Document:

Exhibit 10.8

 

SUGAR INTERNATIONAL LIMITED

 

SERVICE AGREEMENT

 

DATED         May 29th, 2008

 

PARTIES:

 

1.                            SUGAR INTERNATIONAL LIMITED (“Sugar”) Level 3, Falcon Street, Po
Box 137115, Parnell, Auckland 1052 New Zealand

 

2.      DILIGENT BOARD MEMBER SERVICES, INC (“Diligent”) 39 West 37th Street, 8th Floor, New
York, New York 10018, USA

 

BACKGROUND:

 

A.                         Diligent is a provider of web based service for online
board meetings with an online board book.

 

B                              Sugar is a provider of training, management and other
services.

 

C                              The parties have agreed to terms whereby Sugar is to
provide certain services to Diligent.

 

OPERATIVE PART:

 

1.                            Definitions and interpretations

 

Agreement means this agreement as may be amended from time to
time in writing between the parties.

 

Commencement Date means the first day of June 2008.

 

Diligent’s IP means the intellectual property rights, including
without limitation patents, designs, trademarks (registered or unregistered),
copyright or otherwise owned or controlled by Diligent.

 

Confidential Information means
information, in any format:

 

that is by its nature
confidential or that any party knows or ought to know is confidential or that
is designated by any party as confidential under this agreement,

 

including, in the case of Diligent:

 

 

(i)                                     the personnel, policies or business
strategies of Diligent;

 

(ii)                                  information relating to Diligent, Diligent’s
business, Diligent’s operational system, any manual of Diligent;

 

including, in the case of Sugar:

 

(i)                                     the personnel, policies or business
strategies of Sugar

 

(ii)                                  any information relating to Sugar or
concerning clients of Sugar or parties with whom Sugar has any contractual or
business relationships other than Diligent

 

but excludes information that is
in the public domain other than as a result of disclosure by the other party
after the date of this agreement.

 

Insolvency Event means, in relation to a party, its:

 

(i)                                     insolvency (ie being unable to pay debts as they fall
due) or

 

(ii)                                  receivership, voluntary or involuntary

 

(iii)                               liquidation, or

 

(iv)                              bankruptcy

 

Services means the following to be carried out by Sugar for
Diligent:

 

(a)                                  review of its management structure;

 

(b)                                 the re-design of its sale model;

 

(c)                                  lifting the performance of its sales team;

 

(d)                                 carrying out all necessary workshops and training
programmes;

 

(e)                                  developing KPIs and KRAs for sale team members;

 

(f)                                    creating recruitment and selection policies;

 

(g)                                 re-training all existing team members: and

 

(h)                                 evaluating feedback

 

as identified in the
confidential report prepared by Sugar entitled “Business Growth Proposal for
Diligent Board Books” (“Proposal”) annexed to this Agreement.

 

Sugar’s IP means the intellectual property rights, including
without limitation patents, designs, trademarks (registered or unregistered), copyright
or otherwise owned or controlled by Sugar.

 

2

 

2.                                      General Purpose of this Agreement

 

2.1                               Appointment

 

The general purpose of this agreement is to
enable Sugar to provide the Services to Diligent, and Diligent appoints Sugar
to perform the Services on an exclusive basis.

 

2.2                               Term

 

                                                The term of this agreement is four (4) months
from the Commencement Date, subject to clause 8.

 

2.4                               Sugar not Liable

 

                                                Notwithstanding that Sugar is to provide the Services
to Diligent, Sugar assumes no liability for the success of those Services and
in particular but without limitation does not warrant that the major outcomes
identified in the Proposal will be met.

 

3                                         Obligations of the Parties

 

3.1                               Provision
of Services by Sugar

 

In providing the Services Sugar must do so

 

(a)                                  to the
highest professional standards;

 

(b)                                 in a
diligent, proper and business-like manner with due care and attention;

 

(c)                                  in a
professional and courteous manner;

 

(d)                                 to the
reasonable satisfaction of Diligent;

 

(e)                                  in a
way that will not impair or damage Diligent’s goodwill, reputation, marketing
strategy or competitive standing;

 

(f)                                    using
personnel who comply individually  with
the provisions of this clause 3;

 

(g)                                 in
accordance with the Proposal, particularly the sections entitled “Solution” and
“Adding Sugar — Phases 1, 2, 3, 4, 5 and 6.

 

3.2                               Further
Requirements on Sugar

 

Without
limiting any obligation imposed on Sugar by this agreement, Sugar must:

 

(a)                                  ensure
that its trainers and employees engaged in providing the Services comply with
this Agreement and do not cause Sugar to breach any of its obligations under
this Agreement;

 

3

 

(b)                                 not,
and must ensure that each of its employees and Trainers does not, engage in any
conduct that is illegal, unethical, misleading, deceptive;

 

(c)                                  comply with all applicable laws or requirements of any authority or
governmental agency;

 

(d)                                 comply with applicable Privacy Principles and Diligent’s privacy policies
in force from time to time regarding the collection and use of any personal
information;

 

(e)                                  meet all deadlines for each of
the phases specified in the Proposal;

 

(f)                                    report to Diligent as provided by
the Proposal and clause 5.6.

 

3.3                               Diligent’s Obligations

 

Diligent must:

 

(a)                                  ensure that all necessary resources (human, financial
and technical) are made available to enable Sugar to provide the Services as
required by the Proposal and this Agreement;

 

(b)                                 pay to Sugar the fee specified in Clause 4;

 

(c)                                  direct its employees to co-operate with Sugar in the
manner anticipated by the Proposal;

 

(d)                                 co-operate in all reasonable ways to ensure the
objectives of the Proposal are met.

 

4.                                     Fees and Payment

 

4.1                              Fees

 

The total fee for the
provision of the Services by Sugar shall be $US31,000.00 per month, payable in
arears

 

4.2                              Payment of Fees

 

The first monthly payment
shall be paid no later than 10 days after the end of the first month following
the Commencement Date, and each subsequent payment shall be made no later than
10 days after the end of the previous month.

 

4.3                              Travel and Accommodation Costs

 

In addition to the above
fee, Diligent shall pay on a pre-approved basis, all reasonable travel and
accommodation costs incurred by Sugar’s personnel providing the Services in
line and in accordance with Diligent’s existing Travel Policy.

 

4.4                              Goods and Services Tax (GST)

 

All payments under this
clause 4 shall be plus New Zealand GST, if applicable.

 

4

 

5.                                      Further Covenants

 

5.1                               Development
of Further IP

 

Any sales or advertising copy,
artwork and other marketing, public relations and promotions material prepared
by Diligent or Sugar for or on behalf of Diligent during the term, will on its
creation, be vested in Diligent and remain Diligent’s intellectual property

 

5.2                               Client feedback

 

Each
of the parties must give the other:

 

(a)                                  a summary of any general feedback in relation to the Services;

 

(b)                                 in the case of Diligent, the details of any significant complaint about
the Services from its employees or clients, including copies of any
correspondence and written details of any conversation as soon as practicable
after the complaint is made.

 

5.3                               Reports

 

Sugar shall provide to
Diligent summaries of Sugar’s activities under this agreement, and generally
liaise with and report to Diligent, as required by the Proposal.

 

6.                                      Intellectual Property Rights

 

6.1                               Acknowledgement
by Sugar

 

Sugar acknowledges and
agrees that:

 

(a)                                  Diligent owns or is entitled to use Diligent’s
IP;

 

(b)                                 this Agreement does not give Sugar or any other
person any interest in Diligent’s IP;

 

(c)                                  Sugar will be given access and usage rights to
Diligent’s Software and related customer service during the term of this
Agreement;

 

(d)                                 Sugar must not transfer or licence to any person
any part of Diligent’s IP or the right to use or apply any part of Diligent’s
IP.

 

6.2                              Use of Intellectual Property

 

Sugar must only use Diligent’s IP in
accordance with any directions given by Diligent.  Without limiting this obligation, Sugar must:

 

(a)                                   obtain Diligent’s prior consent to the use of
any materials containing any part of Diligent’s IP;

 

(b)                                  not use Diligent’s IP contrary to any direction
given by Diligent;

 

(c)                                   not use any part of Diligent’s IP in combination
with any other name, logo, or trade mark, except in connection with the
provision of the Services Sugar will provide Diligent;

 

(d)                                 not register or seek to register any part of Diligent’s IP;

 

(e)                                  not give permission to any person to apply or use Diligent’s IP.

 

5

 

6.3                               No rights

 

Sugar does not acquire any intellectual
property rights in or in relation to any part of Diligent’s IP.

 

6.4                               Acknowledgement by Diligent

 

Diligent
acknowledges and agrees that:

 

(a)                                  Sugar owns or is entitled to use Sugar’s IP;

 

(b)                                 this agreement does not give Diligent or any other person any interest in
Sugar’s IP;

 

(c)                                  Diligent must not transfer or license to any person any part of Sugar’s
IP or the right to use or apply any part of Sugar’s IP.

 

6.5                               Use of Intellectual Property

 

Diligent must only use Sugar’s IP
in accordance with any directions given by Sugar.  Without limiting this obligation, Diligent
must:

 

(a)                                  obtain Sugar’s prior consent to the use of any materials containing any
part of Sugar’s IP;

 

(b)                                 not use Sugar’s IP contrary to any direction given by Sugar;

 

(c)                                  not use any part of Sugar’s IP in combination with any other name, logo,
or trade mark, except in connection with the provision of the Services;

 

(d)                                 not register or seek to register any part of Sugar’s IP;

 

(e)                                  not give permission to any person to apply or use Sugar’s IP.

 

6.6                               No
Rights

 

Diligent does not acquire any intellectual
property rights in or in relation to any part of Sugar’s IP.

 

6.7                               Other
Intellectual Property Rights

 

Other than as
provided by clause 5.1, Diligent acknowledges that Diligent has and will have
no right title or interest in or to the any material created or used by Sugar
in providing the Services, and Sugar agrees to let Diligent use whatever
materials Sugar provides or creates during the time of this agreement to
improve Diligent’s business performance, and specifically for Diligent to use
such materials to improve the performance of the Diligent Global Sales Force.

 

7.                                      Dispute Resolution

 

7.1                               Parties to  Co-operate

 

From
and after the execution of this Agreement the parties agree to co-operate with
the other to ensure that the desired objectives come to fruition.

 

7.2                               Parties
to Meet as Necessary

 

In
the spirit of mutual goodwill and co-operation in the event of any differences
or difficulties arising between the parties, those parties shall meet with each
other as necessary to discuss in good faith those differences and 

 

6

 

each
party shall use its best endeavours to resolve the matter before recourse to
arbitration or other legal process.

 

7.3                              Resolution
of Dispute

 

If there is a dispute
between the parties about this Agreement or any term or condition of this
Agreement that dispute will be resolved as follows:

 

(i)                          either one party will
give notice to the other of the item in dispute and detailing that party’s view
of the dispute and its proposal of the way to resolve the dispute;

 

(ii)                       the other
party, on receipt of the notice, will reply within 14 (fourteen) days to the
party giving the notice specifying that party’s response to each of the items
raised by the first party;

 

(iii)                    each party
will then within 14 (fourteen) days nominate a senior executive to attend a
meeting where the parties table and discuss the items in dispute or the alleged
breach;

 

(iv)                   if the nominated senior executives are unable to resolve the
dispute or alleged breach within fourteen (14) days of their nomination, the
same shall be submitted to the mediation of a mediator experienced in
commercial mediation and appointed by the parties;

 

(v)                      all disputes not resolved pursuant to
subparagraphs (i) — (iv) above shall be resolved by arbitration
before a single arbitrator in New York, New York, in accordance with the
commercial arbitration rules of the American Arbitration Association.  A request for interim measures addressed by a
party to a judicial authority shall not be deemed incompatible with this
agreement to arbitrate or a waiver of the right to arbitrate; however, all
issues regarding the scope of arbitration or the jurisdiction of the
arbitrator, other than a request for interim measures addressed by a party to a
judicial authority, shall be referred to the arbitrator.

 

(vi)                   at any hearing, the
parties shall have the right to submit argument and evidence, including testimony,
by video conference.  This agreement to
arbitrate, together with any proceedings in connection with an arbitration
award, shall be governed by the Federal Arbitration Act, 9 U.S.C. Sec. 1 et
seq.

 

8.                                      Termination

 

8.1                               Default

 

Notwithstanding the provisons of Article 7 and without limiting any
other right or remedy that either party is entitled to by law, either party may
by written notice to the other party:

 

7

 

(a)                                  terminate this contract if the other party
commits a breach of any provision of this Agreement and:

 

(i)                                      where the breach is capable of
remedy, fails to remedy the breach within twenty (20) business days after
receipt of notice from the other party giving notice specifying the breach and
requiring it to be remedied, or

 

(ii)                                   where the breach is not capable
of remedy but the consequences of the breach are capable of minimization or
elimination, fails to minimize or eliminate the consequences of the breach to
the reasonable satisfaction of the other party within twenty (20) business days
after receipt of notice from the other party specifying the breach.

 

(b)                                 immediately terminate this contract if:

 

(i)                                     an Insolvency Event happens in
relation to the other party

 

(ii)                                  the other party breaches a material
term of this agreement in a way that is not capable of remedy, minimisation, or
elimination.

 

For the purposes of this clause a breach of a material term would include a
breach of such seriousness or consequence that the reputation of:

 

(1)                                   Diligent or Diligent’s IP is or is likely to
be materially injured or reduced or

 

                                                                                               (2)                                   Sugar or Sugar’s IP is or is likely to be
materially injured or reduced or

 

(3)                                  the other party is fraudulent in connection
with this Agreement.

 

8.2                               Termination
by Diligent

 

Notwithstanding any other provisions herein,
Diligent may also terminate this Agreement on giving 30 days notice in writing
to Sugar if it reasonably considers that Sugar is not complying with the
Proposal. When giving such notice, Diligent shall give the reasons it is
terminating the Agreement. Diligent shall be liable to pay Sugar for the
Services up to the actual date of termination.

 

8.3                               Consequences of termination

 

On expiry or
termination of this Agreement for any reason each party must immediately stop
using the other’s IP.  Without limiting
this obligation each party must immediately:

 

(a)                                  deliver up to the other all Materials,
documents or materials containing any IP or Confidential Information;

 

8

 

(b)                                 advise the other party in writing of the
names and addresses of any persons who may be in possession of any IP or
Confidential Information;

 

(c)                                  certify to the other party that it has
returned all IP or Confidential Information;

 

(d)                                 immediately pay to the other all amounts due and payable up to the date
of termination under this Agreement;

 

(e)                                  continue to be bound by the terms of this Agreement which expressly are
to be observed or performed after the expiration or termination.

 

9.                                      Representations, Warranties and
Indemnity Obligations

 

9.1                               IP
Rights

 

Each
party makes the following representations and warranties and undertakes the
following indemnity obligations for the benefit of the other:

 

(a)                                  That it owns its IP Rights;

 

(b)                                 That to the best of its knowledge and belief
the IP Rights do not infringe upon the copyrights, trademarks or patents of any
third person or parties.

 

These
representations and warranties shall survive the termination of this agreement.

 

9.2                               Indemnity

 

Each
party agrees:

 

(a)                                  To indemnify and hold harmless the other and
its officers employees distributors agents licensees from any damage, loss or
expense (including legal fees) occasioned by any claim, demand, action or
proceeding made or initiated by a third person based upon the breach of any of
the representations and warranties made by the breaching party pursuant to
paragraph 9.1 above;

 

(b)                                 That the party not in breach, in consultation
with the breaching party where practicable, shall have the right to withhold
amounts otherwise payable to the breaching party under this Agreement and to
apply such amounts (as may be required) to the satisfaction of the above
indemnity;

 

These indemnities shall survive the termination of
this agreement.

 

10.                              Assignment

 

10.1                       No
Assignment

 

                                               Sugar shall
not be entitled to assign this Agreement and its rights and obligations under
it to any third party.

 

10.2                       No
Consent Required to Public Listing

 

9

 

                                               If there
is a  transfer of shares in Sugar
resulting in a change of control of Sugar due to the public listing of all or
some of the shares in Sugar on either or both of the stock exchanges in New
Zealand or Australia, such transfer is authorised under this agreement and no
further consent or approval is required from Diligent.

 

11.                               Confidentiality

 

11.1                        Confidentiality

 

Subject to clause 11.2 all Confidential
Information is to remain confidential and a party must not, without the prior
consent of the party to whom the Confidential Information relates:

 

(a)                                  disclose
the Confidential Information;

 

(b)                                 use the
Confidential Information in any manner that may, or is intended to, cause loss
or damage to the disclosing party or its related bodies corporate.

 

11.2                        Permitted
Disclosure

 

Confidential Information may be disclosed:

 

(a)                                  to the
Board of Directors and any officer, employee or auditor of a party;

 

(b)                                 to any
court of competent jurisdiction that has directed it;

 

(c)                                  to any
professional or other independent consultant or adviser engaged by a party if
that consultant or adviser is under a duty of confidentiality; and

 

(d)                                 to any
relevant stock exchange as required by the listing rules of that stock
exchange.

 

11.3                        Protection
of Confidential Information

 

Each party must:

 

(a)                                  take or
cause to be taken such reasonable precautions as may be necessary to prevent
the disclosure of any Confidential Information otherwise than in accordance
with this agreement; and

 

(b)                                 at all
times comply with any applicable laws or industry standards relating to privacy
or data protection.

 

11.4                        Survival

 

The parties’ obligations under this clause 11 survive the termination of this agreement.

 

11.5                        Remedy
for Breach

 

Each party acknowledges that any breach by
either or both of them of the provisions of this clause 12 will be likely to result
in a material adverse commercial and financial impact on the non-breaching
party and therefore, the non-breaching party shall have the rights in addition
to any remedies at law, including to seek an interim injunction without the
requirement to put up any bond for potential damages.

 

10

 

12.                               Notices

 

12.1                        Written
Notice Required

 

A notice relating to this agreement must be
given in writing and may be given by an agent of the sender.

 

12.2                        How
Notice to be Given

 

A notice may be give by being:

 

(a)                                  personally
delivered;

 

(b)                                 left at
the party’s current address for notices;

 

(c)                                  sent to
the party’s current address for notices by pre-paid ordinary mail; or

 

(d)                                 sent by
fax to the party’s current fax number for notices.

 

12.3                        Delivery
Particulars

 

The particulars for deliver of notices are
initially:

	
  Diligent:

  	
   

  	
   

  
	
   

  	
   

  	
  39
  West 37th Street,

  
	
   

  	
   

  	
  8th Floor,

  
	
   

  	
   

  	
  New
  York, NY

  
	
   

  	
   

  	
  10018,
  USA

  
	
   

  	
   

  	
   

  
	
  Attention:

  	
   

  	
  Alex Sodi, CEO

  
	
   

  	
   

  	
   

  
	
  Sugar:

  	
   

  	
  Level 3

  
	
   

  	
   

  	
  7 Falcon Street

  
	
   

  	
   

  	
  Parnell

  
	
   

  	
   

  	
  Auckland

  
	
  Telephone:

  	
   

  	
  (9)      337
  0061

  
	
  Fax:

  	
   

  	
  (9)      309
  0788

  
	
  Attention:

  	
   

  	
  John Wall

  
	
   

  	
   

  	
   

  

Each party may change its particulars for
delivery of notices by notice to the other.

 

12.4                        When
Notice Received

 

A notice is deemed to have been received:

 

(a)                                  if posted,
3 (three) business days after posting;

 

(b)                                 if
delivered, on the date of deliver; or

 

(c)                                  if sent by
fax, when the sender’s fax machine produces a report that the fax was sent in
full to the addressee.

 

13                                  Announcements

 

11

 

Neither party will make any public announcement regarding this
Agreement, the Proposal, or the Services, unless and until the form and timing
of any announcement has been agreed in writing between the parties.

 

14.                               General

 

14.1                        Amendment

 

This document may only be varied or replaced by
a document executed by the parties.

 

14.2                        Waiver
and Exercise of Rights

 

(a)                                  A single
or partial exercise or waiver by a party of a right relating to this document
does not prevent any other exercise of that right or the exercise of any other
right.

 

(b)                                 A party is
not liable for any loss, cost or expense of any other party caused or
contributed to by the waiver, exercise, attempted exercise, failure to exercise
or delay in the exercise of a right.

 

14.3                        Further
Steps

 

Each party must promptly do whatever any other
party reasonably requires of it to give effect to this document and to perform
its obligations under it.

 

14.4                        Severability

 

In the event that any one or more of the provisions contained in this
agreement shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this agreement or any other such
instrument.

 

14.5                        Faxed Execution

 

The
parties acknowledge that the execution of a facsimile copy of this Agreement
and transmission by facsimile, each to the other or their respective agent or
solicitors, shall be sufficient evidence to constitute offer and acceptance and
to satisfy the requirements of Section 2 of the New Zealand Contracts
Enforcement Act 1986.

 

14.6                        Force majeure

 

                                                Neither party will be in breach of this
Agreement if the breach is caused by an act of God, fire, act of government or
state, war, civil commotion, insurrection, embargo, prevention from or
hindrance in obtaining any raw materials, energy or other supplies, labor
disputes of whatever nature and any other reason beyond the control of either
party.

 

14.7                        Governing
Law and Jurisdiction

 

(a)                                  This
document is governed by and is to be construed in accordance with the laws
applicable in New York, NY USA.

 

(b)                                 Each party
irrevocably and unconditionally submits to the non-exclusive jurisdiction of
the courts of New Zealand and New York, and 

 

12

 

any courts which have
jurisdiction to hear appeals from any of those courts and waives any right to
object to any proceedings being brought in those courts.

 

Execution

 

 

SIGNED for and on

behalf of SUGAR INTERNATIONAL

LIMITED in the presence of:

 

 

SIGNED for and on

behalf of DILIGENT BOARD MEMBER

SERVICES, INC in the presence of:

 

13Exhibit 10.122

 

LEASE SURRENDER AND TERMINATION AGREEMENT

 

I.                                         PARTIES AND DATE.

 

This Lease Surrender and
Termination Agreement (“Agreement”) is made and entered into as of this 10 day
of February, 2009, between THE IRVINE COMPANY LLC, a Delaware limited liability
company, formerly The Irvine Company (“Landlord”), and MEADE INSTRUMENTS CORP.,
a Delaware corporation (“Tenant”).

 

II.                                     RECITALS.

 

Pursuant to a lease (“Lease”)
dated December 20, 1996, Landlord leased to Tenant those certain premises
(“Premises”) located at 6001 Oak Canyon, Irvine, California, as more fully
described in the Lease.

 

Landlord and Tenant
desire to terminate the Lease upon the terms and conditions contained in this
Agreement.

 

III.                                 TERMINATION.

 

For valuable
consideration:

 

A.                                   Termination Date. 
Subject to the timely performance by Tenant of its obligations herein,
Landlord and Tenant agree that the Lease shall terminate on February 15,
2009  (“Termination Date”).  Tenant shall quit and surrender possession of
the Premises to Landlord on or before February 28, 2009 in the condition
more particularly provided in Section III.H of this Agreement.

 

B.                                     Termination Payment. 
Tenant hereby agrees to pay Landlord, in addition to all Basic Rent and
Operating Expenses due and owing through the Termination Date, the sum of One
Million Two Hundred Thousand Dollars ($1,200,000.00) (the “Termination Payment”),
payable as follows:  (i) Five
Hundred Thousand Dollars ($500,000.00) shall be paid in cash concurrently with
the execution and delivery of this Agreement, and (ii) the balance of the
Termination Payment shall be paid by the delivery of a promissory note (the “Note”)
in favor of Landlord, in the form and with the content of Exhibit A
attached to this Agreement.  The Note
shall be secured by a letter of credit in the amount of the principal sum of
the Note (the Letter of Credit”) issued by Bank of America or by another
financial institution acceptable to Landlord, and delivered to Landlord
concurrently with the execution and delivery of this Agreement.

 

The Letter of Credit
shall be maintained in full force and effect through that date which is thirty
(30) days following the last scheduled payment date for principal amounts under
the Note.  Upon any default by Tenant
under the Note, Landlord shall be entitled to draw upon said Letter of Credit
by the issuance of Landlord’s sole written demand to the issuing financial
institution, which draw shall be in an amount necessary to pay any sum which
Tenant is obligated to pay under the Note.  
Any such draw shall be without waiver or any rights Landlord may have
under this Agreement or at law or in equity as a result of the default.  If any portion of the Letter of Credit is
drawn after a default by Tenant, Tenant shall within ten (10) days after
written demand by Landlord restore the Letter of Credit.  Failure to so restore said Letter of Credit
within said ten (10) days shall be a default by Tenant under this
Agreement.  Partial drawings upon said
Letter of Credit shall be permitted.

 

C.                                     Security Deposit. 
Landlord currently holds the sum of One Hundred Twenty-nine Thousand
Seven Hundred Forty-five Dollars ($129,745.00) as the Security Deposit under Section 4.3
of the Lease.  Of this amount, (i) Landlord
shall retain Sixty-Five Thousand Dollars ($65,000.00) as the “Security Deposit”
under the new “Hubble Lease” (as defined in Section III.G below), and (ii) the
remaining balance (in the amount of Sixty-Four Thousand Seven Hundred
Forty-Five Dollars ($64,745.00)) shall be returned to Tenant within thirty (30)
days following the Termination Date, provided that Tenant fully performs its
obligations under the Lease and this Agreement, including without limitation,
Tenant’s obligations under Section III.H below.

 

D.                                    Landlord’s Conditional Release of Tenant. 
Except for (i) the payment required to be made by Tenant pursuant
to Section III.B above, (ii) any rent or other charges owed by
Tenant, or other obligations required of Tenant set forth in the Lease from and
after the date of this Lease through including the Termination Date, and (iii) any
obligations, liabilities or losses which are based on this Agreement or any
indemnity or hold harmless agreement set forth in the Lease (collectively the “Excluded
Claims”), effective upon the ninety-first (91st)
day after Landlord’s receipt of the full amount of the Termination Payment
(which shall include all payments under the Note), Landlord forever releases
and discharges Tenant from any and all rights, causes of action, actions,
judgments, liens, indebtedness, damages, losses, claims, claims in bankruptcy,
liabilities, and demands of every kind and character in any way related to or
arising from the Lease, provided  however, that the release
granted by Landlord in this Section III.D shall: (x) all times be
subject to the provisions of Section III.E and Article IV of this
Agreement, and (y) not become effective and shall be null and void if a “Bankruptcy
Event” (as defined in Section III.E below) occurs on or before the
ninetieth (90th) day after Landlord’s receipt of the
Termination 

 

 

Payment (which shall
include all payments under the Note).  In
connection with the foregoing conditional release (which does not include the
Excluded Claims), Landlord hereby expressly waives the provisions of Section 1542
of the California Civil Code, which provides:

 

“A GENERAL RELEASE DOES
NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR
HER, MUST HAVE MATERIALLY AFFECTED THE SETTLEMENT WITH THE DEBTOR.”

 

It is understood by
Landlord that if the facts or law with respect to which the foregoing
conditional release is given hereafter turn out to be other than or different
from the facts or law in that connection not known to be or believed by
Landlord to be true, then Landlord hereto expressly assumes the risk of the
facts or law turning out to be so different, and agrees that the foregoing
conditional release shall be in all respects effective and not subject to
termination or rescission based upon such differences in facts or law.

 

E.                                      Bankruptcy Event. 
The parties agree (and Tenant acknowledges Landlord’s express reliance
thereon) that upon (i) Tenant filing a voluntary petition or becoming the
subject of an involuntary petition seeking reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief under an
present or future federal, state or foreign act or law relating to bankruptcy
or insolvency, including without limitation, Chapters 7 and 11 of the United
States Bankruptcy Code (collectively and each individually, a “Bankruptcy Event”),
and (ii) the initiation in any such proceeding of an action to avoid or
recover the payments made to Landlord under this Agreement (including, without
limitation, the Termination Payment) pursuant to the provisions of Chapter 5 of
the Bankruptcy Code or any similar state or foreign law, the release set forth
in Section III.D above, at Landlord’s election, shall be null and void and
Landlord shall retain any and all claims that may exist under the Lease or
otherwise against Tenant.

 

F.                                      Tenant’s Unconditional Release of
Landlord.  Effective upon the date of this Agreement,
Tenant forever releases and discharges Landlord from any and all rights, causes
of action, actions, judgments, liens, indebtedness, damages, losses, claims,
claims in bankruptcy, liabilities and demands of every kind and character in
any way related to or arising from the Lease. 
Not by way of limitation of the foregoing, Tenant represents that
Landlord has not failed to perform, and is not in any respect in default or
otherwise liable in the performance of, any of its obligations under the Lease,
nor in connection with the negotiation and execution of the Lease, the
administration of the Lease, and the leasing, operations, or management of the
Building.  In connection with the
foregoing unconditional release, Tenant hereby expressly waives the provisions
of Section 1542 of the California Civil Code, which provides:

 

“A GENERAL RELEASE DOES
NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN
HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR
HER, MUST HAVE MATERIALLY AFFECTED THE SETTLEMENT WITH THE DEBTOR.”

 

It is understood by
Tenant that if the facts or law with respect to which the foregoing release is
given hereafter turn out to be other than or different from the facts or law in
that connection not known to be or believed by Tenant to be true, then Tenant
hereto expressly assumes the risk of the facts or law turning out to be so
different, and agrees that the foregoing release shall be in all respects
effective and not subject to termination or rescission based upon such
differences in facts or law.

 

G.                                     Contingency.   
Tenant understands and agrees that the effectiveness of this Agreement
is contingent upon the mutual execution and delivery of a new lease agreement
by and between Landlord and Tenant for approximately 25,136 rentable square
feet of space located in a building at 27 Hubble, Irvine, California (the “Hubble
Lease”).

 

H.                                    Restoration. 
Notwithstanding the provisions of Sections 7.3 and 15.3 of the Lease,
Tenant shall restore the Premises, at its sole cost and expense on or before
the Termination Date, only in the following particulars (together with the
accompanying repairs to the Premises):

 

(i)                                     the removal of the optics/lab area
portion of the Premises (including all mechanical and electrical);

 

(ii)                                  the removal of the compressed air system
in the warehouse portion of the Premises;

 

(iii)                               the removal of all “above-standard”
electrical systems in the warehouse portion of the Premises and restoration of
the original electrical system;

 

(iv)                              the removal of the observatory and all
related equipment;

 

(v)                                 the removal of all racking equipment in
the warehouse portion of the Premises; and

 

(vi)                              the removal of Tenant’s signage, cabling,
security system(s) and all of Tenant’s personal property and debris from
the Premises.

 

2

 

IV.                                 TENANT’S REPRESENTATIONS AND WARRANTIES.

 

A.  Authorization/Reasonably Equivalent Value:  Tenant represents and warrants:  (i) that Tenant was not acting under any
misapprehension as to the effect of this Agreement, and acted freely and
voluntarily and was not acting under any coercion or duress; (ii) that the
execution of this Agreement was duly authorized by Tenant; and (iii) that
Tenant believed and now believes that the consideration given by each party for
this Agreement represents reasonably equivalent value.

 

B.  Solvency of Tenant:  Tenant represents and warrants that it is not
currently insolvent as that term is defined in Section 101(32) of Title 11
of the United States Bankruptcy Code, nor will Tenant become insolvent as a
result of this Agreement.

 

C.  Agreement Improves Tenant’s Financial
Position:  Tenant represents and
warrants that the completion of this Agreement will enhance Tenant’s overall
financial position and that Tenant has proffered and requested this Agreement
to improve its financial position.

 

V.                                     GENERAL.

 

A.  Counterparts.  If this Agreement is executed in
counterparts, each shall be considered an original.  Any photographic, photostatic, or other copy
of this Agreement may be introduced in a proceeding subject to state or federal
rules of evidence without foundation.

 

B.  Defined Terms.  All words commencing with initial capital
letters in this Agreement which are not defined in this Agreement shall have
the same meaning in this Agreement as in the Lease.

 

C.  Corporate and Partnership Authority.  If Tenant is a corporation or partnership, or
is comprised of either or both of them, each individual executing this
Agreement for the corporation or partnership represents that he or she is duly
authorized to execute and deliver this Agreement for the corporation or
partnership and that this Agreement is binding upon the corporation or
partnership in accordance with its terms.

 

D.  Attorneys’ Fees.  The provisions of the Lease respecting
payment of prevailing attorneys’ fees shall also apply to this Agreement.

 

VI.                                 EXECUTION.

 

Landlord and Tenant have
executed this Agreement as of the day and year first written above.

 

	
  LANDLORD:

  	
   

  	
  TENANT:

  
	
   

  	
   

  	
   

  
	
  THE IRVINE COMPANY LLC,

  	
   

  	
  MEADE INSTRUMENTS
  COPR.,

  
	
  a Delaware limited
  liability company

  	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/E. Valjean Wheeler

  	
   

  	
  By:

  	
  /s/Paul E. Ross

  
	
   

  	
  E. Valjean Wheeler

  	
   

  	
   

  	
  Paul E. Ross

  
	
   

  	
  President, Office
  Properties

  	
   

  	
   

  	
  Senior Vice President -
  Finance Chief Financial Officer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/Christopher J. Popma

  	
   

  	
  By:

  	
  /s/Steven G. Murdock

  
	
   

  	
  Christopher J. Popma

  	
   

  	
   

  	
  Steven G. Murdock

  
	
   

  	
  Vice President
  Operations, Office Properties

  	
   

  	
   

  	
  Chief Executive Officer

  

 

3

 

PROMISSORY NOTE

 

$700,000.00             

 

                        ,
200 

 

1.                                      MAKER’S PROMISE TO PAY

 

FOR VALUE RECEIVED, MEADE INSTRUMENTS CORP.,
a Delaware corporation (“Maker”),
promises to pay to the order of THE IRVINE COMPANY LLC, a Delaware limited liability company
(“Payee”), at the address set
forth in Section 3 hereof, the principal sum of Seven Hundred Thousand
Dollars ($700,000.00), together with accrued interest on the unpaid principal
balance at the applicable rate as set forth in Section 2 hereof.  Maker acknowledges and agrees that Payee may
assign or otherwise transfer this Note at any time.  Payee or anyone who takes this Note by any
such transfer and who is entitled to receive payments under this Note is
sometimes hereinafter referred to as the “Note
Holder.”

 

2.                                      INTEREST

 

No
interest shall accrue on the principal balance of this Note. Notwithstanding
the foregoing, upon the occurrence of an Event of Default as described in Section 6(a) below,
and for so long as such default continues, the sum(s) of principal then
due and payable hereunder, whether by acceleration or otherwise, shall bear
interest at the per annum rate of ten percent (10%) (the “Default Rate”).

 

3.                                      PAYMENTS

 

NOTICE
TO MAKER:  THE PAYMENT OF PRINCIPAL AND
INTEREST AND ANY OTHER SUMS THEN DUE HEREUNDER IS A BALLOON PAYMENT.  MAKER HAS NO RIGHT WHATSOEVER TO EXTEND OR
RENEW THIS NOTE WHEN THE BALLOON PAYMENT BECOMES DUE ON THE MATURITY DATE.  NOTE HOLDER IS UNDER NO OBLIGATION TO
REFINANCE THE LOAN AT THAT TIME.

 

Maker
shall make payments of principal under this Note in accordance with the
following schedule:

 

(a)                                  Two Hundred Thousand Dollars
($200,000.00) on May 1, 2009;

 

(b)                                 Two Hundred Thousand Dollars
($200,000.00) on August 1, 2009; and

 

(c)                                  Three Hundred Thousand Dollars ($300,000.00)
on November 1, 2009 (the “Maturity Date”).

 

On the
Maturity Date, the entire unpaid principal balance hereof, together with
accrued but unpaid interest thereon and any other sums then due hereunder,
shall immediately become due and payable in full.

 

Any
payments received by Note Holder pursuant to the terms hereof shall be applied
first to the payment of any sums, other than principal and interest, due Note
Holder pursuant to the terms hereof, next to the payment of all interest
accrued to the date of such payment, and then to the payment of principal.  All payments hereunder are payable in lawful
money of the United States of America and shall be wired to the following
account of Note Holder, or shall be payable at such other place as the Note Holder
hereof may designate from time to time:

 

Wells Fargo Bank

San Francisco, CA

Account No:
4944677699

Account Name: TIC
- Tech Portfolio

Routing No:
121000248

[Amount of Wired
Amount or ACH]

Mead Instruments
Corp. - 663841-S29453

 

4.                                      MAKER’S RIGHT TO PREPAY

 

Maker
shall have the right to prepay all or part of the unpaid principal balance
hereof, together with accrued but unpaid interest thereon, at any time without
penalty.

 

EXHIBIT “A” TO LEASE SURRENDER

AND TERMINATION AGREEMENT

 

1

 

5.                                      INTEREST RATE LIMITATION

 

If it
is determined that the transaction contemplated hereby is subject to the usury
laws of the State of California, Note Holder and Maker stipulate and agree that
none of the terms and provisions contained herein or in any document or
instrument executed in connection herewith shall ever be construed to create a
contract for the use, forbearance or detention of money requiring payment of
interest at a rate in excess of the maximum interest rate permitted to be
charged by the laws of the State of California. 
If any Note Holder shall collect monies which are deemed to constitute
interest which would otherwise increase the effective interest rate on this
Note to a rate in excess of the maximum rate permitted to be charged by the
laws of the State of California, all such sums deemed to constitute interest in
excess of such maximum rate shall, at the option of Note Holder, be credited to
the payment of the sums due hereunder or returned to Maker.

 

6.                                      DEFAULT

 

The
occurrence of any of the following shall be deemed to be an “Event of Default” under this Note:

 

(a)           the failure of Maker to pay
principal, interest and any other sums when due pursuant to the terms hereof;
or

 

(b)           the failure of Maker to fully comply
with any other covenant or obligation under this Note.

 

7.                                      REMEDIES

 

Upon
the occurrence of an Event of Default hereunder, Note Holder may, in its sole
and absolute discretion and without demand or notice to Maker, (a) declare
the entire unpaid balance hereof, together with accrued but unpaid interest
thereon and any other sums then due hereunder, immediately due and payable, and
(b) exercise any and all rights and powers and pursue any and all remedies
now or hereafter available under applicable law.  No delay or omission on the part of Note
Holder in exercising any right or remedy under this Note shall operate as a
waiver of such right or remedy.

 

8.                                      LATE CHARGE

 

If any
payment due hereunder is not received by the Note Holder within ten (10) calendar
days after the date such payment is due, Maker shall pay to Note Holder,
without demand, a late charge in an amount equal to four percent (4%) of the
amount past due.  It would be
impracticable or extremely difficult to fix the Note Holder’s actual damages if
payment is not paid when due hereunder, and said late charge shall be deemed to
be the Note Holder’s damage for any such late payment, but shall not limit the
Note Holder’s right to compel prompt performance of any obligation or to
exercise any other remedy under this Note. 
No late charge assessed shall exceed the maximum permitted by law.

 

9.                                      NOTICES

 

Any
notice, request, demand, instruction or other communication to be given to any
party hereunder shall be in writing and shall be deemed to have been duly given
three (3) business days after deposit in the United States mail or, if
personally delivered or sent by registered or certified mail, return receipt
requested, when delivered, as follows:

 

If to
Maker:                                  MEADE INSTRUMENTS CORP.

27 Hubble

Irvine, CA  92618

Attention:

 

If to
Payee:                                    THE IRVINE COMPANY LLC

550 Newport Center
Drive

Newport Beach, CA 
92660

Attn:  Vice
President Operations, Irvine Office Properties - Technology Portfolio

 

The
addressees and addresses for the purpose of this paragraph may be changed by
giving written notice of such change in the manner herein provided for giving
notice.  However, unless and until such
written notice of change is actually received, the last address and addresses
as stated by written notice, or provided herein if no written notice of change
has been received, shall be deemed to continue in effect for all purposes
hereunder.

 

10.                               WAIVERS

 

Maker
hereby waives diligence, presentment, protest and demand, notice of protest,
demand, dishonor and nonpayment of this Note, and notice of intention to
accelerate the maturity of this Note and expressly agrees that, without in any
way affecting the liability of Maker hereunder, Note Holder may extend 

 

2

 

any maturity date or the time for payment of any
installment due hereunder, accept additional security, release any party liable
hereunder and release any security now or hereafter securing this Note.  Maker further waives, to the full extent
permitted by law, the right to plead any and all statutes of limitations as a
defense to any demand on this Note, or on any deed of trust, security
agreement, lease assignment, guaranty or other instrument now or hereafter
securing this Note.  Maker hereby waives
all rights of setoff and counterclaim with respect to this Note, including
rights of setoff and counterclaim with respect to this Note which may arise
from claims heretofore unknown to Maker.

 

11.                               ATTORNEYS’ FEES

 

If the Note Holder
seeks legal advice following a default by Maker hereunder or refers this Note
to collection or to reclaim, protect, preserve or enforce its interest in this
Note or under any instrument securing this Note, then Maker shall pay all
attorneys’ fees and expenses and other costs relating thereto.

 

12.                               THIS NOTE IS SECURED
BY A LETTER OF CREDIT.  This Note is secured by a Letter of Credit in the amount of Seven Hundred
Thousand Dollars ($700,000.00) issued by Bank of America (the “Letter of Credit”).

 

13.                               SEVERABILITY

 

Every
provision of this Note is intended to be severable.  In the event any term or provision hereof is
declared by a court of competent jurisdiction to be illegal or invalid for any
reason whatsoever, such illegality or invalidity shall not affect the balance
of the terms and provisions hereof, which terms and provisions shall remain
binding and enforceable.

 

14.                               NUMBER AND GENDER

 

In
this Note the singular shall include the plural and the masculine shall include
the feminine and neuter gender, and vice versa, if the context so requires.

 

15.                               TIME IS OF THE ESSENCE

 

Time
is strictly of the essence under this Note and any amendment, modification or
revision hereof.

 

16.                               CHOICE OF LAW

 

This
Note shall be governed by and construed in accordance with the laws of the
State of California.

 

17.                               JOINT AND SEVERAL LIABILITY

 

If
this Note should be signed by more than one party, the liability under this
Note of each party shall be joint and several. 
In addition, if Maker is a partnership, the liability under this Note of
each general partner of Maker, and the liability of each general partner of a
partnership which is itself a general partner of Maker, shall be joint and
several.

 

MAKER:

 

MEADE INSTRUMENTS CORP.,

a Delaware corporation

 

	
  By:

  	
  /s/Paul E. Ross

  	
   

  
	
   

  	
  Paul E. Ross

  	
   

  
	
   

  	
  Senior Vice President -
  Finance Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/Steven G. Murdock

  	
   

  
	
   

  	
  Steven G. Murdock 

  	
   

  
	
   

  	
  Chief Executive Officer

  	
   

  

 

3

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