANY, 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.
BENEFICIARY SHALL PAY OUR TRANSFER FEE OF ¼ OF 1% OF THE TRANSFER AMOUNT
(MINIMUM US$250.00) UNDER THIS LETTER OF CREDIT. EACH TRANSFER SHALL BE
EVIDENCED BY 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.

 

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.

 

EXCEPT SO FAR AS OTHERWISE EXPRESSLY STATED, THIS DOCUMENTARY CREDIT IS SUBJECT
TO THE INTERNATIONAL STANDBY PRACTICES (ISP98), INTERNATIONAL CHAMBER OF
COMMERCE, PUBLICATION NO. 590.

 

SILICON VALLEY BANK,

 

      AUTHORIZED SIGNATURE   AUTHORIZED SIGNATURE

 

 C-3 

 

 

IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER __________________

 

EXHIBIT “A”

TRANSFER FORM

 

DATE: ____________________               TO: SILICON VALLEY BANK         3003
TASMAN DRIVE   RE: IRREVOCABLE STANDBY LETTER OF CREDIT   SANTA CLARA, CA 95054
    NO. _____________ ISSUED BY   ATTN:INTERNATIONAL DIVISION.     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
ENDORSE THE TRANSFER ON THE REVERSE THEREOF, AND FORWARD IT DIRECTLY TO THE
TRANSFEREE WITH YOUR CUSTOMARY NOTICE OF TRANSFER.

 

SIGNATURE AUTHENTICATED

 

 C-4 

 

 

The names(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)      
_______________________________________   (Print Authorized Name and Title)    
  _______________________________________   (Authorized Signature)      
_______________________________________   (Telephone Number)      
______________________________   (BENEFICIARY’S NAME)      
By:________________________________       Printed Name:________________________
      Title:_______________________________  

 

 C-5