Common use of Reduction of Letter of Credit Clause in Contracts

Reduction of Letter of Credit. Provided that, as of each “Reduction Date” set forth below, (i) no Tenant Default has occurred which has not been cured or waived in writing, (ii) no monetary Tenant Default has occurred at any time during the preceding two (2) year period; and (iii) on or prior to the applicable Reduction Date, Tenant tenders to Landlord a replacement Letter of Credit or a certificate of amendment to the existing Letter of Credit, conforming in all respects to the requirements of this Section 32(j), in the amount of the applicable Letter of Credit Amount as of such Reduction Date (the “Reduction Conditions”), then the Letter of Credit Amount shall be reduced in accordance with the following schedule: Reduction Date LC Amount Third (3rd) anniversary of the Commencement Date [***] Fourth (4th) anniversary of the Commencement Date [***] Fifth (5th) anniversary of the Commencement Date [***] Sixth (6th) anniversary of the Commencement Date [***] Seventh (7th) anniversary of the Commencement Date [***] In the event the Letter of Credit Amount is reduced pursuant to the foregoing, and simultaneously with Tenant’s tender of the replacement or amended Letter of Credit to Landlord in the form required herein, Landlord shall exchange the Letter of Credit then held by Landlord for the replacement or amended Letter of Credit tendered by Tenant. If Tenant fails to tender to Landlord a replacement Letter of Credit or a certificate of amendment to the existing Letter of Credit on or prior to the Reduction Date, but Tenant subsequently delivers a replacement Letter of Credit or a certificate of amendment to the existing Letter of Credit to Landlord and as of the date of such delivery Tenant otherwise satisfies the Reduction Conditions, then any reductions that were suspended will re-commence as of the date of such delivery.

Reduction of Letter of Credit. Provided thatthat there has been no Event of Default of this Lease by Tenant, as of each “Reduction Date” set forth below, (i) no Tenant Default has occurred which has not been cured or waived in writing, (ii) no monetary Tenant Default has occurred at any time during the preceding two (2) year period; and (iii) on or prior to the applicable each Effective Reduction Date, as detailed below, and Tenant tenders is then in full compliance with its obligations under this Lease, there shall be a reduction in the Letter of Credit Amount as follows: The First Effective Reduction Date shall occur on March 1, 2019 in the amount of $133,333.00; The Second Effective Reduction Date shall occur on March 1, 2020 in the amount of $133,333.00; and The Third Effective Reduction Date shall occur on March 1, 2021 in the amount of $133,334.00. Notwithstanding the above and provided there has been no Event of Default of this Lease by Tenant, in the event Tenant provides evidence, satisfactory to Landlord and Lender, of a replacement capital raise equal to or greater than $100 Million, the Irrevocable Letter of Credit shall no longer be required and Tenant shall be fully released from all obligations under this Section. If there has been an Event of Default of Tenant under the Lease prior to any Effective Reduction Date, then there shall be no further reduction of the Security Deposit. If Tenant is entitled to a reduction in the Letter of Credit, Tenant shall have the right to provide Landlord with written notice requesting that the Letter of Credit be reduced as provided above (the “Reduction Notice”), together with either a Substitute Letter of Credit or a certificate of an amendment to the existing Letter of Credit, conforming in all respects form reasonably acceptable to Landlord, meeting the requirements of this Section 32(j), in the amount of the applicable Letter of Credit Amount as of such 3. If Tenant provides Landlord with a Reduction Date (the “Reduction Conditions”), then the Letter of Credit Amount shall be reduced in accordance with the following schedule: Reduction Date LC Amount Third (3rd) anniversary of the Commencement Date [***] Fourth (4th) anniversary of the Commencement Date [***] Fifth (5th) anniversary of the Commencement Date [***] Sixth (6th) anniversary of the Commencement Date [***] Seventh (7th) anniversary of the Commencement Date [***] In the event the Letter of Credit Amount is reduced pursuant to the foregoing, and simultaneously with Tenant’s tender of the replacement or amended Letter of Credit to Landlord in the form required hereinNotice, Landlord shall exchange the Letter of Credit then held by Landlord for the replacement or amended Letter of Credit tendered by Tenant. If Tenant fails to tender to Landlord a replacement accept such Substitute Letter of Credit or a certificate of amendment to the existing Letter of Credit on or prior within thirty (30) days after the later to occur of (i) Landlord’s receipt of the Reduction Notice, or (ii) the applicable Effective Reduction Date, but Tenant subsequently delivers a replacement . If Landlord draws on the Letter of Credit as permitted in this Lease or a certificate the Letter of amendment to Credit, then, upon demand of Landlord, Tenant shall restore the existing amount available under the Letter of Credit to its then-in-effect amount by providing Landlord and as with an amendment to the Letter of Credit evidencing that the date amount available under the Letter of such delivery Tenant otherwise satisfies the Reduction Conditions, then any reductions that were suspended will reCredit has been restored to its then-commence as of the date of such deliveryin-effect amount.

Reduction of Letter of Credit. Provided that, as of each “Reduction Date” set forth belowFor purposes hereof, (i) the “Letter of Credit Reduction Conditions” shall mean the following: (i) no Tenant Event of Default has shall have occurred which has not been cured or waived in writingduring the immediately preceding twelve (12) months, (ii) no monetary the original Tenant Default has occurred at any time named herein or a Permitted Transferee is the tenant under this Lease, and (iii) both this Lease and the Guaranty are in full force and effect. For purposes hereof, the “Letter of Credit Amount” shall mean the following amounts: (i) during the period of time from the Effective Date through the day immediately preceding two the third (23rd) year periodanniversary of the Rent Commencement Date (both dates inclusive), the “Initial Letter of Credit Amount” shall mean $10,540,000.00; (ii) during the period of time from the third (3rd) anniversary of the Rent Commencement Date through the day immediately preceding the sixth (6th) anniversary of the Rent Commencement Date (both dates inclusive), the “Second Letter of Credit Amount” shall mean $7,026,666.64; and (iii) on or prior to during the applicable Reduction period of time from the sixth (6th) anniversary of the Rent Commencement Date through the Expiration Date, Tenant tenders to Landlord a replacement the “Third Letter of Credit or a certificate Amount” shall mean $3,513,333.32. Effective as of amendment to the existing Letter of Credit, conforming in all respects to the requirements of this Section 32(j), in the amount third (3rd) anniversary of the applicable Rent Commencement Date, provided that the Letter of Credit Amount as of such Reduction Date (the “Reduction Conditions”)Conditions are satisfied, then the Letter of Credit Amount shall be reduced in accordance with from the following schedule: Reduction Date LC Initial Letter of Credit Amount Third (3rd) anniversary to the Second Letter of the Commencement Date [***] Fourth (4th) anniversary Credit Amount. Effective as of the Commencement Date [***] Fifth (5th) anniversary of the Commencement Date [***] Sixth sixth (6th) anniversary of the Rent Commencement Date [***] Seventh Date, provided that (7thi) anniversary the Letter of Credit Reduction Conditions are satisfied, and (ii) Guarantor has a Market Capitalization which is not less than the Market Capitalization of Guarantor as of the Commencement Date [***] In the event Effective Date, the Letter of Credit Amount is shall be reduced pursuant from the Second Letter of Credit Amount to the foregoing, and simultaneously with Tenant’s tender Third Letter of Credit Amount. Each such reduction in the amount of the replacement or amended Letter of Credit shall be effected as follows: Tenant shall either (x) deliver to Landlord a proposed consent to amendment to the Letter of Credit, which amendment shall be reasonably acceptable to the Landlord in all respects, reducing the amount of the Letter of Credit to Landlord in the form required herein, Landlord shall exchange the then-applicable Letter of Credit then held by Landlord for the replacement Amount, or amended Letter of Credit tendered by Tenant. If Tenant fails to tender (y) deliver to Landlord a replacement Letter of Credit or a certificate in the amount of the then-applicable Letter of Credit Amount, which replacement Letter of Credit shall in all respects comply with all of the requirements of this Article 28. Within thirty (30) days after delivery of either the proposed consent to an amendment to the Letter of Credit or proposed replacement Letter of Credit, Landlord will either (A) execute such consent in accordance with the terms thereof, or provide its reasonable objections to such proposed consent or amendment, or (B) consent to the cancellation of the existing Letter of Credit on or prior and to the Reduction Date, but Tenant subsequently delivers a exchange of the replacement Letter of Credit or a certificate of amendment to the for such existing Letter of Credit to Landlord Credit. [***] Certain information in this document has been omitted from this exhibit because it is both (i) not material and as of the date of such delivery Tenant otherwise satisfies the Reduction Conditions, then any reductions that were suspended will re-commence as of the date of such delivery(ii) would be competitively harmful if publicly disclosed.

Reduction of Letter of Credit. Provided that, as of each “Reduction Date” set forth below, (i) no Tenant Default has occurred which has not been cured or waived in writing, (ii) no monetary Tenant Default has occurred at any time during the preceding two (2) year period; and (iii) on or prior to the applicable Reduction Date, that Tenant tenders to Landlord a replacement Letter of Credit or (a) evidence reasonably satisfactory to Landlord demonstrating the Tenant satisfies the “L-C Reduction Conditions,” as that term is defined below, and (b) a certificate of amendment to the existing Letter of CreditL-C, conforming in all respects to the requirements of this Section 32(j)Exhibit G, in the applicable L-C Amount, then the L-C Amount shall be reduced on each “Reduction Date,” as that term is defined below, by an amount equal to one-tenth (1/10th) of the applicable L-C Amount on the date on which the Additional Tenant Improvement Allowance is fully drawn upon. For purposes of this Section 7, the “L-C Reduction Conditions” shall mean that (i) Tenant is not then in default under this Lease and has not been in default at any time during the prior twelve (12) month period, and (ii) as of the Reduction Date, Tenant’s market capitalization (which is calculated by multiplying Tenant’s shares outstanding by the current market price of one share) is equal to at least 80% of its market capitalization upon the date of this Lease. The parties hereby stipulate that Tenant’s market capitalization upon the date of this Lease is equal to $385,000,000.00. For purposes of this Section 7, the “Reduction Date” shall mean each consecutive one-year anniversary of the date on which the Additional Tenant Improvement Allowance is fully drawn upon. EXHIBIT G -4- HCP, INC. Sorrento Gateway [Sorrento Therapeutics, Inc.] SCHEDULE 1 TO EXHIBIT G FORM OF LETTER OF CREDIT (Letterhead of a money center bank acceptable to the Landlord) ________________, 20__ ______________________ ______________________ ______________________ ______________________ Gentlemen: We hereby establish our Irrevocable Letter of Credit Amount as and authorize you to draw on us at sight for the account of such Reduction Date [INSERT TENANT NAME] (the “Reduction ConditionsApplicant”), then a [PLEASE PROVIDE], the aggregate amount of ______________and _____Dollars ($________________). Funds under this Letter of Credit are available to the beneficiary hereof as follows: Any or all of the sums hereunder may be drawn down at any time and from time to time from and after the date hereof by [_______________](“Beneficiary”) when accompanied by this Letter of Credit and a written statement signed by a representative of Beneficiary, (i) certifying that Beneficiary is otherwise allowed to draw down on the Letter of Credit Amount shall be reduced in accordance with pursuant to the following schedule: Reduction Date LC Amount Third terms of that certain office lease by and between Beneficiary and Applicant dated [insert lease date], as amended (3rdcollectively, the “Lease”), (ii) anniversary certifying that Beneficiary is entitled to draw down the full amount of letter of credit no._____________ as the result of the Commencement Date [***] Fourth filing of a voluntary petition under the U.S. Bankruptcy Code or a State Bankruptcy Code by the tenant under the Lease, which filing has not been dismissed at the time of this drawing, or (4thiii) anniversary certifying that Beneficiary is entitled to draw down the full amount of letter of credit no. ______________ as the Commencement Date [***] Fifth (5th) anniversary result of an involuntary petition having been filed under the Commencement Date [***] Sixth (6th) anniversary U.S. Bankruptcy Code or a State Bankruptcy Code against the tenant under the Lease, which filing has not been dismissed at the time of the Commencement Date [***] Seventh (7th) anniversary of the Commencement Date [***] In the event the this drawing. This Letter of Credit Amount is reduced pursuant transferable in its entirety. Should a transfer be desired, such transfer will be subject to the foregoingreturn to us of this advice, and simultaneously together with Tenant’s tender written instructions. The amount of each draft must be endorsed on the replacement or amended Letter of Credit to Landlord in reverse hereof by the form required herein, Landlord shall exchange the Letter of Credit then held by Landlord for the replacement or amended Letter of Credit tendered by Tenant. If Tenant fails to tender to Landlord a replacement Letter of Credit or a certificate of amendment to the existing Letter of Credit on or prior to the Reduction Date, but Tenant subsequently delivers a replacement Letter of Credit or a certificate of amendment to the existing Letter of Credit to Landlord and as of the date of such delivery Tenant otherwise satisfies the Reduction Conditions, then any reductions that were suspended will re-commence as of the date of such deliverynegotiating bank.