EX-10.1 2 dmtk-ex101_6.htm EX-10.1 dmtk-ex101_6.htm

Exhibit 10.1

DEL MAR CORPORATE CENTRE II

 

OFFICE LEASE

 

This Office Lease (the "Lease"), dated as of the date set forth in Section 1 of the Summary of Basic Lease Information (the "Summary"), below, is made by and between KILROY REALTY, L.P., a Delaware limited partnership ("Landlord"), and DERMTECH, INC., a Delaware corporation ("Tenant").

 

SUMMARY OF BASIC LEASE INFORMATION

 

TERMS OF LEASE

 

DESCRIPTION

 

1.

 

Date:

 

July 1, 2021.

 

2.

 

Premises: (Article 1)

 

2.1

 

Building:

 

That certain four (4) story office building located at 12340 El Camino Real, San Diego, California 92130. The Building shall also be referred to herein as the Entire Premises.”

 

2.2

 

Premises:

 

The Entire Premises contains 95,997 rentable (76,012 usable) square feet of space consisting of the entire Building, as further depicted on Exhibit A to the Office Lease and as further described below; provided, however, the term “Premises” as used in this Lease shall mean, until that time as the Phase Commencement Date has occurred as to the Entire Premises,

 

only those phased portions of the

 

Entire Phase Such

 

Premises

 

astowhich

 

the

 

Commencement Date has occurred.

 

phasing of the delivery of such portions of the

 

Entire Premises will occur in the following phases (each, a “Phase”):

 

The Phase I Premises shall be comprised of 10,192 rentable (8,071 usable) square feet of space on the third (3rd) floor of the Building commonly known as Suite 325.

 

The “Phase II Premises” shall be comprised of 29,357 rentable (23,245 usable) square feet of space comprising the fourth (4th) floor of the Building.

 

The “Phase III Premises” shall be 34,488 rentable (27,308 usable) square feet of space comprised of (i) 7,831 rentable (6,201 usable) square feet of space on the first (1st) floor of the Building commonly known as Suite 100,

(ii)18,911 rentable (14,974 usable) square feet of space on the second (2nd) floor of the Building commonly known as Suite 200, and

(iii)7,746 rentable (6,133 usable) square feet of space on the second (2nd) floor commonly known as Suite 250 (“Suite 250”).

 

 

 

The “Phase IV Premises” shall be 21,960 rentable (17,388 usable) square feet of space comprised of (i) 3,128 rentable (2,476 usable)

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

square feet of space on the first (1st) floor of the Building commonly known as Suite 110,

(ii) 6,147 rentable (4,867 usable) square feet of space on the third (3rd) floor of the Building commonly known as Suite 300, (iii) 1,802 rentable (1,427 usable) square feet of space on the third (3rd) floor of the Building commonly known as Suite 310, (iv) 8,040 rentable (6,366 usable) square feet of space on the third (3rd) floor of the Building commonly known as Suite 350, and (v) 2,843 rentable (2,252 usable) square feet of space on the third (3rd) floor of the Building commonly known as Suite 375.

 

 

Each of the above shall be a Phase and collectively the “Phases.”

 

2.3

 

Project:

 

The Building is part of an office project known as "Del Mar Corporate Centre II," as further set forth in Section 1.1.2 of this Lease.

 

3.

 

Lease Term (Article 2):

 

3.1

 

Length of Term:

 

Approximately ten (10) years and six (6) months.

 

3.2

 

Lease Commencement Date; Phased Commencement Dates:

 

The Lease Commencement Date shall occur upon the Possession Date (as defined in Section 1.1.1 of this Lease) with respect to Phase III Premises (alternatively, the “Lease Commencement Date or the Phase III Commencement Date”). With respect to the other Phases, the corresponding phased

 

commencement

 

dates

 

(each

 

a

 

Phase

 

Commencement Date”) shall be as follows:

 

(x) the Phase I Commencement Date shall be the later of the Phase III Commencement Date or the Possession Date as to the Phase I Premises, (y) the “Phase II Commencement Date shall be the Possession Date with respect to Phase II Premises, (y) the “Phase IV Commencement Date” shall be the later of the Phase III Commencement Date or the Possession Date with respect to the Phase IV Premises.

 

3.3

 

Lease Expiration Date:

 

The last day of the one hundred twenty-sixth (126th) full calendar month following the earlier to occur of (i) January 1, 2023, or (ii) the Phase III Commencement Date.

 

3.4

 

Option Terms:

 

Tenant has two (2) options (each an "Extension Option") to extend the Lease Term for a period of five (5)-years (each an "Option Term"), as more particularly set forth in Section 2.2 and Exhibit G of this Lease.

 

4.

 

Base Rent (Article 3):

 

The Base Rent for the particular Phases of the Premises shall be as set forth on Schedule 1 attached to this Lease.

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-2-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

5.

 

Base Year (Article 4):

 

Calendar year 2022; provided, however, electricity is separately metered and directly paid by Tenant to the applicable utility provider or, at Landlord's option, to Landlord.

 

6.

 

Tenant's Share (Article 4):

 

When the Lease Commencement Date has occurred as to the Entire Premises, 100% of the Building, and 56% of the Project. Tenant’s Share of each of the respective Phases are as follows:

 

Tenant’s Share for Phase I: 10.6170% of the Building and 6.0327% of the Project.

 

Tenant’s Share for Phase II: 30.5812% and 17.3766% of the Project.

 

Tenant’s Share for Phase III: 35.9261% and 20.4136% of the Project.

 

Tenant’s Share for Phase IV: 22.8757% and 12.9982% of the Project.

 

7.

 

Permitted Use (Article 5):

 

Tenant may use the Premises solely for general office use, laboratory, research and development use, and uses incidental thereto, all consistent with first-class office standards in the market in which the Project is located (the "Permitted Use").

 

8.

 

Letter of Credit (Article 21):

 

$3,023,905.50, subject to reduction pursuant to the terms of Section 21.3.1 below.

 

9.

 

Parking Pass Ratio (Article 28):

 

3.7 unreserved parking passes for every 1,000 usable square feet of the then-applicable Premises; provided, that when the Phase Commencement Date occurs as to the Entire Premises, Tenant shall have the exclusive right to use the entire parking lot designated for the Building and more particularly shown

 

on Exhibit A-1.

 

During the initial Lease

 

Term and any extension therefor (including any Option Term), Tenant's unreserved parking passes shall generally be without charge; provided, however, Tenant shall remain responsible for any parking taxes or other charges imposed by governmental authorities in connection with its use of such parking, as more particularly detailed in Article 28.

 

10.

 

Address of Tenant (Section 29.18):

 

DermTech, Inc.

11099 N. Torrey Pines Rd., Suite 100 La Jolla, CA 92037

Attention: Office of the General Counsel Telephone Number: (858) 450-4222

E-mail: legalnotices@dermtech.com

(Prior to Lease Commencement Date)

 

 

 

 

 

and

 

DermTech, Inc.

12340 El Camino Real San Diego, CA 92130

 

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-3-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

Attention: Office of the General Counsel Telephone Number: (858) 450-4222

E-mail: legalnotices@dermtech.com

 

 

(After Lease Commencement Date)

 

11.

 

Address of Landlord (Section 29.18):

 

Kilroy Realty, L.P.

c/o Kilroy Realty Corporation

12200 West Olympic Boulevard, Suite 200 Los Angeles, California 90064

Attention: Legal Department

 

 

 

 

with copies to:

 

Kilroy Realty, L.P.

c/o Kilroy Realty Corporation 100 First Street, Suite 250

San Francisco, California 94105 Attention: Mr. John Osmond

 

 

 

and

Kilroy Realty, L.P.

c/o Kilroy Realty Corporation 12770 El Camino Real, Suite 250 San Diego, California 92130 Attention: Mr. Nelson Ackerly

 

 

 

and

 

Allen Matkins Leck Gamble Mallory & Natsis LLP

1901 Avenue of the Stars, Suite 1800 Los Angeles, California 90067 Attention: Anton N.  Natsis, Esq.

 

 

and, for sustainability-related notices only:

 

Kilroy Realty Corporation

12200 West Olympic Boulevard, Suite 200 Los Angeles, California 90064

Attention: Sara Neff, Senior Vice President – Sustainability

 

 

 

12.

 

Brokers (Section 29.24):

 

Representing Tenant: Cushman & Wakefield

 

Representing Landlord: Cushman & Wakefield

 

13.

 

Improvement Allowance (Exhibit B):

 

$125.00 per rentable square foot of the Premises for a total of $11,999,625.00.

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-4-

 

 

 

 

 

 

 


 

 

ARTICLE 1

 

PREMISES, BUILDING, PROJECT, AND COMMON AREAS

 

1.1

 

Premises, Building, Project and Common Areas.

 

1.1.1

 

The Premises; Delivery of Possession. Landlord hereby leases to Tenant

 

and Tenant hereby leases from Landlord the premises set forth in Section 2.2 of the Summary (the "Premises"). The outline of the Premises is set forth in Exhibit A attached hereto and each floor

 

or floors of the Premises has the number of rentable square feet as set forth in Section 2.2 of the Summary. The parties hereto agree that the lease of the Premises is upon and subject to the terms, covenants and conditions (the "TCCs") herein set forth, and Landlord and Tenant each covenant as a material part of the consideration for this Lease to keep and perform each and all of such TCCs by it to be kept and performed. The parties hereto hereby acknowledge that the purpose of Exhibit A is to show the approximate location of the Premises in the "Building," as that term is defined in Section 1.1.2, below, only, and such Exhibit is not meant to constitute an agreement, representation or warranty as to the construction of the Premises, the precise area thereof or the specific location of the "Common Areas," as that term is defined in Section 1.1.3, below, or the elements thereof or of the accessways to the Premises or the "Project," as that term is defined in Section 1.1.2, below. Except as specifically set forth in this Lease and in the Work Letter attached hereto as Exhibit B (the " Work Letter"), Landlord shall tender possession of the Premises to Tenant in its existing "as-is" condition and Landlord shall not be obligated to provide or pay for any improvement work or services related to the improvement of the Premises, Building or Project. Notwithstanding the foregoing, Landlord shall deliver each Phase of the Premises to Tenant vacant, in broom-clean condition, with all building systems in good working order and the roof water-tight, and in compliance with all Applicable Laws (to the extent necessary to obtain or maintain a certificate of occupancy, or its legal equivalent or to perform the Landlord’s Work and the Improvements (provided that Tenant shall be responsible for any compliance work in the Premises and any compliance work in the Building caused by the particular nature of the Improvements being constructed, as opposed to the fact that tenant improvements are being performed generally)), and with the Improvements related to such Phase Substantially Complete. Tenant’s acceptance of any Phase of the Premises shall not be deemed a waiver of Tenant’s right to have defects in the Premises pursuant to the terms of the Tenant Work Letter. The date of Landlord's tendering of possession of the Premises to Tenant following the Substantial Completion of the Improvements (as defined in the Work Letter) shall be the "Possession Date". If for any reason, Landlord is delayed in tendering possession of the Premises to Tenant by any particular date (including, without limitation, on account of any present tenant or occupant of the Premises not vacating the Premises), Landlord shall not be subject to any Losses (as defined in Section 10.1 below) for such failure, and the validity of this Lease shall not be impaired. Neither Landlord nor any agent of Landlord has made any representation or warranty regarding the condition of the Premises, the Building or the Project or with respect to the suitability of any of the foregoing for the conduct of Tenant's business, except as specifically set forth in this Lease and the Work Letter. Landlord shall use its commercially reasonable efforts to obtain vacant, legal possession of the portions of the Premises that are currently leased no later than March 1, 2022 (February 1, 2022 as to Suite 110). Such efforts shall include, without limitation, (i) promptly following execution of this Lease exercising contractual relocation rights under existing leases with tenants whose terms expire beyond such date for their premises, including, without limitation, providing adequate replacement space within Landlord’s (or its affiliates) portfolio, all at Landlord’s sole cost and expense, (ii) entering into lease termination agreements, and (iii) enforcing surrender obligations under existing leases to cause existing tenants to timely surrender their premises in the condition required under their leases.

 

1.1.2

 

The Building and the Project. The Premises constitute the building set

 

forth in Section 2.1 of the Summary (the "Building"). The Building is part of an office project

 

known as "Del Mar Corporate Centre II." The term "Project," as used in this Lease, shall mean

(i) the Building and the Common Areas, (ii) the land (which is improved with landscaping, parking structures and/or facilities and other improvements) upon which the Building and the Common Areas are located, (iii) the other office building, located adjacent to the Building, with an address of 12390 El Camino Real, San Diego, California (the 12390 Building”) and the land upon which such adjacent office building is/are located, and (iv) at Landlord's discretion, any additional real property, areas, land, buildings or other improvements added thereto, so long as such additional real property or improvements (or the construction and addition thereof) do not unreasonably

 

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-5-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

interfere with Tenant’s use of the Premises or materially increase the obligations or decrease the rights of Tenant under this Lease.

 

1.1.3

 

Common Areas.Tenant shall have the non-exclusive right to use in

 

common with other tenants in the Project, and subject to the rules and regulations referred to in

 

Article 5 of this Lease, those portions of the Project which are provided, from time to time, for use in common by Landlord, Tenant and any other tenants of the Project (such areas, together with such other portions of the Project designated by Landlord, in its discretion, including certain areas designated for the exclusive use of certain tenants, or to be shared by Landlord and certain tenants, are collectively referred to herein as the "Common Areas"). The Common Areas shall consist of the "Project Common Areas" and the "Building Common Areas" (as both of those terms are defined below). The term "Project Common Areas," as used in this Lease, shall mean the portion of the Project designated as such by Landlord, and shall include the existing fitness center located in the 12390 Building so long as the same is open and operated as a fitness center for tenants of the Project. The term "Building Common Areas," as used in this Lease, shall mean the portions of the Common Areas located within the Building designated as such by Landlord. The manner in which the Common Areas are maintained and operated shall be at the sole discretion of Landlord, but in all events materially consistent with the first class maintenance and operational standards of “Comparable Buildings” (as that term is defined in Section 2.1 of Exhibit G to this Lease), and the use thereof shall be subject to such rules, regulations and restrictions as Landlord may make from time to time, provided that such rules, regulations and restrictions do not unreasonably interfere with the rights granted to Tenant under this Lease and the Permitted Use. Landlord reserves the right to close temporarily, make alterations or additions to, or change the location of elements of the Project and the Common Areas (but not the Building Common Areas); provided that no such changes shall be permitted which materially reduce Tenant's rights or access hereunder, materially increase Tenant’s obligations hereunder or otherwise unreasonably interfere with Tenant’s use of the Premises for the Permitted Use. Except when and where Tenant's right of access is specifically excluded in this Lease, Tenant shall have the right of access to the Premises, the Building, and the Project parking facility twenty-four (24) hours per day, seven (7) days per week during the "Lease Term," as that term is defined in Section 2.1, below. From and after the occurrence of the Phase Commencement Date as to the Entire Premises (i.e., when the Premises consists of the Entire Premises), all Building Common Areas shall be deemed to be part of the Premises and for Tenant’s sole and exclusive use and Tenant shall have the exclusive right to use all parking for the Building and, Tenant shall have the exclusive right to use the areas of the Project outside of the Premises allocated to the Building including, without limitation, the roof and exterior portions of the Building, the parking areas, and all landscaped areas (collectively, the Outside Areas”) as shown on Exhibit A-1 hereto. None of the foregoing shall result in a change to the rentable area of the Premises. Tenant may use all driveways, sidewalks, parking, loading and landscaped areas only for their intended purposes. Landlord shall reasonably cooperate with Tenant to maintain the exclusivity of the Outside Areas. Landlord shall not use, alter, increase, decrease or otherwise modify the Outside Areas, or permit any third party to do so, in a manner that would materially interfere with Tenant’s use of the Premises or the Outside Areas, or rights or access hereunder, reduce Tenant’s parking rights, reduce of otherwise affect, result in the construction of alterations or improvements in the Outside Areas without Tenant’s prior written consent or materially increase the obligations or decrease the rights of Tenant under this Lease.

 

1.1.4

 

Parking Conversion Rights. Subject to compliance with all Applicable

 

Laws and the TCCs, Tenant shall have the right to enclose the parking areas identified on Exhibit A-1 and/or to convert the same to interior space. If such enclosure consists of mere caging or similar enclosing and securing of such areas, then such enclosure and the use thereof shall not

 

increase the rentable square footage of the Premises. If Tenant permanently encloses such parking areas and converts them to interior space, then (i) Tenant shall cause such areas to be measured in accordance with the BOMA standard used to measure the Premises and the rentable square footage of the Premises shall be increased by such amount, (ii) Tenant shall pay Base Rent on such areas at the same rates applicable to the remainder of the Premises (i.e., the first twelve (12) months following the addition of such area shall be at $2.65 per rentable square foot and shall increase thereafter in the manner applicable to the other Premises and the rental charts set forth on Schedule

I) and (iii) Landlord shall provide Tenant with an Improvement Allowance in the amount of $125 per rentable square foot of such area.

 

 

1.2

 

Stipulation of Rentable Square Feet of Premises and Building.Except as

 

provided in Section 1.1.5 above, for purposes of this Lease, "rentable square feet" and "usable

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-6-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

square feet" of the Premises shall be deemed as set forth in Section 2.2 of the Summary and the rentable square feet of the Building shall be deemed as set forth in Section 2.1 of the Summary.

 

1.3

 

Delayed Delivery.

 

1.3.1

 

Abatement Remedy. Notwithstanding anything contained herein to the

 

contrary, if Landlord does not cause the Possession Date to occur with respect to any Phase the

 

Premises on or before the date that is three (3) months following the “anticipated Possession Date” for such portion of the Premises as set forth in the table below (each such date, an "Outside Delivery Date", each of which shall be extended on a day for day basis to the extent of delays caused by events of Force Majeure, Tenant Delays and delays caused by the City of San Diego planning department, including without limitation, the failure to grant a pre-inspection of the Improvements or the applicable Phase of the Premises), then Tenant shall be entitled to receive a day-for-day abatement of Base Rent (in addition to any other Base Rent abatement provided herein) otherwise due for the portion of the Premises not delivered for the number of days that occur in the "Delayed Delivery Period," as that term is defined below. For purposes of this Lease, the "Delayed Delivery Period" shall mean the period commencing on the day that occurs immediately following the Outside Delivery Date and continuing until the date upon which the Possession Date occurs for the applicable portion of the Premises. With respect to the Phase III Premises, Tenant hereby acknowledges that there shall be no abatement remedy pursuant to the terms of this Section 1.3.1 for any delayed delivery of Suite 250 beyond the Outside Delivery Date, and if Landlord delivers the remainder of the Phase III Premises other than Suite 250, the delivery prior to the Outside Delivery Date for the Phase III Premises shall be deemed satisfied and Tenant shall have no right to any Base Rent abatement.

 

1.3.2

 

Termination Remedy.  Notwithstanding anything contained herein to the

 

contrary, if the Possession Date with respect to the Phase III Premises (other than Suite 250, which shall be expressly excluded from the remedies set forth in this Section 1.3, and if Landlord delivers the remainder of the Phase III Premises other than Suite 250, the delivery prior to the Phase III Termination Outside Date shall be deemed satisfied and Tenant shall have no right to terminate this Lease) does not occur on or before March 1, 2023 (the "Phase III Termination Outside Date", which shall be extended on a day for day basis to the extent of delays caused by events of Force Majeure and Tenant Delays), then Tenant shall have the right to deliver a written notice to

 

Landlord (a "Termination Notice") electing to terminate this Lease in its entirety effective upon the date occurring five (5) business days following receipt by Landlord of the Termination Notice (the "Effective Termination Date"). If Tenant delivers such a Termination Notice to Landlord, then Landlord shall have the right to suspend the occurrence of the Effective Termination Date for a period ending forty-five (45) days after the Phase III Termination Outside Date by delivering written notice to Tenant prior to the Effective Termination Date, that, in Landlord's reasonable, good faith judgment, the Possession Date with respect to the Phase III Premises will occur within forty-five (45) days after the Phase III Termination Outside Date. If the Possession Date with respect to the Phase III Premises occurs within such forty-five (45) day suspension period, then the Termination Notice shall be of no force or effect, but if the Possession Date with respect to the Phase III Premises does not occur within such forty-five (45) day suspension period, then this Lease shall terminate in its entirety and have no further force or effect upon the expiration of such forty-five (45) day suspension period and Landlord shall refund to Tenant any prepaid Rent paid by Tenant to Landlord and return the L-C to Tenant.

 

1.4

 

Early Occupancy of Portion of Premises. Following the date upon which the

 

same become vacant, Tenant shall have the right to occupy either or both of the Phase I Premises and Suite 250 (to the extent the same becomes available prior to the Lease Commencement Date) (the “Early Occupancy Premises”) prior to the Lease Commencement Date (such period from the date upon which Tenant occupies the Early Occupancy Premises until the Lease Commencement Date shall be referred to herein as the "Early Occupancy Period"), provided that

(A) Tenant shall give Landlord at least ten (10) days' prior notice of any such occupancy of the Early Occupancy Premises, (B) a temporary certificate of occupancy (or its legal equivalent) shall

 

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-7-

 

 

Phase

 

 

 

Anticipated Possession Date

 

 

 

Phase II

 

 

 

April 1, 2022

 

 

 

Phase III (excluding Suite 250)

 

 

 

August 1, 2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

have been issued by the appropriate governmental authority for the Early Occupancy Premises, and (C) all of the terms and conditions of this Lease shall apply to the Early Occupancy Premises (and not the remainder of the Premises) as though the Lease Commencement Date had occurred (although the Lease Commencement Date shall not actually occur until the occurrence of the same pursuant to Section 3.2 of the Summary) upon such occupancy of the Early Occupancy Premises by Tenant. Notwithstanding the foregoing, during the Early Occupancy Period, Tenant shall pay "Base Rent," as that term is defined in Article 3 below, in the amount of $4.25 per rentable square foot of the portion of the Early Occupancy Premises occupied by Tenant, and Tenant shall pay "Tenant's Share" of the annual "Direct Expenses," as those terms are defined in Article 4, below and utilities costs for the Early Occupancy Premises during the Early Occupancy Period (with such Tenant’s Share for the entire Early Occupancy Premises being 18.6860%).

 

1.5

 

Right of First Refusal. Landlord hereby grants to the tenant originally named

 

herein (the "Original Tenant") a one-time right of first refusal during the initial Lease Term with

 

respect to available space located in the 12390 Building (the "Refusal Space"). Notwithstanding the foregoing, such right of first refusal of Tenant shall commence only following the expiration or earlier termination of the existing leases (including renewals (and irrespective of whether any such renewal is pursuant to an express written provision in such tenant's lease or whether such renewal is effectuated by a lease amendment or a new lease)) of the Refusal Space, and such right of first refusal shall be subordinate to all rights with respect to such Refusal Space which are set forth in existing leases of space in the 12390 Building, including any renewal, extension or expansion rights (including, but not limited to, must-take, right of first offer, right of first negotiation, right of first refusal, expansion option and other similar rights) set forth in such leases, regardless of whether such renewal, extension or expansion rights are executed strictly in accordance with their terms, or pursuant to a lease amendment or a new lease (all such tenants under such leases are collectively referred to herein as the "Superior Right Holders"). Tenant's right of first refusal shall be on the terms and conditions set forth in this Section 1.3.

 

1.5.1Procedure for Lease.

 

1.5.1.1

 

Procedure for Offer. Landlord shall notify Tenant (the "Refusal

 

Notice") from time-to-time when and if Landlord receives a "bona-fide third-party offer" for any particular portion of the Refusal Space that Landlord intends to accept, provided that the Superior Right Holders have waived their rights to such Refusal Space. Pursuant to such Refusal Notice, Landlord shall offer to lease to Tenant such Refusal Space. The Refusal Notice shall describe the Refusal Space, the lease term, base rent and other fundamental material economic terms and conditions (the “Fundamental Terms”) upon which Landlord proposes to lease such Refusal Space pursuant to the bona-fide third-party offer. For purposes of this Section 1.4, a "bona-fide third-party offer" shall mean an offer or counter-offer received by Landlord to lease the Refusal Space from a qualified third party. For purposes of example only, the following would each constitute a bone-fide third-party offer:

 

1.5.1.1.1

 

Landlord receives a request for proposal from a

 

qualified third party. Landlord responds to the request for proposal with a lease proposal and

 

subsequently receives a written bona-fide counter proposal from the qualified third party that Landlord intends to accept.

 

1.5.1.1.2

 

Landlord receives a written offer to lease from a

 

qualified third party. Landlord responds to the offer with a written counter offer and subsequently

 

receives a bona-fide counter to Landlord's counter offer from the qualified third party that Landlord intends to accept.

 

1.5.1.2

 

Procedure for Acceptance.

 

If Tenant wishes to exercise

 

Tenant's right of first refusal with respect to the Refusal Space, then within five (5) days of delivery of the Refusal Notice to Tenant, Tenant shall deliver written notice to Landlord (the "Refusal Exercise Notice") of Tenant's irrevocable exercise of its right of first refusal with respect to all of the Refusal Space set forth in the Refusal Notice (i.e., Tenant may not elect to lease only a portion thereof) at the rent, and upon the other fundamental material economic terms and conditions contained in such Refusal Notice. If Tenant does not deliver the Refusal Exercise Notice to Landlord within such five (5) day period, then Landlord shall be free to negotiate and enter into a lease or lease amendment for such Refusal Space with anyone and on any terms Landlord desires; provided, that prior to entering a lease with a third party tenant on Fundamental Terms which, on a net effective, present value basis, are more than 10% more favorable to the third party tenant

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-8-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

 

 

than the terms contained in the Refusal Notice, Landlord shall first deliver a revised Refusal Notice to Tenant on such more favorable terms in accordance with the procedure set forth above.

 

1.5.2

 

Amendment to Lease. If Tenant timely exercises Tenant's right of first

 

refusal to lease the Refusal Space as set forth herein, Landlord and Tenant shall within thirty (30)

 

days thereafter execute an amendment to this Lease (the "Refusal Space Amendment") for such Refusal Space upon the terms set forth in the Refusal Notice, but otherwise upon the terms and conditions set forth in this Lease and this Section 1.4; provided, however, the term with respect to the Refusal Space shall be coterminous with this Lease and any concessions offered in the Refusal Notice shall be prorated to reflect such term. An otherwise valid exercise of the such right of first refusal shall be fully effective whether or not a lease amendment is executed.

 

1.5.3

 

Termination of Refusal Right. The rights contained in this Section 1.4

 

shall be personal to the Original Tenant and any Permitted Transferee Assignee, and may only be exercised during the initial Lease Term by the Original Tenant or any Permitted Transferee Assignee (and not any other assignee, sublessee or other transferee of Tenant's interest in this

 

Lease) if the Original Tenant has not assigned this Lease to a Transferee (other than a Permitted Transferee Assignee) and has not subleased more than thirty -three percent (33%) of the then- existing Premises to Transferees (other than Permitted Transferees). The right of first refusal granted herein shall terminate as to the particular Refusal Space upon the failure by Tenant to timely exercise its right of first refusal with respect to such portion of the Refusal Space. The right to lease the Refusal Space as provided in this Section 1.4 may not be exercised if, as of the date of the attempted exercise of the right of first refusal by Tenant, or as of the scheduled date of delivery of the Refusal Space to Tenant, Tenant is in breach or default under this Lease. The right of first refusal granted herein shall terminate as to all Refusal Space and thereafter shall be of no further force or effect on the date that is two (2) years prior to the Lease Expiration Date, it being acknowledged by Tenant that such right of first refusal shall be ineffective as to the Refusal Space when it is expected that the lease of such Refusal Space will not commence on or before the date that is two (2) years prior to the initial Lease Expiration Date.

 

ARTICLE 2

 

LEASE TERM; OPTION TERMS

 

2.1

 

Initial Lease Term. The TCCs and provisions of this Lease shall be effective as

 

of the date of this Lease. The term of this Lease (the "Lease Term") shall be as set forth in

 

Section 3.1 of the Summary, shall commence on the date set forth in Section 3.2 of the Summary (the "Lease Commencement Date"), and shall terminate on the date set forth in Section 3.3 of the Summary (the "Lease Expiration Date") unless this Lease is sooner terminated as hereinafter provided. Tenant hereby acknowledges that portions of the Premises are currently occupied by other tenants of the Building. If Landlord is unable for any reason to deliver possession of the Premises to Tenant on any specific date, then Landlord shall not be subject to any liability for its failure to do so, and such failure shall not affect the validity of this Lease or the obligations of Tenant hereunder. For purposes of this Lease, the term "Lease Year" shall mean each consecutive twelve (12) calendar month period during the Lease Term; provided, however, that the first Lease Year shall commence on the Lease Commencement Date and end on the last day of the month in which the first anniversary of the Lease Commencement Date occurs (or if the Lease Commencement Date is the first day of a calendar month, then the first Lease Year shall commence on the Lease Commencement Date and end on the day immediately preceding the first anniversary of the Lease Commencement Date), and the second and each succeeding Lease Year shall commence on the first day of the next calendar month; and further provided that the last Lease Year shall end on the Lease Expiration Date. For purposes of this Lease, the term "Lease Month" shall mean each succeeding calendar month during the Lease Term; provided that the first Lease Month shall commence on the Lease Commencement Date and shall end on the last day of the first (1st) full calendar month of the Lease Term and that the last Lease Month shall expire on the Lease Expiration Date. At any time during the Lease Term, Landlord may deliver to Tenant a notice in the form as set forth in Exhibit C, attached hereto, as a confirmation only of the information set forth therein, which Tenant shall execute (or provide factually corrective comments to) and return to Landlord within twenty (20) days of receipt thereof.

 

2.2

 

Extension Options. Tenant's Extension Options shall be as provided in accordance

 

with, the terms of Exhibit G attached hereto.

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-9-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

ARTICLE 3

 

BASE RENT

 

Tenant shall pay, without prior notice or demand, to Landlord or Landlord's agent at the management office of the Project, or, at Landlord's option, at such other place as Landlord may from time to time designate in writing, by a check for currency which, at the time of payment, is legal tender for private or public debts in the United States of America, base rent ("Base Rent") as set forth in Section 4 of the Summary, payable in equal monthly installments as set forth in Section 4 of the Summary in advance on or before the first day of each and every calendar month during the Lease Term, without any setoff or deduction whatsoever, except to the extent expressly provided in this Lease. In accordance with Section 4 of the Summary, any increases in Base Rent shall occur on the first day of the applicable Lease Month. The parties acknowledge, however, that Tenant shall pay Base Rent for each "calendar month" of the Lease Term (or a prorated portion of a "calendar month", as applicable), even though the first "Lease Month" may pertain to a period longer than one (1) calendar month. The Base Rent for the first two (2) full calendar months of the Lease Term shall be paid at the time of Tenant's execution of this Lease. If any payment of Rent is for a period which is shorter than one month, the Rent for any such fractional month shall accrue on a daily basis during such fractional month and shall total an amount equal to the product of (i) a fraction, the numerator of which is the number of days in such fractional month and the denominator of which is the actual number of days occurring in such calendar month, and (ii) the then-applicable Monthly Installment of Base Rent. All other payments or adjustments required to be made under the TCCs of this Lease that require proration on a time basis shall be prorated on the same basis.

 

ARTICLE 4

 

ADDITIONAL RENT

 

4.1

 

In General. In addition to paying the Base Rent specified in Article 3 of this Lease,

 

Tenant shall pay "Tenant's Share" of the annual "Direct Expenses," as those terms are defined in Sections 4.2.6 and 4.2.2, respectively, of this Lease, which are in excess of the amount of Direct Expenses applicable to the "Base Year," as that term is defined in Section 4.2.1, below; provided, however, that in no event shall any decrease in Direct Expenses for any "Expense Year" (as that term is defined in Section 4.2.3, below) below Direct Expenses for the Base Year entitle Tenant to any decrease in Base Rent or any credit against sums due under this Lease. Such payments by Tenant, together with any and all other amounts payable by Tenant to Landlord pursuant to the

 

TCCs of this Lease, are hereinafter collectively referred to as the "Additional Rent," and the Base Rent and the Additional Rent are herein collectively referred to as "Rent." All amounts due under this Article 4 as Additional Rent shall be payable for the same periods and in the same manner as the Base Rent; provided, however, the parties hereby acknowledge that the first monthly installment of Tenant's Share of any "Estimated Excess," as that term is set forth in, and pursuant to the terms and conditions of, Section 4.4.2 of this Lease, shall first be due and payable for the calendar month occurring immediately following the expiration of the Base Year. Without limitation on other obligations of Tenant which survive the expiration of the Lease Term, the obligations of Tenant to pay the Additional Rent provided for in this Article 4 shall survive the expiration of the Lease Term.

 

4.2

 

Definitions of Key Terms Relating to Additional Rent. As used in this Article 4,

 

the following terms shall have the meanings hereinafter set forth:

 

4.2.1

 

"Base Year" shall mean the period set forth in Section 5 of the Summary.

 

4.2.2

 

"Direct Expenses" shall mean "Operating Expenses" and "Tax Expenses."

 

4.2.3

 

"Expense Year" shall mean each calendar year, including the Base Year,

 

in which any portion of the Lease Term falls, through and including the calendar year in which the

 

Lease Term expires, provided that Landlord, upon notice to Tenant, may change the Expense Year from time to time to any other twelve (12) consecutive month period, and, in the event of any such change, Tenant's Share of Direct Expenses shall be equitably adjusted for any Expense Year involved in any such change.

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-10-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

4.2.4

 

"Operating Expenses" shall mean all expenses, costs and amounts of

 

every kind and nature which Landlord pays, accrues, or amortizes during any Expense Year

 

because of or in connection with the ownership, management, maintenance, security, repair, replacement, renovation, restoration or operation of the Project, or any portion thereof, in accordance with sound real estate management and accounting practices, consistently applied. Without limiting the generality of the foregoing, Operating Expenses shall specifically include any and all of the following: (i) the cost of supplying all utilities (but excluding the cost of electricity services consumed in the Premises and the premises of other tenants of the Building and any other buildings in the Project (since Tenant is separately paying for the cost of electricity services pursuant to Section 6.1.2 of the Lease)), the cost of operating, repairing, replacing, maintaining, renovating and restoring the existing utility, telephone, mechanical, sanitary, storm drainage, and elevator systems, and the cost of maintenance and service contracts in connection therewith;

(ii) the cost of licenses, certificates, permits and inspections required to be obtained after the Lease Commencement Date and the cost of contesting any governmental enactments which may increase Operating Expenses, and the costs incurred in connection with a governmentally mandated transportation system management program or similar program; (iii) the cost of all insurance carried by Landlord in connection with the Project; (iv) the cost of landscaping, relamping, and all supplies, tools, equipment and materials used in the operation, repair and maintenance of the Project, or any portion thereof; (v) costs incurred in connection with the parking areas servicing the Project; (vi) a management fee and other costs, including management fees, consulting fees, legal fees and accounting fees, of all contractors and consultants in connection with the management, operation, maintenance, replacement, renovation, repair and restoration of the Project; (vii) payments under any equipment rental agreements and the fair rental value of any management office space in the Project; (viii) wages, salaries and other compensation and benefits, including taxes levied thereon, of all persons (other than persons generally considered to be higher in rank than the position of "Senior Asset Manager") engaged in the operation, maintenance and security of the Project; (ix) costs under any instrument pertaining to the sharing of costs by the Project; (x) operation, repair, maintenance, renovation, replacement and restoration of all systems and equipment and components thereof of the Project; (xi) the cost of janitorial, alarm, security and other services, replacement, renovation, restoration and repair of wall and floor coverings, ceiling tiles and fixtures in common areas, maintenance, replacement, renovation, repair and restoration of curbs and walkways, repair to roofs and re-roofing; (xii) amortization of the cost of acquiring or the rental expense of personal property used in the maintenance, operation and repair of the Project, or any portion thereof (which amortization calculation shall include interest at the "Interest Rate," as that term is set forth in Article 25 of this Lease); (xiii) the cost of capital improvements or other costs incurred in connection with the Project (A) which are intended to effect economies in the operation or maintenance of the Project, or any portion thereof, (B) that are required to comply with present or anticipated conservation programs mandated by Applicable Law, (C) which are replacements or modifications of nonstructural items located in the Common Areas required to keep the Common Areas in good order or condition, (D) that are required under any governmental law or regulation by a federal, state or local governmental agency, except for capital repairs, replacements or other improvements to remedy a condition existing prior to the Lease Commencement Date which an applicable governmental authority, if it had knowledge of such condition prior to the Lease Commencement Date, would have then required to be remedied pursuant to then-current governmental laws or regulations in their form existing as of the Lease Commencement Date and pursuant to the then-current interpretation of such governmental laws or regulations by the applicable governmental authority as of the Lease Commencement Date, or

(E) that relate to the safety or security of the Project; provided, however, that any capital expenditure shall be amortized with interest at the Interest Rate over its useful life as Landlord shall reasonably determine in accordance with sound real estate management and accounting practices reasonably consistent with those used by owners of Comparable Buildings, consistently applied, or (Z) with respect to those items included under item (A) above, their recovery/payback period as Landlord shall reasonably determine in accordance with sound real estate management and accounting practices reasonably consistent with those used by owners of Comparable Buildings, consistently applied; (xiv) costs, fees, charges or assessments imposed by, or resulting from any mandate imposed on Landlord by, any federal, state or local government for fire and police protection, trash removal, community services, or other services which do not constitute "Tax Expenses" as that term is defined in Section 4.2.5, below; (xv) payments under any easement, license, operating agreement, declaration, restrictive covenant, or instrument pertaining to the sharing of costs by the Project and (xvi) costs of any additional services not provided to the Project as of the Lease Commencement Date but which are thereafter provided by Landlord in connection

 

 

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-11-

 

 

 

 

 

 

 

 


 

 

with its prudent management of the Project. Notwithstanding the foregoing, for purposes of this Lease, Operating Expenses shall not, however, include:

 

(a)

 

costs, including marketing costs, legal fees, space planners'

 

fees, advertising and promotional expenses, and brokerage fees incurred in connection with the

 

original construction or development, or original, past, or future leasing of the Project, and costs, including permit, license and inspection costs, incurred with respect to the installation of improvements made for new tenants initially occupying space in the Project after the Lease Commencement Date or incurred in renovating or otherwise improving, decorating, painting or redecorating vacant space for tenants or other occupants of the Project (excluding, however, such costs relating to any common areas of the Project or parking facilities);

 

(b)

 

except as set forth in items (xi), (xii), (xiii), and (xiv) above

 

and to the extent needed to repair or maintain existing improvements, depreciation, interest and principal payments on mortgages and other debt costs, if any, penalties and interest;

 

(c)

 

costs for which the Landlord is reimbursed by any tenant or

 

occupant of the Project or by insurance by its carrier or any tenant's carrier or by anyone else (except to the extent of deductibles), and electric power costs for which any tenant directly contracts with the local public service company;

 

(d)

 

any bad debt loss, rent loss, or other reserves;

 

(e)

 

costs associated with the operation of the business of the

 

partnership or entity which constitutes the Landlord, as the same are distinguished from the costs

 

of operation of the Project (which shall specifically include, but not be limited to, accounting costs associated with the operation of the Project). Costs associated with the operation of the business of the partnership or entity which constitutes the Landlord include costs of partnership accounting and legal matters, costs of defending any lawsuits with any mortgagee (except as the actions of the Tenant may be in issue), costs of selling, syndicating, financing, mortgaging or hypothecating any of the Landlord's interest in the Project, and costs incurred in connection with any disputes between Landlord and its employees, between Landlord and Project management, or between Landlord and other tenants or occupants, or between Landlord and any third party, and Landlord's general corporate overhead and general and administrative expenses;

 

(f)

 

the wages and benefits of any employee who does not devote

 

substantially all of his or her employed time to the Project unless such wages and benefits are

 

prorated to reflect time spent on operating and managing the Project vis-a-vis time spent on matters unrelated to operating and managing the Project; provided, that in no event shall Operating Expenses for purposes of this Lease include wages and/or benefits attributable to personnel above the level of Senior Asset Manager;

 

(g)

 

amount paid as ground rental for the Project by the Landlord;

 

(h)

 

overhead and profit increment paid to the Landlord or to

 

subsidiaries or affiliates of the Landlord for services in the Project to the extent the same exceeds

 

the costs of such services rendered by qualified, first-class unaffiliated third parties on a competitive basis;

 

(i)

 

any compensation paid to clerks, attendants or other persons

 

in commercial concessions operated by the Landlord, provided that any compensation paid to any concierge or parking attendants at the Project shall be includable as an Operating Expense;

 

(j)

 

rentals and other related expenses incurred in leasing air

 

conditioning systems, elevators or other equipment which if purchased the cost of which would be

 

excluded from Operating Expenses as a capital cost, except equipment not affixed to the Project which is used in providing janitorial or similar services and, further excepting from this exclusion such equipment rented or leased to remedy or ameliorate an emergency condition in the Project;

 

(k)

 

all items and services for which Tenant or any other tenant

 

in the Project reimburses Landlord (or which Landlord could had obtained reimbursement for it if

 

had used commercially reasonable efforts to obtain such reimbursement) or which Landlord provides selectively to one or more tenants (other than Tenant) without reimbursement;

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-12-

 

 

 

 


 

 

(l)

 

costs, other than those incurred in ordinary maintenance and

 

repair, for sculpture, paintings, fountains or other objects of art;

 

(m)

 

any costs expressly excluded from Operating Expenses

 

elsewhere in this Lease;

 

(n)

 

rent for any office space occupied by Project management

 

personnel to the extent the size or rental rate of such office space exceeds the size or fair market

 

rental value of office space occupied by management personnel of the Comparable Buildings, with adjustment where appropriate for the size of the applicable project;

 

(o)

 

costs to the extent arising from the gross negligence or

 

willful misconduct of Landlord or its agents, employees, vendors, contractors, or providers of materials or services; and

 

(p)

 

costs incurred to comply with laws relating to the removal of

 

Hazardous Material which was in existence in the Building or on the Project prior to the Lease

 

Commencement Date; and costs incurred to remove, remedy, contain, or treat any Hazardous Material, which hazardous material or substance is brought into the Building or onto the Project after the date hereof by Landlord, any Landlord Parties or any other tenant of the Project;

 

(q)

 

fees payable by Landlord for management of the Project in

 

excess of three percent (3%) (the "Management Fee Cap") of Landlord's gross rental revenues,

 

adjusted and grossed up to reflect a one hundred percent (100%) occupancy of the Project with all tenants paying rent, including base rent, pass-throughs, and parking fees (but excluding the cost of after-hours services or utilities and the amount of the management fee) from the Project for any calendar year or portion thereof;

 

(r)     costs of repairs or other work occasioned by fire, windstorm or other casualty (other than those amounts within the deductible limits of insurance policies actually carried by Landlord, which amounts shall be includable as Operating Expenses (subject to clause (t) below) so long as such deductibles are within the generally prevailing range of deductibles to policies carried by landlords of the Comparable Buildings and this Lease is not terminated as a result of such casualty) which are covered by Landlord’s insurance policies or would be covered if Landlord had maintained insurance in accordance with this Lease;

 

(s)

 

reserves for future expenses;

 

(t)

 

earthquake insurance deductibles in an amount greater than

 

$1.00 per rentable square foot of the Project (the Annual Limit”) in any year (provided, however, that, notwithstanding anything else herein to the contrary, if, for any occurrence, the earthquake insurance deductible exceeds the Annual Limit, then, after such deductible is included (up to the Annual Limit) in Operating Expenses for the applicable calendar year, such excess may be included (up to the Annual Limit) in Operating Expenses for the immediately succeeding calendar year, and any portion of such excess that is not so included in Operating Expenses for such

 

immediately succeeding calendar year may be included (up to the Annual Limit) in Operating Expenses for the next succeeding calendar year, and so on with respect to each subsequent calendar year);

 

(u)

 

The cost of repairing any damage caused by hazards or

 

casualty described in (i) Landlord's policies of insurance actually carried by Landlord, (ii) policies

 

of insurance which Landlord is required to maintain pursuant to this Lease, and (iii) extended coverage endorsements covering the Project to the extent Landlord is compensated through proceeds of insurance;

 

(v) costs incurred by Landlord to furnish any particular work or service for other tenants which Landlord is not furnishing to Tenant as a result of Tenant undertaking to perform such work or service in lieu of performance thereof by Landlord;

 

(w)

 

Costs arising from latent defects in the base, shell or core of

 

the Building or improvements installed by Landlord or repair thereof, including costs to correct any defect in the delivery condition of the Building specified in Section 1.1.1 above;

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-13-

 

 

 

 

 

 


 

 

(x)

 

All costs or expenses (including but not limited to fines,

 

penalties, interest and legal fees) incurred due to the violation by Landlord, its employees, agents, contractors or assigns, or any tenant (other than Tenant) or other occupant of the Project, of the terms and conditions of any lease or other occupancy agreement pertaining to the Project, or of any covenants, conditions, restrictions, easements and similar private contracts;

 

(y)

 

costs incurred in connection with disputes between Landlord

 

and any third party;

 

(z)

 

costs   arising   from   Landlord’s   charitable   or   political

 

contributions;

 

(aa)

 

interest, fines or penalties assessed as a result of Landlord’s

 

failure to make payments in a timely manner, unless such failure is caused by Tenant;

 

(bb)

 

entertainment,   dining,   travel,   club,   trade   or   industry

 

organization expenses;

 

(cc)

 

Tax Expenses or any item expressly excluded from Tax

 

Expenses; and

 

(dd)

 

costs for the operation, repair, maintenance or replacement

 

of any other building in the Project other than with respect to any Project Common Areas located within any such building.

 

If Landlord is not furnishing any particular work or service (the cost of which, if performed by Landlord, would be included in Operating Expenses) to a tenant who has undertaken to perform such work or service in lieu of the performance thereof by Landlord, Operating Expenses shall be deemed to be increased by an amount equal to the additional Operating Expenses which would reasonably have been incurred during such period by Landlord if it had at its own expense furnished such work or service to such tenant. If the Project is not fully occupied during all or a portion of any Expense Year (including, without limitation, if any portion of the Project is unleased or is leased, but is not then being used by a tenant in the ordinary course of its business), Landlord may elect to make an appropriate adjustment to the components of Direct Expenses for such Expense Year to determine the amount of Direct Expenses that would have been incurred had the Project been fully occupied; and the amount so determined shall be deemed to have been the

 

amount of Direct Expenses for such Expense Year.

 

For purposes hereof, cost savings in

 

components of Operating Expenses arising by reason of the cessation of use by tenants at the

 

Project due to Casualty (as defined in Section 11.1 below), Force Majeure (as defined in Section

29.16 below), or other extraordinary circumstances are considered variable Operating Expenses that shall be grossed up in Operating Expenses in any Expense Year (including the Base Year) in which such savings occur. If Operating Expenses for the Base Year include amortized costs, or costs (including, but not limited to, costs of insurance, personnel, and increased or new services) relating to extraordinary circumstances, including, but not limited to, Casualty, Force Majeure, boycotts, strikes, conservation surcharges, embargoes or shortages, then at such time as such costs are no longer applicable, the increased Operating Expenses attributable thereto shall be excluded from the Base Year Operating Expenses. In no event shall each of the components of Direct Expenses for any Expense Year related to utility costs, Tax Expenses, Project services costs or Project insurance costs be less than each of the corresponding components of Direct Expenses related to such utility costs, Tax Expenses, Project services costs and Project insurance costs in the Base Year. Except for the management fee permitted pursuant to Section 4.2.4 above, Landlord shall not (i) make a profit by charging items to Operating Expenses that are otherwise also charged separately to others and (ii) subject to Landlord's right to adjust the components of Operating Expenses described above in this paragraph, collect Operating Expenses from Tenant and all other tenants in the Building in an amount in excess of what Landlord incurs for the items included in Operating Expenses.

 

 

4.2.5Taxes.

 

4.2.5.1

 

"Tax Expenses" shall mean all federal, state, county, or local

 

governmental or municipal taxes, fees, charges or other impositions of every kind and nature,

 

whether general, special, ordinary or extraordinary, (including, without limitation, real estate taxes, general and special assessments, transit taxes, leasehold taxes or taxes based upon the receipt of

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-14-

 

 

 

 

 

 


 

 

rent, including gross receipts or sales taxes applicable to the receipt of rent, unless required to be paid by Tenant, personal property taxes imposed upon the fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances, furniture and other personal property used in connection with the Project, or any portion thereof), which shall be paid or accrued during any Expense Year (without regard to any different fiscal year used by such governmental or municipal authority) because of or in connection with the ownership, leasing and operation of the Project, or any portion thereof (including, without limitation, the land upon which the Building and the parking facility adjacent to the Building are located).

 

4.2.5.2

 

Tax Expenses shall include, without limitation: (i) Any tax on the

 

rent, right to rent or other income from the Project, or any portion thereof, or as against the business

 

of leasing the Project, or any portion thereof; (ii) Any assessment, tax, fee, levy or charge in addition to, or in substitution, partially or totally, of any assessment, tax, fee, levy or charge previously included within the definition of real property tax, it being acknowledged by Tenant and Landlord that Proposition 13 was adopted by the voters of the State of California in the June 1978 election ("Proposition 13") and that assessments, taxes, fees, levies and charges may be imposed by governmental agencies for such services as fire protection, street, sidewalk and road maintenance, refuse removal and for other governmental services formerly provided without charge to property owners or occupants, and, in further recognition of the decrease in the level and quality of governmental services and amenities as a result of Proposition 13, Tax Expenses shall also include any governmental or private assessments or the Project's contribution towards a governmental or private cost-sharing agreement for the purpose of augmenting or improving the quality of services and amenities normally provided by governmental agencies; (iii) Any assessment, tax, fee, levy, or charge allocable to or measured by the area of the Premises or the Rent payable hereunder, including, without limitation, any business or gross income tax or excise tax with respect to the receipt of such rent, or upon or with respect to the possession, leasing, operating, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises, or any portion thereof; (iv) Any assessment, tax, fee, levy or charge, upon this transaction or any document to which Tenant is a party, creating or transferring an interest or an estate in the Premises; and (v) all of the real estate taxes and assessments imposed upon or with respect to the Building and all of the real estate taxes and assessments imposed on the land and improvements comprising the Project.

 

4.2.5.3

 

Any costs and expenses (including, without limitation, reasonable

 

attorneys' fees) incurred in attempting to protest, reduce or minimize Tax Expenses shall be

 

included in Tax Expenses in the Expense Year such expenses are paid. Except as set forth in Section 4.2.5.4, below, refunds of Tax Expenses shall be credited against Tax Expenses and refunded to Tenant regardless of when received, based on the Expense Year to which the refund is applicable, provided that in no event shall the amount to be refunded to Tenant for any such Expense Year exceed the total amount paid by Tenant as an increase in Tax Expenses under this Article 4 for such Expense Year. If Tax Expenses for any period during the Lease Term or any extension thereof are increased after payment thereof for any reason, including, without limitation, error or reassessment by applicable governmental or municipal authorities, Tenant shall pay Landlord within thirty (30) days following demand Tenant's Share of any such increased Tax Expenses included by Landlord as Building Tax Expenses pursuant to the TCCs of this Lease. Notwithstanding anything to the contrary contained in this Section 4.2.5 (except as set forth in Section 4.2.5.2, above), there shall be excluded from Tax Expenses (i) all excess profits taxes, franchise taxes, gift taxes, capital stock taxes, inheritance and succession taxes, estate taxes, documentary transfer taxes, federal and state income taxes, and other taxes to the extent applicable to Landlord's general or net income (as opposed to rents, receipts or income attributable to operations at the Project), (ii) any items included as Operating Expenses, (iii) any items paid by Tenant under Section 4.5 of this Lease, (iv) tax penalties incurred as a result of Landlord’s negligence, willful misconduct, or inability, unwillingness or failure to make payments when due,

(v) taxes payable due to any superior lease affecting the Project, (vi) taxes or assessments imposed on land and improvements other than the Project, and (vii) any tax or assessment expense or any increase therein (a) in excess of the amount which would be payable if such tax or assessment expense were paid in installments over the longest permitted term or (b) resulting from the improvement of any of the Project for the sole use of other occupants. Notwithstanding anything to the contrary set forth in this Lease, only Landlord may institute proceedings to reduce Tax Expenses and the filing of any such proceeding by Tenant without Landlord's consent shall

 

 

constitute an

 

Event

 

of

 

Default

 

by

 

Tenant

 

under this Lease.Notwithstanding the foregoing,

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-15-

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

Landlord shall not be obligated to file any application or institute any proceeding seeking a reduction in Tax Expenses.

 

4.2.5.4

 

Notwithstanding anything to the contrary set forth in this Lease,

 

the amount of Tax Expenses for the Base Year and any Expense Year shall be calculated without taking into account any decreases in real estate taxes obtained in connection with Proposition 8, and, therefore, the Tax Expenses in the Base Year and/or an Expense Year may be greater than those actually incurred by Landlord, but shall, nonetheless, be the Tax Expenses due under this Lease; provided that (i) any costs and expenses incurred by Landlord in securing any Proposition 8

 

reduction shall not be included in Direct Expenses for purposes of this Lease, and (ii) tax refunds under Proposition 8 shall not be deducted from Tax Expenses, but rather shall be the sole property of Landlord. Landlord and Tenant acknowledge that this Section 4.2.5.4 is not intended to in any way affect (A) the inclusion in Tax Expenses of the statutory two percent (2.0%) annual maximum allowable increase in Tax Expenses (as such statutory increase may be modified by subsequent legislation), or (B) the inclusion or exclusion of Tax Expenses pursuant to the terms of Proposition 13, which shall be governed pursuant to the terms of Sections 4.2.5.1 through 4.2.5.3, above.

 

4.2.6

 

"Tenant's Share" shall mean the percentage set forth in Section 6 of the

 

Summary.

 

4.3

 

Allocation of Direct Expenses.

 

4.3.1 Method of Allocation. The parties acknowledge that the Building is a part of a multi-building project and that the costs and expenses incurred in connection with the Project (i.e. the Direct Expenses) should be shared between the tenants of the Building and the tenants of the other buildings in the Project. Accordingly, as set forth in Section 4.2 above, Direct Expenses (which consists of Operating Expenses and Tax Expenses) are determined annually for the Project as a whole, and a portion of the Direct Expenses, which portion shall be determined by Landlord on an equitable basis, shall be allocated to the tenants of the Building (as opposed to the tenants of any other buildings in the Project) and such portion shall be the Direct Expenses for purposes of this Lease. Such portion of Direct Expenses allocated to the tenants of the Building shall include all Direct Expenses attributable solely to the Building and an equitable portion of the Direct Expenses attributable to the Project as a whole.

 

4.3.1

 

Cost Pools. Landlord shall have the right, from time to time, to equitably

 

allocate some or all of the Direct Expenses for the Project among different portions or occupants

 

of the Project (the "Cost Pools"), in Landlord's reasonable discretion, so long as such Cost Pools are consistently applied. Such Cost Pools may include, but shall not be limited to, the office space tenants of a building of the Project or of the Project, and the retail space tenants of a building of the Project or of the Project. The Direct Expenses within each such Cost Pool shall be allocated and charged to the tenants within such Cost Pool in an equitable manner.

 

4.4

 

Calculation and Payment of Additional Rent. If for any Expense Year ending

 

or commencing within the Lease Term, Tenant's Share of Direct Expenses for such Expense Year exceeds Tenant's Share of Direct Expenses applicable to the Base Year, then Tenant shall pay to

 

Landlord, in the manner set forth in Section 4.4.1, below, and as Additional Rent, an amount equal to the excess (the "Excess").

 

4.4.1 Statement of Actual Direct Expenses and Payment by Tenant. Landlord shall give to Tenant following the end of each Expense Year, a statement (the "Statement") which shall state in general major categories the Direct Expenses incurred or accrued for the particular Expense Year, and which shall indicate the amount of the Excess. Landlord shall use commercially reasonable efforts to deliver such Statement to Tenant on or before May 1 following the end of the Expense Year to which such Statement relates. Upon receipt of the Statement for each Expense Year commencing or ending during the Lease Term, if an Excess is present, Tenant shall pay, within thirty (30) days after receipt of the Statement, the full amount of the Excess for such Expense Year, less the amounts, if any, paid during such Expense Year as "Estimated Excess," as that term is defined in Section 4.4.2, below, and if Tenant paid more as Estimated Excess than the actual Excess, Tenant shall receive a credit in the amount of Tenant's overpayment against Rent next due under this Lease or Landlord may apply such overpayment against any unpaid Rent. The failure of Landlord to timely furnish the Statement for any Expense Year shall not prejudice Landlord or Tenant from enforcing its rights under this Article 4. Even

 

though the

 

Lease

 

Term

 

has

 

expired

 

and

 

Tenant has vacated the Premises, when the final

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-16-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

determination is made of Tenant's Share of Direct Expenses for the Expense Year in which this Lease terminates, if an Excess is present, Tenant shall, within thirty (30) days after receipt of the Statement, pay to Landlord such amount, and if Tenant paid more as Estimated Excess than the actual Excess, Landlord shall, within thirty (30) days, deliver a check payable to Tenant in the amount of the overpayment or apply such overpayment against any unpaid Rent. The provisions of this Section 4.4.1 shall survive the expiration or earlier termination of the Lease Term. Notwithstanding the immediately preceding sentence, Tenant shall not be responsible for Tenant's Share of any Direct Expenses attributable to any Expense Year which are first billed to Tenant more than two (2) calendar years after the Lease Expiration Date, provided that in any event Tenant shall be responsible for Tenant's Share of Direct Expenses which (x) were levied by any governmental authority or by any public utility companies, and (y) Landlord had not previously received an invoice therefor and which are currently due and owing (i.e., costs invoiced for the first time regardless of the date when the work or service relating to this Lease was performed), at any time following the Lease Expiration Date which are attributable to any Expense Year.

 

4.4.2

 

Statement of Estimated Direct Expenses.   In addition, Landlord shall

 

give Tenant a yearly expense estimate statement (the "Estimate Statement") which shall set forth in general major categories Landlord's reasonable estimate (the "Estimate") of what the total amount of Direct Expenses for the then-current Expense Year shall be and the estimated excess (the "Estimated Excess") as calculated by comparing the Direct Expenses for such Expense Year,

 

which shall be based upon the Estimate, to the amount of Direct Expenses for the Base Year. Landlord shall use commercially reasonable efforts to deliver such Estimate Statement to Tenant on or before May 1 of the Expense Year to which such Estimate Statement relates. The failure of Landlord to timely furnish the Estimate Statement for any Expense Year shall not preclude Landlord from enforcing its rights to collect any Additional Rent under this Article 4, nor shall Landlord be prohibited from revising any Estimate Statement or Estimated Excess theretofore delivered to the extent necessary. Thereafter, Tenant shall pay, within thirty (30) days after receipt of the Estimate Statement, a fraction of the Estimated Excess for the then-current Expense Year (reduced by any amounts paid pursuant to the second to last sentence of this Section 4.4.2). Such fraction shall have as its numerator the number of months which have elapsed in such current Expense Year, including the month of such payment, and twelve (12) as its denominator. Until a new Estimate Statement is furnished (which Landlord shall have the right to deliver to Tenant at any time), Tenant shall pay monthly, with the monthly Base Rent installments, an amount equal to one-twelfth (1/12) of the total Estimated Excess set forth in the previous Estimate Statement delivered by Landlord to Tenant. Throughout the Lease Term Landlord shall maintain records with respect to Direct Expenses in accordance with sound real estate management and accounting practices, consistently applied. Landlord shall not revise any Estimate Statement more than one

(1) time per Expense Year.

 

 

4.5

 

Taxes and Other Charges for Which Tenant Is Directly Responsible.

 

4.5.1

 

Tenant shall be liable for and shall pay before delinquency, taxes levied

 

against Tenant's equipment, furniture, fixtures and any other personal property located in or about the Premises. If any such taxes on Tenant's equipment, furniture, fixtures and any other personal

 

property are levied against Landlord or Landlord's property or if the assessed value of Landlord's property is increased by the inclusion therein of a value placed upon such equipment, furniture, fixtures or any other personal property and if Landlord pays the taxes based upon such increased assessment, which Landlord shall have the right to do regardless of the validity thereof but only under proper protest if requested by Tenant, Tenant shall within thirty (30) days of Landlord’s demand repay to Landlord the taxes so levied against Landlord or the proportion of such taxes resulting from such increase in the assessment, as the case may be.

 

4.5.2

 

If the improvements in the Premises, whether installed and/or paid for by

 

Landlord or Tenant and whether or not affixed to the real property so as to become a part thereof,

 

are assessed for real property tax purposes at a valuation higher than the valuation at which improvements conforming to Landlord's "building standard" in other space in the Building are assessed, then the Tax Expenses levied against Landlord or the property by reason of such excess assessed valuation shall be deemed to be taxes levied against personal property of Tenant and shall be governed by the provisions of Section 4.5.1, above.

 

4.5.3

 

Notwithstanding any contrary provision herein, Tenant shall pay prior to

 

delinquency any (i) rent tax or sales tax, tax, service tax, transfer tax or value added tax, or any

 

other applicable tax on the rent or services herein or otherwise respecting this Lease, (ii) taxes

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-17-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

assessed upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy by Tenant of the Premises or any portion of the Project, including the Project parking facility; or (iii) taxes assessed upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises.

 

4.6

 

Landlord's Records.   Upon Tenant's written request given not more than one

 

hundred eighty (180) days after Tenant's receipt of a Statement for a particular Expense Year, and

 

provided that no Event of Default is then occurring, Landlord shall furnish Tenant with such reasonable supporting documentation pertaining to the calculation of the Excess set forth in the

 

Statement as Tenant may reasonably request.

 

Landlord shall provide said documentation

 

pertaining to the relevant Excess to Tenant within sixty (60) days after Tenant's written request

 

therefor. Within one hundred eighty (180) days after receipt of a Statement by Tenant (the "Audit Period"), if Tenant disputes the amount of the Excess set forth in the Statement, an independent certified public accountant (which accountant (A) is a member of a nationally or regionally recognized certified public accounting firm which has previous experience in auditing financial operating records of landlords of office buildings, (B) shall not already be providing primary accounting and/or lease administration services to Tenant and shall not have provided primary accounting and/or lease administration services to Tenant in the past three (3) years, (C) is not working on a contingency fee basis [i.e., Tenant must be billed based on the actual time and materials that are incurred by the certified public accounting firm in the performance of the audit], and (D) shall not currently or in the future be providing accounting and/or lease administration services to another tenant in the Building and/or the Project in connection with a review or audit by such other tenant of similar expense records), designated and paid for by Tenant, may, after reasonable notice to Landlord and at reasonable times, audit Landlord's records with respect to the Excess set forth in the Statement at Landlord's corporate offices, provided that (i) no Event of Default is then occurring under this Lease, (ii) Tenant has paid all amounts required to be paid under the applicable Estimate Statement and Statement, and (iii) a copy of the audit agreement between Tenant and its particular certified public accounting firm has been delivered to Landlord prior to the commencement of the audit. In connection with such audit, Tenant and Tenant's certified public accounting firm must agree in advance to follow Landlord's reasonable rules and procedures regarding an audit of the aforementioned Landlord records, and shall execute a

 

commercially reasonable confidentiality agreement regarding such audit.

 

Any audit report

 

prepared by Tenant's certified public accounting firm shall be delivered concurrently to Landlord and Tenant within the Audit Period. Tenant's failure to audit the amount of the Excess set forth in any Statement within the Audit Period shall be deemed to be Tenant's approval of such Statement

 

and Tenant, thereafter, waives the right or ability to audit the amounts set forth in such Statement. If after such audit, Tenant still disputes such Excess, an audit to determine the proper amount shall be made, at Tenant's expense, by an independent certified public accountant (the "Accountant") selected by Landlord and subject to Tenant's reasonable approval; provided that if such audit by the Accountant proves that the Direct Expenses in the subject Expense Year were overstated by more than five percent (5%), then the cost of the Accountant and the cost of such audit shall be paid for by Landlord. Tenant hereby acknowledges that Tenant's sole right to audit Landlord's records and to contest the amount of Direct Expenses payable by Tenant shall be as set forth in this Section 4.6, and Tenant hereby waives any and all other rights pursuant to applicable law to audit such records and/or to contest the amount of Direct Expenses payable by Tenant.

 

ARTICLE 5

 

USE OF PREMISES

 

5.1

 

Permitted Use. Tenant may use the Premises solely for the Permitted Use set forth

 

in Section 7 of the Summary and Tenant shall not use or permit the Premises or the Project to be

 

used by any persons under its control for any other purpose or purposes whatsoever without the prior written consent of Landlord, which may be withheld in Landlord's sole and absolute discretion.

 

5.2

 

Prohibited Uses.The uses prohibited under this Lease shall include, without

 

limitation, use of the Premises or a portion thereof for (i) offices of any agency or bureau of the

 

United States or any state or political subdivision thereof; (ii) offices or agencies of any foreign governmental or political subdivision thereof; (iii) offices of any health care professionals or service organization; (iv) schools or other training facilities which are not ancillary to corporate, executive or professional office use; (v) retail or restaurant uses; or (vi) communications firms

 

such as radio and/or television stations.

 

Tenant further covenants and agrees that it shall not use,

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-18-

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

or suffer or permit any person or persons under its control to use, the Premises or any part thereof for any use or purpose contrary to the rules and regulations promulgated by Landlord from time to time ("Rules and Regulations"), the current set of which (as of the date of this Lease) is attached to this Lease as Exhibit D; or in violation of the laws of the United States of America, the State of California, or the ordinances, regulations or requirements of the local municipal or county governing body or other lawful authorities having jurisdiction over the Project, including, without limitation, any such laws, ordinances, regulations or requirements relating to hazardous materials or substances, as those terms are defined by applicable laws now or hereafter in effect; provided, however, Landlord shall not enforce, change or modify the Rules and Regulations in a discriminatory manner and Landlord agrees that the Rules and Regulations shall not be unreasonably modified or enforced in a manner which will (x) unreasonably interfere with the normal and customary conduct of Tenant's business or Tenant rights of access, or (y) or otherwise decrease Tenant’s rights, or increase Tenant’s obligations hereunder (other than on a de minimis basis). Tenant shall not do or permit any person or persons under its control to do anything in or about the Premises which will in any way obstruct or interfere with the rights of other tenants or occupants of the Building or Project, or injure or annoy them or use or allow the Premises to be used for any unlawful purpose, nor shall Tenant cause, maintain or permit any nuisance in, on or about the Premises.

 

5.3

 

Density. Tenant's use shall not result in an occupancy density for the Premises

 

which is greater than eight (8) persons per each one thousand (1,000) rentable square foot of the

 

Premises (or such lesser density as is permitted by Applicable Laws). Landlord makes no representation or warranty that the Base Building, the Common Areas or the Premises will accommodate any particular density or that any particular density is permitted by Applicable Law or zoning requirements. Furthermore, Landlord shall not be obligated to make any changes to the Base Building or Common Areas to accommodate Tenant's occupancy density.

 

5.4

 

CC&Rs.

 

Tenant shall comply with all recorded covenants, conditions, and

 

restrictions currently affecting the Project. Additionally, Tenant acknowledges that the Project

 

may be subject to any future covenants, conditions, and restrictions (the "CC&Rs") which Landlord, in Landlord's discretion, deems reasonably necessary or desirable, and Tenant agrees that this Lease shall be subject and subordinate to such CC&Rs; provided, however, the CC&Rs shall not (i) adversely affect Tenant's rights under this Lease, (ii) adversely affect Tenant's use of the Premises for the Permitted Use, or (iii) increase Tenant's monetary obligations under this Lease, in more than a de minimis manner. Landlord shall have the right to require Tenant to execute and acknowledge, within fifteen (15) business days of a request by Landlord, a "Recognition of Covenants, Conditions, and Restriction," in a form substantially similar to that attached hereto as Exhibit F, agreeing to and acknowledging the CC&Rs.

 

ARTICLE 6

 

SERVICES AND UTILITIES

 

6.1

 

Standard Tenant Services. Landlord shall provide the following services on all

 

days (unless otherwise stated below) during the Lease Term.

 

6.1.1

 

HVAC. Subject to reasonable changes implemented by Landlord and all

 

governmental rules, regulations and guidelines applicable thereto, Landlord shall provide heating,

 

ventilation and air conditioning ("HVAC") when necessary for normal comfort for the Permitted Use in the Premises. Tenant shall operate the HVAC in a first-class manner materially consistent with the guidelines and specifications for such HVAC; provided, that, there will be no restriction on the hours of operation of such HVAC.

 

6.1.2

 

Electricity.

 

Landlord shall provide adequate electrical wiring and

 

facilities for connection to Tenant's lighting fixtures and incidental use equipment, provided

 

that the connected electrical load of the incidental use equipment does not exceed the capacity of the electrical service.

 

6.1.3

 

Lighting. As part of Operating Expenses, Landlord shall replace lamps,

 

starters and ballasts for Building standard lighting fixtures within the Premises. In addition, Tenant

 

shall bear the cost of replacement of lamps, starters and ballasts for non-Building standard lighting fixtures within the Premises.

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-19-

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

6.1.4

 

Water. Landlord shall provide city water from the regular Building outlets

 

for drinking, lavatory and toilet purposes in the Building Common Areas.

 

6.1.5

 

Janitorial.Landlord shall provide janitorial services to the Premises,

 

except the date of observation of the Holidays, in and about the Premises and window washing services in a manner consistent with other Comparable Buildings.

 

6.1.6

 

Elevators. Landlord shall provide nonexclusive, non-attended automatic

 

passenger elevator service during the Building Hours, and shall have at least one elevator available

 

at all other times.

 

Landlord shall provide nonexclusive freight elevator service subject to

 

scheduling by Landlord.

 

Tenant shall cooperate fully with Landlord at all times and abide by all regulations and requirements that Landlord may reasonably prescribe for the proper functioning and protection of the HVAC, electrical, mechanical and plumbing systems.

 

6.2

 

Overstandard Tenant Use.   Tenant's use of electricity shall never exceed the

 

capacity of the feeders to the Project or the risers or wiring installation.

 

6.3   Interruption of Use. Tenant agrees that Landlord shall not be liable for damages, by abatement of Rent or otherwise, for failure to furnish or delay in furnishing any service (including telephone and telecommunication services), or for any diminution in the quality or quantity thereof, when such failure or delay or diminution is occasioned, in whole or in part, by breakage, repairs, replacements, or improvements, by any strike, lockout or other labor trouble, by inability to secure electricity, gas, water, or other fuel at the Building or Project after reasonable effort to do so, by any riot or other dangerous condition, emergency, accident or casualty whatsoever, by act or default of Tenant or other parties, or by any other cause beyond Landlord's reasonable control; and such failures or delays or diminution shall never be deemed to constitute an eviction or disturbance of Tenant's use and possession of the Premises or relieve Tenant from paying Rent or performing any of its obligations under this Lease, except as otherwise provided in Section 6.4 below. Furthermore, Landlord shall not be liable under any circumstances for a loss of, or injury to, property or for injury to, or interference with, Tenant's business, including, without limitation, loss of profits, however occurring, through or in connection with or incidental to a failure to furnish any of the services or utilities as set forth in this Article 6.

 

6.4

 

Abatement Event.

 

If (i) Landlord fails to provide any services required of

 

Landlord under Section 6.1 above or perform any of Landlord's Repair Obligations required under

 

Article 7 below, (ii) such failure causes all or a material portion of the Premises to be untenantable and unusable by Tenant and Tenant actually ceases to use all or such material portion of the Premises, (iii) such failure is the result of the negligence or willful misconduct of Landlord and is reasonably within Landlord's ability to cure, and (iv) such failure is not the result of the acts and/or omissions of Tenant and/or other Tenant Parties (as defined herein), then in order to be entitled to receive the benefits of this Section 6.5, Tenant must give Landlord notice (the "Initial Abatement Notice"), specifying such failure to perform by Landlord (the "Abatement Event"). If Landlord has not commenced to cure such Abatement Event within five (5) business days after the receipt of the Initial Abatement Notice and is not otherwise excused from such performance by this Lease, then prior to any abatement, Tenant must deliver an additional notice to Landlord (the "Additional Abatement Notice"), specifying such Abatement Event and Tenant's intention to abate the payment of Rent under this Lease. If Landlord does not commence to cure such Abatement Event within five (5) business days of receipt of the Additional Abatement Notice and thereafter diligently pursue the cure to completion, Tenant may, upon written notice to Landlord, immediately abate Base Rent and Tenant's Share of Direct Expenses payable under this Lease for that portion of the Premises rendered untenantable and not actually used by Tenant, for the period beginning on the date five (5) business days after the Initial Abatement Notice to the earlier of the date Landlord cures such Abatement Event or the date Tenant recommences the use of such portion of the Premises. If Tenant fails to immediately provide the Additional Abatement Notice and commence applying any abatement of Base Rent and Tenant's Share of Direct Expenses payable under this Lease for that portion of the Premises rendered untenantable and not actually used by Tenant, then Tenant's right to abate Base Rent and Tenant's Share of Direct Expenses shall be of no further force or effect with respect to the applicable Abatement Event. Such right to abate Rent shall be Tenant's sole and exclusive remedy at law or in equity for an Abatement Event. Except as provided in this Section 6.5, nothing contained herein shall be interpreted to mean that Tenant is excused from paying Rent due hereunder.

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-20-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

ARTICLE 7

 

REPAIRS

 

7.1Tenant's Repair and Maintenance Obligations.

 

Subject to Landlord’s

 

obligations in Section 7.2 below,  Tenant shall, at Tenant's own expense, maintain in good

 

condition and operating order (consistent with the condition and operating order existing on the applicable Possession Date) throughout the Lease Term the following (collectively, "Tenant's Repair Obligations"): (i) the Premises, including all improvements, fixtures, equipment, interior window coverings, and furnishings therein, (ii) all furniture, business and trade fixtures, equipment, free-standing cabinet work, movable partitions, Water Sensors, servers, telephones, Lines, merchandise and all other items of Tenant's property located in the Premises (collectively, "Tenant's Property"), (iii) any property or equipment installed by Tenant at the Project, and located outside of the Premises ("Tenant's Off-Premises Property"), and (iv) all areas, improvements and systems exclusively serving the Premises, including any communications or computer wires and cables (collectively, the "Lines") and applicable branch lines of the plumbing, electrical and other Building Systems. Notwithstanding the foregoing, Landlord shall perform and construct, and Tenant shall have no responsibility to perform or construct, any repair, maintenance or improvements necessitated by the negligence or willful misconduct of Landlord or which constitute Landlord Repair Obligations.

 

7.2

 

Landlord's Repair and Maintenance Obligations. Landlord shall maintain in

 

good condition and operating order and keep in good repair and condition throughout the Lease

 

Term the following (collectively, "Landlord's Repair Obligations"): (i) the structural portions of the Building, including the foundation, floor/ceiling slabs, roof structure, roof membrane, curtain wall, exterior glass and mullions, columns, beams, shafts (including elevator shafts), stairs, stairwells, elevator cab, Building mechanical, electrical and telephone closets (collectively, "Building Structure"), (ii) the mechanical, electrical, life safety, plumbing, sprinkler systems and HVAC systems, excluding specialty systems installed by Tenant (collectively, the "Building Systems") and (iii) the Common Areas, which shall include restrooms located on multi-tenant floors of the Building. In addition to the foregoing, Landlord shall perform and construct any repair, maintenance or improvements (a) necessitated by the acts or omissions of Landlord or any other occupant of the Project, or their respective agents, employees or contractors, which is not covered by Tenant’s insurance required to be carried under this Lease (provided that Landlord shall be responsible for any deductible), (b) until the Possession Date of the Entire Premises, to any portion of the Building outside of the demising walls of the Premises, and (c) to the Outside Areas, provided, that Tenant shall pay for its share of the repairs to the extent such costs are properly included in Direct Expenses. The "Base Building" shall mean the Building Structure and the Building Systems. In the event that the Premises has an "open ceiling plan", then Landlord and third parties leasing or otherwise using/managing or servicing space on the floor immediately above the Premises shall have the right to install, maintain, repair and replace mechanical, electrical and plumbing fixtures, devices, piping, ductwork and all other improvements through the floor above the Premises (which may penetrate through the ceiling of the Premises and be visible within the Premises during the course of construction and upon completion thereof), as Landlord may determine in Landlord's sole and absolute discretion and with no approval rights being afforded to Tenant with respect thereto. Notwithstanding Tenant's occupancy of the Premises during the performance of any of Landlord's Repair Obligations, the performance of Landlord's Repair Obligations shall in no way constitute a constructive eviction of Tenant nor entitle Tenant to any abatement of Rent. Landlord shall perform Landlord’s Repair Obligations in a manner designed to minimize interference with Tenant’s use of the Premises. Tenant shall promptly and diligently cooperate with Landlord and any of the third parties performing Landlord's Repair Obligations in the Premises in order to facilitate the performance of such work in an efficient and timely manner. Landlord's entry into the Premises to perform any repairs or maintenance hereunder shall be subject to Article 27 below. Tenant hereby waives any and all rights under and benefits of subsection 1 of Section 1932 and Sections 1941 and 1942 of the California Civil Code or under any similar law, statute, or ordinance now or hereafter in effect.

 

7.3

 

Tenant's Right to Make Repairs. Notwithstanding any of the TCCs set forth in

 

this Lease to the contrary, once Tenant is in occupancy of the Entire Premises only (i.e., at such

 

time as Tenant is the only tenant or occupant of the Building) if Tenant provides notice (or oral notice in the event of an Emergency, as that term is defined, below) to Landlord of an event or circumstance which pursuant to the TCCs of this Lease requires the action of Landlord as a Landlord Repair Obligation, and which event or circumstance materially and adversely affects the

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-21-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

conduct of Tenant’s business from the Premises, and Landlord fails to commence corrective action within a reasonable period of time, given the circumstances, after the receipt of such Notice, but in any event not later than thirty (30) days after receipt of such Notice, then Tenant may proceed to take the required action upon delivery of an additional ten (10) days’ Notice to Landlord specifying that Tenant is taking such required action (provided, however, that the initial thirty (30) day Notice and the subsequent ten (10) day Notice shall not be required in the event of an Emergency) and if such action was required under the TCCs of this Lease to be taken by Landlord and was not commenced by Landlord within such ten (10) day period and thereafter diligently pursued to completion, then Tenant shall be entitled to take such action on behalf of Landlord, in which case Tenant shall receive prompt reimbursement by Landlord of Tenant’s reasonable and actual costs and expenses in taking such action, plus interest thereon at the Interest Rate. In the event Tenant takes such action, Tenant shall comply with the terms and conditions with the manner of construction requirements set forth in Section 8.2 below. Promptly following completion of any work undertaken by Tenant pursuant to the TCCs of this Section 7.3, Tenant shall deliver a reasonably detailed invoice of the work completed, the materials used and the costs relating thereto. If Landlord does not deliver a detailed written objection to Tenant within thirty (30) days after receipt of an invoice from Tenant, then Tenant shall be entitled to deduct from Rent payable by Tenant under this Lease, the amount set forth in such invoice. If, however, Landlord delivers to Tenant, within thirty (30) days after receipt of Tenant’s invoice, a written objection to the payment of such invoice, setting forth with reasonable particularity Landlord’s reasons for its claim that such action did not have to be taken by Landlord pursuant to the TCCs of this Lease or that the charges are excessive (in which case Landlord shall pay the amount it contends would not have been excessive), then Tenant shall not then be entitled to such deduction from Rent, and Tenant may institute legal proceedings against Landlord to collect the amount set forth in the subject invoice; provided that under no circumstances shall Tenant be allowed to terminate this Lease based upon a such default by Landlord. If Tenant receives a final judgment against Landlord (whether by virtue of Landlord’s failure to appeal or unsuccessful appeal of such judgment), Tenant may offset and deduct the amount of the judgment (including all fees, expenses and reasonable attorneys' fees actually incurred by Tenant in connection with such legal proceedings, to the extent included in such judgment), from the Base Rent next due and owing under this Lease. For purposes of this Article 7, an "Emergency" shall mean an event threatening immediate and material danger to people located in a Building or immediate, material damage to a Building, Building Systems, Building Structure, Improvements, Alterations or Tenant's personal property valued at more than $250,000, or the immediate and material impairment of Tenant’s use of all or a substantial portion of the Premises within the Building.

 

ARTICLE 8

 

ADDITIONS AND ALTERATIONS

 

8.1

 

Landlord's Consent to Alterations. Tenant may not make any improvements,

 

alterations, additions or changes (collectively, the "Alterations") without first procuring the prior written consent of Landlord to such Alterations, which consent shall be requested by Tenant not less than ten (10) business days prior to the commencement thereof, and which consent shall not be unreasonably withheld by Landlord, provided it shall be deemed reasonable for Landlord to

 

withhold its consent to any Alteration which constitutes an Alteration Design Problem. An "Alteration Design Problem" is defined as, and will be deemed to exist if such Alterations or Improvements may (i) adversely affect the exterior appearance of the Building; (ii) adversely affect the Building Structure or adversely affect the Building Systems; (iii) fail to comply with Applicable Laws and applicable building codes ("Code") or would cause any other portion of the Project to fail to comply with Applicable Laws or Code, (iv) intentionally omitted, (v) vitiate or otherwise negatively affect any warranty, guaranty, or insurance maintained by Landlord,

(vi) materially increase Landlord's repair or maintenance obligations pursuant to this Lease (unless Tenant agrees in writing to pay the costs thereof as a condition to such Alteration), (vii) affect the certificate of occupancy or its legal equivalent for the Project or any portion thereof, or (viii) fail to adhere to Landlord's Building standard requirements for the Project. Notwithstanding the foregoing, Tenant shall be permitted to make Alterations following ten (10) business days' notice to Landlord ("Cosmetic Alterations Notice"), but without Landlord's prior consent, to the extent that such Alterations do not (a) constitute an Alteration Design Problem, (b) require a building or construction permit, or (c) cost more than $250,000.00 for a particular job of work (the "Cosmetic Alterations"). The Cosmetic Alterations Notice must be accompanied by reasonably adequate evidence that such Cosmetic Alterations meet the criteria set forth above in this Section 8.1 (failing

 

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-22-

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

which Tenant shall not be permitted to perform such Alterations without Landlord's prior written consent). The construction of the initial improvements to the Premises shall be governed by the terms of the Work Letter and not the terms of this Article 8.

 

8.2     Manner of Construction. Landlord may impose, as a condition to Tenant's right to perform any Alterations, such commercially reasonable requirements as Landlord in its reasonable discretion may deem desirable, including, but not limited to, (i) the requirement that Tenant utilize for such purposes only contractors reasonably approved by Landlord, and (ii) any Lines (including riser cables) installed by Tenant shall be (x) appropriately insulated to prevent excessive electromagnetic fields or radiation, (y) surrounded by a protective conduit reasonably acceptable to Landlord, and (z) identified in accordance with Landlord's Building standard requirements. Tenant shall be solely responsible for acquiring a permit for all Alterations, furnishing of a copy of such permit and approvals to Landlord prior to the commencement of the work, and complying with all conditions of said permit in a prompt and expeditious manner. If such Alterations will involve the use of or disturb Hazardous Materials, Tenant shall notify Landlord prior to performing such Alterations and comply with Landlord's reasonable rules and regulations concerning such Hazardous Materials. Tenant shall construct all Alterations in a good and workmanlike manner, in conformance with any and all Applicable Laws and Landlord's construction rules and regulations; provided, however, that prior to commencing to construct any Alteration, Tenant shall meet with Landlord to discuss Landlord's design parameters and Code compliance issues. In performing the work of any such Alterations, Tenant shall have the work performed in such manner so as not to obstruct access to the Project or any portion thereof, by any other tenant of the Project, and so as not to obstruct the business of Landlord or other tenants in the Project. Tenant shall not use (and upon notice from Landlord shall cease using) contractors, services, workmen, labor, materials or equipment that, in Landlord's reasonable judgment and despite the implementation of commercially reasonable staging and scheduling efforts, would nevertheless disturb labor harmony with the workforce or trades engaged in performing other work, labor or services in or about the Project. In addition to Tenant's obligations under Article 9 of this Lease, upon completion of any Alterations, to the extent required by Applicable Law, Tenant shall cause a Notice of Completion to be recorded in the office of the Recorder of the county in which the Project is located in accordance with Section 8182 of the Civil Code of the State of California or any successor statute. Tenant shall, promptly following the completion of any Alterations (including any Cosmetic Alterations) and request by Landlord, compile and deliver to Landlord a "close-out package" in such format reasonably designated by Landlord at the commencement of the particular Alteration (e.g., paper and/or electronic files) containing, without limitation, the following items (to the extent reasonably deemed necessary by Landlord for the particular Alterations): (a) as-built drawings and final record CAD drawings, (b) warranties and guarantees from all contractors, subcontractors and material suppliers, (c) all permits, approvals and other documents issued by any governmental agency in connection with the Alterations, (d) an independent air balance report, if required due to the nature of the Alterations, (e) lien releases for all work performed at the Project, and (f) such other information or materials as may be reasonably requested by Landlord.

 

8.3

 

Payment for Improvements.

 

Tenant is responsible for all of the costs of

 

performing any Alterations. In addition, in connection with all Alterations, Tenant shall pay Landlord an oversight fee equal to five percent (5%) of the cost of the Alterations, and reimburse Landlord for Landlord's reasonable, out-of-pocket costs and expenses actually incurred in connection with Landlord's review of such Alterations (including, but not limited to, fees paid to

 

consultants retained by Landlord to review plans and specifications for such Alterations). All Alterations and Improvements (excluding Tenant's Property and Tenant's Off-Premises Property) shall, upon completion of construction, become part of the Premises and the property of Landlord. Except for Alterations which are permanently affixed to the Premises, at any time Tenant may remove Tenant’s Property from the Premises, provided that Tenant repairs all damage caused by such removal. Landlord shall have no lien or other interest in any item of Tenant’s Property.

 

8.4

 

Construction Insurance.   In addition to the requirements of Article 10 of this

 

Lease, in the event that Tenant makes any Alterations, prior to the commencement of such

 

Alterations, Tenant shall provide Landlord with evidence that Tenant carries "Builder's Risk" insurance in an amount reasonably approved by Landlord covering the construction of such Alterations, and such other insurance as Landlord may reasonably require, it being understood and agreed that all of such Alterations shall be insured by Tenant pursuant to Article 10 of this Lease immediately upon completion thereof.

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-23-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

ARTICLE 9

 

COVENANT AGAINST LIENS

 

Tenant shall keep the Project and Premises free from any liens or encumbrances arising out of the work performed, materials furnished or obligations incurred by or on behalf of Tenant, and shall protect, defend, indemnify and hold Landlord harmless from and against any claims, liabilities, judgments or costs (including, without limitation, reasonable attorneys' fees and costs) arising out of same or in connection therewith. Tenant shall give Landlord notice at least twenty

(20) days prior to the commencement of any such work on the Premises (or such additional time as may be necessary under Applicable Laws) to afford Landlord the opportunity of posting and

 

 

recording appropriate notices of non-responsibility.

 

Tenant shall remove any such lien or

 

encumbrance by bond or otherwise within five (5) business days after notice by Landlord, and if Tenant shall fail to do so, Landlord may pay the amount necessary to remove such lien or

 

encumbrance, without being responsible for investigating the validity thereof. The amount so paid shall be deemed Additional Rent under this Lease payable upon demand, without limitation as to other remedies available to Landlord under this Lease. Nothing contained in this Lease shall authorize Tenant to do any act which shall subject Landlord's title to the Building or Premises to any liens or encumbrances whether claimed by operation of law or express or implied contract. Any claim to a lien or encumbrance upon the Building or Premises arising in connection with any such work or respecting the Premises not performed by or at the request of Landlord shall be null and void, or at Landlord's option shall attach only against Tenant's interest in the Premises and shall in all respects be subordinate to Landlord's title to the Project, Building and Premises.

 

ARTICLE 10

 

INDEMNIFICATION AND INSURANCE

 

10.1

 

Indemnification and Waiver. Except to the extent arising from the negligence or

 

willful misconduct of Landlord or any Landlord Party or Landlord’s breach of this Lease, Tenant hereby assumes all risk of damage to property or injury to persons in, upon or about the Premises

 

from any cause whatsoever and agrees that Landlord, its partners, subpartners and their respective officers, agents, servants, employees, and independent contractors (collectively, "Landlord Parties") shall not be liable for, and are hereby released from any responsibility for, any damage either to person or property or resulting from the loss of use thereof, which damage is sustained by Tenant or by other persons claiming through Tenant. Except to the extent arising from the negligence or willful misconduct of Landlord or any Landlord Party or Landlord’s breach of this Lease, Tenant shall indemnify, defend, protect, and hold harmless the Landlord Parties from and against any and all loss, cost, damage, expense and liability (including without limitation court costs and reasonable attorneys' fees) (collectively, Losses”) incurred in connection with or arising from: (a) any causes in, on or about the Premises; (b) the use or occupancy of the Premises by Tenant or its Transferees or any person claiming under Tenant; (c) any activity, work, or thing done, or permitted or suffered by Tenant in or about the Premises; (d) any acts, omission, or negligence of Tenant, Transferees or any person claiming under Tenant, or the contractors, agents, employees, invitees, or visitors of Tenant or any such person, in, on or about the Project (collectively, "Tenant Parties"); (e) any breach, violation, or non-performance by Tenant or any person claiming under Tenant or the employees, agents, contractors, invitees, or visitors of Tenant or any such person of any term, covenant, or provision of this Lease or any law, ordinance, or governmental requirement of any kind; or (f) the placement of any personal property or other items within the Project. Should Landlord be named as a defendant in any suit brought against Tenant in connection with or arising out of Tenant's occupancy of the Premises, Tenant shall pay to Landlord its costs and expenses incurred in such suit, including without limitation, its actual

 

professional fees such as appraisers', accountants' and attorneys' fees.

 

Subject to Tenant's

 

indemnification obligations set forth above and the waiver of subrogation provided below,

 

Landlord shall indemnify, defend, protect, and hold harmless Tenant from any and all loss, cost, damage, expense, and liability (including, without limitation, court costs and reasonable attorneys' fees) to the extent arising from the gross negligence or willful misconduct of Landlord or the Landlord Parties in, on or about the Project either prior to or during the Lease Term, provided that the terms of the foregoing indemnity shall not apply to the negligence or willful misconduct of

 

Tenant.

 

Further, Tenant's agreement to indemnify Landlord, and Landlord’s agreement to

 

indemnify Tenant pursuant to this Section 10.1 is not intended and shall not relieve any insurance carrier of its obligations under policies required to be carried pursuant to the provisions of this

 

Lease, to the

 

extent

 

such

 

policies

 

cover

 

the matters subject to the applicable party’s

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-24-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

indemnification obligations; nor shall they supersede any inconsistent agreement of the parties set forth in any other provision of this Lease. The provisions of this Section 10.1 shall survive the expiration or sooner termination of this Lease with respect to any claims or liability arising in connection with any event occurring prior to such expiration or termination.

 

10.2

 

Landlord's Fire and Casualty Insurance.Landlord shall carry commercial

 

general liability insurance with respect to the Buildings during the Lease Term, and shall further insure the Buildings during the Lease Term against loss or damage due to fire and other casualties covered within the classification of fire and extended coverage, vandalism coverage and malicious mischief, sprinkler leakage, water damage and special extended coverage. Such insurance shall be written on an "all risks" of physical loss or damage basis for full replacement value of the

 

Buildings, and shall be issued by an insurance company having a rating of not less than A-X in Best's Insurance Guide or which is otherwise reasonably acceptable to Tenant and licensed to do business in the State of California. Such coverage shall be in such amounts, from such companies, and on such other terms and conditions, as Landlord may from time to time reasonably determine. Additionally, at the option of Landlord, such insurance coverage may include the risks of earthquakes and/or flood damage and additional hazards, a rental loss endorsement and one or more loss payee endorsements in favor of the holders of any mortgages or deeds of trust encumbering the interest of Landlord in the Buildings or the ground or underlying lessors of the Buildings, or any portion thereof. Notwithstanding the foregoing provisions of this Section 10.2, the coverage and amounts of insurance carried by Landlord in connection with the Buildings shall, at a minimum, be comparable to the coverage and amounts of insurance which are carried by reasonably prudent landlords of Comparable Buildings, and Worker's Compensation and Employer's Liability coverage as required by Applicable Law. Tenant shall, at Tenant's expense, comply with Landlord's insurance company requirements pertaining to the use of the Premises. If Tenant's conduct or use of the Premises causes any increase in the premium for such insurance policies then Tenant shall reimburse Landlord for any such increase. Tenant, at Tenant's expense, shall comply with all rules, orders, regulations or requirements of the American Insurance Association (formerly the National Board of Fire Underwriters) and with any similar body.

 

10.3

 

Tenant's Insurance.Throughout the Lease Term, Tenant shall maintain the

 

following coverages in the following amounts.The required evidence of coverage must be

 

delivered to Landlord on or before the date required under Section 10.4(I) sub-sections (x) and (y), or Section 10.4(II) below (as applicable). Such policies shall be for a term of at least one (1) year, or the length of the remaining term of this Lease, whichever is less.

 

10.3.1 Commercial General Liability Insurance, including Broad Form contractual liability covering the insured against claims of bodily injury, personal injury and property damage (including loss of use thereof) based upon or arising out of Tenant's operations, occupancy or maintenance of the Project and all areas appurtenant thereto. Such insurance shall be written on an "occurrence" basis. Landlord and any other party the Landlord so specifies that has a material financial interest in the Project, including Landlord's managing agent, ground lessor and/or lender, if any, shall be named as additional insureds as their interests may appear using Insurance Service Organization's form CG2011 or a comparable form approved by Landlord. Tenant shall provide an endorsement or policy excerpt showing that Tenant's coverage is primary and any insurance carried by Landlord shall be excess and non-contributing. The coverage shall also be extended to include damage caused by heat, smoke or fumes from a hostile fire. The policy shall not contain any intra-insured exclusions as between insured persons or organizations. This policy shall include coverage for all liabilities assumed under this Lease as an insured contract for the performance of all of Tenant's indemnity obligations under this Lease. The limits of said insurance shall not, however, limit the liability of Tenant nor relieve Tenant of any obligation hereunder. Limits of liability insurance shall not be less than the following; provided, however, such limits may be achieved through the use of an Umbrella/Excess Policy:

 

Bodily Injury and Property Damage Liability

 

$5,000,000 each occurrence

 

$3,000,000 each occurrence

 

Personal Injury and Advertising Liability

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-25-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

Tenant Legal Liability/Damage to Rented Premises Liability

 

$5,000,000

 

10.3.2 Property Insurance covering (i) all office furniture, personal property, business and trade fixtures, office equipment, free-standing cabinet work, movable partitions, merchandise and all other items of Tenant's business personal property on the Premises installed by, for, or at the expense of Tenant, (ii) the Improvements, and any other improvements which exist in the Premises as of the Lease Commencement Date (excluding the Base Building) (the "Original Improvements"), and (iii) all Alterations performed in the Premises. Such insurance shall be written on a Special Form basis, for the full replacement cost value (subject to reasonable deductible amounts), without deduction for depreciation of the covered items and in amounts that meet any co-insurance clauses of the policies of insurance and shall include coverage for (a) all perils included in the CP 10 30 04 02 Coverage Special Form, and (b) water damage from any cause whatsoever, including, but not limited to, sprinkler leakage, bursting, leaking or stoppage of any pipes, explosion, and backup or overflow from sewers or drains.

 

10.3.2.1 Increase in Project's Property Insurance. Tenant shall pay for any increase in the premiums for the property insurance of the Project if said increase is caused by Tenant's acts, omissions, use or occupancy of the Premises.

 

10.3.2.2 Property Damage.

 

If this Lease is terminated following a

 

Casualty, Tenant shall assign to Landlord the proceeds from any such property insurance for the replacement of the Improvements, and Original Improvements.

 

10.3.2.3 No Representation of Adequate Coverage. Landlord makes no representation that the limits or forms of coverage of insurance specified herein are adequate to cover Tenant's property, business operations or obligations under this Lease.

 

10.3.2.4 Property Insurance Subrogation. Landlord and Tenant intend that their respective property loss risks shall be borne by insurance carriers to the extent above provided (and, in the case of Tenant, by an insurance carrier satisfying the requirements of Section 10.4(i) below), and Landlord and Tenant hereby agree to look solely to, and seek recovery only from, their respective insurance carriers in the event of a property loss to the extent that such coverage is agreed to be provided hereunder. Notwithstanding anything to the contrary herein, the parties each hereby waive and release all rights and claims against each other for such losses, and waive all rights of subrogation of their respective insurers. Landlord and Tenant hereby represent and warrant that their  respective "all  risk" property  insurance policies include  a waiver  of

(i) subrogation by the insurers, and (ii) all rights based upon an assignment from its insured, against Landlord and/or any of the Landlord Parties or Tenant and/or any of the Tenant Parties (as the case may be) in connection with any property loss risk thereby insured against. All of Landlord’s and Tenant’s repair and indemnity obligations under this Lease shall be subject to the waiver and release contained in this paragraph. Tenant will cause all subtenants and licensees of the Premises claiming by, under, or through Tenant to execute and deliver to Landlord a waiver of claims similar to the waiver in this Section 10.3.2.4 and to obtain such waiver of subrogation rights endorsements, provided that Landlord agrees to provide such wavier to such subtenants and licensees. If either party hereto fails to maintain the waivers set forth in items (i) and (ii) above, the party not maintaining the requisite waivers shall indemnify, defend, protect, and hold harmless the other party for, from and against any and all claims, losses, costs, damages, expenses and liabilities (including, without limitation, court costs and reasonable attorneys' fees) arising out of, resulting from, or relating to, such failure.

 

 

10.3.3   Business Income Interruption in an amount not less than one (1) year of

 

Base Rent.

 

10.3.4 Worker's Compensation or other similar insurance pursuant to all applicable state and local statutes and regulations, and Employer's Liability with minimum limits of not less than $1,000,000 each accident/employee/disease.

 

10.3.5 Commercial Automobile Liability Insurance covering all Owned (if any), Hired, or Non-owned vehicles with limits not less than $1,000,000 combined single limit for bodily injury and property damage.

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-26-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

10.4

 

Form of Policies. The minimum limits of policies of insurance required of Tenant

 

under this Lease shall in no event limit the liability of Tenant under this Lease. Such insurance shall (i) be issued by an insurance company having an AM Best rating of not less than A-VII (or to the extent AM Best ratings are no longer available, then a similar rating from another comparable rating agency), or which is otherwise acceptable to Landlord and licensed to do business in the State of California, (ii) be in form and content reasonably acceptable to Landlord and complying with the requirements of Section 10.3 (including, Sections 10.3.1 through 10.3.5),

 

and (iii) Tenant shall not do or permit to be done anything which invalidates the required insurance policies. Tenant shall not cause said insurance to be canceled unless thirty (30) days' prior written notice shall have been given to Landlord and any mortgagee of Landlord (unless such cancellation is the result of non-payment of premiums, in which case note less than five (5) days' notice shall be provided). Tenant shall deliver said policy or policies or certificates thereof and applicable endorsements which meet the requirements of this Article 10 to Landlord on or before (I) the earlier to occur of: (x) the Lease Commencement Date, and (y) the date Tenant and/or its employees, contractors and/or agents first enter the Premises for occupancy, construction of improvements, alterations, or any other move-in activities, and (II) five (5) business days after the renewal of such policies. In the event Tenant shall fail to procure such insurance, or to deliver such policies or certificates and applicable endorsements, Landlord may, at its option, after written notice to Tenant and Tenant's failure to obtain such insurance within five (5) days thereafter, procure such policies for the account of Tenant and the sole benefit of Landlord, and the cost thereof shall be paid to Landlord within ten (10) business days after delivery to Tenant of bills therefor.

 

10.5

 

Intentionally Omitted.

 

10.6

 

Third-Party Contractors.   Tenant shall obtain and deliver to Landlord, Third

 

Party Contractor's certificates of insurance and applicable endorsements at least seven (7) business days prior to the commencement of work in or about the Premises by any vendor or any other

 

third-party contractor (collectively, a "Third Party Contractor").   All such insurance shall

(a) name Landlord as an additional insured under such party's liability policies as required by Section 10.3.1 above and this Section 10.6, (b) provide a waiver of subrogation in favor of Landlord under such Third Party Contractor's commercial general liability insurance, (c) be primary and any insurance carried by Landlord shall be excess and non-contributing, and (d) comply with Landlord's minimum insurance requirements to the extent appropriate and reasonable for the scope of services being provided by such Third Party Contractor.

 

 

ARTICLE 11

 

DAMAGE AND DESTRUCTION

 

11.1

 

Repair of Damage to Premises by Landlord.If the Base Building or any

 

Common Areas serving or providing access to the Premises shall be damaged by a fire or any other casualty (collectively, a "Casualty"), Landlord shall promptly and diligently, subject to reasonable delays for insurance adjustment or other matters beyond Landlord's reasonable control, and subject

 

to all other terms of this Article 11, restore the Base Building and such Common Areas. Such restoration shall be to substantially the same condition of the Base Building and the Common Areas prior to the Casualty, except for modifications required by zoning and building codes and other laws or by the holder of a mortgage on the Building or Project, which are consistent with the character of the Project, provided that access to the Premises and any common restrooms serving the Premises shall not be materially impaired. Tenant shall promptly notify Landlord upon the occurrence of any damage to the Premises resulting from a Casualty, and Tenant shall promptly inform its insurance carrier of any such damage. If this Lease is not terminated as a result of such Casualty, Tenant shall assign to Landlord (or to any party designated by Landlord) all insurance proceeds payable to Tenant under Tenant's insurance required under Section 10.3(ii) and (iii) of this Lease, and Landlord shall repair any injury or damage to the Improvements and the Original Improvements installed in the Premises and shall return such Improvements and the Original Improvements to their original condition; provided that if the cost of such repair by Landlord exceeds the amount of insurance proceeds received by Landlord from Tenant's insurance carrier, as assigned by Tenant, the cost of such repairs shall be paid by Tenant to Landlord prior to Landlord's commencement of repair of the damage. In connection with such repairs and replacements, prior to the commencement of construction, Tenant shall submit to Landlord, for Landlord's review and approval, all plans, specifications and working drawings relating thereto, and Landlord shall select the contractors to perform such improvement work. Landlord shall not

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-27-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

be liable for any inconvenience or annoyance to Tenant or its visitors, or injury to Tenant's business resulting in any way from such damage or the repair thereof; provided however, that if such Casualty shall have damaged all or any portion of the Premises or Common Areas necessary to Tenant's occupancy, and such portion of the Premises is not occupied by Tenant for the purposes such portion of the Premises was used for prior to such Casualty as a result thereof, then during the time and to the extent the Premises is unfit for occupancy for such prior use, the Rent shall be abated in proportion to the ratio that the amount of rentable square feet of the Premises which is unfit for occupancy for such prior use bears to the total rentable square feet of the Premises. Notwithstanding any contrary provision of this Article 11, the parties hereby agree as follows:

(a) the closure of the Project, the Building, the Common Areas, or any part thereof to protect public health shall not constitute a Casualty for purposes of this Lease, (b) Casualty covered by this Article 11 shall require that the physical or structural integrity of the Premises, the Project, the Building, or the Common Areas is degraded as a direct result of such occurrence, and (c) a Casualty under this Article 11 shall not be deemed to occur merely because Tenant is unable to productively use the Premises in the event that the physical and structural integrity of the Premises is undamaged.

 

 

11.2

 

Landlord's Option to Repair. Notwithstanding the terms of Section 11.1 of this

 

Lease, Landlord may elect not to rebuild and/or restore the Premises, Building and/or Project, and instead terminate this Lease, by notifying Tenant in writing of such termination within sixty (60) days after the date of discovery of the damage, such notice to include a termination date giving Tenant sixty (60) days to vacate the Premises, but Landlord may so elect only if the Building or

 

Project shall be damaged by Casualty, whether or not the Premises is affected, and one or more of the following conditions is present: (i) in Landlord's reasonable judgment, repairs to the Building cannot reasonably be completed within two hundred seventy (270) days after the date of discovery of the damage (when such repairs are made without the payment of overtime or other premiums);

(ii) at least $500,000.00, calculated on an inflation adjusted basis, of the cost of repair of the damage is not covered by Landlord's insurance policies (unless Tenant agrees in writing to cover the shortfall in excess of such amount); or (iii) the damage occurs during the last twelve (12) months of the Lease Term; provided, however, that if the Premises and/or access thereto are materially damaged by Casualty, and Landlord does not elect to terminate this Lease pursuant to Landlord's termination right as provided above, and either the repairs cannot, in the reasonable opinion of Landlord, be completed within two hundred seventy (270) days after the damage occurs or the damage occurs during the last twelve (12) months of the Lease Term, Tenant may elect, no earlier than sixty (60) days after the date of the damage and not later than ninety (90) days after the date of such damage, to terminate this Lease by written notice to Landlord effective as of the date specified in the notice, which date shall not be less than thirty (30) days nor more than sixty

(60) days after the date such notice is given by Tenant. Furthermore, if neither Landlord nor Tenant has terminated this Lease, and the repairs are not actually completed within sixty (60) days of the date that Landlord originally estimated for completion in "Landlord's Repair Estimate Notice" (as that term is defined hereinbelow), then Tenant shall have the right to terminate this Lease during the first five (5) business days of each calendar month following the end of such period until such time as the repairs are complete, by notice to Landlord (the "Damage Termination Notice"), effective as of a date set forth in the Damage Termination Notice (the "Damage Termination Date"), which Damage Termination Date shall not be less than ten (10) business days following the end of each such month. Notwithstanding the foregoing, if Tenant delivers a Damage Termination Notice to Landlord, then Landlord shall have the right to suspend the occurrence of the Damage Termination Date for a period ending fifteen (15) days after the Damage Termination Date set forth in the Damage Termination Notice by delivering to Tenant, within five (5) business days of Landlord's receipt of the Damage Termination Notice, a certificate of Landlord's contractor responsible for the repair of the damage certifying that it is such contractor's good faith judgment that the repairs shall be substantially completed within fifteen

(15) days after the Damage Termination Date. If repairs shall be substantially completed prior to the expiration of such fifteen-day period, then the Damage Termination Notice shall be of no force or effect, but if the repairs shall not be substantially completed within such fifteen-day period, then this Lease shall terminate upon the expiration of such thirty-day period. At any time, from time to time, after the date occurring sixty (60) days after the date of the damage, Tenant may request that Landlord inform Tenant of Landlord's reasonable opinion of the date of completion of the repairs and Landlord shall respond to such request within five (5) business days ("Landlord's Repair Estimate Notice"). Notwithstanding the provisions of this Section 11.2, Tenant shall have the right to terminate this Lease under this Section 11.2 only if each of the following conditions is satisfied: (a) the damage to the Project by Casualty was not caused by the gross negligence or

 

 

 

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-28-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

intentional act of Tenant or its partners or subpartners and their respective officers, agents, servants, employees, and independent contractors; (b) Tenant is not then in default under this Lease (beyond the applicable notice and cure periods); and (c) as a result of the damage, Tenant cannot and does not occupy or use at least seventy-five percent (75%) of the Premises which was used for laboratory purposes prior to such Casualty. In the event this Lease is terminated in accordance with the terms of this Section 11.2, Tenant shall assign to Landlord (or to any party designated by Landlord) all insurance proceeds payable to Tenant under Tenant's insurance required under items (ii) and (iii) of Section 10.3.2 of this Lease with respect to the Original Improvements.

 

11.3

 

Waiver of Statutory Provisions.   The provisions of this Lease, including this

 

Article 11, constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises, the Building or the Project, and any statute or regulation of the State of California, including, without limitation, Sections 1932(2) and 1933(4) of the California Civil Code, with respect to any rights or obligations concerning damage or destruction in the absence of an express agreement between the parties, and any other statute or regulation, now or hereafter in effect, shall have no application to this Lease or any damage or destruction to all or any part of the Premises, the Building or the Project.

 

ARTICLE 12

 

NONWAIVER

 

No provision of this Lease shall be deemed waived by either party hereto unless expressly waived in a writing signed thereby. The waiver by either party hereto of any breach of any term, covenant or condition herein contained shall not be deemed to be a waiver of any subsequent breach of same or any other term, covenant or condition herein contained. The subsequent acceptance of Rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach 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 breach at the time of acceptance of such Rent. No acceptance of a lesser amount than the Rent herein stipulated shall be deemed a waiver of Landlord's right to receive the full amount due, nor shall any endorsement or statement on any check or payment or any letter accompanying such check or payment be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the full amount due. No receipt of monies by Landlord from Tenant after the termination of this Lease shall in any way alter the length of the Lease Term or of Tenant's right of possession hereunder, or after the giving of any notice shall reinstate, continue or extend the Lease Term or affect any notice given Tenant prior to the receipt of such monies, it being agreed that after the service of notice or the commencement of a suit, or after final judgment for possession of the Premises, Landlord may receive and collect any Rent due, and the payment of said Rent shall not waive or affect said notice, suit or judgment.

 

ARTICLE 13

 

CONDEMNATION

 

If the whole or any part of the Premises, Building or Project shall be taken by power of eminent domain or condemned by any competent authority for any public or quasi-public use or purpose, or if any adjacent property or street shall be so taken or condemned, or reconfigured or vacated by such authority in such manner as to require the use, reconstruction or remodeling of any part of the Premises, Building or Project, or if Landlord shall grant a deed or other instrument in lieu of such taking by eminent domain or condemnation, Landlord shall have the option to terminate this Lease effective as of the date possession is required to be surrendered to the authority. If more than twenty-five percent (25%) of the rentable square feet of the Premises is taken, or if access to the Premises is substantially impaired, in each case for a period in excess of one hundred eighty (180) days, Tenant shall have the option to terminate this Lease effective as of the date possession is required to be surrendered to the authority. Tenant shall not because of such taking assert any claim against Landlord or the authority for any compensation because of such taking and Landlord shall be entitled to the entire award or payment in connection therewith, except that Tenant shall have the right to file any separate claim available to Tenant for any taking of Tenant's personal property and fixtures belonging to Tenant and removable by Tenant upon expiration of the Lease Term pursuant to the terms of this Lease, and for moving expenses, so long as such claims do not diminish the award available to Landlord, its ground lessor with respect to

 

KILROY REALTY

Del Mar Corporate Centre II

[DermTech, Inc.]

 

 

 

4850-3473-7639.7

377185.00017/7-1-21/gjn/gjn

 

 

-29-

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

 

the Building or Project or its mortgagee, and such claim is payable separately to Tenant. All Rent shall be apportioned as of the date of such termination. If any part of the Premises shall be taken, and this Lease shall not be so terminated, the Rent shall be proportionately abated. Tenant hereby waives any and all rights it might otherwise have pursuant to Section 1265.130 of The California Code of Civil Procedure. Notwithstanding anything to the contrary contained in this Article 13, in the event of a temporary taking of all or any portion of the Premises for a period of one hundred and eighty (180) days or less, then this Lease shall not terminate but the Base Rent and the Additional Rent shall be abated for the period of such taking in proportion to the ratio that the amount of rentable square feet of the Premises taken bears to the total rentable square feet of the Premises. Landlord shall be entitled to receive the entire award made in connection with any such

 

temporary taking.

 

Notwithstanding any contrary provision of this Lease, the following

 

governmental actions (whether through regulatory action, ordinance, or otherwise) shall not constitute a taking or condemnation, either permanent or temporary: (i) an action that requires

 

Tenant's business to close during the Lease Term, (ii) an action that limits or temporarily prohibits access to or use of the Building or the Premises, and (iii) an action taken for the purpose of protecting public safety (e.g., to protect against acts of war, the spread of communicable diseases, or an infestation), and no such governmental actions shall entitle Tenant to any compensation from Landlord or any authority, or Rent abatement or any other remedy under this Lease.

 

ARTICLE 14

 

ASSIGNMENT AND SUBLETTING

 

14.1

 

Transfers. Tenant shall not, without the prior written consent of Landlord, assign,

 

mortgage, pledge, hypothecate, encumber, or permit any lien to attach to, or otherwise transfer,

 

this Lease or any interest hereunder, sublet the Premises or any part thereof, or enter into any license or concession agreements for the occupancy of the Premises or otherwise permit the occupancy or use of the Premises or any part thereof by any persons other than Tenant and its employees and contractors (all of the foregoing are hereinafter sometimes referred to collectively as "Transfers" and any person or entity to whom any Transfer is made or sought to be made is hereinafter sometimes referred to as a "Transferee"). If Tenant desires Landlord's consent to any Transfer, Tenant shall notify Landlord in writing, which notice (the "Transfer Notice") shall include (i) the proposed effective date of the Transfer, which shall not be less than thirty (30) days nor more than one hundred eighty (180) days after the date of delivery of the Transfer Notice, (ii) a description of the portion of the Premises to be transferred (the "Subject Space"), (iii) all of the terms of the proposed Transfer and the consideration therefor, including calculation of the "Transfer Premium", as that term is defined in Section 14.3 below, in connection with such Transfer, the name and address of the proposed Transferee, and a copy of all existing executed and/or proposed documentation pertaining to the proposed Transfer, including all existing operative documents to be executed to evidence such Transfer or the agreements incidental or related to such Transfer, provided that Landlord shall have the right to require Tenant to utilize Landlord's standard consent to Transfer documents in connection with the documentation of any consent to such Transfer, and (iv) current financial statements of the proposed Transferee certified by an officer, partner or owner thereof, business credit and personal references and history of the proposed Transferee and any other information required by Landlord which will enable Landlord to determine the financial responsibility, character, and reputation of the proposed Transferee, nature of such Transferee's business and proposed use of the Subject Space. Any Transfer made without Landlord's prior written consent (to the extent required hereunder) shall, at Landlord's option, be null, void and of no effect, and shall, at Landlord's option, constitute a default by Tenant under this Lease. Whether or not Landlord consents to any proposed Transfer, Tenant shall pay Landlord's review and processing fees, as well as any reasonable professional fees (including, without limitation, attorneys', accountants', architects', engineers' and consultants' fees) incurred by Landlord, within thirty (30) days after written request by Landlord, provided, however, the foregoing fees shall not exceed Two Thousand Five Hundred and 00/100 Dollars ($2,500.00) for a Transfer in the ordinary course of business.

 

14.2

 

Landlord's Consent. Landlord shall not unreasonably withhold its consent to