TENANT SHALL PROVIDE
LANDLORD, AND MAINTAIN IN FULL FORCE AND EFFECT THROUGHOUT THE TERM, A LETTER OF
CREDIT IN SUBSTANTIALLY THE FORM OF EXHIBIT E ISSUED BY ANY NATIONAL BANK THAT
HAS (X) A BRANCH OFFICE WITHIN SAN DIEGO COUNTY WHERE LANDLORD MAY PRESENT
DRAFTS UNDER THE L/C SECURITY AND (Y) AN ISSUER REASONABLY SATISFACTORY TO
LANDLORD, IN THE AMOUNT OF THE SECURITY DEPOSIT, WITH AN INITIAL TERM OF AT
LEAST ONE YEAR.
IF, AT THE TERM EXPIRATION DATE, ANY RENT REMAINS UNCALCULATED
OR UNPAID, THEN:
(I) LANDLORD SHALL WITH REASONABLE DILIGENCE COMPLETE ANY
NECESSARY CALCULATIONS; (II) TENANT SHALL EXTEND THE EXPIRY DATE OF SUCH L/C
SECURITY FROM TIME TO TIME AS LANDLORD REASONABLY REQUIRES; AND (III) IN SUCH
EXTENDED PERIOD, LANDLORD SHALL NOT UNREASONABLY REFUSE TO CONSENT TO AN
APPROPRIATE REDUCTION OF THE L/C SECURITY.
TENANT SHALL REIMBURSE LANDLORD'S
OUT-OF-POCKET LEGAL COSTS NOT TO EXCEED THE SUM OF TWO THOUSAND DOLLARS ($2,000)
IN HANDLING LANDLORD'S ACCEPTANCE OF L/C SECURITY OR ITS REPLACEMENT OR
EXTENSION, EXCEPT WITH RESPECT TO ANY REPLACEMENT IN ACCORDANCE WITH
SUBPARAGRAPH (D) OF THIS SECTION 8.5.
5
(B)
IF TENANT DELIVERS TO LANDLORD SATISFACTORY L/C SECURITY IN PLACE OF
THE ENTIRE SECURITY DEPOSIT, LANDLORD SHALL PROMPTLY REMIT TO TENANT ANY CASH
SECURITY DEPOSIT LANDLORD PREVIOUSLY HELD.
(C)
LANDLORD MAY DRAW UPON THE L/C SECURITY, AND HOLD AND APPLY THE
PROCEEDS IN THE SAME MANNER AND FOR THE SAME PURPOSES AS THE SECURITY DEPOSIT,
IF:
(I) AN UNCURED DEFAULT EXISTS; (II) AS OF THE DATE 45 DAYS BEFORE ANY L/C
SECURITY EXPIRES (EVEN IF SUCH SCHEDULED EXPIRY DATE IS AFTER THE TERM
EXPIRATION DATE) TENANT HAS NOT DELIVERED TO LANDLORD AN AMENDMENT OR
REPLACEMENT FOR SUCH L/C SECURITY, REASONABLY SATISFACTORY TO LANDLORD,
EXTENDING THE EXPIRY DATE TO THE EARLIER OF (1) THE DATE TWO (2) MONTHS AFTER
THE THEN-CURRENT TERM EXPIRATION DATE OR (2) THE DATE ONE YEAR AFTER THE
THEN-CURRENT EXPIRY DATE OF THE L/C SECURITY; (III) THE L/C SECURITY PROVIDES
FOR AUTOMATIC RENEWALS, LANDLORD ASKS THE ISSUER TO CONFIRM THE CURRENT L/C
SECURITY EXPIRY DATE, AND THE ISSUER FAILS TO DO SO WITHIN TEN (10) BUSINESS
DAYS; (IV) TENANT FAILS TO PAY (WHEN AND AS LANDLORD REASONABLY REQUIRES) ANY
BANK CHARGES FOR LANDLORD'S TRANSFER OF THE L/C SECURITY; (V) THE ISSUER OF THE
L/C SECURITY CEASES, OR ANNOUNCES THAT IT WILL CEASE, TO MAINTAIN AN OFFICE
WITHIN SAN DIEGO COUNTY WHERE LANDLORD MAY PRESENT DRAFTS UNDER THE L/C
SECURITY; OR (VI) UPON THE EXPIRATION OR EARLIER TERMINATION OF THIS LEASE, THE
CONDITIONS SET FORTH IN SECTION 8.4 HAVE NOT BEEN SATISFIED, AND THE L/C
SECURITY EXPIRES IN LESS THAN THIRTY (30) DAYS.
THIS PARAGRAPH DOES NOT LIMIT
ANY OTHER PROVISIONS OF THIS LEASE ALLOWING LANDLORD TO DRAW THE L/C SECURITY
UNDER SPECIFIED CIRCUMSTANCES.
(D)
TENANT SHALL NOT SEEK TO ENJOIN, PREVENT, OR OTHERWISE INTERFERE WITH
LANDLORD'S DRAW UNDER L/C SECURITY, EVEN IF IT VIOLATES THIS LEASE.
TENANT
ACKNOWLEDGES THAT THE ONLY EFFECT OF A WRONGFUL DRAW WOULD BE TO SUBSTITUTE A
CASH SECURITY DEPOSIT