Bill.com Holdings, Inc. (Form: 10-Q, Received: 02/11/2020 16:42:29)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 December 31, 2019

☐	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: 001-39149

BILL.COM HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware		83-2661725

(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

1810 Embarcadero Road, Palo Alto, CA		94303

(Address of principal executive offices)		(Zip Code)

(650) 621-7700

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.00001 par value		BILL		The New York Stock Exchange

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 every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☐

Emerging growth company	☒

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 January 31, 2020, the registrant had 72,333,573 shares of common stock, $0.00001 par value per share, outstanding.

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BILL.COM HOLDINGS, INC.

TABLE OF CONTENTS

		Page
Special Note Regarding Forward-Looking Statements		1

Part 1. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of December 31, 2019 and June 30, 2019	3
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2019 and 2018	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended December 31, 2019 and 2018	5
	Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) for the Three and Six Months Ended December 31, 2019 and 2018	6
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2019 and 2018	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4.	Controls and Procedures	39

Part II. OTHER INFORMATION
Item 1.	Legal Proceedings	41
Item 1A.	Risk Factors	41
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3.	Defaults Upon Senior Securities	68
Item 4.	Mine Safety Disclosures	68
Item 5.	Other Information	68
Item 6.	Exhibits	69
	Signatures	70

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future operating results and financial position, our business strategy and plans, market growth, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “target,” “plan,” “expect,” and similar expressions are intended to identify forward-looking statements.

Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

•

our future financial performance, including our expectations regarding our revenue, cost of revenue, gross profit, operating expenses, including changes in research and development, sales and marketing and general and administrative expenses (including any components of the foregoing) and our ability to achieve, and maintain, future profitability;

•

our business plan and our ability to effectively manage our growth;

•

our market opportunity, including our total addressable market;

•

our international expansion plans and ability to expand internationally;

•

anticipated trends, growth rates, and challenges in our business and in the markets in which we operate;

•

beliefs and objectives for future operations;

•

our ability to further attract, retain, and expand our customer base;

•

our ability to develop new products and services and bring them to market in a timely manner;

•

the effects of seasonal trends on our results of operations;

•

our expectations concerning relationships with third parties, including strategic partners;

•

our ability to maintain, protect, and enhance our intellectual property;

•

the effects of increased competition in our markets and our ability to compete effectively;

•

future acquisitions or investments in complementary companies, products, services, or technologies;

•

our ability to stay in compliance with laws and regulations that currently apply or become applicable to our business;

•

economic and industry trends, projected growth, or trend analysis;

•

our ability to attract and retain qualified employees;

•

the increased expenses associated with being a public company; and

•

the future market prices of our common stock.

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.

These forward-looking statements are subject to a number of risks, uncertainties, and assumptions, including those described in the section titled “Risk Factors” in Part II, Item 1A of this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to time. It is not possible for our management to predict all risks, 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 materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties, and assumptions, the future events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.

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You should not rely upon forward-looking statements as predictions of future events. The events and circumstances reflected in the forward-looking statements may not be achieved or occur. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, performance, or achievements. We undertake no obligation to update any of these forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q or to conform these statements to actual results or to changes in our expectations, except as required by law.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this Quarterly Report on Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information.

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 with the SEC as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, performance, and events and circumstances may be materially different from what we expect.

In this Quarterly Report on Form 10-Q, the words "we," "us," "our" and "Bill.com" refer to Bill.com Holdings, Inc. and its wholly owned subsidiaries, unless the context requires otherwise.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BILL.COM HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except per share amounts)

	December 31,			June 30,
	2019			2019
ASSETS
Current assets:
Cash and cash equivalents	$	314,894		$	90,306
Short-term investments		68,135			71,969
Accounts receivable, net		4,791			4,398
Unbilled revenue		5,909			4,795
Prepaid expenses and other current assets		15,768			12,326
Funds held for customers		1,491,763			1,329,306
Total current assets		1,901,260			1,513,100
Property and equipment, net		7,511			6,557
Other assets		6,353			6,641
Total assets	$	1,915,124		$	1,526,298

LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable	$	6,018		$	5,063
Accrued compensation and benefits		6,379			4,333
Other accrued and current liabilities		9,872			6,556
Redeemable convertible preferred stock warrant liabilities	—				688
Deferred revenue		4,274			3,469
Customer fund deposits		1,491,763			1,329,306
Total current liabilities		1,518,306			1,349,415
Deferred revenue, non-current		2,091			1,786
Other long-term liabilities		1,375			1,447
Total liabilities		1,521,772			1,352,648
Commitments and contingencies (Note 11)
Redeemable convertible preferred stock: none authorized, issued and outstanding at December 31, 2019; 106,090 shares authorized, and 52,435 shares issued and outstanding at June 30, 2019	—				276,307
Stockholders' equity (deficit):
Preferred stock: $0.00001 par value per share; 10,000 shares authorized; none issued and outstanding	—			—
Common stock; $0.00001 par value per share; 500,000 and 169,300 shares authorized; 72,267 and 8,154 shares issued and outstanding at December 31, 2019 and June 30, 2019, respectively		2			1
Additional paid-in capital		524,260			14,672
Accumulated other comprehensive income		20			326
Accumulated deficit		(130,930	)		(117,656	)
Total stockholders' equity (deficit)		393,352			(102,657	)
Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit)	$	1,915,124		$	1,526,298

See accompanying notes to condensed consolidated financial statements.

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BILL.COM HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share amounts)

	Three months ended December 31,						Six months ended December 31,
	2019			2018			2019			2018
Revenue
Subscription and transaction fees	$	32,964		$	20,444		$	61,512		$	38,614
Interest on funds held for customers		6,116			5,555			12,748			9,809
Total revenue		39,080			25,999			74,260			48,423
Cost of revenue		9,787			7,175			18,934			13,516
Gross profit		29,293			18,824			55,326			34,907
Operating expenses
Research and development		12,992			6,154			24,507			11,578
Sales and marketing		11,491			6,856			21,758			12,800
General and administrative		12,748			6,404			23,283			12,341
Total operating expenses		37,231			19,414			69,548			36,719
Loss from operations		(7,938	)		(590	)		(14,222	)		(1,812	)
Other income, net		360			686			999			1,003
(Loss) income before (benefit from) provision for income taxes		(7,578	)		96			(13,223	)		(809	)
(Benefit from) provision for income taxes		—			(6	)		51			(27	)
Net (loss) income	$	(7,578	)	$	102		$	(13,274	)	$	(782	)

Net (loss) income per share attributable to common stockholders:
Basic and diluted	$	(0.34	)	$	—		$	(0.87	)	$	(0.10	)
Weighted-average number of common shares used to compute net income (loss) per share attributable to common stockholders:
Basic and diluted		22,306			7,739			15,268			7,581

See accompanying notes to condensed consolidated financial statements.

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BILL.COM HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(Unaudited, in thousands)

	Three months ended December 31,						Six months ended December 31,
	2019			2018			2019			2018
Net (loss) income	$	(7,578	)	$	102		$	(13,274	)	$	(782	)
Other comprehensive (loss) income:
Net unrealized (loss) gain on investments in available- for-sale securities, before tax		(108	)		28			(306	)		170
Income tax	—				(7	)	—				(44	)
Comprehensive (loss) income	$	(7,686	)	$	123		$	(13,580	)	$	(656	)

See accompanying notes to condensed consolidated financial statements.

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BILL.COM HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(Unaudited, in thousands)

	Three months ended December 31, 2019
	Redeemable												Accumulated
	convertible										Additional		other						Total
	preferred stock						Common stock				paid-in		comprehensive			Accumulated			stockholders'
	Shares			Amount			Shares		Amount		capital		income			deficit			equity (deficit)
Balance at September 30, 2019		52,435		$	276,307			8,296	$	1	$	17,242	$	128		$	(123,352	)	$	(105,981	)
Conversion of redeemable convertible preferred stock to common stock upon initial public offering		(52,435	)		(276,307	)		52,435		1		276,306		—			—			276,307
Reclassification of redeemable convertible preferred stock warrant liabilities to additional paid-in capital upon initial public offering		—			—			—		—		1,405		—			—			1,405
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costs		—			—			11,297		—		225,481		—			—			225,481
Exercise of stock options		—			—			174		—		607		—			—			607
Exercise of stock warrants		—			—			65		—		144		—			—			144
Employee stock-based compensation		—			—			—		—		3,075		—			—			3,075
Other comprehensive loss, net of tax		—			—			—		—		—		(108	)		—			(108	)
Net loss		—			—			—		—		—		—			(7,578	)		(7,578	)
Balance at December 31, 2019		—		$	—			72,267	$	2	$	524,260	$	20		$	(130,930	)	$	393,352


	Six months ended December 31, 2019
	Redeemable												Accumulated
	convertible										Additional		other						Total
	preferred stock						Common stock				paid-in		comprehensive			Accumulated			stockholders'
	Shares			Amount			Shares		Amount		capital		income			deficit			equity (deficit)
Balance at June 30, 2019		52,435		$	276,307			8,154	$	1	$	14,672	$	326		$	(117,656	)	$	(102,657	)
Conversion of redeemable convertible preferred stock to common stock upon initial public offering		(52,435	)	$	(276,307	)		52,435		1		276,306	$	—			—			276,307
Reclassification of redeemable convertible preferred stock warrant liabilities to additional paid-in capital upon initial public offering		—			—			—		—		1,405		—			—			1,405
Issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costs		—			—			11,297		—		225,481		—			—			225,481
Exercise of stock options		—			—			316		—		901		—			—			901
Exercise of stock warrants		—			—			65		—		144		—			—			144
Employee stock-based compensation		—			—			—		—		5,351		—			—			5,351
Other comprehensive loss, net of tax		—			—			—		—		—		(306	)		—			(306	)
Net loss		—			—			—		—		—		—			(13,274	)		(13,274	)
Balance at December 31, 2019		—		$	—			72,267	$	2	$	524,260	$	20		$	(130,930	)	$	393,352

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	Three months ended December 31, 2018
	Redeemable										Accumulated
	convertible								Additional		other						Total
	preferred stock				Common stock				paid-in		comprehensive			Accumulated			stockholders'
	Shares		Amount		Shares		Amount		capital		loss			deficit			deficit
Balance at September 30, 2018		47,131	$	191,147		7,645	$	1	$	9,731	$	(72	)	$	(111,226	)	$	(101,566	)
Issuance of Series H redeemable convertible preferred stock, net of issuance costs		4,214		67,101		—		—		—		—			—			—
Exercise of stock options		—		—		234		—		491		—			—			491
Employee stock-based compensation		—		—		—		—		594		—			—			594
Other comprehensive income, net of tax		—		—		—		—		—		21			—			21
Net income		—		—		—		—		—		—			102			102
Balance at December 31, 2018		51,345	$	258,248		7,879	$	1	$	10,816	$	(51	)	$	(111,124	)	$	(100,358	)


	Six months ended December 31, 2018
	Redeemable										Accumulated
	convertible								Additional		other						Total
	preferred stock				Common stock				paid-in		comprehensive			Accumulated			stockholders'
	Shares		Amount		Shares		Amount		capital		loss			deficit			deficit
Balance at June 30, 2018		47,131	$	191,147		7,345	$	1	$	8,614	$	(177	)	$	(110,342	)	$	(101,904	)
Issuance of Series H redeemable convertible preferred stock, net of issuance costs		4,214		67,101		—		—		—		—			—			—
Exercise of stock options		—		—		534		—		949		—			—			949
Employee stock-based compensation		—		—		—		—		1,201		—			—			1,201
Issuance of stock warrants		—		—		—		—		52		—			—			52
Other comprehensive income, net of tax		—		—		—		—		—		126			—			126
Net loss		—		—		—		—		—		—			(782	)		(782	)
Balance at December 31, 2018		51,345	$	258,248		7,879	$	1	$	10,816	$	(51	)	$	(111,124	)	$	(100,358	)

See accompanying notes to condensed consolidated financial statements.

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BILL.COM HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

	Six months ended December 31,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(13,274	)	$	(782	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		2,105			1,573
Stock-based compensation		5,351			1,201
Accretion of discount on investment in marketable debt securities		(2,346	)		(461	)
Revaluation of warrant liabilities and forfeiture of warrants		717			(305	)
Issuance of warrants		—			52
Deferred income taxes		—			(44	)
Changes in assets and liabilities:
Accounts receivable		(393	)		(2,372	)
Unbilled revenue		(1,114	)		(883	)
Prepaid expenses and other current assets		(1,608	)		(2,996	)
Other assets		(581	)		(601	)
Accounts payable		1,146			2,259
Accrued and other current liabilities		4,551			855
Other long-term liabilities		187			(109	)
Deferred revenue		1,110			434
Net cash used in operating activities		(4,149	)		(2,179	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of corporate and customer fund short-term investments		(414,648	)		(415,326	)
Proceeds from maturities of corporate and customer fund short-term investments		407,236			382,984
Proceeds from sale of corporate and customer fund short-term investments		22,725			29,162
Increase in restricted cash and cash equivalents and other receivables included in funds held for customers		(173,730	)		(298,650	)
Purchases of property and equipment		(2,972	)		(1,571	)
Capitalization of internal-use software costs		(340	)		(833	)
Decrease in restricted cash		550			—
Net cash used in investing activities		(161,179	)		(304,234	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock upon initial public offering, net of underwriting discounts and commissions and other offering costs		226,565			—
Proceeds from issuance of redeemable convertible preferred stock, net of issuance costs		—			69,801
Increase in customer fund deposits liability		162,457			297,813
Payments on bank borrowings		—			(417	)
Proceeds from exercise of stock options		901			949
Proceeds from exercise of stock warrants		144			—
Payments of deferred debt issuance costs		(151	)		—
Net cash provided by financing activities		389,916			368,146
NET INCREASE IN CASH AND CASH EQUIVALENTS		224,588			61,733
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		90,306			22,401
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	314,894		$	84,134
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	$	146		$	294
NONCASH FINANCING ACTIVITIES:
Conversion of redeemable convertible preferred stock into common stock upon initial public offering	$	276,307		$	—
Reclassification of redeemable convertible preferred stock warrant liabilities into additional paid-in capital upon initial public offering	$	1,405		$	—
Accrued offering costs	$	1,084		$	—
Accrued preferred stock issuance costs	$	—		$	2,700

See accompanying notes to condensed consolidated financial statements.

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BILL.COM HOLDINGS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 – THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES

Bill.com, Inc. (the Company), a Delaware company incorporated on April 7, 2006, is a provider of software-as-a-service, cloud-based payments products, which allow users to automate accounts payable and accounts receivable transactions and enable users to easily connect with their suppliers and/or customers to do business, manage cash flows and improve back office efficiency.

In November 2018, the Company consummated a reorganization by interposing a holding company between Bill.com, Inc. and its stockholders. To accomplish the reorganization, the Company formed BDC Payments Holdings, Inc. (BDC), which was incorporated in Delaware on August 2, 2018, and Bill.com, LLC (Merger Sub) as a wholly owned subsidiary of BDC. The Company merged Bill.com, Inc. and Merger Sub, with Bill.com, Inc. as the surviving entity, by issuing identical shares of stock of BDC to the stockholders of Bill.com, Inc. in exchange for their equity interest in Bill.com, Inc. After the merger, all of the stockholders of Bill.com, Inc. became 100% stockholders of BDC, and Bill.com, Inc. became a wholly owned subsidiary of BDC. Concurrent with the merger, Bill.com, Inc. (a C-corporation entity) was converted into a limited liability company and renamed into Bill.com, LLC, with BDC as the sole member.

The merger was considered a transaction between entities under common control. Accordingly, BDC recognized the assets and liabilities of Bill.com, Inc. at their carrying values and the accompanying condensed consolidated financial statements present comparative information for prior periods on a consolidated basis, as if both BDC and Bill.com, LLC (formerly Bill.com, Inc.) were under common control for all periods presented. On June 27, 2019, BDC changed its name to Bill.com Holdings, Inc.

Bill.com Holdings, Inc. and Bill.com, LLC are collectively referred to as the “Company” in the accompanying condensed consolidated financial statements after the reorganization.

On December 16, 2019, the Company closed its initial public offering (IPO), in which it issued 11,297,058 shares of common stock at a public offering price of $22.00 per share, which included 1,473,529 shares of common stock issued pursuant to the exercise in full of the over-allotment option by the underwriters. The Company received $225.5 million in net proceeds from the IPO, after deducting underwriting discounts and commissions of $17.4 million and other offering costs of $5.6 million. Upon the completion of the IPO, all shares of the Company’s outstanding redeemable convertible preferred stock were converted into 52,434,505 shares of common stock. Additionally, the Company’s redeemable convertible preferred stock warrants were converted into common stock warrants and the associated redeemable convertible preferred stock warrant liabilities were re-measured to its fair value of $1.4 million and reclassified to additional paid-in capital.

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and have been prepared in accordance with U.S. generally accepted accounting principles (U.S. GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) regarding interim financial reporting. The unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all normal and recurring adjustments that are, in the opinion of management, necessary to present fairly the Company’s financial position, results of operations, comprehensive loss, changes in redeemable convertible preferred stock and stockholders’ equity (deficit), and cash flows for the periods presented. The results of operations for the three and six months ended December 31, 2019 are not necessarily indicative of the results to be expected for the year ending June 30, 2020 or for any other future annual or interim period. The unaudited condensed consolidated balance sheet as of June 30, 2019 included herein was derived from the audited financial statements as of that date, but does not include all disclosures including certain notes required by U.S. GAAP on an annual reporting basis. All significant intercompany accounts and transactions have been eliminated.

These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s final prospectus filed with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, on December 12, 2019 (Prospectus).

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Emerging Growth Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it is (i) no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

The JOBS Act does not preclude an emerging growth company from early adopting new or revised accounting standards. The Company expects to use the extended transition period for any new or revised accounting standards during the period which the Company remains an emerging growth company.

Stock Split

On November 27, 2019, the Company filed an amendment to its amended and restated certificate of incorporation to effect a reverse split of shares of the Company’s issued and outstanding redeemable convertible preferred stock, common stock and non-voting common stock on a 2-for-1 basis. The par value and authorized shares of the redeemable convertible preferred stock, common stock and non-voting common stock were not adjusted as a result of the reverse stock split. All references to the redeemable convertible preferred stock, common stock, non-voting common stock, options to purchase common stock, early exercised stock options, warrants to purchase redeemable convertible preferred stock, warrants to purchase common stock, per share amounts and related information contained in the condensed consolidated financial statements have been retroactively adjusted to reflect the effect of the reverse stock split for all periods presented.

Segment Reporting

The Company operates as one operating segment because its chief operating decision maker, who is the Chief Executive Officer, reviews its financial information on a consolidated basis for purposes of making decisions regarding allocating resources and assessing performance. All long-lived assets are located in the United States and all revenue is generated in the United States.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make various estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and the accompanying notes. Management regularly assesses these estimates, including those related to fair value of common stock prior to the Company’s IPO and stock-based compensation, fair value of redeemable convertible preferred stock warrant liabilities up until the date of the Company’s IPO, useful lives of property and equipment, the attribution method used to recognize revenue on annual contracts, reserve for sales tax obligations, reserve for losses on funds held for customers, and income taxes. The Company evaluates these estimates and assumptions and adjusts those estimates and assumptions accordingly. Actual results could differ from those estimates, and such differences may be material to the condensed consolidated financial statements.

Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, short-term investments, and accounts receivable. The Company maintains its cash and cash equivalents and short-term investments with major financial institutions that may at times exceed federally insured limits. Management believes that these financial institutions are financially sound and the Company has not experienced any losses. There were no customers that exceeded 10% of the Company’s total revenue during the three and six months ended December 31, 2019 and 2018.

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Significant Accounting Policies

The Company’s significant accounting policies are discussed in “Index to Consolidated Financial Statements–Note 1. The Company and its Significant Accounting Policies” in the Notes to Consolidated Financial Statements contained in the Prospectus. There have been no significant changes to these policies as described in the Prospectus.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2019, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 as well as improves consistent application of and simplifies U.S. GAAP for other areas of Topic 740. ASU 2019-12 is effective for nonpublic business entities in fiscal years beginning after December 15, 2021, and interim periods within annual periods beginning after December 15, 2022. Early adoption is permitted. The Company is still evaluating the impact of this amendment on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which requires implementation costs incurred in a hosting arrangement that is a service contract to be capitalized and amortized over the term of the hosting arrangement. ASU 2018-15 is effective for nonpublic business entities in fiscal years beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. Early adoption is permitted. The Company is still evaluating the impact of this amendment on its consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-15 removes, modifies and adds certain disclosure requirements under Topic 820, such as the removal of disclosure of valuation process for Level 3 fair value measurements and removal of disclosure of changes in unrealized gains and losses for recurring Level 3 fair value measurements. ASU 2018-13 is effective for all entities in fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company is still evaluating the impact of this amendment on its consolidated financial statements.

In June 2018, the FASB Issued ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which expands the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. ASU 2018-07 is effective for nonpublic business entities in fiscal years beginning after December 15, 2019, and interim periods within annual periods beginning after December 15, 2020. Early adoption is permitted. The Company is still evaluating the impact of this amendment on its consolidated financial statements.

In November 2016, the FASB issued Accounting ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash, which provides guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows. Accordingly, restricted cash or restricted cash equivalents should be included with cash and cash equivalents when reconciling the total amounts shown on the statement of cash flows at the beginning and at the end of period. ASU 2016-18 is effective for nonpublic business entities in fiscal years beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted. The Company plans to retrospectively adopt this ASU in its annual consolidated financial statements for the year ending June 30, 2020. The adoption of this ASU will change the presentation and classification of corporate restricted cash and restricted cash and cash equivalents included in funds held for customers on its consolidated statements of cash flows.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, which addresses the classification of certain specific cash flow issues including debt prepayment or extinguishment costs, settlement of certain debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of certain insurance claims, distributions received from equity method investees, beneficial interests in securitization transactions and the application of the predominance principle on separately identifiable cash flows. ASU 2016-15 is effective for nonpublic business entities in fiscal years beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted. The Company plans to retrospectively adopt this ASU in its annual consolidated financial statements for the year ending June 30, 2020. The Company has not yet determined the impact the adoption of this ASU will have on its consolidated statements of cash flows.

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In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize leases on-balance sheet and disclose key information about leasing arrangements. Topic 842 was subsequently amended by ASU 2018-10, Codification Improvements to Topic 842, Leases, ASU 2018-11, Leases (Topic 842): Targeted Improvements, and ASU No. 2019-10, Financial Instruments—Credit Losses (Topic 326), Derivatives and Hedging (Topic 815) and Leases (Topic 842) Effective Dates. The new standard establishes a right-of-use model that requires a lessee to recognize a right-of-use (ROU) asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. ASU 2016-02 is effective for nonpublic business entities in fiscal years beginning after December 15, 2020, and interim periods within annual periods beginning after December 15, 2021. Early adoption is permitted. The Company is still evaluating the impact of this amendment on its consolidated financial statements.

NOTE 2 – Revenue, Performance Obligations, Deferred Revenue and Deferred Costs

The Company generates revenue from two primary sources: (1) subscription and transaction fees and (2) interest on funds held for customers. The Company’s customers include small and midsize businesses (SMB), accounting firms and financial institutions. The Company’s subscription and transaction fees are disaggregated by customer category and consisted of the following (in thousands):

	Three months ended December 31,				Six months ended December 31,
	2019		2018		2019		2018
Small-to-midsize business and accounting firm customers	$	30,263	$	18,092	$	56,433	$	34,422
Financial institution customers		2,701		2,352		5,079		4,192
Total subscription and transaction fees	$	32,964	$	20,444	$	61,512	$	38,614

Remaining performance obligations with financial Institutions

As of December 31, 2019, the aggregate amount of transaction price allocated to performance obligations that are unsatisfied (or partially unsatisfied) was $46.2 million. Of this amount, the Company expects to recognize $8.1 million within one year and $38.1 million thereafter.

Deferred revenue

Subscription and transaction fees from customers with which the Company has annual or multi-year contracts are generally billed in advance. These fees are initially recorded as deferred revenue and subsequently recognized as revenue as the performance obligation is satisfied. Deferred revenue is shown as current or non-current in the condensed consolidated balance sheets. The current portion of the deferred revenue was $4.3 million and $3.5 million as of December 31, 2019 and June 30, 2019, respectively. The non-current portion of the deferred revenue was $2.1 million and $1.8 million as of December 31, 2019 and June 30, 2019, respectively. During the three and six months ended December 31, 2019, the Company recognized $1.3 million and $2.6 million, respectively, of revenue that was included in the deferred revenue balance as of June 30, 2019. During the three and six months ended December 31, 2018, the Company recognized $0.8 million and $2.2 million, respectively, of revenue that was included in the deferred revenue balance as of June 30, 2018.

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Deferred costs

Deferred costs consist of (i) deferred sales commissions that are incremental costs of obtaining customer contracts and (ii) deferred service costs, primarily direct payroll costs, for implementation services provided to customers prior to the launching of the Company’s products for general availability (go-live) to customers. Sales commissions paid on renewals are not material and not commensurate with sales commissions paid on the initial contract. Deferred sales commissions are amortized ratably over four to six years, taking into consideration the initial contract term and expected renewal periods. Deferred service costs are amortized ratably over the estimated benefit period of the capitalized costs starting on the go-live date of the service. Deferred costs consisted of the following as of the dates presented (in thousands):

	December 31,		June 30,
	2019		2019
Deferred sales commissions:
Current	$	2,151	$	1,674
Non-current		3,877		3,069
Total deferred sales commissions	$	6,028	$	4,743
Deferred service costs:
Current	$	683	$	755
Non-current		1,920		2,173
Total deferred service costs	$	2,603	$	2,928

The current portion of deferred costs is included in prepaid expenses and other assets and the non-current portion is included in other assets in the accompanying condensed consolidated balance sheets.

NOTE 3 – FAIR VALUE MEASUREMENT

The Company measures and reports its cash equivalents, short-term investments, funds held for customers that are invested in money market funds and marketable debt securities, and redeemable convertible preferred stock warrant liabilities at fair value. Fair value is defined as the exchange price that would be received for an asset or an exit price paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs.

The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as follows:

Level 1 —	Inputs are unadjusted quoted prices in active markets for identical assets or liabilities.
Level 2 —	Inputs other than quoted prices included within Level 1 that are observable, unadjusted quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.
Level 3 —	Unobservable inputs that are supported by little or no market activity for the related assets or liabilities and typically reflect management’s estimate of assumptions that market participants would use in pricing the assets or liabilities.

In determining fair value, the Company utilizes quoted market prices, or valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible, and also considers counterparty credit risk in its assessment of fair value.

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The following tables set forth the fair value of assets and liabilities that were measured at fair value on a recurring basis based on the three-tier fair value hierarchy as of the dates presented (in thousands):

	December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Money market funds	$	136,873	$	—	$	—	$	136,873
Corporate bonds		—		—		—		—
		136,873		—		—		136,873
Short-term investments:
U.S. treasury securities		42,686		—		—		42,686
Corporate bonds		—		17,382		—		17,382
Asset-backed securities		—		8,067		—		8,067
		42,686		25,449		—		68,135
Funds held for customers:
Restricted cash equivalents		405,186		72,428		—		477,614
Corporate bonds		—		303,773		—		303,773
Certificates of deposit		—		106,011		—		106,011
U.S. treasury securities		19,191		—		—		19,191
		424,377		482,212		—		906,589
Total assets measured at fair value	$	603,936	$	507,661	$	—	$	1,111,597

	June 30, 2019
	Level 1		Level 2		Level 3		Total
Assets
Cash equivalents:
Money market funds	$	13,718	$	—	$	—	$	13,718
Short-term investments:
U.S. treasury securities		64,758		—		—		64,758
Corporate bonds		—		4,787		—		4,787
Asset-backed securities		—		2,424		—		2,424
		64,758		7,211		—		71,969
Funds held for customers:
Restricted cash equivalents		424,219		—		—		424,219
Corporate bonds		—		302,070		—		302,070
Certificates of deposit		—		105,377		—		105,377
U.S. treasury securities		30,960		—		—		30,960
		455,179		407,447		—		862,626
Total assets measured at fair value	$	533,655	$	414,658	$	—	$	948,313
Liabilities
Redeemable convertible preferred stock warrant liabilities	$	—	$	—	$	688	$	688
Total liabilities measured at fair value	$	—	$	—	$	688	$	688

There were no transfers of financial instruments between Level 1, Level 2, and Level 3 during the periods presented.

The fair values of the Company’s Level 1 instruments were derived from quoted market prices and active markets for these specific instruments.

The valuation techniques used to measure the fair values of Level 2 instruments were derived from non-binding market consensus prices that were corroborated with observable market data, quoted market prices for similar instruments, or pricing models.

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The fair value measurement of the redeemable convertible preferred stock warrant liabilities as of June 30, 2019 was based on significant inputs not observed in the market and thus represents a Level 3 measurement. The Company estimated the fair value of the liability using the Black-Scholes option-pricing model and any change in fair value is recognized as either gain or loss and included in other income, net in the accompanying condensed consolidated statements of operations.

Immediately upon the completion of the Company’s IPO, all warrants to purchase shares of redeemable convertible preferred stock were converted into warrants to purchase shares of common stock. As a result, the fair value of the redeemable convertible preferred stock warrant liabilities was reclassified to additional paid-in capital.

The table below sets forth a summary of the changes in the fair value of Level 3 financial liabilities as of and for the periods presented (in thousands):

	Three months ended December 31,						Six months ended December 31,
	2019			2018			2019			2018
Fair value, beginning of period	$	853		$	652		$	688		$	663
Change in fair value		552			—			717			(11	)
Reclassification to additional paid-in capital		(1,405	)		—			(1,405	)		—
Forfeiture of warrants		—			(294	)		—			(294	)
Fair value, end of period	$	—		$	358		$	—		$	358

The key inputs used in the Black-Scholes option-pricing model to measure the fair value of Level 3 financial liabilities as of June 30, 2019 were as follows:

Expected term (in years)	0.57
Expected volatility		51.0	%
Risk-free interest rate		2.0	%
Expected dividend yield		0	%

NOTE 4 – SHORT-TERM INVESTMENTS

Short-term investments consisted of the following as of the dates presented (in thousands):

	December 31, 2019
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
U.S. treasury securities	$	42,648	$	38	$	—		$	42,686
Corporate bonds		17,378		7		(3	)		17,382
Asset-backed securities		8,069		1		(3	)		8,067
	$	68,095	$	46	$	(6	)	$	68,135

	June 30, 2019
	Amortized cost		Gross unrealized gains		Fair value
U.S. treasury securities	$	64,683	$	75	$	64,758
Corporate bonds		4,787		—		4,787
Asset-backed securities		2,424		—		2,424
	$	71,894	$	75	$	71,969

The amortized cost and fair value amounts include accrued interest receivable of $0.3 million and $0.2 million as of December 31, 2019 and June 30, 2019, respectively.

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The following table presents gross unrealized losses and fair values for those investments that were in an unrealized loss position as of December 31, 2019 (in thousands):

	December 31, 2019
	Fair value		Unrealized Losses
Corporate bonds	$	4,498	$	(3	)
Asset-backed securities		3,951		(3	)
Total	$	8,449	$	(6	)

Investments with unrealized losses have been in a continuous unrealized loss position for less than 12 months. The Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity. Therefore, the Company does not consider those unrealized investment losses as other-than-temporary impairment of the investments. There have been no significant realized gains or losses on the short-term investments during the three or six months ended December 31, 2019 and 2018.

NOTE 5 – FUNDS HELD FOR CUSTOMERS

Funds held for customers consisted of the following as of the dates presented (in thousands):

	December 31,			June 30,
	2019			2019
Restricted cash and other receivables	$	588,979		$	470,971
Restricted cash equivalents		477,614			424,219
Corporate bonds		303,773			302,070
Certificates of deposit		106,011			105,377
U.S. treasury securities		19,191			30,960
Total funds held for customers		1,495,568			1,333,597
Less - income earned by the Company included in other current assets		(3,805	)		(4,291	)
Total funds held for customers, net of income earned by the Company	$	1,491,763		$	1,329,306

Income earned by the Company that is included in other current assets represents interest income, accretion of discount (offset by amortization of premium), and net unrealized gains on customer funds that were invested in money market funds and short-term marketable debt securities. Earnings from these investments are contractually earned by the Company and are expected to be transferred into the Company’s corporate deposit account upon sale or settlement of the associated investment.

Below is a summary of the fair value of funds held for customers that were invested in short-term marketable debt securities as of the dates presented (in thousands):

	December 31, 2019
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
Corporate bonds	$	303,652	$	148	$	(27	)	$	303,773
Certificates of deposit		105,977		36		(2	)		106,011
U.S. treasury securities		19,185		7		(1	)		19,191
Total	$	428,814	$	191	$	(30	)	$	428,975

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	June 30, 2019
	Amortized cost		Gross unrealized gains		Gross unrealized losses			Fair value
Corporate bonds	$	301,755	$	327	$	(12	)	$	302,070
Certificates of deposit		105,297		81		(1	)		105,377
U.S. treasury securities		30,927		33		—			30,960
Total	$	437,979	$	441	$	(13	)	$	438,407

The amortized cost and fair value amounts include accrued interest receivable of $2.3 million and $1.9 million and as of December 31, 2019 and June 30, 2019, respectively.

The following tables present gross unrealized losses and fair values for those investments that were in an unrealized loss position as of the dates presented (in thousands):

	December 31, 2019
	Fair value		Unrealized losses
Corporate bonds	$	94,472	$	(27	)
Certificates of deposit		13,025		(2	)
U.S. treasury securities		15,185		(1	)
Total	$	122,682	$	(30	)

	June 30, 2019
	Fair value		Unrealized losses
Corporate bonds	$	46,065	$	(12	)
Certificates of deposit		12,027		(1	)
Total	$	58,092	$	(13	)

Investments with unrealized losses have been in a continuous unrealized loss position for less than 12 months. The Company does not intend to sell the investments and it is not likely that the Company will be required to sell the investments before recovery of their amortized cost bases, which may be at maturity. Therefore, the Company does not consider those unrealized investment losses as other-than-temporary impairment of the investments. There have been no significant realized gains or losses on funds held for customers that were invested in short-term marketable debt securities during the three or six months ended December 31, 2019 and 2018.

NOTE 6 – SIGNIFICANT BALANCE SHEET COMPONENTS

Property and equipment – Property and equipment consisted of the following as of the dates presented (in thousands):

	December 31,			June 30,
	2019			2019
Computers, software and equipment	$	10,758		$	10,341
Capitalized software		3,727			3,387
Furniture and fixtures		3,097			1,859
Leasehold improvements		3,499			2,435
		21,081			18,022
Less: accumulated depreciation and amortization		(13,570	)		(11,465	)
Property and equipment, net	$	7,511		$	6,557

Depreciation and amortization expense was $1.1 million and $2.1 million during the three and six months ended December 31, 2019, respectively, and $0.8 million and $1.6 million, during the three and six months ended December 31, 2018, respectively.

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Other accrued and current liabilities – Other accrued and current liabilities consisted of the following as of the dates presented (in thousands):

	December 31,		June 30,
	2019		2019
Accrued sales and use tax	$	4,183	$	2,881
Current portion of a long-term payable for a purchase of software		518		512
Deferred rent and lease incentives		338		494
Non-sufficient funds reserve		310		147
Accrued license fees		295		131
Other		4,228		2,391
Total	$	9,872	$	6,556

NOTE 7 – BANK BORROWINGS

On June 28, 2019, the Company entered into a Senior Secured Credit Facilities Credit Agreement (Senior Facilities Agreement) with Silicon Valley Bank for a revolving credit facility of up to $50.0 million (Total Commitment), which amount may be increased by up to $25.0 million upon request and subject to conditions. On August 15, 2019, Silicon Valley Bank assigned $20.0 million of the Total Commitment to JPMorgan Chase Bank. Under the Senior Facilities Agreement, Bill.com, LLC is the borrower and Bill.com Holdings, Inc. is the guarantor. The Senior Facilities Agreement expires on June 28, 2022. Concurrent with the closing of the Senior Facilities Agreement on June 28, 2019, the Amended and Restated Loan and Security Agreement entered into in October 2017 with Silicon Valley Bank was terminated.

Borrowings under the Senior Facilities Agreement are subject to a borrowing base. In addition, borrowings under the Senior Facilities Agreement are subject to interest at a rate per annum determined as follows: (a) Eurodollar loans shall bear interest at a rate per annum equal to the Eurodollar rate, plus the applicable margin of 1.75% or 2.75% depending on the Company’s cash balance (Eurodollar rate is calculated based on the ratio of Eurodollar Base Rate, which is determined by reference to ICE Benchmark Administration London Interbank Offered Rate over the Eurocurrency Reserve Requirements, but not less than 0%), or (b) Alternate Base Rate (ABR) loans shall bear interest at a rate per annum equal to the ABR, minus the applicable margin of 0.25% or 1.25%, depending on the Company’s cash balance (ABR is equal to the highest of the (i) prime rate, (ii) Federal Funds effective rate plus 0.50%, and (iii) Eurodollar rate plus 1.25%).

The Senior Facilities Agreement requires the Company to comply with certain restricted covenants. As of December 31, 2019 and June 30, 2019, the Company was in compliance with the loan covenants. Borrowings under the Senior Facilities are secured by substantially all of the Company’s assets, and are fully and unconditionally guaranteed by Bill.com Holdings, Inc. Available funds under the Company’s Senior Facilities Agreement, which was reduced by letter of credit utilization totaling $6.9 million, was $43.1 million as of December 31, 2019. The Company had no outstanding borrowings under the Senior Facilities Agreement as of December 31, 2019.

NOTE 8 –STOCKHOLDERS’ EQUITY

Equity Incentive Plans – Stock Options

During the three and six months ended December, 31, 2019, the Company granted an aggregate of 1,192,000 shares and 2,738,740 shares of stock options, respectively, with weighted average exercise prices of $17.37 and $15.12 per share, respectively. The fair value of options granted before the closing of the IPO was estimated at the date of grant using the Black-Scholes option-pricing model with the following assumptions: (i) expected term of 6.25 years, (ii) expected volatility of 50%, (iii) risk-free interest rate range of 1.59% to 1.88% and (iv) expected dividend yield of 0%.

As of December 31, 2019, there was $29.8 million of unamortized stock-based compensation cost related to unvested stock options, which the Company expects to recognize over a weighted-average period of 3.25 years.

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2019 Employee Stock Purchase Plan

On November 26, 2019, the Company’s board of directors approved the 2019 Employee Stock Purchase Plan (ESPP), which became effective on December 11, 2019, the date the Company’s Registration Statement on Form S-1 was declared effective by the SEC. The ESPP is intended to qualify under Section 423 of the Internal Revenue Code of 1986 (as amended) and will provide eligible employees a means to acquire shares of common stock through payroll deductions. Under the ESPP, the Company initially reserved for issuance 1,400,000 shares of common stock, which will increase automatically on July 1 of each fiscal year during the term of the ESPP by the number of shares equal to 1% of the total number of shares of common stock and preferred stock (on as-converted basis) outstanding as of the immediately preceding June 30th, unless the board of directors elects to authorize a lesser number of shares; provided, that, the total number of shares issued under the ESPP may not exceed 14,000,000 shares of common stock.

The ESPP provides for consecutive offering periods during which eligible employees can participate in the ESPP and be granted the right to purchase shares. The first business day of each offering period is the offering date. No offering period may last more than 27 months. Each offering period will be comprised of two six-month purchase periods. The initial offering period of the ESPP started on December 11, 2019, which is the effective date of the ESPP, and will end on February 14, 2021, with two purchase periods on August 14, 2020 and February 14, 2021. All eligible employees were automatically enrolled in the ESPP for the initial offering period, unless an employee withdraws from the ESPP on or before January 15, 2020. Thereafter, a new 12-month offering period will commence on each subsequent February 15^th and August 15th (or if such date is not a business day, then on the business day immediately following such date), with each such offering period consisting of two separate 6-month purchase periods ending on August 14^th and February 14^th, respectively. Eligible employees can contribute up to 15% of their eligible compensation, subject to limitation as provided for in the ESPP, and purchase the common stock at a purchase price per share equal to 85% of the lesser of the fair market value of the common stock on (i) the offering date or (ii) the purchase date.

Stock-based compensation expense was included in the following line items in the accompanying condensed consolidated statements of operations during the periods presented (in thousands):

	Three months ended December 31,				Six months ended December 31,
	2019		2018		2019		2018
Cost of revenue	$	211	$	42	$	359	$	112
Research and development		1,084		119		1,755		352
Sales and marketing		494		122		877		288
General and administrative		1,286		311		2,360		449
	$	3,075	$	594	$	5,351	$	1,201

Stock Warrants

The Company has an agreement with a customer to issue warrants for up to 5.6 million shares of the Company’s common stock at an exercise price of $4.50 per share over a period of five years. Issuance of the warrants is contingent upon certain performance conditions and subject to certain limits. As of December 31, 2019, there were no warrants issued or issuable under this agreement. The Company has concluded that the performance conditions for the issuance of this warrant are not probable of being met.

NOTE 9 – OTHER INCOME, NET

Other income, net consisted of the following for the periods presented (in thousands):

	Three months ended December 31,						Six months ended December 31,
	2019			2018			2019			2018
Interest income	$	933		$	568		$	1,891		$	1,050
Interest expense		(21	)		(156	)		(175	)		(308	)
Revaluation of warrant liabilities and forfeiture of warrants		(552	)		294			(717	)		294
Other		—			(20	)		—			(33	)
Total	$	360		$	686		$	999		$	1,003

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NOTE 10 – INCOME TAXES

The Company’s (benefit from) provision for income taxes during the interim periods is determined using an estimate of the Company’s annual effective tax rate, which is adjusted for certain discrete tax items during the interim period. The Company’s effective tax rate differs from the Federal statutory rate primarily due to the change in valuation allowance related mainly to the Company’s net operating loss carryforwards and research and development credits.

The provision for income taxes during the six months ended December 31, 2019 pertains primarily to state income taxes. The benefit from income taxes during the six months ended December 31, 2018 pertains primarily to the income tax benefit that is reported on the condensed consolidated statements of operations and is offset against the income tax on the unrealized gain on investments in available-for-sale securities that is shown on the condensed consolidated statements of comprehensive (loss) income.

NOTE 11 – COMMITMENTS AND CONTINGENCIES

Operating leases

The Company leases office space under non-cancelable operating lease agreements, which include an 11-year lease of the Company’s future principal executive offices that was entered into in December 2019. These operating leases expire through April 2031.

Rent expense is recognized on a straight-line basis over the lease term. Rent expense was $0.9 million and $1.6 million, during the three and six months ended December 31, 2019, respectively, and $0.6 million and $1.0 million during the three and six months ended December 31, 2018, respectively.

Future minimum lease payments under non-cancelable leases as of December 31, 2019 are as follows (in thousands):

Fiscal years ending June 30:	Amount
Remainder of 2020	$	1,491
2021		1,633
2022		6,768
2023		6,973
2024		7,179
Thereafter		50,547
Total	$	74,591

Other agreements

The Company has a ten-year strategic partnership agreement with a third party to market and promote the Company’s online bill payment products that expires in June 2027. The expense recognized under this agreement, which is included in sales and marketing expenses in the accompanying condensed consolidated statements of operations, was $0.5 million and $1.0 million during the three and six months ended December 31, 2019, respectively, and $0.5 million and $1.1 million during the three and six months ended December 31, 2018, respectively.

The Company purchased a software license and maintenance and support services from a vendor that are payable on an installment basis through August 2021 under a non-cancellable service agreement.

Future payments under these agreements are as follows as of December 31, 2019 (in thousands).

Fiscal years ending June 30:	Amount
Remainder of 2020	$	1,500
2021		3,000
2022		2,000
2023		2,000
2024		2,000
Thereafter		5,500
Total	$	16,000

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Litigation

From time to time, the Company is involved in lawsuits, claims, investigations, and proceedings that arise in the ordinary course of business. The Company records a provision for a liability when management believes that it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. As of December 31, 2019, the estimate of the provision for litigation liability is immaterial. The Company reviews these provisions periodically and adjusts these provisions to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Litigation is inherently unpredictable.

NOTE 12 – NET (LOSS) INCOME PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS

The following table presents the calculation of basic and diluted net (loss) income per share attributable to common stockholders (in thousands, except per share amounts):

	Three months ended December 31,						Six months ended December 31,
	2019			2018			2019			2018
Numerator:
Net (loss) income	$	(7,578	)	$	102		$	(13,274	)	$	(782	)
Less: undistributed earnings allocated to participating securities		—			(102	)		—			—
Net (loss) income attributable to common stockholders	$	(7,578	)	$	—		$	(13,274	)	$	(782	)
Denominator:
Weighted-average shares used to compute net (loss) income per share attributable to common stockholders
Basic and diluted		22,306			7,739			15,268			7,581
Net (loss) income per share attributable to common stockholders:
Basic and diluted	$	(0.34	)	$	—		$	(0.87	)	$	(0.10	)

For periods the Company is in a loss position, basic net loss per share attributable to common shareholders is the same as diluted net loss per share attributable to common shareholders. Potentially dilutive securities, which were excluded from the diluted net loss per share calculations because they would have been antidilutive were as follows as of the dates presented (in thousands):

	December 31,
	2019		2018
Stock options		12,126		6,458
Convertible preferred stock as-converted		—		51,344
Warrants to purchase redeemable convertible preferred stock		—		64
Warrants to purchase common stock		62		23
Total		12,188		57,889

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and in our Prospectus filed with the Securities and Exchange Commission (SEC), pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, on December 12, 2019 (Prospectus). Some of the information contained in this Quarterly Report on Form 10-Q includes forward-looking statements that involve risks and uncertainties. You should read the sections titled “Special Note Regarding Forward-Looking Statements” and “Risk Factors” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Our fiscal year end is June 30, and our fiscal quarters end on September 30, December 31, March 31, and June 30.

Overview

We are a leading provider of cloud-based software that simplifies, digitizes, and automates complex back-office financial operations for small and midsize businesses (SMBs). By transforming how SMBs manage their cash inflows and outflows, we create efficiencies and free our customers to run their businesses.

Our purpose-built, artificial-intelligence (AI)-enabled financial software platform creates seamless connections between our customers, their suppliers, and their clients. Customers use our platform to generate and process invoices, streamline approvals, send and receive payments, reconcile their books, and manage their cash. We have built sophisticated integrations with popular accounting software solutions, banks, and payment processors, enabling our customers to access these mission- critical services through a single connection. In essence, we sit at the center of an SMB’s accounts payable and accounts receivable operations.

We efficiently reach SMBs through our proven direct and indirect go-to-market strategies. We acquire customers directly through digital marketing and inside sales, and indirectly through accounting firms and strategic partnerships. As of December 31, 2019, our partners included some of the most trusted brands in the financial services business, including more than 70 of the top 100 accounting firms and several of the largest financial institutions in the United States, including Bank of America, JPMorgan Chase and American Express. As we add customers and partners, we expect our network to continue to grow organically.

We have grown rapidly and scaled our business operations in recent periods. Our total revenue was $39.1 million and $26.0 million during the three months ended December 31, 2019 and 2018, respectively, an increase of 50%, and $74.3 million and $48.4 million during the six months ended December 31, 2019 and 2018, respectively, an increase of 53%. We generated a net loss of $7.6 million and net income of $0.1 million during the three months ended December 31, 2019 and 2018, respectively, and net losses of $13.3 million and $0.8 million during the six months ended December 31, 2019 and 2018, respectively.

On December 16, 2019, we closed an initial public offering (IPO) in which we issued 11,297,058 shares of our common stock at a public offering price of $22.00 per share, which included 1,473,529 shares of common stock issued pursuant to the exercise in full of the over-allotment option by the underwriters. The IPO resulted in net proceeds of $225.5 million, after deducting underwriting discounts and commissions of $17.4 million and other offering costs of $5.6 million. Upon the closing of the IPO, all of our outstanding redeemable convertible preferred stock automatically converted into 52,434,505 shares of common stock on a one-for-one basis.

Our Revenue Model

We generate revenue by charging subscription and transaction fees, and by earning interest on funds held in trust on behalf of customers while their payment transactions are clearing.

Our subscription revenue is primarily based on a fixed monthly or annual rate per user charged to our customers. Our transaction revenue is comprised of transaction fees on a fixed or variable rate per transaction. Transactions include check issuance, ACH origination, cross-border payments, virtual card issuance, and creation of invoices. Much of our revenue comes from repeat transactions; in fact, repeat transactions by our customers are an important contributor to our recurring revenue.

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We also generate revenue from interest earned on funds held in trust on behalf of customers while payment transactions are clearing. When we process payment transactions, the funds flow through our bank accounts and we have a balance of funds held for customers that is a function of the volume and the type of payments processed. Interest is earned from interest-bearing deposit accounts, certificates of deposit, money market funds, commercial paper, and U.S. Treasury securities. We hold these funds from the day they are withdrawn from a payer’s account to the day the funds are credited to the receiver. This revenue can fluctuate depending on the amount of customer funds held, as well as our yield on customer funds invested, which is influenced by market interest rates and our investments. We are authorized to hold customer funds and process payments through our bank accounts because we are a licensed money transmitter in all required U.S. states. This allows us to provide advanced treasury services and protect our customers from potential fraud.

Key Factors Affecting Our Performance

Acquiring New Customers

Sustaining our growth requires continued adoption of our platform by new customers. We will continue to invest in our efficient go-to-market strategy as we further penetrate our addressable markets. Our financial performance will depend in large part on the overall demand for our platform, particularly demand from SMBs. As of December 31, 2019, we had approximately 86,000 customers across a wide variety of industries and geographies in the United States.

Expanding Our Relationship with Existing Customers

Our revenue grows as we address the evolving needs of our customers and as our customers increase usage of our platform. As they realize the benefits of our solution, our customers often increase the number of users on our platform. We also experience growth from customers when we introduce new products and services that are adopted by our customers.

Our ability to monetize our payments-related services is an important part of our business model. Today, we charge fixed and variable transaction fees for payment transactions initiated, and our revenue and payment volume generally grow as customers process more transactions on our platform. Our ability to influence customers to process more transactions on our platform will have a direct impact on our transaction fee revenue. As payment volume grows we experience growth in the level of funds held for customers, and we also earn interest revenue on these funds while payment transactions are clearing. Our interest earned on customer funds is positively correlated with our interest earnings rate and with customer fund balances. Our interest earnings rate is a function of the market interest rate environment and the mix of our investments across interest bearing accounts, government money market funds, and short-term highly liquid securities. The fund balances are a function of the amount of money transmitted by our customers and the mix of payment types, with some payment types averaging more days in transit than others.

Investing in Sales and Marketing

We intend to increase our marketing spend to drive awareness and generate demand to acquire new customers and develop new accounting firm and strategic partner relationships. We continue to expand efforts to market our platform directly to businesses through online digital marketing, referral programs and other programs. Our investment in supporting accounting firms and strategic partners has been significant and will continue. We support these accounting firms and strategic partners through education and training initiatives like hosting webinars, presenting at industry trade shows, and developing sell-sheet case studies.

As a result, we expect our expenses related to marketing and sales to increase as we continue to grow. These efforts will require us to invest significant financial and other resources.

Investing in Our Platform

We will invest in our platform to maintain our position as a leading provider of SMB back-office financial software. To drive adoption and increase penetration within our base, we will continue to introduce new products and features. We believe that investment in research and development will contribute to our long-term growth but may also negatively impact our short-term profitability. We will continue to leverage emerging technologies and invest in the development of more features that meet and anticipate SMB needs.

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Key Business Metrics

We regularly review several metrics, including the metrics presented in the table below, to measure our performance, identify trends affecting our business, prepare financial projections, and make strategic decisions. We believe that these key business metrics provide meaningful supplemental information for management and investors in assessing our historical and future operating performance. The calculation of the key metrics and other measures discussed below may differ from other similarly-titled metrics used by other companies, securities analysts or investors.

								As of December 31,
								2019		2018		% Growth
Number of customers⁽¹⁾									85,900		71,600		20	%

	Three months ended December 31,							Six months ended December 31,
	2019		2018		% Growth			2019		2018		% Growth
Total Payment Volume (amounts in millions)	$	24,832	$	17,637		41	%	$	46,814	$	33,151		41	%

	Three months ended December 31,							Six months ended December 31,
	2019		2018		% Growth			2019		2018		% Growth
Transactions processed		6,257,000		4,867,000		29	%		12,192,000		9,359,000		30	%

⁽¹⁾	Number of customers as of December 31, 2018 includes approximately 4,500 customers from a strategic partner that did not renew its contract during the six months ended December 31, 2018. Excluding these customers, our customer growth would have been approximately 28%.

Number of Customers

For the purposes of measuring our key business metrics, we define customers as entities that are either billed directly by us or for which we bill our strategic partners during a particular period. Customers who are using our platform during a trial period are not counted as new customers during that period. If an organization has multiple entities billed separately for the use of our platform, each entity is counted as a customer. The number of customers in the table above represents the total number of customers at the end of our fiscal quarter.

Total Payment Volume

To grow revenue from customers we must deliver a product experience that helps them automate their back-office financial operations. The more they use the product and rely upon our features to automate their operations, the more transactions they process on our platform. This metric provides an important indication of the value of transactions that customers are completing on the platform and is an indicator of our ability to generate revenue from our customers. We define Total Payment Volume (TPV) as the value of customer transactions that we process on our platform during a particular period. Our calculation of TPV includes payments that are subsequently reversed. Such payments comprised approximately 1% of TPV for during the three and six months ended December 31, 2019 and 2018.

Transactions Processed

We define transactions processed as the number of customer payment transactions, such as checks, ACH items, wire transfers and virtual cards, initiated and processed through our platform during a particular period.

Non-GAAP Financial Measures

To supplement our condensed consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different than similarly-titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

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We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects and allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making. We are presenting these non-GAAP metrics to assist investors in seeing our financial performance using a management view. We believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.

	Three months ended December 31,						Six months ended December 31,
	2019			2018			2019			2018
Non-GAAP gross profit	$	30,486		$	19,709		$	57,655		$	36,557
Non-GAAP gross margin		78	%		76	%		78	%		75	%
Free cash flow	$	(2,920	)	$	(1,073	)	$	(7,461	)	$	(4,583	)

Non-GAAP Gross Profit and Non-GAAP Gross Margin

We define non-GAAP gross profit and non-GAAP gross margin as GAAP gross profit and GAAP gross margin, respectively, excluding stock-based compensation expense, depreciation and amortization expense, and amortization of deferred costs. We believe non-GAAP gross profit and non-GAAP gross margin provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations, as these measures eliminate the effects of certain variables unrelated to our overall operating performance. The following table presents a reconciliation of our non-GAAP gross profit and non-GAAP gross margin to our GAAP gross profit and GAAP gross margin for the periods presented (amounts in thousands):

	Three months ended December 31,						Six months ended December 31,
	2019			2018			2019			2018
Total revenue	$	39,080		$	25,999		$	74,260		$	48,423
Gross profit		29,293			18,824			55,326			34,907
Add:
Stock-based compensation expense		211			42			359			112
Depreciation and amortization expense and amortization of deferred costs		982			843			1,970			1,538
Non-GAAP gross profit	$	30,486		$	19,709		$	57,655		$	36,557
Gross margin		75	%		72	%		75	%		72	%
Non-GAAP gross margin		78	%		76	%		78	%		75	%

Free Cash Flow

Free cash flow is defined as net cash used in operating activities reduced by purchases of property and equipment and capitalization of internal-use software costs. We believe free cash flow is an important liquidity measure of the cash (if any) that is available, after purchases of property and equipment and capitalization of internal-use software costs, for operational expenses and investment in our business. Free cash flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash. Once our business needs and obligations are met, cash can be used to maintain a strong balance sheet and invest in future growth. The following table presents a reconciliation of our free cash flow to net cash used in operating activities for the periods presented (in thousands):

	Three months ended December 31,						Six months ended December 31,
	2019			2018			2019			2018
Net cash (used in) provided by operating activities	$	(1,769	)	$	76		$	(4,149	)	$	(2,179	)
Purchases of property and equipment		(1,026	)		(737	)		(2,972	)		(1,571	)
Capitalization of internal-use software costs		(125	)		(412	)		(340	)		(833	)
Free cash flow	$	(2,920	)	$	(1,073	)	$	(7,461	)	$	(4,583	)

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Components of Results of Operations

Revenue

We generate revenue from two sources: (1) subscription and transaction fees, and (2) interest on funds held for customers.

Subscription fees are fixed monthly or annually and charged to our customers for the use of our platform to process transactions. Subscription fees are generally charged on a per user per period basis, normally monthly or annually. Transaction fees are fees collected for each transaction processed through our platform, on either a fixed or variable fee basis. Transaction fees primarily include processing of payments in the form of checks, ACH, cross-border payments, virtual cards, and the creation of invoices.

Interest on funds held for customers consists of the interest that we earn from customer funds while payment transactions are clearing. We invest these funds in interest-bearing investment securities, primarily money market funds, commercial paper, certificates of deposit, and U.S. Treasury securities, until those payments are cleared and credited to the intended recipient.

Our contracts with SMB and accounting firm customers primarily consist of cancelable contracts that can be terminated by either party without penalty at any time. In July 2019, we updated our terms of service for our monthly subscription contracts, whereby cancellations become effective at the end of the monthly subscription period in which the last transaction is processed. We recognize subscription revenue for cancelable contracts on a daily basis and transaction revenue on the date we process the transactions. Some of our contracts are non-cancelable annual or monthly contracts. We recognize revenue for non-cancelable annual and monthly contracts as a series of distinct services satisfied over time. We determine the transaction price for such contracts by estimating the total consideration to be received over the contract term from subscription and transaction fees. We recognize the transaction price from annual and monthly contracts as a single performance obligation based on the proportion of transactions processed to the total estimated transactions to be processed over the contract period.

We enter into multi-year contracts with financial institution customers that typically include fees for initial implementation services that are paid during the period. Fees for subscription and transaction processing services are subject to guaranteed monthly minimum fees that are paid over the contract term. These contracts enable the financial institutions to provide their clients with access to online bill pay services through the financial institution’s online platform. Implementation services are required up-front to establish an infrastructure that allows the financial institution’s online platform to communicate with our platform. The financial institution’s clients cannot access online bill pay services until implementation is complete and the financial institution has provided acceptance of the implementation services. The fees we earn through these contracts vary based on the number of users and transactions processed. We have determined these contracts meet the variable consideration allocation exception and therefore we recognize guaranteed monthly payments and any overages as revenue in the month they are earned. We recognize implementation fees based on the proportion of transactions processed to the total estimated transactions to be processed over the contract period.

Cost of Revenue and Expenses

Cost of revenue - Cost of revenue consists primarily of personnel-related costs, including stock- based compensation expenses, for our customer success and payment operations teams, certain costs that are directly attributed to processing customers’ transactions (such as the cost of printing checks), postage for mailing checks, expenses for processing payments (ACH, check, and cross-border wires), direct and amortized costs for implementing and integrating our cloud-based platform into our strategic partners’ systems, costs for maintaining, optimizing, and securing our cloud payments infrastructure, amortization of capitalized internal-use developed software, fees on the investment of customer funds, and allocation of overhead costs. We expect that cost of revenue will increase in absolute dollars, but may fluctuate as a percentage of total revenue from period to period, as we continue to invest in growing our business.

Research and development - Research and development expenses consist primarily of personnel-related expenses, including stock-based compensation expenses, incurred in developing new products or enhancing existing products, and allocated overhead costs. We capitalize certain software development costs that are attributable to developing new products and adding incremental functionality to our platform and amortize such costs in cost of revenue over the estimated life of the new product or incremental functionality, which is generally three years.

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We expense a substantial portion of research and development expenses as incurred. We believe delivering new functionality is critical to attract new customers and expand our relationship with existing customers. We expect to continue to make investments in and expand our offerings to enhance our customers’ experience and satisfaction, and to attract new customers. We expect our research and development expenses to increase in absolute dollars, but they may fluctuate as a percentage of total revenue from period to period as we expand our research and development team to develop new products and product enhancements.

Sales and Marketing - Sales and marketing expenses consist primarily of personnel-related expenses, including stock-based compensation expenses, sales commissions, marketing program expenses, travel-related expenses and costs to market and promote our platform through advertisements, marketing events, partnership arrangements, direct customer acquisition, and allocated overhead costs. Sales commissions that are incremental to obtaining new customer contracts are deferred and amortized ratably over the estimated period of our relationship with new customers.

We focus our sales and marketing efforts on generating awareness of our company, platform, and products, creating sales leads, and establishing and promoting our brand. We plan to increase our investment in sales and marketing by hiring additional sales and marketing personnel, driving our go-to-market strategies, building our brand awareness, and sponsoring additional marketing events. We expect our sales and marketing expenses to increase in absolute dollars, but they may fluctuate as a percentage of total revenue from period to period.

General and Administrative - General and administrative expenses consist primarily of personnel- related expenses, including stock-based compensation expenses, for finance, risk management, legal and compliance, human resources and information technology, costs incurred for external professional services, losses from fraud and credit exposure, and allocated overhead costs. We expect to incur additional general and administrative expenses as a result of operating as a public company, including expenses to comply with the rules and regulations applicable to companies listed on a national securities exchange, expenses related to compliance and reporting obligations pursuant to the rules and regulations of the SEC, as well as higher expenses for director and officer insurance, investor relations, and professional services. We also expect to increase the size of our general and administrative functions to support the growth in our business. As a result, we expect that our general and administrative expenses will increase in absolute dollars but may fluctuate as a percentage of total revenue from period to period.

Other Income, Net - Other income, net consists primarily of interest income on corporate funds invested in money market instruments and highly liquid short-term investments, partially offset by interest expense on our bank borrowings.

(Benefit from) Provision for Income Taxes - This consists of income tax benefit shown on the condensed consolidated statements of operations that is offset against the income tax on the unrealized gain on investments in available-for-sale securities that is shown on the condensed consolidated statements of other comprehensive loss, as well as state income taxes.

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Results of Operations

The following table sets forth our results of operations for the periods presented (in thousands):

	Three months ended December 31,						Six months ended December 31,
	2019			2018			2019			2018
Revenue
Subscription and transaction fees	$	32,964		$	20,444		$	61,512		$	38,614
Interest on funds held for customers		6,116			5,555			12,748			9,809
Total revenue		39,080			25,999			74,260			48,423
Cost of revenue ⁽¹⁾		9,787			7,175			18,934			13,516
Gross profit		29,293			18,824			55,326			34,907
Operating expenses
Research and development ⁽¹⁾		12,992			6,154			24,507			11,578
Sales and marketing ⁽¹⁾		11,491			6,856			21,758			12,800
General and administrative ⁽¹⁾		12,748			6,404			23,283			12,341
Total operating expenses		37,231			19,414			69,548			36,719
Loss from operations		(7,938	)		(590	)		(14,222	)		(1,812	)
Other income, net		360			686			999			1,003
(Loss) income before (benefit from) provision for income taxes		(7,578	)		96			(13,223	)		(809	)
(Benefit from) provision for income taxes		—			(6	)		51			(27	)
Net (loss) income	$	(7,578	)	$	102		$	(13,274	)	$	(782	)

⁽¹⁾Includes stock-based compensation expenses as follows (in thousands):

	Three months ended December 31,				Six months ended December 31,
	2019		2018		2019		2018
Cost of revenue	$	211	$	42	$	359	$	112
Research and development		1,084		119		1,755		352
Sales and marketing		494		122		877		288
General and administrative		1,286		311		2,360		449
	$	3,075	$	594	$	5,351	$	1,201

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The following table presents the components of our consolidated statements of operations for the periods presented as a percentage of total revenue:

	Three months ended December 31,						Six months ended December 31,
	2019			2018			2019			2018
Revenue
Subscription and transaction fees		84	%		79	%		83	%		80	%
Interest on funds held for customers		16	%		21	%		17	%		20	%
Total revenue		100	%		100	%		100	%		100	%
Cost of revenue		25	%		28	%		25	%		28	%
Gross margin		75	%		72	%		75	%		72	%
Operating expenses
Research and development		33	%		24	%		33	%		24	%
Sales and marketing		29	%		26	%		29	%		26	%
General and administrative		33	%		25	%		32	%		26	%
Total operating expenses		95	%		75	%		94	%		76	%
Loss from operations		(20	)%		(3	)%		(19	)%		(4	)%
Other income, net		1	%		3	%		1	%		2	%
(Loss) income before (benefit from) provision for income taxes		(19	)%		—			(18	)%		(2	)%
(Benefit from) provision for income taxes		—			—			—			—
Net (loss) income		(19	)%		—			(18	)%		(2	)%

Comparison of the three months ended December 31, 2019 and 2018

Revenue

The components of our revenue during the three months ended December 31, 2019 and 2018 were as follows (amounts in thousands):

	Three months ended
	December 31,				Change
	2019		2018		Amount		%
Subscription and transaction fees	$	32,964	$	20,444	$	12,520		61	%
Interest on funds held for customers		6,116		5,555		561		10	%
Total revenue	$	39,080	$	25,999	$	13,081		50	%

Subscription and transaction fees increased to $33.0 million during the three months ended December 31, 2019 from $20.4 million during the three months ended December 31, 2018, an increase of $12.6 million or 61%. Subscription fees increased to $19.9 million during the three months ended December 31, 2019 from $14.4 million during the three months ended December 31, 2018, an increase of $5.5 million or 39%, driven primarily by the increase in customers and average subscription revenue per customer. Transaction fees increased to $13.1 million during the three months ended December 31, 2019 from $6.0 million during the three months ended December 31, 2018, an increase of $7.1 million or 114%, due primarily to increased adoption of new product offerings and the increase in the number of transactions initiated. Our total customers increased to approximately 86,000 as of December 31, 2019 compared to over 71,000 as of December 31, 2018, or an increase of approximately 20%. Our average subscription revenue and transaction fees per customer increased by 16% and 78%, respectively, during the three months ended December 31, 2019, driven primarily by the increase in customers’ usage of our platform and payment activities.

Interest on funds held for customers increased to $6.1 million during the three months ended December 31, 2019 from $5.6 million during the three months ended December 31, 2018, an increase of $0.5 million or 10%. The increase was due primarily to the increase in the balance of customer funds held while payment transactions are clearing, partially offset by the decrease in the yield we earned from investing the funds. The average balance of customer funds in transit increased to approximately $1.4 billion during the three months ended December 31, 2019 from approximately $1.1 billion during the three months ended December 31, 2018, an increase of 27%. Fund balances increased due primarily to growth in TPV. Our TPV increased to approximately $24.8 billion during the three months ended December 31, 2019 from

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approximately $17.6 billion during the three months ended December 31, 2018, an increase of 41%. The annualized rate of return earned on customer funds held was 1.74% during the three months ended December 31, 2019, a decrease of 27 basis points over the annualized yield during the same period in fiscal 2019. The decrease in yield was due primarily to change in the short-term interest rate environment as the average daily effective federal funds rate decreased by 56 basis points during the three months ended December 31, 2019 over the same period in fiscal 2019.

Cost of Revenue, Gross Profit, and Gross Margin

Cost of revenue, gross profit, and gross margin during the three months ended December 31, 2019 and 2018 were as follows (amounts in thousands):

	Three months ended
	December 31,						Change
	2019			2018			Amount		%
Cost of revenue	$	9,787		$	7,175		$	2,612		36	%
Gross profit	$	29,293		$	18,824		$	10,469		56	%
Gross margin		75	%		72	%

Cost of revenue increased to $9.8 million during the three months ended December 31, 2019 from $7.2 million during the three months ended December 31, 2018, an increase of $2.6 million or 36%. The increase was due primarily to a $1.2 million increase in direct costs associated with the processing of our customers’ payment transactions, use of software applications and equipment, bank fees for funds held for customers, and data hosting services, which were driven by the increase in the number of customers, increase in adoption of new product offerings and increase in volume of transactions. The increase was also due to a $0.8 million increase in personnel-related costs, including stock-based compensation expense and amortization of increased deferred service costs, due to the hiring of additional personnel who were directly engaged in providing implementation and support services to our customers, and a $0.4 million increase in shared overhead costs. Our average headcount of such personnel during the three months ended December 31, 2019 increased by 23% compared to the same period in fiscal 2019.

Gross margin increased to 75% during the three months ended December 31, 2019 from 72% during the three months ended December 31, 2018, an increase of 3%. The increase was driven primarily by higher revenue on increased adoption of new product offerings.

Research and Development Expenses

Research and development expenses during the three months ended December 31, 2019 and 2018 were as follows (amounts in thousands):

	Three months ended
	December 31,						Change
	2019			2018			Amount		%
Research and development expenses	$	12,992		$	6,154		$	6,838		111	%
Percentage of revenue		33	%		24	%

Research and development expenses increased to $13.0 million during the three months ended December 31, 2019 from $6.2 million during the three months ended December 31, 2018, an increase of $6.8 million or 111%. The increase was due primarily to a $5.7 million increase in personnel-related costs, including stock-based compensation expense, resulting from the hiring of additional personnel who were directly engaged in developing new product offerings, a $0.8 million increase in shared overhead costs, and a $0.3 million increase in costs for engaging consultants and temporary contractors who provided product development services. Our average research and development headcount during the three months ended December 31, 2019 increased by 68% compared to the same period in fiscal 2019.

As a percentage of total revenue, research and development expenses increased to 33% during the three months ended December 31, 2019 from 24% during the three months ended December 31, 2018 due primarily to the increase in our headcount, which resulted in higher personnel-related costs relative to the increase in our revenue.

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Sales and Marketing Expenses

Sales and marketing expenses during the three months ended December 31, 2019 and 2018 were as follows (amounts in thousands):

	Three months ended
	December 31,						Change
	2019			2018			Amount		%
Sales and marketing expenses	$	11,491		$	6,856		$	4,635		68	%
Percentage of revenue		29	%		26	%

Sales and marketing expenses increased to $11.5 million during the three months ended December 31, 2019 from $6.9 million during the three months ended December 31, 2018, an increase of $4.6 million or 68%. The increase was due primarily to a $2.5 million increase in personnel-related costs (net of increase in capitalized sales commissions of $0.7 million), including stock-based compensation expense, due to the hiring of additional personnel who were directly engaged in acquiring new customers and in marketing our products and services, and a $0.5 million increase in shared overhead costs. Our average sales and marketing headcount during the three months ended December 31, 2019 increased by 53% compared to the same period in fiscal 2019. The increase was also attributed to a $0.9 million increase in advertising spend and a $0.7 million increase in various marketing initiatives and activities, such as engaging consultants and attending marketing events, as we continued to increase our effort in promoting our products and services and in increasing brand awareness.

As a percentage of total revenue, sales and marketing expenses increased to 29% during the three months ended December 31, 2019 from 26% during the three months ended December 31, 2018, due primarily to the increase in our headcount, which resulted in higher personnel-related costs relative to the increase in our revenue.

General and Administrative Expenses

General and administrative expenses during the three months ended December 31, 2019 and 2018 were as follows (amounts in thousands):

	Three months ended
	December 31,						Change
	2019			2018			Amount		%
General and administrative expenses	$	12,748		$	6,404		$	6,344		99	%
Percentage of revenue		33	%		25	%

General and administrative expenses increased to $12.7 million during the three months ended December 31, 2019 from $6.4 million during the three months ended December 31, 2018, an increase of $6.3 million or 99%. The increase was due primarily to a $4.0 million increase in personnel-related costs, including stock-based compensation expense, resulting from the hiring of additional executive employees and administrative personnel. Our average general and administrative headcount during the three months ended December 31, 2019 increased by 90% compared to the same period in fiscal 2019. The increase was also due to a $0.9 million increase in professional and consulting fees as we obtained additional external assistance in connection with the overall growth of our business and our preparation to operate as a public company, a $0.6 million increase in money transfer license fees and credit card processing fees and a $0.4 million increase in shared overhead costs due to the overall growth of our business.

As a percentage of total revenue, general and administrative expenses increased to 33% during the three months ended December 31, 2019 from 25% during the three months ended December 31, 2018 due primarily to the increase in our headcount, which resulted in higher personnel-related costs relative to the increase in our revenue.

Other Income, Net

Other income, net during the three months ended December 31, 2019 and 2018 was as follows (amounts in thousands):

	Three months ended
	December 31,				Change
	2019		2018		Amount			%
Other income, net	$	360	$	686	$	(326	)		(48	)%

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Other income, net decreased to $0.4 million during the three months ended December 31, 2019 from $0.7 million during the three months ended December 31, 2018, a decrease of $0.3 million or 48%. The decrease was due primarily to a $0.8 million loss on revaluation of redeemable convertible preferred stock warrant liabilities, partially offset by a $0.4 million increase in interest earned on corporate funds that we invested in money market instruments and highly liquid short-term investments.

(Benefit from) Provision for Income Taxes

(Benefit from) provision for income taxes during the three months ended December 31, 2019 and 2018 was as follows (amounts in thousands):

	Three months ended
	December 31,					Change
	2019		2018			Amount		%
(Benefit from) provision for income taxes	$	—	$	(6	)	$	6		100	%

The benefit from income taxes during the three months ended December 31, 2018 pertains primarily to the income tax benefit that is reported on the condensed consolidated statements of operations and is offset against the income tax on the unrealized gain on investments in available-for-sale securities that is shown on the condensed consolidated statements of comprehensive loss.

Comparison of the six months ended December 31, 2019 and 2018

Revenue

The components of our revenue during the six months ended December 31, 2019 and 2018 were as follows (amounts in thousands):

	Six months ended December 31,				Change
	2019		2018		Amount		%
Subscription and transaction fees	$	61,512	$	38,614	$	22,898		59	%
Interest on funds held for customers		12,748		9,809		2,939		30	%
Total revenue	$	74,260	$	48,423	$	25,837		53	%

Subscription and transaction fees increased to $61.5 million during the six months ended December 31, 2019 from $38.6 million during the six months ended December 31, 2018, an increase of $22.9 million or 59%.

Subscription fees increased to $38.0 million during the six months ended December 31, 2019 from $27.4 million during the six months ended December 31, 2018, an increase of $10.6 million or 39%, driven primarily by the increase in customers and average subscription revenue per customer. Transaction fees increased to $23.5 million during the six months ended December 31, 2019 from $11.2 million during the six months ended December 31, 2018, an increase of $12.3 million or 110%, due primarily to increased adoption of new product offerings and the increase in the number of transactions initiated. Our total customers increased to approximately 86,000 as of December 31, 2019 compared to over 71,000 as of December 31, 2018, or an increase of approximately 20%. Our average subscription revenue and transaction fees per customer increased by 15% and 74%, respectively, during the six months ended December 31, 2019, driven primarily by the increase in customers’ usage of our platform and payment activities.

Interest on funds held for customers increased to $12.7 million during the six months ended December 31, 2019 from $9.8 million during the six months ended December 31, 2018, an increase of $2.9 million or 30%. The increase was due primarily to the increase in the balance of customer funds held while payment transactions are clearing. The average balance of customer funds in transit increased to approximately $1.3 billion during the six months ended December 31, 2019 from approximately $1.0 billion during the six months ended December 31, 2018, an increase of 30%. Fund balances increased due primarily to growth in TPV. Our TPV increased to approximately $46.8 billion during the six months ended December 31, 2019 from approximately $33.2 billion during the six months ended December 31, 2018, an increase of 41%. The annualized rate of return earned on customer funds held was 1.90% during the six months ended December 31, 2019, which remained flat compared to the annualized yield during the same period in fiscal 2019.

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Cost of Revenue, Gross Profit, and Gross Margin

Cost of revenue, gross profit, and gross margin during the six months ended December 31, 2019 and 2018 were as follows (amounts in thousands):

	Six months ended December 31,						Change
	2019			2018			Amount		%
Cost of revenue	$	18,934		$	13,516		$	5,418		40	%
Gross profit	$	55,326		$	34,907		$	20,419		58	%
Gross margin		75	%		72	%

Cost of revenue increased to $18.9 million during the six months ended December 31, 2019 from $13.5 million during the six months ended December 31, 2018, an increase of $5.4 million or 40%. The increase was due primarily to a $2.6 million increase in direct costs associated with the processing of our customers’ payment transactions, use of software applications and equipment, bank fees for funds held for customers, and data hosting services, which were driven by the increase in the number of customers, increase in adoption of new product offerings and increase in volume of transactions. The increase was also due to a $1.7 million increase in personnel-related costs, including stock-based compensation expense and amortization of increased deferred service costs, due to the hiring of additional personnel who were directly engaged in providing implementation and support services to our customers, and a $0.9 million increase in shared overhead costs. Our average headcount of such personnel during the six months ended December 31, 2019 increased by 24% compared to the same period in fiscal 2019.

Gross margin increased to 75% during the six months ended December 31, 2019 from 72% during the six months ended December 31, 2018, an increase of 3%. The increase was driven primarily by higher revenue on increased adoption of new product offerings.

Research and Development Expenses

Research and development expenses during the six months ended December 31, 2019 and 2018 were as follows (amounts in thousands):

	Six months ended December 31,						Change
	2019			2018			Amount		%
Research and development expenses	$	24,507		$	11,578		$	12,929		112	%
Percentage of revenue		33	%		24	%

Research and development expenses increased to $24.5 million during the six months ended December 31, 2019 from $11.6 million during the six months ended December 31, 2018, an increase of $12.9 million or 112%. The increase was due primarily to a $10.7 million increase in personnel-related costs, including stock-based compensation expense, resulting from the hiring of additional personnel who were directly engaged in developing new product offerings, a $1.3 million increase in shared overhead costs, and a $0.8 million increase in costs for engaging consultants and temporary contractors who provided product development services. Our average research and development headcount during the six months ended December 31, 2019 increased by 65% compared to the same period in fiscal 2019.

As a percentage of total revenue, research and development expenses increased to 33% during the six months ended December 31, 2019 from 24% during the six months ended December 31, 2018 due primarily to the increase in our headcount, which resulted in higher personnel-related costs relative to the increase in our revenue.

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Sales and Marketing Expenses

Sales and marketing expenses during the six months ended December 31, 2019 and 2018 were as follows (amounts in thousands):

	Six months ended December 31,						Change
	2019			2018			Amount		%
Sales and marketing expenses	$	21,758		$	12,800		$	8,958		70	%
Percentage of revenue		29	%		26	%

Sales and marketing expenses increased to $21.8 million during the six months ended December 31, 2019 from $12.8 million during the six months ended December 31, 2018, an increase of $9.0 million or 70%. The increase was due primarily to a $4.7 million increase in personnel-related costs (net of increase in capitalized sales commissions of $1.1 million), including stock-based compensation expense, due to the hiring of additional personnel who were directly engaged in acquiring new customers and in marketing our products and services, and a $0.9 million increase in shared overhead costs. Our average sales and marketing headcount during the six months ended December 31, 2019 increased by 52% compared to the same period in fiscal 2019. The increase was also attributed to a $1.7 million increase in various marketing initiatives and activities, such as engaging consultants and attending marketing events, and a $1.6 million increase in advertising spend, as we continued to increase our effort in promoting our products and services and in increasing brand awareness.

As a percentage of total revenue, sales and marketing expenses increased to 29% during the six months ended December 31, 2019 from 26% during the six months ended December 31, 2018, due primarily to the increase in our headcount, which resulted in higher personnel-related costs relative to the increase in our revenue.

General and Administrative Expenses

General and administrative expenses during the six months ended December 31, 2019 and 2018 were as follows (amounts in thousands):

	Six months ended December 31,						Change
	2019			2018			Amount		%
General and administrative expenses	$	23,283		$	12,341		$	10,942		89	%
Percentage of revenue		32	%		26	%

General and administrative expenses increased to $23.3 million during the six months ended December 31, 2019 from $12.3 million during the six months ended December 31, 2018, an increase of $11.0 million or 89%. The increase was due primarily to a $6.8 million increase in personnel-related costs, including stock-based compensation expense, resulting from the hiring of additional executive employees and administrative personnel. Our average general and administrative headcount during the six months ended December 31, 2019 increased by 77% compared to the same period in fiscal 2019. The increase was also due to a $1.2 million increase in professional and consulting fees as we obtained additional external assistance in connection with the overall growth of our business and our preparation to operate as a public company, a $1.1 million increase in money transfer license fees and credit card processing fees and a $0.8 million increase in shared overhead costs due to the overall growth of our business, and a $0.7 million increase in recruiting fees and temporary staffing costs as we engaged external help to recruit employees or to temporarily fill certain roles within the organization.

As a percentage of total revenue, general and administrative expenses increased to 32% during the six months ended December 31, 2019 from 26% during the six months ended December 31, 2018 due primarily to the increase in our headcount, which resulted in higher personnel-related costs relative to the increase in our revenue

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Other Income, Net

Other income, net during the six months ended December 31, 2019 and 2018 was as follows (amounts in thousands):

Six months ended

December 31,

Change

2019

2018

Amount

Other income, net

999

1,003

)

—%

Other income, net, which slightly decreased during the six months ended December 31, 2019, consisted primarily of a $1.0 million loss on revaluation of redeemable convertible preferred warrant liabilities, partially offset by a $0.8 million increase in interest earned on corporate funds that we invested in money market instruments and highly liquid short-term investments.

Provision for (Benefit from) Income Taxes

Provision for (benefit from) income taxes during the six months ended December 31, 2019 and 2018 was as follows (amounts in thousands):

Six months ended

December 31,

Change

2019

2018

Amount

Provision for (benefit from) income taxes

(27

)

289

Liquidity and Capital Resources

On December 16, 2019, we closed our IPO in which we received net proceeds of $225.5 million, after deducting underwriting discounts and commissions of $17.4 million and other offering costs of $5.6 million.

Prior to our IPO, we financed our operations and capital expenditures primarily through sales of redeemable convertible preferred stock, bank borrowings, and utilization of cash generated from operations. As of December 31, 2019, our principal sources of liquidity are our cash and cash equivalents of $314.9 million, our available-for-sale short-term investments of $68.1 million, and funds available under our Senior Facilities Agreement (as defined below). Our cash equivalents are comprised primarily of money market funds and investments in debt securities with original maturities of three months or less. Our short-term investments are comprised primarily of available-for-sale investments in corporate bonds, asset-backed securities and U.S. treasury securities with original maturities of more than three months. Our Senior Facilities Agreement, which expires on June 28, 2022, allows us to borrow up to $50.0 million. Available funds under our Senior Facilities Agreement, which was reduced by letter of credit utilization totaling $6.9 million, was $43.1 million as of December 31, 2019. We had no outstanding borrowings from our Senior Facilities Agreement as of December 31, 2019.

We believe that our cash, cash equivalents, available-for sale short-term investments, and funds available under our Senior Facilities Agreement will be sufficient to meet our working capital requirements for at least the next twelve months. To the extent existing cash, cash from operations, and amounts available for borrowing under the Senior Facilities Agreement are insufficient to fund future activities, we may need to raise additional funds. In the future, we may attempt to raise additional capital through the sale of equity securities or through equity-linked or debt financing arrangements. If we raise additional funds by issuing equity or equity-linked securities, the ownership of our existing stockholders will be diluted. If we raise additional financing by the incurrence of additional indebtedness, we may be subject to increased fixed payment obligations and could also be subject to additional restrictive covenants, such as limitations on our ability to incur additional debt, and other operating restrictions that could adversely impact our ability to conduct our business. Any future indebtedness we incur may result in terms that could be unfavorable to equity investors. There can be no assurances that we will be able to raise additional capital. The inability to raise capital would adversely affect our ability to achieve our business objectives.

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Cash Flows

Below is a summary of our consolidated cash flows (in thousands):

	Six months ended December 31,
	2019			2018
Net cash provided by (used in):
Operating activities	$	(4,149	)	$	(2,179	)
Investing activities		(161,179	)		(304,234	)
Financing activities		389,916			368,146
Net increase in cash and cash equivalents	$	224,588		$	61,733

Net Cash Used in Operating Activities

Our primary source of cash provided by our operating activities is our revenue from subscription and transaction fees. Our subscription revenue is primarily based on a fixed monthly or annual rate per user charged to our customers. Our transaction revenue is comprised of transaction fees on a fixed or variable rate per type of transaction. We also generate cash from the interest earned on funds held in trust on behalf of customers while payment transactions are clearing.

Our primary uses of cash in our operating activities include payments for employee salary and related costs, payments to third parties to fulfill our payment transactions, payments to sales and marketing partners, and other general corporate expenditures.

Net cash used in operating activities increased to $4.1 million during the six months ended December 31, 2019 from $2.2 million during the six months ended December 31, 2018 due primarily to the increase in cash paid for our cost of services and operating expenses, primarily employee salary and related costs due to the increase in headcount, offset by the increase in cash received from subscription and transaction fees revenue, as well as the increase in cash received from interest on funds held for customers.

Net Cash Used in Investing Activities

Cash provided by our investing activities consists primarily of proceeds from the maturities and sale of corporate and customer fund available-for-sale investments. Cash used in our investing activities consists primarily of purchases of corporate and customer fund available-for-sale investments, purchases of property and equipment, and capitalization of internal-use software.

Net cash used in investing activities decreased to $161.2 million during the six months ended December 31, 2019 from $304.2 million during the six months ended December 31, 2018 due primarily to the decrease in the use of restricted cash and cash equivalents included in funds held for customers and the increase in proceeds from the maturities and sale of corporate and customer fund available-for-sale investments, partially offset by the increase in purchases of property and equipment.

Net Cash Provided by Financing Activities

Cash provided by our financing activities consists primarily of proceeds from the issuance of common stock upon the completion of our IPO, issuance of redeemable convertible preferred stock, and exercises of stock options and stock warrants, and increase in customer fund deposits liability. Cash used in our financing activities consists primarily of repayments of our bank borrowings and payments of costs related to the issuance of common stock, preferred stock or debt.

Net cash provided by financing activities increased to $389.9 million during the six months ended December 31, 2019 from $368.1 million during the six months ended December 31, 2018 due primarily to the proceeds from the issuance of common stock upon the completion of our IPO, net of underwriting discounts and other offering costs, partially offset by a lower change in the customer fund deposits liability. Cash provided during the six months ended December 31, 2018 included proceeds from the issuance of redeemable convertible preferred stock.

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Credit Facilities

On June 28, 2019, we entered into a Senior Secured Credit Facilities Credit Agreement (Senior Facilities Agreement) with Silicon Valley Bank for a revolving credit facility of up to $50.0 million (Total Commitment), which amount may be increased by up to $25.0 million upon request and subject to conditions. Under the Senior Facilities Agreement, Bill.com, LLC is the borrower and Bill.com Holdings, Inc. is the guarantor. The Senior Facilities Agreement expires on June 28, 2022 and is secured by substantially all of our assets.

Borrowings under the Senior Facilities Agreement are subject to interest, determined as follows: (a) Eurodollar loans shall bear interest at a rate per annum equal to the Eurodollar rate plus the applicable margin of 1.75% or 2.75%, depending on company cash balances (Eurodollar rate is calculated based on the ratio of Eurodollar Base Rate, which is determined by reference to ICE Benchmark Administration London Interbank Offered Rate (LIBOR), but not less than 0%) or (b) Alternate Base Rate (ABR) loans shall bear interest at a rate per annum equal to the ABR minus the applicable margin of 0.25% or 1.25% depending on company cash balances (ABR is equal to the highest of (i) the prime rate, (ii) the Federal Funds Effective Rate plus 0.50%, and (iii) the Eurodollar rate plus 1.25%).

The Senior Facilities Agreement requires us to comply with certain restrictive covenants. As of December 31, 2019, we were in compliance with the loan covenants.

Available funds under our Senior Facilities Agreement, which was reduced by letter of credit utilization totaling $6.9 million, was $43.1 million as of December 31, 2019. We had no outstanding borrowings under the Senior Facilities Agreement as of December 31, 2019.

Contractual Obligations and Other Commitments

Effective December 31, 2019, we entered into a lease agreement (Lease) for approximately 132,000 square feet of office space located in San Jose, California, for the Company’s future principal executive offices. The Lease is expected to commence in May 2020 and to expire in April 2031 (Lease Term), unless terminated earlier. The initial minimum monthly lease obligation is approximately $500,000 per month, increasing by 3% per year annually over the Lease Term, with a 12-month rent expense abatement. The aggregate minimum lease commitment is approximately $70.0 million, net of abatement.

For additional discussion on our leases and other contractual commitments, refer to Note 11 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Other than the new lease agreement referred to above, there were no material changes in our contractual obligations and other commitments from those disclosed in the Prospectus.

Off-Balance Sheet Arrangements

As of December 31, 2019, we had no off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our consolidated financial condition, results of operations, liquidity, capital expenditures, or capital resources.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements have been prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported revenue generated, and reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in “Management's Discussion and Analysis of Financial Condition and Results of Operations” set forth in the Prospectus.

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Recent Accounting Pronouncements

See “The Company and its Significant Accounting Policies” in Note 1 of the notes to our condensed consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

Our corporate investments are invested in cash and cash equivalents and highly liquid, investment-grade fixed income marketable securities. These assets are available for corporate operating purposes. All of our investments are classified as available-for-sale securities.

Our customer funds assets are invested with safety of principal, liquidity, and diversification as the primary objectives. As a secondary objective, we seek to maximize interest income. Customer funds assets are invested in money market funds that maintain a constant market price, other cash equivalents, and highly liquid, investment- grade fixed income securities, with maturities of up to 13 months from the time of purchase. Our investment policy, reflecting restrictions on permissible investments in applicable state money transmitter laws, governs the types of investments we make.

As part of our customer funds investment strategy, we use funds collected daily from our customers to satisfy the obligations of other unrelated customers, rather than liquidating investments purchased with previously collected funds. There is risk that we may not be able to satisfy customer obligations in full or on time due to insufficient liquidity or due to a decline in value of our investments. However, the liquidity risk is minimized by collecting the customer’s funds in advance of the payment obligation and by maintaining significant investments in bank deposits and constant-value money market funds that allow for same-day liquidity. The risk of a decline in investment value is minimized by our restrictive investment policy allowing for only short-term, high quality fixed income securities. We also maintain other sources of liquidity including our corporate cash balances and our Senior Facilities Agreement.

Interest Rate and Credit Risk

We are exposed to interest-rate risk relating to our investments of corporate cash and funds of our customers that we process through our bank accounts. Our corporate investment portfolio consists principally of interest-bearing bank deposits, money market funds, certificates of deposit, corporate bonds, asset- backed securities, and U.S. Treasury securities. Funds that we hold for customers are held in non-interest and interest-bearing bank deposits, money market funds, certificates of deposit, commercial paper and other corporate notes, and U.S. Treasury securities. We recognize interest earned from funds held for customers as revenue. We do not pay interest to customers. Factors that influence the rate of interest we earn include the short-term market interest rate environment and the weighting of our balances by security type. The annualized interest rate earned on our corporate investment portfolio and funds held for customers decreased to 1.74% and remained flat at 1.91% during the three months and six months ended December 31, 2019 from 2.02% and 1.91% during the three months and six months ended December 31, 2018, respectively, due primarily to the change in short-term interest rate environment as the average daily effective Federal Funds rate decreased by 56 basis points and 14 basis points for the corresponding periods. Our investments in both fixed rate and floating rate interest earning securities carry a degree of interest rate risk. Fixed rate securities may have their fair market value adversely affected due to a rise in interest rates, while floating rate securities may produce less income than predicted if interest rates fall.

Unrealized gains or losses on our marketable debt securities are due primarily to interest rate fluctuations from the time the securities were purchased. We account for both fixed and variable rate securities at fair value with unrealized gains and losses recorded in accumulated other comprehensive income (loss) until the securities are sold. Based on current investment practices, a change in the interest rate of 100 basis points would have changed our interest income from our corporate investment portfolio by approximately $0.5 million and $1.0 million during the three and six months ended December 31, 2019 on average corporate investment balances of $212.3 million and $189.9 million, respectively. A change in the interest rate of 100 basis points would also have changed our interest on funds held for customers by approximately $3.7 million and $6.9 million during the three and six months ended December 31, 2019 on average funds held for customers balances of $1.5 billion and $1.4 billion, respectively. In addition to interest rate risks, we also have exposure to risks associated with changes in laws and regulations that may affect customer fund balances. For example, a change in regulations that restricts the permissible investment alternatives for customer funds would reduce our interest earned revenue.

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We are also exposed to interest-rate risk relating to future bank borrowings. As of December 31, 2019, our Senior Facilities Agreement provides a revolving credit facility of up to $50.0 million that may be increased by up to $25.0 million, subject to conditions, incurring interest expense at a floating market rate plus a contractual spread. However, we had no outstanding borrowings under the Senior Facilities Agreement as of December 31, 2019.

We are exposed to credit risk in connection with our investments in available-for-sale marketable securities through the possible inability of the borrowers to meet the terms of the securities. We limit credit risk by investing in investment-grade securities as rated by Moody’s, Standard & Poor’s or Fitch, by investing only in securities that mature in the near-term, and by limiting concentration in securities other than U.S. Treasuries. Investment in securities of issuers with short-term credit ratings must be rated A-2/P-2/F2 or higher. Investment in securities of issuers with long-term credit ratings must be rated A- or A3, or higher. Investment in asset-backed securities and money market funds must be rated AAA or equivalent. Investment in repurchase agreements will be at least 100 percent collateralized with securities issued by the U.S. government or its agencies. Securities in our corporate portfolio may not mature beyond two years from purchase, and securities held in our customer fund accounts may not mature beyond 13 months from purchase. No more than 5% of invested funds, either corporate or customer, may be held in the issues of a single corporation.

We are also exposed to credit risk related to the timing of payments made from customer funds collected. We typically remit customer funds to our customers’ suppliers in advance of having good or confirmed funds collected from our customers. Customers may not have sufficient available balances in their account to fund remittances we’ve made on their behalf. Furthermore, our customers generally have three days to dispute transactions and if we remit funds in advance of receiving confirmation that no dispute was initiated by our customer, then we could suffer a credit loss. We mitigate this credit exposure by leveraging our data assets to make credit underwriting decisions about whether to accelerate disbursements, managing exposure limits, and various controls in our operating systems.

Foreign Currency Exchange Risk

We are exposed to foreign currency exchange risk relating to our cross-border payment service, which allows customers to pay their international suppliers in foreign currencies. When customers make a cross-border payment, customers fund those payments in U.S. dollars based upon an exchange rate that is quoted on the initiation date of the transaction. Subsequently, when we convert and remit those funds to our customers’ suppliers through our global payment partner, the exchange rate may differ, due to foreign exchange fluctuation, compared to the exchange rate that was initially quoted. Our transaction fees to our customers are not adjusted for changes in foreign exchange rates between the initiation date of the transaction and the date the funds are converted. If the value of the U.S. dollar weakens relative to the foreign currencies, this may have an unfavorable effect on our cash flows and operating results. We do not believe that a 10% change in the relative value of the U.S. dollar to other foreign currencies would have a material effect on our cash flows and operating results.

Item 4. Controls and Procedures

Evaluation of disclosure controls and procedures

Our management, with the participation and supervision of our chief executive officer and our chief financial officer, have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Our disclosure controls and procedures are designed to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on such evaluation, our chief executive officer and chief financial officer have concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting

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Inherent limitation on the effectiveness of internal control

Our management, including our chief executive officer and chief financial officer, do not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are party to litigation and subject to claims incident to the ordinary course of business. As our growth continues, we may become party to an increasing number of litigation matters and claims. The outcome of litigation and claims cannot be predicted with certainty, and the resolution of these matters could materially affect our future results of operations, cash flows, or financial position. We are not presently party to any legal proceedings that, in the opinion of management, would individually or taken together have a material adverse effect on our business, operating results, financial condition, or cash flows.

Item 1A. Risk Factors

Investing in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of 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 our condensed consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q before deciding whether to invest in shares of our common stock. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of or that we deem immaterial may also become important factors that adversely affect our business. If any of the following risks actually occur, our business, financial condition, operating results, and future prospects could be materially and adversely affected. In that event, the market price of our common stock could decline, and you could lose part or all of your investment

Risks Related to Our Business and Industry

We have a history of operating losses and may not achieve or sustain profitability in the future.

We were incorporated in 2006 and have mostly experienced net losses and negative cash flows from operations since inception. We generated a net loss of $7.6 million and a net income of $0.1 million during the three months ended December 31, 2019 and 2018, respectively, and net losses of $13.3 million and $0.8 million during the six months ended December 31, 2019 and 2018, respectively. As of December 31, 2019, we had an accumulated deficit of $130.9 million. While we have experienced significant revenue growth in recent periods, we are not certain whether or when we will obtain a high enough volume of subscription and transaction fee revenue to sustain or increase our growth or achieve or maintain profitability in the future. We also expect our costs and expenses to increase in future periods, which could negatively affect our future operating results if our revenue does not increase. In particular, we intend to continue to expend significant funds to further develop our platform, including introducing new products and functionality, and to expand our marketing programs and sales teams to drive new customer adoption, expand strategic partner integrations, and support international expansion. Our profitability each quarter is also impacted by the mix of our revenue generated from subscriptions and transaction fees, on the one hand, and interest earned on customer funds that we hold in trust, on the other. Any changes in this revenue mix will have the effect of increasing or decreasing our margins. We will also face increased compliance and security costs associated with growth, the expansion of our customer base, and being a public company. Our efforts to grow our business may be costlier than we expect, and we may not be able to increase our revenue enough to offset our increased operating expenses. We may incur significant losses in the future for several reasons, including the other risks described herein, and unforeseen expenses, difficulties, complications, delays, and other unknown events. If we are unable to achieve and sustain profitability, the value of our business and common stock may significantly decrease.

Our recent rapid growth, including growth in our volume of payments, may not be indicative of our future growth, and if we continue to grow rapidly, we may not be able to manage our growth effectively. Our rapid growth also makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.

Our revenue was $39.1 million and $26.0 million, and our TPV was $24.8 billion and $17.6 billion, during the three months ended December 31, 2019 and 2018, respectively. Our revenue was $74.3 million and $48.4 million, and our TPV was $46.8 billion and $33.2 billion during the six months ended December 31, 2019 and 2018, respectively. Although we have recently experienced significant growth in our revenue and payment volume, even if our revenue continues to increase, we expect our growth rate will decline in the future as a result of a variety of factors, including the increasing scale of our business. Overall growth of our revenue depends on a number of factors, including our ability to:

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price our platform effectively to attract new customers and increase sales to our existing customers;

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expand the functionality and scope of the products we offer on our platform;

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maintain the rates at which customers subscribe to and continue to use our platform;

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maintain payment volume;

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generate interest income on customer funds that we hold in trust;

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provide our customers with high-quality customer support that meets their needs;

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introduce our products to new markets outside of the United States;

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serve SMBs across a wide cross-section of industries;

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expand our target market beyond SMBs;

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successfully identify and acquire or invest in businesses, products, or technologies that we believe could complement or expand our platform; and

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increase awareness of our brand and successfully compete with other companies.

We may not successfully accomplish any of these objectives, which makes it difficult for us to forecast our future operating results. Further, the revenue that we derive from interest income on customer funds is dependent on interest rates, which we do not control. If the assumptions that we use to plan our business are incorrect or change in reaction to changes in our market, or if we are unable to maintain consistent revenue or revenue growth, our stock price could be volatile, and it may be difficult to achieve and maintain profitability. You should not rely on our revenue from any prior quarterly or annual periods as any indication of our future revenue or revenue or payment growth.

In addition, we expect to continue to expend substantial financial and other resources on:

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sales, marketing and customer success, including an expansion of our sales organization and new customer success initiatives;

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our technology infrastructure, including systems architecture, scalability, availability, performance, and security;

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product development, including investments in our product development team and the development of new products and new functionality for our AI-enabled platform;

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acquisitions or strategic investments;

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international expansion;

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regulatory compliance and risk management; and

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general administration, including increased legal and accounting expenses associated with being a public company.

These investments may not result in increased revenue growth in our business. If we are unable to increase our revenue at a rate sufficient to offset the expected increase in our costs, or if we encounter difficulties in managing a growing volume of payments, our business, financial position, and operating results will be harmed, and we may not be able to achieve or maintain profitability over the long term.

Our risk management efforts may not be effective to prevent fraudulent activities by our customers or their counterparties, which could expose us to material financial losses and liability and otherwise harm our business.

We offer software that digitizes and automates back-office financial operations for a large number of customers and executes payments to their vendors or from their clients. We are responsible for verifying the identity of our customers and their users, and monitoring transactions for fraud. We have been in the past and will continue to be targeted by parties who seek to commit acts of financial fraud using techniques such as stolen identities and bank accounts, compromised business email accounts, employee or insider fraud, account takeover, false applications, and check fraud. We may suffer losses from acts of financial fraud committed by our customers and their users, our employees or third- parties. For example in 2016, an accounts payable customer fraudulently enrolled on our platform using a stolen business identity and bank account, and disbursed approximately $300,000 funded by an unauthorized bank account. While we were able to recover some of the funds, we incurred a loss of approximately $200,000 in connection with that incident. Also, in 2018, we processed payments on behalf of an accounts receivables customer, whose client made approximately $225,000 in payments to our customer with funds from stolen bank accounts. We were able to recover a portion of the funds but incurred a loss of approximately $75,000 in connection with that incident.

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The techniques used to perpetrate fraud on our platform are continually evolving, and we expend considerable resources to continue to monitor and combat them. In addition, when we introduce new products and functionality, or expand existing products, we may not be able to identify all risks created by the new products or functionality. Our risk management policies, procedures, techniques, and processes may not be sufficient to identify all of the risks to which we are exposed, to enable us to prevent or mitigate the risks we have identified, or to identify additional risks to which we may become subject in the future. Furthermore, our risk management policies, procedures, techniques, and processes may contain errors or our employees or agents may commit mistakes or errors in judgment as a result of which we may suffer large financial losses. The software-driven and highly automated nature of our platform could enable criminals and those committing fraud to steal significant amounts of money from businesses like ours. As greater numbers of customers use our platform, our exposure to material risk losses from a single customer, or from a small number of customers, will increase.

Our current business and anticipated domestic and international growth will continue to place significant demands on our risk management efforts, and we will need to continue developing and improving our existing risk management infrastructure, policies, procedures, techniques, and processes. As techniques used to perpetrate fraud on our platform evolve, we may need to modify our products or services to mitigate fraud risks. As our business grows and becomes more complex, we may be less able to forecast and carry appropriate reserves in our books for fraud related losses.

Further, these types of fraudulent activities on our platform can also expose us to civil and criminal liability, governmental and regulatory sanctions as well as potentially cause us to be in breach of our contractual obligations to our third-party partners.

We transfer large sums of customer funds daily, and are subject to the risk of errors, which could result in financial losses, damage to our reputation, or loss of trust in our brand, which would harm our business and financial results.

During the three and six months ended December 31, 2019, approximately 86,000 customers processed approximately $24.8 and $46.8 billion, respectively, in TPV on our platform. We have grown rapidly and seek to continue to grow, and although we maintain a robust and multi-faceted risk management process, our business is always subject to the risk of financial losses as a result of credit losses, operational errors, software defects, service disruption, employee misconduct, security breaches, or other similar actions or errors on our platform. As a provider of accounts payable, accounts receivable, and payment solutions, we collect and transfer funds on behalf of our customers. Software errors in our platform and operational errors by our employees may also expose us to losses.

Moreover, our trustworthiness and reputation are fundamental to our business. As a provider of cloud-based software for complex back-office financial operations, the occurrence of any credit losses, operational errors, software defects, service disruption, employee misconduct, security breaches, or other similar actions or errors on our platform could result in financial losses to our business and our customers, loss of trust, damage to our reputation, or termination of our agreements with strategic partners and accountants, each of which could result in:

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loss of customers;

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lost or delayed market acceptance and sales of our platform;

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legal claims against us, including warranty and service level agreement claims;

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regulatory enforcement action; or

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diversion of our resources, including through increased service expenses or financial concessions, and increased insurance costs.

Although our terms of service allocate to our customers the risk of loss resulting from our customers’ errors, omissions, employee fraud, or other fraudulent activity related to their systems, in some instances we may cover such losses for efficiency or to prevent damage to our reputation. Although we maintain insurance to cover losses resulting from our errors and omissions, there can be no assurance that our insurance will cover all losses or our coverage will be sufficient to cover our losses. If we suffer significant losses or reputational harm as a result, our business, operating results, and financial condition could be adversely affected.

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Customer funds that we hold in trust are subject to market, interest rate, foreign exchange, and liquidity risks, as well as general political and economic conditions. The loss of these funds could have a material adverse effect on our business, financial condition, and results of operations.

We invest funds that we hold in trust for our customers, including funds being remitted to suppliers, in highly liquid, investment-grade marketable securities, money market securities, and other cash equivalents. Nevertheless, our customer fund assets are subject to general market, interest rate, credit, foreign exchange, and liquidity risks. These risks may be exacerbated, individually or in aggregate, during periods of heavy financial market volatility. In the event of a global financial crisis, such as that experienced in 2008, employment levels and interest rates may decrease with a corresponding impact on our business. As a result, we could be faced with a severe constriction of the availability of liquidity, which could impact our ability to fulfill our obligations to move customer money to its intended recipient. Additionally, we rely upon certain banking partners and third parties to originate ACH payments, process checks, execute wire transfers, and issue virtual cards, which could be similarly affected by a liquidity shortage and further exacerbate our ability to operate our business. Any loss of or inability to access customer funds could have an adverse impact on our cash position and results of operations, could require us to obtain additional sources of liquidity, and could have a material adverse effect on our business, financial condition, and results of operations.

We are licensed as a money transmitter in all required U.S. states. In certain jurisdictions where we operate, we are required to hold eligible liquid assets, as defined by the relevant regulators in each jurisdiction, equal to at least 100% of the aggregate amount of all customer balances. Our ability to manage and accurately account for the assets underlying our customer funds and comply with applicable liquid asset requirements requires a high level of internal controls. As our business continues to grow and we expand our product offerings, we will need to scale our associated internal controls. Our success requires significant public confidence in our ability to properly manage our customers’ balances and handle large and growing transaction volumes and amounts of customer funds. Any failure to maintain the necessary controls or to accurately manage our customer funds and the assets underlying our customer funds in compliance with applicable regulatory requirements could result in reputational harm, lead customers to discontinue or reduce their use of our products, and result in significant penalties and fines, possibly including the loss of our state money transmitter licenses, which would materially harm our business.

We earn revenue from interest earned on customer funds held in trust while payments are clearing, which is subject to market conditions and may decrease as customers’ adoption of electronic payments and technology continues to evolve.

During the three months ended December 31, 2019 and 2018, we generated $6.1 million and $5.6 million, respectively, in revenue from interest earned on funds held in trust on behalf of customers while payment transactions are clearing, or approximately 16% and 21% of our total revenue for such periods, respectively. During the six months ended December 31, 2019 and 2018, we generated $12.7 million and $9.8 million, respectively, in revenue from interest earned on funds held in trust on behalf of customers while payment transactions are clearing, or approximately 17% and 20% of our total revenue for such periods, respectively. While these payments are clearing, we deposit the funds in highly liquid short-term investments, and generate revenue that is correlated to the federal funds rate. When interest rates decrease, the amount of revenue we generate from these investments decreases. Additionally, because we process electronic payments faster than checks, we hold customer funds for a shorter time and consequently, earn less revenue. If our customers transition from checks to electronic payments faster than we anticipate, or to new, faster payment rails like The Clearing House’s Real Time Payments Network, our revenue could decrease and our financial results could be adversely affected.

If we are unable to attract new customers or convert trial customers into paying customers, our revenue growth and operating results will be adversely affected.

To increase our revenue, we must continue to attract new customers and increase sales to those customers. As our market matures, product and service offerings evolve, and competitors introduce lower cost or differentiated products or services that are perceived to compete with our platform, our ability to sell subscriptions could be impaired. Similarly, our subscription sales could be adversely affected if customers or users perceive that features incorporated into alternative products reduce the need for our platform or if they prefer to purchase products that are bundled with solutions offered by other companies. Further, in an effort to attract new customers, we may offer simpler, lower-priced products, which may reduce our profitability.

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We rely upon our marketing strategy of offering risk-free trials of our platform and other inbound, digital marketing strategies to generate sales opportunities. Many of our customers start a risk-free trial of our service. Converting these trial customers to paid customers often requires extensive follow-up and engagement. Many prospective customers never convert from the trial version of a product to a paid version of a product. Further, we often depend on individuals within an organization who initiate the trial versions of our products being able to convince decision makers within their organization to convert to a paid version. To the extent that these users do not become, or are unable to convince others to become, paying customers, we will not realize the intended benefits of this marketing strategy, and our ability to grow our revenue will be adversely affected. As a result of these and other factors, we may be unable to attract new customers, which would have an adverse effect on our business, revenue, gross margins, and operating results.

If we are unable to retain our current customers or sell additional functionality and services to them, our revenue growth will be adversely affected.

To increase our revenue, in addition to acquiring new customers, we must continue to retain existing customers and convince them to expand their use of our platform by increasing the number of users and incenting them to pay for additional functionality. Our ability to retain our customers and increase their usage could be impaired for a variety of reasons, including customer reaction to changes in the pricing of our products or the other risks described in this Quarterly Report on Form 10-Q. As a result, we may be unable to retain existing customers or increase the usage of our platform by them, which would have an adverse effect on our business, revenue, gross margins, and other operating results, and accordingly, on the trading price of our common stock.

Our ability to sell additional functionality to our existing customers may require more sophisticated and costly sales efforts, especially for our larger customers with more senior management and established procurement functions. Similarly, the rate at which our customers purchase additional products from us depends on several factors, including general economic conditions and the pricing of additional product functionality. If our efforts to sell additional functionality to our customers are not successful, our business and growth prospects would suffer.

While some of our contracts are non-cancelable annual subscription contracts, most of our contracts with customers and accounting firms primarily consist of open-ended arrangements that can be terminated by either party without penalty at any time. Our customers have no obligation to renew their subscriptions for our platform after the expiration of their subscription period. For us to maintain or improve our operating results, it is important that our customers continue to maintain their subscriptions on the same or more favorable terms. We cannot accurately predict renewal or expansion rates given the diversity of our customer base in terms of size, industry, and geography. Our renewal and expansion rates may decline or fluctuate as a result of several factors, including customer spending levels, customer satisfaction with our platform, decreases in the number of users, changes in the type and size of our customers, pricing changes, competitive conditions, the acquisition of our customers by other companies, and general economic conditions. If our customers do not renew their subscriptions, or if they reduce their usage of our platform, our revenue and other operating results will decline and our business will suffer. If our renewal or expansion rates fall significantly below the expectations of the public market, securities analysts, or investors, the trading price of our common stock would likely decline.

Our business depends, in part, on our relationships with accounting firms.

Our relationships with our over 4,000 accounting firm partners account for approximately 53% of our total customers and 44% of our total subscription and transaction fees as of and during the three months ended December 31, 2019, respectively. We market and sell our products and services through accounting firms. We also have a partnership with CPA.com to market our products and services to accounting firms, which then enroll their customers directly onto our platform. Although our relationships with accounting firms are independent of one another, if our reputation in the accounting industry more broadly were to suffer, or if we were unable to establish relationships with new accounting firms and grow our relationships with existing accounting firm partners, our growth prospects would weaken and our business, financial position, and operating results may be adversely affected.

Our business depends, in part, on our strategic partnerships with financial institutions.

To grow our business, we will seek to expand our relationships with our financial institution partners and to partner with additional banks and financial institutions. Establishing our strategic partner relationships, particularly with our financial institution customers and, to a lesser extent, accounting software providers, entails extensive and highly specific upfront sales efforts, with little predictability and various ancillary requirements. For example, our financial institution partners generally require us to submit to an exhaustive security audit, given the sensitivity and importance of storing their customer billing and payment data on our platform. As a result, sales to new strategic partner enterprises involve risks that may not be present or that are present to a lesser extent with sales to SMB organizations. With strategic partners, the

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decision to subscribe to our platform frequently requires the approval of multiple management personnel and more technical personnel than would be typical of a smaller organization. Accordingly, sales to strategic partners may require us to invest more time educating and selling to these potential customers. Purchases by strategic partners are also frequently subject to budget constraints and unplanned administrative, processing, and other delays, including considerable efforts to negotiate and document relationships with them. Further, we integrate our platform with our financial institution partners’ own websites and apps, which requires significant time and resources to design and deploy even after sales have been processed and documented. If we are unable to increase sales of our platform to strategic partners and manage the costs associated with marketing our platform to such customers and integrating with their systems, our business, financial position, and operating results may be adversely affected.

We may not be able to attract new financial institution strategic partners if our potential partners favor our competitors’ products or services over our platform or choose to compete with our products directly. Further, many of our existing financial institution partners have greater resources than we do and could choose to develop their own solutions to replace ours. Moreover, certain financial institutions may elect to focus on other market segments and decide to terminate their SMB-focused services. For example, in late 2018, one of our former financial institution partners chose not to renew its relationship with us due to a change in business strategy. As a result, we lost approximately 5,000 customers. Although these customers did not represent a significant amount of revenue for our business, there can be no guarantee that other financial institution partners will not choose to terminate their relationships for strategic or other reasons. If we are unsuccessful in establishing, growing, or maintaining our relationships with strategic partners, our ability to compete in the marketplace or to grow our revenue could be impaired, and our results of operations may suffer.

Our business depends, in part, on our relationship with Intuit.

In addition to our relationship with financial institutions, we rely on our strategic relationship with Intuit Inc., a leading provider of financial, accounting, and tax preparation software, to further expand our business. Our platform is integrated into Intuit’s QuickBooks product, which millions of SMBs rely on for accounting services. Achieving this integration required extensive coordination and commitment of time and resources, and has led to thousands of additional customers for us. If we are unable to increase adoption of our platform by Intuit’s customers, however, our growth prospects may be adversely affected. Additionally, if Intuit reconfigures its platform in a manner that no longer supports our integration or if Intuit terminates this relationship or replaces our platform with that of another provider, we would lose customers and our business would be adversely affected. Finally, Intuit may seek to develop a solution of its own, acquire a solution to compete with ours, thereby or decide to partner with a competitor and build a new product, which its SMB customers may select over ours, thereby harming our growth prospects and adversely affecting our results of operations.

The markets in which we participate are competitive, and if we do not compete effectively, our operating results could be harmed.

The market for financial back-office solutions is fragmented, competitive, and constantly evolving. Our competitors range from large entities that predominantly focus on enterprise resource planning solutions, to smaller niche suppliers of solutions that focus exclusively on document management, workflow management, accounts payable, accounts receivable, and/or electronic bill presentment and payment. With the introduction of new technologies and market entrants, we expect that the competitive environment will remain intense going forward. Our competitors that currently focus on enterprise solutions may offer products to SMBs that compete with ours. Accounting software providers, such as Intuit, as well as the financial institutions with which we partner, may internally develop products, acquire existing, third-party products, or may enter into partnerships or other strategic relationships that would enable them to expand their product offerings to compete with our platform or provide more comprehensive offerings than they individually had offered or achieve greater economies of scale than us. These software providers and financial institutions may have the operating flexibility to bundle competing solutions with other offerings, including offering them at a lower price or for no additional cost to customers as part of a larger sale. In addition, new entrants not currently considered to be competitors may enter the market through acquisitions, partnerships, or strategic relationships. As we look to market and sell our platform to potential customers or strategic partners with existing solutions, we must convince their internal stakeholders that our platform is superior to their current solutions.

We compete on several factors, including:

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product features, quality, and functionality;

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data asset size and ability to leverage artificial intelligence to grow faster and smarter;

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ease of deployment;

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ease of integration with leading accounting and banking technology infrastructures;

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ability to automate processes;

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cloud-based delivery architecture;

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advanced security and control features;

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regulatory compliance leadership, as evidenced by money transmitter licenses in all required US jurisdictions;

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brand recognition; and

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pricing and total cost of ownership.

Our competitors vary in size, breadth, and scope of the products and services offered. Many of our competitors and potential competitors have greater name recognition, longer operating histories, more established customer relationships, larger marketing budgets, and greater resources than us. Our competitors may be able to respond more quickly and effectively than we can to new or changing opportunities, technologies, standards, and customer requirements. For example, an existing competitor or new entrant could introduce new technology that reduces demand for our platform.

For these reasons, we may not be able to compete successfully against our current or future competitors, and this competition could result in the failure of our platform to continue to achieve or maintain market acceptance, any of which would harm our business, operating results, and financial condition.

If we do not or cannot maintain the compatibility of our platform with popular accounting software solutions or offerings of our strategic partners, our revenue and growth prospects will decline.

To deliver a comprehensive solution, our platform integrates with popular accounting software providers including Intuit QuickBooks, Oracle NetSuite, and Sage Intacct, through application program interfaces (APIs) made available by these software providers. We automatically synchronize customers, suppliers, clients, invoices, and payment transactions between our platform and these systems. This two-way sync eliminates duplicate data entry and provides the basis for managing cash- flow through an integrated solution for accounts payables, accounts receivable, and payments.

If any of the accounting software providers change the features of their APIs, discontinue their support of such APIs, restrict our access to their APIs, or alter the terms governing their use in a manner that is adverse to our business, we will not be able to provide synchronization capabilities, which could significantly diminish the value of our platform and harm our business, operating results, and financial condition.

The functionality and popularity of our platform depends, in part, on our ability to integrate our platform with the offerings of our strategic partners. Critically, our financial institution strategic partners must be able to integrate our platform into their existing offerings. These strategic partners periodically update and change their systems, and although we have been able to adapt our platform to their evolving needs in the past, there can be no guarantee that we will be able to do so in the future. In particular, if we are unable to adapt to the needs of our strategic partners’ platforms, our strategic partners may terminate their agreements with us and we may lose access to large numbers of customers as a result.

We depend upon several third-party service providers for processing our transactions. If any of our agreements with our processing providers are terminated, we could experience service interruptions.

We depend on banks, including JPMorgan Chase, The Bancorp Bank, and Silicon Valley Bank, to process ACH transactions and checks for our customers. We have entered into treasury services or similar agreements with these banks for payment processing and related services. Those agreements include significant security, compliance, and operational obligations. If we are not able to comply with those obligations or our agreements with the processing banks are terminated for any reason, we could experience service interruptions as well as delays and additional expenses in arranging new services.

Similarly, we have an agreement with Cambridge Mercantile Corp., under which Cambridge provides us with cross-border wire transfer capabilities. This arrangement has enabled us to offer our cross-border payments service, which we view as a significant growth opportunity for our business. Finally, we have an agreement with Comdata Inc., under which Comdata acts as our program manager and card issuer processor for our virtual card program.

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If any of our banking agreements related to ACH transactions or checks, or our agreements with Cambridge or Comdata are terminated, we may experience business interruptions and delays, and be forced to incur additional expenses, potentially interfering with our existing customer relationships or making us less attractive to potential new customers.

Interruptions or delays in the services provided by AWS or other third-party data centers or internet service providers could impair the delivery of our platform and our business could suffer.

We host our platform using third-party cloud infrastructure services, including co-location facilities at Equinix, Iron Mountain, and Digital West. We also use public cloud hosting with Amazon Web Services (AWS). All of our products utilize resources operated by us through these providers. We therefore depend on our third-party cloud providers’ ability to protect their data centers against damage or interruption from natural disasters, power or telecommunications failures, criminal acts, and similar events. Our operations depend on protecting the cloud infrastructure hosted by such providers by maintaining their respective configuration, architecture, and interconnection specifications, as well as the information stored in these virtual data centers and transmitted by third-party internet service providers. We have periodically experienced service disruptions in the past, and we cannot assure you that we will not experience interruptions or delays in our service in the future. We may also incur significant costs for using alternative equipment or taking other actions in preparation for, or in reaction to, events that damage the data storage services we use. Although we have disaster recovery plans that utilize multiple data storage locations, any incident affecting their infrastructure that may be caused by fire, flood, severe storm, earthquake, power loss, telecommunications failures, unauthorized intrusion, computer viruses and disabling devices, natural disasters, military actions, terrorist attacks, negligence, and other similar events beyond our control could negatively affect our platform. Any prolonged service disruption affecting our platform for any of the foregoing reasons could damage our reputation with current and potential customers, expose us to liability, cause us to lose customers, or otherwise harm our business. Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur.

Our platform is accessed by many customers, often at the same time. As we continue to expand the number of our customers and products available to our customers, we may not be able to scale our technology to accommodate the increased capacity requirements, which may result in interruptions or delays in service. In addition, the failure of data centers, internet service providers, or other third-party service providers to meet our capacity requirements could result in interruptions or delays in access to our platform or impede our ability to grow our business and scale our operations. If our third-party infrastructure service agreements are terminated, or there is a lapse of service, interruption of internet service provider connectivity, or damage to data centers, we could experience interruptions in access to our platform as well as delays and additional expense in arranging new facilities and services

Moreover, we are in the process of gradually migrating our systems from internal data centers and smaller vendors to AWS. AWS provides us with computing and storage capacity pursuant to an agreement that continues until terminated by either party. We have a limited history of operating on AWS. As we migrate our data from our servers to AWS’ servers, we may experience some duplication and incur additional costs. If our data migration is not successful, or if AWS unexpectedly terminates our agreement, we would be forced to incur additional expenses to locate an alternative provider and may experience outages or disruptions to our service. Any service disruption affecting our platform during such migration or while operating on the AWS cloud infrastructure could damage our reputation with current and potential customers, expose us to liability, cause us to lose customers, or otherwise harm our business.

We operate in an emerging and evolving market, which may develop more slowly or differently than we expect. If our market does not grow as we expect, or if we cannot expand our platform to meet the demands of this market, our revenue may decline or fail to grow, and we may incur additional operating losses.

Our primary competition remains the legacy manual processes that SMBs have relied on for generations. Our success will depend, to a substantial extent, on the widespread adoption of our cloud- based back-office solutions as an alternative to existing solutions or adoption by customers that are not using any such solutions at all. Some organizations may be reluctant or unwilling to use our platform for several reasons, including concerns about additional costs, uncertainty regarding the reliability and security of cloud-based offerings, or lack of awareness of the benefits of our platform. Our ability to expand sales of our platform depends on several factors, including prospective customers’ awareness of our platform, the timely completion, introduction, and market acceptance of enhancements to our platform or new products that we may introduce, the effectiveness of our marketing programs, the costs of our platform, and the success of our competitors. If we are unsuccessful in developing and marketing our platform, or if organizations do not perceive or value the benefits of our platform as an alternative to legacy systems, the market for our platform may not continue to develop or may develop more slowly than we expect, either of which would harm our growth prospects and operating results.

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Payments and other financial services-related regulations and oversight are material to our business. Our failure to comply could materially harm our business.

The local, state, and federal laws, rules, regulations, licensing schemes, and industry standards that govern our business include, or may in the future include, those relating to banking, deposit-taking, cross-border and domestic money transmission, foreign exchange, payments services (such as money transmission, payment processing, and settlement services), anti-money laundering, combating terrorist financing, escheatment, international sanctions regimes, and compliance with the Payment Card Industry Data Security Standard, a set of requirements designed to ensure that all companies that process, store, or transmit payment card information maintain a secure environment to protect cardholder data. We do not directly collect or store payment card information; instead, we rely on a third-party payment processor to do so. These laws, rules, regulations, licensing schemes, and standards are enforced by multiple authorities and governing bodies in the United States, including the Department of the Treasury, the Federal Deposit Insurance Corporation, the SEC, self-regulatory organizations, and numerous state and local agencies. As we expand into new jurisdictions, the number of foreign laws, rules, regulations, licensing schemes, and standards governing our business will expand as well. In addition, as our business and products continue to develop and expand, we may become subject to additional laws, rules, regulations, licensing schemes, and standards. We may not always be able to accurately predict the scope or applicability of certain laws, rules, regulations, licensing schemes, or standards to our business, particularly as we expand into new areas of operations, which could have a significant negative effect on our existing business and our ability to pursue future plans.

Our subsidiary, Bill.com, LLC, has obtained licenses or made registrations, as applicable, to operate as a money transmitter (or its equivalent) in the United States, in the District of Columbia, Commonwealth of Puerto Rico, and, to the best of our knowledge, in all the states where such licensure or registration is required for our business. As a licensed money transmitter, we are subject to obligations and restrictions with respect to the investment of customer funds, reporting requirements, bonding requirements, minimum capital requirements, and inspection by state regulatory agencies concerning various aspects of our business. Evaluation of our compliance efforts, as well as the questions of whether and to what extent our products and services are considered money transmission, are matters of regulatory interpretation and could change over time. In the past, regulators have identified violations and we have been subject to fines and other penalties by regulatory authorities due to their interpretations and applications to our business of their respective state money transmission laws. Regulators and third-party auditors have also identified gaps in our anti-money laundering program. In the future, as a result of the regulations applicable to our business, we could be subject to investigations and resulting liability, including governmental fines, restrictions on our business, or other sanctions, and we could be forced to cease conducting certain aspects of our business with residents of certain jurisdictions, be forced to change our business practices in certain jurisdictions, or be required to obtain additional licenses or regulatory approvals. There can be no assurance that we will be able to obtain or maintain any such licenses, and, even if we were able to do so, there could be substantial costs and potential product changes involved in maintaining such licenses, which could have a material and adverse effect on our business. In addition, there are substantial costs and potential product changes involved in maintaining and renewing such licenses, certifications, and approvals, and we could be subject to fines or other enforcement action if we are found to violate disclosure, reporting, anti-money laundering, capitalization, corporate governance, or other requirements of such licenses. These factors could impose substantial additional costs, involve considerable delay to the development or provision of our products or services, require significant and costly operational changes, or prevent us from providing our products or services in any given market.

Government agencies may impose new or additional rules on money transmission, including regulations that:

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prohibit, restrict, and/or impose taxes or fees on money transmission transactions in, to or from certain countries or with certain governments, individuals, and entities;

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impose additional customer identification and customer due diligence requirements;

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impose additional reporting or recordkeeping requirements, or require enhanced transaction monitoring;

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limit the types of entities capable of providing money transmission services, or impose additional licensing or registration requirements;

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impose minimum capital or other financial requirements;

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limit or restrict the revenue that may be generated from money transmission, including revenue from interest earned on customer funds, transaction fees, and revenue derived from foreign exchange;

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require enhanced disclosures to our money transmission customers;

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require the principal amount of money transmission originated in a country to be invested in that country or held in trust until paid;

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limit the number or principal amount of money transmission transactions that may be sent to or from a jurisdiction, whether by an individual or in the aggregate; and

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restrict or limit our ability to process transactions using centralized databases, for example, by requiring that transactions be processed using a database maintained in a particular country or region.

If we lose our founder or key members of our management team or are unable to attract and retain executives and employees we need to support our operations and growth, our business may be harmed.

Our success and future growth depend upon the continued services of our management team and other key employees. Our founder and Chief Executive Officer, René Lacerte, is critical to our overall management, as well as the continued development of our products, strategic partnerships, our culture, our relationships with accounting firms, and our strategic direction. From time to time, there may be changes in our management team resulting from the hiring or departure of executives and key employees, which could disrupt our business. Our senior management and key employees are employed on an at-will basis. We currently do not have “key person” insurance on any of our employees. Certain of our key employees have been with us for a long period of time and have fully vested stock options or other long-term equity incentives that may become valuable and will be publicly tradable now that we are a public company. The loss of our founder, or one or more of our senior management, or other key employees could harm our business, and we may not be able to find adequate replacements. We cannot ensure that we will be able to retain the services of any members of our senior management or other key employees or that we would be able to timely replace members of our senior management or other key employees should any of them depart.

If we fail to offer high-quality customer support, or if our support is more expensive than anticipated, our business and reputation could suffer.

Our customers rely on our customer support services, which we refer to as customer success, to resolve issues and realize the full benefits provided by our platform. High-quality support is also important for the renewal and expansion of our subscriptions with existing customers. We primarily provide customer support over chat and email, with limited phone-based support. If we do not help our customers quickly resolve issues and provide effective ongoing support, or if our support personnel or methods of providing support are insufficient to meet the needs of our customers, our ability to retain customers, increase adoption by our existing customers and acquire new customers could suffer, and our reputation with existing or potential customers could be harmed. If we are not able to meet the customer support needs of our customers by chat and email during the hours that we currently provide support, we may need to increase our support coverage and provide additional phone-based support, which may reduce our profitability.

If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards, changing regulations, and changing business needs, requirements, or preferences, our products may become less competitive.

The market for SMB financial back-office solutions is relatively new and subject to ongoing technological change, evolving industry standards, payment methods and changing regulations, and changing customer needs, requirements, and preferences. The success of our business will depend, in part, on our ability to adapt and respond effectively to these changes on a timely basis, including launching new products and services. The success of any new product and service, or any enhancements or modifications to existing products and services, depends on several factors, including the timely completion, introduction, and market acceptance of such products and services, enhancements, and modifications. If we are unable to enhance our platform, add new payment methods or develop new products that keep pace with technological and regulatory change and achieve market acceptance, or if new technologies emerge that are able to deliver competitive products and services at lower prices, more efficiently, more conveniently, or more securely than our products, our business, operating results, and financial condition would be adversely affected.

Furthermore, modifications to our existing platform or technology will increase our research and development expenses. Any failure of our services to operate effectively with existing or future network platforms and technologies could reduce the demand for our services, result in customer dissatisfaction and adversely affect our business.

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If the prices we charge for our services are unacceptable to our customers, our operating results will be harmed.

We generate revenue by charging customers a fixed monthly rate per user for subscriptions as well as transaction fees. As the market for our platform matures, or as new or existing competitors introduce new products or services that compete with ours, we may experience pricing pressure and be unable to renew our agreements with existing customers or attract new customers at prices that are consistent with our pricing model and operating budget. Our pricing strategy for new products we introduce, including our virtual card and cross-border payment products, may prove to be unappealing to our customers, and our competitors could choose to bundle certain products and services competitive with ours. If this were to occur, it is possible that we would have to change our pricing strategies or reduce our prices, which could harm our revenue, gross profits, and operating results.

We typically provide service level commitments under our strategic partner agreements. If we fail to meet these contractual commitments, we could be obligated to provide credits or refunds for prepaid amounts related to unused subscription services or face contract terminations, which could adversely affect our revenue.

Our agreements with our strategic partners typically contain service level commitments on a monthly basis. If we are unable to meet the stated service level commitments or suffer extended periods of unavailability for our platform, we may be contractually obligated to provide these partners with service credits, up to 10% of the partner’s subscription fees for the month in which the service level was not met. In addition, we could face contract terminations, in which case we would be subject to refunds for prepaid amounts related to unused subscription services. Our revenue could be significantly affected if we suffer unexcused downtime under our agreements with our partners.

Further, any extended service outages could adversely affect our reputation, revenue, and operating results.

We may not be able to scale our business quickly enough to meet our customers’ growing needs, and if we are not able to grow efficiently, our operating results could be harmed.

As usage of our platform grows and we sign additional strategic partners, we will need to devote additional resources to improving and maintaining our infrastructure and computer network and integrating with third-party applications to maintain the performance of our platform. In addition, we will need to appropriately scale our internal business systems and our services organization, including customer support, risk and compliance operations, and professional services, to serve our growing customer base.

Any failure of or delay in these efforts could result in service interruptions, impaired system performance, and reduced customer satisfaction, resulting in decreased sales to new customers, lower subscription renewal rates by existing customers, the issuance of service credits, or requested refunds, all of which could hurt our revenue growth. If sustained or repeated, these performance issues could reduce the attractiveness of our platform to customers and could result in lost customer opportunities and lower renewal rates, any of which could hurt our revenue growth, customer loyalty, and our reputation. Even if we are successful in these efforts to scale our business, they will be expensive and complex, and require the dedication of significant management time and attention. We could also face inefficiencies or service disruptions as a result of our efforts to scale our internal infrastructure. We cannot be sure that the expansion and improvements to our internal infrastructure will be effectively implemented on a timely basis, if at all, and such failures could adversely affect our business, operating results, and financial condition.

The failure to attract and retain additional qualified personnel and any restrictions on the movement of personnel could prevent us from executing our business strategy and growth plans.

To execute our business strategy, we must attract and retain highly qualified personnel. Competition for executive officers, software developers, compliance and risk management personnel and other key employees in our industry and location is intense and increasing. We compete with many other companies for software developers with high levels of experience in designing, developing, and managing cloud-based software and payment systems, as well as for skilled legal and compliance and risk operations professionals. The current regulatory environment related to immigration may increase the likelihood that immigration laws may be modified to further limit the availability of H1-B and other visas. If a new or revised visa program is implemented, it may impact our ability to recruit, hire, retain or effectively collaborate with qualified skilled personnel, including in the areas of artificial intelligence and machine learning, and payment systems and risk management, which could adversely impact our business, operating results and financial condition. Many of the companies with which we compete for experienced personnel have greater resources than we do and can frequently offer such personnel substantially greater compensation than we can offer. If we fail to identify, attract, develop and integrate new personnel, or fail to retain and motivate our current personnel, our growth prospects would be adversely affected.

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Failure to effectively develop and expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our products.

Our ability to increase our customer base and achieve broader market acceptance of our platform will depend to a significant extent on our ability to expand our sales and marketing organizations, and to deploy our sales and marketing resources efficiently. We plan to continue expanding our direct-to-SMB sales force as well as our sales force focused on identifying new strategic partners. We also dedicate significant resources to sales and marketing programs, including digital advertising through services such as Google AdWords. The effectiveness and cost of our online advertising has varied over time and may vary in the future due to competition for key search terms, changes in search engine use, and changes in the search algorithms used by major search engines. These efforts will require us to invest significant financial and other resources. Our business and operating results will be harmed if our sales and marketing efforts do not generate significant increases in revenue. We may not achieve anticipated revenue growth from expanding our sales force if we are unable to hire, develop, integrate, and retain talented and effective sales personnel, if our new and existing sales personnel are unable to achieve desired productivity levels in a reasonable period of time, or if our sales and marketing programs and advertising are not effective.

We are subject to governmental regulation and other legal obligations, particularly those related to privacy, data protection, and information security, and our actual or perceived failure to comply with such obligations could harm our business, by resulting in litigation, fines, penalties, or adverse publicity and reputational damage that may negatively affect the value of our business and decrease the price of our common stock. Compliance with such laws could also result in additional costs and liabilities to us or inhibit sales of our products.

Our customers, their suppliers, customers and other users store personal and business information, financial information and other sensitive information on our platform. In addition, we receive, store, and process personal and business information and other data from and about actual and prospective customers and users, in addition to our employees and service providers. Our handling of data is subject to a variety of laws and regulations, including regulation by various government agencies, such as the U.S. Federal Trade Commission (FTC), and various state, local, and foreign agencies. Our data handling also is subject to contractual obligations and industry standards.

The U.S. federal and various state and foreign governments have adopted or proposed limitations on the collection, distribution, use, and storage of data relating to individuals and businesses, including the use of contact information and other data for marketing, advertising, and other communications with individuals and businesses. In the United States, various laws and regulations apply to the collection, processing, disclosure, and security of certain types of data, including the Electronic Communications Privacy Act, the Computer Fraud and Abuse Act, the Gramm Leach Bliley Act, and state laws relating to privacy and data security. Additionally, the FTC and many state attorneys general are interpreting federal and state consumer protection laws as imposing standards for the online collection, use, dissemination, and security of data. For example, in June 2018, California enacted the California Consumer Privacy Act, which became operative on January 1, 2020 and broadly defines personal information, gives California residents expanded privacy rights and protections, and provides for civil penalties for violations and a private right of action for data breaches. Many aspects of the California Consumer Privacy Act and its interpretation remain unclear, and its full impact on our business and operations remains uncertain. The laws and regulations relating to privacy and data security are evolving, can be subject to significant change, and may result in ever-increasing regulatory and public scrutiny and escalating levels of enforcement and sanctions.

In addition, several foreign countries and governmental bodies, including the European Union, have laws and regulations dealing with the handling and processing of personal information obtained from their residents, which in certain cases are more restrictive than those in the United States. Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure, and security of various types of data, including data that identifies or may be used to identify an individual, such as names, email addresses, and in some jurisdictions, Internet Protocol (IP) addresses. While we believe that the products and services that we currently offer do not subject us to such laws or regulations in foreign jurisdictions, such laws and regulations may be modified or subject to new or different interpretations, and new laws and regulations may be enacted in the future.

Within the European Union, the General Data Protection Regulation (GDPR), significantly increases the level of sanctions for non-compliance from those in existing EU data protection law and imposes direct obligations on data processors in addition to data controllers. EU data protection authorities have the power to impose administrative fines for violations of the GDPR of up to a maximum of €20 million or 4% of the data controller’s or data processor’s total worldwide global turnover for the preceding fiscal year, whichever is higher, and violations of the GDPR may also lead to damages claims by data controllers and data subjects. Such penalties are in addition to any civil litigation claims by data

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controllers, customers, and data subjects. While we believe that the products and services that we currently offer do not subject us to the GDPR, the GDPR and other laws and regulations relating to privacy, data protection, and information security may be modified or subject to new or different interpretations or may be modified in the future, or modifications or enhancements that we make to our products may subject us to GDPR, or we otherwise may become, or have it asserted that we are, subject to the GDPR or other laws or regulations relating to privacy, data protection, or information security. If we are, or are asserted to be, subject to the GDPR, we may need to take steps to cause our processes to be compliant with applicable portions of the GDPR, but we cannot assure you that we will be able to implement changes in a timely manner or without significant disruption to our business, or that such steps will be effective, and we may face the risk of liability under the GDPR.

The scope and interpretation of the laws that are or may be applicable to us are often uncertain and may be conflicting, as a result of the rapidly evolving regulatory framework for privacy issues worldwide. For example, laws relating to the liability of providers of online services for activities of their users and other third parties are currently being 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 ads posted, or the content provided by users. As a result of the laws that are or may be applicable to us, and due to the sensitive nature of the information we collect, we have implemented policies and procedures to preserve and protect our data and our customers’ data against loss, misuse, corruption, misappropriation caused by systems failures, or unauthorized access. If our policies, procedures, or measures relating to privacy, data protection, marketing, or customer communications fail to comply with laws, regulations, policies, legal obligations, or industry standards, we may be subject to governmental enforcement actions, litigation, regulatory investigations, fines, penalties, and negative publicity, and could cause our application providers, customers and partners to lose trust in us, and have an adverse effect on our business, operating results, and financial condition.

In addition to government regulation, privacy advocates and industry groups may propose new and different self-regulatory standards that may apply to us. Because the interpretation and application of privacy and data protection laws, regulations, rules, and other standards are still uncertain, it is possible that these laws, rules, regulations, and other actual or alleged legal obligations, such as contractual or self-regulatory obligations, may be interpreted and applied in a manner that is inconsistent with our existing data management practices or the functionality of our platform. If so, in addition to the possibility of fines, lawsuits and other claims, we could be required to fundamentally change our business activities and practices or modify our software, which could have an adverse effect on our business.

Any failure or perceived failure by us to comply with laws, regulations, policies, legal, or contractual obligations, industry standards, or regulatory guidance relating to privacy or data security, may result in governmental investigations and enforcement actions, litigation, fines and penalties, or adverse publicity, and could cause our customers and partners to lose trust in us, which could have an adverse effect on our reputation and business. We expect that there will continue to be new proposed laws, regulations, and industry standards relating to privacy, data protection, marketing, consumer communications, and information security, and we cannot determine the impact such future laws, regulations, and standards may have on our business. Future laws, regulations, standards, and other obligations or any changed interpretation of existing laws or regulations could impair our ability to develop and market new functionality and maintain and grow our customer base and increase revenue. Future restrictions on the collection, use, sharing, or disclosure of data, or additional requirements for express or implied consent of our customers, partners, or end users for the use and disclosure of such information could require us to incur additional costs or modify our platform, possibly in a material manner, and could limit our ability to develop new functionality.

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, which would negatively affect our business, financial condition, and operating results. In addition, the increased attention focused upon liability issues as a result of lawsuits and legislative proposals could harm our reputation or otherwise adversely affect the growth of our business. Furthermore, any costs incurred as a result of this potential liability could harm our operating results.

We, our strategic partners, our customers, and others who use our services obtain and process a large amount of sensitive data. Any real or perceived improper or unauthorized use of, disclosure of, or access to such data could harm our reputation as a trusted brand, as well as have a material adverse effect on our business.

We, our strategic partners, our customers, and the third-party vendors and data centers that we use, obtain and process large amounts of sensitive data, including data related to our customers and their transactions, as well as other data of the counterparties to their payments. We face risks, including to our reputation as a trusted brand, in the handling and protection of this data, and these risks will increase as our business continues to expand to include new products and technologies.

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Cybersecurity incidents and malicious internet-based activity continue to increase generally, and providers of cloud-based services have frequently been targeted by such attacks. These cybersecurity challenges, including threats to our own IT infrastructure or those of our customers or third-party providers, may take a variety of forms ranging from stolen bank accounts, business email compromise, customer employee fraud, account takeover, check fraud or cybersecurity attacks, to “mega breaches” targeted against cloud-based services and other hosted software, which could be initiated by individual or groups of hackers or sophisticated cyber criminals. A cybersecurity incident or breach could result in disclosure of confidential information and intellectual property, or cause production downtimes and compromised data. We have in the past experienced cybersecurity incidents of limited scale. We may be unable to anticipate or prevent techniques used in the future to obtain unauthorized access or to sabotage systems because they change frequently and often are not detected until after an incident has occurred. As we increase our customer base and our brand becomes more widely known and recognized, third parties may increasingly seek to compromise our security controls or gain unauthorized access to our sensitive corporate information or our customers’ data.

We have administrative, technical, and physical security measures in place, and we have policies and procedures in place to contractually require service providers to whom we disclose data to implement and maintain reasonable privacy and security measures. However, if our privacy protection or security measures or those of the previously mentioned third parties are inadequate or are breached as a result of third-party action, employee or contractor error, malfeasance, malware, phishing, hacking attacks, system error, software bugs or defects in our products, trickery, process failure, or otherwise, and, as a result, there is improper disclosure of, or someone obtains unauthorized access to or exfiltrates funds or sensitive information, including personally identifiable information, on our systems or our partners’ systems, or if we suffer a ransomware or advanced persistent threat attack, or if any of the foregoing is reported or perceived to have occurred, our reputation and business could be damaged. Recent high-profile security breaches and related disclosures of sensitive data by large institutions suggest that the risk of such events is significant, even if privacy protection and security measures are implemented and enforced. If sensitive information is lost or improperly disclosed or threatened to be disclosed, we could incur significant costs associated with remediation and the implementation of additional security measures, and may incur significant liability and financial loss, and be subject to regulatory scrutiny, investigations, proceedings, and penalties.

In addition, our financial institution strategic partners conduct regular audits of our cybersecurity program, and if any of them were to conclude that our systems and procedures are insufficiently rigorous, they could terminate their relationships with us, and our financial results and business could be adversely affected. Under our terms of service and our contracts with strategic partners, if there is a breach of payment information that we store, we could be liable to the partner for their losses and related expenses. Additionally, if our own confidential business information were improperly disclosed, our business could be materially and adversely affected. A core aspect of our business is the reliability and security of our platform. Any perceived or actual breach of security, regardless of how it occurs or the extent of the breach, could have a significant impact on our reputation as a trusted brand, cause us to lose existing partners or other customers, prevent us from obtaining new partners and other customers, require us to expend significant funds to remedy problems caused by breaches and implement measures to prevent further breaches, and expose us to legal risk and potential liability including those resulting from governmental or regulatory investigations, class action litigation, and costs associated with remediation, such as fraud monitoring and forensics. Any actual or perceived security breach at a company providing services to us or our customers could have similar effects.

While we maintain cybersecurity insurance, our insurance may be insufficient or may not cover all liabilities incurred by such attacks. We also cannot be certain that our insurance coverage will be adequate for data handling or data security liabilities actually incurred, that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition, operating results, and reputation.

We currently handle cross-border payments and plan to expand our offering to new customers and to make payments to new countries, creating a variety of operational challenges.

A component of our growth strategy involves our cross-border payments product and, ultimately, expanding our operations internationally. Although we do not currently serve customers outside the United States, starting in 2018 we introduced cross-border payments through our relationship with Cambridge Mercantile, and now offer our United States-based customers the ability to disburse funds to over 130 countries. We are continuing to adapt to and develop strategies to address payments to new countries. However, there is no guarantee that such efforts will have the desired effect.

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Our cross-border payments product and international operations strategy involve a variety of risks, including:

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changes in financial regulations and our ability to comply and obtain any relevant licenses;

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currency exchange rate fluctuations and the resulting effect on our revenue and expenses, and the cost and risk of entering into hedging transactions;

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reduction in cross-border trade resulting from trade sanctions, other trade regulations, and relations;

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potential application of more stringent regulations relating to privacy, data protection, and data security, and the authorized use of, or access to, commercial and personal information;

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potential changes in trade relations, regulations, or laws;

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exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act (FCPA), U.S. bribery laws, the UK Bribery Act, and similar laws and regulations in other jurisdictions; and

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unexpected changes in tax laws.

If we invest substantial time and resources to further expand our cross-border payments offering and are unable to do so successfully and in a timely manner, our business and operating results may suffer.

Future acquisitions, strategic investments, partnerships, collaborations, or alliances could be difficult to identify and integrate, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our operating results and financial condition.

We may in the future seek to acquire or invest in businesses, products, or technologies that we believe could complement or expand our platform, enhance our technical capabilities, or otherwise offer growth opportunities. The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses in identifying, investigating, and pursuing suitable acquisitions, whether or not such acquisitions are completed. In addition, we have no experience in acquiring other businesses, and we may not successfully identify desirable acquisition targets, or if we acquire additional businesses, we may not be able to integrate them effectively following the acquisition.

Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, as well as unfavorable accounting treatment and exposure to claims and disputes by third parties, including intellectual property claims. We also may not generate sufficient financial returns to offset the costs and expenses related to any acquisitions. In addition, if an acquired business fails to meet our expectations, our business, operating results, and financial condition may suffer.

We use open source software in our products, which could subject us to litigation or other actions.

We use open source software in our products. From time to time, there have been claims challenging the ownership of open source software against companies that incorporate it into their products. As a result, we could be subject to lawsuits by parties claiming ownership of what we believe to be open source software. Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition, or require us to devote additional research and development resources to change our products. In addition, if we were to combine our proprietary software products with open source software in a certain manner under certain open source licenses, we could be required to release the source code of our proprietary software products. If we inappropriately use or incorporate open source software subject to certain types of open source licenses that challenge the proprietary nature of our products, we may be required to re-engineer such products, discontinue the sale of such products, or take other remedial actions.

If we fail to maintain and enhance our brand, our ability to expand our customer base will be impaired and our business, operating results, and financial condition may suffer.

We believe that maintaining and enhancing the Bill.com brand is important to support the marketing and sale of our existing and future products to new customers and strategic partners and to expand sales of our platform to existing customers and strategic partners. Our ability to protect our brand is limited as a result of its descriptive nature. Successfully maintaining and enhancing our brand will depend largely on the effectiveness of our marketing and demand generation efforts, our ability to provide reliable products that continue to meet the needs of our customers at competitive prices, our ability to maintain our customers’ trust, our ability to continue to develop new functionality and products, and our ability to successfully differentiate our platform and products from competitive products and services. Our brand promotion activities may not generate customer awareness or yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incur in building our brand. If we fail to successfully promote and maintain our brand, our business could suffer.

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If we fail to adequately protect our proprietary rights, our competitive position could be impaired and we may lose valuable assets, generate less revenue and incur costly litigation to protect our rights.

Our success is dependent, in part, upon protecting our proprietary technology. We rely on a combination of patents, copyrights, trademarks, service marks, trade secret laws, and contractual provisions to establish and protect our proprietary rights. However, the steps we take to protect our intellectual property may be inadequate. While we have been issued patents in the United States and have additional patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications. In addition, any patents issued in the future may not provide us with competitive advantages or may be successfully challenged by third parties. Any of our patents, trademarks, or other intellectual property rights may be challenged or circumvented by others or invalidated through administrative process or litigation. There can be no guarantee that others will not independently develop similar products, duplicate any of our products, or design around our patents. Furthermore, legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain. Despite our precautions, it may be possible for unauthorized third parties to copy our products and use information that we regard as proprietary to create products and services that compete with ours.

No assurance can be given that these agreements will be effective in controlling access to and distribution of our products and proprietary information. Further, these agreements do not prevent our competitors or partners from independently developing technologies that are substantially equivalent or superior to our platform.

We have been in the past, and may in the future be, subject to intellectual property disputes, which are costly and may subject us to significant liability and increased costs of doing business.

We have been in the past and may in the future become subject to intellectual property disputes. Lawsuits are time-consuming and expensive to resolve and they divert management’s time and attention. Although we carry insurance, our insurance may not cover potential claims of this type or may not be adequate to indemnify us for all liability that may be imposed. We cannot predict the outcome of lawsuits and cannot assure you that the results of any such actions will not have an adverse effect on our business, operating results, or financial condition.

The software industry is characterized by the existence of many patents, copyrights, trademarks, trade secrets, and other intellectual and proprietary rights. Companies in the software industry are often required to defend against litigation claims based on allegations of infringement or other violations of intellectual property rights. Our technologies may not be able to withstand any third-party claims against their use. In addition, many companies have the capability to dedicate substantially greater resources to enforce their intellectual property rights and to defend claims that may be brought against them. Any litigation may also involve patent holding companies or other adverse patent owners that have no relevant product revenue, and therefore, our patents may provide little or no deterrence as we would not be able to assert them against such entities or individuals. If a third party is able to obtain an injunction preventing us from accessing such third-party intellectual property rights, or if we cannot license or develop alternative technology for any infringing aspect of our business, we would be forced to limit or stop sales of our software or cease business activities related to such intellectual property. Any inability to license third-party technology in the future would have an adverse effect on our business or operating results and would adversely affect our ability to compete. We may also be contractually obligated to indemnify our customers in the event of infringement of a third party’s intellectual property rights. Responding to such claims, regardless of their merit, can be time consuming, costly to defend, and damaging to our reputation and brand.

Indemnity provisions in various agreements potentially expose us to substantial liability for intellectual property infringement, data protection, and other losses.

Our agreements with strategic partners and some larger customers include indemnification provisions under which we agree to indemnify them for losses suffered or incurred as a result of claims of intellectual property infringement, data protection, damages caused by us to property or persons, or other liabilities relating to or arising from our platform or other contractual obligations. Some of these indemnity agreements provide for uncapped liability and some indemnity provisions survive termination or expiration of the applicable agreement. Large indemnity payments could harm our business, operating results, and financial condition. Although we normally limit our liability with respect to such obligations in our contracts with direct customers and with customers acquired through our accounting firm partners, we may still incur substantial liability, and we may be required to cease use of certain functions of our platform or products, as a result of IP-related claims. Any dispute with a customer with respect to these obligations could have adverse effects on our relationship with that customer and other existing or new customers, and harm our business and operating results. In addition, although we carry insurance, our insurance may not be adequate to indemnify us for all liability that may be imposed, or otherwise protect us from liabilities or damages with respect to claims alleging compromises of customer data, and any such coverage may not continue to be available to us on acceptable terms or at all.

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Changes to payment card networks fees or rules could harm our business.

We are required to comply with Mastercard, American Express, and Visa payment card network operating rules in connection with our virtual card payments service and our subscription billing engine. We have agreed to reimburse our service providers for any fines they are assessed by payment card networks as a result of any rule violations by us. We may also be directly liable to the payment card networks for rule violations. The payment card networks set and interpret the card operating rules. The payment card networks could adopt new operating rules or interpret or reinterpret existing rules that we or our processors might find difficult or even impossible to follow, or costly to implement. We also may seek to introduce other card-related products in the future, which would entail additional operating rules. As a result of any violations of rules, new rules being implemented, or increased fees, we could lose our ability to make payments using virtual cards, or such payments could become prohibitively expensive for us or for our customers. If we are unable to make customer payments to vendors using virtual cards, our business would be adversely affected.

Our business is subject to extensive government regulation and oversight. Our failure to comply with extensive, complex, overlapping, and frequently changing rules, regulations, and legal interpretations could materially harm our business.

Our success and increased visibility may result in increased regulatory oversight and enforcement and more restrictive rules and regulations that apply to our business. We are subject to a wide variety of local, state, federal, and international laws, rules, regulations, licensing schemes, and industry standards in the United States and in other countries in which we operate. These laws, rules, regulations, licensing schemes, and standards govern numerous areas that are important to our business. In addition to the payments and financial services-related regulations, and the privacy, data protection, and information security-related laws described elsewhere, our business is also subject to, without limitation, rules and regulations applicable to: securities, labor and employment, immigration, competition, and marketing and communications practices. Laws, rules, regulations, licensing schemes, and standards applicable to our business are subject to changes and evolving interpretations and application, including by means of legislative changes and/or executive orders, and it can be difficult to predict how they may be applied to our business and the way we conduct our operations, particularly as we introduce new products and services and expand into new jurisdictions. We may not be able to respond quickly or effectively to regulatory, legislative, and other developments, and these changes may in turn impair our ability to offer our existing or planned features, products, and services and/or increase our cost of doing business.

Although we have a compliance program focused on the laws, rules, regulations, licensing schemes, and industry standards that we have assessed as applicable to our business and we are continually investing more in this program, there can be no assurance that our employees or contractors will not violate such laws, rules, regulations, licensing schemes, and industry standards. Any failure or perceived failure to comply with existing or new laws, rules, regulations, licensing schemes, industry standards, or orders of any governmental authority (including changes to or expansion of the interpretation of those laws, regulations, standards or orders), may:

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subject us to significant fines, penalties, criminal and civil lawsuits, license suspension or revocation, forfeiture of significant assets, audits, inquiries, whistleblower complaints, adverse media coverage, investigations, and enforcement actions in one or more jurisdictions levied by federal, state, local or foreign regulators, state attorneys general and private plaintiffs who may be acting as private attorneys general pursuant to various applicable federal, state, and local laws;

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result in additional compliance and licensure requirements;

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increase regulatory scrutiny of our business; and

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restrict our operations and force us to change our business practices or compliance program, make product or operational changes, or delay planned product launches or improvements.

The complexity of U.S. federal and state regulatory and enforcement regimes, coupled with the scope of our international operations and the evolving regulatory environment, could result in a single event giving rise to many overlapping investigations and legal and regulatory proceedings by multiple government authorities in different jurisdictions.

Any of the foregoing could, individually or in the aggregate, harm our reputation as a trusted provider, damage our brands and business, cause us to lose existing customers, prevent us from obtaining new customers, require us to expend significant funds to remedy problems caused by breaches and to avert further breaches, expose us to legal risk and potential liability, and adversely affect our results of operations and financial condition.

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We may require additional capital to support the growth of our business, and this capital might not be available on acceptable terms, if at all.

We have funded our operations since inception primarily through equity financings, sales of subscriptions to our products, and usage-based transaction fees. We cannot be certain when or if our operations will generate sufficient cash to fully fund our ongoing operations or the growth of our business. We intend to continue to make investments to support our business, which may require us to engage in equity or debt financings to secure additional funds. Additional financing may not be available on terms favorable to us, if at all. If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could harm our business, operating results, and financial condition. If we incur additional debt, the debt holders would have rights senior to holders of common stock to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock. Furthermore, if we issue additional equity securities, stockholders will experience dilution, and the new equity securities could have rights senior to those of our common stock. Because our decision to issue securities in the future will depend on numerous considerations, including factors beyond our control, we cannot predict or estimate the amount, timing, or nature of any future issuances of debt or equity securities. As a result, our stockholders bear the risk of future issuances of debt or equity securities reducing the value of our common stock and diluting their interests.

Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.

As of June 30, 2019, we had U.S. federal net operating loss (NOL) carryforwards of approximately $104.2 million and state net operating loss carryforwards of approximately $71.3 million. The federal and material state net operating loss carryforwards will begin to expire in 2026. As of June 30, 2019, we had U.S. federal research and development tax credit carryforwards of approximately $4.7 million and state research and development tax credit carryforwards of approximately $4.3 million. In general, under Sections 382 and 383 of the United States Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs and other tax attributes such as research tax credits to offset future taxable income. If it is determined that we have in the past experienced an ownership change, or if we undergo one or more ownership changes as a result of this offering or future transactions in our stock, then our ability to utilize NOLs and other pre-change tax attributes could be limited by Sections 382 and 383 of the Code. Future changes in our stock ownership, many of which are outside of our control, could result in an ownership change under Sections 382 or 383 of the Code. Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations. For these reasons, we may not be able to utilize a material portion of the NOLs, even if we were to achieve profitability.

The Tax Cuts and Jobs Act (Tax Act) was enacted on December 22, 2017 and significantly reforms the Code. The Tax Act, among other things, includes changes to U.S. federal tax rates and the rules governing net operating loss carryforwards. For federal NOLs arising in tax years beginning after December 31, 2017, the Tax Act limits a taxpayer’s ability to utilize NOL carryforwards to 80% of taxable income. In addition, federal NOLs arising in tax years ending after December 31, 2017 can be carried forward indefinitely, but carryback is generally prohibited. NOLs generated in tax years beginning before January 1, 2018 will not be subject to the taxable income limitation, and NOLs generated in tax years ending before January 1, 2018 will continue to have a two-year carryback and twenty-year carryforward period. Deferred tax assets for NOLs will need to be measured at the applicable tax rate in effect when the NOL is expected to be utilized. The changes in the carryforward/ carryback periods as well as the new limitation on use of NOLs may significantly impact our valuation allowance assessments for NOLs generated after December 31, 2017.

We could be required to collect additional sales taxes or be subject to other tax liabilities that may increase the costs our customers would have to pay for our offering and adversely affect our operating results.

The vast majority of states have considered or adopted laws that impose tax collection obligations on out-of-state companies. States where we have nexus may require us to calculate, collect, and remit taxes on sales in their jurisdiction. Additionally, the Supreme Court of the United States recently ruled in South Dakota v. Wayfair, Inc. et al (Wayfair) that online sellers can be required to collect sales and use tax despite not having a physical presence in the buyer’s state. In response to Wayfair, or otherwise, states or local governments may enforce laws requiring us to calculate, collect, and remit taxes on sales in their jurisdictions. We may be obligated to collect and remit sales and use tax in states in which we have not collected and remitted sales and use tax. A successful assertion by one or more states requiring us to collect taxes where we historically have not or presently do not do so could result in substantial tax liabilities, including taxes on past sales, as well as penalties and interest. The imposition by state governments or local governments of sales tax collection obligations on out-of-state sellers could also create additional administrative burdens for us, put us at a perceived competitive disadvantage if they do not impose similar obligations on our competitors, and decrease our future sales, which could adversely effect our business and operating results.

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Changes in our effective tax rate or tax liability may adversely effect our operating results.

Our effective tax rate could increase due to several factors, including:

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changes in the relative amounts of income before taxes in the various jurisdictions in which we operate due to differing statutory tax rates in various jurisdictions;

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changes in tax laws, tax treaties, and regulations or the interpretation of them, including the Tax Act;

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changes to our assessment about our ability to realize our deferred tax assets that are based on estimates of our future results, the prudence and feasibility of possible tax planning strategies, and the economic and political environments in which we do business;

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the outcome of current and future tax audits, examinations, or administrative appeals; and

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limitations or adverse findings regarding our ability to do business in some jurisdictions.

Any of these developments could adversely affect our operating results.

Natural catastrophic events and man-made problems such as power-disruptions, computer viruses, data security breaches, and terrorism may disrupt our business.

Natural disasters or other catastrophic events may cause damage or disruption to our operations, international commerce and the global economy, and thus could harm our business. We have a large employee presence in Palo Alto, California and a smaller presence in Houston, Texas, and our data centers are located in California and Arizona. The west coast of the United States contains active earthquake zones and the Houston area frequently experiences significant hurricanes. In the event of a major earthquake, hurricane or catastrophic event such as fire, power loss, telecommunications failure, vandalism, cyber-attack, war, or terrorist attack, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our application development, lengthy interruptions in our products, breaches of data security, and loss of critical data, all of which could harm our business, operating results, and financial condition.

Additionally, as computer malware, viruses, and computer hacking, fraudulent use attempts, and phishing attacks have become more prevalent, we, and third parties upon which we rely, face increased risk in maintaining the performance, reliability, security, and availability of our solutions and related services and technical infrastructure to the satisfaction of our customers. Any computer malware, viruses, computer hacking, fraudulent use attempts, phishing attacks, or other data security breaches related to our network infrastructure or information technology systems or to computer hardware we lease from third parties, could, among other things, harm our reputation and our ability to retain existing customers and attract new customers.

In addition, the insurance we maintain may be insufficient to cover our losses resulting from disasters, cyber-attacks, or other business interruptions, and any incidents may result in loss of, or increased costs of, such insurance.

We are obligated to develop and maintain proper and effective internal control over financial reporting, and if we fail to develop and maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable laws and regulations could be impaired.

We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (Exchange Act), the Sarbanes-Oxley Act of 2002 (Sarbanes-Oxley Act), the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the listing requirements of the NYSE, and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time consuming, or costly, and increase demand on our systems and resources, particularly after we are no longer an emerging growth company. The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. It may require significant resources and management oversight to maintain and, if necessary, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. Although we have already hired additional employees to comply with these requirements, we may need to hire more employees in the future or engage outside consultants, which would increase our costs and expenses. Furthermore, for fiscal 2018, we identified material weaknesses in our internal control over financial reporting relating to our financial statement close process and reconciliation of funds held for customers. While no material weaknesses were identified in fiscal 2019, our remediation efforts are still ongoing and there can be no assurance that we will not experience additional material weaknesses in the future.

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We will also be required, pursuant to Section 404 of the Sarbanes-Oxley Act (Section 404), to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting commencing with our second annual report on Form 10-K. Effective internal control over financial reporting is necessary for us to provide reliable financial reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties encountered in their implementation, could cause us to fail to meet our reporting obligations. Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.

This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting, as well as a statement that our independent registered public accounting firm has issued an opinion on the effectiveness of our internal control over financial reporting, provided that 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 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 Exchange Act, or the date we are no longer an emerging growth company, as defined in the JOBS Act. We could be an emerging growth company for up to five years. An independent assessment of the effectiveness of our internal controls could detect problems that our management’s assessment might not. Undetected material weaknesses in our internal controls could lead to financial statement restatements and require us to incur the expense of remediation. We will be required to disclose changes made in our internal control and procedures on a quarterly basis. To comply with the requirements of being a public company, we may need to undertake various actions, such as implementing new internal controls and procedures and hiring accounting or internal audit staff.

We are in the early stages of the costly and challenging process of compiling the system and processing documentation necessary to perform the evaluation needed to comply with Section 404. We may not be able to complete our evaluation, testing, and any required remediation in a timely fashion. During the evaluation and testing process, if we identify material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective.

If we 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 on the effectiveness of our internal control, including as a result of the material weakness described above, we could lose investor confidence in the accuracy and completeness of our financial reports, which could cause the price of our common stock to decline, and we may be subject to investigation or sanctions by the SEC. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the NYSE.

Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.

U.S. generally accepted accounting principles (GAAP) is subject to interpretation by the Financial Accounting Standards Board (FASB), the SEC and various bodies formed to promulgate and interpret appropriate accounting principles. A change in these principles or interpretations could have a significant effect on our reported operating results and financial condition and could affect the reporting of transactions already completed before the announcement of a change.

If our estimates or judgments relating to our critical accounting policies prove to be incorrect, our operating results could be adversely affected.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, as provided in the section titled “Management’s Discussion and Analysis of Financial Condition and Operating Results—Critical Accounting Policies and Estimates.” The results of these estimates form the basis for making judgments about the carrying values of assets, liabilities, and equity, and the amount of revenue and expenses that are not readily apparent from other sources. Significant estimates and judgments involve the identification of performance obligations in revenue recognition, the valuation of the stock- based awards, including the determination of fair value of common stock, and the period of benefit for amortizing deferred commissions, among others. Our operating results may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in the trading price of our common stock.

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Any future litigation against us could be costly and time-consuming to defend.

In addition to intellectual property litigation, we have in the past and may in the future become subject to legal proceedings and claims that arise in the ordinary course of business, such as claims brought by our customers in connection with commercial disputes, employment claims made by our current or former employees, or claims for reimbursement following misappropriation of customer data. Litigation might result in substantial costs and may divert management’s attention and resources, which might seriously harm our business, overall financial condition, and operating results. Insurance might not cover such claims, might not provide sufficient payments to cover all the costs to resolve one or more such claims, and might not continue to be available on terms acceptable to us. A claim brought against us that is uninsured or underinsured could result in unanticipated costs, thereby reducing our operating results and leading analysts or potential investors to reduce their expectations of our performance, which could reduce the trading price of our stock.

Our estimates of market opportunity and forecasts of market growth may prove to be inaccurate, and even if the market in which we compete achieves the forecasted growth, our business could fail to grow at similar rates, if at all.

Market opportunity estimates and growth forecasts included in the Prospectus or this Quarterly Report on Form 10-Q, including those we have generated ourselves, are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The variables that go into the calculation of our market opportunity are subject to change over time, and there is no guarantee that any particular number or percentage of addressable users or companies covered by our market opportunity estimates will purchase our products at all or generate any particular level of revenue for us. Any expansion in our market depends on a number of factors, including the cost, performance, and perceived value associated with our platform and those of our competitors. Even if the market in which we compete meets the size estimates and growth forecasted in the Prospectus, our business could fail to grow at similar rates, if at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many risks and uncertainties. Accordingly, our forecasts of market growth should not be taken as indicative of our future growth.

We are subject to governmental laws and requirements regarding economic and trade sanctions, anti-money laundering, and counter-terror financing that could impair our ability to compete in international markets or subject us to criminal or civil liability if we violate them.

Although we currently only operate in the United States, in the future we will seek to expand internationally and will become subject to additional laws and regulations, and will need to implement new regulatory controls to comply with applicable laws. We are currently required to comply with U.S. economic and trade sanctions administered by the U.S. Department of Treasury’s Office of Foreign Assets Control (OFAC) and we have processes in place to comply with the OFAC regulations as well as similar requirements in other jurisdictions. As part of our compliance efforts, we scan our customers against OFAC and other watchlists. While we offer services only to customers domiciled in the United States, our application could be accessed from anywhere in the world. If our service is accessed from a sanctioned country in violation of the trade and economic sanctions, we could be subject to fines or other enforcement action. We are also subject to various anti-money laundering and counter-terrorist financing laws and regulations around the world that prohibit, among other things, our involvement in transferring the proceeds of criminal activities. In the United States, most of our services are subject to anti-money laundering laws and regulations, including the Bank Secrecy Act, as amended (BSA), and similar laws and regulations. The BSA, among other things, requires money transmitters to develop and implement risk-based anti-money laundering programs, to report large cash transactions and suspicious activity, and in some cases, to collect and maintain information about customers who use their services and maintain other transaction records. Regulators in the United States and globally continue to increase their scrutiny of compliance with these obligations, which may require us to further revise or expand our compliance program, including the procedures we use to verify the identity of our customers and to monitor transactions on our system, including payments to persons outside of the United States. Regulators regularly re-examine the transaction volume thresholds at which we must obtain and keep applicable records or verify identities of customers, and any change in such thresholds could result in greater costs for compliance.

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We are subject to anti-corruption, anti-bribery, and similar laws, and non-compliance with such laws can subject us to criminal or civil liability and harm our business.

We are subject to the FCPA, U.S. domestic bribery laws, and other anti-corruption laws. Anti- corruption and anti-bribery laws have been enforced aggressively in recent years and are interpreted broadly to generally prohibit companies, their employees, and their third-party intermediaries from authorizing, offering, or providing, directly or indirectly, improper payments or benefits to recipients in the public sector. These laws also require that we keep accurate books and records and maintain internal controls and compliance procedures designed to prevent any such actions. Although we currently only maintain operations in the United States, as we increase our international cross-border business and expand operations abroad, we may engage with business partners and third-party intermediaries to market our services and to obtain necessary permits, licenses, and other regulatory approvals. In addition, we or our third-party intermediaries may have direct or indirect interactions with officials and employees of government agencies or state-owned or affiliated entities. We can be held liable for the corrupt or other illegal activities of these third-party intermediaries, our employees, representatives, contractors, partners, and agents, even if we do not explicitly authorize such activities.

We cannot assure you that all of our employees and agents will not take actions in violation of our policies and applicable law, for which we may be ultimately held responsible. As we increase our international business, our risks under these laws may increase.

Detecting, investigating, and resolving actual or alleged violations of anti-corruption laws can require a significant diversion of time, resources, and attention from senior management. In addition, noncompliance with anti-corruption or anti-bribery laws could subject us to whistleblower complaints, investigations, sanctions, settlements, prosecution, enforcement actions, fines, damages, other civil or criminal penalties, injunctions, suspension or debarment from contracting with certain persons, reputational harm, adverse media coverage, and other collateral consequences. If any subpoenas are received or investigations are launched, or governmental or other sanctions are imposed, or if we do not prevail in any possible civil or criminal proceeding, our business, operating results, and financial condition could be materially harmed. In addition, responding to any action will likely result in a materially significant diversion of management’s attention and resources and significant defense costs and other professional fees.

Our Senior Secured Credit Facilities Credit Agreement provides our lender with a first-priority lien against substantially all of our assets, and contains financial covenants and other restrictions on our actions, which could limit our operational flexibility and otherwise adversely affect our financial condition.

Our Senior Secured Credit Facilities Credit Agreement (Senior Facilities Agreement) restricts our ability to, among other things:

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use our accounts receivable, inventory, trademarks, and most of our other assets as security in other borrowings or transactions, unless the value of the assets subject thereto does not exceed a certain threshold;

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incur additional indebtedness;

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incur liens upon our property;

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dispose of certain assets;

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declare dividends or make certain distributions; and

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undergo a merger or consolidation or other transactions.

Our Senior Facilities Agreement also prohibits us during certain covered time periods from allowing Net Revenue (as defined in the Senior Facilities Agreement) for any fiscal quarter to be less than prescribed minimums. Our ability to comply with this and other covenants is dependent upon several factors, some of which are beyond our control.

Our failure to comply with the covenants or payment requirements, or the occurrence of other events specified in our Senior Facilities Agreement, could result in an event of default under the Senior Facilities Agreement, which would give our lender the right to terminate its commitments to provide additional loans under the Senior Facilities Agreement and to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable. In addition, we have granted our lender first-priority liens against all of our assets as collateral. Failure to comply with the covenants or other restrictions in the Senior Facilities Agreement could result in a default. If the debt under our Senior Facilities Agreement was to be accelerated, we may not have sufficient cash on hand or be able to sell sufficient collateral to repay it, which would have an immediate adverse effect on our business and operating results.

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If we cannot maintain our company culture as we grow, our success and our business may be harmed.

We believe our culture has been a key contributor to our success to date and that the critical nature of the platform that we provide promotes a sense of greater purpose and fulfillment in our employees. Any failure to preserve our culture could negatively affect our ability to retain and recruit personnel, which is critical to our growth, and to effectively focus on and pursue our corporate objectives. As we grow and develop the infrastructure of a public company, we may find it difficult to maintain these important aspects of our culture. If we fail to maintain our company culture, our business and competitive position may be adversely affected.

We expect fluctuations in our financial results, making it difficult to project future results, and if we fail to meet the expectations of securities analysts or investors with respect to our operating results, our stock price and the value of your investment could decline.

Our operating results have fluctuated in the past and are expected to fluctuate in the future due to a variety of factors, many of which are outside of our control. As a result, our past results may not be indicative of our future performance. In addition to the other risks described herein, factors that may affect our operating results include the following:

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fluctuations in demand for or pricing of our platform;

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our ability to attract new customers;

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our ability to retain and grow engagement with our existing customers;

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our ability to expand our relationships with our accounting firm partners, financial institution partners, and accounting software partners, or identify and attract new partners;

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customer expansion rates;

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changes in customer preference for cloud-based services as a result of security breaches in the industry or privacy concerns, or other security or reliability concerns regarding our products;

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fluctuations or delays in purchasing decisions in anticipation of new products or product enhancements by us or our competitors;

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changes in customers’ budgets and in the timing of their budget cycles and purchasing decisions;

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potential and existing customers choosing our competitors’ products or developing their own solutions in-house;

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the development or introduction of new platforms or services that are easier to use or more advanced than our current suite of services, especially related to the application of artificial intelligence-based services;

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our failure to adapt to new forms of payment that become widely accepted, including cryptocurrency;

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the adoption or retention of more entrenched or rival services in the international markets where we compete;

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our ability to control costs, including our operating expenses;

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the amount and timing of payment for operating expenses, particularly research and development and sales and marketing expenses, including commissions;

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the amount and timing of non-cash expenses, including stock-based compensation, goodwill impairments, and other non-cash charges;

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the amount and timing of costs associated with recruiting, training, and integrating new employees, and retaining and motivating existing employees;

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fluctuation in market interest rates, which impacts interest earned on funds held for customers;

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the effects of acquisitions and their integration;

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general economic conditions, both domestically and internationally, as well as economic conditions specifically affecting industries in which our customers participate;

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the impact of new accounting pronouncements;

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changes in the competitive dynamics of our market;

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security breaches of, technical difficulties with, or interruptions to, the delivery and use of our platform; and

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awareness of our brand and our reputation in our target markets.

Any of these and other factors, or the cumulative effect of some of these factors, may cause our operating results to vary significantly. In addition, we expect to incur significant additional expenses due to the increased costs of operating as a public company. If our quarterly operating results fall below the expectations of investors and securities analysts who follow our stock, the price of our common stock could decline substantially, and we could face costly lawsuits, including securities class action suits.

Risks Related to Ownership of Our Common Stock

The stock price of our common stock has been, and will likely continue to be volatile, and you may lose part or all of your investment.

The market for our common stock has been, and will likely continue to be, volatile. In addition to the factors discussed in this Quarterly Report on Form 10-Q, the market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

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overall performance of the equity markets;

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actual or anticipated fluctuations in our revenue and other operating results;

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changes in the financial projections we may provide to the public or our failure to meet these projections;

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failure of securities analysts to initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

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recruitment or departure of key personnel;

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the economy as a whole and market conditions in our industry;

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negative publicity related to the real or perceived quality of our platform, as well as the failure to timely launch new products and services that gain market acceptance;

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rumors and market speculation involving us or other companies in our industry;

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announcements by us or our competitors of new products or services, commercial relationships, or significant technical innovations;

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acquisitions, strategic partnerships, joint ventures, or capital commitments;

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new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

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lawsuits threatened or filed against us, litigation involving our industry, or both;

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developments or disputes concerning our or other parties’ products, services or intellectual property rights;

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changes in accounting standards, policies, guidelines, interpretations, or principles;

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interpretations of any of the above or other factors by trading algorithms, including those that employ natural language processing and related methods to evaluate our public disclosures;

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other events or factors, including those resulting from war, incidents of terrorism, or responses to these events;

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the expiration of contractual lock-up or market stand-off agreements; and

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sales of shares of our common stock by us or our stockholders.

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In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies, and technology companies in particular, have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business, and adversely affect our business.

Concentration of ownership of our common stock among our existing executive officers, directors, and principal stockholders may prevent new investors from influencing significant corporate decisions.

As of December 31, 2019, our executive officers, directors, and current beneficial owners of 5% or more of our common stock, in the aggregate, beneficially own approximately 61% of our outstanding common stock. These persons, acting together, may be able to significantly influence all matters requiring stockholder approval, including the election and removal of directors and any merger or other significant corporate transactions. The interests of this group of stockholders may not coincide with the interests of other stockholders.

Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management and affect the market price of our common stock.

Provisions in our restated certificate of incorporation and restated bylaws, may have the effect of delaying or preventing a change of control or changes in our management. Our restated certificate of incorporation and restated bylaws include provisions that:

•

authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights, and preferences determined by our board of directors that may be senior to our common stock;

•

require that any action to be taken by our stockholders be affected at a duly called annual or special meeting and not by written consent;

•

specify that special meetings of our stockholders can be called only by our board of directors, the chairperson of our board of directors, or our chief executive officer;

•

establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors;

•

establish that our board of directors is divided into three classes, with each class serving three- year staggered terms;

•

prohibit cumulative voting in the election of directors;

•

provide that our directors may be removed for cause only upon the vote of sixty-six and two-thirds percent (66 2/3%) of our outstanding shares of common stock;

•

provide that vacancies on our board of directors may be filled only by a majority vote of directors then in office, even though less than a quorum; and

•

require the approval of our board of directors or the holders of at least sixty-six and two-thirds percent (66 2/3%) of our outstanding shares of common stock to amend our bylaws and certain provisions of our certificate of incorporation.

In addition, our restated certificate of incorporation provides that the Court of Chancery of the State of Delaware, to the fullest extent permitted by law, will be 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 (DGCL), our restated certificate of incorporation, or our restated bylaws, or any action asserting a claim against us that is governed by the internal affairs doctrine. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers, and other employees. This exclusive forum provision will not apply to claims that are vested in the exclusive jurisdiction of a court or forum other than the Court of Chancery of the State of Delaware, or for which the Court of Chancery of the State of Delaware does not have subject matter jurisdiction. For instance, the provision would not preclude the filing of claims brought to enforce any liability or duty created by the Securities Exchange Act of 1934, as amended, or the Securities Act of 1933, as amended (Securities Act) or the rules and regulations thereunder in federal court.

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Moreover, Section 203 of the DGCL may discourage, delay, or prevent a change in control of our company. Section 203 imposes certain restrictions on mergers, business combinations, and other transactions between us and holders of 15% or more of our common stock.

We are an “emerging growth company,” and we cannot be certain if the reduced reporting and disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including the auditor attestation requirements of Section 404 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 stockholder approval of any golden parachute payments not previously approved. Pursuant to Section 107 of the JOBS Act, as an emerging growth company, we have elected to use the extended transition period for complying with new or revised accounting standards until those standards would otherwise apply to private companies. As a result, our condensed consolidated financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make our common stock less attractive to investors. In addition, if we cease to be an emerging growth company, we will no longer be able to use the extended transition period for complying with new or revised accounting standards.

We will remain an emerging growth company until the earliest of (i) the last day of the fiscal year following the fifth anniversary of this offering, (ii) the last day of the first fiscal year in which our annual gross revenue is $1.07 billion or more, (iii) the date on which we have, during the previous rolling three-year period, issued more than $1 billion in non-convertible debt securities, and (iv) the last day of the fiscal year in which the market value of our common stock held by non-affiliates exceeded $700 million as of December 31st, our second fiscal quarter, of such fiscal year.

We cannot predict if investors will find our common stock less attractive if we choose to rely on these exemptions. For example, if we do not adopt a new or revised accounting standard, our future operating results may not be as comparable to the operating results of certain other companies in our industry that adopted such standards. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock, and our stock price may be more volatile.

We have incurred and will continue to incur increased costs as a result of operating as a public company, and our management is required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.

As a public company, we will incur significant legal, accounting, and other expenses that we did not incur as a private company, which we expect to further increase after we are no longer an “emerging growth company.” The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the NYSE, and other applicable securities rules and regulations impose various requirements on public companies. Our management and other personnel devote a substantial amount of time to compliance with these requirements. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly compared to when we were a private company.

Our management team has limited experience managing a public company.

Our management team has limited experience managing a publicly traded company, interacting with public company investors and securities analysts, and complying with the increasingly complex laws pertaining to public companies. These new obligations and constituents require significant attention from our management team and could divert their attention away from the day-to-day management of our business, which could harm our business, operating results, and financial condition.

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We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock.

We have never declared or paid any cash dividends on our capital stock, and we do not intend to pay any cash dividends in the foreseeable future. In addition, our Senior Credit Facilities Agreement contains restrictions on our ability to pay 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 common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investments.

If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, our stock price and trading volume could decline.

Our stock price and trading volume is heavily influenced by the way analysts and investors interpret our financial information and other disclosures. If securities or industry analysts do not publish research or reports about our business, downgrade our common stock, or publish negative reports about our business, our stock price would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our stock price to decline and could decrease the trading volume of our common stock.

Future sales of our common stock in the public market could cause the market price of our common stock to decline.

Sales of a substantial number of shares of our common stock in the public or the perception that these sales might occur, could depress the market price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that such sales may have on the prevailing market price of our common stock.

All of our directors and officers and the holders of substantially all of our capital stock and securities convertible into our capital stock are subject to lock-up agreements that restrict their ability to transfer shares of our capital stock for 180 days from the date of the Prospectus. These lock-up agreements limit the number of shares of capital stock that may be sold immediately following this offering. Subject to certain limitations, approximately 60,730,863 shares of common stock will become eligible for sale upon expiration of the 180-day lock-up period. Goldman Sachs & Co. LLC may, in their sole discretion, permit our stockholders who are subject to these lock-up agreements to sell shares prior to the expiration of the lock-up agreements.

In addition, there were 12,126,114 shares of common stock issuable upon the exercise of options outstanding as of December 31, 2019. We registered all of the shares of common stock issuable upon exercise of outstanding options or other equity incentives we may grant in the future, for public resale under the Securities Act. The shares of common stock will become eligible for sale in the public market to the extent such options are exercised, subject to the lock-up agreements described above and compliance with applicable securities laws.

Based on shares outstanding as of December 31, 2019, holders of up to approximately 52,560,875 shares, or 74%, of our common stock will have rights, subject to some conditions, to require us to file registration statements covering the sale of their shares or to include their shares in registration statements that we may file for ourselves or other stockholders.

We may issue our shares of common stock or securities convertible into our common stock from time to time in connection with financings, acquisitions, investments, or otherwise. Any such issuance could result in substantial dilution to our existing stockholders and cause the trading price of our common stock to decline.

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Item 2: Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Equity Securities

From October 1, 2019 through December 12, 2019 (the date of the filing of our registration statement on Form S-8, File No. 333-235459), we issued and sold to our employees an aggregate of 154,916 shares of common stock upon the exercise of options under our 2006 Equity Incentive Plan (2006 Plan) and our 2016 Equity Incentive Plan (2016 Plan), at exercise prices ranging from $0.48 to $8.76 per share, or a weighted-average exercise price of $3.44 per share.

From October 1, 2019 through December 12, 2019 (the date of the filing of our registration statement on Form S-8, File No. 333-235459), we granted to our employees and other service providers an aggregate of 1,192,000 shares of stock options under our 2006 Plan, 2016 Plan and 2019 Equity Incentive Plan, at exercise prices ranging from $15.62 to $22.00 per share, or a weighted-average exercise price of $17.37 per share.

The offers, sales, and issuances of the securities described above were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act or Regulation D promulgated thereunder or Rule 701 promulgated under the Securities Act as transactions by an issuer not involving a public offering or under benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions. Each of the recipients of securities in these transactions was an accredited or sophisticated person and had adequate access, through employment, business, or other relationships, to information about us.

Use of Proceeds

On December 16, 2019, we closed our IPO, in which we issued 11,297,058 shares of common stock at a public offering price of $22.00 per share, which included 1,473,529 shares of common stock issued pursuant to the exercise in full of the over-allotment option by the underwriters. We received $225.5 million in net proceeds from the IPO, after deducting underwriting discounts and commissions of $17.4 million and other offering costs of $5.6 million. There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus filed with the SEC on December 12, 2019 pursuant to Rule 424(b)(4) (Prospectus). The managing underwriters of our IPO were Goldman Sachs & Co. LLC, BofA Securities, Inc. and Jefferies LLC. No payments were made by us to directors, officers or persons owning ten percent or more of our common stock or to their associates, or to our affiliates, in connection with the issuance and sale of the securities registered.

There has been no material change in the planned use of proceeds from our IPO as described in the Prospectus.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

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Item 6: Exhibits

Incorporated by Reference

Exhibit

Number

Description

Form

File No.

Exhibit

Filing Date

Filed

Herewith

3.1

Restated Certificate of Incorporation

3.2

Restated Bylaws

10.1

Form of Indemnification Agreement by and between Bill.com and each of its directors and executive officers

S-1

333-234730

10.1

November 15, 2019

10.2

Bill.com, Inc. 2006 Equity Incentive Plan, including form of equity agreements thereunder

S-1

333-234730

10.2

November 15, 2019

10.3

Bill.com Holdings, Inc. 2016 Equity Incentive Plan, including form of equity agreements thereunder

S-1

333-234730

10.3

November 15, 2019

10.4

Bill.com Holdings, Inc. 2019 Equity Incentive Plan, including form of equity agreements thereunder

S-1/A

333-234730

10.4

December 2, 2019

10.5

Bill.com Holdings, Inc. 2019 Employee Stock Purchase Plan, and forms of subscription agreement thereunder

S-1/A

333-234730

10.5

December 2, 2019

10.6

Office Lease Between US ER America Center 4, LLC (as Landlord) and Bill.com LLC (as Tenant)

31.1

Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*

Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*

Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

XBRL Instance Document

101.SCH

XBRL Taxonomy Extension Schema Document

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

The certifications furnished in Exhibits 32.1 and 32.2 hereto are deemed to accompany this Quarterly Report on Form 10-Q and are not deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act of the Exchange Act.

†	Registrant is requesting or has previously been granted confidential treatment with respect to certain portions of this Exhibit.

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SIGNATURES

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 hereunto duly authorized.


February 11, 2020	By:	/s/ René Lacerte
(Date)		René Lacerte
		Chief Executive Officer
		(Principal Executive Officer)

February 11, 2020	By:	/s/ John Rettig
(Date)		John Rettig
		Chief Financial Officer and Executive Vice President, Finance and Operations
		(Principal Financial and Accounting Officer)

Exhibit 3.1

RESTATED CERTIFICATE OF INCORPORATION

BILL.COM HOLDINGS, INC.

Bill.com Holdings, Inc., a Delaware corporation, hereby certifies that:

1.The name of the corporation is Bill.com Holdings, Inc. The date of filing its original Certificate of Incorporation with the Secretary of State was August 2, 2018 under the name BDC Payments Holdings, Inc.

2.This Restated Certificate of Incorporation of the corporation attached hereto as Exhibit “A”, which is incorporated herein by this reference, and which restates, integrates and further amends the provisions of the Restated Certificate of Incorporation of this corporation as previously amended or supplemented, has been duly adopted by this corporation’s Board of Directors and the requisite stockholders in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware, with the approval of the corporation’s stockholders having been given by written consent without a meeting in accordance with Section 228 of the General Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, said corporation has caused this Restated Certificate of Incorporation to be signed by its duly authorized officer and the foregoing facts stated herein are true and correct.

Dated: December 16, 2019	BILL.COM HOLDINGS, INC.

	By:	/s/ René Lacerte
		René Lacerte
		Chief Executive Officer

EXHIBIT “A”

BILL.COM HOLDINGS, INC.

RESTATED CERTIFICATE OF INCORPORATION

ARTICLE I: NAME

The name of the corporation is Bill.com Holdings, Inc. (the “Corporation”).

ARTICLE II: AGENT FOR SERVICE OF PROCESS

The address of the Corporation’s registered office in the State of Delaware is 3500 South Dupont Highway, City of Dover, County of Kent, DE 19901. The name of its registered agent at such address is Incorporating Services, Ltd.

ARTICLE III: PURPOSE

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “General Corporation Law”).

ARTICLE IV: AUTHORIZED STOCK

1.Total Authorized. The total number of shares of all classes of stock that the Corporation has authority to issue is 510,000,000 shares, consisting of two classes: 500,000,000 shares of Common Stock, $0.00001 par value per share (“Common Stock”), and 10,000,000 shares of Preferred Stock, $0.00001 par value per share (“Preferred Stock”).

2.Designation of Additional Series.

2.1.The Board of Directors of the Corporation (the “Board”) is authorized, subject to any limitations prescribed by the law of the State of Delaware, to provide for the issuance of the shares of Preferred Stock in one or more series, and, by filing a Certificate of Designation pursuant to the applicable law of the State of Delaware (“Certificate of Designation”), to establish from time to time the number of shares to be included in each such series, to fix the designation, powers (including voting powers), preferences and relative, participating, optional or other special rights, if any, of the shares of each such series and any qualifications, limitations or restrictions thereof, and, except where otherwise provided in the applicable Certificate of Designation, to thereafter increase (but not above the total number of authorized shares of the Preferred Stock) or decrease (but not below the number of shares of such series then outstanding) the number of shares of any such series. The number of authorized shares of Preferred Stock may also be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of two-thirds of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote thereon, without a separate vote of the holders of the Preferred Stock, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law, unless a separate vote of the holders of one or more series is required pursuant to the terms

of any Certificate of Designation; provided, however, that if two-thirds of the Whole Board (as defined below) has approved such increase or decrease of the number of authorized shares of Preferred Stock, then only the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, without a separate vote of the holders of the Preferred Stock (unless a separate vote of the holders of one or more series is required pursuant to the terms of any Certificate of Designation), shall be required to effect such increase or decrease. For purposes of this Restated Certificate of Incorporation (as the same may be amended and/or restated from time to time, including pursuant the terms of any Certificate of Designation designating a series of Preferred Stock, this “Certificate of Incorporation”), the term “Whole Board” shall mean the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships.

2.2Except as otherwise expressly provided in any Certificate of Designation designating any series of Preferred Stock pursuant to the foregoing provisions of this Article IV, any new series of Preferred Stock may be designated, fixed and determined as provided herein by the Board without approval of the holders of Common Stock or the holders of Preferred Stock, or any series thereof, and any such new series may have powers, preferences and rights, including, without limitation, voting powers, dividend rights, liquidation rights, redemption rights and conversion rights, senior to, junior to or pari passu with the rights of the Common Stock, any series of Preferred Stock or any future class or series of capital stock of the Corporation.

2.3Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to the stockholders of the Corporation for their vote; provided, however, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Certificate of Incorporation that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon pursuant to this Certificate of Incorporation.

ARTICLE V: AMENDMENT OF BYLAWS

The Board shall have the power to adopt, amend or repeal the Bylaws of the Corporation (as the same may be amended and/or restated from time to time, the “Bylaws”). Any adoption, amendment or repeal of the Bylaws by the Board shall require the approval of a majority of the Whole Board. The stockholders shall also have power to adopt, amend or repeal the Bylaws; provided, however, that notwithstanding any other provision of this Certificate of Incorporation or any provision of law that might otherwise permit a lesser or no vote, but in addition to any vote of the holders of any class or series of stock of the Corporation required by applicable law or by this Certificate of Incorporation, the affirmative vote of the holders of at least two-thirds of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required for the stockholders to adopt, amend or repeal any provision of the Bylaws; provided further, that, in the case of any proposed adoption, amendment or repeal of any provisions of the Bylaws that is approved by the Board and submitted to the stockholders for adoption thereby, if two-thirds of the Whole Board has approved such adoption, amendment or repeal of any provisions of the Bylaws, then only the affirmative vote of the holders of a majority of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to adopt, amend or repeal any provision of the Bylaws.

ARTICLE VI: MATTERS RELATING TO THE BOARD OF DIRECTORS

1.Director Powers. Except as otherwise provided by the General Corporation Law or this Certificate of Incorporation, the business and affairs of the Corporation shall be managed by or under the direction of the Board.

2.Number of Directors. Subject to the special rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, the total number of directors constituting the Whole Board shall be fixed from time to time exclusively by resolution adopted by a majority of the Whole Board.

3.Classified Board. Subject to the special rights of the holders of one or more series of Preferred Stock to elect additional directors under specified circumstances, the directors shall be divided, with respect to the time for which they severally hold office, into three classes designated as Class I, Class II and Class III, respectively (the “Classified Board”). The Board may assign members of the Board already in office to the Classified Board. The number of directors in each class shall be as nearly equal as is practicable. The initial term of office of the Class I directors shall expire at the Corporation’s first annual meeting of stockholders following the closing of the Corporation’s initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, relating to the offer and sale of Common Stock to the public (the “Initial Public Offering”), the initial term of office of the Class II directors shall expire at the Corporation’s second annual meeting of stockholders following the closing of the Initial Public Offering and the initial term of office of the Class III directors shall expire at the Corporation’s third annual meeting of stockholders following the closing of the Initial Public Offering. At each annual meeting of stockholders following the closing of the Initial Public Offering, directors elected to succeed those directors of the class whose terms then expire shall be elected for a term of office expiring at the third succeeding annual meeting of stockholders after their election.

4.Term and Removal. Each director shall hold office until the annual meeting at which such director’s term expires and until such director’s successor is duly elected and qualified, or until such director’s earlier death, resignation, disqualification or removal. Any director may resign by delivering a resignation in writing or by electronic transmission to the Corporation at its principal office or to the Chairperson of the Board, the Chief Executive Officer, or the Secretary. Subject to the special rights of the holders of any series of Preferred Stock, no director may be removed from the Board except for cause and only by the affirmative vote of the holders of at least two-thirds of the voting power of the then-outstanding shares of capital stock of the Corporation entitled to vote thereon, voting together as a single class. In the event of any increase or decrease in the authorized number of directors, (a) each director then serving as such shall nevertheless continue as a director of the class of which he or she is a member and (b) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board among the classes of directors so as to make all classes as nearly equal in number as is practicable, provided that no decrease in the number of directors constituting the Board shall shorten the term of any director.

5.Board Vacancies and Newly Created Directorships. Subject to the special rights of the holders of any series of Preferred Stock, any vacancy occurring in the Board for any cause, and any newly created directorship resulting from any increase in the authorized number of directors, shall be filled only by the affirmative vote of a majority of the directors then in office, even if less than a quorum, or by a sole remaining director, and shall not be filled by the stockholders. Any director elected in accordance with the preceding sentence shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which the director has been assigned expires and until such director’s successor shall have been duly elected and qualified, or until such director’s earlier death, resignation, disqualification or removal.

6.Vote by Ballot. Election of directors need not be by written ballot unless the Bylaws shall so provide.

7.Preferred Directors. If and for so long as the holders of any series of Preferred Stock have the special right to elect additional directors, then upon commencement and for the duration of the period during which such right continues: (i) the then otherwise total authorized number of directors of the Corporation shall automatically be increased by such specified number of directors, and the holders of such Preferred Stock shall be entitled to elect the additional directors so provided for or fixed pursuant to said provisions, and (ii) each such additional director shall serve until such director’s successor shall have been duly elected and qualified, or until such director’s right to hold such office terminates pursuant to said provisions, whichever occurs earlier, subject to his or her earlier death, resignation, retirement, disqualification or removal. Except as otherwise provided by the Board in the resolution or resolutions establishing such series, whenever the holders of any series of Preferred Stock having such right to elect additional directors are divested of such right pursuant to the provisions of such stock, the terms of office of all such additional directors elected by the holders of such stock, or elected to fill any vacancies resulting from the death, resignation, disqualification or removal of such additional directors, shall forthwith terminate and the total authorized number of directors of the Corporation shall be reduced accordingly.

ARTICLE VII: DIRECTOR LIABILITY

1.Limitation of Liability. To the fullest extent permitted by law, no director of the Corporation shall be personally liable for monetary damages for breach of fiduciary duty as a director. Without limiting the effect of the preceding sentence, if the General Corporation Law is hereafter amended to authorize the further elimination or limitation of the liability of a director, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law, as so amended.

2.Change in Rights. Neither any amendment nor repeal of this Article VII, nor the adoption of any provision of this Certificate of Incorporation inconsistent with this Article VII, shall eliminate, reduce or otherwise adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such amendment, repeal or adoption of such an inconsistent provision.

ARTICLE VIII: MATTERS RELATING TO STOCKHOLDERS

1.No Action by Written Consent of Stockholders. Subject to the rights of any series of Preferred Stock then outstanding, no action shall be taken by the stockholders of the Corporation except at a duly called annual or special meeting of stockholders and no action shall be taken by the stockholders of the Corporation by written consent in lieu of a meeting.

2.Special Meeting of Stockholders. Special meetings of the stockholders of the Corporation may be called only by the Chairperson of the Board, the Chief Executive Officer, the Lead Independent Director (as defined in the Bylaws), the President, or the Board acting pursuant to a resolution adopted by a majority of the Whole Board and may not be called by the stockholders or any other person or persons.

3.Advance Notice of Stockholder Nominations and Business Transacted at Special Meetings. Advance notice of stockholder nominations for the election of directors of the Corporation and of business to be brought by stockholders before any meeting of stockholders of the Corporation shall be given in the manner provided in the Bylaws. Business transacted at special meetings of stockholders shall be limited to the purpose or purposes stated in the notice of meeting.

ARTICLE IX: CHOICE OF FORUM

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware, to the fullest extent permitted by law, shall be the sole and exclusive forum for: (a) any derivative action or proceeding brought on behalf of the Corporation; (b) any action asserting a claim of breach of a fiduciary duty owed by, or other wrongdoing by, any director, officer, stockholder, employee or agent of the Corporation to the Corporation or the Corporation’s stockholders; (c) any action asserting a claim against the Corporation arising pursuant to any provision of the General Corporation Law, this Certificate of Incorporation or the Bylaws or as to which the General Corporation Law confers jurisdiction on the Court of Chancery of the State of Delaware; (d) any action to interpret, apply, enforce or determine the validity of this Certificate of Incorporation or the Bylaws; or (e) any action asserting a claim against the Corporation governed by the internal affairs doctrine.

Any person or entity purchasing or otherwise acquiring or holding any interest in shares of capital stock of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article IX.

ARTICLE X: AMENDMENT OF CERTIFICATE OF INCORPORATION

If any provision of this Certificate of Incorporation shall be held to be invalid, illegal, or unenforceable, then such provision shall nonetheless be enforced to the maximum extent possible consistent with such holding and the remaining provisions of this Certificate of Incorporation (including without limitation, all portions of any section of this Certificate of Incorporation containing any such provision held to be invalid, illegal, or unenforceable, which is not invalid, illegal, or unenforceable) shall remain in full force and effect.

The Corporation reserves the right to amend or repeal any provision contained in this Certificate of Incorporation in the manner prescribed by the laws of the State of Delaware and all rights conferred upon stockholders are granted subject to this reservation; provided, however, that, notwithstanding any provision of this Certificate of Incorporation or any provision of law that might otherwise permit a lesser vote or no vote (but subject to Section 2 of Article IV hereof), but in addition to any vote of the holders of any class or series of the stock of the Corporation required by law or by this Certificate of Incorporation, the affirmative vote of the holders of at least two-thirds of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend or repeal any provision of this Certificate of Incorporation; provided, further, that if two-thirds of the Whole Board has approved such amendment or repeal of any provisions of this Certificate of Incorporation, then only the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class (in addition to any other vote of the holders of any class or series of stock of the Corporation required by law of by this Certificate of Incorporation), shall be required to amend or repeal such provisions of this Certificate of Incorporation.

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Exhibit 3.2

Bill.com Holdings, Inc.

(a Delaware corporation)

RESTATED BYLAWS

As Adopted November 14, 2019 and

As Effective December 16, 2019

Bill.com holdings, Inc.

(a Delaware corporation)

RESTATED BYLAWS

TABLE OF CONTENTS

Article I: STOCKHOLDERS		1
Section 1.1:	Annual Meetings	1
Section 1.2:	Special Meetings	1
Section 1.3:	Notice of Meetings	1
Section 1.4:	Adjournments	2
Section 1.5:	Quorum	2
Section 1.6:	Organization	3
Section 1.7:	Voting; Proxies	3
Section 1.8:	Fixing Date for Determination of Stockholders of Record	3
Section 1.9:	List of Stockholders Entitled to Vote	4
Section 1.10:	Inspectors of Elections	4
Section 1.11:	Conduct of Meetings	6
Section 1.12:	Notice of Stockholder Business; Nominations	6

Article II: BOARD OF DIRECTORS		15
Section 2.1:	Number; Qualifications	15
Section 2.2:	Election; Resignation; Removal; Vacancies	15
Section 2.3:	Regular Meetings	15
Section 2.4:	Special Meetings	15
Section 2.5:	Remote Meetings Permitted	15
Section 2.6:	Quorum; Vote Required for Action	16
Section 2.7:	Organization	16
Section 2.8:	Unanimous Action by Directors in Lieu of a Meeting	16
Section 2.9:	Powers	16
Section 2.10:	Compensation of Directors	16
Section 2.11:	Confidentiality	16

Article III: COMMITTEES		17
Section 3.1:	Committees	17
Section 3.2:	Committee Rules	17

Article IV: OFFICERS; CHAIRPERSON; LEAD INDEPENDENT DIRECTOR		17
Section 4.1:	Generally	17
Section 4.2:	Chief Executive Officer	18
Section 4.3:	Chairperson of the Board	18
Section 4.4:	Lead Independent Director	18
Section 4.5:	President	19
Section 4.6:	Chief Financial Officer	19
Section 4.7:	Treasurer	19
Section 4.8:	Vice President	19

Section 4.9:	Secretary	19
Section 4.10:	Delegation of Authority	19
Section 4.11:	Removal	19

Article V: STOCK		20
Section 5.1:	Certificates; Uncertificated Shares	20
Section 5.2:	Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates or Uncertificated Shares	20
Section 5.3:	Other Regulations	20

Article VI: INDEMNIFICATION		21
Section 6.1:	Indemnification of Officers and Directors	21
Section 6.2:	Advance of Expenses	21
Section 6.3:	Non-Exclusivity of Rights	21
Section 6.4:	Indemnification Contracts	22
Section 6.5:	Right of Indemnitee to Bring Suit	22
Section 6.6:	Nature of Rights	22
Section 6.7:	Insurance	22

Article VII: NOTICES		23
Section 7.1:	Notice	23
Section 7.2:	Waiver of Notice	23

Article VIII: INTERESTED DIRECTORS		24
Section 8.1:	Interested Directors	24
Section 8.2:	Quorum	24

Article IX: MISCELLANEOUS		24
Section 9.1:	Fiscal Year	24
Section 9.2:	Seal	24
Section 9.3:	Form of Records	24
Section 9.4:	Reliance Upon Books and Records	24
Section 9.5:	Certificate of Incorporation Governs	25
Section 9.6:	Severability	25
Section 9.7:	Time Periods	25

Article X: AMENDMENT		25

Bill.com holdings, Inc.

(a Delaware corporation)

RESTATED BYLAWS

As Adopted November 14, 2019, 2019 and

As Effective December 16, 2019

Article I: STOCKHOLDERS

Section 1.1:Annual Meetings. If required by applicable law, an annual meeting of stockholders shall be held for the election of directors at such date and time as the Board of Directors (the “Board”) of Bill.com Holdings, Inc. (the “Corporation”) shall each year fix. The meeting may be held either at a place, within or without the State of Delaware as permitted by the Delaware General Corporation Law (the “DGCL”), or by means of remote communication as the Board in its sole discretion may determine. Any proper business may be transacted at the annual meeting.

Section 1.2:Special Meetings. Special meetings of stockholders for any purpose or purposes shall be called in the manner set forth in the Restated Certificate of Incorporation of the Corporation (as the same may be amended and/or restated from time to time, the “Certificate of Incorporation”). The special meeting may be held either at a place, within or without the State of Delaware, or by means of remote communication as the Board in its sole discretion may determine. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of the meeting.

Section 1.3:Notice of Meetings. Notice of all meetings of stockholders shall be given in writing or by electronic transmission in the manner provided by applicable law (including, without limitation, as set forth in Section 7.1.1 of these Bylaws) stating the date, time and place, if any, of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and the record date for determining the stockholders entitled to vote at the meeting (if such date is different from the record date for stockholders entitled to notice of the meeting). In the case of a special meeting, such notice shall also set forth the purpose or purposes for which the meeting is called. Unless otherwise required by applicable law or the Certificate of Incorporation, notice of any meeting of stockholders shall be given not less than ten (10), nor more than sixty (60), days before the date of the meeting to each stockholder of record entitled to vote at such meeting as of the record date for determining the stockholders entitled to notice of the meeting.

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Section 1.4:Adjournments. Notwithstanding Section 1.5 of these Bylaws, the chairperson of the meeting shall have the power to adjourn the meeting to another time, date and place (if any), regardless of whether quorum is present, at any time and for any reason. Any meeting of stockholders, annual or special, may be adjourned from time to time, and notice need not be given of any such adjourned meeting if the time, date and place (if any) thereof and the means of remote communication (if any) by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken; provided, however, that if the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. If after the adjournment a new record date for determination of stockholders entitled to vote is fixed for the adjourned meeting, the Board shall fix as the record date for determining stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote at the adjourned meeting, and shall give notice of the adjourned meeting to each stockholder of record as of the record date so fixed for notice of such adjourned meeting. At the adjourned meeting, the Corporation may transact any business that might have been transacted at the original meeting. If a quorum is present at the original meeting, it shall also be deemed present at the adjourned meeting. To the fullest extent permitted by law, the Board may postpone, reschedule or cancel at any time and for any reason any previously scheduled special or annual meeting of stockholders before it is to be held, regardless of whether any notice or public disclosure with respect to any such meeting has been sent or made pursuant to Section 1.3 hereof or otherwise, in which case notice shall be provided to the stockholders of the new date, time and place, if any, of the meeting as provided in Section 1.3 above.

Section 1.5:Quorum. Except as otherwise provided by applicable law, the Certificate of Incorporation or these Bylaws, at each meeting of stockholders the holders of a majority of the voting power of the shares of stock issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business; provided, however, that where a separate vote by a class or classes or series of stock is required by applicable law or the Certificate of Incorporation, the holders of a majority of the voting power of the shares of such class or classes or series of the stock issued and outstanding and entitled to vote on such matter, present in person or represented by proxy at the meeting, shall constitute a quorum entitled to take action with respect to the vote on such matter. If a quorum shall fail to attend any meeting, the chairperson of the meeting or, if directed to be voted on by the chairperson of the meeting, the holders of a majority of the voting power of the shares entitled to vote who are present in person or represented by proxy at the meeting may adjourn the meeting. Shares of the Corporation’s stock belonging to the Corporation (or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation are held, directly or indirectly, by the Corporation), shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation or any other corporation to vote any shares of the Corporation’s stock held by it in a fiduciary capacity and to count such shares for purposes of determining a quorum. A quorum, once established at a meeting, shall not be broken by the withdrawal of enough votes to leave less than a quorum.

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Section 1.6:Organization. Meetings of stockholders shall be presided over by (a) such person as the Board may designate, or (b) in the absence of such a person, the Chairperson of the Board, or (c) in the absence of such person, the Lead Independent Director, or, (d) in the absence of such person, the Chief Executive Officer of the Corporation, or (e) in the absence of such person, the President of the Corporation, or (f) in the absence of such person, by a Vice President. The Secretary of the Corporation shall act as secretary of the meeting, but in such person’s absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.

Section 1.7:Voting; Proxies. Each stockholder of record entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy. Such a proxy may be prepared, transmitted and delivered in any manner permitted by applicable law. Except as may be required in the Certificate of Incorporation, directors shall be elected by a plurality of the votes cast by the holders of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. At all meetings of stockholders at which a quorum is present, unless a different or minimum vote is required by applicable law, rule or regulation applicable to the Corporation or its securities, the rules or regulations of any stock exchange applicable to the Corporation, the Certificate of Incorporation or these Bylaws, in which case such different or minimum vote shall be the applicable vote on the matter, every matter other than the election of directors shall be decided by the affirmative vote of the holders of a majority of the voting power of the shares of stock entitled to vote on such matter that are present in person or represented by proxy at the meeting and are voted for or against the matter (or if there are two or more classes or series of stock entitled to vote as separate classes, then in the case of each class or series, the holders of a majority of the voting power of the shares of stock of that class or series present in person or represented by proxy at the meeting voting for or against such matter).

Section 1.8:Fixing Date for Determination of Stockholders of Record. In order that the Corporation may determine the stockholders entitled to notice of any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If the Board so fixes a date, such date shall also be the record date for determining the stockholders entitled to vote at such meeting unless the Board determines, at the time it fixes such record date, that a later date on or before the date of the meeting shall be the date for making such determination. If no record date is fixed by the Board, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at 5:00 p.m. Eastern Time on the day next preceding the day on which notice is given, or, if notice is waived, at 5:00 p.m. Eastern Time on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for determination of stockholders entitled to vote at the adjourned meeting, and in such case shall also fix as the record date for stockholders entitled to notice of such adjourned meeting the same or an earlier date as that fixed for determination of stockholders entitled to vote in accordance herewith at the adjourned meeting.

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In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the Board and which shall not be more than sixty (60) days prior to such action. If no such record date is fixed by the Board, then the record date for determining stockholders for any such purpose shall be at 5:00 p.m. Eastern Time on the day on which the Board adopts the resolution relating thereto.

Section 1.9:List of Stockholders Entitled to Vote. The Corporation shall prepare, at least ten (10) days before every meeting of stockholders, a complete list of stockholders entitled to vote at the meeting (provided, however, if the record date for determining the stockholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth (10th) day before the meeting date), arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least ten (10) days prior to the meeting, (a) on a reasonably accessible electronic network as permitted by applicable law (provided that the information required to gain access to the list is provided with the notice of the meeting), or (b) during ordinary business hours, at the principal place of business of the Corporation. If the meeting is held at a location where stockholders may attend in person, a list of stockholders entitled to vote at the meeting shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present at the meeting. If the meeting is held solely by means of remote communication, then the list shall be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access the list shall be provided with the notice of the meeting. Except as otherwise provided by law, the stock ledger shall be the only evidence as to who are the stockholders entitled to examine the list of stockholders required by this Section 1.9 or to vote in person or by proxy at any meeting of stockholders.

Section 1.10:Inspectors of Elections.

1.10.1Applicability. Unless otherwise required by the Certificate of Incorporation or by applicable law, the following provisions of this Section 1.10 shall apply only if and when the Corporation has a class of voting stock that is: (a) listed on a national securities exchange; (b) authorized for quotation on an interdealer quotation system of a registered national securities association; or (c) held of record by more than two thousand (2,000) stockholders. In all other cases, observance of the provisions of this Section 1.10 shall be optional, and at the discretion of the Board.

1.10.2Appointment. The Corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors of election to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting.

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1.10.3Inspector’s Oath. Each inspector of election, before entering upon the discharge of his duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector’s ability.

1.10.4Duties of Inspectors. At a meeting of stockholders, the inspectors of election shall (a) ascertain the number of shares outstanding and the voting power of each share, (b) determine the shares represented at a meeting and the validity of proxies and ballots, (c) count all votes and ballots, (d) determine and retain for a reasonable period of time a record of the disposition of any challenges made to any determination by the inspectors, and (e) certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of the inspectors.

1.10.5Opening and Closing of Polls. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced by the chairperson of the meeting at the meeting. No ballot, proxies or votes, nor any revocations thereof or changes thereto, shall be accepted by the inspectors after the closing of the polls unless the Court of Chancery upon application by a stockholder shall determine otherwise.

1.10.6Determinations. In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted with those proxies, any information provided in connection with proxies pursuant to Section 211(a)(2)b.(i) of the DGCL, or in accordance with Sections 211(e) or 212(c)(2) of the DGCL, ballots and the regular books and records of the Corporation, except that the inspectors may consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider other reliable information for the limited purpose permitted herein, the inspectors at the time they make their certification of their determinations pursuant to this Section 1.10 shall specify the precise information considered by them, including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors’ belief that such information is accurate and reliable.

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Section 1.11:Conduct of Meetings. The Board may adopt by resolution such rules and regulations for the conduct of the meeting of stockholders as it shall deem appropriate. Except to the extent inconsistent with such rules and regulations as adopted by the Board, the person presiding over any meeting of stockholders shall have the right and authority to convene and (for any or no reason) to recess and/or adjourn the meeting, to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such presiding person, are appropriate for the proper conduct of the meeting. Such rules, regulations or procedures, whether adopted by the Board or prescribed by the presiding person of the meeting, may include, without limitation, the following: (i) the establishment of an agenda or order of business for the meeting; (ii) rules and procedures for maintaining order at the meeting and the safety of those present; (iii) limitations on attendance at or participation in the meeting to stockholders entitled to vote at the meeting, their duly authorized and constituted proxies or such other persons as the presiding person of the meeting shall determine; (iv) restrictions on entry to the meeting after the time fixed for the commencement thereof; (v) limitations on the time allotted to questions or comments by participants; (vi) restricting the use of audio/video recording devices and cell phones; and (vii) complying with any state and local laws and regulations concerning safety and security. The presiding person at any meeting of stockholders, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall, if the facts warrant, determine and declare to the meeting that a matter or business was not properly brought before the meeting and if such presiding person should so determine, such presiding person shall so declare to the meeting and any such matter or business not properly brought before the meeting shall not be transacted or considered. Unless and to the extent determined by the Board or the person presiding over the meeting, meetings of stockholders shall not be required to be held in accordance with the rules of parliamentary procedure.

Section 1.12:Notice of Stockholder Business; Nominations.

1.12.1Annual Meeting of Stockholders.

(a)Nominations of persons for election to the Board and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders only: (i) pursuant to the Corporation’s notice of such meeting (or any supplement thereto), (ii) by or at the direction of the Board or any committee thereof or (iii) by any stockholder of the Corporation who was a stockholder of record at the time of giving of the notice provided for in this Section 1.12 (the “Record Stockholder”), who is entitled to vote at such meeting and who complies with the notice and other procedures set forth in this Section 1.12 in all applicable respects. For the avoidance of doubt, the foregoing clause (iii) shall be the exclusive means for a stockholder to make nominations or propose business (other than business included in the Corporation’s proxy materials pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (such act, and the rules and regulations promulgated thereunder, the “Exchange Act”)), at an annual meeting of stockholders, and such stockholder must fully comply with the notice and other procedures set forth in this Section 1.12 to make such nominations or propose business before an annual meeting.

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(b)For nominations or other business to be properly brought before an annual meeting by a Record Stockholder pursuant to Section 1.12.1(a) of these Bylaws:

(i)the Record Stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and provide any updates or supplements to such notice at the times and in the forms required by this Section 1.12;

(ii)such other business (other than the nomination of persons for election to the Board) must otherwise be a proper matter for stockholder action;

(iii)if the Proposing Person (as defined below) has provided the Corporation with a Solicitation Notice (as defined below), such Proposing Person must, in the case of a proposal other than the nomination of persons for election to the Board, have delivered a proxy statement and form of proxy to holders of at least the percentage of the Corporation’s voting shares required under applicable law to carry any such proposal, or, in the case of a nomination or nominations, have delivered a proxy statement and form of proxy to holders of a percentage of the Corporation’s voting shares reasonably believed by such Proposing Person to be sufficient to elect the nominee or nominees proposed to be nominated by such Record Stockholder, and must, in either case, have included in such materials the Solicitation Notice; and

(iv)if no Solicitation Notice relating thereto has been timely provided pursuant to this Section 1.12, the Proposing Person proposing such business or nomination must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this Section 1.12.

To be timely, a Record Stockholder’s notice must be delivered to the Secretary at the principal executive offices of the Corporation not later than 5:00 p.m. Eastern Time on the ninetieth (90th) day nor earlier than 5:00 p.m. Eastern Time on the one hundred and twentieth (120th) day prior to the first anniversary of the preceding year’s annual meeting (except in the case of the Corporation’s first annual meeting following its initial public offering, for which such notice shall be timely if delivered in the same time period as if such meeting were a special meeting governed by Section 1.12.2 of these Bylaws); provided, however, that in the event that the date of the annual meeting is more than thirty (30) days before or more than seventy (70) days after such anniversary date, notice by the Record Stockholder to be timely must be so delivered (A) no earlier than 5:00 p.m. Eastern Time on the one hundred and twentieth (120th) day prior to such annual meeting and (B) no later than 5:00 p.m. Eastern Time on the later of the ninetieth (90th) day prior to such annual meeting or 5:00 p.m. Eastern Time on the tenth (10th) day following the day on which Public Announcement (as defined below) of the date of such meeting is first made by the Corporation. In no event shall an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for providing the Record Stockholder’s notice.

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(c)As to each person whom the Record Stockholder proposes to nominate for election or reelection as a director, in addition to the matters set forth in paragraph (e) below, such Record Stockholder’s notice shall set forth:

(i) the name, age, business address and residence address of such person;

(ii)the principal occupation or employment of such nominee;

(iii)the class, series and number of any shares of stock of the Corporation that are beneficially owned or owned of record by such person or any Associated Person (as defined in Section 1.12.4(c));

(iv)the date or dates such shares were acquired and the investment intent of such acquisition;

(v)all other information relating to such person that would be required to be disclosed in solicitations of proxies for election of directors in an election contest (even if an election contest is not involved), or would be otherwise required, in each case pursuant to and in accordance with Section 14(a) (or any successor provision) under the Exchange Act and the rules and regulations thereunder;

(vi)such person’s written consent to being named in the Corporation’s proxy statement as a nominee, to the public disclosure of information regarding or related to such person provided to the Corporation by such person or otherwise pursuant to this Section 1.12 and to serving as a director if elected;

(vii)whether such person meets the independence requirements of the stock exchange upon which the Corporation’s Common Stock is primarily traded;

(viii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any other material relationships, between or among such Proposing Person or any of its respective affiliates and associates, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, on the other hand, including all information that would be required to be disclosed pursuant to Rule 404 promulgated under Regulation S-K if the Proposing Person or any of its respective affiliates and associates were the “registrant” for purposes of such rule and the nominee were a director or executive officer of such registrant; and

(ix)a completed and signed questionnaire, representation and agreement required by Section 1.12.2 of these Bylaws.

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(d)As to any business other than the nomination of a director or directors that the Record Stockholder proposes to bring before the meeting, in addition to the matters set forth in paragraph (e) below, such Record Stockholder’s notice shall set forth:

(i)a brief description of the business desired to be brought before the meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the Bylaws, the text of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of such Proposing Person, including any anticipated benefit to any Proposing Person therefrom; and

(ii)a description of all agreements, arrangements and understandings between or among any such Proposing Person and any of its respective affiliates or associates, on the one hand, and any other person or persons, on the other hand, (including their names) in connection with the proposal of such business by such Proposing Person;

(e)As to each Proposing Person giving the notice, such Record Stockholder’s notice shall set forth:

(i)the current name and address of such Proposing Person, including, if applicable, their name and address as they appear on the Corporation’s stock ledger, if different;

(ii)the class or series and number of shares of stock of the Corporation that are directly or indirectly owned of record or beneficially owned by such Proposing Person, including any shares of any class or series of the Corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future;

(iii)whether and the extent to which any derivative interest in the Corporation’s equity securities (including without limitation any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of shares of the Corporation or otherwise, and any cash-settled equity swap, total return swap, synthetic equity position or similar derivative arrangement (any of the foregoing, a “Derivative Instrument”), as well as any rights to dividends on the shares of any class or series of shares of the Corporation that are separated or separable from the underlying shares of the Corporation) or any short interest in any security of the Corporation (for purposes of this Bylaw a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any increase or decrease in the value of the subject security, including through performance-related fees) is held directly or indirectly by or for the benefit of such Proposing Person, including without limitation whether and the extent to which any ongoing hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including without limitation any short position or any borrowing or lending of shares) has been made, the effect or intent of which is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, such Proposing Person with respect to any share of stock of the Corporation (any of the foregoing, a “Short Interest”);

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(iv)any proportionate interest in shares of the Corporation or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such Proposing Person or any of its respective affiliates or associates is a general partner or, directly or indirectly, beneficially owns an interest in a general partner of such general or limited partnership;

(v)any direct or indirect material interest in any material contract or agreement with the Corporation, any affiliate of the Corporation or any Competitor (as defined below) (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement);

(vi)any significant equity interests or any Derivative Instruments or Short Interests in any Competitor held by such Proposing Person and/or any of its respective affiliates or associates;

(vii)any other material relationship between such Proposing Person, on the one hand, and the Corporation, any affiliate of the Corporation or any Competitor, on the other hand;

(viii)all information that would be required to be set forth in a Schedule 13D filed pursuant to Rule 13d-1(a) or an amendment pursuant to Rule 13d-2(a) if such a statement were required to be filed under the Exchange Act and the rules and regulations promulgated thereunder by such Proposing Person and/or any of its respective affiliates or associates;

(ix)any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) (or any successor provision) under the Exchange Act and the rules and regulations thereunder;

(x)such Proposing Person’s written consent to the public disclosure of information provided to the Corporation pursuant to this Section 1.12;

(xi)a complete written description of any agreement, arrangement or understanding (whether oral or in writing) (including any knowledge that another person or entity is Acting in Concert (as defined in Section 1.12.4(c)) with such Proposing Person) between or among such Proposing Person, any of its respective affiliates or associates and any other person Acting in Concert with any of the foregoing persons;

(xii)a representation that the Record Stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination;

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(xiii)a representation whether such Proposing Person intends (or is part of a group that intends) to deliver a proxy statement or form of proxy to holders of, in the case of a proposal, at least the percentage of the Corporation’s voting shares required under applicable law to carry the proposal or, in the case of a nomination or nominations, a sufficient number of holders of the Corporation’s voting shares to elect such nominee or nominees (an affirmative statement of such intent being a “Solicitation Notice”); and

(xiv)any proxy, contract, arrangement, or relationship pursuant to which the Proposing Person has a right to vote, directly or indirectly, any shares of any security of the Corporation.

The disclosures to be made pursuant to the foregoing clauses (ii), (iii), (iv) and (vi) shall not include any information with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these Bylaws on behalf of a beneficial owner.

(f)A stockholder providing written notice required by this Section 1.12 shall update such notice in writing, if necessary, so that the information provided or required to be provided in such notice is true and correct in all material respects as of (i) the record date for determining the stockholders entitled to notice of the meeting and (ii) 5:00 p.m. Eastern Time on the tenth (10th) business day prior to the meeting or any adjournment or postponement thereof. In the case of an update pursuant to clause (i) of the foregoing sentence, such update shall be received by the Secretary of the Corporation at the principal executive office of the Corporation not later than five (5) business days after the record date for determining the stockholders entitled to notice of the meeting, and in the case of an update and supplement pursuant to clause (ii) of the foregoing sentence, such update and supplement shall be received by the Secretary of the Corporation at the principal executive office of the Corporation not later than eight (8) business days prior to the date for the meeting and, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed). For the avoidance of doubt, the obligation to update as set forth in this paragraph shall not limit the Corporation’s rights with respect to any deficiencies in any notice provided by a stockholder, extend any applicable deadlines hereunder or enable or be deemed to permit a stockholder who has previously submitted notice hereunder to amend or update any proposal or nomination or to submit any new proposal, including by changing or adding nominees, matters, business and/or resolutions proposed to be brought before a meeting of the stockholders.

(g)Notwithstanding anything in Section 1.12 or any other provision of the Bylaws to the contrary, any person who has been determined by a majority of the Whole Board to have violated Section 2.11 of these Bylaws or a Board Confidentiality Policy (as defined below) while serving as a director of the Corporation in the preceding five (5) years shall be ineligible to be nominated or be qualified to serve as a member of the Board, absent a prior waiver for such nomination or qualification approved by two-thirds of the Whole Board.

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1.12.2Submission of Questionnaire, Representation and Agreement. To be eligible to be a nominee of any stockholder for election or reelection as a director of the Corporation, the person proposed to be nominated must deliver (in accordance with the time periods prescribed for delivery of notice under Section 1.12 of these Bylaws) to the Secretary at the principal executive offices of the Corporation a completed and signed questionnaire in the form required by the Corporation (which form the stockholder shall request in writing from the Secretary of the Corporation and which the Secretary shall provide to such stockholder within ten days of receiving such request) with respect to the background and qualification of such person to serve as a director of the Corporation and the background of any other person or entity on whose behalf, directly or indirectly, the nomination is being made and a signed representation and agreement (in the form available from the Secretary upon written request) that such person: (a) is not and will not become a party to (i) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Corporation or (ii) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Corporation, with such person’s fiduciary duties under applicable law, (b) is not and will not become a party to any Compensation Arrangement (as defined below) that has not been disclosed therein, (c) if elected as a director of the Corporation, will comply with all informational and similar requirements of applicable insurance policies and laws and regulations in connection with service or action as a director of the Corporation, (d) if elected as a director of the Corporation, will comply with all corporate governance, conflict of interest, stock ownership requirements, confidentiality and trading policies and guidelines of the Corporation publicly disclosed from time to time, (e) if elected as a director of the Corporation, will act in the best interests of the Corporation and its stockholders and not in the interests of individual constituencies, (f) consents to being named as a nominee in the Corporation’s proxy statement pursuant to Rule 14a-4(d) under the Exchange Act and any associated proxy card of the Corporation and agrees to serve if elected as a director and (g) intends to serve as a director for the full term for which such individual is to stand for election.

1.12.3Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of such meeting. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of such meeting (a) by or at the direction of the Board or any committee thereof or (b) provided that the Board has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice of the special meeting, who shall be entitled to vote at the meeting and who complies with the notice and other procedures set forth in this Section 1.12 in all applicable respects. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by Section 1.12.1(b) of these Bylaws shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation (i) no earlier than the one hundred and twentieth (120th) day prior to such special meeting and (ii) no later than 5:00 p.m. Eastern Time on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) day following the day on which Public Announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting. In no event shall an adjournment or postponement of a special meeting commence a new time period (or extend any time period) for providing such notice.

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1.12.4General.

(a)Except as otherwise expressly provided in any applicable rule or regulation promulgated under the Exchange Act, only such persons who are nominated in accordance with the procedures set forth in this Section 1.12 shall be eligible to be elected at a meeting of stockholders and serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 1.12. Except as otherwise provided by law or these Bylaws, the chairperson of the meeting shall have the power and duty to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 1.12 and, if any proposed nomination or business is not in compliance herewith, to declare that such defective proposal or nomination shall be disregarded. Notwithstanding the foregoing provisions of this Section 1.12, unless otherwise required by law, if the stockholder (or a Qualified Representative of the stockholder (as defined below)) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or proposed business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.

(b)Notwithstanding the foregoing provisions of this Section 1.12, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein. Nothing in this Section 1.12 shall be deemed to affect any rights of (a) stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (b) the holders of any series of Preferred Stock to elect directors pursuant to any applicable provisions of the Certificate of Incorporation.

(c)For purposes of these Bylaws the following definitions shall apply:

(A)a person shall be deemed to be “Acting in Concert” with another person if such person knowingly acts (whether or not pursuant to an express agreement, arrangement or understanding) in concert with, or toward a common goal relating to the management, governance or control of the Corporation in substantial parallel with, such other person where (1) each person is conscious of the other person’s conduct or intent and this awareness is an element in their decision-making processes and (2) at least one additional factor suggests that such persons intend to act in concert or in substantial parallel, which such additional factors may include, without limitation, exchanging information (whether publicly or privately), attending meetings, conducting discussions or making or soliciting invitations to act in concert or in substantial parallel; provided that a person shall not be deemed to be Acting in Concert with any other person solely as a result of the solicitation or receipt of revocable proxies or consents from such other person in response to a solicitation made pursuant to, and in accordance with, Section 14(a) (or any successor provision) of the Exchange Act by way of a proxy or consent solicitation statement filed on Schedule 14A. A person Acting in Concert with another person shall be deemed to be Acting in Concert with any third party who is also Acting in Concert with such other person;

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(B)affiliate” and “associate” shall have the meanings ascribed thereto in Rule 405 under the Securities Act of 1933, as amended (the “Securities Act”); provided, however, that the term “partner” as used in the definition of “associate” shall not include any limited partner that is not involved in the management of the relevant partnership;

(C)“Associated Person” shall mean with respect to any subject stockholder or other person (including any proposed nominee) (1) any person directly or indirectly controlling, controlled by or under common control with such stockholder or other person, (2) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder or other person, (3) any associate of such stockholder or other person, and (4) any person directly or indirectly controlling, controlled by or under common control or Acting in Concert with any such Associated Person;

(D)“Compensation Arrangement” shall mean any direct or indirect compensatory payment or other financial agreement, arrangement or understanding with any person or entity other than the Corporation, including any agreement, arrangement or understanding with respect to any direct or indirect compensation, reimbursement or indemnification in connection with candidacy, nomination, service or action as a nominee or as a director of the Corporation;

(E)“Competitor” shall mean any entity that provides products or services that compete with or are alternatives to the principal products produced or services provided by the Corporation or its affiliates;

(F)“Proposing Person” shall mean (1) the Record Stockholder providing the notice of business proposed to be brought before an annual meeting or nomination of persons for election to the Board at a stockholder meeting, (2) the beneficial owner or beneficial owners, if different, on whose behalf the notice of business proposed to be brought before the annual meeting or nomination of persons for election to the Board at a stockholder meeting is made, and (3) any Associated Person on whose behalf the notice of business proposed to be brought before the annual meeting or nomination of persons for election to the Board at a stockholder meeting is made;

(G)“Public Announcement” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act; and

(H)to be considered a “Qualified Representative” of a stockholder, a person must be a duly authorized officer, manager, trustee or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as a proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction thereof, at the meeting. The Secretary of the Corporation, or any other person who shall be appointed to serve as secretary of the meeting, may require, on behalf of the Corporation, reasonable and appropriate documentation to verify the status of a person purporting to be a “Qualified Representative” for purposes hereof.

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Article II: BOARD OF DIRECTORS

Section 2.1:Number; Qualifications. The total number of directors constituting the Whole Board shall be fixed from time to time in the manner set forth in the Certificate of Incorporation and the term “Whole Board” shall have the meaning specified in the Certificate of Incorporation. No decrease in the authorized number of directors constituting the Whole Board shall shorten the term of any incumbent director. Directors need not be stockholders of the Corporation.

Section 2.2:Election; Resignation; Removal; Vacancies. Election of directors need not be by written ballot. Each director shall hold office until the annual meeting at which such director’s term expires and until such director’s successor is elected and qualified or until such director’s earlier death, resignation, disqualification or removal. Any director may resign by delivering a resignation in writing or by electronic transmission to the Corporation at its principal office or to the Chairperson of the Board, the Chief Executive Officer, or the Secretary. Such resignation shall be effective upon delivery unless it is specified to be effective at a later time or upon the happening of an event. Subject to the special rights of holders of any series of Preferred Stock to elect directors, directors may be removed only as provided by the Certificate of Incorporation and applicable law. All vacancies occurring in the Board and any newly created directorships resulting from any increase in the authorized number of directors shall be filled in the manner set forth in the Certificate of Incorporation.

Section 2.3:Regular Meetings. Regular meetings of the Board may be held at such places, within or without the State of Delaware, and at such times as the Board may from time to time determine. Notice of regular meetings need not be given if the date, times and places thereof are fixed by resolution of the Board.

Section 2.4:Special Meetings. Special meetings of the Board may be called by the Chairperson of the Board, the Chief Executive Officer, the Lead Independent Director or a majority of the members of the Board then in office and may be held at any time, date or place, within or without the State of Delaware, as the person or persons calling the meeting shall fix. Notice of the time, date and place of such meeting shall be given, orally, in writing or by electronic transmission (including electronic mail), by the person or persons calling the meeting to all directors at least four (4) days before the meeting if the notice is mailed, or at least twenty-four (24) hours before the meeting if such notice is given by telephone, hand delivery, telegram, telex, mailgram, facsimile, electronic mail or other means of electronic transmission; provided, however, that if, under the circumstances, the Chairperson of the Board, the Lead Independent Director or the Chief Executive Officer calling a special meeting deems that more immediate action is necessary or appropriate, notice may be delivered on the day of such special meeting. Unless otherwise indicated in the notice, any and all business may be transacted at a special meeting.

Section 2.5:Remote Meetings Permitted. Members of the Board, or any committee of the Board, may participate in a meeting of the Board or such committee by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to conference telephone or other communications equipment shall constitute presence in person at such meeting.

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Section 2.6:Quorum; Vote Required for Action. At all meetings of the Board, a majority of the Whole Board shall constitute a quorum for the transaction of business. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date or time. Except as otherwise provided herein or in the Certificate of Incorporation, or required by law, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board.

Section 2.7:Organization. Meetings of the Board shall be presided over by (a) the Chairperson of the Board, or (b) in the absence of such person, the Lead Independent Director, or (c) in such person’s absence, by the Chief Executive Officer, or (d) in such person’s absence, by a chairperson chosen by the Board at the meeting. The Secretary shall act as secretary of the meeting, but in such person’s absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.

Section 2.8:Unanimous Action by Directors in Lieu of a Meeting. Any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or such committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee, as applicable. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

Section 2.9:Powers. Except as otherwise provided by the Certificate of Incorporation or the DGCL, the business and affairs of the Corporation shall be managed by or under the direction of the Board.

Section 2.10:Compensation of Directors. Members of the Board, as such, may receive, pursuant to a resolution of the Board, fees and other compensation for their services as directors, including without limitation their services as members of committees of the Board.

Section 2.11:Confidentiality. Each director shall maintain the confidentiality of, and shall not share with any third-party person or entity (including third parties that originally sponsored, nominated or designated such director (the “Sponsoring Party”)), any non‑public information learned in their capacities as directors, including communications among Board members in their capacities as directors. The Board may adopt a board confidentiality policy further implementing and interpreting this bylaw (a “Board Confidentiality Policy”). All directors are required to comply with this bylaw and any such Board Confidentiality Policy unless such director or the Sponsoring Party for such director has entered into a specific written agreement with the Corporation, in either case as approved by the Board, providing otherwise with respect to such confidential information.

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Article III: COMMITTEES

Section 3.1:Committees. The Board may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of the committee, the member or members thereof present at any meeting of such committee who are not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent provided in a resolution of the Board, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority in reference to the following matters: (a) approving, adopting, or recommending to the stockholders any action or matter (other than the election or removal of members of the Board) expressly required by the DGCL to be submitted to stockholders for approval or (b) adopting, amending or repealing any bylaw of the Corporation.

Section 3.2:Committee Rules. Each committee shall keep records of its proceedings and make such reports as the Board may from time to time request. Unless the Board otherwise provides, each committee designated by the Board may make, alter and repeal rules for the conduct of its business. In the absence of such rules, each committee shall conduct its business in the same manner as the Board conducts its business pursuant to Article II of these Bylaws. Except as otherwise provided in the Certificate of Incorporation, these Bylaws or the resolution of the Board designating the committee, any committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and may delegate to any such subcommittee any or all of the powers and authority of the committee.

Article IV: OFFICERS; CHAIRPERSON; LEAD INDEPENDENT DIRECTOR

Section 4.1:Generally. The officers of the Corporation shall consist of a Chief Executive Officer (who may be the Chairperson of the Board or the President), a President, a Secretary and a Treasurer and may consist of such other officers, including, without limitation, a Chief Financial Officer, and one or more Vice Presidents, as may from time to time be appointed by the Board. All officers shall be elected by the Board; provided, however, that the Board may empower the Chief Executive Officer of the Corporation to appoint any officer other than the Chief Executive Officer, the President, the Chief Financial Officer or the Treasurer. Except as otherwise provided by law, by the Certificate of Incorporation or these Bylaws, each officer shall hold office until such officer’s successor is duly elected and qualified or until such officer’s earlier resignation, death, disqualification or removal. Any number of offices may be held by the same person. Any officer may resign by delivering a resignation in writing or by electronic transmission to the Corporation at its principal office or to the Chairperson of the Board, the Chief Executive Officer, or the Secretary. Such resignation shall be effective upon delivery unless it is specified to be effective at some later time or upon the happening of some later event. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled by the Board and the Board may, in its discretion, leave unfilled, for such period as it may determine, any offices. Each such successor shall hold office for the unexpired term of such officer’s predecessor and until a successor is duly elected and qualified or until such officer’s earlier resignation, death, disqualification or removal.

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Section 4.2:Chief Executive Officer. Subject to the control of the Board and such supervisory powers, if any, as may be given by the Board, the powers and duties of the Chief Executive Officer of the Corporation are:

(a)to act as the general manager and, subject to the control of the Board, to have general supervision, direction and control of the business and affairs of the Corporation;

(b)subject to Section 1.6 of these Bylaws, to preside at all meetings of the stockholders;

(c)subject to Section 1.2 of these Bylaws, to call special meetings of the stockholders to be held at such times and, subject to the limitations prescribed by law or by these Bylaws, at such places as he or she shall deem proper; and

(d)to affix the signature of the Corporation to all deeds, conveyances, mortgages, guarantees, leases, obligations, bonds, certificates and other papers and instruments in writing which have been authorized by the Board or which, in the judgment of the Chief Executive Officer, should be executed on behalf of the Corporation; to sign certificates for shares of stock of the Corporation (if any); and, subject to the direction of the Board, to have general charge of the property of the Corporation and to supervise and control all officers, agents and employees of the Corporation.

The person holding the office of President shall be the Chief Executive Officer of the Corporation unless the Board shall designate another officer to be the Chief Executive Officer.

Section 4.3:Chairperson of the Board. Subject to the provisions of Section 2.7 of these Bylaws, the Chairperson of the Board shall have the power to preside at all meetings of the Board and shall have such other powers and duties as provided in these Bylaws and as the Board may from time to time prescribe. The Chairperson of the Board may or may not be an officer of the Corporation.

Section 4.4:Lead Independent Director. The Board may, in its discretion, elect a lead independent director from among its members that are Independent Directors (as defined below) (such director, the “Lead Independent Director”). The Lead Independent Director shall preside at all meetings at which the Chairperson of the Board is not present and shall exercise such other powers and duties as may from time to time be assigned to him or her by the Board or as prescribed by these Bylaws. For purposes of these Bylaws, “Independent Director” has the meaning ascribed to such term under the rules of the exchange upon which the Corporation’s Common Stock is primarily traded.

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Section 4.5:President. The person holding the office of Chief Executive Officer shall be the President of the Corporation unless the Board shall have designated one individual as the President and a different individual as the Chief Executive Officer of the Corporation. Subject to the provisions of these Bylaws and to the direction of the Board, and subject to the supervisory powers of the Chief Executive Officer (if the Chief Executive Officer is an officer other than the President), and subject to such supervisory powers and authority as may be given by the Board to the Chairperson of the Board, and/or to any other officer, the President shall have the responsibility for the general management and control of the business and affairs of the Corporation and the general supervision and direction of all of the officers, employees and agents of the Corporation (other than the Chief Executive Officer, if the Chief Executive Officer is an officer other than the President) and shall perform all duties and have all powers that are commonly incident to the office of President or that are delegated to the President by the Board.

Section 4.6:Chief Financial Officer. The person holding the office of Chief Financial Officer shall be the Treasurer of the Corporation unless the Board shall have designated another officer as the Treasurer of the Corporation. Subject to the direction of the Board and the Chief Executive Officer, the Chief Financial Officer shall perform all duties and have all powers that are commonly incident to the office of Chief Financial Officer, or as the Board or the Chief Executive Officer may from time to time prescribe.

Section 4.7:Treasurer. The person holding the office of Treasurer shall have custody of all monies and securities of the Corporation. The Treasurer shall make such disbursements of the funds of the Corporation as are authorized and shall render from time to time an account of all such transactions. The Treasurer shall also perform such other duties and have such other powers as are commonly incident to the office of Treasurer, or as the Board or the Chief Executive Officer may from time to time prescribe.

Section 4.8:Vice President. Each Vice President shall have all such powers and duties as are commonly incident to the office of Vice President or that are delegated to him or her by the Board or the Chief Executive Officer. A Vice President may be designated by the Board to perform the duties and exercise the powers of the Chief Executive Officer or President in the event of the Chief Executive Officer’s or President’s absence or disability.

Section 4.9:Secretary. The Secretary shall issue or cause to be issued all authorized notices for, and shall keep, or cause to be kept, minutes of all meetings of the stockholders and the Board. The Secretary shall have charge of the corporate minute books and similar records and shall perform such other duties and have such other powers as are commonly incident to the office of Secretary, or as the Board or the Chief Executive Officer may from time to time prescribe.

Section 4.10:Delegation of Authority. The Board may from time to time delegate the powers or duties of any officer of the Corporation to any other officers or agents of the Corporation, notwithstanding any provision hereof.

Section 4.11:Removal. Any officer of the Corporation shall serve at the pleasure of the Board and may be removed at any time, with or without cause, by the Board; provided that if the Board has empowered the Chief Executive Officer to appoint any officer of the Corporation, then such officer may also be removed by the Chief Executive Officer. Such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation.

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Article V: STOCK

Section 5.1:Certificates; Uncertificated Shares. The shares of capital stock of the Corporation shall be uncertificated shares; provided, however, that the resolution of the Board that the shares of capital stock of the Corporation shall be uncertificated shares shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation (or the transfer agent or registrar, as the case may be). Notwithstanding the foregoing, the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be certificated shares. Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the Corporation, by any two authorized officers of the Corporation (it being understood that each of the Chairperson of the Board, the Vice-Chairperson of the Board, the Chief Executive Officer, the President, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary and any Assistant Secretary shall be an authorized officer for such purpose) , representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were an officer, transfer agent or registrar at the date of issue.

Section 5.2:Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates or Uncertificated Shares. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate previously issued by it, alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to agree to indemnify the Corporation and/or to give the Corporation a bond sufficient to indemnify it, against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

Section 5.3:Other Regulations. Subject to applicable law, the Certificate of Incorporation and these Bylaws, the issue, transfer, conversion and registration of shares represented by certificates and of uncertificated shares shall be governed by such other regulations as the Board may establish.

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Article VI: INDEMNIFICATION

Section 6.1:Indemnification of Officers and Directors. Each person who was or is made a party to, or is threatened to be made a party to, or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, legislative or any other type whatsoever (a “Proceeding”), by reason of the fact that such person (or a person of whom such person is the legal representative), is or was a director or officer of the Corporation or, while serving as a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation, or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans (for purposes of this Article VI, an “Indemnitee”), shall be indemnified and held harmless by the Corporation to the fullest extent permitted by the DGCL as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment), against all expenses, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes and penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such Indemnitee in connection therewith, provided such Indemnitee acted in good faith and in a manner that the Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful. Such indemnification shall continue as to an Indemnitee who has ceased to be a director or officer of the Corporation and shall inure to the benefit of such Indemnitees’ heirs, executors and administrators. Notwithstanding the foregoing, subject to Section 6.5 of these Bylaws, the Corporation shall indemnify any such Indemnitee seeking indemnity in connection with a Proceeding (or part thereof) initiated by such Indemnitee only if such Proceeding (or part thereof) was authorized by the Board or such indemnification is authorized by an agreement approved by the Board.

Section 6.2:Advance of Expenses. The Corporation shall pay all expenses (including attorneys’ fees) incurred by an Indemnitee in defending any Proceeding in advance of its final disposition; provided, however, that if the DGCL then so requires, the advancement of such expenses shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such Indemnitee, to repay such amounts if it shall ultimately be determined that such Indemnitee is not entitled to be indemnified under this Article VI or otherwise.

Section 6.3:Non-Exclusivity of Rights. The rights conferred on any person in this Article VI shall not be exclusive of any other right that such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote or consent of stockholders or disinterested directors, or otherwise. Additionally, nothing in this Article VI shall limit the ability of the Corporation, in its discretion, to indemnify or advance expenses to persons whom the Corporation is not obligated to indemnify or advance expenses pursuant to this Article VI.

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Section 6.4:Indemnification Contracts. The Board is authorized to cause the Corporation to enter into indemnification contracts with any director, officer, employee or agent of the Corporation, or any person serving at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation, partnership, joint venture, trust or other enterprise, including employee benefit plans, providing indemnification or advancement rights to such person. Such rights may be greater than those provided in this Article VI.

Section 6.5:Right of Indemnitee to Bring Suit. The following shall apply to the extent not in conflict with any indemnification contract provided for in Section 6.4 of these Bylaws.

6.5.1Right to Bring Suit. If a claim under Section 6.1 or 6.2 of these Bylaws is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the Indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Indemnitee shall be entitled to be paid, to the fullest extent permitted by law, the expense of prosecuting or defending such suit. In any suit brought by the Indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an advancement of expenses) it shall be a defense that the Indemnitee has not met any applicable standard of conduct which makes it permissible under the DGCL (or other applicable law) for the Corporation to indemnify the Indemnitee for the amount claimed.

6.5.2Effect of Determination. The absence of a determination prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in applicable law shall not create a presumption that the Indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the Indemnitee, be a defense to such suit.

6.5.3Burden of Proof. In any suit brought by the Indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the Indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article VI, or otherwise, shall be on the Corporation.

Section 6.6:Nature of Rights. The rights conferred upon Indemnitees in this Article VI shall be contract rights and such rights shall continue as to an Indemnitee who has ceased to be a director, officer or trustee and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators. Any amendment, repeal or modification of any provision of this Article VI that adversely affects any right of an Indemnitee or an Indemnitee’s successors shall be prospective only, and shall not adversely affect any right or protection conferred on a person pursuant to this Article VI with respect to any Proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment, repeal or modification.

~~Section 6.7:Insurance. The Corporation may purchase and maintain insurance, at its expense, to protect itself and any director, officer, employee or agent~~ of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.

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Article VII: NOTICES

Section 7.1:Notice.

7.1.1Form and Delivery. Except as otherwise specifically required in these Bylaws (including, without limitation, Section 7.1.2 of these Bylaws) or by applicable law, all notices required to be given pursuant to these Bylaws may (a) in every instance in connection with any delivery to a member of the Board, be effectively given by hand delivery (including use of a delivery service), by depositing such notice in the mail, postage prepaid, or by sending such notice by overnight express courier, facsimile, electronic mail or other form of electronic transmission and (b) be effectively delivered to a stockholder when given by hand delivery, by depositing such notice in the mail, postage prepaid or, if specifically consented to by the stockholder as described in Section 7.1.2 of these Bylaws, by sending such notice by facsimile, electronic mail or other form of electronic transmission. Any such notice shall be addressed to the person to whom notice is to be given at such person’s address as it appears on the records of the Corporation. The notice shall be deemed given (a) in the case of hand delivery, when received by the person to whom notice is to be given or by any person accepting such notice on behalf of such person, (b) in the case of delivery by mail, upon deposit in the mail, (c) in the case of delivery by overnight express courier, when dispatched, and (d) in the case of delivery via facsimile, electronic mail or other form of electronic transmission, at the time provided in Section 7.1.2 of these Bylaws.

7.1.2Electronic Transmission. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate of Incorporation, or these Bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given in accordance with Section 232 of the DGCL. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed revoked if (a) the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with such consent and (b) such inability becomes known to the Secretary or an Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Notice given pursuant to this Section 7.1.2 shall be deemed given: (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (iii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of such posting and the giving of such separate notice; and (iv) if by any other form of electronic transmission, when directed to the stockholder.

7.1.3Affidavit of Giving Notice. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Corporation that the notice has been given in writing or by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

Section 7.2:Waiver of Notice. Whenever notice is required to be given under any provision of the DGCL, the Certificate of Incorporation or these Bylaws, a written waiver of notice, signed by the person entitled to notice, or waiver by electronic transmission by such person, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any waiver of notice.

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Article VIII: INTERESTED DIRECTORS

Section 8.1:Interested Directors. No contract or transaction between the Corporation and one or more of its members of the Board or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are members of the board of directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board or committee thereof that authorizes the contract or transaction, or solely because his, her or their votes are counted for such purpose, if: (a) the material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; (b) the material facts as to his, her or their relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (c) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board, a committee thereof, or the stockholders.

Section 8.2:Quorum. Interested directors may be counted in determining the presence of a quorum at a meeting of the Board or of a committee which authorizes the contract or transaction.

Article IX: MISCELLANEOUS

Section 9.1:Fiscal Year. The fiscal year of the Corporation shall be determined by resolution of the Board.

Section 9.2:Seal. The Board may provide for a corporate seal, which may have the name of the Corporation inscribed thereon and shall otherwise be in such form as may be approved from time to time by the Board.

Section 9.3:Form of Records. Any records administered by or on behalf of the Corporation in the regular course of its business, including its stock ledger, books of account and minute books, may be kept on or by means of, or be in the form of, any other information storage device, method or one or more electronic networks or databases (including one or more distributed electronic networks or databases), electronic or otherwise, provided that the records so kept can be converted into clearly legible paper form within a reasonable time and otherwise comply with the DGCL. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect such records pursuant to any provision of the DGCL.

Section 9.4:Reliance Upon Books and Records. A member of the Board, or a member of any committee designated by the Board shall, in the performance of such person’s duties, be fully protected in relying in good faith upon the books and records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or committees of the Board, or by any other person as to matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

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Section 9.5:Certificate of Incorporation Governs. In the event of any conflict between the provisions of the Certificate of Incorporation and Bylaws, the provisions of the Certificate of Incorporation shall govern.

Section 9.6:Severability. If any provision of these Bylaws shall be held to be invalid, illegal, unenforceable or in conflict with the provisions of the Certificate of Incorporation, then such provision shall nonetheless be enforced to the maximum extent possible consistent with such holding and the remaining provisions of these Bylaws (including without limitation, all portions of any section of these Bylaws containing any such provision held to be invalid, illegal, unenforceable or in conflict with the Certificate of Incorporation, that are not themselves invalid, illegal, unenforceable or in conflict with the Certificate of Incorporation) shall remain in full force and effect.

Section 9.7:Time Periods. In applying any provision of these Bylaws which requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.

Article X: AMENDMENT

Notwithstanding any other provision of these Bylaws, any alteration, amendment or repeal of these Bylaws, and any adoption of new Bylaws, shall require the approval of the Board or the stockholders of the Corporation as expressly provided in the Certificate of Incorporation.

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CERTIFICATION OF RESTATED BYLAWS

bill.com holdings, INC.

(a Delaware corporation)

I, Raj Aji, certify that I am Secretary of Bill.com Holdings, Inc., a Delaware corporation (the “Corporation”), that I am duly authorized to make and deliver this certification, that the attached Bylaws are a true and complete copy of the Restated Bylaws of the Corporation in effect as of the date of this certificate.

Dated: December 16, 2019

/s/ Raj Aji

Raj Aji

Chief Legal Officer and Secretary

Exhibit 10.6

[***] Certain identified information has been excluded from the exhibit because it is both (i) not material and (ii) would likely cause competitive harm to the registrant if publicly disclosed.

OFFICE LEASE

BETWEEN

US ER America Center 4, LLC

as Landlord

AND

BILL.COM, LLC

as Tenant

Dated: December 31, 2019

*** Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule or exhibit will be furnished supplementally to the Securities and Exchange Commission upon request; provided, however that Bill.com Holdings, Inc. may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedule or exhibit so furnished.

TABLE OF CONTENTS


		Page
I.	BASIC LEASE PROVISIONS AND DEFINITIONS	1
II.	PREMISES	6
III.	TERM	7
IV.	RENT	8
V.	SECURITY DEPOSIT	10
VI.	OPERATING EXPENSES	11
VII.	REAL ESTATE TAXES	15
VIII.	PARKING	16
IX.	USE AND REQUIREMENTS OF LAW	17
X.	ASSIGNMENT AND SUBLETTING	23
XI.	MAINTENANCE AND REPAIR	27
XII.	INITIAL CONSTRUCTION; ALTERATIONS	28
XIII.	SIGNS	31
XIV.	RIGHT OF ENTRY	33
XV.	INSURANCE	33
XVI.	SERVICES AND UTILITIES	35
XVII.	LIABILITY OF LANDLORD	39
XVIII.	RULES AND REGULATIONS	40
XIX.	DAMAGE; CONDEMNATION	40
XX.	DEFAULT OF TENANT	42
XXI.	MORTGAGES	45
XXII.	SURRENDER; HOLDING OVER	46
XXIII.	QUIET ENJOYMENT	46
XXIV.	MISCELLANEOUS	47
XXV.	OPTION TO RENEW	54
XXVI.	RIGHT OF FIRST OFFERING	57

LIST OF EXHIBITS


Exhibit A-1		Site Plan Showing the Building and Project
Exhibit A-2		Legal Description of Land
Exhibit A-3		Outline of the Premises
Exhibit B-1		Work Agreement
Exhibit B-2		Intentionally Omitted
Exhibit B-3		Specifications
Exhibit B-4		Insurance Requirements
Exhibit C		Rules and Regulations
Exhibit D		Secretary’s Certificate
Exhibit E		Outline of Vacant First Floor Space
Exhibit F		List of Environmental Reports
Exhibit F-1		Environmental NDA
Exhibit G		Parking Locations
Exhibit G-1		Locations of Outdoor Amenities and Fire Pit Lounges
Exhibit H		Exterior Master Sign Program
Exhibit H-1		Location of Building Signage
Exhibit H-2		Location of Building Monument Signage
Exhibit I		Form of Letter of Credit
Exhibit J		Form of Existing Mortgage SNDA
Exhibit K		Non-Disclosure Agreement

OFFICE LEASE

THIS OFFICE LEASE (“Lease”) is made as of the 31st day of December, 2019 (“Date of Lease”), by and between US ER America Center 4, LLC, a California limited liability company (“Landlord”), and BILL.COM, LLC, a Delaware limited liability company (“Tenant”).

I. BASIC LEASE PROVISIONS AND DEFINITIONS

1.1Premises. Approximately 131,801 Rentable Square Feet as outlined on Exhibit A-3 attached hereto and made a part hereof (the “Premises”) in the building containing approximately 221,886 Rentable Square Feet and identified as Phase II Building 4 on Exhibit A-1 attached hereto and made a part hereof and located at 6220 America Center Drive, San Jose, California 95002 (referred to in this Lease as either “Building 4” or the “Building”) and comprised of (a) the portion of the first floor known as Suite 100 containing approximately 15,098 Rentable Square Feet, (b) the entire second floor known as Suite 200 containing approximately 38,901 Rentable Square Feet, (c) the entire third floor known as Suite 300 containing approximately 38,901 Rentable Square Feet and (d) the entire fourth floor known as Suite 400 containing approximately 38,901 Rentable Square Feet.

1.2Amenity Building. The building identified as the Amenity Building on Exhibit A-1 attached hereto and made a part hereof (“Amenity Building”) and located at 6250 America Center Drive, San Jose, California 95002, containing approximately 21,273 Rentable Square Feet.

1.3Project. The development depicted on Exhibit A-1 and known as America Center consisting of the real property and all improvements built thereon, including, without limitation, the Land, the Building, the Other Buildings, the Common Area, and Parking Facilities, containing approximately 427,600 Rentable Square Feet in the Phase I Buildings and 465,045 Rentable Square Feet in the Phase II Buildings. The “Phase I Buildings” means the buildings identified on Exhibit A-1 as Existing Building 1 located at 6001 America Center Drive, San Jose, California 95002 and as Existing Building 2 located at 6201 America Center Drive, San Jose, California 95002. The “Phase II Buildings” means the Building, the Amenity Building and the building identified on Exhibit A-1 as Phase II Building 3 located at 6280 America Center Drive, San Jose, California 95002 (“Building 3”). The “Other Buildings” means the Phase I Buildings, the Amenity Building, Building 3 and any other buildings located on the Land that Landlord may elect to include as part of the Project from time to time. Landlord reserves the right to adjust the Rentable Square Footage of the Project and the Other Buildings by delivering notice to Tenant that one or more Other Buildings have been sold, constructed, modified or removed from the Project or that the Common Areas have been modified.

1.4Land. The parcels of land on which the Project is located, as more particularly described on Exhibit A-2 attached hereto and made a part hereof, and all rights, easements and appurtenances thereunto belonging or pertaining. As used in this Lease, references to the “Land” on which the Building and the Surface Lot are located mean “Parcel 4” as identified on Exhibit G and references to the “Land” on which the Amenity Center and the Phase II Parking Garage are located mean “Parcel 3” as identified on Exhibit G.

1.5Common Area. All areas from time to time designated by Landlord for the general and nonexclusive common use or benefit of Tenant, other tenants of the Project, Landlord, and the owners of Other Buildings in the Project, including, without limitation, roadways, entrances and exits, loading areas, landscaped areas, open areas, park areas, entertainment areas, picnic areas, sport courts, service drives, walkways, atriums, courtyards, concourses, ramps, hallways, stairs, washrooms, lobbies, elevators, common trash areas, vending or mail areas, common pipes, conduits, wires and appurtenant equipment within the Project, maintenance and utility rooms and closets, exterior lighting, exterior utility lines, the Amenity Building, the Parking Facilities and the areas identified on Exhibit G-1, and referred to in this Lease as (a) the “Entertainment Center”, “Gaming Tables”, “Stage” and the “Orchard” located between Building 3 and Building 4 (collectively, the “Phase II Common Area”); and (b) the “Basketball Court”, “Sports Field” and “Orchard” comprising the area identified as the “Sports Park”.

1.6Parking Facilities. All parking areas now or hereafter designated by Landlord for use by tenants of the Project and/or their guests and invitees, including, without limitation, surface parking, parking decks, parking structures (including the Phase II Parking Garage) and parking areas under or within the Project whether reserved, exclusive, non-exclusive or otherwise. The “Phase II Parking Garage” means that four-story parking structure located at 6250 America Center Drive, San Jose, California 95002, as shown on Exhibit A-1 and Exhibit G. The “Surface Lot” means the surface parking shown on Exhibit G and located on the parcel identified as “Parcel 4” on Exhibit G.

1.7Rentable Square Feet (Foot) or Rentable Area. The Rentable Area within the Premises, the Building, the Other Buildings and the Project are deemed to be the amounts set forth in this Article I, as measured in accordance with a modified Building Owners and Managers Association 2017 for Single Tenant Office Buildings; Standard Methods of Measurement (ANSI/BOMA Z65.1-2017). Landlord and Tenant stipulate and agree that the Rentable Square Footage of the Premises, the Building, the Other Buildings and the Project are correct and shall not be remeasured.

1.8Permitted Use. Tenant may use the Premises subject to and in accordance with the terms, covenants and conditions set forth in this Lease, the Declaration and applicable governmental regulations, restrictions and permitting (without the necessity of obtaining any zoning changes, conditional use permits or other special permits), solely for administrative use, general business office use, labs, research and development, sales and marketing and uses incidental thereto.

1.9Commencement Date. May 1, 2020.

1.10Expiration Date. April 30, 2031.

1.11Term. 132 months, beginning on the Commencement Date and expiring on the Expiration Date.

1.12Basic Rent. The amount set forth in the schedule below, subject to adjustment as specified in Article IV.


Period	Monthly Basic Rent	Period Basic Rent

05/01/2020 – 04/30/2021*	$494,253.75	$5,931,045.00
05/01/2021 – 04/30/2022	$508,751.86	$6,105,022.32
05/01/2022 – 04/30/2023	$524,567.98	$6,294,815.76
05/01/2023 – 04/30/2024	$540,384.10	$6,484,609.20
05/01/2024 – 04/30/2025	$556,200.22	$6,674,402.64
05/01/2025 – 04/30/2026	$573,334.35	$6,880,012.20
05/01/2026 – 04/30/2027	$590,468.48	$7,085,621.76
05/01/2027 – 04/30/2028	$607,602.61	$7,291,231.32
05/01/2028 – 04/30/2029	$626,054.75	$7,512,657.00
05/01/2029 – 04/30/2030	$644,506.89	$7,734,082.68
05/01/2030 – 04/30/2031	$664,277.04	$7,971,324.48

Except to the extent used by Tenant pursuant to Paragraph 2.3 of the Work Agreement (as defined in Exhibit B-1) in order to fund the Cost of the Tenant Work (as defined in the Exhibit B-1), the Basic Rent shall be abated for the first 12 full calendar months of the Term commencing on May 1, 2020 and ending on April 30, 2021 (“Basic Rent Abatement Period”). All of the remaining terms and conditions of the Lease shall remain in full force and effect during the foregoing Basic Rent Abatement Period. If any Event of Default (as defined in Section 20.1 of the Lease) occurs under this Lease and Landlord terminates this Lease or Tenant’s right to possession of the Premises, then, in addition to Landlord’s other remedies available at law, in equity or under this Lease, the Basic Rent Abatement Period, and Tenant’s right to abate Basic Rent, shall immediately terminate and the unamortized portion of the Basic Rent abated during the Basic Rent Abatement Period (“Abated Basic Rent”) shall immediately become due and payable upon Landlord’s demand.

1.13Intentionally Omitted.

1.14Lease Year. Each consecutive 12-month period elapsing after: (i) the Commencement Date if the Commencement Date occurs on the first day of a month; or (ii) the first day of the month following the Commencement Date if the Commencement Date does not occur on the first day of a month. Notwithstanding the foregoing, the first Lease Year shall include the additional days, if any, between the Commencement Date and the first day of the month following the Commencement Date, in the event the Commencement Date does not occur on the first day of a month.

1.15Calendar Year. For the purpose of this Lease, Calendar Year shall be a period of 12 months commencing on each January 1 during the Term, except that the first Calendar Year shall be that period from and including the Commencement Date through December 31 of that same year, and the last Calendar Year shall be that period from and including the last January 1 of the Term through the earlier of the Expiration Date or date of Lease termination.

1.16Tenant's Proportionate Share. Tenant's Proportionate Share of the Building is 59.40% (determined by dividing the Rentable Square Feet of the Premises by the Rentable Square Feet of the Building and multiplying the resulting quotient by 100 and rounding to the second decimal place).

1.17Parking Space Allocation. Tenant shall have the right to 438 parking spaces within the Parking Facilities during the Term, of which (a) 408 shall be unreserved parking spaces (of which 236 will be located on the Surface Lot and 172 will be located in the Phase II Parking Garage), (b) 12 shall have connections for car-chargers in the reserved spaces in the locations shown on Exhibit G (“Car-Charging Stalls”) (of which 5 will be located in the Surface Lot and 7 shall be located in the Phase II Parking Garage), and (c) 18 shall be the reserved spaces in the locations shown on Exhibit G (“Future Car-Charging Stalls”) (of which 5 will be located in the Surface Lot and 13 shall be located in the Phase II Parking Garage); provided that at such time as Tenant makes the Parking Space Alterations (as defined in Section 8.2) to any Future Car-Charging Stalls, such spaces shall have connections to be car-charging stalls and such spaces will be added to the number of Car-Charging Stalls, and subtracted from the Future Car-Charging Stalls, in Tenant’s Parking Spacing Allocation. For every four spaces that are designated as a Car-Charging Stall as of the Date of Lease there will be two electric car chargers (“EV Stations”) in the locations shown on Exhibit G available for the connections serving each such Car-Charging Stall when in use. The parking rental for each of the parking spaces in Tenant’s Parking Space Allocation shall be $0.00 per month per space during the initial 132-month Term. Tenant’s Parking Space Allocation shall include Tenant’s Proportionate Share of visitor and handicapped parking.

1.18Security Deposit. $[***], subject to adjustment in accordance with Section 5.3.

1.19Brokers:

Landlord’s:

Tenant’s:

Cushman & Wakefield

300 Santana Row, Fifth Floor

San Jose, CA 95128

T3 Advisors

137 Forest Avenue

Palo Alton, CA 94301

1.20Guarantor(s). None.


1.21 “Landlord’s Notice	Steelwave, LLC
Address”.	999 Baker Way, Suite 200
	San Mateo, CA 94404
	Attention:	Steve Dunn
		Email: [***]
	Attention:	Alex Arsenlis
		Email: [***]

With copies at	c/o USAA Real Estate Company
the same time to.	9830 Colonnade Boulevard, Suite 600
	San Antonio, Texas 78230-2239
	Attention:	Teddy Childers
		Email: [***]
	Attention:	Steve Waters
		Email: [***]

1.22 Tenant's	Prior to the Commencement Date:
Notice Address.	1810 Embarcadero Road
	Palo Alto, California 94303

	After the Commencement Date:
	6220 America Center Drive, Suite 100
	San Jose, California 95002

	Prior to or after the Commencement Date, with a
	facsimile copy to:

	Valence Law Group, PC
	Facsimile #: [***]
	Attention: Krista M. Kim, Esq.
	[***]

1.23Interest Rate; Default Rate.

(i) The per annum interest rate listed as the U.S. “prime” rate as published from time to time under “Money Rates” in the Wall Street Journal plus 5% (“Default Rate”), but in no event greater than the maximum rate permitted by law.

(ii) The per annum interest rate listed as the U.S. “prime” rate as published from time to time under “Money Rates” in the Wall Street Journal plus 2% (“Interest Rate”), but in no event greater than the maximum rate permitted by law.

1.24Agents. Officers, partners, members, owners, directors, employees, agents, licensees, contractors, customers and invitees; to the extent customers and invitees are under the principal's control or direction.

1.25Declaration. “Declaration”; “Phase II Easement Agreement” and “Sports Park Easement Agreement”. The “Declaration” means that certain “Declaration and Agreement of Covenants and Restrictions of America Center” recorded in the Official Records of Santa Clara County on December 22, 2008 as Document Number 20074383, as amended from time to time in accordance with the terms thereof, and any Rules that may be promulgated thereunder. The “Phase II Easement Agreement” means that certain “Parking Structure, Common Area and Amenity Building Easement Agreement” recorded in the Official Records of Santa Clara County on August 16, 2018, as Document Number 24004701, as amended from time to time in accordance with the terms thereof, and any rules that may be promulgated thereunder. The Phase II Parking Garage is referred to as the “Parking Structure” under the Phase II Easement Agreement. The “Sports Park Easement Agreement” means that certain “North Sports Park Easement Agreement” recorded in the Official Records of Santa Clara County on November 28, 2017, as Document Number 23813520, as amended from time to time in accordance with the terms thereof, and any rules that may be promulgated thereunder. The Sports Park is referred to as the “North Sports Park” under the Sports Park Easement Agreement.

II. PREMISES

2.1Lease of Premises. In consideration of the agreements contained herein, Landlord hereby leases the Premises to Tenant, and Tenant hereby leases the Premises from Landlord, for the Term and upon the terms and conditions set forth in this Lease. As an appurtenance to the Premises, subject to the terms of the Lease and Landlord’s reservations of rights under Section 2.2 with respect to the Common Area, Tenant shall have (1) the general non-exclusive right together with the other tenants of Building 4 to use the fire pit and lounge for Building 4 shown on Exhibit G-1 attached hereto and incorporated herein and (2) the general and nonexclusive right, (a) together with Landlord, the owner of Building 3 and the other tenants of Building 3 and Building 4, to use the Amenity Building, the Phase II Common Area and the Phase II Parking Garage, (b) together with Landlord, the other owners and the other tenants of the Project, to use the other Common Area; provided, however, except to the extent Landlord’s prior written approval is obtained, Landlord excepts and reserves exclusively to itself the use of (i) roofs (except as otherwise provided in this Lease and except for any Amenities (as defined in, and subject to the terms of, Section 16.6) on the roof of the Amenity Building); (ii) maintenance and utility equipment rooms and closets, and (iii) conduits, wires and appurtenant equipment within the Project and equipment rooms and closets, and exterior utility lines. Subject to the terms of the Lease, including, without limitation, Landlord’s reservation of rights under Section 2.2, Tenant shall have access 24 hours per day, seven days per week, 365 days per year to the Premises, Building, the Surface Lot and the Phase II Parking Garage.

2.2Landlord's Reservations. Provided Tenant's use of and access to the Premises is not materially adversely affected, Landlord reserves the right from time to time to: (i) install, use, maintain, repair, replace and relocate pipes, ducts, conduits, wires and appurtenant meters and equipment above the ceiling surfaces, below the floor surfaces, within the walls and in the central core areas of the Building; (ii) make changes to the design and layout of the Project, including, without limitation, changes to buildings, driveways, entrances, loading and unloading areas, direction of traffic, landscaped areas and walkways, parking spaces and parking areas; (iii) use or close temporarily the Common Areas, and/or other portions of the Project while engaged in making improvements, repairs or alterations to the Building, the Project or any portion thereof; and (iv) Landlord reserves for itself, Landlord’s operators of the Amenities, Landlord’s property manager, and their respective Agents, the right from time to time to use, access and periodically reserve portions of the Amenity Building, the Phase II Common Area, the Parking Facilities, the Sports Park and the other Common Area; provided that Landlord shall exercise commercially reasonable efforts to coordinate with Tenant in connection with the exercise of such right in order that there shall be no material adverse effect to Tenant’s use of and access to such Common Areas. In addition, Landlord expressly reserves the right to change the name of the Building, the Other Buildings or the Project. Tenant acknowledges and agrees that Tenant shall have no right to use or access the exclusive fire pit and lounge for Building 3 as shown on Exhibit G-1 or any of the Parking Facilities other than the Surface Lot and the Phase II Parking Garage. Notwithstanding anything to the contrary in this Lease, to the extent that Landlord has obligations under this Lease with respect to portions of the Common Area that are located on portions of the Project that are not owned by Landlord, unless otherwise provided in the Phase II Easement Agreement, Landlord’s obligation shall be to exercise commercially reasonable efforts to cause the owners of such portions of the Project to perform their respective material obligations, to the extent of Landlord’s rights under the Phase II Easement Agreement, the Sports Park Easement Agreement, or any other applicable recorded easement agreements, covenants, conditions and restrictions and to enforce or exercise any remedies under the foregoing documents against the applicable owner or other responsible party who fails to perform its material obligations pursuant to such documents.

III. TERM

3.1Commencement Date. Subject to the earlier termination or extension as otherwise provided in this Lease, the Term shall commence on the Commencement Date and expire at midnight on the Expiration Date.

3.2Early Possession. Notwithstanding anything to the contrary, upon the later of the Date of Lease, Tenant’s delivery of satisfactory evidence of insurance in accordance with Article XV, the first month’s payment of Basic Rent and Additional Rent (as defined in Section 4.2) for the first month’s payment of Operating Expense Rental (as defined in Section 4.3) and Real Estate Tax Rental (as defined in Section 4.3) and payment of the Security Deposit and continuing until the Commencement Date (the “Early Access Period”), Tenant shall have non-exclusive reasonable rights of entry to the Premises for the purpose of preparing the Premises for Tenant’s use and occupancy, including, without limitation, performing the Tenant Work (as defined in Exhibit B-1) and installing furniture, fixtures, equipment and Cabling (as defined in Section 12.3) (the “Early Access Activities”). Tenant’s entry to the Premises and conducting of any Early Access Activities during the Early Access Period shall be subject to the terms and conditions of this Lease, including, without limitation, the indemnification and hold harmless agreements set forth in Article XVII; provided, however, except for the cost of services requested by Tenant, Tenant shall not be required to pay Rent (as defined in Section 4.2) for any days during the Early Access Period on which Tenant is in possession of the Premises for the sole purpose of the Early Access Activities; provided, however, if Tenant uses all or any portion of the Premises during the Early Access Period for the purpose of conducting business operations, then Tenant shall pay Additional Rent for Operating Expense Rental and Real Estate Tax Rental, commencing on the date of such use. Tenant will coordinate all Early Access Activities with Landlord so as not to unreasonably interfere with Landlord or with other occupants of the Building.

IV. RENT

4.1Basic Rent. Tenant shall pay to Landlord the Basic Rent as specified in Section 1.12. Basic Rent shall be payable in monthly installments as specified in Section 1.12, in advance, without demand, notice, deduction, offset or counterclaim, on or before the first day of each and every calendar month during the Term, except for the Basic Rent Abatement Period; provided, however, the installment of Basic Rent and Additional Rent for Operating Expense Rental and Real Estate Tax Rental in the amount of $706,120.41 payable for the first full calendar month of the Term in which Basic Rent and Additional Rent, respectively, are due shall be due and payable at the time of execution and delivery of this Lease. Any payment made by Tenant to Landlord on account of Basic Rent may be credited by Landlord to the payment of any late charges then due and payable and to any Basic Rent or Additional Rent then past due before being credited to Basic Rent currently due. Tenant shall pay Basic Rent and all Additional Rent electronically via automatic debit, ACH credit or wire transfer to such account as Landlord designates in writing to Tenant. Landlord may, in its sole discretion, designate an address for payment in lawful U.S. Dollars. If the Term commences on a day other than the first day of a calendar month or terminates on a day other than the last day of a calendar month, the monthly Basic Rent and Additional Rent shall be prorated based upon the number of days in such calendar month. Tenant’s covenant to pay Rent and the obligation of Tenant to perform Tenant's other covenants and duties hereunder constitute independent, unconditional obligations to be performed at all times provided for hereunder, save and except only when an abatement thereof or reduction therein is expressly provided for in this Lease and not otherwise.

4.2Additional Rent; Rent. All sums payable by Tenant under this Lease, other than Basic Rent, shall be deemed “Additional Rent,” and, unless otherwise set forth herein, shall be payable in the same manner as set forth above for Basic Rent. Basic Rent and Additional Rent shall jointly be referred to as “Rent” within the meaning of California Civil Code Section 1951(a), the nonpayment of which, after the expiration of applicable notice and cure periods, shall entitle Landlord to exercise all rights and remedies provided in Article XX or by law. It is intended that the Rent provided for in this Lease shall be an absolutely net return to Landlord for the Term of this Lease and any renewals or extensions thereof, free of any and all expenses or charges with respect to the Premises except for the exclusions set forth in Section 6.2 and for those obligations of Landlord expressly set forth herein.

4.3Operating Expense Rental and Real Estate Tax Rental. Tenant shall pay to Landlord throughout the remainder of the Term, as Additional Rent, (i) the Amenity Building Rent (as defined in this Section 4.3), the Management Fee (as defined in this Section 4.3) and Tenant’s Proportionate Share of Operating Expenses (as defined in Section 6.1) during each Calendar Year (collectively, the “Operating Expense Rental”); and (ii) Tenant’s Proportionate Share of Real Estate Taxes (as defined in Article VII) during each Calendar Year (“Real Estate Tax Rental”). The “Amenity Building Rent” shall be in the amount set forth in schedule in Section 4.5 and included in the Operating Expense Rental. The “Management Fee” shall be equal to three percent (3%) of the total of Basic Rent, Operating Expense Rental (exclusive of the Management Fee component) and Real Estate Tax Rental owed by Tenant for each Calendar Year and will be included in the Operating Expense Rental; provided, however, during the Basic Rent Abatement Period, the amount of $[***] shall be used for purposes of calculating the portion of the Management Fee that is based on annual Basic Rent for the applicable portions of the Calendar Years of 2020 and 2021 occurring during the first Lease Year, even though Basic Rent is subject to abatement during the Basic Rent Abatement Period as provided in Section 1.12. In the event the Expiration Date is other than the last day of a Calendar Year, Operating Expense Rental and Real Estate Tax Rental for the applicable Calendar Year shall be appropriately prorated. Landlord shall submit to Tenant at the beginning of each Calendar Year, or as soon thereafter as reasonably possible, a statement of Landlord’s estimate of Operating Expense Rental and Real Estate Tax Rental due from Tenant during such Calendar Year. In addition to Basic Rent, Tenant shall pay to Landlord on or before the first day of each month during such Calendar Year an amount equal to 1/12^th of Landlord’s estimated Operating Expense Rental and estimated

Real Estate Tax Rental as set forth in Landlord’s statement. If Landlord fails to give Tenant notice of its estimated payments due for any Calendar Year, then Tenant shall continue making monthly estimated Operating Expense Rental and Real Estate Tax Rental payments in accordance with the estimate for the previous Calendar Year until a new estimate is provided. If Landlord determines that, because of unexpected increases in Operating Expenses or Real Estate Taxes, Landlord’s estimate of the Operating Expense Rental or Real Estate Tax Rental was too low, then Landlord shall have the right to give a new statement of the estimated Operating Expense Rental and estimated Real Estate Tax Rental due from Tenant for the balance of such Calendar Year and bill Tenant for any deficiency, which deficiency Tenant shall pay within 30 days’ after receipt of Landlord’s invoice. Tenant shall thereafter pay monthly estimated payments based on such new statement.

Within 90 days after the expiration of each Calendar Year, or as soon thereafter as is reasonably practicable, Landlord shall submit a statement to Tenant showing the actual Operating Expenses Rental and the actual Real Estate Tax Rental due from Tenant for such Calendar Year. If for any Calendar Year, Tenant's estimated Operating Expense Rental payments exceed the actual Operating Expense Rental due from Tenant, then Landlord shall give Tenant a credit in the amount of the overpayment toward Tenant's next monthly payment of estimated Operating Expense Rental, or, in the event this Lease has expired or terminated and no Event of Default (as defined in Section 20.1) exists, Landlord shall pay Tenant the total amount of such excess upon delivery of the reconciliation to Tenant. If for any Calendar Year, Tenant's estimated Operating Expense Rental payments are less than the actual Operating Expense Rental due from Tenant, then Tenant shall pay the total amount of such deficiency to Landlord within 30 days after receipt of the reconciliation from Landlord. If for any Calendar Year, Tenant’s estimated Real Estate Tax Rental payments exceed the actual Real Estate Tax Rental due from Tenant, then Landlord shall give Tenant a credit in the amount of the overpayment toward Tenant’s next monthly payment of estimated Real Estate Tax Rental, or, in the event this Lease has expired or terminated and no Event of Default exists, Landlord shall pay Tenant the total amount of such excess upon delivery of the reconciliation to Tenant. If for any Calendar Year, Tenant’s estimated Real Estate Tax Rental payments are less than the actual Real Estate Tax Rental due from Tenant, then Tenant shall pay the total amount of such deficiency to Landlord within 30 days after receipt of the reconciliation from Landlord. Landlord's and Tenant's obligations with respect to any overpayment or underpayment of Operating Expense Rental and Real Estate Tax Rental shall survive the expiration or termination of this Lease, provided Tenant shall not be responsible for Operating Expense Rental or Real Estate Tax Rental which are first billed to Tenant more than 24 months after the Expiration Date.

4.4Sales or Excise Taxes. Tenant shall pay to Landlord, as Additional Rent, concurrently with payment of Basic Rent all taxes, including, but not limited to any and all sales, rent or excise taxes (but specifically excluding income taxes calculated upon the net income of Landlord) on Basic Rent, Additional Rent or other amounts otherwise benefiting Landlord, as levied or assessed by any governmental or political body or subdivision thereof against Landlord on account of such Basic Rent, Additional Rent or other amounts otherwise benefiting Landlord, or any portion thereof.

4.5Intentionally Omitted.

V. SECURITY DEPOSIT

5.1General. Within 10 business days’ after Tenant’s execution of this Lease, Tenant shall deposit the Security Deposit with Landlord to be held by Landlord until disbursement in accordance with the terms of this Lease. The Security Deposit shall not bear interest to Tenant and shall be security for Tenant's obligations under this Lease. Landlord shall be entitled to commingle the Security Deposit with Landlord's other funds. The Security Deposit is not an advance payment of Rent or a measure of Tenant’s liability for damages. Within 45 days after the Expiration Date or earlier termination of this Lease, or such lesser period as may be required by law, provided that Tenant has notified Landlord of the address to which the Security Deposit should be returned, Landlord shall (provided an Event of Default does not then exist) return the Security Deposit to Tenant, less such portion thereof as Landlord shall have applied in accordance with this Article V. If Tenant defaults with respect to any provisions of this Lease, including without limitation any provisions relating to the payment of Rent, then Landlord may use, apply, or retain all or any part of the Security Deposit for the payment of any Rent or any other sum in default, or for the payment of any other amount that Landlord may spend or become obligated to spend by reason of Tenant’s default or to compensate Landlord for any loss or damage that Landlord may suffer by reason of Tenant’s default. If Landlord so applies the Security Deposit or any portion thereof before the Expiration Date or earlier termination of this Lease, Tenant shall deposit with Landlord, within five (5) business days after Landlord notifies Tenant of such application, the amount necessary to restore the Security Deposit to its original amount. If Landlord shall sell or transfer its interest in the Building, Landlord shall have the right to transfer the Security Deposit to such purchaser or transferee, in which event Tenant shall look solely to the new landlord for the return of the Security Deposit, and Landlord thereupon shall be released from all liability to Tenant for the return of the Security Deposit. To the fullest extent permitted by law, Tenant hereby waives the provisions of Section 1950.7 of the California Civil code, and all other provisions of any law, now or hereafter in force, which provide that 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 Tenant or to clean the Premises, it being agreed that Landlord may, in addition, claim those sums reasonably necessary to compensate Landlord for any other loss or damage, foreseeable or unforeseeable, caused by the act or omission of Tenant or its agents, contractors, employers or invitees.

5.2Letter of Credit. Tenant shall satisfy Tenant’s obligations under Section 5.1 by posting with Landlord a Letter of Credit meeting the requirements of this Section 5.2 (the “Letter of Credit”). The Letter of Credit shall be (i) irrevocable; (ii) issued by Silicon Valley Bank or a financial institution approved by Landlord in Landlord’s sole and reasonable discretion; (iii) in a form permitting partial and multiple drawings; (v) for multiple terms of one (1) year each in duration, renewed at least sixty (60) days prior to the expiration thereof, the entire term extending until the date which is ninety (90) days after the expiration of the Term, as such Term may be extended pursuant to the provisions of the Lease; and (vi) be in the form attached hereto as Exhibit I or otherwise in form and substance reasonably acceptable to the Landlord, in its reasonable discretion. If a partial drawing occurs under the Letter of Credit, Tenant shall, upon demand but not more than five (5) business days after Landlord notifies Tenant of such partial drawing, cause the financial institution to reissue the Letter of Credit in the amount then currently required under the terms of the Lease. In addition, within five (5) business days after the bank that issued the Letter of Credit then held by Landlord enters into any form of regulatory or governmental receivership or other similar regulatory or governmental proceeding, including any receivership instituted or commenced by the Federal Deposit Insurance Corporation (“FDIC”), or is otherwise declared insolvent or downgraded by the FDIC, Tenant shall deliver to Landlord a replacement Letter of Credit in the same form and in the amount then currently required under the terms of the Lease and from a financial institution approved by Landlord in its sole and reasonable discretion. Notwithstanding the foregoing, Landlord shall be entitled to draw down the entire amount of the Letter of Credit, without any notice, at any time on or after the earlier of (i) the occurrence of an Event of Default by Tenant under the Lease; or (ii) the thirtieth (30th) day preceding the expiration date of the Letter of Credit in the event Tenant is required to and fails to replace the Letter of Credit. If Landlord draws on the Letter of Credit (or Tenant replaces the Letter of Credit with a Security Deposit in the form of cash with Landlord’s approval), then such cash shall be held by Landlord as a Security Deposit until disbursement or application in accordance with the terms of the Lease.

5.3Decline of Security Deposit/Letter of Credit. Provided Tenant has satisfied the Financial Conditions (as defined in this Section 5.3) and no Event of Default exists under this Lease or would exist but for the pendency of any cure periods provided for in Section 20.1 herein (collectively, the “Reduction Conditions”), the Security Deposit, or Letter of Credit posted in lieu thereof, shall be reduced on the following dates (each a “Reduction Date”) as follows: (a) on May 1, 2023 (“First Reduction Date”), to $[***] (“First Reduction Amount”); (b) on November 1, 2025 (“Second Reduction Date”), to $[***] (“Second Reduction Amount”); and (c) on May 1, 2028 (“Third Reduction Date”), to $[***]. (“Third Reduction Amount”). Notwithstanding the foregoing, if the Reductions Conditions have not been satisfied on a specific Reduction Date, Tenant shall waive any right to a reduced Security Deposit or Letter of Credit, as applicable, on that specific Reduction Date (but not any future Reduction Date) and shall deposit any additional sums necessary to increase the Security Deposit, or provide a replacement Letter of Credit increased, to the full amount required for the period immediately prior to such specific Reduction Date. For purposes of example only, and without limitation to the foregoing, if the Reduction Conditions are not satisfied on the Second Reduction Date, then the amount required for the Security Deposit or Letter of Credit, as applicable shall remain the First Reduction Amount and, to the extent the amount of the Security Deposit or Letter of Credit, as applicable, then held by Landlord is less than the First Reduction Amount, Tenant shall be obligated to deposit any additional sums necessary to increase such amount to the full First Reduction Amount required on the First Reduction Date and the Security Deposit or Letter of Credit, as applicable, shall no longer be eligible for reduction to the Second Reduction Amount; provided, however, if the Reduction Conditions are satisfied on the Third Reduction Date, then Tenant shall again have the right to reduce the amount of the Security Deposit or Letter of Credit, as applicable, to the Third Reduction Amount in accordance with this Section 5.3. As used in this Section 5.3, the “Financial Conditions” mean that as of the applicable Reduction Date Tenant maintains the following computed in accordance with generally accepted accounting principles: (1) a three (3)-year compounded annual revenue growth rate of at least thirty percent (30%); (2) at least sixty (60%) gross profit margins; (3) a current ratio of 1.0 or higher of current total assets divided by current total liabilities; and (4) a current ratio of 3.4 or lower of total liabilities (excluding any funds held for customers) divided by net worth (including convertible preferred stock, but excluding any funds held for customers).

VI. OPERATING EXPENSES

6.1Operating Expenses Defined. As used herein, the term "Operating Expenses" shall mean all expenses, costs and disbursements of every kind and nature, except as specifically excluded otherwise herein, which Landlord incurs because of or in connection with the ownership, maintenance, management and operation of the Project, determined in accordance with sound management accounting principles and not to exceed 100% of the amounts actually incurred by Landlord; provided that (i) if the Building, Phase II Buildings, or Project is less than 95% occupied, all additional costs and expenses of ownership, operation, management and maintenance of the Building or Project, as applicable, that vary with occupancy, which Landlord determines that it would have paid or incurred during any Calendar Year if the Building, Phase II Buildings or Project, as applicable had been 95% occupied; and (ii) if the Building, Phase II Buildings or Project, as applicable is equal to or greater than 95% occupied, all costs and expenses of ownership, operation, management and maintenance of the Building or Project, as applicable, that vary with occupancy, which Landlord determines that it would have paid or incurred during any Calendar Year if the Building, Phase II Buildings or Project, as applicable, had been 100% occupied. With respect to Operating Expenses shared among the Building and one or more Other Buildings or relating to amenities or services provided only to, or used on a disproportionate basis by, Tenant or other specific tenants, Landlord shall allocate on an equitable basis such Operating Expenses to the Building and Other Buildings or among specific tenants of the Project, as determined in Landlord’s reasonable discretion; provided that (a) in accordance with the Phase II Easement Agreement, fifty percent (50%) of the Operating Expenses of the Amenity Building and the Phase II Common Area shall be allocated to the Building, (b) in accordance with the Sports Park Easement Agreement, twenty five percent (25%) of the Operating Expenses of the Sports Park shall be allocated to the Building and (c) in accordance with the Phase II Easement Agreement, forty percent (40%) of the Operating Expenses of the Phase II Parking Garage shall be allocated to the Building.

Operating Expenses may include, without limitation, all costs, expenses and disbursements incurred or made in connection with the following:

(i)Wages and salaries of all employees, whether employed by Landlord or the Project's management company, to the extent engaged in the operation and maintenance of the Project, and all costs related to or associated with such employees or the carrying out of their duties, including uniforms and their cleaning, taxes, auto allowances, training and insurance and benefits (including, without limitation, contributions to pension and/or profit sharing plans and vacation or other paid absences);

(ii)The costs of equipping and maintaining a management office, including, but not limited to, rent, accounting and legal fees, supplies and other administrative costs;

(iii)All supplies, tools, equipment and materials, including Common Area janitorial and lighting supplies, used directly in the operation and maintenance of the Project, including any lease payments therefor;

(iv)All utilities, including, without limitation, electricity, water, sewer and gas, for the Building and Common Area, except for charges for submetered electricity and gas and other Project utilities reasonably allocated to Tenant based on such submetered usage, for which Tenant pays Landlord in accordance with Section 16.4;

(v)All maintenance, operation and service agreements for the Phase II Buildings and the Common Area, and any equipment related thereto, including, without limitation, service and/or maintenance agreements for the Parking Facilities, the Shuttle Service (as defined in Section 16.6), energy management, HVAC, plumbing and electrical systems, exterior window repair, replacement and maintenance, and window cleaning, elevator maintenance, janitorial service for the Common Area, groundskeeping, interior and exterior landscaping and plant maintenance, and maintenance of existing utility connections located outside the Building and connected to the exterior of the Building;

(vi)Premiums and deductibles paid for insurance relating to the Project including, without limitation, fire and extended coverage, boiler, earthquake, windstorm, rental loss, and commercial general liability insurance;

(vii)All repairs to the Project, including interior, exterior, structural or nonstructural repairs and replacements, and regardless of whether foreseen or unforeseen; provided, however, any repairs and replacements which under generally accepted accounting principles should be classified as capital improvements shall be subject to inclusion pursuant to the terms of Section 6.1(ix) and otherwise excluded pursuant to Section 6.2(v) below;

(viii)All maintenance of the Project, including, without limitation, repainting Common Areas, replacing Common Area wall coverings, window coverings and carpet, ice and snow removal, window washing, landscaping, groundskeeping, trash removal and the patching, painting, resealing and complete resurfacing of roads, driveways and parking lots;

(ix)Any capital improvements made to the Project for the purpose of reducing Operating Expenses or which are required under any governmental law or regulation that was not applicable to the Project as of the Date of Lease, the cost of which shall be amortized on a straight-line basis over the improvement's useful life using sound management accounting principles, not to exceed the Project's useful life , together with interest on the unamortized balance of such cost at the Interest Rate, or such higher rate as may have been paid by Landlord on funds borrowed for the purposes of constructing such capital improvements, provided that in the case of capital improvements that lower operating costs, the amortization amount may not exceed Landlord’s reasonable estimate of annual cost savings; and

(x)All amounts paid under easements, declarations, or other agreements or instruments affecting the Project, including, without limitation, assessments paid to property owners' or similar associations or bodies and assessments, costs and expenses incurred pursuant to the Declaration, the Phase II Easement Agreement and the Sports Park Easement Agreement or other easements, declarations, agreements or instruments affecting the Project recorded as of the Date of Lease.

6.2Operating Expense Exclusions. Operating Expenses shall not include: (i) depreciation on the Project; (ii) costs of tenant improvements incurred in renovating leased space for the exclusive use of a particular tenant of the Project; (iii) brokers' commissions; (iv) Project mortgage principal or interest, rental under any ground or underlying lease, or points and fees on any mortgage or other debt instrument encumbering the Building or Project; (v) capital items other than those referred to in Section 6.1; (vi) costs of repairs or other work to the extent Landlord is reimbursed by warranties, insurance or condemnation proceeds; (vii) costs for utilities and Lighting Maintenance (as defined in Section 11.2) charged directly to, or paid directly by, Tenant pursuant to Section 16.4 or other tenants of the Project other than as a part of the Operating Expenses; (viii) fines, interest and penalties incurred due to the late payment of Operating Expenses; (ix) organizational expenses associated with the creation and operation of the entity which constitutes Landlord; (x) any fines, interest, penalties, costs, attorneys’ fees or damages that Landlord pays to Tenant under this Lease or to other tenants in the Project under their respective leases or incurred due to Landlord’s violation of laws in effect as of the Date of Lease; (xi) any fines, interest, penalties, attorneys’ fees or damages incurred due to Landlord’s violation of laws promulgated after the Date of Lease, except to the extent resulting from the failure of Tenant to pay Rent in a timely manner; (xii) Real Estate Taxes as provided for in Article VII; (xiii) items and services for which a tenant or any third party specifically reimburses Landlord (other than as a part of Operating Expenses) or for which a tenant pays third persons; (xiv) attorneys’ fees incurred by Landlord in connection with negotiations for leases with tenants or prospective tenants of the Project and in connection with disputes with or enforcement of any leases with specific tenants or prospective tenants of the Project; (xv) wages, salaries, fees and benefits paid to administrative or executive personnel of Landlord to the extent not acting in the capacity of a Building or Project manager and below such level for any personnel to the extent not involved in the direct operations or management of the Building or Project; (xvi) Landlord’s advertising, promotional and marketing expenses; (xvii) expenses in connection with services or other benefits which are not offered to Tenant, but which are provided to another tenant of the Project without charge; (xviii) any cost representing an amount paid as interest or for services or materials to a person, firm or entity related to Landlord, to the extent such amount exceeds the amount that would be paid as interest or for such services or materials or comparable quality at the then existing market rates to an unrelated person, firm or corporation; (xix) costs of clean-up, removal, remediation and repair in conformance with the requirements of applicable law of any damage or contamination caused by the presence of Hazardous Materials, to the extent of Landlord’s obligation to perform such work at Landlord’s cost pursuant to Section 9.2 of the Lease; provided, however, Operating Expenses may include the costs attributable to such work performed in connection with the ordinary operation and maintenance of the Project, including, without limitation, costs of cleaning up any minor chemical spills directly related to such ordinary maintenance and operation; (xx) costs to correct design or construction defects in the Project (as opposed to the cost of normal repair, maintenance and replacement); (xxi) costs arising from Landlord’s charitable or political contributions; (xxii) costs of damage and repairs necessitated by the gross negligence or willful misconduct of Landlord, Landlord’s employees, contractors or agents; (xxiii) contributions to reserves for Operating Expenses or Real Estate Taxes; (xiv), bad debt loss, rent loss, or reserves for bad debt loss or rent loss; (xxv) any costs associated with Landlord’s reservation for exclusive use of portions of the Amenity Building, the Phase II Common Area, the Parking Facilities, the Sports Park and the other Common Area for itself, Landlord’s operators of the Amenities, Landlord’s property manager, and their respective Agents; (xxvi) items and services for which a tenant or any third party specifically reimburses Landlord (other than as a part of Operating Expenses) or for which a tenant pays third persons; and (xxvii) any charge which would duplicate or otherwise result in double reimbursement to Landlord for a single expenditure made by Landlord.

6.3Tenant’s Right to Audit. Tenant shall have a right, at Tenant’s sole cost and expense, to audit not more than once per Calendar Year Landlord’s Operating Expense Rental reconciliation statement upon the following terms and conditions. Tenant shall notify Landlord in writing that it is exercising its right to audit within 90 days following delivery of the Operating Expense Rental reconciliation statement, indicating in such notice with reasonable specificity those cost components of Operating Expense Rental to be subject to audit. The audit shall take place at Landlord's regional offices or, at Landlord’s option, the Project, at a time mutually convenient to Landlord and Tenant (but not later than 60 days after receipt of Tenant's notice to audit); provided, however, to the extent available in an electronic format, Landlord will accommodate Tenant’s request for copies of records in an electronic format, subject to Tenant’s compliance with Landlord’s reasonable security procedures for electronic delivery. Except as Landlord may consent in writing, the audit shall be completed within 30 days after commencement. Except as permitted in the Audit Confidentiality Agreement (as defined in this Section 6.3), no copying of Landlord’s books or records will be allowed. The audit may be accomplished by either Tenant’s own employees with accounting experience reasonably sufficient to conduct such review, or a nationally or regionally recognized public accounting firm mutually and reasonably acceptable to Landlord and Tenant that is engaged on either a fixed price or hourly basis, and is not compensated on a contingency or bonus basis. Under no circumstances shall Landlord be required to consent to an accounting firm that is also a tenant of Landlord (or any Landlord affiliate) in the Project or any building in the city or metropolitan area in which the Project is located. The records reviewed by Tenant shall be treated as confidential and prior to commencing the audit, Tenant and any other person which may perform such audit for Tenant, shall execute a confidentiality agreement in a form reasonably acceptable to Landlord and Tenant (“Audit Confidentiality Agreement”). A copy of the results of the audit shall be delivered to Landlord within 30 days after the completion of the audit. If Landlord and Tenant determine that Operating Expense Rental for the Calendar Year is less than reported, Landlord shall give Tenant a credit in the amount of the overpayment toward Tenant's next monthly payment of estimated Operating Expense Rental, or, in the event this Lease has expired or terminated and no Event of Default exists, Landlord shall pay Tenant the total amount of such overpayment within 30 days. If Landlord and Tenant determine that Operating Expense Rental for the Calendar Year is more than reported, Tenant shall pay Landlord the amount of any underpayment within 30 days. Furthermore, in the event that Landlord and Tenant determine that the actual Operating Expenses for the Calendar Year are less than the Operating Expenses reported by more than five percent (5%), as substantiated, at Landlord’s option and expense, by a certified public accountant, then a credit in the amount of all reasonable out of pocket third party expenses incurred by Tenant in conducting such review, which amount shall not exceed $3,000.00 shall be applied towards Tenant’s next monthly payments of estimated Operating Expenses Rental or, in the event the Lease has expired or terminated and no Event of Default exists, Landlord shall pay such expenses to Tenant within 30 days after receipt of Tenant’s invoice. Failure by Tenant to timely request an audit, or to timely deliver to Landlord the results of the audit, or to follow any of the procedures set forth in this Section 6.3 is deemed a waiver of the applicable audit right and any right to contest Operating Expense Rental for the applicable Calendar Year and is deemed acceptance of the Operating Expense Rental contained in the Operating Expense Rental reconciliation statement for the applicable Calendar Year. Any audit review by Tenant shall not postpone or alter the liability and obligation of Tenant to pay any Operating Expense Rental due under the terms of this Lease. Tenant shall not be entitled to conduct such an audit if any Event of Default exists under this Lease. No assignee or subtenant shall have any right to conduct an audit except for a permitted assignee or subtenant under Article X of this Lease occupying the entire Premises and no assignee or subtenant shall conduct an audit for any period during which such assignee or sublessee was not in possession of the Premises or for any period in which Tenant has conducted an audit.

VII. REAL ESTATE TAXES

Real Estate Taxes shall be defined as (i) all real property taxes, assessments that are assessed, levied, or imposed on the land, buildings, and/or other improvements comprising all or part of the Project, or which are otherwise imposed in connection with the ownership, leasing, and operation of the Project; (ii) all personal property taxes levied by any public authority on personal property of Landlord used in the management, operation, maintenance and repair of the Project, (iii) all taxes, assessments and reassessments of every kind and nature whatsoever levied or assessed in lieu of or in substitution for existing or additional real or personal property taxes and assessments on the Project, including any so-called value-added tax, and (iv) amounts necessary to be expended because of governmental orders, charges or other actions, whether general or special, ordinary or extraordinary, unforeseen as well as foreseen, of any kind and nature for public improvements, services, benefits or any other purposes which are assessed, levied, confirmed, imposed or become a lien upon the Premises or Project or become payable during or are allocable to the Term; further, Tenant shall reimburse Landlord within 30 days after demand for all taxes and assessments required to be paid by Landlord (except to the extent included in Real Estate Taxes by Landlord), when (a) such taxes are measured by or reasonably attributable to the cost or value of (i) Tenant’s equipment, furniture, fixtures and other personal property located in the Premises, or (ii) the Tenant Work or any other leasehold improvements made in or to the Premises by or for Tenant, to the extent the cost or value of such Tenant Work or other leasehold improvements exceeds the cost or value of a Building standard build-out as reasonably determined by Landlord regardless of whether title to such Tenant Work or improvements is vested in Tenant or Landlord; (b) such taxes are 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 Parking Facilities); or (c) such taxes are assessed upon this transaction or any document to which Tenant is a party creating or transferring an interest or an estate in the Premises, or upon rent or receipts (including any business license tax or gross receipts tax based on the rents or other revenues received by Landlord), the square footage of land or improvements within the Project, or the occupancy by tenants of space within the Project. The Building and the Other Buildings (except for the Amenity Building, which is part of the Building 3 tax parcel) each constitute separate tax parcels, but with respect to Real Estate Taxes shared among the Building and one or more Other Buildings or relating to amenities or services provided only to, or used on a disproportionate basis by specific tenants, Landlord shall allocate on an equitable basis such Real Estate Taxes to the Building and Other Buildings or among specific tenants of the Project, as determined in Landlord’s reasonable discretion; provided that fifty percent (50%) of the Real Estate Taxes of the Amenity Building and the Phase II Common Area, twenty five percent (25%) of the Real Estate Taxes of the Sports Park and forty percent (40%) of the Real Estate Taxes of the Phase II Parking Garage shall be allocated to the Building. Real Estate Taxes include any and all increases in Real Estate Taxes resulting from a change in ownership or new construction with respect to the Premises, the Building or the Project. Further, for the purposes of this Article VII, Real Estate Taxes shall include the reasonable expenses (including, without limitation, reasonable attorneys’ fees) incurred by Landlord in challenging or obtaining or attempting to obtain a reduction of such Real Estate Taxes, regardless of the outcome of such challenge, and any costs incurred by Landlord for compliance, review and appeal of tax liabilities. Notwithstanding the foregoing, Landlord shall have no obligation to challenge Real Estate Taxes. If as a result of any such challenge, a tax refund is made to Landlord, then provided no Event of Default exists under this Lease, the net amount of such refund after payment of all reasonable costs and expenses of the challenge shall be deducted from Real Estate Taxes due in the Calendar Year such refund is received and credited to Real Estate Tax Rental or refunded to Tenant in accordance with Section 4.3. In the case of any Real Estate Taxes which may be evidenced by improvement or other bonds or which may be paid in annual or other periodic installments, Landlord shall elect to cause such bonds to be issued or cause such assessment to be paid in installments over the maximum period permitted by law. Nothing contained in this Lease shall require Tenant to pay any capital stock, franchise, gift, estate, inheritance or succession transfer tax of Landlord, or any income, profits or revenue tax or charge, upon the net income of Landlord from all sources. Further, Landlord shall not include in Real Estate Taxes any late payment charges, interest and penalties caused by Landlord’s late payment of Real Estate Taxes to the applicable governmental authority. Tenant hereby waives any and all rights to protest appraised values or to receive notice of reappraised values regarding the Project or other property of Landlord.

VIII. PARKING

8.1 General. During the Term, Tenant shall have the right in common with other tenants and occupants in the Phase II Buildings to use the Parking Space Allocation (as defined in Section 1.17) without any charge for parking rental during the initial 132-month Term. All parking rights are subject to the Rules and Regulations (as defined in Article XVIII), validation, key-card, sticker or other identification systems set forth by Landlord from time to time. Landlord may restrict certain portions of the Parking Facilities for the exclusive use of one or more tenants of the Project and may designate other areas to be used at large only by customers and visitors of tenants of the Project provided that Landlord shall exercise commercially reasonable efforts to coordinate with Tenant in connection with the exercise of such right in order that there shall be no material adverse effect to Tenant’s use of and access to Tenant’s Parking Space Allocation in the Parking Facilities. Landlord reserves the right to delegate the operation of the Parking Facilities to a parking operator which shall be entitled to all the obligations and benefits of Landlord under this Article VIII; provided, however, Landlord shall have no liability whatsoever for claims arising through acts or omissions of any independent operator of the Parking Facilities. Except in connection with an assignment or sublease that is expressly permitted under this Lease, including, without limitation, an assignment or sublease made in accordance with Section 10.4 or Section 10.5, Tenant’s parking rights and privileges described herein are personal to Tenant and may not be assigned or transferred. Landlord shall have the right to cause to be removed any vehicles of Tenant or its Agents that are parked in violation of this Lease or in violation of the Rules and Regulations of the Building, without liability of any kind to Landlord.

8.2Parking Space Alterations. Provided that no Event of Default exists under this Lease or would exist but for the pendency of any cure period provided for in Section 20.1 (unless such Event of Default requires notice under Section 20.1 and Landlord has not delivered such notice to Tenant) and that the Parking Space Alterations (as defined in this Section 8.2) are performed and completed in accordance with Section 8.2 and Article XII of the Lease, Tenant, at Tenant’s sole cost and expense, shall have the right to make Alterations (as defined by Section 12.3) to the Future Car-Charging Stalls in order to connect to the existing electrical conduit and convert the Future Car-Charging Stalls into additional Car-Charging Stalls by installing equipment, facilities and Alterations consistent with the existing Car-Charging Stalls as necessary in order to accomplish such conversion (collectively, the “Parking Space Alterations”); provided, however, Landlord reserves the right as provided in Article XII to perform the Parking Space Alterations on behalf of Tenant.

8.3Segregated Parking. If Tenant notifies Landlord that Tenant has reasonably determined that Tenant’s use of Tenant’s Parking Space Allocation with respect to either the Phase II Parking Garage or the Surface Lot is not available or is materially impaired due to parking by Landlord, tenants, occupants or others in the Project in a manner that is materially inconsistent with the rights of Tenant under this Lease, then Tenant and Landlord will enter into good faith discussions to resolve such issues through (a) marking spaces or posting signs identifying the spaces reserved for Tenant, (b) marking curbs or pavement or posting signs to identify the boundaries of the Surface Lot, and (c) implementing access controls such as programming access cards to the Phase II Parking Garage so that Tenant and the other tenants and occupants of Building 4, collectively, do not exceed 323 spaces in the Phase II Parking Garage and that the tenants and occupants of Building 3, collectively, do not exceed 484 spaces in the Phase II Parking Garage. Except restricting the use of the Phase II Parking Garage subject to the terms of Section 1.17, Article II and this Article VIII, Landlord will have no responsibility to regulate access to the Phase II Parking Garage or Surface Lot.

IX. USE AND REQUIREMENTS OF LAW

9.1Use. The Premises will be used only for the Permitted Use and for no other purpose. Tenant and Tenant’s Agents will not: (i) do or permit to be done in or about the Premises, do in or about the Project, nor bring to, keep or permit to be brought or kept in the Premises or bring to or keep in the Project, anything which is prohibited by or will in any way conflict with any law, statute, ordinance or governmental rule or regulation which is now in force or which may be enacted or promulgated after the Date of Lease or with the Declaration; (ii) do or permit anything to be done in or about the Premises, or do in or about the Project, which will in any way obstruct or interfere with the rights of other tenants of the Building or Project; (iii) do or permit anything to be done in or about the Premises, or do in or about the Project, anything which is dangerous to persons or property; or (iv) cause, maintain or permit any nuisance in, on or about the Premises or cause or maintain any nuisance in, on or about the Project; or (v) commit or allow to be committed any waste in, on or about the Premises or commit any waste in, on or about the Project. At its sole cost and expense, Tenant will promptly comply with (a) all laws, statutes, ordinances and governmental rules, regulations or requirements now in force or in force after the Commencement Date of this Lease regarding the operation of Tenant’s business and the use, condition, configuration and occupancy of the Premises (except to the extent of Landlord’s obligations under Sections 9.2, 9.3, and 12.1 and Article XIX); (b) the certificate of occupancy issued for the Building and the Premises; and (c) any recorded easement agreements, covenants, conditions and restrictions, if any, which affect the use, condition, configuration and occupancy of the Premises or the Project, including, without limitation, the Declaration, the Phase II Easement Agreement and the Sports Park Easement Agreement. Notwithstanding anything to the contrary contained in this Lease, Tenant’s obligations under this Section 9.1 shall not include the performance of structural alterations or structural repairs to the Premises, except to the extent such work is required in connection with (a) the Tenant Work or Tenant’s Alterations (as defined in Section 12.3), (b) Tenant’s particular use of the Premises (as opposed to Tenant’s use of the Premises for the Permitted Use in a normal and customary manner) or (c) a change in the Permitted Use stated in Section 1.8, regardless of whether Landlord approves such change. The term “Permitted Use” specifically excludes any use as a call center or similar high-density use that exceeds the Standard Density Limitation (as defined in Exhibit C); as an employment agency for day labor; by a governmental agency; or that is inconsistent with the Building being a Class A professional office building consistent with other Class A office buildings in the Silicon Valley of California, Class A market areas.

9.2Hazardous Materials. (a) Tenant Obligations. Tenant shall not bring or allow any of Tenant's Agents to bring on the Premises or the Project, any asbestos, petroleum or petroleum products, used oil, explosives, toxic materials or substances defined as hazardous wastes, hazardous materials or hazardous substances under any federal, state or local law or regulation (“Hazardous Materials”), except for routine office and janitorial supplies used on the Premises and stored in the usual and customary manner and quantities, and in compliance with all applicable environmental laws and regulations (“Permitted Materials”). Except as provided in this Section 9.2, in the event of any release of Hazardous Materials on, from, under or about the Premises or the Project as the result of Tenant’s occupancy or use of the Premises, Landlord shall have the right, but not the obligation, to cause Tenant, at Tenant’s sole cost and expense, to clean up, remove, remediate and repair any soil or groundwater contamination or other damage or contamination in conformance with the requirements of applicable law. Subject to the waivers set forth in Section 15.5, Tenant shall indemnify, protect, hold harmless and defend (by counsel acceptable to Landlord) Landlord, its affiliates, its Agents and each of their respective Agents, successors and assigns, from and against any and all demands, claims, causes of action, damages, penalties, fines, liabilities, judgments, costs and expenses (including, without limitation, reasonable attorneys’ fees and court costs) (“Claims”) to the extent caused by or arising out of (i) a violation of the foregoing prohibitions or (ii) the presence or release of any Hazardous Materials on, from, under or about the Premises, the Project or other properties as the result of Tenant's occupancy or use of the Premises. Notwithstanding anything to the contrary, Tenant's obligation to indemnify, protect, hold harmless and

defend Landlord, its affiliates, its Agents and each of their respective Agents, successors and assigns, shall not extend to any Claims arising as a result of, and Tenant shall not have any liability to Landlord under this Section 9.2 resulting from, any Hazardous Materials (A) existing or generated, on, from, under or about the Project, including, without limitation, the Premises, prior to the Date of Lease (“Pre-Existing Contamination”) unless caused or exacerbated by Tenant’s or Tenant’s Agents’ release of Hazardous Materials, exacerbation of Pre-Existing Contamination, violation of any applicable laws, statutes, ordinances or governmental rules or regulations or breach by Tenant of its obligations under this Section 9.2 (collectively, and separately referred to as “Tenant Responsible Contamination”), subject to the waivers in Section 15.5, (B) that migrate onto the Premises, Building or Project by no fault of Tenant, or (C) generated or brought on the Premises, Building or Project by Landlord or its Agents. Tenant shall immediately give Landlord written notice (1) of any suspected breach of this Section 9.2, (2) upon Tenant’s actual knowledge of the presence or any release of any Hazardous Materials (other than Permitted Materials) within or about the Premises or (3) upon receiving any notices from governmental agencies or other parties pertaining to Hazardous Materials which may affect the Premises. Neither the written consent of Landlord to the presence of the Hazardous Materials, nor Tenant's compliance with all laws applicable to such Hazardous Materials, shall relieve Tenant of its indemnification obligation under this Lease. Landlord shall have the right from time to time, but not the obligation, to (x) request from Tenant information showing Tenant’s compliance with its obligations under Section 9.2; and (y) to enter upon the Premises in accordance with Article XIV to conduct such inspections and undertake such sampling and testing activities as Landlord deems necessary or desirable to determine whether Tenant is in compliance with its obligations under Section 9.2, except that in no event may Landlord sample or test tenant raw materials, lab materials, products or processes, except with the prior written consent of Tenant, which consent may be withheld if commercially reasonable alternative means exist to assure Tenant compliance.

(b)Hazardous Materials Disclosure; Landlord Obligations. (i) Pursuant to the provisions of California Health & Safety Code Section 25359.7, Landlord hereby discloses to Tenant that the Project has been developed on the site of a former landfill and that Hazardous Materials have come to be located at the Project, and pursuant to the provisions of California Health & Safety Code Section 25249.6 (Proposition 65), Landlord provided Tenant with the following warning: “ WARNING: The Hazardous Materials that are located at the Project could expose persons to chemicals, including asbestos, which are known to the State of California to cause cancer. For more information, go to www.P65Warnings.ca.gov.”. For more information also refer to the Environmental Reports (as defined in this Section 9.2(b)). Tenant acknowledges that Landlord made available to Tenant for review, and Tenant had the opportunity to review, prior to the Date of Lease the reports and other materials identified on Exhibit F attached to this Lease, which is attached hereto and incorporated herein by this reference (collectively, the “Environmental Reports ”) regarding actual or potential releases of Hazardous Materials at, on, under, about, or otherwise affecting the Project. Landlord represents that to its knowledge based on the recommendations of Crawford Consulting, Inc., Landlord has provided Tenant with access to the Environmental Reports and that such Environmental Reports comprise all material, relevant reports in Landlord’s possession or in the possession of its consultant, Crawford Consulting, Inc., related to the former landfill and Pre-Existing Contamination. Landlord and Tenant acknowledge and agree that (A) those Environmental Reports identified as “Confidential” in Exhibit F, have been agreed upon between Landlord and Tenant to continue to be treated as Confidential Information (as defined in the Environmental NDA (as defined in this Section 9.2(b)) from and after the Date of Lease, (B) Tenant is obligated under the terms of the Confidentiality Agreement dated February 13, 2019 (“Environmental NDA”), between Landlord and Tenant, which Environmental NDA is attached hereto as Exhibit F-1, to protect the confidentiality of such Confidential Information in accordance with the terms of the Environmental NDA, and such obligation shall continue from and after the Date of Lease with respect to such Confidential Information, (C) any other reports and materials delivered on or after the Date of Lease on behalf of Landlord to Tenant which Landlord identifies or marks as “confidential” or “proprietary” shall constitute Confidential Information that is subject to the Environmental NDA (potentially including, without limitation, reports, data,

documents, materials and other information provided on behalf of Landlord, or prepared in connection with Tenant’s evaluations pursuant to Section 9.2(b)) and Tenant shall be obligated to protect the confidentiality of such Confidential Information in accordance with the terms of the Environmental NDA, (D) Tenant’s obligations under this Section 9.2(b) with respect to all Confidential Information shall survive the expiration or earlier termination of this Lease; (E) Landlord shall continue to make all of the Environmental Reports available for Tenant’s review during the Term upon Tenant’s request and, to the extent applicable, under the terms of the Environmental NDA; and (F) Landlord makes no representations or warranties as to the accuracy of the contents of the Environmental Reports, and no representations or warranties regarding the actual or potential releases, except as set forth below in this Section 9.2(b). Upon Tenant’s request, Landlord shall also make all of the Environmental Reports available for review during the Term by a proposed subtenant of all or a portion of the Premises, a proposed assignee of this Lease or a proposed Ownership Transferee (as defined in Section 10.5); provided that such subtenant, assignee or Ownership Transferee, as applicable, shall be required to execute a confidentiality agreement in substantially the form of the Environmental NDA prior to reviewing, and as a condition to Landlord’s obligation to make available for review, any and all Confidential Information. Tenant acknowledges that it has had the opportunity to conduct all investigation and testing of the Premises, either by itself or with the assistance of an expert, as it deems necessary, that Tenant has determined that the Premises are appropriate for its use and waives and releases any and all claims or objections, including any claim for response costs, loss of use, business interruption, or termination, regarding the physical characteristics of the Premises, including the presence of any Hazardous Materials at, on, under, about, or otherwise affecting or emanating from the Premises. To the extent governmentally required and that Tenant is not responsible under this Section 9.2, Landlord shall be responsible, at no cost to Tenant, and excluded from Operating Expenses as provided in Section 6.2(xix), for the clean-up, removal, remediation and repair of any soil or groundwater contamination or other damage or contamination caused by the Pre-Existing Contamination on the Project in conformance with the requirements of applicable law, including, without limitation, all applicable environmental laws and regulations. Landlord shall indemnify, protect, defend and hold harmless Tenant from and against any and all Claims to the extent resulting from (A) the existence of Hazardous Materials brought on the Premises, Building or Project by Landlord or its Agents; (B) Landlord’s breach of this Section 9.2(b) or (C) the Pre-Existing Contamination; provided, however, Landlord’s obligation to indemnify, defend and hold harmless Tenant as provided in this Section 9.2(b) shall be subject to the waivers in Section 15.5 and shall not apply to the extent of remediation resulting from, or to the extent of remediation increased due to, Tenant Responsible Contamination. The obligations of Landlord and Tenant under Section 9.2 shall survive the expiration or earlier termination, for any reason, of this Lease.

(ii) During the Term, Landlord shall give written notice to Tenant as soon as reasonably practicable of (A) any written communication of any inquiry or claim received from any governmental authority concerning any Hazardous Materials which relates to the Project, and (B) any contamination of the Premises or the Project by Hazardous Materials of which Landlord has notice or actual knowledge and which constitutes a violation of applicable law, statute, ordinance or governmental rule or regulation or results in damage or contamination for which clean up, removal, remediation or repair is required in conformance with applicable laws, statutes, ordinances or governmental rules or regulations. Landlord shall, at its expense (which may be included in Operating Expenses, subject to the terms of Article VI above, including, without limitation, the exclusions set forth in Section 6.2), through its own actions, or by exercising commercially reasonable efforts to compel the actions of others to, observe, comply with and meet all requirements of applicable laws, statutes, ordinances or governmental rules or regulations and the Declaration in connection with the monitoring, inspection, maintenance, repair and remediation of any Hazardous Materials in, on, or under the Building or Project as of the Date of Lease, including, without limitation, performance of the maintenance and operation obligations of Landlord with respect to the methane mitigation systems at the Building as set forth in the Operations, Maintenance and Monitoring Plan and Vapor Mitigation System manual dated May 2018 prepared by Haley & Aldrich, Inc. for the

methane mitigation systems at the Building, Building 3, the Amenity Building, the Parking Structure, and the aboveground Parking Facilities and other Common Areas (except for the Parking Facilities and Common Area located on the Land on which Phase I Buildings are located) (“MMS O&M Manual”). Landlord shall exercise commercially reasonable efforts to coordinate with Tenant in connection with the Landlord’s performance of its obligations under this Section 9.2(b)(ii), in order to minimize any material adverse effect to Tenant’s use of and access to the Premises and Common Areas. In addition, Landlord shall: 1) provide Tenant upon Tenant’s request and subject to the terms of the Environmental NDA, if applicable, the annual report and any other reports, notices, amendments or other documents prepared, and provided or made available to Landlord, by the Association (as defined by the Declaration) pursuant to the Declaration, the semi-annual methane detection and calibration reports created with respect to the Building and the Amenity Building and, to the extent prepared and available, any other material documents, data and reports, including as to maintenance and repair, that Landlord is obligated to prepare under the Declaration or applicable laws, statutes, ordinances and governmental rules, regulations or requirements related to the former landfill and the Improvements (as defined by the Declaration) comprising the related cap and equipment and systems at the Project, including, without limitation, the Methane Mitigation Systems or that are related to Pre-Existing Contamination at the Project; 2) except in the case of an Emergency (as defined in Article XIV), provide Tenant with reasonable prior written notice of any excavation, any other work or expected event on the Project of which Landlord is aware and reasonably expects to both affect the Pre-existing Contamination and disrupt Tenant’s use of the Premises or Common Areas; 3) except in the case of an Emergency, provide Tenant with reasonable prior written notice of any excavation, any other work or expected event on the Project of which Landlord is aware and that Landlord reasonably expects to (or has been advised by the Association or an owner of another Building may) pierce the landfill cap and 4) immediately provide notice to Tenant of any data, condition or event of which Landlord is aware that is related to the Pre-Existing Contamination and that poses risk to the health or welfare of Tenant or any Tenant employee or invitee and Landlord promptly shall provide Tenant with all related material documents, data and reports as they become available to Landlord thereafter, subject to the terms of the Environmental NDA as applicable to any Confidential Information, as determined pursuant to Section 9.2(b).

9.3Compliance with ADA; Warm Shell Condition. Notwithstanding any other statement in this Lease, the provisions in this Section 9.3 shall govern the parties’ compliance with the Americans With Disabilities Act of 1990, as amended from time to time, Public Law 101-336; 42 U.S.C. §§12101, et seq. (the foregoing, together with any similar state statute governing access for the disabled or handicapped collectively referred to as the “ADA”).

(a)Landlord represents and warrants that, to Landlord’s actual knowledge, as of the Date of Lease, the Building, the Premises, the Parking Facilities and Common Areas comply in all material respects with all laws, statutes, ordinances and governmental rules, regulations or requirements now in force, including, but not limited to, the ADA and Title 24 (as the foregoing are applied and interpreted by the applicable governmental authorities or quasi-governmental authorities as of the Date of Lease) and with respect to the Premises only, applicable to a “warm shell” condition, without regard to any specific use of the Premises, Alterations or the Tenant Work; it being agreed by the parties that Landlord’s representation and warranty under this Section 9.3(a) regarding compliance of the Premises with all applicable laws, statutes, ordinances and governmental rules, regulations or requirements, including, but not limited to, the ADA and Title 24, is based solely upon the receipt by Landlord of the Permit Records issued by the City of San Jose under Permit# 2016-119262CI and the absence of receipt by Landlord from the City of San Jose of any notification of subsequent non-compliance.

(i)Landlord shall not be liable to Tenant for any damages for any violation that is contrary to the foregoing representation and warranty, but as Tenant’s sole remedy, Landlord shall perform such corrective work as may be required in this Section 9.3(a)(i). To the extent governmentally required as of Date of Lease, Landlord shall be responsible for compliance with Title III of the ADA with respect to any repairs, replacements or alterations to the core and shell of the Building, and such expense shall not be included as an Operating Expense of the Project; provided, however, if compliance with ADA under this Section 9.3 is required due to (a) Alterations, (b) the Tenant Work, (c) the installation of any of Tenant’s furniture, fixtures, equipment or property, (d) Tenant’s particular use or occupancy of the Premises (as opposed to Tenant’s use and occupancy of the Premises for the Permitted Use in a normal and customary manner), (e) the particular manner in which Tenant conducts its business in the Premises, (f) a change in the Permitted Use stated in Section 1.8, or (g) any Access Improvements (as defined in Section 9.3(c)) that are Tenant’s responsibility under Section 9.3(c), regardless of whether Landlord approves such change, then such compliance shall be Tenant’s responsibility under Section 9.3(b) (collectively and each a, “Tenant ADA Responsibility”). Landlord shall have the right to apply for and obtain a waiver or deferment of compliance, the right to contest any such violation in good faith, including, but not limited to, the right to assert any and all defenses allowed by applicable laws, statutes, ordinances and governmental rules, regulations or requirements, and the right to appeal any decisions, judgments or rulings to the fullest extent permitted by applicable laws, statutes, ordinances and governmental rules, regulations or requirements, and Landlord’s obligation to perform such corrective work under this Section 9.3(a)(i) shall not apply until after the exhaustion of any and all rights to appeal or contest. Notwithstanding the foregoing, if prior to the completion of the Tenant Work, Tenant does not notify Landlord in writing of any violation or alleged violation of applicable laws, statutes, ordinances and governmental rules, regulations or requirements as of the Date of Lease with respect to the Building, Parking Facilities or Common Area, then the issuance of a permanent certificate of occupancy (or sign off on the job card) for the Tenant Work to be constructed pursuant to the Work Agreement shall conclusively establish that Landlord’s foregoing representation and warranty in this Section 9.3(a) was true and correct, and Landlord shall thereafter have no further liability or responsibility pursuant to this Section 9.3(a)(i).

(ii)To the extent governmentally required subsequent to the Date of Lease as a result of an amendment to Title III of the ADA or any regulation thereunder enacted subsequent to the Date of Lease, Landlord shall be responsible for compliance with Title III of the ADA with respect to any repairs, replacements or alterations to the core and shell of the Building, and such expense shall be included as an Operating Expense of the Project, subject to the terms of Article VI, including, without limitation the exclusions from Operating Expenses set forth in Section 6.2; provided, however, if such compliance is required due to a Tenant ADA Responsibility, then such compliance shall be Tenant’s responsibility under Section 9.3(b).

(iii) To the extent governmentally required as of the Commencement Date, or subsequent to the Commencement Date of this Lease as a result of an amendment to Title III of the ADA or any regulation thereunder enacted subsequent to the Commencement Date of this Lease, Landlord shall be responsible for compliance with Title III of the ADA with respect to any repairs, replacements or alterations to the Common Area of the Project, and such expense shall be included as an Operating Expense of the Project, subject to the terms of Article VI, including, without limitation the exclusions from Operating Expenses set forth in Section 6.2. Landlord shall indemnify, defend and hold harmless Tenant and its Agents from all fines, suits, procedures, penalties, claims, liability, losses, expenses and actions of every kind, and all costs associated therewith (including, without limitation, reasonable attorneys’ and consultants’ fees) arising out of or in any way connected with Landlord’s failure to comply with Title III of the ADA as required above.

(b)To the extent governmentally required, Tenant shall be responsible for compliance, at its expense, with Titles I and III of the ADA with respect to the Premises (including, without limitation, the Tenant Work), any Alterations and any Tenant ADA Responsibility; provided, however, Tenant shall not be responsible for compliance with Title III of the ADA with respect to the core and shell of the Building, except for the Tenant ADA Responsibility. Tenant shall indemnify, defend and hold harmless Landlord and its Agents from all fines, suits, procedures, penalties, claims, liability, losses, expenses and actions of every kind, and all costs associated therewith (including, without limitation, reasonable attorneys’ and consultants’ fees) arising out of or in any way connected with Tenant’s failure to comply with Titles I and III of the ADA as required above.

(c)Statement Required under California Civil Code § 1938. The Premises has not undergone inspection by a Certified Access Specialist and the Premises has not been determined to meet all applicable construction-related accessibility standards pursuant to California Civil Code § 55.53. Except to the extent expressly set forth in this Lease, Landlord shall have no liability or responsibility to make any repairs or modifications to the Premises or the Project in order to comply with accessibility standards. Landlord hereby discloses pursuant to California Civil Code Section 1938 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 to correct violations of the construction-related accessibility standards within the premises.” Landlord and Tenant hereby acknowledge and agree that in the event that Tenant elects to perform a CASp inspection of all or any portion of the Premises hereunder (the “Inspection”), such Inspection shall be (a) performed at Tenant’s sole cost and expense, (b) limited to the Premises and (c) performed by a CASp who has been approved (which approval shall not be unreasonably withheld, conditioned or delayed) or designated by Landlord prior to the Inspection. Any Inspection must be performed in a manner which minimizes the disruption of business activities in the Project, and at a time reasonably approved by Landlord. Landlord reserves the right to be present during the Inspection. Tenant agrees to: (i) promptly provide to Landlord a copy of the report or certification prepared by the CASp inspector upon request (the “Report”), (ii) keep the information contained in the Report confidential, except to the extent required by applicable laws, statutes, ordinances and governmental rules, regulations or requirements or to the extent disclosure is needed in order to complete any necessary modifications or improvements required to comply with all applicable accessibility standards under the ADA or other state or federal laws, statutes, ordinances and governmental rules, regulations or requirements as well as any other repairs, upgrades, improvements, modifications or alterations required by the Report or that may be otherwise required to comply with accessibility requirements, the ADA or other applicable laws, statutes, ordinances and governmental rules, regulations or requirements (the “Access Improvements”). As part of the Tenant ADA Responsibility, if governmentally required, Tenant shall be solely responsible for the cost of Access Improvements to the Premises, the Building or the Project necessary to correct any such violations of construction-related accessibility standards identified by such Inspection as required by the ADA or other applicable laws, statutes, ordinances and governmental rules, regulations or requirements, which Access Improvements may, at Landlord’s option, be performed in whole or in part by Landlord at Tenant’s expense, payable as Additional Rent within thirty (30) days following Landlord’s demand. Notwithstanding anything to the contrary in this Section 9.3(c), Landlord shall in no event be responsible under this Lease for performing, or paying the cost of, any Access Improvements that are identified by any such Inspection with respect to the Premises, the Building or the Project, unless Landlord is otherwise obligated to perform, or pay for, such Access Improvements under Section 9.3(a) or other provisions of this Lease.

X. ASSIGNMENT AND SUBLETTING

10.1Landlord's Consent.

(a)Tenant shall not assign, transfer, mortgage or otherwise encumber this Lease or sublet or rent (or permit a third party to occupy or use) the Premises, or any part thereof, nor shall any assignment or transfer of this Lease or the right of occupancy hereunder be effected by operation of law or otherwise, without the prior written consent of Landlord, such consent not to be unreasonably withheld, conditioned or delayed. Subject to the terms of Section 10.4 and Section 10.5 below, a transfer at any one time or from time to time of a majority interest in Tenant (whether stock, partnership interest or other form of ownership or control) shall be deemed to be an assignment of this Lease, unless at the time of such transfer Tenant is an entity whose outstanding stock is listed on a recognized security exchange. Within 30 days following Landlord's receipt of Tenant's request for Landlord's consent to a proposed assignment, sublease, or other encumbrance, together with all information required to be delivered by Tenant pursuant to the provisions of this Section 10.1, Landlord shall: (i) consent to such proposed transaction; (ii) refuse such consent with a statement of the reasons of refusal; or (iii) elect to terminate this Lease in the event of an assignment, or in the case of a Significant Sublease (as defined in Section 10.2), terminate this Lease as to the portion of the Premises proposed to be sublet in accordance with the provisions of Section 10.2. Any assignment, sublease or other encumbrance without Landlord's written consent shall be voidable by Landlord and, at Landlord's election, constitute an Event of Default hereunder. If within the 30-day period set forth above, Landlord fails to timely deliver to Tenant notice of Landlord’s consent, refusal or election to terminate with respect to a proposed assignment or sublease, then Tenant may send a second (2nd) notice (“2^nd Notice of Proposed Transfer”) to Landlord, which notice must contain the following inscription, in bold faced lettering: “SECOND NOTICE DELIVERED PURSUANT TO SECTION 10.1 OF LEASE - - FAILURE TO TIMELY RESPOND WITHIN FIVE (5) BUSINESS DAYS SHALL RESULT IN DEEMED CONSENT TO ASSIGNMENT OR SUBLEASE.” If Landlord fails to deliver notice of Landlord’s consent, refusal or election to terminate with respect to a proposed transfer described in Tenant’s 2^nd Notice of Proposed Transfer within five (5) business days after receipt of such 2^nd Notice of Proposed Transfer, Landlord shall be deemed to have consented to the proposed transfer described in the 2^nd Notice of Proposed Transfer. Without limiting other instances in which Landlord may reasonably withhold consent to an assignment or sublease, Landlord and Tenant acknowledge that it shall be reasonable for Landlord to withhold consent (a) if an Event of Default exists under this Lease or if an Event of Default would exist but for the pendency of any cure periods provided under Section 20.1 (unless such Event of Default requires notice under Section 20.1 and Landlord has not delivered such notice to Tenant); or (b) if the proposed assignee or sublessee is: a governmental entity; a person or entity with whom Landlord has negotiated for space in the Project during the prior six months and for whom Landlord has space available in the Project to meet such person or entity’s needs; a present tenant in the Project for whom Landlord has space available in the Project to meet such person or entity’s needs; a person or entity whose tenancy in the Project would not be a Permitted Use or would violate any exclusivity arrangement which Landlord has with any other tenant; a person or entity of a character or reputation or engaged in a business which is not consistent with the quality of the Project; or not a party of reasonable financial worth and/or financial stability in light of the responsibilities involved under this Lease with respect to a proposed assignment (or under the sublease with respect to a proposed sublease) on the date consent is requested. If Tenant requests Landlord's consent to a specific assignment or subletting, Tenant will submit in writing to Landlord: (1) the name and address of the proposed assignee or subtenant; (2) a counterpart of the proposed agreement of assignment or sublease; (3) reasonably satisfactory information as to the nature and character of the business of the proposed assignee or subtenant, and as to the nature of its proposed use of the space; (4) banking, financial or other credit information reasonably sufficient to enable Landlord to determine the financial responsibility and character of the proposed assignee or subtenant; (5) executed estoppel certificates from Tenant containing such information as provided in Section 24.4; and (6) any other information reasonably requested by Landlord. Notwithstanding anything to the contrary contained herein, if Tenant claims that Landlord has unreasonably withheld or delayed its consent under this Section 10.1, Tenant’s sole remedies shall be a 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 obtain damages or terminate this Lease, whether under California Civil Code Section 1995.310 or otherwise.

(b)Notwithstanding that the prior express written permission of Landlord to any of the aforesaid transactions may have been obtained, the following shall apply:

(i)In the event of an assignment, contemporaneously with the granting of Landlord's aforesaid consent, Tenant shall cause the assignee to expressly assume in writing and agree to perform all of the covenants, duties, and obligations of Tenant hereunder from and after the date of such assignment and such assignee shall be jointly and severally liable therefor along with Tenant.

(ii)All terms and provisions of this Lease shall continue to apply after any such transaction.

(iii)In any case where Landlord consents to an assignment, transfer, encumbrance or subletting, the undersigned Tenant and any Guarantor shall nevertheless remain directly and primarily liable for the performance of all of the covenants, duties, and obligations of Tenant hereunder (including, without limitation, the obligation to pay all Rent and other sums herein provided to be paid), and Landlord shall be permitted to enforce the provisions of this instrument against the undersigned Tenant, any Guarantor and/or any assignee without demand upon or proceeding in any way against any other person. Neither the consent by Landlord to any assignment, transfer, encumbrance or subletting nor the collection or acceptance by Landlord of rent from any assignee, subtenant or occupant shall be construed as a waiver or release of the initial Tenant or any Guarantor from the terms and conditions of this Lease or relieve Tenant or any subtenant, assignee or other party from obtaining the consent in writing of Landlord to any further assignment, transfer, encumbrance or subletting.

(iv)Tenant hereby assigns to Landlord the rent and other sums due from any subtenant, assignee or other occupant of the Premises and hereby authorizes and directs each such subtenant, assignee or other occupant to pay such rent or other sums directly to Landlord; provided however, that until the occurrence of an Event of Default, Tenant shall have the license to continue collecting such rent and other sums. Notwithstanding the foregoing, in the event that the rent due and payable by a sublessee under any such permitted sublease (or a combination of the rent payable under such sublease plus any bonus or other consideration therefor or incident thereto) exceeds the hereinabove provided Rent payable under this Lease, or if with respect to a permitted assignment, permitted license, or other transfer by Tenant permitted by Landlord, the consideration payable to Tenant by the assignee, licensee, or other transferee with respect to the assignment or sublease, as applicable exceeds the Rent payable under this Lease, then Tenant shall be bound and obligated to pay Landlord, in accordance with Section 10.3, 50% of the Net Profits (as defined in Section 10.3) within 30 days following receipt thereof by Tenant from such sublessee, assignee, licensee, or other transferee, as the case may be.

(v)Tenant shall reimburse Landlord for its reasonable, third party attorneys’ fees incurred under this Article X, in connection with any review of, and Landlord’s consent to, any sublease, assignment or deemed assignment made under this Article X, regardless of whether Landlord’s consent is required under this Article X and whether Landlord consents to such request.

10.2Landlord's Option to Recapture Premises. If Tenant proposes to assign this Lease other than in accordance with Sections 10.4 or 10.5, Landlord may, at its option, upon written notice to Tenant given within 30 days after its receipt of Tenant's notice of proposed assignment, together with all other necessary information, elect to recapture the Premises and terminate this Lease. If Tenant proposes to sublease all or a portion of the Premises, other than in accordance with Section 10.4, and such sublease constitutes a Significant Sublease, then Landlord may, at its option upon written notice to Tenant given within 30 days after its receipt of Tenant's notice of proposed subletting, together with all other necessary information, elect to recapture such portion of the Premises as Tenant proposes to sublease and upon such election by Landlord, this Lease shall terminate as to the portion of the Premises recaptured. Notwithstanding the foregoing, Tenant may, within ten (10) days after Landlord’s notice to Tenant terminating this Lease in connection with a proposed assignment of the Lease or with respect to the proposed sublet portion of the Premises, withdraw Tenant’s request for Landlord’s consent to any assignment or subletting under this Article X, in which event this Lease shall remain in full force and effect with respect to the entire Premises. If a portion of the Premises is recaptured, the Rent payable under this Lease shall be proportionately reduced based on the square footage of the Rentable Square Feet retained by Tenant and the square footage of the Rentable Square Feet leased by Tenant immediately prior to such recapture and termination, and Landlord and Tenant shall thereupon execute an amendment to this Lease in accordance therewith. Landlord may thereafter, without limitation, lease the recaptured portion of the Premises to the proposed assignee or subtenant without liability to Tenant. Upon any such termination, Landlord and Tenant shall have no further obligations or liabilities to each other under this Lease with respect to the recaptured portion of the Premises, except with respect to obligations or liabilities which accrue or have accrued hereunder as of the date of such termination (in the same manner as if the date of such termination were the date originally fixed for the expiration of the Term). As used in this Lease, “Significant Sublease” means any sublease of all or any portion of the Premises (whether by itself or when the Rentable Square Feet covered by such sublease is aggregated with the Rentable Square Feet covered by any other subleases of a portion of the Premises then in effect) that covers either a portion of the Premises comprising one or more floors in the Premises or containing 38,901 Rentable Square Feet or more and that (a) is entered into after April 30, 2026; or (b) has a term longer than 60 months (whether pursuant to its initial terms or as a result of a renewal or extension of the term of such sublease).

10.3Distribution of Net Profits. In the event that Tenant assigns this Lease or sublets all or any portion of the Premises during the Term other than in accordance with Sections 10.4 or 10.5,, Landlord shall receive 50% of any “Net Profits” (as hereinafter defined) and Tenant shall receive 50% of any Net Profits received by Tenant from any such assignment or subletting. The term “Net Profits” as used herein shall mean such portion of the Rent payable by such assignee or subtenant in excess of the Rent payable by Tenant under this Lease (or pro rata portion thereof in the event of a subletting) for the corresponding period, sublease plus any bonus or other consideration therefor or incident thereto, after deducting from such excess Rent all of Tenant's documented reasonable third party costs associated with such assignment or subletting, including, without limitation, broker commissions, attorney fees, marketing expenses, costs paid to Landlord in obtaining Landlord’s consent to the assignment or sublease, rent concessions, tenant improvement allowances, and any costs incurred by Tenant to prepare or alter the Premises, or portion thereof, for the assignee or sublessee.

10.4Transfers to Related Entities. Notwithstanding anything in this Article X to the contrary, provided no Event of Default exists under this Lease or would exist but for the pendency of any cure periods provided for under Section 20.1 (unless such Event of Default requires notice under Section 20.1 and Landlord has not delivered such notice to Tenant), Tenant may, without Landlord's consent, but after providing written notice (“Related Entity Notice”) to Landlord (unless, with respect to an Asset Sale Assignee (as defined in this Section 10.4), such prior notice is prohibited under applicable laws or any commercially reasonable confidentiality agreement, in which case Tenant may provide the Related Entity Notice within 10 days after the transaction) and subject to the provisions of Section 10.1(b)(i-v), assign this Lease or sublet all or any portion of the Premises to any Related Entity (as hereinafter defined) provided that (i) such Related Entity is not a governmental entity or agency; (ii) such Related Entity's use of the Premises would not cause Landlord to be in violation of any exclusivity agreement within the Project; (iii) the tangible net worth (computed in accordance with generally accepted accounting principles exclusive of goodwill) of either Tenant or the Affiliated Entity, in the case of an assignment to an Affiliated Entity, or the Asset Sale Assignee, in the case of an assignment to the Asset Sale Assignee, after such transfer is greater than or equal to the greater of (a) the tangible net worth of Tenant as of the Date of Lease; or (b) the tangible net worth of Tenant immediately prior to such transfer, and proof satisfactory to Landlord that such tangible net worth standards have been met shall have been delivered to Landlord concurrently with the Related Entity Notice in accordance with this Section 10.4. “Related Entity” shall be defined as (i) any parent company, subsidiary, affiliate or related corporate entity of Tenant that controls, is controlled by, or is under common control with Tenant (“Affiliated Entity”) or (ii) the assignee of Tenant’s interest under this Lease as part of the sale of all or substantially all of Tenant’s assets to such assignee in one or more transactions (“Asset Sale Assignee”).

10.5Transfers of Ownership. Notwithstanding anything in this Article X to the contrary, provided that no Event of Default exists under this Lease or would exist but for the pendency of any cure periods provided for under Section 20.1 (unless such Event of Default requires notice under Section 20.1 and Landlord has not delivered such notice to Tenant), Tenant may, without Landlord's consent, but after providing written notice (“Ownership Change Notice”) to Landlord (unless such prior notice is prohibited under applicable laws or any commercially reasonable confidentiality agreement, in which case Tenant may provide the Ownership Change Notice within 10 days after the transaction) and subject to the provisions of Section 10.1(b)(i-iii) and (v), transfer a majority interest in Tenant in one or more transactions in connection with a merger, consolidation, sale of all or substantially all of the equity interests in Tenant, or reorganization, provided that such transfer is not used solely to circumvent the obligation to obtain Landlord’s consent pursuant to this Article X and the tangible net worth (computed in accordance with generally accepted accounting principles exclusive of goodwill and other intangible assets) of Tenant after such transfer (or the surviving entity in the case of any merger or consolidation) (“Ownership Transferee”) is at least equal to the greater of (i) the tangible net worth of Tenant as of the Date of Lease; or (ii) the tangible net worth of Tenant immediately prior to such transfer (or the first such transfer in the case of a series of transfers), and proof reasonably satisfactory to Landlord that such tangible net worth standards have been met shall have been delivered to Landlord concurrently with the Ownership Transfer Notice in accordance with this Section 10.5.

10.6Permitted Occupancy by Related Entities. In addition to Tenant's right to assign this Lease or sublet the Premises to a Related Entity in accordance with Section 10.4, Tenant may permit any Related Entity to occupy with Tenant up to twenty (20%) of the Premises on a shared basis with Tenant, without assigning the Lease or subletting the Premises to such Related Entity, provided that (i) such Related Entity’s occupancy shall be subject to the terms of this Lease and the Related Entity’s agreement to fully and completely observe all the Tenant's covenants in this Lease, including, without limitation, the Permitted Use and the insurance and indemnity obligations set forth in Article XV and Article XVII of this Lease, with the exception of the payment of rental and other sums required to be paid hereunder which remain the obligation of Tenant; (ii) such Related Entity is not a governmental entity or agency; (iii) such Related Entity's use of the Premises would not cause Landlord to be in violation of any exclusivity agreement within the Project; (iv) notice shall have been delivered to Landlord at least 10 days prior to the effective date of any such occupancy; (v) Tenant shall exercise a reasonable degree of supervision over such Related Entity’s activity occurring in the Premises; and (vi) Tenant’s occupancy arrangements with the Related Entity shall not, whether in a single transaction or in a series of transactions, be entered into as a subterfuge to avoid the obligations and restrictions relating to transfers set forth in this Article X.

XI. MAINTENANCE AND REPAIR

11.1Landlord's Obligation. Landlord will maintain, clean repair and restore in a first-class manner consistent with the first-class nature of the Building and Project and in reasonably good order and condition (i) the Common Area; (ii) the mechanical, plumbing, electrical, security and HVAC, elevator, and life safety equipment and systems serving the Building; (iii) the structure of the Building (including roof, exterior walls and foundation); (iv) exterior windows of the Building; and (v) Building standard lighting, except for Lightning Maintenance, which is governed by Section 11.2. Except as otherwise provided in Section 6.2, the cost of such maintenance, repairs, replacements and restorations shall be included in the Operating Expenses and paid by Tenant as provided in Article VI; provided, however, subject to Section 15.5, Tenant shall bear the full cost, plus 5% of such cost for Landlord's overhead, of any maintenance, repair or restoration necessitated by the negligence or willful misconduct of Tenant or its Agents. Tenant acknowledges that Landlord shall not be obligated to provide any of the services that Tenant is responsible for providing under Section 11.2; provided, that Tenant may elect to contract with Landlord for janitorial service as provided in Section 11.2. Tenant waives all rights to make repairs at the expense of Landlord, to deduct the cost of such repairs from any payment owed to Landlord under this Lease or to vacate the Premises or terminate this Lease whether under California Civil Code Section 1942 or any other law. Tenant further waives the provisions of California Civil Code Section 1932 with respect to Landlord’s obligations under this Lease.

11.2Tenant's Obligation. Subject to Landlord's express obligations set forth in Section 11.1, Tenant, at its expense, shall maintain the Premises in good condition and repair, reasonable wear and tear and casualty governed by the provisions of Article XIX excepted. Tenant's obligation shall include without limitation the obligation to provide in a first-class manner consistent with the first-class nature of the Building and Project (i) janitorial services and pest control for the Premises (unless the pest problem is proven to be caused by another tenant or occupant of the Building, in which case Landlord shall use commercially reasonable efforts to cause such other tenant or occupant to eliminate the pest problem and pay for the cost of pest control for the Premises) using contractors approved by Landlord pursuant to service contracts approved by Landlord and (ii) maintain, repair and replace all (A) interior windows and walls; (B) floor coverings; (C) ceilings; (D) doors; (E) entrances to the Premises; (F) supplemental HVAC systems within or exclusively serving the Premises, including, without limitation, any Rooftop Installations (as defined in Section 16.7); (G) private restrooms and kitchens, including hot water heaters, plumbing and similar facilities serving Tenant exclusively; and (H) all light bulbs, lamps, starters and ballasts for lighting fixtures within the Premises (“Lighting Maintenance”) using contractors approved by Landlord pursuant to service contracts approved by Landlord; provided that, Landlord shall have the right to contract directly,

subject to reimbursement by Tenant of the associated cost and expense as provided in Section 16.4, for such Lighting Maintenance. Landlord shall not unreasonably withhold, condition or delay consent to Tenant’s use of any contractor, so long as the same maintains all licenses required under applicable law, provides evidence of insurance reasonably satisfactory to Landlord, and will not disrupt the labor harmony of the Building or Project. Landlord may establish reasonable measures to conserve energy and water. Landlord shall have the right to inspect the Premises for compliance with this Section 11.2(a) in accordance with Article XIV and to require Tenant to provide additional cleaning, if necessary. Tenant will promptly advise Landlord of any damage to the Premises or the Project of which Tenant becomes aware. If Tenant requests that Landlord provide janitorial services in order to satisfy Tenant’s obligations under this Section 11.2, then Landlord shall provide such services five days per week using Landlord’s contractors, at the expense of Tenant, and such expense (plus five percent (5%) of such expense for Landlord's overhead) will be collectible as Additional Rent and will be paid by Tenant within 30 days of Landlord’s delivery of an invoice or statement for the same. All damage or injury to the Premises (excluding Tenant's equipment, personal property and trade fixtures) that Tenant is required to repair under this Section may be repaired, restored or replaced by Landlord, at the expense of Tenant, subject to the waivers in Section 15.5, and such expense (plus 5% of such expense for Landlord's overhead) will be collectible as Additional Rent and will be paid by Tenant within 30 days of Landlord’s delivery of an invoice or statement for the same. If Tenant reasonably requests additional documentation or information regarding the charges set forth in such invoice or statement, then Landlord shall promptly provide such documentation or information (which may be provided by email) as Landlord reasonably determines appropriate to substantiate such charges. If Tenant fails to provide or perform any of the services or maintenance required to be provided or performed by Tenant for more than thirty (30) days after notice from Landlord or if Tenant fails to make any repairs to the Premises for more than 30 days after notice from Landlord (although notice shall not be required in the event of an emergency as defined in Article XIV), Landlord may, at its option, cause all required services, maintenance, repairs, restorations or replacements to be made and Tenant shall pay Landlord pursuant to this Section 11.2; provided, however, that, except in the event of an emergency, if such service, maintenance or repair cannot reasonably be provided, performed or made within said 30-day period, then such time period shall be extended as reasonably necessary, provided Tenant has commenced the applicable service, maintenance or repair within the 30-day period and diligently pursues the same to completion. Landlord shall use commercially reasonable efforts to minimize disturbance to Tenant’s use and enjoyment of the Premises during the exercise of any rights under this Section 11.2.

XII. INITIAL CONSTRUCTION; ALTERATIONS

12.1Initial Construction. Landlord and Tenant agree that the construction of any “Tenant Work shall be performed by Tenant in accordance with and as defined in Exhibit B-l. Subject to funding the Tenant Work Allowance (as defined in Exhibit B-1) for the construction of the Tenant Work, Landlord shall have no obligations whatsoever to construct any improvements to the Premises and Tenant accepts the Premises “AS IS”, “WHERE IS” and “with any and all faults”, and Landlord neither makes nor has made any representations or warranties, express or implied, with respect to the quality, suitability or fitness thereof of the Premises, or the condition or repair thereof. Tenant taking possession of the Premises shall be conclusive evidence for all purposes of Tenant's acceptance of the Premises in good order and satisfactory condition, and in a state and condition satisfactory, acceptable and suitable for Tenant's use pursuant to this Lease. Notwithstanding the foregoing, Landlord shall deliver all structural elements and subsystems of the Premises, including but not limited to the HVAC, mechanical, electrical, and plumbing systems serving the Premises, in good working condition and repair as of the Date of Lease and Landlord will be responsible, without cost to Tenant, to repair any latent structural or design defects (as opposed to normal repairs, maintenance and replacements) in the curtain wall, windows and window framing, interior structural framing, foundation, roof, HVAC systems, mechanical, electrical, and plumbing systems occurring or discovered prior to the later of the date that is 12 months after the Date of Lease and the date of expiration of any applicable warranty therefor; provided

that Tenant delivers notice to Landlord thereof prior to the later of the date that is 12 months after Date of Lease and date of expiration of any applicable warranty therefor and such repairs shall not include work required in connection with (a) the Tenant Work or Tenant’s Alterations (as defined in Section 12.3), (b) Tenant’s particular use of the Premises (as opposed to Tenant’s use of the Premises for the Permitted Use in a normal and customary manner) or (c) a change in the Permitted Use stated in Section 1.8, regardless of whether Landlord approves such change.

12.2Installing and Operating Tenant's Equipment. Without first obtaining the written consent of Landlord, not to be unreasonably withheld, conditioned or delayed, Tenant shall not install or operate in the Premises (i) any electrically operated equipment or other machinery, other than standard office equipment that does not require wiring, cooling or other service in excess of Building standards; (ii) any equipment of any kind or nature whatsoever which will require any changes, replacements or additions to, or changes in the use of, any water, heating, plumbing, air conditioning or electrical system of the Premises or the Project; or (iii) any equipment which exceeds the electrical or floor load capacity per square foot for the Building. Landlord's consent to such installation or operation may be conditioned upon the payment by Tenant of additional compensation for any excess consumption of utilities and any additional power, wiring, cooling or other service that may result from such equipment. Machines and equipment which cause noise or vibration that may be transmitted to the structure of the Building or to any space therein so as to be objectionable to Landlord or any other Project tenant shall be installed and maintained by Tenant, at its expense, on vibration eliminators or other devices sufficient to eliminate such noise and vibration. Tenant and Tenant's telecommunications companies, including but not limited to, local exchange telecommunications companies and alternative access vendor services companies, shall have no right of access to the Land, Building or the Project for the installation and operation of telecommunications systems, including but not limited to, voice, video, data, and any other telecommunications services provided over wire, fiber optic, microwave, wireless, and any other transmission systems, for part or all of Tenant's telecommunications within the Building without Landlord's prior written consent, such consent not to be unreasonably withheld, conditioned or delayed.

12.3Alterations. Tenant shall not make or permit any alterations, decorations, additions or improvements of any kind or nature to the Premises or the Project, whether structural or nonstructural, interior, exterior or otherwise (“Alterations”) without the prior written consent of Landlord, said consent not to be unreasonably withheld or delayed. Landlord may impose any reasonable conditions to its consent, including, without limitation: (i) prior approval of the plans and specifications and contractor(s) with respect to the Alterations (provided that Landlord may designate specific contractors with respect to Building systems provided such contractors charge commercially competitive rates); (ii) supervision by Landlord’s representative, at Tenant’s expense, of the Alterations, not to exceed three percent (3%) of the hard and soft costs of the Alteration; (iii) proof of worker’s compensation insurance and commercial general liability insurance carried by Tenant’s contractors and subcontractors in such amounts and meeting such requirements as reasonably requested by Landlord; (iv) delivery to Landlord of written and unconditional waivers of mechanic’s and materialmen’s liens as to the Project for all work, labor and services to be performed and materials to be furnished, signed by all contractors, subcontractors, materialmen and laborers participating in the Alterations; (v) delivery of permits, certificates of occupancy, “as-built” plans, and equipment manuals; and (vi) in the case of Alterations that exceed $200,000 in the aggregate during a 12-month period, any security for performance or payment that is reasonably required by Landlord. The Alterations shall conform to Landlord’s Specifications (as defined in Exhibit B-1) and set forth in Exhibit B-3 attached hereto and made a part hereof and the requirements of federal, state and local governments having jurisdiction over the Premises, including, without limitation, the ADA, the California ADA, the OSHA General Industry Standard (29 C.F.R. Section 1910.1001, et seq.), and the OSHA Construction Standard (29 C.F.R. Section 1926.1001, et seq.) and shall be performed in accordance with the terms and provisions of this Lease and all warranties in effect and in a good and workmanlike manner using material of a quality that is at least equal to the quality designated by Landlord as the minimum standard for the

Building. Notwithstanding the foregoing, Tenant shall have the right, without Landlord’s consent, to perform in the Premises any nonstructural Alteration; provided that Tenant has provided Landlord with at least ten (10) business days prior written notice of such Alteration and such Alteration (i) does not affect the other tenants of the Building or the Building’s mechanical, electrical, plumbing, HVAC or fire, life safety systems or the roof, foundations, exterior walls or structural portions of the Building; (ii) does not require any other alteration, addition, or improvement to be performed in or made to any portion of the Building or Project other than the Premises; (iii) does not materially or negatively impact the future marketability of the Building or increase the Building’s assessed value for tax purposes; (iv) does not alter the architectural or structural integrity of the Building; (v) does not require a building permit; (vi) is not visible from the exterior of the Premises; (vii) do not include any deviations from the Specifications or any light fixtures, entry doors, interior doors, HVAC diffusers or demountable walls; and (viii) together with any other Alterations, does not exceed a cost of $200,000 in any one Calendar Year, unless such Alterations are comprised of carpet and paint only, in which case no such limit shall not apply (provided that Tenant shall not perform such Alterations in stages in order to subvert this provision). All computer, telecommunications or other cabling, wiring and associated appurtenances (collectively, “Cabling”) installed by Tenant inside any of the interior walls of the Premises, above the ceiling of the Premises, in any portion of the ceiling plenum above or below the Premises, or in any portion of the Common Areas of the Project, including but not limited to any of the shafts or utility rooms of the Building, shall be clearly labeled or otherwise identified as having been installed by Tenant. All Cabling installed by Tenant shall comply with the requirements of the National Electric Code and any other applicable fire and safety codes. Landlord may designate reasonable rules, regulations and procedures for the performance of work in the Building and, to the extent reasonably necessary to avoid disruption to the occupants of the Project, shall have the right to designate the time when Alterations may be performed. will not unreasonably require removal of Alterations at the end of the Term such as by requiring removal of Alterations that are not specialized to Tenant’s use of the Building, do not materially and negatively impact the Building’s structure or systems or the future marketability of the Building, are not visible from the Common Areas or the exterior of the Building and are consistent with use of the Premises as a class A office building. If Landlord requires the removal of all or part of the Alterations pursuant to this Section 12.3, Tenant, at its expense, shall repair any damage to the Premises or the Project caused by such removal and restore the Premises and the Project to its condition prior to the construction of such Alterations, reasonable wear and tear excepted. If Tenant fails to remove the Alterations that Tenant is required to remove pursuant to this Section 12.3 and repair and restore the Premises and Project, then Landlord may (but shall not be obligated to) remove, repair and restore the same and the actual cost of such removal, repair and restoration together with any and all damages which Landlord actually suffers and sustains by reason of the failure of Tenant to remove, repair and restore the same, shall be charged to Tenant and paid within 30 days of demand and Landlord’s invoice or statement for the same. If Tenant reasonably requests additional documentation or information regarding the charges set forth in such invoice or statement, then Landlord shall promptly provide such documentation or information (which may be provided by email) as Landlord reasonably determines appropriate to substantiate such charges. Notwithstanding the foregoing, Tenant may remove any trade fixtures, business equipment, personal property and furniture provided that Tenant repairs any damage to the Premises resulting from the removal of such items and restores the Premises to its condition prior to the installation of such items, reasonable wear and tear excepted.

12.4Mechanics' Liens. Tenant will pay or cause to be paid all costs and charges for: (i) work done by Tenant or caused to be done by Tenant, in or to the Premises; and (ii) materials furnished for or in connection with such work. Tenant will indemnify Landlord against and hold Landlord, the Premises, and the Project free, clear and harmless from and against, all mechanics’ and materialmen’s stop notices, liens and claims of liens (collectively, “Liens”), and all other liabilities, liens, claims, and demands on account of such work by or on behalf of Tenant. If any such Lien, at any time, is filed against the Premises, or any part of the Project, Tenant will cause such Lien to be discharged of record within 30 days after the date Tenant receives notice of the filing of such Lien, either by resolving the matter and causing a release to be recorded in the Official Records of the County in which the Project is located, or by recording a mechanic’s lien release bond in accordance with the provisions of Civil Code Section 8424. If Tenant fails to timely cause the Lien to be removed as described above, Landlord may, at its option, pay to the claimant all amounts necessary to discharge the Lien, regardless of the validity or enforceability of the claim, together with any actual related costs and interest, and the amount so paid, together with reasonable attorneys’ fees incurred in connection with such Lien, will be due within 30 days of Landlord’s invoice or statement from Tenant to Landlord as Additional Rent. If Tenant reasonably requests additional documentation or information regarding the charges set forth in such invoice or statement, then Landlord shall promptly provide such documentation or information (which may be provided by email) as Landlord reasonably determines appropriate to substantiate such charges. Nothing contained in this Lease will be deemed the consent or agreement of Landlord to subject Landlord’s interest in all or any portion of the Project to liability under any Lien or to any other lien law. If Tenant receives notice that a Lien has been or is about to be filed against the Premises or any part of the Project, or that any action affecting title to the Project has been commenced to enforce a Lien or otherwise on account of work done by or for or materials furnished to or for Tenant, it will immediately give Landlord written notice of such notice. At least 10 business days prior to the commencement of any work (including, but not limited to, any repairs or Alterations) in or to the Premises, by or for Tenant or any party claiming through Tenant, Tenant will give Landlord written notice of the proposed work and the names and addresses of the persons supplying labor and materials for the proposed work. Landlord will have the right to post notices of non-responsibility or similar notices, if applicable, on the Premises or in the public records in order to protect the Premises and Project against such Liens.

XIII. SIGNS

Except as expressly provided for in this Article XIII, no sign, advertisement or notice shall be inscribed, painted, affixed, placed or otherwise displayed by Tenant on any part of the Project or the outside or the inside of the Building or the Premises (to the extent visible from the exterior of the Premises or the Building). Landlord shall provide, at Tenant’s expense, a listing on the directory in the lobby of the Building listing all Building tenants. Landlord also shall, at Tenant’s expense, place the suite number and Tenant name on or in the immediate vicinity of the entry door to the portion of the Premises located on the first floor of the Building using Building standard sign material and lettering. Landlord shall, at Tenant’s expense, place non-exclusive signage for Tenant (“Building Monument Signage”) on the existing monument sign (“Building Monument Sign”) adjacent to the Building in the second from the top position identified on Exhibit H-2 attached hereto and incorporated herein. Tenant shall, at Tenant’s sole cost and expense, and subject to the terms of this Article XIII, have the non-exclusive right to display exterior building top signage in one (1) location on the Building exterior (“Building Signage”) identified on Exhibit H-1 attached hereto and incorporated herein. Tenant’s right to display the Building Signage is further conditioned on Tenant’s installation and maintenance of such Building Signage in a good and workmanlike manner by contractors approved by Landlord and otherwise in accordance with the same terms that apply to Alterations. Landlord shall not unreasonably withhold, condition or delay consent to Tenant’s use of any contractor, so long as the same maintains all licenses required under applicable law, provides evidence of insurance reasonably satisfactory to Landlord, and will not disrupt the labor harmony of the Building or Project. All Building Monument Signage and Building Signage (collectively, the “Tenant Signage”) shall be subject to Landlord’s approval, in its sole discretion, prior to fabrication and installation as to consistency

in appearance with other tenant signage on the Building Monument Sign and the Other Buildings and as to location, lettering, design, material, size, lighting, logo and color scheme. Accordingly, Tenant shall submit a signage plan to Landlord detailing the design and specifications of all such Tenant Signage. In no event shall any Tenant Signage displayed by Tenant interfere with the visibility of the Building (excluding the portion of the Building on which the Building Signage is affixed) or the Other Buildings. All such signage must conform to all applicable recorded covenants, conditions and restrictions, zoning and other applicable laws, ordinances and governmental requirements, and the Project’s design signage and graphics program, including, without limitation the Exterior Master Sign Program approved by the City of San Jose attached as Exhibit H and incorporated herein, and Tenant shall obtain all required approvals of third parties, if any. Landlord shall be responsible for the maintenance of the Building Monument Signage and the Building Monument Sign in good condition and repair; provided that Tenant shall reimburse Landlord for Tenant’s pro rata share of the actual costs and expenses associated with such maintenance of the Building Monument Signage and the Building Monument Sign, which pro rata share shall be the percentage amount equal to the number of square feet of area on the Building Monument Sign that is occupied by the Building Monument Signage divided by the total number of square feet of area on the Building Monument Sign then occupied by monument signage displaying the names of any occupants of the Building and multiplying the resulting quotient by one hundred and rounding to the second decimal place. Tenant’s right to display the Building Signage under this Article XIII shall be personal to BILL.COM, LLC, a Delaware limited liability company, a Related Entity to whom this Lease is assigned in accordance with Section 10.4 or an Ownership Transferee to whom this Lease is transferred upon satisfaction of the requirements in Section 10.5; provided, however, the Building Signage shall contain only the name and logo of BILL.COM, LLC (unless Landlord grants consent to another name and logo, in its sole discretion). Upon the expiration or earlier termination of this Lease, Landlord’s termination of Tenant’s right to possession of the Premises upon the occurrence of an Event of Default, any assignment of the Lease (unless made to a Related Entity in accordance with Section 10.4 or to an Ownership Transferee in accordance with Section 10.5) or sublease of the Premises (unless made to a Related Entity in accordance with Section 10.4), or the occurrence of a Signage Revocation Condition (as defined in this Article XIII), Tenant’s rights to display the Building Signage shall automatically terminate and Landlord shall have the right to remove, at Landlord’s option, the Building Signage, and repair the affected portions of the Building to the condition as it existed prior to installation of the Building Signage, reasonable wear and tear excepted, all at Tenant’s sole cost and expense, for which Tenant shall reimburse Landlord the actual cost and expense incurred for the same within 30 days of Landlord’s invoice or statement for the same. Upon the expiration or earlier termination of this Lease or Landlord’s termination of Tenant’s right to possession of the Premises upon the occurrence of an Event of Default, Tenant’s rights to display the Building Monument Signage shall automatically terminate and Landlord shall have the right to remove, at Landlord’s option, the Building Monument Signage, and repair the affected portions of the Building Monument Sign to the condition as it existed prior to installation of the Building Monument Signage, reasonable wear and tear excepted, all at Tenant’s sole cost and expense, for which Tenant shall reimburse Landlord the actual cost and expense incurred for the same within 30 days of Landlord’s invoice or statement for the same. As used in this Article XIII, a “Signage Revocation Condition” means one or more of the following: (i) the existence of an Event of Default; (ii) BILL.COM, a Delaware limited liability company, its Related Entity pursuant to an assignment or sublease made in accordance with Section 10.4, or an Ownership Transferee pursuant to a transfer made in accordance with Section 10.5 ceases to occupy at least two (2) full floors of the Building; or (iii) BILL.COM, a Delaware limited liability company, abandons the Premises or vacates the Premises for more than 180 days. If any prohibited sign, advertisement or notice is nevertheless exhibited by Tenant, Landlord shall have the right to remove the same, and Tenant shall pay within 30 days of Landlord’s invoice or statement any and all actual costs and expenses incurred by Landlord in such removal, together with interest thereon at the Default Rate from the demand date. If Tenant reasonably requests additional documentation or information regarding the charges set forth in an invoice or statement that Landlord delivers pursuant to this Article XIII, then Landlord shall promptly provide such documentation or information (which may be provided by email) as Landlord reasonably determines appropriate to substantiate such charges.

XIV. RIGHT OF ENTRY

Tenant shall permit Landlord or its Agents to enter the Premises without charge therefor to Landlord and without diminution of Rent or claim of constructive eviction: (i) to clean, inspect and protect the Premises and the Project and to satisfy Landlord’s obligations under this Lease, the Declaration or applicable laws, ordinances or governmental requirements; (ii) to make such alterations and repairs to the Premises or any portion of the Building, including other tenants’ premises, which Landlord determines to be reasonably necessary; (iii) to exhibit the same to prospective purchaser(s) of the Building or the Project or to present or future Mortgagees; or (iv) to exhibit the same to prospective tenants during the last 12 months of the Term. Notwithstanding anything herein to the contrary, Landlord’s rights under this Article XIV shall be subject to the following: (i) Landlord will exercise commercially reasonable efforts to minimize, as reasonably practicable, any interference with Tenant’s business operations in the Premises and shall provide Tenant with at least 24 hours’ prior notice of entry into the Premises (which may be given by e-mail), except in the event of an apparent emergency condition arising within or affecting the Premises that endangers or threatens to endanger property or the safety of individuals. Except in the case of such emergency condition, as a condition to Landlord’s entry into the Premises: (i) Tenant shall have the right to have a representative of Tenant accompany Landlord or its Agents on any entry into the Premises, if such representative is reasonably made available to Landlord; (ii) Landlord and its Agents shall reasonably cooperate with Tenant’s commercially reasonable security protocols in connection with entry into the Premises, so long as the same have been delivered to Landlord in writing prior to such entry and so long as any such protocols that are ongoing and capable of remaining in place for future entry do not have to be repeated in connection with Landlord’s subsequent entry; and (iii) Tenant may limit Landlord and its Agents from accessing sensitive or secured areas of the Premises reasonably designated as to size and location in advance by Tenant, unless such limitation would prevent Landlord from satisfying its obligations under this Lease, the Declaration or applicable laws, ordinances or governmental requirements.

XV. INSURANCE

15.1Certain Insurance Risks. Tenant will not do or permit to be done any act or thing upon the Premises or the Project which would: (i) jeopardize or be in conflict with fire insurance policies covering the Project, and fixtures and property in the Project; or (ii) increase the rate of fire insurance applicable to the Project to an amount higher than it otherwise would be for general office use of the Project; or (iii) subject Landlord to any liability or responsibility for injury to any person or persons or to property by reason of any business or operation being conducted upon the Premises.

15.2Landlord's Insurance. At all times during the Term, Landlord will carry and maintain:

(a)Fire and extended coverage insurance covering the Building, its equipment and common area furnishings, and leasehold improvements in the Premises to the extent of any initial build out of the Premises by Landlord (excluding the Tenant Work and any Alterations);

(b)Commercial general liability insurance, covering liability arising from operations at the Building and the Project, independent contractors, personal injury, advertising injury, products completed operations and liability assumed under an insured contract (including tort liability of another assumed in a business contract) on an occurrence basis and with cross liability and severability of interest and limits of not less than $1,000,000 combined single limit for personal injury, bodily injury and property damage from any one occurrence; and

(c)Such other insurance as Landlord reasonably determines from time to time.

Notwithstanding the foregoing provisions of this Section 15.2, the coverage and amounts of insurance specified above are minimum amounts and Landlord will carry, also at a minimum, coverages and amounts of insurance comparable to the coverage and amounts of insurance carried by reasonably prudent landlords of comparable buildings in the San Jose area. Subject to the foregoing, the insurance coverages and amounts in this Section 15.2 will be determined by Landlord in the exercise of its reasonable discretion, provided that such amounts under the insurance required by Section 15.2(a) will be no less than stated in such Section.

15.3Tenant's Insurance. On or before the earlier to occur of (i) the Commencement Date; or (ii) the date Tenant commences any work of any type in the Premises pursuant to this Lease (which may be prior to the Commencement Date) and continuing throughout the Term, Tenant will carry and maintain, at Tenant's expense, the following insurance, in the minimum amounts specified below or such other amounts as Landlord may from time to time reasonably request (but in no event in excess of the amounts of insurance then being required by landlords of the comparable buildings in the Silicon Valley of California, Class A market area), with insurance companies and on forms reasonably satisfactory to Landlord:

(a)Commercial general liability insurance, with a combined single occurrence limit and aggregate of not less than $1,000,000. All such insurance will be on an occurrence ISO form CG 0001 0413 or equivalent including without limitation, bodily injury, property damage, personal injury, advertising injury, products and completed operations liability, contractual liability coverage for the performance by Tenant of the indemnity agreements set forth in this Lease, and cross liability and severability of interest;

(b)A policy of cause of loss-specialty property insurance coverage at least equal to ISO Special Form Causes of Loss and covering all of Tenant's furniture and fixtures, machinery, equipment, stock and any other personal property owned and used in Tenant's business and found in, on or about the Project, and any leasehold improvements to the Premises in excess of any initial buildout of the Premises by Landlord (including the Tenant Work and any Alterations), in an amount not less than the full replacement cost;

(c)Worker's compensation insurance insuring against and satisfying Tenant's obligations and liabilities under the worker's compensation laws of the state in which the Premises are located, including employer's liability insurance in the limit of $1,000,000 aggregate;

(d)If Tenant operates owned, hired, or nonowned vehicles on the Project, comprehensive automobile liability will be carried at a limit of liability not less than $1,000,000 combined bodily injury and property damage;

(e)Umbrella liability insurance in excess of the underlying coverage listed in paragraphs (a), (c) and (d) above, with limits of not less than $4,000,000 per occurrence/$4,000,000 aggregate;

(f)Loss of income and extra expense insurance and contingent business income insurance in amounts as will reimburse Tenant for direct or indirect loss of earning attributable to all perils insured against under the ISO Causes of Loss - Special Form Coverage, or attributable to prevention of access to the Premises as a result of such perils. Such insurance shall provide for an extended period of indemnity to be not less than 12 months; and

(g)All insurance required under this Section 15.3 shall be issued by such good and reputable insurance companies qualified to do and doing business in the state in which the Premises are located and having a policyholder rating of not less than “A-” and a financial rating of “VII” in the most current copy of Best's Insurance Report in the form customary to this locality.

15.4Forms of the Policies. Landlord and its affiliates, Landlord’s management company, Landlord’s Mortgagee (as defined in Article XXI), and such other parties as Landlord shall designate to Tenant who have an insurable interest in the Premises or Project shall: (i) be named as additional insureds with respect to the coverages provided for under Section 15.3(a), (d) and (e), (ii) have waiver of subrogation rights with respect to the coverages provided for under Section 15.3 (a), (c), (d) and (e), and (ii) be named as loss payees as their interest may appear with respect to the coverage provided under Section 15.3 (b). Certificates of insurance together with any endorsements providing the required coverage will be delivered to Landlord prior to Tenant’s occupancy of the Premises and from time to time, as applicable, not less than three (3) business days prior to renewal (or replacement) after expiration of the term, not more than three (3) business days prior to material change or reduction in coverage, or not less than 15 days prior to cancellation or other termination thereof. All commercial general liability and property policies (including any umbrella policies in excess of such policies) herein required to be maintained by Tenant will be written as primary policies, not contributing with and not supplemental to the coverage that Landlord may carry. Commercial general liability insurance required to be maintained by Tenant by this Article XV will not be subject to a deductible or any self-insured retention in excess of $500,000.00.

15.5Waiver of Subrogation. Landlord and Tenant each releases, discharges and waives and shall cause their respective insurance carriers to waive any and all rights to recover against the other or against the Agents of such other party and, in the case of Tenant’s waiver, Landlord’s affiliates, management company, and Mortgagee, for any loss or damage to such waiving party (including deductible amounts and self-insured retention) arising from any cause covered by any property insurance required to be carried by such party pursuant to this Article XV or any other property insurance actually carried by such party to the extent of the limits of such policy. Tenant agrees to cause all other occupants of the Premises claiming by, under or through Tenant, to execute and deliver to Landlord and its affiliates, Landlord's management company, and Landlord’s Mortgagee such a release, discharge and waiver of claims and to obtain such waiver of subrogation rights endorsements.

15.6Adequacy of Coverage. Landlord makes no representation that the limits of liability specified to be carried by Tenant pursuant to this Article XV are adequate to protect Tenant and Tenant should obtain such additional insurance or increased liability limits as Tenant deems appropriate. Furthermore, in no way does the insurance required herein limit the liability of Tenant assumed elsewhere in this Lease.

XVI. SERVICES AND UTILITIES

16.1Ordinary Services to the Premises. Landlord shall furnish to the Premises throughout the Term so long as the Premises are occupied: (i) heating, ventilation, and air conditioning (“HVAC”) appropriate for the Permitted Use during Normal Business Hours (as defined in the Rules and Regulations), except for legal holidays observed by the federal government; (ii) trash removal from the Premises; (iii) reasonable use of all existing basic intra-Building and/or Project telephone and network cabling; (iv) hot and cold water from points of supply; (v) Common Area restrooms; (vi) elevator service, provided that Landlord shall have the right to remove such elevators from service as may reasonably be required for moving freight or for servicing or maintaining the elevators or the Building as long as at least one passenger elevator is in service; and (vii) proper facilities to furnish sufficient electrical power of not less than four watts per usable square foot in the Premises for Building standard lighting, facsimile machines, personal computers, printers, copiers and other customary business or office equipment, but not including electricity and air conditioning units required for equipment of Tenant that is in excess of Building standard. The cost of all services provided by Landlord hereunder shall be included within Operating Expenses, unless charged directly (and not as a part of Operating Expenses) to Tenant or another tenant of the Project. Landlord may establish reasonable measures to conserve energy and water.

16.2Additional Services. Should Tenant desire, or Landlord determine it necessary to provide, any additional services beyond those described in Section 16.1, or a rendition of any of such services outside the normal times for providing such service or in excess of standard services, Landlord may (at Landlord's option), upon reasonable advance notice from Tenant to Landlord, furnish such services, and Tenant agrees to pay Landlord within 30 days of Landlord’s invoice or statement Landlord's additional expenses resulting therefrom. If Tenant reasonably requests additional documentation or information regarding the charges set forth in such invoice or statement, then Landlord shall promptly provide such documentation or information (which may be provided by email) as Landlord reasonably determines appropriate to substantiate such charges. Landlord may, from time to time during the Term, set a Building-standard charge for such additional services, or a Building-standard per hour charge for additional or after hours service which shall include the utility, service, labor, and administrative costs and a cost for depreciation of the equipment used to provide such additional or after hours service.

16.3Interruption of Utilities or Services. Landlord will not be liable to Tenant or any other person for direct or consequential damages (including, without limitation, damages to persons or property or for injury to, or interruption of, business), Tenant shall not be entitled to any abatement or reduction of rent except as expressly set forth in this Section 16.3, nor shall a constructive eviction exist or shall Tenant be released from any of Tenant's obligations under this Lease (i) for any failure to supply any heat, air conditioning, elevator, cleaning, lighting or security or for any surges or interruptions of electricity, telecommunications or other service Landlord has agreed to supply during any period when Landlord uses reasonable diligence to supply such services; (ii) as a result of the admission to or exclusion from the Building or Project of any person; or (iii) for any discontinuance permitted under this Article XVI. Landlord reserves the right temporarily to discontinue the services set forth in the foregoing sentence, or any of them, at such times as may be necessary by reason of accident, repairs, alterations or improvement, strikes, lockouts, riots, acts of God, governmental preemption in connection with a national or local emergency, any rule, order or regulation of any governmental agency, conditions of supply and demand which make any product unavailable, Landlord's compliance with any mandatory or voluntary governmental energy conservation or environmental protection program, or any other happening beyond the control of Landlord. In the event of invasion, mob, riot, public excitement or other circumstances rendering such action advisable in Landlord's reasonable opinion, Landlord will have the right to prevent access to the Building or Project during the continuance of the same by such means as Landlord, in its reasonable discretion may deem appropriate, including, without limitation, locking doors and closing Parking Facilities and the Common Areas. Notwithstanding the foregoing, in the event of any failure to furnish, or any stoppage of, the specified services set forth in this Section 16.3 for a period in excess of five consecutive days, and if: (a) such interruption is restricted to the Building and is not a neighborhood blackout or caused by an Event of Force Majeure; (b) such failure to furnish or stoppage is caused by the negligence or willful misconduct of Landlord or by the failure of Landlord to commence and diligently pursue repairs for which Landlord is responsible under this Lease; (c) such interruption results in the Premises becoming untenantable, or any portion thereof in excess of 25% of the Rentable Square Feet of the Premises, becoming untenantable; and (d) Tenant actually ceases to occupy the Premises, or any untenantable portion of the Premises, as a result thereof, Tenant shall be entitled to an abatement of Rent in proportion to the area rendered untenantable and that is unoccupied, which abatement shall commence on the sixth day (and shall not be retroactive) and shall continue for the remainder of the period of such failure to furnish or stoppage of such specified services. As used in this Section 16.3, the specified services are electricity, water, natural gas and sewer service.

16.4Meters. Meters; Lighting Maintenance. The Premises shall be submetered as of the Commencement Date to measure Tenant’s usage of gas and electricity in the Premises. Landlord shall bill to Tenant directly as Additional Rent the charges for submetered gas and electricity usage in the Premises and charges for other Project utilities that Landlord reasonably allocates to Tenant based on such submetered gas and electricity usage. In addition, Landlord reserves the right to perform the Lighting Maintenance and to separately meter or monitor other utility services provided to the Premises, at Tenant’s expense, and bill the charges directly to Tenant, or to separately meter or monitor any other tenant and bill the charges directly to such tenant and to make appropriate adjustments to the Operating Expenses based on the meter charges. Tenant shall pay the charges Landlord bills to Tenant pursuant to this Section 16.4 within 30 days after receipt of Landlord’s invoice.

16.5Telephone and Other Utility Charges. All telephone and other utility service used by Tenant in the Premises shall be paid for directly by Tenant except to the extent the cost of same is included within Operating Expenses or billed to Tenant pursuant to Article XVI.

16.6Amenities. Landlord desires to offer certain amenities (“Amenities”), which are available only to the tenants of the Phase II Buildings, subject to the terms of Article II, and as of the Date of Lease include: (a) a café, pub, and the barbeque area (as shown as “BBQ” on Exhibit G-1) which are located on the ground floor and patio area of the Amenity Building; (b) a fitness/health club facility, which is located on the second floor of the Amenity Building; (c) a putting green and recreation area, which is located on the roof of the Amenity Building; (d) the Stage, Entertainment Center, Orchard and Gaming Tables located in the Phase II Common Area; and (e) a bike room. Landlord also desires to offer a shuttle service to and from the Project and the Bart, Caltrain and light rail mass transit service locations (“Shuttle Service”), which Shuttle Service may be made available, at Landlord’s option, to other tenants of the Project in addition to the tenants of the Phase II Buildings. Tenant shall have the general and nonexclusive right, together with Landlord, the owner of Building 3 and the other tenants and occupants of Building and Building 3, to use such Amenities and the Shuttle Service subject to (i) the terms and conditions of this Lease, and (ii) the Rules and Regulations and any non-discriminatory rules and regulations that Landlord, the owner of Building 3 and Landlord’s independent operators operating the applicable Amenity or the Shuttle Service may impose governing the hours, access to and use of the Shuttle Services and Amenities; provided, however, if the Shuttle Service is made available to other tenants of the Project, then Tenant shall have the general and nonexclusive right, together with Landlord, the other owners and the other tenants of the Project, to use the Shuttle Service. Landlord reserves the right to delegate the operation of the Shuttle Service and Amenities to one or more independent operators (each an “Operator”). Landlord agrees that Tenant will be entitled to reserve the Amenity Building roof, the Amenity Building café, the Amenity Building pub, the Entertainment Center and the Stage (collectively, the “Reservation Amenities” and, each a “Reservation Amenity”) for Tenant’s exclusive use from time to time upon request to Landlord, which request shall set forth the dates, times and reason for such reservation. Landlord shall maintain an electronic calendar that permits Tenant, the tenants of the Building and the tenants of Building 3 to determine the dates available for such reservations and to make such reservations by selecting the available dates and times and entering the Reservation Amenity subject to the reservation and a description of the purpose of the reservation. The Reservation Amenities will be available for reservation on a first-come, first-served basis (except as provided in this Section 16.6), with the following limitations, (A) the reservation of the Amenity Building café or the Amenity Building pub (or both) shall be limited to 3:00 pm – 10:00 pm Monday through Friday, excluding Building holidays; and (B) the reservation of the Amenity Building roof, the Entertainment Center and the Stage shall be limited to 6:00 am – 10:00 pm Monday through Friday, excluding Building holidays and 7:00 am – 10:00 pm on weekends and Building holidays. Notwithstanding the foregoing, if Tenant requests a reservation of the Stage, the Entertainment Center, or a Reservation Amenity in the Amenity Building more than 12 times per year, collectively, then such reservation will be subject to the written consent to such reservation by the tenants of the Building and Building 3, which Landlord shall request from such tenants and exercise commercially reasonable efforts

to obtain. By reserving a Reservation Amenity, Tenant acknowledges and agrees that (1) Landlord may require that Tenant execute Landlord’s commercially reasonable form of license agreement if Landlord reasonably determines appropriate due to Tenant’s purpose for reserving the Reservation Amenity, (2) Tenant shall be responsible, at Tenant’s sole cost and expense, in connection with its use of the Reservation Amenity and for Tenant’s set-up, takedown, security and cleanup, including, without limitation, the removal of all debris, litter, trash, and other materials left by Tenant or Tenant’s Agents in or about such Reservation Amenity, (3) Tenant shall return such Reservation Amenity to its condition immediately prior to Tenant’s use of such Reservation Amenity, (4) Tenant shall pay to Landlord within 30 days after Landlord’s delivery of a Landlord’s invoice or statement for any actual costs and expenses incurred by Landlord and Landlord’s Agents in connection with Tenant’s failure to comply with the foregoing obligations, including, without limitation, for costs for extra janitorial, trash removal, repairs or maintenance and (5) if Tenant desires services for food, beverage, valet, recreation, planning, programming, activities or any other purpose in connection with its reservation of any Reservation Amenity, then Tenant shall be responsible for contracting, at Tenant’s sole cost and expense, for such services directly with an Operator or a separate reputable vendor approved by Landlord, which approval shall not be unreasonably, withheld, conditioned or delayed, so long as such vendor maintains all licenses required under applicable laws, statutes, ordinances and governmental rules, regulations or requirements for providing such services, and provides proof of worker’s compensation insurance, commercial general liability insurance and any other insurance reasonably requested by Landlord in such amounts and meeting such requirements as reasonably requested by Landlord. If Tenant reasonably requests additional documentation or information regarding the charges set forth in Landlord’s invoice or statement delivered pursuant to this Section 16.6, then Landlord shall promptly provide such documentation or information (which may be provided verbally or by email) as Landlord reasonably determines appropriate to substantiate such charges. Notwithstanding the foregoing, Tenant’s use of a Reservation Amenity or the Common Area (with Landlord’s prior consent) in connection with Tenant’s monthly employee meetings shall include the ability for Tenant to play music at reasonable levels, subject to the Rules and Regulations.

16.7Roof Access. Subject to the terms of this Section 16.7, Tenant may during the Term install as an Alteration in accordance with Section 12.3, operate, maintain and use on the roof of the Building, in connection with Tenant’s use of the Premises equipment and associated Cabling and connections approved by Landlord in accordance with Section 12.3 (collectively, “Rooftop Installations”). All costs and expenses associated with the design, fabrication, engineering, permitting, installation, screening, maintenance, repair and removal of the Rooftop Installations shall be borne solely by Tenant. Prior to Tenant’s installation of any Rooftop Installations, Tenant and Landlord shall execute Landlord’s commercially reasonable form license agreement agreed to by Tenant setting forth the terms and conditions mutually agreed to by the parties for Tenant’s installation, operation, maintenance use and removal of any Rooftop Installations (“License Agreement (Rooftop Installations)”). Further, as a condition to Tenant’s installation of any Rooftop Installations, Tenant shall comply with Article XII of this Lease in connection with the installation of the Rooftop Installations and perform and complete any work pursuant to the License Agreement (Rooftop Installations) in accordance with Article XII of the Lease and such License Agreement (Rooftop Installations). Unless and until Landlord and Tenant have executed such License Agreement (Rooftop Installations) or unless otherwise accompanied by Landlord, Tenant shall not have the right to access the roof of the Building. Further, Tenant shall not perform work on, or make any modifications to, the roof of the Building, without Landlord’s prior consent, unless expressly permitted by such License Agreement (Rooftop Installations).

XVII. LIABILITY OF LANDLORD

17.1Tenant’s Indemnification. Except as otherwise provided in this Section 17.1 and in Section 17.2 and subject to the waivers set forth in Section 15.5, Tenant will neither hold nor attempt to hold Landlord, its affiliates, their respective Agents or Mortgagee liable for, and Tenant will indemnify, hold harmless and defend (with counsel reasonably acceptable to Landlord) Landlord, its affiliates, their respective Agents and Mortgagee, from and against, any and all Claims to the extent incurred in connection with or arising from (i) the use or occupancy or manner of use or occupancy of the Premises, or the use of Common Areas, by Tenant or its Agents; (ii) any activity, work or thing done, permitted or suffered by Tenant or its Agents in or about the Premises or done by Tenant or its Agents in or about the Project; (iii) any acts, omissions or negligence of Tenant or its Agents in or about the Premises or the Project; (iv) any breach, violation or nonperformance by Tenant, or violation by Tenant’s Agents, of any term, covenant or provision of this Lease or any law, ordinance or governmental requirement of any kind; and (v) any injury or damage to the person, property or business of Tenant or its Agents, including, without limitation, to vehicles (or the contents thereof) of Tenant or Tenant’s Agent’s that are parked in the Parking Facilities, whether incurred in connection with the removal of any vehicles of Tenant or its Agents that are parked in violation of this Lease, the Rules and Regulations or otherwise. Notwithstanding the foregoing, Tenant’s indemnities and hold harmless agreements set forth in this Section 17.1 shall not apply to the extent that the Claim is caused by the negligence or willful misconduct of Landlord or Landlord’s Agents.

17.2Landlord’s Indemnification. Except as otherwise provided in this Section 17.2 and in Section 17.1 and except to the extent caused by the negligence or willful misconduct of Tenant or Tenant’s Agents, but subject to the waivers in Section 15.5, Landlord will neither hold nor attempt to hold Tenant, its Affiliated Entities, or their respective Agents liable for, and Landlord will indemnify, hold harmless and defend (with counsel reasonably acceptable to Tenant) Tenant, its Affiliated Entities or their respective Agents from and against, any and all Claims to the extent incurred in connection with or arising from (i) acts or omissions of Landlord or Landlord’s Agents with respect to the performance of Landlord’s maintenance, repair, restoration and replacement obligations under this Lease constituting negligence or willful misconduct of Landlord or Landlord’s Agents and (ii) any other acts or omissions of Landlord or Landlord’s Agents constituting gross negligence or willful misconduct of Landlord or Landlord’s Agents.

17.3Waiver and Release. Except to the extent caused by the gross negligence or willful misconduct of Landlord or its Agents, Tenant covenants and agrees that Landlord, its affiliates, their respective Agents and Mortgagee will not at any time or to any extent whatsoever be liable, responsible or in any way accountable for any loss, injury, death or damage (including consequential damages) to persons, property or Tenant's business occasioned by (i) any act or omission of Landlord, its affiliates, or their respective Agents; (ii) any acts or omissions, including theft, of or by any other tenant, occupant or visitor of the Project; (iii) any casualty, explosion, falling plaster or other masonry or glass, steam, gas, electricity, water or rain which may leak from any part of the Building or any other portion of the Project or from the pipes, appliances or plumbing works therein or from the roof, street or subsurface or from any other place, or resulting from dampness; or (iv) the parking of vehicles by Tenant or Tenant’s Agents in the Parking Facilities, including, without limitation, when incurred in connection with the removal of any vehicles of Tenant or its Agents that are parked in violation of this Lease or the Rules and Regulations or otherwise. Tenant agrees to give prompt notice to Landlord upon Tenant’s actual knowledge of the occurrence of any of the events set forth in this Section 17.3 or of defects in the Premises or the Building, or in the fixtures or equipment.

17.4Survival. The covenants, agreements and indemnification obligations under this Article XVII will survive the expiration or earlier termination of this Lease. Tenant’s and Landlord’s covenants, agreements and indemnification obligations are not intended to and will not relieve any insurance carrier of its obligations under policies required to be carried by Tenant or Landlord, respectively, pursuant to the provisions of this Lease.

XVIII. RULES AND REGULATIONS

Tenant and its Agents shall at all times abide by and observe the Rules and Regulations set forth in Exhibit C and any amendments thereto that may reasonably be promulgated in a nondiscriminatory manner from time to time by Landlord for the operation and maintenance of the Building, the Common Area and the Project and the Rules and Regulations shall be deemed to be covenants of this Lease to be performed and/or observed by Tenant. Nothing contained in this Lease shall be construed to impose upon Landlord any duty or obligation to enforce the Rules and Regulations, or the terms or provisions contained in any other lease, against any other tenant of the Project; provided, however, that Landlord agrees to apply the Rules and Regulations on a non-discriminatory basis with respect to Tenant and all other tenants of the Project. Landlord shall not be liable to Tenant for any violation by any party of the Rules and Regulations or the terms of any other Project lease. If there is any inconsistency between this Lease (other than Exhibit C) and the then current Rules and Regulations, this Lease shall govern.

XIX. DAMAGE; CONDEMNATION

19.1Damage to the Premises. If the Premises or the Building shall be damaged by fire or other casualty, Landlord shall diligently and as soon as practicable after such damage occurs (taking into account the time necessary to effect a satisfactory settlement with any insurance company involved) repair such damage at the expense of Landlord; provided, however, that Landlord’s obligation to repair such damage shall not exceed the proceeds of insurance available to Landlord (reduced by any proceeds retained pursuant to the rights of Mortgagee). Notwithstanding the foregoing, if the Premises or the Building are damaged by fire or other casualty to such an extent that, in Landlord’s reasonable judgment, the damage cannot be substantially repaired within 270 days after the date of such damage, or if the Premises are substantially damaged during the last Lease Year, then: (i) Landlord may terminate this Lease as of the date of such damage by written notice to Tenant; or (ii) Tenant may terminate this Lease as of the date of such damage by written notice to Landlord within 10 business days after (a) Landlord’s delivery of a notice that the repairs cannot be made within such 270-day period (Landlord shall use reasonable efforts to deliver to Tenant such notice within 60 days of the date of such damage or casualty); or (b) the date of damage, in the event the damage occurs during the last Lease Year. Without limitation to the foregoing, if the Premises or the Building are damaged by fire or other casualty and Landlord’s reasonable estimate of the cost to repair such damage exceeds the proceeds of insurance available to Landlord (reduced by any proceeds retained pursuant to the rights of Mortgagee) or no such proceeds are available to Landlord, then Landlord shall not be obligated to incur expenses in excess of such insurance proceeds to repair such damage and may terminate this Lease as of the date of such damage by written notice to Tenant, which notice Landlord shall use reasonable efforts to deliver to Tenant within 60 days of the date of such damage or casualty. Rent shall be apportioned and paid to the date of such damage. Notwithstanding anything herein to the contrary, Landlord may only terminate this Lease under this Section 19.1, if Landlord is terminating all other leases within the Building for similarly situated tenants.

During the period that Tenant is deprived of the use of the damaged portion of the Premises, Basic Rent, the Amenity Building Rent and Tenant's Proportionate Share shall be reduced by the ratio that the Rentable Square Footage of the Premises damaged or untenantable bears to the total Rentable Square Footage of the Premises before such damage. All injury or damage to the Premises or the Project resulting from the gross negligence or willful misconduct of Tenant or its Agents shall be repaired by Landlord, at Tenant's expense, subject to the waivers in Section 15.5, and Rent shall not abate nor shall Tenant be entitled to terminate this Lease. Notwithstanding anything herein to the contrary, Landlord shall not be required to rebuild, replace, or repair any of the following: (i) Alterations; (ii) the Tenant Work; (iii) other Tenant improvements that Landlord has reasonably determined to be specialized Tenant improvements at the time of Landlord’s approval of the same; or (iv) personal property of Tenant. Tenant, as a material inducement to Landlord entering into this Lease, irrevocably waives and releases Tenant’s rights under California Civil Code Section 1932(2) and 1933(4) and agrees that in the event of any casualty, the terms of this Lease shall govern.

19.2Condemnation. If (a) 10% or more of the Building or (b) any portion of the Building or Land on which the Phase II Buildings are located shall be taken or condemned by any governmental authority for any public or quasi-public use or purpose (including, without limitation, sale under threat of such a taking), and (i) Tenant will no longer have access to the Building or the Parking Facilities or (ii) the Parking Facilities will no longer have sufficient parking spaces to comply with applicable zoning codes (each a, “Material Taking”), then Landlord or Tenant shall have the right to terminate this Lease by delivering written notice of such termination to the other party, in which event the Term shall cease and terminate as of the date when title vests in such governmental or quasi-governmental authority, and Rent shall be prorated to the date when title vests in such governmental or quasi-governmental authority; provided that, if Landlord terminates this Lease in connection with a Material Taking, then Landlord shall terminate all other similarly situated leases in the Building. If a portion of the Building or the Land is taken or condemned by any governmental or quasi-governmental authority for any public or quasi-public use or purpose (including, without limitation, sale under threat of such a taking), but such taking does not result in a Material Taking, Basic Rent, the Amenity Building Rent and Tenant’s Proportionate Share shall be reduced by the ratio that the Rentable Square Footage of the portion of the Premises so taken bears to the Rentable Square Footage of the Premises before such taking, effective as of the date when title vests in such governmental or quasi-governmental authority, and this Lease shall otherwise continue in full force and effect. Tenant shall have no claim against Landlord (or otherwise) as a result of such taking, and Tenant hereby agrees to make no claim against the condemning authority for any portion of the amount that may be awarded as compensation or damages as a result of such taking; provided, however, that Tenant may, to the extent allowed by law, claim an award for moving expenses and for the taking of any of Tenant's property (other than its leasehold interest in the Premises) which does not, under the terms of this Lease, become the property of Landlord at the termination hereof, as long as such claim is separate and distinct from any claim of Landlord and does not diminish Landlord's award. Tenant hereby assigns to Landlord any right and interest it may have in any award for its leasehold interest in the Premises. This Section 19.2 shall be Tenant’s sole and exclusive remedy in the event of a taking or condemnation. Tenant hereby waives the benefit of California Code of Civil Procedure Section 1265.130.

XX. DEFAULT

20.1Events of Default. Each of the following shall constitute an Event of Default: (i) Tenant fails to pay Rent within five (5) business days after notice from Landlord; provided that no such notice shall be required if at least two such notices shall have been given during the previous 12 months; (ii) Tenant fails to observe or perform any other term, condition or covenant herein binding upon or obligating Tenant within thirty (30) days after notice from Landlord; provided, however, that if such failure cannot reasonably be cured within said 30-day period, then such time period shall be extended provided Tenant has commenced to cure the default within the 30-day period and diligently pursues such cure to completion (notwithstanding the foregoing, if Landlord provides Tenant with notice of Tenant’s failure to observe or perform any term, condition or covenant under this Subsection (ii) on three or more occasions during any 12 month period, then Tenant’s subsequent violation of the same term, condition or covenant shall, at Landlord’s option, be deemed an Event of Default immediately upon the occurrence of such failure, regardless of whether Landlord provides Tenant notice, or Tenant has commenced the cure of the same); (iii) Tenant fails to pay Rent when due and abandons or vacates the Premises or Tenant fails to pay Rent when due and fails to take occupancy of the Premises within 180 days after the Commencement Date; (iv) Tenant fails to execute and return an SNDA (as defined in Article XXI) or estoppel within the time periods provided for in Article XXI or Section 24.4 and such failure continues after the expiration of five (5) business days after Landlord has delivered to Tenant notice stating in bold letters in the re: line that “THIS IS A NOTICE OF DEFAULT RELATING TO TENANT’S FAILURE TO RETURN A DOCUMENT PURSUANT TO TENANT’S LEASE AT 6220 AMERICA CENTER DRIVE, SAN JOSE CALIFORNIA”; (v) Tenant or any Guarantor makes or consents to a general assignment for the benefit of creditors or a common law composition of creditors, or a receiver of the Premises for all or substantially all of Tenant's or Guarantor's assets is appointed; (vi) Tenant or Guarantor hereafter files a voluntary petition in any bankruptcy or insolvency proceeding, or an involuntary petition in any bankruptcy or insolvency proceeding is filed against Tenant or Guarantor and is not discharged by Tenant or Guarantor within 60 days; or (vii) Tenant fails to promptly remedy or discontinue any hazardous conditions which Tenant has created or permitted in violation of law or of this Lease. Any such notices required under this Section 20.1 shall be in satisfaction of, and not in addition to, any notice required under Sections 1161(2) or (3), as the case may be, of the California Code of Civil Procedure. Any notice periods provided for under this Section 20.1 shall run concurrently with any statutory notice periods and any notice given hereunder may be given simultaneously with or incorporated into any such statutory notice.

20.2Landlord's Remedies. Upon the occurrence of an Event of Default, Landlord, at its option, without further notice or demand to Tenant, may, in addition to all other rights and remedies provided in this Lease, at law or in equity, elect one or more of the following remedies:

(a)Terminate this Lease, in which event Tenant shall immediately surrender possession of the Premises to Landlord, and Landlord shall have all the rights and remedies of a landlord provided by California Civil Code Section 1951.2, and in addition to any other rights and remedies Landlord may have, Landlord shall be entitled to recover from Tenant:

(i)the worth at the time of award of the unpaid Rent which had been earned at the time of 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 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, including, but not limited to, the costs and expenses (including reasonable attorneys' fees, whether in-house or outside counsel) of recovering possession of the Premises, expenses of reletting, including necessary repair, renovation and alteration of the Premises and brokerage commissions, and any other reasonable costs and expenses.

As used in Sections 20.2(a)(i) and (ii) above, the “worth at the time of award” is computed by allowing interest at the Default Rate.

(b)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 right to sublet or assign, subject only to reasonable limitations); provided that, Landlord acknowledges that the intent under this Lease is that “breach” in the foregoing means an Event of Default. Accordingly, Tenant acknowledges that in the event Tenant has committed an Event of Default under this Lease and abandoned the Premises, this Lease may, at Landlord’s election, continue in effect for so long as Landlord does not terminate Tenant's right to possession, and Landlord may enforce all its rights and remedies under this Lease, including the right to recover the Rent as it becomes due under this Lease. Without limiting the generality of California Civil Code Section 1951.4(c), acts of maintenance or preservation or efforts to relet the Premises, or the appointment of a receiver upon initiative of Landlord to protect Landlord's interest under this Lease shall not constitute a termination of Tenant's right to possession.

(c)Even though Landlord may have re-entered the Premises as provided in clause (b) above, Landlord may thereafter elect to terminate this Lease and all of the rights of Tenant in or to the Premises.

(d)Landlord may cure the Event of Default for the account of Tenant, and in such event Tenant shall pay Landlord within 30 days after receipt of Landlord’s invoice or statement as Additional Rent all actual costs and expenses incurred by Landlord in connection therewith, including reasonable consultants’ and attorneys’ fees and costs, together with an administrative charge equal to ten percent (10%) of such costs. If Tenant reasonably requests additional documentation or information regarding the charges set forth in such invoice or statement, then Landlord shall promptly provide such documentation or information (which may be provided by email) as Landlord reasonably determines appropriate to substantiate such charges.

(e)Landlord may pursue injunctive relief, and/or recovery of damages, without terminating this Lease.

20.3Mitigation of Damages. Notwithstanding the foregoing, to the extent (but no further) Landlord is required by applicable law to mitigate damages, or is required by law to use efforts to do so, Tenant agrees that if Landlord markets the Premises in a manner substantially similar to the manner in which Landlord and its affiliates market other space in the Project, then Landlord shall be deemed to have used commercially reasonable efforts to mitigate damages. Tenant shall continue to be liable for all Rent (whether accruing prior to, on or after the date of termination of this Lease or Tenant’s right of possession and/or pursuant to the holdover provisions of Section 22.2 below) and Damages, except to the extent that Tenant pleads and proves by clear and convincing evidence that Landlord fails to exercise commercially reasonable efforts to mitigate damages to the extent required under this Section 20.3 and that Landlord’s failure caused an avoidable increase in Landlord’s damages for unpaid Rent. Without limitation to the foregoing, Landlord shall not be deemed to have failed to mitigate damages, or to have failed to use efforts required by law to do so, because: (i) Landlord leases other space in the Project which is vacant prior to re-letting the Premises; (ii) Landlord refuses to relet the Premises to any Related Entity of Tenant, or any principal of Tenant, or any Related Entity of such principal; (iii) Landlord refuses to relet the Premises to any person or entity whose creditworthiness is not acceptable to Landlord in the exercise of its reasonable discretion; (iv) Landlord refuses to relet the Premises to any person or entity because the use proposed to be made of the Premises by such prospective tenant is not general office use of a type and nature consistent with that of the other tenants in the portions of the Project leased or held for lease for general office purposes as of the date Tenant defaults under this Lease (by way of illustration, but not limitation, call center or other high-density use, government offices, consular offices, doctor’s offices or medical or dental clinics or laboratories, or schools would not be uses consistent with that of other tenants in the Project), or such use would, in Landlord’s reasonable judgment, impose unreasonable or excessive demands upon the Building systems, equipment or facilities; (v) Landlord refuses to relet the Premises to any person or entity, or any affiliate of such person or entity, who has been engaged in litigation with Landlord or any of its affiliates; (vi) Landlord refuses to relet the Premises because the tenant or the terms and provisions of the proposed lease are not approved by the holders of any liens or security interests in the Building, or would cause Landlord to be in default of, or to be unable to perform any of its covenants or obligations under, any agreements between Landlord and any third party; (vii) Landlord refuses to relet the Premises because the proposed tenant is unwilling to execute and deliver Landlord’s standard lease form, with such commercially reasonable modifications acceptable to Landlord, or such tenant requires improvements to the Premises to be paid at Landlord’s cost and expense; (viii) Landlord refuses to relet the Premises to a person or entity whose character or reputation, or the nature of such prospective tenant’s business, would not be acceptable to Landlord in its reasonable discretion; (ix) Landlord refuses to expend any material sums of money to market the Premises in excess of the sums Landlord typically expends in connection with the marketing of other space in the Project. As used in this Section 20.3, an “affiliate” means a person or entity that controls, is controlled by, or is under common control with another person or entity.

20.4No Waiver. If Landlord shall institute proceedings against Tenant and a compromise or settlement thereof shall be made, the same shall not constitute a waiver of any other covenant, condition or agreement herein contained, nor of any of Landlord's rights hereunder. No waiver by Landlord of any breach shall operate as a waiver of such covenant, condition or agreement itself, or of any subsequent breach thereof. No payment of Rent by Tenant or acceptance of Rent by Landlord shall operate as a waiver of any breach or default by Tenant under this Lease. No payment by Tenant or receipt by Landlord of a lesser amount than the monthly installment of Rent herein stipulated shall be deemed to be other than a payment on account of the earliest unpaid Rent, nor shall any endorsement or statement on any check or communication accompanying a check for the payment of Rent be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such Rent or to pursue any other remedy provided in this Lease. No act, omission, reletting or re-entry by Landlord, and no acceptance by Landlord of keys from Tenant, shall be considered an acceptance of a surrender of this Lease, shall be construed as an actual or constructive eviction of Tenant, or an election on the part of Landlord to terminate this Lease unless a written notice of such intention is given to Tenant by Landlord.

20.5Late Payment. If Tenant fails to pay any Rent within five days after such Rent becomes due and payable, Tenant shall pay to Landlord without notice a late charge of five percent (5%) of the amount of such overdue Rent; provided, however, with respect to the first late payment in a 12-month period, Tenant will not be obligated to pay such late charge, unless Tenant fails to remedy such failure within five (5) days after notice from Landlord of such late payment. Such late charge shall be deemed Rent and shall be due and payable within two business days after written demand from Landlord.

20.6Waiver of Redemption. Tenant hereby waives, for itself and all persons claiming by and under Tenant, all rights and privileges which it might have under any present or future law to redeem the Premises or to continue this Lease after being dispossessed or ejected from the Premises.

20.7Intentionally Omitted.

20.8Default by Landlord. If Landlord fails to observe or perform any term, condition or covenant herein binding upon or obligating Landlord pursuant to this Lease, then a “Default” shall exist if such failure continues for thirty (30) days after the receipt by Landlord of written notice from Tenant specifying in detail Landlord’s alleged failure to so observe or perform; provided, however, that if such failure cannot be cured within said 30-day period, then Landlord shall not be in Default under this Lease if it commences such observance or performance within such thirty (30) day period and thereafter diligently pursues the same to completion within 180 days after the initial 30-day cure period. Tenant hereby covenants that, prior to the exercise of any remedies for a Default, Tenant will give notice and an opportunity to cure to any Mortgagee of which Tenant has been given notice and as otherwise required under any applicable SNDA.

XXI. MORTGAGES

Contemporaneously with the execution of this Lease, Tenant and Landlord shall execute and acknowledge, and Landlord shall exercise commercially reasonable efforts to obtain from the existing Mortgagee (as defined in this Article XXI), an SNDA on the existing Mortgagee's form attached as Exhibit J and incorporated herein (“Existing Mortgage SNDA”). Subject to the terms of a fully executed SNDA, this Lease is subject and subordinate to any future ground or underlying leases (each a “Ground Lease”) and to any mortgage, deed of trust, security interest, or title retention interest now or hereafter affecting the Land, Building or Project (each a “Mortgage”) and to all renewals, modifications, consolidations, replacements and extensions thereof. This subordination shall be self-operative; however, in confirmation thereof, Tenant shall, within 10 business days of receipt thereof, execute any commercially reasonable instrument (“SNDA”) that Landlord, any ground lessor under a Ground Lease (“Ground Lessor”) or any holder of any note or obligation secured by a Mortgage (“Mortgagee”) may request confirming such subordination or Tenant’s attornment to such Ground Lessor or purchaser of Landlord’s interest under this Lease, as applicable, and providing, among other things, that so long as there is no Event of Default hereunder, Tenant’s use and occupancy of the Premises and its rights under this Lease shall not be disturbed or affected following, as applicable, the termination of such Ground Lease or by any foreclosure or other action (or by the delivery or acceptance of a deed or other conveyance or transfer in lieu thereof) which may be instituted or undertaken in order to enforce any right or remedy available under the Mortgage. Notwithstanding the foregoing, before any foreclosure sale under a Mortgage or termination of a Ground Lease, subject to the terms of any applicable SNDA, the Mortgagee or Ground Lessor, as applicable, shall have the right to subordinate the Mortgage or Ground Lease, as applicable, to this Lease, in which case, in the event of such foreclosure or termination, this Lease may continue in full force and effect and Tenant shall attorn to and recognize as its landlord, as applicable, the Ground Lessor or the purchaser at foreclosure of Landlord’s interest under this Lease.

XXII. SURRENDER; HOLDING OVER

22.1Surrender of the Premises. Tenant shall peaceably surrender the Premises to Landlord on the Expiration Date or earlier termination of this Lease, in broom-clean condition and in as good condition as when Tenant took possession, including, without limitation, the repair of any damage to the Premises caused by the removal of any of Tenant's personal property, Alterations, Rooftop Installations or trade fixtures from the Premises, except for reasonable wear and tear and loss by fire or other casualty and condemnation and any Alterations that Tenant is not required to remove pursuant to Section 12.3. All trade fixtures, equipment, furniture, inventory, effects and Alterations (which are required to be removed pursuant to Section 12.3) left on or in the Premises or the Project after the Expiration Date or earlier termination of this Lease will be deemed conclusively to have been abandoned and may be appropriated, removed, sold, stored, destroyed or otherwise disposed of by Landlord without notice to Tenant or any other person and without obligation to account for them; and Tenant will pay Landlord within 30 days of Landlord’s invoice or statement for all actual expenses incurred in connection with the same, including, but not limited to, the costs of repairing any damage to the Premises or the Project caused by the removal of such property. If Tenant reasonably requests additional documentation or information regarding the charges set forth in such invoice or statement, then Landlord shall promptly provide such documentation or information (which may be provided by email) as Landlord reasonably determines appropriate to substantiate such charges. Tenant's obligation to observe and perform this covenant will survive the expiration or other termination of this Lease.

22.2Holding Over. In the event that Tenant shall not immediately surrender the Premises to Landlord on the Expiration Date or earlier termination of this Lease, including removing all trade fixtures, equipment, furniture, inventory, effects and Alterations, which are required to be removed pursuant to Section 12.3, from the Premises, Tenant shall be deemed to be a tenant-at-will pursuant to the terms and provisions of this Lease, except the daily Basic Rent shall be 150% of the daily Basic Rent in effect on the Expiration Date or earlier termination of this Lease (computed on the basis of a 30 day month) for the first 60 days of such holdover period and, thereafter, twice the daily Basic Rent in effect on the Expiration Date or earlier termination of this Lease (computed on the basis of a 30 day month). Notwithstanding the foregoing, if Tenant shall hold over after the Expiration Date or earlier termination of this Lease, and Landlord shall desire to regain possession of the Premises, then Landlord may forthwith re-enter and take possession of the Premises without process, or by any legal process provided under applicable state law. If Landlord is unable to deliver possession of the Premises to a new tenant, or to perform improvements for a new tenant, as a result of Tenant’s holdover for more than 60 days, Tenant shall be liable to Landlord for all damages, including, without limitation, special or consequential damages, that Landlord suffers from the holdover, including, without limitation, as the result of any claims against Landlord brought by the new tenant.

XXIII. QUIET ENJOYMENT

Landlord covenants that if Tenant shall pay Rent and perform all of the terms and conditions of this Lease to be performed by Tenant within the applicable notice and cure periods, Tenant shall during the Term peaceably and quietly occupy and enjoy possession of the Premises without molestation or hindrance by Landlord or any party claiming through or under Landlord, subject to the provisions of this Lease, any Mortgage to which this Lease is subordinate, the Declaration, the Phase II Easement Agreement, the Sports Park Easement Agreement and any other applicable recorded easement agreements, covenants, conditions and restrictions. If any amendments to the Declaration, Phase II Easement Agreement or Sports Park Easement Agreement are adopted in accordance with the terms thereof, then Landlord shall promptly deliver to Tenant a copy of any such amendments after Landlord receives a recorded copy of such of amendment or is otherwise aware that such amendment has been recorded.

XXIV. MISCELLANEOUS

24.1No Representations by Landlord. Tenant acknowledges that neither Landlord nor its Agents nor any broker has made any representation or promise with respect to the Premises, the Project, the Land or the Common Area, except as expressly set forth in this Lease, and no rights, privileges, easements or licenses are acquired by Tenant except as expressly set forth in this Lease.

24.2No Partnership. Nothing contained in this Lease shall be deemed or construed to create a partnership or joint venture of or between Landlord and Tenant, or to create any other relationship between Landlord and Tenant other than that of landlord and tenant.

24.3Brokers. Landlord recognizes Broker(s) as the sole broker(s) procuring this Lease and shall pay Broker(s) a commission therefor pursuant to a separate agreement between Broker(s) and Landlord. Landlord and Tenant each represents and warrants to the other that it has dealt with no broker, agent, finder or other person other than Broker(s) relating to this Lease. Landlord shall indemnify and hold Tenant harmless, and Tenant shall indemnify and hold Landlord harmless, from and against any and all loss, costs, damages or expenses (including, without limitation, all attorneys’ fees and disbursements) by reason of any claim of liability to or from any broker or person arising from or out of any breach of the indemnitor's representation and warranty.

24.4Estoppel Certificate. (a) Tenant shall, without charge, at any time and from time to time, within 10 business days after request therefor by Landlord, execute, acknowledge and deliver to Landlord a written estoppel certificate certifying, as of the date of such estoppel certificate, the following: (i) that this Lease is unmodified and in full force and effect (or if modified, that this Lease is in full force and effect as modified and setting forth such modifications); (ii) that the Term has commenced (and setting forth the Commencement Date and Expiration Date); (iii) that Tenant is presently occupying the Premises; (iv) the amounts of Basic Rent and Additional Rent currently due and payable by Tenant; (v) that any Tenant Work or Alterations required by this Lease to have been made by Landlord have been made to the satisfaction of Tenant, except as otherwise provided in the estoppel certificate; (vi) that Tenant has no knowledge of any existing set-offs, charges, liens, claims or defenses against the enforcement of any right hereunder, including, without limitation, Basic Rent or Additional Rent (or, if alleged, specifying the same in detail); (vii) that no Basic Rent (except the first installment thereof) has been paid more than 30 days in advance of its due date; (viii) that Tenant has no knowledge of any uncured default by Landlord of its obligations under this Lease (or, if Tenant has such knowledge, specifying the same in detail); (ix) that Tenant is not in default; (x) that the address to which notices to Tenant should be sent is as set forth in this Lease (or, if not, specifying the correct address); and (xi) any other certifications reasonably requested by Landlord. In the event Tenant fails to deliver to Landlord an estoppel certificate as required by this Section within the specified 10-business day period, Tenant shall be conclusively presumed to have adopted and affirmed the contents of the form of estoppel certificate delivered to Tenant by Landlord, and any prospective mortgagee, purchaser, or other third-party may rely on the accuracy of such estoppel certificate as if executed and affirmed by Tenant. Landlord and Tenant intend that any statement delivered pursuant to this Section 24.4(a) may be relied upon by Landlord, and any owner, prospective mortgagee or prospective purchaser in the Project.

(b)Landlord agrees at any time and from time to time, but not more than once in a 12-month period, upon not less than fifteen (15) business days’ prior written notice from Tenant, in connection with any sale, financing, assignment or other material transaction of Tenant, to execute and deliver to Tenant, or Tenant’s designee lender, purchaser or assignee (unless Landlord has refused consent pursuant to Section 10.1), an estoppel certificate certifying, as of the date of such estoppel certificate, the following, to the extent true and accurate: (i) that this Lease is unmodified and in full force and effect (or if modified, that this Lease is in full force and effect as modified and setting forth such modifications); (ii) the date to which Rent has been paid, (ii) that the Term has commenced (and setting forth the Commencement Date and Expiration Date), (iii) whether, to Landlord’s knowledge, there are any current Defaults by Landlord or defaults by Tenant under this Lease (and specifying such Defaults by Landlord and defaults by Tenant, if any, as applicable), and (iv) any other similar certifications reasonably requested by Tenant, its lenders, any purchaser of Tenant or any proposed assignee of the Lease (unless Landlord has refused consent pursuant to Section 10.1). Landlord and Tenant intend that any statement delivered pursuant to this Section 24.4(b) may be relied upon by Tenant, its lenders or any such prospective lender, purchaser or assignee.

24.5Waiver of Jury Trial. To the fullest extent permitted by law, Landlord and Tenant each waive trial by jury in connection with proceedings or counterclaims brought by either of the parties against the other with respect to any matter whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant hereunder or Tenant's use or occupancy of the Premises.

24.6Notices. All notices, demands and requests which may be given or which are required to be given by either party to the other, shall be in writing and shall be deemed effective either: (i) on the date personally delivered to the address set forth in Article I, as evidenced by written receipt for the same, whether or not actually received by the person to whom addressed; (ii) on the third business day after being sent, by certified or registered mail, return receipt requested, postage prepaid, addressed to the intended recipient at the address specified Article I; (iii) on the next succeeding business day after being deposited into the custody of a nationally recognized overnight delivery service such as Federal Express, addressed to such party at the address specified Article I; (iv) on the date delivered by facsimile to the respective numbers specified in Article I, provided confirmation of facsimile is received; or (v) on the date an electronic mail message with a pdf copy of the signed notice is delivered to the e-mail addresses specified in Article I; provided, however, that in the case of any notice delivered in accordance with items (iv) or (v) above, any such facsimile notice or e-mail notice shall be sent by one of the other permitted methods of providing notice (other than facsimile or e-mail notice) on the next succeeding business day (provided that any notices of default sent by in accordance with items (iv) and (v) shall not be deemed effective until the date deemed effective by delivery using one of the other permitted methods). Landlord and Tenant may from time to time by written notice to the other designate another address for receipt of future notices.

24.7Invalidity of Particular Provisions. If any provisions of this Lease or the application thereof to any person or circumstances shall to any extent be invalid or unenforceable, the remainder of this Lease, or the application of such provision to persons or circumstances other than those to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall be valid and be enforced to the full extent permitted by law.

24.8Gender and Number. All terms and words used in this Lease, regardless of the number or gender in which they are used, shall be deemed to include any other number or gender as the context may require.

24.9Benefit and Burden. Subject to the provisions of Article X and except as otherwise expressly provided, the provisions of this Lease shall be binding upon, and shall inure to the benefit of, the parties hereto and each of their respective representatives, heirs, successors and assigns.

24.10Entire Agreement. This Lease (which includes the Exhibits attached hereto) contains and embodies the entire agreement of the parties hereto, and no representations, inducements or agreements, oral or otherwise, between the parties not contained in this Lease shall be of any force or effect. This Lease (other than the Rules and Regulations, which may be changed from time to time as provided herein) may not be modified, changed or terminated in whole or in part in any manner other than by an agreement in writing duly signed by Landlord and Tenant.

24.11Authority. If Tenant signs as a corporation, limited liability company or partnership, the Tenant hereby represents and warrants that Tenant is duly formed, validly existing, in good standing (with respect to a corporation or limited liability company), and qualified to do business in the state in which the Project is located, that Tenant has full power and authority to enter into this Lease and that the person executing this Lease on behalf of Tenant is authorized to execute this Lease on behalf of Tenant. Landlord represents and warrants that Landlord is a duly formed, validly existing, in good standing limited liability company that is qualified to do business in the state in which the Project is located, that Landlord has full power and authority to enter into this Lease and that the person executing this Lease on behalf of Landlord is authorized to execute this Lease on behalf of Landlord. Tenant further agrees that it shall provide Landlord with a secretary's certificate from the secretary of said corporation or limited liability company, if applicable, certifying as to the above in the form of Exhibit D attached hereto and made a part hereof, or in a form that is approved by Landlord, which approval shall not be unreasonable withheld, conditioned or delayed, or, if Tenant is a partnership, it shall provide Landlord with a partnership authorization certifying as to the above in a form acceptable to Landlord. At the request of Landlord, Tenant shall provide to Landlord copies of Tenant’s organizational documents and such incumbency certificate certified by an authorized representative of Tenant as being true, correct, and complete, as may be reasonably required to demonstrate that this Lease is binding upon and enforceable against Tenant.

24.12Attorneys' Fees. If either Landlord or Tenant commences any legal action or proceeding against the other party (including, without limitation, litigation or arbitration) arising out of or in connection with this Lease, the Premises, or the Project (including, without limitation (a) the enforcement or interpretation of either party’s rights or obligations under this Lease (whether in contract, tort, or both) or (b) the declaration of any rights or obligations under this Lease), the prevailing party shall be entitled to recover from the losing party reasonable attorneys’ fees, together with any costs and expenses, incurred in any such action or proceeding, including any attorneys’ fees, costs, and expenses incurred on collection and on appeal.

24.13Interpretation. This Lease is governed by the laws of the state in which the Project is located. All references in this Lease to specific sections of California law shall be deemed to mean and refer to any amendment thereto, and to any renumbered counterpart or superseding successor thereto. Furthermore, this Lease shall not be construed against either party more or less favorably by reason of authorship or origin of language.

24.14Limitation of Liability. None of Landlord’s shareholders, partners, members, managers, directors, officers or employees, whether disclosed or undisclosed, shall have any personal liability under any provision of this Lease. None of Tenant’s shareholders, partners, members, managers, directors, officers or employees, whether disclosed or undisclosed, shall have any personal liability under any provision of this Lease. If Landlord defaults in the performance of any of its obligations hereunder or otherwise becomes liable, responsible or in any way accountable to Tenant for any loss, injury, death or damage (including consequential damages) in connection with this Lease, Tenant shall look solely to Landlord’s equity, interest and rights in the Building and the parcel of Land on which the Building is located for satisfaction of Tenant’s remedies on account thereof, including without limitation, subject to the rights of any Mortgagee, Landlord’s interest in the rents and other income of the Building and, sale proceeds, and any insurance and condemnation proceeds payable to Landlord. Before filing suit for an alleged default by Landlord, Tenant shall give Landlord and any Mortgagee(s) of whom Tenant has been notified, notice and a reasonable time to cure any alleged default. Landlord or any successor owner shall have the right to transfer and assign to a third party, in whole or part, all of its rights and obligations hereunder and in the Building, the Project or the Land, or any portion thereof, and in such event, all liabilities and obligations on the part of the original Landlord, or such successor owner, under this Lease occurring thereafter, shall terminate as of the day of such sale, and thereupon all such liabilities and obligations shall be binding on the new owner. In the event of such transfer or assignment, Landlord shall transfer to such transferee or assignee the balance of the Security Deposit, if any, remaining after lawful deductions and, in accordance with California Civil Code Section 1950.7, after notice to Tenant, all liability with respect to the Security Deposit shall be binding on the new owner and the transferring Landlord shall thereupon be relieved of all liability with respect to the Security Deposit.

24.15Time of the Essence. Time is of the essence as to Tenant's and Landlord’s obligations contained in this Lease.

24.16Force Majeure. Landlord and Tenant (except with respect to the payment of Rent or other amounts due hereunder) shall not be chargeable with, liable for, or responsible to the other for anything or in any amount for any failure to perform or delay caused by: fire; earthquake; explosion; flood; hurricane; the elements; acts of God or the public enemy; actions, restrictions, governmental authorities (permitting or inspection), governmental regulation of the sale of materials or supplies or the transportation thereof; war; invasion; insurrection; rebellion; riots; strikes or lockouts, inability to obtain necessary materials, goods, equipment, services, utilities or labor; or any other cause whether similar or dissimilar to the foregoing which is beyond the reasonable control of such party (collectively, “Events of Force Majeure”); and any such failure or delay due to said causes or any of them shall not be deemed to be a breach of or default in the performance of this Lease.

24.17Headings. Captions and headings are for convenience of reference only.

24.18Memorandum of Lease. Neither Landlord nor Tenant shall record this Lease or a memorandum thereof without the written consent of the other.

24.19Intentionally Omitted.

24.20Financial Reports. Prior to the execution of this Lease by Tenant and thereafter within 15 days after Landlord's request, but no more than once per Lease Year, unless an uncured Event of Default exists or such request is in connection with a sale or financing of the Project, in which event no such limitation shall apply, Tenant will furnish Tenant's and Guarantor’s most recent audited financial statements (including any notes to them) to Landlord, or, if no such audited statements have been prepared, such other financial statements (and notes to them) as may have been prepared by an independent certified public accountant, or, failing those, Tenant's and Guarantor’s internally prepared financial statements, certified by Tenant and Guarantor, as applicable. If requested by Tenant, Landlord shall execute a confidentiality agreement confirming that Landlord will keep confidential Tenant’s confidential and proprietary financial information provided to Landlord in accordance with this Section 24.20 in accordance with terms substantially consistent with the Non-Disclosure Agreement dated effective August 12, 2019, between Landlord and Tenant, a copy of which is attached as Exhibit K. Notwithstanding the foregoing, if Tenant is a corporation with shares traded on a public exchange and makes its financial statements available on line via the internet and provides Landlord with the then current website address and any other path information necessary for Landlord to access the same, then Tenant shall be deemed to have complied with all requirements of this Section 24.20.

24.21Landlord's Fees. Whenever Tenant requests Landlord to take any action or give any consent required or permitted under this Lease, Tenant will reimburse Landlord for all of Landlord’s actual costs incurred in reviewing the proposed action or consent, including, without limitation, attorneys’, engineers’ or architects’ fees, within 30 days after Landlord’s delivery to Tenant of an invoice or statement of such costs. If Tenant reasonably requests additional documentation or information regarding the charges set forth in such invoice or statement, then Landlord shall promptly provide such documentation or information (which may be provided by email) as Landlord reasonably determines appropriate to substantiate such charges. Further, if requested by Tenant in connection with the request for action or consent, Landlord shall provide Tenant with an estimate for any actual out-of-pocket costs to be incurred by Landlord in reviewing a proposed action or consent requested by Tenant. In the event Tenant is willing to pay the estimate amount, Tenant shall notify Landlord, whereupon Landlord shall proceed to review the proposed action or consent. In no event shall Tenant be obligated to pay more than the estimate amount without Tenant’s prior consent thereto. Tenant acknowledges that Landlord shall not have any obligation to proceed with the evaluation of any request until Tenant has approved the estimate amount. Notwithstanding the foregoing, Landlord’s fees with respect to subleases, assignments and transfers shall be governed by Article X, Landlord’s fees with respect to Alterations shall be governed by Article XII, and Landlord’s fees with respect to Tenant Work shall be governed by the Work Agreement. In no event shall Landlord be entitled to duplicative fees with respect to any costs related to or incurred with respect to the same action or the same consent required or permitted under this Lease.

24.22Effectiveness. The furnishing of the form of this Lease shall not constitute an offer and this Lease shall become effective upon and only upon its execution by and delivery to each party hereto.

24.23Light, Air or View Rights. Any diminution or shutting off of light, air or view by any structure which may be erected on lands adjacent to or in the vicinity of the Building and Project shall not affect this Lease, abate any payment owed by Tenant hereunder or otherwise impose any liability on Landlord.

24.24Special Damages. Under no circumstances whatsoever shall Landlord ever be liable hereunder for punitive damages, consequential damages or special damages. Except to the extent of Tenant’s liability for consequential damages and special damages pursuant to Section 22.2, under no circumstances whatsoever shall Tenant ever be liable hereunder for consequential, special or punitive damages.

24.25Counterparts. This Lease may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. This Lease may be executed by a party’s signature transmitted by facsimile or e-mail, and copies of this Lease executed and delivered by means of faxed or e-mailed signatures shall have the same force and effect as copies hereof executed and delivered with original signatures. All parties hereto may rely upon faxed or e-mailed signatures as if such signatures were originals. All parties hereto agree that a faxed or e-mailed signature page may be introduced into evidence in any proceeding arising out of or related to this Lease as if it were an original signature page.

24.26Nondisclosure of Lease Terms. Tenant acknowledges and agrees that the terms of this Lease are confidential and constitute proprietary information of Landlord. Disclosure of the terms could adversely affect the ability of Landlord to negotiate other leases and impair Landlord’s relationship with other tenants. Without limitation to the foregoing, Tenant agrees that it, and its Agents shall not intentionally or voluntarily disclose the terms and conditions of this Lease to any publication or newspaper or any other tenant or apparent prospective tenant of the Building or the Project, without the prior written consent of Landlord, provided, however, that Tenant may disclose the terms to prospective subtenants or assignees under this Lease and to Tenant’s Related Entities, Ownership Transferees, accountants, attorneys, brokers, consultants, financial advisors, purchasers and Agents (collectively, “Representatives”) who need to know such terms, but only to the extent the foregoing agree not to disclose such terms and to comply with this Section 24.26. Notwithstanding the foregoing, if Tenant or any of its Representatives are required by applicable law (including any securities laws), a valid legal order or on the advice of its counsel to disclose any the terms and conditions of this Lease, Tenant and Tenant’s Representatives shall: (a) only disclose that portion of the terms and conditions of this Lease that, on the advice of its legal counsel, Tenant or Tenant’s Representatives are required to disclose; and (b) use reasonable efforts to ensure that the disclosed terms and conditions of this Lease are afforded confidential treatment.

24.27Joint and Several Obligations. If more than one person or entity executes this Lease as Tenant, their execution of this Lease will constitute their covenant and agreement that: (i) each of them is jointly and severally liable for the keeping, observing and performing of all of the terms, covenants, conditions, provisions and agreements of this Lease to be kept, observed and performed by Tenant; and (ii) the term “Tenant” as used in this Lease means and includes each of them jointly and severally. The act of or notice from, or the signature of any one or more of them, with respect to the tenancy of this Lease, including, but not limited to the exercise of any options hereunder, will be binding upon each and all of the persons executing this Lease as Tenant with the same force and effect as if each and all of them had so acted.

24.28Anti-Terrorism. Tenant represents and warrants to Tenant that as of the Date of Lease (i) neither Tenant nor any of its owners or affiliates currently are in violation of any laws relating to terrorism or money laundering (collectively, the “Anti-Terrorism Laws”), including without limitation Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and regulations of the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) related to Specially Designated Nationals and Blocked Persons (SDN’s OFAC Regulations), and/or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56) (the “USA Patriot Act”); (ii) neither Tenant nor any of its owners, affiliates, investors, officers, directors, employees, vendors, subcontractors or agents is a “Prohibited Person” which is defined as follows: (1) a person or entity owned or controlled by, affiliated with, or acting for or on behalf of, any person or entity that is identified as an SDN on the then-most current list published by OFAC at its official website, https://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx, or at any replacement website or other replacement official publication of such list, and (2) a person or entity who is identified as or affiliated with a person or entity designated as a terrorist, or associated with terrorism or money laundering pursuant to regulations promulgated in connection with the USA Patriot Act; and (iii) Tenant

has taken appropriate steps to understand its legal obligations under the Anti-Terrorism Laws and has implemented appropriate procedures to assure its continued compliance with such laws. Tenant covenants with Landlord that from and after the Date of Lease, to the best of Tenant’s knowledge (i) neither Tenant nor any of its owners or affiliates shall be at any time during the term hereof, in violation of the Anti-Terrorism Laws, including without limitation the USA Patriot Act; and (ii) neither Tenant nor any of its owners, affiliates, investors, officers, directors, employees, vendors, subcontractors or agents shall be during the term hereof a Prohibited Person. Landlord represents and warrants to Tenant that as of the Date of Lease (i) neither Landlord nor any of its owners or affiliates currently are in violation of any Anti-Terrorism Laws; (ii) neither Landlord nor any of its owners, affiliates, investors, officers, directors, employees, vendors, subcontractors or agents is a Prohibited Person; and (iii) Landlord has taken appropriate steps to understand its legal obligations under the Anti-Terrorism Laws and has implemented appropriate procedures to assure its continued compliance with such laws. Landlord covenants with Tenant that from and after the Date of Lease, to the best of Landlord’s knowledge (i) neither Landlord nor any of its owners or affiliates shall be at any time during the term hereof, in violation of any Anti-Terrorism Laws; and (ii) neither Landlord nor any of its owners, affiliates, investors, officers, directors, employees, vendors, subcontractors or agents shall be during the term hereof a Prohibited Persons.

24.29Green Initiatives. The parties agree it is in their mutual best interest that the Building and the Premises be operated and maintained in a manner that is environmentally responsible, fiscally prudent, and provides a safe and productive work environment. Accordingly, Tenant shall endeavor to conduct its operations in the Building and within the Premises to: (1) minimize to the extent reasonably feasible: (i) direct and indirect energy consumption and greenhouse gas emissions; (ii) water consumption; (iii) the amount of material entering the waste stream; and (iv) negative impacts upon the indoor air quality of the Building; and (2) permit the Building to achieve and maintain its LEED rating and an Energy Star label, to the extent applicable. Landlord shall endeavor to operate and maintain the Common Area to: minimize to the extent reasonably feasible: (i) direct and indirect energy consumption and greenhouse gas emissions; (ii) water consumption; (iii) the amount of material entering the waste stream; and (iv) negative impacts upon the indoor air quality of the Building. Tenant shall comply with all building energy benchmarking and other requirements imposed by applicable laws, statutes, ordinances and governmental rules, regulations or requirements, including regulations promulgated by the California Energy Commission in implementation of AB 802 and retain copies of its utility data, including, without limitation, Tenant’s utility bills and invoices pertaining to Tenant’s energy, water, and trash usage at the Premises during the Term. In addition, if requested by Landlord or a governmental entity having jurisdiction over the Premises, Tenant shall report to Landlord and such requesting entity the Tenant’s utility usage and such other related information as may be requested within the time required by the governmental entity or such other reasonable time frame as may be requested by Landlord or, at Landlord’s option, provide any written authorization, utility release forms or other documentation required for Landlord to request information regarding Tenant’s utility usage with respect to the Premises directly from the applicable utility company.

XXV. RENEWAL OPTION

25.1 Grant of Option and General Terms. Provided that (i) no material adverse change has occurred in Tenant’s financial condition, (ii) this Lease is in full force and effect, (iii) Bill.com, LLC, a Delaware limited liability company, its Related Entity pursuant to an assignment or sublease in accordance with Section 10.4 or an Ownership Transferee pursuant to a transfer in accordance with Section 10.5 is in possession of the entire Premises, and (iv) no Event of Default shall exist under this Lease, either on the date Tenant exercises its Renewal Option (as defined in this Section 25.1) or as of the effective date of the Renewal Term (as defined in this Section 25.1), or would exist but for the pendency of any cure periods provided under Section 20.1 herein (unless such Event of Default requires notice under Section 20.1 and Landlord has not delivered such notice to Tenant); Tenant shall have the option to extend the Term of this Lease with respect to the entire Premises for one (1) additional period (the “Renewal Option”) of seven (7) years (the “Renewal Term”). The Renewal Option shall be subject to all of the terms and conditions contained in the Lease except that (a) the Renewal Rent (as defined in Section 25.3) shall be at the then prevailing Market Rate (as defined in Section 25.3) on the commencement date of the Renewal Term; (b) Landlord shall have no obligation to improve the Premises or provide any improvement allowance (except as may be set forth in the Landlord’s Response (as defined in Section 25.2) or included as part of the Market Rate); and (c) there shall be no further option to extend the Term beyond the Renewal Term.

25.2 Determination of Market Rate. Tenant shall send Landlord a preliminary expression of Tenant’s willingness to renew this Lease no earlier than January 31, 2030, or later than April 30, 2030 (the “Renewal Notice”), together with financial statements meeting the requirements of Section 24.20. In the event Tenant timely provides Landlord with Tenant's Renewal Notice, Landlord shall notify Tenant (“Landlord's Response”), on or before July 31, 2030, of the Renewal Rent to be payable by Tenant during the Renewal Term. Tenant and Landlord shall negotiate in good faith to determine and mutually agree upon the Market Rate for the Renewal Term. If Landlord and Tenant are unable to agree upon the Market Rate for the Renewal Term, on or before August 31, 2030 (the “Negotiation Period”), as evidenced by an amendment to the Lease executed by both Landlord and Tenant and amending the Lease to provide for the extension of the Term for the Renewal Term, the Renewal Rent, any other terms set forth in Landlord’s Response to improve the Premises or provide any improvement allowance as contemplated in Section 25.1(b) and any other any other terms mutually agreed to by Landlord and Tenant, if applicable, then within 10 days after the last day of the Negotiation Period, Tenant may, by written notice to Landlord (the “Notice of Exercise”), irrevocably elect to exercise such Renewal Option. In order for Tenant to exercise such Renewal Option, Tenant shall send the Notice of Exercise to Landlord stating (i) that Tenant is irrevocably exercising its right to extend the Term pursuant to Article XXV; and (ii) Landlord and Tenant shall be irrevocably bound by the determination of Market Rate set forth hereinafter in this Section 25.2, and if applicable, Section 25.4. If Tenant shall fail to deliver the Notice of Exercise on or before 10 days after the last day of the Negotiation Period, then Tenant shall have waived any right to exercise the Renewal Option. In the event any date referenced in this Section 25.2 falls on a day other than a business day, such date shall be deemed to be the next following business day.

In the event Tenant timely delivers the Notice of Exercise to Landlord, Landlord and Tenant shall each simultaneously present to the other party their final determinations of the Market Rate for the Renewal Term (the “Final Offers”) within 15 days after the last day of the Negotiation Period. If the Market Rate as determined by the lower of the two (2) proposed Final Offers is not more than five percent (5%) below the higher, then the Market Rate shall be determined by averaging the two (2) Final Offers.

If the difference between the lower of the two (2) proposed Final Offers is more than five percent (5%) below the higher, then the Market Rate shall be determined by the procedure (“Baseball Arbitration”) set forth in Section 25.4.

25.3 Renewal Rent. The “Renewal Rent” for the Renewal Term shall be an amount equal to the prevailing Market Rate as determined in accordance with this Article XXV. As used in this Article XXV “Market Rate” shall mean the then prevailing market rate for triple net base rent for tenants of comparable quality for new and renewal leases, but excluding subleases and leases of spaces subject to another tenant’s expansion rights, (“Comparable Renewal Leases”) in similar vintage multi-story, multi-tenant steel frame, Class A office buildings of comparable size, age, use, location and quality in the Silicon Valley market area, taking into consideration all relevant factors, including, without limitation, the size of the Premises, the extent of the availability of space as large as the Premises in the marketplace, Tenant’s right to Building Signage and Building Monument Signage, rental abatement concessions and other concessions being granted in Comparable Renewal Leases, tenant improvements or allowances provided or to be provided for in Comparable Renewal Leases, whether a broker’s commission or finder’s fee is paid in Comparable Renewal Leases, the Amenities and the Amenity Building Rent and all other economic terms then customarily prevailing in such Comparable Renewal Leases in said marketplace.

25.4 Baseball Arbitration. For all purposes of this Lease, Baseball Arbitration shall follow the following procedures:

(a)Within 20 days after the deadline for Landlord and Tenant to present their respective Final Offers, Tenant and Landlord shall each select an arbitrator (“Tenant’s Arbitrator” and “Landlord’s Arbitrator”, respectively) who shall be a qualified and impartial person licensed in the State of California as an MAI appraiser with at least five (5) years of experience in appraising the type of matters for which they are called on to appraise hereunder in the Silicon Valley market area.

(b)Landlord’s Arbitrator and Tenant’s Arbitrator shall name a third arbitrator, similarly qualified, within 10 days after the appointment of Landlord’s Arbitrator and Tenant’s Arbitrator.

(c) Said third arbitrator shall, after due consideration of the factors to be taken into account under the definition of Market Rate set forth in Section 25.2 and hearing whatever evidence the arbitrator deems appropriate from Landlord, Tenant and others, and obtaining any other information the arbitrator deems necessary, in good faith, make its own determination of the Market Rate for the Premises as of the commencement of the Renewal Term (the “Arbitrator’s Initial Determination”) and thereafter select either Landlord’s Final Offer or the Tenant’s Final Offer, but no other, whichever is closest to the Arbitrator’s Initial Determination (the “Final Determination”), such determination to be made within 30 days after the appointment of the third arbitrator. The Arbitrator’s Initial Determination, Final Determination and the market information upon which such determinations are based shall be in writing and counterparts thereof shall be delivered to Landlord and Tenant within said 30-day period. The arbitrator shall have no right or ability to determine the Market Rate in any other manner. The Final Determination shall be binding upon the parties hereto. Within 10 days after the delivery of the Final Determination to Landlord and Tenant, Landlord and Tenant shall execute an amendment to the Lease amending the Lease to provide for the extension of the Term for the Renewal Term, and the Renewal Rent and any other terms set forth in Final Determination to improve the Premises or provide any improvement allowance as contemplated in Section 25.1(b).

(d)The costs and fees of the third arbitrator shall be paid by Landlord if the Final Determination shall be Tenant’s Final Offer or by Tenant if the Final Determination shall be Landlord’s Final Offer.

(e)If Tenant fails to appoint Tenant’s Arbitrator in the manner and within the time specified in Section 25.4, then the Market Rate for the Renewal Term shall be the Market Rate contained in the Landlord’s Final Offer. If Landlord fails to appoint Landlord’s Arbitrator in the manner and within the time specified in Section 25.4 then the Market Rate for the Renewal Term shall be the Market Rate contained in the Tenant’s Final Offer. If Tenant’s Arbitrator and Landlord’s Arbitrator fail to appoint the third arbitrator within the time and in the manner prescribed in Section 25.4, then Landlord and Tenant shall jointly and promptly apply to the local office of the American Arbitration Association for the appointment of the third arbitrator.

25.5 Personal Option. This Renewal Option is personal with respect to BILL.COM, LLC, a Delaware limited liability company, a Related Entity to whom this Lease is assigned in accordance with Section 10.4 or an Ownership Transferee pursuant to a transfer in accordance with Section 10.5. Any assignment of the Lease other than to a Related Entity in accordance with Section 10.4 or pursuant to a transfer to an Ownership Transferee in accordance with Section 10.5 shall automatically terminate BILL.COM, LLC, a Delaware limited liability company’s rights under this Article XXV. Any subletting of any portion of the Premises other than to a Related Entity in accordance with Section 10.4 shall automatically terminate BILL.COM, LLC, a Delaware limited liability company’s rights under this Article XXV, unless (a) such sublease is made in accordance with Section 10.1 and, together with any other subleases meeting the requirements of this Section 25.5(a)-(c), covers only portions of the Premises such that at least two (2) full floors of the Premises are not subject to any sublease (other than a sublease to a Related Entity made in accordance with Section 10.4), (b) at all times during the existence of such sublease(s), BILL.COM, a Delaware limited liability company, its Related Entity pursuant to an assignment or sublease made in accordance with Section 10.4 or its Ownership Transferee pursuant to a transfer made in accordance with Section 10.5 occupies at least two (2) full floors of the Building, and (c) the term of each such sublease(s) expires on or before, and the subtenant under each such sublease(s) no longer occupies any portion of the Premises from and after, the date of Tenant’s delivery of the Renewal Notice. Without limitation to the foregoing, Landlord shall have no obligation to deliver a Landlord’s Response or execute an amendment to this Lease pursuant to this Article XXV during any period in which any sublease of any portion of the Premises other than to a Related Entity in accordance with Section 10.4 is in effect. Time is of the essence with respect to the provisions of this Article XXV.

XXVI. RIGHT OF FIRST OFFERING

26.1General. If, at any time during the Term, any portion of the remainder of the first floor of the Building or the fifth or sixth floors of the Building (each a, and collectively, the “Right of First Offering Space”) becomes vacant and is not subject to any Senior Rights (as defined in Section 26.1.1), Landlord shall so notify Tenant (the “Right of First Offering Notice”), which Right of First Offering Notice shall contain the material economic terms on which Landlord is willing to lease the Right of First Offering Space to Tenant (including, without limitation, prevailing annual market rent, length of term, and Rentable Square Footage). Prevailing annual market rent for the Right of First Offering Space shall be an amount equal to the then prevailing market rate (“ROFO Market Rent”) for triple net base rent for tenants of comparable quality for new leases, but excluding subleases and leases of spaces subject to another tenant’s expansion rights, (“Comparable Leases”) in similar vintage multi-story, multi-tenant steel frame, Class A office buildings of comparable size, age, use, location and quality in the Silicon Valley market area, taking into consideration all relevant factors, including, but not limited to, the size of the Right of First Offering Space, the availability of space as large as the Right of First Offering Space in the marketplace, Tenant’s right to Building Signage and Building Monument Signage, the Amenities and the Amenity Building Rent, rental abatement concessions and other concessions being granted in Comparable Leases, tenant improvements or allowances provided or to be provided for in Comparable Leases, whether a broker’s commission or finder’s fee is paid in Comparable Leases, and all other economic terms then customarily prevailing in such Comparable Leases in said marketplace. Tenant shall then have a period of three (3) business days after the date of Landlord’s delivery of such Right of First Offering Notice during which to exercise its right (“Right of First Offering”) by delivering notice to Landlord (“ROFO Election Notice”), financial statements meeting the requirements of Section 24.20 and a Deposit (as defined in this Section 26.1) (provided Tenant shall have five (5) business days to provide the Deposit) electing to lease all of the Right of First Offering Space described in the Right of First Offering Notice (on the terms set forth therein) or deliver notice to Landlord refusing to lease the same. Failure of Tenant to deliver the ROFO Election Notice and financial statements within such three business-day period and the Deposit within five business days shall be deemed a refusal to exercise Tenant’s Right of First Offering to lease such Right of First Offering Space. If Tenant refuses, or is deemed to have refused, to lease such Right of First Offering Space pursuant to this Section 26.1, then Landlord shall be free to lease the Right of First Offering Space to a third party (or parties) without regard to the Right of First Offering, and this Article XXVI shall terminate and be of no further force and effect. If Tenant properly exercises its Right of First Offering, Tenant’s Right of First Offering shall continue to apply to the balance of the Right of First Offering Space, subject to the terms of this Article XXVI. As used in this Article XXVI, “Deposit” means a non-refundable deposit in an amount equal to the sum of the first month’s ROFO Market Rent for the Right of First Offering Space and increase in the Amenity Building Rent based on the amount allocable to the Right of First Offering Space, as determined by Landlord and as set forth in the Right of First Offering Notice, which Deposit shall be credited towards the first month’s Rent of the Right of First Offering Space as provided in, and subject to the terms of, Section 26.1.2 if Tenant elects to lease the Right of First Offering Space.

26.1.1Limitations. This Right of First Offering shall not apply to space that is currently vacant until such currently vacant space is leased, occupied and subsequently becomes vacant. The Right of First Offering is also subject and subordinate to (i) any rights of first offer, rights of first refusal, or other expansion rights of (a) Hewlett Packard Enterprise Company, a Delaware corporation (together with its successors and assigns, “HPE”) (or HPE’s affiliates that control, are controlled by or are under common control with HPE) under that certain Option Rights and Competitor Restriction Agreement executed as of March 23, 2018, between Landlord, as Owner, and HPE, as Tenant, (“HPE Expansion Rights”) or (b) McAfee, LLC (together with its successors and assigns by merger, consolidation, sale of all or substantially all of its equity interests, reorganization, or sale of all or substantially of its assets “McAfee”) (or McAfee’s affiliates that control, are controlled by or are under common control with McAfee) under that certain Office Lease dated April 10, 2019 (“McAfee Expansion Rights”) between Landlord and McAfee with respect to the portion of the Right of First Offering Space located on the first floor of the Building and not currently leased by McAfee as outlined on Exhibit E attached hereto and made a part hereof (“Vacant First Floor Space”) and (ii) the right of Landlord to renew or extend the term of the following leases or subleases (whether or not, the renewal or extension is on the exact terms contained in the applicable tenant’s lease, subtenant’s sublease or consummated pursuant to a lease amendment or a new lease and regardless of whether such lease or sublease contained a written renewal option) (“Other Tenant Renewal Rights”): (a) that certain Office Lease dated April 10, 2019, between Landlord and McAfee, LLC of the Right of First Offering Space (except for the Vacant First Floor Space, unless leased by McAfee in connection with the McAfee Expansion Rights), (b) each and any lease of Right of First Offering Space entered into in connection with the HPE Expansion Rights, (c) each and any lease or sublease of Right of First Offering Space entered into in connection with McAfee Expansion Rights (such HPE Expansion Rights, McAfee Expansion Rights and Other Tenant Renewal Rights, collectively, referred to as “Senior Rights”).

26.1.2Lease Amendment. If Tenant elects to lease the Right of First Offering Space, then Landlord and Tenant, within 10 business days after Tenant delivers to Landlord the ROFO Election Notice exercising the Right of First Offering shall execute an amendment to this Lease which shall (i) add the applicable Right of First Offering Space to the Premises under this Lease, (ii) increase the annual Basic Rent by an amount equal to the product of the total number of Rentable Square Feet in the Right of First Offering Space, multiplied by the ROFO Market Rent per Rentable Square Foot contained in the Right of First Offering Space as determined by Landlord and set forth in the Right of First Offering Notice, (iii) increase the annual Amenity Building Rent by an amount equal to the product of the total number of Rentable Square Feet of the Amenity Building that is allocable to the Right of First Offering Space, multiplied by the then-prevailing annual rent rate for the Amenity Building, as determined by Landlord and as set forth in the Right of First Offering Notice, (iv) increase Tenant’s Proportionate Share in direct proportion to the increase of Rentable Square Footage in the Premises as a result of said amendment, (v) provide for a credit to Tenant’s monthly Basic Rent for the Right of First Offering Space in the amount of the Deposit, (vi) any increase in the Security Deposit or Letter of Credit, as applicable, as reasonably determined by Landlord based on Landlord’s review of the Tenant’s financial statements delivered with the Election Notice, (vii) memorialize the other material economic terms set forth in Landlord’s Right of First Offering Notice, and (viii) proportionate adjustment to Tenant’s Parking Space Allocation based on the Rentable Square Footage in the Right of First Offering Space. Notwithstanding anything to the contrary, if Tenant fails or refuses to execute such amendment, then Landlord shall retain the Deposit, which shall not constitute Rent, but rather shall be deemed liquidated damages paid by Tenant to Landlord as reimbursement Landlord for the attorneys’ fees, administrative costs and other expenses incurred by Landlord in connection with the Right of First Offering. Except as otherwise indicated in Landlord’s Right of First Offering Notice and this Article XXVI, all of the terms and conditions contained in this Lease shall apply to the Right of

First Offering Space; provided, however, Tenant shall not be entitled to any improvement allowance, moving allowance, free rent or rent abatement concession for any Right of First Offering Space, unless specifically set forth in Landlord’s Right of First Offering Notice. Unless otherwise set forth in Landlord’s Right of First Offering Notice, the commencement date for any Right of First Offering Space shall be 30 days after the later of (x) Tenant’s delivery to Landlord of the ROFO Election Notice exercising said Right of First Offering or (y) Landlord’s delivery of such Right of First Offering Space after vacation by the previous tenant; provided, however, in the event Tenant actually occupies any portion of the Right of First Offering Space prior to such date for the conduct of its business and not solely for Early Access Activities, the commencement date shall be the earlier date upon which Tenant occupies such Right of First Offering Space.

26.2Condition of Premises. Tenant shall accept any Right of First Offering Space in “as is” condition as of the date of any election to lease such space hereunder, except as may be provided in the Right of First Offering Notice. Notwithstanding the foregoing, Landlord shall deliver all structural elements and subsystems of the Right of First Offering Space, including but not limited to the HVAC, mechanical, electrical, and plumbing systems serving the Right of First Offering Space, in good working condition and repair as of the date of the amendment executed in accordance with Section 26.1.2 and Landlord will be responsible, without cost to Tenant, to repair any latent structural or design defects (as opposed to normal repairs, maintenance and replacements) in the curtain wall, windows and window framing, interior structural framing, foundation, roof, HVAC systems, mechanical, electrical, and plumbing systems occurring or discovered prior to the later of the date that is 12 months after the date of the amendment executed in accordance with Section 26.1.2 and the date of expiration of any applicable warranty therefor; provided that Tenant delivers notice to Landlord thereof prior to the later of the date that is 12 months after the date of such amendment and date of expiration of any applicable warranty therefor and such repairs shall not include work required in connection with (a) any of Tenant’s Alterations or other improvements to the Right of First Offering Space, (b) Tenant’s particular use of the Right of First Offering Space (as opposed to Tenant’s use of the Right of First Offering Space for the Permitted Use in a normal and customary manner) or (c) a change in the Permitted Use stated in Section 1.8, regardless of whether Landlord approves such change.

26.3Conditions Precedent. Tenant’s Right of First Offering, Landlord’s obligation to deliver the Right of First Offering Notice and Landlord’s obligation to execute an amendment in accordance with Section 26.1.2 of this Lease are expressly subject to the following conditions precedent: (i) this Lease is in full force and effect, (ii) no material adverse change has occurred in Tenant’s financial condition, (iii) Bill.com, LLC, a Delaware limited liability company, its Related Entity pursuant to an assignment or sublease made in accordance with Section 10.4 or its Ownership Transferee pursuant to a transfer made in accordance with Section 10.5 is in possession of the entire Premises, (iv) no Event of Default exists or would exist but for the pendency of any cure periods provided for in Section 20.1 at the time Tenant delivers the ROFO Election Notice to Landlord exercising the Right of First Offering; and (v) at least one (1) Lease Year remains in the Term or Tenant has timely exercised the applicable Renewal Option.

26.4Holdover. Landlord shall not be liable for the failure to give possession of any Right of First Offering Space to Tenant by reason of the unauthorized holding over or retention of possession by any other tenant or occupant thereof, and no such failure shall impair the validity of this Lease or extend the Term thereof. Notwithstanding the foregoing, Landlord shall use commercially reasonable efforts to obtain possession of the Right of First Offering Space if any other tenant or occupant fails to timely deliver prior to the commencement date for the Right of First Offering Space contemplated by the amendment executed pursuant to Section 26.1.2.

26.5Personal Right. The Right of First Offering is personal with respect to BILL.COM, LLC, a Delaware limited liability company, its Related Entity to whom this Lease is assigned in accordance with Section 10.4 or its Ownership Transferee pursuant to a transfer made in accordance with Section 10.5. Any assignment of the Lease other than to a Related Entity in accordance with Section 10.4 or pursuant to a transfer to an Ownership Transferee in accordance with Section 10.5 shall automatically terminate BILL.COM, a Delaware limited liability company’s rights under this Article XXVI. Any subletting of any portion of the Premises other than to a Related Entity in accordance with Section 10.4 shall automatically terminate BILL.COM, LLC, a Delaware limited liability company’s rights under this Article XXVI, unless (a) such sublease is made in accordance with Section 10.1 and, together with any other subleases meeting the requirements of this Section 25.5(a)-(c), covers only portions of the Premises such that at least two (2) full floors of the Premises are not subject to any sublease (other than a sublease to a Related Entity made in accordance with Section 10.4), (b) at all times during the existence of such sublease(s) BILL.COM, a Delaware limited liability company, its Related Entity pursuant to an assignment or sublease made in accordance with Section 10.4 or its Ownership Transferee pursuant to a transfer made in accordance with Section 10.5 occupies at least two (2) full floors of the Building, and (c) the term of each such sublease(s) expires on or before, and the subtenant under each such sublease no longer occupies any portion of the Premises from and after, the date of Landlord’s delivery of the Right of First Offering Notice. Without limitation to the foregoing, Landlord shall have no obligation to deliver a Right of First Offering Notice or execute an amendment to this Lease pursuant to this Article XXVI during any period in which any sublease of any portion of the Premises other than to a Related Entity in accordance with Section 10.4 is in effect. Time is of the essence with respect to the provisions of this Article XXVI.

[signatures on following page]

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the Date of Lease.


TENANT:

BILL.COM, LLC,
a Delaware limited liability company

By:		/s/ René Lacerte
Name:		René Lacerte
Title:		Chief Executive Officer

Date:		December 31, 2019


LANDLORD:

US ER AMERICA CENTER 4, LLC,
a California limited liability company

By:	US America Center 3 & 4 Development JV, LLC, a Delaware limited liability company its sole and managing member

	By:	SW AC GP, LLC,
		a Delaware limited liability company
		its managing member

		By:	SteelWave. LLC,
			a Delaware limited liability company,
			its managing member

			By:	/s/ Nancy Chau
			Name:	Nancy Chau
			Title:	Vice President

			Date:	December 18, 2019

Exhibit 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a) OR 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, René Lacerte, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Bill.com Holdings, Inc.;

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;

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;

The registrant’s other certifying officer 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:

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;

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

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.

The registrant’s other certifying officer 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):

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

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:	February 11, 2020

Bill.com Holdings, Inc.

/s/ René Lacerte

René Lacerte
Chief Executive Officer
(Principal Executive Officer)

Exhibit 31.2

CERTIFICATION PURSUANT TO

RULE 13a-14(a) OR 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John Rettig, certify that:

I have reviewed this Quarterly Report on Form 10-Q of Bill.com Holdings, Inc.;

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:	February 11, 2020

Bill.com Holdings, Inc.

/s/ John Rettig

John Rettig
Chief Financial Officer and Executive Vice President, Finance and Operations
(Principal Financial and Accounting Officer)

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, René Lacerte, Chief Executive Officer of Bill.com Holdings, Inc. (the “Company”), 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 the best of my knowledge:

The Quarterly Report on Form 10-Q of the Company for the fiscal quarter ended December 31, 2019 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

The information contained in the Report fairly presents, in all material respects, the financial condition, and results of operations of the Company.


Date:	February 11, 2020

Bill.com Holdings, Inc.

/s/ René Lacerte

René Lacerte

Chief Executive Officer

(Principal Executive Officer)

Exhibit 32.2

CERTIFICATION PURSUANT TO

RULE 13a-14(a) OR 15d-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John Rettig, Chief Financial Officer of Bill.com Holdings, Inc. (the “Company”), 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 the best of my knowledge:

The information contained in the Report fairly presents, in all material respects, the financial condition, and results of operations of the Company.


Date:	February 11, 2020

Bill.com Holdings, Inc.

/s/ John Rettig

John Rettig

Chief Financial Officer and Executive Vice President, Finance and Operations

(Principal Financial and Accounting Officer)