UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
☒ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended June 30, 2018
OR
☐ |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission File Number: 001-38211
Roku, Inc.
(Exact name of registrant as specified in its charter)
Delaware |
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26-2087865 |
(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
150 Winchester Circle
Los Gatos, California 95032
(Address of principal executive offices including zip code)
Registrant’s telephone number, including area code: (408) 556-9040
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Accelerated filer |
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Non-accelerated filer |
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☒ (Do not check if a smaller reporting company) |
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Smaller reporting company |
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☐ |
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Emerging growth company |
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☒ |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of July 31, 2018, the registrant had 68,400,971 of Class A common stock, $0.0001 par value per share, and 37,677,499 shares of Class B common stock, $0.0001 par value per share, outstanding.
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Page |
PART I. |
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1 |
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Item 1. |
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1 |
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1 |
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2 |
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3 |
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4 |
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Notes to Unaudited Condensed Consolidated Financial Statements |
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5 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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22 |
Item 3. |
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32 |
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Item 4. |
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32 |
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PART II. |
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33 |
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Item 1. |
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33 |
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Item 1A. |
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33 |
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Item 2. |
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58 |
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Item 3. |
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58 |
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Item 4. |
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58 |
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Item 5. |
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58 |
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Item 6. |
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59 |
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60 |
i
Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act, about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this report, including statements regarding our future results of operations and financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, forward-looking statements may be identified by words such as “anticipate,” “believe,” “continue,” “could,” “design,” “estimate,” “expect,” “intend,” “may,” “plan,” “potentially,” “predict,” “project,” “should,” “will” or the negative of these terms or other similar expressions.
Forward-looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors” and elsewhere in this Form 10-Q, regarding, among other things:
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• |
our financial performance, including our revenue, cost of revenue, operating expenses and our ability to attain and sustain profitability; |
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• |
our ability to attract and retain users and increase hours streamed; |
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• |
our ability to attract and retain advertisers; |
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• |
our ability to attract and retain additional TV brands and service operators to license our technology; |
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our ability to license popular content on our platform on favorable terms, or at all, including the renewals of our existing agreements with content publishers; |
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changes in consumer viewing habits or the growth of TV streaming; |
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the growth of our relevant markets, including the growth in advertising spend on TV streaming platforms, and our ability to successfully grow our business in those markets; |
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• |
our ability to adapt to changing market conditions and technological developments, including developing integrations with our platform partners; |
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our ability to develop and launch new streaming products and provide ancillary services and support; |
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• |
our ability to compete effectively with existing competitors and new market entrants; |
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• |
our ability to successfully manage domestic and international expansion; |
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our ability to attract and retain qualified employees and key personnel; |
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• |
security breaches and system failures; |
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our ability to maintain, protect and enhance our intellectual property; and |
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our ability to comply with laws and regulations that currently apply or may become applicable to our business both in the United States and internationally, including compliance with the EU General Data Protection Regulation. |
We caution you that the foregoing list may not contain all of the forward-looking statements made in this Quarterly Report on Form 10-Q.
Other sections of this report may include additional factors that could harm our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ from those contained in, or implied by, any forward-looking statements.
ii
You should not rely upon forward-looking statements as predictions of future events. We cannot assure you that the events and circ umstances reflected in the forward-looking statements will be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or ac hievements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this report or to conform these statements to actual results or to changes in our expectations. You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed as exhibits to this report with the understanding that our actual future results, levels of activity, performance and achieveme nts may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements.
Investors and others should note that we may announce material business and financial information to our investors using our investor relations website (ir.roku.com/investor-relations), SEC filings, webcasts, press releases, and conference calls. We use these mediums, including our website, to communicate with our members and public about our company, our products, and other issues. It is possible that the information that we make available may be deemed to be material information. We therefore encourage investors and others interested in our company to review the information that we make available on our website .
iii
ROKU, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
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As of |
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June 30, 2018 |
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December 31, 2017 |
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Assets |
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Current Assets: |
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Cash and cash equivalents |
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$ |
174,167 |
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$ |
177,250 |
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Accounts receivable, net of allowances |
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123,612 |
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120,553 |
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Inventories |
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39,431 |
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32,740 |
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Prepaid expenses and other current assets |
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15,131 |
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11,367 |
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Deferred cost of revenue, current portion |
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1,439 |
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3,007 |
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Total current assets |
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353,780 |
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344,917 |
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Property and equipment, net |
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20,212 |
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14,736 |
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Deferred cost of revenue, non-current portion |
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— |
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5,403 |
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Intangible assets, net |
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1,754 |
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2,030 |
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Goodwill |
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1,382 |
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1,382 |
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Other non-current assets |
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4,540 |
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3,429 |
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Total Assets |
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$ |
381,668 |
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$ |
371,897 |
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Liabilities and Stockholders’ Equity |
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Current Liabilities: |
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Accounts payable and accrued liabilities |
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$ |
111,026 |
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$ |
128,757 |
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Deferred revenue, current portion |
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39,151 |
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34,501 |
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Total current liabilities |
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150,177 |
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163,258 |
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Deferred revenue, non-current portion |
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12,435 |
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48,511 |
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Other long-term liabilities |
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7,291 |
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7,849 |
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Total Liabilities |
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169,903 |
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219,618 |
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Commitments and contingencies (Note 7) |
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Stockholders’ Equity: |
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Preferred stock, $0.0001 par value |
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— |
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— |
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Common stock, $0.0001 par value |
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11 |
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10 |
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Additional paid-in capital |
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462,901 |
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435,607 |
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Accumulated deficit |
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(251,147 |
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(283,338 |
) |
Total stockholders’ equity |
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211,765 |
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152,279 |
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Total Liabilities and Stockholders’ Equity |
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$ |
381,668 |
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$ |
371,897 |
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See accompanying notes to condensed consolidated financial statements.
1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
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Three Months Ended |
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Six Months Ended |
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June 30, 2018 |
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June 30, 2017 |
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June 30, 2018 |
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June 30, 2017 |
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Net Revenue: |
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Platform |
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$ |
90,341 |
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$ |
45,976 |
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$ |
165,418 |
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$ |
82,391 |
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Player |
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66,469 |
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53,651 |
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127,968 |
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117,329 |
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Total net revenue (See Note 10) |
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156,810 |
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99,627 |
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293,386 |
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199,720 |
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Cost of Revenue: |
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Platform |
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27,328 |
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11,778 |
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48,994 |
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20,121 |
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Player |
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51,730 |
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50,212 |
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103,528 |
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103,122 |
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Total cost of revenue |
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79,058 |
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61,990 |
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152,522 |
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123,243 |
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Gross Profit: |
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Platform |
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63,013 |
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34,198 |
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116,424 |
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62,270 |
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Player |
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14,739 |
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3,439 |
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24,440 |
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14,207 |
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Total gross profit |
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77,752 |
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37,637 |
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140,864 |
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76,477 |
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Operating Expenses: |
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Research and development |
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40,196 |
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25,776 |
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74,322 |
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48,118 |
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Sales and marketing |
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22,259 |
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14,667 |
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42,577 |
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28,722 |
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General and administrative |
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15,429 |
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10,577 |
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30,999 |
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|
20,855 |
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Total operating expenses |
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77,884 |
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51,020 |
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147,898 |
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|
97,695 |
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Loss from Operations |
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(132 |
) |
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(13,383 |
) |
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(7,034 |
) |
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(21,218 |
) |
Other Income (Expense), Net: |
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|
|
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|
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Interest expense |
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|
(57 |
) |
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|
(304 |
) |
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|
(108 |
) |
|
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(471 |
) |
Change in fair value of preferred stock warrant liability |
|
|
— |
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|
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(1,916 |
) |
|
|
— |
|
|
|
(2,651 |
) |
Other income, net |
|
|
361 |
|
|
|
128 |
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|
|
809 |
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|
|
211 |
|
Total other income (expense), net |
|
|
304 |
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|
|
(2,092 |
) |
|
|
701 |
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|
|
(2,911 |
) |
Income (Loss) Before Income Taxes |
|
|
172 |
|
|
|
(15,475 |
) |
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|
(6,333 |
) |
|
|
(24,129 |
) |
Income tax expense (benefit) |
|
|
(354 |
) |
|
|
38 |
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|
|
(225 |
) |
|
|
86 |
|
Net Income (Loss) Attributable to Common Stockholders |
|
$ |
526 |
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|
$ |
(15,513 |
) |
|
$ |
(6,108 |
) |
|
$ |
(24,215 |
) |
Net income (loss) per share attributable to common stockholders—basic |
|
$ |
0.01 |
|
|
$ |
(3.18 |
) |
|
$ |
(0.06 |
) |
|
$ |
(4.98 |
) |
Net income (loss) per share attributable to common stockholders—diluted |
|
$ |
0.00 |
|
|
$ |
(3.18 |
) |
|
$ |
(0.06 |
) |
|
$ |
(4.98 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders—basic |
|
|
102,652 |
|
|
|
4,882 |
|
|
|
101,079 |
|
|
|
4,866 |
|
Weighted-average shares used in computing net income (loss) per share attributable to common stockholders—diluted |
|
|
121,698 |
|
|
|
4,882 |
|
|
|
101,079 |
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|
|
4,866 |
|
See accompanying notes to condensed consolidated financial statements.
2
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(unaudited)
|
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Common Stock |
|
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Additional Paid-in |
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Treasury |
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Accumulated |
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Total Stockholders’ |
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Shares |
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Amount |
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Capital |
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Stock |
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Deficit |
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Equity |
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Balance—December 31, 2017 |
|
|
99,157 |
|
|
$ |
10 |
|
|
$ |
436,278 |
|
|
$ |
(671 |
) |
|
$ |
(283,338 |
) |
|
$ |
152,279 |
|
Vesting of early exercised stock options |
|
|
— |
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|
|
— |
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|
|
173 |
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|
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— |
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|
|
— |
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|
|
173 |
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Issuance of common stock pursuant to equity incentive plans, net of taxes |
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|
5,763 |
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1 |
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|
17,435 |
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|
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(52 |
) |
|
|
— |
|
|
|
17,384 |
|
Issuance of common stock pursuant to exercise of common stock warrants, net |
|
|
141 |
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|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Stock-based compensation expense |
|
|
— |
|
|
|
— |
|
|
|
9,738 |
|
|
|
— |
|
|
|
— |
|
|
|
9,738 |
|
Adoption of ASU 2016-16 (See Note 1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(40 |
) |
|
|
(40 |
) |
Adoption of ASU 2014-09 (See Note 10) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
38,339 |
|
|
|
38,339 |
|
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(6,108 |
) |
|
|
(6,108 |
) |
Balance—June 30, 2018 |
|
|
105,061 |
|
|
$ |
11 |
|
|
$ |
463,624 |
|
|
$ |
(723 |
) |
|
$ |
(251,147 |
) |
|
$ |
211,765 |
|
See accompanying notes to condensed consolidated financial statements.
3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
|
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Six Months Ended |
|
|||||
|
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June 30, 2018 |
|
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June 30, 2017 |
|
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Cash flows from operating activities: |
|
|
|
|
|
|
|
|
Net loss |
|
$ |
(6,108 |
) |
|
$ |
(24,215 |
) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: |
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
3,606 |
|
|
|
2,580 |
|
Stock-based compensation expense |
|
|
9,738 |
|
|
|
4,593 |
|
Provision for doubtful accounts |
|
|
286 |
|
|
|
294 |
|
Change in fair value of preferred stock warrant liability |
|
|
— |
|
|
|
2,651 |
|
Noncash interest expense |
|
|
— |
|
|
|
300 |
|
Loss from exit of facilities |
|
|
385 |
|
|
|
— |
|
Loss on disposals of property and equipment |
|
|
— |
|
|
|
51 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
Accounts receivable |
|
|
9,383 |
|
|
|
22,839 |
|
Inventories |
|
|
(6,799 |
) |
|
|
16,486 |
|
Prepaid expenses and other current assets |
|
|
309 |
|
|
|
(2,098 |
) |
Deferred cost of revenue |
|
|
2,010 |
|
|
|
(2,615 |
) |
Other noncurrent assets |
|
|
(1,333 |
) |
|
|
(2,803 |
) |
Accounts payable and accrued liabilities |
|
|
(19,000 |
) |
|
|
(6,485 |
) |
Other long-term liabilities |
|
|
(558 |
) |
|
|
3,558 |
|
Deferred revenue |
|
|
(3,387 |
) |
|
|
15,077 |
|
Net cash provided by (used in) operating activities |
|
|
(11,468 |
) |
|
|
30,213 |
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
Purchase of property and equipment |
|
|
(9,013 |
) |
|
|
(4,586 |
) |
Change in deposits |
|
|
— |
|
|
|
86 |
|
Net cash used in investing activities |
|
|
(9,013 |
) |
|
|
(4,500 |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
Proceeds from borrowings, net |
|
|
— |
|
|
|
24,691 |
|
Repayments of borrowings |
|
|
— |
|
|
|
(15,000 |
) |
Proceeds from equity issued under incentive plans, net of repurchases |
|
|
17,398 |
|
|
|
203 |
|
Net cash provided by financing activities |
|
|
17,398 |
|
|
|
9,894 |
|
Net Increase (Decrease) In Cash |
|
|
(3,083 |
) |
|
|
35,607 |
|
Cash and cash equivalents—Beginning of period |
|
|
177,250 |
|
|
|
34,562 |
|
Cash and cash equivalents—End of period |
|
$ |
174,167 |
|
|
$ |
70,169 |
|
Supplemental disclosures of cash flow information: |
|
|
|
|
|
|
|
|
Cash paid for interest |
|
$ |
1 |
|
|
$ |
136 |
|
Cash paid for income taxes |
|
$ |
349 |
|
|
$ |
66 |
|
Supplemental disclosures of noncash investing and financing activities: |
|
|
|
|
|
|
|
|
Unpaid portion of property and equipment purchases |
|
$ |
1,043 |
|
|
$ |
893 |
|
Unpaid initial public offering cost |
|
$ |
— |
|
|
$ |
186 |
|
Issuance of convertible preferred stock warrants in connection with debt |
|
$ |
— |
|
|
$ |
2,032 |
|
See accompanying notes to condensed consolidated financial statements.
4
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. THE COMPANY
Organization and Description of Business
Roku, Inc. (the “Company” or “Roku”), was formed in October 2002 as Roku LLC under the laws of the State of Delaware. On February 1, 2008, Roku LLC was converted into Roku, Inc., a Delaware corporation. The Company’s TV streaming platform allows users to easily discover and access a wide variety of movies and TV episodes, as well as live sports, music, news and more. The Company operates in two reportable segments and generates revenue through the sale of streaming players, advertising, subscription and transaction revenue sharing, as well as through licensing arrangements with TV brands and cable, satellite, and telecommunication service operators (“service operators”).
Initial Public Offering
On October 2, 2017, the Company completed its initial public offering (“IPO”) of Class A common stock, in which it sold 10.4 million shares, including 1.4 million shares pursuant to the underwriters’ over-allotment option. The shares were sold at an IPO price of $14.00 per share for net proceeds of $134.8 million, after deducting underwriting discounts and commissions of $10.1 million. Upon the closing of the Company’s IPO, all outstanding shares of its convertible preferred stock automatically converted into 80.8 million shares of Class B common stock and all outstanding convertible preferred stock warrants automatically converted to Class B common stock warrants on a one-for-one basis. The Company has two classes of authorized common stock – Class A common stock and Class B common stock. Class A common stock entitles holders to one vote per share, and Class B common stock entitles holders to 10 votes per share.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Certain information and note disclosures normally included in the financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on March 1, 2018.
The condensed consolidated balance sheet as of December 31, 2017 has been derived from the audited consolidated financial statements as of that date but does not include all of the information and footnotes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017. The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The results of operations for the three and six months ended June 30, 2018 are not necessarily indicative of the operating results to be expected for the full year or any future periods.
There have been no material changes in the Company’s significant accounting policies, other than the adoption of Accounting Standards Update ("ASU") 2014-09, Revenue from Contracts with Customers (Topic 606), and ASU 2016-16, Income taxes: Intra-Entity Transfers of Assets Other Than Inventory (Topic 740) described below and in Note 10, as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.
Use of Judgements and Estimates
The preparation of the Company’s condensed consolidated financial statements in accordance with U.S. GAAP requires management to make certain estimates, judgments, and assumptions that affect the reported amounts of assets and liabilities and related disclosures at the date of the financial statements, as well as the reported amounts of revenue and expenses during the periods presented. Adoption of ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , added new areas of judgements and estimates such as determination of performance obligations, variable consideration and standalone selling price. Other significant items subject to estimates include revenue recognition for multiple element arrangements, determination of revenue reporting as net versus gross, sales return reserves, customer incentive programs, inventory valuation, the valuation of deferred income tax assets, the recognition and disclosure of contingent liabilities, stock-based compensation and the fair value of assets and liabilities acquired in business combinations. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable under the circumstances. Actual results may differ from the Company’s estimates.
5
The condensed consolidated financial statements have been prepared in accordance with U.S. GAAP and includes the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation.
Comprehensive Loss
Comprehensive loss is equal to the net loss for all periods presented. Therefore, the consolidated statements of comprehensive loss have been omitted from the condensed consolidated financial statements.
Concentrations
Customers accounting for 10% or more of the Company’s net revenue were as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
||||
Customer B |
|
* |
|
|
* |
|
|
* |
|
|
|
10 |
% |
|||
Customer C |
|
|
17 |
% |
|
|
18 |
% |
|
|
17 |
% |
|
|
20 |
% |
Customer E |
|
* |
|
|
* |
|
|
* |
|
|
|
11 |
% |
Customers accounting for 10% or more of the Company’s accounts receivable were as follows:
|
|
As of |
|
|
|||||
|
|
June 30, 2018 |
|
|
December 31, 2017 |
|
|
||
Customer C |
|
|
10 |
% |
|
* % |
|
|
|
Customer D |
|
|
12 |
|
|
|
16 |
|
|
|
* |
Less than 10% |
Content Licensing Fees
The Company licenses content for viewing on The Roku Channel. The licensing arrangements can be for a fixed fee and/or advertising revenue share with specific windows of content availability. The Company capitalizes the content fees and records a corresponding liability at the gross amount of the liability when the license period begins, the cost of the content is known and the content is accepted and available for streaming. The Company amortizes licensed content assets into “Cost of Revenue, Platform” over the contractual window of availability .
As of June 30, 2018, $0.1 million of content related expenses met these requirements and is included in “Prepaid expenses and other current assets ” .
Adoption of New Accounting Standards
On January 1, 2018, the Company adopted guidance in ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , (“new revenue standard”) using the modified retrospective method. The Company applied the new revenue standard to all contracts that were not completed as of January 1, 2018. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. Comparative information for prior periods has not been restated and continues to be reported under the accounting standards in effect for those periods. Refer to Note 10 for the detail on the impact of adoption.
On January 1, 2018, the Company adopted guidance in ASU 2016-16, Income taxes: Intra-Entity Transfers of Assets Other Than Inventory (Topic 740) , using the modified retrospective method. The new guidance allows a reporting entity to recognize the tax expense from the sale of the asset in the seller’s tax jurisdiction when the transfer occurs, even though the pre-tax effects of that transaction are eliminated in consolidation. The adoption of this guidance resulted in a decrease in prepaid expense and other current assets and an increase to the accumulated deficit in amounts that were not material.
6
Recently Issued Accounting Pronouncements No t Yet Adopted
In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment , which eliminates Step 2 from the goodwill impairment test which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill. Under this guidance, an entity should perform its annual or interim goodwill impairment test by comparing the fair value of the reporting unit with its carrying amount, and should recognize an impairment loss for the amount by which the carrying amount exceeds the reporting unit’s fair value, with the loss not exceeding the total amount of goodwill allocated to that reporting unit. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2019, with early adoption permitted. The guidance should be applied prospectively. The Company is evaluating the impact of this new guidance on the consolidated financial statements and the related disclosures.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , related to new accounting and reporting guidelines for leasing arrangements. The guidance requires recognition of right-to-use lease assets and lease liabilities for all leases (with the exception of short-term leases) on the balance sheet of lessees. The guidance is effective for financial statements issued for fiscal years beginning after December 15, 2018, with early adoption permitted. The new standard is to be applied using a modified retrospective approach. The Company is evaluating the impact of this new guidance on the consolidated financial statements and the related disclosures.
Fair Value Measurements
Level 1 —Quoted prices in active markets for identical assets or liabilities.
Financial assets and liabilities measured using Level 1 inputs include cash equivalents, accounts receivable, prepaid expenses, accounts payable and accrued liabilities.
The Company considers all highly liquid investments purchased with an original or remaining maturity of less than three months at the date of purchase to be cash equivalents. The Company measured money market funds of $50.0 million as cash equivalents as of June 30, 2018 using Level 1 inputs. The Company did not have any cash equivalents as of December 31, 2017.
Level 2 —Observable inputs other than quoted prices included within Level 1, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; and inputs other than quoted prices that are observable or are derived principally from, or corroborated by, observable market data by correlation or other means.
The Company does not use Level 2 inputs to measure any assets or liabilities.
Level 3 —Unobservable inputs that are supported by little or no market activity, are significant to the fair value of the assets or liabilities, and reflect the Company’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
The Company does not use Level 3 inputs to measure any assets or liabilities as of June 30, 2018 and December 31, 2017. During the six months ended June 30, 2017, Level 3 instruments consisted of the Company’s preferred stock warrant liability in which the fair value was measured upon issuance and at each reporting date. Pursuant to the IPO, all preferred stock warrants were converted into Class B common stock warrants, which did not require further re-measurements as they were deemed permanent equity.
For the three and six month periods ended June 30, 2017, the inputs that were used to determine the estimated fair value of the convertible preferred stock warrant liability as of the June 30, 2017 valuation date included remaining contractual term of the warrants, the risk-free interest rate, the volatility of comparable public companies over the remaining term, and the fair value of underlying shares. The significant unobservable inputs used in the fair value measurement of the convertible preferred stock warrant liability were the fair value of the underlying stock at the valuation date for periods prior to the IPO and the estimated term of the warrants. Generally, increases (decreases) in the fair value of the underlying stock and estimated term resulted in a directionally similar impact to the fair value measurement.
7
The following table represents the activity of the fair value of Level 3 instruments (in thousands):
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||
|
|
June 30, 2017 |
|
|
June 30, 2017 |
|
||
Convertible preferred stock warrant liability — beginning balance |
|
$ |
10,725 |
|
|
$ |
9,990 |
|
Fair value of new warrants issued |
|
|
2,032 |
|
|
|
2,032 |
|
Change in fair value of preferred stock warrant liability |
|
|
1,916 |
|
|
|
2,651 |
|
Convertible preferred stock warrant liability — ending balance |
|
$ |
14,673 |
|
|
$ |
14,673 |
|
3. BUSINESS COMBINATIONS
On September 6, 2017, the Company acquired all of the outstanding shares of a privately held technology company located in Denmark to enhance the Company’s product offerings, for an aggregate purchase price of $3.5 million. The Company paid $3.0 million of the aggregate purchase price at the time of acquisition with $0.5 million payable one year after the acquisition date. In addition, the Company issued 0.1 million shares of its Class B common stock to two of the founders as part of a continuing services arrangement. The shares are subject to a right of repurchase which lapses over a three year period at varying prices per share.
The purchase price allocation includes $1.4 million of goodwill and $2.2 million of identifiable intangible assets, which primarily consist of developed technology, with an expected useful life of approximately four years. Goodwill represents the excess of the purchase price over the fair value of the assets acquired less liabilities assumed, and is not expected to be deductible for income tax purposes. The goodwill in this transaction is primarily attributable to the acquired workforce and expected operating synergies.
4. Balance sheet components
Accounts Receivable, Net of allowances —Accounts receivable, net of allowances, consisted of the following (in thousands):
|
|
June 30, 2018 |
|
|
December 31, 2017 |
|
||
Gross accounts receivable |
|
$ |
134,564 |
|
|
$ |
138,292 |
|
Allowance for sales returns |
|
|
(4,504 |
) |
|
|
(6,907 |
) |
Allowance for sales incentives |
|
|
(6,153 |
) |
|
|
(10,442 |
) |
Other allowances |
|
|
(295 |
) |
|
|
(390 |
) |
Total allowances |
|
|
(10,952 |
) |
|
|
(17,739 |
) |
Total Accounts Receivable—net of allowances |
|
$ |
123,612 |
|
|
$ |
120,553 |
|
Allowance for Sales Returns —Allowance for sales returns consisted of the following activities (in thousands):
|
|
June 30, 2018 |
|
|
December 31, 2017 |
|
||
Beginning balance |
|
$ |
(6,907 |
) |
|
$ |
(6,916 |
) |
Charged to revenue |
|
|
(6,755 |
) |
|
|
(19,089 |
) |
Utilization of sales return reserve |
|
|
9,158 |
|
|
|
19,098 |
|
Ending balance |
|
$ |
(4,504 |
) |
|
$ |
(6,907 |
) |
Allowance for Sales Incentives —Allowance for sales incentives consisted of the following activities (in thousands):
|
|
June 30, 2018 |
|
|
December 31, 2017 |
|
||
Beginning balance |
|
$ |
(10,442 |
) |
|
$ |
(8,503 |
) |
Charged to revenue |
|
|
(15,448 |
) |
|
|
(44,264 |
) |
Utilization of sales incentive reserve |
|
|
19,737 |
|
|
|
42,325 |
|
Ending balance |
|
$ |
(6,153 |
) |
|
$ |
(10,442 |
) |
8
Property and Equipment, Net —Property and equipment, net consisted of the following (in thousands):
|
|
June 30, 2018 |
|
|
December 31, 2017 |
|
||
Computers and equipment |
|
$ |
13,508 |
|
|
$ |
11,631 |
|
Leasehold improvements |
|
|
13,270 |
|
|
|
8,437 |
|
Website and internal-use software |
|
|
6,925 |
|
|
|
5,461 |
|
Office equipment and furniture |
|
|
2,597 |
|
|
|
1,987 |
|
Total property and equipment |
|
|
36,300 |
|
|
|
27,516 |
|
Accumulated depreciation and amortization |
|
|
(16,088 |
) |
|
|
(12,780 |
) |
Property and Equipment, net |
|
$ |
20,212 |
|
|
$ |
14,736 |
|
Depreciation and amortization expense for the three months ended June 30, 2018 and 2017 was $1.8 million and $1.3 million, respectively. Depreciation and amortization expense for the six months ended June 30, 2018 and 2017 was $3.3 million and $2.6 million, respectively.
Accounts Payable and Accrued Liabilities —Accounts payable and accrued liabilities consisted of the following (in thousands):
|
|
June 30, 2018 |
|
|
December 31, 2017 |
|
||
Accounts payable |
|
$ |
32,931 |
|
|
$ |
56,413 |
|
Accrued royalty expense |
|
|
5,638 |
|
|
|
17,165 |
|
Accrued inventory |
|
|
11,206 |
|
|
|
2,382 |
|
Accrued payroll and related expenses |
|
|
10,181 |
|
|
|
8,699 |
|
Accrued cost of revenue |
|
|
13,783 |
|
|
|
12,210 |
|
Accrued payments to content publishers |
|
|
25,209 |
|
|
|
24,037 |
|
Taxes and related liabilities |
|
|
912 |
|
|
|
1,463 |
|
Customer prepayments |
|
|
5,255 |
|
|
|
545 |
|
Other accrued expenses |
|
|
5,911 |
|
|
|
5,843 |
|
Total Accounts Payable and Accrued Liabilities |
|
$ |
111,026 |
|
|
$ |
128,757 |
|
Deferred Revenue —Deferred revenue consisted of the following (in thousands):
|
|
June 30, 2018 |
|
|
December 31, 2017 |
|
||
Platform, current |
|
$ |
24,433 |
|
|
$ |
19,022 |
|
Player, current |
|
|
14,718 |
|
|
|
15,479 |
|
Total deferred revenue, current |
|
|
39,151 |
|
|
|
34,501 |
|
Platform, non-current |
|
|
7,271 |
|
|
|
42,674 |
|
Player, non-current |
|
|
5,164 |
|
|
|
5,837 |
|
Total deferred revenue, non-current |
|
|
12,435 |
|
|
|
48,511 |
|
Total Deferred Revenue (See Note 10) |
|
$ |
51,586 |
|
|
$ |
83,012 |
|
5. DEBT
The Company did not have any outstanding debt as of June 30, 2018 or December 31, 2017.
Line of credit
The Company first entered into a loan and security agreement (the “LSA”) with Silicon Valley Bank (“Bank’) in July 2011. The LSA was amended and restated in subsequent periods. The amended and restated loan and security agreement (the “Restated 2014 LSA”) entered into in November 2014, provides advances under a revolving line of credit up to $30.0 million and provides for letters of credit to be issued up to the lesser of the available line of credit, reduced by outstanding advances and drawn but unreimbursed letters of credit, or $5.0 million. The financial and non-financial covenants as well as the term of the agreement were updated in subsequent amendments to the Restated 2014 LSA.
9
In June 2017, the Company entered into a second amendment to the Restated 2014 LSA. The advances under the second amendment carry a floating per annum interest rate equal to, at the Company’s option, (1) the prime rate or (2) LIBOR plus 2.75%, or the prime rate plus 1% depending on certain ratios. The amendment further changed the financial covenant to maintain a current ratio (calculated as current assets, divided by current liabilities less deferred revenue) greater than or equal to 1.25. The revolving line of credit terminates on June 30, 2019 at which time all outstanding advances becomes due and payable. As of June 30, 2018 and December 31, 2017, the Company was in compliance with all of the covenants in the amended Restated 2014 LSA.
On July 18, 2018, the Company entered into a third amendment to the Restated 2014 LSA. The amendment increased the amount by which the Company can utilize its line of credit to support the issuances of letters of credits from $5.0 million to $30.0 million.
The Company did not have any borrowings outstanding on the revolving line of credit as of June 30, 2018 and December 31, 2017. The Company had $3.1 million and $1.5 million outstanding in letters of credit as of June 30, 2018 and December 31, 2017, respectively. The interest rate on the line of credit was 4.83% and 4.31% as of June 30, 2018 and December 31, 2017, respectively.
Term loan
In June 2017, the Company entered into a subordinated loan agreement (“2017 Agreement”) with the Bank. The 2017 Agreement provided for a term loan borrowing of $40.0 million, with a minimum of $25.0 million to be initially drawn at the close of the agreement with the remaining amount available for a 24 month period, to be drawn in no less than $5.0 million increments. Advances under the term loan incur a facility fee equal to 1% of the drawn borrowings, in addition to interest payments at an interest rate equal to, at the Company’s option, (1) the prime rate plus 3.5% or (2) LIBOR plus 6.5%, subject to a 1% LIBOR floor. Additionally, the borrowings incur payment in kind interest fees equal to 2.5%, accruing to the unpaid borrowings balance, compounded monthly. Payment in kind interest may be settled in cash, at the Company’s election, during the term or at maturity. The Company is also obligated to pay final payment fees ranging from 1% to 4% depending on the timing of the payment. On October 31, 2017 the Company repaid the entire amount outstanding, and subsequently terminated the 2017 Agreement.
In connection with the 2017 Agreement the Company issued 0.4 million warrants to purchase shares of Series H convertible preferred stock, with an exercise price of $9.17340. The warrants are exercisable up to ten years from the date of issuance. Upon repayment of the amounts borrowed and the subsequent termination of the 2017 Agreement, the Company cancelled 0.1 million warrants that were contingent on future borrowings. The warrant holders exercised 0.1 million warrants during the year ended December 31, 2017 and the remaining 0.2 million warrants during the three months ended March 31, 2018. There were no outstanding warrants as of June 30, 2018.
6. STOCKHOLDERS’ DEFICIT
Preferred Stock
The Company had outstanding convertible preferred stock before its IPO. Upon closing of the Company’s IPO, all outstanding shares of its convertible preferred stock automatically converted into 80.8 million shares of Class B common stock on a one-to-one basis.
On October 2, 2017, the Company filed an Amended and Restated Certificate of Incorporation, which changed the capital structure of the Company. The Company is now authorized to issue 10.0 million shares of undesignated preferred stock with rights and preferences determined by the Company’s Board of Directors (the “Board”) at the time of issuance of such shares. As of June 30, 2018 and December 31, 2017, there were no shares of preferred stock issued and outstanding.
Common Stock
The Company’s Amended and Restated Certificate of Incorporation filed on October 2, 2017, established two classes of authorized common stock, Class A common stock and Class B common stock. All shares of common stock outstanding immediately prior to the IPO, including shares of common stock issued upon the conversion of the convertible preferred stock, were converted into an equivalent number of shares of Class B common stock.
Holders of Class A common stock are entitled to one vote for each share of Class A common stock held on all matters submitted to a vote of stockholders and holders of Class B common stock are entitled to ten votes for each share of Class B common stock held on all matters submitted to a vote of stockholders. Except with respect to voting, the rights of the holders of Class A and Class B common stock are identical. Common stock options held prior to the IPO can be exercised into Class B or Class A common stock at the option of the holder. Warrants to purchase common stock held prior to the IPO were exercised into Class B common stock. Shares of Class B common stock are voluntarily convertible into shares of Class A common stock at the option of the holder and are automatically converted into shares of the Company's Class A common stock upon sale or transfer. All stock options and restricted stock units granted after the IPO are exercised or vested into shares of Class A common stock.
10
The Company has reserved the following shares of common stock for future issuances (in thousands):
|
|
June 30, 2018 |
|
|
Common stock awards granted under equity incentive plans |
|
|
21,485 |
|
Common stock awards available for grant under equity incentive plan |
|
|
16,280 |
|
Total reserved shares of common stock |
|
|
37,765 |
|
Equity Incentive Plans
The 2008 Equity Incentive Plan (the “2008 Plan”) became effective in February 2008. The 2008 Plan allowed for the grant of incentive stock options to employees and for the grant of non-statutory stock options and restricted stock awards to employees, directors and consultants. Options granted under the 2008 Plan were granted at a price per share equivalent to the fair market value on the date of grant. Recipients of option grants under the 2008 Plan who possess more than 10% of the combined voting power of the Company (a “10% Shareholder”) are subject to certain limitations, and incentive stock options granted to such recipients were at a price no less than 110% of the fair market value at the date of grant. Options under the 2008 Plan generally vest over four years and have a term of 10 years.
Commensurate with the Company’s IPO, the Company’s Board of Directors adopted the 2017 Equity Incentive Plan (the “2017 Plan”) which became effective in September 2017. No further equity awards can be granted under the 2008 Plan. The 2017 Plan provides for the grant of incentive stock options to employees and for the grant of non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards, and other forms of equity compensation to employees, directors and consultants. Options and restricted stock units under the 2017 Plan generally vest over four years and have a term of 10 years.
Stock-Based Compensation
The Company measures the cost awards granted under equity incentive plans based on the grant date fair value of the award. The Company uses the straight-line method for expense recognition. The Company recognizes forfeitures as they occur.
The following table shows total stock-based compensation expense for the three and six months ended June 30, 2018 and 2017 (in thousands):
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
||||
Cost of platform revenue |
|
$ |
19 |
|
|
$ |
19 |
|
|
|
38 |
|
|
|
40 |
|
Cost of player revenue |
|
|
67 |
|
|
|
38 |
|
|
|
111 |
|
|
|
74 |
|
Research and development |
|
|
2,801 |
|
|
|
993 |
|
|
|
5,097 |
|
|
|
1,881 |
|
Sales and marketing |
|
|
1,286 |
|
|
|
690 |
|
|
|
2,396 |
|
|
|
1,291 |
|
General and administrative |
|
|
1,136 |
|
|
|
678 |
|
|
|
2,096 |
|
|
|
1,307 |
|
Total stock-based compensation |
|
$ |
5,309 |
|
|
$ |
2,418 |
|
|
$ |
9,738 |
|
|
$ |
4,593 |
|
11
The summary of the Company’s stock option activity is as follows (in thousands, except price per share data):
|
|
Number of Shares |
|
|
Weighted Average Exercise Price |
|
|
Weighted Average Remaining Contractual Life (Years) |
|
|
Weighted Average Grant Date Fair Value Per Share |
|
|
Aggregate Intrinsic Value |
|
|||||
Balance, December 31, 2017 - outstanding |
|
|
26,336 |
|
|
$ |
4.59 |
|
|
|
6.4 |
|
|
|
— |
|
|
|
|
|
Granted |
|
|
186 |
|
|
|
39.05 |
|
|
|
— |
|
|
$ |
16.27 |
|
|
|
|
|
Exercised |
|
|
(5,759 |
) |
|
|
3.05 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Forfeited and expired |
|
|
(474 |
) |
|
|
6.29 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Balance, June 30, 2018 - outstanding |
|
|
20,289 |
|
|
$ |
5.30 |
|
|
|
6.4 |
|
|
|
— |
|
|
$ |
757,711 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable at June 30, 2018 |
|
|
11,472 |
|
|
$ |
3.46 |
|
|
|
4.9 |
|
|
|
— |
|
|
$ |
449,306 |
|
The intrinsic value for options exercised during the three months ended June 30, 2018 and 2017, was $140.8 million and $0.1 million, respectively, and six months ended June 30, 2018 and 2017 was $197.0 million and $0.2 million, respectively, representing the difference between the fair values of the Company’s common stock underlying these options at the dates of exercise and the exercise prices paid. As of June 30, 2018, the Company had $27.0 million of unrecognized stock compensation expense related to unvested stock options that is expected to be recognized over a weighted-average period of approximately 2.3 years.
The fair value of options granted under the equity incentive plans is estimated on the grant date using the Black-Scholes option-valuation model. The assumptions used in the Black-Scholes model are as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
||||
Dividend rate |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
— |
|
Expected term (in years) |
|
5.3 - 6.1 |
|
|
5.3 - 6.5 |
|
|
5.3 - 6.1 |
|
|
5.3 - 6.5 |
|
||||
Risk-free interest rate |
|
2.61 - 2.88% |
|
|
1.90 - 2.07% |
|
|
2.32 - 2.88% |
|
|
1.90 - 2.25% |
|
||||
Expected volatility |
|
38 - 39% |
|
|
40 - 43% |
|
|
38 - 40% |
|
|
40 - 44% |
|
Restricted Stock Units
Pursuant to the 2017 Plan, the Company issued restricted stock units to employees. The summary of the Company’s restricted stock unit activity is as follows (in thousands, except price per share data):
|
|
Number of Shares |
|
|
Weighted Average Grant Date Fair Value Per Share |
|
||
Balance, December 31, 2017 - outstanding |
|
|
272 |
|
|
$ |
43.55 |
|
Awarded |
|
|
971 |
|
|
|
38.17 |
|
Released |
|
|
(7 |
) |
|
|
38.81 |
|
Forfeited |
|
|
(40 |
) |
|
|
41.19 |
|
Balance, June 30, 2018 - outstanding |
|
|
1,196 |
|
|
$ |
39.29 |
|
The unrecognized compensation cost related to restricted stock units as of June 30, 2018 was $43.9 million, which the Company expects to recognize over 3.7 years. The intrinsic value of restricted stock units vested during the three and six months ended June 30, 2018 was $0.3 million representing the fair value of the Company’s common stock underlying the restricted stock units at vesting dates.
Warrants
On June 30, 2018, the Company had no outstanding warrants. As of December 31, 2017, the Company had outstanding warrants to purchase 0.2 million shares of Class B common stock.
Convertible preferred stock warrants issued and outstanding at the time of the Company’s IPO were automatically converted into Class B common stock warrants at the time of the Company’s IPO. Prior to the IPO the fair value of these convertible preferred
12
stock warrants was recorded as a liability and remeasured at the end of each balance sheet date using the Black-Scholes option pricing model. The changes in the fair value dur ing the year were recognized in the condensed consolidated statements of operations.
The assumptions used to value the preferred stock warrants outstanding during the three and six months ended June 30, 2017 as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||
|
|
June 30, 2017 |
|
|
June 30, 2017 |
|
||
Dividend rate |
|
$ |
— |
|
|
$ |
— |
|
Expected term (in years) |
|
3.0 - 8.2 |
|
|
3.0 - 8.2 |
|
||
Risk-free interest rate |
|
1.5% - 2.2% |
|
|
1.5% - 2.2% |
|
||
Expected volatility |
|
43.8 - 49.0% |
|
|
43.8 - 49.0% |
|
7. COMMITMENTS AND CONTINGENCIES
Office Space
The Company has operating lease agreements for office space to support research and development and sales and marketing activities located in the United States, the United Kingdom (U.K.), Denmark, and China, with various expiration dates up to November 2024. Rent expense for the three months ended June 30, 2018 and 2017 was $2.4 million and $1.6 million, respectively and for the six months ended June 30, 2018 and 2017 was $4.6 million and $3.1 million, respectively.
Manufacturing Purchase Commitments
The Company has contracts with vendors for the manufacture of inventory and related items in the normal course of business. As of June 30, 2018, the Company had $104.0 million purchase commitments for inventory and related items.
The Company records a liability for noncancelable purchase commitments in excess of its future demand forecasts. The Company recorded $0.2 million and $0.6 million for these purchase commitments in “Accrued liabilities” as of June 30, 2018 and December 31, 2017, respectively.
Content Licensing
The Company licenses certain content for users to access through The Roku Channel. The Company records an obligation for licensing of content when it enters into an agreement to obtain future titles and the cost of the content is known. Certain agreements include the obligation to license rights for unknown future titles, the ultimate quantity and/or fees for which are not yet determinable as of the reporting date. As of June 30, 2018, the Company had $0.1 million of obligations recorded in “Accrued liabilities” for license purchase commitments. As of June 30, 2018, the Company has $0.2 million of obligations that are not reflected on the financial statements as they do not yet meet the criteria for asset recognition.
Letters of Credit
As of June 30, 2018 and December 31, 2017, the Company had irrevocable letters of credit outstanding in the amount of $3.1 million and $1.5 million, respectively, related to facilities leases. The letters of credit have various expiration dates through 2019.
Contingencies
The Company accrues for loss contingencies, including liabilities for intellectual property licensing, when it believes such losses are probable and reasonably estimable. During the three months ended June 30, 2018, the Company changed its estimate of certain liabilities previously recorded for intellectual property licensing and released $8.9 million as a result of its assessment that the likelihood of payment is now remote. The reversal of $8.9 million is recorded within cost of player revenue in the three and six months ended June 30, 2018, in the condensed consolidated statements of operations.
The Company is currently involved in, and may in the future be involved in, legal proceedings, claims, and investigations in the ordinary course of business, including claims for infringing patents, copyrights or other intellectual property rights related to its platform and products, or the content distributed through its platform by the Company or third-party channel developers. Although the results of these proceedings, claims, and investigations cannot be predicted with certainty, the Company does not believe that the final outcome of any matters that it is currently involved in are reasonably likely to have a material adverse effect on its business, financial condition, or results of operations.
13
Many of the Company’s agreements include provisions for indemnifying content publishers, licensees, contract manufacturers and suppliers in the event that the Company’s products or services or the Company’s technologies incorporated therein, infringe on a third party’s intellectual property rights. It is not possible to determine the maximum potential amount under these indemnification obligations due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each agreement. To date, the Company has not incurred any material costs as a result of such obligations and has not accrued any liabilities related to such obligations in the consolidated financial statements.
Player Warranties
Upon issuance of a standard player warranty, the Company recognizes a liability for the obligation it assumes under the warranty. As of June 30, 2018 and December 31, 2017, the accrued warranty reserve was immaterial.
8. INCOME TAXES
The Company is subject to income tax in the U.S. as well as other tax jurisdictions in which it conducts business. Earnings from non-U.S. activities are subject to local country income tax. The Company does not provide for federal income taxes on the undistributed earnings of its foreign subsidiaries. The Company has not yet made a determination of indefinite reinvestment assertion in light of the Tax Act and considers the conclusion to be incomplete under guidance issued by SEC. The Company expects to reach a final determination within the measurement period in accordance with Staff Accounting Bulletin 118.
The Company recorded an income tax benefit of $0.4 million and an immaterial tax expense for the three months ended June 30, 2018 and 2017, respectively, and a tax benefit of $0.2 million and tax expense of $0.1 million for the six months ended June 30, 2018 and 2017, respectively, related to foreign income taxes and state minimum taxes. Based on the available objective evidence during the six months ended June 30, 2018, the Company believes it is more likely than not that the tax benefits of the U.S. losses incurred may not be realized. Accordingly, the Company recorded a full valuation allowance against the tax benefits of the U.S. losses incurred. The primary difference between the effective tax rate and the statutory tax rate relates to the valuation allowance on the Company’s U.S. losses.
Effective January 1, 2018, the Company adopted the new revenue standard which results in a change to deferred revenues. The change in deferred revenues impacts the deferred tax asset arising out of deferring revenues for GAAP compared to for tax. The deferred tax asset is equally offset by the full valuation allowance.
The Tax Cuts and Job Act (TCJA) of 2017, enacted on December 22, 2017, contains significant changes to U.S. tax law, including lowering the U.S. corporate income tax rate to 21% and implementing a territorial tax system.
TCJA creates a new requirement that global intangible low-taxed income (GILTI) earned by controlled foreign corporations (CFCs) must be included currently in the gross income of the CFCs’ U.S. shareholder. Under U.S. GAAP, the Company is allowed to make an accounting policy choice of either (i) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (ii) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”). The Company’s selection of an accounting policy with respect to the new GILTI tax rules will depend, in part, on analyzing the global income to determine whether the Company expects to have future U.S. inclusions in taxable income related to GILTI and, if so, what the impact is expected to be. The Company has included GILTI in the annual effective tax rate calculation, however, it has not made a policy decision regarding whether to record deferred taxes on GILTI.
9. RELATED-PARTY TRANSACTIONS
The Company has agreements with one of the Company’s strategic investors. The Company recorded revenues of $0.7 million and $0.1 million for the three months ended June 30, 2018 and 2017, respectively, and $1.7 million and $0.1 million for the six months ended June 30, 2018 and 2017, respectively, related to this investor. The Company had accounts receivable balance of $1.8 million and $0.5 million as of June 30, 2018 and December 31, 2017, respectively, related to sales to this investor. The Company incurred expenses of $0.2 million with this investor for the three and six months ended June 30, 2018. There were insignificant expenses for three and six months ended June 30, 2017. The Company had a payable of $0.2 million payable to this investor as of June 30, 2018.
In May 2018, a member of the executive staff for one of the Company’s business partners joined the Company’s Board of Directors. The Company recorded revenues of 1.9 million and $3.3 million for three and six months ended June 30, 2018 with this business partner. The Company had an accounts receivable balance of $1.0 million with this business partner as of June 30, 2018.
14
In addition, a member of the Company’s Board of Directors is a senior vice pre sident at an operating unit of one of the strategic investors. The Company had no significant transactions with this investor for the three and six months ended June 30, 2018 and recorded expense of $0.4 million for the three and six months ended June 30, 2017, respectively. The Company had no balances outstanding with this investor as of June 30, 2018 and December 31, 2017, respectively.
10. REVENUE
On January 1, 2018, the Company adopted ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (the “new revenue standard”) using the modified retrospective method. The Company applied the new revenue standard to all contracts that were not completed as of January 1, 2018. The Company recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those prior periods.
Application of practical expedients and exemptions
The Company reflected the aggregate effect of all modifications that occurred prior to the date of adoption.
The Company expensed sales commissions when incurred because the amortization period is less than one year. Sales commissions are included in “Sales and marketing” expenses in the condensed consolidated statements of operations.
Impact on beginning balances
The cumulative effect of the changes made to the consolidated January 1, 2018 balance sheet for the adoption of the new revenue standard were as follows (in thousands):
|
|
As of |
|
|
Adjustment on |
|
|
As of |
|
|||
Balance Sheet line items impacted |
|
December 31, 2017 |
|
|
adoption of new revenue standard |
|
|
January 1, 2018 |
|
|||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivables, net |
|
$ |
120,553 |
|
|
$ |
12,728 |
|
|
$ |
133,281 |
|
Inventories |
|
|
32,740 |
|
|
|
(108 |
) |
|
|
32,632 |
|
Prepaid expenses and other current assets |
|
|
11,367 |
|
|
|
4,113 |
|
|
|
15,480 |
|
Deferred cost of revenue, current portion |
|
|
3,007 |
|
|
|
(1,076 |
) |
|
|
1,931 |
|
Deferred cost of revenue, non-current portion |
|
|
5,403 |
|
|
|
(3,885 |
) |
|
|
1,518 |
|
Other non-current assets |
|
|
3,429 |
|
|
|
(222 |
) |
|
|
3,207 |
|
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
128,757 |
|
|
|
1,250 |
|
|
|
130,007 |
|
Deferred revenue, current portion |
|
|
34,501 |
|
|
|
8,449 |
|
|
|
42,950 |
|
Deferred revenue, non-current portion |
|
|
48,511 |
|
|
|
(36,488 |
) |
|
|
12,023 |
|
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated deficit |
|
|
(283,338 |
) |
|
|
38,339 |
|
|
|
(244,999 |
) |
Revenue recognition
The Company enters into contracts that may include various combinations of products and services, which are generally capable of being distinct and are accounted for as separate performance obligations.
Revenue is recognized when control of promised products or services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those products or services. This is achieved by applying the following five-step approach:
|
• |
Identification of the contract, or contracts, with a customer |
|
• |
Identification of the performance obligations in the contract |
|
• |
Determination of the transaction price |
|
• |
Allocation of the transaction price to the performance obligations in the contract |
|
• |
Recognition of revenue when, or as, performance obligations are satisfied. |
Shipping charges billed to customers are included in revenue and the related shipping costs are included in cost of revenue. Revenue is recorded net of taxes collected or accrued. Sales taxes are recorded as current liabilities until remitted to the relevant government authority.
15
The Company does not have any capitalized costs associated with contract acquisition because most direct contract acquisition costs relate to contracts that are recognized over a period of one year or less.
Arrangements with multiple performance obligations
The Company’s contracts may contain multiple distinct performance obligations. The computed transaction price is allocated to each performance obligation based on a relative stand-alone selling price (“SSP”). For performance obligations routinely sold separately, the SSP is determined by evaluating such stand-alone sales. For those performance obligations that are not routinely sold separately, the Company determines SSP based on a market assessment approach, or on an expected cost-plus margin approach.
Nature of products and services
Platform segment:
The Company’s platform segment generates revenue from advertising sales, subscription and transaction revenue shares, the sale of branded channel buttons on remote controls and licensing arrangements with TV brands and service operators.
The Company’s advertising revenue is mostly generated through video and display advertising delivered through advertising impressions. The Company enters into advertising arrangements directly with the advertiser or with their agency which purchases advertising on their behalf. Advertising is typically sold on a cost-per-thousand basis as evidenced by an Insertion Order (“IO”) that specifies the terms of the arrangement including the type of ad product, pricing, insertion dates, and the number of impressions over a stated period. Revenue is recognized as the number of impressions are delivered. IOs may include multiple performance obligations as they contain distinct advertising products or services. For such arrangements, the Company allocates revenue to each performance obligation based on their relative SSPs. In addition, advertising revenue is also recognized from distinct performance obligations included in distribution arrangements with content publishers.
The Company earns revenue shares from content publishers based on user subscriptions activated or billed through the Company’s platform and from purchases or rental of publishers’ media. The Company’s revenue share is generally equal to a fixed percentage of the price charged by the content publisher or a contractual flat fee.
The Company sells branded channel buttons on player and TV remote controls that provide one-touch access to a publishers’ content. The Company typically receives a fixed fee per button unit over a defined distribution period.
The Company licenses its technology and proprietary operating system to service operators and TV brands. Arrangements with service operators generally include performance obligations comprised of a license to the technology and proprietary operating system, unspecified upgrades or enhancements, hosting of a branded channel store, and engineering and support services. The Company has determined that the license for the technology and the operating system is one performance obligation. Licensing fees from service operators are mostly generated from unit activations or flat fees and from ongoing maintenance.
Arrangements with TV brands commonly include a license to the Company’s technology and proprietary operating system over a specified term including updates and upgrades. Licensing revenues from TV brands are generated on a flat fee basis or from per unit licensing fees. Arrangements may also include marketing development funds paid to TV brands on a flat fee or a per unit basis. Marketing development funds are included as a reduction to the estimated transaction price.
16
The revenue for licensing of technology and operating system is recognized at a point in time, when the control has transferred to the customer, which usually occurs when the Company makes the IP available to the customer. |
|
Unspecified upgrades to the IP |
The revenue allocated to unspecified upgrades is recognized on a time elapsed basis, by day, over the service period. |
Hosting services |
Hosting fees are recognized on a time elapsed basis, by day, over the service period. |
Professional services |
Professional services revenue is recognized as services are provided or accepted. |
Player segment:
The Company sells the majority of its players through retail distribution channels, including brick and mortar and online retailers, and through the Company’s website. The Company’s player revenue includes allowances for returns and sales incentives in the estimated transaction price. These estimates are based on historical experience and anticipated performance.
The Company’s player revenue include two performance obligations:
|
• |
hardware, which includes embedded software, and |
|
• |
unspecified upgrades or enhancements on a when-and-if available basis. |
The Company has determined that its hardware and embedded software be considered as one performance obligation because the customer cannot benefit from the hardware or the embedded software either on its own or together with other resources that are readily available to the customer.
Nature of performance obligations |
Revenue recognition |
Players |
Revenue recognition occurs at a point in time when control has transferred to the customer, which is based on the contractual terms. |
Unspecified upgrades to the software embedded in the hardware |
The Company initially records the allocated value of the unspecified upgrades as deferred revenue and recognizes it into player revenue ratably on a time elapsed basis, by day, over the estimated economic life of the associated players. |
Revenue disaggregation
The Company’s disaggregated revenues are represented by the two reportable segments discussed in Note 12. The disaggregation is based on the evaluations that are regularly performed by the chief operating decision maker (“CODM”) for purposes of allocating resources and evaluating financial performance. The Company’s CODM is its Chief Executive Officer.
Transaction price allocated to future performance obligations
As of June 30, 2018, the Company had $64.4 million of estimated future revenue related to outstanding performance obligations. The Company expects to recognize approximately 62% of this future revenue over the next twelve months and the remainder thereafter through 2024. This estimated future revenue excludes contracts with original durations of one year or less, amounts in accordance with ASC 606-10-55-18 and variable consideration amounts attributable to royalties.
Contract balances
Contract balances include accounts receivable, contract assets and contract liabilities or deferred revenues. Accounts receivable are recorded at the amount invoiced, net of an allowance for doubtful accounts, with payment terms ranging from 30 to 90 days. Contract assets are created when the timing of revenue recognition differ from the timing of invoicing to a customer. Contract assets primarily relate to the Company’s conditional right to consideration for work completed but not billed. Contract assets are transferred to accounts receivable when the rights become unconditional. The Company’s contract assets are current in nature and are included in “Prepaid expenses and other current assets ”.
Contract liabilities are recorded as deferred revenue and primarily relate to the advance consideration received from customers. Revenue is recognized when the performance obligation is completed and delivered or transfer of control occurs.
17
The table below reflects the contract balances of the Company (in thousands):
|
|
As of |
|
|
As of adoption |
|
||
|
|
June 30, 2018 |
|
|
January 1, 2018 |
|
||
Accounts receivable, net |
|
$ |
123,612 |
|
|
$ |
133,281 |
|
Contract assets, current portion |
|
|
4,751 |
|
|
|
4,113 |
|
Deferred revenue, current portion |
|
|
39,151 |
|
|
|
42,950 |
|
Deferred revenue, non-current portion |
|
|
12,435 |
|
|
|
12,023 |
|
Revenue recognized during the three and six months ended June 30, 2018, from amounts included in deferred revenue at the beginning of each period was approximately $8.3 million and $29.5 million, respectively. Of this amount, approximately $12.4 million related to the delivery of intellectual property that occurred during the quarter ended March 31, 2018. This delivery also resulted in an increase to contract assets of approximately $3.8 million as of June 30, 2018.
Impact of adoption for the three and six months ended June 30, 2018
The impact of adoption of the new revenue standard on January 1, 2018, on the condensed consolidated balance sheet and statements of operations is reflected in the table below (in thousands):
|
|
As of June 30, 2018 |
|
|||||||||
Impact on balance sheet line items |
|
As Reported |
|
|
Balances without adoption of the new revenue standard |
|
|
Impact of adoption Higher / (Lower) |
|
|||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable, net |
|
$ |
123,612 |
|
|
$ |
110,171 |
|
|
$ |
13,441 |
|
Inventories |
|
|
39,431 |
|
|
|
39,431 |
|
|
|
— |
|
Prepaid expenses and other current assets |
|
|
15,131 |
|
|
|
10,574 |
|
|
|
4,557 |
|
Deferred cost of revenue, current portion |
|
|
1,439 |
|
|
|
4,107 |
|
|
|
(2,668 |
) |
Deferred cost of revenue, non-current portion |
|
|
— |
|
|
|
5,496 |
|
|
|
(5,496 |
) |
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
111,026 |
|
|
|
109,026 |
|
|
|
2,000 |
|
Deferred revenue, current portion |
|
|
39,151 |
|
|
|
34,307 |
|
|
|
4,844 |
|
Deferred revenue, non-current portion |
|
|
12,435 |
|
|
|
49,198 |
|
|
|
(36,763 |
) |
Equity: |
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Deficit |
|
|
(251,147 |
) |
|
|
(290,900 |
) |
|
|
39,753 |
|
18
|
|
Three Months Ended June 30, 2018 |
|
|
Six Months Ended June 30, 2018 |
|
||||||||||||||||||
Impact on statements of operations line items |
|
As Reported |
|
|
Balances without adoption of the new revenue standard |
|
|
Impact of adoption Higher / (Lower) |
|
|
As Reported |
|
|
Balances without adoption of the new revenue standard |
|
|
Impact of adoption Higher / (Lower) |
|
||||||
Net Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Platform |
|
$ |
90,341 |
|
|
$ |
86,426 |
|
|
$ |
3,915 |
|
|
$ |
165,418 |
|
|
$ |
158,289 |
|
|
$ |
7,129 |
|
Player |
|
|
66,469 |
|
|
|
67,285 |
|
|
|
(816 |
) |
|
|
127,968 |
|
|
|
126,735 |
|
|
|
1,233 |
|
Total net revenue |
|
|
156,810 |
|
|
|
153,711 |
|
|
|
3,099 |
|
|
|
293,386 |
|
|
|
285,024 |
|
|
|
8,362 |
|
Cost of Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Platform |
|
|
27,328 |
|
|
|
24,436 |
|
|
|
2,892 |
|
|
|
48,994 |
|
|
|
42,912 |
|
|
|
6,082 |
|
Player |
|
|
51,730 |
|
|
|
52,353 |
|
|
|
(623 |
) |
|
|
103,528 |
|
|
|
102,662 |
|
|
|
866 |
|
Total cost of revenue |
|
|
79,058 |
|
|
|
76,789 |
|
|
|
2,269 |
|
|
|
152,522 |
|
|
|
145,574 |
|
|
|
6,948 |
|
Gross Profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Platform |
|
|
63,013 |
|
|
|
61,990 |
|
|
|
1,023 |
|
|
|
116,424 |
|
|
|
115,377 |
|
|
|
1,047 |
|
Player |
|
|
14,739 |
|
|
|
14,932 |
|
|
|
(193 |
) |
|
|
24,440 |
|
|
|
24,073 |
|
|
|
367 |
|
Total gross profit |
|
|
77,752 |
|
|
|
76,922 |
|
|
|
830 |
|
|
|
140,864 |
|
|
|
139,450 |
|
|
|
1,414 |
|
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
40,196 |
|
|
|
40,196 |
|
|
|
— |
|
|
|
74,322 |
|
|
|
74,322 |
|
|
|
— |
|
Sales and marketing |
|
|
22,259 |
|
|
|
22,259 |
|
|
|
— |
|
|
|
42,577 |
|
|
|
42,577 |
|
|
|
— |
|
General and administrative |
|
|
15,429 |
|
|
|
15,429 |
|
|
|
— |
|
|
|
30,999 |
|
|
|
30,999 |
|
|
|
— |
|
Total operating expenses |
|
|
77,884 |
|
|
|
77,884 |
|
|
|
— |
|
|
|
147,898 |
|
|
|
147,898 |
|
|
|
— |
|
Loss from Operations |
|
|
(132 |
) |
|
|
(962 |
) |
|
|
830 |
|
|
|
(7,034 |
) |
|
|
(8,448 |
) |
|
|
1,414 |
|
Net income (loss) |
|
$ |
526 |
|
|
$ |
(304 |
) |
|
$ |
830 |
|
|
$ |
(6,108 |
) |
|
$ |
(7,522 |
) |
|
$ |
1,414 |
|
11. NET LOSS PER SHARE
Basic and diluted net income (loss) per share of common stock allocable to common stockholders is calculated by dividing the net income (loss) allocable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, less shares subject to repurchase, and excludes any dilutive effects of employee stock-based awards and warrants. During the periods, when the Company has reported a net loss, diluted net loss per common share is the same as the basic net loss per share for those periods.
The Company calculates its basic and diluted net income (loss) per share allocable to common stockholders in conformity with the two-class method required for companies with participating securities. In computing diluted net income (loss) allocable to common stockholders, undistributed earnings are re-allocated to reflect the potential impact of dilutive securities. The Company’s basic net income (loss) per share allocable to common stockholders is calculated by dividing the net income (loss) allocable to common stockholders by the weighted-average number of shares of common stock outstanding for the period. For purposes of the calculation of diluted net income (loss) per share allocable to common stockholders, unvested shares of common stock issued upon the early exercise of stock options, options to purchase common stock, common stock warrants and securities like convertible preferred stock and convertible preferred stock warrants that were issued and outstanding before the Company’s IPO, are considered common stock equivalents but have been excluded from the calculation of diluted net loss per share allocable to common stockholders as their effect is antidilutive.
The Company considers all series of its convertible preferred stock that were outstanding before the Company’s IPO, to be participating securities as they were entitled to receive noncumulative dividends prior and in preference to any dividends on shares of common stock. Due to the Company’s net losses, there is no impact on the loss per share calculation in applying the two-class method since the participating securities have no legal obligation to share in any losses.
19
The following table presents the calculation of basic and diluted net income (loss) per share (in t housands, except per share data):
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) allocable to common stockholders |
|
$ |
526 |
|
|
$ |
(15,513 |
) |
|
$ |
(6,108 |
) |
|
$ |
(24,215 |
) |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used in computing net income (loss) per share, basic |
|
|
102,652 |
|
|
|
4,882 |
|
|
|
101,079 |
|
|
|
4,866 |
|
Net income (loss) per share, basic |
|
$ |
0.01 |
|
|
$ |
(3.18 |
) |
|
$ |
(0.06 |
) |
|
$ |
(4.98 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted-average shares used in computing net income (loss) per share, diluted |
|
|
121,698 |
|
|
|
4,882 |
|
|
|
101,079 |
|
|
|
4,866 |
|
Net income (loss) per share, diluted |
|
$ |
0.00 |
|
|
$ |
(3.18 |
) |
|
$ |
(0.06 |
) |
|
$ |
(4.98 |
) |
The potential common shares that would be excluded from the calculation of diluted net income (loss) per share because of their anti-dilutive effect are as follows (in thousands):
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
||||
Equity awards to purchase common stock |
|
|
1,062 |
|
|
|
24,560 |
|
|
|
21,485 |
|
|
|
24,560 |
|
Unvested shares of common stock issued upon early exercise of stock options and business acquisition |
|
|
— |
|
|
|
20 |
|
|
|
105 |
|
|
|
20 |
|
Warrants to purchase common stock |
|
|
— |
|
|
|
375 |
|
|
|
— |
|
|
|
375 |
|
Warrants to purchase convertible preferred stock |
|
|
— |
|
|
|
2,226 |
|
|
|
— |
|
|
|
2,226 |
|
Convertible preferred stock |
|
|
— |
|
|
|
80,844 |
|
|
|
— |
|
|
|
80,844 |
|
Total |
|
|
1,062 |
|
|
|
108,025 |
|
|
|
21,590 |
|
|
|
108,025 |
|
12. SEGMENT INFORMATION
The Company is organized into two reportable segments as follows:
Platform —Consists primarily of fees received from advertisers and content publishers, and from licensing the Company’s technology and proprietary operating system with TV brands and service operators. Platform revenue primarily includes fees earned from the sale of digital advertising and revenue share from new or recurring user subscriptions activated through the Company’s platform and revenue share from user purchases of content publishers’ media through its platform. The Company also earns revenue from the sale of branded channel buttons on remote controls.
Player —Consists primarily of net sales of streaming media players and accessories through retailers and distributors, as well as directly to customers through the Company’s website.
20
Customers accounting for 10% or more of the segment revenues were as follows:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
||||
Platform segment revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer E |
|
* |
|
|
|
11 |
% |
|
* |
|
|
|
13 |
% |
||
Customer G |
|
* |
|
|
* |
|
|
|
10 |
% |
|
* |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Player segment revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Customer A |
|
|
16 |
% |
|
|
16 |
% |
|
|
14 |
% |
|
|
13 |
% |
Customer B |
|
|
10 |
% |
|
* |
|
|
|
14 |
% |
|
|
12 |
% |
|
Customer C |
|
|
39 |
% |
|
|
33 |
% |
|
|
38 |
% |
|
|
32 |
% |
Customer E |
|
* |
|
|
* |
|
|
* |
|
|
|
10 |
% |
* |
Less than 10% of segment revenues |
Substantially all of the Company’s assets were held in the United States and were attributable to the operations in the United States as of June 30, 2018 and December 31, 2017. Revenue in international markets was 10% for the six months ended June 30, 2018 and was less than 10% for the three months ended June 30, 2018 as well as for the three and six months ended June 30, 2017.
13. SUBSEQUENT EVENTS
On July 31, 2018, the Company entered into lease agreements to acquire approximately 472,319 square feet of office space on Coleman Avenue in San Jose to house its new headquarters. The lease includes three floors of a first building and three other buildings. It has an approximate term of 140 months from the date we commence occupancy in the first building. Copies of the lease agreements are filed as exhibits to this Quarterly Report on Form 10-Q.
On July 18, 2018, the Company entered into a third amendment to the restated loan and security agreement with Silicon Valley Bank. The amendment increased the limit to which the Company can utilize its line of credit to support the issuance of letters of credit from $5.0 million to $30.0 million. The increase to the limit will be used to facilitate additional letters of credit required pursuant to the lease for the Company’s new headquarters.
21
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and wit h our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017, filed on March 1, 2018, with the Securities and Exchange Commission (“SEC”).
Overview
Roku pioneered streaming to the TV and we are capitalizing on this large economic opportunity as a leading TV streaming platform for users, content publishers and advertisers. Roku connects users to the streaming content they love, enables content publishers to build and monetize large audiences, and provides advertisers with unique capabilities to engage consumers. As of June 30, 2018, we had 22.0 million active accounts, an increase of 46% from the prior year. In the three and six months ended June 30, 2018, our users streamed 5.5 billion hours and 10.6 billion hours, respectively, an increase of 57% over hours streamed in the three and six months ended June 30, 2017.
Our business model is to grow gross profit by increasing the number of active accounts and growing average revenue per user (“ARPU”), which we believe represents the inherent value of our business model. We grow new accounts through three primary channels: we sell streaming players, we partner with TV brands through our Roku TV licensing program, and we have licensing relationships with service operators.
We generate platform revenue from advertising, content distribution, billing and licensing activities on our platform and player revenue from the sale of streaming players. We generated revenues of $156.8 million and $293.4 million during the three and six months ended June 30, 2018, respectively, up by 57% and 47% respectively, as compared to the three and six months ended June 30, 2017. During the three and six months ended June 30, 2018, we generated gross profit of $77.8 million and $140.9 million, which is up 107% and 84%, respectively, from the three and six months ended June 30, 2017. During the three months ended June 30, 2018, our cost of player revenue was lower by $8.9 million due to the release of accruals of IP licensing obligations that we believe will now not materialize. Excluding this benefit, the gross profit was up 83% and 73% for the three and six months ended June 30, 2018 as compared to the three and six months ended June 30, 2017.
We continue to manage the average selling prices (“ASP”) of our streaming players to expand our active accounts. As a result, player revenues and gross profits may not increase as rapidly as they have historically or at all. We expect that tradeoffs from player gross profit in favor of platform gross profit to grow active accounts will result in increased monetization.
Advertising
Our advertising products enable advertisers to serve relevant ads to our users and measure return on investment. We collect a variety of information on the Roku streaming platform, including user registration data, as well as anonymized information like audience engagement with channels on our platform, use of features like search and interactions with advertisements. With Roku TVs, we give customers the ability to opt-in to use automatic content recognition (ACR) and other technology to collect information about what users watch via antennae and devices connected to Roku TVs, and we collect data about the use of the Roku TV’s home screen and antenna programming guide.
We gather this information and then create user segments, develop look-a-like audience and predictive models, and activate segments for use in a variety of business operations including recommendations for users and analytics for content publishers and advertisers. Our platform also provides a mechanism to match and ingest third party data sets from our advertisers and data vendors who may have demographic or other attributes that would enhance our analytics, products or advertising efforts.
Our advertising products enable advertisers to serve relevant ads to our users and measure return on investment. Our primary advertising products include:
|
• |
Video ads . Our ad-supported content publishers use video ads to monetize our audiences and we also use video ads to monetize our platform. Video ads are sold as 15-second or 30-second spots inserted before a program starts or during a program break, within channels on the Roku platform where we have video inventory access. One of the ways we secure video ad insertion rights from content publishers is via our distribution deals with those publishers. In addition, many publishers also authorize us to fill their own unsold inventory. Except for a minority of video ads that are passed unmodified in a traditional linear broadcast, all video ads are selected and delivered to a user in real-time, as the user is engaging on our platform. Digital advertisers have raised concerns about brand safety, viewability and fraud after certain issues arose between various video ad networks and major online video distributors. OTT is an attractive alternative. On the Roku platform, our video ads play full screen, are not skippable in most channels and are delivered into a curated channel list. |
22
|
• |
Audience development promotions. We utilize a variety of ad placements, particularly native display ads, on the Roku home screen and screen saver, to promote content publishers and their services to our users. We help them to drive channel downloads and traffic to their channels, and to drive subscriptions or movie and TV show consumption. Given our strategic role as a user’s TV streaming home screen, we are increasingly able to predict a user’s likelihood of taking action in response to an ad we serve. We also sell branded channel buttons on player and TV remote controls. The branded buttons are reserved for content publishers who want to reduce friction and drive incremental usage by allowing users to launch straight into the channel. |
|
• |
Brand sponsorships. We support a variety of promotional opportunities for advertisers, such as sponsored themes to take over our home screen and content sponsorships to give users the opportunity to experience a free movie or show (e.g. “Family movie night brought to you by…”). We also sell branding opportunities for content rows in The Roku Channel. |
|
• |
Audience Marketplace. Through our Audience Marketplace program, we provide advertising buyers and sellers with the means to more effectively target audiences on the Roku platform in the U.S. Publishers leverage our first-party data and proprietary ad technology to sell targeted audiences on the Roku platform to advertisers. |
Roku TVs
Roku TVs integrate our Roku Operating System, or Roku OS, and leverage our smart TV hardware reference design. Roku TVs are manufactured and sold by our TV brand licensees including current brands such as Element, Hisense, Hitachi, Insignia, RCA, Philips, Sanyo, Sharp, TCL and Magnavox. They are available in sizes ranging from 24” to 75” at leading retailers in the United States and Canada.
Roku TV Wireless Speakers
In July 2018, we introduced Roku TV Wireless Speakers, the first speakers designed specifically for Roku TVs that wirelessly pair to Roku TVs via Roku Connect technology. Once paired, users can listen to audio from any streaming channel on the Roku platform, live TV from an antenna, or other devices such as a cable set-top box through the Roku TV Wireless Speakers. We believe that adding great audio to a TV should be simple and will enhance the overall entertainment experience. We expect that the Roku TV Wireless Speaker bundle will begin shipping to customers by late October.
Streaming Players
We offer a line of streaming players for sale under the Roku brand in the United States, Canada, the United Kingdom, France, the Republic of Ireland and several Latin American countries, that allow users to access our TV streaming platform. All players run on the Roku OS, and stream content via built-in Ethernet or Wi-Fi capability, depending on the model. Our current product line for the U.S. market includes several models at a range of manufacturers’ suggested retail prices to meet the needs of different users starting at $29.99.
Key Performance Metrics
We use the following key performance metrics to evaluate our business, measure our performance, develop financial forecasts and make strategic decisions. Our key performance metrics are gross profit, active accounts, hours streamed, and ARPU.
Gross Profit
We measure the performance of our business using gross profit, and we are focused on increasing gross profit. The majority of our gross profit is generated from platform revenue. We believe gross profit is the primary metric to measure the performance of our business, because we have two revenue segments with different margin profiles, and we aim to maximize our high margin platform revenue from our active accounts as they stream content on our platform.
Active Accounts
We define active accounts as the number of distinct user accounts that have streamed content on our platform within the last 30 days of the period. The number of active accounts does not correspond to the number of unique individuals who actively utilize our platform or the number of devices associated with an account. For example, a single account may be used by more than one individual, such as a family, and one account may use multiple devices. We believe that the number of active accounts is a relevant measure to gauge the size of our user base and the opportunity to increase our platform revenue and gross profit.
23
We define hours streamed as the aggregate amount of time users streamed content on our platform in a given period. We report hours streamed on a calendar basis. We believe the usage of our platform is an effective measure of user engagement and that the growth in the number of hours of content streamed across our platform reflects our success in addressing the growing user demand for TV streaming. However, our revenues from content providers are not tied to the hours streamed on their streaming channels, and the number of hours streamed does not correlate to revenue earned from such content providers or ARPU on a period-by-period basis. Additionally, we believe increasing user engagement on our streaming platform increases our gross profit because we earn platform revenue from advertising as well as from revenue shares from subscription and transactional video on-demand.
Average Revenue per User
We define ARPU, as our platform revenue during the preceding four quarters divided by the average of the number of active accounts at the end of that period and the end of the prior four quarters. We measure progress in our platform business using ARPU because it helps us understand the rate at which we are monetizing our active account base.
Components of Results of Operations
Platform Revenue
We generate platform revenue from advertising sales, subscription and transaction revenue share, sales of branded channel buttons on remote controls and licensing arrangements with TV brands and service operators. We generate most of our platform revenue in the United States. Our first-party video ad inventory includes native display ads on our home screen and screen saver, as well as ad inventory made available to us through our content publisher agreements. To satisfy existing demand, we can sell video advertising that we purchase from content publishers to supplement our first-party video ad inventory, and to a lesser extent, third-party video advertising on a revenue share basis from content publishers in our Roku Direct Publisher program.
Player Revenue
We generate player revenue from the sale of streaming players through consumer retail distribution channels, including major brick and mortar retailers, such as Best Buy and Walmart, and online retailers, primarily Amazon.com. In our international markets, we sell our players through wholesale distributors which, in turn, sell to retailers. We currently distribute our players in Canada, the United Kingdom, France, the Republic of Ireland and several Latin American countries. We generate most of our player revenue in the United States.
Cost of Revenue
Cost of Platform Revenue
Cost of platform revenue consists of advertising inventory acquisition costs, payment processing fees, third-party cloud service fees, content licensing cost and allocated personnel-related costs, including salaries, benefits and stock-based compensation for Roku personnel that support platform services, including advertising and billing operations, customer service, and teams supporting our TV brands and service operator licensees. We anticipate that cost of platform revenue will increase in absolute dollars.
Cost of Player Revenue
Cost of player revenue is comprised of player manufacturing costs payable to our third-party contract manufacturers, technology licenses or royalty fees, inbound and outbound freight, duty and logistics costs, third-party packaging and assembly costs, provision for excess or obsolete inventory, allocated overhead costs related to facilities and customer support, and salary, benefit and stock-based compensation costs for operations personnel.
Operating and Other Expenses
Research and Development
Research and development expenses consist primarily of personnel-related costs, including employee salaries, benefits and stock-based compensation for our engineers and other employees engaged in the development of our products including new technologies and features and functionality. In addition, research and development expenses include allocated facilities and overhead costs. We believe continued investment is important to attaining our strategic objectives and expect research and development expenses to increase in absolute dollars for the foreseeable future.
24
Sales and marketing expenses consist primarily of personnel-related costs, including salaries, benefits, commissions and stock-based compensation expense for our employees engaged in sales and sales support, data science and analytics, business development, product management, marketing, communications, and partner and customer support functions. Sales and marketing expenses also include costs for marketing and public relations, channel merchandising, including point of purchase and in-store displays, trade shows and other events, professional services, and allocated facilities and other overhead. We expect our sales and marketing expenses to increase as we continue to grow our business.
General and Administrative
General and administrative expenses consist primarily of personnel-related costs, including salaries, benefits and stock-based compensation for our executive, finance, legal, information technology, human resources and other administrative personnel. We expect our general and administrative expenses to increase due to the anticipated growth of our business and related infrastructure, compliance with global laws and regulations, as well as accounting, legal, insurance, investor relations and other costs associated with being a public company.
Other Income (Expense), Net
Our other income (expense), net, for the three and six months ended June 30, 2018, consists of interest income and foreign currency re-measurement and transaction gains and losses. The other income (expense), net, for the three and six months ended June 30, 2017 consisted of changes in the fair value of our convertible preferred stock warrant liability, interest expense on our debt, and foreign currency re-measurement and transaction gains and losses. Prior to our IPO, the underlying shares of our convertible preferred stock warrants were contingently redeemable and we accounted for these warrants as a liability at fair value and re-measured the fair value at each balance sheet date. Pursuant to our IPO, the convertible preferred stock warrant liability was reclassified to stockholders’ equity and re-measurement was no longer required.
Income Tax Expense
Our income tax expense consists primarily of income taxes in certain foreign jurisdictions where we conduct business and state minimum income taxes in the United States. We have a valuation allowance for deferred tax assets, including net operating loss carryforwards and tax credits related primarily to research and development. We expect to maintain this valuation allowance for the foreseeable future.
25
The following table sets forth our results of operations as a percentage of net revenue. As discussed in Note 10, we adopted the new revenue standard effective January 1, 2018 using the modified retrospective method. We recognized the cumulative effect of adopting the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those prior periods.
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
||||
Net Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Platform |
|
|
58 |
% |
|
|
46 |
% |
|
|
56 |
% |
|
|
41 |
% |
Player |
|
|
42 |
% |
|
|
54 |
% |
|
|
44 |
% |
|
|
59 |
% |
Total net revenue |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
Cost of Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Platform |
|
|
17 |
% |
|
|
12 |
% |
|
|
17 |
% |
|
|
10 |
% |
Player |
|
|
33 |
% |
|
|
50 |
% |
|
|
35 |
% |
|
|
52 |
% |
Total cost of revenue |
|
|
50 |
% |
|
|
62 |
% |
|
|
52 |
% |
|
|
62 |
% |
Gross Profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Platform |
|
|
41 |
% |
|
|
34 |
% |
|
|
40 |
% |
|
|
31 |
% |
Player |
|
|
9 |
% |
|
|
4 |
% |
|
|
8 |
% |
|
|
7 |
% |
Total gross profit |
|
|
50 |
% |
|
|
38 |
% |
|
|
48 |
% |
|
|
38 |
% |
Operating Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
|
26 |
% |
|
|
26 |
% |
|
|
25 |
% |
|
|
24 |
% |
Sales and marketing |
|
|
14 |
% |
|
|
15 |
% |
|
|
15 |
% |
|
|
14 |
% |
General and administrative |
|
|
10 |
% |
|
|
11 |
% |
|
|
11 |
% |
|
|
11 |
% |
Total operating expenses |
|
|
50 |
% |
|
|
52 |
% |
|
|
51 |
% |
|
|
49 |
% |
Loss from Operations |
|
|
— |
% |
|
|
(14 |
)% |
|
|
(3 |
)% |
|
|
(11 |
)% |
Other Income (Expense), Net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
Change in fair value of preferred stock warrant liability |
|
|
— |
% |
|
|
(2 |
)% |
|
|
— |
% |
|
|
(1 |
)% |
Other income (expense), net |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
Total other income (expense), net |
|
|
— |
% |
|
|
(2 |
)% |
|
|
— |
% |
|
|
(1 |
)% |
Income (Loss) before income taxes |
|
|
— |
% |
|
|
(16 |
)% |
|
|
(3 |
)% |
|
|
(12 |
)% |
Income tax expense (benefit) |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
|
|
— |
% |
Net income (loss) attributable to common stockholders |
|
|
— |
% |
|
|
(16 |
)% |
|
|
(3 |
)% |
|
|
(12 |
)% |
Comparison of Three and Six Months Ended June 30, 2018 and June 30, 2017
Net Revenue
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
|
||||||||||
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
Change $ |
|
|
Change % |
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
Change $ |
|
|
Change % |
|
||||||||
(in thousands, except percentages) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Platform |
|
$ |
90,341 |
|
|
$ |
45,976 |
|
|
$ |
44,365 |
|
|
|
96 |
% |
|
$ |
165,418 |
|
|
$ |
82,391 |
|
|
$ |
83,027 |
|
|
|
101 |
% |
Player |
|
|
66,469 |
|
|
|
53,651 |
|
|
|
12,818 |
|
|
|
24 |
% |
|
|
127,968 |
|
|
|
117,329 |
|
|
|
10,639 |
|
|
|
9 |
% |
Total Net Revenue |
|
$ |
156,810 |
|
|
$ |
99,627 |
|
|
$ |
57,183 |
|
|
|
57 |
% |
|
$ |
293,386 |
|
|
$ |
199,720 |
|
|
$ |
93,666 |
|
|
|
47 |
% |
Platform
Platform revenue increased by $44.4 million, or 96%, during the three months ended June 30, 2018 compared to the three months ended June 30, 2017 and is inclusive of $3.9 million recognized as a result of the adoption of the new revenue standard. The increase was primarily due to higher advertising, subscription and transaction revenue share and an increase in the number of paid subscriptions amounting to $41.6 million, driven by the continued expansion of our platform segment and of our advertising sales operations and monetization efforts.
26
Platform revenue increased by $83.0 million, or 101%, during the six months ended June 30, 2018 compared to the six months ended June 30, 2017 and is inclusive of $7.1 million recognized as a result of the adoption of t he new revenue standard. The increase was due to higher advertising, subscription and transaction revenue share and an increase in the number of paid subscriptions amounting to $66.0 million. The revenues from licensing arrangements with service operators and TV brands increased by $17.1 million mainly driven by the delivery of intellectual property to a licensing partner during the first quarter of 2018.
Player
Player revenue increased by $12.8 million, or 24%, for the three months ended June 30, 2018 as compared to the three months ended June 30, 2017. During the three months ended June 30, 2018, there was an increase of 22% in the volume of players sold as compared to the three months ended June 30, 2017 and a 2% increase in the average selling price of the players. Most of the increase in the volume of players came from the sale of our lower priced products. The increase in the average selling price was a result of the reduction in various sales incentives provided to customers.
Player revenue increased by $10.6 million, or 9%, for the six months ended June 30, 2018 as compared to the six months ended June 30, 2017. The increase in player revenue was a result of an increase in the volume of players sold mitigated by a reduction in the average selling price of the players during the six months ended June 30, 2018 as compared to the corresponding period in prior year. An increase of 13% in the volume of players sold, consisting mainly of our lower priced products, resulted in a 3% decrease in the average selling price of the players.
Cost of Revenue
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
|
||||||||||
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
Change $ |
|
|
Change % |
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
Change $ |
|
|
Change % |
|
||||||||
(in thousands, except percentages) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Platform |
|
$ |
27,328 |
|
|
$ |
11,778 |
|
|
$ |
15,550 |
|
|
|
132 |
% |
|
$ |
48,994 |
|
|
$ |
20,121 |
|
|
$ |
28,873 |
|
|
|
143 |
% |
Player |
|
|
51,730 |
|
|
|
50,212 |
|
|
|
1,518 |
|
|
|
3 |
% |
|
|
103,528 |
|
|
|
103,122 |
|
|
|
406 |
|
|
|
0 |
% |
Total Cost of Revenue |
|
$ |
79,058 |
|
|
$ |
61,990 |
|
|
$ |
17,068 |
|
|
|
28 |
% |
|
$ |
152,522 |
|
|
$ |
123,243 |
|
|
$ |
29,279 |
|
|
|
24 |
% |
Gross profit: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Platform |
|
$ |
63,013 |
|
|
$ |
34,198 |
|
|
$ |
28,815 |
|
|
|
84 |
% |
|
$ |
116,424 |
|
|
$ |
62,270 |
|
|
$ |
54,154 |
|
|
|
87 |
% |
Player |
|
|
14,739 |
|
|
|
3,439 |
|
|
|
11,300 |
|
|
|
329 |
% |
|
|
24,440 |
|
|
|
14,207 |
|
|
|
10,233 |
|
|
|
72 |
% |
Total Gross Profit |
|
$ |
77,752 |
|
|
$ |
37,637 |
|
|
$ |
40,115 |
|
|
|
107 |
% |
|
$ |
140,864 |
|
|
$ |
76,477 |
|
|
$ |
64,387 |
|
|
|
84 |
% |
Platform
Cost of platform revenue increased by $15.6 million, or 132%, during the three months ended June 30, 2018 as compared to the three months ended June 30, 2017. This increase is a result of higher advertising inventory acquisition costs, ad serving costs, content licensing fees and credit card processing fees totaling $13.5 million and a $1.9 million increase in allocated overhead primarily in advertising operations and our operating system licensing costs support driven by the growth of platform business.
Cost of platform revenue increased by $28.9 million, or 143%, during the six months ended June 30, 2018 as compared to the six months ended June 30, 2017. Advertising inventory acquisition costs, ad serving costs, and credit card processing fees increased by $23.6 million and allocated overhead increased by $4.9 million during this period. The increase is due to growth of platform business which attracts higher advertisements and monetization opportunities.
Gross profit on platform revenue increased by $28.8 million, or 84% during the three months ended June 30, 2018 compared to the three months ended June 30, 2017, primarily driven by strong growth in advertising demand. The increase includes $1.0 million recognized as a result of the adoption of the new revenue standard.
Gross profit on platform revenue increased by $54.2 million, or 87% during the six months ended June 30, 2018 compared to the six months ended June 30, 2017, primarily driven by strong growth in higher margin platform business. The increase includes $1.0 million recognized as a result of the adoption of the new revenue standard.
Player
Cost of player revenue increased by $1.5 million, or 3%, during the three months ended June 30, 2018 as compared to the three months ended June 30, 2017. The increase in cost of player revenue was primarily the result of approximately $9.3 million in
27
incre ased manufacturing and related costs to support the increased volume of players sold offset by the release of accruals related to IP licensing obligations that did not materialize and management now believes will not materialize in the amount of approximat ely $8.9 million.
Cost of player revenue increased by $0.4 million during the six months ended June 30, 2018 as compared to the six months ended June 30, 2017. The increase in cost of player revenue was primarily the result of approximately $9.5 million in increased manufacturing and related costs to support the increased volume of players sold, as offset by the release of accruals related to IP licensing obligations that did not materialize and management now believes will not materialize in the amount of approximately $8.9 million.
Gross profit on player sales increased by $11.3 million, or 329% during the three months ended June 30, 2018 as compared to the three months ended June 30, 2017 mainly due to the release of accruals related to unrealized IP licensing obligations.
Gross profit on player sales increased by $10.2 million, or 72% during the six months ended June 30, 2018 as compared to the six months ended June 30, 2017 mainly due to the release of accruals related to unrealized IP licensing obligations during the second quarter of 2018.
Operating Expenses
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
|
||||||||||
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
Change $ |
|
|
Change % |
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
Change $ |
|
|
Change % |
|
||||||||
(in thousands, except percentages) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
$ |
40,196 |
|
|
$ |
25,776 |
|
|
$ |
14,420 |
|
|
|
56 |
% |
|
$ |
74,322 |
|
|
$ |
48,118 |
|
|
$ |
26,204 |
|
|
|
54 |
% |
Sales and marketing |
|
|
22,259 |
|
|
|
14,667 |
|
|
|
7,592 |
|
|
|
52 |
% |
|
|
42,577 |
|
|
|
28,722 |
|
|
|
13,855 |
|
|
|
48 |
% |
General and administrative |
|
|
15,429 |
|
|
|
10,577 |
|
|
|
4,852 |
|
|
|
46 |
% |
|
|
30,999 |
|
|
|
20,855 |
|
|
|
10,144 |
|
|
|
49 |
% |
Total Operating Expenses |
|
$ |
77,884 |
|
|
$ |
51,020 |
|
|
$ |
26,864 |
|
|
|
53 |
% |
|
$ |
147,898 |
|
|
$ |
97,695 |
|
|
$ |
50,203 |
|
|
|
51 |
% |
Research and Development
Research and development expenses increased by $14.4 million, or 56%, during the three months ended June 30, 2018 as compared to the three months ended June 30, 2017. The increase was primarily due to higher personnel-related costs of $10.9 million as a result of increased engineering headcount, higher facilities costs of $1.3 million and higher platform and product development costs of $2.2 million that includes expenses like consulting and outside services, travel and equipment.
Research and development expenses increased by $26.2 million, or 54%, during the six months ended June 30, 2018 as compared to the six months ended June 30, 2017. The increase was primarily due to higher personnel-related costs of $20.3 million as a result of increased engineering headcount, higher facilities costs of $2.3 million and higher platform and product development costs of $3.6 million that includes expenses like consulting and outside services, travel and equipment.
Sales and Marketing
Sales and marketing expenses increased by $7.6 million, or 52%, during the three months ended June 30, 2018 as compared to the three months ended June 30, 2017. The increase was primarily due to higher personnel-related costs of $5.8 million related to increased headcount and increases in other expenses of $1.1 million that includes consulting services and travel.
Sales and marketing expenses increased by $13.9 million, or 48%, during the six months ended June 30, 2018 as compared to the six months ended June 30, 2017. The increase was primarily due to higher personnel-related costs of $11.2 million related to increased headcount, higher facility costs of $1.5 million and increases in other expenses of $1.2 million that includes expenses like consulting services and travel.
General and Administrative
General and administrative expenses increased by $4.9 million, or 46%, during the three months ended June 30, 2018 as compared to the three months ended June 30, 2017. The increase was primarily due to higher personnel-related costs of $2.6 million as a result of increased headcount in general and administrative functions and consulting and professional service fees of $2.4 million related to increased accounting and legal services to support a growing public organization.
28
General and administra tive expenses increased by $10.1 million, or 49%, during the six months ended June 30, 2018 as compared to the six months ended June 30, 2017. The increase was primarily due to higher personnel-related costs of $5.0 million as a result of increased headcou nt in general and administrative functions and consulting and professional service fees of $4.6 million related to increased accounting and legal services to support a growing public organization.
Other Income (Expense), Net
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
|
||||||||||
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
Change $ |
|
|
Change % |
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
Change $ |
|
|
Change % |
|
||||||||
(in thousands, except percentages) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
$ |
(57 |
) |
|
$ |
(304 |
) |
|
$ |
247 |
|
|
|
(81 |
)% |
|
$ |
(108 |
) |
|
$ |
(471 |
) |
|
$ |
363 |
|
|
|
(77 |
)% |
Change in fair value of convertible preferred stock warrants |
|
|
— |
|
|
|
(1,916 |
) |
|
|
1,916 |
|
|
|
(100 |
)% |
|
|
— |
|
|
|
(2,651 |
) |
|
|
2,651 |
|
|
|
(100 |
)% |
Other income (expense), net |
|
|
361 |
|
|
|
128 |
|
|
|
233 |
|
|
|
182 |
% |
|
|
809 |
|
|
|
211 |
|
|
|
598 |
|
|
|
283 |
% |
Total Other Income (Expense), Net |
|
$ |
304 |
|
|
$ |
(2,092 |
) |
|
$ |
2,396 |
|
|
|
(115 |
)% |
|
$ |
701 |
|
|
$ |
(2,911 |
) |
|
$ |
3,612 |
|
|
|
(124 |
)% |
Other income (expense), net, during the three months ended June 30, 2018, increased by $2.4 million as compared to the three months ended June 30, 2017. The change was primarily due to charge of $1.9 million that was recorded in the three months ended June 30, 2017 related to the change in the fair value of warrants to purchase convertible preferred stock. No such charge was required during the three months ended June 30, 2018 as warrants to purchase convertible preferred stock were converted into warrants to purchase common stock upon our IPO. Other income, net, increased by $0.2 million during three months ended June 30, 2018 as compared to the three months ended June 30, 2017 due to an increase in interest income on a higher cash balance post IPO. Interest expense for the three months ended June 30, 2017 was higher by $0.2 million due to outstanding debt during that period. No such debt was outstanding in 2018.
Other income (expense), net, during the six months ended June 30, 2018, increased by $3.6 million as compared to the six months ended June 30, 2017. The change was primarily due to a charge of $2.7 million that was recorded in the six months ended June 30, 2017 related to the change in fair value of warrants to purchase convertible preferred stock. No such charge was required during the six months ended June 30, 2018. Other income, net, increased by $0.6 million during the six months ended June 30, 2018 as compared to the six months ended June 30, 2017 due to an increase in interest income on a higher cash balance post IPO. Interest expenses for the six months ended June 30, 2017 was higher by $0.4 million due to outstanding debt during that period. No such debt was outstanding in 2018.
Income Tax Expense
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
|
|
|
|
|
||||||||||
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
Change $ |
|
|
Change % |
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
|
Change $ |
|
|
Change % |
|
||||||||
(in thousands, except percentages) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Tax Expense |
|
$ |
(354 |
) |
|
$ |
38 |
|
|
$ |
(392 |
) |
|
|
(1032 |
)% |
|
$ |
(225 |
) |
|
$ |
86 |
|
|
$ |
(311 |
) |
|
|
(362 |
)% |
Income tax expense is comprised of foreign income taxes and state minimum income taxes in the United States.
Liquidity and Capital Resources
As of June 30, 2018, we had cash and cash equivalents of $174.2 million. In October 2017, as a result of our IPO, we received cash proceeds of $134.8 million net of underwriting discounts and commissions but before deducting other offering expenses. Our primary source of liquidity is cash generated through operating and financing activities. Our primary uses of cash include operating costs such as personnel-related expenses and capital spending. Our future capital requirements may vary materially from those currently planned and will depend on many factors including our growth rate and the continuing market acceptance of our advertising platform, operating system and technology and players along with the timing and effort related to the introduction of new platform features, players, hiring of experienced personnel, the expansion of sales and marketing activities, as well as overall economic conditions. We recently entered into lease agreements for a corporate headquarters, and we will start to incur material expenses in future years. We may also contemplate and engage in additional merger and acquisition activity that could materially impact our liquidity and capital resource position. However, we believe that our existing cash balance together with amounts available under our credit facility will be sufficient to fund our working capital and meet our anticipated cash needs for the foreseeable future.
29
We may contemplate and engage in additional merger and acquisition activity that could materially impact our liquidity and capital resource position. We believe that our existing cash and cash equivalent balances, together with amounts available under our credit facility will be sufficient to fund our working capital and meet our anticipated cash needs for the foreseeable future.
As of June 30, 2018, approximately 1.2% of our cash was held outside the United States. These amounts were primarily held in Europe and are utilized to fund our foreign operations. The amount of unremitted earnings related to our foreign subsidiaries is not material.
Silicon Valley Bank Loan and Security Agreements
We first entered into a loan and security agreement (the “LSA”) with Silicon Valley Bank (“Bank’) in July 2011. The LSA was amended at various dates in subsequent periods. We entered into the amended and restated loan and security agreement (the “Restated 2014 LSA”) in November 2014. This Restated 2014 LSA provides advances under the revolving line of credit up to $30.0 million and provides for letters of credit to be issued up to the lesser of the available line of credit, reduced by outstanding advances and drawn but unreimbursed letters of credit, or $5.0 million. The financial and non-financial covenants as well as the term of the agreement were updated in subsequent amendments to the Restated 2014 LSA.
In June 2017, we entered into a second amendment to the Restated 2014 LSA. The advances under the second amendment carry a floating per annum interest rate equal to, at our option, (1) the prime rate or (2) LIBOR plus 2.75%, or the prime rate plus 1% depending on certain ratios. This amendment further changed the financial covenant to maintain a current ratio (calculated as current assets, divided by current liabilities less deferred revenue) greater than or equal to 1.25. The revolving line of credit terminates on June 30, 2019 at which time the principal amount of all outstanding advances becomes due and payable.
On July 18, 2018, the Company entered into a third amendment to the Restated 2014 LSA. The amendment increased the amount by which we can utilize its line of credit to support the issuances of letters of credits from $5.0 million to $30.0 million.
As of June 30, 2018 and December 31, 2017, there were no outstanding borrowings under the revolving line of credit and letters of credit were outstanding in the amount of $3.1 million and $1.5 million, respectively. As of June 30, 2018 and December 31, 2017, we were in compliance with all of the covenants in the amended Restated 2014 LSA. The rate of interest on the line of credit was 4.83% and 4.31%, respectively as of June 30, 2018 and December 31, 2017.
In June 2017, we entered into a subordinated loan agreement (“2017 Agreement”) with the Bank. The 2017 Agreement provides for a term loan borrowing of $40.0 million with a minimum of $25.0 million to be initially drawn at the close of the agreement and the remaining amount available for a 24 month period, to be drawn in no less than $5.0 million increments. Advances under the term loan incur a facility fee equal to 1% of the drawn borrowings, in addition to interest payments at an interest rate equal to, at our option, (1) the prime rate plus 3.5% or (2) LIBOR plus 6.5%, subject to a 1% LIBOR floor. Additionally, the borrowings incur payment in kind interest fees equal to 2.5%, accruing to the unpaid borrowings balance, compounded monthly. Payment in kind interest may be settled in cash, at our election, during the term or at maturity. We are also obligated to pay final payment fees ranging from 1% to 4% depending on the timing of the payment. The 2017 Agreement terminates on October 9, 2020. On October 31, 2017, we repaid the entire amount outstanding, and subsequently terminated the 2017 Agreement.
In connection with the 2017 Agreement we issued warrants to purchase 0.4 million shares of Series H convertible preferred stock, with an exercise price of $9.17340. The warrants are exercisable up to ten years from the date of issuance. Upon the repayment of the amounts borrowed and the subsequent termination of the 2017 Agreement, we cancelled warrants to purchase 0.1 million shares of Class B common stock that were contingent on future borrowings. The remaining warrants were exercised during the year ended December 31, 2017 and during three months ended March 31, 2018. There were no warrants outstanding as of June 30, 2018.
Cash Flows
The following table summarizes our cash flows for the periods presented (in thousands):
|
|
Six Months Ended |
|
|||||
|
|
June 30, 2018 |
|
|
June 30, 2017 |
|
||
Consolidated Statements of Cash Flows Data: |
|
|
|
|
|
|
|
|
Cash flows provided by (used in) operating activities |
|
$ |
(11,468 |
) |
|
$ |
30,213 |
|
Cash flows used in investing activities |
|
|
(9,013 |
) |
|
|
(4,500 |
) |
Cash flows provided by financing activities |
|
|
17,398 |
|
|
|
9,894 |
|
Operating Activities
30
Our operating activities used cash of $11.5 million for the six months ended June 30, 2018. Our net loss of $6.1 million for the six months ended June 30, 2018 was adjusted by non-cash charges of $14.0 million comprising mainly of $3.6 million of depreciat ion and amortization, $9.7 million of stock-based compensation, $0.4 million relating to loss incurred on exiting facilities and $0.3 million of provision related to doubtful accounts. The changes in our operating assets and liabilities used cash of $19.4 million comprising of outflows of $19.0 million from decrease in accounts payable and accrued liabilities due to the timing of payments, $3.4 million from decrease in deferred revenues resulting from the adoption of the new revenue standard and $6.8 millio n from increase in inventory balance from increasing inventory levels from its low point at the end of 2017 holiday season. These outflows were offset by cash inflows from of $9.4 million from decrease in accounts receivable as a result of collections from higher revenues recorded in the last quarter of 2017 holiday season and $2.0 million from decrease in cost of deferred revenues.
Our operating activities provided cash of $30.2 million for the six months ended June 30, 2017. Our net loss of $24.2 million for the six months ended June 30, 2017 was adjusted by non-cash charges of $10.5 million comprising mainly of $2.6 million of depreciation and amortization, $4.6 million of stock-based compensation, $2.7 million change in the fair value of warrants to purchase convertible preferred stock, $0.3 million of provision of doubtful accounts and $0.3 million for non-cash interest expenses relating to the debt. The changes in our operating assets and liabilities provided cash of $44.0 million comprising of inflows of $22.8 million from decrease in accounts receivable, $15.1 million from increase in deferred revenues, $16.5 million from decrease in inventories and $3.6 million from increase in other long-term liabilities. These inflows were offset by outflows of $6.5 million from decrease in accounts payable and accrued liabilities, $2.8 million of increase in other non-current assets, $2.1 million of increase in prepaid and other current assets and $2.6 million increase in deferred cost of revenue.
Investing Activities
Our investing activities for the six months ended June 30, 2018 included cash outflow of $9.0 million spent on purchase of property and equipment, expenditure on leasehold improvements related to expanding our facilities and other capital investments.
Our investing activities for the six months ended June 30, 2017 included cash outflow of $4.5 million, most of which was spent on purchase of property and equipment and expenditure on leasehold improvements.
Financing Activities
Our financing activities provided cash of $17.4 million for the six months ended June 30, 2018. The cash was received mainly from the exercise of employee stock options reflecting the expiry in March 2018 of the six-month lock-up period following the IPO.
Our financing activities provided cash of $9.9 million for the six months ended June 30, 2017. We received net cash proceeds of $24.7 million from the subordinated term loan agreement with Silicon Valley Bank and $0.2 million from exercise of stock options. This was offset by a repayment of $15.0 million balance on the line of credit that was outstanding.
Off-Balance Sheet Arrangements
During the periods presented, we did not have any off-balance sheet arrangements, as defined by applicable SEC rules and regulations.
Contractual Obligations
Our future minimum payments under our non-cancelable contractual obligations were as follows as of June 30, 2018 (in thousands):
|
|
Payments Due by Period |
|
|||||||||||||||||
|
|
Total |
|
|
Less Than 1 Year |
|
|
1 – 3 Years |
|
|
3 – 5 Years |
|
|
More Than 5 Years |
|
|||||
Purchase commitments (1) |
|
$ |
103,993 |
|
|
$ |
103,993 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Operating lease obligations (2) |
|
|
43,335 |
|
|
|
6,516 |
|
|
|
26,216 |
|
|
|
5,525 |
|
|
|
5,078 |
|
Other obligations (3) |
|
|
4,000 |
|
|
|
4,000 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
$ |
151,328 |
|
|
$ |
114,509 |
|
|
$ |
26,216 |
|
|
$ |
5,525 |
|
|
$ |
5,078 |
|
(1) |
Represents commitments to purchase finished goods from our contract manufacturer and other inventory related items. |
(2) |
Represents future minimum lease payments under non-cancelable operating leases. |
(3) |
Represents commitments included in other non- cancelable arrangements like ad buys and other platform services. |
31
Consistent with industry pract ices, we acquire product through a combination of purchase orders, supplier contracts, and open orders based on projected demand information. We currently rely on one outsourced supplier to manufacture, assemble and test our players. This outsourcing suppl ier acquires components and builds product based on projected demand forecasts. If there are unexpected changes to anticipated demand for our products or in the sales mix of our products, some of the firm, non-cancelable, and unconditional purchase commitm ents may result in our being committed to purchase excess inventory.
The contractual commitment amounts in the table above are associated with agreements that are enforceable and legally binding. Obligations under contracts that we can cancel without a significant penalty are not included in the table above.
Critical Accounting Policies and Estimates
Our financial statements are prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.
Except for accounting policies related to our adoption of the new revenue standard, there have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. See Note 10 of Part I, Item 1 of this Quarterly Report on Form 10-Q for the critical accounting policies resulting from our adoption of the new revenue standard.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
During the six months ended June 30, 2018, there were no material changes to our market risk disclosures as set forth under the heading “Item 7A – Quantitative and Qualitative Disclosures About Market Risk,” in Part II of our Annual Report on Form 10-K for the year ended December 31, 2017.
Item 4. Controls and Procedures.
Evaluation of disclosure controls and procedures .
Our management, with the participation of o ur President and Chief Executive Officer, our principal executive officer, and our Chief Financial Officer, our principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our President and Chief Executive Officer and our Chief Financial Officer have concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures were, in design and operation, effective at a reasonable assurance level.
Our management, including our President and Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all errors and all fraud . Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
Changes in internal control over financial reporting.
Except for the changes in the internal controls relating to the adoption of the new revenue standard, there were no changes in our internal control over financial reporting during the quarter ended June 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
32
We are currently involved in, and may in the future be involved in, legal proceedings, claims, and investigations in the ordinary course of our business, including claims for infringing patents, copyrights or other intellectual property rights related to our platform and products, or the content distributed through our platform by us or third-party channel developers. Although the results of these proceedings, claims, and investigations cannot be predicted with certainty, we do not believe that the final outcome of any matters that we are currently involved in are reasonably likely to have a material adverse effect on our business, financial condition, or results of operations. Regardless of final outcomes, however, any such proceedings, claims, and investig ations may nonetheless impose a significant burden on management and employees and may come with expensive attorney fees or unfavorable preliminary and interim rulings.
Our business involves significant risks, some of which are described below. You should carefully consider the risks and uncertainties described below, together with all the other information in this Quarterly Report on Form 10-Q, including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes. If any of the following risks actually occurs, our business, reputation, financial condition, results of operations, revenue, and future prospects could be seriously harmed. Unless otherwise indicated, references to our business being seriously harmed in these risk factors will include harm to our business, reputation, financial condition, results of operations, revenue, and future prospects. In that event, the market price of our Class A common stock could decline, and you could lose part or all of your investment. The risks facing our business have not changed substantively from those discussed in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 1, 2018, except for those risks marked with an asterisk (*).
Risks Related to Our Business and Industry
We have incurred operating losses in the past, expect to incur operating losses in the future and may never achieve or maintain profitability.*
We began operations in 2002 and for all of our history we have experienced net losses and negative cash flows from operations. As of June 30, 2018, we had an accumulated deficit of $251.1 million and for the six months ended June 30, 2018, we experienced a net loss of $6.1 million. We expect our operating expenses to increase in the future as we expand our operations. If our revenue and gross profit do not grow at a greater rate than our operating expenses, we will not be able to achieve and maintain profitability. We expect to incur significant losses in the future for a number of reasons, including without limitation the other risks and uncertainties described herein. Additionally, we may encounter unforeseen operating or legal expenses, difficulties, complications, delays and other factors that may result in losses in future periods. If our expenses exceed our revenue, we may never achieve or maintain profitability and our business may be harmed.
TV streaming is highly competitive and many companies, including large technology companies, TV brands and service operators, are actively focusing on this industry. If we fail to differentiate ourselves and compete successfully with these companies, it will be difficult for us to attract users and our business will be harmed.*
TV streaming is increasingly competitive and global. Our success depends in part on attracting and retaining users on, and effective monetization of, our TV streaming platform. To attract and retain users, we need to be able to respond efficiently to changes in consumer tastes and preferences and continue to increase the type and number of content offerings. Effective monetization requires us to continue to update the features and functionality of our streaming platform for users, content publishers and advertisers. We must also effectively support the most popular sources of streaming content, such as Netflix, Amazon Prime Video, Hulu and YouTube and respond rapidly to actual and anticipated market trends in the U.S. TV streaming industry.
Companies such as Amazon.com, Inc., Apple Inc. and Google Inc. offer TV streaming products that compete with our streaming players and Roku TV. In addition, Google licenses its operating system software for integration into smart TVs and service provider set top boxes and Amazon licenses its operating system software for integration into smart TVs. These companies have the financial resources to subsidize the cost of their streaming devices in order to promote their other products and services making it harder for us to acquire new users and increase hours streamed. These companies could also implement standards or technology that are not compatible with our products or that provide a better streaming experience on competitive products. These companies also promote their brands through traditional forms of advertising, such as TV commercials, as well as internet advertising or website product placement, and have greater resources than us to devote to such efforts.
33
In addition, many TV brands, such as LG, Samsung Electronics Co., Ltd. and VIZIO, Inc., offer their own TV streaming solutions within their TVs. Other devices, such as Microsoft’s Xbox and Sony’s PlayStation game consoles and many DVD and Blu-ray players, also incorporate TV streaming functionali ty. Similarly, some service operators, such as Comcast and Altice, offer TV streaming applications as part of their cable service plans and can leverage their existing consumer bases, installation networks, broadband delivery networks and name recognition to gain traction in the TV streaming market. If users of TV streaming content prefer these alternative products to Roku streaming players and Roku TVs, we may not able to achieve our expected growth in player revenue or gross profit.
In July 2018, we have also announced our new Roku TV Wireless Speaker product line, designed specifically for use with Roku TVs and we may face additional competition from speaker and other peripheral manufacturers. If our wireless speaker products do not operate as designed, do not achieve marketplace acceptance, or do not enhance or produce the benefits to the Roku TV viewing experience as we intend, our users’ overall viewing experience may be diminished and this may impact the overall demand for Roku TVs or other Roku products.
We expect competition in TV streaming from the large technology companies and service operators described above, as well as new and growing companies, to increase in the future. This increased competition could result in pricing pressure, lower revenue and gross profit or the failure of our players, Roku TV and our platform to gain or maintain broad market acceptance. To remain competitive and maintain our position as a leading TV streaming provider we need to continuously invest in product development, marketing, service and support and device distribution infrastructure. In addition, evolving TV standards such as 4K, HDR and unknown future developments may require further investments in the development of our players, Roku TV and our platform. We may not have sufficient resources to continue to make the investments needed to maintain our competitive position. In addition, most of our competitors have longer operating histories, greater name recognition, larger customer bases and significantly greater financial, technical, sales, marketing and other resources than us, which provide them with advantages in developing, marketing or servicing new products and offerings. As a result, they may be able to respond more quickly to market demand, devote greater resources to the development, promotion and sales of their products or the distribution of their content, and influence market acceptance of their products better than we can. These competitors may also be able to adapt more quickly to new or emerging technologies or standards and may be able to deliver products and services at a lower cost. Increased competition could reduce our market share, revenue and operating margins, increase our operating costs, harm our competitive position and otherwise harm our business.
We also compete for video viewing hours with mobile platforms (phones and tablets), and users may prefer to view streaming content on such devices. Increased use of mobile platforms for video streaming could adversely impact the growth of our streaming hours, harm our competitive position and otherwise harm our business.
We may not be successful in our efforts to further monetize our streaming platform, which may harm our business.
In addition to generating player revenue, our business model depends on our ability to generate platform revenue from content publishers and advertisers. We generate platform revenue from advertising campaigns and on a transactional basis from new subscription purchases and content transactions that occur on our platform. As such, we are seeking to expand our user base and increase the number of hours that are streamed across our platform in an effort to create additional platform revenue opportunities. The total number of hours streamed, however, does not correlate with platform revenue on a period-by-period basis, because we do not monetize every hour streamed on our platform. As our user base grows and as we increase the amount of content offered and streamed across our platform, we must effectively monetize our expanding user base and streaming activity.
Our ability to deliver more relevant advertisements to our users and to increase our platform’s value to advertisers depends on the collection of user engagement data, which may be restricted or prevented by a number of factors. Users may decide to opt out or restrict our ability to collect personal viewing data or to provide them with more relevant advertisements. Content publishers may also refuse to allow us to collect data regarding user engagement or refuse to implement mechanisms we request to ensure compliance with our legal obligations or technical requirements. For example, we are not able to fully utilize program level viewing data from many of our most popular channels to improve the relevancy of advertisements provided to our users. Other channels available on our platform, such as Amazon Prime Video, Hulu and YouTube, are focused on increasing user engagement and time spent within their channel by allowing them to purchase additional content and streaming services within their channels. In addition, we do not currently monetize content provided on non-certified channels on our platform. If our users spend most of their time within particular channels where we have limited or no ability to place advertisements or leverage user information, or users opt out from our ability to collect data for use in providing more relevant advertisements, then we may not be able to achieve our expected growth in platform revenue or gross profit. If we are unable to further monetize our platform, our business may be harmed.
To date, the majority of the hours streamed on our platform have consisted of subscription video on demand content; however, in order to materially increase the monetization of our platform through the sale of advertising-supported video, we will need our users to stream significantly more ad-supported content. Our efforts to monetize our platform through ad-supported content is still
34
developing, and may not grow as we expect. Accordingly, there can be no assurance that we will be successful in monetizing our platform through the sale of advertising-supported video.
We depend on a small number of content publishers for a majority of our streaming hours, and if we fail to maintain these relationships, our business could be harmed, even though the revenues received, directly or indirectly, from streaming on certain of these channels has not been significant to our overall revenue.*
Historically, a small number of content publishers have accounted for a significant portion of the content streamed across our platform and the terms and conditions of our relationships with content publishers vary. In the six months ended June 30, 2018, and June 30, 2017, Netflix accounts for approximately one-third of all hours streamed in each period. However, although Netflix is the largest provider of content across our platform, revenue generated from Netflix was not material to our overall revenue during the period, and we do not expect revenue from Netflix to be material to our overall operating results for the foreseeable future. In addition, our agreements with content publishers generally have a term of one to three years and can be terminated before the end of t he term by the content publisher under certain circumstances, such as if we materially breach the agreement, become insolvent, enter bankruptcy, commit fraud or fail to adhere to the content publisher’s security requirements. Further, we do not receive material revenue from YouTube, the most viewed ad-supported channel by hours streamed on our platform for the six months ended June 30, 2018. If we fail to maintain our relationships with the content publishers on terms favorable to us, or at all, or if these content publishers face problems in delivering their content across our platform, we may lose channel partners or users and our business may be harmed.
We operate in an evolving industry, which makes it difficult to evaluate our business and prospects. If TV streaming develops more slowly than we expect, our operating results and growth prospects could be harmed. In addition, our future growth depends on the growth of TV streaming advertising.
TV streaming is a relatively new and rapidly evolving industry, making our business and prospects difficult to evaluate. The growth and profitability of this industry and the level of demand and market acceptance for our products and TV platform are subject to a high degree of uncertainty. We believe that the continued growth of streaming as an entertainment alternative will depend on the availability and growth of cost-effective broadband internet access, the quality of broadband content delivery, the quality and reliability of new devices and technology, the cost for users relative to other sources of content, as well as the quality and breadth of content that is delivered across streaming platforms. These technologies, products and content offerings continue to emerge and evolve. Users, content publishers or advertisers may find TV streaming platforms to be less attractive than traditional TV, which would harm our business. In addition, many advertisers continue to devote a substantial portion of their advertising budgets to traditional advertising, such as TV, radio and print. The future growth of our business depends on the growth of TV streaming advertising, and on advertisers increasing spend on such advertising. We cannot be certain that they will do so. If advertisers do not perceive meaningful benefits of TV streaming advertising, then this market may develop more slowly than we expect, which could adversely impact our operating results and our ability to grow our business.
If we are unable to maintain an adequate supply of quality video ad inventory on our platform, our business may be harmed.
We may fail to attract content publishers that generate sufficient quantity or quality of ad-supported content hours on our platform and continue to grow supply of quality video ad inventory. Our business model depends on our ability to grow video ad inventory on our platform and sell it to advertisers. We grow ad inventory by adding and retaining content publishers on our platform with ad-supported channels that we can monetize. In addition, we do not have access to all video ad inventory on our platform, and we may not secure access in the future. The amount, quality and cost of inventory available to us can change at any time. If we are unable to grow and maintain a sufficient supply of quality video advertising inventory at reasonable costs to keep up with demand, our business may be harmed.
We operate in a highly competitive industry and we compete for advertising revenue with other internet streaming platforms and services, as well as traditional media, such as radio, broadcast, cable and satellite TV and satellite and internet radio. These competitors offer content and other advertising mediums that may be more attractive to advertisers than our TV streaming platform. These competitors are often very large and have more advertising experience and financial resources than we do, which may adversely affect our ability to compete for advertisers and may result in lower revenue and gross profit from advertising. If we are unable to increase our advertising revenue by, among other things, continuing to improve our platform’s data capabilities to further optimize and measure advertisers’ campaigns, increase our advertising inventory and expand our advertising sales team and programmatic capabilities, our business and our growth prospects may be harmed. We may not be able to compete effectively or adapt to any such changes or trends, which would harm our ability to grow our advertising revenue and harm our business.
35
Our players and Roku TVs must operate with various offeri ngs, technologies and systems from our content publishers that we do not control. If Roku devices do not operate effectively with those offerings, technologies and systems, our business may be harmed.
Our Roku OS is designed for performance using relatively low-cost hardware, which enables us to drive user growth with our players and Roku TVs offered at a low cost to consumers. However, our hardware must be interoperable with all channels and other offerings, technologies and systems from our content publishers, including virtual multi-channel video programming distributors such as Sling TV. We have no control over these offerings, technologies and systems beyond our channel certification requirements, and if our players do not provide our users with a high-quality experience on those offerings on a cost-effective basis or if changes are made to those offerings that are not compatible with our players, we may be unable to increase user growth and content hours streamed, we may be required to increase our hardware costs and our business will be harmed. We plan to continue to introduce new products regularly and we have experienced that it takes time to optimize such products to function well with these offerings, technologies and systems. In addition, many of our largest content publishers have the right to test and certify our new products before we can publish their channels on new products. These certification processes can be time consuming and introduce third party dependencies into our product release cycles. If content publishers do not certify new products on a timely basis, or require us to make changes in order to obtain certifications, our product release plans may be adversely impacted. To continue to grow our active accounts and user engagement, we will need to prioritize development of our products to work better with new offerings, technologies and systems. If we are unable to maintain consistent operability of Roku devices that is on parity with or better than other platforms, our business could be harmed. In addition, any future changes to offerings, technologies and systems from our content publishers such as virtual service operators may impact the accessibility, speed, functionality, and other performance aspects of our products, which issues are likely to occur in the future from time to time. We may not successfully develop products that operate effectively with these offerings, technologies or systems. If it becomes more difficult for our users to access and use these offerings, technologies or systems, our business could be harmed.
Changes in consumer viewing habits could harm our business.
The manner in which consumers access streaming content is changing rapidly. As the technological infrastructure for internet access continues to improve and evolve, consumers will be presented with more opportunities to access video, music and games on-demand with interactive capabilities. Time spent on mobile devices is growing rapidly, in particular by young adults streaming video content, including popular streaming channels like Netflix and YouTube, as well as content from cable or satellite providers available live or on-demand on mobile devices. In addition, personal computers, smart TVs, DVD players, Blu-ray players, gaming consoles and cable set top boxes allow users to access streaming entertainment content. If other streaming or technology providers are able to respond and take advantage of changes in consumer viewing habits and technologies better than us, our business could be harmed.
New entrants may enter the TV streaming market with unique service offerings or approaches to providing video. In addition, our competitors may enter into business combinations or alliances that strengthen their competitive positions. If new technologies render the TV streaming market obsolete or we are unable to successfully compete with current and new competitors and technologies, our business will be harmed, and we may not be able to increase or maintain our market share and revenue.
If we fail to obtain or maintain popular content, we may fail to retain existing users and attract new users.
We have invested a significant amount of time to cultivate relationships with our content publishers; however, such relationships may not continue to grow or yield further financial results. We must continuously maintain existing relationships and identify and establish new relationships with content publishers to provide popular content. In order to remain competitive, we must consistently meet user demand for popular streaming channels and content; particularly as we launch new players or enter new markets, including international markets. If we are not successful in helping our content publishers launch and maintain streaming channels that attract and retain a significant number of users on our platform or if we are not able to do so in a cost-effective manner, our business will be harmed. Our ability to successfully help content publishers maintain and expand their channel offerings on a cost-effective basis largely depends on our ability to:
|
• |
effectively market new streaming channels and enhancements to our existing streaming channels; |
|
• |
minimize launch delays of new and updated streaming channels; and |
|
• |
minimize platform downtime and other technical difficulties. |
If we fail to help our content publishers maintain and expand their channel offerings our business may be harmed.
36
If the advertisements on our platform are not relevant or not engaging to our users, our growth in active accounts and hours streamed may be adversely i mpacted.
We have made, and are continuing to make, investments to enable advertisers to deliver relevant advertising content to users on our platform. Existing and prospective Roku advertisers may not be successful in serving ads that lead to and maintain user engagement. Those ads may seem irrelevant, repetitive or overly targeted and intrusive. We are continuously seeking to balance the objectives of our users and advertisers with our desire to provide an optimal user experience, but we may not be successful in achieving a balance that continues to attract and retain users and advertisers. If we do not introduce relevant advertisements or such advertisements are overly intrusive and impede the use of our TV streaming platform, our users may stop using our platform which will harm our business.
The Roku Channel may not generate sufficient advertising revenues.*
We operate “The Roku Channel,” an ad-supported streaming channel on the Roku platform that gives our users free access to a collection of films and other content, and this channel has become a top 5 channel on our platform by in terms of active account reach as of June 30, 2018. We do not receive subscriptions or other fees from users that access content on The Roku Channel. We have incurred, and will continue to incur, costs and expenses in connection with the launch, development, expansion and operation of The Roku Channel, which we monetize through advertising. For example, we have recently announced the availability of The Roku Channel in Canada and on other non-Roku smart televisions. If our users do not continue to stream the free, ad-supported content we make available on The Roku Channel, we will not have the opportunity to monetize The Roku Channel through advertising. Furthermore, if the advertisements on The Roku Channel are not relevant to our users or such advertisements are overly intrusive and impede our users’ enjoyment of the content we make available, our users may not stream content and view advertisements on The Roku Channel, and The Roku Channel may not generate sufficient advertising revenues to be cost effective for us to operate.
Our growth will depend in part upon our ability to develop relationships with TV brands and, to a lesser extent, service operators.*
We developed, and intend to continue to develop, relationships with TV brands and service operators in both the United States and international markets. Our licensing arrangements are complex and time-consuming to negotiate and complete. Our current and potential partners include TV brands, cable and satellite companies and telecommunication providers. Under these license arrangements, we generally have limited control over the amount and timing of resources these entities dedicate to the relationship. If our TV brand or service operator partners fail to meet their forecasts for distributing licensed devices, our business may be harmed.
We license our Roku OS to certain TV brands to manufacture co-branded smart TVs, or Roku TVs. The primary economic benefits that we derive from these license arrangements have been and will likely continue to be indirect, primarily from growing our active accounts and increasing hours streamed. We have not received, nor do we expect to receive significant license revenue from these arrangements in the near term, but we expect to incur expenses in connection with these commercial agreements. If these arrangements do not result in increased users and hours streamed, our business may be harmed. The loss of a relationship with a TV brand or service operator could harm our results of operations, damage our reputation, increase pricing and promotional pressures from other partners and distribution channels or increase our marketing costs. If we are not successful in maintaining existing and creating new relationships with any of these third parties, or if we encounter technological, content licensing or other impediments to our development of these relationships, our ability to grow our business could be adversely impacted.
If our users sign up for offerings and services outside of our platform or though other channels on our platform, our business may be harmed.
We earn revenue by acquiring subscribers for certain of our content publishers activated on or through our platform. If users do not use our platform for these purchases or subscriptions for any reason, and instead pay for services directly with content publishers or by other means that we do not receive attribution for, our business may be harmed. In addition, certain channels available on our platform allow users to purchase additional streaming services from within their channels. The revenues we earn from these transactions are generally not equivalent to the revenues we earn from activations on or through our platform that we receive full attribution credit for. Accordingly, if users activate their subscriptions for content or services through other channels on our platform, our business may be harmed.
37
If we were to lose the services of our Chief Executive Officer or other members of o ur senior management team, we may not be able to execute our business strategy.
Our success depends in a large part upon the continued service of key members of our senior management team. In particular, our founder, President and Chief Executive Officer, Anthony Wood, is critical to our overall management, as well as the continued development of our devices and the Roku platform, our culture and our strategic direction. All of our executive officers are at will employees, and we do not maintain any key person life insurance policies. The loss of any member of our senior management team could harm our business.
If we are unable to attract and retain highly qualified employees, we may not be able to continue to grow our business.
Our ability to compete and grow depends in large part on the efforts and talents of our employees. Our employees, particularly engineers and other product developers, are in high demand, and we devote significant resources to identifying, hiring, training, successfully integrating and retaining these employees. As competition with other companies’ increases, we may incur significant expenses in attracting and retaining high quality engineers and other employees. The loss of employees or the inability to hire additional skilled employees as necessary to support the rapid growth of our business and the scale of our operations could result in significant disruptions to our business, and the integration of replacement personnel could be time-consuming and expensive and cause additional disruptions to our business.
We believe a critical component to our success and our ability to retain our best people is our culture. As we continue to grow and develop a public company infrastructure, we may find it difficult to maintain our entrepreneurial, execution-focused culture. In addition, many of our employees, may be able to receive significant proceeds from sales of our equity in the public markets, which may reduce their motivation to continue to work for us. Moreover, the equity ownership of many of our employees could create disparities in wealth among our employees, which may harm our culture and relations among employees and our business.
Most of our agreements with content publishers are not long term. Any disruption in the renewal of such agreements may result in the removal of certain content from our platform and may harm our active account growth and engagement.
We enter into agreements with all our content publishers, which have varying expiration dates; typically over one to three years. Upon expiration of these agreements, we are required to re-negotiate and renew these agreements in order to continue providing offerings from these content publishers on our platform. We may not be able to reach a satisfactory agreement before our existing agreements have expired. If we are unable to renew such agreements on a timely basis, we may be required to temporarily or permanently remove certain content from our platform. The loss of such content from our platform for any period of time may harm our business.
If our content publishers do not continue to develop channels for our platform and participate in new features that we may introduce from time to time, our business may be harmed.
As our platform and products evolve, we will continue to introduce new features, which may or may not be attractive to our content publishers or meet their requirements. For example, some content publishers have elected not to participate in our cross-channel search feature, our integrated advertising framework, known as RAF, or have imposed limits on our data gathering for usage within their channels. In addition, our platform utilizes our proprietary Brightscript scripting language in order to allow our content publishers to develop and create channels on our platform. If we introduce new features or utilize a new scripting language in the future, such a change may not comply with our content publisher’s certification requirements. In addition, our content publishers may find other languages, such as HTML5, more attractive to develop for and shift their resources to developing their channels on other platforms. If content publishers do not find our platform simple and attractive to develop channels for, do not value and participate in all of the features and functionality that our platform offers, or determine that our software developer kit or new features of our platform do not meet their certification requirements, our business may be harmed.
Our quarterly operating results may be volatile and are difficult to predict, and our stock price may decline if we fail to meet the expectations of securities analysts or investors.
Our revenue, gross profit and other operating results could vary significantly from quarter-to-quarter and year-to-year and may fail to match our past performance due to a variety of factors, including many factors that are outside of our control. Factors that may contribute to the variability of our operating results and cause the market price of our Class A common stock to fluctuate include:
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the entrance of new competitors or competitive products in our market, whether by established or new companies; |
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our ability to retain and grow our active account base and increase engagement among new and existing users; |
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our ability to maintain effective pricing practices, in response to the competitive markets in which we operate or other macroeconomic factors, such as inflation or increased product taxes; |
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our revenue mix, which drives gross profit; |
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seasonal or other shifts in advertising revenue or player sales; |
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the timing of the launch of new or updated products, streaming channels or features; |
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the addition or loss of popular content; |
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the ability of retailers to anticipate consumer demand; |
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an increase in the manufacturing or component costs of our players or the manufacturing or component costs of our TV brand licensees for Roku TVs; and |
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an increase in costs associated with protecting our intellectual property, defending against third-party intellectual property infringement allegations or procuring rights to third-party intellectual property. |
Our gross profit margins vary across our devices and platform offerings. Player revenue has a lower gross margin compared to platform revenue derived through our arrangements with advertising, content distribution, billing and licensing activities. Gross margins on our players vary across player models and can change over time as a result of product transitions, pricing and configuration changes, component costs, player returns and other cost fluctuations. In addition, our gross margin and operating margin percentages, as well as overall profitability, may be adversely impacted as a result of a shift in device, geographic or sales channel mix, component cost increases, price competition, or the introduction of new players, including those that have higher cost structures with flat or reduced pricing. We have in the past and may in the future strategically reduce our player gross margin in an effort to increase our active accounts and grow our gross profit. As a result, our player revenue may not increase as rapidly as it has historically, or at all, and, unless we are able to adequately increase our platform revenue and grow our active accounts, we may be unable to grow gross profit and our business will be harmed. If a reduction in gross margin does not result in an increase in our active accounts and gross profit, our financial results may suffer and our business may be harmed.
Our revenue and gross profit are subject to seasonality and if our sales during the holiday season fall below our expectations, our business may be harmed.
Seasonal consumer shopping patterns significantly affect our business. Specifically, our revenue and gross profit are traditionally strongest in the fourth quarter of each fiscal year and represent a high percentage of the total net revenue for such fiscal year due to higher consumer purchases and increased advertising during holiday periods. Furthermore, a significant percentage of our player sales through retailers in the fourth quarter are pursuant to committed sales agreements with retailers for which we recognize significant discounts in the average selling prices in the third quarter in an effort to grow our active accounts, which will reduce our player gross margin.
Given the seasonal nature of our player sales, accurate forecasting is critical to our operations. We anticipate that this seasonal impact on revenue and gross profit is likely to continue and any shortfall in expected fourth quarter revenue, due to macroeconomic conditions, a decline in the effectiveness of our promotional activities, actions by our competitors or disruptions in our supply or distribution chain, or for any other reason, would cause our full year results of operations to suffer significantly. For example, delays or disruptions at U.S. ports of entry could adversely affect our or our licensees’ ability to timely deliver players and co-branded Roku TVs to retailers during the holiday season. A substantial portion of our expenses are personnel related and include salaries, stock-based compensation and benefits that are not seasonal in nature. Accordingly, in the event of a revenue shortfall, we would be unable to mitigate the negative impact on margins, at least in the short term, and our business would be harmed.
We and our TV brand partners depend on our retail sales channels to effectively market and sell our players and Roku TVs, and if we or our partners fail to maintain and expand effective retail sales channels we could experience lower player or Roku TV sales.*
To continue to acquire new active accounts, we must maintain and expand our retail sales channels. The majority of our players and Roku TVs are sold through traditional brick and mortar retailers, such as Best Buy, Target and Walmart, including their online sales platforms, and online retailers such as Amazon.com. To a lesser extent, we sell players directly through our website and internationally through distributors. For six months ended June 30, 2018 and June 30, 2017, Amazon.com, Best Buy and Walmart each accounted for more than 66% and 57%, respectively, of our player revenue and are expected to each account for more than 10% of our player revenue in fiscal 2018. These three retailers collectively accounted for 61% of our player revenue for the year ended December 31, 2017 and 2016. These retailers and our international distributors also sell products offered by our competitors. We have no minimum purchase commitments or long-term contracts with any of these retailers or distributors. If one or several retailers or distributors were to discontinue selling our players or Roku TVs, or choose not to prominently display those devices in their stores or on their websites, the volume of Roku devices sold could decrease, which would harm our business. For example, in April 2018, Amazon,com and Best Buy announced a partnership whereby two Best Buy controlled smart TV brands will exclusively utilize Amazon.com’s operating system, and such TVs will be sold by Best Buy and Amazon.com. Although this arrangement is not
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expected to limit our TV brand partners’ ability to sell on either Amazon.com or at Best Buy, if our existing TV brands choose to work with other operating system developers, this may im pact our Roku TV program and our ability to continue to grow active accounts. Traditional retailers have limited shelf and end cap space in their stores and limited promotional budgets, and online retailers have limited prime website product placement spac e. Competition is intense for these resources, and a competitor with more extensive product lines and stronger brand identity, such as Apple or Google, possesses greater bargaining power with retailers. In addition, one of our online retailers, Amazon.com, sells its own competitive TV streaming products and is able to market and promote these products more prominently on its website, and could refuse to offer our devices. Any reduction in our ability to place and promote our devices, or increased competitio n for available shelf or website placement, would require us to increase our marketing expenditures simply to maintain our product visibility, which may harm our business. In particular, the availability of product placement during peak retail periods, suc h as the holiday season, is critical to our revenue growth, and if we are unable to effectively sell our devices during these periods, our business would be harmed.
If our efforts to build a strong brand and maintain customer satisfaction and loyalty are not successful, we may not be able to attract or retain users, and our business may be harmed.
Building and maintaining a strong brand is important to attract and retain users, as potential users have a number of TV streaming choices. Successfully building a brand is a time consuming and comprehensive endeavor, and can be positively and negatively impacted by any number of factors. Some of these factors, such as the quality or pricing of our players or our customer service, are within our control. Other factors, such as the quality and reliability of Roku TVs and the quality of the content that our content publishers provide, may be out of our control, yet users may nonetheless attribute those factors to us. Our competitors may be able to achieve and maintain brand awareness and market share more quickly and effectively than we can. Many of our competitors are larger companies and promote their brands through traditional forms of advertising, such as print media and TV commercials, and have substantial resources to devote to such efforts. Our competitors may also have greater resources to utilize internet advertising or website product placement more effectively than we can. If we are unable to execute on building a strong brand, it may be difficult to differentiate our business and platform from our competitors in the marketplace, therefore our ability to attract and retain users may be adversely affected and our business may be harmed.
Our streaming platform allows our customers to choose from thousands of channels, representing a variety of content from a wide range of content publishers. Our customers can choose and control which channels they download and watch, and they can use parental control settings to prevent channels from being downloaded to our devices. While we have policies that prohibit the publication of content that is unlawful, incites illegal activities or violates third-party rights, among other things, we may distribute channels that include controversial content. Controversies related to the content included on certain of the channels that we distribute could result in negative publicity, cause harm to our reputation and brand or subject us to claims, and may harm our business.
We must successfully manage streaming device and other product introductions and transitions in order to remain competitive.
We must continually develop new and improved streaming devices and other products that meet changing consumer demands. Moreover, the introduction of a new streaming device or other product is a complex task, involving significant expenditures in research and development, promotion and sales channel development. For example, in July 2018, we announced our new Roku TV Wireless Speaker, designed specifically for use with Roku TVs. Whether users will broadly adopt new products is not certain. Our future success will depend on our ability to develop new and competitively priced streaming devices and other products and add new desirable content and features to our platform. Moreover, we must introduce new streaming devices and other products in a timely and cost-effective manner, and we must secure production orders for those products from our contract manufacturers. The development of new products is a highly complex process, and while our research and development efforts are aimed at solving increasingly complex problems, we do not expect that all of our projects will be successful. The successful development and introduction of new products depends on a number of factors, including the following:
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the accuracy of our forecasts for market requirements beyond near term visibility; |
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our ability to anticipate and react to new technologies and evolving consumer trends; |
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our development, licensing or acquisition of new technologies; |
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our timely completion of new designs and development; |
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the ability of our contract manufacturer to cost-effectively manufacture our new products; |
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the availability of materials and key components used in manufacturing; and |
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our ability to attract and retain world-class research and development personnel. |
If any of these or other factors becomes problematic, we may not be able to develop and introduce new devices in a timely or cost-effective manner, and our business may be harmed.
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We do not have manufacturing capabilities and pri marily depend upon a few contract manufacturers, and our operations could be disrupted if we encounter problems with the contract manufacturers.
We do not have any internal manufacturing capabilities and primarily rely upon one contract manufacturer, Foxconn Industrial Internet Co. Ltd., or Foxconn, to build our players. We similarly rely on one contract manufacturer, Tonly Electronics Holdings Ltd., or Tonly, to manufacture our wireless speakers. Our contract manufacturers may be vulnerable to capacity constraints and reduced component availability, and our control over delivery schedules, manufacturing yields and costs, particularly when components are in short supply or when we introduce a new player or other product or feature, is limited. In addition, we have limited control over Foxconn’s or Tonly’s quality systems and controls, and therefore must rely on them to manufacture our players and other products to our quality and performance standards and specifications. Delays, component shortages and other manufacturing and supply problems could impair the retail distribution of our players and other products and ultimately our brand. Furthermore, any adverse change in our contract manufacturers’ financial or business condition could disrupt our ability to supply players to our retailers and distributors.
Our contracts with our contract manufacturers generally do not obligate them to supply our players or other products in any specific quantity or at any specific price. In the event our contracts manufacturers are unable to fulfill our production requirements in a timely manner or decide to terminate their relationship with us, our order fulfillment may be delayed, and we would have to identify, select and qualify acceptable alternative contract manufacturers. Alternative contract manufacturers may not be available to us when needed or may not be in a position to satisfy our production requirements at commercially reasonable prices or to our quality and performance standards. Any significant interruption in manufacturing at one of our contract manufacturers would require us to reduce our supply of players or other products to our retailers and distributors, which in turn would reduce our revenue. In addition, the Foxconn and Tonly facilities are located in the People’s Republic of China and may be subject to political, economic, social and legal uncertainties that may harm our relationships with these parties. We believe that the international location of these facilities increases supply risk, including the risk of supply interruptions. Furthermore, any manufacturing issues affecting the quality of our products, including Roku TVs, wireless speakers or players, could harm our business.
If either of our contract manufacturers fail for any reason to continue manufacturing our players or other products in required volumes and at high quality levels, or at all, we would have to identify, select and qualify acceptable alternative contract manufacturers. Alternative contract manufacturers may not be available to us when needed, or may not be in a position to satisfy our production requirements at commercially reasonable prices or to our quality and performance standards. Any significant interruption in manufacturing at a contract manufacturer could require us to reduce our supply of players or other products to our retailers and distributors, which in turn would reduce our revenue and user growth.
Changes in general economic conditions, geopolitical conditions, U.S. trade policies and other factors beyond our control may adversely impact our business and operating results.*
Our businesses are subject to risks generally associated with doing business abroad, such as foreign governmental regulation in the countries in which our manufacturing sources are located. Our operations and performance depend significantly on global, regional and U.S. economic and geopolitical conditions. During, and following, the U.S. presidential election in 2016, there has been discussion and dialogue regarding potential significant changes to U.S. trade policies, legislation, treaties and tariffs, including the North American Free Trade Agreement. At this time, it is unknown whether and to what extent new legislation will be passed into law, pending or new regulatory proposals will be adopted, international trade agreements will be negotiated, or the effect that any such action would have, either positively or negatively, on our industry or our business. If any new legislation and/or regulations are implemented, or if existing trade agreements are renegotiated, it may be inefficient and expensive for us to alter our business operations in order to adapt to or comply with such changes. Such operational changes could have a material adverse effect on our business, financial condition, results of operations or cash flows.
Also, various countries, in addition to the United States, regulate the import and export of certain technology, including import and export licensing requirements, and have enacted laws that could limit our ability to distribute our products or could limit our commercial and/or strategic partners ability to implement our products in those countries. Changes in our products or future changes in export and import regulations may create delays in the introduction of our products in international markets, prevent our commercial and/or strategic partners with international operations from deploying our products globally or, in some cases, prevent the export or import of our products to certain countries, governments, or persons altogether. Any change in export or import regulations, economic sanctions or related legislation, increased export and import controls stemming governmental policies, or change in the countries, governments, persons or technologies targeted by such regulations, could result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or new customers in international markets. Any decreased use of our products or limitation on our ability to export or sell our products would harm our business.
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If we fail to accurately foreca st our manufacturing requirements and manage our inventory with our contract manufacturers, we could incur additional costs, experience manufacturing delays and lose revenue.
We bear supply risk under our contract manufacturing arrangements with Foxconn and Tonly. Lead times for the materials and components that our contract manufacturers orders on our behalf through different component suppliers vary significantly and depend on numerous factors, including the specific supplier, contract terms and market demand for a component at a given time. Lead times for certain key materials and components incorporated into our players are currently lengthy, requiring our contract manufacturer to order materials and components several months in advance. If we overestimate our production requirements, our contract manufacturer may purchase excess components and build excess inventory. If our contract manufacturer, at our request, purchase excess components that are unique to our players or build excess players, we could be required to pay for these excess components or players. In the past, we have agreed to reimburse our contract manufacturer for purchased components that were not used as a result of our decision to discontinue players or the use of particular components. If we incur costs to cover excess supply commitments, this would harm our business.
Conversely, if we underestimate our player or other product requirements, our contract manufacturers may have inadequate component inventory, which could interrupt the manufacturing of our players or other products and result in delays or cancellation of orders from retailers and distributors. In addition, from time to time we have experienced unanticipated increases in demand that resulted in the need to ship players via air freight, which is more expensive than ocean freight, and adversely affected our player gross margin during such periods of high demand, for example, during end-of-year holidays. If we fail to accurately forecast our manufacturing requirements, our business may be harmed.
Our players incorporate key components from sole source suppliers and if our contract manufacturer is unable to source these components on a timely basis, due to fabrication capacity issues or other material supply constraints, we will not be able to deliver our players to our retailers and distributors.
We depend on sole source suppliers for key components in our players. Our players utilize specific system on chip, or SoC, Wi-Fi silicon products and Wi-Fi front-end modules from various manufacturers, depending on the player, for which we do not have a second source. Although this approach allows us to maximize player performance on lower cost hardware, reduce engineering qualification costs and develop stronger relationships with our strategic suppliers, this also creates supply chain risk. These sole source suppliers could be constrained by fabrication capacity issues or material supply issues, stop producing such components, cease operations or be acquired by, or enter into exclusive arrangements with, our competitors or other companies. Any such interruption or delay may force us to seek similar components from alternative sources, which may not be available. Switching from a sole source supplier would require that we redesign our players to accommodate new components, and would require us to re-qualify our players with regulatory bodies, such as the Federal Communications Commission, or FCC, which would be costly and time-consuming.
Our reliance on sole source suppliers involves a number of additional risks, including risks related to:
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supplier capacity constraints; |
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price increases; |
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timely delivery; |
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component quality; and |
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delays in, or the inability to execute on, a supplier roadmap for components and technologies. |
Any interruption in the supply of sole source components for our players could adversely affect our ability to meet scheduled player deliveries to our retailers and distributors, result in lost sales and higher expenses and harm our business.
If we have difficulty managing our growth in operating expenses, our business could be harmed.*
We have experienced significant growth in research and development, sales and marketing, support services and operations in recent years and expect to continue to expand these activities. Our historical growth has placed, and expected future growth will continue to place, significant demands on our management, as well as our financial and operational resources, to:
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manage a larger organization; |
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hire more employees, including engineers with relevant skills and experience; |
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expand our manufacturing and distribution capacity; |
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increase our sales and marketing efforts; |
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broaden our customer support capabilities; |
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support a larger number of TV brand and service operators; |
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implement appropriate operational and financial systems; |
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expand internationally; and |
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maintain effective financial disclosure controls and procedures. |
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In addition, due to the continued growth in our headcount, we have recently entered into lease agreements for a new corporate headquarters, and we will start to incur material expenses in future years.
If we fail to manage our growth effectively, we may not be able to execute our business strategies and our business will be harmed.
We may be unable to successfully expand our international operations, including our recent expansion into Latin America. In addition, our international expansion plans, if implemented, will subject us to a variety of risks that may harm our business.*
We currently generate the vast majority of our revenue in the United States and have limited experience marketing, selling and supporting our players and monetizing our platform outside the United States. In addition, we have limited experience managing the administrative aspects of a global organization. We currently sell our players in Canada, the United Kingdom, the Republic of Ireland, France and several Latin American countries. While we intend to continue to explore opportunities to expand our business in international markets in which we see compelling opportunities to build relationships with users, advertisers and retail distributors, TV brands and service operators, we may not be able to create or maintain international market demand for our players and TV streaming platform. In addition, as we expand our operations internationally, our support organization will face additional challenges, including those associated with delivering support, training and documentation in languages other than English. We may also be subject to new statutory restrictions and risks. For example, as more fully described below, effective as of May 25, 2018, the EU General Data Protection Regulation, includes certain requirements related to the collection, storage and use of data related to EU data subjects. We may find it necessary or desirable to make changes to comply with these new regulations. It is not possible to predict the ultimate effect of evolving EU data protection regulation and implementation or other legal requirements over time. In addition, there may be no foreign equivalents to the Digital Millennium Copyright Act to shield us from liability in connection with infringing materials that content publishers may make available on our platform. In addition, we may be required in international jurisdictions to offer longer warranty periods than we currently offer in the United States. If we invest substantial time and resources to expand our international operations and are unable to do so successfully and in a timely manner, our business and financial condition may be harmed.
In the course of expanding our international operations and operating overseas, we will be subject to a variety of risks, including:
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differing regulatory requirements, including privacy and consumer protection laws and regulations, tax laws, trade laws, labor regulations, tariffs, export quotas, custom duties or other trade restrictions; |
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the slower adoption and acceptance of streaming products in other countries; |
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competition with existing local traditional pay TV services and products; |
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greater difficulty supporting and localizing our players and platform; |
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our ability to deliver or provide access to popular streaming channels to users in certain international markets; |
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different or unique competitive pressures as a result of, among other things, the presence of local consumer electronics companies and the greater availability of free content on over-the-air channels in certain countries; |
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challenges inherent in efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, compensation and benefits and compliance programs; |
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differing legal and court systems, including limited or unfavorable intellectual property protection; |
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risk of change in international political or economic conditions; |
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restrictions on the repatriation of earnings; and |
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working capital constraints . |
If ongoing litigation in Mexico continues to prevent our products from entering the marketplace, our international expansion plans may be impacted and our operating results may suffer.
We are involved in litigation in Mexico that was commenced by a large Mexican pay TV and internet access provider. Roku was not named as a defendant in this case, as the case principally targeted entities that are alleged to sell unlicensed content to consumers using our platform, among other means. At the commencement of this case, however, a court issued a temporary ban on the importation and sale of Roku devices in Mexico, which remains in effect. In response to this ban, the Company commenced a separate proceeding in a federal District Court in Mexico City challenging the constitutionality of the ban. The deferral District Court has dismissed Roku’s claims and Roku has appealed his decision. Involvement in these legal proceedings has been complicated and has drawn management time and company resources. In addition to eliminating potential revenue for new products sold in Mexico, our involvement in this litigation has caused us to incur legal expenses and other costs, and to the extent these legal and other expenses grow, our involvement in this litigation, or similar legal matters in the future, could be disruptive to our business. The extended ban on sales of products has made it difficult for us to expand our platform business in Mexico, which has also impeded our ability to add new channels, grow streaming hours and increase platform revenue in Mexico. If content partners or distributors in Latin America or in any other country are influenced by these proceedings and are deterred from working with us to sell players or other products or to
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maintain their channels or sell advertising on our platform, this could impair our ability to implement our international expansion plans.
If we experience higher player returns than we expect and are unable to resell such returned players as refurbished players our business could be harmed.
We offer customers who purchase players through our website 30 days to return such players. We also generally honor the return policies of our retail and distribution partners, who typically allow customers to return players, even with open packaging within certain time periods that may exceed 30 days. We generally resell any returned players as refurbished players. In the event we decide to permanently reduce the retail prices of our players, we provide price protection to certain distribution partners for the players they hold in inventory at the time of the price drop. To the extent we experience a greater number of returns than we expect, are unable to resell returned players as refurbished players or are required to provide price protection in amounts greater than we expect, our business could be harmed.
We are subject to payment-related risks and, if our advertisers or advertising agencies do not pay or dispute their invoices, our business may be harmed.
Many of our contracts with advertising agencies provide that if the advertiser does not pay the agency, the agency is not liable to us, and we must seek payment solely from the advertiser, a type of arrangement called sequential liability. Contracting with these agencies, which in some cases have or may develop higher-risk credit profiles, may subject us to greater credit risk than if we were to contract directly with advertisers. This credit risk may vary depending on the nature of an advertising agency’s aggregated advertiser base. We may also be involved in disputes with agencies and their advertisers over the operation of our platform or the terms of our agreements. If we are unable to collect or make adjustments to bills, we could incur write-offs for bad debt, which could have a material adverse effect on our results of operations for the periods in which the write-offs occur. In the future, bad debt may exceed reserves for such contingencies and our bad debt exposure may increase over time. Any increase in write-offs for bad debt could have a materially negative effect on our business, financial condition and operating results. If we are not paid by our advertisers or advertising agencies on time or at all, our business may be harmed.
Any significant d isruption in our computer systems or those of third parties we utilize in our operations could result in a loss or degradation of service on our platform and could harm our business.
We rely on the expertise of our engineering and software development teams for the performance and operation of our platform and computer systems. Service interruptions, errors in our software or the unavailability of computer systems used in our operations could diminish the overall attractiveness of our devices and platform to existing and potential users. We utilize computer systems located either in our facilities or those of third-party server hosting providers and third-party internet-based or cloud computing services. Although we generally enter into service level agreements with these parties, we exercise no control over their operations, which makes us vulnerable to any errors, interruptions or delays that they may experience. In the future, we may transition additional features of our services from our managed hosting systems to cloud computing services, which may require significant expenditures and engineering resources. If we are unable to manage a transition effectively, we may experience operational delays and inefficiencies until the transition is complete. Upon the expiration or termination of any of our agreements with third-party vendors, we may not be able to replace their services in a timely manner or on terms and conditions, including service levels and cost, that are favorable to us, and a transition from one vendor to another vendor could subject us to operational delays and inefficiencies until the transition is complete. In addition, fires, floods, earthquakes, power losses, telecommunications failures, break-ins and similar events could damage these systems and hardware or cause them to fail completely. As we do not maintain entirely redundant systems, a disrupting event could result in prolonged downtime of our operations and could adversely affect our business. Any disruption in the services provided by these vendors could have adverse impacts on our business reputation, customer relations and operating results.
If any aspect of our computer systems or those of third parties we utilize in our operations fails, it may lead to downtime or slow processing time, either of which may harm the experience of users. We have experienced, and may in the future experience, service disruptions, outages and other performance problems due to a variety of factors, including infrastructure changes, human or software errors and capacity constraints. We expect to continue to make significant investments in our technology infrastructure to maintain and improve the user experience and platform performance. To the extent that we do not effectively address capacity constraints, upgrade our systems as needed and continually develop our technology and network architecture to accommodate increasingly complex services and functions, increasing numbers of users, and actual and anticipated changes in technology, our business may be harmed.
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Significant disruptions of our information technology systems or data security incidents could harm our reputation and our business and subject us to liability.*
We are increasingly dependent on information technology systems and infrastructure to operate our business. In the ordinary course of our business, we collect, store, process and transmit large amounts of sensitive corporate and other information, including intellectual property, proprietary business information, user information and other confidential information. It is critical that we do so in a secure manner to maintain the confidentiality, integrity and availability of such sensitive information. We have also outsourced elements of our operations (including elements of our information technology infrastructure) to third parties, or may have incorporated technology into our platform, that collects, processes, transmits and stores our users’ personal and credit card information, and as a result, we manage a number of third-party vendors who may or could have access to our computer networks or to confidential information that moves across our platform. In addition, many of those third parties in turn subcontract or outsource some of their responsibilities to third parties. As a result, our information technology systems, including the functions of third parties that are involved or have access to those systems, is very large and complex. While all information technology operations are inherently vulnerable to inadvertent or intentional security breaches, incidents, attacks and exposures, the size, complexity, accessibility and distributed nature of our information technology systems, and the large amounts of sensitive information stored on those systems, make such systems potentially vulnerable to unintentional or malicious, internal and external attacks on our technology environment. Potential vulnerabilities can be exploited from inadvertent or intentional actions of our employees, third-party vendors, business partners, or by malicious third parties. Attacks of this nature are increasing in their frequency, levels of persistence, sophistication and intensity, and are being conducted by sophisticated and organized groups and individuals with a wide range of motives (including, but not limited to, industrial espionage) and expertise, including organized criminal groups, “hacktivists,” nation states and others. In addition to the extraction of sensitive information, such attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and threaten the confidentiality, integrity and availability of information.
We maintain limited insurance policies to cover losses relating to our systems. Though it is difficult to determine what harm may directly result from any specific interruption or breach, any failure to maintain performance, reliability, security and availability of our network infrastructure to the satisfaction of our users or regulators may harm our reputation and our ability to retain existing users and attract new users. Because of our prominence in the TV streaming industry, we believe we may be a particularly attractive target for hackers. Our platform also incorporates licensed software from third-parties, including open source software, and we may also be vulnerable to attacks that focus on such third-party software. Any attempts by hackers to disrupt our platform, our devices, website, computer systems or our mobile apps, if successful, could harm our business, subject us to liability, be expensive to remedy and damage our reputation. Efforts to prevent hackers from entering our computer systems or exploiting vulnerabilities in our devices are expensive to implement and may not be effective in detecting or preventing intrusion or vulnerabilities. Such unauthorized access to users’ data could damage our reputation and our business and could expose us of the risk to contractual damages, litigation and regulatory fines and penalties that could harm our business.
Significant disruptions of our, our third-party vendors’ and/or commercial partners’ information technology systems or other similar data security incidents could adversely affect our business operations and/or result in the loss, misappropriation, and/or unauthorized access, use or disclosure of, or the prevention of access to, sensitive information, which could harm our business. In addition, information technology system disruptions, whether from attacks on our technology environment or from computer viruses, natural disasters, terrorism, war and telecommunication and electrical failures, could result in a material disruption of our product development and our business operations.
There is no way of knowing with certainty whether we have experienced any data security incidents that have not been discovered. While we have no reason to believe this to be the case, attackers have become very sophisticated in the way they conceal access to systems, and many companies that have been attacked are not aware that they have been attacked. Any event that leads to unauthorized access, use or disclosure of personal information, including but not limited to personal information regarding our customers, could disrupt our business, harm our reputation, compel us to comply with applicable federal and/or state breach notification laws and foreign law equivalents, subject us to time consuming, distracting and expensive litigation, regulatory investigation and oversight, mandatory corrective action, require us to verify the correctness of database contents, or otherwise subject us to liability under laws, regulations and contractual obligations, including those that protect the privacy and security of personal information. This could result in increased costs to us, and result in significant legal and financial exposure and/or reputational harm. In addition, any failure or perceived failure by us or our vendors or business partners to comply with our privacy, confidentiality or data security-related legal or other obligations to third parties, or any further security incidents or other inappropriate access events that result in the unauthorized access, release or transfer of sensitive information, which could include personally identifiable information, may result in governmental investigations, enforcement actions, regulatory fines, litigation, or public statements against us by advocacy groups or others, and could cause third parties, including current and potential partners, to lose trust in us or we could be subject to claims by third parties that we have breached our privacy- or confidentiality-related obligations, which could materially and adversely affect our business and prospects. Moreover, data security incidents and other inappropriate access can be difficult to detect, and any delay in identifying them may lead to increased harm of the type described above. While we have implemented
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security measures intended to protect our information technology systems and infrastructure, there can be no assuran ce that such measures will successfully prevent service interruptions or further security incidents.
Changes in how network operators manage data that travel across their networks could harm our business.
Our business relies upon the ability of consumers to access high-quality streaming content through the internet. As a result, the growth of our business depends on our users’ ability to obtain low-cost, high-speed access to the internet, which relies in part on the network operators’ continuing willingness to upgrade and maintain their equipment as needed to sustain a robust internet infrastructure as well as their continued willingness to preserve the open and interconnected nature of the internet. We exercise no control over network operators, which makes us vulnerable to any errors, interruptions or delays in their operations. Any material disruption in internet services could harm our business.
To the extent that the number of internet users continues to increase, network congestion could adversely affect the reliability of our platform. We may also face increased costs of doing business if network operators engage in discriminatory practices with respect to streamed video content in an effort to monetize access to their networks by data providers. In the past, ISPs have attempted to implement usage-based pricing, bandwidth caps and traffic “shaping” or throttling. To the extent network operators were to create tiers of internet access service and either charge us for access to these tiers or prohibit our content offerings from being available on some or all of these tiers, our quality of service could decline, our operating expenses could increase and our ability to attract and retain customers could be impaired, each of which would harm our business.
In addition, most network operators that provide consumers with access to the internet also provide these consumers with multichannel video programming. These network operators have an incentive to use their network infrastructure in a manner adverse to the continued growth and success of other companies seeking to distribute similar video programming. To the extent that network operators are able to provide preferential treatment to their own data and content, as opposed to ours, our business could be harmed.
We could become subject to litigation regarding intellectual property rights that could be costly, result in the loss of rights important to our devices and platform or otherwise harm our business.
Some internet, technology and media companies, including some of our competitors, own large numbers of patents, copyrights and trademarks, which they may use to assert claims against us. Third parties have asserted, and may in the future assert, that we have infringed, misappropriated or otherwise violated their intellectual property rights. As we face increasing competition, the possibility of intellectual property rights claims against us will grow. Plaintiffs who have no relevant product revenue may not be deterred by our own issued patents and pending patent applications in bringing intellectual property rights claims against us. The cost of patent litigation or other proceedings, even if resolved in our favor, could be substantial. Some of our competitors may be better able to sustain the costs of such litigation or proceedings because of their substantially greater financial resources. Patent litigation and other proceedings may also require significant management time and divert management from our business. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could impair our ability to compete in the marketplace. The occurrence of any of the foregoing could harm our business.
As a result of intellectual property infringement claims, or to avoid potential claims, we may choose or be required to seek licenses from third parties. These licenses may not be available on commercially reasonable terms, or at all. Even if we are able to obtain a license, the license would likely obligate us to pay license fees or royalties or both, and the rights granted to us might be nonexclusive, with the potential for our competitors to gain access to the same intellectual property. In addition, the rights that we secure under intellectual property licenses may not include rights to all of the intellectual property owned or controlled by the licensor, and the scope of the licenses granted to us may not include rights covering all of the products and services provided by us and our licensees. Furthermore, an adverse outcome of a dispute may require us to pay damages, potentially including treble damages and attorneys’ fees, if we are found to have willfully infringed a party’s intellectual property; cease making, licensing or using technologies that are alleged to infringe or misappropriate the intellectual property of others; expend additional development resources to redesign our solutions; enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies, content or materials; and to indemnify our partners and other third parties. In addition, any lawsuits regarding intellectual property rights, regardless of their success, could be expensive to resolve and would divert the time and attention of our management and technical personnel.
Under our agreements with many of our content publishers, licensees, contract manufacturers and suppliers, we are required to provide indemnification in the event our technology is alleged to infringe upon the intellectual property rights of third parties.
In certain of our agreements we indemnify our content publishers, licensees, manufacturing partners and suppliers. We could incur significant expenses defending these partners if they are sued for patent infringement based on allegations related to our technology. In addition, if a partner were to lose a lawsuit and in turn seek indemnification from us, we could be subject to significant
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monetary liabilities. In addition, because the devices sold by our licensing partners and TV brands often involve the use of third-party technology, this increases our exposure to litigation in circumstances where there is a claim of infringement ass erted against the player in question, even if the claim does not pertain to our technology.
If we fail to protect or enforce our intellectual property or proprietary rights, our business and operating results could be harmed.
We regard the protection of our patents, trade secrets, copyrights, trademarks, trade dress, domain names and other intellectual property or proprietary rights as critical to our success. We strive to protect our intellectual property rights by relying on federal, state and common law rights, as well as contractual restrictions. We seek to protect our confidential proprietary information, in part, by entering into confidentiality agreements and invention assignment agreements with all our employees, consultants, advisors and any third parties who have access to our proprietary know-how, information or technology. However, we cannot be certain that we have executed such agreements with all parties who may have helped to develop our intellectual property or who had access to our proprietary information, nor can we be certain that our agreements will not be breached. Any party with whom we have executed such an agreement could potentially breach that agreement and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. We cannot guarantee that our trade secrets and other confidential proprietary information will not be disclosed or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Detecting the disclosure or misappropriation of a trade secret and enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, time-consuming and could result in substantial costs and the outcome of such a claim is unpredictable. Further, the laws of certain foreign countries do not protect proprietary rights to the same extent or in the same manner as the laws of the United States. As a result, we may encounter significant problems in protecting and defending our intellectual property or proprietary rights both in the United States and abroad. If we are unable to prevent the disclosure of our trade secrets to third parties, or if our competitors independently develop any of our trade secrets, we may not be able to establish or maintain a competitive advantage in our market, which could harm our business.
We have filed and will in the future file patent applications on inventions that we deem to be innovative. There is no guarantee that our patent applications will issue as granted patents, that the scope of the protection gained will be sufficient or that an issued patent may subsequently be deemed invalid or unenforceable. Patent laws, and scope of coverage afforded by them, have recently been subject to significant changes, such as the change to “first-to-file” from “first-to-invent” resulting from the Leahy-Smith America Invents Act. This change in the determination of inventorship may result in inventors and companies having to file patent applications more frequently to preserve rights in their inventions, which may favor larger competitors that have the resources to file more patent applications. Another change to the patent laws may incentivize third parties to challenge any issued patent in the United States Patent and Trademark Office, or USPTO, as opposed to having to bring such an action in U.S. federal court. Any invalidation of a patent claim could have a significant impact on our ability to protect the innovations contained within our devices and platform and could harm our business.
The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions to maintain patent applications and issued patents. We may fail to take the necessary actions and to pay the applicable fees to obtain or maintain our patents. Noncompliance with these requirements can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to use our technologies and enter the market earlier than would otherwise have been the case.
We pursue the registration of our domain names, trademarks and service marks in the United States and in certain locations outside the United States. We are seeking to protect our trademarks, patents and domain names in an increasing number of jurisdictions, a process that is expensive and time-consuming and may not be successful or which we may not pursue in every location.
Litigation may be necessary to enforce our intellectual property or proprietary rights, protect our trade secrets or determine the validity and scope of proprietary rights claimed by others. Any litigation of this nature, regardless of outcome or merit, could result in substantial costs, adverse publicity or diversion of management and technical resources, any of which could adversely affect our business and operating results. If we fail to maintain, protect and enhance our intellectual property or proprietary rights, our business may be harmed.
We and our third -party contractors collect, process, transmit and store the personal information of our users, which creates legal obligations and exposes us to potential liability.
We collect, process, transmit and store information about our users’ device usage patterns, and rely on third-party contractors to collect, process, transmit and store personal information of our users, including our users’ credit card data. Further, we and third parties use tracking technologies, including cookies, device identifiers and related technologies, to help us manage and track our users’
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interactions with our platform, devices, websit e and partners’ content streaming channels and deliver relevant advertising for ourselves and on behalf of our partners on our devices.
We collect information about the interaction of users with our devices, our advertisements, and our partners’ streaming channels. To deliver relevant advertisements effectively, we must successfully leverage this data as well as data provided by third parties. Our ability to collect and use such data could be restricted by a number of factors, including consumers choosing to opt out from our collection of this data or the ability of our advertisers to use such data to provide more relevant advertisements, restrictions imposed by advertisers, content publishers and service providers, changes in technology, and new developments in laws, regulations and industry standards. For example, our privacy policy outlines the type of data we collect and discloses to users how to disable or restrict such data collection and the use of such data in providing more relevant advertisements. Any restrictions on our ability to collect data could harm our ability to grow our revenue, particularly our advertising revenue which depends on engaging the relevant recipients of advertising campaigns.
Various federal and state laws and regulations govern the collection, use, retention, sharing and security of the data we receive from and about our users. The regulatory environment for the collection and use of consumer data by device manufacturers, online service providers, content distributors, advertisers and publishers is very unsettled in the United States and internationally. Privacy groups and government bodies, including the Federal Trade Commission, have increasingly scrutinized privacy issues with respect to devices that link personal identities or user and device data, with data collected through the internet, and we expect such scrutiny to continue to increase. The United States and foreign governments have enacted and are considering regulations that could significantly restrict industry participants’ ability to collect, use and share personal information and pseudonymous data, such as by regulating the level of consumer notice and consent required before a company can place cookies or other tracking technologies. As another example, the California Consumer Privacy Act (“CCPA”) was signed into law on June 28, 2018 and takes effect on January 1, 2020. It applies to entities that do business in California and imposes a number of additional requirements, such as disclosure obligations associated with the personal information that they collect, sell or disclose, including the purposes for which the personal information will be used. The Act also grants Californians new rights over their personal information, including for example rights to access personal information, request deletion of the information, and opt out of the sale of such information. The Act also includes anti-discrimination provisions that limit businesses’ ability to deny services, charge different prices, or offer different qualities of service to consumers who exercise their rights. The CPPA has substantial penalties for non-compliance. We are continuing to assess the impact of the CCPA on our business. In addition, some countries are considering or have enacted laws requiring that user data regarding users in their country be maintained in their country. Maintaining local data centers in individual countries could increase our operating costs significantly. In addition, the General Data Protection Regulation, which became effective in May 2018, includes operational and compliance requirements and significant penalties for non-compliance. Any failure or perceived failure to comply with privacy-related legal obligations, or any compromise of security of user data, may result in governmental enforcement actions, litigation, contractual indemnity or public statements against us by consumer advocacy groups or others. In addition to potential liability, these events could harm our business.
We have incurred, and will continue to incur, expenses to comply with privacy and security standards and protocols imposed by law, regulation, industry standards and contractual obligations. Increased regulation of data collection, use and security practices, including self-regulation and industry standards, changes in existing laws, enactment of new laws, increased enforcement activity, and changes in interpretation of laws, could increase our cost of compliance and operation, limit our ability to grow our business or otherwise harm our business.
If service operators refuse to authenticate streaming channels on our platform, our users may be restricted from accessing certain content on our platform and our business may be harmed.
Certain service operators, including pay TV providers, have from time to time refused to grant our users access to streaming content through “TV Everywhere” channels and have made that content available only on certain devices favored by such service operators, including devices offered by that service operator or its partners. If major service operators do not authenticate popular TV Everywhere channels on our platform, we may be unable to offer a broad selection of popular streaming channels and consumers may not purchase or use our streaming players. If we are unable to continue to provide access to popular streaming channels on our platform, our business may be harmed.
United States or international rules that permit ISPs to limit internet data consumption by users, including unreasonable discrimination in the provision of broadband internet access services, could harm our business.*
Laws, regulations or court rulings that adversely affect the popularity or growth in use of the internet, including decisions that undermine open and neutrally administered internet access, could decrease customer demand for our service offerings, may impose additional burdens on us or could cause us to incur additional expenses or alter our business model.
On February 26, 2015, the FCC adopted open internet rules intended to protect the ability of consumers and content producers to send and receive non-harmful, lawful information on the internet. The FCC’s Open Internet Order prohibited broadband internet access service providers from: (i) blocking access to legal content, applications, services or non-harmful devices; (ii) throttling,
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impairing or degrading performance based on content, applications, services or non-harmful devices; and (iii) charging more for favorable delivery of content or favoring self-provisioned content over third-party content. The Open Internet Order also prohibited broadband internet access service providers from unreasonably interfering with consumers’ ability to select, access and use the lawful content, applications, services or devices of their choosing as well as edge providers’ ability to make lawful content, applications, services or devices available to consumers. On June 14, 2016, the U.S. Court of Appeals for the District of Columbia Circuit upheld the Open Internet Order against a challenge by twelve partie s. Several parties, including AT&T Inc., the American Cable Association, CenturyLink, CTIA, the National Cable & Telecommunications Association and the United States Telecom Association, petitioned the United States Supreme Court for certiorari on Septemb er 28, 2017. The Supreme Court has not resolved these petitions as of this date.
In the interim, the FCC proposed and adopted a new order (the Restoring Internet Freedom Order), that repeals most of the rules adopted in the Open Internet Order. The Restoring Internet Freedom Order reclassified broadband internet access service as a non-common carrier “information service” and repealed rules that had prohibited broadband internet access service providers from: (i) blocking access to legal content, applications, services or non-harmful devices; (ii) throttling, impairing or degrading performance based on content, applications, services or non-harmful devices; and (iii) charging more for favorable delivery of content or favoring self-provisioned content over third-party content. The Restoring Internet Freedom Order continued to require internet service providers to be transparent about their policies and network management practices, and subjected discriminatory practices to case-by-case assessment under antitrust and consumer protection laws. Most portions of the Restoring Internet Freedom Order went into effect on April 23, 2018 and the remainder went into effect on June 11, 2018. Numerous parties have filed judicial challenges to the Restoring Internet Freedom Order, and the litigation has been consolidated in the U.S. Court of Appeals for the District of Columbia Circuit. To the extent the courts or the agencies do not uphold or adopt sufficient safeguards to protect against discriminatory conduct, network operators may seek to extract fees from us or our content publishers to deliver our traffic or otherwise engage in blocking, throttling or other discriminatory practices, and our business could be harmed.
As we expand internationally, government regulation protecting the non-discriminatory provision of internet access may be nascent or non-existent. In those markets where regulatory safeguards against unreasonable discrimination are nascent or non-existent and where local network operators possess substantial market power, we could experience anti-competitive practices that could impede our growth, cause us to incur additional expenses or otherwise harm our business. Future regulations or changes in laws and regulations or their existing interpretations or applications could also hinder our operational flexibility, raise compliance costs and result in additional liabilities for us, which may harm our business.
Broadband internet providers are subject to government regulation and enforcement actions, and changes in current or future laws, regulations or enforcement actions that negatively impact our distributors or content publishers could harm our business.*
Upon the effective date of the FCC’s Restoring Internet Freedom Order , the FTC became primarily responsible for regulating broadband privacy and data security in the United States. The FTC follows an enforcement-focused approach to regulating broadband privacy and security. Future FTC enforcement actions could cause us or our content publishers to alter advertising claims or alter or eliminate certain features or functionalities of our products or services which may harm our business. At the FCC, many broadband internet providers provide traditional telecommunications services that are subject to FCC and state rate regulation of interstate telecommunications services, and are recipients of federal universal service fund payments, which are intended to subsidize telecommunications services in areas that are expensive to serve. Changes in rate regulations or in universal service funding rules, either at the federal or state level, could affect these broadband internet providers’ revenue and capital spending plans. In addition, various international regulatory bodies have jurisdiction over non-United States broadband internet providers. The CCPA also applies to broadband internet providers that do business in California. To the extent these broadband internet providers are adversely affected by laws or regulations regarding their business, products or service offerings, our business could be harmed.
Our financial results may be adversely affected by changes in accounting principles applicable to us.*
Generally accepted accounting principles in the United States ( “U.S. GAAP” ) are subject to interpretation by the Financial Accounting Standards Board (FASB), the SEC, and other various bodies formed to promulgate and interpret appropriate accounting principles. For example, in May 2014, the FASB issued ASU 2014 ‑09 , Revenue from Contracts with Customers (Topic 606) , which supersedes nearly all existing revenue recognition guidance under GAAP. We have adopted the new revenue standard using the modified retrospective method. The new revenue standard may significantly impact the amount and timing of revenue recognitio n, such as recognizing revenue from existing contracts in periods other than when we historically reported under previous GAAP. Further, the new revenue standard could result in changes to the periods when revenue is recognized in the future compared with management’s earlier expectations under previous GAAP. In addition, the new revenue standard may also change the timing of when expense recognition may occur related to costs to obtain and fulfill customer contracts. While the adoption does not change the cash
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flows received from our contracts with customers, it could have a material adverse effect on our financial position or results of operations .
If government regulations or laws relating to the internet, video or other areas of our business change, we may need to alter the manner in which we conduct our business or our business could be harmed.*
We are subject to general business regulations and laws, as well as regulations and laws specific to the internet and online services, which may include laws and regulations related to data privacy and security, consumer protection, data localization, law enforcement access to data, encryption, telecommunications, social media, payment processing, taxation, intellectual property, competition, electronic contracts, internet access, net neutrality, advertising, calling and texting, content restrictions, and accessibility, among others. We cannot guarantee that we have been or will be fully compliant in every jurisdiction. Litigation and regulatory proceedings are inherently uncertain, and the laws and regulations governing issues such as data privacy and security, payment processing, taxation, net neutrality, video, telecommunications, and consumer protection related to the internet continue to develop. For example, laws relating to the liability of providers of online services for activities of their users and other third parties have been tested by a number of claims, including actions based on invasion of privacy and other torts, unfair competition, copyright and trademark infringement, and other theories based on the nature and content of the materials searched, the advertisements posted, actions taken or not taken by providers in response to user activity or the content provided by users. Congress has also recently enacted legislation related to liability of providers of online services and may continue to legislate in this area. The recently enacted CCPA also applies to entities that do business in California and imposes a number of new requirements on internet and online services. Moreover, as internet commerce and advertising continues to evolve, increasing regulation by federal, state and foreign regulatory authorities becomes more likely.
As we develop new services and devices, and improve our TV streaming platform, we may also be subject to new laws and regulations specific to such technologies. For example, in developing our Roku TV reference design, we were required to understand, address and comply with an evolving regulatory framework for developing, manufacturing, marketing and selling TVs. If we fail to adequately address or comply with such regulations regarding the manufacture and sale of TVs, we may be subject to fines or sanctions, and our licensees may be unable to sell Roku TVs at all, which would harm our business and our ability to grow our user base.
Laws relating to data privacy and security, data localization, law enforcement access to data, encryption, and similar activities continue to proliferate, often with little harmonization between jurisdictions and little guidance. A number of existing bills are pending in U.S. Congress and other government bodies that contain provisions that would regulate, for example, how companies can use cookies and other tracking technologies to collect, use and share user information. The CCPA also imposes requirement on certain tracking activity, and we are continuing to assess the impact of the CCPA on our business. The European Union has already enacted laws requiring advertisers or companies like ours to, for example, obtain informed consent from users for the placement of cookies or other tracking technologies and the delivery of relevant advertisements. If we or the third parties that we work with, such as contract payment processing services, content publishers, vendors or developers violate or are alleged to violate applicable privacy or security laws, industry standards, our contractual obligations, or our policies, such violations and alleged violations may also put our users’ information at risk and could in turn harm our business and reputation and subject us to potential liability. Any of these consequences could cause our users, advertisers or publishers to lose trust in us, which could harm our business. Furthermore, any failure on our part to comply with these laws may subject us to liability and reputational harm.
Our use of data to deliver relevant advertising and other services on our platform places us and our content publishers at risk for claims under various unsettled laws, including the Video Privacy Protection Act, or VPPA. Some of our content publishers have been engaged in litigation over alleged violations of the VPPA relating to activities on our platform in connection with advertising provided by unrelated third parties. The Federal Trade Commission has also revised its rules implementing the Children’s Online Privacy Protection Act, or COPPA Rules, broadening the applicability of the COPPA Rules, including the types of information that are subject to these regulations, and could limit the information that we or our content publishers and advertisers may collect and use through certain content publishers, the content of advertisements and in relation to certain channel partner content. The CCPA also imposes certain opt in and opt out requirements for certain information about minors. We and our content publishers and advertisers could be at risk for violation or alleged violation of these and other privacy, advertising, or similar laws.
Our actual or perceived failure to adequately protect personal data and confidential information could harm our business.
A variety of state, national, foreign, and international laws and regulations apply to the collection, use, retention, protection, disclosure, security, transfer and other processing of personal data. These privacy and data protection-related laws and regulations are evolving, with new or modified laws and regulations proposed and implemented frequently and existing laws and regulations subject to new or different interpretations. In addition, some state and national governments have passed laws requiring notification of users when there has been a security breach involving personal data as well as imposes additional obligations for companies. For example,
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The California Consumer Privacy A ct of 2018, which was enacted on June 28, 2018, becomes effective in January 2020 and imposes additional obligations on companies that process information on California residents. Compliance with these laws and regulations can be costly and could delay or impede the development of new products.
We historically have relied upon adherence to the U.S. Department of Commerce’s Safe Harbor Privacy Principles and compliance with the U.S.-EU Safe Harbor Framework under Directive 95/46/EC, commonly referred to as the Data Protection Directive, agreed to by the U.S. Department of Commerce and the EU. The U.S.-EU Safe Harbor Framework, which established means for legitimizing the transfer of personal data by U.S. companies from the European Economic Area, or EEA, to the United States, was invalidated in 2015 by a decision of the European Court of Justice, or the ECJ.
On July 12, 2016, the European Commission adopted the EU-U.S. Privacy Shield, which provides a framework for the transfer of personal data of EU data subjects to the U.S., and on May 4, 2016, the EU General Data Protection Regulation, or GDPR, which will replace Directive 95/46/EC, was formally published. The GDPR went into effect on May 25, 2018 and as a regulation as opposed to a directive is directly applicable in EU member states. Among other things, the GDPR applies to data controllers and processors outside of the EU whose processing activities relate to the offering of goods or services to, or monitoring the behavior within the EU of, EU data subjects.
We will continue to review our business practices and may find it necessary or desirable to make changes to our personal data handling to cause our transfer and receipt of EEA residents’ personal data to be legitimized under applicable European law. The regulation of data privacy in the EU continues to evolve, and it is not possible to predict the ultimate effect of evolving data protection regulation and implementation over time.
While we have implemented administrative, physical and electronic security measures to protect against reasonably foreseeable loss, misuse and alteration of personal data and confidential information (e.g., protected content or intellectual property), cyberattacks on companies have increased in frequency and potential impact in recent years and, if successful against us, may harm our reputation and business and subject us to potential liability despite reasonable precautions.
If we are not able to comply with these laws or regulations or if we become liable under these laws or regulations, we could be directly harmed, and we may be forced to implement new measures to reduce our exposure to this liability. This may require us to expend substantial resources or to discontinue certain products or services, which may seriously harm our business. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could seriously harm our business. Any costs incurred as a result of this potential liability could seriously harm our business.
If we are found liable for content that we distribute through our players, our business could be harmed.
As a distributor of content, we face potential liability for negligence, copyright, patent or trademark infringement, public performance royalties or other claims based on the nature and content of materials that we distribute. The Digital Millennium Copyright Act, or the DMCA, is intended, in part, to limit the liability of eligible service providers for caching, hosting or linking to, user content that includes materials that infringe copyrights or other rights. We rely on the protections provided by the DMCA in conducting our business. However, the DMCA and similar statutes and doctrines that we may rely on in the future is subject to uncertain judicial interpretation and regulatory and legislative amendments. Moreover, the DMCA only provides protection primarily in the United States. If the rules around these statutes and doctrines change, if international jurisdictions refuse to apply similar protections or if a court were to disagree with our application of those rules to our business, we could incur liability and our business could be harmed. If we become liable for these types of claims as a result of the content that is streamed over our platform, then our business may suffer. Litigation to defend these claims could be costly and the expenses and damages arising from any liability could harm our business. Our insurance may not be adequate to cover these types of claims or any liability that may be imposed on us.
In addition, we may be adversely impacted if copyright holders assert claims, or commence litigation, alleging copyright infringement against the developers of channels that are distributed on our platform. While our platform policies prohibit streaming content on our platform without distribution rights from the copyright holder, and we maintain processes and systems for the reporting and removal of infringing content, in certain instances our platform has been misused by unaffiliated third parties to unlawfully distribute copyrighted content. For example, we are involved in litigation in Mexico that was commenced by a large Mexican pay TV and internet access provider. The Company was not named as a defendant in this case, as the case principally targeted entities that are alleged to sell unlicensed content to consumers using our platform, among other means. Involvement in these legal proceedings has been complicated and has drawn management time and company resources.
Our involvement in any such legal matters now or in the future, could cause us to incur significant legal expenses and other costs, and be disruptive to our business.
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Our devices are highly technical and may contain undetected hardware errors or software bugs, whi ch could manifest themselves in ways that could harm our reputation and our business.
Our devices and those of our licensees are highly technical and have contained and may in the future contain undetected software bugs or hardware errors. These bugs and errors can manifest themselves in any number of ways in our devices or our platform, including through diminished performance, security vulnerabilities, data quality in logs or interpretation of data, malfunctions or even permanently disabled devices. Some errors in our devices may only be discovered after a device has been shipped and used by users, and may in some cases only be detected under certain circumstances or after extended use. We update our software on a regular basis and, despite our quality assurance processes, we could introduce bugs in the process of updating our software. The introduction of a serious software bug, could result in devices becoming permanently disabled. We offer a limited one year warranty in the United States and any such defects discovered in our players after commercial release could result in loss of revenue or delay in revenue recognition, loss of customer goodwill and users and increased service costs, any of which could harm our business, operating results and financial condition. We could also face claims for product or information liability, tort or breach of warranty, or other violations of laws or regulations. In addition, our player contracts with users contain provisions relating to warranty disclaimers and liability limitations, which may not be upheld. Defending a lawsuit, regardless of its merit, is costly and may divert management’s attention and adversely affect the market’s perception of Roku and our devices. In addition, if our business liability insurance coverage proves inadequate or future coverage is unavailable on acceptable terms or at all, our business could be harmed.
Components used in our devices may fail as a result of manufacturing, design or other defects over which we have no control and render our devices permanently inoperable.
We rely on third-party component suppliers to provide certain functionalities needed for the operation and use of our devices. Any errors or defects in such third-party technology could result in errors in our devices that could harm our business. If these components have a manufacturing, design or other defect, they can cause our devices to fail and render them permanently inoperable. For example, the typical means by which our users connect their home networks to our devices is by way of a Wi-Fi access point in the home network router. If the Wi-Fi receiver in our device fails, then our device cannot detect a home network’s Wi-Fi access point, and our device will not be able to display or deliver any content to the TV screen. As a result, we may have to replace these devices at our sole cost and expense. Should we have a widespread problem of this kind, our reputation in the market could be adversely affected and our replacement of these devices would harm our business.
If we are unable to obtain necessary or desirable third-party technology licenses, our ability to develop new devices or platform enhancements may be impaired.
We utilize commercially available off-the-shelf technology in the development of our devices and platform. As we continue to introduce new features or improvements to our devices and the Roku platform, we may be required to license additional technologies from third parties. These third-party licenses may be unavailable to us on commercially reasonable terms, if at all. If we are unable to obtain necessary third-party licenses, we may be required to obtain substitute technologies with lower quality or performance standards, or at a greater cost, any of which could harm the competitiveness of our devices, platform and our business.
Our use of open source software could impose limitations on our ability to commercialize our devices and our TV streaming platform.
We incorporate open source software in our TV streaming platform. From time to time, companies that incorporate open source software into their products have faced claims challenging the ownership of open source software and/or compliance with open source license terms. Therefore, we could be subject to suits by parties claiming ownership of what we believe to be open source software or noncompliance with open source licensing terms. Although we monitor our use of open source software, the terms of many open source software licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on the sale of our devices. In such event, we could be required to make our proprietary software generally available to third parties, including competitors, at no cost, to seek licenses from third parties in order to continue offering our devices, to re-engineer our devices or to discontinue the sale of our devices in the event re-engineering cannot be accomplished on a timely basis or at all, any of which could harm our business.
The quality of our customer support is important to our users and licensees, and if we fail to provide adequate levels of customer support we could lose users and licensees, which would harm our business.
Our users and licensees depend on our customer support organization to resolve any issues relating to devices. A high level of support is critical for the successful marketing and sale of devices. We currently outsource our customer support operation to a third-party customer support organization. If we do not effectively train, update and manage our third-party customer support organization to assist our users, and if that support organization does not succeed in helping them quickly resolve issues or provide effective ongoing support, it could adversely affect our ability to sell our devices to users and harm our reputation with potential new users and our licensees.
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We will need to improve our operational and financial systems to support our expected growth, increasingly complex business arrangements, and rules governing revenue and expense recognition an d any inability to do so could adversely affect our billing services and financial reporting.
We have increasingly complex business arrangements with our content publishers and licensees, and the rules that govern revenue and expense recognition in our business are increasingly complex. To manage the expected growth of our operations and increasing complexity, we will need to improve our operational and financial systems, procedures and controls and continue to increase systems automation to reduce reliance on manual operations. An inability to do so will negatively affect our billing services and financial reporting. Our current and planned systems, procedures and controls may not be adequate to support our complex arrangements and the rules governing revenue and expense recognition for our future operations and expected growth. Delays or problems associated with any improvement or expansion of our operational and financial systems and controls could adversely affect our relationships with our users, content publishers or licensees; cause harm to our reputation and brand; and could also result in errors in our financial and other reporting.
If we are unable to implement and maintain effective internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our Class A common stock may be adversely affected.
We are required to maintain internal control over financial reporting and to report any material weaknesses in such internal control. Section 404 of the Sarbanes-Oxley Act of 2002 requires that we furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting beginning with the year ending December 31, 2018. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. Our independent registered public accounting firm will not be required to attest to the effectiveness of our internal control over financial reporting until our first annual report required to be filed with the Securities and Exchange Commission, or SEC, following the later of the date we are deemed to be an “accelerated filer” or a “large accelerated filer,” each as defined in the Securities Exchange Act of 1934, as amended, or the date we are no longer an “emerging growth company,” as defined in the JOBS Act. If we have a material weakness in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. We are in the process of designing and implementing the internal control over financial reporting required to comply with this obligation, which process will be time-consuming, costly and complicated. If we identify material weaknesses in our internal control over financial reporting, are unable to comply with the requirements of Section 404 in a timely manner, are unable to assert that our internal control over financial reporting is effective, or if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, investors may lose confidence in the accuracy and completeness of our financial reports, and the market price of our Class A common stock could be adversely affected. In addition, we could become subject to investigations by the stock exchange on which our Class A common stock is listed, the SEC or other regulatory authorities, which could require additional financial and management resources.
We may pursue acquisitions, which involve a number of risks, and if we are unable to address and resolve these risks successfully, such acquisitions could harm our business.
We may in the future acquire businesses, products or technologies to expand our offerings and capabilities, user base and business. We have evaluated, and expect to continue to evaluate, a wide array of potential strategic transactions; however, we have limited experience completing or integrating acquisitions. Any acquisition could be material to our financial condition and results of operations and could require us to raise capital in the equity markets or issue additional equity and any anticipated benefits from an acquisition may never materialize. In addition, the process of integrating acquired businesses, products or technologies may create unforeseen operating difficulties and expenditures. Acquisitions in international markets would involve additional risks, including those related to integration of operations across different cultures and languages, currency risks and the particular economic, political and regulatory risks associated with specific countries. We may not be able to address these risks successfully, or at all, without incurring significant costs, delays or other operational problems and if we were unable to address such risks successfully our business could be harmed.
We have a credit facility that provides our lender with a first-priority lien against substantially all of our assets and contains financial covenants and other restrictions on our actions that may limit our operational flexibility or otherwise adversely affect our financial condition.
We entered into an amended and restated loan and security agreement with Silicon Valley Bank in November 2014, which was amended in May 2015, June 2017 and July 2018, providing for a $30.0 million revolving line of credit. Our loan agreement with Silicon Valley Bank contains a number of restrictive covenants, and the terms may restrict our current and future operations, particularly our ability to respond to certain changes in our business or industry, or take future actions. Pursuant to this agreement, we granted Silicon Valley Bank a security interest in substantially all of our assets. See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Silicon Valley Bank Loan and Security Agreement.”
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If we fail to comply w ith the covenants or payments specified in our credit facility, Silicon Valley Bank could declare an event of default, which would give it the right to terminate its commitment to provide additional loans and declare all borrowings outstanding, together wi th accrued and unpaid interest and fees, to be immediately due and payable. In addition, Silicon Valley Bank would have the right to proceed against the assets we provided as collateral pursuant to the credit facility. If the debt under this credit facilit y was accelerated, we may not have sufficient cash or be able to sell sufficient assets to repay this debt, which would harm our business and financial condition.
If we fail to comply with the laws and regulations relating to the collection of sales tax and payment of income taxes in the various states in which we do business, we could be exposed to unexpected costs, expenses, penalties and fees as a result of our noncompliance, which could harm our business.
By engaging in business activities in the United States, we become subject to various state laws and regulations, including requirements to collect sales tax from our sales within those states, and the payment of income taxes on revenue generated from activities in those states. The laws and regulations governing the collection of sales tax for sales on our website and payment of income taxes are numerous, complex, and vary from state to state. A successful assertion by one or more states that we were required to collect sales or other taxes or to pay income taxes where we did not could result in substantial tax liabilities, fees and expenses, including substantial interest and penalty charges, which could harm our business.
New legislation that would change U.S. or foreign taxation of international business activities or other tax-reform policies could seriously harm our business.
Reforming the taxation of international businesses has been a priority for U.S. politicians, and key members of the legislative and executive branches have proposed a wide variety of potential changes. Certain changes to U.S. tax laws, including limitations on the ability to defer U.S. taxation on earnings outside of the United States until those earnings are repatriated to the United States, could affect the tax treatment of our foreign earnings, as well as cash and cash equivalent balances we maintain outside the United States. Additionally, any changes in the U.S. or foreign taxation of such activities may increase our worldwide effective tax rate and the amount of taxes we pay and seriously harm our business.
For example, the Tax Cut and Jobs Act (“TCJA”) was enacted on December 22, 2017 and significantly reforms the Code. The TCJA, among other things, includes changes to U.S. federal tax rates, imposes additional limitations on the deductibility of interest, has both positive and negative changes to the utilization of future net operating loss carryforwards, allows for the expensing of certain capital expenditures, and puts into effect the migration from a “worldwide” system of taxation to a territorial system. Our net deferred tax assets and liabilities and valuation allowance will be revalued at the newly enacted U.S. corporate rate. The impact of this tax reform on us and on holders of our common stock is uncertain and could be adverse and our business could be seriously harmed.
We may require additional capital to meet our financial obligations and support planned business growth, and this capital might not be available on acceptable terms or at all.
We intend to continue to make significant investments to support planned business growth and may require additional funds to respond to business challenges, including the need to develop new devices and enhance the Roku platform, maintain adequate levels of inventory to support our retail partners’ demand requirements, improve our operating infrastructure or acquire complementary businesses, personnel and technologies. Accordingly, we may need to engage in equity or debt financings to secure additional funds. If we raise additional funds through future issuances of equity or convertible debt securities, our then existing stockholders could suffer significant dilution, and any new equity securities we issue could have rights, preferences and privileges superior to those of holders of our Class A common stock. Any debt financing we secure could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions. If we were to violate the restrictive covenants, we could incur penalties, increased expenses and an acceleration of the payment terms of our outstanding debt, which could in turn harm our business.
We may not be able to obtain additional financing on terms favorable to us, if at all. If we are unable to obtain adequate financing or financing on terms satisfactory to us when we require it, our ability to continue to support our business growth and to respond to business challenges could be significantly impaired, and our business may be harmed.
Our facilities are located near known earthquake fault zones, and the occurrence of an earthquake or other natural disaster could cause damage to our facilities and computer systems, which could require us to curtail or cease operations.
Our principal offices and a network operations center are located in the San Francisco Bay Area, an area known for earthquakes, and are thus vulnerable to damage. We are also vulnerable to damage from other types of disasters, including power loss, fire, floods,
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communications failures and similar events. If any disaster w ere to occur, our ability to operate our business at our facilities could be impaired.
Risks Related to Ownership of Our Class A Common Stock
The dual class structure of our common stock as contained in our amended and restated certificate of incorporation has the effect of concentrating voting control with those stockholders who held our stock prior to our IPO, including our executive officers, employees and directors and their affiliates, and limiting your ability to influence corporate matters.
Our Class B common stock has 10 votes per share, and our Class A common stock has one vote per share. Our President and Chief Executive Officer, Anthony Wood, holds and controls the vote of a significant number of shares of our outstanding common stock, and therefore will have significant influence over our management and affairs and over all matters requiring stockholder approval, including election of directors and significant corporate transactions, such as a merger or other sale of Roku or our assets, for the foreseeable future. If Mr. Wood’s employment with us is terminated, he will continue to have the same influence over matters requiring stockholder approval.
In addition, the holders of Class B common stock collectively will continue to be able to control all matters submitted to our stockholders for approval even if their stock holdings represent less than 50% of the outstanding shares of our common stock. Because of the 10-to-1 voting ratio between our Class B and Class A common stock, the holders of our Class B common stock collectively will continue to control a majority of the combined voting power of our common stock even when the shares of Class B common stock represent as little as 10% of the combined voting power of all outstanding shares of our Class A and Class B common stock. This concentrated control will limit your ability to influence corporate matters for the foreseeable future, and, as a result, the market price of our Class A common stock could be adversely affected.
Future transfers by holders of Class B common stock will generally result in those shares converting to Class A common stock, which will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long term. If, for example, Mr. Wood retains a significant portion of his holdings of Class B common stock for an extended period of time, he could, in the future, control a majority of the combined voting power of our Class A and Class B common stock. As a board member, Mr. Wood owes a fiduciary duty to our stockholders and must act in good faith in a manner he reasonably believes to be in the best interests of our stockholders. As a stockholder, even a controlling stockholder, Mr. Wood is entitled to vote his shares in his own interests, which may not always be in the interests of our stockholders generally.
Our stock price may be volatile, and the value of our Class A common stock may decline.*
The market price of our Class A common stock could be subject to wide fluctuations in response to many risk factors listed in this section, and others beyond our control, including:
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actual or anticipated fluctuations in our financial condition and operating results; |
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changes in projected operational and financial results; |
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loss by us of key content publishers; |
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changes in laws or regulations applicable to our devices or platform; |
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the commencement or conclusion of legal proceedings that involve us; |
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actual or anticipated changes in our growth rate relative to our competitors; |
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announcements of new products or services by us or our competitors; |
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announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital-raising activities or commitments; |
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additions or departures of key personnel; |
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issuance of new or updated research or reports by securities analysts; |
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the use by investors or analysts of third-party data regarding our business that may not reflect our financial performance; |
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fluctuations in the valuation of companies perceived by investors to be comparable to us; |
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sales of our Class A common stock; |
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share price and volume fluctuations attributable to inconsistent trading volume levels of our shares; and |
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general economic and market conditions. |
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Furthermore, the stock markets frequently experience extreme price and volume fluctuations that affect the market prices of equity securities of many companies. These fluctuations often have been unrelated or disproportionate to the operating performance o f those companies. These broad market and industry fluctuations, as well as general economic, political and market conditions such as recessions, elections, interest rate changes or international currency fluctuations, may negatively impact the market pric e of our Class A common stock. As a result of such fluctuations, you may not realize any return on your investment in us and may lose some or all of your investment. In the past, companies that have experienced volatility in the market price of their stoc k have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Securities litigation against us could result in substantial costs and divert our management’s attention from other business concerns, which could harm our business.
Future sales and issuances of our capital stock or rights to purchase capital stock could result in additional dilution of the percentage ownership of our stockholders and could cause our stock price to decline.
We may issue additional securities in the future and from time to time. Future sales and issuances of our capital stock or rights to purchase our capital stock could result in substantial dilution to our existing stockholders. We may sell Class A common stock, convertible securities and other equity securities in one or more transactions at prices and in a manner as we may determine from time to time. If we sell any such securities in subsequent transactions, investors may be materially diluted. New investors in such subsequent transactions could gain rights, preferences and privileges senior to those of holders of our Class A common stock.
Future sales of shares by existing stockholders could cause our stock price to decline.*
If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our Class A common stock in the public market, the trading price of our Class A common stock could decline. All of our outstanding shares are eligible for sale in the public market, other than shares and options exercisable held by directors, executive officers and other affiliates that are subject to volume limitations under Rule 144 of the Securities Act. In addition, we have reserved shares for future issuance under our equity incentive plan. Our employees, other service providers, and directors are subject to our quarterly trading window, which generally opens at the start of the second full trading day after the public dissemination of our annual or quarterly financial results and closes (i) with respect to the first, second and third quarter of each fiscal year, at the end of the fifteenth day of the last month of the such quarter and (ii) with respect to the fourth quarter of each fiscal year, at the end of the trading day on the Wednesday before Thanksgiving. These employees, service providers and directors may also sell shares during a closed window periods pursuant to trading plans that comply with the requirements of Rule 10b5 - 1 (c)(1) under the Exchange Act . When these shares are issued and subsequently sold, it would be dilutive to existing stockholders and the trading price of our Class A common stock could decline.
If securities or industry analysts do not publish research or publish unfavorable research about our business, our stock price and trading volume could decline.
A limited number of equity research analysts provide research coverage of our Class A common stock, and we cannot assure you that such equity research analysts will adequately provide research coverage of our Class A common stock. A lack of adequate research coverage may adversely affect the liquidity and market price of our Class A common stock. To the extent we obtain equity research analyst coverage, we will not have any control of the analysts or the content and opinions included in their reports. The price of our Class A common stock could decline if one or more equity research analysts downgrade our stock or issue other unfavorable commentary or research. If one or more equity research analysts cease coverage of our company, or fail to publish reports on us regularly, demand for our stock could decrease, which in turn could cause our stock price or trading volume to decline.
We incur costs and demands upon management as a result of complying with the laws and regulations affecting public companies in the United States, which may harm our business.
As a public company listed in the United States, we incur significant additional legal, accounting and other expenses. In addition, changing laws, regulations and standards relating to corporate governance and public disclosure, including regulations implemented by the SEC and The NASDAQ Global Select Market, may increase legal and financial compliance costs and make some activities more time consuming. These laws, regulations and standards are subject to varying interpretations and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If, notwithstanding our efforts, we fail to comply with new laws, regulations and standards, regulatory authorities may initiate legal proceedings against us and our business may be harmed.
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Failure to comply with these rules might also make it more diffic ult for us to obtain certain types of insurance, including director and officer liability insurance, and we might be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified persons to serve on our Board of Directors, on committees of our Board of Directors or as members of senior management.
We are an “emerging growth company,” and we intend to comply only with reduced disclosure requirements applicable to emerging growth companies. As a result, our Class A common stock could be less attractive to investors.
We are an “emerging growth company,” as defined in the JOBS Act and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the closing of the IPO, (b) in which we have total annual gross revenue of over $1.07 billion or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. We cannot predict if investors will find our Class A common stock less attractive if we choose to rely on these exemptions. If some investors find our Class A common stock less attractive as a result of any choices to reduce future disclosure, there may be a less active trading market for our Class A common stock and our stock price may be more volatile.
We do not intend to pay dividends in the foreseeable future.
We have never declared or paid any cash dividends on our Class A or Class B common stock and do not intend to pay any cash dividends in the foreseeable future. We anticipate that we will retain all of our future earnings to grow our business and for general corporate purposes. Moreover, our outstanding loan and security agreements contain prohibitions on the payment of cash dividends on our capital stock. Any determination to pay dividends in the future will be at the discretion of our Board of Directors. Accordingly, investors must rely on sales of their Class A common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.
Provisions in our corporate charter documents and under Delaware law may prevent or frustrate attempts by our stockholders to change our management or hinder efforts to acquire a controlling interest in us, and the market price of our Class A common stock may be lower as a result.
There are provisions in our certificate of incorporation and bylaws that may make it difficult for a third-party to acquire, or attempt to acquire, control of Roku, even if a change in control was considered favorable by our stockholders.
Our charter documents also contain other provisions that could have an anti-takeover effect, such as:
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establishing a classified Board of Directors so that not all members of our Board of Directors are elected at one time; |
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permitting the Board of Directors to establish the number of directors and fill any vacancies and newly created directorships; |
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providing that directors may only be removed for cause; |
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prohibiting cumulative voting for directors; |
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requiring super-majority voting to amend some provisions in our certificate of incorporation and bylaws; |
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authorizing the issuance of “blank check” preferred stock that our Board of Directors could use to implement a stockholder rights plan; |
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eliminating the ability of stockholders to call special meetings of stockholders; |
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prohibiting stockholder action by written consent, which requires all stockholder actions to be taken at a meeting of our stockholders; and |
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reflecting our two classes of common stock as described above. |
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibit a person who owns 15% or more of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. Any provision in our certificate of incorporation or our bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our Class A common stock, and could also affect the price that some investors are willing to pay for our Class A common stock.
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Our amended and restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware and the federal district courts of the United States of America will be the excl usive forums for substantially all disputes between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. Our amended and restated certificate of incorporation further provides that the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the Securities Act. These choice of forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. In December 2017, a plaintiff filed a complaint in the Court of Chancery in Delaware seeking a declaration that these choice of forum provisions are invalid and unenforceable. If a court were to find either choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Sales of Unregistered Securities
None.
Use of Proceeds from our Initial Public Offering of Class A Common Stock
On September 27, 2017, our registration statement on Form S-1 (No. 333-220318) was declared effective by the SEC for our IPO of Class A common stock. On October 2, 2017, we closed our IPO, in which we issued and sold 10.4 million shares of our Class A common stock at a public offering price of $14.00 per share, for net proceeds of approximately $130.8 million, after deducting underwriting discounts and commissions of $10.1 million and offering expenses of approximately $4.0 million paid by the Company. No payments for such expenses were made directly or indirectly to (i) any of our officers or directors or their associates, (ii) any persons owning 10% or more of any class of our equity securities, or (iii) any of our affiliates. The offer and sale of all of the shares in the IPO were registered under the Securities Act pursuant to a registration statement on Form S-1 (No. 333-220318), which was declared effective by the SEC on September 27, 2018. Following the sale of the shares in connection with the closings of the IPO, the offering terminated.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
None.
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Incorporation by reference |
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Exhibit Number |
Description |
Form |
SEC File No. |
Exhibit |
Filing Date |
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3.1 |
Amended and Restated Certificate of Incorporation of Roku, Inc. |
8-K |
001-38211 |
3.1 |
10/03/2017 |
3.2 |
S-1 |
333-220318 |
3.4 |
09/01/2017 |
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4.1 |
Reference is made to Exhibits 3.1 through 3.2 . |
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4.2 |
S-1/A |
333-220318 |
4.1 |
09/18/2017 |
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10.24* |
Forms of Option Agreement and Option Grant Notice under 2017 Equity Incentive Plan . |
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10.25* |
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10.26* |
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10.27* |
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31.1* |
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31.2* |
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32.1* |
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32.2* |
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101.INS |
XBRL Instance Document |
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101.SCH |
XBRL Taxonomy Extension Schema Document |
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101.CAL |
XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF |
XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB |
XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE |
XBRL Taxonomy Extension Presentation Linkbase Document |
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* |
Filed herewith. |
* These exhibits are furnished with this Quarterly Report on Form 10-Q and are not deemed filed with the Securities and Exchange Commission and are not incorporated by reference in any filing of Roku, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filings.
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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Roku, Inc. |
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Date: August 10, 2018 |
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By: |
/s/ Anthony Wood |
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Anthony Wood |
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President and Chief Executive Officer (Principal Executive Officer) |
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Date: August 10, 2018 |
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By: |
/s/ Steve Louden |
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Steve Louden |
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Chief Financial Officer (Principal Financial and Accounting Officer) |
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Exhibit 10.24
ROKU, Inc.
Stock Option Grant Notice
(2017 Equity Incentive Plan)
Roku, Inc. (the “ Company ”), pursuant to its 2017 Equity Incentive Plan (the “ Plan ”), hereby grants to Optionholder an option to purchase the number of shares of the Company’s Common Stock set forth below. This option is subject to all of the terms and conditions as set forth in this stock option grant notice (this “ Stock Option Grant Notice ”), in the Option Agreement, , including any special terms and conditions for Optionholder’s country set forth in the appendix attached to the Option Agreement as Exhibit A (the “ Appendix ” and, together with the Option Agreement, the " Agreement "), the Plan and the Notice of Exercise, all of which are attached hereto and incorporated herein in their entirety. Capitalized terms not explicitly defined herein but defined in the Plan or the Option Agreement will have the same definitions as in the Plan or the Agreement. If there is any conflict between the terms herein and the Plan, the terms of the Plan will control.
Optionholder: |
«Optionee» |
Date of Grant: |
«GrantDate» |
Vesting Commencement Date: |
«VestingCommenceDate» |
Number of Shares Subject to Option: |
«NoofShares» |
Exercise Price (Per Share): |
«ExercisePrice» |
Total Exercise Price: |
«TotalExercisePrice» |
Expiration Date: |
«ExpirDate» |
Type of Grant: ☐ Incentive Stock Option 1 ☐ Nonstatutory Stock Option
Exercise Schedule : ☐ Same as Vesting Schedule ☐ Early Exercise Permitted
Vesting Schedule : |
[_____________] |
Payment: By one or a combination of the following items (described in the Option Agreement):
☐ By cash, check, bank draft, wire transfer or money order payable to the Company
☐ Pursuant to a Regulation T Program if the shares are publicly traded
☐ By delivery of already-owned shares if the shares are publicly traded
|
☐ |
If and only to the extent this option is a Nonstatutory Stock Option, and subject to the Company’s consent at the time of exercise, by a “net exercise” arrangement |
Additional Terms/Acknowledgements: Optionholder acknowledges receipt of, and understands and agrees to all of the terms and conditions set forth in, this Stock Option Grant Notice, the Agreement and the Plan. Optionholder acknowledges and agrees that this Stock Option Grant Notice and the Agreement may not be modified, amended or revised except as provided in the Plan. Optionholder further acknowledges that as of the Date of Grant, this Stock Option Grant Notice, the Agreement, and the Plan set forth the entire understanding between Optionholder and the Company regarding this option award
|
1 |
If this is an Incentive Stock Option, it (plus other outstanding Incentive Stock Options) cannot be first exercisable for more than $100,000 in value (measured by exercise price) in any calendar year. Any excess over $100,000 is a Nonstatutory Stock Option. |
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and supersede all prior oral and written agreements, promises and/or representations on that subject with the exception of (i) options previously granted and delivered to Optionholder, (ii) any compensation recovery policy that is adopted by the Company or is otherwise required by applicable law and (iii) any written employment or severance arrangement that would provide for vesting acceleration of this option upon the terms and conditions set forth therein.
By accepting this option, Optionholder consents to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
Attachments : Agreement, 2017 Equity Incentive Plan, Notice of Exercise and Early Exercise Stock Purchase Agreement
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Exhibit 10.24
Option Agreement
(Incentive Stock Option or Nonstatutory Stock Option)
Pursuant to your Stock Option Grant Notice (“ Stock Option Grant Notice ”) and this Option Agreement, including any special terms and conditions for your country set forth in the appendix attached hereto as Exhibit A (the “ Appendix ” and, together with the Option Agreement, this “ Agreement ”), Roku, Inc. (the “ Company ”) has granted you an option under its 2017 Equity Incentive Plan (the “ Plan ”) to purchase the number of shares of the Company’s Common Stock indicated in your Stock Option Grant Notice at the exercise price indicated in your Stock Option Grant Notice. The option is granted to you effective as of the date of grant set forth in the Stock Option Grant Notice (the “ Date of Grant ”). If there is any conflict between the terms in this Agreement and the Plan, the terms of the Plan will control. Capitalized terms not explicitly defined in this Agreement or in the Stock Option Grant Notice but defined in the Plan will have the same definitions as in the Plan.
The details of your option, in addition to those set forth in the Stock Option Grant Notice and the Plan, are as follows:
1. Vesting. Your option will vest as provided in your Stock Option Grant Notice. Vesting will cease upon the termination of your Continuous Service, as described in Section 8 below.
2. Number of Shares and Exercise Price. The number of shares of Common Stock subject to your option and your exercise price per share in your Stock Option Grant Notice will be adjusted for Capitalization Adjustments.
3. Exercise Restriction for Non-Exempt Employees. If you are an Employee eligible for overtime compensation under the U.S. Fair Labor Standards Act of 1938, as amended (that is, a “ Non-Exempt Employee ”), and except as otherwise provided in the Plan, you may not exercise your option until you have completed at least six (6) months of Continuous Service measured from the Date of Grant, even if you have already been an employee for more than six (6) months. Consistent with the provisions of the Worker Economic Opportunity Act, you may exercise your option as to any vested portion prior to such six (6) month anniversary in the case of (i) your death or disability, (ii) a Corporate Transaction in which your option is not assumed, continued or substituted, (iii) a Change in Control or (iv) your termination of Continuous Service on your “retirement” (as defined in the Company’s benefit plans).
4. Exercise prior to Vesting (“Early Exercise”). If permitted in your Stock Option Grant Notice ( i.e. , the “Exercise Schedule” indicates “Early Exercise Permitted”) and subject to the provisions of your option, you may elect at any time that is both (i) during the period of your Continuous Service and (ii) during the term of your option, to exercise all or part of your option, including the unvested portion of your option; provided , however , that:
(a) a partial exercise of your option will be deemed to cover first vested shares of Common Stock and then the earliest vesting installment of unvested shares of Common Stock;
(b) any shares of Common Stock so purchased from installments that have not vested as of the date of exercise will be subject to the purchase option in favor of the Company as described in the Company’s form of Early Exercise Stock Purchase Agreement;
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(c) you will enter into the Company’s form of Early Exercise Stock Purchase Agreement with a vesting schedule that will result in the same vesting as if no early exercise had occurred; and
(d) if your option is an Incentive Stock Option, then, to the extent that the aggregate Fair Market Value (determined at the Date of Grant) of the shares of Common Stock with respect to which your option plus all other Incentive Stock Options you hold are exercisable for the first time by you during any calendar year (under all plans of the Company and its Affiliates) exceeds $100,000, your option(s) or portions thereof that exceed such limit (according to the order in which they were granted) will be treated as Nonstatutory Stock Options.
5. Incentive Stock Option Limitation. If your option is an Incentive Stock Option, then, to the extent that the aggregate Fair Market Value (determined at the Date of Grant) of the shares of Common Stock with respect to which your option plus all other Incentive Stock Options you hold are exercisable for the first time by you during any calendar year (under all plans of the Company and its Affiliates) exceeds one hundred thousand dollars ($100,000), your option(s) or portions thereof that exceed such limit (according to the order in which they were granted) will be treated as Nonstatutory Stock Options.
6. Method of Payment. You must pay the full amount of the exercise price for the shares you wish to exercise. You may pay the exercise price in cash or by check, bank draft, wire transfer or money order payable to the Company or in any other manner permitted by your Stock Option Grant Notice , which may include one or more of the following:
(a) Provided that at the time of exercise the Common Stock is publicly traded, pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds. This manner of payment is also known as a “broker-assisted exercise”, “same day sale”, or “sell to cover”.
(b) Provided that at the time of exercise the Common Stock is publicly traded, by delivery to the Company (either by actual delivery or attestation) of already-owned shares of Common Stock that are owned free and clear of any liens, claims, encumbrances or security interests, and whose Fair Market Value is equal to the aggregate exercise price on the date of exercise. “Delivery” for these purposes, in the sole discretion of the Company at the time you exercise your option, will include delivery to the Company of your attestation of ownership of such shares of Common Stock in a form approved by the Company. You may not exercise your option by delivery to the Company of Common Stock if doing so would violate the provisions of any law, regulation or agreement restricting the redemption of the Company’s stock.
7. Whole Shares. You may exercise your option only for whole shares of Common Stock.
8. Compliance. In no event may you exercise your option unless the shares of Common Stock issuable upon exercise are then registered under the Securities Act or, if not registered, the Company has determined that your exercise and the issuance of the shares would be exempt from the registration requirements of the Securities Act. The exercise of your option also must comply with all other applicable laws and regulations governing your option, including any U.S. and non-U.S. state, federal and local laws, and you may not exercise your option if the Company determines that such
2.
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exercise would not be in material compliance with such laws and regulations (including any restrictions on exercise required for compliance with Treas. Reg. 1.401(k)-1(d)(3), if applicable).
9. Term. You may not exercise your option before the Date of Grant or after the expiration of the option’s term. The term of your option expires, subject to the provisions of Section 5(h) of the Plan, upon the earliest of the following:
(a) immediately upon the termination of your Continuous Service for Cause;
(b) [ Delete for 10 year options - three (3) months after the termination of your Continuous Service for any reason other than Cause, your Disability, or your death (except as otherwise provided in Section 8(d) below); provided , however , that if during any part of such three-month period your option is not exercisable solely because of the condition set forth in the section above relating to “Compliance,” your option will not expire until the earlier of the Expiration Date or until it has been exercisable for an aggregate period of three (3) months after the termination of your Continuous Service; provided further , that if (i) you are a Non-Exempt Employee, (ii) your Continuous Service terminates within six (6) months after the Date of Grant, and (iii) you have vested in a portion of your option at the time of your termination of Continuous Service, your option will not expire until the earlier of (x) the later of (A) the date that is seven (7) months after the Date of Grant, and (B) the date that is three (3) months after the termination of your Continuous Service, and (y) the Expiration Date;]
(c) [ Delete for 10 year options - twelve (12) months after the termination of your Continuous Service due to your Disability (except as otherwise provided in Section 9(d)) below;]
(d) [ Delete for 10 year options - eighteen (18) months after your death if you die either during your Continuous Service or within three (3) months after your Continuous Service terminates for any reason other than Cause;]
(e) the Expiration Date indicated in your Stock Option Grant Notice; and
(f) the day before the tenth (10th) anniversary of the Date of Grant.
If your option is an Incentive Stock Option, note that to obtain the U.S. federal income tax advantages associated with an Incentive Stock Option, the Code requires that at all times beginning on the Date of Grant and ending on the day three (3) months before the date of your option’s exercise, you must be an employee of the Company or an Affiliate, except in the event of your death or Disability. The Company has provided for extended exercisability of your option under certain circumstances for your benefit but cannot guarantee that your option will necessarily be treated as an Incentive Stock Option if you continue to provide services to the Company or an Affiliate as a Consultant or Director after your employment terminates or if you otherwise exercise your option more than three (3) months after the date your employment with the Company or an Affiliate terminates.
For purposes of your option, your Continuous Service will be considered terminated (regardless of the reason of termination, whether or not later found to be invalid or in breach of employment or other laws or rules in the jurisdiction where you are providing services or the terms of your employment or service agreement, if any) effective as of the date that you cease to actively provide services to the Company or any Affiliate and will not be extended by any notice period ( e.g. , employment or service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment or other laws in the jurisdiction where you are employed or providing services or the terms of your employment or service agreement, if any). The Board shall have exclusive discretion to determine when you are no longer actively employed or providing services for purposes of
3.
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the Plan (including whether you still may be considered to be providing services while on a leave of absence).
10. Exercise.
(a) You may exercise the vested portion of your option (and the unvested portion of your option if your Stock Option Grant Notice so permits) during its term by (i) delivering a Notice of Exercise (in a form designated by the Company) or completing such other documents and/or procedures designated by the Company for exercise and (ii) paying the exercise price and any applicable Tax-Related Items (as defined in Section 12 below) to the Company’s Secretary, stock plan administrator, or such other person as the Company may designate, together with such additional documents as the Company may then require.
(b) By exercising your option you agree that, as a condition to any exercise of your option, the Company may require you to enter into an arrangement providing for the payment by you to the Company of any Tax-Related Items.
(c) If your option is an Incentive Stock Option, by exercising your option you agree that you will notify the Company in writing within fifteen (15) days after the date of any disposition of any of the shares of the Common Stock issued upon exercise of your option that occurs within two (2) years after the Date of Grant or within one (1) year after such shares of Common Stock are transferred upon exercise of your option.
(d)
By exercising your option you agree that you will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any shares of Common Stock or other securities of the Company held by you, for a period of one hun
dred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act
or such longer period as
the underwriters or the Company will request to facilitate
compliance with FINRA Rule 2241
or any success
or or
similar rule
s
or
regulation
(the “
Lock-Up Period
”);
provided
,
however
, that nothing contained in this section will prevent the exercise of a repurchase option, if any, in favor of the Company during the Lock-Up Period. You further agree to execute and deliver such other agreements as may be reasonably requested by the Comp
any
or the
underwriters
that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to your shares of Common Stock
until the end of such period.
You also agree that any transferee of any shares of Common Stock (or other securities) of the Company held by you will be bound by this Section 10(d).
The underwriters of the Company’s stock are intended third party beneficiaries of this Section 10(d) and will have the right, power and authority to enforce the provisions hereof as though they were a party hereto.
11. Transferability. Except as otherwise provided in this Section 11, your option is not transferable, except by will or by the laws of descent and distribution, and is exercisable during your life only by you.
(a) Certain Trusts. Upon receiving written permission from the Board or its duly authorized designee, you may transfer your option to a trust if you are considered to be the sole beneficial owner (determined under Section 671 of the Code and applicable U.S. state law, or comparable non-U.S. laws) while the option is held in the trust. You and the trustee must enter into transfer and other agreements required by the Company.
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(b) Domestic Relations Orders. Upon receiving written permission from the Board or its duly authorized designee, and provided that you and the designated transferee enter into transfer and other agreements required by the Company, you may transfer your option pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulation 1.421-1(b)(2), or comparable non-U.S. law, that contains the information r equired by the Company to effectuate the transfer. You are encouraged to discuss the proposed terms of any division of this option with the Company prior to finalizing the domestic relations order or marital settlement agreement to help ensure the require d information is contained within the domestic relations order or marital settlement agreement. If this option is an Incentive Stock Option, this option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.
(c) Beneficiary Designation. Upon receiving written permission from the Board or its duly authorized designee, you may, by delivering written notice to the Company, in a form approved by the Company and any broker designated by the Company to handle option exercises, designate a thi rd party who, on your death, will thereafter be entitled to exercise this option and receive the Common Stock or other consideration resulting from such exercise. In the absence of such a designation, your executor or administrator of your estate or your legal heirs will be entitled to exercise this option and receive, on behalf of your estate, the Common Stock or other consideration resulting from such exercise.
12. Responsibility for Taxes.
(a) You acknowledge that, regardless of any action the Company or, if different, your employer (the “ Employer ”) takes with respect to any or all income tax, social insurance, payroll tax, fringe benefit tax, payment on account or other tax related items related to your participation in the Plan and legally applicable to you (“ Tax-Related Items ”), the ultimate liability for all Tax-Related Items is and remains your responsibility and may exceed the amount actually withheld by the Company or the Employer, if any. You further acknowledge that the Company and the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of your option, including, but not limited to, the grant, vesting or exercise of your option, the subsequent sale of shares of Common Stock acquired pursuant to such exercise and the issuance of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of your option to reduce or eliminate your liability for Tax-Related Items or achieve any particular tax result. You acknowledge and agree that you will not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates for Tax-Related Items arising from your option. In particular, you acknowledge that this option is exempt from Section 409A of the Code only if the exercise price per share specified in the Grant Notice is at least equal to the “fair market value” per share of the Common Stock on the Date of Grant and there is no other impermissible deferral of compensation associated with the option. Further, if you are subject to Tax-Related Items in more than one jurisdiction, you acknowledge that the Company and/or the Employer may be required to withhold or account for Tax-Related Items in more than one jurisdiction.
(b) Prior to the relevant taxable or tax withholding event, as applicable, you agree to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items. In this regard, you authorize the Company and/or the Employer, or their respective agents, at their discretion, to satisfy their withholding obligations with regard to all Tax-Related Items by: (i) withholding from your wages or other cash compensation paid to you by the Company and/or the Employer, (ii) withholding from the proceeds of the sale of shares of Common Stock acquired at exercise of your option and sold either through a voluntary sale or through a mandatory sale arranged by the Company (on your behalf pursuant to this authorization without further consent); and/or (iii) if this option is a Nonstatutory Stock Option, withholding a number of shares of Common Stock that are otherwise deliverable to you upon exercise.
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(c) Depending on the withholding method, the Company or the Employer may withho ld or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates, including maximum applicable rates, in which case you may receive a refund of any over-withheld amount in cash and wi ll have no entitlement to the Common Stock equivalent. If the obligation for Tax-Related Items is satisfied by withholding a number of shares of Common Stock, for tax purposes, you are deemed to have been issued the full number of shares of Common Stock, notwithstanding that a number of the shares of Common Stock is held back solely for the purpose of paying the Tax-Related Items.
(d) You agree to pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of your participation in the Plan that cannot be satisfied by the means previously described. You acknowledge and agree that the Company may refuse to honor the exercise and refuse to issue or deliver the shares of Common Stock, or the proceeds of the sale of the shares of Common Stock, if you fail to comply with your obligations in connection with the Tax-Related Items.
13. Nature of Grant . In accepting your option, you acknowledge, understand and agree that:
(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted under the Plan;
(b) the grant of this option is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of options (whether on the same or different terms), or benefits in lieu of options, even if options have been granted in the past;
(c) all decisions with respect to future options or other grants, if any, will be at the sole discretion of the Company;
(d) you are voluntarily participating in the Plan;
(e) this option and the shares of Common Stock subject to this option, and the income and value of same, are not intended to replace any pension rights or compensation;
(f) the future value of the shares of Common Stock underlying the option is unknown, indeterminable, and cannot be predicted with certainty;
(g) if the underlying shares of Common Stock do not increase in value, the option will have no value;
(h) if you exercise the option and acquire shares of Common Stock, the value of such shares of Common Stock may increase or decrease in value, even below the exercise price
(i) no claim or entitlement to compensation or damages shall arise from forfeiture of this option resulting from the termination of your Continuous Service (for any reason whatsoever, whether or not later found to be invalid or in breach of employment laws in the jurisdiction where you are employed or rendering services or the terms of your employment or service agreement, if any), and in consideration of the grant of this option, you irrevocably agree not to institute any claim against the Company or any Affiliate,
6 .
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(j) unless otherwise provided in the Plan or by the Company in its dis cretion, the option and the benefits evidenced by this Agreement do not create any entitlement to have the option or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the shares of Common Stock;
(k) unless otherwise agreed with the Company, this option and any shares of Common Stock acquired under the Plan, and the income and value of same, are not granted as consideration for, or in connection with, the service you may provide as a director of an Affiliate; and
(l) the following provisions apply only if you are employed or rendering services outside the United States:
(i) neither the Company, the Employer nor any other Affiliate shall be liable for any foreign exchange rate fluctuation between your local currency and the United States Dollar that may affect the value of the option or of any amounts due to you pursuant to the exercise of the option or the subsequent sale of any shares of Common Stock acquired upon exercise;
(ii) this option and the shares of Common Stock subject to this option, and the income and value of same, are not part of normal or expected compensation for any purpose, including, without limitation, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments.
14. No Advice Regarding Grant . The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding your participation in the Plan, or your acquisition or sale of the underlying shares of Common Stock. You are hereby advised to consult with your own personal tax, legal and financial advisors regarding your participation in the Plan before taking any action related to the Plan.
15. Data Privacy . You hereby explicitly and unambiguously consent to the collection, use and transfer, in electronic or other form, of your personal data as described in this Agreement and any other grant materials by and among, as applicable, Employer, the Company and any other Affiliate for the exclusive purpose of implementing, administering and managing your participation in the Plan.
You understand that the Company and the Employer may hold certain personal information about you, including, but not limited to, your name, home address, email address and telephone number, email address, date of birth, social insurance, passport or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company, details of all options or any other entitlement to shares of stock awarded, canceled, vested, unvested or outstanding in your favor (“Data”), for the exclusive purpose of implementing, administering and managing the Plan.
You understand that Data will be transferred to E*TRADE Financial Corporate Services, Inc., or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company with the implementation, administration and management of the Plan (the “Designated Broker”). You understand that the recipients of Data may be located in the United States or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than your country. You understand that if you reside outside the United States, you may request a list with the names and addresses of any potential recipients of Data by contacting your local human resources representative. You authorize the Company, the Designated Broker and any possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer Data, in electronic or
7.
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other form, for the sole purposes of implementing, administering and managing your participation in the Plan. You understand that Data will be held only as long as is necessary to implement, administer and manage your participation in the Plan. You understand that if you reside outside the United States, you may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herei n, in any case without cost, by contacting in writing your local human resources representative. Further, you understand that you are providing the consents herein on a purely voluntary basis. If you do not consent, or if you later seek to revoke your co nsent, your employment status or service with the Company or any Affiliate will not be affected; the only consequence of refusing or withdrawing your consent is that the Company would not be able to grant options or other equity awards to you or administer or maintain such awards. Therefore, you understand that refusing or withdrawing your consent may affect your ability to participate in the Plan. For more information on the consequences of your refusal to consent or withdrawal of consent, you understand that you may contact your local human resources representative.
16. Right of Repurchase. The Company will have the right to repurchase all of the shares of Common Stock you acquire pursuant to the exercise of your option upon termination of your Continuous Service for Cause. Such repurchase will be at the exercise price you paid to acquire the shares and will be effected pursuant to such other terms and conditions, and at such time, as the Company will determine.
17. Option not a Service Contract. Your option is not an employment or service contract, and nothing in your option will be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Employer, or of the Employer to continue your employment. In addition, nothing in your option will obligate the Company or an Affiliate, their respective stockholders, boards of directors, officers or employees to continue any relationship that you might have as a Director or Consultant for the Company or an Affiliate. Finally, the grant of the option shall not be interpreted as forming an employment or service contract with the Company.
18. Notices. Any notices provided for in your option or the Plan will be given in writing (including electronically) and will be deemed effectively given upon receipt or, in the case of notices delivered by mail by the Company to you, five (5) days after deposit in the United States mail, postage prepaid, addressed to you at the last address you provided to the Company. The Company may, in its sole discretion, decide to deliver any documents related to participation in the Plan and this option by electronic means or to request your consent to participate in the Plan by electronic means. By accepting this option, you consent to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company.
19. Governing Plan Document . Your option is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your option, and is further subject to all interpretations, amendments, rules and regulations, which may from time to time be promulgated and adopted pursuant to the Plan. If there is any conflict between the provisions of your option and those of the Plan, the provisions of the Plan will control. In addition, your option (and any compensation paid or shares issued under your option) is subject to recoupment in accordance with The Dodd–Frank Wall Street Reform and Consumer Protection Act and any implementing regulations thereunder, any clawback policy adopted by the Company and any compensation recovery policy otherwise required by applicable law. No recovery of compensation under such a clawback policy will be an event giving rise to a right to voluntarily terminate employment upon a resignation for “good reason,” or for a “constructive termination” or any similar term under any plan of or agreement with the Company.
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20. Other Documents . You hereby acknowledge receipt of and the right to receive a document providing the information required by Rule 428(b)(1) promulgated under the Securities Act, which includes the Plan prospectus. In addition, you acknowledge receipt of the Company’s policy permitti ng certain individuals to sell shares only during certain “window” periods and the Company’s insider trading policy, in effect from time to time.
21. Voting Rights . You will not have voting or any other rights as a shareholder of the Company with respect to the shares to be issued pursuant to this option until such shares are issued to you. Upon such issuance, you will obtain full voting and other rights as a shareholder of the Company. Nothing contained in this option, and no action taken pursuant to its provisions, will create or be construed to create a trust of any kind or a fiduciary relationship between you and the Company or any other person.
22. Severability . If all or any part of this Option Agreement or the Plan is declared by any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any portion of this Agreement or the Plan not declared to be unlawful or invalid. Any Section of this Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.
23. Language. If you have received this Agreement, or any other document related to this option and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control. You acknowledge that you are sufficiently proficient in English to understand the terms and conditions of this Agreement.
24. Insider Trading Restrictions/Market Abuse Laws. You acknowledge that you may be subject to insider trading restrictions and/or market abuse laws in applicable jurisdictions, including the United States and your country of residence, which may affect your ability to acquire or sell the shares of Common Stock or rights to the shares of Common Stock under the Plan during such times as you are considered to have “inside information” regarding the Company (as defined by the laws in your country). Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. You acknowledge that it is your responsibility to comply with any applicable restrictions, and you are advised to speak to your personal advisor on this matter.
25. Foreign Asses/Account and Tax Reporting, Exchange Controls. Your country may have certain foreign asset, account and/or tax reporting requirements and exchange controls which may affect your ability to acquire or hold shares of Common Stock under the Plan or cash received from participating in the Plan (including from any dividends received or sale proceeds arising from the sale of shares of Common Stock) in a brokerage or bank account outside your country. You understand that you may be required to report such accounts, assets or transactions to the tax or other authorities in your country. You also may be required to repatriate sale proceeds or other funds received as a result of participation in the Plan to your country through a designated bank or broker and/or within a certain time after receipt. In addition, you may be subject to tax payment and/or reporting obligations in connection with any income realized under the Plan and/or from the sale of shares of Common Stock. You acknowledge that you are responsible for complying with all such requirements, and that you should consult personal legal and tax advisors, as applicable, to ensure compliance.
26. Appendix. Notwithstanding any provisions in this Option Agreement, your option shall be subject to the special terms and conditions for your country set forth in the Appendix attached hereto as Exhibit A . Moreover, if you relocate to one of the countries included therein, the terms and conditions
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for such country will apply to you to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or adm inistrative reasons. The Appendix constitutes part of this Option Agreement.
27. Imposition of Other Requirements . The Company reserves the right to impose other requirements on your participation in the Plan, and on any shares of Common Stock acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require you to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.
28. Governing Law/Venue . The interpretation, performance and enforcement of this Agreement will be governed by the law of the State of Delaware without regard to that state’s conflicts of laws rules. For purposes of any action, lawsuit or other proceedings brought to enforce this Agreement, including its Exhibit, relating to it, or arising from it, the parties hereby submit to and consent to the sole and exclusive jurisdiction of the courts within Santa Clara County, State of California, and no other courts, where this grant is made and/or to be performed.
29. Miscellaneous .
(a) The rights and obligations of the Company under your option will be transferable to any one or more persons or entities, and all covenants and agreements hereunder will inure to the benefit of, and be enforceable by the Company’s successors and assigns.
(b) You agree upon request to execute any further documents or instruments necessary or desirable in the sole determination of the Company to carry out the purposes or intent of your option.
(c) You acknowledge and agree that you have reviewed your option in its entirety, have had an opportunity to obtain the advice of counsel prior to executing and accepting your option, and fully understand all provisions of your option.
(d) All obligations of the Company under the Plan and this Agreement will be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
|
* |
** |
|
This Option Agreement will be deemed to be signed by you upon the signing by you or otherwise by your acceptance of the Grant Notice to which it is attached.
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Exhibit A
Appendix to Option Agreement
Special Terms and Conditions for Employees outside the United States
Capitalized terms used but not defined in this Appendix have the meanings set forth in the Plan and/or in the Option Agreement.
Terms and Conditions
This Appendix includes additional terms and conditions that govern the option granted to you under the Plan if you reside and/or work in one of the countries listed below. If you are a citizen or resident (or are considered as such for local law purposes) of a country other than the country in which you are currently residing and/or working, or if you relocate to another country after the grant of the option, the Company shall, in its discretion, determine to what extent the special terms and conditions contained herein shall be applicable to you.
Notifications
This Appendix may also include information regarding exchange controls and certain other issues of which you should be aware with respect to participation in the Plan. The information is based on the securities, exchange control, and other laws in effect in the respective countries as of August 2017. Such laws are often complex and change frequently. As a result, the Company strongly recommends that you not rely on the information in this Appendix as the only source of information relating to the consequences of your participation in the Plan because the information may be out of date at the time the you exercise your option or you sell shares of Common Stock acquired under the Plan.
In addition, the information contained herein is general in nature and may not apply to your particular situation, and the Company is not in a position to assure you of a particular result. Accordingly, you are advised to seek appropriate professional advice as to how the relevant laws in your country may apply to your situation.
Finally, if you are a citizen or resident (or are considered as such for local law purposes) of a country other than the country in which you are currently residing and/or working, or if you relocate to another country after the grant of the option, the notifications contained herein may not be applicable to you in the same manner.
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China
Terms and Conditions
The following provisions apply to Participants who are subject to exchange control regulations in the People’s Republic of China (“China”), including the requirements imposed by the State Administration of Foreign Exchange (“SAFE”), as determined by the Company in its sole discretion:
Restriction on Exercise . You will not be permitted to exercise your option and obtain any shares of Common Stock unless and until the necessary approvals for the Plan have been obtained from SAFE and remain in place, as determined by the Company in its sole discretion. Further, the Company is under no obligation to issue shares of Common Stock if the Company has not or does not obtain SAFE approval or if any such SAFE approval subsequently becomes invalid or ceases to be in effect by the time you exercise your option.
Method of Payment. This provision supplements Sections 6 and 12 of the Option Agreement:
Notwithstanding anything to the contrary in the Option Agreement or the Plan, due to exchange control laws in China, you will be required to exercise you option using the cashless sell-all exercise method pursuant to which all shares subject to the exercised option will be sold immediately upon exercise and the proceeds of sale, less the exercise price, any Tax-Related Items and broker’s fees or commissions, will be remitted to the you in accordance with any applicable exchange control laws and regulations. The Company reserves the right to provide additional methods of exercise depending on the development of local law.
Exchange Control Requirements . Due to exchange control requirements in China, you understand and agree that you will not be permitted to transfer any shares of Common Stock acquired under the Plan out of the account established for you with the Designated Broker and that you will be required to immediately repatriate to China any cash proceeds from the sale of the shares of Common Stock you acquire under the Plan as well as any cash dividends paid on such shares. You further understand that such repatriation of cash proceeds will need to be effectuated through a special exchange control account established by the Company, the Employer or any other Affiliate in China, and you hereby consent and agree that any proceeds from the sale of shares of Common Stock or the receipt of any cash dividends may be transferred to such special account prior to being delivered to you.
The proceeds may be paid to you in U.S. dollars or local currency at the Company’s discretion. In the event the proceeds are paid to you in U.S. dollars, you understand that you will be required to set up a U.S. dollar bank account in China and provide the bank account details to the Employer and/or the Company, so that the proceeds may be deposited into this account. If the proceeds are paid to you in local currency, you agree to bear any currency fluctuation risk between the time the shares of Common Stock are sold or cash dividends are paid and the time the proceeds are distributed to you through any such special account.
You agree to comply with any other requirements that may be imposed by the Company in the future in order to facilitate compliance with exchange control requirements in China.
Post-Termination Exercise Period. This provision modifies Section 9 of the Option Agreement:
Notwithstanding the post-termination exercise periods set forth in Section 9 of the Option Agreement, to comply with local exchange control requirements, you will be required to exercise the option within the lesser of (i) the period set forth in Section 9 of the Option Agreement, and (ii) three (3) months after
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termination of your Continuous Service, regardless of the reason for termination. The Company r eserves the right to allow for a longer exercise period depending on the development of local law.
Notifications
Exchange Control Information . Chinese residents must report to SAFE all details of foreign financial assets and liabilities, as well as details of any economic transactions conducted with non-Chinese residents, either directly or through financial institutions.
Denmark
Terms and Conditions
Danish Stock Option Act. By accepting this option, you acknowledge that you received an Employer Statement, translated into Danish, which is being provided to comply with the Danish Stock Option Act. To the extent more favorable and required to comply with the Danish Stock Option Act, the terms set forth in the Employer Statement will apply to your option.
Notifications
Securities/Tax Reporting Information. If you establish a brokerage or bank account holding shares outside Denmark, you must report this safety-deposit account to the Danish Tax Administration. For this purpose, you must file a Form V (Erklaering V) with the Danish Tax Administration. The Form V must be signed by you and may be signed by the applicable broker or bank where the account is held. By signing the Form V, the broker or bank undertakes an obligation, without further request each year, to forward information to the Danish Tax Administration concerning the shares in the account. By signing the Form V, you authorize the Danish Tax Administration to examine the account. In the likely event that the Form V is not also signed by the broker or bank either because of refusal on the part of the broker and/or bank or due to the laws of the country in question, you are solely responsible for providing certain details regarding the foreign brokerage or bank account and shares deposited therein to the Danish Tax Administration as part of your annual income tax return.
In addition, if you open a brokerage account (or a deposit account with a U.S. bank) outside of Denmark, the brokerage account (or bank account) will be treated as a deposit account because cash can be held in the account. In such case, you must also file a Form K (Erklaering K) with the Danish Tax Administration. The Form K must be signed both by you and by the applicable broker or bank where the account is held, unless an exemption from the broker/bank signature requirement is granted by the Danish Tax Administration. It is possible to seek the exemption on the Form K, which you should do at the time you submit the Form K. By signing the Form K, you (and the broker/bank, to the extent the exemption is not granted) undertake an obligation, without further request each year, to forward information to the Danish Tax Administration concerning the content of the account. By signing the Form K, you authorize the Danish Tax Administration to examine the account. In the likely event that the Form K is not also signed by the broker or bank either because of refusal on the part of the broker and/or bank or due to the laws of the country in question, you are solely responsible for providing certain details regarding the foreign brokerage or bank account and cash deposited therein to the Danish Tax Administration as part of your annual income tax return.
Foreign Asset/Account Reporting Information. If you establish an account holding shares or cash outside of Denmark, you must report the account to the Danish Tax Administration. The form which should be used to make the report can be obtained from a local bank. These obligations are separate from and in addition to the obligations described above.
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SPECIAL NOTICE FOR EMPLOYEES IN DENMARK
EMPLOYER STATEMENT
Pursuant to Section 3(1) of the Act on Stock Options in employment relations (the “ Stock Option Act ”), you are entitled to receive the following information regarding the options granted to you by Roku, Inc. (the “ Company ”) under the Roku, Inc. 2017 Equity Incentive Plan (the “ Plan ”) in a written statement.
This statement contains information applicable to your participation in the Plan, as required under the Stock Option Act, while the other terms and conditions of your options are described in detail in the Plan and the Option Agreement (the “ Agreement ”), both of which have been made available to you. Capitalized terms used but not defined herein shall have the same meanings given to them in the Plan or the Agreement, as applicable.
Section 1 of the Stock Option Act provides that the Stock Option Act only applies to employees. Employees are defined in section 2 of the Stock Option Act as persons who receive remuneration for their personal services in an employment relationship. Persons, including managers, who are not regarded as employees under the Stock Option Act, will not be subject to the Stock Option Act. If you are not an employee within the meaning of the Stock Option Act, the Company therefore has no obligation to issue an employer information statement to you and you will not be able to rely on this statement for legal purposes, since only the terms and conditions set out in the Plan apply.
1. Date of grant
The date of grant of your options is the date that the Board or Committee approved a grant for you and determined it would be effective, which is set forth in the Agreement.
2. |
Terms or conditions for option grant |
|
The grant of options under the Plan is made at the sole discretion of the Company. Employees, Directors and Consultants of the Company and its Affiliates, are eligible to receive grants under the Plan. The Board has broad discretion to determine who will receive options and to set the terms and conditions of the options. The Company may decide, in its sole discretion, not to make any grants of options to you in the future. Under the terms of the Plan and the Agreement, you have no entitlement or claim to receive future grants of options. |
3. |
Exercise date or period |
|
The options will vest and become exercisable over a period of time (as set forth in the Agreement), subject to your Continuous Service through the applicable vesting date and other conditions set forth in the Plan and Agreement, and subject to Section 5 of this statement. |
4. |
Exercise Price |
|
During the exercise period, the options can be exercised to purchase shares of common stock of the Company at a price per share not less than the fair market value of the stock on the date the option is granted, as determined in accordance with the Plan. |
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The treatment of your options upon termination of employment will be determined under Sections 4 and 5 of the Stock Option Act unless the terms contained in the Plan and the Agreement are more favorable to you than Sections 4 and 5 of the Stock Option Act. If the terms contained in the Plan and the Agreement are more favorable to you, then such terms will govern the treatment of your option upon termination of employment.
6. |
Financial aspects of participating in the Plan |
|
The grant of stock options has no immediate financial consequences for you. The value of the options is not taken into account when calculating holiday allowances, pension contributions or other statutory consideration calculated on the basis of salary. |
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Shares of stock are financial instruments and investing in stock will always have financial risk. The future value of Company shares is unknown and cannot be predicted with certainty. |
Roku, Inc.
150 Winchester Circle
Los Gatos, CA 95032
U.S.A.
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SÆRLIG MEDDELELSE TIL MEDARBEJDERE I DANMARK
ARBEJDSGIVERERKLÆRING
I henhold til § 3, stk. 1, i lov om brug af køberet eller tegningsret mv. i ansættelsesforhold (" Aktieoptionsloven ") er du berettiget til i en skriftlig erklæring at modtage følgende oplysninger om de aktieoptioner, som du tildeles af Roku, Inc. (” Selskabet ”) i henhold til Roku, Inc.'s 2017 Equity Incentive Plan (” Planen ”).
Denne erklæring indeholder, i henhold til Aktieoptionsloven, de oplysninger, der er gældende for din deltagelse i Planen, mens de øvrige kriterier og betingelser for dine aktieoptioner er beskrevet nærmere i Planen og i Option Agreement (" Aftalen "), som begge er stillet til rådighed for dig. Begreber, der står med stort begyndelsesbogstav i denne arbejdsgivererklæring, men som ikke er defineret heri, har den betydning, der er defineret i Planen, hhv. Aftalen.
I henhold til Aktieoptionslovens § 1 finder loven kun anvendelse for lønmodtagere. Lønmodtagere er defineret i Aktieoptionslovens § 2 som personer, der modtager vederlag for personligt arbejde i tjenesteforhold.
Personer, herunder direktører, som ikke anses for at være lønmodtagere i Aktieoptionslovens forstand, er ikke omfattet af Aktieoptionsloven. Hvis du ikke er lønmodtager i Aktieoptionslovens forstand, er Selskabet derfor ikke forpligtet til at udstede en arbejdsgivererklæring til dig, og du vil ikke i juridisk henseende kunne henholde dig til denne arbejdsgivererklæring, da alene Planens vilkår er gældende.
1. Tildelingstidspunkt
Tidspunktet for tildelingen af dine aktieoptioner er den dag, hvor Bestyrelsen eller Komitéen godkendte din tildeling og besluttede, at den skulle træde i kraft. Tidspunktet fremgår af Aftalen.
2. |
Vilkår og betingelser for optionstildelingen |
|
Aktieoptioner, der er omfattet af Planen, tildeles udelukkende efter Selskabets skøn. Tildeling kan i henhold til Planen ske til Medarbejdere, Bestyrelsesmedlemmer og Konsulenter i Selskabet og dets Tilknyttede Selskaber. Bestyrelsen har vide beføjelser til at bestemme, hvem der skal modtage optioner og til at fastsætte betingelserne herfor. Selskabet kan frit vælge fremover ikke at tildele dig aktieoptioner. I henhold til bestemmelserne i Planen og Aftalen har du ikke hverken ret til eller krav på fremover at få tildelt aktieoptioner. |
3. |
Udnyttelsestidspunkt eller -periode |
|
Aktieoptionerne modnes over en periode (som anført i Aftalen), forudsat at du på det relevante modningstidspunkt opfylder betingelsen om Fortsat Ansættelse og de øvrige betingelser i Planen og i Aftalen, og med forbehold for pkt. 5 i denne erklæring. |
4. |
Udnyttelseskurs |
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I udnyttelsesperioden kan aktieoptionerne udnyttes til at købe ordinære aktier i Selskabet til en kurs, som ikke kan være lavere end markedskursen for de ordinære aktier på tildelingstidspunktet, som opgjort i overensstemmelse med Planen. |
5. |
Din retsstilling i forbindelse med fratræden |
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Dine aktieoptioner vil i tilfælde af din fratræden blive behandlet i overensstemmelse med Aktieoptionslovens §§ 4 og 5, medmindre bestemmelserne i Planen og Aftalen er mere fordelagtige for dig end Aktieoptionslovens §§ 4 og 5. Hvis bestemmelserne i Planen og Aftalen er mere fordelagtige for dig, vil det være disse bestemmelser, der er gældende for, hvordan din aktieoption behandles i forbindelse med din fratræden.
6. |
Økonomiske aspekter ved deltagelse i Planen |
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Tildelingen af aktieoptioner har ingen umiddelbare økonomiske konsekvenser for dig. Værdien af aktieoptionerne indgår ikke i beregningen af feriepenge, pensionsbidrag eller øvrige lovbestemte, vederlagsafhængige ydelser. |
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Aktier er finansielle instrumenter, og investering i aktier vil altid være forbundet med en økonomisk risiko. Den fremtidige værdi af Selskabets aktier kendes ikke og kan ikke forudsiges med sikkerhed. |
Roku, Inc.
150 Winchester Circle
Los Gatos, CA 95032
U.S.A.
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Germany
Notifications
Exchange Control Information. Cross-border payments in excess of €12,500 must be reported monthly to the German Federal Bank ( Bundesbank ). In case of payments in connection with securities (including proceeds realized upon the sale of shares of Common Stock or the receipt of dividends), the report must be made by the 5th day of the month following the month in which the payment was received. The report must be filed electronically and the form of report (“ Allgemeine Meldeportal Statistik ”) can be accessed via the Bundesbank’s website ( www.bundesbank.de ), in both German and English. You are responsible for making this report.
Netherlands
There are no country-specific terms.
United Kingdom
Terms and Conditions
Responsibility for Taxes. The following supplements Section 12 of the Option Agreement:
Without limitation to Section 12 of the Option Agreement, you agree that you are liable for all Tax-Related Items and hereby covenant to pay all such Tax-Related Items, as and when requested by the Company or the Employer or by Her Majesty’s Revenue & Customs (“ HRMC ”) (or any other tax authority or any other relevant authority). You also hereby agree to indemnify and keep indemnified the Company and the Employer against any Tax-Related Items that they are required to pay or withhold or have paid or will pay to HMRC on your behalf (or any other tax authority or any other relevant authority).
Notwithstanding the foregoing, if you are an executive officer or director (within the meaning of Section 13(k) of the Exchange Act), you acknowledge that you may not be able to indemnify the Company or the Employer for the amount of any income tax not collected from or paid by you, as it may be considered a loan. In this case, the amount of any income tax not collected within ninety (90) days of the end of the U.K. tax year in which the event giving rise to the Tax-Related Item(s) occurs may constitute a benefit to you on which additional income tax and national insurance contributions may be payable. You acknowledge that you will be responsible for reporting and paying any income tax due on this additional benefit directly to the HMRC under the self-assessment regime and for paying the Company or the Employer, as applicable, for the value of any national insurance contributions due on this additional benefit, which may also be recovered from you at any time by any of the means referred to in Section 12 of the Option Agreement.
Joint Election. As a condition of participation in the Plan, you agree to accept any liability for secondary Class 1 National Insurance contributions that may be payable by the Company or the Employer (or any successor to the Company or the Employer) in connection with the option and any event giving rise to Tax-Related Items (the “ Employer NICs ”). The Employer NICs may be collected by the Company or the Employer using any of the methods described in the Plan or in Section 12 of the Option Agreement.
Without prejudice to the foregoing, you agree to execute a joint election with the Company and/or the Employer (a “ Joint Election ”), the form of such Joint Election being formally approved by HMRC, and any other consent or elections required by the Company or the Employer in respect of the Employer NICs
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liability. You further agree to execute such other elections as may be required by any successor to the Company and/or the Employer for the purpose of continuing the effectiveness of your Joint Election.
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Exhibit 10.24
2017 Equity Incentive Plan
148766248 v2
Exhibit 10.24
NOTICE OF EXERCISE
Roku, Inc.
150 Winchester Circle
Los Gatos, CA 95032
Date of Exercise: _______________
This constitutes notice to Roku, Inc. (the “ Company ”) under my stock option that I elect to purchase the below number of shares of Common Stock of the Company (the “ Shares ”) for the exercise price set forth below.
Type of option (check one): |
Incentive ☐ |
Nonstatutory ☐ |
Stock option dated: |
_______________ |
_______________ |
Number of Shares as
|
_______________ |
_______________ |
Certificates to be
|
_______________ |
_______________ |
Total exercise price: |
$______________ |
$______________ |
Cash payment delivered
|
$______________ |
$______________ |
Regulation T Program (cashless exercise 1 ): |
$______________ |
$______________ |
Value of ________ Shares delivered herewith 2 : |
$______________ |
$______________] |
By this exercise, I agree (i) to provide such additional documents as you may require pursuant to the terms of the Roku, Inc. 2017 Equity Incentive Plan, (ii) to provide for the payment by me to you (in the manner designated by you) of your withholding obligation, if any, relating to the exercise of this option, and (iii) if this exercise relates to an incentive stock option, to notify you in writing within fifteen (15) days after the date of any disposition of any of the Shares issued upon exercise of this option that occurs within two (2) years after the date of grant of this option or within one (1) year after such Shares are issued upon exercise of this option.
|
1 |
Shares must meet the public trading requirements set forth in the option agreement. |
2 |
Shares must meet the public trading requirements set forth in the option. Shares must be valued in accordance with the terms of the option being exercised, and must be owned free and clear of any liens, claims, encumbrances or security interests. Certificates must be endorsed or accompanied by an executed assignment separate from certificate. |
148766248 v2
I hereby make the following certifications an d representations with respect to the number of Shares listed above, which are being acquired by me for my own account upon exercise of the option as set forth above:
I acknowledge that the Shares have not been registered under the Securities Act of 1933, as amended (the “ Securities Act ”), and are deemed to constitute “restricted securities” under Rule 701 and Rule 144 promulgated under the Securities Act. I warrant and represent to the Company that I have no present intention of distributing or selling said Shares, except as permitted under the Securities Act and any applicable state securities laws.
I further acknowledge that I will not be able to resell the Shares for at least ninety (90) days after the stock of the Company becomes publicly traded ( i.e., subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934) under Rule 701 and that more restrictive conditions apply to affiliates of the Company under Rule 144.
I further acknowledge that all certificates representing any of the Shares subject to the provisions of the option will have endorsed thereon appropriate legends reflecting the foregoing limitations, as well as any legends reflecting restrictions pursuant to the Company’s Articles of Incorporation, Bylaws and/or applicable securities laws.
I further acknowledge and agree that, except for such information as required to be delivered to me by the Company pursuant to the option or the Plan (if any), I will have no right to receive any information from the Company by virtue of the grant of the option or the purchase of shares of Common Stock through exercise of the option, ownership of such shares of Common Stock, or as a result of my being a holder of record of stock of the Company. Without limiting the foregoing, to the fullest extent permitted by law, I hereby waive all inspection rights under Section 220 of the Delaware General Corporation Law and all such similar information and/or inspection rights that may be provided under the law of any jurisdiction, or any federal, state or foreign regulation, that are, or may become, applicable to the Company or the Company’s capital stock (the “ Inspection Rights ”). I hereby covenant and agree never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to be commenced any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights.
I further agree that, if required by the Company (or a representative of the underwriters) in connection with the first underwritten registration of the offering of any securities of the Company under the Securities Act, I will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to any shares of Common Stock or other securities of the Company for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act (or such longer period as the underwriters or the Company will request to facilitate compliance with FINRA Rule 2241 or any successor or similar rule or regulation) (the “ Lock-Up Period ”). I further agree to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriters that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop‑transfer instructions with respect to securities subject to the foregoing restrictions until the end of such period.
Very truly yours,
2 .
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Print Name
Address of Record:
_______________________________________
_______________________________________ |
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3 .
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Exhibit 10.24
Early Exercise Stock Purchase Agreement
This Agreement is made by and between Roku, Inc., a Delaware corporation (the “ Company ”), and _______________ (“ Purchaser ”).
Witnesseth:
Whereas, Purchaser holds a stock option dated _______________ to purchase shares of Class A Common Stock (“ Common Stock ”) of the Company (the “ Option ”) pursuant to the Company’s 2017 Equity Incentive Plan (the “ Plan ”); and
Whereas , the Option consists of a Stock Option Grant Notice and an Option Agreement; and
Whereas, Purchaser desires to exercise the Option on the terms and conditions contained herein; and
Whereas, Purchaser wishes to take advantage of the early exercise provision of Purchaser’s Option and therefore to enter into this Agreement;
Now, therefore, it is agreed between the parties as follows:
1. Incorporation of Plan and Option by Reference. This Agreement is subject to all of the terms and conditions as set forth in the Plan and the Option. If there is a conflict between the terms of this Agreement and/or the Option and the terms of the Plan, the terms of the Plan shall control. If there is a conflict between the terms of this Agreement and the terms of the Option, the terms of the Option shall control. Defined terms not explicitly defined in this Agreement but defined in the Plan shall have the same definitions as in the Plan. Defined terms not explicitly defined in this Agreement or the Plan but defined in the Option shall have the same definitions as in the Option.
2. Purchase and Sale of Common Stock.
(a) Agreement to purchase and sell Common Stock . Purchaser hereby agrees to purchase from the Company, and the Company hereby agrees to sell to Purchaser, an aggregate of ( ) shares of Common Stock at $ per share, for an aggregate purchase price of $ , payable as follows:
Cash, check, bank draft or money order payable to the Company $__________
Value of ______ shares of Common Stock $__________
Total Exercise Price $__________.
(b) Closing . The closing hereunder, including payment for and delivery of the Common Stock, shall occur at the offices of the Company immediately following the execution of this Agreement, or at such other time and place as the parties may mutually agree; provided, however, that if stockholder approval of the Plan is required before the Option may be exercised, then the Option may not be exercised, and the closing shall be delayed, until such stockholder approval is obtained. If such stockholder approval is not obtained within the time limit specified in the Plan, then this Agreement shall be null and void.
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3. Unvested Share Repurchase Option.
(a) Repurchase Option . In the event Purchaser’s Continuous Service terminates, then the Company shall have an irrevocable option (the “ Repurchase Option ”) for a period of ninety (90) days after said termination (or in the case of shares issued upon exercise of the Option after such date of termination, within ninety (90) days after the date of the exercise), or such longer period as may be agreed to by the Company and Purchaser, to repurchase from Purchaser or Purchaser’s personal representative, as the case may be, those shares that Purchaser received pursuant to the exercise of the Option that have not as yet vested as of such termination date in accordance with the Vesting Schedule indicated on Purchaser’s Stock Option Grant Notice (the “ Unvested Shares ”).
(b) Share Repurchase Price . The Company may repurchase all or any of the Unvested Shares at the lower of (i) the Fair Market Value of the such shares (as determined under the Plan) on the date of repurchase, or (ii) the price equal to Purchaser’s Exercise Price for such shares as indicated on Purchaser’s Stock Option Grant Notice.
4. Exercise of Repurchase Option . The Repurchase Option shall be exercised by written notice signed by such person as designated by the Company, and delivered or mailed as provided herein. Such notice shall identify the number of shares of Common Stock to be purchased and shall notify Purchaser of the time, place and date for settlement of such purchase, which shall be scheduled by the Company within the term of the Repurchase Option set forth above. The Company shall be entitled to pay for any shares of Common Stock purchased pursuant to its Repurchase Option at the Company’s option in cash or by offset against any indebtedness owing to the Company by Purchaser (including without limitation any Promissory Note given in payment for the Common Stock), or by a combination of both. Upon delivery of such notice and payment of the purchase price in any of the ways described above, the Company shall become the legal and beneficial owner of the Common Stock being repurchased and all rights and interest therein or related thereto, and the Company shall have the right to transfer to its own name the Common Stock being repurchased by the Company, without further action by Purchaser.
5. Capitalization Adjustments to Common Stock. In the event of a Capitalization Adjustment, then any and all new, substituted or additional securities or other property to which Purchaser is entitled by reason of Purchaser’s ownership of Common Stock shall be immediately subject to the Repurchase Option and be included in the word “Common Stock” for all purposes of the Repurchase Option with the same force and effect as the shares of the Common Stock presently subject to the Repurchase Option, but only to the extent the Common Stock is, at the time, covered by such Repurchase Option. While the total Option Price shall remain the same after each such event, the Option Price per share of Common Stock upon exercise of the Repurchase Option shall be appropriately adjusted.
6. Corporate Transactions. In the event of a Corporate Transaction, then the Repurchase Option may be assigned by the Company to the successor of the Company (or such successor’s parent company), if any, in connection with such Corporate Transaction. To the extent the Repurchase Option remains in effect following such Corporate Transaction, it shall apply to the new capital stock or other property received in exchange for the Common Stock in consummation of the Corporate Transaction, but only to the extent the Common Stock was at the time covered by such right. Appropriate adjustments shall be made to the price per share payable upon exercise of the Repurchase Option to reflect the Corporate Transaction upon the Company’s capital structure; provided, however, that the aggregate price payable upon exercise of the Repurchase Option shall remain the same.
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7. Escrow of Unvested Common Stock . As security for Purchaser’s faithful performance of the terms of this Agreement and to insure the availability for delivery of Purchaser’s Common Stock upon exercise of the Repurchase Option herein provided for, Purchaser agrees, at the closing hereunder, to deliver to and deposit with __________________ (“ Escrow Agent ”), as Escrow Agent in this transaction, three (3) stock assignments duly endorsed (with date and number of shares blank) in the form attached hereto as Exhibit A, together with a certificate or certificates evidencing all of the Common Stock subject to the Repurchase Option; said documents are to be held by the Escrow Agent and delivered by said Escrow Agent pursuant to the Joint Escrow Instructions of the Company and Purchaser set forth in Ex hibit B, attached hereto and incorporated by this reference, which instructions also shall be delivered to the Escrow Agent at the closing hereunder.
8. Rights of Purchaser . Subject to the provisions of the Option, Purchaser shall exercise all rights and privileges of a stockholder of the Company with respect to the shares deposited in escrow. Purchaser shall be deemed to be the holder of the shares for purposes of receiving any dividends that may be paid with respect to such shares and for purposes of exercising any voting rights relating to such shares, even if some or all of such shares have not yet vested and been released from the Company’s Repurchase Option.
9. Limitations on Transfer . In addition to any other limitation on transfer created by applicable securities laws, Purchaser shall not sell, assign, hypothecate, donate, encumber or otherwise dispose of any interest in the Common Stock while the Common Stock is subject to the Repurchase Option. After any Common Stock has been released from the Repurchase Option, Purchaser shall not sell, assign, hypothecate, donate, encumber or otherwise dispose of any interest in the Common Stock except in compliance with the provisions herein and applicable securities laws. Furthermore, the Common Stock shall be subject to any right of first refusal in favor of the Company or its assignees that may be contained in Purchaser’s Stock Option Agreement.
10. Restrictive Legends . All certificates representing the Common Stock shall have endorsed thereon legends in substantially the following forms (in addition to any other legend which may be required by other agreements between the parties hereto):
(a) “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN OPTION SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR SUCH HOLDER’S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS COMPANY. ANY TRANSFER OR ATTEMPTED TRANSFER OF ANY SHARES SUBJECT TO SUCH OPTION IS VOID WITHOUT THE PRIOR EXPRESS WRITTEN CONSENT OF THE COMPANY.”
(b) “THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.”
(c) “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A RIGHT OF FIRST REFUSAL OPTION IN FAVOR OF THE COMPANY AND/OR ITS ASSIGNEE(S) AS PROVIDED IN THE BYLAWS OF THE COMPANY AND IN AN AGREEMENT WITH THE COMPANY.”
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(d) “THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED PURSUANT TO THE EXERCISE OF AN INCENTIVE STOCK OPTION OR A NONSTATUTORY STOCK OPTION .
(e) “THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A TRANSFER RESTRICTION, AS PROVIDED IN THE BYLAWS OF THE COMPANY.”
(f) Any legend required by appropriate blue sky officials.
11. Investment Representations. In connection with the purchase of the Common Stock, Purchaser represents to the Company the following:
(a) Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Common Stock. Purchaser is acquiring the Common Stock for investment for Purchaser’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act.
(b) Purchaser understands that the Common Stock has not been registered under the Securities Act by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.
(c) Purchaser further acknowledges and understands that the Common Stock must be held indefinitely unless the Common Stock is subsequently registered under the Securities Act or an exemption from such registration is available. Purchaser further acknowledges and understands that the Company is under no obligation to register the Common Stock. Purchaser understands that the certificate evidencing the Common Stock will be imprinted with a legend that prohibits the transfer of the Common Stock unless the Common Stock is registered or such registration is not required in the opinion of counsel for the Company.
(d) Purchaser is familiar with the provisions of Rules 144 and 701, under the Securities Act, as in effect from time to time, which, in substance, permit limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer thereof (or from an affiliate of such issuer), in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of issuance of the securities, such issuance will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the securities exempt under Rule 701 may be sold by Purchaser ninety (90) days thereafter, subject to the satisfaction of certain of the conditions specified by Rule 144 and the market stand-off provision described in Purchaser’s Stock Option Agreement and Section 12 below.
(e) In the event that the sale of the Common Stock does not qualify under Rule 701 at the time of purchase, then the Common Stock may be resold by Purchaser in certain limited circumstances subject to the provisions of Rule 144, which requires, among other things: (i) the availability of certain public information about the Company, and (ii) the resale occurring following the required holding period under Rule 144 after Purchaser has purchased, and made full payment of (within the meaning of Rule 144), the securities to be sold.
(f) Purchaser further understands that at the time Purchaser wishes to sell the Common Stock there may be no public market upon which to make such a sale, and that, even if such a
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public market then exists, the Company may not be satisfying the current public current information requirements of Rule 144 or 701, and that, in such event, Purchaser would be precluded from selling the Common Stock under Rule 144 or 701 even if the minimum holding period requirement had been satisfied.
(g) Purchaser further warrants and represents that Purchaser has either (i) preexisting personal or business relationships, with the Company or any of its officers, directors or controlling persons, or (ii) the capacity to protect his own interests in connection with the purchase of the Common Stock by virtue of the business or financial expertise of Purchaser or of professional advisors to Purchaser who are unaffiliated with and who are not compensated by the Company or any of its affiliates, directly or indirectly. Purchaser further warrants and represents that Purchaser’s purchase the Common Stock was not accomplished by the publication of any advertisement.
12. Lock-Up Period. By exercising the Option, Purchaser agrees not to sell, dispose of, transfer, make any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with the same economic effect as a sale, any shares of Common Stock or other securities of the Company held by Purchaser, for a period of one hundred eighty (180) days following the effective date of a registration statement of the Company filed under the Securities Act or such longer period as necessary to permit compliance with FINRA Rule 2241 and similar rules or regulations (the “ Lock-Up Period ”); provided, however , that nothing shall prevent the exercise of the Repurchase Option during the Lock-Up Period. Purchaser further agrees to execute and deliver such other agreements as may be reasonably requested by the Company and/or the underwriter(s) that are consistent with the foregoing or that are necessary to give further effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to Purchaser’s shares of Common Stock until the end of such period. The underwriters of the Company’s stock are intended third party beneficiaries of this Section 12 and shall have the right, power and authority to enforce the provisions hereof as though they were a party hereto.
13. Section 83( b ) Election. Purchaser understands that Section 83(a) of the Code taxes as ordinary income the difference between the amount paid for the Common Stock and the fair market value of the Common Stock as of the date any restrictions on the Common Stock lapse. In this context, “restriction” includes the right of the Company to buy back the Common Stock pursuant to the Repurchase Option set forth above. Purchaser understands that Purchaser may elect to be taxed at the time the Common Stock is purchased, rather than when and as the Repurchase Option expires, by filing an election under Section 83(b) (an “ 83(b) Election ”) of the Code with the Internal Revenue Service within thirty (30) days of the date of purchase. Even if the fair market value of the Common Stock at the time of the execution of this Agreement equals the amount paid for the Common Stock, the 83(b) Election must be made to avoid income under Section 83(a) in the future. Purchaser understands that failure to file such an 83(b) Election in a timely manner may result in adverse tax consequences for Purchaser. Purchaser further understands that Purchaser must file an additional copy of such 83(b) Election with his or her federal income tax return for the calendar year in which the date of this Agreement falls. Purchaser acknowledges that the foregoing is only a summary of the effect of United States federal income taxation with respect to purchase of the Common Stock hereunder, and does not purport to be complete. Purchaser further acknowledges that the Company has directed Purchaser to seek independent advice regarding the applicable provisions of the Code, the income tax laws of any municipality, state or foreign country in which Purchaser may reside, and the tax consequences of Purchaser’s death. PURCHASER ACKNOWLEDGES THAT IT IS PURCHASER’s RESPONSIBILITY, AND NOT THE COMPANY’S, TO FILE A TIMELY ELECTION UNDER SECTION 83(B) of the Code. The Company and its legal counsel WILL NOT assume responsibility for failure to file the 83(b) Election in a timely manner under any circumstances. PURCHASER
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ASSUMES ALL RESPONSIBILITY FOR PAYING ALL TAXES RESULTING FROM SUCH ELECTION OR THE LAPSE OF THE RESTRICTIONS ON THE COMMON STOCK. Forms of 83(b) E lection are attached hereto as Exhibit C for reference.
14. Refusal to Transfer . The Company shall not be required (a) to transfer on its books any shares of Common Stock of the Company which shall have been transferred in violation of any of the provisions set forth in this Agreement, or (b) to treat as owner of such shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such shares shall have been so transferred.
15. No Employment Rights . This Agreement is not an employment contract and nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company or its Affiliates to terminate Purchaser’s employment for any reason at any time, with or without cause and with or without notice.
16. Miscellaneous.
(a) Notices. All notices required or permitted hereunder shall be in writing and shall be deemed effectively given: (a) upon personal delivery to the party to be notified, (b) when sent by confirmed facsimile if sent during normal business hours of the recipient, and if not during normal business hours of the recipient, then on the next business day, (c) five (5) calendar days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) business day after deposit with a nationally recognized overnight courier, specifying next day delivery, with written verification of receipt. All communications shall be sent to the other party hereto at such party’s address hereinafter set forth on the signature page hereof, or at such other address as such party may designate by ten (10) days advance written notice to the other party hereto.
(b) Successors and Assigns. This Agreement shall inure to the benefit of the successors and assigns of the Company and, subject to the restrictions on transfer herein set forth, be binding upon Purchaser, Purchaser’s successors, and assigns. The Company may assign the Repurchase Option hereunder at any time or from time to time, in whole or in part.
(c) Attorneys’ Fees; Specific Performance. Purchaser shall reimburse the Company for all costs incurred by the Company in enforcing the performance of, or protecting its rights under, any part of this Agreement, including reasonable costs of investigation and attorneys’ fees. It is the intention of the parties that the Company, upon exercise of the Repurchase Option and payment for the shares repurchased, pursuant to the terms of this Agreement, shall be entitled to receive the Common Stock, in specie, in order to have such Common Stock available for future issuance without dilution of the holdings of other stockholders. Furthermore, it is expressly agreed between the parties that money damages are inadequate to compensate the Company for the Common Stock and that the Company shall, upon proper exercise of the Repurchase Option, be entitled to specific enforcement of its rights to purchase and receive said Common Stock.
(d) Governing Law; Venue. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware. The parties agree that any action brought by either party to interpret or enforce any provision of this Agreement shall be brought in, and each party agrees to, and does hereby, submit to the jurisdiction and venue of, the appropriate state or federal court for the district encompassing the Company’s principal place of business.
(e) Further Execution. The parties agree to take all such further action(s) as may reasonably be necessary to carry out and consummate this Agreement as soon as practicable, and to take
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whatever steps may be necessary to obtain any governmental approval in connection with or otherwise qualify the issuance of the securities that are the subject of this Agreement.
(f) Independent Counsel. Purchaser acknowledges that this Agreement has been prepared on behalf of the Company by Cooley llp , counsel to the Company and that Cooley llp does not represent, and is not acting on behalf of, Purchaser. Purchaser has been provided with an opportunity to consult with Purchaser’s own counsel with respect to this Agreement.
(g) Entire Agreement; Amendment. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes and merges all prior agreements or understandings, whether written or oral. This Agreement may not be amended, modified or revoked, in whole or in part, except by an agreement in writing signed by each of the parties hereto.
(h) Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.
(i) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one instrument. This Agreement may also be executed and delivered by facsimile signature, PDF or any electronic signature complying with the U.S. federal ESIGN Act of 2000 (e.g., www.docusign.com).
T he parties hereto have executed this Agreement as of _______________.
Roku, Inc.
By
Name
Title
Purchaser
Signature
Name (Please print)
Attachments:
Exhibit A Assignment Separate from Certificate
Exhibit B Joint Escrow Instructions
Exhibit C Forms of Section 83(b) Election
7 .
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Exhibit 10.24
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
For Value Received, _______________________ hereby sells, assigns and transfers unto Roku , Inc., a Delaware corporation (the “Company”), pursuant to the Repurchase Option under that certain Early Exercise Stock Purchase Agreement, dated _______________ by and between the undersigned and the Company (the “Agreement”), _______________ (_______________) shares of Common Stock of the Company standing in the undersigned’s name on the books of the Company represented by Certificate No(s). _______________ and does hereby irrevocably constitute and appoint the Company’s Secretary attorney-in-fact to transfer said Common Stock on the books of the Company with full power of substitution in the premises. This Assignment may be used only in accordance with and subject to the terms and conditions of the Agreement, in connection with the repurchase of shares of Common Stock issued to the undersigned pursuant to the Agreement, and only to the extent that such shares remain subject to the Company’s Repurchase Option under the Agreement.
Dated: _______________
(Signature)
(Print Name)
(Instruction: Please do not fill in any blanks other than the “Signature” line and the “Print Name” line . )
148766248 v2
Exhibit 10.24
JOINT ESCROW INSTRUCTIONS
Secretary
__________________
__________________
__________________
Dear Sir or Madam:
As Escrow Agent for both Roku, Inc. , a Delaware corporation (“Company”), and the undersigned purchaser of Common Stock of the Company (“Purchaser”), you are hereby authorized and directed to hold the documents delivered to you pursuant to the terms of that certain Early Exercise Stock Purchase Agreement (“Agreement”), dated _______________ to which a copy of these Joint Escrow Instructions is attached as Exhibit B, in accordance with the following instructions:
17. In the event the Company or an assignee shall elect to exercise the Repurchase Option set forth in the Agreement, the Company or its assignee will give to Purchaser and you a written notice specifying the number of shares of Common Stock to be purchased, the purchase price, and the time for a closing hereunder at the principal office of the Company. Purchaser and the Company hereby irrevocably authorize and direct you to close the transaction contemplated by such notice in accordance with the terms of said notice.
18. At the closing you are directed (a) to date any stock assignments necessary for the transfer in question, (b) to fill in the number of shares being transferred, and (c) to deliver same, together with the certificate evidencing the shares of Common Stock to be transferred, to the Company against the simultaneous delivery to you of the purchase price (which may include suitable acknowledgment of cancellation of indebtedness) of the number of shares of Common Stock being purchased pursuant to the exercise of the Repurchase Option.
19. Purchaser irrevocably authorizes the Company to deposit with you any certificates evidencing shares of Common Stock to be held by you hereunder and any additions and substitutions to said shares as specified in the Agreement. Purchaser does hereby irrevocably constitute and appoint you as the Purchaser’s attorney-in-fact and agent for the term of this escrow to execute with respect to such securities and other property all documents of assignment and/or transfer and all stock certificates necessary or appropriate to make all securities negotiable and complete any transaction herein contemplated, including but not limited to any appropriate filing with state or government officials or bank officials. Subject to the provisions of this paragraph 3, Purchaser shall exercise all rights and privileges of a stockholder of the Company while the stock is held by you.
20. This escrow shall terminate and the shares of stock held hereunder shall be released in full upon the expiration or exercise in full of the Repurchase Option, whichever occurs first.
21. If at the time of termination of this escrow you should have in your possession any documents, securities, or other property belonging to Purchaser, you shall deliver all of same to Purchaser and shall be discharged of all further obligations hereunder; provided, however, that if at the time of termination of this escrow you are advised by the Company that the property subject to this escrow is the subject of a pledge or other security agreement, you shall deliver all such property to the pledgeholder or other person designated by the Company.
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22. Except as otherwise provided in these Joint Escrow Instructions, your duties hereunder may be altered, amended, modified or revoked only by a writing signed by all of the parties hereto.
23. You shall be obligated only for the performance of such duties as are specifically set forth herein and may rely and shall be protected in relying or refraining from acting on any instrument reasonably believed by you to be genuine and to have been signed or presented by the proper party or parties or their assignees. You shall not be personally liable for any act you may do or omit to do hereunder as Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith and any act done or omitted by you pursuant to the advice of your own attorneys shall be conclusive evidence of such good faith.
24. You are hereby expressly authorized to disregard any and all warnings given by any of the parties hereto or by any other person or corporation, excepting only orders or process of courts of law, and are hereby expressly authorized to comply with and obey orders, judgments or decrees of any court. In case you obey or comply with any such order, judgment or decree of any court, you shall not be liable to any of the parties hereto or to any other person, firm or corporation by reason of such compliance, notwithstanding any such order, judgment or decree being subsequently reversed, modified, annulled, set aside, vacated or found to have been entered without jurisdiction.
25. You shall not be liable in any respect on account of the identity, authority or rights of the parties executing or delivering or purporting to execute or deliver the Agreement or any documents or papers deposited or called for hereunder.
26. You shall not be liable for the outlawing of any rights under any statute of limitations with respect to these Joint Escrow Instructions or any documents deposited with you.
27. Your responsibilities as Escrow Agent hereunder shall terminate if you shall cease to be Secretary of the Company or if you shall resign by written notice to the Company party. In the event of any such termination, the Secretary of the Corporation shall automatically become the successor Escrow Agent unless the Company shall appoint another successor Escrow Agent, and Purchaser hereby confirms the appointment of such successor as Purchaser’s attorney-in-fact and agent to the full extent of your appointment.
28. If you reasonably require other or further instruments in connection with these Joint Escrow Instructions or obligations in respect hereto, the necessary parties hereto shall join in furnishing such instruments.
29. It is understood and agreed that should any dispute arise with respect to the delivery and/or ownership or right of possession of the securities, you are authorized and directed to retain in your possession without liability to anyone all or any part of said securities until such dispute shall have been settled either by mutual written agreement of the parties concerned or by a final order, decree or judgment of a court of competent jurisdiction after the time for appeal has expired and no appeal has been perfected, but you shall be under no duty whatsoever to institute or defend any such proceedings.
30. Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery, including delivery by express courier or five days after deposit in the United States Post Office, by registered or certified mail with postage and fees prepaid, addressed to each of the other parties hereunto entitled at the following addresses, or at such other addresses as a party may designate by ten days’ advance written notice to each of the other parties hereto:
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150 Winchester Circle
Los Gatos, CA 95032
Attn: Chief Financial Officer
Purchaser:
Escrow Agent:
31. By signing these Joint Escrow Instructions you become a party hereto only for the purpose of said Joint Escrow Instructions; you do not become a party to the Agreement.
32. You shall be entitled to employ such legal counsel and other experts (including without limitation the firm of Cooley llp) as you may deem necessary properly to advise you in connection with your obligations hereunder. You may rely upon the advice of such counsel, and may pay such counsel reasonable compensation therefor. The Company shall be responsible for all fees generated by such legal counsel in connection with your obligations hereunder.
33.
This instrument shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns. It is understood and agreed that references to “you” or “your” herein refer to the original Escrow Agent and to any and all successor Escrow Agents. It is understood and agreed that the Company may at any time or from time to time assign its rights under the Agreement and these Joint Escrow Instructions in whole or in part.
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34. This Agreement shall be governed by and interpreted and determined in accordance with the laws of the State of Delaware.
Very truly yours,
Roku, Inc.
By
Name:____________________________________
Title
Purchaser:
Signature
__________________________________________
Name (Please Print)
Escrow Agent:
4.
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Exhibit C
Section 83( b ) Election
(for Stock Acquired under Nonstatutory Stock Option)
[•], 20__
Department of the Treasury
Internal Revenue Service
[ City, State Zip ] 1
Re: |
Election Under Section 83(b) |
Ladies and Gentlemen:
The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in gross income as compensation for services the excess (if any) of the fair market value of the shares described below over the amount paid for those shares. The following information is supplied in accordance with Treasury Regulation § 1.83-2:
1. |
The name, social security number, address of the undersigned, and the taxable year for which this election is being made are: |
Name: ____________
Social Security Number: ____________
Address: ____________
____________
|
Taxable year: Calendar year 20__. |
2. |
The property that is the subject of this election: [#] shares of common stock of Roku, Inc., a Delaware corporation (the “ Company ”). |
3. The property was transferred on: [•], 20__.
4. |
The property is subject to the following restrictions: |
The shares are subject to repurchase at less than their fair market value if the undersigned does not continue to provide services for the Company for a designated period of time. The right of repurchase lapses over a specified vesting period..
5. |
The fair market value of the property at the time of transfer (determined without regard to any restriction other than a nonlapse restriction as defined in Treasury Regulation § 1.83-3(h)): $[•] per share x [#] shares = $[•]. |
6. |
For the property transferred, the undersigned paid: $[•] per share x [#] shares = $[•]. |
7. |
The amount to include in gross income is: $[•]. 2 |
|
1 |
Per Treasury Regulation § 1.83-2(c), the Section 83(b) election must be filed with the IRS office where the person otherwise files his or her tax return. See http://www.irs.gov/uac/Where-to-File-Addresses-for--Taxpayers-and--Tax-Professionals-Filing-Form-1040 . Use the address in the row which includes the state in which the service provider lives and in the column entitled “And you ARE NOT enclosing a payment”. |
2 |
This should equal the amount in Item 5 minus the amount in Item 6, and in many cases will be $0.00. |
5 .
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The undersigned taxpayer will file this election with the Internal Revenue Service office with which taxpayer files his or her annual income tax return not later than 30 days after the date of transfer of the property. A copy of the election also will be furnished to the person for whom the services were performed and the transferee of the property, if any. Additionally, the undersigned will include a copy of the election with his or her income tax return for the taxable year in which the prop erty is transferred. The undersigned is the person performing the services in connection with which the property was transferred.
Very truly yours,
___________________________ [ Name ]
6 .
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(for Stock Acquired under Incentive Stock Option)
[•], 20__
Department of the Treasury
Internal Revenue Service
[ City, State Zip ] 1
Re: |
Election Under Section 83(b) |
Ladies and Gentlemen:
The undersigned taxpayer hereby elects, pursuant to the provisions of Sections 55-56 and 83(b) of the Internal Revenue Code of 1986, as amended (the “ Code ”), to include in alternative minimum taxable income for the undersigned’s current taxable year, as compensation for services, the excess, if any, of the fair market value of the property described below at the time of transfer over the amount paid for such property. The undersigned also elects pursuant to Section 83(b) of the Code to include in gross income for the taxable year in which the undersigned disposes of some or all of the property described below in a transaction which fails to satisfy the requirements of Section 422(a)(1) of the Code (a “ disqualifying disposition ”), as compensation for services, the lesser of (i) the excess, if any, of the fair market value of the disposed property at the time of transfer to the undersigned over the amount paid for such property; or (ii) the excess, if any of the amount realized by the undersigned in the disqualifying disposition over the amount paid for such property at the time of its transfer to the undersigned.
The following information is supplied in accordance with Treasury Regulation § 1.83-2:
1. |
The name, social security number, address of the undersigned, and the taxable year for which this election is being made are: |
Name: ____________
Social Security Number: ____________
Address: ____________
____________
|
Taxable year: Calendar year 20__. |
2. |
The property that is the subject of this election: [#] shares of common stock of Roku, Inc, a Delaware corporation (the “ Company ”). |
3. The property was transferred on: [•], 20__.
4. The property is subject to the following restrictions:
|
1 |
Per Treasury Regulation § 1.83-2(c), the Section 83(b) election must be filed with the IRS office where the person otherwise files his or her tax return. See http://www.irs.gov/uac/Where-to-File-Addresses-for--Taxpayers-and--Tax-Professionals-Filing-Form-1040 . Use the address in the row which includes the state in which the service provider lives and in the column entitled “And you ARE NOT enclosing a payment”. |
Exhibit 10.24
The shares are subject to repurchase at less than their fair market value if the undersigned does not continue to provide services for the Company for a designated period of time. The risk of repurchase lapses over a specified vesting period.
5. |
The fair market value of the property at the time of transfer (determined without regard to any restriction other than a nonlapse restriction as defined in Treasury Regulation § 1.83-3(h)): $[•] per share x [#] shares = $[•]. |
6. |
For the property transferred, the undersigned paid: $[•] per share x [#] shares = $[•]. |
7. |
The amount to include in gross income is: $[•]. 1 |
The undersigned taxpayer will file this election with the Internal Revenue Service office with which taxpayer files his or her annual income tax return not later than 30 days after the date of transfer of the property. A copy of the election also will be furnished to the person for whom the services were performed and the transferee of the property, if any. Additionally, the undersigned will include a copy of the election with his or her income tax return for the taxable year in which the property is transferred. The undersigned is the person performing the services in connection with which the property was transferred.
Very truly yours,
[ Name ]
|
1 |
This should equal the amount in Item 5 minus the amount in Item 6, and in many cases will be $0.00. |
2.
Exhibit 10.24
Instructions for Filing Section 83( b ) Election
Attached is a form of election under Section 83(b) of the Internal Revenue Code and an accompanying IRS cover letter. Please fill in your social security number and sign the election and cover letter, then proceed as follows:
(a) |
Make four copies of the completed election form and one copy of the IRS cover letter. |
(b) |
Send the original election form and cover letter, the copy of the cover letter, and a self-addressed stamped return envelope to the Internal Revenue Service Center where you would otherwise file your tax return. Even if an address for an Internal Revenue Service Center is already included in the forms below, it is your obligation to verify such address. This can be done by searching for the term “where to file” on www.irs.gov or by calling 1 (800) 829-1040. Sending the election via certified mail, requesting a return receipt, is also recommended. |
(c) Deliver one copy of the completed election form to ROKU, Inc .
(d) |
Attach one copy of the completed election form to your state personal income tax return when you file it for the year of exercise (assuming you file a state income tax return), if required by state law. |
(f) Retain one copy of the completed election form for your personal pe rmanent records.
Note: An additional copy of the completed election form must be delivered to the transferee (recipient) of the property if the service provider and the transferee are not the same person.
Please note that the election must be filed with the IRS within 30 days of the date of your stock option early exercise. Failure to file within that time will render the election void and you may recognize ordinary taxable income as your vesting restrictions lapse. Roku, Inc. and its counsel cannot assume responsibility for failure to file the election in a timely manner under any circumstances.
3.
Exhibit 10.24
[•], 20__
RETURN SERVICE REQUESTED
Department of the Treasury
Internal Revenue Service
[ City, State Zip ]
Re: |
Election Under Section 83(b) of the Internal Revenue Code |
|
Dear Sir or Madam:
Enclosed please find an executed form of election under Section 83(b) of the Internal Revenue Code of 1986, as amended, filed with respect to an interest in Roku, Inc.
Also enclosed is a copy of this letter and a stamped, self-addressed envelope. Please acknowledge receipt of these materials by marking the copy when received and returning it to the undersigned.
Thank you very much for your assistance.
Very truly yours,
_________________________
[ Name ]
Enclosures
4 .
Exhibit 10.25
THIRD A mendment
to
AMENDED AND RESTATED Loan and security agreement
This Third Amendment to Amended and Restated Loan and Security Agreement (this “Amendment”) is entered into this 18 th day of July, 2018, by and between Silicon Valley Bank , a California corporation (“Bank”) and ROKU, INC., a Delaware corporation (“Borrower”).
Recitals
A. Bank and Borrower have entered into that certain Amended and Restated Loan and Security Agreement dated as of November 18, 2014, as amended by that certain First Amendment to Amended and Restated Loan and Security Agreement dated as of May 14, 2015, and as further amended by that certain Second Amendment to Amended and Restated Loan and Security Agreement dated as of June 9, 2017 (as the same has been or may from time to time be further amended, modified, supplemented or restated, the “Loan Agreement”).
B. Bank has extended credit to Borrower for the purposes permitted in the Loan Agreement.
C. Bo rrower has requested that Bank amend the Loan Agreement to make certain revisions thereto as more fully set forth herein.
D. Bank has agreed to so amend certain provisions of the Loan Agreement, but only to the extent, in accordance with the terms, subject to the conditions and in reliance upon the representations and warranties set forth below.
Agreement
Now, Therefore, in consideration of the foregoing recitals and other good and valuable consideration, the receipt and adequacy of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:
1. Definitions. Capitalized terms used but not defined in this Amendment shall have the meanings given to them in the Loan Agreement.
2. Amendments to Loan Agreement.
2.1 Section 13 ( Definitions ). The following terms and their respective definitions set forth in Section 13.1 are deleted in their entirety and replaced with the following:
“ “ Credit Facility Sublimit Amount ” is an aggregate amount not to exceed Thirty Million Dollars ($30,000,000) at any time outstanding.”
“ “ Current Liabilities ” are all obligations and liabilities of Borrower to Bank (including reimbursement obligations for issued and undrawn letters of credit),
plus, without duplication, the aggregate amount of Borrow er’s Total Liabilities that mature within one (1) year.”
“ “ Current Ratio ” is a ratio of (a) the sum of (i) Current Assets and (ii) SAM Investments to (b) Current Liabilities, minus Deferred Revenue.”
“ “ Quick Assets ” is, on any date, Borrower’s unrestricted cash maintained with Bank or Bank’s Affiliates (including, without limitation, SAM Investments), plus net billed accounts receivable.”
2.2 Section 13 ( Definitions ). The following new term and its definition are inserted to appear alphabetically in Section 13.1:
“ “ SAM Investments ” means the aggregate value of all securities, financial assets, other investment property and other amounts maintained by Borrower in Account No. *****638 with and/or through U.S. Bank, N.A. that is subject to a Securities Account Control Agreement among Borrower, Bank, SVB Asset Management and U.S. Bank, N.A.”
2.3 Exhibit B (Compliance Certificate) . The Compliance Certificate appearing as Exhibit B to the Loan Agreement is deleted in its entirety and replaced with the Compliance Certificate attached as Schedule 1 hereto. From and after the date hereof, all references in the Loan Agreement to the Compliance Certificate shall be deemed to refer to Schedule 1 attached hereto.
3. |
Limitation of Amendments. |
3.1 The amendments set forth in Section 2, above, are effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Bank may now have or may have in the future under or in connection with any Loan Document.
3.2 This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, representations, warranties, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.
4. Representations and Warranties. To induce Bank to enter into this Amendment, Borrower hereby represents and warrants to Bank as follows:
4.1 Immediately after giving effect to this Amendment (a) the representations and warranties contained in the Loan Documents are true, accurate and complete in all material respects as of the date hereof (except to the extent such representations and warranties relate to an earlier date, in which case they are true and correct as of such date), and (b) no Event of Default has occurred and is continuing;
2
4.2 Borrower has the power and authority to execute and deliver this Amendment and to perform its obligations under the Loan Agreement, as amended by this Amendment;
4.3 The organizational documents of Borrower delivered to Bank on the Second Amendment Effective Date remain true, accurate and complete and have not been amended, supplemented or restated and are and continue to be in full force and effect;
4.4 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly authorized;
4.5 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not and will not contravene (a) any law or regulation binding on or affecting Borrower, (b) any contractual restriction with a Person binding on Borrower, (c) any order, judgment or decree of any court or other governmental or public body or authority, or subdivision thereof, binding on Borrower, or (d) the organizational documents of Borrower;
4.6 The execution and delivery by Borrower of this Amendment and the performance by Borrower of its obligations under the Loan Agreement, as amended by this Amendment, do not require any order, consent, approval, license, authorization or validation of, or filing, recording or registration with, or exemption by any governmental or public body or authority, or subdivision thereof, binding on Borrower, except as already has been obtained or made; and
4.7 This Amendment has been duly executed and delivered by Borrower and is the binding obligation of Borrower, enforceable against Borrower in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar laws of general application and equitable principles relating to or affecting creditors’ rights.
5. Ratification of Amended and Restated Intellectual Property Security Agreement . Borrower hereby ratifies, confirms and reaffirms, all and singular, the terms and conditions of a certain Amended and Restated Intellectual Property Security Agreement dated as of June 9, 2017 between Borrower and Bank, and acknowledges, confirms and agrees that said Amended and Restated Intellectual Property Security Agreement shall remain in full force and effect.
6. Integration . This Amendment and the Loan Documents represent the entire agreement about this subject matter and supersede prior negotiations or agreements. All prior agreements, understandings, representations, warranties, and negotiations between the parties about the subject matter of this Amendment and the Loan Documents merge into this Amendment and the Loan Documents.
7. Counterparts. This Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument.
3
8. Effectiveness . This Amendment shall be deemed effective upon (a) the due execution and delivery to Bank of this Amendment by each party hereto, and (b) Borrower’s payment to Bank of Bank’s legal fees and expenses incurred in connection with this Amendment.
[Signature page follows.]
4
In Witness Whereof, the parties hereto have caused this Amendment to be duly executed and delivered as of the date first written above.
BANK |
BORROWER |
SILICON VALLEY BANK
By: /s/ Kyle Larrabee Name: Kyle Larrabee Title: Vice President _____________ |
ROKU, INC.
By: /s/ Peter Nichter Name: Peter Nichter Title: VP Finance |
|
|
5
EXHIBIT B
Compliance Certificate
TO: |
SILICON VALLEY BANKDate: ____________ |
FROM: |
ROKU, INC. |
The undersigned authorized officer of ROKU, INC. (“ Borrower ”) certifies that under the terms and conditions of (a) the Amended and Restated Loan and Security Agreement between Borrower and Bank dated as of November 18, 2014 (as amended and as may be further amended, supplemented, replaced, restated, amended and restated or otherwise modified from time to time, the “Senior Agreement”), and (b) the Subordinated Loan and Security Agreement between Borrower, Bank and the other lenders party thereto dated as of June 9, 2017 (as may be amended, supplemented, replaced, restated, amended and restated or otherwise modified from time to time, the “Subordinated Loan Agreement”) (the Senior Loan Agreement and the Subordinated Loan Agreement are, collectively, the “Agreement”):
(1) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below; (2) there are no Events of Default except as noted below; (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date; (4) Borrower, and each of its Subsidiaries, have timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Senior Agreement and Section 5.8 of the Subordinated Loan Agreement; and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank.
Attached are the required documents supporting the certification. The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.
6
Required |
Actual |
Complies |
|
|
|
|
|
Maintain on a Monthly Basis: |
|
|
|
Current Ratio of at least |
1.25:1.00 |
_____:1.00 |
Yes No |
Performance Pricing |
Applies |
|
|
|
|
Streamline Eligible |
(a) Prime or (b) LIBOR plus 2.75% |
Yes No |
Not Streamline Eligible |
Prime + 1.0% |
Yes No |
Streamline Eligible |
Required |
Actual |
Complies |
|
|
|
|
Adjusted Quick Ratio greater than |
1.00 to 1.00 |
____:1.00 |
Yes No |
The following financial covenant and streamline eligibility analysis and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.
Other Matters
Have there been any amendments of or other changes to the capitalization table of Borrower and to the Operating Documents of Borrower or any of its Subsidiaries? If yes, provide copies of any such amendments or changes with this Compliance Certificate. |
Yes |
No |
The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
ROKU, INC.
By: ___________________________ Name: Title:
|
BANK USE ONLY
Received by: _____________________ authorized signer Date: _________________________
Verified: ________________________ authorized signer Date: _________________________ Compliance Status:Yes No |
7
Schedule 1 to Compliance Certificate
Financial Covenants of Borrower/Streamline Eligibility
In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.
Dated: ____________________
I. Current Ratio (Section 6.9(a))
Required: (i) Commencing with the month ending March 31, 2015, and continuing for each month thereafter, through and including the month ending May 31, 2017, at least 1.10 to 1.00, and (ii) commencing with the month ending June 30, 2017, and continuing for each month thereafter, at least 1.25 to 1.00
Actual:
A. |
Aggregate value of Borrower’s current assets and SAM Investments |
$_______
|
B. |
Aggregate value of all obligations and liabilities of Borrower to Bank (including reimbursement obligations for issued and undrawn letters of credit) |
$_______ |
C. |
Aggregate value of obligations that should, under GAAP, be classified as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness (other than Subordinated Debt), and not otherwise reflected in line B above that matures within one (1) year |
$_______ |
D. |
Deferred Revenue |
$_______ |
E. |
Current Liabilities (the sum of lines B and C minus line D) |
$_______ |
F. |
Current Ratio (line A divided by line E) |
|
Is line F equal to or greater than 1.25:1.00?
______ No, not in compliance ______ Yes, in compliance
II. Adjusted Quick Ratio (Streamline Eligible)
Required: Greater than 1.00 to 1.00.
Actual:
A. |
Aggregate value of Borrower’s unrestricted cash maintained with Bank or Bank’s Affiliates (including SAM Investments) |
$_______
|
B. |
Aggregate value of Borrower’s net billed accounts receivable |
$_______ |
C. |
Quick Assets (the sum of lines A and B) |
$_______ |
D. |
Aggregate value of all obligations and liabilities of Borrower to Bank (including reimbursement obligations for issued and undrawn letters of credit) |
$_______ |
E. |
Aggregate value of obligations that should, under GAAP, be classified as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness (other than Subordinated Debt), and not otherwise reflected in line D above that matures within one (1) year |
$_______ |
F. |
Aggregate value of all outstanding Obligations under the Revolving Line and not otherwise reflected in line D or E above |
|
G. |
Current Liabilities (the sum of lines (D and E), plus F) |
$_______ |
H. |
Deferred Revenue |
$_______ |
8
Is line I greater than 1.00 to 1.00?
______ No, not Streamline Eligible ______ Yes, Streamline Eligible
9
Exhibit 10.26
COLEMAN HIGHLINE
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 CAP PHASE 1, LLC, a Delaware limited liability company (" Landlord "), and ROKU, INC., a Delaware corporation (" Tenant ").
SUMMARY OF BASIC LEASE INFORMATION
TERMS OF LEASE |
DESCRIPTION |
||
1. |
Date: |
August 1, 2018 |
|
2. |
Premises ( Article 1 ). |
|
|
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2.1 |
Building: |
That certain five (5)-story building located at 1155 Coleman Avenue, San Jose, California 95110, consisting of 186,620 rentable square feet (" RSF "), commonly known as Building Two. |
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2.2 |
Premises: |
91,368 RSF located on the first (1 st ), second (2 nd ) and third (3 rd ) floors of the Building, as further set forth in Exhibit A to this Lease. |
3. |
Lease Term ( Article 2 ). |
|
|
|
3.1 |
Length of Term: |
Approximately one hundred forty (140) full calendar months from the "Lease Commencement Date" (defined below). |
|
3.2 |
Lease Commencement Date: |
The date that is the earlier to occur of (i) the date upon which Tenant first commences to conduct business operations in the Premises and (ii) the date of the Substantial Completion of the Tenant Improvements (as that term is defined in Section 5.1 of Exhibit B attached to this Lease) with respect to floors 1 and 2, which is anticipated to be January 23, 2019. Notwithstanding the foregoing, Tenant has no obligation to pay Base Rent or Tenant's Share of Direct Expenses with respect to floor 3 of Building 2 until the date of the Substantial Completion of the Tenant Improvements with respect to floor 3, which date is anticipated to be April 23, 2019. |
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3.3 |
Lease Expiration Date: |
The last day of the one hundred fortieth (140 th ) full calendar month of the Lease Term. |
4. |
Base Rent ( Article 3 ): |
|
788288.01/WLA 375755-00007/8-9-18//ejw |
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
5. |
Tenant's Share ( Article 4 ): |
48.9594% |
6. |
Permitted Use ( Article 5 ):
|
General office, research and development uses, and ancillary uses thereto, all of which uses shall comply with (i) all "Applicable Laws," as that term is set forth in Article 24 of this Lease, including "Environmental Laws" and "Environmental Permits" (each as defined in Exhibit G ), (ii) all applicable zoning and building codes and (iii) the first-class nature of the Project. |
7. |
Letter of Credit ( Article 21 ): |
$2,960,323.00, subject to reduction as set forth in Article 21 below. |
8. |
Parking Pass Ratio ( Article 28 ): |
3.3 unreserved parking passes for every 1,000 RSF of the Premises, subject to Article 28 below, commencing on the Lease Commencement Date. |
9. |
Address of Tenant ( Section 29.18 ): |
ROKU, Inc.
With a copy to: ROKU, Inc. 150 Winchester Circle Los Gatos, California 95032 Attn: General Counsel |
10. |
Address of Landlord ( Section 29.18 ): |
See Section 29.18 of the Lease. |
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|
|
11. |
Broker(s) ( Section 29.24 ):
|
|
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Representing Tenant: Newmark Cornish & Carey 2804 Mission College Blvd., Suite 120 Santa Clara, California 95054 |
Representing Landlord: CBRE, Inc. 225 West Santa Clara Street, 12 th Floor San Jose, California 95113 |
13. |
Tenant Improvement Allowance ( Exhibit B ): |
$7,537,860.00 (i.e., $82.50 per rentable square foot of the Premises). |
788288.01/WLA 375755-00007/8-9-18//ejw |
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
ARTICLE 1
PREMISES, BUILDING, PROJECT, AND COMMON AREAS
1.1 Premises, Building, Project and Common Areas .
1.1.1 The Premises . 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. Landlord and Tenant hereby acknowledge and agree that the RSF of the Premises is stipulated as set forth in Section 2.2 of the Summary, and that such RSF shall not be subject to remeasurement or modification. The parties hereto agree that the lease of the Premises is upon and subject to the terms, covenants and conditions herein set forth, and the parties each covenants as a material part of the consideration for this Lease to keep and perform each and all of such terms, covenants and conditions by it to be kept and performed and that this Lease is made upon the condition of such performance. 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 or in the Tenant Work Letter attached hereto as Exhibit B (the " Tenant Work Letter "), Landlord shall not be obligated to provide or pay for any improvement work or services related to the improvement of the Premises. Tenant also acknowledges that 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 Tenant Work Letter. Notwithstanding the foregoing, upon the Lease Commencement Date and any applicable First Offer Commencement Date, the Building Systems, as that term is defined in Section 7.1 of this Lease, shall be in good working condition and repair, and Landlord hereby covenants that the Building Systems shall remain in good working condition for a period of twelve (12) months following the Lease Commencement Date and any applicable First Offer Commencement Date pursuant to the terms and conditions of this Section 1.1.1 . Landlord shall, at Landlord's sole cost and expense (which shall not be deemed an Operating Expense, as that term is defined in Section 4.2.4 ), repair or replace any failed or inoperable portion of such Building Systems during such twelve (12) month period (" Landlord's Warranty "), provided that the need to repair or replace was not caused by the misuse, misconduct, damage, destruction, and/or negligence (collectively, " Tenant Damage ") of Tenant, its subtenants and/or assignees, if any, or any company which it acquired, sold or merged with Tenant, or any Tenant Parties, as that term is defined in Section 10.1 below, or by any modifications, Alterations, as that term is defined in Section 8.1 below, or improvements (including the Tenant Improvements, as that term is defined in Section 2.1 of the Tenant Work Letter) constructed by or on behalf of Tenant. Landlord's Warranty shall not be deemed to require Landlord to replace any portion of the Building Systems, as opposed to repair such portion of Building Systems, unless prudent commercial property management practices dictate replacement rather than repair of the item in question. To the extent repairs which Landlord is required to make pursuant to this Section 1.1.1 are necessitated in part by Tenant Damage, then Tenant shall reimburse Landlord for an equitable proportion of the cost of such repair. If it is determined that the Building Systems (or any portion thereof) was not in good working condition and repair as of the Lease Commencement Date, Landlord shall not be liable to Tenant for any damages, but as Tenant's sole remedy, Landlord, at no cost to Tenant, shall promptly commence such work or take such other action as may be necessary to place the same in good working condition and repair, and shall thereafter diligently pursue the same to completion.
1.1.2 The Building and The Project . The Premises is part of the building set forth in Section 2.1 of the Summary (the " Building "). The Building is part of a mixed-use project known as "Coleman Highline." The term " Project ," as used in this Lease, shall mean (i) the Building, (ii) the Common Areas, (iii) the building within the Project known as Building One depicted on the site plan attached hereto as Exhibit A-1 and located at 1143 Coleman Avenue, (iv) once constructed, up to six (6) other office buildings (commonly known as Buildings Three through Eight), up to two (2) hotels, up to five (5) amenities structures, and up to two (2) retail buildings, all as depicted on the site plan attached hereto as Exhibit A-1 , (v) the land (which is improved with landscaping, parking facilities, outdoor amenities areas and other improvements) upon which the Building and the adjacent buildings are located, and (vi) at Landlord's discretion, any additional real property, areas, land, buildings or other improvements added thereto outside of the Project; provided that any such additions to the Project will not violate clauses (a) through (e) of Section 1.1.3 below without the prior written consent of Tenant, which may be given or withheld in Tenant’s reasonable discretion.
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 manner in which the Common Areas are maintained and operated shall be at the reasonable discretion of Landlord, provided that Landlord shall at all times (1) maintain and operate the Common Areas in a first‑class manner at least consistent with "Comparable Buildings," as that term is defined in Section 4 of Exhibit F to this Lease; and (2) designate and operate the Common Areas in a manner that does not violate clauses (a) through (f) of the immediately following sentence. Landlord reserves the right to close temporarily, make alterations or additions to, or change the location of elements of the Project (other than the Premises) and the Common Areas, provided that Landlord shall not, without the prior written consent of Tenant, which may be given or withheld in Tenant’s reasonable discretion, make any permanent alterations, additions or changes which (a) change the nature of the Project to something other than a first class office building project, (b) materially, adversely affect Tenant's use of the Premises for the Permitted Use or materially interfere with Tenant’s business operations being conducted at the Premises, (c) materially adversely affect Tenant's ingress to or egress from the Project, Building, the Premises or the parking areas servicing the same, (d) materially impair the visibility of Tenant's signage rights as provided under this Lease, and/or (e) materially increase Tenant's
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
monetary obligations under this Lease. Except when and where Tenant' s right of access is specifically excluded as the result of (i) an emergency, (ii) a requirement by Applicable L aw or the Underlying Documents (as that term is defined in Section 5.5 below) , or (iii) a specific provision set forth in this Lease, Tenant shall have the right of ingress and egress to the Premises , the Common Areas and Tenant's Parking Areas (as that term is defined in Article 28 below) twenty- four (24) hours per day, seven (7) days per week, every day of the year during the Lease Term.
1.1.4 Amenities Building . The Project shall include construction of an amenities building (" Amenities Building ") located at 1149 Coleman Avenue, San Jose, California. Landlord shall operate the Amenities Building for use by the tenants and occupants of the buildings commonly known as Buildings One through Four in the Project, and such use may include all or any of the following uses: a fitness center or health club (the " Shared Fitness Center "), conference facilities, cafeteria, or any other use consistent with the practices of landlords of Comparable Buildings. The Amenities Building shall, at all times, include a Shared Fitness Center that is accessible and operational no less than six (6) days a week, subject to temporary closures for repairs and maintenance, and closures due to an event of casualty, Force Majeure, or emergency, and subject to Tenant's compliance with Landlord's access rules and procedures. Tenant acknowledges and agrees that the Shared Fitness Center need not be fully staffed at all times. Tenant shall have the non-exclusive right during the Lease Term to use the Amenities Building for the uses made available by Landlord. Landlord reserves the right to control the manner in which the Amenities Building is maintained and operated, and to make alterations or additions to, or to relocate (but not entirely eliminate) the Amenities Building; provided that Landlord shall continue to operate and maintain the Amenities Building consistent with the practices of landlords of Comparable Buildings and any such alterations, additions or relocations shall not materially adversely affect Tenant’s use of or access to the Amenities Building; provided further that, subject to Landlord's continued obligation to operate the Shared Fitness Center, Tenant shall have the right to consult with Landlord on the services offered at the Amenities Building, and Landlord shall implement any reasonable recommendations of Tenant . Tenant shall comply with such reasonable rules, regulations and requirements relating to the Amenities Building as Landlord may from time to time promulgate in writing (including the requirement, if applicable, that Tenant's employees using any services provided at the Amenities Building execute Landlord's standard waiver form) and provided by written notice to Tenant. Tenant acknowledges and agrees that Landlord shall have the right to include in Operating Expenses costs incurred in connection with the Amenities Building.
1.1.5 Other Project Leases . Concurrently with the parties’ mutual execution and delivery of this Lease, and as a condition precedent to the effectiveness of this Lease, an affiliate of Landlord, CAP OZ 34, LLC, a Delaware limited liability company and Tenant are executing and delivering a separate lease (as amended, supplemented or modified, the " Building 3, 4 and A2 Lease ") for additional space within the Project consisting of that certain six (6)-story building to be located at 1173 Coleman Avenue, San Jose, California 95110, commonly known as Building Three (" Building 3 ") (ii) that certain five (5)-story building to be located at 1167 Coleman Avenue, San Jose, California 95110, commonly known as Building Four (" Building 4 ") and (iv) that certain three (3)-story amenities building to be located at 1161 Coleman Avenue, San Jose, California 95110, commonly known as the A2 Amenity Building (" Building A2 "), all of which are more particularly shown on the site plan attached hereto as Exhibit A-1 . Landlord further acknowledges that Tenant intends to utilize the Premises, Building 3, Building 4, Building A2 and, if applicable, Building 5, as a unified corporate campus, and accordingly, the parties agree that each of the occupants of such buildings, or portion(s) thereof, shall have the same right during the Lease Term to use the amenities (including the Amenities Building) and the Common Areas as are granted to the occupants of the Premises under this Lease. Accordingly, Landlord hereby agrees that if the Building 3, 4 and A2 Lease terminates as a result of a casualty or condemnation event pursuant to Articles 11 and 13, respectively, of the Building 3,4 and A2 Lease that affects Building 3, Building 4 and Building A2, but does not also give rise to a right for Tenant to terminate this Lease pursuant to Article 11 or Article 13 hereof, then Tenant shall have the right to terminate this Lease by delivering notice to Landlord either within five (5) business days following Tenant's receipt of the "Landlord's" termination notice to Tenant under the Building 3, 4 and A2 Lease or concurrently with Tenant's delivery to such "Landlord" of notice terminating the Building 3, 4 and A2 Lease. In addition, Landlord hereby agrees that if Tenant elects to terminate the Building 3, 4 and A2 Lease pursuant to a termination right provided in Section 5 of the Tenant Work Letter attached as Exhibit B to the Building 3, 4 and A2 Lease, then Tenant shall have the right, concurrently with delivery of the notice of termination to the "Landlord" under the Building 3, 4 and A2 Lease, to also terminate this Lease by delivery of written notice to Landlord. As of the date of Tenant's termination of this Lease pursuant to this Section 1.1.5 , if at all, Landlord and Tenant shall be released from any and all liability, and rights and obligations to each other resulting under this Lease, except for any rights and obligations which expressly survive the expiration or earlier termination of this Lease.
1.2 Right of First Offer . During the first forty-eight (48) months of the Lease Term, Landlord hereby grants to the original Tenant set forth in this Lease (the " Original Tenant ") and any Permitted Transferee Assignee, an ongoing right of first offer (the " Right of First Offer ") with respect to office space in Building 1 and Building 2, excluding the Premises (the " First Offer Space "), on the terms and conditions set forth in this Section 1.2 ; provided that, with respect to office space in Building 2 only, such Right of First Offer shall be subject to Landlord's initial leasing of such First Offer Space after the date of this Lease. Notwithstanding the foregoing, and subject to the terms and conditions of Section 1.2.6 below, such Right of First Offer shall (i) with respect to Building 1, be subordinate to any leases entered into by Landlord for the First Offer Space prior to the date of this Lease, (ii) with respect to Building 2, be subordinate to the initial lease(s) entered into by Landlord for the First Offer Space, (iii) be subordinate to all expansion rights set forth in any lease entered into by Landlord prior to the date of this Lease, and (iv) be subordinate to any lease (an " Intervening Lease ") entered into by Landlord following Tenant's failure to timely exercise its right to lease the First Offer Space and all expansion rights set forth in any Intervening Lease (collectively, the " Superior Leases ", and the tenants under such Superior Leases are " Superior Right Holders ") (including, in each instance, renewals and expansions of any such Superior Leases, pursuant to rights in effect as of the date of this Lease regardless of whether such rights are exercised strictly in accordance with their terms). The only Superior Right Holder, as of the date of this Lease, is 8x8, Inc.
1.2.1 Procedure for Offer . From time to time, prior to leasing the First Offer Space to a third party (other than to a Superior Right Holder), Landlord shall deliver written notice to Tenant (the " First Offer Notice ") describing First Offer Space (or portion thereof) that is then available and pursuant to such First Offer Notice, Landlord shall offer to lease to Tenant the First Offer Space described in the First Offer Notice. The First Offer Notice shall describe the space so offered to Tenant and shall set forth the Base Rent and the other "Economic
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Terms" (as that term is defined herein below) upon which Landlord is willing to lease such space to Tenant. As used in this Section 1. 2 , " Economic Terms " shall refer to: (i) the rental rate (including additional rent and considering any "base year" or "expense stop" applicable thereto); (ii) the amount of any improvement allowance or the value of any work to be performed by Landlord in connection with the lease of such First Offer Space (which amount is a deduction from the cost to Tenant or such other party); and (iii) the amount of free rent (which amount is a deduction from the cost to Tenant or such other party).
1.2.2 Procedure for Acceptance . If Tenant wishes to exercise Tenant's Right of First Offer with respect to the space described in the First Offer Notice, then within ten (10) business days of delivery of the First Offer Notice to Tenant, Tenant shall have the right to deliver notice to Landlord (" Tenant's First Offer Exercise Notice ") of Tenant's election to exercise its right of first offer with respect to the entire space described in the First Offer Notice on the terms contained in such notice. If Tenant does not deliver Tenant's First Offer Exercise Notice within the ten (10) business day period, then Landlord shall be free to enter into a lease (" Third Party Lease ") for the space described in the First Offer Notice to anyone to whom Landlord desires on any terms Landlord desires; provided, however, during the 180-day period following the initial delivery of the First Offer Notice to Tenant, if the Economic Terms that Landlord is prepared to accept under a Third Party Lease are greater than ten percent (10%) more favorable to the tenant than the Economic Terms offered by Landlord to Tenant (as determined using a "Net Equivalent Lease Rate", as defined in Exhibit F attached hereto), then Landlord shall first make an offer of such more favorable Economic Terms (as such Economic Terms are determined using a Net Equivalent Lease Rate and adjusted to account for the difference, if any, in the lease term offered to Tenant and the lease term offered to such third party) (the " New Offer Terms ") to Tenant by written notice (the " Additional Notice ") setting forth the New Offer Terms, and Tenant shall have five (5) business days from Tenant's receipt of the Additional Notice to accept the New Offer Terms set forth in the Additional Notice (which procedure shall be repeated until Landlord enters into a lease or lease amendment with respect to such First Offer Space which does not require Landlord to deliver another Additional Notice to Tenant pursuant to the terms of this paragraph or Tenant exercises such Right of First Offer, as applicable). If Landlord does not lease the First Offer Space within the foregoing one hundred eighty (180) day period, then Landlord shall also provide Tenant with an Additional Notice prior to entering into a Third Party Lease.
1.2.3 First Offer Term . Tenant shall commence payment of Rent for the First Offer Space, and the term of the First Offer Space (the " First Offer Term ") shall commence upon the date set forth in the First Offer Notice (the " First Offer Commencement Date ") and shall terminate on the Lease Expiration Date.
1.2.4 Construction in First Offer Space . Tenant shall accept delivery of the First Offer Space in its then "as is" condition, and Tenant's construction of improvements in the First Offer Space shall comply with the terms of Article 8 of the First Offer Lease (defined below). Any improvement allowance to which Tenant may be entitled shall be as set forth in the First Offer Notice.
1.2.5 Amendment to Lease . If Tenant timely exercises its Right of First Offer as set forth herein, then Landlord and Tenant shall, within thirty (30) days thereafter, execute an amendment to this Lease for such First Offer Space upon the terms and conditions as set forth in the First Offer Notice and this Section 1.2 , but with appropriate adjustments, if applicable, to reflect the single-tenant nature of the Building. Notwithstanding the foregoing, the failure of Landlord and Tenant to execute and deliver such First Offer Space amendment shall not affect an otherwise valid exercise of Tenant's first offer rights or the parties' rights and responsibilities in respect thereof.
1.2.6 Termination of Right of First Offer . The Right of First Offer shall be personal to the Original Tenant and any Permitted Transferee Assignee, and may only be exercised by the Original Tenant or such Permitted Transferee Assignee (and not any other assignee, sublessee or other transferee of Tenant's interest in this Lease) if the Original Tenant or any Permitted Transferee Assignee occupies the entire Premises. The Right of First Offer granted herein shall not terminate as to particular First Offer Space upon the failure by Tenant to exercise its Right of First Offer with respect to such First Offer Space as offered by Landlord and Landlord shall re-offer such space to Tenant upon the expiration or earlier termination of any Intervening Lease. Tenant shall not have the right to lease First Offer Space, as provided in this Section 1.2 , if, as of the date of the attempted exercise of any Right of First Offer by Tenant, or, at Landlord's option, as of the scheduled date of delivery of such First Offer Space to Tenant, (i) Tenant is in monetary or material non-monetary default under this Lease (beyond the applicable notice and cure periods) more than once during the preceding twelve (12) month period, (ii) Tenant has made a Transfer (as defined in Section 14.1 below) of more than twenty-five percent (25%), in the aggregate, of the Premises other than to a Permitted Transferee (as that term is defined in Section 14.8 below), and/or (iii) Tenant (or its Permitted Transferee, as the case may be) has vacated more than twenty-five percent (25%), in the aggregate, of the Premises for more than thirty (30) consecutive days, other than as a result of Alterations performed pursuant to Article 8 below or relating to a Casualty pursuant to Article 11 below.
Rentable Square Feet of Premises . For purposes of this Lease, "rentable square feet" of the Premises shall be calculated pursuant to BOMA 2017 for Office Buildings: Standard Methods of Measurement (ANSI/BOMA Z65.1-2017), and its accompanying guidelines (collectively, " BOMA 2017 "). Landlord and Tenant hereby stipulate and agree that the rentable area of the Premises, based on the Base Building Plans (as that term is defined in Section 1.1 of the Tenant Work Letter) is as set forth in Section 2.2 of the Summary.
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ARTICLE 2
LEASE TERM
; OPTION TERM
2.1 In General . The terms 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. For purposes of this Lease, the term " Lease Year " shall mean each consecutive twelve (12) month period during the Lease Term, provided that the last Lease Year shall end 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 (the " Notice of Lease Term Dates "), attached hereto, as a confirmation only of the information set forth therein, which Tenant shall execute and return to Landlord within fifteen (15) business days of receipt thereof (provided that if said Notice of Lease Term Dates is not factually correct, then Tenant shall make such changes as are necessary to make the Notice of Lease Term Dates factually correct and shall thereafter execute and return such Notice of Lease Term Dates to Landlord within such fifteen (15) business day period), and thereafter the dates set forth on such Notice of Lease Term Dates shall be conclusive and binding upon Tenant and Landlord, unless Landlord sends a Notice to Tenant rejecting Tenant’s changes, whereupon this procedure shall be repeated until the parties mutually agree upon the contents of the Notice of Lease Term Dates. In the event Landlord shall fail to send Tenant the Notice of Lease Term Dates within thirty (30) days following the Lease Commencement Date, such failure shall not be a default under this Lease, but Tenant may send to Landlord Notice of the occurrence of the Lease Commencement Date substantially in the form of the Notice of Lease Term Dates which Notice of Lease Term Dates Landlord shall acknowledge by executing a copy of the Notice of Lease Term Dates and returning it to Tenant (provided that if said Notice of Lease Term Dates is not factually correct, Landlord shall make such changes to the Notice of Lease Term Dates as are necessary to make such Notice of Lease Term Dates factually correct, which revised Notice of Lease Term Dates shall thereafter be subject to the procedure for finalization set forth in this Section 2.1 ). Once the Notice of Lease Term Dates is executed and delivered by Landlord and Tenant, the same shall be binding upon Landlord and Tenant.
2.2 Option Term .
2.2.1 Option Right . Landlord hereby grants Original Tenant one (1) option to extend the Lease Term for the entire Premises by a period of seven (7) years (the " Option Term "). Such option shall be exercisable only by "Notice" (as that term is defined in Section 29.18 of this Lease) delivered by Tenant to Landlord as provided below, provided that, as of the date of delivery of such Notice, (i) Tenant has not then received notice of a monetary or material non-monetary default under this Lease that then remains uncured, and (ii) Tenant has not been in monetary or material non-monetary default under this Lease (beyond the applicable notice and cure periods) more than twice during the preceding twelve (12) month period. Upon the proper exercise of such option to extend, and provided that, at Landlord's election, as of the end of the Lease Term, (A) Tenant has not then received notice of a monetary or material non-monetary default under this Lease that then remains uncured, and (B) Tenant has not been in monetary or material non-monetary default under this Lease (beyond the applicable notice and cure periods) more than twice during the preceding twelve (12) month period, then the Lease Term, as it applies to the entire Premises, shall be extended for a period of seven (7) years. The rights contained in this Section 2.2 shall only be exercised by the Original Tenant (or any assignee of the Original Tenant's interest in this Lease, but not any sublessee or other transferee of the Original Tenant's interest in this Lease), and shall terminate upon the date that Tenant makes a Transfer of more than fifty percent (50%), in the aggregate, of the initial Premises other than to a Permitted Transferee for all or substantially all of the remaining Lease Term.
2.2.2 Intentionally Omitted .
2.2.3 Option Rent . The Rent payable by Tenant during the Option Term (the " Option Rent ") shall be equal to ninety-seven and one-half percent (97.5%) of the "Market Rent," as that term is defined in, and determined pursuant to, Exhibit F attached hereto.
2.2.4 Exercise of Option . The option contained in this Section 2.2 shall be exercised by Tenant, if at all, only in the manner set forth in this Section 2.2 . Tenant shall deliver notice (the " Exercise Notice ") to Landlord not more than eighteen (18) months nor less than fifteen (15) months prior to the expiration of the initial Lease Term, stating that Tenant is exercising its option. Concurrently with such Exercise Notice, Tenant shall deliver to Landlord Tenant's calculation of the Option Rent (the " Tenant's Option Rent Calculation "). Landlord shall deliver notice (the " Landlord Response Notice ") to Tenant on or before the date which is thirty (30) days after Landlord's receipt of the Exercise Notice and Tenant's Option Rent Calculation, stating that (A) Landlord is accepting Tenant's Option Rent Calculation as the Option Rent, or (B) rejecting Tenant's Option Rent Calculation and setting forth Landlord's calculation of the Market Rent (the " Landlord's Option Rent Calculation "). Within ten (10) business days of its receipt of the Landlord Response Notice, Tenant may, at its option, accept the Market Rent contained in the Landlord's Option Rent Calculation. If Tenant does not affirmatively accept or Tenant rejects the Option Rent specified in the Landlord's Option Rent Calculation, the parties shall follow the procedure set forth in Section 2.2.5 below, and the Option Rent shall be determined in accordance with the terms of Section 2.2.5 below. Notwithstanding the foregoing, Tenant shall be permitted to submit a non-binding notice of interest (the " Interest Notice ") to Landlord not less than eighteen (18) months prior to the expiration of the then Lease Term, and following Landlord's receipt of such Interest Notice, Landlord shall deliver to Tenant not less than sixteen (16) months prior to the expiration of the then Lease Term, Landlord's non-binding estimate of the Option Rent.
2.2.5 Determination of Market Rent . In the event Tenant timely and appropriately exercises its option to extend the Lease but rejects the Option Rent set forth in the Landlord's Option Rent Calculation
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pursuant to Section 2.2.4 above, then Landlord and Tenant shall attempt to agree upon the Option Rent using their reasonable good-faith efforts. If Landlord and Tenant fail to reach agreement upon the Option Rent applicable to the Option Term on or before the date that is ninety (90) days prior to the expiration of the initial Lease Term (the " Outside Agreement Date "), then the Option Rent shall be determined by arbitration pursuant to the terms of this Section 2.2.5 . Each party shall make a separate determination of the Market Rent (i.e., the determinations of one hundred percent (100%) of Market R ent ( as opposed to the Option Rent determinations equal to ninety-seven and one-half percent (97.5%) of Market Rent) (the " Exchanged Market Rents ") , within five (5) days following the Outside Agreement Date, and such determinations shall be submitted to arbitration in accordance with Section 2.2.5 .1 through Section 2.2.5 .4 , below. The determination of the arbitrators shall be limited solely to the issue area of whether L andlord's or Tenant's Exchanged Market Rents determination is the closest to the actual Market Rent as determined by the arbitrators, taking into account the requirements of Section 2.2 of this Lease .
2.2.5.1 Landlord and Tenant shall each appoint one arbitrator who shall by profession be a MAI appraiser or real estate broker who shall have been active over the ten (10) year period ending on the date of such appointment in the appraising and/or leasing of first class office properties in the vicinity of the Building. Each such arbitrator shall be appointed within fifteen (15) days after the Outside Agreement Date. Landlord and Tenant may consult with their selected arbitrators prior to appointment and may select an arbitrator who is favorable to their respective positions (including an arbitrator who has previously represented Landlord and/or Tenant, as applicable). The arbitrators so selected by Landlord and Tenant shall be deemed " Advocate Arbitrators ."
2.2.5.2 The two Advocate Arbitrators so appointed shall be specifically required pursuant to an engagement letter within ten (10) days of the date of the appointment of the last appointed Advocate Arbitrator to agree upon and appoint a third arbitrator (" Neutral Arbitrator ") who shall be qualified under the same criteria set forth hereinabove for qualification of the two Advocate Arbitrators except that (i) neither the Landlord or Tenant or either parties' Advocate Arbitrator may, directly, or indirectly, consult with the Neutral Arbitrator prior or subsequent to his or her appearance, and (ii) the Neutral Arbitrator cannot be someone who has represented Landlord and/or Tenant during the five (5) year period prior to such appointment. The Neutral Arbitrator shall be retained via an engagement letter jointly prepared by Landlord's counsel and Tenant's counsel.
2.2.5.3 Within ten (10) business days following the appointment of the Neutral Arbitrator, Landlord and Tenant shall in good faith endeavor to agree upon the terms of and enter into an arbitration agreement (the " Arbitration Agreement ") which shall set forth the following:
(a) Each of Landlord's and Tenant's Exchanged Market Rents exchanged by the parties pursuant to Section 2.2.5 , above;
(b) An agreement to be signed by the Neutral Arbitrator, the form of which agreement shall be attached as an exhibit to the Arbitration Agreement, whereby the Neutral Arbitrator shall agree to undertake the arbitration and render a decision in accordance with the terms of this Lease, as modified by the Arbitration Agreement, and shall require the Neutral Arbitrator to demonstrate to the reasonable satisfaction of the parties that the Neutral Arbitrator has no conflicts of interest with either Landlord or Tenant;
(c) Instructions to be followed by the Neutral Arbitrator when conducting such arbitration;
(d) That Landlord and Tenant shall each have the right to submit to the Neutral Arbitrator (with a copy to the other party), on or before the date that occurs fifteen (15) days following the appointment of the Neutral Arbitrator, an advocate statement (and any other information such party deems relevant) prepared by or on behalf of Landlord or Tenant, as the case may be, in support of Landlord's or Tenant's respective Exchanged Market Rents (the " Briefs ");
(e) That within five (5) business days following the exchange of Briefs, Landlord and Tenant shall each have the right to provide the Neutral Arbitrator (with a copy to the other party) with a written rebuttal to the other party's Brief (the “ First Rebuttals ”);provided, however, such First Rebuttals shall be limited to the facts and arguments raised in the other party's Brief and shall identify clearly which argument or fact of the other party's Brief is intended to be rebutted;
(f) That within five (5) business days following the parties’ receipt of each other’s First Rebuttal, Landlord and Tenant, as applicable, shall each have the right to provide the Neutral Arbitrator (with a copy to the other party) with a written rebuttal to the other party’s First Rebuttal (the “ Second Rebuttals ”); provided, however, such Second Rebuttals shall be limited to the facts and arguments raised in the other party’s First Rebuttal and shall identify clearly which argument or fact of the other party’s First Rebuttal is intended to be rebutted;
(g) The date, time and location of the arbitration, which shall be mutually and reasonably agreed upon by Landlord and Tenant, taking into consideration the schedules of the Neutral Arbitrator, the Advocate Arbitrators, Landlord and Tenant, and each party's applicable consultants, which date shall in any event be within forty-five (45) days following the appointment of the Neutral Arbitrator;
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(h) That no discovery shall take place in connection with the arbitration, other than to verify the factual information that is presented by Landlord or Tenant;
(i) That the Neutral Arbitrator shall not be allowed to undertake an independent investigation or consider any factual information other than presented by Landlord or Tenant, except that the Neutral Arbitrator shall be permitted to visit the Project and the buildings containing the Comparable Transactions;
(j) Tenant shall have the right to present oral arguments to the Neutral Arbitrator at the arbitration for a period of time not to exceed three (3) hours (" Tenant's Initial Statement ");
(k) Following Tenant's Initial Statement, Landlord shall have the right to present oral arguments to the Neutral Arbitrator at the arbitration for a period of time not to exceed three (3) hours (" Landlord's Initial Statement ");
(l) Following Landlord's Initial Statements the Advocate Arbitrator representing Tenant shall have up to one (1) additional hour to present additional arguments and/or to rebut the arguments offered in Landlord's Initial Statement ( " Tenant's Rebuttal Statement ");
(m) Following Tenant's Rebuttal Statement, the Advocate Arbitrator representing Landlord shall have up to one (1) additional hour to present additional arguments and/or to rebut the arguments offered in Tenant's Initial Statement and Tenant's Rebuttal Statement;
(n) That, not later than ten (10) business days after the date of the arbitration, the Neutral Arbitrator shall render a decision (the " Ruling ") indicating whether Landlord's or Tenant's Exchanged Market Rents determination is closer to the Market Rent;
(o) That following notification of the Ruling, Landlord's or Tenant's Exchanged Market Rents determination, whichever is selected by the Neutral Arbitrator as being closer to the Market Rent, shall then be multiplied by ninety-seven and one-half percent (97.5%) to become the then applicable Option Rent; and
(p) That the decision of the Neutral Arbitrator shall be binding on Landlord and Tenant.
(q) If a date by which an event described in Section 2.2.5.3 above, is to occur falls on a weekend or a holiday, the date shall be deemed to be the next business day. If the parties fail to enter into an Arbitration Agreement within ten (10) days following the appointment of the Neutral Arbitrator, then the arbitration shall nonetheless proceed in accordance with this Section 2.2.5 notwithstanding such failure.
2.2.6 In the event that the Option Rent shall not have been determined pursuant to the terms hereof prior to the commencement of the Option Term, Tenant shall be required to pay the Option Rent, initially provided by Landlord to Tenant, and upon the final determination of the Option Rent, the payments made by Tenant shall be reconciled with the actual amounts due, and the appropriate party shall make any corresponding payment to the other party within thirty (30) calendar days after the Option Rent has finally been determined. Upon final determination of the Option Rent, Landlord and Tenant shall execute an amendment reflecting Tenant’s exercise of the extension option and the extension of the Lease Term and the Option Rent as finally determined; provided that the failure of either party to execute such amendment shall not affect the validity of the terms of this Lease that apply to the Option Term.
3.1 In General . 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 by written notice to Tenant, by a wire transfer in accordance with written instructions provided by Landlord or 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 3.2 and 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 as otherwise expressly set forth in this Lease. Concurrently with Tenant's execution and delivery of this Lease to Landlord, Tenant shall pay to Landlord an amount equal to $328,924.80, which amount shall be applied to the first month of Base Rent due under this Lease. If any Rent payment date (including the Lease Commencement Date) falls on a day of the month other than the first day of such month or if any payment of Rent is for a period which is shorter than one month, the Rent for any fractional month shall accrue on a daily basis for the period from the date such payment is due to the end of such calendar month or to the end of the Lease Term at a rate per day which is equal to 1/365 of the applicable annual Rent. All other payments or adjustments required to be made under the terms of this Lease that require proration on a time basis shall be prorated on the same basis.
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3.2 Base Rent Abatement . Provided that n o monetary or material non-monetary event of default is occurring beyond any applicable notice and cure period , and subject to the terms of this Section 3.2 below, then , with respect to floors 1 and 2 of the Premises, during the six (6) full calendar months following the Lease Commencement Date and with respect to floor 3 of the Premises, during the six (6) full calendar months following the Substantial Completion of the Tenant Improvements with respect to floor 3 ( collectively, the " Base Rent Abatement Period " ), Tenant shall be entitled to an abatement of Base Rent (collectively, the " Base Rent Abatement ") . Tenant acknowledges and agrees that the foregoing Base Rent Abatement has been granted to Tenant as additional consideration for entering into this Lease , and for agreeing to pay the Rent and perform the terms and conditions otherwise required under this Lease . Tenant acknowledges and agrees that during such Base Rent Abatement Period, such Base Rent Abatement shall have no effect on the calculation of any future increases in Base Rent or Direct Expenses payable by Tenant pursuant to the terms of this Lease, which increases shall be calculated without regard to such Base Rent Abatement. Additionally, Tenant shall be obligated to pay all "Additional Rent" (as that term is defined in Section 4.1 of this Lease) during the Base Rent Abatement Periods. I n connection with any sale, financing or refinancing of the Building or Project, Landlord shall have the right to buy out all or any portion of the Base Rent Abatement at any time prior to the expiration of the Base Rent Abatement Period by (1) providing written notice thereof to Tenant and (2) paying to Tenant the amount of Base Rent Abatement then remaining due discounted to present value at a per annum rate equal to the discount rate of the Federal Reserve Bank of San Francisco . If Landlord elects to buy out all or a portion of the Base Rent Abatement , Landlord and Tenant shall, at Landlord’s option, enter into an amendment to the Lease . In no event shall Landlord be obligated to pay a commission with respect to the Base Rent Abatement and Tenant and Landlord shall each indemnify the other against all costs, expenses, attorneys’ fees, and other liability for commissions or other compensation claimed with respect to the Base Rent Abatement by any broker or agent claiming the same by, through or under the indemnifying party.
4.1 General Terms . 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 of this Lease, respectively. Such payments by Tenant, together with any and all other amounts payable by Tenant to Landlord pursuant to the terms 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. 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 " Tenant's Share " shall mean the amount 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 in which any portion of the Lease Term falls, through and including the calendar year in which the Lease Term expires.
4.2.4 " Operating Expenses " shall mean, except as otherwise set forth in this Section 4.2.4 , all expenses, costs and amounts of every kind and nature which Landlord pays or accrues during any Expense Year because of or in connection with the ownership, management, maintenance, security, repair, replacement, restoration or operation of the Project, or any portion thereof. For purposes of clarification, any given type of Operating Expense shall be included either as paid or as accrued during an Expense Year (but not both as paid and as accrued) and such manner of accounting as to such type of Operating Expense shall be maintained consistently throughout the Lease Term. 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 to the Common Areas, the cost of operating, repairing, and maintaining the utility, telephone, mechanical, sanitary, storm drainage, and elevator systems, and the cost of maintenance and service contracts in connection therewith (but excluding the costs of any utilities provided to the Premises and the premises of other tenants of the Project to the extent Tenant is then paying Landlord directly for such utility costs pursuant to Article 6 below); (ii) the cost of licenses, certificates, permits and inspections and the reasonable cost of contesting any governmental enactments that are reasonably likely to 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 (except for the cost of Pollution Legal Liability Environmental insurance) in connection with the Project as reasonably determined by Landlord; (iv) except to the extent constituting a capital expenditure (other than Permitted Capital Items), 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) the cost of operation, repair, restoration, and maintenance of all parking areas and amenities areas, including the Amenities Building and any cafeterias and conference spaces; (vi) subject to the exclusions from Operating Expenses below, fees and other costs, including management and/or incentive fees, consulting fees, legal fees and accounting fees, of all contractors and consultants in connection with the management, operation, maintenance and repair of the Project (provided, however, if any of such fees are paid to parties who provide services for more than one building or project, only the prorated portion of those fees reflecting the percentage of such parties' working time devoted to the Project shall be included in Operating Expenses); (vii) payments under any equipment rental agreements and the fair rental value of any management office space; (viii) subject to item (f), below, wages, salaries and other compensation and benefits, including taxes levied thereon, of all persons 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 and replacement of all systems and
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equipment and components thereof of the Project (but excluding repairs and replacements that constitute capital repairs or capital improvements, other than Permitted Capital Items ); (xi) the cost of janitorial, alarm, security and other services, replacement of wall and floor coverings, ceiling tiles and fixtures in Common Areas, maintenance of curbs and walkways, and repair to roofs (but excluding the costs of janitorial services provided to the premises of other tenants of the Project to the extent Tenant is then providing its own janitorial services to the Premises pursuant to Article 6 below); (xii) amortization (including reasonable interest on the unamortized cost) over such period of time as Landlord shall reasonably determine, 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; (xiii) the cost of capital improvements or other costs incurred in connection with the Project (A) which are reasonably anticipated to reduce current or future Operating Expenses or to enhance or improve the safety or security of the Project or its occupants, (B) which are replacements or modifications of nonstructural items located in the Common Areas required to keep the Common Areas in good order or condition, or (C) that are required under any governmental law or regulation (collectively, " Permitted Capital Items "); provided, however, that any capital expenditure shall be amortized (including interest on the amortized cost at the rate of seven percent (7%)) over (X) its reasonable useful life as Landlord shall reasonably determine in accordance with sound real estate management and accounting practices, consistently applied, or ( Y ) 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 , consistently applied; and (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, and (xv) payments under any Underlying Documents (as that term is defined in Section 5.5 below). Notwithstanding the foregoing, for purposes of this Lease, Operating Expenses shall not, however, include:
(a) costs, including construction costs, permit, license and inspection costs, legal fees, space planners' fees, advertising, marketing and promotional expenses (except as otherwise expressly set forth above) and leasing commissions, and brokerage fees incurred in connection with the original construction or development, or original or future leasing of the Project, and costs, including permit, license and inspection costs, incurred with respect to the installation of improvements made for tenants or other occupants occupying space in the Project or incurred in renovating or otherwise improving, decorating, painting or redecorating 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 expressly set forth in items (xii), (xiii), and (xiv) above, depreciation, interest and principal payments on mortgages or any other debt instruments and any other debt costs, if any, penalties, late fees, and interest, costs of capital repairs and alterations, and costs of capital improvements and equipment;
(c) costs for which the Landlord is reimbursed, or would have been reimbursed if Landlord had carried the insurance Landlord is required to carry pursuant to this Lease or would have been reimbursed if Landlord had used commercially reasonable efforts to collect such amounts, from any tenant or occupant of the Project or by insurance from its carrier or any tenant's carrier or by anyone else;
(d) any bad debt loss, rent loss, or reserves for bad debts or rent loss, or reserves of any kind;
(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;
(f) the wages and benefits (including fringe 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 Project supervising manager or general manager; or Project supervising engineer
(g) amount paid as ground rental for the Project by the Landlord;
(h) except for a Project management fee (subject to item (o) below), overhead and profit increment paid to Landlord or to subsidiaries or affiliates of the Landlord for services or utilities in the Project to the extent the same exceeds the costs of such services rendered by qualified, unaffiliated third parties on a competitive basis (provided that Landlord shall have the right to include in Operating Expenses service or utility charges paid to affiliates or subsidiaries of Landlord, provided that such costs do not exceed market costs or rates for services or utilities);
(i) all costs of commercial concessions (other than parking) operated by or on behalf of the Landlord, including without limitation rent, operating costs, utility costs and any compensation paid to clerks, attendants or other persons in connection with such concessions;
(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
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Expenses as a capital cost, except equipment not affixed to the Project which is used in providing janitorial or similar services to the Common Areas 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 Landlord provides selectively to one or more tenants (other than Tenant) without reimbursement;
(l) any costs expressly excluded from Operating Expenses elsewhere in this Lease;
(m) 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 in the vicinity of the Building, with adjustment where appropriate for the size of the applicable project;
(n) costs, other than those incurred in ordinary insurance, maintenance and repair, for sculpture, paintings, fountains or other objects of art;
(o) any management fee for the management of the Project which exceeds two percent (2%) of the sum of Tenant's annual Base Rent obligations fully grossed up and adjusted to reflect a one hundred percent (100%) occupancy of the Project with all tenants paying full rent, as contrasted with free rent, half-rent and the like;
(p) costs for repairs and/or replacements to the extent arising from the negligence or willful misconduct of Landlord, its affiliates or employees;
(q) costs (including fines, penalties and late fees) incurred to correct violations of Applicable Laws, which violations are Landlord's obligation to correct pursuant to Article 24 below;
(r) electric power costs and other utility costs for which any tenant directly contracts with a public service company;
(s) tax penalties or other similar costs that are expressly excluded from Tax Expenses;
(t) any above Building standard cleaning, including, but not limited to construction cleanup or special cleanings associated with parties/events;
(u) the cost of any training or incentive programs, other than for tenant life safety information services;
(v) costs of correcting defects in any portion of the Project, or the equipment used therein and the replacement of defective equipment, except that conditions resulting from ordinary wear and tear will not be deemed defects for the purpose of this category;
(w) brokerage commissions, attorneys' and accountants' fees related thereto, loan brokerage fees, closing costs, interest charges and other similar costs incurred in connection with the sale, refinancing, mortgaging, or selling, or change of ownership of the Project;
(x) costs of repairs or other work occasioned by fire, windstorm, or other casualty, whether or not Landlord carries such insurance (except for any commercially reasonable insurance deductible which such deductibles shall be included in the definition of Operating Expenses);
(y) repairs or other work paid for through condemnation proceeds;
(z) all costs incurred by Landlord in connection with any dispute relating to the Landlord’s title to or ownership of the Project or any portion thereof;
(aa) contributions to political or charitable organizations;
(bb) expenses and costs relating in any way whatsoever to the identification, testing, monitoring and control, encapsulation, removal, remediation, replacement, repair, or abatement of any Hazardous Materials or mold within the Building or Project (to the extent the same is defined as Hazardous Materials under Applicable Law) and the cost of Pollution Legal Liability Environmental insurance;
(cc) the costs of any "tenant relations" parties, events or promotions;
(dd) costs and expenses of providing HVAC service to other tenant spaces in the Building during non-Building Hours;
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
(ee) all items and services for which Tenant or any other tenant in the Project reimburses Landlord or which Landlord provides selectively to one or more tenants (other than Tenant) without reimbursement;
(ff) advertising or promotional expenditures and the costs of acquiring and installing signs in or on any of the Building identifying the owner of the Building or any other tenant or occupant of the Building;
(gg) except as expressly set forth in Section 4.2.3 above, costs of any mitigation fees, impact fees, subsidies, tap-in fees, connection fees or similar one-time charges or costs (however characterized), imposed as a condition of or in connection with the development of the Project or Building or any expansion thereof, though any such costs related to the Tenant Improvements shall be Tenant’s sole responsibility; and
(hh) costs relating to the repair or replacement of structural portions of the roof, foundations, floors and exterior walls and all structural seismic upgrading costs.
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 at least one hundred percent (100%) occupied during all or a portion of any Expense Year, Landlord shall make an appropriate adjustment to the variable components of Operating Expenses for such year to determine the amount of Operating Expenses that would have been incurred had the Project been one hundred percent (100%) occupied; and the amount so determined shall be deemed to have been the amount of Operating Expenses for such year. For purposes of this subsection, variable components include only those component expenses that are affected by variations in occupancy levels. Except for the management fee (subject to item (o) 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 variable 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.
4.2.5 Taxes .
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 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.
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 tax or assessment levied in connection with Caltrain or any similar transportation system; (iv) 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; and (v) 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. All assessments that can be paid by Landlord in installments, shall be paid by Landlord in the maximum number of installments permitted by Applicable Law.
4.2.5.3 Any costs and expenses (including, without limitation, reasonable attorneys' and consultants' 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. Tax refunds 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 Additional Rent under this Article 4 for such Expense Year. Notwithstanding anything to the contrary set forth in this Lease, except as set forth in Section 4.2.5.4 below, (a) only Landlord may institute proceedings to reduce Tax Expenses and the filing of any such proceeding by Tenant without Landlord's consent
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
shall constitute an event of default by Tenant under this Lease, and (b) Landlord shall not be obligated to file any application or institute any proceeding seeking a reduction in Tax Expenses. 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 upon demand Tenant's Share of any such increased Tax Expenses. Notwithstanding anything to the contrary contained in this Section 4.2.5 , 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, federal and state income taxes, corporate, capital stock or capital gains taxes, documentary transfer taxes, penalties incurred as a result of Landlord's failure to timely pay taxes or to file any tax or informational returns, 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, and (iii) any items paid by Tenant under Section 4.5 of this Lease.
4.2.5.4 So long as Tenant is leasing the entire initial Premises, Tenant may request from Landlord whether or not Landlord intends to file an appeal of any portion of Tax Expenses which are appealable by Landlord (the " Appealable Tax Expenses ") for any tax fiscal year. Landlord shall deliver written notice to Tenant within ten (10) days after such request indicating whether Landlord intends to file an appeal of Appealable Tax Expenses for such tax fiscal year. If Landlord indicates that Landlord will not file an appeal of such Tax Expenses, then Tenant may provide Landlord with written notice (" Appeals Notice ") at least thirty (30) days prior to the final date in which an appeal must be filed, requesting that Landlord file an appeal. Upon receipt of the Appeals Notice, but subject to the terms and conditions of this Section 4.2.5.4 below, Landlord shall promptly file such appeal and thereafter Landlord shall diligently prosecute such appeal to completion. Tenant may at any time in its sole discretion direct Landlord to terminate an appeal it previously elected pursuant to an Appeals Notice. In the event Tenant provides an Appeals Notice to Landlord and the resulting appeal reduces the Tax Expenses for the tax fiscal year in question as compared to the original bill received for such tax fiscal year and such reduction is greater than the costs for such appeal, then the costs for such appeal shall be included in Tax Expenses and passed through to the tenants of the Building when funds are actually received. Alternatively, if the appeal does not result in a reduction of Tax Expenses for such tax fiscal year or if the reduction of Tax Expenses is less than the costs of the appeal, then Tenant shall reimburse Landlord, within thirty (30) days after written demand, for any and all costs reasonably incurred by Landlord which are not covered by the reduction in connection with such appeal. Tenant's failure to timely deliver an Appeals Notice shall waive Tenant's rights to request an appeal of the applicable Tax Expenses for such tax fiscal year. In addition, Tenant's obligations to reimburse Landlord for the costs of the appeal pursuant to this Section shall survive the expiration or earlier termination of this Lease in the event the appeal is not concluded until after the expiration or earlier termination of this Lease. Upon request, Landlord agrees to keep Tenant apprised of all tax protest filings and proceedings undertaken by Landlord to obtain a reduction or refund of Tax Expenses.
4.3 Allocation of Direct Expenses
4.3.1 Method of Allocation . The parties acknowledge that the Building is part of a multi-building project and that the Direct Expenses should be shared on a reasonable and logical basis between the tenants of the Building and the tenants of the other buildings in the Project. In addition, the Project will be constructed in phases, with certain costs and expenses incurred in connection with a particular phase that should be shared exclusively amongst tenants of a particular phase. 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 portions of the Direct Expenses, which portions shall be determined by Landlord on an equitable and consistent basis, shall be allocated to the tenants of the Building (as opposed to the tenants of any other buildings in the Project) and such portions 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, an equitable portion of the Direct Expenses attributable to any phase or phases in which the Premises is located and an equitable portion of the Direct Expenses attributable to the Project as a whole. For purposes of allocating Direct Expenses during the Lease Term, those Direct Expenses not reasonably attributable exclusively to the Building shall be allocated on a rentable area basis, except where otherwise dictated by prudent commercial property management and accounting practices or to achieve an equitable and customary allocation of Direct Expenses, provided that, in either case, such method of allocation is consistent with standard industry practice and Landlord does not discriminate against Tenant in connection with the determination of the method of allocation. Any costs that are exclusively attributable to a particular building or phase within the Project which does not include a portion of the Premises shall be excluded from the definition of Direct Expenses for purposes of this Lease.
4.3.2 Cost Pools . As set forth in Section 4.3.1 above, 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 "). Such Cost Pools may include, but shall not be limited to, the office space tenants, the hotel operator(s) or owner(s), and the retail space tenants of a portion of the Project, and such allocations may be implemented to reflect that certain services or amenities are not provided to certain types of space or certain types of tenants, operators or owners of a portion of the Project (including use of the Amenities Building), in which event Tenant's Share of Direct Expenses related to such services or amenities may be equitably adjusted to reflect the space to which such services or amenities are generally provided or attributable (for example, Direct Expenses attributable to the Amenities Building shall be allocated to only tenants with access to and use of the Amenities Building). The Direct Expenses within each such Cost Pool shall be allocated and charged to the tenants within such Cost Pool in an equitable manner, and if applicable, shall be allocated based on the rentable area of the space subject to the Cost Pool compared to the total rentable area of the Building or Project, as applicable. Any costs allocated to a Cost Pool which does not include a portion of the Premises (e.g., the hotel Cost Pool) shall be excluded from the definition of Direct Expenses for purposes of this Lease.
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
4.4 Calculation and Payment of Additional Rent . Tenant shall pay to Landlord, in the manner set forth in Section 4.4.1 , below, and as Additional Rent, an amount equal to Tenant's Share of Direct Expenses for each Expense Year .
4.4.1 Statement of Actual Direct Expenses and Payment by Tenant . Landlord shall give to Tenant within forty-five (45) days following the end of each Expense Year, a statement (the " Statement ") which shall state, in general major categories, the Direct Expenses incurred or accrued, as applicable, for such preceding Expense Year, and which shall indicate the amount of Tenant's Share of Direct Expenses. Upon request from Tenant, Landlord shall provide reasonably detailed information and documentation with respect to any of the general major categories and any particular expenses identified in the Statement. Upon receipt of the Statement for each Expense Year commencing or ending during the Lease Term. Tenant shall pay, within thirty (30) days after receipt of the Statement, the full amount of Tenant's Share of Direct Expenses for such Expense Year, less the amounts, if any, paid by Tenant during such Expense Year as "Estimated Direct Expenses," as that term is defined in Section 4.4.2 , below, and if Tenant paid more as Estimated Direct Expenses than the actual Tenant's Share of Direct Expenses, Tenant shall receive a credit in the amount of Tenant's overpayment against Rent next due under this Lease, or if the amount of such credit exceeds the amount of Rent due for the remainder of the Lease Term, then Landlord shall, within thirty (30) days, deliver a check payable to Tenant in the amount of such excess. 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 (provided that in the event that such failure continues for a period of four (4) months following receipt of notice from Tenant, Tenant may elect to seek specific performance). Even though the Lease Term has expired and Tenant has vacated the Premises, when the final determination is made of Tenant's Share of Direct Expenses for the Expense Year in which this Lease terminates, Tenant shall within thirty (30) days after receipt of the Statement, pay to Landlord Tenant's Share of Direct Expenses less any amounts paid by Tenant as Estimated Direct Expenses for such Expense Year, and if Tenant paid more as Estimated Direct Expenses than the actual Tenant's Share of Direct Expenses, Landlord shall, within thirty (30) days, deliver a check payable to Tenant in the amount of the overpayment. 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 eighteen (18) months after the earlier of the expiration of the applicable Expense Year or the Lease Expiration Date, except that Tenant shall be responsible for Tenant's Share of Direct Expenses attributable to any Expense Year (x) that were levied by any governmental authority or by any public utility companies, (y) for which Landlord had not previously received an invoice, and (z) are currently due and owing at any time following the applicable Expense Year, provided that Landlord delivers Tenant a bill for such amounts within six (6) months following Landlord's receipt of the bill therefor.
4.4.2 Statement of Estimated Direct Expenses . In addition, Landlord shall endeavor to 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 Tenant's Share of Direct Expenses (the " Estimated Direct Expenses "). Upon request from Tenant, Landlord shall provide reasonably detailed information and documentation with respect to any of the general major categories and/or particular expenses related to such categories. 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 Estimated Direct Expenses under this Article 4 (provided that in the event that such failure continues for a period of four (4) months following receipt of notice from Tenant, Tenant may elect to seek specific performance), nor shall Landlord be prohibited from revising any Estimate Statement or Estimated Direct Expenses theretofore delivered to the extent necessary; provided, however, any such subsequent revision shall set forth on a reasonably specific basis any particular expense increase. Thereafter, Tenant shall pay, with its next installment of Base Rent due (but not sooner than thirty (30) days after receipt of the Estimate Statement), a fraction of the Estimated Direct Expenses for the then-current Expense Year (reduced by any amounts paid pursuant to the 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 Direct Expenses set forth in the previous Estimate Statement delivered by Landlord to Tenant.
4.4.3 Refund of Overpayment of Excess . If the Statement shows that the Direct Expenses for any Expense Year ending or beginning within the Lease Term is less than the Estimated Direct Expenses actually paid by Tenant for that Expense Year, Landlord shall credit Tenant's next payment of Base Rent and Estimated Direct Expenses with the amount by which Tenant's payments of Estimated Direct Expenses exceed the actual Direct Expenses due for that Expense Year. If that Statement is provided to Tenant after the end of the Lease Term, Landlord shall include with the Statement a refund of the amount by which Tenant's payments of Estimated Direct Expenses exceed the actual Tenant's Share of Direct Expenses due for that Expense Year.
4.4.4 Controllable Expenses . Further, notwithstanding the foregoing, in no event shall Controllable Operating Expenses, as that term is defined below, for any Expense Year following the Expense Year that commences on January 1st of the second (2nd) full calendar year following the Lease Commencement Date (the " Measuring Expense Year ") increase by more than five percent (5%) per Expense Year on a cumulative, compounded basis; for example, the maximum amount of Controllable Operating Expenses that may be included in the calculation of such Operating Expenses for each calendar year after the Measuring Expense Year shall equal the product of the Controllable Operating Expenses and the following percentages for the following calendar years: 105% for the first year following the Measuring Expense Year; 110.25% for the second year following the Measuring Expense Year; 115.76% for the third year following the Measuring Expense Year; 121.55% for the fourth year following the Measuring Expense Year; etc. However, any increases in Operating Expenses not
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
recovered by Landlord due to the foregoing limitation shall be carried forward into succeeding calendar years during the Lease Term (subject to the foregoing limitation) to the extent necessary until fully recouped by Landlord. Upon the commencement of each Option Term, the Measuring Expense Year shall be reset to be the Expense Year that commences on January 1 st of the Expense Year following the Expense Year in which such Option Term commences. As used herein " Controllable Operating Expenses " shall mean all Operating Expenses , excluding the following: (i) utility charges, (ii) the cost of union labor , including payroll and benefits , which shall include labor which is not union as of the Effective Date, but which unionizes after the Lease, (i ii ) market-wide labor-rate increases due to extraordinary circumstances, including without limitation, boycotts and strikes, ( i v) costs incurred due to an event of " Force Majeure, " as that term is defined in Section 29.16 of this Lease and other extraordinary weather-related costs (such as those resulting from infestation, storms, drought and other severe weather) , (v) Landlord ' s insurance costs and deductibles thereunder , (v i ) costs relating to compliance with governmentally mandated transportation management programs , (vii ) costs relating to the operation of the Shuttle Service (as that term is defined in Section 29.34 below), (viii ) costs incurred to comply with governmental requirements and Applicable Laws, (ix ) amortized cos ts of capital expenditures, (x) any costs incurred specifically at the request of Tenant and not expressly required to be incurred by Landlord pursuant to this Lease, (xi) Tax Expenses, and (xii) any other costs that are not reasonably within Landlord's control .
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, subject, however, to Tenant's right to contest any such taxes. 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 upon 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 tenant 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 tenant improvements conforming to the "Building Standard Amount" 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. Solely for the purpose of determining Tax Expenses in this Section 4.5.2 , Landlord and Tenant agree that the value of building standard improvements is $82.50 per rentable square foot (the " Building Standard Amount "). To the extent that Landlord enforces the terms of this Section 4.5.2 against Tenant, then Landlord shall not include in Tax Expenses, taxes assessed against any other tenant improvements in the Project to the extent such taxes relate to the value of such tenant improvements in excess of the Building Standard Amount.
4.5.3 Notwithstanding any contrary provision herein, Tenant shall pay prior to delinquency any (i) rent tax or sales 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 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 facilities; 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, subject, however, in each case to Tenant's right to contest any such taxes.
4.6 Landlord's Records . Throughout the Lease Term, Landlord shall maintain books and records with respect to Direct Expenses in accordance with generally accepted real estate accounting and management practices, consistently applied. Landlord shall maintain for a period of at least three (3) years following the end of the Expense Year to which they pertain, the books and records relating to all Direct Expenses for such Expense Year. Within one (1) year after receipt of a Statement by Tenant (the " Audit Period "), if Tenant disputes the amount of Direct Expenses 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, and (B) 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), designated and paid for by Tenant, may, after reasonable notice to Landlord and at reasonable times, audit Landlord's records with respect to the Statement at Landlord's corporate offices in the Comparable Area (as that term is defined in Exhibit F attached hereto), provided that ( i ) Tenant is not then in monetary or material non-monetary default under this Lease (beyond the applicable notice and cure periods provided under this Lease), and ( ii )Tenant has paid all amounts required to be paid under the applicable Estimate Statement and Statement (but Tenant shall be deemed to have paid the same "under protest"). In connection with such audit, Tenant and Tenant's certified public accounting firm 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 Direct Expenses 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; provided, however, if Landlord revises a Statement after delivering the same to Tenant, then Tenant shall continue to have the right to dispute such revisions for a period of one hundred eighty (180) days after Landlord delivers such revised Statement to Tenant. If after such audit, Tenant still disputes such Direct Expenses, 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
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Accountant proves that Direct Expenses set forth in the particular Statement were overstated by more than three percent ( 3 %), 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 inspect such books and records and/or to contest the amount of Direct Expenses payable by Tenant .
5.1 Permitted Use . Tenant shall use the Premises solely for the Permitted Use set forth in Section 6.1 of the Summary and Tenant shall not use or permit the Premises or the Project to be used 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. Tenant may operate its business according to prudent industry practices so long as the use or presence of Hazardous Materials is in accordance with the terms and condition set forth in this Article 5 and is otherwise strictly and properly monitored according to, and in compliance with, all then applicable Environmental Laws. Tenant shall comply with all Underlying Documents.
5.2 Intentionally Omitted .
5.2.1 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, unless Landlord has agreed to permit such uses within other portions of the office component of the Project; (ii) offices or agencies of any foreign governmental or political subdivision thereof, unless Landlord has agreed to permit such uses within other portions of the office component of the Project; (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; and (vi) uses prohibited under the Underlying Documents. Tenant's use shall not result in an occupancy density for the Premises which is greater than the density permitted by Applicable Laws and zoning requirements, and further provided that Landlord shall not be obligated to make any changes to the Base Building or Common Areas to accommodate Tenant's occupancy density. Tenant further covenants and agrees that it shall not use, or suffer or permit any person or persons to use, the Premises or any part thereof for any use or purpose contrary to the rules and regulations attached to this Lease as Exhibit D (" Rules and Regulations "), 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 unreasonably interfere with the normal and customary conduct of Tenant's business. In the event of any conflict between the Rules and Regulations and the other provisions of this Lease, the other provisions of this Lease shall control. Tenant shall not do or permit anything to be done in or about the Premises which will in any material way obstruct or interfere with the rights of other tenants or occupants of the Project, 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 Hazardous Materials . Tenant shall comply with the terms specific to Hazardous Materials set forth on Exhibit G attached hereto and complete Landlord's Pre-Leasing Environmental Exposure Questionnaire (the " Environmental Questionnaire "), which is attached as Schedule 1 to Exhibit G .
5.4 Underlying Documents . Tenant shall comply with all existing easements, licenses, operating agreements, declarations, restrictive covenants, and instruments pertaining to the sharing of costs by the Building, including, without limitation, any covenants, conditions and restrictions affecting the property, and reciprocal easement agreements affecting the property, any parking licenses or agreements, and any agreements with transit agencies affecting the Project (collectively, " Existing Underlying Documents ") and specifically including, without limitation, the Covenant to Restrict Use of Property Environmental Restriction recorded in the Official Records of the County of Santa Clara as Document No. 16119710 on or about February 21, 2002, and the Covenant to Restrict Use of Property Environmental Restriction recorded in the Official Records of the County of Santa Clara as Document No. 19451014 on or about May 31, 2007 (collectively, the " Existing CC&Rs "). Additionally, Tenant acknowledges that the Project may be subject to any future easements, licenses, operating agreements, declarations, restrictive covenants, and instruments pertaining to the sharing of costs by the Building, including, without limitation, any covenants, conditions and restrictions affecting the property, and reciprocal easement agreements affecting the property, any parking licenses or agreements, and any agreements with transit agencies affecting the Project (collectively, the " Future Underlying Documents ", and together with the Existing Underlying Documents, the " Underlying Documents ") which Landlord, in Landlord's discretion, deems reasonably necessary or desirable, and Tenant agrees that this Lease shall be subject and subordinate to such Future Underlying Documents; provided that such Future Underlying Documents shall not violate clauses (a) through (e) of Section 1.1.3 above, without prior written consent of Tenant, which may be given or withheld in Tenant's reasonable discretion. 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 Restrictions," in a form substantially similar to that attached hereto as Exhibit J , agreeing to and acknowledging the Future Underlying Documents.
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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 limitations imposed by all governmental rules, regulations and guidelines applicable thereto, Landlord shall provide heating and air conditioning (" HVAC ") when necessary for normal comfort for normal office use in the Premises from 8:00 A.M. to 6:00 P.M. Monday through Friday, and on Saturdays from 9:00 A.M. to 1:00 P.M. (collectively, the " Building Hours "), except for the date of observation of New Year's Day, President's Day, Independence Day, Labor Day, Memorial Day, Thanksgiving Day, Christmas Day and, at Landlord's discretion, other locally or nationally recognized holidays which are observed by other buildings comparable to and in the vicinity of the Building (collectively, the " Holidays "). If Tenant desires to use HVAC during hours other than the Building Hours, Tenant shall give Landlord such prior notice, if any, as Landlord shall from time to time reasonably establish as appropriate, of Tenant's desired use in order to supply such HVAC, and Landlord shall supply such HVAC to Tenant at such hourly cost per zone to Tenant (which shall be treated as Additional Rent) as Landlord shall from time to time establish.
6.1.1.1 Supplemental HVAC . As a part of the Tenant Improvements and subject to the terms of the Tenant Work Letter, Tenant, at its sole expense (or as a deduction from the Tenant Improvement Allowance), may install supplemental HVAC units in the Premises for the purpose of providing supplemental air-conditioning to the Premises (the " Tenant HVAC System "). All aspects of the Tenant HVAC System (including, but not limited to, any connection to the Building's chilled or condenser water system) shall be subject to Landlord's prior written approval, in accordance with Article 8 below or the Tenant Work Letter (as applicable). Tenant may not connect into the Building's chilled or condenser water system without Landlord’s prior written consent. Tenant shall be permitted, at Tenant's sole cost and expense, to access 277/480 volts of electricity (subject to availability) from the existing bus duct riser in connection with the Tenant HVAC System. At Landlord's election prior to the expiration or earlier termination of this Lease, Tenant shall leave the Tenant HVAC System in the Premises upon the expiration or earlier termination of this Lease, in which event the Tenant HVAC System shall be surrendered with the Premises upon the expiration or earlier termination of this Lease, and Tenant shall thereafter have no further rights with respect thereto. In the event that Landlord fails to elect to have the Tenant HVAC System left in the Premises upon the expiration or earlier termination of this Lease, then Tenant shall remove the Tenant HVAC System upon the expiration or earlier termination of this Lease, and repair all damage to the Building resulting from such removal, at Tenant's sole cost and expense. Tenant shall be solely responsible, at Tenant's sole cost and expense, for the monitoring, operation, repair, replacement, and removal (subject to the foregoing terms of this Section 6.1.1.2 ), of the Tenant HVAC System, and in no event shall the Tenant HVAC System interfere with Landlord's operation of the Building. Any reimbursements owing by Tenant to Landlord pursuant to this Section 6.1.1.2 shall be payable by Tenant within five (5) business days of Tenant's receipt of an invoice therefor.
6.1.2 Electricity . Notwithstanding any provision to the contrary contained in this Lease, Tenant shall pay the cost of all electricity provided to and/or consumed in the Premises (including normal and excess consumption and including the cost of electricity to operate the HVAC air handlers) directly to Landlord within thirty (30) days after written notice and as Additional Rent under this Lease (and not as part of Operating Expenses), which electricity shall be measured pursuant to separate submeters, installed by Landlord, at Landlord's sole cost and expense during Landlord's construction of the Tenant Improvements. Landlord shall designate the electricity utility provider from time to time. Tenant shall bear the cost of replacement of lamps, starters and ballasts for non-Building standard lighting fixtures within the Premises. Tenant's use of electricity shall never exceed the capacity of the feeders to the Project or the risers or wiring installation, and subject to the terms of Section 29.29 , below, Tenant shall not install or use or permit the installation or use of any computer or electronic data processing equipment in the Premises, without the prior written consent of Landlord, except for reasonable quantities of desktop computers and other typical desktop equipment. Landlord shall provide electrical panels at each floor of the Premises, which panels Tenant may use for lighting and incidental equipment use.
6.1.3 Water . Landlord shall provide city water from the regular Building outlets for drinking, lavatory and toilet purposes in the Common Areas, which water shall be measured pursuant to separate submeters, installed by Landlord, at Landlord's sole cost and expense during Landlord's construction of the Tenant Improvements.
6.1.4 Janitorial . Landlord shall not provide janitorial services for the Premises. Tenant shall perform all janitorial services and other cleaning within the Premises in a standard consistent with janitorial services provided in Comparable Buildings, including without limitation, day porter service (including light bulb maintenance and restroom fixtures maintenance), interior window cleaning, cleaning supplies deliveries and stocking, restroom cleaning, other cleaning (including pressure washing, carpet cleaning, etc.), waste and trash removal, and exterminating and pest control. Without Landlord's prior consent, Tenant shall not use (and upon notice from Landlord shall cease using) janitorial service providers who would, in Landlord's reasonable and good faith judgment, disturb labor harmony with the workforce or trades engaged in performing other work, labor or services in or about the Project.
6.1.5 Elevators . Landlord shall provide nonexclusive, non-attended automatic passenger elevator service.
6.1.6 Cooperation . 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
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the HVAC , electrical, mechanical and plumbing systems , provided Tenant is given written notice of the same and such regulations and requirements do not materially impair Tenant’s use of the Premises for the Permitted Use or Tenant’s other rights and privileges under this Lease . Landlord acknowledges Tenant' s concern that Landlord be motivated to cause the Building Systems to function properly and provide services required to be provided under this Article 6 . Landlord agrees that, if Tenant so elects and appoints a property manager (the " Tenant Facility Coordinator " ), Landlord shall permit the Tenant Facility Coordinator to review and consult with Landlord regarding the provision of services to the Premises and specific vendors and subcontractors providing services to the Building Systems serving the Premises . Landlord shall meet with the Tenant Facility Coordinator , upon request, but not more frequently than on a quarterly basis regarding such items .
6.1.7 Access Control; Tenant's Security System .
6.1.7.1 Landlord's Obligations . Landlord may, as part of Operating Expenses, provide on-site access control procedures and security services for the Common Areas and Parking Facilities. If Landlord provides such access control procedures and security services, notwithstanding anything to the contrary contained in this Lease, the "Landlord Parties," as that term is defined in Section 10.1 of this Lease, shall not be liable for, and the Landlord Parties are hereby released from any responsibility for any damage either to person or property sustained by Tenant incurred in connection with or arising from any acts or omissions of such access control personnel, or the Landlord Parties; provided, however, that Landlord shall remain liable for personal injury and/or property damage to the extent directly caused by the negligence or willful misconduct of Landlord's access control personnel or the Landlord Parties (but in any event Landlord shall not be liable hereunder for the acts or omissions of any third parties at the Project).
6.1.7.2 Tenant's Obligations . Tenant hereby acknowledges that Landlord shall have no obligation to provide guard service or other security measures for the benefit of the Premises or Project . Any such security measures for the benefit of the Premises shall be provided by Tenant, at Tenant's sole cost and expense. Tenant shall hire security personnel (" Tenant's Security Personnel "); provided that (i) Tenant's Security Personnel must not carry a firearm or other weapon , (ii) Tenant's Security Personnel must reasonably cooperate with Landlord's security personnel and reasonable rules and regulations reasonably established in writing by Landlord and delivered by written notice to Tenant relating to security and access control for the Project, and (iii) the security contractor (if any) providing Tenant's Security Personnel to Tenant hereunder shall comply with Landlord's reasonable insurance requirements, and (i v) any third party security contractor shall be subject to Landlord's approval, not to be unreasonably withheld, conditioned or delayed. Tenant shall provide Landlord written notice of the names of Tenant's Security Personnel prior to any of Tenant's Security Personnel performing security services hereunder. In addition, (a) Tenant's Security Personnel shall be licensed and bonded and shall at all times maintain any and all required licenses or other governmental permits required in connection with any weapons carried by Tenant's Security Personnel and/or the performance of its duties under this Lease and shall at all times conduct themselves in a manner consistent with a first class office building project, (b) a commercially reasonable background check shall be performed on all of Tenant's Security Personnel, and (c) all of Tenant's Security Personnel shall be union labor and comply with the Applicable Laws and Code. Subject to the terms of this Lease, Tenant hereby assumes all responsibility for the protection of Tenant and its agents, employees, contractors, invitees and guests, and the property thereof, from acts of third parties, including keeping doors locked and other means of entry to the Premises closed.
6.1.7.3 Tenant's Security System in the Premises . Subject to the terms and conditions of this Lease (including Article 8 hereof), Tenant may, at its own expense, install, maintain, repair and replace from time to time, its own security system (" Tenant's Security System ") in the Premises. Tenant shall coordinate the selection, installation and operation of Tenant's Security System with Landlord, and Landlord likewise shall cooperate with Tenant, in order to ensure that Tenant's Security System is compatible with Landlord's Building security systems and equipment, and to the extent that Tenant's Security System is not compatible with the Building Systems, Tenant shall not be entitled to install and/or operate the Tenant's Security System. Tenant shall be solely responsible, at Tenant's sole cost and expense, for the installation, monitoring, operation and removal of Tenant's Security System. Tenant may coordinate Tenant's Security System to provide that the Building Systems and Tenant's Security System will operate on the same type of key card, so that Tenant's employees are able to use a single card for both systems, but shall not otherwise integrate Tenant's Security System with the Building Systems.
6.2 Overstandard Tenant Use . If Tenant uses heat-generating machines, machines other than normal fractional horsepower office machines, or equipment or lighting other than Building standard lights in the Premises, which may affect the temperature otherwise maintained by the air conditioning system or increase the water normally furnished for the Premises by Landlord pursuant to the terms of Section 6.1 of this Lease, and as a result of such use, Tenant uses water or HVAC in excess of that supplied by Landlord pursuant to Section 6.1 of this Lease, Tenant shall pay to Landlord, upon billing, the actual cost of such excess consumption, the cost of the installation, operation, and maintenance of equipment which is installed in order to supply such excess consumption, and the reasonable cost of the increased wear and tear on existing equipment caused by such excess consumption plus a reasonable administrative fee (but in no event duplicative of costs included in Operating Expenses) based on a percentage of such costs (as reimbursement for Landlord's costs to read the metering devices) and Landlord may install devices to separately meter any increased use and in such event Tenant shall pay the increased cost directly to Landlord, on demand, at the rates charged by the public utility company furnishing the same, including the cost of installing, testing and maintaining of such additional metering devices. If Tenant's density or machines or equipment (1) affects the temperature otherwise maintained by the air conditioning system or (2) otherwise overloads any utility, Landlord may install supplemental air conditioning units or other supplemental equipment in the Premises, and the cost thereof, including the cost of design, installation, operation, use, and maintenance, in each case, plus a standard reasonable administrative fee (but in no event duplicative of costs included in Operating Expenses), shall be paid by Tenant to Landlord within thirty (30) days after Landlord has delivered to Tenant an
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invoice therefor. Notwithstanding any provision to the contrary contained in this Lease , Tenant shall promptly pay to Landlord , a standard reasonable charge (but in no event duplicative of costs included in Operating Expenses) for any services provided to Tenant which Landlord is not specifically obligated to provide to Tenant pursuant to the terms of this Lease .
6.3 Interruption of Use . Tenant agrees that Landlord shall not be liable for damages, by abatement of Rent (except as set forth in Section 19.5.2 , below) 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 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, constitute a breach of any implied warranty, or relieve Tenant from paying Rent (except as set forth in Section 19.5.2 , below) or performing any of its obligations under this Lease. 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 . The foregoing terms of this Section 6.3 shall not limit Landlord's liability, if any, pursuant to Applicable Laws for property damage or personal injury arising from Landlord's negligence or willful misconduct.
7.1 Landlord's Repair and Maintenance Obligations . Landlord shall maintain in good condition and operating order and keep in good repair and condition, in a manner consistent with the landlords of the Comparable Buildings, the structural portions of the Buildings, including, without limitation, the foundation, floor/ceiling slabs, roof, curtain wall, exterior glass and mullions, columns, beams, shafts (including elevator shafts), stairs, stairwells, elevator cab, men's and women's washrooms located in Common Areas (and excluding men's and women's washrooms on any full floors of the Premises and within any Building fully leased by Tenant), Building mechanical, electrical and telephone closets (collectively, " Building Structure "), the Base Building mechanical, electrical, life safety, plumbing, sprinkler systems and HVAC systems which were not constructed by Tenant Parties (collectively, the " Building Systems ") and the Project Common Areas, including, without limitation, the Project parking facilities and landscaping. Notwithstanding anything in this Lease to the contrary, Tenant shall be required to repair the Building Structure and/or the Building Systems to the extent caused due to Tenant's use of the Premises for other than Permitted Use unless and to the extent such damage is covered by Landlord's Warranty or is covered by insurance carried or required to be carried by Landlord pursuant to Article 10 and to which the waiver of subrogation is applicable (such obligation to the extent applicable to Tenant as qualified and conditioned will hereinafter be defined as the " BS/BS Exception "). The costs of performing Landlord's obligations under this Section 7.1 shall be included in Operating Expenses, but only to the extent permitted (and not excluded) by Section 4.2.4 above.
7.2 Tenant's Repair and Maintenance Obligations . Tenant shall, at Tenant's own expense, pursuant to the terms of this Lease, including without limitation Article 8 hereof, keep the Premises, including all improvements, fixtures, equipment, interior window coverings, and furnishings therein, and the floor or floors of the Building on which the Premises is located, in good order, repair and condition (subject to reasonable wear and tear) at all times during the Lease Term, but such obligation shall not extend to the Building Structure and the Building Systems except pursuant to the BS/BS Exception. In addition, Tenant shall, at Tenant's own expense, pursuant to the terms of this Lease, including Article 8 below, promptly and adequately repair all damage to the Premises and replace or repair all damaged, broken, or worn fixtures and appurtenances, but such obligation shall not extend to the Building Structure and the Building Systems, except pursuant to the BS/BS Exception (and which are not covered by Landlord's Warranty), except for damage caused by ordinary wear and tear or beyond the reasonable control of Tenant; provided however, that, at Landlord's option, or if Tenant fails to make such repairs, Landlord may, after written notice to Tenant and Tenant's failure to repair within fifteen (15) business days thereafter, but need not, make such repairs and replacements, and Tenant shall pay Landlord the actual and reasonable out of pocket cost thereof, and a percentage of the cost thereof (not to exceed three percent (3%) of the cost of such work, to be uniformly established for the Building and/or the Project) sufficient to reimburse Landlord for all overhead, general conditions, fees and other costs or expenses arising from Landlord's involvement with such repairs and replacements forthwith upon being billed for same.
7.3 Other Terms . 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.
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ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1 Landlord's Consent to Alterations . Tenant shall have the right, without Landlord's consent but upon five (5) business days' prior notice to Landlord, to make strictly cosmetic, non‑structural additions and alterations (" Cosmetic Alterations ") to the Premises that do not (i) require a construction permit, or (ii) cause a Design Problem (as that term is defined in the Tenant Work Letter). Except for Cosmetic Alterations, Tenant may not make any improvements, alterations, additions or changes to the Premises or any mechanical, plumbing or HVAC facilities or systems pertaining to the Premises (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, conditioned or delayed by Landlord, provided it shall be deemed reasonable for Landlord to withhold its consent to any Alteration which constitutes a Design Problem. If Landlord disapproves of any proposed Alterations, Landlord shall respond, in writing, stating the grounds for such disapproval, within ten (10) business days after receipt of Tenant’s request for approval of the proposed Alterations. If Landlord fails to respond with its approval or disapproval within ten (10) business days after receipt of Tenant’s request, then Tenant may send Landlord a reminder notice setting forth such failure containing the following sentence at the top of such notice in bold, capitalized font at least twelve (12) points in size: " LANDLORD'S FAILURE TO RESPOND TO THIS NOTICE WITHIN FIVE (5) BUSINESS DAYS SHALL RESULT IN LANDLORD'S DEEMED APPROVAL OF TENANT'S ALTERATION " (the " Reminder Notice "). Any such Reminder Notice shall include a complete copy of Tenant's plans and specification for such Alteration. If Landlord fails to respond within five (5) business days after receipt of a Reminder Notice, then Tenant’s Alteration for which Tenant requested Landlord's approval shall be deemed approved by Landlord. The construction of the initial improvements to the Premises shall be governed by the terms of the Tenant Work Letter and not the terms of this Article 8 .
8.2 Manner of Construction . Landlord may impose, as a condition of its consent to any and all Alterations or repairs of the Premises or about the Premises, reasonable requirements, including, but not limited to, the requirement that Tenant utilize for such purposes only contractors, subcontractors, materials, mechanics and materialmen selected by Tenant reasonably approved by Landlord, the requirement that upon Landlord's request, Tenant shall, at Tenant's expense, remove such Alterations to the extent required pursuant to Section 8.5 below. Tenant shall construct such Alterations and perform such repairs in a good and workmanlike manner, in conformance with any and all Applicable Laws, including without limitation the LEED certification requirements relating to the construction of the Alterations required by the City of San Jose, and pursuant to a valid building permit, issued by the City of San Jose, all in conformance with Landlord's tenant improvement manual promulgated by Landlord regarding construction performed by tenants of the Project and provided to Tenant in writing prior to the date of this Lease (as the same may be reasonably modified by Landlord, on a non-discriminatory basis, from time to time, " TI Manual"); 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 the event Tenant performs any Alterations in the Premises which require or give rise to governmentally required changes to the "Base Building," as that term is defined below, then Landlord shall, at Tenant's expense, make such changes to the Base Building. The " Base Building " shall mean the Building Structure and the Building Systems. In performing the work of any such Alterations, Tenant shall have the work performed in such manner so as not to unreasonably obstruct access to the Project or any portion thereof, by any other tenant of the Project, and so as not to unreasonably 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, would disturb labor harmony with the workforce or trades engaged in performing other work, labor or services in or about the Building or the Common Areas. In addition to Tenant's obligations under Article 9 of this Lease, upon completion of any Alterations, Tenant agrees to cause a Notice of Completion to be recorded in the office of the Recorder of the County of Santa Clara in accordance with Section 8182 of the Civil Code of the State of California or any successor statute, and Tenant shall deliver to the Project construction manager a reproducible copy of the "as built" drawings of the Alterations, as well as an electronic CAD file, as well as all permits, approvals and other documents issued by any governmental agency in connection with the Alterations.
8.3 Payment for Improvements . If payment is made by Tenant directly to contractors, Tenant shall (i) comply with Landlord's reasonable requirements for final lien releases and waivers in connection with Tenant's payment for Alterations work to contractors. If Tenant orders any work directly from Landlord, Tenant shall pay to Landlord an amount equal to two percent (2%) of the cost of such Alterations work to compensate Landlord for all overhead, general conditions, fees and other costs and expenses arising from Landlord's involvement with such Alterations work. If Tenant does not order any Alterations work directly from Landlord, Tenant shall reimburse Landlord for Landlord's reasonable, actual, out-of-pocket costs and expenses actually incurred in connection with Landlord's review of such Alterations work that requires the prior consent of Landlord under Section 8.1 above.
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 or Tenant's contractor carries "Builder's All 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. In addition, Tenant's contractors and subcontractors shall be required to carry Commercial General Liability insurance in an amount approved by Landlord and otherwise in accordance with the requirements of Article 10 of this Lease. Tenant's Contractors and Subcontractors shall name Landlord as an additional insured on their General Liability Policies on a form at least as broad as CG 20 10 11/85.
8.5 Landlord's Property . Except as expressly set forth in this Lease, Landlord and Tenant hereby acknowledge and agree that (i) all Alterations, improvements, fixtures, equipment and/or appurtenances which may be installed or placed in or about the Premises (excluding Tenant's removable trade fixtures, furniture or non-affixed office equipment), from time to time, shall be at the sole cost of Tenant and, if not removed by Tenant prior to the
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
end of the Lease Term, shall upon the expiration or earlier termination of the Lease Term become part of the Premises and the property of Landlord , and (ii) the Tenant Improvements shall, if not removed by Tenant prior to the end of the Lease Term become the property of Landlord upon the expiration or earlier termination of the Lease Term, and in furtherance thereof, prior to the expiration or earlier termination of the Lease Term, Tenant may remove any Alterations, improvements, fixtures and/or equipment which Tenant can substantiate to Landlord have not been paid for with any tenant improvement allowance funds provided to Tenant by Landlord, provided Tenant repairs any damage to the Premises and Building caused by such removal and returns the affected portion of the Premises to a reasonable building standard tenant improved condition . Furthermore, Landlord may, by written notice to Tenant prior to the end of the Lease Term , or given following any earlier termination of this Lease , require Tenant , at Tenant ' s expense, to remove any Specialty Improvements (defined hereinbelow) , and to repair any damage to the Premises and Project caused by such removal ; provided, however, if, in connection with its notice to Landlord requesting Landlord's approval of any Alterations or Tenant Improvements , ( x ) Tenant requests Landlord 's decision with regard to whether the applicable Alteration or Tenant Improvement constitutes a Specialty Improvement that will be required to be removed , and ( y ) Landlord thereafter agrees in writing to waive the removal requirement with regard to such Specialty Improvements , then Tenant shall not be required to so remove such Specialty Improvements ; provided further, however, that if Tenant requests such a determination from Landlord and Landlord, within ten (10) business days following Landlord's receipt of such request from Tenant with respect to Specialty Improvements , fails to address the removal requirement with regard to such Specialty Improvements , then the parties shall mutually and reasonably agree upon whether the Specialty Improvement s are required to be removed prior to the end of the Lease Term for the portion of the Premises containing such Specialty Improvement s . If Tenant fails to complete such removal and/or to repair any damage caused by the removal of any Specialty Improvements , then at Landlord ' s option, either (A) Tenant shall be deemed to be holding over in the Premises and Rent shall continue to accrue in accordance with the terms and conditions of Article 16 , below, until such work shall be completed, and/or (B) Landlord may do so and may charge the cost thereof to Tenant . Tenant hereby protects, defends, indemnifies and holds Landlord harmless from and against any liability, cost, obligation, expense or claim of lien in any manner relating to the installation, placement, removal or financing of any such Alterations , improvements, fixtures and/or equipment in, on or about the Premises , which obligations of Tenant shall survive the expiration or earlier termination of this Lease . Notwithstanding the foregoing, Landlord shall not require Tenant to remove any improvements which do not constitute Specialty Improvements , and in all instances, Tenant shall be required to remove the Mandatory Removal Items. " Specialty Improvements " means any Alterations or Tenant Improvements other than normal and customary general office improvements and with above-standard demolition costs , including laboratories, server rooms, data centers, computer rooms, raised flooring and specialty ceilings , any kitchens, showers, restrooms, washrooms or similar facilities in the Premises that are not part of the Base Building , excluding the Cafeteria and Fitness Center in Building A2 , a ny private/internal stairways in the Premises , as opposed to fire stairs (and Tenant shall be required to demolish and "cap" any such private/internal stairways at the expiration or earlier termination of this Lease). " Mandatory Removal Items " means the following: (a) any Alterations or Tenant Improvements which affect the Base Building , ( b ) any other items, improvements or fixtures which Tenant is expressly required to remove pursuant to the terms of this Lease, (c) any Alterations or improvements located outside of the Premises, (d) any improvements or signage incorporating Tenant ' s name or logo, (e) safes and vaults, and (f) any alteration, improvement or equipment not complying with Applicable Laws , all of which in all cases Tenant shall be required to remove, and to restore the Premises or Project, as applicable, to their previous conditi on .
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 ten (10) business 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 ten (10) 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.
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
ARTICLE 10
INDEMNIFICATION AND
INSURANCE
10.1 Indemnification and Waiver . Tenant hereby assumes all risk of damage to property or injury to persons in, upon or about the Premises from any cause whatsoever (including, but not limited to, any personal injuries resulting from a slip and fall in, upon or about the Premises) 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, provided that the terms of the foregoing assumption and release shall not apply to Landlord's breach of this Lease or the negligence or willful misconduct of Landlord or any Landlord Parties. Tenant shall indemnify, defend, protect, and hold harmless the Landlord Parties from any and all loss, cost, damage, expense and liability (including without limitation court costs and reasonable attorneys' fees) incurred in connection with or arising from any cause in, on or about the Premises (including, but not limited to, a slip and fall), any negligence of Tenant or of any person claiming by, through or under Tenant, or of the contractors, agents, servants, employees, invitees, guests or licensees of Tenant (collectively, " Tenant Parties " or individually, a " Tenant Party ") or any such person, in, on or about the Project or any breach by Tenant of the terms of this Lease, either during or, with respect to those terms that survive the expiration or earlier termination of the Lease Term, after the expiration or earlier termination of the Lease Term, provided that the terms of the foregoing indemnity shall not apply to the extent caused by the negligence or willful misconduct of Landlord or the Landlord Parties. 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 reasonable appraisers', accountants' and attorneys' fees. Landlord shall indemnify, defend, protect, and hold harmless Tenant from any and all loss, cost, damage, expense and liability (including without limitation reasonable attorneys' fees) to the extent arising from the negligence or willful misconduct of Landlord or the Landlord Parties in, on or about the Project, or any breach by Landlord of the terms of this Lease, either during or, with respect to those terms that survive the expiration or earlier termination of the Lease Term, after the expiration or earlier termination of the Lease Term, provided that the terms of Landlord’s foregoing indemnity obligations shall not apply to the extent caused by the negligence or willful misconduct of Tenant or the Tenant Parties. 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 Tenant's or Landlord's, as applicable, 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 are subject to the terms of Section 29.13 below. Notwithstanding anything to the contrary contained in this Lease, nothing in this Lease shall impose any obligations on Tenant or Landlord to be responsible or liable for, and each hereby releases the other from all liability for, consequential damages other than those consequential damages incurred by Landlord in connection with a holdover of the Premises by Tenant after the expiration or earlier termination of this Lease. Notwithstanding the foregoing, for purposes of this Lease, consequential damages shall not be deemed to include property damage or personal injury damages. 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 Insurance . Throughout the Lease Term, Landlord shall procure and maintain in full force and effect with respect to the Building: (i) a policy or policies of property insurance covering the full replacement value of the Building written on a physical loss or damage basis under a "special form" or "All Risk" form policy, together with any coverages or endorsements required by any lender and/or reasonably deemed prudent by Landlord to carry, such as, without limitation, sprinkler leakage, vandalism and malicious mischief coverage, and earthquake; and (ii) a policy of commercial general liability insurance with a limit of liability of not less than $10,000,000 per occurrence insuring Landlord's activities with respect to the Premises and the Building for loss, damage or liability for personal injury or death of any person or loss or damage to property occurring in, upon or about the Premises or the Building. Landlord may meet any of the foregoing occurrence limits with the use of blanket or umbrella policies. Notwithstanding the foregoing provisions of this Section 10.2 , the coverage and amounts of insurance carried by Landlord in connection with the Buildings shall be materially comparable to the coverage and amounts of insurance which are carried by landlords of Comparable Buildings. Tenant shall, at Tenant's expense, comply with all insurance company requirements pertaining to the use of the Premises that (a) have been disclosed in writing to Tenant by Landlord and (b) pertain to Tenant's business operations, conduct or use of the Premises and the Building, whether imposed by Tenant's insurers, Landlord's insurers, or both. If Tenant's conduct or use of the Premises for other than the Permitted Use, Office Permitted Use or Amenities Permitted Use, as applicable, causes any increase in the premium for such insurance policies, and Tenant fails to discontinue such use within fifteen (15) days after Tenant’s receipt of written notice from Landlord of such increase in the premium, 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. The minimum limits of policies of insurance required of Landlord under this Lease shall in no event limit the liability of Landlord under this Lease.
10.3 Tenant's Insurance . Tenant shall maintain the following coverages in the following amounts. Landlord makes no representation or warranty to Tenant that the amount of insurance required to be carried by Tenant under the terms of this Lease is adequate to fully protect Tenant's interests. Tenant is encouraged to evaluate its insurance needs and obtain whatever additional types or amounts of insurance that it may deem desirable or appropriate.
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10.3.1 Commercial General Liability Insurance on an occurrence form covering the insured against claims of bodily injury, personal injury and property damage (including loss of use thereof) arising out of Tenant's operations, and contractual liabilities (covering the performance by Tenant of its indemnity agreements) including a Broad Form endorsement covering the insuring provisions of this Lease and the performance by Tenant of the indemnity agreements set forth in Section 10.1 of this Lease and including products and completed operations coverage for limits of liability on a per location basis of not less than:
Bodily Injury and
|
$5,000,000 each occurrence $5,000,000 annual aggregate |
Personal Injury Liability |
$5,000,000 each occurrence $5,000,000 annual aggregate Reasonable Insured's participation |
The limits above can be provided in combination with an excess or umbrella policy. In the event Tenant is unable to procure the prescribed limit in a single policy, an Excess or Umbrella policy will be acceptable only in the event it includes an endorsement specifying that the coverage provided in the Excess or Umbrella policy will provide coverage on a follow form, primary and non-contributory basis for all additional insureds.
The annual aggregate limits of Insurance shall apply separately to this location.
10.3.2 Physical Damage Insurance covering (i) all office furniture, business and trade fixtures, office equipment, free-standing cabinet work, movable partitions, merchandise and all other items of Tenant's property on the Premises installed by, for, or at the expense of Tenant, (ii) the " Tenant Improvements ," as that term is defined in the Tenant Work Letter, 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 other improvements, alterations and additions to the Premises (excluding the Base Building). Such insurance shall be written on a " Special Form " of physical loss or damage basis, for the full replacement cost value (subject to reasonable deductible amounts) new 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 damage or other loss caused by fire or other peril including, but not limited to, vandalism and malicious mischief, theft, water damage of any type, including sprinkler leakage, bursting or stoppage of pipes, and explosion, and providing business interruption coverage for a period of one year.
10.3.3 Worker's Compensation and Employer's Liability or other similar insurance pursuant to all applicable state and local statutes and regulations.
10.3.4 Contractual Liability Insurance sufficient to cover Tenant's liability and obligations under this Lease (including, but not limited to, Tenant's third-party indemnity obligations under Section 10.1 of this Lease), but only if such contractual liability insurance is not already included in Tenant's commercial general liability insurance policy and umbrella/excess liability insurance policy.
10.3.5 Commercial Auto Liability Insurance (if applicable) covering automobiles owned, hired or used by Tenant in carrying on its business with limits not less than $1,000,000 combined single limit for each accident, and scheduled to the umbrella/excess liability insurance policy.
10.3.6 Business Interruption Insurance in an amount sufficient to cover a period of interruption of not less than twelve (12) months.
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) name Landlord, its officers, directors and employees, Landlord's property manager, and all other persons and/or entities as reasonably directed by Landlord as additional insureds (hereinafter " Additional Insureds "); (ii) specifically cover, including any Additional Insured endorsements, the liability assumed by Tenant under this Lease, including, but not limited to, Tenant's obligations under Section 10.1 of this Lease, using Insurance Service Organization's form 2010 1185 or a comparable form approved by Landlord; (iii) if Tenant uses a Blanket Additional Insured Form, such form shall not exclude any Additional Insured from coverage because they are not a party to this Lease; (iv) be issued by an insurance company having a rating of not less than A-X in Best's Insurance Guide or which is otherwise acceptable to Landlord and licensed to do business in the State of California; (v) other than with respect to Worker's Compensation coverage, be primary and non-contributory insurance as to all claims thereunder and provide that any insurance carried by Landlord is excess and is non-contributing with any insurance requirement of Tenant; (vi) provide that said insurance shall not be canceled or coverage changed unless ten (10) days' prior written notice shall have been given to Landlord and any mortgagee of Landlord (except for cancellation for non-payment of premium); and (vii) Tenant's commercial general liability coverage (including Additional Insured endorsements, and primary and non-contributory endorsements), property insurance and Worker's Compensation and Employer's Liability coverage shall include a waiver of subrogation endorsement in favor of Landlord. Tenant shall deliver said policy or policies or certificates thereof to Landlord on or before the Lease Commencement Date and at least thirty (30) days before the expiration dates thereof. In the event Tenant shall fail to procure such insurance, Landlord may, at its option, procure such policies for the account of Tenant, and the cost thereof shall be paid to Landlord within thirty (30) days after delivery to Tenant of bills therefor.
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
10.5 Subrogation . Landlord and Tenant intend that their respective property loss risks shall be borne by reasonable insurance carriers to the extent above provided, 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. The parties each hereby waive all rights and claims against each other for such losses, and waive all rights of subrogation of their respective insurers, provided such waiver of subrogation shall not affect the right to the insured to recover thereunder. The parties agree that their respective insurance policies are now, or shall be, endorsed such that the waiver of subrogation shall not affect the right of the insured to recover thereunder, so long as no material additional premium is charged therefor. If Landlord or Tenant fail to carry the amounts and types of insurance required to be carried pursuant to this Article 10 , in addition to any remedies Landlord or Tenant may have under this Lease, such failure shall be deemed to be a covenant and agreement by the party failing to carry such insurance to self-insure with respect to the type and amount of insurance such party so failed to carry, with full waiver of subrogation with respect thereto.
10.6 Additional Insurance Obligations . Not more than once every five (5) years, Landlord may request, and Tenant shall carry and maintain during the entire Lease Term, at Tenant's sole cost and expense, increased amounts of the insurance required to be carried by Tenant pursuant to this Article 10 and such other reasonable types of insurance coverage and in such reasonable amounts covering the Premises and Tenant's operations therein, as may be reasonably requested by Landlord. Tenant shall not be required to procure or maintain increased amounts of insurance or other types of insurance coverage that are (a) beyond those typically maintained by similarly situated parties leasing reasonably similar amounts and types of space for use in Comparable Buildings or (b) not available at commercially reasonable rates.
10.7 Self-Insurance . Notwithstanding anything to the contrary contained in Article 10 of this Lease, the Original Tenant only shall, at the Original Tenant’s election, be entitled to self‑insure its insurance requirements set forth in this Lease, provided that any self‑insurance shall be deemed to contain all of the terms and conditions applicable to such insurance as required in Article 10 of this Lease, including, without limitation, a waiver of subrogation. With respect to any claims which may result from incidents occurring during the Lease Term, the Original Tenant's self‑insurance obligation shall survive the expiration of the Lease Term to the same extent as the insurance required under Article 10 of this Lease, as hereby amended, would survive. Notwithstanding anything to the contrary contained in this Article 10 , the Original Tenant shall only have the right to self‑insure its insurance requirements under this Article 10 if the Original Tenant continues to maintain a net worth (excluding good will as an asset), as evidenced by Tenant's most recent year-end financial statement audited by a certified public accountant, of equal to or greater than One Billion and 00/100 Dollars ($1,000,000,000) (the " Financial Requirement "). The Original Tenant, no more than once per calendar year, within fifteen (15) days following a written request from Landlord, shall provide Landlord with Tenant's most recent year-end financial statement audited by a certified public accountant evidencing that the Original Tenant is continuing to satisfy the Financial Requirement. Notwithstanding the foregoing, if Tenant’s financial statements are accessible online through filings with the United States Securities and Exchange Commission, or any other governmental authority of which Tenant notifies Landlord and Landlord is readily able to access the website of the other governmental authority, Tenant shall not be required to provide the requested financial information.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 Repair of Damage to Premises by Landlord . To the extent that Landlord does not have actual knowledge of the same, Tenant shall promptly notify Landlord of any damage to the Premises resulting from fire or any other casualty. If the Premises, Building Structure, Building Systems, or any Common Areas serving or providing access to the Premises shall be damaged by fire or other 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 Applicable Laws or reasonably required by the holder of a mortgage on the Building or Project or any other modifications to the Common Areas deemed desirable by Landlord, provided that such modifications will not violate clauses (a) through (e) of Section 1.1.3 above without the prior written consent of Tenant, which may be given or withheld in Tenant's reasonable discretion. In the event this Lease is not terminated pursuant to this Article 11, Tenant shall, at its sole cost and expense, repair any injury or damage to the Tenant Improvements and the Original Improvements installed in the Premises and shall return such Tenant Improvements and Original Improvements substantially to their original condition, except for modifications required by zoning and building codes and Applicable Laws. Prior to the commencement of construction, Tenant shall submit to Landlord, for Landlord's review and approval (which approval shall not be withheld unless a Design Problem exists), all plans, specifications and working drawings relating thereto, and Tenant shall select the contractors to perform such improvement work, subject to Landlord's reasonable approval. Landlord shall not 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 Landlord shall use commercially reasonable efforts to minimize any such inconvenience or annoyance. If any such fire or other casualty shall have damaged the Premises or Common Areas necessary to Tenant's occupancy, and the Premises (or the affected portion thereof) are not occupied by Tenant as a result thereof, then during the time and to the extent the Premises are unfit for occupancy, the Rent shall be abated in proportion to the ratio that the amount of RSF of the Premises which is unfit for occupancy for the purposes permitted under this Lease bears to the total RSF of the Premises. Tenant's right to rent abatement pursuant to the preceding sentence shall terminate as of the date which is reasonably determined by Landlord to be the date Tenant should have completed repairs to the Premises (and including a reasonable period for the re-installation of Tenant's furniture, fixtures and equipment and moving back into the damaged portion of the Premises) assuming Tenant used reasonable due diligence in connection therewith (provided that in no event shall
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such Rent re-commence until such time as Landlord has restored the Base Building and the Common Areas necessary for Tenant’s use of the Premises to a commercially reasonable condition and Landlord has obtained all occupancy permits that are required to allow the legal occupancy of the affected Building and to allow the Tenant to conduct business operations from its Premises (assuming that Tenant has received a certificate of occupancy, temporary certificate of occupancy, or its legal equivalent, for its Premises, which shall remain Tenant’s obligation)) ; provided that Landlord shall be deemed to have restored the Base Building and the Common Areas on the date that Landlord would have completed such work, but for any delays caused by Tenant or any of Tenant's agents .
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 ninety (90) days to vacate the Premises, but Landlord may so elect only if the Building or Project shall be damaged by fire or other casualty or cause, whether or not the Premises are affected, and one or more of the following conditions is present: (i) in Landlord's reasonable judgment, repairs 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) and Landlord elects to terminate the leases of all other tenants of the Project similarly affected by the damage and destruction and not to commence rebuilding or reconstructing within one (1) year from the date of such damage and/or destruction; (ii) the holder of any mortgage on the Building or Project or ground lessor with respect to the Building or Project shall require that the insurance proceeds or any portion thereof be used to retire the mortgage debt and Tenant does not agree to fund the amount in excess of the "Landlord Contribution," as that term is defined below, or shall terminate the ground lease, as the case may be, and in each such case, Landlord elects to terminate the leases of all other tenants of the Project similarly affected by the damage and destruction and not to commence rebuilding or reconstructing within one (1) year from the date of such damage and/or destruction; (iii) except for the Landlord Contribution, the damage is not fully covered by Landlord's insurance policies (or would not have been covered under the insurance policies which Landlord is required to maintain under this Lease) and Landlord elects not to commence rebuilding or reconstructing within one (1) year from the date of such damage and destruction and elects to terminate the leases of all other tenants of the Project similarly affected by the damage and destruction; or (iv) the damage occurs during the last twelve (12) months of the Lease Term; or (v) any owner of any other portion of the Project, other than Landlord, does not intend to repair the damage to such portion of the Project, and Landlord elects to terminate the leases of all other tenants of the Project similarly affected by the damage and destruction and not to commence rebuilding or reconstructing within one (1) year from the date of such damage and/or destruction; provided, however, that if Landlord does not elect to terminate this Lease pursuant to Landlord's termination right as provided above, and (a) the repairs cannot, in the reasonable opinion of Landlord, be completed within two hundred seventy (270) days after the date of the casualty, or (b) the damage occurs during the last twelve (12) months of the Lease Term, or (c) after commencing repairs, Landlord fails to complete the same by the “Anticipated Repair Completion Date” (as hereinafter defined), then Tenant may elect, no earlier than sixty (60) days after the date of the damage and in the case of (a) or (b) above not later than one hundred twenty (120) 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. For the purposes of this Section 11.2 , the " Landlord Contribution " shall mean $10,000,000.00. At any time, from time to time, after the date occurring thirty (30) days after the date of the damage, Tenant may request that Landlord provide Tenant with its reasonable, good faith opinion of the date of completion of the repairs (the “ Anticipated Repair Completion Date ”), and Landlord shall respond to such request within five (5) business days. 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 fire or other casualty was not caused by the gross negligence or willful misconduct of Tenant and/or its partners or subpartners and/or their respective officers, agents, servants, employees, and/or independent contractors; (b) Tenant is not then in default under this Lease beyond any applicable notice and cure period; and (c) as a result of the damage, Tenant cannot (and does not) reasonably conduct business from a material portion of the Premises
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.
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 or payment of Rent by Tenant shall not be deemed to be a waiver of any preceding breach by Tenant or Landlord 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 or Tenant's knowledge of such preceding breach at the time of acceptance or payment 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
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without prejudice to Landlord's right to recover the full amount due. No receipt of monies by Landlord from Tenant or payment by Tenant to Landlord 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 , but any such paid amounts shall be credited against the sums Tenant would otherwise owe Landlord. Tenant's payment of any Rent hereunder shall not constitute a waiver by Tenant of any breach or default by Landlord under this Lease nor shall Landlord's payment of monies due Tenant hereunder constitute a waiver by Landlord of any breach or default by Tenant under this Lease .
If the whole or any material 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 material 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; provided, however, that Landlord shall only have the right to terminate this Lease if Landlord terminates the leases of all other tenants of the Building similarly affected by the taking. If more than twenty-five percent (25%) of the RSF of the Premises is taken, or if access to the Premises is substantially impaired, or if any material portion of the parking for the Premises is taken, 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 but Landlord may only terminate this Lease upon the foregoing terms if Landlord terminates the leases of all other tenants of the Building similarly affected by the taking. 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 claim is payable separately to Tenant or is otherwise separately identifiable. Notwithstanding anything in this Article 13 to the contrary, Landlord and Tenant shall each be entitled to receive fifty percent (50%) of the "bonus value" of the leasehold estate in connection therewith, which bonus value shall be equal to the difference between the Rent payable under this Lease and the sum established by the condemning authority as the award for compensation for the leasehold. 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 RSF of the Premises taken bears to the total RSF of the Premises. Landlord shall be entitled to receive the entire award made in connection with any such temporary taking, but nothing herein shall preclude Tenant from seeking a recovery from the condemning authority to the extent Landlord's award is not reduced as a result thereof.
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 Transfers . Tenant shall not, without the prior written consent of Landlord (except as otherwise provided in Section 14.8 below), which consent shall not be unreasonably withheld, conditioned or delayed (subject to the terms of Section 14.2, below ), assign, mortgage, pledge, hypothecate, encumber, or permit any lien to attach to, or otherwise transfer, this Lease or any interest hereunder, permit any assignment, or other transfer of this Lease or any interest hereunder by operation of law, sublet the Premises or any part thereof, or enter into any license or concession agreements 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, subject to the terms of this Section 14 below (all of the foregoing are hereinafter sometimes referred to individually as a " Transfer " and collectively as " Transfers " and any person 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 twenty (20) 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, 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 Landlord's consent to such Transfer, and (iv) current financial statements of the proposed Transferee certified by an officer, partner or owner thereof or by a certified public accountant, business credit and personal references and history of the proposed Transferee and any other information reasonably 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 (or deemed consent) 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 reasonable review and processing fees, as well as
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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 (" Transfer Fee "), provided, Tenant shall not be required to pay more than Two Thousand Five Hundred Dollars ($2,500.00) as a Transfer Fee in connection with any one Transfer in the ordinary course of business , (b) Landlord shall provide supporting documentation for the Transfer Fee , and (c) no Transfer Fee shall be payable by Tenant in the event of any deemed approval of a proposed Transfer following Landlord’s failure to timely respond as set forth above. The foregoing Transfer Fee cap shall increase by ten percent (10%) after each five (5) year period during the Lease Term .
14.2 Landlord's Consent . Landlord shall not unreasonably withhold or delay its consent to any proposed Transfer of the Subject Space to the Transferee on the terms specified in the Transfer Notice. Within fifteen (15) business days after receiving the completed Transfer Notice, Landlord shall approve or disapprove the proposed Transfer in writing. If Landlord disapproves the Transfer, Landlord shall provide a reasonably detailed, written explanation. If Landlord fails to respond within the required time, Tenant may send a written "reminder notice". If Landlord fails to respond within five (5) business days after receipt of such reminder notice, then, with respect to a sublease only, Landlord shall, at Tenant's option, be considered to have consented to the Transfer. Without limitation as to other reasonable grounds for withholding consent, the parties hereby agree that it shall be reasonable under this Lease and under any Applicable Law for Landlord to withhold consent to any proposed Transfer where one or more of the following apply:
14.2.1 The Transferee is engaged in a business which is not consistent with the quality of the Building, as judged by then existing tenants of the Building and of Comparable Buildings;
14.2.2 The Transferee intends to use the Subject Space for purposes which are not permitted under this Lease;
14.2.3 The Transferee is either a governmental agency or instrumentality thereof unless Landlord, with respect to the applicable Building, has leased space or has approved any assignment or subletting to comparable (in terms of use, security issues, express or implied power of eminent domain, reputation and character) governmental agencies or instrumentalities thereof;
14.2.4 During the first three (3) years of the Lease Term only (or such earlier period as the remainder of the office space in Building 2 is ninety percent (90%) leased), the rent charged by Tenant to such Transferee during the term of such Transfer, calculated using a present value analysis, is less than ninety-five percent (95%) of the rent being quoted by Landlord at the time of such Transfer for comparable space in the Project for a comparable term, calculated using a present value analysis;
14.2.5 The Transferee is not (considering any credit enhancements provided) a party of reasonable financial worth and/or financial stability in light of the responsibilities to be undertaken in connection with the Transfer on the date consent is requested;
14.2.6 The proposed Transfer would cause a violation of an exclusive use right granted by Landlord in good faith in another lease for space in the Project, or would give an occupant of the Project a right to cancel its lease as a result of the proposed use to be made of the space by the proposed Transferee, provided that upon request from Tenant, Landlord shall provide Notice of all applicable exclusive use rights in the Project; or
14.2.7 The terms of the proposed Transfer will allow the Transferee to exercise a right of renewal, right of expansion, right of first offer, or other similar right held by Tenant (or will allow the Transferee to occupy space leased by Tenant pursuant to any such right, but not yet occupied by Tenant).
14.2.8 Either the proposed Transferee, or any person or entity which directly or indirectly, controls, is controlled by, or is under common control with, the proposed Transferee, (i) occupies space in the Project at the time of the request for consent, or (ii) is negotiating with Landlord or has negotiated with Landlord during the six (6) month period immediately preceding the date Landlord receives the Transfer Notice, to lease space in the Project, and in either instance, Landlord has comparable space available.
If Landlord consents to any Transfer pursuant to the terms of this Section 14.2 (and does not exercise any recapture rights Landlord may have under Section 14.4 of this Lease), Tenant may within nine (9) months after Landlord's consent, but not later than the expiration of said nine-month period, enter into such Transfer of the Premises or portion thereof, upon substantially the same terms and conditions as are set forth in the Transfer Notice furnished by Tenant to Landlord pursuant to Section 14.1 of this Lease, provided that if there are any material changes in the terms and conditions from those specified in the Transfer Notice (i) such that Landlord would initially have been entitled to refuse its consent to such Transfer under this Section 14.2 , or (ii) which would cause the proposed Transfer to be more favorable to the Transferee than the terms set forth in Tenant's original Transfer Notice, Tenant shall again submit the Transfer to Landlord for its approval and other action under this Article 14 (including Landlord's right of recapture, if any, under Section 14.4 of this Lease). Notwithstanding anything to the contrary in this Lease, if Tenant or any proposed Transferee claims that Landlord has unreasonably withheld, conditioned or delayed its consent under Section 14.2 or otherwise has breached or acted unreasonably under this Article 14 , their sole remedies shall be a suit for contract damages (other than damages for injury to, or interference with, Tenant's business including, without limitation, loss of profits, however occurring) or declaratory judgment and an injunction for the relief sought, and Tenant hereby waives all other remedies, including, without limitation, any right at law or equity to terminate this Lease, on its own behalf and, to the extent permitted under all Applicable Laws, on behalf of the proposed Transferee.
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14.3 Transfer Premium . If Landlord consents to a Transfer, as a condition thereto which the parties hereby agree is reasonable, Tenant shall pay to Landlord fifty percent (50%) of any Transfer Premium received by Tenant from such Transferee. " Transfer Premium " shall mean all rent, additional rent or other consideration payable by such Transferee in connection with the Transfer in excess of the Rent and Additional Rent payable by Tenant under this Lease during the term of the Transfer on a per RSF basis if less than all of the Premises is transferred. The Transfer Premium shall be calculated after deducting the reasonable expenses incurred by Tenant for (i) any changes, alterations and improvements to the Premises in connection with the Transfer, (ii) any free base rent or other economic concessions (including use of furniture, fixtures and equipment) reasonably provided to the Transferee, (iii) any brokerage commissions and reasonable legal fees and other professional fees incurred by Tenant in connection with the Transfer, and (iv) any amounts payable to Landlord under Section 14.1 above (collectively, " Transfer Costs "). Tenant shall first recoup all Transfer Costs from the Transferee before any Transfer Premium must be paid to Landlord. " Transfer Premium " shall also include, but not be limited to, key money, bonus money or other cash consideration paid by Transferee to Tenant in connection with such Transfer, and any payment in excess of fair market value for services rendered by Tenant to Transferee or for assets, fixtures, inventory, equipment, or furniture transferred by Tenant to Transferee in connection with such Transfer.
14.4 Landlord's Option as to Subject Space . Notwithstanding anything to the contrary contained in this Article 14 , Tenant shall give Landlord notice (the " Intention to Transfer Notice ") at any time determined in Tenant’s sole discretion prior to or concurrent with Tenant’s delivery of a Transfer Notice that Tenant is contemplating a Transfer (whether or not the contemplated Transferee or the terms of such contemplated Transfer have been determined); provided, however, that Landlord hereby acknowledges and agrees that Tenant shall only be obligated to deliver an Intention to Transfer Notice hereunder, and Landlord shall only have the right to recapture space with respect to, a Transfer pertaining to (x) the entire Premises for any portion of the remaining Lease Term and/or (y) at least fifty percent (50%) of the Premises for the lesser of (i) three (3) or more years, or (ii) all or substantially all of the remaining Lease Term. Landlord's right to recapture as set forth in this Section 14.4 shall not be triggered unless and until Landlord receives an Intention to Transfer Notice from Tenant. Tenant may indicate in a Transfer Notice that such Transfer Notice also serves as an Intention to Transfer Notice, but, in any event, if Tenant fails to deliver an Intention to Transfer Notice with respect to Contemplated Transfer Space, and thereafter delivers a Transfer Notice, such Transfer Notice shall be deemed to also serve as an Intention to Transfer Notice with respect to the Subject Space described in the Transfer Notice. The Intention to Transfer Notice shall specify the portion of and amount of RSF of the Premises which Tenant intends to Transfer (the " Contemplated Transfer Space "), the contemplated date of commencement of the contemplated Transfer (the " Contemplated Effective Date "), and the contemplated length of the term of such contemplated Transfer, and shall specify that such Intention to Transfer Notice is delivered to Landlord pursuant to this Section 14.4 in order to allow Landlord to elect to recapture the Contemplated Transfer Space. Thereafter, Landlord shall have the option, by giving written notice to Tenant within fifteen (15) business days after receipt of any Intention to Transfer Notice, to recapture the Contemplated Transfer Space. If Landlord elects to recapture, then the recapture shall cancel and terminate this Lease with respect to such Contemplated Transfer Space as of the Contemplated Effective Date. In the event of a recapture by Landlord, if this Lease shall be canceled with respect to less than the entire Premises, (I) the Base Rent reserved herein shall be proportionately reduced based upon the number of RSF relinquished by Tenant on each applicable floor of the Premises and the applicable Base Rent per RSF for such floor of the Premises, and (II) Tenant’s Share shall be proportionately reduced based upon the number of RSF of the Premises relinquished by Tenant and the total RSF of the Building. If Landlord declines, or fails to elect in a timely manner, to recapture such Contemplated Transfer Space under this Section 14.4 , then, subject to the other terms and conditions of this Article 14 , for a period of nine (9) months (the " Nine Month Transfer Period ") commencing on the last day of such fifteen (15) business day period, Landlord shall not have any right to recapture the Contemplated Transfer Space with respect to any Transfer made during the Nine Month Transfer Period, provided that any such Transfer is substantially on the terms set forth in the Intention to Transfer Notice, and provided further that any such Transfer shall be subject to the remaining terms and conditions of this Article 14 . If such a Transfer is not so consummated within the Nine Month Transfer Period (or if a Transfer is so consummated, then upon the expiration of the term of any Transfer of such Contemplated Transfer Space consummated within such Nine Month Transfer Period), Tenant shall again be required to submit a new Intention to Transfer Notice to Landlord with respect any contemplated Transfer, as provided above in this Section 14.4 .
14.5 Effect of Transfer . If Landlord consents to a Transfer, (i) the terms and conditions of this Lease shall in no way be deemed to have been waived or modified, (ii) such consent shall not be deemed consent to any further Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to Landlord, promptly after execution, an original executed copy of all documentation evidencing the Transfer in form reasonably acceptable to Landlord, (iv) Tenant shall furnish upon Landlord's request a complete statement, certified by an independent certified public accountant, or Tenant's chief financial officer or another financial officer of Tenant, setting forth in detail the computation of any Transfer Premium Tenant has derived and shall derive from such Transfer, and (v) no Transfer relating to this Lease or agreement entered into with respect thereto, whether with or without Landlord's consent, shall relieve Tenant or any guarantor of the Lease from any liability under this Lease, including, without limitation, in connection with the Subject Space. Landlord or its authorized representatives shall have the right at all reasonable times to audit the books, records and papers of Tenant relating to the calculation of any Transfer Premium, and shall have the right to make copies thereof. If the Transfer Premium respecting any Transfer shall be found understated, Tenant shall, within thirty (30) days after demand, pay the deficiency, and if understated by more than five percent (5%), Tenant shall pay Landlord's costs of such audit.
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14.6 Additional Transfers . For purposes of this Lease, the term " Transfer " shall also include (i) if Tenant is a partnership, the withdrawal or change, voluntary, involuntary or by operation of law, of more than fifty percent (50%) of the partners, or transfer of more than fifty percent (50%) of partnership interests, within a twelve (12)-month period, or the dissolution of the partnership without immediate reconstitution thereof, and (ii) if Tenant is a closely held corporation ( i.e. , whose stock is not publicly held and not traded through an exchange or over the counter), (A) the dissolution, merger, consolidation or other reorganization of Tenant or (B) the sale or other transfer of an aggregate of more than fifty percent (50%) of the voting shares of Tenant (other than to immediate family members by reason of gift or death), within a twelve (12)-month period, or (C) the sale, mortgage, hypothecation or pledge of an aggregate of more than fifty percent (50%) of the value of the unencumbered assets of Tenant within a twelve (12)-month period.
14.7 Occurrence of Material Default . Any Transfer hereunder shall be subordinate and subject to the provisions of this Lease, and if this Lease shall be terminated during the term of any Transfer, except as provided in Section 14.9 below, Landlord shall have the right to: (i) treat such Transfer as cancelled and repossess the Subject Space by any lawful means, or (ii) require that such Transferee attorn to and recognize Landlord as its landlord under any such Transfer. If Tenant shall be in monetary or material non-monetary default under this Lease beyond any applicable notice and cure period, then Landlord is hereby irrevocably authorized to direct any Transferee to make all payments under or in connection with the Transfer directly to Landlord (which payments Landlord shall apply towards Tenant's obligations under this Lease) until such monetary or material non-monetary default is cured. Such Transferee shall rely on any representation by Landlord that Tenant is in monetary or material non-monetary default hereunder beyond any applicable notice and cure period, without any need for confirmation thereof by Tenant. Upon any assignment, the assignee shall assume in writing all obligations and covenants of Tenant thereafter to be performed or observed under this Lease. No collection or acceptance of rent by Landlord from any Transferee shall be deemed a waiver of any provision of this Article 14 or the approval of any Transferee or a release of Tenant from any obligation under this Lease, whether theretofore or thereafter accruing. In no event shall Landlord's enforcement of any provision of this Lease against any Transferee be deemed a waiver of Landlord's right to enforce any term of this Lease against Tenant or any other person. If Tenant's obligations hereunder have been guaranteed, Landlord's consent to any Transfer shall not be effective unless the guarantor also consents to such Transfer.
14.8 Deemed Consent Transfers . Notwithstanding anything to the contrary contained in this Lease, (A) an assignment or subletting of all or a portion of the Premises to an affiliate of Tenant (an entity which is controlled by, controls, or is under common control with, Tenant as of the date of this Lease), (B) a sale of corporate shares of capital stock in Tenant in connection with an initial public offering of Tenant's stock on a nationally-recognized stock exchange, (C) an assignment of the Lease to an entity which acquires all or substantially all of the stock or assets of Tenant, or (D) an assignment of the Lease to an entity which is the resulting entity of a merger or consolidation of Tenant during the Lease Term, shall not be deemed a Transfer requiring Landlord's consent under this Article 14 (any such assignee or sublessee described in items (A) through (D) of this Section 14.8 is hereinafter referred to as a " Permitted Transferee "), provided that (i) Tenant notifies Landlord at least thirty (30) days prior to the effective date of any such assignment or sublease and promptly supplies Landlord with any documents or information reasonably requested by Landlord regarding such Transfer or Permitted Transferee as set forth above, (ii) Tenant is not in default, beyond the applicable notice and cure period, and such assignment or sublease is not a subterfuge by Tenant to avoid its obligations under this Lease, (iii) such Permitted Transferee is engaged in a business which is consistent with the quality of the Building, as judged by then existing tenants of the Building and of Comparable Buildings, (iv) such Permitted Transferee shall have a long term issuer credit rating from Moody's Professional Rating Service (" Moody's ") of BB or better (or in the event such applicable Moody's ratings are no longer available, comparable ratings from Fitch Ratings Ltd. (" Fitch ") or Standard and Poor's Professional Rating Service (" S&P ")), (v) no assignment or sublease relating to this Lease, whether with or without Landlord's consent, shall relieve Tenant from any liability under this Lease, and (vi) the liability of such Permitted Transferee under either an assignment or sublease shall be joint and several with Tenant. An assignee of Tenant's entire interest in this Lease who qualifies as a Permitted Transferee may also be referred to herein as a " Permitted Transferee Assignee ." " Control ," as used in this Section 14.8 , shall mean the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities of, or possession of the right to vote, in the ordinary direction of its affairs, of more than fifty percent (50%) of the voting interest in, any person or entity.
14.9 Occupancy by Others . Notwithstanding any contrary provision of this Article 14 , Tenant shall have the right without the payment of a Transfer Premium, without being subject to Section 14.4, and without the receipt of Landlord's consent, to permit the occupancy of portions of the Premises to any individual(s) or entities with a business relationship with Tenant (" Tenant's Occupants ") subject to the following conditions: (i) all such individuals or entities shall be of a character and reputation consistent with the quality of the Building, as judged by then existing tenants of the Building and of Comparable Buildings; (ii) such occupancy shall not be a subterfuge by Tenant to avoid its obligation under this Lease or the restrictions on Transfers pursuant to this Article 14 , (iii) in the aggregate, such Tenant's Occupants do not occupy more than ten percent (10%) of the Premises; and (iv) such Tenant's Occupants do not have a separately demised space or separate exclusive entrance to their space. Tenant shall promptly supply Landlord with any document or information reasonably requested by Landlord regarding any such individuals or entities. Any occupancy permitted under this Section 14.9 shall not be deemed a Transfer under this Article 14 and shall not require Landlord's consent. Notwithstanding the foregoing, no such occupancy shall relieve Tenant from any liability under this Lease.
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ARTICLE 15
SURRENDER OF PREMISES; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES
15.1 Surrender of Premises . No act or thing done by Landlord or any agent or employee of Landlord during the Lease Term shall be deemed to constitute an acceptance by Landlord of a surrender of the Premises unless such intent is specifically acknowledged in writing by Landlord. The delivery of keys to the Premises to Landlord or any agent or employee of Landlord shall not constitute a surrender of the Premises or effect a termination of this Lease, whether or not the keys are thereafter retained by Landlord, and notwithstanding such delivery Tenant shall be entitled to the return of such keys at any reasonable time upon request until this Lease shall have been properly terminated. The voluntary or other surrender of this Lease by Tenant, whether accepted by Landlord or not, or a mutual termination hereof, shall not work a merger, and at the option of Landlord shall operate as an assignment to Landlord of all subleases or subtenancies affecting the Premises or terminate any or all such sublessees or subtenancies.
15.2 Removal of Tenant Property by Tenant . Upon the expiration of the Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject to the provisions of this Article 15 , quit and surrender possession of the Premises to Landlord in as good order and condition as when Tenant took possession and as thereafter improved by Landlord and/or Tenant, excepting reasonable wear and tear, damage from casualty which is not Tenant's obligation to repair, and repairs which are specifically made the responsibility of Landlord hereunder excepted. Upon such expiration or termination, Tenant shall, without expense to Landlord, remove or cause to be removed from the Premises all debris and rubbish, and such items of furniture, equipment, business and trade fixtures, free-standing cabinet work, movable partitions and other articles of personal property owned by Tenant or installed or placed by Tenant at its expense in the Premises, including cables, conduits and floor monuments (unless otherwise agreed by Landlord), and such similar articles of any other persons claiming under Tenant, as Landlord may require to be removed in accordance with the terms of this Lease, and Tenant shall repair at its own expense all damage to the Premises and Building resulting from such removal.
15.3 End of Term Walk-Through . At least forty-five (45) days prior to the expiration of this Lease, Tenant may provide Landlord with a notice (the " Walk-Through Notice ") requesting a walk-through of the Premises to confirm the condition thereof and any removal or restoration obligations. Within thirty (30) days after Landlord’s receipt of such Walk-Through Notice, Landlord and Tenant shall conduct an exit walk-through of the Premises. The exit walk-through is to be conducted on a date and time mutually acceptable to Landlord and Tenant; however, if the parties are unable to agree on a time and date, such walk-through shall be conducted at 10:00 a.m. on the thirtieth (30th) day after such Walk-Through Notice; except if such day falls on a Holiday, Saturday or Sunday in which case such walk-through shall be conducted on the next business day. Within five (5) business days after such walk-through, Landlord will provide Tenant with a list of items, if any, that are Tenant's responsibility to remove or restore pursuant to Section 15.2 or Section 8.5 of this Lease. If Tenant concurs with such list, Tenant shall proceed to comply with same (and all such work shall be completed prior to the Lease Expiration Date). If Tenant disagrees with Landlord, Landlord and Tenant shall attempt to agree and modify the list in accordance with such agreement, but no such disagreement shall excuse Tenant from any failure to comply with its restoration and removal obligations under this Lease.
If Tenant holds over after the expiration of the Lease Term with the express written consent of Landlord, such tenancy shall be from month-to-month only, and shall not constitute a renewal hereof or an extension for any further term, and in such case Base Rent shall be payable at a monthly rate of one hundred fifty percent (150%) of the Base Rent applicable during the last rental period of the Lease Term under this Lease. Such month-to-month tenancy shall be subject to every other applicable term, covenant and agreement contained herein. If Tenant holds over after the expiration of the Lease Term without the express written consent of Landlord, such tenancy shall be a tenancy at sufferance, and shall not constitute a renewal hereof or an extension for any further term, and in such case daily damages in any action to recover possession of the Premises shall be calculated at a daily rate equal to the greater of (i) one hundred fifty percent (150%) of the Base Rent applicable during the last rental period of the Lease Term under this Lease (calculated on a per diem basis) or (ii) the fair market rental rate for the Premises as of the commencement of such holdover period. Nothing contained in this Article 16 shall be construed as consent by Landlord to any holding over by Tenant, and Landlord expressly reserves the right to require Tenant to vacate and deliver possession of the Premises to Landlord as provided in this Lease upon the expiration or other termination of this Lease. The provisions of this Article 16 shall not be deemed to limit or constitute a waiver of any other rights or remedies of Landlord provided herein or at law. If Tenant holds over without Landlord's express written consent, and tenders payment of rent for any period beyond the expiration of the Lease Term by way of check (whether directly to Landlord, its agents, or to a lock box) or wire transfer, Tenant acknowledges and agrees that the cashing of such check or acceptance of such wire shall be considered inadvertent and not be construed as creating a month-to-month tenancy, provided Landlord refunds such payment to Tenant promptly upon learning that such check has been cashed or wire transfer received. Tenant acknowledges that any holding over without Landlord's express written consent may compromise or otherwise affect Landlord's ability to enter into new leases with prospective tenants regarding the Premises. Therefore, if Tenant fails to vacate and deliver the Premises prior to the date that is the later of (i) thirty (30) days after the termination or expiration of this Lease, and (ii) thirty (30) days after Landlord's notification to Tenant that Landlord has reached agreement with a third-party for occupancy of the Premises or any portion thereof, in addition to any other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless from and against all claims made by any succeeding tenant founded upon such failure to vacate and deliver, and any losses suffered by Landlord, including lost profits, resulting from such failure to vacate and deliver. Tenant agrees that any proceedings necessary to recover possession of the Premises, whether before or after expiration of the Lease Term, shall be considered an action to enforce the terms of this Lease for purposes of the awarding of any attorney's fees in connection therewith.
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
ARTICLE 17
ESTOPPEL CERTIFICATES
17.1 Tenant Estoppel Certificate . Within ten (10) business days following a request in writing by Landlord, Tenant shall execute, acknowledge and deliver to Landlord an estoppel certificate, which, as submitted by Landlord, shall be substantially in the form of Exhibit E , attached hereto (or such other commercially reasonable form as may be required by any prospective mortgagee or purchaser of the Project, or any portion thereof), indicating therein any exceptions thereto that may exist at that time, and shall also contain any other factual information regarding the Premises of this Lease reasonably requested by Landlord or Landlord's mortgagee or prospective mortgagee. Any such certificate may be relied upon by any prospective mortgagee or purchaser of all or any portion of the Project. At any time during the Lease Term, Landlord may require Tenant to provide Landlord with a current financial statement and financial statements of the two (2) years prior to the current financial statement year. Such statements shall be prepared in accordance with generally accepted accounting principles and, if such is the normal practice of Tenant, shall be audited by an independent certified public accountant. Notwithstanding the foregoing, for any year during which (i) stock in the entity which constitutes Tenant under this Lease (as opposed to an entity that controls Tenant or is otherwise an affiliate of Tenant) is publicly traded on NASDAQ or a national stock exchange, and (ii) Tenant has its own, separate and distinct 10K and 10Q filing requirements (as opposed joint or cumulative filings with an entity that controls Tenant or with entities which are otherwise affiliates of Tenant), then Tenant's obligation to provide Landlord with a copy of its financial statements for any such year shall be deemed satisfied. Failure of Tenant to timely execute, acknowledge and deliver such estoppel certificate (or provide written comments to any proposed certificate delivered by Landlord) within a two (2) business day period following the receipt of Landlord’s second written request therefor shall constitute an acceptance of the Premises and an acknowledgment by Tenant that statements included in the estoppel certificate are true and correct, without exception.
17.2 Landlord Estoppel Certificate . Landlord hereby agrees to provide to Tenant an estoppel certificate signed by Landlord, containing the same types of information (including, without limitation, the same representations and warranties and reliance language), and within the same periods of time, as set forth on Exhibit E , with such changes as are reasonably necessary to reflect that the estoppel certificate is being granted and signed by Landlord to Tenant, rather than from Tenant to Landlord or a lender, and shall also contain any other factual information reasonably requested by Tenant. If Landlord fails to timely execute, acknowledge and deliver such estoppel certificate (or provide written comments to any proposed certificate delivered by Tenant) within ten (10) business days following receipt thereof, Landlord shall be deemed to have disapproved such estoppel certificate. Any such certificate may be relied upon by any prospective assignee, lender, subtenant or investor of Tenant. If Landlord provides written comments to any estoppel certificate received from Tenant, then Landlord shall have five (5) business days following receipt of a revised estoppel certificate to execute, acknowledge and deliver to Tenant such revised estoppel certificate (or provide written comments to any such revised estoppel certificate delivered by Tenant) and the same process described above shall apply with respect to Landlord's failure to timely execute, acknowledge and deliver such revised estoppel certificate (or provide written comments to any proposed certificate delivered by Tenant).
This Lease shall be subject and subordinate to all present and future ground or underlying leases of the Building or Project and to the lien of any mortgage, trust deed or other encumbrances now or hereafter in force against the Building or Project or any part thereof, if any, and to all renewals, extensions, modifications, consolidations and replacements thereof, and to all advances made or hereafter to be made upon the security of such mortgages or trust deeds, unless the holders of such mortgages, trust deeds or other encumbrances, or the lessors under such ground lease or underlying leases (collectively, " Lenders "), require in writing that this Lease be superior thereto. Landlord's delivery to Tenant of commercially reasonable non-disturbance agreement(s) (the " Nondisturbance Agreement ") in favor of Tenant from any Lenders who come into existence following the date hereof but prior to the expiration of the Lease Term shall be in consideration of, and a condition precedent to, Tenant's agreement to be bound by the terms and conditions of this Article 18 . Tenant covenants and agrees in the event any proceedings are brought for the foreclosure of any such mortgage or deed in lieu thereof (or if any ground lease is terminated), to attorn, without any deductions or set-offs whatsoever (except for any rights to rent abatement and rights to offset rent expressly set forth in this Lease), to the Lender upon any such foreclosure sale or deed in lieu thereof, if so requested to do so by such Lender, and to recognize such Lender as the lessor under this Lease, provided such Lender shall agree to accept this Lease (including, without limitation, Landlord’s obligations to fund the Tenant Improvement Allowance in accordance with the Tenant Work Letter) and not disturb Tenant's occupancy, so long as Tenant is not in default under this Lease beyond applicable notice and cure periods. Landlord's interest herein may be assigned as security at any time to any lienholder. Tenant shall, within ten (10) business days of request by Landlord, execute such further instruments or assurances as Landlord may reasonably deem necessary to evidence or confirm the subordination or superiority of this Lease to any such mortgages, trust deeds, ground leases or underlying leases. Subject to Tenant's receipt of the Nondisturbance Agreement described herein, Tenant waives the provisions of any current or future statute, rule or law which may give or purport to give Tenant any right or election to terminate or otherwise adversely affect this Lease and the obligations of the Tenant hereunder in the event of any foreclosure proceeding or sale. Concurrently with the execution of this Lease by Tenant and Landlord, Landlord shall provide to Tenant the Nondisturbance Agreement in Exhibit H attached hereto executed and notarized by the existing mortgagee for the Building and Landlord.
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
19.1 Events of Default . The occurrence of any of the following shall constitute a default of this Lease by Tenant:
19.1.1 Any failure by Tenant to pay any Rent or any other charge required to be paid under this Lease, or any part thereof, when due unless such failure is cured within five (5) business days after notice; or
19.1.2 Except where a specific time period is otherwise set forth in this Section 19.1 , any failure by Tenant to observe or perform any other provision, covenant or condition of this Lease to be observed or performed by Tenant where such failure continues for thirty (30) days after Tenant's receipt of written notice thereof from Landlord; provided that if the nature of such default is such that the same cannot reasonably be cured within a thirty (30) day period, Tenant shall not be deemed to be in default if it diligently commences such cure within such period and thereafter diligently proceeds to rectify and cure such default; or
19.1.3 Abandonment (as defined in California Civil Code Section 1951.3) of the Premises by Tenant; or
19.1.4 The failure by Tenant to observe or perform according to the provisions of Articles 5 , 17 or 18 of this Lease or under the Tenant Work Letter where such failure continues for more than five (5) business days after Tenant's receipt of written notice from Landlord.
The notice periods provided herein are in addition to, and not in lieu of, any notice and/or cure periods expressly provided under the applicable terms of this Lease and/or provided by law. No statutory notice may be sent until the cure periods set forth in this Section 19.1 have expired without a cure being effectuated.
19.2 Remedies Upon Default . Upon the occurrence of any event of default by Tenant (beyond applicable notice and cure periods), Landlord shall have, in addition to any other remedies available to Landlord at law or in equity (all of which remedies shall be distinct, separate and cumulative), the option to pursue any one or more of the following remedies, each and all of which shall be cumulative and nonexclusive, without any notice or demand whatsoever, except as required by Applicable Laws.
19.2.1 Terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any other remedy which it may have for possession or arrearages in rent, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying the Premises or any part thereof, without being liable for prosecution or any claim or damages therefor; and Landlord may recover from Tenant the following:
(i) The worth at the time of award of unpaid rent which has been earned at the time of such termination; plus
(ii) The worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus
(iii) The worth at the time of award of the amount by which the unpaid rent for the balance of the Lease Term after the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus
(iv) Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom; and
(v) At Landlord's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by Applicable Law.
The term " rent " as used in this Section 19.2 shall be deemed to be and to mean all sums of every nature required to be paid by Tenant pursuant to the terms of this Lease, whether to Landlord or to others. As used in Sections 19.2.1(i) and (ii) , above, the "worth at the time of award" shall be computed by allowing interest at the rate set forth in Article 25 of this Lease, but in no case greater than the maximum amount of such interest permitted by law. As used in Section 19.2.1(iii) above, the " worth at the time of award " shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).
19.2.2 Landlord shall have the remedy described in California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee's breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations). Accordingly, if Landlord does not elect to terminate this Lease on account of any default by Tenant, Landlord may, from time to time, without terminating this Lease, enforce all of its rights and remedies under this Lease, including the right to recover all rent as it becomes due.
19.2.3 Landlord shall at all times have the rights and remedies (which shall be cumulative with each other and cumulative and in addition to those rights and remedies available under Sections 19.2.1 and 19.2.2 , above, or any law or other provision of this Lease), without prior demand or notice except as required by Applicable Law, to seek any declaratory, injunctive or other equitable relief, and specifically enforce this Lease, or restrain or enjoin a violation or breach of any provision hereof.
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
19.3 Subleases of Tenant . If Landlord elects to terminate this Lease on account of any default by Tenant, as set forth in this Article 19 , Landlord shall have the right to terminate any and all subleases, licenses, concessions or other consensual arrangements for possession entered into by Tenant and affecting the Premises or may, in Landlord's sole discretion, succeed to Tenant's interest in such subleases, licenses, concessions or arrangements. In the event of Landlord's election to succeed to Tenant's interest in any such subleases, licenses, concessions or arrangements, Tenant shall, as of the date of notice by Landlord of such election, have no further right to or interest in the rent or other consideration receivable thereunder.
19.4 Efforts to Relet . No re-entry or repossession, repairs, maintenance, changes, alterations and additions, reletting, appointment of a receiver to protect Landlord's interests hereunder, or any other action or omission by Landlord shall be construed as an election by Landlord to terminate this Lease or Tenant's right to possession, or to accept a surrender of the Premises, nor shall same operate to release Tenant in whole or in part from any of Tenant's obligations hereunder, unless express written notice of such intention is sent by Landlord to Tenant. Nothing in this Lease shall constitute a waiver by Tenant of its statutory rights to redeem or reinstate this Lease.
19.5 Landlord Default .
19.5.1 General . Notwithstanding anything to the contrary set forth in this Lease, Landlord shall not be in default in the performance of any obligation required to be performed by Landlord pursuant to this Lease unless Landlord fails to perform such obligation within thirty (30) days after the receipt of notice from Tenant specifying in detail Landlord’s failure to perform; provided, however, if the nature of Landlord’s obligation is such that more than thirty (30) days are reasonably required for its performance, then Landlord shall not be in default under this Lease if it shall commence such performance within such thirty (30) day period and thereafter diligently pursue the same to completion. Upon any such default by Landlord under this Lease, Tenant may, except as otherwise specifically provided in this Lease to the contrary, exercise any of its rights provided at law or in equity.
19.5.2 Abatement of Rent . In the event that Tenant is prevented from using, and does not use, the Premises or any portion thereof, as a result of (i) any repair, maintenance or alteration performed by Landlord, or which Landlord failed to perform, after the Lease Commencement Date applicable to the Premises and required by this Lease, which substantially interferes with Tenant's use of or ingress to or egress from the Building or Tenant's Parking Areas; (ii) any failure by Landlord to provide services, utilities or ingress to and egress from the Building or Premises that Landlord is required to provide under this Lease, and which are reasonably within Landlord's ability to control (the parties acknowledging that an interruption in utilities caused by a utility provider is not within Landlord's ability to control); or (iii) the presence of Hazardous Materials brought on the Premises by any Landlord Parties (any such set of circumstances as set forth in items (i) through (iii), above, to be known as an " Abatement Event "), then Tenant shall give Landlord Notice of such Abatement Event, and if such Abatement Event continues for three (3) consecutive business days after Landlord’s receipt of any such notice, or occurs for five (5) non-consecutive business days during any calendar month, or occurs for ten (10) non-consecutive business days in a twelve (12) month period (provided Landlord is sent a notice for each such Abatement Event) (in either of such events, the " Eligibility Period "), then the Base Rent and Tenant’s Share of Direct Expenses shall be abated or reduced, as the case may be, after expiration of the Eligibility Period for such time that Tenant continues to be so prevented from using, and does not use, the Premises, or a portion thereof, in the proportion that the rentable area of the portion of the Premises that Tenant is prevented from using, and does not use (" Unusable Area "), bears to the total rentable area of the Premises; provided, however, in the event that Tenant is prevented from using, and does not use, the Unusable Area for a period of time in excess of the Eligibility Period and the remaining portion of the Premises is not sufficient to allow Tenant to effectively conduct its business therein, and if Tenant does not conduct its business from such remaining portion, then for such time after expiration of the Eligibility Period during which Tenant is so prevented from effectively conducting its business therein (in Tenant's reasonable judgment), the Base Rent and Tenant's Share of Direct Expenses for the entire Premises shall be abated for such time as Tenant continues to be so prevented from using, and does not use, the Premises. If, however, Tenant reoccupies any portion of the Premises during such period, the Rent allocable to such reoccupied portion, based on the proportion that the rentable area of such reoccupied portion of the Premises bears to the total rentable area of the Premises, shall be payable by Tenant from the date Tenant reoccupies such portion of the Premises. Such right to abate Base Rent and Tenant’s Share of Direct Expenses shall be Tenant's sole and exclusive remedy at law or in equity to abate Rent for an Abatement Event. To the extent Tenant is entitled to abatement because of an event covered by Articles 11 or 13 of this Lease, then Tenant's abatement rights shall be as set forth in Articles 11 and 13 above. Except as provided in this Section 19.5.2 or elsewhere in this Lease, nothing contained herein shall be interpreted to mean that Tenant is excused from paying Rent due hereunder.
19.5.3 Tenant's Right to Make Repairs . Notwithstanding any of the terms set forth in this Lease to the contrary, 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 requires the action of Landlord with respect to repair and/or maintenance required on any full floor of the Building leased by Tenant, including repairs to the Building Structure and/or Building System located on such floor, which event or circumstance with respect to the Building Structure or Building System materially or adversely affects the 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) business 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 terms of this Lease to be taken by Landlord and was not commenced by Landlord within such ten (10) business day period and thereafter diligently pursued to completion, then Tenant shall be entitled to prompt reimbursement by Landlord of Tenant's reasonable costs and expenses in taking such action. Landlord's failure to dispute Tenant's right to make repairs shall conclusively be deemed Landlord's waiver of any claim that Tenant
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
improperly performed self-help in accordance with this Section 19.7 or that the costs incurred by Tenant in such performance are excessive . In the event Tenant takes such action, Tenant shall use only those contractors used by Landlord in the Building for work unless such contractors are unwilling or unable to perform, or timely perform, such work, in which event Tenant may utilize the services of any other qualified contractor which normally and regularly performs similar work in Comparable Buildings. Following completion of any work taken by Tenant pursuant to the terms of this Section 19.5.3 , Tenant shall deliver a 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 (" Landlord ' s Set-Off Notice ") , 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 terms 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 if so elected by Tenant shall be Tenant's sole remedy . If Landlord delivers a Landlord's Set-Off Notice to Tenant, then Tenant shall not be entitled to such deduction from Rent; provided that Tenant may proceed to claim a default by Landlord under this Lease for any amount not paid by Landlord. Any final award in favor of Tenant for any such default , which is not subject to appeal, from a court or arbitrator in favor of Tenant , which is not paid by Landlord within the time period directed by such award (together with interest at the Interest Rate from the date Landlord was required to pay such amount until such offset occurs), may be offset by Tenant from Rent next due and payable under this Lease . For purposes of this Section 19. 5 .3 , an " Emergency " shall mean an event threatening immediate and material danger to people located in the Building or immediate, material damage to the Building, Building Systems, Building Structure, Tenant Improvements, or Alterations, or creates a realistic possibility of an immediate and material interference with, or immediate and material interruption of a material aspect of Tenant's business operations.
ARTICLE 20
COVENANT OF QUIET ENJOYMENT
Landlord covenants that so long as no default (beyond applicable notice and cure periods) exists under this Lease, Tenant shall, during the Lease Term, peaceably and quietly have, hold and enjoy the Premises subject to the terms, covenants, conditions, provisions and agreements hereof without interference by any persons lawfully claiming by or through Landlord. The foregoing covenant is in lieu of any other express or implied covenant of quiet enjoyment.
21.1 Delivery of Letter of Credit . Tenant shall cause the Bank (as that term is defined below) to deliver to Landlord , within three (3) business days of Tenant 's execution of this Lease , a letter of credit (the " L‑C ") that complies in all respects with the requirements of this Article 21 in the amount set forth in Section 8 of the Summary (the " L‑C Amount "). The L‑C shall: (i) be issued by a Bank ; (ii) be in the form attached hereto as Exhibit J ; (iii) be irrevocable, unconditional, and payable upon demand; (iv) be maintained in effect, whether through renewal or extension, for the period commencing on the date of this Lease and continuing until the date (the " L‑C Expiration Date ") that is no less than one hundred twenty (120) days following the expiration of the Lease Term, as the same may be extended; (v) contain a provision that provides that the L-C shall be automatically renewed on an annual basis without amendment of the L-C unless the Bank delivers a written notice of cancellation to Landlord and Tenant at least sixty (60) days prior to the expiration of the L‑C , without any action whatsoever on the part of Landlord ; (vi) be fully assignable by Landlord , its successors and assigns; (vii) permit partial draws and multiple presentations and drawings, and (viii) be otherwise subject to the International Standby Practices-ISP 98, International Chamber of Commerce Publication #590. Tenant shall pay all expenses, points, and/or fees incurred by Tenant in obtaining the L‑C. The term " Bank " referred to herein shall mean any of the following banks: (a) Wells Fargo Bank, N.A., (b) JPMorgan Chase Bank, N.A., (c) Bank of America, N.A. (d) US Bank or (e) Silicon Valley Bank , which (I) accepts deposits and maintains accounts; (II) that is chartered under the laws of the United States, any State thereof, or the District of Columbia, and which is insured by the Federal Deposit Insurance Corporation; (III) whose long-term issuer rating is no less than "Baa1" on Moody's (the " Bank's Credit Rating Threshold ").
21.2 Landlord 's Rights to Draw . Landlord , or its then authorized representatives, shall have the right to draw down an amount up to the face amount of the L‑C if any of the following shall have occurred or be applicable : (i) such amount is due to Landlord under the terms and conditions of this Lease ; (ii) the Lease has terminated prior to the expiration of the Lease Term as a result of Tenant 's breach or default of any term or provision of the Lease ; (iii) Tenant has filed a voluntary petition under the U. S. Bankruptcy Code or any state bankruptcy code (collectively, " Bankruptcy Code "); (iv) an involuntary petition has been filed against Tenant under the Bankruptcy Code ; (v) the Lease has been rejected, or is deemed rejected, under Section 365 of the U.S. Bankruptcy Code , following the filing of a voluntary petition by Tenant under the Bankruptcy Code , or the filing of an involuntary petition against Tenant under the Bankruptcy Code ; (vi) the Bank has notified Landlord that the L‑C will not be renewed or extended through the L‑C Expiration Date ; (vii) the Bank has failed to notify Landlord that the L-C will be renewed or extended on or before the date that is sixty (60) days before the applicable L-C expiration date; (viii) Tenant is placed into receivership or conservatorship, or becomes subject to similar proceedings under Federal or State law; (ix) Tenant executes an assignment for the benefit of creditors; or (x) if (1) any of the Bank 's rating has been reduced below the Bank's Credit Rating Threshold; or (2) there is otherwise a material adverse change in the financial condition of the Bank , and Tenant has failed to provide Landlord with a replacement letter of credit, conforming in all respects to the requirements of this Article 21 (including, but not limited to, the requirements
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placed on the issuing Bank more particularly set forth in this Section 21.1 above), in the amount of the applicable L ‑C Amount , within ten (10) days (such ten (10) day period is the " Rating Replacement Period ") following Landlord 's written demand therefor (with no other notice or cure or grace period being applicable thereto, notwithstanding anything in this Lease to the contrary) (each of the foregoing being an " L ‑C Draw Event ") . Notwithstanding the foregoing, prior to drawing on the L-C due to an L-C Draw Event pursuant to (x) above, Landlord and Tenant shall meet during the ten (10) day period described in (x), and Tenant shall have the opportunity to discuss with Landlord the Bank's rating and whether drawing the L-C is prudent or reasonably necessary. The L ‑C shall be honored by the Bank regardless of whether Tenant disputes Landlord 's right to draw upon the L ‑C. In addition, in the event the Bank is placed into receivership or conservatorship by the Federal Deposit Insurance Corporation, any state regulator, or any successor or similar entity, then, effective as of the date such receivership or conservatorship occurs, said L ‑C shall be deemed to fail to meet the requirements of this Article 21 , and, within ten (10) days (such ten (10) day period is the " FDIC Replacement Period ") following Landlord 's notice to Tenant of such receivership or conservatorship (the " L ‑C FDIC Replacement Notice "), Tenant shall replace such L ‑C with a substitute letter of credit from a different commercial bank (which commercial bank shall meet or exceed the Bank's Credit Rating Threshold and shall otherwise be acceptable to Landlord ) and that complies in all respects with the requirements of this Article 21 . Following a draw due to an L-C Draw Event pursuant to (x) above , if Tenant fails to replace such L ‑C with a conforming, substitute letter of credit pursuant to the terms and conditions of Section 21.1 , hereof, then, notwithstanding anything in this Lease to the contrary, following the lapse of an additional fifty (50) day notice and cure period (commencing as of the expiration of the Rating Replacement Period), Landlord shall have the right to declare Tenant in default of this Lease for which there shall be no notice or grace or cure periods being applicable thereto (other than the aforesaid periods). A s required following receipt of the L-C FDIC Replacement Notice, if Tenant fails to replace such L ‑C with a conforming, substitute letter of credit pursuant to the terms and conditions of Section 21.1 , hereof, then, notwithstanding anything in this Lease to the contrary, Landlord shall have the right to declare Tenant in default of this Lease for which there shall be no notice or grace or cure periods being applicable thereto (other than the aforesaid FDIC Replacement Period ). Tenant shall have no right to voluntarily replace the L-C without Landlord 's prior written approval, in Landlord ' s sole and absolute discretion . Tenant shall be responsible for the payment of any and all costs incurred by Landlord relating to the review of any replacement L ‑C (including, without limitation, Landlord 's reasonable attorneys' fees), which replacement is required pursuant to this Section or is otherwise requested by Tenant , and such attorneys' fees shall be payable by Tenant to Landlord within ten (10) days of billing. In the event of an assignment by Tenant of its interest in the Lease (and irrespective of whether Landlord ' s consent is required for such assignment), the acceptance of any replacement or substitute letter of credit by Landlord from the assignee shall be subject to Landlord ' s prior written approval, in Landlord ' s sole and absolute discretion, and the attorney ' s fees incurred by Landlord in connection with such determination shall be payable by Tenant to Landlord within ten (10) days of billing. Within two (2) business days following Tenant 's receipt of a written notice from Landlord , Tenant shall cause the Bank to deliver written confirmation to Landlord of the renewal or extension of the L ‑C (unless the Bank has previously notified Landlord in writing that it shall not be renewing or extending the L ‑C), or if so requested by Landlord , Tenant shall facilitate Landlord 's direct communication with the Bank in order that Landlord may immediately confirm such renewal or extension directly with the Bank .
21.3 Application of L ‑ C Proceeds . Tenant hereby acknowledges and agrees that Landlord is entering into this Lease in material reliance upon the ability of Landlord to draw upon the L‑C upon the occurrence of any L‑C Draw Event and apply the proceeds of the L-C in accordance with this Article 21 . In the event of any L‑C Draw Event, Landlord may, but without obligation to do so, and without notice to Tenant (except in connection with an L-C Draw Event under Section 21.2(x) above), draw upon the L‑C , in part or in whole, and apply the proceeds of the L-C to cure any such L-C Draw Event and/or to compensate Landlord for any and all damages or losses of any kind or nature sustained or which Landlord reasonably estimates that it will sustain resulting from Tenant 's breach or default of the Lease or other L-C Draw Event and/or to compensate Landlord for any and all damages or losses arising out of, or incurred in connection with, the termination of this Lease , including, without limitation, those specifically identified in Section 1951.2 of the California Civil Code. The use, application, or retention of the L‑C proceeds, or any portion thereof, by Landlord shall not prevent Landlord from exercising any other right or remedy provided by this Lease or by any applicable Law, it being intended that Landlord shall not first be required to proceed against the L‑C , and such L‑C or the proceeds thereof shall not operate as a limitation on any recovery to which Landlord may otherwise be entitled. No condition or term of this Lease shall be deemed to render the L‑C conditional to justify the issuer of the L‑C in failing to honor a drawing upon such L‑C in a timely manner. Tenant agrees and acknowledges that: (i) the L‑C constitutes a separate and independent contract between Landlord and the Bank ; (ii) Tenant is not a third party beneficiary of such contract; (iii) Tenant has no property interest whatsoever in the L‑C or the proceeds thereof; (iv) Tenant has no right to assign or encumber the L‑C or any part thereof and neither Landlord nor its successors or assigns will be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance; and (v) in the event Tenant becomes a debtor under any chapter of the Bankruptcy Code , Tenant is placed into receivership or conservatorship, there is an event of a receivership, conservatorship, bankruptcy filing by, or on behalf of, Tenant , or Tenant executes an assignment for the benefit of creditors, neither Tenant , any trustee, receiver, conservator, assignee, nor Tenant 's bankruptcy estate shall have any right to restrict or limit Landlord 's claim or rights to the L‑C or the proceeds thereof by application of Section 502(b)(6) of the U. S. Bankruptcy Code, any similar State or federal law, or otherwise.
21.3.1 Maintenance of L-C by Tenant . If, as a result of any drawing by Landlord of all or any portion of the L-C, the amount of the L-C shall be less than the L-C Amount, Tenant shall, within five (5) days thereafter, provide Landlord with additional letter(s) of credit in an amount equal to the deficiency, and any such additional letter(s) of credit shall comply with all of the provisions of this Article 21 , and if Tenant fails to comply with the foregoing, the same shall be subject to the terms of Section 21.4.2 below. If Tenant exercises its option to extend the Lease Term pursuant to Section 2.2 of this Lease then, not later than one hundred twenty (120) days prior to the commencement of the Option Term, Tenant shall deliver to Landlord a new L C or certificate of renewal or extension evidencing the L-C Expiration Date as one hundred twenty (120) days after the expiration of the Option Term. If the L‑C is not timely renewed, or if Tenant fails to maintain the L‑C in the amount and in accordance with
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the terms set forth in this Article 21 , Landlord shall have the right to present the L ‑C to the Bank in accordance with the terms of this Article 21 , and the proceeds of the L-C may be applied by Landlord against any Rent payable by Tenant under this Lease that is not paid when due and/or to pay for all losses and damages that Landlord has suffered or that Landlord reasonably estimates that it will suffer as a result of any breach or default by Tenant under this Lease . In the event Landlord elects to exercise its foregoing rights, (I) any unused proceeds shall constitute the property of Landlord (and not Tenant 's property or, in the event of a receivership, conservatorship, or bankruptcy filing by, or on behalf of, Tenant , property of such receivership, conservatorship or Tenant 's bankruptcy estate) and need not be segregated from Landlord 's other assets, and (II) Landlord agrees to pay to Tenant within thirty (30) days after the L ‑C Expiration Date the amount of any proceeds of the L-C received by Landlord and not applied against any Rent payable by Tenant under this Lease that was not paid when due or used to pay for any losses and/or damages suffered by Landlord (or reasonably estimated by Landlord that it will suffer) as a result of any breach or default by Tenant under this Lease ; provided, however, that if prior to the L ‑C Expiration Date a voluntary petition is filed by Tenant , or an involuntary petition is filed against Tenant by any of Tenant 's creditors, under the Bankruptcy Code , then Landlord shall not be obligated to make such payment in the amount of the unused L-C proceeds until either all preference issues relating to payments under this Lease have been resolved in such bankruptcy or reorganization case or such bankruptcy or reorganization case has been dismissed.
21.4 Transfer and Encumbrance . The L-C shall also provide that Landlord may, at any time and without notice to Tenant and without first obtaining Tenant's consent thereto, transfer (one or more times) all or any portion of its interest in and to the L-C to another party, person or entity, regardless of whether or not such transfer is from or as a part of the assignment by Landlord of its rights and interests in and to this Lease. In the event of a transfer of Landlord's interest in this Lease, Landlord shall transfer the L-C, in whole or in part, to the transferee and thereupon Landlord shall, without any further agreement between the parties, be released by Tenant from all liability therefor, and it is agreed that the provisions hereof shall apply to every transfer or assignment of the whole of said L-C to a new landlord. In connection with any such transfer of the L-C by Landlord, Tenant shall, at Tenant's sole cost and expense, execute and submit to the Bank such applications, documents and instruments as may be necessary to effectuate such transfer, and Tenant shall be responsible for paying the Bank's transfer and processing fees in connection therewith, provided that Landlord shall have the right (in its sole discretion), but not the obligation, to pay such fees on behalf of Tenant, in which case Tenant shall reimburse Landlord within ten (10) days after Tenant's receipt of an invoice from Landlord therefor.
21.5 L-C Not a Security Deposit . Landlord and Tenant: (i) acknowledge and agree that in no event or circumstance shall the L ‑ C, any renewal or substitute therefor or any proceeds thereof be deemed to be or treated as a "security deposit" under any law applicable to security deposits in the commercial context , including, but not limited to, Section 1950.7 of the California Civil Code, as such Section now exists or as it may be hereafter amended or succeeded (the " Security Deposit Laws " ); (ii) acknowledge and agree that the L ‑ C (including any renewal thereof or substitute therefor or any proceeds thereof) is not intended to serve as a security deposit, and the Security Deposit Laws shall have no applicability or relevancy thereto; and (iii) waive any and all rights, duties and obligations that any such party may now, or in the future will, have relating to or arising from the Security Deposit Laws. Tenant hereby irrevocably waives and relinquishes the provisions of Section 1950.7 of the California Civil Code and any successor statute, and all other provisions of law, now or hereafter in effect, which (x) establish the time frame by which a landlord must refund a security deposit under a lease, and/or (y) provide that a landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by a tenant or to clean the premises, it being agreed that Landlord may, in addition, claim those sums specified in this Article 21 and/or those sums reasonably necessary to (a) compensate Landlord for any loss or damage caused by Tenant's breach of this Lease, including any damages Landlord suffers following termination of this Lease , and/or (b) compensate Landlord for any and all damages arising out of, or incurred in connection with, the termination of this Lease , including, without limitation, those specifically identified in Section 1951.2 of the California Civil Code .
21.6 Non-Interference By Tenant . Tenant agrees not to interfere in any way with any payment to Landlord of the proceeds of the L-C, either prior to or following a "draw" by Landlord of all or any portion of the L-C, regardless of whether any dispute exists between Tenant and Landlord as to Landlord's right to draw down all or any portion of the L-C. No condition or term of this Lease shall be deemed to render the L‑C conditional and thereby afford the Bank a justification for failing to honor a drawing upon such L-C in a timely manner. Tenant shall not request or instruct the Bank to refrain from paying sight draft(s) drawn under such L‑C.
21.7 Waiver of Certain Relief . Tenant unconditionally and irrevocably waives (and as an independent covenant hereunder, covenants not to assert) any right to claim or obtain any of the following relief in connection with the L‑C:
21.7.1 A temporary restraining order, temporary injunction, permanent injunction, or other order that would prevent, restrain or restrict the presentment of sight drafts drawn under the L‑C or the Bank's honoring or payment of sight draft(s); or
21.7.2 Any attachment, garnishment, or levy in any manner upon either the proceeds of the L‑C or the obligations of the Bank (either before or after the presentment to the Bank of sight drafts drawn under such L‑C) based on any theory whatever.
21.8 Remedy for Improper Drafts . Tenant's sole and exclusive remedy in connection with Landlord's improper draw against the L-C or Landlord's improper application or retention of any proceeds of the L-C shall be the right to obtain from Landlord a refund of the amount of any sight draft(s) that were improperly presented or the proceeds of which were misapplied or wrongfully held, together with interest at the Default Rate and reasonable actual out-of-pocket attorneys' fees, provided that at the time of such refund, Tenant increases the amount of such L‑C to the amount (if any) then required under the applicable provisions of this Lease. Tenant acknowledges that Landlord's draw against the L‑C, application or retention of any proceeds thereof, or the Bank's payment under such L‑C, could not, under any circumstances, cause Tenant injury that could not be remedied by an award of money
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damages, and that the recovery of money damages would be an adequate remedy therefor. In the event Tenant shall be entitled to a refund as aforesaid and Landlord shall fail to make such payment within ten (10) business days after demand, Tenant shall have the right to deduct the amount thereof together with interest thereon at the Default Rate from the next installment(s) of Base Rent.
21.9 Reduction of L-C Amount . Subject to the terms of this Section 21.9 , and Tenant's satisfaction of the L-C Reduction Condition, which is to be confirmed by Landlord, the L-C Amount shall be reduced on the last day of the ninetieth (90 th ) full calendar month of the Lease Term (the " Reduction Date "), by Tenant's delivery to Landlord of an amendment to the existing L-C, conforming in all respects to the requirements of this Article 21 , but in the amount of fifty percent (50%) of the original L-C Amount. If Tenant is not satisfying the L-C Reduction Condition as of the Reduction Date, then Tenant may reduce the L-C Amount as of such later date that Tenant is then satisfying the L-C Reduction Condition. If Tenant is allowed to reduce the L-C Amount pursuant to the terms and conditions of this Section 21.9 , then Landlord shall reasonably cooperate with Tenant in order to effectuate such reduction. For purposes of this Section 21.9 , the " L-C Reduction Condition " shall mean that Tenant has been "cash flow positive," on a trailing twelve (12) month "Adjusted EBITDA" (i.e., after excluding from Net Income or Loss (i) other income (expense), net, (ii) stock-based compensation expense, (iii) depreciation and amortization, and (iv) income tax expense where applicable) basis during the twelve (12) month period ending on the last day of Tenant's most recently completed fiscal quarter ending prior to the measurement date.
ARTICLE 22
ROOFTOP AND RISER RIGHTS
22.1 Telecommunications Equipment . At any time during the Lease Term, subject to the terms of this Lease, Tenant may for each of the Buildings, (i) install, at Tenant's sole cost and expense, two (2) communications dishes or up to 24" in diameter, or one (1) communications antenna or comparable communications equipment upon the roof of the Building not to exceed 48" in height, (ii) use the Building telecommunications rooms and risers to install (A) two (2) two inch (2") diameter ridged metal conduits from the Building MPOE to the Premises, and (B) one (1) two inch (2") conduit from the Premises to the roof for connection of Tenant's rooftop equipment to the Premises (all such equipment, installations and connections, collectively, the " Telecommunications Equipment "). The use of such areas of the Building for the installation of the Telecommunications Equipment shall be for the sole use of Tenant in connection with its business in the Premises, and shall be without the payment of any additional Base Rent or Direct Expenses with respect thereto. The physical appearance and all specifications of the Telecommunications Equipment shall be subject to Landlord's reasonable approval, the location of any such installation of the Telecommunications Equipment shall be designated by Landlord (subject to Tenant's reasonable approval), and Landlord may require Tenant to install screening around such Telecommunications Equipment, at Tenant's sole cost and expense, as reasonably designated by Landlord. Tenant shall be responsible, at Tenant's sole cost and expense, for (i) obtaining all permits or other governmental approvals required in connection with the Telecommunications Equipment (including, without limitation, approval by the Federal Aviation Administration), (ii) installing, repairing and maintaining and causing the Telecommunications Equipment to comply with all Applicable Laws, and (iii) prior to the expiration or earlier termination of this Lease, removal of the Telecommunications Equipment and all associated wiring, and the restoration of all affected areas of the Building to the condition existing prior to the installation thereof, including restoration of any roof penetrations. The Telecommunications Equipment shall constitute Mandatory Removal Items under Section 8.5 above.
22.2 Interference . In no event shall Tenant permit the Telecommunications Equipment to interfere with the systems of any building in the Project or the Project or any other communications equipment at or servicing any building in the Project or the Project. Except to the extent arising from or out of the negligence or willful misconduct of any of the Landlord Parties, Tenant shall indemnify, defend, protect, and hold harmless the Landlord Parties from any and all loss, cost, damage, expense and liability (including, without limitation, court costs and reasonable attorneys' fees) incurred in connection with or arising from any cause related to Tenant's installation, use, repair or maintenance or any other matter relating to or in connection with the Telecommunications Equipment. In the event Tenant elects to exercise its right to install the Telecommunication Equipment, then Tenant shall give Landlord prior notice thereof. Landlord agrees that it shall not install, and shall prohibit the installation and/or operation by any other party of, any microwave dishes/earth satellite disks, whip antennae, other communications devices, towers and/or other structures on the roof of the Building which would interfere with Tenant's use of the Telecommunications Equipment.
23.1 Full Floors . Tenant, if the Premises comprise an entire floor of the Building, at its sole cost and expense, may install identification signage anywhere in the Premises including in the elevator lobby of the Premises, provided that such signs must not be visible from the exterior of the Building, and provided all signs are in keeping with the quality, design and style of the Building and Project.
23.2 Multi-Tenant Floors . If other tenants occupy space on the floor on which the Premises is located, Tenant's identifying signage shall be provided by Landlord, at Tenant's cost, and such signage shall be comparable to that used by Landlord for other similar floors in the Building and shall comply with Landlord's then-current Building standard signage program.
23.3 Prohibited Signage and Other Items . Except for "Tenant's Signage" (as that term is defined below), any signs, notices, logos, pictures, names or advertisements which are installed and that have not been separately approved by Landlord may be removed without notice by Landlord at the sole expense of Tenant. Any signs, window coverings, or blinds (even if the same are located behind the Landlord-approved window coverings
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for the Building), or other items visible from the exterior of the Premises or Building, shall be subject to the prior approval of Landlord, in its sole discretion.
23.4 Tenant's Signage . In addition to the signage rights expressly set forth above in this Article 23 , Tenant, at Tenant's sole cost and expense, shall be entitled to install up to one (1) sign on the exterior of the Building, and up to one (1) panel on any monument sign pertaining to the Building (in the locations more particularly identified on Exhibit I attached hereto) identifying Tenant's name and/or logo (the " Tenant's Signage ") in connection with Tenant's lease of the Premises.
23.4.1 Specifications and Permits . Tenant's Signage shall set forth Tenant's name and/or logo as determined by Tenant in its sole discretion, but subject to Landlord's reasonable approval, and in no event shall the Tenant's Signage include an "Objectionable Name," as that term is defined in Section 23.4.2 , below. The graphics, materials, color, design, lettering, lighting, size, illumination, specifications and exact locations of Tenant's Signage shall be subject to the prior written approval of Landlord, which approval shall not be unreasonably withheld, conditioned or delayed, and shall be consistent and compatible with the quality and nature of the Project and Landlord's Building standard signage specifications. In addition, the Tenant's Signage shall be subject to Tenant's receipt of all necessary governmental or quasi-governmental approvals and permits (collectively, " Governmental Approvals ") and shall be subject to all Applicable Laws and the Underlying Documents. Tenant hereby acknowledges that Landlord has made no representation or warranty to Tenant with respect to the probability of obtaining all necessary Governmental Approvals for the Tenant's Signage. In the event Tenant does not receive the necessary Governmental Approvals for the Tenant's Signage, Tenant's and Landlord's rights and obligations under this Lease shall be unaffected.
23.4.2 Objectionable Name . To the extent Tenant desires to change the name and/or logo set forth on the Tenant's Signage, such name and/or logo shall not have a name which relates to an entity which is of a character or reputation, or is associated with a political faction or orientation, which is inconsistent with the quality of the Project, or which would otherwise reasonably offend a landlord of the Comparable Buildings (an " Objectionable Name "). The parties hereby agree that the name "Roku" or any reasonable derivation thereof, shall not be deemed an Objectionable Name.
23.4.3 Termination of Right to Tenant's Signage . The rights contained in this Section 23.4 shall be personal to the Original Tenant or a Permitted Transferee Assignee, and may only be exercised and maintained by the Original Tenant or such Permitted Transferee Assignee (and not any other assignee, sublessee or other transferee of either of the Original Tenant's interest in the Lease) if the Original Tenant or such Permitted Transferee Assignee has not subleased more than thirty-five percent (35%) of the initial Premises and any other space leased by Tenant in the Project, and a default by Tenant under this Lease is not then occurring beyond the applicable notice and cure period. In the event Tenant fails to comply with any of the requirements set forth hereinabove, the signage rights provided in this Section 23.4 shall automatically terminate.
23.4.4 Cost and Maintenance; Change and Replacement . The actual costs of the Tenant's Signage and the installation, design, construction and any and all other costs associated with the Tenant's Signage, including, without limitation, utility charges and hook-up fees, permits, and maintenance and repairs, shall be the sole responsibility of Tenant. Should the Tenant's Signage require repairs and/or maintenance, as determined in Landlord's reasonable judgment, Landlord shall have the right to provide notice thereof to Tenant and Tenant (except as set forth below) shall cause such repairs and/or maintenance to be performed within thirty (30) days after receipt of such notice from Landlord, at Tenant's sole cost and expense; provided, however, if such repairs and/or maintenance are reasonably expected to require longer than thirty (30) days to perform, Tenant shall commence such repairs and/or maintenance within such thirty (30) day period and shall diligently prosecute such repairs and maintenance to completion. Should Tenant fail to perform such repairs and/or maintenance within the periods described in the immediately preceding sentence, Landlord shall, upon the delivery of an additional five (5) business days' prior written notice, have the right to cause such work to be performed and to charge Tenant as Additional Rent for the actual cost of such work. Subject to Tenant's agreement to comply with the terms of this Section 23.4 , Tenant shall be permitted to change and/or replace the Tenant's Signage periodically in Tenant's reasonable discretion. Upon the expiration or earlier termination of this Lease or upon any earlier termination of Tenant's rights to the Tenant's Signage as set forth herein, Tenant shall, at Tenant's sole cost and expense, cause the Tenant's Signage to be removed and shall cause the areas in which such Tenant's Signage was located to be restored to the condition existing immediately prior to the placement of such Tenant's Signage except for (x) ordinary wear and tear, (y) damage by Casualty that is not Tenant's obligation to repair hereunder, or (z) repairs which are specifically made the responsibility of Landlord hereunder. If Tenant fails to timely remove the Tenant's Signage or to restore the areas in which such the Tenant's Signage was located, as provided in the immediately preceding sentence, then Landlord may perform such work, and all actual costs incurred by Landlord in so performing shall be reimbursed by Tenant to Landlord within thirty (30) days after Tenant's receipt of an invoice therefor. The terms and conditions of this Section 23.4.4 shall survive the expiration or earlier termination of the Lease.
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ARTICLE 24
COMPLIANCE WITH LAW
24.1 Tenant's Obligations . Tenant shall not knowingly do anything or suffer anything to be done in or about the Premises or the Project which will in any way materially conflict with any law, statute, ordinance or other governmental rule, regulation or requirement now in force or which may hereafter be enacted or promulgated (collectively, " Applicable Laws "). At its sole cost and expense, Tenant shall promptly comply with all such Applicable Laws (including the making of any alterations required to comply with Applicable Laws) which relate to (i) Tenant's use of the Premises, (ii) any Alterations made by Tenant to the Premises, and any tenant improvements in the Premises, or (iii) the Base Building, but as to the Base Building, only to the extent such obligations are triggered by nontypical general office Alterations made by Tenant to the Premises, or any nontypical general office Tenant Improvements, or Tenant's use of the Premises for non‑general office use. Should any standard or regulation now or hereafter be imposed on Landlord or Tenant by a state, federal or local governmental body charged with the establishment, regulation and enforcement of occupational, health or safety standards for employers, employees, landlords or tenants, then Tenant agrees, at its sole cost and expense, to comply promptly with such standards or regulations as they relate to Tenant or to the Premises. The judgment of any court of competent jurisdiction or the admission of Tenant in any judicial action, regardless of whether Landlord is a party thereto, that Tenant has violated any of said governmental measures, shall be conclusive of that fact as between Landlord and Tenant.
24.2 Landlord's Obligations . Landlord shall comply with all Applicable Laws (including Environmental Laws, as that term is defined in Exhibit G ) relating to the Base Building and Project Common Areas (which compliance may include the remediation, removal or abatement of Hazardous Materials), provided that compliance with such Applicable Laws is not the responsibility of Tenant under this Lease and provided further that such compliance is required by a governmental authority. Without limiting the foregoing, Landlord's development and post-development activities in the Project shall materially comply with all requirements set forth in that certain April 2011 Soil Management Plan (the " SMP ") prepared by the City of San Jose and approved by the Department of Toxic Substances Control of the California Environmental Protection Agency (the " DTSC "). Furthermore, Landlord shall (i) install a vapor barrier membrane in the Building and comply with all recommendations set forth in that certain Vapor Barrier Membrane Repair Manual dated April 3, 2018 prepared by Langan Engineering and Environmental Services Inc., and (ii) use commercially efforts to cause FMC Corporation to comply with all of its remediation, treatment and monitoring in the Project as required by Applicable Laws and any applicable governmental authority, including, without limitation the DTSC. Landlord shall be permitted to include in Operating Expenses any costs or expenses incurred by Landlord under this Article 24 to the extent not prohibited by the terms of Section 4.2.4 .
24.3 Certified Access Specialist . Tenant hereby waives any and all rights under and benefits of California Civil Code Section 1938 and acknowledges that neither the Project nor the Premises has undergone inspection by a Certified Access Specialist (CASp) (defined in California Civil Code Section 55.52). As required by Section 1938(e) of the California Civil Code, Landlord hereby states as follows: "A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises." In furtherance of the foregoing, Landlord and Tenant hereby agree that any CASp inspection requested by Tenant shall be conducted, at Tenant's sole cost and expense, by a CASp designated by Landlord.
If any installment of Rent or any other sum due from Tenant shall not be received by Landlord or Landlord's designee within five (5) business days after written notice that said amount was not paid when due, then Tenant shall pay to Landlord a late charge equal to three percent (3%) of the overdue amount, but not in excess of Twenty-Five Thousand Dollars ($25,000), plus any reasonable attorneys' fees incurred by Landlord by reason of Tenant's failure to pay Rent and/or other charges when due hereunder. Notwithstanding the foregoing, Landlord agrees to waive said late charge on the first occasion of such late payment of Rent during any consecutive twelve (12) calendar month period. The late charge shall be deemed Additional Rent and the right to require it shall be in addition to all of Landlord's other rights and remedies hereunder or at law and shall not be construed as liquidated damages or as limiting Landlord's remedies in any manner. In addition to the late charge described above, any Rent or other amounts owing hereunder which are not paid within ten (10) business days after the date they are due shall bear interest from the date when due until paid at a rate per annum (the " Default Rate ") equal to the lesser of (i) the annual " Bank Prime Loan " rate cited in the Federal Reserve Statistical Release Publication G.13(415), published on the first Tuesday of each calendar month (or such other comparable index as Landlord and Tenant shall reasonably agree upon if such rate ceases to be published) plus two (2) percentage points, and (ii) the highest rate permitted by Applicable Law.
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ARTICLE 26
LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT
26.1 Landlord's Cure . All covenants and agreements to be kept or performed by Tenant under this Lease shall be performed by Tenant at Tenant's sole cost and expense and without any reduction of Rent, except to the extent, if any, otherwise expressly provided herein. If Tenant shall fail to perform any obligation under this Lease, and such failure shall continue in excess of the time allowed under Section 19.1.2 , above, unless a specific time period is otherwise stated in this Lease, Landlord may upon an additional three (3) business days' notice to Tenant, but shall not be obligated to, make any such payment or perform any such act on Tenant's part without waiving its rights based upon any default of Tenant and without releasing Tenant from any obligations hereunder.
26.2 Tenant's Reimbursement . Except as may be specifically provided to the contrary in this Lease, Tenant shall pay to Landlord, within thirty (30) days after delivery by Landlord to Tenant of invoices together with reasonable supporting evidence therefor: (i) sums equal to expenditures reasonably made and obligations incurred by Landlord in connection with the remedying by Landlord of Tenant's defaults pursuant to the provisions of Section 26.1 ; (ii) sums equal to all losses, costs, liabilities, damages and expenses referred to in Article 10 of this Lease; and (iii) sums equal to all expenditures made and obligations incurred by Landlord in collecting or attempting to collect the Rent or in enforcing or attempting to enforce any rights of Landlord under this Lease or pursuant to law, including, without limitation, all reasonable legal fees and other amounts so expended. Tenant's obligations under this Section 26.2 shall survive the expiration or sooner termination of the Lease Term.
Landlord reserves the right at all reasonable times and upon no less than twenty-four (24) hours' prior notice to Tenant (except in the case of an emergency, in which case, no prior notice shall be required) to enter the Premises to (i) inspect them; (ii) show the Premises to prospective purchasers, or to current or prospective mortgagees, ground or underlying lessors or insurers or, during the last twelve (12) months of the Lease Term, to prospective tenants; (iii) post notices of nonresponsibility; or (iv) alter, improve or repair the Premises or the Building, or for structural alterations, repairs or improvements to the Building or the Building's systems and equipment; provided, however, except for (a) emergencies, (b) repairs, alterations, improvements or additions required by governmental or quasi-governmental authorities or court order or decree, or (c) repairs which are the obligation of Tenant hereunder, any such entry into the Premises by Landlord shall be performed in a manner so as not to materially interfere with Tenant's use of, or access to, the Premises; provided further that, with respect to items (b) and (c) above, Landlord shall use commercially reasonable efforts to not materially interfere with Tenant's use of, or access to, the Premises. Notwithstanding anything to the contrary contained in this Article 27 , Landlord may enter the Premises at any time to (A) perform services required of Landlord; (B) take possession due to any breach of this Lease in the manner provided herein; and (C) perform any covenants of Tenant which Tenant fails to perform. Landlord may make any such entries without the abatement of Rent, except as otherwise provided in this Lease, and may take such reasonable steps as required to accomplish the stated purposes. Tenant shall at all times, except in the case of emergencies, have the right to escort Landlord or any Landlord Parties while the same are in the Premises. For each of the above purposes, Landlord shall at all times have a key with which to unlock all the doors in the Premises, excluding Tenant's vaults, safes and special security areas designated in advance by Tenant. Notwithstanding anything to the contrary set forth in this Lease, Tenant may reasonably designate certain reasonable areas of the Premises as " Secured Areas " should Tenant require such areas for the purpose of securing certain valuable property or confidential information. In connection with the foregoing, Landlord shall not enter such Secured Areas except in the event of an emergency. Landlord need not clean any area designated by Tenant as a Secured Area and shall only maintain or repair such secured areas to the extent (x) such repair or maintenance is required in order to maintain and repair the Building Structure and/or the Building Systems; (y) as required by Applicable Law, or (z) in response to specific requests by Tenant and in accordance with a schedule reasonably designated by Tenant, subject to Landlord's reasonable approval. In an emergency, Landlord shall have the right to use any means that Landlord may deem proper to open the doors in and to the Premises. Any entry into the Premises by Landlord in the manner hereinbefore described shall not be deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an actual or constructive eviction of Tenant from any portion of the Premises. No provision of this Lease shall be construed as obligating Landlord to perform any repairs, alterations or decorations except as otherwise expressly agreed to be performed by Landlord herein. For purposes of this Article, an emergency situation is one that poses a threat of imminent bodily harm or property damage. If Landlord makes an emergency entry onto the Premises when no authorized representative of Tenant is present, Landlord shall use commercially reasonable efforts to provide telephone notice to Tenant as soon as reasonably possible within twenty-four (24) hours after that entry and shall take reasonable steps to secure the Premises until a representative of Tenant arrives at the Premises.
Tenant shall be entitled to use, commencing on the Lease Commencement Date, the amount of parking passes set forth in Section 8 of the Summary, on a monthly basis throughout the Lease Term, which parking passes shall pertain to the Project parking facilities, which shall include unreserved surface parking passes for parking in front of the Building only. During the initial Lease Term, Tenant shall not be obligated to pay to Landlord for automobile parking passes on a monthly basis; provided, however, Tenant shall be responsible for the full amount of any taxes imposed by any governmental authority in connection with the renting of such parking passes by Tenant
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or the use of the parking facilities by Tenant. Tenant's continued right to use the parking passes is conditioned upon Tenant abiding by all reasonable rules and regulations which are prescribed in writing and delivered by written notice to Tenant from time to time for the orderly operation and use of the parking facilities where the parking passes are located (including any sticker or other identification system established by Landlord and the prohibition of vehicle repair and maintenance activities in the Project's parking facilities), Tenant's cooperation in seeing that Tenant's employees and visitors also comply with such rules and regulations and Tenant not being in default under this Lease. Tenant's use of the Project parking facilities shall be at Tenant's sole risk and Tenant acknowledges and agrees that Landlord shall have no liability whatsoever for damage to the vehicles of Tenant, its employees and/or visitors, or for other personal injury or property damage or theft relating to or connected with the parking rights granted herein or any of Tenant's, its employees' and/or visitors' use of the parking facilities. Tenant's rights hereunder , including reserved parking rights, are subject to the terms of any Underlying Documents , which include, without limitation, certain rights for use of the parking facilities and parking spaces in connection with events at the stadium located adjacent to the Project ; provided that Tenant shall not be obligated to move or relocate vehicles in order to accommodate such events at the stadium . Landlord specifically reserves the right to change the size, configuration, design, layout and all other aspects of the Project parking facilities at any time and Tenant acknowledges and agrees that Landlord may, without incurring any liability to Tenant and without any abatement of Rent under this Lease, from time to time, temporarily close-off or restrict access to the Project parking facilities for purposes of permitting or facilitating any such construction, alteration or improvements. Landlord may delegate its responsibilities hereunder to a parking operator in which case such parking operator shall have all the rights of control attributed hereby to the Landlord. The parking passes used by Tenant pursuant to this Article 28 are provided to Tenant solely for use by Tenant's own personnel and such passes may not be transferred, assigned, subleased or otherwise alienated by Tenant without Landlord's prior approval.
28.2 Terms; Captions . The words " Landlord " and " Tenant " as used herein shall include the plural as well as the singular. The necessary grammatical changes required to make the provisions hereof apply either to corporations or partnerships or individuals, men or women, as the case may require, shall in all cases be assumed as though in each case fully expressed. The captions of Articles and Sections are for convenience only and shall not be deemed to limit, construe, affect or alter the meaning of such Articles and Sections.
28.3 Binding Effect . Subject to all other provisions of this Lease, each of the covenants, conditions and provisions of this Lease shall extend to and shall, as the case may require, bind or inure to the benefit not only of Landlord and of Tenant, but also of their respective heirs, personal representatives, successors or assigns, provided this clause shall not permit any assignment by Tenant contrary to the provisions of Article 14 of this Lease.
28.4 No Air Rights . No rights to any view or to light or air over any property, whether belonging to Landlord or any other person, are granted to Tenant by this Lease. If at any time any windows of the Premises are temporarily darkened or the light or view therefrom is obstructed by reason of any repairs, improvements, maintenance or cleaning in or about the Project, the same shall be without liability to Landlord and without any reduction or diminution of Tenant's obligations under this Lease.
28.5 Intentionally Omitted .
28.6 Transfer of Landlord's Interest . Tenant acknowledges that Landlord has the right to transfer all or any portion of its interest in the Project or Building and in this Lease, and Tenant agrees that in the event of any such transfer, Landlord shall automatically be released from all liability under this Lease not accrued as of the date of transfer (to the extent that such obligations are expressly assumed by the transferee) and Tenant agrees to look solely to such transferee for the performance of Landlord's obligations hereunder after the date of transfer and such transferee shall be deemed to have fully assumed and be liable for all obligations of this Lease to be performed by Landlord which first arise or accrue after the date of transfer, including the return of any Security Deposit, and subject to the terms of Article 18 of this Lease, Tenant shall attorn to such transferee. Tenant further acknowledges that Landlord may assign its interest in this Lease to a mortgage lender as additional security and agrees that such an assignment shall not release Landlord from its obligations hereunder and that Tenant shall continue to look to Landlord for the performance of its obligations hereunder.
28.7 Recording . Tenant shall have the right to record against the Project a memorandum providing record notice of the Lease , which shall be in the form of Exhibit K attached hereto (the " Memorandum "). The parties shall sign the Memorandum concurrently with the execution of this Lease. In addition, within thirty (30) days after Landlord's written request following the expiration or earlier termination of this Lease, Tenant shall execute and deliver to Landlord in recordable form, termination of the Memorandum. Tenant's obligation to execute and deliver such termination of the Memorandum shall survive the expiration or earlier termination of this Lease. Tenant shall be solely responsible for all costs incurred under this Section 29.6 .
28.8 Landlord's Title . Landlord's title is and always shall be paramount to the title of Tenant. Nothing herein contained shall empower Tenant to do any act which can, shall or may encumber the title of Landlord.
28.9 Relationship of Parties . Nothing contained in this Lease shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent, partnership, joint venturer or any association between Landlord and Tenant.
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28.10 Application of Payments . Landlord shall have the right to apply payments received from Tenant pursuant to this Lease, regardless of Tenant's designation of such payments, to satisfy any obligations of Tenant hereunder, in such order and amounts as Landlord, in its sole discretion, may elect.
28.11 Time of Essence . Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor. Whenever in the Lease a payment is required to be made by one party to the other, but a specific date for payment is not set forth or a specific number of days within which payment is to be made is not set forth, or the words "immediately," "promptly," and/or "on demand," or their equivalent, are used to specify when such payment is due, then such payment shall be due thirty (30) days after the date that the party which is entitled to such payment sends notice to the other party demanding such payment.
28.12 Partial Invalidity . If any term, provision or condition contained in this Lease shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term, provision or condition to persons or circumstances other than those with respect to which it is invalid or unenforceable, shall not be affected thereby, and each and every other term, provision and condition of this Lease shall be valid and enforceable to the fullest extent possible permitted by law.
28.13 No Warranty . In executing and delivering this Lease, Tenant has not relied on any representations, including, but not limited to, any representation as to the amount of any item comprising Additional Rent or the amount of the Additional Rent in the aggregate or that Landlord is furnishing the same services to other tenants, at all, on the same level or on the same basis, or any warranty or any statement of Landlord which is not set forth herein or in one or more of the exhibits attached hereto.
28.14 Landlord Exculpation; No Consequential Damages . The liability of Landlord or the Landlord Parties to Tenant for any default by Landlord under this Lease or arising in connection herewith or with Landlord's operation, management, leasing, repair, renovation, alteration or any other matter relating to the Project or the Premises shall be limited solely and exclusively to an amount which is equal to the interest of Landlord in the Project and the rents, issue, profits and proceeds therefrom, including, without limitation, any sales or insurance proceeds (following payment of any outstanding liens and/or mortgages, whether attributable to sales or insurance proceeds or otherwise). Neither Landlord, nor any of the Landlord Parties shall have any personal liability therefor, and Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant. The limitations of liability contained in this Section 29.13 shall inure to the benefit of Landlord's and the Landlord Parties' present and future partners, beneficiaries, officers, directors, trustees, shareholders, agents and employees, and their respective partners, heirs, successors and assigns. Under no circumstances shall any present or future partner of Landlord (if Landlord is a partnership), or trustee or beneficiary (if Landlord or any partner of Landlord is a trust), have any liability for the performance of Landlord's obligations under this Lease. Notwithstanding any contrary provision herein, neither Landlord nor the Landlord Parties shall be liable under any circumstances for injury or damage to, or interference with, Tenant's business, including but not limited to, loss of profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use, in each case, however occurring ; similarly, except with respect to Tenant's violations of the provisions of this Lease regarding Hazardous Materials and Tenant' s holding over in the Premises following the expiration or sooner termination of this Lease , Tenant shall not be liable under any circumstances for injury or damage to, or interference with, Landlord' s business, including, but not limited to, loss of profits or other revenues (not including, however, loss of rents), loss of business opportunity, loss of goodwill or loss of use, in each case, however occurring.
28.15 Entire Agreement . It is understood and acknowledged that there are no oral agreements between the parties hereto affecting this Lease and this Lease constitutes the parties' entire agreement with respect to the leasing of the Premises and supersedes and cancels any and all previous negotiations, arrangements, brochures, agreements and understandings, if any, between the parties hereto or displayed by Landlord to Tenant with respect to the subject matter thereof, and none thereof shall be used to interpret or construe this Lease. None of the terms, covenants, conditions or provisions of this Lease can be modified, deleted or added to except in writing signed by the parties hereto.
28.16 Right to Lease; Tenant Competitors . Landlord reserves the absolute right to effect such other tenancies in the Project as Landlord in the exercise of its sole business judgment shall determine to best promote the interests of the Building or Project. Tenant does not rely on the fact, nor does Landlord represent, that any specific tenant or type or number of tenants shall, during the Lease Term, occupy any space in the Building or Project. Landlord shall not, without the prior written consent of Tenant, which may be granted or withheld in Tenant’s sole and absolute discretion, enter into any lease or other occupancy agreement with, or consent to an assignment or subletting (except in the case of a "permitted transfer" to an affiliate entity or similar transfer for which Landlord's prior consent is not required) to, any Tenant Competitor for the Building or Building 1 (the " Competitor Restricted Area ") (or any portion thereof). For purposes hereof, the term " Tenant Competitor " shall mean either Apple Inc. or Amazon.com, Inc., or any subsidiary of either Apple Inc. or Amazon.com, Inc. if such subsidiary's primary products or services compete with the products and services offered by Tenant as its primary business (as reasonably determined by Tenant and as such products and services may change and expand from time to time). Notwithstanding anything herein to the contrary, Landlord shall not be deemed to have violated the terms of this Section 29.15 if: (i) any tenant or occupant merges or consolidates with or into, or acquires or is acquired by, any Tenant Competitor, (ii) Landlord is required to permit such lease pursuant to a court order, or (iii) Landlord, after a reasonable inquiry, in good faith believes that any prospective tenant is not a Tenant Competitor. The prohibition on Landlord leasing space in the Competitor Restricted Area to Tenant Competitors under this Section 29.15 shall terminate upon the date that is the earliest to occur of: (a) the date that Original Tenant assigns this Lease to any entity other than a Permitted Transferee Assignee, (b) that date that Tenant subleases more than thirty-five percent (35%) of the Premises, (c) the date Tenant no longer occupies sixty-five percent (65%) of the greater of (i) the Premises initially leased to Tenant hereunder as of the date of this Lease, and (ii) the Premises leased to Tenant
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hereunder as modified subsequent to the date of this Lease, or (d) the date when less than fifteen (15) months remain in the then Lease Term (as the same may be extended), or upon any earlier date as of which Tenant has waived all rights to renew or extend the Lease Term. Notwithstanding anything to the contrary in this Section 29.15, the prohibition on Landlord leasing space in the Competitor Restricted Area to Tenant Competitors under this Section 29.15 shall not apply to (A) any existing lease or occupancy agreement entered into by Landlord and any other tenant in the Project prior to the Effective Date, or (B) any lease entered into by Landlord and any other tenant in the Project for shared office workplaces offering certain office services incidental to the primary office uses (the " Co-Work Uses "). The " Co-Work Uses " shall include, without limitation, the design, development, marketing, ope ration and/or managing of: (a) executive, administrative and general business off ices and other lawful uses, (b) fle xible workplace center use, (c) event space, and/or (d) other ancillary office related uses to such tenant' s operations and services as the same may develop or expand over time, including, but not limited to, training centers, data centers, conference centers, kitchens, storage, office pantries, recreational areas, community facilities or common areas intended to serve the occupants and users of such t enant's co-working facility, including limited food service or sale, beer , wine and liquor service .
28.17 Force Majeure . Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, any Permit Delay (as that term is defined herein below), acts of God, acts of war, terrorist acts, inability to obtain services, labor, or materials or reasonable substitutes therefor, governmental actions, civil commotions, fire or other casualty, and other causes beyond the reasonable control of the party obligated to perform, except with respect to the obligations imposed with regard to Rent and other charges to be paid by Tenant pursuant to this Lease (collectively, a " Force Majeure "), notwithstanding anything to the contrary contained in this Lease, shall excuse the performance of such party for a period equal to any such prevention, delay or stoppage and, therefore, if this Lease specifies a time period for performance of an obligation of either party, that time period shall be extended by the period of any delay in such party's performance caused by a Force Majeure. The term " Permit Delay " shall mean the inability of Landlord to obtain building permits required in connection with the construction of the Base, Shell and Core and Project within thirty (30) days after Landlord's submittal to the City for such permits, other than the City's refusal to issue such permits due to an incomplete or inaccurate submittal to the City by Landlord.
28.18 Intentionally Omitted .
28.19 Notices . All notices, demands, statements, designations, approvals or other communications (collectively, " notices " or " Notices ") given or required to be given by either party to the other hereunder or by law shall be in writing, shall be (A) sent by United States certified or registered mail, postage prepaid, return receipt requested (" Mail "), (B) transmitted by telecopy, if such telecopy is promptly followed by a Notice sent by Mail, (C) delivered by a nationally recognized overnight courier, or (D) delivered personally. Any Notice shall be sent, transmitted, or delivered, as the case may be, to Tenant at the appropriate address set forth in Section 9 of the Summary, or to such other place as Tenant may from time to time designate in a Notice to Landlord, or to Landlord at the addresses set forth below, or to such other places as Landlord may from time to time designate in a Notice to Tenant. Any Notice will be deemed given (i) three (3) days after the date it is posted if sent by Mail, (ii) the date the telecopy is transmitted, (iii) the date the overnight courier delivery is made, or (iv) the date personal delivery is made. As of the date of this Lease, any Notices to Landlord must be sent, transmitted, or delivered, as the case may be, to the following addresses:
CAP Phase 1, LLC
c/o Hunter Properties Inc.
10121 Miller Avenue, Suite 200
Cupertino, California 95014-3469
Attention: Deke Hunter and Sherri Prieb
and
Allen Matkins Leck Gamble Mallory & Natsis LLP
1901 Avenue of the Stars
Suite 1800
Los Angeles, California 90067
Attention: Anton N. Natsis, Esq.
28.20 Joint and Several . If there is more than one Tenant, the obligations imposed upon Tenant under this Lease shall be joint and several.
28.21 Authority . Tenant represents and warrants that Tenant is a duly formed and existing entity qualified to do business in California and that Tenant has full right and authority to execute and deliver this Lease and that each person signing on behalf of Tenant is authorized to do so. Tenant shall, within ten (10) days after Landlord's request, deliver to Landlord satisfactory evidence of good standing in Tenant's state of incorporation. Landlord warrants that Landlord is a duly formed and existing entity qualified to do business in California and that Landlord has full right and authority to execute and deliver this Lease and that each person signing on behalf of Landlord is authorized to do so.
28.22 Attorneys' Fees . In the event that either Landlord or Tenant should bring suit for the possession of the Premises, for the recovery of any sum due under this Lease, or because of the breach of any provision of this Lease or for any other relief against the other, then all costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party therein shall be paid by the other party, which obligation on the part of the other party shall be deemed to have accrued on the date of the commencement of such action and shall be enforceable whether or not the action is prosecuted to judgment.
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28.23 Governing Law; Jurisdiction; WAIVER OF TRIAL BY JURY . This Lease shall be construed and enforced in accordance with the laws of the State of California. IN ANY ACTION OR PROCEEDING ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I) THE JURISDICTION OF ANY COMPETENT COURT WITHIN THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, (II) SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW, AND (III) IN THE INTEREST OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. IN THE EVENT LANDLORD COMMENCES ANY SUMMARY PROCEEDINGS OR ACTION FOR NONPAYMENT OF BASE RENT OR ADDITIONAL RENT, TENANT SHALL NOT INTERPOSE ANY COUNTERCLAIM OF ANY NATURE OR DESCRIPTION (UNLESS SUCH COUNTERCLAIM SHALL BE MANDATORY) IN ANY SUCH PROCEEDING OR ACTION, BUT SHALL BE RELEGATED TO AN INDEPENDENT ACTION AT LAW.
28.24 Submission of Lease . Submission of this instrument for examination or signature by Tenant or Landlord does not constitute a reservation of, option for or option to lease, and it is not effective as a lease or otherwise until full execution and delivery by both Landlord and Tenant.
28.25 Brokers . Landlord and Tenant hereby warrant to each other that they have had no dealings with any real estate broker or agent in connection with the negotiation of this Lease, excepting only the real estate brokers or agents specified in Section 11 of the Summary (the " Brokers "), and that they know of no other real estate broker or agent who is entitled to a commission in connection with this Lease. Each party agrees to indemnify and defend the other party against and hold the other party harmless from any and all claims, demands, losses, liabilities, lawsuits, judgments, costs and expenses (including without limitation reasonable attorneys' fees) with respect to any leasing commission or equivalent compensation alleged to be owing on account of any dealings with any real estate broker or agent, other than the Brokers, occurring by, through, or under the indemnifying party. Landlord agrees to pay the Brokers a commission pursuant to a separate written agreement entered into between Landlord and the Brokers in connection with this transaction.
28.26 Independent Covenants . This Lease shall be construed as though the covenants herein between Landlord and Tenant are independent and not dependent and Tenant hereby expressly waives the benefit of any statute to the contrary and agrees that if Landlord fails to perform its obligations set forth herein, Tenant shall not be entitled to make any repairs or perform any acts hereunder at Landlord's expense or to any setoff of the Rent or other amounts owing hereunder against Landlord, except as expressly set forth in this Lease to the contrary.
28.27 Project or Building Name and Signage . Subject to Article 26 above, Landlord shall have the right at any time to change the name of the Project or Building and to install, affix and maintain any and all signs on the exterior and on the interior of the Project or Building as Landlord may, in Landlord's sole discretion, desire. Tenant shall not use the name of the Project or Building or use pictures or illustrations of the Project or Building in advertising or other publicity or for any purpose other than as the address of the business to be conducted by Tenant in the Premises, without the prior written consent of Landlord, except that Tenant may use a picture of the Building on its web site and on announcements and the like to graphically show the location of the its offices so long as (i) it does not state or imply that Tenant owns the Building or Project, and (ii) the same is not presented in a manner which may damage the reputation or image of the Building or Project and is otherwise reflective of the first class nature of the Project.
28.28 Counterparts . This Lease may be executed in counterparts with the same effect as if both parties hereto had executed the same document. Both counterparts shall be construed together and shall constitute a single lease.
28.29 Confidentiality . Tenant acknowledges that the content of this Lease and any related documents are confidential information. Tenant shall keep such confidential information strictly confidential and shall not disclose such confidential information to any person or entity other than Tenant's financial, legal, and space planning consultants. Landlord acknowledges that the content of this Lease and any related documents are confidential information. Landlord shall keep such confidential information strictly confidential and shall not disclose such confidential information to any person or entity other than Landlord's financial, legal and space planning consultants, or its directors, officers, employees, attorneys, accountants, prospective lenders, prospective purchasers, and current and potential partners. To the extent Landlord (or any Landlord Party) or Tenant is a publicly traded corporation, such party may be obligated to regularly provide financial information concerning Landlord, Tenant and/or its affiliates to the shareholders of its affiliates, to the Federal Securities and Exchange Commission and other regulatory agencies, and to auditors and underwriters, which information may include, without limitation, summaries of financial information concerning leases, rents, costs and results of operations of its business, including any financial obligations set forth in this Lease, and such required disclosures shall be permitted pursuant to the terms of this Section 29.28 . This provision shall survive the expiration or earlier termination of this Lease for one (1) year.
28.30 Development of the Project .
28.30.1 Subdivision . Landlord reserves the right to further subdivide all or a portion of the Project; provided, however, that no such subdivision shall violate clauses (a) through (e) of Section 1.1.3 above.
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28.30.2 The Other Improvements . If portions of the Project or property adjacent to the Project (collectively, the " Other Improvements ") are owned by an entity other than Landlord, Landlord, at its option, may enter into an agreement with the owner or owners of any or all of the Other Improvements to provide (i) for reciprocal rights of access and/or use of the Project and the Other Improvements, (ii) for the common management, operation, maintenance, improvement and/or repair of all or any portion of the Project and the Other Improvements, (iii) for the allocation of a portion of the Direct Expenses to the Other Improvements and the operating expenses and taxes for the Other Improvements to the Project, and (iv) for the use or improvement of the Other Improvements and/or the Project in connection with the improvement, construction, and/or excavation of the Other Improvements and/or the Project; provided, however, that no such agreement shall violate clauses (a) through (e) of Section 1.1.3 above. Nothing contained in this Section 29.29 shall be deemed or construed to limit or otherwise affect Landlord's right to convey all or any portion of the Project or any other of Landlord's rights described in this Lease.
28.30.3 Renovations . It is specifically understood and agreed that Landlord has no obligation and has made no promises to alter, remodel, improve, renovate, repair or decorate the Premises, Project, or any part thereof and that no representations respecting the condition of the Premises or the Project have been made by Landlord to Tenant except as specifically set forth herein or in the Tenant Work Letter. However, Tenant hereby acknowledges that Landlord may during the Lease Term renovate, improve, alter, or modify (collectively, the " Renovations ") the Project and/or the Premises. Except as expressly set forth in Section 19.5.2 , above, Tenant hereby agrees that such Renovations and Landlord's actions in connection with such Renovations shall in no way constitute a constructive eviction of Tenant nor entitle Tenant to any abatement of Rent. Landlord shall have no responsibility and shall not be liable to Tenant for any injury to or interference with Tenant's business arising from the Renovations, nor shall Tenant be entitled to any compensation or damages from Landlord for loss of the use of the whole or any part of the Premises or of Tenant's personal property or improvements resulting from the Renovations, or for any inconvenience or annoyance occasioned by such Renovations. Landlord shall use commercially reasonable efforts to have all Renovations, once started, be completed reasonably expeditiously, with such work being organized and conducted in a manner which will minimize any interference to Tenant's business operations in the Premises and to not violate clauses (a) through (e) of Section 1.1.3 above.
28.30.4 Construction of Project and Other Improvements . Tenant acknowledges that portions of the Project and/or the Other Improvements may be under construction following Tenant's occupancy of the Premises, and that such construction may result in levels of noise, dust, obstruction of access, etc. which are in excess of that present in a fully constructed project. Tenant hereby waives any and all rent offsets or claims of constructive eviction which may arise in connection with such construction. In conducting such construction, Landlord agrees to use commercially reasonable efforts to minimize any interference with Tenant's business operations in the Premises and to not violate clauses (a) through (e) of Section 1.1.3 above.
28.31 No Violation . Tenant hereby warrants and represents that neither its execution of nor performance under this Lease shall cause Tenant to be in violation of any agreement, instrument, contract, law, rule or regulation by which Tenant is bound, and Tenant shall protect, defend, indemnify and hold Landlord harmless against any claims, demands, losses, damages, liabilities, costs and expenses, including, without limitation, reasonable attorneys' fees and costs, arising from Tenant's breach of this warranty and representation.
28.32 Communications and Computer Lines . Tenant may install, maintain, replace, remove or use any communications or computer wires and cables serving the Premises (collectively, the " Lines "), provided that (i) Tenant shall obtain Landlord's prior written consent (not to be unreasonably withheld conditioned or delayed), use an experienced and qualified contractor reasonably approved in writing by Landlord, and comply with all of the other provisions of Articles 7 and 8 of this Lease, (ii) an acceptable number of spare Lines and space for additional Lines shall be maintained for existing and future occupants of the Project, as reasonably determined by Landlord, (iii) the Lines therefor (including riser cables) shall be appropriately insulated to prevent excessive electromagnetic fields or radiation, shall be surrounded by a protective conduit reasonably acceptable to Landlord, and shall be identified in accordance with the "Identification Requirements," as that term is set forth hereinbelow, (iv) any new or existing Lines servicing the Premises shall comply with all applicable governmental laws and regulations, (v) as a condition to permitting the installation of new Lines, Landlord may require that Tenant remove existing Lines located in or serving the Premises and repair any damage in connection with such removal, and (vi) Tenant shall pay all costs in connection therewith. All Lines shall be clearly marked with adhesive plastic labels (or plastic tags attached to such Lines with wire) to show Tenant's name, suite number, telephone number and the name of the person to contact in the case of an emergency (A) every four feet (4') outside the Premises (specifically including, but not limited to, the electrical room risers and other Common Areas), and (B) at the Lines' termination point(s) (collectively, the " Identification Requirements ").
28.33 Transportation Management . Tenant shall fully comply with any governmentally required programs implemented by Landlord to manage parking, transportation or traffic in and around the Project and/or the Building, and in connection therewith, Tenant shall take responsible action for the transportation planning and management of all employees located at the Premises by working directly with Landlord, any governmental transportation management organization or any other transportation-related committees or entities.
28.34 Office of Foreign Assets Control . Landlord and Tenant each certifies to the other party that it is not entering into this Lease, nor acting, for or on behalf of any person or entity named as a terrorist or other banned or blocked person or entity pursuant to any law, order, rule or regulation of the United States Treasury Department or the Office of Foreign Assets Control. Tenant hereby agrees to indemnify, defend and hold Landlord and the Landlord Parties harmless from any and all Claims arising from or related to any breach of the foregoing certification. Landlord hereby agrees to indemnify, defend and hold Tenant and the Tenant Parties harmless from any and all Claims arising from or related to any breach of the foregoing certification.
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
28.35 Shuttle Service . Subject to the provisions of this Section 29.3 4 , Landlord shall provide and continuously operate (or cause a third party to operate) throughout the Lease Term a shuttle service (the " Shuttle Service ") at the Project providing services to the nearest CalTrain station to Tenant's employees (" Shuttle Service Riders "). Tenant shall have the right to consult with Landlord on the number and size of shuttles, frequency, hours of use, routes and location of the drop-off and pick-up areas for the Shuttle Service, and Landlord shall implement any reasonable recommendations of Tenant. The use of the Shuttle Service shall be subject to the reasonable rules and regulations established from time to time by Landlord and/or the operator of the Shuttle Service. Landlord and Tenant acknowledge that the use of the Shuttle Service by the Shuttle Service Riders shall be at their own risk and that the terms and provisions of Section 10.1 of this Lease shall apply to Tenant and the Shuttle Service Rider's use of the Shuttle Service. The costs of operating, maintaining and repairing the Shuttle Service shall be included as part of Operating Expenses and no separate fee s will be charged to the users of the Shuttle Service.
28.36 Rules and Regulations . Wherever "rules and regulations" are referenced in this Lease, in all events Landlord shall not enforce, change or modify such 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 unreasonably interfere with the normal and customary conduct of Tenant's business. In the event of any conflict between any such rules and regulations and the other provisions of this Lease, the other provisions of this Lease shall control.
[Signatures follow on next page.]
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed the day and date first above written.
LANDLORD :
CAP PHASE 1, LLC,
a Delaware limited liability company
By: |
Coleman Airport Partners, LLC, a California limited liability company |
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Its: |
Sole Member |
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By: |
HS Airport, LLC, a California limited liability company |
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Its: |
Manager |
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By: |
/s/ Derek K. Hunter, Jr. |
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Name: |
Derek K. Hunter, Jr. |
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Its: |
Member |
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By: |
/ s/ Edward D. Storm |
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Name: |
Edward D. Storm |
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Its: |
Member |
[signatures continue on following page]
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
Roku, Inc.
a Delaware corporation
By: |
/s/ Steve Louden |
Name: |
Steve Louden |
Title: |
CFO |
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By: |
/s/ Troy Fenner |
Name: |
Troy Fenner |
Title: |
SVP HR |
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
COLEMAN HIGHLINE
OUTLINE OF PREMISES
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EXHIBIT A-1 -1 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
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EXHIBIT A-1 -2 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
COLEMAN HIGHLINE
SITE PLAN
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EXHIBIT A-1 -4 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
COLEMAN HIGHLINE
TENANT WORK LETTER
This Tenant Work Letter shall set forth the terms and conditions relating to the construction of the improvements in the Premises. This Tenant Work Letter is essentially organized chronologically and addresses the issues of the construction of the Premises, in sequence, as such issues will arise during the actual construction of the Premises. All references in this Tenant Work Letter to Sections of "this Tenant Work Letter" shall mean the relevant portion of Sections 1 through 6 of this Tenant Work Letter.
SECTION 1
LANDLORD'S CONSTRUCTION
Landlord has constructed, at its sole cost and expense, the “base, shell and core” of the Building (collectively, the " Base, Shell and Core" and/or " Base Building "), in accordance with the plans and specifications referenced in Schedule 1-C , attached hereto (the " Base Building Plans "), and Tenant shall accept delivery of the Premises and Base Building in its currently existing "as-is" condition, subject to Landlord's Warranty.
SECTION 2
TENANT IMPROVEMENTS
2.1 Tenant Improvement Allowance . Tenant shall be entitled to an improvement allowance (the " Tenant Improvement Allowance ") in the amount set forth in Section 13 of the Summary for the costs relating to the initial design and construction of the improvements which are permanently affixed to the Premises (the " Tenant Improvements "). The Tenant Improvements shall be constructed on a floor by floor basis, with floors 1 and 2 of the Building constructed concurrently, and floor 3 of the Building constructed separately. In no event shall Landlord be obligated to make disbursements pursuant to this Tenant Work Letter in the event that Tenant fails to immediately pay any portion of the "Over-Allowance Amount," as defined in Section 4.2.1 , nor shall Landlord be obligated to pay a total amount which exceeds the Tenant Improvement Allowance. Notwithstanding the foregoing or any contrary provision of this Lease, all Tenant Improvements shall be deemed Landlord's property under the terms of this Lease. Any unused portion of the Tenant Improvement Allowance remaining as of the Lease Commencement Date, shall remain with Landlord and Tenant shall have no further right thereto.
2.2 Disbursement of the Tenant Improvement Allowance .
2.2.1 Tenant Improvement Allowance Items . Except as otherwise set forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be disbursed by Landlord (each of which disbursements shall be made pursuant to Landlord's disbursement process, including, without limitation, Landlord's receipt of invoices for all costs and fees described herein) only for the following items and costs (collectively, the " Tenant Improvement Allowance Items "):
2.2.1.1 Payment of (a) the fees of the "Architect" and the "Engineers," as those terms are defined in Section 3.1 of this Tenant Work Letter, (b) the fees of Tenant’s consultants for project management and other engineers and/or consultants for lighting, HVAC, generators, rooftop installation, audio video equipment, not to exceed Five and 00/100 Dollars ($5.00) per RSF, (c) the fees incurred by, and the cost of documents and materials supplied by, Landlord and Landlord's consultants in connection with the preparation and review of the "Construction Drawings," as that term is defined in Section 3.1 of this Tenant Work Letter and (d) payment of plan check, permit and license fees relating to construction of the Tenant Improvements;
2.2.1.2 The cost of any changes in the Base Building when such changes are required by the Construction Drawings (including if such changes are due to the fact that such work is prepared on an unoccupied basis), such cost to include all direct architectural and/or engineering fees and expenses incurred in connection therewith;
2.2.1.3 The cost of any changes to the Construction Drawings or Tenant Improvements required by all applicable building codes (the " Code "); but to the extent changes are required because Landlord did not deliver the applicable building to Tenant in the condition required by Section 1, above, Landlord shall pay for such costs separate and apart from, and in addition to, the Tenant Improvement Allowance;
2.2.1.4 The "Landlord Supervision Fee", as that term is defined in Section 4.3.2 of this Tenant Work Letter.
2.2.1.5 The payment of plan check, plan check expeditor, permit and license fees relating to the construction of the Tenant Improvements;
2.2.1.6 The cost of construction of the Tenant Improvements, inclusive of supplemental HVAC and other backup power components, and including, without limitation, testing and inspection costs, after hours freight elevator usage (and services in connection with oversize or overweight items for which Landlord’s elevator warranty requires an on-site elevator operator), hoisting and trash removal costs, and contractors’ fees and general conditions;
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
2.2. 1. 7 The cost of connection of the Premises to the Building’s energy management systems, and for chilled water hook-up fees, if applicable for the Premises; and
2.2.1.8 Sales and use taxes and Title 24 fees.
2.3 Building Standards; LEED Standards . Landlord has established or may establish specifications for certain Building standard components to be used in the construction of the Tenant Improvements in the Premises. The quality of Tenant Improvements shall be equal to or of greater quality than the quality of such Building standards, provided that Landlord may, at Landlord’s option, require the Tenant Improvements to comply with certain Building standards. Landlord may make changes to said specifications for Building standards from time to time. Removal requirements for Tenant Improvements are addressed in Article 8 of this Lease. Tenant shall not be obligated to incur any costs associated with Landlord's construction of the Base Building to comply with any LEED requirements, or relating to any LEED certification obtained for the Base Building.
SECTION 3
CONSTRUCTION DRAWINGS
3.1 Selection of Architect/Construction Drawings . Tenant shall retain KSH as the architect/space planner (the " Architect ") to prepare the "Construction Drawings," as that term is defined in this Section 3.1 . Tenant shall retain the engineering consultants designated by Landlord (the " Engineers ") to prepare all engineering construction documents and specifications relating to the structural life safety, and sprinkler work in the Premises, which work is not part of the Base Building. The plans and drawings to be prepared by Architect and the Engineers hereunder shall be known collectively as the " Construction Drawings ." All Construction Drawings shall comply with reasonable, industry standard drawing formats and specifications and shall be subject to Landlord's approval, which shall not be unreasonably withheld or delayed; provided, that any components of the Construction Drawings which present a "Design Problem" (as that term is defined hereinbelow) shall be subject to Landlord's consent in its sole and absolute discretion (collectively, " Landlord's Consent Standard "). Tenant and Architect shall verify, in the field, the dimensions and conditions as shown on the relevant portions of the Base Building Plans, and Tenant and Architect shall be solely responsible for the same, and Landlord shall have no responsibility in connection therewith. Landlord's review of the Construction Drawings as set forth in this Section 3 , shall be for its sole purpose and shall not imply Landlord's review of the same, or obligate Landlord to review the same, for quality, design, Code compliance or other like matters. Accordingly, notwithstanding that any Construction Drawings are reviewed by Landlord or its space planner, architect, engineers and consultants, and notwithstanding any advice or assistance which may be rendered to Tenant by Landlord or Landlord's space planner, architect, engineers, and consultants, Landlord shall have no liability whatsoever in connection therewith and shall not be responsible for any omissions or errors contained in the Construction Drawings, and Tenant's waiver and indemnity set forth in this Lease shall specifically apply to the Construction Drawings. A " Design Problem " is defined as and will be deemed to exist if such improvements (i) will affect the exterior appearance of the Building, (ii) will adversely affect the Base Building, (iii) will unreasonably interfere with any other Building occupant's normal and customary office operations, (iv) will fail to comply with Applicable Laws, including without limitation the LEED certification requirements relating to the construction of the Tenant Improvements required by the City of San Jose, (v) could adversely affect the CofO issued for the Building, (vi) could delay the Final Condition Date, or (vii) are not consistent with the Permitted Use.
3.2 Final Space Plan . Prior to the date of this Lease, Tenant and the Architect prepared, and Landlord approved, the final space plan for Tenant Improvements in the first and second floor of the Premises (collectively, the " Final Space Plan "), which Final Space Plan is attached hereto as Schedule 2 . On or before the date set forth in Schedule 1 , attached hereto, Tenant and the Architect shall prepare the Final Space Plan for Tenant Improvements in the third floor of the Premises, which Final Space Plan shall include a layout and designation of all offices, rooms and other partitioning, their intended use, and equipment to be contained therein, and shall deliver four (4) hard copies signed by Tenant to Landlord for Landlord's approval, and concurrently with Tenant's delivery of such hard copies, Tenant shall send to Landlord via electronic mail one (1) .pdf electronic copy of such Final Space Plan.
3.3 Final Working Drawings . On or before the date set forth in Schedule 1-A , Tenant, the Architect and the Engineers shall complete the architectural and engineering documents for the Premises, and Architect shall compile a fully coordinated set of architectural, structural, mechanical, electrical and plumbing working drawings in a form which is complete to allow subcontractors to bid on the work and to obtain all applicable permits (collectively, the " Final Construction Drawings ") and shall submit the same to Landlord for Landlord’s approval, which shall not be withheld except in the case of a Design Problem. Tenant shall supply Landlord with four (4) copies signed by Tenant of such Final Construction Drawings. Landlord shall advise Tenant within ten (10) business days after Landlord’s receipt of the Final Construction Drawings for the Premises if the same is incomplete in any material respect or if a Design Problem exists, or if the same do not comply with the Final Space Plan. If Tenant is so advised, Tenant shall immediately revise the Final Construction Drawings to cause them to be complete and to eliminate any Design Problem. If Landlord fails to respond to the Final Construction Drawings within the ten (10) business day period set forth above, Tenant may send Landlord a notice of setting forth such failure.
3.4 Permits; Approved Working Drawings . The Final Working Drawings shall be approved by Landlord (the " Approved Working Drawings ") prior to the commencement of the construction of the Tenant Improvements. Tenant shall immediately submit the Approved Working Drawings to the appropriate municipal authorities for all applicable building and other permits necessary to allow "Contractor," as that term is defined in Section 4.1 , below, to commence and fully complete the construction of the Tenant Improvements (the " Permits "), and, in connection therewith, Tenant shall coordinate with Landlord in order to allow Landlord, at its option, to take part in all phases of the permitting process and shall supply Landlord, as soon as possible, with all plan check
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EXHIBIT B -2- |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
numbers and dates of submittal and obtain the Permits on or before the date set forth in Schedule 1 -A , provided that such coordination does not delay permit plan submittal . Notwithstanding anything to the contrary set forth in this Section 3.4 , Tenant hereby agrees that neither Landlord nor Landlord's consultants shall be responsible for obtaining any building permit or certificate of occupancy for the Premises and that the obtaining of the same shall be Tenant's responsibility; provided however that Landlord shall, in any event, cooperate with Tenant in executing permit applications and performing other ministerial acts reasonably necessary to enable Tenant to obtain any such permit or certificate of occupancy. No changes, modifications or alterations in the Approved Working Drawings may be made without the prior written consent of Landlord , which consent shall be granted or withheld in accordance with Landlord's Consent Standard , provided that Landlord may withhold its consent, in its sole discretion, to any change in the Approved Working Drawings if such change would directly or indirectly delay the "Substantial Completion" of the Premises as that term is defined in Section 5.1 of this Tenant Work Letter.
3.5 Time Deadlines . Tenant shall use its best, good faith, efforts and all due diligence to cooperate with the Architect, the Engineers, and Landlord to complete all phases of the Construction Drawings and the permitting process and to receive the Permits, and with Contractor for approval of the "Cost Proposal," as that term is defined in Section 4.2 of this Tenant Work Letter, as soon as possible after the execution of the Lease, and, in that regard, shall meet with Landlord on a scheduled basis to be determined by Landlord, to discuss Tenant's progress in connection with the same. The applicable dates for approval of items, plans and drawings as described in this Section 3 , Section 4 , below, and in this Tenant Work Letter are set forth and further elaborated upon in Schedule 1-A (the " Time Deadlines "), attached hereto. Tenant agrees to comply with the Time Deadlines.
3.6 Electronic Approvals . Notwithstanding any provision to the contrary contained in the Lease or this Tenant Work Letter, Landlord may, in Landlord's sole and absolute discretion, transmit or otherwise deliver any of the approvals required under this Tenant Work Letter via electronic mail to Tenant's representative identified in Section 5.1 of this Tenant Work Letter, or by any of the other means identified in Section 29.18 of this Lease.
SECTION 4
CONSTRUCTION OF THE TENANT IMPROVEMENTS
4.1 Contractor . Landlord shall retain Devcon as contractor (" Contractor ") to construct the Tenant Improvements. Landlord shall require the Contractor to obtain competitive bids from at least three (3) qualified subcontractors for work related to the major trades as designated by Landlord and Tenant ( e.g. , structural, mechanical, electrical, plumbing, HVAC, life safety, and sprinkler work), and Landlord shall select the lowest cost bid which is conforming and consistent with the bid assumptions and directions and the construction schedule, unless (i) otherwise directed by Tenant at the time Tenant approves the Cost Proposal, or (ii) Landlord becomes aware of any information regarding the qualifications of such subcontractor after the bids are received which Landlord deems pertinent to the construction of the Improvements and which Landlord reasonably deems grounds for disqualification of such subcontractor's bid.
4.2 Cost Proposal . After the Approved Working Drawings are signed by Landlord and Tenant, Landlord shall provide Tenant with a cost proposal in accordance with the Approved Working Drawings, which cost proposal shall include, as nearly as possible, the cost of all Tenant Improvement Allowance Items to be incurred by Tenant in connection with the design and construction of the Tenant Improvements, and shall include subcontractor backup documentation in connection with such cost (the " Cost Proposal "). Tenant shall approve or disapprove line items and deliver the Cost Proposal to Landlord within ten (10) business days of the receipt of the same, and upon receipt of the same by Landlord, Landlord shall be released by Tenant to purchase the approved items set forth in the Cost Proposal and to commence the construction relating to such items. The date by which Tenant must approve and deliver the Cost Proposal to Landlord shall be known hereafter as the " Cost Proposal Delivery Date ".
4.3 Construction of Tenant Improvements by Contractor under the Supervision of Landlord .
4.3.1 Over-Allowance Amount . On the Cost Proposal Delivery Date, Tenant shall identify the amount equal to the difference between the amount of the anticipated total costs of constructing the Tenant Improvements as identified on the Cost Proposal (the " Anticipated Costs ") and the amount of the Tenant Improvement Allowance (less any portion thereof already disbursed by Landlord, or in the process of being disbursed by Landlord, on or before the commencement of construction of the Tenant Improvements). In the event that the Anticipated Costs are greater than the amount of the Tenant Improvement Allowance (the " Anticipated Over-Allowance Amount "), then, Tenant shall pay a percentage of each amount requested by the Contractor or otherwise to be disbursed under this Tenant Work Letter, which percentage (the " Percentage ") shall be equal to the Anticipated Over-Allowance Amount divided by the amount of the Anticipated Costs (after deducting from the Anticipated Costs any amounts expended in connection with the preparation of the Construction Drawings, and the cost of all other Tenant Improvements incurred prior to the commencement of construction of the Tenant Improvements), and such payments by Tenant (the " Over-Allowance Payments ") shall be a condition to Landlord's obligation to pay any amounts from the Tenant Improvement Allowance (the " Tenant Improvement Allowance Payments "). After the initial determination of the Anticipated Costs, Tenant shall advise Landlord from time to time as such Anticipated Costs are further refined or determined or the costs relating to the design and construction of the Tenant Improvements otherwise change and the Anticipated Over-Allowance Amount, and the Over-Allowance Payments shall be adjusted such that the Tenant Improvement Allowance Payments by Landlord and the Over-Allowance Payments by Tenant shall accurately reflect the then-current amount of Anticipated Costs.
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EXHIBIT B -3 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
4.3.2 Landlord's Retention of Contractor . Landlord shall independently retain Contractor to construct the Tenant Improvements in accordance with the Approved Working Drawings and the Cost Proposal and Landlord shall supervise the construction by Contractor, and Tenant shall pay a construction supervision and management fee (the " Landlord Supervision Fee ") to Landlord in an amount equal to the product of (i) two percent (2%) and (ii) the hard costs of constructing the Tenant Improvements . Landlord's contract with the Contractor shall include a ten percent (10%) final retention.
4.3.3 Contractor's Warranties and Guaranties . Landlord shall obtain commercially reasonable warranties and guaranties from Contractor relating to the Tenant Improvements, which warranties shall be for a period of no less than one (1) year after Substantial Completion of Tenant Improvements. Landlord hereby assigns to Tenant all such warranties and guaranties, and Tenant hereby waives all claims against Landlord relating to, or arising out of the construction of, the Tenant Improvements.
4.3.4 Tenant’s Covenants . Tenant hereby indemnifies Landlord for any loss, claims, damages or delays arising from the actions of Architect on the Premises or in the Building. Within fifteen (15) days after completion of construction of the Tenant Improvements, Tenant shall cause Contractor and Architect to cause a Notice of Completion to be recorded in the office of the County Recorder of the county in which the Building is located in accordance with Section 8182 of the Civil Code of the State of California or any successor statute and furnish a copy thereof to Landlord upon recordation, failing which, Landlord may itself execute and file the same as Tenant’s agent for such purpose. In addition, immediately after the Substantial Completion of the Premises, Tenant shall have prepared and delivered to the Building a copy of the “as built” plans and specifications (including all working drawings) for the Tenant Improvements.
SECTION 5
COMPLETION OF THE TENANT IMPROVEMENTS;
LEASE COMMENCEMENT DATE
5.1 Ready for Occupancy . For purposes of this Lease, " Substantial Completion of the Tenant Improvements " shall occur upon the completion of construction of the Tenant Improvements in the applicable floor of the Premises pursuant to the Approved Working Drawings, with the exception of any punch list items and any tenant fixtures, work-stations, built-in furniture, or equipment to be installed by Tenant or under the supervision of Contractor and the issuance of a temporary certificate of occupancy (or legal equivalent) for the Premises. Except as provided in Section 5.2 below, the Lease Commencement Date shall occur as set forth in this Lease and this Section 5.1 . The date that Landlord causes (or is deemed to have caused) Substantial Completion of the Tenant Improvements in the applicable floor of the Premises is the " Substantial Completion Date ".
5.2 Delay of the Substantial Completion of the Premises . Due to Tenant Delays, if there shall be a delay or there are delays in the Substantial Completion of the Tenant Improvements or in the occurrence of any of the other conditions precedent to the applicable Lease Commencement Date, as set forth in the Lease, as a direct, indirect, partial, or total result of (each of the following, a " Tenant Delay ", and collectively, " Tenant Delays "):
5.2.1 Tenant's failure to comply with the Time Deadlines;
5.2.2 Tenant's failure to timely approve any matter requiring Tenant's approval;
5.2.3 A breach by Tenant of the terms of this Tenant Work Letter or the Lease;
5.2.4 Changes in any of the Construction Drawings after disapproval of the same by Landlord or because the same do not comply with Code or other Applicable Laws or because the same affect Landlord's ability to obtain a temporary certificate of occupancy (or legal equivalent) for the Premises;
5.2.5 Tenant's request for changes in the Approved Working Drawings, provided that Landlord shall notify Tenant within ten (10) business days after Landlord receives Tenant's requested changes in the Approved Working Drawings if Landlord anticipates that such changes will delay Substantial Completion of the Tenant Improvements;
5.2.6 Tenant's requirement for materials, components, finishes or improvements which are not available in a commercially reasonable time given the anticipated date of Substantial Completion of the Tenant Improvements, as set forth in the Lease, or which are different from, or not included in Landlord's Building standards;
5.2.7 Changes to the Base Building required by the Approved Working Drawings;
5.2.8 Tenant's use of specialized or unusual improvements and/or delays in obtaining Permits due thereto;
5.2.9 Any failure by Tenant to timely pay to Landlord any portion of the Over‑Allowance Amount; or
5.2.10 Any other acts or omissions of Tenant, or its agents, or employees; then, notwithstanding anything to the contrary set forth in the Lease or this Tenant Work Letter and regardless of the actual date of the Substantial Completion of the Tenant Improvements, the Lease Commencement Date (or with respect to floor 3 only, the obligation to commence paying Base Rent and Tenant's Share of Direct Expenses) shall be deemed to be
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
the date the Lease Commencement Date would have occurred if no Tenant D elays had occurred. If Landlord contends that a Tenant Delay or Force Majeure has occurred, Landlord shall notify Tenant in writing of the event which constitutes such Tenant Delay or Force Majeure, as applicable (the " Tenant Delay Notice "). If such actions, inaction or circumstance described in t he Tenant Delay N otice are not cured by Tenant within one (1) business day of Tenant’s receipt of the Tenant Delay Notice and if such action, inaction or circumstance otherwise qualify as a Tenant Delay or Force Majeure , then a Tenant Delay or Force Majeure, as applicable, shall be deemed to have occurred commencing as of the date of Tenant’s receipt of the Tenant Delay Notice and ending as of the date such delay ends .
5.3 Substantial Completion Date Rent Abatement . If Landlord has not caused the Substantial Completion Date with respect to floors 1 and 2 to occur on or before February 23, 2019 or the Substantial Completion Date with respect to floor 3 on or before May 23, 2019(as applicable, " First Rent Abatement Date "), subject to extension by virtue of Force Majeure, and any Tenant Delays, then Tenant shall be entitled to a one-half-day-for-day abatement of Base Rent attributable to the applicable portion of the Premises (i.e., either floors 1 and 2, or floor 3) for each day following the applicable First Rent Abatement Date until the earlier to occur of: (i) the applicable Substantial Completion Date, and (ii) for floors 1 and 2, July 23, 2019 and for floor 3, October 23, 2019. If the applicable Substantial Completion Date has not occurred on or before July 24, 2019 for floors 1 and 2 or before October 24, 2019 for floor 3(such applicable day being the " Second Rent Abatement Date "), subject to extension by virtue of Force Majeure, and any Tenant Delays, Tenant shall be entitled to an abatement of Base Rent equal to twice the per diem Base Rent attributable to the applicable portion of the Premises (i.e., either floors 1 and 2, or floor 3) for each day following the applicable Second Rent Abatement Date until the applicable Substantial Completion Date (the Base Rent abatements described herein are referred to herein, collectively, as the " Late Delivery Date Abatements "). Tenant shall immediately apply any accrued Late Delivery Date Abatements against payments of Rent as they become due.
5.3.2 Substantial Completion Date Termination Right . Further, if the Substantial Completion Date for floors 1 and 2 has not occurred by eleven (11) months following the anticipated Delivery Date (the " Substantial Completion Termination Date "), subject to extension by virtue of Force Majeure, and, at Landlord's sole option, any Tenant Delays, Tenant and Landlord shall each have the right to terminate this Lease by written notice to the other party (" Substantial Completion Termination Notice ") effective upon the date occurring five (5) business days following receipt by the non-terminating party of the Substantial Completion Termination Notice (the " Termination Effective Date "), in which event, Landlord shall return any prepaid rent forthwith to Tenant. Should the applicable Substantial Completion Date occur prior to Tenant's exercise of the foregoing termination right, however, such termination right shall, in such event, expire and be of no further force or effect upon such occurrence of the Substantial Completion Date (provided that Tenant shall be entitled to receive all of the Late Delivery Date Abatements). If Tenant delivers a Substantial Completion Termination Notice to Landlord, then Landlord shall have the right to suspend the occurrence of the Termination Effective Date for a period ending thirty (30) days after the Termination Effective Date by delivering written notice to Tenant, prior to the Termination Effective Date, that, in Landlord's reasonable, good faith judgment, the Substantial Completion Date will occur within thirty (30) days after the Termination Effective Date. If the Substantial Completion Date is satisfied within such thirty (30) day suspension period, then the Substantial Completion Termination Notice shall be of no force or effect, but if the Substantial Completion Date does not occur within such thirty (30) day suspension period, then this Lease shall terminate upon the expiration of such thirty (30) day suspension period. The Termination Effective Date shall be extended to the extent of any Force Majeure, and, at Landlord's sole option, any Tenant Delays. Upon any termination as set forth in this Section 5.3.2 , Landlord and Tenant shall be released from any and all liability to each other resulting under this Lease. Tenant's rights to the Late Delivery Abatements and the right to terminate this Lease, as set forth in Section 5.3.1 above and this Section 5.3.2 , shall be Tenant's sole and exclusive remedies at law or in equity for the failure of any Substantial Completion Date to occur prior to or after any particular date.
SECTION 6
MISCELLANEOUS
6.1 Tenant's Entry Into the Premises Prior to Substantial Completion . Provided that Tenant and its agents do not interfere with construction of the Tenant Improvements, Contractor shall allow Tenant access to the Premises prior to the Substantial Completion of the Tenant Improvements for the purpose of Tenant installing overstandard equipment or fixtures (including Tenant's data and telephone equipment) in the Premises. Prior to Tenant's entry into the Premises as permitted by the terms of this Section 6.1 , Tenant shall submit a schedule to Landlord and Contractor, for their approval, which schedule shall detail the timing and purpose of Tenant's entry. Tenant shall hold Landlord harmless from and indemnify, protect and defend Landlord against any loss or damage to the Building or Premises and against injury to any persons caused by Tenant's actions pursuant to this Section 6.1 .
6.2 Miscellaneous Items . Prior to the Lease Commencement Date, during the construction of the Tenant Improvements, and subject to compliance with Landlord's TI Manual (as the same is in effect on the date of this Lease), and if and to the extent reasonably available, Tenant may use the following items, on a nonexclusive basis, and in a manner and to the extent reasonably necessary to perform the Tenant Improvements: freight elevators, loading areas, non-potable water, temporary electrical services, and HVAC; provided, however, that Tenant shall be responsible, at Tenant's cost, for providing any security services required to facilitate operation of the foregoing after-hours, which security services shall be subject to Landlord's reasonable approval.
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT B -5 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
6.3 Tenant's Representative . Tenant has designated Ernest Evans as its sole representative with respect to the matters set forth in this Tenant Work Letter (whose e-mail address for the purposes of this Tenant Work Letter is eevans@roku.com , who, until further notice to Landlord, shall have full authority and responsibility to act on behalf of the Tenant as required in this Tenant Work Letter.
6.4 Landlord's Representatives . Landlord has designated Curtis Leigh (whose e-mail address for the purposes of this Tenant Work Letter is curtis@hunterproperties.com), as its sole representative with respect to the matters set forth in this Tenant Work Letter, who, until further notice to Tenant, shall have full authority and responsibility to act on behalf of the Landlord as required in this Tenant Work Letter.
6.5 Labor Harmony . 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, would disturb labor harmony with the workforce or trades engaged in performing other work, labor or services in or about the Building or the Common Areas. In addition, Tenant shall retain any union trades to the extent required by the Underlying Documents or Applicable Laws.
6.6 Time is of the Essence . Time is of the essence under this Tenant Work Letter. Unless otherwise indicated, all references herein to a "number of days" shall mean and refer to calendar days. In all instances where Tenant is required to approve or deliver an item, if no written notice of approval is given or the item is not delivered within the stated time period, at Landlord's sole option, at the end of such period the item shall automatically be deemed approved or delivered by Tenant and the next succeeding time period shall commence. If any item requiring approval is timely disapproved by the applicable party, the procedure for preparation of the document and approval thereof shall be repeated until the document is approved.
6.7 Tenant's Lease Default . Notwithstanding any provision to the contrary contained in this Lease , if any default, after expiration of any applicable notice or cure period, as described in the Lease or this Tenant Work Letter has occurred at any time on or before the Substantial Completion of the Tenant Improvements, then (i) in addition to all other rights and remedies granted to Landlord pursuant to this Lease, Landlord shall have the right to withhold payment of all or any portion of the Tenant Improvement Allowance, and (ii) all other obligations of Landlord under the terms of the Lease and this Tenant Work Letter shall be forgiven until such time as such default is cured or waived pursuant to the terms of this Lease (in which case, Tenant shall be responsible for any delay in the Substantial Completion of the Tenant Improvements caused by such inaction by Landlord).
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT B -6 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
TIME DEADLINES
Dates |
Actions to be Performed |
|
A. |
Complete |
Final Space Plan for floors 1 and 2 to be completed by Tenant and delivered to Landlord. |
B. |
August 15, 2018 |
Tenant to deliver Final Working Drawings for floors 1 and 2 to Landlord and all specifications for materials and fixtures for floors 1 and 2 with acceptable procurement schedules. |
C. |
August 17, 2018 |
Final Space Plan for floor 3 to be completed by Tenant and delivered to Landlord. |
D. |
November 1, 2018 |
Tenant to deliver Final Working Drawings for floor 3 to Landlord and all specifications for materials and fixtures for floor 3 with acceptable procurement schedules. |
E. |
August 28, 2018 |
Tenant to deliver Permits for floors 1 and 2 to Contractor. |
F. |
November 30, 2018 |
Tenant to deliver Permits for floor 3 to Contractor. |
G. |
Five (5) business days after the receipt of the Cost Proposal by Tenant |
Tenant to approve Cost Proposal for floors 1 and 2 and deliver Cost Proposal for floors 1 and 2 to Landlord. |
I. |
Five (5) business days after the receipt of the Cost Proposal by Tenant |
Tenant to approve Cost Proposal for floor 3 and deliver Cost Proposal for floor 3 to Landlord. |
788288.01/WLA 375755-00007/8-9-18//ejw |
SCHEDULE 1-A TO EXHIBIT B -1 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
COLEMAN HIGHLINE
BASE BUILDING DESCRIPTION
All references to "Code" below shall mean compliance with applicable Code to the extent necessary for Tenant to obtain and retain a CofO for the Premises for general office use.
All landscape, site work, lighting, paving, striping, Code related signage, and utilities (sewer, water, gas). Includes infrastructure for future communication and cable TV requirements. Work includes all vaults, fees, backflow and monitoring devices.
2) |
Shell: |
All work required to obtain a shell permit final inspection (not a temporary certificate for occupancy). All work shall conform to local Code for the shell. Weather tight (air and water infiltration) shell complete with rain water distribution system. Exterior doors with manual exit panic hardware. 2 sets of standard pre- engineered stairs for access and egress with one set to access the roof. Fire riser and complete shell system, including "up heads" with capped tees for Tenant Improvements at all floors and roof monitors and PIV (monitoring system by Tenant). Floor of the Building designed for 80 PSF uniform live load. Steel framework shall be designed to accommodate shaft and elevator openings. Includes roof screen. Insulation at underside of roof deck provided, furring and drywall at perimeter walls and all columns are excluded. 10’ high ceiling for most open office space. The Building is classified as Type II-A. Exterior lobby door hardware to be electrified.
3) |
Electrical: |
All primary and secondary electrical services from the street to a location in the Building, including transformer pads, and house meter section.
4) |
Core: |
All work related to construction of core bathrooms, stairs shafts, HVAC shafts, electrical and phone rooms, janitor closets, elevators and shafts. Work related to construction of main lobby and upper elevator lobbies are excluded.
|
a) |
Core bathrooms (one set for men and women per floor) shall include multiple stalls with one (1) handicap stall per floor and provide +2 plumbing fixtures over code requirement for occupancy load. Includes showers for men and women on first floor only. Bathroom will receive tile flooring and wall tiles up to wainscot height at wet walls only (6’ above finished floor). All other bathroom i nterior walls and gypsum board ceilings will be taped, finished, and painted. All plumbing fixtures including water closets, urinals, lavatory sinks and faucets will be battery operated. Toilet accessories including soap dispensers, toilet paper dispensers, toilet seat dispensers, trash receptacles, paper towel dispensers, napkin dispensers, and handicap grab bars are included. Plastic laminate toilet partitions are included. Granite countertops with under mount sinks are included. All associated lighting, fire sprinklers, power receptacles, ventilation, venting, sewer piping, water piping and floor drains are included. All associated lighting and fire sprinklers are included. |
|
b) |
Stair shafts will be constructed with metal stud framing and drywall assembly with fire rating in compliance to construction type. Stairs to be 1’ wider than Code required. All interior walls facing the egress stairs will be taped, finished, and painted. Gypsum board ceiling will be constructed at the top level. No soffit on the underside of stairs. Stair rails and stringers will be painted. All associated lighting and fire sprinklers are included. |
|
c) |
Electrical and telephone rooms will receive sealed concrete with plywood backing on walls. Electrical scope will include power distribution including transformer, conduit risers and electrical panels. Conduit risers will be provided for phone service distribution. |
|
d) |
SVP transformer pad for each Building. Main switchboard to be per CEC, Silicon Valley Power and City of San Jose requirements. Meter main per Silicon Valley Power requirements, with utility metering section with CAT5E station cable to MPOE. Provide a vertical 480/277V 3PH bus riser complete with bus plugs capable of supply full floor power, lighting and miscellaneous loads at electrical room on each floor for future tenant distribution. |
|
e) |
Fully operational main electric service for the Building including main switchboard rated at 14 Watts per SF, 2500 AMP 480/277V 3PH, serving Tenant lighting, power and miscellaneous loads, as well as Base Building electrical and mechanical equipment loads. Space sized for Tenant panels and transformers are included. Includes bus duct for lighting and power for Core only. Includes conduits and wire feeders for Mechanical. Landlord to provide electrical panels for Tenant to use at electrical closet on each floor of the Premises. |
788288.01/WLA 375755-00007/8-9-18//ejw |
SCHEDULE 1-B TO EXHIBIT B -1 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
|
g) |
DDC controls for Base Building system (rooftop heating and cooling) with the availability of the addition of DDC controls should the future tenant require. Electrical monitoring is not included. |
General Office Areas:
Lighting load (including task lighting): Cooling system designed for 1.2 watts/RSF; Lighting designed to be restricted to .95 watts/RSF to conform to potential LEED goals
Non Core miscellaneous office equipment designed for cooling loads 3.0 watts/RSF (highly populated floor plates need more watts/SF)
Designated dry lab space: Increased loads are a tenant expense performed by Landlord
Occupancy: designed to accommodate 150 SF/person
|
h) |
Hot water boiler system, including hot water pump(s), water treatment and all necessary piping specialties, serving one riser extending from the roof to the lower floor. Supply and return valves to be located on each floor for future connection to hot water piping loop if required. Piping loops on each floor are not included. |
|
i) |
Auxiliary cooling is not included. |
|
j) |
Domestic cold water main branch piping to each floor near the stair for future break rooms. |
|
k) |
Fire alarm system: Building is fully sprinklered and monitored including the PIV as required by Code. Life safety system distribution (smoke detectors, annunciators, strobes, etc) as required by Code for core and common areas. Each floor is designated as one smoke zone. Fire alarm to be expandable. |
|
l) |
Building telephone MPOE shall be separate from Main Electrical Room. Roof pad to allow for future 24hr cooling tenant requirement and stacked IDF closets shall be included per Code. Phone systems, switching equipment, connections etc., are not included. |
|
m) |
Elevators (quantity and size to meet code) shall be machine room less elevators with call buttons to meet ADA and fire code requirements. Pit ladder(s), separation screens, sill angles, guide rails and separation beams will be installed, if required, in shaft. Elevator vestibule walls will be fire taped for tenant improvement. Flooring on upper level vestibule to be provided by T.I. Excludes build out of main lobby and upper elevator lobbies. Standard elevator cab finish will be provided. Upgrades if required by Tenant. Elevators to include security card-reader. |
|
n) |
Emergency power; An inverter will be provided for the Building to power exterior egress lighting. All interior egress lights to be powered by self-contained emergency battery packs. |
|
o) |
Tenant generator provisions; Provisions will be made at exterior utility enclosure for a 500kW generator for the Building. Provisions to include underground conduits for power, control and parasitic connections. Balance of work to be NIC. |
|
p) |
All core walls will be constructed with metal stud framing and drywall assembly with fire rating in compliance to construction type. Wall facing Tenant space will be fire taped. |
788288.01/WLA 375755-00007/8-9-18//ejw |
SCHEDULE 1-B TO EXHIBIT B -2 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
BASE BUILDING PLANS
COLEMAN HIGHLINE BUILDING 2 1155 COLEMAN AVE., SAN JOSE SHEET NUMBER TITLE ARCHITECTURAL DRAWING DATE 2A2.1 2A2.2 2A3.1 2A4.1 2A4.2 2A5.1 2A5.2 2A10.4 FIRST FLOOR – PROPOSED PARTITION PLAN SECOND FLOOR - PROPOSED PARTITION PLAN FIRST FLOOR – REFLECTED CEILING PLAN POWER & COMMUNICATION PLAN GROUND FLOOR FINISH PLAN SECOND FLOOR FINISH PLAN PARTITION SCHEDULE 7/18/2018 7/10/2018 *NOTE – NO PLANS FOR BUILDING 2 THIRD FLOOR FIT OUT AVAILABLE AS LEASE SIGNING.
788288.01/WLA 375755-00007/8-9-18//ejw |
SCHEDULE 1-C TO EXHIBIT B -1 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
FINAL SPACE PLAN
SUMMARY 12 WORKSTATIONS (6’ x 8’) 10 HUDDLE ROOMS 4 PHONE ROOMS 0 (S) CONFERENCE 4 (M) CONFERENCE 3 (L) CONFERENCE 9 MISC. STORAGE 2 OPEN COLLABORATION 0’ 5’ 20’ KSH ARCHITECTS KORTH SUNSERI HAGEY ROKU FIRST FLOOR -6’ x 8’ WORKSTATION 2018,0611 ASK 5
788288.01/WLA 375755-00007/8-9-18//ejw |
SCHEDULE 2 -1 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
SUMMARY 170 WORKSTATIONS (6’ x 8’) 11 HUDDLE ROOMS 12 PHONE ROOMS 5 (S) CONFERENCE 6 (M) CONFERENCE 2 (L) CONFERENCE 2 OPEN COLLABORATION 0’ 5’ 20’ KSH ARCHITECTS KORTH SUNSERI HAGEY ROKU SECOND FLOOR -6’ x 8’ WORKSTATION 2018,0611 ASK 7
788288.01/WLA 375755-00007/8-9-18//ejw |
SCHEDULE 2 -2 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
COLEMAN HIGHLINE
NOTICE OF LEASE TERM DATES
To: |
_______________________
|
Re: Office Lease dated ____________, 20__ between ____________________, a _____________________ (" Landlord "), and _______________________, a _______________________ (" Tenant ") concerning Suite ______ on floor(s) __________ of the office building located at _____________________.
Gentlemen:
In accordance with the Office Lease (the " Lease "), we wish to advise you and/or confirm as follows:
|
1. |
The Lease Term shall commence on or has commenced on _____________ for a term of _______________ ending on _______________. |
|
2. |
Rent commenced to accrue on ____________, in the amount of ____________. |
|
3. |
If the Lease Commencement Date is other than the first day of the month, the first billing will contain a pro rata adjustment. Each billing thereafter, with the exception of the final billing, shall be for the full amount of the monthly installment as provided for in the Lease. |
|
4. |
Your rent checks should be made payable to __________ at ______________. |
"Landlord": |
|
|
, |
a |
|
|
|
By: |
|
Its: |
|
Agreed to and Accepted as
of
, 20_
.
"Tenant":
|
|
a |
|
|
|
|
|
By: |
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Its: |
|
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT C -1 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
COLEMAN HIGHLINE
RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the following Rules and Regulations. Landlord shall not be responsible to Tenant for the nonperformance of any of said Rules and Regulations by or otherwise with respect to the acts or omissions of any other tenants or occupants of the Project. In the event of any conflict between the Rules and Regulations and the other provisions of this Lease, the other provisions of this Lease shall control. Landlord will not discriminate against Tenant in the enforcement of the Rules and Regulations.
1. Tenant shall not alter any lock or install any new or additional locks or bolts on any doors or windows of the Premises without obtaining Landlord's prior written consent. Tenant shall bear the cost of any lock changes or repairs required by Tenant.
2. Tenant, its employees and agents must be sure that the doors to the Premises are securely closed and locked when leaving the Premises if it is after the normal hours of business for the Premises. The Landlord and his agents shall in no case be liable for damages for any error with regard to the admission to or exclusion from the Building of any person. In case of invasion, mob, riot, public excitement, or other commotion, Landlord reserves the right to prevent access to the Building or the Project during the continuance thereof by any means it deems appropriate for the safety and protection of life and property.
3. The requirements of Tenant will be attended to only upon application at the management office for the Project or at such office location designated by Landlord. Employees of Landlord shall not perform any work or do anything outside their regular duties unless under special instructions from Landlord.
4. No sign, advertisement, notice or handbill shall be exhibited, distributed, painted or affixed by Tenant on any part of the Premises or the Building without the prior written consent of the Landlord. Tenant shall not disturb, solicit, peddle, or canvass any occupant of the Project and shall cooperate with Landlord and its agents of Landlord to prevent same.
5. The toilet rooms, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed, and no foreign substance of any kind whatsoever shall be thrown therein. The expense of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by the tenant who, or whose servants, employees, agents, visitors or licensees shall have caused same.
6. Tenant shall not overload the floor of the Premises, nor mark, drive nails or screws, or drill into the partitions, woodwork or drywall or in any way deface the Premises or any part thereof without Landlord's prior written consent.
7. Tenant shall not use or keep in or on the Premises, the Building, or the Project any kerosene, gasoline, explosive material, corrosive material, material capable of emitting toxic fumes, or other inflammable or combustible fluid chemical, substitute or material. Tenant shall provide material safety data sheets for any hazardous material or substance used or kept on the Premises.
8. Tenant shall not bring into or keep within the Project, the Building or the Premises any firearms, animals, birds, aquariums, or, except in areas designated by Landlord, bicycles or other vehicles.
9. Tenant shall not occupy or permit any portion of the Premises to be occupied as an office for a messenger-type operation or dispatch office, public stenographer or typist, or for the manufacture or sale of narcotics, or tobacco in any form, or as a medical office, or as a barber or manicure shop, or as an employment bureau without the express prior written consent of Landlord. Tenant shall not engage or pay any employees on the Premises except those actually working for such tenant on the Premises nor advertise for laborers giving an address at the Premises.
10. Landlord reserves the right to exclude or expel from the Project any person who, in the judgment of Landlord, is intoxicated or under the influence of liquor or drugs, or who shall in any manner do any act in violation of any of these Rules and Regulations.
11. Tenant shall not waste electricity, water or air conditioning and agrees to cooperate fully with Landlord to ensure the most effective operation of the Building's heating and air conditioning system, and shall refrain from attempting to adjust any controls. Tenant shall participate in recycling programs undertaken by Landlord.
12. Tenant shall comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governmental agency.
13. Tenant must comply with requests by the Landlord concerning the informing of their employees of items of importance to the Landlord.
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT D -1 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
14. Tenant must comply with applicable " NO-SMOKING " ordinances and all related, similar or successor ordinances, rules, regulations or codes. If Tenant is required under the ordinance to adopt a written smoking policy, a copy of said policy shall be on file in the office of the Building. In addition, no smoking of any substance shall be permitted within the Project except in specifically designated outdoor areas. Within such designated outdoor areas, all remnants of consumed cigarettes and related paraphernalia shall be deposited in ash trays and/or waste receptacles. No cigarettes shall be extinguished and/or left on the ground or any other surface of the Project. Cigarettes shall be extinguished only in ashtrays. Furthermore, in no event shall Tenant, its employees or agents smoke tobacco products or other substances (x) within any interior areas of the Project, or (y) within two hundred feet (200 ' ) of the main entrance of the Building or the main entrance of any of the adjacent buildings, or (z) within seventy-five feet (75 ' ) of any ot her entryways into the Building.
15. Tenant hereby acknowledges that Landlord shall have no obligation to provide guard service or other security measures for the benefit of the Premises, the Building or the Project. Tenant hereby assumes all responsibility for the protection of Tenant and its agents, employees, contractors, invitees and guests, and the property thereof, from acts of third parties, including keeping doors locked and other means of entry to the Premises closed, whether or not Landlord, at its option, elects to provide security protection for the Project or any portion thereof. Tenant further assumes the risk that any safety and security devices, services and programs which Landlord elects, in its sole discretion, to provide may not be effective, or may malfunction or be circumvented by an unauthorized third party, and Tenant shall, in addition to its other insurance obligations under this Lease, obtain its own insurance coverage to the extent Tenant desires protection against losses related to such occurrences. Tenant shall cooperate in any reasonable safety or security program developed by Landlord or required by law.
16. No auction, liquidation, fire sale, going-out-of-business or bankruptcy sale shall be conducted in the Premises without the prior written consent of Landlord.
17. No tenant shall use or permit the use of any portion of the Premises for living quarters, sleeping apartments or lodging rooms.
18. Tenant shall install and maintain, at Tenant's sole cost and expense, an adequate, visibly marked and properly operational fire extinguisher next to any heat producing equipment, and any equipment which uses flammable materials or gases in the Premises.
Landlord reserves the right at any time to reasonable change or rescind any one or more of these Rules and Regulations, or to make such other and further reasonable Rules and Regulations as in Landlord's reasonable judgment may from time to time be necessary for the management, safety, care and cleanliness of the Premises, Building, the Common Areas and the Project, and for the preservation of good order therein, as well as for the convenience of other occupants and tenants therein. Landlord may waive any one or more of these Rules and Regulations for the benefit of any particular tenants, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of any other tenant, nor prevent Landlord from thereafter enforcing any such Rules or Regulations against any or all tenants of the Project; provided further, however, Landlord shall not discriminate against Tenant in the enforcement of any of the Rules and Regulations. Tenant shall be deemed to have read these Rules and Regulations and to have agreed to abide by them as a condition of its occupancy of the Premises.
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT D -2 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
COLEMAN HIGHLINE
FORM OF TENANT'S ESTOPPEL CERTIFICATE
The undersigned as Tenant under that certain Office Lease (the " Lease ") made and entered into as of ___________, 20_ by and between _______________ as Landlord, and the undersigned as Tenant, for Premises on the ______________ floor(s) of the office building located at _____________________, certifies as follows:
1. Attached hereto as Exhibit A is a true and correct copy of the Lease and all amendments and modifications thereto. The documents contained in Exhibit A represent the entire agreement between the parties as to the Premises.
2. The undersigned currently occupies the Premises described in the Lease, the Lease Term commenced on __________, and the Lease Term expires on ___________, and the undersigned has no option to terminate or cancel the Lease or to purchase all or any part of the Premises, the Building and/or the Project.
3. Base Rent became payable on ____________.
4. The Lease is in full force and effect and has not been modified, supplemented or amended in any way except as provided in Exhibit A .
5. Tenant has not transferred, assigned, or sublet any portion of the Premises nor entered into any license or concession agreements with respect thereto except as follows:
6. Tenant shall not modify the documents contained in Exhibit A without the prior written consent of Landlord's mortgagee.
7. All monthly installments of Base Rent, all Additional Rent and all monthly installments of estimated Additional Rent have been paid when due through ___________. The current monthly installment of Base Rent is $_____________________.
8. To the undersigned's actual current knowledge, all conditions of the Lease to be performed by Landlord necessary to the enforceability of the Lease have been satisfied and Landlord is not in default thereunder. In addition, the undersigned has not delivered any notice to Landlord regarding a default by Landlord thereunder.
9. No rental has been paid more than thirty (30) days in advance and no security has been deposited with Landlord except as provided in the Lease.
10. As of the date hereof, to the undersigned's actual current knowledge, there are no existing defenses or offsets, or, to the undersigned's actual current knowledge, claims or any basis for a claim, that Tenant has against Landlord.
11. Tenant hereby represents and warrants that Tenant has full right and authority to execute and deliver this Estoppel Certificate and that each person signing on behalf of Tenant is authorized to do so.
12. There are no actions pending against Tenant under the bankruptcy or similar laws of the United States or any state.
13. Other than in compliance with all Applicable Laws and incidental to the ordinary course of the use of the Premises, the undersigned has not used or stored any hazardous substances in the Premises.
14. To the undersigned's actual current knowledge, all tenant improvement work to be performed by Landlord under the Lease has been completed in accordance with the Lease and has been accepted by Tenant and all reimbursements and allowances due to Tenant under the Lease in connection with any tenant improvement work have been paid in full.
Tenant acknowledges that this Estoppel Certificate may be delivered to Landlord or to a prospective mortgagee or prospective purchaser, and acknowledges that said prospective mortgagee or prospective purchaser will be relying upon the statements contained herein in making the loan or acquiring the property of which the Premises are a part and that receipt by it of this certificate is a condition of making such loan or acquiring such property.
Executed at ______________ on the ____ day of ___________, 20__.
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT E -1 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
"Tenant": |
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788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT E -2 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
COLEMAN HIGHLINE
MARKET RENT DETERMINATION
When determining Market Rent, the following rules and instructions shall be followed.
1. RELEVANT FACTORS . The " Market Rent ," as used in this Lease, shall be equal to the annual rent per rentable square foot, at which tenants, are, pursuant to transactions consummated within twelve (12) months prior to the commencement of the Option Term, provided that timing adjustments shall be made to reflect any changes in the Market Rent following the date of any particular Comparable Transaction up to the date of the commencement of the applicable Option Term, leasing non-sublease, non-encumbered space comparable in location and quality to the Premises containing a square footage comparable to that of the Premises for a term of five (5) years, in an arm's-length transaction, which comparable space is located in "Comparable Buildings" (transactions satisfying the foregoing criteria shall be known as the " Comparable Transactions "). The terms of the Comparable Transactions shall be calculated as a "Net Equivalent Lease Rate" pursuant to the terms of this Exhibit F , and shall take into consideration only the following terms and concessions: (i) the rental rate and escalations for the Comparable Transactions, (ii) the amount of parking rent per parking permit paid in the Comparable Transactions, if any (and taking into consideration that Tenant is provided parking without charge and the availability and type of parking), (iii) operating expense and tax protection granted in such Comparable Transactions such as a base year or expense stop (although for each such Comparable Transaction the base rent shall be adjusted to a triple net base rent using reasonable estimates of operating expenses and taxes as determined by Landlord for each such Comparable Transaction); (iv) rental abatement concessions, if any, being granted such tenants in connection with such comparable space, (v) any "Renewal Allowance," as defined herein below, to be provided by Landlord in connection with the Option Term as compared to the improvements or allowances provided or to be provided in the Comparable Transactions, taking into account the contributory value of the existing improvements in the Premises (or Reduced Premises, as applicable), such value to be based upon the age, design, quality of finishes, and layout and use of the existing improvements, and (vi) all other monetary concessions (including the value of any signage, availability of amenities and services), if any, being granted such tenants in connection with such Comparable Transactions. Notwithstanding any contrary provision hereof, in determining the Market Rent, no consideration shall be given to (A) any period of rental abatement, if any, granted to tenants in Comparable Transactions in connection with the design, permitting and construction of improvements, or (B) any commission paid or not paid in connection with such Comparable Transaction. The Market Rent shall include adjustment of the stated size of the Premises (or Reduced Premises, as applicable) based upon the standards of measurement utilized in the Comparable Transactions; provided, however, the size of the Premises shall, notwithstanding the foregoing, be at least equal to the greater of: (i) the square footages set forth in this Lease, and (ii) the square footage of the Premises determined pursuant to the standards of space measurement used in the Comparable Transactions.
2. TENANT SECURITY . The Market Rent shall additionally include a determination as to whether, and if so to what extent, Tenant must provide Landlord with financial security, such as an enhanced security deposit, a letter of credit or guaranty, for Tenant's Rent obligations during the Option Term. Such determination shall be made by reviewing the extent of financial security then generally being imposed in Comparable Transactions from tenants of comparable financial condition and credit history to the then existing financial condition and credit history of Tenant (with appropriate adjustments to account for differences in the then-existing financial condition of Tenant and such other tenants, and giving reasonable consideration to Tenant's prior performance history during the Lease Term).
3. RENEWAL IMPROVEMENT ALLOWANCE . Notwithstanding anything to the contrary set forth in this Exhibit F , once the Market Rent for the Option Term is determined as a Net Equivalent Lease Rate, if, in connection with such determination, it is deemed that Tenant is entitled to an improvement or comparable allowance for the improvement of the Premises, (the total dollar value of such allowance shall be referred to herein as the " Renewal Allowance "), Landlord shall pay the Renewal Allowance to Tenant pursuant to a commercially reasonable disbursement procedure determined by Landlord and the terms of Article 8 of this Lease, and, as set forth in Section 5 , below, of this Exhibit F , the rental rate component of the Market Rent shall be increased to be a rental rate which takes into consideration that Tenant will receive payment of such Renewal Allowance and, accordingly, such payment with interest shall be factored into the base rent component of the Market Rent.
4. COMPARABLE BUILDINGS . For purposes of this Lease, the term " Comparable Buildings " shall mean the other buildings in the Project and other first-class multi-tenant and single-tenant occupancy office buildings which are comparable to the Building in terms of age (based upon the date of completion of construction or major renovation), quality of construction, level of services and amenities (including, but not limited to, the type (e.g., surface, covered, subterranean) and amount of parking), size and appearance], with similar access to public transit and are located in the following area (the " Comparable Area "): downtown San Jose, the West Valley area of San Jose and the City of Santa Clara.
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT F -1 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
5. METHODOLOGY FOR REVIEWING AND COMPARING THE COMPARABLE TRANSACTIONS . For purposes of this Section 5 , the term " Comparable Transactions " shall include any proposed transactions with third parties for the First Offer Space (pursuant to Section 1. 2 of this Lease). In order to analyze the Comparable Transactions based on the factors to be considered in calculating Market Rent and in order to evaluate the value of the Economic Terms (pursuant to Section 1. 2 of this Lease), and given that the Comparable Transactions may vary in terms of length of term, rental rate, concessions, etc., the following steps shall be taken into consideration to "adjust" the objective data from each of the Comparable Transactions . By taking this approach, a " Net Equivalent Lease Rate " for each of the Comparable Transactions shall be determined using the following steps to adjust the Comparable Transactions, which will allow for an "apples to apples" comparison of the Comparable Transactions.
5.1. The contractual rent payments for each of the Comparable Transactions should be arrayed monthly or annually over the lease term. All Comparable Transactions should be adjusted to simulate a net rent structure, wherein the tenant is responsible for the payment of all property operating expenses in a manner consistent with this Lease. This results in the estimate of Net Equivalent Rent received by each landlord for each Comparable Transaction being expressed as a periodic net rent payment.
5.2 Any free rent or similar inducements received over time should be deducted in the time period in which they occur, resulting in the net cash flow arrayed over the lease term.
5.3 The resultant net cash flow from the lease should then be discounted (using an 8% annual discount rate) to the lease commencement date, resulting in a net present value estimate.
5.4 From the net present value, up front inducements (improvements allowances and other concessions) should be deducted. These items should be deducted directly, on a "dollar for dollar" basis, without discounting since they are typically incurred at lease commencement, while rent (which is discounted) is a future receipt.
5.5 The net present value should then be amortized back over the lease term as a level monthly or annual net rent payment using the same annual discount rate of 8.0% used in the present value analysis. This calculation will result in a hypothetical level or even payment over the option period, termed the "Net Equivalent Lease Rate" (or constant equivalent in general financial terms).
6. USE OF NET EQUIVALENT LEASE RATES FOR COMPARABLE TRANSACTIONS . The Net Equivalent Lease Rates for the Comparable Transactions shall then be used to reconcile, in a manner usual and customary for a real estate appraisal process, to a conclusion of Market Rent which shall be stated as a "NNN" lease rate applicable to each year of the Option Term.
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT F -2 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
COLEMAN HIGHLINE
HAZARDOUS MATERIALS
1. Prohibitions . Tenant hereby represents, warrants and covenants that except for those chemicals or materials, and their respective quantities, specifically listed on the Environmental Questionnaire, neither Tenant nor Tenant's employees, contractors and subcontractors of any tier, entities with a contractual relationship with Tenant (other than Landlord), or any entity acting as an agent or sub-agent of Tenant (collectively, " Tenant's HazMat Agents ") will produce, use, store or generate any Hazardous Materials, on, under or about the Premises, nor cause or permit any Hazardous Material to be brought upon, placed, stored, manufactured, generated, blended, handled, recycled, used or "Released," as that term is defined below, on, in, under or about the Premises. If any information provided to Landlord by Tenant on the Environmental Questionnaire, or otherwise relating to information concerning Hazardous Materials is intentionally false, intentionally incomplete, or intentionally misleading in any material respect, the same shall be deemed a default by Tenant under this Lease. Tenant shall deliver to Landlord an updated Environmental Questionnaire upon request. Landlord's prior written consent shall be required to any Hazardous Materials use for the Premises not described on the initial Environmental Questionnaire, such consent to be withheld in Landlord's sole discretion. Tenant shall not install or permit any underground storage tank on the Premises. In addition, Tenant agrees that it: (i) shall not cause or suffer to occur, the Release of any Hazardous Materials at, upon, under or within the Premises or any contiguous or adjacent premises; and (ii) shall not engage in activities at the Premises that could result in, give rise to, or lead to the imposition of liability upon Tenant or Landlord or the creation of an environmental lien or use restriction upon the Premises. For purposes of this Lease, " Hazardous Materials " means all flammable explosives, petroleum and petroleum products, waste oil, radon, radioactive materials, toxic pollutants, asbestos, polychlorinated biphenyls (" PCBs "), medical waste, chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic substances or related materials, including without limitation any chemical, element, compound, mixture, solution, substance, object, waste or any combination thereof, which is or may be hazardous to human health, safety or to the environment due to its radioactivity, ignitability, corrosiveness, reactivity, explosiveness, toxicity, carcinogenicity, infectiousness or other harmful or potentially harmful properties or effects, or defined as, regulated as or included in, the definition of "hazardous substances," "hazardous wastes," "hazardous materials," or "toxic substances" under any Environmental Laws. The term "Hazardous Materials" for purposes of this Lease shall also include any mold, fungus or spores, whether or not the same is defined, listed, or otherwise classified as a "hazardous material" under any Environmental Laws, if such mold, fungus or spores may pose a risk to human health or the environment or negatively impact the value of the Premises. For purposes of this Lease, " Release " or " Released " or " Releases " shall mean any release, deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing, or other movement of Hazardous Materials into the environment.
2. Notices . Unless Tenant is required by Applicable Laws to give earlier notice to Landlord, Tenant shall notify Landlord in writing as soon as possible, but in no event later than five (5) days after (i) the occurrence of any actual, alleged or threatened Release of any Hazardous Material in, on, under, from, about or in the vicinity of the Premises (whether past or present), regardless of the source or quantity of any such Release, or (ii) Tenant becomes aware of any regulatory actions, inquiries, inspections, investigations, directives, or any cleanup, compliance, enforcement or abatement proceedings (including any threatened or contemplated investigations or proceedings) relating to or potentially affecting the Premises, or (iii) Tenant becomes aware of any claims by any person or entity relating to any Hazardous Materials in, on, under, from, about or in the vicinity of the Premises, whether relating to damage, contribution, cost recovery, compensation, loss or injury. Collectively, the matters set forth in clauses (i), (ii) and (iii) above are hereinafter referred to as " Hazardous Materials Claims ". Tenant shall promptly forward to Landlord copies of all orders, notices, permits, applications and other communications and reports in connection with any Hazardous Materials Claims. Additionally, Tenant shall promptly advise Landlord in writing of Tenant's discovery of any occurrence or condition on, in, under or about the Premises that could subject Tenant or Landlord to any liability, or restrictions on ownership, occupancy, transferability or use of the Premises under any Environmental Laws. Tenant shall not enter into any legal proceeding or other action, settlement, consent decree or other compromise with respect to any Hazardous Materials Claims without first notifying Landlord of Tenant's intention to do so and affording Landlord the opportunity to join and participate, as a party if Landlord so elects, in such proceedings and in no event shall Tenant enter into any agreements which are binding on Landlord or the Premises without Landlord's prior written consent. Landlord shall have the right to appear at and participate in, any and all legal or other administrative proceedings concerning any Hazardous Materials Claim. For purposes of this Lease, " Environmental Laws " means all applicable present and future laws relating to the protection of human health, safety, wildlife or the environment, including, without limitation, (A) all requirements pertaining to reporting, licensing, permitting, investigation and/or remediation of emissions, discharges, Releases, or threatened Releases of Hazardous Materials, whether solid, liquid, or gaseous in nature, into the air, surface water, groundwater, or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of Hazardous Materials; and (B) all requirements pertaining to the health and safety of employees or the public. Environmental Laws include, but are not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 USC § 9601, et seq., the Hazardous Materials Transportation Authorization Act of 1994, 49 USC § 5101, et seq., the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, and Hazardous and Solid Waste Amendments of 1984, 42 USC § 6901, et seq., the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 USC § 1251, et seq., the Clean Air Act of 1966, 42 USC § 7401, et seq., the Toxic Substances Control Act of 1976, 15 USC § 2601, et seq., the Safe Drinking Water Act of 1974, 42 USC §§ 300f through 300j, the Occupational Safety and Health Act of 1970, as amended, 29 USC § 651 et seq., the Oil Pollution Act of 1990, 33 USC § 2701 et seq., the Emergency Planning and Community Right-To-Know Act of 1986, 42 USC § 11001 et seq., the National Environmental Policy Act of 1969, 42 USC § 4321 et seq., the Federal Insecticide, Fungicide and Rodenticide Act of 1947, 7 USC § 136 et
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT G -1- |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
seq., California Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health & Safety Code §§ 25300 et seq., Hazardous Materials Release Response Plans and Inventory Act, California Health & Safety Code, §§ 25500 et seq., Underground Storage of Hazardous Substances provisions, California Health & Safety Code, §§ 25280 et seq., California Hazardous Waste Control Law, California Health & Safety Code, §§ 25100 et seq., and any other state or local law counterparts, as amended, as such applicable laws, are in effect as of the Lease Commencement Date, or thereafter adopted, published, or promulgated. " Environmental Permits " means all permits, approvals, identification numbers, licenses and other authorizations required under any applicable Environmental Laws.
3. Releases of Hazardous Materials . If Tenant or any of Tenant’s HazMat Agents causes any Release of any Hazardous Material in, on, under, from or about the Premises at any time during the Lease Term, in addition to notifying Landlord as specified above, Tenant, at its own sole cost and expense, shall (i) immediately comply with any and all reporting requirements imposed pursuant to any and all Environmental Laws, (ii) provide a written certification to Landlord indicating that Tenant has complied with all applicable reporting requirements, (iii) take any and all necessary investigation, corrective and remedial action in accordance with any and all applicable Environmental Laws, utilizing an environmental consultant approved by Landlord, all in accordance with the provisions and requirements of this Exhibit G , and (iv) take any such additional investigative, remedial and corrective actions as Landlord shall in its reasonable discretion deem necessary such that the Premises is remediated to the condition existing prior to such Release, all in accordance with the provisions and requirements of this Section 3 . Landlord may, as required by any and all Environmental Laws, report the Release of any Hazardous Material caused by Tenant or any of Tenant’s HazMat Agents to the appropriate governmental authority, identifying Tenant as the responsible party. Tenant shall deliver to Landlord copies of all administrative orders, notices, demands, directives or other communications directed to Tenant from any governmental authority with respect to any Release of Hazardous Materials in, on, under, from, or about the Premises, together with copies of all investigation, assessment, and remediation plans and reports prepared by or on behalf of Tenant in response to any such regulatory order or directive. Tenant's obligations under this Section 3 shall not apply to Existing Hazardous Materials and any Landlord Hazardous Materials (as those terms are defined in Section 4.2 below). Nothing in this Lease shall impose any liability on Tenant for any Existing Hazardous Materials or Hazardous Materials brought onto the Project or any portion thereof after the date of this Lease by any third parties other than Tenant's HazMat Agents.
4. Indemnification .
4.1 In General . Without limiting in any way Tenant's obligations under any other provision of this Lease, but subject to Section 4.2 below, Tenant shall be solely responsible for and shall protect, defend, indemnify and hold the Landlord Parties harmless from and against any and all claims, judgments, losses, damages, costs, expenses, penalties, enforcement actions, taxes, fines, remedial actions, liabilities (including, without limitation, actual attorneys' fees, litigation, arbitration and administrative proceeding costs, expert and consultant fees and laboratory costs) including, without limitation, consequential damages and sums paid in settlement of claims, which arise before, during or after the Lease Term in whole or in part, foreseeable or unforeseeable, directly or indirectly arising out of or attributable to the presence, use, generation, manufacture, treatment, handling, refining, production, processing, storage, Release or presence of Hazardous Materials in, on, under or about the Premises by Tenant or Tenant's HazMat Agents. The foregoing obligations of Tenant shall include, including without limitation: (i) the costs of any required or necessary removal, repair, cleanup or remediation of the Premises, and the preparation and implementation of any closure, removal, remedial or other required plans; (ii) judgments for personal injury or property damages; and (iii) all costs and expenses incurred by Landlord in connection therewith.
4.2 Limitations . Notwithstanding anything in Section 4.1 , above, to the contrary, Tenant's indemnity of Landlord as set forth in Section 4.1 , above, shall not be applicable to claims based upon Hazardous Materials which (i) may exist in, on or about the Project or any portion thereof as of the date of this Lease (" Existing Hazardous Materials ") or (ii) were brought onto the Project or any portion thereof by Landlord or any other Landlord Parties (" Landlord Hazardous Materials "), except, in each instance to the extent that Tenant's construction activities and/or Tenant's other acts or omissions (including Tenant's failure to remove, remediate or otherwise treat or "Clean-up," as that term is defined in Section 9 , below, the subject Existing Hazardous Materials during the tenancy of the Premises) caused or exacerbated the subject claim.
5. Compliance with Environmental Laws . Without limiting the generality of Tenant's obligation to comply with Applicable Laws as otherwise provided in this Lease, Tenant shall, at its sole cost and expense, comply with all Environmental Laws. Tenant shall obtain and maintain any and all necessary permits, licenses, certifications and approvals appropriate or required for the use, handling, storage, and disposal of any Hazardous Materials used, stored, generated, transported, handled, blended, or recycled by Tenant on the Premises. Landlord shall have a continuing right, without obligation, to require Tenant to obtain, and to review and inspect any and all such permits, licenses, certifications and approvals, together with copies of any and all Hazardous Materials management plans and programs, any and all Hazardous Materials risk management and pollution prevention programs, and any and all Hazardous Materials emergency response and employee training programs respecting Tenant's use of Hazardous Materials. Upon request of Landlord, Tenant shall deliver to Landlord a narrative description explaining the nature and scope of Tenant's activities involving Hazardous Materials and showing to Landlord's satisfaction compliance with all Environmental Laws and the terms of this Lease.
6. Assurance of Performance .
6.1 Environmental Assessments In General . Landlord may, but shall not be required to, engage from time to time such contractors as Landlord determines to be appropriate to perform "Environmental
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT G -2- |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
Assessments," as that term is defined below, to ensure Tenant's compliance with the requirements of this Lease with respect to Hazardous Materials. For purposes of this Lease, " Environmental Assessment " means an assessment including, without limitation: (i) an environmental site assessment conducted in accordance with the then-current standards of the American Society for Testing and Materials and meeting the requirements for satisfying the "all appropriate inquiries" requirements; and (ii) sampling and testing of the Premises based upon potential recognized environmental conditions or areas of concern or inquiry identified by the environmental site assessment, including, without limitation: (A) an asbestos survey conducted according to the standards of the Asbestos Hazard Emergency Response Act protocol; (B) testing of any transformers on the Premises for PCBs; (C) testing for lead-based paints; (D) soil and groundwater sampling to measure the effect of any actual or suspected release or discharge of Hazardous Materials on the Premises; and (E) such other sampling and testing reasonably necessary to determine the environmental condition of the Premises.
6.2 Costs of Environmental Assessments . All costs and expenses incurred by Landlord in connection with any such Environmental Assessment initially shall be paid by Landlord; provided that if any such Environmental Assessment shows that Tenant has failed to comply with the provisions of this Exhibit G , then all of the costs and expenses of such Environmental Assessment directly related to Tenant's failure shall be reimbursed by Tenant as Additional Rent within thirty (30) days after receipt of written demand therefor.
6.3 Other Matters . Each Environmental Assessment conducted by Landlord shall be conducted: (i) only after Landlord has provided to Tenant notice reasonably detailing the extent of Landlord's access requirement at least ten (10) days prior to the date of such Environmental Assessment; and (ii) in a manner reasonably designed to minimize the interruption of Tenant's use of the Premises. Tenant shall have the right to reasonably approve the timing of Landlord's entry onto the Premises in order to minimize the interruption of Tenant's use of the Premises. Landlord shall repair any damage caused by the performance of the Environmental Assessment, and shall restore the Premises to the condition existing immediately prior to the Environmental Assessment, unless response actions are required of Tenant pursuant to the provisions of this Lease based on the findings of the Environmental Assessment.
7. Clean-up .
7.1 Environmental Reports; Clean-Up . If any written report, including any report containing results of any Environmental Assessment (an " Environmental Report ") shall indicate (i) the presence of any Hazardous Materials as to which Tenant has a removal or remediation obligation under this Exhibit G , and (ii) that as a result of same, the investigation, characterization, monitoring, assessment, repair, closure, remediation, removal, or other clean-up (the " Clean-up ") of any Hazardous Materials is required, Tenant shall immediately prepare and submit to Landlord within thirty (30) days after receipt of the Environmental Report a comprehensive plan, subject to Landlord's written approval, specifying the actions to be taken by Tenant to perform the Clean-up so that the Premises is restored to the conditions required by this Lease. Upon Landlord's approval of the Clean-up plan, Tenant shall, at Tenant's sole cost and expense, without limitation on any rights and remedies of Landlord under this Lease, immediately implement such plan with a consultant reasonably acceptable to Landlord and proceed to Clean-up Hazardous Materials in accordance with all Applicable Laws and as required by such plan and this Lease. If, within thirty (30) days after receiving a copy of such Environmental Report, Tenant fails either (a) to complete such Clean-up, or (b) with respect to any Clean-up that cannot be completed within such thirty-day period, fails to proceed with diligence to prepare the Clean-up plan and complete the Clean-up as promptly as practicable, then Landlord shall have the right, but not the obligation, and without waiving any other rights under this Lease, to carry out any Clean-up recommended by the Environmental Report or required by any governmental authority having jurisdiction over the Premises, and recover all of the costs and expenses thereof from Tenant as Additional Rent, payable within ten (10) days after receipt of written demand therefor.
7.2 No Rent Abatement . Tenant shall continue to pay all Rent due or accruing under this Lease during any Clean-up, and shall not be entitled to any reduction, offset or deferral of any Base Rent or Additional Rent due or accruing under this Lease during any such Clean-up.
7.3 Surrender of Premises . Tenant shall complete any Clean-up prior to surrender of the Premises upon the expiration or earlier termination of this Lease, and shall fully comply with all Environmental Laws and requirements of any governmental authority with respect to such completion, including, without limitation, fully comply with any requirement to file a risk assessment, mitigation plan or other information with any such governmental authority in conjunction with the Clean-up prior to such surrender. Tenant shall obtain and deliver to Landlord a letter or other written determination from the overseeing governmental authority confirming that the Clean-up has been completed in accordance with all requirements of such governmental authority and that no further response action of any kind is required for the unrestricted use of the Premises (" Closure Letter "). Upon the expiration or earlier termination of this Lease, Tenant shall also be obligated to close all permits obtained in connection with Hazardous Materials in accordance with Applicable Laws.
7.4 Failure to Timely Clean-Up . Should any Clean-up for which Tenant is responsible not be completed, or should Tenant not receive the Closure Letter and any governmental approvals required under Environmental Laws in conjunction with such Clean-up prior to the expiration or earlier termination of this Lease, then Tenant shall be liable to Landlord as a holdover tenant (as more particularly provided in Article 16 ) until Tenant has fully complied with its obligations under this Exhibit G .
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT G -3 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
8 . Confidentiality . Unless compelled to do so by Applicable Laws, Tenant agrees that Tenant shall not disclose, discuss, disseminate or copy any information, data, findings, communications, conclusions and reports regarding the environmental condition of the Premises to any person or entity (other than Tenant's consultants, attorneys, property managers and employees that have a need to know such information), including any governmental authority, without the prior written consent of Landlord. In the event Tenant reasonably believes that disclosure is compelled by Applicable Laws, it shall provide Landlord ten (10) days' advance notice of disclosure of confidential information so that Landlord may attempt to obtain a protective order. Tenant may additionally release such information to bona fide prospective purchasers or lenders, subject to any such parties' written agreement to be bound by the terms of this Exhibit G .
9. Copies of Environmental Reports . Within thirty (30) days of receipt thereof, Tenant shall provide Landlord with a copy of any and all environmental assessments, audits, studies and reports regarding Tenant's activities with respect to the Premises, or ground water beneath the Land, or the environmental condition or Clean-up thereof. Tenant shall be obligated to provide Landlord with a copy of such materials without regard to whether such materials are generated by Tenant or prepared for Tenant, or how Tenant comes into possession of such materials.
10. Signs, Response Plans, Etc . Tenant shall be responsible for posting on the Premises any signs required under applicable Environmental Laws. Tenant shall also complete and file any business response plans or inventories required by any applicable laws. Tenant shall concurrently file a copy of any such business response plan or inventory with Landlord.
11. Survival . Each covenant, agreement, representation, warranty and indemnification made by Tenant set forth in this Exhibit G shall survive the expiration or earlier termination of this Lease and shall remain effective until all of Tenant's obligations under this Exhibit G have been completely performed and satisfied.
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT G -4 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
COLEMAN HIGHLINE
FORM OF ENVIRONMENTAL QUESTIONNAIRE
ENVIRONMENTAL QUESTIONNAIRE
FOR COMMERCIAL AND INDUSTRIAL PROPERTIES
Property Name: |
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Property Address: |
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Instructions : The following questionnaire is to be completed by the Lessee representative with knowledge of the planned operations for the specified building/location. Please print clearly and attach additional sheets as necessary.
1.0 PROCESS INFORMATION
Describe planned use, and include brief description of manufacturing processes employed.
2.0 HAZARDOUS MATERIALS
Are hazardous materials used or stored? If so, continue with the next question. If not, go to Section 3.0.
2.1 |
Are any of the following materials handled on the Property? Yes ☐ No ☐ |
(A material is handled if it is used, generated, processed, produced, packaged, treated, stored, emitted, discharged, or disposed.) If so, complete this section. If this question is not applicable, skip this section and go on to Section 5.0.
☐ Explosives |
☐ Fuels |
☐ Oils |
☐ Solvents |
☐ Oxidizers |
☐ Organics/Inorganics |
☐ Acids |
☐ Bases |
☐ Pesticides |
☐ Gases |
☐ PCBs |
☐ Radioactive Materials |
☐ Other (please specify) |
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2 – 2. |
If any of the groups of materials checked in Section 2.1, please list the specific material(s), use(s), and quantity of each chemical used or stored on the site in the Table below. If convenient, you may substitute a chemical inventory and list the uses of each of the chemicals in each category separately. |
Material |
Physical State (Solid, Liquid, or Gas) |
Usage |
Container Size |
Number of Containers |
Total Quantity |
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2– 3. |
Describe the planned storage area location(s) for these materials. Please include site maps and drawings as appropriate. |
3.0 HAZARDOUS WASTES
Are hazardous wastes generated? Yes ☐ No ☐
If yes, continue with the next question. If not, skip this section and go to section 4.0.
3.1 |
Are any of the following wastes generated, handled, or disposed of (where applicable) on the Property? |
☐ Hazardous wastes |
☐ Industrial Wastewater |
☐ Waste oils |
☐ PCBs |
☐ Air emissions |
☐ Sludges |
☐ Regulated Wastes |
☐ Other (please specify) |
788288.01/WLA 375755-00007/8-9-18//ejw |
SCHEDULE 1 TO EXHIBIT G -1 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
WASTE GENERATED |
RCRA listed Waste? |
SOURCE |
APPROXIMATE MONTHLY QUANTITY |
WASTE CHARACTERIZATION |
DISPOSITION |
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3– 3. |
Please include name, location, and permit number (e.g. EPA ID No.) for transporter and disposal facility, if applicable. Attach separate pages as necessary. |
Transporter/Disposal Facility Name |
Facility Location |
Transporter (T) or Disposal (D) Facility |
Permit Number |
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3 – 4. |
Are pollution controls or monitoring employed in the process to prevent or minimize the release of wastes into the environment? Yes ☐ No ☐ |
3– 5. |
If so, please describe. |
4.0 USTS/ASTS
4.1 |
Are underground storage tanks (USTs), aboveground storage tanks (ASTs), or associated pipelines used for the storage of petroleum products, chemicals, or liquid wastes present on site (lease renewals) or required for planned operations (new tenants)?Yes___No___ |
If not, continue with section 5.0. If yes, please describe capacity, contents, age, type of the USTs or ASTs, as well any associated leak detection/spill prevention measures. Please attach additional pages if necessary.
Capacity |
Contents |
Year Installed |
Type (Steel, Fiberglass, etc) |
Associated Leak Detection / Spill Prevention Measures * |
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* Note: |
The following are examples of leak detection / spill prevention measures: |
Integrity testing |
Inventory reconciliation |
Leak detection system |
Overfill spill protection |
Secondary containment |
Cathodic protection |
4 – 2. |
Please provide copies of written tank integrity test results and/or monitoring documentation, if available. |
4 – 3. |
Is the UST/AST registered and permitted with the appropriate regulatory agencies?Yes
☐
No
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4 – 4. |
If this Questionnaire is being completed for a lease renewal, and if any of the USTs/ASTs have leaked, please state the substance released, the media(s) impacted (e.g., soil, water, asphalt, etc.), the actions taken, and all remedial responses to the incident. |
4 – 5. |
If this Questionnaire is being completed for a lease renewal, have USTs/ASTs been removed from the Property? Yes ☐ No ☐ |
If yes, please provide any official closure letters or reports and supporting documentation (e.g., analytical test results, remediation report results, etc.).
4 – 6. |
For Lease renewals, are there any above or below ground pipelines on site used to transfer chemicals or wastes? Yes ☐ No ☐ |
For new tenants, are installations of this type required for the planned operations?
Yes ☐ No ☐
788288.01/WLA 375755-00007/8-9-18//ejw |
SCHEDULE 1 TO EXHIBIT G -2 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
If yes to either question, please describe.
5.0 ASBESTOS CONTAINING BUILDING MATERIALS
Please be advised that an asbestos survey may have been performed at the Property. If provided, please review the information that identifies the locations of known asbestos containing material or presumed asbestos containing material. All personnel and appropriate subcontractors should be notified of the presence of these materials, and informed not to disturb these materials. Any activity that involves the disturbance or removal of these materials must be done by an appropriately trained individual/contractor.
6.0 REGULATORY
6 – 1. |
Does the operation have or require a National Pollutant Discharge Elimination System (NPDES) or equivalent permit? Yes
☐
No
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6 – 2. |
Has a Hazardous Materials Business Plan been developed for the site? Yes
☐
No
☐
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CERTIFICATION
I am familiar with the real property described in this questionnaire. By signing below, I represent and warrant that the answers to the above questions are complete and accurate to the best of my knowledge. I also understand that Lessor will rely on the completeness and accuracy of my answers in assessing any environmental liability risks associated with the property.
Signature:
Name:
Title:
Date:
Telephone:
788288.01/WLA 375755-00007/8-9-18//ejw |
SCHEDULE 1 TO EXHIBIT G -3 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
COLEMAN HIGHLINE
FORM OF SNDA
Wells Fargo Bank, National Association
Commercial Real Estate
1512 Eureka Rd., Suite 350
Roseville, CA 95661
Attention: Jackie DeSimone
Loan No.: 1015366
(Space Above For Recorder's Use)
SUBORDINATION AGREEMENT, ACKNOWLEDGMENT OF LEASE ASSIGNMENT, ESTOPPEL, ATTORNMENT AND NON-DISTURBANCE AGREEMENT
(Lease to Security Instrument)
NOTICE: |
THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. |
THIS SUBORDINATION AGREEMENT, ACKNOWLEDGMENT OF LEASE ASSIGNMENT, ESTOPPEL, ATTORNMENT AND NON-DISTURBANCE AGREEMENT (" Agreement ") is made as of August 1, 2018 by and among CAP PHASE 1, LLC, a Delaware limited liability company, owner of the real property hereinafter described (" Landlord "), ROKU, INC., a Delaware corporation (" Tenant ") and Wells Fargo Bank, National Association (collectively with its successors or assigns, " Lender ").
R E C I T A L S
A. |
Pursuant to the terms and provisions of a lease dated August 1, 2018 (" Lease "), Landlord granted to Tenant a leasehold estate in and to a portion of the property described on Exhibit A attached hereto and incorporated herein by this reference (which property, together with all improvements now or hereafter located on the property, is defined as the " Property "). |
B . |
Landlord has executed that certain Construction Deed of Trust with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as of December 29, 2015, and recorded in the Official Records of Santa Clara County, California on December 29, 2015 as Document No. 23183228 (the " Security Instrument ") securing, among other things, that certain Promissory Note Secured by Deed of Trust (the " Note ") in the principal sum of Ninety-Seven Million Three Hundred Fifty Thousand and No/100 ths Dollars ($97,350,000.00), in favor of Lender (" Loan "). |
C . |
As a condition to Lender making the Loan secured by the Security Instrument, Lender requires that the Security Instrument be unconditionally and at all times remain a lien on the Property, prior and superior to all the rights of Tenant under the Lease and that the Tenant specifically and unconditionally subordinate the Lease to the lien of the Security Instrument. |
D . |
Subject to the terms and conditions of this Agreement, Landlord and Tenant have agreed to the subordination, attornment and other agreements herein in favor of Lender. |
NOW THEREFORE, for valuable consideration and to induce Lender to make the Loan, Landlord and Tenant hereby agree, for the benefit of Lender, as follows:
1. |
SUBORDINATION . Landlord and Tenant hereby agree that: |
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1.1 |
Prior Lien . The Security Instrument securing the Note in favor of Lender, and any modifications, renewals or extensions thereof (including, without limitation, any modifications, renewals or extensions with respect to any additional advances made subject to the Security Instrument), shall unconditionally be and at all times remain a lien on the Property prior and superior to the Lease; |
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1.2 |
Subordination . Lender would not make the Loan without this agreement to subordinate; and |
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT H -1 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
AND FURTHER, Tenant individually declares, agrees and acknowledges for the benefit of Lender, that:
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1.4 |
Use of Proceeds . Lender, in making disbursements pursuant to the Note, the Security Instrument or any loan agreements with respect to the Property, is under no obligation or duty to, nor has Lender represented that it will, see to the application of such proceeds by the person or persons to whom Lender disburses such proceeds, and any application or use of such proceeds for purposes other than those provided for in such agreement or agreements shall not defeat this agreement to subordinate in whole or in part; and |
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1.5 |
Waiver, Relinquishment and Subordination . Tenant intentionally and unconditionally waives, relinquishes and subordinates all of Tenant's right, title and interest in and to the Property to the lien of the Security Instrument and understands that in reliance upon, and in consideration of, this waiver, relinquishment and subordination, specific loans and advances are being and will be made by Lender and, as part and parcel thereof, specific monetary and other obligations are being and will be entered into which would not be made or entered into but for said reliance upon this waiver, relinquishment and subordination. |
2. |
ASSIGNMENT . Tenant acknowledges and consents to the assignment of the Lease by Landlord in favor of Lender. |
3. |
ESTOPPEL . Tenant acknowledges and represents, to Tenant's actual knowledge as of the date of this Agreement, that: |
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3.1 |
Entire Agreement . The Lease constitutes the entire agreement between Landlord and Tenant with respect to the Property and Tenant claims no rights with respect to the Property other than as set forth in the Lease; |
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3.2 |
No Prepaid Rent . No deposits or prepayments of rent have been made in connection with the Lease, except for prepayment of the first month of Base Rent concurrently with Lease execution, as set forth in Section 3.1 of the Lease. |
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3.3 |
No Default . As of the date of this Agreement: (i) there exists no breach, default, or event or condition which, with the giving of notice or the passage of time or both, would constitute a breach or default under the Lease; and (ii) there are no existing claims, defenses or offsets against rental due or to become due under the Lease; |
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3.4 |
Lease Effective . The Lease has been duly executed and delivered by Tenant and, subject to the terms and conditions thereof, the Lease is in full force and effect, the obligations of Tenant thereunder are valid and binding and there have been no amendments, modifications or additions to the Lease, written or oral; and |
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3.5 |
No Broker Liens . Neither Tenant nor Landlord has incurred any fee or commission with any real estate broker which would give rise to any lien right under state or local law, except as set forth in Section 29.24 of the Lease. |
In no event shall the issuance of the foregoing statements subject Tenant to any liability whatsoever (other than to create an estoppel as between Tenant and Lender), despite the failure of Tenant to disclose correct or relevant information. The foregoing statements shall not serve as an estoppel as between Tenant and Landlord.
4. |
ADDITIONAL AGREEMENTS . Tenant covenants and agrees that, during all such times as Lender is the beneficiary under the Security Instrument: |
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4.1 |
Modification, Termination and Cancellation . Except as expressly permitted by the Lease, Tenant will not enter into any agreement to terminate or cancel the Lease (in whole or in part) without Lender’s prior written consent and, except as expressly permitted by the Lease, will not make any payment to Landlord in consideration of any modification, termination or cancellation of the Lease (in whole or in part) without Lender's prior written consent. Additionally, Lender shall not be bound by any material modification or amendment to the Lease made without Lender’s prior written consent except where such modifications or amendments solely memorialize Tenant’s exercise of expansion or extension options or other rights expressly provided in the Lease. For purposes of this Section 4.1 , a “material” modification or amendment of the Lease means a modification or amendment that reduces the rent, term, size of Tenant’s premises or Tenant’s obligation to pay operating expenses or other reimbursements, common area charges or any of its other financial obligations under the Lease, adds options on the part of the Tenant to extend the term of the Lease or expand Tenant’s premises or to purchase the Property or any portion thereof, or otherwise materially increases Lender’s obligations or materially decreases Tenant’s obligations under the Lease. |
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT H -2 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
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4.3 |
No Advance Rents . Tenant will make no payments or prepayments of rent more than one (1) month in advance of the time when the same become due under the Lease; |
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4.4 |
Assignment of Rents . Upon receipt by Tenant of written notice from Lender that Lender has elected to terminate the license granted to Landlord to collect rents, as provided in the Security Instrument, and directing the payment of rents by Tenant to Lender, Tenant shall comply with such direction to pay and Landlord hereby agrees that Tenant shall not be required to determine whether Landlord is in default under the Loan and/or the Security Instrument, and Landlord further agrees that all such payments by Tenant to Lender shall satisfy Tenant’s obligations under the Lease with respect to such payments. |
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4.5 |
Insurance and Condemnation Proceeds . In the event there is any conflict between the terms in the Security Instrument and the Lease regarding the use of insurance proceeds or condemnation proceeds with respect to the Property, the provisions of the Security Instrument shall control. |
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4.6 |
Limitation on Default Under Lease . Notwithstanding anything to the contrary in the Lease, Tenant acknowledge and agrees, for the benefit of Landlord and any person or entity that acquires the Property pursuant to the foreclosure of the Security Instrument, or by any proceeding or voluntary conveyance in lieu of foreclosure (a " Successor Landlord "), that no condition of, or act or omission with respect to, any portion of the Project owned by person or entity other than Landlord or an entity under the common control with Landlord or Successor Landlord or entity under common control with Successor Landlord, as applicable, shall constitute a breach of, or default under, the Lease. |
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4.7 |
Scope of Project . Tenant acknowledges and agree that, for purposes of those provisions of the Lease relating to Landlord’s obligation to repair the Project following a casualty or condemnation event and/or providing Tenant with a termination right for Landlord’s failure to repair the Project within the timeframes provided in the Lease, the term “Project” shall mean and refer to only that portion of the Project then-owned by Landlord or an entity under the common control with Landlord or Successor Landlord or entity under common control with Successor Landlord, as applicable. |
5. |
ATTORNMENT . In the event of a foreclosure under the Security Instrument, the parties (including for this purpose any transferee of Lender or any transferee of Landlord's title in and to the Property by Lender's exercise of the remedy of sale by foreclosure under the Security Instrument) agree as follows: |
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5.1 |
Payment of Rent . Tenant shall pay to Lender all rental payments required to be made by Tenant pursuant to the terms of the Lease for the duration of the term of the Lease; |
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5.2 |
Continuation of Performance . Tenant shall be bound to Lender in accordance with all of the provisions of the Lease for the balance of the term thereof, and Tenant hereby attorns to Lender as its landlord, such attornment to be effective and self-operative without the execution of any further instrument immediately upon Lender succeeding to Landlord's interest in the Lease and giving written notice thereof to Tenant; |
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT H -3 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
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5.5 |
Limitation on Lender's Liability . Tenant agrees to look solely to Lender's interest in the Property and the rent, income or proceeds derived therefrom for the recovery of any judgment against Lender, and in no event shall Lender or any of its affiliates, officers, directors, shareholders, partners, agents, representatives or employees ever be personally liable for any such obligation, liability or judgment. |
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5.6 |
No Representation . Lender shall not be liable with respect to any representations from Landlord, whether pursuant to the Lease or otherwise, including, but not limited to, any representation related to the use of the Property, compliance with zoning, landlord’s title, landlord’s authority, habitability or fitness for purposes or commercial suitability, or hazardous wastes, hazardous substances, toxic materials or similar phraseology relating to the environmental condition of the Property or any portion thereof. |
6. |
NON-DISTURBANCE . In the event of a foreclosure under the Security Instrument (or deed in lieu thereof), so long as there shall then exist no breach, default, or event of default (in each case, beyond any applicable notice and cure periods) on the part of Tenant under the Lease, Lender agrees for itself and its successors and assigns that the leasehold interest of Tenant under the Lease shall not be extinguished or terminated, but rather the Lease shall continue in full force and effect and Lender shall recognize and accept Tenant as tenant under the Lease subject to the terms and provisions of the Lease, except as modified by this Agreement; provided , however , that Tenant and Lender agree that the following provisions of the Lease (if any) shall not be binding on Lender nor its successors and assigns: any option to purchase or right of first refusal to purchase with respect to the Property . |
7. |
MISCELLANEOUS . |
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7.1 |
Remedies Cumulative . All rights of Lender herein to collect rents on behalf of Landlord under the Lease are cumulative and shall be in addition to any and all other rights and remedies provided by law and pursuant to this Agreement and the Lease. |
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7.2 |
NOTICES . All notices, demands, or other communications under this Agreement shall be in writing and shall be delivered to the appropriate party at the address set forth below (subject to change from time to time by written notice to all other parties to this Agreement). All notices, demands or other communications shall be considered as properly given if delivered personally or sent by first class United States Postal Service mail, postage prepaid, or by Overnight Express Mail or by overnight commercial courier service, charges prepaid, except that notice of Default may be sent by certified mail, return receipt requested, charges prepaid. Notices so sent shall be effective three (3) Business Days after mailing, if mailed by first class mail, and otherwise upon delivery or refusal; provided , however , that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. For purposes of notice, the address of the parties shall be: |
Landlord: |
Cap Phase 1, LLC 10121 Miller Avenue, Suite 200 Cupertino, CA 95014 Attention: Derek K. Hunter, Jr. and Sherri Prieb
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With a copy to: |
Allen Matkins Leck Gamble Mallory & Natsis LLP 1901 Avenue of the Stars Suite 1800 Los Angeles, California 90067 Attention: Anton N. Natsis, Esq.
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Tenant: |
ROKU, Inc.
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With a copy to: |
ROKU, Inc.
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788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT H -4 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
Wells Fargo Bank, National Association Commercial Real Estate (AU #2961) 420 Montgomery Street, 6 th Floor San Francisco, CA 94104
Attention: Sarah S. Carroll
Loan #: 1015366 |
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With a copy to: |
Wells Fargo Bank, National Association Minneapolis Loan Center MAC N9303-110 600 South Fourth Street, 9 th Floor Minneapolis, MN 55415
Attention: Melanie Robertson
Loan #: 1015366 |
Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days' notice to the other party in the manner set forth hereinabove.
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7.3 |
Heirs, Successors and Assigns . Except as otherwise expressly provided under the terms and conditions herein, the terms of this Agreement shall bind and inure to the benefit of the heirs, executors, administrators, nominees, successors and assigns of the parties hereto. |
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7.4 |
Headings . All article, section or other headings appearing in this Agreement are for convenience of reference only and shall be disregarded in construing this Agreement. |
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7.5 |
Counterparts . To facilitate execution, this document may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single document. It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages. |
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7.6 |
Exhibits, Schedules and Riders . All exhibits, schedules, riders and other items attached hereto are incorporated into this Agreement by such attachment for all purposes. |
[ Remainder of Page Intentionally Left Blank; Signature Pages Follow ]
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT H -5 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day and year first above written.
NOTICE: |
THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION WHICH ALLOWS THE PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO OBTAIN A LOAN A PORTION OF WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN IMPROVEMENT OF THE LAND. |
IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS AGREEMENT, THE PARTIES CONSULT WITH THEIR ATTORNEYS WITH RESPECT HERETO.
"LANDLORD"
CAP Phase 1, LLC,
a Delaware limited liability company
By: |
Coleman Airport Partners, LLC, a California limited liability company |
Its: |
Sole Member |
By: |
HS Airport, LLC, a California limited liability company |
Its: |
Manager |
By: |
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Name: |
Derek K. Hunter, Jr. |
Its: |
Member |
By: |
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Name: |
Edward D. Storm |
Its: |
Member |
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. |
STATE OF CALIFORNIA
COUNTY OF ______________ SS.
On __________________________________________________________________ before me, _____________________________________________________________, personally appeared ________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
Signature
My commission expires .
Lender Signature Page to Roku, Inc. SNDA
ROKU, INC.,
a Delaware corporation
By: |
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Name: |
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Title: |
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. |
STATE OF CALIFORNIA
COUNTY OF ______________ SS.
On __________________________________________________________________ before me, _____________________________________________________________, personally appeared ________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
Signature
My commission expires .
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT H -1 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
WELLS FARGO BANK, NATIONAL ASSOCIATION
By:
Name: Sarah S. Carroll
Title: Vice President
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. |
STATE OF CALIFORNIA
COUNTY OF ______________ SS.
On __________________________________________________________________ before me, _____________________________________________________________, personally appeared ________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
Signature
My commission expires .
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT H -2 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
EXHIBIT A - DESCRIPTION OF PROPERTY
Real property in the City of San Jose, County of Santa Clara, State of California, described as follows:
PARCEL ONE: (LOT 1)
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF ADJUSTED PARCEL B AS DESCRIBED IN THE LOT LINE ADJUSTMENT PERMIT RECORDED ON JUNE 22, 1999 AS DOCUMENT NO. 14867793, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE MOST EASTERLY CORNER OF SAID ADJUSTED PARCEL B, SAID CORNER BEING ON THE SOUTHWESTERLY LINE OF COLEMAN AVENUE, SHOWN AS "PROPOSED COLEMAN AVE." ON THE RECORD OF SURVEY RECORDED ON JANUARY 25, 1960 IN BOOK 116 OF MAPS, AT PAGE 18, RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, ALSO BEING SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 613.02 FEET TO THE MOST NORTHERLY CORNER OF THE PROPERTY DESCRIBED IN THE GRANT DEED RECORDED ON NOVEMBER 14, 2012 AS DOCUMENT NO. 21950036, OFFICIAL RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED, SOUTH 32° 25' 10" WEST 12.46 FEET TO THE POINT OF BEGINNING;
THENCE CONTINUING ALONG SAID GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED THE FOLLOWING FOUR COURSES:
SOUTH 32° 25' 10" WEST 914.47 FEET TO THE BEGINNING OF A NON-TANGENT CURVE TO THE RIGHT, CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 790.00 FEET, A RADIAL LINE TO SAID CURVE BEARS NORTH 46° 30' 54" EAST;
ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 8° 56' 30", AN ARC LENGTH OF 123.29 FEET;
SOUTH 34° 32' 36" EAST 137.61 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE LEFT, CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 810.00 FEET;
ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 19° 32' 12", AN ARC LENGTH OF 276.19 FEET TO THE SOUTHWESTERLY LINE OF SAID ADJUSTED PARCEL B;
THENCE ALONG SAID SOUTHWESTERLY LINE OF ADJUSTED PARCEL B, NORTH 57° 34' 50" WEST 830.92 FEET TO THE MOST WESTERLY CORNER OF SAID ADJUSTED PARCEL B;
THENCE ALONG THE NORTHWESTERLY LINE OF SAID ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 265.72 FEET TO A POINT BEING 817.36 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, SOUTH 57° 34' 50" EAST 255.23 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE LEFT, CONCAVE NORTHERLY, HAVING A RADIUS OF 40.00 FEET;
THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90° 00' 00", AN ARC LENGTH OF 62.83 FEET TO A POINT BEING 637.79 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 735.36 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE RIGHT, CONCAVE SOUTHERLY, HAVING A RADIUS OF 30.00 FEET;
THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 79° 57' 34", AN ARC LENGTH OF 41.87 FEET TO THE POINT OF BEGINNING.
PARCEL TWO: (NEW LOT 2)
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING ALL OF LOT 2 AND A PORTION OF LOTS 3 AND 5, AS DESCRIBED IN THAT CERTAIN "GRANT DEED" RECORDED MARCH 05, 2015 AS DOCUMENT NO. 22873576, OFFICIAL RECORDS OF SANTA CLARA COUNTY, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHERLY CORNER OF SAID LOT 3;
THENCE ALONG THE SOUTHWESTERLY LINE OF SAID LOT 3, NORTH 57°34'50" WEST, 119.42 FEET;
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT I -1 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
THENCE LEAVING SAID SOUTHWESTERLY LINE, NORTH 32°25 ' 10 " EAST, 513.86 FEET TO A POINT ON THE NORTHEASTERLY LINE OF SAID LOT 5;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID LOTS 5 AND 2, SOUTH 57°34'50" EAST, 89.42 FEET;
THENCE ALONG A CURVE TO THE RIGHT HAVING A RADIUS OF 30.00 FEET, THROUGH A CENTRAL ANGLE OF 90°00'00" FOR AN ARC DISTANCE OF 47.12 FEET;
THENCE SOUTH 32°25'10" WEST, 483.86 FEET TO THE POINT BEGINNING.
BEING NEW LOT 2, AS SHOWN ON THAT CERTAIN LOT LINE ADJUSTMENT PERMIT RECORDED FEBRUARY 8, 2018 AS INSTRUMENT NO. 23864278 OF OFFICIAL RECORDS.
PARCEL THREE: (NEW LOT 3)
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF LOT 3, AS DESCRIBED IN THAT CERTAIN "GRANT DEED" RECORDED MARCH 05, 2015 AS DOCUMENT NO. 22873576, OFFICIAL RECORDS OF SANTA CLARA COUNTY, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHERLY CORNER OF SAID LOT 3,
THENCE ALONG THE SOUTHWESTERLY LINE OF SAID LOT 3, NORTH 57°34'50" WEST, 119.42 FEET; TO THE TRUE POINT OF BEGINNING
THENCE CONTINUING ALONG SAID SOUTHWESTERLY LINE, NORTH 57°34'50" WEST, 187.00 FEET;
THENCE LEAVING SAID SOUTHWESTERLY LINE, NORTH 32°25'10" EAST, 158.42 FEET;
THENCE SOUTH 57°34'50" EAST, 187.00 FEET;
THENCE SOUTH 32°25'10" WEST, 158.42 FEET TO THE TRUE POINT OF BEGINNING.
BEING NEW LOT 3, AS SHOWN ON THAT CERTAIN LOT LINE ADJUSTMENT PERMIT RECORDED FEBRUARY 8, 2018 AS INSTRUMENT NO. 23864278 OF OFFICIAL RECORDS.
PARCEL FOUR: (LOT 4)
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF ADJUSTED PARCEL B AS DESCRIBED IN THE LOT LINE ADJUSTMENT PERMIT RECORDED ON JUNE 22, 1999 AS DOCUMENT NO. 14867793, OFFICIAL RECORDS OF SANTA CLARA COUNTY AND A PORTION OF PARCEL ONE AS DESCRIBED IN THE GRANT DEED RECORDED ON JANUARY 19, 2011 AS DOCUMENT NO. 21052358, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE MOST EASTERLY CORNER OF SAID ADJUSTED PARCEL B, SAID CORNER BEING ON THE SOUTHWESTERLY LINE OF COLEMAN AVENUE, SHOWN AS "PROPOSED COLEMAN AVE." ON THE RECORD OF SURVEY RECORDED ON JANUARY 25, 1960 IN BOOK 116 OF MAPS, AT PAGE 18, RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, ALSO BEING SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 613.02 FEET TO THE MOST NORTHERLY CORNER OF THE PROPERTY DESCRIBED IN THE GRANT DEED RECORDED ON NOVEMBER 14, 2012 AS DOCUMENT NO. 21950036, OFFICIAL RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED, SOUTH 32° 25' 10" WEST 12.00 FEET TO A POINT BEING 12.00 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 144.77 FEET TO A POINT OF CUSP, SAID POINT BEING ALSO THE BEGINNING OF A TANGENT CURVE TO THE RIGHT, CONCAVE WESTERLY, HAVING A RADIUS OF 30.00 FEET;
THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90° 00' 00", AN ARC LENGTH OF 47.12 FEET TO A POINT BEING 727.79 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, SOUTH 32° 25' 10" WEST 483.86 FEET TO THE POINT OF BEGINNING, SAID POINT BEING 525.86 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT I -2 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34 ' 50 " WEST 309.42 FEET TO A POINT BEING 1,037.21 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, SOUTH 32° 25' 10" WEST 230.50 FEET TO A POINT BEING 756.36 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, SOUTH 57° 34' 50" EAST 289.42 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE LEFT, CONCAVE NORTHERLY, HAVING A RADIUS OF 20.00 FEET;
THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90° 00' 00", AN ARC LENGTH OF 31.42 FEET TO A POINT BEING 727.79 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 210.50 FEET TO THE POINT OF BEGINNING.
PARCEL FIVE: (NEW LOT 5)
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF LOTS 3, 5 AND 6, AS DESCRIBED IN THAT CERTAIN "GRANT DEED" RECORDED MARCH 05, 2015 AS DOCUMENT NO. 22873576, OFFICIAL RECORDS OF SANTA CLARA COUNTY, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHERLY CORNER OF SAID LOT 6;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID LOT 6, SOUTH 57°34'50" EAST, 117.95 FEET TO THE TRUE POINT OF BEGINNING;
THENCE LEAVING SAID NORTHEASTERLY LINE, SOUTH 32°25'10" WEST, 221.94 FEET;
THENCE SOUTH 57°34'50" EAST, 179.56 FEET;
THENCE SOUTH 32°25'10" WEST, 52.50 FEET;
THENCE SOUTH 57°34'50" EAST, 4.00 FEET;
THENCE SOUTH 32°25'10" WEST, 26.50 FEET;
THENCE SOUTH 57°34'50" EAST, 11.50 FEET;
THENCE SOUTH 32°25'10" WEST, 19.38 FEET;
THENCE SOUTH 57°34'50" EAST, 18.50 FEET;
THENCE SOUTH 32°25'10" WEST, 35.12 FEET;
THENCE SOUTH 57°34'50" EAST, 187.00 FEET;
THENCE NORTH 32°25'10" EAST, 355.44 FEET TO THE NORTHEASTERLY LINE OF LOT 5;
THENCE ALONG THE NORTHEASTERLY LINE OF LOT 5 AND LOT 6, NORTH 57°34'50" WEST 400.56 FEET TO THE TRUE POINT OF BEGINNING.
BEING NEW LOT 5, AS SHOWN ON THAT CERTAIN LOT LINE ADJUSTMENT PERMIT RECORDED FEBRUARY 8, 2018 AS INSTRUMENT NO. 23864278 OF OFFICIAL RECORDS.
PARCEL SIX: (NEW LOT 6)
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF LOTS 3, 5 AND 6, AS DESCRIBED IN THAT CERTAIN "GRANT DEED" RECORDED MARCH 05, 2015 AS DOCUMENT NO. 22873576, OFFICIAL RECORDS OF SANTA CLARA COUNTY, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE CORNER OF SAID LOT 6;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID LOT 6, SOUTH 57°34'50" EAST, 117.95 FEET;
THENCE LEAVING SAID NORTHEASTERLY LINE, SOUTH 32°25'10" WEST, 221.94 FEET;
THENCE SOUTH 57°34'50" EAST, 179.56 FEET;
THENCE SOUTH 32°25'10" WEST, 52.50 FEET;
THENCE SOUTH 57°34'50" EAST, 4.00 FEET;
THENCE SOUTH 32°25'10" WEST, 26.50 FEET;
THENCE SOUTH 57°34'50" EAST, 11.50 FEET;
THENCE SOUTH 32°25'10" WEST, 19.38 FEET;
THENCE SOUTH 57°34'50" EAST, 18.50 FEET;
THENCE SOUTH 32°25'10" WEST, 193.54 FEET TO A POINT ON THE SOUTHWESTERLY LINE OF SAID LOT 3;
THENCE ALONG THE SOUTHWESTERLY LINE OF LOT 3 AND LOT 6, NORTH 57°34'50" WEST, 331.50 FEET;
THENCE NORTH 32°25'10" EAST, 513.86 FEET TO THE POINT OF BEGINNING.
BEING NEW LOT 6, AS SHOWN ON THAT CERTAIN LOT LINE ADJUSTMENT PERMIT RECORDED FEBRUARY 8, 2018 AS INSTRUMENT NO. 23864278 OF OFFICIAL RECORDS.
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT I -3 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL ONE AS DESCRIBED IN THE GRANT DEED RECORDED ON JANUARY 19, 2011 AS DOCUMENT NO. 21052358, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE MOST EASTERLY CORNER OF ADJUSTED PARCEL B AS DESCRIBED IN THE LOT LINE ADJUSTMENT PERMIT RECORDED ON JUNE 22, 1999 AS DOCUMENT NO. 14867793, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID CORNER BEING ON THE SOUTHWESTERLY LINE OF COLEMAN AVENUE, SHOWN AS "PROPOSED COLEMAN AVE." ON THE RECORD OF SURVEY RECORDED ON JANUARY 25, 1960 IN BOOK 116 OF MAPS, AT PAGE 18, RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, ALSO BEING SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 613.02 FEET TO THE MOST NORTHERLY CORNER OF THE PROPERTY DESCRIBED IN THE GRANT DEED RECORDED ON NOVEMBER 14, 2012 AS DOCUMENT NO. 21950036, OFFICIAL RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED, SOUTH 32° 25' 10" WEST 12.00 FEET TO A POINT BEING 12.00 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 424.19 FEET TO THE POINT OF BEGINNING, SAID POINT BEING 1,037.21 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B;
THENCE PARALLEL WITH THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, SOUTH 32° 25' 10" WEST 513.86 FEET TO THE POINT OF BEGINNING, SAID POINT BEING 525.86 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE.
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 328.50 FEET TO A POINT BEING 1,365.71 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, SOUTH 32° 25' 10" WEST 230.50 FEET TO A POINT BEING DISTANT 756.36 FEET SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, SOUTH 57°34' 50" EAST 328.50 FEET TO A POINT BEING 1,037.21 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 230.50 FEET TO THE POINT OF BEGINNING.
PARCEL EIGHT: (LOT 8)
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL ONE AS DESCRIBED IN THE GRANT DEED RECORDED ON JANUARY 19, 2011 AS DOCUMENT NO. 21052358, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE MOST EASTERLY CORNER OF ADJUSTED PARCEL B AS DESCRIBED IN THE LOT LINE ADJUSTMENT PERMIT RECORDED ON JUNE 22, 1999 AS DOCUMENT NO. 14867793, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID CORNER BEING ON THE SOUTHWESTERLY LINE OF COLEMAN AVENUE, SHOWN AS "PROPOSED COLEMAN AVE." ON THE RECORD OF SURVEY RECORDED ON JANUARY 25, 1960 IN BOOK 116 OF MAPS, AT PAGE 18, RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, ALSO BEING SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 613.02 FEET TO THE MOST NORTHERLY CORNER OF THE PROPERTY DESCRIBED IN THE GRANT DEED RECORDED ON NOVEMBER 14, 2012 AS DOCUMENT NO. 21950036, OFFICIAL RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED, SOUTH 32° 25' 10" WEST 12.00 FEET TO A POINT BEING 12.00 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT I -4 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34 ' 50 " WEST 752.69 FEET TO THE POINT OF BEGINNING, SAID POINT BEING 1,365.71 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B SOUTH 32° 25' 10" WEST 513.86 FEET TO A POINT BEING 525.86 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 513.68 FEET TO A POINT BEING 1,879.39 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 483.86 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE RIGHT, CONCAVE SOUTHERLY, HAVING A RADIUS OF 30.00 FEET;
THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90° 00' 00", AN ARC DISTANCE OF 47.12 FEET TO A POINT BEING 12.00 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, SOUTH 57° 34' 50" EAST 483.68 FEET TO THE POINT OF BEGINNING.
PARCEL NINE: (LOT 9)
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL ONE AS DESCRIBED IN THE GRANT DEED RECORDED ON JANUARY 19, 2011 AS DOCUMENT NO. 21052358, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE MOST EASTERLY CORNER OF ADJUSTED PARCEL B AS DESCRIBED IN THE LOT LINE ADJUSTMENT PERMIT RECORDED ON JUNE 22, 1999 AS DOCUMENT NO. 14867793, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID CORNER BEING ON THE SOUTHWESTERLY LINE OF COLEMAN AVENUE, SHOWN AS "PROPOSED COLEMAN AVE." ON THE RECORD OF SURVEY RECORDED ON JANUARY 25, 1960 IN BOOK 116 OF MAPS, AT PAGE 18, RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, ALSO BEING SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 613.02 FEET TO THE MOST NORTHERLY CORNER OF THE PROPERTY DESCRIBED IN THE GRANT DEED RECORDED ON NOVEMBER 14, 2012 AS DOCUMENT NO. 21950036, OFFICIAL RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED, SOUTH 32° 25' 10" WEST 12.00 FEET TO A POINT BEING 12.00 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 752.69 FEET TO A POINT BEING 1,365.71 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B;
THENCE PARALLEL WITH THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, SOUTH 32° 25' 10" WEST 513.86 FEET TO THE POINT OF BEGINNING, SAID POINT BEING 525.86 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, SOUTH 32° 25' 10" WEST 230.50 FEET TO A POINT BEING 756.36 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57°34' 50" WEST 493.68 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE RIGHT, CONCAVE EASTERLY, HAVING A RADIUS OF 20.00 FEET;
THENCE ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 90° 00' 00", AN ARC LENGTH OF 31.42 FEET TO A POINT BEING 1,879.39 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 210.50 FEET TO A POINT BEING 525.86 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, SOUTH 57°34' 50" EAST 513.68 FEET TO THE POINT OF BEGINNING.
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT I -5 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
NON-EXCLUSIVE EASEMENTS AS CONTAINED IN THAT CERTAIN "AMENDED AND RESTATED RECIPROCAL EASEMENT AGREEMENT" RECORDED MARCH 5, 2015 AS INSTRUMENT NO. 22873580 OF OFFICIAL RECORDS.
APNs: 230-46-075 (Affects Parcel One), 230-46-076 (Affects a portion of Parcel Two), 230-46-077 (Affects a portion of Parcels Two, Three, Five and Six), 230-46-078 (Affects Parcel Four), 230-46-079 (Affects a portion of Parcels Two, Five and Six), 230-46-080 (Affects a portion of Parcels Five and Six), 230-46-081 (Affects Parcel Seven), 230-46-082 (Affects Parcel Eight) and 230-46-083 (Affects Parcel Nine)
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT I -6 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
COLEMAN HIGHLINE
LOCATIONS OF TENANT'S SIGNAGE
Roku Tenant signage at East side of top of building – East side facing Avaya Stadium BUILDING 2 – TOP OF ROOF SCREEN TOP OF PARAPET. TOP OF DROPPED PARAPET. TOP OF ROOF STRUCTURE 6 TH FLOOR 5 TH FLOOR 4 TH FLOOR 3 RD FLOOR 2 ND FLOOR 1 ST FLOOR GRADE AT FIRE TRUCK ACCESS SITE ELEVATION – EAST. 1/16” = 1”-0” BUILDING 1 (UNDER SEPARATE PERMIT) N M L K J F E.4 E D B A
Tenant's logo :
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT I -7 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
COLEMAN HIGHLINE
FORM OF RECOGNITION OF COVENANTS, CONDITIONS, AND RESTRICTIONS
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
ALLEN MATKINS LECK GAMBLE
MALLORY & NATSIS LLP
1901 Avenue of the Stars, 18th Floor
Los Angeles, California 90067
Attention: Anton N. Natsis, Esq.
RECOGNITION OF COVENANTS,
CONDITIONS, AND RESTRICTIONS
This Recognition of Covenants, Conditions, and Restrictions (this " Agreement ") is entered into as of the __ day of ________, 20___, by and between __________________ ("Landlord"), and ________________ ("Tenant"), with reference to the following facts:
A. Landlord and Tenant entered into that certain Office Lease dated _____, 20__ (the " Lease "). Pursuant to the Lease, Landlord leased to Tenant and Tenant leased from Landlord space (the " Premises ") located in an office building on certain real property described in Exhibit A attached hereto and incorporated herein by this reference (the " Property ").
B. The Premises is located in an office building located on real property which is part of an area owned by Landlord containing approximately ___ (__) acres of real property located in the City of ____________, California (the " Project "), as more particularly described in Exhibit B attached hereto and incorporated herein by this reference.
C. Landlord, as declarant, has previously recorded, or proposes to record concurrently with the recordation of this Agreement, a Declaration of Covenants, Conditions, and Restrictions (the " Declaration "), dated ________________, 20___, in connection with the Project.
D. Tenant is agreeing to recognize and be bound by the terms of the Declaration, and the parties hereto desire to set forth their agreements concerning the same.
NOW, THEREFORE, in consideration of (a) the foregoing recitals and the mutual agreements hereinafter set forth, and (b) for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows,
1. Tenant's Recognition of Declaration . Notwithstanding that the Lease has been executed prior to the recordation of the Declaration, Tenant agrees to recognize and by bound by all of the terms and conditions of the Declaration.
2. Miscellaneous .
2.1 This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, estates, personal representatives, successors, and assigns.
2.2 This Agreement is made in, and shall be governed, enforced and construed under the laws of, the State of California.
2.3 This Agreement constitutes the entire understanding and agreements of the parties with respect to the subject matter hereof, and shall supersede and replace all prior understandings and agreements, whether verbal or in writing. The parties confirm and acknowledge that there are no other promises, covenants, understandings, agreements, representations, or warranties with respect to the subject matter of this Agreement except as expressly set forth herein.
2.4 This Agreement is not to be modified, terminated, or amended in any respect, except pursuant to any instrument in writing duly executed by both of the parties hereto.
2.5 In the event that either party hereto shall bring any legal action or other proceeding with respect to the breach, interpretation, or enforcement of this Agreement, or with respect to any dispute relating to any transaction covered by this Agreement, the losing party in such action or proceeding shall reimburse the prevailing party therein for all reasonable costs of litigation, including reasonable attorneys' fees, in such amount as may be determined by the court or other tribunal having jurisdiction, including matters on appeal.
2.6 All captions and heading herein are for convenience and ease of reference only, and shall not be used or referred to in any way in connection with the interpretation or enforcement of this Agreement.
788288.01/WLA 375755-00007/8-9-18//ejw |
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COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
2.7 If any provision of this Agreement, as applied to any party or to any circumstance, shall be adjudged by a court of competent jurisdictions to be void or unenforceable for any reason, the same shall not affect any other provision of this Agreement, the application of such provision under circumstances different from those adjudged by the court, or the validity or enforceability of this Agreement as a whole.
2.8 Time is of the essence of this Agreement.
2.9 The Parties agree to execute any further documents, and take any further actions, as may be reasonable and appropriate in order to carry out the purpose and intent of this Agreement.
2.10 As used herein, the masculine, feminine or neuter gender, and the singular and plural numbers, shall each be deemed to include the others whenever and whatever the context so indicates.
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT J -2- |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
SIGNATURE PAGE OF RECOGNITION OF
COVENANTS, CONDITIONS AND RESTRICTIONS
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
"Landlord": CAP Phase 1, LLC, a Delaware limited liability company |
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Coleman Airport Partners, LLC, |
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a California limited liability company |
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HS Airport, LLC, |
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a California limited liability company |
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Manager |
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By: |
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Name: |
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Derek K. Hunter, Jr. |
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788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT J -3 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
COLEMAN HIGHLINE
FORM OF LETTER OF CREDIT
(Letterhead of a money center bank
acceptable to the Landlord)
LADIES AND GENTLEMEN:
WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. ___________ IN YOUR FAVOR FOR THE ACCOUNT OF [Insert Tenant's Name], A [Insert Entity Type], UP TO THE AGGREGATE AMOUNT OF USD[Insert Dollar Amount] ([Insert Dollar Amount] U.S. DOLLARS) EFFECTIVE IMMEDIATELY AND EXPIRING ON ___(Expiration Date)___ AVAILABLE BY PAYMENT UPON PRESENTATION OF YOUR DRAFT AT SIGHT DRAWN ON [Insert Bank Name] WHEN ACCOMPANIED BY THE FOLLOWING DOCUMENT(S):
1. THE ORIGINAL OF THIS IRREVOCABLE STANDBY LETTER OF CREDIT AND AMENDMENT(S), IF ANY.
2. BENEFICIARY'S SIGNED STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED REPRESENTATIVE OF [Insert Landlord's Name], A [Insert Entity Type] ("LANDLORD") STATING THE FOLLOWING:
"THE UNDERSIGNED HEREBY CERTIFIES THAT THE LANDLORD, EITHER (A) UNDER THE LEASE (DEFINED BELOW), OR (B) AS A RESULT OF THE TERMINATION OF SUCH LEASE, HAS THE RIGHT TO DRAW DOWN THE AMOUNT OF USD IN ACCORDANCE WITH THE TERMS OF THAT CERTAIN OFFICE LEASE DATED [Insert Lease Date], AS THE SAME MAY HAVE BEEN AMENDED (COLLECTIVELY, THE "LEASE"), OR SUCH AMOUNT CONSTITUTES DAMAGES OWING BY THE TENANT TO BENEFICIARY RESULTING FROM THE BREACH OF SUCH LEASE BY THE TENANT THEREUNDER, OR THE TERMINATION OF SUCH LEASE, AND SUCH AMOUNT REMAINS UNPAID AT THE TIME OF THIS DRAWING."
OR
"THE UNDERSIGNED HEREBY CERTIFIES THAT WE HAVE RECEIVED A WRITTEN NOTICE OF [Insert Bank Name]'S ELECTION NOT TO EXTEND ITS STANDBY LETTER OF CREDIT NO. AND HAVE NOT RECEIVED A REPLACEMENT LETTER OF CREDIT WITHIN AT LEAST SIXTY (60) DAYS PRIOR TO THE PRESENT EXPIRATION DATE."
OR
"THE UNDERSIGNED HEREBY CERTIFIES THAT BENEFICIARY IS ENTITLED TO DRAW DOWN THE FULL AMOUNT OF LETTER OF CREDIT NO. AS THE RESULT OF THE FILING OF A VOLUNTARY PETITION UNDER THE U.S. BANKRUPTCY CODE OR A STATE BANKRUPTCY CODE BY THE TENANT UNDER THAT CERTAIN OFFICE LEASE DATED [Insert Lease Date], AS THE SAME MAY HAVE BEEN AMENDED (COLLECTIVELY, THE "LEASE"), WHICH FILING HAS NOT BEEN DISMISSED AT THE TIME OF THIS DRAWING."
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT K -1 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
"THE UNDERSIGNED HEREBY CERTIFIES THAT BENEFICIARY IS ENTITLED TO DRAW DOWN THE FULL AMOUNT OF LETTER OF CREDIT NO. ___________ AS THE RESULT OF AN INVOLUNTARY PETITION HAVING BEEN FILED UNDER THE U.S. BANKRUPTCY CODE OR A STATE BANKRUPTCY CODE AGAINST THE TENANT UNDER THAT CERTAIN OFFICE LEASE DATED [Insert Lease Date], AS THE SAME MAY HAVE BEEN AMENDED (COLLECTIVELY, THE "LEASE"), WHICH FILING HAS NOT BEEN DISMISSED AT THE TIME OF THIS DRAWING."
OR
"THE UNDERSIGNED HEREBY CERTIFIES THAT BENEFICIARY IS ENTITLED TO DRAW DOWN THE FULL AMOUNT OF LETTER OF CREDIT NO. ________________ AS THE RESULT OF THE REJECTION, OR DEEMED REJECTION, OF THAT CERTAIN OFFICE LEASE DATED [Insert Lease Date], AS THE SAME MAY HAVE BEEN AMENDED, UNDER SECTION 365 OF THE U.S. BANKRUPTCY CODE."
SPECIAL CONDITIONS:
PARTIAL DRAWINGS AND MULTIPLE PRESENTATIONS MAY BE MADE UNDER THIS STANDBY LETTER OF CREDIT, PROVIDED, HOWEVER, THAT EACH SUCH DEMAND THAT IS PAID BY US SHALL REDUCE THE AMOUNT AVAILABLE UNDER THIS STANDBY LETTER OF CREDIT.
ALL INFORMATION REQUIRED WHETHER INDICATED BY BLANKS, BRACKETS OR OTHERWISE, MUST BE COMPLETED AT THE TIME OF DRAWING. [Please Provide The Required Forms For Review, And Attach As Schedules To The Letter Of Credit.]
ALL SIGNATURES MUST BE MANUALLY EXECUTED IN ORIGINALS.
ALL BANKING CHARGES ARE FOR THE APPLICANT'S ACCOUNT.
IT IS A CONDITION OF THIS STANDBY LETTER OF CREDIT THAT IT SHALL BE DEEMED AUTOMATICALLY EXTENDED WITHOUT AMENDMENT FOR A PERIOD OF ONE YEAR FROM THE PRESENT OR ANY FUTURE EXPIRATION DATE, UNLESS AT LEAST SIXTY (60) DAYS PRIOR TO THE EXPIRATION DATE WE SEND YOU NOTICE BY NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE THAT WE ELECT NOT TO EXTEND THIS LETTER OF CREDIT FOR ANY SUCH ADDITIONAL PERIOD. SAID NOTICE WILL BE SENT TO THE ADDRESS INDICATED ABOVE, UNLESS A CHANGE OF ADDRESS IS OTHERWISE NOTIFIED BY YOU TO US IN WRITING BY RECEIPTED MAIL OR COURIER. ANY NOTICE TO US WILL BE DEEMED EFFECTIVE ONLY UPON ACTUAL RECEIPT BY US AT OUR DESIGNATED OFFICE. IN NO EVENT, AND WITHOUT FURTHER NOTICE FROM OURSELVES, SHALL THE EXPIRATION DATE BE EXTENDED BEYOND A FINAL EXPIRATION DATE OF ___(120 days from the Lease Expiration Date) ___.
THIS LETTER OF CREDIT MAY BE TRANSFERRED SUCCESSIVELY IN WHOLE OR IN PART ONLY UP TO THE THEN AVAILABLE AMOUNT IN FAVOR OF A NOMINATED TRANSFEREE ("TRANSFEREE"), ASSUMING SUCH TRANSFER TO SUCH TRANSFEREE IS IN COMPLIANCE WITH ALL APPLICABLE U.S. LAWS AND REGULATIONS. AT THE TIME OF TRANSFER, THE ORIGINAL LETTER OF CREDIT AND ORIGINAL AMENDMENT(S) IF ANY, MUST BE SURRENDERED TO US TOGETHER WITH OUR TRANSFER FORM (AVAILABLE UPON REQUEST) AND PAYMENT OF OUR CUSTOMARY TRANSFER FEES, WHICH FEES SHALL BE PAYABLE BY APPLICANT (PROVIDED THAT BENEFICIARY MAY, BUT SHALL NOT BE OBLIGATED TO, PAY SUCH FEES TO US ON BEHALF OF APPLICANT, AND SEEK REIMBURSEMENT THEREOF FROM APPLICANT). IN CASE OF ANY TRANSFER UNDER THIS LETTER OF CREDIT, THE DRAFT AND ANY REQUIRED STATEMENT MUST BE EXECUTED BY THE TRANSFEREE AND WHERE THE BENEFICIARY'S NAME APPEARS WITHIN THIS STANDBY LETTER OF CREDIT, THE TRANSFEREE'S NAME IS AUTOMATICALLY SUBSTITUTED THEREFOR.
ALL DRAFTS REQUIRED UNDER THIS STANDBY LETTER OF CREDIT MUST BE MARKED: ''DRAWN UNDER [Insert Bank Name] STANDBY LETTER OF CREDIT NO. ___________."
We hereby agree with you that if drafts are presented to [ Insert Bank Name ] under this Letter of Credit at or prior to [ Insert Time – ( e.g. , 11:00 AM)], on a business day, and provided that such drafts presented conform to the terms and conditions of this Letter of Credit, payment shall be initiated by us in immediately available funds by our close of business on the succeeding business day. If drafts are presented to [ Insert Bank Name ] under this Letter of Credit after [ Insert Time – ( e.g. , 11:00 AM)], on a business day, and provided that such drafts conform with the terms and conditions of this Letter of Credit, payment shall be initiated by us in immediately available funds by our close of business on the second succeeding business day. As used in this Letter of Credit, "business day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in the state of California are authorized or required by law to close. If the expiration date for this Letter of Credit shall ever fall on a day which is not a business day then such expiration date shall automatically be extended to the date which is the next business day.
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT K -2 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
Presentation of a drawing under this Letter of Credit may be made on or prior to the then current expiration date hereof by hand delivery, courier service, overnight mail, or facsimile. Presentation by facsimile transmission shall be by transmission of the above required sight draft drawn on us together with this Letter of Credit to our facsimile number, [ Insert Fax Number – (___) ___-____], attention: [ Insert Appropriate Recipient ], with telephonic confirmation of our receipt of such facsimile transmission at our telephone number [ Insert Telephone Number – (___) ___-____] or to such other facsimile or telephone numbers, as to which you have received written notice from us as being the applicable such number. We agree to notify you in writing, by NATIONALLY RECOGNIZED OVERNIGHT courier service, of any change in such direction. Any facsimile presentation pursuant to this paragraph shall also state thereon that the original of such sight draft and Letter of Credit are being remitted, for delivery on the next business day, to [ Insert Bank Name ] at the applicable address for presentment pursuant to the paragraph FOLLOWING this one.
WE HEREBY ENGAGE WITH YOU THAT ALL DOCUMENT(S) DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS STANDBY LETTER OF CREDIT WILL BE DULY HONORED IF DRAWN AND PRESENTED FOR PAYMENT AT OUR OFFICE LOCATED AT [Insert Bank Name], [Insert Bank Address], ATTN: [Insert Appropriate Recipient], ON OR BEFORE THE EXPIRATION DATE OF THIS CREDIT, ___(Expiration Date)___ .
IN THE EVENT THAT THE ORIGINAL OF THIS STANDBY LETTER OF CREDIT IS LOST, STOLEN, MUTILATED, OR OTHERWISE DESTROYED, WE HEREBY AGREE TO ISSUE A DUPLICATE ORIGINAL HEREOF UPON RECEIPT OF A WRITTEN REQUEST FROM YOU AND A CERTIFICATION BY YOU (PURPORTEDLY SIGNED BY YOUR AUTHORIZED REPRESENTATIVE) OF THE LOSS, THEFT, MUTILATION, OR OTHER DESTRUCTION OF THE ORIGINAL HEREOF.
EXCEPT SO FAR AS OTHERWISE EXPRESSLY STATED HEREIN, THIS STANDBY LETTER OF CREDIT IS SUBJECT TO THE "INTERNATIONAL STANDBY PRACTICES" (ISP 98) INTERNATIONAL CHAMBER OF COMMERCE (PUBLICATION NO. 590).
Very truly yours,
(Name of Issuing Bank)
By:
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT K -3 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
FORM OF MEMORANDUM OF LEASE
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
ROKU, Inc.
c/o Friedman & Associates, Inc.
1100 Glendon Avenue, Suite PH9
Los Angeles, CA 90024-3526
Attention: Jason Perscheid, Esq.
(space above this line for recorder’s use)
MEMORANDUM OF LEASE
This Memorandum of Lease (" Memorandum ") is made and entered into as of August 1, 2018, for the purpose of recording, by and between CAP Phase 1, LLC, a Delaware limited liability company (" Landlord "), and Roku, Inc., a Delaware corporation (" Tenant ").
1. Defined Terms; Exhibits . All capitalized terms used in this Memorandum and not otherwise defined herein shall have the meanings ascribed to such terms in the Lease (as defined below). All Exhibits referenced herein are attached hereto, and are incorporated herein by this reference.
2. Premises; Building; Project . Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, pursuant to the terms and conditions of that certain Office Lease dated as of August 1, 2018 (as amended, the " Lease "), those certain premises described in the Lease, consisting of a total of 91,368 rentable square feet of space (the " Premises "), depicted on Exhibit A attached to the Lease. The Premises consists of space on the first (1 st ), second (2 nd ) and third (3 rd ) floors of that certain building located at 1155 Coleman Avenue, San Jose, California (the " Building "). The Building is located on the land legally described on Exhibit A to this Memorandum.
3. Lease Term . The term of the Lease (" Lease Term ") is for a period of approximately one hundred forty (140) calendar months, starting on the Lease Commencement Date and ending one hundred forty (140) calendar months thereafter, subject to adjustment as provided in the Lease. The Lease Commencement Date is expected to occur on or about January 23, 2019, subject to adjustment as provided in the Lease.
4. Extension Options . Pursuant to the Lease, Landlord grants to Tenant one (1) option to extend the Lease Term for a period of seven (7) years.
5. Right of First Offer . Pursuant to the Lease, Landlord grants to Tenant, during the first forty-eight (48) months of the Lease Term, an ongoing right of first offer to lease office space in the Building and that certain building in the Project located at 1143 Coleman Avenue.
6. Lease Incorporated . All the other terms, conditions and covenants of the Lease are incorporated herein by this reference. In the event of a conflict between the provisions of this Memorandum and the provisions of the Lease, the provisions of the Lease shall govern.
7. Counterparts . This Memorandum may be executed in counterparts, each of which shall be an original but all of which together shall constitute one and the same agreement. This Memorandum is solely for notice and recording purposes and shall not be construed to alter, modify, expand, diminish or supplement the provisions of the Lease.
8. Successors and Assigns . The terms, covenants and provisions of the Lease, the terms of which are hereby incorporated by reference into this Memorandum, shall extend to and be binding upon the respective executors, administrators, heirs, successors and assigns of Tenant and Landlord.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT L -1 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
IN WITNESS WHEREOF, Landlord and Tenant have caused this Memorandum to be executed the day and date first above written.
"LANDLORD" CAP Phase 1, LLC, a Delaware limited liability company |
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Coleman Airport Partners, LLC, |
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a California limited liability company |
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HS Airport, LLC, |
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a California limited liability company |
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Edward D. Storm |
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"TENANT" Roku, Inc. a Delaware corporation |
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788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT L -2 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of )
County of ______________________ )
On _________________________, before me, ,
(insert name of notary)
Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of )
County of )
On _________________________, before me, ,
(insert name of notary)
Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
[ATTACH LEGAL DESCRIPTION]
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT L -3 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
LEGAL DESCRIPTION
50" EAST 255.23 FEET TO THE BEGINNING OF A TANGENT CURVE TO T HE LEFT, CONCAVE NORT HERLY, HAVING A RADIUS OF 40.00 FEET; THENCE ALONG SAID CURVE T HROUGH A CENTRAL ANGLE OF 900 00' 00", AN ARC LENGTH OF 62.83 FEET TO A POINT BEING 637.79 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM T HE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B; THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 73S.36 FEET TO THE BEGINNING OF A TANGENT CURVE TO T HE RIGHT, CONCAVE SOUTHERLY, HAVING A RADIUS OF 30.00 FEET; THENCE ALONG SAID CURVE T HROUGH A CENTRAL ANGLE OF 79 57' 34", AN ARC LENGTH OF 41.87 FEET TO THE PO NT OF BEGINNING. PARCEL TWO: (NEW LOT 2) NEW LOT 2 AS SHOWN ON LOT LINE ADJUSTMENT PERMIT NO. AH7-03S, AS EVIDENCED BY DOCUMENT RECORDED FEBRUARY 08,2018 AS DOCUMENT NO. 23864278 OF OFFICIAL RECORDS, BEING MORE PAR HCULARLY DESCRIBED AS FOLLOWS: BEING ALL OF LOT 2 AND A POR HON OF LOTS 3 AND S AS DESCRIBED IN T HAT CERTAIN "GRANT DEED" RECORDED MARCH OS,201S AS DOCUMENT NO.22873S76, OFFICIAL RECORDS OF SANTA CLARA COUNTY, AND BEING MORE PAR HCULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHERLY CORNER OF SAID LOT 3; THENCE ALONG THE SOUTHWESTERLY LINE OF SAID LOT 3, NORT H S7°34'SO" WEST,119.42 FEET; THENCE LEAVING SAID SOUTHWESTERLY LINE, NORT H32°25'10" EAST,513.86 FEET TO A POINT ON T HE NORT HEASTERLY LINE OF SAID LOT S; THENCE ALONG THE NORTHEASTERLY LINE OF SAID LOTS 5 AND 2, SOUTH 57°34'SO" EAST, 89.42 FEET; THENCE ALONG A CURVE TO T HE RIGHT HAVING A RADIUS OF 30.00 FEET, THROUGH A CENTRAL ANGLE OF 90°00'00" FOR AN ARC DISTANCE OF 47.12 FEET; THENCE ALONG THE SOUTHEASTERLY LINE OF SAID LOTS 2 AND 3, SOUTH 32°25'10" WEST, 483.86 FEET TO T HE POINT OF BEGINNING. PARCEL T HREE:(NEW LOT 3) NEW LOT 3 AS SHOWN ON LOT LINE ADJUSTMENT PERMIT NO. AH7-03S, AS EVIDENCED BY DOCUMENT RECORDED FEBRUARY 08,2018 AS DOCUMENT NO. 23864278 OF OFFICIAL RECORDS, BEING MORE PAR HCULARLY DESCRIBED AS FOLLOWS: BEING A PORTION OF LOT 3 AS DESCRIBED IN T HAT CERTAIN "GRANT DEED" RECORDED MARCH OS, 2015 AS DOCUMENT NO. 22873S76, OFFICIAL RECORDS OF SANTA CLARA COUNTY, AND BEING MORE PAR HCULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHERLY CORNER OF SAID LOT 3; THENCE ALONG THE SOUTHWESTERLY LINE OF SAID LOT 3, NORTH S7°34'50" WEST, 119.42
LEGAL DESCRIPTION Real property in the City of San Jose, County of Santa Clara, State of California, described as follows: PARCEL ONE: (LOT 1) ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CAUFORNIA, BEING A PORTION OF ADJUSTED PARCEL BAS DESCRIBED IN THE LOT LINE ADJUSTMENT PERMIT RECORDED ON JLINE 22,1999 AS DOCUMENT NO. 14867793, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMECING AT THE MOST EASTERLY CORNER OF SAID ADJUSTED PARCEL B, SAID CORNER BEING ON THE SOUTHWESTERLY LINE OF COLEMAN AVENUE, SHOWN AS "PROPOSED COLEMAN AVE." ON THE RECORD OF SURVEY RECORDED ON JANUARY 25,1960 IN BOOK 116 OF MAPS, AT PAGE 18, RECORDS OF SANTA CLARA COUNTY; THENCE ALONG THE NORTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, ALSO BEING SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 613.02 FEET TO THE MOST NORTHERLY CORNER OF THE PROPERTY DESCRIBED IN THE GRANT DEED RECORDED ON NOVEMBER 14,2012 AS DOCUMENT NO. 21 950036, OFFICIAL RECORDS OF SANTA CLARA COUNTY; THENCE ALONG THE GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED, SOUTH 32°25' 10" WEST 12.46 FEET TO THE POINT OF BEGINNING; THENCE CONTINUING ALONG SAID GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED THE FOLLOWING FOUR COURSES: SOUTH 32° 25' 10" WEST 914.47 FEET TO THE BEGINN NG OF A NON-TANGENT CURVE TO THE RIGHT, CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 790.00 FEET, A RADIAL LINE TO SAID CURVE BEARS NORTH 46° 30' 54" EAST; ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 8° 56' 30", AN ARC LENGTH OF 123.29 FEET; SOUTH 34° 32' 36" EAST 137.61FEET TO THE BEGINNNG OF A TANGENT CURVE TO THE LEFT, CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 810.00 FEET; ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 19° 32' 12", AN ARC LENGTH OF 276.19 FEET TO THE SOUTHWESTERLY LINE OF SAID ADJUSTED PARCEL B; THENCE ALONG SAID SOUTHWESTERLY LINE OF ADJUSTED PARCEL B, NORTH 57° 34' 50" WEST 830.92 FEET TO THE MOST WESTERLY CORNER OF SAID ADJUSTED PARCEL B; THENCE ALONG THE NORTHWESTERLY LINE OF SAID ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 265.72 FEET TO A POINT BEING 817.36 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE; THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, SOUTH 57° 34'
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT M -1 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
50" EAST 255.23 FEET TO THE BEGINNING OF A TANGENT CURVE TO T HE LEFT, CONCAVE NORT HERLY, HAVING A RADIUS OF 40.00 FEET; THENCE ALONG SAID CURVE T HROUGH A CENTRAL ANGLE OF 900 00' 00", AN ARC LENGTH OF 62.83 FEET TO A POINT BEING 637.79 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM T HE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B; THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 73S.36 FEET TO THE BEGINNING OF A TANGENT CURVE TO T HE RIGHT, CONCAVE SOUTHERLY, HAVING A RADIUS OF 30.00 FEET; THENCE ALONG SAID CURVE T HROUGH A CENTRAL ANGLE OF 79 57' 34", AN ARC LENGTH OF 41.87 FEET TO THE PO NT OF BEGINNING. PARCEL TWO: (NEW LOT 2) NEW LOT 2 AS SHOWN ON LOT LINE ADJUSTMENT PERMIT NO. AH7-03S, AS EVIDENCED BY DOCUMENT RECORDED FEBRUARY 08,2018 AS DOCUMENT NO. 23864278 OF OFFICIAL RECORDS, BEING MORE PAR HCULARLY DESCRIBED AS FOLLOWS: BEING ALL OF LOT 2 AND A POR HON OF LOTS 3 AND S AS DESCRIBED IN T HAT CERTAIN "GRANT DEED" RECORDED MARCH OS,201S AS DOCUMENT NO.22873S76, OFFICIAL RECORDS OF SANTA CLARA COUNTY, AND BEING MORE PAR HCULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHERLY CORNER OF SAID LOT 3; THENCE ALONG THE SOUTHWESTERLY LINE OF SAID LOT 3, NORT H S7°34'SO" WEST,119.42 FEET; THENCE LEAVING SAID SOUTHWESTERLY LINE, NORT H32°25'10" EAST,513.86 FEET TO A POINT ON T HE NORT HEASTERLY LINE OF SAID LOT S; THENCE ALONG THE NORTHEASTERLY LINE OF SAID LOTS 5 AND 2, SOUTH 57°34'SO" EAST, 89.42 FEET; THENCE ALONG A CURVE TO T HE RIGHT HAVING A RADIUS OF 30.00 FEET, THROUGH A CENTRAL ANGLE OF 90°00'00" FOR AN ARC DISTANCE OF 47.12 FEET; THENCE ALONG THE SOUTHEASTERLY LINE OF SAID LOTS 2 AND 3, SOUTH 32°25'10" WEST, 483.86 FEET TO T HE POINT OF BEGINNING. PARCEL T HREE:(NEW LOT 3) NEW LOT 3 AS SHOWN ON LOT LINE ADJUSTMENT PERMIT NO. AH7-03S, AS EVIDENCED BY DOCUMENT RECORDED FEBRUARY 08,2018 AS DOCUMENT NO. 23864278 OF OFFICIAL RECORDS, BEING MORE PAR HCULARLY DESCRIBED AS FOLLOWS: BEING A PORTION OF LOT 3 AS DESCRIBED IN T HAT CERTAIN "GRANT DEED" RECORDED MARCH OS, 2015 AS DOCUMENT NO. 22873S76, OFFICIAL RECORDS OF SANTA CLARA COUNTY, AND BEING MORE PAR HCULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHERLY CORNER OF SAID LOT 3; THENCE ALONG THE SOUTHWESTERLY LINE OF SAID LOT 3, NORTH 57°34'50" WEST, 119.42
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT M -2 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
FEET, TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING ALONG SAID SOUTHWESTERLY LINE, NORTH 57°34'50" WEST,187.00 FEET; THENCE LEAVING SAID SOUTHWESTERLY LINE, NORTH 32°25'10" EAST,158.42 FEET; THENCE SOUTH 57°34'50" EAST,187.00 FEET; THENCE SOUTH 32°25'10" WEST,158.42 FEET TO THE TRUE POINT OF BEGINNING. PARCEL FOUR: (LOT 4) ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF ADJUSTED PARCEL BAS DESCRIBEDIN THE LOT LINE ADJUSTMENT PERMIT RECORDED ON JLINE 22,1999 AS DOCUMENT NO. 14867793, OFFICIAL RECORDS OF SANTA CLARA COUNTY AND A PORTION OF PARCEL ONE AS DESCRIBED IN THE GRANT DEED RECORDED ON JANUARY 19,2011 AS DOCUMENT NO. 21052358, OFFIOAL RECORDS OF SANTA CLARA COUNTY, SAID PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT THE MOST EASTERLY CORNER OF SAID ADJUSTED PARCEL B, SAID CORNER BEING ON THE SOUTHWESTERLY LINE OF COLEMAN AVENUE, SHOWN AS "PROPOSED COLEMAN AVE." ON THE RECORD OF SURVEY RECORDED ON JANUARY 25,1960 IN BOOK 116 OF MAPS, AT PAGE 18, RECORDS OF SANTA CLARA COUNTY; THENCE ALONG THE NORTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, ALSO BEING SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 613.02 FEET TO THE MOST NORTHERLY CORNER OF THE PROPERTY DESCRIBED IN THE GRANT DEED RECORDED ON NOVEMBER 14,2012 AS DOCUMENT NO. 2 1950036, OFFICIAL RECORDS OF SANTA CLARA COUNTY; THENCE ALONG THE GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED, SOUTH 32° 25' 10" WEST 12.00 FEET TO A POINT BEING 12.00 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE; THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 144.77 FEET TO A POINT OF CUSP, SAID POINT BEING ALSO THE BEGINNING OF A TANGENT CURVE TO THE RIGHT, CONCAVE WESTERLY, HAVING A RADIUS OF 30.00 FEET; THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 900 00' 00", AN ARC LENGTH OF 47.12 FEET TO A POINT BEING 727.79 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B; THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, SOUTH 32° 25' 10" WEST 483.86 FEET TO THE POINT OF BEGINNING, SAID POINT BEING 525.86 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE; THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 309.42 FEET TO A PO NT BEING 1,037.21FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B; THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, SOUTH 32° 25'
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT M -3 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
10" WEST 230.50 FEET TO A PO NT BENIG 756.36 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE; THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, SOUTH 57° 34' 50" EAST 289.42 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE LEFT, CONCAVE NORTHERLY, HAVING A RADIUS OF 20.00 FEET; THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 900 00' 00", AN ARC LENGTH OF 31.42 FEET TO A POINT BEING 727.79 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B; THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 210.50 FEET TO THE POINT OF BEGINNING. PARCEL FIVE:(NEW LOT 5) NEW LOT 5 AS SHOWN ON LOT LINE ADJUSTMENT PERMIT NO. AT17-035, AS EVIDENCED BY DOCUMENT RECORDED FEBRUARY 08,2018 AS DOCUMENT NO. 23864278 OF OFFICIAL RECORDS, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS; BEING A PORTION OF LOTS 3,5 AND 6 AS DESCRIBEDIN THAT CERTAIN "GRANT DEED" RECORDED MARCH 05, 2015 AS DOCUMENT NO.22873576, OFFICIAL RECORDS OF SANTA CLARA COUNTY, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHERLY CORNER OF SAID LOT 6; THENCE ALONG THE NORTHEASTERLY LINE OF SAID LOT 6, SOUTH 57°34'50" EAST,117.95 FEET TO THE TRUE PO NT OF BEGINNING; THENCE LEAVING SAID NORTHEASTERLY LINE, SOUTH 32°25'10" WEST,221.94 FEET; THENCE SOUTH 57°34'50" EAST,179.56 FEET; THENCE SOUTH 32°25'10" WEST,52.50 FEET; THENCE SOUTH 57°34'50" EAST, 4.00 FEET; THENCE SOUTH 32°25'10" WEST,26.50 FEET; THENCE SOUTH 57°34'50" EAST,11.50 FEET; THENCE SOUTH 32°25'10" WEST,19.38 FEET; THENCE SOUTH 57°34'50" EAST,18.50 FEET; THENCE SOUTH 32°25'10" WEST,35.12 FEET; THENCE SOUTH 57°34'50" EAST,187.00 FEET; THENCE NORTH 320Z5'10" EAST,355.44 FEET TO A PO NT ON THE NORTHEASTERLY LINE OF SAID LOT 5; THENCE ALONG THE NORTHEASTERLY LINE OF SAID LOTS 5 AND 6, NORTH 57°34'50" WEST 400.56 FEET TO THE TRUE PO NT OF BEGINNING.
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT M -4 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
PARCEL SIX:(NEW LOT 6) NEW LOT 6 AS SHOWN ON LOT LINE ADJUSTMENT PERMIT NO. AT17-035, AS EVIDENCED BY DOCUMENT RECORDED FEBRUARY 08,2018 AS DOCUMENT NO. 23864278 OF OFFICIAL RECORDS, BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS; BEING A PORTION OF LOTS 3,5 AND 6 AS DESCRIBEDIN THAT CERTAIN "GRANT DEED" RECORDED MARCH 05,2015 AS DOCUMENT NO.22873576, OFFICIAL RECORDS OF SANTA CLARA COUNTY, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: BEGINNING AT THE NORTHERLY CORNER OF SAID LOT 6; THENCE ALONG THE NORTHEASTERLY LINE OF SAID LOT 6, SOUTH 57°34'50" EAST,117.95 FEET; THENCE LEAVING SAID NORTHEASTERLY LINE, SOUTH 32°25'10" WEST,221.94 FEET; THENCE SOUTH 57°34'50" EAST,179.56 FEET; THENCE SOUTH 32°25'10" WEST,52.50 FEET; THENCE SOUTH 57°34'50" EAST, 4.00 FEET; THENCE SOUTH 32°25'10" WEST,26.50 FEET; THENCE SOUTH 57°34'50" EAST,11.50 FEET; THENCE SOUTH 32°25'10" WEST,19.38 FEET; THENCE SOUTH 57°34'50" EAST,18.50 FEET; THENCE SOUTH 32°25'10" WEST,193.54 FEET TO A POINT ON THE SOUTHWESTERLY LINE OF SAID LOT 3; THENCE ALONG THE SOUTHWESTERLY LINE OF SAID LOTS 3 AND 6, NORTH 57°34'50" WEST, 331.50 FEET; THENCE ALONG THE NORTHWESTERLY LINE OF SAID LOT 6, NORTH 32°25'10" EAST,513.86 FEET TO THE POINT OF BEGINNING. PARCEL SEVEN: (LOT 7) ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CAUFORN A, BEING A PORTION OF PARCEL ONE AS DESCRIBED IN THE GRANT DEED RECORDED ON JANUARY 19,2011AS DOCUMENT NO. 21052358, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENONG AT THE MOST EASTERLY CORNER OF ADJUSTED PARCEL BAS DESCRIBED IN THE LOT LINE ADJUSTMENT PERMIT RECORDED ON JLINE 22,1999 AS DOCUMENT NO. 14867793, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID CORNER BEING ON THE SOUTHWESTERLY LINE OF COLEMAN AVENUE, SHOWN AS "PROPOSED COLEMAN AVE." ON THE RECORD OF SURVEY RECORDED ON JANUARY 25,1960 IN BOOK 116 OF MAPS, AT PAGE
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EXHIBIT M -5 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
18, RECORDS OF SANTA CLARA COUNTY; THENCE ALONG THE NORTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, ALSO BEING SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 613.02 FEET TO THE MOST NORTHERLY CORNER OF THE PROPERTY DESCRIBED IN THE GRANT DEED RECORDED ON NOVEMBER 14,2012 AS DOCUMENT NO. 21950036, OFFICIAL RECORDS OF SANTA CLARA COUNTY; THENCE ALONG THE GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED, SOUTH 32° 25' 10" WEST 12.00 FEET TO A POINT BEING 12.00 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE; THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 424.19 FEET TO THE POINT OF BEGINNING, SAID POINT BEING 1,037.21FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B; THENCE PARALLEL WITH THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, SOUTH 32° 25' 10" WEST 513.86 FEET TO THE POINT OF BEGINNNG, SAID POINT BEING 525.86 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE. THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 328. 50 FEET TO A PO NT BEING 1,365.71FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B; THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, SOUTH 32° 25' 10" WEST 230. 50 FEET TO A PO NT BEING DISTANT 756.36 FEET SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE; THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, SOUTH 57°34' 50" EAST 328.50 FEET TO A PO NT BEING 1,037.21FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B; THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 230.50 FEET TO THE POINT OF BEGINNING. PARCEL EIGHT: (LOT 8) ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL ONE AS DESCRIBED IN THE GRANT DEED RECORDED ON JANUARY 19,2011 AS DOCUMENT NO. 21052358, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENONG AT THE MOST EASTERLY CORNER OF ADJUSTED PARCEL BAS DESCRIBED IN THE LOT LINE ADJUSTMENT PERMIT RECORDED ON JUNE 22,1999 AS DOCUMENT NO. 14867793, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID CORNER BEING ON THE SOUTHWESTERLY LINE OF COLEMAN AVENUE, SHOWN AS "PROPOSED COLEMAN AVE." ON THE RECORD OF SURVEY RECORDED ON JANUARY 25,1960 IN BOOK 116 OF MAPS, AT PAGE 18, RECORDS OF SANTA CLARA COUNTY; THENCE ALONG THE NORTHEASTERLYLINE OF SAID ADJUSTED PARCEL B, ALSO BEING SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 613. 02 FEET TO THE
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EXHIBIT M -6 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
MOST NORTHERLY CORNER OF THE PROPERTY DESCRIBED IN THE GRANT DEED RECORDED ON NOVEMBER 14,2012 AS DOCUMENT NO. 21950036, OFFICIAL RECORDS OF SANTA CLARA COUNTY; THENCE ALONG THE GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED, SOUTH 32° 25' 10" WEST 12.00 FEET TO A POINT BEING 12.00 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE; THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 752.69 FEET TO THE POINT OF BEGINNING, SAID POINT BEING 1,365.71 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B; THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B SOUTH 32° 25' 10" WEST 513.86 FEET TO A PO NT BEING 525.86 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE; THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 513.68 FEET TO A PO NT BEING 1,879. 39 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B; THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 483.86 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE RIGHT, CONCAVE SOUTHERLY, HAVING A RADIUS OF 30.00 FEET; THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 900 00' 00", AN ARC DISTANCE OF 47.12 FEET TO A PO NT BEING 12.00 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE; THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, SOUTH 57° 34' 50" EAST 483.68 FEET TO THE POINT OF BEGINN NG. PARCEL N NE: (LOT 9) ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL ONE AS DESCRIBED IN THE GRANT DEED RECORDED ON JANUARY 19,2011 AS DOCUMENT NO. 21052358, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS: COMMENCING AT THE MOST EASTERLY CORNER OF ADJUSTED PARCEL BAS DESCRIBED IN THE LOT LINE ADJUSTMENT PERMIT RECORDED ON JLINE 22,1999 AS DOCUMENT NO. 14867793, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID CORNER BEING ON THE SOUTHWESTERLY LINE OF COLEMAN AVENUE, SHOWN AS "PROPOSED COLEMAN AVE." ON THE RECORD OF SURVEY RECORDED ON JANUARY 25,1960 IN BOOK 116 OF MAPS, AT PAGE 18, RECORDS OF SANTA CLARA COUNTY; THENCE ALONG THE NORTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, ALSO BEING SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 613.02 FEET TO THE MOST NORTHERLY CORNER OF THE PROPERTY DESCRIBED IN THE GRANT DEED RECORDED ON NOVEMBER 14, 2012 AS DOCUMENT NO. 21950036, OFFICIAL RECORDS OF SANTA CLARA COUNTY; THENCE ALONG THE GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED, SOUTH 32°25'
788288.01/WLA 375755-00007/8-9-18//ejw |
EXHIBIT M -7 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
10" WEST 12.00 FEET TO A POINT BEING 12.00 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE,FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE; THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 752.69 FEET TO A PO NT BEING 1,365.71FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B; THENCE PARALLEL WITH THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, SOUTH 32° 25' 10" WEST 513.86 FEET TO THE POINT OF BEGINNING, SAID POINT BEING 525.86 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE; THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, SOUTH 32° 25' 10" WEST 230. 50 FEET TO A PO NT BEING 756.36 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE; THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57°34' 50" WEST 493.68 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE RIGHT, CONCAVE EASTERLY, HAVING A RADIUS OF 20.00 FEET; THENCE ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 90° 00' 00", AN ARC LENGTH OF 31.42 FEET TO A POINT BE NG 1,879.39 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B; THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 210.50 FEET TO A PO NT BEING 525.86 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE; THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, SOUTH 57°34' 50" EAST 513.68 FEET TO THE POINT OF BEGINN NG. PARCEL TEN: NON-EXCLUSIVE EASEMENTS AS CONTAINEDIN THAT CERTAIN •SECOND AMENDED AND RESTATED REOPROCAL EASEMENT AGREEMENT'' RECORDED MARCH 18,2018 AS INSTRUMENT NO. 23888777 OF OFFICIAL RECORDS. APN: 230-46-075 (Affects Parcel One) 230-46-076 (Affects Portion of Parcel Two) 230-46-077 (Affects Parcel Three and portion of Parcels Two, Five and Six) 230-46-078 (Affects Parcel Four) 230-46-079 (Affects Portion of Parcels Two, Five and Six) 230-46-080 (Affects Portion of Parcels Five and Six) 230-46-081{Affects Parcel Seven) 230-46-082 (Affects Parcel Eight) 230-46-083 (Affects Parcel Nine)
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EXHIBIT M -8 - |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
COLEMAN HIGHLINE
CAP PHASE 1, LLC,
a Delaware limited liability company,
as Landlord,
and
ROKU, INC.,
a Delaware corporation,
as Tenant.
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|
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
TABLE OF CONTENTS
|
|
Page |
PREMISES, BUILDING, PROJECT, AND COMMON AREAS |
3 |
|
ARTICLE 2 |
LEASE TERM; OPTION TERM |
6 |
ARTICLE 3 |
BASE RENT |
8 |
ARTICLE 4 |
ADDITIONAL RENT |
9 |
ARTICLE 5 |
USE OF PREMISES |
16 |
ARTICLE 6 |
SERVICES AND UTILITIES |
17 |
ARTICLE 7 |
REPAIRS |
19 |
ARTICLE 8 |
ADDITIONS AND ALTERATIONS |
20 |
ARTICLE 9 |
COVENANT AGAINST LIENS |
21 |
ARTICLE 10 |
INDEMNIFICATION AND INSURANCE |
22 |
ARTICLE 11 |
DAMAGE AND DESTRUCTION |
24 |
ARTICLE 12 |
NONWAIVER |
25 |
ARTICLE 13 |
CONDEMNATION |
26 |
ARTICLE 14 |
ASSIGNMENT AND SUBLETTING |
26 |
ARTICLE 15 |
SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES |
30 |
ARTICLE 16 |
HOLDING OVER |
30 |
ARTICLE 17 |
ESTOPPEL CERTIFICATES |
31 |
ARTICLE 18 |
SUBORDINATION |
31 |
ARTICLE 19 |
DEFAULTS; REMEDIES |
32 |
ARTICLE 20 |
COVENANT OF QUIET ENJOYMENT |
34 |
ARTICLE 21 |
LETTER OF CREDIT |
34 |
ARTICLE 22 |
ROOFTOP AND RISER RIGHTS |
37 |
ARTICLE 23 |
SIGNS |
37 |
ARTICLE 24 |
COMPLIANCE WITH LAW |
39 |
ARTICLE 25 |
LATE CHARGES |
39 |
ARTICLE 26 |
LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT |
40 |
ARTICLE 27 |
ENTRY BY LANDLORD |
40 |
ARTICLE 28 |
TENANT PARKING |
40 |
ARTICLE 29 |
MISCELLANEOUS PROVISIONS |
|
EXHIBITS
EXHIBIT A |
OUTLINE OF PREMISES |
EXHIBIT A-1 |
SITE PLAN |
EXHIBIT B |
TENANT WORK LETTER |
SCHEDULE 1-A TO EXHIBIT B |
TIME DEADLINES |
SCHEDULE 1 -B TO EXHIBIT B |
BASE BUILDING DESCRIPTION |
SCHEDULE 1-C TO EXHIBIT B |
BASE BUILDING PLANS |
SCHEDULE 2 TO EXHIBIT B |
FINAL SPACE PLAN |
EXHIBIT C |
FORM OF NOTICE OF LEASE TERM DATES |
EXHIBIT D |
RULES AND REGULATIONS |
EXHIBIT E |
FORM OF TENANT'S ESTOPPEL CERTIFICATE |
EXHIBIT F |
MARKET RENT DETERMINATION |
EXHIBIT G |
HAZARDOUS MATERIALS |
SCHEDULE 1 TO EXHIBIT G |
ENVIRONMENTAL QUESTIONNAIRE |
EXHIBIT H |
FORM OF SNDA |
EXHIBIT I |
LOCATIONS OF TENANT'S SIGNAGE |
EXHIBIT J |
FORM OF RECOGNITION OF COVENANTS, CONDITIONS, AND RESTRICTIONS |
EXHIBIT K |
FORM OF LETTER OF CREDIT |
EXHIBIT L |
FORM OF MEMORANDUM OF LEASE |
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(i ) |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
INDEX
|
Page(s) |
32 |
|
Accountant |
15 |
Additional Notice |
5 |
Additional Rent |
9 |
Advocate Arbitrators. |
7 |
Alterations |
19 |
Amenities Building |
4 |
Anticipated Over-Allowance Amount |
Exhibit B |
Appealable Tax Expenses |
13 |
Appeals Notice |
13 |
Applicable Laws |
38 |
Arbitration Agreement |
7 |
Audit Period |
15 |
Bank |
33 |
Bank Prime Loan |
38 |
Bankruptcy Code |
33 |
Bank's Credit Rating Threshold |
33 |
Base Building |
19, Exhibit B |
Base Building Plans |
Exhibit B |
Base Rent |
8 |
Base Rent Abatement |
8 |
Base Rent Abatement Period |
8 |
Base, Shell and Core |
Exhibit B |
Briefs |
7 |
Brokers |
43 |
BS/BS Exception |
19 |
Building |
3 |
Building 3 |
4 |
Building 3,4 and A2 Lease |
4 |
Building 4 |
4 |
Building A2 |
4 |
Building Hours |
16 |
Building Structure |
18 |
Building Systems |
19 |
Clean-up |
Exhibit G |
Closure Letter |
Exhibit G |
Common Areas |
3 |
Comparable Area |
Exhibit F |
Comparable Buildings |
Exhibit F |
Comparable Transactions |
Exhibit F |
Competitor Restricted Area |
41 |
Contractor |
Exhibit B |
Control, |
28 |
Controllable Operating Expenses |
14 |
Cosmetic Alterations |
19 |
Cost Pools |
13 |
Co-Work Uses |
41 |
Default Rate |
38 |
Delay Notice |
4 |
Direct Expenses |
9 |
Economic Terms |
5 |
Eligibility Period |
32 |
Emergency |
33 |
Environmental Assessment |
2 |
Environmental Laws |
Exhibit G |
Environmental Permits |
Exhibit G |
Environmental Questionnaire |
16 |
Environmental Report |
Exhibit G |
Estimate |
14 |
Estimate Statement |
14 |
Estimated Excess |
14 |
Exchanged Market Rents |
7 |
Exercise Notice |
6 |
Existing CC&Rs |
16 |
Existing Hazardous Materials |
Exhibit G |
Existing Underlying Documents |
16 |
Expense Year |
9 |
FDIC Replacement Period |
34 |
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(ii) |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
|
Page(s) |
5 |
|
First Offer Notice |
5 |
First Offer Space |
4 |
First Offer Term |
5 |
First Rebuttals |
7 |
First Rent Abatement Date |
Exhibit B |
Fitch |
28 |
Force Majeure |
42 |
Future Underlying Documents |
16 |
Governmental Approvals |
37 |
Hazardous Materials |
Exhibit G |
Hazardous Materials Claims |
Exhibit G |
Holidays |
16 |
HVAC |
16 |
Identification Requirements |
44 |
Interest Notice |
6 |
Intervening Lease |
4 |
Landlord |
Summary |
Landlord Contribution |
24 |
Landlord Hazardous Materials |
Exhibit G |
Landlord Parties |
21 |
Landlord Response Notice |
6 |
Landlord's Initial Statement |
8 |
Landlord's Option Rent Calculation |
6 |
Landlord's Set-Off Notice |
33 |
Landlord's Warranty |
3 |
Late Delivery Date Abatements |
Exhibit B |
L‑C |
33 |
L‑C Amount |
33 |
L‑C Draw Event |
34 |
L‑C Expiration Date |
33 |
L‑C FDIC Replacement Notice |
34 |
L-C Reduction Condition |
36 |
Lease |
Summary |
Lease Commencement Date |
6 |
Lease Expiration Date |
6 |
Lease Term |
6 |
Lease Year |
6 |
Lenders |
30 |
Lines |
44 |
|
42 |
Mandatory Removal Items |
20 |
Market Rent |
Exhibit F |
Measuring Expense Year |
14 |
Memorandum |
40 |
Moody's |
28 |
Net Equivalent Lease Rate |
Exhibit F |
Neutral Arbitrator |
7 |
New Offer Terms |
5 |
Nondisturbance Agreement |
30 |
Notice of Lease Term Dates |
6 |
Notices |
42 |
Objectionable Name |
37 |
Operating Expenses |
9 |
Option Rent |
6 |
Option Term |
6 |
Original Improvements |
22 |
Original Tenant |
4 |
Other Improvements |
43 |
Outside Agreement Date |
7 |
Over-Allowance Payments |
Exhibit B |
PCBs |
Exhibit G |
Percentage |
Exhibit B |
Permit Delay |
42 |
Permitted Capital Items |
10 |
Permitted Transferee |
28 |
Permitted Transferee Assignee. |
28 |
Premises |
3 |
Project |
3 |
Proposition 13 |
12 |
Rating Replacement Period |
34 |
788288.01/WLA 375755-00007/8-9-18//ejw |
(iii) |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
|
Page(s) |
36 |
|
Release |
Exhibit G |
Reminder Notice |
19 |
Renewal Allowance |
Exhibit F |
Renovations |
44 |
Rent. |
9 |
Right of First Offer |
4 |
RSF |
Summary |
Rules and Regulations |
16 |
Ruling |
8 |
S&P |
28 |
Second Rebuttals |
7 |
Second Rent Abatement Date |
Exhibit B |
Secured Areas |
39 |
Security Deposit Laws |
35 |
Shared Fitness Center |
4 |
Shuttle Service |
44 |
Shuttle Service Riders |
44 |
Specialty Improvements |
20 |
Statement |
13 |
Subject Space |
26 |
Substantial Completion Termination Date |
Exhibit B |
Substantial Completion Termination Notice |
Exhibit B |
Summary |
Summary |
Superior Leases |
4 |
Tax Expenses |
12 |
Telecommunications Equipment |
36 |
Tenant |
Summary |
Tenant Competitor |
41 |
Tenant Damage |
3 |
Tenant Facility Coordinator |
17 |
Tenant HVAC System |
16 |
Tenant Improvement Allowance Payments |
Exhibit B |
Tenant Improvements, |
22 |
Tenant Parties |
21 |
Tenant Party |
21 |
Tenant Work Letter |
3 |
Tenant's First Offer Exercise Notice |
5 |
Tenant's HazMat Agents |
Exhibit G |
Tenant's Initial Statement |
8 |
Tenant's Occupants |
28 |
Tenant's Option Rent Calculation |
6 |
Tenant's Rebuttal Statement |
8 |
Tenant's Security Personnel |
17 |
Tenant's Security System |
18 |
Tenant's Share |
9 |
Tenant's Signage |
37 |
Termination Effective Date |
Exhibit B |
Third Party Lease |
5 |
TI Manual |
19 |
Transfer |
25 |
Transfer Costs |
27 |
Transfer Notice |
25 |
Transfer Premium |
27 |
Transferee |
25 |
Transfers |
25 |
Underlying Documents |
16 |
Unusable Area |
32 |
788288.01/WLA 375755-00007/8-9-18//ejw |
(iv ) |
COLEMAN HIGHLINE 1155 Coleman Avenue [Building 2] Roku, Inc. |
Exhibit 10.27
COLEMAN HIGHLINE
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 CAP OZ 34, LLC, a Delaware limited liability company (" Landlord "), and ROKU, INC., a Delaware corporation (" Tenant ").
SUMMARY OF BASIC LEASE INFORMATION
TERMS OF LEASE |
DESCRIPTION |
||
1. Date: |
August 1, 2018 |
||
2. Premises
|
|
||
2.1 Building: |
Each of the following is a " Building " and are, collectively, the " Buildings ": (i) that certain six (6)-story building (" Building 3 ") to be located at 1173 Coleman Avenue, San Jose, California 95110, containing 194,790 rentable square feet (" RSF "), commonly known as Building Three, (ii) that certain five (5)-story building (" Building 4 ") to be located at 1167 Coleman Avenue, San Jose, California 95110, containing 163,272 RSF, commonly known as Building Four, and (iv) that certain three (3)-story amenities building (" Building A2 ") to be located at 1161 Coleman Avenue, San Jose, California 95110, containing 22,889 RSF, commonly known as the A2 Amenity Building. |
||
2.2 Premises: |
A total of 380,951 RSF, as further set forth in Exhibit A to this Lease, consisting of (i) the entirety of the 194,790 RSF of Building 3 (" Building 3 Premises "), (ii) the entirety of the 163,272 RSF of Building 4 (" Building 4 Premises "), and (iii) the entirety of the 22,889 RSF of Building A2 (" Building A2 Premises "). The Building 3 Premises, the Building 4 Premises and the Building A2 Premises are each referred to herein as a " Phase ," and collectively as the " Premises ". |
||
3. Lease Term
|
|
||
3.1 Length of Term: |
Approximately one hundred forty (140) full calendar months from the "Lease Commencement Date" under the Building 2 Lease (as that term is defined in Section 1.1.4 below). |
||
3.2.1 Building 3 Lease Commencement Date: |
The date (the " Building 3 Lease Commencement Date ") that is the earlier to occur of (i) the date upon which Tenant first commences to conduct business operations in the Building 3 Premises and (ii) the date that is the latest to occur of (a) five (5) months after the Delivery Date (as that term is defined in Section 1.2 of Exhibit B attached to this Lease) for Building 3, (b) the Final Condition Date (as that term is defined in Section 1.3 of Exhibit B attached to this Lease) for Building 3, and (c) March 1, 2020. The anticipated Delivery Date is September 24, 2019. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
|
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
The date (the " Building 4 Lease Commencement Date ") that is the earlier to occur of (i) the date upon which Tenant first commences to conduct business operations in the Building 4 Premises and (ii) the date that is the latest to occur of (a) five (5) months after the Delivery Date (as that term is defined in Section 1.2 of Exhibit B attached to this Lease) for Building 4, (b) the Final Condition Date (as that term is defined in Section 1.3 of Exhibit B attached to this Lease) for Building 4, and (c) March 1, 2020. The anticipated Delivery Date is September 24, 2019. |
|||
3.2.3 Building A2 Lease Commencement Date: |
The date (the " Building A2 Lease Commencement Date ") that is the earlier to occur of (i) the date upon which Tenant first commences to conduct business operations in the Building A2 Premises and (ii) the date that is the latest to occur of (a) five (5) months after the Delivery Date (as that term is defined in Section 1.2 of Exhibit B attached to this Lease) for Building A2, (b) the Final Condition Date (as that term is defined in Section 1.3 of Exhibit B attached to this Lease) for Building A2, and (c) March 1, 2019. The anticipated Delivery Date is September 24, 2019. The Building 3 Lease Commencement Date, the Building 4 Lease Commencement Date and the Building A2 Lease Commencement Date are each referred to herein as a " Lease Commencement Date ," and collectively as the " Lease Commencement Dates ". |
||
3.3 Lease Expiration Date: |
The last day of the one hundred fortieth (140 th ) full calendar month of the lease term for the Building 2 Lease. |
||
4. Base Rent
|
The following Base Rent schedule was determined based on the total rentable square feet of the entire Premises, without regard to the phasing Lease Commencement Dates. Following the determination of the actual Lease Commencement Dates for each Phase of the Premises, the parties shall execute an amendment to this Lease reflecting the applicable Lease Commencement Date for each Phase and the Base Rent (as increased as of the applicable Lease Commencement Date) owed for each Phase. For example, the Base Rent for the Building 3 Premises will be based on a Monthly Base Rent of $3.71 per RSF during Lease Year 1. If the Building 4 Lease Commencement Date is the first day of Lease Year 2, then the Base Rent for both the Building 3 Premises and the Building 4 Premises shall be based on a Monthly Base Rent of $3.82 per RSF for Lease Year 2. |
||
|
|
Monthly
|
|
Lease Year 1
|
$16,950,795.72 |
$1,412,566.31 |
$3.71 |
Lease Year 2 |
$17,459,319.60 |
$1,454,943.30 |
$3.82 |
Lease Year 3 |
$17,983,099.20 |
$1,498,591.60 |
$3.93 |
Lease Year 4 |
$18,522,592.20 |
$1,543,549.35 |
$4.05 |
Lease Year 5 |
$19,078,269.96 |
$1,589,855.83 |
$4.17 |
Lease Year 6 |
$19,650,618.00 |
$1,637,551.50 |
$4.30 |
Lease Year 7 |
$20,240,136.60 |
$1,686,678.05 |
$4.43 |
Lease Year 8 |
$20,847,340.68 |
$1,737,278.39 |
$4.56 |
Lease Year 9 |
$21,472,760.88 |
$1,789,396.74 |
$4.70 |
Lease Year 10 |
$22,116,943.68 |
$1,843,078.64 |
$4.84 |
Lease Year 11 |
$22,780,452.00 |
$1,898,371.00 |
$4.98 |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
-2 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
|
Subject to the terms set forth in Section 3.2 below, the Base Rent attributable to the applicable six (6) month periods commencing on each of the Lease Commencement Dates, respectively, and ending on the last day of the sixth (6 th ) full calendar month following each of the Lease Commencement Dates, respectively, shall be abated. |
* |
The initial Monthly Installment of Base Rent amount was calculated by multiplying the initial Monthly Rental Rate per RSF amount by the number of rentable square feet of space in the Premises, and the Annual Base Rent amount was calculated by multiplying the initial Monthly Installment of Base Rent amount by twelve (12). In all subsequent Base Rent payment periods during the Lease Term commencing on the first (1st) day of the full calendar month that is Lease Month 13, the calculation of each Monthly Installment of Base Rent amount reflects an annual increase of three percent (3%) and each Annual Base Rent amount was calculated by multiplying the corresponding Monthly Installment of Base Rent amount by twelve (12). |
** |
The amounts identified in the column entitled "Monthly Rental Rate per RSF" are rounded amounts provided for informational purposes only. |
5. Tenant's Share
|
|
6. Permitted Use
6.1 Office Permitted Use:
6.2 Amenities Permitted Use: |
|
7. Letter of Credit
|
$16,950,795.00, subject to reduction as set forth in Article 21 below. |
8. Parking Pass Ratio
|
3.3 unreserved parking passes for every 1,000 RSF of the Building 3 Premises and Building 4 Premises, subject to Article 28 below, commencing on the applicable Lease Commencement Date. Tenant's electrical vehicle parking rights and certain rights to additional parking are set forth in Article 28 below. |
9. Address of Tenant
|
ROKU, Inc.
With a copy to:
ROKU, Inc.
|
10. Address of Landlord
|
|
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
-3 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
-4 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
ARTICLE 1
PREMISES,
BUILDINGS
, PROJECT, AND COMMON AREAS
1.1 Premises, Buildings, Project and Common Areas .
1.1.1 The Premises . 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. Landlord and Tenant hereby acknowledge and agree that the RSF of the Premises is stipulated as set forth in Section 2.2 of the Summary, and that such RSF shall not be subject to remeasurement or modification; provided, however, that Tenant shall have the right to verify the RSF of the Premises in accordance with Section 1.3 below solely for the purpose of confirming that Landlord has constructed the Base Building in accordance with the Base Building Plans (as that term is defined in Section 1.1 of the Tenant Work Letter). The parties hereto agree that the lease of the Premises is upon and subject to the terms, covenants and conditions herein set forth, and the parties each covenants as a material part of the consideration for this Lease to keep and perform each and all of such terms, covenants and conditions by it to be kept and performed and that this Lease is made upon the condition of such performance. The parties hereto hereby acknowledge that the purpose of Exhibit A is to show the approximate location of the Premises in the "Buildings" 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 or in the Tenant Work Letter attached hereto as Exhibit B (the " Tenant Work Letter "), Landlord shall not be obligated to provide or pay for any improvement work or services related to the improvement of the Premises. Tenant also acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty regarding the condition of the Premises, the Buildings 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 Tenant Work Letter. Subject to Applicable Laws, Tenant shall have the right to use, on an exclusive basis and without charge, the roof deck of Building A2 (the " Roof Deck "). Tenant's use of the Roof Deck shall be subject to such reasonable rules and regulations as may be prescribed in writing by Landlord from time to time and provided by written notice to Tenant. Tenant shall not be permitted to install or place on the Roof Deck any furniture, fixtures, plants, graphics, signs or insignias or other items of any kind whatsoever, without Landlord's prior consent, which consent shall not be unreasonably withheld, conditioned or delayed, and any alterations or improvements shall be constructed by Tenant as Alterations pursuant to Article 8 above, or as Tenant Improvements pursuant to the Tenant Work Letter. The Roof Deck shall be considered part of the Premises for all purposes under this Lease. Notwithstanding the foregoing, upon the applicable Lease Commencement Date and any applicable First Offer Commencement Date, the Building Systems, as that term is defined in Section 7.1 of this Lease, shall be in good working condition and repair, and Landlord hereby covenants that the Building Systems shall remain in good working condition for a period of twelve (12) months following the applicable Lease Commencement Date and any applicable First Offer Commencement Date pursuant to the terms and conditions of this Section 1.1.1 . Landlord shall, at Landlord's sole cost and expense (which shall not be deemed an Operating Expense, as that term is defined in Section 4.2.4 ), repair or replace any failed or inoperable portion of such Building Systems during such twelve (12) month period (" Landlord's Warranty "), provided that the need to repair or replace was not caused by the misuse, misconduct, damage, destruction, and/or negligence (collectively, " Tenant Damage ") of Tenant, its subtenants and/or assignees, if any, or any company which it acquired, sold or merged with Tenant, or any Tenant Parties, as that term is defined in Section 10.1 below, or by any modifications, Alterations, as that term is defined in Section 8.1 below, or improvements (including the Tenant Improvements, as that term is defined in Section 2.1 of the Tenant Work Letter) constructed by or on behalf of Tenant. Landlord's Warranty shall not be deemed to require Landlord to replace any portion of the Building Systems, as opposed to repair such portion of Building Systems, unless prudent commercial property management practices dictate replacement rather than repair of the item in question. To the extent repairs which Landlord is required to make pursuant to this Section 1.1.1 are necessitated in part by Tenant Damage, then Tenant shall reimburse Landlord for an equitable proportion of the cost of such repair. If it is determined that the Building Systems (or any portion thereof) was not in good working condition and repair as of the applicable Lease Commencement Date, Landlord shall not be liable to Tenant for any damages, but as Tenant's sole remedy, Landlord, at no cost to Tenant, shall promptly commence such work or take such other action as may be necessary to place the same in good working condition and repair, and shall thereafter diligently pursue the same to completion.
1.1.2 The Buildings and The Project . The Premises is the principal component of the Buildings set forth in Section 2.1 of the Summary. The Buildings are part of a mixed-use project known as "Coleman Highline." The term " Project ," as used in this Lease, shall mean (i) the Buildings, (ii) the Common Areas, (iii) the buildings within the Project known as Building One and Building Two depicted on the site plan attached hereto as Exhibit A-1 and located at 1143 Coleman Avenue (" Building 1 ") and 1155 Coleman Avenue (" Building 2 "), respectively, (iv) once constructed, up to four (4) other office buildings (commonly known as Buildings Five through Eight), up to two (2) hotels, up to five (5) amenities structures, and up to two (2) retail buildings, all as depicted on the site plan attached hereto as Exhibit A-1 , (v) the land (which is improved with landscaping, parking facilities, outdoor amenities areas and other improvements) upon which the Buildings and the adjacent buildings are located, and (vi) at Landlord's discretion, any additional real property, areas, land, buildings or other improvements added thereto outside of the Project; provided that any such additions to the Project will not materially violate clauses (a) through (e) of Section 1.1.3 below without the prior written consent of Tenant, which may be given or withheld in Tenant’s reasonable discretion.
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
5 |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
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 manner in which the Common Areas are maintained and operated shall be at the reasonable discretion of Landlord , provided that Landlord shall at all times (1) maintain and operate the Common Areas in a first ‑class manner at least consistent with "Comparable Buildings," as that term is defined in Section 4 of Exhibit F to this Lease; and (2) designate and operate the Common Areas in a manner that does not violate clauses (a) through ( f ) of the immediately following sentence . Landlord reserves the right to close temporarily, make alterations or additions to, or change the location of elements of the Project (other than the Premises) and the Common Areas , provided that Landlord shall not, without the prior written consent of Tenant, which may be given or withheld in Tenant’s reasonable discretion, make any permanent alterations, additions or changes which (a) change the nature of the Project to something other than a first class office building project , (b) materially, adversely affect Tenant's use of the Premises for the Permitted Use or materially interfere with Tenant’s business operations being conducted at the Premises, (c) materially adversely affect Tenant's ingress to or egress from the Project, Building, the Premises or the parking areas servicing the same , (d) materially impair the visibility of Tenant's signage rights as provided under this Lease, and/or (e) materially increase Tenant's monetary obligations under this Lease. Except when and where Tenant' s right of access is specifically excluded as the result of (i) an emergency, (ii) a requirement by Applicable L aw or the Underlying Documents (as that term is defined in Section 5.5 below) , or (iii) a specific provision set forth in this Lease, Tenant shall have the right of ingress and egress to the Premises , the Common Areas and Tenant's Parking Areas (as that term is defined in Article 28 below) twenty- four (24) hours per day, seven (7) days per week, every day of the year during the Lease Term.
1.1.4 Intentionally Omitted .
1.1.5 Other Project Leases . Concurrently with the parties’ mutual execution and delivery of this Lease, and as a condition precedent to the effectiveness of this Lease, an affiliate of Landlord, CAP Phase 1, LLC, a Delaware limited liability company, and Tenant are executing and delivering a separate lease (as amended, supplemented or modified, the " Building 2 Lease ") for Building 2, which is more particularly shown on the site plan attached hereto as Exhibit A-1 . Landlord acknowledges that Tenant intends to utilize the Premises and Building 2 as a unified corporate campus, and accordingly, the parties agree that each of the occupants of such buildings, or portion(s) thereof, shall have the same right during the Lease Term to use the amenities (including the Amenities Building) and the Common Areas as are granted to the occupants of the Premises under this Lease.
1.2 Right of First Offer . Landlord, on behalf of CAP Tranche 2, LLC (an affiliate of Landlord), hereby grants to the original Tenant set forth in this Lease (the " Original Tenant ") and any Permitted Transferee Assignee a one-time right of first offer (the " Right of First Offer ") with respect to the entirety of the building within the Project, if and once constructed, to be known as Building Five depicted on the site plan attached hereto as Exhibit A-1 and located at 1179 Coleman Avenue (the " First Offer Space "), on the terms and conditions set forth in this Section 1.2 ; provided that such First Offer Space is not the subject of any leasing negotiations (either orally or in writing) or a lease proposal, letter of intent, term sheet, or other lease document as part of an agreement involving three (3) or more office buildings at the Project. Notwithstanding the foregoing, and subject to the terms and conditions of Section 1.2.6 below, such Right of First Offer shall (i) subordinate any agreement involving three (3) or more office buildings at the Project and all expansion rights set forth in such agreements (the " Superior Leases ", and the tenants under such Superior Leases are " Superior Right Holders ") (including, in each instance, renewals and expansions of any such Superior Leases, pursuant to rights in effect as of the date of this Lease regardless of whether such rights are exercised strictly in accordance with their terms). Notwithstanding any contrary provision in the lease of any Superior Right Holder, such rights of any Superior Right Holder shall continue to be superior to Tenant's Right of First Offer in the event that such Superior Right Holder's lease is renewed or otherwise modified (and irrespective of whether any such renewal is currently set forth in such lease or is subsequently granted or agreed upon, and regardless of whether such renewal is consummated pursuant to a lease amendment or a new lease).
1.2.1 Procedure for Offer . From time to time, prior to leasing the First Offer Space to a third party (other than to a Superior Right Holder), Landlord shall deliver written notice to Tenant (the " First Offer Notice ") describing First Offer Space (or portion thereof) that is then available and pursuant to such First Offer Notice, Landlord shall offer to lease to Tenant the First Offer Space described in the First Offer Notice. The First Offer Notice shall describe the space so offered to Tenant and shall set forth the Base Rent and the other "Economic Terms" (as that term is defined herein below) upon which Landlord is willing to lease such space to Tenant. As used in this Section 1.2 , " Economic Terms " shall refer to: (i) the rental rate (including additional rent and considering any "base year" or "expense stop" applicable thereto); (ii) the amount of any improvement allowance or the value of any work to be performed by Landlord in connection with the lease of such First Offer Space (which amount is a deduction from the cost to Tenant or such other party); and (iii) the amount of free rent (which amount is a deduction from the cost to Tenant or such other party).
1.2.2 Procedure for Acceptance . If Tenant wishes to exercise Tenant's Right of First Offer with respect to the space described in the First Offer Notice, then within ten (10) business days of delivery of the First Offer Notice to Tenant, Tenant shall have the right to deliver notice to Landlord (" Tenant's First Offer Exercise Notice ") of Tenant's election to exercise its right of first offer with respect to the entire space described in the First Offer Notice on the terms contained in such notice. If, within the ten (10) business day period, Tenant does not deliver Tenant's First Offer Exercise Notice, then Landlord shall be free to enter into a lease (" Third Party Lease ") for the space described in the First Offer Notice to anyone to whom Landlord desires on any terms Landlord desires; provided, however, during the 180-day period following the initial delivery of the First Offer Notice to
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
-6- |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Tenant, if the Economic Terms that Landlord is prepared to accept under a Third Party Lease are greater than ten percent (10 %) more favorable to the tenant than the Economic Terms offered by Landlord to Tenant (as determined using a "Net Equivalent Lease Rate", as defined in Exhibit F attached hereto), then Landlord shall first make an offer of such more favorable Economic Terms (as such Economic Terms are determined using a Net Equivalent Lease Rate and adjusted to account for the difference, if any, in the lease term offered to Tenant and the lease term offered to such third party) (the " New Offer Terms ") to Tenant by written notice (the " Additional Notice ") setting forth the New Offer Terms, and Tenant shall have five (5) business days from Tenant's receipt of the Additional Notice to accept the New Offer Terms set forth in the Additional Notice (which procedure shall be repeated until Landlord enters into a lease or lease amendment with respect to such First Offer Space which does not require Landlord to deliver another Additional Notice to Tenant pursuant to the terms of this paragraph or Tenant exercises such Right of First Offer, as applicable). If Landlord does not lease the First Offer Space within the foregoing one hundred eighty (180) day period, then Landlord shall also provide Tenant with an Additional Notice prior to ente ring into a Third Party Lease.
1.2.3 First Offer Term . Tenant shall commence payment of Rent for the First Offer Space, and the term of the First Offer Space (the " First Offer Term ") shall commence upon the date set forth in the First Offer Notice (the " First Offer Commencement Date ") and shall terminate on the date set forth in the First Offer Notice.
1.2.4 Construction in First Offer Space . Tenant shall accept delivery of the First Offer Space in its then "as is" condition, and Tenant's construction of improvements in the First Offer Space shall comply with the terms of Article 8 of the First Offer Lease (defined below). Any improvement allowance to which Tenant may be entitled shall be as set forth in the First Offer Notice.
1.2.5 First Offer Lease . If Tenant timely exercises its Right of First Offer as set forth herein, then Landlord and Tenant shall, within thirty (30) days thereafter, execute a separate lease for such First Offer Space (the " First Offer Lease ") which First Offer Lease shall contain the following: (i) the terms and conditions set forth in the First Offer Notice and this Section 1.2 ; (ii) an obligation that Tenant deliver to Landlord under the First Offer Lease, concurrently with Tenant's execution of the First Offer Lease, a letter of credit in an amount equal to the first twelve (12) months of the base rent under the First Offer Lease that complies in all respects with the requirements of Article 21 of this Lease and that is subject to reduction in accordance with Section 21.9 of this Lease, except that the first reduction date of such letter of credit amount shall occur on the first day of the first full calendar month following the completion of one-third of the First Offer Term and the second reduction date of such letter of credit amount shall occur on the first day of the first full calendar month following the completion of two-thirds of the First Offer Term; and (iii) the non-business oriented terms and conditions of this Lease. Notwithstanding the foregoing, the failure of Landlord and Tenant to execute and deliver such First Offer Lease shall not affect an otherwise valid exercise of Tenant's first offer rights or the parties' rights and responsibilities in respect thereof.
1.2.6 Termination of Right of First Offer . The Right of First Offer shall be personal to the Original Tenant and any Permitted Transferee Assignee, and may only be exercised by the Original Tenant or such Permitted Transferee Assignee (and not any other assignee, sublessee or other transferee of Tenant's interest in this Lease) if the Original Tenant or any Permitted Transferee Assignee occupies the entire Premises. Tenant shall not have the right to lease First Offer Space, as provided in this Section 1.2 , if, as of the date of the attempted exercise of any Right of First Offer by Tenant, or, at Landlord's option, as of the scheduled date of delivery of such First Offer Space to Tenant, (i) Tenant is in monetary or material non-monetary default under this Lease (beyond the applicable notice and cure periods) more than once during the preceding twelve (12) month period, (ii) Tenant has made a Transfer (as defined in Section 14.1 below) of more than twenty-five percent (25%), in the aggregate, of the Premises other than to a Permitted Transferee (as that term is defined in Section 14.8 below), (iii) Tenant (or its Permitted Transferee, as the case may be) has vacated more than twenty-five percent (25%), in the aggregate, of the Premises for more than thirty (30) consecutive days, other than as a result of Alterations performed pursuant to Article 8 below or relating to a Casualty pursuant to Article 11 below, and/or (iv) less than fifteen (15) months then remain in the initial Lease Term (and in no event shall Tenant's Right of First Offer be applicable during the Option Term).
1.2.7 Binding Effect on Landlord . For so long as CAP OZ 34, LLC, a Delaware limited liability company, or an entity which directly or indirectly controls, is controlled by, or is under common control with CAP OZ 34, LLC, a Delaware limited liability company, is the Landlord under this Lease (each, an " Original Landlord ") and an Original Landlord is also the owner of the First Offer Space, Landlord's obligations under this Section 1.2 shall remain covenants binding on Original Landlord, and a default by the owner of the First Offer Space with respect to the Right of First Offer shall constitute a default by Original Landlord under this Lease. Upon the transfer of Original Landlord's interest in the Premises and in this Lease to any third party (other than any other Original Landlord) or upon the transfer of Original Landlord's interest in the First Offer Space to any third party, Landlord shall automatically be released from all obligations under this Section 1.2 and Tenant agrees to look solely to the owner of the First Offer Space for the performance of the obligations under this Section 1.2 after the date of transfer.
1.3 Rentable Square Feet of Premises . For purposes of this Lease, "rentable square feet" of the Premises shall be calculated pursuant to BOMA 2017 for Office Buildings: Standard Methods of Measurement (ANSI/BOMA Z65.1-2017), and its accompanying guidelines, as applicable to single-tenant buildings ( i.e. , rentable square footage equating to Gross Building Area) (collectively, " BOMA 2017 "). Landlord and Tenant hereby stipulate and agree that the rentable area of the Premises, based on the Base Building Plans (as that term is defined in Section 1.1 of the Tenant Work Letter) is as set forth in Section 2.2 of the Summary. Within sixty (60) days after the Lease Commencement Date, Tenant may object to the amount of the rentable square footage of the Premises as set forth in this Lease; provided, however, Tenant may only object if the Building, as constructed, deviates from the Base Building Plans and, as a result of such deviation, the rentable square footage of the Premises is reduced, and
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then any objection by Tenant to the rentable square footage of the Premises shall be limited solely to the amount of the actual deviation of the rentable square footages of the Premises , as constructed , deviates from the rentable square footages set forth in this Lease (the " Deviation ") . Tenant ' s failure to deliver written notice of such objection within said sixty ( 6 0) day period shall be deemed to constitute Tenant ' s acceptance of the rentable square footage set forth in this Lease . If Tenant objects to the amount of the rentable square footage, Landlord ' s space planner/architect and Tenant ' s space planner/architect shall promptly meet and attempt to agree upon the rentable square footage of the Premises as measure d pursuant to BOMA 201 7 , it being understood that any adjustment must be limited to the Deviation . If Landlord ' s space planner/architect and Tenant ' s space planner/architect cannot agree on the amount of the Deviation within thirty (30) days after Tenant ' s objection thereto, Landlord and Tenant shall mutually select an independent third party space measurement professional to field measure the Deviation pursuant to BOMA 201 7 , subject to the limitations set forth herein. Such third party independent measurement professional ' s determination shall be conclusive and binding on Landlord and Tenant . Landlord and Tenant shall equally split the fees and expenses of the independent third party space measurement professional. If the Lease Term commences prior to the calculation of the Deviation , Landlord ' s determination of the Deviation shall be utilized until a final determination of the Deviation is made, whereupon an appropriate adjustment, if necessary, shall be made retroactively, and Landlord shall make appropriate payment (if applicable) to Tenant . In the event that pursuant to the procedure described in this Section 1.3 above, it is determined that the rentable square footage amounts shall be different from those set forth in this Lease , all amounts, percentages and figures appearing or referred to in this Lease based upon such incorrect amount (including, without limitation, the amount of the Rent , as those term is defined in Section 4.1 of this Lease , and the amount of the Tenant Improvement Allowance, as that term is defined in Section 2.1 of the Tenant Work Letter ) shall be modified in accordance with such determination. If such determination is made, it will be confirmed in writing by Landlord to Tenant .
ARTICLE 2
LEASE TERM; OPTION TERM
2.1 In General . The terms 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 , 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. For purposes of this Lease, the term " Lease Year " shall mean each consecutive twelve (12) month period during the Lease Term, provided , however, that Lease Year 1 for this Lease shall commence on the same day as Lease Year 2 under the Building 2 Lease, and provided further that the last Lease Year shall end 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 (the " Notice of Lease Term Dates "), attached hereto, as a confirmation only of the information set forth therein, which Tenant shall execute and return to Landlord within fifteen (15) business days of receipt thereof (provided that if said Notice of Lease Term Dates is not factually correct, then Tenant shall make such changes as are necessary to make the Notice of Lease Term Dates factually correct and shall thereafter execute and return such Notice of Lease Term Dates to Landlord within such fifteen (15) business day period), and thereafter the dates set forth on such Notice of Lease Term Dates shall be conclusive and binding upon Tenant and Landlord, unless Landlord sends a Notice to Tenant rejecting Tenant’s changes, whereupon this procedure shall be repeated until the parties mutually agree upon the contents of the Notice of Lease Term Dates. In the event Landlord shall fail to send Tenant the Notice of Lease Term Dates within thirty (30) days following the Lease Commencement Date, such failure shall not be a default under this Lease, but Tenant may send to Landlord Notice of the occurrence of the Lease Commencement Date substantially in the form of the Notice of Lease Term Dates which Notice of Lease Term Dates Landlord shall acknowledge by executing a copy of the Notice of Lease Term Dates and returning it to Tenant (provided that if said Notice of Lease Term Dates is not factually correct, Landlord shall make such changes to the Notice of Lease Term Dates as are necessary to make such Notice of Lease Term Dates factually correct, which revised Notice of Lease Term Dates shall thereafter be subject to the procedure for finalization set forth in this Section 2.1 ). Once the Notice of Lease Term Dates is executed and delivered by Landlord and Tenant, the same shall be binding upon Landlord and Tenant.
2.2 Option Term .
2.2.1 Option Right . Landlord hereby grants Original Tenant one (1) option (the " Extension Option ") to extend the Lease Term for the entire Premises (or with respect to the Reduced Premises, as described below) by a period of seven (7) years (the " Option Term "). Such Extension Option shall be exercisable only by "Notice" (as that term is defined in Section 29.18 of this Lease) delivered by Tenant to Landlord as provided below, provided that, as of the date of delivery of such Notice, (i) Tenant has not then received notice of a monetary or material non-monetary default under this Lease that then remains uncured, and (ii) Tenant has not been in monetary or material non-monetary default under this Lease (beyond the applicable notice and cure periods) more than twice during the preceding twelve (12) month period. Upon the proper exercise of such option to extend, and provided that, at Landlord's election, as of the end of the Lease Term, (A) Tenant has not then received notice of a monetary or material non-monetary default under this Lease that then remains uncured, and (B) Tenant has not been in monetary or material non-monetary default under this Lease (beyond the applicable notice and cure periods) more than twice during the preceding twelve (12) month period, then the Lease Term, as it applies to the entire Building 3 Premises, the entire Building 4 Premises and/or the entire Building A2 Premises, shall be extended for a period of seven (7) years. The rights contained in this Section 2.2 shall only be exercised by the Original Tenant (or any assignee of the Original Tenant's interest in this Lease (but not any sublessee or other transferee of the Original Tenant's interest in this Lease), and shall terminate upon the date that Tenant makes a Transfer of more than fifty percent (50%), in the aggregate, of the initial Premises other than to a Permitted Transferee for all or substantially all of the remaining Lease Term.
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2.2.2 Reduced P remises . If Tenant exercises the Extension Option, Tenant shall have the right to exercise the Extension Option as to all or a portion of the Premises then leased by Tenant under this Lease, provide d that, if Tenant exercises the Extension O ption with respect to less than the entire Premises (the " Reduced Premises "), then the Reduced Premises must consist of the entire Building 3 Premises or the entire Building 4 Premises or both , and (ii) Tenant may exercise the Extension Option with respect to the Building A2 Premises only if Tenant also exercises the Extension Option with respect to both the Building 3 Premises and the Building 4 Premises. If Tenant exercises an extension option with respect to less than the entire Premises pursuant to the prior sentence, then for purposes of the remainder of this Section 2.2 , Exhibit F , and during the period from and after the commencement of the Option Term, the term "Premises" shall mean the Reduced Premises.
2.2.3 Option Rent . The Rent payable by Tenant during the Option Term (the " Option Rent ") shall be equal to ninety-seven and one-half percent (97.5%) of the "Market Rent," as that term is defined in, and determined pursuant to, Exhibit F attached hereto. The Option Rent for the Building 3 Premises and the Building 4 Premises shall be equal to the same per rentable square foot amount for each portion of the Premises. In addition, if Tenant exercises the Extension Option with respect to the Building A2 Premises, the Option Rent for the Building A2 Premises shall be determined by determining the Option Rent for the Building 3 Premises and the Building 4 Premises, and shall then be applied on the same per rentable square foot basis to the Building A2 Premises, and the Option Rent for the Building A2 Premises shall not otherwise be subject to a separate determination of Market Rent.
2.2.4 Exercise of Option . The option contained in this Section 2.2 shall be exercised by Tenant, if at all, only in the manner set forth in this Section 2.2 . Tenant shall deliver notice (the " Exercise Notice ") to Landlord not more than eighteen (18) months nor less than fifteen (15) months prior to the expiration of the initial Lease Term, stating that Tenant is exercising its option. Concurrently with such Exercise Notice, Tenant shall deliver to Landlord Tenant's calculation of the Option Rent (the " Tenant's Option Rent Calculation "). Landlord shall deliver notice (the " Landlord Response Notice ") to Tenant on or before the date which is thirty (30) days after Landlord's receipt of the Exercise Notice and Tenant's Option Rent Calculation, stating that (A) Landlord is accepting Tenant's Option Rent Calculation as the Option Rent, or (B) rejecting Tenant's Option Rent Calculation and setting forth Landlord's calculation of the Market Rent (the " Landlord's Option Rent Calculation "). Within ten (10) business days of its receipt of the Landlord Response Notice, Tenant may, at its option, accept the Market Rent contained in the Landlord's Option Rent Calculation. If Tenant does not affirmatively accept or Tenant rejects the Option Rent specified in the Landlord's Option Rent Calculation, the parties shall follow the procedure set forth in Section 2.2.5 below, and the Option Rent shall be determined in accordance with the terms of Section 2.2.5 below. Notwithstanding the foregoing, Tenant shall be permitted to submit a non-binding notice of interest (the " Interest Notice ") to Landlord not less than eighteen (18) months prior to the expiration of the then Lease Term, and following Landlord's receipt of such Interest Notice, Landlord shall deliver to Tenant not less than sixteen (16) months prior to the expiration of the then Lease Term, Landlord's non-binding estimate of the Option Rent.
2.2.5 Determination of Market Rent . In the event Tenant timely and appropriately exercises its option to extend the Lease but rejects the Option Rent set forth in the Landlord's Option Rent Calculation pursuant to Section 2.2.4 above, then Landlord and Tenant shall attempt to agree upon the Option Rent using their reasonable good-faith efforts. If Landlord and Tenant fail to reach agreement upon the Option Rent applicable to the Option Term on or before the date that is ninety (90) days prior to the expiration of the initial Lease Term (the " Outside Agreement Date "), then the Option Rent shall be determined by arbitration pursuant to the terms of this Section 2.2.5 . Each party shall make a separate determination of the Market Rent (i.e., the determinations of one hundred percent (100%) of Market Rent (as opposed to the Option Rent determinations equal to ninety-seven and one-half percent (97.5%) of Market Rent) (the " Exchanged Market Rents "), within five (5) days following the Outside Agreement Date, and such determinations shall be submitted to arbitration in accordance with Section 2.2.5.1 through Section 2.2.5.4 , below. The determination of the arbitrators shall be limited solely to the issue area of whether Landlord's or Tenant's Exchanged Market Rents determination is the closest to the actual Market Rent as determined by the arbitrators, taking into account the requirements of Section 2.2 of this Lease.
2.2.5.1 Landlord and Tenant shall each appoint one arbitrator who shall by profession be a MAI appraiser or real estate broker who shall have been active over the ten (10) year period ending on the date of such appointment in the appraising and/or leasing of first class office properties in the vicinity of the Buildings. Each such arbitrator shall be appointed within fifteen (15) days after the Outside Agreement Date. Landlord and Tenant may consult with their selected arbitrators prior to appointment and may select an arbitrator who is favorable to their respective positions (including an arbitrator who has previously represented Landlord and/or Tenant, as applicable). The arbitrators so selected by Landlord and Tenant shall be deemed " Advocate Arbitrators ."
2.2.5.2 The two Advocate Arbitrators so appointed shall be specifically required pursuant to an engagement letter within ten (10) days of the date of the appointment of the last appointed Advocate Arbitrator to agree upon and appoint a third arbitrator (" Neutral Arbitrator ") who shall be qualified under the same criteria set forth hereinabove for qualification of the two Advocate Arbitrators except that (i) neither the Landlord or Tenant or either parties' Advocate Arbitrator may, directly, or indirectly, consult with the Neutral Arbitrator prior or subsequent to his or her appearance, and (ii) the Neutral Arbitrator cannot be someone who has represented Landlord and/or Tenant during the five (5) year period prior to such appointment. The Neutral Arbitrator shall be retained via an engagement letter jointly prepared by Landlord's counsel and Tenant's counsel.
2.2.5.3 Within ten (10) business days following the appointment of the Neutral Arbitrator, Landlord and Tenant shall in good faith endeavor to agree upon the terms of and enter into an arbitration agreement (the " Arbitration Agreement ") which shall set forth the following:
(a) Each of Landlord's and Tenant's Exchanged Market Rents exchanged by the parties pursuant to Section 2.2.5 , above;
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(b) An agreement to be signed by the Neutral Arbitrator, the form of which agreement shall be attached as an exhibit to the Arbitration Agreement, whereby the Neutral Arbitrator shall agree to undertake the arbitration and render a decision in accordance with the terms of this Lease, as modified by the Arbitration Agreement, and shall require the Neutral Arbitrator to demonstrate to the reasonable satisfaction of the parties that the Neutral Arbitrator has no conflicts of interest with either Landlord or Tenant;
(c) Instructions to be followed by the Neutral Arbitrator when conducting such arbitration;
(d) That Landlord and Tenant shall each have the right to submit to the Neutral Arbitrator (with a copy to the other party), on or before the date that occurs fifteen (15) days following the appointment of the Neutral Arbitrator, an advocate statement (and any other information such party deems relevant) prepared by or on behalf of Landlord or Tenant, as the case may be, in support of Landlord's or Tenant's respective Exchanged Market Rents (the " Briefs ");
(e) That within five (5) business days following the exchange of Briefs, Landlord and Tenant shall each have the right to provide the Neutral Arbitrator (with a copy to the other party) with a written rebuttal to the other party's Brief (the “ First Rebuttals ”);provided, however, such First Rebuttals shall be limited to the facts and arguments raised in the other party's Brief and shall identify clearly which argument or fact of the other party's Brief is intended to be rebutted;
(f) That within five (5) business days following the parties’ receipt of each other’s First Rebuttal, Landlord and Tenant, as applicable, shall each have the right to provide the Neutral Arbitrator (with a copy to the other party) with a written rebuttal to the other party’s First Rebuttal (the “ Second Rebuttals ”); provided, however, such Second Rebuttals shall be limited to the facts and arguments raised in the other party’s First Rebuttal and shall identify clearly which argument or fact of the other party’s First Rebuttal is intended to be rebutted;
(g) The date, time and location of the arbitration, which shall be mutually and reasonably agreed upon by Landlord and Tenant, taking into consideration the schedules of the Neutral Arbitrator, the Advocate Arbitrators, Landlord and Tenant, and each party's applicable consultants, which date shall in any event be within forty-five (45) days following the appointment of the Neutral Arbitrator;
(h) That no discovery shall take place in connection with the arbitration, other than to verify the factual information that is presented by Landlord or Tenant;
(i) That the Neutral Arbitrator shall not be allowed to undertake an independent investigation or consider any factual information other than presented by Landlord or Tenant, except that the Neutral Arbitrator shall be permitted to visit the Project and the buildings containing the Comparable Transactions;
(j) Tenant shall have the right to present oral arguments to the Neutral Arbitrator at the arbitration for a period of time not to exceed three (3) hours (" Tenant's Initial Statement ");
(k) Following Tenant's Initial Statement, Landlord shall have the right to present oral arguments to the Neutral Arbitrator at the arbitration for a period of time not to exceed three (3) hours (" Landlord's Initial Statement ");
(l) Following Landlord's Initial Statements the Advocate Arbitrator representing Tenant shall have up to one (1) additional hour to present additional arguments and/or to rebut the arguments offered in Landlord's Initial Statement (" Tenant's Rebuttal Statement ");
(m) Following Tenant's Rebuttal Statement, the Advocate Arbitrator representing Landlord shall have up to one (1) additional hour to present additional arguments and/or to rebut the arguments offered in Tenant's Initial Statement and Tenant's Rebuttal Statement;
(n) That, not later than ten (10) business days after the date of the arbitration, the Neutral Arbitrator shall render a decision (the " Ruling ") indicating whether Landlord's or Tenant's Exchanged Market Rents determination is closer to the Market Rent;
(o) That following notification of the Ruling, Landlord's or Tenant's Exchanged Market Rents determination, whichever is selected by the Neutral Arbitrator as being closer to the Market Rent, shall then be multiplied by ninety-seven and one-half percent (97.5%) to become the then applicable Option Rent; and
(p) That the decision of the Neutral Arbitrator shall be binding on Landlord and Tenant.
(q) If a date by which an event described in Section 2.2.5.3 above, is to occur falls on a weekend or a holiday, the date shall be deemed to be the next business day. If the parties fail to enter into an Arbitration Agreement within ten (10) days following the appointment of the Neutral Arbitrator, then the arbitration shall nonetheless proceed in accordance with this Section 2.2.5 notwithstanding such failure.
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2.2.6 In the event that the Option Rent shall not have been determined pursuant to the terms hereof prior to the commencement of the Option Term, Tenant shall be required to pay the Option Rent, initially provided by Landlord to Tenant, and upon the final determination of the Option Rent, the payments made by Tenant shall be reconciled with the actual amounts due, and the appropriate party shall make any corresponding payment to the other party within thirty (30) cale ndar days after the Option Rent has finally been determined . Upon final determination of the Option Rent, Landlord and Tenant shall execute an amendment reflecting Tenant’s exercise of the extension option and the extension of the Lease Term and the Option Rent as finally determined; provided that the failure of either party to execute such amendment shall not affect the validity of the terms of this Lease that apply to the Option Term .
3.1 In General . 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 by written notice to Tenant, by a wire transfer in accordance with written instructions provided by Landlord or 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 as otherwise expressly set forth in this Lease. Concurrently with Tenant's execution and delivery of this Lease to Landlord, Tenant shall pay to Landlord an amount equal to $706,283.15, which amount shall be applied to fifty percent (50%) of the first month of Base Rent due under this Lease. Tenant shall deliver (i) the remaining fifty percent (50%) of the first month of Base Rent due under this Lease with respect to the Building 3 Premises no later than ten (10) business days following the Delivery Date for Building 3, (ii) the remaining fifty percent (50%) of the first month of Base Rent due under this Lease with respect to the Building 4 Premises no later than ten (10) business days following the Delivery Date for Building 4, and (iii) the remaining fifty percent (50%) of the first month of Base Rent due under this Lease with respect to the Building A2 Premises no later than ten (10) business days following the Delivery Date for Building A2. If any Rent payment date (including the Lease Commencement Date) falls on a day of the month other than the first day of such month or if any payment of Rent is for a period which is shorter than one month, the Rent for any fractional month shall accrue on a daily basis for the period from the date such payment is due to the end of such calendar month or to the end of the Lease Term at a rate per day which is equal to 1/365 of the applicable annual Rent. All other payments or adjustments required to be made under the terms of this Lease that require proration on a time basis shall be prorated on the same basis.
3.2 Base Rent Abatement . Provided that no monetary or material non-monetary event of default is occurring beyond any applicable notice and cure period, and subject to the terms of this Section 3.2 below, then during the initial six (6) full calendar months following the applicable Lease Commencement Date (collectively, the " Base Rent Abatement Period "), Tenant shall be entitled to an abatement of Base Rent (collectively, the " Base Rent Abatement "). The Base Rent Abatement shall apply separately with respect to the Building 3 Premises, the Building 4 Premises, and the Building A2 Premises. Tenant acknowledges and agrees that the foregoing Base Rent Abatement has been granted to Tenant as additional consideration for entering into this Lease, and for agreeing to pay the Rent and perform the terms and conditions otherwise required under this Lease. Tenant acknowledges and agrees that during such Base Rent Abatement Period, such Base Rent Abatement shall have no effect on the calculation of any future increases in Base Rent or Direct Expenses payable by Tenant pursuant to the terms of this Lease, which increases shall be calculated without regard to such Base Rent Abatement. Additionally, Tenant shall be obligated to pay all "Additional Rent" (as that term is defined in Section 4.1 of this Lease) during the Base Rent Abatement Periods. In connection with any sale, financing or refinancing of the Building or Project, Landlord shall have the right to buy out all or any portion of the Base Rent Abatement at any time prior to the expiration of the Base Rent Abatement Period by (1) providing written notice thereof to Tenant and (2) paying to Tenant the amount of Base Rent Abatement then remaining due discounted to present value at a per annum rate equal to the discount rate of the Federal Reserve Bank of San Francisco. If Landlord elects to buy out all or a portion of the Base Rent Abatement, Landlord and Tenant shall, at Landlord’s option, enter into an amendment to the Lease. In no event shall Landlord be obligated to pay a commission with respect to the Base Rent Abatement and Tenant and Landlord shall each indemnify the other against all costs, expenses, attorneys’ fees, and other liability for commissions or other compensation claimed with respect to the Base Rent Abatement by any broker or agent claiming the same by, through or under the indemnifying party.
4.1 General Terms . 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 of this Lease, respectively. Such payments by Tenant, together with any and all other amounts payable by Tenant to Landlord pursuant to the terms 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. 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.
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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 " Tenant's Share " shall mean the amount 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 in which any portion of the Lease Term falls, through and including the calendar year in which the Lease Term expires.
4.2.4 " Operating Expenses " shall mean, except as otherwise set forth in this Section 4.2.4 , all expenses, costs and amounts of every kind and nature which Landlord pays or accrues during any Expense Year because of or in connection with the ownership, management, maintenance, security, repair, replacement, restoration or operation of the Project, or any portion thereof. For purposes of clarification, any given type of Operating Expense shall be included either as paid or as accrued during an Expense Year (but not both as paid and as accrued) and such manner of accounting as to such type of Operating Expense shall be maintained consistently throughout the Lease Term. 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 to the Common Areas, the cost of operating, repairing, and maintaining the utility, telephone, mechanical, sanitary, storm drainage, and elevator systems, and the cost of maintenance and service contracts in connection therewith (but excluding the costs of any utilities provided to the Premises and the premises of other tenants of the Project to the extent Tenant is then paying Landlord directly for such utility costs pursuant to Article 6 below); (ii) the cost of licenses, certificates, permits and inspections and the reasonable cost of contesting any governmental enactments that are reasonably likely to 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 (except for the cost of Pollution Legal Liability Environmental insurance) in connection with the Project as reasonably determined by Landlord; (iv) except to the extent constituting a capital expenditure (other than Permitted Capital Items), 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) the cost of operation, repair, restoration, and maintenance of all parking areas and amenities areas, including the amenities building and any cafeterias and conference spaces; (vi) subject to the exclusions from Operating Expenses below, fees and other costs, including management and/or incentive fees, consulting fees, legal fees and accounting fees, of all contractors and consultants in connection with the management, operation, maintenance and repair of the Project (provided, however, if any of such fees are paid to parties who provide services for more than one building or project, only the prorated portion of those fees reflecting the percentage of such parties' working time devoted to the Project shall be included in Operating Expenses); (vii) payments under any equipment rental agreements and the fair rental value of any management office space; (viii) subject to item (f), below, wages, salaries and other compensation and benefits, including taxes levied thereon, of all persons 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 and replacement of all systems and equipment and components thereof of the Project (but excluding repairs and replacements that constitute capital repairs or capital improvements, other than Permitted Capital Items); (xi) the cost of janitorial, alarm, security and other services, replacement of wall and floor coverings, ceiling tiles and fixtures in Common Areas, maintenance of curbs and walkways, and repair to roofs (but excluding the costs of janitorial services provided to the premises of other tenants of the Project to the extent Tenant is then providing its own janitorial services to the Premises pursuant to Article 6 below); (xii) amortization (including reasonable interest on the unamortized cost) over such period of time as Landlord shall reasonably determine, 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; (xiii) the cost of capital improvements or other costs incurred in connection with the Project (A) which are reasonably anticipated to reduce current or future Operating Expenses or to enhance or improve the safety or security of the Project or its occupants, (B) which are replacements or modifications of nonstructural items located in the Common Areas required to keep the Common Areas in good order or condition, or (C) that are required under any governmental law or regulation (collectively, " Permitted Capital Items "); provided, however, that any capital expenditure shall be amortized (including interest on the amortized cost at the rate of seven percent (7%)) over (X) its reasonable useful life as Landlord shall reasonably determine in accordance with sound real estate management and accounting practices, consistently applied, or (Y) 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, consistently applied; and (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, and (xv) payments under any Underlying Documents (as that term is defined in Section 5.5 below). Notwithstanding the foregoing, for purposes of this Lease, Operating Expenses shall not, however, include:
(a) costs, including construction costs, permit, license and inspection costs, legal fees, space planners' fees, advertising, marketing and promotional expenses (except as otherwise expressly set forth above) and leasing commissions, and brokerage fees incurred in connection with the original construction or development, or original or future leasing of the Project, and costs, including permit, license and inspection costs, incurred with respect to the installation of improvements made for tenants or other occupants occupying space in the Project or incurred in renovating or otherwise improving, decorating, painting or redecorating 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 expressly set forth in items (xii), (xiii), and (xiv) above, depreciation, interest and principal payments on mortgages or any other debt instruments and any other debt costs, if any, penalties, late fees, and interest, costs of capital repairs and alterations, and costs of capital improvements and equipment;
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(c) costs for which the Landlord is reimbursed , or would have been reimbursed if Landlord had carried the insurance Landlord is required to carry pursuant to this Lease or would have been reimbursed if Landlord had used commercially reasonable efforts to collect such amounts, from any tenant or occupant of the Project or by insurance from its carrier or any tenant's carrier or by anyone else;
(d) any bad debt loss, rent loss, or reserves for bad debts or rent loss, or reserves of any kind;
(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;
(f) the wages and benefits (including fringe 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 Project supervising manager or general manager; or Project supervising engineer
(g) amount paid as ground rental for the Project by the Landlord;
(h) except for a Project management fee (subject to item (o) below), overhead and profit increment paid to Landlord or to subsidiaries or affiliates of the Landlord for services or utilities in the Project to the extent the same exceeds the costs of such services rendered by qualified, unaffiliated third parties on a competitive basis (provided that Landlord shall have the right to include in Operating Expenses service or utility charges paid to affiliates or subsidiaries of Landlord, provided that such costs do not exceed market costs or rates for services or utilities);
(i) all costs of commercial concessions (other than parking) operated by or on behalf of the Landlord, including without limitation rent, operating costs, utility costs and any compensation paid to clerks, attendants or other persons in connection with such concessions;
(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 to the Common Areas 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 Landlord provides selectively to one or more tenants (other than Tenant) without reimbursement;
(l) any costs expressly excluded from Operating Expenses elsewhere in this Lease;
(m) 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 in the vicinity of the Buildings, with adjustment where appropriate for the size of the applicable project;
(n) costs, other than those incurred in ordinary insurance, maintenance and repair, for sculpture, paintings, fountains or other objects of art;
(o) any management fee for the management of the Project which exceeds two percent (2%) of the sum of Tenant's annual Base Rent obligations fully grossed up and adjusted to reflect a one hundred percent (100%) occupancy of the Project with all tenants paying full rent, as contrasted with free rent, half-rent and the like;
(p) costs for repairs and/or replacements to the extent arising from the negligence or willful misconduct of Landlord, its affiliates or employees;
(q) costs (including fines, penalties and late fees) incurred to correct violations of Applicable Laws, which violations are Landlord's obligation to correct pursuant to Article 24 below;
(r) electric power costs and other utility costs for which any tenant directly contracts with a public service company;
(s) tax penalties or other similar costs that are expressly excluded from Tax Expenses;
(t) any above Building standard cleaning, including, but not limited to construction cleanup or special cleanings associated with parties/events;
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(u) the cost of any training or incentive programs, other than for tenant life safety information services ;
(v) costs of correcting defects in any portion of the Project, or the equipment used therein and the replacement of defective equipment, except that conditions resulting from ordinary wear and tear will not be deemed defects for the purpose of this category;
(w) brokerage commissions, attorneys' and accountants' fees related thereto, loan brokerage fees, closing costs, interest charges and other similar costs incurred in connection with the sale, refinancing, mortgaging, or selling, or change of ownership of the Project;
(x) costs of repairs or other work occasioned by fire, windstorm, or other casualty, whether or not Landlord carries such insurance (except for any commercially reasonable insurance deductible which such deductibles shall be included in the definition of Operating Expenses);
(y) repairs or other work paid for through condemnation proceeds;
(z) all costs incurred by Landlord in connection with any dispute relating to the Landlord’s title to or ownership of the Project or any portion thereof;
(aa) contributions to political or charitable organizations;
(bb) expenses and costs relating in any way whatsoever to the identification, testing, monitoring and control, encapsulation, removal, remediation, replacement, repair, or abatement of any Hazardous Materials or mold within the Building or Project (to the extent the same is defined as Hazardous Materials under Applicable Law) and the cost of Pollution Legal Liability Environmental insurance;
(cc) the costs of any "tenant relations" parties, events or promotions;
(dd) costs and expenses of providing HVAC service to other tenant spaces in the Building during non-Building Hours;
(ee) all items and services for which Tenant or any other tenant in the Project reimburses Landlord or which Landlord provides selectively to one or more tenants (other than Tenant) without reimbursement;
(ff) advertising or promotional expenditures and the costs of acquiring and installing signs in or on any of the Building identifying the owner of the Building or any other tenant or occupant of the Building;
(gg) except as expressly set forth in Section 4.2.3 above, costs of any mitigation fees, impact fees, subsidies, tap-in fees, connection fees or similar one-time charges or costs (however characterized), imposed as a condition of or in connection with the development of the Project or Building or any expansion thereof, though any such costs related to the Tenant Improvements shall be Tenant’s sole responsibility; and
(hh) costs relating to the repair or replacement of structural portions of the roof, foundations, floors and exterior walls and all structural seismic upgrading costs.
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 at least one hundred percent (100%) occupied during all or a portion of any Expense Year, Landlord shall make an appropriate adjustment to the variable components of Operating Expenses for such year to determine the amount of Operating Expenses that would have been incurred had the Project been one hundred percent (100%) occupied; and the amount so determined shall be deemed to have been the amount of Operating Expenses for such year. For purposes of this subsection, variable components include only those component expenses that are affected by variations in occupancy levels. Except for the management fee (subject to item (o) 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 variable 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.
4.2.5 Taxes .
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 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.
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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 tax or assessment levied in connection with Caltrain or any similar transportation system; (iv) 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; and (v) 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. All assessments that can be paid by Landlord in installments, shall be paid by Landlord in the maximum number of installments permitted by Applicable Law.
4.2.5.3 Any costs and expenses (including, without limitation, reasonable attorneys' and consultants' 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. Tax refunds 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 Additional Rent under this Article 4 for such Expense Year. Notwithstanding anything to the contrary set forth in this Lease, except as set forth in Section 4.2.5.4 below, (a) 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, and (b) Landlord shall not be obligated to file any application or institute any proceeding seeking a reduction in Tax Expenses. 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 upon demand Tenant's Share of any such increased Tax Expenses. Notwithstanding anything to the contrary contained in this Section 4.2.5 , 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, federal and state income taxes, corporate, capital stock or capital gains taxes, documentary transfer taxes, penalties incurred as a result of Landlord's failure to timely pay taxes or to file any tax or informational returns, 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, and (iii) any items paid by Tenant under Section 4.5 of this Lease.
4.2.5.4 So long as Tenant is leasing the entire initial Premises, Tenant may request from Landlord whether or not Landlord intends to file an appeal of any portion of Tax Expenses which are appealable by Landlord (the " Appealable Tax Expenses ") for any tax fiscal year. Landlord shall deliver written notice to Tenant within ten (10) days after such request indicating whether Landlord intends to file an appeal of Appealable Tax Expenses for such tax fiscal year. If Landlord indicates that Landlord will not file an appeal of such Tax Expenses, then Tenant may provide Landlord with written notice (" Appeals Notice ") at least thirty (30) days prior to the final date in which an appeal must be filed, requesting that Landlord file an appeal. Upon receipt of the Appeals Notice, but subject to the terms and conditions of this Section 4.2.5.4 below, Landlord shall promptly file such appeal and thereafter Landlord shall diligently prosecute such appeal to completion. Tenant may at any time in its sole discretion direct Landlord to terminate an appeal it previously elected pursuant to an Appeals Notice. In the event Tenant provides an Appeals Notice to Landlord and the resulting appeal reduces the Tax Expenses for the tax fiscal year in question as compared to the original bill received for such tax fiscal year and such reduction is greater than the costs for such appeal, then the costs for such appeal shall be included in Tax Expenses and passed through to the tenants of the Building when funds are actually received. Alternatively, if the appeal does not result in a reduction of Tax Expenses for such tax fiscal year or if the reduction of Tax Expenses is less than the costs of the appeal, then Tenant shall reimburse Landlord, within thirty (30) days after written demand, for any and all costs reasonably incurred by Landlord which are not covered by the reduction in connection with such appeal. Tenant's failure to timely deliver an Appeals Notice shall waive Tenant's rights to request an appeal of the applicable Tax Expenses for such tax fiscal year. In addition, Tenant's obligations to reimburse Landlord for the costs of the appeal pursuant to this Section shall survive the expiration or earlier termination of this Lease in the event the appeal is not concluded until after the expiration or earlier termination of this Lease. Upon request, Landlord agrees to keep Tenant apprised of all tax protest filings and proceedings undertaken by Landlord to obtain a reduction or refund of Tax Expenses.
4.3 Allocation of Direct Expenses
4.3.1 Method of Allocation . The parties acknowledge that the Buildings are part of a multi-building project and that the Direct Expenses should be shared on a reasonable and logical basis between Tenant as tenant of the Buildings and the tenants of the other buildings in the Project. In addition, the Project will be constructed in phases, with certain costs and expenses incurred in connection with a particular phase that should be shared exclusively amongst tenants of a particular phase. 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 portions of the Direct Expenses, which portions shall be determined by Landlord on an equitable and consistent basis, shall be allocated to Tenant as tenant of the Buildings (as opposed to the tenants of any other
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buildings in the Project) and such portion s shall be the Direct Expenses for purposes of this Lease. Such portion of Direct Expenses allocated to Tenant as tenant of the Buildings shall include all Direct Expenses attributable solely to the Buildings , an equitable portion of the Direct Expenses attributable to any phase or phases in which the Premises is located and an equitable portion of the Direct Expenses attributable to the Project as a whole. For purposes of allocating Direct Expenses during the Lease Term , those Direct Expenses not reasonably attributable exclusively to the Buildings shall be allocated on a rentable area basis, except where otherwise dictated by prudent commercial property management and accounting practices or to achieve an equitable and customary allocation of Direct Expenses , provided that, in either case, such method of allocation is consistent with standard industry practice and Landlord does not discriminate against Tenant in connection with the determination of the method of allocation . Any costs that are exclusively attributable to a particular building or phase within the Project which does not include a portion of the Premises shall be excluded from the definition of Direct Expenses for purposes of this Lease .
4.3.2 Cost Pools . As set forth in Section 4.3.1 above, 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 "). Such Cost Pools may include, but shall not be limited to, the office space tenants, the hotel operator(s) or owner(s), and the retail space tenants of a portion of the Project, and such allocations may be implemented to reflect that certain services or amenities are not provided to certain types of space or certain types of tenants, operators or owners of a portion of the Project (including use of the amenities building), in which event Tenant's Share of Direct Expenses related to such services or amenities may be equitably adjusted to reflect the space to which such services or amenities are generally provided or attributable (for example, Direct Expenses attributable to the amenities building shall be allocated to only tenants with access to and use of the amenities building). The Direct Expenses within each such Cost Pool shall be allocated and charged to the tenants within such Cost Pool in an equitable manner, and if applicable, shall be allocated based on the rentable area of the space subject to the Cost Pool compared to the total rentable area of the Building or Project, as applicable. Any costs allocated to a Cost Pool which does not include a portion of the Premises (e.g., the hotel Cost Pool) shall be excluded from the definition of Direct Expenses for purposes of this Lease.
4.4 Calculation and Payment of Additional Rent . Tenant shall pay to Landlord, in the manner set forth in Section 4.4.1 , below, and as Additional Rent, an amount equal to Tenant's Share of Direct Expenses for each Expense Year.
4.4.1 Statement of Actual Direct Expenses and Payment by Tenant . Landlord shall give to Tenant within forty-five (45) days following the end of each Expense Year, a statement (the " Statement ") which shall state, in general major categories, the Direct Expenses incurred or accrued, as applicable, for such preceding Expense Year, and which shall indicate the amount of Tenant's Share of Direct Expenses. Upon request from Tenant, Landlord shall provide reasonably detailed information and documentation with respect to any of the general major categories and any particular expenses identified in the Statement. Upon receipt of the Statement for each Expense Year commencing or ending during the Lease Term. Tenant shall pay, within thirty (30) days after receipt of the Statement, the full amount of Tenant's Share of Direct Expenses for such Expense Year, less the amounts, if any, paid by Tenant during such Expense Year as "Estimated Direct Expenses," as that term is defined in Section 4.4.2 , below, and if Tenant paid more as Estimated Direct Expenses than the actual Tenant's Share of Direct Expenses, Tenant shall receive a credit in the amount of Tenant's overpayment against Rent next due under this Lease, or if the amount of such credit exceeds the amount of Rent due for the remainder of the Lease Term, then Landlord shall, within thirty (30) days, deliver a check payable to Tenant in the amount of such excess. 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 (provided that in the event that such failure continues for a period of four (4) months following receipt of notice from Tenant, Tenant may elect to seek specific performance). Even though the Lease Term has expired and Tenant has vacated the Premises, when the final determination is made of Tenant's Share of Direct Expenses for the Expense Year in which this Lease terminates, Tenant shall within thirty (30) days after receipt of the Statement, pay to Landlord Tenant's Share of Direct Expenses less any amounts paid by Tenant as Estimated Direct Expenses for such Expense Year, and if Tenant paid more as Estimated Direct Expenses than the actual Tenant's Share of Direct Expenses, Landlord shall, within thirty (30) days, deliver a check payable to Tenant in the amount of the overpayment. 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 eighteen (18) months after the earlier of the expiration of the applicable Expense Year or the Lease Expiration Date, except that Tenant shall be responsible for Tenant's Share of Direct Expenses attributable to any Expense Year (x) that were levied by any governmental authority or by any public utility companies, (y) for which Landlord had not previously received an invoice, and (z) are currently due and owing at any time following the applicable Expense Year, provided that Landlord delivers Tenant a bill for such amounts within six (6) months following Landlord's receipt of the bill therefor.
4.4.2 Statement of Estimated Direct Expenses . In addition, Landlord shall endeavor to 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 Tenant's Share of Direct Expenses (the " Estimated Direct Expenses "). Upon request from Tenant, Landlord shall provide reasonably detailed information and documentation with respect to any of the general major categories and/or particular expenses related to such categories. 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 Estimated Direct Expenses under this Article 4 (provided that in the event that such failure continues for a period of four (4) months following receipt of notice from Tenant, Tenant may elect to seek specific performance), nor shall Landlord be prohibited from revising any Estimate Statement or Estimated Direct Expenses theretofore delivered to the extent necessary; provided, however, any such subsequent revision shall set forth on a reasonably specific basis any particular expense increase. Thereafter, Tenant shall pay, with its
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next installment of Base Rent due (but not sooner than thirty (30) days after receipt of the Estimate Statement) , a fraction of the Estimated Direct Expenses for the then-current Expense Year (reduced by any amounts paid pursuant to the 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 Direct Expenses set forth in the previous Estimate Statement delivered by Landlord to Tenant.
4.4.3 Refund of Overpayment of Excess . If the Statement shows that the Direct Expenses for any Expense Year ending or beginning within the Lease Term is less than the Estimated Direct Expenses actually paid by Tenant for that Expense Year, Landlord shall credit Tenant's next payment of Base Rent and Estimated Direct Expenses with the amount by which Tenant's payments of Estimated Direct Expenses exceed the actual Direct Expenses due for that Expense Year. If that Statement is provided to Tenant after the end of the Lease Term, Landlord shall include with the Statement a refund of the amount by which Tenant's payments of Estimated Direct Expenses exceed the actual Tenant's Share of Direct Expenses due for that Expense Year.
4.4.4 Controllable Expenses . Further, notwithstanding the foregoing, in no event shall Controllable Operating Expenses, as that term is defined below, for any Expense Year following the Expense Year that commences on January 1st of the second (2nd) full calendar year following the Lease Commencement Date (the " Measuring Expense Year ") increase by more than five percent (5%) per Expense Year on a cumulative, compounded basis; for example, the maximum amount of Controllable Operating Expenses that may be included in the calculation of such Operating Expenses for each calendar year after the Measuring Expense Year shall equal the product of the Controllable Operating Expenses and the following percentages for the following calendar years: 105% for the first year following the Measuring Expense Year; 110.25% for the second year following the Measuring Expense Year; 115.76% for the third year following the Measuring Expense Year; 121.55% for the fourth year following the Measuring Expense Year; etc. However, any increases in Operating Expenses not recovered by Landlord due to the foregoing limitation shall be carried forward into succeeding calendar years during the Lease Term (subject to the foregoing limitation) to the extent necessary until fully recouped by Landlord. Upon the commencement of each Option Term, the Measuring Expense Year shall be reset to be the Expense Year that commences on January 1 st of the Expense Year following the Expense Year in which such Option Term commences. As used herein " Controllable Operating Expenses " shall mean all Operating Expenses, excluding the following: (i) utility charges, (ii) the cost of union labor, including payroll and benefits, which shall include labor which is not union as of the Effective Date, but which unionizes after the Lease, (iii) market-wide labor-rate increases due to extraordinary circumstances, including without limitation, boycotts and strikes, (iv) costs incurred due to an event of "Force Majeure," as that term is defined in Section 29.16 of this Lease and other extraordinary weather-related costs (such as those resulting from infestation, storms, drought and other severe weather), (v) Landlord's insurance costs and deductibles thereunder, (vi) costs relating to compliance with governmentally mandated transportation management programs, (vii) costs relating to the operation of the Shuttle Service (as that term is defined in Section 29.34 below), (viii) costs incurred to comply with governmental requirements and Applicable Laws, (ix) amortized costs of capital expenditures, (x) any costs incurred specifically at the request of Tenant and not expressly required to be incurred by Landlord pursuant to this Lease, (xi) Tax Expenses, and (xii) any other costs that are not reasonably within Landlord's control.
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, subject, however, to Tenant's right to contest any such taxes. 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 upon 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 tenant 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 tenant improvements conforming to the "Building Standard Amount" 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. Solely for the purpose of determining Tax Expenses in this Section 4.5.2 , Landlord and Tenant agree that the value of building standard improvements is $82.50 per rentable square foot (the " Building Standard Amount "). To the extent that Landlord enforces the terms of this Section 4.5.2 against Tenant, then Landlord shall not include in Tax Expenses, taxes assessed against any other tenant improvements in the Project to the extent such taxes relate to the value of such tenant improvements in excess of the Building Standard Amount.
4.5.3 Notwithstanding any contrary provision herein, Tenant shall pay prior to delinquency any (i) rent tax or sales 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 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 facilities; 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, subject, however, in each case to Tenant's right to contest any such taxes.
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4.6 Landlord ' s Records . Throughout the Lease Term, Landlord shall maintain books and records with respect to Direct Expenses in accordance with generally accepted real estate accounting and management practices, consistently applied. Landlord shall maintain for a period of at least three (3) years following the end of the Expense Year to which they pertain, the books and records relating to all Direct Expenses for such Expense Year. Within one (1) year after receipt of a Statement by Tenant (the " Audit Period " ), if Tenant disputes the amount of Direct Expenses 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, and (B) 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 ) , designated and paid for by Tenant , may, after reasonable notice to Landlord and at reasonable times, audit Landlord ' s records with respect to the Statement at Landlord ' s corporate offices in the Comparable Area (as that term is defined in Exhibit F attached hereto) , provided that ( i ) Tenant is not then in monetary or material non-monetary default under this Lease (beyond the applicable notice and cure periods provided under this Lease ), and ( ii ) Tenant has paid all amounts required t o be paid under the applicable Estimate Statement and Statement (but Tenant shall be deemed to have paid the same "under protest") . In connection with such audit, Tenant and Tenant ' s certified public accounting firm 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 Direct Expenses 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 ; provided, however, if Landlord revises a Statement after delivering the same to Tenant , then Tenant shall continue to have the right to dispute such revisions for a period of one hundred eighty (180) days after Landlord delivers such revised Statement to Tenant . If after such audit, Tenant still disputes such Direct Expenses , 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 Direct Expenses set forth in the particular Statement were overstated by more than three percent ( 3 %), 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 inspect such books and records and/or to contest the amount of Direct Expenses payable by Tenant .
5.1 Office Permitted Use . Tenant shall use the Building 3 Premises and Building 4 Premises solely for the Office Permitted Use set forth in Section 6.1 of the Summary and Tenant shall not use or permit the Building 3 Premises, Building 4 Premises or the Project to be used 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. Tenant may operate its business according to prudent industry practices so long as the use or presence of Hazardous Materials is in accordance with the terms and condition set forth in this Article 5 and is otherwise strictly and properly monitored according to, and in compliance with, all then applicable Environmental Laws. Tenant shall comply with all Underlying Documents.
5.2 Amenities Permitted Use . Tenant shall use the Building A2 Premises solely for the Amenities Permitted Use set forth in Section 6.2 of the Summary, and in accordance with this Section 5.2 , and Tenant shall not use or permit the Building A2 Premises to be used 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.
5.2.1 Cafeteria . To the extent permitted by Applicable Laws and Code, Tenant, at Tenant's sole cost and expense, may use a portion of the Building A2 Premises for the operation of a cafeteria (the " Cafeteria "), for the exclusive use of Tenant's employees and guests (collectively, the " Cafeteria Users ") in an area of the Building A2 Premises reasonably designated by Landlord in consultation with Tenant. No cooking odors shall be emitted from the Building A2 Premises other than through ventilation equipment and systems installed therein to service the Cafeteria in accordance with the provisions of this Section 5.2.1 . The Cafeteria shall be of a size permitted by Applicable Laws. Tenant's obligations under this Section 5.2.1 are cumulative and in addition to all other obligations of Tenant under this Lease.
5.2.2 Fitness Center . To the extent permitted by Applicable Laws and Code, Tenant may use a portion of the Building A2 Premises for the operation of a fitness center (the " Fitness Center ") which may include, without limitation, the following primary uses: weight and aerobic training, personal training, group training, aerobics, free weights, and treadmills, stationary bicycles, elliptical machines, and stair-climbing machines, and shall in no event include installation or operation of a swimming pool, sauna or whirlpool facilities. The Fitness Center shall be for the exclusive use of Tenant's and its subtenant's employees and guests (collectively, the " Fitness Center Users ") and Tenant shall not make the Fitness Center available to other tenants or occupants of the Project (or their employees) or to members of the general public. The Fitness Center shall be of a size permitted by Applicable Laws and Code. Tenant's obligations under this Section 5.2.2 are cumulative and in addition to all other obligations of Tenant under this Lease.
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5.2.3 Ge neral Terms Applicable to Cafeteria and Fitness Center .
5.2.3.1 Third Party Operator . Tenant may exercise the right to operate a Cafeteria and/or Fitness Center through retention of a third party operator or operators to operate the Cafeteria and/or the Fitness Center (a " Third Party Operator "); provided that the Third Party Operator must comply with, all of the terms, covenants, conditions and obligations on Tenant's part to be observed and performed under this Lease (other than Tenant's obligation to pay Base Rent or Direct Expenses under this Lease), including the requirement to obtain insurance in the requisite amounts and to indemnify, defend and hold Landlord harmless from and against any loss or other liabilities resulting from the use and operations contemplated by Sections 5.2.1 and 5.2.2 above. Any violation of any provision of this Lease by the Third Party Operator shall be deemed to be a default by Tenant under such provision. Third Party Operator shall have no recourse against Landlord whatsoever on account of any failure by Landlord to perform any of its obligations under this Lease or on account of any other matter, provided that the foregoing shall in no way be deemed to limit Tenant’s ability to pursue Landlord on behalf of a Third Party Operator on account of any failure by Landlord to perform any of its obligations under this Lease. All notices required of Landlord under this Lease shall be forwarded only to Tenant in accordance with the terms of this Lease and in no event shall Landlord be required to send any notices to any Third Party Operator. In no event shall any use or occupancy of any portion of the Building A2 Premises by the Third Party Operator release or relieve Tenant from any of its obligations under this Lease. The Third Party Operator shall be a Tenant Party, and Tenant shall be fully and primarily liable for all acts and omissions of such Third Party Operator as fully and completely as if such Third Party Operator was an employee of Tenant. In no event shall the occupancy of any portion of the Building A2 Premises by any Third Party Operator be deemed to create a landlord/tenant relationship between Landlord and such Third Party Operator or be deemed to vest in Third Party Operator any right or interest in the Building A2 Premises or this Lease, and, in all instances, Tenant shall be considered the sole tenant under the Lease notwithstanding the occupancy of any portion of the Building A2 Premises by any Third Party Operator. Upon request from Landlord, Tenant shall provide to Landlord a copy of any agreement between Tenant and the Third Party Operator and the insurance required to be maintained by the Third Party Operator prior to the Third Party Operator being allowed access to the Building A2 Premises by Tenant. Any equipment or other property of the Third Party Operator in the Project shall be subject to Section 8.5 and Article 15 of this Lease. However, nothing in this Section 5.2 shall diminish Landlord's rights elsewhere in this Lease or imply that Landlord has any duties to the Third Party Operator. No disputes between Tenant and the Third Party Operator shall in any way affect the obligations of Tenant hereunder.
5.2.3.2 Licensing; Permits and Operation . Tenant shall construct the Cafeteria and/or Fitness Center, if at all, as part of the Improvements or as an Alteration. If Tenant elects to operate the Cafeteria and/or Fitness Center, Tenant shall give Landlord prior notice thereof and shall submit to Landlord (i) construction ready plans and specifications for the Cafeteria and/or Fitness Center for Landlord's review and approval (including, any cooking, ventilation, air conditioning, grease traps, kitchen and other equipment in or for the Building A2 Premises with respect to the Cafeteria) (such submission, review and approval shall be governed by the Tenant Work Letter and this Section 5.2 ), and (ii) all necessary consents, approvals, permits or registrations, required for the construction and operation of the Cafeteria and/or Fitness Center in accordance with Applicable Laws and Code. If approved by Landlord, the Cafeteria and/or Fitness Center shall be installed and constructed in accordance with the Tenant Work Letter or Article 8 (as applicable), and this Section 5.2 . In addition, Landlord, in its reasonable discretion, may require the installation of emergency drainage and leak detection water sensors in connection with the installation of any shower facilities in the Fitness Center, at Tenant's sole cost and expense (or as a deduction from the Tenant Improvement Allowance, if installed as part of the Improvements). In connection with the construction of the Fitness Center, Tenant shall also install any structural floor reinforcement and noise/vibration dampening measures reasonably required by Landlord. The Cafeteria and/or Fitness Center shall be maintained and operated by Tenant, at Tenant's expense: (a) consistent with the character of Building A2 ; and (b) in compliance with all Applicable Laws and Code, such reasonable rules and regulations as may be adopted in writing by Landlord from time to time and provided by written notice to Tenant, and the other provisions of this Lease.
5.2.3.3 Waivers . Tenant or the Third Party Operator of the Cafeteria and/or Fitness Center shall endeavor to obtain written waivers on commercially reasonable forms reasonably satisfactory to Landlord from all Cafeteria Users and Fitness Center Users agreeing and acknowledging that Landlord is not responsible for, nor affiliated with, the operation of the Cafeteria and/or Fitness Center and that Landlord and the other Landlord Parties shall have no responsibility with respect to, and are hereby released from any cost, loss, damage or claim arising from or relating to the quality, care or services provided by the Cafeteria and/or Fitness Center, or for any acts or omissions of any Third Party Operator in connection with the operation of the Cafeteria and/or Fitness Center, or otherwise arising from the use of the use of the Cafeteria by any Cafeteria Users or the use of the Fitness Center by any Fitness Center Users.
5.2.3.4 Personal Rights . The right to operate the Cafeteria and/or Fitness Center in the Building A2 Premises pursuant to the terms and conditions of Sections 5.2.1 and 5.2.2 above is personal to (A) the Original Tenant, (B) any assignee of Tenant's interest in this Lease, (C) any Transferee subleasing more than fifty percent (50%) of the Premises, and (D) any Third Party Operator.
5.3 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, unless Landlord has agreed to permit such uses within other portions of the office component of the Project; (ii) offices or agencies of any foreign governmental or political subdivision thereof, unless Landlord has agreed to permit such uses within other portions of the office component of the Project; (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; and (vi) uses prohibited under the
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Underlying Documents . Tenant's use shall not result in an occupancy density for the Premises which is greater than the density permitted by A pplicable Laws and zoning requirements, and further provided that Landlord shall not be obligated to make any changes to the Base Building or Common Areas to accommodate Tenant's occupancy density . Tenant further covenants and agrees that it shall not use, or suffer or permit any person or persons to use, the Premises or any part thereof for any use or purpose contrary to the rules and regulations attached to this Lease as Exhibit D (" Rules and Regulations "), 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 unreasonably interfere with the normal and customary conduct of Tenant's business. In the event of any conflict between the Rules and Regulations and the other provisions of this Lease, the other provisions of this Lease shall control. Tenant shall not do or permit anything to be done in or about the Premises which will in any material way obstruct or interfere with the rights of other tenants or occupants of the Project, 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.
5.4 Hazardous Materials . Tenant shall comply with the terms specific to Hazardous Materials set forth on Exhibit G attached hereto and complete Landlord's Pre-Leasing Environmental Exposure Questionnaire (the " Environmental Questionnaire "), which is attached as Schedule 1 to Exhibit G .
5.5 Underlying Documents . Tenant shall comply with all existing easements, licenses, operating agreements, declarations, restrictive covenants, and instruments pertaining to the sharing of costs by the Buildings, including, without limitation, any covenants, conditions and restrictions affecting the property, and reciprocal easement agreements affecting the property, any parking licenses or agreements, and any agreements with transit agencies affecting the Project (collectively, " Existing Underlying Documents ") and specifically including, without limitation, the Covenant to Restrict Use of Property Environmental Restriction recorded in the Official Records of the County of Santa Clara as Document No. 16119710 on or about February 21, 2002, and the Covenant to Restrict Use of Property Environmental Restriction recorded in the Official Records of the County of Santa Clara as Document No. 19451014 on or about May 31, 2007 (collectively, the " Existing CC&Rs "). Additionally, Tenant acknowledges that the Project may be subject to any future easements, licenses, operating agreements, declarations, restrictive covenants, and instruments pertaining to the sharing of costs by the Buildings, including, without limitation, any covenants, conditions and restrictions affecting the property, and reciprocal easement agreements affecting the property, any parking licenses or agreements, and any agreements with transit agencies affecting the Project (collectively, the " Future Underlying Documents ", and together with the Existing Underlying Documents, the " Underlying Documents ") which Landlord, in Landlord's discretion, deems reasonably necessary or desirable, and Tenant agrees that this Lease shall be subject and subordinate to such Future Underlying Documents; provided that such Future Underlying Documents shall not violate clauses (a) through (e) of Section 1.1.3 above, without prior written consent of Tenant, which may be given or withheld in Tenant's reasonable discretion. 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 Restrictions," in a form substantially similar to that attached hereto as Exhibit J , agreeing to and acknowledging the Future Underlying Documents.
5.6 Ground Lease . The Project is encumbered by that certain Ground Lease dated as of approximately an even date herewith (the " Ground Lease "), by and between Landlord, as ground lessee, and CAP Phase 1, LLC, as ground lessor (the " Ground Landlord "). Additionally, Tenant acknowledges that the Project may be subject to any ground lease and/or modification or amendment to the existing Ground Lease (collectively, the " Future Ground Lease ") which Landlord, in Landlord's discretion, deems reasonably necessary or desirable, and Tenant agrees that this Lease shall be subject and subordinate to such Future Ground Lease; provided that such Future Ground Lease shall not violate clauses (a) through (e) of Section 1.1.3 above, without prior written consent of Tenant, which may be given or withheld in Tenant's reasonable discretion. Concurrently with the execution of this Lease by Tenant and Landlord, Landlord shall provide to Tenant the Nondisturbance Agreement in Exhibit H-1 attached hereto executed and notarized by the Ground Landlord. As of the date hereof, Wells Fargo Bank, N.A. (the " Existing Lender "), has a deed of trust against the land that is the subject of the Ground Lease (the " Existing Loan "). Landlord has caused (or shall cause concurrently with the full execution and delivery of this Lease), the Existing Lender to subordinate the Existing Loan to the Ground Lease and to agree to accept the Ground Lease and not disturb Landlord's tenancy under the Ground Lease.
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 limitations imposed by all governmental rules, regulations and guidelines applicable thereto, Landlord shall provide heating and air conditioning (" HVAC ") as appropriate, from the Building Systems (the " BB HVAC System ") for normal office use in the Building 3 Premises and Building 4 Premises, and for the appropriate use applicable to the Building A2 Premises, at such temperatures and in such amounts as are standard for Comparable Buildings with comparable densities and heat loads in the vicinity of the Buildings (not to exceed the HVAC system's capacity) during any hours specified by Tenant. Tenant shall cooperate fully with Landlord at all times and abide by all regulations and requirements that Landlord may reasonably prescribe in writing for the proper functioning and protection of the BB HVAC System.
6.1.1.1 Supplemental HVAC . As a part of the Tenant Improvements and subject to the terms of the Tenant Work Letter, Tenant, at its sole expense (or as a deduction from the Tenant Improvement Allowance), may install supplemental HVAC units in the Premises for the purpose of providing supplemental air-
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conditioning to the Premises (the " Tenant HVAC System "). All aspects of the Tenant HVAC System (including, but not limited to, any connection to the Building's chilled or condenser water system) shall be subject to Landlord's prior written approval, in accordance with Article 8 below or the Tenant Work Letter (as applicable) . Tenant may not connect into the Building's chilled or condenser water system without Landlord’s prior written consent . Tenant shall be permitted, at Tenant's sole cost and expense, to access 277/480 volts of electricity (subject to availability) from the existing bus duct riser in connection with the Tenant HVAC System. At Landlord's election prior to the expiration or earlier termination of this Lease, Tenant shall leave the Tenant HVAC System in the Premises upon the expiration or earlier termination of this Lease, in which event the Tenant HVAC System shall be surrendered with the Premises upon the expiration or earlier termination of this Lease, and Tenant shall thereafter have no further rights with respect thereto. In the event that Landlord fails to elect to have the Tenant HVAC System left in the Premises upon the expiration or earlier termination of this Lease, then Tenant shall remove the Tenant HVAC System upon the expiration or earlier termination of this Lease, and repair all damage to the Buildings resulting from such removal, at Tenant's sole cost and expense. Tenant shall be solely responsible, at Tenant's sole cost and expense, for the monitoring, operation, repair, replacement, and removal (subject to the foregoing terms of this Section 6. 1.1.2 ), of the Tenant HVAC System, and in no event shall the Tenant HVAC System interfere with Landlord's operation of the Buildings . Any reimbursements owing by Tenant to Landlord pursuant to this Section 6. 1.1.2 shall be payable by Tenant within five ( 5 ) business days of Tenant's receipt of an invoice therefor.
6.1.2 Electricity . Notwithstanding any provision to the contrary contained in this Lease, Tenant shall pay the cost of all electricity provided to and/or consumed in the Premises (including normal and excess consumption and including the cost of electricity to operate the HVAC air handlers) directly to Landlord within thirty (30) days after written notice and as Additional Rent under this Lease (and not as part of Operating Expenses). Landlord shall designate the electricity utility provider from time to time. Tenant shall bear the cost of replacement of lamps, starters and ballasts for non-Building standard lighting fixtures within the Premises. Tenant's use of electricity shall never exceed the capacity of the feeders to the Project or the risers or wiring installation, and subject to the terms of Section 29.29 , below, Tenant shall not install or use or permit the installation or use of any computer or electronic data processing equipment in the Premises, without the prior written consent of Landlord, except for reasonable quantities of desktop computers and other typical desktop equipment. Landlord shall provide electrical panels at each floor of the Premises, which panels Tenant may use for lighting and incidental equipment use.
6.1.3 Water . Landlord shall provide city water from the regular Building outlets for drinking, lavatory and toilet purposes in the Common Areas.
6.1.4 Janitorial . Landlord shall not provide janitorial services for the Premises. Tenant shall perform all janitorial services and other cleaning within the Premises in a standard consistent with janitorial services provided in Comparable Buildings, including without limitation, day porter service (including light bulb maintenance and restroom fixtures maintenance), interior window cleaning, cleaning supplies deliveries and stocking, restroom cleaning, other cleaning (including pressure washing, carpet cleaning, etc.), waste and trash removal, and exterminating and pest control. Without Landlord's prior consent, Tenant shall not use (and upon notice from Landlord shall cease using) janitorial service providers who would, in Landlord's reasonable and good faith judgment, disturb labor harmony with the workforce or trades engaged in performing other work, labor or services in or about the Project.
6.1.5 Elevators . Landlord shall provide nonexclusive, non-attended automatic passenger elevator service.
6.1.6 Cooperation . 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, provided Tenant is given written notice of the same and such regulations and requirements do not materially impair Tenant’s use of the Premises for the Permitted Use or Tenant’s other rights and privileges under this Lease. Landlord acknowledges Tenant's concern that Landlord be motivated to cause the Building Systems to function properly and provide services required to be provided under this Article 6 . Landlord agrees that, if Tenant so elects and appoints a property manager (the " Tenant Facility Coordinator "), Landlord shall permit the Tenant Facility Coordinator to review and consult with Landlord regarding the provision of services to the Premises and specific vendors and subcontractors providing services to the Building Systems serving the Premises. Landlord shall meet with the Tenant Facility Coordinator, upon request, but not more frequently than on a quarterly basis regarding such items.
6.1.7 Access Control; Tenant's Security System .
6.1.7.1 Landlord's Obligations . Landlord may, as part of Operating Expenses, provide on-site access control procedures and security services for the Common Areas and Parking Facilities. If Landlord provides such access control procedures and security services, notwithstanding anything to the contrary contained in this Lease, the "Landlord Parties," as that term is defined in Section 10.1 of this Lease, shall not be liable for, and the Landlord Parties are hereby released from any responsibility for any damage either to person or property sustained by Tenant incurred in connection with or arising from any acts or omissions of such access control personnel, or the Landlord Parties; provided, however, that Landlord shall remain liable for personal injury and/or property damage to the extent directly caused by the negligence or willful misconduct of Landlord's access control personnel or the Landlord Parties (but in any event Landlord shall not be liable hereunder for the acts or omissions of any third parties at the Project).
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6.1.7.2 Tenant's Obligations . Tenant hereby acknowledges that Landlord shall have no obligation to provide guard service or other security measures for the benefit of the Premises or Project . Any such security measures for the benefit of the Premises shall be provided by Tenant, at Tenant's sole cost and expense. Tenant shall hire security personnel (" Tenant's Security Personnel "); provided that (i) Tenant 's Security Personnel must not carry a firearm or other weapon , (ii) Tenant 's Security Person nel must reasonably cooperate with Landlord's security personnel and reasonable rules and regulations reasonably established in writing by Landlord and delivered by written notice to Tenant relating to security and access control for the Project , and (iii) the security contractor (if any) providing Tenant ' s Security Personnel to Tenant hereunder shall comply with Landlord ' s reasonable insurance requirements , and ( i v) any third party security contractor shall be subject to Landlord's approval, not to be unreasonably withheld, conditioned or delayed. Tenant shall provide Landlord written notice of the names of Tenant's Security Personnel prior to any of Tenant's Security Personnel performing sec urity services hereunder. In addition, (a ) Tenant's Security Personnel shall be licensed and bonded and shall at all times maintain any and all required licenses or other governmental permits required in connection with any weapons carried by Tenant's Security Personnel and/or the performance of its duties under this Lease and shall at all times conduct themselves in a manner consistent with a first class office building project , (b ) a commercially reasonable background check shall be performed on all of Tenant's Security Personnel , and (c) all of Tenant's Security Personnel shall be union labor and comply with the Applicable Laws and Code . Subject to the terms of this Lease, Tenant hereby assumes all responsibility for the protection of Tenant and its agents, employees, contractors, invitees and guests, and the property thereof, from acts of third parties, including keeping doors locked and other means of entry to the Premises closed.
6.1.7.3 Tenant's Security System in the Premises . Subject to the terms and conditions of this Lease (including Article 8 hereof), Tenant may, at its own expense, install, maintain, repair and replace from time to time, its own security system (" Tenant's Security System ") in the Premises. Tenant shall coordinate the selection, installation and operation of Tenant's Security System with Landlord, and Landlord likewise shall cooperate with Tenant, in order to ensure that Tenant's Security System is compatible with Landlord's Building security systems and equipment, and to the extent that Tenant's Security System is not compatible with the Building Systems, Tenant shall not be entitled to install and/or operate the Tenant's Security System. Tenant shall be solely responsible, at Tenant's sole cost and expense, for the installation, monitoring, operation and removal of Tenant's Security System. Tenant may coordinate Tenant's Security System to provide that the Building Systems and Tenant's Security System will operate on the same type of key card, so that Tenant's employees are able to use a single card for both systems, but shall not otherwise integrate Tenant's Security System with the Building Systems.
6.2 Overstandard Tenant Use . If Tenant uses heat-generating machines, machines other than normal fractional horsepower office machines, or equipment or lighting other than Building standard lights in the Premises, which may affect the temperature otherwise maintained by the air conditioning system or increase the water normally furnished for the Premises by Landlord pursuant to the terms of Section 6.1 of this Lease, and as a result of such use, Tenant uses water or HVAC in excess of that supplied by Landlord pursuant to Section 6.1 of this Lease, Tenant shall pay to Landlord, upon billing, the actual cost of such excess consumption, the cost of the installation, operation, and maintenance of equipment which is installed in order to supply such excess consumption, and the reasonable cost of the increased wear and tear on existing equipment caused by such excess consumption plus a reasonable administrative fee (but in no event duplicative of costs included in Operating Expenses) based on a percentage of such costs (as reimbursement for Landlord's costs to read the metering devices) and Landlord may install devices to separately meter any increased use and in such event Tenant shall pay the increased cost directly to Landlord, on demand, at the rates charged by the public utility company furnishing the same, including the cost of installing, testing and maintaining of such additional metering devices. If Tenant's density or machines or equipment (1) affects the temperature otherwise maintained by the air conditioning system or (2) otherwise overloads any utility, Landlord may install supplemental air conditioning units or other supplemental equipment in the Premises, and the cost thereof, including the cost of design, installation, operation, use, and maintenance, in each case, plus a standard reasonable administrative fee (but in no event duplicative of costs included in Operating Expenses), shall be paid by Tenant to Landlord within thirty (30) days after Landlord has delivered to Tenant an invoice therefor. Notwithstanding any provision to the contrary contained in this Lease, Tenant shall promptly pay to Landlord, a standard reasonable charge (but in no event duplicative of costs included in Operating Expenses) for any services provided to Tenant which Landlord is not specifically obligated to provide to Tenant pursuant to the terms of this Lease.
6.3 Interruption of Use . Tenant agrees that Landlord shall not be liable for damages, by abatement of Rent (except as set forth in Section 19.5.2 , below) 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 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, constitute a breach of any implied warranty, or relieve Tenant from paying Rent (except as set forth in Section 19.5.2 , below) or performing any of its obligations under this Lease. 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 . The foregoing terms of this Section 6.3 shall not limit Landlord's liability, if any, pursuant to Applicable Laws for property damage or personal injury arising from Landlord's negligence or willful misconduct.
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7.1 Landlord's Repair and Maintenance Obligations . Landlord shall maintain in good condition and operating order and keep in good repair and condition, in a manner consistent with the landlords of the Comparable Buildings, the structural portions of the Buildings, including, without limitation, the foundation, floor/ceiling slabs, roof, curtain wall, exterior glass and mullions, columns, beams, shafts (including elevator shafts), stairs, stairwells, elevator cab, men's and women's washrooms located in Common Areas (and excluding men's and women's washrooms on any full floors of the Premises and within any Building fully leased by Tenant), Building mechanical, electrical and telephone closets (collectively, " Building Structure "), the Base Building mechanical, electrical, life safety, plumbing, sprinkler systems and HVAC systems which were not constructed by Tenant Parties (collectively, the " Building Systems ") and the Project Common Areas, including, without limitation, the Project parking facilities and landscaping. Notwithstanding anything in this Lease to the contrary, Tenant shall be required to repair the Building Structure and/or the Building Systems to the extent caused due to Tenant's use of the Premises for other than Permitted Use with respect to Building 3 and Building 4, and normal and customary operations for the applicable amenity usage with respect to Building A2, unless and to the extent such damage is covered by Landlord's Warranty or is covered by insurance carried or required to be carried by Landlord pursuant to Article 10 and to which the waiver of subrogation is applicable (such obligation to the extent applicable to Tenant as qualified and conditioned will hereinafter be defined as the " BS/BS Exception "). The costs of performing Landlord's obligations under this Section 7.1 shall be included in Operating Expenses, but only to the extent permitted (and not excluded) by Section 4.2.4 above.
7.2 Tenant's Repair and Maintenance Obligations . Tenant shall, at Tenant's own expense, pursuant to the terms of this Lease, including without limitation Article 8 hereof, keep the Premises, including all improvements, fixtures, equipment, interior window coverings, and furnishings therein, and the floor or floors of the Buildings on which the Premises is located, in good order, repair and condition (subject to reasonable wear and tear) at all times during the Lease Term, but such obligation shall not extend to the Building Structure and the Building Systems except pursuant to the BS/BS Exception. In addition, Tenant shall, at Tenant's own expense, pursuant to the terms of this Lease, including Article 8 below, promptly and adequately repair all damage to the Premises and replace or repair all damaged, broken, or worn fixtures and appurtenances, but such obligation shall not extend to the Building Structure and the Building Systems, except pursuant to the BS/BS Exception (and which are not covered by Landlord's Warranty), except for damage caused by ordinary wear and tear or beyond the reasonable control of Tenant; provided however, that, at Landlord's option, or if Tenant fails to make such repairs, Landlord may, after written notice to Tenant and Tenant's failure to repair within fifteen (15) business days thereafter, but need not, make such repairs and replacements, and Tenant shall pay Landlord the actual and reasonable out of pocket cost thereof, and a percentage of the cost thereof (not to exceed three percent (3%) of the cost of such work, to be uniformly established for the Buildings and/or the Project) sufficient to reimburse Landlord for all overhead, general conditions, fees and other costs or expenses arising from Landlord's involvement with such repairs and replacements forthwith upon being billed for same.
7.3 Other Terms . 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.
ARTICLE 8
ADDITIONS AND ALTERATIONS
8.1 Landlord's Consent to Alterations . Tenant shall have the right, without Landlord's consent but upon five (5) business days' prior notice to Landlord, to make strictly cosmetic, non‑structural additions and alterations (" Cosmetic Alterations ") to the Premises that do not (i) require a construction permit, or (ii) cause a Design Problem (as that term is defined in the Tenant Work Letter). Except for Cosmetic Alterations, Tenant may not make any improvements, alterations, additions or changes to the Premises or any mechanical, plumbing or HVAC facilities or systems pertaining to the Premises (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, conditioned or delayed by Landlord, provided it shall be deemed reasonable for Landlord to withhold its consent to any Alteration which constitutes a Design Problem. If Landlord disapproves of any proposed Alterations, Landlord shall respond, in writing, stating the grounds for such disapproval, within ten (10) business days after receipt of Tenant’s request for approval of the proposed Alterations. If Landlord fails to respond with its approval or disapproval within ten (10) business days after receipt of Tenant’s request, then Tenant may send Landlord a reminder notice setting forth such failure containing the following sentence at the top of such notice in bold, capitalized font at least twelve (12) points in size: " LANDLORD'S FAILURE TO RESPOND TO THIS NOTICE WITHIN FIVE (5) BUSINESS DAYS SHALL RESULT IN LANDLORD'S DEEMED APPROVAL OF TENANT'S ALTERATION " (the " Reminder Notice "). Any such Reminder Notice shall include a complete copy of Tenant's plans and specification for such Alteration. If Landlord fails to respond within five (5) business days after receipt of a Reminder Notice, then Tenant’s Alteration for which Tenant requested Landlord's approval shall be deemed approved by Landlord. The construction of the initial improvements to the Premises shall be governed by the terms of the Tenant Work Letter and not the terms of this Article 8 .
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8.2 Manner of Construction . Landlord may impose, as a condition of its consent to any and all Alterations or repairs of the Premises or about the Premises, reasonable requirements, including, but not limited to, the requirement that Tenant utilize for such purposes only contractors, subcontractors, materials, mechanics and materialmen selected by Tenant reasonably approved by Landlord, the requirement that upon Landlord's request, Tenant shall, at Tenant's expense, remove such Alterations to the extent required pursuant to Section 8.5 below. Tenant shall construct such Alterations and perform such repairs in a good and workmanlike manner, in conformance with any and all Applicable Laws, including without limitation the LEED certification requirements relating to the construction of the Alterations required by the City of San Jose, and pursuant to a valid building permit, issued by the City of San Jose, all in conformance with Landlord's tenant improvement manual promulgated by Landlord regarding construction performed by tenants of the Project and provided to Tenant in writing prior to the date of this Lease (as the same may be reasonably modified by Landlord, on a non-discriminatory basis, from time to time, " TI Manual "); 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 the event Tenant performs any Alterations in the Premises which require or give rise to governmentally required changes to the "Base Building," as that term is defined below, then Landlord shall, at Tenant's expense, make such changes to the Base Building. The " Base Building " shall mean the Building Structure and the Building Systems. In performing the work of any such Alterations, Tenant shall have the work performed in such manner so as not to unreasonably obstruct access to the Project or any portion thereof, by any other tenant of the Project, and so as not to unreasonably 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, would disturb labor harmony with the workforce or trades engaged in performing other work, labor or services in or about the Buildings or the Common Areas. In addition to Tenant's obligations under Article 9 of this Lease, upon completion of any Alterations, Tenant agrees to cause a Notice of Completion to be recorded in the office of the Recorder of the County of Santa Clara in accordance with Section 8182 of the Civil Code of the State of California or any successor statute, and Tenant shall deliver to the Project construction manager a reproducible copy of the "as built" drawings of the Alterations, as well as an electronic CAD file, as well as all permits, approvals and other documents issued by any governmental agency in connection with the Alterations.
8.3 Payment for Improvements . If payment is made by Tenant directly to contractors, Tenant shall (i) comply with Landlord's reasonable requirements for final lien releases and waivers in connection with Tenant's payment for Alterations work to contractors. If Tenant orders any work directly from Landlord, Tenant shall pay to Landlord an amount equal to two percent (2%) of the cost of such Alterations work to compensate Landlord for all overhead, general conditions, fees and other costs and expenses arising from Landlord's involvement with such Alterations work. If Tenant does not order any Alterations work directly from Landlord, Tenant shall reimburse Landlord for Landlord's reasonable, actual, out-of-pocket costs and expenses actually incurred in connection with Landlord's review of such Alterations work that requires the prior consent of Landlord under Section 8.1 above.
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 or Tenant's contractor carries "Builder's All 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. In addition, Tenant's contractors and subcontractors shall be required to carry Commercial General Liability insurance in an amount approved by Landlord and otherwise in accordance with the requirements of Article 10 of this Lease. Tenant's Contractors and Subcontractors shall name Landlord as an additional insured on their General Liability Policies on a form at least as broad as CG 20 10 11/85.
8.5 Landlord's Property . Except as expressly set forth in this Lease, Landlord and Tenant hereby acknowledge and agree that (i) all Alterations, improvements, fixtures, equipment and/or appurtenances which may be installed or placed in or about the Premises (excluding Tenant's removable trade fixtures, furniture or non-affixed office equipment), from time to time, shall be at the sole cost of Tenant and, if not removed by Tenant prior to the end of the Lease Term, shall upon the expiration or earlier termination of the Lease Term become part of the Premises and the property of Landlord, and (ii) the Tenant Improvements shall, if not removed by Tenant prior to the end of the Lease Term become the property of Landlord upon the expiration or earlier termination of the Lease Term, and in furtherance thereof, prior to the expiration or earlier termination of the Lease Term, Tenant may remove any Alterations, improvements, fixtures and/or equipment which Tenant can substantiate to Landlord have not been paid for with any tenant improvement allowance funds provided to Tenant by Landlord, provided Tenant repairs any damage to the Premises and Building caused by such removal and returns the affected portion of the Premises to a reasonable building standard tenant improved condition. Furthermore, Landlord may, by written notice to Tenant prior to the end of the Lease Term, or given following any earlier termination of this Lease, require Tenant, at Tenant's expense, to remove any Specialty Improvements (defined hereinbelow), and to repair any damage to the Premises and Project caused by such removal; provided, however, if, in connection with its notice to Landlord requesting Landlord's approval of any Alterations or Tenant Improvements, ( x ) Tenant requests Landlord's decision with regard to whether the applicable Alteration or Tenant Improvement constitutes a Specialty Improvement that will be required to be removed, and ( y ) Landlord thereafter agrees in writing to waive the removal requirement with regard to such Specialty Improvements, then Tenant shall not be required to so remove such Specialty Improvements; provided further, however, that if Tenant requests such a determination from Landlord and Landlord, within ten (10) business days following Landlord's receipt of such request from Tenant with respect to Specialty Improvements, fails to address the removal requirement with regard to such Specialty Improvements, then the parties shall mutually and reasonably agree upon whether the Specialty Improvements are required to be removed prior to the end of the Lease Term for the portion of the Premises containing such Specialty Improvements. If Tenant fails to complete such removal and/or to repair any damage caused by the removal of any Specialty Improvements, then at Landlord's option, either (A) Tenant shall be deemed to be holding over in the Premises and Rent shall continue to accrue in accordance with the terms and conditions of Article 16 , below, until such work shall be completed, and/or (B) Landlord may do so and may charge the cost thereof to Tenant. Tenant hereby protects,
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defends, indemnifies and holds Landlord harmless from and against any liability, cost, obligation, expense or claim of lien in any manner relating to the installation, placement, removal or financing of any such Alterations , improvements, fixtures and/or equipment in, on or about the Premises , which obligations of Tenant shall survive the expiration or earlier termination of this Lease . Notwithstanding the foregoing, Landlord shall not require Tenant to remove any improvements which do not constitute Specialty Improvements , and in all instances, Tenant shall be required to remove the Mandatory Removal Items. " Specialty Improvements " means any Alterations or Tenant Improvements other than normal and customary general office improvements and with above-standard demolition costs , including laboratories, server rooms, data centers, computer rooms, raised flooring and specialty ceilings , any kitchens, showers, restrooms, washrooms or similar facilities in the Premises that are not part of the Base Building , excluding the Cafeteria and Fitness Center in Building A2 , a ny private/internal stairways in the Premises , as opposed to fire stairs (and Tenant shall be required to demolish and "cap" any such private/internal stairways at the expiration or earlier termination of this Lease). " Mandatory Removal Items " means the following: (a) any Alterations or Tenant Improvements which affect the Base Building , ( b ) any other items, improvements or fixtures which Tenant is expressly required to remove pursuant to the terms of this Lease, (c) any Alterations or improvements located outside of the Premises, (d) any improvements or signage incorporating Tenant ' s name or logo, (e) safes and vaults, and (f) any alteration, improvement or equipment not complying with Applicable Laws , all of which in all cases Tenant shall be required to remove, and to restore the Premises or Project, as applicable, to their previous conditi on .
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 ten (10) business 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 ten (10) 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 Buildings 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 Buildings 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, Buildings and Premises.
ARTICLE 10
INDEMNIFICATION AND INSURANCE
10.1 Indemnification and Waiver . Tenant hereby assumes all risk of damage to property or injury to persons in, upon or about the Premises from any cause whatsoever (including, but not limited to, any personal injuries resulting from a slip and fall in, upon or about the Premises) 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, provided that the terms of the foregoing assumption and release shall not apply to Landlord's breach of this Lease or the negligence or willful misconduct of Landlord or any Landlord Parties. Tenant shall indemnify, defend, protect, and hold harmless the Landlord Parties from any and all loss, cost, damage, expense and liability (including without limitation court costs and reasonable attorneys' fees) incurred in connection with or arising from any cause in, on or about the Premises (including, but not limited to, a slip and fall), any negligence of Tenant or of any person claiming by, through or under Tenant, or of the contractors, agents, servants, employees, invitees, guests or licensees of Tenant (collectively, " Tenant Parties " or individually, a " Tenant Party ") or any such person, in, on or about the Project or any breach by Tenant of the terms of this Lease, either during or, with respect to those terms that survive the expiration or earlier termination of the Lease Term, after the expiration or earlier termination of the Lease Term, provided that the terms of the foregoing indemnity shall not apply to the extent caused by the negligence or willful misconduct of Landlord or the Landlord Parties. 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 reasonable appraisers', accountants' and attorneys' fees. Landlord shall indemnify, defend, protect, and hold harmless Tenant from any and all loss, cost, damage, expense and liability (including without limitation reasonable attorneys' fees) to the extent arising from the negligence or willful misconduct of Landlord or the Landlord Parties in, on or about the Project, or any breach by Landlord of the terms of this Lease, either during or, with respect to those terms that survive the expiration or earlier termination of the Lease Term, after the expiration or earlier termination of the Lease Term, provided that the terms of Landlord’s foregoing indemnity obligations shall not apply to the extent caused by the negligence or willful misconduct of Tenant or the Tenant Parties. 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
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cover the matters subject to Tenant's or Landlord's, as applicable, 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 are subject to the terms of Section 29.13 below. Notwithstanding anything to the contrary contained in this Lease, nothing in this Lease shall impose any obligations on Tenant or Landlord to be responsible or liable for, and each hereby releases the other from all liability for, consequential damages other than those consequential damages incurred by Landlord in connection with a holdover of the Premises by Tenant after the expiration or earlier termination of this Lease. Notwithstanding the foregoing, for purposes of this Lease, consequential damages shall not be deemed to include property damage or personal injury damages. 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 Insurance . Throughout the Lease Term, Landlord shall procure and maintain in full force and effect with respect to the Building: (i) a policy or policies of property insurance covering the full replacement value of the Building written on a physical loss or damage basis under a "special form" or "All Risk" form policy, together with any coverages or endorsements required by any lender and/or reasonably deemed prudent by Landlord to carry, such as, without limitation, sprinkler leakage, vandalism and malicious mischief coverage, and earthquake; and (ii) a policy of commercial general liability insurance with a limit of liability of not less than $10,000,000 per occurrence insuring Landlord's activities with respect to the Premises and the Building for loss, damage or liability for personal injury or death of any person or loss or damage to property occurring in, upon or about the Premises or the Building. Landlord may meet any of the foregoing occurrence limits with the use of blanket or umbrella policies. Notwithstanding the foregoing provisions of this Section 10.2 , the coverage and amounts of insurance carried by Landlord in connection with the Buildings shall be materially comparable to the coverage and amounts of insurance which are carried by landlords of Comparable Buildings. Tenant shall, at Tenant's expense, comply with all insurance company requirements pertaining to the use of the Premises that (a) have been disclosed in writing to Tenant by Landlord and (b) pertain to Tenant's business operations, conduct or use of the Premises and the Building, whether imposed by Tenant's insurers, Landlord's insurers, or both. If Tenant's conduct or use of the Premises for other than the Permitted Use, Office Permitted Use or Amenities Permitted Use, as applicable, causes any increase in the premium for such insurance policies, and Tenant fails to discontinue such use within fifteen (15) days after Tenant’s receipt of written notice from Landlord of such increase in the premium, 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. The minimum limits of policies of insurance required of Landlord under this Lease shall in no event limit the liability of Landlord under this Lease.
10.3 Tenant's Insurance . Tenant shall maintain the following coverages in the following amounts. Landlord makes no representation or warranty to Tenant that the amount of insurance required to be carried by Tenant under the terms of this Lease is adequate to fully protect Tenant's interests. Tenant is encouraged to evaluate its insurance needs and obtain whatever additional types or amounts of insurance that it may deem desirable or appropriate.
10.3.1 Commercial General Liability Insurance on an occurrence form covering the insured against claims of bodily injury, personal injury and property damage (including loss of use thereof) arising out of Tenant's operations, and contractual liabilities (covering the performance by Tenant of its indemnity agreements) including a Broad Form endorsement covering the insuring provisions of this Lease and the performance by Tenant of the indemnity agreements set forth in Section 10.1 of this Lease and including products and completed operations coverage for limits of liability on a per location basis of not less than:
Bodily Injury and
|
$10,000,000 each occurrence $10,000,000 annual aggregate |
Personal Injury Liability |
$10,000,000 each occurrence $10,000,000 annual aggregate Reasonable Insured's participation |
The limits above can be provided in combination with an excess or umbrella policy. In the event Tenant is unable to procure the prescribed limit in a single policy, an Excess or Umbrella policy will be acceptable only in the event it includes an endorsement specifying that the coverage provided in the Excess or Umbrella policy will provide coverage on a follow form, primary and non-contributory basis for all additional insureds.
The annual aggregate limits of Insurance shall apply separately to this location.
10.3.2 Physical Damage Insurance covering (i) all office furniture, business and trade fixtures, office equipment, free-standing cabinet work, movable partitions, merchandise and all other items of Tenant's property on the Premises installed by, for, or at the expense of Tenant, (ii) the " Tenant Improvements ," as that term is defined in the Tenant Work Letter, 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 other improvements, alterations and additions to the Premises (excluding the Base Building). Such insurance shall be written on a " Special Form " of physical loss or damage basis, for the full replacement cost value (subject to reasonable deductible amounts) new 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 damage or other loss caused by fire or other peril including, but not limited to, vandalism and malicious mischief, theft, water damage of any type, including sprinkler leakage, bursting or stoppage of pipes, and explosion, and providing business interruption coverage for a period of one year.
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10.3.3 Worker's Compensation and Employer's Liability or other similar insurance pursuant to all applicable state and local statutes and regulations.
10.3.4 Contractual Liability Insurance sufficient to cover Tenant's liability and obligations under this Lease (including, but not limited to, Tenant's third-party indemnity obligations under Section 10.1 of this Lease), but only if such contractual liability insurance is not already included in Tenant's commercial general liability insurance policy and umbrella/excess liability insurance policy.
10.3.5 Commercial Auto Liability Insurance (if applicable) covering automobiles owned, hired or used by Tenant in carrying on its business with limits not less than $1,000,000 combined single limit for each accident, and scheduled to the umbrella/excess liability insurance policy.
10.3.6 Business Interruption Insurance in an amount sufficient to cover a period of interruption of not less than twelve (12) months.
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) name Landlord, its officers, directors and employees, Landlord's property manager, and all other persons and/or entities as reasonably directed by Landlord as additional insureds (hereinafter " Additional Insureds "); (ii) specifically cover, including any Additional Insured endorsements, the liability assumed by Tenant under this Lease, including, but not limited to, Tenant's obligations under Section 10.1 of this Lease, using Insurance Service Organization's form 2010 1185 or a comparable form approved by Landlord; (iii) if Tenant uses a Blanket Additional Insured Form, such form shall not exclude any Additional Insured from coverage because they are not a party to this Lease; (iv) be issued by an insurance company having a rating of not less than A-X in Best's Insurance Guide or which is otherwise acceptable to Landlord and licensed to do business in the State of California; (v) other than with respect to Worker's Compensation coverage, be primary and non-contributory insurance as to all claims thereunder and provide that any insurance carried by Landlord is excess and is non-contributing with any insurance requirement of Tenant; (vi) provide that said insurance shall not be canceled or coverage changed unless ten (10) days' prior written notice shall have been given to Landlord and any mortgagee of Landlord (except for cancellation for non-payment of premium); and (vii) Tenant's commercial general liability coverage (including Additional Insured endorsements, and primary and non-contributory endorsements), property insurance and Worker's Compensation and Employer's Liability coverage shall include a waiver of subrogation endorsement in favor of Landlord. Tenant shall deliver said policy or policies or certificates thereof to Landlord on or before the Lease Commencement Date and at least thirty (30) days before the expiration dates thereof. In the event Tenant shall fail to procure such insurance, Landlord may, at its option, procure such policies for the account of Tenant, and the cost thereof shall be paid to Landlord within thirty (30) days after delivery to Tenant of bills therefor.
10.5 Subrogation . Landlord and Tenant intend that their respective property loss risks shall be borne by reasonable insurance carriers to the extent above provided, 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. The parties each hereby waive all rights and claims against each other for such losses, and waive all rights of subrogation of their respective insurers, provided such waiver of subrogation shall not affect the right to the insured to recover thereunder. The parties agree that their respective insurance policies are now, or shall be, endorsed such that the waiver of subrogation shall not affect the right of the insured to recover thereunder, so long as no material additional premium is charged therefor. If Landlord or Tenant fail to carry the amounts and types of insurance required to be carried pursuant to this Article 10 , in addition to any remedies Landlord or Tenant may have under this Lease, such failure shall be deemed to be a covenant and agreement by the party failing to carry such insurance to self-insure with respect to the type and amount of insurance such party so failed to carry, with full waiver of subrogation with respect thereto.
10.6 Additional Insurance Obligations . Not more than once every five (5) years, Landlord may request, and Tenant shall carry and maintain during the entire Lease Term, at Tenant's sole cost and expense, increased amounts of the insurance required to be carried by Tenant pursuant to this Article 10 and such other reasonable types of insurance coverage and in such reasonable amounts covering the Premises and Tenant's operations therein, as may be reasonably requested by Landlord. Tenant shall not be required to procure or maintain increased amounts of insurance or other types of insurance coverage that are (a) beyond those typically maintained by similarly situated parties leasing reasonably similar amounts and types of space for use in Comparable Buildings or (b) not available at commercially reasonable rates.
10.7 Self-Insurance . Notwithstanding anything to the contrary contained in Article 10 of this Lease, the Original Tenant only shall, at the Original Tenant’s election, be entitled to self‑insure its insurance requirements set forth in this Lease, provided that any self‑insurance shall be deemed to contain all of the terms and conditions applicable to such insurance as required in Article 10 of this Lease, including, without limitation, a waiver of subrogation. With respect to any claims which may result from incidents occurring during the Lease Term, the Original Tenant's self‑insurance obligation shall survive the expiration of the Lease Term to the same extent as the insurance required under Article 10 of this Lease, as hereby amended, would survive. Notwithstanding anything to the contrary contained in this Article 10 , the Original Tenant shall only have the right to self‑insure its insurance requirements under this Article 10 if the Original Tenant continues to maintain a net worth (excluding good will as an asset), as evidenced by Tenant's most recent year-end financial statement audited by a certified public accountant, of equal to or greater than One Billion and 00/100 Dollars ($1,000,000,000) (the " Financial Requirement "). The Original Tenant, no more than once per calendar year, within fifteen (15) days following a written request from Landlord, shall provide Landlord with Tenant's most recent year-end financial statement audited by a certified public accountant evidencing that the Original Tenant is continuing to satisfy the Financial Requirement. Notwithstanding the foregoing, if Tenant’s financial statements are accessible online through filings
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with the United States Securities and Exchange Commission, or any other governmental authority of which Tenant notifies Landlord and Landlord is readily able to access the website of the other governmental authority, Tenant shall not be required to provide the requested financial information.
ARTICLE 11
DAMAGE AND DESTRUCTION
11.1 Repair of Damage to Premises by Landlord . To the extent that Landlord does not have actual knowledge of the same, Tenant shall promptly notify Landlord of any damage to the Premises resulting from fire or any other casualty. If the Premises, Building Structure, Building Systems, or any Common Areas serving or providing access to the Premises shall be damaged by fire or other 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 Applicable Laws or reasonably required by the holder of a mortgage on the Buildings or Project or any other modifications to the Common Areas deemed desirable by Landlord, provided that such modifications will not violate clauses (a) through (e) of Section 1.1.3 above without the prior written consent of Tenant, which may be given or withheld in Tenant's reasonable discretion. In the event this Lease is not terminated pursuant to this Article 11, Tenant shall, at its sole cost and expense, repair any injury or damage to the Tenant Improvements and the Original Improvements installed in the Premises and shall return such Tenant Improvements and Original Improvements substantially to their original condition, except for modifications required by zoning and building codes and Applicable Laws. Prior to the commencement of construction, Tenant shall submit to Landlord, for Landlord's review and approval (which approval shall not be withheld unless a Design Problem exists), all plans, specifications and working drawings relating thereto, and Tenant shall select the contractors to perform such improvement work, subject to Landlord's reasonable approval. Landlord shall not 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 Landlord shall use commercially reasonable efforts to minimize any such inconvenience or annoyance. If any such fire or other casualty shall have damaged the Premises or Common Areas necessary to Tenant's occupancy, and the Premises (or the affected portion thereof) are not occupied by Tenant as a result thereof, then during the time and to the extent the Premises are unfit for occupancy, the Rent shall be abated in proportion to the ratio that the amount of RSF of the Premises which is unfit for occupancy for the purposes permitted under this Lease bears to the total RSF of the Premises. Tenant's right to rent abatement pursuant to the preceding sentence shall terminate as of the date which is reasonably determined by Landlord to be the date Tenant should have completed repairs to the Premises (and including a reasonable period for the re-installation of Tenant's furniture, fixtures and equipment and moving back into the damaged portion of the Premises) assuming Tenant used reasonable due diligence in connection therewith (provided that in no event shall such Rent re-commence until such time as Landlord has restored the Base Building and the Common Areas necessary for Tenant’s use of the Premises to a commercially reasonable condition and Landlord has obtained all occupancy permits that are required to allow the legal occupancy of the affected Building and to allow the Tenant to conduct business operations from its Premises (assuming that Tenant has received a certificate of occupancy, temporary certificate of occupancy, or its legal equivalent, for its Premises, which shall remain Tenant’s obligation)); provided that Landlord shall be deemed to have restored the Base Building and the Common Areas on the date that Landlord would have completed such work, but for any delays caused by Tenant or any of Tenant's agents.
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, Buildings 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 ninety (90) days to vacate the Premises, but Landlord may so elect only if the Buildings or Project shall be damaged by fire or other casualty or cause, whether or not the Premises are affected, and one or more of the following conditions is present: (i) in Landlord's reasonable judgment, repairs 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) and Landlord elects to terminate the leases of all other tenants of the Project similarly affected by the damage and destruction and not to commence rebuilding or reconstructing within one (1) year from the date of such damage and/or destruction; (ii) the holder of any mortgage on the Buildings or Project or ground lessor with respect to the Buildings or Project shall require that the insurance proceeds or any portion thereof be used to retire the mortgage debt and Tenant does not agree to fund the amount in excess of the "Landlord Contribution," as that term is defined below, or shall terminate the ground lease, as the case may be, and in each such case, Landlord elects to terminate the leases of all other tenants of the Project similarly affected by the damage and destruction and not to commence rebuilding or reconstructing within one (1) year from the date of such damage and/or destruction; (iii) except for the Landlord Contribution, the damage is not fully covered by Landlord's insurance policies (or would not have been covered under the insurance policies which Landlord is required to maintain under this Lease) and Landlord elects not to commence rebuilding or reconstructing within one (1) year from the date of such damage and destruction and elects to terminate the leases of all other tenants of the Project similarly affected by the damage and destruction; or (iv) the damage occurs during the last twelve (12) months of the Lease Term; or (v) any owner of any other portion of the Project, other than Landlord, does not intend to repair the damage to such portion of the Project, and Landlord elects to terminate the leases of all other tenants of the Project similarly affected by the damage and destruction and not to commence rebuilding or reconstructing within one (1) year from the date of such damage and/or destruction; provided, however, that if Landlord does not elect to terminate this Lease pursuant to Landlord's termination right as provided above, and (a) the repairs cannot, in the reasonable opinion of Landlord, be completed within two hundred seventy (270) days after the date of the casualty, or (b) the damage occurs during the last twelve (12) months of the Lease Term, or (c) after commencing repairs, Landlord fails to complete the same by the “Anticipated Repair Completion Date” (as hereinafter defined), then Tenant may elect, no earlier than sixty (60) days after the date of the damage
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and in the case of (a) or (b) above not later than one hundred twenty (120 ) 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. For the purposes of this Section 11.2 , the " Landlord Contribution " shall mean $10,000,000.00. At any time, from time to time, after the date occurring thirty (30) days after the date of the damage, Tenant may request that Landlord provide Tenant with its reasonable, good faith opinion of the date of completion of the repairs (the “ Anticipated Repair Completion Date ”), and Landlord shall respond to such request within five (5) business days. 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 fire or other casualty was not caused by the gross negligence or willful misconduct of Tenant and/ or its partners or subpartners and /or their respective officers, agents, servants, employees, and /or independent contractors; (b) Tenant is not then in default under this Lease beyond any applicable notice and cure period ; and (c) as a result of the damage, and notwithstanding any damage to the Building A2 Premises, Tenant cannot (and does not) reasonably conduct business from a material portion of the Building 3 Premises and a material portion of the Building 4 Premises .
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 Buildings 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 Buildings or the Project.
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 or payment of Rent by Tenant shall not be deemed to be a waiver of any preceding breach by Tenant or Landlord 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 or Tenant's knowledge of such preceding breach at the time of acceptance or payment 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 or payment by Tenant to Landlord 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, but any such paid amounts shall be credited against the sums Tenant would otherwise owe Landlord. Tenant's payment of any Rent hereunder shall not constitute a waiver by Tenant of any breach or default by Landlord under this Lease nor shall Landlord's payment of monies due Tenant hereunder constitute a waiver by Landlord of any breach or default by Tenant under this Lease.
If the whole or any material part of the Premises, Buildings 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 material part of the Premises, Buildings 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 RSF of the Premises is taken, or if access to the Premises is substantially impaired, or if any material portion of the parking for the Premises is taken, 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 claim is payable separately to Tenant or is otherwise separately identifiable. Notwithstanding anything in this Article 13 to the contrary, Landlord and Tenant shall each be entitled to receive fifty percent (50%) of the "bonus value" of the leasehold estate in connection therewith, which bonus value shall be equal to the difference between the Rent payable under this Lease and the sum established by the condemning authority as the award for compensation for the leasehold. 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
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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 RSF of the Premises taken bears to the total RSF of the Premises. Landlord shall be entitled to receive the entire award made in connection with any such temporary taking , but nothing herein shall preclude Tenant from seeking a recovery from the condemning authority to the extent Landlord's award is not reduced as a result thereof .
ARTICLE 14
ASSIGNMENT AND SUBLETTING
14.1 Transfers . Tenant shall not, without the prior written consent of Landlord (except as otherwise provided in Section 14.8 below), which consent shall not be unreasonably withheld, conditioned or delayed (subject to the terms of Section 14.2, below ), assign, mortgage, pledge, hypothecate, encumber, or permit any lien to attach to, or otherwise transfer, this Lease or any interest hereunder, permit any assignment, or other transfer of this Lease or any interest hereunder by operation of law, sublet the Premises or any part thereof, or enter into any license or concession agreements 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, subject to the terms of this Section 14 below (all of the foregoing are hereinafter sometimes referred to individually as a " Transfer " and collectively as " Transfers " and any person 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 twenty (20) 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, 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 Landlord's consent to such Transfer, and (iv) current financial statements of the proposed Transferee certified by an officer, partner or owner thereof or by a certified public accountant, business credit and personal references and history of the proposed Transferee and any other information reasonably 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 (or deemed consent) 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 reasonable 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 (" Transfer Fee "), provided, Tenant shall not be required to pay more than Two Thousand Five Hundred Dollars ($2,500.00) as a Transfer Fee in connection with any one Transfer in the ordinary course of business, (b) Landlord shall provide supporting documentation for the Transfer Fee, and (c) no Transfer Fee shall be payable by Tenant in the event of any deemed approval of a proposed Transfer following Landlord’s failure to timely respond as set forth above. The foregoing Transfer Fee cap shall increase by ten percent (10%) after each five (5) year period during the Lease Term.
14.2 Landlord's Consent . Landlord shall not unreasonably withhold or delay its consent to any proposed Transfer of the Subject Space to the Transferee on the terms specified in the Transfer Notice. Within fifteen (15) business days after receiving the completed Transfer Notice, Landlord shall approve or disapprove the proposed Transfer in writing. If Landlord disapproves the Transfer, Landlord shall provide a reasonably detailed, written explanation. If Landlord fails to respond within the required time, Tenant may send a written "reminder notice". If Landlord fails to respond within five (5) business days after receipt of such reminder notice, then, with respect to a sublease only, Landlord shall, at Tenant's option, be considered to have consented to the Transfer. Without limitation as to other reasonable grounds for withholding consent, the parties hereby agree that it shall be reasonable under this Lease and under any Applicable Law for Landlord to withhold consent to any proposed Transfer where one or more of the following apply:
14.2.1 The Transferee is engaged in a business which is not consistent with the quality of the Buildings, as judged by then existing tenants of the Building and of Comparable Buildings;
14.2.2 The Transferee intends to use the Subject Space for purposes which are not permitted under this Lease;
14.2.3 The Transferee is either a governmental agency or instrumentality thereof unless Landlord, with respect to the applicable Building, has leased space or has approved any assignment or subletting to comparable (in terms of use, security issues, express or implied power of eminent domain, reputation and character) governmental agencies or instrumentalities thereof;
14.2.4 The Transferee is not (considering any credit enhancements provided) a party of reasonable financial worth and/or financial stability in light of the responsibilities to be undertaken in connection with the Transfer on the date consent is requested;
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14.2.5 The proposed Transfer would cause a violation of an exclusive use right granted by Landlord in good faith in another lease for space in the Project, or would give an occupant of the Project a right to cancel its lease as a result of the proposed use to be made of the space by the proposed Transferee , provided that upon request from Tenant, Landlord shall provide Notice of all applicable exclusive use rights in the Project ; or
14.2.6 The terms of the proposed Transfer will allow the Transferee to exercise a right of renewal, right of expansion, right of first offer, or other similar right held by Tenant (or will allow the Transferee to occupy space leased by Tenant pursuant to any such right, but not yet occupied by Tenant).
14.2.7 Either the proposed Transferee, or any person or entity which directly or indirectly, controls, is controlled by, or is under common control with, the proposed Transferee, (i) occupies space in the Project at the time of the request for consent, or (ii) is negotiating with Landlord or has negotiated with Landlord during the six (6) month period immediately preceding the date Landlord receives the Transfer Notice, to lease space in the Project, and in either instance, Landlord has comparable space available.
If Landlord consents to any Transfer pursuant to the terms of this Section 14.2 (and does not exercise any recapture rights Landlord may have under Section 14.4 of this Lease), Tenant may within nine (9) months after Landlord's consent, but not later than the expiration of said nine-month period, enter into such Transfer of the Premises or portion thereof, upon substantially the same terms and conditions as are set forth in the Transfer Notice furnished by Tenant to Landlord pursuant to Section 14.1 of this Lease, provided that if there are any material changes in the terms and conditions from those specified in the Transfer Notice (i) such that Landlord would initially have been entitled to refuse its consent to such Transfer under this Section 14.2 , or (ii) which would cause the proposed Transfer to be more favorable to the Transferee than the terms set forth in Tenant's original Transfer Notice, Tenant shall again submit the Transfer to Landlord for its approval and other action under this Article 14 (including Landlord's right of recapture, if any, under Section 14.4 of this Lease). Notwithstanding anything to the contrary in this Lease, if Tenant or any proposed Transferee claims that Landlord has unreasonably withheld, conditioned or delayed its consent under Section 14.2 or otherwise has breached or acted unreasonably under this Article 14 , their sole remedies shall be a suit for contract damages (other than damages for injury to, or interference with, Tenant's business including, without limitation, loss of profits, however occurring) or declaratory judgment and an injunction for the relief sought, and Tenant hereby waives all other remedies, including, without limitation, any right at law or equity to terminate this Lease, on its own behalf and, to the extent permitted under all Applicable Laws, on behalf of the proposed Transferee.
14.3 Transfer Premium . If Landlord consents to a Transfer, as a condition thereto which the parties hereby agree is reasonable, Tenant shall pay to Landlord fifty percent (50%) of any Transfer Premium received by Tenant from such Transferee. " Transfer Premium " shall mean all rent, additional rent or other consideration payable by such Transferee in connection with the Transfer in excess of the Rent and Additional Rent payable by Tenant under this Lease during the term of the Transfer on a per RSF basis if less than all of the Premises is transferred. The Transfer Premium shall be calculated after deducting the reasonable expenses incurred by Tenant for (i) any changes, alterations and improvements to the Premises in connection with the Transfer, (ii) any free base rent or other economic concessions (including use of furniture, fixtures and equipment) reasonably provided to the Transferee, (iii) any brokerage commissions and reasonable legal fees and other professional fees incurred by Tenant in connection with the Transfer, and (iv) any amounts payable to Landlord under Section 14.1 above (collectively, " Transfer Costs "). Tenant shall first recoup all Transfer Costs from the Transferee before any Transfer Premium must be paid to Landlord. " Transfer Premium " shall also include, but not be limited to, key money, bonus money or other cash consideration paid by Transferee to Tenant in connection with such Transfer, and any payment in excess of fair market value for services rendered by Tenant to Transferee or for assets, fixtures, inventory, equipment, or furniture transferred by Tenant to Transferee in connection with such Transfer.
14.4 Landlord's Option as to Subject Space . Notwithstanding anything to the contrary contained in this Article 14 , Tenant shall give Landlord notice (the " Intention to Transfer Notice ") at any time determined in Tenant’s sole discretion prior to or concurrent with Tenant’s delivery of a Transfer Notice that Tenant is contemplating a Transfer (whether or not the contemplated Transferee or the terms of such contemplated Transfer have been determined); provided, however, that Landlord hereby acknowledges and agrees that Tenant shall only be obligated to deliver an Intention to Transfer Notice hereunder, and Landlord shall only have the right to recapture space with respect to, a Transfer pertaining to (x) the entire Premises for any portion of the remaining Lease Term and/or (y) at least fifty percent (50%) of the Premises within any particular Building for the lesser of (i) three (3) or more years, or (ii) all or substantially all of the remaining Lease Term. Landlord's right to recapture as set forth in this Section 14.4 shall not be triggered unless and until Landlord receives an Intention to Transfer Notice from Tenant. Tenant may indicate in a Transfer Notice that such Transfer Notice also serves as an Intention to Transfer Notice, but, in any event, if Tenant fails to deliver an Intention to Transfer Notice with respect to Contemplated Transfer Space, and thereafter delivers a Transfer Notice, such Transfer Notice shall be deemed to also serve as an Intention to Transfer Notice with respect to the Subject Space described in the Transfer Notice. The Intention to Transfer Notice shall specify the portion of and amount of RSF of the Premises which Tenant intends to Transfer (the " Contemplated Transfer Space "), the contemplated date of commencement of the contemplated Transfer (the " Contemplated Effective Date "), and the contemplated length of the term of such contemplated Transfer, and shall specify that such Intention to Transfer Notice is delivered to Landlord pursuant to this Section 14.4 in order to allow Landlord to elect to recapture the Contemplated Transfer Space. Thereafter, Landlord shall have the option, by giving written notice to Tenant within fifteen (15) business days after receipt of any Intention to Transfer Notice, to recapture the Contemplated Transfer Space. If Landlord elects to recapture, then the recapture shall cancel and terminate this Lease with respect to such Contemplated Transfer Space as of the Contemplated Effective Date. In the event of a recapture by Landlord, if this Lease shall be canceled with respect to less than the entire Premises, (I) the Base Rent reserved herein shall be proportionately reduced based upon the number of RSF relinquished by Tenant on each applicable floor of the Premises and the applicable Base Rent per RSF for such floor of the
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Premises, and ( II ) Tenant’s Share shall be proportionately reduced based upon the number of RSF of the Premises relinquished by Tenant and the total RSF of the Building. If Landlord declines, or fails to elect in a timely manner, to recapture such Contemplated Transfer Space under this Section 14.4 , then, subject to the other terms and conditions of this Article 14 , for a period of nine ( 9 ) months (the " Nine Month Transfer Period ") commencing on the last day of such fifteen (15) business day period, Landlord shall not have any right to recapture the Contemplated Transfer Space with respect to any Transfer made during the Nine Month Transfer Period, provided that any such Transfer is substantially on the terms set forth in the Intention to Transfer Notice, and provided further that any such Transfer shall be subject to the remaining terms and conditions of this Article 14 . If such a Transfer is not so consummated within the Nine Month Transfer Period (or if a Transfer is so consummated, then upon the expiration of the term of any Transfer of such Contemplated Transfer Space consummated within such Nine Month Transfer Period), Tenant shall again be required to submit a new Intention to Transfer Notice to Landlord with respect any contemplated Transfer, as provided above in this Section 14.4 . At any time that any party other than Tenant and/or its Permitted Transferees are directly leasing from Landlord any portion of the office space within Building 3, Building 4 and/or Building A2, Landlord and Tenant shall promptly enter into a lease amendment consistent with the terms and conditions of this Lease , but documenting the nature of the applicable Building as no longer a single - tenant office building.
14.5 Effect of Transfer . If Landlord consents to a Transfer, (i) the terms and conditions of this Lease shall in no way be deemed to have been waived or modified, (ii) such consent shall not be deemed consent to any further Transfer by either Tenant or a Transferee, (iii) Tenant shall deliver to Landlord, promptly after execution, an original executed copy of all documentation evidencing the Transfer in form reasonably acceptable to Landlord, (iv) Tenant shall furnish upon Landlord's request a complete statement, certified by an independent certified public accountant, or Tenant's chief financial officer or another financial officer of Tenant, setting forth in detail the computation of any Transfer Premium Tenant has derived and shall derive from such Transfer, and (v) no Transfer relating to this Lease or agreement entered into with respect thereto, whether with or without Landlord's consent, shall relieve Tenant or any guarantor of the Lease from any liability under this Lease, including, without limitation, in connection with the Subject Space. Landlord or its authorized representatives shall have the right at all reasonable times to audit the books, records and papers of Tenant relating to the calculation of any Transfer Premium, and shall have the right to make copies thereof. If the Transfer Premium respecting any Transfer shall be found understated, Tenant shall, within thirty (30) days after demand, pay the deficiency, and if understated by more than five percent (5%), Tenant shall pay Landlord's costs of such audit.
14.6 Additional Transfers . For purposes of this Lease, the term " Transfer " shall also include (i) if Tenant is a partnership, the withdrawal or change, voluntary, involuntary or by operation of law, of more than fifty percent (50%) of the partners, or transfer of more than fifty percent (50%) of partnership interests, within a twelve (12)-month period, or the dissolution of the partnership without immediate reconstitution thereof, and (ii) if Tenant is a closely held corporation ( i.e. , whose stock is not publicly held and not traded through an exchange or over the counter), (A) the dissolution, merger, consolidation or other reorganization of Tenant or (B) the sale or other transfer of an aggregate of more than fifty percent (50%) of the voting shares of Tenant (other than to immediate family members by reason of gift or death), within a twelve (12)-month period, or (C) the sale, mortgage, hypothecation or pledge of an aggregate of more than fifty percent (50%) of the value of the unencumbered assets of Tenant within a twelve (12)-month period.
14.7 Occurrence of Material Default . Any Transfer hereunder shall be subordinate and subject to the provisions of this Lease, and if this Lease shall be terminated during the term of any Transfer, except as provided in Section 14.9 below, Landlord shall have the right to: (i) treat such Transfer as cancelled and repossess the Subject Space by any lawful means, or (ii) require that such Transferee attorn to and recognize Landlord as its landlord under any such Transfer. If Tenant shall be in monetary or material non-monetary default under this Lease beyond any applicable notice and cure period, then Landlord is hereby irrevocably authorized to direct any Transferee to make all payments under or in connection with the Transfer directly to Landlord (which payments Landlord shall apply towards Tenant's obligations under this Lease) until such monetary or material non-monetary default is cured. Such Transferee shall rely on any representation by Landlord that Tenant is in monetary or material non-monetary default hereunder beyond any applicable notice and cure period, without any need for confirmation thereof by Tenant. Upon any assignment, the assignee shall assume in writing all obligations and covenants of Tenant thereafter to be performed or observed under this Lease. No collection or acceptance of rent by Landlord from any Transferee shall be deemed a waiver of any provision of this Article 14 or the approval of any Transferee or a release of Tenant from any obligation under this Lease, whether theretofore or thereafter accruing. In no event shall Landlord's enforcement of any provision of this Lease against any Transferee be deemed a waiver of Landlord's right to enforce any term of this Lease against Tenant or any other person. If Tenant's obligations hereunder have been guaranteed, Landlord's consent to any Transfer shall not be effective unless the guarantor also consents to such Transfer.
14.8 Deemed Consent Transfers . Notwithstanding anything to the contrary contained in this Lease, (A) an assignment or subletting of all or a portion of the Premises to an affiliate of Tenant (an entity which is controlled by, controls, or is under common control with, Tenant as of the date of this Lease), (B) a sale of corporate shares of capital stock in Tenant in connection with an initial public offering of Tenant's stock on a nationally-recognized stock exchange, (C) an assignment of the Lease to an entity which acquires all or substantially all of the stock or assets of Tenant, or (D) an assignment of the Lease to an entity which is the resulting entity of a merger or consolidation of Tenant during the Lease Term, shall not be deemed a Transfer requiring Landlord's consent under this Article 14 (any such assignee or sublessee described in items (A) through (D) of this Section 14.8 is hereinafter referred to as a " Permitted Transferee "), provided that (i) Tenant notifies Landlord at least thirty (30) days prior to the effective date of any such assignment or sublease and promptly supplies Landlord with any documents or information reasonably requested by Landlord regarding such Transfer or Permitted Transferee as set forth above, (ii) Tenant is not in default, beyond the applicable notice and cure period, and such assignment or sublease is not a
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subterfuge by Tenant to avoid its obligations under this Lease, (iii) such Permitted Transferee is engaged in a business which is consistent with the quality of the Buildings , as judged by then existing tenants of the Building and of Comparable Buildings , (iv) such Permitted Transferee shall have a long term issuer credit rating from Moody's Professional Rating Service ( " Moody's " ) of BB or better (or in the event such applicable Moody's ratings are no longer available, comparable ratings from Fitch Ratings Ltd. ( " Fitch " ) or Standard and Poor's Professional Rating Service ( " S&P " ) ) , (v) no assignment or sublease relating to this Lease, whether with or without Landlord's consent, shall relieve Tenant from any liability under this Lease, and (vi) the liability of such Permitted Transferee under either an assignment or sublease shall be joint and several with Tenant. An assignee of Tenant's entire interest in this Lease who qualifies as a Permitted Transferee may also be referred to herein as a " Permitted Transferee Assignee ." " Control ," as used in this Section 14.8 , shall mean the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities of, or possession of the right to vote, in the ordinary direction of its affairs, of more than fifty percent (50%) of the voting interest in, any person or entity.
14.9 Occupancy by Others . Notwithstanding any contrary provision of this Article 14 , Tenant shall have the right without the payment of a Transfer Premium, without being subject to Section 14.4, and without the receipt of Landlord's consent, to permit the occupancy of portions of the Premises to any individual(s) or entities with a business relationship with Tenant (" Tenant's Occupants ") subject to the following conditions: (i) all such individuals or entities shall be of a character and reputation consistent with the quality of the Buildings, as judged by then existing tenants of the Building and of Comparable Buildings; (ii) such occupancy shall not be a subterfuge by Tenant to avoid its obligation under this Lease or the restrictions on Transfers pursuant to this Article 14 , (iii) in the aggregate, such Tenant's Occupants do not occupy more than ten percent (10%) of the Premises; and (iv) such Tenant's Occupants do not have a separately demised space or separate exclusive entrance to their space. Tenant shall promptly supply Landlord with any document or information reasonably requested by Landlord regarding any such individuals or entities. Any occupancy permitted under this Section 14.9 shall not be deemed a Transfer under this Article 14 and shall not require Landlord's consent. Notwithstanding the foregoing, no such occupancy shall relieve Tenant from any liability under this Lease.
ARTICLE 15
SURRENDER OF PREMISES; OWNERSHIP AND
REMOVAL OF TRADE FIXTURES
15.1 Surrender of Premises . No act or thing done by Landlord or any agent or employee of Landlord during the Lease Term shall be deemed to constitute an acceptance by Landlord of a surrender of the Premises unless such intent is specifically acknowledged in writing by Landlord. The delivery of keys to the Premises to Landlord or any agent or employee of Landlord shall not constitute a surrender of the Premises or effect a termination of this Lease, whether or not the keys are thereafter retained by Landlord, and notwithstanding such delivery Tenant shall be entitled to the return of such keys at any reasonable time upon request until this Lease shall have been properly terminated. The voluntary or other surrender of this Lease by Tenant, whether accepted by Landlord or not, or a mutual termination hereof, shall not work a merger, and at the option of Landlord shall operate as an assignment to Landlord of all subleases or subtenancies affecting the Premises or terminate any or all such sublessees or subtenancies.
15.2 Removal of Tenant Property by Tenant . Upon the expiration of the Lease Term, or upon any earlier termination of this Lease, Tenant shall, subject to the provisions of this Article 15 , quit and surrender possession of the Premises to Landlord in as good order and condition as when Tenant took possession and as thereafter improved by Landlord and/or Tenant, excepting reasonable wear and tear, damage from casualty which is not Tenant's obligation to repair, and repairs which are specifically made the responsibility of Landlord hereunder excepted. Upon such expiration or termination, Tenant shall, without expense to Landlord, remove or cause to be removed from the Premises all debris and rubbish, and such items of furniture, equipment, business and trade fixtures, free-standing cabinet work, movable partitions and other articles of personal property owned by Tenant or installed or placed by Tenant at its expense in the Premises, including cables, conduits and floor monuments (unless otherwise agreed by Landlord), and such similar articles of any other persons claiming under Tenant, as Landlord may require to be removed in accordance with the terms of this Lease, and Tenant shall repair at its own expense all damage to the Premises and Buildings resulting from such removal.
15.3 End of Term Walk-Through . At least forty-five (45) days prior to the expiration of this Lease, Tenant may provide Landlord with a notice (the " Walk-Through Notice ") requesting a walk-through of the Premises to confirm the condition thereof and any removal or restoration obligations. Within thirty (30) days after Landlord’s receipt of such Walk-Through Notice, Landlord and Tenant shall conduct an exit walk-through of the Premises. The exit walk-through is to be conducted on a date and time mutually acceptable to Landlord and Tenant; however, if the parties are unable to agree on a time and date, such walk-through shall be conducted at 10:00 a.m. on the thirtieth (30th) day after such Walk-Through Notice; except if such day falls on a Holiday, Saturday or Sunday in which case such walk-through shall be conducted on the next business day. Within five (5) business days after such walk-through, Landlord will provide Tenant with a list of items, if any, that are Tenant's responsibility to remove or restore pursuant to Section 15.2 or Section 8.5 of this Lease. If Tenant concurs with such list, Tenant shall proceed to comply with same (and all such work shall be completed prior to the Lease Expiration Date). If Tenant disagrees with Landlord, Landlord and Tenant shall attempt to agree and modify the list in accordance with such agreement, but no such disagreement shall excuse Tenant from any failure to comply with its restoration and removal obligations under this Lease.
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If Tenant holds over after the expiration of the Lease Term with the express written consent of Landlord, such tenancy shall be from month-to-month only, and shall not constitute a renewal hereof or an extension for any further term, and in such case Base Rent shall be payable at a monthly rate of one hundred fifty percent (150%) of the Base Rent applicable during the last rental period of the Lease Term under this Lease. Such month-to-month tenancy shall be subject to every other applicable term, covenant and agreement contained herein. If Tenant holds over after the expiration of the Lease Term without the express written consent of Landlord, such tenancy shall be a tenancy at sufferance, and shall not constitute a renewal hereof or an extension for any further term, and in such case daily damages in any action to recover possession of the Premises shall be calculated at a daily rate equal to the greater of (i) one hundred fifty percent (150%) of the Base Rent applicable during the last rental period of the Lease Term under this Lease (calculated on a per diem basis) or (ii) the fair market rental rate for the Premises as of the commencement of such holdover period. Nothing contained in this Article 16 shall be construed as consent by Landlord to any holding over by Tenant, and Landlord expressly reserves the right to require Tenant to vacate and deliver possession of the Premises to Landlord as provided in this Lease upon the expiration or other termination of this Lease. The provisions of this Article 16 shall not be deemed to limit or constitute a waiver of any other rights or remedies of Landlord provided herein or at law. If Tenant holds over without Landlord's express written consent, and tenders payment of rent for any period beyond the expiration of the Lease Term by way of check (whether directly to Landlord, its agents, or to a lock box) or wire transfer, Tenant acknowledges and agrees that the cashing of such check or acceptance of such wire shall be considered inadvertent and not be construed as creating a month-to-month tenancy, provided Landlord refunds such payment to Tenant promptly upon learning that such check has been cashed or wire transfer received. Tenant acknowledges that any holding over without Landlord's express written consent may compromise or otherwise affect Landlord's ability to enter into new leases with prospective tenants regarding the Premises. Therefore, if Tenant fails to vacate and deliver the Premises prior to the date that is the later of (i) thirty (30) days after the termination or expiration of this Lease, and (ii) thirty (30) days after Landlord's notification to Tenant that Landlord has reached agreement with a third-party for occupancy of the Premises or any portion thereof, in addition to any other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless from and against all claims made by any succeeding tenant founded upon such failure to vacate and deliver, and any losses suffered by Landlord, including lost profits, resulting from such failure to vacate and deliver. Tenant agrees that any proceedings necessary to recover possession of the Premises, whether before or after expiration of the Lease Term, shall be considered an action to enforce the terms of this Lease for purposes of the awarding of any attorney's fees in connection therewith.
ARTICLE 17
ESTOPPEL CERTIFICATES
17.1 Tenant Estoppel Certificate . Within ten (10) business days following a request in writing by Landlord, Tenant shall execute, acknowledge and deliver to Landlord an estoppel certificate, which, as submitted by Landlord, shall be substantially in the form of Exhibit E , attached hereto (or such other commercially reasonable form as may be required by any prospective mortgagee or purchaser of the Project, or any portion thereof), indicating therein any exceptions thereto that may exist at that time, and shall also contain any other factual information regarding the Premises of this Lease reasonably requested by Landlord or Landlord's mortgagee or prospective mortgagee. Any such certificate may be relied upon by any prospective mortgagee or purchaser of all or any portion of the Project. At any time during the Lease Term, Landlord may require Tenant to provide Landlord with a current financial statement and financial statements of the two (2) years prior to the current financial statement year. Such statements shall be prepared in accordance with generally accepted accounting principles and, if such is the normal practice of Tenant, shall be audited by an independent certified public accountant. Notwithstanding the foregoing, for any year during which (i) stock in the entity which constitutes Tenant under this Lease (as opposed to an entity that controls Tenant or is otherwise an affiliate of Tenant) is publicly traded on NASDAQ or a national stock exchange, and (ii) Tenant has its own, separate and distinct 10K and 10Q filing requirements (as opposed joint or cumulative filings with an entity that controls Tenant or with entities which are otherwise affiliates of Tenant), then Tenant's obligation to provide Landlord with a copy of its financial statements for any such year shall be deemed satisfied. Failure of Tenant to timely execute, acknowledge and deliver such estoppel certificate (or provide written comments to any proposed certificate delivered by Landlord) within a two (2) business day period following the receipt of Landlord’s second written request therefor shall constitute an acceptance of the Premises and an acknowledgment by Tenant that statements included in the estoppel certificate are true and correct, without exception.
17.2 Landlord Estoppel Certificate . Landlord hereby agrees to provide to Tenant an estoppel certificate signed by Landlord, containing the same types of information (including, without limitation, the same representations and warranties and reliance language), and within the same periods of time, as set forth on Exhibit E , with such changes as are reasonably necessary to reflect that the estoppel certificate is being granted and signed by Landlord to Tenant, rather than from Tenant to Landlord or a lender, and shall also contain any other factual information reasonably requested by Tenant. If Landlord fails to timely execute, acknowledge and deliver such estoppel certificate (or provide written comments to any proposed certificate delivered by Tenant) within ten (10) business days following receipt thereof, Landlord shall be deemed to have disapproved such estoppel certificate. Any such certificate may be relied upon by any prospective assignee, lender, subtenant or investor of Tenant. If Landlord provides written comments to any estoppel certificate received from Tenant, then Landlord shall have five (5) business days following receipt of a revised estoppel certificate to execute, acknowledge and deliver to Tenant such revised estoppel certificate (or provide written comments to any such revised estoppel certificate delivered by Tenant) and the same process described above shall apply with respect to Landlord's failure to timely execute, acknowledge and deliver such revised estoppel certificate (or provide written comments to any proposed certificate delivered by Tenant).
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This Lease shall be subject and subordinate to all present and future ground or underlying leases of the Buildings or Project and to the lien of any mortgage, trust deed or other encumbrances now or hereafter in force against the Building or Project or any part thereof, if any, and to all renewals, extensions, modifications, consolidations and replacements thereof, and to all advances made or hereafter to be made upon the security of such mortgages or trust deeds, unless the holders of such mortgages, trust deeds or other encumbrances, or the lessors under such ground lease or underlying leases (collectively, " Lenders "), require in writing that this Lease be superior thereto. Landlord's delivery to Tenant of commercially reasonable non-disturbance agreement(s) (the " Nondisturbance Agreement ") in favor of Tenant from any Lenders who come into existence following the date hereof but prior to the expiration of the Lease Term shall be in consideration of, and a condition precedent to, Tenant's agreement to be bound by the terms and conditions of this Article 18 . Tenant covenants and agrees in the event any proceedings are brought for the foreclosure of any such mortgage or deed in lieu thereof (or if any ground lease is terminated), to attorn, without any deductions or set-offs whatsoever (except for any rights to rent abatement and rights to offset rent expressly set forth in this Lease), to the Lender upon any such foreclosure sale or deed in lieu thereof, if so requested to do so by such Lender, and to recognize such Lender as the lessor under this Lease, provided such Lender shall agree to accept this Lease (including, without limitation, Landlord’s obligations to fund the Tenant Improvement Allowance in accordance with the Tenant Work Letter, or in the alternative, and notwithstanding anything herein to the contrary, the recognition of Tenant’s right to offset rent for Landlord’s failure to pay the Tenant Improvement Allowance as provided in the Tenant Work Letter) and not disturb Tenant's occupancy, so long as Tenant is not in default under this Lease beyond applicable notice and cure periods. Landlord's interest herein may be assigned as security at any time to any lienholder. Tenant shall, within ten (10) business days of request by Landlord, execute such further instruments or assurances as Landlord may reasonably deem necessary to evidence or confirm the subordination or superiority of this Lease to any such mortgages, trust deeds, ground leases or underlying leases. Subject to Tenant's receipt of the Nondisturbance Agreement described herein, Tenant waives the provisions of any current or future statute, rule or law which may give or purport to give Tenant any right or election to terminate or otherwise adversely affect this Lease and the obligations of the Tenant hereunder in the event of any foreclosure proceeding or sale. Any Nondisturbance Agreement provided by a Lender for construction financing following the termination of Landlord's existing loan shall also be substantially in the form of Exhibit H-2 attached hereto.
19.1 Events of Default . The occurrence of any of the following shall constitute a default of this Lease by Tenant:
19.1.1 Any failure by Tenant to pay any Rent or any other charge required to be paid under this Lease, or any part thereof, when due unless such failure is cured within five (5) business days after notice; or
19.1.2 Except where a specific time period is otherwise set forth in this Section 19.1 , any failure by Tenant to observe or perform any other provision, covenant or condition of this Lease to be observed or performed by Tenant where such failure continues for thirty (30) days after Tenant's receipt of written notice thereof from Landlord; provided that if the nature of such default is such that the same cannot reasonably be cured within a thirty (30) day period, Tenant shall not be deemed to be in default if it diligently commences such cure within such period and thereafter diligently proceeds to rectify and cure such default; or
19.1.3 Abandonment (as defined in California Civil Code Section 1951.3) of the Premises by Tenant; or
19.1.4 The failure by Tenant to observe or perform according to the provisions of Articles 5 , 17 or 18 of this Lease or under the Tenant Work Letter where such failure continues for more than five (5) business days after Tenant's receipt of written notice from Landlord.
The notice periods provided herein are in addition to, and not in lieu of, any notice and/or cure periods expressly provided under the applicable terms of this Lease and/or provided by law. No statutory notice may be sent until the cure periods set forth in this Section 19.1 have expired without a cure being effectuated.
19.2 Remedies Upon Default . Upon the occurrence of any event of default by Tenant (beyond applicable notice and cure periods), Landlord shall have, in addition to any other remedies available to Landlord at law or in equity (all of which remedies shall be distinct, separate and cumulative), the option to pursue any one or more of the following remedies, each and all of which shall be cumulative and nonexclusive, without any notice or demand whatsoever, except as required by Applicable Laws.
19.2.1 Terminate this Lease, in which event Tenant shall immediately surrender the Premises to Landlord, and if Tenant fails to do so, Landlord may, without prejudice to any other remedy which it may have for possession or arrearages in rent, enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying the Premises or any part thereof, without being liable for prosecution or any claim or damages therefor; and Landlord may recover from Tenant the following:
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(i) The worth at the time of award of unpaid rent which has been earned at the time of such termination; plus
(ii) The worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus
(iii) The worth at the time of award of the amount by which the unpaid rent for the balance of the Lease Term after the time of award exceeds the amount of such rental loss that Tenant proves could have been reasonably avoided; plus
(iv) Any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this Lease or which in the ordinary course of things would be likely to result therefrom; and
(v) At Landlord's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by Applicable Law.
The term " rent " as used in this Section 19.2 shall be deemed to be and to mean all sums of every nature required to be paid by Tenant pursuant to the terms of this Lease, whether to Landlord or to others. As used in Sections 19.2.1(i) and (ii) , above, the "worth at the time of award" shall be computed by allowing interest at the rate set forth in Article 25 of this Lease, but in no case greater than the maximum amount of such interest permitted by law. As used in Section 19.2.1(iii) above, the " worth at the time of award " shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).
19.2.2 Landlord shall have the remedy described in California Civil Code Section 1951.4 (lessor may continue lease in effect after lessee's breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations). Accordingly, if Landlord does not elect to terminate this Lease on account of any default by Tenant, Landlord may, from time to time, without terminating this Lease, enforce all of its rights and remedies under this Lease, including the right to recover all rent as it becomes due.
19.2.3 Landlord shall at all times have the rights and remedies (which shall be cumulative with each other and cumulative and in addition to those rights and remedies available under Sections 19.2.1 and 19.2.2 , above, or any law or other provision of this Lease), without prior demand or notice except as required by Applicable Law, to seek any declaratory, injunctive or other equitable relief, and specifically enforce this Lease, or restrain or enjoin a violation or breach of any provision hereof.
19.3 Subleases of Tenant . If Landlord elects to terminate this Lease on account of any default by Tenant, as set forth in this Article 19 , Landlord shall have the right to terminate any and all subleases, licenses, concessions or other consensual arrangements for possession entered into by Tenant and affecting the Premises or may, in Landlord's sole discretion, succeed to Tenant's interest in such subleases, licenses, concessions or arrangements. In the event of Landlord's election to succeed to Tenant's interest in any such subleases, licenses, concessions or arrangements, Tenant shall, as of the date of notice by Landlord of such election, have no further right to or interest in the rent or other consideration receivable thereunder.
19.4 Efforts to Relet . No re-entry or repossession, repairs, maintenance, changes, alterations and additions, reletting, appointment of a receiver to protect Landlord's interests hereunder, or any other action or omission by Landlord shall be construed as an election by Landlord to terminate this Lease or Tenant's right to possession, or to accept a surrender of the Premises, nor shall same operate to release Tenant in whole or in part from any of Tenant's obligations hereunder, unless express written notice of such intention is sent by Landlord to Tenant. Nothing in this Lease shall constitute a waiver by Tenant of its statutory rights to redeem or reinstate this Lease.
19.5 Landlord Default .
19.5.1 General . Notwithstanding anything to the contrary set forth in this Lease, Landlord shall not be in default in the performance of any obligation required to be performed by Landlord pursuant to this Lease unless Landlord fails to perform such obligation within thirty (30) days after the receipt of notice from Tenant specifying in detail Landlord’s failure to perform; provided, however, if the nature of Landlord’s obligation is such that more than thirty (30) days are reasonably required for its performance, then Landlord shall not be in default under this Lease if it shall commence such performance within such thirty (30) day period and thereafter diligently pursue the same to completion. Upon any such default by Landlord under this Lease, Tenant may, except as otherwise specifically provided in this Lease to the contrary, exercise any of its rights provided at law or in equity.
19.5.2 Abatement of Rent . In the event that Tenant is prevented from using, and does not use, the Premises or any portion thereof, as a result of (i) any repair, maintenance or alteration performed by Landlord, or which Landlord failed to perform, after the Lease Commencement Date applicable to the Premises and required by this Lease, which substantially interferes with Tenant's use of or ingress to or egress from the Building or Tenant's Parking Areas; (ii) any failure by Landlord to provide services, utilities or ingress to and egress from the Building or Premises that Landlord is required to provide under this Lease, and which are reasonably within Landlord's ability to control (the parties acknowledging that an interruption in utilities caused by a utility provider is not within Landlord's ability to control); or (iii) the presence of Hazardous Materials brought on the Premises by any Landlord
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Parties (any such set of circumstances as set forth in items (i) through (iii), above, to be known as an " Abatement Event "), then Tenant shall give Landlord Notice of such Abatement Event, and if such Abatement Event continues for three (3) consecutive business days after Landlord’s receipt of any such notice, or occurs for five (5) non-consecutive business days during any calendar month, or occurs for ten (10) non-consecutive business days in a twelve (12) month period (provided Landlord is sent a notice for each such Abatement Event) (in either of such events, the " Eligibility Period "), then the Base Rent and Tenant’s Share of Direct Expenses shall be abated or reduced, as the case may be, after expiration of the Eligibility Period for such time that Tenant continues to be so prevented from using, and does not use, the Premises, or a portion thereof, in the proportion that the rentable area of the portion of the Premises that Tenant is prevented from using, and does not use (" Unusable Area "), bears to the total rentable area of the Premises; provided, however, in the event that Tenant is prevented from using, and does not use, the Unusable Area for a period of time in excess of the Eligibility Period and the remaining portion of the Premises is not sufficient to allow Tenant to effectively conduct its business therein, and if Tenant does not conduct its business from such remaining portion, then for such time after expiration of the Eligibility Period during which Tenant is so prevented from effectively conducting its business therein (in Tenant's reasonable judgment), the Base Rent and Tenant's Share of Direct Expenses for the entire Premises shall be abated for such time as Tenant continues to be so prevented from using, and does not use, the Premises. If, however, Tenant reoccupies any portion of the Premises during such period, the Rent allocable to such reoccupied portion, based on the proportion that the rentable area of such reoccupied portion of the Premises bears to the total rentable area of the Premises, shall be payable by Tenant from the date Tenant reoccupies such portion of the Premises. Such right to abate Base Rent and Tenant’s Share of Direct Expenses shall be Tenant's sole and exclusive remedy at law or in equity to abate Rent for an Abatement Event. To the extent Tenant is entitled to abatement because of an event covered by Articles 11 or 13 of this Lease, then Tenant's abatement rights shall be as set forth in Articles 11 and 13 above. Except as provided in this Section 19.5 .2 or elsewhere in this Lease, nothing contained herein shall be interpreted to mean that Tenant is excused from paying Rent due hereunder.
19.5.3 Tenant's Right to Make Repairs . Notwithstanding any of the terms set forth in this Lease to the contrary, 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 requires the action of Landlord with respect to repair and/or maintenance required on any full floor of the Building leased by Tenant, including repairs to the Building Structure and/or Building System located on such floor, which event or circumstance with respect to the Building Structure or Building System materially or adversely affects the 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) business 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 terms of this Lease to be taken by Landlord and was not commenced by Landlord within such ten (10) business day period and thereafter diligently pursued to completion, then Tenant shall be entitled to prompt reimbursement by Landlord of Tenant's reasonable costs and expenses in taking such action. Landlord's failure to dispute Tenant's right to make repairs shall conclusively be deemed Landlord's waiver of any claim that Tenant improperly performed self-help in accordance with this Section 19.7 or that the costs incurred by Tenant in such performance are excessive. In the event Tenant takes such action, Tenant shall use only those contractors used by Landlord in the Building for work unless such contractors are unwilling or unable to perform, or timely perform, such work, in which event Tenant may utilize the services of any other qualified contractor which normally and regularly performs similar work in Comparable Buildings. Following completion of any work taken by Tenant pursuant to the terms of this Section 19.5.3 , Tenant shall deliver a 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 (" Landlord's Set-Off Notice "), 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 terms 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 if so elected by Tenant shall be Tenant's sole remedy. If Landlord delivers a Landlord's Set-Off Notice to Tenant, then Tenant shall not be entitled to such deduction from Rent; provided that Tenant may proceed to claim a default by Landlord under this Lease for any amount not paid by Landlord. Any final award in favor of Tenant for any such default, which is not subject to appeal, from a court or arbitrator in favor of Tenant, which is not paid by Landlord within the time period directed by such award (together with interest at the Interest Rate from the date Landlord was required to pay such amount until such offset occurs), may be offset by Tenant from Rent next due and payable under this Lease. For purposes of this Section 19.5.3 , an " Emergency " shall mean an event threatening immediate and material danger to people located in the Building or immediate, material damage to the Building, Building Systems, Building Structure, Tenant Improvements, or Alterations, or creates a realistic possibility of an immediate and material interference with, or immediate and material interruption of a material aspect of Tenant's business operations.
ARTICLE 20
COVENANT OF QUIET ENJOYMENT
Landlord covenants that so long as no default (beyond applicable notice and cure periods) exists under this Lease, Tenant shall, during the Lease Term, peaceably and quietly have, hold and enjoy the Premises subject to the terms, covenants, conditions, provisions and agreements hereof without interference by any persons lawfully claiming by or through Landlord. The foregoing covenant is in lieu of any other express or implied covenant of quiet enjoyment.
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21.1 Delivery of Letter of Credit . Tenant shall cause the Bank (as that term is defined below) to deliver to Landlord , within three (3) business days of Tenant 's execution of this Lease , a letter of credit (the " L‑C ") that complies in all respects with the requirements of this Article 21 in the amount set forth in Section 8 of the Summary (the " L‑C Amount "). The L‑C shall: (i) be issued by a Bank ; (ii) be in the form attached hereto as Exhibit J ; (iii) be irrevocable, unconditional, and payable upon demand; (iv) be maintained in effect, whether through renewal or extension, for the period commencing on the date of this Lease and continuing until the date (the " L‑C Expiration Date ") that is no less than one hundred twenty (120) days following the expiration of the Lease Term, as the same may be extended; (v) contain a provision that provides that the L-C shall be automatically renewed on an annual basis without amendment of the L-C unless the Bank delivers a written notice of cancellation to Landlord and Tenant at least sixty (60) days prior to the expiration of the L‑C , without any action whatsoever on the part of Landlord ; (vi) be fully assignable by Landlord , its successors and assigns; (vii) permit partial draws and multiple presentations and drawings, and (viii) be otherwise subject to the International Standby Practices-ISP 98, International Chamber of Commerce Publication #590. Tenant shall pay all expenses, points, and/or fees incurred by Tenant in obtaining the L‑C. The term " Bank " referred to herein shall mean any of the following banks: (a) Wells Fargo Bank, N.A., (b) JPMorgan Chase Bank, N.A., (c) Bank of America, N.A. (d) US Bank or (e) Silicon Valley Bank , which (I) accepts deposits and maintains accounts; (II) that is chartered under the laws of the United States, any State thereof, or the District of Columbia, and which is insured by the Federal Deposit Insurance Corporation; (III) whose long-term issuer rating is no less than "Baa1" on Moody's (the " Bank's Credit Rating Threshold ").
21.2 Landlord 's Rights to Draw . Landlord , or its then authorized representatives, shall have the right to draw down an amount up to the face amount of the L‑C if any of the following shall have occurred or be applicable : (i) such amount is due to Landlord under the terms and conditions of this Lease ; (ii) the Lease has terminated prior to the expiration of the Lease Term as a result of Tenant 's breach or default of any term or provision of the Lease ; (iii) Tenant has filed a voluntary petition under the U. S. Bankruptcy Code or any state bankruptcy code (collectively, " Bankruptcy Code "); (iv) an involuntary petition has been filed against Tenant under the Bankruptcy Code ; (v) the Lease has been rejected, or is deemed rejected, under Section 365 of the U.S. Bankruptcy Code , following the filing of a voluntary petition by Tenant under the Bankruptcy Code , or the filing of an involuntary petition against Tenant under the Bankruptcy Code ; (vi) the Bank has notified Landlord that the L‑C will not be renewed or extended through the L‑C Expiration Date ; (vii) the Bank has failed to notify Landlord that the L-C will be renewed or extended on or before the date that is sixty (60) days before the applicable L-C expiration date; (viii) Tenant is placed into receivership or conservatorship, or becomes subject to similar proceedings under Federal or State law; (ix) Tenant executes an assignment for the benefit of creditors; or (x) if (1) any of the Bank 's rating has been reduced below the Bank's Credit Rating Threshold; or (2) there is otherwise a material adverse change in the financial condition of the Bank , and Tenant has failed to provide Landlord with a replacement letter of credit, conforming in all respects to the requirements of this Article 21 (including, but not limited to, the requirements placed on the issuing Bank more particularly set forth in this Section 21.1 above), in the amount of the applicable L‑C Amount , within ten (10) days (such ten (10) day period is the " Rating Replacement Period ") following Landlord 's written demand therefor (with no other notice or cure or grace period being applicable thereto, notwithstanding anything in this Lease to the contrary) (each of the foregoing being an " L‑C Draw Event "). Notwithstanding the foregoing, prior to drawing on the L-C due to an L-C Draw Event pursuant to (x) above, Landlord and Tenant shall meet during the ten (10) day period described in (x), and Tenant shall have the opportunity to discuss with Landlord the Bank's rating and whether drawing the L-C is prudent or reasonably necessary. The L‑C shall be honored by the Bank regardless of whether Tenant disputes Landlord 's right to draw upon the L‑C. In addition, in the event the Bank is placed into receivership or conservatorship by the Federal Deposit Insurance Corporation, any state regulator, or any successor or similar entity, then, effective as of the date such receivership or conservatorship occurs, said L‑C shall be deemed to fail to meet the requirements of this Article 21 , and, within ten (10) days (such ten (10) day period is the " FDIC Replacement Period ") following Landlord 's notice to Tenant of such receivership or conservatorship (the " L‑C FDIC Replacement Notice "), Tenant shall replace such L‑C with a substitute letter of credit from a different commercial bank (which commercial bank shall meet or exceed the Bank's Credit Rating Threshold and shall otherwise be acceptable to Landlord ) and that complies in all respects with the requirements of this Article 21 . Following a draw due to an L-C Draw Event pursuant to (x) above, if Tenant fails to replace such L‑C with a conforming, substitute letter of credit pursuant to the terms and conditions of Section 21.1 , hereof, then, notwithstanding anything in this Lease to the contrary, following the lapse of an additional fifty (50) day notice and cure period (commencing as of the expiration of the Rating Replacement Period), Landlord shall have the right to declare Tenant in default of this Lease for which there shall be no notice or grace or cure periods being applicable thereto (other than the aforesaid periods). A s required following receipt of the L-C FDIC Replacement Notice, if Tenant fails to replace such L‑C with a conforming, substitute letter of credit pursuant to the terms and conditions of Section 21.1 , hereof, then, notwithstanding anything in this Lease to the contrary, Landlord shall have the right to declare Tenant in default of this Lease for which there shall be no notice or grace or cure periods being applicable thereto (other than the aforesaid FDIC Replacement Period). Tenant shall have no right to voluntarily replace the L-C without Landlord 's prior written approval, in Landlord 's sole and absolute discretion. Tenant shall be responsible for the payment of any and all costs incurred by Landlord relating to the review of any replacement L‑C (including, without limitation, Landlord 's reasonable attorneys' fees), which replacement is required pursuant to this Section or is otherwise requested by Tenant , and such attorneys' fees shall be payable by Tenant to Landlord within ten (10) days of billing. In the event of an assignment by Tenant of its interest in the Lease (and irrespective of whether Landlord 's consent is required for such assignment), the acceptance of any replacement or substitute letter of credit by Landlord from the assignee shall be subject to Landlord 's prior written approval, in Landlord 's sole and absolute discretion, and the attorney's fees incurred by Landlord in connection with such determination shall be payable by Tenant to Landlord within ten (10) days of billing. Within two (2) business days following Tenant 's receipt of a written notice from Landlord , Tenant shall cause the Bank to deliver written confirmation to Landlord of the renewal or extension of the L‑C
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(unless the Bank has previously notified Landlord in writing that it shall not be renewing or extending the L ‑C), or if so requested by Landlord , Tenant shall facilitate Landlord 's direct communication with the Bank in order that Landlord may immediately confirm such renewal or extension directly with the Bank .
21.3 Application of L ‑ C Proceeds . Tenant hereby acknowledges and agrees that Landlord is entering into this Lease in material reliance upon the ability of Landlord to draw upon the L‑C upon the occurrence of any L‑C Draw Event and apply the proceeds of the L-C in accordance with this Article 21 . In the event of any L‑C Draw Event, Landlord may, but without obligation to do so, and without notice to Tenant (except in connection with an L-C Draw Event under Section 21.2(x) above), draw upon the L‑C , in part or in whole, and apply the proceeds of the L-C to cure any such L-C Draw Event and/or to compensate Landlord for any and all damages or losses of any kind or nature sustained or which Landlord reasonably estimates that it will sustain resulting from Tenant 's breach or default of the Lease or other L-C Draw Event and/or to compensate Landlord for any and all damages or losses arising out of, or incurred in connection with, the termination of this Lease , including, without limitation, those specifically identified in Section 1951.2 of the California Civil Code. The use, application, or retention of the L‑C proceeds, or any portion thereof, by Landlord shall not prevent Landlord from exercising any other right or remedy provided by this Lease or by any applicable Law, it being intended that Landlord shall not first be required to proceed against the L‑C , and such L‑C or the proceeds thereof shall not operate as a limitation on any recovery to which Landlord may otherwise be entitled. No condition or term of this Lease shall be deemed to render the L‑C conditional to justify the issuer of the L‑C in failing to honor a drawing upon such L‑C in a timely manner. Tenant agrees and acknowledges that: (i) the L‑C constitutes a separate and independent contract between Landlord and the Bank ; (ii) Tenant is not a third party beneficiary of such contract; (iii) Tenant has no property interest whatsoever in the L‑C or the proceeds thereof; (iv) Tenant has no right to assign or encumber the L‑C or any part thereof and neither Landlord nor its successors or assigns will be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance; and (v) in the event Tenant becomes a debtor under any chapter of the Bankruptcy Code , Tenant is placed into receivership or conservatorship, there is an event of a receivership, conservatorship, bankruptcy filing by, or on behalf of, Tenant , or Tenant executes an assignment for the benefit of creditors, neither Tenant , any trustee, receiver, conservator, assignee, nor Tenant 's bankruptcy estate shall have any right to restrict or limit Landlord 's claim or rights to the L‑C or the proceeds thereof by application of Section 502(b)(6) of the U. S. Bankruptcy Code, any similar State or federal law, or otherwise.
21.3.1 Maintenance of L-C by Tenant . If, as a result of any drawing by Landlord of all or any portion of the L-C, the amount of the L-C shall be less than the L-C Amount, Tenant shall, within five (5) days thereafter, provide Landlord with additional letter(s) of credit in an amount equal to the deficiency, and any such additional letter(s) of credit shall comply with all of the provisions of this Article 21 , and if Tenant fails to comply with the foregoing, the same shall be subject to the terms of Section 21.4.2 below. If Tenant exercises its option to extend the Lease Term pursuant to Section 2.2 of this Lease then, not later than one hundred twenty (120) days prior to the commencement of the Option Term, Tenant shall deliver to Landlord a new L C or certificate of renewal or extension evidencing the L-C Expiration Date as one hundred twenty (120) days after the expiration of the Option Term. If the L‑C is not timely renewed, or if Tenant fails to maintain the L‑C in the amount and in accordance with the terms set forth in this Article 21 , Landlord shall have the right to present the L‑C to the Bank in accordance with the terms of this Article 21 , and the proceeds of the L-C may be applied by Landlord against any Rent payable by Tenant under this Lease that is not paid when due and/or to pay for all losses and damages that Landlord has suffered or that Landlord reasonably estimates that it will suffer as a result of any breach or default by Tenant under this Lease. In the event Landlord elects to exercise its foregoing rights, (I) any unused proceeds shall constitute the property of Landlord (and not Tenant's property or, in the event of a receivership, conservatorship, or bankruptcy filing by, or on behalf of, Tenant, property of such receivership, conservatorship or Tenant's bankruptcy estate) and need not be segregated from Landlord's other assets, and (II) Landlord agrees to pay to Tenant within thirty (30) days after the L‑C Expiration Date the amount of any proceeds of the L-C received by Landlord and not applied against any Rent payable by Tenant under this Lease that was not paid when due or used to pay for any losses and/or damages suffered by Landlord (or reasonably estimated by Landlord that it will suffer) as a result of any breach or default by Tenant under this Lease; provided, however, that if prior to the L‑C Expiration Date a voluntary petition is filed by Tenant, or an involuntary petition is filed against Tenant by any of Tenant's creditors, under the Bankruptcy Code, then Landlord shall not be obligated to make such payment in the amount of the unused L-C proceeds until either all preference issues relating to payments under this Lease have been resolved in such bankruptcy or reorganization case or such bankruptcy or reorganization case has been dismissed.
21.4 Transfer and Encumbrance . The L-C shall also provide that Landlord may, at any time and without notice to Tenant and without first obtaining Tenant's consent thereto, transfer (one or more times) all or any portion of its interest in and to the L-C to another party, person or entity, regardless of whether or not such transfer is from or as a part of the assignment by Landlord of its rights and interests in and to this Lease. In the event of a transfer of Landlord's interest in this Lease, Landlord shall transfer the L-C, in whole or in part, to the transferee and thereupon Landlord shall, without any further agreement between the parties, be released by Tenant from all liability therefor, and it is agreed that the provisions hereof shall apply to every transfer or assignment of the whole of said L-C to a new landlord. In connection with any such transfer of the L-C by Landlord, Tenant shall, at Tenant's sole cost and expense, execute and submit to the Bank such applications, documents and instruments as may be necessary to effectuate such transfer, and Tenant shall be responsible for paying the Bank's transfer and processing fees in connection therewith, provided that Landlord shall have the right (in its sole discretion), but not the obligation, to pay such fees on behalf of Tenant, in which case Tenant shall reimburse Landlord within ten (10) days after Tenant's receipt of an invoice from Landlord therefor.
21.5 L-C Not a Security Deposit . Landlord and Tenant: (i) acknowledge and agree that in no event or circumstance shall the L ‑ C, any renewal or substitute therefor or any proceeds thereof be deemed to be or treated as a "security deposit" under any law applicable to security deposits in the commercial context , including, but not limited to, Section 1950.7 of the California Civil Code, as such Section now exists or as it may be hereafter amended
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or succeeded (the " Security Deposit Laws " ); (ii) acknowledge and agree that the L ‑ C (including any renewal thereof or substitute therefor or any proceeds thereof) is not intended to serve as a security deposit, and the Security Deposit Laws shall have no applicability or relevancy thereto; and (iii) waive any and all rights, duties and obligations that any such party may now, or in the future will, have relating to or arising from the Security Deposit Laws . Tenant hereby irrevocably waives and relinquishes the provisions of Section 1950.7 of the California Civil Code and any successor statute, and all other provisions of law, now or hereafter in effect, which (x) establish the time frame by which a landlord must refund a security deposit under a lease, and/or (y) provide that a landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by a tenant or to clean the premises, it being agreed that Landlord may, in addition, claim those sums specified in this Article 21 and/or those sums reasonably necessary to (a) compensate Landlord for any loss or damage caused by Tenant's breach of this Lease, including any damages Landlord suffers following termination of this Lease , and/or (b) compensate Landlord for any and all damages arising out of, or incurred in connection with, the termination of this Lease , including, without limitation, those specifically identified in Section 1951.2 of the California Civil Code .
21.6 Non-Interference By Tenant . Tenant agrees not to interfere in any way with any payment to Landlord of the proceeds of the L-C, either prior to or following a "draw" by Landlord of all or any portion of the L-C, regardless of whether any dispute exists between Tenant and Landlord as to Landlord's right to draw down all or any portion of the L-C. No condition or term of this Lease shall be deemed to render the L‑C conditional and thereby afford the Bank a justification for failing to honor a drawing upon such L-C in a timely manner. Tenant shall not request or instruct the Bank to refrain from paying sight draft(s) drawn under such L‑C.
21.7 Waiver of Certain Relief . Tenant unconditionally and irrevocably waives (and as an independent covenant hereunder, covenants not to assert) any right to claim or obtain any of the following relief in connection with the L‑C:
21.7.1 A temporary restraining order, temporary injunction, permanent injunction, or other order that would prevent, restrain or restrict the presentment of sight drafts drawn under the L‑C or the Bank's honoring or payment of sight draft(s); or
21.7.2 Any attachment, garnishment, or levy in any manner upon either the proceeds of the L‑C or the obligations of the Bank (either before or after the presentment to the Bank of sight drafts drawn under such L‑C) based on any theory whatever.
21.8 Remedy for Improper Drafts . Tenant's sole and exclusive remedy in connection with Landlord's improper draw against the L-C or Landlord's improper application or retention of any proceeds of the L-C shall be the right to obtain from Landlord a refund of the amount of any sight draft(s) that were improperly presented or the proceeds of which were misapplied or wrongfully held, together with interest at the Default Rate and reasonable actual out-of-pocket attorneys' fees, provided that at the time of such refund, Tenant increases the amount of such L‑C to the amount (if any) then required under the applicable provisions of this Lease. Tenant acknowledges that Landlord's draw against the L‑C, application or retention of any proceeds thereof, or the Bank's payment under such L‑C, could not, under any circumstances, cause Tenant injury that could not be remedied by an award of money damages, and that the recovery of money damages would be an adequate remedy therefor. In the event Tenant shall be entitled to a refund as aforesaid and Landlord shall fail to make such payment within ten (10) business days after demand, Tenant shall have the right to deduct the amount thereof together with interest thereon at the Default Rate from the next installment(s) of Base Rent.
21.9 Reduction of L-C Amount . Subject to the terms of this Section 21.9 , and Tenant's satisfaction of the L-C Reduction Condition, which is to be confirmed by Landlord, the L-C Amount shall be reduced (i) on the last day of the forty-second (42 nd ) full calendar month of the Lease Term (the " First Reduction Date "), by Tenant's delivery to Landlord of an amendment to the existing L-C, conforming in all respects to the requirements of this Article 21 , but in the amount of seventy-five percent (75%) of the original L-C Amount, and (ii) on the last day of the ninetieth (90 th ) full calendar month of the Lease Term (the " Second Reduction Date "), by Tenant's delivery to Landlord of an amendment to the existing L-C, conforming in all respects to the requirements of this Article 21 , but in the amount of fifty percent (50%) of the original L-C Amount. If Tenant is not satisfying the L-C Reduction Condition as of the Reduction Date, then Tenant may reduce the L-C Amount as of such later date that Tenant is then satisfying the L-C Reduction Condition. If Tenant is allowed to reduce the L-C Amount pursuant to the terms and conditions of this Section 21.9 , then Landlord shall reasonably cooperate with Tenant in order to effectuate such reduction. For purposes of this Section 21.9 , the " L-C Reduction Condition " shall mean that Tenant has been "cash flow positive," on a trailing twelve (12) month "Adjusted EBITDA" (i.e., after excluding from Net Income or Loss (i) other income (expense), net, (ii) stock-based compensation expense, (iii) depreciation and amortization, and (iv) income tax expense where applicable) basis during the twelve (12) month period ending on the last day of Tenant's most recently completed fiscal quarter ending prior to the measurement date.
ARTICLE 22
ROOFTOP AND RISER RIGHTS
22.1 Telecommunications Equipment . At any time during the Lease Term, subject to the terms of this Lease, Tenant may for each of the Buildings, (i) install, at Tenant's sole cost and expense, two (2) communications dishes or up to 24" in diameter, or one (1) communications antenna or comparable communications equipment upon the roof of the Building not to exceed 48" in height, (ii) use the Building telecommunications rooms and risers to install (A) two (2) two inch (2") diameter ridged metal conduits from the Building MPOE to the Premises, and (B) one (1) two inch (2") conduit from the Premises to the roof for connection of Tenant's rooftop equipment to the
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Premises (all such equipment, installations and connections, collectively, the " Telecommunications Equipment "). The use of such areas of the Building for the installation of the Telecommunications Equipment shall be for the sole use of Tenant in connection with its business in the Premises, and shall be without the payment of any additional Base Rent or Direct Expenses with respect thereto. The physical appearance and all specifications of the Telecommunications Equipment shall be subject to Landlord's reasonable approval, the location of any such installation of the Telecommunications Equipment shall be designated by Landlord (subject to Tenant's reasonable approval), and Landlord may require Tenant to install screening around such Telecommunications Equipment, at Tenant's sole cost and expense, as reasonably designated by Landlord. Tenant shall be responsible, at Tenant's sole cost and expense, for (i) obtaining all permits or other governmental approvals required in connection with the Telecommunications Equipment (including, without limitation, approval by the Federal Aviation Administration) , (ii) installing, repairing and maintaining and causing the Telecommunications Equipment to comply with all Applicable Laws, and (iii) prior to the expiration or earlier termination of this Lease, removal of the Telecommunications Equipment and all associated wiring, and the restoration of all affected areas of the Building to the condition existing prior to the installation thereof, including restoration of any roof penetrations. The Telecommunications Equipment shall constitute Mandatory Removal Items under Section 8.5 above.
22.2 Interference . In no event shall Tenant permit the Telecommunications Equipment to interfere with the systems of any building in the Project or the Project or any other communications equipment at or servicing any building in the Project or the Project. Except to the extent arising from or out of the negligence or willful misconduct of any of the Landlord Parties, Tenant shall indemnify, defend, protect, and hold harmless the Landlord Parties from any and all loss, cost, damage, expense and liability (including, without limitation, court costs and reasonable attorneys' fees) incurred in connection with or arising from any cause related to Tenant's installation, use, repair or maintenance or any other matter relating to or in connection with the Telecommunications Equipment. In the event Tenant elects to exercise its right to install the Telecommunication Equipment, then Tenant shall give Landlord prior notice thereof. Landlord agrees that it shall not install, and shall prohibit the installation and/or operation by any other party of, any microwave dishes/earth satellite disks, whip antennae, other communications devices, towers and/or other structures on the roof of the Building which would interfere with Tenant's use of the Telecommunications Equipment.
23.1 Full Floors . Tenant, if the Premises comprise an entire floor of the Buildings, at its sole cost and expense, may install identification signage anywhere in the Premises including in the elevator lobby of the Premises, provided that such signs must not be visible from the exterior of the Buildings, and provided all signs are in keeping with the quality, design and style of the Building and Project.
23.2 Multi-Tenant Floors . If other tenants occupy space on the floor on which the Premises is located, Tenant's identifying signage shall be provided by Landlord, at Tenant's cost, and such signage shall be comparable to that used by Landlord for other similar floors in the Building and shall comply with Landlord's then-current Building standard signage program.
23.3 Prohibited Signage and Other Items . Except for "Tenant's Signage" (as that term is defined below), any signs, notices, logos, pictures, names or advertisements which are installed and that have not been separately approved by Landlord may be removed without notice by Landlord at the sole expense of Tenant. Any signs, window coverings, or blinds (even if the same are located behind the Landlord-approved window coverings for the Buildings), or other items visible from the exterior of the Premises or Buildings, shall be subject to the prior approval of Landlord, in its sole discretion.
23.4 Tenant's Signage . In addition to the signage rights expressly set forth above in this Article 23 , Tenant, at Tenant's sole cost and expense, shall be entitled to (i) install up to two (2) exterior signs on each of the Buildings, (ii) install up to one (1) panel on any monument sign pertaining to Building 3 and/or Building 4, and (iii) paint Tenant's name and/or logo on the roof of either Building 3 or Building 4, but not both (in the locations more particularly identified on Exhibit I attached hereto) identifying Tenant's name and/or logo (the " Tenant's Signage ") in connection with Tenant's lease of the Premises.
23.4.1 Specifications and Permits . Tenant's Signage shall set forth Tenant's name and/or logo as determined by Tenant in its sole discretion, but subject to Landlord's reasonable approval, and in no event shall the Tenant's Signage include an "Objectionable Name," as that term is defined in Section 23.4.2 , below. The graphics, materials, color, design, lettering, lighting, size, illumination, specifications and exact locations of Tenant's Signage shall be subject to the prior written approval of Landlord, which approval shall not be unreasonably withheld, conditioned or delayed, and shall be consistent and compatible with the quality and nature of the Project and Landlord's Building standard signage specifications. In addition, the Tenant's Signage shall be subject to Tenant's receipt of all necessary governmental or quasi-governmental approvals and permits (collectively, " Governmental Approvals ") and shall be subject to all Applicable Laws and the Underlying Documents. Tenant hereby acknowledges that Landlord has made no representation or warranty to Tenant with respect to the probability of obtaining all necessary Governmental Approvals for the Tenant's Signage. In the event Tenant does not receive the necessary Governmental Approvals for the Tenant's Signage, Tenant's and Landlord's rights and obligations under this Lease shall be unaffected.
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23.4.2 Objectionable Name . To the extent Tenant desires to change the name and/or logo set forth on the Tenant's Signage, such name and/or logo shall not have a name which relates to an entity which is of a character or reputation, or is associated with a political faction or orientation, which is inconsistent with the quality of the Project , or which would otherwise reasonably offend a landlord of the Comparable Buildings (an " Objectionable Name "). The parties hereby agree that the name " Roku " or any reasonable derivation thereof, shall not be deemed an Objectionable Name .
23.4.3 Termination of Right to Tenant's Signage . The rights contained in this Section 23.4 shall be personal to the Original Tenant or a Permitted Transferee Assignee, and may only be exercised and maintained by the Original Tenant or such Permitted Transferee Assignee (and not any other assignee, sublessee or other transferee of either of the Original Tenant's interest in the Lease) if the Original Tenant or such Permitted Transferee Assignee has not subleased more than thirty-five percent (35%) of the initial Premises and any other space leased by Tenant in the Project, and a default by Tenant under this Lease is not then occurring beyond the applicable notice and cure period. In the event Tenant fails to comply with any of the requirements set forth hereinabove, the signage rights provided in this Section 23.4 shall automatically terminate.
23.4.4 Cost and Maintenance; Change and Replacement . The actual costs of the Tenant's Signage and the installation, design, construction and any and all other costs associated with the Tenant's Signage, including, without limitation, utility charges and hook-up fees, permits, and maintenance and repairs, shall be the sole responsibility of Tenant. Should the Tenant's Signage require repairs and/or maintenance, as determined in Landlord's reasonable judgment, Landlord shall have the right to provide notice thereof to Tenant and Tenant (except as set forth below) shall cause such repairs and/or maintenance to be performed within thirty (30) days after receipt of such notice from Landlord, at Tenant's sole cost and expense; provided, however, if such repairs and/or maintenance are reasonably expected to require longer than thirty (30) days to perform, Tenant shall commence such repairs and/or maintenance within such thirty (30) day period and shall diligently prosecute such repairs and maintenance to completion. Should Tenant fail to perform such repairs and/or maintenance within the periods described in the immediately preceding sentence, Landlord shall, upon the delivery of an additional five (5) business days' prior written notice, have the right to cause such work to be performed and to charge Tenant as Additional Rent for the actual cost of such work. Subject to Tenant's agreement to comply with the terms of this Section 23.4 , Tenant shall be permitted to change and/or replace the Tenant's Signage periodically in Tenant's reasonable discretion. Upon the expiration or earlier termination of this Lease or upon any earlier termination of Tenant's rights to the Tenant's Signage as set forth herein, Tenant shall, at Tenant's sole cost and expense, cause the Tenant's Signage to be removed and shall cause the areas in which such Tenant's Signage was located to be restored to the condition existing immediately prior to the placement of such Tenant's Signage except for (x) ordinary wear and tear, (y) damage by Casualty that is not Tenant's obligation to repair hereunder, or (z) repairs which are specifically made the responsibility of Landlord hereunder. If Tenant fails to timely remove the Tenant's Signage or to restore the areas in which such the Tenant's Signage was located, as provided in the immediately preceding sentence, then Landlord may perform such work, and all actual costs incurred by Landlord in so performing shall be reimbursed by Tenant to Landlord within thirty (30) days after Tenant's receipt of an invoice therefor. The terms and conditions of this Section 23.4.4 shall survive the expiration or earlier termination of the Lease.
ARTICLE 24
COMPLIANCE WITH LAW
24.1 Tenant's Obligations . Tenant shall not knowingly do anything or suffer anything to be done in or about the Premises or the Project which will in any way materially conflict with any law, statute, ordinance or other governmental rule, regulation or requirement now in force or which may hereafter be enacted or promulgated (collectively, " Applicable Laws "). At its sole cost and expense, Tenant shall promptly comply with all such Applicable Laws (including the making of any alterations required to comply with Applicable Laws) which relate to (i) Tenant's use of the Premises, (ii) any Alterations made by Tenant to the Premises, and any tenant improvements in the Premises, or (iii) the Base Building, but as to the Base Building, only to the extent such obligations are triggered by nontypical general office Alterations made by Tenant to the Premises, or any nontypical general office Tenant Improvements, or Tenant's use of the Premises for non‑general office use. Should any standard or regulation now or hereafter be imposed on Landlord or Tenant by a state, federal or local governmental body charged with the establishment, regulation and enforcement of occupational, health or safety standards for employers, employees, landlords or tenants, then Tenant agrees, at its sole cost and expense, to comply promptly with such standards or regulations as they relate to Tenant or to the Premises. The judgment of any court of competent jurisdiction or the admission of Tenant in any judicial action, regardless of whether Landlord is a party thereto, that Tenant has violated any of said governmental measures, shall be conclusive of that fact as between Landlord and Tenant.
24.2 Landlord's Obligations . Landlord shall comply with all Applicable Laws (including Environmental Laws, as that term is defined in Exhibit G ) relating to the Base Building and Project Common Areas (which compliance may include the remediation, removal or abatement of Hazardous Materials), provided that compliance with such Applicable Laws is not the responsibility of Tenant under this Lease and provided further that such compliance is required by a governmental authority. Without limiting the foregoing, Landlord's development and post-development activities in the Project shall materially comply with all requirements set forth in that certain April 2011 Soil Management Plan (the " SMP ") prepared by the City of San Jose and approved by the Department of Toxic Substances Control of the California Environmental Protection Agency (the " DTSC "). Furthermore, Landlord shall (i) install a vapor barrier membrane in the Buildings and comply with all recommendations set forth in that certain Vapor Barrier Membrane Repair Manual dated April 3, 2018 prepared by Langan Engineering and Environmental Services Inc., and (ii) use commercially efforts to cause FMC Corporation to comply with all of its remediation, treatment and monitoring in the Project as required by Applicable Laws and any applicable governmental authority, including, without limitation the DTSC. Landlord shall be permitted to include in Operating Expenses any costs or expenses incurred by Landlord under this Article 24 to the extent not prohibited by the terms of Section 4.2.4 .
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24.3 Certified Access Specialist . Tenant hereby waives any and all rights under and benefits of California Civil Code Section 1938 and acknowledges that neither the Project nor the Premises has undergone inspection by a Certified Access Specialist (CASp) (defined in California Civil Code Section 55.52). As required by Section 1938(e) of the California Civil Code, Landlord hereby states as follows: " A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises. " In furtherance of the foregoing, Landlord and Tenant hereby agree that any CASp inspection requested by Tenant shall be conducted, at Tenant ' s sole cost and expense, by a CASp designated by Landlord.
If any installment of Rent or any other sum due from Tenant shall not be received by Landlord or Landlord's designee within five (5) business days after written notice that said amount was not paid when due, then Tenant shall pay to Landlord a late charge equal to three percent (3%) of the overdue amount, but not in excess of Twenty-Five Thousand Dollars ($25,000), plus any reasonable attorneys' fees incurred by Landlord by reason of Tenant's failure to pay Rent and/or other charges when due hereunder. Notwithstanding the foregoing, Landlord agrees to waive said late charge on the first occasion of such late payment of Rent during any consecutive twelve (12) calendar month period. The late charge shall be deemed Additional Rent and the right to require it shall be in addition to all of Landlord's other rights and remedies hereunder or at law and shall not be construed as liquidated damages or as limiting Landlord's remedies in any manner. In addition to the late charge described above, any Rent or other amounts owing hereunder which are not paid within ten (10) business days after the date they are due shall bear interest from the date when due until paid at a rate per annum (the " Default Rate ") equal to the lesser of (i) the annual " Bank Prime Loan " rate cited in the Federal Reserve Statistical Release Publication G.13(415), published on the first Tuesday of each calendar month (or such other comparable index as Landlord and Tenant shall reasonably agree upon if such rate ceases to be published) plus two (2) percentage points, and (ii) the highest rate permitted by Applicable Law.
ARTICLE 26
LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT
26.1 Landlord's Cure . All covenants and agreements to be kept or performed by Tenant under this Lease shall be performed by Tenant at Tenant's sole cost and expense and without any reduction of Rent, except to the extent, if any, otherwise expressly provided herein. If Tenant shall fail to perform any obligation under this Lease, and such failure shall continue in excess of the time allowed under Section 19.1.2 , above, unless a specific time period is otherwise stated in this Lease, Landlord may upon an additional three (3) business days' notice to Tenant, but shall not be obligated to, make any such payment or perform any such act on Tenant's part without waiving its rights based upon any default of Tenant and without releasing Tenant from any obligations hereunder.
26.2 Tenant's Reimbursement . Except as may be specifically provided to the contrary in this Lease, Tenant shall pay to Landlord, within thirty (30) days after delivery by Landlord to Tenant of invoices together with reasonable supporting evidence therefor: (i) sums equal to expenditures reasonably made and obligations incurred by Landlord in connection with the remedying by Landlord of Tenant's defaults pursuant to the provisions of Section 26.1 ; (ii) sums equal to all losses, costs, liabilities, damages and expenses referred to in Article 10 of this Lease; and (iii) sums equal to all expenditures made and obligations incurred by Landlord in collecting or attempting to collect the Rent or in enforcing or attempting to enforce any rights of Landlord under this Lease or pursuant to law, including, without limitation, all reasonable legal fees and other amounts so expended. Tenant's obligations under this Section 26.2 shall survive the expiration or sooner termination of the Lease Term.
Landlord reserves the right at all reasonable times and upon no less than twenty-four (24) hours' prior notice to Tenant (except in the case of an emergency, in which case, no prior notice shall be required) to enter the Premises to (i) inspect them; (ii) show the Premises to prospective purchasers, or to current or prospective mortgagees, ground or underlying lessors or insurers or, during the last twelve (12) months of the Lease Term, to prospective tenants; (iii) post notices of nonresponsibility; or (iv) alter, improve or repair the Premises or the Buildings, or for structural alterations, repairs or improvements to the Buildings or the Buildings' systems and equipment; provided, however, except for (a) emergencies, (b) repairs, alterations, improvements or additions required by governmental or quasi-governmental authorities or court order or decree, or (c) repairs which are the obligation of Tenant hereunder, any such entry into the Premises by Landlord shall be performed in a manner so as not to materially interfere with Tenant's use of, or access to, the Premises; provided further that, with respect to items (b) and (c) above, Landlord shall use commercially reasonable efforts to not materially interfere with Tenant's use of, or access to, the Premises. Notwithstanding anything to the contrary contained in this Article 27 , Landlord may enter the Premises at any time to (A) perform services required of Landlord; (B) take possession due to any breach of this Lease in the manner provided herein; and (C) perform any covenants of Tenant which Tenant fails to
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perform. Landlord may make any such entries without the abatement of Rent, except as otherwise provided in this Lease, and may take such reasonable steps as required to accomplish the stated purposes. Tenant shall at all times, except in the case of emergencies, have the right to escort Landlord or any Landlord Parties while the same are in the Premises. For each of the above purposes, Landlord shall at all times have a key with which to unlock all the doors in the Premises, excluding Tenant's vaults, safes and special security areas designated in advance by Tenant. Notwithstanding anything to the contrary set forth in this Lease, Tenant may reasonably designate certain reasonable areas of the Premises as " Secured Areas " should Tenant require such areas for the purpose of securing certain valuable property or confidential information. In connection with the foregoing, Landlord shall not enter such Secured Areas except in the event of an emergency. Landlord need not clean any area designated by Tenant as a Secured Area and shall only maintain or repair such secured areas to the extent (x) such repair or maintenance is required in order to maintain and repair the Building Structure and/or the Building Systems; (y) as required by Applicable Law, or (z) in response to specific requests by Tenant and in accordance with a schedule reasonably designated by Tenant, subject to Landlord's reasonable approval. In an emergency, Landlord shall have the right to use any means that Landlord may deem proper to open the doors in and to the Premises. Any entry into the Premises by Landlord in the manner hereinbefore described shall not be deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an actual or constructive eviction of Tenant from any portion of the Premises. No provision of this Lease shall be construed as obligating Landlord to perform any repairs, alterations or decorations except as otherwise expressly agreed to be performed by Landlord herein. For purposes of this Article, an emergency situation is one that poses a threat of imminent bodily harm or property damage. If Landlord makes an emergency entry onto the Premises when no authorized representative of Tenant is present, Landlord shall use commercially reasonable efforts to provide telephone notice to Tenant as soon as reasonably possible within twenty-four (24) hours after that entry and shall take reasonable steps to secure the Premises until a representative of Tenant arrives at the Premises.
28.1 Tenant's Use of Project Parking Facilities . Tenant shall be entitled to use, commencing on the Lease Commencement Date, the amount of parking passes set forth in Section 8 of the Summary, on a monthly basis throughout the Lease Term, which parking passes shall pertain to the Project parking facilities, which shall include unreserved surface parking passes for parking in front of Building 3 and Building 4, as well as sixty-five (65) reserved parking passes for parking in the garage located at 1170 Champions Drive, San Jose, California (the " Parking Garage "). The location of the reserved parking spaces in the Parking Garage shall be designated by Landlord and are depicted on Exhibit N attached hereto. During the initial Lease Term, Tenant shall not be obligated to pay to Landlord for automobile parking passes on a monthly basis; provided, however, Tenant shall be responsible for the full amount of any taxes imposed by any governmental authority in connection with the renting of such parking passes by Tenant or the use of the parking facilities by Tenant. Tenant's continued right to use the parking passes is conditioned upon Tenant abiding by all reasonable rules and regulations which are prescribed in writing and delivered by written notice to Tenant from time to time for the orderly operation and use of the parking facilities where the parking passes are located (including any sticker or other identification system established by Landlord and the prohibition of vehicle repair and maintenance activities in the Project's parking facilities), Tenant's cooperation in seeing that Tenant's employees and visitors also comply with such rules and regulations and Tenant not being in default under this Lease. Tenant's use of the Project parking facilities shall be at Tenant's sole risk and Tenant acknowledges and agrees that Landlord shall have no liability whatsoever for damage to the vehicles of Tenant, its employees and/or visitors, or for other personal injury or property damage or theft relating to or connected with the parking rights granted herein or any of Tenant's, its employees' and/or visitors' use of the parking facilities. Tenant's rights hereunder, including reserved parking rights, are subject to the terms of any Underlying Documents, which include, without limitation, certain rights for use of the parking facilities and parking spaces in connection with events at the stadium located adjacent to the Project; provided that Tenant shall not be obligated to move or relocate vehicles in order to accommodate such events at the stadium. Landlord specifically reserves the right to change the size, configuration, design, layout and all other aspects of the Project parking facilities at any time and Tenant acknowledges and agrees that Landlord may, without incurring any liability to Tenant and without any abatement of Rent under this Lease, from time to time, temporarily close-off or restrict access to the Project parking facilities for purposes of permitting or facilitating any such construction, alteration or improvements. Landlord may delegate its responsibilities hereunder to a parking operator in which case such parking operator shall have all the rights of control attributed hereby to the Landlord. The parking passes used by Tenant pursuant to this Article 28 are provided to Tenant solely for use by Tenant's own personnel and such passes may not be transferred, assigned, subleased or otherwise alienated by Tenant without Landlord's prior approval.
28.2 Electrical Vehicle Charging Stations . Landlord shall install, at Landlord 's sole cost and expense, forty-eight (48) dual head electrical vehicle charging stations (" EV Stations ") in the Parking Garage (in the locations depicted on Exhibit N attached hereto ), which shall be designated as reserved for Tenant's use, subject to use of the EV Station parking spaces in connection with events at the stadium located adjacent to the Project; provided that Tenant may, at Tenant's sole election, program the EV Stations to prevent use of the EV Stations by third parties. Landlord shall promptly repair any damage to the EV Stations caused by third party use, at Landlord's sole cost and expense and without reimbursement by Tenant through Operating Expense or otherwise; provided that Tenant shall otherwise be solely responsible, at Tenant 's sole cost and expense, for the use and maintenance of such EV Stations. Landlord shall also provide, at Landlord's sole cost and expense, conduit and panel capacity for forty-eight (48) EV Stations in the Parking Garage, which EV Stations may be installed by Tenant, at Tenant's sole cost and expense, in the locations depicted on Exhibit N attached hereto , during the Lease Term if Tenant elects to install such EV Stations; provided that Tenant shall be solely responsible, at Tenant's sole cost and expense, for the installation, use and maintenance of such EV Stations utilizing such conduit and panel capacity. In the event Tenant elects to install any such EV Stations, the same shall be designated for exclusive use by Tenant during the Lease Term, except as required by Applicable Laws and subject to use in connection with events at the stadium located adjacent to the Project.
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ARTICLE 29
MISCELLANEOUS PROVISIONS
29.1 Terms; Captions . The words " Landlord " and " Tenant " as used herein shall include the plural as well as the singular. The necessary grammatical changes required to make the provisions hereof apply either to corporations or partnerships or individuals, men or women, as the case may require, shall in all cases be assumed as though in each case fully expressed. The captions of Articles and Sections are for convenience only and shall not be deemed to limit, construe, affect or alter the meaning of such Articles and Sections.
29.2 Binding Effect . Subject to all other provisions of this Lease, each of the covenants, conditions and provisions of this Lease shall extend to and shall, as the case may require, bind or inure to the benefit not only of Landlord and of Tenant, but also of their respective heirs, personal representatives, successors or assigns, provided this clause shall not permit any assignment by Tenant contrary to the provisions of Article 14 of this Lease.
29.3 No Air Rights . No rights to any view or to light or air over any property, whether belonging to Landlord or any other person, are granted to Tenant by this Lease. If at any time any windows of the Premises are temporarily darkened or the light or view therefrom is obstructed by reason of any repairs, improvements, maintenance or cleaning in or about the Project, the same shall be without liability to Landlord and without any reduction or diminution of Tenant's obligations under this Lease.
29.4 Bicycle Storage . As part of the construction of the Base, Shell and Core, Landlord shall install secured bicycle storage area(s) (the " Bicycle Storage Area(s) "), in the locations within the Parking Garage or Common Areas of the Project as shown on Exhibit M attached to this Lease, that will accommodate no less than one hundred fifty (150) bicycles. Tenant shall have the exclusive right to use the Bicycle Storage Area(s) for day-use parking of bicycles by Tenant and Tenant's employees, visitors, invitees and sublessees ; provided that Tenant shall otherwise be solely responsible, at Tenant 's sole cost and expense, for the use and maintenance the Bicycle Storage Area(s), and for providing janitorial and security services to the Bicycle Storage Area(s) . Tenant's exclusive use of the Bicycle Storage Area shall be proportionately reduced in connection with any reduction in Tenant's lease of the Premises (whether pursuant to Section 2.2 above, or otherwise).
29.5 Transfer of Landlord's Interest . Tenant acknowledges that Landlord has the right to transfer all or any portion of its interest in the Project or Buildings and in this Lease, and Tenant agrees that in the event of any such transfer, Landlord shall automatically be released from all liability under this Lease not accrued as of the date of transfer (to the extent that such obligations are expressly assumed by the transferee) and Tenant agrees to look solely to such transferee for the performance of Landlord's obligations hereunder after the date of transfer and such transferee shall be deemed to have fully assumed and be liable for all obligations of this Lease to be performed by Landlord which first arise or accrue after the date of transfer, including the return of any Security Deposit, and subject to the terms of Article 18 of this Lease, Tenant shall attorn to such transferee. Tenant further acknowledges that Landlord may assign its interest in this Lease to a mortgage lender as additional security and agrees that such an assignment shall not release Landlord from its obligations hereunder and that Tenant shall continue to look to Landlord for the performance of its obligations hereunder.
29.6 Recording . Tenant shall have the right to record against the Project a memorandum providing record notice of the Lease , which shall be in the form of Exhibit L attached hereto (the " Memorandum "). The parties shall sign the Memorandum concurrently with the execution of this Lease. In addition, within thirty (30) days after Landlord's written request following the expiration or earlier termination of this Lease, Tenant shall execute and deliver to Landlord in recordable form, termination of the Memorandum. Tenant's obligation to execute and deliver such termination of the Memorandum shall survive the expiration or earlier termination of this Lease. Tenant shall be solely responsible for all costs incurred under this Section 29.6 .
29.7 Landlord's Title . Landlord's title is and always shall be paramount to the title of Tenant. Nothing herein contained shall empower Tenant to do any act which can, shall or may encumber the title of Landlord.
29.8 Relationship of Parties . Nothing contained in this Lease shall be deemed or construed by the parties hereto or by any third party to create the relationship of principal and agent, partnership, joint venturer or any association between Landlord and Tenant.
29.9 Application of Payments . Landlord shall have the right to apply payments received from Tenant pursuant to this Lease, regardless of Tenant's designation of such payments, to satisfy any obligations of Tenant hereunder, in such order and amounts as Landlord, in its sole discretion, may elect.
29.10 Time of Essence . Time is of the essence with respect to the performance of every provision of this Lease in which time of performance is a factor. Whenever in the Lease a payment is required to be made by one party to the other, but a specific date for payment is not set forth or a specific number of days within which payment is to be made is not set forth, or the words "immediately," "promptly," and/or "on demand," or their equivalent, are used to specify when such payment is due, then such payment shall be due thirty (30) days after the date that the party which is entitled to such payment sends notice to the other party demanding such payment.
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29.11 Partial Invalidity . If any term, provision or condition contained in this Lease shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such term, provision or condition to persons or circumstances other than those with respect to which it is invalid or unenforceable, shall not be affected thereby, and each and every other term, provision and condition of this Lease shall be valid and enforceable to the fullest extent possible permitted by law.
29.12 No Warranty . In executing and delivering this Lease, Tenant has not relied on any representations, including, but not limited to, any representation as to the amount of any item comprising Additional Rent or the amount of the Additional Rent in the aggregate or that Landlord is furnishing the same services to other tenants, at all, on the same level or on the same basis, or any warranty or any statement of Landlord which is not set forth herein or in one or more of the exhibits attached hereto.
29.13 Landlord Exculpation; No Consequential Damages . The liability of Landlord or the Landlord Parties to Tenant for any default by Landlord under this Lease or arising in connection herewith or with Landlord's operation, management, leasing, repair, renovation, alteration or any other matter relating to the Project or the Premises shall be limited solely and exclusively to an amount which is equal to the interest of Landlord in the Project and the rents, issue, profits and proceeds therefrom, including, without limitation, any sales or insurance proceeds (following payment of any outstanding liens and/or mortgages, whether attributable to sales or insurance proceeds or otherwise). Neither Landlord, nor any of the Landlord Parties shall have any personal liability therefor, and Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant. The limitations of liability contained in this Section 29.13 shall inure to the benefit of Landlord's and the Landlord Parties' present and future partners, beneficiaries, officers, directors, trustees, shareholders, agents and employees, and their respective partners, heirs, successors and assigns. Under no circumstances shall any present or future partner of Landlord (if Landlord is a partnership), or trustee or beneficiary (if Landlord or any partner of Landlord is a trust), have any liability for the performance of Landlord's obligations under this Lease. Notwithstanding any contrary provision herein, neither Landlord nor the Landlord Parties shall be liable under any circumstances for injury or damage to, or interference with, Tenant's business, including but not limited to, loss of profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use, in each case, however occurring ; similarly, except with respect to Tenant's violations of the provisions of this Lease regarding Hazardous Materials and Tenant' s holding over in the Premises following the expiration or sooner termination of this Lease , Tenant shall not be liable under any circumstances for injury or damage to, or interference with, Landlord' s business, including, but not limited to, loss of profits or other revenues (not including, however, loss of rents), loss of business opportunity, loss of goodwill or loss of use, in each case, however occurring.
29.14 Entire Agreement . It is understood and acknowledged that there are no oral agreements between the parties hereto affecting this Lease and this Lease constitutes the parties' entire agreement with respect to the leasing of the Premises and supersedes and cancels any and all previous negotiations, arrangements, brochures, agreements and understandings, if any, between the parties hereto or displayed by Landlord to Tenant with respect to the subject matter thereof, and none thereof shall be used to interpret or construe this Lease. None of the terms, covenants, conditions or provisions of this Lease can be modified, deleted or added to except in writing signed by the parties hereto.
29.15 Right to Lease . Landlord reserves the absolute right to effect such other tenancies in the Project as Landlord in the exercise of its sole business judgment shall determine to best promote the interests of the Buildings or Project. Tenant does not rely on the fact, nor does Landlord represent, that any specific tenant or type or number of tenants shall, during the Lease Term, occupy any space in the Buildings or Project. Landlord shall not, without the prior written consent of Tenant, which may be granted or withheld in Tenant’s sole and absolute discretion, enter into any lease or other occupancy agreement with, or consent to an assignment or subletting (except in the case of a “permitted transfer” to an affiliate entity or similar transfer for which Landlord’s prior consent is not required) to, any Tenant Competitor for the First Offer Space (for purposes of this section, referred to as the " Competitor Restricted Area ") (or any portion thereof). For purposes hereof, the term " Tenant Competitor " shall mean either Apple Inc. or Amazon.com, Inc., or any subsidiary of either Apple Inc. or Amazon.com, Inc. if such subsidiary's primary products or services compete with the products and services offered by Tenant as its primary business (as reasonably determined by Tenant and as such products and services may change and expand from time to time). Notwithstanding anything herein to the contrary, Landlord shall not be deemed to have violated the terms of this Section 29.15 if: (i) any tenant or occupant merges or consolidates with or into, or acquires or is acquired by, any Tenant Competitor, (ii) Landlord is required to permit such lease pursuant to a court order, or (iii) Landlord, after a reasonable inquiry, in good faith believes that any prospective tenant is not a Tenant Competitor. The prohibition on Landlord leasing space in the Competitor Restricted Area to Tenant Competitors under this Section 29.15 shall terminate upon the date that is the earliest to occur of: (a) the date that Original Tenant assigns this Lease to any entity other than a Permitted Transferee Assignee, (b) that date that Tenant subleases more than thirty-five percent (35%) of the Premises, (c) the date Tenant no longer occupies sixty-five percent (65%) of the greater of (i) the Premises initially leased to Tenant hereunder as of the date of this Lease, and (ii) the Premises leased to Tenant hereunder as modified subsequent to the date of this Lease, or (d) the date when less than fifteen (15) months remain in the then Lease Term (as the same may be extended), or upon any earlier date as of which Tenant has waived all rights to renew or extend the Lease Term. Notwithstanding anything to the contrary in this Section 29.15, the prohibition on Landlord leasing space in the Competitor Restricted Area to Tenant Competitors under this Section 29.15 shall not apply to (A) any existing lease entered into by Landlord and any other tenant in the Project prior to the Effective Date, or (B) any lease entered into by Landlord and any other tenant in the Project for shared office workplaces offering certain office services incidental to the primary office uses (the " Co-Work Uses "). The "Co-Work Uses" shall include, without limitation, the design, development, marketing, operation and/or managing of: (a) executive, administrative and general business offices and other lawful uses, (b) flexible workplace center use, (c) event space, and/or (d) other ancillary office related uses to such tenant's operations and services as the same may develop or expand over time, including, but not limited to, training centers, data centers, conference centers,
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kitchens, storage, office pantries, recreational areas, community facilities or common areas intended to serve the occupants and users of such t enant's co-working facility, including limited food service or sale, beer , wine and liquor service . For so long as an Original Landlord is the Landlord under this Lease and an Original Landlord is also the owner of Building 5, Landlord's obligations under this Section 29.15 shall remain covenants binding on Original Landlord, and a default by the owner of Building 5 in the performance of the obligations under this Secti on 29.15 constitute a default by Original Landlord under this Lease . Upon the transfer of Original Landlord's interest in the Premises and in this Lease to any third party (other than any other Original Landlord) or upon the transfer of Original Landlord's interest in Building 5 to any third party, Landlord shall automatically be released from all obligations under this Section 29.15 and Tenant agrees to look solely to the owner of Building 5 for the performance of the obligations under this Secti on 29.15 after the date of transfer.
29.16 Force Majeure . Any prevention, delay or stoppage due to strikes, lockouts, labor disputes, any Permit Delay (as that term is defined herein below), acts of God, acts of war, terrorist acts, inability to obtain services, labor, or materials or reasonable substitutes therefor, governmental actions, civil commotions, fire or other casualty, and other causes beyond the reasonable control of the party obligated to perform, except with respect to the obligations imposed with regard to Rent and other charges to be paid by Tenant pursuant to this Lease (collectively, a " Force Majeure "), notwithstanding anything to the contrary contained in this Lease, shall excuse the performance of such party for a period equal to any such prevention, delay or stoppage and, therefore, if this Lease specifies a time period for performance of an obligation of either party, that time period shall be extended by the period of any delay in such party's performance caused by a Force Majeure. The term " Permit Delay " shall mean the inability of Landlord to obtain building permits required in connection with the construction of the Base, Shell and Core and Project within thirty (30) days after Landlord's submittal to the City for such permits, other than the City's refusal to issue such permits due to an incomplete or inaccurate submittal to the City by Landlord.
29.17 Intentionally Omitted .
29.18 Notices . All notices, demands, statements, designations, approvals or other communications (collectively, " notices " or " Notices ") given or required to be given by either party to the other hereunder or by law shall be in writing, shall be (A) sent by United States certified or registered mail, postage prepaid, return receipt requested (" Mail "), (B) transmitted by telecopy, if such telecopy is promptly followed by a Notice sent by Mail, (C) delivered by a nationally recognized overnight courier, or (D) delivered personally. Any Notice shall be sent, transmitted, or delivered, as the case may be, to Tenant at the appropriate address set forth in Section 9 of the Summary, or to such other place as Tenant may from time to time designate in a Notice to Landlord, or to Landlord at the addresses set forth below, or to such other places as Landlord may from time to time designate in a Notice to Tenant. Any Notice will be deemed given (i) three (3) days after the date it is posted if sent by Mail, (ii) the date the telecopy is transmitted, (iii) the date the overnight courier delivery is made, or (iv) the date personal delivery is made. As of the date of this Lease, any Notices to Landlord must be sent, transmitted, or delivered, as the case may be, to the following addresses:
CAP OZ 34, LLC
10121 Miller Avenue, Suite 200
Cupertino, California 95014
Attention: Derek K. Hunter, Jr. and Sherri Prieb
and
Allen Matkins Leck Gamble Mallory & Natsis LLP
1901 Avenue of the Stars
Suite 1800
Los Angeles, California 90067
Attention: Anton N. Natsis, Esq.
29.19 Joint and Several . If there is more than one Tenant, the obligations imposed upon Tenant under this Lease shall be joint and several.
29.20 Authority . Tenant represents and warrants that Tenant is a duly formed and existing entity qualified to do business in California and that Tenant has full right and authority to execute and deliver this Lease and that each person signing on behalf of Tenant is authorized to do so. Tenant shall, within ten (10) days after Landlord's request, deliver to Landlord satisfactory evidence of good standing in Tenant's state of incorporation. Landlord warrants that Landlord is a duly formed and existing entity qualified to do business in California and that Landlord has full right and authority to execute and deliver this Lease and that each person signing on behalf of Landlord is authorized to do so.
29.21 Attorneys' Fees . In the event that either Landlord or Tenant should bring suit for the possession of the Premises, for the recovery of any sum due under this Lease, or because of the breach of any provision of this Lease or for any other relief against the other, then all costs and expenses, including reasonable attorneys' fees, incurred by the prevailing party therein shall be paid by the other party, which obligation on the part of the other party shall be deemed to have accrued on the date of the commencement of such action and shall be enforceable whether or not the action is prosecuted to judgment.
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29.22 Governing Law; Jurisdiction; WAIVER OF TRIAL BY JURY . This Lease shall be construed and enforced in accordance with the laws of the State of California. IN ANY ACTION OR PROCEEDING ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I) THE JURISDICTION OF ANY COMPETENT COURT WITHIN THE COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, (II) SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW, AND (III) IN THE INTEREST OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT'S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. IN THE EVENT LANDLORD COMMENCES ANY SUMMARY PROCEEDINGS OR ACTION FOR NONPAYMENT OF BASE RENT OR ADDITIONAL RENT, TENANT SHALL NOT INTERPOSE ANY COUNTERCLAIM OF ANY NATURE OR DESCRIPTION (UNLESS SUCH COUNTERCLAIM SHALL BE MANDATORY) IN ANY SUCH PROCEEDING OR ACTION, BUT SHALL BE RELEGATED TO AN INDEPENDENT ACTION AT LAW.
29.23 Submission of Lease . Submission of this instrument for examination or signature by Tenant or Landlord does not constitute a reservation of, option for or option to lease, and it is not effective as a lease or otherwise until full execution and delivery by both Landlord and Tenant.
29.24 Brokers . Landlord and Tenant hereby warrant to each other that they have had no dealings with any real estate broker or agent in connection with the negotiation of this Lease, excepting only the real estate brokers or agents specified in Section 11 of the Summary (the " Brokers "), and that they know of no other real estate broker or agent who is entitled to a commission in connection with this Lease. Each party agrees to indemnify and defend the other party against and hold the other party harmless from any and all claims, demands, losses, liabilities, lawsuits, judgments, costs and expenses (including without limitation reasonable attorneys' fees) with respect to any leasing commission or equivalent compensation alleged to be owing on account of any dealings with any real estate broker or agent, other than the Brokers, occurring by, through, or under the indemnifying party. Landlord agrees to pay the Brokers a commission pursuant to a separate written agreement entered into between Landlord and the Brokers in connection with this transaction.
29.25 Independent Covenants . This Lease shall be construed as though the covenants herein between Landlord and Tenant are independent and not dependent and Tenant hereby expressly waives the benefit of any statute to the contrary and agrees that if Landlord fails to perform its obligations set forth herein, Tenant shall not be entitled to make any repairs or perform any acts hereunder at Landlord's expense or to any setoff of the Rent or other amounts owing hereunder against Landlord, except as expressly set forth in this Lease to the contrary.
29.26 Project or Building Name and Signage . Subject to Article 26 above, Landlord shall have the right at any time to change the name of the Project or any of the Buildings and to install, affix and maintain any and all signs on the exterior and on the interior of the Project or Buildings as Landlord may, in Landlord's sole discretion, desire. Tenant shall not use the name of the Project or Buildings or use pictures or illustrations of the Project or Buildings in advertising or other publicity or for any purpose other than as the address of the business to be conducted by Tenant in the Premises, without the prior written consent of Landlord, except that Tenant may use a picture of the Building on its web site and on announcements and the like to graphically show the location of the its offices so long as (i) it does not state or imply that Tenant owns the Building or Project, and (ii) the same is not presented in a manner which may damage the reputation or image of the Building or Project and is otherwise reflective of the first class nature of the Project.
29.27 Counterparts . This Lease may be executed in counterparts with the same effect as if both parties hereto had executed the same document. Both counterparts shall be construed together and shall constitute a single lease.
29.28 Confidentiality . Tenant acknowledges that the content of this Lease and any related documents are confidential information. Tenant shall keep such confidential information strictly confidential and shall not disclose such confidential information to any person or entity other than Tenant's financial, legal, and space planning consultants. Landlord acknowledges that the content of this Lease and any related documents are confidential information. Landlord shall keep such confidential information strictly confidential and shall not disclose such confidential information to any person or entity other than Landlord's financial, legal and space planning consultants, or its directors, officers, employees, attorneys, accountants, prospective lenders, prospective purchasers, and current and potential partners. To the extent Landlord (or any Landlord Party) or Tenant is a publicly traded corporation, such party may be obligated to regularly provide financial information concerning Landlord, Tenant and/or its affiliates to the shareholders of its affiliates, to the Federal Securities and Exchange Commission and other regulatory agencies, and to auditors and underwriters, which information may include, without limitation, summaries of financial information concerning leases, rents, costs and results of operations of its business, including any financial obligations set forth in this Lease, and such required disclosures shall be permitted pursuant to the terms of this Section 29.28 . This provision shall survive the expiration or earlier termination of this Lease for one (1) year.
29.29 Development of the Project .
29.29.1 Subdivision . Landlord reserves the right to further subdivide all or a portion of the Project; provided, however, that no such subdivision shall violate clauses (a) through (e) of Section 1.1.3 above.
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COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
29.29.2 The Other Improvements . If portions of the Project or property adjacent to the Project (collectively, the " Other Improvements ") are owned by an entity other than Landlord, Landlord, at its option, may enter into an agreement with the owner or owners of any or all of the Other Improvements to provide (i) for reciprocal rights of access and/or use of the Project and the Other Improvements, (ii) for the common management, operation, maintenance, improvement and/or repair of all or any portion of the Project and the Other Improvements, (iii) for the allocation of a portion of the Direct Expenses to the Other Improvements and the operating expenses and taxes for the Other Improvements to the Project, and (iv) for the use or improvement of the Other Improvements and/or the Project in connection with the improvement, construction, and/or excavation of the Other Improvements and/or the Project; provided, however, that no such agreement shall violate clauses (a) through (e) of Section 1.1.3 above. Nothing contained in this Section 29.29 shall be deemed or construed to limit or otherwise affect Landlord's right to convey all or any portion of the Project or any other of Landlord's rights described in this Lease.
29.29.3 Renovations . It is specifically understood and agreed that Landlord has no obligation and has made no promises to alter, remodel, improve, renovate, repair or decorate the Premises, Project, or any part thereof and that no representations respecting the condition of the Premises or the Project have been made by Landlord to Tenant except as specifically set forth herein or in the Tenant Work Letter. However, Tenant hereby acknowledges that Landlord may during the Lease Term renovate, improve, alter, or modify (collectively, the " Renovations ") the Project and/or the Premises. Except as expressly set forth in Section 19.5.2 , above, Tenant hereby agrees that such Renovations and Landlord's actions in connection with such Renovations shall in no way constitute a constructive eviction of Tenant nor entitle Tenant to any abatement of Rent. Landlord shall have no responsibility and shall not be liable to Tenant for any injury to or interference with Tenant's business arising from the Renovations, nor shall Tenant be entitled to any compensation or damages from Landlord for loss of the use of the whole or any part of the Premises or of Tenant's personal property or improvements resulting from the Renovations, or for any inconvenience or annoyance occasioned by such Renovations. Landlord shall use commercially reasonable efforts to have all Renovations, once started, be completed reasonably expeditiously, with such work being organized and conducted in a manner which will minimize any interference to Tenant's business operations in the Premises and to not violate clauses (a) through (e) of Section 1.1.3 above.
29.29.4 Construction of Project and Other Improvements . Tenant acknowledges that portions of the Project and/or the Other Improvements may be under construction following Tenant's occupancy of the Premises, and that such construction may result in levels of noise, dust, obstruction of access, etc. which are in excess of that present in a fully constructed project. Tenant hereby waives any and all rent offsets or claims of constructive eviction which may arise in connection with such construction. In conducting such construction, Landlord agrees to use commercially reasonable efforts to minimize any interference with Tenant's business operations in the Premises and to not violate clauses (a) through (e) of Section 1.1.3 above.
29.30 No Violation . Tenant hereby warrants and represents that neither its execution of nor performance under this Lease shall cause Tenant to be in violation of any agreement, instrument, contract, law, rule or regulation by which Tenant is bound, and Tenant shall protect, defend, indemnify and hold Landlord harmless against any claims, demands, losses, damages, liabilities, costs and expenses, including, without limitation, reasonable attorneys' fees and costs, arising from Tenant's breach of this warranty and representation.
29.31 Communications and Computer Lines . Tenant may install, maintain, replace, remove or use any communications or computer wires and cables serving the Premises (collectively, the " Lines "), provided that (i) Tenant shall obtain Landlord's prior written consent (not to be unreasonably withheld conditioned or delayed), use an experienced and qualified contractor reasonably approved in writing by Landlord, and comply with all of the other provisions of Articles 7 and 8 of this Lease, (ii) an acceptable number of spare Lines and space for additional Lines shall be maintained for existing and future occupants of the Project, as reasonably determined by Landlord, (iii) the Lines therefor (including riser cables) shall be appropriately insulated to prevent excessive electromagnetic fields or radiation, shall be surrounded by a protective conduit reasonably acceptable to Landlord, and shall be identified in accordance with the "Identification Requirements," as that term is set forth hereinbelow, (iv) any new or existing Lines servicing the Premises shall comply with all applicable governmental laws and regulations, (v) as a condition to permitting the installation of new Lines, Landlord may require that Tenant remove existing Lines located in or serving the Premises and repair any damage in connection with such removal, and (vi) Tenant shall pay all costs in connection therewith. All Lines shall be clearly marked with adhesive plastic labels (or plastic tags attached to such Lines with wire) to show Tenant's name, suite number, telephone number and the name of the person to contact in the case of an emergency (A) every four feet (4') outside the Premises (specifically including, but not limited to, the electrical room risers and other Common Areas), and (B) at the Lines' termination point(s) (collectively, the " Identification Requirements ").
29.32 Transportation Management . Tenant shall fully comply with any governmentally required programs implemented by Landlord to manage parking, transportation or traffic in and around the Project and/or the Buildings, and in connection therewith, Tenant shall take responsible action for the transportation planning and management of all employees located at the Premises by working directly with Landlord, any governmental transportation management organization or any other transportation-related committees or entities.
29.33 Office of Foreign Assets Control . Landlord and Tenant each certifies to the other party that it is not entering into this Lease, nor acting, for or on behalf of any person or entity named as a terrorist or other banned or blocked person or entity pursuant to any law, order, rule or regulation of the United States Treasury Department or the Office of Foreign Assets Control. Tenant hereby agrees to indemnify, defend and hold Landlord and the Landlord Parties harmless from any and all Claims arising from or related to any breach of the foregoing certification. Landlord hereby agrees to indemnify, defend and hold Tenant and the Tenant Parties harmless from any and all Claims arising from or related to any breach of the foregoing certification.
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COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
29.34 Shuttle Service . Subject to the provisions of this Section 29.3 4 , Landlord shall provide and continuously operate (or cause a third party to operate) throughout the Lease Term a shuttle service (the " Shuttle Service ") at the Project providing services to the nearest CalTrain station to Tenant's employees (" Shuttle Service Riders "). Tenant shall have the right to consult with Landlord on the number and size of shuttles, frequency, hours of use, routes and location of the drop-off and pick-up areas for the Shuttle Service, and Landlord shall implement any reasonable recommendations of Tenant. The use of the Shuttle Service shall be subject to the reasonable rules and regulations established from time to time by Landlord and/or the operator of the Shuttle Service. Landlord and Tenant acknowledge that the use of the Shuttle Service by the Shuttle Service Riders shall be at their own risk and that the terms and provisions of Section 10.1 of this Lease shall apply to Tenant and the Shuttle Service Rider's use of the Shuttle Service. The costs of operating, maintaining and repairing the Shuttle Service shall be included as part of Operating Expenses and no separate fee s will be charged to the users of the Shuttle Service.
29.35 Rules and Regulations . Wherever "rules and regulations" are referenced in this Lease, in all events Landlord shall not enforce, change or modify such 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 unreasonably interfere with the normal and customary conduct of Tenant's business. In the event of any conflict between any such rules and regulations and the other provisions of this Lease, the other provisions of this Lease shall control.
[Signatures follow on next page.]
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COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
IN WITNESS WHEREOF, Landlord and Tenant have caused this Lease to be executed the day and date first above written.
LANDLORD : |
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CAP OZ 34, LLC a Delaware limited liability company |
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CAP OZ I, LLC, a Delaware limited liability company |
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Sole Member |
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HS Airport 2, LLC, a California limited liability company |
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/s/ Derek K. Hunter, Jr. |
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Member |
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[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
TENANT : |
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Roku, Inc. a Delaware corporation |
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/s/ Steve Louden |
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Steve Louden |
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CFO |
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/s/ Troy Fenner |
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Troy Fenner |
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COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
COLEMAN HIGHLINE
OUTLINE OF PREMISES
Building 3 1173 Coleman Ave 1 st Floor San Jose, Ca 95110
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT A -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Building 3 1173 Coleman Ave 2nd Floor San Jose, Ca 95110
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT A -2 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Building 3 1173 Coleman Ave 3rd Floor San Jose, Ca 95110
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT A -3 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Building 3 1173 Coleman Ave 4th Floor San Jose, Ca 95110
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT A -4 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Building 3 1173 Coleman Ave 5th Floor San Jose, Ca 95110
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT A -5 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Building 3 1173 Coleman Ave 6th Floor San Jose, Ca 95110
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT A -6 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Building 4 1167 Coleman Ave 1st Floor San Jose, Ca 95110
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT A -7 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Building 4 1167 Coleman Ave 2nd Floor San Jose, Ca 95110
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT A -8 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Building 4 1167 Coleman Ave 3rd Floor San Jose, Ca 95110
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT A -9 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Building 4 1167 Coleman Ave 4th Floor San Jose, Ca 95110
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT A -10 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Building 4 1167 Coleman Ave 5th Floor San Jose, Ca 95110
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT A -11 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Amenity 2 1161 Coleman Ave Exhibit A-2: Premises 1st Floor San Jose, Ca 95110
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT A -12 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Amenity 2 1161 Coleman Ave Exhibit A-2: Premises 2nd Floor San Jose, Ca 95110
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT A -13 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Amenity 2 1161 Coleman Ave Exhibit A-2: Premises 3rd Floor San Jose, Ca 95110
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT A -14 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
COLEMAN HIGHLINE
SITE PLAN
1123 Coleman Ave Stadium Retail Pads 501 Earthquakes Way Hotel 595 1144 Project Amenities Building Phase 1 1193 Building 6 1185 Building 4 1167 Amenity 1149 Building 1 1143 Building 5 1179 Aviation Ave Building 3 1173 Building 2 1155 Building 8 1199 Amenity 1189 Amentiy 1161 Highline Drive598 Garage 1188 1170 1146 Champions Drive
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EXHIBIT A-1 -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
COLEMAN HIGHLINE
TENANT WORK LETTER
This Tenant Work Letter shall set forth the terms and conditions relating to the construction of the improvements in the Premises. This Tenant Work Letter is essentially organized chronologically and addresses the issues of the construction of the Premises, in sequence, as such issues will arise during the actual construction of the Premises. All references in this Tenant Work Letter to Sections of "this Tenant Work Letter" shall mean the relevant portion of Sections 1 through 6 of this Tenant Work Letter.
SECTION 1
LANDLORD'S INITIAL CONSTRUCTION OF THE BASE BUILDING
1.1 Construction of Base Building . Landlord shall construct, at its sole cost and expense, in a good workmanlike manner and without deduction from the Tenant Improvement Allowance, the base, shell, and core of each Building (collectively, the " Base, Shell and Core " and/or " Base Building "), in accordance with the plans and specifications referenced in Schedule 1-C , attached hereto (the " Base Building Plans "), subject to Landlord Minor Changes, as that term is defined herein below. Additionally, to the extent not set forth in the version of the Base Building Plans referenced in Schedule 1-C (the " Base Building Description "), Landlord shall make the necessary modifications to provide that the Base Building, as constructed by Landlord, shall comply with the Base Building Description set forth in Schedule 1-B , subject to Landlord Minor Changes. In the event of a conflict between Schedule 1-C and Schedule 1-B , Schedule 1-B shall prevail. As of the date hereof, the Base Building plans and specifications for Building A2 have not yet been prepared, and accordingly, Schedule 1-C only includes a description of the Base Building Plans for Building 2 and Building 3. Landlord shall prepare the Base Building plans and specifications for Building A2 to be comply with the applicable Base Building Description set forth on Schedule 1-B , and upon completion the same shall constitute "Base Building Plans" for all purposes under this Lease. Landlord hereby reserves the right to modify each Base Building Description and the Base Building Plans, provided that such modifications (A) are required to comply with Applicable Laws, (B) will not (i) materially and adversely affect Tenant's Permitted Use of the applicable Premises and the Project, or (ii) result in the use of materials, systems or components which are not of a materially equivalent or better quality than the materials, systems and components set forth in the Base Building Description, or in the Lease, or (C) pertain to portions of the Project located outside of the Buildings (collectively, " Landlord Minor Changes "). The Base Building Condition shall have been constructed in a good and workmanlike manner, and in compliance with Applicable Laws for unoccupied space as of the date of the Lease to the extent required to allow Tenant, subject to Tenant's construction of the Tenant Improvements in accordance with Applicable Laws, to obtain a certificate of occupancy or its legal equivalent allowing the legal occupancy of the Premises for the Permitted Use. Within five (5) days after delivery of the Premises to Tenant, Landlord and Tenant shall have a "walk-through" of the delivered Premises to jointly create a punch-list setting forth any deviations between the required Base Building and the actual condition of the Premises (the " Delivery Punch List "). Landlord shall repair or correct the items set forth on the Delivery Punch List within a commercially reasonable period after the date of such walk through.
1.2 Delivery Condition . The " Delivery Condition ", with respect to a particular Building, shall occur at such time as Landlord delivers such Building to Tenant for commencement of construction of the Tenant Improvements, and in compliance with the conditions set forth in Schedule 1-D , attached hereto. The date that the applicable Building shall be delivered to Tenant in the Delivery Condition is the " Delivery Date ") with respect to such Building. The parties acknowledge and agree that the Delivery Condition does not reflect all work necessary to cause each Building to be in substantially completed Base, Shell and Core condition. As such, Landlord shall continue to be obligated to perform additional construction after the completion of the Delivery Condition to cause the Premises to be in Final Condition (as defined in Section 1.3 below). From and after each Delivery Date, neither party shall unreasonably interfere with or delay the work of the other party or of other tenants and occupants of the Project and/or their contractors or consultants, and Landlord and Tenant shall mutually coordinate and cooperate with each other and with other tenants and occupants of the Project, and shall cause their respective employees, vendors, contractors, and consultants to work in harmony with and to mutually coordinate and cooperate with the other's employees, vendors, contractors and consultants, respectively, to minimize any interference or delay by either party with respect to the other party's work, including, without limitation, coordinating shared use of the Project loading dock and freight elevators. Notwithstanding the foregoing, in the event of any irreconcilable conflict between the work of Landlord's workers, mechanics and contractors and the work of Tenant's workers, mechanics and contractors, Landlord and Tenant shall resolve such conflict or interference by a reasonable resequencing or rescheduling of Tenant's remaining work as necessary to avoid the conflict or interference.
1.3 Final Condition . The " Final Condition " shall mean that the Base, Shell and Core of the applicable Building has been substantially completed in accordance with the Base Building Plans (as the same may be modified in accordance with the terms and conditions of this Tenant Work Letter) to the extent necessary for Landlord to obtain a certificate of occupancy or temporary certificate of occupancy, or legal equivalent (each, a " CofO "), for the applicable Base, Shell and Core, except to the extent Landlord's inability to obtain the CofO is caused by the Tenant Improvements not being designed per Code or because the Substantial Completion of the Tenant Improvements has not yet occurred, as those terms are defined below. The date that Landlord causes the Final Condition to occur shall be referred to as the " Final Condition Date ". The Final Condition Date shall occur separately as to each Building and shall be deemed to occur on the date the Final Condition would have occurred but for any Tenant Delay (as defined below). As used herein, the term " Tenant Delay " shall mean (i) the failure of Tenant to timely approve or disapprove any matter requiring Tenant's approval relating to the construction of the Base, Shell and Core; (ii)
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EXHIBIT B -1- |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
unreasonable (when judged in accordance with industry custom and practice) interference by Tenant , its agents or Tenant Parties (except as otherwise allowed by this Tenant Work Letter ) with the substantial completion of the Base, Shell and Core and which objectively preclude or delay the construction of the Base, Shell and Core and the Delivery Date and (iii) Tenant 's physical alteration of the items of the Base, Shell and Core on any floor of the Premises or Tenant 's failure to complete or construct any portion of the Tenant Improvements (including temporary or permanent life-safety work or fire sprinkler work) (such altered item or item that Tenant fails to construct shall each be a " TI Item "), which altered or unconstructed TI Item interferes with Landlord 's ability to cause the substantial completion of the Base, Shell and Core; provided that to the extent Landlord reasonably determines that the altered or unconstructed TI Item will delay the substantial completion of the Base, Shell and Core, Landlord may, upon prior notice to Tenant , modify such altered TI Item or construct the unconstructed TI Item, and deduct the cost thereof (as reasonably determined by Landlord) from the Tenant Improvement Allowance , in a manner necessary for Landlord to cause the substantial completion of the Base, Shell and Core.
SECTION 2
TENANT IMPROVEMENTS
2.1 Tenant Improvement Allowance . Tenant shall be entitled to an improvement allowance (the " Tenant Improvement Allowance ") in the amount Tenant shall be entitled to an improvement allowance (the " Tenant Improvement Allowance ") (i) in the amount of $82.50 per RSF of the Building 3 Premises for the costs relating to the initial design and construction of the improvements which are permanently affixed to the Building 3 Premises, (ii) in the amount of $82.50 per RSF of the Building 4 Premises for the costs relating to the initial design and construction of the improvements which are permanently affixed to the Building 4 Premises, and (iii) in the amount of $82.50 per RSF of the Building A2 Premises for the costs relating to the initial design and construction of the improvements which are permanently affixed to the Building A2 Premises, (collectively, the " Tenant Improvements "). In no event shall Landlord be obligated to make disbursements pursuant to this Tenant Work Letter in the event that Tenant fails to immediately pay any portion of the "Over-Allowance Amount," as defined in Section 4.2.1 , nor shall Landlord be obligated to pay a total amount which exceeds the Tenant Improvement Allowance. Notwithstanding the foregoing or any contrary provision of this Lease, all Tenant Improvements shall be deemed Landlord's property under the terms of this Lease. Any unused portion of the Tenant Improvement Allowance remaining as of the Lease Commencement Date, shall remain with Landlord and Tenant shall have no further right thereto.
2.2 Disbursement of the Tenant Improvement Allowance .
2.2.1 Tenant Improvement Allowance Items . Except as otherwise set forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be disbursed by Landlord (each of which disbursements shall be made pursuant to Landlord's disbursement process, including, without limitation, Landlord's receipt of invoices for all costs and fees described herein) for costs related to the construction of the Tenant Improvements and for the following items and costs (collectively, the " Tenant Improvement Allowance Items "):
2.2.1.1 Payment of (a) the fees of the "Architect" and the "Engineers," as those terms are defined in Section 3.1 of this Tenant Work Letter, (b) the fees of Tenant’s consultants for project management and other engineers and/or consultants for lighting, HVAC, generators, rooftop installation, audio video equipment, not to exceed Five and 00/100 Dollars ($5.00) per RSF, (c) the fees incurred by, and the cost of documents and materials supplied by, Landlord and Landlord's consultants in connection with the preparation and review of the "Construction Drawings," as that term is defined in Section 3.1 of this Tenant Work Letter and (d) payment of plan check, permit and license fees relating to construction of the Tenant Improvements;
2.2.1.2 The cost of any changes in the Base Building when such changes are required by the Construction Drawings (including if such changes are due to the fact that such work is prepared on an unoccupied basis), such cost to include all direct architectural and/or engineering fees and expenses incurred in connection therewith;
2.2.1.3 The cost of any changes to the Construction Drawings or Tenant Improvements required by all applicable building codes (the " Code "); but to the extent changes are required because Landlord did not deliver the applicable building to Tenant in the condition required by Section 1, above, Landlord shall pay for such costs separate and apart from, and in addition to, the Tenant Improvement Allowance;
2.2.1.4 The "Landlord Supervision Fee", as that term is defined in Section 4.3.2 of this Tenant Work Letter.
2.2.1.5 The payment of plan check, plan check expeditor, permit and license fees relating to the construction of the Tenant Improvements;
2.2.1.6 The cost of construction of the Tenant Improvements, inclusive of supplemental HVAC and other backup power components, and including, without limitation, testing and inspection costs, after hours freight elevator usage (and services in connection with oversize or overweight items for which Landlord’s elevator warranty requires an on-site elevator operator), hoisting and trash removal costs, and contractors’ fees and general conditions;
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EXHIBIT B -2 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
2.2. 1. 7 The cost of connection of the Premises to the Building’s energy management systems, and for chilled water hook-up fees, if applicable for the Premises; and
2.2.1.8 Sales and use taxes and Title 24 fees.
2.2.2 Disbursement of Tenant Improvement Allowance . During the construction of the Tenant Improvements, Landlord shall make monthly disbursements of the Tenant Improvement Allowance for Tenant Improvement Allowance Items and shall authorize the release of monies as follows.
2.2.2.1 Monthly Disbursements . On or before the twentieth (20th) day of each calendar month, during the construction of the Tenant Improvements (or such other date as Landlord may designate), Tenant shall deliver to Landlord: (i) a request for payment of the "Contractor," as that term is defined in Section 4.1.1 of this Tenant Work Letter, approved by Tenant, in a form to be provided by Landlord, showing the schedule, by trade, of percentage of completion of the Tenant Improvements in the Premises, detailing the portion of the work completed and the portion not completed; (ii) invoices from all of "Tenant's Agents," as that term is defined in Section 4.1.2 of this Tenant Work Letter, for labor rendered and materials delivered to the Premises; and (iii) executed mechanic's lien releases from all of Tenant's Agents which shall comply with the appropriate provisions, as reasonably determined by Landlord, of California Civil Code Sections 8132, 8134, 8136 and/or 8138. Tenant's request for payment shall be deemed Tenant's acceptance and approval of the work furnished and/or the materials supplied as set forth in Tenant's payment request. Thereafter, Landlord shall deliver a check to Tenant made jointly payable to Contractor and Tenant, or directly to Contractor at Landlord's sole discretion, in payment of the lesser of: (A) the amounts so requested by Tenant, as set forth in this Section 2.2.2.1 , above, less a ten percent (10%) retention (the aggregate amount of such retentions to be known as the " Final Retention ") to the extent required pursuant to this Section 2.2.2.1 below, and (B) the balance of any remaining available portion of the Tenant Improvement Allowance (not including the Final Retention), provided that Landlord does not dispute any request for payment based on non-compliance of any work with the "Approved Working Drawings," as that term is defined in Section 3.4 below, or due to any substandard work, or for any other reason. Landlord's payment of such amounts shall not be deemed Landlord's approval or acceptance of the work furnished or materials supplied as set forth in Tenant's payment request. Notwithstanding the foregoing, if Tenant's contract with the Contractor (as defined below) includes a retention, the retention withheld by Landlord in clause (A) of the preceding sentence shall be ten percent (10%) less the retention in Tenant's contract with the Contractor such that the aggregate percentage withheld between Landlord and the Contractor equals ten percent (10%). Notwithstanding anything to the contrary contained in this Section 2.2.2.1 and Section 2.2.2.2 below, any costs of constructing the Tenant Improvements that are not part of the Contract, such as permitting fees, and reimbursements to the Architect shall not be subject to the Final Retention.
2.2.2.2 Final Retention . Subject to the provisions of this Work Letter, a check for the Final Retention payable jointly to Tenant and Contractor, or directly to Contractor at Landlord's sole discretion, shall be delivered by Landlord to Tenant within thirty (30) days following the completion of construction of the Tenant Improvements, provided that (i) Tenant delivers to Landlord (a) paid invoices for all Tenant Improvements and related costs for which the Tenant Improvement Allowance is to be disbursed, (b) signed permits for all Tenant Improvements completed within the Premises, (c) properly executed unconditional mechanics lien releases in compliance with both California Civil Code Section 8134 and either Section 8136 or Section 8138 from Tenant's contractor, subcontractors and material suppliers and any other party which has lien rights in connection with the construction of the Tenant Improvements, (ii) Landlord has determined that no substandard work exists which adversely affects the mechanical, electrical, plumbing, heating, ventilating and air conditioning, life-safety or other systems of the Building, the curtain wall of the Building, the structure or exterior appearance of the Building, or any other tenant's use of such other tenant's leased premises in the Building, (iii) Architect delivers to Landlord a "Certificate of Substantial Completion", in a form reasonably acceptable to Landlord, certifying that the construction of the Tenant Improvements in the Premises has been substantially completed, (iv) Tenant delivers to Landlord a "close-out package" in both paper and electronic forms (including, as-built drawings, and final record CADD files for the associated plans, warranties and guarantees from all contractors, subcontractors and material suppliers, and an independent air balance report); and (v) a certificate of occupancy, a temporary certificate of occupancy or its equivalent is issued to Tenant for the Premises.
2.2.2.3 Other Terms . Landlord shall only be obligated to make disbursements from the Tenant Improvement Allowance to the extent costs are incurred by Tenant for Tenant Improvement Allowance Items.
2.3 Building Standards; LEED Standards . Landlord has established or may establish specifications for certain Building standard components to be used in the construction of the Tenant Improvements in the Premises. The quality of Tenant Improvements shall be equal to or of greater quality than the quality of such Building standards, provided that Landlord may, at Landlord’s option, require the Tenant Improvements to comply with certain Building standards. Landlord may make changes to said specifications for Building standards from time to time. Removal requirements for Tenant Improvements are addressed in Article 8 of this Lease. Tenant shall not be obligated to incur any costs associated with Landlord's construction of the Base Building to comply with any LEED requirements, or relating to any LEED certification obtained for the Base Building.
2.4 Offset Right . Notwithstanding anything to the contrary contained herein, if Landlord fails to timely fulfill its obligation to fund any portion of the Tenant Improvement Allowance, Tenant shall be entitled to deliver notice (" Payment Notice ") thereof to Landlord and to any mortgage or trust deed holder of the Building whose identity and address have been previously provided to Tenant. If Landlord still fails to fulfill any such obligation within twenty (20) business days after Landlord’s receipt of the Payment Notice from Tenant and if Landlord fails to deliver notice to Tenant within such twenty (20) business day period explaining Landlord’s reasons that Landlord
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EXHIBIT B -3- |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
believes that the amounts described in Tenant’s Payment Notice are not due and payable by Landlord (" Refusal Notice "), Tenant shall be entitled to offset the amount so funded, together with interest at the Interest Rate from the date Landlord was obligated to pay such amount until the date of offset, against Tenant’s next obligations to pay Rent; provided, however, Landlord shall be obligated to immediately disburse to Tenant any undisputed amounts. However, if Tenant is in default under Section 19.1 of this Lease at the time that such offset would otherwise be applicable, Tenant shall not be entitled to such offset until such default is cured. If Landlord delivers a Refusal Notice, and if Landlord and Tenant are not able to agree on the amounts to be so paid by Landlord, if any, within ten (10) days after Tenant’s receipt of a Refusal Notice , Tenant shall not be entitled to offset such amount against Rent unless and until such dispute is finally resolved by mutual agreement of the parties or pursuant to a final, non-appealable order issued by a court of competent jurisdiction .
SECTION 3
CONSTRUCTION DRAWINGS
3.1 Selection of Architect/Construction Drawings . Tenant shall retain KSH as the architect/space planner (the " Architect ") to prepare the "Construction Drawings," as that term is defined in this Section 3.1 . Tenant shall retain the engineering consultants designated by Landlord (the " Engineers ") to prepare all engineering construction documents and specifications relating to the structural life safety, and sprinkler work in the Premises, which work is not part of the Base Building. The plans and drawings to be prepared by Architect and the Engineers hereunder shall be known collectively as the " Construction Drawings ." All Construction Drawings shall comply with reasonable, industry standard drawing formats and specifications and may be submitted to Landlord on a building-by-building basis as such Construction Drawings are completed, and shall be subject to Landlord's approval, which shall not be unreasonably withheld or delayed; provided, that any components of the Construction Drawings which present a "Design Problem" (as that term is defined hereinbelow) shall be subject to Landlord's consent in its sole and absolute discretion (collectively, " Landlord's Consent Standard "). Tenant and Architect shall verify, in the field, the dimensions and conditions as shown on the relevant portions of the Base Building Plans, and Tenant and Architect shall be solely responsible for the same, and Landlord shall have no responsibility in connection therewith. Landlord's review of the Construction Drawings as set forth in this Section 3 , shall be for its sole purpose and shall not imply Landlord's review of the same, or obligate Landlord to review the same, for quality, design, Code compliance or other like matters. Accordingly, notwithstanding that any Construction Drawings are reviewed by Landlord or its space planner, architect, engineers and consultants, and notwithstanding any advice or assistance which may be rendered to Tenant by Landlord or Landlord's space planner, architect, engineers, and consultants, Landlord shall have no liability whatsoever in connection therewith and shall not be responsible for any omissions or errors contained in the Construction Drawings, and Tenant's waiver and indemnity set forth in this Lease shall specifically apply to the Construction Drawings. A " Design Problem " is defined as and will be deemed to exist if such improvements (i) will affect the exterior appearance of the Buildings, (ii) will adversely affect the Base Building, (iii) will fail to comply with Applicable Laws, including without limitation the LEED certification requirements relating to the construction of the Tenant Improvements required by the City of San Jose, (iv) could adversely affect the CofO issued for the Buildings, (v) could delay the Final Condition Date, or (vi) are not consistent with the applicable Permitted Use.
3.2 Intentionally Omitted .
3.3 Final Working Drawings . On or before the date set forth in Schedule 1-A , Tenant, the Architect and the Engineers shall complete the architectural and engineering documents for the Premises, and Architect shall compile a fully coordinated set of architectural, structural, mechanical, electrical and plumbing working drawings in a form which is complete to allow subcontractors to bid on the work and to obtain all applicable permits (collectively, the " Final Construction Drawings ") and shall submit the same to Landlord for Landlord’s approval, which shall not be withheld except in the case of a Design Problem. Tenant shall supply Landlord with four (4) copies signed by Tenant of such Final Construction Drawings. Landlord shall advise Tenant within ten (10) business days after Landlord’s receipt of the Final Construction Drawings for the Premises if the same is incomplete in any material respect or if a Design Problem exists. If Tenant is so advised, Tenant shall immediately revise the Final Construction Drawings to cause them to be complete and to eliminate any Design Problem. If Landlord fails to respond to the Final Construction Drawings within the ten (10) business day period set forth above, Tenant may send Landlord a notice of setting forth such failure.
3.4 Permits; Approved Working Drawings . The Final Working Drawings shall be approved by Landlord (the " Approved Working Drawings ") prior to the commencement of the construction of the Tenant Improvements. Tenant shall immediately submit the Approved Working Drawings to the appropriate municipal authorities for all applicable building and other permits necessary to allow "Contractor," as that term is defined in Section 4.1 , below, to commence and fully complete the construction of the Tenant Improvements (the " Permits "), and, in connection therewith, Tenant shall coordinate with Landlord in order to allow Landlord, at its option, to take part in all phases of the permitting process and shall supply Landlord, as soon as possible, with all plan check numbers and dates of submittal and obtain the Permits on or before the date set forth in Schedule 1-A , provided that such coordination does not delay permit plan submittal. Notwithstanding anything to the contrary set forth in this Section 3.4 , Tenant hereby agrees that neither Landlord nor Landlord's consultants shall be responsible for obtaining any building permit or certificate of occupancy for the Premises and that the obtaining of the same shall be Tenant's responsibility; provided however that Landlord shall, in any event, cooperate with Tenant in executing permit applications and performing other ministerial acts reasonably necessary to enable Tenant to obtain any such permit or certificate of occupancy. No changes, modifications or alterations in the Approved Working Drawings may be made without the prior written consent of Landlord, which consent shall be granted or withheld in accordance with Landlord's Consent Standard.
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EXHIBIT B -4 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
3.5 Time Deadlines . Tenant shall use its best, good faith, efforts and all due diligence to cooperate with the Architect, the Engineers, and Landlord to complete all phases of the Construction Drawings and the permitting process and to receive the P ermits, as soon as possible after the execution of the Lease, and, in that regard, shall meet with Landlord on a scheduled basis to be determined by Landlord, to discuss Tenant's progress in connection with the same. The applicable dates for approval of items, plans and drawings as described in this Section 3 , Section 4 , below, and in this Tenant Work Letter are set forth and further elaborated upon in Schedule 1 -A (the " Time Deadlines "), attached hereto. Tenant agrees to comply with the Time Deadlines.
3.6 Electronic Approvals . Notwithstanding any provision to the contrary contained in the Lease or this Tenant Work Letter, Landlord may, in Landlord's sole and absolute discretion, transmit or otherwise deliver any of the approvals required under this Tenant Work Letter via electronic mail to Tenant's representative identified in Section 5.1 of this Tenant Work Letter, or by any of the other means identified in Section 29.18 of this Lease.
SECTION 4
CONSTRUCTION OF THE TENANT IMPROVEMENTS
4.1 Tenant's Selection of Contractors .
4.1.1 Contractor . A general contractor shall be retained by Tenant to construct the Tenant Improvements. Such general contractor (the " Contractor ") shall be selected by Tenant, and reasonably approved by Landlord. Tenant shall deliver to Landlord notice of its selection of the Contractor upon such selection.
4.1.2 Tenant's Agents . All subcontractors, laborers, materialmen, and suppliers used by Tenant (such subcontractors, laborers, materialmen, and suppliers, and the Contractor to be known collectively as " Tenant's Agents ") must be approved in writing by Landlord, which approval shall not be unreasonably withheld or delayed. If Landlord does not approve any of Tenant's proposed subcontractors, laborers, materialmen or suppliers, Tenant shall submit other proposed subcontractors, laborers, materialmen or suppliers for Landlord's written approval.
4.2 Construction of Tenant Improvements by Tenant's Agents .
4.2.1 Construction Contract; Cost Budget . Tenant shall engage the Contractor under a contract reasonably approved by Landlord (the " Contract "). Prior to the commencement of the construction of the Tenant Improvements, and after Tenant has accepted all bids for the Tenant Improvements, Tenant shall provide Landlord with a detailed breakdown, by trade, of the final costs to be incurred or which have been incurred, as set forth more particularly in Sections 2.2.1.1 through 2.2.1.8 , above, in connection with the design and construction of the Improvements to be performed by or at the direction of Tenant or the Contractor, which costs form a basis for the amount of the Contract (the " Anticipated Costs "). In the event that the Anticipated Costs are greater than the amount of the Tenant Improvement Allowance (the " Anticipated Over-Allowance Amount "), then, Tenant shall pay a percentage of each amount requested by the Contractor or otherwise to be disbursed under this Tenant Work Letter, which percentage (the " Percentage ") shall be equal to the Anticipated Over-Allowance Amount divided by the amount of the Anticipated Costs (after deducting from the Anticipated Costs any amounts expended in connection with the preparation of the Construction Drawings, and the cost of all other Tenant Improvements incurred prior to the commencement of construction of the Tenant Improvements), and such payments by Tenant (the " Over-Allowance Payments ") shall be a condition to Landlord's obligation to pay any amounts from the Tenant Improvement Allowance (the " Tenant Improvement Allowance Payments "). After the initial determination of the Anticipated Costs, Tenant shall advise Landlord from time to time as such Anticipated Costs are further refined or determined or the costs relating to the design and construction of the Tenant Improvements otherwise change and the Anticipated Over-Allowance Amount, and the Over-Allowance Payments shall be adjusted such that the Tenant Improvement Allowance Payments by Landlord and the Over-Allowance Payments by Tenant shall accurately reflect the then-current amount of Anticipated Costs.
4.2.2 Tenant's Agents .
4.2.2.1 Landlord's General Conditions for Tenant's Agents and Tenant Improvement Work . Tenant's and Tenant's Agent's construction of the Tenant Improvements shall comply with the following: (i) the Tenant Improvements shall be constructed in strict accordance with the Approved Working Drawings; and (ii) Tenant's Agents shall submit schedules of all work relating to the Tenant Improvements to Contractor and Contractor shall, within five (5) business days of receipt thereof, inform Tenant's Agents of any changes which are necessary thereto, and Tenant's Agents shall adhere to such corrected schedule. Tenant shall pay a construction supervision and management fee (the " Landlord Supervision Fee ") to Landlord in an amount equal to the product of (i) two percent (2%) and (ii) the hard costs of constructing the Tenant Improvements.
4.2.2.2 Indemnity . Tenant's indemnity of Landlord as set forth in this Lease shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to any act or omission of Tenant or Tenant's Agents, or anyone directly or indirectly employed by any of them, or in connection with Tenant's non-payment of any amount arising out of the Tenant Improvements and/or Tenant's disapproval of all or any portion of any request for payment. Such indemnity by Tenant, as set forth in this Lease, shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to Landlord's performance of any ministerial acts reasonably necessary (i) to permit Tenant to complete the Tenant Improvements, and (ii) to enable Tenant to obtain any building permit or certificate of occupancy for the Premises.
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EXHIBIT B -5 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
4.2.2.3 Requirements of Tenant's Agents . Each of Tenant's Agents shall guarantee to Tenant and for the benefit of Landlord that the portion of the Tenant Improvements for which it is responsible shall be free from any defects in workmanship and materials for a period of not less than one (1) year from the date of completion thereof. Each of Tenant's Agents shall be responsible for the replacement or repair, without additional charge, of all work done or furnished in accordance with its contract that shall become defective within one (1) year after the completion of the work performed by su ch contractor or subcontractors . The correction of such work shall include, without additional charge, all additional expenses and damages incurred in connection with such removal or replacement of all or any part of the Tenant Improvements, and/or the Building and/or common areas that may be damaged or disturbed thereby. All such warranties or guarantees as to materials or workmanship of or with respect to the Tenant Improvements shall be contained in the Contract or subcontract and shall be written such that such guarantees or warranties shall inure to the benefit of both Landlord and Tenant, as their respective interests may appear, and can be directly enforced by either. Tenant covenants to give to Landlord any assignment or other assurances which may be necessary to effect such right of direct enforcement.
4.2.2.4 Insurance Requirements .
4.2.2.4.1 General Coverages . All of Tenant's Agents shall carry worker's compensation insurance covering all of their respective employees, and shall also carry public liability insurance, including property damage, all with limits, in form and with companies as are required to be carried by Tenant as set forth in this Lease.
4.2.2.4.2 Special Coverages . Tenant shall carry "Builder's All Risk" insurance in an amount approved by Landlord covering the construction of the Tenant Improvements, and such other insurance as Landlord may require, it being understood and agreed that the Tenant Improvements shall be insured by Tenant pursuant to this Lease immediately upon completion thereof. Such insurance shall be in amounts and shall include such extended coverage endorsements as may be reasonably required by Landlord including, but not limited to, the requirement that all of Tenant's Agents shall carry excess liability and Products and Completed Operation Coverage insurance, each in amounts not less than $5,000,000 per incident, $5,000,000 in aggregate, and in form and with companies as are required to be carried by Tenant as set forth in this Lease.
4.2.2.4.3 General Terms . Certificates for all insurance carried pursuant to this Section 4.2.2.4 shall be delivered to Landlord before the commencement of construction of the Tenant Improvements and before the Contractor's equipment is moved onto the site. All such policies of insurance must contain a provision that the company writing said policy will give Landlord thirty (30) days prior written notice of any cancellation or lapse of the effective date or any reduction in the amounts of such insurance. In the event that the Tenant Improvements are damaged by any cause during the course of the construction thereof, Tenant shall immediately repair the same at Tenant's sole cost and expense. Tenant's Agents shall maintain all of the foregoing insurance coverage in force until the Tenant Improvements are fully completed and accepted by Landlord, except for any Products and Completed Operation Coverage insurance required by Landlord, which is to be maintained for ten (10) years following completion of the work and acceptance by Landlord and Tenant. All policies carried under this Section 4.2.2.4 shall insure Landlord and Tenant, as their interests may appear, as well as Contractor and Tenant's Agents. All insurance, except Workers' Compensation, maintained by Tenant's Agents shall preclude subrogation claims by the insurer against anyone insured thereunder. Such insurance shall provide that it is primary insurance as respects the owner and that any other insurance maintained by owner is excess and noncontributing with the insurance required hereunder. The requirements for the foregoing insurance shall not derogate from the provisions for indemnification of Landlord by Tenant under Section 4.2.2.2 of this Work Letter. Landlord may, in its discretion, require Tenant to obtain a lien and completion bond or some alternate form of security satisfactory to Landlord in an amount sufficient to ensure the lien-free completion of the Tenant Improvements and naming Landlord as a co-obligee.
4.2.3 Governmental Compliance . The Tenant Improvements shall comply in all respects with the following: (i) the Code and other state, federal, city or quasi-governmental laws, codes, ordinances and regulations, as each may apply according to the rulings of the controlling public official, agent or other person; (ii) applicable standards of the American Insurance Association (formerly, the National Board of Fire Underwriters) and the National Electrical Code; and (iii) building material manufacturer's specifications.
4.2.4 Inspection by Landlord . Landlord shall have the right to inspect the Tenant Improvements at all times, provided however, that Landlord's failure to inspect the Tenant Improvements shall in no event constitute a waiver of any of Landlord's rights hereunder nor shall Landlord's inspection of the Tenant Improvements constitute Landlord's approval of the same. Should Landlord disapprove any portion of the Tenant Improvements, Landlord shall notify Tenant in writing of such disapproval and shall specify the items disapproved. Any defects or deviations in, and/or disapproval by Landlord of, the Tenant Improvements shall be rectified by Tenant at no expense to Landlord, provided however, that in the event Landlord determines that a defect or deviation exists or disapproves of any matter in connection with any portion of the Tenant Improvements and such defect, deviation or matter might adversely affect the mechanical, electrical, plumbing, heating, ventilating and air conditioning or life-safety systems of the Building, the structure or exterior appearance of the Building or any other tenant's use of such other tenant's leased premises, Landlord may, take such action as Landlord deems necessary, at Tenant's expense and without incurring any liability on Landlord's part, to correct any such defect, deviation and/or matter, including, without limitation, causing the cessation of performance of the construction of the Tenant Improvements until such time as the defect, deviation and/or matter is corrected to Landlord's satisfaction.
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EXHIBIT B -6 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
4.2.5 Meetings . Commencing upon the execution of this Lease, Tenant shall hold weekly meetings at a reasonable time, with the Architect and the Contractor regarding the progress of the preparation of Construction Drawings and the construction of the Tenant Improvements, which meetings shall be held at a location designated by Landlord, and Landlord and/or its agents shall receive prior notice of, and shall have the right to attend, all such meetings, and, upon Landlord's request, certain of Tenant's Agents shall attend such meetings. In addition, minutes shall be taken at all such meetings, a copy of which minutes shall be promptly delivered to Landlord. One such meeting each month shall include the review of Contractor's current request for payment.
4.3 Notice of Completion; Copy of Record Set of Plans . Tenant hereby indemnifies Landlord for any loss, claims, damages or delays arising from the actions of Architect on the Premises or in the Building. Within ten (10) days after completion of construction of the Tenant Improvements, Tenant shall cause a Notice of Completion to be recorded in the office of the County Recorder of the county in which the Building is located in accordance with Section 8182 of the Civil Code of the State of California or any successor statute and furnish a copy thereof to Landlord upon recordation, failing which, Landlord may itself execute and file the same as Tenant’s agent for such purpose, at Tenant's sole cost and expense. At the conclusion of construction, (i) Tenant shall cause the Architect and Contractor (A) to update the Approved Working Drawings as necessary to reflect all changes made to the Approved Working Drawings during the course of construction, (B) to certify to the best of their knowledge that the "record-set" of as-built drawings are true and correct, which certification shall survive the expiration or termination of this Lease, and (C) to deliver to Landlord two (2) sets of copies of such record set of drawings within ninety (90) days following issuance of a certificate of occupancy for the Premises, and (ii) Tenant shall deliver to Landlord a copy of all warranties, guaranties, and operating manuals and information relating to the improvements, equipment, and systems in the Premises.
SECTION 5
COMPLETION OF THE TENANT IMPROVEMENTS;
LEASE COMMENCEMENT DATE
5.1 Landlord Caused Delays . Each Lease Commencement Date shall occur as provided in Section 2.1 of this Lease, provided that each Lease Commencement Date shall be extended by the number of days of delay of the Substantial Completion of the Tenant Improvements, as that term is defined in Section 5.3 , below, in the applicable portion of the Premises to the extent (i) caused by a Landlord Caused Delay, as that term is defined below, and (ii) the subject delay causes the Substantial Completion of the Tenant Improvements to occur after March 1, 2020. As used herein, the term " Landlord Caused Delay " shall mean actual delays to the extent resulting from the acts or omissions of Landlord including, but not limited to (a) material and unreasonable interference by Landlord, its agents or other Landlord Parties (except as otherwise allowed under this Tenant Work Letter) with the Substantial Completion of the Tenant Improvements which objectively precludes or delays the construction of Tenant Improvements, which interference relates to access by Tenant, or Tenant's Agents to the Building or any Critical Common Areas or service (including temporary power) during normal construction hours, or the use thereof during normal construction hours, and (b) delays due to the acts or failures to act of Landlord with respect to payment of the Tenant Improvement Allowance (except as otherwise allowed under this Tenant Work Letter).
5.2 Determination of Landlord Caused Delay . If Tenant contends that a Landlord Caused Delay has occurred, Tenant shall notify Landlord in writing (the " Delay Notice ") of the event which constitutes such Landlord Caused Delay. If such actions, inaction or circumstance described in the Delay Notice are not cured by Landlord within one (1) business day of Landlord's receipt of the Delay Notice and if such action, inaction or circumstance otherwise qualify as a Landlord Caused Delay, then a Landlord Caused Delay shall be deemed to have occurred commencing as of the date of Landlord's receipt of the Delay Notice and ending as of the date such delay ends. Notwithstanding the foregoing, an event shall constitute the basis for a Landlord Caused Delay only to the extent the effect of such Landlord Caused Delay cannot be mitigated in a reasonably practicable manner by Landlord on commercially reasonable terms (without requiring Landlord to incur any expense or overtime). For purposes of this Section 5 , " Substantial Completion of the Tenant Improvements " shall mean completion of construction of the Tenant Improvements in the Premises pursuant to the Approved Working Drawings, with the exception of any punch list items.
5.3 Delivery Date Delay .
5.3.1 Delivery Date Rent Abatement . If Landlord has not caused any particular Delivery Date to occur on or before October 24, 2019 (" First Rent Abatement Date "), subject to extension by virtue of Force Majeure, and any Tenant Delays, then Tenant shall be entitled to a one-half-day-for-day abatement of Base Rent attributable to the applicable portion of the Premises for each day following the First Rent Abatement Date until the earlier to occur of: (i) the applicable Delivery Date, and (ii) March 24, 2020. If any particular Delivery Date has not occurred on or before March 25, 2020 (such day being the " Second Rent Abatement Date "), subject to extension by virtue of Force Majeure, and any Tenant Delays, Tenant shall be entitled to an abatement of Base Rent equal to twice the per diem Base Rent attributable to the applicable portion of the Premises for each day following the Second Rent Abatement Date until the applicable Delivery Date (the Base Rent abatements described herein are referred to herein, collectively, as the " Late Delivery Date Abatements "). Tenant shall immediately apply any accrued Late Delivery Date Abatements against payments of Rent as they become due.
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EXHIBIT B -7 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
5.3.2 Delivery Date Termination Right . Further, if no Delivery Date has occurred within eleven (11) months following the first anticipated Delivery Date (the " Delivery Termination Date "), subject to extension by virtue of Force Majeure, and, at Landlord's sole option, any Tenant Delays, Tenant and Landlord shall each have the right to terminate this Lease by written notice to the other party (" Delivery Termination Notice ") effective upon the date occurring five (5) business days following receipt by the non-terminating party of the Delivery Termination Notice (the " Termination Effective Date "), in which event, Landlord shall return any prepaid R ent forthwith to Tenant. Should any Delivery Date occur prior to Tenant's exercise of the foregoing termination right, however, such termination right shall, in such event, expire and be of no further force or effect upon such occurrence of any Delivery Date (provided that Tenant shall be entitled to receive all of the Late Delivery Date Abatements). If Tenant delivers a Delivery Termination Notice to Landlord, then Landlord shall have the right to suspend the occurrence of the Termination Effective Date for a period ending thirty (30) days after the Termination Effective Date by delivering written notice to Tenant, prior to the Termination Effective Date, that, in Landlord's reasonable, good faith judgment, the Delivery Date will occur within thirty (30) days after the Termination Effective Date. If any Delivery Date is satisfied within such thirty (30) day suspension period, then the Delivery Termination Notice shall be of no force or effect, but if no Delivery Date does occur s within such thirty (30) day suspension period, then this Lease shall terminate upon the expiration of such thirty (30) day suspension period. The Termination Effective Date shall be extended to the extent of any Force Majeure, and, at Landlord's sole option, any Tenant Delays. Upon any termination as set forth in this Section 5.3.2 , Landlord and Tenant shall be released from any and all liability to each other resulting under this Lease. Tenant's rights to the Late Delivery Abatements and the right to terminate this Lease, as set forth in Section 5.3.1 above and this Section 5.3.2 , shall be Tenant's sole and exclusive remedies at law or in equity for the failure of any Delivery Date to occur prior t o or after any particular date.
SECTION 6
MISCELLANEOUS
6.1 Miscellaneous Items . Prior to the Lease Commencement Date, during the construction of the Tenant Improvements, and subject to compliance with Landlord's TI Manual (as the same is in effect on the date of this Lease), and if and to the extent reasonably available, Tenant may use the following items, on a nonexclusive basis, and in a manner and to the extent reasonably necessary to perform the Tenant Improvements: freight elevators, loading areas, non-potable water, temporary electrical services, and HVAC; provided, however, that Tenant shall be responsible, at Tenant's cost, for providing any security services required to facilitate operation of the foregoing after-hours, which security services shall be subject to Landlord's reasonable approval.
6.2 Tenant's Representative . Tenant has designated Ernest Evans as its sole representative with respect to the matters set forth in this Tenant Work Letter (whose e-mail address for the purposes of this Tenant Work Letter is eevans@roku.com, who, until further notice to Landlord, shall have full authority and responsibility to act on behalf of the Tenant as required in this Tenant Work Letter.
6.3 Landlord's Representatives . Landlord has designated Curtis Leigh (whose e-mail address for the purposes of this Tenant Work Letter is curtis@hunterproperties.com), as its sole representative with respect to the matters set forth in this Tenant Work Letter, who, until further notice to Tenant, shall have full authority and responsibility to act on behalf of the Landlord as required in this Tenant Work Letter.
6.4 Labor Harmony . 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, would disturb labor harmony with the workforce or trades engaged in performing other work, labor or services in or about the Building or the Common Areas. In addition, Tenant shall retain any union trades to the extent required by the Underlying Documents or Applicable Laws.
6.5 Time is of the Essence . Time is of the essence under this Tenant Work Letter. Unless otherwise indicated, all references herein to a "number of days" shall mean and refer to calendar days. In all instances where Tenant is required to approve or deliver an item, if no written notice of approval is given or the item is not delivered within the stated time period, at Landlord's sole option, at the end of such period the item shall automatically be deemed approved or delivered by Tenant and the next succeeding time period shall commence. If any item requiring approval is timely disapproved by the applicable party, the procedure for preparation of the document and approval thereof shall be repeated until the document is approved.
6.6 Tenant's Lease Default . Notwithstanding any provision to the contrary contained in this Lease , if any default, after expiration of any applicable notice or cure period, as described in the Lease or this Tenant Work Letter has occurred at any time on or before the Substantial Completion of the Tenant Improvements, then (i) in addition to all other rights and remedies granted to Landlord pursuant to this Lease, Landlord shall have the right to withhold payment of all or any portion of the Tenant Improvement Allowance, and (ii) all other obligations of Landlord under the terms of the Lease and this Tenant Work Letter shall be forgiven until such time as such default is cured or waived pursuant to the terms of this Lease (in which case, Tenant shall be responsible for any delay in the Substantial Completion of the Tenant Improvements caused by such inaction by Landlord).
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT B -8 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
TIME DEADLINES
Dates |
Actions to be Performed |
A. March 1, 2019 |
Final Space Plan to be completed by Tenant and delivered to Landlord. |
B. June 14, 2019 |
Tenant to deliver Final Working Drawings to Landlord. |
C. August 2, 2019 |
Tenant to deliver Permits to Contractor. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
SCHEDULE 1-A TO EXHIBIT B -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
COLEMAN HIGHLINE
BASE BUILDING DESCRIPTION
Buildings 3 and 4 :
All references to "Code" below shall mean compliance with applicable Code to the extent necessary for Tenant to obtain and retain a CofO for the Premises for general office use.
All landscape, site work, lighting, paving, striping, Code related signage, and utilities (sewer, water, gas). Includes infrastructure for future communication and cable TV requirements. Work includes all vaults, fees, backflow and monitoring devices.
2) |
Shell: |
All work required to obtain a shell permit final inspection (not a temporary certificate for occupancy). All work shall conform to local Code for the shell. Weather tight (air and water infiltration) shell complete with rain water distribution system. Exterior doors with manual exit panic hardware. 2 sets of standard pre- engineered stairs for access and egress with one set to access the roof. Fire riser and complete shell system, including "up heads" with capped tees for Tenant Improvements at all floors and roof monitors and PIV (monitoring system by Tenant). Floor of the Buildings designed for 80 PSF uniform live load. Steel framework shall be designed to accommodate shaft and elevator openings. Includes roof screen. Insulation at underside of roof deck provided, furring and drywall at perimeter walls and all columns are excluded. 10’ high ceiling for most open office space. The Buildings are classified as Type II-A. Exterior lobby door hardware to be electrified.
3) |
Electrical: |
All primary and secondary electrical services from the street to a location in the Buildings, including transformer pads, and house meter section.
4) |
Core: |
All work related to construction of core bathrooms, stairs shafts, HVAC shafts, electrical and phone rooms, janitor closets, elevators and shafts. Work related to construction of main lobby and upper elevator lobbies are excluded.
|
a) |
Core bathrooms (one set for men and women per floor) shall include multiple stalls with one (1) handicap stall per floor and provide +2 plumbing fixtures over code requirement for occupancy load. Includes showers for men and women on first floor only. Bathroom will receive tile flooring and wall tiles up to wainscot height at wet walls only (6’ above finished floor). All other bathroom i nterior walls and gypsum board ceilings will be taped, finished, and painted. All plumbing fixtures including water closets, urinals, lavatory sinks and faucets will be battery operated. Toilet accessories including soap dispensers, toilet paper dispensers, toilet seat dispensers, trash receptacles, paper towel dispensers, napkin dispensers, and handicap grab bars are included. Plastic laminate toilet partitions are included. Granite countertops with under mount sinks are included. All associated lighting, fire sprinklers, power receptacles, ventilation, venting, sewer piping, water piping and floor drains are included. All associated lighting and fire sprinklers are included. |
|
b) |
Stair shafts will be constructed with metal stud framing and drywall assembly with fire rating in compliance to construction type. Stairs to be 1’ wider than Code required. All interior walls facing the egress stairs will be taped, finished, and painted. Gypsum board ceiling will be constructed at the top level. No soffit on the underside of stairs. Stair rails and stringers will be painted. All associated lighting and fire sprinklers are included. |
|
c) |
Electrical and telephone rooms will receive sealed concrete with plywood backing on walls. Electrical scope will include power distribution including transformer, conduit risers and electrical panels. Conduit risers will be provided for phone service distribution. |
|
d) |
SVP transformer pad for each Building. Main switchboard to be per CEC, Silicon Valley Power and City of San Jose requirements. Meter main per Silicon Valley Power requirements, with utility metering section with CAT5E station cable to MPOE. Provide a vertical 480/277V 3PH bus riser complete with bus plugs capable of supply full floor power, lighting and miscellaneous loads at electrical room on each floor for future tenant distribution. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
SCHEDULE 1-B TO EXHIBIT B -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
|
f) |
HVAC shall be air-cooled package rooftop VAV unit(s). Units will be side discharge to a shaft location where ducts will extend down shaft and connect to fire smoke dampers at ceiling level for each floor. Rooftop ductwork will be internally lined and ductwork inside shaft will be wrapped. Duct loops at each floor are not included (risers and stubs on each floor only). Design shall be for an indoor temperature of 74 F, and outdoor temperatures corresponding to the 0.4% ASHRAE design day: a winter temperature of 36 F, and a summer temperature of 92 F dry bulb and 67 F wet bulb. Additionally, HVAC design shall comply with ASHRAE Standard 90.1, 62.1, and 55. Landlord to provide mechanical HVAC pads on roof for Tenant-installed HVAC units, Landlord to coordinate conduit placement for electrical, data and AV during construction of Buildings 3 and 4 prior to pouring the concrete slab, provided that locations are identified by Tenant for Landlord in a timely manner and will not impact construction schedule. |
|
g) |
DDC controls for Base Building system (rooftop heating and cooling) with the availability of the addition of DDC controls should the future tenant require. Electrical monitoring is not included. |
General Office Areas:
Lighting load (including task lighting): Cooling system designed for 1.2 watts/RSF; Lighting designed to be restricted to .95 watts/RSF to conform to potential LEED goals
Non Core miscellaneous office equipment designed for cooling loads 3.0 watts/RSF (highly populated floor plates need more watts/SF)
Designated dry lab space: Increased loads are a tenant expense performed by Landlord
Occupancy: designed to accommodate 150 SF/person
|
h) |
Hot water boiler system, including hot water pump(s), water treatment and all necessary piping specialties, serving one riser extending from the roof to the lower floor. Supply and return valves to be located on each floor for future connection to hot water piping loop if required. Piping loops on each floor are not included. |
|
i) |
Auxiliary cooling is not included. |
|
j) |
Domestic cold water main branch piping to each floor near the stair for future break rooms. |
|
k) |
Fire alarm system: Buildings are fully sprinklered and monitored including the PIV as required by Code. Life safety system distribution (smoke detectors, annunciators, strobes, etc) as required by Code for core and common areas. Each floor is designated as one smoke zone. Fire alarm to be expandable. |
|
l) |
Building telephone MPOE shall be separate from Main Electrical Room. Roof pad to allow for future 24hr cooling tenant requirement and stacked IDF closets shall be included per Code. Phone systems, switching equipment, connections etc., are not included. |
|
m) |
Elevators (quantity and size to meet code) shall be machine room less elevators with call buttons to meet ADA and fire code requirements. Pit ladder(s), separation screens, sill angles, guide rails and separation beams will be installed, if required, in shaft. Elevator vestibule walls will be fire taped for tenant improvement. Flooring on upper level vestibule to be provided by T.I. Excludes build out of main lobby and upper elevator lobbies. Standard elevator cab finish will be provided. Upgrades if required by Tenant. Elevators to include security card-reader interface capacity. |
|
n) |
Emergency power; An inverter will be provided for the Buildings to power exterior egress lighting. All interior egress lights to be powered by self-contained emergency battery packs. |
|
o) |
Tenant generator provisions; Provisions will be made at exterior utility enclosure for a 500kW generator for the Buildings. Provisions to include underground conduits for power, control and parasitic connections. Balance of work to be NIC. |
|
p) |
All core walls will be constructed with metal stud framing and drywall assembly with fire rating in compliance to construction type. Wall facing Tenant space will be fire taped. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
SCHEDULE 1-B TO EXHIBIT B -2 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
1) |
Site and Shell: |
All landscape, site work, lighting, paving, striping, Code related signage, and utilities (sewer, water, gas). Includes infrastructure for future communication and cable TV requirements. Work includes all vaults, fees, backflow and monitoring devices.
2) |
Shell: |
All work required to obtain a shell permit final inspection (not a temporary certificate for occupancy). All work shall conform to local Code for the shell. Weather tight (air and water infiltration) shell complete with rain water distribution system. Exterior doors with manual exit panic hardware. 3 exterior sets of standard pre- engineered stairs for access and egress. Fire riser and complete shell system, including "up heads" with capped tees for Tenant Improvements at all floors and roof monitors and PIV (monitoring system by Tenant). Floor of the Building designed for 80 PSF uniform live load. Steel framework shall be designed to accommodate shaft openings. Insulation at underside of roof deck provided, furring and drywall at perimeter walls and all columns are excluded. The Building is classified as Type II-B.
3) |
Electrical: |
All primary and secondary electrical services from the street to a location in the Building, including transformer pads, and house meter section.
4) |
Core: |
All work related to construction of core bathrooms, stairs, HVAC shafts, electrical and phone rooms, janitor closets, elevators and shafts.
|
a) |
Core bathrooms (one set for men and women on the first and second floor and one unisex toilet rooms on the third floor) shall include plumbing stub ups for in quantity and locations agreed upon by Landlord and Tenant for multiple stalls with one (1) handicap stall per floor and in compliance with code requirement for occupancy load. All sewer piping, water piping and floor drains associated with stub ups are included. All drywall demising partitions, fixtures, finishes, toilet partitions, toilet accessories, lighting, power receptacles, fire sprinklers and HVAC will be designed and installed as part of tenant fit out. |
|
b) |
If required for egress, interior stair shafts will be constructed with metal stud framing and drywall assembly with fire rating in compliance to construction type. All interior walls facing the egress stairs will be taped, finished, and painted. Gypsum board ceiling will be constructed at the top level. No soffit on the underside of stairs. Stair rails and stringers will be painted. All associated lighting and fire sprinklers are included. |
|
c) |
Electrical and telephone rooms will receive sealed concrete with plywood backing on walls. Electrical scope will include power distribution including transformer, conduit risers and electrical panels. Conduit risers will be provided for phone service distribution. |
|
d) |
SVP transformer pad for Building. Main switchboard to be per CEC, Silicon Valley Power and City of San Jose requirements. Meter main per Silicon Valley Power requirements, with utility metering section with CAT5E station cable to MPOE. Provide a vertical 480/277V 3PH bus riser complete with bus plugs capable of supply full floor power, lighting and miscellaneous loads at electrical room on each floor for future tenant distribution. |
|
e) |
Fully operational main electric service for the Building including main switchboard rated at 14 Watts per SF, 2500 AMP 480/277V 3PH, serving Tenant lighting, power and miscellaneous loads, as well as Base Building electrical and mechanical equipment loads. Space sized for Tenant panels and transformers not included. Includes bus duct for lighting and power for Core only. Includes conduits and wire feeders for Mechanical. |
|
f) |
HVAC equipment shall be housed in Utility Yard adjacent to Building. Exterior ductwork will be internally lined and ductwork inside shaft will be wrapped. Duct loops at each floor are not included (risers and stubs on each floor only). Design shall be for an indoor temperature of 74 F, and outdoor temperatures corresponding to the 0.4% ASHRAE design day: a winter temperature of 36 F, and a summer temperature of 92 F dry bulb and 67 F wet bulb. Additionally, HVAC design shall comply with ASHRAE Standard 90.1, 62.1, and 55. Mechanical HVAC pads for shell provided HVAC equipment is included, all other pads by tenant. Landlord to provide mechanical HVAC pads in the Utility Yard for Tenant-installed HVAC units, Landlord to coordinate conduit placement for electrical, data and AV during construction of Building A2 prior to pouring the concrete slab, provided that locations are identified by Tenant for Landlord in a timely manner and will not impact construction schedule. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
SCHEDULE 1-B TO EXHIBIT B -3 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
General Office Areas:
Lighting load (including task lighting): Cooling system designed for 1.2 watts/RSF; Lighting designed to be restricted to .95 watts/RSF to conform to potential LEED goals
Non Core miscellaneous office equipment cooling loads 3.0 watts/RSF (highly populated floor plates need more watts/SF)
Occupancy: 150 SF/person
|
h) |
Hot water boiler system, including hot water pump(s), water treatment and all necessary piping specialties, serving one riser extending from the roof to the lower floor. Supply and return valves to be located on each floor for future connection to hot water piping loop if required. Piping loops on each floor are not included. |
|
i) |
Auxiliary cooling is not included. |
|
j) |
Domestic cold water main branch piping to each floor near the stair for future break rooms. |
|
k) |
Fire alarm system: Building is fully sprinklered and monitored including the PIV as required by Code. Life safety system distribution (smoke detectors, annunciators, strobes, etc) as required by Code for core and common areas. Each floor is designated as one smoke zone. Fire alarm to be expandable. |
|
l) |
Building telephone MPOE shall be separate from Main Electrical Room. Roof pad to allow for future 24hr cooling tenant requirement and stacked IDF closets shall be included per Code. Phone systems, switching equipment, connections etc., are not included. |
|
m) |
Elevators (quantity and size to meet code) shall be machine room less elevators with call buttons to meet ADA and fire code requirements. Pit ladder(s), separation screens, sill angles, guide rails and separation beams will be installed, if required, in shaft. Elevator vestibule walls will be fire taped for tenant improvement. Flooring on upper level vestibule to be provided by T.I. Excludes build out of main lobby and upper elevator lobbies. Standard elevator cab finish will be provided. Upgrades if required by Tenant. Elevators to include security card-reader interface capacity. |
|
n) |
Emergency power; An inverter will be provided for the Building to power exterior egress lighting. All interior egress lights to be powered by self-contained emergency battery packs. |
|
p) |
All core walls will be constructed with metal stud framing and drywall assembly with fire rating in compliance to construction type. Wall facing Tenant space will be fire taped. |
|
q) |
Tenant to provide furniture for the rooftop terrace and the courtyard areas. Landlord to provide built-in benches and planters at Highline and planters on the rooftop terrace. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
SCHEDULE 1-B TO EXHIBIT B -4 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
BASE BUILDING PLANS FOR BUILDINGS 3 AND 4
COLEMAN HIGHLINE BUILDING 3 1173 COLEMAN AVE.,SAN JOSE SHEET NUMBER TITLE ARCHITECTURAL DRAWING DATE 3AO.O COVER SHEET - BUILDING 3 S/29/20183A0.1A CODE COMPLIANCE & EXIT DIAGRAM - 1ST FLOOR S/29/2018 3AO.lB CODE COMPLIANCE & EXIT DIAGRAM - 2ND FLOOR S/29/2018 3AO.lC CODE COMPLIANCE & EXIT DIAGRAM - 3RD FLOOR S/29/2018 3AO.lD CODE COMPLIANCE & EXIT DIAGRAM- 4TH FLOOR S/29/2018 3A0.2A TITLE24 S/29/2018 3A0.2B TITLE24 S/29/2018 3A0.3 CALGREEN 5/29/2018 3Al.O SITE PLAN - FOR REFERENCE ONLY 5/29/2018 3A2.1.1 BUILDING 3 - FIRST FLOOR PLAN S/29/2018 3A2.1.2 BUILDING 3 - SECOND FLOOR PLAN S/29/2018 3A2.1.3 BUILDING 3 - THIRD FLOOR PLAN S/29/2018 3A2.1.4 BUILDING 3 - FOURTH FLOOR PLAN S/29/2018 3A2.1.5 BUILDING 3 - FIFTH FLOOR PLAN S/29/2018 3A2.1.6 BUILDING 3 - SIXTH FLOOR PLAN S/29/2018 3A2.1.7 BUILDING 3 - ROOF PLAN S/29/2018 3A2.1.8 BUILDING 3 - PENTHOUSE ROOF PLAN S/29/2018 3A2.2 BUILDING 3 - DOOR SCHEDULE S/29/2018 3A2.3 BUILDING 3 - FINISH SCHEDULE/MATRIX S/29/2018 3A3.0A SITE ELEVATIONS - FOR REFERENCE ONLY S/29/2018 3A3.0B SITE ELEVATIONS - FOR REFERENCE ONLY S/29/2018 3A3.1 BUILDING 3 - NORTH ELEVATION S/29/2018 3A3.2 BUILDING 3 - EAST ELEVATION S/29/2018 3A3.3 BUILDING 3 - SOUTH AND WEST ELEVATIONS S/29/2018 3A3.4 BUILDING 3 - BUILDING SECTIONS S/29/2018 3A3.5 BUILDING 3 - WALL SECTIONS S/29/2018 3A3.6 BUILDING 3 - WALL SECTIONS 5/29/2018 3A4.1 BUILDING 3 - ENLARGED RESTROOM PLANS (TYP.) S/29/2018 3A4.2 BUILDING 3 - ENLARGED SHOWER ROOM PLANS 5/29/2018 3A6.1 BUILDING 3 - FIRST FLOOR/ HIGHLINE SOFFIT REFLECTED CEILING PLAN 5/29/2018 3A6.2 BUILDING 3 - SECOND FLOOR REFLECTED CEILING PLAN 5/29/2018 3A7.1 BUILDING 3 - STAIR #1ENLARGED PLANS S/29/2018 3A7.2 BUILDING 3 - STAIR #1SECTIONS S/29/2018 3A7.3 BUILDING 3 - STAIR #2 ENLARGED PLANS S/29/2018 3A7.4 BUILDING 3 - STAIR #2 SECTIONS S/29/2018 3A7.5 BUILDING 3 - STAIR DETAILS S/29/2018 3A7.6 BUILDING 3 - ENLARGED ELEVATOR PLANS S/29/2018 3A7.6A BUILDING 3 - ELEVATOR PIT PLANS S/29/2018
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
SCHEDULE 1-C TO EXHIBIT B -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
3A7.7 BUILDING 3 - ELEVATOR SECTIONS 5/29/2018 3A7.8 BUILDING 3 - ELEVATOR DETAILS 5/29/2018 3A7.9 BUILDING 3 - TYPICAL EXTERIOR STAIRS AT HIGHLINE 5/29/2018 3A7.10 BUILDING 3 - TYPICAL EXTERIOR STAIRS AT HIGHLINE 5/29/2018 3A8.1 BUILDING 3 - EXTERIOR DETAILS 5/29/2018 3A8.2 BUILDING 3 - EXTERIOR DETAILS AT CANOPY 5/29/2018 3A8.3 BUILDING 3 - EXTERIOR DETAILS 5/29/2018 3A8.4 BUILDING 3 - EXTERIOR DETAILS 5/29/2018 3A8.5 BUILDING 3 - HANDSET PRECAST PANEL ELEVATIONS@ HIGHLINE 5/29/2018 3A8.6 BUILDING 3 - FIRST FLOOR- PLAN DETAILS 5/29/2018 3A8.7 BUILDING 3 - UPPER FLOORS- PLAN DETAILS 5/29/2018 3A8.8 HIGHLINE EXPANSION JOINT DETAILS 5/29/2018 3A8.9 HIGHLINE EXPANSION JOINT DETAILS 5/29/2018 3A8.12 BUILDING 3 - PARAPET DETAILS 5/29/2018 3A8.13 BUILDING 3 - DUCT HOUSE & STAIR EXTERIOR WALL DETAILS 5/29/2018 3A8.20 BUILDING 3 - EDGE OF SLAB FIRESAFING DETAILS 5/29/2018 3A8.21 BUILDING 3 - GYP.BD. PENETRATION DETAILS 5/29/2018 3A8.22 BUILDING 3 - GYP.BD. PENETRATION DETAILS 5/29/2018 3A9.3 BUILDING 3 - RESTROOM DETAILS 5/29/2018 3A9.4 BUILDING 3 - SHOWER DETAILS 5/29/2018 STRUCTURAL 351.01 GENERAL NOTES 5/29/2018 351.01 GENERAL NOTES 5/29/2018 351.01 LOADING DIAGRAMS 5/29/2018 351.02 TYPICAL CONCRETE DETAILS 5/29/2018 3Sl.02A TYPICAL CONCRETE DETAILS 5/29/2018 3Sl.02B TYPICAL CONCRETE DETAILS 5/29/2018 351.03 TYPICAL STEEL DECK DETAILS 5/29/2018 3Sl.03A TYPICAL STEEL DECK DETAILS 5/29/2018 351.04 TYPICAL STEEL DETAILS 5/29/2018 3Sl.04A TYPICAL STEEL DETAILS 5/29/2018 3Sl.04B TYPICAL STEEL DETAILS 5/29/2018 3Sl.04C TYPICAL STEEL DETAILS 5/29/2018 351.040 TYPICAL STEEL DETAILS 5/29/2018 352.01 BLDG 3- LE VEL 1(FOUNDATION PLAN) 5/29/2018 352.02 BLDG 3- LE VEL 2 FRAMING PLAN 5/29/2018 352.03 BLDG 3- LE VEL 3 FRAMING PLAN 5/29/2018 352.04 BLDG 3- LE VELS 4,5 AND 6 FRAMING PLAN 5/29/2018 352.05 BLDG 3- ROOF FRAMING PLAN 5/29/2018 352.06 BLDG 3- PENTHOUSE FRAMING PLAN 5/29/2018 353.01 BRACE FRAME ELEVATIONS 5/29/2018 353.02 BRACE FRAME DETAILS 5/29/2018 3S3.02A BRACE FRAME DETAILS 5/29/2018
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
SCHEDULE 1-C TO EXHIBIT B -2 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
353.02B BRACE FRAME DETAILS 5/29/2018 354.01 FOUNDATION SECTIONS AND DETAILS 5/29/2018 354.01A FOUNDATION SECTIONS AND DETAILS 5/29/2018 354.02 NON-FRAME STEEL COLUMN SCHEDULE AND DETAILS 5/29/2018 355.01 SECTIONS AND DETAILS 5/29/2018 355.01A SECTIONS AND DETAILS 5/29/2018 355.01B SECTIONS AND DETAILS 5/29/2018 355.02 SECTIONS AND DETAILS 5/29/2018 356.01 PRECAST PANEL SUPPORT DETAILS 5/29/2018 356.01A PRECAST PANEL SUPPORT DETAILS 5/29/2018 MECHANICAL 3MO BUILDING 3 MECHANICAL COVER SHEET 5/29/2018 3M1 BUILDING 3 MECHANICAL SCHEDULES 5/29/2018 3M2.1 BUILDING 3 MECHANICAL 1ST FLOOR PLAN 5/29/2018 3M2.2 BUILDING 3 MECHANICAL 2ND FLOOR PLAN 5/29/2018 3M2.3 BUILDING 3 MECHANICAL 3RD FLOOR PLAN 5/29/2018 3M2.4 BUILDING 3 MECHANICAL 4TH FLOOR PLAN 5/29/2018 3M2.5 BUILDING 3 MECHANICAL 5TH FLOOR PLAN 5/29/2018 3M2.6 BUILDING 3 MECHANICAL 6TH FLOOR PLAN 5/29/2018 3M2.7R BUILDING 3 MECHANICAL ROOF PLAN 5/29/2018 3M3 BUILDING 3 MECHANICAL SECTIONS 5/29/2018 3M4.1 BUILDING 3 MECHANICAL DETAILS 5/29/2018 3M4.2 BUILDING 3 MECHANICAL DETAILS 5/29/2018 3M5 BUILDING 3 MECHANICAL TITLE 24 5/29/2018 ELECTRICAL 3EO.O COVER SHEET 5/29/2018 3E0.1 LUMINAIRE SCHEDULE 5/29/2018 3E0.2 T24 COMPLIANCE - BUILDING 3 5/29/2018 3E0.3 T24 COMPLIANCE - BUILDING 3 5/29/2018 3E0.4 T24 COMPLIANCE - BUILDING 3 5/29/2018 3EO.S T24 COMPLIANCE - BUILDING 3 5/29/2018 3E0.6 T24 COMPLIANCE - BUILDING 3 5/29/2018 3E0.7 T24 COMPLIANCE - BUILDING 3 5/29/2018 3E0.8 T24 COMPLIANCE - BUILDING 3 5/29/2018 3E2.1 BUILDING 31ST FLOOR ELECTRICAL PLAN 5/29/2018 3E2.2 BUILDING 3 2ND FLOOR ELECTRICAL PLAN 5/29/2018 3E2.3 BUILDING 3 3RD FLOOR ELECTRICAL PLAN 5/29/2018 3E2.4 BUILDING 34TH FLOOR ELECTRICAL PLAN 5/29/2018 3E2.5 BUILDING 35TH FLOOR ELECTRICAL PLAN 5/29/2018 3E2.6 BUILDING 36TH FLOOR ELECTRICAL PLAN 5/29/2018 3E2.7 BUILDING 3 ROOF ELECTRICAL PLAN 5/29/2018 3E4.1 BUILDING 3 SINGLE LINE DIAGRAM 5/29/2018
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
SCHEDULE 1-C TO EXHIBIT B -3 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
3E4.2 BUILDING 3 SINGLE LINE DIAGRAM EMERGENCY SYSTEMS 5/29/2018 3E4.3 BUILDING 3 GROUND RISER DIAGRAM 5/29/2018 3E5.O SCHEDULES 5/29/2018 3E5.l BUILDING 3 PANEL SCHEDULES 5/29/2018 3E6.1 BUILDING 3 ENLARGED PLANS 5/29/2018 3E6.2 BUILDING 3 PARTIAL HIGHLINE PLAN 5/29/2018 3E6.3 BUILDING 3 ENLARGED PLANS 5/29/2018 PLUMBING 3Pl.O INDEX, LEGENDS AND SCHEDULE 5/29/2018 3P1.1 PLUMBING - PACIFIC GAS, ELECTRIC,& CALCULATIONS 5/29/2018 3P1.2 PLUMBING - FIRE STOPPING CUT SHEETS 5/29/2018 3P2.1U PLUMBING - FIRST FLOOR PLAN UNDERGROUND 5/29/2018 3P2.1U PLUMBING - FIRST FLOOR PLAN PIPING 5/29/2018 3P2.2 PLUMBING - SECOND FLOOR PLAN 5/29/2018 3P2.3 PLUMBING - THIRD FLOOR PLAN 5/29/2018 3P2.4 PLUMBING - FOURTH FLOOR PLAN 5/29/2018 3P2.5 PLUMBING - FIFTH FLOOR PLAN 5/29/2018 3P2.6 PLUMBING - SIXTH FLOOR PLAN 5/29/2018 3P2.7 PLUMBING - ROOF PLAN 5/29/2018 3P2.8 PLUMBING - PENTHOUSE ROOF PLAN 5/29/2018 3P3.1 PLUMBING - ENLARGED FLOOR PLANS- WASTE AND VENT 5/29/2018 3P3.2 PLUMBING - ENLARGED FLOOR PLANS - HOT AND COLD WATER 5/29/2018 3P4.1 PLUMBING - DIAGRAMS 5/29/2018 3P4.2 PLUMBING - DIAGRAMS RAIN WATER 5/29/2018 3P4.3 PLUMBING - DOMESTIC HOT & COLD WATER 5/29/2018 3P4.4 PLUMBING - DIAGRAMS 5/29/2018
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
SCHEDULE 1-C TO EXHIBIT B -4 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
COLEMAN HIGHLINE BUILDING 4 1167 COLEMAN AVE.,SAN JOSE SHEET NUMBER TITLE DRAWING DATE ARCHITECTURAL 4AO.O COVER SHEET • BUILDNI G 4 5/29/2018 4A0.1A CODE COMPLIANCE & EXIT DIAGRAM- 1ST FLOOR 5/29/2018 4AO.lB CODE COMPLIANCE & EXIT DIAGRAM- 2ND FLOOR 5/29/2018 4AO. C CODE COMPLIANCE & EXIT DIAGRAM- 3RD FLOOR & HIGHLINE 5/29/2018 4A0.1D CODE COMPLIANCE & EXIT DIAGRAM- TYPICAL UPPER FLOORS 5/29/2018 4A0.2A TITlE 24 5/29/2018 4A0.2B TITlE 24 5/29/2018 4A0.3 CALGREEN 5/29/2018 4A.Ol SITE PLAN• FOR REFERENCE ONLY 5/29/2018 4A2.1.1 BUILDING 4• FIRST FLOOR PLAN 5/29/2018 4A2.1.2 BUILDING 4• SECOND FLOOR PLAN 5/29/2018 4A2.1.3 BUILDING 4 • THIRD FLOOR PLAN 5/29/2018 4A2.1.4 BUILDING 4 • FOURTH FLOOR PLAN 5/29/2018 4A2.1.5 BUILDING 4 • FIFTH FLOOR PLAN 5/29/2018 4A2.1.7 BUILDING 4 • ROOF PLAN 5/29/2018 4A2.1.8 BUILDING 4 • PENTHOUSE ROOF PLAN 5/29/2018 4A2.2 BUILDING 4 • DOOR SCHEDULE 5/29/2018 4A2.3 BUILDING 4 • FINISH SCHEDULE/MATRIX 5/29/2018 4A3.0A SITE ELEVATIONS• FOR REFERENCE ONLY 5/29/2018 4A3.0B SITE ELEVATIONS• FOR REFERENCE ONLY 5/29/2018 4A3.1 BUILDNI G 4• SOUTH ELEVATION 5/29/2018 4A3.2 BUILDNI G 4• WEST ELEVATION 5/29/2018 4A3.3 BUILDNI G 4• NORTH & EAST ELEVATIONS 5/29/2018 4A3.4 BUILDNI G 4• BUILDNI G SECTIONS 5/29/2018 4A3.5 BUILDING 4• WALL SECTIONS 5/29/2018 4A3.6 BUILDING 4• WALL SECTIONS 5/29/2018 4A4.1 BUILDING 4• ENLARGED RESTROOM PLANS (TYP.) 5/29/2018 4A4.2 BUILDING 4• ENLARGED SHOWER ROOM PLANS 5/29/2018 4A6.1 BUILDING 4• FIRST FLOOR/ HIGHLINE SOFFIT REFLECTED CEILING PLAN 5/29/2018 4A6.2 BUILDING 4• SECOND FLOOR REFLECTED CEILING PLAN 5/29/2018 4A7.1 BUILDING 4• STAIR #1ENLARGED PLANS 5/29/2018 4A7.2 BUILDING 4• STAIR #1SECTIONS 5/29/2018 4A7.3 BUILDING 4• STAIR #2 ENLARGED PLANS 5/29/2018 4A7.4 BUILDING 4 • STAIR #2 SECTIONS 5/29/2018 4A7.5 BUILDING 4 • STAIR DETAILS 5/29/2018 4A7.6 BUILDING 4 • ENLARGED ELEVATOR PLANS 5/29/2018 4A7.6A BUILDING 4 • ELEVATOR PIT PLANS 5/29/2018
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
SCHEDULE 1-C TO EXHIBIT B -5 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
4A7.7 BUILDING 4 - ELEVATOR SECTIONS 5/29/2018 4A7.8 BUILDING 4 - ELEVATOR DETAILS 5/29/2018 4A7.9 BUILDING 4 - TYPICAL EXTERIOR STAIRS AT HIGHLINE 5/29/2018 4A7.10 BUILDING 4 - TYPICAL EXTERIOR STAIRS AT HIGHLINE 5/29/2018 4A8.1 BUILDING 4 - EXTERIOR DETAILS 5/29/2018 4A8.2 BUILDING 4 - EXTERIOR DETAILS AT CANOPY 5/29/2018 4A8.3 BUILDING 4 - EXTERIOR DETAILS 5/29/2018 4A8.4 BUILDING 4 - EXTERIOR DETAILS 5/29/2018 4A8.5 BUILDING 4 - HANDSET PRECAST PANEL ELEVATIONS@ HIGHLINE 5/29/2018 4A8.6 BUILDING 4 - FIRST FLOOR - PLAN DETAILS 5/29/2018 4A8.7 BUILDING 4 - UPPER FLOORS - PLAN DETAILS 5/29/2018 4A8.8 HIGHLINE EXPANSION JOINT DETAILS 5/29/2018 4A8.9 HIGHLINE EXPANSION JOINT DETAILS 5/29/2018 4A8.12 BUILDING 4 - PARAPET DETAILS 5/29/2018 4A8.13 BUILDING 4 - DUCT HOUSE & STAIR EXTERIOR WALL DETAILS 5/29/2018 4A8.20 BUILDING 4 - EDGE OF SLAB FIRESAFING DETAILS 5/29/2018 4A8.21 BUILDING 4- GYP. BD. PENETRATION DETAILS 5/29/2018 4A8.22 BUILDING 4 - GYP. BD. PENETRATION DETAILS 5/29/2018 4A9.3 BUILDING 4 - RESTROOM DETAILS 5/29/2018 STRUCTURAL 451.01 GENERAL NOTES 5/29/2018 451.01 GENERAL NOTES 5/29/2018 451.01 LOADING DIAGRAMS 5/29/2018 451.02 TYPICAL CONCRETE DETAILS 5/29/2018 45l.02A TYPICAL CONCRETE DETAILS 5/29/2018 45l.02B TYPICAL CONCRETE DETAILS 5/29/2018 451.03 TYPICAL STEEL DECK DETAILS 5/29/2018 45l.03A TYPICAL STEEL DECK DETAILS 5/29/2018 451.04 TYPICAL STEEL DETAILS 5/29/2018 45l.04A TYPICAL STEEL DETAILS 5/29/2018 45l.04B TYPICAL STEEL DETAILS 5/29/2018 4Sl.04C TYPICAL STEEL DETAILS 5/29/2018 451.040 TYPICAL STEEL DETAILS 5/29/2018 452.01 BLDG 3 - LEVEL 1{FOUNDATION PLAN) 5/29/2018 452.02 BLDG 3 - LEVEL 2 FRAMlNG PLAN 5/29/2018 452.03 BLDG 3 - LEVEL 3 FRAMlNG PLAN 5/29/2018 452.04 BLDG 3 - LEVELS 4 AND 5 FRAMING PLAN 5/29/2018 452.05 BLDG 3 - ROOF FRAMING PLAN 5/29/2018 452.06 BLDG 3 - PENTHOUSE FRAMING PLAN 5/29/2018 453.01 BRACE FRAME ELEVATIONS 5/29/2018 453.02 BRACE FRAME DETAILS 5/29/2018 453.02A BRACE FRAME DETAILS 5/29/2018 453.02B BRACE FRAME DETAILS 5/29/2018
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
SCHEDULE 1-C TO EXHIBIT B -6 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
454.01 FOUNDATION SECTIONS AND DETAILS 5/29/2018 454.01A FOUNDATION SECTIONS AND DETAILS 5/29/2018 454.02 NON-FRAME STEEL COLUMN SCHEDULE AND DETAILS 5/29/2018 455.01 SECTIONS AND DETAILS 5/29/2018 455.01A SECTIONS AND DETAILS 5/29/2018 455.01B SECTIONS AND DETAILS 5/29/2018 455.02 SECTIONS AND DETAILS 5/29/2018 456.01 PRECAST PANEL SUPPORT DETAILS 5/29/2018 456.01A PRECAST PANEL SUPPORT DETAILS 5/29/2018 MECHANICAL 4M0 BUILDING 4 MECHANICAL COVER SHEET 5/29/2018 4M1 BUILDING 4 MECHANICAL SCHEDULES 5/29/2018 4M2.1 BUILDING 4 MECHANICAL 1ST FLOOR PLAN 5/29/2018 4M2.2 BUILDING 4 MECHANICAL 2ND FLOOR PLAN 5/29/2018 4M2.3 BUILDING 4 MECHANICAL 3RD FLOOR PLAN 5/29/2018 4M2.4 BUILDING 4 MECHANICAL 4TH FLOOR PLAN 5/29/2018 4M2.5 BUILDING 4 MECHANICAL 5TH FLOOR PLAN 5/29/2018 4M2.6 BUILDING 4 MECHANICAL 6TH FLOOR PLAN 5/29/2018 4M2.7R BUILDING 4 MECHANICAL ROOF PLAN 5/29/2018 4M3 BUILDING 4 MECHANICAL SECTIONS 5/29/2018 4M4.1 BUILDING 4 MECHANICAL DETAILS 5/29/2018 4M4.2 BUILDING 4 MECHANICAL DETAILS 5/29/2018 4M5 BUILDING 4 MECHANICAL TITLE 24 5/29/2018 ELECTRICAL 4E0.0 COVER SHEET 5/29/2018 4E0.1 LUMINAIRE SCHEDULE 5/29/2018 4E0.2 T24 COMPLIANCE - BUILDING 4 5/29/2018 4E0.3 T24 COMPLIANCE - BUILDING 4 5/29/2018 4E0.4 T24 COMPLIANCE - BUILDING 4 5/29/2018 4E0.5 T24 COMPLIANCE - BUILDING 4 5/29/2018 4E0.6 T24 COMPLIANCE - BUILDING 4 5/29/2018 4E0.7 T24 COMPLIANCE - BUILDING 4 5/29/2018 4E0.8 T24 COMPLIANCE - BUILDING 4 5/29/2018 4E2.1 BUILDING 41ST FLOOR ELECTRICAL PLAN 5/29/2018 4E2.2 BUILDING 4 2ND FLOOR ELECTRICAL PLAN 5/29/2018 4E2.3 BUILDING 4 3RD FLOOR ELECTRICAL PLAN 5/29/2018 4E2.4 BUILDING 44TH FLOOR ELECTRICAL PLAN 5/29/2018 4E2.5 BUILDING 45TH FLOOR ELECTRICAL PLAN 5/29/2018 4E2.7 BUILDING 4 ROOF ELECTRICAL PLAN 5/29/2018 4E4.1 BUILDING 4 SINGLE LINE DIAGRAM 5/29/2018 4E4.2 BUILDING 4 SINGLE LINE DIAGRAM EMERGENCY SYSTEMS 5/29/2018 4E4.3 BUILDING 4 GROUND RISER DIAGRAM 5/29/2018
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
SCHEDULE 1-C TO EXHIBIT B -7 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
4E5.0 SCHEDULES 5/29/2018 4E5.1 BUILDING 4 PANEL SCHEDULES 5/29/2018 4E6.1 BUILDING 4 ENLARGED PLANS 5/29/2018 4E6.2 BUILDING 4 PARTIAL HIGHLINE PLAN 5/29/2018 4E6.3 BUILDING 4 ENLARGED PLANS 5/29/2018 PLUMBING 4P.Ol INDEX, LEGENDS AND SCHEDULE 5/29/2018 4P1.1 PLUMBING - PACIFIC GAS, ELECTRIC,& CALCULATIONS 5/29/2018 4P1.2 PLUMBING - FIRE STOPPING CUT SHEETS 5/29/2018 4P2.1U PLUMBING - FIRST FLOOR PLAN UNDERGROUND 5/29/2018 4P2.1U PLUMBING - FIRST FLOOR PLAN PIPING 5/29/2018 4P2.2 PLUMBING - SECOND FLOOR PLAN 5/29/2018 4P2.3 PLUMBING - THIRD FLOOR PLAN 5/29/2018 4P2.4 PLUMBING - FOURTH FLOOR PLAN 5/29/2018 4P2.5 PLUMBING - FIFTH FLOOR PLAN 5/29/2018 4P2.6 PLUMBING - SIXTH FLOOR PLAN 5/29/2018 4P2.7 PLUMBING - ROOF PLAN 5/29/2018 4P2.8 PLUMBING - PENTHOUSE ROOF PLAN 5/29/2018 4P3.1 PLUMBING - ENLARGED FLOOR PLANS - WASTE AND VENT 5/29/2018 4P3.2 PLUMBING - ENLARGED FLOOR PLANS - HOT AND COLD WATER 5/29/2018 4P4.1 PLUMBING - DIAGRAMS 5/29/2018 4P4.2 PLUMBING - DIAGRAMS RAIN WATER 5/29/2018 4P4.3 PLUMBING - DOMESTIC HOT & COLD WATER 5/29/2018 4P4.4 PLUMBING - DIAGRAMS 5/29/2018
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
SCHEDULE 1-C TO EXHIBIT B -8 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
DELIVERY CONDITION
Each applicable Building shall be in " Delivery Condition " following the substantial completion of the following portions of the Base, Shell and core on each floor of the applicable portion of the Premises.
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Structural steel with spray applied fireproofing (where such spray is required). |
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Unfinished mechanical shaft construction. |
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Fire sprinkler risers and distribution for complete shell system, including “up heads”. |
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Tenant sleeves at electrical/data closets. |
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Completed core restrooms. |
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Building exit stairs. |
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Floors in broom-swept condition. |
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Temporary or permanent power to support construction activities related to the Improvements. |
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Freight elevator or hoist accessible to TI contractor. Contractor will follow set protocol for use of freight elevator during construction including coordination with Base Building contractor during construction. |
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Roof installed on the Building. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
SCHEDULE 1-D TO EXHIBIT B -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
COLEMAN HIGHLINE
NOTICE OF LEASE TERM DATES
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Re: Office Lease dated ____________, 20__ between ____________________, a _____________________ (“ Landlord ”), and _______________________, a _______________________ (“ Tenant ”) concerning Suite ______ on floor(s) __________ of the office building located at _____________________.
Gentlemen:
In accordance with the Office Lease (the “ Lease ”), we wish to advise you and/or confirm as follows:
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The Lease Term shall commence on or has commenced on _____________ for a term of _______________ ending on _______________. |
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Rent commenced to accrue on ____________, in the amount of ____________. |
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If the Lease Commencement Date is other than the first day of the month, the first billing will contain a pro rata adjustment. Each billing thereafter, with the exception of the final billing, shall be for the full amount of the monthly installment as provided for in the Lease. |
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Your rent checks should be made payable to __________ at ______________. |
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788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT C -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
COLEMAN HIGHLINE
RULES AND REGULATIONS
Tenant shall faithfully observe and comply with the following Rules and Regulations. Landlord shall not be responsible to Tenant for the nonperformance of any of said Rules and Regulations by or otherwise with respect to the acts or omissions of any other tenants or occupants of the Project. In the event of any conflict between the Rules and Regulations and the other provisions of this Lease, the other provisions of this Lease shall control. Landlord will not discriminate against Tenant in the enforcement of the Rules and Regulations.
1. Tenant shall not alter any lock or install any new or additional locks or bolts on any doors or windows of the Premises without obtaining Landlord's prior written consent. Tenant shall bear the cost of any lock changes or repairs required by Tenant.
2. Tenant, its employees and agents must be sure that the doors to the Premises are securely closed and locked when leaving the Premises if it is after the normal hours of business for the Premises. The Landlord and his agents shall in no case be liable for damages for any error with regard to the admission to or exclusion from the Building of any person. In case of invasion, mob, riot, public excitement, or other commotion, Landlord reserves the right to prevent access to the Building or the Project during the continuance thereof by any means it deems appropriate for the safety and protection of life and property.
3. The requirements of Tenant will be attended to only upon application at the management office for the Project or at such office location designated by Landlord. Employees of Landlord shall not perform any work or do anything outside their regular duties unless under special instructions from Landlord.
4. No sign, advertisement, notice or handbill shall be exhibited, distributed, painted or affixed by Tenant on any part of the Premises or the Building without the prior written consent of the Landlord. Tenant shall not disturb, solicit, peddle, or canvass any occupant of the Project and shall cooperate with Landlord and its agents of Landlord to prevent same.
5. The toilet rooms, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed, and no foreign substance of any kind whatsoever shall be thrown therein. The expense of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by the tenant who, or whose servants, employees, agents, visitors or licensees shall have caused same.
6. Tenant shall not overload the floor of the Premises, nor mark, drive nails or screws, or drill into the partitions, woodwork or drywall or in any way deface the Premises or any part thereof without Landlord's prior written consent.
7. Tenant shall not use or keep in or on the Premises, the Building, or the Project any kerosene, gasoline, explosive material, corrosive material, material capable of emitting toxic fumes, or other inflammable or combustible fluid chemical, substitute or material. Tenant shall provide material safety data sheets for any hazardous material or substance used or kept on the Premises.
8. Tenant shall not bring into or keep within the Project, the Building or the Premises any firearms, animals, birds, aquariums, or, except in areas designated by Landlord, bicycles or other vehicles.
9. Tenant shall not occupy or permit any portion of the Premises to be occupied as an office for a messenger-type operation or dispatch office, public stenographer or typist, or for the manufacture or sale of narcotics, or tobacco in any form, or as a medical office, or as a barber or manicure shop, or as an employment bureau without the express prior written consent of Landlord. Tenant shall not engage or pay any employees on the Premises except those actually working for such tenant on the Premises nor advertise for laborers giving an address at the Premises.
10. Landlord reserves the right to exclude or expel from the Project any person who, in the judgment of Landlord, is intoxicated or under the influence of liquor or drugs, or who shall in any manner do any act in violation of any of these Rules and Regulations.
11. Tenant shall not waste electricity, water or air conditioning and agrees to cooperate fully with Landlord to ensure the most effective operation of the Building's heating and air conditioning system, and shall refrain from attempting to adjust any controls. Tenant shall participate in recycling programs undertaken by Landlord.
12. Tenant shall comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governmental agency.
13. Tenant must comply with requests by the Landlord concerning the informing of their employees of items of importance to the Landlord.
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT D -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
14. Tenant must comply with applicable " NO-SMOKING " ordinances and all related, similar or successor ordinances, rules, regulations or codes. If Tenant is required under the ordinance to adopt a written smoking policy, a copy of said policy shall be on file in the office of the Building. In addition, no smoking of any substance shall be permitted within the Project except in specifically designated outdoor areas. Within such designated outdoor areas, all remnants of consumed cigarettes and related paraphernalia shall be deposited in ash trays and/or waste receptacles. No cigarettes shall be extinguished and/or left on the ground or any other surface of the Project. Cigarettes shall be extinguished only in ashtrays. Furthermore, in no event shall Tenant, its employees or agents smoke tobacco products or other substances (x) within any interior areas of the Project, or (y) within two hundred feet (200 ' ) of the main entrance of the Building or the main entrance of any of the adjacent buildings, or (z) within seventy-five feet (75 ' ) of any ot her entryways into the Building.
15. Tenant hereby acknowledges that Landlord shall have no obligation to provide guard service or other security measures for the benefit of the Premises, the Building or the Project. Tenant hereby assumes all responsibility for the protection of Tenant and its agents, employees, contractors, invitees and guests, and the property thereof, from acts of third parties, including keeping doors locked and other means of entry to the Premises closed, whether or not Landlord, at its option, elects to provide security protection for the Project or any portion thereof. Tenant further assumes the risk that any safety and security devices, services and programs which Landlord elects, in its sole discretion, to provide may not be effective, or may malfunction or be circumvented by an unauthorized third party, and Tenant shall, in addition to its other insurance obligations under this Lease, obtain its own insurance coverage to the extent Tenant desires protection against losses related to such occurrences. Tenant shall cooperate in any reasonable safety or security program developed by Landlord or required by law.
16. No auction, liquidation, fire sale, going-out-of-business or bankruptcy sale shall be conducted in the Premises without the prior written consent of Landlord.
17. No tenant shall use or permit the use of any portion of the Premises for living quarters, sleeping apartments or lodging rooms.
18. Tenant shall install and maintain, at Tenant's sole cost and expense, an adequate, visibly marked and properly operational fire extinguisher next to any heat producing equipment, and any equipment which uses flammable materials or gases in the Premises.
Landlord reserves the right at any time to reasonable change or rescind any one or more of these Rules and Regulations, or to make such other and further reasonable Rules and Regulations as in Landlord's reasonable judgment may from time to time be necessary for the management, safety, care and cleanliness of the Premises, Building, the Common Areas and the Project, and for the preservation of good order therein, as well as for the convenience of other occupants and tenants therein. Landlord may waive any one or more of these Rules and Regulations for the benefit of any particular tenants, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of any other tenant, nor prevent Landlord from thereafter enforcing any such Rules or Regulations against any or all tenants of the Project; provided further, however, Landlord shall not discriminate against Tenant in the enforcement of any of the Rules and Regulations. Tenant shall be deemed to have read these Rules and Regulations and to have agreed to abide by them as a condition of its occupancy of the Premises.
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT D -2 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
COLEMAN HIGHLINE
FORM OF TENANT'S ESTOPPEL CERTIFICATE
The undersigned as Tenant under that certain Office Lease (the " Lease ") made and entered into as of ___________, 20_ by and between _______________ as Landlord, and the undersigned as Tenant, for Premises on the ______________ floor(s) of the office building located at _____________________, certifies as follows:
1. Attached hereto as Exhibit A is a true and correct copy of the Lease and all amendments and modifications thereto. The documents contained in Exhibit A represent the entire agreement between the parties as to the Premises.
2. The undersigned currently occupies the Premises described in the Lease, the Lease Term commenced on __________, and the Lease Term expires on ___________, and the undersigned has no option to terminate or cancel the Lease or to purchase all or any part of the Premises, the Building and/or the Project.
3. Base Rent became payable on ____________.
4. The Lease is in full force and effect and has not been modified, supplemented or amended in any way except as provided in Exhibit A .
5. Tenant has not transferred, assigned, or sublet any portion of the Premises nor entered into any license or concession agreements with respect thereto except as follows:
6. Tenant shall not modify the documents contained in Exhibit A without the prior written consent of Landlord's mortgagee.
7. All monthly installments of Base Rent, all Additional Rent and all monthly installments of estimated Additional Rent have been paid when due through ___________. The current monthly installment of Base Rent is $_____________________.
8. To the undersigned's actual current knowledge, all conditions of the Lease to be performed by Landlord necessary to the enforceability of the Lease have been satisfied and Landlord is not in default thereunder. In addition, the undersigned has not delivered any notice to Landlord regarding a default by Landlord thereunder.
9. No rental has been paid more than thirty (30) days in advance and no security has been deposited with Landlord except as provided in the Lease.
10. As of the date hereof, to the undersigned's actual current knowledge, there are no existing defenses or offsets, or, to the undersigned's actual current knowledge, claims or any basis for a claim, that Tenant has against Landlord.
11. Tenant hereby represents and warrants that Tenant has full right and authority to execute and deliver this Estoppel Certificate and that each person signing on behalf of Tenant is authorized to do so.
12. There are no actions pending against Tenant under the bankruptcy or similar laws of the United States or any state.
13. Other than in compliance with all Applicable Laws and incidental to the ordinary course of the use of the Premises, the undersigned has not used or stored any hazardous substances in the Premises.
14. To the undersigned's actual current knowledge, all tenant improvement work to be performed by Landlord under the Lease has been completed in accordance with the Lease and has been accepted by Tenant and all reimbursements and allowances due to Tenant under the Lease in connection with any tenant improvement work have been paid in full.
Tenant acknowledges that this Estoppel Certificate may be delivered to Landlord or to a prospective mortgagee or prospective purchaser, and acknowledges that said prospective mortgagee or prospective purchaser will be relying upon the statements contained herein in making the loan or acquiring the property of which the Premises are a part and that receipt by it of this certificate is a condition of making such loan or acquiring such property.
Executed at ______________ on the ____ day of ___________, 20__.
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT E -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
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788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT E -2 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
COLEMAN HIGHLINE
MARKET RENT DETERMINATION
When determining Market Rent, the following rules and instructions shall be followed.
1. RELEVANT FACTORS . The " Market Rent ," as used in this Lease, shall be equal to the annual rent per rentable square foot, at which tenants, are, pursuant to transactions consummated within twelve (12) months prior to the commencement of the Option Term, provided that timing adjustments shall be made to reflect any changes in the Market Rent following the date of any particular Comparable Transaction up to the date of the commencement of the applicable Option Term, leasing non-sublease, non-encumbered space comparable in location and quality to the Premises containing RSF equal to or in excess of one hundred thousand (100,000) RSF for a term of five (5) years, in an arm's-length transaction, which comparable space is located in "Comparable Buildings" (transactions satisfying the foregoing criteria shall be known as the " Comparable Transactions "). The terms of the Comparable Transactions shall be calculated as a "Net Equivalent Lease Rate" pursuant to the terms of this Exhibit F , and shall take into consideration only the following terms and concessions: (i) the rental rate and escalations for the Comparable Transactions, (ii) the amount of parking rent per parking permit paid in the Comparable Transactions, if any (and taking into consideration that Tenant is provided parking without charge and the availability and type of parking), (iii) operating expense and tax protection granted in such Comparable Transactions such as a base year or expense stop (although for each such Comparable Transaction the base rent shall be adjusted to a triple net base rent using reasonable estimates of operating expenses and taxes as determined by Landlord for each such Comparable Transaction); (iv) rental abatement concessions, if any, being granted such tenants in connection with such comparable space, (v) any "Renewal Allowance," as defined herein below, to be provided by Landlord in connection with the Option Term as compared to the improvements or allowances provided or to be provided in the Comparable Transactions, taking into account the contributory value of the existing improvements in the Premises (or Reduced Premises, as applicable), such value to be based upon the age, design, quality of finishes, and layout and use of the existing improvements, and (vi) all other monetary concessions (including the value of any signage, availability of amenities and services), if any, being granted such tenants in connection with such Comparable Transactions. Notwithstanding any contrary provision hereof, in determining the Market Rent, no consideration shall be given to (A) any period of rental abatement, if any, granted to tenants in Comparable Transactions in connection with the design, permitting and construction of improvements, or (B) any commission paid or not paid in connection with such Comparable Transaction. The Market Rent shall include adjustment of the stated size of the Premises (or Reduced Premises, as applicable) based upon the standards of measurement utilized in the Comparable Transactions; provided, however, the size of the Premises shall, notwithstanding the foregoing, be at least equal to the greater of: (i) the square footages set forth in this Lease, and (ii) the square footage of the Premises determined pursuant to the standards of space measurement used in the Comparable Transactions.
2. TENANT SECURITY . The Market Rent shall additionally include a determination as to whether, and if so to what extent, Tenant must provide Landlord with financial security, such as an enhanced security deposit, a letter of credit or guaranty, for Tenant's Rent obligations during the Option Term. Such determination shall be made by reviewing the extent of financial security then generally being imposed in Comparable Transactions from tenants of comparable financial condition and credit history to the then existing financial condition and credit history of Tenant (with appropriate adjustments to account for differences in the then-existing financial condition of Tenant and such other tenants, and giving reasonable consideration to Tenant's prior performance history during the Lease Term).
3. RENEWAL IMPROVEMENT ALLOWANCE . Notwithstanding anything to the contrary set forth in this Exhibit F , once the Market Rent for the Option Term is determined as a Net Equivalent Lease Rate, if, in connection with such determination, it is deemed that Tenant is entitled to an improvement or comparable allowance for the improvement of the Premises, (the total dollar value of such allowance shall be referred to herein as the " Renewal Allowance "), Landlord shall pay the Renewal Allowance to Tenant pursuant to a commercially reasonable disbursement procedure determined by Landlord and the terms of Article 8 of this Lease, and, as set forth in Section 5 , below, of this Exhibit F , the rental rate component of the Market Rent shall be increased to be a rental rate which takes into consideration that Tenant will receive payment of such Renewal Allowance and, accordingly, such payment with interest shall be factored into the base rent component of the Market Rent.
4. COMPARABLE BUILDINGS . For purposes of this Lease, the term " Comparable Buildings " shall mean the other buildings in the Project and other first-class multi-tenant and single-tenant occupancy office buildings which are comparable to the Building in terms of age (based upon the date of completion of construction or major renovation), quality of construction, level of services and amenities (including, but not limited to, the type (e.g., surface, covered, subterranean) and amount of parking), size and appearance, with similar access to public transit and are located in the following area (the " Comparable Area "): downtown San Jose, the West Valley area of San Jose and the City of Santa Clara.
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT F -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
5. METHODOLOGY FOR REVIEWING AND COMPARING THE COMPARABLE TRANSACTIONS . For purposes of this Section 5 , the term " Comparable Transactions " shall include any proposed transactions with third parties for the First Offer Space (pursuant to Section 1. 2 of this Lease). In order to analyze the Comparable Transactions based on the factors to be considered in calculating Market Rent and in order to evaluate the value of the Economic Terms (pursuant to Section 1. 2 of this Lease), and given that the Comparable Transactions may vary in terms of length of term, rental rate, concessions, etc., the following steps shall be taken into consideration to "adjust" the objective data from each of the Comparable Transactions . By taking this approach, a " Net Equivalent Lease Rate " for each of the Comparable Transactions shall be determined using the following steps to adjust the Comparable Transactions, which will allow for an "apples to apples" comparison of the Comparable Transactions.
5.1. The contractual rent payments for each of the Comparable Transactions should be arrayed monthly or annually over the lease term. All Comparable Transactions should be adjusted to simulate a net rent structure, wherein the tenant is responsible for the payment of all property operating expenses in a manner consistent with this Lease. This results in the estimate of Net Equivalent Rent received by each landlord for each Comparable Transaction being expressed as a periodic net rent payment.
5.2 Any free rent or similar inducements received over time should be deducted in the time period in which they occur, resulting in the net cash flow arrayed over the lease term.
5.3 The resultant net cash flow from the lease should then be discounted (using an 8% annual discount rate) to the lease commencement date, resulting in a net present value estimate.
5.4 From the net present value, up front inducements (improvements allowances and other concessions) should be deducted. These items should be deducted directly, on a "dollar for dollar" basis, without discounting since they are typically incurred at lease commencement, while rent (which is discounted) is a future receipt.
5.5 The net present value should then be amortized back over the lease term as a level monthly or annual net rent payment using the same annual discount rate of 8.0% used in the present value analysis. This calculation will result in a hypothetical level or even payment over the option period, termed the "Net Equivalent Lease Rate" (or constant equivalent in general financial terms).
6. USE OF NET EQUIVALENT LEASE RATES FOR COMPARABLE TRANSACTIONS . The Net Equivalent Lease Rates for the Comparable Transactions shall then be used to reconcile, in a manner usual and customary for a real estate appraisal process, to a conclusion of Market Rent which shall be stated as a "NNN" lease rate applicable to each year of the Option Term.
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT F -2 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
COLEMAN HIGHLINE
HAZARDOUS MATERIALS
1. Prohibitions . Tenant hereby represents, warrants and covenants that except for those chemicals or materials, and their respective quantities, specifically listed on the Environmental Questionnaire, neither Tenant nor Tenant's employees, contractors and subcontractors of any tier, entities with a contractual relationship with Tenant (other than Landlord), or any entity acting as an agent or sub-agent of Tenant (collectively, " Tenant's HazMat Agents ") will produce, use, store or generate any Hazardous Materials, on, under or about the Premises, nor cause or permit any Hazardous Material to be brought upon, placed, stored, manufactured, generated, blended, handled, recycled, used or "Released," as that term is defined below, on, in, under or about the Premises. If any information provided to Landlord by Tenant on the Environmental Questionnaire, or otherwise relating to information concerning Hazardous Materials is intentionally false, intentionally incomplete, or intentionally misleading in any material respect, the same shall be deemed a default by Tenant under this Lease. Tenant shall deliver to Landlord an updated Environmental Questionnaire upon request. Landlord's prior written consent shall be required to any Hazardous Materials use for the Premises not described on the initial Environmental Questionnaire, such consent to be withheld in Landlord's sole discretion. Tenant shall not install or permit any underground storage tank on the Premises. In addition, Tenant agrees that it: (i) shall not cause or suffer to occur, the Release of any Hazardous Materials at, upon, under or within the Premises or any contiguous or adjacent premises; and (ii) shall not engage in activities at the Premises that could result in, give rise to, or lead to the imposition of liability upon Tenant or Landlord or the creation of an environmental lien or use restriction upon the Premises. For purposes of this Lease, " Hazardous Materials " means all flammable explosives, petroleum and petroleum products, waste oil, radon, radioactive materials, toxic pollutants, asbestos, polychlorinated biphenyls (" PCBs "), medical waste, chemicals known to cause cancer or reproductive toxicity, pollutants, contaminants, hazardous wastes, toxic substances or related materials, including without limitation any chemical, element, compound, mixture, solution, substance, object, waste or any combination thereof, which is or may be hazardous to human health, safety or to the environment due to its radioactivity, ignitability, corrosiveness, reactivity, explosiveness, toxicity, carcinogenicity, infectiousness or other harmful or potentially harmful properties or effects, or defined as, regulated as or included in, the definition of "hazardous substances," "hazardous wastes," "hazardous materials," or "toxic substances" under any Environmental Laws. The term "Hazardous Materials" for purposes of this Lease shall also include any mold, fungus or spores, whether or not the same is defined, listed, or otherwise classified as a "hazardous material" under any Environmental Laws, if such mold, fungus or spores may pose a risk to human health or the environment or negatively impact the value of the Premises. For purposes of this Lease, " Release " or " Released " or " Releases " shall mean any release, deposit, discharge, emission, leaking, spilling, seeping, migrating, injecting, pumping, pouring, emptying, escaping, dumping, disposing, or other movement of Hazardous Materials into the environment.
2. Notices . Unless Tenant is required by Applicable Laws to give earlier notice to Landlord, Tenant shall notify Landlord in writing as soon as possible, but in no event later than five (5) days after (i) the occurrence of any actual, alleged or threatened Release of any Hazardous Material in, on, under, from, about or in the vicinity of the Premises (whether past or present), regardless of the source or quantity of any such Release, or (ii) Tenant becomes aware of any regulatory actions, inquiries, inspections, investigations, directives, or any cleanup, compliance, enforcement or abatement proceedings (including any threatened or contemplated investigations or proceedings) relating to or potentially affecting the Premises, or (iii) Tenant becomes aware of any claims by any person or entity relating to any Hazardous Materials in, on, under, from, about or in the vicinity of the Premises, whether relating to damage, contribution, cost recovery, compensation, loss or injury. Collectively, the matters set forth in clauses (i), (ii) and (iii) above are hereinafter referred to as " Hazardous Materials Claims ". Tenant shall promptly forward to Landlord copies of all orders, notices, permits, applications and other communications and reports in connection with any Hazardous Materials Claims. Additionally, Tenant shall promptly advise Landlord in writing of Tenant's discovery of any occurrence or condition on, in, under or about the Premises that could subject Tenant or Landlord to any liability, or restrictions on ownership, occupancy, transferability or use of the Premises under any Environmental Laws. Tenant shall not enter into any legal proceeding or other action, settlement, consent decree or other compromise with respect to any Hazardous Materials Claims without first notifying Landlord of Tenant's intention to do so and affording Landlord the opportunity to join and participate, as a party if Landlord so elects, in such proceedings and in no event shall Tenant enter into any agreements which are binding on Landlord or the Premises without Landlord's prior written consent. Landlord shall have the right to appear at and participate in, any and all legal or other administrative proceedings concerning any Hazardous Materials Claim. For purposes of this Lease, " Environmental Laws " means all applicable present and future laws relating to the protection of human health, safety, wildlife or the environment, including, without limitation, (A) all requirements pertaining to reporting, licensing, permitting, investigation and/or remediation of emissions, discharges, Releases, or threatened Releases of Hazardous Materials, whether solid, liquid, or gaseous in nature, into the air, surface water, groundwater, or land, or relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport, or handling of Hazardous Materials; and (B) all requirements pertaining to the health and safety of employees or the public. Environmental Laws include, but are not limited to, the Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 USC § 9601, et seq., the Hazardous Materials Transportation Authorization Act of 1994, 49 USC § 5101, et seq., the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, and Hazardous and Solid Waste Amendments of 1984, 42 USC § 6901, et seq., the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 USC § 1251, et seq., the Clean Air Act of 1966, 42 USC § 7401, et seq., the Toxic Substances Control Act of 1976, 15 USC § 2601, et seq., the Safe Drinking Water Act of 1974, 42 USC §§ 300f through 300j, the Occupational Safety and Health Act of 1970, as amended, 29 USC § 651 et seq., the Oil Pollution Act of 1990, 33 USC § 2701 et seq., the Emergency Planning and Community Right-To-Know Act of 1986, 42 USC § 11001 et seq., the National Environmental Policy Act of 1969, 42 USC § 4321 et seq., the Federal Insecticide, Fungicide and Rodenticide Act of 1947, 7 USC § 136 et
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT G -1- |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
seq., California Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health & Safety Code §§ 25300 et seq., Hazardous Materials Release Response Plans and Inventory Act, California Health & Safety Code, §§ 25500 et seq., Underground Storage of Hazardous Substances provisions, California Health & Safety Code, §§ 25280 et seq., California Hazardous Waste Control Law, California Health & Safety Code, §§ 25100 et seq., and any other state or local law counterparts, as amended, as such applicable laws, are in effect as of the Lease Commencement Date, or thereafter adopted, published, or promulgated. " Environmental Permits " means all permits, approvals, identification numbers, licenses and other authorizations required under any applicable Environmental Laws.
3. Releases of Hazardous Materials . If Tenant or any of Tenant’s HazMat Agents causes any Release of any Hazardous Material in, on, under, from or about the Premises at any time during the Lease Term, in addition to notifying Landlord as specified above, Tenant, at its own sole cost and expense, shall (i) immediately comply with any and all reporting requirements imposed pursuant to any and all Environmental Laws, (ii) provide a written certification to Landlord indicating that Tenant has complied with all applicable reporting requirements, (iii) take any and all necessary investigation, corrective and remedial action in accordance with any and all applicable Environmental Laws, utilizing an environmental consultant approved by Landlord, all in accordance with the provisions and requirements of this Exhibit G , and (iv) take any such additional investigative, remedial and corrective actions as Landlord shall in its reasonable discretion deem necessary such that the Premises is remediated to the condition existing prior to such Release, all in accordance with the provisions and requirements of this Section 3 . Landlord may, as required by any and all Environmental Laws, report the Release of any Hazardous Material caused by Tenant or any of Tenant’s HazMat Agents to the appropriate governmental authority, identifying Tenant as the responsible party. Tenant shall deliver to Landlord copies of all administrative orders, notices, demands, directives or other communications directed to Tenant from any governmental authority with respect to any Release of Hazardous Materials in, on, under, from, or about the Premises, together with copies of all investigation, assessment, and remediation plans and reports prepared by or on behalf of Tenant in response to any such regulatory order or directive. Tenant's obligations under this Section 3 shall not apply to Existing Hazardous Materials and any Landlord Hazardous Materials (as those terms are defined in Section 4.2 below). Nothing in this Lease shall impose any liability on Tenant for any Existing Hazardous Materials or Hazardous Materials brought onto the Project or any portion thereof after the date of this Lease by any third parties other than Tenant's HazMat Agents.
4. Indemnification .
4.1 In General . Without limiting in any way Tenant's obligations under any other provision of this Lease, but subject to Section 4.2 below, Tenant shall be solely responsible for and shall protect, defend, indemnify and hold the Landlord Parties harmless from and against any and all claims, judgments, losses, damages, costs, expenses, penalties, enforcement actions, taxes, fines, remedial actions, liabilities (including, without limitation, actual attorneys' fees, litigation, arbitration and administrative proceeding costs, expert and consultant fees and laboratory costs) including, without limitation, consequential damages and sums paid in settlement of claims, which arise before, during or after the Lease Term in whole or in part, foreseeable or unforeseeable, directly or indirectly arising out of or attributable to the presence, use, generation, manufacture, treatment, handling, refining, production, processing, storage, Release or presence of Hazardous Materials in, on, under or about the Premises by Tenant or Tenant's HazMat Agents. The foregoing obligations of Tenant shall include, including without limitation: (i) the costs of any required or necessary removal, repair, cleanup or remediation of the Premises, and the preparation and implementation of any closure, removal, remedial or other required plans; (ii) judgments for personal injury or property damages; and (iii) all costs and expenses incurred by Landlord in connection therewith.
4.2 Limitations . Notwithstanding anything in Section 4.1 , above, to the contrary, Tenant's indemnity of Landlord as set forth in Section 4.1 , above, shall not be applicable to claims based upon Hazardous Materials which (i) may exist in, on or about the Project or any portion thereof as of the date of this Lease (" Existing Hazardous Materials ") or (ii) were brought onto the Project or any portion thereof by Landlord or any other Landlord Parties (" Landlord Hazardous Materials "), except, in each instance to the extent that Tenant's construction activities and/or Tenant's other acts or omissions (including Tenant's failure to remove, remediate or otherwise treat or "Clean-up," as that term is defined in Section 9 , below, the subject Existing Hazardous Materials during the tenancy of the Premises) caused or exacerbated the subject claim.
5. Compliance with Environmental Laws . Without limiting the generality of Tenant's obligation to comply with Applicable Laws as otherwise provided in this Lease, Tenant shall, at its sole cost and expense, comply with all Environmental Laws. Tenant shall obtain and maintain any and all necessary permits, licenses, certifications and approvals appropriate or required for the use, handling, storage, and disposal of any Hazardous Materials used, stored, generated, transported, handled, blended, or recycled by Tenant on the Premises. Landlord shall have a continuing right, without obligation, to require Tenant to obtain, and to review and inspect any and all such permits, licenses, certifications and approvals, together with copies of any and all Hazardous Materials management plans and programs, any and all Hazardous Materials risk management and pollution prevention programs, and any and all Hazardous Materials emergency response and employee training programs respecting Tenant's use of Hazardous Materials. Upon request of Landlord, Tenant shall deliver to Landlord a narrative description explaining the nature and scope of Tenant's activities involving Hazardous Materials and showing to Landlord's satisfaction compliance with all Environmental Laws and the terms of this Lease.
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT G -2 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
6 . Assurance of Performance .
6.1 Environmental Assessments In General . Landlord may, but shall not be required to, engage from time to time such contractors as Landlord determines to be appropriate to perform "Environmental Assessments," as that term is defined below, to ensure Tenant's compliance with the requirements of this Lease with respect to Hazardous Materials. For purposes of this Lease, "Environmental Assessment" means an assessment including, without limitation: (i) an environmental site assessment conducted in accordance with the then-current standards of the American Society for Testing and Materials and meeting the requirements for satisfying the "all appropriate inquiries" requirements; and (ii) sampling and testing of the Premises based upon potential recognized environmental conditions or areas of concern or inquiry identified by the environmental site assessment, including, without limitation: (A) an asbestos survey conducted according to the standards of the Asbestos Hazard Emergency Response Act protocol; (B) testing of any transformers on the Premises for PCBs; (C) testing for lead-based paints; (D) soil and groundwater sampling to measure the effect of any actual or suspected release or discharge of Hazardous Materials on the Premises; and (E) such other sampling and testing reasonably necessary to determine the environmental condition of the Premises.
6.2 Costs of Environmental Assessments . All costs and expenses incurred by Landlord in connection with any such Environmental Assessment initially shall be paid by Landlord; provided that if any such Environmental Assessment shows that Tenant has failed to comply with the provisions of this Exhibit G , then all of the costs and expenses of such Environmental Assessment directly related to Tenant's failure shall be reimbursed by Tenant as Additional Rent within thirty (30) days after receipt of written demand therefor.
6.3 Other Matters . Each Environmental Assessment conducted by Landlord shall be conducted: (i) only after Landlord has provided to Tenant notice reasonably detailing the extent of Landlord's access requirement at least ten (10) days prior to the date of such Environmental Assessment; and (ii) in a manner reasonably designed to minimize the interruption of Tenant's use of the Premises. Tenant shall have the right to reasonably approve the timing of Landlord's entry onto the Premises in order to minimize the interruption of Tenant's use of the Premises. Landlord shall repair any damage caused by the performance of the Environmental Assessment, and shall restore the Premises to the condition existing immediately prior to the Environmental Assessment, unless response actions are required of Tenant pursuant to the provisions of this Lease based on the findings of the Environmental Assessment.
7. Clean-up .
7.1 Environmental Reports; Clean-Up . If any written report, including any report containing results of any Environmental Assessment (an " Environmental Report ") shall indicate (i) the presence of any Hazardous Materials as to which Tenant has a removal or remediation obligation under this Exhibit G , and (ii) that as a result of same, the investigation, characterization, monitoring, assessment, repair, closure, remediation, removal, or other clean-up (the " Clean-up ") of any Hazardous Materials is required, Tenant shall immediately prepare and submit to Landlord within thirty (30) days after receipt of the Environmental Report a comprehensive plan, subject to Landlord's written approval, specifying the actions to be taken by Tenant to perform the Clean-up so that the Premises is restored to the conditions required by this Lease. Upon Landlord's approval of the Clean-up plan, Tenant shall, at Tenant's sole cost and expense, without limitation on any rights and remedies of Landlord under this Lease, immediately implement such plan with a consultant reasonably acceptable to Landlord and proceed to Clean-up Hazardous Materials in accordance with all Applicable Laws and as required by such plan and this Lease. If, within thirty (30) days after receiving a copy of such Environmental Report, Tenant fails either (a) to complete such Clean-up, or (b) with respect to any Clean-up that cannot be completed within such thirty-day period, fails to proceed with diligence to prepare the Clean-up plan and complete the Clean-up as promptly as practicable, then Landlord shall have the right, but not the obligation, and without waiving any other rights under this Lease, to carry out any Clean-up recommended by the Environmental Report or required by any governmental authority having jurisdiction over the Premises, and recover all of the costs and expenses thereof from Tenant as Additional Rent, payable within ten (10) days after receipt of written demand therefor.
7.2 No Rent Abatement . Tenant shall continue to pay all Rent due or accruing under this Lease during any Clean-up, and shall not be entitled to any reduction, offset or deferral of any Base Rent or Additional Rent due or accruing under this Lease during any such Clean-up.
7.3 Surrender of Premises . Tenant shall complete any Clean-up prior to surrender of the Premises upon the expiration or earlier termination of this Lease, and shall fully comply with all Environmental Laws and requirements of any governmental authority with respect to such completion, including, without limitation, fully comply with any requirement to file a risk assessment, mitigation plan or other information with any such governmental authority in conjunction with the Clean-up prior to such surrender. Tenant shall obtain and deliver to Landlord a letter or other written determination from the overseeing governmental authority confirming that the Clean-up has been completed in accordance with all requirements of such governmental authority and that no further response action of any kind is required for the unrestricted use of the Premises (" Closure Letter "). Upon the expiration or earlier termination of this Lease, Tenant shall also be obligated to close all permits obtained in connection with Hazardous Materials in accordance with Applicable Laws.
7.4 Failure to Timely Clean-Up . Should any Clean-up for which Tenant is responsible not be completed, or should Tenant not receive the Closure Letter and any governmental approvals required under Environmental Laws in conjunction with such Clean-up prior to the expiration or earlier termination of this Lease, then Tenant shall be liable to Landlord as a holdover tenant (as more particularly provided in Article 16 ) until Tenant has fully complied with its obligations under this Exhibit G .
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT G -3 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
8 . Confidentiality . Unless compelled to do so by Applicable Laws, Tenant agrees that Tenant shall not disclose, discuss, disseminate or copy any information, data, findings, communications, conclusions and reports regarding the environmental condition of the Premises to any person or entity (other than Tenant's consultants, attorneys, property managers and employees that have a need to know such information), including any governmental authority, without the prior written consent of Landlord. In the event Tenant reasonably believes that disclosure is compelled by Applicable Laws, it shall provide Landlord ten (10) days' advance notice of disclosure of confidential information so that Landlord may attempt to obtain a protective order. Tenant may additionally release such information to bona fide prospective purchasers or lenders, subject to any such parties' written agreement to be bound by the terms of this Exhibit G .
9. Copies of Environmental Reports . Within thirty (30) days of receipt thereof, Tenant shall provide Landlord with a copy of any and all environmental assessments, audits, studies and reports regarding Tenant's activities with respect to the Premises, or ground water beneath the Land, or the environmental condition or Clean-up thereof. Tenant shall be obligated to provide Landlord with a copy of such materials without regard to whether such materials are generated by Tenant or prepared for Tenant, or how Tenant comes into possession of such materials.
10. Signs, Response Plans, Etc . Tenant shall be responsible for posting on the Premises any signs required under applicable Environmental Laws. Tenant shall also complete and file any business response plans or inventories required by any applicable laws. Tenant shall concurrently file a copy of any such business response plan or inventory with Landlord.
11. Survival . Each covenant, agreement, representation, warranty and indemnification made by Tenant set forth in this Exhibit G shall survive the expiration or earlier termination of this Lease and shall remain effective until all of Tenant's obligations under this Exhibit G have been completely performed and satisfied.
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT G -4 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
COLEMAN HIGHLINE
FORM OF ENVIRONMENTAL QUESTIONNAIRE
ENVIRONMENTAL QUESTIONNAIRE
FOR COMMERCIAL AND INDUSTRIAL PROPERTIES
Property Name:
Property Address:
Instructions : The following questionnaire is to be completed by the Lessee representative with knowledge of the planned operations for the specified building/location. Please print clearly and attach additional sheets as necessary.
1.0 PROCESS INFORMATION
Describe planned use, and include brief description of manufacturing processes employed.
2.0 HAZARDOUS MATERIALS
Are hazardous materials used or stored? If so, continue with the next question. If not, go to Section 3.0.
2.1 |
Are any of the following materials handled on the Property?Yes ☐ No ☐ |
(A material is handled if it is used, generated, processed, produced, packaged, treated, stored, emitted, discharged, or disposed.) If so, complete this section. If this question is not applicable, skip this section and go on to Section 5.0.
☐ Explosives |
☐ Fuels |
☐ Oils |
☐ Solvents |
☐ Oxidizers |
☐ Organics/Inorganics |
☐ Acids |
☐ Bases |
☐ Pesticides |
☐ Gases |
☐ PCBs |
☐ Radioactive Materials |
☐ Other (please specify) |
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2– 2. |
If any of the groups of materials checked in Section 2.1, please list the specific material(s), use(s), and quantity of each chemical used or stored on the site in the Table below. If convenient, you may substitute a chemical inventory and list the uses of each of the chemicals in each category separately. |
Material |
Physical State (Solid, Liquid, or Gas) |
Usage |
Container Size |
Number of Containers |
Total Quantity |
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2 – 3. |
Describe the planned storage area location(s) for these materials. Please include site maps and drawings as appropriate. |
3.0 HAZARDOUS WASTES
Are hazardous wastes generated? Yes ☐ No ☐
If yes, continue with the next question. If not, skip this section and go to section 4.0.
3.1 |
Are any of the following wastes generated, handled, or disposed of (where applicable) on the Property? |
☐ Hazardous wastes |
☐ Industrial Wastewater |
☐ Waste oils |
☐ PCBs |
☐ Air emissions |
☐ Sludges |
☐ Regulated Wastes |
☐ Other (please specify) |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
SCHEDULE 1 TO EXHIBIT G -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
WASTE GENERATED |
RCRA listed Waste? |
SOURCE |
APPROXIMATE MONTHLY QUANTITY |
WASTE CHARACTERIZATION |
DISPOSITION |
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3 – 3. |
Please include name, location, and permit number (e.g. EPA ID No.) for transporter and disposal facility, if applicable. Attach separate pages as necessary. |
Transporter/Disposal Facility Name |
Facility Location |
Transporter (T) or Disposal (D) Facility |
Permit Number |
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3– 4. |
Are pollution controls or monitoring employed in the process to prevent or minimize the release of wastes into the environment?Yes ☐ No ☐ |
3– 5. |
If so, please describe. |
4.0 USTS/ASTS
4.1 |
Are underground storage tanks (USTs), aboveground storage tanks (ASTs), or associated pipelines used for the storage of petroleum products, chemicals, or liquid wastes present on site (lease renewals) or required for planned operations (new tenants)?Yes___No___ |
If not, continue with section 5.0. If yes, please describe capacity, contents, age, type of the USTs or ASTs, as well any associated leak detection/spill prevention measures. Please attach additional pages if necessary.
Capacity |
Contents |
Year Installed |
Type (Steel, Fiberglass, etc) |
Associated Leak Detection / Spill Prevention Measures * |
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* Note: |
The following are examples of leak detection / spill prevention measures: |
Integrity testing |
Inventory reconciliation |
Leak detection system |
Overfill spill protection |
Secondary containment |
Cathodic protection |
4– 2. |
Please provide copies of written tank integrity test results and/or monitoring documentation, if available. |
4– 3. |
Is the UST/AST registered and permitted with the appropriate regulatory agencies? Yes
☐
No
☐
|
4– 4. |
If this Questionnaire is being completed for a lease renewal, and if any of the USTs/ASTs have leaked, please state the substance released, the media(s) impacted (e.g., soil, water, asphalt, etc.), the actions taken, and all remedial responses to the incident. |
4 – 5. |
If this Questionnaire is being completed for a lease renewal, have USTs/ASTs been removed from the Property? Yes ☐ No ☐ |
If yes, please provide any official closure letters or reports and supporting documentation (e.g., analytical test results, remediation report results, etc.).
4 – 6. |
For Lease renewals, are there any above or below ground pipelines on site used to transfer chemicals or wastes? Yes ☐ No ☐ |
For new tenants, are installations of this type required for the planned operations?
Yes ☐ No ☐
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
SCHEDULE 1 TO EXHIBIT G -2 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
If yes to either question, please describe.
5.0 ASBESTOS CONTAINING BUILDING MATERIALS
Please be advised that an asbestos survey may have been performed at the Property. If provided, please review the information that identifies the locations of known asbestos containing material or presumed asbestos containing material. All personnel and appropriate subcontractors should be notified of the presence of these materials, and informed not to disturb these materials. Any activity that involves the disturbance or removal of these materials must be done by an appropriately trained individual/contractor.
6.0 REGULATORY
6 – 1. |
Does the operation have or require a National Pollutant Discharge Elimination System (NPDES) or equivalent permit? Yes
☐
No
☐
|
6 – 2. |
Has a Hazardous Materials Business Plan been developed for the site? Yes
☐
No
☐
|
CERTIFICATION
I am familiar with the real property described in this questionnaire. By signing below, I represent and warrant that the answers to the above questions are complete and accurate to the best of my knowledge. I also understand that Lessor will rely on the completeness and accuracy of my answers in assessing any environmental liability risks associated with the property.
Signature:
Name:
Title:
Date:
Telephone:
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
SCHEDULE 1 TO EXHIBIT G -3 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
COLEMAN HIGHLINE
FORM OF SNDA FROM GROUND LANDLORD
ROKU, Inc.
c/o Friedman & Associates, Inc.
1100 Glendon Avenue, Suite PH9
Los Angeles, CA 90024-3526
Attention: Jason Perscheid, Esq.
(Space Above For Recorder's Use)
SUBORDINATION, ESTOPPEL, ATTORNMENT AND NON-DISTURBANCE AGREEMENT
(Lease to Ground Lease)
THIS SUBORDINATION, ESTOPPEL, ATTORNMENT AND NON-DISTURBANCE AGREEMENT (" Agreement ") is made as of August 1, 2018 by and among CAP PHASE 1, LLC, a Delaware limited liability company, owner of the real property hereinafter described (" Ground Landlord "), CAP OZ 34, LLC, a Delaware limited liability company (" Landlord ") and ROKU, INC., a Delaware corporation (" Tenant "), and WELLS FARGO BANK, NATIONAL ASSOCIATION (together with its successor, assigns, designees and any future holder of a mortgage or deed of trust lien encumbering the Property, " Fee Lender ").
R E C I T A L S
A. |
Ground Landlord is the owner of certain real property located in the City of San Jose, County of Santa Clara, State of California and more particularly described on Exhibit A-1 hereto (the “ Fee Estate ”). |
B. |
The Fee Estate is currently encumbered by that certain Construction Deed of Trust with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as of December 29, 2015 (the “ Fee Deed of Trust ”), executed by Ground Landlord, in favor of the trustee named therein, for the benefit of Fee Lender, and recorded in the Official Records of Santa Clara County, California on December 29, 2015 as Document No. 2383228. |
C. |
Pursuant to the terms and provisions of a ground lease of approximately an even date herewith (" Ground Lease "), Ground Landlord granted to Landlord a leasehold estate in and to the portion of the Fee Estate more particularly described on Exhibit A-2 attached hereto and incorporated herein by this reference (which property, together with all improvements now or hereafter located on the property, is defined as the " Property "). |
D. |
Pursuant to the terms and provisions of a lease of even date herewith (“ Lease ”), Landlord granted to Tenant a leasehold estate in and to certain premises located (or to be located) on the Property, as more particularly described in the Lease (the “ Leased Premises ”). |
E. |
Subject to the terms and conditions of this Agreement, Ground Landlord, Landlord and Tenant have agreed to the subordination, attornment, non-disturbance and other agreements herein contained. |
NOW THEREFORE, for valuable consideration, the sufficiency of which is hereby acknowledged, Ground Landlord, Landlord and Tenant hereby agree as follows:
|
-1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
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1.1 |
Prior Lien . The Ground Lease, and any modifications, renewals or extensions thereof, shall unconditionally be and at all times remain prior and superior to the Lease; and |
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1.2 |
Whole Agreement . This Agreement shall be the whole agreement and only agreement with regard to the subordination of the Lease to the Ground Lease and shall supersede and cancel, but only insofar as would affect the priority between the Ground Lease and the Lease, any prior agreements as to such subordination, including, without limitation, those provisions, if any, contained in the Lease which provide for the subordination of the Lease to a ground lease (but only as to the Ground Lease described herein, and not to any future ground lease). |
2. |
ESTOPPEL . |
|
2.1 |
Tenant Estoppel . Tenant acknowledges and represents, to Tenant's actual knowledge as of the date of this Agreement, that: |
|
2.1.1 |
Entire Agreement . The Lease constitutes the entire agreement between Landlord and Tenant with respect to the Property and Tenant claims no rights with respect to the Property or the Fee Estate other than as set forth in the Lease; |
|
2.1.2 |
No Default . As of the date of this Agreement: (i) there exists no breach, default, or event or condition which, with the giving of notice or the passage of time or both, would constitute a breach or default under the Lease; and (ii) there are no existing claims, defenses or offsets against rental due or to become due under the Lease; and |
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2.1.3 |
Lease Effective . The Lease has been duly executed and delivered by Tenant and, subject to the terms and conditions thereof, the Lease is in full force and effect, the obligations of Tenant thereunder are valid and binding and there have been no amendments, modifications or additions to the Lease, written or oral. |
In no event shall the issuance of the foregoing statements subject Tenant to any liability whatsoever (other than to create an estoppel as between Tenant and Ground Landlord), despite the failure of Tenant to disclose correct or relevant information. The foregoing statements shall not serve as an estoppel as between Tenant and Landlord.
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2.2 |
Ground Landlord Estoppel . Ground Landlord acknowledges and represents, to Ground Landlord's actual knowledge as of the date of this Agreement, that: |
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2.2.1 |
Entire Agreement . The Ground Lease constitutes the entire agreement between Ground Landlord and Landlord with respect to the Property; |
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2.2.2 |
No Default . As of the date of this Agreement: there exists no breach, default, or event or condition which, with the giving of notice or the passage of time or both, would constitute a breach or default under the Ground Lease; and |
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2.2.3 |
Lease Effective . The Ground Lease has been duly executed and delivered by Ground Landlord and, subject to the terms and conditions thereof, the Ground Lease is in full force and effect, the obligations of the parties thereunder are valid and binding and there have been no amendments, modifications or additions to the Ground Lease, written or oral. |
In no event shall the issuance of the foregoing statements subject Ground Landlord to any liability whatsoever (other than to create an estoppel as between Ground Landlord and Tenant), despite the failure of Tenant to disclose correct or relevant information. The foregoing statements shall not serve as an estoppel as between Ground Landlord and Landlord.
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-2 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
|
3.1 |
Payment of Rent . Tenant shall pay to Ground Landlord all rental payments required to be made by Tenant pursuant to the terms of the Lease for the duration of the term of the Lease. |
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3.2 |
Continuation of Performance . Tenant shall be bound to Ground Landlord in accordance with all of the provisions of the Lease for the balance of the term thereof, and Tenant hereby attorns to Ground Landlord as its landlord, such attornment to be effective and self-operative without the execution of any further instrument immediately upon termination of the Ground Lease. |
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3.3 |
Subsequent Transfer . Ground Landlord, by succeeding to the interest of the landlord under the Lease, shall become obligated to perform the covenants of landlord thereunder. Upon any further transfer of the landlord’s interest under the Lease by Ground Landlord, all of such obligations accruing thereafter shall terminate as to Ground Landlord so long as all such obligations are assumed in writing by such successor owner. |
4. |
ADDITIONAL AGREEMENTS . Landlord and Tenant covenant and agree that, at all such times as the Ground Lease is in effect: |
|
4.1 |
Modification . Ground Landlord shall not be bound by any material modification or amendment to the Lease made without Ground Landlord’s prior written consent except where such modifications or amendments solely memorialize Tenant’s exercise of expansion or extension options or other rights expressly provided in the Lease. For purposes of this Section 4.1, a “material” modification or amendment of the Lease means a modification or amendment that reduces the rent, term, size of Tenant’s premises or Tenant’s obligation to pay operating expenses or other reimbursements, common area charges or any of its other financial obligations under the Lease, adds options on the part of the Tenant to extend the term of the Lease or expand Tenant’s premises or to purchase the Property or any portion thereof, or otherwise materially increases Lender’s obligations or materially decreases Tenant’s obligations under the Lease. |
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4.2 |
No Advance Rents . Tenant will not make, nor shall Landlord accept, payments or prepayments of rent more than one (1) month in advance of the time when the same become due under the Lease, except for the prepayment of the first (1 st ) month's Base Rent, as set forth in Section 3.1 of the Lease. |
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4.3 |
Limitation on Liability . Ground Landlord will not be liable for any act, omission or obligation of Landlord. |
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4.4 |
Representations and Warranties . Ground Landlord shall not be obligated or liable with respect to any representations or warranties contained in the Lease, or any indemnity obligations owed by Landlord to Tenant thereunder. |
5. |
NO OFFSET . Except for any of Tenant’s offset rights expressly set forth in the Lease, including, without limitation, Tenant’s offset rights resulting from Tenant’s actual performance and payment pursuant to Tenant’s exercise of its rights under Section 19.5.3 of the Lease, Ground Landlord shall not be liable for, or subject to, any offsets or defenses which Tenant may have by reason of any act or omission of Landlord under the Lease. |
6. |
LIMITATION ON LIABILITY . Tenant agrees to look solely to Ground Landlord’s interest in the Property and the rent, income or proceeds derived therefrom for the recovery of any judgment against Ground Landlord, and in no event shall Ground Landlord or any of its affiliates, officers, directors, shareholders, partners, agents, representatives or employees ever be personally liable for any such obligation, liability or judgment. |
|
-3 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
|
7.1 |
Termination of Ground Lease . In the event of termination of the Ground Lease, Ground Landlord agrees for itself and its successors and assigns that the leasehold interest of Tenant under the Lease shall not be extinguished or terminated, but rather the Lease shall continue in full force and effect and Ground Landlord shall recognize and accept Tenant as tenant under the Lease subject to and in accordance with the terms and provisions of the Lease . |
In the event of a foreclosure under the Fee Deed of Trust, so long as there shall then exist no breach, default, or event of default (in each case, beyond any applicable notice and cure periods) on the part of Landlord under the Ground Lease, Fee Lender agrees for itself and its successors and assigns that the leasehold interest of Landlord under the Ground Lease shall not be extinguished or terminated, but rather the Ground Lease shall continue in full force and effect and Fee Lender shall recognize and accept Landlord as tenant under the Ground Lease subject to the terms and provisions of the Ground Lease, except as modified by this Agreement (it being acknowledged and agreed that, following the exercise of the remedy of sale by foreclosure (or conveyance in lieu thereof) under the Fee Deed of Trust, the provisions of this Agreement benefiting Ground Landlord shall inure to the benefit of Fee Lender as Ground Landlord’s successor-in-interest); provided, however, that Landlord and Fee Lender agree that the following provisions of the Ground Lease (if any) shall not be binding on Fee Lender nor its successors and assigns: any option to purchase or right of first refusal to purchase with respect to the Property.
In addition, if the Ground Lease is not then in effect, in the event of a foreclosure under the Fee Deed of Trust, so long as there shall then exist no breach, default, or event of default (in each case, beyond any applicable notice and cure periods) on the part of Tenant under the Lease, Fee Lender agrees for itself and its successors and assigns that the leasehold interest of Tenant under the Lease shall not be extinguished or terminated, but rather the Lease shall continue in full force and effect and Fee Lender shall recognize and accept Tenant as tenant under the Lease subject to the terms and provisions of the Lease, except as modified by this Agreement; provided, however, that Tenant and Fee Lender agree that the following provisions of the Lease (if any) shall not be binding on Fee Lender nor its successors and assigns: any option to purchase or right of first refusal to purchase with respect to the Property.
8. |
LIMITATION ON FEE LENDER LIABILITY . Ground Landlord and Landlord acknowledge that, as of the date hereof, the Fee Deed of Trust encumbers the Fee Estate, which Fee Estate is subject to the Ground Lease. In the event of a foreclosure under the Fee Deed of Trust Landlord, as tenant under the Ground lease agrees that, notwithstanding anything to the contrary in this Agreement, or the Ground Lease or to the contrary, Fee Lender (including, for this purpose, any transferee of Fee Lender or any transferee of Ground Landlord’s title in and to the Fee Estate by Fee Lender's exercise of the remedy of sale by foreclosure (or conveyance in lieu thereof) under the Fee Deed of Trust) shall: |
|
(a) |
not be liable for any act, omission or obligation of Ground Landlord; |
|
(b) |
not be subject to any offsets or defenses which Landlord might have against Ground Landlord; |
|
(c) |
not be obligated or liable with respect to any representations or warranties contained in the Ground Lease, or any indemnity obligations owed by Ground Landlord to Landlord thereunder; and |
|
(d) |
not be bound by any amendment or modification of the Ground Lease which is entered into without Fee Lender’s prior written consent. |
|
-4 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
|
9.1 |
Notices . All notices, demands, or other communications under this Agreement shall be in writing and shall be delivered to the appropriate party at the address set forth below (subject to change from time to time by written notice to all other parties to this Agreement). All notices, demands or other communications shall be considered as properly given if delivered personally or sent by first class United States Postal Service mail, postage prepaid, or by Overnight Express Mail or by overnight commercial courier service, charges prepaid, except that notice of Default may be sent by certified mail, return receipt requested, charges prepaid. Notices so sent shall be effective three (3) Business Days after mailing, if mailed by first class mail, and otherwise upon delivery or refusal; provided , however , that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. For purposes of notice, the address of the parties shall be: |
Ground Landlord: |
Cap Phase 1, LLC 10121 Miller Avenue, Suite 200 Cupertino, CA 95014 Attention: Derek K. Hunter, Jr. and Sherri Prieb
|
With a copy to: |
Allen Matkins Leck Gamble Mallory & Natsis LLP 1901 Avenue of the Stars Suite 1800 Los Angeles, California 90067 Attention: Anton N. Natsis, Esq.
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Landlord: |
CAP OZ 34, LLC
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With a copy to: |
Allen Matkins Leck Gamble Mallory & Natsis LLP 1901 Avenue of the Stars Suite 1800 Los Angeles, California 90067 Attention: Anton N. Natsis, Esq.
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Tenant: |
ROKU, Inc.
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With a copy to: |
ROKU, Inc.
Attention: General Counsel |
Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days' notice to the other party in the manner set forth hereinabove.
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9.2 |
Heirs, Successors and Assigns . Except as otherwise expressly provided under the terms and conditions herein, the terms of this Agreement shall bind and inure to the benefit of the heirs, executors, administrators, nominees, successors and assigns of the parties hereto. |
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-5 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
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9.3 |
Headings . All article, section or other headings appearing in this Agreement are for convenience of reference only and shall be disregarded in construing this Agreement. |
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9.4 |
Counterparts . To facilitate execution, this document may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single document. It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages. |
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9.5 |
Exhibits, Schedules and Riders . All exhibits, schedules, riders and other items attached hereto are incorporated into this Agreement by such attachment for all purposes. |
[ Remainder of Page Intentionally Left Blank; Signature Pages Follow ]
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-6 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day and year first above written.
"GROUND LANDLORD"
CAP Phase 1, LLC,
a Delaware limited liability company
By: |
Coleman Airport Partners, LLC, a California limited liability company |
Its: |
Sole Member |
By: |
HS Airport, LLC, a California limited liability company |
Its: |
Manager |
By: |
|
Name: |
Derek K. Hunter, Jr. |
Its: |
Member |
By: |
|
Name: |
Edward D. Storm |
Its: |
Member |
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. |
STATE OF CALIFORNIA
COUNTY OF ______________ SS.
On __________________________________________________________________ before me, _____________________________________________________________, personally appeared ________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
Signature
My commission expires .
./ -/// |
-7- |
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CAP OZ 34, LLC ,
a Delaware limited liability company
By: |
|
Name: |
|
Its: |
|
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. |
STATE OF CALIFORNIA
COUNTY OF ______________ SS.
On __________________________________________________________________ before me, _____________________________________________________________, personally appeared ________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
Signature
My commission expires .
|
-8 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
ROKU, INC.,
a Delaware corporation
By: |
|
Name: |
|
Its: |
|
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. |
STATE OF CALIFORNIA
COUNTY OF ______________ SS.
On __________________________________________________________________ before me, _____________________________________________________________, personally appeared ________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
Signature
My commission expires .
|
-9 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
TO
SUBORDINATION, ESTOPPEL, ATTORNMENT AND NON-DISTURBANCE AGREEMENT
(Lease to Ground Lease)
Fee Lender acknowledges and agrees to the foregoing Agreement. The foregoing Agreement shall not alter, waive or diminish any of Ground Landlord’s obligations under the Fee Deed of Trust.
“ FEE LENDER ”
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: |
|
|
Name: |
|
Richard W. Daniel |
Title: |
|
Senior Vice President |
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. |
STATE OF CALIFORNIA
COUNTY OF SS.
On ______________________________________ before me, ______________________________, personally appeared ________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
Signature
My commission expires .
|
-10 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
EXHIBIT A-1 - DESCRIPTION OF FEE ESTATE
Real property in the City of San Jose, County of Santa Clara, State of California, described as follows:
PARCEL ONE: (LOT 1)
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF ADJUSTED PARCEL B AS DESCRIBED IN THE LOT LINE ADJUSTMENT PERMIT RECORDED ON JUNE 22, 1999 AS DOCUMENT NO. 14867793, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE MOST EASTERLY CORNER OF SAID ADJUSTED PARCEL B, SAID CORNER BEING ON THE SOUTHWESTERLY LINE OF COLEMAN AVENUE, SHOWN AS "PROPOSED COLEMAN AVE." ON THE RECORD OF SURVEY RECORDED ON JANUARY 25, 1960 IN BOOK 116 OF MAPS, AT PAGE 18, RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, ALSO BEING SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 613.02 FEET TO THE MOST NORTHERLY CORNER OF THE PROPERTY DESCRIBED IN THE GRANT DEED RECORDED ON NOVEMBER 14, 2012 AS DOCUMENT NO. 21950036, OFFICIAL RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED, SOUTH 32° 25' 10" WEST 12.46 FEET TO THE POINT OF BEGINNING;
THENCE CONTINUING ALONG SAID GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED THE FOLLOWING FOUR COURSES:
SOUTH 32° 25' 10" WEST 914.47 FEET TO THE BEGINNING OF A NON-TANGENT CURVE TO THE RIGHT, CONCAVE SOUTHWESTERLY, HAVING A RADIUS OF 790.00 FEET, A RADIAL LINE TO SAID CURVE BEARS NORTH 46° 30' 54" EAST;
ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 8° 56' 30", AN ARC LENGTH OF 123.29 FEET;
SOUTH 34° 32' 36" EAST 137.61 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE LEFT, CONCAVE NORTHEASTERLY, HAVING A RADIUS OF 810.00 FEET;
ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 19° 32' 12", AN ARC LENGTH OF 276.19 FEET TO THE SOUTHWESTERLY LINE OF SAID ADJUSTED PARCEL B;
THENCE ALONG SAID SOUTHWESTERLY LINE OF ADJUSTED PARCEL B, NORTH 57° 34' 50" WEST 830.92 FEET TO THE MOST WESTERLY CORNER OF SAID ADJUSTED PARCEL B;
THENCE ALONG THE NORTHWESTERLY LINE OF SAID ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 265.72 FEET TO A POINT BEING 817.36 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, SOUTH 57° 34' 50" EAST 255.23 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE LEFT, CONCAVE NORTHERLY, HAVING A RADIUS OF 40.00 FEET;
THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90° 00' 00", AN ARC LENGTH OF 62.83 FEET TO A POINT BEING 637.79 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 735.36 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE RIGHT, CONCAVE SOUTHERLY, HAVING A RADIUS OF 30.00 FEET;
THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 79° 57' 34", AN ARC LENGTH OF 41.87 FEET TO THE POINT OF BEGINNING.
PARCEL TWO: (NEW LOT 2)
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING ALL OF LOT 2 AND A PORTION OF LOTS 3 AND 5, AS DESCRIBED IN THAT CERTAIN "GRANT DEED" RECORDED MARCH 05, 2015 AS DOCUMENT NO. 22873576, OFFICIAL RECORDS OF SANTA CLARA COUNTY, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHERLY CORNER OF SAID LOT 3;
THENCE ALONG THE SOUTHWESTERLY LINE OF SAID LOT 3, NORTH 57°34'50" WEST, 119.42 FEET;
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT H-1 -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
THENCE LEAVING SAID SOUTHWESTERLY LINE, NORTH 32°25'10" EAST, 513.86 FEET TO A POINT ON THE NORTHEASTERLY LINE OF SAID LOT 5;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID LOTS 5 AND 2, SOUTH 57°34'50" EAST, 89.42 FEET;
THENCE ALONG A CURVE TO THE RIGHT HAVING A RADIUS OF 30.00 FEET, THROUGH A CENTRAL ANGLE OF 90°00'00" FOR AN ARC DISTANCE OF 47.12 FEET;
THENCE SOUTH 32°25'10" WEST, 483.86 FEET TO THE POINT BEGINNING.
BEING NEW LOT 2, AS SHOWN ON THAT CERTAIN LOT LINE ADJUSTMENT PERMIT RECORDED FEBRUARY 8, 2018 AS INSTRUMENT NO. 23864278 OF OFFICIAL RECORDS.
PARCEL THREE: (NEW LOT 3)
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF LOT 3, AS DESCRIBED IN THAT CERTAIN "GRANT DEED" RECORDED MARCH 05, 2015 AS DOCUMENT NO. 22873576, OFFICIAL RECORDS OF SANTA CLARA COUNTY, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE SOUTHERLY CORNER OF SAID LOT 3,
THENCE ALONG THE SOUTHWESTERLY LINE OF SAID LOT 3, NORTH 57°34'50" WEST, 119.42 FEET; TO THE TRUE POINT OF BEGINNING
THENCE CONTINUING ALONG SAID SOUTHWESTERLY LINE, NORTH 57°34'50" WEST, 187.00 FEET;
THENCE LEAVING SAID SOUTHWESTERLY LINE, NORTH 32°25'10" EAST, 158.42 FEET;
THENCE SOUTH 57°34'50" EAST, 187.00 FEET;
THENCE SOUTH 32°25'10" WEST, 158.42 FEET TO THE TRUE POINT OF BEGINNING.
BEING NEW LOT 3, AS SHOWN ON THAT CERTAIN LOT LINE ADJUSTMENT PERMIT RECORDED FEBRUARY 8, 2018 AS INSTRUMENT NO. 23864278 OF OFFICIAL RECORDS.
PARCEL FOUR: (LOT 4)
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF ADJUSTED PARCEL B AS DESCRIBED IN THE LOT LINE ADJUSTMENT PERMIT RECORDED ON JUNE 22, 1999 AS DOCUMENT NO. 14867793, OFFICIAL RECORDS OF SANTA CLARA COUNTY AND A PORTION OF PARCEL ONE AS DESCRIBED IN THE GRANT DEED RECORDED ON JANUARY 19, 2011 AS DOCUMENT NO. 21052358, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE MOST EASTERLY CORNER OF SAID ADJUSTED PARCEL B, SAID CORNER BEING ON THE SOUTHWESTERLY LINE OF COLEMAN AVENUE, SHOWN AS "PROPOSED COLEMAN AVE." ON THE RECORD OF SURVEY RECORDED ON JANUARY 25, 1960 IN BOOK 116 OF MAPS, AT PAGE 18, RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, ALSO BEING SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 613.02 FEET TO THE MOST NORTHERLY CORNER OF THE PROPERTY DESCRIBED IN THE GRANT DEED RECORDED ON NOVEMBER 14, 2012 AS DOCUMENT NO. 21950036, OFFICIAL RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED, SOUTH 32° 25' 10" WEST 12.00 FEET TO A POINT BEING 12.00 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 144.77 FEET TO A POINT OF CUSP, SAID POINT BEING ALSO THE BEGINNING OF A TANGENT CURVE TO THE RIGHT, CONCAVE WESTERLY, HAVING A RADIUS OF 30.00 FEET;
THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90° 00' 00", AN ARC LENGTH OF 47.12 FEET TO A POINT BEING 727.79 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, SOUTH 32° 25' 10" WEST 483.86 FEET TO THE POINT OF BEGINNING, SAID POINT BEING 525.86 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT H-1 -2 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 309.42 FEET TO A POINT BEING 1,037.21 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, SOUTH 32° 25' 10" WEST 230.50 FEET TO A POINT BEING 756.36 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, SOUTH 57° 34' 50" EAST 289.42 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE LEFT, CONCAVE NORTHERLY, HAVING A RADIUS OF 20.00 FEET;
THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90° 00' 00", AN ARC LENGTH OF 31.42 FEET TO A POINT BEING 727.79 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 210.50 FEET TO THE POINT OF BEGINNING.
PARCEL FIVE: (NEW LOT 5)
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF LOTS 3, 5 AND 6, AS DESCRIBED IN THAT CERTAIN "GRANT DEED" RECORDED MARCH 05, 2015 AS DOCUMENT NO. 22873576, OFFICIAL RECORDS OF SANTA CLARA COUNTY, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHERLY CORNER OF SAID LOT 6;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID LOT 6, SOUTH 57°34'50" EAST, 117.95 FEET TO THE TRUE POINT OF BEGINNING;
THENCE LEAVING SAID NORTHEASTERLY LINE, SOUTH 32°25'10" WEST, 221.94 FEET;
THENCE SOUTH 57°34'50" EAST, 179.56 FEET;
THENCE SOUTH 32°25'10" WEST, 52.50 FEET;
THENCE SOUTH 57°34'50" EAST, 4.00 FEET;
THENCE SOUTH 32°25'10" WEST, 26.50 FEET;
THENCE SOUTH 57°34'50" EAST, 11.50 FEET;
THENCE SOUTH 32°25'10" WEST, 19.38 FEET;
THENCE SOUTH 57°34'50" EAST, 18.50 FEET;
THENCE SOUTH 32°25'10" WEST, 35.12 FEET;
THENCE SOUTH 57°34'50" EAST, 187.00 FEET;
THENCE NORTH 32°25'10" EAST, 355.44 FEET TO THE NORTHEASTERLY LINE OF LOT 5;
THENCE ALONG THE NORTHEASTERLY LINE OF LOT 5 AND LOT 6, NORTH 57°34'50" WEST 400.56 FEET TO THE TRUE POINT OF BEGINNING.
BEING NEW LOT 5, AS SHOWN ON THAT CERTAIN LOT LINE ADJUSTMENT PERMIT RECORDED FEBRUARY 8, 2018 AS INSTRUMENT NO. 23864278 OF OFFICIAL RECORDS.
PARCEL SIX: (NEW LOT 6)
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF LOTS 3, 5 AND 6, AS DESCRIBED IN THAT CERTAIN "GRANT DEED" RECORDED MARCH 05, 2015 AS DOCUMENT NO. 22873576, OFFICIAL RECORDS OF SANTA CLARA COUNTY, AND BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING AT THE CORNER OF SAID LOT 6;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID LOT 6, SOUTH 57°34'50" EAST, 117.95 FEET;
THENCE LEAVING SAID NORTHEASTERLY LINE, SOUTH 32°25'10" WEST, 221.94 FEET;
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT H-1 -3 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
THENCE SOUTH 57°34'50" EAST, 179.56 FEET;
THENCE SOUTH 32°25'10" WEST, 52.50 FEET;
THENCE SOUTH 57°34'50" EAST, 4.00 FEET;
THENCE SOUTH 32°25'10" WEST, 26.50 FEET;
THENCE SOUTH 57°34'50" EAST, 11.50 FEET;
THENCE SOUTH 32°25'10" WEST, 19.38 FEET;
THENCE SOUTH 57°34'50" EAST, 18.50 FEET;
THENCE SOUTH 32°25'10" WEST, 193.54 FEET TO A POINT ON THE SOUTHWESTERLY LINE OF SAID LOT 3;
THENCE ALONG THE SOUTHWESTERLY LINE OF LOT 3 AND LOT 6, NORTH 57°34'50" WEST, 331.50 FEET;
THENCE NORTH 32°25'10" EAST, 513.86 FEET TO THE POINT OF BEGINNING.
BEING NEW LOT 6, AS SHOWN ON THAT CERTAIN LOT LINE ADJUSTMENT PERMIT RECORDED FEBRUARY 8, 2018 AS INSTRUMENT NO. 23864278 OF OFFICIAL RECORDS.
PARCEL SEVEN: (LOT 7)
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL ONE AS DESCRIBED IN THE GRANT DEED RECORDED ON JANUARY 19, 2011 AS DOCUMENT NO. 21052358, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE MOST EASTERLY CORNER OF ADJUSTED PARCEL B AS DESCRIBED IN THE LOT LINE ADJUSTMENT PERMIT RECORDED ON JUNE 22, 1999 AS DOCUMENT NO. 14867793, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID CORNER BEING ON THE SOUTHWESTERLY LINE OF COLEMAN AVENUE, SHOWN AS "PROPOSED COLEMAN AVE." ON THE RECORD OF SURVEY RECORDED ON JANUARY 25, 1960 IN BOOK 116 OF MAPS, AT PAGE 18, RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, ALSO BEING SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 613.02 FEET TO THE MOST NORTHERLY CORNER OF THE PROPERTY DESCRIBED IN THE GRANT DEED RECORDED ON NOVEMBER 14, 2012 AS DOCUMENT NO. 21950036, OFFICIAL RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED, SOUTH 32° 25' 10" WEST 12.00 FEET TO A POINT BEING 12.00 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 424.19 FEET TO THE POINT OF BEGINNING, SAID POINT BEING 1,037.21 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B;
THENCE PARALLEL WITH THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, SOUTH 32° 25' 10" WEST 513.86 FEET TO THE POINT OF BEGINNING, SAID POINT BEING 525.86 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE.
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 328.50 FEET TO A POINT BEING 1,365.71 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, SOUTH 32° 25' 10" WEST 230.50 FEET TO A POINT BEING DISTANT 756.36 FEET SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, SOUTH 57°34' 50" EAST 328.50 FEET TO A POINT BEING 1,037.21 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 230.50 FEET TO THE POINT OF BEGINNING.
PARCEL EIGHT: (LOT 8)
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT H-1 -4 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL ONE AS DESCRIBED IN THE GRANT DEED RECORDED ON JANUARY 19, 2011 AS DOCUMENT NO. 21052358, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE MOST EASTERLY CORNER OF ADJUSTED PARCEL B AS DESCRIBED IN THE LOT LINE ADJUSTMENT PERMIT RECORDED ON JUNE 22, 1999 AS DOCUMENT NO. 14867793, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID CORNER BEING ON THE SOUTHWESTERLY LINE OF COLEMAN AVENUE, SHOWN AS "PROPOSED COLEMAN AVE." ON THE RECORD OF SURVEY RECORDED ON JANUARY 25, 1960 IN BOOK 116 OF MAPS, AT PAGE 18, RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, ALSO BEING SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 613.02 FEET TO THE MOST NORTHERLY CORNER OF THE PROPERTY DESCRIBED IN THE GRANT DEED RECORDED ON NOVEMBER 14, 2012 AS DOCUMENT NO. 21950036, OFFICIAL RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED, SOUTH 32° 25' 10" WEST 12.00 FEET TO A POINT BEING 12.00 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 752.69 FEET TO THE POINT OF BEGINNING, SAID POINT BEING 1,365.71 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B SOUTH 32° 25' 10" WEST 513.86 FEET TO A POINT BEING 525.86 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 513.68 FEET TO A POINT BEING 1,879.39 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 483.86 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE RIGHT, CONCAVE SOUTHERLY, HAVING A RADIUS OF 30.00 FEET;
THENCE ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 90° 00' 00", AN ARC DISTANCE OF 47.12 FEET TO A POINT BEING 12.00 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, SOUTH 57° 34' 50" EAST 483.68 FEET TO THE POINT OF BEGINNING.
PARCEL NINE: (LOT 9)
ALL THAT CERTAIN REAL PROPERTY SITUATE IN THE CITY OF SAN JOSE, COUNTY OF SANTA CLARA, STATE OF CALIFORNIA, BEING A PORTION OF PARCEL ONE AS DESCRIBED IN THE GRANT DEED RECORDED ON JANUARY 19, 2011 AS DOCUMENT NO. 21052358, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID PROPERTY BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
COMMENCING AT THE MOST EASTERLY CORNER OF ADJUSTED PARCEL B AS DESCRIBED IN THE LOT LINE ADJUSTMENT PERMIT RECORDED ON JUNE 22, 1999 AS DOCUMENT NO. 14867793, OFFICIAL RECORDS OF SANTA CLARA COUNTY, SAID CORNER BEING ON THE SOUTHWESTERLY LINE OF COLEMAN AVENUE, SHOWN AS "PROPOSED COLEMAN AVE." ON THE RECORD OF SURVEY RECORDED ON JANUARY 25, 1960 IN BOOK 116 OF MAPS, AT PAGE 18, RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE NORTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, ALSO BEING SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 613.02 FEET TO THE MOST NORTHERLY CORNER OF THE PROPERTY DESCRIBED IN THE GRANT DEED RECORDED ON NOVEMBER 14, 2012 AS DOCUMENT NO. 21950036, OFFICIAL RECORDS OF SANTA CLARA COUNTY;
THENCE ALONG THE GENERAL NORTHWESTERLY LINE OF SAID GRANT DEED, SOUTH 32° 25' 10" WEST 12.00 FEET TO A POINT BEING 12.00 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57° 34' 50" WEST 752.69 FEET TO A POINT BEING 1,365.71 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B;
THENCE PARALLEL WITH THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B, SOUTH 32° 25' 10" WEST 513.86 FEET TO THE POINT OF BEGINNING, SAID POINT BEING 525.86 FEET DISTANT
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT H-1 -5- |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, SOUTH 32° 25' 10" WEST 230.50 FEET TO A POINT BEING 756.36 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, NORTH 57°34' 50" WEST 493.68 FEET TO THE BEGINNING OF A TANGENT CURVE TO THE RIGHT, CONCAVE EASTERLY, HAVING A RADIUS OF 20.00 FEET;
THENCE ALONG SAID CURVE, THROUGH A CENTRAL ANGLE OF 90° 00' 00", AN ARC LENGTH OF 31.42 FEET TO A POINT BEING 1,879.39 FEET DISTANT NORTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM THE SOUTHEASTERLY LINE OF SAID ADJUSTED PARCEL B;
THENCE PARALLEL WITH SAID SOUTHEASTERLY LINE OF ADJUSTED PARCEL B, NORTH 32° 25' 10" EAST 210.50 FEET TO A POINT BEING 525.86 FEET DISTANT SOUTHWESTERLY, MEASURED AT A RIGHT ANGLE, FROM SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE;
THENCE PARALLEL WITH SAID SOUTHWESTERLY LINE OF COLEMAN AVENUE, SOUTH 57°34' 50" EAST 513.68 FEET TO THE POINT OF BEGINNING.
PARCEL TEN:
NON-EXCLUSIVE EASEMENTS AS CONTAINED IN THAT CERTAIN "AMENDED AND RESTATED RECIPROCAL EASEMENT AGREEMENT" RECORDED MARCH 5, 2015 AS INSTRUMENT NO. 22873580 OF OFFICIAL RECORDS.
APNs: 230-46-075 (Affects Parcel One), 230-46-076 (Affects a portion of Parcel Two), 230-46-077 (Affects a portion of Parcels Two, Three, Five and Six), 230-46-078 (Affects Parcel Four), 230-46-079 (Affects a portion of Parcels Two, Five and Six), 230-46-080 (Affects a portion of Parcels Five and Six), 230-46-081 (Affects Parcel Seven), 230-46-082 (Affects Parcel Eight) and 230-46-083 (Affects Parcel Nine)
Real property in the City of San Jose, County of Santa Clara, State of California, described as follows:
PARCEL ONE: (Lot 8)
All that certain real property situate in the City of San Jose, County of Santa Clara, State of California, being a portion of Parcel One as described in the Grant Deed recorded on January 11, 2011 as Document No. 21052358, Official Records of Santa Clara County, said property being more particularly described as follows:
Commencing at the most easterly corner of Adjusted Parcel B as described in the Lot Line Adjustment Permit recorded on June 22, 1999 as Document No. 14867793, Official Records of Santa Clara County, said corner being on the southwesterly line of Coleman Avenue, shown as “Proposed Coleman Ave.” on the Record of Survey recorded on January 25, 1960 in Book 116 of Maps, at Page 18, Records of Santa Clara County;
Thence along the Northeasterly line of said Adjusted Parcel B, also being said Southwesterly line of Coleman Avenue, North 57° 34’ 50” West 613.02 feet to the most Northerly corner of the property described in the Grant Deed recorded on November 15, 2012 as Document No. 21950036, Official Records of Santa Clara County;
Thence along the general Northwesterly line of said Grant Deed, South 32° 25’ 10” West 12.00 feet to a point being 12.00 feet distant southwesterly, measured at a right angle, from said Southwesterly line of Coleman Avenue;
Thence parallel with said Southwesterly line of Coleman Avenue, North 57° 34’ 50” West 752.69 feet to the Point of Beginning, said point being 1,365.71 feet distant northwesterly, measured at a right angle, from the southeasterly line of said Adjusted Parcel B;
Thence parallel with said Southeasterly line of Adjusted Parcel B South 32° 25’ 10” West 513.86 feet to a point being 525.86 feet distant southwesterly, measured at a right angle, from said southwesterly line of Coleman Avenue;
Thence parallel with said southwesterly line of Coleman Avenue, North 57° 34’ 50” West 513.68 feet to a point being 1,879.39 feet distant northwesterly, measured at a right angle, from said southeasterly line of Adjusted Parcel B;
Thence parallel with said Southeasterly line of Adjusted Parcel B, North 32° 25’ 10” East 483.86 feet to the beginning of a tangent curve to the right, concave southerly, having a radius of 30.00 feet;
Thence along said curve through a central angle of 90° 00’ 00”, an arc distance of 47.12 feet to a point being 12.00 feet distant southwesterly, measured at a right angle, from said southwesterly line of Coleman Avenue;
Thence parallel with said southwesterly line of Coleman Avenue, South 57° 34’ 50” East 483.68 feet to the Point of Beginning.
PARCEL TWO: (Lot 9)
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT H-1 -6 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
All that certain real property situate in the City of San Jose, County of Santa Clara, State of California, being a portion of Parcel One as described in the Grant Deed recorded on January 11, 2011 as Document No. 21052358, Official Records of Santa Clara County, said property being more particularly described as follows:
Commencing at the most easterly corner of Adjusted Parcel B as described in the Lot Line Adjustment Permit recorded on June 22, 1999 as Document No. 14867793, Official Records of Santa Clara County, said corner being on the southwesterly line of Coleman Avenue, shown as “Proposed Coleman Ave.” on the Record of Survey recorded on January 25, 1960 in Book 116 of Maps, at Page 18, Records of Santa Clara County;
Thence along the Northeasterly line of said Adjusted Parcel B, also being said Southwesterly line of Coleman Avenue, North 57° 34’ 50” West 613.02 feet to the most Northerly corner of the property described in the Grant Deed recorded on November 15, 2012 as Document No. 21950036, Official Records of Santa Clara County;
Thence along the general Northwesterly line of said Grant Deed, South 32° 25’ 10” West 12.00 feet to a point being 12.00 feet distant southwesterly, measured at a right angle, from said Southwesterly line of Coleman Avenue;
Thence parallel with said Southwesterly line of Coleman Avenue, North 57° 34’ 50” West 752.69 feet to a point being 1,365.71 feet distant northwesterly, measured at a right angle, from the southeasterly line of said Adjusted Parcel B;
Thence parallel with the Southeasterly line of said Adjusted Parcel B, South 32° 25’ 10” West 513.86 feet to the Point of Beginning, said point being 525.86 feet distant southwesterly, measured at a right angle, from said southwesterly line of Coleman Avenue;
Thence parallel with said southeasterly line of Adjusted Parcel B, South 32° 25’ 10” West 230.50 feet to a point being 756.36 feet distant southwesterly, measured at a right angle, from said southwesterly line of Coleman Avenue;
Thence parallel with said southwesterly line of Coleman Avenue, North 57°34’ 50” West 493.68 feet to the beginning of a tangent curve to the right, concave easterly, having a radius of 20.00 feet;
Thence along said curve, through a central angle of 90° 00’ 00”, an arc length of 31.42 feet to a point being 1,879.39 feet distant northwesterly, measured at a right angle, from the southeasterly line of said Adjusted Parcel B;
Thence parallel with said southeasterly line of Adjusted Parcel B, North 32° 25’ 10” East 210.50 feet to a point being 525.86 feet distant southwesterly, measured at a right angle, from said southwesterly line of Coleman Avenue;
Thence parallel with said southwesterly line of Coleman Avenue, South 57°34’ 50” East 513.68 feet to the Point of Beginning.
PARCEL THREE:
Non-exclusive easements as contained in that certain “Second Amended and Restated Reciprocal Easement Agreement” recorded March 15, 2018 as Instrument No. 23888777 of Official Records.
APN: 230-46-082 (Affects Parcel One) and 230-46-083 (Affects Parcel Two)
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT H-1 -7 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
EXHIBIT A-2 - DESCRIPTION OF PROPERTY
Real property in the City of San Jose, County of Santa Clara, State of California, described as follows:
PARCEL ONE: (Lot 8)
All that certain real property situate in the City of San Jose, County of Santa Clara, State of California, being a portion of Parcel One as described in the Grant Deed recorded on January 11, 2011 as Document No. 21052358, Official Records of Santa Clara County, said property being more particularly described as follows:
Commencing at the most easterly corner of Adjusted Parcel B as described in the Lot Line Adjustment Permit recorded on June 22, 1999 as Document No. 14867793, Official Records of Santa Clara County, said corner being on the southwesterly line of Coleman Avenue, shown as “Proposed Coleman Ave.” on the Record of Survey recorded on January 25, 1960 in Book 116 of Maps, at Page 18, Records of Santa Clara County;
Thence along the Northeasterly line of said Adjusted Parcel B, also being said Southwesterly line of Coleman Avenue, North 57° 34’ 50” West 613.02 feet to the most Northerly corner of the property described in the Grant Deed recorded on November 15, 2012 as Document No. 21950036, Official Records of Santa Clara County;
Thence along the general Northwesterly line of said Grant Deed, South 32° 25’ 10” West 12.00 feet to a point being 12.00 feet distant southwesterly, measured at a right angle, from said Southwesterly line of Coleman Avenue;
Thence parallel with said Southwesterly line of Coleman Avenue, North 57° 34’ 50” West 752.69 feet to the Point of Beginning, said point being 1,365.71 feet distant northwesterly, measured at a right angle, from the southeasterly line of said Adjusted Parcel B;
Thence parallel with said Southeasterly line of Adjusted Parcel B South 32° 25’ 10” West 513.86 feet to a point being 525.86 feet distant southwesterly, measured at a right angle, from said southwesterly line of Coleman Avenue;
Thence parallel with said southwesterly line of Coleman Avenue, North 57° 34’ 50” West 513.68 feet to a point being 1,879.39 feet distant northwesterly, measured at a right angle, from said southeasterly line of Adjusted Parcel B;
Thence parallel with said Southeasterly line of Adjusted Parcel B, North 32° 25’ 10” East 483.86 feet to the beginning of a tangent curve to the right, concave southerly, having a radius of 30.00 feet;
Thence along said curve through a central angle of 90° 00’ 00”, an arc distance of 47.12 feet to a point being 12.00 feet distant southwesterly, measured at a right angle, from said southwesterly line of Coleman Avenue;
Thence parallel with said southwesterly line of Coleman Avenue, South 57° 34’ 50” East 483.68 feet to the Point of Beginning.
PARCEL TWO: (Lot 9)
All that certain real property situate in the City of San Jose, County of Santa Clara, State of California, being a portion of Parcel One as described in the Grant Deed recorded on January 11, 2011 as Document No. 21052358, Official Records of Santa Clara County, said property being more particularly described as follows:
Commencing at the most easterly corner of Adjusted Parcel B as described in the Lot Line Adjustment Permit recorded on June 22, 1999 as Document No. 14867793, Official Records of Santa Clara County, said corner being on the southwesterly line of Coleman Avenue, shown as “Proposed Coleman Ave.” on the Record of Survey recorded on January 25, 1960 in Book 116 of Maps, at Page 18, Records of Santa Clara County;
Thence along the Northeasterly line of said Adjusted Parcel B, also being said Southwesterly line of Coleman Avenue, North 57° 34’ 50” West 613.02 feet to the most Northerly corner of the property described in the Grant Deed recorded on November 15, 2012 as Document No. 21950036, Official Records of Santa Clara County;
Thence along the general Northwesterly line of said Grant Deed, South 32° 25’ 10” West 12.00 feet to a point being 12.00 feet distant southwesterly, measured at a right angle, from said Southwesterly line of Coleman Avenue;
Thence parallel with said Southwesterly line of Coleman Avenue, North 57° 34’ 50” West 752.69 feet to a point being 1,365.71 feet distant northwesterly, measured at a right angle, from the southeasterly line of said Adjusted Parcel B;
Thence parallel with the Southeasterly line of said Adjusted Parcel B, South 32° 25’ 10” West 513.86 feet to the Point of Beginning, said point being 525.86 feet distant southwesterly, measured at a right angle, from said southwesterly line of Coleman Avenue;
Thence parallel with said southeasterly line of Adjusted Parcel B, South 32° 25’ 10” West 230.50 feet to a point being 756.36 feet distant southwesterly, measured at a right angle, from said southwesterly line of Coleman Avenue;
Thence parallel with said southwesterly line of Coleman Avenue, North 57°34’ 50” West 493.68 feet to the beginning of a tangent curve to the right, concave easterly, having a radius of 20.00 feet;
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT H-1 -8 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Thence along said curve, through a central angle of 90° 00’ 00”, an arc length of 31.42 feet to a point being 1,879.39 feet distant northwesterly, measured at a right angle, from the southeasterly line of said Adjusted Parcel B;
Thence parallel with said southeasterly line of Adjusted Parcel B, North 32° 25’ 10” East 210.50 feet to a point being 525.86 feet distant southwesterly, measured at a right angle, from said southwesterly line of Coleman Avenue;
Thence parallel with said southwesterly line of Coleman Avenue, South 57°34’ 50” East 513.68 feet to the Point of Beginning.
PARCEL THREE:
Non-exclusive easements as contained in that certain “Second Amended and Restated Reciprocal Easement Agreement” recorded March 15, 2018 as Instrument No. 23888777 of Official Records.
APN: 230-46-082 (Affects Parcel One) and 230-46-083 (Affects Parcel Two)
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT H-1 -9 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
COLEMAN HIGHLINE
FORM OF SNDA FOR CONSTRUCTION FINANCING
Wells Fargo Bank, National Association
Commercial Real Estate
1512 Eureka Rd., Suite 350
Roseville, CA 95661
Attention: Jackie DeSimone
Loan No.: 1015366
(Space Above For Recorder's Use)
SUBORDINATION AGREEMENT, ACKNOWLEDGMENT OF LEASE ASSIGNMENT, ESTOPPEL, ATTORNMENT AND NON-DISTURBANCE AGREEMENT
(Lease to Security Instrument)
NOTICE: |
THIS SUBORDINATION AGREEMENT RESULTS IN YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT. |
THIS SUBORDINATION AGREEMENT, ACKNOWLEDGMENT OF LEASE ASSIGNMENT, ESTOPPEL, ATTORNMENT AND NON-DISTURBANCE AGREEMENT (" Agreement ") is made as of _________, 20__ by and among CAP OZ 34, LLC, a Delaware limited liability company, owner of the real property hereinafter described (" Landlord "), ROKU, INC., a Delaware corporation (" Tenant ") and Wells Fargo Bank, National Association (collectively with its successors or assigns, " Lender ").
R E C I T A L S
A. |
Pursuant to the terms and provisions of a lease dated August 1, 2018 (" Lease "), Landlord granted to Tenant a leasehold estate in and to a portion of the property described on Exhibit A attached hereto and incorporated herein by this reference (which property, together with all improvements now or hereafter located on the property, is defined as the " Property "). |
B . |
Landlord has executed that certain Construction Deed of Trust with Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing, dated as of December 29, 2015, and recorded in the Official Records of Santa Clara County, California on December 29, 2015 as Document No. 23183228 (the " Security Instrument ") securing, among other things, that certain Promissory Note Secured by Deed of Trust (the " Note ") in the principal sum of Ninety-Seven Million Three Hundred Fifty Thousand and No/100 ths Dollars ($97,350,000.00), in favor of Lender (" Loan "). |
C . |
As a condition to Lender making the Loan secured by the Security Instrument, Lender requires that the Security Instrument be unconditionally and at all times remain a lien on the Property, prior and superior to all the rights of Tenant under the Lease and that the Tenant specifically and unconditionally subordinate the Lease to the lien of the Security Instrument. |
D . |
Subject to the terms and conditions of this Agreement, Landlord and Tenant have agreed to the subordination, attornment and other agreements herein in favor of Lender. |
NOW THEREFORE, for valuable consideration and to induce Lender to make the Loan, Landlord and Tenant hereby agree, for the benefit of Lender, as follows:
1. |
SUBORDINATION . Landlord and Tenant hereby agree that: |
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1.1 |
Prior Lien . The Security Instrument securing the Note in favor of Lender, and any modifications, renewals or extensions thereof (including, without limitation, any modifications, renewals or extensions with respect to any additional advances made subject to the Security Instrument), shall unconditionally be and at all times remain a lien on the Property prior and superior to the Lease; |
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1.2 |
Subordination . Lender would not make the Loan without this agreement to subordinate; and |
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1.3 |
Whole Agreement . This Agreement shall be the whole agreement and only agreement with regard to the subordination of the Lease to the lien of the Security Instrument and shall supersede and cancel, but only insofar as would affect the priority between the Security Instrument and the Lease, any prior agreements as to such subordination, including, without limitation, those provisions, if any, contained in the Lease which provide for the subordination of the Lease to a deed or deeds of trust or to a mortgage or mortgages. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT H -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
AND FURTHER, Tenant individually declares, agrees and acknowledges for the benefit of Lender, that:
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1.4 |
Use of Proceeds . Lender, in making disbursements pursuant to the Note, the Security Instrument or any loan agreements with respect to the Property, is under no obligation or duty to, nor has Lender represented that it will, see to the application of such proceeds by the person or persons to whom Lender disburses such proceeds, and any application or use of such proceeds for purposes other than those provided for in such agreement or agreements shall not defeat this agreement to subordinate in whole or in part; and |
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1.5 |
Waiver, Relinquishment and Subordination . Tenant intentionally and unconditionally waives, relinquishes and subordinates all of Tenant's right, title and interest in and to the Property to the lien of the Security Instrument and understands that in reliance upon, and in consideration of, this waiver, relinquishment and subordination, specific loans and advances are being and will be made by Lender and, as part and parcel thereof, specific monetary and other obligations are being and will be entered into which would not be made or entered into but for said reliance upon this waiver, relinquishment and subordination. |
2. |
ASSIGNMENT . Tenant acknowledges and consents to the assignment of the Lease by Landlord in favor of Lender. |
3. |
ESTOPPEL . Tenant acknowledges and represents, to Tenant's actual knowledge as of the date of this Agreement, that: |
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3.1 |
Entire Agreement . The Lease constitutes the entire agreement between Landlord and Tenant with respect to the Property and Tenant claims no rights with respect to the Property other than as set forth in the Lease; |
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3.2 |
No Prepaid Rent . No deposits or prepayments of rent have been made in connection with the Lease, except as set forth in Section 3.1 of the Lease. |
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3.3 |
No Default . As of the date of this Agreement: (i) there exists no breach, default, or event or condition which, with the giving of notice or the passage of time or both, would constitute a breach or default under the Lease; and (ii) there are no existing claims, defenses or offsets against rental due or to become due under the Lease; |
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3.5 |
No Broker Liens . Neither Tenant nor Landlord has incurred any fee or commission with any real estate broker which would give rise to any lien right under state or local law, except as set forth in Section 29.24 of the Lease. |
In no event shall the issuance of the foregoing statements subject Tenant to any liability whatsoever (other than to create an estoppel as between Tenant and Lender), despite the failure of Tenant to disclose correct or relevant information. The foregoing statements shall not serve as an estoppel as between Tenant and Landlord.
4. |
ADDITIONAL AGREEMENTS . Tenant covenants and agrees that, during all such times as Lender is the beneficiary under the Security Instrument: |
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4.1 |
Modification, Termination and Cancellation . Except as expressly permitted by the Lease, Tenant will not enter into any agreement to terminate or cancel the Lease (in whole or in part) without Lender’s prior written consent and, except as expressly permitted by the Lease, will not make any payment to Landlord in consideration of any modification, termination or cancellation of the Lease (in whole or in part) without Lender's prior written consent. Additionally, Lender shall not be bound by any material modification or amendment to the Lease made without Lender’s prior written consent except where such modifications or amendments solely memorialize Tenant’s exercise of expansion or extension options or other rights expressly provided in the Lease. For purposes of this Section 4.1 , a “material” modification or amendment of the Lease means a modification or amendment that reduces the rent, term, size of Tenant’s premises or Tenant’s obligation to pay operating expenses or other reimbursements, common area charges or any of its other financial obligations under the Lease, adds options on the part of the Tenant to extend the term of the Lease or expand Tenant’s premises or to purchase the Property or any portion thereof, or otherwise materially increases Lender’s obligations or materially decreases Tenant’s obligations under the Lease. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT H -2- |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
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expiration of the time period provided in the Lease for the cure thereof by Landlord ; provided , however , that if such default cannot with diligence be cured by Lender within such fifteen (15) day period, the commencement of action by Lender within such fifteen (15) day period to remedy the same shall be deemed sufficient so long as Lender pursues such cure with diligence . Notwithstanding the foregoing, nothing in this agreement shall preclude Tenant from immediately exercising Tenant’s rights under Section 19.7 of the Lease following Landlord’s failure to perform Landlord’s repair and maintenance obligations within the applicable notice and cure periods set forth in Section 19.7 of the Lease ; |
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4.3 |
No Advance Rents . Tenant will make no payments or prepayments of rent more than one (1) month in advance of the time when the same become due under the Lease; |
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4.4 |
Assignment of Rents . Upon receipt by Tenant of written notice from Lender that Lender has elected to terminate the license granted to Landlord to collect rents, as provided in the Security Instrument, and directing the payment of rents by Tenant to Lender, Tenant shall comply with such direction to pay and Landlord hereby agrees that Tenant shall not be required to determine whether Landlord is in default under the Loan and/or the Security Instrument, and Landlord further agrees that all such payments by Tenant to Lender shall satisfy Tenant’s obligations under the Lease with respect to such payments. |
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4.5 |
Insurance and Condemnation Proceeds . In the event there is any conflict between the terms in the Security Instrument and the Lease regarding the use of insurance proceeds or condemnation proceeds with respect to the Property, the provisions of the Security Instrument shall control. |
5. |
ATTORNMENT . In the event of a foreclosure under the Security Instrument, the parties (including for this purpose any transferee of Lender or any transferee of Landlord's title in and to the Property by Lender's exercise of the remedy of sale by foreclosure under the Security Instrument) agree as follows: |
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5.1 |
Payment of Rent . Tenant shall pay to Lender all rental payments required to be made by Tenant pursuant to the terms of the Lease for the duration of the term of the Lease; |
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5.2 |
Continuation of Performance . Tenant shall be bound to Lender in accordance with all of the provisions of the Lease for the balance of the term thereof, and Tenant hereby attorns to Lender as its landlord, such attornment to be effective and self-operative without the execution of any further instrument immediately upon Lender succeeding to Landlord's interest in the Lease and giving written notice thereof to Tenant; |
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5.4 |
Subsequent Transfer . Lender, by succeeding to the interest of Landlord under the Lease, shall become obligated to perform the covenants of Landlord thereunder to the extent the covenants accrue during the period Lender is the “Landlord” under this Lease. Upon any further transfer of Landlord's interest by Lender, all of such obligations accruing thereafter shall terminate as to Lender so long as all such obligations are assumed in writing by such successor owner. |
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5.5 |
Limitation on Lender's Liability . Tenant agrees to look solely to Lender's interest in the Property and the rent, income or proceeds derived therefrom for the recovery of any judgment against Lender, and in no event shall Lender or any of its affiliates, officers, directors, shareholders, partners, agents, representatives or employees ever be personally liable for any such obligation, liability or judgment. |
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5.6 |
No Representation . Lender shall not be liable with respect to any representations from Landlord, whether pursuant to the Lease or otherwise, including, but not limited to, any representation related to the use of the Property, compliance with zoning, landlord’s title, landlord’s authority, habitability or fitness for purposes or commercial suitability, or hazardous wastes, hazardous substances, toxic materials or similar phraseology relating to the environmental condition of the Property or any portion thereof. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT H -3- |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
terminated, but rather the Lease shall continue in full force and effect and Lender shall recognize and accept Tenant as tenant under the Lease subject to the terms and provisions of the Lease , except as modified by this Agreement; provided , however , that Tenant and Lender agree that the following provisions of the Lease (if any) shall not be binding on Lender nor its successors and assigns: any option to purchase or right of first refusal to purchase with respect to the Property . |
7. |
MISCELLANEOUS . |
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7.1 |
Remedies Cumulative . All rights of Lender herein to collect rents on behalf of Landlord under the Lease are cumulative and shall be in addition to any and all other rights and remedies provided by law and pursuant to this Agreement and the Lease. |
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7.2 |
NOTICES . All notices, demands, or other communications under this Agreement shall be in writing and shall be delivered to the appropriate party at the address set forth below (subject to change from time to time by written notice to all other parties to this Agreement). All notices, demands or other communications shall be considered as properly given if delivered personally or sent by first class United States Postal Service mail, postage prepaid, or by Overnight Express Mail or by overnight commercial courier service, charges prepaid, except that notice of Default may be sent by certified mail, return receipt requested, charges prepaid. Notices so sent shall be effective three (3) Business Days after mailing, if mailed by first class mail, and otherwise upon delivery or refusal; provided , however , that non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. For purposes of notice, the address of the parties shall be: |
Landlord: |
CAP OZ 34, LLC 10121 Miller Avenue, Suite 200 Cupertino, CA 95014 Attention: Derek K. Hunter, Jr. and Sherri Prieb
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With a copy to: |
Allen Matkins Leck Gamble Mallory & Natsis LLP 1901 Avenue of the Stars Suite 1800 Los Angeles, California 90067 Attention: Anton N. Natsis, Esq.
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Tenant: |
ROKU, Inc.
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With a copy to: |
ROKU, Inc.
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Lender: |
Wells Fargo Bank, National Association Commercial Real Estate (AU #2961) 420 Montgomery Street, 6 th Floor San Francisco, CA 94104
Attention: Sarah S. Carroll
Loan #: 1015366 |
With a copy to: |
Wells Fargo Bank, National Association Minneapolis Loan Center MAC N9303-110 600 South Fourth Street, 9 th Floor Minneapolis, MN 55415
Attention: Melanie Robertson
Loan #: 1015366 |
Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days' notice to the other party in the manner set forth hereinabove.
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7.3 |
Heirs, Successors and Assigns . Except as otherwise expressly provided under the terms and conditions herein, the terms of this Agreement shall bind and inure to the benefit of the heirs, executors, administrators, nominees, successors and assigns of the parties hereto. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT H -4 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
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7.4 |
Headings . All article, section or other headings appearing in this Agreement are for convenience of reference only and shall be disregarded in construing this Agreement. |
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7.5 |
Counterparts . To facilitate execution, this document may be executed in as many counterparts as may be convenient or required. It shall not be necessary that the signature of, or on behalf of, each party, or that the signature of all persons required to bind any party, appear on each counterpart. All counterparts shall collectively constitute a single document. It shall not be necessary in making proof of this document to produce or account for more than a single counterpart containing the respective signatures of, or on behalf of, each of the parties hereto. Any signature page to any counterpart may be detached from such counterpart without impairing the legal effect of the signatures thereon and thereafter attached to another counterpart identical thereto except having attached to it additional signature pages. |
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7.6 |
Exhibits, Schedules and Riders . All exhibits, schedules, riders and other items attached hereto are incorporated into this Agreement by such attachment for all purposes. |
[ Remainder of Page Intentionally Left Blank; Signature Pages Follow ]
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT H -5 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this Agreement as of the day and year first above written.
NOTICE: THIS SUBORDINATION AGREEMENT CONTAINS A PROVISION WHICH ALLOWS THE PERSON OBLIGATED ON YOUR REAL PROPERTY SECURITY TO OBTAIN A LOAN A PORTION OF WHICH MAY BE EXPENDED FOR OTHER PURPOSES THAN IMPROVEMENT OF THE LAND.
IT IS RECOMMENDED THAT, PRIOR TO THE EXECUTION OF THIS AGREEMENT, THE PARTIES CONSULT WITH THEIR ATTORNEYS WITH RESPECT HERETO.
"LANDLORD" CAP OZ 34, LLC a Delaware limited liability company |
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CAP OZ I, LLC, |
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a Delaware limited liability company |
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Sole Member |
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By: |
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HS Airport 2, LLC, |
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a California limited liability company |
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Its: |
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Manager |
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By: |
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Name: |
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Derek K. Hunter, Jr. |
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Its: |
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Member |
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. |
STATE OF CALIFORNIA
COUNTY OF ______________ SS.
On __________________________________________________________________ before me, _____________________________________________________________, personally appeared ________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
Signature
My commission expires .
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT H -6 - |
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ROKU, INC.,
a Delaware corporation
By: |
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Name: |
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Its: |
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. |
STATE OF CALIFORNIA
COUNTY OF ______________ SS.
On __________________________________________________________________ before me, _____________________________________________________________, personally appeared ________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
Signature
My commission expires .
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT H -7 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
WELLS FARGO BANK, NATIONAL ASSOCIATION
By: |
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Name: |
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Title: |
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A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. |
STATE OF CALIFORNIA
COUNTY OF ______________ SS.
On __________________________________________________________________ before me, _____________________________________________________________, personally appeared ________________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal
Signature
My commission expires .
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT H -8 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
EXHIBIT A - DESCRIPTION OF PROPERTY
Real property in the City of San Jose, County of Santa Clara,State of California,described as follows: PARCEL ONE: (Lot 8) All that certain real property situate in the City of San Jose, County of Santa Clara,State of California, beingportion of Parcel One as described in the Grant Deed recorded on January 11, 2011 as Document No. 21052358, Official Records of Santa Clara County, said property being more particularly described as follows: Commencing at the most easterly corner of Adjusted Parcel B as described in the Lot Line Adjustment Permit recorded on June 22,1999 as Document No. 14867793, Official Records of Santa Clara County, said corner being on the southwesterly line of Coleman Avenue, shown as "Proposed Coleman Ave." on the Record of Survey recorded on January 25, 1960 in Book 116 of Maps, at Page 18, Records of Santa Clara County; Thence along the Northeasterly line of said Adjusted Parcel B, also being said Southwesterly line of Coleman Avenue, North 57° 34' 50" West 613.02 feet to the most Northerly corner of the property described in the Grant Deed recorded on November 15, 2012 as Document No. 21950036, Official Records of Santa Clara County; Thence along the general Northwesterly line of said Grant Deed, South 32° 25' 10" West 12.00 feet to a point being 12.00 feet distant southwesterly, measured at a right angle,from said Southwesterly line of Coleman Avenue; Thence parallel with said Southwesterly line of Coleman Avenue, North 57° 34' 50" West 752.69 feet to the Point of Beginning, said point being 1,365.71 feet distant northwesterly, measured at a right angle,from the southeasterly line of said Adjusted Parcel B; Thence parallel with said Southeasterly line of Adjusted Parcel B South 32° 25' 10" West 513.86 feet to a point being 525.86 feet distant southwesterly, measured at a right angle,from said southwesterly line of Coleman Avenue; Thence parallel with said southwesterly line of Coleman Avenue, North 57° 34' 50" West 513.68 feet to a point being 1,879.39 feet distant northwesterly, measured at a right angle, from said southeasterly line of Adjusted Parcel B; Thence parallel with said Southeasterly line of Adjusted Parcel B, North 32° 25' 10" East 483.86 feet to the beginning of a tangent curve to the right, concave southerly,having a radius of 30.00 feet; Thence along said curve through a central angle of 90° 00' 00", an arc distance of 47.12 feet to a point being 12.00 feet distant southwesterly, measured at a right angle, from said southwesterly line of Coleman Avenue; Thence parallel with said southwesterly line of Coleman Avenue, South 57° 34' 50" East 483.68 feet to the Point of Beginning. PARCEL TWO: (Lot 9)
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT I -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
All that certain real property situate in the Oty of San Jose,County of Santa Clara,State of California,being a portion of ParcelOne as described in the Grant Deed recorded on January 11, 2011 as Document No. 21052358, Official Records of Santa Clara County,said property being more particularly described as follows: Commencing at the most easterly corner of Adjusted Parcel B as described in the Lot Line Adjustment Permit recorded on June 22, 1999 as Document No. 14867793, Official Records of Santa Clara County, said corner being on the southwesterly line of Coleman Avenue,shown as "Proposed Coleman Ave." on the Record of Swvey recorded on January 25, 1960 in Book 116 of 1aps, at Page 18, Records of Santa Clara County; Thence along the Northeasterly line of said Adjusted Parcel B, also being said Southwesterly line of Coleman Avenue, North 57° 34' 50" West 613.02 feet to the most Northerly corner of the property described in the Grant Deed recorded on November 15, 2012 as Document No. 21950036, Official Records of Santa Clara County; Thence along the general Northwesterly line of said Grant Deed,South 32° 25' 10" West 12.00 feet to a point being 12.00 feet distant southwesterly,measured at a right angle,from said Southwesterly line of Coleman Avenue; Thence parallel with said Southwesterly line of Coleman Avenue,North 57° 34' 50" West 752.69 feet to a point being 1,365.71feet distant northwesterly,measured at a right angle,from the southeasterly line of said Adjusted Parcel B; Thence parallel with the Southeasterly line of said Adjusted Parcel B,South 32° 25' 10" West 513.86 feet to the Point of Beginning, said point being 525.86 feet distant southwesterly, measured at a right angle,from said southwesterly line of Coleman Avenue; Thence parallel with said southeasterly line of Adjusted Parcel B,South 32° 25' 10" West 230.50 feet to a point being 756.36 feet distant southwesterly, measured at a right angle,from said southwesterly line of Coleman Avenue; Thence parallel with said southwesterly line of Coleman Avenue,North 57°34' 50" West 493.68 feet to the beginning of a tangent curve to the right,concave easterly,having a radius of 20.00 feet• ' Thence along said curve,through a centralangle of 90° 00' 00", an arc length of 31.42 feet to a point being 1,879.39 feet distant northwesterly,measured at a right angle, from the southeasterly line of said Adjusted Parcel B; Thence parallel with said southeasterly line of Adjusted Parcel B,North 32° 25' 10" East 210.50 feet to a point being 525.86 feet distant southwesterly, measured at a right angle,from said southwesterly line of Coleman Avenue; Thence parallel with said southwesterly line of Coleman Avenue,South 57°34'50" East 513.68 feet to the Point of Beginning. PARCEL THREE: Non-exclusive easements as contained in that certain "Second Amended and Restated Reciprocal Easement Agreement" recorded IVlarch 15, 2018 as Instrument No. 23888777 of Official Records. APN: 230-46-082 (Affects Parcel One) and 230-46-083 (Affects ParcelTwo)
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT I -2 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
COLEMAN HIGHLINE
LOCATIONS OF TENANT'S SIGNAGE
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT I -3 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT I -4 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Tenant's logo :
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT I -5 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
COLEMAN HIGHLINE
FORM OF RECOGNITION OF COVENANTS, CONDITIONS, AND RESTRICTIONS
RECORDING REQUESTED BY
AND WHEN RECORDED RETURN TO:
ALLEN MATKINS LECK GAMBLE
MALLORY & NATSIS LLP
1901 Avenue of the Stars, 18th Floor
Los Angeles, California 90067
Attention: Anton N. Natsis, Esq.
RECOGNITION OF COVENANTS,
CONDITIONS, AND RESTRICTIONS
This Recognition of Covenants, Conditions, and Restrictions (this " Agreement ") is entered into as of the __ day of ________, 20___, by and between __________________ ("Landlord"), and ________________ ("Tenant"), with reference to the following facts:
A. |
Landlord and Tenant entered into that certain Office Lease dated _____, 20__ (the " Lease "). Pursuant to the Lease, Landlord leased to Tenant and Tenant leased from Landlord space (the " Premises ") located in an office building on certain real property described in Exhibit A attached hereto and incorporated herein by this reference (the " Property "). |
B. |
The Premises is located in an office building located on real property which is part of an area owned by Landlord containing approximately ___ (__) acres of real property located in the City of ____________, California (the " Project "), as more particularly described in Exhibit B attached hereto and incorporated herein by this reference. |
C. |
Landlord, as declarant, has previously recorded, or proposes to record concurrently with the recordation of this Agreement, a Declaration of Covenants, Conditions, and Restrictions (the " Declaration "), dated ________________, 20___, in connection with the Project. |
D. |
Tenant is agreeing to recognize and be bound by the terms of the Declaration, and the parties hereto desire to set forth their agreements concerning the same. |
NOW, THEREFORE, in consideration of (a) the foregoing recitals and the mutual agreements hereinafter set forth, and (b) for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows,
1. |
Tenant's Recognition of Declaration . Notwithstanding that the Lease has been executed prior to the recordation of the Declaration, Tenant agrees to recognize and by bound by all of the terms and conditions of the Declaration. |
2. |
Miscellaneous . |
2.1 This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, estates, personal representatives, successors, and assigns.
2.2 This Agreement is made in, and shall be governed, enforced and construed under the laws of, the State of California.
2.3 This Agreement constitutes the entire understanding and agreements of the parties with respect to the subject matter hereof, and shall supersede and replace all prior understandings and agreements, whether verbal or in writing. The parties confirm and acknowledge that there are no other promises, covenants, understandings, agreements, representations, or warranties with respect to the subject matter of this Agreement except as expressly set forth herein.
2.4 This Agreement is not to be modified, terminated, or amended in any respect, except pursuant to any instrument in writing duly executed by both of the parties hereto.
2.5 In the event that either party hereto shall bring any legal action or other proceeding with respect to the breach, interpretation, or enforcement of this Agreement, or with respect to any dispute relating to any transaction covered by this Agreement, the losing party in such action or proceeding shall reimburse the prevailing party therein for all reasonable costs of litigation, including reasonable attorneys' fees, in such amount as may be determined by the court or other tribunal having jurisdiction, including matters on appeal.
2.6 All captions and heading herein are for convenience and ease of reference only, and shall not be used or referred to in any way in connection with the interpretation or enforcement of this Agreement.
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
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COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
2.7 If any provision of this Agreement, as applied to any party or to any circumstance, shall be adjudged by a court of competent jurisdictions to be void or unenforceable for any reason, the same shall not affect any other provision of this Agreement, the application of such provision under circumstances different from those adjudged by the court, or the validity or enforceability of this Agreement as a whole.
2.8 Time is of the essence of this Agreement.
2.9 The Parties agree to execute any further documents, and take any further actions, as may be reasonable and appropriate in order to carry out the purpose and intent of this Agreement.
2.10 As used herein, the masculine, feminine or neuter gender, and the singular and plural numbers, shall each be deemed to include the others whenever and whatever the context so indicates.
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT J -2- |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
SIGNATURE PAGE OF RECOGNITION OF
COVENANTS, CONDITIONS AND RESTRICTIONS
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the day and year first above written.
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"Tenant": ROKU, INC., a Delaware corporation |
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788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT J -3 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
COLEMAN HIGHLINE
FORM OF LETTER OF CREDIT
(Letterhead of a money center bank
acceptable to the Landlord)
LADIES AND GENTLEMEN:
WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. ___________ IN YOUR FAVOR FOR THE ACCOUNT OF [Insert Tenant's Name], A [Insert Entity Type], UP TO THE AGGREGATE AMOUNT OF USD[Insert Dollar Amount] ([Insert Dollar Amount] U.S. DOLLARS) EFFECTIVE IMMEDIATELY AND EXPIRING ON ___(Expiration Date)___ AVAILABLE BY PAYMENT UPON PRESENTATION OF YOUR DRAFT AT SIGHT DRAWN ON [Insert Bank Name] WHEN ACCOMPANIED BY THE FOLLOWING DOCUMENT(S):
1. |
THE ORIGINAL OF THIS IRREVOCABLE STANDBY LETTER OF CREDIT AND AMENDMENT(S), IF ANY. |
2. |
BENEFICIARY'S SIGNED STATEMENT PURPORTEDLY SIGNED BY AN AUTHORIZED REPRESENTATIVE OF [Insert Landlord's Name], A [Insert Entity Type] ("LANDLORD") STATING THE FOLLOWING: |
"THE UNDERSIGNED HEREBY CERTIFIES THAT THE LANDLORD, EITHER (A) UNDER THE LEASE (DEFINED BELOW), OR (B) AS A RESULT OF THE TERMINATION OF SUCH LEASE, HAS THE RIGHT TO DRAW DOWN THE AMOUNT OF USD IN ACCORDANCE WITH THE TERMS OF THAT CERTAIN OFFICE LEASE DATED [Insert Lease Date], AS THE SAME MAY HAVE BEEN AMENDED (COLLECTIVELY, THE "LEASE"), OR SUCH AMOUNT CONSTITUTES DAMAGES OWING BY THE TENANT TO BENEFICIARY RESULTING FROM THE BREACH OF SUCH LEASE BY THE TENANT THEREUNDER, OR THE TERMINATION OF SUCH LEASE, AND SUCH AMOUNT REMAINS UNPAID AT THE TIME OF THIS DRAWING."
OR
"THE UNDERSIGNED HEREBY CERTIFIES THAT WE HAVE RECEIVED A WRITTEN NOTICE OF [Insert Bank Name]'S ELECTION NOT TO EXTEND ITS STANDBY LETTER OF CREDIT NO. ___________ AND HAVE NOT RECEIVED A REPLACEMENT LETTER OF CREDIT WITHIN AT LEAST SIXTY (60) DAYS PRIOR TO THE PRESENT EXPIRATION DATE."
OR
"THE UNDERSIGNED HEREBY CERTIFIES THAT BENEFICIARY IS ENTITLED TO DRAW DOWN THE FULL AMOUNT OF LETTER OF CREDIT NO. ___________ AS THE RESULT OF THE FILING OF A VOLUNTARY PETITION UNDER THE U.S. BANKRUPTCY CODE OR A STATE BANKRUPTCY CODE BY THE TENANT UNDER THAT CERTAIN OFFICE LEASE DATED [Insert Lease Date], AS THE SAME MAY HAVE BEEN AMENDED (COLLECTIVELY, THE "LEASE"), WHICH FILING HAS NOT BEEN DISMISSED AT THE TIME OF THIS DRAWING."
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT K -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
"THE UNDERSIGNED HEREBY CERTIFIES THAT BENEFICIARY IS ENTITLED TO DRAW DOWN THE FULL AMOUNT OF LETTER OF CREDIT NO. ___________ AS THE RESULT OF AN INVOLUNTARY PETITION HAVING BEEN FILED UNDER THE U.S. BANKRUPTCY CODE OR A STATE BANKRUPTCY CODE AGAINST THE TENANT UNDER THAT CERTAIN OFFICE LEASE DATED [Insert Lease Date], AS THE SAME MAY HAVE BEEN AMENDED (COLLECTIVELY, THE "LEASE"), WHICH FILING HAS NOT BEEN DISMISSED AT THE TIME OF THIS DRAWING."
OR
"THE UNDERSIGNED HEREBY CERTIFIES THAT BENEFICIARY IS ENTITLED TO DRAW DOWN THE FULL AMOUNT OF LETTER OF CREDIT NO. ________________ AS THE RESULT OF THE REJECTION, OR DEEMED REJECTION, OF THAT CERTAIN OFFICE LEASE DATED [Insert Lease Date], AS THE SAME MAY HAVE BEEN AMENDED, UNDER SECTION 365 OF THE U.S. BANKRUPTCY CODE."
SPECIAL CONDITIONS:
PARTIAL DRAWINGS AND MULTIPLE PRESENTATIONS MAY BE MADE UNDER THIS STANDBY LETTER OF CREDIT, PROVIDED, HOWEVER, THAT EACH SUCH DEMAND THAT IS PAID BY US SHALL REDUCE THE AMOUNT AVAILABLE UNDER THIS STANDBY LETTER OF CREDIT.
ALL INFORMATION REQUIRED WHETHER INDICATED BY BLANKS, BRACKETS OR OTHERWISE, MUST BE COMPLETED AT THE TIME OF DRAWING. [Please Provide The Required Forms For Review, And Attach As Schedules To The Letter Of Credit.]
ALL SIGNATURES MUST BE MANUALLY EXECUTED IN ORIGINALS.
ALL BANKING CHARGES ARE FOR THE APPLICANT'S ACCOUNT.
IT IS A CONDITION OF THIS STANDBY LETTER OF CREDIT THAT IT SHALL BE DEEMED AUTOMATICALLY EXTENDED WITHOUT AMENDMENT FOR A PERIOD OF ONE YEAR FROM THE PRESENT OR ANY FUTURE EXPIRATION DATE, UNLESS AT LEAST SIXTY (60) DAYS PRIOR TO THE EXPIRATION DATE WE SEND YOU NOTICE BY NATIONALLY RECOGNIZED OVERNIGHT COURIER SERVICE THAT WE ELECT NOT TO EXTEND THIS LETTER OF CREDIT FOR ANY SUCH ADDITIONAL PERIOD. SAID NOTICE WILL BE SENT TO THE ADDRESS INDICATED ABOVE, UNLESS A CHANGE OF ADDRESS IS OTHERWISE NOTIFIED BY YOU TO US IN WRITING BY RECEIPTED MAIL OR COURIER. ANY NOTICE TO US WILL BE DEEMED EFFECTIVE ONLY UPON ACTUAL RECEIPT BY US AT OUR DESIGNATED OFFICE. IN NO EVENT, AND WITHOUT FURTHER NOTICE FROM OURSELVES, SHALL THE EXPIRATION DATE BE EXTENDED BEYOND A FINAL EXPIRATION DATE OF ___(120 days from the Lease Expiration Date) ___.
THIS LETTER OF CREDIT MAY BE TRANSFERRED SUCCESSIVELY IN WHOLE OR IN PART ONLY UP TO THE THEN AVAILABLE AMOUNT IN FAVOR OF A NOMINATED TRANSFEREE ("TRANSFEREE"), ASSUMING SUCH TRANSFER TO SUCH TRANSFEREE IS IN COMPLIANCE WITH ALL APPLICABLE U.S. LAWS AND REGULATIONS. AT THE TIME OF TRANSFER, THE ORIGINAL LETTER OF CREDIT AND ORIGINAL AMENDMENT(S) IF ANY, MUST BE SURRENDERED TO US TOGETHER WITH OUR TRANSFER FORM (AVAILABLE UPON REQUEST) AND PAYMENT OF OUR CUSTOMARY TRANSFER FEES, WHICH FEES SHALL BE PAYABLE BY APPLICANT (PROVIDED THAT BENEFICIARY MAY, BUT SHALL NOT BE OBLIGATED TO, PAY SUCH FEES TO US ON BEHALF OF APPLICANT, AND SEEK REIMBURSEMENT THEREOF FROM APPLICANT). IN CASE OF ANY TRANSFER UNDER THIS LETTER OF CREDIT, THE DRAFT AND ANY REQUIRED STATEMENT MUST BE EXECUTED BY THE TRANSFEREE AND WHERE THE BENEFICIARY'S NAME APPEARS WITHIN THIS STANDBY LETTER OF CREDIT, THE TRANSFEREE'S NAME IS AUTOMATICALLY SUBSTITUTED THEREFOR.
ALL DRAFTS REQUIRED UNDER THIS STANDBY LETTER OF CREDIT MUST BE MARKED: ''DRAWN UNDER [Insert Bank Name] STANDBY LETTER OF CREDIT NO. ___________."
We hereby agree with you that if drafts are presented to [ Insert Bank Name ] under this Letter of Credit at or prior to [ Insert Time – ( e.g. , 11:00 AM)], on a business day, and provided that such drafts presented conform to the terms and conditions of this Letter of Credit, payment shall be initiated by us in immediately available funds by our close of business on the succeeding business day. If drafts are presented to [ Insert Bank Name ] under this Letter of Credit after [ Insert Time – ( e.g. , 11:00 AM)], on a business day, and provided that such drafts conform with the terms and conditions of this Letter of Credit, payment shall be initiated by us in immediately available funds by our close of business on the second succeeding business day. As used in this Letter of Credit, "business day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in the state of California are authorized or required by law to close. If the expiration date for this Letter of Credit shall ever fall on a day which is not a business day then such expiration date shall automatically be extended to the date which is the next business day.
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT K -2 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Presentation of a drawing under this Letter of Credit may be made on or prior to the then current expiration date hereof by hand delivery, courier service, overnight mail, or facsimile. Presentation by facsimile transmission shall be by transmission of the above required sight draft drawn on us together with this Letter of Credit to our facsimile number, [ Insert Fax Number – (___) ___-____], attention: [ Insert Appropriate Recipient ], with telephonic confirmation of our receipt of such facsimile transmission at our telephone number [ Insert Telephone Number – (___) ___-____] or to such other facsimile or telephone numbers, as to which you have received written notice from us as being the applicable such number. We agree to notify you in writing, by NATIONALLY RECOGNIZED OVERNIGHT courier service, of any change in such direction. Any facsimile presentation pursuant to this paragraph shall also state thereon that the original of such sight draft and Letter of Credit are being remitted, for delivery on the next business day, to [ Insert Bank Name ] at the applicable address for presentment pursuant to the paragraph FOLLOWING this one.
WE HEREBY ENGAGE WITH YOU THAT ALL DOCUMENT(S) DRAWN UNDER AND IN COMPLIANCE WITH THE TERMS OF THIS STANDBY LETTER OF CREDIT WILL BE DULY HONORED IF DRAWN AND PRESENTED FOR PAYMENT AT OUR OFFICE LOCATED AT [Insert Bank Name], [Insert Bank Address], ATTN: [Insert Appropriate Recipient], ON OR BEFORE THE EXPIRATION DATE OF THIS CREDIT, ___(Expiration Date)___ .
IN THE EVENT THAT THE ORIGINAL OF THIS STANDBY LETTER OF CREDIT IS LOST, STOLEN, MUTILATED, OR OTHERWISE DESTROYED, WE HEREBY AGREE TO ISSUE A DUPLICATE ORIGINAL HEREOF UPON RECEIPT OF A WRITTEN REQUEST FROM YOU AND A CERTIFICATION BY YOU (PURPORTEDLY SIGNED BY YOUR AUTHORIZED REPRESENTATIVE) OF THE LOSS, THEFT, MUTILATION, OR OTHER DESTRUCTION OF THE ORIGINAL HEREOF.
EXCEPT SO FAR AS OTHERWISE EXPRESSLY STATED HEREIN, THIS STANDBY LETTER OF CREDIT IS SUBJECT TO THE "INTERNATIONAL STANDBY PRACTICES" (ISP 98) INTERNATIONAL CHAMBER OF COMMERCE (PUBLICATION NO. 590).
Very truly yours,
(Name of Issuing Bank)
By:
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT K -3 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
FORM OF MEMORANDUM OF LEASE
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
ROKU, Inc.
c/o Friedman & Associates, Inc.
1100 Glendon Avenue, Suite PH9
Los Angeles, CA 90024-3526
Attention: Jason Perscheid, Esq.
(space above this line for recorder’s use)
MEMORANDUM OF LEASE
This Memorandum of Lease (" Memorandum ") is made and entered into as of August 1, 2018, for the purpose of recording, by and between CAP OZ 34, LLC, a Delaware limited liability company (" Landlord "), and Roku, Inc., a Delaware corporation (" Tenant ").
1. Defined Terms; Exhibits . All capitalized terms used in this Memorandum and not otherwise defined herein shall have the meanings ascribed to such terms in the Lease (as defined below). All Exhibits referenced herein are attached hereto, and are incorporated herein by this reference.
2. Premises; Building; Project . Landlord hereby leases to Tenant and Tenant hereby leases from Landlord, pursuant to the terms and conditions of that certain Office Lease dated as of August 1, 2018 (as amended, the " Lease "), those certain premises described in the Lease, consisting of a total of 380,951 rentable square feet of space (the " Premises "), depicted on Exhibit A attached to the Lease. The Premises consists of (i) the entirety of the building located at 1173 Coleman Avenue, San Jose, California, (ii) the entirety of the building located at 1167 Coleman Avenue, San Jose, California, and (iii) the entirety of the building located at 1161 Coleman Avenue, San Jose, California (the " Buildings "). The Buildings are located on the land legally described on Exhibit A to this Memorandum.
3. Lease Term . The term of the Lease (" Lease Term ") is for a period of approximately one hundred forty (140) calendar months, starting on the Lease Commencement Date and ending one hundred forty (140) calendar months thereafter, subject to adjustment as provided in the Lease. The Lease Commencement Date is expected to occur on or about March 1, 2020, subject to adjustment as provided in the Lease.
4. Extension Options . Pursuant to the Lease, Landlord grants to Tenant one (1) option to extend the Lease Term for a period of seven (7) years.
5. Right of First Offer . Pursuant to the Lease, Landlord grants to Tenant a one-time right of first offer to lease office space in the Building and that certain building in the Project located at 1179 Coleman Avenue.
6. Lease Incorporated . All the other terms, conditions and covenants of the Lease are incorporated herein by this reference. In the event of a conflict between the provisions of this Memorandum and the provisions of the Lease, the provisions of the Lease shall govern.
7. Counterparts . This Memorandum may be executed in counterparts, each of which shall be an original but all of which together shall constitute one and the same agreement. This Memorandum is solely for notice and recording purposes and shall not be construed to alter, modify, expand, diminish or supplement the provisions of the Lease.
8. Successors and Assigns . The terms, covenants and provisions of the Lease, the terms of which are hereby incorporated by reference into this Memorandum, shall extend to and be binding upon the respective executors, administrators, heirs, successors and assigns of Tenant and Landlord.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT L -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
IN WITNESS WHEREOF, Landlord and Tenant have caused this Memorandum to be executed the day and date first above written.
"LANDLORD" CAP OZ 34, LLC a Delaware limited liability company |
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HS Airport 2, LLC, |
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788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT L -2 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of )
County of )
On , before me, ,
(insert name of notary)
Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
State of )
County of ______________________ )
On _________________________, before me, ,
(insert name of notary)
Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature (Seal)
[ATTACH LEGAL DESCRIPTION]
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT L -3 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
LEGAL DESCRIPTION
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT N -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT N -1 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
DEPICTION OF BICYCLE STORAGE AREA(S)
EXHIBIT N
RESERVED PARKING AND ELECTRICAL VEHICLE CHARGING STATIONS
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT N -2 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT N -3 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT N -4 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT N -5 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
EXHIBIT N -6 - |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
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COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
COLEMAN HIGHLINE
CAP OZ 34, LLC,
a Delaware limited liability company,
as Landlord,
and
ROKU, INC.,
a Delaware corporation,
as Tenant.
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
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COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
TABLE OF CONTENTS
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Page |
PREMISES, BUILDINGS, PROJECT, AND COMMON AREAS |
5 |
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ARTICLE 2 |
LEASE TERM; OPTION TERM |
8 |
ARTICLE 3 |
BASE RENT |
11 |
ARTICLE 4 |
ADDITIONAL RENT |
11 |
ARTICLE 5 |
USE OF PREMISES |
18 |
ARTICLE 6 |
SERVICES AND UTILITIES |
20 |
ARTICLE 7 |
REPAIRS |
23 |
ARTICLE 8 |
ADDITIONS AND ALTERATIONS |
23 |
ARTICLE 9 |
COVENANT AGAINST LIENS |
25 |
ARTICLE 10 |
INDEMNIFICATION AND INSURANCE |
25 |
ARTICLE 11 |
DAMAGE AND DESTRUCTION |
28 |
ARTICLE 12 |
NONWAIVER |
29 |
ARTICLE 13 |
CONDEMNATION |
29 |
ARTICLE 14 |
ASSIGNMENT AND SUBLETTING |
30 |
ARTICLE 15 |
SURRENDER OF PREMISES; OWNERSHIP AND REMOVAL OF TRADE FIXTURES |
33 |
ARTICLE 16 |
HOLDING OVER |
34 |
ARTICLE 17 |
ESTOPPEL CERTIFICATES |
34 |
ARTICLE 18 |
SUBORDINATION |
35 |
ARTICLE 19 |
DEFAULTS; REMEDIES |
35 |
ARTICLE 20 |
COVENANT OF QUIET ENJOYMENT |
37 |
ARTICLE 21 |
LETTER OF CREDIT |
38 |
ARTICLE 22 |
ROOFTOP AND RISER RIGHTS |
40 |
ARTICLE 23 |
SIGNS |
41 |
ARTICLE 24 |
COMPLIANCE WITH LAW |
42 |
ARTICLE 25 |
LATE CHARGES |
43 |
ARTICLE 26 |
LANDLORD'S RIGHT TO CURE DEFAULT; PAYMENTS BY TENANT |
43 |
ARTICLE 27 |
ENTRY BY LANDLORD |
43 |
ARTICLE 28 |
TENANT PARKING |
44 |
ARTICLE 29 |
MISCELLANEOUS PROVISIONS |
45 |
EXHIBITS
EXHIBIT A |
OUTLINE OF PREMISES |
EXHIBIT A-1 |
SITE PLAN |
EXHIBIT B |
TENANT WORK LETTER |
SCHEDULE 1-A TO EXHIBIT B |
TIME DEADLINES |
SCHEDULE 1 -B TO EXHIBIT B |
BASE BUILDING DESCRIPTION |
SCHEDULE 1-C TO EXHIBIT B |
BASE BUILDING PLANS FOR BUILDINGS 3 AND 4 |
SCHEDULE 1-D TO EXHIBIT B |
DELIVERY CONDITION |
EXHIBIT C |
FORM OF NOTICE OF LEASE TERM DATES |
EXHIBIT D |
RULES AND REGULATIONS |
EXHIBIT E |
FORM OF TENANT'S ESTOPPEL CERTIFICATE |
EXHIBIT F |
MARKET RENT DETERMINATION |
EXHIBIT G |
HAZARDOUS MATERIALS |
SCHEDULE 1 TO EXHIBIT G |
ENVIRONMENTAL QUESTIONNAIRE |
EXHIBIT H-1 |
FORM OF SNDA FOR GROUND LANDLORD |
EXHIBIT H -2 |
FORM OF SNDA FOR CONSTRUCTION FINANCING |
EXHIBIT I |
LOCATIONS OF TENANT'S SIGNAGE |
EXHIBIT J |
FORM OF RECOGNITION OF COVENANTS, CONDITIONS, AND RESTRICTIONS |
EXHIBIT K |
FORM OF LETTER OF CREDIT |
EXHIBIT L |
FORM OF MEMORANDUM OF LEASE |
EXHIBIT M |
DEPICTION OF BICYCLE STORAGE AREA(S) |
EXHIBIT N |
RESERVED PARKING AND ELECTRICAL VEHICLE CHARGING STATIONS |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
(i ) |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
INDEX
|
Page(s) |
35 |
|
Accountant |
17 |
Additional Notice |
6 |
Additional Rent |
10 |
Advocate Arbitrators. |
8 |
Alterations |
22 |
Anticipated Over-Allowance Amount |
Exhibit B |
Appealable Tax Expenses |
14 |
Appeals Notice |
14 |
Applicable Laws |
40 |
Arbitration Agreement |
8 |
Audit Period |
17 |
Bank |
36 |
Bank Prime Loan |
41 |
Bankruptcy Code |
36 |
Bank's Credit Rating Threshold |
36 |
Base Building |
22, Exhibit B |
Base Building Description |
Exhibit B |
Base Building Plans |
Exhibit B |
Base Rent |
10 |
Base Rent Abatement |
10 |
Base Rent Abatement Period |
10 |
Base, Shell and Core |
Exhibit B |
BB HVAC System |
19 |
Briefs |
9 |
Brokers |
46 |
BS/BS Exception |
21 |
Building |
Summary |
Building 1 |
4 |
Building 2 |
4 |
Building 2 Lease |
5 |
Building 3 |
Summary |
Building 3 Premises |
Summary |
Building 4 |
Summary |
Building 4 Premises |
Summary |
Building A2 |
Summary |
Building A2 Premises |
Summary |
Building Structure |
21 |
Building Systems |
21 |
Buildings |
Summary |
Cafeteria |
17 |
Cafeteria Users |
17 |
Clean-up |
Exhibit G |
Closure Letter |
Exhibit G |
CofO |
Exhibit B |
Common Areas |
5 |
Comparable Area |
Exhibit F |
Comparable Buildings |
Exhibit F |
Comparable Transactions |
Exhibit F |
Competitor Restricted Area |
44 |
Control, |
31 |
Controllable Operating Expenses |
16 |
Cosmetic Alterations |
22 |
Cost Pools |
15 |
Co-Work Uses |
45 |
Default Rate |
41 |
Delay Notice |
Exhibit B |
Deliver Punch List |
Exhibit B |
Delivery Condition |
Exhibit B |
Delivery Date |
Exhibit B |
Delivery Termination Date |
Exhibit B |
Delivery Termination Notice |
Exhibit B |
Deviation |
6 |
Direct Expenses |
10 |
Economic Terms |
5 |
Eligibility Period |
35 |
Emergency |
36 |
Environmental Assessment |
2 |
Environmental Laws |
Exhibit G |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
(ii) |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
|
Page(s) |
Exhibit G |
|
Environmental Questionnaire |
19 |
Environmental Report |
Exhibit G |
Estimate |
15 |
Estimate Statement |
15 |
Estimated Excess |
15 |
EV Stations |
43 |
Exchanged Market Rents |
8 |
Exercise Notice |
8 |
Existing CC&Rs |
19 |
Existing Hazardous Materials |
Exhibit G |
Existing Lender |
19 |
Existing Loan |
19 |
Existing Underlying Documents |
19 |
Expense Year |
10 |
Extension Option |
7 |
FDIC Replacement Period |
36 |
Final Condition |
Exhibit B |
Final Condition Date |
Exhibit B |
First Offer Commencement Date |
6 |
First Offer Lease |
6 |
First Offer Notice |
5 |
First Offer Space |
5 |
First Offer Term |
6 |
First Rebuttals |
9 |
First Reduction Date |
38 |
First Rent Abatement Date |
Exhibit B |
Fitch |
31 |
Fitness Center |
17 |
Fitness Center Users |
17 |
Force Majeure |
45 |
Future Ground Lease |
19 |
Future Underlying Documents |
19 |
Governmental Approvals |
40 |
Ground Landlord |
19 |
Ground Lease |
19 |
Hazardous Materials |
Exhibit G |
Hazardous Materials Claims |
Exhibit G |
HVAC |
19 |
Identification Requirements |
47 |
Interest Notice |
8 |
Landlord |
Summary |
Landlord Caused Delay |
Exhibit B |
Landlord Contribution |
27 |
Landlord Hazardous Materials |
Exhibit G |
Landlord Minor Changes |
Exhibit B |
Landlord Parties |
24 |
Landlord Response Notice |
8 |
Landlord's Initial Statement |
9 |
Landlord's Option Rent Calculation |
8 |
Landlord's Set-Off Notice |
36 |
Landlord's Warranty |
4 |
Late Delivery Date Abatements |
Exhibit B |
L‑C |
36 |
L‑C Amount |
36 |
L‑C Draw Event |
36 |
L‑C Expiration Date |
36 |
L‑C FDIC Replacement Notice |
37 |
L-C Reduction Condition |
39 |
Lease |
Summary |
Lease Expiration Date |
7 |
Lease Term |
7 |
Lease Year |
7 |
Lenders |
33 |
Lines |
47 |
|
45 |
Mandatory Removal Items |
23 |
Market Rent |
Exhibit F |
Measuring Expense Year |
16 |
Memorandum |
43 |
Moody's |
31 |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
(iii) |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
|
Page(s) |
Exhibit F |
|
Neutral Arbitrator |
8 |
New Offer Terms |
6 |
Nondisturbance Agreement |
33 |
Notice of Lease Term Dates |
7 |
Notices |
45 |
Objectionable Name |
40 |
Operating Expenses |
11 |
Option Rent |
8 |
Option Term |
7 |
Original Improvements |
25 |
Original Landlord |
6 |
Original Tenant |
5 |
Other Improvements |
47 |
Outside Agreement Date |
8 |
Over-Allowance Payments |
Exhibit B |
PCBs |
Exhibit G |
Percentage |
Exhibit B |
Permit Delay |
45 |
Permitted Capital Items |
11 |
Permitted Transferee |
31 |
Permitted Transferee Assignee. |
31 |
Premises |
4 |
Project |
4 |
Proposition 13 |
14 |
Rating Replacement Period |
36 |
Reduced Premises |
7 |
Release |
Exhibit G |
Reminder Notice |
22 |
Renewal Allowance |
Exhibit F |
Renovations |
47 |
Rent. |
10 |
Right of First Offer |
5 |
Roof Deck |
4 |
RSF |
Summary |
Rules and Regulations |
18 |
Ruling |
9 |
S&P |
31 |
Second Rebuttals |
9 |
Second Reduction Date |
39 |
Second Rent Abatement Date |
Exhibit B |
Secured Areas |
42 |
Security Deposit Laws |
38 |
Shuttle Service |
48 |
Shuttle Service Riders |
48 |
Specialty Improvements |
23 |
Statement |
15 |
Subject Space |
28 |
Substantial Completion of the Tenant Improvements |
Exhibit B |
Summary |
Summary |
Superior Leases |
5 |
Tax Expenses |
13 |
Telecommunications Equipment |
39 |
Tenant |
Summary |
Tenant Competitor |
44 |
Tenant Damage |
4 |
Tenant Delay |
Exhibit B |
Tenant Facility Coordinator |
20 |
Tenant HVAC System |
19 |
Tenant Improvement Allowance Payments |
Exhibit B |
Tenant Improvements, |
25 |
Tenant Parties |
24 |
Tenant Party |
24 |
Tenant Work Letter |
4 |
Tenant's First Offer Exercise Notice |
5 |
Tenant's HazMat Agents |
Exhibit G |
Tenant's Initial Statement |
9 |
Tenant's Occupants |
31 |
Tenant's Option Rent Calculation |
8 |
Tenant's Rebuttal Statement |
9 |
Tenant's Security Personnel |
20 |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
(iv) |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
|
Page(s) |
21 |
|
Tenant's Share |
10 |
Tenant's Signage |
40 |
Termination Effective Date |
Exhibit B |
Third Party Lease |
5 |
Third Party Operator |
17 |
TI Item |
Exhibit B |
TI Manual |
22 |
Transfer |
28 |
Transfer Costs |
30 |
Transfer Notice |
28 |
Transfer Premium |
29 |
Transferee |
28 |
Transfers |
28 |
Underlying Documents |
19 |
Unusable Area |
35 |
788287.02/WLA 375755-00007/7-26-18/mjh/ejw |
(v ) |
COLEMAN HIGHLINE 1173, 1167 & 1161 Coleman Avenue Roku, Inc. |
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Anthony Wood, certify that:
2) |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3) |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4) |
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b) |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
c) |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5) |
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: August 10, 2018 |
|
By: |
/s/ Anthony Wood |
|
|
|
Anthony Wood |
|
|
|
President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Steve Louden, certify that:
2) |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3) |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4) |
The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
|
b) |
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
|
c) |
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5) |
The registrant's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: August 10, 2018 |
|
By: |
/s/ Steve Louden |
|
|
|
Steve Louden |
|
|
|
Chief Financial Officer |
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Anthony Wood, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
The Quarterly Report on Form 10-Q of Roku, Inc. for the quarter ended June 30, 2018, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
The information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects, the financial condition and results of operations of Roku, Inc.
Date: August 10, 2018 |
|
By: |
/s/ Anthony Wood |
|
|
|
Anthony Wood |
|
|
|
President and Chief Executive Officer |
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Steve Louden, do hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
The Quarterly Report on Form 10-Q of Roku, Inc. for the quarter ended June 30, 2018, as filed with the Securities and Exchange Commission (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
The information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects, the financial condition and results of operations of Roku, Inc.
Date: August 10, 2018 |
|
By: |
/s/ Steve Louden |
|
|
|
Steve Louden |
|
|
|
Chief Financial Officer |