0001535379-17-000004.txt : 20170331 0001535379-17-000004.hdr.sgml : 20170331 20170127171538 ACCESSION NUMBER: 0001535379-17-000004 CONFORMED SUBMISSION TYPE: DRS/A PUBLIC DOCUMENT COUNT: 40 FILED AS OF DATE: 20170127 20170331 DATE AS OF CHANGE: 20170211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Cloudera, Inc. CENTRAL INDEX KEY: 0001535379 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 262922329 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: DRS/A SEC ACT: 1933 Act SEC FILE NUMBER: 377-01449 FILM NUMBER: 17554672 BUSINESS ADDRESS: STREET 1: 1001 PAGE MILL ROAD, BUILDING 3 CITY: PALO ALTO STATE: CA ZIP: 94304 BUSINESS PHONE: 650 644 3950 MAIL ADDRESS: STREET 1: 1001 PAGE MILL ROAD, BUILDING 3 CITY: PALO ALTO STATE: CA ZIP: 94304 DRS/A 1 filename1.htm Document

Confidential Draft Submitted on January 27, 2017
This draft registration statement has not been filed publicly with the
Securities and Exchange Commission and all information contained herein remains strictly confidential.
Registration No. 333-           
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________
FORM S-1 
REGISTRATION STATEMENT
Under
The Securities Act of 1933
_______________________________________________

CLOUDERA, INC.
(Exact name of registrant as specified in its charter)
Delaware
7372
26-2922329
(State or other jurisdiction of incorporation or organization)
(Primary standard industrial code
number)
(I.R.S. employer identification no.)
_______________________________________________

1001 Page Mill Road, Building 3
Palo Alto, CA 94304
(650) 362-0488
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
_______________________________________________

Thomas J. Reilly
Chief Executive Officer
Cloudera, Inc.
1001 Page Mill Road, Building 3
Palo Alto, CA 94304
(650) 362-0488
(Name, address, including zip code, and telephone number, including area code, of agent for service)
_______________________________________________

Copies to:
David A. Bell, Esq.
Niki Fang, Esq.
Fenwick & West LLP
Silicon Valley Center
801 California Street
Mountain View, CA 94041
(650) 988-8500
David Middler, Esq.,
Chief Legal Officer
Jay Wedge, Esq., Senior Counsel
Cloudera, Inc.
1001 Page Mill Road, Building 3
Palo Alto, CA 94304
(650) 362-0488
Richard C. Blake, Esq.
Heidi E. Mayon, Esq.
Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP
1200 Seaport Blvd.
Redwood City, CA 94063
(650) 321-2400
_______________________________________________

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. ¨
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer x
Smaller reporting company ¨
 
 
(Do not check if a smaller
reporting company)
 
_______________________________________________

CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities to be Registered
Proposed Maximum Aggregate Offering Price (1)(2)
Amount of Registration Fee
Common Stock, par value $0.00005 per share
$
$
(1)
Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended.
(2)
Includes the aggregate offering price of additional shares the underwriters have the option to purchase to cover over-allotments, if any.
_______________________________________________

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. .
 


The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any jurisdiction where the offer or sale is not permitted.

PROSPECTUS (Subject to Completion)
Issued             , 2017
                       Shares
clouderalogocmyk1.jpg
COMMON STOCK
______________________
Cloudera, Inc. is offering                   shares of its common stock. This is our initial public offering and no public market currently exists for our shares. We anticipate that the initial public offering price will be between $        and $        per share.
______________________
We intend to apply to list our common stock on the                                under the symbol “CLDR.”
______________________
We are an “emerging growth company” as defined under the federal securities laws. Investing in our common stock involves risks. See “Risk Factors” beginning on page 14.
______________________
PRICE $       A SHARE
______________________
 
Price to
Public
 
Underwriting
Discounts and
Commissions(1)
 
Proceeds to
Cloudera
Per Share
    $
 
    $
 
    $
Total
$
 
$
 
$
_______________
(1)
See the section titled “Underwriters” for a description of the compensation payable to the underwriters.
We have granted the underwriters the right to purchase up to an additional                                              shares of common stock to cover over-allotments, if any.
The Securities and Exchange Commission and state regulators have not approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Morgan Stanley & Co. LLC expects to deliver the shares of common stock to purchasers on or about                                                                , 2017.
______________________



MORGAN STANLEY



                             , 2017



TABLE OF CONTENTS

______________________
We have not authorized anyone to provide you with additional information or information that is different from or to make any representations other than those contained in this prospectus or in any free‑writing prospectus prepared by or on behalf of us to which we may have referred you in connection with this offering. We and the underwriters take no responsibility for, and can provide no assurances as to the reliability of, any other information that others may give you. We are offering to sell, and seeking offers to buy, our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock. Our business, financial condition, results of operations and future growth prospects may have changed since that date.
Unless the context requires otherwise, the words “we,” “us,” “our,” the “Company” and “Cloudera” refer to Cloudera, Inc. and its subsidiaries taken as a whole. For purposes of this prospectus, unless the context otherwise requires, the term “stockholders” shall refer to the holders of our common stock.
Through and including                , 2017 (the 25th day after the date of this prospectus) U.S. federal securities laws may require all dealers that effect transactions in our common stock, whether or not participating in this offering, to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.
For investors outside the United States, neither we nor any of the underwriters have done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus and any such free‑writing prospectus outside the United States.

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PROSPECTUS SUMMARY
This summary highlights information contained in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all of the information you should consider in making your investment decision. You should read the entire prospectus carefully before making an investment in our common stock. You should carefully consider, among other things, our consolidated financial statements and related notes and the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.
CLOUDERA, INC.
Overview
Cloudera empowers organizations to become data‑driven enterprises in the newly hyperconnected world. We have developed the leading modern platform for data management, machine learning and advanced analytics. We have achieved this position through extensive collaboration with the global open source community, continuous innovation in data management technologies and by leveraging the latest advances in infrastructure including the public cloud for “big data” applications. Our pioneering hybrid open source software (HOSS) model incorporates the best of open source with our robust proprietary software to form an enterprise-grade platform. This platform delivers an integrated suite of capabilities for data management, machine learning and advanced analytics, affording customers an agile, scalable and cost effective solution for transforming their businesses. Our platform enables organizations to use vast amounts of data from a variety of sources, including the Internet of Things (IoT), to better serve and market to their customers, design connected products and services and reduce risk through greater insight from data. A vibrant ecosystem has developed around our platform, and a growing range of applications is being built on it. We believe that our solution is the most widely adopted big data platform.
The world is rapidly becoming interconnected through mobile, social, internet and sensor activity. International Data Corporation (IDC) estimates that by 2020 there will be 30 billion internet‑connected and mobile devices. Additionally, the quantity of information produced per year is expected to grow, with IDC estimating that approximately 440 times more information will be created in 2020 than in 2005. Developers have created data‑intensive applications to take advantage of all of this information. Traditional data management technologies cannot technologically or economically capture this data or support these applications. Enterprises are challenged to manage and use rapidly growing quantities of data of new and varying types. They are also operating in increasingly competitive and demanding regulatory environments. To achieve their business objectives, they must adopt information‑centric strategies and a data‑driven approach to problem solving. Organizations across all industries need to develop the ability to act quickly and cost‑effectively on massive amounts of data in any form from any source to gain insight, to compete effectively and to comply with laws and regulations. They need to manage all available data, wherever it may originate or reside. They need a modern open data architecture built on the latest open source technologies and designed for public cloud infrastructure.
In response, we have created our software platform and pioneered the hybrid open source software model. HOSS combines the best open source software with proprietary software to meet the exacting requirements of large enterprises. By integrating robust proprietary software with our open source platform, built on the leading data management and analytics technologies, we deliver substantially greater value to customers in managing, operating and securing their data and data architectures. Our HOSS model also meaningfully differentiates our solutions from those of our competitors, including open source “free riders” who take from, but do not contribute to, the open source community at large. This differentiation also builds long‑lived customer relationships and generates the revenue to support sustained innovation.
Our scale‑out distributed architecture delivers high performance on inexpensive industry‑standard hardware or cloud infrastructure. We allow enterprises to operate, manage and move workloads across multiple architectures, mixing on‑premises and cloud environments, including all major public cloud infrastructure providers – Amazon Web Services, Microsoft Azure and Google Cloud Platform – as well as managed service providers (MSPs). We also enable enterprises’ “multi‑cloud” strategies, allowing them to move workloads from the data center to the public cloud, among public cloud vendors, and back again, thus avoiding cloud lock‑in. In addition, our customers deploy,

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configure and monitor all their workloads at scale across these environments from a “single pane of glass.” This flexibility allows customers to constantly determine and implement the most cost‑efficient strategies.
The market for next‑generation data management, machine learning and advanced analytics is large and rapidly growing as the world increasingly connects. Our platform currently addresses three new transformative markets: (i) Dynamic Data Management Systems; (ii) Cognitive/AI Systems and Content Analytics Software; and (iii) Advanced and Predictive Analytics Software. IDC estimates that in aggregate these markets will grow from $8.7 billion in 2015 to $22.1 billion in 2020 at a combined compound annual growth rate of 20.5%. Beyond these new markets, we can also disrupt traditional markets, including a significant portion of the Relational Database Management Systems and Non‑Relational Database Management Systems markets. Adding together IDC’s estimates of these new and traditional markets, we believe our total addressable opportunity including these additional markets is expected to reach $65.6 billion by 2020.
We offer our software platform on a subscription basis and focus our selling efforts on the largest 8,000 corporate enterprises globally (Global 8000) as well as large public sector organizations. We target these organizations because they capture and manage the majority of the world’s data and operate highly complex IT environments. These organizations are likely to realize the greatest value from our enterprise‑grade platform. We have achieved significant growth and global scale in a relatively short period of time, and as of January 31, 2017, we have more than             Global 8000 customers. Our customers continue to expand their usage of our platform. The net expansion rate for our subscription revenue was      % as of January 31, 2017. A growing, vibrant ecosystem has developed around our platform, and many third‑party developers have primarily standardized on it, creating more than        applications which we refer to as Partner Solutions. As part of this ecosystem, we have developed a strategic partnership with Intel Corporation, or Intel, to optimize our software for use with Intel processors and architecture. As a result of our and Intel’s dedication to this partnership, our platform achieves differentiated performance on Intel architecture today, and is expected to achieve differentiated performance on future Intel platform technologies. We will further expand our customer opportunity through the continued growth in use cases and packaged solutions, the expansion of our partner ecosystem and the proliferation of skills, driven by ease of use and accelerating adoption of the cloud. See “Market, Industry and Other Data” for how we define Global 8000, large public sector organizations and calculate our net expansion rate.
For our fiscal years ended January 31, 2016 and January 31, 2017, our revenue was $166.0 million and $      million, respectively, representing year‑over‑year growth in revenue of       % for our most recent fiscal year. Over the same period, operating cash outflows increased from $90.5 million to $      million while our net losses were $203.1 million and $      million, respectively, which includes $63.6 million and $      million, respectively, of stock‑based compensation expense.
Industry Background
Successful organizations have always collected and analyzed data. They have used it to understand their customers, design and build their products, and address opportunities and manage risk in their businesses.
Today, large organizations are awash in vastly more data than ever before. They collect real‑time and streaming data on events and transactions, social and interaction data about their customers, news and market data about themselves and their competition, and much more. They are also operating in increasingly competitive and demanding regulatory environments. To achieve their business objectives, they must capture, secure, prepare, analyze and act on all of that data quickly.
This flood of data overwhelms data management systems created in earlier decades. Those systems were designed for the data volumes and for the analytical problems of an earlier day. They were never intended to handle the thousand‑fold or greater increase in volume, nor today’s combination and complexity of data and new data types. Those systems predated powerful new analytic techniques such as machine learning and natural language processing.
The first organizations confronted with this combination of volume, complexity and analytic challenges were web‑scale consumer internet companies like Google, Facebook and Yahoo. Those web pioneers created a new

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software architecture and a collection of open source software projects to solve their data problems. That software was sophisticated and powerful, but demanded exceptional technical and operational skill of its users.
Today, boardrooms and C‑suites across all industries are focused on developing the ability to use vast amounts of data from a variety of sources to better serve customers, design products and services and manage risk. Their organizations need technology that gives them better insights than legacy systems allow. They need new systems to compete effectively and to comply with the laws and regulations that govern them. They need an enterprise‑grade solution to manage and act on all available data, wherever it may originate or reside. They need the power and sophistication of the web‑scale consumer internet leaders, packaged for consumption by ordinary enterprises. Enterprises require a modern data management, machine learning and analytics platform.
Factors affecting the development of nextgeneration data management, machine learning and advanced analytics
A modern platform for data management, machine learning and analytics is valuable because more data often yields better answers to hard questions. It enables enterprises to look at problems at much higher resolution. It permits queries to examine not just the last month or quarter, but the last year or decade of customer behavior. Using powerful machine learning algorithms, it can examine historical data and find patterns that more accurately predict future trends. Such a platform allows enterprises to extract more value from their data and effect digital transformation.
The main factors driving complexity and challenges in extracting value from data are:
The rise of the interconnected world and the Internet of Things (IoT), which is contributing to an increasingly connected world and accelerating data generation as new types of sensors continue to proliferate and are almost always connected to a network;
The explosion of new data, as organizations are undergoing digital transformation and are digitalizing an increasing number of business activities to improve and transform operations, functions and processes, producing data at an unprecedented scale;
The proliferation of machine learning and artificial intelligence, as organizations realize the value that predictive and advanced algorithms can provide in a diverse array of applications; and
The modernization of enterprise infrastructure, as organizations seek to take advantage of the latest technological developments. In particular, there are two core trends that large enterprises are embracing today:
Open source software is playing an increasingly central role in enterprises’ technology architectures as enterprises value the rapidity of innovation, agility stemming from an open ecosystem and avoidance of vendor lock‑in; and
Public cloud infrastructure is the fastest growing type of infrastructure today with organizations enticed by the elasticity and flexibility it offers.
Requirements of the Modern Data Management and Analytics Platform
Organizations need a modern data platform with:
The ability to deploy on‑premises or in the public cloud or both. Many enterprises have data on‑premises for long‑lived workloads and rely on public cloud infrastructure for transient workloads. As a result, enterprises require a solution that provides the flexibility to store and analyze their data in a mixed infrastructure environment. In addition, enterprises require the ability to run natively on different public cloud platforms, or multi‑cloud capability, so that they can choose among competing public cloud platforms and move workloads among them to avoid cloud lock‑in.

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Access to the latest open source technologies. Collaborating across borders and company lines, the global open source software community innovates quickly. This innovation can lead to competing software projects, which creates complexity and risk for enterprises that simply want to use the best and most appropriate open source software. Enterprises need a trusted partner to play an active role in the community, contributing significantly to open source development and continuously curating the various projects to create a highly integrated, secure and high‑performance platform.
Support for machine learning. Distributed systems together with large amounts of data allow enterprises to use machine learning to understand the past and to predict the future. To perform machine learning, a data platform must support flexible schema and multiple data science languages. It must also support a new class of analytic algorithms as machine learning uses sophisticated algorithms to examine data and to extract patterns. Enterprises require a modern data management and analytics platform that powers the algorithms to apply machine learning to real business problems and real business data.
Enterprise‑grade performance, features and functionality. Enterprises require a platform suited to operating in highly complex technology, business and regulatory environments, including:
Scalability and performance. Legacy data management systems do not meet the performance demands of modern data applications. These systems depend on a single or limited number of expensive, centralized computers to handle storage and processing. Huge quantities of data accessed by many users running a combination of SQL queries, text searches and machine learning technologies can simply overwhelm legacy systems. The modern data platform requires a scale‑out architecture – which combines many small, inexpensive computers and pools their storage and processing power – to meet performance demands.
Operate and manage resources across environments at scale. As data and processing needs grow, enterprises require technology that offers visibility across systems and workloads without regard to whether those assets are deployed on‑premises or in the cloud. As enterprise systems scale, centralized monitoring and management in any infrastructure environment becomes critical to data architecture operations, as well as to regulatory and policy compliance.
Data security and governance. Data is strategic, and enterprises are retaining more of it for longer – even permanently. A large concentration of data creates unique and significant security concerns. Business policy, legal and regulatory regimes impose rules as to who may use data, for what purposes and how it is safeguarded. Policy setting, enforcement and monitoring for compliance purposes demand data governance technology that reports on usage, tracks data lineage and ensures that enterprises can meet the strict privacy and other controls that apply. To appropriately safeguard data and comply with legal and regulatory requirements, enterprises must ensure proper authentication, authorization and access at every level.
Low total cost of ownership. The amount of data available for analysis has grown exponentially, but IT budgets have not. Even if legacy data management technologies could address the challenges of “big data,” they would be cost prohibitive. Enterprises require the ability to manage their data architecture at scale and the flexibility to use the infrastructure that is most cost efficient and appropriate for each use case.
Our Market Opportunity
The market for next‑generation data management, machine learning and advanced analytics is large and rapidly growing as the world increasingly connects. Our platform currently addresses three new transformative markets: (i) Dynamic Data Management Systems; (ii) Cognitive/AI Systems and Content Analytics Software; and (iii) Advanced and Predictive Analytics Software. Technologies within the first market help enterprises capture and manage the increasing volume and complexity of new data. Technologies within the latter two markets help enterprises generate insights and derive value from their data. IDC estimates that in aggregate these markets will grow from $8.7 billion in 2015 to $22.1 billion in 2020 at a combined compound annual growth rate of 20.5%.

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Beyond these new markets, we can also disrupt traditional markets, including a significant portion of the Relational Database Management Systems and Non‑Relational Database Management Systems markets. Technologies within these markets represent traditional systems used by enterprises to manage their data. Adding together IDC’s estimates of these new and traditional markets, we believe our total addressable opportunity including these additional markets is expected to reach $65.6 billion by 2020.
Our Solution
Cloudera empowers organizations to become data‑driven enterprises in the newly hyperconnected world. We have developed the leading modern platform for data management, machine learning and advanced analytics. Building on the approach of web‑scale consumer internet companies, we have collaborated with the global open source community to innovate and deliver our cloud‑native platform. Our scale‑out distributed architecture delivers high performance on inexpensive, industry‑standard hardware or cloud infrastructure. We allow enterprises to operate, manage and move workloads across multiple architectures, mixing on‑premises and cloud environments, including all major public cloud infrastructure providers. We believe that our solution is the most widely adopted big data platform, with a growing range of applications being built on it.
We have pioneered the hybrid open source software development model, or HOSS. Our model is based on active participation and leadership in the open source data management ecosystem and software development process, and utilization of the very best open source technologies. As authors and participants, we contribute new projects and enhance existing projects. We also identify the best projects that are growing in popularity among developers and in adoption by enterprises. This involvement helps us recognize and champion emerging standards, as we did when we led the market by embracing Spark as a complement to the original MapReduce data processing engine.
To deliver the agility and innovation of open source software to our customers, our platform integrates 26 distinct open source projects, 16 of which were created by our employees. We combine those curated open source projects with our robust proprietary software to form an enterprise‑grade platform. We provide a full and integrated suite of data management, machine learning and advanced analytic capabilities, affording enterprises a single platform that is agile, scalable and cost effective for transforming their businesses.
We believe our approach has a profound impact both on our customers and on the open source community. Our HOSS model delivers substantially greater value to customers in managing, operating and securing their data and data architectures. In addition, our robust proprietary software meaningfully differentiates our solutions from those of our competitors, including open source “free riders” who take from, but do not contribute to, the open source community at large. This differentiation drives the revenue to sustain investment in further innovation in the open source data management ecosystem to address a broadening set of enterprise data needs.
Key Benefits and Differentiators
These are the key benefits and differentiators of our solution.
Deployable on‑premises or in the public cloud or both. With our agnostic approach to infrastructure, enterprises store and analyze their data in the environment that best meets their performance and efficiency goals. Our solution allows enterprises to manage both long‑lived and transient workloads across environments, mixing on‑premises and public cloud infrastructure, including all major public cloud vendors – Amazon Web Services, Microsoft Azure and Google Cloud Platform. We enable enterprises’ multi‑cloud strategies, allowing them to move workloads from the data center to the public cloud, among public cloud vendors, and back again. Customers maintain and control access to their data, and they are better able to obtain attractive terms and avoid cloud vendor lock‑in.
Leverages the latest open source innovation. Our platform integrates the latest innovations in open source data management technology. In addition to our contributions to new project innovation and existing project enhancement, we are able to leverage the most significant innovations of the broader global community. For example, we were the first data platform vendor to incorporate Spark, integrating it into our platform in 2013, enhancing batch processing and enabling real‑time, streaming and machine learning

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workloads. This curation and integration is a continuous commitment as demonstrated by our adoption of projects such as Solr, Kafka, Impala and Kudu. As a result, we serve customers better and capitalize as a business on the latest open source technologies to deliver a highly integrated, secure and high‑performance platform.
Enables machine learning. Our platform is uniquely designed to enable the rapidly growing data science community and machine learning applications. Through our integration of Spark and popular data science languages like Python and R, our platform supports batch, real‑time and advanced analytics. We provide the capabilities to reliably run massively iterative algorithms, including machine learning algorithms, over large volumes of data, to support a diverse range of relational and non‑relational schemas and to express analytic workloads in multiple development and data science languages. These capabilities allow enterprises to identify trends in historical data, to recognize events in current or streaming data and to predict events in the future, continuously improving with experience.
Delivers enterprise‑grade performance, features and functionality. Our platform meets the exacting requirements of large enterprises, including:
Scalability and high performance. Our distributed architecture allows our customers to easily and inexpensively increase capacity to meet the speed and throughput demands of enterprise applications. Combining many small, inexpensive computers and pooling their storage and processing power in one or more “clusters,” our platform can deliver ten times or greater performance improvements over legacy systems at lower cost. As data volumes or performance requirements increase, adding more capacity or computing power is as simple as adding additional computers to the cluster. Capacity and performance expand linearly with cluster size. With just one installation of our platform, a customer can scale to hundreds of petabytes of data under management.
Integrated management at scale and across environments. Our customers can deploy, configure and monitor all their clusters and workloads at scale from a centralized interface across any mix of public cloud or on‑premises environments. We offer configurable monitoring and reporting and intuitive, robust troubleshooting to provide comprehensive management of large, growing data sets and concurrent use cases.
Data security and governance. Our platform uses proprietary authentication, network isolation, user‑ and role‑based permissions, access logging, auditing, lineage and encryption including sophisticated key management to provide comprehensive, enterprise‑grade data security across the platform. In addition, our platform enables regulatory and industry‑specific compliance through comprehensive data governance, including data discovery, data lineage, metadata tagging and policy enforcement.
Low total cost of ownership. Our scale‑out architecture delivers high performance on inexpensive industry‑standard hardware or cloud infrastructure. This architecture allows organizations to gain insights and realize value from data at much lower cost than traditional data management platforms. Our proprietary cloud automation, systems management and data management capabilities reduce the personnel required to operate clusters and workloads while meeting compliance standards. Our platform allows customers to select the infrastructure environment that is most cost‑effective and appropriate for each use case. Additionally, the native security features of our platform require no additional third party licenses, further reducing costs to customers.
Our Strategy
Key elements of our strategy include:
leading cloud innovation for big data, extending our original cloud-native architecture;
growing our addressable market by expanding the range of applications our platform can support;
extending our position as the leader in hybrid open source software;

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continuing to rapidly acquire new customers;
accelerating existing customer expansion;
leveraging our partner ecosystem;
showcasing a data‑driven business with our own operations; and
cultivating a passion for solving the world’s greatest challenges through data.
Risks Related to Our Business and Investment in Our Common Stock
Investing in our common stock involves a high degree of risk. You should carefully consider the risks highlighted in the section titled “Risk Factors” immediately following this prospectus summary before making an investment decision. We may be unable for many reasons, including those that are beyond our control, to implement our business strategy successfully. These risks include:
we have a history of losses, and we may not become profitable in the future;
we have a short operating history, which makes it difficult to predict our future results of operations;
the market for our data management and analytics platform may develop more slowly than we expect;
we face intense competition and could lose market share to our competitors;
our customers may not renew or expand their subscriptions, or may do so on unfavorable terms;
our sales cycles can be long and unpredictable, particularly with respect to large subscriptions, and our sales efforts require considerable time and expense;
we do not have an adequate history with our subscription or pricing models to accurately predict the long‑term rate of customer adoption or renewal, or the impact these will have on our revenue or operating results;
our results may fluctuate significantly from period to period;
we face risks because we derive substantially all of our revenue from a single software platform, and we may fail to satisfy customer demands or achieve increased market acceptance;
we have been, and may in the future be, subject to intellectual property rights claims by third parties, and we may fail to adequately protect confidential information and our intellectual property rights; and
our directors, executive officers and stockholders who own greater than 5% of our outstanding common stock, and their affiliates, who after this offering will collectively hold more than % of our outstanding common stock, will have the ability to influence or control the outcome of matters submitted to our stockholders for approval.
If we are unable to adequately address these and other risks we face, our business, financial condition, operating results and prospects may be adversely affected.
Corporate History and Information
We were incorporated in Delaware in 2008, and we had               full‑time employees as of January 31, 2017. Our principal executive offices are located at 1001 Page Mill Road, Building 3, Palo Alto, California 94304 and our telephone number is (650) 362‑0488. Our website address is www.cloudera.com. The information on, or that can be accessed through, our websites are not incorporated by reference into this prospectus and should not be considered part of this prospectus.

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In May 2014, in conjunction with forming our strategic partnership with Intel, Intel invested approximately $741.8 million in our capital stock, including purchasing approximately $370.9 million from us and an aggregate of approximately $370.9 million from some of our stockholders. Subsequently, Intel has purchased additional shares of our capital stock from some of our stockholders, bringing Intel’s aggregate investment in our capital stock to approximately $766.5 million as of October 31, 2016. After completion of this offering, Intel will hold approximately % of our outstanding common stock based on the number of shares outstanding as of January 31, 2017. See “Business-Intel Strategic Partnership” and “Certain Relationships and Related-Party Transactions.”
Cloudera is a registered trademark of the Company. Cloudera Navigator, Cloudera Navigator Audit and Lineage, Cloudera Navigator Optimizer, Cloudera Navigator Encrypt, Cloudera Navigator Key Trustee, Cloudera Essentials, Cloudera Enterprise, Cloudera Data Science, Cloudera Real Time, Cloudera Analytics, Cloudera Manager and Cloudera Director are some of our trademarks used in this prospectus. Solely for convenience, our trademarks, tradenames and service marks referred to in this prospectus appear without the ®, ™ and SM symbols, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights to these trademarks and tradenames.
Other trademarks appearing in this prospectus are the property of their respective holders. For example, Apache Avro, Apache Flume, Apache Hadoop, Apache Hadoop YARN, Apache HBase, Apache Hive, Apache Impala (incubating), Apache Kafka, Apache Kudu, Apache Pig, Apache Sentry, Apache Solr, Apache Spark, Apache Spot (incubating) and Apache Sqoop are trademarks of the Apache Software Foundation. All references to Avro, Flume, Hadoop, Hadoop YARN, HBase, Hive, Impala, Kafka, Kudu, Pig, Sentry, Solr, Spark, Spot and Sqoop are to the corresponding Apache project.
Implications of Being an Emerging Growth Company
As a company with less than $1.0 billion in revenue during our last completed fiscal year, we qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012. An emerging growth company may take advantage of specified reduced reporting requirements that are otherwise applicable generally to public companies. These reduced reporting requirements include:
an exemption from compliance with the auditor attestation requirement on the effectiveness of our internal control over financial reporting;
an exemption from compliance with any requirement that the Public Company Accounting Oversight Board may adopt regarding a supplement to the auditor’s report providing additional information about the audit and the financial statements;
reduced disclosure about our executive compensation arrangements;
an exemption from the requirements to obtain a non‑binding advisory vote on executive compensation or a stockholder approval of any golden parachute arrangements; and
extended transition periods for complying with new or revised accounting standards.
We will remain an “emerging growth company” for up to five years. However, among other factors, if the market value of our common stock that is held by non‑affiliates exceeds $700 million as of any July 31 after our first annual report, we would cease to be an “emerging growth company” as of the following January 31.


8


THE OFFERING
Common stock offered by us
                shares

Common stock to be outstanding after this offering
                shares

Over-allotment option offered by us
                shares

Use of proceeds
We intend to use the net proceeds of this offering for working capital and other general corporate purposes. We may also use a portion of the net proceeds to acquire or invest in complementary businesses, products, services, technologies or assets. See “Use of Proceeds.”

Risk factors
See “Risk Factors” beginning on page 14 and other information included in this prospectus for a discussion of factors that you should consider carefully before deciding to invest in our common stock.

Proposed ticker symbol
“CLDR”

The number of shares of common stock to be outstanding after this offering is based on 111,612,951 shares of common stock outstanding as of October 31, 2016, and excludes:
23,414,207 shares of our common stock issuable upon the exercise of stock options outstanding as of October 31, 2016, with a weighted‑average exercise price of $4.58 per share;
15,101,448 shares of our common stock subject to restricted stock units (RSUs) outstanding as of October 31, 2016;
955,806 shares of our common stock reserved for future issuance under our 2008 Equity Incentive Plan as of October 31, 2016 and 6,000,000 additional shares of our common stock reserved for future issuance after October 31, 2016, of which:
243,500 shares of our common stock are issuable upon the exercise of stock options granted after October 31, 2016 through January 27, 2017, with an exercise price of $17.85 per share;
6,853,400 shares of our common stock are subject to RSUs granted after October 31, 2016 through January 27, 2017;
               shares that will become available for future issuance under our 2017 Equity Incentive Plan in connection with this offering; and
                additional shares of our common stock reserved for future issuance under our 2017 Equity Incentive Plan and            shares of common stock reserved for future issuance under our 2017 Employee Stock Purchase Plan, which plans will become effective in connection with this offering and contain provisions that will automatically increase their share reserves each year, as more fully described in “Executive Compensation—Employee Benefit Plans.”

9


Except as otherwise indicated, all information in this prospectus assumes:
the automatic conversion of all outstanding shares of our redeemable convertible preferred stock outstanding as of October 31, 2016 into an aggregate of 74,907,415 shares of common stock immediately prior to the completion of this offering;
no exercise or cancellation of outstanding options or vesting of restricted stock units subsequent to October 31, 2016;
the filing and effectiveness of our restated certificate of incorporation and adoption of our restated bylaws, each of which will occur immediately prior to the completion of this offering; and
no exercise by the underwriters of their over‑allotment option to purchase up to an additional            shares of our common stock in this offering.

10


SUMMARY CONSOLIDATED FINANCIAL DATA
We have derived the summary consolidated statement of operations data for the year ended January 31, 2016 from our audited consolidated financial statements and the summary consolidated statements of operations data for the nine months ended October 31, 2015 and 2016 and the summary consolidated balance sheet data as of October 31, 2016 from our unaudited interim consolidated financial statements, included elsewhere in this prospectus. We have derived the summary consolidated statement of operations data for the year ended January 31, 2015 from our audited consolidated financial statements that are not included in this prospectus. The unaudited interim consolidated financial statements have been prepared on the same basis as our audited consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly our financial position and results of operations. You should read the following summary consolidated financial data in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and related notes included elsewhere in this prospectus. Our historical results are not necessarily indicative of the results to be expected for the full year or any other period in the future.
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2015
 
2016
 
2015
 
2016
 
(in thousands, except share and per share data)
Consolidated Statements of Operations Data:
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
Subscription
$
72,615

 
$
119,150

 
$
82,424

 
$
144,093

Services
36,503

 
46,898

 
33,244

 
44,106

Total revenue
109,118

 
166,048

 
115,668

 
188,199

Cost of revenue:(1) (2)
 
 
 
 
 
 
 
Subscription
18,314

 
30,996

 
22,240

 
28,932

Services
32,148

 
45,178

 
33,663

 
36,355

Total cost of revenue
50,462

 
76,174

 
55,903

 
65,287

Gross profit
58,656

 
89,874

 
59,765

 
122,912

Operating expenses:(1) (2)
 
 
 
 
 
 
 
Research and development
66,431

 
98,123

 
77,007

 
75,894

Sales and marketing
103,736

 
162,152

 
116,898

 
148,343

General and administrative
25,041

 
34,236

 
26,971

 
24,966

Total operating expenses
195,208

 
294,511

 
220,876

 
249,203

Loss from operations
(136,552
)
 
(204,637
)
 
(161,111
)
 
(126,291
)
Interest income, net
327

 
2,218

 
1,520

 
2,143

Other income (expense), net
(490
)
 
386

 
404

 
(311
)
Net loss before benefit from (provision for) income taxes
(136,715
)
 
(202,033
)
 
(159,187
)
 
(124,459
)
Benefit from (provision for) income taxes
1,285

 
(1,110
)
 
(840
)
 
(1,426
)
Net loss
(135,430
)
 
(203,143
)
 
(160,027
)
 
(125,885
)
Deemed dividend to preferred stockholders
(43,207
)
 

 

 

Net loss attributable to common stockholders
$
(178,637
)
 
$
(203,143
)
 
$
(160,027
)
 
$
(125,885
)
Net loss per share attributable to common stockholders, basic and diluted
$
(6.53
)
 
$
(6.21
)
 
$
(5.03
)
 
$
(3.47
)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted(3)
27,347,970

 
32,723,629

 
31,802,117

 
36,260,948

Pro forma net loss per share attributable to common stockholders, basic and diluted(3)

 
$
(1.89
)
 
 
 
$
(1.13
)
Weighted-average shares used in computing pro forma net loss per share attributable to common stockholders, basic and diluted(3)

 
107,631,044

 
 
 
111,168,363

Other Financial Statement Data:
 
 
 
 
 
 
 
Non-GAAP operating loss(4)
$
(100,431
)
 
$
(137,592
)
 
$
(100,705
)
 
$
(106,959
)

11


___________
(1)
Amounts include stock‑based compensation expense as follows:
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2015
 
2016
 
2015
 
2016
 
(in thousands)
Cost of revenue – subscription
$
996

 
$
3,363

 
$
3,008

 
$
1,051

Cost of revenue – services
1,376

 
4,301

 
3,862

 
1,363

Research and development
11,687

 
23,048

 
21,480

 
4,325

Sales and marketing
11,530

 
19,187

 
17,520

 
4,496

General and administrative
8,477

 
13,691

 
11,939

 
5,322

Total stock-based compensation expense
$
34,066

 
$
63,590

 
$
57,809

 
$
16,557

(2)
Amounts include amortization of acquired intangible assets as follows:
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2015
 
2016
 
2015
 
2016
 
(in thousands)
Cost of revenue – subscription
$
906

 
$
1,732

 
$
1,305

 
$
1,483

Sales and marketing
1,149

 
1,723

 
1,292

 
1,292

Total amortization of acquired intangible assets
$
2,055

 
$
3,455

 
$
2,597

 
$
2,775

(3)
See Notes 2, 14 and 15 to our consolidated financial statements included elsewhere in this prospectus for an explanation of the calculations of our basic, diluted and pro forma net loss per share attributable to common stockholders, and the weighted‑average number of shares used in the computation of the per share amounts.
(4)
We define non‑GAAP operating loss as loss from operations before stock‑based compensation expense and amortization of acquired intangible assets. For more information about our non‑GAAP operating loss and a reconciliation of our non‑GAAP operating loss to loss from operations, the most directly comparable financial measure calculated and presented in accordance with U.S. generally accepted accounting principles (GAAP), see the section titled “Selected Consolidated Financial Data—Non‑GAAP Financial Measure.”
 
As of October 31, 2016
 
Actual
 
Pro Forma(1)
 
Pro
Forma As
Adjusted
(2)(3)
 
(in thousands)
Consolidated Balance Sheet Data:
 
 
 
 
 
Cash and cash equivalents
$
31,448

 
$
 
$
Marketable securities, current and noncurrent
258,018

 
 
 
 
Working capital
120,925

 
 
 
 
Total assets
418,181

 
 
 
 
Deferred revenue, current and noncurrent
162,022

 
 
 
 
Redeemable convertible preferred stock
657,687

 
 
 
 
Total stockholders’ equity (deficit)
(450,042
)
 
 
 
 
___________
(1)
Reflects the automatic conversion of all outstanding shares of our redeemable convertible preferred stock into an aggregate of 74,907,415 shares of common stock.
(2)
Reflects the pro forma adjustment described in footnote (1) and the sale by us of           shares of common stock in this offering at an assumed initial public offering price of $          per share, the midpoint of the price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us and the application of the net proceeds of this offering as described in “Use of Proceeds.”
(3)
A $1.00 increase (decrease) in the assumed initial public offering price of $          per share, the midpoint of the price range set forth on the cover page of this prospectus, would increase (decrease) each of pro forma as adjusted cash and cash equivalents, working capital, total assets and total stockholders’ equity by $           million, assuming the number of shares we are offering, as set forth on the cover page of this prospectus, remains the same, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We may also increase or decrease the number of shares we are offering. An increase (decrease) of 1,000,000 in the number of shares we are offering would increase (decrease) each of pro forma as adjusted cash and cash equivalents, working capital, total assets and total

12


stockholders’ equity by approximately $           million, assuming the initial public offering price per share remains the same. The pro forma as adjusted information is illustrative only, and we will adjust this information based on the actual initial public offering price, number of shares offered and other terms of this offering determined at pricing.

13


RISK FACTORS
Investing in our common stock involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this prospectus, including our consolidated financial statements and the related notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our common stock. The occurrence of any of the events or developments described below could materially and adversely affect our business, financial condition, results of operations and growth prospects. In such an event, the market price of our common stock could decline, and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently believe are not material may also impair our business, financial condition, results of operations and growth prospects.
Risks Related to our Business
We have a history of losses, and we may not become profitable in the future.
We have incurred net losses since our founding in 2008, including net losses of $135.4 million, $203.1 million and $125.9 million for the years ended January 31, 2015 and 2016 and the nine months ended October 31, 2016, respectively, and expect to continue to incur net losses for the foreseeable future. As a result, we had an accumulated deficit of $614.6 million at October 31, 2016. These losses and accumulated deficit reflect the substantial investments we made to acquire new customers, commercialize our platform, participate in the open source development community and develop our proprietary software components under our hybrid open source software (HOSS) model, and continue to develop our platform. Furthermore, to the extent we are successful in increasing our customer base, we may also incur increased losses because customer acquisition costs and upfront costs associated with new customers are higher in the first year than the aggregate revenue we recognize from those new customers in the first year.
We expect to continue to make significant future expenditures related to the development and expansion of our business, including:
investments in our research and development team and in the development of new solutions and enhancements of our platform, including contributions to the open source data management ecosystem;
investments in sales and marketing, including expanding our sales force, increasing our customer base, increasing market awareness of our platform and development of new technologies;
expanding of our operations and infrastructure, including internationally;
hiring additional employees; and
incurring costs associated with general administration, including legal, accounting and other expenses related to being a public company upon completion of this offering.
As a result of these increased expenses, we will have to generate and sustain increased revenue to be profitable in future periods. Further, in future periods, our revenue growth rate could decline, and we may not be able to generate sufficient revenue to offset higher costs and achieve or sustain profitability. If we fail to achieve, sustain or increase profitability, our business and operating results could be adversely affected.
We have a short operating history, which makes it difficult to predict our future results of operations.
We have a short operating history, which limits our ability to forecast our future results of operations and subjects us to a number of uncertainties, including our ability to plan for and anticipate future growth. Our historical revenue growth should not be considered indicative of our future performance. Further, in future periods, our revenue growth could slow or our revenue could decline for a number of reasons, including slowing demand for our solutions, increasing competition, a decrease in the growth of our overall market, or our failure, for any reason, to continue to capitalize on growth opportunities. We have also encountered and will encounter risks and uncertainties frequently experienced by growing companies in rapidly changing industries, such as determining appropriate investments of our limited resources, market reception of our platform and HOSS model, competition from other

14


companies, attracting and retaining customers, hiring, integrating, training and retaining skilled personnel, developing new solutions and unforeseen expenses. If our assumptions regarding these risks and uncertainties, which we use to plan our business, are incorrect or change, or if we do not address these risks successfully, our operating and financial results could be adversely affected.
If the market for our data management, machine learning and analytics platform develops more slowly than we expect, our growth may slow or stall, and our operating results could be harmed.
The market for a data management, machine learning and analytics platform is relatively new, rapidly evolving and unproven. Our future success will depend in large part on our ability to penetrate the existing market for data management, machine learning and analytics platforms, as well as the continued growth and expansion of that market. It is difficult to predict customer adoption and renewals of our subscriptions, customer demand for our platform, the size, growth rate and expansion of this market, the entry of competitive products or the success of existing competitive products. Our ability to penetrate the existing market for data management, machine learning and analytics platforms and any expansion of that market depends on a number of factors, including the cost, performance and perceived value associated with our platform, as well as potential customers’ willingness to adopt an alternative approach to data collection, storage and processing. If we or other data management providers experience security incidents, loss of customer data, disruptions in delivery or other problems, the market for data management, machine learning and analytics platforms as a whole, including our solutions, may be negatively affected. Furthermore, many potential customers have made significant investments in legacy data collection, storage and processing software and may be unwilling to invest in new solutions. If data management, machine learning and analytics platforms do not achieve widespread adoption, or there is a reduction in demand caused by a lack of customer acceptance, technological challenges, weakening economic conditions, security or privacy concerns, competing technologies and products, decreases in corporate spending or otherwise, it could result in decreased revenue and our business could be adversely affected.
We face intense competition and could lose market share to our competitors, which could adversely affect our business, financial condition and results of operations.
The market for data management, machine learning and analytics platforms is intensely competitive and characterized by rapid changes in technology, customer requirements, industry standards and frequent new product introductions and improvements. We anticipate continued challenges from current competitors, which in many cases are more established and enjoy greater resources than us, as well as by new entrants into the industry. If we are unable to anticipate or effectively react to these competitive challenges, our competitive position could weaken, and we could experience a decline in our growth rate or revenue that could adversely affect our business and results of operations.
Our main sources of current and potential competition fall into four categories:
legacy data management product providers such as HP, IBM, Oracle and Teradata;
public cloud providers who include proprietary data management, machine learning and analytics offerings, such as Amazon Web Services, Google Cloud Platform and Microsoft Azure;
strategic and technology partners who may also offer our competitors’ technology or otherwise partner with them, including our strategic partners who provide Partner Solutions (see “Business—Partners and Strategic Alliances”) as they may offer a substantially similar solution based on a competitor’s technology; and
open source companies, including Hortonworks and MapR, as well as internal IT organizations that provide open source self‑support for their enterprises.
Many of our existing competitors have, and some of our potential competitors could have, substantial competitive advantages such as:
greater name recognition, longer operating histories and larger customer bases;

15


larger sales and marketing budgets and resources and the capacity to leverage their sales efforts and marketing expenditures across a broader portfolio of products;
broader, deeper or otherwise more established relationships with technology, channel and distribution partners and customers;
wider geographic presence or greater access to larger customer bases;
greater focus in specific geographies;
lower labor and research and development costs;
larger and more mature intellectual property portfolios; and
substantially greater financial, technical and other resources to provide support, to make acquisitions and to develop and introduce new products.
In addition, some of our larger competitors have substantially broader and more diverse product and service offerings and may be able to leverage their relationships with distribution partners and customers based on other products or incorporate functionality into existing products to gain business in a manner that discourages users from purchasing our platform, including by selling at zero or negative margins, product bundling or offering closed technology platforms such as IBM Watson. Potential customers may also prefer to purchase from their existing suppliers rather than a new supplier regardless of platform performance or features. As a result, even if the features of our platform are superior, customers may not purchase our solutions. These larger competitors often have broader product lines and market focus or greater resources and may therefore not be as susceptible to economic downturns or other significant reductions in capital spending by customers. If we are unable to sufficiently differentiate our solutions from the integrated or bundled products of our competitors, such as by offering enhanced functionality, performance or value, we may see a decrease in demand for those solutions, which could adversely affect our business, operating results and financial condition.
In addition, new innovative start‑up companies, and larger companies that are making significant investments in research and development, may introduce products that have greater performance or functionality, are easier to implement or use, or incorporate technological advances that we have not yet developed or implemented or may invent similar or superior products and technologies that compete with our platform. Our current and potential competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their resources.
Some of our competitors have made or could make acquisitions of businesses that allow them to offer more competitive and comprehensive solutions. As a result of such acquisitions, our current or potential competitors may be able to accelerate the adoption of new technologies that better address customer needs, devote greater resources to bring these products and services to market, initiate or withstand substantial price competition, or develop and expand their product and service offerings more quickly than we do. These competitive pressures in our market or our failure to compete effectively may result in fewer orders, reduced revenue and gross margins and loss of market share. In addition, it is possible that industry consolidation may impact customers’ perceptions of the viability of smaller or even mid‑size software firms and consequently customers’ willingness to purchase from such firms.
We may not compete successfully against our current or potential competitors. If we are unable to compete successfully, or if competing successfully requires us to take costly actions in response to the actions of our competitors, our business, financial condition and results of operations could be adversely affected. In addition, companies competing with us may have an entirely different pricing or distribution model. Increased competition could result in fewer customer orders, price reductions, reduced operating margins and loss of market share. Further, we may be required to make substantial additional investments in research, development, marketing and sales in order to respond to such competitive threats, and we cannot assure you that we will be able to compete successfully in the future.

16


Because of the characteristics of open source software, there may be fewer technology barriers to entry in the hybrid open source market by new competitors and it may be relatively easy for new and existing competitors with greater resources than we have to compete with us.
One of the characteristics of open source software is that the governing license terms generally allow liberal modifications of the code and distribution thereof to a wide group of companies and/or individuals. As a result, others could easily develop new software products based upon those open source programs that compete with existing open source software that we support and incorporate into our platform. Such competition with use of the open source projects that we utilize can materialize without the same degree of overhead and lead time required by us, particularly if the customers do not value the differentiation of our proprietary components. It is possible for new and existing competitors with greater resources than ours to develop their own open source software or hybrid proprietary and open source software offerings, potentially reducing the demand for, and putting price pressure on, our platform. In addition, some competitors make open source software available for free download and use or may position competing open source software as a loss leader. We cannot guarantee that we will be able to compete successfully against current and future competitors or that competitive pressure and/or the availability of open source software will not result in price reductions, reduced operating margins and loss of market share, any one of which could seriously harm our business.
If our customers do not renew or expand their subscriptions, or if they renew on less favorable terms, our future revenue and operating results will be harmed.
Our future success depends, in part, on our ability to sell renewals of subscriptions and expand the deployment of our platform with existing customers. While we generally offer subscriptions of up to three years in length, our customers typically purchase one-year subscriptions which generally do not provide for automatic renewal or a right to terminate the subscription early. Our customers may not renew or expand the use of their subscriptions after the expiration of their current subscription agreements. In addition, our customers may opt for a lower‑priced edition of our platform or decrease their usage of our platform. Our existing customers generally have no contractual obligation to expand or renew their subscriptions after the expiration of the committed subscription period and given our limited operating history, we may not be able to accurately predict customer renewal rates. Our customers’ renewal and/or expansion pricing rates may decline or fluctuate as a result of factors, including, but not limited to, their satisfaction with our platform and our customer support, the frequency and severity of software and implementation errors, our platform’s reliability, the pricing of our subscriptions and services, or competing solutions or services, the effects of global economic conditions and their ability to continue their operations and spending levels. If our customers renew their subscriptions, they may renew for shorter contract lengths, less usage or on other terms that are less economically beneficial to us. We have limited historical data with respect to rates of customer subscription renewals, so we may not accurately predict future renewal trends. We cannot assure you that our customers will renew or expand their subscriptions, and if our customers do not renew their agreements or renew on less favorable terms or for less usage, our revenue may grow more slowly than expected or decline and our business could suffer.
Achieving renewal or expansion of subscriptions may require us to increasingly engage in sophisticated and costly sales efforts that may not result in additional sales. In addition, the rate at which our customers expand the deployment of our platform depends on a number of factors, including general economic conditions, the functioning of our solutions, the ability of our field organization, together with our partner ecosystem, to assist our customers in identifying new use cases, modernizing their data architectures, and achieving success with data‑driven initiatives and our customers’ satisfaction with our customer support. If our efforts to expand penetration within our customers are not successful, our business may suffer.
Our sales cycles can be long, unpredictable and vary seasonally, particularly with respect to large subscriptions, and our sales efforts require considerable time and expense.
Our results of operations may fluctuate, in part, because of the resource‑intensive nature of our sales efforts, the length and variability of the sales cycle for our platform and the difficulty in making short‑term adjustments to our operating expenses. The timing of our sales is difficult to predict. The length of our sales cycle, from initial evaluation to payment for our subscriptions is generally four to nine months, but can vary substantially from

17


customer to customer. Our sales cycle can extend to more than 18 months for some customers. Our sales efforts involve educating our customers about the use, technical capabilities and benefits of our platform, solutions and HOSS model. Customers often undertake a prolonged evaluation process, which frequently involves not only our platform but also those of other companies. Some of our customers initially deploy our platform on a limited basis, with no guarantee that these customers will deploy our platform widely enough across their organization to justify our substantial pre‑sales investment. As a result, it is difficult to predict exactly when, or even if, we will make a sale to a potential customer or if we can increase sales to our existing customers. Large individual sales have, in some cases, occurred in quarters subsequent to those we anticipated, or have not occurred at all. If our sales cycle lengthens or our substantial upfront investments do not result in sufficient revenue to justify our investments, our operating results could be adversely affected.
We have seasonal and end-of-quarter concentration of our sales, which impacts our ability to plan and manage cash flows and margins. Our sales vary by season with the fourth quarter typically being our largest. In addition, within each quarter, most sales occur in the last month of that quarter. Therefore, it is difficult to determine whether we are achieving our quarterly expectations until near the end of the quarter, with seasonality magnifying the difficulty for determining whether we will achieve annual expectations. Most of our expenses are relatively fixed or require time to adjust. Therefore, if expectations for our business are not accurate, we may not be able to adjust our cost structure on a timely basis and margins and cash flows may differ from expectations.
We do not have an adequate history with our subscription or pricing models to accurately predict the long‑term rate of customer adoption or renewal, or the impact these will have on our revenue or operating results.
We have limited experience with respect to determining the optimal prices and pricing models for our solutions. As the markets for our solutions mature, or as new competitors introduce new products or services that compete with ours, we may be unable to attract new customers at the same price or based on the same pricing model as we have used historically. Moreover, large customers, which are the focus of our sales efforts, may demand greater price concessions. Additionally, the renewal rate of our large customers may have more significant impact period to period on our revenue and operating results. As a result, in the future we may be required to reduce our prices, which could adversely affect our revenue, gross margin, profitability, financial position and cash flow. In addition, as an increasing amount of our business may move to our cloud‑based solutions for transient workloads and the use of our consumption‑based pricing model may represent a greater share of our revenue, our revenue may be less predictable or more variable than our historical revenue from a time period-based subscription pricing model. Moreover, a consumption‑based subscription pricing model may ultimately result in lower total cost to our customers over time, or may cause our customers to limit usage in order to stay within the limits of their existing subscriptions, reducing overall revenue or making it more difficult for us to compete in our markets.
Our results may fluctuate significantly from period to period, which could adversely impact the value of our common stock.
Our results of operations, including our revenue, gross margin, profitability and cash flows, may vary significantly in the future, and period‑to‑period comparisons of our operating results may not be meaningful. Accordingly, our results for any particular period should not be relied upon as an indication of future performance. Our financial results may fluctuate from period to period as a result of a variety of factors, many of which are outside of our control. Fluctuation in periodic results may adversely impact the value of our common stock. Factors that may cause fluctuations in our periodic financial results include, without limitation, those listed elsewhere in this “Risk Factors” section and those listed below:
the budgeting cycles and purchasing practices of our customers, including their tendency to purchase in the fourth quarter of our fiscal year, and near the end of each quarter;
the achievement of milestones in connection with delivery of services, impacting the timing of services revenue recognition;
subscriptions from the Global 8000 and other large enterprises;
price competition;

18


our ability to attract and retain new customers;
our ability to expand penetration within our existing customer base;
the timing and success of new solutions by us and our competitors;
changes in customer requirements or market needs and our ability to make corresponding changes to our business;
changes in the competitive landscape, including consolidation among our competitors or customers;
general economic conditions, both domestically and in our foreign markets;
the timing and amount of certain payments and expenses, such as research and development expenses, sales commissions and stock‑based compensation, including the recording of stock‑based compensation expense as a result of the vesting and settlement of restricted stock units (RSUs) including in connection with this offering;
our inability to adjust certain fixed costs and expenses, particularly in research and development, for changes in demand;
increases or decreases in our revenue and expenses caused by fluctuations in foreign currency exchange rates, as an increasing portion of our revenue is collected and expenses are incurred and paid in currencies other than the U.S. dollar;
the cost of and potential outcomes of existing and future claims or litigation, which could have a material adverse effect on our business;
future accounting pronouncements and changes in our accounting policies; and
changes in tax laws or tax regulations.
Any one of the factors above or the cumulative effect of some of the factors above may result in significant fluctuations in our operating results. This variability and unpredictability could result in our failure to meet our revenue or other operating result expectations or those of investors for a particular period. The failure to meet or exceed such expectations could have a material adverse effect on our business, results of operations and financial condition that could ultimately adversely affect our stock price.
Because we derive substantially all of our revenue from a single software platform, failure of this platform to satisfy customer demands or to achieve increased market acceptance could adversely affect our business, results of operations, financial condition and growth prospects.
We derive and expect to continue to derive substantially all of our revenue from our data management, machine learning and analytics platform. As such, the market acceptance of our platform is critical to our continued success. Demand for our platform is affected by a number of factors beyond our control, including continued market acceptance, the timing of development and release of new products by our competitors, technological change, any developments or disagreements with the open source community and growth or contraction in our market. We expect the growth and proliferation of data to lead to an increase in the data analyses demands of our customers, and our platform may not be able to scale and perform to meet those demands or may not be chosen by users for those needs. If we are unable to continue to meet customer demands or to achieve more widespread market acceptance of our platform and solutions, our business operations, financial results and growth prospects will be materially and adversely affected.

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We have been, and may in the future be, subject to intellectual property rights claims by third parties, which are extremely costly to defend, could require us to pay significant damages and could limit our ability to use certain technologies.
Companies in the software and technology industries, including some of our current and potential competitors, own large numbers of patents, copyrights, trademarks and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights. In addition, many of these 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. The litigation may involve patent holding companies or other adverse patent owners that have no relevant product revenue and against which our patents may therefore provide little or no deterrence. From time‑to‑time, third parties, including certain other companies, have asserted and may assert patent, copyright, trademark or other intellectual property rights against us, our partners or our customers. We or our customers have received, and may in the future receive, notices that claim we have misappropriated, misused or infringed other parties’ intellectual property rights, and, to the extent we gain greater market visibility, we face a higher risk of being the subject of intellectual property infringement claims, which is not uncommon with respect to the enterprise software market.
There may be third‑party intellectual property rights, including issued or pending patents, that cover significant aspects of our technologies, the technologies in our platform or business methods. We may be exposed to increased risk of being the subject of intellectual property infringement claims as a result of acquisitions and our incorporation of open source software into our platform, as, among other things, we have a lower level of visibility into the development process with respect to such technology or the care taken to safeguard against infringement risks. Any intellectual property claims, with or without merit, could be very time‑consuming, could be expensive to settle or litigate and could divert our management’s attention and other resources. These claims could also subject us to significant liability for damages, potentially including treble damages if we are found to have willfully infringed patents or copyrights. These claims could also result in our having to stop using, distributing or supporting technology found to be in violation of a third party’s rights. We might be required to seek a license for the intellectual property, which may not be available on reasonable terms or at all. Even if a license were available, we could be required to pay significant royalties, which would increase our operating expenses. As a result, we may be required to develop alternative non‑infringing technology, which could require significant effort and expense. If we cannot license or develop technology for any infringing aspect of our business, we could be forced to limit or stop sales of our offerings and may be unable to compete effectively. Any of these results could adversely affect our business operations and financial results.
Third parties may also assert such claims against our customers or partners whom we typically indemnify against claims that our solutions infringe, misappropriate or otherwise violate the intellectual property rights of third parties, including in the third‑party open source components included in our platform, as well as our own open source and proprietary components. As the numbers of products and competitors in our market increase and overlaps occur, claims of infringement, misappropriation and other violations of intellectual property rights may increase. Also, to the extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited or have divulged proprietary or other confidential information.
Any failure to protect our intellectual property rights could impair our ability to protect our proprietary technology and our brand.
Our success depends, in part, on our ability to protect proprietary methods and technologies that we develop under patent and other intellectual property laws of the United States and other jurisdictions outside of the United States so that we can prevent others from using our inventions and proprietary information. If we fail to protect our intellectual property rights adequately, our competitors may gain access to our technology, and our business may be harmed. In addition, defending our intellectual property rights may entail significant expense. Any of our patents, trademarks or other intellectual property rights may be challenged by others or invalidated through administrative process or litigation. While we have patents and patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications or the patent protection may not be obtained quickly enough to meet our business needs. In addition, our existing patents and any patents issued in the future may not provide us with competitive advantages, or may be successfully challenged by third parties.

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Moreover, despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our platform or offerings or obtain and use information that we regard as proprietary. We generally enter into confidentiality or license agreements with our employees, consultants, vendors and customers, and generally limit access to and distribution of our proprietary information. However, we cannot be certain that we have entered into such agreements with all parties who may have or have had access to our confidential information or that the agreements we have entered into will not be breached. We cannot guarantee that any of the measures we have taken will prevent misappropriation of our technology. Because we may be an attractive target for cybersecurity attacks, we may have a greater risk of unauthorized access to, and misappropriation of, our proprietary information.
Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain, and we also may face proposals to change the scope of protection for some intellectual property right. Effective patent, trademark, copyright and trade secret protection may not be available to us in every country in which our products or services are available. The laws of some countries may not be as protective of intellectual property rights as those in the United States, and mechanisms for enforcement of intellectual property rights may be inadequate. Also, our involvement in standard setting activity or the need to obtain licenses from others may require us to license our intellectual property. Accordingly, despite our efforts, we may be unable to prevent third parties from using our intellectual property.
We may be required to spend significant resources to monitor and protect our intellectual property rights and we may conclude that in at least some instances the benefits of protecting our intellectual property rights may be outweighed by the expense. We may initiate claims or litigation against third parties for infringement of our proprietary rights or to establish the validity of our proprietary rights. Any litigation, whether or not it is resolved in our favor, could result in significant expense to us and divert the efforts of our technical and management personnel.
We do not control and may be unable to predict the future course of open source technology development, including the ongoing development of open source components used in our platform, which could reduce the market appeal of our platform and damage our reputation.
We do not control many aspects of the development of the open source technology in our platform. Different groups of open source software programmers collaborate with one another to develop the software projects in our platform. Given the disparate inputs from various developers, we cannot control entirely how an open source project develops and matures. Also, different open source projects may overlap or compete with the ones that we incorporate into our platform. The technology developed by one group for one project may become more widely used than that developed by others. If we acquire or adopt a new technology and incorporate it into our platform but a competing technology becomes more widely used or accepted, the market appeal of our platform may be reduced and that could harm our reputation, diminish our brand and result in decreased revenue.
If open source software programmers, many of whom we do not employ, or our own internal programmers do not continue to develop and enhance open source technologies, we may be unable to develop new technologies, adequately enhance our existing technologies or meet customer requirements for innovation, quality and price.
We rely to a significant degree on a number of open source software programmers, or committers and contributors, to develop and enhance components of our platform. Additionally, members of the corresponding Apache Software Foundation Project Management Committees (PMCs) many of whom are not employed by us, are primarily responsible for the oversight and evolution of the codebases of important components of the open source data management ecosystem. If the open source data management committers and contributors fail to adequately further develop and enhance open source technologies, or if the PMCs fail to oversee and guide the evolution of open source data management technologies in the manner that we believe is appropriate to maximize the market potential of our solutions, then we would have to rely on other parties, or we would need to expend additional resources, to develop and enhance our platform. We also must devote adequate resources to our own internal programmers to support their continued development and enhancement of open source technologies, and if we do not do so, we may have to turn to third parties or experience delays in developing or enhancing open source technologies. We cannot predict whether further developments and enhancements to these technologies would be available from reliable alternative sources. In either event, our development expenses could be increased and our technology release and upgrade schedules could be delayed. Delays in developing, completing or delivering new or

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enhanced components to our platform could cause our offerings to be less competitive, impair customer acceptance of our solutions and result in delayed or reduced revenue for our solutions.
Our software development and licensing model could be negatively impacted if the Apache License, Version 2.0 is not enforceable or is modified so as to become incompatible with other open source licenses.
Important components of our platform have been provided under the Apache License 2.0. This license states that any work of authorship licensed under it, and any derivative work thereof, may be reproduced and distributed provided that certain conditions are met. It is possible that a court would hold this license to be unenforceable or that someone could assert a claim for proprietary rights in a program developed and distributed under it. Any ruling by a court that this license is not enforceable, or that open source components of our platform may not be reproduced or distributed, may negatively impact our distribution or development of all or a portion of our solutions. In addition, at some time in the future it is possible that important components of the open source projects in our platform may be distributed under a different license or the Apache License 2.0, which governs Hadoop, Spark and other current elements of our platform, may be modified, which could, among other consequences, negatively impact our continuing development or distribution of the software code subject to the new or modified license.
Further, full utilization of our platform may depend on software, applications, hardware and services from various third parties, and these items may not be compatible with our platform and its development or available to us or our customers on commercially reasonable terms, or at all, which could harm our business.
Our use of open source software in our solutions could negatively affect our ability to sell our platform and subject us to possible litigation.
Our solutions include software covered by open source licenses, which may include, by way of example, GNU General Public License and the Apache License. We do not own all of the open source technology in our platform and the ownership of the open source technology in our platform may not be easily determinable by us. Rather, we rely on the Apache Software Foundation (ASF) as well as certain other third party open source contributors to ensure that the open source contributions to our platform are properly owned by the committers and contributors who contribute the open source technology and that such contributions do not infringe on other parties’ intellectual property rights. Moreover, the terms of certain of the open source licenses have not been interpreted by United States or other courts, and there is a risk that such licenses could be construed in a manner that is incompatible with our current business model, imposing unanticipated conditions or restrictions on our ability to market our solutions. We, our customers and the ASF may have received or may in the future receive, notices that claim we have misappropriated, misused or infringed other parties’ intellectual property rights, and, to the extent products based on the open source data management ecosystem gain greater market visibility, we, our customers, and the ASF, face a higher risk of being the subject of intellectual property infringement claims. In addition, we or our customers could be subject to lawsuits by parties claiming ownership of (or that different license terms apply to) what we believe to be open source software, or seeking to enforce the terms of an open source license. By the terms of certain open source licenses, we could be required to release the source code of our proprietary software, and to make our proprietary software available under open source licenses, if we combine our proprietary software with open source software in a certain manner. In the event that portions of our proprietary software are determined to be impacted by an open source license, we could be required to publicly release the affected portions of our source code, re‑engineer all or a portion of our technologies, or otherwise be limited in the licensing of our technologies and services, each of which could reduce or eliminate the value of our technologies and cause us to have to significantly alter our current business model. These claims could also result in litigation (including litigation against our customers or partners, which could result in us being obligated to indemnify our customers or partners against such litigation), require us to purchase a costly license or require us to devote additional research and development resources to change our solutions, any of which could have a negative effect on our business and operating results. In addition, if the license terms for the open source code change, we may be forced to re‑engineer our solutions or incur additional costs to find alternative tools.
In addition to risks related to license requirements, usage of open source software can lead to greater risks than use of third‑party commercial software, as open source licensors generally do not provide warranties, support, indemnity or assurance of title or controls on origin of the software. Further, some open source projects have known

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vulnerabilities and architectural instabilities and are provided on an “as‑is” basis. Many of these risks associated with usage of open source software, such as the lack of warranties or assurances of title, cannot be eliminated, and could, if not properly addressed, negatively affect the performance of our platform and our business. In addition, we are often required to absorb these risks in our customer and partner relationships by agreeing to provide warranties, support and indemnification with respect to such third party open source software. While we have established processes intended to alleviate these risks, we cannot assure that these measures will reduce these risks.
Because our business relies on the Apache Software Foundation, our business could be harmed by the decisions made by the ASF or claims or disputes directed at or reputational harm otherwise suffered by the ASF.
Our business relies on the ASF, a non‑profit corporation that supports Apache open source software projects. We do not control nor can we predict the decisions the ASF will make with respect to the further development and enhancement of open source technologies which may impact our business. For example, the reduction or elimination of support of Hadoop, Spark or other technologies by the ASF, the migration of Hadoop, Spark and other open source data management technology to an organization other than the ASF, or any other actions taken by the ASF or the Hadoop project may impact our business model. Moreover, if the ASF is subject to claims, disputes or otherwise suffers reputational harm, our business, results of operations, financial condition and growth prospectus could be harmed if customers perceive our solutions to be risky or inferior to data management solutions which do not rely on the ASF for continued development and enhancement of open source technologies.
Security and privacy breaches may hurt our business.
Any security breach, including those resulting from a cybersecurity attack, or any unauthorized access, unauthorized usage, virus or similar breach or disruption could result in the loss of confidential information, damage to our reputation, early termination of our contracts, litigation, regulatory investigations or other liabilities. If our security measures or the security measures we have provided to customers are breached as a result of third‑party action, employee error, malfeasance or otherwise and, as a result, someone obtains unauthorized access to our customers’ confidential information, our reputation may be damaged, our business may suffer and we could incur significant liability.
Techniques used to obtain unauthorized access or to sabotage systems change frequently and generally are not recognized until launched against a target. As a result, we may be unable to anticipate these techniques or to implement adequate preventative measures. If an actual or perceived security breach occurs, the market perception of our security measures could be harmed and we could lose sales and customers.
In addition, many of our customers use our platform to store and process vast quantities of private and otherwise sensitive data that are critical to their businesses. They may have a greater sensitivity to security defects in our products than to defects in other, less critical, software products. An actual or perceived security breach or theft of the business‑critical data of one of our customers, regardless of whether the breach is attributable to the failure of our products or services, could adversely affect the market’s perception of our security products. Moreover, if a high‑profile security breach occurs with respect to another data management, machine learning and analytics platform provider, our customers and potential customers may lose trust in the security of data management, machine learning and analytics platforms generally, which could adversely impact our ability to retain existing customers or attract new ones.
Real or perceived errors, failures, bugs or disruptions in our platform and solutions could adversely affect our reputation and business could be harmed.
Our platform and solutions are very complex and have contained and may contain undetected defects or errors, especially when solutions are first introduced or enhanced. In addition, our platform employs open source software and to the extent that our solutions depend upon the successful operation of open source software in conjunction with our solutions, any undetected errors or defects in this open source software could prevent the deployment or impair the functionality of our solutions, delay new solutions introductions, result in a failure of our solutions, result in liability to our customers, and injure our reputation.

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If our platform is not implemented or used correctly or as intended, inadequate performance and disruption in service may result. Moreover, as we acquire companies and integrate new open source data management projects, we may encounter difficulty in incorporating the newly‑obtained technologies into our platform and maintaining the quality standards that are consistent with our reputation.
Since our customers use our platform and solutions for important aspects of their business, any errors, defects, disruptions in service or other performance problems could hurt our reputation and may damage our customers’ businesses. Furthermore, defects in our platform and solutions may require us to implement design changes or software updates. Any defects or errors in our platform and solutions, or the perception of such defects or errors, could result in:
expenditure of significant financial and product development resources in efforts to analyze, correct, eliminate or work around errors or defects;
loss of existing or potential customers or channel partners;
delayed or lost revenue;
delay or failure to attain market acceptance;
delay in the development or release of new solutions or services;
negative publicity, which will harm our reputation;
warranty claims against us, which could result in an increase in our provision for doubtful accounts;
an increase in collection cycles for accounts receivable or the expense and risk of litigation; and
harm to our results of operations.
Although we have contractual protections, such as warranty disclaimers and limitation of liability provisions, in our standard terms and conditions of sale, they may not fully or effectively protect us from claims by customers, partners or other third parties. Any insurance coverage we may have may not adequately cover all claims asserted against us, or cover only a portion of such claims. In addition, even claims that ultimately are unsuccessful could result in our expenditure of funds in litigation and divert management’s time and other resources.
If we are unable to hire, retain, train and motivate qualified personnel and senior management, our business could be harmed.
Our future success depends, in part, on our ability to continue to attract, integrate and retain qualified and highly skilled personnel. In particular, we are substantially dependent on the continued service of our existing engineering personnel because of the complexity of our platform and are also highly dependent on the contributions of our executive team. The loss of any key personnel could make it more difficult to manage our operations and research and development activities, reduce our employee retention and revenue and impair our ability to compete. Although we have entered into employment offer letters with our key personnel, these agreements have no specific duration and constitute at‑will employment. We do not maintain key person life insurance policies on any of our employees. The loss of one or more of our key employees could seriously harm our business. If we are unable to attract, integrate, or retain the qualified and highly skilled personnel required to fulfill our current or future needs, our business, financial condition and operating results could be harmed.
Competition for highly skilled personnel is often intense, especially in the San Francisco Bay Area where we have a substantial presence and need for highly skilled personnel. We may not be successful in attracting, integrating or retaining qualified personnel to fulfill our current or future needs. We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining highly skilled employees with appropriate qualifications. In addition, job candidates and existing employees often consider the value of the equity awards they receive in connection with their employment. If the perceived value of our common stock declines, it may adversely affect our ability to hire or retain highly skilled employees. In addition, we may periodically change our equity

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compensation practices, which may include reducing the number of employees eligible for equity awards or reducing the size of equity awards granted per employee. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects could be harmed.
We have experienced rapid growth in recent periods and expect our growth to continue. If we fail to effectively manage our growth, our business and operating results could be adversely affected.
We have experienced and may continue to experience rapid growth in our headcount and operations, which has placed and will continue to place significant demands on our managerial, administrative, operational, financial and other resources. For example, our employee headcount increased from 1,140 employees as of January 31, 2016 to                     employees as of January 31, 2017. This growth has placed, and any future growth will place, significant demands on our management and our operational and financial infrastructure. To manage this growth effectively, we must continue to improve our operational, financial and management systems and controls by, among other things:
recruiting, training, integrating and retaining new employees, particularly for our sales and research and development teams;
developing and improving our internal administrative infrastructure, particularly our financial, operational, compliance, recordkeeping, communications and other internal systems;
managing our international operations and the risks associated therewith;
maintaining high levels of satisfaction with our platform among our customers; and
effectively managing expenses related to any future growth.
If we fail to manage our growth, or if we fail to implement improvements or maintain effective internal controls, our costs and expenses may increase more than we plan and our ability to expand our customer base, enhance our platform, develop new solutions, expand penetration within existing customers, respond to competitive pressures or otherwise execute our business plan, our business and operating results could be adversely affected.
Because we recognize subscription revenue from our platform over the subscription term, downturns or upturns in new sales and renewals will not be immediately reflected in our operating results.
We generally recognize subscription revenue ratably over the term of the subscription period. As a result, most of the revenue we report in each quarter are derived from the recognition of deferred revenue relating to subscriptions entered into during previous quarters. Consequently, a decline in new or renewed subscriptions, or a reduction in expansion rates, in any single quarter could have only a small impact on our revenue results during that quarter or subsequent period. Such a decline or deceleration, however, will negatively affect our revenue or revenue growth rates in future quarters. Accordingly, the effect of these changes or events may not be fully reflected in our results of operations until future periods. Given the ratable nature of our revenue recognition, our subscription model also makes it difficult for us to rapidly increase our revenue through additional sales in any period. We may be unable to adjust our cost structure to reflect the changes in revenue. In addition, a significant majority of our costs are expensed as incurred, while revenue is generally recognized over the life of the customer agreement. As a result, increased growth in the number of our customers could result in our recognition of more costs than revenue in the earlier periods of the terms of our agreements.
Our revenue growth depends in part on the success of our strategic relationships with third parties and their continued performance.
We seek to grow our partner ecosystem as a way to grow our business. To grow our business, we anticipate that we will continue to establish and maintain relationships with third parties, such as resellers, OEMs, system integrators, independent software and hardware vendors and platform and cloud service providers. For example, in 2014, we entered into a strategic collaboration and optimization agreement with Intel. In addition, we work closely with select vendors to design solutions to specifically address the needs of certain industry verticals or use cases within those verticals, which we refer to as Partner Solutions. As our agreements with strategic partners terminate or expire, we may be unable to renew or replace these agreements on comparable terms, or at all. Moreover, we cannot

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guarantee that the companies with which we have strategic relationships will continue to devote the resources necessary to expand our reach, increase our distribution and increase the number of Partner Solutions and associated use cases. In addition, customer satisfaction with Partner Solutions may be less than anticipated, negatively impacting anticipated revenue growth and results of operations. Further, some of our strategic partners offer competing products and services or also work with our competitors. As a result of these factors, many of the companies with which we have strategic alliances may choose to pursue alternative technologies and develop alternative products and services in addition to or in lieu of our platform, either on their own or in collaboration with others, including our competitors. If we are unsuccessful in establishing or maintaining our relationships with third parties, our ability to compete in the marketplace or to grow our revenue could be impaired and our operating results may suffer. Even if we are successful in establishing and maintaining these relationships with third parties, we cannot assure you that these relationships will result in increased customer usage of our platform or increased revenue.
The sum of our revenue and changes in deferred revenue may not be an accurate indicator of business activity within a period.
Investors or analysts sometimes look to the sum of our revenue and changes in deferred revenue as an indicator of business activity in a period for businesses such as ours, sometimes referred to as “estimated billings.” However, these measures may significantly differ from underlying business activity for a number of reasons including:
a relatively large number of transactions occur at the end of the quarter. Invoicing of those transactions may or may not occur before the end of the quarter based on a number of factors including receipt of information from the customer, volume of transactions and holidays. A shift of a few days has little economic impact on our business, but will shift deferred revenue from one period into the next;
multi‑year upfront billings may distort trends;
subscriptions that have deferred start dates; and
services that are invoiced upon delivery.
Accordingly, we do not believe that estimated billings is an accurate indicator of future revenue for any given period of time. However, many companies that provide subscriptions report changes in estimated billings as a key operating or financial metric, and it is possible that analysts or investors may view this metric as important. Thus, any changes in our estimated billings could adversely affect the market price of our common stock.
The forecasts of market growth included in this prospectus may prove to be inaccurate, and, even if the markets in which we compete achieve the forecasted growth, we cannot assure you our business will grow at similar rates, if at all.
Growth forecasts are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate. The forecasts in this prospectus relating to the expected growth in the market for our platform were prepared by a third party based on their research, estimates and assumptions. While these factors may seem reasonable to them and us, the resulting forecasts may prove to be inaccurate. Even if this market experiences the forecasted growth described in this prospectus, we may not grow our business at similar rates, or 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, the forecasts of market growth included in this prospectus should not be taken as indicative of our future growth.
If our new components and enhancements to our platform do not achieve sufficient market acceptance, our financial results and competitive position will suffer.
We spend substantial amounts of time and money to research and develop new components and enhancements of our platforms to incorporate additional features, improve functionality or other enhancements in order to meet our customers’ rapidly evolving demands. When we develop a new component or enhancement to our platform, whether open source or proprietary, we typically incur expenses and expend resources upfront to develop, market and promote the new component. Therefore, when we develop and introduce new components or enhancements to our

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platform, they must achieve high levels of market acceptance in order to justify the amount of our investment in developing and bringing them to market. For example, if our new file system based on the open source Kudu project does not garner widespread market adoption and implementation, our growth prospects, future financial results and competitive position could suffer.
Our new components or enhancements to our platform and changes to our platform could fail to attain sufficient market acceptance for many reasons, including:
our failure to predict market demand accurately in terms of platform functionality, including curating new open source projects, and to supply a platform that meets this demand in a timely fashion;
delays in releasing to the market our new components or enhancements to our platform to the market;
defects, errors or failures;
complexity in the implementation or utilization of the new components and enhancements;
negative publicity about their performance or effectiveness;
introduction or anticipated introduction of competing platforms by our competitors;
poor business conditions for our end‑customers, causing them to delay IT purchases; and
reluctance of customers to purchase platforms incorporating open source software or to purchase hybrid platforms.
If our new components or enhancements and changes do not achieve adequate acceptance in the market, our competitive position will be impaired, and our revenue will be diminished. The adverse effect on our financial results may be particularly acute because of the significant research, development, marketing, sales and other expenses we will have incurred in connection with the new solutions or enhancements.
If we do not effectively hire, retain, train and oversee our direct sales force, we may be unable to add new customers or increase sales to our existing customers, and our business may be adversely affected.
We continue to be substantially dependent on our direct sales force to obtain new customers and increase sales with existing customers. There is significant competition for sales personnel with the skills and technical knowledge that we require. Our ability to achieve significant revenue growth will depend, in large part, on our success in recruiting, training and retaining sufficient numbers of sales personnel to support our growth, particularly in international markets. In addition, a large percentage of our sales force is new to our company. New hires require significant training and may take significant time before they achieve full productivity. Our recent hires and planned hires may not become productive as quickly as we expect, and we may be unable to hire or retain sufficient numbers of qualified individuals in the markets where we do business or plan to do business. In addition, growth of our direct sales force leads to increasing difficulty and complexity in its organization, management and leadership, at which we may prove unsuccessful. If we are unable to hire and train a sufficient number of effective sales personnel, we are ineffective at overseeing a growing sales force, or the sales personnel we hire are otherwise unsuccessful in obtaining new customers or increasing sales to our existing customer base, our business will be adversely affected.
We may acquire or invest in companies and technologies, which may divert our management’s attention, and result in additional dilution to our stockholders. We may be unable to integrate acquired businesses and technologies successfully or achieve the expected benefits of such acquisitions or investments.
As part of our business strategy, we have acquired companies in the past and may evaluate and consider potential strategic transactions, including acquisitions of, or investments in, businesses, technologies, services, products and other assets in the future. For example, we acquired Gazzang, Inc. in June 2014 and Xplain.io, Inc. in February 2015. We also may enter into relationships with other businesses to expand our solutions or our ability to provide services. An acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the businesses,

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technologies, products, personnel or operations of the acquired companies, particularly if the key personnel of the acquired company choose not to work for us, their technology is not easily adapted to work with ours, or we have difficulty retaining the customers of any acquired business due to changes in ownership, management or otherwise. Negotiating these transactions can be time‑consuming, difficult and expensive, and our ability to close these transactions may often be subject to conditions or approvals that are beyond our control. Consequently, these transactions, even if undertaken and announced, may not close.
Even if we are able to complete acquisitions or enter into alliances and joint ventures that we believe will be successful, such transactions are inherently risky. Acquisitions involve many risks, including the following:
an acquisition may negatively impact our results of operations because it:
may require us to incur charges, including integration and restructuring costs, both one‑time and ongoing, as well as substantial debt or liabilities, including unanticipated and unknown liabilities,
may cause adverse tax consequences, substantial depreciation or deferred compensation charges,
may result in acquired in‑process research and development expenses or in the future may require the amortization, write‑down or impairment of amounts related to deferred compensation, goodwill and other intangible assets, or
may not generate sufficient financial returns for us to offset our acquisition costs;
we may encounter difficulties or unforeseen expenditures in integrating the business, technologies, products, personnel or operations of any company that we acquire, particularly if key personnel of the acquired company decide not to work for us;
an acquisition and integration process is complex, expensive and time consuming, and may disrupt our ongoing business, divert resources, increase our expenses and distract our management;
an acquisition may result in a delay or reduction of customer purchases for both us and the company acquired due to customer uncertainty about continuity and effectiveness of service from either company;
an acquisition may result in increased regulatory and compliance requirements;
an acquisition may result in increased uncertainty if we enter into businesses, markets or business models in which we have limited or no prior experience and in which competitors have stronger market positions;
we may encounter difficulties in maintaining the key business relationships and the reputations of the businesses we acquire, and we may be dependent on unfamiliar affiliates and partners of the companies we acquire;
we mail fail to maintain sufficient controls, policies and procedures, including integrating any acquired business into our control environment;
we may fail to achieve anticipated synergies, including with respect to complementary software or services;
we may obtain unanticipated or unknown liabilities, including intellectual property or other claims, or become exposed to unanticipated risks in connection with any acquisition; and
an acquisition may involve the entry into geographic or business markets in which we have little or no prior experience.
If we are unable to address these difficulties and challenges or other problems encountered in connection with any future acquisition or investment, we might not realize the anticipated benefits of that acquisition or investment, we might incur unanticipated liabilities or we might otherwise suffer harm to our business generally.

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To the extent we pay the consideration for any future acquisitions or investments in cash, the payment would reduce the amount of cash available to us for other purposes. Future acquisitions or investments could also result in dilutive issuances of our equity securities or the incurrence of debt, contingent liabilities, amortization expenses, or impairment charges against goodwill on our balance sheet, any of which could harm our financial condition and negatively impact our stockholders.
As we expand internationally, our business will become more susceptible to risks associated with international operations.
We have recently expanded internationally, and intend to continue such international expansion. For example, we sell the various editions of our platform through our direct sales force, which is comprised of inside sales and field sales personnel, and is located in a variety of geographic regions, including the United States, Europe and Asia, and have customers located in over                  countries as of January 31, 2017. We intend to continue to expand internationally.
Conducting international operations subjects us to risks that we have not generally faced in the United States. These risks include:
challenges caused by distance, language, cultural and ethical differences and the competitive environment;
heightened risks of unethical, unfair or corrupt business practices, actual or claimed, in certain geographies and of improper or fraudulent sales arrangements that may impact financial results and result in restatements of, and irregularities in, financial statements;
foreign exchange restrictions and fluctuations in currency exchange rates, including that, because a majority of our international contracts are denominated in U.S. dollars, an increase in the strength of the U.S. dollar may make doing business with us less appealing to a non‑U.S. dollar denominated customer;
application of multiple and conflicting laws and regulations, including complications due to unexpected changes in foreign laws and regulatory requirements;
risks associated with trade restrictions and foreign import requirements, including the importation, certification and localization of our solutions required in foreign countries, as well as changes in trade, tariffs, restrictions or requirements;
new and different sources of competition;
potentially different pricing environments, longer sales cycles and longer accounts receivable payment cycles and collections issues;
management communication and integration problems resulting from cultural differences and geographic dispersion;
potentially adverse tax consequences, including multiple and possibly overlapping tax structures, the complexities of foreign value‑added tax systems, restrictions on the repatriation of earnings and changes in tax rates;
greater difficulty in enforcing contracts, accounts receivable collection and longer collection periods;
the uncertainty and limitation of protection for intellectual property rights in some countries;
increased financial accounting and reporting burdens and complexities;
lack of familiarity with locals laws, customs and practices, and laws and business practices favoring local competitors or partners; and
political, social and economic instability abroad, terrorist attacks and security concerns in general.

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The occurrence of any one of these risks could harm our international business and, consequently, our results of operations. Additionally, operating in international markets requires significant management attention and financial resources. We cannot be certain that the investment and additional resources required to operate in other countries will produce desired levels of revenue or profitability.
Some of our business partners also have international operations and are subject to the risks described above. Even if we are able to successfully manage the risks of international operations, our business may be adversely affected if our business partners are not able to successfully manage these risks.
Our business in countries with a history of corruption and transactions with foreign governments increase the risks associated with our international activities.
As we operate and sell internationally, we are subject to the Foreign Corrupt Practices Act (FCPA), the United Kingdom Bribery Act of 2010, or the UK Bribery Act, and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties for the purpose of obtaining or retaining business. We have operations, deal with and make sales to governmental customers in countries known to experience corruption, particularly certain emerging countries in Africa, East Asia, Eastern Europe, South America and the Middle East. Our activities in these countries create the risk of unauthorized payments or offers of payments by one of our employees, consultants, sales agents or channel partners that could be in violation of various anti‑corruption laws, even though these parties may not be under our control. While we have implemented policies and controls intended to prevent these practices by our employees, consultants, sales agents and channel partners, our existing safeguards and any future improvements may prove to be less than effective, and our employees, consultants, sales agents or channel partners may engage in conduct for which we might be held responsible. Violations of the FCPA, the UK Bribery Act and other laws may result in severe criminal or civil sanctions, including suspension or debarment from U.S. government contracting, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition.
We are subject to governmental export control, sanctions and import laws and regulations that could subject us to liability or impair our ability to compete in international markets.
Because we incorporate encryption functionality into our platform (including any products comprising the platform), we are subject to certain U.S. export control laws that apply to encryption items. As such, our platform may be exported outside the United States through an export license exception; an export license is required to certain countries, end‑users and end‑uses. If we were to fail to comply with such U.S. export controls laws, U.S. customs regulations, U.S. economic sanctions, or other similar laws, we could be subject to both civil and criminal penalties, including substantial fines, possible incarceration for employees and managers for willful violations, and the possible loss of our export or import privileges. Obtaining the necessary export license for a particular sale or offering may not be possible and may be time‑consuming and may result in the delay or loss of sales opportunities. Furthermore, U.S. export control laws and economic sanctions prohibit the export of products to certain U.S. embargoed or sanctioned countries, governments and persons, as well as for prohibited end‑uses. Monitoring and ensuring compliance with these complex U.S. export control laws is particularly challenging because our platform and related services are widely distributed throughout the world and are available for download without registration. Even though we take precautions to ensure that we and our reseller partners comply with all relevant export control laws and regulations, any failure by us or our reseller partners to comply with such laws and regulations could have negative consequences for us, including reputational harm, government investigations and penalties.
In addition, various countries regulate the import of certain encryption technology, including through import permit and license requirements, and have enacted laws that could limit our ability to distribute our platform or could limit our end‑customers’ ability to implement our products in those countries. Changes in our products or changes in export and import regulations in such countries may create delays in the introduction of our platform into international markets, prevent our end‑customers with international operations from deploying our products globally or, in some cases, prevent or delay the export or import of our platform to certain countries, governments or persons altogether. Any change in export or import laws or regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing export, import or sanctions laws or regulations, or change in the countries,

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governments, persons, or technologies targeted by such export, import or sanctions laws or regulations, could result in decreased use of our platform by, or in our decreased ability to export or sell our platform to, existing or potential end‑customers with international operations. Any decreased use of our platform or limitation on our ability to export to or sell our platform in international markets could adversely affect our business, financial condition and operating results.
We are exposed to fluctuations in currency exchange rates, which could negatively affect our operating results.
Our sales contracts are primarily denominated in U.S. dollars, and therefore substantially all of our revenue is not subject to foreign currency risk. However, a strengthening of the U.S. dollar could increase the real cost of our platform to our customers outside of the United States, which could adversely affect our operating results. In addition, an increasing portion of our operating expenses is incurred and an increasing portion of our assets is held outside the United States. These operating expenses and assets are denominated in foreign currencies and are subject to fluctuations due to changes in foreign currency exchange rates. If we are not able to successfully hedge against the risks associated with currency fluctuations, our operating results could be adversely affected.
Our failure to raise additional capital could reduce our ability to compete and could harm our business.
We expect that our existing cash and cash equivalents, together with our net proceeds from this offering, will be sufficient to meet our anticipated cash needs for the foreseeable future. However if we change our business strategy, we may need to raise additional funds in the future, and we may not be able to obtain additional debt or equity financing on favorable terms, if at all. If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests and the per share value of our common stock could decline. Furthermore, if we engage in debt financing, the holders of debt would have priority over the holders of common stock, and we may be required to accept terms that restrict our ability to incur additional indebtedness. We may also be required to take other actions that would otherwise be in the interests of the debt holders and force us to maintain specified liquidity or other ratios, any of which could harm our business, operating results and financial condition.
We are exposed to the credit risk of some of our resellers and customers and to credit exposure in weakened markets, which could result in material losses.
Most of our sales are on an unsecured basis. Although we seek to mitigate these risks, we cannot be certain that these efforts will be effective in reducing our credit risks, especially as we expand our business internationally. If we are unable to adequately control these risks, our business, results of operations and financial condition could be harmed.
Federal, state, foreign government and industry regulations, as well as self‑regulation related to privacy and data security concerns, pose the threat of lawsuits and other liability.
We collect and utilize demographic and other information, including personally identifiable information, from and about our employees and our existing and potential customers and partners. Such information may be collected from our customers and partners when they visit our website or through their use of our products and interactions with our company and employees such as when signing up for certain services, registering for training seminars, participating in a survey, participating in polls or signing up to receive e‑mail newsletters.
A wide variety of domestic and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data. These data protection and privacy‑related laws and regulations are evolving and may result in regulatory and public scrutiny and escalating levels of enforcement and sanctions. Our failure to comply with applicable laws and regulations, or to protect such data, could result in enforcement action against us, including fines, claims for damages by customers and other affected individuals, damage to our reputation and loss of goodwill (both in relation to existing customers and prospective customers), any of which could have a material adverse effect on our operations, financial performance and business. Evolving and changing definitions of personal data and personal information within the European Union, the United States, and elsewhere may limit or inhibit our ability to operate or expand our business. Even the perception of privacy concerns, whether or not valid, may harm our reputation, inhibit adoption of our products by current and future customers or adversely impact our ability to attract and retain workforce talent.

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Loss, retention or misuse of certain information and alleged violations of laws and regulations relating to privacy and data security, and any relevant claims, may expose us to potential liability and may require us to expend significant resources on data security and in responding to and defending such allegations and claims. In addition, future laws, regulations, standards and other obligations, and changes in the interpretation of existing laws, regulations, standards and other obligations could impair our customers’ ability to collect, use or disclose data relating to individuals, which could decrease demand for our platform, increase our costs and impair our ability to maintain and grow our customer base and increase our revenue.
A portion of our revenue is generated by sales to government entities and heavily regulated organizations, which are subject to a number of challenges and risks.
A portion of our sales are to governmental entities. Additionally, many of our current and prospective customers, such as those in the financial services and health care industries, are highly regulated and may be required to comply with more stringent regulations in connection with subscribing to and deploying our platform. Selling to these entities can be highly competitive, expensive and time consuming, often requiring significant upfront time and expense without any assurance that these efforts will result in a sale. Government and highly regulated entities often require contract terms that differ from our standard arrangements and impose compliance requirements that are complicated, require preferential pricing or “most favored nation” terms and conditions, or are otherwise time consuming and expensive to satisfy. If we undertake to meet special standards or requirements and do not meet them, we could be subject to increased liability from our customers or regulators. Even if we do meet them, the additional costs associated with providing our services to government and highly regulated customers could harm our margins. Moreover, changes in the underlying regulatory conditions that affect these types of customers could harm our ability to efficiently provide our services to them and to grow or maintain our customer base.
Additionally, government certification requirements for platforms like ours may change and in doing so restrict our ability to sell into certain government sectors until we have attained the revised certification. Government demand and payment for our solutions may be impacted by public sector budgetary cycles and funding authorizations, with funding reductions or delays adversely affecting public sector demand for our solutions. Additionally, government entities routinely investigate and audit government contractors’ administrative processes, and any unfavorable audit could result in the government entity refusing to continue buying our solutions, a reduction of revenue, fines or civil or criminal liability if the audit uncovers improper or illegal activities, which could adversely impact our operating results. Furthermore, engaging in sales activities to foreign governments introduces additional compliance risks specific to the FCPA, the UK Bribery Act and other similar statutory requirements prohibiting bribery and corruption in the jurisdictions in which we operate.
The requirements of being a public company may strain our resources, divert management's attention and affect our ability to attract and retain executive management and qualified board members.
As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, or the Exchange Act, the Sarbanes‑Oxley Act of 2002, or the Sarbanes‑Oxley Act, the Dodd‑Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd‑Frank Act, the listing requirements of the applicable listing exchange 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. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. 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 will increase our costs and expenses.

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In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management's time and attention from revenue‑generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.
However, for as long as we remain an “emerging growth company” as defined in the Jumpstart our Business Startups Act of 2012, or the JOBS Act, 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, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes‑Oxley Act, 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. We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.”
Further, the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act of 1933, as amended, or Securities Act, registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non‑emerging growth companies but any such election to opt out is irrevocable. We have elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, we, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of our financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult because of the potential differences in accounting standards used.
We will remain an “emerging growth company” for up to five years. However, among other factors, if the market value of our common stock that is held by non‑affiliates exceeds $700 million as of any July 31 after our first annual report, we would cease to be an “emerging growth company” as of the following January 31.
We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.
As a result of disclosure of information in this prospectus and in filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business and operating results.

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If we fail to maintain an effective system of internal controls, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.
As a public company, we will be subject to the reporting requirements of the Exchange Act, the Sarbanes‑Oxley Act, and the rules and regulations of the listing standards of the applicable stock exchange. We expect that the requirements of these rules and regulations will continue to increase our legal, accounting, and financial compliance costs, make some activities more difficult, time‑consuming, and costly, and place significant strain on our personnel, systems, and resources.
The Sarbanes‑Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. We are continuing to develop and refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we will file with the Securities and Exchange Commission (SEC) is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers. We are also continuing to improve our internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting‑related costs and significant management oversight.
Our current controls and any new controls that we develop may become inadequate because of changes in conditions in our business. Further, weaknesses in our disclosure controls and internal control over financial reporting may be discovered in the future. Any failure to develop or maintain effective controls or any difficulties encountered in their implementation or improvement could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our financial statements for prior periods. Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will eventually be required to include in our periodic reports that will be filed with the SEC. Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which could have a negative effect on the trading price of our common stock. In addition, if we are unable to continue to meet these requirements, we may not be able to remain listed on the applicable stock exchange. We are not currently required to comply with the SEC rules that implement Section 404 of the Sarbanes‑Oxley Act and are therefore not required to make a formal assessment of the effectiveness of our internal control over financial reporting for that purpose. As a public company, we will be required to provide an annual management report on the effectiveness of our internal control over financial reporting commencing with our second annual report on Form 10‑K.
Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company” as defined in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed, or operating. Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business and operating results and could cause a decline in the price of our common stock.
We are an “emerging growth company” and we cannot be certain if the reduced 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 intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies,” including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes‑Oxley Act, 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. We may take

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advantage of these exemptions for so long as we are an “emerging growth company,” which could be as long as five years following the completion of this offering but we expect to not be an “emerging growth company” sooner. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. 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 the price of our common stock may be more volatile.
Our financial results may be adversely affected by changes in accounting principles applicable to us.
Generally accepted accounting principles in the United States (GAAP) are subject to interpretation by the Financial Accounting Standards Board (FASB), the SEC, and other various bodies formed to promulgate and interpret appropriate accounting principles. For example, in May 2014, the FASB issued accounting standards update No. 2014‑09 (Topic 606), Revenue from Contracts with Customers, which supersedes nearly all existing revenue recognition guidance under GAAP. We will be required to implement this guidance in fiscal 2020. We have not selected a transition method and continue to evaluate what effect, if any, the amendments and transition alternatives could have on our financial position and results of operations. Regardless of the transition method selected, application of Topic 606 may significantly impact the amount and timing of revenue recognition, such as recognizing revenue from existing contracts in periods other than when historically reported under existing GAAP or the revenue recognized under existing GAAP could be eliminated as part of the effect of adoption. Further, adoption of Topic 606 could result in changes to the periods when revenue is recognized in the future compared with management’s current expectations under existing GAAP. In addition, Topic 606 may significantly change the timing of when expense recognition will occur related to costs to obtain and fulfill customer contracts. While the adoption of Topic 606 does not change the cash flows received from our contracts with customers, the adoption of Topic 606 could have a material adverse effect on our financial position or results of operations.
Changes in our provision for income taxes or adverse outcomes resulting from examination of our income tax returns could adversely affect our results.
We are subject to income taxation in the United States and numerous foreign jurisdictions. Determining our provision for income taxes requires significant management judgment. In addition, our provision for income taxes is subject to volatility and could be adversely affected by many factors, including, among other things, changes to our operating or holding structure, changes in the amounts of earnings in jurisdictions with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities and changes in tax laws. We could be subject to tax examinations in various jurisdictions. Tax authorities may disagree with our use of research and development tax credits, intercompany charges, cross‑jurisdictional transfer pricing or other matters and assess additional taxes. While we regularly assess the likely outcomes of these examinations to determine the adequacy of our provision for income taxes, there can be no assurance that the outcomes of such examinations will not have a material impact on our operating results and cash flows.
In addition, we may be subject to the examination of our income tax returns by the U.S. Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. There can be no assurance that the outcomes from these continuous examinations will not have an adverse effect on our results of operations.
The enactment of legislation implementing changes in the United States of taxation of international business activities or the adoption of other tax reform policies could materially impact our financial position and results of operations.
Recent changes to United States tax laws, including limitations on the ability of taxpayers to claim and utilize foreign tax credits and the deferral of certain tax deductions until earnings outside of the United States are repatriated to the United States, as well as changes to United States tax laws that may be enacted in the future, could impact the tax treatment of our foreign earnings. Due to expansion of our international business activities, any changes in the United States taxation of such activities may increase our worldwide effective tax rate and adversely affect our financial position and results of operations.

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Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations.
In general, under Section 382 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 net operating losses (NOLs) to offset future taxable income. If our existing NOLs are subject to limitations arising from previous ownership changes, our ability to utilize NOLs could be limited by Section 382 of the Code. Future changes in our stock ownership, some of which are outside of our control, could result in an ownership change under Section 382 of the Code. Furthermore, our ability to utilize NOLs of companies that we may acquire in the future may be subject to limitations. There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities. For these reasons, we may not be able to utilize a portion of the NOLs reflected on our balance sheet, even if we attain profitability.
We have business and customer relationships with certain entities who are stockholders or are affiliated with our directors, or both, and conflicts of interest may arise because of such relationships.
Some of our customers and other business partners are affiliated with certain of our directors or hold shares of our capital stock, or both. For example, we have entered into strategic relationships and/or customer relationships with Intel Corporation, or Intel. Our director Kim Stevenson is an employee of Intel and Intel is a stockholder. We believe that the transactions and agreements that we have entered into with related parties are on terms that are at least as favorable as could reasonably have been obtained at such time from third parties. However, these relationships could create, or appear to create, potential conflicts of interest when our board of directors is faced with decisions that could have different implications for us and these other parties or their affiliates. In addition, conflicts of interest may arise between us and these other parties and their affiliates. The appearance of conflicts, even if such conflicts do not materialize, might adversely affect the public’s perception of us, as well as our relationship with other companies and our ability to enter into new relationships in the future, including with competitors of such related parties, which could harm our business and results of operations.
Adverse economic conditions may negatively impact our business.
Our business depends on the overall demand for information technology and on the economic health of our current and prospective customers. Any significant weakening of the economy in the United States or Europe and of the global economy, more limited availability of credit, a reduction in business confidence and activity, decreased government spending, economic uncertainty and other difficulties may affect one or more of the sectors or countries in which we sell our applications. Global economic and political uncertainty may cause some of our customers or potential customers to curtail spending, and may ultimately result in new regulatory and cost challenges to our international operations. In addition, a strong dollar could reduce demand for our products in countries with relatively weaker currencies. These adverse conditions could result in reductions in sales of our applications, longer sales cycles, reductions in subscription duration and value, slower adoption of new technologies and increased price competition. Any of these events could have an adverse effect on our business, operating results and financial position.
Our business is subject to the risks of earthquakes, fire, power outages, floods, terrorism and other catastrophic events, and to interruption by man‑made problems such as terrorism.
A significant natural disaster, such as an earthquake, fire or a flood, or a significant power outage could have a material adverse impact on our business, financial condition and results of operations. Our corporate headquarters are located in Palo Alto, California, in a region known for seismic activity, and we have significant offices in San Francisco, New York City and Austin in the United States and internationally in Budapest, London and Singapore. Further, if a natural disaster or terrorist event occurs in a region from which we derive a significant portion of our revenue, customers in that region may delay or forego purchases of our products, which may materially and adversely impact our results of operations for a particular period. For example, the west coast of the United States contains active earthquake zones and the eastern seaboard is subject to seasonal hurricanes while New York and the United Kingdom have suffered significant terrorist attacks. Additionally, we rely on our network and third‑party infrastructure and enterprise applications, internal technology systems and our website for our development, marketing, finance, customer support, operational support, hosted services and sales activities. In the event of a

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major earthquake, hurricane or catastrophic event such as fire, power loss, floods, telecommunications failure, cyber‑attack, war or terrorist attack, we may be unable to continue our operations and may endure system interruptions, reputational harm, delays in our development of solutions, lengthy interruptions in our services, breaches of data security and loss of critical data, all of which could have an adverse effect on our operating results. All of the aforementioned risks may be augmented if the business continuity plans for us and our service providers prove to be inadequate. To the extent that any of the above results in delays or cancellations of customer orders, or the delay in the deployment of our products, our business, financial condition and results of operations could be adversely affected.
Risks Related to Ownership of Our Common Stock and this Offering
There has been no prior public market for our common stock, the stock price of our common stock may be volatile or may decline regardless of our operating performance, and you may not be able to resell your shares at or above the initial public offering price.
There has been no public market for our common stock prior to this offering. The initial public offering price for our common stock will be determined through negotiations among the underwriters and us and may vary from the market price of our common stock following this offering. The market prices of the securities of newly public companies such as us have historically been highly volatile. The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including the factors included in this Risk Factors section as well as:
overall performance of the equity markets;
actual or anticipated fluctuations in our operating results;
changes in the financial projections we may provide to the public or our failure to meet these projections;
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;
recruitment or departure of key personnel;
the economy as a whole and market conditions in our industry;
rumors and market speculation involving us or other companies in our industry;
announcements by us or our competitors of significant technical innovations, acquisitions, strategic partnerships, joint ventures, or capital commitments;
actual or anticipated developments in our business or our competitors’ businesses or the competitive landscape generally;
developments or disputes concerning our intellectual property or our offerings, or third‑party proprietary rights;
announced or completed acquisitions of businesses or technologies by us or our competitors;
changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;
changes in accounting standards, policies, guidelines, interpretations or principles;
new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
lawsuits threatened or filed against us;

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other events or factors, including those resulting from war, incidents of terrorism, or responses to these events;
the expiration of contractual lock‑up or market standoff agreements; and
sales of shares of our common stock by us or our stockholders.
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 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.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.
The trading market for our common stock will depend in part on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. If few securities analysts commence coverage of us, or if industry analysts cease coverage of us or fail to publish reports on us regularly, demand for our common stock could decrease, which might cause our common stock price and trading volume to decline. If one or more of the analysts who cover us downgrade our common stock or publish inaccurate or unfavorable research about our business, our common stock price could decline.
Our directors, executive officers and principal stockholders will continue to have substantial control over us after this offering, which could limit your ability to influence the outcome of key transactions, including a change of control.
Our directors, executive officers and our stockholders who own greater than 5% of our outstanding common stock, together with their affiliates, will beneficially own, in the aggregate, approximately        % of our outstanding common stock after this offering, based on the number shares outstanding as of January 31, 2017. As a result, these stockholders, if acting together, will be able to influence or control matters requiring approval by our stockholders, including the election of directors and the approval of mergers, acquisitions or other extraordinary transactions. In addition, these stockholders, acting together, would have the ability to control the management and affairs of our company. They may also have interests that differ from yours and may vote in a way with which you disagree and which may be adverse to your interests. This concentration of ownership may have the effect of delaying, preventing or deterring a change of control of our company, could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of our company and might ultimately affect the market price of our common stock.
In addition, Intel will hold approximately         % of our outstanding common stock after this offering, based on the number shares outstanding as of January 31, 2017. Pursuant to our investor rights agreement, Intel has specified ownership maintenance rights. As such, Intel could have considerable influence over matters such as approving a potential acquisition of us. Intel’s investment in and position in our company could also discourage others from pursuing any potential acquisition of us, which could have the effect of depriving the holders of our common stock of the opportunity to sell their shares at a premium over the prevailing market price.
We cannot assure you that a market will develop for our common stock or what the market price of our common stock will be.
We intend to apply for listing of our common stock on under the symbol “CLDR.” However, we cannot assure you that an active trading market for our common stock will develop on such exchange or elsewhere or, if developed, that any market will be sustained. We cannot predict the prices at which our common stock will trade. The initial public offering price of our common stock was determined by negotiations with the underwriters and may not bear any relationship to the market price at which our common stock will trade after this offering or to any other established criteria of the value of our business.

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We have broad discretion in the use of the net proceeds that we receive in this offering.
The principal purposes of this offering are to increase our capitalization and financial flexibility, create a public market for our stock and thereby enable access to the public equity markets by our employees and stockholders, obtain additional capital, and increase our visibility in the marketplace. We have not yet determined the specific allocation of the net proceeds that we receive in this offering. Rather, we intend to use the net proceeds we receive from this offering for general corporate purposes, including headcount expansion, working capital, sales and marketing activities, development, general and administrative matters and capital expenditures. We also may use a portion of the net proceeds to acquire complementary businesses, products, services or technologies. Accordingly, our management will have broad discretion over the specific use of the net proceeds that we receive in this offering and might not be able to obtain a significant return, if any, on investment of these net proceeds. Investors in this offering will need to rely upon the judgment of our management with respect to the use of proceeds. If we do not use the net proceeds that we receive in this offering effectively, our business, operating results and financial condition could be harmed.
Because the initial public offering price of our common stock will be substantially higher than the pro forma net tangible book value per share of our outstanding common stock following this offering, new investors will experience immediate and substantial dilution.
The initial public offering price is substantially higher than the pro forma net tangible book value per share of our common stock immediately following this offering based on the total value of our tangible assets less our total liabilities. Therefore, if you purchase shares of our common stock in this offering, based on the midpoint of the price range set forth on the cover page of this prospectus, and the issuance of shares of common stock in this offering, you will experience immediate dilution of $          per share, the difference between the price per share you pay for our common stock and its pro forma net tangible book value per share as of                . This dilution is due in large part to the fact that our earlier investors paid substantially less than the initial public offering price when they purchased their shares of common stock. In addition, we have issued RSUs and options to acquire common stock at prices significantly below the initial public offering price. To the extent these RSUs and outstanding options are ultimately settled or exercised, there will be further dilution to investors in this offering. In addition, if the underwriters exercise their option to purchase additional shares from us or if we issue additional equity securities, you will experience additional dilution. See the section titled “Dilution” for additional information.
Sales of substantial amounts of our common stock in the public markets, or the perception that they might occur, could cause the market price of our common stock to decline.
Sales of a substantial number of shares of our common stock into the public market, particularly sales by our directors, executive officers, and principal stockholders, or the perception that these sales might occur, could cause the market price of our common stock to decline and may make it more difficult for you to sell your common stock at a time and price that you deem appropriate.
Substantially all of our securities outstanding prior to this offering are currently restricted from resale as a result of lock‑up and market standoff agreements. See the section titled “Shares Eligible for Future Sale” for additional information. These securities will become available to be sold 181 days after the date of this prospectus. Morgan Stanley & Co. LLC may, in its discretion, permit our security holders to sell shares prior to the expiration of the restrictive provisions contained in the lock‑up agreements. Shares held by directors, executive officers, and other affiliates will also be subject to volume limitations under Rule 144 under the Securities Act and various vesting agreements.
In addition, as of October 31, 2016, we had options outstanding that, if fully exercised, would result in the issuance of 23,414,207 shares of common stock. We also had 15,101,448 RSUs outstanding as of October 31, 2016 some of which will vest six months after this offering. All of the shares of common stock issuable upon the exercise of stock options or settlement of RSUs, and the shares reserved for future issuance under our equity incentive plans, will be registered for public resale under the Securities Act. Accordingly, these shares will be able to be freely sold in the public market upon issuance subject to existing lock‑up or market standoff agreements and applicable vesting requirements.

39


Immediately following this offering, the holders of           shares of our common stock will have rights, subject to some conditions, to require us to file registration statements for the public resale of the common stock issuable upon conversion of such shares or to include such shares in registration statements that we may file for us or other stockholders.
We do not intend to pay dividends for the foreseeable future.
We have never declared or paid any cash dividends on our common stock and do not intend to pay any cash dividends in the foreseeable future. We anticipate that we will retain all of our future earnings for use in the development of our business and for general corporate purposes. 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.
Defensive measures in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
Our amended and restated certificate of incorporation and amended and restated bylaws that will be in effect upon completion of this offering contain provisions that could delay or prevent a change in control of our company. These provisions could also make it difficult for stockholders to elect directors who are not nominated by the current members of our board of directors or take other corporate actions, including effecting changes in our management. These provisions include:
a classified board of directors with three‑year staggered terms, which could delay the ability of stockholders to change the membership of a majority of our board of directors;
the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;
the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of our board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;
the requirement that a special meeting of stockholders may be called only by the chairman of our board of directors, our president, our secretary, or a majority vote of our board of directors, which could delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors;
the requirement for the affirmative vote of holders of at least 662/3% of the voting power of all of the then outstanding shares of the voting stock, voting together as a single class, to amend the provisions of our amended and restated certificate of incorporation relating to the issuance of preferred stock and management of our business or our amended and restated bylaws, which may inhibit the ability of an acquirer to effect such amendments to facilitate an unsolicited takeover attempt;
the ability of our board of directors to amend the bylaws, which may allow our board of directors to take additional actions to prevent an unsolicited takeover and inhibit the ability of an acquirer to amend the bylaws to facilitate an unsolicited takeover attempt;
the requirement that in order for a stockholder to be eligible to propose a nomination or other business to be considered at an annual meeting of our stockholders, such stockholder must have continuously beneficially owned at least       % of the Company’s outstanding common stock for a period of              before giving such notice, which may discourage, delay or deter stockholders or a potential acquirer from conducting a

40


solicitation of proxies to elect the their own slate of directors or otherwise attempting to obtain control of us or influence over our business; and
advance notice procedures with which stockholders must comply to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage, delay or deter stockholders or a potential acquirer from conducting a solicitation of proxies to elect the their own slate of directors or otherwise attempting to obtain control of us or influence over our business.
In addition, our restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware 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, 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 with respect to such claims. Alternatively, if a court were to find the choice of forum provision contained in our restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
In addition, because we are incorporated in Delaware, we are governed by the provisions of the anti‑takeover provisions of the Delaware General Corporation Law, which may discourage, delay or prevent a change in control by prohibiting us from engaging in a business combination with an interested stockholder for a period of three years after the person becomes an interested stockholder, even if a change of control would be beneficial to our existing stockholders. Although we believe these provisions collectively provide for an opportunity to obtain greater value for stockholders by requiring potential acquirers to negotiate with our board of directors, they would apply even if an offer rejected by our board was considered beneficial by some stockholders. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.


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SPECIAL NOTE REGARDING FORWARD‑LOOKING STATEMENTS
This prospectus contains forward‑looking statements. All statements contained in this prospectus other than statements of historical fact, including statements regarding our future results of operations, financial position, market size and opportunity, our business strategy and plans, the factors affecting our performance and our objectives for future operations, are forward‑looking statements. The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “expect,” “objective,” “plan,” “potential,” “seek,” “grow,” “target,” “if” and similar expressions are intended to identify forward‑looking statements. We have based these forward‑looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short‑term and long‑term business operations and objectives and financial needs. These forward‑looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the “Risk Factors.” Moreover, we operate in a very competitive and rapidly changing environment. 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 prospectus may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward‑looking statements. Forward‑looking statements contained in this prospectus include, but are not limited to, statements about:
our expectations regarding our results of operations and financial condition;
our expectations regarding the development and expansion of our business;
our ability to successfully enter new markets and manage our international expansion;
our ability to expand our customer base, renew subscriptions and expand penetration of existing customers;
anticipated trends and challenges in our business and in the markets in which we operate;
our ability to develop new features and functionality that meet market needs and achieve market acceptance;
the anticipated benefits associated with the use of our platform;
our ability to retain and hire necessary employees and staff our operations appropriately;
the timing and amount of certain expenses;
our ability to maintain, protect and enhance our intellectual property; and
worldwide economic conditions and their impact on enterprise software spending.
We caution you that the foregoing list may not contain all of the forward‑looking statements made in this prospectus. In addition, in light of these risks and uncertainties, the matters referred to in the forward‑looking statements contained in this prospectus may not occur.
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, levels of activity, performance or achievements. We are under no duty to update any of these forward–looking statements after the date of this prospectus or to conform these statements to actual results or revised expectations.
You should read this prospectus and the documents that we reference in this prospectus and have filed with the Securities and Exchange Commission as exhibits to the registration statement of which this prospectus is a part with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

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MARKET, INDUSTRY AND OTHER DATA
Introduction
This prospectus contains estimates and information concerning our industry, our business, and the market for our solutions, including market position, market size and growth rates of the markets in which we participate, that are based on industry publications, surveys and reports. Although we have not independently verified the accuracy or completeness of the data contained in these industry publications, surveys, and reports, we believe the publications, surveys and reports are generally reliable, although such information is inherently subject to uncertainties and imprecise. The industry in which we operate is subject to a high degree of uncertainty and risk due to variety of factors, including those described in the “Risk Factors.” These and other factors could cause results to differ materially from those expressed in these publications and reports.
The source of certain statistical data, estimates, and forecasts contained in this prospectus are the following independent industry publications or reports:
Black Duck Software and North Bridge, 2015 Future of Open Source Survey, 2015
International Data Corporation, Worldwide Internet of Things Forecast Update, May 2016
International Data Corporation, Worldwide Semiannual Software Tracker, November 2016
International Data Corporation, Worldwide Software Tracker Taxonomy, August 2016
Global 8000
We refer to the largest 8,000 corporate enterprises globally as the Global 8000. For purposes of defining the Global 8000, the top 2,000 enterprises in the Global 8000 are based on the FORBES Global 2000 ranking. The FORBES Global 2000 is an annual ranking of the top 2,000 public companies in the world by Forbes magazine. The ranking is based on a mix of four metrics: sales, profit, assets and market value. The remainder of our Global 8000 is based on entities listed in Data.com as having the highest annual revenue, excluding those that are listed in the FORBES Global 2000. Data.com is a service offered by salesforce.com, inc. that we use to categorize companies by industry.
For purposes of customer count, a customer is defined as an entity with a unique FORBES Global 2000 or Data.com identifier and quarterly subscription revenue as of the measurement date.
The FORBES Global 2000 is updated annually in the second quarter of the calendar year. Current and prior period Global 8000 customer counts are based on the most recent FORBES Global 2000 list for comparability purposes. We similarly update the remainder of the Global 8000 based on Data.com information. Our customer count is subject to adjustments for acquisitions, spin‑offs and other market activity. Where these adjustments occur, previously disclosed numbers of customers are restated to allow for comparability. For example, we add a Global 8000 customer when a Global 8000 company that is not our customer acquires a company in our existing customer base that is not a Global 8000 company. When we enter into a contract with a Global 8000 parent company, or any of its related subsidiaries, or any combination of entities within a Global 8000 company, we count only one Global 8000 customer. We do not count further penetration into entities within a given Global 8000 customer as a new customer in the Global 8000 customer count. We make exceptions for holding companies and other organizations for which the FORBES Global 2000 or Data.com identifier in our judgment does not accurately represent the Cloudera customer.

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For purposes of identifying our industry verticals, we group Data.com industry categories into industry verticals, including as follows:
Industry Vertical
 
Data.com Industry Categories
Business Services
 
Business Services
Consulting
IT Services
Legal Services
Managed Service Providers
Professional Services
Services
Consumer and Retail
 
Consulting (IT)
Consumer Products
Consumer Services
Retail
Retail & Distribution
Retail/CPG
Wholesale
Banking and Financial Services
 
Banking
Finance
Financial Services
Insurance
Healthcare and Life Sciences
 
Biotechnology Health
Pharmaceuticals and Biotech
Health, Pharmaceuticals, and Biotech
Hospitals/Health Care
Medical Devices
Medical/Dental/Healthcare
Pharmaceuticals
Technology
 
Computer Software
Computers/Hardware
Engineering
High Tech – Other
High Technology
Security (Computer/Software)
Software – Other
Software & Internet
Software & Technology
Software (includes SaaS, Web, Mobile)
Technology
Technology – E-tailing
Telecommunications
 
Communication Carriers
Communications
Telecommunications
For purposes of determining the top ten enterprises in each industry vertical, we have excluded state‑controlled firms. In addition, we have categorized Alphabet Inc. as included in the technology industry, in contrast to its categorization by Data.com as a telecommunications company. Similarly, we have recategorized General Electric Company and Siemens AG from manufacturing to technology. We believe these are more accurate categorizations for our industry vertical purposes.

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Large Public Sector Organization
We define “large public sector organization” to include the various departments, agencies and other organizations of the U.S. federal government, large state agencies, such as very large school districts and local government, as well as similar organizations of foreign governments and subdivisions. Due to the variety of ambiguities, judgments and distinctions that could be made, and the lack of a widely accepted standard, in how such customers are counted, we currently do not include large public sector organizations in our customer counts.
Net Expansion Rate
We have provided an analysis of our net expansion rate. Our quarterly net subscription revenue expansion rate equals:
the subscription revenue in a given quarter from all customers that had subscription revenue in the same quarter of the prior year,
divided by
the subscription revenue attributable to that same group of customers in that prior quarter.
Our net expansion rate equals the simple arithmetic average of our quarterly net subscription revenue expansion rate for the four quarters ending with the most recently completed fiscal quarter.

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USE OF PROCEEDS
We estimate that our net proceeds from the sale of the shares of common stock that we are offering will be approximately $          million, based on an assumed initial public offering price of $          per share, which is the midpoint of the estimated price range set forth on the cover of this prospectus, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. Each $1.00 increase or decrease in the assumed initial public offering price would increase or decrease, as applicable, the net proceeds to us by approximately $          , assuming the number of shares offered by us, as set forth on the cover of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters’ over‑allotment option is exercised in full, we estimate that our net proceeds will be approximately $          million.
The principal purposes of this offering are to obtain additional capital, create a public market for our common stock, facilitate our future access to the public equity markets, increase awareness of our company among potential customers and improve our competitive position. We intend to use the net proceeds from this offering for working capital and other general corporate purposes, which may include sales and marketing activities, research, product development, general and administrative matters and capital expenditures. We may also use a portion of the net proceeds for the acquisition of, or investment in, complementary companies, products, services, technologies or assets. However, we have no current understandings, commitments or agreements to enter into any such acquisitions or make any such investments. We do not have more specific plans for the net proceeds from this offering.
We have not yet determined our anticipated expenditures and therefore cannot estimate the amounts to be used for each of the purposes discussed above. The amounts and timing of any expenditures will vary depending on the amount of cash generated by our operations, competitive and technological developments and the rate of growth, if any, of our business. Accordingly, our management will have significant discretion and flexibility in applying the net proceeds from this offering, and investors will be relying on the judgment of our management regarding the application of these net proceeds.
Pending the uses described above, we intend to invest the net proceeds from this offering in short‑term, interest‑bearing obligations, investment‑grade instruments, certificates of deposit or direct or guaranteed obligations of the U.S. government. The goal with respect to the investment of these net proceeds will be capital preservation and liquidity so that these funds are readily available to fund our operations.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our capital stock, and we do not currently intend to pay any cash dividends after the offering or for the foreseeable future. We expect to retain future earnings, if any, to fund the development and growth of our business. Any future determination to pay dividends on our common stock will be at the discretion of our board of directors and will depend upon, among other factors, our financial condition, operating results, current and anticipated cash needs, plans for expansion and other factors that our board of directors may deem relevant.

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CAPITALIZATION
The following table sets forth our cash, cash equivalents, and marketable securities and capitalization as of October 31, 2016 on:
an actual basis;
a pro forma basis to reflect: (i) the automatic conversion of all outstanding shares of our redeemable convertible preferred stock into an aggregate of 74,907,415 shares of common stock; and (ii) the filing and effectiveness of our amended and restated certificate of incorporation immediately prior to the closing of this offering; and
a pro forma as adjusted basis to give effect to (i) the pro forma adjustments set forth above and (ii) the sale and issuance of          shares of our common stock by us in this offering, based upon the receipt by us of the estimated net proceeds from this offering at the assumed initial public offering price of $          per share, the midpoint of the price range set forth on the cover page of this prospectus, and after deducting the underwriting discounts and commissions and estimated offering expenses payable by us and the application of the net proceeds from this offering as described in “Use of Proceeds.”
You should read this information together with our consolidated financial statements and related notes appearing elsewhere in this prospectus and the information set forth in “Selected Consolidated Financial Data” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
 
October 31, 2016
 
Actual
 
Pro Forma
 
Pro Forma
as Adjusted
(1)
 
(in thousands, except share and per share data)
Cash, cash equivalents and marketable securities
$
289,466

 
$
 
$
Redeemable convertible preferred stock, $0.00005 par value per share, 74,907,415 shares authorized, issued and outstanding, actual; no shares authorized, issued and outstanding, pro forma and pro forma as adjusted
$
657,687

 
$
 
$
Stockholders’ equity (deficit):
 
 
 
 
 
Preferred stock, $0.00005 par value per share; no shares authorized, issued and outstanding, actual;        shares authorized, no shares issued and outstanding, pro forma and pro forma as adjusted

 
 
 
 
Common stock, $0.00005 par value per share, 160,000,000 shares authorized, 36,705,536 shares issued and outstanding, actual;         shares authorized,         shares issued and outstanding, pro forma; and         shares issued and outstanding, pro forma as adjusted
2

 
 
 
 
Additional paid‑in capital
165,023

 
 
 
 
Accumulated other comprehensive loss
(502
)
 
 
 
 
Accumulated deficit
(614,565
)
 
 
 
 
Total stockholders’ equity (deficit)
(450,042
)
 
 
 
 
Total capitalization
$
207,645

 
$
 
$
___________
(1)
Each $1.00 increase (decrease) in the assumed initial public offering price of $     per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase (decrease) our cash, cash equivalents and marketable securities, total stockholders’ equity and total capitalization by approximately $     million, assuming that the number of shares of our common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions payable by us. Each increase (decrease) of 1,000,000 shares in the number of shares offered by us would increase (decrease) the amount of our cash, cash equivalents and marketable securities, total stockholders’ equity and total capitalization by approximately $     million, assuming an

47


initial public offering price of $     per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions payable by us. The pro forma as adjusted information discussed above is illustrative only and will adjust based on the actual initial price to the public and other terms of this offering determined at pricing.

The number of shares of our common stock issued and outstanding in the table above does not include the following shares:
23,414,207 shares of our common stock issuable upon the exercise of stock options outstanding as of October 31, 2016, with a weighted‑average exercise price of $4.58 per share;
15,101,448 shares of our common stock subject to restricted stock units (RSUs) outstanding as of October 31, 2016;
955,806 shares of our common stock reserved for future issuance under our 2008 Equity Incentive Plan as of October 31, 2016 and 6,000,000 additional shares of our common stock reserved for future issuance after October 31, 2016, of which:
243,500 shares of our common stock are issuable upon the exercise of stock options granted after October 31, 2016 through January 27, 2017, with an exercise price of $17.85 per share;
6,853,400 shares of our common stock are subject to RSUs granted after October 31, 2016 through January 27, 2017;
               shares that will become available for future issuance under our 2017 Equity Incentive Plan in connection with this offering; and
                additional shares of our common stock reserved for future issuance under our 2017 Equity Incentive Plan and            shares of common stock reserved for future issuance under our 2017 Employee Stock Purchase Plan, which plans will become effective in connection with this offering and contain provisions that will automatically increase their share reserves each year, as more fully described in “Executive Compensation—Employee Benefit Plans.”

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DILUTION
If you invest in our common stock in this offering, your interest will be diluted to the extent of the difference between the initial public offering price per share of our common stock in this offering and the pro forma as adjusted net tangible book value per share of our common stock immediately after this offering.
As of October 31, 2016, our pro forma net tangible book value was approximately $     million, or $     per share of common stock. Our pro forma net tangible book value per share represents the amount of our total tangible assets reduced by the amount of our total liabilities and divided by the total number of shares of our common stock outstanding as of October 31, 2016, assuming the conversion of all outstanding shares of our redeemable convertible preferred stock into                shares of our common stock, which conversion will occur immediately prior to the completion of the offering.
After giving further effect to the sale of      shares of our common stock in this offering, at the assumed initial public offering price of $     per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, after deducting underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma as adjusted net tangible book value as of October 31, 2016 would have been approximately $     million, or $     per share. This represents an immediate increase in pro forma as adjusted net tangible book value of $     per share to our existing stockholders and an immediate dilution of $     per share to investors purchasing shares in this offering. The following table illustrates this dilution:
Assumed initial public offering price per share
 
 
$
Pro forma net tangible book value per share as of October 31, 2016
$
 
 
Increase in pro forma net tangible book value (deficit) per share attributable to new investors purchasing shares in this offering
 
 
 
Pro forma as adjusted net tangible book value per share after this offering
 
 
 
Dilution in pro forma net tangible book value per share to new investors in this offering
 
 
$
A $1.00 increase (decrease) in the assumed initial public offering price of $     per share, which is the midpoint of the estimated offering price range set forth on the cover page of this prospectus, would increase (decrease) our pro forma as adjusted net tangible book value by approximately $     per share and the dilution per share to investors in this offering by $     per share, assuming the number of shares of our common stock offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting underwriting discounts and commissions payable by us.
Similarly, a 1,000,000 increase (decrease) in the number of shares of our common stock offered by us would increase (decrease) our pro forma as adjusted net tangible book value by approximately $     per share and the dilution per share to investors in this offering by $     per share, assuming the assumed initial public offering price remains the same and after deducting underwriting discounts and commissions payable by us. If the underwriters exercise their option to purchase additional shares in full, the pro forma as adjusted net tangible book value per share of our common stock would be $     per share, and the dilution in pro forma net tangible book value per share to investors purchasing shares in this offering would be $     per share.

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The following table summarizes, on a pro forma as adjusted basis described above as of October 31, 2016, the differences between existing stockholders and new investors with respect to the number of shares of common stock purchased from us, the total consideration paid to us, and the average price per share paid, before deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us:
 
Shares Purchased
 
Total Consideration
 
Average
Price
 
Per Share
 
Number
 
Percent
 
Amount
 
Percent
 
Existing stockholders
 
 
%

 
$
 
%

 
$
Investors purchasing shares in this offering
 
 
 
 
 
 
 
 
 
Total
 
 
100.0
%
 
$
 
100.0
%
 
 
Except as otherwise indicated, the above discussion and tables assume no exercise of the underwriters’ option to purchase additional shares. If the underwriters exercise their option to purchase additional shares in full, our existing stockholders would own     % and our new investors would own      % of the total number of shares of our common stock outstanding upon the completion of this offering.
The number of shares of our common stock issued and outstanding in the table above does not include the following shares:
23,414,207 shares of our common stock issuable upon the exercise of stock options outstanding as of October 31, 2016, with a weighted‑average exercise price of $4.58 per share;
15,101,448 shares of our common stock subject to restricted stock units (RSUs) outstanding as of October 31, 2016;
955,806 shares of our common stock reserved for future issuance under our 2008 Equity Incentive Plan as of October 31, 2016 and 6,000,000 additional shares of our common stock reserved for future issuance after October 31, 2016, of which:
243,500 shares of our common stock are issuable upon the exercise of stock options granted after October 31, 2016 through January 27, 2017, with an exercise price of $17.85 per share;
6,853,400 shares of our common stock are subject to RSUs granted after October 31, 2016 through January 27, 2017;
               shares that will become available for future issuance under our 2017 Equity Incentive Plan in connection with this offering; and
                additional shares of our common stock reserved for future issuance under our 2017 Equity Incentive Plan and            shares of common stock reserved for future issuance under our 2017 Employee Stock Purchase Plan, which plans will become effective in connection with this offering and contain provisions that will automatically increase their share reserves each year, as more fully described in “Executive Compensation—Employee Benefit Plans.”
To the extent that any outstanding options to purchase shares of our common stock are exercised or new awards are granted under our equity compensation plans, there will be further dilution to investors participating in this offering.

50


SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated statement of operations data for the year ended January 31, 2016, and the selected consolidated balance sheet data as of January 31, 2016, have been derived from our audited consolidated financial statements included elsewhere in this prospectus. The selected consolidated statement of operations data for the year ended January 31, 2015, and the selected consolidated balance sheet data as of January 31, 2015, have been derived from our audited consolidated financial statements that are not included in this prospectus. The selected consolidated statements of operations data for the nine months ended October 31, 2015 and 2016 and the selected consolidated balance sheet data as of October 31, 2016, have been derived from our unaudited interim consolidated financial statements included elsewhere in this prospectus. The unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements, and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly our financial position and results of operations. You should read the following selected consolidated financial data in conjunction with our consolidated financial statements and the accompanying notes and the information in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained elsewhere in this prospectus. Our historical results are not necessarily indicative of the results that may be expected for the full year or any other period in the future.
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2015
 
2016
 
2015
 
2016
 
(in thousands, except share and per share data)
Consolidated Statements of Operations Data:
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
Subscription
$
72,615

 
$
119,150

 
$
82,424

 
$
144,093

Services
36,503

 
46,898

 
33,244

 
44,106

Total revenue
109,118

 
166,048

 
115,668

 
188,199

Cost of revenue:(1) (2)
 
 
 
 
 
 
 
Subscription
18,314

 
30,996

 
22,240

 
28,932

Services
32,148

 
45,178

 
33,663

 
36,355

Total cost of revenue
50,462

 
76,174

 
55,903

 
65,287

Gross profit
58,656

 
89,874

 
59,765

 
122,912

Operating expenses:(1) (2)
 
 
 
 
 
 
 
Research and development
66,431

 
98,123

 
77,007

 
75,894

Sales and marketing
103,736

 
162,152

 
116,898

 
148,343

General and administrative
25,041

 
34,236

 
26,971

 
24,966

Total operating expenses
195,208

 
294,511

 
220,876

 
249,203

Loss from operations
(136,552
)
 
(204,637
)
 
(161,111
)
 
(126,291
)
Interest income, net
327

 
2,218

 
1,520

 
2,143

Other income (expense), net
(490
)
 
386

 
404

 
(311
)
Net loss before benefit from (provision for) income taxes
(136,715
)
 
(202,033
)
 
(159,187
)
 
(124,459
)
Benefit from (provision for) income taxes
1,285

 
(1,110
)
 
(840
)
 
(1,426
)
Net loss
(135,430
)
 
(203,143
)
 
(160,027
)
 
(125,885
)
Deemed dividend to preferred stockholders
(43,207
)
 

 

 

Net loss attributable to common stockholders
$
(178,637
)
 
$
(203,143
)
 
$
(160,027
)
 
$
(125,885
)
Net loss per share attributable to common stockholders, basic and diluted
$
(6.53
)
 
$
(6.21
)
 
$
(5.03
)
 
$
(3.47
)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted(3)
27,347,970

 
32,723,629

 
31,802,117

 
36,260,948

Pro forma net loss per share attributable to common stockholders, basic and diluted(3)


 
$
(1.89
)
 


 
$
(1.13
)
Weighted-average shares used in computing pro forma net loss per share attributable to common stockholders, basic and diluted(3)


 
107,631,044

 


 
111,168,363


51


___________
(1)
Amounts include stock‑based compensation expense as follows:
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2015
 
2016
 
2015
 
2016
 
(in thousands)
Cost of revenue – subscription
$
996

 
$
3,363

 
$
3,008

 
$
1,051

Cost of revenue – services
1,376

 
4,301

 
3,862

 
1,363

Research and development
11,687

 
23,048

 
21,480

 
4,325

Sales and marketing
11,530

 
19,187

 
17,520

 
4,496

General and administrative
8,477

 
13,691

 
11,939

 
5,322

Total stock-based compensation expense
$
34,066

 
$
63,590

 
$
57,809

 
$
16,557

(2)
Amounts include amortization of acquired intangible assets as follows:
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2015
 
2016
 
2015
 
2016
 
(in thousands)
Cost of revenue – subscription
$
906

 
$
1,732

 
$
1,305

 
$
1,483

Sales and marketing
1,149

 
1,723

 
1,292

 
1,292

Total amortization of acquired intangible assets
$
2,055

 
$
3,455

 
$
2,597

 
$
2,775

(3)
See Notes 2, 14 and 15 to our consolidated financial statements included elsewhere in this prospectus for an explanation of the calculations of our basic, diluted and pro forma net loss per share attributable to common stockholders and the weighted‑average number of shares used in the computation of the per share amounts.
 
As of
January 31,
 
As of
October 31,
 
2015
 
2016
 
2016
 
(in thousands)
Consolidated Balance Sheet Data:
 
 
 
 
 
Cash and cash equivalents
$
359,814

 
$
35,966

 
$
31,448

Marketable securities, current and noncurrent
138,448

 
362,279

 
258,018

Working capital
387,096

 
142,717

 
120,925

Total assets
575,239

 
512,887

 
418,181

Deferred revenue, current and noncurrent
116,089

 
158,175

 
162,022

Redeemable convertible preferred stock
657,687

 
657,687

 
657,687

Total stockholders’ deficit
(222,640
)
 
(343,509
)
 
(450,042
)

52


Non‑GAAP Financial Measure
In addition to our results determined in accordance with U.S. generally accepted accounting principles (GAAP), we believe the following non‑GAAP financial measure is useful in evaluating our operating performance.
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2015
 
2016
 
2015
 
2016
 
(in thousands)
Other Financial Statement Data:
 
 
 
 
 
 
 
Non-GAAP operating loss
$
(100,431
)
 
$
(137,592
)
 
$
(100,705
)
 
$
(106,959
)
We define non‑GAAP operating loss as loss from operations before stock‑based compensation expense and amortization of acquired intangible assets. We believe that this non‑GAAP financial measure, when taken together with the corresponding GAAP financial measure, provides meaningful supplemental information regarding our performance by excluding certain items that may not be indicative of our business, operating results or future outlook. Our management uses, and believes that investors benefit from referring to, this non‑GAAP financial measure in evaluating our operating results, as well as when planning, forecasting, budgeting and analyzing future periods. We also use non‑GAAP operating loss in conjunction with traditional GAAP measures to communicate with our board of directors concerning our financial performance.
We believe non‑GAAP operating loss provides investors and other users of our financial information consistency and comparability with our past financial performance and facilitates period to period comparisons of operations. We believe non‑GAAP operating loss is useful in evaluating our operating performance compared to that of other companies in our industry as this metric generally eliminates the effects of certain items that may vary for different companies for reasons unrelated to overall operating performance. Our definition may differ from the definitions used by other companies and therefore comparability may be limited. In addition, other companies may not publish this or similar metrics. Thus, our non‑GAAP operating loss should be considered in addition to, not as a substitute for or in isolation from, measures prepared in accordance with GAAP.
We compensate for these limitations by providing investors and other users of our financial information a reconciliation of non‑GAAP operating loss to loss from operations, the related GAAP financial measure. We encourage investors and others to review our financial information in its entirety, not to rely on any single financial measure and to view non‑GAAP operating loss in conjunction with loss from operations. The following table provides a reconciliation of loss from operations to non‑GAAP operating loss:
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2015
 
2016
 
2015
 
2016
 
(in thousands)
Loss from operations
$
(136,552
)
 
$
(204,637
)
 
$
(161,111
)
 
$
(126,291
)
Stock-based compensation expense
34,066

 
63,590

 
57,809

 
16,557

Amortization of acquired intangible assets
2,055

 
3,455

 
2,597

 
2,775

Non-GAAP operating loss
$
(100,431
)
 
$
(137,592
)
 
$
(100,705
)
 
$
(106,959
)
For the reasons set forth below, we believe that excluding the components described below provides useful information to investors and others in understanding and evaluating our operating results and future prospects in the same manner as we do and in comparing our financial results across accounting periods and to financial results of peer companies.
Stock‑Based Compensation Expense. We exclude stock‑based compensation expense from our non‑GAAP financial measure consistent with how we evaluate our operating results and prepare our operating plans, forecasts and budgets. Further, when considering the impact of equity award grants, we

53


focus on overall stockholder dilution rather than the accounting charges associated with such equity grants. The exclusion of the expense facilitates the comparison of results and business outlook for future periods with results for prior periods in order to better understand the long term performance of our business.
Amortization of Acquired Intangible Assets. We exclude the amortization of acquired intangible assets from our non‑GAAP financial measure. Although the purchase accounting for an acquisition necessarily reflects the accounting value assigned to intangible assets, our management team excludes the GAAP impact of acquired intangible assets when evaluating our operating results. Likewise, our management team excludes amortization of acquired intangible assets from our operating plans, forecasts and budgets. The exclusion of the expense facilitates the comparison of results and business outlook for future periods with results for prior periods in order to better understand the long term performance of our business.

54


MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the section titled “Selected Consolidated Financial Data” and the consolidated financial statements and related notes thereto included elsewhere in this prospectus. This discussion contains forward‑looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included elsewhere in this prospectus. Our fiscal year end is January 31, and references throughout this prospectus to a given fiscal year are to the twelve months ended on that date.
Overview
Cloudera empowers organizations to become data‑driven enterprises in the newly hyperconnected world. We have developed the leading modern platform for data management, machine learning and advanced analytics.  We have achieved this position through extensive collaboration with the global open source community, continuous innovation in data management technologies and by leveraging the latest advances in infrastructure including the public cloud for “big data” applications. Our pioneering hybrid open source software (HOSS) model incorporates the best of open source with our robust proprietary software to form an enterprise‑grade platform. This platform delivers an integrated suite of capabilities for data management, machine learning and advanced analytics, affording customers an agile, scalable and cost‑effective solution for transforming their businesses. Offered on a subscription basis, our platform enables organizations to use vast amounts of data from a variety of sources, including the Internet of Things (IoT), to better serve and market to their customers, design connected products and services and reduce risk through greater insight from data. We believe that our solution is the most widely adopted big data platform, with a growing range of applications being built on it.
Since our founding, our collaboration with the open source community and our proprietary software innovation have enabled us to grow our technology, platform offerings and customer base rapidly. The graphic below provides an outline of selected milestones.
clouderatimelinegraphicfinal.jpg

55


We focus our selling efforts on the largest 8,000 corporate enterprises globally (Global 8000) as well as large public sector organizations. We target these organizations because they capture and manage the majority of the world’s data and operate highly complex IT environments. These organizations are likely to realize the greatest value from utilizing our enterprise‑grade platform. See “Market, Industry and Other Data” for how we define Global 8000.
To maintain our strong partner ecosystem, we will continue to establish and maintain relationships with third parties. To date, over 2,500 resellers, systems integrators, independent software vendors and platform and cloud providers have registered under our Cloudera Connect partner program to gain access to marketing, sales, training and support resources. We have also developed a strategic partnership with Intel Corporation, or Intel, to optimize our software for use with Intel processors and architecture. As a result of our and Intel’s dedication to this partnership, our platform achieves differentiated performance on Intel architecture today, and is expected to achieve differentiated performance on future Intel platform technologies.
We have achieved significant growth over our operating history. For our fiscal years ended January 31, 2016 and January 31, 2017, our revenue was $166.0 million and $      million, respectively, representing year‑over‑year growth in revenue of       % for our most recent fiscal year. Over the same period, operating cash outflows increased from $90.5 million to $      million while our net losses were $203.1 million and $      million, respectively, which includes $63.6 million and $      million, respectively, of stock‑based compensation expense.
Our Hybrid Open Source Software (HOSS) Business Model
We have created our software platform and pioneered the hybrid open source software model. HOSS combines the best open source software with proprietary software to meet the exacting requirements of large enterprises. By integrating robust proprietary software with our open source platform, built on the leading data management and analytics technologies, we deliver substantially greater value to customers in managing, operating and securing their data and data architectures. This approach also creates meaningful differentiation that drives long‑lived customer relationships, as well as the revenue to support sustained innovation.
Subscription Model
We offer term‑based subscriptions of our platform generally on a per node basis, whether deployed on‑premises or in the cloud. We also offer consumption‑based pricing for cloud‑based deployments. As of January 31, 2017,         % of our Global 8000 customers run workloads in the cloud. We also generate revenue from professional services and training.
We offer subscriptions for five editions of our platform, ranging from Cloudera Essentials to the industry leading Cloudera Enterprise. Other editions are designed to address the most common and critical data challenges enterprises face: Cloudera Data Science for programmatic preparation, predictive modeling and machine learning; Cloudera Real Time for online, streaming and real‑time applications; and Cloudera Analytics for business intelligence and SQL analytics.
Operating Model
We market and sell our platform to a broad range of organizations, although we focus our selling efforts on large enterprises, primarily the Global 8000, as well as large public sector organizations. We target these organizations because they capture and manage the vast majority of the world’s data and operate highly complex IT environments, and our enterprise‑grade platform has the greatest opportunity to benefit these organizations. Our total number of Global 8000 customers grew from 255 as of January 31, 2015 to 381 as of January 31, 2016, and grew to        as of January 31, 2017. See “Market, Industry and Other Data—Global 8000.”
We have a broad customer base that spans industries and geographies. For fiscal 2016, no customer accounted for more than 10% of our total revenue. We have significant revenue in the banking and financial services, technology, business services, telecommunications, public sector, consumer and retail, and healthcare and life sciences verticals, and continue to expand our penetration across many other data‑intensive industries. We have a

56


substantial and growing international presence with more than       % of our revenue generated outside of the United States in fiscal year ended January 31, 2017.
We market our platform primarily through a direct sales force while benefiting from business driven by our ecosystem of technology partners, resellers, OEMs, MSPs, independent software vendors and systems integrators. The size and growth of our partner ecosystem affords us reach and greater distribution of our software, enhancing our field organizations’ efforts. Moreover, we work closely with select vendors to design solutions to specifically address the needs of certain industry verticals or use cases, which we refer to as Partner Solutions. See “Business—Partners and Strategic Alliances” and “Business—Intel Strategic Partnership.”
Since our founding, we have invested heavily to grow our business. We have increased our headcount from 1,140 employees as of January 31, 2016 to             employees as of January 31, 2017. We make significant investments in research and development. We expend engineering resources to drive innovation in the open source community, integrate the latest open source technologies, and create proprietary software to constantly improve the functionality and performance of our platform. We make these investments to meet the evolving needs of our customers and capitalize on the growing market for data management, machine learning and analytics software. We intend to continue this investment as we aim to expand our category leadership in open source data management.
We also remain committed to investing in our sales and marketing activities, including expanding our strategic partnerships and alliances, to acquire new customers and increase penetration among existing customers. Our business model focuses on maximizing the lifetime value of a customer relationship. We recognize subscription revenue ratably over the term of the subscription period, and recognize consumption‑based revenue as processor hours are consumed. In general, customer acquisition costs and upfront costs associated with new customers are higher in the first year than the aggregate revenue we recognize from those new customers in the first year. Over the lifetime of the customer relationship, we also incur sales and marketing costs to renew or increase usage per customer. However, these costs, as a percentage of revenue, are significantly less than those initially incurred to acquire the customer. As a result, the profitability of a customer to our business in any particular period depends in part upon how long a customer has been a subscriber and the degree to which they have expanded their usage of our platform. We believe that, over time, as our customer base grows and a relatively higher percentage of our subscription revenue is attributable to renewals or greater usage among existing customers relative to new customers, associated sales and marketing expenses and other allocated upfront costs as a percentage of revenue will decrease, subject to investments we may make in our business.
To further illustrate the economics of our customer relationships, we have provided an analysis of our net expansion rate. Our quarterly net subscription revenue expansion rate equals:
the subscription revenue in a given quarter from all customers that had subscription revenue in the same quarter of the prior year,
divided by
the subscription revenue attributable to that same group of customers in that prior quarter.
Our net expansion rate equals the simple arithmetic average of our quarterly net subscription revenue expansion rate for the four quarters ending with the most recently completed fiscal quarter. Our experience has been that net expansion rates are generally consistent across customer cohorts, irrespective of the age of the cohort. In particular, our net expansion rate as of January 31, 2017 was     %.
Factors Affecting Our Performance
Acquiring New Customers
We believe that the shift from legacy data management systems to a modern data platform is just beginning. We intend to target new Global 8000 customers by continuing to invest in our field organization, both domestically and internationally. We are also committed to extending and strengthening relationships within our partner ecosystem to expand our reach, increase our distribution and increase the number of Partner Solutions. We believe this strategy

57


will allow us to maximize leverage for our sales force. Our business and results of operations will depend on our ability to continue to add new Global 8000 customers.
Expanding Penetration within Our Existing Customer Base
Our existing customer base is large and growing, and we remain committed to ensuring our customers fully utilize the capabilities of our platform. Our customers often start with small deployments and then expand their usage significantly as they derive value from their data using our platform. Our field organization, together with our partner ecosystem, assists our customers in identifying new use cases, modernizing their data architectures and achieving success with data‑driven initiatives. We believe this allows our customers to fully realize the strategic value of their data. Our business and results of operations will depend on our ability to drive higher usage of our platform within our growing base of Global 8000 customers.
Investments in Future Growth
We believe that we are only beginning to penetrate our market opportunity with Global 8000 companies and public sector entities, and we intend to continue to invest in our future growth. As discussed above, we expect to continue to make significant investments in research and development as well as sales and marketing activities. We also plan to continue to invest in operational and administrative functions to support our expected growth and our transition to a public company. We expect to use the proceeds from this offering to fund these growth strategies and do not expect to be profitable in the near future. As discussed in “—Our Hybrid Open Source Software Business Model—Operating Model,” these investments will be unprofitable in the short term until our customer base grows to include a higher percentage of subscription revenue that is attributable to renewals and greater usage of our platform.
Components of Results of Operations
Revenue
We generate revenue primarily from the sale of subscriptions for our platform that our customers deploy either on‑premises or in the cloud, as well as the sale of services. Subscription revenue relates to term (or time‑based) subscriptions to our platform, which includes both open source and proprietary software. Our subscription arrangements are typically one to three years in length and we recognize subscription revenue ratably over the term of the subscription period. Our subscription includes internet, email and phone support, bug fixes and the right to receive unspecified software updates and upgrades released when and if available during the subscription term. Services revenue relates to professional services for the implementation and use of our subscriptions, customer training and education services, and related reimbursable travel costs.
Cost of Revenue
Cost of revenue for subscriptions primarily consists of personnel costs including salaries, bonuses, travel costs, benefits and stock‑based compensation for employees providing technical support for our subscription customers, allocated shared costs (including rent and information technology) and amortization of acquired intangible assets from business combinations. Cost of revenue for services primarily consists of personnel costs including salaries, bonuses, benefits and stock‑based compensation, fees to subcontractors associated with service contracts, travel costs and allocated shared costs (including rent and information technology). We expect cost of revenue to increase in absolute dollars for the foreseeable future as we continue to obtain new customers and expand our relationship with existing customers. As discussed in detail below, see “—Significant Impacts of Stock‑based Compensation Expense,” we expect stock‑based compensation expense associated with cost of revenue to increase by approximately $28 million and approximately $36 million for subscription and services, respectively, in the near term related to the restricted stock units (RSUs) outstanding as of October 31, 2016 as a result of achieving vesting conditions in connection with this offering.
Operating Expenses
Research and Development.  Research and development expenses primarily consist of personnel costs including salaries, bonuses, travel costs, benefits and stock‑based compensation for our research and development employees,

58


contractor fees, allocated shared costs (including rent and information technology), supplies, and depreciation of equipment associated with the continued development of our platform prior to establishment of technological feasibility and the related maintenance of the existing technology. We expect our research and development expenses to increase in absolute dollars for the foreseeable future as we continue to enhance and add new technologies, features and functionality to our subscriptions. As discussed in detail below, see “—Significant Impacts of Stock‑based Compensation Expense,” we expect stock‑based compensation expense associated with research and development expenses to increase by approximately $131 million in the near term related to the RSUs outstanding as of October 31, 2016 as a result of achieving vesting conditions in connection with this offering. We also expect allocated shared costs to increase in the periods following the commencement of the lease for our new headquarters in Palo Alto in July 2017.
Sales and Marketing.  Sales and marketing expenses primarily consist of personnel costs including salaries, bonuses, travel costs, sales‑based incentives, benefits and stock‑based compensation for our sales and marketing employees. In addition, sales and marketing expenses also includes costs for advertising, promotional events, corporate communications, product marketing and other brand‑building activities, allocated shared costs (including rent and information technology) and amortization of acquired intangible assets from business combinations. Sales‑based incentives are expensed as incurred. We expect our sales and marketing expenses to increase in absolute dollars as we continue to invest in selling and marketing activities to attract new customers and expand our relationship with existing customers. As discussed in detail below, see “—Significant Impacts of Stock‑based Compensation Expense,” we expect stock‑based compensation expense associated with sales and marketing expenses to increase by approximately $125 million in the near term related to the RSUs outstanding as of October 31, 2016 as a result of achieving vesting conditions in connection with this offering.
General and Administrative.  General and administrative expenses primarily consist of personnel costs including salaries, bonuses, travel costs, benefits and stock‑based compensation for our executive, finance, legal, human resources, information technology and other administrative employees. In addition, general and administrative expenses include fees for third‑party professional services, including consulting, legal and accounting services and other corporate expenses, and allocated shared costs (including rent and information technology). We expect our general and administrative expenses to increase in absolute dollars due to the anticipated growth of our business and related infrastructure as well as legal, accounting, insurance, investor relations and other costs associated with becoming a public company. As discussed in detail below, see “—Significant Impacts of Stock‑based Compensation Expense,” we expect stock‑based compensation expense associated with general and administrative expenses to increase by approximately $44 million in the near term related to the RSUs outstanding as of October 31, 2016 as a result of achieving vesting conditions in connection with this offering. We also expect allocated shared costs to increase in the periods following the commencement of the lease for our new headquarters in Palo Alto in July 2017.
Interest Income, net
Interest income primarily relates to amounts earned on our cash and cash equivalents and marketable securities.
Other Income (Expense), net
Other income (expense), net primarily relates to foreign currency transactions, realized gains and losses on our marketable securities, and other non‑operating gains or losses.
Provision for Income Taxes
Provision for income taxes primarily consists of state and foreign income taxes. Due to cumulative losses, we maintain a valuation allowance against our deferred tax assets. We consider all available evidence, both positive and negative, in assessing the extent to which a valuation allowance should be applied against our deferred tax assets.

59


Significant Impacts of Stock‑based Compensation Expense
Restricted Stock Units
We have granted RSUs to our employees and members of our board of directors under our 2008 Equity Incentive Plan, or the 2008 Plan. The employee RSUs vest upon the satisfaction of both a service condition and a liquidity condition. The service condition for these awards is satisfied pro-rata over four years. The liquidity condition is satisfied upon the occurrence of a qualifying event or six months following the effective date of this offering. See “Critical Accounting Policies and Estimates—Stock‑Based Compensation” and Note 10 to our consolidated financial statements.
As of October 31, 2016, we have 15.1 million RSUs outstanding with a total grant date fair value of $364.1 million. We have not recognized any stock‑based compensation expense related to these RSUs as a qualifying liquidity event has not yet occurred. In the quarter in which this offering is completed, we will begin recording stock‑based compensation expense using the accelerated attribution method. If this offering had been completed on October 31, 2016, we would have recognized $179.4 million of stock‑based compensation expense on that date, and would have approximately $184.7 million of additional future period expense to be recognized over the remaining service periods through fiscal 2021.
In December 2016, we granted to employees 6,853,400 RSUs as well as options to purchase 243,500 shares of our common stock with an exercise price of $17.85 per share and an aggregate grant date fair value of approximately $128.0 million. We expect to grant additional RSUs and stock options in the future which will also increase stock‑based compensation expense in future periods.
Tender Offer
In May 2015, an unrelated third party initiated a cash tender offer which was completed in July 2015 for the purchase of our common stock from specified categories of current and former employees which had a significant impact on our stock‑based compensation expense for the nine months ended October 31, 2015, and specifically in our second quarter of fiscal 2016. Sellers participating in the tender offer sold a total of 4,079,131 shares of common stock to the unrelated third party. The purchase price per share in the tender offer was in excess of the fair value of our outstanding common stock at the time of the transaction and accordingly, upon the completion of the transaction, we recorded $16.6 million as stock‑based compensation expense related to the excess of the selling price per share of common stock paid to our employees over the fair value of the tendered shares.
Additionally, the completion of the tender offer was a qualifying liquidity event, such that the performance‑based vesting requirement was satisfied for those RSUs that had met the service condition at this date. Upon the completion of the transaction, we recorded $19.7 million of stock‑based compensation expense for the RSUs for which both the service condition and the qualifying liquidity event had been achieved.
The total stock‑based compensation expense related to the tender offer impacted our second quarter of fiscal 2016 as follows (in thousands):
Cost of revenue – subscription
$
1,954

Cost of revenue – services
2,514

Research and development
16,179

Sales and marketing
9,481

General and administrative
6,191

Total stock-based compensation expense
$
36,319


60


Results of Operations
The following table sets forth our results of operations for the periods indicated:
 
Year Ended January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
 
(in thousands)
Revenue:
 
 
 
 
 
Subscription
$
119,150

 
$
82,424

 
$
144,093

Services
46,898

 
33,244

 
44,106

Total revenue
166,048

 
115,668

 
188,199

Cost of revenue:(1) (2)
 
 
 
 
 
Subscription
30,996

 
22,240

 
28,932

Services
45,178

 
33,663

 
36,355

Total cost of revenue
76,174

 
55,903

 
65,287

Gross profit
89,874

 
59,765

 
122,912

Operating expenses:(1) (2)
 
 
 
 
 
Research and development
98,123

 
77,007

 
75,894

Sales and marketing
162,152

 
116,898

 
148,343

General and administrative
34,236

 
26,971

 
24,966

Total operating expenses
294,511

 
220,876

 
249,203

Loss from operations
(204,637
)
 
(161,111
)
 
(126,291
)
Interest income, net
2,218

 
1,520

 
2,143

Other income (expense), net
386

 
404

 
(311
)
Net loss before provision for income taxes
(202,033
)
 
(159,187
)
 
(124,459
)
Provision for income taxes
(1,110
)
 
(840
)
 
(1,426
)
Net loss
$
(203,143
)
 
$
(160,027
)
 
$
(125,885
)
___________
(1)
Amounts include stock‑based compensation expense as follows:
 
Year Ended January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
 
(in thousands)
Cost of revenue – subscription
$
3,363

 
$
3,008

 
$
1,051

Cost of revenue – services
4,301

 
3,862

 
1,363

Research and development
23,048

 
21,480

 
4,325

Sales and marketing
19,187

 
17,520

 
4,496

General and administrative
13,691

 
11,939

 
5,322

Total stockbased compensation expense
$
63,590

 
$
57,809

 
$
16,557

(2)
Amounts include amortization of acquired intangible assets as follows:
 
Year Ended January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
 
(in thousands)
Cost of revenue – subscription
$
1,732

 
$
1,305

 
$
1,483

Sales and marketing
1,723

 
1,292

 
1,292

Total amortization of acquired intangible assets
$
3,455

 
$
2,597

 
$
2,775


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The following table sets forth selected consolidated statements of operations data for each of the periods indicated as a percentage of total revenue:
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
Revenue:
 
 
 
 
 
Subscription
72
 %
 
71
 %
 
77
 %
Services
28

 
29

 
23

Total revenue
100

 
100

 
100

Cost of revenue(1) (2): 
 
 
 
 
 
Subscription
19

 
19

 
16

Services
27

 
29

 
19

Total cost of revenue
46

 
48

 
35

Gross margin
54

 
52

 
65

Operating expenses(1) (2):
 
 
 
 
 
Research and development
59

 
67

 
40

Sales and marketing
98

 
101

 
79

General and administrative
20

 
23

 
13

Total operating expenses
177

 
191

 
132

Loss from operations
(123
)
 
(139
)
 
(67
)
Interest income, net
1

 
1

 
1

Other income (expense), net

 

 

Net loss before provision for income taxes
(122
)
 
(138
)
 
(66
)
Provision for income taxes

 

 
(1
)
Net loss
(122
)%
 
(138
)%
 
(67
)%
___________
(1)
Amounts include stock‑based compensation expense as a percentage of total revenue as follows:
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
Cost of revenue – subscription
2
%
 
3
%
 
1
%
Cost of revenue – services
3

 
3

 
1

Research and development
14

 
19

 
2

Sales and marketing
11

 
15

 
2

General and administrative
8

 
10

 
3

Total stockbased compensation expense
38
%
 
50
%
 
9
%

62


(2)
Amounts include amortization of acquired intangible assets as a percentage of total revenue as follows:
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
Cost of revenue – subscription
1
%
 
1
%
 
1
%
Sales and marketing
1

 
1

 
1

Total amortization of acquired intangible assets
2
%
 
2
%
 
2
%
Nine Months Ended October 31, 2015 and 2016
Revenue
 
Nine Months Ended
October 31,
 
Change
 
2015
 
2016
 
Amount
 
%
 
(dollars in thousands)
Subscription
$
82,424

 
$
144,093

 
$
61,669

 
75
%
Services
33,244

 
44,106

 
10,862

 
33
%
Total revenue
$
115,668

 
$
188,199

 
$
72,531

 
63
%
As a percentage of total revenue:
 
 
 
 
 
 
 
Subscription
71
%
 
77
%
 
 
 
 
Services
29
%
 
23
%
 
 
 
 
Total revenue
100
%
 
100
%
 
 
 
 
The increase in subscription revenue was primarily attributable to volume driven increases in subscription sales to new and existing customers. Our net expansion rate for the period ended October 31, 2016 was     %.
Our services revenue increased at a lower rate compared to the increase in our subscription revenue primarily due to our existing customers increasing experience with the technology and our efforts to develop relationships with partners and other system integrators, resulting in a shift of the provision of such services to these partners. Customers benefit from the increased choice in partners and system integrators, and we anticipate that our services revenue will continue to decrease as a percentage of total revenue in future periods.

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Cost of Revenue, Gross Profit and Gross Margin
 
Nine Months Ended
October 31,
 
Change
 
2015
 
2016
 
Amount
 
%
 
(dollars in thousands)
Cost of revenue:
 
 
 
 
 
 
 
Subscription
$
22,240

 
$
28,932

 
$
6,692

 
30
%
Services
33,663

 
36,355

 
2,692

 
8
%
Total cost of revenue
$
55,903

 
$
65,287

 
$
9,384

 
17
%
Gross profit
$
59,765

 
$
122,912

 
$
63,147

 
106
%
Gross margin:
 
 
 
 
 
 
 
Subscription
73
 %
 
80
%
 
 
 
 
Services
(1
)%
 
18
%
 
 
 
 
Total gross margin
52
 %
 
65
%
 
 
 
 
Cost of revenue, as a percentage of total revenue:
 
 
 
 
 
 
 
Subscription
19
 %
 
16
%
 
 
 
 
Services
29
 %
 
19
%
 
 
 
 
Total cost of revenue
48
 %
 
35
%
 
 
 
 
The increase in cost of revenue for subscription was primarily due to an increase of $6.9 million in salaries and benefits related to growth in employee headcount to support our overall expansion in customers and an increase of $1.1 million in allocated shared costs, partially offset by a decrease of $2.0 million in stockbased compensation expense mainly due to the tender offer in July 2015, which was not repeated in fiscal 2017.
Subscription gross margin improved from 73% to 80% in the nine months ended October 31, 2016 as compared to the same period a year ago. We expect subscription gross margin to decline in future periods due to the recording of stockbased compensation expense related to RSUs vesting in connection with this offering and in the subsequent service period partially offset by improvement in economies of scale. Excluding the impact of stockbased compensation expense, we would expect subscription gross margin to continue to improve.
The increase in cost of revenue for services was primarily due to an increase of $3.0 million in salaries and benefits related to growth in employee headcount and an increase of $1.3 million in fees to subcontractors as a result of higher demand of services by our customers, offset by a decrease of $2.5 million in stockbased compensation expense mainly due to the tender offer in July 2015, which was not repeated in fiscal 2017.
Services gross margin improved from (1)% to 18% in the nine months ended October 31, 2016 as compared to the same period a year ago. We expect services gross margin to decline due to the recording of stockbased compensation expense related to the RSUs vesting in connection with this offering and in the subsequent service period partially offset by increased utilization of chargeable consultants.

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Operating Expenses
 
Nine Months Ended
October 31,
 
Change
 
2015
 
2016
 
Amount
 
%
 
(dollars in thousands)
Research and development
$
77,007

 
$
75,894

 
$
(1,113
)
 
(1
)%
Sales and marketing
116,898

 
148,343

 
31,445

 
27
 %
General and administrative
26,971

 
24,966

 
(2,005
)
 
(7
)%
Total operating expenses
$
220,876

 
$
249,203

 
$
28,327

 
13
 %
Operating expenses, as a percentage of total revenue:
 
 
 
 
 
 
 
Research and development
67
%
 
40
%
 
 
 
 
Sales and marketing
101
%
 
79
%
 
 
 
 
General and administrative
23
%
 
13
%
 
 
 
 
Total operating expenses
191
%
 
132
%
 
 
 
 
Research and Development
The decrease in research and development expenses was primarily due to a decrease of $17.2 million in stockbased compensation expense mainly due to the tender offer in July 2015 which was not repeated in fiscal 2017, partially offset by an increase of $12.6 million in employee‑related costs including salaries, benefits and travel costs, associated with the growth in employee headcount, an increase of $0.7 million in depreciation expense of equipment to support our research and development activities and an increase of $0.9 million in allocated shared costs.
Sales and Marketing
The increase in sales and marketing expenses was primarily due to an increase of $35.9 million in employee‑related costs including salaries, incentivebased compensation, benefits and travel costs, associated with the growth in employee headcount to support our overall sales activities and an increase of $2.8 million in allocated shared costs, offset by a decrease of $13.0 million in stockbased compensation expense mainly due to the tender offer in July 2015 which was not repeated in fiscal 2017.
General and Administrative
The decrease in general and administrative expenses was primarily due to a decrease of $6.6 million in stockbased compensation expense mainly due to the tender offer in July 2015 which was not repeated in fiscal 2017, offset by an increase of $4.5 million in employee‑related costs including salaries, benefits and travel costs, associated with the growth in employee headcount to support our overall expansion and an increase of $0.5 million in allocated shared costs.
Interest Income, net
 
Nine Months Ended
October 31,
 

Change
 
2015
 
2016
 
Amount
 
%
 
(dollars in thousands)
Interest income, net
$
1,520

 
$
2,143

 
$
623

 
41
%
Interest income, net increased primarily as a result of higher interest rates obtained from investing more of our cash and cash equivalents in marketable securities.

65


Other Income (Expense), net
 
Nine Months Ended
October 31,
 
Change
 
2015
 
2016
 
Amount
 
%
 
(dollars in thousands)
Other income (expense), net
$
404

 
$
(311
)
 
$
(715
)
 
not meaningful
Other income (expense), net decreased primarily as a result of an escrow claim adjustment in fiscal 2016 of $0.8 million related to a fiscal 2015 acquisition outside of the measurement period.
Provision for Income Taxes
 
Nine Months Ended
October 31,
 

Change
 
2015
 
2016
 
Amount
 
%
 
(dollars in thousands)
Provision for income taxes
$
840

 
$
1,426

 
$
586

 
70
%
Provision for income taxes increased primarily due to an increase in pretax income in our foreign locations driven by our continued international expansion into new countries.
Seasonality
We have seasonal and end-of-quarter concentration of our sales, which impacts our ability to plan and manage cash flows and margins. Our sales vary by season with the fourth quarter typically being our largest. In addition, within each quarter, most sales occur in the last month of that quarter. See “Risk Factors—Our sales cycles can be long, unpredictable and vary seasonally, particularly with respect to large subscriptions, and our sales efforts require considerable time and expense.”
Liquidity and Capital Resources
As of October 31, 2016, our principal sources of liquidity were cash, cash equivalents and marketable securities totaling $289.5 million which were held for working capital purposes. Our cash equivalents are comprised primarily of money market funds and our marketable securities are comprised of U.S. agency obligations, assetbacked securities, corporate notes and obligations, commercial paper, municipal securities and U.S. treasury securities. To date, our principal sources of liquidity have been the net proceeds we received through private sales of equity securities, as well as payments received from customers for our subscriptions and services.
We believe our existing liquidity will be sufficient to meet our working capital and capital expenditure needs for at least the next twelve months. Our future capital requirements may vary materially from those currently planned and will depend on many factors, including our net expansion rate, the timing and extent of spending on research and development efforts, the expansion of sales and marketing activities, the continuing market acceptance of our subscriptions and services and ongoing investments to support the growth of our business. We may in the future enter into arrangements to acquire or invest in complementary businesses, services and technologies and intellectual property rights. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders. The incurrence of debt financing would result in debt service obligations and the instruments governing such debt could contain operating and financing covenants that would restrict our operations. Additional funds may not be available on terms favorable to us, or at all. If adequate funds are not available on acceptable terms, or at all, we may not be able to adequately fund our business plans and it could have a negative effect on our operating cash flows and financial condition.

66


The following table summarizes our cash flows for the periods indicated:
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
 
(in thousands)
Cash used in operating activities
$
(90,497
)
 
$
(68,279
)
 
$
(84,619
)
Cash provided by (used in) investing activities
(242,682
)
 
(256,619
)
 
92,960

Cash provided by financing activities
9,663

 
8,144

 
2,553

Effect of exchange rate changes
(334
)
 
(93
)
 
6

Net increase (decrease) in cash, cash equivalents and restricted cash
$
(323,850
)
 
$
(316,847
)
 
$
10,900

Cash Used in Operating Activities
During the nine months ended October 31, 2016, cash used in operating activities was $84.6 million which was due to a net loss of $125.9 million partially offset by noncash adjustments of $26.4 million and an increase from net change in operating assets and liabilities of $14.8 million. Noncash adjustments consisted of $7.5 million of depreciation and amortization, $16.6 million of stockbased compensation and $2.4 million in accretion and amortization of marketable securities. The net change in operating assets and liabilities was due to an increase in deferred revenue of $3.8 million due to the receipt of cash from customers in advance of revenue recognition, an increase in accounts payable and accrued expenses and other liabilities of $4.4 million due to growth in operations and timing of payments to vendors, an increase in accrued compensation of $4.3 million due to an increase in headcount, a decrease in prepaid expenses and other assets of $0.4 million and a decrease in accounts receivable of $1.9 million due to the receipt of cash from customers compared to timing of invoicing.
During the nine months ended October 31, 2015, cash used in operating activities was $68.3 million which was due to a net loss of $160.0 million partially offset by noncash adjustments of $66.6 million and an increase from net change in operating assets and liabilities of $25.1 million. Noncash adjustments consisted of $6.3 million of depreciation and amortization, $57.8 million of stockbased compensation and $2.5 million in accretion and amortization of marketable securities. The net change in operating assets and liabilities was due to an increase in deferred revenue of $22.5 million due to the receipt of cash from customers in advance of revenue recognition, a net increase in accounts payable and accrued expenses and other liabilities of $3.0 million due to growth in operations and timing of payments to vendors, an increase in accrued compensation of $2.3 million due to an increase in headcount, a decrease of $1.8 million in prepaid expenses and other assets, partially offset by an increase in accounts receivable of $4.5 million due to the timing of invoicing compared to the receipt of cash from customers.
During the year ended January 31, 2016, cash used in operating activities was $90.5 million which was due to a net loss of $203.1 million partially offset by noncash adjustments of $75.8 million and an increase in net change in operating assets and liabilities of $36.9 million. Noncash adjustments consisted of $8.6 million of depreciation and amortization, $63.6 million of stockbased compensation and $3.6 million in accretion and amortization of marketable securities. The net change in operating assets and liabilities was due to an increase in deferred revenue of $42.1 million due to the receipt of cash from customers in advance of revenue recognition over deferred revenue recognized, an increase in accounts payable and accrued expenses and other liabilities of $6.2 million due to growth in operations and timing of payments to vendors, an increase in accrued compensation of $9.4 million due to an increase in headcount, partially offset by an increase in accounts receivable of $19.0 million due to the timing of invoicing compared to the receipt of cash from customers, and an increase of $1.8 million in prepaid expenses and other assets.
Cash Provided by (Used in) Investing Activities
During the nine months ended October 31, 2016, cash provided by investing activities was $93.0 million which was due to sales and maturities of marketable securities of $206.4 million, partially offset by purchases of

67


marketable securities of $103.8 million, capital expenditures for the purchase of property and equipment of $6.9 million and cash used in business combinations, net of cash acquired, of $2.7 million.
During the nine months ended October 31, 2015, cash used in investing activities was $256.6 million which was due to purchases of marketable securities of $373.5 million, cash used in business combinations, net of cash acquired, of $8.9 million, purchases of property and equipment of $2.9 million, partially offset by sales and maturities of marketable securities of $128.7 million.
During the year ended January 31, 2016, cash used in investing activities was $242.7 million which was due to purchases of marketable securities of $411.5 million, cash used in business combinations, net of cash acquired, of $8.9 million, purchases of property and equipment of $5.5 million, partially offset by sales and maturities of marketable securities of $183.3 million.
Cash Provided by Financing Activities
During the nine months ended October 31, 2016, cash provided by financing activities was $2.6 million which was due to proceeds from the issuance of common stock upon exercise of stock options.
During the nine months ended October 31, 2015, cash provided by financing activities was $8.1 million which was due to net proceeds of $9.3 million from the exercise of stock options, partially offset by $1.2 million in payments for net share settlement of restricted stock units related to employee taxes.
During the year ended January 31, 2016, cash provided by financing activities was $9.7 million which was due to proceeds of $10.9 million from the issuance of common stock upon exercise of stock options, partially offset by $1.2 million in payments for shares withheld related to net share settlement of restricted stock units.
OffBalance Sheet Arrangements
Through October 31, 2016, we have not entered into any offbalance sheet arrangements and do not have any holdings in variable interest entities.
Contractual Obligations and Commitments
The following table summarizes our non‑cancelable contractual obligations as of January 31, 2016:
 
Payments Due By Period
 
Total
 
Less than 1 Year
 
1-2 Years
 
3-5 Years
 
More than 5 Years
 
(in thousands)
Operating leases (1)   
$
33,218

 
$
8,072

 
$
13,813

 
$
9,973

 
$
1,360

Total contractual obligations
$
33,218

 
$
8,072

 
$
13,813

 
$
9,973

 
$
1,360

___________
(1)
We lease our facilities under long‑term operating leases, which expire at various dates through 2021. The lease agreements frequently include provisions which require us to pay taxes, insurance, or maintenance costs.
In September 2016, we entered into a new non‑cancelable operating lease agreement to rent office space in Palo Alto, California. The lease has a 125‑month term (which includes five months of free rent), commences in July 2017 and ends in November 2027 with an option to renew for an additional 84 months. Total minimum lease payments under the lease agreement are $227.1 million, of which $1.8 million was required to be paid upon execution, and is omitted from the above table of non‑cancelable contractual obligations as of January 31, 2016. Our contractual obligations for this lease are $1.5 million in fiscal 2018, $19.9 million in fiscal 2019, $20.5 million in fiscal 2020, $21.1 million in fiscal 2021, $21.8 million in fiscal 2022 and $140.5 million thereafter. Concurrent with this lease agreement, we entered into a non‑cancelable sublease agreement to sublet a portion of this office space for a five year term commencing in July 2017. Rental proceeds under this sublease are expected to be $5.3 million in fiscal 2018, $9.3 million in fiscal 2019, $9.6 million in fiscal 2020, $9.8 million in fiscal 2021, $10.1 million in fiscal 2022 and $4.3 million thereafter.

68


As of January 31, 2016 and October 31, 2016, we had an aggregate of $2.5 million and $17.0 million, respectively, in letters of credit outstanding in favor of certain landlords for office space. These letters of credit renew annually and expire at various dates through 2027.
Deferred Revenue and Unbilled Deferred Revenue
Our deferred revenue consists of amounts that have been invoiced but that have not yet been recognized as revenue as of the end of a reporting period.
Unbilled deferred revenue represents future noncancelable customer commitments under our subscription agreements that have not been invoiced and, accordingly, are not recorded in deferred revenue. For our annual or multipleyear subscription contracts we typically invoice an initial annual amount at contract signing followed by subsequent annual invoices over the contract term. Until these amounts are invoiced, they are not recorded in revenue, deferred revenue, accounts receivable or elsewhere in our consolidated financial statements, and are considered by us to be unbilled deferred revenue. We expect unbilled deferred revenue to fluctuate from period to period for several reasons, including the timing and duration of customer contracts, varying billing cycles and the timing and duration of customer renewals. Unbilled deferred revenue does not include minimum revenue commitments from resellers as we recognize revenue and deferred revenue upon sellthrough to an end user customer.
Our total deferred revenue and unbilled deferred subscription revenue as of January 31, 2017 was $        million.
Quantitative and Qualitative Disclosures about Market Risk
We have operations both within the United States and internationally, and we are exposed to market risks in the ordinary course of our business. Our market risk exposure is primarily a result of fluctuations in interest rates and foreign currency exchange rates. Information relating to quantitative and qualitative disclosures about these markets risks is described below.
Interest Rate Risk
Our primary exposure to market risk relates to interest rate changes. We had cash and cash equivalents and marketable securities totaling $289.5 million as of October 31, 2016, which were held for working capital purposes. Our cash equivalents are comprised primarily of money market funds and our marketable securities are comprised of U.S. agency obligations, assetbacked securities, corporate notes and obligations, commercial paper, municipal securities, certificates of deposit and U.S. treasury securities. Our investments are made for capital preservation purposes. We do not hold or issue financial instruments for trading or speculative purposes. A hypothetical 100 basis point change in interest rates would change the fair value of our investments in marketable securities by $2.6 million.
Foreign Currency Risk
Our revenue and expenses are primarily denominated in U.S. dollars. For our nonU.S. operations, the majority of our revenue and expenses are denominated in other currencies such as Euro, British Pound Sterling, Australian Dollar and Chinese Yuan. For the nine months ended October 31, 2016, approximately 10% of our revenue and approximately 17% of aggregate cost of sales and operating expenses were generated in currencies other than U.S. dollars.
For the nine months ended October 31, 2016, we recorded a loss on foreign exchange transactions of $0.4 million. To date, we have not had a formal hedging program with respect to foreign currency, but we may do so in the future if our exposure to foreign currency should become more significant. A 10% increase or decrease in current exchange rates would not have a material effect on our financial results.
Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (GAAP). The preparation of these financial statements requires our management to make

69


estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses and related disclosures. 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 judgments and estimates under different assumptions or conditions and any such differences may be material. We believe that our significant accounting policies, which are discussed in Note 2 to our consolidated financial statements, and the accounting policies discussed below, involve a greater degree of complexity, involving management’s judgments and estimates. Accordingly, these are the policies we believe are critical to understanding our financial condition and historical and future results of operations.
Revenue Recognition
We generate revenue from subscriptions and services. Subscription arrangements are typically one to three years in length but may be up to seven years in limited cases. Arrangements with our customers typically do not include general rights of return. Incremental direct costs incurred related to the acquisition or origination of a customer contract are expensed as incurred.
Revenue recognition commences when all of the following criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the fee is fixed or determinable; and (iv) collection is probable.
Subscription revenue
Subscription revenue relates to term (or timebased) subscription agreements for both open source and proprietary software. Subscriptions include internet, email and phone support, bug fixes, and the right to receive unspecified software updates and upgrades released when and if available during the subscription term. Revenue for subscription arrangements is recognized ratably over the contractual term of the arrangement beginning on the date access to the subscription is made available to the customer.
Services revenue
Services revenue relates to professional services for the implementation and use of our subscriptions, training and education services and related reimbursable travel costs.
For time and materials and fixed fee arrangements, revenue is recognized as the services are performed or upon acceptance, if applicable. For milestonebased arrangements, revenue is recognized upon acceptance or subsequent to completion and upon the lapse of any acceptance period.
Revenue for training and education services is recognized upon delivery except for OnDemand Training, which is recognized ratably over the contractual term.
Multiple‑element arrangements
Arrangements with our customers generally include multiple elements (e.g., subscription and services). We allocate revenue to each element of the arrangement based on vendor‑specific objective evidence of each element’s fair value (VSOE) when we can demonstrate sufficient evidence of the fair value. VSOE for elements of an arrangement is based upon the normal pricing and discounting practices for those elements when sold separately on a stand‑alone basis.
We have established VSOE for some of our services. If VSOE for one or more undelivered elements does not exist, revenue recognition does not commence until delivery of both the subscription and services have commenced, or when VSOE of the undelivered elements has been established. Once revenue recognition commences, revenue for the arrangement is recognized ratably over the longest service period in the arrangement.
Reseller arrangements
We also recognize subscription revenue for sales through resellers or other indirect sales channels. Subscription revenue from these sales is generally recognized upon sellthrough to an end user customer. Subscription revenue

70


from these sales does not commence until cash is collected where payments to us are believed to be contingent upon payment by the end user to the reseller.
Deferred revenue
Deferred revenue consists of amounts billed to or collected from customers under a binding agreement provided delivery of the related subscription and services has commenced.
Business Combinations, Goodwill and Intangible Assets
We allocate the fair value of purchase consideration in a business combination to tangible assets, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is allocated to goodwill. The allocation of the purchase consideration requires management to make significant estimates and assumptions, especially with respect to intangible assets. These estimates can include, but are not limited to, future expected cash flows from acquired customers and acquired technology from a market participant perspective, useful lives and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable but which are inherently uncertain and unpredictable, and, as a result, actual results may differ from estimates. During the measurement period, which is up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.
We assess goodwill for impairment at least annually and whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. We test goodwill using the twostep process. In the first step, we compare the carrying amount of the reporting unit to the fair value based on the fair value of our common stock. If the fair value of the reporting unit exceeds the carrying value, goodwill is not considered impaired and no further testing is required. If the carrying value of the reporting unit exceeds the fair value, goodwill is potentially impaired and the second step of the impairment test must be performed. In the second step, we would compare the implied fair value of the goodwill to its carrying amount to determine the amount of impairment loss, if any.
Acquired finitelived intangible assets are amortized over their estimated useful lives. We evaluate the recoverability of our intangible assets for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying amounts to the future undiscounted cash flows the intangible assets are expected to generate. If such review indicates that the carrying amount of our intangible assets is not recoverable, the carrying amount of such assets is reduced to fair value. We have not recorded any such impairment charge during the periods presented.
Stock‑based Compensation
We recognize stock‑based compensation expense for all stockbased payments. Employee stockbased compensation cost is estimated at the grant date based on the fair value of the equity for financial reporting purposes and is recognized as expense, net of estimated forfeitures, over the requisite service period.
We calculate the fair value of options based on the BlackScholes optionpricing model. The BlackScholes model requires the use of various assumptions including expected option life and expected stock price volatility. We estimate the expected term for stock options using the simplified method due to the lack of historical exercise activity. The simplified method calculates the expected term as the midpoint between the vesting date and the contractual expiration date of the award. We estimate volatility using volatilities of a group of public companies in a similar industry, stage of life cycle, and size. The interest rate is derived from government bonds with similar term to the option granted. We have not declared nor do we expect to declare dividends. Therefore, there is no dividend impact on the valuation of options. We use the straightline method for employee expense attribution for stock options.
We have granted RSUs to our employees and members of our board of directors under the 2008 Plan. The employee RSUs vest upon the satisfaction of both a service condition and a liquidity condition. The service

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condition for the majority of these awards is satisfied pro-rata over four years. The liquidity condition is satisfied upon the occurrence of a qualifying event or six months following the effective date of this offering.
The liquidity condition is viewed as a performancebased criterion for which the achievement of such liquidity event is not deemed probable for accounting purposes until the event occurs. In the quarter in which such event occurs, we will begin recording stockbased compensation expense using the accelerated attribution method, net of forfeitures.
Stockbased compensation expense is recorded based on awards that are ultimately expected to vest, and such expense has been reduced for estimated forfeitures. When estimating forfeitures, we consider voluntary termination behaviors as well as trends of the actual option forfeitures.
We also record stockbased compensation expense when a holder of an economic interest in our company purchases shares from an employee for an amount in excess of the fair value of the common stock at the time of the purchase. We recognize any excess value transferred in these transactions as stockbased compensation expense in the statement of operations.
We estimated the fair value of options and other equity awards granted to nonemployees using the BlackScholes method which are subject to periodic remeasurement over the period during which services are rendered. We recognize the stockbased compensation expense for nonemployee options and other equity awards over the vesting period using the straightline method.
Common Stock Valuations
Given the absence of a public trading market of our common stock, and in accordance with the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately Held Company Equity Securities Issued as Compensation, our board of directors exercised reasonable judgment and considered numerous and subjective factors to determine the best estimate of fair value of our common stock, including, but not limited to:
relevant precedent transactions involving our capital stock;
contemporaneous valuations performed by third party specialists;
rights, preferences, and privileges of our redeemable convertible preferred stock relative to those of our common stock;
actual operating and financial performance;
current business conditions and financial projections;
likelihood of achieving a liquidity event, such as an initial public offering or a sale of our business;
the lack of marketability of our common stock, and the illiquidity of stockbased awards involving securities in a private company;
recent secondary stock sales;
market multiples of comparable publicly‑traded companies;
stage of development;
industry information such as market size and growth; and
U.S. and global capital and macroeconomic conditions.
We determined the fair value of our common stock for financial reporting purposes, taking into account the factors described above, using a combination of valuation methodologies with varying weighting applied to each methodology. One valuation methodology used was the Probability Weighted Expected Return Method (PWERM) under which the value of our common stock was estimated based upon an analysis of values for the Company

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assuming an initial public offering as a possible future event. We applied a discount for lack of marketability to account for a lack of access to an active public market.
In addition to the PWERM, we utilized the arm’slength transactions of our equity securities in the secondary market and as well as a tender offer completed in fiscal 2016. The weighting used in each period for the secondary transactions for purposes of determining the valuation of our common stock considered factors including the number of shares sold, relationship of the parties involved, timing of the transactions in relation to the valuation date and our financial condition.
Following this offering, it will not be necessary to determine the fair value of our common stock using these valuation approaches as shares of our common stock will be traded in the public market.
Based on an assumed initial public offering price of $      per share, which is the midpoint of the price range set forth on the cover page of this prospectus, the aggregate intrinsic value of stock options outstanding as of January 31, 2017 was $          million, with $         million related to vested stock options and the aggregate intrinsic value of RSUs outstanding as of October 31, 2016 was $         million.
JOBS Act Accounting Election
We are an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012, or 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 such time as those standards apply to private companies. We have 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 we (i) are no longer an emerging growth company or (ii) affirmatively and irrevocably opt out of the extended transition period provided in the JOBS Act. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Recent Accounting Pronouncements
Recently Adopted Accounting Standards
In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update, or ASU, No. 2015‑17, Balance Sheet Classification of Deferred Taxes, or ASU 201517, which simplifies the presentation of deferred income taxes. ASU 2015‑17 provides presentation requirements to classify deferred tax assets and liabilities as noncurrent in a classified statement of financial position. For public business entities, this standard is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, this standard is effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for all entities as of the beginning of an interim or annual reporting period. We early adopted this standard prospectively in the first quarter of fiscal 2017 which did not have a material impact on our consolidated financial statements.
In November 2016, the FASB issued ASU No. 2016‑18, Statement of Cash Flows (Topic 230): Restricted Cash, or ASU 2016‑18. ASU 2016‑18 requires that the statement of cash flows explains the change during the period in the total cash, cash equivalents, and restricted cash. For public entities, this standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, this standard is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. This standard should be applied retrospectively and early adoption is permitted, including adoption in an interim period. We early adopted this standard for the nine month period ended October 31, 2016 and have retroactively adjusted the consolidated statements of cash flows for all periods presented.
Recently Issued Accounting Standards
In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606), or ASU 2014‑09, which amended the existing FASB Accounting Standards Codification. ASU 201409 establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that

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reflects the expected consideration received in exchange for those goods or services and also provides guidance on the recognition of costs related to obtaining and fulfilling customer contracts. For public entities, this standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. For all other entities, this standard is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted, but may not be adopted by us any earlier than February 1, 2017. We are currently in the process of assessing the adoption methodology, which allows the amendment to be applied either retrospectively to each prior period presented or with the cumulative effect recognized as of the date of initial application. We are also currently evaluating the impact this standard will have on our consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016‑02, Leases (Topic 842), or ASU 2016‑02, which requires lessees to record most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016‑02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right‑to‑use asset for the right to use the underlying asset for the lease term. For public entities, this standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. For all other entities, this standard is effective for annual reporting periods beginning after December 15, 2019, and interim periods within annual periods beginning after December 15, 2020. Early adoption is permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements.
In March 2016, the FASB issued ASU No. 2016‑09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share‑Based Payment Accounting, or ASU 201609, which simplifies the accounting and reporting of share‑based payment transactions, including adjustments to how excess tax benefits and payments for tax withholdings should be classified and provides the election to eliminate the estimate for forfeitures. For public entities, this standard is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. For all other entities, this standard is effective for annual reporting periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any entity in any interim or annual period for which financial statements have not been issued or made available for issuance. We are currently evaluating the impact that this standard will have on our consolidated financial statements.
In June 2016 the FASB issued ASU No. 201613, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, or ASU 201613. ASU 201613 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. For public entities, this standard is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. For all other entities, this standard is effective for annual reporting periods beginning after December 15, 2020, including interim periods within that reporting period. Earlier adoption is permitted in our first interim period in fiscal 2020. We are currently evaluating the impact that this standard will have on our consolidated financial statements.
In August 2016, the FASB issued ASU No. 201615, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, or ASU 201615. ASU 201615 identifies how certain cash receipts and cash payments are presented and classified in the Statement of Cash Flows. For public entities, this standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. For all other entities, this standard is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. This standard should be applied retrospectively and early adoption is permitted, including adoption in an interim period. We are currently evaluating the impact that this standard will have on our consolidated financial statements.


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BUSINESS
Overview
Cloudera empowers organizations to become data‑driven enterprises in the newly hyperconnected world. We have developed the leading modern platform for data management, machine learning and advanced analytics. We have achieved this position through extensive collaboration with the global open source community, continuous innovation in data management technologies and by leveraging the latest advances in infrastructure including the public cloud for “big data” applications. Our pioneering hybrid open source software (HOSS) model incorporates the best of open source with our robust proprietary software to form an enterprise-grade platform. This platform delivers an integrated suite of capabilities for data management, machine learning and advanced analytics, affording customers an agile, scalable and cost effective solution for transforming their businesses. Our platform enables organizations to use vast amounts of data from a variety of sources, including the Internet of Things (IoT), to better serve and market to their customers, design connected products and services and reduce risk through greater insight from data. A vibrant ecosystem has developed around our platform, and a growing range of applications is being built on it. We believe that our solution is the most widely adopted big data platform.
The world is rapidly becoming interconnected through mobile, social, internet and sensor activity. International Data Corporation (IDC) estimates that by 2020 there will be 30 billion internet‑connected and mobile devices. Additionally, the quantity of information produced per year is expected to grow, with IDC estimating that approximately 440 times more information will be created in 2020 than in 2005. Developers have created data‑intensive applications to take advantage of all of this information. Traditional data management technologies cannot technologically or economically capture this data or support these applications. Enterprises are challenged to manage and use rapidly growing quantities of data of new and varying types. They are also operating in increasingly competitive and demanding regulatory environments. To achieve their business objectives, they must adopt information‑centric strategies and a data‑driven approach to problem solving. Organizations across all industries need to develop the ability to act quickly and cost‑effectively on massive amounts of data in any form from any source to gain insight, to compete effectively and to comply with laws and regulations. They need to manage all available data, wherever it may originate or reside. They need a modern open data architecture built on the latest open source technologies and designed for public cloud infrastructure.
In response, we have created our software platform and pioneered the hybrid open source software model. HOSS combines the best open source software with proprietary software to meet the exacting requirements of large enterprises. By integrating robust proprietary software with our open source platform, built on the leading data management and analytics technologies, we deliver substantially greater value to customers in managing, operating and securing their data and data architectures. Our HOSS model also meaningfully differentiates our solutions from those of our competitors, including open source “free riders” who take from, but do not contribute to, the open source community at large. This differentiation also builds long‑lived customer relationships and generates the revenue to support sustained innovation.
Our scale‑out distributed architecture delivers high performance on inexpensive industry‑standard hardware or cloud infrastructure. We allow enterprises to operate, manage and move workloads across multiple architectures, mixing on‑premises and cloud environments, including all major public cloud infrastructure providers – Amazon Web Services, Microsoft Azure and Google Cloud Platform – as well as managed service providers (MSPs). We also enable enterprises’ “multi‑cloud” strategies, allowing them to move workloads from the data center to the public cloud, among public cloud vendors, and back again, thus avoiding cloud lock‑in. In addition, our customers deploy, configure and monitor all their workloads at scale across these environments from a “single pane of glass.” This flexibility allows customers to constantly determine and implement the most cost‑efficient strategies.
The market for next‑generation data management, machine learning and advanced analytics is large and rapidly growing as the world increasingly connects. Our platform currently addresses three new transformative markets: (i) Dynamic Data Management Systems; (ii) Cognitive/AI Systems and Content Analytics Software; and (iii) Advanced and Predictive Analytics Software. IDC estimates that in aggregate these markets will grow from $8.7 billion in 2015 to $22.1 billion in 2020 at a combined compound annual growth rate of 20.5%. Beyond these new markets, we can also disrupt traditional markets, including a significant portion of the Relational Database

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Management Systems and Non‑Relational Database Management Systems markets. Adding together IDC’s estimates of these new and traditional markets, we believe our total addressable opportunity including these additional markets is expected to reach $65.6 billion by 2020.
We offer our software platform on a subscription basis and focus our selling efforts on the largest 8,000 corporate enterprises globally (Global 8000) as well as large public sector organizations. We target these organizations because they capture and manage the majority of the world’s data and operate highly complex IT environments. These organizations are likely to realize the greatest value from our enterprise‑grade platform. We have achieved significant growth and global scale in a relatively short period of time, and as of January 31, 2017, we have more than             Global 8000 customers. Our customers continue to expand their usage of our platform. The net expansion rate for our subscription revenue was      % as of January 31, 2017. A growing, vibrant ecosystem has developed around our platform, and many third‑party developers have primarily standardized on it, creating more than        applications which we refer to as Partner Solutions. As part of this ecosystem, we have developed a strategic partnership with Intel Corporation, or Intel, to optimize our software for use with Intel processors and architecture. As a result of our and Intel’s dedication to this partnership, our platform achieves differentiated performance on Intel architecture today, and is expected to achieve differentiated performance on future Intel platform technologies. We will further expand our customer opportunity through the continued growth in use cases and packaged solutions, the expansion of our partner ecosystem and the proliferation of skills, driven by ease of use and accelerating adoption of the cloud. See “Market, Industry and Other Data” for how we define Global 8000, large public sector organizations and calculate our net expansion rate.
For our fiscal years ended January 31, 2016 and January 31, 2017, our revenue was $166.0 million and $      million, respectively, representing year‑over‑year growth in revenue of       % for our most recent fiscal year. Over the same period, operating cash outflows increased from $90.5 million to $      million while our net losses were $203.1 million and $      million, respectively, which includes $63.6 million and $      million, respectively, of stock‑based compensation expense.
Industry Background
Successful organizations have always collected and analyzed data. They have used it to understand their customers, design and build their products, and address opportunities and manage risk in their businesses.
Today, large organizations are awash in vastly more data than ever before. They collect real‑time and streaming data on events and transactions, social and interaction data about their customers, news and market data about themselves and their competition, and much more. They are also operating in increasingly competitive and demanding regulatory environments. To achieve their business objectives, they must capture, secure, prepare, analyze and act on all of that data quickly.
This flood of data overwhelms data management systems created in earlier decades. Those systems were designed for the data volumes and for the analytical problems of an earlier day. They were never intended to handle the thousand‑fold or greater increase in volume, nor today’s combination and complexity of data and new data types. Those systems predated powerful new analytic techniques such as machine learning and natural language processing.
The first organizations confronted with this combination of volume, complexity and analytic challenges were web‑scale consumer internet companies like Google, Facebook and Yahoo. Those web pioneers created a new software architecture and a collection of open source software projects to solve their data problems. That software was sophisticated and powerful, but demanded exceptional technical and operational skill of its users.
Today, boardrooms and C‑suites across all industries are focused on developing the ability to use vast amounts of data from a variety of sources to better serve customers, design products and services and manage risk. Their organizations need technology that gives them better insights than legacy systems allow. They need new systems to compete effectively and to comply with the laws and regulations that govern them. They need an enterprise‑grade solution to manage and act on all available data, wherever it may originate or reside. They need the power and sophistication of the web‑scale consumer internet leaders, packaged for consumption by ordinary enterprises. Enterprises require a modern data management, machine learning and analytics platform.

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Factors affecting the development of nextgeneration data management, machine learning and advanced analytics
A modern platform for data management, machine learning and analytics is valuable because more data often yields better answers to hard questions. It enables enterprises to look at problems at much higher resolution. It permits queries to examine not just the last month or quarter, but the last year or decade of customer behavior. Using powerful machine learning algorithms, it can examine historical data and find patterns that more accurately predict future trends. Such a platform allows enterprises to extract more value from their data and effect digital transformation.
The main factors driving complexity and challenges in extracting value from data are:
The rise of the interconnected world and the Internet of Things (IoT). An increasingly connected world is accelerating the pace of data generation. More and more data is created from mobile, social and internet connected devices, and business activity is increasingly digitally instrumented. New types of sensors continue to proliferate, and they are usually connected to a network today. As a result, today we have connected homes, connected cars, connected patients, connected machines and connected supply chains that expand the types of data produced, including streaming, image, audio and video. By 2020, IDC estimates that there will be 30 billion internet‑connected and mobile devices.
The explosion of new data. Data is created in sharply increasing volumes as enterprises seek to digitally transform. Enterprises are digitalizing an increasing number of business activities to improve and transform operations, functions and processes, producing data at an unprecedented scale. IDC estimates that approximately eight times as much information was created in 2015 than in 2010 and 90 times as much information was created in 2015 than in 2005. This quantity of information is expected to continue to grow, with IDC estimating that approximately 440 times more information will be created in 2020 than in 2005.
The proliferation of machine learning and artificial intelligence. To identify trends in historical data and to recognize events in current data and predict them in the future, organizations process large data sets with advanced algorithms that recognize the trends and that improve with experience. This capability is commonly referred to as machine learning. The rise of big data enhances the quality of machine learning algorithms by providing larger, more comprehensive data sets upon which to learn and improve. Greater availability of data, lower compute costs, significant business opportunity and greater operational complexity are increasing the demand for machine learning and artificial intelligence applications. Machine learning and artificial intelligence are being used in a broad and diverse array of applications such as fraud prevention, media placement, crop planting, equipment maintenance, store merchandising and cybersecurity.
The modernization of enterprise infrastructure. Organizations are increasingly updating their infrastructure to take advantage of the latest technological developments and meet demands of their executive management, employees and customers. In addition to the regular cycle of new hardware and software purchases in the data center, there are two core trends that large enterprises are embracing today:
Open source software. Open source software is playing an increasingly central role in enterprises’ technology architectures. It has proliferated as developers and business owners embrace its distributed and collaborative approach to software development. This approach accelerates innovation available to enterprises, vendors and community participants. Enterprises can quickly advance their infrastructure initiatives through direct contributions or simple modifications to open source projects. In addition, enterprises are especially attracted to open source software as a mechanism for reducing the threat of vendor lock‑in. According to a 2015 market survey by Black Duck Software and North Bridge Venture Partners, more than 78% of enterprises run on open source software.
Public cloud infrastructure. Public cloud infrastructure provides the ability to quickly spin systems up and down and to dynamically grow and shrink their processing power. Enticed by this elasticity, as well as flexibility, usage pricing and minimal setup time and costs, organizations of all sizes are increasingly adopting public cloud architectures for storage and computing needs. Public cloud is the

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fastest growing type of infrastructure today. Maturing public cloud services have equipped today’s business leaders with a range of IT architecture alternatives, enhancing their ability to select the optimal infrastructure for the performance and cost requirements of specific applications or workloads, such as using cloud infrastructure for transient workloads.
Limitations of Legacy Data Management Technology
In prior decades, organizations bought dedicated technology to solve specific data‑related business problems. They used document management systems for storing resumes and contracts, control systems for running factories and relational databases for back‑office reporting and billing. While each of these systems was useful, they were isolated, not integrated. It was difficult or impossible to combine data from these systems for a comprehensive view of the business.
The rapid expansion in the volume and velocity of data generates more dynamic information sets, making these special‑purpose legacy architectures even more expensive and cumbersome to use. Enterprises need systems that operate on all their data. Their analytic requirements demand that they run not only SQL, but also the flexible, iterative algorithms that are the basis for machine learning applications. Furthermore, the proliferation of images, audio, video, geo‑location data, clickstream data and sensor data creates opportunities for new analyses and applications. The siloed systems of the past are incompatible with what today’s organizations need for today’s data: flexibility, scalability, elasticity and agility from a rich collection of integrated analytic capabilities and an open ecosystem.
The Evolution of the Open Source Data Management Ecosystem
Web‑scale consumer internet companies were among the first to encounter the challenge of processing immense volumes of diverse data. With no commercial alternative, these companies created the scalable storage and processing infrastructure that serves as the foundation for the modern data management and analytics platform. In December 2004, Google published a white paper describing its approach for developing such a platform. Independently, two software developers, Doug Cutting and Mike Cafarella, were struggling to build web‑scale systems at the time. Building on the ideas behind Google’s approach, they created the beginning of an open source data storage and processing solution. Cutting named this software “Hadoop,” after a stuffed toy elephant that belonged to his young son.
Cutting and Cafarella hoped to initiate a vibrant open source community around their work, so they donated the code to the Apache Software Foundation in 2005. Now known as “Apache Hadoop,” this software project has spawned a rich ecosystem of open source and proprietary software for next generation data management.
Hadoop was originally designed to provide high performance, low‑cost processing of complex data at scale. It comprised the open source technologies known as HDFS and MapReduce. Since then, an open source data management ecosystem has developed that now comprises more than 40 major projects, including those two original Hadoop projects, as well as Spark, Impala, Kudu and Kafka. As the ecosystem has grown, so have complexity and risk. These projects tackle complementary problems in collecting, processing and analyzing data. Together, they offer unprecedented power and flexibility. Their proliferation, though, increases the challenge for enterprises that need to use them, as they are sometimes overlapping, competing or inconsistent in approach. In addition, some projects may not be enterprise quality or accepted as open source standards. With the consistent and on‑going expansion of the open source data management ecosystem, driven by the rapid innovation of the global open source community, enterprises can spend significant time and resources understanding, deploying and using these technologies.
Requirements of the Modern Data Management and Analytics Platform
Organizations need a modern data platform with:
The ability to deploy on‑premises or in the public cloud or both. Many enterprises have data on‑premises for long‑lived workloads and rely on public cloud infrastructure for transient workloads. As a result, enterprises require a solution that provides the flexibility to store and analyze their data in a mixed

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infrastructure environment. In addition, enterprises require the ability to run natively on different public cloud platforms, or multi‑cloud capability, so that they can choose among competing public cloud platforms and move workloads among them to avoid cloud lock‑in.
Access to the latest open source technologies. Collaborating across borders and company lines, the global open source software community innovates quickly. This innovation can lead to competing software projects, which creates complexity and risk for enterprises that simply want to use the best and most appropriate open source software. Enterprises need a trusted partner to play an active role in the community, contributing significantly to open source development and continuously curating the various projects to create a highly integrated, secure and high‑performance platform.
Support for machine learning. Distributed systems together with large amounts of data allow enterprises to use machine learning to understand the past and to predict the future. To perform machine learning, a data platform must support flexible schema and multiple data science languages. It must also support a new class of analytic algorithms as machine learning uses sophisticated algorithms to examine data and to extract patterns. Enterprises require a modern data management and analytics platform that powers the algorithms to apply machine learning to real business problems and real business data.
Enterprise‑grade performance, features and functionality. Enterprises require a platform suited to operating in highly complex technology, business and regulatory environments, including:
Scalability and performance. Legacy data management systems do not meet the performance demands of modern data applications. These systems depend on a single or limited number of expensive, centralized computers to handle storage and processing. Huge quantities of data accessed by many users running a combination of SQL queries, text searches and machine learning technologies can simply overwhelm legacy systems. The modern data platform requires a scale‑out architecture – which combines many small, inexpensive computers and pools their storage and processing power – to meet performance demands.
Operate and manage resources across environments at scale. As data and processing needs grow, enterprises require technology that offers visibility across systems and workloads without regard to whether those assets are deployed on‑premises or in the cloud. As enterprise systems scale, centralized monitoring and management in any infrastructure environment becomes critical to data architecture operations, as well as to regulatory and policy compliance.
Data security and governance. Data is strategic, and enterprises are retaining more of it for longer – even permanently. A large concentration of data creates unique and significant security concerns. Business policy, legal and regulatory regimes impose rules as to who may use data, for what purposes and how it is safeguarded. Policy setting, enforcement and monitoring for compliance purposes demand data governance technology that reports on usage, tracks data lineage and ensures that enterprises can meet the strict privacy and other controls that apply. To appropriately safeguard data and comply with legal and regulatory requirements, enterprises must ensure proper authentication, authorization and access at every level.
Low total cost of ownership. The amount of data available for analysis has grown exponentially, but IT budgets have not. Even if legacy data management technologies could address the challenges of “big data,” they would be cost prohibitive. Enterprises require the ability to manage their data architecture at scale and the flexibility to use the infrastructure that is most cost efficient and appropriate for each use case.
Our Market Opportunity
The market for next‑generation data management, machine learning and advanced analytics is large and rapidly growing as the world increasingly connects. Our platform currently addresses three new transformative markets: (i) Dynamic Data Management Systems; (ii) Cognitive/AI Systems and Content Analytics Software; and (iii) Advanced and Predictive Analytics Software. Technologies within the first market help enterprises capture and

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manage the increasing volume and complexity of new data. Technologies within the latter two markets help enterprises generate insights and derive value from their data. IDC estimates that in aggregate these markets will grow from $8.7 billion in 2015 to $22.1 billion in 2020 at a combined compound annual growth rate of 20.5%.
Beyond these new markets, we can also disrupt traditional markets, including a significant portion of the Relational Database Management Systems and Non‑Relational Database Management Systems markets. Technologies within these markets represent traditional systems used by enterprises to manage their data. Adding together IDC’s estimates of these new and traditional markets, we believe our total addressable opportunity including these additional markets is expected to reach $65.6 billion by 2020.
Our Solution
Cloudera empowers organizations to become data‑driven enterprises in the newly hyperconnected world. We have developed the leading modern platform for data management, machine learning and advanced analytics. Building on the approach of web‑scale consumer internet companies, we have collaborated with the global open source community to innovate and deliver our cloud‑native platform. Our scale‑out distributed architecture delivers high performance on inexpensive, industry‑standard hardware or cloud infrastructure. We allow enterprises to operate, manage and move workloads across multiple architectures, mixing on‑premises and cloud environments, including all major public cloud infrastructure providers. We believe that our solution is the most widely adopted big data platform, with a growing range of applications being built on it.
We have pioneered the hybrid open source software development model, or HOSS. Our model is based on active participation and leadership in the open source data management ecosystem and software development process, and utilization of the very best open source technologies. As authors and participants, we contribute new projects and enhance existing projects. We also identify the best projects that are growing in popularity among developers and in adoption by enterprises. This involvement helps us recognize and champion emerging standards, as we did when we led the market by embracing Spark as a complement to the original MapReduce data processing engine.
To deliver the agility and innovation of open source software to our customers, our platform integrates 26 distinct open source projects, 16 of which were created by our employees. We combine those curated open source projects with our robust proprietary software to form an enterprise‑grade platform. We provide a full and integrated suite of data management, machine learning and advanced analytic capabilities, affording enterprises a single platform that is agile, scalable and cost effective for transforming their businesses.
We believe our approach has a profound impact both on our customers and on the open source community. Our HOSS model delivers substantially greater value to customers in managing, operating and securing their data and data architectures. In addition, our robust proprietary software meaningfully differentiates our solutions from those of our competitors, including open source “free riders” who take from, but do not contribute to, the open source community at large. This differentiation drives the revenue to sustain investment in further innovation in the open source data management ecosystem to address a broadening set of enterprise data needs.
Key Benefits and Differentiators
These are the key benefits and differentiators of our solution.
Deployable on‑premises or in the public cloud or both. With our agnostic approach to infrastructure, enterprises store and analyze their data in the environment that best meets their performance and efficiency goals. Our solution allows enterprises to manage both long‑lived and transient workloads across environments, mixing on‑premises and public cloud infrastructure, including all major public cloud vendors – Amazon Web Services, Microsoft Azure and Google Cloud Platform. We enable enterprises’ multi‑cloud strategies, allowing them to move workloads from the data center to the public cloud, among public cloud vendors, and back again. Customers maintain and control access to their data, and they are better able to obtain attractive terms and avoid cloud vendor lock‑in.

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Leverages the latest open source innovation. Our platform integrates the latest innovations in open source data management technology. In addition to our contributions to new project innovation and existing project enhancement, we are able to leverage the most significant innovations of the broader global community. For example, we were the first data platform vendor to incorporate Spark, integrating it into our platform in 2013, enhancing batch processing and enabling real‑time, streaming and machine learning workloads. This curation and integration is a continuous commitment as demonstrated by our adoption of projects such as Solr, Kafka, Impala and Kudu. As a result, we serve customers better and capitalize as a business on the latest open source technologies to deliver a highly integrated, secure and high‑performance platform.
Enables machine learning. Our platform is uniquely designed to enable the rapidly growing data science community and machine learning applications. Through our integration of Spark and popular data science languages like Python and R, our platform supports batch, real‑time and advanced analytics. We provide the capabilities to reliably run massively iterative algorithms, including machine learning algorithms, over large volumes of data, to support a diverse range of relational and non‑relational schemas and to express analytic workloads in multiple development and data science languages. These capabilities allow enterprises to identify trends in historical data, to recognize events in current or streaming data and to predict events in the future, continuously improving with experience.
Delivers enterprise‑grade performance, features and functionality. Our platform meets the exacting requirements of large enterprises, including:
Scalability and high performance. Our distributed architecture allows our customers to easily and inexpensively increase capacity to meet the speed and throughput demands of enterprise applications. Combining many small, inexpensive computers and pooling their storage and processing power in one or more “clusters,” our platform can deliver ten times or greater performance improvements over legacy systems at lower cost. As data volumes or performance requirements increase, adding more capacity or computing power is as simple as adding additional computers to the cluster. Capacity and performance expand linearly with cluster size. With just one installation of our platform, a customer can scale to hundreds of petabytes of data under management.
Integrated management at scale and across environments. Our customers can deploy, configure and monitor all their clusters and workloads at scale from a centralized interface across any mix of public cloud or on‑premises environments. We offer configurable monitoring and reporting and intuitive, robust troubleshooting to provide comprehensive management of large, growing data sets and concurrent use cases.
Data security and governance. Our platform uses proprietary authentication, network isolation, user‑ and role‑based permissions, access logging, auditing, lineage and encryption including sophisticated key management to provide comprehensive, enterprise‑grade data security across the platform. In addition, our platform enables regulatory and industry‑specific compliance through comprehensive data governance, including data discovery, data lineage, metadata tagging and policy enforcement.
Low total cost of ownership. Our scale‑out architecture delivers high performance on inexpensive industry‑standard hardware or cloud infrastructure. This architecture allows organizations to gain insights and realize value from data at much lower cost than traditional data management platforms. Our proprietary cloud automation, systems management and data management capabilities reduce the personnel required to operate clusters and workloads while meeting compliance standards. Our platform allows customers to select the infrastructure environment that is most cost‑effective and appropriate for each use case. Additionally, the native security features of our platform require no additional third party licenses, further reducing costs to customers.

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Our Strategy
Key elements of our strategy include:
Leading cloud innovation for big data. Our original architecture was designed for the cloud. It comprises inexpensive industry standard hardware and scale‑out distributed technology that delivers elasticity, agility and flexibility. We have innovated since our inception using cloud technologies to develop advanced analytic techniques, including machine learning, security, data governance, lineage and compliance. We intend to continue to lead in cloud innovation for big data.
Growing our addressable market by expanding the range of applications our platform can support. We intend to continue to develop our platform’s architecture in order to support a wider range of data types, access patterns and use cases. For example, we created Impala to enable high‑performance, self‑serve business intelligence applications. Similarly, we have incorporated Spark into our platform to handle streaming and machine learning, supporting IoT and real‑time data applications. In addition, we partner with select vendors to design solutions that address the needs of industry verticals and specific use cases, which we refer to as Partner Solutions. As of January 31, 2017, there were over           Partner Solutions in our partner ecosystem. This innovation and collaboration grows our available market and allows us to support additional applications and use cases to gain new customers and expand existing customer relationships.
Extending our position as the leader in hybrid open source software. We intend to continue to pioneer the HOSS model, innovating in our proprietary software concurrently with our work in open source. We believe that creating differentiation in both dimensions is a significant competitive advantage. We dedicate substantial engineering resources to collaborate with the community in open source software development and innovation. We play a central role in founding and popularizing open source projects that go on to become industry standards. Cloudera employees have founded 16 open source data management projects, including many of the most commercially significant ones and the original Hadoop technologies. Our HOSS model allows us to deliver more value to our customers, achieve meaningful product differentiation, and make it more difficult for competitors to “free ride” on open source innovation.
Continuing to rapidly acquire new customers. We focus our go‑to‑market efforts on large enterprises, primarily the Global 8000, as well as large public sector organizations. We target these organizations because they capture and manage the majority of the world’s data and operate highly complex IT environments. These organizations are likely to realize the greatest value from utilizing our enterprise‑grade platform. As of January 31, 2017, we have penetrated            % of the Global 8000. Benefiting from accelerating cloud adoption, ease of use and proliferation of “big data” technology skills, over time we will expand our customer focus beyond the Global 8000. We intend to continue our sales and marketing investments to acquire new customers. Furthermore, we are committed to deepening our presence in the 27 countries in which we currently operate and to expanding our international customer base.
Accelerating existing customer expansion. Our goal is to enable customers to access all available data and to extract greater value from it. We intend to broaden our relationships with existing customers by helping them solve more problems and providing best‑in‑class support. Our field organization, together with our partner ecosystem, assists our customers in identifying new use cases, modernizing their data architectures and gaining more insight from their data. In addition, as customers’ data grows and more users take advantage of each use case, more computational power and storage (or resource consumption in the cloud) is required, and our economic relationship with each customer expands. Our large and experienced support organization uses the machine learning capabilities of our platform to predict problems before they occur and to proactively help our customers achieve their objectives, driving satisfaction and expanded utilization of our platform.
Leveraging our partner ecosystem. Over 2,500 resellers, systems integrators, independent software vendors and platform and cloud providers have registered under our Cloudera Connect partner program to gain access to marketing, sales, training and support resources. In addition, a growing, vibrant ecosystem is

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developing around our platform, and many third‑party developers have primarily standardized on it in building applications. These partners also enhance our field organization’s efforts across industry verticals and geographies. We intend to maintain strong engagement with our partner ecosystem to gain increased reach and greater distribution of our software, develop new applications, accelerate customer expansion and penetrate new markets.
Showcasing a data‑driven business with our own operations. The way we operate our business reflects our belief in the data‑driven enterprise. We use our own platform to capture, process and analyze information across our organization to improve our engineering, sales, support and finance functions.
Cultivating a passion for solving the world’s greatest challenges through data. As a global society, we face tremendous challenges. The world’s population will grow significantly over the next thirty years. Billions more of us will need food, clean water and clean energy. Climate change, disease and terrorism threaten global health and welfare. We rely on technology that is subject to sophisticated cyber‑attacks. Data analysis and machine learning are powerful tools for solving all of these problems, and we believe we can make a substantial contribution toward delivering these capabilities. We aim to create a culture and build passion among our employees, our partners and our customers for using data to solve the world’s biggest problems.
Our Technology
We have pioneered the HOSS model, open source software that is combined with proprietary software, for specific applications and to meet enterprise‑grade requirements. By integrating robust proprietary software with our open source platform built on the leading data management, machine learning and advanced analytics technologies such as Hadoop and Spark, we deliver a unique, high‑performance and cost‑effective platform to our customers for managing, analyzing and securing their data
We offer subscriptions for five editions of our platform, ranging from Cloudera Essentials to the industry leading Cloudera Enterprise. Other editions are designed to address the most common and critical data challenges enterprises face: Cloudera Data Science for programmatic preparation, predictive modeling and machine learning; Cloudera Real Time for online, streaming and real‑time applications; and Cloudera Analytics for business intelligence and SQL analytics.
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Our platform offerings are based on open source components developed in partnership with the broader open source community. Our engineers are actively involved in the development of the open source elements included in

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our platform and carefully curate which open source projects are integrated into the platform, ensuring interoperability and optimizing performance. The precise composition of the platform in its integrated form is unique to Cloudera and highly differentiated.
Integrate. Data comes from an increasing variety of sources in an increasing number of types. Our platform enables customers to capture digital information in any form from any source and collect it however it arrives — streaming continuously or in batches from external databases or other sources — and in any format, whether structured or unstructured. This flexibility provides organizations with the ability to draw insights from all of their data irrespective of volume, form or speed at which it is generated.
Store. We deliver storage software technologies that are optimized for a variety of data types, access patterns and performance requirements. These storage engines provide our customers with the scalability and cost efficiency to meet the data and size requirements of both on‑premises and cloud architectures. These storage engines include HDFS, which provides vast scalability, as well as the NoSQL store (HBase) for data requiring more frequent updates. We now also offer an in‑memory columnar relational store (Kudu), technology founded and contributed to the open source community by Cloudera engineers, designed especially for IoT and complex query workloads. For clarity, Cloudera does not provide the underlying storage infrastructure for the data. We rely on hardware partners and we integrate with the object storage services of the major public cloud vendors, such as Amazon’s Simple Storage Service (S3) and Microsoft’s Azure Data Lake Service (ADLS).
Unified Services. Our platform provides a unified set of services including resource management and security for enterprise management, scalability and functionality. Our resource management capabilities schedule workloads and optimize the allocation of compute and memory capacity to maximize efficiency in data analysis, allowing customers to extract value faster and at lower cost. Our security framework (Sentry) controls data access down to the table, column or row and is backed by strong, centralized authentication. All data in our platform can be encrypted, and we provide enterprise‑grade key management to protect information without sacrificing functionality or performance.
Process, analyze and serve. Our platform is able to process, analyze and consistently deliver data at high levels of performance. By providing high performance per node, our customers can run their applications at higher rates of interactivity and operate at lower cost. We offer fast, flexible batch processing (the Spark, Hive, Pig and MapReduce projects) as well as rapid querying (Impala) and faceted search (Solr). Our platform also utilizes a variety of data science languages for predictive analysis and machine learning (Spark). Moreover, we offer the ability to analyze streaming data and compare it against reference data to generate insights and responses in real time.
In addition to the open source elements included in our platform, we develop proprietary, robust systems management, data governance, and cloud automation components to scale, secure and optimize our platform for the enterprise.
Operations. Cloudera Manager allows our customers to manage all of their clusters and workloads from a “single pane of glass.” It automates the operational aspects of our platform including patching, updating, upgrading, tuning, reconfiguring, monitoring, alerting and usage reporting. Using Cloudera Manager, customers can easily set up automated deployment of clusters and configurations with the ability to manage multiple development, test and production clusters. We provide complete visibility with advanced monitoring capabilities as well as information on jobs and query performance. Additionally, Cloudera Manager offers a customizable dashboard with the ability to create advanced charts for historical monitoring and custom triggers and thresholds for each customer’s environment. Finally, with comprehensive automation for rolling upgrades and built-in backup and disaster recovery, Cloudera Manager requires minimal downtime for maintenance.
Cloud enablement. Cloudera Director simplifies organizations’ ability to take advantage of public cloud infrastructure for data management, machine learning and advanced analytics and enables mixed architectural environments. Cloudera Director automates and abstracts cluster interactions with cloud infrastructure providers, including Amazon Web Services, Microsoft Azure and Google Cloud Platform,

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providing cloud automation and orchestration through an intuitive user interface. Using Cloudera Director, customers can create large scale production clusters in the cloud in a matter of minutes. Cloudera Director provides cloud automation for transient workloads (disposable, single‑purpose clusters) and for elastic workloads (long‑lived clusters that grow or shrink over time). Cloudera Director is deeply integrated with our platform and directly linked to Cloudera Manager for a consistent administrative experience.
Data management. Our Cloudera Navigator family of components provides a complete data governance system for the data managed in Cloudera clusters, offering critical capabilities such as data discovery, workload migration and optimization, audit, lineage, metadata tagging and data policy automation. This enables enterprises to track, classify and locate data to comply with business governance and compliance rules quickly and easily.
Cloudera Navigator Audit and Lineage provides a full auditable history of all data accesses with a unified searchable audit dashboard which, combined with integrated backup and disaster recovery, makes compliance and business continuity easy. It allows customers to find key data assets when needed and to satisfy the demands of business policy and regulatory oversight.
Cloudera Navigator Optimizer analyzes the SQL queries that customers use, whether against traditional enterprise data warehouses or their Cloudera installation. It deduces the structures and schema of data managed by the system and can offer advice to database administrators for optimizing data layout in order to improve system performance. Most importantly, it simplifies the migration of traditional relational workloads from legacy systems to our platform so that customers can determine the optimal technology to run queries and store data to reduce costs and improve performance.
Cloudera Navigator Encrypt and Key Trustee are two complementary, and essential, components of our security capability. Our encryption technology allows customers to set and enforce the policies governing data encryption in the system. It uses the native capabilities of the Intel Architecture systems that our customers use, when available, to perform strong encryption of data at very low overhead. Our key management functionality keeps the encryption keys physically remote from the encrypted data, minimizing the chance that a systems breach could capture both. It allows an administrator to easily grant and revoke key privileges for any user and to enforce security discipline.
Our research and development expenses for fiscal 2015, 2016 and 2017 were $66.4 million, $98.1 million and $           million, respectively.
Customer Support, Services and Education
We have built a company culture that focuses on consistently delivering value for our customers and ensuring their success and satisfaction. We deliver exceptional support, professional services and training to ensure our customers get the most out of our technology. We offer technical assistance through our large and experienced global support organization. Built on powerful predictive analytics using our own technology, we proactively monitor our customers’ platforms to prevent issues before they arise, avoid common cluster misconfigurations, and suggest optimization based on similar cases at other customers. Our predictive analytics allow us to proactively initiate a substantial fraction of our support engagements for customers, before they realize that they have a problem themselves.
In addition, our teams of experienced solution architects, business value consultants and training professionals are designed to enhance the customer experience with personalized assistance, from implementation and best practices to education and online training. We believe that we can further advance the community’s goals through education. In addition to offering online training, we have trained over          individuals in person through January 31, 2017. Through the Cloudera Academic Program, we provide access to curriculum, software and training to colleges and universities to accelerate the adoption of the platform. We believe we are the leading modern data management educator.

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Customers
We focus on the largest 8,000 corporate enterprises globally (Global 8000) as well as large public sector organizations because these organizations capture and manage the vast majority of the world’s data and operate highly complex IT environments. These organizations are likely to realize the greatest value from utilizing our enterprise‑grade platform. Large enterprises are rapidly adopting our platform. As of January 31, 2017, we served more than            Global 8000 customers in more than                   countries. We have already achieved significant penetration of the largest enterprises. As of October 31, 2016, our customers included:
7 of the top 10 largest banks,
8 of the top 10 largest technology companies,
9 of the top 10 largest telecommunication companies, and
6 of the top 10 largest healthcare and life sciences companies,
in each case, based on the FORBES Global 2000 ranking and Data.com industry categorization. See “Market, Industry and Other Data—Global 8000.”
For purposes of defining the Global 8000, the top 2,000 enterprises in the Global 8000 are based on the FORBES Global 2000 ranking and the remainder is based on entities listed in Data.com as having the highest annual revenue, excluding those that are listed in the FORBES Global 2000.
For purposes of customer count, a Global 8000 customer is defined as an entity with a unique FORBES Global 2000 or Data.com identifier and quarterly subscription revenue as of the measurement date. We make exceptions for holding companies and other organizations for which the FORBES Global 2000 or Data.com identifier in our judgment does not accurately represent the Cloudera customer. Our customer count is subject to adjustments for acquisitions, spin‑offs and other market activity. Where these adjustments occur, previously disclosed numbers of customers are restated to allow for comparability. See “Market, Industry and Other Data—Global 8000.”
No individual customer represented more than 10% of revenue in the fiscal year ended January 31, 2016 or for the nine months ended October 31, 2016.
Sales and Marketing
We primarily sell through our direct sales force, which is comprised of field and inside sales personnel and are organized by enterprise size and geography.
Our sales force is supported by sales engineers with deep technical expertise and responsibility for pre‑sales technical support, solutions engineering for our end‑customers, and technical training for our channel and strategic partners.
We generate customer leads, accelerate sales opportunities, and build brand awareness through our marketing programs and through our strategic partner relationships. Our marketing programs target both the C-suite and the line of business owners, technology professionals and risk professionals, as well as software developers and data scientists. Our principal marketing programs include:
webinars, user conferences and events that we sponsor, such as Strata + Hadoop World;
cooperative marketing efforts with partners; and
use of our website.

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Partners and Strategic Alliances
We believe that strong engagement with our partner ecosystem affords us increased reach and greater distribution of our software, enhancing our field organization’s efforts. We have developed a large partner network in order to facilitate the establishment of industry standards, ensure an open ecosystem for our customers, accelerate the adoption of our platform and extend our sales capabilities and coverage. Over 2,500 vendors – a variety of systems integrators, resellers, software and OEM partners, data systems vendors, and cloud and platform vendors – have registered under our Cloudera Connect partner program to gain access to marketing, sales, training and support resources.
Our partners and strategic alliances include:
Systems integrators and resellers. Hundreds of systems integrators offer professional services to create custom solutions built on our platform for their customers across a variety of industry verticals. Resellers offer our platform to their customers in combination with their products. These channel partners create significant leverage for our field sales organization, improving new customer acquisition and existing customer penetration through use case expansion.
Software and OEM partners. Our technology partners offer solutions designed to work with or built on our platform. Hundreds of certified solutions have been tested and validated to run on our platform, accelerating adoption of our combined solutions.
Data systems vendors. We ensure that our platform is interoperable with a variety of traditional data systems vendors. These integrations provide our customers with access to their data stored in those systems for use in our platform.
Platform and cloud vendors. To ensure our customers can run our software in any environment, we nurture relationships with public cloud providers and other enterprise platforms to achieve the highest interoperability across architectures.
Many third‑party developers have primarily standardized on our platform and we work closely with select partners to design solutions that specifically address the needs of certain industry verticals or use cases within those verticals, which we refer to as Partner Solutions. As of January 31, 2017, there were over           Partner Solutions applications in our partner ecosystem. For example, the Accenture Cyber Intelligence Platform marries advances in chip processor technology with a proprietary combination of artificial intelligence, machine learning and streaming analytics to help organizations identify never before seen, network‑born cybersecurity threats in near real‑time, utilizing our platform.
Intel Strategic Partnership
Intel believes that big data applications will be one of the largest drivers of data center utilization, whether in the cloud, private cloud or traditional data centers in the future. In 2014, in connection with an equity investment in the company, we entered into a strategic collaboration and optimization agreement with Intel. See “Certain Relationships and Related-Party Transactions.” Consistent with Intel’s data center and IoT technology initiatives, the primary objective of the agreement is to ensure that our solutions deliver optimal performance and security with Intel processors and platform technology. Intel and Cloudera maintain a joint product roadmap, and each company dedicates substantial resources to fulfilling this objective. As a result, our platform achieves differentiated performance on Intel architecture today, and is expected to achieve differentiated performance on future Intel platform technologies immediately upon release to customers. Among many tangible examples of joint development, Intel and Cloudera collaborated on optimized data encryption speed through use of arithmetic acceleration built into the Intel Architecture. Intel and Cloudera also collaborated to develop Spot (incubating project), an open source cybersecurity analytics platform built on open data models that provides advanced threat detection using big data analytics and machine learning.

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Competition
We operate in an intensely competitive data management, machine learning and analytics market that is characterized by the constant development of new products and continued innovation, particularly in the open source community. Our main sources of current and potential competition fall into four categories:
legacy data management product providers;
public cloud providers who include proprietary data management and analytics offerings;
strategic and technology partners who may also offer our competitors’ technology or otherwise partner with them; and
open source companies, as well as internal IT organizations that provide open source self‑support for their enterprises.
As the market for data management and analytics platforms continues to grow and offerings based on the open source data management ecosystem continue to gain traction, we expect more highly specialized vendors will enter the market or larger competitors will bundle solutions with their products more effectively.
The principal competitive factors in our market include:
ability to deploy in a variety of infrastructure environments, including multi‑cloud capability;
ability to identify and leverage innovative open source technologies;
enablement of machine learning and other advanced technologies;
enterprise‑grade performance and features such as scalability, security, cost of ownership and ease of deployment and use of applications;
breadth, depth and quality of application functionality;
domain expertise and understanding of customer requirements across verticals;
ability to innovate and respond to customer needs rapidly;
quality and responsiveness of services and support organizations and level of customer satisfaction;
brand awareness and reputation;
size of customer base and level of user adoption; and
ability to integrate with legacy and other enterprise infrastructures and third‑party applications.
We believe that we compete favorably on the basis of these factors. Our ability to remain competitive will largely depend on our ongoing performance in the areas of cloud and integration of open source and advanced technologies.
Intellectual Property
Intellectual property is an important aspect of our business, and we seek protection for our intellectual property as appropriate. To establish and protect our proprietary rights, we rely upon a combination of patent, copyright, trade secret and trademark laws and contractual restrictions such as confidentiality agreements, licenses and intellectual property assignment agreements. We maintain a policy requiring our employees, contractors, consultants and other third parties to enter into confidentiality and proprietary rights agreements to control access to our proprietary information. These laws, procedures and restrictions provide only limited protection, and any of our intellectual property rights may be challenged, invalidated, circumvented, infringed or misappropriated. Furthermore, the laws of certain countries do not protect proprietary rights to the same extent as the laws of the United States, and we

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therefore may be unable to protect our proprietary technology in certain jurisdictions. Moreover, our platform incorporates software components licensed to the general public under open source software licenses such as the Apache 2.0 Software License. We obtain many components from software developed and released by contributors to independent open source components of our platform. Open source licenses grant licensees broad permissions to use, copy, modify and redistribute our platform. As a result, open source development and licensing practices can limit the value of our software copyright assets.
As of January 31, 2017, we had been granted                    U.S. patents and had                    U.S. patent applications pending. Our patents expire between                    and                    . We also had                    issued patents and                    patent applications pending in foreign jurisdictions. We continually review our development efforts to assess the existence and patentability of new intellectual property. We pursue the registration of our domain names, trademarks and service marks in the United States and in certain locations outside the United States. To protect our brand, we file trademark registrations in some jurisdictions.
Legal Proceedings
From time to time, we are a party to or act as an indemnitor to our customers or partners on various litigation matters, and we or our customers or partners are subject to claims that arise in the ordinary course of business. In addition, we or our customers or partners have received, and may in the future receive, various types of claims including potential claims from third parties asserting, among other things, infringement of their intellectual property rights. Future litigation may be necessary to defend ourselves, or our customers or partners on indemnity matters, by determining the scope, enforceability and validity of third‑party proprietary rights or to establish our proprietary rights. Further, the ultimate outcome of any litigation is uncertain and, regardless of outcome, litigation can have an adverse impact on us because of defense costs, potential negative publicity, diversion of management resources and other factors. Accordingly, there can be no assurance that existing or future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on our business, consolidated financial position, results of operations or cash flows.
Facilities
We currently lease approximately 54,000 square feet of space for our current corporate headquarters in Palo Alto, California under a lease agreement that expires in 2021. We have also entered into a lease for approximately 225,000 square feet of space in Palo Alto, California commencing in July 2017 for our future corporate headquarters. This lease expires in 2027, and we have an option to renew for an additional 84 months. In addition, we entered into a five year sublease agreement with a third party subtenant for approximately 105,000 square feet of this space. This sublease agreement commences in July 2017. We have additional offices in San Francisco, New York City and Austin in the United States and internationally in Budapest, London and Singapore under leases that expire at varying times between 2018 and 2024. We believe that our current facilities are sufficient for our current needs. We intend to add new facilities or expand existing facilities as we add staff or expand our geographic markets, and we believe that suitable additional space will be available as needed to accommodate any such expansion of our organization.
Employees
As of January 31, 2017, we had       full‑time employees. Of these employees,       are in the United States and                 are in our international locations. None of our employees is represented by a labor union or covered by collective bargaining agreements. We have not experienced any work stoppages. We consider our relationship with our employees to be good.

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MANAGEMENT
Executive Officers and Directors
The following table provides information regarding our executive officers and directors as of January 27, 2017:
Name
 
Age
 
Position(s)
Thomas J. Reilly
 
54
 
Chief Executive Officer and Director
Michael A. Olson
 
54
 
Chief Strategy Officer and Chairman
Jim Frankola
 
52
 
Chief Financial Officer
Martin Cole(1)(3)
 
60
 
Director
Ping Li(2)
 
44
 
Director
Steve J. Sordello(1)
 
47
 
Director
Kimberly S. Stevenson
 
54
 
Director
Richard H. Williams(2)(3) 
 
73
 
Director
___________
(1)
Member of the audit committee
(2)
Member of the compensation committee
(3)
Member of the corporate governance and nominating committee
Executive Officers 
Thomas J. Reilly has served as a member of our board of directors and as our Chief Executive Officer since June 2013. Prior to Cloudera, Mr. Reilly served as Vice President and General Manager of Enterprise Security at Hewlett‑Packard Company from November 2010 to May 2012. From December 2006 to May 2011, Mr. Reilly served as Chief Executive Officer of ArcSight, Inc., an enterprise security company, which HP acquired in 2010. Prior to ArcSight, from April 2004 to October 2006, Mr. Reilly was Vice President of Business Information Services for International Business Machines Corporation (IBM), a computer technology company, following its acquisition of Trigo Technologies, Inc., a product information company, where Mr. Reilly served as the Chief Executive Officer. Mr. Reilly currently serves on the board of directors of Jive Software, Inc., an enterprise software company, and on the boards of directors of several private companies. He previously served on the boards of directors of ArcSight from June 2008 to October 2010 and of Eloqua, Inc. from June 2012 to February 2013. Mr. Reilly holds a B.S. in mechanical engineering from the University of California, Berkeley. Mr. Reilly was selected to serve as a member of our board of directors due to the perspective and experience he brings as our Chief Executive Officer, and due to his extensive experience managing technology companies, ranging from start‑up to large public companies.
Michael A. Olson is our co‑founder and has served as the Chairman of our board of directors since April 2009 and as our Chief Strategy Officer since June 2013. Previously, Mr. Olson served as our Chief Executive Officer from August 2008 to June 2013. Prior to Cloudera, from February 2006 to January 2008, Mr. Olson was Vice President of Embedded Technologies at Oracle Corporation, a software and data management developer. Beginning in 1998, Mr. Olson served as Vice President of Sales and Marketing of Sleepycat Software, Inc., a software company, and later served as Chief Executive Officer from 2000 until its acquisition by Oracle in 2006. Mr. Olson holds a B.A. in computer science and M.S. in electrical engineering and computer science from the University of California, Berkeley. Mr. Olson was selected to serve as a member of our board of directors due to the perspective and experience he brings as our co‑founder, Chief Strategy Officer and our former Chief Executive Officer.
Jim Frankola has served as our Chief Financial Officer since October 2012. From June 2010 to September 2012, Mr. Frankola served as Chief Financial Officer of Yodlee, Inc. a data aggregation and data analytics platform company. Prior to Yodlee, Mr. Frankola served as Chief Financial Officer of Ariba, Inc., a software and information technology services company. Mr. Frankola has also held various other senior level financial and business management positions at several companies, including IBM and Avery Dennison Corporation. Mr. Frankola holds a B.S. in accounting from Penn State University and an M.B.A. from New York University Stern School of Business and is a Certified Public Accountant.

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Non‑Employee Directors 
Martin Cole has served as a member of our board of directors since September 2014. Prior to retiring in August 2014, Mr. Cole held various roles at Accenture, a professional services company, where he had worked since 1980. Most recently, Mr. Cole served as the Chief Executive of the Technology Group from 2012 to 2014, Chief Executive of the Communications, Media & Technology Operating Group from 2007 to 2012, Chief Executive of the Government Operating Group from 2004 to 2006, Managing Partner of the Outsourcing and Infrastructure Delivery Group from 2002 to 2004, and Partner in the Outsourcing and Government Practices Group from 1989 to 2002, in addition to numerous other leadership positions during his tenure at Accenture. Mr. Cole currently serves on the boards of directors of the Western Union Company and Western Digital Corporation. Mr. Cole holds a B.A. in liberal arts from Dartmouth College and an M.A. in public affairs from the University of Texas at Austin. Mr. Cole was selected to serve as a member of our board of directors due to his extensive experience as a former executive officer of a multinational management consulting, technology services and outsourcing company and his experience serving on the boards of directors of public companies.
Ping Li has served as a member of our board of directors since October 2008. Mr. Li is a Partner at Accel, a venture capital firm, where he has worked since 2004. Prior to Accel, Mr. Li was a senior Product Line Manager and Director of Corporate Development at Juniper Networks, Inc. from 2000 to 2004. Mr. Li has also previously worked as a strategy consultant for McKinsey & Company, advising technology clients in their growth strategies, from 1998 to 1999. Mr. Li currently serves on the boards of directors of several private companies, and previously served on the boards of directors of Nimble Storage, Inc., a flash storage solutions company and YuMe, Inc., a video advertising company. Mr. Li holds a A.B. in economics from Harvard University and an M.B.A. from Stanford University. Mr. Li was selected to serve on our board of directors due to his investment experience in the information technology and data storage industries and and his experience serving on the boards of directors of public companies.
Steve J. Sordello has served as a member of our board of directors since September 2014. Mr. Sordello is currently Chief Financial Officer of Linkedin Corporation, a professional social networking platform, where he has worked since July 2007. Prior to Linkedin, Mr. Sordello was Chief Financial Officer of TiVo Corporation, a digital recording company, from August 2006 to July 2007, and served as the Chief Financial Officer of Ask.com (originally known as Ask Jeeves), a web search engine, from May 1999 to October 2005. Mr. Sordello also serves on the board of directors of Atlassian Corporation PLC, an enterprise software company, and as a member of the Board of Trustees at Santa Clara University. Mr. Sordello holds a B.S. in management and an M.B.A. from Santa Clara University. Mr. Sordello was selected to serve as a member of our board of directors due to his operational and financial expertise gained as an executive at several companies.
Kimberly S. Stevenson has served as a member of our board of directors since June 2014. Ms. Stevenson is currently the Corporate Vice President and a member of the management committee of Intel, which she joined in September 2009. She is also currently the Chief Operating Officer for the Client and Internet of Things Business and Systems Architecture Group. Previously, Ms. Stevenson served as Chief Information Officer of Intel from February 2012 to August 2016, and as Vice President and General Manager of Intel’s Global IT Operations and Services from September 2009 to January 2012. Prior to joining Intel, Ms. Stevenson spent seven years at the former Electronic Data Systems, Inc., now HP Enterprise Services, holding a variety of positions including Vice President of its Worldwide Communications, Media and Entertainment Industry Practice, as well as the Vice President of Enterprise Service Management, where she oversaw the global development and delivery of enterprise services. Before joining Electronic Data Systems, Ms. Stevenson spent 18 years at IBM, from February 1983 to September 2002, in several executive positions including Vice President of Marketing and Operations of the eServer iSeries division. Ms. Stevenson currently serves as a member of the board of directors of Boston Private Financial Holdings, Inc, and she previously served on the board of directors of Riverbed Technology, Inc. from March 2013 to April 2015. Ms. Stevenson holds a B.Sc. in International Business from Northeastern University and an M.B.A. from Cornell University. Ms. Stevenson was selected to serve as a member of our board of directors due to her extensive operational experience with technology companies and her experience serving on the boards of directors of public companies.

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Richard H. Williams has served as a member of our board of directors since February 2013. Mr. Williams is currently the President and Chief Executive Officer of Webroot Inc., a cybersecurity company, where he has worked since August 2009. Prior to Webroot, Mr. Williams worked as a Chief Executive Officer‑in‑Residence at Accel, from December 2007 to August 2009. Prior to this, Mr. Williams served as the President and Chief Executive Officer of Wily Technology, Inc., an enterprise software company, from October 2001 to March 2006. Mr. Williams also previously held various executive and business roles at IBM. Mr. Williams served on the board of SupportSoft, Inc. from June 2002 to May 2005, and currently serves on the board of directors of several private companies. Mr. Williams holds a B.S. in mathematics from the University of North Dakota. Mr. Williams was selected to serve as a member of our board of directors due to his extensive experience as an executive officer and serving on the boards of directors of technology companies.
Election of Officers
Our executive officers are elected by, and serve at the discretion of, our board of directors. There are no family relationships among any of our directors or executive officers.
Board Composition
Pursuant to a voting agreement, as amended through March 24, 2014, Messrs. Li, Reilly, Olson and Williams were designated to serve as members of our board of directors. Pursuant to the voting agreement, Mr. Li was selected as the representative of our Series A convertible preferred stock, Messrs. Reilly and Olson were selected as representatives of our common stock and Mr. Williams was unanimously selected by our board of directors as an independent director. The voting agreement provided for Intel to designate a director to serve as the representative of our Series F‑1 convertible preferred stock. On May 21, 2014, Ms. Stevenson was elected to our board of directors as the representative of our Series F‑1 convertible preferred stock. Messrs. Li, Reilly, Olson and Williams continue to serve on our board of directors and will continue to serve as directors until their resignation or until their successors are duly elected by the holders of our common stock, despite the fact that the voting agreement will terminate upon the completion of this offering. Upon completion of this offering, pursuant to a right of first refusal notice and standstill agreement, dated March 24, 2014, we have agreed that our board of directors will nominate for election a director designated by Intel at each annual meeting of the stockholders at which the term of such designee ends. See “Description of Capital Stock” and “Certain Relationships and Related‑Party Transactions.”
Immediately following the completion of this offering, we will file our restated certificate of incorporation. We anticipate that the restated certificate of incorporation will divide our board of directors into three classes, with staggered three‑year terms:
Class I directors, whose initial term will expire at the annual meeting of stockholders expected to be held in 2018;
Class II directors, whose initial term will expire at the annual meeting of stockholders expected to be held in 2019; and
Class III directors, whose initial term will expire at the annual meeting of stockholders expected to be held in 2020.
At each annual meeting of stockholders after the initial classification, the successors to directors whose terms have expired will be elected to serve from the time of election and qualification until the third annual meeting following election. Upon the completion of this offering, the Class I directors will consist of          ,          and          ; the Class II directors will consist of          ,          and          ; and the Class III directors will consist of          ,          and          . As a result, only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three‑year terms.
In addition, we intend to restate our bylaws and certificate of incorporation upon the completion of this offering to provide that only the board of directors may fill vacancies, including newly created seats, on the board of directors until the next annual meeting of stockholders, subject to limited exceptions. Any additional directorships

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resulting from an increase in the number of directors will be distributed among the three classes so that, as nearly as possible, each class will consist of one‑third of the total number of directors.
This classification of the board of directors and the provisions described above may have the effect of delaying or preventing changes in our control or management. Our restated certificate of incorporation will further provide for the removal of a director only for cause and by the affirmative vote of the holders of two‑thirds or more of the shares then entitled to vote at an election of our directors. See “Description of Capital Stock—Defensive Measures—Restated Certificate of Incorporation and Restated Bylaw Provisions.”
Board Independence
We intend to apply to list our common stock on the                    . The listing rules of this stock exchange generally require that a majority of the members of a listed company’s board of directors be independent within specified periods following the completion of an initial public offering. In addition, the listing rules generally require that, subject to specified exceptions, each member of a listed company’s audit, compensation and governance committees be independent.
Audit committee members must also satisfy the independence criteria set forth in Rule 10A‑3 under the Securities Exchange Act of 1934, as amended, or Exchange Act. In order to be considered independent for purposes of Rule 10A‑3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries, or be an affiliated person of the listed company or any of its subsidiaries. Compensation committee members must also satisfy the independence criteria as required by Rule 10C‑1 under the Exchange Act.
Our board of directors has determined that none of the members of our board of directors other than Messrs. Reilly, and Olson and Ms. Stevenson has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of the members of our board of directors other than Messrs. Reilly and Olson and Ms. Stevenson is “independent” as that term is defined under the rules of the          .
Lead Director
Our board of directors has appointed Mr. Cole to serve as our Lead Director. As Lead Director, Mr. Cole has the following roles and responsibilities:
calling meetings of our independent directors as may be necessary from time to time;
presiding executive sessions of our independent directors;
advising our Chief Executive Officer, Chairman and other members of senior management on business strategy and leadership development, as appropriate;
serving as principal liaison between our independent directors and our Chief Executive Officer and Chairman;
discussing any significant conclusions or requests arising from the independent director sessions with our Chief Executive Officer or Chairman, and otherwise communicating from time to time with our Chief Executive Officer and Chairman;
disseminating information to the rest of our board of directors as appropriate;
being available, as appropriate, for communication with stockholders;
providing leadership to our board of directors if circumstances arise in which the role of our Chief Executive Officer or Chairman may be, or may be perceived to be, in conflict;
reviewing and approving agendas and meeting schedules to assure that there is sufficient time for

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discussion of all agenda items, and information provided to our board of directors; and
performing other duties as may be, from time to time, set forth in our bylaws or requested by our board of directors to assist it in the fulfillment of its responsibilities, by individual directors, by our Chief Executive Officer or by our Chairman.
Our board leadership structure allows us to leverage the experience of our Chief Executive Officer, expertise and long‑term perspective of our Chairman and the independent perspective of our Lead Director. We believe that this structure, combined with our strong committee system, meets the current corporate governance needs and oversight responsibilities of the board of directors.
Board Committees
Our board of directors has established an audit committee, a compensation committee and a corporate governance and nominating committee. The composition and responsibilities of each committee are described below. Following the completion of this offering, copies of the charters for each committee will be available on the investor relations portion of our website, www.cloudera.com. Members serve on these committees until their resignations or until otherwise determined by the board of directors.
Audit Committee
Our audit committee is comprised of Mr. Sordello, who is the chair of the audit committee, Mr. Cole, and               . The composition of our audit committee meets the requirements for independence under the current          and Securities and Exchange Commission (SEC) rules and regulations. Each member of our audit committee is financially literate. In addition, our board of directors has determined that Mr. Sordello is an audit committee financial expert within the meaning of Item 407(d) of Regulation S‑K of the Securities Act.
All audit services to be provided to us and all permissible non‑audit services to be provided to us by our independent registered public accounting firm will be approved in advance by our audit committee. Our audit committee recommended, and our board of directors adopted, a charter for our audit committee, which will be posted on our website. Our audit committee, among other things:
selects a firm to serve as the independent registered public accounting firm to audit our financial statements;
helps to ensure the independence of the independent registered public accounting firm;
discusses the scope and results of the audit with the independent registered public accounting firm, and reviews, with management and the independent accountants, our interim and year‑end operating results;
develops procedures for employees to anonymously submit concerns about questionable accounting or audit matters; and
considers the adequacy of our internal accounting controls and audit procedures.
Compensation Committee
Our compensation committee is comprised of Mr. Williams, who is the chair of the compensation committee, Mr. Li and                    . The composition of our compensation committee meets the requirements for independence under current          and SEC rules and regulations. Each member of this committee is also a non‑employee director, as defined pursuant to Rule 16b‑3 promulgated under the Exchange Act, and an outside director, as defined pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code. The purpose of our compensation committee is to discharge the responsibilities of our board of directors relating to compensation of our executive officers. Our compensation committee, among other things:
reviews and determines the compensation of our executive officers and recommends to our board of directors the compensation for our directors;

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administers our stock and equity incentive plans;
reviews and makes recommendations to our board of directors with respect to incentive compensation and equity plans; and
establishes and reviews general policies relating to compensation and benefits of our employees.
Corporate Governance and Nominating Committee
The corporate governance and nominating committee is comprised of Martin Cole, who is the chair of the corporate governance and nominating committee, Mr. Williams and                     . The composition of our corporate governance and nominating committee meets the requirements for independence under the current           rules and regulations. Our compensation committee recommended, and our board of directors adopted, a charter for our corporate governance and nominating committee. Our corporate governance and nominating committee, among other things:
identifies, evaluates and recommends nominees to our board of directors and committees of our board of directors;
conducts searches for appropriate directors;
evaluates the performance of our board of directors and of individual directors;
considers and makes recommendations to the board of directors regarding the composition of the board and its committees;
reviews developments in corporate governance practices;
evaluates the adequacy of our corporate governance practices and reporting; and
makes recommendations to our board of directors concerning corporate governance matters.
Code of Ethics
In connection with this offering, our board of directors amended our code of ethics that applies to all of our employees, officers and directors. Following the completion of this offering, the full text of our code of ethics will be posted on the investor relations section of our website. We intend to disclose future amendments to certain provisions of our code of business conduct, or waivers of these provisions, on our website and/or in public filings.
Compensation Committee Interlocks and Insider Participation
Since February 1, 2016, the following members or former members of our board of directors have at one time been members of our compensation committee: Messrs. Li and Williams and Scott Dietzen, a former director. None of them has at any time been one of our officers or employees. None of our executive officers serves or in the past has served as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving on our board of directors or our compensation committee.
Director Compensation
Our board of directors has adopted a compensation program with respect to the compensation of our non‑employee directors. Pursuant to this program, each board member receives annual cash compensation of $30,000. Additionally, the lead director receives annual cash compensation of $20,000, the chair of the audit committee receives annual cash compensation of $20,000, the chair of the compensation committee receives annual cash compensation of $15,000 and the chair of the corporate governance and nominating committee receives annual cash compensation of $7,000.
In addition, each new non‑employee director is eligible to receive $450,000 worth of restricted stock units (RSUs), with one‑third of the RSUs vesting on the first annual anniversary of the vesting commencement date and

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the remaining RSUs vesting quarterly over the subsequent two years, and each continuing director is eligible to receive $200,000 worth of RSUs annually, with all of the units vesting on the first annual anniversary of the vesting commencement date. Upon a change of control of our company, all of unvested equity awards granted to members of our board of directors will immediately vest.
Messrs. Reilly and Olson, our Chief Executive Officer and Chief Strategy Officer, respectively, received no compensation for their service as directors. Mr. Li and Aneel Bhusri, a former director, also received no compensation for their services as directors. Mr. Bhusri and Dr. Dietzen resigned from our board of directors on December 14, 2016.
The following table presents the total compensation for each person who served as a non‑employee member of our board of directors during the year ended January 31, 2016.
Name
 
Fees
Earned or
Paid in Cash
 
RSU
Awards(1) 
 
Total
Martin Cole
 
$         6,167
 
$        33,335
 
$          39,502
Scott Dietzen(2)
 
           5,000
 
          33,335
 
            38,335
Steven J. Sordello
 
           8,333
 
          33,335
 
            41,668
Kimberly S. Stevenson
 
           5,000(3)
 
                —(4)
 
              5,000
Richard H. Williams
 
           7,500
 
          33,335
 
            40,835
___________
(1)
The amounts reported in this column represent the aggregate grant date fair value of equity awards granted under our 2008 Equity Incentive Plan to our directors during the year ended January 31, 2016 as computed in accordance with FASB ASC Topic 718. The assumptions used in calculating the dollar amount recognized for financial statement reporting purposes of the equity awards reported in this column are set forth in Note 10 to our consolidated financial statements included in this prospectus. Note that the amounts reported in this column reflect the accounting cost for these equity awards and do not correspond to the actual economic value that may be received by our directors from the equity awards.
(2)
Dr. Dietzen resigned from the board of directors on December 14, 2016.
(3)
Fee paid to Intel on Ms. Stevenson’s behalf.
(4)
Ms. Stevenson waived her right to receive 1,647 RSUs in connection with her directorship.



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EXECUTIVE COMPENSATION
Summary Compensation Table
The following table provides information concerning all plan and non‑plan compensation awarded to, earned by or paid to our Chief Executive Officer and each of our two other most highly compensated officers, whom we collectively refer to as “named executive officers,” during the year ended January 31, 2016.
Name and Principal Position
 
Fiscal Year
 
Salary
 
Bonus
 
Stock
Awards(2)
 
Option
Awards(3)
 
Non-Equity Incentive Plan Compensation
 
Total
Thomas J. Reilly
 
2016
 
$300,000
 
$

 
$
5,520,690

 
$
1,421,330

 
$138,000(4)
 
$
7,380,020

Chief Executive Officer

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Jim Frankola
 
2016
 
$268,750(1)
 
$

 
$

 
$

 
$  78,000(4)
 
$
346,750

Chief Financial Officer

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Michael A. Olson
 
2016
 
$250,000
 
$

 
$

 
$

 
$  72,000(4)
 
$
322,000

Chief Strategy Officer

 
 
 
 
 
 
 
 
 
 
 
 
 
 
___________
(1)
Mr. Frankola’s base salary was increased to $275,000 effective May 1, 2015.
(2)
The amounts reported in this column represent the aggregate grant date fair value of the restricted stock units granted under our 2008 Stock Incentive Plan to our named executive officers in fiscal 2016 as computed in accordance with FASB ASC Topic 718. The assumptions used in calculating the dollar amount recognized for financial statement reporting purposes of the equity awards reported in this column are set forth in Note 10 to our consolidated financial statements included in this prospectus. Note that the amounts reported in this column reflect the accounting value for these equity awards and do not correspond to the actual economic value that may be received by our named executive officers from the equity awards.
(3)
The amounts reported in this column represent the aggregate grant date fair value of the stock options granted under our 2008 Stock Incentive Plan to our named executive officers in fiscal 2016 as computed in accordance with FASB ASC Topic 718. The assumptions used in calculating the dollar amount recognized for financial statement reporting purposes of the equity awards reported in this column are set forth in Note 10 to our consolidated financial statements included in this prospectus. Note that the amounts reported in this column reflect the accounting value for these equity awards and do not correspond to the actual economic value that may be received by our named executive officers from the equity awards.
(4)
These amounts reflect bonuses earned by Messrs. Reilly, Frankola and Olson based upon our achievement of financial objectives and milestones. Mr. Reilly was eligible to earn a target bonus of $150,000. Mr. Frankola was eligible to earn a target bonus of $84,688. Mr. Olson was eligible to earn a target bonus of $78,125.


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2016 Outstanding Equity Awards at Year‑End Table
The following table provides information regarding the unexercised stock options and unvested restricted stock units (RSUs) held by our named executive officers as of January 31, 2016.
 
 
 
 
Option Awards
 
Stock Awards
 
 
Grant
Date(1)
 
Number of Securities
Underlying Unexercised
Options
 
Exercise
Price
 
Expiration
Date
 
Number of
Shares that
Have Not
Vested
 
Market
Value of
Shares that
Have Not
Vested(2)
Name
 
 
Exercisable
 
Unexercisable
 
 
 
Thomas J. Reilly
 
6/28/2013(3)
 
7,335,907

 

 
$
3.21

 
6/27/2023
 
 
 
 
 
 
3/26/2015(4)
 

 
89,000

 
16.24

 
3/25/2025
 
 
 
 
 
 
3/26/2015(5)
 
 
 
 
 
 
 
 
 
207,000

 
$
Jim Frankola
 
10/9/2012(6)
 
334,007

 
192,463

 
1.72

 
10/8/2022
 
 
 
 
 
 
11/8/2013(7)
 
29,166

 
70,834

 
3.64

 
11/7/2023
 
 
 
 
 
 
11/8/2013(8)
 
4,166

 
95,834

 
3.64

 
11/7/2023
 
 
 
 
 
 
1/31/2015(9)
 

 
41,000

 
16.02

 
1/30/2025
 
 
 
 
 
 
1/31/2015(10)
 
 
 
 
 
 
 
 
 
95,000

 
$
Michael A. Olson
 
3/30/2012(11)
 
148,632

 
16,668

 
1.68

 
3/29/2022
 
 
 
 
 
 
6/28/2013(12)
 
875,001

 
708,333

 
3.21

 
6/27/2023
 
 
 
 
 
 
1/31/2015(13)
 

 
41,000

 
16.02

 
1/30/2025
 
 
 
 
 
 
1/31/2015(14)
 
 
 
 
 
 
 
 
 
95,000

 
$
___________
(1)
All of the outstanding equity awards were granted under our 2008 Stock Incentive Plan and are subject to acceleration of vesting as described in “— Termination or Change in Control Arrangements” below.
(2)
The market price for our common stock is based on the assumed initial public offering price of our common stock of $         per share, which is the midpoint of the estimated price range on the cover of this prospectus.
(3)
1/4th of the option vested on June 18, 2014 and 1/48th vests monthly thereafter.
(4)
1/24th of the option vests monthly beginning on June 18, 2017.
(5)
Our board of directors approved this award on March 26, 2015. These RSUs vest and are settled upon the satisfaction of both a service‑based requirement and a liquidity event requirement. The vesting commencement date (VCD) for these RSUs is June 15, 2017. The service-based requirement will be satisfied with respect to 1/8th of the RSUs on each quarterly anniversary of the VCD. The liquidity event requirement will be satisfied upon Mr. Reilly’s continued employment through six months following the effective date of this offering. On that date, those RSUs for which the service-based vesting requirement has been satisfied will vest and be settled in shares and 1/8th of the RSUs will continue to vest and be settled in shares on each quarterly anniversary the VCD thereafter.
(6)
1/4th of the option vested at October 1, 2013 and an additional 1/48th vests monthly thereafter.
(7)
1/48th of the option vests monthly beginning on December 1, 2014.
(8)
1/48th of the option vests monthly beginning on December 1, 2015.
(9)
1/24th of the option vests monthly beginning on January 1, 2017.
(10)
Our board of directors approved this award on January 31, 2015. These RSUs vest and are settled upon the satisfaction of both a service‑based requirement and a liquidity event requirement. The VCD for these RSUs is December 15, 2016. The service-based requirement will be satisfied with respect to 1/8th of the RSUs on each quarterly anniversary of the VCD. The liquidity event requirement will be satisfied upon Mr. Frankola’s continued employment through six months following the effective date of this offering. On that date, those RSUs for which the service-based vesting requirement has been satisfied will vest and be settled in shares and 1/8th of the RSUs will continue to vest and be settled in shares on each quarterly anniversary of the VCD thereafter.
(11)
1/4th of the option vested on March 29, 2013 and 1/48th vests monthly thereafter.
(12)
1/48th of the option vests monthly beginning on June 27, 2013.
(13)
1/24th of the option vests monthly beginning on January 1, 2017.
(14)
Our board of directors approved this award on January 31, 2015. These RSUs vest and are settled upon the satisfaction of both a service‑based requirement and a liquidity event requirement. The vesting commencement date (VCD) for these RSUs is December 15, 2016. The service-based requirement will be satisfied with respect to 1/8th of the RSUs on each quarterly anniversary of the VCD. The liquidity event requirement will be satisfied upon Mr. Olson’s continued employment through

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six months following the effective date of this offering. On that date, those RSUs for which the service-based requirement has been satisfied will vested and be settled in shares and 1/8th of the RSUs will continue to vest and be settled in shares on each quarterly anniversary the VCD thereafter.
Employment, Severance and Change of Control Arrangements
Offer Letters and Employment Agreements
We have entered into offer letters with Messrs. Reilly and Mr. Olson and an employment agreement with Mr. Frankola. Each of these arrangements provide for at‑will employment and generally include the named executive officer’s initial base salary, an indication of eligibility for an annual cash incentive award opportunity and equity awards. In addition, each of our named executive officers has executed a form of our standard confidential information and invention assignment agreement. Any potential payments and benefits due upon a termination of employment or a change in control of us are further described in “ Termination or Change in Control Arrangements” below.
Thomas J. Reilly
We entered into an offer letter with Mr. Reilly, our Chief Executive Officer, on May 22, 2013. Pursuant to the offer letter, Mr. Reilly’s initial base salary was established at $300,000 per year. In addition, Mr. Reilly is eligible to receive an annual cash bonus of up to $150,000 based on the achievement of mutually agreed‑upon objectives. On June 28, 2013, in accordance with the terms of his offer letter, Mr. Reilly was granted a stock option to purchase 7,335,907 shares of our common stock at an exercise price of $3.21 per share, which was equal to the fair market value of our common stock on the date the option was granted as determined by our board of directors. This option vested with respect to 25% of the shares subject to it on June 18, 2014, and 1/48th of the shares subject to the option vested or, subject to Mr. Reilly’s continued service, will continue to vest ratably on the first day of each monthly anniversary over the following 36 month period.
While Mr. Reilly’s offer letter provides that his employment is at will and may be terminated at any time, with or without cause, his offer letter also provides that he would be entitled to severance benefits in the event we terminate his employment without cause (as defined in the offer letter) or he resigns for good reason (as defined in the offer letter). However, on December 13, 2016, Mr. Reilly entered into a Severance and Change in Control Agreement, which supersedes the severance benefits Mr. Reilly would have otherwise been entitled to receive under his offer letter. The terms of the severance benefits under the Severance and Change in Control Agreement with Mr. Reilly are described in “ Termination or Change in Control Arrangements” below.
Jim Frankola
We entered into an employment agreement with Mr. Frankola, our Chief Financial Officer, on September 10, 2012. Pursuant to the agreement, Mr. Frankola’s initial base salary was established at $250,000 per year. In addition, Mr. Frankola was initially eligible to receive an annual cash bonus of up to $50,000 based on the achievement of certain performance goals, which are set by the board of directors after consulting with Mr. Frankola. On October 9, 2012, in accordance with the terms of his agreement, Mr. Frankola was granted a stock option to purchase 1,026,470 shares of our common stock at an exercise price of $1.72 per share, which was equal to the fair market value of our common stock on the date the option was granted as determined by our board of directors. This option vested with respect to 25% of the shares subject to it on October 1, 2013 and 1/48th of the shares subject to the option vested on the first day of each monthly anniversary ratably over the following 36 month period.
While Mr. Frankola’s employment agreement provides that his employment is at will and may be terminated at any time, with or without cause, his employment agreement also provides that he would be entitled to severance benefits in the event his employment is terminated by the Company without cause (as defined in the employment agreement) or he resigns for good reason (as defined in the employment agreement). However, on December 5, 2016, Mr. Frankola entered into a Severance and Change in Control Agreement, which supersedes the severance benefits Mr. Frankola would have otherwise been entitled to receive under his employment agreement. The terms of the severance benefits under the Severance and Change in Control Agreement with Mr. Frankola are described in “ Termination or Change in Control Arrangements” below.

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Michael A. Olson
We entered into an offer letter with Mr. Olson, our co‑founder, Chairman and Chief Strategy Officer, in October 2008. Pursuant to the offer letter, Mr. Olson initially served as our President and Chief Executive Officer with an initial base salary to be mutually agreed. On August 22, 2008, pursuant to the terms of his offer letter, Mr. Olson was granted the right to purchase 5,000,000 shares of restricted stock for $0.000025 per share, which was equal to the fair market value of our common stock on the date the shares were granted as determined by our board of directors. This restricted stock award vested with respect to 15% of the shares subject to it on the first day of each monthly anniversary ratably over the following 36 month period.
While Mr. Olson’s offer letter provides that his employment is at will and may be terminated at any time, with or without cause, his offer letter also provides that he would be entitled to severance benefits in the event his employment is terminated by the Company without cause (as defined in the offer letter) or he resigns on account of a constructive termination (as defined in the offer letter). However, on December 5, 2016, Mr. Olson entered into a Severance and Change in Control Agreement, which supersedes the severance benefits Mr. Olson would have otherwise been entitled to receive under his offer letter. The terms of the severance benefits under the Severance and Change in Control Agreement with Mr. Olson are described in “ Termination or Change in Control Arrangements” below.
Termination or Change in Control Arrangements
We entered into Severance and Change in Control Agreements with each of the named executive officers in December 2016. Pursuant to these agreements, we have agreed to make certain payments and provide certain benefits upon termination of employment by us without cause (as defined in the applicable Severance and Change in Control Agreement) or by the employee for good reason (as defined in the applicable Severance and Change in Control Agreement). These payments and benefits depend on whether or not such termination occurs in connection with a change in control (as defined in the applicable Severance and Change in Control Agreement) and will be subject to the named executive officer’s execution and non‑revocation of a general release of claims in a form prescribed by us.
If the termination of a named executive officer occurs during the period commencing three months prior to and ending twelve months following a change in control, the named executive officer will be entitled to receive:
(i)
a lump sum payment equal to the sum of:
(a)
his annual base salary,
(b)
his annual target bonus (calculated as if all applicable bonus targets were achieved) and
(c)
a prorated portion of his annual target bonus (calculated as if all applicable bonus targets were achieved and based on the number of days worked during the bonus period);
(ii)
twelve months of COBRA premiums (or a taxable payment in an amount equal to such premiums);
(iii)
accelerated vesting of 100% of all outstanding equity awards; and
(iv)
a twelve month post‑termination exercise window for all outstanding non‑qualified stock options.
If the termination of a named executive officer does not occur during the period commencing three months prior to and ending twelve months following a change in control, the named executive officer will be entitled to receive:
(i)
a lump sum payment equal to the sum of:
(a)
his annual base salary and
(b)
a prorated portion of his annual target bonus (calculated as if all applicable bonus targets were achieved and based on the number of days worked during the bonus period);

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(ii)
twelve months of COBRA premiums (or a taxable payment in an amount equal to such premiums); and
(iii)
a twelve month post‑termination exercise window for all outstanding non‑qualified stock options.
Pursuant to the Severance and Change in Control Agreements, each of named executive officers has also agreed to refrain from competing with us while employed with our company and to refrain soliciting any of our employees or consultants during, and for the one‑year period following, his employment.
Employee Benefit Plans
2008 Equity Incentive Plan
Our board of directors adopted our 2008 Equity Incentive Plan on August 22, 2008, which our stockholders also approved on August 22, 2008, and which has been amended from time to time thereafter. Our 2008 Equity Incentive Plan provides for the grant of incentive stock options, within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, or the Code, to our employees or any parent or subsidiary’s employees and for the grant of nonstatutory stock options to our employees, directors, consultants and any parent or subsidiary’s employees and consultants. Restricted stock units, stock appreciation rights, stock awards, and restricted stock may also be granted under the 2008 Equity Incentive Plan. We primarily grant restricted stock units and stock options, and we have not granted restricted stock or stock appreciation rights under our 2008 Equity Incentive Plan. We will cease issuing awards under our 2008 Equity Incentive Plan upon the implementation of the 2017 Equity Incentive Plan, which is described below. Likewise, we will not grant any additional awards under our 2008 Equity Incentive Plan following our initial public offering. Instead, we will grant equity awards under our 2017 Equity Incentive Plan. However, any outstanding awards granted under the 2008 Equity Incentive Plan will remain outstanding, subject to the terms of our 2008 Equity Incentive Plan and applicable award agreements, until they are exercised or settled or until they terminate or expire by their terms.
Share Reserve 
As of          , we had         shares of our common stock authorized for issuance under our 2008 Equity Incentive Plan. Of these shares, options to purchase         shares had been exercised, options to purchase         shares remained outstanding and         shares remained available for future grant. In addition, as of         , we had         RSUs outstanding under the 2008 Equity Incentive Plan.
Administration
The Compensation Committee of our board of directors currently administers our 2008 Equity Incentive Plan.
Stock Options 
The Compensation Committee of our board of directors sets forth the terms of stock options granted under our 2008 Equity Incentive Plan in option award agreements, including the applicable vesting and exercise conditions applicable to the options. The exercise price of stock options granted under our 2008 Equity Incentive Plan must be at least equal to the fair market value of our common stock on the date of grant and the term of the stock options may not exceed ten years. With respect to incentive stock options granted to any employee who owns 10% or more of the voting power of all classes of our outstanding stock as of the grant date, the term of the option must not exceed five years and the exercise price must equal at least 110% of the fair market value of our common stock on the grant date.
Restricted Stock Units (RSUs) 
Our 2008 Equity Incentive Plan also permits the issuance of RSUs to our service providers. RSUs granted under our 2008 Equity Incentive Plan represent the right to receive shares of our common stock or cash payment at a specified future date and may be subject to continuous service or performance vesting requirements.

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Additional Provisions 
Our board of directors has the authority to amend, suspend or terminate the 2008 Equity Incentive Plan, provided that no amendment may materially or adversely affect awards already granted without the written consent of the holder of the affected award. Our 2008 Equity Incentive Plan provides that our stockholders must approve actions that require stockholder approval under applicable law, approve any increase in the number of shares reserved for issuance and approve any material changes to the class of persons who are eligible for awards under it.
Capitalization Adjustments
In the event of certain events that result in a change to our corporate or capital structure, including a stock dividend, stock split, recapitalization or other similar event, without the receipt of applicable consideration and other than a normal cash dividend, our board of directors shall make proportional adjustments to the maximum number and kind of securities that are subject to any outstanding awards, that will be issued upon the exercise of incentive stock options and that are available for issuance of new awards under our 2008 Equity Incentive Plan.
Corporate Transaction 
If we experience, a company transaction (as defined in our 2008 Equity Incentive Plan), unless a change of control transaction, unless our board otherwise determines with respect to a particular award in the agreement evidencing the award or in a written employment, services or other agreement, outstanding awards under our 2008 Equity Incentive Plan, including any vesting provisions, may be assumed or substituted by the successor company. The vesting of outstanding awards that are not assumed or substituted will be accelerated and then will terminate upon the closing of the company transaction. Alternatively, upon the closing of a company transaction, our board of directors may instead elect to terminate any outstanding option or stock appreciation right in exchange for a cash payment equal to, for each share of common stock subject to such award (whether or not then exercisable), the fair market value of the consideration receivable by holders of common stock for each share less the exercise price per share.
Gazzang 2008 Stock Purchase and Option Plan
In connection with our acquisition of Gazzang, Inc. in June 2014, our board of directors approved the assumption of unvested stock options held by continuing employees in the acquisition. Effective as of the closing of the acquisition, the assumed stock options represented stock options to purchase shares of our common stock. These stock options were assumed on substantially the same terms and conditions as applied to such stock options immediately prior to the consummation of the acquisition, except that the number of shares of our common stock subject to each option and the exercise price of each stock option were adjusted in accordance with the terms of the merger agreement. In addition, each assumed stock option was treated for tax purposes as a nonqualified stock option.
Upon closing of the acquisition of Gazzang, Inc. and after application of the adjustments to the number of shares of common stock subject to the assumed stock options in connection with the acquisition,             shares of our common stock were subject to the assumed stock options. As of January 31, 2017, options to purchase             shares had been exercised, and options to purchase             shares remained outstanding. Any shares subject to the assumed options that are canceled, repurchased or forfeited do not again become available for grant under the Amended and Restated 2008 Stock Purchase and Option Plan or any of our other equity plans. Since the closing of the acquisition, we have not granted and will not grant any stock options or other awards under the Amended and Restated 2008 Stock Purchase and Option Plan.
Additional Provisions
Our board of directors has the authority to amend, suspend or terminate the 2008 Stock Purchase and Option Plan, provided that no amendment may materially or adversely affect awards already granted without the written consent of the holder of the affected award.

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Capitalization Adjustments
In the event of certain events that result in any change to our common stock, including a stock dividend, stock split, recapitalization or other similar event, without the receipt of applicable consideration and other than a normal cash dividend, our board of directors shall make proportional adjustments to the maximum number and kind of securities that are subject to any outstanding awards, that will be issued upon the exercise of incentive stock options and that are available for issuance of new awards under the 2008 Amended and Restated Stock Purchase and Option Plan.
Corporate Transaction
If we experience a corporate transaction (as defined in the 2008 Amended and Restated Stock Purchase and Option Plan), unless otherwise provided in the agreement between us and the option holder evidencing the terms and conditions of the option grant, outstanding options under the Amended and Restated 2008 Stock Purchase and Option Plan may be assumed or substituted by the successor company. The vesting of outstanding awards that are not assumed or substituted and that are held by current employees at the effective time of the corporate transaction will be accelerated in full and then will terminate upon the closing of the transaction to the extent not exercised. The vesting of outstanding awards that are not assumed or substituted and that are not held by current employees at the effective time of the change in control transaction will not be accelerated and will terminate upon the closing of the transaction to the extent not exercised. Alternatively, upon the closing of a corporate transaction, our board of directors may instead elect to terminate any outstanding option in exchange for a cash payment equal to the excess, if any, of (A) the value of the property the option holder would have received upon the exercise of the option over (B) the exercise price, if any, payable by such option holder to exercise the option.
2017 Equity Incentive Plan
Our board of directors adopted our 2017 Equity Incentive Plan in         , 2017, which our stockholders approved in         . Our 2017 Equity Incentive Plan will be effective on the date immediately prior to the effective date of the registration statement of which this prospectus forms a part and will serve as the successor to our 2008 Equity Incentive Plan.
Share Reserve 
We reserved         shares of our common stock for issuance under our 2017 Equity Incentive Plan, plus an additional number of shares of common stock equal to any shares reserved but not issued or subject to outstanding awards under our 2008 Equity Incentive Plan on the effective date of our 2017 Equity Incentive Plan, plus, on and after the effective date of our 2017 Equity Incentive Plan, (i) shares that are subject to outstanding awards under the 2008 Equity Incentive Plan which cease to be subject to such awards, (ii) shares issued under the 2008 Equity Incentive Plan which are forfeited or repurchased at their original issue price, and (iii) shares subject to awards under the 2008 Equity Incentive Plan that are used to pay the exercise price of an option or withheld to satisfy the tax withholding obligations related to any award. The number of shares reserved for issuance under our 2017 Equity Incentive Plan will increase automatically on the first day of January of each calendar year during the term of the plan by a number of shares of common stock equal to the lesser of (i)         % of the total outstanding shares our common stock as of the immediately preceding December 31st or (ii) a number of shares determined by our board of directors.
Term 
The 2017 Equity Incentive Plan terminates ten years from the date of its approval by our board of directors, unless earlier terminated by our board of directors.
Eligibility 
The 2017 Equity Incentive Plan provides for the award of stock options, restricted stock awards, stock bonus awards, stock appreciation rights, RSUs and performance awards. No person will be eligible to receive more than         shares in any calendar year under our 2017 Equity Incentive Plan other than a new employee of ours, who will be eligible to receive no more than         shares under our 2017 Equity Incentive Plan in the calendar year in

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which the employee commences employment. All awards other than incentive stock options may be granted to our employees, directors, consultants, independent contractors and advisors, provided the consultants, independent contractors and advisors render services not in connection with the offer and sale of securities in a capital‑raising transaction. Incentive stock options may be granted only to our employees.
Administration 
The 2017 Equity Incentive Plan will be administered by the compensation committee of our board of directors, all of the members of which are non‑employee directors under applicable federal securities laws and outside directors as defined under applicable federal tax laws, or by our board of directors acting in place of our compensation committee. Our compensation committee will have the authority to construe and interpret our 2017 Equity Incentive Plan, grant awards and make all other determinations necessary or advisable for its administration. Awards under the 2017 Equity Incentive Plan may be made subject to “performance factors” and other terms in order to qualify as performance‑based compensation for the purposes of Section 162(m) of the Code.
The 2017 Equity Incentive Plan provides for the granting of stock options (both incentive stock options and nonstatutory stock options), restricted stock, stock appreciation rights, RSUs, performance awards and stock bonuses. A brief description of each type of award is set forth below.
Stock Options 
A stock option is the right, but not the obligation, to purchase a share of our common stock at a certain price and upon certain conditions. The exercise price of each stock option must be at least equal to the fair market value of our common stock on the date of grant. The exercise price of incentive stock options granted to 10% stockholders must be at least equal to 110% of the fair market value on the date of grant (and have a term that does not exceed five years). Our compensation committee may provide for options to be exercised only as they vest or to be immediately exercisable with any shares issued on exercise being subject to our right of repurchase that lapses as the shares vest. The maximum term of options granted under our 2017 Equity Incentive Plan is ten years.
Restricted Stock
A restricted stock award is an offer by us to sell shares of our common stock subject to restrictions. The price (if any) of a restricted stock award will be determined by our compensation committee. Unless otherwise determined by our compensation committee at the time of award, vesting will cease on the date the participant no longer provides services to us and unvested shares will be forfeited to or repurchased by us.
Stock Appreciation Rights 
Stock appreciation rights provide for a payment, or payments, in cash or shares of our common stock, to the holder based upon the difference between the fair market value of our common stock on the date of exercise and the stated exercise price. Stock appreciation rights may vest based on time or achievement of performance conditions.
Restricted Stock Units (RSUs) 
An RSU is an award that covers a number of shares of our common stock that may be settled upon vesting in cash, by the issuance of the underlying shares or a combination of both. These awards are subject to forfeiture prior to settlement because of termination of employment or failure to achieve performance conditions.
Performance Awards
Performance awards cover a number of shares of our common stock that may be settled upon achievement of pre‑established performance conditions in cash or by issuance of the underlying shares or other property (or any combination thereof). These awards are subject to forfeiture prior to settlement because of termination of employment or failure to achieve performance conditions.

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Stock Bonus Awards  
Stock bonus awards may be granted as additional compensation for services or performance, and therefore, may not be issued in exchange for cash.
Additional Provisions 
Awards granted under our 2017 Equity Incentive Plan may not be transferred in any manner other than by will or by the laws of descent and distribution, or as determined by our compensation committee. Unless otherwise restricted by our compensation committee, awards that are nonstatutory stock options may be exercised during the lifetime of the optionee only by the optionee, the optionee’s guardian or legal representative, a family member of the optionee who has acquired the option by a permitted transfer, or after the optionee’s death, by the legal representative of the optionee’s heirs or legatees. Awards that are incentive stock options may be exercised during the lifetime of the optionee only by the optionee, the optionee’s guardian or legal representative, or, after the optionee’s death, by the legal representative of the optionee’s heirs or legatees. Stock options granted under our 2017 Equity Incentive Plan generally may be exercised for a period of three months after the termination of the optionee’s service to us, except in the case of death or permanent disability, in which case the options generally may be exercised for up to twelve months following termination of the optionee’s service to us. Awards granted under our 2017 Equity Incentive Plan may be subject to clawback or recoupment pursuant to any applicable compensation clawback or recoupment policy adopted by our board of directors or as required by applicable law.
Change of Control 
If we experience a change of control transaction, outstanding awards, including any vesting provisions, may be assumed or substituted by the successor company. The vesting of outstanding awards that are not assumed or substituted will be accelerated unless otherwise determined by our board of directors and then will expire upon the closing of a change in control transaction.
2017 Employee Stock Purchase Plan
We adopted our 2017 Employee Stock Purchase Plan in          , 2017, and it was approved by our stockholders in          , in order to enable eligible employees to purchase shares of our common stock at a discount following the date of this offering. Purchases will be accomplished through participation in discrete offering periods. Our 2017 Employee Stock Purchase Plan is intended to qualify as an employee stock purchase plan under Section 423 of the Code.
Share Reserve 
We initially reserved          shares of our common stock for issuance under our 2017 Employee Stock Purchase Plan. The number of shares reserved for issuance under our 2017 Employee Stock Purchase Plan will increase automatically on January 1st of each of the first          calendar years following the first offering date by the number of shares equal to the lesser of either          % of the total outstanding shares of our common stock as of the immediately preceding December 31st (rounded to the nearest whole share) or a number of shares of our common stock. The aggregate number of shares issued over the term of our 2017 Employee Stock Purchase Plan will not exceed          shares of our common stock.
Offering Periods 
The first offering period and purchase period under our 2017 Employee Stock Purchase Plan will begin and end upon a date to be approved by our board of directors or our compensation committee. Each subsequent offering period will be for six months (commencing each             and             ) and will consist of one             ‑month purchase period, unless otherwise determined by our board of directors or our compensation committee.
Eligibility and Participation 
Our employees generally are eligible to participate in our 2017 Employee Stock Purchase Plan if they are employed by us for at least            hours per week and more than             months in a calendar year. Employees who

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are 5% stockholders, or would become 5% stockholders as a result of their participation in our 2017 Employee Stock Purchase Plan, are ineligible to participate in our 2017 Employee Stock Purchase Plan. We may impose additional restrictions on eligibility. Once an employee is enrolled in our 2017 Employee Stock Purchase Plan, participation will be automatic in subsequent offering periods. An employee’s participation automatically ends upon termination of employment for any reason.
Payment for Shares and Purchase Price
Under our 2017 Employee Stock Purchase Plan, eligible employees will be able to acquire shares of our common stock by accumulating funds through payroll deductions. Our eligible employees will be able to select a rate of payroll deduction between             % and             % of their base cash compensation. The purchase price for shares of our common stock purchased under our 2017 Employee Stock Purchase Plan will be 85% of the lesser of the fair market value of our common stock on (i) the first trading day of the applicable offering period and (ii) the last trading day of each purchase period in the applicable offering period.
Administration and Term 
The compensation committee or our board of directors will administer our 2017 Employee Stock Purchase Plan. The compensation committee or our board of directors also has the right to amend or terminate our 2017 Employee Stock Purchase Plan at any time. Our 2017 Employee Stock Purchase Plan will terminate on the tenth anniversary of the last day of the first purchase period, unless it is terminated earlier by our board of directors or all shares of common stock reserved for issuance under our 2017 Employee Stock Purchase Plan have been issued.
Share Limitations 
No participant will have the right to purchase shares of our common stock in an amount, when aggregated with purchase rights under all our employee stock purchase plans that are also in effect in the same calendar year(s), that has a fair market value of more than $25,000, determined as of the first day of the applicable purchase period, for each calendar year in which that right is outstanding. In addition, no participant will be permitted to purchase more than             shares during any one purchase period or such lesser amount determined by our compensation committee or our board of directors.
Change in Control 
If we experience a change in control transaction, each outstanding right to purchase shares under our 2017 Employee Stock Purchase Plan may be assumed or an equivalent option substituted by the successor corporation. In the event that the successor corporation refuses to assume or substitute the outstanding purchase rights, any offering period that commenced prior to the closing of the proposed change in control transaction will be shortened and terminated on a new purchase date. The new purchase date will occur on or prior to the closing of the proposed change in control transaction and our 2017 Employee Stock Purchase Plan will then terminate on the closing of the proposed change in control.
401(k) Plan
We maintain a retirement plan for the benefit of our employees. The plan is intended to qualify as a tax‑qualified 401(k) plan so that contributions to the 401(k) plan, and income earned on such contributions, are not taxable to participants until withdrawn or distributed from the 401(k) plan (except in the case of contributions under the 401(k) plan designated as Roth contributions). The 401(k) plan provides that each participant may contribute up to 100% of his or her pre‑tax compensation, up to an annual statutory limit. Participants who are at least 50 years old can also contribute additional amounts based on statutory limits for “catch‑up” contributions. Under the 401(k) plan, each employee is fully vested in his or her deferred salary contributions. Employee contributions are held and invested by the plan’s trustee as directed by participants. Our 401(k) plan provides for discretionary matching of employee contributions.

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Limitation of Liability and Indemnification of Directors and Officers
Our restated certificate of incorporation will contain provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for the following:
for any breach of their duty of loyalty to us or our stockholders;
for any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;
unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or
for any transaction from which they derived an improper personal benefit.
Our restated bylaws will provide that we shall indemnify, to the fullest extent permitted by law, any person who is or was a party or is threatened to be made a party to any action, suit or proceeding, by reason of the fact that he or she is or was one of our directors or officers or is or was serving at our request as a director or officer of another corporation, partnership, joint venture, trust or other enterprise. Our restated bylaws will provide that we may indemnify our employees or agents. Our restated bylaws will also provide that we must advance expenses incurred by or on behalf of a director or officer in advance of the final disposition of any action or proceeding, subject to limited exceptions.
Prior to the completion of this offering, we intend to obtain insurance policies under which, subject to the limitations of the policies, coverage is provided to our directors and officers against loss arising from claims made by reason of breach of fiduciary duty or other wrongful acts as a director or officer, including claims relating to public securities matters, and to us with respect to payments that may be made by us to these officers and directors pursuant to our indemnification obligations or otherwise as a matter of law.
Prior to completion of this offering, we also intend to enter into indemnification agreements with each of our directors and executive officers that may be broader than the specific indemnification provisions contained in the Delaware General Corporation Law. These indemnification agreements may require us, among other things, to indemnify our directors and executive officers against liabilities that may arise by reason of their status or service. These indemnification agreements may also require us to advance all expenses incurred by the directors and executive officers in investigating or defending any such action, suit or proceeding. We believe that these agreements are necessary to attract and retain qualified individuals to serve as directors and executive officers.
At present, we are not aware of any pending litigation or proceeding involving any person who is or was one of our directors, officers, employees or other agents or is or was serving at our request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.
The underwriting agreement provides for indemnification by the underwriters of us and our officers, directors and employees for certain liabilities arising under the Securities Act of 1933, as amended, or the Securities Act, or otherwise.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling our company pursuant to the foregoing provisions, we have been informed that, in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

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CERTAIN RELATIONSHIPS AND RELATED‑PARTY TRANSACTIONS
In addition to the compensation arrangements, including employment, termination of employment and change of control arrangements and indemnification arrangements described in “Executive Compensation” and the registration rights described in “Description of Capital Stock—Registration Rights,” the following is a description of each transaction since February 1, 2013 and each currently proposed transaction in which:
we have been or are to be a participant;
the amount involved exceeds $120,000; and
any of our directors, executive officers or holders of more than 5% of our capital stock, or any immediate family member of or person sharing the household with any of these individuals, had or will have a direct or indirect material interest.
Series F‑1 Preferred Stock Financing
In May 2014, we sold an aggregate of 11,994,668 shares of our Series F‑1 preferred stock at a purchase price of $30.92 per share to Intel Corporation, or Intel, for an aggregate purchase price of approximately $370.9 million. Ms. Stevenson, one of our directors, is a Corporate Vice President of Intel, and entities affiliated with Intel hold more than 22% of our outstanding capital stock as of October 31, 2016. The purchase price of the Series F‑1 preferred stock was determined based on a number of factors, including the status of our business and results of operations, our expectations for the future, discussions between third parties and management with respect to prices at which such third parties would be willing to purchase our Series F‑1 preferred stock and negotiations between our management, board of directors and Intel. Prior to the sale of our Series F‑1 preferred stock, Intel did not hold any equity interest in us, nor did any of its affiliates serve as a member of our board of directors. Each share of our Series F‑1 preferred stock will convert automatically into one share of our common stock upon the completion of this offering.
In connection with the Series F‑1 financing, we entered into a confidentiality agreement with Intel, under which Intel has agreed to keep confidential the information provided to Intel as a result of Intel’s notice, information and inspection rights as a stockholder of our company, as well as the information provided to Intel’s representative on our board of directors as a result of his or her position as a member of the board of directors. Moreover, with specified exceptions, Intel will not seek to obtain confidential information from Intel’s representative on our board of directors that the representative has received in his or her capacity as a member of the board of directors.
2014 Tender Offer
In April 2014, in connection with the Series F‑1 financing, we agreed to waive certain transfer restrictions in connection with, and assist in the administration of, a tender offer that Intel proposed to commence. In May 2014, Intel commenced a tender offer to purchase shares of our capital stock from specified securityholders, including Accel, Greylock Partners and their respective affiliates. A broad class of securityholders, which included employees, were eligible to participate in the tender offer. Among other sellers, Mr. Olson, one of our directors and executive officers, and Mr. Frankola, one of our executive officers, also sold shares of capital stock in the tender offer. An aggregate of 11,994,666 shares of our capital stock were tendered to, and purchased by, Intel pursuant to the tender offer at a price of approximately $30.92 per share, aggregating approximately $370.9 million for a total investment by Intel of $741.8 million, including its investment in the Series F‑1 financing.
Investor Rights Agreement
We entered into an investor rights agreement with certain holders of our convertible preferred stock, including entities with which certain of our directors are affiliated. Mr. Li, one of our directors, is a partner at Accel; entities affiliated with Accel hold shares of our common stock, Series A convertible preferred stock, Series B convertible preferred stock, Series C convertible preferred stock, Series D convertible preferred stock and Series E convertible preferred stock. Mr. Bhusri, one of our former directors, is an advisory partner at Greylock Partners and a member of the board of directors of Intel; entities affiliated with Greylock hold shares of our Series B convertible preferred stock, Series C convertible preferred stock, Series D convertible preferred stock and Series E convertible preferred

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stock. Ms. Stevenson, one of our directors, is a Corporate Vice President at Intel, and entities affiliated with Intel hold shares of our common stock, Series A convertible preferred stock, Series B convertible preferred stock, Series C convertible preferred stock, Series D convertible preferred stock, Series E convertible preferred stock and Series F‑1 convertible preferred stock. For more information on these entities, see “Principal Stockholders.” These stockholders are entitled to rights with respect to the registration of their shares following our initial public offering under the Securities Act. For a description of these registration rights, see “Description of Capital Stock—Registration Rights.”
Under this agreement, Intel has specified ownership maintenance rights.
Under this agreement, Intel also has a special Form S‑3 registration right. At any time after we are eligible to file a registration statement on Form S‑3, Intel can request that we register all or a portion of their shares on Form S‑3. This right is limited to one registration statement filing in any twelve month period. We may postpone the filing of a registration statement for Intel’s registrable securities on Form S‑3 one time in a twelve month period for up to 90 days if our board of directors determines that such a filing would be materially detrimental to us and our stockholders. These registration rights will terminate upon the earlier to occur of the closing of a deemed liquidation event or when the shares held by and issuable to Intel and its affiliates may be sold without registration in compliance with Rule 144 of the Securities Act. Intel and its affiliates have entered into agreements with the underwriters not to make any demand for or exercise their registration rights for 180 days following the date of this prospectus. For a description of these agreements, see “Underwriters.”
Right of First Notice and Standstill Agreement
In conjunction with the Series F‑1 preferred stock financing, we entered into a right of first notice and standstill agreement with Intel. The right of first notice provisions of this agreement terminate upon the completion of this offering. However, following completion of this offering, pursuant to the terms of this agreement, we have agreed that our board of directors will nominate for election a director designated by Intel at each annual meeting of the stockholders at which the term of such designee ends. This right terminates upon specified circumstances, including Intel and its affiliates ceasing to hold at least 13% of our fully‑diluted shares, subject to specified deferrals and exceptions; Intel materially breaching the collaboration and optimization agreement discussed below; the consummation of an acquisition of our company; and the consummation of a direct or an indirect investment by Intel or its affiliates of equity securities issued by specified competitors, or the acquisition of such a competitor’s business or assets (subject to specified exceptions).
This agreement also provides restrictions on Intel’s ability to acquire our securities and assets. These restrictions include, but are not limited to, Intel’s ability to acquire more than 20% of our fully diluted capital stock, which we refer to as the Intel Maximum Percentage, and Intel’s ability to acquire any assets, indebtedness or businesses of our company; propose or effect any tender or exchange offers involving our company; any recapitalization, restructuring, reorganization, liquidation or dissolution involving our company; any solicitation of proxies or consents to vote with respect to the voting of the securities of our company; or otherwise act, alone or in concert with others, to seek representation on or to control or influence our management, board of directors or policies. However, these restrictions do not:
limit the Intel designated director in fulfilling his or her fiduciary duties as a director in his or her good faith judgment,
preclude Intel from engaging in private discussions with us, including with respect to a potential mutually agreed acquisition of Cloudera meeting specified criteria, or
preclude Intel from making an offer to us that provides for the full acquisition of Cloudera, whether by merger, tender offer or otherwise, and engaging in a tender offer for a full acquisition of Cloudera meeting specified criteria.
In the event that another investor (including its affiliates), other than a purely financial investor, acquires a greater percentage of our fully‑diluted shares than the Intel Maximum Percentage, or Other Strategic Holder, Intel’s Maximum Percentage shall increase to the percentage held by such Other Strategic Holder. A purely financial

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investor is an investor that has acquired our securities in the ordinary course of business and not with the purpose nor with the effect of changing or influencing the control of our company or does not have any strategic or commercial relationship with us. In addition, if such Other Strategic Holder is not subject to standstill terms, or is subject to standstill terms more favorable to such Other Strategic Holder than the terms applicable to Intel, these restrictions will be suspended and, if applicable, replaced by such more favorable terms (or no restriction, if the Other Strategic Holder is not subject to standstill terms).
Further, these restrictions will be suspended if a “person” (as defined by Section 13(d)(3) of the Exchange Act) or “group” (as defined by Section 13(d)(3) of the Exchange Act):
enters into an agreement with us providing for the acquisition of Cloudera or the purchase or other acquisition of all or substantially all of our assets,
enters into an agreement with us providing for the purchase or other acquisition of, including by way of tender offer, or purchases or otherwise acquires, beneficial ownership of securities representing a majority of the voting power of our capital stock, or
files with the SEC a Schedule TO covering a tender offer providing for the purchase or other acquisition of beneficial ownership of securities representing a majority of the voting power of our capital stock;
until such agreement or tender offer has lapsed, is abandoned, terminated or is otherwise no longer pending.
Voting Agreement
We are a party to a voting agreement with Intel and certain other parties under which Intel has agreed to restrictions on its voting power. Pursuant to the voting agreement, similar voting restrictions on Intel will be included in our amended certificate of incorporation and bylaws that will be effective following the closing of this offering. See “Description of Capital Stock—Common Stock—Voting Rights” for a description of the voting agreement and these restrictions.
Intel Enterprise Subscription Agreement
We entered into an Enterprise Subscription Agreement (ESA) with Intel pursuant to which Intel became our customer.  Under the ESA, Intel may use our platform in support of its big data initiatives and other internal needs.  The ESA term is effective from April 2014 and expires in May 2018.  We have received approximately $2.2 million, $5.3 million and $6.0 million for the years ended January 31, 2015 and 2016 and for the nine months ended October 31, 2016, respectively, in payments from Intel for subscriptions and services under the ESA. We anticipate receiving $16.5 million in future payments from Intel under the terms of the ESA.
Intel Collaboration and Optimization Agreement
In conjunction with the Series F‑1 preferred stock financing, we entered into a collaboration and optimization agreement with Intel. This agreement governs our collaboration with Intel on the development, marketing and distribution of specified open source data management software, including the optimization of such software for use with Intel’s processors and architecture. Either party may terminate the agreement under certain circumstances, including if the parties fail to meet certain collaboration goals. Moreover, Intel may terminate the agreement with or without cause upon twelve months written notice at any time after March 21, 2015. The agreement automatically renews following the expiration of the initial term on March 21, 2018 for an additional twelve month term, and thereafter will be automatically extended for additional twelve month periods, unless either party provides written notice of non‑renewal at least 180 days before the expiration of the renewal term.
Marketing and Miscellaneous Cooperation with Intel
We have received approximately $600,000 from Intel over the past 24 months for miscellaneous marketing, services and other items related to the operation of the strategic partnership.

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Executive Compensation and Employment Arrangements
Please see “Executive Compensation” for information on compensation arrangements with our executive officers, including restricted stock unit and option grants and agreements with executive officers. Please see “Executive Compensation—Termination or Change in Control Arrangements” for information on termination arrangements with executive officers.
Indemnification of Directors and Officers
See “Executive Compensation—Limitation of Liability and Indemnification of Directors and Officers” for information on our indemnification arrangements with our directors and executive officers.
RSU and Stock Option Grants
See “Executive Compensation” for information on certain restricted stock unit grants and stock option grants to our executive officers and related grant policies.
Review, Approval or Ratification of Transactions with Related Parties
We intend to adopt a written related person transactions policy that our executive officers, directors, nominees for election as a director, beneficial owners of more than 5% of our common stock and any members of the immediate family of and any entity affiliated with any of the foregoing persons are not permitted to enter into a material related person transaction with us without the review and approval of our audit committee or a committee composed solely of independent directors in the event it is inappropriate for our audit committee to review such transaction due to a conflict of interest. We expect the policy to provide that any request for us to enter into a transaction with an executive officer, director, nominee for election as a director, beneficial owner of more than 5% of our common stock or with any of their immediate family members or affiliates, in which the amount involved exceeds $120,000 will be presented to our audit committee for review, consideration and approval. In approving or rejecting any such proposal, we expect that our audit committee will consider the relevant facts and circumstances available and deemed relevant to the audit committee, including, but not limited to, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest in the transaction.
Although we have not had a written policy for the review and approval of transactions with related persons, our board of directors has historically reviewed and approved any transaction where a director or officer had a financial interest, including all of the transactions described above. Prior to approving such a transaction, the material facts as to a director’s or officer’s relationship or interest as to the agreement or transaction were disclosed to our board of directors. Our board of directors would take this information into account when evaluating the transaction and in determining whether such transaction was fair to our company and in the best interest of all of our stockholders.


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PRINCIPAL STOCKHOLDERS
The following table presents information as to the beneficial ownership of our common stock as of October 31, 2016, and as adjusted to reflect our sale of common stock in this offering, by:
each stockholder known by us to be the beneficial owner of more than 5% of our common stock;
each of our directors, except two of our directors who resigned as of December 14, 2016;
each of our named executive officers; and
all of our directors and executive officers as a group.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and thus represents voting or investment power with respect to our securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Shares of our common stock subject to options that are currently exercisable or exercisable within 60 days of October 31, 2016 are deemed to be outstanding and to be beneficially owned by the person holding the options for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
Percentage ownership of our common stock before this offering is based on 111,612,951 shares of our common stock outstanding on October 31, 2016, which includes 74,907,415 shares of common stock resulting from the automatic conversion of all outstanding shares of our preferred stock upon the completion of this offering. Percentage ownership of our common stock after the offering (assuming no exercise of the underwriters’ option to purchase additional shares to cover over‑allotments) also assumes the foregoing and assumes the sale of           shares by us in this offering. Unless otherwise indicated, the address of each of the individuals and entities named below is c/o Cloudera, 1001 Page Mill Road, Building 3, Palo Alto, California 94304.
Name of Beneficial Owner
Number of Shares Beneficially Owned
 
Percent of Shares Beneficially Owned
 
Before the Offering
 
After the Offering
Named Executive Officers and Directors:
 
 
 
 
 
Thomas J. Reilly(1)
7,335,907

 
6.2
%
 
 
Jim Frankola(2)
1,079,573

 
1.0
%
 
 
Michael A. Olson(3)
4,859,154

 
4.3
%
 
 
Martin Cole(4)
18,522

 
*

 
 
Ping Li(5)
18,409,144

 
16.5
%
 
 
Steven J. Sordello(6)
18,522

 
*

 
 
Kimberly S. Stevenson(7)
24,865,827

 
22.3
%
 
 
Richard H. Williams(8)
281,297

 
*

 
 
All executive officers and directors as a group (8 persons)(9)
56,867,946

 
46.9
%
 
 
5% Stockholders:
 
 
 
 
 
Intel Corporation(7)
24,865,827

 
22.3
%
 
 
Entities affiliated with Accel(5)
18,409,144

 
16.5
%
 
 
Entities affiliated with Greylock Partners(10)
14,199,711

 
12.7
%
 
 
___________
*
Represents beneficial ownership of less than 1% of our outstanding shares of common stock.
(1)
Consists of shares subject to options that are exercisable within 60 days of October 31, 2016.

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(2)
Consists of (a) 452,000 shares, (b) 605,636 shares subject to stock options that are exercisable within 60 days of October 31, 2016, and (c) 21,937 RSUs which are subject to vesting conditions which are expected to occur within 60 days of October 31, 2016.
(3)
Consists of (a) 9,700 shares held by Mr. Olson, (b) 3,350,820 shares held by the Michael and Teresa Olson Revocable Trust dated May 24, 2001, of which Mr. Olson is trustee and (c) 1,498,634 shares subject to stock options that are exercisable within 60 days of October 31, 2016.
(4)
Consists of (a) 15,000 shares and (b) 3,522 RSUs which are subject to vesting conditions expected to occur within 60 days of October 31, 2016.
(5)
Consists of (a) 3,018,220 shares held by Accel Growth Fund II L.P., or AGF II, (b) 218,537 shares held by Accel Growth Fund II Strategic Partners L.P., or AGF II Strategic, (c) 293,736 shares held by Accel Growth Fund Investors 2012 L.L.C., or AGFI, (d) 1,316,887 shares held by Accel Investors 2008 L.L.C., or AI 2008, (e) 1,382 shares held by Accel Investors 2013 L.L.C., or AI 2013, (f) 12,592,182 shares held by Accel X L.P., or Accel X, (g) 954,215 shares held by Accel X Strategic Partners L.P., or Accel X Strategic, (h) 978 shares held by Accel XI Strategic Partners L.P., or Accel XI Strategic and (i) 13,007 shares held by Accel XI, L.P., or Accel XI. Accel Growth Fund II Associates L.L.C., or AGF II Associates, is the general partner of AGF II and AGF II Strategic and has the sole voting and investment power. Andrew G. Braccia, Sameer K. Gandhi, Ping Li, Tracy L. Sedlock, Ryan J. Sweeney and Richard P. Wong are the Managing Members of AGF II Associates and AGFI and share voting and investment powers over such shares. Accel X Associates L.L.C., or Accel X Associates, is the general partner of Accel X and Accel X Strategic and has the sole voting and investment power. Andrew G. Braccia, Kevin J. Efrusy, Sameer K. Gandhi, Ping Li, Tracy L. Sedlock and Richard P. Wong are the Managing Members of Accel X Associates and AI 2008 and share voting and investment powers over such shares. Accel XI Associates L.L.C., or Accel XI Associates, is the General Partner of Accel XI and Accel XI Strategic and has the sole voting and investment power. Andrew G. Braccia, Sameer K. Gandhi, Ping Li, Tracy L. Sedlock and Richard P. Wong are the Managing Members of Accel XI Associates and AI 2013 and share voting and investment powers over such shares. The principal business address for all entities and individuals affiliated with Accel is 428 University Avenue, Palo Alto, California 94301.
(6)
Consists of (a) 15,000 shares and (b) 3,522 RSUs which are subject to vesting conditions expected to occur within 60 days of October 31, 2016.
(7)
Consists of 24,865,827 shares held by Intel Corporation, or Intel. Ms. Stevenson serves as a Corporate Vice President of Intel. The principal business address for Ms. Stevenson and Intel is 2200 Mission College Blvd., Santa Clara, California 95054.
(8)
Consists of (a) 105,650 shares, (b) 174,000 shares subject to stock options that are exercisable within 60 days of October 31, 2016, and (b) 1,647 RSUs which are subject to vesting conditions expected to occur within 60 days of October 31, 2016.
(9)
Consists of (a) 47,223,141 shares, (b) 9,614,177 shares subject to stock options that are exercisable within 60 days of October 31, 2016, and (c) 30,628 RSUs which are subject to vesting conditions expected to occur within 60 days of October 31, 2016, each of which are held by our directors and officers as a group.
(10)
Consists of (a) 12,140,760 shares held by Greylock XII Limited Partnership, or Greylock XII, (b) 709,983 shares held by Greylock XII Principals LLC, Greylock XII LLC and (c) 1,348,968 shares held by Greylock XII‑A Limited Partnership, or Greylock XII‑A. Greylock XII GP LLC, or Greylock GP, serves as the general partner of Greylock XII and Greylock XII‑A. William W. Helman and Aneel Bhusri are the senior managing members of Greylock GP and as such, each of them may be deemed to share voting power and investment control over the shares held of record by Greylock XII and Greylock XII‑A. The shares registered in the name of Greylock XII LLC are held in nominee form only and as a result, Greylock XII LLC does not have voting power or investment control over such shares. Each of the beneficiaries for which Greylock XII LLC acts as nominee retains sole voting power and investment control with respect to the shares held on their behalf. As such, Greylock XII PLLC disclaims beneficial ownership with respect to all such shares. The principal business address for all entities and individuals affiliated with Greylock Partners is 2550 Sand Hill Road, Menlo Park, California 94025.

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DESCRIPTION OF CAPITAL STOCK
Upon the completion of this offering, our authorized capital stock will consist of                   shares of common stock, $0.00005 par value per share, and                   shares of undesignated preferred stock, $0.00005 par value per share. The following description summarizes the most important terms of our capital stock. Because it is only a summary, it does not contain all the information that may be important to you. For a complete description, you should refer to our restated certificate of incorporation and restated bylaws, which are included as exhibits to the registration statement of which this prospectus forms a part, and to the provisions of applicable Delaware law.
Common Stock
As of October 31, 2016, there were 111,612,951 shares of our common stock outstanding, held by approximately 791 stockholders of record, and no shares of preferred stock outstanding, assuming the conversion of all outstanding shares of our preferred stock into shares of our common stock, which will occur upon the completion of this offering. After this offering, there will be                   shares of our common stock outstanding, or                   shares if the underwriters exercise in full their option to purchase additional shares of common stock in this offering.
Dividend Rights
Subject to preferences that may apply to shares of preferred stock outstanding at the time, the holders of outstanding shares of our common stock are entitled to receive dividends out of funds legally available at the times and in the amounts that our board of directors may determine.
Voting Rights
Each holder of common stock is entitled to one vote for each share of common stock held on all matters submitted to a vote of stockholders. Cumulative voting for the election of directors is not provided for in our restated certificate of incorporation, which means that the holders of a majority of our shares of common stock can elect all of the directors then standing for election.
Upon the completion of this offering, our restated certificate of incorporation and bylaws will provide, and under the voting agreement Intel entered with us Intel has agreed to, certain restrictions on its voting power. These restrictions include, among other things, a limitation of Intel’s voting rights to 20% of the aggregate voting rights of the aggregate outstanding voting capital stock of the company. In addition, Intel and its affiliates are required, and shall be deemed, to cast their collective voting power in excess of the 20% limitation “for” or “against” the matter being voted upon in the same ratio and in the same proportion as the company’s other stockholders, other than Intel and its affiliates, collectively voted “for” or “against” such matter. Further, if Intel and its affiliates collectively hold 66% or more of the voting power with respect any matter requiring a separate series or class vote under Section 242 of Delaware General Corporation Law, under restated certificate of incorporation or otherwise, then Intel and its affiliates will be required to vote for or against such matter as recommended by our board of directors. See “Certain Relationships and Related‑Party Transactions—Voting Agreement” for more information.
No Preemptive or Similar Rights
Our common stock is not entitled to preemptive rights and is not subject to conversion or redemption.
Right to Receive Liquidation Distributions
Upon our liquidation, dissolution or winding‑up, the assets legally available for distribution to our stockholders would be distributable ratably among the holders of our common stock and any participating preferred stock outstanding at that time after payment of liquidation preferences, if any, on any outstanding shares of preferred stock and payment of other claims of creditors.
Fully Paid and Nonassessable
All of our outstanding shares of common stock are, and the shares of our common stock to be issued pursuant to this offering will be, fully paid and non‑assessable.

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Preferred Stock
Immediately upon the completion of this offering, each outstanding share of preferred stock will be converted into common stock.
Following this offering, our board of directors will be authorized, subject to limitations prescribed by Delaware law, to issue preferred stock in one or more series, to establish from time to time the number of shares to be included in each series, to fix the designation, powers, preferences and rights of the shares of each series and any of its qualifications, limitations or restrictions, in each case without further action by our stockholders. Our board of directors can also increase or decrease the number of shares of any series of preferred stock, but not below the number of shares of that series then outstanding, unless approved by the affirmative vote of the holders of a majority of our capital stock entitled to vote, or such other vote as may be required by the certificate of designation establishing the series. Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect the voting power or other rights of the holders of the common stock. The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in our control and might adversely affect the market price of our common stock and the voting and other rights of the holders of our common stock. We have no current plan to issue any shares of preferred stock.
Options
As of October 31, 2016, we had outstanding options to purchase an aggregate of 23,414,207 shares of our common stock, with a weighted‑average exercise price of $4.58 per share under our 2008 Plan and the Gazzang Plan.
RSUs
As of October 31, 2016, we had outstanding RSUs that may be settled for an aggregate of 15,101,448 shares of our common stock granted pursuant to our 2008 Plan.
Registration Rights
Following this offering, the holders of                   shares of our common stock issued upon conversion of our convertible preferred stock will be entitled to rights with respect to the registration of these shares under the Securities Act, as described below.
Demand Registration Rights
At any time after the earlier of (i) March 24, 2017 or (ii) 180 days after the effective date of this offering, the holders of at least a majority of the then‑outstanding shares having registration rights can request that we file a registration statement covering at least a majority of the registrable securities then‑outstanding with an anticipated aggregate offering price of greater than $15.0 million, net of any underwriters’ discounts and commissions. We will only be required to file two registration statements upon exercise of these demand registration rights. We may postpone the filing of a registration statement for up to 90 days once in a twelve month period if our board of directors determines that the filing would be seriously detrimental to us or our stockholders.
Piggyback Registration Rights
If we register any of our securities for our account or the account of a stockholder, the stockholders with registration rights will have the right to include their shares in the registration statement. However, this right does not apply to a registration relating to any of our employee benefit plans, a corporate reorganization, a registration that requires information that is not substantially the same or a registration in which the only common stock being registered is common stock issuable upon conversion of debt securities that are also being registered. The underwriters of any underwritten offering will have the right to limit, due to marketing reasons, the number of shares registered by these holders, in which case the number of shares to be registered will be apportioned pro rata among these holders, according to the total number of registrable securities owned by each holder, or in a manner mutually agreed upon by the holders. However, the number of shares to be registered by these holders cannot be reduced

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unless all other securities (other than securities to be sold by our company) are excluded entirely and may not be reduced below 30% of the total shares covered by the registration statement, except for in connection with an initial public offering, in which case the underwriters may exclude these holders entirely.
Form S‑3 Registration Rights
The holders of at least 30% of the then‑outstanding shares having registration rights can request that we register all or a portion of their shares on Form S‑3 if we are eligible to file a registration statement on Form S‑3 and the aggregate price to the public of the shares offered is equal to or greater than $1,000,000, net of any underwriters’ discounts and commissions. This right only survives for two Form S‑3 registrations effected pursuant to this right. We may postpone the filing of a registration statement on Form S‑3 for up to 90 days once in a twelve month period if our board of directors determines that the filing would be seriously detrimental to us or our stockholders. We will not be required to file such a registration statement during the period that is 60 days before and 180 days after the effective date of a registration initiated by us.
These registration rights will terminate upon the earlier to occur of the closing of a deemed liquidation event or when the shares held by and issuable to Intel and its affiliates may be sold without registration in compliance with Rule 144 of the Securities Act. Intel and its affiliates have entered into agreements with the underwriters prohibiting the exercise of their registration rights for 180 days following the date of this prospectus. For a description of these agreements, see “Underwriters.”
Intel Corporation Form S‑3 Registration Rights
At any time after we are eligible to file a registration statement on Form S‑3, Intel, can request that we register all or a portion of their shares on Form S‑3. This right is limited to one registration statement filing in any twelve month period. We may postpone the filing of a registration statement for Intel’s registrable securities on Form S‑3 one time in a twelve month period for up to 90 days if our board of directors determines that such a filing would be materially detrimental to us and our stockholders. We will not be required to file such a registration statement during the period that is 60 days before and 180 days after the effective date of a registration initiated by us.
These registration rights will terminate upon the earlier to occur of the closing of a deemed liquidation event or when the shares held by and issuable to Intel and its affiliates may be sold without registration in compliance with Rule 144 of the Securities Act. Intel and its affiliates have entered into agreements with the underwriters not to make any demand for or exercise their registration rights for 180 days following the date of this prospectus. For a description of these agreements, see “Underwriters.”
Registration Expenses
We will pay all expenses incurred in connection with each of the registrations described above, except for underwriters’ and brokers’ discounts and commissions. However, we will not pay for any expenses of any demand registration or Form S‑3 registration if the request is subsequently withdrawn by a majority of the holders requesting that we file such a registration statement, subject to limited exceptions.
Termination of Registration Rights
The registration rights will terminate upon the earlier to occur of the closing of a deemed liquidation event or, with respect to a particular holder of registrable securities, when the shares held by and issuable to such holder may be sold without registration in compliance with Rule 144 of the Securities Act. Holders of substantially all of our shares with these registration rights have entered into agreements with the underwriters prohibiting the exercise of their registration rights for 180 days following the date of this prospectus. For a description of these agreements, see “Underwriters.”
Defensive Measures
Certain provisions of Delaware law, our restated certificate of incorporation and our restated bylaws may have the effect of delaying, deferring or discouraging another person from acquiring control of our company. These provisions, which are summarized below, are expected to discourage certain types of coercive takeover practices and

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inadequate takeover bids and encourage persons seeking to acquire control of our company to first negotiate with our board of directors.
Section 203 of the Delaware General Corporation Law
Upon completion of this offering, we will be subject to the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a “business combination” with an “interested stockholder” for a three‑year period following the time that this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed manner. Under Section 203, a business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following conditions:
before the stockholder became interested, our board of directors approved either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock plans in some instances, but not the outstanding voting stock owned by the interested stockholder; or
at or after the time the stockholder became interested, the business combination was approved by our board of directors and authorized at an annual or special meeting of the stockholders by the affirmative vote of at least two‑thirds of the outstanding voting stock which is not owned by the interested stockholder.
Section 203 defines a business combination to include:
any merger or consolidation involving the corporation and the interested stockholder;
any sale, transfer, lease, pledge or other disposition involving the interested stockholder of 10% or more of the assets of the corporation;
subject to exceptions, any transaction that results in the issuance of transfer by the corporation of any stock of the corporation to the interested stockholder;
subject to exceptions, any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; and
the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.
In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the outstanding voting stock of the corporation and any entity or person affiliated with or controlling or controlled by the entity or person.
Restated Certificate of Incorporation and Restated Bylaw Provisions
Our restated certificate of incorporation and our restated bylaws will include a number of provisions that may have the effect of deterring hostile takeovers, or delaying or preventing changes in control of our management team or changes in our board of directors or our governance or policy, including the following:
Board of Directors Vacancies. Our restated bylaws and certificate of incorporation will authorize generally only our board of directors to fill vacant directorships resulting from any cause or created by the expansion of our board of directors. In addition, the number of directors constituting our board of directors may be set only by resolution adopted by a majority vote of our entire board of directors. These provisions prevent a stockholder from increasing the size of our board of directors and gaining control of our board of directors by filling the resulting vacancies with its own nominees.

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Classified Board. Our restated certificate of incorporation and restated bylaws will provide that our board is classified into three classes of directors. The existence of a classified board could delay a successful tender offeror from obtaining majority control of our board of directors, and the prospect of that delay might deter a potential offeror.
Stockholder Action. Our restated certificate of incorporation will provide that our stockholders may not take action by written consent, but may only take action at annual or special meetings of our stockholders. Stockholders will not be permitted to cumulate their votes for the election of directors. Our restated bylaws will further provide that special meetings of our stockholders may be called only by a majority of our entire board of directors. We also anticipate that our bylaws will limit the business that may be conducted at an annual meeting of stockholders to those matters properly brought before the meeting.
Holding Requirements for Stockholder Proposals and Director Nominations. Our restated bylaws will provide for continuous, beneficial ownership requirements of our common stock for stockholders seeking to bring business before our annual meeting of stockholders or to nominate candidates for election as directors at our annual meeting of stockholders. These provisions may delay or preclude our stockholders from bringing matters before our annual meeting of stockholders and from making nominations for directors at our annual meeting of stockholders.
Advance Notice Requirements for Stockholder Proposals and Director Nominations. Our restated bylaws will provide advance notice procedures for stockholders seeking to bring business before our annual meeting of stockholders or to nominate candidates for election as directors at our annual meeting of stockholders. Our restated bylaws also will specify certain requirements regarding the form and content of a stockholder’s notice. These provisions may preclude our stockholders from bringing matters before our annual meeting of stockholders or from making nominations for directors at our annual meeting of stockholders.
Amendment to Certificate of Incorporation and Bylaws. Certain amendments to our certificate of incorporation will require approval by the holders of at least two‑thirds of our outstanding common stock. An amendment to our bylaws will require the approval of a majority of our entire board of directors or approval by the holders of at least two‑thirds of our outstanding common stock.
Issuance of Undesignated Preferred Stock. We anticipate that after the filing of our restated certificate of incorporation, our board of directors will have the authority, without further action by the stockholders, to issue up to                           shares of undesignated preferred stock with rights and preferences, including voting rights, designated from time to time by the board of directors. The existence of authorized but unissued shares of preferred stock enables our board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise.
Choice of Forum
Our restated certificate of incorporation will provide that the Court of Chancery of the State of Delaware 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, our restated certificate of incorporation or our restated bylaws; any action to interpret, apply, enforce or determine the validity of our restated certificate of incorporation or bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. The enforceability of similar choice of forum provisions in other companies’ certificates of incorporation has been challenged in legal proceedings and it is possible that a court could find these types of provisions to be inapplicable or unenforceable.
Stock Exchange Listing
We intend to apply for listing of our common stock on                                           under the symbol “CLDR.”
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is                           .

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SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for our common stock, and we cannot predict the effect, if any, that market sales of shares of our common stock or the availability of shares of our common stock for sale will have on the market price of our common stock prevailing from time to time. Nevertheless, sales of substantial amounts of our common stock, including shares issued upon exercise of outstanding options, in the public market after this offering could adversely affect market prices prevailing from time to time and could impair our ability to raise capital through the sale of our equity securities.
Upon the completion of this offering, based on the number of shares outstanding as of                         , we will have          shares of common stock outstanding. Of these outstanding shares, all of the          shares sold in this offering will be freely tradable, except that any shares purchased by immediate family members of our officers or directors in the directed share program or by our affiliates, as that term is defined in Rule 144 under the Securities Act, may only be sold in compliance with the limitations described below.
The remaining outstanding shares of our common stock will be deemed restricted securities as defined under Rule 144. Restricted securities may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144 or Rule 701 promulgated under the Securities Act, which rules are summarized below. In addition, all of our stockholders have entered into market standoff agreements with us or lock‑up agreements with the underwriters under which they agreed, subject to specific exceptions, not to sell any of their stock for at least 180 days following the date of this prospectus. Subject to the provisions of Rule 144 or Rule 701, based on an assumed offering date of        , 2017, shares will be available for sale in the public market as follows:
Beginning on the date of this prospectus,          shares sold in this offering will be immediately available for sale in the public market; and
Beginning 180 days after the date of this prospectus,          additional shares will become eligible for sale in the public market, of which          shares will be freely tradable under Rule 144,          shares will be held by affiliates and subject to the volume and other restrictions of Rule 144, as described below, and the remaining          shares will be held by non‑affiliates and subject to the holding period requirements of Rule 144.
Lock‑Up Agreements
Our directors, executive officers, the holders of substantially all of our common stock and securities convertible into or exchangeable for our common stock have entered into lock‑up agreements with the underwriters prior to the commencement of this offering pursuant to which each of these persons or entities, with limited exceptions, for a period of 180 days after the date of this prospectus, may not, without the prior written consent of Morgan Stanley & Co. LLC, offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of our common stock or any securities convertible into or exercisable or exchangeable for our common stock. See “Underwriters” for additional information.
Rule 144
In general, under Rule 144 as currently in effect, once we have been subject to public company reporting requirements for at least 90 days, a person who is not deemed to have been one of our affiliates for purposes of the Securities Act at any time during the 90 days preceding a sale and who has beneficially owned the shares proposed to be sold for at least six months, including the holding period of any prior owner other than our affiliates, is entitled to sell those shares without complying with the manner of sale, volume limitation or notice provisions of Rule 144, subject to compliance with the public information requirements of Rule 144. If such a person has beneficially owned the shares proposed to be sold for at least one year, including the holding period of any prior owner other than our affiliates, then that person is entitled to sell those shares without complying with any of the requirements of Rule 144.

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In general, under Rule 144, as currently in effect, our affiliates or persons selling shares on behalf of our affiliates are entitled to sell upon expiration of the lock‑up agreements described above, within any three‑month period beginning 90 days after the date of this prospectus, a number of shares that does not exceed the greater of:
1% of the number of shares of common stock then outstanding, which will equal approximately          shares immediately after this offering; or
The average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to that sale.
Sales under Rule 144 by our affiliates or persons selling shares on behalf of our affiliates are also subject to certain manner of sale provisions and notice requirements and to the availability of current public information about us.
Rule 701
Rule 701 generally allows a stockholder who purchased shares of our common stock pursuant to a written compensatory plan or contract and who is not deemed to have been an affiliate of our company during the immediately preceding 90 days to sell these shares in reliance upon Rule 144, but without being required to comply with the public information and holding period requirements of Rule 144. Rule 701 also permits affiliates of our company to sell their Rule 701 shares under Rule 144 without complying with the holding period requirements of Rule 144. All holders of Rule 701 shares, however, are required to wait until 90 days after the date of this prospectus before selling those shares pursuant to Rule 701.
Registration Statement
We intend to file a registration statement on Form S‑8 under the Securities Act covering all of the shares of our common stock subject to outstanding stock options and RSUs and reserved for issuance under our equity incentive plans. We expect to file this registration statement on, or as soon as practicable after, the effective date of this prospectus. However, the shares registered on Form S‑8 will not be eligible for resale until expiration of the lock‑up agreements and market standoff provisions to which they are subject.
Registration Rights
We have granted demand registration rights, rights to participate in offerings that we initiate and Form S‑3 registration rights to certain of our stockholders to sell our common stock. For a further description of these rights, see “Description of Capital Stock—Registration Rights.”

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MATERIAL U.S. FEDERAL INCOME TAX CONSIDERATIONS FOR
NON‑U.S. HOLDERS OF COMMON STOCK
This section summarizes the material U.S. federal income tax considerations relating to the acquisition, ownership and disposition of our common stock by “non‑U.S. holders” (as defined below) pursuant to this offering. This summary does not provide a complete analysis of all potential U.S. federal income tax considerations relating thereto. The information provided below is based upon provisions of the Internal Revenue Code of 1986, as amended, or the Code, Treasury regulations promulgated thereunder, administrative rulings, and judicial decisions currently in effect. These authorities may change at any time, possibly retroactively, or the Internal Revenue Service (IRS) might interpret the existing authorities differently. In either case, the tax considerations of owning or disposing of our common stock could differ from those described below. As a result, we cannot assure you that the tax consequences described in this discussion will not be challenged by the IRS or will be sustained by a court if challenged by the IRS.
This discussion assumes that a non‑U.S. holder holds shares of our common stock as a capital asset within the meaning of Section 1221 of the Code (generally, for investment purposes). This summary does not address the tax considerations arising under the laws of any non‑U.S., state or local jurisdiction, or, except to the limited extent provided below, under U.S. federal estate and gift tax laws. In addition, this discussion does not address tax considerations applicable to an investor’s particular circumstances or to investors that may be subject to special tax rules, including, without limitation:
banks, insurance companies or other financial institutions;
corporations that accumulate earnings to avoid U.S. federal income tax;
persons subject to the alternative minimum tax or the Medicare contribution tax;
tax exempt organizations or tax qualified retirement plans;
controlled foreign corporations or passive foreign investment companies;
persons who acquired our common stock as compensation for services;
dealers in securities or currencies;
traders in securities that elect to use a mark to market method of accounting for their securities holdings;
persons that own, or are deemed to own, more than 5% of our capital stock (except to the extent specifically set forth below);
certain former citizens or long term residents of the United States;
persons who hold our common stock as a position in a hedging transaction, “straddle,” “conversion transaction” or other risk reduction transaction; or
persons deemed to sell our common stock under the constructive sale provisions of the Code.
In addition, if a partnership or entity classified as a partnership for U.S. federal income tax purposes is a beneficial owner of our common stock, the tax treatment of a partner in the partnership or an owner of the entity will depend upon the status of the partner or other owner and the activities of the partnership or other entity. Accordingly, this summary does not address tax considerations applicable to partnerships that hold our common stock, and partners in such partnerships should consult their own tax advisors.
INVESTORS CONSIDERING THE PURCHASE OF OUR COMMON STOCK SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S. FEDERAL INCOME AND ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE CONSEQUENCES OF FOREIGN, STATE OR LOCAL LAWS, AND TAX TREATIES.

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Non‑U.S. Holder Defined
For purposes of this summary, a “non‑U.S. holder” is any beneficial owner of our common stock, other than a partnership, that is not, for U.S. federal income tax purposes, any of the following:
an individual who is a citizen or resident of the United States;
a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized under the laws of the United States, any state therein or the District of Columbia;
a trust if it (i) is subject to the primary supervision of a U.S. court and one of more U.S. persons have authority to control all substantial decisions of the trust or (ii) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or
an estate whose income is subject to U.S. income tax regardless of source.
If you are an individual who is a non‑U.S. citizen, you may, in many cases, be deemed to be a resident alien, as opposed to a nonresident alien, by virtue of being present in the United States for at least 31 days in the calendar year and for an aggregate of at least 183 days during a three‑year period ending in the current calendar year. For these purposes, all the days present in the current year, one‑third of the days present in the immediately preceding year, and onesixth of the days present in the second preceding year are counted. Resident aliens are subject to U.S. federal income tax as if they were U.S. citizens. Such an individual is urged to consult his or her own tax advisor regarding the U.S. federal income tax consequences of the ownership or disposition of our common stock.
Dividends
We do not expect to declare or make any distributions on our common stock in the foreseeable future. If we do pay dividends on shares of our common stock, however, such distributions will constitute dividends for U.S. federal income tax purposes to the extent paid from our current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Distributions in excess of our current and accumulated earnings and profits will constitute a return of capital that is applied against and reduces, but not below zero, a nonU.S. holder’s adjusted tax basis in shares of our common stock. Any remaining excess will be treated as gain realized on the sale or other disposition of our common stock. See “—Sale of Common Stock” below.
Any dividend paid to a non‑U.S. holder on our common stock that is not effectively connected with a non‑U.S. holder’s conduct of a trade or business in the United States will generally be subject to U.S. withholding tax at a 30% rate. The withholding tax might apply at a reduced rate, however, under the terms of an applicable income tax treaty between the United States and the non‑U.S. holder’s country of residence. You should consult your own tax advisors regarding your entitlement to benefits under a relevant income tax treaty. Generally, in order for us or our paying agent to withhold tax at a lower treaty rate, a non‑U.S. holder must certify its entitlement to treaty benefits. A non‑U.S. holder generally can meet this certification requirement by providing a Form W‑8BEN, W‑8BENE or other appropriate form (or any successor or substitute form thereof) to us or our paying agent. If the non‑U.S. holder holds the stock through a financial institution or other agent acting on the holder’s behalf, the holder will be required to provide appropriate documentation to the holder’s agent. The holder’s agent will then be required to provide certification to us or our paying agent, either directly or through other intermediaries. If you are eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty, you may obtain a refund or credit of any excess amounts withheld by filing an appropriate claim for a refund with the IRS in a timely manner.
Dividends received by a non‑U.S. holder that are effectively connected with a U.S. trade or business conducted by the non‑U.S. holder, and if required by an applicable income tax treaty between the United States and the non‑U.S. holder’s country of residence, are attributable to a permanent establishment maintained by the non‑U.S. holder in the United States, are not subject to U.S. withholding tax. To obtain this exemption, a non‑U.S. holder must provide us or our paying agent with an IRS Form W‑8ECI properly certifying such exemption. Such effectively connected dividends, although not subject to withholding tax, are taxed at the same graduated rates applicable to U.S. persons, net of certain deductions and credits. In addition to being taxed at graduated tax rates, dividends received by a corporate non‑U.S. holder that are effectively connected with a

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U.S. trade or business of the corporate non‑U.S. holder may also be subject to a branch profits tax at a rate of 30% or such lower rate as may be specified by an applicable tax treaty.
Sale of Common Stock
Subject to the discussion below regarding Backup Withholding and Information Reporting and the Foreign Account Tax Compliance Act, non‑U.S. holders will generally not be subject to U.S. federal income tax on any gains realized on the sale, exchange or other disposition of our common stock unless:
the gain (i) is effectively connected with the conduct by the non‑U.S. holder of a U.S. trade or business and (ii) if required by an applicable income tax treaty between the United States and the non‑U.S. holder’s country of residence, is attributable to a permanent establishment maintained by the non‑U.S. holder in the United States (in which case the special rules described below apply);
the non‑U.S. holder is an individual who is present in the United States for 183 days or more in the taxable year of the sale, exchange or other disposition of our common stock, and certain other requirements are met (in which case the gain would be subject to a flat 30% tax, or such reduced rate as may be specified by an applicable income tax treaty, which may be offset by U.S. source capital losses, even though the individual is not considered a resident of the United States); or
the rules of the Foreign Investment in Real Property Tax Act (FIRPTA) treat the gain as effectively connected with a U.S. trade or business.
The FIRPTA rules may apply to a sale, exchange or other disposition of our common stock if we are, or were within the shorter of the five‑year period preceding the disposition and the non‑U.S. holder’s holding period, a “U.S. real property holding corporation” (USRPHC). In general, we would be a USRPHC if interests in U.S. real estate comprised at least half of the value of our business assets. We do not believe that we are a USRPHC and we do not anticipate becoming one in the future. Even if we become a USRPHC, as long as our common stock is regularly traded on an established securities market, such common stock will be treated as U.S. real property interests only if beneficially owned by a non‑U.S. holder that actually or constructively owned more than 5% of our outstanding common stock at some time within the five‑year period preceding the disposition.
If any gain from the sale, exchange or other disposition of our common stock, (i) is effectively connected with a U.S. trade or business conducted by a non‑U.S. holder and (ii) if required by an applicable income tax treaty between the United States and the non‑U.S. holder’s country of residence, is attributable to a permanent establishment maintained by such non‑U.S. holder in the United States, then the gain generally will be subject to U.S. federal income tax at the same graduated rates applicable to U.S. persons, net of certain deductions and credits. If the non‑U.S. holder is a corporation, under certain circumstances, that portion of its earnings and profits that is effectively connected with its U.S. trade or business, subject to certain adjustments, generally would be subject also to a “branch profits tax” at a rate of 30% or such lower rate as may be specified by an applicable income tax treaty.
U.S. Federal Estate Tax
The estates of nonresident alien individuals generally are subject to U.S. federal estate tax on property with a U.S. situs. Because we are a U.S. corporation, our common stock will be U.S. situs property and therefore will be included in the taxable estate of a nonresident alien decedent, unless an applicable estate tax treaty between the United States and the decedent’s country of residence provides otherwise.
Backup Withholding and Information Reporting
The Code and the Treasury regulations require those who make specified payments to report the payments to the IRS. Among the specified payments are dividends and proceeds paid by brokers to their customers. The required information returns enable the IRS to determine whether the recipient properly included the payments in income. This reporting regime is reinforced by “backup withholding” rules. These rules require the payors to withhold tax from payments subject to information reporting if the recipient fails to cooperate with the reporting regime by failing to provide his taxpayer identification number to the payor, furnishing an incorrect identification number, or failing to

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report interest or dividends on his returns. The backup withholding tax rate is currently 28%. The backup withholding rules do not apply to payments to foreign corporations, provided they establish such exemption.
Payments to non‑U.S. holders of dividends on common stock generally will not be subject to backup withholding, and payments of proceeds made to non‑U.S. holders by a broker upon a sale of common stock will not be subject to information reporting or backup withholding, in each case so long as the non‑U.S. holder certifies its nonresident status (and we or the applicable paying agent do not have actual knowledge or reason to know the holder is a U.S. person or that the conditions of any other exemption are not, in fact, satisfied) or otherwise establishes an exemption. The certification procedures to claim treaty benefits described under “— Dividends” above will generally satisfy the certification requirements necessary to avoid the backup withholding tax. We must report annually to the IRS any dividends paid to each non‑U.S. holder and the tax withheld, if any, with respect to these dividends. Copies of these reports may be made available to tax authorities in the country where the non‑U.S. holder resides.
Under the Treasury regulations, the payment of proceeds from the disposition of shares of our common stock by a non‑U.S. holder made to or through a U.S. office of a broker generally will be subject to information reporting and backup withholding unless the beneficial owner certifies, under penalties of perjury, among other things, its status as a non‑U.S. holder (and the broker does not have actual knowledge or reason to know the holder is a U.S. person) or otherwise establishes an exemption. The payment of proceeds from the disposition of shares of our common stock by a non‑U.S. holder made to or through a non‑U.S. office of a broker generally will not be subject to backup withholding and information reporting. Information reporting, but not backup withholding, however, will apply to a payment of proceeds, even if that payment is made outside of the United States, if you sell our common stock through a non‑U.S. office of a broker that is:
a U.S. person (including a foreign branch or office of such person);
a “controlled foreign corporation” for U.S. federal income tax purposes;
a foreign person 50% or more of whose gross income from certain periods is effectively connected with a U.S. trade or business; or
a foreign partnership if at any time during its tax year (a) one or more of its partners are U.S. persons who, in the aggregate, hold more than 50% of the income or capital interests of the partnership or (b) the foreign partnership is engaged in a U.S. trade or business;
unless the broker has documentary evidence that the beneficial owner is a non‑U.S. holder and certain other conditions are satisfied, or the beneficial owner otherwise establishes an exemption (and the broker has no actual knowledge or reason to know to the contrary).
Backup withholding is not an additional tax. Any amounts withheld from a payment to a holder of common stock under the backup withholding rules can be credited against any U.S. federal income tax liability of the holder, if any, and may entitle the holder to a refund, provided that the required information is furnished to the IRS in a timely manner.
Foreign Account Tax Compliance Act
In addition to, and separately from the withholding rules described above, U.S. federal withholding taxes may apply under the Foreign Account Tax Compliance Act (FATCA) on certain types of payments, including dividends and the gross proceeds of a disposition of our common stock, made to non‑U.S. financial institutions and certain other non‑U.S. entities. Specifically, a 30% withholding tax may be imposed on dividends on, or gross proceeds from the sale or other disposition of, our common stock paid to a “foreign financial institution” or a “non‑financial foreign entity” (each as defined in the Code), unless (1) the foreign financial institution undertakes certain diligence and reporting obligations, (2) the non‑financial foreign entity either certifies it does not have any “substantial United States owners” (as defined in the Code) or furnishes identifying information regarding each substantial United States owner, or (3) the foreign financial institution or non‑financial foreign entity otherwise qualifies for an exemption from these rules. The 30% federal withholding tax described in this paragraph cannot be reduced under an income

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tax treaty with the United States. If the payee is a foreign financial institution and is subject to the diligence and reporting requirements in (1) above, it must enter into an agreement with the U.S. Department of the Treasury requiring, among other things, that it undertake to identify accounts held by certain “specified United States persons” or “United States‑owned foreign entities” (each as defined in the Code), annually report certain information about such accounts, and withhold 30% on certain payments to non‑compliant foreign financial institutions and certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the United States governing FATCA may be subject to different rules.
Under applicable Treasury Regulations and IRS guidance, FATCA withholding as described above currently apply to payments of dividends on our common stock, and will also apply to payments of gross proceeds from the sale or other disposition of our common stock made on or after January 1, 2019.
Prospective investors should consult their tax advisors regarding the potential application of withholding under FATCA to their investment in our common stock.
THE PRECEDING DISCUSSION OF U.S. FEDERAL TAX CONSIDERATIONS IS FOR GENERAL INFORMATION ONLY. IT IS NOT TAX ADVICE. EACH PROSPECTIVE INVESTOR SHOULD CONSULT ITS OWN TAX ADVISOR REGARDING THE PARTICULAR U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF PURCHASING, HOLDING AND DISPOSING OF OUR COMMON STOCK, INCLUDING THE CONSEQUENCES OF ANY PROPOSED CHANGE IN APPLICABLE LAWS.

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UNDERWRITERS
Under the terms and subject to the conditions in an underwriting agreement dated the date of this prospectus, the underwriters named below, for whom Morgan Stanley & Co. LLC is acting as representative, have severally agreed to purchase, and we have agreed to sell to them, severally, the number of shares indicated below:
Name
Number of Shares
Morgan Stanley & Co. LLC
 
 
 
Total:
 
The underwriters and the representative are collectively referred to as the “underwriters” and the “representative,” respectively. The underwriters are offering the shares of common stock subject to their acceptance of the shares from us and subject to prior sale. The underwriting agreement provides that the obligations of the several underwriters to pay for and accept delivery of the shares of common stock offered by this prospectus are subject to the approval of certain legal matters by their counsel and to certain other conditions. The underwriters are obligated to take and pay for all of the shares of common stock offered by this prospectus if any such shares are taken. However, the underwriters are not required to take or pay for the shares covered by the underwriters’ overallotment option described below.
The underwriters initially propose to offer part of the shares of common stock directly to the public at the offering price listed on the cover page of this prospectus and part to certain dealers at a price that represents a concession not in excess of $           per share under the public offering price. After the initial offering of the shares of common stock, the offering price and other selling terms may from time to time be varied by the representative. Sales of common stock made outside of the United States may be made by affiliates of the underwriters.
We have granted to the underwriters an option, exercisable for 30 days from the date of this prospectus, to purchase up to                           additional shares of common stock at the public offering price listed on the cover page of this prospectus, less underwriting discounts and commissions. The underwriters may exercise this option solely for the purpose of covering overallotments, if any, made in connection with the offering of the shares of common stock offered by this prospectus. To the extent the option is exercised, each underwriter will become obligated, subject to certain conditions, to purchase about the same percentage of the additional shares of common stock as the number listed next to the underwriter’s name in the preceding table bears to the total number of shares of common stock listed next to the names of all underwriters in the preceding table.
The following table shows the per share and total public offering price, underwriting discounts and commissions, and proceeds before expenses to us. These amounts are shown assuming both no exercise and full exercise of the underwriters’ overallotment option.
 
 
 
Total
 
Per
Share
 
No
Exercise
 
Full
Exercise
Public offering price
$
 
$
 
$
Underwriting discounts and commissions:
 
 
 
 
 
Proceeds, before expenses
$
 
$
 
$
The estimated offering expenses payable by us, exclusive of the underwriting discounts and commissions, are approximately $           million. We have agreed to reimburse the underwriters for their expenses relating to clearance of this offering with the Financial Industry Regulatory Authority up to $           .
The underwriters have informed us that they do not intend sales to discretionary accounts to exceed 5% of the total number of shares of common stock offered by them.

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We intend to apply to list our common stock on the           under the trading symbol “CLDR.”
We and all directors and officers and the holders of all of our outstanding stock and equity securities have agreed that, without the prior written consent of Morgan Stanley & Co. LLC on behalf of the underwriters, we and they will not, during the period ending 180 days after the date of this prospectus, or the restricted period:
offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any shares of common stock or any securities convertible into or exercisable or exchangeable for shares of common stock;
file any registration statement with the Securities and Exchange Commission relating to the offering of any shares of common stock or any securities convertible into or exercisable or exchangeable for common stock; or
enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common stock;
whether any such transaction described above is to be settled by delivery of common stock or such other securities, in cash or otherwise. In addition, we and each such person agrees that, without the prior written consent of Morgan Stanley & Co. LLC, on behalf of the underwriters, we or such other person will not, during the restricted period, make any demand for, or exercise any right with respect to, the registration of any shares of common stock or any security convertible into or exercisable or exchangeable for common stock.
The restrictions in the immediately preceding paragraph do not apply to:
transactions by a security holder relating to shares of common stock or other securities acquired in open market transactions after the completion of the offering of the shares, provided that no filing under Section 16(a) of the the Securities Exchange Act of 1934, or the Exchange Act, is required or voluntarily made in connection with subsequent sales of common stock or other securities acquired in such open market transactions;
the sale of shares of common stock pursuant to the underwriting agreement;
transfers of shares of common stock or any securities convertible into or exercisable or exchangeable for common stock by a security holder (i) as a bona fide gift, or gifts, or for bona fide estate planning purposes, (ii) by will or intestacy or (iii) to an immediate family member or a trust for the direct or indirect benefit of the security holder;
transfers or distributions of shares of common stock or any securities convertible into or exercisable or exchangeable for common stock by a (i) security holder that is a corporation, partnership, limited liability company or other business entity (A) to another corporation, partnership, limited liability company or other business entity that controls, is controlled by or managed by or is under common control with such security holder or (B) as part of a distribution to an equity holder of such security holder;
the exercise or settlement of options or restricted stock units granted under a stock incentive plan or other equity award plan described in this prospectus, in each case by a security holder provided that the shares of common stock delivered upon such exercise are subject to the restrictions set forth above and no filing under Section 16(a) of the Exchange Act is required or voluntarily made in connection with such exercise or settlement within sixty days after the date of this prospectus, and after such sixtieth day, any filing under Section 16(a) of the Exchange Act shall clearly indicate in the footnotes thereto that (i) the filing relates to the exercise or settlement of options or restricted stock units granted under a stock incentive plan or other equity award plan, (ii) no shares were sold by the reporting person and (iii) the shares received upon exercise or settlement of the option or restricted stock unit or exercise of warrants are subject to the restrictions set forth above;

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the transfer or disposition by a security holder of shares of common stock or any securities convertible into common stock by a security holder to us upon a vesting or settlement event of our securities or upon the exercise of options, restricted stock units or warrants to purchase our securities, in each case on a “cashless exercise” or “net exercise” basis to the extent permitted by the instruments representing such options, restricted stock units or warrants so long as such “cashless exercise” or “net exercise” is effected solely by the surrender of outstanding options, restricted stock units or warrants to us and our cancellation of all or a portion thereof to pay the exercise price and/or withholding tax and remittance obligations, provided no filing under Section 16(a) of the Exchange Act is required or voluntarily made in connection with such transfer or disposition within sixty days after the date of this prospectus, and after such sixtieth day, any filing under Section 16(a) of the Exchange Act shall clearly indicate in the footnotes thereto that (i) the filing relates to the transfer or disposition described in this paragraph and (ii) no shares were sold by the reporting person;
the exercise of warrants outstanding described in this prospectus, provided that the shares of common stock delivered upon such exercise are subject to the restrictions set forth above and no filing under Section 16(a) of the Exchange Act is required or voluntarily made during the applicable restricted period;
the establishment of a trading plan pursuant to Rule 10b51 under the Exchange Act for the transfer of shares of common stock, provided that such plan does not provide for the transfer of common stock during the 180day restricted period and no public announcement or filing under the Exchange Act regarding the establishment of such plan shall be required of or voluntarily made by or on behalf of the security holder or us;
transfers of shares of common stock or any securities convertible into or exercisable or exchangeable for common stock that occurs pursuant to a settlement agreement not involving a disposition for value, related to the distribution of assets in connection with the dissolution of a marriage or civil union, by operation of law pursuant to a qualified domestic order in connection with a divorce settlement or pursuant to any other court order provided that the shares of common stock delivered upon such transfer are subject to the restrictions set forth above and no filing under Section 16(a) of the Exchange Act is required or voluntarily made during the applicable restricted period unless such filing clearly indicates in the footnotes thereto that such transfer occurred by operation of law and pursuant to a qualified domestic order or in connection with a divorce settlement;
the transfer by a security holder of shares of our common stock or any security convertible into or exercisable or exchangeable for common stock to us, pursuant to agreements under which we have the option to repurchase such shares;
the conversion or reclassification of the outstanding preferred stock or other classes of common stock into shares of common stock in connection with the consummation of this offering and, if applicable, the conversion of highvote common stock to lowvote common stock in accordance with our certificate of incorporation, provided that any such shares of common stock received upon such conversion or reclassification are subject to the restrictions set forth above; and
the transfer by a security holder of shares of our common stock or any security convertible into or exercisable or exchangeable for common stock pursuant to a bona fide thirdparty tender offer, merger, consolidation or other similar transaction made to all holders of the common stock involving a change of control of us, provided that such transaction has been approved by our board of directors and provided further that if the tender offer, merger, consolidation or other such transaction is not completed, the common stock owned by the security holder shall remain subject to the restrictions set forth above.
provided that in the case of any transfer or distribution pursuant to the third and fourth bullets above, it shall be a condition of the transfer or distribution that each transferee, donee or distributee shall sign and deliver a copy of the lockup agreement prior to or upon such transfer and no filing under Section 16(a) of the Exchange Act (other than, in the case of the third bullet above, a Form 5) reporting a reduction in beneficial ownership of shares of common stock shall be required or shall be made voluntarily during the applicable restricted period.

128


Morgan Stanley & Co. LLC, in its sole discretion, may release the common stock and other securities subject to the lockup agreements described above in whole or in part at any time.
In order to facilitate the offering of the common stock, the underwriters may engage in transactions that stabilize, maintain or otherwise affect the price of the common stock. Specifically, the underwriters may sell more shares than they are obligated to purchase under the underwriting agreement, creating a short position. A short sale is covered if the short position is no greater than the number of shares available for purchase by the underwriters under the overallotment option described above. The underwriters can close out a covered short sale by exercising the overallotment option or purchasing shares in the open market. In determining the source of shares to close out a covered short sale, the underwriters will consider, among other things, the open market price of shares compared to the price available under the overallotment option. The underwriters may also sell shares in excess of the overallotment option, creating a naked short position. The underwriters must close out any naked short position by purchasing shares in the open market. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the common stock in the open market after pricing that could adversely affect investors who purchase shares of common stock in this offering. As an additional means of facilitating this offering, the underwriters may bid for, and purchase, shares of common stock in the open market to stabilize the price of the common stock. These activities may raise or maintain the market price of the common stock above independent market levels or prevent or retard a decline in the market price of the common stock. The underwriters are not required to engage in these activities and may end any of these activities at any time.
We and the underwriters have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act.
A prospectus in electronic format may be made available on websites maintained by one or more underwriters, or selling group members, if any, participating in this offering. The representative may agree to allocate a number of shares of common stock to underwriters for sale to their online brokerage account holders. Internet distributions will be allocated by the representative to underwriters that may make Internet distributions on the same basis as other allocations.
The underwriters and their respective affiliates are full service financial institutions engaged in various activities, which may include securities trading, commercial and investment banking, financial advisory, investment management, investment research, principal investment, hedging, financing and brokerage activities. Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for us, for which they received or will receive customary fees and expenses.
In addition, in the ordinary course of their various business activities, the underwriters and their respective affiliates may make or hold a broad array of investments and actively trade debt and equity securities (or related derivative securities) and financial instruments (including bank loans) for their own account and for the accounts of their customers and may at any time hold long and short positions in such securities and instruments. Such investment and securities activities may involve our securities and instruments. The underwriters and their respective affiliates may also make investment recommendations or publish or express independent research views in respect of such securities or instruments and may at any time hold, or recommend to clients that they acquire, long or short positions in such securities and instruments.
In the ordinary course of business, we sold, and may in the future sell, solutions to one or more of the underwriters or their respective affiliates in armslength transactions on market competitive terms.
Pricing of the Offering
Prior to this offering, there has been no public market for our common stock. The initial public offering price will be determined by negotiations between us and the representative. Among the factors to be considered in determining the initial public offering price will be our future prospects and those of our industry in general, our sales, earnings and certain other financial and operating information in recent periods, and the priceearnings ratios, pricesales ratios, market prices of securities, and certain financial and operating information of companies engaged in activities similar to ours.

129


Selling Restrictions
European Economic Area
In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive, each a Relevant Member State, an offer to the public of any shares of our common stock may not be made in that Relevant Member State, except that an offer to the public in that Relevant Member State of any shares of our common stock may be made at any time under the following exemptions under the Prospectus Directive, if they have been implemented in that Relevant Member State:
(a)
to any legal entity which is a qualified investor as defined in the Prospectus Directive;
(b)
to fewer than 100 or, if the Relevant Member State has implemented the relevant provision of the 2010 PD Amending Directive, 150, natural or legal persons (other than qualified investors as defined in the Prospectus Directive), as permitted under the Prospectus Directive, subject to obtaining the prior consent of the representatives for any such offer; or
(c)
in any other circumstances falling within Article 3(2) of the Prospectus Directive, provided that no such offer of shares of our common stock shall result in a requirement for the publication by us or any underwriter of a prospectus pursuant to Article 3 of the Prospectus Directive.
For the purposes of this provision, the expression an “offer to the public” in relation to any shares of our common stock in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any shares of our common stock to be offered so as to enable an investor to decide to purchase any shares of our common stock, as the same may be varied in that Member State by any measure implementing the Prospectus Directive in that Member State, the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 PD Amending Directive, to the extent implemented in the Relevant Member State), and includes any relevant implementing measure in the Relevant Member State, and the expression “2010 PD Amending Directive” means Directive 2010/73/EU.
United Kingdom
Each underwriter has represented and agreed that:
(a)
it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act 2000 (FSMA) received by it in connection with the issue or sale of the shares of our common stock in circumstances in which Section 21(1) of the FSMA does not apply to us; and
(b)
it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the shares of our common stock in, from or otherwise involving the United Kingdom.


130


LEGAL MATTERS
Fenwick & West LLP, Mountain View, California will pass upon the validity of the issuance of the shares of common stock offered by this prospectus. Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, Redwood City, California, is representing the underwriters in this offering.
EXPERTS
Ernst & Young LLP, independent registered public accounting firm, has audited our consolidated financial statements at January 31, 2016, and for the year then ended, as set forth in their report. We have included our financial statements in the prospectus and elsewhere in the registration statement in reliance on Ernst & Young LLP’s report, given on their authority as experts in accounting and auditing.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S‑1 under the Securities Act with respect to the shares of common stock offered hereby. This prospectus, which constitutes a part of the registration statement, does not contain all of the information set forth in the registration statement, some items of which are contained in exhibits to the registration statement as permitted by the rules and regulations of the SEC. For further information with respect to us and our common stock, we refer you to the registration statement, including the exhibits and the consolidated financial statements and notes filed as a part of the registration statement. Statements contained in this prospectus concerning the contents of any contract or any other document are not necessarily complete. If a contract or document has been filed as an exhibit to the registration statement, please see the copy of the contract or document that has been filed. Each statement in this prospectus relating to a contract or document filed as an exhibit is qualified in all respects by the filed exhibit. The exhibits to the registration statement should be reviewed for the complete contents of these contracts and documents. A copy of the registration statement, including the exhibits and the financial statements and notes filed as a part of the registration statement, may be inspected without charge at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549, and copies of all or any part of the registration statement may be obtained from the SEC upon the payment of fees prescribed by it. You may call the SEC at 1‑800‑SEC‑0330 for more information on the operation of the public reference facilities. The SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements and other information regarding companies that file electronically with it.
As a result of this offering, we will become subject to the information and reporting requirements of the Exchange Act and, in accordance with this law, will file periodic reports, proxy statements and other information with the SEC. These periodic reports, proxy statements and other information will be available for inspection and copying at the SEC’s public reference facilities and the website of the SEC referred to above.


131


CLOUDERA, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


F-1


REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors and Stockholders
Cloudera, Inc.

We have audited the accompanying consolidated balance sheet of Cloudera, Inc. as of January 31, 2016, and the related consolidated statements of operations, comprehensive loss, redeemable convertible preferred stock and stockholders’ deficit and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Cloudera, Inc. at January 31, 2016, and the consolidated results of its operations and its cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP
Redwood City, California
December 20, 2016

F-2

CLOUDERA, INC.
Consolidated Balance Sheets
(in thousands, except share and per share data)

 
 
 
 
 
Pro Forma
Stockholders

Equity as of
 
January 31, 2016
 
October 31, 2016
 
October 31, 2016
 
 
 
(unaudited)
ASSETS
 
 
 
 
 
CURRENT ASSETS:
 
 
 
 
 
Cash and cash equivalents
$
35,966

 
$
31,448

 
 
Short-term marketable securities
216,584

 
216,663

 
 
Accounts receivable, net
49,410

 
47,554

 
 
Prepaid expenses and other current assets
8,799

 
7,891

 
 
Total current assets
310,759

 
303,556

 
 
Property and equipment, net
12,882

 
14,363

 
 
Marketable securities, noncurrent
145,695

 
41,355

 
 
Intangible assets, net
9,036

 
7,996

 
 
Goodwill
30,551

 
31,516

 
 
Restricted cash
28

 
15,446

 
 
Other assets
3,936

 
3,949

 
 
TOTAL ASSETS
$
512,887

 
$
418,181

 
 
LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
 
 
 
 
 
CURRENT LIABILITIES:
 
 
 
 
 
Accounts payable
$
4,080

 
$
4,403

 
 
Accrued compensation
22,154

 
26,482

 
 
Other accrued liabilities
11,173

 
13,438

 
 
Deferred revenue, current portion
130,635

 
138,308

 
 
Total current liabilities
168,042

 
182,631

 
 
Deferred revenue, less current portion
27,540

 
23,714

 
 
Other liabilities
3,127

 
4,191

 
 
TOTAL LIABILITIES
198,709

 
210,536

 
 
Commitments and contingencies (Note 7)
 
 
 
 
 
Redeemable convertible preferred stock, $0.00005 par value; 74,907,415 shares authorized, issued, and outstanding at January 31, 2016 and October 31, 2016 (unaudited); $670,875 aggregate liquidation preference at January 31, 2016 and October 31, 2016 (unaudited); no shares issued and outstanding, pro forma (unaudited)
657,687

 
657,687

 
$
STOCKHOLDERS’ EQUITY (DEFICIT):
 
 
 
 
 
Preferred stock, $0.00005 par value; no shares authorized, issued and outstanding, at January 31, 2016 and October 31, 2016 (unaudited);        shares authorized, no shares issued and outstanding, pro forma (unaudited)
 
 
 
 
 
Common stock, $0.00005 par value; 150,000,000 and 160,000,000 shares authorized at January 31, 2016 and October 31, 2016 (unaudited), respectively; 35,775,694 and 36,705,536 shares issued and outstanding at January 31, 2016 and October 31, 2016 (unaudited), respectively;          shares authorized,          shares issued and outstanding, pro forma (unaudited)
1

 
2

 
 
Additional paid-in capital
145,914

 
165,023

 
 
Accumulated other comprehensive loss
(744
)
 
(502
)
 
 
Accumulated deficit
(488,680
)
 
(614,565
)
 
 
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)
(343,509
)
 
(450,042
)
 
$
TOTAL LIABILITIES, REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)
$
512,887

 
$
418,181

 
 

The accompanying notes are an integral part of these consolidated financial statements.
F-3

CLOUDERA, INC.
Consolidated Statements of Operations
(in thousands, except share and per share data)


 
 
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
 
 
 
(unaudited)
Revenue:
 
 
 
 
 
Subscription
$
119,150

 
$
82,424

 
$
144,093

Services
46,898

 
33,244

 
44,106

Total revenue
166,048

 
115,668

 
188,199

Cost of revenue:(1) (2)
 
 
 
 
 
Subscription
30,996

 
22,240

 
28,932

Services
45,178

 
33,663

 
36,355

Total cost of revenue
76,174

 
55,903

 
65,287

Gross profit
89,874

 
59,765

 
122,912

Operating expenses:(1) (2)
 
 
 
 
 
Research and development
98,123

 
77,007

 
75,894

Sales and marketing
162,152

 
116,898

 
148,343

General and administrative
34,236

 
26,971

 
24,966

Total operating expenses
294,511

 
220,876

 
249,203

Loss from operations
(204,637
)
 
(161,111
)
 
(126,291
)
Interest income, net
2,218

 
1,520

 
2,143

Other income (expense), net
386

 
404

 
(311
)
Net loss before provision for income taxes
(202,033
)
 
(159,187
)
 
(124,459
)
Provision for income taxes
(1,110
)
 
(840
)
 
(1,426
)
Net loss attributable to common stockholders
$
(203,143
)
 
$
(160,027
)
 
$
(125,885
)
Net loss per share attributable to common stockholders, basic and diluted
$
(6.21
)
 
$
(5.03
)
 
$
(3.47
)
Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted
32,723,629

 
31,802,117

 
36,260,948

Pro forma net loss per share attributable to common stockholders, basic and diluted (unaudited)
$
(1.89
)
 
 
 
$
(1.13
)
Weighted-average shares used in computing pro forma net loss per share attributable to common stockholders, basic and diluted (unaudited)
107,631,044

 
 
 
111,168,363

___________
(1)
Amounts include stock‑based compensation expense as follows (in thousands):
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
 
 
 
(unaudited)
Cost of revenue – subscription
$
3,363

 
$
3,008

 
$
1,051

Cost of revenue – services
4,301

 
3,862

 
1,363

Research and development
23,048

 
21,480

 
4,325

Sales and marketing
19,187

 
17,520

 
4,496

General and administrative
13,691

 
11,939

 
5,322


The accompanying notes are an integral part of these consolidated financial statements.
F-4

CLOUDERA, INC.
Consolidated Statements of Operations
(in thousands, except share and per share data)


(2)
Amounts include amortization of acquired intangible assets as follows (in thousands):
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
 
 
 
(unaudited)
Cost of revenue – subscription
$
1,732

 
$
1,305

 
$
1,483

Sales and marketing
1,723

 
1,292

 
1,292








The accompanying notes are an integral part of these consolidated financial statements.
F-5

CLOUDERA, INC.
Consolidated Statements of Comprehensive Loss
(in thousands)


 
Year Ended January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
 
 
 
(unaudited)
Net loss
$
(203,143
)
 
$
(160,027
)
 
$
(125,885
)
Other comprehensive income (loss), net of tax:
 
 
 
 
 
Foreign currency translation gains (losses)
(334
)
 
(93
)
 
6

Unrealized gain (loss) on investments
(187
)
 
(85
)
 
236

Total other comprehensive income (loss), net of tax
(521
)
 
(178
)
 
242

Comprehensive loss
$
(203,664
)
 
$
(160,205
)
 
$
(125,643
)


The accompanying notes are an integral part of these consolidated financial statements.
F-6

CLOUDERA, INC.
Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit
(in thousands, except share data)


 
Redeemable Convertible
Preferred Stock
 
 
Common Stock
 
Additional Paid-In Capital
 
Accumulated Other Comprehensive Loss
 
Accumulated Deficit
 
Total Stockholders’ Deficit
 
Shares
 
Amount
 
 
Shares
 
Amount
 
Balance as of January 31, 2015
74,907,415

 
$
657,687

 
 
28,815,224

 
$
1

 
$
63,119

 
$
(223
)
 
$
(285,537
)
 
$
(222,640
)
Stock option exercises

 

 
 
5,838,389

 

 
10,865

 

 

 
10,865

Vested restricted stock units converted into shares

 

 
 
799,552

 

 

 

 

 

Stock-based compensation expense

 

 
 

 

 
63,590

 

 

 
63,590

Shares issued related to business combination

 

 
 
358,735

 

 
9,542

 

 

 
9,542

Shares withheld related to net share settlement of restricted stock

 

 
 
(36,206
)
 

 
(1,202
)
 

 

 
(1,202
)
Unrealized loss on investment

 

 
 

 

 

 
(187
)
 

 
(187
)
Foreign currency translation adjustment

 

 
 

 

 

 
(334
)
 

 
(334
)
Net loss

 

 
 

 

 

 

 
(203,143
)
 
(203,143
)
Balance as of January 31, 2016
74,907,415

 
657,687

 
 
35,775,694

 
1

 
145,914

 
(744
)
 
(488,680
)
 
(343,509
)
Stock option exercises (unaudited)

 

 
 
903,079

 
1

 
2,552

 

 

 
2,553

Vested restricted stock units converted into shares (unaudited)

 

 
 
26,763

 

 

 

 

 

Stock-based compensation expense (unaudited)

 

 
 

 

 
16,557

 

 

 
16,557

Unrealized gain on investment (unaudited)

 

 
 

 

 

 
236

 

 
236

Foreign currency translation adjustment (unaudited)

 

 
 

 

 

 
6

 

 
6

Net loss (unaudited)

 

 
 

 

 

 

 
(125,885
)
 
(125,885
)
Balance as of October 31, 2016 (unaudited)
74,907,415

 
$
657,687

 
 
36,705,536

 
$
2

 
$
165,023

 
$
(502
)
 
$
(614,565
)
 
$
(450,042
)

The accompanying notes are an integral part of these consolidated financial statements.
F-7

CLOUDERA, INC.
Consolidated Statements of Cash Flows
(in thousands)




Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
 
 
 
(unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net loss
$
(203,143
)
 
$
(160,027
)
 
$
(125,885
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
 
 
Depreciation and amortization
8,586

 
6,334

 
7,471

Stock-based compensation
63,590

 
57,809

 
16,557

Accretion and amortization of marketable securities
3,605

 
2,495

 
2,420

Loss on disposal of fixed assets
3

 

 

Changes in assets and liabilities:
 
 
 
 
 
Accounts receivable
(19,015
)
 
(4,494
)
 
1,856

Prepaid expenses and other assets
(1,795
)
 
1,799

 
378

Accounts payable
1,455

 
(626
)
 
910

Accrued compensation
9,374

 
2,343

 
4,328

Accrued expenses and other liabilities
4,757

 
3,637

 
3,499

Deferred revenue
42,086

 
22,451

 
3,847

Net cash used in operating activities
(90,497
)
 
(68,279
)
 
(84,619
)
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
Purchases of marketable securities
(411,524
)
 
(373,535
)
 
(103,776
)
Sales of marketable securities
71,379

 
57,350

 
51,138

Maturities of marketable securities
111,913

 
71,351

 
155,232

Cash used in business combinations, net of cash acquired
(8,911
)
 
(8,911
)
 
(2,700
)
Capital expenditures
(5,539
)
 
(2,874
)
 
(6,934
)
Net cash provided by (used in) investing activities
(242,682
)
 
(256,619
)
 
92,960

CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
Shares withheld related to net share settlement of restricted stock units
(1,202
)
 
(1,202
)
 

Proceeds from exercise of stock options
10,865

 
9,346

 
2,553

Net cash provided by financing activities
9,663

 
8,144

 
2,553

Effect of exchange rate changes
(334
)
 
(93
)
 
6

Net increase (decrease) in cash, cash equivalents and restricted cash
(323,850
)
 
(316,847
)
 
10,900

Cash, cash equivalents and restricted cash — Beginning of period
359,844

 
359,844

 
35,994

Cash, cash equivalents and restricted cash — End of period
$
35,994

 
$
42,997

 
$
46,894

 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
 
 
 
 
 
Cash paid for income taxes
$
1,131

 
$
740

 
$
1,031

Cash paid for interest
$
1

 
$
1

 
$

 
 
 
 
 
 
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES
 
 
 
 
 
Purchases of property and equipment in other accrued liabilities
$
793

 
$
1,306

 
$
36

Fair value of common stock issued as consideration for business combinations
$
9,542

 
$
9,542

 
$


The accompanying notes are an integral part of these consolidated financial statements.
F-8

CLOUDERA, INC.
Notes to Consolidated Financial Statements
(information as of October 31, 2016 and for the nine months ended October 31, 2015 and 2016 is unaudited)


1.    Organization and Description of Business
Cloudera, Inc. was incorporated in the state of Delaware on June 27, 2008 and is headquartered in Palo Alto, California. We sell subscriptions and services for our data management, machine learning and advanced analytics platform. This platform delivers an integrated suite of capabilities for data management, machine learning and advanced analytics, affording customers an agile, scalable and cost‑effective solution for transforming their businesses.
Unless the context requires otherwise, the words “we,” “us,” “our,” the “Company” and “Cloudera” refer to Cloudera, Inc. and its subsidiaries taken as a whole.
As of January 31, 2016 and October 31, 2016, we have an accumulated deficit totaling $488.7 million and $614.6 million. We have funded our operations primarily with the net proceeds from private placements of redeemable convertible preferred stock and proceeds from the sale of our subscriptions and services. Management believes that currently available resources will be sufficient to fund our cash requirements for at least the next twelve months.
2.    Summary of Significant Accounting Policies
Basis of Consolidation
The consolidated financial statements include the accounts of Cloudera, Inc. and its wholly owned subsidiaries which are located in various countries, including the United States, Australia, China, Germany, Hungary and the United Kingdom. All intercompany balances and transactions have been eliminated upon consolidation. The financial statements are prepared in accordance with accounting principles generally accepted in the United States (GAAP).
Fiscal Year
Our fiscal year ends on January 31. References to fiscal 2016, for example, refers to the fiscal year ended January 31, 2016.
Unaudited Interim Financial Information
The accompanying interim consolidated balance sheet as of October 31, 2016, the interim consolidated statements of operations, comprehensive loss and cash flows for the nine months ended October 31, 2015 and 2016 and the interim consolidated statement of redeemable convertible preferred stock and stockholders’ deficit for the nine months ended October 31, 2016 are unaudited. The financial data and information disclosed in these notes to the consolidated financial statements related to that date and these periods are also unaudited. The unaudited interim consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly our financial position as of October 31, 2016 and the results of our operations and cash flows for the nine months ended October 31, 2015 and 2016. The consolidated results of operations for the nine months ended October 31, 2016 are not necessarily indicative of the results to be expected for the entire year ending January 31, 2017, or for any other future annual or interim period.
Unaudited Pro Forma Balance Sheet Information
The unaudited pro forma balance sheet information as of October 31, 2016 presents our consolidated stockholders’ deficit assuming conversion of all of our outstanding shares of redeemable convertible preferred stock into shares of our common stock upon the closing of a firm commitment underwritten initial public offering (IPO) for the sale of our common stock. The shares of common stock issuable and the proceeds expected to be received upon the completion of a qualifying IPO are excluded from such pro forma financial information.

F-9


Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Significant items subject to such estimates include revenue recognition, the useful lives of property and equipment and intangible assets, allowance for doubtful accounts, stock‑based compensation expense, annual bonus attainment, self‑insurance costs incurred, the fair value of tangible and intangible assets acquired and liabilities assumed resulting from business combinations, the fair value of common stock, the assessment of elements in a multi‑element arrangement and the valuation assigned to each element, and contingencies. These estimates and assumptions are based on management’s best estimates and judgment. Management regularly evaluates its estimates and assumptions using historical experience and other factors; however, actual results could differ significantly from these estimates.
Segments
We operate as two operating segments – subscription and services. Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker, who is our chief executive officer, in deciding how to allocate resources and assessing performance.
Foreign Currency Translation
The functional currency of our foreign subsidiaries is the local currency. The gains and losses resulting from translating our foreign subsidiaries’ financial statements into U.S. dollars have been reported in accumulated other comprehensive loss on the consolidated balance sheet. Assets and liabilities are translated at exchange rates in effect at the balance sheet date. Equity is translated at the historical rates from the original transaction period. Revenue and expenses are translated at average exchange rates in effect during the period. Foreign currency transaction gains and losses are included in other income, net on the statement of operations.
Cash, Cash Equivalents and Restricted Cash
Cash equivalents consist of short term, highly liquid investments with original maturities of three months or less from the date of purchase. Restricted cash represents cash on deposit with financial institutions in support of letters of credit outstanding in favor of certain landlords for office space.
A reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheets is as follows (in thousands):
 
As of
 
January 31,
 
October 31,
 
October 31,
 
2016
 
2015
 
2016
 
 
 
(unaudited)
Cash and cash equivalents
$
35,966

 
$
42,966

 
$
31,448

Restricted cash
28

 
31

 
15,446

Total cash, cash equivalents and restricted cash – end of period
$
35,994

 
$
42,997

 
$
46,894

Marketable Securities
We have investments in various marketable securities which are classified as available for sale. We determine the appropriate classification of marketable securities at the time of purchase and reevaluate such determination at each balance sheet date. The investments are adjusted for amortization of premiums and discounts to maturity and such amortization is included in interest income, net on the statement of operations. Changes in market value considered to be temporary are recorded as unrealized gains or losses in other comprehensive loss. Realized gains and losses and declines in value judged to be other than temporary on available‑for‑sale securities are included in other income (expense), net on the statement of operations. The cost of securities sold is based on the specific‑identification method.

F-10


Strategic Investments
We own interests in non‑marketable equity and debt securities, which consist of minority equity and debt investments in privately‑held companies. We report these investments at cost or marked down to fair value when an event or circumstance indicates an other‑than‑temporary decline in value has occurred. These investments are valued using significant unobservable inputs or data in an inactive market which requires judgment due to the absence of market prices and inherent lack of liquidity.
Concentration of Credit Risk and Significant Customers
Financial instruments that subject us to concentrations of credit risk consist primarily of cash and cash equivalents, marketable securities, restricted cash, and accounts receivable. Our cash is deposited with high credit quality financial institutions. At times such deposits may be in excess of the Federal Depository Insurance Corporation insured limits. We have not experienced any losses on these deposits.
At January 31, 2016 and October 31, 2016, no single customer represented 10% or more of accounts receivable. For the year ended January 31, 2016 and nine months ended October 31, 2015 and 2016, no single customer accounted for 10% or more of revenue.
Accounts Receivable and Allowance for Doubtful Accounts
Accounts receivable are recorded at the invoiced amount. We generally do not require collateral and estimate the allowance for doubtful accounts based on the age of outstanding receivables, customer creditworthiness and existing economic conditions. If events or changes in circumstances indicate that specific receivable balances may be impaired, further consideration is given to the collectability of those balances and an allowance is recorded accordingly. Past‑due receivable balances are written off when internal collection efforts have been unsuccessful in collecting the amount due. As of both January 31, 2016 and October 31, 2016, the allowance for doubtful accounts was $0.1 million. The movements in the allowance for doubtful accounts were not significant for any of the periods presented.
Property and Equipment, Net
Property and equipment are stated at cost, net of accumulated depreciation and amortization. Depreciation and amortization of property and equipment is calculated using a straight‑line method over the estimated useful lives of the respective assets. Maintenance and repairs that do not extend the life or improve the asset are expensed when incurred.
The estimated useful lives of the Company’s assets are as follows:
Computer software
2 years
Computer equipment
2-3 years
Furniture and office equipment
3 years
Leasehold improvements
Shorter of remaining lease term or estimated useful life
We review property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. An impairment loss is recognized when the total of estimated undiscounted future cash flows expected to result from the use of the asset and its eventual disposition is less than its carrying amount. Impairment, if any, would be assessed using discounted cash flows or other appropriate measures of fair value. There was no impairment of property and equipment during the year ended January 31, 2016 or during the nine months ended October 31, 2016.

F-11


Goodwill and Intangible Assets
Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Goodwill amounts are not amortized, but rather tested for impairment at least annually in November or more often if and when circumstances indicate that the carrying value may not be recoverable.
Intangible assets are amortized over their useful lives. Each period we evaluate the estimated remaining useful life of our intangible assets and whether events or changes in circumstances warrant a revision to the remaining period of amortization.
We evaluate the recoverability of our long‑lived assets, including intangible assets, for possible impairment whenever events or circumstances indicate that the carrying amount of such assets may not be recoverable. Recoverability of these assets is measured by comparison of the carrying amount of each asset to the future undiscounted cash flows the asset is expected to generate. If the undiscounted cash flows used in the test for recoverability are less than the carrying amount of these assets, then the carrying amount of such assets is reduced to fair value.
There were no impairments of goodwill or intangible assets during the year ended January 31, 2016 or during the nine months ended October 31, 2016.
Business Combinations
We use our best estimates and assumptions to assign fair value to tangible and intangible assets acquired and liabilities assumed at the acquisition date. Such estimates are inherently uncertain and subject to refinement. We continue to collect information and reevaluate these estimates and assumptions and record any adjustments to the preliminary estimates to goodwill provided that we are within the measurement period. Upon the conclusion of the measurement period or final determination of the fair value of assets acquired or liabilities assumed, whichever comes first, any subsequent adjustments are recorded to the consolidated statements of operations.
Capitalized Software Costs
Capitalization of software development costs for products to be sold to third parties begins upon the establishment of technological feasibility and ceases when the product is available for general release. There is generally no significant passage of time between achievement of technological feasibility and the availability of our software for general release, and the majority of our software is open‑source. Therefore, we have not capitalized any software costs through January 31, 2016 or October 31, 2016. All software development costs have been charged to research and development expense in the consolidated statements of operations as incurred.
Deferred Offering Costs
Deferred offering costs, which consist of direct incremental legal, consulting, banking and accounting fees relating to anticipated equity offerings, are capitalized and will be offset against proceeds upon the consummation of the offerings. In the event an anticipated offering is terminated, deferred offering costs will be expensed. As of January 31, 2016 and October 31, 2016, there were no capitalized deferred offering costs in the consolidated balance sheets.
Comprehensive Loss
Comprehensive loss represents the net loss for the period plus the results of certain changes to stockholders’ deficit that are not reflected in the consolidated statements of operations.
Revenue Recognition
We generate revenue from subscriptions and services. Subscription arrangements are typically one to three years in length but may be up to seven years in limited cases. Arrangements with our customers typically do not include

F-12


general rights of return. Incremental direct costs incurred related to the acquisition or origination of a customer contract are expensed as incurred.
Revenue recognition commences when all of the following criteria are met: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred; (iii) the fee is fixed or determinable; and (iv) collection is probable.
Subscription revenue
Subscription revenue relates to term (or time‑based) subscription agreements for both open source and proprietary software. Subscriptions include internet, email and phone support, bug fixes, and the right to receive unspecified software updates and upgrades released when and if available during the subscription term. Revenue for subscription arrangements is recognized ratably over the contractual term of the arrangement beginning on the date access to the subscription is made available to the customer.
Services revenue
Services revenue relates to professional services for the implementation and use of our subscriptions, training and education services and related reimbursable travel costs.
For time and materials and fixed fee arrangements, revenue is recognized as the services are performed or upon acceptance, if applicable. For milestone‑based arrangements, revenue is recognized upon acceptance or subsequent to completion upon the lapse of any acceptance period.
Revenue for training and education services is recognized upon delivery, except for On‑Demand Training, which is recognized ratably over the contractual term.
Multipleelement arrangements
Arrangements with our customers generally include multiple elements such as subscription and services. We allocate revenue to each element of the arrangement based on vendor‑specific objective evidence of each element’s fair value (VSOE) when we can demonstrate sufficient evidence of the fair value. VSOE for elements of an arrangement is based upon the normal pricing and discounting practices for those elements when sold separately on a stand‑alone basis.
We have established VSOE for some of our services. If VSOE for one or more undelivered elements does not exist, revenue recognition does not commence until delivery of both the subscription and services have commenced, or when VSOE of the undelivered elements has been established. Once revenue recognition commences, revenue for the arrangement is recognized ratably over the longest service period in the arrangement.
Reseller arrangements
We recognize subscription revenue for sales through resellers or other indirect sales channels. Subscription revenue from these sales is generally recognized upon sell‑through to an end user customer. Subscription revenue from these sales does not commence until cash is collected where payments to us are believed to be contingent upon payment by the end user to the reseller.
Deferred revenue
Deferred revenue consists of amounts billed to or collected from customers under a binding agreement provided delivery of the related subscription and services has commenced.
Cost of Revenue
Cost of revenue for subscriptions and services is expensed as incurred. Cost of revenue for subscriptions primarily consists of personnel costs such as salaries, bonuses and benefits and stock‑based compensation for employees providing technical support for our subscription customers, allocated shared costs (including rent and information technology) and amortization of acquired intangible assets. Cost of revenue for services primarily

F-13


consists of personnel costs for employees and subcontractors associated with service contracts, travel costs and allocated shared costs.
Research and Development
Research and development costs are expensed as incurred and primarily include personnel costs, contractor fees, allocated shared costs, supplies, and depreciation of equipment associated with the development of new features for our subscriptions prior to the establishment of their technological feasibility.
Advertising Costs
Advertising costs are expensed as incurred. Advertising costs were $0.7 million, $0.5 million, and $0.6 million for the year ended January 31, 2016 and the nine months ended October 31, 2015 and 2016, respectively.
Stock‑Based Compensation
We recognize stock‑based compensation expense for all stock‑based payments. Employee stock‑based compensation cost is estimated at the grant date based on the fair value of the equity for financial reporting purposes and is recognized as expense, net of estimated forfeitures, over the requisite service period. Fair value of our common stock for financial reporting purposes is determined considering numerous objective and subjective factors and requires judgment to determine the fair value of common stock for financial reporting purposes as of the date of each equity grant. These objective and subjective factors include, but are not limited to:
relevant precedent transactions involving our capital stock;
contemporaneous valuations performed by third party specialists;
rights, preferences, and privileges of our redeemable convertible preferred stock relative to those of our common stock;
actual operating and financial performance;
current business conditions and financial projections;
likelihood of achieving a liquidity event, such as an initial public offering or a sale of our business;
the lack of marketability of our common stock, and the illiquidity of stock‑based awards involving securities in a private company;
recent secondary stock sales;
market multiples of comparable publicly‑traded companies;
stage of development;
industry information such as market size and growth; and
U.S. and global capital market and macroeconomic conditions.
We have elected to calculate the fair value of options based on the Black‑Scholes option‑pricing model. The Black‑Scholes model requires the use of various assumptions including expected option life and expected stock price volatility. We estimate the expected term for stock options using the simplified method due to the lack of historical exercise activity. The simplified method calculates the expected term as the midpoint between the vesting date and the contractual expiration date of the award. We estimate the options’ volatility using volatilities of a group of public companies in a comparable industry, stage of life cycle, and size. The interest rate is derived from government bonds with similar lives as the options’ expected lives. We have not declared nor do we expect to declare dividends. Therefore, there is no dividend impact on the valuation of options. We are using the straight‑line (single‑option) method for employee expense attribution for stock options.

F-14


We have granted restricted stock units (RSUs) to our employees and members of our board of directors under the 2008 Equity Incentive Plan, or the 2008 Plan. The employee RSUs vest upon the satisfaction of both a service condition and a liquidity condition. The service condition for the majority of these awards is satisfied pro-rata over four years. The liquidity condition is satisfied upon the occurrence of a qualifying liquidity event or six months following the effective date of an IPO. The liquidity condition is viewed as a performance‑based criterion for which the achievement of such liquidity event is not deemed probable for accounting purposes until the event occurs. In the quarter in which such event occurs, we will begin recording stock‑based compensation expense using the accelerated attribution method, net of forfeitures.
Stock‑based compensation expense is recorded based on awards that are ultimately expected to vest, and such expense has been reduced for estimated forfeitures. When estimating forfeitures, we consider voluntary termination behaviors as well as historical forfeitures.
Stock‑based compensation expense is also recorded when a holder of an economic interest in Cloudera purchases shares from an employee for an amount in excess of the fair value of the common stock at the time of the purchase. We recognize any excess value transferred in these transactions as stock‑based compensation expense in the consolidated statement of operations.
Options and other equity awards granted to non‑employees are accounted for at their estimated fair value using the Black‑Scholes method and are subject to periodic re‑measurement over the period during which services are rendered. Stock‑based compensation expense is recognized over the vesting period on a straight‑line basis.
Income Taxes
We account for income taxes under the liability method, whereby deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is established when, in management’s estimate, it is more likely than not that the deferred tax asset will not be realized.
Any liability related to uncertain tax positions is recorded on the financial statements within other liabilities. Penalties and interest expense related to income taxes, including uncertain tax positions, are classified as a component of provision for income taxes, as necessary.
Net Loss Per Share Attributable to Common Stockholders
We follow the two‑class method when computing net loss per common share as we issue shares that meet the definition of participating securities. The two‑class method determines net income (loss) per common share for each class of common stock and participating securities according to dividends declared or accumulated and participation rights in undistributed earnings. The two‑class method requires income available to common stockholders for the period to be allocated between common stock and participating securities based upon their respective rights to receive dividends as if all income for the period had been distributed. Our redeemable convertible preferred stock contractually entitles the holders of such shares to participate in dividends, but does not contractually require the holders of such shares to participate in our losses. For periods in which we have reported net losses, diluted net loss per common share attributable to common stockholders is the same as basic net loss per common share attributable to common stockholders, because potentially dilutive common shares are not assumed to have been issued if their effect is anti‑dilutive.
The unaudited pro forma basic and diluted net loss per share has been computed to give effect to the conversion of the shares of redeemable convertible preferred stock into common stock as if such conversion had occurred at the beginning of the period or the date of issuance, if later. The unaudited pro forma net loss per share does not include the shares to be sold and related proceeds to be received from an IPO.

F-15


Commitments and Contingencies
Liabilities for loss contingencies arising from claims, assessments, litigation, fines and penalties and other sources are recorded when it is probable that a liability has been or will be incurred and the amount of the liability can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.
Recently Adopted Accounting Standards
In November 2015, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update, or ASU, No. 2015‑17, Balance Sheet Classification of Deferred Taxes, or ASU 2015‑17, which simplifies the presentation of deferred income taxes. ASU 2015‑17 provides presentation requirements to classify deferred tax assets and liabilities as noncurrent in a classified statement of financial position. For public business entities, this standard is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. For all other entities, this standard is effective for financial statements issued for annual periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for all entities as of the beginning of an interim or annual reporting period. We early adopted this standard prospectively in the first quarter of fiscal 2017 which did not have a material impact on our consolidated financial statements.
In November 2016, the FASB issued ASU No. 2016‑18, Statement of Cash Flows (Topic 230): Restricted Cash, or ASU 2016‑18. ASU 2016‑18 requires that the statement of cash flows explains the change during the period in the total cash, cash equivalents, and restricted cash. For public entities, this standard is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, this standard is effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. This standard should be applied retrospectively and early adoption is permitted, including adoption in an interim period. We early adopted this standard for the nine month period ended October 31, 2016 and have retroactively adjusted the consolidated statements of cash flows for all periods presented.
Recently Issued Accounting Standards
In May 2014, the FASB issued ASU No. 2014‑09, Revenue from Contracts with Customers (Topic 606), or ASU 2014‑09, which amended the existing FASB Accounting Standards Codification. ASU 2014‑09 establishes a principle for recognizing revenue upon the transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services and also provides guidance on the recognition of costs related to obtaining and fulfilling customer contracts. For public entities, this standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period.  For all other entities, this standard is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. Early adoption is permitted, but may not be adopted by us any earlier than February 1, 2017. We are currently in the process of assessing the adoption methodology, which allows the amendment to be applied either retrospectively to each prior period presented or with the cumulative effect recognized as of the date of initial application. We are also currently evaluating the impact this standard will have on our consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016‑02, Leases (Topic 842), or ASU 2016‑02, which requires lessees to record most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016‑02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right‑to‑use asset for the right to use the underlying asset for the lease term. For public entities, this standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. For all other entities, this standard is effective for annual reporting periods beginning after December 15, 2019, and interim periods within annual periods beginning after December 15, 2020. Early adoption is permitted. We are currently evaluating the impact that this standard will have on our consolidated financial statements.
In March 2016, the FASB issued ASU No. 2016‑09, Compensation – Stock Compensation (Topic 718): Improvements to Employee Share‑Based Payment Accounting, or ASU 2016‑09, which simplifies the accounting and reporting of share‑based payment transactions, including adjustments to how excess tax benefits and payments

F-16


for tax withholdings should be classified and provides the election to eliminate the estimate for forfeitures. For public entities, this standard is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. For all other entities, this standard is effective for annual reporting periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. Early adoption is permitted for any entity in any interim or annual period for which financial statements have not been issued or made available for issuance. We are currently evaluating the impact that this standard will have on our consolidated financial statements.
In June 2016 the FASB issued ASU No. 2016‑13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, or ASU 2016‑13. ASU 2016‑13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. For public entities, this standard is effective for annual reporting periods beginning after December 15, 2019, including interim periods within that reporting period. For all other entities, this standard is effective for annual reporting periods beginning after December 15, 2020, including interim periods within that reporting period. Earlier adoption is permitted in our first interim period in fiscal 2020. We are currently evaluating the impact that this standard will have on our consolidated financial statements.
In August 2016, the FASB issued ASU No. 2016‑15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, or ASU 2016‑15. ASU 2016‑15 identifies how certain cash receipts and cash payments are presented and classified in the Statement of Cash Flows. For public entities, this standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. For all other entities, this standard is effective for annual reporting periods beginning after December 15, 2018, and interim periods within annual periods beginning after December 15, 2019. This standard should be applied retrospectively and early adoption is permitted, including adoption in an interim period. We are currently evaluating the impact that this standard will have on our consolidated financial statements.
3.    Cash Equivalents and Marketable Securities
The following are the fair values of our cash equivalents and marketable securities as of January 31, 2016 (in thousands):
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Estimated
Fair Value
 
 
 
 
 
 
 
 
Cash equivalents:(1)
 
 
 
 
 
 
 
Money market funds
$
22,434

 
$

 
$

 
$
22,434

Commercial paper
7,999

 

 
(1
)
 
7,998

Marketable securities:
 
 
 
 
 
 
 
U.S. agency obligations
6,039

 

 
(4
)
 
6,035

Asset-backed securities
71,026

 
11

 
(46
)
 
70,991

Corporate notes and obligations
214,535

 
31

 
(231
)
 
214,335

Commercial paper
15,989

 

 

 
15,989

Municipal securities
33,869

 
21

 
(9
)
 
33,881

U.S. treasury securities
21,064

 
7

 
(23
)
 
21,048

Total cash equivalents and marketable
securities
$
392,955

 
$
70

 
$
(314
)
 
$
392,711

___________
(1)
Included in “cash and cash equivalents” in the accompanying consolidated balance sheet as of January 31, 2016.

F-17


The following are the fair values of our cash equivalents and marketable securities as of October 31, 2016 (in thousands):
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Estimated
Fair Value
 
(unaudited)
Cash equivalents:(1)
 
 
 
 
 
 
 
Money market funds
$
17,591

 
$

 
$

 
$
17,591

Marketable securities:
 
 
 
 
 
 
 
U.S. agency obligations
5,007

 
1

 

 
5,008

Asset-backed securities
51,921

 
10

 
(9
)
 
51,922

Corporate notes and obligations
151,134

 
35

 
(91
)
 
151,078

Commercial paper
1,895

 
1

 

 
1,896

Municipal securities
18,567

 
10

 
(6
)
 
18,571

Certificate of deposit
19,500

 
30

 

 
19,530

U.S. treasury securities
10,001

 
12

 

 
10,013

Total cash equivalents and marketable
securities
$
275,616

 
$
99

 
$
(106
)
 
$
275,609

___________
(1) Included in “cash and cash equivalents” in the accompanying consolidated balance sheet as of October 31, 2016.
Maturities of our noncurrent marketable securities generally range from one to four years at both January 31, 2016 and October 31, 2016.
As of January 31, 2016, the following marketable securities were in an unrealized loss position (in thousands):
 
Less than 12 months
 
Greater than 12 months
 
Total
 
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
U.S. agency obligations
$
6,035

 
$
(4
)
 
$

 
$

 
$
6,035

 
$
(4
)
Asset-backed securities
42,184

 
(46
)
 

 

 
42,184

 
(46
)
Corporate notes and obligations
161,385

 
(219
)
 
16,662

 
(12
)
 
178,047

 
(231
)
Commercial paper
11,997

 
(1
)
 

 

 
11,997

 
(1
)
Municipal securities
7,021

 
(9
)
 

 

 
7,021

 
(9
)
U.S. treasury securities
13,044

 
(23
)
 

 

 
13,044

 
(23
)
Total
$
241,666

 
$
(302
)
 
$
16,662

 
$
(12
)
 
$
258,328

 
$
(314
)
As of October 31, 2016, the following marketable securities were in an unrealized loss position (in thousands):
 
Less than 12 Months
 
Greater than 12 Months
 
Total
 
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
 
Fair Value
 
Unrealized
Losses
 
(unaudited)
Asset-backed securities
$
19,002

 
$
(9
)
 
$

 
$

 
$
19,002

 
$
(9
)
Corporate notes and obligations
83,074

 
(83
)
 
19,746

 
(8
)
 
102,820

 
(91
)
Municipal securities
4,622

 
(6
)
 

 

 
4,622

 
(6
)
Total
$
106,698

 
$
(98
)
 
$
19,746

 
$
(8
)
 
$
126,444

 
$
(106
)
The unrealized loss for each of these fixed rate marketable securities ranged from less than $1,000 to $28,000 as of January 31, 2016 and less than $1,000 to $18,000 as of October 31, 2016. We do not believe any of the unrealized

F-18


losses represent an other‑than‑temporary impairment based on our evaluation of available evidence as of January 31, 2016 and October 31, 2016. We expect to receive the full principal and interest on all of these marketable securities and have the ability and intent to hold these investments until a recovery of fair value.
Realized gains and realized losses on our cash equivalents and marketable securities are included in other income (expense), net on the consolidated statement of operations. The amounts are as follows (in thousands):
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
 
 
 
(unaudited)
Realized gains
$
51

 
$
50

 
$
26

Realized losses

 

 
(1
)
Net realized gains
$
51

 
$
50

 
$
25

Reclassification adjustments out of accumulated other comprehensive loss into net loss were immaterial for the year ended January 31, 2016 and the nine months ended October 31, 2016.
4.    Fair Value Measurement
Our financial assets and liabilities consist principally of cash and cash equivalents, marketable securities, restricted cash, accounts receivable, and accounts payable. We measure and record certain financial assets and liabilities at fair value on a recurring basis. The estimated fair value of accounts receivable and accounts payable approximates their carrying value due to their short‑term nature. Cash equivalents, marketable securities and restricted cash are recorded at estimated fair value.
All of our cash equivalents and marketable securities are classified within Level 1 or Level 2 because the cash equivalents and marketable securities are valued using quoted market prices or alternative pricing sources and models utilizing observable market inputs.
We follow 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 at the measurement date.
Level 2
Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life.
Level 3
Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model.

F-19


The following table represents our financial assets and liabilities according to the fair value hierarchy, measured at fair value as of January 31, 2016 (in thousands):
 
Level 1
 
Level 2
 
Level 3
 
Total
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
22,434

 
$

 
$

 
$
22,434

Commercial paper

 
7,998

 

 
7,998

Marketable securities:
 
 
 
 
 
 
 
U.S. agency obligations

 
6,035

 

 
6,035

Asset-backed securities

 
70,991

 

 
70,991

Corporate notes and obligations

 
214,335

 

 
214,335

Commercial paper

 
15,989

 

 
15,989

Municipal securities

 
33,881

 

 
33,881

U.S. treasury securities

 
21,048

 

 
21,048

Restricted cash:
 
 
 
 
 
 
 
Money market funds
28

 

 

 
28

Total financial assets
$
22,462

 
$
370,277

 
$

 
$
392,739

The following table represents our financial assets and liabilities according to the fair value hierarchy, measured at fair value as of October 31, 2016 (in thousands):
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(unaudited)
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
17,591

 
$

 
$

 
$
17,591

Marketable securities:
 
 
 
 
 
 
 
U.S. agency obligations

 
5,008

 

 
5,008

Asset-backed securities

 
51,922

 

 
51,922

Corporate notes and obligations

 
151,078

 

 
151,078

Commercial paper

 
1,896

 

 
1,896

Municipal securities

 
18,571

 

 
18,571

Certificate of deposits

 
19,530

 

 
19,530

U.S. treasury securities

 
10,013

 

 
10,013

Restricted cash:
 
 
 
 
 
 
 
Money market funds
15,446

 

 

 
15,446

Total financial assets
$
33,037

 
$
258,018

 
$

 
$
291,055

We value our Level 1 assets using quoted prices in active markets for identical instruments. We value our Level 2 assets with the help of a third-party pricing service using quoted market prices for similar instruments, nonbinding market prices that are corroborated by observable market data, or pricing models such as discounted cash flow techniques. We use such pricing data as the primary input, to which we have not made any material adjustments during the periods presented, to make our determination and assessments as to the ultimate valuation of these assets.
There were no transfers into or out of Level 1, Level 2 or Level 3 for the year ended January 31, 2016 and the nine months ended October 31, 2016.

F-20


5.    Balance Sheet Components
Property and Equipment, Net
The cost and accumulated depreciation and amortization of property and equipment are as follows (in thousands):
 
As of
 
January 31, 2016
 
October 31, 2016
 
 
 
(unaudited)
Computers equipment and software
$
17,054

 
$
18,007

Office furniture and equipment
3,462

 
4,018

Leasehold improvements
7,088

 
8,288

Construction in progress

 
165

Property and equipment, gross
27,604

 
30,478

Less: accumulated depreciation and amortization
(14,722
)
 
(16,115
)
Property and equipment, net
$
12,882

 
$
14,363

Depreciation expense was $5.2 million for the year ended January 31, 2016, and $3.8 million and $4.7 million for the nine months ended October 31, 2015 and 2016, respectively.
Intangible Assets
Intangible assets consisted of the following as of January 31, 2016 (dollars in thousands):
 
Gross Fair
Value
 
Accumulated
Amortization
 
Net Book
Value
 
Weighted Average
Remaining Useful Life
(in years)
Developed technology
$
8,420

 
$
(2,575
)
 
$
5,845

 
3.5

Customer relationships and other acquired intangible assets
6,125

 
(2,934
)
 
3,191

 
1.8

Total
$
14,545

 
$
(5,509
)
 
$
9,036

 
2.9

Intangible assets consisted of the following as of October 31, 2016 (dollars in thousands):
 
Gross Fair
Value
 
Accumulated
Amortization
 
Net Book
Value
 
Weighted Average
Remaining
Useful Life
(in years)
 
(unaudited)
Developed technology
$
10,155

 
$
(4,040
)
 
$
6,115

 
3.2

Customer relationships and other acquired intangible assets
6,125

 
(4,244
)
 
1,881

 
1.1

Total
$
16,280

 
$
(8,284
)
 
$
7,996

 
2.7


F-21


Amortization expense for intangible assets was $3.5 million during the year ended January 31, 2016 and $2.6 million and $2.8 million for the nine months ended October 31, 2015 and 2016, respectively. Amortization expense for intangible assets was recorded in the consolidated statements of operations as follows (in thousands):
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
 
 
 
(unaudited)
Cost of revenue – subscription
$
1,732

 
$
1,305

 
$
1,483

Sales and marketing
1,723

 
1,292

 
1,292

Total amortization of acquired intangible assets
$
3,455

 
$
2,597

 
$
2,775

The expected future amortization expense of these intangible assets as of January 31, 2016 is as follows (in thousands):
Year Ended January 31:
 
2017
$
3,431

2018
3,128

2019
1,684

2020
793

Total intangible assets, net
$
9,036

Goodwill
The following table represents the changes to goodwill (in thousands):
Balance at January 31, 2015
$
13,801

Additions from acquisitions
16,750

Balance at January 31, 2016
30,551

Additions from acquisitions (unaudited)
965

Balance at October 31, 2016 (unaudited)
$
31,516

There was no impairment of goodwill during the year ended January 31, 2016 or during the nine months ended October 31, 2016. Goodwill is attributable entirely to our subscription operating segment.
Accrued Compensation
Accrued compensation consists of the following (in thousands):
 
As of
 
January 31, 2016
 
October 31, 2016
 
 
 
(unaudited)
Accrued salaries and benefits
$
1,610

 
$
2,467

Accrued bonuses
9,924

 
11,635

Accrued commissions
8,094

 
9,305

Accrued compensation related taxes and other
2,526

 
3,075

Total accrued compensation
$
22,154

 
$
26,482


F-22


Other Accrued Liabilities
Other accrued liabilities consists of the following (in thousands):
 
As of
 
January 31, 2016
 
October 31, 2016
 
 
 
(unaudited)
Accrued taxes
$
965

 
$
1,851

Deferred real estate costs
338

 
157

Accrued professional costs
2,448

 
2,943

Customer deposits
256

 
573

Deferred sublease income

 
861

Accrued self-insurance costs
1,407

 
793

Other accrued liabilities
5,759

 
6,260

Total other accrued liabilities
$
11,173

 
$
13,438

Other accrued liabilities include costs incurred from third‑party vendors that provide marketing, corporate event planning and cloud‑computing services.
6.    Business Combinations
Xplain
In February 2015, we acquired all outstanding equity of Xplain.io, Inc., or Xplain, a provider of a self‑service analytics tool. We acquired Xplain for the assembled workforce and expected synergies with our current offerings. We have included the financial results of Xplain in the consolidated financial statements from the date of acquisition. The amount of revenue and earnings included in the consolidated financial statements for this acquisition were not determinable because we have integrated Xplain’s self‑service technology analytics with our current offerings. We concluded that this acquisition relates to our subscription operating segment. The acquisition date fair value of the consideration transferred for Xplain was approximately $19.7 million, which consisted of the following (in thousands, except share data):
 
Fair Value
Cash
$
10,153

Common stock (358,735 shares of common stock)
9,542

Total
$
19,695

The following table summarizes the estimated fair values of assets acquired and liabilities assumed as of the date of acquisition (dollars in thousands):
 
Fair Value
 
Estimated
Useful Life
Net tangible assets
$
1,181

 
n/a
Developed technology and other acquired intangible assets
1,764

 
5 years
Goodwill
16,750

 
n/a
Net assets acquired
$
19,695

 
 
The excess of purchase consideration over the fair value of net tangible and identifiable intangible assets acquired was recorded as goodwill. The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed were based on management’s estimates and assumptions.

F-23


The amount recorded for developed technology represents the estimated fair value of Xplain’s self‑service analytics technology. The goodwill balance is primarily attributed to the assembled workforce and expanded market opportunities when integrating Xplain’s self‑service analytics technology and expertise with our other offerings. The goodwill balance is deductible for U.S. income tax purposes.
Fiscal 2017 Business Combination
In March 2016, we acquired a provider of a platform for data science and analytics. We concluded that this acquisition relates to the our subscription operating segment and is accounted for as a business combination. The estimated purchase price consideration transferred was approximately $2.7 million in cash.
The following table summarizes the estimated fair value of assets acquired as of the date of acquisition (dollars in thousands):
 
Fair Value
 
Estimated
Useful Life
 
(unaudited)
Developed technology
$
1,735

 
5 years
Goodwill
965

 
n/a
Net assets acquired
$
2,700

 
 
The excess of purchase consideration over the fair value of the identifiable intangible asset acquired was recorded as goodwill. The fair value assigned to identifiable intangible assets was based on management’s estimates and assumptions.
The amount recorded for developed technology represents the estimated fair value of the acquired company’s data science and analytics platform technology. The goodwill balance is primarily attributed to the assembled workforce and expanded market opportunities when integrating the acquired company’s data science and analytics platform and expertise with our current offerings. The goodwill balance is deductible for U.S. income tax purposes.
7.    Commitments and Contingencies
Letters of Credit
As of January 31, 2016 and October 31, 2016, we had a total of $2.5 million and $17.0 million in letters of credit outstanding in favor of certain landlords for office space. These letters of credit renew annually and expire at various dates through 2027.
Operating Leases
We lease facilities space under non‑cancelable operating leases with various expiration dates. Future minimum lease payments under our operating leases at January 31, 2016 are as follows (in thousands):
Year Ended January 31:

2017
$
8,072

2018
7,741

2019
6,072

2020
5,355

2021
4,618

2022
1,360

Total future minimum lease payments
$
33,218

In September 2016, we entered into a new non‑cancelable operating lease agreement to rent office space in Palo Alto, California. The lease has a 125‑month term, which includes five months of free rent, commences in July 2017

F-24


and ends in November 2027 with an option to renew for an additional 84 months. Total minimum lease payments under the lease agreement are $227.1 million, of which $1.8 million was required to be prepaid upon execution, and are omitted from the table of future minimum lease payments as of January 31, 2016 above. Our contractual obligations for this lease are $1.5 million in fiscal 2018, $19.9 million in fiscal 2019, $20.5 million in fiscal 2020, $21.1 million in fiscal 2021, $21.8 million in fiscal 2022, and $140.5 million thereafter. Concurrent with this lease agreement, we entered into a non‑cancelable sublease agreement to sublet a portion of this office space, commencing July 2017, with a five year term. Rental proceeds committed under this sublease are $5.3 million in fiscal 2018, $9.3 million in fiscal 2019, $9.6 million in fiscal 2020, $9.8 million in fiscal 2021, $10.1 million in fiscal 2022, and $4.3 million thereafter.
Rental expense related to our non‑cancelable operating leases was approximately $7.2 million, $3.7 million, and $4.5 million for the year ended January 31, 2016 and for the nine months ended October 31, 2015 and 2016, respectively.
Deferred rent
We account for operating leases containing predetermined fixed increases of the base rental rate during the lease term on a straight‑line basis over the lease term. We recorded the difference between amounts charged to operations and amounts payable under our operating leases as deferred rent in the consolidated balance sheets.
Indemnification
From time to time, we enter into certain types of contracts that contingently require us to indemnify various parties against claims from third parties. These contracts primarily relate to (i) certain real estate leases under which we may be required to indemnify property owners for environmental and other liabilities and other claims arising from our use of the applicable premises, (ii) our bylaws, under which we must indemnify directors and executive officers, and may indemnify other officers and employees, for liabilities arising out of their relationship, (iii) contracts under which we must indemnify directors and certain officers for liabilities arising out of their relationship, (iv) contracts under which we may be required to indemnify customers or partners against certain claims, including claims from third parties asserting, among other things, infringement of their intellectual property rights, and (v) procurement, consulting, or license agreements under which we may be required to indemnify vendors, consultants or licensors for certain claims, including claims that may be brought against them arising from our acts or omissions with respect to the supplied products, technology or services. From time to time, we may receive indemnification claims under these contracts in the normal course of business. In addition, under these contracts we may have to modify the accused infringing intellectual property and/or refund amounts received.
In the event that one or more of these matters were to result in a claim against us, an adverse outcome, including a judgment or settlement, may cause a material adverse effect on our future business, operating results or financial condition. It is not possible to determine the maximum potential amount under these contracts due to the limited history of prior indemnification claims and the unique facts and circumstances involved in each particular agreement.
We maintain director and officer insurance, which may cover certain liabilities arising from our obligation to indemnify our directors.
To date, we have not incurred any material costs, and have not accrued any liabilities in the consolidated financial statements as a result of these provisions.
Contingencies
In the ordinary course of business, we are or may be involved in a variety of litigation matters, suits, investigations, and proceedings, including actions with respect to intellectual property claims, government investigations, labor and employment claims, breach of contract claims, tax, and other matters. Regardless of the outcome, these litigation matters can have an adverse impact on us because of defense costs, diversion of management resources, harm to reputation, and other factors. In addition, it is possible that an unfavorable resolution of one or more such litigation matters could, in the future, materially and adversely affect our financial

F-25


position, results of operations, and cash flows in a particular period or subject us to an injunction that could seriously harm its business.
We record a provision for contingent losses when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to our outstanding legal matters management believes that the amount or estimable range of possible loss will not, either individually or in the aggregate, have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. However, the outcome of litigation is inherently uncertain. Therefore, if one or more of these legal matters were resolved against us for amounts in excess of management’s expectations, our results of operations and financial condition including in a particular reporting period, could be materially adversely affected.
8.    Redeemable Convertible Preferred Stock
The authorized, issued, and outstanding shares of redeemable convertible preferred stock as of January 31, 2016 and October 31, 2016 are as follows (in thousands, except shares):
 
 
Shares Authorized, Issued
and Outstanding
 
Aggregate Liquidation
Preference
 
Net Carrying
Value
Series A
 
12,936,594

 
$
5,000

 
$
4,909

Series B
 
12,314,006

 
6,000

 
5,945

Series C
 
8,951,868

 
24,000

 
23,899

Series D
 
8,965,178

 
40,000

 
39,902

Series E
 
8,756,093

 
65,000

 
64,891

Series F
 
10,989,008

 
160,000

 
155,039

Series F-1
 
11,994,668

 
370,875

 
363,102

 
 
74,907,415

 
$
670,875

 
$
657,687

The holders of redeemable convertible preferred stock, or preferred stock, have various rights and preferences as follows:
Dividends
The holders of shares of preferred stock are entitled to receive dividends at the rate of 8% per annum of the preferred stock price per share on each outstanding share of preferred stock (as adjusted for any stock dividends, combinations, or splits with respect to such shares). Dividends are payable in preference and priority to any payment of any dividend on our common stock. Such dividends are payable only when and if declared by the board of directors, but only out of funds that are legally available, and are non-cumulative. Thereafter, any dividends or other non-liquidating distribution by us to our stockholders shall be distributed among the holders of the shares of common stock and preferred stock on an as converted basis. No dividends have been declared through January 31, 2016 and October 31, 2016.
Conversion
Each share of preferred stock is convertible, at the option of the holder, into a number of fully paid and non-assessable shares of common stock on a one-for-one basis. The conversion rate is subject to adjustment from time to time for the effect of a stock split, stock dividend, or other similar distribution. Additionally, conversion is automatic upon the closing of a qualified public offering of common stock, with net proceeds of at least $50.0 million after commissions and underwriting discounts.
Liquidation
In the event of our liquidation, sale, dissolution, or winding up, whether voluntary or involuntary, the holders of preferred stock are entitled to receive, prior and in preference to any distribution of our assets to the holders of

F-26


common stock, an amount equal to the liquidation preference per share, plus any declared but unpaid dividends with respect to such shares. If the proceeds are less than the liquidation amount, the payments will be allocated to each Series in proportion to the respective liquidation preference amounts if paid in full.
After payment has been made to the holders of preferred stock of the full amounts to which they are entitled, the holders of common stock shall be entitled to receive our remaining assets pro rata based on the number of shares of common stock held by each holder.
Voting
The holders of preferred stock are entitled to one vote for each share of common stock that would be held, on an as-converted basis. Generally, preferred stockholders vote with common stockholders as a single class. The Series A, B, and F-1 preferred stockholders, each as a separate class, elect a director. The common stockholders as a class elect two directors. All other directors are elected by all stockholders, both preferred and common, voting together on an as-converted basis.
Redemption
Although our preferred stock is not mandatorily or currently redeemable, they are classified outside of stockholders’ deficit because they are potentially redeemable upon certain events outside of our control, including a greater than 50% change in control or our liquidation, sale, dissolution, or winding up. The carrying values of preferred stock have not been accreted to their redemption values as these events are not considered probable of occurrence. Subsequent adjustments of the carrying values to redemption values will be made only if and when it becomes probable redemption will occur.
9.    Common Stock
The following table summarizes our authorized, issued, reserved and outstanding common stock as of January 31, 2016:
 
 
Authorized
Preferred Stock
 
Issued
Preferred
 
Common
Reserved
 
Common
Issued
 
Common Issued
or Reserved for
Issuance
Series A
 
12,936,594

 
12,936,594

 
12,936,594

 

 
12,936,594

Series B
 
12,314,006

 
12,314,006

 
12,314,006

 

 
12,314,006

Series C
 
8,951,868

 
8,951,868

 
8,951,868

 

 
8,951,868

Series D
 
8,965,178

 
8,965,178

 
8,965,178

 

 
8,965,178

Series E
 
8,756,093

 
8,756,093

 
8,756,093

 

 
8,756,093

Series F
 
10,989,008

 
10,989,008

 
10,989,008

 

 
10,989,008

Series F-1
 
11,994,668

 
11,994,668

 
11,994,668

 

 
11,994,668

Common outstanding
 

 

 

 
35,775,694

 
35,775,694

2008 Equity Incentive Plan:
 


 


 


 


 
 
Restricted stock units and options outstanding
 

 

 
36,009,314

 

 
36,009,314

Shares available for grant
 

 

 
336,697

 

 
336,697

Amended and Restated 2008 Stock Purchase and Option Plan (from prior acquisition):
 


 


 


 


 


   Options outstanding
 

 

 
54,337

 

 
54,337

Undesignated
 

 

 
2,916,543

 

 
2,916,543

 
 
74,907,415

 
74,907,415

 
114,224,306

 
35,775,694

 
150,000,000


F-27


The following table summarizes our authorized, issued, reserved and outstanding common stock as of October 31, 2016:
 
 
Authorized
Preferred Stock
 
Issued
Preferred
 
Common
Reserved
 
Common
Issued
 
Common Issued
or Reserved for
Issuance
 
 
(unaudited)
Series A
 
12,936,594

 
12,936,594

 
12,936,594

 

 
12,936,594

Series B
 
12,314,006

 
12,314,006

 
12,314,006

 

 
12,314,006

Series C
 
8,951,868

 
8,951,868

 
8,951,868

 

 
8,951,868

Series D
 
8,965,178

 
8,965,178

 
8,965,178

 

 
8,965,178

Series E
 
8,756,093

 
8,756,093

 
8,756,093

 

 
8,756,093

Series F
 
10,989,008

 
10,989,008

 
10,989,008

 

 
10,989,008

Series F-1
 
11,994,668

 
11,994,668

 
11,994,668

 

 
11,994,668

Common outstanding
 

 

 

 
36,705,536

 
36,705,536

2008 Equity Incentive Plan:
 


 


 


 


 
 
Restricted stock units and options outstanding
 

 

 
38,461,613

 

 
38,461,613

Shares available for grant
 

 

 
955,806

 

 
955,806

Amended and Restated 2008 Stock Purchase and Option Plan (from prior acquisition):
 


 


 


 


 
 
   Options outstanding
 

 

 
54,042

 

 
54,042

Undesignated
 

 

 
8,915,588

 

 
8,915,588

 
 
74,907,415

 
74,907,415

 
123,294,464

 
36,705,536

 
160,000,000

10.    Stock Option Plans
As of January 31, 2016 and October 31, 2016, 56,575,886 and 60,577,136, respectively, shares of common stock were reserved under the 2008 Plan for the grant of incentive and nonqualified stock options, restricted stock purchases, awards and units and stock appreciation rights to employees, directors, consultants and other service providers.
The 2008 Plan provides for stock options to be granted at an exercise price not less than 100% of the fair market value at the grant date as determined by the board of directors, unless, with respect to incentive stock options, the optionee is a 10% stockholder, in which case the option price will not be less than 110% of such fair market value. Options granted generally have a maximum term of ten years from the grant date, are exercisable upon vesting unless otherwise designated for early exercise by the board of directors at the time of grant, and generally vest over a four year period, with 25% vesting after one year and then ratably on a monthly basis for the remaining three years.

F-28


The following tables summarize stock option activity and related information:
 
 
 
Options Outstanding
 
Shares
Available
for Grant
 
Options
Outstanding
 
Weighted-
Average
Exercise
Price
 
Weighted-Average Remaining
Contractual
Term
(Years)
 
Aggregate
Intrinsic
Value
 
 
 
 
 
 
 
 
 
(in thousands)
Balance — January 31, 2015
1,017,709

 
30,848,554

 
$
3.59

 

 

Additional shares reserved
5,858,469

 

 

 

 

Restricted stock activity, net
(6,749,712
)
 

 

 

 

Granted
(1,318,890
)
 
1,318,890

 
17.94

 

 

Exercised

 
(5,838,389
)
 
1.87

 

 

Canceled
1,493,769

 
(1,493,769
)
 
6.28

 

 

Shares in lieu of taxes
36,206

 

 

 

 
 
Plan shares expired
(854
)
 

 

 

 
 
Balance — January 31, 2016
336,697

 
24,835,286

 
4.60

 
6.9

 
$
497,338

Additional shares reserved (unaudited)
4,001,250

 

 

 

 

Restricted stock activity, net (unaudited)
(3,899,846
)
 

 

 

 
 
Granted (unaudited)
(126,980
)
 
126,980

 
17.85

 

 

Exercised (unaudited)

 
(903,079
)
 
2.83

 

 

Canceled (unaudited)
644,980

 
(644,980
)
 
10.40

 

 

Plan shares expired (unaudited)
(295
)
 

 

 

 
 
Balance — October 31, 2016 (unaudited)
955,806

 
23,414,207

 
$
4.58

 
6.3

 
$
342,650

Exercisable— January 31, 2016
 
 
15,723,845

 
$
3.12

 
6.6

 
$
338,100

Vested or expected to vest — January 31, 2016
 
 
24,067,662

 
$
4.44

 
7.0

 
$
485,600

Exercisable — October 31, 2016 (unaudited)
 
 
18,621,982

 
$
3.51

 
6.0

 
$
292,225

Vested or expected to vest — October 31, 2016 (unaudited)
 
 
23,097,595

 
$
4.48

 
6.3

 
$
340,340

As of January 31, 2016 and October 31, 2016, there were no unvested options exercisable.
The total intrinsic value of options exercised during the year ended January 31, 2016 and during the nine months ended October 31, 2015 and 2016 was $160.0 million, $141.0 million and $16.2 million, respectively. The intrinsic value is the difference between the current fair market value of the stock for accounting purposes at the time of exercise and the exercise price of the stock option. As we have accumulated net operating losses, no future tax benefit related to option exercises has been recognized.

F-29


The weighted-average grant-date value of employee options granted during the year ended January 31, 2016 and for the nine months ended October 31, 2015 and 2016 was $17.94, $15.63 and $10.13 per share for, respectively. The value of employee options for stock-based compensation expense purposes is estimated at the grant date using the Black-Scholes option-pricing model with the following weighted-average assumptions:
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
 
 
 
(unaudited)
Volatility
44.3%
 
44.3%
 
48.17%
Risk-free interest rate
1.7%
 
1.71%
 
1.42%
Expected term (in years)
6.1 years
 
6.1 years
 
6.0 years
Expected dividends
—%
 
—%
 
—%
The unamortized stock-based compensation expense, net of estimated forfeitures, of $46.9 million and $30.9 million at January 31, 2016 and October 31, 2016, respectively, will be recognized over the average remaining vesting period of 1.9 years and 1.4 years, respectively. This unamortized stock-based compensation expense excludes the expense associated with the employee RSUs because there is a performance-based requirement for vesting. Consequently, the timing of when we will recognize the stock-based compensation expense is dependent on a liquidity event as discussed below. The unamortized stock-based compensation expense for these RSUs is $303.2 million and $364.1 million at January 31, 2016 and October 31, 2016, respectively.
We issue RSUs to employees and directors. The employee RSUs under the 2008 Plan have two vesting conditions: (1) a service condition and (2) a liquidity condition which is considered a performance-based condition. For new employee grants, the RSUs generally meet the service condition over a four year period, with 25% meeting after one year and then ratably on a quarterly basis for the remaining three years. For continuing employee grants, the RSUs generally meet the service condition pro-rata quarterly over the four-year period (without a one-year cliff). In the event of a liquidity event such as an IPO of our common stock, a change in control, or certain qualifying secondary liquidity transactions, as defined by the board of directors and within the time period determined by the board of directors, and the employee remains employed with us upon the occurrence of the event or six months following the effective date of an IPO, the RSUs will be settled in shares of our common stock to the extent the service condition has been met. Upon the satisfaction of both vesting conditions, the RSUs entitle the holder to one share of common stock for each unit of restricted stock. The total fair value of RSUs vested during the year ended January 31, 2016 and for the nine months ended October 31, 2015 and 2016 was $22.5 million, $22.4 million, and $0.6 million, respectively.

F-30


Restricted stock activity is as follows:
 
Restricted Stock Units Outstanding
 
Number of
Restricted
Stock Units
 
Weighted-
Average
Grant Date
Fair Value
Per Share
 
 
 
 
Balance — January 31, 2015
5,278,205

 
$
25.80

Granted
7,559,269

 
26.16

Canceled
(809,557
)
 
23.99

Vested and converted to shares
(799,552
)
 
25.82

Balance — January 31, 2016
11,228,365

 
26.17

Granted (unaudited)
5,291,184

 
20.43

Canceled (unaudited)
(1,391,338
)
 
25.62

Vested and converted to shares (unaudited)
(26,763
)
 
26.37

Balance — October 31, 2016 (unaudited)
15,101,448

 
$
24.21

In May 2015, an unrelated third party initiated a cash tender offer which was completed in July 2015 for the purchase of shares of our common stock from specified categories of current and former employees who sold a total of 4,079,131 shares of our common stock to the unrelated third party. The purchase price per share in the tender offer was in excess of the fair value of our common stock at the time of the transaction and accordingly, upon completion of the transaction, we recorded $16.6 million as stock-based compensation expense related to the excess of the selling price per share of common stock paid to our employees over the fair value of the tendered shares.
This tender offer was a qualifying liquidity event under the 2008 Plan governing RSUs, meaning the performance condition was achieved for those RSUs that had met the service condition as of this date. Upon the close of the transaction, we recorded $19.7 million of stock-based compensation expense, using the accelerated attribution method, for the RSUs for which both vesting conditions had been achieved.
Except for the RSUs that vested concurrent with the close of the tender offer, there was no stock-based compensation expense recognized for the employee RSUs granted in fiscal 2016 and the nine months ended October 31, 2016 , due to the contingent nature of the possible liquidity events. This condition is viewed as a performance-based criterion which is not considered probable in accounting for the stock-based compensation expense. As such, once the performance-based criterion is achieved, we will begin recognizing stock-based compensation expense using the accelerated attribution method, net of estimated forfeitures, for all RSUs over the remaining service period. In the case of an IPO event, the performance-based criterion is achieved six months following the completion of our IPO. For the RSUs for which the service condition has been met as of the date of our IPO, or is met within that six month period, the stock-based compensation expense will be recognized over the six month period following the effective date of our IPO. If this offering had been completed on October 31, 2016, we would have recognized $179.4 million of stock‑based compensation expense on that date, and would have approximately $184.7 million of additional future period expense to be recognized over the remaining service periods through fiscal 2021.

F-31


Stock-based compensation expense was recorded in the consolidated statements of operations as follows (in thousands):
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
 
 
 
(unaudited)
Cost of revenue – subscription
$
3,363

 
$
3,008

 
$
1,051

Cost of revenue – services
4,301

 
3,862

 
1,363

Research and development
23,048

 
21,480

 
4,325

Sales and marketing
19,187

 
17,520

 
4,496

General and administrative
13,691

 
11,939

 
5,322

Total stock-based compensation expense
$
63,590

 
$
57,809

 
$
16,557

11.    Income taxes
The domestic and foreign components of loss before provision for income taxes consisted of the following (in thousands):
 
Year Ended
January 31,
 
2016
Domestic
$
(204,713
)
Foreign
2,680

Total loss before income taxes
$
(202,033
)
The components of provision for income taxes are as follows (in thousands):
 
Year Ended
January 31,
 
2016
Current:
 
   Federal
$

   State
(177
)
   Foreign
(940
)
Total current tax expense
(1,117
)
Deferred:
 
   Federal

   State

   Foreign
7

Total deferred tax expense
7

Total provision for income taxes
$
(1,110
)

F-32


Our effective tax rate substantially differed from the federal statutory tax rate of 34% primarily due to the change in the valuation allowance for our deferred tax assets. A reconciliation of income taxes at the statutory federal income tax rate to the provision for income taxes included in the consolidated statements of operations is as follows (in thousands):
 
Year Ended
January 31,
 
2016
U.S. federal statutory income tax at 34%
$
68,691

Research tax credits
1,532

Stock-based compensation
(11,060
)
Change in valuation allowance
(60,245
)
Other
(28
)
Provision for income taxes
$
(1,110
)
The deferred tax assets and liabilities were as follows (in thousands):
 
As of
January 31,
 
2016
Deferred tax assets:
 
   Accruals and reserves
$
9,076

   Deferred revenue
19,978

   Net operating loss carryforward
126,495

   Research and development credits and other credits
7,718

   Stock-based compensation
7,308

   Gross deferred tax assets
170,575

Less valuation allowance
(167,729
)
Total deferred tax assets
2,846

Deferred tax liabilities:
 
   Depreciation and amortization
(2,689
)
Gross deferred tax liabilities
(2,689
)
Net deferred tax assets
$
157

We have not recorded a provision for deferred United States tax expense related to $3.1 million of our undistributed earnings of our foreign subsidiaries as of January 31, 2016 because these earnings are intended to be permanently reinvested in operations outside of the United States. We have determined the unrecognized deferred tax liabilities associated with these earnings are not material.
A valuation allowance is provided when it is more likely than not that the deferred tax assets will not be realized. We have established a valuation allowance to offset net deferred tax assets at January 31, 2016 due to the uncertainty of realizing future tax benefits from our net operating loss carryforwards and other deferred tax assets. The net change in the total valuation allowance for the years ended January 31, 2016 was an increase of approximately $68.8 million.
At January 31, 2016, we have federal, California and other state net operating loss carryforwards of approximately $467.2 million, $166.0 million and $140.1 million, respectively, expiring beginning fiscal 2029, for federal and California purposes and fiscal 2018 for other states’ purposes.
The excess tax benefits associated with stock option exercises are recorded directly to stockholders’ equity only when such benefits are realized following the tax law ordering approach. As a result, the excess tax benefits included

F-33


in net operating loss carryforwards but not reflected in deferred tax assets for fiscal 2016 are $51.0 million. The excess tax benefit associated with stock option exercises will only be recorded to equity when they reduce cash taxes payable.
At January 31, 2016, we have federal and state research credit carryforwards of approximately $7.9 million and $7.3 million, respectively, expiring beginning in calendar year 2029 for federal purposes. The state credits can be carried forward indefinitely.
Federal and state tax laws may impose substantial restrictions on the utilization of the net operating loss and credit carryforward attributes in the event of an ownership change as defined in Section 382 of the Internal Revenue Code. Accordingly, our ability to utilize these carryforwards may be limited as a result of such ownership change. Such a limitation could result in the expiration of carryforwards before they are utilized.
For benefits to be recorded, a tax position must be more likely than not to be sustained upon examination. The amount recognized is measured as the largest amount of benefit that is greater than 50% likely of being realized upon settlement. The following table reflects the changes in the gross unrecognized tax benefits (in thousands):
 
Year Ended
January 31,
 
2016
Balance as of February 1, 2015
$
4,200

Tax positions taken in current period
 
     Gross increases
2,300

Balance as of January 31, 2016
$
6,500

We recognize interest and penalties related to income tax matters in the provision for income taxes. As of January 31, 2016, we had no accrued interest and penalties related to uncertain tax positions. We are subject to taxes in the United States and other foreign jurisdictions. In the normal course of business, we are subject to examination by various federal, state and local taxing authorities. We are not currently under audit by the Internal Revenue Service or any other tax authority. All tax years remain open to examination by major taxing jurisdictions in which we file returns.
12.    Related Party Transactions
We have been engaged in commercial transactions with Intel Corporation, a holder of our common stock and preferred stock, representing approximately 22% of outstanding shares as of October 31, 2016, with a representative serving as a member of our board of directors, including a multi-year subscription and services agreement, and a collaboration and optimization agreement. The aggregate revenue we recognized from this customer was $5.4 million, $3.9 million and $6.2 million for the year ended January 31, 2016 and nine months ended October 31, 2015 and 2016, respectively. There were $1.5 million and $2.3 million in accounts receivable due from this customer as of January 31, 2016 and October 31, 2016, respectively. There was $1.5 million and $2.2 million in deferred revenue as of January 31, 2016 and October 31, 2016, respectively.
13.    Segment Information
The results of the reportable segments are derived directly from our management reporting system and are based on our method of internal reporting which are not necessarily in conformity with GAAP. Management measures the performance of each segment based on several metrics, including contribution margin, as defined below. Management does not use asset information to assess performance and make decisions regarding allocation of resources. Therefore, depreciation and amortization expense is not allocated among segments.
Contribution margin is used, in part, to evaluate the performance of, and allocate resources to, each of the segments. Segment contribution margin includes segment revenue less the related cost of sales excluding certain operating expenses that are not allocated to segments because they are separately managed at the consolidated corporate level. These unallocated costs include stock-based compensation expense, amortization of acquired

F-34


intangible assets, direct sales and marketing costs, research and development costs, corporate general and administrative costs, such as legal and accounting, interest income, interest expense, and other income (expense).
Financial information for each reportable segment was as follows (in thousands):
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
 
 
 
(unaudited)
Revenue:
 
 
 
Subscription
$
119,150

 
$
82,424

 
$
144,093

Services
46,898

 
33,244

 
44,106

Total revenue
$
166,048

 
$
115,668

 
$
188,199

 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
 
 
 
(unaudited)
Contribution margin:
 
 
 
Subscription
$
93,249

 
$
64,497

 
$
117,695

Services
6,021

 
3,443

 
9,114

Total segment contribution margin
$
99,270

 
$
67,940

 
$
126,809

The reconciliation of segment financial information to our loss from operations is as follows (in thousands):
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
 
 
 
(unaudited)
Segment contribution margin
$
99,270

 
$
67,940

 
$
126,809

Amortization of acquired intangible assets
(3,455
)
 
(2,597
)
 
(2,775
)
Stock-based compensation expense
(63,590
)
 
(57,809
)
 
(16,557
)
Corporate costs, such as research and development, corporate general and administrative and other
(236,862
)
 
(168,645
)
 
(233,768
)
Loss from operations
$
(204,637
)
 
$
(161,111
)
 
$
(126,291
)
Sales outside of the United States represented approximately 21 %, 17% and 25% of our total revenue for the year ended January 31, 2016 and nine months ended October 31, 2015 and 2016 , respectively. All revenues from external customers are attributed to individual countries on an end‑customer basis, based on domicile of the purchasing entity, if known, or the location of the customer’s headquarters if the specific purchasing entity within the customer is unknown.
As of January 31, 2016 and October 31, 2016, assets located outside the United States were less than 1% of total assets, respectively.

F-35


14.    Net Loss Per Share Attributable to Common Stockholders
The following table sets forth the calculation of basic and diluted net loss per share attributable to common stockholders during the periods presented (in thousands, except share and per share data):
 
Year Ended
January 31,
 
Nine Months Ended
October 31,
 
2016
 
2015
 
2016
 
 
 
(unaudited)
Numerator:
 
 
 
 
 
Net loss
$
(203,143
)
 
$
(160,027
)
 
$
(125,885
)
Denominator:
 
 
 
 
 
Weighted-average shares used in computing net loss attributable to common stockholders, basic and diluted
32,723,629

 
31,802,117

 
36,260,948

Net loss per share attributable to common stockholders, basic and diluted
$
(6.21
)
 
$
(5.03
)
 
$
(3.47
)
The following outstanding shares of common stock equivalents were excluded from the computation of the diluted net loss per share attributable to common stockholders for the periods presented because their effect would have been anti‑dilutive:
 
As of
 
January 31,
 
October 31,
 
2016
 
2015
 
2016
 
 
 
(unaudited)
Redeemable convertible preferred stock on an as-if converted basis
74,907,415

 
74,907,415

 
74,907,415

Stock options to purchase common stock
24,835,286

 
25,673,669

 
23,414,207

Restricted stock units
11,228,365

 
7,835,981

 
15,101,448

Total
110,971,066

 
108,417,065

 
113,423,070

15.    Unaudited Pro Forma Net Loss Per Share
Pro forma net loss per share was computed to give effect to the automatic conversion of all series of redeemable convertible preferred stock using the if‑converted method as though the conversion had occurred as of the beginning of the period or the date of issuance, if later. As discussed in Note  10 , RSUs will be settled in shares of our common stock to the extent the service condition has been met and the recipient remains employed with the Company six months following the effective date of an IPO. These RSUs are subject to forfeiture prior to settlement in the event of termination of employment or where the recipient is not employed with the Company six months following the effective date of an IPO. The pro forma share amounts in the table below do not give effect to the settlement of such RSUs as the vesting is subject to employment following this offering. The net loss used in computing pro forma net loss per share amounts in the table below do not give effect to the stock-based compensation expense associated with RSUs that have both a service and a performance condition. Such expense will be recognized using the accelerated attribution method in the six months following the effective date of our IPO. If this offering had been completed on October 31, 2016, we would have recognized $179.4 million of additional stock‑based compensation expense on that date, and would have approximately $184.7 million of additional future period expense to be recognized over the remaining service periods through fiscal 2021.

F-36


The following table sets forth the computation of our unaudited pro forma basic and diluted net loss per share (in thousands, except share and per share data):
 
Year Ended
January 31, 2016
 
Nine Months Ended
October 31, 2016
Numerator:
 
 
 
Net loss used in computing pro forma net loss per share
$
(203,143
)
 
$
(125,885
)
Denominator:
 
 
 
Weighted-average shares of common stock used in computing net loss per share attributable to common stockholders
32,723,629

 
36,260,948

Weighted-average pro forma adjustment to reflect assumed conversion of redeemable convertible preferred stock
74,907,415

 
74,907,415

Weighted-average shares used in computing pro forma net loss per share attributable to common stockholders, basic and diluted
107,631,044

 
111,168,363

Pro forma net loss per share attributable to common stockholders, basic and diluted
$
(1.89
)
 
$
(1.13
)
16.    Subsequent Events
In preparing the consolidated financial statements as of January 31, 2016 and for the year then ended, we evaluated subsequent events for recognition and measurement purposes through June 1, 2016, the date the independent auditors’ report was originally issued and the audited annual consolidated financial statements were available for issuance. After the original issuance of the consolidated financial statements and through December 20, 2016, we evaluated subsequent events or transactions that have occurred that may require disclosure in the accompanying consolidated financial statements.
17.    Subsequent Events (unaudited)
In preparing the unaudited interim consolidated financial statements as of October 31, 2016 and for the nine months then ended, we evaluated subsequent events through December 20, 2016, the date the unaudited interim consolidated financial statements were available for issuance.
Through December 20, 2016, we increased the number of shares reserved for grant under the 2008 Plan by 6,000,000 shares of our common stock, and we granted to employees 6,853,400 RSUs as well as options to purchase 243,500 shares of our common stock with an exercise price of $17.85 per share and an aggregate grant date fair value of approximately $128.0 million.


F-37















clouderalogocmyk1.jpg




PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses to be paid by the Registrant in connection with the sale of the shares of common stock being registered hereby. All amounts are estimates except for the Securities and Exchange Commission (SEC) registration fee and the Financial Industry Regulatory Authority (FINRA) filing fee.
SEC registration fee
$
*
FINRA filing fee
 
*
The                listing fee
 
*
Printing and engraving expenses
 
*
Legal fees and expenses
 
*
Accounting fees and expenses
 
*
Transfer agent and registrar fees and expenses
 
*
Miscellaneous fees and expenses
 
*
Total
$
*
___________
* To be provided amendment.
Item 14. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation’s board of directors to grant, indemnity to directors and officers under certain circumstances and subject to certain limitations. The terms of Section 145 of the Delaware General Corporation Law are sufficiently broad to permit indemnification under certain circumstances for liabilities, including reimbursement of expenses incurred, arising under the Securities Act of 1933, as amended, or Securities Act.
As permitted by the Delaware General Corporation Law, the Registrant’s restated certificate of incorporation that will be in effect upon the completion of the offering contains provisions that eliminate the personal liability of its directors for monetary damages for any breach of fiduciary duties as a director, except liability for the following:
any breach of the director’s duty of loyalty to the Registrant or its stockholders;
acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;
under Section 174 of the Delaware General Corporation Law (regarding unlawful dividends and stock purchases); or
any transaction from which the director derived an improper personal benefit.
As permitted by the Delaware General Corporation Law, the Registrant’s restated bylaws that will be in effect upon the completion of the offering provide that:
the Registrant is required to indemnify its directors and officers to the fullest extent permitted by the Delaware General Corporation Law, subject to very limited exceptions;
the Registrant may indemnify its other employees and agents as set forth in the Delaware General Corporation Law;
the Registrant is required to advance expenses, as incurred, to its directors and officers in connection with a legal proceeding to the fullest extent permitted by the Delaware General Corporation Law, subject to limited exceptions; and

II-1


the rights conferred in the bylaws are not exclusive.
The Registrant has entered, and intends to continue to enter into separate indemnification agreements with its current directors and executive officers to provide these directors and executive officers additional contractual assurances regarding the scope of the indemnification set forth in the Registrant’s restated certificate of incorporation and restated bylaws and to provide additional procedural protections. At present, there is no pending litigation or proceeding involving a director, executive officer or employee of the Registrant for which indemnification is sought. Reference is also made to the Underwriting Agreement filed as Exhibit 1.01 to this registration statement, which provides for the indemnification of executive officers, directors and controlling persons of the Registrant against certain liabilities. The indemnification provisions in the Registrant’s restated certificate of incorporation, restated bylaws and the indemnification agreements entered into or to be entered into between the Registrant and each of its directors and executive officers may be sufficiently broad to permit indemnification of the Registrant’s directors and executive officers for liabilities arising under the Securities Act.
The Registrant has directors’ and officers’ liability insurance for securities matters.
Reference is made to the following documents filed as exhibits to this Registration Statement regarding relevant indemnification provisions described above and elsewhere herein:
Exhibit Document
 
Number
Form of Underwriting Agreement
 
1.01
Form of Restated Certificate of Incorporation of the Registrant, to be in effect upon completion of this offering
 
3.02
Form of Restated Bylaws of the Registrant, to be in effect upon completion of this offering
 
3.04
Amended and Restated Investor Rights Agreement, dated as of March 24, 2014, by and among the Registrant and certain investors of the Registrant
 
4.02
Form of Indemnity Agreement entered into between the Registrant and its directors and executive officers
 
10.01
Item 15. Recent Sales of Unregistered Securities.
Since January 26, 2014, the Registrant has issued and sold the following unregistered securities:
1.
Options to employees, directors, consultants, and other service providers to purchase an aggregate of 5,057,310 shares of common stock under its 2008 Equity Incentive Plan, or 2008 Plan, with per share exercise prices ranging from $10.05 to $20.24.
2.
Options to employees to purchase an aggregate of 64,574 shares of common stock under its Gazzang Plan, with per share exercise prices ranging from $1.59 to $1.82.
3.
An aggregate of 25,083,958 restricted stock units to employees, directors, consultants, and other service providers to be settled in shares of common stock under its 2008 Plan.
4.
10,678,951 shares of common stock to its employees, directors, consultants, and other service providers upon exercise of options granted under its 2008 Plan, with purchase prices ranging from $0.085 to $19.46, for an aggregate purchase price of $21,878,467.
5.
1,008 shares of common stock to employees upon exercise of options granted under its Gazzang Plan, with purchase prices ranging from $1.59 to $1.82, for an aggregate purchase price of $1,784.
6.
In May 2014, the Registrant entered into a Series F‑1 Preferred Stock Purchase Agreement pursuant to which it issued and sold to one accredited investors an aggregate of 11,994,668 shares of its Series F‑1 preferred stock, at a purchase price of $30.92 per share, for aggregate consideration of approximately $370,875,135.

II-2


None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering. Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(2) of the Securities Act (or Regulation D or Regulation S promulgated thereunder) or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.
Item 16. Exhibits and Financial Statement Schedules.
(a)    Exhibits.
Exhibit Number
 
Exhibit Title
1.01*
 
Form of Underwriting Agreement
3.01+
 
Amended and Restated Certificate of Incorporation of the Registrant, as currently in effect
3.02*
 
Form of Restated Certificate of Incorporation of the Registrant, to be effective upon the completion of this offering
3.03+
 
Amended and Restated Bylaws of the Registrant, as currently in effect
3.04*
 
Form of Restated Bylaws of the Registrant, to be effective upon the completion of this offering
4.01*
 
Form of Registrant’s Common Stock Certificate
4.02*
 
Amended and Restated Investor Rights Agreement, dated as of March 24, 2014, by and among the Registrant and certain investors of the Registrant
4.03*
 
Right of First Notice and Standstill Agreement, dated as of March 24, 2014, by and between the Registrant and Intel Corporation
4.04*
 
Confidentiality Agreement, dated as of March 21, 2014, by and between the Registrant and Intel Corporation
5.01*
 
Opinion of Fenwick & West LLP regarding the legality of the securities being registered
10.01*
 
Form of Indemnification Agreement entered into between the Registrant and each of its directors and executive officers
10.02+
 
2008 Equity Incentive Plan, as amended, and forms of agreement thereunder
10.03*
 
2017 Equity Incentive Plan, and forms of agreement thereunder
10.04*
 
2017 Employee Stock Purchase Plan
10.05+
 
Offer Letter between Thomas J. Reilly and the Registrant, dated May 22, 2013
10.06+
 
Employment Agreement between Jim Frankola and the Registrant, dated September 10, 2012
10.07+
 
Offer Letter between Michael A. Olson and the Registrant, dated October 2008
10.08†
 
Lease between 495 Java Drive Associates, L.P. and the Registrant, dated as of April 18, 2013
10.09†
 
Lease between 395 Page Mill LLC and the Registrant, dated as of September 6, 2016
10.10†
 
Consent to Sublease between 395 Page Mill LLC, Machine Zone, Inc. and the Registrant dated as of September 26, 2016
10.11*
 
Collaboration and Optimization Agreement, dated as of March 21, 2014, by and between the Registrant and Intel Corporation
21.01+
 
List of subsidiaries
23.01*
 
Consent of Fenwick & West LLP (included in Exhibit 5.01)
23.02*
 
Consent of Independent Registered Public Accounting Firm
24.01*
 
Power of Attorney (included on the signature page to this Registration Statement)
___________
*
To be filed by amendment.
+
Previously submitted.
Confidential treatment has been requested for portions of this exhibit pursuant to Rule 406 promulgated under the Securities Act. These portions have been omitted and submitted separately to the Securities and Exchange Commission.

II-3


(b)    Financial Statement Schedules.
All other financial statement schedules are omitted because they are not applicable or the information is included in the Registrant’s consolidated financial statements or related notes.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the Registrant pursuant to provisions described in Item 14 above, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1)
for purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.
(2)
for the purpose of determining any liability under the Securities Act, each post‑effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-4


SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Palo Alto, State of California, on                                    , 2017.
 
CLOUDERA, INC.
 
 
 
 
By:
 
 
 
Thomas J. Reilly
 
 
Chief Executive Officer
KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature appears below constitutes and appoints Thomas J. Reilly and Jim Frankola, and each of them, his true and lawful attorneys‑in‑fact and agents with full power of substitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post‑effective amendments) to this Registration Statement, and to sign any registration statement for the same offering covered by the Registration Statement that is to be effective upon filing pursuant to Rule 462(b) promulgated under the Securities Act, and all post‑effective amendments thereto, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys‑in‑fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys‑in‑fact and agents or any of them, or his or their substitute or substitutes, may lawfully do or cause to be done or by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated:
Name
Title
Date
 
Chief Executive Officer and Director
(Principal Executive Officer)
 
Thomas J. Reilly
                         , 2017
 
Chief Financial Officer
(Principal Financial and Accounting Officer)
 
Jim Frankola
                         , 2017
 
Chief Strategy Officer and Chairman
(Director)
 
Michael A. Olson
                         , 2017
 
Director
 
Ping Li
                         , 2017
 
Director
 
Martin I. Cole
                         , 2017
 
Director
 
Steve J. Sordello
                         , 2017
 
Director
 
Kimberly S. Stevenson
                         , 2017
 
Director
 
Richard H. Williams
                         , 2017


II-5


EXHIBIT INDEX
Exhibit Number
 
Exhibit Title
1.01*
 
Form of Underwriting Agreement
3.01+
 
Amended and Restated Certificate of Incorporation of the Registrant, as currently in effect
3.02*
 
Form of Restated Certificate of Incorporation of the Registrant, to be effective upon the completion of this offering
3.03+
 
Amended and Restated Bylaws of the Registrant, as currently in effect
3.04*
 
Form of Restated Bylaws of the Registrant, to be effective upon the completion of this offering
4.01*
 
Form of Registrant’s Common Stock Certificate
4.02*
 
Amended and Restated Investor Rights Agreement, dated as of March 24, 2014, by and among the Registrant and certain investors of the Registrant
4.03*
 
Right of First Notice and Standstill Agreement, dated as of March 24, 2014, by and between the Registrant and Intel Corporation
4.04*
 
Confidentiality Agreement, dated as of March 21, 2014, by and between the Registrant and Intel Corporation
5.01*
 
Opinion of Fenwick & West LLP regarding the legality of the securities being registered
10.01*
 
Form of Indemnification Agreement entered into between the Registrant and each of its directors and executive officers
10.02+
 
2008 Equity Incentive Plan, as amended, and forms of agreement thereunder
10.03*
 
2017 Equity Incentive Plan, and forms of agreement thereunder
10.04*
 
2017 Employee Stock Purchase Plan
10.05+
 
Offer Letter between Thomas J. Reilly and the Registrant, dated May 22, 2013
10.06+
 
Employment Agreement between Jim Frankola and the Registrant, dated September 10, 2012
10.07+
 
Offer Letter between Michael A. Olson and the Registrant, dated October 2008
10.08†
 
Lease between 495 Java Drive Associates, L.P. and the Registrant, dated as of April 18, 2013
10.09†
 
Lease between 395 Page Mill LLC and the Registrant, dated as of September 6, 2016
10.10†
 
Consent to Sublease between 395 Page Mill LLC, Machine Zone, Inc. and the Registrant dated as of September 26, 2016
10.11*
 
Collaboration and Optimization Agreement, dated as of March 21, 2014, by and between the Registrant and Intel Corporation
21.01+
 
List of subsidiaries
23.01*
 
Consent of Fenwick & West LLP (included in Exhibit 5.01)
23.02*
 
Consent of Independent Registered Public Accounting Firm
24.01*
 
Power of Attorney (included on the signature page to this Registration Statement)
___________
*
To be filed by amendment.
+
Previously submitted.
Confidential treatment has been requested for portions of this exhibit pursuant to Rule 406 promulgated under the Securities Act. These portions have been omitted and submitted separately to the Securities and Exchange Commission.


EX-10.08 2 filename2.htm Exhibit
Exhibit 10.08

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.
















LEASE AGREEMENT
by and between
495 Java Drive Associates, L.P.
(“Landlord”)
and
CLOUDERA, INC.
(“Tenant”)
Dated as of April 18, 2013





















CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


BASIC LEASE INFORMATION
Lease Date:
April 18, 2013
LANDLORD:
495 JAVA DRIVE ASSOCIATES, L.P.,
a California limited partnership
Managing Agent:
THE MOZART DEVELOPMENT COMPANY
Landlord’s and Managing Agent’s Address:
c/o THE MOZART DEVELOPMENT COMPANY
1068 East Meadow Circle
Palo Alto, CA 94303
Attn: John Mozart and Chris Keith
TENANT:
CLOUDERA, INC.,
a Delaware corporation
Tenant’s Address:
Prior to the Commencement Date:
433 California Street, Suite 1100
San Francisco, CA 94104
Attention: Jim Frankola

From and after the Commencement Date:|
At the Premises

Land:
The real property outlined on Exhibit “A” attached hereto.
Premises:
Two (2) separate buildings (each, a “Building” and collectively, the “Buildings”), having addresses of 1001 Page Mill Road, Building #2 (“Building 2”) and Building #3 (“Building 3”), in Palo Alto, California, as identified on the Site Plan attached hereto as Exhibit “A”.
Project:
The Land, the Buildings, and all other buildings and improvements now or hereafter located on the Land. The Project may be expanded to include other land and improvements and/or reconfigured in accordance with Paragraph l(b).
Rentable Area of the Premises:
Deemed to be 53,558 rentable square feet (the “Rentable Area”), consisting of 26,661 rentable square feet in Building 2 (“Building 2 Rentable Area”) and 26,897 rentable square feet in Building 3 (“Building 3 Rentable Area”). The Rentable Area for each Building indicated shall be conclusive and binding on the parties for all purposes of this Lease including, without limitation, for calculating Monthly Base Rent, Tenant’s Share and the Tenant Allowance, and not subject to remeasurement by either party during the Term of this Lease.
Tenant’s Use of the Premises:
General Office, administration, and software research and development (“Permitted Uses”).
Lease Term:
The initial term of this Lease shall commence, for each Building, on the Commencement Date for such Building as defined below, and shall expire for both Buildings on the date immediately preceding the date that is ninety-five (95) months after the Building 2 Commencement Date (as applicable for each Building, the “Initial Term”), with the right to extend for one (1) additional five (5) year term in accordance with Paragraph 37.

2

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


Building 2 Scheduled Delivery Date:
The date immediately following receipt of consent to this Lease from each of the current Mortgagee and the Ground Lessor as required by Paragraph 42 and 43, respectively.
Building 3 Scheduled Delivery Date:
September 1, 2014, subject to Paragraphs 3(a), 42 and 43.
Building 2 Scheduled Commencement Date:
July 1, 2013.
Building 3 Scheduled Commencement Date:
November 1, 2014, subject to Paragraphs 3(a), 42 and 43.
Tenant Allowance:
For Building 2:    $1,199,745.00, representing $45.00 per square foot of Building 2 Rentable Area.
For Building 3:
$537,940.00, representing $20.00 per square foot of Building 3 Rentable Area.
Monthly Base Rent:
Monthly Base Rent shall be the following amounts for the following periods of time (provided that the last two columns below shall apply only on and after the Building 3 Commencement Date):
Lease
Month
Building 2 Monthly Base Rent
Building 3 Monthly Base Rent
Aggregate Monthly Base Rent
1-12

$135,971.10


$0.00


$135,971.10

13-16

$140,050.23


$0.00


$140,050.23

17-24

$140,050.23


$141,289.94


$281,340.17

25-36

$144,251.74


$145,528.64


$289,780.38

37-48

$148,579.29


$149,894.50


$298,473.79

49-60

$153,036.67


$154,391.33


$307,428.00

61-72

$157,627.77


$159,023.07


$316,650.84

73-84

$162,356.60


$163,793.77


$326,150.37

85-95

$167,227.30


$168,707.58


$335,934.88

Tenant’s Share:
For Building 2:    100%
For Building 3:
100%
Building 2 Share:
17.94%
Building 3 Share:
18.10%
Building 2 Minimum Parking:
84 non-exclusive stalls, 12 of which will be located in the Parking Garage (as defined in Paragraph 33) and 72 of which will be located on the surface parking lot for the Project, all in accordance with Paragraph 33 (“Building 2 Minimum Parking”).
Building 3 Minimum Parking:
84 non-exclusive stalls, 5 of which will be located in the Parking Garage and 79 of which will be located on the surface parking lot for the Project, all in accordance with Paragraph 33 (“Building 3 Minimum Parking”).

3

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


Lease Security:
Two letters of credit, one in the face amount of [***] (the “Initial Letter of Credit”), and the second in the face amount of [***] (the “Additional Letter of Credit”), as more particularly provided in Paragraph 31.
Landlord’s Broker:
Cornish & Carey Commercial Newmark Knight Frank
Tenant’s Broker:
Cornish & Carey Commercial Newmark Knight Frank
The foregoing Basic Lease Information is hereby incorporated into and made a part of this Lease. Each reference in this Lease to any of the Basic Lease Information shall mean the respective information hereinabove set forth and shall be construed to incorporate all of the terms provided under the particular paragraph pertaining to such information. In the event of any conflict between any Basic Lease Information and the Lease, the latter shall control.
LANDLORD:
495 JAVE DRIVE ASSOCIATES, L.P.,
A California limited partnership
By:
M-D Ventures, Inc.
 
a California corporation
Its:
General Partner

 
 
By:
/s/ John Mozart
Its:
President

TENANT:

CLOUDERA, INC.,
a Delaware corporation
By:
/s/ Jim Frankola
Its:
CFO

 
 
By:
 
Its:
 







4

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


LEASE AGREEMENT
THIS LEASE AGREEMENT is made and entered into as of April 18, 2013, by and between 495 JAVA DRIVE ASSOCIATES, L.P., a California limited partnership (herein called “Landlord”), and CLOUDERA, INC., a Delaware corporation (herein called “Tenant”).
1.LEASED PREMISES.
(a)    Premises. Upon and subject to the terms, covenants and conditions hereinafter set forth, Landlord hereby leases to Tenant and Tenant hereby hires from Landlord the Premises (as defined in the Basic Lease Information).
(b)    Project. The Building is located on the Land (as defined in the Basic Lease Information), which is currently improved with four, two-story buildings (inclusive of the Buildings), all as an integrated project (as it may be improved and developed from time to time, the “Project”). Landlord shall have the right, at any time and from time to time, and without incurring any liability to Tenant and without constituting an eviction (constructive or otherwise), and without entitling Tenant to any abatement of Rent or to terminate this Lease or otherwise releasing Tenant from any of Tenant’s obligations under this Lease, to do any of the following:
(i)    construct additional buildings and improvements on the Land in such locations as Landlord may determine, in its sole discretion;
(ii)    expand the land and improvements that are included in the “Project” to include other property acquired by Landlord or its affiliates which is contiguous to the Project (as such term is defined at any given time), regardless of whether any such property is leased to Tenant or leased to, sold to or occupied by a third party or third parties; and (iii) reduce the land and improvements that are included in the Project, subdivide the Project, or otherwise reconfigure the Project in any way.
Tenant shall cooperate with Landlord in connection with any construction or development activities with respect to any such construction of buildings or improvements, or expansion or reconfiguration of the Project, including executing any necessary conditions, covenants, restrictions, encumbrances, or other documents and instruments for the benefit of other portions of the Project, at Landlord’s request. In addition, Tenant acknowledges that during any such construction and development, Landlord, its tenants, and their respective employees, contractors and agents will require access across and through the Common Area (as defined below) for purposes of construction and development of additional buildings and improvements in the Building and Project (as it may exist from time to time), and use of portions of the Common Area for construction staging in connection with such construction and development, including, without limitation, for the storage of all necessary materials, tools and equipment, and Landlord shall not be liable to Tenant for any interference with Tenant’s use of the Common Area with respect to such activities or any noise, vibration, or other disturbance to Tenant’s business at the Premises which may result from such activities, so long as the Building structure is not materially adversely affected by such activities, the Project continues to be in compliance with all applicable Laws, the Minimum Parking (as defined in Paragraph 33 below) continues to be available to Tenant in such forms as Landlord may elect pursuant to Paragraph 33, and Tenant at all times has reasonable access to the Premises. Landlord shall use commercially reasonable efforts to minimize interference with Tenant’s access to and use of the Premises in accordance with this Lease during any of the Landlord activities specified herein, and Additional Charges payable by Tenant shall not be materially increased during and as a result of any such construction or development activities.
(c)    Common Area. The term “Common Area” shall mean all areas and facilities within the Project that are not designated by Landlord, from time to time, for the exclusive use of Tenant or any other tenant or other occupant of the Project, and that are located outside the perimeter footings of any buildings now or hereafter located in the Project, including the parking areas, access and perimeter roads, pedestrian sidewalks, landscaped areas, trash enclosures, recreation areas and the like. For the avoidance of doubt, neither of the Buildings, nor the Parking

1

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


Garage (as defined in Paragraph 33) or Elevated Walkway (as defined in Paragraph 4(b)(i)(F)) is a part of the Common Area.
2.    OCCUPANCY AND USE. Tenant may use and occupy the Premises for the Permitted Uses specified in the Basic Lease Information and for no other use or purpose without the prior written consent of Landlord. Landlord shall have the right to grant or withhold consent to a proposed change of use in its sole discretion. Tenant shall be entitled to the use on a nonexclusive basis of the Common Area with other occupants of the Project for so long as Landlord continues to own the Project in accordance with the Rules and Regulations established by Landlord from time to time; provided, however, that if Landlord reconfigures the Project or sells a portion of the Project, Landlord shall assure to Tenant that Tenant shall continue to have reasonable access to the Premises and the Minimum Parking as specified in Paragraph 33 through a reciprocal easement agreement or other like mechanism. Notwithstanding the above, Tenant understands and agrees that (a) that certain Restated and Amended Lease dated March 30, 1999 by and between The Board of Trustees of the Leland Stanford Junior University, as lessor (“Ground Lessor”), and Varian Associates, Inc., a Delaware corporation (“Varian”), as lessee, the interest of Varian having been assigned to Landlord under that certain Assignment and Assumption of Lessee’s Interest in Lease dated March 30, 1999, a Memorandum of which was recorded on March 30, 1999 as instrument no. 14729321 in the Office of the County Recorder of Santa Clara County, California (the “Ground Lease”), and (b) certain other easements, covenants, conditions, restrictions, and access agreements recorded in the official records of Santa Clara County (collectively, including the Ground Lease, the “Encumbrances”) encumber the Land and Project, and that Tenant’s occupancy and use of the Premises and use of the Common Area may be restricted by such Encumbrances. If necessary, Tenant shall execute such documents as are reasonably necessary to cause this Lease to become subordinate to such encumbrances, subject to customary non-disturbance provisions to the extent provided for, and obtainable by Tenant, under the express terms of the applicable Encumbrance (other than the Ground Lease).
3.    TERM AND POSSESSION.
(a)    Term. The term of this Lease (the “Term”) shall commence with respect to each Building on the later to occur of the Delivery Date of such Building and the date that the Ground Lessor provides its consent to this Lease as specified in Paragraph 43 hereof and, unless sooner terminated pursuant to the express provisions of this Lease, shall expire on the date immediately prior to the day that is ninety-five (95) months after the Building 2 Commencement Date, provided that Tenant shall have one option to extend the Term in accordance with the terms and conditions of Paragraph 37. “Delivery Date” shall mean the date on which Landlord has tendered possession of the Premises to Tenant in order for Tenant to commence work on the Tenant Improvements (as defined in the Work Letter attached hereto as Exhibit “B”), which Landlord currently anticipates to be on or before the Scheduled Delivery Date with respect to each Building that is specified in the Basic Lease Information, provided that if Landlord, for any reason whatsoever (including without limitation failure by the current tenant of Building 3 to vacate the Premises upon expiration of its lease term on August 31, 2014), cannot deliver possession of each Building on or before the Scheduled Delivery Date, then this Lease shall not be void or voidable, nor shall Landlord be liable to Tenant for any loss or damages resulting therefrom. All of the rights and obligations of the parties under this Lease (other than Tenant’s obligation to pay Monthly Base Rent and Additional Charges for Expenses and Taxes, but including Tenant’s insurance and indemnification obligations, and Tenant’s obligation to pay for electricity provided directly to the applicable Building) shall commence on the Delivery Date. The “Commencement Date” with respect to each Building shall be the earlier of the Scheduled Commencement Date for such Building (as specified in the Basic Lease Information), or the date on which Tenant actually commences business operations in any portion of the applicable Building. Within five (5) business days after the Commencement Date for each Building, the parties shall execute a letter confirming the Commencement Date for such Building and certifying that Tenant has accepted delivery of such Building, in the form attached hereto as Exhibit “D” (the “Commencement Date Memorandum”). Either party’s failure to request execution of, or to execute, the Commencement Date Memorandum shall not in any way alter the applicable Building Commencement Date. The dates upon which the Term shall actually commence and terminate with respect to each Building included in the Premises pursuant to this Paragraph 3(a) are herein called the “Delivery Date” and the “Expiration Date,” respectively. Notwithstanding anything to the contrary specified in this Lease, if Landlord fails to deliver possession of Building 3 to Tenant by December 31, 2014, Tenant shall have the right, exercisable by delivering written notice to Landlord by January 31, 2015, to terminate this Lease, whereupon this Lease shall terminate and be

2

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


of no further force or effect, and Landlord shall promptly return the Letters of Credit to Tenant; provided, however, that if Tenant fails to deliver such written notice by January 31, 2015 Tenant shall have no further right to terminate this Lease thereafter.
(b)    Condition of Premises. Completion of the Tenant Improvements (as defined in the Work Letter) by Tenant shall be governed by the terms and conditions of the Work Letter which is attached hereto as Exhibit “B”. Tenant’s obligation to construct the Tenant Improvements pursuant to the Work Letter is independent of, and in addition to, Tenant’s obligation to pay Rent under this Lease. Tenant acknowledges that Tenant has had an opportunity to conduct a thorough and diligent inspection and investigation of the Premises, Common Area and Building Systems (as defined in Paragraph 8(a) below) for each Building (including, without limitation, the electrical and HVAC capacity and distribution systems to and throughout the Premises). Landlord shall deliver to Tenant, and Tenant shall accept, the Premises in their “as-is, where-is condition, with all faults” as of the date of this Lease; provided, however, that the roof and Building Systems of each Building shall be delivered in good order and working condition, and if Tenant notifies Landlord within three (3) months following either Delivery Date that any of the Building Systems (excluding any portion of such Building Systems damaged or altered by Tenant as part of, or during installation of, the Tenant Improvements) serving the applicable Building are not in good working condition, then Landlord shall perform the necessary maintenance, repair and/or replacement of said portions of the Building Systems so that they are in good working condition and the cost of any resulting capital repairs or replacements (as opposed to routine maintenance) of such Building Systems that are deemed necessary by Landlord will not be included in Expenses; provided, however, that the foregoing warranty and undertaking by Landlord shall not apply to the extent of any damage caused by Tenant’s construction of the Tenant Improvements or by other acts or omissions of Tenant or Tenant’s agents that affect the condition of the roof or Building Systems. Other than the express warranty in the preceding sentence, Landlord has not made and will not make any representation or warranty, express or implied, with respect to the condition of the Premises, Buildings, Common Area or Building Systems, or with respect to the suitability, fitness or capacity of any of the foregoing for the conduct of Tenant’s Permitted Use or for any other purpose. Subject to the foregoing, by accepting delivery of the Premises, Tenant shall be deemed to have accepted the same as suitable for the purpose herein intended, and to have acknowledged that the condition of the Premises complies with Landlord’s obligations for delivery of the Premises as provided in this Paragraph 3(b).
(c)    Deemed Occupancy. Tenant shall be deemed to occupy the Premises from and after the Commencement Date, regardless of whether Tenant actually physically occupies any portion of the Premises. This Paragraph 3(c) shall not be construed as an obligation of Tenant to continuously occupy the Premises.
4.    RENT; RENT ADJUSTMENTS; ADDITIONAL CHARGES FOR EXPENSES AND TAXES.
(a)    Monthly Base Rent. Commencing on the Commencement Date and throughout the Term of this Lease, Tenant shall pay Monthly Base Rent, in the amount specified in the Basic Lease Information on the first day of each month, in advance, in lawful money of the United States (without any prior demand therefor and without deduction or offset whatsoever, except as expressly provided in Paragraphs 21 and 22) to Landlord or its Managing Agent at the address specified in the Basic Lease Information or to such other firm or to such other place as Landlord or its Managing Agent may from time to time designate in writing.
(b)    Additional Charges for Expenses and Taxes. In addition, to Monthly Base Rent, commencing on the Commencement Date Tenant shall pay to Landlord all Additional Charges (as defined below) as and when payable as provided in this Paragraph 4(b), at the place where the Monthly Base Rent is payable, and Landlord shall have the same remedies for a Default (as defined in Paragraph 20(a)) in the payment of Additional Charges as for a Default in the payment of Monthly Base Rent.
(i)    Definitions of Additional Charges: For purposes of this Paragraph 4(b), the following terms shall have the meanings hereinafter set forth:
(A)    “Additional Charges” shall mean with respect to each Building included in the Premises, Tenant’s Share of Expenses and Real Estate Taxes that are attributable to such Building, which will

3

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


be payable Tenant pursuant to Paragraph 4(b)(iii) and Paragraph 4(b)(ii), respectively (the foregoing collectively sometimes being referred to herein as “Additional Charges for Expenses and Taxes”), and all other charges and other amounts whatsoever payable by Tenant under this Lease.
(B)    “Tax Year” shall mean each twelve (12) consecutive month period commencing January 1st of the calendar year during which the Commencement Date of this Lease occurs.
(C)    “Tenant’s Share” shall mean, with respect to each Building, the percentage figure specified in the Basic Lease Information.
(D)    “Real Estate Taxes” shall mean, with respect to each Building, the “Building Share” (as defined in clause (E) below) of all taxes, assessments and charges levied upon or with respect to the Project or any personal property of Landlord used in the operation of thereof, or Landlord’s interest in the Project or such personal property. Real Estate Taxes shall include, without limitation, all general real property taxes and general and special assessments, charges, fees or assessments for transit, housing, police, fire or other governmental services or purported benefits to the Project (provided, however, that any refunds of Real Estate Taxes paid by Tenant (as part of Tenant’s Share of Real Estate Taxes) shall be credited against Tenant’s further obligation to pay Real Estate Taxes during the Term), service payments in lieu of taxes, and any tax, fee or excise on the act of entering into this Lease, or any other lease of space in the Project, or on the use or occupancy of the Project or any part thereof, or on the rent payable under any lease or in connection with the business of renting space in the Project, that are now or hereafter levied or assessed against Landlord by the United States of America, the State of California, or any political subdivision, public corporation, district or any other political or public entity, and shall also include any other tax, fee or other excise, however described, that may be levied or assessed as a substitute for, or as an addition to, in whole or in part, any other Real Estate Taxes, whether or not now customary or in the contemplation of the parties on the date of this Lease. Real Estate Taxes shall not include franchise, transfer, inheritance or capital stock taxes, or income taxes measured by the net income of Landlord from all sources unless, due to a change in the method of taxation, any of such taxes is levied or assessed against Landlord as a substitute for, or as an addition to, in whole or in part, any other tax that would otherwise constitute a Real Estate Tax. Additionally, Real Estate Taxes shall not include any assessments or like charges to pay for any remediation of contamination from any Hazardous Substance (which are not the liability of Tenant pursuant to Paragraph 35 hereof). Real Estate Taxes also shall not include any taxes attributable to any new construction on the Project that increases the rentable area of the Project, or any increase in any Real Estate Taxes directly attributable to such new buildings or improvements; provided, however, that Real Estate Taxes shall include any new taxes or increases in Real Estate Taxes attributable to any new construction, buildings or improvements that are used for parking or other Common Area uses (or the proportionate amount of any such new taxes or increase attributable to the portion of any new construction, buildings or improvements used for parking or other Common Area uses). Real Estate Taxes shall also include reasonable legal fees, costs and disbursements incurred in connection with proceedings to contest, determine or reduce Real Estate Taxes; provided that such fees, costs and disbursements do not exceed the actual savings in Real Estate Taxes obtained by Tenant over the Term of the Lease. If any assessments are levied on the Project, Tenant shall have no obligation to pay more than Tenant’s Share of that amount of annual installments of principal and interest that would become due during the Lease Term had Landlord elected to pay the assessment in installment payments, even if Landlord pays the assessment in full.
(E)    “Building Share” shall mean, with respect to each Building, the Rentable Area in such Building, divided by the rentable area in the Project, as determined by Landlord in its reasonable discretion. Initially, the Building Share for each Building shall be as shown in the Basic Lease Information, which is calculated based on a total rentable area in the Project, inclusive of the rentable area contained within the Buildings, of 148,593 square feet.
(F)    “Expenses” shall mean, with respect to each Building, the total costs and expenses paid or incurred by Landlord in connection with the management, operation, maintenance and repair of the applicable Building and Common Area, including, without limitation, (i) the cost of air conditioning, electricity, steam, heating, mechanical, ventilating, elevator systems and all other utilities, to the extent provided by Landlord, and the cost of supplies and equipment and maintenance and service contracts in connection therewith; (ii) the cost of repairs

4

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


and general maintenance and cleaning; (iii) the Building Share of the cost of fire, extended coverage, boiler, sprinkler, public liability, property damage, rent, earthquake (if Landlord elects to obtain it) and other insurance obtained by Landlord in connection with the Project, all including, without limitation, insurance premiums and any deductible amounts paid by Landlord, including, without limitation, the insurance required by Paragraph 11(e); (iv) fees, charges and other costs, including management fees, consulting fees, legal fees and accounting fees, fees of all independent contractors engaged by Landlord directly related to the operation of the Building or reasonably charged by Landlord if Landlord performs management services in connection with the Building (though the management fee shall not exceed the cap noted in the following paragraph); (v) the cost of any capital improvements made to the Building, and the Building Share of the cost of any capital improvements made to the Common Area, after the date of this Lease (a) as a labor saving device or to effect other economies in the operation or maintenance of the Building or Common Area (from which a reasonable person would anticipate that savings would actually result), (b) to repair or replace capital items which are no longer capable of providing the services required of them (other than in connection with a casualty which is addressed by Paragraph 21), or (c) that are made to the Building or Common Area after the date of this Lease and are required under any Laws (as defined in Paragraph 6) (excluding, however, any capital improvements required by Laws that are Tenant’s responsibility under Paragraph 6, which shall be paid directly by Tenant pursuant to Paragraph 6), where such capital improvements were not required under any such Laws to be completed with respect to the Building or Common Area prior to the date the Lease was executed or which requirement was triggered by any event occurring after the date of this Lease; and the cost of capital improvements incurred by Landlord, which are the responsibility of Tenant pursuant to this Lease, shall be amortized over the useful life of the capital item in question as determined in accordance with generally accepted accounting principles (“GAAP”), together with interest on the unamortized balance at the greater of (x) the rate paid by Landlord on funds borrowed for the purpose of constructing such capital improvements; or (y) 8% per annum; and (vi) any other expenses of any other kind whatsoever incurred in managing, operating, maintaining and repairing the Building, including, but not limited to, costs incurred pursuant to the Encumbrances and the Building’s Share of Project Common Expenses. “Project Common Expenses” shall mean any expenses paid or incurred by Landlord in connection with the management, operation, maintenance and repair of the Common Area in the Project and any other Expenses paid or incurred by Landlord for the benefit of the Project as a whole, including, but not limited to, the cost of maintaining the surface parking areas and facilities located in the Common Area and landscaping, and utility costs attributable to the Common Area. Tenant shall also pay its pro rata share of Expenses attributable to the Parking Garage, based on the ratio of (i) the aggregate number of spaces in the Parking Garage which are allocated for the use of Tenant to (ii) the total number of parking spaces which are located within the Parking Garage. In addition, Tenant shall pay its pro rata share (as determined from time to time) of Expenses attributable to the existing second floor walkway between Building 2 and Building 3 (the “Elevated Walkway”) based the ratio of the Rentable Area then included in the Premises to the Rentable Area of both Buildings (for the avoidance of doubt, after the Building 3 Commencement Date Tenant’s pro rata share of Expenses attributable to the Elevated Walkway will be 100%).
Notwithstanding anything to the contrary herein contained, Expenses shall not include, and in no event shall Tenant have any obligation to pay for pursuant to this Paragraph 4 or Paragraph 8(c) (except as expressly provided in (mm) below), (aa) the construction cost of any new buildings or improvements on the Project that increase the rentable area of the Project (or any additional operating expenses incurred during the course of construction and as a direct result of such construction); (bb) any rent payable pursuant to the Ground Lease, or any debt service (including, but without limitation, interest and principal) required to be made on any mortgage or deed of trust recorded with respect to either Building and/or the real property on which the Building is located other than interest payable pursuant to Paragraph 4(b)(1)(F)(v) above; (cc) the cost of special services, goods or materials provided to any tenant; (dd) depreciation; (ee) the portion of a management fee paid to Landlord or any affiliate of Landlord in excess of three percent (3%) of Monthly Base Rent; (ff) costs occasioned by Landlord’s fraud or willful misconduct under applicable laws; (gg) costs for which Landlord has a right of and has received reimbursement from others, including without limitation costs that are covered by third party warranties or subject to reimbursement from other tenants or insurance companies; (hh) environmental pollution remediation related costs for which Landlord has indemnified Tenant pursuant to Paragraph 35(c); (ii) advertising or promotional costs; (jj) leasing commissions; (kk) any costs and expenses associated with the operation of the business of the legal entity which constitutes Landlord (as opposed to the operation of the Building or the Project), including, without limitation, disputes between partners, sale or financing matters, legal entity accounting, income taxation matters and disputes with employees; (ll) legal fees and expenses associated with the enforcement, negotiation or amendment of leases with respect to the Project or disputes with tenants under any such leases; (mm) repair,

5

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


replacement and upgrades to the structural elements of the Building, other than any capital improvements described in Paragraphs 4(b)(l)(F)(v) above and costs for which Tenant is expressly obligated pursuant to Paragraph 8(c). All costs and expenses shall be determined in accordance with generally accepted accounting principles which shall be consistently applied (with accruals appropriate to Landlord’s business). Expenses shall not include specific costs incurred for the account of, separately billed to and paid by specific tenants.
(G)    “Expense Year” shall mean each twelve (12) consecutive month period commencing January 1 of the calendar year during which the Commencement Date of the Lease occurs.
(ii)    Payment of Real Estate Taxes: Commencing on the Commencement Date for each Building, Tenant shall pay to Landlord as Additional Charges one-twelfth (1/12th) of Tenant’s Share of Real Estate Taxes attributable to such Building for each Tax Year on or before the first day of each month during such Tax Year, in advance, in an amount reasonably estimated by Landlord and billed by Landlord to Tenant, and Landlord shall have the right initially to determine monthly estimates and to revise such estimates from time to time. With reasonable promptness after Landlord has received the tax bills for any Tax Year, Landlord shall furnish Tenant with a statement (herein called “Landlord’s Tax Statement”) setting forth the amount of Real Estate Taxes for such Tax Year, and Tenant’s Share thereof. If the actual Tenant’s Share of Real Estate Taxes for such Tax Year exceed the estimated Real Estate Taxes paid by Tenant for such Tax Year, Tenant shall pay to Landlord the difference between the amount paid by Tenant and the actual Real Estate Taxes within thirty (30) days after the receipt of Landlord’s Tax Statement, and if the total amount paid by Tenant for any such Tax Year shall exceed the actual Tenant’s Share of Real Estate Taxes for such Tax Year, such excess shall be credited against the next installment of Real Estate Taxes due from Tenant to Landlord hereunder. If it has been determined that Tenant has overpaid Real Estate Taxes during the last year of the Lease Term, then Landlord shall reimburse Tenant for such overage on or before the thirtieth (30th) day following the Expiration Date. No delay by Landlord in providing a Landlord’s Tax Statement shall be deemed a default by Landlord or a waiver of Landlord’s right to require payment of the actual or estimated sums of Tenant’s Share of Real Estate Taxes that are payable by Tenant under this Lease.
(iii)    Payment of Expenses: Commencing on the Commencement Date for each Building, Tenant shall pay to Landlord as Additional Charges one-twelfth (1/12th) of Tenant’s Share of the Expenses attributable to such Building for each Expense Year on or before the first day of each month of such Expense Year, in advance, in an amount reasonably estimated by Landlord and billed by Landlord to Tenant, and Landlord shall have the right initially to determine monthly estimates and to revise such estimates from time to time. With reasonable promptness after the expiration of each Expense Year, Landlord shall furnish Tenant with a statement (herein called “Landlord’s Expense Statement”), setting forth in reasonable detail the Expenses for such Expense Year and Tenant’s Share thereof. If the actual Tenant’s Share of Expenses for such Expense Year exceed the estimated Tenant’s Share of Expenses paid by Tenant for such Expense Year, Tenant shall pay to Landlord the difference between the amount paid by Tenant and the actual Tenant’s Share of Expenses within thirty (30) days after the receipt of Landlord’s Expense Statement, and if the total amount paid by Tenant for any such Expense Year shall exceed the actual Tenant’s Share of Expenses for such Expense Year, such excess shall be credited against the next installment of the estimated Tenant’s Share of Expenses due from Tenant to Landlord hereunder. If it has been determined that Tenant has overpaid Expenses during the last year of the Lease Term, then Landlord shall reimburse Tenant for such overage on or before the thirtieth (30th) day following the Expiration Date. No delay by Landlord in providing a Landlord Expense Statement shall be deemed a default by Landlord or a waiver of Landlord’s right to require payment of the actual or estimated sums of Tenant’s Share of Expenses that are payable by Tenant under this Lease.
(iv)    Other: To the extent any item of Real Estate Taxes or Expenses is payable by Landlord in advance of the period to which it is applicable (e.g. insurance and tax escrows required by any Mortgagee), or to the extent that prepayment is customary for the service or matter, Landlord may (i) include such items in Landlord’s estimate for periods prior to the date such item is to be paid by Landlord and (ii) to the extent Landlord has not collected the full amount of such item prior to the date such item is to be paid by Landlord, Landlord may include the balance of such full amount in a revised monthly estimate for Additional Charges. If the Commencement Date or Expiration Date shall occur on a date other than the first day of a Tax Year and/or Expense Year, Tenant’s Share of Real Estate

6

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


Taxes and Expenses, for the Tax Year and/or Expense Year in which the Commencement Date or Expiration Date occurs shall be prorated.
(v)    Audit: Within ninety (90) days after receipt of any Expense Statement or Tax Statement from Landlord, Tenant shall have the right, at Tenant’s sole cost, to examine Landlord’s books and records relating to such Expense Statement or Tax Statement, and/or commence to cause an independent audit thereof to be conducted by an accounting firm to be selected by Tenant and subject to the reasonable approval of Landlord, in each case at Landlord’s or Landlord’s manager’s office where such books and records are physically located. If the audit conclusively proves that Tenant has overpaid either Expenses or Real Estate Taxes by more than five percent (5%), Tenant shall notify Landlord within such ninety (90) day period after the date the applicable Expense Statement or Tax Statement was received by Tenant, and then Landlord shall promptly reimburse Tenant for (i) such overage and (ii) all actual out-of-pocket costs incurred by Tenant associated with such audit up to a maximum amount of $5,000. If Tenant fails to object to any such Expense Statement or Tax Statement, or if Tenant objects to any statement or requests an audit but then fails to complete the audit, within ninety (90) days after receipt of the applicable statement, such Expense Statement and/or Tax Statement shall be final and shall not be subject to any audit, challenge or adjustment by Tenant. All of the information obtained through any audit by Tenant and any compromise, settlement or adjustment reached between Landlord and Tenant relative to the results of such audit shall be held in strict confidence by the Tenant. Tenant shall continue to make all Rent payments hereunder (including without limitation payments of Additional Charges for Expenses and Real Estate Taxes) during any such audit period and pending resolution of any dispute between Landlord and Tenant.
(c)    “Rent”. As used herein, the term “Rent” shall include all Monthly Base Rent and Additional Charges (including, without limitation, Additional Charges for Real Estate Taxes and Expenses pursuant to Paragraph 4(b), and Additional Charges pursuant to Paragraphs 4(d), 7(b) and (c), 8(c), 9, 11(d), and 24). If the Commencement Date for either Building occurs on a day other than the first day of a calendar month, or the Expiration Date occurs on a day other than the last day of a calendar month, then the Monthly Base Rent and Additional Charges for such fractional month shall be prorated on a daily basis. An amount equal to one month’s Monthly Base Rent and Additional Charges for Expenses and Taxes, as reasonably estimated by Landlord, shall be due upon execution of this Lease.
(d)    Late Charges. Tenant recognizes that late payment of any Monthly Base Rent or Additional Charges will result in administrative expenses to Landlord, the extent of which additional expense is extremely difficult and economically impractical to ascertain. Tenant therefore agrees that if Tenant fails to pay any installment of Monthly Base Rent or Additional Charges within three (3) days after it is due, then the amount of such unpaid Monthly Base Rent or Additional Charges shall be increased by a late charge to be paid to Landlord by Tenant in an amount equal to five percent (5%) of the amount of the delinquent Monthly Base Rent or Additional Charges. In addition, any outstanding Monthly Base Rent, Additional Charges, late charges and other outstanding amounts shall accrue interest at an annualized rate of the lesser of (i) the greater of, 10% or The Federal Reserve Discount Rate plus 5%, or (ii) the maximum rate permitted by law (the “Default Rate”), until paid to Landlord. Tenant agrees that such amount is a reasonable estimate of the loss and expense to be suffered by Landlord as a result of such late payment by Tenant and may be charged by Landlord to defray such loss and expense. The provisions of this Paragraph 4(d) in no way relieve Tenant of the obligation to pay Monthly Base Rent or Additional Charges on or before the date on which they are due, nor do the terms of this Paragraph 4(d) in any way affect Landlord’s remedies under this Lease or applicable Laws if any Rent is unpaid after the date due.
5.    RESTRICTIONS ON USE. Tenant shall not do or permit anything to be done in or about the Premises which will obstruct or interfere with the rights of other tenants or occupants of the Building or the Project or injure or annoy them, nor use or allow the Premises to be used for any unlawful purpose, nor shall Tenant cause or maintain or permit any nuisance in, on or about the Premises. Tenant shall not commit or suffer the commission of any waste in, on or about the Premises.
6.    COMPLIANCE WITH LAWS.
(a)    Tenant’s Compliance Obligations.

7

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


(i)    Tenant shall not use the Premises or permit anything to be done in or about the Premises, or do or permit anything to be done by Tenant or any of Tenant’s employees, agents, affiliates, principals, licensees, assigns, subtenants, successors, contractors or invitees (each of the foregoing including Tenant, a “Tenant Party” and collectively, the “Tenant Parties”) within the portions of the Project outside the Premises, which will in any way conflict with any Laws (as defined below), and Tenant shall promptly, at its sole expense, maintain the Premises, the Tenant Improvements and any Alterations (as defined in Paragraph 7 below) permitted hereunder and Tenant’s use and operations thereon in strict compliance at all times with all Laws; provided, however, that Tenant’s obligation to comply with Laws relating to Hazardous Substances is subject to the terms and conditions of Paragraph 35, and Tenant shall not be responsible for compliance with clean-up provisions of any Laws with respect to Hazardous Substances except to the extent of any release caused by any Tenant Party or otherwise included in Tenant’s indemnity contained in Paragraph 35. ‘“Laws” shall mean any and all present and future laws, statutes, ordinances, resolutions, regulations, proclamations, orders or decrees of any municipal, county, state or federal government or other governmental or regulatory authority with jurisdiction over the Project, or any portion thereof, whether currently in effect or adopted in the future and whether or not in the contemplation of the parties hereto, and shall include, without limitation, all Laws relating to health and safety (including, without limitation, the California Occupational Safety and Health Act of 1973 and the California Safe Drinking Water and Toxic Enforcement Act of 1986, including posting and delivery of notices required by such Laws with respect to the Premises), disabled accessibility (including, without limitation, the Americans with Disabilities Act, 42 U.S.C. section 12101 et seq.), Hazardous Substances, and all present and future life safety, fire, sprinkler, seismic retrofit, transportation demand and management plan, building code and municipal code requirements. Tenant shall promptly deliver to Landlord a copy of any notice received from any governmental agency in connection with the Premises. Any alterations that are Tenant’s responsibility pursuant to this Paragraph 6(a) shall be made in accordance with Paragraph 7 below, at Tenant’s sole cost. The parties acknowledge and agree that Tenant’s obligation to comply with all Laws as provided in this Paragraph 6(a) (subject to the limitations contained in Paragraph 6(a)(ii)) is a material part of the bargained-for consideration under this Lease. Tenant’s obligations under this Paragraph 6(a) and under Paragraph 8(c) below shall include, without limitation, the responsibility of Tenant to make substantial or structural repairs and alterations to the Premises to the extent provided above, regardless of, among other factors, the relationship of the cost of curative action to the Rent under this Lease, the length of the then remaining Term hereof, the relative benefit of the repairs to Tenant or Landlord, the degree to which the curative action may interfere with Tenant’s use or enjoyment of the Premises, and the likelihood that the parties contemplated the particular Law involved.
(ii)    Notwithstanding Paragraph 6(a)(i), Landlord, and not Tenant, shall be responsible for:
(A)    correcting any condition with respect to the Common Area, exterior of either Building, structural portions of either Building (including structural portions of the Premises, but excluding any Tenant Improvements and Alterations which are of a “structural” nature but not part of the Building structure), or Building Systems that is in violation of applicable Laws, subject to Tenant’s obligation to pay Tenant’s Share of such costs to the extent they are included as Expenses under Paragraph 4(b)(i)(F), and
(B)    correcting any condition with respect to either Building which is in violation of applicable Laws as of the Delivery Date of such Building,
unless in either case the requirement that such condition be corrected is triggered by (I) the installation, use or operation of the Tenant Improvements, any Alterations, or any of Tenant’s Trade Fixtures or personal property; (II) the negligent or intentional acts or omissions of any of the Tenant Parties; or (III) the particular use or particular occupancy or manner of use or occupancy of the Premises by the Tenant Parties (not applicable to office space in general), or by the cumulative effect of (I), (II) and/or (III) collectively, in which event Tenant, and not Landlord, shall be responsible for correcting such condition at Tenant’s sole cost.
(b)    Insurance Requirements. Tenant shall not do or permit anything to be done in or about the Premises or bring or keep anything therein which will in any way increase the rate of any insurance upon the Project or any of its contents (unless Tenant agrees to pay for such increase) or cause a cancellation of any insurance on the Project or otherwise violate any requirements, guidelines, conditions, rules or orders with respect to such insurance.

8

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


Tenant shall at its sole cost and expense promptly comply with the requirements of the Insurance Services Office (ISO), board of fire underwriters, or other similar body now or hereafter constituted relating to or affecting Tenant’s use or occupancy of the Project (other than in situations where compliance involves repair, maintenance or replacement of items that Landlord is expressly required to repair, maintain or replace under this Lease).
(c)    No Limitation on Obligations. The provisions of this Paragraph 6 shall in no way limit Tenant’s maintenance, repair and replacement obligations under Paragraph 8 or Tenant’s obligation to pay Expenses under Paragraph 4(b).
(d)    Conclusiveness. The judgment of any court of competent jurisdiction or the admission of Tenant in an action against Tenant, whether Landlord is a party thereto or not, that Tenant has so violated any such Law shall be conclusive of such violation as between Landlord and Tenant.
7.    ALTERATIONS.
(a)    Landlord Consent. Tenant shall not make or suffer to be made any alterations, additions or improvements (collectively, “Alterations”), in, on or to the Premises or any part thereof without the prior written consent of Landlord in Landlord’s sole discretion. Tenant’s request for approval of any proposed Alterations shall be accompanied by a full set of complete plans and specifications for such proposed Alterations for Landlord’s review. If Landlord fails to approve or disapprove any proposed Alterations within fifteen (15) business days after receipt of Tenant’s written request for approval, Landlord shall be deemed to have disapproved such Alterations. Any Alterations in, on or to the Premises, except for Tenant’s Trade Fixtures, shall be the property of Tenant during the Term and shall become Landlord’s property at the end of the Term without compensation to Tenant. “Trade Fixtures” shall mean, collectively, any trade fixtures, furniture and trade equipment installed by the Tenant which may be removed from the Premises without injury thereto (including, without limitation, demountable partitions, computer racking and similar demountable fixtures, but excluding wiring, conduit and fiberoptic cabling and similar infrastructure related to telephone, telecommunications or similar communications systems which shall be considered “Alterations” for purposes of this Paragraph 7 and Paragraph 25). Tenant’s Trade Fixtures shall remain the property of the Tenant and shall be removed by the Tenant, at the Tenant’s sole cost and expense, from the Premises upon the expiration or earlier termination of this Lease.
(b)    Permitted Alterations. Notwithstanding anything to the contrary set forth in Paragraph 7(a), Tenant may perform non-structural Alterations to the Premises, subject to the terms of this Lease, without Landlord’s consent, provided that the cost of said non-structural alterations as evidenced by Tenant do not exceed $20,000 in any twelve month period or $100,000 in the aggregate over the Term of this Lease, and provided further that such non-structural alterations (i) will not impair the structural integrity of the Buildings, (ii) will not adversely affect any of the building systems serving the Premises or Buildings, (iii) will not be visible from the exterior of the Buildings, and (iv) will be consistent and compatible, functionally and aesthetically, with Tenant Improvements and Alterations previously approved by Landlord (the foregoing being defined as the “Permitted Alterations”).
(c)    Construction of Alterations. Any Alterations by Tenant consented to by Landlord pursuant to Paragraph 7(a) shall be made by Tenant, at Tenant’s sole cost and expense, in accordance with plans and specifications reasonably approved by Landlord, and with a contractor designated by Tenant and approved in writing by Landlord. With respect to any Alterations that affect the structure of either Building or the Building Systems, at Landlord’s option the Alterations shall be made by Landlord, or by a contractor specified by Landlord, for Tenant’s account and Tenant shall reimburse Landlord for the cost thereof (including a reasonable charge for Landlord’s supervision and administration of such work), as an Additional Charge, within twenty (20) days after receipt of a statement from Landlord therefor.
(d)    Landlord Review. Tenant shall reimburse Landlord upon demand for any reasonable out-of-pocket expenses incurred by Landlord in connection with the review of any proposed Alterations made by Tenant, including fees charged by Landlord’s contractors or consultants to review plans and specifications, and such obligation shall be an Additional Charge. Landlord’s consent to any Alterations shall not obligate Landlord to repair, maintain,

9

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


insure or otherwise assume any responsibility or liability with respect to any such Alteration. In addition, notwithstanding Landlord’s review, Tenant and not Landlord shall be responsible for compliance of the Alterations, and plans and specifications therefor (including, without limitation, Tenant’s plans and specifications for the Alterations), with all applicable Laws, and Landlord shall not be responsible for any omissions or errors therein.
(e)    Restoration. Landlord and Tenant acknowledge that Tenant’s obligations with respect to any removal of Tenant Improvements and related restoration and repair of the Premises are governed by that certain work letter attached hereto as Exhibit B (the “Work Letter”). In connection with its approval of any Alterations (other than the Tenant Improvements), Landlord shall, within fifteen (15) business days after Tenant’s specific written request made at the time Tenant requests Landlord’s approval of such Alterations (any such specific request by Tenant, a “Removal Determination Request”), but subject to the provisions below, expressly designate in writing which Alterations or components of Alterations may remain in the Premises upon the expiration or sooner termination of this Lease. If Landlord does not expressly indicate that any portion or component of the Alterations described in the Removal Determination Request may remain, then Landlord may require that such portion of component of the Alterations be removed from the Premises at the expiration or earlier termination of the Lease Term; provided, however, that if Landlord fails to respond to a Removal Determination Request within such 15 business day period) then Tenant may send a subsequent written notice to Landlord renewing the Removal Determination Request, and if Landlord fails to respond to the subsequent Removal Determination Request within an additional 5 business day period (but has otherwise approved the Alterations pursuant to Paragraph 7(a)), then such Alterations may remain in the Premises upon the expiration or sooner termination of this Lease, provided that the second Removal Determination Request expressly notes in capitalized, boldfaced language that Landlord’s failure to respond will mean Landlord has waived its right to request removal of all such Alterations. Without limiting Landlord’s right to require removal of any Alterations (including Permitted Alterations), in Landlord’s sole discretion, Landlord shall be entitled to require removal of Alterations that, in Landlord’s judgment, (i) are non‑standard office improvements that are not consistent with other upscale professional services office space within comparable Class A office buildings in the Stanford Research Park and University Circle, (ii) affect the structure of the Building or the Building Systems; or (iii) would have no value, or would have negative value, to a future tenant. Without limiting the foregoing, Landlord may require removal of Tenant’s signage, electrical or telecommunications risers and conduits, cables and lines installed by or on behalf of Tenant, raised flooring, heat pumps, supplemental air conditioning equipment, UPS systems, rolling files or storage units and any accompanying structural steel reinforcements at the expiration or earlier termination of the Lease Term. Any obligation of Tenant to remove Alterations pursuant to this Paragraph 7(d) shall also require Tenant to repair any damage resulting to the Premises in connection with the removal of such Alterations. For avoidance of doubt, Tenant shall not be obligated to remove any Landlord-approved Tenant Improvements or Alterations from the Premises at the expiration of the Lease Term that Landlord has specifically designated in writing may remain in the Premises pursuant to this Paragraph 7(d) or Paragraph 2(d) of the Work Letter, or that are the subject of a second Removal Determination Request to which Landlord does not respond within 5 business days.
8.    REPAIR AND MAINTENANCE.
(a)    Landlord’s Obligations. Landlord shall be responsible for the following repair, replacement and maintenance obligations: (i) maintenance and repair of the exterior, roof and structural portions of the Buildings (including load bearing walls and foundations); (ii) repair and maintenance of the elevators and base building systems for mechanical, electrical (connection to the main panel installed in each Building), HVAC (stubbed to the Building) and plumbing, and all controls appurtenant thereto (collectively, “Building Systems”); (iii) repair, replacement and maintenance of Common Area, Parking Garage, and Elevated Walkway; and (iv) structural alterations to the Buildings required under applicable Laws to the extent not the responsibility of Tenant pursuant to Paragraphs 6 or 7 hereof. Landlord’s obligations under this Paragraph 8(a) with respect to any particular repair, replacement or maintenance requirement (other than general maintenance of the Common Area, in the ordinary course of business) shall not commence until Tenant notifies Landlord in writing of any circumstances that Tenant believes may trigger Landlord’s obligations. Tenant shall cooperate with Landlord in connection with Landlord’s repair, maintenance and replacement activities pursuant to this Paragraph 8(a) both within the Premises and in the Common Area, including, without limitation, by cooperating in any parking restrictions and limitations and/or other restrictions and limitations on use of the Common Area during such activities. Landlord shall use commercially reasonable efforts to minimize

10

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


interference with Tenant’s access to and use of the Premises in accordance with this Lease during any repairs, maintenance, alteration or improvement in or to any portion of the Project and/or the Premises.
(b)    Tenant’s Obligations. Tenant shall maintain, repair and replace (as necessary), at its sole cost and expense, all portions of the Premises that are not Landlord’s obligations under Paragraph 8(a) in good working order and first class condition, including, without limitation, the interior portion of each Building, the Tenant Improvements, the Alterations, and any additional tenant improvements, alterations or additions installed by or on behalf of Tenant within the Premises (including without limitation any supplemental air conditioning units required pursuant to Paragraph 13(c) or otherwise for Tenant’s use of the Premises), to the extent necessary to maintain the Premises in the same condition as exists upon completion of the Tenant Improvements in compliance with the Work Letter. Tenant shall be responsible for the expense of installation, operation, and maintenance of its telephone and other communications cabling from the point of entry into the Premises and throughout the Premises; though Landlord shall have the right to perform such work on behalf of Tenant in Common Area, and Tenant shall reimburse Landlord for the costs thereof (including a reasonable charge for Landlord’s supervision and administration of such work) as an Additional Charge. Tenant’s obligations under this Paragraph 8(b) include, without limitation, the replacement, at Tenant’s sole cost and expense, of any portions of the Premises that are not Landlord’s express responsibility under Paragraph 8(a), if it would be commercially prudent to replace, rather than repair, such portions of the Premises, regardless of whether such replacement would be considered a capital expenditure. Tenant hereby waives and releases its right to make repairs at Landlord’s expense under Sections 1941 and 1942 of the California Civil Code or under any similar law, statute or ordinance now or hereafter in effect. In addition, Tenant hereby waives and releases its right to terminate this Lease under Section 1932(1) of the California Civil Code or under any similar law, statute or ordinance now or hereafter in effect.
(c)    Additional Obligations of Tenant. The purpose of Paragraphs 8(a) and 8(b) is to define the obligations of Landlord and Tenant to perform various repair and maintenance functions; the allocation of the costs therefor are covered under this Paragraph 8(c) and Paragraph 4. Tenant shall be responsible for Tenant’s Share of all costs incurred by Landlord in connection Landlord’s obligations under Paragraph 8(a), which costs shall be payable by Tenant as Additional Charges in accordance with Paragraph 4(b) to the extent they are properly included in Expenses thereunder. In addition, Tenant shall pay all costs incurred in connection with Tenant’s obligations under Paragraph 8(b). Further, notwithstanding anything to the contrary in this Paragraph 8 or elsewhere in this Lease, Tenant shall bear the full cost of repairs or maintenance, interior or exterior, structural or otherwise, to preserve each Building in good working order and first-class condition, arising out of (i) the existence, installation, use or operation of the Tenant Improvements, any Alterations, or any of Tenant’s Trade Fixtures or personal property; (ii) the moving of Tenant’s property or fixtures in or out of the Building or Project or in and about the Premises; (iii) the acts, omissions or negligence of any of the Tenant Parties, or (iv) the particular use or particular occupancy or manner of use or occupancy of the Premises by Tenant or any such person. All costs payable by Tenant in connection therewith, to the extent such costs are incurred by Landlord but payable by Tenant, shall be considered Additional Charges and shall be payable to Landlord by Tenant on demand with interest at the Default Rate accruing from the date Landlord incurs such costs. Any Alterations required with respect to Tenant’s responsibilities pursuant to this Paragraph 8(c) shall be made in accordance with Paragraph 7.
(d)    No Abatement. Except to the extent any claims arising from any of the foregoing are reimbursed by rental abatement insurance proceeds actually received by Landlord (taking into account any deductible amounts or time periods with respect to such insurance), there shall be no abatement of Rent with respect to, and Landlord shall not be liable for any injury to or interference with Tenant’s business arising from, any repairs, maintenance, alteration or improvement in or to any portion of the Project, including the Premises, or in or to the fixtures, appurtenances and equipment therein.
9.    LIENS. Tenant shall keep the Premises and Project free from any liens arising out of any work performed, material furnished or obligations incurred by Tenant. In the event that Tenant shall not, within twenty (20) days after Tenant receives notice of the imposition of any such lien (or within such earlier period of time as required by any Mortgagee), cause the same to be released of record by payment or posting of a proper bond, Landlord shall have, in addition to all other remedies provided herein and by law, the right, but not the obligation, to cause the same

11

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


to be released by such means as it shall deem proper, including payment of the claim giving rise to such lien. All such sums paid by Landlord and all expenses incurred by it in connection therewith shall be considered Additional Charges and shall be payable to Landlord by Tenant on demand with interest at the Default Rate. Landlord shall have the right at all times to post and keep posted on the Premises any notices permitted or required by law, or which Landlord shall deem proper, for the protection of Landlord, the Premises, the Project, and any other party having an interest therein, from mechanics’ and materialmen’s liens, and Tenant shall give written notice to Landlord at least fifteen (15) days’ prior to commencement of any construction on the Premises.
10.    ASSIGNMENT AND SUBLETTING.
(a)    Landlord’s Consent Required. Except as otherwise provided in this Paragraph 10, Tenant shall not directly or indirectly, voluntarily or by operation of law, sell, assign, encumber, pledge or otherwise transfer or hypothecate all or any part of the Premises or Tenant’s leasehold estate hereunder (collectively, “Assignment”), or permit the Premises to be occupied by anyone other than Tenant or sublet the Premises or any portion thereof (the foregoing, including without limitation any license or use agreement, any sub-sublease or subsequent subletting by any subtenant, sub-subtenant or other occupant of any portion of the Premises, and similar occupancy rights, collectively, “Sublease”), without Landlord’s prior written consent in each instance, which consent shall not be unreasonably withheld, conditioned or delayed. Without otherwise limiting the criteria upon which Landlord may withhold its consent to any proposed Sublease or Assignment, Landlord’s withholding of consent shall be presumptively reasonable where either: (i) the creditworthiness of the proposed sublessee or assignee is not acceptable to Landlord, in Landlord’s reasonable discretion, or to any Mortgagee; or (ii) the proposed sublessee’s or assignee’s use of the Premises is not in compliance with the Permitted Use as described in the Basic Lease Information or may violate or create a potential violation of Laws or third party agreements (including leases) affecting the Project, or will involve the storage, use or disposal of Hazardous Substances other than as expressly allowed by this Lease; or (iii) if at the time of Tenant’s request for consent the Landlord either has available space for lease in the Project or anticipates that there will be available space in the Project within the subsequent six (6) months, and if the proposed subtenant or assignee is a then-existing tenant or occupant of the Project, or is a prospective tenant with whom Landlord is dealing with regard to leasing space in the Project or with whom Landlord has had any dealings within the past six months with regard to leasing space in the Project, or is an affiliate of any such tenant, occupant or prospective tenant; (iv) if the proposed form of Sublease or Assignment does not include the provisions expressly required to be included in any Sublease or Assignment pursuant to this Paragraph 10; or (v) if such Assignment or Sublease is not consented to by the Ground Lessor or any Mortgagee, to the extent such consent is required. Notwithstanding any contrary provision of law, including California Civil Code Section 1995.310, Tenant shall have no right, and Tenant hereby waives and relinquishes any right, to cancel or terminate this Lease in the event Landlord is determined to have unreasonably withheld or delayed its consent to a proposed Transfer. If Landlord consents to the Sublease or Assignment, Tenant may thereafter enter into a valid Sublease or Assignment upon the terms and conditions set forth in this Paragraph 10.
(b)    Request for Consent. If Tenant desires at any time to enter into an Assignment of this Lease or a Sublease of the Premises or any portion thereof for which Landlord’s consent is required, it shall first give written notice to Landlord of its desire to do so, which notice shall contain (i) the name of the proposed assignee, subtenant or occupant; (ii) the name and nature of the proposed assignee’s, subtenant’s, or occupant’s business to be carried on in the Premises; (iii) the terms and provisions of the proposed Assignment or Sublease; and (iv) such financial and other information as Landlord may reasonably request concerning the proposed assignee, subtenant or occupant. Any improvements, additions, or alterations to the Premises or either Building that are required by applicable Laws or are deemed necessary or appropriate by Landlord, in Landlord’s reasonable judgment, as a result of any such Sublease or Assignment including, without limitation, demising walls and/or other improvements, additions or alterations necessary to cause the Premises to be suitable for multiple tenants (all of the foregoing collectively, “Required Sublease Improvements”), shall be installed and provided by Tenant (or, at Landlord’s sole option, by Landlord but at Tenant’s expense), without cost or expense to Landlord. Landlord may condition its consent to any proposed Sublease or Assignment on both (x) the construction of Required Sublease Improvements, and (y) a requirement that funds sufficient, in Landlord’s reasonable judgment, to cause the removal of the Required Sublease Improvements and restoration of the Premises to its condition prior to installation of the Required Sublease Improvements upon the earlier of expiration or termination of the Sublease or Assignment or this Lease be provided by Tenant to Landlord upon Landlord’s approval

12

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


of such Sublease or Assignment, to be held as additional security for Tenant’s obligations to remove the Required Sublease Improvements upon expiration or earlier termination of this Lease as required by Paragraph 25(a). Tenant shall reimburse Landlord upon demand for any reasonable out-of-pocket expenses incurred by Landlord in connection with such review, including reasonable attorneys’ fees, and such obligation shall be an Additional Charge.
(c)    Landlord’s Response/Recapture. At any time within fifteen (15) days after Landlord’s receipt of the notice specified in Paragraph 10(b), Landlord may by written notice to Tenant elect either to (i) consent to the Sublease or Assignment; or (ii) disapprove the Sublease or Assignment. In addition, with respect to any proposed Sublease or Assignment that would commence during an Extension Term (as defined in Paragraph 37), Landlord may elect to terminate this Lease as to the portion of the Premises that is specified in such notice, with a proportionate abatement in Monthly Base Rent and Additional Charges. If Landlord elects to terminate the Lease as to a portion of the Premises pursuant to the immediately preceding sentence, Tenant shall at all times provide reasonable and appropriate access to such portion of the Premises and use of any common facilities within the affected Building(s) (if such sublease is for less than an entire Building). Promptly after request from Landlord, Tenant shall enter into any amendment to this Lease or other documentation reasonably requested by Landlord in connection with any such termination of this Lease as to a portion of the Premises. If Landlord elects to terminate the Lease as to a portion of the Premises pursuant to this Paragraph 10(c), such termination shall be effective sixty (60) days after Landlord’s election, unless otherwise agreed by Landlord and Tenant. Failure by Landlord to either consent to or disapprove, or to elect to terminate as a result of, a proposed Assignment or Sublease within the fifteen (15) day time period specified above shall be deemed to be Landlord’s disapproval thereof and election not to terminate this Lease.
(d)    Bonus Rent. If Landlord consents to the Sublease or Assignment within fifteen (15) days after receipt of Tenant’s notice pursuant to Paragraph 10(b), Tenant may within one hundred twenty (120) days after Landlord’s consent, but not later than the expiration of said one hundred twenty (120) days, enter into such Assignment or Sublease of the Premises or portion thereof upon the terms and conditions set forth in the notice furnished by Tenant to Landlord pursuant to Paragraph 10(b). However, Tenant shall pay to Landlord fifty percent (50%) of the “Bonus Rent” (as defined below) attributable to such Sublease or Assignment. Tenant shall pay Bonus Rent to Landlord as and when it is received by Tenant, regardless of the time period to which it is attributable. “Bonus Rent” shall mean any rent or other consideration realized by Tenant under any and all Subleases and/or Assignments, including, without limitation, any sums paid for the sale or rental of the Tenant Improvements or any Alterations, that is in excess of the Monthly Base Rent and Additional Charges payable hereunder (or the amount thereof proportionate to the portion of the Premises subject to such Sublease(s) and/or Assignment(s)), after first deducting from such excess any costs payable by Tenant to Landlord pursuant to express provisions of this Lease in connection with Landlord’s review of Tenant’s request for consent to such Sublease(s) or Assignment(s), any reasonable legal fees and costs (up to a maximum of $15,000), and any customary brokers’ commissions that Tenant has incurred in connection with such Sublease or Assignment, all amortized on a straight line basis (without interest) over the term of the Sublease or Assignment in equal monthly installments.
(e)    No Release or Deemed Approval. No consent by Landlord to any Assignment or Sublease by Tenant shall relieve Tenant of any obligation to be performed by Tenant under this Lease, whether arising before or after the Assignment or Sublease. The consent by Landlord to any Assignment or Sublease shall not relieve Tenant from the obligation to obtain Landlord’s express written consent to any other Assignment or Sublease. Any Assignment or Sublease that is not in compliance with this Paragraph 10 shall be void and, at the option of Landlord, shall constitute a Default by Tenant under this Lease. The acceptance of Monthly Base Rent or Additional Charges by Landlord from a proposed assignee or sublessee shall not be deemed consent to such Assignment or Sublease by Landlord.
(f)    Reorganization; Permitted Transfers. The following shall be deemed a voluntary assignment of Tenant’s interest in this Lease: (i) any dissolution, merger, consolidation, or other reorganization of Tenant; and (ii) if the Tenant is a corporation and the capital stock of Tenant is not publicly traded, the sale or transfer to one person or entity (or group of related persons or entities) of stock possessing more than fifty percent (50%) of the total combined voting power of all classes of Tenant’s stock issued, outstanding and entitled to vote for the election of directors (unless such sale or transfer is solely for the purpose of raising working capital and no one person or entity (or group of related persons or entities) controls more than thirty percent (30%) of the Tenant’s capital stock); and (iii)

13

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


a sale or transfer described in clause (ii) if the Tenant is a corporation and the capital stock of Tenant is publicly traded before, but not after, such sale or transfer. Notwithstanding anything to the contrary contained in this Paragraph 10, Tenant may enter into any of the following transfers (a “Permitted Transfer”) without Landlord’s prior written consent, and such transfers shall not be subject to Landlord’s rights set forth in Paragraphs 10(c) and 10(d), so long as Tenant notifies Landlord promptly following such Permitted Transfer: (1) Tenant may assign its interest in the Lease to a corporation, partnership, professional corporation, limited liability company, or limited liability partnership which results from a stock sale, merger, consolidation or other reorganization (“Transfer Entity”), and a merger or reorganization may occur with respect to Tenant without any assignment of Tenant’s interest in the Lease, in which case Tenant shall be considered the “Transfer Entity” for purposes of this paragraph, so long as the Transfer Conditions (as defined below) are satisfied, and (2) Tenant may assign this Lease to a Transfer Entity which purchases or otherwise acquires all or substantially all of the assets of Tenant, so long as the Transfer Conditions are satisfied.
The “Transfer Conditions” are as follows: (A) the surviving Transfer Entity and/or an Approved Guarantor (as defined below) have an aggregate net worth immediately following such transaction that is equal to or greater than the net worth of Tenant both as of the date of this Lease and as of the date immediately preceding such transaction, and (B) the surviving Transfer Entity and/or an Approved Guarantor have an aggregate cash balance immediately following such transaction that is equal to or greater than fifty percent (50%) of the remaining Rent payments under this Lease as of the effective date of such Permitted Transfer, provided that if the Transfer Entity does not satisfy the condition in (A) or (B) above, then either or both such conditions will be deemed satisfied if, prior to the effective date of such Permitted Transfer, the Tenant amends each of the Letters of Credit and delivers such amendments to Landlord to increase the face amount of the Initial Letter of Credit to [***] and of the Additional Letter of Credit to [***], in which event the provisions of Paragraph 31(b) shall thereafter be deemed deleted and of no further force and effect and Tenant shall have no right to reduce the face amount of either Letter of Credit.
“Approved Guarantor” means an entity or person affiliated with the Tenant and/or Transfer Entity and acceptable to Landlord, in Landlord’s reasonable discretion, which provides a guaranty of this Lease, in form and substance reasonably satisfactory to Landlord, under which the Approved Guarantor guarantees the full payment and performance of the obligations of the Tenant under this Lease.
Notwithstanding any such Permitted Transfer, or any such Assignment that is not a Permitted Transfer to which Landlord consents pursuant to this Paragraph 10, the original Tenant (and any constituent partners, members, shareholders or owners of the original Tenant) that, by virtue of the ownership structure or entity form of Tenant or pursuant to any express provision of this Lease, were liable for Tenant’s obligations hereunder prior to the Permitted Transfer or Assignment, but shall remain liable for performance and compliance with all of the terms, conditions and provisions of this Lease. After a Permitted Transfer or an Assignment to which Landlord consents pursuant to this Paragraph 10, the surviving entity shall promptly execute and deliver to Landlord an agreement in form reasonably satisfactory to Landlord under which such surviving entity assumes the obligations of Tenant hereunder.
(g)    Assumption by Assignee. Each assignee pursuant to an Assignment as provided in this Paragraph 10 shall assume all obligations of Tenant under this Lease that arise or accrue from and after the effective date of such Assignment, and shall be and remain liable jointly and severally with Tenant for the payment of Monthly Base Rent and Additional Charges, and for the performance of all the terms, covenants, conditions and agreements herein contained on Tenant’s part to be performed for the Term. No Assignment shall be binding on Landlord unless the assignee or Tenant shall deliver to Landlord a counterpart of the Assignment and an instrument (in recordable form if required by any Mortgagee or ground lessor) that contains a covenant of assumption by the assignee satisfactory in substance and form to Landlord, consistent with the requirements of this Paragraph 10(g), but the failure or refusal of the assignee to execute such instrument of assumption shall not release or discharge the assignee from its liability as set forth herein. Notwithstanding anything to the contrary in this Lease, no Sublease shall be binding on Landlord unless and until Landlord agrees in writing following termination of this Lease to recognize such sublessee (which agreement Landlord shall not be obligated to enter into) and such sublessee agrees in writing to attorn to Landlord on the terms and conditions of the sublease (including the obligations under this Lease to the extent that they relate to the portion of the Premises subleased). Any Sublease entered into by Tenant hereunder shall include an obligation by the sublessee to so attorn to Landlord if Landlord, in Landlord’s sole discretion, elects to recognize such Sublease upon

14

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


any termination of this Lease and agrees to not disturb subtenant’s rights or possession under the Sublease being recognized, and Landlord’s consent to any Sublease shall be conditioned upon such obligation by the sublessee.
(h)    Affiliate Transfers. Tenant shall have the right, without Landlord’s consent and without triggering Landlord’s rights under Paragraphs 10(c) and 10(d), but with written notice to Landlord at least ten (10) days prior thereto, to enter into an Assignment of Tenant’s interest in the Lease or a Sublease of all or any portion of the Premises to an Affiliate (as defined below) of Tenant, provided that (i) in connection with an Assignment that is not a Sublease, the Affiliate delivers to Landlord concurrent with such Assignment a written notice of the Assignment and an assumption agreement whereby the Affiliate assumes and agrees to perform, observe and abide by the terms, conditions, obligations, and provisions of this Lease arising from and after the effective date of the assignment; and (ii) the assignee or sublessee remains an Affiliate throughout the term of this Lease (and, in connection with an Assignment that is not a Sublease, the assumption agreement shall contain provisions consistent with the provisions of this Paragraph 10(h) allowing Landlord to terminate this Lease at such time as the entity is no longer an Affiliate of the original Tenant). If this Lease is assigned or sublet to an Affiliate and thereafter any circumstance occurs which causes such assignee or sublessee to no longer be an Affiliate of the assigning or subleasing Tenant, Tenant shall give written notice thereof to Landlord, which notice, to become effective, shall refer to Landlord’s right to terminate this Lease pursuant to this Paragraph 10(h) in the event of an Assignment, or to cause Tenant to terminate the Sublease in the event of a Sublease (“Affiliation Termination Notice”). Following the occurrence of the circumstance giving rise to the discontinuation of such assignee or sublessee being an Affiliate (“Affiliate Termination”) of the assigning or subleasing Tenant, Landlord shall be entitled to terminate this Lease in the event of an Assignment, or to cause Tenant to terminate the Sublease in the event of a Sublease, unless Landlord has given its prior written consent to such circumstance., which consent shall not be unreasonably withheld by Landlord so long as, in the event of an Assignment, such assignee (after giving effect to such circumstance) has financial strength (as demonstrated by audited financial statements) equal to or greater than the assigning or subleasing Tenant (including its net worth) as of the date of execution of this Lease, or the assigning or subleasing Tenant executes a guaranty in usual form reasonably acceptable to Landlord (however, this does not imply that Tenant would be released without such guaranty). No Sublease or Assignment by Tenant made pursuant to this Paragraph 10(h) shall relieve Tenant of Tenant’s obligations under this Lease. As used in this Paragraph 10(h), the term “Affiliate” shall mean and collectively refer to a corporation or other entity which controls, is controlled by or is under common control with Tenant, by means of an ownership of either (aa) more than fifty percent (50%) of the outstanding voting shares of stock or partnership or other ownership interests, or (bb) stock, or partnership or other ownership interests, which provide the right to control the operations, transactions and activities of the applicable entity.
(i)    Assignment of Sublease Consideration. Tenant hereby absolutely and irrevocably assigns to Landlord any and all rights to receive rent and other consideration from any sublease during the pendency of any Default under this Lease, and agrees that Landlord, as assignee for Tenant for purposes hereof, or a receiver for Tenant appointed on Landlord’s application may (but shall not be obligated to) collect such rents and other consideration and apply the same toward Tenant’s obligations to Landlord under this Lease during the pendency of any Default under this Lease; provided, however, that Landlord grants to Tenant at all times prior to occurrence of any Default under this Lease, the right to collect such rents. Any Sublease shall provide that any such subtenant agrees that upon receipt of notice from Landlord directing subtenant to pay the sublease rent directly to Landlord, subtenant shall pay rent due under the Sublease to Landlord. Landlord shall credit Tenant with any rent received by Landlord under such assignment, but the acceptance of any payment on account of rent from any subtenant as the result of any such Default shall in no manner whatsoever serve to release Tenant from any liability under this Lease, except to the extent of the rent so credited.
11.    INSURANCE AND INDEMNIFICATION.
(a)    Landlord Indemnity. To the fullest extent permitted by Law, and except to the extent caused by the negligence or willful misconduct of Tenant Parties or Tenant’s breach of this Lease, Landlord shall indemnify and hold Tenant harmless from and defend Tenant against any and all claims or liability for any loss, injury or damage to any person or property, including any reasonable attorney’s fees (but excluding any loss of business or profits or other consequential damages), occurring in, on, or about the Project to the extent such loss, injury or damage

15

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


is caused by the gross negligence or willful misconduct of Landlord; provided, however, that (i) the foregoing indemnity shall not include claims to the extent insured or required to be insured by Tenant under this Lease or claims waived by Tenant pursuant to Paragraph 12, and (ii) the foregoing shall not negate, limit or affect any express and/or specific limitation on Landlord’s liability set forth in this Lease including, without limitation, in Paragraph 11(b) and in Paragraph 20(d).
(b)    Tenant Release. To the fullest extent permitted by Law, and notwithstanding anything to the contrary in this Lease, except to the extent caused by the gross negligence or willful misconduct of Landlord or its authorized agents or employees and not covered by insurance required to be carried by Tenant under this Lease, Landlord shall not be liable to Tenant or any third party, and Tenant on behalf of all Tenant Parties hereby waives all claims against Landlord, (i) for any loss, death, injury or damage to person or property caused by or from water leakage of any character from the roof, walls, basement, or other portions of the Premises or the Building, gas, fire, oil, electricity, theft, vandalism, seismic activity, act of God, acts of a public enemy, riot, strike, insurrection, war, terrorist acts, court order, requisition or order of governmental body or authority, regardless of whether the negligence of Landlord or any of its agents or employees was a cause of, or in any way contributed to, such loss, death, injury or damage; or (ii) that occur by reason of the negligence or willful misconduct of Tenant Parties; or (iii) for any damage or inconvenience that may arise through repair, alteration or maintenance of any part of the Project or failure to make any such repair except as expressly otherwise provided in Paragraphs 21 and 22. Notwithstanding anything to the contrary in this Lease, Landlord shall not be liable for any loss, injury or damage arising from any act or omission of any other tenant or occupant of the Project, nor shall Landlord be liable under any circumstances for any injury to or interference with Tenant’s business, or for any lost profits or other consequential damages incurred by Tenant or any other Tenant Parties, including without limitation any loss, claim, cost, expense or damage which would be covered by a standard policy of business interruption insurance, even if caused by the active, passive or gross negligence, or the willful misconduct, of Landlord, its agents or employees. Tenant acknowledges that any casualty insurance carried by Landlord will not cover loss of income to Tenant or damage to the Tenant Improvements or Alterations in the Premises installed by Tenant or Tenant’s Trade Fixtures or personal property located within the Premises. Tenant shall be required to maintain the insurance described in Paragraph 11 (d) below during the Term.
(c)    Tenant Indemnity. To the fullest extent permitted by Law, and except to the extent caused by the gross negligence or willful misconduct of Landlord or its authorized agents or employees and not covered by insurance required to be carried by Tenant under this Lease, Tenant shall indemnify and hold Landlord harmless from and defend Landlord against any and all claims or liability for any loss, injury, death or damage to any person or property whatsoever: (i) occurring in or on the Premises; or (ii) occurring in, on, or about any other portion of the Project to the extent such injury or damage is caused by the negligence or willful misconduct of the Tenant Parties. In addition, and to the fullest extent permitted by Law and except to the extent caused by the gross negligence or willful misconduct of Landlord or its authorized agents or employees and not covered by insurance required to be carried by Tenant under this Lease, Tenant shall indemnify and hold Landlord and the Project harmless from, and defend Landlord and the Project against, any and all claims, liability, losses, costs, damages (including damage to Landlord’s property), injury or expenses (including costs, expenses and attorneys’ fees) arising out of or in any way related to or resulting directly or indirectly from (AA) any breach of this Lease by Tenant, (BB) any matter referred to in Paragraph 11(f), (CC) the conduct of any activities, work or business of Tenant Parties in or about the Project, including, but not limited to any release, discharge, storage or use of any Hazardous Substance, and/or (DD) the condition, use or occupancy of the Premises from and after the Building 2 Delivery Date (with respect to Building 2) or the Building 3 Delivery Date (with respect to Building 3), as applicable. Tenant further shall indemnify and hold Landlord harmless from and defend Landlord against any and all loss, claims, proceedings, cost, damage, injury, causes of action, liabilities or expense arising out of or in any way related to work or labor performed, materials or supplies furnished to or at the request of Tenant or in connection with obligations incurred by or performance of any work done for the account of Tenant in the Premises or the Project. In the event of a discrepancy between the terms of this Paragraph 11(c) and the terms of Paragraph 35 of the Lease concerning Hazardous Substance liability, the latter shall control. The foregoing indemnity shall not diminish Landlord’s repair and maintenance responsibilities expressly set forth in this Lease.
(d)    Tenant Insurance Requirements. Tenant shall procure at its cost and expense and keep in effect during the Term the following insurance:

16

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


(i)    Commercial general liability insurance with respect to the Premises and Project on an occurrence form, including contractual liability, with a minimum combined single limit of liability of Eight Million Dollars ($8,000,000) per occurrence. The limits of such insurance shall not limit the liability of Tenant hereunder, and Tenant is responsible for ensuring that the amount of liability insurance carried by Tenant is sufficient for Tenant’s purposes.
(ii)    Business interruption insurance, insuring Tenant for a period of twelve (12) months against losses arising from the interruption of Tenant’s business, and for lost profits, and charges and expenses which continue but would have been earned if the business had gone on without interruption, insuring against such perils, in such form and with such deductible amounts as are commercially reasonable.
(iii)    “Special” (also known as “all risk”) property insurance (including, without limitation, boiler and machinery (if applicable); sprinkler damage, vandalism and malicious mischief), with earthquake sprinkler leakage endorsement, insuring the Tenant Improvements, any Alterations, and all of Tenant’s Trade Fixtures and personal property. Such insurance shall be in an amount equal to full replacement cost of the aggregate of the foregoing and shall provide coverage comparable to the coverage in the standard ISO All Risk form, when such form is supplemented with the coverages required herein.
(iv)    During the course of construction of the Tenant Improvements and any Alterations, Tenant shall cause any contractors performing such Tenant Improvements to keep in force Comprehensive Builder’s Risk/Course of Construction insurance, with the same requirements as property insurance policies described above.
(v)    Worker’s compensation insurance and employer’s liability insurance with limits not less than $1,000,000 or such higher amount as may be required by law.
(vi)    Such other insurance as may be required by Laws, or by Landlord to the extent it is commercially reasonable for tenants to be required to carry such other insurance under similar leases with respect to similar property in similar locations.
Insurance required to be carried by Tenant under this Paragraph 11(d) shall be in financially responsible companies licensed to do business in California and rated “A” VII or better in “Best’s Insurance Guide.” In addition, all such insurance shall name Landlord, any Mortgagee, the Ground Lessor, and such other parties as Landlord may request as additional insureds (by endorsement in a form reasonably acceptable to Landlord), shall specifically include the liability assumed hereunder by Tenant, and shall provide that it is primary insurance, and not excess over or contributory with any other valid, existing and applicable insurance in force for or on behalf of Landlord, shall provide that Landlord and any other additional insured shall receive thirty (30) days’ (ten (10) days’ for non­payment of premium) written notice from the insurer prior to any cancellation of coverage, and shall be made expressly subject to the provisions of Paragraph 11 of the Ground Lease. Any deductible or self-insurance provisions under any insurance policies maintained by Tenant shall be subject to Landlord’s prior written approval. Tenant shall deliver copies of policies of such insurance and certificates naming the additional insureds thereof to Landlord on or before the Commencement Date, and thereafter at least ten (10) days before the expiration dates of expiring policies. If Tenant shall fail to procure such insurance, or to deliver such policies or certificates, Landlord may, at its option, procure same for the account of Tenant, and the cost thereof shall be paid to Landlord as Additional Charges within five (5) days after delivery to Tenant of bills therefor.
(e)    Landlord Insurance. Landlord shall maintain insurance on the Project, including the Buildings (excluding the Tenant Improvements and any Alterations, which shall be insured by Tenant) and the Common Area, against fire and risks covered by “special” coverage (also known as “all risk”) (excluding earthquake and flood, though Landlord, at its sole option, may include this coverage, and Tenant acknowledges that Landlord intends to initially carry such coverage) on a 100% of “replacement cost” basis (though reasonable deductibles may be included under such coverage). Landlord’s insurance shall have a building ordinance provision, and shall provide for rental interruption insurance covering a period of twelve (12) full months. In no event shall Landlord be deemed a co‑insurer under such policy. Landlord shall also maintain commercial general liability insurance with respect to the Project on an occurrence basis in amounts not less than Ten Million Dollars ($10,000,000) per occurrence with respect to bodily

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


injury or death and property damage in the Project. Notwithstanding the foregoing obligations of Landlord to carry insurance, Landlord may modify the foregoing coverages if and to the extent it is commercially reasonable to do so. Tenant acknowledges that, notwithstanding any provision of this Paragraph 11(e) or this Lease, Landlord currently intends to carry earthquake insurance on the Project during the Term of this Lease.
(f)    Disclaimer regarding Security. Tenant acknowledges that even if Landlord installs and operates security cameras, key card access systems, or other security equipment and/or provides any other services that could be construed as being intended to enhance security, Landlord shall have no obligation to Tenant or to any of Tenant’s Parties for any damage, claim, loss or liability related to any claim that Landlord had a duty to provide security or that the equipment or services provided by Landlord were inadequate, inoperative or otherwise failed to provide adequate security. Any such claim made against Landlord by any Tenant Party shall be included within Tenant’s obligation of indemnity and defense set forth in subparagraph (c) above.
(g)    Survival. The provisions of this Paragraph 11 shall survive the expiration or termination of this Lease with respect to any claims or liability occurring or arising prior to such expiration or termination.
12.    WAIVER OF SUBROGATION. Notwithstanding anything to the contrary in this Lease, the parties hereto release each other and their respective principals, affiliates, agents, employees, successors, assignees and subtenants from all liability for loss or damage to the Premises, or any improvements thereto, or the Project or any personal property of such party therein that is caused by or results from a risk (i) that is actually insured against, to the extent of receipt of payment under such policy (unless the failure to receive payment under any such policy results from a failure of the insured party to comply with or observe the terms and conditions of the insurance policy covering such liability, in which event, such release shall not be so limited), (ii) that is required to be insured against under this Lease, or (iii) that would normally be covered by the standard form of “special” or “all risk-extended coverage” property insurance, in each such case without regard to the negligence or willful misconduct of the party so released. Landlord and Tenant shall each obtain from their respective insurers under all policies of fire, theft, and other property insurance maintained by either of them at any time during the Term insuring or covering the Premises or the Project or any portion thereof of its contents therein, a waiver of all rights of subrogation which the insurer of one party might otherwise, if at all, have against the other party or against the Ground Lessor, and Landlord and Tenant shall each indemnify the other against any loss or expense, including reasonable attorneys’ fees, resulting from the failure to obtain such waiver.
13.    SERVICES AND UTILITIES.
(a)    Landlord’s Responsibilities. Landlord shall provide the maintenance and repairs described in Paragraph 8(a), except for damage occasioned by the act of Tenant or for which Tenant is responsible pursuant to Paragraph 8(c), in which case, but in any event subject to the terms of Paragraph 12 above, such damage shall be repaired by Landlord at Tenant’s expense. In addition, and subject to the provisions elsewhere in this Lease and to the Rules and Regulations, Tenant shall have access to the Premises, and Landlord shall furnish the following services and utilities to the Premises and the Common Area (as applicable), twenty-four (24) hours a day, seven (7) days a week, all consistent with use of the Premises for general office uses: hot and cold water, electricity, heat and air conditioning required in Landlord’s judgment for the comfortable use and occupation of the Premises for general office uses, and elevator service (if the Building has an elevator) which shall mean service either by non-attended automatic elevators or elevators with attendants, or both, at the option of the Landlord. In addition, Landlord shall provide garbage pickup and recycling services for the Buildings and Common Area (but not within the Premises) during the times and in the manner that such services are, in Landlord’s judgment, customarily furnished in comparable office buildings in the immediate market area. Tenant agrees at all times to cooperate fully with Landlord and to abide by all the regulations and requirements which Landlord may reasonably prescribe for the proper functioning and protection of the Building Systems.
(b)    Tenant’s Responsibilities. Subject to the provisions elsewhere herein contained and to the Rules and Regulations, Tenant shall be responsible for arranging for, and direct payment of any and all cost of, internal security, transportation management programs, telephone, cable and digital communications equipment and services,

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


and any and all other utilities and services not provided by Landlord. Landlord shall cooperate in a reasonable manner with Tenant’s efforts to arrange all such services.
(c)    Supplemental Equipment. Wherever heat generating machines, excess lighting or equipment are used in the Premises which affect the temperature otherwise maintained by the air conditioning system, Landlord reserves the right to install (or to require that Tenant install) supplementary air conditioning units in the Premises, and the cost thereof, including the cost of installation and the cost of operation and maintenance thereof, shall be paid by Tenant to Landlord upon demand by Landlord.
(d)    No Excessive Load. Tenant will not without the written consent of Landlord, which consent shall not be unreasonably withheld or delayed, use any apparatus or device in the Premises which, when used, puts an excessive load on the Building or its structure or Building Systems, including, without limitation, electronic data processing machines, punch card machines and machines using excess lighting or voltage in excess of the amount required for normal office use or for which the Buildings were designed, which will in any way materially increase the amount of gas, electricity or water usually furnished or supplied for use of the Premises as general office space; nor connect with electric current, except through existing electrical outlets in the Premises, or water pipes or gas outlets, any apparatus or device for the purposes of using gas, electrical current or water. If Tenant shall require water, electrical current, garbage pickup and recycling, or any other resource, utility or service in excess of that usually furnished or supplied for use of the Premises as general office space, Tenant shall first obtain the consent of Landlord, which Landlord shall not unreasonably withhold, to the use thereof. If applicable, Landlord may cause a special meter or other appropriate equipment to be installed in the Premises so as to measure the amount of water, electric current or other resource consumed for any such excess or other use. The cost of any such meters or equipment and of installation, maintenance and repair thereof shall be paid for by Tenant, and Tenant agrees to pay Landlord promptly upon demand by Landlord for all such water, electric current or other resource consumed, as shown by said meters or equipment or as otherwise reasonably determined by Landlord, at the rates charged by the local public utility, furnishing the same, plus any additional expense incurred in keeping account of the water, electric current or other resource so consumed.
(e)    No Liability. Landlord shall not be in default hereunder, nor be deemed to have evicted Tenant, nor be liable for any damages directly or indirectly resulting from, nor shall Tenant be relieved from performance of any covenant on its part to be performed hereunder, nor shall the rental herein reserved be abated by reason of (i) the installation, use or interruption of use of any equipment in connection with the foregoing utilities and services; (ii) failure to furnish or delay or interruption in furnishing any services to be provided by Landlord when such failure, delay or interruption is caused by Force Majeure (as defined below), or by the making of repairs or improvements to the Premises or to the Building, or during the continuance of any Default by Tenant hereunder; or (iii) the limitation, curtailment, rationing or restriction on use of water, electricity, gas or any other form of energy, or any other service or utility whatsoever serving the Premises, the Building or the Project. Furthermore, Landlord shall be entitled to cooperate with the mandatory requirements of national, state or local governmental agencies or utilities suppliers in connection with reducing energy or other resources consumption. Landlord shall also be entitled, at Landlord’s sole option, to suspend, discontinue or limit any and all services and utilities hereunder for so long as Tenant is in Default under this Lease. Landlord shall use reasonable diligence to make such repairs as may be required to lines, cables, wires, pipes equipment or machinery within the Project to provide restoration of the services Landlord is responsible for providing under this Paragraph 13 and, where the cessation or interruption of such services has occurred due to circumstances or conditions beyond Project boundaries, to cause the same to be restored by diligent application or request to the provider thereof. In no event shall any mortgagee or beneficiary under any mortgage or deed of trust on all or any portion of the Project, the Building, or the Land (any such mortgagee or beneficiary, a “Mortgagee”) be or become liable for any default of Landlord under this Paragraph 13. “Force Majeure” shall be defined as acts of God or the elements, acts of the government, labor disturbances of any character, shortages of materials or labor, or any other conditions or causes beyond the reasonable control of either Landlord or Tenant, as applicable.
14.    ESTOPPEL CERTIFICATES. Tenant, at any time and from time to time (but subject to the last sentence of this Paragraph 14), within ten (10) business days from receipt of written notice from Landlord, will execute, acknowledge and deliver to Landlord and, at Landlord’s request, to any prospective purchaser, ground or underlying lessor or Mortgagee or any other party acquiring an interest in Landlord, an estoppel certificate of Tenant in a form

19

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


containing such information as is customary or as may reasonably be required by any of such persons. Landlord, at any time and from time to time (but subject to the last sentence of this Paragraph 14), within ten (10) business days from receipt of written notice from Tenant, will execute and deliver to Tenant an estoppel certificate of Landlord certifying that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification) and the date to which any rent and other charges have been paid in advance, and acknowledging that there are not, to Landlord’s knowledge, any uncured defaults on the part of Tenant or specifying such defaults if they are claimed. It is intended that any such certificate of either party delivered pursuant to this Paragraph 14 may be relied upon by the other party and any prospective purchaser, ground or underlying lessor or Mortgagee, or such other party. Neither party shall be required to provide an estoppel certificate to the other more than one time per calendar year, unless such party is then in default under this Lease, or an event has occurred that with the giving of notice or passage of time would lead to a default by such party, or in connection with a potential sale or refinancing of the Project or an interest in Landlord requesting party, in which events the one time per year limitation shall not apply.
15.    HOLDING OVER. If Tenant (directly or through any successor-in-interest of Tenant) remains in possession of all or any portion of the Premises after the expiration or termination of this Lease without the written consent of Landlord, Tenant’s continued possession shall be on the basis of a tenancy at the sufferance of Landlord. In such event, Tenant shall continue to comply with or perform all the terms and obligations of Tenant under this Lease, except that the Monthly Base Rent during Tenant’s holding over shall be one hundred fifty percent (150%) of the Monthly Base Rent and Additional Charges payable in the last full month prior to the termination or expiration of this Lease (subject to a 3% increase on each anniversary of the Building 2 Commencement Date occurring after such holding over begins). In addition to Rent, Tenant shall pay Landlord for all damages proximately caused by reason of the Tenant’s retention of possession. Landlord’s acceptance of Rent after the termination of this Lease shall not constitute a renewal of this Lease, and nothing contained in this provision shall be deemed to waive Landlord’s right of re-entry or any other right hereunder or at law. Tenant acknowledges that, in Landlord’s marketing and re-leasing efforts for the Premises, Landlord is relying on Tenant’s vacation of the Premises on the Expiration Date. Accordingly, Tenant shall indemnify, defend and hold Landlord harmless from and against all claims, liabilities, losses, costs, expenses and damages arising or resulting directly or indirectly from Tenant’s failure to timely surrender the Premises, including (i) any loss, cost or damages suffered by any prospective tenant of all or any part of the Premises, and (ii) Landlord’s damages as a result of such prospective tenant rescinding or refusing to enter into the prospective lease of all or any portion of the Premises by reason of such failure of Tenant to timely surrender the Premises. Upon written request from Tenant received during the last three (3) months of the Lease, Landlord shall advise Tenant whether a new lease, or a letter of intent for a new lease, has been entered into for any portion of the Premises.
16.    SUBORDINATION.
(a)    Mortgages and Encumbrances. Without the necessity of any additional document being executed by Tenant for the purpose of effecting a subordination, this Lease shall be subject and subordinate at all times to: (i) the Encumbrances and all ground leases or underlying leases which may now exist or hereafter be executed affecting the Buildings, the Land or both; (ii) any CC&Rs or other similar Encumbrances, currently in effect or that Landlord may enter into in the future, that affect all or any portion of the Project; and (iii) the lien of any Mortgage which may now exist or hereafter be executed in any amount for which the Buildings, Land, Project, Ground Lease or other underlying leases, or Landlord’s interest or estate in any of said items, is specified as security. Notwithstanding the foregoing, Landlord shall have the right to subordinate or cause to be subordinated any such ground leases or underlying leases or any such Mortgages or other liens or encumbrances to this Lease. In the event that any ground lease or underlying lease terminates for any reason or any Mortgage is foreclosed or a conveyance in lieu of foreclosure is made for any reason, Tenant shall, notwithstanding any subordination, attorn to and become the Tenant, on the terms and conditions of this Lease, of the successor in interest to Landlord at the option of such successor in interest and subject to such successor’s agreement to not disturb Tenant’s possession as provided below in this Paragraph. Notwithstanding anything to the contrary contained herein (but subject to Paragraph 16(b) below), this Lease shall not be subject or subordinate to any ground or underlying lease or to any Mortgage, lien or other security interest affecting the Premises that may be entered into by Landlord after the date of this Lease, unless the ground lessor, Mortgagee or other holder of the interest to which this Lease would be subordinated executes a customary recognition and non-disturbance agreement which provides that Tenant shall be entitled to continue in possession of the Premises on the

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


terms and conditions of this Lease if and for so long as Tenant fully performs all of its obligations hereunder. Tenant covenants and agrees to execute and deliver upon demand by Landlord and in the form requested by Landlord, any customary additional documents evidencing the priority or subordination of this Lease with respect to any such future ground leases or underlying leases or the lien of any such Mortgage. Tenant shall execute and deliver any such documents within ten (10) days after Landlord’s written request. In addition, Landlord shall use commercially reasonable efforts to obtain, within thirty (30) days after both Landlord and Tenant execute and deliver this Lease, a customary non-disturbance and attornment agreement (“NDA”) from the holder of the Mortgage that currently encumbers the Building as of the date of this Lease, in form and substance acceptable to the mortgagee under such Mortgage, with such reasonable changes as Tenant shall request and Tenant agrees to execute and deliver any such NDA within ten (10) days after Landlord’s written request; provided, however, that obtaining an NDA shall not be a condition to this Lease.
(b)    Ground Lease. Notwithstanding the provisions of Paragraph 16(a) above to the contrary, specifically with regard to the Ground Lease, this Lease shall be subject and subordinate to the terms, covenants and conditions of the Ground Lease and the rights of the Ground Lessor without the requirement that the Ground Lessor enter into a separate recognition and non-disturbance agreement as contemplated by Paragraph 16(a), provided that upon any termination or surrender of the Ground Lease, at Ground Lessor’s sole option, this Lease shall either terminate automatically, or shall continue in full force and effect and the Tenant shall attorn to or, at the option of Ground Lessor, enter into a direct lease on identical terms (i.e. the terms of this Lease) with, Ground Lessor. Landlord agrees not to terminate the Ground Lease voluntarily, or modify the Ground Lease in a manner that materially adversely affects Tenant’s rights hereunder, and agrees that, so long as Tenant is not in Default hereunder, and no condition has occurred that with the giving of notice or passage of time would constitute a Default by Tenant hereunder, Landlord shall not cause a default under the Ground Lease. Landlord further agrees to promptly provide to Tenant a copy of any written notice of default Landlord receives from Ground Lessor.
17.    RULES AND REGULATIONS. Tenant shall faithfully observe and comply with the rules and regulations attached to this Lease as Exhibit “C” and all reasonable modifications thereof and additions thereto from time to time put into effect by Landlord (as so modified and amended from time to time, the “Rules and Regulations”). Landlord shall not be responsible for the nonperformance by any other Tenant or occupant of the Building or the Project of any Rules and Regulations. In the event of an express and direct conflict between the terms, covenants, agreements and conditions of this Lease and those set forth in the Rules and Regulations, this Lease shall control.
18.    RE-ENTRY BY LANDLORD. Landlord reserves and shall at all reasonable times, upon twenty-four (24) hours prior notice (except in the case of an emergency), and subject to Tenant’s reasonable security precautions and the right of Tenant to accompany Landlord at all times (except in the case of an emergency), have the right to re-enter the Premises to inspect the same, to supply any service to be provided by Landlord to Tenant hereunder, to show the Premises to prospective purchasers, Mortgagees or tenants (as to prospective tenants, only during the last twelve (12) months of the Lease Term), to post notices of nonresponsibility or as otherwise required or allowed by this Lease or by law, and to alter, improve or repair the Premises and any portion of the Building and may for that purpose erect, use, and maintain scaffolding, pipes, conduits, and other necessary structures in and through the Premises where reasonably required by the character of the work to be performed. Landlord shall not be liable in any manner for any inconvenience, disturbance, loss of business, nuisance or other damage arising from Landlord’s entry and acts pursuant to this paragraph and Tenant shall not be entitled to an abatement or reduction of Monthly Base Rent or Additional Charges if Landlord exercises any rights reserved in this paragraph and hereby waives any claim for damages for any disturbance, loss of business, nuisance, injury or inconvenience to or interference with Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss arising from Landlord’s entry and acts pursuant to this Paragraph. For each of the aforesaid purposes, Landlord shall at all times have and retain a key with which to unlock all of the doors in, upon and about the Premises, excluding Tenant’s vaults and safes, or special security areas (designated in advance), and Landlord shall have the right to use any and all means which Landlord may deem necessary or proper to open said doors in an emergency, in order to obtain entry to any portion of the Premises, and any entry to the Premises, or portion thereof obtained by Landlord by any of said means, or otherwise, shall not under any emergency circumstances be construed or deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an eviction, actual or constructive, of Tenant from the Premises or any portions thereof. Landlord shall use commercially

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


reasonable efforts during re-entry to not unreasonably interfere with Tenant’s Permitted Use of the Premises or its business conducted therein.
19.    INSOLVENCY OR BANKRUPTCY. The appointment of a receiver to take possession of all or substantially all of the assets of Tenant, or an assignment of Tenant for the benefit of creditors, or any action taken or suffered by Tenant under any insolvency, bankruptcy, reorganization or other debtor relief proceedings, whether now existing or hereafter amended or enacted (any of the foregoing, an “Insolvency Proceeding”), shall at Landlord’s option constitute a breach of this Lease by Tenant; provided that a petition in bankruptcy, or receiver attachment, or other remedy pursued by a third party (without any action or complicity by Tenant) will not constitute a breach so long as it is discharged within sixty (60) days. Upon the happening of any such breach or at any time thereafter, to the extent permitted by applicable law, this Lease shall terminate five (5) days after written notice of termination from Landlord to Tenant. In no event shall this Lease be assigned or assignable by operation of law or by voluntary or involuntary bankruptcy proceedings or otherwise and in no event shall this Lease or any rights or privileges hereunder be an asset of Tenant under any bankruptcy, insolvency, reorganization or other debtor relief proceedings.
20.    DEFAULT.
(a)    Tenant Default. The failure to perform or honor any covenant, condition or representation made under this Lease shall constitute a “Default” hereunder by Tenant upon expiration of the appropriate grace or cure period provided in this Paragraph 20(a). Tenant shall have a period of three (3) days from the date of written notice from Landlord (which notice shall be deemed to be the notice required by Section 1161 of the California Code of Civil Procedure; provided, however, that no such notice shall be deemed a forfeiture or termination of this Lease unless Landlord expressly so elects in such notice) within which to cure any failure to pay Monthly Base Rent or Additional Charges; provided, however, that Landlord shall not be required to provide such notice more than two (2) times during any two (2) year period during the Term with respect to non-payment of Monthly Base Rent or Additional Charges, the third such non-payment constituting Default without requirement of notice. Tenant shall have a period of thirty (30) days from the date of receipt of written notice from Landlord (which notice shall be deemed to be the notice required by Section 1161 of the California Code of Civil Procedure; provided, however, that no such notice shall be deemed a forfeiture or termination of this Lease unless Landlord expressly so elects in such notice) within which to cure any other curable failure to perform any obligations under this Lease; provided, however, that with respect to any curable failure to perform a non-monetary obligation that cannot reasonably be cured within thirty (30) days, the cure period shall be extended for an additional period of time reasonably required to cause such cure if Tenant commences to cure and provides Landlord with a planned process and expected timing to complete such cure (which shall be reasonably acceptable to Landlord) within thirty (30) days from Landlord’s notice and continues to prosecute diligently the curing thereof to completion consistent with such planned process and expected timing as they may be subsequently revised by Tenant, with Landlord’s approval in Landlord’s reasonable discretion, provided that such cure period shall in no event extend beyond ninety (90) days after Landlord’s notice. Notwithstanding the foregoing, (i) if a specific time for performance or a different cure period is specified elsewhere in this Lease with respect to any specific obligation of Tenant, such specific performance or cure period shall apply with respect to a failure of such obligation in lieu of, and not in addition to, the cure period provided in this Paragraph 20(a); (ii) the cure period specified in Paragraph 24 shall apply with respect to Landlord’s rights to cure Tenant’s failure to perform pursuant to Paragraph 24, and (iii) the cure rights provided in this Paragraph 20(a) shall not extend the specific time for compliance with any required delivery, approval or performance obligation under Paragraph 14, 16 or 32 of the Lease.
(b)    Landlord Remedies. Upon a Default of this Lease by Tenant, Landlord shall have the following rights and remedies in addition to any other rights or remedies available to Landlord at law or in equity:
The rights and remedies provided by California Civil Code, Section 1951.2 or successor code section, including but not limited to the right to recover from Tenant: (A) the worth at the time of award of the unpaid Rent and other amounts which had been earned at the time of termination; (B) 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 Rent loss that the Tenant proves could have been reasonably avoided; (C) the worth at the time of award of the amount by which the unpaid Rent for the balance of the Term after the time of award exceeds the amount of such Rent loss that the Tenant

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


proves could be reasonably avoided; and (D) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease or which, in the ordinary course of things, would be likely to result therefrom. The “worth at the time of award” of the amounts referred to in (A) and (B) shall be computed with interest at eighteen percent (18%) per annum or the highest lawful rate, whichever is the lower. The “worth at the time of award” of the amount referred to in (C) shall be computed by discounting such amount at the “discount rate” of the Federal Reserve Bank of San Francisco in effect as of time of award plus one percent (1%) and, where rental value is a material issue, shall be based upon competent appraisal evidence. Recovery of the worth at the time of award of the amount by which the unpaid Base Rent and Additional Charges for the balance of the Term after the time of award exceeds the amount of rental loss for the same period that the Tenant proves could be reasonably avoided shall be computed pursuant to subsection (b) of said Section 1951.2. For purposes of computing unpaid Rent that would have accrued and become payable under this Lease pursuant to the provisions of this Paragraph 20(b), unpaid Rent shall consist of the sum of the total Base Rent for the balance of the Term, plus a computation of the Additional Charges for the balance of the Term; the assumed Additional Charges for the calendar year of the Default and each future calendar year in the Term shall be equal to the Additional Charges for the calendar year prior to the year in which the Default occurs compounded at a per annum rate equal to the mean average rate of inflation for the preceding five (5) calendar years as determined by reference to the Consumer Price Index -- all items for the San Francisco-Oakland-San Jose Area, All Urban Consumers, published by the Bureau of Labor Statistics of the United States Department of Labor (Base Year 1982-84=100), or such successor index as may be established to provide a measure of the current purchasing power of the dollar.
(i)    The rights and remedies provided by California Civil Code, Section 1951.4, that allows Landlord to continue this Lease in effect and to enforce all of its rights and remedies under this Lease, including the right to recover Monthly Base Rent and Additional Charges as they become due, for so long as Landlord does not terminate Tenant’s right to possession. Acts of maintenance or preservation, efforts to relet the Premises or the appointment of a receiver upon Landlord’s initiative to protect its interest under this Lease shall not constitute a termination of Tenant’s rights to possession;
(ii)    The right to terminate this Lease by giving notice to Tenant in accordance with applicable law;
(iii)    If Landlord elects to terminate this Lease, the right and power to enter the Premises and remove therefrom all persons and property and, to store such property in a public warehouse or elsewhere at the cost of and for the account of Tenant, and to sell such property and apply such proceeds therefrom pursuant to applicable California law.
(c)    Landlord Default. Landlord shall have a period of thirty (30) days from the date of written notice from Tenant within which to cure any default of Landlord under this Lease; provided, however, that with respect to any default that cannot reasonably be cured within thirty (30) days, the default shall not be deemed to be uncured if Landlord commences to cure within thirty (30) days from Tenant’s notice and continues to prosecute diligently the curing thereof to completion. Tenant agrees to deliver to any Mortgagee a copy of any Notice of Default served upon the Landlord in the manner prescribed by Paragraph 26 hereof, provided that prior to such notice Tenant has been notified in writing (by way of Notice of Assignment of Rents and Leases, or otherwise) of the address of such Mortgagee. Tenant further agrees that if Landlord shall have failed to cure such default within the time provided for in this Lease, then the Mortgagee shall have an additional thirty (30) days (provided that Tenant notifies Mortgagee concurrently with Tenant’s notice to Landlord at the beginning of Landlord’s thirty (30) day period; otherwise Mortgagee shall have sixty (60) days from the date on which it is noticed) within which to cure such default or if such default cannot be cured within that time, then the cure period shall be extended for such additional time as may be necessary to cure such default if within such applicable period Mortgagee has commenced and is diligently pursuing the remedies necessary to cure such default (including, but not limited to, commencement of foreclosure proceedings, if necessary to effect such cure), in which event the Lease shall not be terminated while such remedies are being so diligently pursued.
(d)    Tenant’s Remedies. Notwithstanding any other provision of this Lease, if any default hereunder by Landlord is not cured within the applicable cure period provided in Paragraph 20(c) or any other applicable

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


cure period provided in this Lease (including any Mortgagee’s additional cure period), Tenant’s exclusive remedies shall be (i) an action for specific performance, or (ii) an action for actual damages. Notwithstanding any other provision of this Lease, the liability of Landlord to Tenant for any breach or default by Landlord under the terms of this Lease, or for any other matter related to this Lease or to the Premises or Project, shall be limited to Tenant’s actual direct, but not consequential, damages therefor, and any judgment against Landlord in connection therewith shall be recoverable only from the interest of Landlord in the Buildings. Tenant hereby waives any claim for damages for any disturbance, loss of business, nuisance, injury or inconvenience to or interference with Tenant’s business, any loss of occupancy or quiet enjoyment of the Premises, and any other loss arising from Landlord’s entry and acts pursuant to Paragraph 18 or otherwise with respect to any act, omission or breach of Landlord. Without limiting the preceding sentence, in no event shall Landlord be liable to Tenant for any consequential damages, including, without limitation, any losses arising from any interruption of Tenant’s business, or for lost profits, or for charges or expenses which continue but would have been earned if the business had gone on without interruption, or for any other loss, claim, cost, expense or damage which would be covered by a standard policy of business interruption insurance. Landlord, or if Landlord is a partnership its partners whether general or limited, or if Landlord is a corporation its directors, officers or shareholders, or if Landlord is a limited liability company its members or managers, shall never be personally liable for any such judgment. Any lien obtained to enforce such judgment and any levy of execution thereon shall be subject and subordinate to any Mortgage (excluding any Mortgage which was created as part of an effort to defraud creditors, i.e., a fraudulent conveyance); provided, however that any such judgment and any such levy of execution thereon shall not be subject or subordinated to any Mortgage that is created or recorded in the official records of the county in which the Project is located after the date of the judgment giving rise to such lien. Landlord’s interest in the Buildings shall include any insurance proceeds received by Landlord which are not controlled by any Mortgagee or other lender. Tenant hereby waives the benefit of any Laws granting it (A) the right to perform Landlord’s obligations, or (B) the right to terminate this Lease or withhold Rent on account of any Landlord default, including, without limitation, Sections 1932(1), 1941 and 1942 of the California Civil Code.
21.    DAMAGE BY FIRE, ETC..
(a)    Restoration or Termination.
(i)    Damage to Premises. If either Building is damaged by fire or other casualty under circumstances where, in the reasonable judgment of Landlord, the Premises can be made tenantable with all damage repaired within two hundred seventy (270) days from the date of such damage, then Landlord shall diligently rebuild the same. If Landlord rebuilds the Premises, Tenant shall repair and restore the Tenant Improvements and any Alterations to the Premises in accordance with Paragraph 7 or, at Landlord’s election, Landlord may repair and rebuild the Tenant Improvements and/or any Alterations at Tenant’s expense. If Landlord rebuilds the Premises, this Lease shall remain in full force and effect except that Tenant shall be entitled to a proportionate reduction of Monthly Base Rent and Additional Charges for Expenses and Taxes for the period of time during which such repairs to be made hereunder by Landlord are being made and, as a result of such repairs, Tenant’s Permitted Use or access to the Premises are significantly adversely affected. Such reduction of Monthly Base Rent and Additional Charges for Expenses and Taxes, if any, shall be based upon the proportion that the area of the Premises rendered untenantable by such damage bears to the total area of the Premises, and shall be limited to the extent of rental abatement insurance proceeds actually received by Landlord under Landlord’s casualty insurance policy (taking into account any deductible amounts or time periods with respect to such insurance).
(ii)    Restoration or Termination. Within thirty (30) days after the date of fire or other casualty to either Building, Landlord shall notify Tenant whether or not, in Landlord’s reasonable opinion, such repairs can be made within two hundred and seventy (270) days after the date of such damage and Landlord’s reasonable estimate of the time needed for such repairs. If such repairs cannot be made within two hundred and seventy (270) days from the date of such damage, Landlord shall have the option within thirty (30) days after the date of such damage to elect either to: (i) notify Tenant of Landlord’s intention to repair such damage and diligently prosecute such repairs, in which event this Lease shall continue in full force and effect and the Monthly Base Rent and Additional Charges for Expenses and Taxes shall be reduced as provided in Paragraphs 21(a)(i); or (ii) notify Tenant of Landlord’s election to terminate this Lease with respect to the affected Building as of a date specified in such notice, which date shall not be

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


less than thirty (30) days nor more than sixty (60) days after such notice is given and this Lease shall terminate on the date specified in such notice. If Landlord notifies Tenant that restoration or repair of the Building will take more than two hundred and seventy (270) days, Tenant shall have a right to terminate the Lease within respect to the affected Building within thirty (30) days following receipt of Landlord’s notice, by providing Landlord with written notice of its election to do so. In such event (and also in the event Landlord terminates the Lease pursuant to this Paragraph 21(a)(ii), Tenant shall have no liability for payment of the deductible under Landlord’s insurance relating to such damage. In case of termination by either event, the Monthly Base Rent and Additional Charges for Expenses and Taxes shall be reduced by a proportionate amount based upon the extent to which such damage interfered with Tenant’s Permitted Use of the affected Building, and Tenant shall pay such reduced Monthly Base Rent and Additional Charges for Expenses and Taxes up to the effective date of such termination. Landlord agrees to refund to Tenant any Monthly Base Rent and Additional Charges for Expenses and Taxes previously paid for any period of time subsequent to the effective date of such termination with respect to the affected Building. The repairs to be made hereunder by Landlord shall not include, and Landlord shall not be required to repair, any damage by fire or other casualty or cause to the property of Tenant or any Alterations, Tenant Improvements or Trade Fixtures. Tenant hereby waives the provisions of Section 1932.2, and Section 1933.4, of the Civil Code of California.
(b)    Uninsured Casualty. Notwithstanding Paragraph 21(a), and subject to the termination right in Paragraph 21(c), in the event of a Major Casualty (as defined below) to the Building (i) by a casualty of a type not required to be insured against by Landlord under the terms of this Lease, or (ii) under circumstances where the net insurance proceeds (plus applicable deductibles that are included in Expenses) obtained as a result of such casualty are ninety percent (90%) or a lesser percentage of the cost of restoration, rebuilding or replacement (including circumstances in which Landlord has been required by any Mortgagee to utilize insurance proceeds to pay down the Mortgage), this Lease shall automatically terminate with respect to the affected Building unless Landlord elects in writing, within thirty (30) days after the date of such damage, to reconstruct the Building. If Landlord reconstructs the Building pursuant to this Paragraph 21(b), Tenant shall be obligated to reconstruct the Tenant Improvements and any Alterations located in the Building, at Tenant’s cost. A “Major Casualty” shall mean a casualty that renders unusable twenty percent (20%) or more of the Net Rentable Area of the Building, or that materially adversely affects the use of the Building, or for which the cost of restoration would exceed five percent (5%) of the replacement cost of the Building.
(c)    Casualty at End of Term. Notwithstanding anything to the contrary contained in this Lease, if during the twelve (12) months prior to the expiration of the Term (including any Extension Term if Tenant then has exercised its option to extend pursuant to Paragraph 37), a Building or a substantial portion thereof is damaged or destroyed by fire or other casualty, either Tenant or Landlord shall have the option to terminate this Lease with respect to the affected Building as of the date of such damage or destruction by written notice to the other party given within thirty (30) days after such damage or destruction, in which event Landlord shall make a proportionate refund to Tenant of such Monthly Base Rent and Additional Charges for Expenses and Taxes as may have been paid in advance. For purposes of this Paragraph 20(c), (i) a substantial portion of the Building shall mean fifty percent (50%) or more of the Building is damaged.
22.    EMINENT DOMAIN. If any part over fifteen percent (15%) of a Building shall be taken or appropriated under the power of eminent domain or conveyed in lieu thereof, Tenant shall have the right to terminate this Lease with respect to such Building at its option. If any part of a Building shall be taken or appropriated under power of eminent domain or conveyed in lieu thereof and such taking is so extensive that it renders the remaining portion of the Building unsuitable for the use being made of the Building on the date immediately preceding such taking, Landlord may terminate this Lease at its option. If there is a taking or appropriation under the power of eminent domain or conveyance in lieu thereof of any portion of the Common Area which causes the Premises to permanently violate parking requirements under any applicable Laws or which permanently prevents surface access to either Building from a public street in a manner consistent with access requirements of a first-class office building in Palo Alto, Landlord shall cure such non-compliance or provide alternative access by any reasonable means, and if Landlord reasonably determines that such violation is not curable or alternative access not obtainable by reasonable means or fails to commence such cure within sixty (60) days after such taking or other action, both Landlord and Tenant shall have the option, exercisable by written notice to the other party, of terminating this Lease with respect to the affected Building as of the date of vesting of title pursuant to the taking or other action. In any of such events, Landlord shall receive

25

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


(and Tenant shall assign to Landlord upon demand from Landlord) any income, rent, award or any interest therein which may be paid in connection with the exercise of such power of eminent domain, and Tenant shall have no claim against Landlord for any part of sum paid by virtue of such proceedings, whether or not attributable to the value of the unexpired term of this Lease, except that Tenant shall be entitled to petition the condemning authority for the following: (i) the value of Tenant’s Trade Fixtures; (ii) Tenant’s relocation costs; and (iii) Tenant’s goodwill, loss of business and business interruption. If a part of the Premises shall be so taken or appropriated or conveyed and neither party hereto shall elect to terminate this Lease and the Premises have been damaged as a consequence of such partial taking or appropriation or conveyance, Landlord shall restore the Premises continuing under this Lease at Landlord’s cost and expense; provided, however, that Landlord shall not be required to repair or restore any injury or damage to the property of Tenant or to make any repairs or restoration of the Tenant Improvements, any Alterations or Trade Fixtures. Thereafter, the Monthly Base Rent and Additional Charges to be paid under this Lease for the remainder of the Term shall be proportionately reduced, such that thereafter the amounts to be paid by Tenant shall be in the ratio that they are of the portion of the Premises not so taken bears to the total area of the Premises prior to such taking. Notwithstanding anything to the contrary contained in this Paragraph 22, if the temporary use or occupancy of any part of the Premises shall be taken or appropriated under power of eminent domain during the Term, this Lease shall be and remain unaffected by such taking or appropriation and Tenant shall continue to pay in full all Monthly Base Rent and Additional Charges payable hereunder by Tenant during the Term; in the event of any such temporary appropriation or taking, Tenant shall be entitled to receive that portion of any award which represents compensation for the use of or occupancy of the Premises during the Term, and Landlord shall be entitled to receive that portion of any award which represents the cost of restoration of the Premises and the use and occupancy of the Premises after the end of the Term. If such temporary taking is for a period longer than two hundred and seventy (270) days and unreasonably interferes with Tenant’s use of either Building, then Tenant shall have the right to terminate the Lease with respect to the affected Building. Landlord and Tenant understand and agree that the provisions of this Paragraph 22 are intended to govern fully the rights and obligations of the parties in the event of a taking of all or any portion of the Premises. Accordingly, the parties each hereby waives any right to terminate this Lease in whole or in part under Sections 1263.260, 1265.120 and 1265.130 of the California Code of Civil Procedure or under any similar Law now or hereafter in effect.
23.    SALE BY LANDLORD. If Landlord sells or otherwise conveys its interest in the Premises, Landlord shall be relieved of all of its obligations under the Lease accruing from and after the date of sale or conveyance (including the obligations of Landlord under Paragraph 35), provided Landlord’s successor assumes in writing the all of obligations in this Lease to be performed by Landlord on and after the effective date of the transfer (including the obligations of Landlord under Paragraph 35), whereupon Tenant shall attorn to such successor.
24.    RIGHT OF LANDLORD TO PERFORM. All covenants and agreements to be performed by Tenant under any of the terms of this Lease shall be performed by Tenant at Tenant’s sole cost and expense and without any abatement of Monthly Base Rent or Additional Charges. If Tenant fails to pay any sum of money, other than Monthly Base Rent or Additional Charges for Expenses and Taxes, required to be paid by it hereunder or fails to perform any other act on its part to be performed hereunder (including, without limitation, Tenant’s obligation to maintain and repair the Premises pursuant to Paragraph 8(b)), regardless of whether such failure has become a Default hereunder, and either (i) such failure continues, and Tenant does not commence cure of such failure, for ten (10) days after notice thereof by Landlord as provided in Paragraph 20(a) (except in the event of emergency, when no notice or cure period shall be required), or (ii) having commenced such cure Tenant does not diligently prosecute the curing thereof, or (iii) default under the Ground Lease or any Mortgage or other Encumbrance is, in Landlord’s reasonable judgment, likely to occur due to Tenant’s failure to cure such failure in a timely manner, or (iv) if Landlord is, in Landlord’s reasonable business judgment, in a better position to accomplish such cure or can accomplish such cure in a more efficient or cost effective manner than Tenant, then in any such situation Landlord may, but shall not be obligated so to do, and without waiving or releasing Tenant from any obligations of Tenant, make any such payment or perform any such act on Tenant’s part to be made or performed as provided in this Lease. All sums so paid and costs so incurred by Landlord, together with interest thereon at the Default Rate from the date Landlord makes such payment or incurs such cost, shall be payable as Additional Charges to Landlord within thirty (30) days after receipt by Tenant of a bill or statement therefor.
25.    SURRENDER OF PREMISES.

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


(a)    Delivery of the Premises. At the end of the Term or any renewal thereof or other sooner termination of this Lease, subject to the terms of Paragraphs 7, 21, 22 and 35 and the rights and obligations of the parties concerning casualty damage pursuant to Paragraph 21, Tenant will peaceably deliver to Landlord possession of the Premises, together with all improvements or additions upon or belonging to Landlord (including without limitation the Charging Stations (as defined in Paragraph 45), if any, and the Security System (as defined in Paragraph 44) and Bike Racks (as defined in Paragraph 46), if applicable), by whomsoever made with all components of the Premises in good working order and maintained with any necessary repairs completed in the reasonable opinion of Landlord or Landlord’s contractor. All space in the Premises shall be clean and well-maintained with walls freshly painted as necessary (or touched up, if acceptable to Landlord in its reasonable discretion), and carpet shampooed and presentable for re-leasing. Any damaged or unpresentable carpet shall be replaced. All window coverings shall be cleaned and any damaged coverings repaired or replaced. Any damaged ceiling tiles shall be replaced and all light fixtures shall be fully operational and clean. All doors shall be presentable and damaged doors repaired or replaced. The interior of all windows shall be washed and all interior partition glass shall be cleaned. If Tenant is obligated to remove or restore any Tenant Improvements or Alterations upon termination or expiration of the Lease pursuant to Paragraph 7(d), the Work Letter, or other provisions of this Lease, the affected area will be returned to Landlord in the form of open office space in the condition described above or in a condition otherwise approved by Landlord in its sole discretion. Tenant may, upon the termination of this Lease, remove all Trade Fixtures, and all movable furniture and equipment belonging to Tenant, at Tenant’s sole cost, provided that Tenant repairs any damage caused by such removal. Property not so removed by the Expiration Date (or in the event of an earlier termination, within five (5) days of such earlier termination date) shall be deemed abandoned by Tenant regardless of its value, and title to the same shall thereupon pass to Landlord without any cost to Landlord, and Landlord shall have the right to remove and dispose of all or any portion of such property, fixtures or equipment after the expiration or earlier termination of this Lease. Tenant waives any and all rights it may have under California Civil Code Sections 1980-1993.09. Tenant further covenants and agrees that Tenant will not create or allow any security interest to attach to any of Tenant’s personal property, fixtures or equipment that are located in the Premises during the Term unless the holder of such security interest waives in writing any and all of its rights under California Civil Code Sections 1980-1993.09. Upon the expiration or sooner termination of the Term, Tenant shall upon demand by Landlord, at Landlord’s election either (i) at Tenant’s sole cost and expense, forthwith and with all due diligence remove any Tenant Improvements, Alterations and Required Sublease Improvements made by or for the account of Tenant, designated by Landlord to be removed and restore the Premises to the condition required by this Paragraph 25(a); or (ii) pay Landlord the reasonable estimated cost thereof.
(b)    No Merger. The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, shall not work a merger, and shall, at the option of Landlord, terminate all or any existing subleases or subtenancies, or may, at the option of Landlord, operate as an assignment to it of any or all such subleases or subtenancies.
26.    NOTICES. Except as otherwise expressly provided in this Lease, any bills, statements, notices, demands, requests or other communications given or required to be given under this Lease shall be effective only if rendered or given in writing, sent by certified mail, return receipt requested, reputable overnight carrier, or delivered personally, (i) to Tenant (A) at Tenant’s address set forth in the Basic Lease Information, if sent prior to Tenant’s taking possession of the Premises, or (B) at the Premises if sent subsequent to Tenant’s taking possession of the Premises, or (C) at any place where Tenant may be found if sent subsequent to Tenant’s vacating, deserting, abandoning or surrendering the Premises; or (ii) to Landlord at Landlord’s address set forth in the Basic Lease Information; or (iii) to such other address as either Landlord or Tenant may designate as its new address for such purpose by notice given to the other in accordance with the provisions of this Paragraph 26. Any such bill, statement, notice, demand, request or other communication shall be deemed to have been rendered or given on the date the return receipt indicates delivery of or refusal of delivery if sent by certified mail, the day upon which recipient accepts and signs for delivery from a reputable overnight carrier, or on the date a reputable overnight carrier indicates refusal of delivery, or upon the date personal delivery is made to the address in the Basic Lease Information (or pursuant to subsequent notification of change in notice address). Tenant appoints as its agent to receive the service of all default notices and notice of commencement of unlawful detainer proceedings the person in charge of or occupying the Premises at the time, and if there is no such person, then such service may be made by attaching the same on the main entrance of the Premises. If Tenant is notified in writing of the identity and address of any Mortgagee or ground or underlying lessor, Tenant

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


shall give to such Mortgagee or ground or underlying lessor notice of any default by Landlord under the terms of this Lease in writing sent by registered or certified mail, and such Mortgagee or ground or underlying lessor shall be given the opportunity to cure such default (as defined in Paragraph 20(b)) prior to Tenant exercising any remedy available to it.
27.    TAXES PAYABLE BY TENANT. At least ten (10) days prior to delinquency Tenant shall pay all taxes levied or assessed upon Tenant’s equipment, furniture, fixtures and other personal property located in or about the Premises. If the assessed value of Landlord’s property is increased by the inclusion therein of a value placed upon Tenant’s equipment, furniture, fixtures or other personal property, Tenant shall pay to Landlord, upon written demand, the taxes so levied against Landlord, or the proportion thereof resulting from said increase in assessment.
28.    ABANDONMENT. Tenant shall not abandon the Premises or cease performing its financial, insurance, and maintenance obligations under this Lease at any time during the Term, and shall at all times during the Term provide adequate security for the Premises. If Tenant shall abandon the Premises and cease performing its financial, insurance or maintenance obligations under this Lease, or surrender the Premises or be dispossessed by process of law, or otherwise, any personal property belonging to Tenant and left on the Premises shall, at the option of Landlord, be deemed to be abandoned and title thereto shall thereupon pass to Landlord. For purposes of this Paragraph 28, the Tenant shall not be deemed to have abandoned the Premises solely because the Tenant is not occupying the Premises.
29.    ATTORNEY’S FEES. If Tenant or Landlord places the enforcement of this Lease or any part thereof, or the collection of any Rent due or to become due hereunder, or recovery of possession of the Premises, in the hands of an attorney or collection agency, or brings any action for any relief against the other, declaratory or otherwise, arising out of this Lease, including any suit by Landlord for the recovery of Rent or possession of the Premises and whether such litigation sounds in tort or in contract, the losing party shall pay to the prevailing party a reasonable sum for attorneys’ fees and costs (including without limitation collection agency costs, court costs, and fees of appraisers, experts and accountants), which obligation to pay fees and costs shall be deemed to have accrued on the earlier of the placement of such matter in the hands of an attorney or collection agency or the commencement of such action and shall be paid whether or not an action or lawsuit is prosecuted to judgment. “Prevailing party” within the meaning of this Paragraph 29 shall include, without limitation, a party who dismisses an action for recovery hereunder in exchange for payment of the sums allegedly due, performance of covenants allegedly breached or consideration substantially equal to the relief sought in the action. As used herein, attorneys’ fees and costs shall include, without limitation, attorneys’ fees, costs, and expenses incurred in connection with any (i) post judgment motions; (ii) contempt proceedings; (iii) garnishment, levy, and debtor and third party examination; (iv) discovery; and (v) bankruptcy litigation.
30.    LIGHT AND AIR. Tenant covenants and agrees that no diminution of light, air or view by any structure which may hereafter be erected (whether or not by Landlord) shall entitle Tenant to any reduction of rent under this Lease, result in any liability of Landlord to Tenant, or in any other way affect this Lease or Tenant’s obligations hereunder.
31.    LEASE SECURITY.
(a)    Letters of Credit.
(i)    Initial Letter of Credit. Within three (3) business days after receipt of consent to this Lease from each of the current Mortgagee and the Ground Lessor as required by Paragraph 42 and 43, respectively, Tenant shall deliver to Landlord an unconditional, irrevocable, transferable letter of credit in the amount specified in the Basic Lease Information for the Initial Letter of Credit, satisfying the requirements set forth in this Paragraph 31 (the “Initial Letter of Credit”).
(ii)    Additional Letter of Credit. In addition to the Initial Letter of Credit, on or prior to August 1, 2014, Tenant shall deliver to Landlord an additional unconditional, irrevocable, transferable letter of credit in the amount specified in the Basic Lease Information for the Additional Letter of Credit and satisfying the requirements

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


set forth in this Paragraph 31 (the “Additional Letter of Credit”). The Initial Letter of Credit and Additional Letter of Credit are sometimes collectively defined herein as the “Letters of Credit” and each individually as a “Letter of Credit.”
(iii)    Requirements of Letters of Credit. Each Letter of Credit shall be issued by a financial institution, and in form and substance, acceptable to Landlord and any Mortgagee, in their respective reasonable discretion, with an original term of no less than one year and automatic extensions through the end of the Term of this Lease and sixty (60) days thereafter. Landlord shall not unreasonably withhold, condition or delay its approval of such a financial institution if it is a national bank, or a bank branch located in the United States (with an office in the United States allowing the Letter of Credit to be presented to and paid by such office pursuant to procedures acceptable to Landlord in its reasonable discretion) with assets of the issuing bank or bank branch in excess of Twenty Billion Dollars ($20,000,000,000). Landlord approves the initial issuance of the Letters of Credit from Silicon Valley Bank. If Landlord determines at any time, in good faith, that the issuing bank or bank branch has assets of less than Twenty Billion Dollars ($20,000,000,000), then Landlord may require that Tenant replace the Letter of Credit with a Letter of Credit from a different financial institution acceptable to Landlord, in the reasonable exercise of its discretion, at the time the Letter of Credit next requires renewal or replacement pursuant to its terms or this Lease. If Landlord determines at any time, in good faith, that the issuing bank or bank branch has or intends to close or cease operations from the issuing bank branch, then Landlord may require that Tenant replace both Letters of Credit with one or more Letters of Credit from a different financial institution acceptable to Landlord, in the reasonable exercise of its discretion on the earlier of ten (10) business days after notice from Landlord and ten (10) business days prior to the date on which the issuing bank or bank branch closes or ceases operations from the issuing bank branch. Each Letter of Credit shall (i) be a stand-by, at-sight, irrevocable letter of credit; (ii) be payable to Landlord or its Mortgagee (either as specified by Landlord, the “Beneficiary”); (iii) require that any draw on the Letter of Credit shall be made only upon receipt by the issuer of a letter signed by a purported authorized representative of the Beneficiary certifying that the Beneficiary is entitled to draw on the Letter of Credit pursuant to this Lease; (iv) allow partial draws; and (v) provide that it is governed by the Uniform Customs and Practice for Documentary Credits (1993 revisions) or the International Standby Practices (ISP 98). Tenant shall keep both Letters of Credit, at its expense, in full force and effect until the sixtieth (60th) day after the Expiration Date or other termination of this Lease, to insure the faithful performance by Tenant of all of the covenants, terms and conditions of this Lease, including, without limitation, Tenant’s obligations to repair, replace or maintain the Premises. Each Letter of Credit shall provide at least thirty (30) days’ prior written notice to Landlord and the Beneficiary of cancellation or material change thereof.
(iv)    Draws on Letters of Credit.
(A)    At any time after a Draw Event (as defined below) occurs, the Beneficiary may present its written demand for payment of the entire face amount of either or both Letters of Credit (or, at the Beneficiary’s sole election, for payment of a portion of the amount of either or both Letters of Credit as is required to compensate Landlord for damages incurred, with subsequent demands at the Beneficiary’s sole election as Landlord incurs further damages) and the funds so obtained shall become due and payable to the Beneficiary. The Beneficiary may retain such funds to the extent required to compensate Landlord for damages incurred, or to reimburse Landlord as provided herein, in connection with any such Default or other Draw Event, and any remaining funds shall be held as cash security for Tenant’s obligations hereunder.
(B)    A “Draw Event” shall mean any of the following: (I) a “Default” occurs under this Lease; (II) an event has occurred which, with the passage of time or giving of notice or both, would constitute Default, where Landlord is prevented from, or delayed in, giving such notice because of an Insolvency Proceeding; (III) Tenant is the subject of an Insolvency Proceeding; (IV) the Lease is terminated by Landlord due to a Tenant Default; (V) either Letter of Credit is not replaced with a Letter of Credit from a different financial institution if and when required by Paragraph 31(a)(iii); or (VI) either Letter of Credit is not extended by thirty (30) days prior to its expiration.
(v)    Replacement After Draw. If Landlord or the Beneficiary uses any portion of either Letter of Credit, or the cash security deposit resulting from a draw on either Letter of Credit, to cure any Default by Tenant hereunder and/or for any other reason permitted or contemplated by this Paragraph 31, Landlord may, at its election, so inform Tenant in writing and request that Tenant provide a replacement Letter of Credit or pay to Landlord

29

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


a sum sufficient to return the applicable Letter(s) of Credit or cash security to one hundred percent (100%) of the amount specified in the Basic Lease Information. Within five (5) business days of the receipt by Tenant of such a notice from Landlord, Tenant shall provide a replacement Letter of Credit to Landlord or pay to Landlord in cash or immediately available funds the sum so requested, and the sum so paid by Tenant shall be held by Landlord as a part of the required lease security hereunder (until an acceptable replacement Letter of Credit is provided). Tenant’s failure to provide such replacement Letter of Credit or make such payment within such time period shall constitute a Default under this Lease without the necessity of further notice or opportunity to cure. Such replenishment obligation shall bear interest at the Default Rate hereunder, and Tenant acknowledges that attachment will be a proper remedy by which Landlord may seek to recover the amount that Tenant has then failed to pay. Any unused portion of the funds so obtained by Landlord or the Beneficiary shall be returned to Tenant upon replacement of either Letter of Credit in the full required amount.
(vi)    Cash Security. Any cash proceeds resulting from a draw upon or replenishment of either Letter of Credit shall be treated as cash security for Tenant’s obligations under this Lease. If Tenant fails to pay Monthly Base Rent, Additional Charges for Expenses and Taxes, or other Rent or charges due hereunder, or otherwise Defaults with respect to any provision of this Lease, Landlord may use all or any portion of the such cash security for the payment of any Rent due hereunder, to pay any other sum to which Landlord may become obligated by reason of Tenant’s Default, or to compensate Landlord for any loss or damages which Landlord may suffer as a result of such Default (including, without limitation, amounts which Landlord may be entitled to recover pursuant to Section 1951.2 of the California Civil Code). Landlord may in its sole discretion (but shall not be required to) use the cash security or any portion thereof to cure any failure by Tenant to perform any of its obligations hereunder or to compensate Landlord for any damages Landlord incurs as a result of Tenant’s failure to perform any of its covenants or obligations hereunder, it being understood that any use of the cash security shall not constitute a bar or defense to any of Landlord’s remedies under this Lease or at law. Landlord shall have no obligation to segregate any cash security from its general funds or to pay interest thereon.
(vii)    Assignment of Letter of Credit/Mortgagee. Landlord shall assign the Letters of Credit and its rights thereto in connection with any sale or other transfer of Landlord’s interest in the Buildings. In addition, Landlord shall be entitled to assign the Letter of Credits and/or its rights thereto or to the proceeds therefrom from time to time in connection with an assignment of this Lease to a Mortgagee as security for the obligations of Landlord to such Mortgagee. Tenant shall cooperate with Landlord in connection with any modifications of or amendments to the Letters of Credit that may be reasonably requested by any Mortgagee and/or in connection with any such assignment. At Landlord’s sole election, Landlord may also direct Tenant to cause the Letters of Credit to directly name a Mortgagee as the sole beneficiary thereunder.
(b)    Annual Reduction of Letter of Credit. So long as the Reduction Conditions (as defined below) are satisfied as of the applicable date, (i) the face amount of the Initial Letter of Credit may be reduced by amendment on each anniversary of the Building 2 Commencement Date in the amount of [***], and (ii) the face amount of the Additional Letter of Credit may be reduced by amendment on each anniversary of the Building 3 Commencement Date in the amount of [***]. The “Reduction Conditions” shall mean (i) Tenant is not in Default and no other Draw Event has occurred on or prior to such anniversary date, and (ii) Landlord has not delivered a notice of default or breach of this Lease to Tenant hereunder during the previous calendar year, regardless of whether such default or breach was cured by Tenant within any applicable grace or cure period; provided, however, that any such notice of default or breach relating to a non-monetary default which was disputed, in good faith, by Tenant and ultimately determined (by agreement of the parties, arbitration or judicial action) not to be a default or breach shall not be considered for purposes of determining whether such condition has been met.
(c)    Return of Security. Upon expiration of the Term or earlier termination of this Lease, the Letters of Credit and/or any cash security, as applicable, then held by Landlord shall be returned to Tenant, reduced by those amounts that may be required by Landlord to remedy Defaults on the part of Tenant in the payment of rent, to repair damages to the Premises caused by Tenant and to clean the Premises; provided, however, that (i) Landlord shall not be obligated to return the Letters of Credit or cash security or any part thereof until all breaches by Tenant of its obligations under this Lease have been cured and all damages which Landlord may suffer in connection with any such

30

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


breach have been ascertained in amount and paid in full; and (ii) in no event shall any such return be construed as an admission by Landlord that Tenant has performed all of its covenants and obligations hereunder.
(d)    Assignment Upon Transfer. If Landlord conveys or transfers its interest in the Premises and, as a part of such conveyance or transfer, Landlord assigns its interest in this Lease: (i) the Letters of Credit and/or any cash security (or any portion thereof not previously applied) shall be transferred to Landlord’s successor; and (ii) upon Landlord’s provision of written notice to Tenant of the transfer contemplated in subparagraph 31(d)(i) hereof, Landlord shall be released and discharged from any further liability to Tenant with respect to the Letters of Credit or any cash security. In no event shall any Mortgagee, or any purchaser of all or any portion of the Project at a public or private foreclosure sale or exercise of a power of sale, have any liability or obligation whatsoever to Tenant or Tenant’s successors or assigns for the return of the Letters of Credit or cash security in the event any such Mortgagee or purchaser becomes a mortgagee in possession or succeeds to the interest of Landlord under this Lease unless, and then only to the extent that, such Mortgagee or purchaser has received all or any part of the Letters of Credit or cash security. No trust relationship is created herein between Landlord and Tenant with respect to the Letters of Credit or cash security. Tenant acknowledges that neither the Letters of Credit nor any cash security is an advance payment of any kind or a measure of Landlord’s damages in the event of Tenant’s default. Tenant hereby waives any rights that it may now or hereafter have under California Civil Code Section 1950.7 and the provisions of any other Law that are inconsistent with this Paragraph 31.
(e)    Conversion of Deposit to Loan. Landlord and Tenant acknowledge and agree that, if Tenant defaults under this Lease and fails to fully cure such default within the applicable cure period and Landlord elects to pursue its remedies under California Civil Code Section 1951.2 or under this Lease to terminate this Lease (any such event, a “Landlord Action”), (i) Landlord will incur certain damages, costs and expenses, including, without limitation, marketing costs, commissions, relocation costs, tenant improvement costs, and carrying costs in connection with releasing the Premises, in addition to the other damages, costs and expenses Landlord may incur as a result of such default and/or other defaults under this Lease (all of the foregoing collectively, “Default Damages”); (ii) Landlord has no assurance of a source of funds to cover such Default Damages other than the proceeds of any cash security deposit or Letters of Credit; and (iii) the proceeds of any cash security deposit or Letters of Credit should be available to Landlord to apply to Default Damages, even if the amount thereof exceeds that amount to which Landlord is ultimately determined to be entitled under this Lease and pursuant to applicable law. Accordingly, at the sole election of the Beneficiary, the Beneficiary shall be entitled to draw the full amount of the Letters of Credit (or the full amount of the cash security deposit shall be released to the Landlord) which is then existing (after any previous application of funds and/or replenishment by Tenant pursuant to this Paragraph 31), simultaneously with commencement of a Landlord Action or at any time thereafter. All proceeds thereof in excess of amounts applied (pursuant to this Paragraph 31) to Default Damages incurred by Landlord prior to commencement of the Landlord Action shall be deemed a loan from Tenant to Landlord (the “Default Loan”). The Default Loan shall be unsecured and shall not bear interest, and repayment thereof shall be limited to the terms and conditions set forth in this paragraph. Any sums to which Landlord from time to time becomes entitled hereunder and pursuant to law as a result of Tenant’s Default and any previous Defaults of the Lease, to which the Letters of Credit (or cash collateral) have not previously been applied pursuant to Paragraph 31, shall be offset against the principal balance of the Loan. The amount of the Default Loan remaining, if any, after such offset shall be referred to herein as the “Excess Amount.” The Excess Amount shall be payable by Landlord to Tenant from, and only from, first any proceeds from the cash security deposit or Letters of Credit which have not been applied to Default Damages incurred by Landlord after the same are finally determined (the “Remaining Proceeds”), and then Excess Rent. The Remaining Proceeds shall be paid by Landlord to Tenant promptly upon final determination after the entire Premises are leased to a third party or parties “Excess Rent” shall mean the amount by which (x) rent received by Landlord (from the tenant or tenants leasing all or any portion of the Premises after Tenant’s default) in any month exceeds (y) the amount of rent that would have been payable under this Lease for such month if this Lease had not been terminated. Landlord shall pay Tenant one-half of the Excess Rent until the earlier of (A) the date the Excess Amount is fully repaid or (B) the date that would have been the Expiration Date of this Lease. Any remaining balance of the Default Loan shall be due and payable on the date that would have been the Expiration Date of this Lease. If the Default Loan is insufficient to cover all Default Damages, Tenant shall pay Landlord any such shortfall within fifteen (15) days following written demand by Landlord, and Landlord shall have all rights and remedies available at law or elsewhere in the Lease with respect to such shortfall. Notwithstanding anything to the contrary in this Paragraph 31(e), if a final non-appealable judgment is obtained establishing the amount of damages to which Landlord is entitled

31

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


as a result of Tenant’s Default, and to the extent that such damages amount exceeds the then-existing balance of the Default Loan, then the remaining balance of the Default Loan shall be due and payable within thirty (30) days after entry of such final non-appealable judgment.
32.    CORPORATE AUTHORITY; FINANCIAL INFORMATION. If Tenant signs as a corporation each of the persons executing this Lease on behalf of Tenant does hereby covenant and warrant that Tenant is a duly authorized and existing corporation, that Tenant has and is qualified to do business in California, that the corporation has full right and authority to enter into this Lease, and that each and both of the persons signing on behalf of the corporation were authorized to do so and by their signatures bind Tenant. If Tenant signs as a partnership or limited liability company, each of the persons executing this Lease on behalf of Tenant does hereby covenant and warrant that Tenant is a duly authorized and existing partnership or limited liability company, as applicable, that Tenant has and is qualified to do business in California, that Tenant has full right and authority to enter into this Lease, and that each and both of the persons signing on behalf of the Tenant were authorized to do so and by their signatures bind the Tenant. Upon Landlord’s request, Tenant shall provide Landlord with evidence reasonably satisfactory to Landlord confirming the foregoing covenants and warranties. Tenant hereby further covenants and warrants to Landlord that all financial information and other descriptive information regarding Tenant’s business, which has been or shall be furnished to Landlord, is accurate and complete in all material respects at the time of delivery to Landlord. At any time that Tenant is not a publicly traded corporation and not more than one time per calendar year (unless Tenant is then in default under this Lease, or an event has occurred that with the giving of notice or passage of time would lead to a Tenant default, or in connection with a potential sale or refinancing of the Project, or an interest in Landlord, in which events the one time per year limitation shall not apply), Tenant will furnish to Landlord within ten (10) days following Landlord’s request therefor, (i) copies of financial statements of Tenant for the year to date, certified by an officer of Tenant; and (ii) copies of audited, consolidated financial statements of Tenant, including balance sheets and statements of income and expenses, for the most recent fiscal year, certified and audited by independent public accountants of recognized standing. Landlord agrees that, at any time Tenant is not publicly traded, Tenant’s financial statements delivered to Landlord pursuant to this Paragraph 32 will be confidential and constitute proprietary information Tenant and that disclosure of the information of Tenant derived therefrom could adversely affect Tenant. Accordingly, Landlord shall protect such financial statements and information contained therein against unauthorized disclosure using the same degree of care, but no less than reasonable care, as Landlord uses to protect its own similar information, provided that Landlord may disclose such financial statements to employees, affiliates, partners, consultants, attorneys, accountants and agents of Landlord who have a need to know the information contained in such financial statements, provided that Landlord informs each such recipient of the confidentiality obligations in this Paragraph 32 and instructs such recipient to comply with such obligations. The financial statements also may be disclosed to third parties in connection with current or future potential or existing financing, including financing secured by the Project, or current or future potential or existing sale of the Project or of any interest in the Landlord, provided that each person to whom Landlord provides the financial statements will be advised in writing to maintain the confidentiality of the financial statements.
33.    PARKING. From and after the Commencement Date for each Building, Tenant shall have the right, at no cost to Tenant during the Term (including Extension Term, if applicable) to non-exclusive use of the number of parking spaces indicated as such Building’s “Minimum Parking” in the Basic Lease Information (subject to Paragraph 45 below), which includes, in part, a specified number of non-exclusive stalls for each Building in the parking garage located in Building #1 of the Project as shown on Exhibit “A” (the “Parking Garage”), all in locations reasonably designated by Landlord. Landlord shall not be obligated to enforce Tenant’s Minimum Parking or to reserve spaces either in the Parking Garage or on the surface auto court. Landlord may, at its option, install a security gate and/or other access devices for the Parking Garage (although Landlord shall not be obligated to do so and may discontinue it at any time during the Term), and Landlord shall provide parking passes and/or access keys or cards for the number of parking spaces included in Minimum Parking that are in the parking garage; provided that such items are provided to Tenant solely for use by Tenant, and may not be transferred, assigned (except in connection with an assignment of this Lease), or subleased (except in connection with a sublease of this Lease and then in proportion to the space sublet) without Landlord’s prior written approval. Tenant shall not be obligated to pay for the Minimum Parking, provided that Landlord, at its sole election, may charge for the use of parking spaces in the Parking Garage in excess of the Minimum Parking. Tenant shall comply, and shall use best efforts to cause Tenant’s employees, visitors and invitees to comply, with all rules and regulations prescribed by Landlord from time to time for the Parking Garage and surface parking. Tenant’s use of and rights to the Minimum Parking shall be subject to the Encumbrances and the rules and

32

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


regulations of Landlord for such parking facilities which may be established or altered by Landlord at any time or from time to time during the Term.
34.    REAL ESTATE BROKERS. Each party represents that it has not had dealings with any real estate brokers, finder or other person with respect to this Lease in any manner, except for any broker named in the Basic Lease Information, whose fees or commission, if earned, shall be paid by Landlord pursuant to separate agreement with Landlord’s Broker named in the Basic Lease Information. Each party shall hold harmless the other party from all damages resulting from any claims that may be asserted against the other party by any other broker, finder or other person with whom the other party has or purportedly has dealt.
35.    HAZARDOUS SUBSTANCE LIABILITY. Tenant has received from Landlord a copy of the following reports (the “Environmental Reports”): Phase 1 Environmental Site Assessment Update by GeoTrans dated June 4, 2001.
(a)    Definition of Hazardous Substances. For the purpose of this Lease, “Hazardous Substances” shall be defined, collectively, as oil, flammable explosives, asbestos, radioactive materials, hazardous wastes, toxic or contaminated substances or similar materials, including, without limitation, any substances which are “hazardous substances,” “hazardous wastes,” “hazardous materials” or “toxic substances” under applicable environmental laws ordinance or regulation.
(b)    Tenant Indemnity. Tenant releases Landlord from any liability for, waives all claims against Landlord and shall indemnify, defend and hold harmless Landlord, its employees, partners, agents, subsidiaries and affiliates against any and all claims, suits, losses, costs (including costs of investigation, clean up, monitoring, restoration and reasonable attorneys’ fees), damage or liability, whether foreseeable or unforeseeable, by reason of property damage (including diminution in the value of the property of Landlord), personal injury or death arising from or related to Hazardous Substances released, manufactured, discharged, disposed, used or stored by Tenant or any Tenant Parties on, in, or under the Project or Premises during the initial Term and any Extension Term. The provisions of this Tenant Indemnity regarding Hazardous Substances shall survive the termination of the Lease.
(c)    Landlord Indemnity. Landlord releases Tenant from any liability for, waives all claims against Tenant and shall indemnify, defend and hold harmless Tenant, its subsidiaries and affiliates, to the extent of Landlord’s interest in the Building, against any and all actions by any governmental agency for clean up of Hazardous Substances on or under the Project, including costs of legal proceedings, investigation, clean up, monitoring, and restoration, including reasonable attorney fees, if, and to the extent, arising from the presence of Hazardous Substances on, in or under the Project or Premises, except to the extent caused by the release, disposal, use or storage of Hazardous Substances in, on or about the Premises by Tenant or any Tenant Parties. The provisions of this Landlord Indemnity regarding Hazardous Substances shall survive the termination of the Lease.
(d)    De Minimus Amount. Tenant has informed Landlord, that except for very immaterial amounts of Hazardous Substances incidental to its office use (e.g. copier toner), Tenant will not use any Hazardous Substances in material amounts within the Premises and shall comply with any applicable Laws to the extent that it does.
36.    SIGNAGE. Tenant shall be allowed its name on (a) the existing monument located in front of the Buildings on an exclusive basis, and (b) the existing two monument signs located at the corner of Hanover and Page Mill roads and at the corner of Page Mill and Hansen roads (the “Shared Monuments”), each on a non-exclusive basis with other tenants in the Project. With respect to the Shared Monuments, Tenant shall have the right to one nameplate for each Building on each Shared Monument from and after the applicable Commencement Date for such Building. All such signage shall be in conformity with standards provided by Landlord, all applicable Laws, and the Ground Lease. Such signage shall be limited to identification of Tenant’s name and the location of the Premises and otherwise reasonable acceptable to Landlord. All signage shall be at Tenant’s expense, and upon the expiration or earlier termination of this Lease Tenant shall remove such signage and repair or replace, as the case may be, any damage to the sign structures, monument, and Building and Building finishes caused by such removal, which replacement

33

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


obligation shall include, without limitation, (i) replacement of base plates that are removed or damaged by Tenant during the installation or removal of Tenant’s signage and (ii) replacement of granite substrates on monument signs as necessary.
37.    OPTION TO RENEW. Upon the conditions that (i) no Default by Tenant has occurred under this Lease that has not been cured within the applicable notice and cure period, and (ii) the originally named Tenant or any Permitted Transferee physically occupies not less than seventy percent (70%) of the Premises as of the date Tenant delivers the Exercise Notice (as defined below) and as of the commencement date of the Extension Term, then Tenant shall have the right to extend the Term with respect to the entire Premises for one (1) period of five (5) years (the “Extension Term”) following the initial Expiration Date by giving written notice (the “Exercise Notice”) to Landlord at least twelve (12) months prior to the Expiration of the Initial Term. This option shall be personal to the originally named Tenant under this Lease or any Permitted Transferee and may only be exercised as to the entire Premises.
38.    RENT DURING EXTENSION TERM. The initial Monthly Base Rent during the Extension Term shall be the Fair Market Rental Value for the Premises as of the commencement of the Extension Term, as determined below (and such initial Monthly Base Rent shall be subject to annual increases of 3% during the Extension Term):
(a)    Within thirty (30) days after receipt of Tenant’s Exercise Notice, Landlord shall notify Tenant of Landlord’s estimate of the Fair Market Rental Value for the Premises, as determined below, for determining Monthly Base Rent during the ensuing Extension Term; provided, however, if Tenant’s Exercise Notice is given more than twelve (12) months before the Expiration Date, Landlord’s estimate of Pair Market Rental Value may, but need not be given more than twelve (12) months before the Expiration Date. Within fifteen (15) days after receipt of such notice from Landlord, Tenant shall notify Landlord in writing that it (i) agrees with such rental rate, or (ii) disagrees with such rental rate. No response shall constitute agreement. In the event that Tenant disagrees with Landlord’s estimate of Pair Market Rental Value for the Premises, then the parties shall meet and endeavor to agree within fifteen (15) days after Landlord receives Tenant’s notice described in the immediately preceding sentence. If the parties cannot agree upon the Fair Market Rental Value within said fifteen (15) day period, then the parties shall submit the matter to binding appraisal in accordance with the following procedure except that in any event neither party shall be obligated to start such procedure sooner than twelve (12) months before the expiration of the Term. Within fifteen (15) days of the conclusion of the period during which the two parties fail to agree (but not sooner than twelve (12) months before the expiration of the Term), the parties shall either (i) jointly appoint an appraiser for this purpose or (ii) failing this joint action, each separately designate a disinterested appraiser. No person shall be appointed or designated an appraiser unless such person has at least five (5) years experience in appraising major commercial property in Santa Clara County and is a member of a recognized society of real estate appraisers. If the parties jointly appoint an appraiser, such appraiser shall determine the Fair Market Rental Value for the Premises within thirty (30) days of his or her appointment and such determination shall be binding and conclusive upon the parties. If within thirty (30) days after the appointment, the two appraisers reach agreement on the Fair Market Rental Value for the Premises, that value shall be binding and conclusive upon the parties. If the two appraisers thus appointed cannot reach agreement on the Fair Market Rental Value for the Premises within thirty (30) days after their appointment, then the appraisers thus appointed shall appoint a third disinterested appraiser having like qualifications within five (5) days. If within thirty (30) days after the appointment of the third appraiser a majority of the appraisers agree on the Fair Market Rental Value of the Premises, that value shall be binding and conclusive upon the parties. If within thirty (30) days after the appointment of the third appraiser a majority of the appraisers cannot reach agreement on the Fair Market Rental Value for the Premises, then the three appraisers shall each simultaneously submit their independent appraisal to the parties, the appraisal farthest from the median of the three appraisals shall be disregarded, and the mean average of the remaining two appraisals shall be deemed to be the Fair Market Rental Value for the Premises and shall be binding and conclusive upon the parties. Each party shall pay the fees and expenses of the appraiser appointed by it and shall share equally the fees and expenses of the third appraiser. If the two appraisers appointed by the parties cannot agree on the appointment of the third appraiser, they or either of them shall give notice of such failure to agree to the parties and if the parties fail to agree upon the selection of such third appraiser within ten (10) days after the appraisers appointed by the parties give such notice, then either of the parties, upon notice to the other party, may request such appointment by the American Arbitration Association or, on its failure, refusal or inability to act, may apply for such appointment to the presiding judge of the Superior Court of Santa Clara County, California.

34

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


(b)    Wherever used throughout this Paragraph, the term “Fair Market Rental Value” shall mean the fair market rental value of the Premises, using as a guide the rate of monthly base rent which would be charged during the Extension Term for comparable high image, Class A office space in comparable condition, of comparable quality, in comparable Class A office buildings in the Stanford Research Park and University Circle areas of Palo Alto (“Comparable Area”), as of the time that the applicable Extension Term commences, with appropriate adjustments regarding taxes, insurance and operating expenses as necessary to insure comparability to this Lease, as the case may be, and also taking into consideration (i) amount and type of parking (including without limitation underground and reserved parking spaces), (ii) the location and address, (iii) the existence of any leasehold improvements (regardless of who paid for them and with the assumption, for purposes of determining the Fair Market Rental Value, that they are fully usable by Tenant), (iv) the proposed term of lease, (v) the amount of space leased, (vi) the extent of services provided or to be provided, (vi) the amenities provided, including common area amenities such as water features and landscaping, and (viii) any other relevant terms or conditions (including consideration of whether or not the monthly base rent is fixed, and concessions with respect to phase-ins or early occupancy agreements, moving costs, rebates, signing bonuses, early lease terminations, lease buy-outs, free rent and other lease concessions). For purposes of determining Fair Market Rental Value, any unique circumstances and underlying factors that are present in any comparable leases that are considered (such as, by way of example only, relationships between the landlord and tenant that are not arm’s length, the fact the premises are within a distressed asset or an asset that has been acquired by foreclosure or is held as REO property, and/or the fact that such leases are subleases or renewals at a discount off market rent) shall be taken into account, to the extent such circumstances and factors may affect the motivations of the landlord and/or the rent charged and/or concessions provided under such leases.
(c)    In the event of a failure, refusal or inability of any appraiser to act, his successor shall be appointed by the party who originally appointed him, but in the case of the third appraiser, his successor shall be appointed in the same manner as provided for appointment of the third appraiser.
(d)    The appraisers shall render their appraisals in writing with counterpart copies to Landlord and Tenant. The appraisers shall have no power to modify the provisions of this Lease.
(e)    To the extent that binding appraisal has not been completed prior to the expiration of any preceding period for which Monthly Base Rent has been determined, Tenant shall pay Monthly Base Rent at the greater of the Monthly Base Rent paid during the last month of the preceding period or the Fair Market Rental Value estimated by Landlord, with an adjustment to be made once Fair Market Rental Value is ultimately determined by binding appraisal.
(f)    From and after the commencement of the Extension Term, all of the other terms, covenants and conditions of the Lease shall also apply.
39.    INTENTIONALLY OMITTED.
40.    CONDITIONAL RIGHT OF FIRST OFFER. Subject to any renewal or expansion options or other preferential rights of other tenants in the Project that exist as of the date of this Lease, and subject to Landlord’s prior review of Tenant’s financial condition in Landlord’s sole discretion as provided below, Tenant shall have a one-time right to make the first offer to lease (“Right of First Offer”) with respect to all or a portion of the rentable area in “Building #4” of the Project as shown on Exhibit “A”, excluding Building common areas, if any (the “First Right Space”), as and when such space shall become “available for lease” (as defined below) on the following terms and conditions:
(a)    During the Lease Term, and so long as there is no Default by Tenant that has not been cured within the applicable notice and cure period, Landlord, upon becoming aware that any First Right Space will “be available for lease,” shall send Tenant written notice (“Availability Notice”) identifying the First Right Space, specifying the available date (or estimated available date) thereof and indicating the Rent and other material terms and conditions on which Landlord is willing, in good faith, to lease such portion of the First Right Space to a third party. Tenant shall have ten (10) business days (ending at 5:00 p.m. Pacific time on such tenth day) after receipt of the Availability Notice (“Offer Notice Deadline”) to deliver to Landlord the Tenant’s written unconditional offer to lease the First Right Space

35

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


described in the Availability Notice for the Rent specified in the Availability Notice and otherwise on the terms and conditions set forth in the Availability Notice (“Offer Notice”), together with Tenant’s current financial information as described in the last sentence of Paragraph 32. Within ten (10) business days after receipt of Tenant’s Offer Notice and the required financial information, Landlord shall send Tenant written notice (the “Acceptance Notice”) indicating that Landlord, based on Landlord’s review and approval in Landlord’s sole discretion of Tenant’s financial information, accepts Tenant’s Offer Notice; failure by Landlord to send an Acceptance Notice within such ten (10) business day period shall be deemed Landlord’s disapproval of Tenant’s financial information and rejection of Tenant’s Offer Notice, in which event Tenant’s rights under this Paragraph shall terminate. In addition, if Tenant does not deliver to Landlord its Tenant Election Notice within such ten (10) business day period, Tenant’s rights under this Paragraph 40 shall terminate with respect to such First Right Space. Upon termination of Tenant’s rights as provided above, Landlord thereafter may enter into one or more leases with one or more parties with respect to such First Right Space at any time and on such terms and conditions as Landlord elects; provided, however, if Landlord fails to enter into a lease with respect to such First Right Space within twelve (12) months after the Offer Notice Deadline, Tenant’s Right of First Offer with respect to such First Right Space shall be reinstated and Landlord shall notify Tenant of any future availability of such First Right Space in accordance herewith. Tenant’s failure to lease a particular First Right Space shall not affect Tenant’s right of first offer hereunder for any other First Right Space that has not previously been the subject of an Availability Notice. First Right Space shall be or will become “available for lease” upon the first to occur of (i) the expiration or earlier termination of any lease thereof in effect (without regard to whether such lease shall have commenced) on the date of the execution of this Lease, without a new lease having been entered into with the existing tenant under such lease, or an assignee or sublessee of such existing tenant that controls or occupies all or any portion of such leased space, or with any other tenant in the Project having any right in effect on the date of execution of this Lease to lease such leased space, and (ii) the waiver or lapse of any option to renew or extend the term of such lease and Landlord’s determination in Landlord’s sole discretion that Landlord will not commence or continue (if already commenced) negotiations for a renewal or new lease with the existing tenant or any assignee or sublessee of such existing tenant then in control or occupancy of all or any portion of such leased space; provided, however, that if, as of the date hereof, such space shall be subject to any other written rights of first offer, first refusal or expansion, such space shall not be deemed to be or to become “available for lease” until such rights shall have been waived or permitted to lapse.
(b)    The terms of the Lease for any First Right Space shall be as follows:
(i)    The Rent and the other terms and conditions for any First Right Space leased by Tenant pursuant to this Paragraph 40 shall be based on the Rentable Area of such space as determined by measurement of Landlord’s architect, which such architect shall certify in writing to Landlord and Tenant. The Rentable Area for such First Right Space shall by computed in a manner consistent with the computations for the Premises. The initial Monthly Base Rent for the First Right Space shall be the Monthly Base Rent specified in the Availability Notice, and shall be subject to the annual adjustment as specified in the Availability Notice.
(ii)    If Tenant elects to lease all or part of the First Right Space pursuant to this Paragraph 40, Tenant’s obligations for payment of Rent shall commence for the applicable portion of the First Right Space (the “First Right Space Rent Commencement Date”) on the date specified in the Availability Notice.
(iii)    If Tenant leases all or a portion of the First Right Space pursuant to this Paragraph 40, in addition to the terms set forth in clauses (i) and (ii) above, and except as otherwise provided in the Availability Notice, this Lease shall automatically be modified to provide as follows:
(A)    Both the Premises and such First Right Space shall be part of the “Premises” under the Lease, such that the term “Premises” as used in the Lease shall refer collectively to both the Premises and such First Right Space;
(B)    In addition to Tenant’s Share of Taxes and Expenses attributable to the initial Premises, Tenant shall pay “Tenant Share” of Taxes and Expenses attributable to such First Right Space (calculated in the same manner as for the initial Premises);

36

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


(C)    Tenant’s lease of the First Right Space shall be on the same terms and conditions as in effect for the Premises from time to time, except as expressly provided in this Paragraph 40 and/or in the Availability Notice;
(D)    The Expiration Date of the Initial Term or, if applicable, any Extension Term for entire Premises (including the initial Premises and such First Right Space) shall be the Expiration Date under this Lease, provided that if the First Right Space Rent Commencement Date would occur less than two years before the Expiration Date of the then-current Term, then as a condition to the lease of such First Right Space Tenant shall exercise Tenant’s option to extend for the subsequent Extension Term;
(E)    Tenant’s rights to extend this Lease pursuant to Paragraph 37 shall apply to both the initial Premises and such First Right Space, such that Tenant may only exercise its right to either Extension Term with respect to the entire Premises, rather than only the initial Premises or the First Right Space;
(iv)    The parties shall in proceed in good faith to negotiate and enter into an amendment of this Lease confirming the automatic modification of this Lease, on all of the terms and conditions, and in the form, contemplated by this Paragraph 40 and the Availability Notice and as otherwise mutually agreed by Landlord and Tenant, within thirty (30) days after Landlord’s Acceptance Notice (if any), provided that failure to enter into such amendment shall not void the automatic notification of the Lease terms as provided in this Paragraph 40.
(c)    Tenant’s rights under this Paragraph 40 shall expire with respect to any specific First Right Space on the first to occur of (i) Tenant’s failure to respond to any Availability Notice from Landlord by delivering an Offer Notice in accordance with the terms of this Paragraph 40 within ten (10) days after receipt of Landlord’s Availability Notice, (ii) Landlord’s failure to respond to any Offer Notice with an Acceptance Notice in accordance with the terms of this Paragraph 40 within ten (10) business days after receipt of an Offer Notice; or (iii) a foreclosure or conveyance in lieu of foreclosure on the Building or the First Right Space by a Mortgagee.
(d)    Without the necessity of any additional document being executed by Tenant for the purpose of effecting a subordination but subject to the provisions of Paragraph 16 hereof, Tenant’s rights under this Paragraph 40 shall be subject and subordinate at all times to: (i) the Ground Lease, the Encumbrances, and all ground leases or underlying leases which may now exist or hereafter be executed affecting the Building, and (ii) the lien of any Mortgage which may now exist or hereafter be executed in any amount. Notwithstanding the foregoing, Landlord shall have the right to subordinate or cause to be subordinated any such ground leases, underlying leases, Encumbrances or Mortgages to Tenant’s rights pursuant to this Paragraph 40.
(e)    Landlord may require that Tenant confirm by estoppel certificate or like document that Tenant’s rights under this Paragraph 40 do not apply to a specific transaction which Landlord is considering or specify the reasons why Tenant believes that Tenant’s rights hereunder apply to said transaction.
(f)    Neither party has had any contact or dealings regarding space in the Project other than the Premises through any licensed real estate broker or other person who may claim a right to a commission or finder’s fee as a procuring cause of any lease that might be entered into with respect to the First Right Space as contemplated by this Paragraph 40 or otherwise. If any broker or finder makes a claim for a commission or finder’s fee based upon any such contact, dealings, or communications, the party through whom the broker or finder makes his claim shall be responsible for such commission or fee, and all costs and expenses (including reasonable attorneys’ fees) incurred by the other party in defending against such claim.
41.    MISCELLANEOUS.
(a)    Defined Terms. The term “Premises” wherever it appears herein includes and shall be deemed or taken to include (except where such meaning would be clearly repugnant to the context) the space demised and improvements now or at any time hereafter comprising or built in the space hereby demised. The paragraph headings herein are for convenience of reference and shall in no way define, increase, limit or describe the scope or intent of

37

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


any provision of this Lease. The term “Landlord” shall include Landlord and its successors and assigns. In any case where this Lease is signed by more than one person, the obligations hereunder shall be joint and several. The term “Tenant” or any pronoun used in place thereof shall indicate and include the masculine or feminine, the singular or plural number, individuals, firms or corporations, and their and each of their respective successors, executors, administrators, and permitted assigns, according to the context hereof.
(b)    General Provisions. Time is of the essence of this Lease and all of its provisions. This Lease shall in all respects be governed by the laws of the State of California. This Lease, together with its exhibits, contains all the agreements of the parties hereto and supersedes any previous negotiations. There have been no representations made by the Landlord or Tenant or understandings made between the parties other than those set forth in this Lease and its exhibits. This Lease may not be modified except by a written instrument by the parties hereto.
(c)    Construction. The language in all parts of this Lease shall in all cases be construed as a whole and in accordance with its fair meaning and not restricted for or against any party, regardless of which party may have drafted the provision in question, it being agreed that this is a negotiated agreement. Accordingly, any rule of law or legal decision that would require interpretation of any ambiguities in this Lease against the party drafting it is not applicable and is waived. If for any reason whatsoever any of the provisions hereof shall be unenforceable or ineffective, all of the other provisions shall be and remain in full force and effect.
(d)    Quiet Enjoyment. Upon Tenant paying the Monthly Base Rent and Additional Charges and performing all of Tenant’s obligations under this Lease, Tenant shall have quiet and peaceful enjoyment of the Premises during the Term as against all persons or entities lawfully claiming by, through or under Landlord; subject, however, to the provisions of this Lease.
(e)    Waiver. If either Landlord or Tenant waives the performance of any term, covenant or condition contained in this Lease, such waiver shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein. Furthermore, the acceptance of Monthly Base Rent or Additional Charges by Landlord shall not constitute a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, regardless of Landlord’s knowledge of such preceding breach at the time Landlord accepted such Monthly Base Rent or Additional Charges. Failure by Landlord to enforce any of the terms, covenants or conditions of this Lease for any length of time shall not be deemed to waive or to decrease the right of Landlord to insist thereafter upon strict performance by Tenant. Waiver by Landlord of any term, covenant or condition contained in this Lease may only be made by a written document signed by Landlord.
(f)    Successors and Assigns. Subject to the provisions of Paragraph 10, the terms, covenants and conditions contained herein shall be binding upon and inure to the benefit of the parties hereto and their respective legal and personal representatives, successors and assigns.
(g)    Nondisclosure of Lease Terms. Tenant agrees that the terms of this Lease are confidential and constitute proprietary information of Landlord, and that disclosure of the terms hereof could adversely affect the ability of Landlord to negotiate with other tenants. Tenant hereby agrees that Tenant and its partners, officers, directors, employees, agents, real estate brokers and sales persons and attorneys shall not disclose the terms of this Lease to any other person without Landlord’s prior written consent, except to any accountants of Tenant in connection with the preparation of Tenant’s financial statements or tax returns, to an assignee of this Lease or subtenant of the Premises, or to an entity or person to whom disclosure is required by applicable law or in connection with any action brought to enforce this Lease.
42.    LEASE EFFECTIVE DATE/EXECUTION BY LANDLORD. Submission of this instrument for examination or signature by Tenant does not constitute a reservation of or option for lease, and it is not effective as a lease or otherwise until execution and delivery by both Landlord and Tenant. In addition, Landlord shall have forty-five (45) days after the execution of this Lease by Tenant and delivery thereof to Landlord to obtain the current Mortgagee’s consent to this Lease, and if such consent is not obtained within such sixty (60) day period (as it may be extended by mutual agreement of Landlord and Tenant) either Landlord or Tenant may terminate this Lease by written

38

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


notice to the other party, and Landlord shall immediately thereafter return the pre-paid Rent to Tenant. Satisfaction of this condition shall be evidenced by Landlord’s execution of this Lease and delivery thereof to Tenant, without any independent verification by Tenant being required.
43.    GROUND LESSOR’S CONSENT. This Lease is expressly conditioned upon receipt of the written consent of the Ground Lessor. Landlord shall use reasonable diligence to obtain the written consent of Ground Lessor to this Lease in form and substance acceptable to Landlord. In the event such consent has not been obtained within thirty (30) days from the date this Lease is executed by both Landlord and Tenant, Landlord may terminate this Lease by written notice to Tenant, and neither party shall thereafter have any obligation or liability to the other with respect to this Lease.
44.    SECURITY SYSTEM.
(a)    Installation. Landlord shall allow the Tenant, at Tenant’s expense, to install an integrated security system for the Premises (a “Security System”). Such Security System may be installed as part of the Tenant Improvements but may not be paid from the TI Allowance.
(b)    Plans and Specifications. Landlord will have the right to review and approve, in its reasonable discretion, all plans and specifications for the Security System and for the installation of the Security System and any related equipment. Landlord will have the right to reasonably designate the location of all equipment connecting the Security System with the Premises (including, without limitation, all wires, cables and other connecting equipment).
(c)    Costs. Tenant will be solely responsible for all costs and expenses incurred in installing, operating (including any utility expense), maintaining, repairing and removing the Security System from the Premises. Without limiting the foregoing, Tenant will, at its sole cost and expense, comply with all Laws, and all reasonable procedures established by Landlord, relating to the installation, operation, maintenance, repair and removal of the Security System and related equipment and facilities, and the Security System’s connections within the Premises.
(d)    Title and Liability. Title in and to the Security System and all equipment related thereto installed by Tenant will be vested in Tenant throughout the term of this Lease and, at the expiration of the Lease Term at Landlord’s sole option, will either be removed by Tenant or remain in the Premises (in which event title shall automatically transfer to Landlord without further action). Tenant will indemnify, defend and hold Landlord and Landlord’s mortgagees and contractors harmless from and against any and all third party claims, costs, expenses and liabilities (including reasonable attorneys’ fees) arising out of or in connection with Tenant’s installation, operation, maintenance, repair and removal of the Security System. Tenant’s obligations under this Paragraph 44 will survive the expiration or earlier termination of the term of this Lease.
45.    CHARGING STATIONS.
(a)    Installation. Landlord shall allow the Tenant, at Tenant’s expense, to install up to three (3) electric vehicle charging stations for each Building (collectively, the “Charging Stations”), in locations specified by Landlord in the parking lot for the Project. Such Charging Stations may be installed as part of the Tenant Improvements but may not be paid from the TI Allowance. Charging Stations installed by Tenant shall reduce Tenant’s Minimum Parking, such that for each individual Charging Station installed by Tenant, Tenant’s Minimum Parking for the applicable Building will be reduced by one parking space.
(b)    Plans and Specifications. Landlord and the Ground Lessor will have the right to review and approve, in the same manner as Landlord’s and Ground Lessor’s approval of the Tenant Improvements, all plans and specifications for the Charging Stations and for the installation of the Charging Stations and any related equipment. Without limiting other grounds on which Landlord may disapprove the Charging Stations, Landlord may withhold approval if any conditions imposed by governmental authorities with respect to permits or other approvals required for the Charging Stations are not acceptable to Landlord in Landlord’s sole discretion. If Landlord approves the plans and specifications for the Charging Stations, Tenant shall itself submit them to the Ground Lessor for Ground Lessor’s

39

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


approval, and shall provide Landlord will any correspondence from Ground Lessor with respect thereto. Landlord will have the right to designate the location of all equipment connecting the Charging Station with the Project (including, without limitation, all wires, cables and other connecting equipment).
(c)    Costs. Tenant will be solely responsible for all costs and expenses incurred in installing, operating (including any utility expense), maintaining and repairing the Charging Stations from the Project. Without limiting the foregoing, Tenant will, at its sole cost and expense, comply with all Laws (including by obtaining any permits or other approvals required from governmental entities), and all reasonable procedures established by Landlord, relating to the installation, operation, maintenance and repair of the Charging Stations and related equipment and facilities, and the Charging Station’s connections within the Project.
(d)    Title and Liability. Title in and to the Charging Stations and all equipment related thereto installed by Tenant will be vested in Tenant throughout the Term of this Lease and shall automatically be transferred to Landlord without further action upon the expiration of this Lease. Tenant shall have no right to remove the Charging Stations after they have been installed. Tenant will indemnify, defend and hold Landlord and Landlord’s mortgagees and contractors harmless from and against any and all third party claims, costs, expenses and liabilities (including reasonable attorneys’ fees) arising out of or in connection with Tenant’s installation, operation, maintenance and repair of the Charging Stations during the Term of this Lease. Tenant’s obligations under this Paragraph 45 will survive the expiration or earlier termination of the term of this Lease.
46.    BICYCLE RACKS/BICYCLE STORAGE.
(a)    Installation. Landlord shall allow the Tenant, at Tenant’s expense, to install uncovered, unsecured (not lockable) bicycle storage racks for up to fifteen (15) bicycles in the Parking Garage for the Project (the “Bike Racks”), in a location specified by Landlord. Such Bike Racks may be installed as part of the Tenant Improvements but may not be paid from the TI Allowance.
(b)    Plans and Specifications. Landlord will have the right to review and approve, in its reasonable discretion, all plans and specifications for the Bike Racks and for the installation of the Bike Racks and any related equipment.
(c)    Costs. Tenant will be solely responsible for all costs and expenses incurred in installing, operating, maintaining, repairing and removing the Bike Racks from the Project. Without limiting the foregoing, Tenant will, at its sole cost and expense, comply with all Laws, and all reasonable procedures established by Landlord, relating to the installation, operation, maintenance, repair and removal of the Bike Racks and related equipment and facilities.
(d)    Title and Liability. Title in and to the Bike Racks and all equipment related thereto installed by Tenant will be vested in Tenant throughout the term of this Lease and, at the expiration of the Lease Term at Landlord’s sole option, will either be removed by Tenant or remain in the Premises (in which event title shall automatically transfer to Landlord without further action). Tenant will indemnify, defend and hold Landlord and Landlord’s mortgagees and contractors harmless from and against any and all third party claims, costs, expenses and liabilities (including reasonable attorneys’ fees) arising out of or in connection with the use of, and with Tenant’s installation, operation, maintenance and repair of, the Bike Racks during the Term of this Lease. Tenant’s obligations under this Paragraph 46 will survive the expiration or earlier termination of the term of this Lease.


40

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the date first above written.
LANDLORD:
495 JAVE DRIVE ASSOCIATES, L.P.,
A California limited partnership
By:
M-D Ventures, Inc.
 
a California corporation
Its:
General Partner
 
 
By:
/s/ John Mozart
Its:
President

TENANT:

CLOUDERA, INC.,
a Delaware corporation
By:
/s/ Jim Frankola
Its:
CFO
 
 
By:
 
Its:
 





41

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


EXHIBITS
Exhibit “A”     Site Plan of Project
Exhibit “B”     Work Letter
Exhibit “C”     Rules and Regulations
Exhibit “D”    Commencement Date Memorandum





CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


EXHIBIT A
SITE PLAN OF PROJECT
image02.jpg

A-1

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


EXHIBIT “B”
WORK LETTER
1.
Construction of Tenant Improvements. Tenant shall install the Tenant Improvements (as described in Paragraph 2(a) below) in accordance with the terms and conditions of this Work Letter. The quantities, character and manner of installation of all of the work related to the Tenant Improvements shall be subject to the limitations imposed by any applicable governmental regulations, laws, ordinances, codes and rules. Notwithstanding the foregoing, Landlord may at Landlord’s sole election itself (with Landlord’s contractor) construct the portion of the Tenant Improvements that consist of the restrooms and related improvements that will service Building 2 (the “Restroom Improvements”), at Tenant’s cost up to a maximum amount of $322,764 (subject to Section 9(b) below), provided that (a) Landlord notifies Tenant in writing of such election prior to Tenant’s commencement of construction of the Tenant Improvements, and (b) Landlord shall use commercially reasonable efforts to not unreasonably interfere with or delay Tenant’s installation of the Tenant Improvements. If a certificate of occupancy or equivalent permit sign-off for the Premises is delayed beyond the Building 2 Scheduled Commencement Date solely as a result of Landlord’s failure to substantially complete the Restroom Improvements prior to such date, which failure does not result from Tenant Delays (as defined below) or Force Majeure, then the Building 2 Commencement Date shall be extended day for day by the number of days after the Building 2 Scheduled Commencement Date until the issuance of a certificate of occupancy or equivalent permit sign-off (but in no event shall the Building 2 Commencement Date be delayed beyond the date Tenant commences business in the Premises), provided, however, that Tenant delivers written notice to Landlord at such time as Tenant becomes aware that Landlord is in danger of causing such delay. “Tenant Delays” shall mean (i) Tenant’s delay in submittal of Tenant’s Plans and/or responses to Landlord’s comments to Tenant’s Plans beyond the time periods provided in this Work Letter, (ii) Tenant’s delay in any submittals for permits or other governmental approvals with respect to the Tenant Improvements (including without limitation the Restroom Improvements), (iii) changes in Tenant’s Plans as they relate to the Restroom Improvements after they have been submitted to governmental authorities for permits, (iv) delay in obtaining materials for reasons outside Landlord’s reasonable control, and (v) Tenant’s failure to provide reasonable access to the Premises to Landlord’s contractors to install the Restroom Improvements, or unreasonable interference with such installation by Tenant or its contractors or agents.
2.
Design of Tenant Improvements.
(a)
Definition of Tenant Improvements. The Tenant Improvements shall include all improvements to the Premises and to Tenant’s interior space that Tenant requires for Tenant’s use of the Premises. The scope of the Tenant Improvements may include modifications and/or additions to the structure of the Building or the existing improvements in the Premises as required for compliance with applicable Laws (including, without limitation, the Americans With Disabilities Act and other current code requirements) or as otherwise reasonable required in connection with the Tenant Improvements, all subject to Landlord’s review and approval pursuant to this Work Letter and all at Tenant’s sole cost and expense (subject to the Tenant Allowance provided by Landlord).
(b)
Tenant’s Plans.
(i)
Tenant shall diligently pursue the preparation of all drawings, plans and specifications for Tenant Improvements in accordance with this Paragraph 2(b). All such plans, drawings and specifications shall be performed by an architect and/or engineer (as applicable) reasonably acceptable to Landlord and Tenant, and shall include the following: (i) a space plan for the Premises; (ii) complete architectural, engineering and other plans for the Tenant Improvements; and (iii) a list of tenant improvement building standards for interior design, including a schedule (e.g. color palate, material board and spec sheets) of all interior color and finishes. Items (ii) and (iii) above are collectively referred to herein as “Working Drawings”. The space plan and Working Drawings shall comply with all applicable regulations, laws, ordinances, codes and rules. Tenant shall submit its space plan to Landlord,

B - 1

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


for review and approval in Landlord’s sole discretion. Within ten (10) business days after such submission, Landlord shall either approve or disapprove the space plan. Tenant shall make any changes necessary in order to correct any item identified by Landlord as grounds for its disapproval, and shall resubmit the correct space plan to Landlord within ten (10) business days after Landlord’s disapproval. Within ten (10) business days after Landlord received the revised space plan, Landlord shall approve or disapprove it. This procedure shall be repeated until the space plan is finally approved by Landlord and written approval has been delivered to Tenant. If Landlord fails to approve or disapprove any submission within the required time period Landlord shall be deemed to have disapproved such submission. Landlord has approved the space plan for Building 2, a copy of which is attached hereto as Schedule 2 (the “Building 2 Space Plan”), subject to Landlord’s right to review and approve the Working Drawings, interior color and finishes, materials, specifications, and other items pursuant to Paragraph 2(b)(ii) and (iii) below, and further subject to compliance and conformance with the Minimum Specifications (as defined in Paragraph 2(b)(iii) below).
(ii)
Within twenty-one (21) days after Landlord has finally approved Tenant’s space plan, Tenant shall submit its Working Drawings and a pallet of interior colors and finishes to Landlord for Landlord’s review and approval, in Landlord’s sole discretion. Landlord’s approval or disapproval of such Working Drawings and pallet, and Tenant’s response thereto, shall follow the procedure (including deemed disapproval) described in Subsection (i) above with respect to the space plan. All items finally approved by Landlord pursuant to this Paragraph 2(b) are referred to herein collectively as “Tenant’s Plans”. Once approved by Landlord, no changes shall be made to Tenant’s Plans without the prior written approval of Landlord, in Landlord’s sole discretion.
(iii)
Landlord has established a partial list of Minimum Building Specifications for Building 2 (the “Minimum Specifications”) which is attached to this Exhibit as Schedule 1, for use in the design and construction of the Tenant Improvements, provided that the Minimum Specifications is not a complete list of products, specifications and finishes to be used in the construction of the Tenant Improvements and accordingly, Tenant shall cause to be described in the Working Drawings all products, specifications and finishes to be used in the construction of the Tenant Improvements which are not otherwise listed on, or which deviate from, the Minimum Specifications, all of which shall be subject to Landlord’s approval in Landlord’s sole discretion. Unless otherwise expressly agreed to by Landlord, the portion of the Tenant Improvements pertaining to the products, specifications and finishes specified in the Minimum Specifications shall comply with the Minimum Specifications.
(c)
Permits for Tenant Improvements. Upon receipt of Landlord’s final approval of the Working Drawings for each Building, Tenant’s Architect shall submit them to the appropriate municipal authorities for all applicable building permits necessary to allow Tenant’s Contractor (as defined below) to commence and fully complete the construction of Tenant Improvements for the applicable Building. Tenant shall be responsible for obtaining any building permit or certificate of occupancy for the Premises; provided that Landlord shall cooperate with Tenant in executing permit applications and performing other ministerial acts reasonably necessary to enable Tenant to obtain any such permit or certificate of occupancy. No changes, modifications or alterations in the Working Drawings approved by Landlord may be made, nor, except for field changes and minor change orders, shall the actual construction of the Tenant Improvements deviate from the approved Working Drawings in any way, without the prior written consent of Landlord, in Landlord’s sole discretion.
(d)
Election to Remove Tenant Improvements. In connection with its approval of Tenant’s Plans, Landlord shall, subject to the provisions below, designate in writing which Tenant Improvements or components of Tenant Improvements may remain in the Premises upon the expiration or sooner termination of this Lease. If Landlord does not make such designation in writing with respect to any

B-2

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


portion or component of the Tenant Improvements at the time Landlord approves Tenant’s Plans, Landlord may require that such portion of component of the Tenant Improvements be removed from the Premises at the expiration of the Lease Term. Without limiting Landlord’s right to require removal of any Tenant Improvements, in Landlord’s sole discretion, Landlord shall be entitled to require the removal of Tenant Improvements that, in Landlord’s judgment, (i) are non­standard office improvements that are not consistent with other upscale professional services office space within comparable Class A office buildings in the Stanford Research Park and University Circle areas of Palo Alto, (ii) affect the structure of the Building or the Building Systems; or (iii) would have no value, or would have negative value, to a future tenant. Without limiting any other provision of this Paragraph 2(d), Landlord may require removal of Tenant’s signage, electrical or telecommunications risers and conduits, cables and lines installed by or on behalf of Tenant, raised flooring, heat pumps, supplemental air conditioning equipment, UPS systems, rolling files or storage units and any accompanying structural steel reinforcements at the expiration or sooner termination of the Lease Term. Any obligation of Tenant to remove Tenant Improvements pursuant to this Paragraph 2(d) shall also require Tenant to repair any damage resulting to the Premises in connection with the removal of such Tenant Improvements. With respect to any Tenant Improvements that Landlord does not designate may remain in the Premises, Landlord may condition its consent to such Tenant Improvements on a requirement that funds sufficient, in Landlord’s reasonable judgment, to cause the removal of such Tenant Improvements and restoration of the Premises to its condition prior to installation of such Tenant Improvements be provided by Tenant to Landlord prior to installation of such Tenant Improvements, to be held as additional security for Tenant’s obligations to remove the designated Tenant Improvements upon expiration or earlier termination of this Lease as required by this Paragraph. Subject to Landlord’s rights as described above to require removal of components of the Tenant Improvements, materials, finishes, equipment and all other items depicted in the Tenant Plans but not in the Building 2 Space Plan or described in more detail in the Tenant Plans, Landlord agrees that the general configuration of the Building 2 Premises depicted on the approved Building 2 Space Plan, other than the ceiling grid which must be removed and restored in a manner acceptable to Landlord in its sole discretion, may remain at the expiration or earlier termination of the Lease.
3.
Tenant’s Contractor. Tenant shall use a general contractor for the Tenant Improvements approved in writing by Landlord, in Landlord’s sole discretion (“Tenant’s Contractor”). Landlord approves Novo Construction as Tenant’s Contractor, and DES as one of Tenant’s subcontractors. The construction contract for the Tenant Improvements with Tenant’s Contractor (the “Construction Contract”) shall be in form and substance acceptable to Tenant and reasonably approved by Landlord and shall include without limitation requirements (i) that Tenant’s Contractor carry such insurance as Landlord may reasonably require; and (ii) that Landlord may succeed Tenant and enforce the Construction Contract in the event of a termination of the Lease. Landlord and Tenant shall each have the full benefit of all contractor warranties in connection with the Tenant Improvements. Tenant shall direct and authorize Tenant’s Contractor to keep Landlord informed of the construction process for the Tenant Improvements and to provide Landlord with reasonable access to all documentation and other information in Tenant’s Contractor’s possession or control regarding construction of the Tenant Improvements.
4.
Construction of Tenant Improvements.    After the Landlord and Ground Lessor (in accordance with Paragraph 12 hereof) approve Tenant’s Plans and Tenant receives any necessary building permits, Tenant shall administer and diligently prosecute the construction of Tenant Improvements in accordance with Tenant’s Plans, in compliance with applicable Laws, and using building standard material, subject to Landlord’s right, at its election, to itself construct the Restroom Improvements. All Tenant Improvements (other than, if applicable, the Restroom Improvements) shall be constructed by Tenant’s Contractor (and/or its subcontractors), and Tenant shall be responsible for project management with respect to construction of the Tenant Improvements. During construction of the Tenant Improvements, Tenant and its contractors and subcontractors (i) shall not interfere with the access to, use of, or business conducted within any other portions of the Project by other tenants or occupants, (ii) shall use diligent efforts to coordinate the timing of work, deliveries and other construction matters with tenants or occupants of the Project that could be adversely impacted by such work, deliveries and construction matters, including, without limitation, by scheduling work

B-3

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


that would create noise, vibrations, dust or other similar annoyances to other tenants or occupants of the Project outside normal business hours, notwithstanding any additional cost (for overtime or otherwise) that Tenant may incur, (iii) shall clean and secure construction and staging areas daily, (iv) shall stage all construction and store all construction materials and equipment in a location designated by Landlord (in Landlord’s sole discretion) on the Project, and (v) shall otherwise abide by all rules and requirements established or imposed by Landlord relating to the performance of the Tenant Improvements, including rules relating to any required shutdown of utilities (including life-safety systems), storage of materials, and coordination of work with other tenant’s or occupant’s contractors. Tenant shall not be charged any construction management fee for Landlord’s review of Tenant’s Plans or any oversight of the construction of the Tenant Improvements.
5.
Landlord’s Right to Inspect and Stop Work. Landlord shall have the right to object to any material deviation from the Tenant’s Plans not approved by Landlord in accordance with this Work Letter (a “Plan Deviation”). Tenant shall cause any such Plan Deviation to be corrected. If the Plan Deviation is not corrected by Tenant, Landlord may cause such Plan Deviation to be remedied, at Tenant’s expense, and/or shall have the authority, without liability to Tenant, to stop construction of the Tenant Improvements (i) until a Plan Deviation is corrected, as provided in this Paragraph 5, or (ii) if Tenant does not comply with the requirements of Paragraph 4, until any such non-compliance is corrected.
6.
Compliance with Laws.     All of the Tenant Improvements shall be installed in compliance with all applicable Laws, including, without limitation, and as applicable, the Americans with Disabilities Act; provided, however, that Landlord shall be responsible for correcting any condition with respect to the exterior of the Buildings and Common Area (including ingress and egress to the Buildings) that is in violation of applicable Laws as of the date of this Lease unless the requirement that such condition be corrected is triggered by (a) the installation, use or operation of the Tenant Improvements or any of Tenant’s Trade Fixtures or personal property; (b) the acts or omissions of any of the Tenant Parties; or (c) the particular use or particular occupancy or manner of use or occupancy of the Premises by the Tenant Parties (not applicable to office space in general) or by the cumulative effect of (a), (b) and/or (c) collectively. All costs of such compliance (other than Landlord’s express obligations in the preceding sentence) shall be paid for by Tenant (subject to Paragraph 9(b)). Landlord’s review and approval of Tenant’s Plans shall not imply Landlord’s review of the quality, design, code compliance or similar matters with respect to the Tenant Improvements; accordingly, notwithstanding that Tenant’s Plans are reviewed by Landlord or its agent and notwithstanding any advice or assistance that may be rendered to Tenant by Landlord or Landlord’s agents, Landlord shall have no liability whatsoever in connection therewith and shall not be responsible for any omissions or errors contained in Tenant’s Plans.
7.
Access.     Landlord shall provide Tenant’s Contractor with access to the Building for purposes of constructing the Tenant Improvements from and after the execution of this Lease.
8.
Representative. Tenant has designated Kyla Brennan and Landlord has designated Chris Keith as their sole site representatives with respect to the matters set forth in this Work Letter, and such representatives, until further notice to the other party, shall have full authority and responsibility to act on behalf of the Tenant or Landlord, respectively, as required in this Work Letter.
9.
Tenant Improvement Costs.
(a)
Tenant Responsibility for Costs. Tenant shall bear the cost of Tenant Improvements, subject to the terms of clause (b) below, including, without limitation, costs in connection with space planning, preparing Tenant’s Plans, engineering, plan checking, special inspections and testing, any consultants, and related permits and fees for Tenant Improvements; provided, however, that Tenant shall not be responsible for any overhead, supervision, review of plans or construction management or supervision in connection with the Tenant Improvements by Landlord. Other than providing the Tenant Allowance in accordance with clause (b) below, Landlord shall not be obligated to pay any portion of the cost of the Tenant Improvements, and Tenant shall be obligated to keep the Project free of all liens and claims relating to the design and construction of the Tenant Improvements.

B-4

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


(b)
Tenant Allowance. Landlord shall provide Tenant an allowance for each Building in an amount not to exceed the sum set forth in the Basic Lease Information for the Tenant Allowance for the applicable Building (collectively, the “Tenant Allowance”), to be applied toward the cost of the following items in respect of the Tenant Improvements in the applicable Building: Architectural and engineering fees, space planning, building permits or other governmental fees, and the cost of labor, materials, contractors fees and overhead, and other charges included in the construction contract for construction of Tenant Improvements, including the contractor’s fee, overhead and general conditions, sales and use taxes, the cost of the builder’s risk insurance during construction and all testing and inspection costs. If Landlord elects to itself construct the Restroom Improvements, Landlord shall make payments to its contractor for the Restroom Improvements as and when such costs are incurred and deduct the amount of such payments from the Tenant Allowance for Building 2 up to the maximum amount stated in Paragraph I of this Work Letter. Landlord shall not be obligated to disburse any remaining portion of the Tenant Allowance attributable to a Building until such time as (i) the Commencement Date for the applicable Building has occurred and Tenant has accepted delivery of the Building and made the initial prepayment of Rent with respect to the applicable portion of the Premises; and (ii) Tenant has delivered to Landlord and Landlord has approved, in Landlord’s reasonable discretion, all of the following: (A) invoices, paid receipts and/or related evidence reasonably acceptable to Landlord establishing that Tenant has paid an amount equal to that portion of the Tenant Allowance requested by Tenant to third parties in connection with the Tenant Improvements in the applicable Building; (B) executed unconditional final mechanics’ lien releases, in statutory form, from Tenant’s contractor and all subcontractors, laborers, materialmen and suppliers used by Tenant with respect to all work in and to the Premises located in the applicable Building; (C) a certificate from Tenant’s architect or space planner, in a form reasonably acceptable to Landlord, certifying that the construction of the Tenant Improvements in the applicable Building has been substantially completed and meets all applicable building codes; (D) a copy of the certificate of occupancy (or similar governmental authorization) for the applicable Building; (E) “as-built” drawings for the Tenant Improvements in the applicable Building, signed by either Tenant’s architect, space planner or contractor, and electronic CAD files from Tenant’s Contractor and all subcontractors; and (F) a final punch list signed off by both Tenant and Landlord and/or their architects. Thereafter, Landlord shall deliver, within fifteen (15) days following Tenant’s delivery of the materials and information required for disbursement thereof in the preceding sentence, a check payable to Tenant in the amount of that portion of the Tenant Allowance requested by Tenant and paid to third parties in connection with the Tenant Improvements for the applicable Building (which amount shall not exceed the portion of the Tenant Allowance provided for such Building as specified in the Basic Lease Information). Landlord’s payment of any portion of the Tenant Allowance shall not be deemed Landlord’s approval any of the Tenant Improvements absent Landlord’s prior approval pursuant to this Work Letter. Landlord’s obligation to disburse the Tenant Allowance for each Building under this Paragraph 9(b) shall expire six (6) months after the Delivery Date for the applicable Building, subject to extension due to Force Majeure, such that Landlord shall not be obligated to provide to Tenant any undisbursed portion of the Tenant Allowance for a Building unless Tenant has delivered to Landlord all documents required above within nine (9) months after the Delivery Date of such Building.
10.
Lease Default. Notwithstanding any provision to the contrary contained in the Lease, during any time in which Tenant is in default under the Lease prior to completion of the Tenant Improvements, then (i) in addition to all other rights and remedies granted to Landlord pursuant to the Lease, Landlord may cause the Tenant’s Contractor to cease the construction of the Premises, and (ii) all other obligations of Landlord under the terms of this Work Letter shall be suspended until such time as such failure to perform is cured by Tenant pursuant to the terms of the Lease.
11.
Delay.    Notwithstanding anything herein to the contrary, delay in the completion of the Tenant Improvements shall not subject Landlord to any liability for any loss or damage resulting therefrom (including, without limitation, any lost profits, loss of business or other consequential damages), or entitle Tenant to any credit,

B-5

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


abatement or adjustment of Rent or other sums payable under the Lease, or cause a delay or extension of either Commencement Date.
12.
Ground Lessor Consent. The Tenant Improvements are subject to Ground Lessor consent pursuant to the Ground Lease. Landlord shall use reasonable diligence to obtain the written consent of Ground Lessor to the Tenant Improvements that are otherwise acceptable to Landlord. Without limiting its right to otherwise withhold consent to Tenant Improvements pursuant to this Work Letter, Landlord shall be entitled to withhold its own consent to the Tenant Improvements to the extent they are not approved by the Ground Lessor on the terms and conditions of the Ground Lease.
13.
Defined Terms. All capitalized terms not defined in this Work Letter shall have the meaning given them in the Lease.



B-6

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


Schedule 1
Minimum Building Standards
1001 Page Mill Road, Building #2, Palo Alto
1.
Ceiling Grid:    Fine Line Grid - 24” x 24”, provided that (i) 2’ x 4’ grid in open plan work areas will be acceptable with 2 x 2’ second-look type tile (style and tile to be approved by Landlord in Landlord’s sole discretion), and (ii) 2 x 2’ grid for office, conference and lobby areas will be acceptable; provided, however, that all grids must align throughout building (Landlord will not approve interior office, conference and lobby as independent, non-aligning systems).
2.
Lighting System:    Avante Recessed Direct/Indirect - 24” x 24”
3.
Fire Sprinklers:    Concealed
4.
Glass/Glazing:    Herculite frameless storefront - 1/2” minimum standard, butt-jointed, or framed - 1/2” minimum standard, butt-jointed glass system.
5.
Hardware:    Chrome. Locks shall be mortise, or with matte finish metal such as Brushed Aluminum Chrome or Nickel subject to Landlord’s approval of specific material in Landlord’s sole discretion.
6.
Wall height:    6” below deck @ offices, conference, kitchen, meeting; office/conference perimeter walls also subject to Landlord’s approval.
7.
Door Spec:    9 ft min, Prefinished wood (mahogany, walnut, clear oak, sycamore or maple), subject to Landlord’s approval of specific material in Landlord’s sole discretion).
8.
Counters:    Solid surface in cores, kitchen, break room, copy
9.
Flooring:    Carpet tile, stone, ceramic tile
10.
Window covering:    Mechoshade (existing mini-blinds may not be reused).
Tenant shall obtain Landlord approval for All Final finish colors, materials.
1st / 2nd floor Bathroom/Core -Tenant shall obtain Landlord approval for elevation(s), materials, lay-out (to be consistent with Class A, Palo Alto office space i.e. - full height tile walls, fully tiled floors, etc).


B - 7

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.



Schedule 2
Building 2 Space Plan
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C - 8

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


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B - 9

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


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B - 10

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


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B - 11

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


EXHIBIT “C”
RULES AND REGULATIONS
1.    Sidewalks, halls, passages, exits, entrances, elevators, escalators and stairways shall not be obstructed by Tenant or used by Tenant for any purpose other than for ingress to and egress from the Premises. The halls, passages, exits, entrances, elevators and stairways outside the Premises are not for the use of the general public and Landlord shall in all cases retain the right to control and prevent access thereto by all persons whose presence, in the judgment of Landlord, shall be prejudicial to the safety, character, reputation and interests of the Project and its tenants, provided that nothing herein contained shall be construed to prevent such access to persons with whom Tenant normally deals in the ordinary course of Tenant’s business unless such persons are engaged in illegal activities. Tenant, and Tenant’s employees or invitees, shall not go upon the roof of the Buildings, except as authorized by Landlord.
2.    No sign, placard, picture, name, advertisement or notice visible from the exterior of the Premises shall be inscribed, painted, affixed, installed or otherwise displayed by Tenant either on the Premises or any part of the Buildings without the prior written consent of Landlord, and Landlord shall have the right to remove any such sign, placard, picture, name, advertisement or notice without notice to and at the expense of Tenant.
If Landlord shall have given such consent to Tenant at any time, whether before or after the execution of the Lease, such consent shall not in any way operate as a waiver or release of any of the provisions hereof or of the Lease, and shall be deemed to relate only to the particular sign, placard, picture, name, advertisement or notice so consented to by Landlord and shall not be construed as dispensing with the necessity of obtaining the specific written consent of Landlord with respect to any other such sign, placard, picture, name, advertisement or notice. All approved signs or lettering on doors and walls shall be printed, painted, affixed or inscribed at the expense of Tenant by a person approved by Landlord.
3.    The bulletin board or directory of the Buildings will be provided exclusively for the display of the name and location of tenants only and Landlord reserves the right to exclude any other names therefrom.
4.    No curtains, draperies, blinds, shutters, shades, screens or other coverings, awnings, hangings or decorations shall be attached to, hung or placed in, or used in connection with, any window, door or patio on the Premises without the prior written consent of Landlord. In any event with the prior written consent of Landlord, all such items shall be installed inboard of Landlord’s window coverings (if any) and shall not in any way be visible from the exterior of the Buildings. No articles shall be placed or kept on the window sills so as to be visible from the exterior of the Buildings. No articles shall be placed against glass partitions or doors which might appear unsightly from outside the Buildings.
5.    Landlord reserves the right to exclude from the Buildings between the hours of 6:00 p.m. and 8:00 a.m. and at all hours on Saturdays, Sundays and holidays all persons who do not present a pass to the applicable Building signed by Landlord. Landlord will furnish passes to persons for whom Tenant requests the same in writing. Tenant shall be responsible for all persons for who it requests passes and shall be liable to Landlord for all acts of such persons. Landlord shall in no case be liable for damages for error with regard to the admission to or exclusion from the Buildings of any person.
During the continuance of any invasion, mob, riot, public excitement or other circumstance rendering such action advisable in Landlord’s opinion, Landlord reserves the right to prevent access to the Buildings by closing the doors, or otherwise, for the safety of tenants and protection of the Buildings and property in the Buildings.
6.    Landlord shall have the right to approve any person or persons providing janitorial or other cleaning services for the Premises. Tenant shall not cause any unnecessary labor by reason of Tenant’s carelessness or indifference in the preservation of good order and cleanliness of the Premises. Landlord shall not in any way be responsible to Tenant for any loss of property on the Premises, however occurring, or for any damage done to the effects of Tenant by any employee or any other person.

C - 1

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


7.    Tenant shall see that the doors of the Premises are closed and securely locked and must observe reasonable care and caution that all water faucets or water apparatus are entirely shut off before Tenant or its employees leave such Premises, and that all utility switches over which Tenant has control shall likewise be carefully shut off (other than as required for security or safety purposes), so as to prevent waste or damage, and for any default or carelessness the Tenant shall make good all injuries sustained by other tenants or occupants of the Buildings or Landlord.
8.    As more specifically provided in the Lease, Tenant shall not waste electricity, water or air conditioning and agrees to cooperate reasonably with Landlord to facilitate the most effective operation of each Building’s heating and air conditioning, and shall refrain from attempting to adjust any controls other than room thermostats installed for Tenant’s use and/or supplemental heating or air conditioning systems installed by Tenant.
9.    Tenant shall keep and cause to be kept closed all window coverings when necessary because of the sun’s position.
10.    Tenant shall not alter any lock or access device or install a new or additional lock or access device or any bolt on any door of the Premises without the prior written consent of Landlord. If Landlord shall give its consent, Tenant shall in each case furnish Landlord with a key for any such lock.
11.    Tenant shall not make or have made additional copies of any keys or access devices provided by Landlord but shall instead obtain any necessary additional keys or devices from Landlord. Tenant, upon the termination of the tenancy, shall deliver to Landlord all the keys or access devices for the Buildings, offices, rooms and toilet rooms which shall have been furnished to Tenant or which Tenant shall have had made. In the event of the loss of any keys or access devices so furnished by Landlord, Tenant shall pay Landlord the actual cost (including rekeying if necessary) therefor.
12.    The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed and no foreign substance of any kind whatsoever shall be thrown therein, and the expense of any breakage, stoppage or damage resulting from the violation of this rule by Tenant or Tenant’s employees or invitees shall be borne by Tenant.
13.    Tenant shall not use or keep in the Premises or the Buildings any kerosene, gasoline or inflammable or combustible fluid or material other than limited quantities necessary for the operation or maintenance of office or office equipment. Tenant shall not use any method of heating or air conditioning other than supplied or approved by Landlord.
14.    Tenant shall not use, keep or permit to be used or kept in the Premises any foul or noxious gas or substance or permit or suffer the Premises to be occupied or used in a manner offensive or objectionable to Landlord or other occupants of the Buildings by reason of noise, odors and/or vibrations or interfere in any way with other tenants or those having business therein, nor shall any animals or birds be brought or kept in or about the Premises or the Buildings.
15.    Except as consented to by Landlord, no cooking shall be done or permitted by Tenant on the Premises (except that use by the Tenant of Underwriter’s Laboratory approved equipment for the heating of food (e.g., in a standard microwave oven), the preparation of coffee, tea, hot chocolate and similar beverages for Tenant and its employees shall be permitted, provided that such equipment and use are in accordance with all applicable federal, state and city laws, codes, ordinances, rules and regulations), nor shall Premises be used for lodging.
16.    Except with the prior written consent of Landlord, Tenant shall not sell, or permit the sale, at retail, of newspapers, magazines, periodicals, theater tickets or any other goods or merchandise in or on the Premises, nor shall Tenant carry on, or permit or allow any employee or other person to carry on, the business of stenography, typewriting or any similar business in or from the Premises for the service or accommodation of occupants of any other portion of the Buildings, nor shall the Premises be used for the storage of merchandise or for manufacturing of any kind, or the business of a public barber shop or beauty parlor, nor shall the Premises be used for any improper, immoral or objectionable purpose, or any business or activity other than that specifically provided for in Tenant’s Lease.

C - 2

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


17.    If Tenant requires telegraphic, telephonic, burglar alarm or similar services, it shall first obtain and comply with Landlord’s reasonable instructions in their installation.
18.    Landlord will direct electricians as to where and how telephone, telegraph and electrical wires are to be introduced or installed. No boring or cutting for wires will be allowed without the prior written consent of Landlord. The location of burglar alarms, telephones, call boxes and other office equipment affixed to the Premises shall be subject to the written approval of Landlord, which shall not be unreasonably withheld.
19.    Tenant shall not install any radio or television antenna, loudspeaker or any other device on the exterior walls or the roof of the Buildings. Tenant shall not interfere with radio or television broadcasting or reception from or in the Buildings or elsewhere.
20.    Tenant shall not lay linoleum, tile, carpet or any other floor covering so that the same shall be affixed to the floor of the Premises in any manner except as approved in writing by Landlord. The expense of repairing any damage resulting from a violation of this rule by Tenant or Tenant’s contractors, employees or invitees or the removal of any floor covering shall be borne by Tenant. Tenant shall use chair pads if needed to avoid excess wear and tear to the floor coverings.
21.    Landlord shall have the right to prescribe the weight, size, and position of all safes, furniture or other heavy equipment brought into the Buildings. Safes or other heavy objects shall, if considered necessary by Landlord, stand on wood strips of such thickness as determined by Landlord to be necessary to properly distribute the weight thereof. Landlord will not be responsible for loss of or damage to any such safe, equipment or property from any cause, and all damage done to the Buildings by moving or maintaining any such safe, equipment or other property shall be repaired at the expense of Tenant.
22.    Business machines and mechanical equipment belonging to Tenant which cause noise or vibration that may be transmitted to the structure of the Building or to any space therein to such a degree as to be objectionable to Landlord shall be placed and maintained by Tenant, at Tenant’s expense on vibration eliminators or other devices sufficient to eliminate noise or vibration. The persons employed to move such equipment in or out of the Buildings must be acceptable to Landlord.
23.    Tenant shall not place a load upon any floor of the Premises which exceeds the load per square foot which such floor was designed to carry and which is allowed by law. Tenant shall not deface the Premises or any part thereof. Tenant may hang pictures on walls in the Premises. Any damage to the walls caused by molley bolts, or like hanging materials, will be repaired by Tenant.
24.    Tenant shall not install, maintain or operate upon the Premises any vending machine without the written consent of Landlord, other than for Tenant’s employees, guests and invitees.
25.    There shall not be used in any space, either by Tenant or others, any hand trucks except those equipped with rubber tires and side guards or such other material-handling equipment as Landlord may approve. No other vehicles of any kind shall be brought by Tenant into or kept in or about the Premises.
26.    Tenant shall store all trash and garbage within the interior of the Premises. No material shall be placed in the trash boxes or receptacles if such material is of such nature that it may not be disposed of in the ordinary and customary manner of removing and disposing of trash and garbage in the jurisdiction in which the Premises is located, without violation of any law or ordinance governing such disposal. All trash, garbage and refuse disposal shall be made only through entryways and elevators provided for such purposes and at such times as Landlord shall designate.
27.    Canvassing, soliciting, distribution of handbills or any other written material and peddling in the Project are prohibited, and Tenant shall cooperate to prevent the same. Tenant shall not make room-to-room solicitation of business from other tenants in the Project.

C - 3

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


28.    Landlord shall have the right, exercisable upon reasonable advance notice and without liability to Tenant, to change the name and address of the Project or any individual Building.
29.    Landlord reserves the right to exclude or expel from the Project any person who, in Landlord’s judgment, is intoxicated or under the influence of liquor or drugs or who is in violation of any of the rules or regulations of the Project.
30.    Without the prior written consent of Landlord, Tenant shall not use the name of the Buildings or Project in connection with or in promoting or advertising the business of Tenant except as Tenant’s address. Tenant may use Project’s name on its stationery and business cards.
31.    Tenant shall comply with all safety, fire protection and evacuation procedures and regulations established by Landlord or any governmental agency.
32.    Tenant assumes any and all responsibility for protecting the Premises from theft, robbery and pilferage, which includes keeping doors locked and other means of entry to the Premises closed, unless caused by the gross negligence or willful misconduct of Landlord, its agents, servants, or employees.
33.    The requirements of Tenant will be attended to only upon application at the management office of the Project by an authorized individual. Employees of Landlord shall not perform any work or do anything outside of their regular duties unless under special instructions from Landlord.
34.    Landlord may waive any one or more of these Rules and Regulations for the benefit of any particular tenant or tenants, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of any other tenant or tenants, nor prevent Landlord from thereafter enforcing any such Rules and Regulations against any or all tenants of the Project.
35. Landlord reserves the right to make such other and reasonable rules and regulations as in its judgment may from time to time be needed for safety and security, for care and cleanliness of the Project and for the preservation of good order therein. Tenant agrees to abide by all such Rules and Regulations hereinafter stated and any additional rules and regulations which are adopted. No new Rule or Regulation shall be designed to discriminate solely against Tenant.
36.    Tenant shall be responsible for the observance of all of the foregoing Rules and Regulations by Tenant’s employees, agents, clients, customers, invitees and guests.
37. Tenant shall not use the Common Areas for any gathering, party, picnic or similar functions without Landlord’s prior written consent, in Landlord’s sole discretion. Any use of the Common Area and any consent to such use shall be conditioned upon Tenant indemnifying, defending and holding Landlord harmless against any personal injury, death or damages to the Project or any portion thereof or any other property of Landlord or any other tenants in the building or any other party as a result of the function. Prior to any such gathering, party, picnic or similar function, Tenant shall provide Landlord with evidence of insurance, in the form and liability amounts required by Landlord, covering the foregoing indemnification obligations.
Unless otherwise defined, terms used in these Rules and Regulations shall have the same meaning as in the Lease.


C - 4

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


EXHIBIT “D”
COMMENCEMENT DATE MEMORANDUM
[DATE]
 
 
 
Attn:
 

Re:
Confirmation of Building     Commencement Date under the Lease Agreement by and between 495 Java Drive Associates, LP and Cloudera, Inc., dated as of         , 2013 (the “Lease”)
Dear Sirs:
This letter will confirm that the "Building __ Commencement Date" under the referenced Lease is _____________. By signing below, Tenant certifies that it has accepted delivery of Building_.
Please acknowledge your receipt of this letter and confirmation of the Commencement Date by signing and returning a copy to the undersigned; provided, however, that your failure to so sign and return this letter is not required in order for the Commencement Date to occur pursuant to the terms of the Lease.
Very truly yours,
 
 
495 Java Drive Associates, L.P.,
a California limited partnership
 
 
BY
M-D Ventures, Inc.,
 
a California corporation
Its:
General Partner
 
 
 
 
By:
 
Its:
 

Acknowledged and Agreed:
 
 
Cloudera, Inc.,
A Delaware corporation
 
 
By:
 
Its:
 
Date:
 


D - 1
EX-10.09 3 filename3.htm Exhibit
Exhibit 10.09
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

TRIPLE NET SPACE LEASE
(SINGLE-TENANT)
between
395 PAGE MILL LLC,
a Delaware limited liability company,
as
LANDLORD
and
CLOUDERA, INC.,
a Delaware corporation,
as
TENANT
for
PREMISES
At
395 Page Mill Road
PALO ALTO, CALIFORNIA



CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

Table of Contents
 
 
 
 
Page
 
 
 
 
 
ARTICLE I SUMMARY OF BASIC LEASE INFORMATION
 
 
 
 
 
ARTICLE II PREMISES
 
 
 
 
 
 
Section 2.01
 
Demise of Premises
 
Section 2.02
 
Common Areas
 
Section 2.03
 
Parking
 
Section 2.04
 
Tenant Improvement Allowance
 
 
 
 
 
ARTICLE III TERM
 
 
 
 
 
 
Section 3.01
 
Lease Term
 
Section 3.02
 
Option to Extend
 
 
 
 
 
ARTICLE IV RENT; TRIPLE NET LEASE
 
 
 
 
 
 
Section 4.01
 
Base Rent
 
Section 4.02
 
Abatement Period
 
Section 4.03
 
Payment of Rent
 
Section 4.04
 
Additional Rent
 
Section 4.05
 
Operating Expenses; Insurance Expenses; Real Estate Taxes
 
Section 4.06
 
Tenant’s Right to Review Supporting Data
 
Section 4.07
 
Letter of Credit Security
 
 
 
 
 
ARTICLE V USE
 
 
 
 
 
 
Section 5.01
 
Permitted Use and Limitations on Use
 
Section 5.02
 
Compliance with Laws
 
Section 5.03
 
Delivery of Premises
 
Section 5.04
 
Building Security
 
Section 5.05
 
Rules and Regulations
 
Section 5.06
 
Tenant’s Remedies for Failures of Representations and Warranties
 
 
 
 
 
ARTICLE VI MAINTENANCE, REPAIRS AND ALTERATIONS
 
 
 
 
 
 
Section 6.01
 
Maintenance of Premises and Building
 
Section 6.02
 
Maintenance of Common Areas
 
Section 6.03
 
Alterations, Additions and Improvements
 
Section 6.04
 
Covenant Against Liens
 
 
 
 
 
ARTICLE VII INSURANCE
 
 
 
 
 
 
Section 7.01
 
Property/Rental Insurance for Premises
 
Section 7.02
 
Property Insurance for Fixtures and Inventory
 
Section 7.03
 
Landlord’s Liability Insurance
 
Section 7.04
 
Tenant’s Liability Insurance

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

TABLE OF CONTENTS
(continued)
 
 
 
 
Page
 
 
 
 
 
 
Section 7.05
 
Evidence of Insurance
 
Section 7.06
 
Mutual Waiver of Claims and Subrogation Rights
 
Section 7.07
 
Indemnification and Exculpation
 
 
 
 
 
ARTICLE VIII DAMAGE OR DESTRUCTION
 
 
 
 
 
 
Section 8.01
 
Repair of Damage by Landlord
 
Section 8.02
 
Waiver of Civil Code Remedies
 
Section 8.03
 
No Abatement of Rentals
 
Section 8.04
 
No Liability for Tenant’s Alterations or Personal Property
 
 
 
 
 
ARTICLE IX REAL ESTATE TAXES
 
 
 
 
 
 
Section 9.01
 
Payment of Taxes
 
Section 9.02
 
Proration for Partial Years
 
Section 9.03
 
Personal Property Taxes
 
 
 
 
 
ARTICLE X UTILITIES
 
 
 
 
 
 
Section 10.01
 
Utilities and Services
 
 
 
 
 
ARTICLE XI ASSIGNMENT AND SUBLETTING
 
 
 
 
 
 
Section 11.01
 
Landlord’s Consent Required
 
Section 11.02
 
Tenant Affiliates
 
Section 11.03
 
No Release of Tenant
 
Section 11.04
 
Excess Rent
 
Section 11.05
 
Information to be Provided
 
Section 11.06
 
Landlord’s Recapture Rights
 
Section 11.07
 
Occurrence of Default
 
Section 11.08
 
Additional Transfers
 
 
 
 
 
ARTICLE XII DEFAULTS; REMEDIES
 
 
 
Section 12.01
 
Defaults
 
Section 12.02
 
Remedies
 
Section 12.03
 
Default by Landlord
 
Section 12.04
 
Late Charges
 
Section 12.05
 
Landlord’s Right to Perform Tenant’s Obligations
 
 
 
 
 
ARTICLE XIII CONDEMNATION OF PREMISES
 
 
 
 
 
 
Section 13.01
 
Total Condemnation
 
Section 13.02
 
Partial Condemnation


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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

TABLE OF CONTENTS
(continued)
 
 
 
 
Page
 
 
 
 
 
 
Section 13.03
 
Award to Tenant
 
 
 
 
 
ARTICLE XIV ENTRY BY LANDLORD
 
 
 
 
 
ARTICLE XV ESTOPPEL CERTIFICATE
 
 
 
Section 15.01
 
Estoppel Certificate
 
Section 15.02
 
Failure to Deliver
 
Section 15.03
 
Financial Statements
 
 
 
 
 
ARTICLE XVI LIMITATIONS ON LANDLORD’S LIABILITY
 
 
 
 
 
ARTICLE XVII GENERAL PROVISIONS
 
 
 
 
 
 
Section 17.01
 
Severability
 
Section 17.02
 
Agreed Rate Interest on Past-Due Obligations
 
Section 17.03
 
Time of Essence
 
Section 17.04
 
Submission of Lease.
 
Section 17.05
 
Incorporation of Prior Agreements and Exhibits and Schedules
 
Section 17.06
 
Notices
 
Section 17.07
 
Waivers
 
Section 17.08
 
Recording
 
Section 17.09
 
Surrender of Possession; Holding Over
 
Section 17.10
 
Cumulative Remedies
 
Section 17.11
 
Covenants and Conditions
 
Section 17.12
 
Binding Effect; Choice of Law
 
Section 17.13
 
Lease to be Subordinate and Lender Protections
 
Section 17.14
 
Attorneys’ Fees
 
Section 17.15
 
Signs
 
Section 17.16
 
Merger
 
Section 17.17
 
Quiet Possession
 
Section 17.18
 
Easements
 
Section 17.19
 
Authority
 
Section 17.20
 
Force Majeure Delays
 
Section 17.21
 
Hazardous Materials
 
Section 17.22
 
Modifications Required By Landlord’s Lender
 
Section 17.23
 
Brokers
 
Section 17.24
 
Survival
 
Section 17.25
 
Confidentiality
 
Section 17.26
 
Telecommunications Equipment
 
Section 17.27
 
List of Exhibits and Schedules


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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

This Triple Net Space Lease (the “Lease”), dated as of the date first written in the Summary of Basic Lease Information set forth in Article I below (the “Summary”), is made by and between 395 PAGE MILL LLC, a Delaware limited liability company (“Landlord”) and CLOUDERA, INC., a Delaware corporation (“Tenant”).

ARTICLE 1
SUMMARY OF BASIC LEASE INFORMATION
TERMS OF LEASE
DESCRIPTION
Effective Date:
September 6, 2016
Premises (Article II)
 
Premises:
The entire three (3) story building located at 395 Page Mill Road in Palo Alto, California containing an agreed upon 224,852 square feet of Rentable Area (as defined in Section 2.01 below) and shown on Exhibit A attached hereto.
Building:
The entire three (3) story building located at 395 Page Mill Road in Palo Alto, California containing an agreed upon 224,852 square feet of Rentable Area (as defined in Section 2.01 below) and shown on Exhibit A attached hereto.
Project:
The Project consists of the Building and the related real property more particularly described in Exhibit A attached hereto. The Project also includes in its Common Areas an approximately 209 car Parking Structure (the Parking Structure”), together with any current or future additional surface parking lots and above or below ground parking structures thereon or therein (which, together with the Parking Structure are collectively the Parking Facilities”. The Project is commonly referred to as “395 Page Mill Road,” and is depicted in Exhibit A.
Parking Spaces  
(Section 2.03):
An agreed upon 680 (which is based on three and two tenths (3.20) parking spaces per one thousand (1,000) square feet of gross measured area as determined pursuant to City of Palo Alto project approvals within the Premises) including the 209 parking spaces within the Parking Structure.
Lease Term (Article III).
 
Commencement Date:
July 1, 2017 or any earlier date that Tenant first commences business within the Premises, subject to the terms of Section 5.03(a) below.
Expiration Date:
The last day of the one hundred twenty-fifth (125th) month after the Commencement Date.


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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

TERMS OF LEASE
DESCRIPTION
Option(s) to Extend:
Tenant is given one (1) option to extend the Lease Term (the “Option to Extend”) for a period of eighty-four (84) months (the “Extended Term”) immediately following the date on which the initial Lease Term would otherwise expire.
Base Rent
(Section 4.01):
Months
Total SF
Rent psf/mo
Monthly
Rent
Commencement Date-Month 12*
224,852
$7.25
$1,630,177.00
13-24
224,852
$7.47
$1,679,082.31
25-36
224,852
$7.69
$1,729,454.78
37-48
224,852
$7.92
$1,781,338.42
49-60
224,852
$8.16
$1,834,778.58
61-72
224,852
$8.41
$1,889,821.93
73-84
224,852
$8.66
$1,946,516.59
85-96
224,852
$8.92
$2,004,912.09
97-108
224,852
$9.19
$2,065,059.45
109-120
224,852
$9.46
$2,127,011.23
121-125
224,852
$9.75
$2,190,821.57
 
* Notwithstanding anything herein to the contrary, the Base Rent for months 1-5 of the Lease Term are to be conditionally abated pursuant to the terms of Section 4.02 below.
Tenant’s Share
(Section 4.05).
100%
Permitted Use
(Article V):
General office, research and development and all other legally permitted uses
Broker
(Section 17.23):
Landlord’s Broker: Newmark Knight Frank Cornish & Carey Commercial (Phil Mahoney)
Tenant’s Broker: Newmark Knight Frank Cornish & Carey
Commercial (Ben Stern and Jon Cannon).
Tenant’s Representative  
(Section 5.1 of  
Exhibit C):
Steve Hirai
Landlord’s 
Representative 
(Section 5.2 of 
Exhibit C):
Janette D’Elia


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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

ARTICLE II
PREMISES
Section 2.01    Demise of Premises.
Landlord hereby leases to Tenant and Tenant leases from Landlord for the Lease Term, at the rental, and upon all of the terms and conditions set forth herein, certain premises described in the Summary (“Premises”), which Premises currently comprise all of that certain building described in the Summary (the “Building”) on real property situated at 395 Page Mill Road in the City of Palo Alto, County of Santa Clara, State of California. The Premises are more particularly described in Exhibit “A” attached hereto. Subject to the terms and conditions of this Lease, Landlord reserves the right to access and use the restrooms and janitor, telephone and electrical closets (as well as the space above any dropped ceilings) for cabling, wiring, pipes and other building system elements. The rentable square footage of the Premises and Building (the “Rentable Area”) has been determined and certified by Landlord’s architect by a method described as “dripline,” whereby the measurement encompasses the outermost perimeter of the constructed building, including every projection thereof and all area beneath each such projection, whether or not enclosed, with no deduction for any inward deviation of structure and with the measurement being made floor by floor, but beginning from the top of the Building. Subject to Landlord’s reasonable security measures, Applicable Laws (as defined in Section 5.02 below), emergencies and force majeure events and repair work being performed by Landlord, Landlord acknowledges and agrees that Tenant, its employees, agents, and invitees shall have access to the Premises and the Building twenty-four (24) hours a day, seven (7) days a week.
Section 2.02    Common Areas.
During the Lease Term, Tenant shall have the non-exclusive right to use the Common Areas (as defined below). Landlord reserves the right, in its sole discretion, to modify the Common Areas (including, without limitation, increasing or reducing the size thereof, adding or removing Project structures, facilities or other improvements, or changing the use, configuration and elements thereof), to designate certain areas for the exclusive use of Landlord, and to close or restrict access of certain areas from time to time for repair, maintenance or construction or to prevent a dedication thereof; provided that (i) Tenant nevertheless shall have direct access to the Premises (including access through the lobby of the Building and the elevators of the Building) and to parking areas serving the Building, and (ii) any such modifications, when completed, shall not unreasonably interfere with or restrict Tenant’s access to or possession or use of the Premises or the visibility of Tenant’s signage. Landlord further reserves the right to establish, repeal and amend from time to time reasonable rules and regulations for the use of the Common Areas and to grant easements or other rights to use the Common Areas to others; provided, however, that (A) no amendment to the rules and regulations shall (I) unreasonably interfere with or restrict Tenant’s access to or possession or use of the Premises, (II) be binding until Tenant has received at least ten (10) business days’ prior written notice of such rules and regulations, or (III) not apply retroactively; and (B) to the extent of any conflict between an express provision of this Lease (other than the attached Rules and Regulations) and such Common Areas rules and regulations, this Lease shall control. The “Common Areas” consists of: (i) the Parking Structure,

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

and (ii) all landscaping, sidewalks, walkways, driveways, curbs, Parking Facilities (including striping), roadways within the Project, sprinkler systems, lighting, surface water drainage systems, as well as additional or different facilities as Landlord may from time to time designate or install or make available for the use by Tenant in common with others.
Section 2.03    Parking.
The Parking Facilities set forth in the summary shall be made available to Tenant for Tenant’s exclusive use during any portion of the Lease Term and the Extended Term in which Tenant is the sole tenant of the Project, and on a non-exclusive basis during any portion of the Lease Term and the Extended Term when Tenant is not the sole tenant of the Project. Landlord shall have no liability for the use of any such parking spaces by anyone (besides Landlord) other than Tenant or Tenant’s visitors. In the event Landlord is required by any law to limit or control parking at the Building or the Project, whether by validation of parking tickets or any other method of assessment, Tenant, at its cost, agrees to participate in such validation or assessment program under such reasonable rules and regulations as are from time to time established by Landlord. Tenant shall pay no monthly or “per space” fee for the Parking Facilities and except as otherwise expressly provided herein, all costs and expenses associated with parking areas serving the Project shall be included in Operating Expenses. Tenant, at Tenant’s sole expense (which expense may be paid for out of the Tenant Improvement Allowance if so requested by Tenant pursuant to Section 2.03 of the Work Letter), may install between twelve (12) and twenty (20) dual electric vehicles charging stations at the Project based on the specification and at the approximate locations depicted on Schedule 1 attached hereto (the “Charging Stations”), provided that Tenant shall submit construction drawings to Landlord for such approval and such Charging Stations shall be subject to Landlord’s prior written consent to the size, actual location, design and materials of such Charging Stations, which consent shall not be unreasonably withheld. Tenant shall have the exclusive use of the Charging Stations during the Lease Term and Extended Term, and Tenant shall have the right to install signage on or about the Charging Stations indicating same. Upon the expiration or earlier termination of this Lease, Tenant shall remove some or all of the above-ground head and station portions of those Charging Stations (but Tenant not be required to remove the conducts or other below-ground infrastructure for such Charging Stations), as directed by Landlord, and return the relevant area to the condition in which it existed prior to installation of such Charging Stations. Tenant, at Tenant’s sole expense, may implement a valet parking system for the Parking Facilities at any time Tenant is the sole occupant of the Project and such system has received the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed. In addition to the foregoing, Tenant shall have the right to re-stripe a portion of the Parking Facilities to designate (i) a certain number of parking spaces as “visitor” parking spaces, and (ii) a certain number of parking spaces for purposes of the Charging Stations.
Section 2.04    Tenant Improvement Allowance.
Landlord shall provide to Tenant a Tenant Improvement Allowance of Four Million Four Hundred Ninety-Seven Thousand Forty and 00/100 Dollars ($4,497,040.00) (i.e. $20.00 per square foot of Rentable Area in the Premises) (the “Tenant Improvement Allowance”) to be used for the Tenant Improvements as set forth in the Work Letter Agreement for Tenant

-7-

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

Improvements and Interior Specification Standards attached hereto as Exhibit C (the “Work Letter”).
ARTICLE III
TERM
Section 3.01    Lease Term.
The term of this Lease (the “Lease Term”) shall commence on the Commencement Date set forth in the Summary, and shall expire, unless sooner terminated or extended as provided for herein, on the Expiration Date set forth in the Summary (the “Expiration Date”). Within thirty (30) days following the Commencement Date, Landlord and Tenant shall execute and deliver a Memorandum of Commencement of Lease Term substantially in the form attached hereto as Exhibit B as a confirmation of the information set forth therein.
Section 3.02    Option to Extend.
(a)    Exercise.
The Option to Extend set forth in the Summary may be exercised by Tenant, if at all, only by delivery of irrevocable written notice (the “Option Notice”) to Landlord given not more than twelve (12) months nor less than nine (9) months prior to the end of the initial Lease Term; provided, however, if, as of the date of delivery of the Option Notice or any day thereafter on or before the last day of the initial Lease Term, Tenant (i) has received a written notice of a Tenant default hereunder which default remains uncured, (ii) has assigned this Lease to anyone other than an Affiliate (as defined in Section 11.02 below), (iii) is currently subletting more than fifty percent (50%) of the Premises to anyone other than an Affiliate, or (iv) has previously been in default under this Lease three (3) or more times, then, at the sole option of Landlord, the Option Notice shall be null and void and of no force or effect, and this Lease shall expire on the last day of the initial Lease Term, if not sooner terminated. Furthermore, it is understood and agreed that the Option to Extend contemplated in this Section 3.02 is personal to the originally named Tenant and any Affiliate (as hereinafter defined) and are not transferable without the prior written consent of Landlord.
(b)    Extended Term Rent.
In the event Tenant exercises Tenant’s Option to Extend set forth herein, all the terms and conditions of this Lease shall continue to apply during the Extended Term, except that the Base Rent payable by Tenant during the Extended Term shall be equal to one hundred percent (100%) of Fair Market Rent (as defined below), as determined pursuant to Section 3.02(c) below. “Fair Market Rent” shall equal to the annual rent per rentable square foot (including additional rent and considering any “base year” or “expense stop” applicable thereto), including all escalations, at which tenants (pursuant to leases consummated within the twelve (12) month period preceding the first day of the Extended Term) are leasing non-sublease, non-encumbered, non-equity space which is not significantly greater or smaller in size than the subject space, for a comparable lease term, in an arm’s length transaction, which comparable

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space is located in the “Comparable Buildings,” as that term is defined in this Section 3.02(b), below (transactions satisfying the foregoing criteria shall be known as the “Comparable Transactions”), taking into consideration the following concessions (the “Concessions”): (a) rental abatement concessions, if any, being granted such tenants in connection with such comparable space; (b) tenant improvements or allowances provided or to be provided for such comparable space, and taking into account the value, if any, of the existing improvements in the subject space, such value to be based upon the age, condition, design, quality of finishes and layout of the improvements and the extent to which the same can be utilized by a general office user other than Tenant; and (c) other reasonable monetary concessions being granted such tenants in connection with such comparable space. The Fair Market Rent shall additionally include a determination as to whether, and if so to what extent, Tenant must provide Landlord with financial security, such as a letter of credit or guaranty, for Tenant’s Rent obligations in connection with Tenant’s lease of the Premises during the Extended Term. Such determination shall be made by reviewing the extent of financial security then generally being imposed in Comparable Transactions from tenants of comparable financial condition and credit history to the then existing financial condition and credit history of Tenant (with appropriate adjustments to account for differences in the then-existing financial condition of Tenant and such other tenants). The Concessions (A) shall be reflected in the effective rental rate (which effective rental rate shall take into consideration the total dollar value of such Concessions as amortized on a straight-line basis over the applicable term of the Comparable Transaction (in which case such Concessions evidenced in the effective rental rate shall not be granted to Tenant)) payable by Tenant, or (B) at Landlord’s election, all such Concessions shall be granted to Tenant in kind. The term “Comparable Buildings” shall mean the Building and those other office buildings located in the greater Palo Alto – Menlo Park office market.
(c)    Determination of Fair Market Rent.
(i)    Negotiation. If Tenant timely and properly exercises the Option to Extend, then, within the first thirty (30) days following the date of delivery of the Option Notice (the “Negotiation Period”), the parties shall meet in good faith to negotiate the Base Rent for the Premises during the Extended Term. If, during the Negotiation Period, the parties agree on the Base Rent for the Premises during the Extended Term, then such agreed amount shall be the Base Rent payable by Tenant during the Extended Term.
(d)    Arbitration.
In the event that the parties are unable to agree on the Base Rent for the Premises within the Negotiation Period, then within ten (10) days after the expiration of the Negotiation Period, each party shall separately designate to the other in writing and engage an appraiser to make this determination. Each appraiser designated shall be either a real estate broker or appraiser who shall have been active over the five (5) year period ending on the date of such appointment in the leasing or appraisal, as the case may be, of commercial corporate campuses in Palo Alto, California. The failure of either party to appoint an appraiser within the time allowed shall be deemed equivalent to appointing the appraiser appointed by the other party, who shall then determine the Fair Market Rent for the Premises for the Extended Term. Within five (5) business days of their appointment, the two designated appraisers shall jointly designate

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a third similarly qualified appraiser. The third similarly qualified appraiser shall not have worked in any capacity for either party over the immediately preceding five (5) year period. Within thirty (30) days after their appointment, each of the two appraisers appointed by the parties shall submit to the third appraiser a sealed envelope containing such appointed appraiser’s good faith determination of the Fair Market Rent for the Premises for the Extended Term; concurrently with such delivery, each such appraiser shall deliver a copy of his or her determination to the other appraiser. The third appraiser shall, within ten (10) days following receipt of such submissions, then determine which of the two appraisers’ determinations most closely reflects Fair Market Rent. The determination selected by the third appraiser shall be deemed to be the Fair Market Rent for the Premises during the Extended Term. The third appraiser shall have no rights to adjust, amend or otherwise alter the determinations made by the appraisers selected by the parties, but must select one or the other of such appraisers’ submissions. The determination most closely reflecting the third appraiser’s determination shall be final and binding upon the parties. Said third appraiser shall, upon selecting the determination which most closely resembles Fair Market Rent, concurrently notify both parties hereto in writing. Each party shall be solely responsible to pay the fees and costs of the appraiser that it appointed and the parties shall share the fees and costs of the third appraiser equally. If the Extended Term begins prior to the determination of Fair Market Rent, Tenant shall pay monthly installments of Base Rent equal to one hundred three percent (103%) of the monthly installment of Base Rent in effect for the last year of the initial Lease Term. Once a determination is made, any over payment or under payment of Base Rent by Tenant shall be reimbursed as a credit against, or paid by adding to, the monthly installment of Base Rent next falling due.
ARTICLE IV
RENT; TRIPLE NET LEASE
Section 4.01    Base Rent.
Commencing on the Commencement Date and continuing throughout the Lease Term (except during the Base Rent Abatement Period described in Section 4.02 below), Tenant shall pay to Landlord, without prior notice or demand, base rent (“Base Rent”) as set forth in the Summary, which shall be payable in monthly installments, in advance, on or before the first day of each calendar month of the Lease Term. In the event that any month in the Lease Term begins on a day other than the first (1st) day of a month, the Base Rent and Additional Rent for such month shall be multiplied by a fraction, the numerator of which shall be the number of days in such month during the Lease Term and the denominator of which shall be number of days in such calendar month (e.g., if the Lease Term commences September 14, the fraction for such month shall be 17/30). Notwithstanding the foregoing, upon Tenant’s execution and delivery of this Lease to Landlord, Tenant shall pay to Landlord (i) Base Rent for the sixth (6th) month of the Lease Term equal to One Million Six Hundred Thirty Thousand One Hundred Seventy-Seven and 00/100 Dollars ($1,630,177.00)), and (ii) Additional Rent for the fourth (4th) month of the Lease Term equal to Two Hundred Fifteen Thousand Eight Hundred Fifty-Seven and 92/100 Dollars ($215,857.92), for a total aggregate initial payment to Landlord of One Million Eight Hundred Forty-Six Thousand Thirty-Four and 92/100 Dollars ($1,846,034.92) (together, the “Initial Rent”).

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Section 4.02    Abatement Period.
Notwithstanding anything herein to the contrary, Landlord and Tenant acknowledge and agree that Tenant shall not pay Base Rent hereunder for months one through five of the Lease Term (the “Base Rent Abatement Period”), as is shown in the “Base Rent” portion of the Summary; provided, however, that if at any time during the Lease Term Tenant is in default under the terms of this Lease (beyond any applicable notice and cure periods provided for herein), Landlord’s agreement to waive payment of the Base Rent during the Base Rent Abatement Period shall be immediately revoked without further notice to Tenant and any previous waiver of Base Rent by Landlord shall be null and void. In the event of a default by Tenant under this Lease (beyond any applicable notice and cure period provided for herein), in addition to all other remedies in connection therewith, Landlord shall have the right to demand immediate payment of any and all Base Rent which would have been due and payable in accordance with this Lease absent the waiver contained in this Section 4.02; provided, however, that any such amount payable to Landlord shall be prorated based on the number of years remaining on the Lease Term (e.g., if five (5) years are remaining in the Lease Term, Tenant would pay to Landlord one-half (1/2) of the total amount of the abated rent).
Section 4.03    Payment of Rent.
This Lease is what is commonly called an “Absolute Triple Net Lease,” it being understood that, except where and to the extent that Base Rent and/or Additional Rent is waived or abated by Landlord under the express terms of this Lease, Landlord shall receive the Base Rent set forth in Section 4.01 free and clear of, and in addition to, any and all expenses, costs, impositions, taxes, assessments, liens or charges of any nature whatsoever. Tenant shall pay all Rent in lawful money of the United States of America to Landlord at the notice address stated herein or to such other persons or at such other places as Landlord may designate in writing on or before the due date specified for same without prior demand, set-off or deduction of any nature whatsoever. It is the intention of the parties hereto that this Lease shall not be terminable for any reason by Tenant and that Tenant shall in no event be entitled to any abatement of or reduction in Rent payable under this Lease, except as herein expressly provided in Section 4.02 above and Articles VIII and XIII concerning destruction and condemnation. Any present or future law to the contrary shall not alter this agreement of the parties.
Section 4.04    Additional Rent.
In addition to the Base Rent referenced in Section 4.01, commencing on the first day of the fourth (4th) month of the Lease Term and continuing throughout the Lease Term, except as waived or abated by Landlord under the express terms of this Lease, Tenant shall pay (i) Tenant’s Share of Operating Expenses; (ii) Tenant’s Share of Insurance Expenses; (iii) Tenant’s Share of Real Estate Taxes; and (iv) a management fee (the “Management Fee”), payable on a monthly basis, in advance, at the same time and in the same manner applicable to monthly installments of Base Rent, in an amount equal to three percent (3.0%) of the then applicable monthly installment of Base Rent (for the purposes of this Section 4.04, the Base Rent due hereunder for each month during the Base Rent Abatement Period of the Lease Term shall be deemed to be One Million Six Hundred Thirty Thousand One Hundred Seventy-Seven and 00/100 Dollars ($1,630,177.00) per

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

month) for the first sixty (60) months of the Lease Term and two percent (2.0%) of the then applicable monthly installment of Base Rent for the remainder of the Lease Term. All of the foregoing payments, together with any and all other amounts (other than Base Rent), whether or not contemplated, payable by Tenant pursuant to the terms of this Lease are referred to herein, collectively, as “Additional Rent,” and Base Rent and Additional Rent are referred to herein, collectively, as “Rent.”
Section 4.05    Operating Expenses; Insurance Expenses; Real Estate Taxes.
(a)    Definitions.
Operating Expenses” shall mean all expenses, costs and amounts of every kind and nature (other than Insurance Expenses and Real Estate Taxes) other than those excluded pursuant to the terms of Section 4.05(d) below which Landlord pays or accrues (whether obligated to do so or undertaken at Landlord’s discretion) during any calendar year during the Lease Term because of or in connection with the operation, management, maintenance, security, repair, replacement and restoration of (1) the Project, and (2) the Building, or any portion thereof, including the Common Areas. Without limiting the generality of the foregoing, Operating Expenses shall specifically include any and all of the following:
(i)    With respect to the Project, any and all costs and expenses charged to Landlord as owner of the Project, including, but not limited to, costs and expenses of operating, cleaning, lighting, maintaining, repairing and replacing all Project Common Areas improvements and elements (including, without limitation, light poles and fixtures, storm and sanitary sewers, parking lots, driveways and roads); and
(ii)    With respect to the Building (or any portion thereof) or the Project to the extent such costs are incurred by Landlord and not otherwise included pursuant to item (i) above, all costs and expenses of cleaning, lighting, maintaining, repairing and replacing all improvements and elements (including, without limitation, light poles and fixtures, parking lots, driveways and roads, storm and sanitary systems; costs of removal of trash, rubbish, garbage and other refuse; costs of painting of exterior and interior walls; costs of removal of graffiti; costs of maintaining landscaping; costs of providing security systems and personnel to the extent Landlord determines in its discretion to do so; fire protection and fire hydrant charges (including fire protection system signaling devices now or hereafter required, and the costs of maintaining of same); water and sewer charges; utility charges; license and permit fees necessary to operate and maintain the Building or the Project; costs of supplies, tools and materials purchased or rented for the exclusive use of the Building or Project and used in the operation and maintenance of the Building or the Project and the Common Areas; the cost (or the reasonable depreciation of the cost) of equipment used in the operation and maintenance of the Building or the Project and the Common Areas (which shall be expensed or amortized, respectively, by Landlord in its good faith discretion using generally accepted accounting principles) and rent paid for leasing any such equipment; reasonable cost of on-site or off-site space for the storage of any and all items used in conjunction with the operation, management, maintenance and repair of the Project or Building (including, without limitation, tools, machinery, records, decorations, tables, benches, supplies and meters); the cost of making all improvements which are intended to reduce

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

Operating Expenses or to increase public safety as required by any Applicable Laws (but only to the extent of such savings over the Lease Term), or improvements which may be then required by governmental authority, laws, statutes, ordinances and/or regulations; the cost of all licenses, certificates, permits and inspections; the reasonable cost of contesting any governmental enactments which may affect Operating Expenses; reasonable costs incurred to comply with any transportation demand management program, any present or anticipated conservation program or any other required governmental program; payments under any easement, license, operating agreement, declaration, restrictive covenant, or instrument pertaining to the sharing of costs by the Building or the Project; costs, fees, charges or assessments imposed by, or resulting from any mandate imposed on Landlord by, any federal, state or local government for fire and police protection, trash removal, community services, or other services which do not constitute Real Estate Taxes hereunder; total compensation and benefits (including premiums for workers’ compensation and other insurance, except to the extent such premiums are included in Insurance Expenses) paid to or on behalf of Landlord’s employees, agents, consultants and contractors below the grade of building manager, including, without limitation, full or part time on-site management or maintenance personnel. Notwithstanding the above, if Tenant’s Share of the cost of any particular capital expenditure to the Building or Common Area exceeds Fifty Thousand and No/100 Dollars ($50,000.00), then such cost, together with interest thereon at the rate actually charged Landlord by any lender or, if no such interest is relevant, with interest thereon at an interest rate equal to the Agreed Rate (as defined in Section 17.02 below), shall be amortized over its useful life, and the amount includible in Operating Expenses shall be limited to the monthly amortized cost thereof. The determination of what constitutes a capital expenditure and the useful life applicable thereto shall be made by Landlord in its good faith discretion using generally accepted accounting principles.
Insurance Expenses” shall mean all expenses, costs and amounts of every kind and nature which Landlord pays or accrues (whether obligated to do so or undertaken at Landlord’s discretion) during any calendar year during the Lease Term because of or with respect to insurance carried by Landlord in connection with the Building or the Project, including, without limitation, all insurance described in Sections 7.01 and 7.03 below.
Real Estate Taxes” shall mean all federal, state, county, or local governmental or municipal taxes, fees, charges or other impositions of every kind and nature, whether general, special, ordinary or extraordinary (including, without limitation, real estate taxes, general and special assessments, transit taxes, business taxes, leasehold taxes or taxes based upon the receipt of rent, including gross receipts or sales taxes applicable to the receipt of rent, unless required to be paid by Tenant, personal property taxes imposed upon the fixtures, machinery, equipment, apparatus, systems and equipment, appurtenances, furniture and other personal property used in connection with the Project, or any portion thereof), which shall be paid or accrued during any calendar year (without regard to any different fiscal year used by such governmental or municipal authority) because of or in connection with the ownership, leasing and operation of the Project, or any portion thereof. Notwithstanding anything to the contrary contained herein, “Real Estate Taxes” shall not include: (i) any net income taxes, franchise taxes, or any succession, estate or inheritance taxes of Landlord; or (ii) any penalties, interest, or other charges imposed as a result of Landlord’s late payment or non-payment of any Real Estate Taxes

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

unless such failure is a direct result of Tenant’s failure to pay Landlord Real Estate Taxes as and when due hereunder.
(b)    Intentionally Deleted.
(c)    Payment.
Commencing on the first day of the fourth (4th) month after the Commencement Date, and continuing through the Lease Term, Tenant shall pay, on the first day of each calendar month, monthly installments of Tenant’s Share of Operating Expenses, Tenant’s Share of Insurance Expenses and Tenant’s Share of Real Estate Taxes in amounts set forth in a written estimate by Landlord. Landlord shall have the right to revise its estimate from time to time during a particular calendar year and, commencing with Tenant’s next installment of Base Rent due, Tenant thereafter shall pay such amounts set forth in such revised estimate (which may include an additional monthly amount based upon any shortfall in Landlord’s previous estimate). Landlord shall endeavor to furnish to Tenant a statement (hereinafter referred to as “Landlord’s Statement”), within one hundred twenty (120) days after the end of each calendar year, which shall set forth the actual amounts of Tenant’s Share of Operating Expenses, Tenant’s Share of Insurance Expenses and Tenant’s Share of Real Estate Taxes for such preceding calendar year. In the event that the actual amounts of Tenant’s Share of Operating Expenses, Tenant’s Share of Insurance Expenses and Tenant’s Share of Real Estate Taxes for such preceding calendar year exceed the estimated amounts paid by Tenant with respect to each of Tenant’s Share during such preceding calendar year, then Tenant shall pay to Landlord, as Additional Rent, the entire amount of such excess within thirty (30) days after receipt of Landlord’s Statement. In the event that the actual amounts of Tenant’s Share of Operating Expenses, Tenant’s Share of Insurance Expenses and Tenant’s Share of Real Estate Taxes for such preceding calendar year are less than the estimated amounts paid by Tenant with respect to each of Tenant’s Shares during such preceding calendar year, then Landlord shall apply such difference as a credit to Additional Rent next falling due (or if the Lease Term has expired or terminated and there remains no money due to Landlord, then Landlord shall remit to Tenant the amount of such excess within sixty (60) days of the expiration or earlier termination of the Lease. Tenant’s Share of Operating Expenses, Tenant’s Share of Insurance Expenses and Tenant’s Share of Real Estate Taxes for the ensuing estimation period shall be adjusted upward or downward based upon Landlord’s Statement.
(d)    Exclusions.
For purposes of this Lease, the term Operating Expenses shall not include (and Tenant shall have no liability for) any of the following:
(i)    Landlord’s non-cash charges, such as depreciation (except for the amortization of capital items as described in Section 4.05(a) above),
(ii)    any payments of points, interest or principal relating to any debt secured by the Premises,
(iii)    costs associated with the operation of the business of the ownership or entity which constitutes “Landlord,” as distinguished from the costs of Premises

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

operations, including, but not limited to, partnership accounting and legal matters, costs of defending any lawsuits with any mortgagee (except as the actions of Tenant may be in issue), costs of selling syndicating, financing, mortgaging or hypothecating any of Landlord’s interest in the Premises, costs of any disputes between Landlord and its employee (if any) not engaged in Premises operation, or outside fees paid in connection with disputes with other tenants,
(iv)    legal fees, space planners’ fees, real estate brokers’ leasing commissions, and advertising expenses incurred in connection with leasing of the Premises,
(v)    costs for which Landlord is reimbursed by its insurance carrier or any tenant’s insurance carrier,
(vi)    costs incurred to remove, remedy, contain or treat any Hazardous Materials (as defined in Section 17.21(a) below) existing at the Project prior to the Commencement Date, except to the extent that such costs result from the acts or omissions of Tenant or any of Tenant’s Parties (as defined in Section 7.07 below); provided, however, that nothing herein shall be deemed to modify or lessen the obligations of Tenant pursuant to Section 17.21 of this Lease,
(vii)    any bad debt loss, rent loss or reserves for bad debts or rent loss,
(viii)    costs of a capital nature, including, without limitation, capital improvements and replacements, capital repairs, capital equipment and capital tools, unless such costs are amortized pursuant to the terms of Subsection 4.05(a) above,
(ix)    any interest or late fee resulting from any failure of Landlord to pay any item of Operating Expense when it would have been due without such interest or late fee, provided, however, that nothing herein shall be deemed from precluding Landlord from passing through to Tenant as an Operating Expense any cost associated with paying Operating Expenses on any permitted installment or other periodic basis, even if such payment basis results in an increase in the Operating Expense in question,
(x)    overhead and profit increment paid to Landlord or to subsidiaries or affiliates of Landlord for such services in the Premises to the extent the same exceeds the costs of such services rendered by unaffiliated third parties on a competitive basis.
(xi)    costs of repairs or rebuilding necessitated by condemnation,
(xii)    space planning fees and commissions,
(xiii)    expenses for repairs, replacements or improvements to the extent such expenses are covered by warranties from contractors or suppliers,
(xiv)    costs incurred due to Landlord’s violation of any terms and conditions of this Lease or of any Applicable Laws (as defined in Section 5.02 below) in effect prior to the date the relevant improvement in the Common Area was built,

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

(xv)    costs or repairs or other work occasioned by fire, earthquake, windstorm or other casualty, except for a reasonable deductible under any insurance policy, and
(xvi)    reserves of any kind.
It is understood that Operating Expenses shall be reduced by all cash discounts, trade discounts, or quantity discounts received by Landlord or Landlord’s managing agent in the purchase of any goods, utilities, or services in connection with the operation of the Premises. In the calculation of any expenses hereunder, it is understood that Landlord will not charge Tenant more than one hundred percent (100%) of any Operating Expense due hereunder.
Section 4.06    Tenant’s Right to Review Supporting Data.
(a)    Exercise of Right by Tenant.
Provided Tenant has not received written notice of a Tenant default from Landlord under this Lease and such default has not yet been cured, and provided further that Tenant strictly complies with the provisions of this Section 4.06, Tenant shall have the right to reasonably review supporting data for any portion of a Landlord’s Statement that Tenant claims is incorrect. In order for Tenant to exercise its right under this Section 4.06, Tenant shall, within one hundred twenty (120) days after any Landlord’s Statement is received, deliver a written notice to Landlord specifying the portions of such Landlord’s Statement that are claimed to be incorrect, and Tenant shall simultaneously pay to Landlord all amounts due from Tenant to Landlord as specified in such Landlord’s Statement if such amounts have not previously been paid. Except as expressly set forth in Section 4.06(c) below, in no event shall Tenant be entitled to withhold, deduct, or offset any monetary obligation of Tenant to Landlord under this Lease, including, without limitation, Tenant’s obligation to make all Base Rent payments and all payments of Additional Rent pending the completion of, and regardless of the results of, any review under this Section 4.06. The right to review granted to Tenant under this Section 4.06 may only be exercised once for any Landlord’s Statement.
(b)    Procedures for Review.
Tenant agrees that any review of supporting data under this Section shall occur at such location at which Landlord’s records for the Building or the Project are then located; provided that such location shall be in and around the San Francisco Bay Area. Any review and audit of the supporting data under this Section shall occur at such location and at such time during Landlord’s normal business hours on such days (“Access Days”) during the thirty (30) day period after Tenant’s delivery of its Audit Notice as Landlord shall reasonable designate (the “Review Period”). Any review to be conducted by Tenant under this Section 4.06 shall be at the sole expense of Tenant and shall be conducted by a firm of certified public accountants of national standing, or a professional services real estate firm that provides operating expense review service on a non-contingency fee basis. Tenant acknowledges and agrees that any supporting data reviewed under this Section 4.06 shall constitute confidential information of Landlord, which shall not be disclosed to anyone other than the accountants performing the review and the management of Tenant who receive the results of the review.

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

Except (i) to the extent required by law, (ii) in connection with any legal proceeding concerning this Lease, or (iii) to the extent such information or results are otherwise publicly available, the disclosure of such information or results of the review to any other person, whether or not caused by the conduct of Tenant, shall constitute a material breach of this Lease. Tenant shall deliver the results of its audit and review (“Audit Report”) to Landlord within the thirty (30) day period after the last Access Day designated by Landlord.
(c)    Resolution of Disputes Regarding Operating Expenses, Insurance Expenses and Real Estate Taxes.
Any errors disclosed by the Audit Report under this Section shall be promptly corrected (in which case Landlord will provide a revised Landlord’s Statement within fifteen (15) days after receipt of Tenant’s Audit Report), provided that Landlord shall have the right to cause another review of the supporting data to be made by a firm of certified public accountants of Landlord’s choice. In the event of a disagreement between the two accounting firms, the two accounting firms shall promptly agree on a third independent accountant who shall decide each item of disagreement and whose decision shall be deemed to be correct, final and binding on both Landlord and Tenant (“Final Accounting”). If the two accounting firms fail to select the independent accountant within thirty (30) days after Landlord’s accounting firm completes its review, Landlord or Tenant may apply to the presiding judge of the Superior Court to appoint such independent accountant. If the audit and review process described above results in a determination that Tenant has overpaid obligations for a preceding period, the amount of such overpayment plus interest at the Agreed Rate shall be credited against Tenant’s subsequent installment obligations to pay its share of rent or, if the Lease has terminated or expired, paid in cash to Tenant within thirty (30) days after the determination of overpayment is delivered to Landlord. In the event that such results show that Tenant has underpaid its obligations for a preceding period, the amount of such underpayment shall be paid by Tenant to Landlord with the next succeeding installment obligation of Additional Rent or, if the Lease has terminated or expired, in cash within thirty (30) days after the determination of underpayment is delivered to Tenant. Each party shall pay all the costs, and expenses of its chosen accounting firm and one half of the costs and expenses of the independent accountant, if any, or if the Final Accounting results in a difference from Landlord’s Statement of more than five percent (5%), then Landlord shall pay the costs and expenses of the audit and review. If the Final Accounting results in a difference from Landlord’s Statement of less than five percent (5%), then Tenant shall pay the costs and expenses of the audit and review. The payment by Tenant of any amounts pursuant to this Article IV shall not preclude Tenant from questioning, during the Review Period, the correctness of the particular Landlord’s Statement in question provided by Landlord, but the failure of Tenant to object thereto, conduct and complete its inspection and conduct the audit as described above prior to the expiration of the Review Period for such Landlord’s Statement shall be conclusively deemed Tenant’s approval of the Landlord’s Statement in question and the amount of Operating Expenses and other Additional Rent, as the case may be, shown thereon.
(d)    Effect of Tenant’s Default.
In the event that Landlord provides Tenant with written notice that Tenant is in default of its obligations under this Lease at any time during the pendency of a review of

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

records under this Section 4.06, said right to review shall immediately cease until such default is cured by Tenant.
Section 4.07    Letter of Credit Security.
(a)    Deposit of Letter of Credit Security.
Tenant shall deposit with Landlord, within five (5) days after the execution of this Lease, an unconditional, irrevocable letter of credit (“Letter of Credit”) on a form reasonably acceptable to Landlord and, if required, Landlord’s lender(s), and in favor of Beneficiary, defined below, in the initial amount of [***] but subject to potential [***] pursuant to the terms of Section 4.07(g) below (the “Letter of Credit Security”). “Beneficiary,” as used herein refers to either: (x) Landlord as beneficiary, or (y) if required by Landlord’s lender(s), Landlord and Landlord’s lender(s) as co-beneficiaries under the Letter of Credit Security. If Landlord’s lender requires that it be a co-beneficiary of the Letter of Credit Security then Tenant, upon Landlord’s request, shall execute and deliver a Tri-Party Agreement in the form of Schedule 2 attached hereto. The Letter of Credit Security shall: (i) be issued by a commercial money center bank reasonably satisfactory to Landlord with retail branches in San Francisco, California (the “Issuer”); (ii) be a standby, at-sight, irrevocable letter of credit; (iii) be payable to Beneficiary; (iv) permit multiple, partial draws; (v) provide that any draw on the Letter of Credit Security shall be made upon receipt by the Issuer of a sight draft accompanied by a letter from Landlord stating that Landlord is entitled to draw on the Letter of Credit Security in the amount of such draw pursuant to the provisions of this Lease; (vi) provide for automatic annual extensions, without amendment (so-called “evergreen” provision) with a final expiry date no sooner than ninety (90) days after the end of the Lease Term; (vii) be governed by the Uniform Customs and Practice for Documentary Credits (2007 revisions) International Chamber of Commerce Publication 600; and (viii) be cancelable if, and only if, Issuer delivers to Beneficiary no less than sixty (60) days advance written notice of Issuer’s intent to cancel. Tenant shall pay all costs, expenses, points and/or fees incurred by Tenant in obtaining the Letter of Credit Security. For purposes of this Lease, Silicon Valley Bank is hereby approved as an Issuer for purposes of the initial Letter of Credit.
(b)    Landlord’s Right to Draw on Letter of Credit Security.
The Letter of Credit Security shall be held by Landlord as security for the performance of all of Tenant’s obligations pursuant to this Lease. Landlord shall have the immediate right to draw upon the Letter of Credit Security, in whole or in part and without prior notice to Tenant, other than as required under this Lease, at any time and from time to time: (1) if a default occurs under this Lease (beyond any applicable notice and cure period), or (2) Tenant either files a voluntary bankruptcy petition or an involuntary bankruptcy petition is filed against Tenant by an entity or entities other than Landlord, under 11 U.S.C. §101 et seq., or Tenant executes an assignment for the benefit of creditors. No condition or term of this Lease shall be deemed to render the Letter of Credit Security conditional, thereby justifying the Issuer of the Letter of Credit Security in failing to honor a drawing upon such Letter of Credit Security in a timely manner. The Letter of Credit Security and its proceeds shall constitute Landlord’s sole and separate property (and not Tenant’s property or, in the event of a bankruptcy filing by or against

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Tenant, property of Tenant’s bankruptcy estate) and Landlord may immediately upon any draw (and without notice to Tenant) apply or offset the proceeds of the Letter of Credit Security against: (A) any amounts payable by Tenant under the Lease that are not paid when due, after the expiration of any applicable notice and cure period; (B) all losses and damages that Landlord has suffered or may reasonably estimate that it may suffer as a result of any default (after the expiration of any applicable notice and cure period, unless Landlord is stayed by operation of law from giving such notice and cure period) by Tenant under this Lease, including any damages arising under Section 1951.2 of the California Civil Code for rent due following termination of this Lease; (C) any costs incurred by Landlord in connection with Tenant’s default (after expiration of any applicable notice and cure period, unless Landlord is stayed by operation of law from giving such notice and cure period) under this Lease (including reasonable attorney’s fees); and (D) any other amount that Landlord may spend or become obligated to spend by reason of Tenant’s default under this Lease but in no event in excess of amounts to which the Landlord would be entitled under the law. If any portion of the Letter of Credit Security is so drawn upon or applied, Tenant shall, within five (5) business days after written demand therefor, deposit cash with Issuer in an amount sufficient to restore the Letter of Credit Security to its original amount; Tenant’s failure to do so shall be a default by Tenant. It is expressly understood that Landlord shall be relying on Issuer rather than Tenant for the timely payment of proceeds under the Letter of Credit Security and the rights of Landlord pursuant to this Section are in addition to any rights which Landlord may have against Tenant pursuant to Article XII below. Landlord shall not be required to keep the proceeds from the Letter of Credit Security separate from Landlord’s general funds or be deemed a trustee of same.
(c)    Replacement Letter of Credit Security.
If, for any reason whatsoever, the Letter of Credit Security becomes subject to cancellation or expiration during the Lease Term, within forty-five (45) days prior to expiration of the Letter of Credit Security, Tenant shall cause the Issuer or another bank satisfying the conditions of Section 4.07(a) above to issue and deliver to Landlord a Letter of Credit Security to replace the expiring Letter of Credit Security (the “Replacement Letter of Credit Security”). The Replacement Letter of Credit Security shall be in the same amount as the original Letter of Credit Security (subject to the terms of Section 4.07(g) below) and shall be on the terms and conditions set forth in Sections 4.07(a), (i) through (viii) above. Failure of Tenant to cause the Replacement Letter of Credit Security to be issued forty-five (45) days prior to the then pending expiration or cancellation shall entitle Landlord to fully draw down on the existing Letter of Credit Security and, at Landlord’s election, shall be an event of default under this Lease without any relevant notice and cure period.
(d)    Transfer of Beneficiary.
During the Lease Term Landlord may transfer its interest in the Lease or Landlord’s lender may change. Landlord may request a change to Beneficiary under the Letter of Credit Security to the successor of Landlord and/or Landlord’s lender (the “Transferee”). Tenant agrees to cooperate and to cause Issuer, at Landlord’s cost (not to exceed Five Hundred Dollars ($500)), to timely issue a new Letter of Credit Security on the same terms and conditions as the original Letter of Credit Security, except that the new Letter of Credit Security shall be payable

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

to the Transferee. Landlord shall surrender the existing Letter of Credit Security to Tenant simultaneously with Tenant’s delivery of the new Letter of Credit Security to Transferee.
(e)    Return of the Letter of Credit Security.
The Letter of Credit Security or any balance thereof shall be returned (without interest) to Tenant (or, at Tenant’s option, to the last assignee of Tenant’s interests hereunder) within thirty (30) days after the expiration or earlier termination of the Lease and after Tenant has vacated the Premises and surrendered possession; provided that if prior to the Expiration Date a voluntary bankruptcy provision is filed by Tenant, or an involuntary bankruptcy is filed against Tenant by any of Tenant’s creditors other than Landlord, under 11 U.S.C. § 101 et seq., or Tenant executes an assignment for the benefit of creditors, then Landlord shall not be obligated to return the Letter of Credit Security or any proceeds of the Letter of Credit Security until all statutes of limitations for any preference avoidance statutes applicable to such bankruptcy or assignment for the benefit of creditors have elapsed or the bankruptcy court or assignee, whichever is applicable, has executed a binding release releasing Landlord of any and all liability for the preferential transfers relating to payments made under this Lease, and Landlord may retain and offset against any remaining Letter of Credit Security proceeds the full amount Landlord is required to pay to any third party on account of preferential transfers relating to this Lease. Landlord agrees it will cooperate in providing Issuer with a letter of cancellation or such other reasonable documentation as Issuer requests to effect the return and extinguishment of the credit issued under the Letter of Credit Security.
(f)    Acknowledgment of Parties.
Landlord and Tenant (a) acknowledge and agree that in no event or circumstance shall the Letter of Credit Security or any renewal thereof or substitute therefor or any proceeds thereof be deemed to be or treated as a “security deposit” under any law applicable to security deposits in the commercial context, including, but not limited to Section 1950.7 of the California Civil Code, as such Section now exists or as it may be hereafter amended or succeeded (the “Security Deposit Laws”), (b) acknowledge and agree that the Letter of Credit Security (including any renewal thereof or substitute therefor or any proceeds thereof) is not intended to serve as a security deposit, and the Security Deposit Laws shall have no applicability or relevancy thereto, and (c) waive any and all rights, duties and obligations that any such party may now, or in the future will, have relating to or arising from the Security Deposit Laws. Tenant hereby waives the provisions of Section 1950.7 of the California Civil Code and all other provisions of law, now or hereafter in effect, which (i) establish the time frame by which a Landlord must refund a security deposit under a lease, and/or (ii) provide that a Landlord may claim from a security deposit only those sums reasonably necessary to remedy defaults in the payment of rent, to repair damage caused by a Tenant or to clean the premises, it being agreed that Landlord may, in addition, claim those sums specified in this Section 4.07 and/or those sums reasonably necessary to compensate Landlord for any loss or damage caused by Tenant’s breach of this Lease, including any damages Landlord suffers following termination of this Lease.
(g)    [***] of Letter of Credit Security.

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Notwithstanding anything to the contrary in this Section 4.07, provided that (i) Landlord has not then delivered a written notice of default to Tenant that has not yet been cured, (ii) Tenant has completed an initial public offering and the market capitalization of Tenant [***], (iii) Tenant has delivered evidence reasonably satisfactory to Landlord that Tenant is [***] (as defined below), and (iv) Tenant has delivered evidence reasonably satisfactory to Landlord that Tenant has the [***] (as defined below), the amount of the Letter of Credit Security required hereunder pursuant to Section 4.07(a) above [***]:
1.    Prior to fifth (5th) anniversary of the Commencement Date, [***].
2.    From and after the fifth (5th) anniversary of the Commencement Date, [***].
As used herein, the term [***] means for the preceding four (4) calendar quarters, Tenant shall have [***]. As used herein, [***] means [***]. As used herein, [***], as applicable, no more than two (2) years from the date of acquisition or creation, as applicable:
Type of Investment
Minimum Credit Quality
(2 ratings required / lower rating applies when securities are split-rated)
Issued by U.S. Government - Treasury, Bills, Notes, Bonds and other obligations
N/A
Issued by U.S. Government Sponsored Enterprises (GSE’s), (also known as Agency securities, but excluding MBS)
N/A
Direct obligations of Foreign/Sovereign Governments: including agency, supranational and local government debt (U.S. dollar denominated)
A- (S&P) or A3 (Moody’s) or A-(Fitch)
Repurchase agreements
Collateralized 100% with either U.S. Treasuries or Government Agencies
Domestic and foreign Bankers Acceptances, Certificates of Deposit or similar time deposits by a major bank
A-1 (S&P) or P-1 (Moody’s) or F1 (Fitch)
Money market mutual funds that are SEC Rule 2a-7 compliant
AAA (S&P) or Aaa (Moody’s) or
AAA (Fitch)
Domestic and foreign Commercial paper, including ABCP
A-1 (S&P) or P-1 (Moody’s) or F1 (Fitch)

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

Domestic and foreign debt issued by corporations or financial institutions
A- (S&P) or A3 (Moody’s) or A- (Fitch)
Municipal notes & bonds including variable rate demand notes
SP-1 (S&P) or VMIG1 (Moody’s) or F1 (Fitch)
A- (S&P) or A3 (Moody’s) or A- (Fitch)
Asset-Backed Securities (“ABS”)
AAA (S&P) or Aaa (Moody’s) or AAA (Fitch) rated and restricted to credit card and auto loan receivables.

ARTICLE V
USE
Section 5.01    Permitted Use and Limitations on Use.
(a)    Tenant shall use and occupy the Premises only for the Permitted Use set forth in the Summary and for no other use or purpose whatsoever. Tenant shall not use, suffer or knowingly permit the use of the Premises by any Tenant Party in any manner that would constitute waste, nuisance or unlawful acts. Tenant shall not do anything in or about the Premises which would (a) cause structural injury to the Building or the Premises, or (b) cause damage to any part of the Building or the Premises. Tenant shall not operate any equipment within the Building or the Premises which would (i) materially damage the Building or the Common Areas, (ii) overload existing mechanical, electrical or other systems or equipment servicing the Building, (iii) impair the efficient operation of the sprinkler system or the heating, ventilating or air conditioning equipment within or servicing the Building, (iv) overload or damage or corrode the sanitary sewer system, or (v) damage the Common Areas or any other part of the Project. Tenant shall not attach, hang or suspend anything from the ceiling, roof, walls or columns of the Building or set any load on the floor in excess of the load limits for which such items are designed nor operate hard wheel forklifts within the Premises. Any dust, fumes, or waste products generated by Tenant’s use of the Premises shall be contained and disposed so that they do not (A) create an unreasonable fire or health hazard, (B) damage the Premises, or (C) result in the violation of any law. Except as approved by Landlord, Tenant shall not change the exterior of the Building, or the area outside of the Premises, or install any equipment or antennas on or make any penetrations of the exterior or roof of the Building, except as provided for in Section 17.26. Tenant shall not conduct on any portion of the Premises any sale of any kind (but nothing herein is meant to prohibit sales and marketing activities of Tenant’s products and services in the normal course of business consistent with the permitted use), including any public or private auction, fire sale, going-out-of-business sale, distress sale or other liquidation sale, and any such sale shall be an immediate event of default hereunder without the benefit of a notice and cure period from Landlord, notwithstanding anything to the contrary in this Lease. No materials, supplies, tanks or containers, equipment, finished products or semi-finished products, raw materials, inoperable vehicles or articles of any nature shall be stored upon or permitted to remain within the outside areas of the Premises except in fully fenced and screened areas outside the Building which have been designed for such purpose and have been approved in writing by

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

Landlord for such use by Tenant and for which Tenant has obtained all appropriate permits from governmental agencies having jurisdiction over such articles.
(b)    Dogs. Notwithstanding anything to the contrary contained elsewhere in the Lease, Tenant shall be permitted during the Lease Term (as the same may be extended), to bring into the Premises (and during any time period in which Tenant is the sole tenant of the Project, anywhere within the Project) up to thirty (30) fully domesticated and trained dogs kept by Tenant’s employees as pets (“Permitted Dogs”) provided and on condition that
(i)    all Permitted Dogs shall be strictly controlled at all times and shall not be permitted to foul, damage or otherwise mar any part of the Premises or the Building or Project;
(ii)    upon Landlord’s request from time to time, Tenant shall provide Landlord with evidence of all current vaccinations for Permitted Dogs having access to the Premises;
(iii)    Tenant shall be responsible for any additional cleaning costs and all other costs which may arise from the presence of the Permitted Dogs in the Project in excess of the costs that would have been incurred had the Permitted Dogs not been allowed in or around the Project;
(iv)    Tenant shall be liable for, and hereby agrees to indemnify, defend, protect and hold Landlord and all the Landlord Parties (as defined in Section 7.07 below) harmless from any and all claims, liabilities, expenses (including reasonable attorneys’ fees), causes of action arising from any and all acts (including but not limited to biting or causing bodily injury to, or damage to the property of any of the Landlord Parties or any other tenant, subtenant, occupant, licensee or invitee of the Project) of, or the presence of any Permitted Dogs in, on or about the Project.
(v)    Tenant shall immediately remove any waste and excrement of any Permitted Dogs from the Project;
(vi)    Tenant shall be responsible for, and indemnify, defend, protect and hold Landlord harmless from and against any and all liabilities, expenses (including reasonable attorneys’ fees), causes of action, costs to remedy any and all damage caused by any Permitted Dogs or other dogs brought onto the Project by Tenant or any Tenant’s Parties to the Project or the property of any of the Landlord Parties or any other tenant, subtenant, occupant, licensee or invitee of the Project; and
(vii)    Tenant shall comply with all Applicable Laws associated with or governing the presence of the Permitted Dogs or other dogs brought onto the Project by Tenant or any Tenant’s Parties on the Project and such presence shall not violate the certificate of occupancy.

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(viii)    Tenant shall be responsible for, and shall pay within thirty (30) days after demand, all costs to remedy any and all damage caused by any Permitted Dogs or other dogs brought onto the Project by Tenant or any of Tenant’s employees to the Project or the property of any other tenant, subtenant, occupant, licensee or invitee of the Premises;
(ix)    Permitted Dogs will not be permitted in any portion of the Premises located on a floor upon which Tenant does not lease all of the Rentable Area;
(x)    All Permitted Dogs must be on a leash at all times when outside the Premises except in designated off-leash areas;
(xi)    Tenant shall take reasonable precautions so that Permitted Dogs with fleas and/or other infections or open wounds are not allowed into the Project;
(xii)    Upon expiration or earlier termination of this Lease, Landlord shall have the right to utilize special cleaning services to remedy any soiling or damage caused by Permitted Dogs and Tenant shall reimburse Landlord the cost thereof within thirty (30) days after written demand; and
(xiii)    Each Permitted Dog must have all licenses required by all Applicable Laws and those licenses must be current and attached to the Permitted Dog so as to be visible.
Section 5.02    Compliance with Laws.
Landlord represents and warrants to Tenant that as of the Commencement Date the Building shall be in full compliance with all applicable laws, statutes, codes, rules, regulations and ordinances including, without limitation, the Americans With Disabilities Act (collectively the “Applicable Laws”) as such Applicable Laws were in effect as of the date the permit for the construction of the Building was received. Throughout the Lease Term and the Extended Term, Tenant shall comply with all Applicable Laws and covenants and private restrictions applicable to the Premises promulgated now or in the future regarding the physical condition of the Premises. By executing this Lease, Tenant acknowledges that it has reviewed and satisfied itself as to its compliance, or intended compliance with the applicable zoning and permit requirements, hazardous materials and waste requirements, and all other Applicable Laws relevant to the uses stated in Section 5.01 above or the occupancy of the Premises.
Section 5.03    Delivery of Premises.
(a)    Early Entry.
Notwithstanding anything herein to the contrary, as of the Delivery Date (as defined below), Tenant and Tenant’s invitees may enter the Premises, at Tenant’s sole risk, for the sole purpose of installation of the Tenant Improvements (as defined in Section 2.1 of Exhibit C attached hereto and made a part hereof), and its furniture, fixtures, equipment, trade fixtures, data and telecommunications wiring and equipment and other business related equipment (collectively, the “FF&E”) Tenant’s occupancy of the Premises prior to the Commencement

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Date shall be for the purpose of constructing the Tenant Improvements and installing the FF&E and shall be on all of the terms and conditions of this Lease as though the Lease Term had commenced on the Delivery Date, except the obligation to pay Base Rent, Operating Expenses, Insurance Expenses and Real Estate Taxes; provided, however, that Tenant may occupy up to ten percent (10%) of the Premises after the Delivery Date but prior to the Commencement Date for the conduct of Tenant’s business therein if the Landlord’s Work has been completed in such area and Tenant pays the Base Rent, Operating Expenses, Insurance Expenses and Real Estate Taxes due hereunder based on the Rentable Area used by Tenant during such time period. The “Delivery Date” shall mean that date on which all of the following have occurred: (a) this Lease is fully executed and delivered by Landlord and Tenant; and (b) Tenant has delivered to Landlord (i) the Initial Rent, (ii) the Letter of Credit Security, and (iii) evidence of the insurance described in Article VII below, (iv) the previous tenant shall have vacated and surrendered the Premises, and (v) Landlord shall have substantially completed the “Landlord’s Work” described in the Work Letter. Tenant’s continued right to enter the Premises prior to the Commencement Date shall be conditioned upon such access not interfering with Landlord’s completion of the “Landlord Work.” Tenant shall ensure that any entry by Tenant or its invitees does not unreasonably interfere with the construction or completion of any work to be performed by Landlord hereunder. Notwithstanding the forgoing or anything to the contrary set forth in this Lease, should Landlord, in good faith, be diligently performing Landlord’s Work, but such Landlord’s Work shall be incomplete, so long as Tenant otherwise complies with the terms of this Section 5.03(a)(1), Tenant shall, before the Commencement Date, be authorized to access the Premises during the early entry period referenced herein in order to construct the Tenant Improvements and install the FF&E as described herein or, subject to the terms of this Section 5.03(a), conduct Tenant’s business therein.
(b)    Condition of Premises.
Having made such inspection of the Premises, the Building or the Project as it deemed prudent and appropriate (including, without limitation, testing for the presence of mold), subject to the terms of this Lease and the Work Letter for the construction of Tenant Improvements, Tenant hereby accepts the Premises in their condition existing as of the Commencement Date, “AS-IS” and “WITH ALL FAULTS” subject to all Applicable Laws, including but not limited to any applicable zoning, municipal, county and state laws, ordinances and regulations governing and regulating the use and condition of the Premises, Landlord’s obligations pursuant to Section 1.1 of the Work Letter to complete the Landlord’s Work, Landlord’s express representations and warranties hereunder, and any Private Restrictions or covenants or restrictions, liens, encumbrances and title exceptions of record, and accepts this Lease subject thereto and to all matters disclosed thereby and by any exhibits attached hereto. Except as specifically set forth in this Lease and in the Work Letter, Landlord shall not be obligated to provide or pay for any improvement work or services related to the improvement of the Premises. Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty as to the present or future suitability of the Premises for the conduct of Tenant’s business. Neither party has been induced to enter into this Lease by, nor is either party relying on, any representation or warranty outside those expressly set forth in this Lease. The commencement of business operations from the Premises by Tenant shall

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

presumptively establish that, subject to the terms of Section 5.06 below, the Premises and Building were at such time in good and sanitary order, condition and repair.
(c)    Inspection by a CASp in Accordance with Civil Code Section 1938.
To Landlord’s actual knowledge, the Premises has not undergone inspection by a Certified Access Specialist (CASp). The foregoing verification is included in this Lease solely for the purpose of complying with California Civil Code Section 1938 and shall not in any manner affect Landlord’s and Tenant’s respective responsibilities for compliance with construction-related accessibility standards as provided under this Lease.
Section 5.04    Building Security.
Tenant acknowledges and agrees that it assumes sole responsibility for security at the Premises for its agents, employees, invitees, licensees, contractors, guests and visitors and will provide such systems and personnel for same including, without limitation, while such person(s) are using the Common Areas, as it deems necessary or appropriate and at its sole cost and expense. Notwithstanding anything to the contrary contained in this Lease, neither Landlord nor any of the Landlord Parties (as defined in Section 7.07 below) shall be liable in any manner for any security personnel, services, procedures or equipment in, at, on or about the Premises, the Building or the Project (whether or not provided by Landlord) or for the failure of the same to prevent or control, or to apprehend anyone suspected of, personal injury, property damage or any criminal conduct in, on or about the Building or the Project.
Section 5.05    Rules and Regulations.
Landlord may from time to time promulgate reasonable and nondiscriminatory rules and regulations applicable for the care and orderly management of the Premises or the Project and/or its Common Areas. Such rules and regulations shall be binding upon Tenant on the tenth (10th) business day after Tenant receives a written copy thereof, and Tenant agrees to thereafter abide by such rules and regulations. No rules and regulations shall require Tenant to pay Additional Rent nor shall any such rules and regulations apply retroactively. A copy of the initial Rules and Regulations is attached hereto as Exhibit G. If there is a conflict between the rules and regulations and any of the provisions of this Lease, the provisions of this Lease shall prevail. Landlord shall not be responsible for the violation of any such rules and regulations against each of the tenants by any person, including, without limitation, Tenant or its employees, agents, invitees, licensees, guests, visitors or contractors.
Section 5.06    Tenant’s Remedies for Failures of Representations and Warranties.
Subject to all of the terms of this Lease for the construction of Tenant Improvements and the limitations described in this Section 5.06 below, Landlord shall deliver the Premises to Tenant on the Delivery Date with the building systems serving the Base, Shell and Core of the Building (excluding any supplemental or other heating and air conditioning systems installed by any previous tenants or subtenants of the Premises) in good working condition. In the event that it is determined, and Tenant notifies Landlord in writing within sixty (60) days after the Commencement Date of this Lease, that the building systems failed to be in good working

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

condition and repair as of the Date of the Lease, or the statement made in Section 5.02 above that the Building is in compliance with all Applicable Laws as of the date permits were issued for the construction thereof is untrue, and such failure was not caused by Tenant, then it shall be the obligation of Landlord, and the sole right and remedy of Tenant, after receipt of written notice from Tenant setting forth with specificity the nature of the failure, to correct such failure within a reasonable time and at Landlord’s sole cost (which cost shall not be reimbursed to Landlord as an Operating Expense). Tenant’s failure to give such written notice to Landlord within sixty (60) days after the Commencement Date of this Lease shall constitute a conclusive presumption that the building systems are in good working condition and repair as of the Date of this Lease and the Building is in compliance with all Applicable Laws, and any required correction after that date shall be performed by the party responsible for such repair pursuant to the terms of this Lease.
ARTICLE VI
MAINTENANCE, REPAIRS AND ALTERATIONS
Section 6.01    Maintenance of Premises and Building.
(a)    Throughout the Lease Term, Tenant, at its sole cost and expense, shall keep, maintain, repair and replace the Premises and every part thereof (except as provided in 6.01(b) below, the Work Letter and also except for maintenance, repairs or replacement costs caused solely by an act of negligence or intentional misconduct by Landlord during the Lease Term, subject to Section 7.06 below) and all improvements and appurtenances in the Premises, including, without limitation, all interior walls, all doors and windows, all wall surfaces and floor coverings, worn fixtures and appurtenances, all Alterations, additions and improvements installed by or on behalf of Tenant during the Lease Term, sewer, plumbing, electrical, lighting, heating, ventilation and cooling systems, fixtures and equipment servicing the building systems, roof membrane of the Building, all fire sprinklers, all fire safety and security systems and the generator associated therewith, fixtures and equipment, all wiring, and all glazing, in the same good order, condition and repair as they are in on the Delivery Date, or as they may be improved after the Delivery Date, normal wear and tear, and damage due to casualty not caused by Tenant excepted, provided that, for purposes of this Lease, wear and tear which could have been prevented by first class maintenance practices performed in accordance with industry standards shall not be considered “normal.” Landlord and Tenant acknowledge and agree that Tenant has full control over the heating, ventilation and cooling systems and, as a result thereof, there shall be no markup or after-hours charge for the use of such systems.
(b)    At all times during the Lease Term, Landlord shall maintain, repair and replace the exterior walls, structural walls, supporting pillars, foundations, and structural components of the roof of the Building. All costs and expenses incurred by Landlord in connection with the foregoing obligations shall be included in Operating Expenses; provided, however, if such maintenance, repair or replacement is due to the acts, omissions or negligence of Tenant or any Tenant Parties (as defined in Section 7.07 below), then Landlord shall nevertheless make such repairs at Tenant’s expense, and Tenant, within thirty (30) days (or, in the case of emergencies, twenty-four (24) hours after receipt of such notice) after receipt of an invoice and reasonable supporting documentation, shall pay to Landlord all costs and expenses

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of any such repairs, together with accrued interest at the Agreed Rate from the date of Landlord’s payment. Tenant shall give Landlord written notice of any needed repairs which are the obligation of Landlord hereunder. It shall then be the obligation of Landlord, after receipt of such notice, to perform the same within thirty (30) days (or within twenty-four (24) hours in the event of an emergency) after such notice; provided, however, that if the nature of the repairs is such that more than thirty (30) days are reasonably required for performance, then Landlord shall not be deemed to be in default hereunder if Landlord commences such repairs within said thirty (30) day (or twenty-four (24) hour period in the event of an emergency) period and thereafter diligently prosecutes them and provided further, that for purposes of this sentence “commences” includes material steps taken by Landlord to investigate, design, consult, bid or seek permit or other governmental approval in connection with such repair. Landlord shall not be liable to Tenant for any damage to person or property as a result of any failure to timely perform any of its obligations with respect to the repair, maintenance or replacement of the Premises, the Building or the Project or any part thereof, and Tenant’s sole right and remedy (together with its rights under Section 12.03 below) shall be to sue Landlord for specific performance of Landlord’s obligations pursuant to the terms of this Section 6.01(b). Tenant hereby expressly waives all rights under and benefits of Sections 1941 and 1942 of the California Civil Code or under any law, statute or ordinance on the same subject now or hereafter in effect to make repairs and offset the cost of same against Rent or to withhold or delay any payment of Rent or any other of its obligations hereunder as a result of any default by Landlord under this Section 6.01(b).
(c)    Tenant agrees to keep the Premises clean and in sanitary condition as required by the health, sanitary and police ordinances and regulations of any political subdivision having jurisdiction and to remove all trash and debris which may be found in the Premises. Tenant further agrees to keep the interior surfaces of the Premises, including, without limitation, windows, floors, walls, doors, showcases and fixtures clean and neat in appearance. If Tenant refuses or neglects to commence (as defined above) such repairs and/or maintenance for which Tenant is responsible under this Article VI within a thirty (30) day period (or within twenty- four (24) hours in the event of an emergency) after written notice from Landlord and thereafter to diligently prosecute the same to completion, then Landlord, upon at least 24 hours prior written notice (except in an emergency when no such notice shall be required), may enter the Premises and cause such repairs and/or maintenance to be made, and Landlord shall not be responsible to Tenant for any loss or damage occasioned thereby, and Tenant, within thirty (30) days after receipt of an invoice, shall pay to Landlord all costs and expenses of any such repairs and/or maintenance, together with accrued interest at the Agreed Rate from the date of Landlord’s payment. If Landlord becomes entitled to enter the Premises as aforesaid more than once during any twelve (12) calendar months or more than twice during the Lease Term, then Landlord may elect to enter into a maintenance contract at a market rate for first-rate maintenance with a third party for the performance of all or a part of Tenant’s maintenance obligations, whereupon (i) Tenant shall be relieved from its obligations to perform only those maintenance obligations covered by such maintenance contract, and (ii) Tenant shall bear the entire cost of such maintenance contract which shall be paid in advance, as Additional Rent, on a monthly basis with Tenant’s Base Rent payments.

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Section 6.02    Maintenance of Common Areas.
At all times during the Lease Term, Landlord shall maintain, repair and replace all features, facilities and improvements in, on or about the Common Areas, landscaping, curbs, walkways, driveways, roadways, parking areas, and lighting, sprinkler, drainage, sewer and plumbing systems, fixtures and equipment. All costs and expenses incurred by Landlord in connection with the foregoing obligations shall be included in Operating Expenses; provided, however, if such maintenance, repair or replacement is due to the acts, omissions or negligence of Tenant or any Tenant Parties, then Landlord shall nevertheless make such repairs at Tenant’s expense, and Tenant, within thirty (30) days after receipt of an invoice, shall pay to Landlord all out-of-pocket costs and expenses of any such repairs, together with accrued interest at the Agreed Rate from the date of Landlord’s payment.
Section 6.03    Alterations, Additions and Improvements.
No alterations, additions, or improvements (“Alterations”) shall be made to the Premises or Common Areas by Tenant without the prior written consent of Landlord, which shall not be unreasonably withheld, conditioned or delayed. Landlord may impose, as a condition of its consent to any and all Alterations or repairs of the Premises or about the Premises, such requirements as Landlord in its sole discretion may deem desirable, including the payment to Landlord of a construction management fee equal to two percent (2%) of the hard construction costs of constructing and installing the Alteration(s) in question (the “Landlord Supervision Fee”). The construction of the initial improvements to the Premises shall be governed by the terms of the Work Letter and not the terms of this Section 6.03. Notwithstanding the foregoing or anything to the contrary set forth herein, Tenant may, without Landlord’s prior written consent or the payment of a Landlord Supervision Fee, but upon not less than ten (10) days’ prior written notice to Landlord, make Alterations (including removal and rearrangement of prior Alterations) which (a) do not affect the structural integrity or any structural components of the Building, (b) are not visible from the exterior of the Building, (c) do not require a building permit, and (d) do not involve the expenditure of more than Fifty Thousand Dollars ($50,000.00) in any given instance or One Hundred Thousand Dollars ($100,000.00) in the aggregate during any twelve (12) month period. As a condition to Landlord’s obligation to consider any request for consent hereunder, Tenant hereby agrees to pay Landlord upon demand for the reasonable out-of-pocket costs and expenses of consultants, engineers, architects, attorneys and others for reviewing plans and specifications and costs incurred to third parties in connection with monitoring the construction of any proposed Alterations. Landlord may require Tenant to remove any such Alterations at the expiration or sooner termination of the Lease Term and to restore the Premises to their prior condition pursuant to the terms of Section 17.09 hereof; provided that, if Tenant makes written request to Landlord concurrently with Tenant’s request for consent to any Alterations, then Landlord shall make its election to require removal of such Alterations, if at all, at the time consent to such Alterations is given. Notwithstanding the foregoing, in no event shall Tenant be required to remove any Tenant Improvements (as defined in the Work Letter) from the Premises upon the expiration of earlier termination of this Lease unless those Alterations are Non-Standard Alterations. As used herein, the term “Non-Standard Alterations” shall mean Alterations of a type or quantity that would not be installed by or for a typical tenant using space

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for general office or research and development purposes, such as internal stairwells or high density mobile filing systems, auditoriums, movie theaters or film projection rooms, private restrooms, data center rooms, swimming pools, basketball courts, laboratories and, supplemental HVAC units or ducting. Any “open ceilings”, concrete slabs, tenant finishes that meet or exceed the Specifications set forth in the Work Letter or floors space plans that are in the same proportion of individual offices to conference rooms and other public areas currently in the portion of the Premises that was previous sublet to Disney Interactive (i.e., the entire second floor of the Building) (provided that such areas do not include items that are otherwise deemed to be Non-Standard Alterations hereunder) shall not be considered Non-Standard Alterations and Tenant shall have no obligation to remove or modify any such Alterations upon the expiration or earlier termination of this Lease. All Alterations to be made to the Premises shall be designed by and made under the supervision of a California licensed architect and/or California licensed structural engineer (each of whom has been approved by Landlord) and shall be made in accordance with plans and specifications which have been furnished to and approved by Landlord in writing prior to commencement of work. All Alterations shall be constructed and installed, at the sole cost and expense of Tenant, by California licensed contractors approved by Landlord, in compliance with the terms and conditions of the Work Letter, including but not limited to the “Specifications” set forth in Schedule Two thereof, along with all Applicable Laws, and in good and workmanlike manner, and shall have been approved in writing by the City of Palo Alto and any other applicable governmental agencies. Subject to Landlord’s right to require Tenant to remove Alterations in accordance with this Section 6.03, all Alterations, including, without limitation, all lighting, electrical, heating, ventilation, air conditioning and full height partitioning, drapery and carpeting installations made by Tenant, together with all property that has become an integral part of the Premises, shall not be deemed trade fixtures and shall become the property of Landlord at the expiration or sooner termination of the Lease. If Tenant fails to complete such removal and/or to repair any damage caused by the removal of any Alterations or improvements in the Premises and return the affected portion of the Premises to their condition existing prior to the installation of such Alterations or, if elected by Landlord, to a building standard tenant improved condition as determined by Landlord, prior to the expiration or earlier termination of this Lease, then Rent shall continue to accrue under this Lease in accordance with Section 17.09, below, after the end of the Lease Term until such work shall be completed, and Landlord shall have the right, but not the obligation, to perform such work and to charge the cost thereof to Tenant. Tenant hereby protects, defends, indemnifies and holds Landlord harmless from any liability, cost, obligation, expense or claim of lien, including but not limited to, court costs and reasonable attorneys’ fees, in any manner relating to the installation, placement, removal or financing of any such Alterations, improvements, fixtures and/or equipment in, on or about the Premises, which obligations of Tenant shall survive the expiration or earlier termination of this Lease. Tenant shall retain title to all furniture and trade fixtures placed on the Premises. Within thirty (30) days after completion of any Alterations, Tenant shall provide Landlord with (A) a complete set of both hard copies and CAD drawings of “as built” plans for such Alterations, and (B) a statement of all final costs of design, demolition, construction and installation of such Alterations, together with all supporting documentation therefor and, if the Landlord Supervision Fee paid in connection with such Alterations was understated, an amount equal to the actual Landlord Supervision Fee (based upon the statement of final costs) less any amount previously paid to Landlord on account thereof.

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Section 6.04    Covenant Against Liens.
Tenant shall not allow any liens arising from any act or omission of Tenant (including but not limited to Tenant’s failure to pay Landlord any amounts due Landlord pursuant to the terms of the Work Letter) to exist, attach to, be placed on, or encumber Landlord’s or Tenant’s interest in the Premises, the Building or the Project, or any portion of either, by operation of law or otherwise. Tenant shall not suffer or permit any lien of mechanics, material suppliers, or others to be placed against the Premises, the Building or the Project, or any portion thereof, with respect to work or services performed or claimed to have been performed for Tenant or materials furnished or claimed to have been furnished to Tenant or the Premises. Landlord has the right at all times to post and keep posted on the Premises any notice that it considers necessary for protection from such liens. At least seven (7) days before beginning construction of any Alterations, Tenant shall give Landlord written notice of the expected commencement date of that construction to permit Landlord to post and record a notice of nonresponsibility. If any such lien attaches or if Tenant receives notice of any such lien, Tenant shall cause the lien to be released and removed of record, by recordation of a lien release bond or otherwise, within thirty (30) days after receipt of notice thereof. Despite any other provision of this Lease, if the lien is not released and removed within thirty (30) days after Tenant’s receipt of notice of such lien, then Landlord may immediately take all action necessary to release and remove the lien, without any duty to investigate the validity of such lien. All expenses (including reasonable attorney fees and the cost of any bond) incurred by Landlord in connection with a lien incurred by Tenant or its removal shall be considered Additional Rent under this Lease and be immediately due and payable by Tenant.
ARTICLE VII
INSURANCE
Section 7.01    Property/Rental Insurance for Premises.
At all times during the Lease Term, Landlord shall keep the Premises (including the Tenant Improvements, but excluding any Alterations or other property required to be insured by Tenant pursuant to Section 7.02 below), the Building and the Project insured against loss or damage by fire and those risks normally included in special form (causes of loss) property insurance in an amount not less than one hundred percent (100%) of the replacement cost thereof. Insurance shall include a Building Ordinance and Increased Cost of Construction Endorsement insuring the increased cost of reconstructing the Premises and the Building and/or Project due to the need to comply with applicable statutes, ordinances and requirements of all municipal, state and federal authorities now in force, or which may be in force hereafter. In addition, Landlord may keep the Premises (including the Tenant Improvements, but excluding any Alterations or other property required to be insured by Tenant pursuant to Section 7.02 below), the Building and the Project insured against, without limitation, (i) earthquake and earthquake sprinkler leakage, (ii) flood, (iii) loss of rents (including scheduled rent increases) and extra expenses, (iv) boiler and machinery, (v) fire damage legal liability form, including waiver of subrogation, and (vi) such other perils as either Landlord’s lender shall require or Landlord shall deem reasonable for the protection of the Building and the Project. Such insurance shall be subject to such deductibles as Landlord may choose in its sole discretion. All

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premiums for all such insurance shall be included in Insurance Expenses recoverable by Landlord in accordance with Article IV.
Section 7.02    Property Insurance for Fixtures and Inventory.
At all times during from and after the Commencement Date through and including the expiration or earlier termination of this Lease, Tenant shall, at its sole expense, maintain special form (causes of loss) property insurance, which includes the same coverage as required of Landlord in Section 7.01 above, on any trade fixtures, furnishings, merchandise, equipment, artwork or other personal property in or on the Premises, and on all Alterations (whether or not presented to Landlord for its consent). The amount of such insurance shall not be less than one hundred percent (100%) of replacement cost with commercially reasonable deductibles, and Landlord shall not have any responsibility, nor pay any cost, for maintaining any insurance required by this Section 7.02. Tenant shall pay all deductibles under such policies in the event of a loss. In addition, during such time as Tenant is performing work in or to the Premises, Tenant, at Tenant’s expense, shall also maintain, or shall cause its contractor(s) to maintain, builder’s risk insurance for the full insurable value of such work. To the extent that Landlord is obligated to pay for the repair or restoration of the loss or damage covered by the policy, Landlord shall be paid the proceeds of the “all risk” insurance covering the loss or damage. To the extent Tenant is obligated to pay for the repair or restoration of the loss or damage, covered by the policy, Tenant shall be paid the proceeds of the “all risk” insurance covering the loss or damage. If both Landlord and Tenant are obligated to pay for the repair or restoration of the loss or damage covered by the policy, the insurance proceeds shall be paid to each of them in the pro rata proportion of their obligations to repair or restore the loss or damage. If the loss or damage is not repaired or restored (for example, if the Lease is terminated by Landlord pursuant to Section 8.01 of this Lease, below), the insurance proceeds shall be paid to Landlord and Tenant in the pro rata proportion of their relative contributions to the cost of the leasehold improvements covered by the policy.
Section 7.03    Landlord’s Liability Insurance.
During the Lease Term, Landlord shall maintain a policy or policies of commercial general liability insurance covering Landlord (and such others as designated by Landlord) against claims and liability for bodily injury, personal injury and property damage (including loss of use thereof) in, on, or about the Building and the Project, with combined single limit coverage in an amount determined by Landlord in Landlord’s sole discretion; provided that if such policy is a blanket policy that covers properties (other than the Building or the Project) owned by Landlord, only that portion allocable to the Building or the Project, as the case may be, shall be payable hereunder. All premiums for all such insurance shall be included in Insurance Expenses recoverable by Landlord in accordance with Article IV.
Section 7.04    Tenant’s Liability Insurance.
At all times during the period from and after the Commencement Date through and including the expiration or earlier termination of this Lease, Tenant shall obtain and keep in force a policy or policies of commercial general liability insurance, on an occurrence basis, issued on a

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form at least as broad as Insurance Services Office (“ISO”) Commercial General Liability Coverage “occurrence” form CG 00 01 1001 or another ISO Commercial General Liability “occurrence” form providing equivalent coverage, covering Tenant, and naming Landlord and any Landlord Parties (as defined in Section 7.07(a), below) and any lenders or ground lessors whose names are provided to Tenant as additional insureds, against claims and liability for bodily injury, personal injury and property damage (including loss of use thereof) based upon, involving or arising out of (a) Tenant’s operations and contractual liabilities, or (b) ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing coverage in amount of not less than Five Million Dollars ($5,000,000) per occurrence; provided, however, the limits of such insurance shall not limit the liability of Tenant nor relieve Tenant of any obligation under this Lease. Such insurance shall include (i) Broad Form Property Damage coverage, (ii) coverage for Additional Landlords or Premises, and (iii) coverage for “amendment of the pollution exclusion” to provide coverage for damage caused by heat, smoke, fumes from a fire. All general liability insurance to be carried by Tenant shall be primary to, and not contributory with, any similar insurance carried by Landlord (whose insurance shall be considered excess insurance only).
Section 7.05    Evidence of Insurance.
Tenant shall furnish to Landlord prior to its initial entry to the Premises pursuant to Section 5.03(a), and, upon request, evidence reasonably acceptable to Landlord in its reasonable discretion that the property insurance and liability insurance required to be maintained by Tenant is in full force and effect for the twelve (12) month period following the Commencement Date or such expiration date; and that Landlord has been named as an additional insured to the extent of contractual liability assumed in this Lease, including, without limitation, Section 7.07 below. The insurance shall be issued by insurance carriers approved by Landlord; provided, however, that such approval shall not be unreasonably withheld, so long as Tenant’s insurance carrier has a Best’s Insurance Guide rating not less than “A-” and within a financial size category of note less than “Class VII” and which is licensed to do business in California. Any or all of Landlord’s insurance may be provided by blanket coverage maintained by Landlord or any affiliate of Landlord under its insurance program for its portfolio of properties, and in such event Operating Expenses shall include the portion of the reasonable cost of blanket insurance that is allocated to the Building.
Section 7.06    Mutual Waiver of Claims and Subrogation Rights.
Landlord and Tenant hereby release and relieve the other, and waive their entire claim of recovery for loss or damage to property arising out of or incident to any peril covered by the insurance policies required to be carried pursuant to Sections 7.01 and 7.02 above (but only to the extent such damage is insured under any insurance policy required by this Lease or which would have been so insured had the party carried the insurance required by the waiving party hereunder), when such property constitutes the Project, or is in, on or about the Project, whether or not such loss or damage is due to the negligence of Landlord or Tenant, or their respective agents, employees, guests, licensees, invitees, or contractors. Tenant and Landlord waive all rights of subrogation against each other on behalf of, and shall obtain a waiver of all subrogation

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rights from, all property and casualty insurers referenced above. Tenant shall obtain from its subtenants and other occupants of the Premises a similar waiver and release of claims against any or all of Tenant or Landlord. The insurance policies required by this Lease shall contain no provision that would invalidate or restrict the parties’ waiver and release of the rights of recovery in this section. The parties hereto covenant that no insurer shall hold any right of subrogation against the parties hereto by virtue of such insurance policy. Any deductibles and self-insured retentions shall be deemed to be “insurance” for the purposes of this Section 7.06.
Section 7.07    Indemnification and Exculpation.
(a)    Except as otherwise provided in Section 7.07(b), Tenant shall indemnify, defend, protect and hold free and harmless Landlord and Landlord’s partners, subpartners, members, parent organizations, affiliates, subsidiaries, principal shareholders and other constituent entities, and their respective officers, directors, servants, employees, agents, independent contractors and representatives, beneficiaries, agents and any ground lessor or lender with a lien on the Building (collectively, “Landlord Parties”) from any and all liability, claims, loss, damages, causes of action (whether in tort or contract, law or equity, or otherwise), costs, expenses, charges, assessments, fines, and penalties of any kind, including without limitation, reasonable attorneys’, experts’ and arbitrators’ fees and costs and court costs (collectively “Indemnified Loss”), arising or resulting, or which is claimed to have arisen or resulted from, (i) any cause in, on or about the Premises, (ii) any acts, omissions or negligence of Tenant, its partners, subpartners, members, parent organizations, affiliates, subsidiaries, principal shareholders, other constituent entities or any other person or entity claiming by, through or under Tenant, or any of their respective officers, directors, servants, employees, agents, and independent contractors, licensees, invitees, visitors or guests (collectively, “Tenant Parties”), in, on or about the Premises or the Project, and (iii) any breach or default in the timely observance or performance of any obligation on Tenant’s part to be observed or performed under this Lease. Notwithstanding the foregoing, Tenant’s indemnity contained in Section 7.07(a) above shall not apply to Indemnified Loss arising or resulting from the gross negligence or willful misconduct of Landlord or any of Landlord Parties.
(b)    Tenant hereby waives all claims against Landlord for damages to goods, wares and merchandise and all other personal property in, on or about the Premises and for injury or death to persons in, on or about the Premises, from any cause arising at any time to the fullest extent permitted by law, except that such waiver shall not apply to any claims caused by the gross negligence or willful misconduct of Landlord or any of Landlord Parties. Any goods, property or personal effects stored or placed in or about the Premises shall be at the sole risk of the Tenant, and neither the Landlord Parties nor their insurers shall in any manner be held responsible therefor. Notwithstanding the provisions of Section 7.07(c) above, or any other provision of this Lease, in no event shall Landlord or any Landlord Parties be liable to Tenant under any circumstances for (i) injury or damage to, or interruption or interference with, Tenant’s business (including, but not limited to, loss of profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use, however occurring) or other consequential damages, in each case however occurring, or (ii) any damage which is or could be covered by the insurance Tenant is required to carry under this Lease.

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(c)    The provisions of this Section 7.07 shall survive the expiration or earlier termination of this Lease with respect to any Indemnified Loss occurring or arising prior to such expiration or termination.
ARTICLE VIII
DAMAGE OR DESTRUCTION
Section 8.01    Repair of Damage by Landlord.
(a)    In the event all or any part of the Premises is damaged during the Lease Term from any fire or other casualty, then Landlord shall promptly conduct the repair and diligently pursue the same to completion, subject to reasonable delays for insurance adjustment and other matters beyond Landlord’s reasonable control (in which event the provisions of Section 17.20 below shall apply), and subject to all other terms and conditions of this Article VIII; provided, however, Tenant (and not Landlord) shall promptly repair all damage to those items as to which Tenant is required to maintain property insurance under Section 7.02 above. Except as otherwise provided in Section 8.01(b) below, no such damage shall terminate this Lease. Such restoration shall be to substantially the same condition of the Base, Shell and Core of the Building (as defined in Section 1.1 of the Work Letter) and the Common Areas prior to the casualty, except for modifications required by zoning and building codes and other Applicable Laws or by the holder of a mortgage on the Building or Project or any other modifications to the Common Areas deemed desirable by Landlord, provided that access to the Premises shall not be materially impaired. If such fire or other casualty shall have damaged the Premises, then Landlord shall allow Tenant a proportionate abatement of Base Rent to the extent Landlord actually receives proceeds of rental interruption insurance purchased by Landlord as part of Insurance Expenses during the time and to the extent the Premises are unfit for occupancy for the purposes permitted under this Lease, and not occupied by Tenant as a result thereof; provided that, in any event, Tenant’s right to abate Base Rent shall terminate as of the later to occur of (i) the date on which Landlord completes its repairs under this Section 8.01(a), or (ii) the date (as reasonably determined by Landlord) on which Tenant should have completed its repairs under this Section 8.01(a) assuming Tenant used reasonable diligence in pursuing the same and provided further, however, if the damage or destruction is due to the negligence or willful misconduct of Tenant or any of its agents, employees, contractors, invitees or guests, then there shall be no rent abatement. Unless this Lease is terminated pursuant to Section 8.01(b), Tenant shall pay to Landlord Tenant’s Share (if the applicable insurance policy insures only the Premises and not other parts of the Project) or Tenant’s Share (if the applicable insurance policy insures the Premises as well as some or all of the Project) of any insurance deductible within ten (10) business days after written demand.
(b)    Notwithstanding the terms of Section 8.01(a) above, Landlord may elect not to repair or restore the Premises or the Project, and instead to terminate this Lease, by notifying Tenant in writing of such termination within sixty (60) days after the date of discovery of the damage, such notice to include a termination date giving Tenant not less than thirty (30) days to vacate the Premises, but Landlord may so elect only if the Building or the Project Premises shall be damaged by fire or other casualty, whether or not the Premises are affected,

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

and one or more of the following conditions is present: (i) in Landlord’s reasonable judgment, repairs cannot reasonably be completed within two hundred seventy (270) days after the date of discovery of the damage (when such repairs are made without the payment of overtime or other premiums); (ii) the holder of any mortgage on the Building or the Premises or ground lease with respect to the Building or the Premises shall require that the insurance proceeds or any portion thereof be used to retire the mortgage debt, or shall terminate the ground lease, as the case may be; (iii) the damage is not fully covered by Landlord’s insurance policies (other than deductible amounts actually paid by Tenant and other tenants of the Building or the Project); (iv) Landlord decides to rebuild the Building or the Project so that they will be substantially different structurally or architecturally; or (v) the damage was not caused by Landlord and occurs during the last twelve (12) months of the Lease Term or during the last six (6) months of any Extended Term and, in Landlord’s reasonable judgment, repairs cannot reasonably be completed within sixty (60) days after the date of discovery of the damage (when such repairs are made without the payment of overtime or other premiums).
(c)    Notwithstanding the terms of Section 8.01(a) above, Tenant may elect to terminate this Lease, by notifying Landlord in writing of such termination within sixty (60) days after the date of discovery of the damage, such notice to include a termination date giving Tenant not less than thirty (30) days nor more than ninety (90) days to vacate the Premises, but Tenant may so elect only if the Building shall be damaged by fire or other casualty, whether or not the Premises are affected, and all of the following conditions are present: (i) in Landlord’s reasonable judgment, repairs cannot reasonably be completed within two hundred seventy (270) days after the date of discovery of the damage (when such repairs are made without the payment of overtime or other premiums), (ii) the damage was not caused by the actions or omissions of Tenant or any Tenant Parties and (iii) more than thirty-five percent (35%) of the Building was affected by the casualty and Tenant is not, in fact, using the portion of the Building affected by casualty. In addition, Tenant may terminate this Lease if the Building is damaged by a casualty that was not caused by the actions or omissions of Tenant or any Tenant Parties and the damage occurs during the last twelve (12) months of the Lease Term and, in Landlord’s reasonable judgment, repairs cannot reasonably be completed within sixty (60) days after the date of discovery of the damage (when such repairs are made without the payment of overtime or other premiums).
Section 8.02    Waiver of Civil Code Remedies.
Tenant hereby expressly waives any rights to terminate this Lease upon damage or destruction to the Premises, including without limitation any rights pursuant to the provisions of Section 1932, Subdivisions 1 and 2 and Section 1933, Subdivision 4, of the California Civil Code, as amended from time to time, and the provisions of any similar law hereinafter enacted.
Section 8.03    No Abatement of Rentals.
Except as otherwise expressly provided in Section 8.01(a) above, the Base Rent, Additional Rent and other charges due under this Lease shall not be reduced or abated by reason of any damage or destruction to the Premises, and Landlord shall be entitled to all proceeds of the insurance maintained pursuant to Section 7.01 above. Landlord shall not be liable for any

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

inconvenience or annoyance to Tenant or its visitors, or injury to Tenant’s business (including, without limitation, loss of business, profits or goodwill), resulting in any way from any damage or the repair thereof.
Section 8.04    No Liability for Tenant’s Alterations or Personal Property.
In no event shall Landlord have any liability for, nor shall it be required to repair or restore, any injury or damage to Tenant’s Alterations or personal property or to any other personal property of other parties in or upon the Premises, the Building or the Project.
ARTICLE IX
REAL ESTATE TAXES
Section 9.01    Payment of Taxes.
(a)    For all periods of time during the Lease Term, Tenant shall pay Tenant’s Share of Real Estate Taxes as is provided for in Section 4.06 above.
(b)    Except as otherwise expressly provided herein below, if at any time during the Lease Term, the State of California or any political subdivision of the state, including any county, city, city and county, public corporation, district, or any other political entity or public corporation of this state, levies or assesses against Landlord a tax, fee, charge, imposition or excise on rents under leases of space in the Building or the Project, the square footage of the Building or the Project, the act of entering into leases of space in the Building or the Project, or the occupancy of tenants of the Building or the Project, or levies or assesses against Landlord any other tax, fee, or excise, however described, including, without limitation, a so-called value added, business license, transit, commuter, environmental or energy tax fee, charge or excise or imposition related to the Building or the Project, as a direct substitution in whole or in part for, or in addition to, any Real Estate Taxes (collectively, “Additional Real Estate Taxes”), then the same shall be included in “Real Estate Taxes” for all purposes hereunder; provided that, notwithstanding the foregoing, if any such Additional Real Estate Taxes pertain solely to (i) Rent under this Lease (as opposed to under all leases of space in the Building or the Project), (ii) the square footage of the Premises (as opposed to the square footage of the Building or the Project), (iii) the act of entering into this Lease (as opposed to all leases of space in the Building or the Project), or (iv) the occupancy of Tenant (as opposed to all tenants or occupants of the Building or the Project) (as opposed to all leases of space in the Building or the Project), then such Additional Real Estate Taxes shall not be included in “Real Estate Taxes,” and shall be the sole obligation and liability of Tenant and shall be paid by Tenant, as Additional Rent, ten (10) days before delinquency or, if a statement of such Additional Real Estate Taxes is not delivered to Tenant by Landlord by such date, within ten (10) days after receipt of such statement and before delinquency if at all possible (or, if such Additional Real Estate Taxes are levied against Landlord or Landlord’s property, then Landlord shall pay the same before delinquency and Tenant shall reimburse Landlord any such amount within ten (10) days after written demand accompanied by a copy of Landlord’s tax bill); and further provided that, if any such Additional Real Estate Taxes pertain not only to the Project, but to additional property of Landlord located outside the Project as well, then “Real Estate Taxes” shall only include the pro rata portion of

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such Additional Real Estate Taxes that pertains to the Project or the Premises, as applicable, which portion shall be computed upon the amounts and at the rates that otherwise would be payable if the Project were the only property of Landlord.
(c)    Landlord shall provide Tenant with copies of all bills for Real Estate Taxes and Additional Real Estate Taxes for the Project promptly upon Landlord’s receipt of Tenant’s written request therefor.
(d)    With respect to taxes and assessments which may lawfully be paid in installments, “Real Estate Taxes” and “Additional Real Estate Taxes” for any period during the Lease Term shall include only such portion of the same which is payable within such period and any interest payable thereon computed (whether or not such is the case) as if Landlord had elected to pay the same over the longest period permitted by law.
Section 9.02    Proration for Partial Years.
If any Real Estate Taxes or Additional Real Estate Taxes to be paid by Tenant shall cover any period prior to the Commencement Date or after the Expiration Date, then Tenant’s Share of such Real Estate Taxes shall be prorated on a day-for-day basis such that the amount actually paid or reimbursed by Tenant covers only the period of time within the applicable tax fiscal year during which this Lease shall be in effect. If Landlord shall obtain any abatement or refund on account of any Real Estate Taxes or other Additional Real Estate Taxes as to which Tenant shall have made payments hereunder, then Landlord shall promptly refund to Tenant an equitable portion of any such abatement or refund, after deducting therefrom the reasonable costs and expenses incurred by Landlord in obtaining such abatement or refund.
Section 9.03    Personal Property Taxes.
(a)    Tenant shall pay prior to delinquency all taxes imposed, assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Tenant contained in the Premises or elsewhere. When possible, Tenant shall cause said trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Landlord. If any of Tenant’s said personal property shall be assessed with Landlord’s real property, Tenant shall pay to Landlord, as Additional Rent, the amount of taxes attributable to Tenant’s personal property within ten (10) days after receipt of a written statement thereof.
(b)    If Tenant shall fail to make timely payment of any such taxes pursuant to Subsections 9.03(a) or (b), Landlord shall have the right to pay the same, in which case Tenant shall repay such amount to Landlord, as Additional Rent, with Tenant’s next installment of Rent, together with interest at the Agreed Rate.

ARTICLE X
UTILITIES

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Section 10.01    Utilities and Services.
(a)    Commencing on the Commencement Date, Tenant shall pay, prior to delinquency and throughout the Lease Term, all charges for water, gas, heating, ventilation, air conditioning, cooling, sewer, telephone, electricity, garbage, janitorial service, landscaping and all other services and utilities supplied to the Premises. All charges for utilities and services which are separately metered to the Premises or which are provided directly to Tenant or the Premises by utility companies or third party providers shall be paid directly by Tenant to such utility companies or third party providers prior to delinquency. All other charges for utilities and services shall be included in Operating Expenses recoverable by Landlord in accordance with Article IV.
(b)    The disruption, failure, lack or shortage of any service or utility with respect to the Premises, the Building or the Project due to any cause whatsoever shall not affect any obligation of Tenant hereunder, and Tenant shall faithfully keep and observe all the terms, conditions and covenants of this Lease and pay all Rent due hereunder, all without diminution, credit or deduction. Notwithstanding the foregoing, if Tenant is prevented from using, and does not use the Premises or any material portion thereof as a result of a disruption of utilities to the Premises, and such disruption is caused solely, without intervening cause by the intentional acts, gross negligence or willful misconduct of Landlord or Landlord Parties (an “Abatement Event”), then Tenant shall give Landlord written notice of such Abatement Event, and if such Abatement Event continues for five (5) consecutive business days (the “Eligibility Period”), then the Base Rent payable hereunder shall be abated or reduced, as the case may be, after expiration of the Eligibility Period for such time that Tenant continues to be so prevented and does not use, the Premises, or any material portion thereof, in the proportion that the Rentable Area of the Building that Tenant is prevented from using, and does not use (the “Unusable Area”) bears to the total Rentable Area of the Building. In addition to the foregoing, if such disruption, failure, lack or shortage is caused by Landlord’s negligent or willful failure to observe or perform its obligations hereunder, then, promptly after receipt of written notice from Tenant specifying such failure, Landlord shall initiate the cure of such failure and thereafter shall diligently prosecute said cure to completion.
(c)    Subject to the prior written consent of Landlord, which consent shall not be unreasonably withheld, conditioned or delayed, Tenant may, at Tenant’s sole cost and expense, install voice/data/coax wiring and telephone system equipment throughout the Premises.
ARTICLE XI
ASSIGNMENT AND SUBLETTING
Section 11.01    Landlord’s Consent Required.
Except as provided in Section 11.02, Tenant shall not voluntarily or by operation of law assign, transfer, mortgage, sublet, license or otherwise transfer or encumber (collectively, a “Transfer”) all or any part of Tenant’s interest in this Lease or in the Premises or any part thereof to another party (a “Transferee”), without Landlord’s prior written consent; provided, however, Landlord shall not unreasonably withhold, condition (including, but not limited to

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

requesting an increase in the Letter of Credit or additional security for this Lease) or delay its consent to an assignment of this Lease or a subletting of all or a portion of the Premises. Notwithstanding the preceding sentence, any proposed Transfer that would require a Recognition Agreement or agreement of similar import to Landlord and Landlord’s Lender (defined in Section 15.01 below), Landlord’s consent may be conditioned upon an increase in the Letter of Credit or additional security for this Lease. Tenant’s notice to Landlord requesting consent to an assignment or subletting must comply with Section 11.05 below and contain the following inscription in bold-faced type: “FIRST NOTICE DELIVERED PURSUANT TO ARTICLE 11 OF LEASE – FAILURE TO RESPOND MAY RESULT IN DEEMED APPROVAL OF ASSIGNMENT OR SUBLEASE.” Landlord shall respond in writing to Tenant’s written request for consent hereunder within fifteen (15) business days and any attempted assignment, transfer, mortgage, encumbrance, subletting or licensing without obtaining Landlord’s prior written consent shall be void, and shall constitute a breach of this Lease. If Landlord fails to respond to Tenant’s request for consent to any proposed assignment or subletting, Tenant may send a second (2nd) notice to Landlord, which notice must contain the following inscription in bold-faced type: “SECOND NOTICE DELIVERED PURSUANT TO ARTICLE 11 OF LEASE - FAILURE TO TIMELY RESPOND WITHIN TEN (10) BUSINESS DAYS SHALL RESULT IN DEEMED APPROVAL OF ASSIGNMENT OR SUBLEASE.” If Landlord fails to deliver notice of Landlord’s consent to, or the withholding of Landlord’s consent, to the proposed assignment or sublease within such ten (10) business day period, Landlord shall be deemed to have approved the assignment or sublease in question. If Landlord at any time timely delivers notice to Tenant of Landlord’s withholding of consent to a proposed assignment or sublease, Landlord shall specify in reasonable detail in such notice the basis for such withholding of consent. Tenant shall reimburse Landlord upon demand for Landlord’s reasonable costs and expenses (including attorneys’ fees, architect fees and engineering fees) incurred by Landlord involved in reviewing any request for consent whether or not such consent is granted; provided, however, that the maximum aggregate amount of attorneys’ fees which Tenant may be obligated to pay in connection with any Tenant request for consent shall be $5,000 for each such request, unless the request includes a proposed recognition agreement for the subtenant. Notwithstanding anything herein to the contrary, Tenant hereby agrees that Tenant shall initially occupy a minimum of one hundred twenty thousand (120,000) square feet of Rentable Area in the Building. Without limitation as to other reasonable grounds for withholding consent, the parties hereby agree that it shall be reasonable under this Lease and under any Applicable Law for Landlord to withhold consent to any proposed Transfer where one or more of the following apply:
(i)    The Transferee is of a character or reputation or engaged in a business which is not consistent with the quality of the Building or the Project;
(ii)    The Transferee intends to use the subject space for purposes which are not permitted under this Lease;
(iii)    The Transferee is either a governmental agency or instrumentality thereof;

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(iv)    The Transferee is not a party of reasonable financial worth and/or financial stability in light of the responsibilities to be undertaken in connection with the Transfer on the date consent is requested. For the purposes of this Section 11.01(iv), reasonable financial worth and/or financial stability shall mean that the proposed Transferee shall have Cash Equivalents equal to or greater than the amount of rent due under the proposed term of the Transfer. Notwithstanding the foregoing, if at the time of the proposed subleasing Tenant has Cash Equivalents of Two Hundred Twenty-Five Million Dollars ($225,000,000) or greater, Landlord will not withhold Landlord’s consent to a subletting in which the sublessee is not requesting a recognition agreement from the Landlord based upon the creditworthiness of the proposed sublessee, so long as Cloudera, Inc. remains primarily liable under this Lease;
(v)    The proposed Transfer would cause a violation of another lease for space in the Project, or would give an occupant of the Building a right to cancel its lease; or
(vi)    If any proposed Transfer shall potentially have any adverse effect on the real estate investment trust qualification requirements applicable to Landlord and its affiliates.
Tenant hereby waives Section 1995.310 of the California Civil Code pertaining to remedies for withholding of consent to transfer of a leasehold.
Section 11.02    Tenant Affiliates.
Tenant, without Landlord’s prior written consent, but upon not less than ten (10) business days prior written notice to Landlord, may assign this Lease, or sublet all or any portion of the Premises, to any business entity which controls, is controlled by, or is under common control with Tenant, or to any business entity resulting from the merger or consolidation with Tenant, or to any person or entity which acquires all of Tenant’s stock (“Affiliate”), provided that said assignee or subtenant (i) has a net worth equal to or greater than that of Tenant as of the date of this Lease or the date of the Transfer, whichever is greater, and (ii) assumes, in full, the obligations of Tenant under this Lease arising from and after such assignment. Any portion of the Premises which is assigned or sublet to an Affiliate of Tenant shall not be included in the calculation of subleased, assigned or transferred Rentable Area for the purposes of Section 11.06.
Section 11.03    No Release of Tenant.
Regardless of whether or not Landlord’s consent is required or obtained, no subletting or assignment (including, without limitation, to an Affiliate) shall release Tenant of Tenant’s obligations under this Lease or alter the primary liability of Tenant to pay the Rent and to perform all other obligations to be performed by Tenant hereunder. The acceptance of Rent by Landlord from any other person shall not be deemed consent to any subsequent assignment or subletting. In the event of any default in the payment of Rent or performance of any obligation hereunder by any assignee or successor of Tenant, Landlord may proceed directly against Tenant without the necessity of exhausting remedies against said assignee or successor.

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Section 11.04    Excess Rent.
In the event Landlord shall consent to a Transfer, Tenant shall pay to Landlord, as Additional Rent, fifty percent (50%) of all sums (including the fair market value of all non-cash consideration excluding the value, however, of any and all furniture or equipment which Tenant allows such subtenant or assignee to use) collected or received by Tenant from a subtenant or assignee which are in excess of the Base Rent and Additional Rent due and payable with respect to the subject space pursuant to Article IV for the time period encompassed by the sublease or assignment term, after first deducting reasonable leasing commissions and attorneys’ fees not in excess of Five Thousand Dollars ($5,000) paid by Tenant with respect to such sublease or assignment, the amount of such commissions and fees being amortized over the term of such sublease or assignment for the purposes of this Section 11.04. With respect to an assignment, Tenant shall make such payment on the effective date of such assignment. With respect to a sublease, Tenant shall make such payment, in advance, on a monthly basis with its regularly scheduled Base Rent payments.
Section 11.05    Information to be Provided.
Tenant’s written request to Landlord for consent to an assignment or subletting or other form of Transfer shall be accompanied by (a) the name and legal composition of the proposed Transferee; (b) the nature of the proposed Transferee’s business to be carried on in the Premises; (c) the terms and provisions of the proposed Transfer agreement (including, without limitation, a description of the portion of the Premises to be Transferred, and the effective date of the proposed Transfer), including calculation of the excess rent described in Section 11.04 above, in connection with such assignment or subletting, the name and address of the proposed Transferee, and a copy of all existing executed and/or proposed documentation pertaining to the proposed Transfer, including all existing operative documents to be executed to evidence such Transfer or the agreements incidental or related to such Transfer; (d) a copy of all executed and/or the final version of the proposed documentation pertaining to the proposed Transfer; and (e) such financial and other reasonable information as Landlord may promptly request concerning the proposed Transferee.
Section 11.06    Landlord’s Recapture Rights.
(a)    Landlord’s Recapture Rights.
Notwithstanding any other provision of this Article 11, if Tenant desires to assign, sublease or otherwise Transfer to any person or entity (other than an Affiliate) any interest in this Lease or the Premises or any part thereof, then Tenant shall deliver to Landlord a written request for consent, together with all of the information specified in Section 11.05 above. If such Transfer (together with all other assignments, subleases or Transfers then in effect) would affect more than sixty percent (60%) of the then-remaining Rentable Area of the Premises in the aggregate (such total affected portion of the Rentable Area of the Premises being referred to herein as the “Recapture Space”) for more than sixty percent (60%) of the then-remaining Lease Term (not taking into account any possible Extension Periods), then Landlord shall have the option to recapture the Recapture Space, which option shall be exercisable only by giving

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written notice to Tenant (“Recapture Notice”) within thirty (30) days after Landlord’s receipt of Tenant’s request for consent. Upon Landlord’s timely delivery of a Recapture Notice to Tenant (i) Tenant may, by delivering written notice to Landlord within two (2) business days after receipt of the Recapture Notice, rescind its request to Transfer any interest in this Lease or the Premises, whereupon Landlord shall have no right to recapture the Recapture Space and this Lease shall remain in full force and effect, or (ii) should Tenant fail to deliver written notice to Landlord within two (2) business days as mentioned in sub-section (i) above, this Lease shall terminate, and Tenant shall be fully and forever released by Landlord of and from all non-delinquent obligations of Tenant under this Lease with respect to the Recapture Space effective on the date that is specified in Tenant’s request for consent as the effective date of the proposed Transfer, except for those obligations which expressly survive the term of this Lease pursuant to the terms thereof.
(b)    Consequences of Recapture.
If Landlord recaptures less than the entire Premises pursuant to Section 11.06(a) above, then the Rent reserved herein shall be prorated on the basis the of the Rentable Area of the portion of the Premises retained by Tenant in proportion to the Rentable Area contained in the Premises. This Lease, as so amended, shall continue thereafter in full force and effect. Either party may require written confirmation of the amendments to this Lease necessitated by Landlord’s recapture of the Recapture Space. If Landlord recaptures the Recapture Space, then Landlord shall promptly (but in all events prior to Landlord tendering possession of the Recapture Space to a third party) construct, paint, and furnish any partitions required to segregate the Recapture Space from the remaining Premises retained by Tenant, as well as arrange for separate provision of utilities and services (including, at Landlord’s option, installation of separate meters if and to the extent the premises are served by separately metered utilities) (collectively, the “Demising Improvements”). Landlord, at Landlord’s sole cost and expense, agrees that the Demising Improvements shall be completed pursuant to plans and specifications reasonably acceptable to Tenant and that Landlord shall use commercially reasonable efforts to minimize any interference with Tenant’s use and enjoyment of the Premises during the construction of any Demising Improvements.
Section 11.07    Occurrence of Default.
If Tenant shall be in default under this Lease, then Landlord is hereby irrevocably authorized to direct any Transferee to make all payments under or in connection with a Transfer directly to Landlord (which payments Landlord shall apply towards Tenant’s obligations under this Lease) until such default is cured. Such Transferee shall rely on any representation by Landlord that Tenant is in default hereunder, without any need for confirmation thereof by Tenant. Upon any assignment, the assignee shall assume in writing all obligations and covenants of Tenant thereafter to be performed or observed under this Lease. No collection or acceptance of rent by Landlord from any Transferee shall be deemed a waiver of any provision of this Article XI or the approval of any Transferee or a release of Tenant from any obligation under this Lease, whether theretofore or thereafter accruing. In no event shall Landlord’s enforcement of any provision of this Lease against any Transferee be deemed a waiver of Landlord’s right to enforce

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any term of this Lease against Tenant or any other person. If Tenant’s obligations hereunder have been guaranteed, Landlord’s consent to any Transfer shall not be effective unless the guarantor also consents to such Transfer.
Section 11.08    Additional Transfers.
For purposes of this Lease, the term “Transfer” shall also include (i) if Tenant is a partnership or a limited liability company, the withdrawal or change, voluntary, involuntary or by operation of law, of fifty percent (50%) or more of the partners, officers or members, as applicable, or transfer of fifty percent (50%) or more of partnership, ownership or membership interests (as applicable), within a twelve (12)-month period, or the dissolution of the partnership or limited liability company without immediate reconstitution thereof, and (ii) if Tenant is a closely held corporation (i.e., whose stock is not publicly held and not traded through an exchange or over the counter), (A) the dissolution, merger, consolidation or other reorganization of Tenant or (B) the sale or other transfer of an aggregate of fifty percent (50%) or more of the voting shares of Tenant (other than to immediate family members by reason of gift or death), within a twelve (12)-month period, or (C) the sale, mortgage, hypothecation or pledge of an aggregate of fifty percent (50%) or more of the value of the unencumbered assets of Tenant within a twelve (12)-month period.
ARTICLE XII
DEFAULTS; REMEDIES
Section 12.01    Defaults.
The occurrence of any one or more of the following events shall constitute a material default and breach of this Lease by Tenant:
(i)    The vacation or abandonment of all or a substantial portion of the Premises by Tenant, or the commission of waste at the Premises, or the making of an assignment, subletting or other transfer in violation of Article XI. Tenant waives any right to notice Tenant may have under Section 1951.3 of the California Civil Code, the terms of this Section 12.01(a) being deemed such notice to Tenant as required by said Section 1951.3;
(ii)    The failure by Tenant to make any payment of Base Rent as and when due;
(iii)    The failure by Tenant to make any payment of any other sum owing under this Lease as and when due, if such failure continues for a period of five (5) business days after written notice thereof from Landlord to Tenant. In the event that Landlord serves Tenant with a Notice to Pay Rent or Quit in the form required by applicable law, such Notice shall constitute the notice required by this paragraph, provided that the cure period stated in such Notice shall be five (5) business days rather than the statutory three (3) days;
(iv)    Tenant’s failure to provide: (i) any supplemental letter of credit as required by Section 4.07, (ii) any instrument or assurance as required by Section 7.05, (iii) estoppel certificate as required by Section 15.01 or (iv) any document subordinating this Lease to

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a Lender’s (as defined in §15.01 below) deed of trust as required by Section 17.13, if any such failure continues for five (5) business days after written notice of the failure. In the event Landlord serves Tenant with a Notice to Perform Covenant or Quit in the form required by applicable law, such Notice shall constitute the notice required by this paragraph, provided that the cure period stated in such Notice shall be five (5) business days rather than the statutory three (3) days;
(v)    The failure by Tenant to observe or perform any of the covenants, conditions or provisions of this Lease to be observed or performed by Tenant, other than described in paragraphs (a), (b), (c) or (d) of this Section 12.01, if such failure continues for a period of ten (10) business days after written notice thereof from Landlord to Tenant; provided, however, that if the nature of Tenant’s default is such that more than ten (10) business days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within said ten (10) business day period and thereafter diligently prosecutes such cure to completion. In the event Landlord serves Tenant with a Notice to Perform Covenant or Quit in the form required by applicable law, such Notice shall constitute the notice required by this paragraph, provided that the cure period stated in such Notice shall be ten (10) business days rather than the statutory three (3) days;
(vi)    (i) The making by Tenant of any general arrangement or assignment for the benefit of creditors; (ii) the filing by Tenant of a voluntary petition in bankruptcy under Title 11 U.S.C. or the filing of an involuntary petition against Tenant which remains uncontested for a period of sixty (60) days; (iii) the appointment of a trustee or receiver to take possession of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease; or (iv) the attachment, execution or other judicial seizure of substantially all of Tenant’s assets located at the Premises or of Tenant’s interest in this Lease, provided, however, in the event that any provisions of this Section 12.01(e) is contrary to any applicable law, such provision shall be of no force or effect;
(vii)    The discovery by Landlord that any financial statement given to Landlord by Tenant, or any future guarantor of Tenant’s obligations hereunder, was materially false;
(viii)    Tenant’s Transfer of this Lease or any portion of the Premises in violation of the terms of Article XI hereof;
(ix)    Tenant’s failure to occupy the Premises within thirty (30) business days after the Commencement Date; or
(x)    The occurrence of a default and breach by Tenant under any other lease between Tenant and Landlord for premises in the Project.
Section 12.02    Remedies.
In the event of any such material default and breach by Tenant, Landlord may at any time thereafter, and without limiting Landlord in the exercise of any right or remedy which Landlord may have by reason of such default and breach:

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(a)    Terminate Tenant’s right to possession of the Premises by any lawful means, in which case this Lease shall terminate and Tenant shall immediately surrender possession of the Premises to Landlord. In such event Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant’s default including, but not limited to, (i) the cost of recovering possession of the Premises including reasonable attorney’s fees related thereto; (ii) the worth at the time of the award of any unpaid Rent that had been earned at the time of the termination, to be computed by allowing interest at the Agreed Rate but in no case greater than the maximum amount of interest permitted by law, (iii) the worth at the time at the time of the award of the amount by which the unpaid Rent that would have been earned between the time of the termination and the time of the award exceeds the amount of unpaid Rent that Tenant proves could reasonably have been avoided, to be computed by allowing interest at the Agreed Rate but in no case greater than the maximum amount of interest permitted by law, (iv) the worth at the time of the award of the amount by which the unpaid Rent for the balance of the Lease Term after the time of the award exceeds the amount of unpaid Rent that Tenant proves could reasonably have been avoided, to be computed by discounting that amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of the award plus one percent (1%), (v) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant’s failure to perform obligations under this Lease, including, but not limited to, brokerage commissions and advertising expenses, expenses of remodeling the Premises for a new tenant (whether for the same or a different use), and any special concessions made to obtain a new tenant, and (vi) any other amounts, in addition to or in lieu of those listed above, that may be permitted by Applicable Laws.
(b)    Maintain Tenant’s right to possession as provided in Civil Code Section 1951.4 (Landlord may continue lease in effect after Tenant’s breach and abandonment and recover Rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations), in which case this Lease shall continue in effect whether or not Tenant shall have abandoned the Premises. In such event Landlord shall be entitled to enforce all of Landlord’s rights and remedies under this Lease, including the right to recover the Rent as it becomes due hereunder.
(c)    Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the State of California.
(d)    Tenant hereby waives for Tenant and for all those claiming under Tenant any and all rights now or hereafter existing to redeem by order of judgment of any court or by any legal process or writ, Tenant’s right of occupancy of the Premises after any termination of this Lease.
Section 12.03    Default by Landlord.
Landlord shall not be in default under this Lease unless Landlord fails to perform obligations required of Landlord within thirty (30) days after receipt of written notice from Tenant to Landlord and to the holder of any first mortgage or deed of trust covering the Premises whose name and address shall have theretofore been furnished to Tenant in writing, specifying that Landlord has failed to perform such obligation; provided, however, that if the nature of

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Landlord’s obligation is such that more than thirty (30) days are reasonably required for performance then Landlord shall not be in default if Landlord commences performance within such thirty (30) day period and thereafter diligently prosecutes the same to completion. In the event Landlord does not commence performance of any maintenance or repair required of Landlord hereunder within the thirty (30) day period provided herein, and in the event that such maintenance or repair relates to improvements which are wholly within the Premises (not including any Building core systems or equipment), Tenant may perform such maintenance or repair, and Tenant shall be entitled to prompt reimbursement by Landlord of Tenant’s reasonable costs and expenses in taking such action, together with interest thereon at the Agreed Rate. Tenant waives any right to terminate this Lease or to vacate the Premises on Landlord’s default under this Lease. Tenant’s sole remedy on Landlord’s default is an action for damages (subject to the terms of Article XVI hereof) or injunctive or declaratory relief.
Section 12.04    Late Charges.
Tenant hereby acknowledges that late payment by Tenant to Landlord of Rent and other sums due hereunder will cause Landlord to incur costs not contemplated by this Lease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed on Landlord by the terms of any mortgage or trust deed covering the Premises. Accordingly, if any installment of Rent or any other sum due from Tenant shall not be received by Landlord or Landlord’s designated agent within five (5) days after such amount is due and owing, Tenant shall pay to Landlord a late charge equal to five percent (5%) of such overdue amount each time a late charge is payable during the Lease Term. Notwithstanding the above, on three occasions during the Lease Term (as it may be extended) but not more than once every twelve (12) months during the Lease Term, Tenant shall be entitled to written notice of non-receipt of Rent from Landlord, and Tenant shall not be liable for any late charge, interest or other late fee hereunder if such Rent is received by Landlord within three (3) business days after Tenant’s receipt of such written notice from Landlord. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Landlord will incur by reason of late payment by Tenant. Acceptance of such late charge by Landlord shall in no event constitute a waiver of Tenant’s default with respect to such overdue amount, nor prevent Landlord from exercising any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for three (3) consecutive installments of Rent, then Rent shall automatically become due and payable quarterly in advance, rather than monthly, notwithstanding Section 4.01 or any other provision of this Lease to the contrary. The late charge shall be deemed Additional Rent and the right to require it shall be in addition to all of Landlord’s other rights and remedies hereunder or at law and shall not be construed as liquidated damages or as limiting Landlord’s remedies in any manner.
Section 12.05    Landlord’s Right to Perform Tenant’s Obligations.
All obligations to be performed or observed by Tenant under this Lease shall be performed or observed by Tenant at Tenant’s expense and without any reduction of Rent. Landlord may perform or observe any obligation of Tenant which is in default hereunder beyond

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any applicable notice and cure period, without waiving Landlord’s other rights and remedies for Tenant’s failure to perform or observe any obligations under this Lease and without releasing Tenant from any such obligations. Within thirty (30) days after receiving a statement from Landlord, Tenant shall pay to Landlord the amount of expense reasonably incurred by Landlord in performing or observing Tenant’s obligation, together with interest thereon at the Agreed Rate and Landlord’s standard fee for such involvement.
ARTICLE XIII
CONDEMNATION OF PREMISES
Section 13.01    Total Condemnation.
If the entire Premises shall be taken by condemnation at any time during the Lease Term (whether by exercise of governmental power or the sale or transfer by Landlord to any condemnor under threat of condemnation or while proceedings for condemnation are pending) such that there does not remain a portion suitable for occupation, then this Lease shall terminate as of the date transfer of possession is required. Upon such condemnation, all Rent shall be paid up to the date transfer of possession is required, and Tenant shall have no claim against Landlord for the value of the unexpired portion of the Lease Term.
Section 13.02    Partial Condemnation.
Except as otherwise provided in this Section 13.02, if any portion of the Premises is taken by condemnation during the Lease Term (whether by exercise of governmental power or the sale or transfer by Landlord to any condemnor under threat of condemnation or while proceedings for condemnation are pending), then this Lease shall remain in full force and effect as to the portion not taken. If more than thirty-three percent (33%) of the total Rentable Area of the Premises is taken by condemnation, or if a partial taking leaves the Premises unfit for the conduct of Tenant’s business, then Tenant shall have the right to terminate this Lease effective as of the date transfer of possession is required. In addition, if more than thirty-three percent (33%) of the total Rentable Area of the Premises is taken by condemnation, then Landlord shall have the right to terminate this Lease effective as of the date transfer of possession is required. Tenant and Landlord may elect to exercise their respective rights to terminate this Lease pursuant to this Section 13.02, if at all, by delivering written notice to the other party within thirty (30) days after receipt of notice of such condemnation. All Rent shall be paid up to the date of termination, and Tenant shall have no claim against Landlord for the value of the unexpired portion of the Lease Term. If this Lease shall not be terminated, then the Rent reserved herein shall be prorated on the basis the of the Rentable Area of the portion of the Premises retained by Tenant in proportion to the Rentable Area contained in the Premises immediately prior to the partial taking. If Tenant’s continued use of the Premises requires alterations and repair by reason of a partial taking, all such alterations and repair shall be made by Tenant at Tenant’s expense. Tenant waives all rights it may have under California Code of Civil Procedure Sections 1263.260 and 1265.130 or otherwise, to terminate this Lease based on partial condemnation.

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Section 13.03    Award to Tenant.
Tenant shall not because of such taking assert any claim against Landlord or the authority for any compensation because of such taking and Landlord shall be entitled to the entire award or payment in connection therewith, except that Tenant shall have the right to file any separate claim available to Tenant for any taking of Tenant’s personal property and fixtures belonging to Tenant and removable by Tenant upon expiration of the Lease Term pursuant to the terms of this Lease, and for moving expenses, so long as such claims do not diminish the award available to Landlord, its ground lessor with respect to the Building or Project or its Lender (as defined in §15.01 below), and such claim is payable separately to Tenant.
ARTICLE XIV
ENTRY BY LANDLORD
Tenant shall permit Landlord and its employees, agents and contractors upon twenty- four (24) hours’ notice (except in the case of emergency, in which event no notice shall be necessary), to the Premises and all parts thereof (i) at all reasonable times for any of the following purposes: to inspect the Premises; to maintain the Premises; to make such repairs to the Premises as Landlord is obligated or may elect to make, and to make repairs, alterations or additions to any other portion of the Building; and (ii) to show the Premises and to post “For Lease” signs for the purposes of re-letting the Premises during the last nine (9) months of the Lease Term; to show the Premises to prospective lenders or purchasers of the Building; and to post notices of nonresponsibility. Notwithstanding anything to the contrary contained in this Article XIV, Landlord may enter the Premises at any time to (A) perform services required of Landlord, including janitorial service; (B) take possession due to any breach of this Lease in the manner provided herein; and (C) perform any covenants of Tenant which Tenant fails to perform pursuant to Section 12.05 above. Landlord may make any such entries without the abatement of Rent and may take such reasonable steps as required to accomplish the stated purposes. Tenant hereby waives any claims for damages or for any injuries or inconvenience to or interference with Tenant’s business, lost profits, any loss of occupancy or quiet enjoyment of the Premises, and any other loss occasioned thereby except that such waiver shall not apply to any actual, out-of-pocket damages incurred by Tenant in connection with Landlord’s entry in the Building when such loss or damage is due to Landlord’s negligence or willful misconduct. For each of the above purposes, Landlord shall at all times have a key with which to unlock all the doors in the Premises, excluding Tenant’s vaults, safes and special security areas designated in advance by Tenant. In an emergency, Landlord shall have the right to use any means that Landlord may deem proper to open the doors in and to the Premises. Any entry into the Premises by Landlord in the manner hereinbefore described shall not be deemed to be a forcible or unlawful entry into, or a detainer of, the Premises, or an actual or constructive eviction of Tenant from any portion of the Premises. No provision of this Lease shall be construed as obligating Landlord to perform any repairs, alterations or decorations except as otherwise expressly agreed to be performed by Landlord herein.
ARTICLE XV
ESTOPPEL CERTIFICATE

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Section 15.01    Estoppel Certificate.
Tenant shall, at any time upon not less than fifteen (15) days’ prior written notice from Landlord or any holder of a mortgage affecting the Premises, the Building, the land beneath the Building or any interest of Landlord therein (any such holder, “Lender”), execute, acknowledge and deliver to Landlord a statement in the same form and substance as Exhibit E attached hereto in writing (i) certifying, if true, that this Lease is unmodified and in full force and effect (or, if modified, stating the nature of such modification and certifying, if true, that this Lease, as so modified, is in full force and effect) and the date to which the Rent and other charges are paid in advance, if any; (ii) acknowledging, if true, that there are not, to Tenant’s knowledge, any uncured defaults on the part of Landlord or Tenant hereunder, or specifying such defaults if any are known or claimed; and (iii) certifying or acknowledging, if true, such other matters as are requested by any prospective lender or purchaser of the Building which are reasonably related to the loan or sale transaction. Any such statement may be conclusively relied upon by any prospective lender or purchaser of the Building or Project.
Section 15.02    Failure to Deliver.
Tenant’s failure to timely execute, acknowledge and deliver such statement shall constitute an acceptance and acknowledgment by Tenant that such statement is true and correct, without exception. In addition, Tenant shall pay to Landlord a per diem late fee equal to Five Hundred and No/100 Dollars ($500.00) per day for each day after such fifteen (15) day period until the fully-executed statement is delivered to Landlord.
Section 15.03    Financial Statements.
In the event of either: (i) a proposed sale of all or any portion of the Building or Project, (ii) a proposed financing or refinancing of all or any portion of the Building or Project, or (iii) a request therefor from Landlord’s lender (but not more than once in any twelve (12) month period), Tenant shall, within fifteen (15) days following Tenant’s receipt of a written request of Landlord, submit to Landlord with true and complete copies of its financial statements for its last fiscal year (including interim periods following the end of the last fiscal year for which annual statements are available). Such statements shall be prepared in accordance with generally accepted accounting principles consistently applied and certified as true and correct by an authorized officer of Tenant. Notwithstanding the foregoing, this financial statement delivery requirement shall not be applicable so long as the stock in Tenant is publicly traded on the New York Stock Exchange, the American Stock Exchange or NASDAQ. Any financial statements provided to Landlord pursuant to this section shall be kept confidential and not disclosed to any third parties other than a Lender, any prospective lender or any actual or prospective purchaser of the Property, or as required by Applicable Law or a court order.
ARTICLE XVI
LIMITATIONS ON LANDLORD’S LIABILITY
If Landlord shall fail to perform any covenant, term or condition of this Lease upon Landlord’s part to be performed, and if as a consequence of such default Tenant shall recover a

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money judgment against Landlord, such judgment shall be satisfied only by the interest of Landlord in the Project, provided that in no event shall such liability extend to any insurance proceeds received by Landlord or any Landlord Parties in connection with the Project, the Building or the Premises. None of the Landlord Parties shall have any personal liability therefor, and Tenant hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Tenant. The limitations of liability contained in this Article XVI shall inure to the benefit of the Landlord’s and all Landlord Parties’ present and future partners, beneficiaries, officers, directors, trustees, shareholders, agents and employees, and their respective partners, heirs, successors and assigns. Under no circumstances shall any present or future partner of Landlord (if Landlord is a partnership), or trustee or beneficiary (if Landlord or any partner of Landlord is a trust), have any liability for the performance of Landlord’s obligations under this Lease. Notwithstanding any contrary provision herein, neither Landlord nor any Landlord Parties shall be liable under any circumstances for injury or damage to, or interference with, Tenant’s business, including but not limited to, loss of profits, loss of rents or other revenues, loss of business opportunity, loss of goodwill or loss of use, in each case, however occurring.
ARTICLE XVII
GENERAL PROVISIONS
Section 17.01    Severability.
The invalidity of any provision of this Lease shall in no way affect the validity of any other provision hereof.
Section 17.02    Agreed Rate Interest on Past-Due Obligations.
In addition to the late charge described above, any Rent or other amounts owing hereunder which are not paid (A) within five (5) business days after the date they are due, or (B) upon the date they are due if any Rent or other amounts owing hereunder have not been received by Landlord or Landlord’s designee within five (5) business days after the date due on two (2) or more prior occasions during the immediately preceding twelve (12) month period, shall bear interest from the date when due until paid at a rate per annum equal to the lesser of (x) the annual “Bank Prime Loan” rate cited in the Federal Reserve Statistical Release publication H.15(519), published weekly (or such other comparable index as Landlord and Tenant shall reasonably agree upon if such rate ceases to be published) plus four percent (4%) and (y) the highest rate permitted by applicable law (the “Agreed Rate”).
Section 17.03    Time of Essence.
Time is of the essence in the performance of all obligations under this Lease.
Section 17.04    Submission of Lease.
The submission of this Lease to Tenant shall be for examination purposes only, and does not and shall not constitute a reservation of or option for Tenant to lease, or otherwise create any interest of Tenant in the Premises or any other premises situated in the Project. The return to

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Landlord of Tenant-executed copies of this Lease shall not be binding upon Landlord, notwithstanding any preparation or anticipatory reliance or expenditures by Tenant or any time interval, until Landlord has in fact executed and actually delivered a fully-executed copy of this Lease to Tenant. This document shall not be effective as a lease or otherwise until executed and delivered by both Landlord and Tenant.
Section 17.05    Incorporation of Prior Agreements and Exhibits and Schedules.
This Lease (including Exhibits A, B, C, D, E, F, G and H, and Schedule 1 and Schedule 2) contains all agreements of the parties with respect to any matter mentioned herein. No prior agreement or understanding pertaining to any such matter shall be effective. All of those exhibits, together with the schedules thereto, are hereby incorporated into this Lease by this reference thereto, and are made a part of the Lease. This Lease may be modified in writing only, signed by the parties in interest at the time of the modification. Except as otherwise stated in this Lease, Tenant hereby acknowledges that neither the Landlord nor any employees or agents of the Landlord has made any oral or written warranties or representations to Tenant relative to the condition or use by Tenant of said Premises.
Section 17.06    Notices.
(a)    Written Notice.
Any notice required or permitted to be given hereunder shall be in writing and shall be given by a method described in paragraph (b) below and shall be addressed to Tenant or to Landlord, as the case may be, at the respective address noted below next to the signature of such party. Either party may, by notice to the other party, specify a different address for notice purposes. A copy of all notices required or permitted to be given hereunder to Tenant or to Landlord, as the case may be, shall be concurrently transmitted to such other persons at such addresses as may hereafter be designated by Tenant or Landlord, respectively, by notice to the other party; provided, however, no delay or failure of delivery to any such persons shall affect the validity of the delivery of such notice to Tenant or to Landlord, as the case may be.
(b)    Methods of Delivery.
(i)    When personally delivered to the recipient, notice is effective upon delivery. Delivery to the person apparently designated to receive deliveries at the subject address (e.g., a receptionist) shall constitute personal delivery if made during business hours.
(ii)    When mailed by certified mail with return receipt requested, notice is effective upon receipt if delivery is confirmed by a return receipt.
(iii)    When delivered by recognized overnight courier service (e.g., Federal Express, Airborne, United Parcel Service, DHL WorldWide Express) with charges prepaid or charged to the sender’s account, notice is effective upon delivery if delivery is confirmed by the courier service.

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(iv)    When delivered by electronic mail to the last electronic mail address of the recipient known to the party giving notice, notice is effective on receipt as long as (A) a duplicate copy of the notice is promptly given by first-class or certified mail or by overnight delivery, or (B) the receiving party delivers a written confirmation of receipt. Any notice given by electronic mail shall be considered to have been received on the next business day if it is received after 5:00 p.m. (recipient’s time) on a nonbusiness day.
(c)    Refused, Unclaimed or Undeliverable Notices.
Any correctly addressed notice that is refused, unclaimed, or undeliverable because of an act or omission of the party to be notified shall be considered to be effective as of the first date that the notice was refused, unclaimed, or considered undeliverable by the postal authorities, messenger, or overnight courier service.
Section 17.07    Waivers.
No waiver of any provision hereof shall be deemed a waiver of any other provision hereof or of any subsequent breach of the same or any other provisions. Any consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of consent to or approval of any subsequent act. The acceptance of Rent hereunder by Landlord shall not be a waiver of any preceding breach by Tenant of any provision hereof, other than the failure of Tenant to pay the particular Rent so accepted, regardless of Landlord’s knowledge of such preceding breach at the time of acceptance of such Rent.
Section 17.08    Recording.
Tenant may not record a “short form” memorandum of this Lease.
Section 17.09    Surrender of Possession; Holding Over.
(a)    At the expiration or earlier termination of this Lease, Tenant shall remove all of Tenant’s equipment, trade fixtures, supplies, wall decorations, signage and other personal property from the Premises, the Building and the Common Areas and shall vacate the Premises, and surrender to Landlord possession of the Premises and all improvements therein, broom clean and in as good order and condition as when possession was taken by Tenant, excepting only normal wear and tear, damage due to casualty not caused by Tenant or Tenant’s agents, employees or contractors. Except for such normal wear and tear, damage due to casualty not caused by Tenant or Tenant’s agents, employees or contractors, Tenant shall, at Tenant’s sole expense: (i) repair all damage to the Premises, the interior and exterior of the Building and the Common Areas caused by Tenant’s removal of its property; (ii) patch and refinish, to Landlord’s reasonable satisfaction, all penetrations made by Tenant or any Tenant Parties to the roof, floor, interior or exterior walls or ceiling of the Premises and the Building, whether or not such penetrations were made with Landlord’s approval; (iii) repair or replace all damaged ceiling tiles, wall coverings and floor coverings to the reasonable satisfaction of Landlord; (iv) repair all damage caused by Tenant to the exterior surface of the Building, (v) remove or cause to be removed from the Premises all debris and rubbish, such items of furniture, equipment, business and trade fixtures, free-standing cabinet work, movable partitions and other articles of personal

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property owned by Tenant or installed or placed by Tenant at its expense in the Premises, and such similar articles of any other persons claiming under Tenant, as Landlord may, in its sole discretion, require to be removed, and (vi) remove or cause to be removed from the Premises all debris and rubbish. Upon the expiration or earlier termination of this Lease, Landlord may reenter the Premises and remove all persons and property therefrom. If Tenant shall fail to surrender to Landlord the Premises, the Building and the Common Areas in the condition required by this Section 17.09(a) at the expiration or earlier termination of this Lease, then Landlord, at Tenant’s expense, may remove Tenant’s signs, property and/or improvements not so removed and make such repairs and replacements not so made or hire, at Tenant’s expense, independent contractors to perform such work. Tenant shall be liable to Landlord for all costs incurred by Landlord in returning the Premises, the Building and the Common Areas to the required condition, together with interest thereon at the Agreed Rate from the date incurred by Landlord until paid. Tenant shall pay to Landlord the amount of all costs so incurred (including, without limitation, costs of disposal, storage and insurance), together with interest at the Agreed Rate, within thirty (30) days after receipt of an invoice therefor.
(b)    If Tenant, without Landlord’s prior written consent, remains in possession of the Premises after the expiration of the Lease Term, then such occupancy shall be a tenancy-at-sufferance on every applicable term, condition and agreement contained herein (including the payment of Additional Rent), except that monthly Base Rent shall be payable at a rate equivalent to one hundred fifty percent (150%) of the higher of (i) the monthly Base Rent in effect immediately prior to such expiration, or (ii) the fair market rental value of the Premises at such time, such payments to be made as herein provided for Base Rent. Nothing contained in this Section 17.09 shall be construed as consent by Landlord to any holding over by Tenant, and Landlord expressly reserves the right to require Tenant to surrender possession of the Premises to Landlord as provided in this Lease upon the expiration or other termination of this Lease. The provisions of this Section 17.09 shall not be deemed to limit or constitute a waiver of any other rights or remedies of Landlord provided herein or at law. If Tenant fails to surrender the Premises upon the termination or expiration of this Lease, in addition to any other liabilities to Landlord accruing therefrom, Tenant shall protect, defend, indemnify and hold Landlord harmless from all loss, costs (including reasonable attorneys’ fees) and liability resulting from such failure, including, without limiting the generality of the foregoing, any claims made by any succeeding tenant founded upon such failure to surrender and any lost profits to Landlord resulting therefrom.
(c)    No act or thing done by Landlord or any agent or employee of Landlord during the Lease Term shall be deemed to constitute an acceptance by Landlord of a surrender of the Premises unless such intent is specifically acknowledged in writing by Landlord. The delivery of keys to the Premises to Landlord or any agent or employee of Landlord shall not constitute a surrender of the Premises or effect a termination of this Lease, whether or not the keys are thereafter retained by Landlord, and notwithstanding such delivery Tenant shall be entitled to the return of such keys at any reasonable time upon request until this Lease shall have been properly terminated. The voluntary or other surrender of this Lease by Tenant, whether accepted by Landlord or not, or a mutual termination hereof, shall not work a merger, and at the

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option of Landlord shall operate as an assignment to Landlord of all subleases or subtenancies affecting the Premises or terminate any or all such sublessees or subtenancies.
Section 17.10    Cumulative Remedies.
No remedy or election hereunder by Landlord shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.
Section 17.11    Covenants and Conditions.
This Lease shall be construed as though the covenants herein between Landlord and Tenant are independent and not dependent and Tenant hereby expressly waives the benefit of any statute to the contrary and agrees that if Landlord fails to perform its obligations set forth herein, Tenant shall not be entitled to make any repairs or perform any acts hereunder at Landlord’s expense or to any setoff of the Rent or other amounts owing hereunder against Landlord.
Section 17.12    Binding Effect; Choice of Law.
Subject to any provisions hereof restricting assignment or subletting by Tenant and a fully-executed subject to the provisions of Article XVI, this Lease shall bind the parties, their personal representatives, successors and assigns. This Lease shall be governed by the laws of the State of California. IN ANY ACTION OR PROCEEDING ARISING HEREFROM, LANDLORD AND TENANT HEREBY CONSENT TO (I) THE JURISDICTION OF ANY COMPETENT COURT WITHIN THE STATE OF CALIFORNIA, (II) SERVICE OF PROCESS BY ANY MEANS AUTHORIZED BY CALIFORNIA LAW, AND (III) IN THE INTEREST OF SAVING TIME AND EXPENSE, TRIAL WITHOUT A JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES HERETO AGAINST THE OTHER OR THEIR SUCCESSORS IN RESPECT OF ANY MATTER ARISING OUT OF OR IN CONNECTION WITH THIS LEASE, THE RELATIONSHIP OF LANDLORD AND TENANT, TENANT’S USE OR OCCUPANCY OF THE PREMISES, AND/OR ANY CLAIM FOR INJURY OR DAMAGE, OR ANY EMERGENCY OR STATUTORY REMEDY. IN THE EVENT LANDLORD COMMENCES ANY SUMMARY PROCEEDINGS OR ACTION FOR NONPAYMENT OF BASE RENT OR ADDITIONAL RENT, TENANT SHALL NOT INTERPOSE ANY COUNTERCLAIM OF ANY NATURE OR DESCRIPTION (UNLESS SUCH COUNTERCLAIM SHALL BE MANDATORY) IN ANY SUCH PROCEEDING OR ACTION, BUT SHALL BE RELEGATED TO AN INDEPENDENT ACTION AT LAW.
Section 17.13    Lease to be Subordinate and Lender Protections.
(a)    Subordination and Attornment.
Tenant agrees that this Lease is and shall be, at all times, subject and subordinate to (i) the lien of any mortgage, deed of trust or other encumbrances now existing or hereafter executed which Landlord may create against the Premises, the Building or the Project, including all modifications, renewals, extensions and replacements thereof, and to all advances made or hereafter to be made upon the security of such mortgages or trust deeds, unless the

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holders of such mortgages, trust deeds or other encumbrances, or the lessors under such ground lease or underlying leases, require in writing that this Lease be superior thereto, and (ii) all ground or underlying leases now existing or hereafter executed affecting the Building or the Project, including all modifications, renewals, extensions and replacements thereof; provided, however, that regardless of any default under any such ground or underlying lease or any termination of any such ground or underlying lease, so long as Tenant timely performs all covenants and conditions of this Lease and continues to make all timely payments hereunder, this Lease and Tenant’s possession and rights hereunder shall not be disturbed by any ground or underlying landlord, or anyone claiming under or through any such ground or underlying landlord. Tenant shall execute and deliver any commercially reasonable documents confirming the subordination of this Lease within ten (10) days after delivery of same by Landlord, provided that with respect to any ground or underlying lease, the ground or underlying landlord agrees therein that this Lease will not be terminated if Tenant is not in default following the termination of any such ground or underlying lease. Tenant hereby agrees that a Subordination, Nondisturbance and Attornment Agreement (“SNDA”) which is substantially in the form attached hereto as Exhibit D shall be deemed to be commercially reasonable for purposes of the immediately preceding sentence. Landlord shall use commercially reasonable efforts to obtain such a SNDA from any lender with an existing mortgage or deed of trust recorded against the Project as of the Date of this Lease within sixty (60) days after the Date of this Lease, and (ii) any future lender which may have a mortgage or deed of trust recorded against the Project within sixty (60) days after the date such mortgage or deed of trust is recorded against the Project; provided that Landlord shall not be deemed to be in default hereunder, and Tenant shall not have any grounds for termination of this Lease, abatement of Rent or other remedy should Landlord fail to obtain such SNDA.
Section 17.14    Attorneys’ Fees.
In the event any action or proceeding is brought by any party to enforce or interpret the provisions of this Lease, or if any other action or proceeding is brought arising out of or relating to this Lease, the prevailing party in such action or proceeding shall be entitled to recover the reasonable fees of its attorneys, experts and arbitrators, and other costs of suit.
Section 17.15    Signs.
(a)    Subject to the terms of this Section 17.15, throughout the Lease Term, Tenant shall have the exclusive right, at Tenant’s sole expense, to install and maintain Tenant’s company name on two Exterior Building Parapet Signs on the Building, along with directional signage of the project and monument signage all as depicted on Exhibit E attached hereto; provided, however, that such rights to the Exterior Building Parapet Sign shall terminate, and Tenant, at Tenant’s sole expense, shall remove any such Exterior Building Parapet Signs as provided for in this Section 17.15 as if the Lease Term had expired, if Landlord recaptures more than sixty percent (60%) of the Premises from Tenant for more than fifty percent (50%) of the then-remaining Lease Term pursuant to the terms of Section 11.06 above.
(b)    Tenant shall not place any signs outside the Premises (or visible from outside the Premises) without Landlord’s prior written consent, which consent shall not be

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unreasonably withheld; provided, however, any such signage shall be subject to the terms of this Section 17.15. Tenant’s identification signage and other signage, including any directional signage outside the Premises (or visible from outside the Premises) shall be referred to herein, collectively, as “Tenant’s Signage.” All aspects of Tenant’s Signage, including, but not limited to, quality, design, color, style, lighting, size and specifications, as applicable, shall be (i) consistent with Landlord’s signage policy set forth on Exhibit D attached hereto and any other signage program for the Building or the Project which may be in effect from time to time, (ii) subject to Landlord’s prior written approval which shall not be unreasonably withheld, conditioned or delayed, and (iii) in compliance with all applicable governmental laws, ordinances, rules, regulations, codes and approvals. Tenant shall be responsible, at its sole cost and expense, for the installation, maintenance, repair and replacement of Tenant’s Signage. Upon the expiration or earlier termination of this Lease, Tenant shall, at Tenant’s sole cost and expense, remove Tenant’s Signage and repair any damage resulting therefrom. Notwithstanding anything to the contrary contained in this Section 17.15, Landlord, at its election, shall have the right to perform any and all installation, maintenance, repair, replacement and removal of Tenant’s Signage and to repair any damage resulting therefrom, in which instance Tenant shall pay to Landlord upon demand the cost of such installation, maintenance, repair, replacement, removal and repair within ten (10) days after receipt of an invoice. Tenant shall be responsible, at its sole cost and expense, for obtaining all governmental approvals for Tenant’s Signage, provided that Tenant shall not submit any applications or requests for governmental approvals without first obtaining Landlord’s prior written approval thereof which shall not be unreasonably withheld, conditioned or delayed, and provided further that Tenant shall provide written notice to Landlord of all hearings and meetings with any applicable governmental authority regarding Tenant’s applications or requests for governmental approvals not later than five (5) business days prior thereto. Subject to the foregoing, upon request by Tenant from time to time, Landlord agrees (at no cost to Landlord) to reasonably cooperate with Tenant in connection with Tenant’s efforts to obtain all governmental approvals for Tenant’s Signage, provided that Landlord shall have no obligation (and Tenant shall have no right) to agree to or to comply with any conditions which may be imposed upon Landlord or the Building or the Project in connection with any governmental approvals for Tenant’s Signage. Tenant hereby acknowledges and agrees that the governmental approvals for Tenant’s Signage are not conditions to the validity of this Lease, and in the event Tenant fails to obtain any such approvals, this Lease shall continue in full force and effect in accordance with its terms, except that Tenant shall have no right with respect to Tenant’s Signage which is not so approved. Should the name of the originally named Tenant herein be legally changed or should Tenant’s Signage be assigned to an Affiliate (any such other name referred to herein as a “New Name”), Tenant, at its sole cost and expense, shall be entitled to modify Tenant’s name as the same appears on Tenant’s Signage to reflect Tenant’s New Name, so long as Tenant’s New Name is not an Objectionable Name. In addition to the foregoing, should Tenant assign this Lease or sublet a portion of the Premises to an approved Transferee, Tenant, at its sole cost and expense, shall be entitled to allocate a portion of Tenant’s Signage to such approved Transferee and such approved Transferee shall be entitled to use such portion of Tenant’s Signage for the then-remaining Lease Term in accordance with the terms and conditions of this Section 17.15. As used herein, the term “Objectionable Name” shall mean any name which relates to an entity which is of a character or reputation, or is associated with a political orientation or faction, which is inconsistent with the quality of the Building or the Project, or

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which would otherwise reasonably offend a landlord of similar buildings in the vicinity of the Building.
Section 17.16    Merger.
The voluntary or other surrender of this Lease by Tenant, or a mutual cancellation thereof, or a termination by Landlord, shall not work a merger, and shall, at the option of Landlord, terminate all or any existing subtenancies or may, at the option of Landlord, operate as an assignment to Landlord of any or all of such subtenancies.
Section 17.17    Quiet Possession.
Landlord covenants that Tenant, upon timely paying the Rent for the Premises and timely observing and performing all of the covenants, conditions and provisions on Tenant’s part to be observed and performed hereunder, shall have quiet possession of the Premises for the Lease Term, subject to all of the covenants, conditions and provisions of this Lease. The foregoing covenant is in lieu of any other covenant express or implied.
Section 17.18    Easements.
Landlord reserves to itself the right, from time to time, to grant such easements, rights and dedications that Landlord deems necessary or desirable, and to cause the recordation of parcel maps and covenants, conditions and restrictions, so long as such easements, rights, dedications, maps and covenants, conditions and restrictions do not unreasonably interfere with Tenant’s use of or access to the Premises. Tenant shall sign any of the aforementioned or other documents, and take such other actions, which are reasonably necessary or appropriate to accomplish such granting, recordation and subordination of the Lease to same, upon request of Landlord, and failure to do so within ten (10) business days after a written request to do so shall constitute a material breach of this Lease, provided that Landlord shall reimburse Tenant for Tenant’s reasonable out-of-pocket expenses (including reasonable attorneys’ fees) necessarily incurred in the performance of Tenant’s obligations under this Section 17.18.
Section 17.19    Authority.
Each individual executing this Lease on behalf of a corporation, limited liability company or partnership or other corporate represents and warrants that he or she is duly authorized to execute and deliver this Lease on behalf of such entity in accordance with a duly adopted resolution of the governing group of the entity empowered to grant such authority, and that this Lease is binding upon said entity in accordance with its terms. Each party shall provide the other with a certified copy of its resolution within thirty (30) days after execution hereof, but failure to do so shall in no manner (i) be evidence of the absence of authority or (ii) affect the representation or warranty.
Section 17.20    Force Majeure Delays.
In any case where Landlord is required to do any act (other than the payment of money), and the performance of such act is prevented, delayed or stopped due to Acts of God or Nature,

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war, terrorism, civil commotion, fire, flood or other casualty, labor difficulties, shortages of labor or materials or equipment, government regulations, delay by government or regulatory agencies with respect to approval or permit process, unusually severe weather, the time for performance of such act (whether designated by a fixed date, a fixed time or a “reasonable time”) shall be deemed to be extended by the period of such prevention, delay or stoppage.
Section 17.21    Hazardous Materials.
(a)    Definition of Hazardous Materials and Environmental Laws.
Hazardous Materials” means any chemical, substance, petroleum, pollutant, product, waste or other material of any nature whatsoever (collectively called “Hazardous Materials”) subject to regulation pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. sections 9601, et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. section 1801, et seq.; the Resource Conservation and Recovery Act, 42 U.S.C. section 6901, et seq.; the Toxic Substances Control Act, 15 U.S.C. sections 2601, et seq.; the Clean Air Act, 42 U.S.C. sections 7401 et seq.; the Clean Water Act, 33 U.S.C. sections 1251, et seq.; the California Hazardous Waste Control Act, Health and Safety Code sections 25100, et seq.; the California Hazardous Substances Account Act, Health and Safety Code sections 26300, et seq.; the California Safe Drinking Water and Toxic Enforcement Act, Health and Safety Code sections 25249.5, et seq.; California Health and Safety Code sections 25280, et seq. (Underground Storage of Hazardous Substances); the California Hazardous Waste Management Act, Health and Safety Code sections 25170.1, et seq.; California Health and Safety Code sections 25501. et seq. (Hazardous Materials Response Plans and Inventory); California Health and Safety Code sections 25214.9 et seq. (Electronic Waste); or the Porter-Cologne Water Quality Control Act, California Water Code sections 13000, et seq.; all of the foregoing as may be amended from time to time; or any other federal, state or local statute, law, ordinance, resolution, code, rule, regulation, order or decree regulating, relating to or imposing liability (including, but not limited to, warning, disclosure, management, storage, disposal, release, response, removal and remediation costs) or standards of conduct or performance concerning any Hazardous Material as now or at any time hereafter may be in effect (collectively, “Environmental Laws”).
(b)    Use of Hazardous Materials.
Tenant shall not cause or permit any Hazardous Materials to be brought upon, kept or used in, on or about the Project by Tenant or Tenant Parties without the prior written consent of Landlord. Tenant shall, at all times, provide any required warnings or disclosure, and shall use, keep, store, and handle all such Hazardous Materials in or about the Project in compliance with all applicable Environmental Laws. Tenant shall not treat or dispose of Hazardous Materials at the Project. Tenant shall properly dispose of Hazardous Materials at an off-site facility in accordance with Environmental Laws, and shall properly remove from the Premises or the Project, as applicable, all Hazardous Materials used or brought onto the Premises or the Project by or at the direction of Tenant during the Lease Term prior to the expiration or earlier termination of the Lease.

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(c)    Environmental Indemnity.
Tenant agrees to indemnify, defend, protect and hold Landlord harmless from any liabilities, losses, claims, damages, penalties, fines, attorney’s fees, expert fees, court costs, remediation costs, investigation costs, or other expenses resulting from or arising out of a breach of this Section 17.21 or the use, storage, treatment, transportation, release, presence, generation, or disposal of Hazardous Materials on, from or about the Project, and/or subsurface or ground water, after the Delivery Date from an act or omission of Tenant (or Tenant’s successor) or any Tenant Parties.
(d)    Tenant’s Remediation Obligations.
If the presence of Hazardous Materials on the Project is a result of an act or omission of Tenant or any Tenant Parties (or their successors), and such Hazardous Materials contaminate the Project or any water or soil beneath the Project, Tenant shall promptly take all action necessary or appropriate to investigate and remedy that contamination, at its sole cost and expense, provided that Landlord’s consent to such action shall first be obtained, which consent shall not be unreasonably withheld, conditioned or delayed.
(e)    Notification.
Tenant shall promptly notify Landlord of (i) any release of Hazardous Materials in, on or about the Premises, and (ii) any communication received from any governmental entity concerning Hazardous Materials or the violation of Environmental Laws that relate to the Premises.
Section 17.22    Modifications Required By Landlord’s Lender.
If any current or prospective lender or ground lessor for the Building or the Project requests a modification of this Lease that will not increase Tenant’s cost or expense or materially and adversely change Tenant’s rights and obligations hereunder, then this Lease shall be so modified and Tenant shall execute whatever documents are reasonably required by such lender or ground landlord and deliver the same to Landlord within ten (10) days after the request.
Section 17.23    Brokers.
Landlord and Tenant represent and warrant to each other that they have had no dealings with any real estate broker or agent in connection with the negotiation of this Lease, except for the Broker defined in the Basic Terms, and that they know of no other real estate broker or agent who is entitled to a commission or finder’s fee in connection with this Lease through the party making such representation and warranty. Each party shall indemnify, protect, defend, and hold harmless the other party against all claims, demands, losses, liabilities, lawsuits, judgments, and costs and expenses (including reasonable attorneys’ fees) for any leasing commission, finder’s fee, or equivalent compensation alleged to be owning on account of the indemnifying party’s dealings with any real estate broker or agent.
Section 17.24    Survival.

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All covenants and obligations arising out of this Lease shall survive the expiration or earlier termination of this Lease and shall remain outstanding until satisfied in full.
Section 17.25    Confidentiality.
Neither Landlord nor Tenant shall make any public announcement or disclosure of the terms of this Lease to outside brokers or other third parties, before or after the Effective Date hereof, without the specific prior written consent of the other, except for such disclosures to the parties’ lenders, creditors, investors, partners, members, officers, employees, agents, consultants, attorneys and accountants as may be necessary to permit each party to perform its obligations hereunder.
Section 17.26    Telecommunications Equipment.
If Tenant determines that fiber optic lines or telecommunications carriers available to the Building are insufficient for Tenant’s telecommunications needs, Landlord will not unreasonably withhold its consent to Tenant’s request to add additional carriers (and Landlord will not charge any such carrier any additional fee or charge over and above the fees or charges payable by the existing carriers) and/or upgrade such systems, at Tenant’s sole cost and expense and subject to such rules, regulations and conditions as Landlord may reasonably require. To the extent such upgrades involve the placement of new fiber optic lines, such shall be located in existing conduits to the extent reasonably possible. In addition, Tenant may install, or cause a carrier, vendor or other operator selected by Tenant and acceptable to Landlord to install, maintain and operate microwave dishes and related equipment (collectively, the “Telecommunications Equipment”) on a site (the “Site”) located on the roof of the Building, provided that such Telecommunications Equipment is approved in advance by Landlord, which approval shall not be unreasonably withheld.
(a)    Any installation, maintenance, operation, alteration, repair or replacement of Telecommunications Equipment by or for Tenant shall be subject to all of the requirements and provisions of this Lease, including the terms and conditions of Section 6.03 Alterations. Landlord may also require that any such work, including work on or involving the roof (and including, without limitation, any roof penetrations approved by Landlord), be performed, at Tenant’s cost, by a contactor designated or approved by Landlord. Landlord may require that Tenant, or the carrier or operator, as applicable, enter into a telecommunications access agreement on Landlord’s standard form prior to any installation of Telecommunications Equipment. Notwithstanding anything to the contrary herein, Landlord acknowledges that Tenant desires to install Telecommunications Equipment similar to that shown on Exhibit H hereto on the roof of the Building and agrees not to unreasonably withhold Landlord’s consent to any such Telecommunications Equipment, subject to Landlord’s further approval of the location, size, design and materials of such Telecommunications Equipment, which approval shall not be unreasonably withheld.
(b)    If Tenant installs any Telecommunications Equipment, Tenant shall do so at its sole cost and expense, and Tenant shall obtain, at its sole cost and expense, any and all permits, authorizations and certificates, including, without limitation, zoning variances or

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changes, as may be required with respect to such Telecommunications Equipment from all governmental agencies. Landlord agrees to reasonably cooperate with Tenant to obtain same if required by applicable governmental agencies; provided, however, that Landlord shall not be obligated to incur any costs or accept the imposition of any zoning change or use restrictions affecting the Building.
(c)    Telecommunications Equipment installed or operated by or for Tenant shall not interfere with the operations (including, without limitation, transmissions or reception) of any other Telecommunications Equipment located in the Building.
(d)    Tenant shall repair any damage caused by Tenant’s installation, maintenance, operation, alteration, repair or replacement of Telecommunications Equipment, and shall indemnify, protect, defend and hold Landlord harmless from any and all claims, liabilities, damages or expenses (collectively, the “Claims”) associated therewith, including, without limitation: (i) any Claims by other tenants of the Premises or other third parties that Tenant’s installation, maintenance, operation, alteration, repair or replacement of Telecommunications Equipment has caused interference or interruption with the operation of other Telecommunications Equipment; and (2) any voiding of or other effect that Tenant’s installation, maintenance, operation, alteration, repair or replacement of Telecommunications Equipment may have on any warranty with respect to the roof or other portions of the Building. Landlord shall not be liable for any damage to or interference with Tenant’s business or any loss of income from Tenant’s business, or for loss of or damage to Tenant’s Telecommunications Equipment caused by or resulting from any damage to or interference with, or operation of Tenant’s Telecommunications Equipment, including, without limitation, maintenance, operation, alteration, repair or replacement of other Telecommunications Equipment in the Building, whether by or for Landlord, other tenants of the Premises, or other third parties, and Tenant waives all Claims against Landlord for the same, except that Landlord shall indemnify, protect, defend and hold Tenant harmless from all Claims (but in no event lost profits or other consequential damages) to the extent arising out of or in connection with the gross negligence or willful acts of Landlord or its agents, employees, or representatives. Landlord’s approval of Tenant’s installation of any Telecommunications Equipment shall not constitute a representation that any Telecommunications Equipment will function effectively in or on the Building.
Section 17.27    List of Exhibits and Schedules.
EXHIBIT A:
Real Property Legal Description, Project Site Plan and Premises Floor Plan
EXHIBIT B:
Memorandum of Commencement of Lease Term and Schedule of Base Rent
EXHIBIT C
Work Letter Agreement for Tenant Improvements and Interior Specification Standards
EXHIBIT D
Signage Exhibit

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EXHIBIT E
SNDA
EXHIBIT F:
Estoppel Certificate
EXHIBIT G:
Rules and Regulations
EXHIBIT H:
Telecommunications Equipment
SCHEDULE 1:
Charging Stations Site Plan
SCHEDULE 2:
Tri-Party Agreement
LANDLORD AND TENANT EACH HAS CAREFULLY READ AND HAS REVIEWED THIS LEASE AND BEEN ADVISED BY LEGAL COUNSEL OF ITS OWN CHOOSING AS TO EACH TERM AND PROVISION CONTAINED HEREIN AND, BY EXECUTION OF THIS LEASE, SHOWS ITS INFORMED AND VOLUNTARY CONSENT THERETO. EACH PARTY HEREBY AGREE THAT, AT THE TIME THIS LEASE IS EXECUTED, THE TERMS AND CONDITIONS OF THIS LEASE ARE COMMERCIALLY REASONABLE AND EFFECTUATE THE INTENT AND PURPOSE OF LANDLORD AND TENANT WITH RESPECT TO THE PREMISES.
Executed at Palo Alto, California, as of the reference date.
(Signatures continued on next page)

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LANDLORD:
 
ADDRESS:
395 PAGE MILL LLC,
 
 
a Delaware limited liability company
 
c/o Jay Paul Company
By:
/s/ Phillip A. Verinsky
 
Four Embarcadero Center,
Name:
Phillip A. Verinsky
 
Suite 3620
 
(Type or Print Name)
 
San Francisco, CA 94111
Title:
Vice President
 
 
 
 
ADDRESS:
 
 
 
TENANT:
 
(Before Commencement Date)
 
 
 
CLOUDERA, INC.,
 
1001 Page Mill Road
a Delaware corporation
 
Building 2
By:
/s/ Jim Frankola
 
Palo Alto, California 94304
Name:
Jim Frankola
 
Attention: Jim Frankola
 
(Type or Print Name)
 
 
Title:
CFO
 
With a copy to:
 
 
 
 
 
1001 Page Mill Road
 
 
Building 2
 
 
Palo Alto, California 94304
 
 
Attention: David Middler
 
 
 
 
 
(After Commencement Date)
 
 
 
 
 
395 Page Mill Road
 
 
Palo Alto, California 94304
 
 
Attn: Jim Frankola
 
 
 
 
 
 
 
With a copy to:
 
 
 
 
 
 
 
395 Page Mill Road
 
 
 
Palo Alto, California 94304
 
 
 
Attn: David Middler


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EXHIBIT A
PROJECT SITE PLAN AND PREMISES FLOOR PLAN
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PREMISES
Legal Description of Real Property For The Premises
Real property in the City of Palo Alto, County of Santa Clara, State of California, described as follows:
All of Parcel 1, as said Parcel is shown upon that certain Parcel Map entitled, “Parcel Map, consisting of all of Block 4 ‘Map of Sunnyside Addition to the Town of Mayfield’ (K Maps, 47) and portions Lots 1, 2, 7 & 8 of ‘Lambert Tract, Town of Mayfield’ (C Misc. Records, 350)”, which Map was filed for record in the Office of the Recorder of the County of Santa Clara, State of California on June 27, 1975 in Book 358 of Maps, at Page 23.


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EXHIBIT B
MEMORANDUM OF
COMMENCEMENT OF LEASE TERM
Pursuant to Article III, Section 3.01, paragraph (a) of the above-referenced Lease, the parties to said Lease agree to the following:
The Commencement Date of the Lease is __________, 20__.
The date for commencement of Base Rent for the Premises is ______________.
The date for commencement of payment of Operating Expenses, Real Property Taxes and Insurance Expenses is _________________.
Attached hereto as a part hereof is a true and correct schedule of Base Rent. The total Rentable Area of the Premises is an agreed upon 224,852 square feet of Rentable Area.
Each person executing this Memorandum certifies that he or she is authorized to do so on behalf of and as the act of the entity indicated. Executed as of ___________, 20__, at Palo Alto (Santa Clara County), California.
“Landlord”
 
 
395 PAGE MILL LLC, a Delaware limited liability company
 
 
By:
 
Name:
 
 
(Type or Print Name)
 
 
Title:
 
“Tenant”
 
 
CLOUDERA, INC.,
a Delaware corporation
 
 
By:
 
Name:
 
 
(Type or Print Name)
 
 
Title:
 

B-1

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

EXHIBIT C
WORK LETTER AGREEMENT FOR TENANT IMPROVEMENTS
AND INTERIOR SPECIFICATION STANDARDS
This Work Letter Agreement (“Work Letter”) shall set forth the terms and conditions relating to the construction of Tenant Improvements within the Premises. This Work Letter is essentially organized chronologically and is intended to address the issues of the construction of Tenant Improvements at the Premises, in sequence, as such issues will arise during the actual construction of the Premises. All references in this Work Letter to Articles or Sections of “the Lease” shall mean the relevant portions of the above referenced Lease to which this Work Letter is attached as Exhibit C, and all references in this Work Letter to Sections of “this Work Letter” shall mean the relevant portions of Sections 1 through 5 of this Work Letter.
SECTION 1
DELIVERY OF THE PREMISES
1.1    Condition of Premises. Landlord has constructed, at its sole cost and expense, the base, shell, and core (collectively, the “Base, Shell, and Core”). Notwithstanding anything set forth in this Tenant Work Letter to the contrary, Tenant shall accept the Base, Shell and Core from Landlord in their presently existing, “as-is” condition. Notwithstanding the foregoing, following the mutual execution and delivery of the Lease, Landlord shall, at Landlord’s sole cost and expense, construct and/or install, as the case may be, the following improvements in the Premises (collectively, the “Landlord Work”): Landlord shall deliver the Premises with the “incubator” space, the private offices and the corridor separating the kitchen from the outdoor patio area restored pursuant to the existing tenant’s restoration obligations depicted on Schedule Three attached hereto unless otherwise agreed to in writing by Landlord and Tenant.
SECTION 2
TENANT IMPROVEMENTS
2.1    Tenant to Construct. At Tenant’s sole cost and expense, including, subject to the terms of this Section 2.1, payment to Landlord of an amount equal to two percent (2.0%) of the hard construction costs associated with such improvements as an oversight fee (the “Construction Management Fee”). Tenant shall construct certain interior improvements in conformance with the Approved Working Drawings described below (“Tenant Improvements”) and subject to all the terms and conditions of the Lease and this Agreement, provided that a failure, for any reason, to complete the construction of the Tenant Improvements for the Premises by the Commencement Date therefor shall have no impact on the relevant Commencement Date and date for commencement of payment of Base Rent, which shall remain unchanged. To the extent such amount is in excess of the Construction Management Fee, Tenant shall reimburse Landlord for Landlord’s reasonable out-of-pocket design review costs in connection with each of the plans and working and construction drawings reviewed, by Landlord, pursuant to Article III below, within thirty (30) days of receipt of a reasonably detailed invoice by Tenant, in which

C-1

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

event Tenant shall be excused from paying the Construction Management Fee to Landlord. Any Tenant Improvements that require the use of Building risers, raceways, shafts and/or conduits, shall be subject to Landlord’s reasonable rules, regulations, and restrictions, including the requirement that any cabling vendor must be selected from a list provided by Landlord, and that the amount and location of any such cabling must be approved by Landlord. Notwithstanding the foregoing, Landlord hereby approves Isetta Data Communications (“IDC”) as an approved cabling vendor for purposes of performing certain portions of the Tenant Improvements. All Tenant Improvements for which the Tenant Improvement Allowance has been made available shall be deemed Landlord’s property under the terms of the Lease; provided, however, Landlord may, by written notice to Tenant at the time the Tenant Improvements are approved, require Tenant to remove the Tenant Improvements prior to the end of the Lease Term, or given following any earlier termination of this Lease, require Tenant, at Tenant’s expense, to remove any Tenant Improvements and to repair any damage to the Premises and Building caused by such removal and return the affected portion of the Premises to their condition existing prior to the installment of such Tenant Improvements.
2.2    Tenant Improvement Allowance.
(a)    Tenant Improvement Allowance. Landlord shall provide a tenant improvement allowance (the “Tenant Improvement Allowance”) in the amount of Four Million Four Hundred Ninety-Seven Thousand and Forty and 00/100 Dollars ($4,497,040.00), (i.e., $20.00 per square foot of Rentable Area in the Premises) to be used by Tenant solely for the Tenant Improvement Allowance Items described in Section 2.3 below in connection with improving the Premises pursuant to the Approved Working Drawings (as defined in Section 3.4 below).
(b)    Use of Funds. The Tenant Improvement Allowance shall be used towards the costs of Tenant Improvement Allowance Items (defined below) and Landlord shall be under no obligation to fund costs relating to furniture, equipment, including, without limitation, screening or viewing equipment, trade fixtures, moving expenses and other personal property. In no event shall Landlord be obligated to make disbursements of Landlord’s funds pursuant to this Work Letter in a total amount which exceeds the cost of the Tenant Improvement Allowance Items. All such improvements shall be subject to all of the terms of this Work Letter. The Tenant Improvement Allowance must be used on or before the date that is one (1) year after the Commencement Date of the Lease or any unused portions thereof shall be waived and forfeited as to Tenant. Also, if the actual cost of such improvements is less than the amount of the Tenant Improvement Allowance, the unused portions thereof shall be forfeited by Tenant.
2.3    Disbursement of the Tenant Improvement Allowance.
2.3.1    Tenant Improvement Allowance Items. Except as otherwise set forth in this Work Letter, the Tenant Improvement Allowance shall be disbursed by Landlord (pursuant to Landlord’s disbursement process as described below) for costs of the design and construction of the Tenant Improvements, including the following items and costs (collectively, the “Tenant Improvement Allowance Items”):

C-2

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

(i)    the payment of fees of the “Architect,” and the “Engineers,” as those terms are defined in Section 3.1 of this Work Letter and all fees paid by Tenant to, and the cost of documents and materials supplied by, a project manager and other construction and/or design consultants in connection with the design and construction of the Tenant Improvements as well as all other actual and documented out-of-pocket costs reasonably expended by Landlord or Tenant in connection with the construction of the Tenant Improvements;
(ii)    the payment of plan check, permit and license fees relating to construction of the Tenant Improvements;
(iii)    the cost of construction of the Tenant Improvements, including, without limitation, contractor’s fees and general conditions, costs of labor, materials, equipment, and services, testing and inspection costs, costs of trash removal, demolition, utility hook-up charges, hoist fees, parking fees and utilities usage;
(iv)    the cost of any changes to the Construction Drawings or Tenant Improvements required by the Applicable Laws, all of which shall be Tenant’s responsibility, at Tenant’s sole expense;
(v)    sales and use taxes, gross receipts taxes, fees (including, without limitation Title 24 fees); and
(vi)    the purchase and installation of the Charging Stations.
2.3.2    Disbursement of the Tenant Improvement Allowance. During the design and construction of the Tenant Improvements, Landlord shall make monthly disbursements of the Tenant Improvement Allowance for Tenant Improvement Allowance Items for the benefit of Tenant and shall authorize the release of monies for the benefit of Tenant pursuant to the disbursement process set forth below. On or before the twenty-fifth (25th) day of each month (a ”Submittal Date”), Tenant shall deliver to Landlord: (i) an application and certification (the ”Payment Application”) for payment of the “Contractor,” as that term is defined in Section 4.1 of this Work Letter (or for reimbursement to Tenant if Tenant has already paid the Contractor or other person or entity entitled to payment) or Tenant, as applicable, showing the schedule, by trade of percentage of completion of the Tenant Improvements in the Premises, detailing the portion of the work completed and the portion not completed; (ii) appropriate executed progress mechanics’ lien releases which comply with the applicable provisions of California Civil Code Section 8132, and unconditional releases (with respect to payments previously made); and (iii) invoices for non-Contractor payments and other information and documentation reasonably requested in good faith by Landlord or Landlord’s lender. If Tenant does not elect the above–referenced one installment payment upon the completion of the Tenant Improvements, on or before the date occurring thirty (30) days after the Submittal Date, and assuming Landlord receives all of the information described in items (i) through (iii), above, Landlord shall deliver a check to Tenant made payable to Tenant or if Tenant elects, to the Contractor, subcontractor, Architect, Engineer or consultant designated by Tenant for payment, up to the amount of the Tenant Improvement Allowance, in an amount equal to Landlord’s Share of the applicable Payment Application. Notwithstanding the foregoing, with respect to those

C-3

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

Tenant Improvement Allowance Items for which the payment scheme set forth in items (i) and (ii) of this Subsection 2.3.2 is not applicable (e.g., fees and expenses of the Architect or Engineers or any other pre-construction items, collectively, the “Non-Construction Allowance Items”), Landlord shall make disbursements of the Tenant Improvement Allowance therefor on a monthly basis in an amount equal to Landlord’s Share of the requested amount following Landlord’s receipt of invoices and other reasonable evidence that Tenant has incurred the cost for the applicable Non-Construction Allowance Items (unless Landlord has received a preliminary notice in connection with such costs, in which event conditional lien releases must be submitted in connection with such costs), and such other information and documentation reasonably required by Landlord or Landlord’s lender. As used herein, the term “Landlord’s Share” shall mean a percentage obtained by dividing the amount of the Tenant Improvement Allowance by the aggregate amount of the Tenant Improvement Allowance Items. By way of example only, if the Tenant Improvement Allowance were One Million Dollars ($1,000,000) and the aggregate amount of the Tenant Improvement Allowance Items was Two Million Dollars ($2,000,000), then Landlord’s Share would be fifty percent (50%). At no time shall the disbursed amount of the Tenant Improvement Allowance exceed the Tenant Improvement Allowance per square foot times the square foot of Rentable Area of the Premises being made ready for the next Commencement Date pursuant to the Lease and this Work Letter.
SECTION 3
CONSTRUCTION DRAWINGS
3.1    Preparation of Drawings. Landlord and Tenant hereby select and approve Studio O+A as the architect/space planner (the “Architect”) for purposes of the Lease and Work Letter. Tenant shall retain the Architect and engineering consultants approved by Landlord (the “Engineers”), to prepare all plans and engineering working drawings relating to the structural, mechanical, electrical, plumbing, HVAC, life safety, and sprinkler work to be conducted in the Premises. The plans and drawings to be prepared by Architect and the Engineers hereunder shall be referenced collectively as the “Construction Drawings.” All Construction Drawings shall comply with the Specifications and drawing format and specifications reasonably determined by Landlord, and shall be subject to Landlord’s approval (which approval shall not be unreasonably withheld, conditioned or delayed). The Construction Drawings shall contain the information listed on Schedule One attached hereto. Tenant and Architect shall verify, in the field, the dimensions and conditions as shown on the relevant portions of the base Building plans, and Tenant and Architect shall be solely responsible for the same, and Landlord shall have no responsibility in connection therewith. Landlord’s review of the Construction Drawings as set forth in this Section 3, shall be for its sole purpose and shall not imply Landlord’s review of the same, or obligate Landlord to review the same, for quality, design, code compliance or other like matters. Accordingly, notwithstanding that any Construction Drawings are reviewed by Landlord or its space planner, architect, engineers and consultants, and notwithstanding any advice or assistance which may be rendered to Tenant by Landlord or Landlord’s space planner, architect, engineers, and consultants and Landlord shall have no liability whatsoever in connection therewith and shall not be responsible for any omissions or errors contained in the Construction Drawings and Tenant’s waiver and indemnity set forth in Section 7.07(a) of the Lease shall

C-4

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

specifically apply to the Construction Drawings. Tenant shall be required to include in its contracts with the Architect and the Engineers a provision which requires ownership of all Construction Drawings to be transferred to Tenant upon the Substantial Completion of the Tenant Improvements and Tenant hereby grants to Landlord a non-exclusive right to use such Construction Drawings, including, without limitation, a right to make copies thereof. All Construction Drawings shall comply with the drawing format and specifications as determined by Landlord, and shall be subject to Landlord’s approval. Tenant and Architect shall verify, in the field, the dimensions and conditions as shown on the relevant portions of the base building plans, and Tenant and Architect shall be solely responsible for the same, and Landlord shall have no responsibility in connection therewith. Landlord’s review of the Construction Drawings as set forth in this Section 3, shall be for its sole purpose and shall not imply Landlord’s review of the same, or obligate Landlord to review the same, for quality, design, code compliance or other like matters. Accordingly, notwithstanding that any Construction Drawings are reviewed by Landlord or its space planner, architect, engineers and consultants, and notwithstanding any advice or assistance which may be rendered to Tenant by Landlord or Landlord’s space planner, architect, engineers, and consultants, Landlord shall have no liability whatsoever in connection therewith and shall not be responsible for any omissions or errors contained in the Construction Drawings, and Tenant’s waiver and indemnity set forth in this Lease shall specifically apply to the Construction Drawings.
3.2    Final Space Plan. Tenant shall supply Landlord with a signed final space plan for the Premises (the “Final Space Plan”) which Final Space Plan shall include a layout and designation of all office, rooms and other partitioning, their intended use, and equipment to be contained therein, and shall comply with the Specifications and include a layout and designation of all offices, rooms and other partitioning, their intended use, and equipment to be contained therein. Landlord may request clarification or more specific drawings for special use items not included in the Final Space Plan. Landlord shall deliver written notice to Tenant within ten (10) business days after Landlord’s receipt of the Final Space Plan for the Premises if the Final Space Plan is unsatisfactory or incomplete in any respect. If Tenant is so advised, Tenant shall cause the Final Space Plan to be revised to correct any deficiencies or other matters Landlord may reasonably require and submit the revised Final Space Plan to Landlord for its approval no later than ten (10) business days after Landlord delivers its advice. Landlord’s failure to advise timely shall be deemed approval.
3.3    Final Working Drawings. After the Final Space Plan has been approved by Landlord, Tenant shall supply the Architects and Engineers with a complete listing of standard and non-standard equipment and specifications, including, without limitation, B.T.U. calculations, electrical requirements and special electrical receptacle requirements for the Premises, to enable the Engineers and the Architect to complete the Final Working Drawings (as that term is defined below) in the manner as set forth below. Upon the approval of the Final Space Plan by Landlord and Tenant, Tenant shall promptly cause the Architect and the Engineers to complete the architectural and engineering drawings for the Premises, and Architect shall compile a fully coordinated set of architectural, structural, mechanical, electrical and plumbing working drawings with complete specifications in a form which is complete to allow subcontractors to bid on all of the work and to obtain all applicable permits (collectively, the

C-5

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

Final Working Drawings”) and shall submit to Landlord for Landlord’s approval four (4) copies signed by Tenant of such Final Working Drawings. The Final Working Drawings shall comply with the Final Space Plan and the specifications. Landlord shall advise Tenant within ten (10) business days after Landlord’s receipt if the Final Working Drawings are unsatisfactory or incomplete in any respect. If Tenant is so advised, Tenant shall immediately revise the Final Working Drawings in accordance with such review and any disapproval of Landlord in connection therewith and submit the revised Final Working Drawings to Landlord no later than ten (10) business days after Landlord delivers its advice. Landlord’s failure to advise timely shall be deemed approval.
3.4    Approved Working Drawings. The Final Working Drawings shall be approved by Landlord (the “Approved Working Drawings”) prior to the commencement of construction of the Premises by Tenant. After approval by Landlord of the Final Working Drawings, Tenant shall submit the same to the City of Palo Alto for all applicable building permits, and, in connection therewith, Tenant shall coordinate with Landlord in order to allow Landlord, at its option, to take part in all phases of the permitting process and shall supply Landlord, as soon as possible, with all plan check numbers and dates of submittal for Permits. Tenant hereby agrees that neither Landlord nor Landlord’s consultants shall be responsible for obtaining any building permit or certificate of occupancy for the Premises and that obtaining the same shall be Tenant’s responsibility; provided, however, that Landlord shall cooperate with Tenant in a timely manner in executing permit applications and performing other ministerial acts reasonably necessary to enable Tenant to obtain any such permit or certificate of occupancy. No material changes, modifications or alterations in the Approved Working Drawings may be made without the prior written consent of Landlord, which consent may not be unreasonably withheld, conditioned or delayed.
3.5    Specifications. Landlord has established specifications (the “Specifications”) for the Building standard components to be used in the construction of the Tenant Improvements in the Premises (collectively, the “Standard Improvement Package”), which Specifications shall be supplied to Tenant by Landlord. A copy of Landlord’s current Specifications are attached hereto as Schedule Two. The quality of Tenant Improvements shall be equal to or of greater quality than the quality of the Specifications, provided that Landlord may, at Landlord’s option, require the Tenant Improvements to comply with certain Specifications. Landlord may make changes to the Specifications for the Standard Improvement Package from time to time.
SECTION 4
CONSTRUCTION OF THE TENANT IMPROVEMENTS
4.1    Tenant’s Selection of Contractors.
4.1.1    The Contractor. Tenant hereby selects and Landlord hereby approves Novo Construction (“Contractor”) to be general contractor for the construction of the Tenant Improvements pursuant to a written construction contract (“Construction Contract”).
4.1.2    Tenant’s Agents. All subcontractors used by Tenant must be reasonably experienced in performance of comparable subtrade work in tenant improvement projects in first

C-6

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

class office buildings and, subject to the terms of this Section 4.1.2, approved in writing by Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. Tenant reserves the right to require competitive bids for the Tenant Improvement work; provided, however that (a) the mechanical and electrical subcontractors shall be selected from a list of at least three pre-approved subcontractors provided by Landlord, or if Tenant desires to use a subcontractor not on Landlord’s pre-approved list, said subcontractor shall be subject to Landlord’s reasonable approval and (b) Landlord reserves the right to require Tenant to use its subcontractors for any work related to the exterior building skin, fire alarm tie in, roofing or mechanical system controls; and (c) except as provided above, Tenant shall have the right to select, review, and approve all subcontractors, including information technology subcontractors, that will be involved in the design and construction of the Tenant Improvements, at Tenant’s sole discretion; provided, however said subcontractors are capable of performing the quality of work consistent with a Class A office/R&D building and the work performed by said subcontractors does not violate any of Landlord’s existing warranties. Tenant’s subcontractors, laborers, materialmen, and suppliers and the Contractor are collectively referred to herein as “Tenant’s Agents”).
4.2    Construction of Tenant Improvements by Tenant’s Agents.
4.2.1    Construction Contract, Cost Budget. Within five (5) business days of its execution by Tenant and Contractor, Tenant shall deliver a copy of the Construction Contract and the budget for the construction of the Tenant Improvements. To the extent additional costs are made necessary in order to make the Premises comply with Applicable Laws as a result of the Tenant Improvements, Tenant shall submit a new budget therefor by Landlord, which budget shall be subject to Landlord’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed.
4.2.2    Tenant’s Agents.
4.2.2.1    Landlord’s General Conditions for Tenant’s Agents and Tenant Improvement Work. Tenant’s and Tenant’s Agent’s construction of the Tenant Improvements shall comply with the following: (i) the Tenant Improvements shall be constructed in substantial accordance with the Approved Working Drawings and a construction schedule to be created on or before the commencement of construction by contractor and approved by Landlord which approval shall not be unreasonably withheld or delayed (“Approved Construction Schedule”); (ii) contractor shall take such action as is necessary to cause Tenant’s Agents to adhere to the Approved Construction Schedule; and (iii) Tenant shall abide by and cause all of Tenant’s Agents to abide by all rules made by Landlord’s building manager with respect to the use of freight, loading dock and service elevators, store of materials, coordination of work with the contractors of other tenants, and any other matter in connection with this Work Letter, including, without limitation, the construction of the Tenant Improvements. Tenant shall reimburse Landlord within ten (10) days after demand, for all costs of repair and cleanup incurred by Landlord for damage to the Premises, the Building or the Project caused by Tenant or

C-7

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

Tenant’s Agents or debris, litter or other materials or matter left within the premises at any time.
4.2.2.2    Requirements of Tenant’s Agents Indemnity. Tenant’s indemnity of Landlord as set forth in Section 7.07(a) of the Lease shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to any act or omission of Tenant or Tenant’s Agents, or anyone directly or indirectly employed by any of them, or in connection with Tenant’s non-payment of any amount arising out of the Tenant Improvements and/or Tenant’s disapproval of all or any portion of any request for payment. Such indemnity by Tenant, as set forth in Section 7.07(a) of the Lease, shall also apply with respect to any and all costs, losses, damages, injuries and liabilities, except to the extent caused by Landlord’s gross negligence or willful misconduct, related to Landlord’s performance of any ministerial acts reasonably necessary (i) to permit Tenant to complete the Tenant Improvements, and (ii) to enable Tenant to obtain any building permit or certificate of occupancy for the Premises. Each of Tenant’s Agents shall guarantee to Tenant and for the benefit of Landlord that the portion of the Tenant Improvements for which it is responsible shall be free from any defects in workmanship and materials for a period of not less than one (1) year from the date of completion thereof. Each of Tenant’s Agents shall be responsible for the replacement or repair, without additional charge, of all work done or furnished in accordance with its contract that shall become defective within one (1) year after the completion of the work performed by such contractor or subcontractors. The correction of such work shall include, without additional charge, all additional expenses and damages incurred in connection with such removal or replacement of all or any part of the Tenant Improvements, and/or the Building and/or the Common Areas that may be damaged or disturbed thereby. All such warranties or guarantees as to materials or workmanship of or with respect to the Tenant Improvements shall be contained in the Contract or subcontract and Tenant shall use good faith efforts to provide that such guarantees or warranties shall inure to the benefit of both Landlord and Tenant, as their respective interests may appear, and can be directly enforced by either. Tenant covenants to give to Landlord any commercially reasonable assignment (to the extent the guarantees and warranties are assignable) or other reasonable assurances which may be necessary to effect such right of direct enforcement or that Tenant will enforce such warranties and guaranties on Landlord’s behalf.
4.2.2.3    Insurance Requirements.
4.2.2.3.1    General Coverages. Tenant’s Contractor shall carry worker’s compensation insurance covering all of their respective employees, and shall also carry commercial general liability insurance, including property damage, all with limits, in form and with companies as are required to be carried by Tenant as set forth in Section 7.04 of the Lease.
4.2.2.3.2    Special Coverages. Tenant shall carry “Builder’s All Risk” insurance in an amount approved by Landlord covering the construction of the Tenant Improvements, and such other insurance as Landlord may require, it being understood and

C-8

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

agreed that the Tenant Improvements shall be insured by Tenant pursuant to Section 7.02 of the Lease immediately upon completion thereof. Such insurance shall be in amounts and shall include such extended coverage endorsements as may be reasonably required by Landlord including, but not limited to, the requirement that all of Tenant’s Agents shall carry excess liability and Products Completed Operation Coverage insurance, each in amounts not less than $1,000,000 per incident, $2,000,000 in aggregate, and in form and with companies as are required to be carried by Tenant as set forth in Section 7.05 of the Lease.
4.2.2.3.3    General Terms. Certificates for all insurance carried pursuant to this Section 4.2.2.4 shall be delivered to Landlord before the commencement of construction of the Tenant Improvements and before the Contractor’s equipment is moved onto the Project. All such policies of insurance must contain a provision that the company writing said policy will give Landlord thirty (30) days prior written notice of any cancellation or lapse of the effective date or any reduction in the amounts of such insurance. In the event that the new Tenant Improvements are damaged by any cause during the course of the construction thereof, Tenant shall promptly repair the same at Tenant’s sole cost and expense. Tenant’s Agents shall maintain all of the foregoing insurance coverage in force until the Tenant Improvements are fully completed and accepted by Landlord, except for any Products and Completed Operation Coverage insurance required by Landlord, which is to be maintained for ten (10) years following completion of the work and acceptance by Landlord and Tenant. All policies carried under this Section 4.2.2.4 shall insure Landlord and Tenant, as their interests may appear, as well as contractors and Tenant’s Agents. All insurance, except Workers’ Compensation, maintained by Tenant’s Agents shall preclude subrogation claims by the insurer against anyone insured thereunder. Such insurance shall provide that it is primary insurance as respects the Landlord and that any other insurance maintained by Landlord is excess and noncontributing with the insurance required hereunder. The requirements for the foregoing insurance shall not derogate from the provisions for indemnification of Landlord by Tenant under Section 4.2.2.2 as set forth in this Work Letter.
4.2.3    Governmental Compliance. The Tenant Improvements shall comply in all respects with the following: (i) any state, federal, city or quasi-governmental laws, codes, ordinances and regulations, as each may apply according to the rulings of the controlling public official, agent or other person; (ii) applicable standards of the American Insurance Association (formerly, the National Board of Fire Underwriters) and the National Electrical Code, to the extent such standards are legally binding only; and (iii) building material manufacturer’s specifications.
4.2.4    Inspection by Landlord. Landlord shall have the right to inspect the Tenant Improvements at all reasonable times, provided however, that Landlord’s failure to inspect the Tenant Improvements shall in no event constitute a waiver of any of Landlord’s rights hereunder nor shall Landlord’s inspection of the Tenant Improvements constitute Landlord’s approval of the same. Should Landlord disapprove any portion of the Tenant Improvements, Landlord shall notify Tenant in writing of such disapproval and shall specify the items disapproved. Any defects or deviations in, and/or disapproval by Landlord of, the Tenant Improvements shall be rectified by Tenant at no expense to Landlord, provided however, that in

C-9

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

the event Landlord determines that a defect or deviation exists or disapproves of any matter in connection with any portion of the Tenant Improvements and such defect, deviation or matter might adversely affect the mechanical, electrical, plumbing, heating, ventilating and air-conditioning or life-safety systems of the Building, the structure or exterior appearance of the Building or any other tenant’s use of such other tenant’s leased premises, Landlord may take such action as Landlord deems necessary, at Tenant’s expense and without incurring any liability on Landlord’s part, to correct any such defect, deviation and/or matter, including, without limitation, causing the cessation of performance of the construction of the Tenant Improvements until such time as the defect, deviation and/or matter is corrected to Landlord’s satisfaction.
4.2.5    Meetings. Commencing upon the execution of this Lease, Tenant shall hold periodic meetings at a reasonable time with the Architect and the Contractor regarding the progress of the preparation of Construction Drawings and the construction of the Tenant Improvements. Tenant shall provide Landlord with reasonable advance written notice of all such meetings to enable landlord’s representative to attend and participate.
4.3    Substantial Completion. For purposes of the Lease and this Work Letter, “Substantial Completion” of the Premises shall occur upon the completion of construction of the Tenant Improvements in the Premises pursuant to the Approved Working Drawings, with the exception of any punch list items and any tenant fixtures, work-stations, built-in furniture or equipment to be installed by Tenant or under the supervision of Contractor.
4.4    Notice of Completion; Copy of Record Set of Plans. Within ten (10) days after completion of construction of the Tenant Improvements, Tenant shall cause a Notice of Completion to be recorded in the office of the Recorder of the County of Santa Clara in accordance with Section 8182 of the Civil Code of the State of California or any successor statute, and shall furnish a copy thereof to Landlord upon such recordation. If Tenant fails to do so, Landlord may execute and file the same on behalf of Tenant as Tenant’s agent for such purpose, at Tenant’s sole cost and expense. At the conclusion of construction, (i) Tenant shall cause the Architect and Contractor (A) to update the Approved Working Drawings as necessary to reflect all changes made to the Approved Working Drawings during the course of construction, (B) to certify to the best of their knowledge that the “record-set” of “as-built” drawings are true and correct, which certification shall survive the expiration or termination of this Lease, and (C) to deliver to Landlord a digital CAD set and two (2) sets of copies of such record set of drawings within sixty (60) days following issuance of a certificate of occupancy for the Premises, and (ii) Tenant shall deliver to Landlord a copy of all warranties, guaranties, and operating manuals and information relating to the improvements, equipment, and systems in the Premises.
4.5    Tenant Delays. For the purposes of this Work Letter and the Lease, “Tenant Delay” means either: (i) Tenant’s failure to fulfill its obligation with respect to provide either documents or approvals within the time periods specified therefore herein, (ii) any Change Orders requested by Tenant, (iii) a breach by Tenant of the terms of this Work Letter or the Lease, (iv) changes in any of the Construction Drawings after disapproval of the same by Landlord or because the same do not comply with Applicable Laws, (v) Tenant’s requirement for materials, components, finishes or improvements which are not available in a commercially

C-10

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

reasonable time given the anticipated Delivery Date of the Premises, or which are different from, or not included in, the Standard Improvement Package, (vi) changes to the Base, Shell and Core required by the Approved Working Drawings, or (vii) an act or omission of Tenant or Tenant’s Agents which interferes with the progress of construction of the any work performed by Landlord in the Building.
SECTION 5
MISCELLANEOUS
5.1    Tenant’s Representative. Tenant has designated Steve Hirai as its sole representative with respect to the matters set forth in this Work Letter, who shall have full authority and responsibility to act on behalf of the Tenant as required in this Work Letter.
5.2    Landlord’s Representative. Landlord has designated Janette D’Elia as its sole representative with respect to the matters set forth in this Work Letter, who, until further notice to Tenant, shall have full authority and responsibility to act on behalf of the Landlord as required in this Work Letter.
5.3    Time of the Essence in This Tenant Work Letter. Unless otherwise indicated, all references herein to a “number of days” shall mean and refer to calendar days. If any item requiring approval is timely disapproved by Landlord, the procedure for preparation of the document and approval thereof shall be repeated until the document is approved by Landlord.
5.4    Tenant’s Lease Default. Notwithstanding any provision to the contrary contained in this Lease, if any material default as described in Section 12.01 of Lease or failure by Tenant to timely observe or perform an obligation under this Work Letter has occurred at any time on or before the completion of the Tenant Improvements, then (i) in addition to all other rights and remedies granted to Landlord pursuant to the Lease, Landlord shall have the right to cause Contractor to cease the construction of the Tenant Improvements (in which case, Tenant shall be responsible for any further delay in the completion of the Tenant Improvements caused by such work stoppage), and (ii) all other obligations of Landlord under the terms of this Work Letter shall be forgiven until such time as such default is cured pursuant to the terms of the Lease (in which case, Tenant shall be responsible for any delay in the completion of the Tenant Improvements caused by such inaction by Landlord), and (iii) the date on which payment of Base Rent is to commence under the Lease shall not be affected.
5.5    Tenant’s Agents. All subcontractors, laborers, materialmen, and suppliers retained directly by Tenant shall conduct their activities in and around the Premises, the Building or the Project in a harmonious relationship with all other subcontractors, laborers, materialmen and suppliers at the Premises, the Building or the Project.
5.6    Change Orders. No material changes, modifications or alterations in the Approved Working Drawings in the Tenant Improvement work pursuant thereto (collectively referred to as “Change Orders”) shall be made by Tenant without the prior written consent of Landlord, which consent shall not be unreasonably withheld. Landlord will respond to Tenant’s

C-11

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

submission of all requests for Change Orders for Landlord approval within five (5) business days from Landlord’s actual receipt. All requests for Change Orders shall be made in writing. Once approved in writing, such Change Orders shall become a part of the Approved Working Drawings. Without limiting the foregoing, a Change Order shall be automatically deemed “material” if such Change Order exceeds One Hundred Thousand Dollars ($100,000) in cost or if it will adversely affect any of the building systems or structure.
5.7    Assignment of the Risk. Tenant accepts, assumes and shall be solely responsible for all risks for the construction and installation of the Tenant Improvements other than for risks resulting from the gross negligence or willful misconduct of Landlord or Landlord’s employees, agents, contractors or subcontractors.
5.8    No Partnership. Nothing in this Agreement shall cause Landlord and Tenant to be partners or joint venturers.
5.9    Hazardous Materials. If the construction of the Tenant Improvements or Tenant’s move into the Premises will involve the use of Hazardous Materials, Tenant shall comply with the terms and conditions of the Lease regarding such Hazardous Materials.
5.10    Schedules. Attached hereto and incorporated herein by reference are the following schedules:
Schedule One to Exhibit C - Construction Drawing Requirements
Schedule Two to Exhibit C – Tenant Improvement Specifications
Schedule Three to Exhibit C – Existing Tenant Restoration Plan

C-12

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

SCHEDULE ONE TO EXHIBIT C
CONSTRUCTION DRAWINGS REQUIREMENTS
I.    Floor Plans Showing:
1.
Location and type of all partitions.
2.
Location and type of all doors. Indicate hardware and provide keying schedule.
3.
Location and type of glass partitions, windows, and doors. Indicate framing and reference full-height partitions.
4.
Locations of telephone equipment room.
5.
Critical dimensions necessary for construction, with indication of required clearances.
6.
Location and types of all electrical items: outlets, switches, telephone outlets and lighting.
7.
Location and type of equipment that will require special electrical requirements. Provide manufacturers’ specifications for use and operation, including heat output.
8.
Location, weight per square foot, and description of any heavy equipment or filing system.
9.
Requirements for special air-conditioning or ventilation.
10.
Location and type of plumbing.
11.
Location and type of kitchen equipment.
12.
Location, type and color of floor covering, wall covering, paint and finishes.
II.    Details Showing
1.
All millwork with verified dimensions of all equipment to be built in.
2.
Corridor entrance.
3.
Bracing or support of special walls, glass partitions, etc., if desired. If not included with the plans, Tenant’s engineer will design all support or bracing required at Tenant’s expense.
III.    Additional Information
1.
Provide Landlord with Title 24 energy calculations.

C-13

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

SCHEDULE TWO TO WORK LETTER
TENANT IMPROVEMENT SPECIFICATIONS
INTERIOR SPECIFICATION STANDARDS
ABBREVIATED BUILDING STANDARDS
Note: The Lessee Improvements shall be Class “A” and, their quality must be at a minimum, per the following standards:
GENERAL OFFICE
CUSTOM CABINETRY
SCOPE: All materials and labor for the construction and installation of Cabinetry and all related accessories per WIC Standards.
A.
Trade Standards: Woodworking Institute of California (WIC) latest edition Section 15 and 16 for plastic laminated casework and plastic laminated countertops. Color of plastic laminate to be selected by Architect.
B.
All cabinetry to be constructed to “Custom-Grade” Specifications. Cabinetry to be flush overlay construction.
C.
Plastic Laminate: High Pressure thermoset laminated plastic surfacing material to equal or surpass NEMA LD3, Nevamar, WilsonArt or approved equal.
1.    Countertops, shelf-tops, splashes, and edges: Grade GP 50, 0.050 inches thick.
2.    All other exposed vertical surfaces: Grade GP 28, 0.028 inches thick.
3.    Semi-exposed backing sheet: Grade CL 20, 0.020 inches thick.
4.    Concealed backing sheet: Grade BK 20, 0.020 inches thick.
D.
Adhesives: Bond surfaces to Type 11 as recommend by Plastic Laminate Manufacturer.
E.
Hinges: Heavy-duty concealed self-closing hinges. Amount of hinges per Door per WIC. Stanley or approved equal.
F.
Door and Drawer Pulls: Wire-pull with 4-inch centers; Dull Chrome finish; Stanley 4483 or approved equal.
G.
Drawer slides: Heavy-duty grade with ball-bearings. Stanley, Klein, or approved equal.
H.
Door Catches: Heavy-duty commercial friction type.
1.
Recessed Adjustable Shelf Standards: Aluminum or zinc-plated recessed type; Knape & Vogt with clips or approved equal.
I.
Base and Wall Cabinets including doors: 3/4-inch thick medium density particleboard:
1.
Conceal all fastenings.
2.
Provide clear spaces as required for mechanical and electrical fittings.
3.
Plastic laminate and self-edge all shelves.
4.
Provide 3/4-inch thick doors and drawer faces.
5.
Unless indicated otherwise, all shelving to be adjustable.
6.
Provide back and ends on all cabinets.
7.
All exposed cabinet faces to be finished to match cabinet face.
J.
Countertops and Shelving: 3/4-inch thick medium density particleboard. Backsplash to be 3/4 inches thick, glued and screwed into top with scribed edges. Joints in countertop to be not closer than 24 inches from sinks. Joints shall be shop fitted, splined, glued and mechanically fastened.
K.
Installation of Cabinetry shall be per WIC instructions, Custom Grade.

C-14

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

WOOD DOORS
SCOPE:
All materials and labor necessary for the installation of Wood Doors, required accessories and preparations for hardware.
A.
Non-rated Wood Doors: 1-3/4 inch thick, flush, solid core, plain sliced Select White Maple veneer with Select White Maple edge. Cores may be either of the following: Glued block Hardwood Core per NWMA or Particleboard Core per NWMA. Manufacturer: Algoma, Weyerhaeuser, or approved equal.
B.
Fire-rated Wood Doors: 1-3/4 inch thick, flush, solid core, plain sliced Select White Maple face veneer with Select White Maple Edge with mineral core per rating. Manufacturer: Algoma, Weyerhaeuser, or approved equal. Doors shall have a permanent UL label.
C.
Vision Panels (where applies): Fire rated vision panel where required. Set in square metal stop to match metal doorstops as provided by doorframe manufacturer.
D.
Doors shall be 8’- 0” x 3’-0” leafs typical.
E.
Water base transparent finish, no added formaldehyde.
ALUMINUM DOOR AND WINDOW FRAMES
SCOPE:
All materials and labor necessary for the installation of Aluminum Door Frames.
A.
Frame Manufacturers: Raco, or Ragland Manufacturing Company, Inc.
B.
Door Frames: Non-rated and 20-minute label, Raco “Trimstyle” frame with Trim 700 (3/8 inch by 1- 1/2 inch) with no exposed fasteners.
C.
Finish, Door and Window Frame Extrusions, Wall Trim:
1.
Painted and oven-cured with “Duralaq” finish.
2.
Color: Clear.
3.
Finish shall meet or exceed requirements of AAMA Specifications 603.
4.
Coat inside of frame profile with bituminous coating to a thickness of 1/16 inch where in contact with dissimilar materials.
DOOR HARDWARE
SCOPE:
All materials and labor for the installation of all Door Hardware, locksets, closers, hinges, miscellaneous door hardware.
A.
Swinging Door Lockset and Cylinder: Schlage “L” series with lever #17 handle with 6 pin cylinder.
B.
Keyway: Furnish blank keyways to match existing master-key system. Match existing keyways.
C.
Finishes: Satin Chrome, 626 finish. Paint closers to match.
D.
Kickplates: 16 gauge stainless steel; 10 inches high: width to equal door width less 2 inches.
HARDWARE SCHEDULE
Hardware Group A (Typical, rated, single door)
1
Lockset
Schlage
L9050PD
1-1/2 pair
Butt Hinges
Hager
BB1279
1
Closer
Norton
700 Series
1
Stop
Quality
(332 @ carpet)
1
Smoke Seal
Pemko
Hardware Group B (Typical, rated, closet/service door)
1
Lockset
Schlage
L9080PD
1-1/2 pair
Butt Hinges
Hager
BB1279
1
Closer
Norton
700 Series w/ hold-open
1
Stop
Quality
(332 @ carpet)
1
Smoke Seal
Pemko

C-15

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

Hardware Group C (Typical, non-rated door)
1
Lockset
Schlage
L9050PD
1-1/2 pair
Butt Hinges
Hager
BB1279
1
Stop
Quality
(332 @ carpet)
Hardware Group D (Typical, non-rated, closet/service door)
1
Lockset
Schlage
L9080PD
1-1/2 pair
Butt Hinges
Hager
BB1279
1
Stop
Quality
(332 @ carpet)
Hardware Group E (Card-access door)
1
Electric Lockset
Schlage
L9080PDGU
1-1/2 pair
Butt Hinges
Hager
BB1279 – NRP
(2 pr @ 8’ door)
 
1
Electric Butt
Hager
1
Closer
Norton
700 Series w/ hold-open
1
Stop
Quality
(332 @ carpet)

Hardware Group F (Typical, double door)
1
Electric Lockset
Schlage
L9050PD
3 pair
Butt Hinges
Hager
BB1270
1
Auto Flush Bolt
Glyn Johnson
FB-8
1
Dustproof Strike
Glyn Johnson
DP2
1
Closer
Norton
7700 Series
2
Stop
Quality
(332 @ carpet)
1
Astragal
Pemko
1
Coordinator
Glyn Johnson
1
Smoke Seal
Pemko
GLAZING
SCOPE: All materials and labor for the installation of Glass.
A.
Manufacturers: PPG Industries, or Viracon, Inc. See glazing schedule below.
B.
Shop prepares all glazing. Edges to have no chips or fissures.
C.
Glazing Materials:
1.
Safety Glass: ASTM C1048, fully tempered with horizontal tempering, Condition A uncoated, Type 1 transparent flat, Class 1 clear, Quality q3 glazing select, conforming to ANSI Z97.1.
2.
Mirror Glass: Clear float type with copper and silver coating, organic overcoating, square, polished edges, 1/4-inch thick.
3.
Wire Glass: Clear, polished both sides, square wire mesh of woven stainless steel wire 1/2 inch x 1/2 inch grid; 1/4 inch thick.
4.
Tempered Glass: 1/4 inch thick, no tong marks. UL rated for 1 -hour rating.
5.
Spacers: Neoprene.
6.
Tape to be poly-iso-butylene.
D.
Schedule:
1.
Type A: 1/4-inch thick mirror, annealed, heat strengthened, or full tempered as required.
2.
Type B: 1/4 inch thick clear float glass, annealed, heat strengthened, or full tempered as required.
3.
Type C: 1/4-inch thick wire glass plate, square pattern “Baroque.”

C-16

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

LIGHT GAUGE METAL FRAMING
SCOPE: All materials and labor necessary for the installation of metal framing and related accessories.
A.
Structural Studs: 14 gauge punched channel studs with knurled screw-type flanges, prime-coated steel. Manufacturer: United States Gypsum SJ or approved equal. Submit cut-sheet of material.
B.
Partition Studs: 20 gauge studs with key-hole shaped punch-outs at 24 inches on center. Manufacturer: United States Gypsum ST or approved equal.
C.
Fasteners for Structural Studs: Metal screws as recommended by metal system manufacturer. Weld at all structural connection points.
D.
Reinforce framed door and window openings with double studs at each jamb (flange-to-flange and weld) and fasten to runners with screws and weld. Reinforce head with 14 gauge double stud same width as wall. Screw and weld.
E.
Provide all accessories as required to fasten metal-framing per manufacturers recommendations.
F.
Provide and install flat-strapping at all structural walls (walls with concrete footings beneath the walls). Minimum bracing shall be 25 % of structural walls shall be braced with flat-strapping per Manufacturers recommendations. Weld at all strap ends and at all intermediate studs.
G.
Provide foundation clips at 4’-0” on center at structural walls. Anchor with 1/2 inch diameter by 10 inch long anchor bolts.
H.
Non-structural interior partitions shall be anchored with power-driven fasteners at 4’-0” on center at the concrete slab.
ACOUSTIC CEILING SYSTEM
SCOPE:
All materials and labor for the installation of the Acoustic Ceiling System including T-Bar system, Acoustic Ceiling Panels, Suspension wiring and fastening devices and Glued-down Ceiling Panels.
A.
Manufacturer: Armstrong, or approved equal. Exposed 9/16” T-bar system with shadow line wall trim; factory painted; steel construction; rated for intermediate duty.
D.
Acoustical Tile: “Second Look”, conforming to the following:
1.    Size: 24 x 48 inches.
2.    Thickness: 3/4 inches.
3.    Composition: Mineral.
4.    NRC Range: .55 to .60.
5.    STC Range: 35 to 39.
6.    Flame Spread: ASTME84,0-25. UL Label, 25 or under.
7.    Edge: Tegular, Lay-in.
8.    Surface Color: White.
9.    Surface Finish: Factory-applied washable vinyl latex paint.
G.
Installation to be per ASTM C636 structural testing. Lateral support for each 96 square feet of ceiling flared at 45 degrees in 4 directions.
H.
Provide clips for panel uplift restraints at all panels, 2 per panel.
GYPSUM WALLBOARD
SCOPE:
Provide all materials and labor for the installation of Gypsum Wallboard including all accessories and finishes.
A.
Standard Gypsum Wallboard: ASTM C36;. Ends square cut, tapered edges.
B.
Fire Resistant Gypsum Wallboard: ASTM C36, 5/8 inches thick Type X. Ends square cut, tapered edges. See Drawings for locations.
C.
Moisture-resistant gypsum wallboard: ASTM C630-90.

C-17

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

D.
Joint-reinforcing Tape and Joint Compound: ASTM C475, as manufactured by or recommended by wallboard manufacturer. Minimum 3 coat application for a smooth finish.
E.
Corner Bead: Provide at all exposed outside corners;
F.
L-shaped edge trim: Provide at all exposed intersections with different materials.
G.
All work shall be done in accordance with the USG recommended method of installation.
1.    Finish: level 4 smooth, non-textured typical.
2.    Lobby Finish: level 5 smooth, non-textured
PAINTING
A.
Paint Manufacturers: ICI, Dunn-Edwards, Benjamin Moore, all with Low VOC content.
Paint colors shall be selected by the Architect.
D.
Painting Schedule: Provide for up to 6 different color applications – (more colors than 6 need prior approval.)
E.
Interior Gypsum Wallboard:
1.
Primer: Vinyl Wall Primer/Sealer.
2.
1 stand 2nd Coat: Eggshell Acrylic Latex.
F.
Metal Framing:
1. Primer: Red Oxide, shop-primed (for non-galvanized) if exposed.
G.
Wood Work, Wood Doors:
1. Two coats of transparent finish. Sand lightly between coats with steel wool.
INSULATION
A.    R-15 in exterior walls.
B.    R-25 on Roof.
C.    Sound batts in conference, restroom and lobby walls, and over top of partition walls in ceiling space
ROOF EQUIPMENT
A.    Galvanized steel mechanical platform and associated access stairs and guard rail system.
B.
Roof screen to coordinate with detail of exterior skin, design and materials to be approved by architect.
FULL HEIGHT GLAZED PARTITION
A.    ¼” glazed partition, in building standard aluminum frame.
FINISHES
A.    Vinyl Composite Tile: Armstrong stonetex, 12” x 12”.
B.    Sheet Resilient flooring: Forbo Linoleum or equal
C.    Resilient Base: Roppe Pinnacle rubber wall base, 4” toed at resilient floors and flat type at carpet.
D.    Window Coverings: Miniblinds, Levelor, color: TBD.
E.    Carpet:
Option 1: (loop pile)    Designweave, Techno, 26 oz. (Direct glue
installation) or equal.
Option 2: (loop pile)    Designweave, Up Front, 28 oz. (Direct glue
installation) or equal.
Option 3: (loop pile)    Designweave, Rewire, 28 oz. (Direct glue
installation) or equal.

C-18

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

KITCHEN FIXTURES
A.
Sink: Ekkay stainless steel, GECR-2521-L&R, 20 gauge, 25”w x 21 ¼” D x 5 3/8” D, ADA compliant.
B.
Kitchen Faucet: American Standard, Silhouette Single control, #4205 series, spout 9 ¾”, 1.5-2.0 GPM flow restrictors.
KITCHEN APPLIANCES
A.    Dishwasher:
Option 1:    GE GSD463DZWW, 24’W x 24 ¾” D x 34-35” H, 9 gallons/wash.
Option 2:    Bosch, SHU5300 series, 5.4 gallons/wash-with water heater.
B.    Refrigerator:
Full Size:    GE, “S” series top-mount, TBX16SYZ, 16.4 cubic feet, recessed,
recessed handles, 28” W x 29 1/8” D x 66 ¾” H, white, optional
factory installed ice-maker.
Under-counter:
Option 1:    U-Line, #29R, 3.5 cubic feet, white.
Option 2:    U-Line, Combo 29FF, Frost Free with factory installed
icemaker, 2.1 cubic feet, white.
C.    Microwave:        GE, Spacesaver II JEM25WY, Midsize, 9 cubic feet, 800 watts, Energy Star
23 13/16” W x 11 13/16”D x 12 5/16” H.
Option 1:        Under counter Mounting Kit, #4AD19-4.
Option 2:        Accessory Trim Kit # JXB37WN, 26 1/8” W X 18 1/4” H
(built-in application).
D.    Garbage Disposal:    ISE #77, ¾” horsepower, Energy Star.
E.    Water Heater:    To be selected by DES.
PUBLIC SPACES
FRONT BUILDING LOBBY
Walk Off Matts:
Design Materials, Sisel, Calcutta #68. Natural, 100% coir.
Floor Tile:
3/8” x 18” x 18” Recycled Content Porcelain Tiles, Manufacturer: Daltile, Crossville or equal, set in mortar bed in recessed slab as approved by Owner.
Transition Strips:
5/16” x 1 ½” x random length strips, cherry wood flooring.
Corridor Carpeting:
Carpet over pad, Atlas, PacifiCrest 28oz loop pile or better or as approved by Owner.
Lobby Ceiling:
Suspended gypsum board ceiling, Painted.
Building Lobby:
Akarl shades hanging #J1-9 ¾” x 5’-2” or equal as approved Pendant Fixture by owner.
Stairs &
P & P Railing, Modesto with custom cherry guard rail
Mezzanine Railing:
Rep: Oliver Capp (805) 241-8810. Hand and guard railing P & P
 
Railings, Modesto stainless steel railing with horizontal spirals
 
and custom cherry guard rail cap by others, fittings dark gray
 
metallic or equal as approved by Owner.


C-19

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

BACK BUILDING LOBBY & EMERGENCY STAIRS
Walk Off Matts:
Design Materials, Sisal, Calcutta #68, Natural, 100% coir.
Treads & Landings:
Carpet covered concrete, as approved by Owner.
Stringers, Risers
Painted steel stringer, eggshell finish
& Handrails
enamel.
Ceiling:
Suspended gypsum board ceiling.
ELEVATORS
Cars:
(1) 3800 lb, (1) 3500 lb 150 ft/min by Otis.
Elevator Doors:
Stainless Steel.
Elevator
Interior Paneling:
Cherry veneer with stainless steel reveals and railing.
Elevator Floor:
Slate 3/8” x 18” x 18” tile as approved by Owner.
RESTROOMS
Counter tops:
Stone/marble, Solid Surface or equal as approved by Owner.
Walls at Lavatories:
Eggshell finish, latex paint, Benjamin Moore.
Floor at Toilets:
2” x 2” matte porcelain ceramic floor tiles, thin set, Dal-tile.
Walls at Toilets:
2” x 2” matte porcelain ceramic wall tiles, thin set, Dal-tile.
Ceiling:
Suspended gypsum board ceiling.
Toilet compartments:
 

A.
Manufactured floor-anchored metal toilet compartments and wall-hung urinal screens.
B.
Approved Manufacturer, Global Steel Products Corp, or approved equal.
C.
Toilet Partitions: Stainless Steel finish.
D.
Hardware: Hinges: Manufacturer’s standard self-closing type that can be adjusted to hold door open at any angle up to 90 degrees. Latch and Keeper: Surface-mounted latch unit, designed for emergency access, with combination rubber-faced door strike and keeper. Coat Hook: Combination hook and rubber-tipped bumper. Door Pull: Manufacturer’s standard.
Ceramic Tile
A.
Manufacturer: Dal-Tile or approved equal.
B.
Size: 4-1/4” x 4-1/4” for walls, 8 x 8 for floors, ¾” liner strip as accent.
C.
Glaze: Satin glaze for walls, unglazed tile for floors.
D.
Color: As selected by Architect.
E.
Accessories: Base, corners, coved cap and glazed to match.
F.
Wall and floor installation: per applicable TCA.
G.
Membrane: Chloraloy or approved equal.
H.
Tile Backer Board: 1/2 inch thick wonderboard.
I.
Grout: Commercial Portland Cement Grout; Custom Building Products or approved equal.
J.
Mortar: Latex-Portland cement mortar; Custom Building Products or approved equal.

C-20

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

RESTROOM:
Toilet:
Kohler/American Standard, commercial quality.
Urinal:
Kohler/American Standard, commercial quality.
Lavatory:
Kohler/American Standard, undercounter.
Lavatory Faucet:
Kroin handicap lavatory faucet #HV1LH, polished chrome,
 
0.75-1.0 GPM flow restrictors.
Soap Dispenser
Bobrick, 8226, Lavatory mounted for soaps, 34 fl oz.
Counter:

Toilet accessories:
A.
Manufacturer: Bobrick Washroom Equipment, or approved equal.
B.
Schedule: Model numbers used in this schedule are Bobrick (134) unless otherwise noted.
C.
Combination Paper Towel Dispenser/Waste Receptacle: Recessed, Model B‑3944, one per restroom #7151 and 7152, and two per restroom #7050 and 7061.
D.
Feminine Napkin Vendor: Recessed, combination napkin/tampon vendor, Model B-3500, with 25 cent operation, one per each women’s toilet room.
E.
Soap Dispenser: Lavatory mounted dispenser, Model B-822, one per each lavatory.
F.
Toilet Paper Dispenser: Surface-mounted, Model JRT, JR Escort, “In-Sight” by Scott Paper Company, one per stall.
G.
Toilet Seat Cover Dispenser: Recessed, wall-mounted, Model B-301, one per stall.
H.
Sanitary Napkin Disposal: Recessed, wall-mounted, Model B-353, one per each women’s handicapped and odd stall.
I.
Sanitary Napkin Disposal: Partition-mounted, Model B-354 (serves two stalls).
J.
Grab Bars: Horizontal 36”, B6206-36: 42”, B62-6-42: one per each handicapped stall.
K.
Mop/Broom Holders: B223-24 (one per janitor closet).
L.
Paper Towel Dispensers: Recessed mounted, Model B-359, one at side wall adjacent to sink.
LESSEE CORRIDORS
Walls:
Eggshell finish, latex paint, Benjamin Moore.
Floors:
28oz loop carpet over pad with 4” resilient base as approved by Owner.
Ceiling:
24” x 24” x ¾” thick fine fissured type mineral fiber, Armstrong
 
Cirus acoustical tile (beveled regular edge) in a 24” x 24” Donn
 
ineline suspended grid, white finish.
Water Fountain:
Haws Model #1114 Stainless Steel #4.
Cross Corridor
3’-6” x full height, 20 minute rated, pocket assembly,
Smoke Detector:
on magnetic hold opens.

LESSEE GENERAL LIGHTING
A.    Finelite Series 12, perforated.

C-21

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

ELECTRICAL
A.
50 foot candles at working surface.
B.
3 Bulb 2x4 parbolic fixtures.
C.
½ 20 Amp circuit for each hard wall office.
D.
Electrical Devices: Recessed wall mounted devices with plastic cover plate. Color: white, multi-gang plate 80400 Series duplex wall outlets.
E.
Telephone/Data Outlets: Recessed wall mounted, Standard 2x4 wall box with ¾” EMT conduit from box to sub out above ceiling walls pull string, cabling, terminations and cover-plates, color: white, provided by Lessee’s vendor. Lessee shall furnish telephone backboard.
F.
Light Switches: Dual level rocker type, mounted at standard locations, with plastic cover plate, 5325-W cover plate single switch B0401-W, double switch B0409-W. Decors by Leviton, colors: white, and will comply with Title 24 Energy Codes. Decors by Leviton.
MECHANICAL
A.
VAV Reheat system – design/build. Each floor to have a minimum of thirty zones. Provide reheat boxes on all zones on top floor and at all exterior zones on lower floor. System shall meet T-24 for ventilation. Design shall be for 73 deg. Ambient interior temperature and 2 ½ watts per sq. ft. min.
FIRE SPRINKLER SYSTEM
As required by NFPA & factory mutual standard hazard, seismically braced.
END


C-22

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

SCHEDULE THREE TO EXHIBIT C
EXISTING TENANT RESTORATION PLAN
exhibitc1.jpg

C-23

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

EXHIBIT D
SIGNAGE EXHIBIT
Each Tenant of a single tenant Building will be permitted (subject to compliance with Section 17.15 of the Lease) to place the following signs unless specifically provided otherwise in the Lease (collectively the “Permitted Signs”):
Two Exterior Building Parapet Signs
Exclusive Building Monument Sign near the entrance to the parking lot associated with the Building. Tenant shall cause architectural and engineering drawings for each proposed sign to be prepared in sufficient detail and with sufficient load calculations for Landlord’s approval. The exact size, design, color, location and materials of the Tenant’s signs on the Monument and Building, will be determined by Landlord in its sole and absolute discretion, provided that Landlord will not unreasonably withhold, condition or delay its consent to a tenant sign which employs a design and color commonly used by such tenant for marketing purposes so long as it fits within the space allocated by Landlord, and so long as it is in keeping with the overall design scheme of the Premises. All signs shall comply with all applicable government laws and regulations and, prior to commencing the installation of any approved signage, Tenant shall provide Landlord evidence of approval from local architectural review board or similar, applicable governmental body. All signs shall comply with all applicable government laws and regulations. Notwithstanding anything to the contrary herein, Landlord acknowledges that Tenant desires to install signage similar to that shown on Schedule 1 hereto on the exterior of the Building, signage similar to that shown on Schedule 2 on the monument sign serving the Building and signage similar to that shown on Schedule 3 hereto in the lobby of the Building and agrees not to unreasonably withhold Landlord’s consent to any such signage, subject to Landlord’s further approval of the location, size, design and materials of such signage, which approval shall not be unreasonably withheld.


D-1

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

SCHEDULE ONE TO EXHIBIT D
exhibitd1.jpg

D-2

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

exhibitd2.jpg

D-3

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

exhibitd3.jpg

D-4

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

SCHEDULE TWO TO EXHIBIT D
exhibitd4.jpg

D-5

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

exhibitd5.jpg

D-6

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

exhibitd6.jpg

D-7

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

SCHEDULE THREE TO EXHIBIT Dexhibitd7.jpg

D-8

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

exhibitd8.jpg

D-9

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

EXHIBIT E
SNDA
SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT
This Subordination, Non-Disturbance and Attornment Agreement (the “Agreement”) is dated as of the ____ day of _________, 201_, between [________________________], a [(together with its successors and/or assigns, “Lender”), and ________________________________________ (together with its permitted successors and/or assigns, “Tenant”), and is consented to by Landlord (as defined below).
RECITALS
A.    Tenant is the tenant under a certain lease (the “Lease”) dated as of _________________, with ______________________, a ___________________________ (together with all successors-in-interest, “Landlord”) or its predecessor in interest, of premises described in the Lease (the “Premises”) located in a certain office building located at ____________, in ________, ______________ and more particularly described in Exhibit A attached hereto and made a part hereof (such office building, including the Premises, is hereinafter referred to as the “Property”).
B.    Lender intends to make a loan to Landlord (the “Loan”) secured by a certain [Deed of Trust][Mortgage][Deed to Secure Debt], Assignment of Leases and Rents, Security Agreement and Fixture Filing (as the same may be amended, restated, supplemented, replaced or otherwise modified, the “Security Instrument”) by Landlord [to the trustee named therein] for the benefit of Lender, which Security Instrument shall encumber the Property and will be recorded with the clerk of the county in which the Property is located.
C.    Tenant acknowledges that Lender will rely on this Agreement.
AGREEMENT
For mutual consideration, including the mutual covenants and agreements set forth below, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1.The Lease, as the same may hereafter be modified, amended or extended, and all of Tenant’s right, title and interest in and to the Premises and all rights, remedies and options of Tenant under the Lease, are and shall be unconditionally subject and subordinate to the Security Instrument and the lien thereof, to all the terms, conditions and provisions of the Security Instrument, to each and every advance made or hereafter made under the Security Instrument, and to all renewals, modifications, consolidations, replacements, substitutions and extensions of the Security Instrument; provided, however, and Lender agrees, that so long as (a) no event has occurred and no condition exists, which would entitle Landlord to terminate the Lease or would cause, without further action of Landlord, the termination of the Lease or would entitle Landlord

E-1

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

to dispossess Tenant from the Premises, (b) the term of the Lease has commenced and Tenant is in possession of the Premises, (c) the Lease shall be in full force and effect and shall not have been otherwise modified or supplemented in any way without Lender’s prior written consent, (d) Tenant attorns to Lender, which attornment is hereby acknowledged by Tenant as effective and self-operative, without the execution of any other instruments, and (e) neither Lender nor its successors or assigns shall be liable under any warranty of construction contained in the Lease or any implied warranty of construction; then, and in such event Tenant’s leasehold estate under the Lease shall not be terminated, Tenant’s possession of the Premises shall not be disturbed by Lender and Lender will accept the attornment of Tenant.
2.    Notwithstanding anything to the contrary contained in the Lease, Tenant hereby agrees that in the event of any act, omission or default by Landlord or Landlord’s agents, employees, contractors, licensees or invitees which would give Tenant the right, either immediately or after the lapse of a period of time, to terminate the Lease, or to claim a partial or total eviction, or to reduce the rent payable thereunder or credit or offset any amounts against future rents payable thereunder, Tenant will not exercise any such right (i) until it has given written notice of such act, omission or default to Lender by delivering notice of such act, omission or default, in accordance with this Agreement, and (ii) until a period of not less than sixty (60) days for remedying such act, omission or default shall have elapsed following the giving of such notice. Notwithstanding the foregoing, in the case of any default of Landlord which cannot be cured within such sixty (60) day period, if Lender shall within such period proceed promptly to cure the same (including such time as may be necessary to acquire possession of the Premises if possession is necessary to effect such cure) and thereafter shall prosecute the curing of such default with diligence, then the time within which such default may be cured by Lender shall be extended for such period as may be necessary to complete the curing of the same with diligence. Lender’s cure of Landlord’s default shall not be considered an assumption by Lender of Landlord’s other obligations under the Lease. Unless Lender otherwise agrees in writing, Landlord shall remain solely liable to perform Landlord’s obligations under the Lease (but only to the extent required by and subject to the limitation included with the Lease), both before and after Lender’s exercise of any right or remedy under this Agreement. If Lender or any successor or assign becomes obligated to perform as Landlord under the Lease, such person or entity will be released from those obligations when such person or entity assigns, sells or otherwise transfers its interest in the Premises or the Property.
3.    If Lender succeeds to the interest of Landlord or any successor to Landlord (such event, whether a foreclosure, deed-in-lieu of foreclosure or other acquisition, being referred to herein as a “Foreclosure”), in no event shall Lender (a) have any liability for any act or omission of Landlord or any other prior landlord under the Lease which occurs prior to the date Lender succeeds to the rights of Landlord under the Lease, nor any liability for claims, offsets or defenses which Tenant might have had against Landlord or any other prior landlord, (b) be obligated to complete or permit the construction of any improvements under the Lease, except for any obligation arising after Foreclosure and only for any construction or expenditure that a real estate mortgage investment conduit is allowed to make under Section 856(e)(4)(B) of the Internal Revenue Code of 1986, as amended and/or supplemented from time to time, and regulations and rulings thereunder (if applicable), (c) be bound by any rents paid more than one

E-2

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

month in advance to Landlord or any other prior landlord, (d) be liable for any money (including, without limitation, security deposits) deposited with Landlord or any other prior landlord, or (e) be bound by any modification, amendment, extension or cancellation of the Lease not consented to in writing by Lender; and further provided, that nothing herein shall negate the right of Lender after a Foreclosure to exercise the rights and remedies, including termination of the Lease, of Landlord under the Lease upon the occurrence of an event of default by Tenant under the Lease in accordance therewith. As to any event of default by Tenant under the Lease existing at the time of Foreclosure, such Foreclosure shall not operate to waive or abate any action initiated by Landlord under the Lease to terminate the same on account of such event of default. In no event shall Lender have any personal liability as successor to Landlord and Tenant shall look only to the estate and property of Lender in the Land and the Improvements for the satisfaction of Tenant’s remedies for the collection of a judgment (or other judicial process) requiring the payment of money in the event of any default by Lender as Landlord under the Lease, and no other property or assets of Lender shall be subject to levy, execution or other enforcement procedure for the satisfaction of Tenant’s remedies under or with respect to the Lease. Tenant agrees that Lender, as holder of the Security Instrument, and as Landlord under the Lease if it succeeds to that position, shall in no event have any liability for the performance or completion of any initial work or installations or for any loan or contribution or rent concession towards initial work, which are required to be made by Landlord (A) under the Lease or under any related Lease documents or (B) for any space which may hereafter become part of said Premises, and any such requirement shall be inoperative in the event Lender succeeds to the position of Landlord prior to the completion or performance thereof. Tenant further agrees with Lender that Tenant will not voluntarily subordinate the Lease to any lien or encumbrance without Lender’s prior written consent.
4.    All notices, demands, or other communications under this Agreement shall be in writing and shall be delivered to the appropriate party at the address set forth below (subject to change from time to time by written notice to all other parties to this Agreement). Except when otherwise required by law, any notice which a party is required or may desire to give the other shall be in writing and may be sent by personal delivery or by mail (either (i) by United States registered or certified mail, return receipt requested, postage prepaid, or (ii) by Federal Express or similar generally recognized overnight carrier regularly providing proof of delivery). Any notice so given by mail shall be deemed to have been given as of the date of delivery established by U.S. Post Office return receipt or the overnight carrier’s proof of delivery, as the case may be. Any such notice not so given shall be deemed given upon receipt of the same by the party to whom the same is to be given. Notwithstanding the foregoing, non-receipt of any communication as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days’ notice to the other party in the manner set forth hereinabove.

E-3

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


Lender:
[___________________]
[___________________]
[___________________]
Attention: [__________]
Facsimile: [__________]
 
Mesa West Capital, LLC
11755 Wilshire Blvd., Suite 2100
Los Angeles, CA 90025
Attention: Steve Fried
Facsimile: (310) 806-6301
 
Mesa West Capital, LLC
11755 Wilshire Blvd., Suite 2100
Los Angeles, CA 90025
Attention: Ronnie Gul
Facsimile: (310) 806-6301
 
Mesa West Capital, LLC
299 Park Avenue, 20th Floor
New York, NY 10171
Attention: Raphael Fishbach
Facsimile: (212) 871-8901
 
Mesa West Capital, LLC
11755 Wilshire Blvd., Suite 2100
Los Angeles, CA 90025
Attention: Loan Notices (JF)
Facsimile: (310) 806-6301
 
Mesa West Capital, LLC
11755 Wilshire Blvd., Suite 2100
Los Angeles, CA 90025
Attention: Mark Zytko
Facsimile: (310) 806-6301
With a Copy To:
[___________________]
[___________________]
[___________________]
Attention: [__________]
Facsimile: [__________]
Tenant:
[___________________]
[___________________]
[___________________]
Attention: [__________]
Facsimile: [__________]
Landlord:
[___________________]
[___________________]
[___________________]
Attention: [__________]
Facsimile: [__________]

E-4

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

With a Copy To:
[___________________]
[___________________]
[___________________]
Attention: [__________]
Facsimile: [__________]
5.    Tenant agrees that, notwithstanding any provision hereof to the contrary, the terms of the Security Instrument shall continue to govern with respect to the disposition of any insurance proceeds or eminent domain awards, and any obligations of Landlord to restore the real estate of which the Premises are a part shall, insofar as they apply to Lender, be limited to insurance proceeds or eminent domain awards received by Lender after the deduction of all costs and expenses incurred in obtaining such proceeds or awards.
6.    Tenant hereby consents to the assignment of leases and rents from Landlord to Lender under the Security Instrument in connection with the Loan. Tenant acknowledges that the interest of the Landlord under the Lease is to be assigned to Lender solely as security for the purposes specified in said assignments, and Lender shall have no duty, liability or obligation whatsoever under the Lease or any extension or renewal thereof, either by virtue of said assignments or by any subsequent receipt or collection of rents thereunder, unless Lender shall specifically undertake such liability in writing or unless Lender or its designee or nominee becomes, and then only with respect to periods in which Lender or its designee or nominee becomes, the fee owner of the Premises. Tenant agrees that upon receipt of a written notice from Lender of a default by Landlord under the Loan, Tenant will thereafter, if requested by Lender, pay rent to Lender in accordance with the terms of the Lease.
7.    This Agreement may be executed by in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute and be construed as one and the same instrument. This Agreement shall be interpreted and construed in accordance with and governed by the laws of the State of New York.
8.    The Lease shall not be assigned by Tenant, modified, amended or terminated (except a termination that is permitted in the Lease without Landlord’s consent) without Lender’s prior written consent in each instance.
9.    The term “Lender” as used herein includes any successor or assign of the named Lender herein, including without limitation, any co-lender at the time of making the Loan, any purchaser at a foreclosure sale and any transferee pursuant to a deed-in-lieu of foreclosure, and their successors and assigns, and the terms “Tenant” and “Landlord” as used herein include any successor and assign of the named Tenant and Landlord herein, respectively; provided, however, that such reference to Tenant’s or Landlord’s successors and assigns shall not be construed as Lender’s consent to any assignment or other transfer by Tenant or Landlord.
10.    If any provision of this Agreement is held to be invalid or unenforceable by a court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to be enforceable, or if such modification is not practicable, such provision shall be deemed deleted from this Agreement, and the other provisions of this Agreement shall remain in full force and effect.

E-5

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

11.    Neither this Agreement nor any of the terms hereof may be terminated, amended, supplemented, waived or modified orally, but only by an instrument in writing executed by the party against which enforcement of the termination, amendment, supplement, waiver or modification is sought. This Agreement may be executed in counterparts. This Agreement shall be construed in accordance with the laws of the State of New York. The person executing this Agreement on behalf of Tenant is authorized by Tenant to do so and execution hereof is the binding act of Tenant enforceable against Tenant.
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REMAINDER OF PAGE LEFT INTENTIONALLY BLANK

E-6

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


Witness the execution hereof as of the date first above written.
LENDER:
[________________]
By:
 
Name:
 
Title:
 

TENANT:
CLOUDERA, INC.,
A Delaware corporation
By:
 
Name:
 
Title:
 

The undersigned executes this Agreement in order to consent to the terms thereof.
“Landlord”
395 PAGE MILL LLC,
a Delaware limited liability company
By:
 
Name:
 
Title:
 



E-7

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

EXHIBIT F
ESTOPPEL CERTIFICATE
[Letterhead of Tenant]
ESTOPPEL CERTIFICATE
[Date]
[Lender Name]
[Lender Address]
[Lender Address]
Attn: [Loan Officer]
RE:
[Loan No. _______]
 
Premises at [_______], Palo Alto, CA 92127

Ladies and Gentlemen:
It is our understanding that you have placed a mortgage upon the subject premises and as a condition precedent thereof have required this certification of the undersigned.
The undersigned, as Tenant, under that certain lease dated ________, 20__, made with 395 PAGE MILL LLC, as Landlord, hereby ratifies said lease and certifies that: The “Commencement Date” of said lease is ________, 20__; and
12.
The undersigned is presently solvent and free from reorganization and/or bankruptcy and is in occupancy, open, and conducting business with the public in the premises; and
13.
The operation and use of the premises do not involve the generation, treatment, storage, disposal or release of a hazardous substance or a solid waste into the environment other than to the extent necessary to conduct its ordinary course of business in the premises and in accordance with all applicable environmental laws, and that the premises are being operated in accordance with all applicable environmental laws, zoning ordinances and building codes; and
14.
The current base rental payable pursuant to the terms of said lease is ______ ($____); and
15.
Said lease is in full force and effect and has not been assigned, modified, supplemented or amended in any way except ____________ and neither party thereto is in default thereunder; and

F-1

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

16.
The lease described above represents the entire agreement between the parties as to the leasing of the premises; and
17.
The term of said lease expires on ________, 20__; and
18.
All conditions under said lease to be performed by the Landlord have been satisfied, including, without limitation, all co-tenancy requirements thereunder, if any; and
19.
All required contributions by Landlord to Tenant on account of any tenant improvements have been received; and
20.
On this date there are no existing defenses or offsets, claims or counterclaims which the undersigned has against the enforcement of said lease by the Landlord; and
21.
No rental has been paid in advance except for the advance payment of base rent due for the first (1st) month of the lease, in the amount of ______($____), which was paid upon lease execution; and
22.
Tenant’s rentable area is ________ square feet; and
23.
The most recent payment of current basic rental was for the payment in the amount of ______($____) due on ________, 20__, and all basic rental and additional rental payable pursuant to the terms of the Lease have been paid up to said date; and
24.
The undersigned acknowledges notice that Landlord’s interest under the lease and the rent and all other sums due thereunder will be assigned to you as part of the security of a mortgage loan by you to Landlord. In the even that [Lender Name], as lender, notifies the undersigned of a default under the deed of trust and demands that the undersigned pay its rent and all other sums due under the lease to lender, Tenant agrees that it shall pay its rent and all such other sums to lender.
Very truly yours,
____________________________
[Tenant’s Legal Name]
By:____________________________
Its:____________________________


F-2

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

EXHIBIT G
RULES AND REGULATIONS
1.    Tenant and Tenant’s employees shall not in any way obstruct the sidewalks, entry passages, pedestrian passageways, driveways, entrances and exits to the Project or the Building, and they shall use the same only as passageways to and from their respective work areas. Except as expressly set forth in the Lease, no tenant and no employee or invitee of any tenant shall go upon the roof of the Building without Landlord’s consent or make any roof or terrace penetrations. Tenant shall not allow anything to be placed on the outside terraces or balconies without the prior written consent of Landlord, which consent shall not be unreasonably withheld.
2.    Any sash doors, sashes, windows, glass doors, lights and skylights that reflect or admit light into the Common Areas of the Project shall not be covered or obstructed by the Tenant. Water closets, urinals and wash basins shall not be used for any purpose other than those for which they were constructed, and no rubbish, newspapers, food or other substance of any kind shall be thrown into them. Except in connection with ordinary and customary interior decorating, Tenant shall not mark, drive nails, screw or drill into, paint or in any way deface the exterior walls, roof, foundations, bearing walls or pillars without the prior written consent of Landlord, which consent may be withheld in Landlord’s sole discretion. The reasonable and actual, out-of-pocket expense of repairing any breakage, stoppage or damage resulting from a violation of the foregoing rule shall be borne by Tenant.
3.    Except as otherwise set forth in the Lease, no sign, placard, picture, advertisement, name or notice shall be installed or displayed on any part of the outside or inside of the Building without the prior written consent of Landlord. Landlord shall have the right to remove, at Tenant’s expense and without notice, any sign installed or displayed in violation of this rule. All approved signs or lettering on doors and walls shall be printed, painted, affixed or inscribed at the expense of Tenant by a person chosen reasonably by Landlord.
4.    The directory of the Building will be provided exclusively for the display of the name and location of tenants, and Landlord reserves the right to exclude any other names therefrom. Tenant shall pay Landlord’s standard charge for Tenant’s listing thereon and for any changes by Tenant.
5.    Except as consented to in writing by Landlord or in accordance with Building standard improvements, no draperies, curtains, blinds, shades, screens or other devices shall be hung at or used in connection with any window or exterior door or doors of the Premises. No awning shall be permitted on any part of the Premises. Tenant shall not place anything against or near glass partitions or doors or windows which may appear unsightly from outside the Premises.
6.    No awning or shade shall be affixed or installed over or in the windows or the exterior of the Premises except with the consent of Landlord, which consent may not be unreasonably withheld, conditioned or delayed.

G-1

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

7.    Tenant agrees to reasonably cooperate with Landlord, and to abide by all reasonable regulations and requirements which Landlord may prescribe for the proper function and protection of the Building HVAC system; provided, however, that such rules shall be applied and enforced in a uniform manner. Tenant agrees not to connect any apparatus, device, conduit or pipe to the Building chilled and hot water air conditioning supply lines. Subject to Tenant’s rights under the Lease, Tenant further agrees that neither Tenant nor its servants, employees, agents, visitors, licensees or contractors shall at any time enter mechanical installations or facilities of the Building or unreasonably tamper with, touch or otherwise affect said installations or facilities. The cost of maintenance and service calls to adjust and regulate the HVAC system shall be charged to Tenant if the need for maintenance work results from either Tenant’s unreasonably tampering with room thermostats, defects in the HVAC system as installed by Tenant, or Tenant’s failure to comply with its obligations under this Section, or Tenant’s heat or cold generation in excess of that which is customary for general office use.
8.    Tenant shall not do anything in the Premises, or bring or keep anything therein, which will in any way increase the risk of fire or the rate of fire insurance or which shall conflict with the regulations of the fire department or the law or with any insurance policy on the Premises or any part thereof, or with any rules or regulations established by any administrative body or official having jurisdiction, and it shall not use any machinery therein, even though its installation may have been permitted, which may cause any unreasonable noise, jar, or tremor to the floors or walls, or which by its weight might injure the floors of the Premises.
9.    If Tenant desires telegraphic, telephonic, burglar alarm or similar services, Tenant first shall obtain Landlord’s prior written consent (which shall not be unreasonably withheld, conditioned or delayed), and shall comply with Landlord’s commercially reasonable instructions for their installation.
10.    Tenant shall not place a load upon any floor of the Premises which exceeds the maximum load per square foot which the floor was designed to carry and which is allowed by law. Tenant’s business machines and mechanical equipment which cause noise or vibration which may be transmitted to the structure of the Building or to any space therein, and which is reasonably objectionable to Landlord or to any tenants in the Building, shall be placed and maintained by Tenant, at Tenant’s expense, on vibration eliminators or other devices sufficient to eliminate noise or vibration.
11.    Tenant shall not use or keep in the Premises any Hazardous Materials, except as expressly permitted by the Lease. Tenant shall not use or permit to be used in the Premises any foul or noxious gas or substance, or permit or allow the Premises to be occupied or used in a manner offensive or objectionable to Landlord or other occupants of the Building by reason of noise, odors or vibrations.
12.    Landlord may reasonably limit weight, size and position of all safes, fixtures and other equipment used in the Premises. If Tenant shall require extra heavy equipment, Tenant shall notify Landlord of such fact and shall pay the cost of structural bracing to accommodate it. All damage done to the Premises or Project by installing, removing or maintaining extra heavy equipment shall be repaired at the expense of Tenant.

G-2

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

13.    Tenant and Tenant’s officers, agents and employees shall not make nor permit any loud, unusual or improper noises that unreasonably interfere with other Tenants or those having business with them.
14.    No machinery of any kind will be allowed in the Premises without the written consent of Landlord, which consent may not be unreasonably withheld, conditioned or delayed. This shall not apply, however, to customary office equipment or trade fixtures or package handling equipment.
15.    All freight must be moved into, within and out of the Project only during such reasonable hours and according to such reasonable regulations as may be posted from time to time by Landlord.
16.    Except as provided in the Lease, no aerial or satellite dish or similar device shall be erected on the roof or exterior walls of the Premises, or on the grounds, without in each instance, the written consent of Landlord, which consent may not be unreasonably withheld, conditioned or delayed. Any aerial so installed without such written consent shall be subject to removal without notice at any time.
17.    All garbage, including wet garbage, refuse or trash shall be placed by the Tenant in the receptacles appropriate for that purpose and only at locations prescribed by the Landlord and in accordance with Landlord’s reasonable refuse and recycling plan as may be amended from time to time.
18.    Tenant shall not burn any trash or garbage at any time in or about the Premises or any area of the Project.
19.    Tenant shall not use any method of heating or air-conditioning other than that supplied by Landlord, unless Tenant receives the prior written consent of Landlord.
20.    Landlord reserves the right to exclude any person from the Building between the hours of 6:00 p.m. and 7:00 a.m. the following day, or any other hours as may be established from time to time by Landlord, and on Saturdays, Sundays and legal holidays, unless that person is known to the person or employee in charge of the Building and has a pass or is properly identified. Tenant shall be responsible for all persons for whom it requests passes and shall be liable to Landlord for all acts of those persons. Landlord shall not be liable for damages for any error in admitting or excluding any person from the Building. Landlord reserves the right to prevent access to the Building by closing the doors or by other appropriate action in case of invasion, mob, riot, public excitement or other commotion.
21.    Tenant shall observe all security regulations issued by the Landlord and comply with instructions and/or directions of the duly authorized security personnel for the protection of the Project and all tenants therein, except to the extent such regulations unreasonably and materially limit Tenant’s right of access to the Premises and Project’s parking facilities or prohibit Landlord from entering “Secured Areas,” all as provided in the Lease.

G-3

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

22.    Landlord will furnish Tenant, free of charge, with two (2) keys to Tenant’s premises entrance. Tenant shall deliver to Landlord, upon the termination of its tenancy, the keys to all locks for doors on the Premises, along with all of the cards for the card key system to the Building and in the event of loss of any keys or cards furnished by Landlord, shall pay Landlord therefor.
23. Tenant’s requests for assistance will be attended to only upon appropriate application to the office of the Building by an authorized individual. Employees of Landlord shall not perform any work or do anything outside of their regular duties unless under special instructions from Landlord, and no employee of Landlord will admit any person (Tenant or otherwise) to any office without specific instructions from Landlord.
24.    To the extent Tenant has been granted any parking privileges in the Lease, Tenant shall not park its vehicles in any parking areas designated by Landlord as areas for parking by visitors to the Building or other reserved parking spaces. Tenant shall not leave vehicles in the parking areas serving the Building overnight (unless Tenant is the sole tenant of the Project), nor park any vehicles in the parking areas serving the Building, other than automobiles, motorcycles, motor driven or non-motor driven bicycles or four-wheeled trucks. Tenant, its agents, employees and invitees shall not park any one (1) vehicle in more than one (1) parking space.
25.    The scheduling and manner of all Tenant move-ins and move-outs shall be subject to the reasonable discretion and reasonable approval of Landlord, and move-ins and move-outs shall take place only after 6:00 p.m. on weekdays, on weekends, or at other times as Landlord may designate. Landlord shall have the right to approve or disapprove the movers or moving company employed by Tenant (provided, however, that such approval shall not be unreasonably withheld, conditioned or delayed), and Tenant shall cause the movers to use only the entry doors and elevators reasonably designated by Landlord. If Tenant’s movers damage the elevator or any other part of the Project, Tenant shall pay to Landlord the amount required to repair the damage.
26.    Any requirements of the Tenant will be considered only upon written application to Landlord at Landlord’s address set forth in the Lease.
27.    No waiver of any rule or regulation by Landlord shall be effective unless expressed in writing and signed by Landlord or its authorized agent.
28.    Landlord reserves the right to exclude or expel from the Project any person who, in the reasonable judgment of Landlord, is intoxicated or under the influence of liquor or drugs, or who shall in any manner do any act in violation of the law or the rules and regulations of the Project.
29.    Tenant shall cooperate with Landlord’s commercially reasonable requires to assure the most effective operation of the Building’s heating and air-conditioning and to comply with any governmental energy-saving rules, laws or regulations of which Tenant has actual notice.
30.    Landlord reserves the right, exercisable without notice and without liability to Tenant, to change the name and street address of the Building.

G-4

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

31.    Subject to the terms and conditions of the Lease, Landlord reserves the right at any time to change or rescind any one or more of these rules and regulations or make such other and further reasonable, non-discriminatory rules and regulations as in Landlord’s judgment may from time to time be necessary for the operation, management, safety, care and cleanliness of the Project and the Premises, and for the preservation of good order therein, as well as for the convenience of other occupants and tenants of the Project. Subject to the terms and conditions of the Lease, Landlord shall not be responsible to Tenant or the any other person for the non-observance or violation of the rules and regulations by any other tenant or other person. Tenant shall be deemed to have read these rules and have agreed to abide by them as a condition to its occupancy of the Premises. Notwithstanding anything to the contrary contained herein, Landlord agrees that the rules and regulations for the Project shall not be (i) modified or enforced in any way by Landlord so as to unreasonably and materially interfere with Tenant’s permitted use set forth in this Lease or Tenant’s access to the Premises or Project parking facility, or (ii) discriminatorily enforced against Tenant and not against other tenants of the Project.
32.    In the event of any conflict between these rules and regulations, or any further or modified rules and regulations from time to time issued by Landlord, and the Lease provisions, the Lease provisions shall govern and control.


G-5

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

EXHIBIT H
TELECOMMUNICATIONS EQUIPMENT
exhibith1.jpg


H-1

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

exhibith2.jpg

H-2

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

exhibith3.jpg

H-3

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

exhibith4.jpg

H-4

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

exhibith5.jpg

H-5

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

exhibith6.jpg



H-6

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

exhibith7.jpg

H-7

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

exhibith8.jpg

H-8

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


exhibith9.jpg


H-9

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

exhibith10.jpg

H-10

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

SCHEDULE 1
Charging Stations Site Plan

Schedule 1-1

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

schedule1.jpg

Schedule 1-2

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

SCHEDULE 2
TRI-PARTY AGREEMENT
This Tri-Party Agreement (this “Agreement”) is made and entered into as of August ___, 2016, by and among 395 PAGE MILL LLC, a Delaware limited liability company (“Borrower”), CLOUDERA, INC., a Delaware corporation (“Tenant”) and NONGHYUP BANK, as trustee of HYUNDAI STAR PRIVATE REAL ESTATE INVESTMENT TRUST 5 (“Lender”).
RECITALS
A.    On or about August__, 2016, Borrower and Tenant entered into that certain “Triple Net Building Lease”, (as the same is or may hereafter be amended from time to time, the “Lease”) whereby Tenant agreed to lease from Borrower, and Borrower agreed to Lease to Tenant, that certain real property located at 395 Page Mill Road, Palo Alto, Santa Clara County, California more particularly described on Exhibit A hereto (the “Property”) together with any and all improvements now or hereafter located on the Property (collectively together with the Property, the “Premises”) on and subject to the terms and conditions set forth in the Lease.
B.    Pursuant to Section 4.07 of the Lease, Tenant has caused Silicon Valley Bank (“Issuing Bank”) to issue its irrevocable standby letter of credit No. [***] in favor of Borrower and Lender as co-beneficiaries for the account of Tenant in the stated amount of [***] (together with all and any replacement or renewal letters of credit, the “Letter of Credit”).
C.    On or about July 25, 2016, Borrower and Lender entered into a Loan Agreement whereby Lender agreed to make a [***] loan (the “Loan”) to Borrower. The Loan Agreement, together with all other documents and instruments evidencing, securing or relating to the Loan are referred to herein as the “Loan Documents.”
D.    Pursuant to the Loan Documents, Lender and Borrower agreed that any letters of credit issued on behalf of Tenant as security under the Lease name both Lender and Borrower as co-beneficiaries.
E.    Now, therefore, in consideration of the foregoing and the covenants and agreements contained herein, and for other good and valuable consideration, the parties hereto agree as follows:
AGREEMENT
1.    Borrower and Tenant agree to cause Issuing Bank to issue the Letter of Credit in the form attached hereto as Exhibit B.
2.    Agreements of Borrower. Borrower agrees that:

1

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

a)
Lender shall have the right to hold the original copy of the Letter of Credit; and
b)
Lender shall have the right to draw upon the Letter of Credit pursuant to the terms and provisions of Section 4.07 of the Lease.
c)
The foregoing notwithstanding, as between Lender and Borrower, the provisions of the Loan Documents shall govern and control the rights and priorities of Borrower and Lender in, to and under the Letter of Credit and which of Borrower or Lender shall have the right to make drawings on the Letter of Credit, whether the proceeds of any drawing under the Letter of Credit shall be paid to Borrower or retained by Lender, the order of application of the proceeds of any drawing under the Letter of Credit against the obligations of Borrower under the Loan Documents and any similar or related matters.
d)
Borrower may not assign or otherwise transfer Borrower’s rights as a co-beneficiary under the Letter of Credit to any other party without the prior written consent of Lender, except in connection with any assignment or transfer of the Premises or Lease permitted without Lender’s consent pursuant to the terms of the Loan Documents.
3.    Agreements of Lender. Lender agrees, for itself and for all of the other lenders who now or hereafter may hold an interest in the Loan, that:
a)
As between Lender and Tenant and between Borrower and Tenant, the provisions of Section 4.07 of the Lease shall govern and control (i) any and all drawings under the Letter of Credit, (ii) the use and application of the proceeds of any and all drawings on the Letter of Credit, and (iii), if applicable, the return of the Letter of Credit and/or any proceeds of any and all drawings thereon;
b)
Lender shall only be entitled to draw on the Letter of Credit if and to the extent Borrower is entitled to draw on the Letter of Credit pursuant to the provisions of Section 4.07 of the Lease;
c)
The foregoing notwithstanding, as between Lender and Borrower, the provisions of the Loan Documents shall govern and control the rights and priorities of Borrower and Lender in, to and under the Letter of Credit and which of Borrower or Lender shall have the right to make drawings on the Letter of Credit, whether the proceeds of any drawing under the Letter of Credit shall be paid to Borrower or retained by Lender, the order of application of the proceeds of any drawing under the Letter of Credit against the obligations of Borrower under the Loan Documents and any similar or related matters.
4.    General Provisions.
a)
Upon Lender’s request, each of Borrower and Tenant shall execute, acknowledge and deliver any other commercially reasonable instruments and perform any other

2

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

commercially reasonable acts necessary, desirable or proper, as determined by Lender in its reasonable and good faith discretion, to establish, confirm and/or preserve Lender’s rights under the Letter of Credit.
b)
This Agreement, its construction, interpretation, and enforcement, and the rights of the parties hereto with respect to all matters arising hereunder or related hereto shall be determined under, governed by, and construed in accordance with the laws of the State of California without giving effect to its conflict of laws principles.
c)
This Agreement constitutes the entire understanding among the parties hereto with respect to the matters contemplated herein, and this Agreement cannot be amended, modified or discharged in any way except by written instrument signed by the parties hereto.
d)
Any provision of this Agreement which is prohibited, invalid, illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition, invalidity, illegality or unenforceability without invalidating, affecting or impairing the validity, legality or enforceability of the remaining provisions hereof, and any such prohibition, invalidity, illegality or unenforceability in any such jurisdiction shall not invalidate, affect or impair the validity, legality or enforceability of such provision in any other jurisdiction.
e)
This Agreement shall inure to the benefit of and be binding upon the parties hereto and their successors and assigns. Without limiting the generality of the foregoing, any successor to Lender under the Loan Documents or any other person or entity to whom Lender transfers its interest in any of the Letter of Credit (whether through assignment, reissuance of said Letter(s) of Credit or otherwise) who is not the Landlord under the Lease shall acknowledge and agree in writing, for the benefit of Tenant, that it is and shall be bound by the terms and provisions of this Agreement, a copy of which written agreement shall be provided to Tenant.
f)
Notices. All notices or other communications required or permitted to be given pursuant to the provisions of this Agreement shall be in writing and shall be considered as properly given if delivered to the appropriate party at the address set forth below (subject to change from time to time by written notice to all other parties to this Agreement). Except when otherwise required by law, any notice which a party is required or may desire to give the other shall be in writing and may be sent by personal delivery or by mail (either (i) by United States registered or certified mail, return receipt requested, postage prepaid, or (ii) by Federal Express or similar generally recognized overnight carrier regularly providing proof of delivery). Any notice so given by mail shall be deemed to have been given as of the date of delivery established by U.S. Post Office return receipt or the overnight carrier’s proof of delivery, as the case may be. Any such notice not so given shall be deemed given upon receipt of the same by the party to whom the notice is to be given; provided, however, that non-receipt of any communication

3

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

as the result of any change of address of which the sending party was not notified or as the result of a refusal to accept delivery shall be deemed receipt of such communication. For purposes of notice, the addresses of the parties shall be:
If to Borrower:
If to Tenant:
395 Page Mill LLC
c/o Jay Paul Company
Four Embarcadero Center,
Suite 3620
San Francisco. California
94111
Attention: Jay Paul
Cloudera, Inc.
395 Page Mill Road
Palo Alto,
California 94306
Attention: Jim Frankola
With a copy to:
With a copy to:
Manatt Phelps Phillips LLP One Embarcadero Center 
San Francisco, California 94111
Attention: Clayton Gantz, Esq.
 
 
 
If to Lender:
 
Nonghyup Bank, as trustee of Hyundai Star Private Real Estate Investment Trust 5
13F, 120, Tongil-Ro, Jung-Gu
Seoul, Republic of Korea 04517
Facsimile: 82-2-2080-3697
Attention: Doug Jun Lee
 
With a copy to:
 
Paul Hastings LLP
200 Park Avenue
New York, New York 10166
Attention: Eric F. Allendorf, Esq.
 

Any party shall have the right to change its address for notice hereunder to any other location within the continental United States by the giving of thirty (30) days’ notice to the other party in the manner set forth hereinabove.
g)
If any party to this Agreement shall bring any action or proceeding for any relief against the other, declaratory or otherwise, arising out of this Agreement, the losing party shall pay to the prevailing party reasonable attorney’s fees and costs incurred in bringing or defending such action or proceeding and/or enforcing any judgment granted therein, all of which shall be deemed to have accrued upon the commencement of such action or proceeding and shall be paid whether or not such action or proceeding is prosecuted to final judgment. Any judgment or order entered in such action or proceeding shall contain a specific provision providing for the recovery of attorney’s fees and costs, separate from the judgment, incurred in enforcing such judgment.

4

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

h)
Neither the Lease nor any of the Loan Documents are modified by this Agreement.
This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, taken together, shall constitute one and same instrument.
[NO FURTHER TEXT ON THIS PAGE]



5

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.
“LENDER”    “TENANT”
NONGHYUP BANK, as trustee of    CLOUDERA, INC.,
HYUNDAI STAR PRIVATE REAL ESTATE    a Delaware corporation
INVESTMENT TRUST 5
By:
 
 
By:
 
Its:
 
 
Its:
 

“BORROWER”
395 PAGE MILL LLC,
a Delaware limited liability company
By:
 
Its:
 



6

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

EXHIBIT A
LEGAL DESCRIPTION



7

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

EXHIBIT B
FORM OF LETTER OF CREDIT
IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER ______________
ISSUE DATE: _____________
ISSUING BANK:
SILICON VALLEY BANK
3003 TASMAN DRIVE
2ND FLOOR, MAIL SORT HF210
SANTA CLARA, CALIFORNIA 95054
BENEFICIARY:
395 PAGE MILL, LLC, A DELAWARE LIMITED
LIABILITY COMPANY (“LANDLORD”)
AND/OR
NONGHYUP BANK, as trustee of HYUNDAI STAR
PRIVATE REAL ESTATE TRUST 5
(“LENDER”) C/O MESA WEST CAPITAL, LLC
11755 WILSHIRE BLVD., SUITE 2100
LOS ANGELES, CA 90025
APPLICANT:
CLOUDERA INC.
1001 PAGE MILL
PALO ALTO, CA 94304
AMOUNT: US[***]
EXPIRATION DATE:    ONE YEAR FROM ISSUANCE
LOCATION: SANTA CLARA, CALIFORNIA
DEAR SIR/MADAM:
WE HEREBY ESTABLISH OUR IRREVOCABLE STANDBY LETTER OF CREDIT NO. SVBSF0 ________ IN FAVOR OF THE ABOVE NAMED BENEFICIARY AVAILABLE BY YOUR DRAFTS DRAWN ON US AT SIGHT IN THE FORM OF EXHIBIT “A” ATTACHED AND ACCOMPANIED BY THE FOLLOWING DOCUMENTS:
1.    THE ORIGINAL OF THIS LETTER OF CREDIT AND ALL AMENDMENT(S), IF ANY.
2.    A DATED AND SIGNED BENEFICIARY’S STATEMENT STATING AS FOLLOWS:
“AN EVENT OF DEFAULT (AS DEFINED IN THE LEASE) HAS OCCURRED BY APPLICANT, AS TENANT UNDER THAT CERTAIN LEASE AGREEMENT BETWEEN TENANT, AND LANDLORD. FURTHERMORE THIS IS TO CERTIFY THAT: (I) LANDLORD HAS GIVEN WRITTEN NOTICE TO TENANT TO CURE THE DEFAULT PURSUANT TO THE TERMS OF THE LEASE; (II) SUCH DEFAULT HAS NOT BEEN CURED UP TO THIS DATE OF DRAWING UNDER THIS LETTER OF CREDIT; AND (III) LANDLORD IS AUTHORIZED TO DRAW DOWN ON THE LETTER OF CREDIT UNDER THE LEASE.” OR
“AN EVENT OF DEFAULT (AS DEFINED IN THE LEASE) OR BANKRUPTCY BY APPLICANT HAS OCCURRED BY APPLICANT AS TENANT UNDER THAT CERTAIN LEASE AGREEMENT BETWEEN TENANT, AND LANDLORD AS A RESULT LANDLORD IS AUTHORIZED TO DRAW DOWN ON THE LETTER OF CREDIT UNDER THE LEASE.”

ALL THE DETAILS SET FORTH HEREIN IN THIS LETTER OF CREDIT
Applicant’s Authorized Signature
 
DATE
Schedule 2-8

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

WE HEREBY CERTIFY THAT WE WILL NOT INQUIRE AS TO THE ACCURACY OF SUCH STATEMENT NOR WE WILL CONSIDER ANY DISPUTES BY THE APPLICANT REGARDING THE CONTENTS OF SUCH STATEMENT.
PARTIAL DRAWS AND MULTIPLE PRESENTATIONS ARE ALLOWED.
ANY ONE BENEFICIARY OR ALL BENEFICIARIES, ACTING INDIVIDUALLY OR JOINTLY, MAY DRAW ON THIS LETTER OF CREDIT IN WHOLE OR IN PART, AND ANY ACTION TAKEN BY ANY BENEFICIARY HEREUNDER SHALL BIND ALL OF THEM.
THIS LETTER OF CREDIT SHALL BE AUTOMATICALLY EXTENDED FOR AN ADDITIONAL PERIOD OF ONE YEAR, WITHOUT AMENDMENT, FROM THE PRESENT OR EACH FUTURE EXPIRATION DATE UNLESS AT LEAST 60 DAYS PRIOR TO THE THEN CURRENT EXPIRATION DATE WE SEND YOU A NOTICE BY REGISTERED MAIL OR OVERNIGHT COURIER SERVICE AT THE ABOVE ADDRESS (OR ANY OTHER ADDRESS INDICATED BY YOU, IN A WRITTEN NOTICE TO US THE RECIEPT OF WHICH WE HAVE ACKNOWLEDGED, AS THE ADDRESS TO WHICH WE SHOULD SEND SUCH NOTICE) THAT THIS LETTER OF CREDIT WILL NOT BE EXTENDED BEYOND THE CURRENT EXPIRATION DATE. IN NO EVENT SHALL THIS LETTER OF CREDIT BE AUTOMATICALLY EXTENDED BEYOND SEPTEMBER 30, 2027, WHICH IS THE FINAL EXPIRATION DATE. IN THE EVENT OF SUCH NOTICE OF NON- EXTENSION, YOU MAY DRAW HEREUNDER WITH A DRAFT STATED ABOVE AND ACCOMPANIED BY THIS ORIGINAL LETTER OF CREDIT AND AMENDMENT(S), IF ANY, ALONG WITH YOUR SIGNED STATEMENT STATING THAT YOU HAVE RECEIVED A NON-EXTENSION NOTICE FROM SILICON VALLEY BANK AND YOU HAVE NOT RECEIVED A REPLACEMENT LETTER OF CREDIT ACCEPTABLE TO YOU.
THIS LETTER OF CREDIT IS TRANSFERABLE ONE OR MORE TIMES, BUT IN EACH INSTANCE ONLY UP TO THE THEN AVAILABLE AMOUNT, ASSUMING SUCH TRANSFER TO SUCH TRANSFEREE WOULD BE IN COMPLIANCE WITH THEN APPLICABLE LAW AND REGULATION, INCLUDING BUT NOT LIMITED TO THE REGULATIONS OF THE U. S. DEPARTMENT OF TREASURY AND U. S. DEPARTMENT OF COMMERCE. AT THE TIME OF TRANSFER, THE ORIGINAL LETTER OF CREDIT AND ORIGINAL AMENDMENT(S), IF ANY, MUST BE SURRENDERED TO US AT OUR ADDRESS INDICATED IN THIS LETTER OF CREDIT TOGETHER WITH OUR TRANSFER FORM ATTACHED HERETO AS EXHIBIT “B” DULY EXECUTED. THE CORRECTNESS OF THE SIGNATURE AND TITLE OF THE PERSON SIGNING THE TRANSFER FORM MUST BE VERIFIED BY BENEFICIARY’S BANK. BENEFICIARY SHALL PAY OUR TRANSFER FEE OF ¼ OF 1% OF THE TRANSFER AMOUNT (MINIMUM US $250.00) UNDER THIS LETTER OF CREDIT. PAYMENT OF ANY TRANSFER FEES AND/OR ANY TRANSFER COST SHALL NOT BE A CONDITION PRECEDENT TO TRANSFER. EACH TRANSFER SHALL BE EVIDENCED BY OUR ENDORSEMENT ON THE REVERSE OF THE LETTER OF CREDIT AND WE SHALL FORWARD THE ORIGINAL OF THE LETTER OF CREDIT SO ENDORSED TO THE TRANSFEREE.
ALL DEMANDS FOR PAYMENT SHALL BE MADE EITHER IN PERSON OR BY OVERNIGHT COURIER BY PRESENTATION OF THE ORIGINAL APPROPRIATE DOCUMENTS DURING REGULAR BUSINESS HOURS ON A BUSINESS DAY AT OUR OFFICE (THE “BANK’S OFFICE”) AT: SILICON VALLEY BANK, 3003 TASMAN DRIVE, SANTA CLARA, CA 95054, ATTENTION: GLOBAL FINANCIAL SERVICES STANDBY LETTER OF CREDIT DEPARTMENT; OR BY FACSIMILE TRANSMISSION AT: (408) 496-2418 OR (408) 969-6510; AND SIMULTANEOUSLY UNDER TELEPHONE ADVICE TO: (408)654-6274 OR (408) 654-7716, ATTENTION: STANDBY LETTER OF CREDIT NEGOTIATION DEPARTMENT WITH ORIGINALS TO FOLLOW BY OVERNIGHT COURIER SERVICE; PROVIDED, HOWEVER, THE BANK WILL DETERMINE HONOR OR DISHONOR ON THE BASIS OF PRESENTATION BY FACSIMILE ALONE, AND WILL NOT EXAMINE THE ORIGINALS.
WE HEREBY AGREE WITH THE BENEFICIARY THAT THE DRAFTS DRAWN UNDER AND IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT SHALL BE DULY HONORED UPON PRESENTATION TO US ON OR BEFORE THE EXPIRATION DATE OF THIS LETTER OF CREDIT.

ALL THE DETAILS SET FORTH HEREIN IN THIS LETTER OF CREDIT
Applicant’s Authorized Signature
 
DATE
Schedule 2-9

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

IF ANY INSTRUCTIONS ACCOMPANYING A DRAWING UNDER THIS LETTER OF CREDIT REQUEST THAT PAYMENT IS TO BE MADE BY TRANSFER TO YOUR ACCOUNT WITH ANOTHER BANK, WE WILL ONLY EFFECT SUCH PAYMENT BY FED WIRE TO A U.S. REGULATED BANK, AND WE AND/OR SUCH OTHER BANK MAY RELY ON AN ACCOUNT NUMBER SPECIFIED IN SUCH INSTRUCTIONS EVEN IF THE NUMBER IDENTIFIES A PERSON OR ENTITY DIFFERENT FROM THE INTENDED PAYEE.
THIS LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICES (ISP98), INTERNATIONAL CHAMBER OF COMMERCE, PUBLICATION NO. 590.
SILICON VALLEY BANK,
AUTHORIZED SIGNATURE
 
AUTHORIZED SIGNATURE




ALL THE DETAILS SET FORTH HEREIN IN THIS LETTER OF CREDIT
Applicant’s Authorized Signature
 
DATE
Schedule 2-10

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER ____________________
EXHIBIT “A”
 
 
 
 
 
 
DATE:____________
REF. NO. ________________
 
 
AT SIGHT OF THIS DRAFT
 
 
PAY TO THE ORDER OF _____________________________________________US$_______________
 
 
US DOLLARS
 
 
 
DRAWN UNDER SILICON VALLEY BANK, SANTA CLARA, CALIFORNIA, STANDBY
 
 
LETTER OF CREDIT NUMBER NO. ________________________DATED ___________________
 
 
TO:
SILICON VALLEY BANK
 
 
 
3003 TASMAN DRIVE
 
 
 
 
SANTA CLARA, CA 95054
(BENEFICIARY’S NAME)
 
 
 
 
 
 
 
 
 
Authorized Signature
 
 
 
 
 
 


GUIDELINES TO PREPARE THE DRAFT
1.
DATE: ISSUANCE DATE OF DRAFT.
2.
REF. NO.: BENEFICIARY’S REFERENCE NUMBER, IF ANY.
3.
PAY TO THE ORDER OF: NAME OF BENEFICIARY AS INDICATED IN THE L/C (MAKE SURE BENEFICIARY ENDORSES IT ON THE REVERSE SIDE).
4.
US$: AMOUNT OF DRAWING IN FIGURES.
5.
USDOLLARS: AMOUNT OF DRAWING IN WORDS.
6.
LETTER OF CREDIT NUMBER: SILICON VALLEY BANK’S STANDBY L/C NUMBER THAT PERTAINS TO THE DRAWING.
7.
DATED: ISSUANCE DATE OF THE STANDBY L/C.
8.
BENEFICIARY’S NAME: NAME OF BENEFICIARY AS INDICATED IN THE L/C.
9.
AUTHORIZED SIGNATURE: SIGNED BY AN AUTHORIZED SIGNER OF BENEFICIARY.

IF YOU HAVE QUESTIONS RELATED TO THIS STANDBY LETTER OF CREDIT PLEASE CONTACT US AT _______________.
IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER _________________


ALL THE DETAILS SET FORTH HEREIN IN THIS LETTER OF CREDIT
Applicant’s Authorized Signature
 
DATE
Schedule 2-11

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.

EXHIBIT “B”
TRANSFER FORM
DATE: _____________________
TO:    SILICON VALLEY BANK
3003 TASMAN DRIVE    RE: IRREVOCABLE STANDBY LETTER OF CREDIT
SANTA CLARA, CA 95054    NO. _______________ ISSUED BY
ATTN:INTERNATIONAL DIVISION.    SILICON VALLEY BANK, SANTA CLARA
STANDBY LETTERS OF CREDIT    L/C AMOUNT: _____________________
GENTLEMEN:
FOR VALUE RECEIVED, THE UNDERSIGNED BENEFICIARY HEREBY IRREVOCABLY TRANSFERS TO:
 
(NAME OF TRANSFEREE)
 
(ADDRESS)
ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY TO DRAW UNDER THE ABOVE LETTER OF CREDIT UP TO ITS AVAILABLE AMOUNT AS SHOWN ABOVE AS OF THE DATE OF THIS TRANSFER.
BY THIS TRANSFER, ALL RIGHTS OF THE UNDERSIGNED BENEFICIARY IN SUCH LETTER OF CREDIT ARE TRANSFERRED TO THE TRANSFEREE. TRANSFEREE SHALL HAVE THE SOLE RIGHTS AS BENEFICIARY THEREOF, INCLUDING SOLE RIGHTS RELATING TO ANY AMENDMENTS, WHETHER INCREASES OR EXTENSIONS OR OTHER AMENDMENTS, AND WHETHER NOW EXISTING OR HEREAFTER MADE. ALL AMENDMENTS ARE TO BE ADVISED DIRECTLY TO THE TRANSFEREE WITHOUT NECESSITY OF ANY CONSENT OF OR NOTICE TO THE UNDERSIGNED BENEFICIARY.
THE ORIGINAL OF SUCH LETTER OF CREDIT IS RETURNED HEREWITH, AND WE ASK YOU TO ENDORSE THE TRANSFER ON THE REVERSE THEREOF, AND FORWARD IT DIRECTLY TO THE TRANSFEREE WITH YOUR CUSTOMARY NOTICE OF TRANSFER.
SIGNATURE AUTHENTICATED
 
 
 
 
The names(s), title(s), and signature(s) conform to that/those on file with us for the company and the signature(s) is/are authorized to execute this instrument.
 
(BENEFICIARY’S NAME)
 
By:
 
 
 
 
Printed Name:
 
(Name of Bank)
 
Title:
 
 
 
 
 
 
 
(Address of Bank)
 
 
 
 
 
 
 
 
 
 
(City, State, Zip Code)
 
 
 
 
 
 
 
 
 
 
(Print Authorized Name and Title)
 
 
 
 
 
 
 
 
 
 
(Authorized Signature)
 
 
 
 
 
 
 
 
 
 
(Telephone Number)
 
 
 
 
 
 
 
 
 
 


ALL THE DETAILS SET FORTH HEREIN IN THIS LETTER OF CREDIT
Applicant’s Authorized Signature
 
DATE
Schedule 2-12
EX-10.10 4 filename4.htm Exhibit
Exhibit 10.10

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


CONSENT TO SUBLEASE
This Consent to Sublease (“Sublease Consent”) is made and entered into as of September 26, 2016, by and among 395 Page Mill LLC, a Delaware limited liability company (“Master Landlord”), Cloudera Inc., a Delaware corporation (“Sublandlord”), and Machine Zone, Inc., a Delaware corporation (“Subtenant”).
RECITALS
A.    Master Landlord, as landlord, and Sublandlord, as tenant, entered into that certain Triple Net Space Lease dated September 6, 2016 (the “Master Lease”), pursuant to which Master Landlord leased to Sublandlord certain premises consisting of the building (“Building”) and related real property known as 395 Page Mill Road in Palo Alto, California (“Premises”). All capitalized terms used in this Sublease Consent and not defined herein have the same meaning as in the Master Lease.
B.    Sublandlord desires to sublease to Subtenant a portion of the Premises (such portion herein called the “Sublease Premises”) pursuant to a Sublease Agreement dated as of September 12, 2016 (the “Sublease”), a signed copy of which is attached as “Exhibit A” hereto. The Sublease Premises consists of approximately 104,852 rentable square feet of space consisting of certain portions of the first and second floors of the Building, as more particularly described in the Sublease. Master Landlord is willing to consent to the Sublease, subject to the terms and conditions of this Sublease Consent.
NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Master Landlord, Sublandlord and Subtenant agree as follows:
1.Consent to Sublease.
(a)    Subject to the terms and conditions of this Sublease Consent, Master Landlord hereby consents to the Sublease for the Sublease Premises. Nothing in this Sublease Consent or in the Sublease shall be deemed a waiver by Master Landlord of any right that it may have to terminate or amend the Master Lease pursuant to the terms thereof or as otherwise may be agreed upon by Master Landlord and Sublandlord. The foregoing consent shall not operate as approval or ratification by Master Landlord of any of the expressed or implied provisions of the Sublease and Master Landlord shall not be bound by or estopped in any way by the provisions of the Sublease. This Consent shall not be construed or implied to be a consent to any other matter for which Master Landlord’s consent is required under the Master Lease, including, without limitation, any Alterations under Section 6.03 of the Master Lease or any signage under Section 17.15 of the Master Lease.
(b)    Pursuant (and subject) to the terms of Section 11.01 of the Master Lease, Sublandlord shall reimburse Master Landlord upon demand for its reasonable costs and expenses,

-1-

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


including attorneys’ fees, incurred by Master Landlord in connection with the proposed Sublease and this Consent is expressly conditioned on such payment timely being made.
(c)    This Consent to Sublease shall in no way release Sublandlord or any person or entity claiming by, through or under Sublandlord from any of its covenants, agreements, liabilities and duties under the Master Lease (including, without limitation, all indemnification and insurance obligations), as the same may be amended from time to time, without respect to any provision to the contrary in the Sublease.
(d)    Sublandlord shall be liable to Master Landlord for any default under the Master Lease, whether such default is caused by Sublandlord or Subtenant or anyone claiming by or through either Sublandlord or Subtenant, but the foregoing shall not be deemed to restrict or diminish any right which Master Landlord may have against Subtenant pursuant to the Master Lease, in law or in equity for violation of the Master Lease or otherwise, including, without limitation, the right to enjoin or otherwise restrain any violation of the Master Lease by Subtenant.
2.    Sublease Subordinate. The Sublease is and shall be at all times subject and subordinate to the Master Lease. Nothing in this Sublease Consent shall be construed to amend or waive any of the provisions, covenants or conditions in the Master Lease.
3.    Sublease Consent to Govern. In the case of any conflict between the provisions of this Sublease Consent and the provisions of the Sublease or the Master Lease, the provisions of this Sublease Consent shall prevail as between Master Landlord and Sublandlord or as between Master Landlord and Subtenant.
4.    Further Transfers. Any further or additional sublease, assignment, termination or other transfer of any interest in the Sublease or the Sublease Premises shall require the prior written consent of Master Landlord pursuant to, and to the extent required, by the terms and conditions of the Master Lease.
5.    Master Landlord Not Party to Sublease. Master Landlord shall not by reason of this Sublease Consent (a) be bound by or become a party to the Sublease or have any obligation to Subtenant to provide the services or utilities to be provided to Sublandlord pursuant to the terms of the Master Lease, (b) be deemed to have accepted the attornment of Subtenant, or (c) be deemed liable to Subtenant (x) for any failure of Sublandlord to perform or observe Sublandlord’s obligations under the Sublease, or (y) in connection with the Sublease Premises. Notwithstanding anything to the contrary contained in the Sublease, Master Landlord shall have no obligation (i) to Sublandlord in connection with the Sublease, or (ii) to Subtenant in connection with the Sublease Premises, the Sublease or the Master Lease. Subtenant shall have no right, and there shall not be vested in Subtenant any right, to exercise rights of first refusal, options, or other similar expansion or preferential rights, if any, given to Sublandlord as the tenant under the Master Lease. Nothing in the Sublease, this Sublease Consent or otherwise shall be deemed to be an express or implied agreement on the part of Master Landlord to recognize or allow the Sublease to continue beyond any termination of the Master Lease. The parties hereto acknowledge and agree that the Sublease shall terminate (to the extent it has not already done so) upon the expiration or earlier termination of the Master Lease for any reason whatsoever.

2

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


6.    Indemnity. The indemnity and defense obligations set forth in Section 7.07(a) of the Master Lease and incorporated into the Sublease through the terms of Section I 2 thereof, shall apply with equal force and for the benefit of Master Landlord. If any action or proceeding is brought against Master Landlord by reason of any such matter, upon notice from Master Landlord, Subtenant shall defend the same with legal counsel reasonably acceptable to Master Landlord and at Subtenant’s sole expense. The obligations of Subtenant under this paragraph 6 shall survive any termination of the Sublease or the Master Lease.
7.    Assignment of Rent and Default.
(a)    Assignment of Rent. Sublandlord hereby irrevocably assigns and transfers to Master Landlord all of Sublandlord’s interest in the Monthly Rent and additional rent payable by Subtenant under the Sublease, subject however, to the terms of paragraph 7(b) below and subject to the rights of Master Landlord’s lenders pursuant to any subordination, non-disturbance and attornment agreement now or hereafter existing between Master Landlord and such lender(s).
(b)    License to Collect Sublease Rents. Master Landlord, by executing this Sublease Consent, agrees that during any period of time when there is no default by Sublandlord under the Master Lease (after notice and the expiration of the applicable cure period in the Master Lease), Sublandlord may receive, collect and enjoy the Monthly Rent and additional rent accruing under the Sublease. However, if Sublandlord shall default under the Master Lease (after notice and the expiration of the applicable cure period in the Master Lease), then Master Landlord may, at its option and in addition to all other rights and remedies available under the Master Lease, at law or in equity, receive and collect, directly from Subtenant, all Monthly Rent and additional rent (as these terms are defined in the Sublease) owing or thereafter becoming due under the Sublease during the period of time in which there exists such uncured failure by Sublandlord.
(c)    Authorization to Direct Sublease Payments. Sublandlord hereby irrevocably authorizes and directs Subtenant to pay to Master Landlord Monthly Rent and additional rent which is due and unpaid as of any date on or after the delivery by Master Landlord of a written notice (“Payment Notice”) demanding payment of Monthly Rent and additional rent and stating that a default exists (after notice and the expiration of the applicable cure period in the Master Lease) in the performance or observance of Sublandlord’s obligations under the Master Lease. Sublandlord agrees that Subtenant shall have the right to rely upon any such Payment Notice from Master Landlord, and that Subtenant shall pay Monthly Rent and additional rent to Master Landlord without any obligation or right to inquire as to whether such default exists and notwithstanding any notice or claim from Sublandlord to the contrary. Sublandlord shall have no right or claim against Subtenant for any such Monthly Rent and additional rent so paid by Subtenant to Master Landlord.
(d)    Additional Provisions. Subtenant shall provide to Sublandlord concurrently with any payment to Master Landlord reasonable evidence of such payment. Any sums paid directly by Subtenant to Master Landlord in accordance with this paragraph 7 shall be credited toward amounts payable by Subtenant to Sublandlord under the Sublease and Master Landlord shall credit such amounts towards the rent or damages due from Sublandlord under the Master Lease. Any sums paid directly by Subtenant to Master Landlord pursuant to this Section 7(d) in excess of those owed by Sublandlord to Master Landlord shall be promptly paid to Sublandlord.

3

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


(e)    No Liability to Subtenant. Master Landlord shall not, by reason of the foregoing provisions of this paragraph 7 or by exercising its rights to direct and accept payments from Subtenant (i) be bound by or become a party to the Sublease, (ii) be deemed to have accepted the attornment of Subtenant, or (iii) be deemed liable to Subtenant for any failure of Sublandlord to perform and comply with Sublandlord’s obligations under the Sublease.
8.    Insurance; Waiver of Subrogation.
(a)    Subtenant shall name Master Landlord and Sublandlord and their respective lenders identified to Subtenant as “additional insured” on all liability policies carried by Subtenant with respect to the Sublease Premises.
(b)    Master Landlord, Sublandlord and Subtenant (each, a “Waiving Party”) hereby release and relieve the others (each, a “Released Party”), and each Waiving Party hereby waives its entire right of recovery against each Released Party, for Joss or damage to property arising out of or incident to perils which are required to be insured against by the Waiving Party pursuant to the terms of the Master Lease and/or Sublease, which perils occur on or about the Sublease Premises, whether due to the negligence of any of them, or their respective agents, employees contractors and/or invitees. Notwithstanding the foregoing, nothing herein shall be deemed to affect the obligation of Sublandlord to reimburse Master Landlord for the amount of any deductible portion of Master Landlord’s insurance policy pursuant to the terms of the Master Lease. Each Waiving Party shall give notice to the insurance carrier or carriers that the foregoing mutual waiver of subrogation is contained in this Sublease Consent and shall obtain from their respective insurance carriers a waiver of the rights of subrogation.
9.    Brokerage Commissions. Sublandlord shall indemnify, defend, protect and hold harmless Master Landlord from any claim or liability arising out of any assertion by any real estate finder, agent or broker that a commission or fee is due and payable in connection with the transactions contemplated by the Sublease.
10.    Representations Regarding Consideration. Sublandlord and Subtenant each represents and warrants that the Sublease sets forth the true accurate and full amount of all consideration to be received, directly or indirectly, by Sublandlord and furnished, directly or indirectly, by Subtenant in connection with the Sublease and this Sublease Consent is conditioned on the truth of said representation and warranty.
11.    Proof of Insurance, Estoppel Certificates, SNDAs, Easements and Modifications. As part of the consideration for Master Landlord’s consent hereunder, Subtenant agrees that the obligations of Sublandlord set forth in Master Lease Sections 7.05 (Proof of Insurance), 15.01 (Estoppel Certificates), 17.13 (SNDA), 17.18 (Easements) and 17.22 (Lender Required Modifications) are incorporated herein by this reference as obligations owed hereunder to Master Landlord by Subtenant (in addition to being owed to Sublandlord as obligations under the Sublease), and Subtenant agrees to deliver the (i) proof of insurance, (ii) Estoppel Certificate, (iii) subordination, non-disturbance and attornment agreements, (iv) easements, rights, dedications, parcel maps, conditions, covenants and restrictions, or (v) modifications required by lenders within ten ( 10) days after Master Landlord requests same, with copies to Sublandlord. Notwithstanding

4

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


the foregoing, Subtenant shall not be required to obtain coverage in excess of that set forth in the Sublease. Each of Subtenant’s obligations owed to Master Landlord under this paragraph 11 is also hereby agreed to be an obligation of Subtenant owed to Sublandlord under the Sublease and, if not timely performed, a breach under the Sublease.
12.    Notice From Sublandlord. Sublandlord shall provide written notice to Master Landlord within five (5) business days after the occurrence of any termination of the Sublease prior to the expiration of the Sublease term.
13.    Attorneys’ Fees. In the event that any legal action or proceeding, including, without limitation, arbitration and declaratory relief, is commenced for the purpose of enforcing or seeking a declaration of any rights or remedies pursuant to this Sublease Consent, the prevailing party or parties shall be entitled to recover from the non-prevailing party or parties reasonable attorneys’ fees, as well as costs of suit, in such action or proceeding, whether or not such action is prosecuted to final judgment.
14.    Miscellaneous Provisions.
(a)    Sublandlord and Subtenant each agrees not to amend, modify, supplement, or otherwise change in any respect the Sublease (“Amendment”) without the prior written consent of Master Landlord which shall not be unreasonably withheld from Sublandlord. Any amendment, modification, supplement, or change to the Sublease not in accordance with this subparagraph shall be void.
(b)    This Sublease Consent contains the final expression and entire agreement as well as a complete and exclusive statement of that agreement among the parties hereto regarding the matters which are the subject of this Sublease Consent and shall not be contradicted by any prior agreement or contemporaneous oral agreement. The terms, covenants and conditions of this Sublease Consent shall apply to and bind the permitted heirs, successors, assigns, executors and administrators of all the parties hereto. The parties hereto acknowledge and agree that no rule of construction, to the effect that any ambiguities are to be resolved against the drafting party, shall be employed in the interpretation of this Sublease Consent. If any provision of this Sublease Consent is determined to be illegal or unenforceable, such determination shall not affect any other provisions of this Sublease Consent and all such other provisions shall remain in full force and effect.
(c)    Each party hereto certifies to each of the other parties that no voluntary or involuntary petition under the Bankruptcy Code (11 U.S.C. §§ 101 et seq.) has been filed by or against it and that it is not presently entitled to relief under the Bankruptcy Code.
(d)    By signing this Sublease Consent, each person signing this Sublease Consent on behalf of an entity party certifies that he or she is authorized to execute this Sublease Consent and to bind his or her respective party to the terms of this Sublease Consent, and that all corporate or other entity action necessary to authorize the execution of this Sublease Consent by each respective party has been taken and is presently in force and effect.

5

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


(e)    This Sublease Consent may be executed in any number of counterparts, each of which shall be deemed an original, and when taken together they shall constitute one and the same Sublease Consent.
(f)    Sublandlord (but not Subtenant) waives any requirement under California unlawful detainer statutes or otherwise that Master Landlord name or serve Subtenant with any default notice given under the Master Lease or to name or make Subtenant a party to any eviction proceedings. Master Landlord may seek and recover possession of the Premises from Sublandlord pursuant to the terms of the Master Lease (including the Sublease Premises) without recovering possession from Subtenant. Conversely, to the extent Master Landlord deems it necessary or appropriate to name and/or serve Subtenant with notice and/or to make Subtenant a party to such proceedings, the same shall not be deemed a violation of any duty owed by Master Landlord to Subtenant and upon forfeiture of the Master Lease pursuant to such proceedings, the Sublease shall also be forfeited.
(g)    Nothing in this Sublease Consent shall be deemed a consent by Master Landlord to any change of any nature in the size or location of the Sublease Premises (whether increase, decrease, different Building(s) or floors or otherwise) notwithstanding anything in the Sublease. Any such change shall require the prior written consent of Master Landlord, which will not be unreasonably withheld or delayed.
(h)    Subtenant shall comply with all of Master Landlord’s security and access requirements in connection with Subtenant’s use of the Sublease Premises and surrounding Premises.
15.    Notices. All notices required, authorized or permitted by this Consent to Sublease or applicable law shall be in writing and (i) may be delivered in person (by hand or courier), (ii) may be served by any of the methods authorized by California Code of Civil Procedure, Section 1162, or (iii) may be sent by regular, certified or registered mail or U.S. Postal Service Express Mail or other nationally-recognized overnight courier, with postage prepaid and shall be deemed given on the date delivered or, if delivery is attempted but fails, on the first date delivery was attempted but refused or prevented by absence of a party, locked door or other physical barrier. Any party hereto may by written notice to the other specify a different address for notice.
Master Landlord:
 
With a courtesy copy to:
 
 
 
395 Page Mill LLC
 
Sheppard Mullin Richter & Hampton LLP
c/o Jay Paul Company
 
Four Embarcadero Center, 17th Floor
Four Embarcadero Center, Suite 3620
 
San Francisco, California 94111
San Francisco, California 94111
 
Attn: Doug Van Gessel

6

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


Sublandlord:
 
 
 
 
 
Cloudera, Inc.
 
Cloudera, Inc.
395 Page Mill Road
 
395 Page Mill Road
Pal o Alto, California 94304
 
Palo Alto, California 94304
Attn: Jim Frankola
 
Attn: David Middler
Subtenant:
 
 
 
 
 
Machine Zone, Inc.
 
 
2225 E. Bayshore Road, Ste. 200
 
 
Palo Alto, California 94304
 
 
Attn: General Counsel
 
 


7

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


IN WITNESS WHEREOF, Master Landlord, Sublandlord and Subtenant have executed this Sublease Consent as of the day and year first hereinabove written.
“MASTER LANDLORD”
 
395 PAGE MILL LLC,
a Delaware limited liability company
By:
/s/ Philip A. Verinsky
 
Philip A. Verinsky
 
(type or print name)
Its:
Vice President
“SUBLANDLORD”
 
CLOUDERA INC.,
a Delaware corporation
By:
/s/ Jim Frankola
 
Jim Frankola
 
(type or print name)
Its:
CFO
“SUBTENANT”
 
MACHINE ZONE, INC.,
a Delaware corporation
By:
/s/ Victoria Valenzuela
 
Victoria Valenzuela
 
(type or print name)
Its:
General Counsel

-8-

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


EXHIBIT A
COPY OF SIGNED SUBLEASES

-9-

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


SUBLEASE
THIS SUBLEASE, dated for reference purposes as of September 12, 2016 (“Sublease”), is entered into by and between CLOUDERA, INC., a Delaware corporation (“Sublandlord”), and MACHINE ZONE, INC., a Delaware corporation (“Subtenant”).
RECITALS
A.    Sublandlord, as tenant, entered into that certain Triple Net Space Lease, dated as of August __, 2016 (“Master Lease”), with 395 PAGE MILL LLC, a Delaware limited liability company (“Landlord”), for the lease of the office building located at 395 Page Mill Road, Palo Alto, California 94306, comprising approximately 224,852 square feet of rentable area (the “Premises”).
B.    Subject to the terms and conditions of this Sublease, Subtenant desires to sublease from Sublandlord, and Sublandlord desires to sublease to Subtenant, a portion of the Premises as specified herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged by the parties, Sublandlord and Subtenant hereby agree as follows:
1.Sublease.
1.1    Subleased Premises; Measurement. Subject to the receipt of the Consent (as defined in Section 1.2 below), Sublandlord hereby subleases to Subtenant, and Subtenant hereby subleases from Sublandlord, the following premises: (a) approximately 57,703 rentable square feet on the second floor of the Premises, (b) approximately 35,067 rentable square feet located in Suite 100 on the first floor of the Premises, and (c) approximately 12,082 rentable square feet adjacent to the gymnasium on the first floor of the Premises, for an aggregate of approximately 104,852 rentable square feet, as more particularly depicted on Exhibit A attached hereto (together, the “Subleased Premises”). The exact square footage of the Subleased Premises will be confirmed by Sublandlord’s architect taking into account the load factor and shared areas (i.e. gymnasium and multi-purpose/auditorium room). At such time as the final square footage of the Subleased Premises has been determined, Sublandlord and Subtenant shall execute an amendment to this Sublease, prepared by Sublandlord’s counsel, in order to amend Section 3 below and any other terms which may be affected by such calculation. In addition to the foregoing, Subtenant shall have the right to use in common with Sublandlord all other Common Areas of the Premises, including, without limitation, the first floor lobby of the Premises, the gymnasium and the multi-purpose/auditorium room; provided, however, Subtenant shall pay its Pro Rata Share (as defined below) of any incidental operating expenses incurred by Sublandlord for the janitorial service, maintenance or towel service, as applicable, for the general operation of the gymnasium and multi-purpose/auditorium room, and shall pay for any costs and expenses incurred directly on behalf of Subtenant for its sole use thereof. Notwithstanding the foregoing, to the extent that Subtenant elects not to use the gymnasium or the multi-purpose/auditorium room, Subtenant shall not pay its Pro Rata Share of any incidental

1

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


operating expenses for the gymnasium or multi-purpose/auditorium room, nor will Subtenant be charged for any equipment or set-up costs associated with outfitting the gymnasium or the multi-purpose/auditorium room.
1.2    Consent. This Sublease and Subtenant’s and Sublandlord’s obligations hereunder are expressly conditioned upon the execution by Landlord of a written consent to this Sublease, with such modifications as may be required by Landlord and as are reasonably acceptable to Sublandlord and Subtenant (“Consent”). Sublandlord shall promptly comply with all of the terms of the Master Lease applicable to such Consent, including the payment of any fees required in connection therewith, and the requirement to promptly submit a request for the Consent a second time if Landlord shall have failed to respond to the first request for the Consent. Subtenant shall promptly deliver to Sublandlord any information reasonably requested by Landlord in connection with Landlord’s approval of this Sublease. In the event Landlord fails to execute and deliver the Consent by December 31, 2016 (subject to force majeure and which period may be extended by Sublandlord day-for-day if Subtenant delays in providing any reasonable information, signatures or documents required by Landlord in connection with providing its consent), Subtenant and Sublandlord shall each have the right to cancel this Sublease by giving written notice of such cancellation to the other party at any time during such period (as the same may be extended pursuant to this Section 1.2) and prior to receipt of the fully executed Consent, whereupon Sublandlord shall promptly refund to Subtenant all amounts previously paid by Subtenant to Sublandlord in connection with this Sublease and thereafter neither party shall have any further rights or obligations hereunder.
2.    Term; Early Access Period.
2.1    Subject to the Early Access Period (as defined below), Sublandlord shall deliver to Subtenant the Subleased Premises on the date that is the last to occur of (i) July 1, 2017, (ii) the date the Consent is fully executed and delivered to Subtenant, or (iii) the date that possession of the Subleased Premises is delivered to Subtenant, which shall occur no more than two (2) business days after the date that the Premises is delivered by Landlord to Sublandlord in accordance with the Master Lease (the “Commencement Date”). The term of this Sublease (the “Term”) shall end on the date that is sixty (60) months thereafter, but in no event later than the expiration of the Master Lease (the “Expiration Date”), unless sooner terminated pursuant to any provision hereof. Subtenant has no right to retain possession of the Subleased Premises or any part thereof beyond the expiration or earlier termination of this Sublease or the Master Lease. If for any reason whatsoever, Sublandlord fails to timely deliver the Subleased Premises to Subtenant, this Sublease shall not be void or voidable, nor shall Sublandlord, or Sublandlord’s agents be liable to Subtenant for any loss or damage resulting therefrom, except as expressly set forth in this Sublease.
2.2    From and after the date that the Consent is fully executed and delivered, if Sublandlord has gained early access to the Premises in accordance with the Master Lease, and provided that Subtenant has not committed a default under this Sublease (beyond any applicable notice and cure period provided for herein), Subtenant and Subtenant’s invitees may enter the Subleased Premises, at Subtenant’s sole risk, in order to install in the Subleased Premises its furnishings, equipment, cabling and perform general business set-up, subject to the other terms of this Sublease, and for construction of the Subtenant’s Improvements (as defined below) (the “Early

2

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


Access Period”). For the avoidance of doubt, the Early Access Period shall commence no later than two (2) business days after Sublandlord has gained early access to the Premises in accordance with the Master Lease, and any work conducted by Subtenant during such period shall not interfere with any work being performed to the Premises by Landlord or Sublandlord. Prior to any entry by Subtenant pursuant to this Section 2.2, Subtenant shall have first furnished evidence of all insurance required hereunder and under the Master Lease. Subtenant’s use of the Subleased Premises during the Early Access Period shall be subject to all of the terms and conditions of this Sublease and the Master Lease excluding the obligation to pay Monthly Base Rent or Subtenant’s Pro Rata Share (as defined below) of Operating Expenses, Insurance Expenses or Real Estate Taxes.
3.    Subtenant’s Rent Payment Obligations.
3.1    Monthly Base Rent. Commencing on the Commencement Date, Subtenant shall pay to Sublandlord monthly base rent for the Subleased Premises (“Monthly Base Rent”) in accordance with the table below (“Base Rent Schedule”). Rent for any partial months shall be prorated based on the formula set forth in Section 4.01 of the Master Lease.
Period
Approximate Rentable Square Feet of Subleased Premises
Rent per Rentable Square Foot
Monthly Base Rent for Subleased Premises
Month 1 - Month 12
104,852
$7.25
$760,177.00
Month 13 - Month 24
104,852
$7.47
$783,244.44
Month 25 - Month 36
104,852
$7.69
$806,311.88
Month 37 - Month 48
104,852
$7.92
$830,427.84
Month 49 - Month 60
104,852
$8.16
$855,592.32
3.2    Abated Rent. Notwithstanding anything herein to the contrary, Sublandlord and Subtenant acknowledge and agree that Subtenant shall not pay Monthly Base Rent or Subtenant’s Pro Rata Share of Operating Expenses, Insurance Expenses or Real Estate Taxes for the Subleased Premises (expressly excluding any applicable utility or janitorial costs provided to the common areas of the Premises or to the Subleased Premises and not otherwise separately paid for by Subtenant) for the first two (2) months of the Term hereof commencing on the Commencement Date (the “Base Rent Abatement Period”); provided, however, that if, at any time during the Term hereof, Subtenant is in default under the terms of this Sublease (beyond any applicable notice and cure periods provided for herein), Sublandlord’s agreement to waive the Monthly Base Rent and Subtenant’s Pro Rata Share of Operating Expenses, Insurance Expenses and Real Estate Tax payments as specified in this Section 3.2 during the Base Rent Abatement Period shall be immediately revoked without further notice to Subtenant. In the event of a default by Subtenant under this Sublease (beyond any applicable notice and cure period provided for herein), in addition

3

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


to all other remedies in connection therewith, Sublandlord shall have the right to demand immediate payment of any and all Base Rent which would have been due and payable in accordance with this Sublease absent the waiver contained in this Section 3.2.
3.3    Advanced Payment of Base Rent; Payment of Monthly Base Rent. Within two (2) business days after Landlord’s execution and delivery of the Consent, Subtenant shall deliver to Sublandlord (a) an amount equal to $760,177.00, which amount shall be applied to the Base Rent for the third month of the Term, and (b) an amount equal to $100,657.92, which amount shall be applied to Subtenant’s Pro Rata Share of Operating Expenses, Insurance Expenses and Real Estate Taxes for the third month of the Term. In consideration of the Base Rent Abatement Period and the foregoing, Subtenant shall commence paying Monthly Base Rent to Sublandlord for the Subleased Premises on the first day of the third month of the Term hereof. Monthly Base Rent shall be paid without deduction or offset on the first day of each month of the Term from and after the first day of the second month of the Term. If the Term does not begin on the first day of a calendar month or end on the last day of a calendar month, the monthly Base Rent for any such partial month shall be prorated by multiplying the monthly Base Rent by a fraction, the numerator of which is the number of days of the partial calendar month included in the Term and the denominator of which is the total number of days in the full calendar month. All Rent (as defined below) shall be payable in lawful money of the United States to Sublandlord at the address stated herein or to such other persons or at such other places as Sublandlord may designate in writing.
3.4    Operating Expenses, Insurance Expenses, Real Estate Taxes.
3.4.1    Subtenant shall, during the term of this Sublease, pay Subtenant’s Pro Rata Share (defined below) of Operating Expenses, Insurance Expenses and Real Estate Taxes with respect to the Subleased Premises in accordance with the Master Lease. For purposes of this Sublease, (a) Landlord has provided Sublandlord with an estimate of the monthly Operating Expenses, Insurance and Real Estate Taxes (excluding utilities and janitorial service) for the Subleased Premises in an amount equal to $100,657.92 (subject to change in accordance with the Master Lease and this Sublease), and (b) as used herein, the term “Subtenant’s Pro Rata Share” shall be equal to the total rentable square footage of the Subleased Premises (when the actual square footage of the Subleased Premises has been finally determined pursuant to Section 1 above) as compared with the total square footage of the Premises. By way of illustration only, the Subleased Premises comprises approximately 104,852 rentable square feet and the Premises comprises 224,852 rentable square feet, as a result, Subtenant’s Pro Rata Share would be calculated as follows: 104,852/224,852 = 46.70%.
3.4.2    Notwithstanding anything contrary set forth in the Master Lease, Subtenant may, at Subtenant’s sole discretion, cost and expense, contract with a reputable janitorial services company for the provision of janitorial service within the Subleased Premises.
Should Subtenant elect to hire a separate janitorial services company, Sublandlord shall not charge or pass-through to Subtenant as an Operating Expense janitorial service for the Subleased Premises.
3.5    Rent. As used in this Sublease, the term “Rent” shall mean, collectively, Monthly Base Rent for the Subleased Premises, Subtenant’s Pro Rata Share of Operating Expenses,

4

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


Insurance Expenses and Real Estate Taxes, and all other sums payable by Subtenant to Sublandlord under this Sublease, whether or not expressly designated as “rent”, all of which are deemed and designated as rent pursuant to the terms of this Sublease, except as expressly set forth in this Sublease. Notwithstanding the foregoing, “Rent” under this Sublease shall not include, and Subtenant shall have no responsibility or liability for (i) the payment of any cost, expense, and/or charge arising from Sublandlord’s breach of the Master Lease, or (ii) costs arising from Sublandlord’s failure to perform any condition or obligation under the Master Lease.
4.    Utilities and Services. Subject to the terms of the Master Lease, should the Subleased Premises be separately metered for water, electricity, natural gas or other utilities serving the Subleased Premises, all such utilities used by Subtenant in the Subleased Premises (e.g., water, electricity and natural gas, as applicable) shall be paid for by Subtenant by separate charge billed by the applicable utility company and payable directly by Subtenant. Should the Subleased Premises not be separately metered, Subtenant shall pay Subtenant’s Pro Rata Share of any such utilities and services billed to Sublandlord but provided to the Subleased Premises, but specifically excluding any charges incurred by Sublandlord’s excessive (more than standard building usage) and excess use of the same. Utility service to the Subleased Premises may be furnished by one or more companies. Landlord shall have the exclusive right to reasonably designate any company providing utility service to the Subleased Premises. Any utilities paid for directly by Subtenant shall not be included as Operating Expenses and, accordingly, shall not be passed-through for payment by Subtenant. Each of Sublandlord and Subtenant shall be responsible for paying for the actual cost of any excess utility consumption by such party with respect to their portion of the Premises, such payments to be based on Sublandlord’s reasonable estimate of the actual costs therefor, or, at Sublandlord or Subtenant’s option, a submeter or similar device to measure such usage (with the cost of said device to be shared 50/50). Notwithstanding anything to the contrary specified in the Master Lease or this Sublease, Subtenant shall not install equipment of any kind or nature whatsoever nor engage in any practice or use which will necessitate any changes, replacements or additions to, or in the use of, the water system, heating system, plumbing system, air conditioning system, electrical system, floor load capacities, or other mechanical or structural system of the Subleased Premises or the Premises, unless otherwise permitted under the Master Lease and in such case in accordance with the terms thereof.
5.    Letter of Credit.
5.1    Within two (2) business days after Subtenant’s execution and delivery of this Sublease to Sublandlord, Subtenant shall deposit with Sublandlord an irrevocable standby letter of credit (the “Letter of Credit”) in substantially the same form as Exhibit C attached hereto in an amount equal to [***]. Sublandlord hereby approves of Comerica Bank as an issuing bank for the Letter of Credit. The Letter of Credit shall be held by Sublandlord as security for the faithful performance by Subtenant of all the provisions of this Sublease to be performed or observed by Subtenant. For purposes of this Sublease, Sections 4.07(b), (c) and (e) of the Master Lease shall apply to the rights and obligations of the parties with respect to the Letter of Credit.
5.2    On the third anniversary of the Commencement Date of this Sublease, and provided that Subtenant has not committed a default hereunder or under the Master Lease that has

5

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


not been cured within the applicable cure period, the Letter of Credit shall be reduced to an amount equal to six (6) months’ of the then existing Base Rent.
5.3    On the fourth anniversary of the Commencement Date of this Sublease, and provided that Subtenant has not committed a default hereunder or under the Master Lease that has not been cured within the applicable cure period, the Letter of Credit shall be reduced to an amount equal to four (4) months’ of the then existing Base Rent.
6.    Right of First Offer. For purposes of this Sublease, “ROFO Space” shall mean any space located in the Premises. The rights with respect to the ROFO Space specified herein are and shall be personal to Subtenant and shall not be transferred or assigned by Subtenant or inure to the benefit of any party other than the Subtenant. So long as Subtenant is not then in default under this Sublease, prior to entering into a sublease of any ROFO Space, Sublandlord shall give Subtenant a notice (the “ROFO Notice”) identifying (i) the location and rentable square footage of the ROFO Space that Sublandlord desires to sublease (the “Actual ROFO Space”) and (ii) the terms (the “ROFO Sublease Proposal”) for the sublease transaction that Sublandlord proposes to sublease the Actual ROFO Space including (x) the term (including commencement and expiration dates) for which Sublandlord proposes to sublease the Actual ROFO Space, and (y) the base rent upon which Sublandlord proposes to sublease the Actual ROFO Space (including any fixed and/or indexed adjustments and escalations in “base rent”). For a period of ten (10) business days following Sublandlord’s delivery of the ROFO Notice (the “ROFO Exercise Period”), Subtenant shall have the right to exercise its right to sublease the Actual ROFO Space designated in the ROFO Notice upon all of the terms set forth in the ROFO Sublease Proposal (or on such terms as otherwise agreed upon by Sublandlord and Subtenant), and, except as otherwise herein provided, on the other terms and conditions set forth in the ROFO Notice and this Sublease to the extent the terms of this Sublease do not conflict with the terms of the ROFO Notice. If the terms of this Sublease conflict with the terms of the ROFO Notice, then the terms of the ROFO Notice shall apply with respect to only the Actual ROFO Space identified in the applicable ROFO Notice. The terms and provisions contained in a ROFO Notice shall not apply to any other ROFO Notice or any other ROFO Space unless and only to the extent expressly provided in such other ROFO Notice. Subtenant may only exercise its right to sublease the Actual ROFO Space by written notice given to Sublandlord prior to the expiration of the ROFO Exercise Period, and a failure to give written notice of the exercise of such right prior to the expiration of the ROFO Exercise Period shall constitute an election not to exercise such right with respect to such Actual ROFO Space. Promptly after Subtenant’s exercise of its option with respect to the Actual ROFO Space pursuant to this Section 6, Sublandlord shall, in accordance with the Master Lease, notify Landlord of its intent to sublease the Actual ROFO Space to Subtenant. Upon receipt of Landlord’s written consent to Subtenant’s subleasing the Actual ROFO Space, Sublandlord shall prepare an amendment to this Sublease, in a form reasonably satisfactory to Sublandlord and Subtenant, to incorporate the Actual ROFO Space into the Subleased Premises and to reflect changes in the size of the Subleased Premises, Base Rent, Subtenant’s Pro Rata Share and any other mutually agreed upon terms, due to the addition of the Actual ROFO Space. The parties shall execute such amendment within thirty (30) days after Sublandlord’s delivery of such amendment to Subtenant. Unless otherwise expressly provided in the ROFO Notice, Subtenant shall not be entitled to receive, and Sublandlord shall not be obligated to provide, any construction allowance for any ROFO Space, and Subtenant shall accept the Actual ROFO Space

6

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


on the date upon which Sublandlord delivers possession thereof to Subtenant in its “as-is” condition, without any representation, allowance or build-out from Sublandlord with respect to the improvement or condition thereof, except to the extent otherwise expressly provided in a ROFO Notice. Should Sublandlord deliver a ROFO Notice to Subtenant on or before the date that is nine (9) months after the Commencement Date, the material business terms contained in this Sublease (including, but not limited to, Base Rent schedule, rent abatement period, expiration date, and tenant improvement allowance) shall be included in such ROFO Notice. Should Landlord deliver a ROFO Notice to Subtenant at any time after the nine (9) month anniversary of the Commencement Date of this Sublease through the Expiration Date, the base rent payable for the Actual ROFO Space shall be equal to the base rent, on a cost per square foot and periodic basis set forth on the Base Rent Schedule (e.g, if the commencement date of the term for the Actual ROFO Space is between months 25 and 36 of the term of this Sublease, the base monthly rent shall be $7.69 per square foot and shall increase on a periodic basis in the manner set forth on the Base Rent Schedule). If Subtenant does not exercise (or is deemed to have elected not to exercise) its option to sublease the Actual ROFO Space prior to the expiration of the ROFO Exercise Period, then Sublandlord may proceed to lease the Actual ROFO Space on the same terms set forth in the ROFO Notice.
7.    Parking. Subtenant shall have the right, at no cost to Subtenant during the Term hereof, to use Subtenant’s Pro Rata Share of parking spaces within the Parking Facilities (estimated at 317, which represents Subtenant’s Pro Rata Share of 680 parking spaces provided to Sublandlord pursuant to the Master Lease), including any additional parking spaces if the Parking Facilities are increased. Such parking spaces may be reasonably adjusted by Sublandlord based on the determination of the actual square footage of the Subleased Premises, if applicable. At any time during the Term hereof, Sublandlord shall have the right to institute valet parking for all or a portion of the parking spaces referenced herein. Should Sublandlord institute such valet parking for the benefit of both Sublandlord and Subtenant, Subtenant shall pay its Pro Rata Share of the costs and expenses therefor on a monthly basis in accordance with the terms hereof. In addition to the foregoing, Subtenant shall have the right, at no cost to Subtenant during the Term hereof, to use its Pro Rata Share of bicycle parking on or about the Premises. Notwithstanding the foregoing and for the avoidance of doubt, any Charging Stations which Sublandlord may install within the Parking Facilities shall be exclusive to Sublandlord and Subtenant shall have no right to use such Charging Stations at any time during the Term hereof. Should Subtenant elect, in accordance with the Master Lease and subject to Landlord’s approval rights contained therein, to install additional electronic charging stations within the Parking Facilities for Subtenant’s exclusive use, Subtenant may install five (5) such charging stations providing power to ten (10) parking spaces within the Parking Facilities as set forth on Exhibit D attached hereto, shall be the same make/model as the Charging Stations installed by Sublandlord, shall be installed in the area specified by Landlord and Sublandlord and, so long as these conditions are satisfied, Sublandlord shall reasonably consent to such installation. Sublandlord reserves the right to require that the charging stations installed by Subtenant be separately metered, with the installation cost of such separate meter(s) and the cost of the electricity being provided to such charging stations to be borne solely by Subtenant.

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


8.    Use and Occupancy.
8.1    Use. The Subleased Premises shall be used and occupied by Subtenant in accordance with the Permitted Use specified in the Summary of Basic Lease Information of the Master Lease and Article V of the Master Lease and for no other purpose.
8.2    Compliance with Master Lease.
8.2.1    Subtenant agrees that it will occupy the Subleased Premises in accordance with the terms of the Master Lease and will not knowingly suffer to be done or omit to do any act which may result in a violation of or a default under any of the terms and conditions of the Master Lease, or render Sublandlord liable for any damage, charge or expense thereunder, except for (1) any charge or expense attributable to the period prior to or after Subtenant’s occupancy of the Subleased Premises (specifically including, without limitation, any occupancy for the purposes contemplated by Section 2.2 above), (2) any damages, charges and expenses to the extent caused by Sublandlord under the Master Lease excluding damages, charges and expenses to the extent caused by Subtenant under this Sublease, or (3) any damages, charges and expenses arising from the gross negligence or willful misconduct of Sublandlord (the damages, charges and expenses described in the foregoing clauses (1), (2) and (3) are referred to collectively herein as the “Excluded Charges”). Subtenant further covenants and agrees to indemnify Sublandlord against and hold Sublandlord harmless from any claim, demand, action, proceeding, suit, liability, loss, judgment, expense (including reasonable attorneys’ fees and disbursements) and damages of any kind or nature whatsoever arising out of, by reason of, or resulting from, Subtenant’s failure to perform or observe any of the terms and conditions of the Master Lease or this Sublease. Sublandlord covenants and agrees to indemnify Subtenant against, defend and hold Subtenant harmless from any claim, demand, action, proceeding, suit, liability, loss, judgment, expense (including reasonable attorneys’ fees and disbursements) and damages of any kind or nature whatsoever arising out of, by reason of, or resulting from, (i) any acts, omissions or gross negligence of Sublandlord in or about the Subleased Premises (except to the extent caused by Subtenant’s negligence), or (ii) any breach or default by Sublandlord under the Master Lease or this Sublease.
8.2.2    Subtenant agrees that Sublandlord shall not be required to perform any of the covenants, agreements and/or obligations of Landlord under the Master Lease and, insofar as any of the covenants, agreements and obligations of Sublandlord hereunder are required to be performed under the Master Lease by Landlord thereunder, Subtenant acknowledges and agrees that Sublandlord shall be entitled to look to Landlord for such performance. In addition, Sublandlord shall have no obligation to perform any improvements or repairs or any other obligation of Landlord under the Master Lease. Sublandlord shall not be responsible for any failure or interruption, for any reason whatsoever, of the services or facilities that may be appurtenant to or supplied to the Premises by Landlord or otherwise, including, without limitation, heat, air conditioning, ventilation, life-safety, water, electricity, elevator service and cleaning service, if any; and no failure to furnish, or interruption of, any such services or facilities shall give rise to any abatement, diminution or reduction of Subtenant’s obligations under this Sublease, or any liability on the part of Sublandlord unless such failure or interruption is caused by Sublandlord; provided, however, if Sublandlord is entitled to any rent abatement or reduction under the Master Lease, then Subtenant shall be entitled

8

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


to the same rights as Sublandlord under this Sublease with respect to the Subleased Premises. If at any time the Sublandlord is entitled to any rent abatement or reduction under the Master Lease, then Subtenant shall be entitled to the same rights as Sublandlord under this Sublease with respect to the Subleased Premises. Notwithstanding the foregoing, Sublandlord shall use commercially reasonable efforts, as reasonably indicated under the circumstances, to keep the Master Lease in effect, and provided that there is no uncured default hereunder by Subtenant, upon Subtenant’s request to Sublandlord to do so, Sublandlord shall use commercially reasonable efforts to obtain the performance by Landlord of its obligations under the Master Lease and/or to obtain the consent or approval of Landlord of any action Subtenant desires to take that requires such consent or approval; provided, however, if Landlord defaults under the Master Lease or fails to perform any of its obligations under the Master Lease after receipt of written notice from Sublandlord of such failure, Sublandlord shall either institute legal proceedings against Landlord directly, or assign to Sublandlord’s rights under the Master Lease to Subtenant to the extent necessary to permit Subtenant to institute legal proceedings against the Landlord to obtain performance of Landlord’s obligations under the Master Lease. If Sublandlord fails to abide by the provision set forth in the previous sentence, Subtenant shall have the right to take such action and institute legal proceedings in the name of Sublandlord, and for the purpose and to such extent, all rights and remedies of Sublandlord under the Master Lease are hereby conferred upon and assigned to Subtenant. Subtenant hereby waives and releases any right it may have under applicable law to make repairs at Sublandlord’s expense.
8.2.3    Any other provision in this Sublease to the contrary notwithstanding, Subtenant shall pay to Sublandlord as additional Rent hereunder any and all sums which Sublandlord may be required to pay to Landlord under the Master Lease with respect to the Subleased Premises to the extent attributable to the Subtenant.
8.2.4    Sublandlord reserves the right (i) on not less than one business days’ written notice to Subtenant, to inspect the Subleased Premises if Sublandlord has a reasonable suspicion that Subtenant has defaulted under this Sublease, and (ii) following a default by Subtenant (beyond applicable notice and cure periods), to enter upon the Subleased Premises, with reasonable prior notice, and to take such actions or cause such things to be done as may be necessary or appropriate in order to cure any Subtenant default under this Sublease or under the Master Lease.
8.2.5    Subtenant shall have no responsibility or liability for (i) making improvements or alterations to the Subleased Premises in order to comply with changes in laws unless such improvements are necessitated by Subtenant’s alterations or particular use of the Subleased Premises, or (ii) any non-compliance with any laws or requirements that are in existence as of the Commencement Date of this Sublease. In no event shall Subtenant be responsible or liable for any structural improvements or modifications to the Subleased Premises or the Building or any base building upgrades. Subtenant shall have no obligation to repair or restore the Building or the Subleased Premises in the event of any casualty or governmental taking, or the payment of any costs relating to the repair or restoration of the Building as a result of such casualty or taking.
9.    Building Security. Subject to Landlord’s approval rights in the Master Lease, and to Sublandlord’s approval, Subtenant shall have the right to (i) maintain armed security guards

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CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


within each of the entrances to the Subleased Premises at all times (24 hours a day, 7 days a week), and (ii) install security cameras at all entrances to and within the Subleased Premises, all at Subtenant’s cost and expense. Subtenant agrees that such security guards will be fully-insured and employed by a third-party security company, fully insured and bonded.
10.    Improvements; Improvement Allowance. Subtenant shall be entitled to a one- time tenant improvement allowance in the amount of $15.00 per rentable square foot of the Subleased Premises for an aggregate amount of $1,572,780 (assuming 104,852 rentable square feet in the Subleased Premises) (the “Improvement Allowance”) for constructing Subtenant’s improvements in the Subleased Premises (“Improvements”). Unless otherwise specified herein, the Improvement Allowance (and payments relating thereto) and construction and restoration of the Improvements shall be subject to the terms of the Master Lease and Work Letter attached thereto. For the avoidance of doubt, Subtenant shall construct Subtenant’s Improvements in conformance with the Work Letter including, but not limited to, the production and submission of Subtenant’s Construction Drawings and Subtenant’s Approved Working Drawings to Sublandlord for review and approval by Sublandlord and the Architect and, upon receipt of such approval, Sublandlord shall submit same to Landlord for review in conformance with the Work Letter; provided, however, the Improvement Allowance must be used on or before the date that is eleven (11) months after the Commencement Date of this Sublease or any unused portions thereof shall be waived and forfeited as to Subtenant. In addition to the foregoing, if the actual cost of such improvements is less than the amount of the Improvement Allowance, the unused portions thereof shall be forfeited by Subtenant. Subtenant shall pay to Landlord the Construction Management Fee relating to Subtenant’s Improvements (and shall pay Landlord’s reasonable out-of-pocket costs associated therewith should the Management Fee be exceeded by Landlord for its other review costs), together with the reimbursement to Sublandlord of Sublandlord’s reasonable out-of-pocket design review costs in connection with each of the plans and working and construction drawings reviewed by Sublandlord. Subject to the GC Bid and Review Procedures (as defined below), Subtenant shall be required to use the Contractor and the Architect specified in the Work Letter for the design and construction of Subtenant’s Improvements. For purposes of this Sublease the “GC Bid and Review Procedures” shall consist of the following: (a) upon Subtenant’s receipt of each of the bids from the Contractor and the Architect for Subtenant’s Improvements, Subtenant may, in Subtenant’s sole discretion and expense, solicit additional bids for Subtenant’s Improvements from up to two (2) contractors and/or architects as reasonably approved by Sublandlord; (b) at such time as Subtenant receives the additional bids from any such contractor and/or architect, Subtenant shall promptly provide same to Sublandlord for Sublandlord’s review and, so long as the additional bids received from such contractors and/or architects are within fifteen percent (15%), on a cost per square foot basis, of the bids of the Contractor and Architect, the Contractor and Architect shall perform the design and construction of Subtenant’s Improvements. Should the bid from (y) the Contractor exceed the bid received from the other contractors by more than fifteen percent (15%) on a cost per square foot basis or materially extend the timetable proposed by the Contractor, or (z) the Architect exceed the bid received from the other architects by more than fifteen percent (15%) on a cost per square foot basis or materially extend the timetable proposed Architect, Sublandlord and Subtenant shall meet and confer, in good faith, for the purpose of selecting a contractor and/or architect, as applicable, to perform Subtenant’s Improvements reasonably acceptable to Sublandlord and Subtenant.

10

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


11.    Subject to Master Lease. This Sublease is and shall be at all times subject and subordinate to the Master Lease. Subtenant acknowledges that Subtenant has reviewed and is familiar with all of the terms, agreements, covenants and conditions of the Master Lease, and assumes and agrees to be bound thereby. Additionally, Subtenant’s rights under this Sublease shall be subject to the terms of the Consent.
12.    Incorporation of Master Lease. The terms, covenants and conditions of the Master Lease are hereby incorporated into this Sublease as they apply to the Subleased Premises, except as otherwise expressly provided herein. Capitalized terms used herein shall have the meanings given to those terms in the Master Lease, unless otherwise defined herein. The terms, conditions and respective obligations of Sublandlord and Subtenant to each other under this Sublease shall be the terms and conditions of the Master Lease except for those provisions of the Master Lease which are directly contradicted by this Sublease in which event the terms of this Sublease shall control over the Master Lease. Therefore, for the purposes of incorporation in this Sublease, (1) wherever in the Master Lease the word “Landlord” is used it shall be deemed to mean the Sublandlord herein, (2) wherever in the Master Lease the word “Tenant” is used it shall be deemed to mean the Subtenant herein, and (3) wherever in the Master Lease the words “Lease”, “Premises”, “Rent” or “Term” are used, such terms shall be deemed to mean this Sublease, the Subleased Premises, the Rent hereunder and the Term hereunder, respectively. The time limits contained in the Master Lease for the giving of notices, making of demands or performing of any act, condition or covenant on the part of the tenant thereunder, or for the exercise by the tenant thereunder of any right, remedy or option, are changed for the purposes of incorporation herein by reference by shortening the same in each instance by one (1) day, so that in each instance Subtenant shall have one (1) day less time to observe or perform hereunder than Sublandlord has as the tenant under the Master Lease. Any non-liability, release, indemnity or hold harmless provision in the Master Lease for the benefit of Landlord or Tenant that is incorporated herein by reference shall be deemed to inure to the benefit of Sublandlord and Landlord, on the one hand, and Subtenant, on the other hand, and any other person intended to be benefitted by said provision, for the purpose of incorporation by reference in this Sublease. Any right of Landlord under the Master Lease of access or inspection, any right of Landlord under the Master Lease to do work in the Premises and any right of Landlord under the Master Lease in respect of rules and regulations, which is incorporated herein by reference, shall be deemed to inure to the benefit of Sublandlord, Landlord, and any other person intended to be benefitted by said provision, for the purpose of incorporation by reference in this Sublease.
13.    Modifications. For the purposes of incorporation herein, the terms of the Master Lease are subject to the following additional modifications:
13.1    In all provisions of the Master Lease (under the terms thereof and without regard to modifications thereof for purposes of incorporation into this Sublease) requiring the approval or consent of Landlord, Subtenant shall be required to obtain the approval or consent of both Sublandlord and Landlord.
13.2    In all provisions of the Master Lease requiring Tenant to submit, exhibit to, supply or provide Landlord with evidence, certificates, or any other matter or thing, Subtenant shall

11

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


be required to submit, exhibit to, supply or provide, as the case may be, the same to both Landlord and Sublandlord.
13.3    Sublandlord shall have no obligation to restore or rebuild any portion of the Premises after any damage or destruction or any taking by eminent domain unless otherwise specified in the Master Lease.
13.4    Sublandlord shall have no obligation to maintain any portion of the Premises unless otherwise specified in the Master Lease.
13.5    Sublandlord shall have no obligation to provide utilities or any other services to the Subleased Premises.
13.6    In all provisions of the Master Lease requiring Tenant to designate Landlord as an additional or named insured on its insurance policy, Subtenant shall be required to so designate Landlord and Sublandlord on its insurance policy.
13.7    The right of Subtenant to assign the Sublease or to sub-sublet all or any part of the Subleased Premises shall require the prior written consent of both Landlord and Sublandlord and shall otherwise be subject to and governed by Article XI of the Master Lease. In addition and for the avoidance of doubt, should Subtenant elect to assign the Sublease or sub­sublet all or any portion of the Subleased Premises, Sublandlord shall have the right to recapture the Subleased Premises in accordance with Section 11.06(a) of the Master Lease; provided, however, that for purposes of this Sublease and exercising Sublandlord’s recapture right, the percentages referenced in such section shall be disregarded in their entirety.
13.8    Exclusions. The following provisions of the Master Lease are NOT incorporated herein:
Master Lease: The following sections contained in the Summary of Basic Lease Information: Effective Date, Commencement Date, Expiration Date, Options(s) to Extend, Base Rent, Tenant’s Share, and Broker; Sections 2.04, 3.01, 3.02, 4.01, 4.02, 4.06, 4.07(a), 4.07(d), 4.07(g), 5.03, the last two sentences of Section 5.06, 17.23, 17.26, Section 2.2(a) of the Work Letter, Schedule 1 to Exhibit D, Schedule 3 to Exhibit D, Exhibit H, Schedule 1 and Schedule 2; except that to the extent of any conflict between the Master Lease and this Sublease then as between Sublandlord and Subtenant the terms of this Sublease shall govern.
14.    Sublandlord’s Representations and Warranties. Sublandlord represents and warrants to Subtenant now and as of the Commencement Date as follows:
14.1    Exhibit B to this Sublease is a true and complete copy of the Master Lease. The Master Lease, as attached as Exhibit B to this Sublease, is in full force and effect and has not been amended or modified.

12

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


14.2    Sublandlord has received no notice of default under the Master Lease, and to its actual knowledge, there exists no fact or circumstance which with the giving of notice or the passage of time or both would constitute a default by Sublandlord under the Master Lease.
14.3    Sublandlord has given no notice of default under the Master Lease and to its actual knowledge, without inquiry, there exists no fact or circumstance which with the giving of notice or the passage of time or both would constitute a default by Landlord under the Master Lease.
14.4    To Sublandlord’s knowledge, the Subleased Premises are in good working condition and repair, and are in compliance with Applicable Laws. In the event that it is determined, and Subtenant notifies Sublandlord in writing within thirty (30) days after the Commencement Date of this Sublease, that the building systems failed to be in good working condition and repair as of the Commencement Date of this Sublease, or the statement made in Section 5.02 above that the Building is in compliance with all Applicable Laws as of the date permits were issued for the construction thereof is untrue, and such failure was not caused or triggered by Subtenant or Subtenant’s Improvements, then it shall be the obligation of Sublandlord, and the sole right and remedy of Subtenant, after receipt of written notice from Subtenant setting forth with specificity the nature of the failure, to correct such failure within a reasonable time and at Sublandlord’s sole cost (which cost shall not be reimbursed to Sublandlord as an Operating Expense). Subtenant’s failure to give such written notice to Landlord within thirty (30) days after the Commencement Date of this Sublease shall constitute a conclusive presumption that the building systems are in good working condition and repair as of the Commencement Date of this Sublease and the Building is in compliance with all Applicable Laws.
15.    Sublandlord’s Obligations. Sublandlord shall timely pay to Landlord all rents and other amounts due under the provisions of the Master Lease and shall timely perform all covenants and obligations of Sublandlord under the Master Lease, except to the extent the same are expressly provided to be performed directly by Subtenant to Landlord in accordance with the express provisions of this Sublease. Sublandlord shall promptly provide written notice of any and all breaches or defaults claimed by Landlord under the Master Lease, and shall promptly deliver a copy of any and all other correspondence from Landlord concerning the Master Lease or the Premises. If and to the extent rent or other obligations of Sublandlord shall abate under the Master Lease or applicable law with respect to the Premises, Rent and such other obligations payable under this Sublease shall be abated for the same periods of time and in the same proportion to Subtenant’s obligations hereunder as such abated rent and other obligations bear to the obligations of Sublandlord under the Master Lease with respect to the Premises. If the Master Lease terminates, then this Sublease shall terminate and the parties shall be relieved of any further liability or obligation under this Sublease. Sublandlord will not terminate, amend or modify the Master Lease, or enter into subordination agreements with, or deliver estoppel certificates to, any lender of Sublandlord not required pursuant to the Master Lease. All rights of Sublandlord with respect to the Premises, or any part thereof, shall with respect to periods falling within the Term of this Sublease accrue to Subtenant, including without limitation rights of Sublandlord in the event of condemnation of the Premises or any part thereof or rights arising due to a breach of the Master Lease by Landlord and any rights to use of common areas or other interests licensed to Sublandlord under or in connection with the Master Lease. Sublandlord shall take all commercially reasonable actions necessary to

13

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


preserve the Master Lease. Sublandlord shall timely take all commercially reasonable actions necessary to enforce the provisions of the Master Lease for the benefit of Subtenant in its occupancy and use of the Premises pursuant to this Sublease.
16.    Termination of Master Lease. Sublandlord hereby acknowledges and agrees that it shall not voluntarily terminate the Master Lease without the prior written consent of Subtenant.
17.    Indemnity.
(a)    In addition to the indemnities provided under the Master Lease as incorporated herein, except to the extent arising from the negligence or willful misconduct of Sublandlord or its employees, contractors, agents or consultants, Subtenant shall indemnify, defend and hold harmless Sublandlord from and against all losses, costs, damages, expenses and liabilities, including, without limitation, reasonable attorneys’ fees and disbursements, which Sublandlord may incur or pay out (including, without limitation, to Landlord under the Master Lease) by reason of (i) any accidents, damages or injuries to persons or property occurring in, on or about the Subleased Premises (except to the extent caused by Sublandlord’s negligence or willful misconduct), (ii) any breach or default hereunder by Subtenant, (iii) any work performed after the date hereof in or to the Subleased Premises (except if performed by Landlord or Sublandlord), or (iv) any act, omission, negligence or willful misconduct on the part of Subtenant and/or its officers, partners, employees, agents, contractors, customers and/or invitees, or any person claiming through or under Subtenant in or about the Subleased Premises.
(b)    Except to the extent arising from the negligence or willful misconduct of Subtenant or its employees, contractors, agents or consultants, Sublandlord shall indemnify, defend and hold harmless Subtenant from and against all losses, costs, damages, expenses and liabilities, including, without limitation, reasonable attorneys’ fees and disbursements, which Subtenant may incur or pay out (including, without limitation, to Landlord under the Master Lease) by reason of (i) any accidents, damages or injuries to persons or property occurring in, on or about the Premises (except to the extent caused by Subtenant’s negligence or willful misconduct), (ii) any breach or default hereunder by Sublandlord or under the Master Lease, (iii) any work performed after the date hereof in or to the Premises (except if performed by Landlord or Subtenant), or (iv) any act, omission, negligence or willful misconduct on the part of Sublandlord and/or its officers, partners, employees, agents, contractors, customers and/or invitees, or any person claiming through or under Sublandlord in or about the Premises.
(c)    The foregoing indemnities (and those referenced therein) shall survive the expiration or earlier termination of this Sublease.
18.    Limitation on Liability. Notwithstanding any other term or provision of this Sublease, the liability of Sublandlord to Subtenant for any default in Sublandlord’s obligations under this Sublease shall be limited to actual, direct damages, and under no circumstances shall Subtenant, its partners, members, shareholders, directors, agents, officers, employees, contractors, sublessees, successors and/or assigns be entitled to recover from Sublandlord (or otherwise be indemnified by Sublandlord) for: (a) any losses, costs, claims, causes of action, damages or other liability incurred in connection with a failure of Landlord, its partners, members, shareholders,

14

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


directors, agents, officers, employees, contractors, successors and/or assigns to perform or cause to be performed Landlord’s obligations under the Master Lease unless such failure to perform is due to a breach by Sublandlord under the Master Lease; or (b) any damages or other liability arising from or incurred in connection with the condition of the Subleased Premises or suitability of the Subleased Premises for Subtenant’s intended use. Subtenant shall, however, have the right to seek any injunctive or other equitable remedies as may be available to Subtenant under applicable law. Notwithstanding any other term or provision of this Sublease, (i) no personal liability shall at any time be asserted or enforceable against Sublandlord’s or Subtenant’s members, shareholders, directors, officers, or partners on account of any of Sublandlord’s or Subtenant’s obligations or actions under this Sublease, and (ii) neither Sublandlord nor Subtenant shall be liable to the other for any lost revenues, lost profit or other consequential, special or punitive damages arising in connection with this Sublease for any reason, save and except Sublandlord’s statutory remedies under California Civil Code Section 1951.2 or any successor statute. As used in this Sublease, the term “Sublandlord” means at any time the then current holder of the tenant’s interest under the Master Lease and of the sublandlord’s interest under this Sublease.
19.    Consents and Approvals. In any instance when Sublandlord’s consent or approval is required under this Sublease, Sublandlord’ s refusal to consent to or approve any matter or thing shall be deemed reasonable if, without limitation, such consent or approval is required under the provisions of the Master Lease incorporated herein by reference but has not been obtained from Landlord after request by Sublandlord.
20.    Condition of Subleased Premises.
20.1    Delivery of Possession.
20.1.1    Sublandlord shall deliver the Subleased Premises in a clean, broom-swept condition, in good working order and condition, including all building systems (excluding VAV boxes, lighting fixtures and light bulbs) serving the Subleased Premises.
20.1.2    Subject to the provisions of Section 20.1.1, Sublandlord shall deliver to Subtenant, and Subtenant shall accept, possession of the Subleased Premises in their “AS IS” condition as the Subleased Premises exist on the Commencement Date and, notwithstanding anything to the contrary set forth in Section 5.06 of the Master Lease to the contrary, Sublandlord shall have no obligation to furnish, render, pay for, consent to or supply any work, labor, services, materials, furniture, fixtures, equipment, decorations or other items to make the Subleased Premises ready or suitable for Subtenant’s occupancy. Notwithstanding the foregoing, in the event that it is determined, and Subtenant notifies Sublandlord in writing within thirty (30) days after the Commencement Date, that the building systems failed to be in good working condition and repair as of the Commencement Date and such failure was not caused by Subtenant, then Sublandlord shall notify Landlord of same and use commercially reasonable efforts to cause Landlord to perform in accordance with its obligations set forth in Section 5.06 of the Master Lease. In making and executing this Sublease, Subtenant has relied solely on such investigations, examinations and inspections as Subtenant has chosen to make or has made and, except as otherwise provided in Section 20.1.1, has not relied on and Sublandlord has not made, any representation or warranty concerning the Subleased Premises. Subtenant acknowledges that Sublandlord has afforded

15

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


Subtenant the opportunity for full and complete investigations, examinations and inspections of the Subleased Premises. Subtenant acknowledges that it is not authorized to make or perform any alterations or improvements in or to the Subleased Premises except as permitted by the provisions of this Sublease and the Master Lease.
20.1.3    Pursuant to California Civil Code Section 1938, Sublandlord hereby states that the Subleased Premises has not undergone an inspection by a Certified Access Specialist (CASp) (defined in California Civil Code Section 55.52).
21.    Surrender. Upon the expiration or any earlier termination of this Sublease, Subtenant shall deliver the Subleased Premises to Sublandlord in express compliance with Section 17.09 of the Master Lease; provided, however, Subtenant shall have no obligation or liability with respect to the removal and/or restoration of any improvements or alterations not otherwise constructed by Subtenant, including any improvements or alterations constructed by Sublandlord, and Sublandlord shall remain responsible for the removal of the same, at Sublandlord’s sole cost and expense.
22.    Signage. Subject to the prior written consent of Landlord and Sublandlord and as specified by Sublandlord, Subtenant shall have the right, at Subtenant’s sole cost and expense and otherwise in compliance with Section 17.15 of the Master Lease, to Subtenant’s Pro Rata Share of signage on the two existing monument signs at the entry to the parking area. All Subtenant signage installed by Subtenant shall be removed at Subtenant’s sole cost and expense prior to the expiration or earlier termination of this Sublease and Subtenant shall repair all damage occasioned by such removal to the reasonable satisfaction of Sublandlord and Landlord.
23.    Notices. Any notice by either party to the other required, permitted or provided for herein shall be valid only if in writing and shall be deemed to be duly given only if (a) delivered personally, or (b) sent by means of FedEx, UPS Next Day Air or another reputable express mail delivery service guaranteeing next day delivery, or (c) sent by United States certified or registered mail, return receipt requested, addressed (i) if to Subtenant, Machine Zone, Inc., 2225 E. Bayshore Road, Suite 200, Palo Alto, CA 94303; Attn: General Counsel, and (ii) if to Sublandlord, Cloudera, Inc., 395 Page Mill Road, Palo Alto, CA 94304, Attn: Steve Hirai, or at such other address for either party as that party may designate by notice to the other. A notice shall be deemed given and effective upon date of receipt or refusal to accept receipt unless the notice is delivered personally and such delivery takes place after hours or on a holiday or weekend, in which event the notice shall be deemed given on the next succeeding business day.
24.    Brokers. Sublandlord hereby represents that it has not dealt with any broker in connection with this Sublease or the Premises other than Cornish & Carey Commercial (“Sublandlord’s Broker”). Subtenant hereby represents that it has not dealt with any broker in connection with this Sublease or the Premises other than CBRE (“Subtenant’s Broker”). Sublandlord shall indemnify, defend and hold Subtenant harmless from and against any and all claims of any brokers, claiming to have represented the Sublandlord in connection with the Sublease or the Premises, including any fees owed to Sublandlord’ s Broker which are Sublandlord’s obligation. Subtenant shall indemnify, defend and hold Sublandlord harmless from and against any and all claims of any brokers, other than Subtenant’s Broker, claiming to have represented the Subtenant in connection with the Sublease or the Premises. Notwithstanding the foregoing, Sublandlord shall

16

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


pay (i) all commissions due to Sublandlord’s Broker in accordance with the terms of the applicable agreement between the parties with respect thereto, and (ii) a procuring commission of $1.50 per square foot per year to Sublandlord’s Broker whereupon Sublandlord’s Broker shall remit same to Subtenant’s Broker pursuant to the terms of a separate listing agreement with respect to the Subleased Premises.
25.    Complete Agreement. There are no representations, warranties, agreements, arrangements or understandings, oral or written, between the parties or their representatives relating to the subject matter of this Sublease which are not fully expressed in this Sublease. This Sublease cannot be changed or terminated nor may any of its provisions be waived orally or in any manner other than by a written agreement executed by both parties.
26.    Interpretation. This Sublease shall be governed by and construed in accordance with California law. If any provision of this Sublease or the application thereof to any person or circumstance shall, for any reason and to any extent, be invalid or unenforceable, the remainder of this Sublease and the application of that provision to other persons or circumstances shall not be affected but rather shall be enforced to the extent permitted by law. The captions, headings and titles, if any, in this Sublease are solely for convenience of reference and shall not affect its interpretation. This Sublease shall be construed without regard to any presumption or other rule requiring construction against the party causing this Sublease or any part thereof to be drafted. If any words or phrases in this Sublease shall have been stricken out or otherwise eliminated, whether or not any other words or phrases have been added, this Sublease shall be construed as if the words or phrases so stricken out or otherwise eliminated were never included in this Sublease and no implication or inference shall be drawn from the fact that said words or phrases were so stricken out or otherwise eliminated. Each covenant, agreement, obligation or other provision of this Sublease shall be deemed and construed as a separate and independent covenant of the party bound by, undertaking or making same, not dependent on any other provision of this Sublease unless otherwise expressly provided. All terms and words used in this Sublease, regardless of the number or gender in which they are used, shall be deemed to include any other number and any other gender as the context may require. The word “person” as used in this Sublease shall mean a natural person or persons, a partnership, a corporation or any other form of business or legal association or entity.
27.    Confidentiality; Publicity.
27.1    The parties shall treat the contents of this Sublease as confidential information and shall not disclose the terms and conditions hereof to other parties; provided, however, each party may disclose portions of this Sublease to its officers, directors, employees, attorneys, architects, accountants, and other consultants and advisors to the extent such persons need to know such information provided such parties are first informed of the confidential nature of such information and each such party agrees to treat the information as confidential. In addition, the contents of this Sublease may be divulged to the extent, but only to the extent, required by law or in any administrative or judicial proceeding in which a party is required to divulge such information, however in such event such party shall notify the other prior to making such disclosure.
27.2    Neither Landlord nor Sublandlord shall be permitted to use Subtenant’s name, marks or logos, or to issue any press release or other publicity regarding, or make any public

17

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


statements, disclosures or communications concerning, this Agreement or any of its terms, or the relationship of the Parties, without prior written approval from Subtenant, which may be granted or withheld in Subtenant’s sole discretion. Without limiting the foregoing, Landlord and Sublandlord may not disclose or publicize to third parties any information related to its business relationship with Subtenant in marketing materials, sales pitches, case studies, on its website or other materials or documentation, without the express prior written consent of Subtenant.
28.    Arbitration. Except for claims: (a) for nonpayment of Rent; (b) for breach of confidentiality; (c) arising out of the indemnity obligations; (d) involving any party other than Sublandlord and Subtenant; and (d) for injunctive relief, any dispute, claim or controversy arising out of or related to this Sublease or the performance, enforcement, breach, termination, validity or interpretation thereof, including the determination of the scope or applicability of this agreement to arbitrate, that cannot be resolved through good faith discussions between the parties within a reasonable period of time (not to exceed 30 days), will be settled by binding arbitration conducted before one arbitrator. The arbitration shall be administered by the Judicial Arbitration and Mediation Services (“JAMS”). The arbitrator shall administer and conduct any arbitration in accordance with California law, including the California Code of Civil Procedure, and the arbitrator shall apply substantive and procedural California law to any dispute or claim, without reference to rules of conflict of law. Any arbitration under this Sublease shall be conducted in Santa Clara County, California. Either party may submit the matter to arbitration. The arbitrator shall issue a written decision with the essential findings and conclusions on which the decision is based. If, for any reason, any part or portion of this arbitration clause is held to be invalid or unenforceable, all other valid parts and portions shall be severable in nature, and remain fully enforceable. Each party will bear its own expenses in the arbitration and will share equally the costs of the arbitration; provided, however, that the arbitrator may, in its discretion, award costs and fees to the prevailing party. Judgment upon the award may be entered in any court having jurisdiction over the award or over the applicable party or its assets. THE PARTIES HEREBY WAIVE ANY RIGHTS THEY MAY HAVE TO TRIAL BY JURY IN REGARD TO ARBITRABLE CLAIMS.
29.    Counterparts. This Sublease may be executed in separate counterparts, each of which shall constitute an original and all of which together shall constitute one and the same instrument. This Sublease shall be fully executed when each party has signed and delivered to the other party at least one counterpart, even though no single counterpart contains the signatures of all parties hereto.
30.    Authority to Execute. Subtenant and Sublandlord each represents and warrants to the other that each person executing this Sublease on behalf of such party is duly authorized to so execute and deliver this Sublease.
[Signatures on Following Page]

18

CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


IN WITNESS WHEREOF, the parties hereto have executed this Sublease as of the date first above written.
SUBLANDLORD:
 
SUBTENANT:
 
 
 
CLOUDERA, INC.,
 
MACHINE ZONE, INC.,
a Delaware corporation
 
a Delaware corporation
By:
/s/ Jim Frankola
 
By:
/s/ Victoria Valenzuela
Name:
Jim Frankola
 
Name:
Victoria Valenzuela
Title:
CFO
 
Title:
General Counsel
Date:
9/14/16
 
Date:
9/12/16


CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


EXHIBIT A
Depiction of Subleased Premises
[To be attached]


CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


image0.jpg


CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


image1a01.jpg


CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


EXHIBIT B
Master Lease
[To be attached]


CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


EXHIBIT C
Comerica Form of Letter of Credit
[To be attached]


CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


image2a01.jpg
 
Comerica Bank

International Trade Services
2321 Rosecrans Ave. 5th Fl.
El Segundo, CA 90245
Tel: 310-297-2858
SWIFT: [***]

Irrevocable
Standby Letter of Credit No.:
[***]

Beneficiary:
Cloudera, Inc.
1001 Page Mill Road
Palo Alto, CA 94306, United States
Applicant:
Machine Zone, Inc.
1050 Page Hill Road
Palo Alto, CA 94304 United States
Date of Issue:
September 22, 2016
Date and Place of Expiry:
August 29, 2017 office of Issuing Bank
Or any automatically extended date, as herein defined.
Amount:
USD [***]

We hereby open our lrrevocable Standby Letter of Credit no. [***] in Beneficiary’s favor, for account of Machine Zone, Inc. for a sum not exceeding USD [***] available by Beneficiary’s draft(s) at sight on Comerica Bank when accompanied by:
1. The original of this Irrevocable Standby Letter of Credit and Amendment(s) if any.
2. Beneficiary’s statement on its letterhead dated and signed by the Beneficiary, indicating name and title of the signer using either of the wording as follows:
A. The undersigned hereby certifies that the amount of USD (amount) is being drawn under Comerica Bank’s Standby Letter of Credit no. [***] as there has been an uncured default or event of default under one or more of the terms of that certain Sublease Agreement dated September 12, 2016 that exists by and between Cloudera, Inc. (as “Sublandlord”) and Machine Zone, Inc. (as “Subtenant”).
or
B. The undersigned hereby certifies that we have received a written notice of Comerica Bank’s election not to extend their Standby Letter of Credit No. [***] and have not received a replacement Letter of Credit or any other financial assurance satisfactory to us from Machine Zone, Inc.


CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


Special Conditions:
All signatures must be manually executed in original.
All information required whether indicated by blanks, brackets or otherwise, must be completed at the time of drawing.
Partial drawings and multiple presentations may be made under this Irrevocable Standby Letter of Credit, provided, however, that each such demand that is paid by us shall reduce the amount available under this Irrevocable Standby Letter of Credit.
It is a condition of this Irrevocable Standby Letter of Credit that it shall be deemed automatically extended without amendment for a period of one year from the present or any future expiration date, unless at least thirty (30) days prior to the expiration date we send Beneficiary notice by overnight courier that we elect not to extend this Irrevocable Standby Letter of Credit for any such additional period. Said notification will be sent to the address indicated above, unless a change of address is otherwise notified by Beneficiary to us in writing by receipted mail or courier. In no event, and without further notice from ourselves, will this Letter of Credit be extended beyond August 29, 2022 which shall be the final expiration date of this Letter of Credit.
This Standby Letter of Credit may be successively transferable in its entirety (but not in part) up to the then available amount in favor of a nominated Transferee (“Transferee”), assuming such transfer to such Transferee is in compliance with all applicable U.S. laws and regulations. If transferred, this Standby Letter of Credit must be returned to us together with our transfer form (available upon request), duly executed. In case of any transfer, the draft and any required statement must be executed by the Transferee and where the Beneficiary’s name appears within this Standby Letter of Credit, the Transferee’s name is automatically substituted therefore. At the time of the transfer request, the original of this Standby Letter of Credit and any amendment(s) thereto must be provided. Comerica Bank will not assume or undertake any liability or responsibility for verifying, validating or authenticating the authority or rights of any party(ies) requesting the transfer of this Letter of Credit or executing any document(s) in connection therewith.
All drafts required under this Irrevocable Standby Letter of Credit must be marked: “Drawn under Comerica Bank Irrevocable Standby Letter of Credit no. [***].
In the case of cancellation, the original Standby Letter of Credit and all Amendments thereto must be returned to us together with a written request from Beneficiary referencing this Standby Letter of Credit number and authorizing its cancellation.
All documents are to be dispatched in one lot by courier service to Comerica Bank International Trade Services, 2321 Rosecrans Ave., 5th fl., El Segundo, CA 90245, Attn: Standby Letter of Credit Dept.
This Irrevocable Standby Letter of Credit sets forth in full the terms of our undertaking and such undertaking shall not be in any way modified, amended or amplified by reference to any document, Instrument or agreement referred to herein or in which this Irrevocable Standby Letter of Credit is referred to or to which this Irrevocable Standby Letter of Credit relates, and any such reference shall not be deemed to incorporate herein by reference any document, instrument or agreement.
As a condition to honoring a demand for payment, in order to comply with applicable laws and regulations, Comerica Bank may require additional information to be submitted by the beneficiary, such as Information on parties that sign documents. In the event this Information is not provided by the beneficiary in a timely manner, Comerica Bank may in its sole discretion, despite documents being in compliance with the terms and of this Letter of Credit, decline payment and will hold documents pending resolution.
With respect to Demand Document 2A above, we will not inquire as to the accuracy of such statement nor will we consider any disputes by the Applicant regarding the contents of such statement.


CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


We hereby engage with Beneficiary that all drawing(s) made under and in compliance with the terms of this Irrevocable Standby Letter of Credit will be duly honored if drawn and presented for payment at our office located at Comerica Bank International Trade Services, 2321 Rosecrans Ave., 5th Fl., El Segundo, CA 90245, Attn: Standby Letter of Credit Dept. on or before the expiration date of this credit, or any automatically extended date.
Except so far as otherwise expressly stated herein, this Standby Letter of Credit is subject to the “International Standby Practices” (ISP 98) International Chamber of Commerce (Publication No. 590).
Regards,
/s/ Amy Wong
Authorized Signature(s)


CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


EXHIBIT D
Depiction of Charging Stations
[To be attached]


CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT WERE OMITTED AND REPLACED WITH “[***]”. A COMPLETE VERSION OF THIS EXHIBIT HAS BEEN FILED SEPARATELY WITH THE SECRETARY OF THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO AN APPLICATION REQUESTING CONFIDENTIAL TREATMENT UNDER RULE 406 OF THE SECURITIES ACT OF 1933.


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