Agreement No.

CIRM 2216

CALIFORNIA fNSTITUTE FOR REGEN ERA TIVE MEDICfNE lNDEPENDENT CONSULTANT AGREEMENT

THiS AGREEMENT to furnish certain consultant services is made and

between the California Institute for Regenerative Medicine hereinafter called (ClRM), and Square 1 Bank hereinafter called (the Consultant).

L NATURE AND PLACE(S) OF SERVICE

A. The Consultant shall furnish to CIRM the following described services including a time schedule by which the Consultant is to produce or provide specified materials or perform certain consulting services as well as reports on the progress of the services:

See Attachment A.

CIRM makes no representations or guarantees regarding the number of loan applications, if any, that will be assigned to Consultant pursuant to this Agreement, nor does this Agreement prohibit ClRM from entering into agreements with other consultants to provide the same services; CIRM shall have sole discretion to determine which, if any, loan applications will be assigned to Consultant.

B. In addition to the services described in subparagraph A. above, the

Consultant's proposal to CIRM shall be incorporated herein reference

and made part of this Agreement.

C. If the Consultant is an entity other than an individual, CIRM requires that staff be assigned according to Attachment A to perform the work set forth herein. No reassignment of work to any other individual(s) other than those described in Attachment A, and those reasonably determined by Consultant from time to time, shall be made without the written approval ofCIRM.

D. Placers) of performance of such services shall be:

Consultant's location:

SQUARE 1 BANK

12481 High Bluff Drive, Suite 350 San Diego, CA 92130

(and such other locations as Consultant reasonably deems necessary or appropriate from time to time)

CIRM's location:

210 King Street

San Francisco, CA 94 J 07

E< CIRM will not provide to or for Consultant working space, equipment,

or services,

It TERM OF AGREEMENT

A. The term of this Agreement shall be from September 1,2009 through June 30,2012,

B. Each party reserves the right to terminate this Agreement subject to 60

written notice to the other party. In addition, this Agreement may be terminated by either party for cause. The term "for cause" shall mean that the nO[Jterminating party fails to meet the terms, conditions, and/or responsibilities of this Agreement. In this instance, the termination shall be effective as of the date indicated on the terminating party's notification to the non-terminating party.

C. The term of this Agreement may be extended by the mutual, written

consent of both parties.

HI. COMPENSATION AND REIMBURSEMENT FOR EXPENSES

A. CIRM shall pay the Consultant for services performed as set forth in Attachment B.'

MAXIMUM TO BE PAID UNDER THIS AGREEMENT $250,000.

• Reimbursement for travel and per diem shall be in accordance with established CIRM rates and policies.

B. Payments shall be made upon the Consultant's submission of invoices indicating the Agreement Number and setting forth charges in accordance with rates detailed in Article III-A. Each invoice shall include the Consultant's taxpayer identification number (Social Security or employer identification number). Invoices shall be submitted not more frequently than monthly in arrears to:

California Institute for Regenerative Medicine John Robson

Vice President of Operations 210 King Street

San Francisco, CA 94107

Payment will be made in accordance with, and within the time specified in, Government Code Chapter 4.5, commencing with Section 927. The following link will take you to the Government Code cited for further

IV. REPORTING

In performing consulting services under this the Consultant shall

provide progress reports to CIRM upon CIRM's reasonable request, but no more frequently than quarterly.

V. NOTIFICATION

Unless otherwise in this all notices or demands any party

relating to this Agreement or any other agreement entered into in connection

herewith shall be in and shall be personally delivered or sent

recognized overnight delivery service, certified mail, postage prepaid, return receipt requested, or by telefacsimile to CIRM or to the Consultant, as the case may be, at its addresses set forth below:

CIRM:

John Robson 210 King Street

San Francisco, CA 94107 Fax: (415) 396-9141

The Consultant:

SQUARE I BANK

12481 High Bluff Drive, Ste, 350 San Diego, CA 92130

Attn: Scott Foote

Fax: (858) 436 -3501

With a copy to:

406 Blackwell Street, Suite 240 Durham, NC 27701

Attn: Leah Webb

Fax: (919)314-3110

The parties hereto may change the address at which they are to receive notices hereunder, by notice in writing in the foregoing manner given to the other.

VI. TAXES

The compensation stated in Article III includes all applicable taxes and will not be changed hereafter as the result of Consultant's failure to include any applicable tax or as the result of any change in the Consultant's tax liabilities. The Consultant acknowledges that compensation payable hereunder may be subject to withholding of state and federal income tax, including state income tax subject to withholding pursuant to California Revenue and Taxation Code Sections 18661-18677.

VII. CONSULTANT STATUS

A. Both parties agree that in the performance of this Agreement the Consultant shall not be an agent or employee of CIRM, shall not be covered by the State

of Cali forni a Worker's Compensation Insurance or Insurance,

shall not be eligible to participate in CIRM's retirement programs, and shall

not be entitled to any other CIRM benefits,

B. The Consultant shall be solely responsible for the conduct and control of the work to be performed by the Consultant under this Agreement, except that the Consultant shall report to CIRM the results of such work, The Consultant's services for CIRM shall be performed in accordance with currently approved methods and ethical standards employed by the Consultant.

California State Contract Code 10515 states: No person, firm, or subsidiary

thereof who has been awarded a consulting services contract may submit a bid

for, nor be awarded a contract on or after July 1, for the provision of

services, procurement of goods or supplies, or any other related action that is required, suggested, or otherwise deemed appropriate in the end product of the consulting services contract

VIII. ASSIGNMENT OR SUBCONTRACTING

The Consultant may not assign or transfer this Agreement, or any interest or claim, or subcontract any portion of the work, without the prior written approval of CIRM, not to be unreasonably withheld, conditioned or delayed, The withholding or granting of such approval is totally discretionary with CIRM. If CJRM consents to such assignment or transfer, the terms and conditions of this Agreement shall be binding upon any assignee or transferee.

IX. PROPERTY RIGHTS, INCLUDING PATENTS AND COPYRIGHTS

A. All written and other tangible material ("Material") produced pursuant to

this Agreement by the Consultant shall be considered a work-made-for-hire under the Copyright Act. To the extent said Material does not qualify as a work-madefor-hire, Consultant hereby assigns all right, title, and interest, including, but not limited to, copyright and all copyright rights in the Material to ClRM and shall execute any and all documents necessary to effectuate such assignment In the event Consultant uses any individual who is not a full-time employee of Consultant or uses any other entity to perform any of the work required by Consultant hereunder, Consultant shan require said individual or entity to sign an agreement before commencing work that contains identical wording to the foregoing two sentences except that the word "Consultant" shall be replaced with the individual's or entity's name.

B. This section docs not apply to loan documentation materials developed by

Consultant independent ofCIRM and used in connection with Consultant's services under this Agreement CIRM shall have an irrevocable license for use of such materials for which CIRM shall be deemed to have fully paid Consultant as part ofthe fee for Consultant's services hereunder. CIRM's license for the use of

such materials shall survive the termination of this Agreement and shall remain in

effect for the term loans issued in reliance on such materials,

Co Notwithstanding the foregoing or any other provision of this to

the contrary, the Consultant shall be to use, for its own purposes,

including but not limited to credit of loans to, or other investments

borrowers the Material produced and or the services

hereunder as date of execution ofthis Agreement CIRM hereby grants to

the Consultant non-transferrable, nonexclusive a royalty-free license to the Material for these purposes.

X. LIABILITY AND INSURANCE REQUIREMENTS

A. The Consultant agrees to defend, at CIRM's indemnify, and hold harmless CIRM, its officers, agents, and employees (the "CIRM Parties") from and against any and all third party claims, losses, expenses

(including costs and reasonable attorney's fees), claims for injury, or damages (collectively, "Claims") against the CIRM Parties that are caused by or directly result from the grossly negligent or intentional acts of the Consultant, its officers, employees, or agents or Consultant's breach of this Agreement, except to the extent the Claims arise from the gross negligence or willful malfeasance of the CIRM Parties or any of them, In addition, Consultant agrees to defend, at CIRM's election, indemnify, and hold harmless the ClRM Parties from and against any and all Claims against the ClRM Parties accruing or resulting to any and all contractors, subcontractors, suppliers of the Consultant, or any other person, firm or corporation furnishing services or supplying goods to the Consultant in connection with the Consultant's performance of this Agreement, except to the extent the Claims arise from the gross negligence or willful malfeasance ofCIRM. Notwithstanding the foregoing, in no event shall the (i) Consultant be liable for special, consequential or exemplary damages, or for lost profits; and (ii) maximum liability hereunder exceed the maximum amount then paid under this Agreement, in accordance with m. A., above.

Notwithstanding and without limiting the foregoing, CIRM will make all final decisions regarding risk assessment, loan documentation, funding, loan administration and reJated matters regarding loans to be made by CIRM; the Consultant shall have no liability whatsoever with respect thereto, including but not limited to any decision by CIRM to fund or not fund a particular loan; any decision made or action taken by CIRM with respect to the administration of a particular loan; any borrower's performance or Jack of performance of any loan; or any related matter.

B. CIRM agrees to defend, at the Consultant's election, indemnify, and hold harmless the Consultant, its officers, agents, and employees (the

"Consultant from and against any and all third party claims,

losses, expenses (including costs and reasonable claims

for injury, or damages

Parties that are caused by or result from the grossly

intentional acts of the CIRM Parties or any ofthem, or CIRM's breach of this Agreement, except to the extent the Claims arise from the gross negligence or willful malfeasance of the Consultant Parties or any of them, In addition, CIRM agrees to defend, at the Consultant's election, indemnify, and hold harmless the Consultant Parties from and against any and all Claims against the Consultant Parties accruing or resulting to any and all contractors, subcontractors, suppliers of CIRM, or any other person, firm or corporation furnishing services or supplying goods to CIRM in connection with CIRM's performance of this Agreement, except to the extent the Claims arise from the gross negligence or willful malfeasance of the Consultant. Notwithstanding the foregoing, in no event shall (i) CIRM be liable for special, consequential or exemplary damages, or for lost profits; and (ii) the maximum liability hereunder exceed the maximum amount to be paid under this Agreement, in accordance with III. A., above.

C. The Consultant shall furnish a Certificate of Insurance (contractual liability included) showing minimum coverage as follows:

1. General Liability: Comprehensive or Commercial Form

(Minimum Limits)

(i) General Aggregate (BI, PD)*

(ii) Products, Completed Operations Aggregate

(iii) Personal and Advertising Injury

(iv) Each Occurrence

$2,000,000

$2,000,000 $1,000,000 $1,000,000

'" (not applicable to comprehensive form)

However, if such insurance is written on a claims-made form following termination of this Agreement, coverage shall survive for a period no less than three years. Coverage must include a Primary and Non-Contributory provision and a Severability of Interest provision. Coverage shall also provide for a retroactive date of placement coinciding with the effective date of this Agreement.

2. Business Auto Liability: (Minimum Limits) for Owned, Scheduled, Non-Owned, or Hired Automobiles with a combined single limit of no less than $1,000,000 per occurrence.

3. Workers' Compensation: as required under California State Law.

4. Professional Liability Insurance: (Minimum Limits)

$2,000,000

If this insurance is written on a claims-made form, it shall continue

for three years following termination of this The

insurance shall have a retroactive date of placement to or

coinciding with the effective date of this Agreement. The insurance must include Contractual

The Consultant shall endeavor to notify CIRM at least twenty to cancellation of or changes in any of the required insurance.

Premiums 011 all insurance policies shall be paid directly by the Consultant.

XL RECORDS ABOUT INDIVIDUALS

A. The Consultant acknowledges that the creation and maintenance of records pertaining to individuals is subject to certain requirements set forth by the California Information Practices Act (Civil Code 1798, et seq.) and by CIRM policy. Such requirements include provisions governing the collection, maintenance, accuracy, dissemination, and disclosure of information about individuals, including the right of access by the subject individuals.

B. If the Consultant creates confidential or personal records about an individual, as defined by the Information Practices Act, including notes or tape recordings, the information shall be collected to the greatest extent practicable directly from the individual who is the subject of tile information. When collecting the information, the Consultant shall inform the individual that the record is being made and of the purpose of the record in accordance with the Consultant's ordinary practice.

C. Subject to IX, above, records containing confidential or personal information about individuals are the property of CIRM and subject to CIRM's policies and applicable federal and state laws; and, the Consultant agrees to deliver all such records, including originals and all copies and summaries, to CIRM upon termination of this Agreement.

D. CIRM acknowledges that certain records containing confidential or personal information about individuals may be deemed nonpublic personal information under the Grarnm-Leach-Bliley Act, other federal or state privacy laws (as amended) and the rules and regulations promulgated thereunder to which Consultant is subject (collectively, the "Privacy Laws"). CIRM agrees (i) not to disclose or use such information except as

permitted or required law, to establish and maintain procedures

reasonably to assure the and of all such

information (including procedures involving the proper disposal of

nonpublic personal information) and to cooperate with Consultant and

provide reasonable assistance to Consultant in ensuring compliance with

such Privacy Laws, consistent with CIRM's under the

California Public Records Act.

E. The Consultant shall not use recording devices in discussions with CIRM's employees without notifying all parties to the discussion that the discussion is being recorded.

XU. EXAMINA nON OF RECORDS

The Consultant agrees that CIRM and its authorized agents shall have the right to review and copy any records and supporting documentation pertaining to the performance of this Agreement including, but not limited to, all documents, records and work papers whether obtained or copied from CIRM or developed by the Consultant. The Consultant agrees to maintain such records for a minimum of

five years after final payment, unless a longer period of records retention is

agreed to by the Consultant in its reasonable discretion. The Consultant agrees to allow CIRM and its authorized agent's access to such records during normal business hours, upon prior written request, but no more frequently than quarterly. Further, the Consultant agrees to include a similar right of access in any subcontract related to the performance by the Consultant of this Agreement

In accordance with state law, the Consultant agrees that CIRM, its authorized agents, the State Controller's Office, and the Bureau of State Audits (collectively, the "Auditors") shall have the right, in connection with an audit, to review and copy any records and supporting documentation pertaining to the performance of this Agreement including, but not limited to, all documents, records and work papers whether obtained or copied from CIRM or developed by the Consultant. The Consultant agrees to maintain such records for possible audit for a minimum of five (S) years after final payment, unless a longer period of records retention is agreed to by the Consultant in its reasonable discretion. Consultant agrees to allow the Auditors access to such records during normal business hours, upon prior written request, and to allow interviews of any employees who might reasonably have information related to such records. Further, the Consultant agrees to include a similar right of the Auditors to audit records and interview staff in any subcontract related to the performance by the Consultant of this Agreement.

XIII. CONFLICTS OF INTEREST

A. The Consultant will not hire any officer or employee of CIRM to perform any service covered by this Agreement during the term of the Agreement and within three months of the termination of this Agreement. lfthe work is to be performed in connection with a federal or state contract or grant,

the Consultant will not hire any employee of the government concerned to

nprtr-.rm any service covered this

The Consultant affirms that it shall

with the Conflict of Interest

which is incorporated into this Agreement as Attachment C

C

The Consultant shall not be in a reporting relationship to a CIRM employee who is a near relative, nor shall the near relative be in a

decision-making position with to the Consultant

XIV.

OPPORTUNITY COMPLIANCE

The Consultant that as a state government contractor or subcontractor, the Consultant is obligated to comply with all state laws and regulations regarding equal opportunity in government contracts. When applicable, the Consultant agrees that all such laws and their implementing regulations are incorporated herein as though set forth in full. These laws include the nondiscrimination requirements of Government Code sections 12990 and 11135, and the nondiscrimination program and clause required by Title 2, Division 4, Chapter 5 of the California Code of Regulations.

XV. CONFIDENTIALITY

This Agreement shall be subject to the terms and conditions of that certain Mutual Nondisclosure Agreement by and between CIRM and the Consultant dated as of August 7, 2009.

XVI. APPLICABLE LA W

The laws of the State of California shall govern this Agreement, without regard to principles of conflicts of law.

XVII. TERMS TO BE EXCLUSIVE

This Agreement, including all attachments hereto, all as amended from time to time, constitutes the entire understanding between the parties regarding the subject matter hereof and supersedes any prior understanding between the parties, oral or written, regarding the same subject matter.

XVIII. WAIVER OR MODIFICATION OF TERMS

No waiver, amendment or other modifications ofthe terms of this Agreement shall be binding upon either party unless expressed in writing and signed by both parties hereto.

XIX. STANDARD FOR PERFORMANCE

The parties acknowledge that ClRM, in selecting the Consultant to perform the services hereunder, is upon the Consultant's reputation for excellence in

the of the services hereunder, The Consultant shall

perform the services in the manner of one who is a specialist in the types of services to be performed. All deadlines set forth in the are

binding and may be modified subsequent written agreement of the

parties. The Consultant shall devote such time to performance of or his

duties under this Agreement as is reasonably necessary for the satisfactory performance of such duties within the deadlines set forth herein. Nothing in the foregoing shall be construed to alter the requirement that time is of the essence in this Agreement.

XX. EXCLUSION. Independent Consultant warrants that it is not excluded from participation in any governmental sponsored program, including, without limitation, the Federal Procurement and Nonprocurement Programs fut1R:llwww.epls.gov/epls/search.do). Consultant shall inform CIRM in the event that, during the term of the Agreement, it is excluded from participation in any federal procurement program.

XXI RESOLUTION OF DISPUTES

If the Consultant disputes any action by CIRM arising under or out of the performance ofthis contract, the Consultant shall notify CIRM of the dispute in writing and parties shall attempt to resolve the dispute upon mutually acceptable terms. In the event the parties are unable satisfactorily to resolve such dispute, the Consultant shall notify CIRM of the same and request a claims decision. CIR.M shall issue a decision within 30 days of the Consultant's notice. If the Consultant disagrees with CIRM's claims decision, the Consultant shall submit a formal claim to the President of CIRM. The President's decision shall be rendered within 30 days of the Consultant's notice, and may encompass facts, interpretation of the contract and determinations or applications of law. The decision shall be in writing following an opportunity for the Consultant to present oral or documentary evidence and arguments in support ofthc claim. In the event the Consultant disagrees with the decision of the President of CIRM, the Consultant shall be entitled to pursue whatever judicial remedies are available to it.

The Consultant shall continue with the responsibilities under this Agreement during any dispute, except to the extent any such dispute challenges the duty or obligation of the Consultant to continue to perform under this Agreement.

XXII SURVIVAL

The following paragraphs shall survive the termination or early expiration of this Agreement: V (Notification), IX (Property Rights, Including Patents and Copyrights), X (Liability and Insurance Requirements), XII (Examination of Records), XIII.A (Conflicts of Interest), XV (Confidentiality), XXI (Resolution of Disputes), and xxn (Survival).

[Balance of Page Intentionally Left Blank]

CONSULTANT

THE CALIFORNIA INSTITUTE FOR REGENERATIVE ME leI '

[Signature Page to Consultant Agreement]

Date

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ATTACHMENT A - Scope of Services

The Consultant will be expected to perform the duties with to the

CIRM loan program for the CIRM Disease Team Research Awards (RF A 09-01);

ClRM will that loan submit standard financial disclosure forms

with their application for a loan. After receipt of the financial disclosure CIRM

will assign each loan applicant to Consultant, after identifying potential conf1icts of

interest. The Consultant will then work directly with the loan to obtain any

additional information necessary to complete its review.

3. Financial Hue The Consultant will review the entity's business

plan, key financial metrics, bank account verification, and the credit history (such as a

Dun & Bradstreet report) and any litigation of record for both the applicant and its

principals, all and such other matters and/or otherwise as customarily reviewed by the Consultant in the ordinary course of the Consultant's business. ClRM will make all final decisions regarding risk assessment, loan documentation and funding.

b. Assessment of Non-Scientific Risk Factors: In conjunction with the filing of an application for an award, Loan Applicants will be required to identify the key nonscientific risk factors they foresee with regard to their ability to implement the product development plan as submitted. Information requested will include: complete capitalization requirements and sources (beyond the CIRM loan requests), key employee/consultants necessary to achieve the goals of the project, and relevant approvals/timelines TIle Consultant may, but shall not be required to, suggest methods for CIRM to reduce its loan risk (i.e, milestone adjustments, delay project initiation until additional funds are secured, etc). Risk factors should be updated upon the written request and expense of CIRM, and may be reviewed by CIRM as disbursements are made, but maybe be updated and reviewed more frequently if reasonably determined necessary. C1RM will make all final decisions regarding risk assessment, loan documentation and funding.

c. Financial Underwriting Review: The Consultant will review the status of the applicants' current capitalization and plans for obtaining future capital, analyze the applicants' cash flow plans and internal financial controls, and confirm the lack of disclosed material contingent liabilities, liens, or obligations against the applicants. This review may include any other areas of research and analysis deemed appropriate by the Consultant and CIRM. These loans support cutting edge research, so CIRM understands that each scientific research project will present risks, and does not expect the Consultant to guarantee (and the Consultant shall have no liability to CIRM or otherwise with respect to) product development, project results or performance by any applicant, including under any loan made by CIRM; however, CIRM docs expect that the Consultant will produce a written summary of its analysis. CIRM will make all final decisions regarding risk assessment, loan documentation and funding.

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d. Structuring of Loan; Documentation of Loan Agreement; Filing of Security Documents: CIRM will develop a standard loan agreement for use for all loans, subject to revisions as required for a particular loan. The Consultant will cause to be filed all UCC Financing Statements and other, similar recordable security interests

the "Financing Statements") CIRM to the Consultant for filing. The

Consultant shall be entitled to upon the CIRM to the Consultant of

Financing Statements as evidence of the due authorization by the borrower to

file the same. Consultant shall not be required to, and shall not, verify the accuracy or legal sufficiency of any filing(s) to be made on CIRM's behalf. Further, with respect to any public records searches and filings to be performed by Consultant hereunder, CIRM acknowledges that responsibility for maintaining public records rests with the filing

office of each jurisdiction, and Consultant no liability with respect thereto beyond

its to exercise reasonable care. CIRM will make all final decisions regarding risk

assessment, loan documentation and funding.

e. Loan Administration: The Consultant, in close communication and cooperation with CIRM, and upon CIRM's prior written request and in CIRM's sale discretion, will perform certain aspects of loan administration, including (i) monitoring compliance with financial milestones and capitalization requirements, if applicable (per the relevant loan documentation); and (ii) monitoring financial covenant compliance, all as expressly set forth in the relevant loan documentation. The Consultant will provide a written update of such Loan Administration to CIRM as necessary, but in any event, not more frequently than quarterly. CIRM will make all final decisions regarding Loan Administration.

f. Management of Warrants: The Consultant will, upon delivery of the same to the Consultant by CIRM, hold the Warrants in the same manner engaged in by the Consultant with respect to its own warrant portfolio. The Consultant will use commercially reasonable efforts to sell the warrants at CIRM's direction. The Consultant shall have no liability to CIRM or any other party for the value, or lack of value, of any warrant held by offor the benefit ofCIRM, including in connection with any potential or actual sale, transfer or other disposition of any warrant. CIRM will make all final decisions regarding actions taken with respect to any warrants granted to CIRM and managed by Consultant.

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ATT.iCHMENT B ~ Compensation and Reimbursement for EXl!ells~§

.. Loan

" Annual Service Fee per Loan 0[$1 •••

.. Warrant Administration Fee per Loan of. Fee is included in Annual Service Fee.

.. Estimated

Fees per Loan of ••••• IPaid as services are np,·t'''·IT\{'rl

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ATTACHMENTC

CONFLICT OF INTEREST POLlCY FOR LOAN PROGRAM FINANCIALCONSOLTANTS

INTRODUCTION

The role of ClRM's loan program financial consultants is to assist CIRM with the administration of its loan program. The financial consultants will not be making decisions, and the analysis provided by the financial consultants will be subject to intervening, substantive review by CIRM staff before being presented to the Finance Subcommittee and to CIRM's Governing Board. Under California law, therefore, the financial consultants are not subject to the State's conflict of in teres I laws. To ensure the integrity and the success of CIRM's loan program, however, it is critical that the financial consultants disclose to CIRM financial interests that would create a potential for conflicts of interest and that CIRlv1 have the power to reassign a loan applicant if CIRM determines that the potential for a conflict outweighs the benefit of the financial consultant's involvement in the loan.

This policy is no! intended to prevent a financial consultant from entering into a financial relationship with a loan recipient, provided that CIRM's loan is not subordinated to a loan provided by the financial consultant. However, as described below, the financial consultant must disclose its intention to enter into such a relationship, and CIRM reserves the right, in its sole discretion, 10 reassign the loan to another financial consultant.

POLICY

The following Conflicts of Interest Policy is intended to assure full and accurate conflicts checks and conflicts monitoring throughout the term of the contract.

I. A financial consultant shall disclose to CIRM any preexisting financial or other relationship between the financial consultant and a loan applicant ana the manner in which the financial consultant would propose to address the potential for a conflict of interest if CIRM were to assign the loan applicant to the financial consultant. CIRM reserves the right to reassign the loan applicant to another financial consultant for any reason, including ifCIRM determines, in its sole discretion, that the advantage of the financial consultant's familiarity with the loan applicant is outweighed by the potential for a conflict ofinterest,

2, A financial consultant shall disclose to CIRM its intention to enter into a financial relationship or other relationship with a loan recipient that has been assigned to the financial consultant and the manner in which the financial consultant would propose to address the potential for a conflict of interest arising from the relationship. CIRM reserves the right to reassign the loan to another financial consultant ifCIRM, in its sole discretion, determines that the benefit of the relationship between the financial consultant and the loan recipient, including the potential for additional financing, is outweighed by the potential for a conflict of interest.

3. A financial consultant shall to disclose to CIRM whether any its staff who are assigned to the CIRM loan program have a personal financial interest in an applicant. Employees of a financial consultant who have a financial interest in a loan applicant shall be prohibited from participating in any of the financial consultant's work with respect to that applicant. For these purposes, a financial interest is defined as an investment of $2,000 or more or the receipt of income of $500 or more in 12-month period preceding th e employee's involvement in the loan application.

4. After disclosure of any potential conflict, CiRM may, in its sole discretion, determine that a conflict is nonmaterial. However, lfCIRM, in its sole discretion, determines that the conflict is material, CIRM may require the loan to be transferred to another financial consultant. In addition, if CIRM, in its sole discretion, determines that an employee of the financial consultant has a material conflict of in teres 1 with respect to a particular loan application, CIRM may require the financial consultant to assign another employee to the loan.

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