Amendment No. 1 to Form S-1

As filed with the Securities and Exchange Commission on July 18, 2011

Registration No. 333-175298

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Amendment No. 1

to

FORM S-1

REGISTRATION STATEMENT

Under

The Securities Act of 1933

 

Zynga Inc.

(Exact name of Registrant as specified in its charter)

 

Delaware   7371   42-1733483

(State or other jurisdiction of

incorporation or organization)

 

(Primary Standard Industrial

Classification Code Number)

 

(I.R.S. Employer

Identification Number)

 

444 De Haro Street, Suite 125

San Francisco, CA 94107

(800) 762-2530

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

David M. Wehner

Zynga Inc.

444 De Haro Street, Suite 125

San Francisco, CA 94107

(800) 762-2530

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

Copies to:

Eric C. Jensen

Kenneth L. Guernsey

John T. McKenna

Cooley LLP

101 California Street, 5th Floor

San Francisco, CA 94111

(415) 693-2000

 

Reginald D. Davis

Karyn R. Smith

Devang S. Shah

Zynga Inc.

444 De Haro Street, Suite 125

San Francisco, CA 94107

(800) 762-2530

 

Keith F. Higgins

Brian C. Erb

Ropes & Gray LLP

Three Embarcadero Center

San Francisco, CA 94111

(415) 315-6300

 

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, 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, please 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer   ¨    Accelerated filer   ¨
Non-accelerated filer   x  (Do not check if a smaller reporting company)    Smaller reporting company   ¨

 

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, as amended, or until the Registration Statement shall become effective on such date as the Securities and Exchange Commission acting pursuant to said Section 8(a), may determine.

 

 


EXPLANATORY NOTE

 

This Amendment No. 1 to the Registration Statement on Form S-1 (File No. 333-175298) of Zynga Inc. (the “Registration Statement”) is being filed solely for the purpose of filing certain exhibits as indicated in Part II of this Amendment No. 1. This Amendment No. 1 does not modify any provision of the prospectus that forms a part of the Registration Statement. Accordingly, a preliminary prospectus has been omitted.


PART II

 

INFORMATION NOT REQUIRED IN PROSPECTUS

 

ITEM 13. Other Expenses of Issuance and Distribution.

 

The following table sets forth the costs and expenses, other than underwriting discounts and commissions, payable in connection with the sale and distribution of the securities being registered. All amounts are estimated except the SEC registration fee, the FINRA filing fee and the                     listing fee. Except as otherwise noted, all the expenses below will be paid by Zynga.

 

Item

   Amount  

SEC Registration fee

   $ 116,100   

FINRA filing fee

     75,500   

Initial             listing fee

     *   

Legal fees and expenses

     *   

Accounting fees and expenses

     *   

Printing and engraving expenses

     *   

Transfer agent and registrar fees and expenses

     *   

Blue Sky fees and expenses

     *   

Miscellaneous fees and expenses

     *   
        

Total

     $      *   
        

 

  *   To be filed by 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 in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities, including reimbursement for expenses incurred, arising under the Securities Act of 1933, as amended. Our amended and restated certificate of incorporation to be in effect upon the closing of this offering provides for indemnification of our directors, officers, employees and other agents to the maximum extent permitted by the Delaware General Corporation Law, and our amended and restated bylaws to be in effect upon the closing of this offering provide for indemnification of our directors, officers, employees and other agents to the maximum extent permitted by the Delaware General Corporation Law.

 

We have entered into indemnification agreements with our directors and officers, whereby we have agreed to indemnify our directors and officers to the fullest extent permitted by law, including advancement of expenses incurred in legal proceedings to which the director or officer was, or is threatened to be made, a party by reason of the fact that such director or officer is or was a director, officer, employee or agent of Zynga, provided that such director or officer acted in good faith and in a manner that the director or officer reasonably believed to be in, or not opposed to, the best interest of Zynga. At present, there is no pending litigation or proceeding involving a director or officer of Zynga regarding which indemnification is sought, nor is the registrant aware of any threatened litigation that may result in claims for indemnification.

 

We maintain insurance policies that indemnify our directors and officers against various liabilities arising under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, and amended, that might be incurred by any director or officer in his capacity as such.

 

The underwriters are obligated, under certain circumstances, pursuant to the underwriting agreement to be filed as Exhibit 1.1 hereto, to indemnify us, our officers, directors and the selling stockholders against liabilities under the Securities Act of 1933, as amended.

 

II-1


ITEM 15. Recent Sales of Unregistered Securities.

 

The following sets forth information regarding all unregistered securities sold since January 1, 2008:

 

  (a)   From January 1, 2008 to May 31, 2011, options to purchase 148,380,024 shares have been exercised for cash consideration in the aggregate amount of $6,132,353. From January 1, 2008 to May 31, 2011, we granted restricted stock units for 94,117,861 shares to our employees and directors.

 

  (b)   Issuances of Capital Stock

 

  (1)   On February 12, 2008, we issued 40,207,312 shares of our Series A-1 preferred stock, par value $0.00000625, to certain investors at a price per share of $0.125 for an aggregate purchase price of $5,025,914.

 

  (2)   On July 18, 2008, we issued 59,391,296 shares of our Series B preferred stock, par value $0.00000625, to certain investors at a price per share of $0.4209375 for an aggregate purchase price of $25,000,024.

 

  (3)   On November 4, 2009, we issued 3,200,000 shares of our Series B-1 preferred stock, par value $0.00000625, to certain investors at a price per share of $4.746075 for an aggregate purchase price of $15,187,440.

 

  (4)   On April 24, 2010, we issued 2,330,472 shares of our Series B-2 preferred stock, par value $0.00000625, to certain investors at a price per share of $6.436465 for an aggregate purchase price of $15,000,002.

 

  (5)   On June 1, 2010, we issued 22,527,892 shares of our Series B-2 preferred stock, par value $0.00000625, to certain investors at a price per share of $6.436465 for an aggregate purchase price of $144,999,988.

 

  (6)   On June 3, 2010, we issued 23,304,716 shares of our Series B-2 preferred stock, par value $0.00000625, to certain investors at a price per share of $6.436465 for an aggregate purchase price of $149,999,989.

 

  (7)   On February 18, 2011, we issued 34,927,368 shares of our Series C preferred stock, par value $0.00000625, to certain investors at a price per share of $14.029115 for an aggregate purchase price of $490,000,062.

 

  (8)   From January 1, 2008 to December 31, 2009, we issued 15,965,936 shares of our Series B common stock, par value $0.00000625, as consideration to certain investors in connection with acquisitions.

 

  (9)   From January 1, 2010 to December 31, 2010, we issued 26,584,658 shares of our Series Z preferred stock, par value $0.00000625, as consideration to certain investors in connection with acquisitions.

 

  (10)   From January 1, 2011 to date, we issued 858,115 shares of our Series Z preferred stock, par value $0.00000625, as consideration to certain investors in connection with acquisitions.

 

The offers, sales and issuances of the securities described in Item 15(a) were deemed to be exempt from registration under the Securities Act under either (1) Rule 701 promulgated under the Securities Act as offers and sale of securities pursuant to certain compensatory benefit plans and contracts relating to compensation in compliance with Rule 701 or (2) Section 4(2) of the Securities Act as transactions by an issuer not involving any public offering, or because they did not involve a sales of securities. The recipients of securities in each of these transactions represented their intention to acquire the securities for investment only and not with view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the stock certificates and instruments issued in such transactions. All recipients had adequate access, through their relationships with us, to information about us.

 

II-2


The offers, sales, and issuances of the securities described in Item 15(b) were deemed to be exempt from registration under the Securities Act in reliance on Section 4(2) of the Securities Act or Regulation D promulgated thereunder as transactions by an issuer not involving a public offering. The recipients of securities in each of these transactions acquired the securities for investment only and not with a view to or for sale in connection with any distribution thereof and appropriate legends were affixed to the securities issued in these transactions. Each of the recipients of securities in these transactions was an accredited or sophisticated person and had adequate access, through employment, business or other relationships, to information about us.

 

II-3


ITEM 16. Exhibits and Financial Statement Schedules.

 

(a) Exhibits.

 

Exhibit
    No.    

  

Description of Exhibit

  1.1*   

Form of Underwriting Agreement.

  3.1*   

Amended and Restated Certificate of Incorporation of Zynga Inc.

  3.2*    Form of Amended and Restated Certificate of Incorporation of Zynga Inc., to be in effect upon closing of the offering.
  3.3   

Amended and Restated Bylaws of Zynga Inc., as currently in effect.

  3.4*   

Form of Amended and Restated Bylaws of Zynga Inc., to be in effect upon closing of the offering.

  4.1*   

Form of Zynga Inc. Class A Common Stock Certificate.

  5.1*   

Form of Opinion of Cooley LLP.

10.1    Fifth Amended and Restated Investor Rights Agreement, by and between Zynga Inc., the investors listed on Schedule A thereto and Mark Pincus, dated February 18, 2011.
10.2+   

Zynga Inc. 2007 Equity Incentive Plan.

10.3+   

Form of Option Agreement under 2007 Equity Incentive Plan.

10.4*+   

Zynga Inc. 2011 Equity Incentive Plan.

10.5*+   

Forms of Option Agreement and Option Grant Notice under 2011 Equity Incentive Plan.

10.6*+    Form of Indemnification Agreement made by and between Zynga Inc. and each of its directors and executive officers.
10.7*+   

Offer Letter, between Zynga Inc. and Steven Chiang, dated January 27, 2010.

10.8*+   

Offer Letter, between Zynga Inc. and Reginald D. Davis, dated April 21, 2009.

10.9*+   

Offer Letter, between Zynga Inc. and Cadir Lee, dated November 17, 2008.

10.10*+   

Offer Letter, between Zynga Inc. and Mark Pincus, dated November 16, 2007.

10.11*+   

Offer Letter, between Zynga Inc. and John Schappert, dated March 31, 2011.

10.12*+   

Offer Letter, between Zynga Inc. and Owen Van Natta, dated July 28, 2010.

10.13*+   

Offer Letter, between Zynga Inc. and David M. Wehner, dated June 22, 2010.

10.14    Office Lease by and between 650 Townsend Associates LLC and Zynga Inc., dated September 24, 2010; First Amendment to Lease dated February 17, 2011; and Second Amendment to Lease dated March 25, 2011.
10.15†    Developer Addendum by and between Facebook, Inc. and Zynga Inc., dated May 15, 2010.
10.16†    Developer Addendum #2 by and between Facebook, Inc. and Zynga Inc., dated December 27, 2010.
10.17   

Warrant to Purchase Class B Common Stock, dated July 18, 2008, issued to KPCB Holdings, Inc.

10.18    Warrant to Purchase Class B Common Stock, dated July 31, 2009, issued to Allen & Company LLC.
10.19    Warrant to Purchase Class B Common Stock, dated June 16, 2011, issued to Kleiner Perkins Caufield & Byers, LLC.

 

II-4


Exhibit
    No.    

    

Description of Exhibit

  21.1      

List of subsidiaries.

  23.1*      

Consent of Cooley LLP (included in Exhibit 5.1).

  23.2#      

Consent of Independent Registered Public Accounting Firm.

  24.1#      

Power of Attorney.

 

  *   To be filed by amendment. All other exhibits are filed herewith.

 

  +   Indicates management contract or compensatory plan.

 

    Portions of this exhibit have been omitted pending a determination by the Securities and Exchange Commission as to whether these portions should receive confidential treatment.

 

  #   Previously filed.

 

(b) Financial Statement Schedules.

 

Schedule II — Valuation and Qualifying Accounts

 

(Dollars in thousands)

   Beginning
Balance
     Charged  to
Operations(A)
     Write-offs(B)     Ending
Balance
 

Allowance for Doubtful Accounts

          

Year ended December 31, 2010

   $ 356       $ 9       $ (40   $ 325   
                                  

Year ended December 31, 2009

   $ 210       $ 175       $ (29   $ 356   
                                  

Year ended December 31, 2008

   $ 0       $ 210       $ (0   $ 210   
                                  

 

  (A)   Reserves for customer balances

 

  (B)   Uncollectible accounts written off

 

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 the foregoing provisions, 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

 

II-5


  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-6


SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, we have duly caused this Amendment No. 1 to the Registration Statement on Form S-1 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Francisco, State of California, on the 18th day of July, 2011.

 

  Zynga Inc.
By:  

/S/    MARK PINCUS

 

Mark Pincus

Chief Executive Officer and Chairman

 

Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to the Registration Statement has been signed by the following persons in the capacities and on the dates indicated.

 

Signature

  

Title

 

Date

/S/    MARK PINCUS

Mark Pincus

  

Chief Executive Officer and Chairman (Principal Executive Officer)

  July 18, 2011

/S/    DAVID M. WEHNER

David M. Wehner

  

Chief Financial Officer

(Principal Financial Officer)

  July 18, 2011

/S/    MARK VRANESH

Mark Vranesh

  

Chief Accounting Officer

(Principal Accounting Officer)

  July 18, 2011

*

Bradley A. Feld

  

Director

 

  July 18, 2011

*

William “Bing” Gordon

  

Director

 

  July 18, 2011

*

Reid Hoffman

  

Director

 

  July 18, 2011

*

Jeffrey Katzenberg

  

Director

 

  July 18, 2011

*

Stanley J. Meresman

  

Director

 

  July 18, 2011

*

John Schappert

  

Director

 

  July 18, 2011

*

Owen Van Natta

  

Director

 

  July 18, 2011

 

*By:

 

/s/    DAVID M. WEHNER

  David M. Wehner
  Attorney-in-fact

 

II-7


EXHIBIT INDEX

 

Exhibit
    No.    

  

Description of Exhibit

  1.1*   

Form of Underwriting Agreement.

  3.1*   

Amended and Restated Certificate of Incorporation of Zynga Inc.

  3.2*    Form of Amended and Restated Certificate of Incorporation of Zynga Inc., to be in effect upon closing of the offering.
  3.3   

Amended and Restated Bylaws of Zynga Inc., as currently in effect.

  3.4*   

Form of Amended and Restated Bylaws of Zynga Inc., to be in effect upon closing of the offering.

  4.1*   

Form of Zynga Inc. Class A Common Stock Certificate.

  5.1*   

Form of Opinion of Cooley LLP.

10.1    Fifth Amended and Restated Investor Rights Agreement, by and between Zynga Inc., the investors listed on Schedule A thereto and Mark Pincus, dated February 18, 2011.
10.2+   

Zynga Inc. 2007 Equity Incentive Plan.

10.3+   

Form of Option Agreement under 2007 Equity Incentive Plan.

10.4*+   

Zynga Inc. 2011 Equity Incentive Plan.

10.5*+   

Forms of Option Agreement and Option Grant Notice under 2011 Equity Incentive Plan.

10.6*+    Form of Indemnification Agreement made by and between Zynga Inc. and each of its directors and executive officers.
10.7*+   

Offer Letter, between Zynga Inc. and Steven Chiang, dated January 27, 2010.

10.8*+   

Offer Letter, between Zynga Inc. and Reginald D. Davis, dated April 21, 2009.

10.9*+   

Offer Letter, between Zynga Inc. and Cadir Lee, dated November 17, 2008.

10.10*+   

Offer Letter, between Zynga Inc. and Mark Pincus, dated November 16, 2007.

10.11*+   

Offer Letter, between Zynga Inc. and John Schappert, dated March 31, 2011.

10.12*+   

Offer Letter, between Zynga Inc. and Owen Van Natta, dated July 28, 2010.

10.13*+   

Offer Letter, between Zynga Inc. and David M. Wehner, dated June 22, 2010.

10.14    Office Lease by and between 650 Townsend Associates LLC and Zynga Inc., dated September 24, 2010; First Amendment to Lease dated February 17, 2011; and Second Amendment to Lease dated March 25, 2011.
10.15†    Developer Addendum by and between Facebook, Inc. and Zynga Inc., dated May 15, 2010.
10.16†    Developer Addendum #2 by and between Facebook, Inc. and Zynga Inc., dated December 27, 2010.
10.17   

Warrant to Purchase Class B Common Stock, dated July 18, 2008, issued to KPCB Holdings, Inc.

10.18    Warrant to Purchase Class B Common Stock, dated July 31, 2009, issued to Allen & Company LLC.
10.19    Warrant to Purchase Class B Common Stock, dated June 16, 2011, issued to Kleiner Perkins Caufield & Byers, LLC.
21.1   

List of subsidiaries.

23.1*   

Consent of Cooley LLP (included in Exhibit 5.1).


Exhibit
    No.    

    

Description of Exhibit

  23.2#      

Consent of Independent Registered Public Accounting Firm.

  24.1#      

Power of Attorney.

 

  *   To be filed by amendment.

 

  +   Indicates management contract or compensatory plan.

 

    Portions of this exhibit have been omitted pending a determination by the Securities and Exchange Commission as to whether these portions should be granted confidential treatment.

 

  #   Previously filed.
Amended and Restated Bylaws of Zynga Inc., as currently in effect

Exhibit 3.3

 

 

 

ZYNGA INC.

a Delaware Corporation

AMENDED AND RESTATED BYLAWS

As Adopted June 15, 2011

 

 

 


TABLE OF CONTENTS

 

 

         Page  

ARTICLE I: STOCKHOLDERS

     1   

Section 1.1 :

  Annual Meetings      1   

Section 1.2 :

  Special Meetings      1   

Section 1.3 :

  Notice of Meetings      1   

Section 1.4 :

  Adjournments      1   

Section 1.5 :

  Quorum      2   

Section 1.6 :

  Organization      2   

Section 1.7 :

  Voting; Proxies      2   

Section 1.8 :

  Fixing Date for Determination of Stockholders of Record      2   

Section 1.9 :

  List of Stockholders Entitled to Vote      3   

Section 1.10 :

  Action by Written Consent of Stockholders      3   

Section 1.11 :

  Inspectors of Elections      5   

ARTICLE II: BOARD OF DIRECTORS

     6   

Section 2.1 :

  Number; Qualifications      6   

Section 2.2 :

  Election; Resignation; Removal; Vacancies      6   

Section 2.3 :

  Regular Meetings      6   

Section 2.4 :

  Special Meetings      7   

Section 2.5 :

  Remote Meetings Permitted      7   

Section 2.6 :

  Quorum; Vote Required for Action      7   

Section 2.7 :

  Organization      8   

Section 2.8 :

  Written Action by Directors      8   

Section 2.9 :

  Powers      8   

Section 2.10 :

  Compensation of Directors      8   

ARTICLE III: COMMITTEES

     8   

Section 3.1 :

  Committees      8   

Section 3.2 :

  Committee Rules.      9   

ARTICLE IV: OFFICERS

     9   

Section 4.1 :

  Generally      9   

Section 4.2 :

  Chief Executive Officer      9   

Section 4.3 :

  Chairperson of the Board      10   

Section 4.4 :

  President      10   

Section 4.5 :

  Vice President      10   

Section 4.6 :

  Chief Financial Officer      10   

Section 4.7 :

  Treasurer      10   

Section 4.8 :

  Chief Technology Officer      10   

Section 4.9 :

  Secretary      10   

Section 4.10 :

  Delegation of Authority      11   

Section 4.11 :

  Removal      11   

 

- i -


ARTICLE V: STOCK

     11   

Section 5.1 :

  Certificates      11   

Section 5.2 :

  Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates      11   

Section 5.3 :

  Restrictions on Transfer and Ownership of Capital Stock of the Corporation      12   

Section 5.4 :

  Other Regulations      12   

ARTICLE VI: INDEMNIFICATION

     12   

Section 6.1 :

  Indemnification of Officers and Directors      13   

Section 6.2 :

  Advance of Expenses      13   

Section 6.3 :

  Non-Exclusivity of Rights      13   

Section 6.4 :

  Indemnification Contracts      14   

Section 6.5 :

  Right of Indemnitee to Bring Suit      14   

Section 6.6 :

  Nature of Rights      14   

ARTICLE VII: NOTICES

     15   

Section 7.1 :

  Notice      15   

Section 7.2 :

  Waiver of Notice      16   

ARTICLE VIII: INTERESTED DIRECTORS

     16   

Section 8.1 :

  Interested Directors      16   

Section 8.2 :

  Quorum      16   

ARTICLE IX: MISCELLANEOUS

     16   

Section 9.1 :

  Fiscal Year      16   

Section 9.2 :

  Seal      16   

Section 9.3 :

  Form of Records      16   

Section 9.4 :

  Reliance upon Books and Records      17   

Section 9.5 :

  Certificate of Incorporation Governs      17   

Section 9.6 :

  Severability      17   

ARTICLE X: AMENDMENT

     17   

 

- ii -


ZYNGA INC.

a Delaware Corporation

AMENDED AND RESTATED BYLAWS

As Adopted June 15, 2011

ARTICLE I: STOCKHOLDERS

Section 1.1: Annual Meetings. Unless members of the Board of Directors of the Corporation (the “Board”) are elected by written consent in lieu of an annual meeting, as permitted by Section 211 of the Delaware General Corporation Law (the “DGCL”) and these Bylaws, an annual meeting of stockholders shall be held for the election of directors at such date and time as the Board shall each year fix. The meeting may be held either at a place, within or without the State of Delaware, or by means of remote communication as the Board in its sole discretion may determine. Any proper business may be transacted at the annual meeting.

Section 1.2: Special Meetings. Special meetings of stockholders for any purpose or purposes may be called at any time by the Chairperson of the Board, the Chief Executive Officer, the President, the holders of shares of the Corporation that are entitled to cast not less than ten percent (10%) of the total number of votes entitled to be cast by all stockholders at such meeting, or by a majority of the “Whole Board,” which shall mean the total number of authorized directors, whether or not there exist any vacancies in previously authorized directorships. Special meetings may not be called by any other person or persons. If a special meeting of stockholders is called by any person or persons other than by a majority of the members of the Board, then such person or persons shall request such meeting by delivering a written request to call such meeting to each member of the Board, and the Board shall then determine the time and date of such special meeting, which shall be held not more than one hundred twenty (120) days nor less than thirty-five (35) days after the written request to call such special meeting was delivered to each member of the Board. The special meeting may be held either at a place, within or without the State of Delaware, or by means of remote communication as the Board in its sole discretion may determine.

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

Section 1.4: Adjournments. The chairperson of the meeting shall have the power to adjourn the meeting to another time, date and place (if any). Any meeting of stockholders may adjourn from time to time, and notice need not be given of any such adjourned meeting if the time, date and place (if any) thereof and the means of remote communications (if any) by which stockholders and proxy holders may be deemed to be present in person and vote at such

 

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adjourned meeting are announced at the meeting at which the adjournment is taken; provided, however, that if the adjournment is for more than thirty (30) days, or if a new record date is fixed for the adjourned meeting, then a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At the adjourned meeting the Corporation may transact any business that might have been transacted at the original meeting. To the fullest extent permitted by law, the Board may postpone or reschedule any previously scheduled special or annual meeting of stockholders before it is to be held, in which case notice shall be provided to the stockholders of the new date, time and place, if any, of the meeting as provided in Section 1.3 above.

Section 1.5: Quorum. At each meeting of stockholders the holders of a majority of the voting power of the shares of stock entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business, unless otherwise required by applicable law. If a quorum shall fail to attend any meeting, the chairperson of the meeting or the holders of a majority of the shares entitled to vote who are present, in person or by proxy, at the meeting may adjourn the meeting. Shares of the Corporation’s stock belonging to the Corporation (or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation are held, directly or indirectly, by the Corporation), shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation or any other corporation to vote any shares of the Corporation’s stock held by it in a fiduciary capacity and to count such shares for purposes of determining a quorum.

Section 1.6: Organization. Meetings of stockholders shall be presided over by such person as the Board may designate, or, in the absence of such a person, the Chairperson of the Board, or, in the absence of such person, the President of the Corporation, or, in the absence of such person, such person as may be chosen by the holders of a majority of the voting power of the shares entitled to vote who are present, in person or by proxy, at the meeting. Such person shall be chairperson of the meeting and, subject to Section 1.11 hereof, shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seems to him or her to be in order. The Secretary of the Corporation shall act as secretary of the meeting, but in such person’s absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.

Section 1.7: Voting; Proxies. Each stockholder entitled to vote at a meeting of stockholders, or to take corporate action by written consent without a meeting, may authorize another person or persons to act for such stockholder by proxy. Such a proxy may be prepared, transmitted and delivered in any manner permitted by applicable law. Except as may be required in the Certificate of Incorporation, directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Unless otherwise provided by applicable law, the Certificate of Incorporation or these Bylaws, every matter other than the election of directors shall be decided by the affirmative vote of the holders of a majority of the voting power of the shares of stock entitled to vote on such matter that are present in person or represented by proxy at the meeting and are voted for or against the matter.

Section 1.8: Fixing Date for Determination of Stockholders of Record.

 

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1.8.1 Generally. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or to take corporate action by written consent without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, except as otherwise required by law, in advance, a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the Board and which shall not be more than sixty (60), nor less than ten (10), days before the date of such meeting, nor, except as provided in Section 1.8.2 below, more than sixty (60) days prior to any other action. If no record date is fixed by the Board, then the record date shall be as provided by applicable law. To the fullest extent provided by law, a determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board may fix a new record date for the adjourned meeting.

1.8.2 Stockholder Request for Action by Written Consent. Any stockholder of record seeking to have the stockholders authorize or take corporate action by written consent without a meeting shall, by written notice to the Secretary of the Corporation, request the Board to fix a record date for such consent. Such request shall include a brief description of the action proposed to be taken. Unless a record date has previously been fixed by the Board for the written consent pursuant to this Section 1.8, the Board shall, within ten (10) days after the date on which such a request is received, adopt a resolution fixing the record date. Such record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board. If no record date has been fixed by the Board within ten (10) days after the date on which such a request is received, then the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board is required by applicable law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation as required by law. If no record date has been fixed by the Board and prior action by the Board is required by applicable law, then the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the date on which the Board adopts the resolution taking such prior action.

Section 1.9: List of Stockholders Entitled to Vote. A complete list of stockholders entitled to vote at any meeting of stockholders, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder, shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the meeting, either on a reasonably accessible electronic network as permitted by law (provided that the information required to gain access to the list is provided with the notice of the meeting) or during ordinary business hours at the principal place of business of the Corporation. If the meeting is held at a location where stockholders may attend in person, the list shall also be produced and kept at the time and place of the meeting during the whole time thereof and may be inspected by any stockholder who is present at the meeting. If the meeting is held solely by means of remote communication, then the list shall be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access the list shall be provided with the notice of the meeting.

Section 1.10: Action by Written Consent of Stockholders.

 

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1.10.1 Procedure. Unless otherwise provided by the Certificate of Incorporation, any action required or permitted to be taken at any annual or special meeting of the stockholders may be taken without a meeting, without prior notice and without a vote, if a consent or consents in writing, setting forth the action so taken, shall be signed in the manner permitted by law by the holders of outstanding stock having not less than the number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, to its principal place of business or to an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the agent of the Corporation’s registered office in the State of Delaware shall be by hand or by certified or registered mail, return receipt requested. Written stockholder consents shall bear the date of signature of each stockholder who signs the consent in the manner permitted by law and shall be delivered to the Corporation as provided in Section 1.10.2 below. No written consent shall be effective to take the action set forth therein unless, within sixty (60) days of the earliest dated consent delivered to the Corporation in the manner required by law, written consents signed by a sufficient number of stockholders to take the action set forth therein are delivered to the Corporation in the manner required by law.

1.10.2 Form of Consent A telegram, cablegram or other electronic transmission consenting to an action to be taken and transmitted by a stockholder or proxy holder, or a person or persons authorized to act for a stockholder or proxy holder, shall be deemed to be written, signed and dated for the purposes of this section, provided that any such telegram, cablegram or other electronic transmission sets forth or is delivered with information from which the Corporation can determine (a) that the telegram, cablegram or other electronic transmission was transmitted by the stockholder or proxy holder or by a person or persons authorized to act for the stockholder or proxy holder and (b) the date on which such stockholder or proxy holder or authorized person or persons transmitted such telegram, cablegram or electronic transmission. The date on which such telegram, cablegram or electronic transmission is transmitted shall be deemed to be the date on which such consent was signed. No consent given by telegram, cablegram or other electronic transmission shall be deemed to have been delivered until such consent is reproduced in paper form and until such paper form shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to a Corporation’s registered office shall be made by hand or by certified or registered mail, return receipt requested. Notwithstanding the foregoing limitations on delivery, consents given by telegram, cablegram or other electronic transmission may be otherwise delivered to the principal place of business of the Corporation or to an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded if, to the extent and in the manner provided by resolution of the Board. Any copy, facsimile or other reliable reproduction of a consent in writing may be substituted or used in lieu of the original writing for any and all purposes for which the original writing could be used, provided that such copy, facsimile or other reproduction shall be a complete reproduction of the entire original writing.

1.10.3 Notice of Consent. Prompt notice of the taking of corporate action by stockholders without a meeting by less than unanimous written consent of the stockholders shall be given to those stockholders who have not consented thereto in writing and, who, if the action had been taken at a meeting, would have been entitled to notice of the meeting, if the record date

 

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for such meeting had been the date that written consents signed by a sufficient number of holders to take the action were delivered to the Corporation as required by law. If the action which is consented to is such as would have required the filing of a certificate under the DGCL (the “Certificate of Action”) if such action had been voted on by stockholders at a meeting thereof, then if the DGCL so requires, the certificate so filed shall state, in lieu of any statement required by the DGCL concerning any vote of stockholders, that written stockholder consent has been given in accordance with Section 228 of the DGCL.

Section 1.11: Inspectors of Elections.

1.11.1 Applicability. Unless otherwise required by the Certificate of Incorporation or by the DGCL, the following provisions of this Section 1.11 shall apply only if and when the Corporation has a class of voting stock that is: (a) listed on a national securities exchange; (b) authorized for quotation on an interdealer quotation system of a registered national securities association; or (c) held of record by more than two thousand (2,000) stockholders. In all other cases, observance of the provisions of this Section 1.11 shall be optional, and at the discretion of the Board.

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

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

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

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

1.11.6 Determinations. In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted with those proxies, any information provided in connection with proxies in accordance with any information provided pursuant to Section 211(a)(2)(B)(i) of the DGCL, or Sections 211(e) or

 

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212(c)(2) of the DGCL, ballots and the regular books and records of the Corporation, except that the inspectors may consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider other reliable information for the limited purpose permitted herein, the inspectors at the time they make their certification of their determinations pursuant to this Section 1.11 shall specify the precise information considered by them, including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors’ belief that such information is accurate and reliable.

ARTICLE II: BOARD OF DIRECTORS

Section 2.1: Number; Qualifications. The Board shall consist of one or more directors. The authorized number of directors of the Corporation shall be fixed by the Board from time to time. Directors need not be stockholders unless so required by the Certificate of Incorporation. If for any cause, the directors shall not have been elected at an annual meeting, they may be elected as soon thereafter as convenient.

Section 2.2: Election; Resignation; Removal; Vacancies. Each director shall hold office until the next annual meeting of stockholders and until such director’s successor is elected and qualified, or until such director’s earlier death, resignation or removal. Any director may resign at any time upon written notice to the Corporation. Subject to the rights of any holders of Preferred Stock or Common Stock then outstanding: (a) any director or the entire Board may be removed, with or without cause, by the holders of a majority of the shares then entitled to vote at an election of directors and (b) any vacancy occurring in the Board for any reason, and any newly created directorship resulting from any increase in the authorized number of directors to be elected by all stockholders having the right to vote as a single class, may be filled by the stockholders, by a majority of the directors then in office, although less than a quorum, or by a sole remaining director.

Section 2.3: Regular Meetings. Regular meetings of the Board may be held at such places, within or without the State of Delaware, and at such times as the Board may from time to time determine. Notice of regular meetings need not be given if the date, times and places thereof are fixed by resolution of the Board; provided that each director must receive written notice of any regular Board meeting at which any CEO Succession Matter is acted upon no less than 72 hours prior to such meeting and such written notice shall include a detailed description of the CEO Succession Matter; for the purposes of this sentence only, notice shall be deemed “received” by a director when delivered personally, telecopied (with confirmation) or delivered by an overnight courier (with confirmation) to the directors at their addresses appearing in the books and records of the Corporation. A “CEO Succession Matter” shall mean any matter before the Board concerning the hiring, termination, retention or compensation of the Chief Executive Officer (“CEO”) of the Corporation. Without limitation, such matters shall include any action which would (i) interpret any provision of any employment agreement between the CEO and the Corporation; (ii) approve any action which would constitute a constructive termination of the CEO or permit the CEO to terminate employment with the Corporation for good reason or other similar cause under any employment or other agreement between the CEO

 

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and the Corporation; (iii) determine that the CEO may be terminated for cause or other similar reason under the terms of any employment or other agreement between the CEO and the Corporation, or otherwise; (iv) determine that the CEO is disabled or otherwise unable to perform his or her job functions; (v) determine to withhold any salary, benefits, incentives, equity compensation, termination benefits, retirement benefits, perquisites, change in control payments or other similar payments, or any other compensation under any agreement between the CEO and the Corporation; (vi) terminate the CEO without cause; (vii) reduce the benefits or compensation of the CEO, including bonus target or terms; or (viii) approve of any CEO succession plan or similar measure.

Section 2.4: Special Meetings. Special meetings of the Board may be called by the Chairperson of the Board, the President or a majority of the members of the Board then in office and may be held at any time, date or place, within or without the State of Delaware, as the person or persons calling the meeting shall fix. Notice of the time, date and place of such meeting shall be given, orally, in writing or by electronic transmission (including electronic mail), by the person or persons calling the meeting to all directors at least four (4) days before the meeting if the notice is mailed, or at least twenty-four (24) hours before the meeting if such notice is given by telephone, hand delivery, telegram, telex, mailgram, facsimile, electronic mail or other means of electronic transmission. Unless otherwise indicated in the notice, any and all business may be transacted at a special meeting. Notwithstanding the above, each director must receive written notice of any special Board meeting at which any CEO Succession Matter is discussed or acted upon no less than 72 hours prior to such meeting and such written notice shall include a description of the CEO Succession Matter; for the purposes of this sentence only, notice shall be deemed “received” by a director when delivered personally, by telegram, telex, mailgram, facsimile, electronic mail or other means of electronic transmission (with confirmation of receipt) or delivered by an overnight courier (with confirmation of receipt) to the directors at their addresses appearing in the books and records of the Corporation.

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

Section 2.6: Quorum; Vote Required for Action. At all meetings of the Board a majority of the Whole Board shall constitute a quorum for the transaction of business. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date or time without further notice thereof. Except as otherwise provided herein or in the Certificate of Incorporation, or required by law, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board. Notwithstanding the above, if the number of authorized directors has been increased to five pursuant to Section 4.5(a) of the Corporation’s Amended and Restated Certificate of Incorporation, the quorum for the transaction of any business at a Board meeting constituting a CEO Succession Matter shall be four, or if the number of authorized directors is increased to a number greater than five, the number of directors representing the total number of votes of the Whole Board, minus one vote (the “CEO Succession Matter Quorum”). In addition, notwithstanding the above, a CEO Succession Matter shall require the approval of (i) three directors if there are four authorized

 

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directors of the Corporation; (ii) four directors if there are five authorized directors of the Corporation; or (iii) if the number of authorized directors is increased to greater than five, then the CEO Succession Matter shall require the affirmative vote of directors representing the total number of votes of the Whole Board, minus one vote (the “CEO Succession Matter Vote”). Any reference in these Bylaws to a number or proportion of directors shall be deemed to refer to the number or proportion of the votes of the directors.

Section 2.7: Organization. Meetings of the Board shall be presided over by the Chairperson of the Board, or in such person’s absence by the President, or in such person’s absence by a chairperson chosen at the meeting. The Secretary shall act as secretary of the meeting, but in such person’s absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.

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

Section 2.9: Powers. The Board may, except as otherwise required by law or the Certificate of Incorporation, exercise all such powers and manage and direct all such acts and things as may be exercised or done by the Corporation.

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

ARTICLE III: COMMITTEES

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

 

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Section 3.2: Committee Rules. Unless the Board otherwise provides, each committee designated by the Board may make, alter and repeal rules for the conduct of its business. In the absence of such rules each committee shall conduct its business in the same manner as the Board conducts its business pursuant to Article II of these Bylaws.

ARTICLE IV: OFFICERS

Section 4.1: Generally. The officers of the Corporation shall consist of a Chief Executive Officer (who may be the Chairperson of the Board or the President), a Secretary and a Treasurer and may consist of such other officers, including a Chief Financial Officer, Chief Technology Officer and one or more Vice Presidents, as may from time to time be appointed by the Board. All officers shall be elected by the Board; provided, however, that the Board may empower the Chief Executive Officer of the Corporation to appoint any officer other than the Chairperson of the Board, the Chief Executive Officer, the President, the Chief Financial Officer or the Treasurer. Each officer shall hold office until such person’s successor is appointed or until such person’s earlier resignation, death or removal. Any number of offices may be held by the same person. Any officer may resign at any time upon written notice to the Corporation. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled by the Board.

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

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

(b) Subject to Article I, Section 1.6, to preside at all meetings of the stockholders;

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

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

The President shall be the Chief Executive Officer of the Corporation unless the Board shall designate another officer to be the Chief Executive Officer. If there is no President, and the Board has not designated any other officer to be the Chief Executive Officer, then the Chairperson of the Board shall be the Chief Executive Officer.

 

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Section 4.3: Chairperson of the Board. The Chairperson of the Board shall have the power to preside at all meetings of the Board and shall have such other powers and duties as provided in these Bylaws and as the Board may from time to time prescribe.

Section 4.4: President. The President shall be the Chief Executive Officer of the Corporation unless the Board shall have designated another officer as the Chief Executive Officer of the Corporation. Subject to the provisions of these Bylaws and to the direction of the Board, and subject to the supervisory powers of the Chief Executive Officer (if the Chief Executive Officer is an officer other than the President), and subject to such supervisory powers and authority as may be given by the Board to the Chairperson of the Board, and/or to any other officer, the President shall have the responsibility for the general management and control of the business and affairs of the Corporation and the general supervision and direction of all of the officers, employees and agents of the Corporation (other than the Chief Executive Officer, if the Chief Executive Officer is an officer other than the President) and shall perform all duties and have all powers that are commonly incident to the office of President or that are delegated to the President by the Board.

Section 4.5: Vice President. Each Vice President shall have all such powers and duties as are commonly incident to the office of Vice President, or that are delegated to him or her by the Board or the Chief Executive Officer. A Vice President may be designated by the Board to perform the duties and exercise the powers of the Chief Executive Officer in the event of the Chief Executive Officer’s absence or disability.

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

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

Section 4.8: Chief Technology Officer. The Chief Technology Officer shall have responsibility for the general research and development activities of the Corporation, for supervision of the Corporation’s research and development personnel, for new product development and product improvements, for overseeing the development and direction of the Corporation’s intellectual property development and such other responsibilities as may be given to the Chief Technology Officer by the Board, subject to: (a) the provisions of these Bylaws; (b) the direction of the Board; (c) the supervisory powers of the Chief Executive Officer of the Corporation; and (d) those supervisory powers that may be given by the Board to the Chairperson or Vice Chairperson of the Board.

Section 4.9: Secretary. The Secretary shall issue or cause to be issued all authorized notices for, and shall keep, or cause to be kept, minutes of all meetings of the stockholders and

 

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the Board. The Secretary shall have charge of the corporate minute books and similar records and shall perform such other duties and have such other powers as are commonly incident to the office of Secretary, or as the Board or the Chief Executive Officer may from time to time prescribe.

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

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

ARTICLE V: STOCK

Section 5.1: Certificates. The shares of capital stock of the Corporation shall be represented by certificates; provided, however, that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock may be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation (or the transfer agent or registrar, as the case may be). Notwithstanding the adoption of such resolution by the Board, every holder of stock that is a certificated security shall be entitled to have a certificate signed by or in the name of the Corporation by the Chairperson or Vice-Chairperson of the Board, or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation, certifying the number of shares owned by such stockholder in the Corporation. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were an officer, transfer agent or registrar at the date of issue. If any holder of uncertificated shares elects to receive a certificate, the Corporation (or the transfer agent or registrar, as the case may be) shall, to the extent permitted under applicable law and rules, regulations and listing requirements of any stock exchange or stock market on which the Corporation’s shares are listed or traded, cease to provide annual statements indicating such holder’s holdings of shares in the Corporation.

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

 

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Section 5.3: Restrictions on Transfer and Ownership of Capital Stock of the Corporation. Until the occurrence of a Liquidity Event (as defined below), unless otherwise permitted pursuant to the terms of a written agreement between the Corporation and any such transferring stockholder or its permitted assigns, no share of capital stock of the Corporation acquired subsequent to November 10, 2010 may be Transferred (as defined below) by the acquirer thereof without the written consent of the Corporation.

For purposes of this Section 5.3, the following terms shall have the meanings ascribed to them as set forth below:

Liquidity Event” means the first to occur of (i) an IPO (as defined below) or (ii) a Change of Control (as defined below).

Transferred,” as it relates to the capital stock of the Corporation, means any sale, assignment, transfer, conveyance, hypothecation or other transfer or disposition of such capital stock or any legal or beneficial interest in such capital stock, whether or not for value and whether voluntary or involuntary or by operation of law.

IPO” means an underwritten public offering by the Corporation of its securities that is registered pursuant to the U.S. Securities Act of 1933, as amended.

Change of Control” means (i) (a) a dissolution or liquidation of the Corporation or (b) any reorganization, consolidation, merger or similar transaction or series of related transactions (each, a “combination transaction”) in which the Corporation is a constituent corporation or is a party if, as a result of such combination transaction, the voting securities of the Corporation that are outstanding immediately prior to the consummation of such combination transaction (other than any such securities that are held by an Acquiring Shareholder (as defined below)) do not represent, or are not converted into, securities of the surviving corporation of such combination transaction (or such surviving corporation’s parent corporation if the surviving corporation is owned by the parent corporation) that, immediately after the consummation of such combination transaction, together possess at least fifty percent (50%) of the total voting power of all securities of such surviving corporation (or its parent corporation, if applicable) that are outstanding immediately after the consummation of such combination transaction, including securities of such surviving corporation (or its parent corporation, if applicable) that are held by the Acquiring Shareholder; or (ii) a sale of all or substantially all of the assets of the Corporation, that is followed by the distribution of the proceeds to the Corporation’s shareholders.

Acquiring Shareholder” means a shareholder or shareholders of the company that (i) merges or combines with the Corporation in such combination transaction or (ii) owns or controls a majority of another corporation that merges or combines with the Corporation in such combination transaction.

Section 5.4: Other Regulations. The issue, conversion and registration of stock certificates and uncertificated securities, and additional provisions regarding the transfer of capital stock of the Corporation, shall be governed by such other regulations as the Board may establish.

ARTICLE VI: INDEMNIFICATION

 

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

Section 6.2: Advance of Expenses. The Corporation shall pay all expenses (including attorneys’ fees) incurred by such an Indemnitee in defending any such Proceeding as they are incurred in advance of its final disposition; provided, however, that (a) if the DGCL then so requires, the payment of such expenses incurred by such an Indemnitee in advance of the final disposition of such Proceeding shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such Indemnitee, to repay all amounts so advanced if it should be determined ultimately by final judicial decision from which there is no appeal that such Indemnitee is not entitled to be indemnified under this Article VI or otherwise; and (b) the Corporation shall not be required to advance any expenses to a person against whom the Corporation directly brings a claim, in a Proceeding, alleging that such person has breached such person’s duty of loyalty to the Corporation, committed an act or omission not in good faith or that involves intentional misconduct or a knowing violation of law, or derived an improper personal benefit from a transaction.

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

 

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expenses to persons whom the Corporation is not obligated to indemnify or advance expenses pursuant to this Article VI.

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

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

6.5.1 Right to Bring Suit. If a claim under Section 6.1 or 6.2 of this Article VI is not paid in full by the Corporation within sixty (60) days after a written claim has been received by the Corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the Indemnitee may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit. In (a) any suit brought by the Indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an advancement of expenses) it shall be a defense that, and (b) in any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that, the Indemnitee has not met any applicable standard for indemnification set forth in applicable law.

6.5.2 Effect of Determination. Neither the failure of the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in applicable law, nor an actual determination by the Corporation (including its directors who are not parties to such action, a committee of such directors, independent legal counsel or its stockholders) that the Indemnitee has not met such applicable standard of conduct, shall create a presumption that the Indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the Indemnitee, be a defense to such suit.

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

Section 6.6: Nature of Rights. The rights conferred upon Indemnitees in this Article VI shall be contract rights and such rights shall continue as to an Indemnitee who has ceased to be a director, officer or trustee and shall inure to the benefit of the Indemnitee’s heirs,

 

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executors and administrators. Any amendment, repeal or modification of any provision of this Article VI that adversely affects any right of an Indemnitee or an Indemnitee’s successors shall be prospective only, and shall not adversely affect any right or protection conferred on a person pursuant to this Article VI and existing at the time of such amendment, repeal or modification.

ARTICLE VII: NOTICES

Section 7.1: Notice.

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

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

7.1.3 Affidavit of Giving Notice. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Corporation that the notice has been given

 

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in writing or by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

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

ARTICLE VIII: INTERESTED DIRECTORS

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

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

ARTICLE IX: MISCELLANEOUS

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

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

Section 9.3: Form of Records. Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account and minute books, may be kept on or by means of, or be in the form of, diskettes, CDs, or any other information

 

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storage device or method, provided that the records so kept can be converted into clearly legible paper form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect such records pursuant to any provision of the DGCL.

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

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

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

ARTICLE X: AMENDMENT

Unless otherwise required by the Certificate of Incorporation, stockholders of the Corporation holding at least a majority of the voting power of the Corporation’s outstanding voting stock then entitled to vote at an election of directors shall have the power to adopt, amend or repeal Bylaws. To the extent provided in the Certificate of Incorporation, the Board shall also have the power to adopt, amend or repeal Bylaws of the Corporation; provided, however that amendment of the provisions of Sections 2.3, 2.4 or 2.6 relating to notice provisions, quorum requirements and approval requirements for CEO Succession Matters shall require the approval of stockholders of the Corporation holding at least a majority of the voting power of the Corporation’s outstanding voting stock then entitled to vote at an election of directors or the approval of the directors (i) at a meeting at which a CEO Succession Matter Quorum is present by a CEO Succession Matter Vote or (ii) by unanimous written consent.

 

 

 

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CERTIFICATION OF BYLAWS

OF

ZYNGA INC.

a Delaware Corporation

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

Dated: June 15, 2011

 

/s/ Reggie Davis
Reggie Davis, Secretary
Fifth Amended and Restated Investor Rights Agreement

Exhibit 10.1

EXECUTION

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT

This Fifth Amended and Restated Investors’ Rights Agreement (this “Agreement”) is made and entered into as of February 18, 2011 by and among Zynga Inc., a Delaware corporation (the “Company”), the persons and entities listed on Exhibit A attached hereto (the “Investors”) and Mark Pincus.

WHEREAS, certain of the Investors (the “Prior Investors”) are holders of outstanding shares of the Company’s Series A Preferred Stock (“Series A Stock”) issued by the Company to such Investors pursuant to a Series A Preferred Stock Purchase Agreement by and among the Company and the Prior Investors dated as of November 15, 2007, as amended (the “Series A Agreement”), shares of the Company’s Series A-1 Preferred Stock (“Series A-1 Stock”) issued by the Company to such Investors pursuant to a Series A-1 Preferred Stock Purchase Agreement by and among the Company and such Investors dated as of February 12, 2008, as amended (the “Series A-1 Agreement”), shares of the Company’s Series B Preferred Stock (“Series B Stock”) issued by the Company to such Investors pursuant to a Series B Preferred Stock Purchase Agreement by and among the Company and such Investors dated as of July 18, 2008, as amended (the “Series B Agreement”), shares of the Company’s Series B-1 Preferred Stock (“Series B-1 Stock”) issued by the Company to such Investors pursuant to a Series B-1 Preferred Stock Purchase Agreement by and among the Company and such Investors dated as of November 4, 2009, as amended (the “Series B-1 Agreement”), and/or shares of the Company’s Series B-2 Preferred Stock (“Series B-2 Stock”) issued by the Company to such Investors pursuant to a Series B-2 Preferred Stock Purchase Agreement by and among the Company and such Investors dated as of April 23, 2010, as amended (the “Series B-2 Agreement”), and have also been granted certain information and registration rights and rights of first refusal under that certain Fourth Amended and Restated Investors’ Rights Agreement by and among the Company and the Prior Investors dated as of April 23, 2010 (the “Prior Rights Agreement”).

WHEREAS, certain of the Investors (the “Series C Investors”) have agreed to purchase shares of the Company’s Series C Preferred Stock (“Series C Stock” and together with the Series A Stock, the Series A-1 Stock, the Series B Stock, the Series B-1 Stock and the Series B-2 Stock, the “Preferred Stock”) pursuant to a certain Series C Preferred Stock Purchase Agreement by and among the Company and such Series C Investors dated as of even date herewith (the “Series C Agreement”). The Series C Agreement provides that, as a condition to the Series C Investors’ purchase of Series C Stock thereunder, the Company will enter into this Agreement and the Series C Investors will be granted the rights set forth herein.

WHEREAS, the Company and the undersigned parties desire to enter into this Agreement in order to amend, restate and replace their rights and obligations under the Prior Rights Agreement with the rights and obligations set forth in this Agreement.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises hereinafter set forth, the parties hereby agree as follows:

1. INFORMATION RIGHTS.

1.1 Basic Financial Information. The Company covenants and agrees that, commencing on the date of this Agreement, (i) for so long as any Investor holds at least 4,000,000 shares of Series A Stock issued under the Series A Preferred Stock Purchase

 


Agreement, Series A-1 Stock issued under the Series A-1 Agreement, Series B Stock issued under the Series B Agreement, Series B-1 Stock issued under the Series B-1 Agreement, Series B-2 Stock issued under the Series B-2 Agreement, and/or the equivalent number (on an as-converted basis) of shares of Class A Common Stock, issued upon the conversion of such shares of Series A Stock, Series A-1 Stock, Series B Stock, Series B-1 Stock, or Series B-2 Stock, or otherwise issued to or acquired by (or issuable upon conversion or exercise of any warrant, right or other security that is issued to or otherwise acquired by) the Investors on or after the date hereof (the “Conversion Stock”), (ii) for so long as DST Global Limited (“DST”) holds at least 500,000 shares of Series B-1 Stock issued under the Series B-1 Agreement, and/or (iii) for so long as an Investor (x) holds at least 900,000 shares of Series C Preferred Stock, (y) is a Mutual Fund, or (z) is an Advisory Client of a Registered Investment Adviser which serves as the investment adviser set forth on Exhibit A hereto (or is an Advisory Client of a Registered Investment Adviser which is Controlled by or under common Control with such investment adviser) for any 1940 Act Investor(s) (each such Investor described in (i) through (iii), a “Major Investor”), the Company will:

(a) Annual Reports. Furnish to such Major Investor, as soon as practicable, and in any event within one hundred twenty (120) days after the end of each fiscal year of the Company, a consolidated balance sheet as of the end of such fiscal year, a consolidated statement of operations and a consolidated statement of cash flows of the Company and its subsidiaries for such year, setting forth in each case in comparative form the figures from the Company’s previous fiscal year (if any), prepared in accordance with generally accepted accounting principles and audited by a certified public accountant;

(b) Quarterly Reports. Furnish to such Major Investor as soon as practicable, and in any event within thirty (30) days after the end of each fiscal quarter of the Company (except the last quarter of the Company’s fiscal year), quarterly unaudited financial statements, including a balance sheet, a statement of operations and a statement of cash flows; and

(c) Monthly Reports. Use reasonable efforts to provide such Major Investor as soon as practicable after the end of each month (except the last month of the Company’s fiscal year), monthly unaudited financial statements, including a balance sheet, a statement of operations and a statement of cash flows, and such other financial metrics as the Board of Directors of the Company (the “Board”) deems appropriate.

(d) Delivery to 1940 Act Investors. The obligation to deliver reports, access or other information to Investors who are 1940 Act Investors pursuant to this Section 1.1 or otherwise in this Agreement shall be satisfied (if applicable) if such report, access or other information is delivered to the Registered Investment Adviser for such 1940 Act Investor set forth on Exhibit A hereto or the designated Registered Investment Adviser of any permitted transferee. Notwithstanding anything to the contrary in Section 1.3 below, the Registered Investment Adviser shall not provide any information delivered hereunder to any Advisory Client(s) that is not either a Mutual Fund or an Investor listed on Schedule 1.1(d) to this Agreement, without the prior written consent of the Company; such consent not to be unreasonably withheld, conditioned or delayed, except that the Company may condition such consent on such Advisory Client(s) entering into a non-disclosure agreement with the Company on substantially the same terms set forth in Section 1.4 below.

 

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For the purposes of this Agreement, “1940 Act Investor” means any Series C Investor (other than KPCB Holdings, Inc., as nominee) hereunder constituting (i) an investment company registered as such under the Investment Company Act of 1940, as amended (the “1940 Act”) (“Mutual Fund”) or (ii) an advisory client (“Advisory Client”) of an investment adviser registered as such under the Investment Advisers Act of 1940, as amended (“Registered Investment Adviser”), and “Control” and any derivations thereof shall have the meaning set forth in Section 2(a)(9) of the 1940 Act.

1.2 Inspection Rights. The Company shall permit each Major Investor, at such Investor’s expense, to visit and inspect the Company’s properties, to examine its books of account and records and to discuss the Company’s affairs, finances and accounts with its officers, all at such reasonable times as may be requested by such Major Investor.

1.3 Confidentiality. Each Investor who receives information pursuant to this Section 1 agrees that, unless at such time such Investor (or in the case of a 1940 Act Investor, the Registered Investment Adviser (or a Registered Investment Adviser that is Controlled by or under common Control with such Registered Investment Adviser) of such 1940 Act Investor) is party to a then-binding non-disclosure agreement with the Company (an “Investor NDA”) (which in such case shall govern the confidentiality obligations of such Investor), such Investor will keep confidential and will not disclose, divulge or use for any purpose (other than to monitor its investment in the Company) any confidential information obtained from the Company pursuant to the terms of this Agreement (including notice of the Company’s intention to file a registration statement), at all times until after such Investor can prove that such confidential information (a) is known or becomes known to the public in general (other than as a result of a breach of this Section 1.3 by such Investor), (b) is or has been independently developed or conceived by the Investor without use of the Company’s confidential information, or (c) is or has been made known or disclosed to the Investor by a third party without a breach of any obligation of confidentiality such third party may have to the Company. Notwithstanding the foregoing, an Investor may disclose confidential information:

(a) to any of the Investor’s attorneys, accountants, consultants, and other professionals to the extent necessary to obtain their services in connection with monitoring the Investor’s investment in the Company and if such professionals are obligated to maintain the confidentiality of the same;

(b) to any prospective purchaser (to the extent the transfer to such purchaser would be permitted under the terms of the Bylaws of the Company and any applicable agreement between such Investor and the Company and the prospective purchaser would, if the sale were consummated, qualify as a Major Investor under Section 1.1 above) of any Registrable Securities from the Investor, if such prospective purchaser agrees to be bound by the provisions of this Section 1.3;

(c) as may otherwise be required by law, if the Investor promptly notifies the Company of such disclosure and takes reasonable steps to minimize the extent of any such required disclosure; or

(d) if such Investor is a 1940 Act Investor, to its Registered Investment Adviser (if applicable), provided that such Registered Investment Adviser is party to a written non-disclosure agreement which prohibits disclosure of such information.

 

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1.4 Competitors. If the Board determines, in its sole discretion, that a Major Investor has invested, or is directly or indirectly assisting or supporting, in a material manner, a direct competitor of the Company, the only rights under this Section 1 that such Major Investor shall have shall be to receive audited annual financial statements if and when they are delivered to the other Major Investors; provided that members of the Board shall abstain from any vote as to whether an entity is a direct competitor of the Company if the outcome of such vote may affect such member’s, or such member’s affiliates’, rights under this Section 1. Notwithstanding the foregoing, a Major Investor may purchase and hold up to a ten percent (10%) interest in any publicly traded entity, including an entity that may compete directly with the Company, without reduction of its rights under Section 1 pursuant to this Section 1.4, subject to such investment being a passive investment where the Major Investor neither intends nor has the right to influence (other than through the voting of shares) or direct the operations or management of such publicly traded entity. Notwithstanding the foregoing, nothing in this Section 1.4 shall apply to Mutual Funds, any Investor set forth on Schedule 1.1(d), or their permitted transferees. The Company hereby confirms that none of (a) Facebook Inc., (b) Gaia Interactive, Inc. or (c) a gaming company primarily focused on users in the Russian Federation, Eastern Europe or the Commonwealth of Independent States are direct competitors. Notwithstanding anything to the contrary contained herein, the information rights of SOFTBANK CORP., its direct or indirect, wholly-owned subsidiaries, and the investment funds of which SOFTBANK CORP. or one or more of its wholly-owned subsidiaries is the investment advisor, managing member, general partner or entity performing a similar function (collectively, “SB”), as applicable, under Section 1 hereof shall not be available unless and until SOFTBANK CORP. and the Company enter into an agreement related to SB’s investment in (a) RockYou, Inc. and (b) RockYou Asia, Inc., and SB remains in compliance with the provisions thereof.

1.5 Termination of Certain Rights. The Company’s obligations under Sections 1.1 and 1.2 above will terminate upon the earliest to occur of the following:

(a) the closing of the first sale of securities of the Company to the public for the account of the Company pursuant to an effective registration statement filed by the Company under the Securities Act of 1933, as amended (the “IPO”);

(b) the Company becomes subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); or

(c) the liquidation, dissolution or winding up of the Company or immediately prior to the consummation of an event described in Section 3.6 of Article V of the Company’s Thirteenth Amended and Restated Certificate of Incorporation, as amended from time to time (the “Restated Certificate”).

1.6 Termination of Investor’s Obligations. Each Investor’s obligations under Sections 1.3 and 1.4 above shall terminate on the later to occur of (i) the events described in Section 1.5(a)-(c) above, or (ii) such time as the Investor NDA terminates in accordance with its terms.

1.7 Records. The Company will maintain true books and records of account in which full and correct entries will be made of all its business transactions pursuant to a system of accounting established and administered in accordance with generally accepted accounting principles consistently applied (except as noted therein), and will set aside on its books all such

 

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proper accruals and reserves as shall be required under generally accepted accounting principles consistently applied.

2. REGISTRATION RIGHTS.

2.1 Definitions. For purposes of this Section 2:

(a) Registration. The terms “register,” “registration” and “registered” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act of 1933, as amended (the “Securities Act”), and the declaration or ordering of effectiveness of such registration statement.

(b) Registrable Securities. The term “Registrable Securities” means:

(i) any shares of Class A Common Stock issued or issuable upon the conversion of any shares of Series A Stock issued under the Series A Agreement, Series A-1 Stock issued under the Series A-1 Agreement, Series B Stock issued under the Series B Agreement, Series B-1 Stock issued under the Series B-1 Agreement, Series B-2 Stock issued under the Series B-2 Agreement, or Series C Stock issued under the Series C Agreement, as such agreement may hereafter be amended from time to time, that are now owned or may hereafter be acquired by any Investor or any Investor’s permitted successors and assigns;

(ii) any other shares of Class A Common Stock issued to or otherwise acquired by (or issuable upon conversion or exercise of any warrant, right or other security that is issued to or otherwise acquired by) the Investors on or after the date hereof; and

(iii) any shares of Class A Common Stock issued (or issuable upon the conversion or exercise of any warrant, right or other security that is issued) as a dividend or other distribution with respect to, or in exchange for or in replacement of, all such shares of Class A Common Stock described in clauses (i) and (ii) of this subsection (b); excluding in all cases, however, any Registrable Securities sold by a person in a transaction in which rights under this Section 2 are not assigned in accordance with this Agreement or any Registrable Securities with respect to which, pursuant to Section 2.11hereof, the holders are no longer entitled to registration rights pursuant to Sections 2.2, 2.3 or 2.4 hereof.

(c) Registrable Securities Then Outstanding. The number of shares of “Registrable Securities then outstanding” shall mean the number of shares of Class A Common Stock that are Registrable Securities that are then (1) issued and outstanding or (2) issuable pursuant to the exercise or conversion of then outstanding and then exercisable and qualifying options, restricted stock units, warrants or convertible securities.

(d) Holder. The term “Holder” means any person owning of record Registrable Securities or any assignee of record of such Registrable Securities to whom rights set forth herein have been duly assigned in accordance with this Agreement; provided, however, that for purposes of this Agreement, a record holder of shares of Series A Stock and/or Series A-1 Stock and/or Series B Stock and/or Series B-1 Stock and/or Series B-2 Stock and/or Series C Stock convertible into such Registrable Securities shall be deemed to be the Holder of such Registrable Securities; provided, further, that the Company shall in no event be obligated to

 

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register shares of Series A Stock, Series A-1 Stock Series B Stock, Series B-1 Stock, and/or Series B-2 Stock or Series C Stock, and that Holders of Registrable Securities will not be required to convert their shares of Series A Stock, Series A-1 Stock, Series B Stock, Series B-1 Stock, and/or Series B-2 Stock or Series C Stock into Class A Common Stock in order to exercise the registration rights granted hereunder until immediately before (but subject to) the closing of the offering to which the registration relates; and provided, further, that for purposes of Sections 2.9 and 3 of this Agreement, the term “Holder” includes Mark Pincus and any assignee of record of Mark Pincus’s Company Stock (as defined in Section 3.1) to whom his rights under Section 3 hereof have been duly assigned in accordance with this Agreement.

(e) Form S-3. The term “Form S-3” means such form under the Securities Act as is in effect on the date hereof or any successor registration form under the Securities Act subsequently adopted by the SEC that permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.

(f) SEC. The term “SEC” or “Commission” means the U.S. Securities and Exchange Commission.

2.2 Demand Registration.

(a) Request by Holders. If the Company shall receive at any time after the earlier of thirty-six (36) months after the date hereof, or one hundred eighty (180) days after the effective date of the IPO, a written request from the Holders of at least (i) a majority of the Registrable Securities then outstanding, and/or (ii) a majority of the Series C Stock then outstanding that the Company file a registration statement under the Securities Act covering the registration of Registrable Securities pursuant to this Section 2.2, then the Company shall, within twenty (20) days after the receipt of such written request, give written notice of such request (the “Request Notice”) to all Holders, and effect, as soon as practicable, the registration under the Securities Act of all Registrable Securities that Holders request to be registered and included in such registration by written notice given by such Holders to the Company within twenty (20) days after receipt of the Request Notice, subject only to the limitations of this Section 2; provided that the Registrable Securities requested by all Holders to be registered pursuant to such request must either: (i) be at least 25% of all Registrable Securities then outstanding or (ii) have an anticipated aggregate public offering price of not less than $5,000,000 if such requested registration is the IPO.

(b) Underwriting. If the Holders initiating the registration request under this Section 2.2 (the “Initiating Holders”) intend to distribute the Registrable Securities covered by their request by means of an underwriting, then they shall so advise the Company as a part of their request made pursuant to this Section 2.2 and the Company shall include such information in the written notice referred to in Section 2.2(a). In such event, the right of any Holder to include his, her, or its Registrable Securities in such registration shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall enter into an underwriting agreement in customary form with the managing underwriter or underwriters selected for such underwriting by the Company. The Company shall not be required to include any securities of any Holder in such underwriting unless such Holder accepts the terms of the underwriting as

 

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agreed upon between the Company and the underwriters selected by it and enters into an underwriting agreement in customary form with the underwriter or underwriters selected by the Company. Notwithstanding any other provision of this Section 2.2, if the underwriter(s) advise(s) the Company in writing that marketing factors require a limitation of the number of securities to be underwritten then the Company shall so advise all Holders of Registrable Securities that would otherwise be registered and underwritten pursuant hereto, and the number of Registrable Securities that may be included in the underwriting shall be reduced as required by the underwriter(s) and allocated among the Holders of Registrable Securities on a pro rata basis according to the number of Registrable Securities then outstanding held by each Holder requesting registration (including the Initiating Holders); provided, however, that the number of shares of Registrable Securities to be included in such underwriting and registration shall not be reduced unless all other securities of the Company are first entirely excluded from the underwriting and registration. Any Registrable Securities excluded and withdrawn from such underwriting shall be withdrawn from the registration.

(c) Maximum Number of Demand Registrations. The Company is obligated to effect only one (1) such registration pursuant to each of this Section 2.2(a)(i) and (ii).

(d) Deferral. Notwithstanding the foregoing, if the Company shall furnish to Holders requesting the filing of a registration statement pursuant to this Section 2.2, a certificate signed by the President or Chief Executive Officer of the Company stating that in the good faith judgment of the Board, it would be seriously detrimental to the Company and its stockholders for such registration statement to be filed and it is therefore essential to defer the filing of such registration statement, then the Company shall have the right to defer such filing for a period of not more than one hundred twenty (120) days after receipt of the request of the Initiating Holders; provided, however, that the Company may not utilize this right more than once in any consecutive twelve (12) month period.

(e) Expenses. All expenses incurred in connection with a registration pursuant to this Section 2.2, including without limitation all registration and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Company, and the reasonable fees and disbursements of one counsel for the selling Holders, which may be counsel for the Company (but excluding underwriters’ discounts and commissions), shall be borne by the Company. Each Holder participating in a registration pursuant to this Section 2.2 shall bear such Holder’s proportionate share (based on the number of shares sold by such Holder over the total number of shares included in such registration at the time it is declared effective) of all discounts, commissions or other amounts payable to underwriters or brokers in connection with such offering. Notwithstanding the foregoing, the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to this Section 2.2 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered, unless the Holders of a majority of the Registrable Securities then outstanding agree to forfeit their right to one (1) demand registration pursuant to this Section 2.2 (in which case such right shall be forfeited by all Holders of Registrable Securities); provided, however, that if at the time of such withdrawal, there shall have occurred a material adverse change in the condition, business, or prospects of the Company not known to the Holders at the time of their request for such registration and have withdrawn their request for registration with reasonable promptness after learning of such

 

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material adverse change, then the Holders shall not be required to pay any of such expenses and shall retain their demand registration rights pursuant to this Section 2.2.

2.3 Piggyback Registrations. The Company shall notify all Holders of Registrable Securities in writing at least thirty (30) days prior to filing any registration statement under the Securities Act for purposes of effecting a public offering of securities of the Company (including, but not limited to, registration statements relating to secondary offerings of securities of the Company, but excluding registration statements relating to any registration under Section 2.2 or Section 2.4 of this Agreement or to any employee benefit plan or a corporate reorganization or other transaction covered by Rule 145 promulgated under the Securities Act, or a registration on any registration form that does not permit secondary sales or does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities) and will afford each such Holder an opportunity to include in such registration statement all or any part of the Registrable Securities then held by such Holder. Each Holder desiring to include in any such registration statement all or any part of the Registrable Securities held by such Holder shall, within twenty (20) days after receipt of the above-described notice from the Company, so notify the Company in writing, and in such notice shall inform the Company of the number of Registrable Securities such Holder wishes to include in such registration statement. If a Holder decides not to include all of its Registrable Securities in any registration statement thereafter filed by the Company, such Holder shall nevertheless continue to have the right to include any Registrable Securities in any subsequent registration statement or registration statements as may be filed by the Company with respect to offerings of its securities, all upon the terms and conditions set forth herein.

(a) Underwriting. If a registration statement under which the Company gives notice under this Section 2.3 is for an underwritten offering, then the Company shall so advise the Holders of Registrable Securities. In such event, the right of any such Holder’s Registrable Securities to be included in a registration pursuant to this Section 2.3 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their Registrable Securities through such underwriting shall enter into an underwriting agreement in customary form with the managing underwriter or underwriter(s) selected for such underwriting. Notwithstanding any other provision of this Agreement, if the managing underwriter determine(s) in good faith that marketing factors require a limitation of the number of shares to be underwritten, then the managing underwriter(s) may exclude shares (including Registrable Securities) from the registration and the underwriting, and the number of shares that may be included in the registration and the underwriting shall be allocated, first, to the Company, and second, to Holders requesting inclusion of their Registrable Securities in such registration statement on a pro rata basis based on the number of Registrable Securities each such Holder has requested to be included in the registration; provided, however, that the right of the underwriters to exclude shares (including Registrable Securities) from the registration and underwriting as described above shall be restricted so that the number of Registrable Securities included in any such registration is not reduced below fifteen percent (15%) of the shares included in the registration, except for a registration relating to the IPO, from which all Registrable Securities may be excluded as long as such registration does not include shares of any other selling stockholders. In no event will shares of any other selling stockholder be included in such registration that would reduce the number of shares which may be included by Holders without the written consent of Holders of not less than a majority of the Registrable

 

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Securities proposed to be sold in the offering. If any Holder disapproves of the terms of any such underwriting, such Holder may elect to withdraw therefrom by written notice, given in accordance with Section 6.1 hereof, to the Company and the underwriter, delivered at least twenty (20) days prior to the effective date of the registration statement. Any Registrable Securities excluded or withdrawn from such underwriting shall be excluded and withdrawn from the registration. For any Holder that is a nominee, venture capital or private equity fund, partnership, limited liability company, corporation or 1940 Act Investor, the principal of such Holder, or affiliated venture capital or private equity funds, partners, retired partners, members, retired members, stockholders or 1940 Act Investor (which shall include all 1940 Act Investors advised by a Registered Investment Adviser that is Controlled by or under common Control with such 1940 Act Investor’s Registered Investment Adviser), if applicable) of such Holder or such Holder’s principal, or the estates and family members of any such partners and retired partners or members and retired members and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single “Holder,” and any pro rata reduction with respect to such “Holder” shall be based upon the aggregate amount of shares carrying registration rights owned by all entities and individuals included in such “Holder,” as defined in this sentence.

(b) Expenses. All expenses incurred in connection with a registration pursuant to this Section 2.3, including without limitation all registration and qualification fees, printers’ and accounting fees, fees and disbursements of counsel for the Company, and the reasonable fees and disbursements of one counsel for the selling Holders, which may be counsel for the Company (but excluding underwriters’ discounts and commissions), shall be borne by the Company. Each Holder participating in a registration pursuant to this Section 2.3 shall bear such Holder’s proportionate share (based on the number of shares sold by such Holder over the total number of shares included in such registration at the time it goes effective) of all discounts, commissions or other amounts payable to underwriters or brokers in connection with such offering.

2.4 Form S-3 Registration. In case the Company shall receive from any Holder or Holders of Registrable Securities then outstanding a written request or requests that the Company effect a registration on Form S-3 and any related qualification or compliance with respect to all or a part of the Registrable Securities owned by such Holder or Holders, then the Company will do the following:

(a) Notice. Promptly give written notice of the proposed registration and the Holder’s or Holders’ request therefor, and any related qualification or compliance, to all other Holders of Registrable Securities.

(b) Registration. As soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder’s or Holders’ Registrable Securities as are specified in such request, together with all or such portion of the Registrable Securities of any other Holder or Holders joining in such request as are specified in a written request given within twenty (20) days after receipt of such written notice from the Company; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance pursuant to this Section 2.4:

(i) if Form S-3 is not available for such offering;

 

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(ii) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than $6,000,000;

(iii) if the Company shall furnish to the Holders a certificate signed by the President or Chief Executive Officer of the Company stating that in the good faith judgment of the Board, it would be seriously detrimental to the Company and its stockholders for such Form S-3 Registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement no more than once during any consecutive twelve (12) month period for a period of not more than one hundred twenty (120) days after receipt of the request of the Holder or Holders under this Section 2.4;

(iv) if the Company has, within the consecutive twelve (12) month period preceding the date of such request, already effected one (1) registration on Form S-3 for the Holders pursuant to this Section 2.4; or

(v) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance.

(c) Expenses. Subject to the foregoing, the Company shall file a Form S-3 registration statement covering the Registrable Securities and other securities so requested to be registered pursuant to this Section 2.4 as soon as practicable after receipt of the request or requests of the Holders for such registration. The Company shall pay all expenses incurred in connection with the first two registrations requested pursuant to this Section 2.4, (excluding underwriters’ or brokers’ discounts and commissions), including without limitation all filing, registration and qualification, printers’ and accounting fees and the reasonable fees and disbursements of one (1) counsel for the selling Holder or Holders and counsel for the Company, and the reasonable fees and disbursements of one counsel for the selling Holders, which may be counsel for the Company. Each Holder participating in a registration pursuant to this Section 2.4 shall bear such Holder’s proportionate share (based on the number of shares sold by such Holder over the total number of shares included in such registration at the time it goes effective) of all discounts, commissions or other amounts payable to underwriters or brokers in connection with such offering. All expenses incurred in connection with any subsequent registration requested pursuant to this Section 2.4 shall be borne by the Holders who participate in such registration on a pro rata basis according to the number of shares sold by such Holder over the total number of shares included in such registration at the time it goes effective.

(d) Not Demand Registration. Form S-3 registrations shall not be deemed to be demand registrations as described in Section 2.2 above.

2.5 Obligations of the Company. Whenever required to effect the registration of any Registrable Securities under this Agreement, the Company shall, subject to the provisions of Section 2.5(g) below, as expeditiously as reasonably possible:

(a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use reasonable efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the

 

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Registrable Securities registered thereunder, keep such registration statement effective for up to one hundred eighty (180) days.

(b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement and, in connection with any registration on Form S-3 pursuant to Section 2.4 above, use reasonable efforts to timely file all reports required under the Exchange Act in order to maintain the right to continue to use such Form and to maintain such registration in effect.

(c) Furnish to the Holders such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of the Registrable Securities owned by them that are included in such registration.

(d) Use reasonable efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

(e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter(s) of such offering. Each Holder participating in such underwriting hereby agrees to also enter into and perform its obligations under such an agreement.

(f) Use reasonable efforts to notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing.

(g) Notwithstanding any other provision of this Agreement, from and after the time a registration statement filed under this Section 2 covering Registrable Securities is declared effective, the Company shall have the right to suspend the registration statement and the related prospectus in order to prevent premature disclosure of any material non-public information related to corporate developments by delivering notice of such suspension to the Holders, provided, however, that the Company may exercise the right to such suspension only once in any consecutive twelve (12) month period and for a period not to exceed ninety (90) days. From and after the date of a notice of suspension under this Section 2.5(g), each Holder agrees not to use the registration statement or the related prospectus for resale of any Registrable Security until the earlier of (1) notice from the Company that such suspension has been lifted or (2) the ninetieth (90) day following the giving of the notice of suspension.

(h) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered

 

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under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. The Company will use reasonable efforts to amend or supplement such prospectus in order to cause such prospectus not to include any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.

(i) Use its reasonable efforts to furnish, on the date that such Registrable Securities are delivered to the underwriters for sale, if such securities are being sold through underwriters, (i) an opinion, dated as of such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and (ii) a letter, dated as of such date, from the independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering addressed to the underwriters.

2.6 Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to Sections 2.2, 2.3 or 2.4 that the selling Holders shall furnish to the Company such information regarding themselves, the Registrable Securities held by them, and the intended method of disposition of such securities as shall be required to timely effect the registration of their Registrable Securities.

2.7 Delay of Registration. No Holder shall have any right to obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this Section 2.

2.8 Indemnification. In the event any Registrable Securities are included in a registration statement under Sections 2.2, 2.3 or 2.4:

(a) By the Company. To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the stockholders, partners, members, managers, officers and directors of each Holder, any underwriter (as defined in the Securities Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or violations (collectively, the Violations and, individually, a Violation):

(i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto; or

(ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading; or

 

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(iii) any violation or alleged violation by the Company of the Securities Act, the Exchange Act, any federal or state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any federal or state securities law in connection with the offering covered by such registration statement.

The Company will reimburse each such Holder, partner, member, managers, officer or director, underwriter or controlling person for any legal or other expenses reasonably incurred by them, within three months after a request for reimbursement has been received by the Company, in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the indemnity agreement contained in this Section 2.8(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based upon a Violation that occurs in reliance upon and in conformity with written information furnished expressly for use in connection with such registration by such Holder, stockholder, partner, officer, member, manager, director, underwriter or controlling person of such Holder.

(b) By Selling Holders. To the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who have signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, any underwriter and any other Holder selling securities under such registration statement or any of such other Holder’s partners, members, managers, directors or officers or any person who controls such Holder within the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages or liabilities (joint or several) to which the Company or any such director, officer, controlling person, underwriter or other such Holder, partner, member, manager, director, officer or controlling person of such other Holder may become subject under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims, damages or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon and in conformity with written information furnished by such Holder expressly for use in connection with such registration. Each such Holder will reimburse any legal or other expenses reasonably incurred by the Company or any such director, officer, controlling person, underwriter or other Holder, partner, member, manager officer, director or controlling person of such other Holder in connection with investigating or defending any such loss, claim, damage, liability or action; within three months after a request for reimbursement has been received by the indemnifying Holder, provided, however, that the indemnity agreement contained in this Section 2.8(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder, which consent shall not be unreasonably withheld; and provided further, that the total amounts payable in indemnity by a Holder under this Section 2.8(b) in respect of any Violation shall not exceed the net proceeds received by such Holder in the registered offering out of which such Violation arises.

(c) Notice. Promptly after receipt by an indemnified party under this Section 2.8 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.8, deliver to the indemnifying party a written notice of

 

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the commencement thereof. The indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an indemnified party shall have the right to retain its own counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential conflict of interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a reasonable time of the commencement of any such action, but only to the extent prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 2.8, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 2.8.

(d) Contribution. If the indemnification provided for in this Section 2.8 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall contribute to the amount paid or payable by such indemnified party with respect to such loss, liability, claim, damage or expense in the proportion that is appropriate to reflect the relative fault of the indemnifying party and the indemnified party in connection with the statements or omissions that resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. In any such case, (A) no such Holder will be required to contribute any amount in excess of the public offering price of all such Registrable Securities sold by such Holder pursuant to such registration statement; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation.

(e) Conflict with Underwriting Agreement. Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement will control.

(f) Survival. The obligations of the Company and Holders under this Section 2.8 shall survive the completion of any offering of Registrable Securities in a registration statement, and otherwise.

2.9 “Market Stand-Off” Agreement. Each Holder hereby agrees that it shall not, to the extent requested by the Company or an underwriter of securities of the Company, sell or otherwise transfer or dispose of any Registrable Securities or other shares of stock of the Company then owned by such Holder (other than to donees or partners of the Holder who agree to be similarly bound) for up to one hundred eighty (180) days following the effective date of any registration statement of the Company filed under the Securities Act; provided, however,

 

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that, if during the last seventeen (17) days of the restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs, or prior to the expiration of the restricted period the Company announces that it will release earnings results during the sixteen-day period beginning on the last day of the restricted period, and if the Company’s securities are listed on the Nasdaq Stock Market and Rule 2711 thereof applies, then the restrictions imposed by this Section 2.9 shall continue to apply until the expiration of the eighteen-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event. In no event shall the restricted period extend beyond two hundred fifteen (215) days after the effective date of the registration statement and the restrictions imposed by this Section 2.9 shall not apply unless all stockholders then holding more than one percent (1%) of the total equity of the Company on a fully diluted basis and all of the Company’s then-current executive officers and directors enter into similar agreements. Notwithstanding the foregoing, a Holder that is a 1940 Act Investor or one of its permitted transferees shall not be prohibited from selling, transferring or disposing of shares of stock purchased in connection with, or on the open market subsequent to, the IPO, nor shall any such holder be subject to the foregoing restrictions in a registered offering subsequent to the IPO.

For purposes of this Section 2.9, the term Company shall include any wholly owned subsidiary of the Company into which the Company merges or consolidates. In order to enforce the foregoing covenant, the Company shall have the right to place restrictive legends on the certificates representing the shares subject to this Section and to impose stop transfer instructions with respect to the Registrable Securities and such other shares of stock of each Holder (and the shares or securities of every other person subject to the foregoing restriction) until the end of such period. Each Holder further agrees to enter into any agreement reasonably required by the underwriters to implement the foregoing within any reasonable timeframe so requested.

2.10 Rule 144 Reporting. With a view to making available the benefits of certain rules and regulations of the SEC that may at any time permit the sale of the Registrable Securities to the public without registration, after such time as a public market exists for the Class A Common Stock, the Company agrees to:

(a) Use reasonable efforts to make and keep public information available, as those terms are understood and defined in Rule 144 under the Securities Act, at all times after the effective date of the first registration under the Securities Act filed by the Company for an offering of its securities to the general public;

(b) Use reasonable efforts to file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements); and

(c) So long as a Holder owns any Registrable Securities, use reasonable efforts to furnish to the Holder forthwith upon request a written statement by the Company as to its compliance with the reporting requirements of said Rule 144 (at any time after ninety (90) days after the effective date of the first registration statement filed by the Company for an offering of its securities to the general public), and of the Securities Act and the Exchange Act (at any time after it has become subject to the reporting requirements of the Exchange Act), a copy of the most recent annual or quarterly report of the Company, and such other reports and documents of the Company as a Holder may reasonably request in availing itself of any rule or

 

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regulation of the SEC allowing a Holder to sell any such securities without registration (at any time after the Company has become subject to the reporting requirements of the Exchange Act).

(d) Use reasonable efforts to furnish to Holder forthwith, but in any event within five (5) business days following the receipt of a supportable request therefor, (i) unlegended stock certificates in connection with sales of Registrable Securities by a Holder pursuant to said Rule 144, or (ii) in the event that such request is made after the IPO, shall furnish to the Company’s transfer agent an opinion of counsel that such unlegended stock certificates may be issued.

2.11 Termination of the Company’s Obligations. The Company shall have no obligations pursuant to Sections 2.2 through 2.4 with respect to: (a) any request or requests for registration made by any Holder on a date more than two (2) years after the closing date of the IPO; or (b) any Registrable Securities proposed to be sold by a Holder in a registration pursuant to Section 2.2, 2.3 or 2.4 at the later of (x) eighteen months subsequent to the IPO or (y) such time as, in the opinion of counsel to the Company, all such Registrable Securities proposed to be sold by a Holder may be sold in a three-month period without registration under the Securities Act pursuant to Rule 144 under the Securities Act.

3. RIGHT OF FIRST REFUSAL.

3.1 General. Mark Pincus (for so long as (i) he holds at least 2,000,000 shares of the Company’s Class B Common Stock, par value $0.0000125 per share (the Class B Common Stock, and together with the Class A Common Stock, the Common Stock), and/or the equivalent number (accounting for the Class B Common Stock on an as-converted basis) of shares of Class A Common Stock and (ii) is serving as either an employee of the Company or a director of the Company), each Major Investor and any party to whom such Major Investor’s rights under this Section 3 have been duly assigned in accordance with Section 5.1(c) (each, a Rights Holder) has the right of first refusal to purchase such Rights Holder’s Pro Rata Share (as defined below and on an as-converted-to Class A Common Stock basis), of all (or any part) of any “New Securities” (as defined in Section 3.2) that the Company may from time to time issue after the date of this Agreement; provided, however, such Rights Holder shall have no right to purchase any such New Securities if the purchase (or offer of the right to purchase) would cause the Company to be in violation of applicable federal securities laws by virtue of such offer or sale. A Rights Holder’s Pro Rata Share for purposes of this right of first refusal is the ratio of (a) the number of shares of Company Stock (as defined below) as to which such Rights Holder is the Holder (and/or is deemed to be the Holder), to (b) a number of shares of Class A Common Stock equal to the sum of (1) the total number of shares of Class A Common Stock then outstanding plus (2) the total number of shares of Class A Common Stock into which all then-outstanding shares of Preferred Stock are then convertible plus (3) the total number of shares of Class A Common Stock into which all then outstanding shares of the Company’s Class B Common Stock are then convertible plus (4) the number of shares of Class A Common Stock reserved for issuance upon the exercise or vesting of outstanding stock options, restricted stock units, warrants or other stock rights and/or the conversion of securities issuable upon the exercise or vesting of outstanding stock options, restricted stock units, warrants or other stock rights. The term Company Stock means (i) with respect to Mark Pincus, all shares of capital stock held or issuable upon the conversion or exercise of any warrant, right or other security that is held, including without limitation all classes of Common Stock and Preferred Stock, of the Company,

 

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by Mark Pincus and (ii) with respect to Rights Holders other than Mark Pincus, such Rights Holder’s Registrable Securities. Notwithstanding anything herein to the contrary, if the Company issues New Securities that are, or represent the right to receive, shares of Common Stock at a per-share purchase price of more than $0.112875 (as adjusted for any stock splits, combinations, stock dividends, recapitalizations or the like), then Mark Pincus’s Pro Rata Share of such New Securities shall equal the ratio of (a) one half (1/2) of the number of shares of Company Stock as to which he is the Holder (and/or is deemed to be the Holder), to (b) a number of shares of Class A Common Stock equal to the sum of (1) the total number of shares of Class A Common Stock then outstanding plus (2) the total number of shares of Class A Common Stock into which all then-outstanding shares of Preferred Stock are then convertible plus (3) the total number of shares of Class A Common Stock into which all then outstanding shares of Class B Common Stock are then convertible plus (4) the number of shares of Class A Common Stock reserved for issuance upon the exercise or vesting of outstanding stock options, restricted stock units, warrants or other stock rights and/or the conversion of securities issuable upon the exercise or vesting of outstanding stock options, restricted stock units, warrants or other stock rights.

3.2 New Securities. New Securities shall mean any Preferred Stock or Common Stock, whether now authorized or not, and rights, options or warrants to purchase such Common Stock or Preferred Stock, and securities of any type whatsoever that are, or may become, convertible or exchangeable into such Common Stock or Preferred Stock; provided, however, that the term “New Securities” does not include:

(a) any shares of Series C Stock issued under the Series C Agreement, as such agreement may be amended from time to time;

(b) shares of Class A Common Stock issued or issuable upon conversion of shares of Preferred Stock and/or Class B Common Stock that are currently outstanding or issued hereafter;

(c) 9,580,000 shares of Class A Common Stock (and/or warrants or other rights therefore) issued to KPCB Holdings, Inc, as nominee, or its designee;

(d) 3,884,120 shares of Class A Common Stock (and the warrant or other rights therefor) issuable upon the exercise of a warrant to purchase shares of Class A Common Stock issuable to a strategic partner of the Corporation.

(e) 86,856 shares of Class A Common Stock (and/or warrants or other rights therefor) issued to Allen & Company or its designee;

(f) shares of Common Stock (and/or options, restricted stock units, warrants or rights therefor) granted or issued hereafter to employees, officers, directors, contractors, consultants, or advisors of the Company or any Subsidiary pursuant to incentive agreements, stock purchase or stock option plans, stock bonuses or awards, warrants, contracts or other compensatory arrangements that are approved by the Board;

(g) shares of Common Stock or Preferred Stock (and/or options, restricted stock units, warrants or rights therefor) issued pursuant to any strategic transaction (other than any transaction described in (i) below) entered into for primarily non-equity financing purposes, provided that any such arrangement is approved by the Board and by the

 

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vote of holders of a majority of the then-outstanding Preferred Stock, voting together as a single class on an as-converted to Class A Common Stock basis;

(h) shares of Common Stock or Preferred Stock (and/or options, restricted stock units, warrants or rights therefor) issued pursuant to any equipment loan or leasing arrangement, real property leasing arrangement or debt financing from a bank or similar financial institution, provided that any such arrangement is approved by the Board;

(i) shares of Common Stock or Preferred Stock (and/or options, restricted stock units, warrants or rights therefore) issued for consideration other than cash pursuant to any merger, consolidation, acquisition, joint venture or similar business combination, provided that any such arrangement is approved by the Board;

(j) shares of Common Stock or Preferred Stock issuable upon exercise or settlement of any options, restricted stock units, warrants or rights to purchase any securities of the Company outstanding as of the date of this Agreement and any securities issuable upon the conversion thereof;

(k) shares of the Company’s capital stock issued in connection with any stock split, stock dividend, recapitalization or similar event;

(l) shares of Common Stock issued or issuable in a public offering prior to or in connection with which all outstanding shares of Preferred Stock will be converted to Common Stock pursuant to the terms of the Restated Certificate; and

(m) shares of Common Stock or Preferred Stock (and/or options, restricted stock units, warrants or rights therefor) issued or issuable hereafter that are approved by the vote of holders of a majority of the then-outstanding Preferred Stock, voting together as a single class, as being excluded from the definition of “New Securities” under this Section 3.2.

3.3 Procedures. In the event that the Company proposes to undertake an issuance of New Securities, it shall give to each Rights Holder a written notice of its intention to issue New Securities (the Notice), describing the type of New Securities and the price and the general terms upon which the Company proposes to issue such New Securities given in accordance with Section 6.1 hereof. Each Rights Holder shall have ten (10) business days from the date such Notice is effective, as determined pursuant to Section 6.1 hereof based upon the manner or method of notice, to agree in writing to purchase such Rights Holder’s Pro Rata Share of such New Securities for the price and upon the general terms specified in the Notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased (not to exceed such Rights Holder’s Pro Rata Share). If any Rights Holder fails to so agree in writing within such ten (10) business-day period to purchase such Rights Holder’s full Pro Rata Share of an offering of New Securities (a Nonpurchasing Holder), then such Nonpurchasing Holder shall forfeit the right hereunder to purchase that part of such Rights Holder’s Pro Rata Share of such New Securities that he, she or it did not so agree to purchase and the Company shall promptly give each Rights Holder who has timely agreed to purchase such Rights Holder’s full Pro Rata Share of such offering of New Securities (a Purchasing Holder) written notice of the failure of any Nonpurchasing Holder to purchase such Nonpurchasing Rights Holder’s full Pro Rata Share of such offering of New Securities (the Overallotment Notice). Each Purchasing Holder shall have a right of overallotment such that such Purchasing Holder may

 

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agree to purchase a portion of the Nonpurchasing Holders’ unpurchased Pro Rata Shares of such offering on a pro rata basis according to the relative Pro Rata Shares of the Purchasing Rights Holders, at any time within five (5) business days after receiving the Overallotment Notice.

3.4 Failure to Exercise. In the event that the Rights Holders fail to exercise in full the right of first refusal within the applicable periods set forth in Section 3.3, then the Company shall have ninety (90) days thereafter to sell the New Securities with respect to which the Rights Holders’ rights of first refusal hereunder were not exercised, at a price and upon general terms not more favorable to the purchasers thereof than specified in the Company’s Notice to the Rights Holders. In the event that the Company has not issued and sold the New Securities within such 90-day period, then the Company shall not thereafter issue or sell any New Securities without again first offering such New Securities to the Rights Holders pursuant to this Section 3.

3.5 Termination. This right of first refusal shall terminate upon the earliest to occur of the following:

(a) immediately prior to but subject to the closing of the IPO;

(b) the liquidation, dissolution or winding up of the Company or immediately prior to the consummation of an event described in Section 3.6 of Article V of the Restated Certificate;

(c) with respect to Mark Pincus, on the first date he (i) no longer holds at least 2,000,000 shares of Class B Common Stock and/or the equivalent number (accounting for the Class B Common Stock on an as-converted basis) of shares of Class A Common Stock and (ii) does not serve as an employee of the Company or a director of the Company; or

(d) with respect to Rights Holders other than Mark Pincus, on the date that such Rights Holder is no longer a Major Investor.

3.6 Sale Without Notice. In lieu of giving notice to the Rights Holders prior to the issuance of New Securities as provided in Section 3.3, the Company, with the prior written consent of the Major Investors holding shares of Series A Stock, Series A-1 Stock, Series B Stock, Series B-1 Stock, Series B-2 Stock, Series C Stock and/or Conversion Stock representing and/or convertible into a majority of all the Investors’ Shares (as defined below), voting together as a single class on an as-converted basis, may elect to give notice to the Rights Holders within fifteen (15) days after the issuance of New Securities. Such notice shall describe the type, price and terms of the New Securities. Each Rights Holder shall have ten (10) business days from the date such notice is effective, as determined pursuant to Section 6.1 hereof based upon the manner or method of notice, to agree in writing to purchase such Rights Holder’s Pro Rata Share of such New Securities for the price and upon the general terms specified in the notice by giving written notice to the Company and stating therein the quantity of New Securities to be purchased (not to exceed such Rights Holder’s Pro Rata Share). The rights of overallotment purchases and the terms of overallotment purchases set forth in Section 3.3 will apply to any sale of New Securities under this Section 3.6 as well. The closing of the sale under this Section 3.6 shall occur within thirty (30) days of the date of notice to the Rights Holders under this Section 3.6.

 

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3.7 Waiver of Right of First Refusal. The undersigned Prior Investors and Mark Pincus hereby waive (on behalf of themselves and all other Prior Investors) all rights of first refusal under Section 3 of the Prior Rights Agreement with respect to the sale and issuance by the Company of the Series C Stock pursuant to the Series C Agreement (and any Common Stock issuable upon the conversion thereof). The undersigned Prior Investors and Mark Pincus also hereby waive (on behalf of themselves and all other Prior Investors) any notice period required under Section 3 of the Prior Rights Agreement with respect to the sale and issuance by the Company of the Series C Stock pursuant to the Series C Agreement (and any Common Stock issuable upon the conversion thereof).

4. COVENANTS OF THE COMPANY.

4.1 The Company covenants and agrees that, so long as at least eight million (8,000,000) shares of Preferred Stock remain outstanding, the Company shall not, except (i) in connection with any any merger, consolidation, acquisition, joint venture or similar business combination, or (ii) with the unanimous approval of the Board, grant shares of restricted Common Stock (and/or options, restricted stock units, warrants or rights for the purchase of Common Stock) to any employee, officer, director, consultant or other service provider to the Company that vest, or could vest upon the occurrence of one or more events, at a rate faster than the following: twenty-five percent (25%) of the shares vest on the one-year anniversary of the date on which vesting commenced and the remainder vests in equal monthly installments over the following thirty-six (36) months. Furthermore, all such shares of restricted Common Stock granted to any employee, officer, director, consultant or other service provider to the Company (including all shares issuable on exercise of any such options, restricted stock units, warrants and rights for the purchase of Common Stock) that are unvested shall be subject to a repurchase option in favor of the Company, which repurchase option shall provide that, upon termination of the employment of the stockholder, with or without cause, the Company or its assignees (to the extent permissible under applicable securities laws) retains the right to repurchase at cost any such unvested shares.

4.2 The Company covenants that it will use commercially reasonable efforts to ensure that, at all times on or after the date of this Agreement, all outstanding shares of Common Stock and Preferred Stock, and all shares of Common Stock and Preferred Stock issuable upon the exercise or conversion of outstanding options, restricted stock units, warrants or other exercisable or convertible securities are subject to a market standoff or “lockup” agreement of not less than 180 days following the Company’s initial public offering, with customary extensions of the lockup period.

4.3 The Company will not grant accelerated vesting of any shares of restricted Common Stock (or any options, restricted stock units, warrants or rights for the purchase of Common Stock) held by any employee, officer, director, consultant or other service provider to the Company without the express approval of the Board, including at least one of the directors elected solely by the holders of Preferred Stock (each such director, a Preferred Director), set forth in the minutes of the Board or a written consent of the Board; provided, however, that, without any such consent of a Preferred Director, the Board may grant accelerated vesting (i) to those persons who are entitled to acceleration of (a) 25% of the then-unvested shares held by each such holder on the consummation of an event described in Section 3.6 of Article V of the Restated Certificate and/or (b) an additional 25% of the then-unvested shares held by each such

 

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holder on involuntary termination without “cause” or voluntary termination for “good reason” within 12 months after an event described in Section 3.6 of Article V of the Restated Certificate ((a) and (b) together, the Standard Acceleration Terms) pursuant to agreements between them and the Company outstanding as of the date of this Agreement and (ii) those persons who may execute agreements with the Company containing the Standard Acceleration Terms after the date hereof, provided that such agreements are approved by the Board.

For purposes of this Section 4.3, (i) “cause” means an employee’s termination because of (A) any willful, material violation by such employee of any law or regulation applicable to the business of the Company, such employee’s conviction for, or guilty plea to, a felony or a crime involving moral turpitude, or any willful perpetration by such employee of a common law fraud; (B) such employee’s commission of an act of personal dishonesty that involves personal profit in connection with the Company or any other entity having a business relationship with the Company; (C) any material breach by such employee of any provision of any agreement or understanding between the Company and such employee regarding the terms of such employee’s service as an employee, officer, director or consultant to the Company, including without limitation, the willful and continued failure or refusal of such employee to perform the material duties required of such employee as an employee, officer, director or consultant of the Company, other than as a result of having a disability, or a breach of any applicable invention assignment and confidentiality agreement or similar agreement between the Company and such employee; (D) such employee’s disregard of the policies of the Company so as to cause loss, damage or injury to the property, reputation or employees of the Company; or (E) any other misconduct by such employee that is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company; and (ii) “good reason” for an employee’s voluntary termination shall be deemed to exist as the result of (A) a reduction in such employee’s annual base salary or a material reduction by the Company in such employee’s medical, dental, insurance, short- and long-term disability insurance and 401(k) retirement plan benefits (collectively, the Employee Benefits) to which such employee is entitled immediately prior to such reduction with the result that such employee’s overall Employee Benefits package is significantly reduced (other than (1) in connection with a general decrease in the salary or Employee Benefits of all similarly situated employees and (2) in connection with an event described in Section 3.6 of Article V of the Restated Certificate to the extent necessary to make such employee’s salary or Employee Benefits commensurate with those of other employees of the Company or its successor entity or parent entity who are similarly situated with such employee following such event); or (B) the requirement by the Company that such employee relocate his or her principal place of employment to a location that has the effect of increasing such employee’s commute to more than fifty (50) miles. All references to the Company in the foregoing definitions of “cause” and “good reason” shall include parent, subsidiary, affiliate and successor entities of the Company.

4.4 The Company will cause each person now or hereafter employed by it or by any subsidiary with access to confidential information and/or trade secrets to enter into a customary invention assignment and confidentiality agreement or an employment or consulting agreement containing substantially similar terms. In addition, the Company shall not amend, modify, terminate, waive, or otherwise alter, in whole or in part, any such agreement between the Company and any employee to make such agreement materially less favorable to the Company, without the consent of the Board.

 

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5. ASSIGNMENT AND AMENDMENT.

5.1 Assignment. Notwithstanding anything herein to the contrary:

(a) Information Rights. The rights of a Major Investor under Section 1 may be assigned only to (i) an Affiliate (as defined below) of any Major Investor, (ii) a party who acquires from a Major Investor (or a Major Investor’s permitted assigns), pursuant to the last paragraph of Section 4.7 of the Series B-2 Agreement, at least 4,000,000 shares of Series A Stock, Series A-1 Stock, Series B Stock, Series B-1 Stock, and Series B-2 Stock and/or an equivalent number (on an as-converted to Class A Common Stock basis) of shares of Conversion Stock, or (iii) a party who acquires from a 1940 Act Investor (or a 1940 Act Investor’s permitted assigns), any shares of Series C Stock or Conversion Stock solely to the extent such acquiring party is (A) a Mutual Fund, (B) an Advisory Client of a Registered Investment Adviser which serves as the investment adviser set forth on Exhibit A hereto (or a Registered Investment Adviser that is Controlled by or under common Control with such investment adviser) for any 1940 Act Investor(s); provided that such Registered Investment Adviser shall be the recipient of such information, or (C) a transferee of a 1940 Act Investor permitted under the Company’s Bylaws who acquires at least nine hundred thousand (900,000) shares of Series C Stock and/or an equivalent number (on an as-converted to Class A Common Stock basis) of shares of Conversion Stock. An Affiliate means (x) with respect to any transferring 1940 Act Investor, any recipient 1940 Act Investor that is advised by a Registered Investment Adviser that is Controlled by or under common Control with, the Registered Investment Adviser of such transferring 1940 Act Investor set forth on Exhibit A hereto, (y) with respect to a direct or indirect, wholly-owned subsidiary of SOFTBANK CORP., of SOFTBANK CORP., or (z) with respect to any other Investor, a principal or a direct, or indirect, wholly-owned, controlled venture capital fund or subsidiary of the entity specified or such entity’s principal.

(b) Registration Rights. The registration rights of a Holder under Section 2 may be assigned only to: (i) an Affiliate, partner, retired partner, member, retired member, stockholder or retired stockholder of the Holder or such Holder’s principal; (ii) a family member of the Holder or such Holder’s principal, or a trust for the benefit of any individual Holder or such Holder’s principal or Holder’s family member(s) or family member(s) of such Holder’s principal; or (iii) a party who acquires at least eight hundred thousand (800,000) shares of Registrable Securities (or all shares held by the transferor if less).

(c) Refusal Rights. The rights of a Rights Holder, including without limitation Mark Pincus’s rights, under Section 3 may be assigned only to (i) an Affiliate of the Rights Holder or the Rights Holder’s principal; (ii) in the case of Mark Pincus, (1) his spouse, his siblings, the siblings of his spouse or any of his lineal ancestors or descendants or (2) a trust for the benefit of Mark Pincus, his spouse, his siblings, the siblings of his spouse or any of his lineal ancestors or descendants; (iii) a party who acquires from a Rights Holder (or a Rights Holder’s permitted assigns) at least 4,000,000 shares of Series A Stock, Series A-1 Stock, Series B Stock, Series B-1 Stock, Series B-2 Stock and/or an equivalent number (on an as-converted to Class A Common Stock basis) of shares of Conversion Stock, or (iv) a party who acquires from a Rights Holder (or a Rights Holder’s permitted assigns) at least nine hundred thousand (900,000) shares of Series C Stock and/or an equivalent number (on an as-converted to Class A Common Stock basis) of shares of Conversion Stock.

 

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No party may be assigned any of the foregoing rights unless the Company is given written notice by the assigning party at the time of such assignment stating the name and address of the assignee and identifying the securities of the Company as to which the rights in question are being assigned; provided, further, that any such assignee of such rights is not deemed by the Board, in its reasonable judgment, to be a direct competitor of the Company; and provided, further, that any such assignee shall receive such assigned rights subject to all the terms and conditions of this Agreement, including without limitation the provisions of this Section 5 and must execute and deliver a counterpart or addendum to this Agreement manifesting their consent to be bound by the terms of this Agreement prior to any transfer of rights hereunder.

5.2 Amendment and Waiver of Rights. Any provision of this Agreement may be amended or terminated and the observance thereof may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of the Company and Investors (and/or any of their permitted successors or assigns) holding shares of Series A Stock, Series A-1 Stock, Series B Stock, Series B-1 Stock, Series B-2 Stock, Series C Stock and/or Conversion Stock representing and/or convertible into a majority of all the Investors’ Shares (as defined below); provided, however, that Mark Pincus’s rights under Section 3 hereof may not be amended or terminated without Mark Pincus’s written consent; provided, further, that no provision of this Agreement may be amended or terminated, or the observance thereof waived, without the written consent of the Investor whose rights under this Agreement are affected differently by such amendment or waiver than those of other Investors; provided, however, that the specific demand registration rights of the Holders of Series C Preferred Stock hereunder may not be amended in a manner that would be adverse to such Holders or terminated without the written consent of Holders holding shares of Series C Stock representing a majority of all the Series C Stock then held by all Holders; provided, further, if an amendment or waiver disproportionately adversely affects the obligations or rights of a group of Investors in relation to other Investors, then such amendment or waiver shall require the written consent of Investors representing at least a majority of the outstanding Preferred Stock or Conversion Stock then held by the Investors so affected (it being understood that the proportionality and magnitude of such effect will be determined without regard to relative share ownership); and provided, further, that for any issuance of New Securities the Major Investors (and/or any of their permitted successors or assigns) holding a majority of the shares of Company Stock held by all Major Investors may waive any notice under Section 3 as to all Rights Holders and may waive the rights of first refusal under Section 3 in whole or in part as to all Rights Holders (including without limitation, Mark Pincus). As used herein, the term Investors’ Shares shall mean the shares of Series A Stock issued under the Series A Agreement and/or Series A-1 Stock issued under the Series A-1 Agreement and/or Series B Stock issued under the Series B Agreement, Series B-1 Stock issued under the Series B-1 Agreement, Series B-2 Stock issued under the Series B-2 Agreement, Series C Stock issued under the Series C Agreement plus all then-outstanding shares of Conversion Stock. Any amendment, termination or waiver effected in accordance with this Section 5.2 shall be binding upon each Investor, each Holder, each permitted successor, transferee, or assignee of such Investor or Holder, Mark Pincus and the Company.

6. GENERAL PROVISIONS.

6.1 Notices. Any and all notices required or permitted to be given to a party pursuant to the provisions of this Agreement will be in writing and will be effective and deemed to provide such party sufficient notice under this Agreement on the earliest of the following:

 

23


(i) at the time of personal delivery, if delivery is in person; (ii) when sent by electronic mail or facsimile if sent during normal business hours of the recipient, if not, then on the next business day; (iii) one (1) business day after deposit with an express overnight courier for United States deliveries, or two (2) business days after such deposit for deliveries outside of the United States, with proof of delivery from the courier requested; or (iv) five (5) business days after deposit in the United States mail by certified mail (return receipt requested) for United States deliveries. All notices for delivery outside the United States will be sent by facsimile or by express courier. All notices not delivered personally or by facsimile will be sent with postage and/or other charges prepaid and properly addressed to the party to be notified at the address or facsimile number as follows, or at such other address, electronic mail address or facsimile number as such other party may designate by one of the indicated means of notice herein to the other parties hereto as follows or as such party may designate by ten (10) days’ advance written notice to the other parties hereto:

(a) if to an Investor or Mark Pincus, at such party’s address as set forth on Exhibit A

(b) if to the Company, marked “Attention: General Counsel” at:

Zynga Inc.

444 De Haro Street

Suite 132

San Francisco, CA 94107

Email: legal@zynga.com

with a copy (which shall not constitute notice) to

Jones Day

1755 Embarcadero Road

Palo Alto, CA 94303

Attention: Timothy Curry, Esq.

Facsimile: (650) 739-3900

Email: tcurry@jonesday.com

(c) if to Mark Pincus, to:

Mark Pincus

c/o Zynga Inc.

444 De Haro Street

Suite 132

San Francisco, CA 94107

 

24


6.2 Entire Agreement. This Agreement and the documents referred to herein, together with all the Exhibits hereto, constitute the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and supersede any and all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the specific subject matter hereof.

6.3 Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of California, without giving effect to that body of laws pertaining to conflict of laws.

6.4 Severability. If any provision of this Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If such clause or provision cannot be so enforced, such provision shall be stricken from this Agreement and the remainder of this Agreement shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Agreement. Notwithstanding the forgoing, if the value of this Agreement based upon the substantial benefit of the bargain for any party is materially impaired, which determination as made by the presiding court or arbitrator of competent jurisdiction shall be binding, then all parties agree to substitute such provision(s) through good faith negotiations.

6.5 Third Parties. Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the parties hereto and their successors and assigns, any rights or remedies under or by reason of this Agreement.

6.6 Successors and Assigns. Subject to the provisions of Section 5.1, this Agreement, and the rights and obligations of the parties hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives.

6.7 Titles and Headings. The titles, captions and headings of this Agreement are included for ease of reference only and will be disregarded in interpreting or construing this Agreement. Unless otherwise specifically stated, all references herein to “Sections” and “Exhibits” will mean “sections” of this Agreement and “exhibits” hereto.

6.8 Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall constitute one and the same agreement.

6.9 Costs and Attorneys’ Fees. In the event that any action, suit or other proceeding is instituted concerning or arising out of this Agreement or any transaction contemplated hereunder, the prevailing party shall recover all of such party’s costs and reasonable attorneys’ fees incurred in each such action, suit or other proceeding, including any and all appeals or petitions therefrom.

6.10 Adjustments for Stock Splits, Etc. Wherever in this Agreement there is a reference to a specific number of shares of Common Stock or Preferred Stock of any class or series, then, upon the occurrence of any subdivision, combination, or stock dividend of such class or series of stock, the specific number of shares so referenced in this Agreement shall

 

25


automatically be proportionally adjusted to reflect the effect on the outstanding shares of such class or series of stock by such subdivision, combination, or stock dividend.

6.11 Aggregation of Stock. For purposes of Sections 1 (including the definition of Major Investor), 3 and 5.1, all shares held or acquired by affiliated entities or persons (including the principals of an Investor or a Holder, affiliated 1940 Act Investors or, if applicable, 1940 Act Investors advised by a Registered Investment Adviser that is Controlled by or under common Control with the Registered Investment Adviser of such 1940 Act Investor) shall be aggregated together for the purpose of determining the availability of any rights under this Agreement.

6.12 Further Assurances. The parties agree to execute such further documents and instruments and to take such further actions as may be reasonably necessary to carry out the purposes and intent of this Agreement.

6.13 Facsimile Signatures. This Agreement may be executed and delivered by facsimile or other electronic means and upon such delivery the facsimile or other electronically delivered signature will be deemed to have the same effect as if the original signature had been delivered to the other party. The original signature copy shall be delivered to the other party by express overnight delivery. The failure to deliver the original signature copy and/or the nonreceipt of the original signature copy shall have no effect upon the binding and enforceable nature of this Agreement.

6.14 Prior Rights Agreement Superseded. Pursuant to Section 5.2 of the Prior Rights Agreement, the undersigned parties who are parties to such Prior Rights Agreement hereby restate the Prior Rights Agreement to read in its entirety as set forth in this Agreement, such that the Prior Rights Agreement is hereby terminated and entirely replaced and superseded by this Agreement.

6.15 Massachusetts Business Trust.

(a) A copy of the Agreement and Declaration of Trust of Fidelity Contrafund and Fidelity Advisor New Insights Fund (collectively, the Fidelity Investors) is on file with the Secretary of State of the Commonwealth of Massachusetts and notice is hereby given that this Agreement is executed on behalf of the trustees of the Fidelity Investors or any affiliate thereof as trustees and not individually and that the obligations of this Agreement are not binding on any of the trustees, officers or stockholders of the Fidelity Investors or any affiliate thereof individually but are binding only upon such Investor or any affiliate thereof and its assets and property.

(b) Certain other Investors are also Massachusetts Business Trusts. A copy of the Agreement and Declaration of Trust of each such Investor is on file with the Secretary of State of the Commonwealth of Massachusetts and notice is hereby given that this Agreement is executed on behalf of the trustees of each such Investor as trustees and not individually and that the obligations of this Agreement are not binding on any of the trustees, officers or stockholders of any such Investor individually but are binding only upon each such Investor and its assets and property.

 

26


6.16 Additional Parties. Notwithstanding anything to the contrary contained herein, if the Company issues additional shares of Series C Stock after the date hereof, as a condition to the issuance of such shares the Company shall require that any purchaser of shares of Series C Stock become a party to this Agreement by executing and delivering a counterpart signature page hereto agreeing to be bound by and subject to the terms of this Agreement as an Investor. Each such person shall thereafter be deemed an Investor for all purposes under this Agreement and notwithstanding anything to the contrary contained herein, the Company shall update relevant Schedules to include such additional Investor without requiring notice to or consent of any party.

[SIGNATURE PAGES FOLLOW]

 

27


IN WITNESS WHEREOF, the undersigned parties have executed this Fifth Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

COMPANY:
ZYNGA INC.
By:   /s/ Mark Pincus
Name:   Mark Pincus
Title:   President and Chief Executive Officer

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


IN WITNESS WHEREOF, the undersigned parties have executed this Fifth Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

HOLDER:
/s/ Mark Pincus
MARK PINCUS

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


IN WITNESS WHEREOF, the undersigned parties have executed this Fifth Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

INVESTOR:
AVALON VENTURES VIII, LP
By:   Avalon Ventures VIII GP, LLC
Its:   General Partner
By:   /s/ Rich Levandov
Name:   Rich Levandov
Title:   Managing Member

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


IN WITNESS WHEREOF, the undersigned parties have executed this Fifth Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

INVESTORS:
DST GLOBAL LIMITED

By:

  /s/ Sean Hogan
Name:   Sean Hogan
Title:   Director

 

DIGITAL SKY TECHNOLOGIES LTD.

By:

   
Name:    
Title:    

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


IN WITNESS WHEREOF, the undersigned parties have executed this Fifth Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

INVESTORS:
DST GLOBAL LIMITED

By:

   

Name:

   

Title:

   

 

DIGITAL SKY TECHNOLOGIES LTD.

By:

  /s/ Alexander Tamas

Name:

  Alexander Tamas

Title:

  Managing Director

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


IN WITNESS WHEREOF, the undersigned parties have executed this Fifth Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

INVESTOR:
FOUNDRY VENTURE CAPITAL 2007 L.P.

By:

  Foundry Venture 2007, LLC, its general partner

 

By:

  /s/ Bradley A. Feld

Name:

  Bradley A. Feld

Title:

  Manager

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


IN WITNESS WHEREOF, the undersigned parties have executed this Fifth Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

INVESTOR:

INSTITUTIONAL VENTURE PARTNERS

XII, L.P.

By:   Institutional Venture Management XII LLC
Its:   General Partner
By:   /s/ J. Sanford Miller
  Managing Director
  J. Sanford Miller

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


IN WITNESS WHEREOF, the undersigned parties have executed this Fifth Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

INVESTORS:
UNION SQUARE VENTURES 2004, L.P.
By: Union Square GP 2004, L.L.C.
By:   /s/ Fred Wilson

Name:

  Fred Wilson

Title:

  Managing Member

 

UNION SQUARE PRINCIPALS 2004, L.L.C.
By:   /s/ Fred Wilson

Name:

  Fred Wilson

Title:

  Managing Member.

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


IN WITNESS WHEREOF, the undersigned parties have executed this Fifth Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

INVESTOR:
KPCB HOLDINGS, INC., AS NOMINEE

By:

  /s/ Eric J. Keller

Name:

  Eric J. Keller

Title:

  President

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


IN WITNESS WHEREOF, the undersigned parties have executed this Fifth Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

INVESTOR: T. ROWE PRICE ASSOCIATES, INC., INVESTMENT ADVISER, FOR AND ON BEHALF OF THE ADVISORY CLIENTS ON ATTACHMENT A, LISTED BELOW:
T. Rowe Price New America Growth Fund;
T. Rowe Price New America Growth Portfolio;
(each such advisory client, an “Investor”)
By:   /s/ Paul R. Bartolo
Name:   Paul Bartolo
Title:   Vice President
INVESTOR: T. ROWE PRICE ASSOCIATES, INC., INVESTMENT ADVISER, FOR AND ON BEHALF OF THE ADVISORY CLIENTS ON ATTACHMENT A, LISTED BELOW:

T. Rowe Price Global Technology Fund, Inc.;

TD Mutual Funds – TD Science & Technology Fund;

(each such advisory client, an “Investor”)
By:   /s/ Henry M. Ellenbogen
Name:   Henry M. Ellenbogen
Title:   Vice President

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


INVESTOR: T. ROWE PRICE ASSOCIATES, INC., INVESTMENT ADVISER, FOR AND ON BEHALF OF THE ADVISORY CLIENTS ON ATTACHMENT A, LISTED BELOW:

T. Rowe Price Growth Stock Fund, Inc.;

JNL Series Trust – JNL/T. Rowe Price Established Growth Fund;

ING Partners, Inc. – ING T. Rowe Price Growth

Equity Portfolio;

Metropolitan Series Fund, Inc. – T. Rowe Price

Large Cap Growth Portfolio;

Lincoln Variable Insurance Products Trust – LVIP — T. Rowe Price Growth Stock Fund;

Conagra Foods, Inc. – Large Cap Diversified

Growth;

T. Rowe Price Growth Stock Trust;

East Bay Municipal Utility District – Domestic;

Advantus – Minnesota Life Insurance Co. Growth Stock;

NFL Player Second Career Savings Plan;

Prudential Retirement Insurance & Annuity Co.;

(each such advisory client, an “Investor”)
By:   /s/ Paul R. Bartolo
Name:   Paul R. Bartolo
Title:   VP

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


INVESTOR: T. ROWE PRICE ASSOCIATES, INC., INVESTMENT ADVISER, FOR AND ON BEHALF OF THE ADVISORY CLIENTS ON ATTACHMENT A, LISTED BELOW:

T. Rowe Price Institutional Large-Cap Growth

Fund;

Operating Engineers Local #18 – LCG;

Caterpillar Master Pension Trust;

Caterpillar, Inc. Veba Trust;

Caterpillar Investment Trust;

Invensys, Inc. 401K Plan;

Union Pacific Corporation;

Harris Corporation – Large Cap Growth;

Sears 401K Savings Plan;

Xerox Corporation;

Nextera Energy Inc. Employee Pension Plan – LCG;

Nextera Energy Inc. Bargaining Unit Employee

Savings Plan;

BAE Systems;

Lyondell Petrochemical Company;

National Rural Electric Cooperative Association;

USG Corporation Retirement Plan Trust;

Monsanto Company Savings and Investment Plan;

T. Rowe Price U.S. Equities Trust;

(each such advisory client, an “Investor”)
By:   /s/ Robert W. Sharps
Name:   Robert W. Sharps
Title:   Vice President

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


IN WITNESS WHEREOF, the undersigned parties have executed this Fifth Amended and Restated Investors’ Rights Agreement as of the date first written above.

INVESTOR: THE UNIVERSAL

INSTITUTIONAL FUNDS, INC. – MID

CAP GROWTH PORTFOLIO

By:   Morgan Stanley Investment Management Inc.
Its:   Investment Manager
By:   /s/ Sandeep Chainani
Name:   Sandeep Chainani
Title:   MD

 

INVESTOR: MORGAN STANLEY MID

CAP GROWTH FUND

By:   Morgan Stanley Investment Advisors Inc.
Its:   Investment Adviser
By:   /s/ Sandeep Chainani
Name:   Sandeep Chainani
Title:   MD

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


INVESTOR: MORGAN STANLEY SELECT DIMENSIONS INVESTMENT SERIES – MID CAP GROWTH PORTFOLIO
By:   Morgan Stanley Investment Advisors Inc.
Its:   Investment Adviser
By:   /s/ Sandeep Chainani
Name:   Sandeep Chainani
Title:   MD

 

INVESTOR: MORGAN STANLEY INSTITUTIONAL FUND TRUST - MID

CAP GROWTH PORTFOLIO

By:   Morgan Stanley Investment Management Inc.
Its:   Investment Adviser
By:   /s/ Sandeep Chainani
Name:   Sandeep Chainani
Title:   MD

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


INVESTOR: ALLIANZ VARIABLE INSURANCE TRUST – AZL MORGAN STANLEY MID CAP GROWTH FUND
By:   Morgan Stanley Investment Management Inc.
Its:   Sub-Adviser
By:   /s/ Sandeep Chainani
Name:   Sandeep Chainani
Title:   MD

 

INVESTOR: EQUITABLE ADVISORS TRUST – EQ/MORGAN STANLEY MID-CAP GROWTH PORTFOLIO
By:   Morgan Stanley Investment Management Inc.
Its:   Sub-Adviser
By:   /s/ Sandeep Chainani
Name:   Sandeep Chainani
Title:   MD

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


INVESTOR: TRANSAMERICA FUNDS – TRANSAMERICA MORGAN STANLEY MID-CAP GROWTH
By:   Morgan Stanley Investment Management Inc.
Its:   Sub-Adviser
By:   /s/ Sandeep Chainani
Name:   Sandeep Chainani
Title:   MD

 

INVESTOR: LAWRENCIUM ATOLL INVESTMENTS LTD
By:   Morgan Stanley Investment Management Inc.
Its:   Investment Manager
By:   /s/ Sandeep Chainani
Name:   Sandeep Chainani
Title:   MD

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


INVESTOR: MET INVESTOR SERIES TRUST- MORGAN STANLEY MID CAP GROWTH PORTFOLIO
By:   Morgan Stanley Investment Management Inc.
Its:   Sub-Adviser
By:   /s/ Sandeep Chainani
Name:   Sandeep Chainani
Title:   MD

 

INVESTOR: TRANSAMERICA SERIES TRUST – TRANSAMERICA MORGAN STANLEY MID-CAP GROWTH VP
By:   Morgan Stanley Investment Management Inc.
Its:   Sub-Adviser
By:   /s/ Sandeep Chainani
Name:   Sandeep Chainani
Title:   MD

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


INVESTOR: VALIC COMPANY I – MID CAP STRATEGIC GROWTH FUND
By:   Morgan Stanley Investment Management Inc.
Its:   Sub-Adviser
By:   /s/ Sandeep Chainani
Name:   Sandeep Chainani
Title:   MD

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


IN WITNESS WHEREOF, the undersigned parties have executed this Fifth Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

INVESTOR:
FIDELITY CONTRAFUND: FIDELITY CONTRAFUND
By:   /s/ Jeffrey Christian
Name:   Jeffrey Christian
Title:   Deputy Treasurer

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


INVESTOR:
FIDELITY CONTRAFUND: FIDELITY ADVISOR NEW INSIGHTS FUND
By:   /s/ Jeffrey Christian
Name:   Jeffrey Christian
Title:   Deputy Treasurer

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


IN WITNESS WHEREOF, the undersigned parties have executed this Fifth Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

INVESTOR: JANUS INVESTMENT FUND ON BEHALF OF ITS SERIES, JANUS TWENTY FUND

By:

  Janus Capital Management LLC

Its:

  Investment Adviser

By:

  /s/ Ron Sachs

Name:

  Ron Sachs

Title:

  Vice President

 

INVESTOR: JANUS INVESTMENT FUND ON BEHALF OF ITS SERIES, JANUS FUND

By:

  Janus Capital Management LLC

Its:

  Investment Adviser

By:

  /s/ Jonathan Coleman

Name:

  Jonathan Daniel Coleman

Title:

  Executive Vice President, Co-Chief Investment Officer

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


INVESTOR: JANUS INVESTMENT FUND ON BEHALF OF ITS SERIES, JANUS FORTY FUND

By:

  Janus Capital Management LLC

Its:

  Investment Adviser

By:

  /s/ Ron Sachs

Name:

  Ron Sachs

Title:

  Vice President

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


IN WITNESS WHEREOF, the undersigned parties have executed this Fifth Amended and Restated Investors’ Rights Agreement as of the date first written above.

 

INVESTOR:

 

CAPITAL WORLD INVESTORS

on behalf of :

 

The Growth Fund of America, Inc.;

New Perspective Fund, Inc. ;

American Funds Insurance Series - Growth Fund;

 

(each such fund, an “Investor”

By:

  /s/ Michael J. Downer

Name:

  Michael J. Downer

Title:

  Senior Vice President and Secretary, Capital Research and Management Company

 

[SIGNATURE PAGE TO ZYNGA INC.

FIFTH AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT]


EXHIBIT A

Schedule of Investors

Google Inc.

1600 Amphitheatre Parkway

Mountain View, CA 94043

Attention: David Lawee

SOFTBANK CORP.

1-9-1 Higashi-Shirnbashi

Minato-ku, Tokyo 105-7303

Japan

DAG Ventures Limited

251 Lytton Avenue, Suite 200

Palo Alto, CA 94301

SB Asia Pacific Investments Limited

Ugland House, P.O. Box 309

George Town, Grand Cayman

Cayman Islands

With a copy (which shall not constitute notice) to

Sullivan & Cromwell LLP

1870 Embarcadero Road

Palo Alto, CA 94303

Attn: John L. Savva

Fax: (650) 461-5700

Digital Sky Technologies Limited

c/o Tulloch & Co - Attn: Alastair Tulloch

4 Hill Street

London, W1J 5NE

United Kingdom

DST Global Limited

c/o Tulloch & Co - Attn: Alastair Tulloch

4 Hill Street

London, W1J 5NE

United Kingdom


KPCB Holdings, Inc., as nominee

c/o Kleiner Perkins Caufield & Byers

2750 Sand Hill Road

Menlo Park, CA 94025

Attention: Bing Gordon

With a copy to (which shall not constitute the giving of notice):

Sayre E. Stevick

Fenwick & West LLP

801 California Street

Mountain View, CA 94041

Institutional Venture Partners XII, L.P.

3000 Sand Hill Road

Building 2, Suite 250

Menlo Park, CA 94025

Union Square Ventures 2004, LP

Union Square Principals 2004, LLC

915 Broadway

Suite 1408

New York, NY 10010

PG Ventures, Inc.

75 Rockefeller Plaza – 23rd Floor

New York, NY 10019

Foundry Venture Capital 2007, L.P.

1050 Walnut Street, Suite 210

Boulder, CO 80302

F&W Investments LLC-Series 2007

c/o Fenwick & West LLP

801 California Street

Mountain View, CA 94041

Attention: Laird H. Simons, III

Theodore H. Pincus Declaration of

Trust Dated June 10, 1992

c/o Theodore H. Pincus

400 East Ohio Street, East Penthouse

Chicago, IL 60611


Archimedes Capital

543 West Crescent Drive

Palo Alto, CA 94301

Reid Hoffman

800 Highschool Way #310

Mountain View, CA 94041

Paul Martino

146 Beverly Street

Mountain View, CA 94043

The D’Anconia Trust

c/o Russell Anweiler

PO Box 475665

San Francisco, CA 94147-5665

Peter Thiel

1 Letterman Drive

Bldg. C, Suite 400

San Francisco, CA 94129

Avalon Ventures VIII, LP

888 Prospect Street

Suite 320

La Jolla, CA 92037

Gary Leff

1720 N. Larrabee Street

Chicago, IL 60614

European Founders Fund GmbH & Co.

Beteiligungs KG Nr.1

c/o Pöllath und Partners

Kardinal–Faulhaber–Strasse 10

80333 Munich, Germany

With a copy to:

Tamara L. Thompson

Thompson Legal Advisory

229 Brannan Street, Suite 18G

San Francisco, CA 94107

Fax (415) 896-5166


The Universal Institutional Funds, Inc. – Mid Cap Growth Portfolio;

Morgan Stanley Institutional Fund Trust–Mid Cap Growth Portfolio;

Allianz Variable Insurance Trust – AZL Morgan Stanley Mid Cap Growth Fund;

Equitable Advisors Trust – EQ/Morgan Stanley Mid-Cap Growth Portfolio;

Transamerica Funds – Transamerica Morgan Stanley Mid-Cap Growth;

Lawrencium Atoll Investments Ltd.;

Met Investor Series Trust- Morgan Stanley Mid Cap Growth Portfolio;

Transamerica Series Trust – Transamerica Morgan Stanley Mid-Cap Growth VP;

Valic Company I – Mid Cap Strategic Growth Fund;

c/o Morgan Stanley Investment Management Inc.

522 Fifth Avenue (investment adviser to such Investors)

New York, New York 10036

Attention: Sandeep Chainani

Copy to Joseph Benedetti

Morgan Stanley Mid Cap Growth Fund;

Morgan Stanley Select Dimensions Investment Series – Mid Cap Growth Portfolio;

c/o Morgan Stanley Investment Advisors Inc.

(investment adviser to such Investors)

522 Fifth Avenue

New York, New York 10036

Attention: Sandeep Chainani

Copy to Joseph Benedetti

Janus Twenty Fund;

Janus Fund;

Janus Forty Fund;

c/o Janus Capital Management LLC (investment adviser to such Investors)

151 Detroit Street

Denver, CO 80206

Attn: General Counsel


Fidelity Contrafund: Fidelity Contrafund

c/o Fidelity Investments

82 Devonshire Street, VI3H

Boston, MA 02109

Attn: Andrew Boyd

With a copy to:

H. David Henken, Esq.

Goodwin Procter LLP

Exchange Place

Boston, MA 02109

Fidelity Contrafund: Fidelity Advisor New

Insights Fund

c/o Fidelity Investments

82 Devonshire Street, V13H

Boston, MA 02109

Attn: Andrew Boyd

With a copy to:

H. David Henken, Esq.

Goodwin Procter LLP

Exchange Place

Boston, MA 02109

Fidelity Management and Research Company

serves as the investment adviser to both Fidelity

Contrafunds listed above.

The Growth Fund of America, Inc.;

New Perspective Fund, Inc.;

American Funds Insurance Series-Growth Fund;

c/o Capital World Investors, a division of Capital

Research and Management Company (investment adviser to such Investors)

333 South Hope Street

53rd Floor

Los Angeles, CA 90071

Attn: Michael Triessl / Don Rolfe

T. Rowe Price New America Growth Fund;

T. Rowe Price New America Growth Portfolio;

T. Rowe Price Growth Stock Fund, Inc.;

JNL Series Trust – JNL/T. Rowe Price Established Growth Fund;

ING Partners, Inc. – ING T. Rowe Price Growth

Equity Portfolio;


Metropolitan Series Fund, Inc. – T. Rowe Price

Large Cap Growth Portfolio;

Lincoln Variable Insurance Products Trust – LVIP — T. Rowe Price Growth Stock Fund;

Conagra Foods, Inc. – Large Cap Diversified Growth;

T. Rowe Price Growth Stock Trust;

East Bay Municipal Utility District – Domestic;

Advantus – Minnesota Life Insurance Co. Growth Stock;

NFL Player Second Career Savings Plan;

Prudential Retirement Insurance & Annuity Co.;

T. Rowe Price Institutional Large-Cap Growth Fund;

Operating Engineers Local #18 – LCG;

Caterpillar Master Pension Trust;

Caterpillar, Inc. Veba Trust;

Caterpillar Investment Trust;

Invensys, Inc. 401K Plan;

Union Pacific Corporation;

Harris Corporation – Large Cap Growth;

Sears 401K Savings Plan;

Xerox Corporation;

Nextera Energy Inc. Employee Pension Plan – LCG;

Nextera Energy Inc. Bargaining Unit Employee

Savings Plan;

BAE Systems;

Lyondell Petrochemical Company;

National Rural Electric Cooperative Association;

USG Corporation Retirement Plan Trust;

Monsanto Company Savings and Investment Plan;

T. Rowe Price U.S. Equities Trust;

T. Rowe Price Global Technology Fund, Inc.;

TD Mutual Funds – TD Science & Technology Fund;

c/o T. Rowe Price Associates, Inc. (as investment adviser to such Investors)

100 East Pratt Street

Baltimore, MD 21202

Attn: Andrew Baek, Vice President and Senior

Legal Counsel

Phone: 410-345-2090

Email: andrew_baek@troweprice.com


Schedule 1.1(d)

LAWRENCIUM ATOLL INVESTMENTS LTD

T. ROWE PRICE GROWTH STOCK TRUST

T. ROWE PRICE U.S. EQUITIES TRUST

TD MUTUAL FUNDS-TD SCIENCE & TECHNOLOGY FUND

Zynga Inc. 2007 Equity Incentive Plan

Exhibit 10.2

ZYNGA GAME NETWORK INC.

2007 EQUITY INCENTIVE PLAN

Adopted on November 2, 2007

As Amended through September 3, 2010

1. PURPOSE. The purpose of this Plan is to provide incentives to attract, retain and motivate eligible persons whose present and potential contributions are important to the success of the Company, its Parent and Subsidiaries by offering eligible persons an opportunity to participate in the Company’s future performance through awards of Options, Restricted Stock, and Restricted Stock Units. Capitalized terms not defined in the text are defined in Section 23 hereof. Although this Plan is intended to be a written compensatory benefit plan within the meaning of Rule 701 promulgated under the Securities Act, grants may be made pursuant to this plan which do not qualify for exemption under Rule 701 promulgated under the Securities Act or Section 25102(o) of the California Corporations Code (Section 25102(o)). Any requirement of this Plan which is required in law only because of Section 25102(o) need not apply if the Committee so provides.

2. SHARES SUBJECT TO THE PLAN.

2.1 Number of Shares Available. Subject to Sections 2.2 and 18 hereof, the total number of Shares reserved and available for grant and issuance pursuant to this Plan will be 144,000,000 Shares. Subject to Sections 2.2, 5.10 and 18 hereof, Shares subject to Awards previously granted will again be available for grant and issuance in connection with future Awards under this Plan to the extent such Shares: (i) cease to be subject to issuance upon exercise of an Option, other than due to exercise of such Option; (ii) are subject to an Award granted hereunder but the Shares subject to such Award are forfeited or repurchased by the Company at the original issue price; or (iii) are subject to an Award that otherwise terminates without Shares being issued. At all times, the Company will reserve and keep available a sufficient number of Shares as will be required to satisfy the requirements of all Awards granted and outstanding under this Plan.

2.2 Adjustment of Shares. In the event that the number of outstanding shares of the Company’s Class A Common Stock is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of the Company without consideration, then (i) the number of Shares reserved for issuance under this Plan, (ii) the Exercise Prices of and number of Shares subject to outstanding Options and (iii) the Purchase Prices of and number of Shares subject to other outstanding Awards will be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and compliance with applicable securities laws; provided, however, that fractions of a Share will not be issued but will either be paid in cash at the Fair Market Value of such fraction of a Share or will be rounded down to the nearest whole Share, as determined by the Committee; and provided, further, that the Exercise Price of any Option may not be decreased to below the par value of the Shares.


3. ELIGIBILITY. ISOs (as defined in Section 5 hereof) may be granted only to employees (including officers and directors who are also employees) of the Company or of a Parent or Subsidiary of the Company. NQSOs (as defined in Section 5 hereof), Restricted Stock Awards and Restricted Stock Units may be granted to employees, officers, directors and consultants of the Company or any Parent or Subsidiary of the Company; provided such consultants are natural persons who render bona fide services not in connection with the offer and sale of securities in a capital-raising transaction. A person may be granted more than one Award under this Plan.

4. ADMINISTRATION.

4.1 Committee Authority. This Plan will be administered by the Committee or the Board if no Committee is created by the Board. Subject to the general purposes, terms and conditions of this Plan, and to the direction of the Board, the Committee will have full power to implement and carry out this Plan. Without limitation, the Committee will have the authority to:

(a) construe and interpret this Plan, any Award Agreement and any other agreement or document executed pursuant to this Plan;

(b) prescribe, amend and rescind rules and regulations relating to this Plan;

(c) approve persons to receive Awards;

(d) determine the form and terms of Awards;

(e) determine the number of Shares or other consideration subject to Awards;

(f) determine whether Awards will be granted singly, in combination with, in tandem with, in replacement of, or as alternatives to, other Awards under this Plan or awards under any other incentive or compensation plan of the Company or any Parent or Subsidiary of the Company;

(g) subject to Sections 16.1 and 16.2 hereof, grant waivers of any conditions of this Plan or any Award;

(h) determine the terms of vesting, exercisability and payment of Awards;

(i) correct any defect, supply any omission, or reconcile any inconsistency in this Plan, any Award, any Award Agreement, any Exercise Agreement or any Restricted Stock Purchase Agreement;

(j) determine whether an Award has been earned;

(k) make all other determinations necessary or advisable for the administration of this Plan; and

 

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(l) extend the vesting period beyond a Participant’s Termination Date.

4.2 Committee Discretion. Unless in contravention of any express terms of this Plan or an Award, any determination made by the Committee with respect to any Award will be made in its sole discretion either (i) at the time of grant of the Award, or (ii) subject to Section 5.9 hereof, at any later time. Any such determination will be final and binding on the Company and on all persons having an interest in any Award under this Plan. The Committee may delegate to one or more officers of the Company the authority to grant an Award under this Plan, provided such officer or officers are members of the Board.

5. OPTIONS. The Committee may grant Options to eligible persons described in Section 3 hereof and will determine whether such Options will be Incentive Stock Options within the meaning of the Code (ISOs) or Nonqualified Stock Options (NQSOs), the number of Shares subject to the Option, the Exercise Price of the Option, the period during which the Option may be exercised, and all other terms and conditions of the Option, subject to the following:

5.1 Form of Option Grant. Each Option granted under this Plan will be evidenced by an Award Agreement which will expressly identify the Option as an ISO or an NQSO (Stock Option Agreement), and will be in such form and contain such provisions (which need not be the same for each Participant) as the Committee may from time to time approve, and which will comply with and be subject to the terms and conditions of this Plan.

5.2 Date of Grant. The date of grant of an Option will be the date on which the Committee makes the determination to grant such Option, unless a later date is otherwise specified by the Committee. The Stock Option Agreement and a copy of this Plan will be delivered to the Participant within a reasonable time after the granting of the Option.

5.3 Exercise Period. Options may be exercisable immediately but subject to repurchase pursuant to Section 12 hereof or may be exercisable within the times or upon the events determined by the Committee as set forth in the Stock Option Agreement governing such Option; provided, however, that no Option will be exercisable after the expiration of ten (10) years from the date the Option is granted, nor exercisable earlier than six (6) months after its date of grant if granted to an employee who is a non-exempt employee for purposes of overtime pay except as permitted under the Fair Labor Standards Act of 1938; and provided further that no ISO granted to a person who directly or by attribution owns more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or of any Parent or Subsidiary (Ten Percent Shareholder) will be exercisable after the expiration of five (5) years from the date the ISO is granted. The Committee also may provide for Options to become exercisable at one time or from time to time, periodically or otherwise, in such number of Shares or percentage of Shares as the Committee determines.

5.4 Exercise Price. The Exercise Price of an Option will be determined by the Committee when the Option is granted and shall not be less than the Fair Market Value per Share unless expressly determined in writing by the Committee on the Option’s date of grant; provided that the Exercise Price of an ISO granted to a Ten Percent Shareholder will not be less

 

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than one hundred ten percent (110%) of the Fair Market Value of the Shares on the date of grant. Payment for the Shares purchased must be made in accordance with Section 8 hereof.

5.5 Method of Exercise. Options may be exercised only by delivery to the Company of a written stock option exercise agreement (the “Exercise Agreement”) in a form approved by the Committee (which need not be the same for each Participant). The Exercise Agreement will state (i) the number of Shares being purchased, (ii) the restrictions imposed on the Shares purchased under such Exercise Agreement, if any, and (iii) such representations and agreements regarding Participant’s investment intent and access to information and other matters, if any, as may be required or desirable by the Company to comply with applicable securities laws. Participant shall execute and deliver to the Company the Exercise Agreement together with payment in full of the Exercise Price, and any applicable taxes, for the number of Shares being purchased.

5.6 Termination. Subject to earlier termination pursuant to Sections 18 and 19 hereof and notwithstanding the exercise periods set forth in the Stock Option Agreement, exercise of an Option will always be subject to the following:

(a) If the Participant is Terminated for any reason other than death, Disability or for Cause, then the Participant may exercise such Participant’s Options only to the extent that such Options are exercisable as to Vested Shares upon the Termination Date or as otherwise determined by the Committee. Such Options must be exercised by the Participant, if at all, as to all or some of the Vested Shares calculated as of the Termination Date or such other date determined by the Committee, within three (3) months after the Termination Date (or within such shorter time period, not less than thirty (30) days, or within such longer time period, not exceeding five (5) years, after the Termination Date as may be determined by the Committee, with any exercise beyond three (3) months after the Termination Date deemed to be an NQSO) but in any event, no later than the expiration date of the Options.

(b) If the Participant is Terminated because of Participant’s death or Disability (or the Participant dies within three (3) months after a Termination other than for Cause), then Participant’s Options may be exercised only to the extent that such Options are exercisable as to Vested Shares by Participant on the Termination Date or as otherwise determined by the Committee. Such options must be exercised by Participant (or Participant’s legal representative or authorized assignee), if at all, as to all or some of the Vested Shares calculated as of the Termination Date or such other date determined by the Committee, within twelve (12) months after the Termination Date (or within such shorter time period, not less than six (6) months, or within such longer time period, not exceeding five (5) years, after the Termination Date as may be determined by the Committee, with any exercise beyond (i) three (3) months after the Termination Date when the Termination is for any reason other than the Participant’s death or disability, within the meaning of Section 22(e)(3) of the Code, or (ii) twelve (12) months after the Termination Date when the Termination is for Participant’s disability, within the meaning of Section 22(e)(3) of the Code, deemed to be an NQSO) but in any event no later than the expiration date of the Options.

 

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(c) If a Participant is terminated for Cause, such Participant’s Options shall expire immediately upon such termination, unless a later time is expressly determined by the Committee.

5.7 Limitations on Exercise. The Committee may specify a reasonable minimum number of Shares that may be purchased on any exercise of an Option, provided that such minimum number will not prevent Participant from exercising the Option for the full number of Shares for which it is then exercisable.

5.8 Limitations on ISOs. The aggregate Fair Market Value (determined as of the date of grant) of Shares with respect to which ISOs are exercisable for the first time by a Participant during any calendar year (under this Plan or under any other incentive stock option plan of the Company or any Parent or Subsidiary of the Company) will not exceed One Hundred Thousand Dollars ($100,000). If the Fair Market Value of Shares on the date of grant with respect to which ISOs are exercisable for the first time by a Participant during any calendar year exceeds One Hundred Thousand Dollars ($100,000), then the Options for the first One Hundred Thousand Dollars ($100,000) worth of Shares to become exercisable in such calendar year will be ISOs and the Options for the amount in excess of One Hundred Thousand Dollars ($100,000) that become exercisable in that calendar year will be NQSOs. In the event that the Code or the regulations promulgated thereunder are amended after the Effective Date (as defined in Section 19 hereof) to provide for a different limit on the Fair Market Value of Shares permitted to be subject to ISOs, then such different limit will be automatically incorporated herein and will apply to any Options granted after the effective date of such amendment.

5.9 Modification, Extension or Renewal. The Committee may modify, extend or renew outstanding Options and authorize the grant of new Options in substitution therefor, provided that any such action may not, without the written consent of a Participant, impair any of such Participant’s rights under any Option previously granted. Any outstanding ISO that is modified, extended, renewed or otherwise altered will be treated in accordance with Section 424(h) of the Code. Subject to Section 5.10 hereof, the Committee may reduce the Exercise Price of outstanding Options without the consent of Participants by a written notice to them; provided, however, that the Exercise Price may not be reduced below the minimum Exercise Price that would be permitted under Section 5.4 hereof for Options granted on the date the action is taken to reduce the Exercise Price; provided, further, that the Exercise Price will not be reduced below the par value of the Shares, if any.

5.10 No Disqualification. Notwithstanding any other provision in this Plan, no term of this Plan relating to ISOs will be interpreted, amended or altered, nor will any discretion or authority granted under this Plan be exercised, so as to disqualify this Plan under Section 422 of the Code or, without the consent of the Participant, to disqualify any Participant’s ISO under Section 422 of the Code. In no event shall the total number of Shares issued (counting each reissuance of a Share that was previously issued and then forfeited or repurchased by the Company as a separate issuance) under the Plan upon exercise of ISOs exceed 50,000,000 Shares (adjusted in proportion to any adjustments under Section 2.2 hereof) over the term of the Plan.

6. RESTRICTED STOCK. A Restricted Stock Award is an offer by the Company to sell to an eligible person Shares that are subject to certain specified restrictions. The

 

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Committee will determine to whom an offer will be made, the number of Shares the person may purchase, the Purchase Price, the restrictions to which the Shares will be subject, and all other terms and conditions of the Restricted Stock Award, subject to the following:

6.1 Form of Restricted Stock Award. All purchases under a Restricted Stock Award made pursuant to this Plan will be evidenced by an Award Agreement (“Restricted Stock Purchase Agreement”) that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan. The Restricted Stock Award will be accepted by the Participant’s execution and delivery of the Restricted Stock Purchase Agreement and full payment for the Shares to the Company within thirty (30) days from the date the Restricted Stock Purchase Agreement is delivered to the person. If such person does not execute and deliver the Restricted Stock Purchase Agreement along with full payment for the Shares to the Company within such thirty (30) days, then the offer will terminate, unless otherwise determined by the Committee.

6.2 Purchase Price. The Purchase Price of Shares sold pursuant to a Restricted Stock Award will be determined by the Committee on the date the Restricted Stock Award is granted or at the time the purchase is consummated. Payment of the Purchase Price must be made in accordance with Section 8 hereof.

6.3 Restrictions. Restricted Stock Awards may be subject to the restrictions set forth in Section 12 hereof or such other restrictions not inconsistent with Section 25102(o) of the California Corporations Code.

7. RESTRICTED STOCK UNITS.

7.1 Awards of Restricted Stock Units. A Restricted Stock Unit is an Award covering a number of Shares that may be settled in cash, or by issuance of those Shares at a date in the future. No Purchase Price shall apply to an RSU settled in Shares other than the payment of the aggregate par value of all Shares issuable upon such settlement. All grants of Restricted Stock Units will be evidenced by an Award Agreement (Restricted Stock Unit Agreement) that will be in such form (which need not be the same for each Participant) as the Committee will from time to time approve, and will comply with and be subject to the terms and conditions of this Plan.

7.2 Form and Timing of Settlement. To the extent permissible under applicable law, the Committee may permit a Participant to defer payment under a RSU to a date or dates after the RSU is earned, provided that the terms of the RSU and any deferral satisfy the requirements of Section 409A of the Code (or any successor) and any regulations or rulings promulgated thereunder. Payment may be made in the form of cash or whole Shares or a combination thereof, all as the Committee determines.

8. PAYMENT FOR SHARE PURCHASES.

8.1 Payment. Payment for Shares purchased pursuant to this Plan may be made in cash (by check) or, where expressly approved for the Participant by the Committee and where permitted by law:

 

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(a) by cancellation of indebtedness of the Company owed to the Participant;

(b) by surrender of shares of the Company that: (i) either (A) for which the Company has received “full payment of the purchase price” within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares) or (B) were obtained by Participant in the public market and (ii) are clear of all liens, claims, encumbrances or security interests;

(c) by tender of a full recourse promissory note having such terms as may be approved by the Committee and bearing interest at a rate sufficient to avoid imputation of income under Sections 483 and 1274 of the Code; provided, however, that Participants who are not employees or directors of the Company will not be entitled to purchase Shares with a promissory note unless the note is adequately secured by collateral other than the Shares; provided, further, that the portion of the Exercise Price or Purchase Price, as the case may be, equal to the par value of the Shares must be paid in cash or other legal consideration permitted by Delaware General Corporation Law;

(d) by waiver of compensation due or accrued to the Participant from the Company for services rendered;

(e) with respect only to purchases upon exercise of an Option, and provided that a public market for the Company’s stock exists:

(i) through a “same day sale” commitment from the Participant and a Company-designated broker-dealer that is a member of the Financial Industry Regulatory Authority (a Dealer) whereby the Participant irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased sufficient to pay the total Exercise Price, and whereby the Dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company; or

(ii) through a “margin” commitment from the Participant and a Dealer whereby the Participant irrevocably elects to exercise the Option and to pledge the Shares so purchased to the Dealer in a margin account as security for a loan from the Dealer in the amount of the total Exercise Price, and whereby the Dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company; or

(f) by any combination of the foregoing.

8.2 Loan Guarantees. The Committee may, in its sole discretion, elect to assist the Participant in paying for Shares purchased under this Plan by authorizing a guarantee by the Company of a third-party loan to the Participant.

9. WITHHOLDING TAXES.

9.1 Withholding Generally. Whenever Shares are to be issued in satisfaction of Awards granted under this Plan, the Company may require the Participant to remit to the

 

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Company an amount sufficient to satisfy federal, state and local withholding tax requirements prior to the delivery of any certificate or certificates for such Shares. Whenever, under this Plan, payments in satisfaction of Awards are to be made in cash by the Company, such payment will be net of an amount sufficient to satisfy federal, state, and local withholding tax requirements.

9.2 Stock Withholding. When, under applicable tax laws, a Participant incurs tax liability in connection with the exercise or vesting of any Award that is subject to tax withholding and the Participant is obligated to pay the Company the amount required to be withheld, the Committee may in its sole discretion allow the Participant to satisfy the minimum withholding tax obligation by electing to have the Company withhold from the Shares to be issued that minimum number of Shares having a Fair Market Value equal to the minimum amount required to be withheld, determined on the date that the amount of tax to be withheld is to be determined; but in no event will the Company withhold Shares if such withholding would result in adverse accounting consequences to the Company. All elections by a Participant to have Shares withheld for this purpose will be made in accordance with the requirements established by the Committee for such elections and be in writing in a form acceptable to the Committee.

10. PRIVILEGES OF STOCK OWNERSHIP. No Participant will have any of the rights of a shareholder with respect to any Shares until the Shares are issued to the Participant. After Shares are issued to the Participant, the Participant will be a shareholder and have all the rights of a shareholder with respect to such Shares, including the right to vote and receive all dividends or other distributions made or paid with respect to such Shares; provided, that if such Shares are Restricted Stock, then any new, additional or different securities the Participant may become entitled to receive with respect to such Shares by virtue of a stock dividend, stock split or any other change in the corporate or capital structure of the Company will be subject to the same restrictions as the Restricted Stock. The Participant will have no right to retain such stock dividends or stock distributions with respect to Unvested Shares that are repurchased pursuant to Section 12 hereof.

11. TRANSFERABILITY. Subject to Sections 16.1 and 16.2 hereof, except as permitted by the Committee, Awards granted under this Plan, and any interest therein, will not be transferable or assignable by the Participant, other than by will or by the laws of descent and distribution, and, with respect to NQSOs, by instrument to an inter vivos or testamentary trust in which the options are to be passed to beneficiaries upon the death of the trustor (settlor), or by gift to “immediate family” as that term is defined in 17 C.F.R. 240.16a-1(e), and may not be made subject to execution, attachment or similar process. During the lifetime of the Participant, an Award will be exercisable only by the Participant or the Participant’s legal representative and any elections with respect to an Award may be made only by the Participant or the Participant’s legal representative.

12. RESTRICTIONS ON SHARES.

12.1 Right of First Refusal. At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) in the Award Agreement a right of first refusal to purchase all Shares that a Participant (or a subsequent transferee) may propose to transfer to a third party, provided that such right of first refusal terminates upon the Company’s initial public

 

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offering of Class A Common Stock pursuant to an effective registration statement filed under the Securities Act.

12.2 Right of Repurchase. At the discretion of the Committee, the Company may reserve to itself and/or its assignee(s) in the Award Agreement a right to repurchase Unvested Shares held by a Participant for cash and/or cancellation of purchase money indebtedness owed to the Company by the Participant following such Participant’s Termination at any time.

13. CERTIFICATES. All certificates for Shares or other securities delivered under this Plan will be subject to such stock transfer orders, legends and other restrictions as the Committee may deem necessary or advisable, including restrictions under any applicable federal, state or foreign securities law, or any rules, regulations and other requirements of the SEC or any stock exchange or automated quotation system upon which the Shares may be listed or quoted.

14. ESCROW; PLEDGE OF SHARES. To enforce any restrictions on a Participant’s Shares set forth in Section 12 hereof, the Committee may require the Participant to deposit all certificates representing Shares, together with stock powers or other instruments of transfer approved by the Committee, appropriately endorsed in blank, with the Company or an agent designated by the Company to hold in escrow until such restrictions have lapsed or terminated. The Committee may cause a legend or legends referencing such restrictions to be placed on the certificates. Any Participant who is permitted to execute a promissory note as partial or full consideration for the purchase of Shares under this Plan will be required to pledge and deposit with the Company all or part of the Shares so purchased as collateral to secure the payment of Participant’s obligation to the Company under the promissory note; provided, however, that the Committee may require or accept other or additional forms of collateral to secure the payment of such obligation and, in any event, the Company will have full recourse against the Participant under the promissory note notwithstanding any pledge of the Participant’s Shares or other collateral. In connection with any pledge of the Shares, the Participant will be required to execute and deliver a written pledge agreement in such form as the Committee will from time to time approve. The Shares purchased with the promissory note may be released from the pledge on a pro rata basis as the promissory note is paid.

15. EXCHANGE AND BUYOUT OF AWARDS. The Committee may, at any time or from time to time, authorize the Company, with the consent of the respective Participants, to issue new Awards in exchange for the surrender and cancellation of any or all outstanding Awards. The Committee may at any time buy from a Participant an Award previously granted with payment in cash, shares of Class A Common Stock of the Company (including Restricted Stock) or other consideration, based on such terms and conditions as the Committee and the Participant may agree.

16. SECURITIES LAW AND OTHER REGULATORY COMPLIANCE. Although this Plan is intended to be a written compensatory benefit plan within the meaning of Rule 701 promulgated under the Securities Act, grants may be made pursuant to this plan that do not qualify for exemption under Rule 701 or Section 25102(o) of the California Corporations Code. Any requirement of this Plan which is required in law only because of Section 25102(o) need not apply with respect to a particular Award if the Committee so provides. An Award will

 

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not be effective unless such Award is in compliance with all applicable federal and state securities laws, rules and regulations of any governmental body, and the requirements of any stock exchange or automated quotation system upon which the Shares may then be listed or quoted, as they are in effect on the date of grant of the Award and also on the date of exercise or other issuance. Notwithstanding any other provision in this Plan, the Company will have no obligation to issue or deliver certificates for Shares under this Plan prior to (i) obtaining any approvals from governmental agencies that the Company determines are necessary or advisable, and/or (ii) compliance with any exemption, completion of any registration or other qualification of such Shares under any state or federal law or ruling of any governmental body that the Company determines to be necessary or advisable. The Company will be under no obligation to register the Shares with the SEC or to effect compliance with the exemption, registration, qualification or listing requirements of any state securities laws, stock exchange or automated quotation system, and the Company will have no liability for any inability or failure to do so.

16.1 Option Compliance with the Exemption Provided by Rule 12h-1(f). Notwithstanding any other provision in this Plan or any Award Agreement, if, at the end of the Company’s most recently completed fiscal year, (i) the aggregate of the number of Option Holders (plus the number of other holders of all other outstanding compensatory stock options to purchase Shares) equals or exceeds five hundred (500), and (ii) the Company’s “total assets” as defined by Rule 12g5-2 promulgated under the Exchange Act exceed $10 million, then the following restrictions shall apply to Option Holders during any period during which the Company does not have a class of its securities registered under Section 12 of the Exchange Act and is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act: (A) the Options and, prior to exercise, the Shares to be issued upon exercise of the Options may not be transferred until the Company is no longer relying on the exemption provided by Rule 12h-1(f), except: (1) as permitted by Rule 701(c) promulgated under the Securities Act, (2) to a guardian upon the disability of the Option Holder, or (3) to an executor upon the death of the Option Holder (collectively, the Permitted Option Transferees); provided, however, that the following transfers are permitted: (x) transfers by the Option Holder to the Company, and (y) transfers in connection with a Change in Control (as defined below) or other acquisition transaction involving the Company, if after such transaction the Options no longer remain outstanding and the Company is no longer relying on the exemption provided by Rule 12h-1(f); provided further, that any Permitted Option Transferees may not further transfer the Options; (B) except as otherwise provided in (A) above, the Options and Shares to be issued upon exercise of the Options are restricted as to any pledge, hypothecation, or other transfer, including any short position, any “put equivalent position” as defined by Rule 16a-1(h) promulgated under the Exchange Act, or any “call equivalent position” as defined by Rule 16a-1(b) promulgated under the Exchange Act by the Option Holder prior to exercise of an Option until the Company is no longer relying on the exemption provided by Rule 12h-1(f); and (C) at any time that the Company is relying on the exemption provided by Rule 12h-1(f), the Company shall deliver to Option Holders (whether by physical or electronic delivery or by written notice of the availability of the information on an internet site (and of any password needed to access the information if the internet site is password-protected)) the information required by Rules 701(e)(3), (4), and (5) promulgated under the Securities Act, every six (6) months, including financial statements that are not more than one hundred eighty (180) days old; provided, however, that the Company may condition the delivery of such information upon the Option Holder’s agreement to maintain the confidentiality of such information.

 

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16.2 RSU Compliance with the Exemption Provided by RSU Rule 12h-1(f). Notwithstanding any other provision in this Plan or any Award Agreement, if, at the end of the Company’s most recently completed fiscal year, (i) the aggregate of the number of RSU Holders (plus the number of other holders of all other outstanding compensatory restricted stock units in respect of Shares) equals or exceeds five hundred (500), and (ii) the Company’s “total assets” as defined by Rule 12g5-2 promulgated under the Exchange Act exceed $10 million, then the following restrictions shall apply to RSU Holders during any period during which the Company does not have a class of its securities registered under Section 12 of the Exchange Act and is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act: (A) the RSUs and, prior to settlement, any Shares to be issued upon the lapse or termination of all restrictions on the RSUs may not be transferred until the Company is no longer relying on the exemption provided by RSU Rule 12h-1(f), except: (1) as permitted by Rule 701(c) promulgated under the Securities Act, (2) to a guardian upon the disability of the RSU Holder, or (3) to an executor upon the death of the RSU Holder (collectively, the Permitted RSU Transferees); provided, however, that the following transfers are permitted: (x) transfers by the RSU Holder to the Company, and (y) transfers in connection with a Change in Control (as defined below) or other acquisition transaction involving the Company, if after such transaction the RSUs no longer remain outstanding and the Company is no longer relying on the exemption provided by RSU Rule 12h-1(f); provided further, that any Permitted RSU Transferees may not further transfer the RSUs; (B) except as otherwise provided in (A) above, the RSUs and any Shares to be issued upon settlement of the RSUs are restricted as to any pledge, hypothecation, or other transfer, including any short position, any “put equivalent position” as defined by Rule 16a-1(h) promulgated under the Exchange Act, or any “call equivalent position” as defined by Rule 16a-1(b) promulgated under the Exchange Act by the RSU Holder prior to settlement of an RSU until the Company is no longer relying on the exemption provided by RSU Rule 12h-1(f); and (C) at any time that the Company is relying on the exemption provided by RSU Rule 12h-1(f), the Company shall deliver to RSU Holders (whether by physical or electronic delivery or by written notice of the availability of the information on an internet site (and of any password needed to access the information if the internet site is password-protected)) the information required by Rules 701(e)(3), (4), and (5) promulgated under the Securities Act, every six (6) months, including financial statements that are not more than one hundred eighty (180) days old; provided, however, that the Company may condition the delivery of such information upon the RSU Holder’s agreement to maintain the confidentiality of such information.

17. NO OBLIGATION TO EMPLOY; CHANGE IN TIME COMMITMENT. Nothing in this Plan or any Award granted under this Plan will confer or be deemed to confer on any Participant any right to continue in the employ of, or to continue any other relationship with, the Company or any Parent or Subsidiary or limit in any way the right of the Company or any Parent or Subsidiary to terminate a Participant’s employment or other relationship at any time, with or without Cause. In the event a Participant’s regular level of time commitment in the performance of his or her services for the Company and its Parents and Subsidiaries is reduced (for example, and without limitation, if the Participant is an employee of the Company and the employee has a change in status from a full-time employee to a part-time employee) after the date of grant of any Award to the Participant, the Committee has the right in its sole discretion to (i) make a corresponding reduction in the number of Shares subject to any portion of such Award that is scheduled to vest after the date of such change in time commitment, and (ii) in lieu of or in combination with such a reduction, extend the vesting schedule applicable to such Award. In

 

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the event of any such reduction, the Participant shall have no right with respect to any portion of the Award that is so reduced.

18. CORPORATE TRANSACTIONS.

18.1 Assumption or Replacement of Awards by Successor or Acquiring Company. In the event of (a) (i) a dissolution or liquidation of the Company or (ii) any reorganization, consolidation, merger or similar transaction or series of related transactions (each, a combination transaction) in which the Company is a constituent corporation or is a party if, as a result of such combination transaction, the voting securities of the Company that are outstanding immediately prior to the consummation of such combination transaction (other than any such securities that are held by an Acquiring Shareholder (defined below)) do not represent, or are not converted into, securities of the surviving corporation of such combination transaction (or such surviving corporation’s parent corporation if the surviving corporation is owned by the parent corporation) that, immediately after the consummation of such combination transaction, together possess at least fifty percent (50%) of the total voting power of all securities of such surviving corporation (or its parent corporation, if applicable) that are outstanding immediately after the consummation of such combination transaction, including securities of such surviving corporation (or its parent corporation, if applicable) that are held by the Acquiring Shareholder; or (b) a sale of all or substantially all of the assets of the Company, that is followed by the distribution of the proceeds to the Company’s shareholders (any of the events described in clause (a) or (b) above, a Change in Control), any or all outstanding Awards may be assumed, converted or replaced by the successor or acquiring corporation (if any), which assumption, conversion or replacement will be binding on all Participants. In the alternative, the successor or acquiring corporation may substitute equivalent Awards or provide substantially similar consideration to Participants as was provided to shareholders of the Company (after taking into account the existing provisions of the Awards). The successor or acquiring corporation may also substitute by issuing, in place of outstanding Shares of the Company held by the Participant, substantially similar shares or other property subject to repurchase restrictions and other provisions no less favorable to the Participant than those which applied to such outstanding Shares immediately prior to such transaction described in this Section 18.1. For purposes of this Section 18.1, an Acquiring Shareholder means a shareholder or shareholders of the company that (i) merges or combines with the Company in such combination transaction or (ii) owns or controls a majority of another corporation that merges or combines with the Corporation in such combination transaction. In the event such successor or acquiring corporation (if any) refuses to assume, convert, replace or substitute Awards, as provided above, pursuant to a transaction described in this Section 18.1, then notwithstanding any other provision in this Plan to the contrary, such Awards will expire on such transaction at such time and on such conditions as the Board will determine.

18.2 Other Treatment of Awards. Subject to any greater rights granted to Participants under the foregoing provisions of this Section 18, in the event of the occurrence of any transaction described in Section 18.1 hereof, any outstanding Awards will be treated as provided in the applicable agreement or plan of reorganization, merger, consolidation, dissolution, liquidation or sale of assets.

 

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18.3 Assumption of Awards by the Company. The Company, from time to time, also may substitute or assume outstanding awards granted by another company, whether in connection with an acquisition of such other company or otherwise, by either (i) granting an Award under this Plan in substitution of such other company’s award or (ii) assuming such award as if it had been granted under this Plan if the terms of such assumed award could be applied to an Award granted under this Plan. Such substitution or assumption will be permissible if the holder of the substituted or assumed award would have been eligible to be granted an Award under this Plan if the other company had applied the rules of this Plan to such grant. In the event the Company assumes an award granted by another company, the terms and conditions of such award will remain unchanged (except that the exercise price and the number and nature of shares issuable upon exercise of any such option will be adjusted appropriately pursuant to Section 424(a) of the Code). In the event the Company elects to grant a new Option rather than assuming an existing option, such new Option may be granted with a similarly adjusted Exercise Price.

19. ADOPTION AND SHAREHOLDER APPROVAL. This Plan was adopted by the Board on November 2, 2007 (the “Effective Date”) and was approved by the shareholders of the Company on November 13, 2007. Upon the Effective Date, the Board may grant Awards pursuant to this Plan; provided, however, that: (i) no Option may be exercised prior to initial shareholder approval of this Plan; (ii) no Option granted pursuant to an increase in the number of Shares approved by the Board shall be exercised prior to the time such increase has been approved by the shareholders of the Company; (iii) in the event that initial shareholder approval is not obtained within the time period provided herein, all Awards for which only the exemption from California’s securities qualification requirements provided by Section 25102(o) can apply shall be canceled, any Shares issued pursuant to any such Award shall be canceled and any purchase of such Shares issued hereunder shall be rescinded; and (iv) Awards (to which only the exemption from California’s securities qualification requirements provided by Section 25102(o) can apply) granted pursuant to an increase in the number of Shares approved by the Board which increase is not approved by shareholders within the time then required under Section 25102(o) shall be canceled, any Shares issued pursuant to any such Awards shall be canceled, and any purchase of Shares subject to any such Award shall be rescinded.

20. TERM OF PLAN/GOVERNING LAW. Unless earlier terminated as provided herein, this Plan will terminate ten (10) years from the Effective Date or, if earlier, the date of shareholder approval. This Plan and all agreements hereunder shall be governed by and construed in accordance with the laws of the State of California.

21. AMENDMENT OR TERMINATION OF PLAN. Subject to Section 5.9 hereof, the Board may at any time terminate or amend this Plan in any respect, including without limitation amendment of any form of Award Agreement or instrument to be executed pursuant to this Plan; provided, however, that the Board will not, without the approval of the shareholders of the Company, amend this Plan in any manner that requires such shareholder approval pursuant to Section 25102(o) of the California Corporations Code or the Code or the regulations promulgated thereunder as such provisions apply to ISO plans.

22. NONEXCLUSIVITY OF THE PLAN. Neither the adoption of this Plan by the Board, the submission of this Plan to the shareholders of the Company for approval, nor any

 

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provision of this Plan will be construed as creating any limitations on the power of the Board to adopt such additional compensation arrangements as it may deem desirable, including, without limitation, the granting of stock options and other equity awards otherwise than under this Plan, and such arrangements may be either generally applicable or applicable only in specific cases.

23. DEFINITIONS. As used in this Plan, the following terms will have the following meanings:

Award means any award under this Plan, including any Option, Restricted Stock Award, or Restricted Stock Unit.

Award Agreement means, with respect to each Award, the signed written agreement between the Company and the Participant setting forth the terms and conditions of the Award, including the Stock Option Agreement, Restricted Stock Purchase Agreement, and Restricted Stock Unit Agreement.

Board means the Board of Directors of the Company.

Cause means (i) if a Participant is party to one or more agreements with the Company or a Parent or Subsidiary of the Company that relate to equity awards and contain a definition of “Cause”, the definition of “Cause” in the applicable agreement(s), or (ii) if a Participant is not party to such any such agreement, Termination because of (A) any willful, material violation by the Participant of any law or regulation applicable to the business of the Company or a Parent or Subsidiary of the Company, the Participant’s conviction for, or guilty plea to, a felony or a crime involving moral turpitude, or any willful perpetration by the Participant of a common law fraud, (B) the Participant’s commission of an act of personal dishonesty which involves personal profit in connection with the Company or any other entity having a business relationship with the Company, (C) any material breach by the Participant of any provision of any agreement or understanding between the Company or any Parent or Subsidiary of the Company and the Participant regarding the terms of the Participant’s service as an employee, officer, director or consultant to the Company or a Parent or Subsidiary of the Company, including without limitation, the willful and continued failure or refusal of the Participant to perform the material duties required of such Participant as an employee, officer, director or consultant of the Company or a Parent or Subsidiary of the Company, other than as a result of having a Disability, or a breach of any applicable invention assignment and confidentiality agreement or similar agreement between the Company or a Parent or Subsidiary of the Company and the Participant, (D) the Participant’s disregard of the policies of the Company or any Parent or Subsidiary of the Company so as to cause loss, damage or injury to the property, reputation or employees of the Company or a Parent or Subsidiary of the Company, or (E) any other misconduct by the Participant which is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company or a Parent or Subsidiary of the Company.

Code means the Internal Revenue Code of 1986, as amended.

Committee means the committee created and appointed by the Board to administer this Plan, or if no committee is created and appointed, the Board.

 

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Company means Zynga Game Network Inc., or any successor corporation.

Disability means a disability, whether temporary or permanent, partial or total, as determined by the Committee.

Exchange Act means the Securities Exchange Act of 1934, as amended.

Exercise Price means the price per Share at which a holder of an Option may purchase Shares issuable upon exercise of the Option.

Fair Market Value means, as of any date, the value of a share of the Company’s Class A Common Stock determined as follows:

(a) if such Class A Common Stock is then publicly traded on a national securities exchange, its closing price on the date of determination on the principal national securities exchange on which the Class A Common Stock is listed or admitted to trading as reported in The Wall Street Journal;

(b) if such Class A Common Stock is publicly traded but is not quoted, nor listed or admitted to trading, on a national securities exchange, the average of the closing bid and asked prices on the date of determination as reported by The Wall Street Journal (or, if not so reported, as otherwise reported by any newspaper or other source as the Committee may determine); or

(c) if none of the foregoing is applicable, by the Committee in good faith.

Option means an award of an option to purchase Shares pursuant to Section 5 hereof.

Option Holder means a Participant to whom one or more Options is granted under this Plan or, if applicable, such other person who holds one or more outstanding Options.

Parent means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if each of such corporations other than the Company owns stock representing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

Participant means a person who receives an Award under this Plan.

Plan means this Zynga Game Network Inc. 2007 Equity Incentive Plan, as amended from time to time.

Purchase Price means the price at which a Participant may purchase Restricted Stock.

Restricted Stock means Shares purchased pursuant to a Restricted Stock Award.

 

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Restricted Stock Award means an award of Shares pursuant to Section 6 hereof.

Restricted Stock Unit or RSU means an award made pursuant to Section 7 hereof.

RSU Holder” means a Participant to whom one or more RSUs is granted under this Plan or, if applicable, such other person who holds one or more outstanding RSUs.

RSU Rule 12h-1(f) means Rule 12h-1(f), but read as if it applied to restricted stock units instead of stock options, with all conditions of Rule 12h-1(f) applicable to restricted stock units as if they were stock options (except to the extent necessary to reflect any structural differences between restricted stock units and stock options generally).

Rule 12h-1(f) means Rule 12h-1(f) promulgated under the Exchange Act.

SEC means the Securities and Exchange Commission.

Securities Act means the Securities Act of 1933, as amended.

Shares means shares of the Company’s Class A Common Stock, $0.00025 par value per share, reserved for issuance under this Plan, as adjusted pursuant to Sections 2 and 18 hereof, and any successor security.

Subsidiary means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock representing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

Termination or Terminated means, for purposes of this Plan with respect to a Participant, that the Participant has for any reason ceased to provide services as an employee, officer, director or consultant to the Company or a Parent or Subsidiary of the Company. A Participant will not be deemed to have ceased to provide services in the case of (i) sick leave, (ii) military leave, or (iii) any other leave of absence approved by the Committee, provided that such leave is for a period of not more than ninety (90) days (a) unless reinstatement (or, in the case of an employee with an ISO, reemployment) upon the expiration of such leave is guaranteed by contract or statute, or (b) unless provided otherwise pursuant to formal policy adopted from time to time by the Company’s Board and issued and promulgated in writing. In the case of any Participant on (i) sick leave, (ii) military leave or (iii) an approved leave of absence, the Committee may make such provisions respecting suspension of vesting of the Award while on leave from the Company or a Parent or Subsidiary of the Company as it may deem appropriate, except that in no event may an Option be exercised after the expiration of the term set forth in the Stock Option Agreement. The Committee will have sole discretion to determine whether a Participant has ceased to provide services and the effective date on which the Participant ceased to provide services (the Termination Date).

Unvested Shares means Unvested Shares as defined in the Award Agreement.

 

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Vested Shares means Vested Shares as defined in the Award Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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24. EXECUTION. To record the adoption of this Plan by the Board and the amendment and restatement of this Plan as set forth herein, the Company has caused its authorized officer to execute the same as of September 3, 2010.

 

ZYNGA GAME NETWORK INC.
/s/ Reggie Davis
Reggie Davis
General Counsel and Secretary

 

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Form of Option Agreement under 2007 Equity Incentive Plan

Exhibit 10.3

ZYNGA INC.

2007 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

This Stock Option Agreement (the “Agreement”) is made and entered into as of the date of grant set forth below (the “Date of Grant”) by and between Zynga Inc., a Delaware corporation (the “Company”), and the participant named below (the “Participant”). Capitalized terms not defined herein shall have the meaning ascribed to them in the Company’s 2007 Equity Incentive Plan (the “Plan”).

 

Participant:

    
Social Security Number:     
Address:     
Total Option Shares:     
Exercise Price Per Share:    $
Date of Grant:     
Vesting Start Date:     
Expiration Date:     
   (unless earlier terminated under Section 5.6 of the Plan)
Classification of Optionee    [ ] Employee
   [ ] Non-Employee
Type of Stock Option:   
Grant Number:   

1. Grant of Option. The Company hereby grants to Participant an option (this “Option”) to purchase the total number of shares of Class A Common Stock, $0.00005 par value, of the Company set forth above as Total Option Shares (the “Shares”) at the Exercise Price Per Share set forth above (the “Exercise Price”), subject to all of the terms and conditions of this Agreement and the Plan. If designated as an Incentive Stock Option above, the Option is intended to qualify as an “incentive stock option” (the “ISO”) within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

2. Exercise Period.

2.1 Exercise Period of Option. Provided Participant continues to provide services to the Company or to any Parent or Subsidiary of the Company, the Shares issuable upon exercise of this Option will become vested and exercisable with respect to 25% of the Shares on the first anniversary of the Vesting Start Date set forth on the first page of this Agreement and 1/48th monthly thereafter until the Shares are vested with respect to 100% of the


Shares. If application of the vesting percentage causes a fractional share, such share shall be rounded down to the nearest whole share for each month except for the last month in such vesting period, at the end of which last month this Option shall become vested for the full remainder of the Shares. Notwithstanding any provision in the Plan or this Agreement to the contrary, Options for Unvested Shares (as defined in Section 2.2 of this Agreement) will not be exercisable on or after Participant’s Termination Date.

2.2 Vesting of Options. Shares that are vested pursuant to the schedule set forth in Section 2.1 are “Vested Shares”. Shares that are not vested pursuant to the schedule set forth in Section 2.1 are “Unvested Shares”.

2.3 Definitions.

(a) “Cause” means Termination because of:

(i) any willful, material violation by Participant of any law or regulation applicable to the business of the Company, Participant’s conviction for, or guilty plea to, a felony or a crime involving moral turpitude, or any willful perpetration by Participant of a common law fraud;

(ii) Participant’s commission of an act of personal dishonesty that involves personal profit in connection with the Company or any other entity having a business relationship with the Company;

(iii) any material breach by Participant of any provision of any agreement or understanding between the Company and Participant regarding the terms of Participant’s service as an employee, officer, director or consultant to the Company, including without limitation, the willful and continued failure or refusal of Participant to perform the material duties required of Participant as an employee, officer, director or consultant of the Company, other than as a result of having a Disability, or a breach of any applicable invention assignment and confidentiality agreement or similar agreement between the Company and Participant;

(iv) Participant’s disregard of the policies of the Company so as to cause loss, damage or injury to the property, reputation or employees of the Company; or

(v) any other misconduct by Participant that is materially injurious to the financial condition or business reputation of, or is otherwise materially injurious to, the Company.

No act or failure to act by the Participant shall be considered “willful” if done or omitted by the Participant in good faith with reasonable belief that such action or omission was in the best interests of the Company. All references to the Company in this definition of “Cause” shall include parent, subsidiary, affiliate and successor entities of the Company.

2.4 Expiration. The Option shall expire on the Expiration Date set forth above or earlier as provided in Section 3 below or pursuant to Section 5.6 of the Plan.


3. Termination.

3.1 Termination for Any Reason Except Death, Disability or Cause. If Participant is Terminated for any reason, except death, Disability or for Cause, the Option, to the extent (and only to the extent) that it would have been exercisable by Participant on the Termination Date, may be exercised by Participant no later than three months after the Termination Date, but in any event no later than the Expiration Date.

3.2 Termination Because of Death or Disability. If Participant is Terminated because of death or Disability of Participant (or Participant dies within three months of Termination when Termination is for any reason other than Participant’s Disability or for Cause), the Option, to the extent that it is exercisable by Participant on the Termination Date, may be exercised by Participant (or Participant’s legal representative) no later than 12 months after the Termination Date, but in any event no later than the Expiration Date. Any exercise beyond (i) three months after the Termination Date when the Termination is for any reason other than the Participant’s death or disability, within the meaning of Section 22(e)(3) of the Code; or (ii) 12 months after the Termination Date when the termination is for Participant’s disability, within the meaning of Section 22(e)(3) of the Code, is deemed to be an NQSO.

3.3 Termination for Cause. If the Participant is terminated for Cause, Participant’s Options expire immediately upon such Termination.

3.4 No Obligation to Employ. Nothing in the Plan or this Agreement shall confer on Participant any right to continue in the employ of, or other relationship with, the Company or any Parent or Subsidiary of the Company, or limit in any way the right of the Company or any Parent or Subsidiary of the Company to terminate Participant’s employment or other relationship at any time, with or without Cause.

4. Manner of Exercise.

4.1 Stock Option Exercise Agreement. To exercise this Option, Participant (or in the case of exercise after Participant’s death or incapacity, Participant’s executor, administrator, heir or legatee, as the case may be) must deliver to the Company an executed stock option exercise agreement in the form attached hereto as Exhibit A, or in such other form as may be approved by the Committee from time to time (the “Exercise Agreement”), which shall set forth, inter alia, (i) Participant’s election to exercise the Option, (ii) the number of Shares being purchased, (iii) any restrictions imposed on the Shares and (iv) any representations, warranties and agreements regarding Participant’s investment intent and access to information as may be required by the Company to comply with applicable securities laws. If someone other than Participant exercises the Option, then such person must submit documentation reasonably acceptable to the Company verifying that such person has the legal right to exercise the Option and such person shall be subject to all of the restrictions contained herein as if such person were the Participant.

4.2 Limitations on Exercise. The Option may not be exercised unless such exercise is in compliance with all applicable federal and state securities laws, as they are in effect on the date of exercise. The Option may not be exercised as to fewer than 100 Shares unless it is exercised as to all Shares as to which the Option is then exercisable.


4.3 Payment. The Exercise Agreement shall be accompanied by full payment of the Exercise Price for the shares being purchased in cash (by check), or where permitted by law:

(a) by cancellation of indebtedness of the Company to the Participant;

(b) by surrender of shares of the Company’s Class A Common Stock that (i) either (A) have been paid for within the meaning of SEC Rule 144 (and, if such shares were purchased from the Company by use of a promissory note, such note has been fully paid with respect to such shares); or (B) were obtained by Participant in the open public market; and (ii) are clear of all liens, claims, encumbrances or security interests;

(c) by waiver of compensation due or accrued to Participant for services rendered;

(d) provided that a public market for the Company’s stock exists: (i) through a “same day sale” commitment from Participant and a Company-designated broker-dealer that is a member of the Financial Industry Regulatory Authority (a “Dealer”) whereby Participant irrevocably elects to exercise the Option and to sell a portion of the Shares so purchased sufficient to pay for the total Exercise Price and whereby the Dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company, or (ii) through a “margin” commitment from Participant and a Dealer whereby Participant irrevocably elects to exercise the Option and to pledge the Shares so purchased to the Dealer in a margin account as security for a loan from the Dealer in the amount of the total Exercise Price, and whereby the Dealer irrevocably commits upon receipt of such Shares to forward the total Exercise Price directly to the Company;

(e) any other form of consideration approved by the Committee; or

(f) by any combination of the foregoing.

4.4 Tax Withholding. Prior to the issuance of the Shares upon exercise of the Option, Participant must pay or provide for any applicable federal, state and local withholding obligations of the Company. If the Committee permits, Participant may provide for payment of withholding taxes upon exercise of the Option by requesting that the Company retain the minimum number of Shares with a Fair Market Value equal to the minimum amount of taxes required to be withheld; but in no event will the Company withhold Shares if such withholding would result in adverse accounting consequences to the Company. In such case, the Company shall issue the net number of Shares to the Participant by deducting the Shares retained from the Shares issuable upon exercise.

4.5 Issuance of Shares. Provided that the Exercise Agreement and payment are in form and substance satisfactory to counsel for the Company, the Company shall issue the Shares registered in the name of Participant, Participant’s authorized assignee, or Participant’s legal representative, and shall deliver certificates representing the Shares with the appropriate legends affixed thereto.

5. Notice of Disqualifying Disposition of ISO Shares. If the Option is an ISO, and if Participant sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (i) the date two years after the Date of Grant, and (ii) the date one year after


transfer of such Shares to Participant upon exercise of the Option, Participant shall immediately notify the Company in writing of such disposition. Participant agrees that Participant may be subject to income tax withholding by the Company on the compensation income recognized by Participant from the early disposition by payment in cash or out of the current wages or other compensation payable to Participant.

6. Compliance with Laws and Regulations. The Plan and this Agreement are intended to comply with Section 25102(o) of the California Corporations Code and any regulations relating thereto. Any provision of this Agreement which is inconsistent with Section 25102(o) or any regulations relating thereto shall, without further act or amendment by the Company or the Board, be reformed to comply with the requirements of Section 25102(o) and any regulations relating thereto. The exercise of the Option and the issuance and transfer of Shares shall be subject to compliance by the Company and Participant with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company’s Class A Common Stock may be listed at the time of such issuance or transfer. Participant understands that the Company is under no obligation to register or qualify the Shares with the SEC, any state securities commission or any stock exchange to effect such compliance.

7. Nontransferability of Option. The Option may not be transferred in any manner other than by will or by the laws of descent and distribution, and, with respect to NQSOs, by instrument to an inter vivos or testamentary trust in which the options are to be passed to beneficiaries upon the death of the trustor (settlor), or by gift to “immediate family” as that term is defined in 17 C.F.R. 240.16a-1(e), and may be exercised during the lifetime of Participant only by Participant or in the event of Participant’s incapacity, by Participant’s legal representative. The terms of the Option shall be binding upon the executors, administrators, successors and assigns of Participant.

8. Company’s Right of First Refusal. Before any Vested Shares held by Participant or any transferee of such Vested Shares may be sold or otherwise transferred (including without limitation a transfer by gift or operation of law), the Company and/or its assignee(s) shall have an assignable right of first refusal to purchase the Vested Shares to be sold or transferred on the terms and conditions set forth in the Exercise Agreement (the “Right of First Refusal”). The Company’s Right of First Refusal will terminate when the Company’s securities become publicly traded.

9. Tax Consequences. Set forth below is a brief summary as of the Effective Date of the Plan of some of the federal and California tax consequences of exercise of the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. PARTICIPANT SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

9.1 Exercise of ISO. If the Option qualifies as an ISO, there will be no regular federal or California income tax liability upon the exercise of the Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as a tax preference item for federal alternative minimum tax purposes and may subject the Participant to the alternative minimum tax in the year of exercise.


9.2 Exercise of Nonqualified Stock Option. If the Option does not qualify as an ISO, there may be a regular federal and California income tax liability upon the exercise of the Option. Participant will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If Participant is a current or former employee of the Company, the Company may be required to withhold from Participant’s compensation or collect from Participant and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income at the time of exercise.

9.3 Disposition of Shares. The following tax consequences may apply upon disposition of the Shares.

(a) Incentive Stock Options. If the Shares are held for more than 12 months after the date of purchase of the Shares pursuant to the exercise of an ISO and are disposed of more than two years after the Date of Grant, any gain realized on disposition of the Shares will be treated as long term capital gain for federal and California income tax purposes. If Vested Shares purchased under an ISO are disposed of within the applicable one year or two year period, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates in the year of the disposition) to the extent of the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price.

(b) Nonqualified Stock Options. If the Shares are held for more than 12 months after the date of the transfer of the Shares pursuant to the exercise of an NQSO, any gain realized on disposition of the Shares will be treated as long term capital gain.

(c) Withholding. The Company may be required to withhold from the Participant’s compensation or collect from the Participant and pay to the applicable taxing authorities an amount equal to a percentage of this compensation income.

10. Privileges of Stock Ownership. Participant shall not have any of the rights of a shareholder with respect to any Shares until the Shares are issued to Participant.

11. Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by Participant or the Company to the Committee for review. The resolution of such a dispute by the Committee shall be final and binding on the Company and Participant.

12. Entire Agreement. The Plan is incorporated herein by reference. This Agreement and the Plan constitute the entire agreement and understanding of the parties with respect to the subject matter of this Agreement, and supersede all prior understandings and agreements, whether oral or written, between or among the parties hereto with respect to the specific subject matter hereof.

13. Notices. Any and all notices required or permitted to be given to a party pursuant to the provisions of this Agreement will be in writing and will be effective and deemed to provide such party sufficient notice under this Agreement on the earliest of the following: (i) at the time of personal delivery, if delivery is in person or by email; (ii) at the time of transmission by facsimile, addressed to the other party at its facsimile number specified herein (or hereafter modified by subsequent notice to the parties hereto), with confirmation of receipt made by both telephone and printed confirmation sheet verifying successful transmission of the facsimile; (iii) one business day after deposit with an express overnight courier for United States deliveries, or


two business days after such deposit for deliveries outside of the United States, with proof of delivery from the courier requested; or (iv) three business days after deposit in the United States mail by certified mail (return receipt requested) for United States deliveries.

All notices for delivery outside the United States will be sent by facsimile or e-mail with confirmation of receipt, or by express courier. All notices not delivered personally or by facsimile or e-mail will be sent with postage and/or other charges prepaid and properly addressed to the Company at: 444 De Haro Street, Suite 132, San Francisco, CA 94107, 415-503-0222, or stockadmin@zynga.com and to the Participant at the address, facsimile number or email address set forth below the Participant’s signature line of this Agreement, or at such other address or facsimile number as such other party may designate by one of the indicated means of notice herein to the other parties hereto. Notices to the Company will be marked “Attention: Stock Plan Administrator”.

14. Successors and Assigns. The Company may assign any of its rights under this Agreement including its rights to purchase Shares under the Right of First Refusal. No other party to this Agreement may assign, whether voluntarily or by operation of law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company. This Agreement shall be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement shall be binding upon Participant and Participant’s heirs, executors, administrators, legal representatives, successors and assigns.

15. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California, without giving effect to that body of laws pertaining to conflict of laws.

16. Acceptance. Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. Participant has read and understands the terms and provisions thereof, and accepts the Option subject to all the terms and conditions of the Plan and this Agreement. Participant acknowledges that there may be adverse tax consequences upon exercise of the Option or disposition of the Shares and that Participant should consult a tax adviser prior to such exercise or disposition.

17. Further Assurances. The parties agree to execute such further documents and instruments and to take such further actions as may be reasonably necessary to carry out the purposes and intent of this Agreement.

18. Titles and Headings. The titles, captions and headings of this Agreement are included for ease of reference only and will be disregarded in interpreting or construing this Agreement. Unless otherwise specifically stated, all references herein to “sections” and “exhibits” will mean “sections” and “exhibits” to this Agreement.

19. Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered will be deemed an original, and all of which together shall constitute one and the same agreement.

20. Severability. If any provision of this Agreement is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto.


If such clause or provision cannot be so enforced, such provision shall be stricken from this Agreement and the remainder of this Agreement shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Agreement. Notwithstanding the forgoing, if the value of this Agreement based upon the substantial benefit of the bargain for any party is materially impaired, which determination as made by the presiding court or arbitrator of competent jurisdiction shall be binding, then both parties agree to substitute such provision(s) through good faith negotiations.

21. Facsimile Signatures. This Agreement may be executed and delivered by facsimile and upon such delivery the facsimile signature will be deemed to have the same effect as if the original signature had been delivered to the other party.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized representative and Participant has executed this Agreement, effective as of the Date of Grant.

 

ZYNGA INC.     PARTICIPANT  
By:          
      Signature
Reginald D. Davis      
    (Please print name)
Secretary, General Counsel        
444 De Haro Street, Suite 132       Address:    
San Francisco, CA 94107            
      Fax:    
      Email:    
Office Lease by and between 650 Townsend Associates LLC and Zynga Inc.

Exhibit 10.14

OFFICE LEASE

699 EIGHTH STREET

SAN FRANCISCO, CALIFORNIA

LANDLORD:

650 TOWNSEND ASSOCIATES LLC

TENANT:

ZYNGA GAME NETWORK INC.


    

TABLE OF CONTENTS

 
         Page  
1.   Definitions      1   
  1.1         Terms Defined      1   
  1.2         Basic Lease Information      21   
2.   Premises      22   
  2.1         Lease of Premises      22   
  2.2         Delivery of Premises      22   
  2.3         Delay Rent Credits      23   
  2.4         Termination for Delay in Completion      23   
  2.5         Acceptance of the Premises      24   
  2.6         Conditions of Delivery of Certain Premises      24   
  2.7         Lease of Temporary Premises      25   
  2.8         Tenant Construction      26   
3.   Term      28   
  3.1         Term of Lease      28   
  3.2         Early Access      28   
  3.3         Tenant’s Early Termination Options      28   
  3.4         Option to Extend      30   
4.   Rent      34   
  4.1         Obligation to Pay Base Rent      34   
  4.2         Manner of Rent Payment      34   
  4.3         Additional Rent      35   
  4.4         Late Payment of Rent; Interest      35   
  4.5         Abatement of Base Rent      35   
5.   Calculation and Payments of Escalation Rent      35   
  5.1         Payment of Estimated Escalation Rent      35   
  5.2         Escalation Rent Statement and Adjustment      36   
  5.3         Adjustments to Operating Expenses      37   
  5.4         Adjustments to Tenant’s Percentage Share      38   
  5.5         Payment of Real Property Taxes in Installments      38   
  5.6         Proration for Partial Year      38   
  5.7         Certain Real Property Taxes Limited      38   
  5.8         Inspection of Landlord’s Records      39   
6.   Payments by Tenant      40   
  6.1         Impositions      40   
  6.2         Net of Electricity      40   
7.   Use of Premises      41   
  7.1         Permitted Use      41   
  7.2         Ancillary Uses      41   
  7.3         Landlord Cooperation      41   
  7.4         Compliance with Requirements      42   
  7.5         Compliance With Environmental Laws; Use of Hazardous Materials      42   

 

i


  7.6         Sustainable Building Operations      43   
  7.7         Recycling and Waste Management      44   
  7.8         Landlord Covenants      44   
  7.9         No Third Party Beneficiary      44   
  7.10       Generators      44   
8.   Building Services      46   
  8.1         Building-Standard Services      46   
  8.2         No Representation      46   
  8.3         Building Security Services and Access      46   
  8.4         Interruption or Unavailability of Services      47   
  8.5         Tenant’s Use of Excess Electricity and Water; Premises Occupancy Load      48   
  8.6         Provision of Additional Services; After-Hours HVAC Services      48   
  8.7         Tenant’s Supplemental Air Conditioning      49   
  8.8         Janitorial Service      49   
  8.9         Tenant to Provide Security Services      49   
  8.10       Controls      50   
  8.11       Service Providers      50   
  8.12       Property Management      50   
9.   Maintenance and Repair      50   
  9.1         Landlord’s Maintenance Obligations      50   
  9.2         Operable Building Systems upon Lease Commencement      51   
  9.3         Tenant’s Obligations      51   
10.   Alterations to Premises      51   
  10.1        Landlord Consent; Procedure      51   
  10.2        General Requirements      52   
  10.3        Landlord’s Right to Inspect      53   
  10.4        Tenant’s Obligations Upon Completion      53   
  10.5        Ownership and Removal of Alterations      53   
  10.6        Minor Alterations      54   
  10.7        Landlord’s Fee      54   
11.   Liens      54   
12.   Damage or Destruction      55   
  12.1        Repair Obligations      55   
  12.2        Termination Rights      55   
  12.3        Completion of Repairs      56   
  12.4        Rent Abatement      56   
  12.5        Waiver of Statutory Provisions      56   
  12.6        Casualty Following Exercise of Purchase Option      57   
13.   Eminent Domain      57   
  13.1        Lease Termination      57   
  13.2        Partial Taking      57   
  13.3        Landlord’s Termination Right      57   
  13.4        Compensation      57   
  13.5        Waiver      58   

 

ii


14.   Insurance      58   
  14.1        Liability Insurance      58   
  14.2        Form of Policies      58   
  14.3        Landlord’s Insurance      59   
15.   Waiver of Subrogation Rights      59   
16.   Waiver of Liability and Indemnification      59   
  16.1        Indemnification      60   
  16.2        Duty to Defend      60   
  16.3        Survival      60   
17.   Assignment and Subletting      60   
  17.1        Restriction on Transfers      61   
  17.2        Notice of Proposed Transfer      61   
  17.3        Reasonable Conditions      62   
  17.4        Transfer Premium      62   
  17.5        Terms of Consent      63   
  17.6        Subsequent Consents      63   
  17.7        Permitted Transfers      63   
  17.8        Permitted Occupancy by Certain Business Affiliates      64   
  17.9        Arbitration      64   
18.   Rules and Regulations      64   
19.   Entry of Premises by Landlord; Modification to Common Areas      65   
  19.1        Entry of Premises      65   
  19.2        Modifications to Common Areas      65   
  19.3        Waiver of Claims      66   
20.   Default and Remedies      66   
  20.1        Events of Default      66   
  20.2        Landlord’s Remedies Upon Occurrence of Event of Default      67   
  20.3        Damages Upon Termination      67   
  20.4        Computation of Certain Rent for Purposes of Default      68   
  20.5        Landlord’s Right to Cure Defaults      68   
  20.6        Remedies Cumulative      68   
  20.7        Landlord’s Default      68   
21.   Subordination, Attornment and Nondisturbance      69   
  21.1        Subordination and Attornment      69   
  21.2        Mortgage Subordination      70   
  21.3        Notice to Encumbrancer      70   
  21.4        Rent Payment Direction      70   
  21.5        SNDA      70   
22.   Sale or Transfer by Landlord; Lease Non-Recourse      71   
  22.1        Release of Landlord on Transfer      71   
  22.2        Lease Nonrecourse to Landlord; Limitation of Liability      71   
23.   Estoppel Certificate      71   

 

iii


  23.1        Tenant Estoppel      71   
  23.2        Landlord Estoppel      71   
24.   No Light, Air, or View Easement      72   
25.   Holding Over      72   
26.   Letter Of Credit      72   
  26.1        Delivery of Letter of Credit      72   
  26.2        Transfer of Letter of Credit      73   
  26.3        In General      73   
  26.4        Application of Letter of Credit      74   
  26.5        Security Deposit      75   
  26.6        Increase in Letter of Credit Amount      75   
  26.7        Reduction in Letter of Credit      77   

27.

 

Waiver

     77   

28.

 

Notices; Tenant’s Agent for Service

     77   

29.

 

Authority

     78   

30.

 

Parking; Transportation

     78   
  30.1        Lease of Parking Spaces      78   
  30.2        Tenant’s Right to Secure Parking      79   
  30.3        Use of the Parking Spaces      79   
  30.4        Management of Parking Garage      80   
  30.5        Abatement      80   
  30.6        Shuttle Service      80   

31.

 

Communications and Computer Lines

     80   
  31.1        Tenant’s Rights      80   
  31.2        Landlord’s Rights      81   
  31.3        Removal; Line Problems      81   

32.

 

Miscellaneous

     82   
  32.1        No Joint Venture      82   
  32.2        Successors and Assigns      82   
  32.3        Construction and Interpretation      82   
  32.4        Severability      82   
  32.5        Entire Agreement      82   
  32.6        Governing Law      83   
  32.7        Costs and Expenses      83   
  32.8        Standards of Performance and Approvals      83   
  32.9        Brokers      83   
  32.10      Memorandum of Lease      84   
  32.11      Quiet Enjoyment      84   
  32.12      Force Majeure      84   
  32.13      Surrender of Premises      84   
  32.14      Exhibits      85   
  32.15      Survival of Obligations      85   

 

iv


  32.16      Time of the Essence      85   
  32.17      Waiver of Trial By Jury; Waiver of Counterclaim      85   
  32.18      Consent to Venue      86   
  32.19      Financial Statements      86   
  32.20      Subdivision; Future Ownership      86   
  32.21      Modification of Lease      87   
  32.22      No Option      87   
  32.23      Reserved      87   
  32.24      Compliance with Anti-Terrorism Law      87   
  32.25      First Source Hiring Program      87   
  32.26      Landlord Lien Waiver      88   
  32.27      Rent Not Based on Income      88   
  32.28      Counterparts      88   

33.

 

Expansion Options

     88   
  33.1        Expansion Option at Lease Terms      88   
  33.2        Expansion Option at Modified Lease Terms      90   
  33.3        Expansion Option at Market Terms      92   
  33.4        Conditions of Exercise      94   
  33.5        Expansion Premises Tenant Improvement Allowance      94   
  33.6        Letter of Credit Amendment; Commissions      94   
  33.7        Amendment to Lease      95   
  33.8        Expansion Rent Adjustment      95   
  33.9        Rights Personal to Original Tenant      95   

34.

 

Right of First Refusal

     95   
  34.1        First Refusal Space      95   
  34.2        First Refusal Notice      95   
  34.3        Lease of First Refusal Space      96   
  34.4        Conditions of Exercise      96   
  34.5        Letter of Credit Amendment; Commissions      96   
  34.6        Amendment to Lease      97   
  34.7        Suite 500 Premises Limited Rights      97   
  34.8        Rights Personal to Original Tenant      97   

35.

 

Right of First Offer

     97   
  35.1        First Offer Space      97   
  35.2        Offering Notice      97   
  35.3        Lease of First Offer Space      98   
  35.4        Conditions of Exercise      98   
  35.5        Letter of Credit Amendment      99   
  35.6        Amendment to Lease      99   
  35.7        Rights Personal to Original Tenant      99   

36.

 

Purchase Option

     99   
  36.1        Grant of Purchase Option      99   
  36.2        Offer Procedure      99   
  36.3        Purchase Agreement      100   
  36.4        Rejection of Offer      100   
  36.5        Excluded Transfers      101   
  36.6        Condition of Title      101   

 

v


  36.7        Right to Effect a Like Kind Exchange      101   
  36.8        Broker’s Commission      102   
  36.9        No Implied Obligation      102   
  36.10      Personal to Original Tenant      102   
  36.11      Time of Essence      102   

37.

 

Rooftop Parking Area; Terrace and Dog Run

     102   
  37.1        Use      102   
  37.2        Improvements to Parking Garage Roof Space      102   
  37.3        Protection of Project      102   
  37.4        Use and Maintenance      103   
  37.5        Costs      103   
  37.6        Conditions to Continued Use      103   
  37.7        Lease Provisions      104   

38.

 

Tenant’s Rooftop and Other Equipment

     104   
  38.1        Grant of License      104   
  38.2        Interference      104   
  38.3        Roof Repairs      105   
  38.4        Rules and Regulations      105   
  38.5        Transfer of Rights      105   

39.

 

Sidewalk Areas

     105   

40.

 

Cafeteria

     106   
  40.1        Construction and Use      106   
  40.2        Operation      106   
  40.3        Costs      107   

41.

 

Tenant Competitors

     107   

42.

 

Dogs

     108   
  42.1        General Conditions      108   
  42.2        Costs and Expenses      108   
  42.3        Insurance; Indemnity      108   
  42.4        Rights Personal to Original Tenant      109   

43.

 

Storage Premises

     109   

44.

 

Signs

     109   
  44.1        Building Directory      109   
  44.2        Interior Signage      109   
  44.3        Exterior Signs      110   
  44.4        Approvals      111   
  44.5        Maintenance and Removal      111   
  44.6        Restriction on Competitor Signage      112   
  44.7        Assignment and Subleasing      112   

45.

 

JAMS ARBITRATION

     112   
  45.1        General Submittals to Arbitration      112   
  45.2        JAMS      112   

 

vi


  45.3        Provisional Remedies      113   
  45.4        Waiver of Rights to Litigate in a Court or Jury Trial      113   

46.

 

Representations and Warranties. Landlord warrants and represents that:

     113   
  46.1        No Other Third-Party Rights      113   
  46.2        Encumbrances      114   

 

vii


Exhibits

    
Exhibit A-1:    Floor Plans of Premises and Storage Space
Exhibit A-2:    Floor Plans of Temporary Premises
Exhibit A-3:    Floor Plans of Expansion Premises
Exhibit A-4:    Floor Plans Depicting Relocation Tenants
Exhibit A-5:    Reserved
Exhibit A-6:    Plan Depicting Location of Sidewalk Area
Exhibit B-1:    Rules and Regulations
Exhibit B-2:    Rooftop Rules
Exhibit C:    Work Letter
Exhibit D:    Confirmation of Lease Term
Exhibit E:    Janitorial Specifications
Exhibit F:    Form of Subordination, Non-Disturbance and Attornment
Exhibit G:    Form of Letter of Credit
Exhibit H:    Example of Calculation of Weighted Average Abatement Period
Exhibit I:    Location of Existing Generators
Exhibit J:    Landlord Security Program
Exhibit K:    Location of Parking Spaces
Exhibit L:    Memorandum of Lease
Exhibit M:    Tenant Competitors
Exhibit N:    Reserved
Exhibit O:    Reserved
Exhibit P:    Existing Encumbrances
Exhibit Q:    Form of Estoppel Certificate
Exhibit R:    Form of Confidentiality Agreement
Exhibit S:    Early Termination Example Calculations

 

viii


OFFICE LEASE

699 EIGHTH STREET

San Francisco, California

BASIC LEASE INFORMATION

 

Lease Date:

September 24, 2010

 

Landlord:

650 Townsend Associates LLC,

a Delaware limited liability company

 

Tenant:

Zynga Game Network Inc.,

a Delaware corporation

 

Premises:

A total of approximately 267,866 Adjusted Rentable Square Feet (as defined in Section 1.1.1 below) at the Building comprised of the following:

 

  (i) Suites 120 and 140 located on the concourse level containing approximately 75,000 Adjusted Rentable Square Feet (the “Concourse Premises”);

 

  (ii) Suites 50, 60 and 70 and the lobby located on the first floor containing approximately 20,425 Adjusted Rentable Square Feet (the “First Floor Premises”);

 

  (iii) Suites 250, 252, 260, 270, 271, 275, 280, 285 and 290 located on the second floor containing approximately 24,066 Adjusted Rentable Square Feet and certain corridor space adjacent thereto containing approximately 8,000 Adjusted Rentable Square Feet (“Second Floor Corridor Space”), totaling approximately 32,066 Adjusted Rentable Square Feet on the second floor (the “Second Floor Premises”);

 

  (iv) Suites 350, 352, 360, 365 and 375 located on the third floor containing approximately 36,492 Adjusted Rentable Square Feet (“Third Floor Premises”);

 

  (v) Suites 550 and 575 located on the fifth floor containing approximately 52,071 Adjusted Rentable Square Feet (the “Fifth Floor Premises”); and

 

  (vi) Suites 650, 675 and 680 located on the sixth floor containing approximately 51,812 Adjusted Rentable Square Feet (the “Sixth Floor Premises”).

 

  Floor plans of the Premises are attached hereto as Exhibit A 1.

 

ix


Term:

Commencing on the Lease Date and expiring on the day preceding the seventh (7th) year anniversary of the first full month following the Commencement Date, except as may be extended pursuant to Section 3.4 below.

 

Commencement Date:

The earlier to occur of (a) the date which is thirty (30) days after the Phase 1 Substantial Completion Date (as defined in the Work Letter) and (b) the date Tenant commences business operations in at least one hundred nineteen thousand (119,000) Adjusted Rentable Square Feet of the Phase 1 Premises. The Commencement Date shall occur before (and shall be a precondition to) the occurrence of the Phase 2 Substantial Completion Date (as defined in the Work Letter).

 

Target Phase 1 Completion Date:

April 1, 2011

 

Target Phase 2 Completion Date:

June 1, 2011

 

Phase 1 Rent Commencement Date:

The Commencement Date, subject to abatement as provided in Section 4.5 below.

 

Phase 2 Rent Commencement Date:

The earlier to occur of (a) the date which is thirty (30) days after the Phase 2 Substantial Completion Date or (b) with respect to each Suite comprising the Phase 2 Premises, the date Tenant commences business operations in such Suite, subject to abatement as provided in Section 4.5 below.

 

Expiration Date:

The day preceding the seventh (7th) year anniversary of the first full month following the Commencement Date.

Base Rent (Net of Electrical):

 

Time Period

  

Annual Base

    Rent/ARSF    

   Annual Base Rent      Monthly Base
Rent
 

Phase 1 Rent Commencement

Date until the Phase 2 Rent

Commencement Date

  

$24.50 (except for the

Concourse Premises which

is $15.00)

   $ 4,717,606.50       $ 393,133.88   

Phase 2 Rent Commencement

Date to the first anniversary of the

Phase 1 Rent Commencement Date

  

$24.50 (except for the

Concourse Premises which

is $15.00)

   $ 5,850,217.00       $ 487,518.08   

First anniversary of the Phase 1

Rent Commencement Date to the

second anniversary of the Phase 1

Rent Commencement Date

  

$25.50 (except for the

Concourse Premises which

is $16.00)

   $ 6,118,083.00       $ 509,840.25   

 

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Second anniversary of the Phase 1

Rent Commencement Date to the

third anniversary of the Phase 1

Rent Commencement Date

  

$26.50 (except for the

Concourse Premises which

is $17.00)

   $ 6,385,949.00       $ 532,162.42   

Third anniversary of the Phase 1

Rent Commencement Date to the

fourth anniversary of the Phase 1

Rent Commencement Date

  

$27.50 (except for the

Concourse Premises which

is $18.00)

   $ 6,653,815.00       $ 554,484.58   

Fourth anniversary of the Phase 1

Rent Commencement Date to the

fifth anniversary of the Phase 1

Rent Commencement Date

  

$28.50 (except for the

Concourse Premises which

is $19.00)

   $ 6,921,681.00       $ 576,806.75   

Fifth anniversary of the Phase 1

Rent Commencement Date to the

sixth anniversary of the Phase 1

Rent Commencement Date

  

$29.50 (except for the

Concourse Premises which

is $20.00)

   $ 7,189,547.00       $ 599,128.92   

Sixth anniversary of the Phase 1

Rent Commencement Date to the

Expiration Date

  

$30.50 (except for the

Concourse Premises which

is $21.00)

   $ 7,457,413.00       $ 621,451.08   

Extension Terms

   See Section 3.4 below   

 

Base Year:

Calendar year 2011

 

Tenant’s Percentage Share:

33.12% as of the Phase 1 Commencement Date (initially being the quotient of 221,637 Adjusted Rentable Square Feet of the Phase 1 Premises divided by 669,166 Adjusted Rentable Square Feet multiplied by 100); and

 

  40.03% as of the Phase 2 Commencement Date (initially being the quotient of 267,866 Adjusted Rentable Square Feet of the Premises divided by 669,166 Adjusted Rentable Square Feet multiplied by 100).

 

Letter of Credit/Security Deposit:

As described in Article 26

 

Number of Parking Spaces:

One (1) parking space for each 1,800 Adjusted Rentable Square Feet in the Premises

 

Tenant’s Address:

Prior to Commencement Date:

Zynga Game Network Inc.

365 Vermont Street

San Francisco, CA 94103

Attention: Director of Real Estate

 

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with a copy to:

Zynga Game Network Inc.

365 Vermont Street

San Francisco, CA 94103

Attention: General Counsel

 

and a copy to:

Paul, Hastings, Janofsky & Walker LLP

55 Second Street, 24th Floor

San Francisco, CA 94105

Attention: Stephen I. Berkman, Esq.

On and after Commencement Date:

 

  Zynga Game Network Inc.

699 Eighth Street

San Francisco, California 94103

Attention: Director of Real Estate

 

with a copy to:

Zynga Game Network Inc.

699 Eighth Street

San Francisco, California 94103

Attention: General Counsel

 

and a copy to:

Paul, Hastings, Janofsky & Walker LLP

55 Second Street, 24th Floor

San Francisco, CA 94105

Attention: Stephen I. Berkman, Esq.

 

Landlord’s Address for Notices:

650 Townsend Associates LLC

c/o TMG Partners

100 Bush Street, 26th Floor

San Francisco, California 94104

Attn: Lynn Tolin

 

Landlord’s Address for Payments:

650 Townsend Associates LLC

P.O. Box 49034

San Jose, California 95161-9034

Brokers:

 

      Landlord’s Broker:

The CAC Group (Bruce A. Wilson and Steve Anderson)

 

      Tenant’s Broker:

Colliers International (Jay Sternberg and Philip Arnautou)

Exhibits

Exhibit A-1:         Floor Plans of Premises and Storage Space

Exhibit A-2:         Floor Plans of Temporary Premises

Exhibit A-3:         Floor Plans of Expansion Premises

Exhibit A-4:         Floor Plans Depicting Relocation Tenants

Exhibit A-5:         Reserved

Exhibit A-6:         Plan Depicting Location of Sidewalk Area

 

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Exhibit B-1:

   Rules and Regulations

Exhibit B-2:

   Rooftop Rules

Exhibit C:

   Work Letter

Exhibit D:

   Confirmation of Lease Term

Exhibit E:

   Janitorial Specifications

Exhibit F:

   Form of Subordination, Non-Disturbance and Attornment

Exhibit G:

   Form of Letter of Credit

Exhibit H:

   Example of Calculation of Weighted Average Abatement Period

Exhibit I:

   Location of Existing Generators

Exhibit J:

   Landlord Security Program

Exhibit K:

   Location of Parking Spaces

Exhibit L:

   Memorandum of Lease

Exhibit M:

   Tenant Competitors

Exhibit N:

   Reserved

Exhibit O:

   Reserved

Exhibit P:

   Existing Encumbrances

Exhibit Q:

   Form of Estoppel Certificate

Exhibit R:

   Form of Confidentiality Agreement
Exhibit S:    Early Termination Example Calculations

 

xiii


OFFICE LEASE

THIS LEASE is made and entered into by and between Landlord and Tenant as of the Lease Date.

Landlord and Tenant hereby agree as follows:

1. Definitions.

1.1 Terms Defined. The following terms have the meanings set forth below. Certain other terms have the meanings set forth elsewhere in this Lease.

1.1.1 8th Street Signage. The term “8th Street Signage” shall have the meaning set forth in Section 44.3.3 below.

1.1.2 AAA. The term “AAA” shall have the meaning set forth in Section 45.2 below.

1.1.3 Abatement Event. The term “Abatement Event” shall have the meaning set forth in Section 8.4 below.

1.1.4 Acceptance Notice. The term “Acceptance Notice” shall have the meaning set forth in Section 36.2.2 below.

1.1.5 Acceptance Period. The term “Acceptance Period” shall have the meaning set forth in Section 36.2.2 below.

1.1.6 Additional Generator. The term “Additional Generator” shall have the meaning set forth in Section 7.10.2 below.

1.1.7 Adjusted Rentable Square Feet. The term “Adjusted Rentable Square Feet” means the rentable square footage of the Premises or the Building, as the case may be, determined in accordance the Building Owners and Managers Association standard method of measurement (ANSI Z65/1-1996) and adjusted based on a load factor determined by Landlord’s architect and approved by Tenant’s architect.

1.1.8 Alterations. The term “Alterations” means alterations, additions or other improvements to the Premises made by or on behalf of Tenant, other than the Tenant Improvements and Ancillary Tenant Improvements.

1.1.9 Amortization Rate. The term “Amortization Rate” means the applicable Interest Rate at the time a capital improvement or capital asset is installed, constructed or acquired (whichever is earliest), but not more than the maximum rate permitted by Applicable Laws at the time such capital improvements or capital assets are installed, constructed or acquired (whichever is earliest).

1.1.10 Ancillary Tenant Improvements. The term “Ancillary Tenant Improvements” shall have the meaning set forth in the Work Letter.

 

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1.1.11 Ancillary Uses. The term “Ancillary Uses” means fitness/health facility (including showers for users of such facility), ATM facility, travel agency, concessions and franchises related specifically to office services functions that may be outsourced by a tenant (such as food service, reproduction services, mail room services, cleaning, security, IT services, MEP services and/or engineering services), childcare facility, auditorium, board rooms, libraries, training rooms and facilities, audiovisual and closed circuit television facilities, messenger and mailroom facilities, reproduction and copying facilities, word processing centers, computer and communications facilities, pantries (including vending machines), file rooms (including condensed file rooms with reinforced flooring if required), meeting and conference centers and rooms, storage space and kitchens, serveries, cafeterias and dining rooms, in all cases as a use ancillary to Tenant’s use of the Premises for general office and administrative use.

1.1.12 Annual Statement. The term “Annual Statement” shall have the meaning set forth in Section 5.2 below.

1.1.13 Anti-Terrorism Law. The term “Anti-Terrorism Law” means any Applicable Laws relating to terrorism, anti-terrorism, money-laundering or anti-money laundering activities, including without limitation the United States Bank Secrecy Act, the United States Money Laundering Control Act of 1986, Executive Order No. 13224, and Title 3 of the USA Patriot Act, and any regulations promulgated under any of them.

1.1.14 Anticipated Delivery Date. The term “Anticipated Delivery Date” shall have the meaning set forth in Section 33.1.1 below.

1.1.15 Applicable Laws. The term “Applicable Laws” means all applicable laws, statutes, ordinances, orders, judgments, decrees, regulations, permit conditions, and requirements of all courts and all federal, state, county, municipal or other governmental or quasi-governmental authorities, departments, commissions, agencies and boards now or hereafter in effect, including, but not limited to, the Americans With Disabilities Act (42 U.S.C. § 12101 et seq.) and Title 24 of the California Code of Regulations and all regulations and guidelines promulgated thereunder.

1.1.16 Approval. The term “approval” shall have the meaning set forth in Section 32.8 below.

1.1.17 Arbitration of Disputes. The term “Arbitration of Disputes” shall have the meaning set forth in Section 45.1 below.

1.1.18 Arbitration Notice. The term “Arbitration Notice” shall have the meaning set forth in Section 45.2 below.

1.1.19 Arbitration Panel. The term “Arbitration Panel” shall have the meaning set forth in Section 3.4.6 (d) below.

1.1.20 Arbitration Rules. The term “Arbitration Rules” shall have the meaning set forth in Section 45.2 below.

1.1.21 Arbitrator. The term “Arbitrator” shall have the meaning set forth in Section 45.2 below.

1.1.22 Available Expansion Premises. The term “Available Expansion Premises” shall mean (a) those portions of the Expansion Premises comprised of Suite 460 (as defined

 

2


herein), Suite 500 (as defined herein), and Suite 600 (as defined herein), each as depicted on the floor plans attached hereto as Exhibit A-3, all of which are Available for Lease (as defined herein) as of the Lease Date and to the extent such portions remain Available for Lease during any applicable period in which an Expansion Option may be exercised and (b) the remaining portions of the Expansion Premises that first become and remain Available for Lease during any applicable period in which an Expansion Option may be exercised.

1.1.23 Available for Lease: The term “Available for Lease” shall mean an applicable space is vacant or, if occupied, when Landlord has reasonably determined that it will place the applicable space on the market for lease.

1.1.24 Bank. The term “Bank” shall have the meaning set forth in Section 26.1 below.

1.1.25 Bankruptcy Code. The term “Bankruptcy Code” means the United States Bankruptcy Code or any state bankruptcy code.

1.1.26 Base Rent. The term “Base Rent” shall have the meaning set forth in Section 4.1 below.

1.1.27 Base Year. The term “Base Year” shall have the meaning set forth in the Basic Lease Information.

1.1.28 Base Real Property Taxes. The term “Base Real Property Taxes” means the Real Property Taxes allocable to the Base Year, including any reduction in Base Real Property Taxes obtained by Landlord after the date hereof as a result of a commonly called Proposition 8 application; provided, however, that the Base Real Property Taxes shall hereafter be increased by (a) the amount of any increase in Real Property Taxes due solely to the expiration or reversal of such Proposition 8 application or (b) the positive difference between a reduction to the Real Property Taxes obtained by Landlord as a result of a Proposition 8 application applicable to the Base Year and a reduction to the Real Property Taxes obtained by Landlord as a result of a Proposition 8 application applicable to any year subsequent to the Base Year.

1.1.29 Bona Fide Offer. The term “Bona Fide Offer” shall have the meaning set forth in Section 34.2 below.

1.1.30 Building. The term “Building” means the six-story office building located within the Project, including related Common Areas and the Parking Garage.

1.1.31 Building Fuel Tank. The term “Building Fuel Tank” shall have the meaning set forth in Section 7.10.1 below.

1.1.32 Building Holidays. The term “Building Holidays” means New Year’s Day, Martin Luther King, Jr. Day, President’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, the day after Thanksgiving and Christmas Day.

1.1.33 Building Rules. The term “Building Rules” shall have the meaning set forth in Section 18 below.

1.1.34 Building Standard Hours. The term “Building Standard Hours” means 8:00 a.m. to 6:00 p.m. on weekdays (except Building Holidays).

 

3


1.1.35 Building Systems. The term “Building Systems” means all systems serving the Building in general, including, but not limited to, the fire/life safety, electrical, plumbing, HVAC, security and telecommunications systems, including all components thereof and related equipment, but excluding any equipment that is separately installed by or on behalf of Tenant and any distribution systems or equipment existing within the Premises as of the Lease Date.

1.1.36 Business Affiliates. The term “Business Affiliates” shall have the meaning set forth in Section 17.8 below.

1.1.37 Cable Path. The term “Cable Path” shall have the meaning set forth in Section 38.1 below.

1.1.38 Cafeteria. The term “Cafeteria” shall have the meaning set forth in Section 40.1 below.

1.1.39 Casualty. The term “Casualty” means fire, earthquake, or other event of a sudden, unexpected, or unusual nature.

1.1.40 Change of Ownership Transaction. The term “Change of Ownership Transaction” shall have the meaning set forth in Section 17.1 below.

1.1.41 Claims. The term “Claims” means any and all obligations, losses, claims, actions (including remedial or enforcement actions of any kind and administrative or judicial proceedings, suits, orders or judgments), causes of action, liabilities, penalties, damages (excluding, except with respect to third-party claims, foreseeable and unforeseeable consequential damages and punitive damages), costs and expenses (including reasonable attorneys’ and consultants’ fees and expenses).

1.1.42 Common Areas. The term “Common Areas” means all areas of the Project designated by Landlord from time to time for the common use or benefit of occupants of the Building, and their employees and invitees, or the public.

1.1.43 Comparable Buildings. The term “Comparable Buildings” means the other office buildings located in the South of Market and Showplace Square sub-market areas of San Francisco, California, that are comparable in terms of age, size, location, quality of construction and quality of common area improvements to the Building.

1.1.44 Comparison Leases. The term “Comparison Leases” shall have the meaning set forth in Section 3.4.4 below.

1.1.45 Complete Termination. The term “Complete Termination” shall have the meaning set forth in Section 2.4.1 below.

1.1.46 Confirmation. The term “Confirmation” shall have the meaning set forth in Section 3.1 below.

1.1.47 Connections. The term “Connections” shall have the meaning set forth in Section 38.1 below.

1.1.48 Construction Completion Date. The term “Construction Completion Date” shall have the meaning set forth in Section 2.8 (b) below.

 

4


1.1.49 Control. The term “Control” means the ownership, directly or indirectly, of more than fifty percent (50%) of the voting securities of, or possession of the right to vote, in the ordinary direction of its affairs, of more than fifty percent (50%) of the voting interest in, any person or entity.

1.1.50 Current Assets. The term “Current Assets” shall have the meaning set forth in Section 26.6.3 below.

1.1.51 Current Liabilities. The term “Current Liabilities” shall have the meaning set forth in Section 26.6.4 below.

1.1.52 Deed. The term “Deed” shall have the meaning set forth in Section 36.6 below.

1.1.53 Delay Rent Credits. The term “Delay Rent Credits” shall have the meaning set forth in Section 2.3 below.

1.1.54 Delayed Delivery Premises. The term “Delayed Delivery Premises” shall have the meaning set forth in Section 2.6.1 below.

1.1.55 Deposit. The term “Deposit” shall have the meaning set forth in Section 26.5 below.

1.1.56 Determination. The term “Determination” shall have the meaning set forth in Section 3.4.6 (a) below.

1.1.57 Early Phase 2 Occupancy. The term “Early Phase 2 Occupancy” shall have the meaning set forth in Section 2.2.2 below.

1.1.58 Early Phase 2 Occupancy Space. The term “Early Phase 2 Occupancy Space” shall have the meaning set forth in Section 2.2.2 below.

1.1.59 Early Termination Date. The term “Early Termination Date” shall have the meaning set forth in Section 3.3.1 below.

1.1.60 Early Termination Option. The term “Early Termination Option” shall have the meaning set forth in Section 3.3.1 below.

1.1.61 Eligibility Period. The term “Eligibility Period” shall have the meaning set forth in Section 8.4 below.

1.1.62 Encumbrance. The term “Encumbrance” means any ground lease or underlying lease, or the lien of any mortgage, deed of trust, and other encumbrances now or hereafter placed on or against the Building or the Project, or both, and all renewals, extensions, modifications, consolidations and replacements thereof.

1.1.63 Encumbrancer. The term “Encumbrancer” means the holder of the beneficial interest under an Encumbrance.

1.1.64 Environmental Laws. The term “Environmental Laws” means all Applicable Laws in any way relating to or regulating human health or safety, industrial hygiene, or the

 

5


use, generation, handling, emission, release, discharge, storage or disposal of Hazardous Materials, now or hereafter in force, as amended from time to time.

1.1.65 Equipment. The term “Equipment” shall have the meaning set forth in Section 38.1 below.

1.1.66 Escalation Rent. The term “Escalation Rent” means the Tenant’s Percentage Share of the total dollar increase, if any, in Operating Expenses allocable to each calendar year, or part thereof, after the Base Year, over the amount of Base Operating Expenses, and Tenant’s Percentage Share of the total dollar increase, if any, in Real Property Taxes allocable to the tax year or years occurring in each such calendar year over the Base Real Property Taxes for the tax year or years occurring in the Base Year.

1.1.67 Estimated Restoration Period. The term “Estimated Restoration Period” shall have the meaning set forth in Section 12.1 below.

1.1.68 Estoppel Reminder Notice. The term “Estoppel Reminder Notice” shall have the meaning set forth in Section 23.1 below.

1.1.69 Event of Default. The term “Event of Default” shall have the meaning set forth in Section 20.1 below.

1.1.70 Excess Cooling Problem. The term “Excess Cooling Problem” shall have the meaning set forth in Section 8.5 below.

1.1.71 Executive Order No. 13224. The term “Executive Order No. 13224” means Executive Order No. 13224 on Terrorist Financing effective September 24, 2001, and relating to “Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism,” as may be amended from time to time.

1.1.72 Existing Generators. The term “Existing Generators” shall have the meaning set forth in Section 7.10.1 below.

1.1.73 Existing Security Holder. The term “Existing Security Holders” shall have the meaning set forth in Section 21.5 below.

1.1.74 Existing Tenants. The term “Existing Tenants” shall have the meaning set forth in Section 2.6.1 below.

1.1.75 Expansion at Lease Terms Period. The term “Expansion at Lease Terms Period” shall have the meaning set forth in Section 33.1.1 below.

1.1.76 Expansion at Market Terms Period. The term “Expansion at Market Terms Period” shall have the meaning set forth in Section 33.3.1 below.

1.1.77 Expansion at Modified Lease Terms Period. The term “Expansion at Modified Lease Terms Period” shall have the meaning set forth in Section 33.2.1 below.

1.1.78 Expansion Delays. The term “Expansion Delays” shall have the meaning set forth in Section 33.1.3 below.

 

6


1.1.79 Expansion Notice. The term “Expansion Notice” shall have the meaning set forth in Section 33.4 below.

1.1.80 Expansion Option. The term “Expansion Option” shall have the meaning set forth in Section 33.3.1 below.

1.1.81 Expansion Premises. The term “Expansion Premises” means (a) Suite 265 located on the second floor containing approximately 2,557 Adjusted Rentable Square Feet (“Suite 265”), (b) Suite 380 located on the third floor containing approximately 11,064 Adjusted Rentable Square Feet (“Suite 380”), (c) Suite 450 located on the fourth floor containing approximately 12,549 Adjusted Rentable Square Feet (“Suite 450”), (d) Suite 460 located on the fourth floor containing approximately 14,279 Adjusted Rentable Square Feet (“Suite 460”), (e) Suite 475 located on the fourth floor containing approximately 20,531 Adjusted Rentable Square (“Suite 475”), (f) Suite 480 located on the fourth floor containing approximately 4,703 Adjusted Rentable Square Feet (“Suite 480”), (g) the Suite 500 Premises, and (h) Suite 600 located on the sixth floor containing approximately 59,056 Adjusted Rentable Square Feet (“Suite 600”), as depicted on the floor plans attached hereto as Exhibit A-3.

1.1.82 Expense Claim. The term “Expense Claim” shall have the meaning set forth in Section 5.2 below.

1.1.83 Expense Resolution Period. The term “Expense Resolution Period” shall have the meaning set forth in Section 5.2 below.

1.1.84 Extension Option. The term “Extension Option” shall have the meaning set forth in Section 3.4.1 below.

1.1.85 Extension Term. The term “Extension Term” shall have the meaning set forth in Section 3.4.1 below.

1.1.86 Fair Market Rent. The term “Fair Market Rent” shall have the meaning set forth in Section 3.4.4 below.

1.1.87 Fee Transfer. The term “Fee Transfer” shall have the meaning set forth in Section 36.2.1 below.

1.1.88 First Offer Space. The term “First Office Space” shall have the meaning set forth in Section 35.1 below.

1.1.89 First Refusal Election Period. The term “First Refusal Election Period” shall have the meaning set forth in Section 34.2 below.

1.1.90 First Refusal Exercise Notice. The term “First Refusal Exercise Notice” shall have the meaning set forth in Section 34.2 below.

1.1.91 First Refusal Notice. The term “First Refusal Notice” shall have the meaning set forth in Section 34.2 below.

1.1.92 First Refusal Space. The term “First Refusal Space” shall have the meaning set forth in Section 34.1 below.

 

7


1.1.93 Force Majeure Event. The term “Force Majeure Event” shall have the meaning set forth in Section 32.12 below.

1.1.94 FSHP. The term “FSHP” shall have the meaning set forth in Section 32.25 below.

1.1.95 Green Rating Systems. The term “Green Rating Systems” means the U.S. EPA’s Energy Star® rating system, the U.S. Green Building Council’s Leadership in Energy and Environmental Design (LEED) rating system and other third party rating systems.

1.1.96 Hazardous Materials. The term “Hazardous Materials” means any substance or material that is described as a toxic, hazardous, corrosive, ignitable, flammable or reactive substance, waste or material or a pollutant or contaminant, or words of similar import, in any Environmental Laws, and includes asbestos, petroleum, petroleum products, polychlorinated biphenyls, radon gas, radioactive matter, and chemicals that may cause cancer or reproductive toxicity.

1.1.97 HVAC. The term “HVAC” means the heating, ventilation and air conditioning system serving the Building in general.

1.1.98 Impasse Date. The term “Impasse Date” shall have the meaning set forth in Section 3.4.6 (a) below.

1.1.99 Impositions. The term “Impositions” means any and all taxes, excluding Real Property Taxes, payable by Landlord (other than net income taxes) whether or not now customary or within the contemplation of the parties hereto imposed upon, measured by or reasonably attributable to the cost or value of Tenant’s equipment, furniture, fixtures and other personal property located in the Premises or by the cost or value of any leasehold improvements made in or to the Premises by or for Tenant (other than (i) the Tenant Improvements excluding the Cafeteria improvements and (ii) standard office improvements), regardless of whether title to such improvements shall be in Tenant or Landlord. Impositions do not include income, franchise, transfer, inheritance or capital stock taxes, unless any such taxes are levied or assessed against Landlord as a substitute for, in whole or in part, any Imposition.

1.1.100 Indemnitees. The term “Indemnitees” shall have the meaning set forth in Section 16.1.1 below.

1.1.101 Independent Arbitrator. The term “Independent Arbitrator” shall have the meaning set forth in Section 3.4.6 (c) below.

1.1.102 Independent CPA. The term “Independent CPA” shall have the meaning set forth in Section 5.8.2 below.

1.1.103 Initial Deposit. The term “Initial Deposit” shall have the meaning set forth in Section 36.2.2 below.

1.1.104 Interest Rate. The term “Interest Rate” means the greater of (a) six percent (6%) per annum and (b) the Prime Rate plus four percent (4%); provided, however, that if such rate of interest shall exceed the maximum rate allowed by law, the Interest Rate shall be automatically reduced to the maximum rate of interest permitted by applicable law.

1.1.105 Janitorial Credit. The term “Janitorial Credit” shall have the meaning set forth in Section 8.8 below.

 

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1.1.106 Land. The term “Land” means the parcel of land shown as Lot 9, Assessor’s Block 3783, on that certain map entitled “Parcel Map of a Portion of 100 VARA Block No. 412, Also Being a Portion of Assessor’s Block 3783,” which map was filed November 29, 1988, at Page 36, in Book 38, of Parcel Maps, of the Official Records of the City and County of San Francisco, California.

1.1.107 Landlord Affiliate. The term “Landlord Affiliate” means (a) any corporation, limited liability company, limited partnership or other entity which Controls, is Controlled by or is under common Control with Landlord and (b) TMG Partners, a California corporation.

1.1.108 Landlord Delays. The term “Landlord Delays” shall have the meaning set forth in the Work Letter.

1.1.109 Landlord Parties. The term “Landlord Parties” means Landlord and its employees, agents, contractors, licensees, invitees, representatives, officers, directors, partners, and members and each of the foregoing is a “Landlord Party.”

1.1.110 Landlord’s Casualty Notice. The term “Landlord’s Casualty Notice” shall have the meaning set forth in Section 12.1 below.

1.1.111 Landlord’s Dispute Period. The term “Landlord’s Dispute Period” shall have the meaning set forth in Section 5.8.2 below.

1.1.112 Landlord’s Initial Proposal. The term “Landlord’s Initial Proposal” shall have the meaning set forth in Section 3.4.5 (a) below.

1.1.113 Landlord’s Lease Expenses. The term “Landlord’s Lease Expenses” shall have the meaning set forth in Section 3.3.1 below.

1.1.114 Landlord’s Market Rate Proposal. The term “Landlord’s Market Rate Proposal” shall have the meaning set forth in Section 3.4.5 (b) below.

1.1.115 Landlord’s Records. The term “Landlord’s Records” shall have the meaning set forth in Section 5.8.1 below.

1.1.116 LC Expiration Date. The term “LC Expiration Date” shall have the meaning set forth in Section 26.1 below.

1.1.117 Lease Terms Expansion Date. The term “Lease Terms Expansion Date” shall have the meaning set forth in Section 33.1.2 below.

1.1.118 Lease Terms Expansion Notice. The term “Lease Terms Expansion Notice” shall have the meaning set forth in Section 33.1.2 below.

1.1.119 Lease Terms Expansion Option. The term “Lease Terms Expansion Option” shall have the meaning set forth in Section 33.1.1 below.

1.1.120 Lease Year. The term “Lease Year” means each consecutive twelve (12) month period during the Term, commencing on the first day of the first full month following the Commencement Date, except that the first Lease Year shall include any partial month between the Commencement Date and the first day of the following month. For example, if the Commencement Date

 

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occurs on January 15, the first Lease Year will commence on January 15 and end on January 31 of the immediately succeeding calendar year, and each subsequent Lease Year shall commence on February 1 and end on January 31 of the immediately succeeding calendar year.

1.1.121 LED Signs. The term “LED Signs” shall have the meaning set forth in Section 44.3.1 below.

1.1.122 Letter of Credit. The term “Letter of Credit” shall have the meaning set forth in Section 26.1 below.

1.1.123 Letter of Credit Amount. The term “Letter of Credit Amount” shall have the meaning set forth in Section 26.1 below.

1.1.124 License. The term “License” shall have the meaning set forth in Section 38.1 below.

1.1.125 License Area. The term “License Area” shall have the meaning set forth in Section 38.1 below.

1.1.126 Line Problems. The term “Line Problems” shall have the meaning set forth in Section 31.3 below.

1.1.127 Lines. The term “Lines” shall have the meaning set forth in Section 31.1 below.

1.1.128 Mandatory Controls. The term “Mandatory Controls” shall have the meaning set forth in Section 8.10 below.

1.1.129 Market Terms Expansion Date. The term “Market Terms Expansion Date” shall have the meaning set forth in Section 33.3.2 below.

1.1.130 Market Terms Expansion Notice. The term “Market Terms Expansion Notice” shall have the meaning set forth in Section 33.3.2 below.

1.1.131 Market Terms Expansion Option. The term “Market Terms Expansion Option” shall have the meaning set forth in Section 33.3.1 below.

1.1.132 Material First Refusal Economic Terms. The term “Material First Refusal Economic Terms” shall have the meaning set forth in Section 34.2 below.

1.1.133 Material ROFO Economic Terms. The term “Material ROFO Economic Terms” shall have the meaning set forth in Section 35.2 below.

1.1.134 Minimum Credit Test. The term “Minimum Credit Test” shall have the meaning set forth in Section 26.6.1 below.

1.1.135 Minor Alterations. The term “Minor Alterations” means Alterations that are not visible from the exterior of the Premises and do not (i) affect the roof, walls, structural portions of the Building, Building Systems, or any Common Area or (ii) cost in excess of Two Hundred Fifty Thousand Dollars ($250,000.00) with respect to any one project.

 

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1.1.136 Modified Lease Terms Expansion Date. The term “Modified Lease Terms Expansion Date” shall have the meaning set forth in Section 33.2.2 below.

1.1.137 Modified Lease Terms Expansion Notice. The term “Modified Lease Terms Expansion Notice” shall have the meaning set forth in Section 33.2.2 below.

1.1.138 Modified Lease Terms Expansion Option. The term “Modified Lease Terms Expansion Option” shall have the meaning set forth in Section 33.2.1 below.

1.1.139 Modified Tenant Allowance. The term “Modified Tenant Allowance” shall have the meaning set forth in Section 33.2.3 below.

1.1.140 Net Worth. The term “Net Worth” means the excess of total assets over total liabilities, determined in accordance with generally accepted accounting principles, excluding, however, from the determination of total assets, goodwill and other intangibles and deferred revenue (i.e. revenue for which a party has received cash not yet recognized for accounting purposes).

1.1.141 Notice of Proposed Transfer. The term “Notice of Proposed Transfer” shall have the meaning set forth in Section 17.2 below.

1.1.142 Occupancy Agreement. The term “Occupancy Agreement” shall have the meaning set forth in Section 41 below.

1.1.143 Offering Notice. The term “Offering Notice” shall have the meaning set forth in Section 35.2 below.

1.1.144 Operating Expenses.

(a) The term “Operating Expenses” means the total costs and expenses that are, subject to the provisions of Section 1.1.144(c) below, actually incurred by Landlord in connection with the ownership, management, operation, maintenance and repair of the Project, including, without limitation, the following costs: (1) salaries, wages, bonuses and other compensation (including hospitalization, medical, surgical, retirement plan, pension plan, union dues, parking privileges, life insurance, including group life insurance, welfare and other fringe benefits, and vacation, holidays and other paid absence benefits) relating to employees of Landlord or its agents engaged in the management, operation, repair, or maintenance of the Project and costs of training such employees; (2) payroll, social security, workers’ compensation, unemployment and similar taxes with respect to such employees of Landlord or its agents, and the cost of providing disability or other benefits imposed by law or otherwise, with respect to such employees; (3) uniforms (including the cleaning, replacement and pressing thereof) provided to such employees; (4) except as expressly excluded below, premiums and other charges incurred by Landlord with respect to fire, other casualty, boiler and machinery, theft, rent interruption and liability insurance, and any other insurance (including earthquake insurance) as may be deemed necessary or advisable in the reasonable judgment of Landlord, or as may be required by any Encumbrancer, all in such amounts as Landlord determines to be appropriate, and, after the Base Year, costs of repairing an insured casualty solely to the extent of the deductible amount under the applicable insurance policy; (5) water charges and sewer rents or fees; (6) license, permit and inspection fees and charges, the cost of contesting any governmental enactments that may affect Operating Expenses, and the costs incurred in connection with any transportation system management program or similar program, including the costs of operating any shuttle bus or similar program; (7) sales, use and excise taxes on goods and services purchased by Landlord in connection with the operation, maintenance or repair of the Project and Building Systems; (8) telephone, facsimile, postage, courier, stationery supplies and other expenses

 

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incurred in connection with the operation, maintenance, or repair of the Project; (9) management fees and expenses (including fees and expenses for accounting, financial management, data processing and information services) and costs of tenant service programs; provided, however, that Tenant’s Percentage Share of the amounts set forth in this clause (9) for any calendar year shall not include any property management fees (A) payable to Landlord or an affiliate of Landlord to the extent that such amount exceeds the arms-length competitive price at Comparable Buildings for similar services and (B) in any case to the extent greater than three percent (3%) of the Building’s revenues plus expenses; (10) repairs to and physical maintenance of the Project (excluding any capital repairs or replacements, except as expressly provided below), including Building Systems and appurtenances thereto, and repair and replacement of worn out equipment, facilities and installations (excluding any capital repairs or replacements, except as expressly provided below); (11) janitorial, window cleaning, security services, extermination, water treatment, rubbish removal, plumbing, riser management and other services, and inspection or service contracts for elevator, electrical, mechanical, sanitary, HVAC, and other building equipment and systems; (12) supplies, tools, materials and equipment used in connection with the operation, maintenance or repair of the Project; (13) painting the exterior of the Building or the Common Areas and the cost of maintaining and repairing or replacing the sidewalks, landscaping and other Common Areas; (14) all costs and expenses for electricity, chilled or condenser water, air conditioning, water for heating, gas, fuel, steam, heat, lights, sewer service, communications service, power and other energy related utilities required in connection with the operation, maintenance and repair of the Project; (15) the cost of any capital improvements, repairs or replacements (as defined by the generally accepted accounting principals) made by Landlord to the Project after the Base Year or capital assets (as defined by the generally accepted accounting principals) acquired by Landlord after the Base Year, in each case only as required to comply with any Applicable Laws first enacted after the Commencement Date, such cost or allocable portion to be amortized over the useful life thereof as reasonably determined by Landlord in accordance with industry standard practices (commencing upon the completion of such capital improvement, repair or replacement), together with interest on the unamortized balance at the Amortization Rate; (16) the cost of any capital improvements made by Landlord to the Project or capital assets acquired by Landlord after the Base Year (each as defined by the generally accepted accounting principals) that are reasonably anticipated by Landlord to reduce other Operating Expenses, and only to the extent of such reasonably anticipated savings, such cost or allocable portion thereof to be amortized over the useful life thereof as reasonably determined by Landlord in accordance with industry standard practices (commencing upon the completion of such capital improvement), together with interest on the unamortized balance at the Amortization Rate; (17) the cost of furniture, window coverings, carpeting, decorations, landscaping and other customary and ordinary items of personal property provided by Landlord for use in the Common Areas or in the Building office (to the extent that such Building office is dedicated to the operation and management of the Building); (18) property management office rent or rental value (which rent or rental shall be subject to increases after the Base Year not to exceed $1.00 per Adjusted Rentable Square Foot per year); (19) payments under any Recorded Documents pertaining to the sharing of costs by the Building; and (20) the cost of operation, repair, maintenance and other expenses relating to the Parking Garage, including resurfacing, restriping and cleaning in excess of revenues payable to Landlord from the Parking Garage.

(b) To the extent costs and expenses described above relate to both the Project and other property or relate to the Common Areas, such costs and expenses shall, in determining the amount of Operating Expenses, be equitably allocated by Landlord in its reasonable discretion.

(c) Operating Expenses shall not include the following: (1) depreciation on the Building; (2) debt service, rental under any ground or underlying lease, or interest, principal, points and fees on any mortgage or other debt instrument encumbering the Building (except that, as provided in Section 1.1.144(a) above, Landlord may include interest in the amortization of certain

 

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capital expenditures); (3) Real Property Taxes; (4) attorneys’ fees and expenses, brokerage commissions, or other related expenses incurred in connection with leasing of the Project including lease concessions, rental abatements and construction allowances; (5) the cost of any improvements or equipment that would be properly classified as capital expenditures (except for any capital expenditures expressly included in Operating Expenses); (6) the cost of decorating, improving for tenant occupancy, painting or redecorating portions of the Building to be demised to tenants; (7) advertising expenses relating to vacant space; (8) real estate brokers’ or other leasing commissions; (9) rentals incurred in leasing HVAC systems, elevators or other equipment that if purchased rather than rented, would constitute a capital item that is excluded, except for (i) rental costs incurred in making repairs or in keeping Building Systems in operation while repairs are being made and (ii) rental costs of equipment not affixed to the Building that is used in providing janitorial or similar services; (10) costs for which Landlord is reimbursed by insurance carried by, or required to be carried by, Landlord or condemnation proceeds, other tenants or any other source, and Landlord shall use commercially reasonable efforts to pursue claims under insurance policies, existing warranties and/or guaranties or against other third parties, as applicable, to pay such costs; provided, that, the cost of pursuing such claims shall be included in Operating Expenses; (11) any bad debt loss, rent loss, or reserves for bad debt loss or rent loss; (12) costs incurred in connection with the operation of the business of the entity constituting Landlord, as distinguished from the costs of operating the Building, including accounting and legal matters, costs of defending any lawsuits with any mortgagee, costs of selling, syndicating, financing, mortgaging or hypothecating any of Landlord’s interest in the Building; (13) overhead and profit increment paid to Landlord or its affiliates for goods and/or services in the Building to the extent the same materially exceed the cost of such goods and/or services of comparable quality rendered by unaffiliated third parties of similar skill, competence and experience in Comparable Buildings; (14) costs for which Landlord has been compensated by a management fee to the extent that the inclusion of such costs in Operating Expenses would result in a double charge; (15) Landlord’s political or charitable contributions; (16) the cost of any “tenant relations” parties, events or promotions; (17) costs attributable to an increase in the size of the Project management office or rent attributable to any such increase; (18) insurance which is not customarily carried by institutional owners of Comparable Buildings; (19) costs to repair or replace the Project resulting from any casualty (except commercially reasonable deductibles under Landlord’s insurance policies may be included in Operating Expenses); (20) repairs, alterations, additions, improvements or replacements made to rectify or correct any defect in the design, materials or workmanship of the Project (as opposed to the cost of normal repair, maintenance and replacement expected in light of the specifications of the applicable construction materials and equipment) or to comply with any Applicable Laws in effect as of the Phase 1 Substantial Completion Date (based on the current interpretation thereof by applicable governmental entity(ies) as of the Phase 1 Substantial Completion Date); (21) repairs, alterations, additions, improvements or replacements made to rectify or correct damage caused by the negligence or willful misconduct of Landlord or any Landlord Party; (22) costs incurred in installing, operating and maintaining any specialty improvement not normally installed, operated and maintained in projects comparable to the Project, including, without limitation, an observatory, luncheon club, or athletic or recreational facilities, if not generally available to all office tenants of the Project, including Tenant; (23) salaries, wages, bonuses and other compensation (including hospitalization, medical, surgical, retirement plan, pension plan, union dues, parking privileges, life insurance, including group life insurance, welfare and other fringe benefits, and vacation, holidays and other paid absence benefits) relating to asset managers, leasing agents, promotional directors, officers, directors, or executives of Landlord that are above the rank of senior property manager or the Building chief engineer; (24) fines, penalties or interest incurred due to violation by Landlord of the terms and conditions of any lease or any Applicable Laws or due to violation by any other tenant in the Project of the terms and conditions of any lease or any Applicable Laws; (25) interest, penalties or other costs arising out of Landlord’s failure to make timely payment of its obligations; (26) property management fees in excess of the amount set forth in clause (9) of Section 1.1.144(a) above; (27) costs incurred to test, survey, cleanup, contain, abate, remove, or otherwise remedy Hazardous Materials or mold from the Project (except that Operating Expenses shall include costs incurred in

 

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connection with the prudent operation and maintenance of the Project, such as monitoring air quality); (28) costs incurred to correct defective equipment installed in the Project (as opposed to the cost of normal repair, maintenance and replacement expected in light of the specifications of the applicable equipment); (29) sale or financing costs incurred in connection with any sale, financing or refinancing of the Project; (30) any reserves; (31) costs of any artwork; (32) the cost of operation, repair, maintenance and other expenses relating to the portions of the Building used for retail and restaurant use, to the extent that, in Landlord’s reasonable judgment, such costs exceed the costs that which would have been incurred by Landlord if the entirety of the Building had been office space (rather than a mixture of office and retail and restaurant space); (33) costs and expenses of providing HVAC service to other tenant spaces in the Building outside of Building Standard Hours; (34) costs and expenses of providing electricity to areas of the Building outside of the Common Areas; (35) costs and expenses to provide water, gas, fuel, steam, lights, sewer service and other utilities to other tenants or occupants of the Building materially in excess of amounts typically used in connection with ordinary office use; (36) costs relating to the repair of structural portions of the roof, foundations, floors and exterior walls; (37) costs incurred in connection with re-certification pursuant to one or more Green Rating Systems or to support achieving any energy and carbon reduction targets (except costs incurred pursuant to Section 7.6.2 below); (38) the cost of labor and employees with respect to personnel not located at the Building on a full-time basis unless such costs are appropriately allocated between the Building and the other responsibilities of such personnel; (39) any of the amounts set forth in clause (1) or clause (2) of Section 1.1.144(a) above to the extent paid to asset managers, leasing agents, promotional directors, officers, directors, or executives of Landlord that are above the rank of senior property manager or the Building chief engineer; (40) costs for janitorial services for any rentable area in the Project to the extent Tenant continues to provide such services to the Premises as set forth herein; and (41) the amount of any taxes imposed on the use of the parking spaces in the Parking Garage by any governmental or quasi-governmental authority. In addition, Operating Expenses for the Base Expense Year shall not include market-wide cost increases due to Force Majeure Events, boycotts, strikes, conservation surcharges, embargoes or other shortages, or market-wide security or insurance cost increases due to extraordinary circumstances, such as an act of terrorism.

1.1.145 Outside Phase 1 Premises Delivery Date. The term “Outside Phase 1 Premises Delivery Date” shall have the meaning set forth in Section 2.4.1 below.

1.1.146 Outside Phase 2 Premises Delivery Date. The term “Outside Phase 2 Premises Delivery Date” shall have the meaning set forth in Section 2.4.1 below.

1.1.147 Parking Charge. The term “Parking Charge” shall have the meaning set forth in Section 30.1 below.

1.1.148 Parking Garage. The term “Parking Garage” means the parking structure within the Building and the parking spaces located on the roof of the Building.

1.1.149 Parking Garage Roof Space. The term “Parking Garage Roof Space” shall have the meaning set forth in Section 37.1 below.

1.1.150 Parking Spaces. The term “Parking Spaces” shall have the meaning set forth in Section 30.1 below.

1.1.151 Permitted Assignee. The term “Permitted Assignee” shall have the meaning set forth in Section 17.7.1 below.

1.1.152 Permitted Expansion TI Items. The term “Permitted Expansion TI Items” shall have the meaning set forth in Section 33.1.3 below.

 

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1.1.153 Permitted Transfer Costs. The term “Permitted Transfer Costs” shall have the meaning set forth in Section 17.4 below.

1.1.154 Permitted Transferee. The term “Permitted Transferee” shall have the meaning set forth in Section 17.7.1 below, and collectively as “Permitted Transferees.”

1.1.155 Permitted Use. The term “Permitted Use” means general office and administrative use and any Ancillary Uses.

1.1.156 Phase 1 Premises. The term “Phase 1 Premises” means the Concourse Premises, the First Floor Premises, the Third Floor Premises, the Fifth Floor Premises and the Sixth Floor Premises (as those terms are defined in the Basic Lease Information), excepting the Suite 375 Premises.

1.1.157 Phase 1 Substantial Completion. The term “Phase 1 Substantial Completion” shall have the meaning set forth in the Work Letter.

1.1.158 Phase 1 Tenant Completion Date. The term “Phase 1 Tenant Completion Date” shall have the meaning set forth in Section 2.8 (b) below.

1.1.159 Phase 2 Premises. The term “Phase 2 Premises” means the Second Floor Premises as defined in the Basic Lease Information and the Suite 375 Premises.

1.1.160 Phase 2 Substantial Completion. The term “Phase 2 Substantial Completion” shall have the meaning set forth in the Work Letter.

1.1.161 Phase 2 Tenant Completion Date. The term “Phase 2 Tenant Completion Date” shall have the meaning set forth in Section 2.8 (b) below.

1.1.162 Phase 2 Termination. The term “Phase 2 Termination” shall have the meaning set forth in Section 2.4.1 below.

1.1.163 Preexisting Hazardous Materials. The term “Preexisting Hazardous Materials” shall have the meaning set forth in Section 7.5.4 below.

1.1.164 Premises. The term “Premises” shall have the meaning set forth in the Basic Lease Information.

1.1.165 Prime Rate. The term “Prime Rate” means the latest U.S. prime rate reported in the Money Rates column of The Wall Street Journal on the first day on which The Wall Street Journal is published in the month in which the applicable sums are payable or incurred. If the Wall Street Journal is no longer published, the Prime Rate shall mean the publicly announced prime rate or reference rate charged by the San Francisco Main Office of Bank of America, N.A. (or any successor bank) on the first day of the month in which the applicable sums are payable or incurred (or if there is no such publicly announced rate, the rate quoted by such bank in pricing ninety (90) day commercial loans to substantial commercial borrowers on said date).

1.1.166 Prohibited Person. The term “Prohibited Person” means (a) a person or entity that is listed in the Annex to Executive Order No. 13224, or a person or entity owned or controlled by an entity that is listed in the Annex to Executive Order No. 13224; (b) a person or entity with whom Landlord is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law; or (c) a person or entity that is named as a “specially designated national and blocked person” on the most

 

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current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, http://www.treas.gov/ofac/t11sdn.pdf or at any replacement website or other official publication of such list.

1.1.167 Project. The term “Project” means the Land, the Building and other improvements at any time located on the Land, and all appurtenances related thereto, including the loading dock area.

1.1.168 Protection Period. The term “Protection Period” shall have the meaning set forth in Section 5.7 below.

1.1.169 PSA Assignment Party. For purposes of this Lease, the term “PSA Assignment Party” shall mean (a) any Tenant Affiliate or (b) Mark Pincus or (c) any corporation, limited liability company, limited partnership or other entity which is Controlled by Mark Pincus.

1.1.170 PSA Negotiation Period. The term “PSA Negotiation Period” shall have the meaning set forth in Section 36.3 below.

1.1.171 Purchase Agreement. The term “Purchase Agreement” shall have the meaning set forth in Section 36.3 below.

1.1.172 Purchase Offer Notice. The term “Purchase Offer Notice” shall have the meaning set forth in Section 36.2.1 below.

1.1.173 Purchase Option. The term “Purchase Option” shall have the meaning set forth in Section 36.1 below.

1.1.174 Real Property Taxes. The term “Real Property Taxes means all taxes, assessments (whether general or special), excises, transit charges, housing fund assessments or other housing charges, levies or fees, ordinary or extraordinary, unforeseen as well as foreseen, of any kind, which are assessed, levied, charged or imposed (1) on the Project or any part thereof, (2) on Landlord with respect to the Project, (3) on the act of entering into this Lease or any other lease of space in the Project, (4) on the use or occupancy of the Project or any part thereof, (5) with respect to services or utilities consumed in the use, occupancy or operation of the Project, (6) on or attributable to personal property used in connection with the Building, including the Common Areas, (7) related to any governmentally-mandated transportation plan, fund or system affecting the Building, and (8) relating to or on or measured by the rent payable under this Lease or in connection with the business of renting space in the Project, including, without limitation, any gross income tax, gross receipts tax or excise tax levied with respect to the receipt of such rent, by the United States of America, the State of California, the City and County of San Francisco, any political subdivision, public corporation, district or other political or public entity or public authority, and shall also include any other tax, fee or other excise, however described, which may be levied or assessed in lieu of, as a substitute (in whole or in part), for any other Real Property Taxes. Real Property Taxes shall include reasonable attorneys’, accountants’, and consultants’ fees, costs and disbursements incurred in connection with proceedings to contest, determine or reduce Real Property Taxes. Real Property Taxes shall not include (1) income, franchise, transfer, inheritance or capital stock taxes, unless levied or assessed in lieu of, as a substitute (in whole or in part), for any other Real Property Taxes; or (2) any taxes imposed on the use of the parking spaces in the Parking Garage by any governmental or quasi-governmental authority allocable to each calendar year that exceeds the amount of such taxes allocable to the Base Year.

 

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1.1.175 Reassessment. The term “Reassessment” shall have the meaning set forth in Section 5.7 below

1.1.176 Recorded Documents. The term “Recorded Documents” means all easement agreements, cost sharing agreements, covenants, conditions, and restrictions and all similar agreements affecting the Project, whether now or hereafter recorded against the Project.

1.1.177 Relocation. The term “Relocation” shall have the meaning set forth in Section 2.6.1 below.

1.1.178 Relocation Agreement. The term “Relocation Agreement” shall have the meaning set forth in Section 2.6.1 below.

1.1.179 Renewal Premises. The term “Renewal Premises” shall have the meaning set forth in Section 3.4.2 below.

1.1.180 Rent. The term “Rent” means the Base Rent, Escalation Rent, Parking Charges, and all other additional rent, additional charges and amounts payable by Tenant in accordance with this Lease.

1.1.181 Rent Abatement. The term “Rent Abatement” shall have the meaning set forth in Section 4.5 below.

1.1.182 Rent Abatement Period. The term “Rent Abatement Period” shall have the meaning set forth in Section 4.5 below.

1.1.183 Rent Payment Notice. The term “Rent Payment Notice” shall have the meaning set forth in Section 21.4 below.

1.1.184 Repairs to Generator Area. The term “Repairs to Generator Area” shall have the meaning set forth in Section 7.10.3 below.

1.1.185 Restore. The terms “Restore” or “Restoration” shall have the meaning set forth in Section 12.1 below.

1.1.186 Right of First Offer. The term “Right of First Offer” shall have the meaning set forth in Section 35.1 below.

1.1.187 Right of First Refusal. The term “Right of First Refusal” shall have the meaning set forth in Section 34.1 below.

1.1.188 ROFO Exercise Notice. The term “ROFO Exercise Notice” shall have the meaning set forth in Section 35.3.3 below.

1.1.189 ROFO Exercise Period. The term “ROFO Exercise Period” shall have the meaning set forth in Section 35.3.1 below.

1.1.190 ROFO Target Date. The term “ROFO Target Date” shall have the meaning set forth in Section 35.2 below.

1.1.191 ROFR Target Date. The term “ROFR Target Date” shall have the meaning set forth in Section 34.2 below.

 

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1.1.192 Roof Repairs. The term “Roof Repairs” shall have the meaning set forth in Section 38.3 below.

1.1.193 Rooftop Equipment. The term “Rooftop Equipment” shall have the meaning set forth in Section 38.1 below.

1.1.194 Sidewalk Area. The term “Sidewalk Area” shall have the meaning set forth in Section 39 below.

1.1.195 SNDA. The term “SNDA” shall have the meaning set forth in Section 21.5 below.

1.1.196 Standard Janitorial Services. The term “Standard Janitorial Services” shall have the meaning set forth in Section 8.8 below.

1.1.197 Storage Rent. The term “Storage Rent” shall have the meaning set forth in Section 43 below.

1.1.198 Storage Space. The term “Storage Space” shall have the meaning set forth in Section 43 below.

1.1.199 Subject Space. The term “Subject Space” shall have the meaning set forth in Section 17.2 below.

1.1.200 Suite 375 Premises. The term “Suite 375 Premises” means Suite 375 located on the third floor of the Building and containing approximately 14,163 Adjusted Rentable Square Feet, as shown on the floor plans attached hereto as Exhibit A-1.

1.1.201 Suite 375 Relocation Expenses. The term “Suite 375 Relocation Expenses” shall have the meaning set forth in Section 2.6.2 below.

1.1.202 Suite 375 Tenant’s New Premises. The term “Suite 375 Tenant’s New Premises” shall have the meaning set forth in Section 2.6.2 below.

1.1.203 Suite 460 Premises. The term “Suite 460 Premises” means Suite 460, located on the fourth floor of the Building and containing approximately 14,279 Adjusted Rentable Square Feet, as shown on the floor plans attached hereto as Exhibit A-2.

1.1.204 Suite 500 Premises. The term “Suite 500 Premises” means Suite 500 located on the fifth floor of the Building containing approximately 60,864 Adjusted Rentable Square Feet, as shown on the floor plans attached hereto as Exhibit A-3.

1.1.205 Suite 500/600 Parking Spaces. The term “Suite 500/600 Parking Spaces” shall have the meaning set forth in Section 30.1 below.

1.1.206 Superior Rights. The term “Superior Rights” means: (A) (i) the rights of the tenant under the existing lease of Suite 265, currently set to expire April 2, 2013; (ii) the rights of the tenant under the existing lease of Suite 380, currently set to expire April 30, 2012 with one (1) two (2)-year option to renew; (iii) the rights of the tenant under the existing lease of Suite 450, currently set to expire May 31, 2012 with two (2) three (3)-year options to renew; (iv) the rights of the tenant under the existing lease of Suite 475, currently set to expire September 30, 2015 with two (2) five (5)-year options

 

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to renew; (v) the right of the tenant under the existing lease of Suite 480, currently set to expire November 30, 2010; and (vi) the first refusal right of the tenant under the existing lease of Suite 450 with respect to Suite 460 (each such existing lease, an “Existing Expansion Premises Lease”) and (B) any renewal of an Existing Expansion Premises Lease, whether or not pursuant to an express written provision in such lease and without regard to whether such renewal is characterized by the parties thereto as a “renewal” or as a “new lease.”

1.1.207 Supplemental Cooling Equipment. The term “Supplemental Cooling Equipment” shall have the meaning set forth in Section 8.5 below.

1.1.208 Taken. The term “Taken” shall have the meaning set forth in Section 13.1 below.

1.1.209 Taking. The term “Taking” shall have the meaning set forth in Section 13.1 below.

1.1.210 Target Completion Date. The term “Target Completion Date” shall have the meaning set forth in Section 2.2.1 below.

1.1.211 Tax Increase. The term “Tax Increase” shall have the meaning set forth in Section 5.7 below.

1.1.212 Temporary OpEx Pass Through Payments. The term “Temporary OpEx Pass Through Payments” shall have the meaning set forth in Section 2.7.1 below.

1.1.213 Temporary Premises. The term “Temporary Premises” shall have the meaning set forth in Section 2.7.1 below.

1.1.214 Temporary Premises Expansion Notice. The term “Temporary Premises Expansion Notice” shall have the meaning set forth in Section 2.7.2 below.

1.1.215 Temporary Premises Expansion Option. The term “Temporary Premises Expansion Option” shall have the meaning set forth in Section 2.7.2 below.

1.1.216 Temporary Premises Term. The term “Temporary Premises Term” shall have the meaning set forth in Section 2.7.1 below.

1.1.217 Tenant Affiliate. The term “Tenant Affiliate” shall have the meaning set forth in Section 17.7.1 below.

1.1.218 Tenant Competitor. The term “Tenant Competitor” shall have the meaning set forth in Section 41 below.

1.1.219 Tenant Delay. The term “Tenant Delay” shall have the meaning set forth in the Work Letter.

1.1.220 Tenant Draw Package. The term “Tenant Draw Package” shall have the meaning set forth in Section 33.1.3 below.

1.1.221 Tenant Improvements. The term “Tenant Improvements” shall have the meaning set forth in the Work Letter.

 

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1.1.222 Tenant Parties. The term “Tenant Parties” means Tenant and Tenant’s Transferees and Business Affiliates, and their respective employees, agents, contractors, licensees, invitees, representatives, officers, directors, partners, members, and each of the foregoing is a “Tenant Party.”

1.1.223 Tenant Shuttle. The term “Tenant Shuttle” shall have the meaning set forth in Section 30.6 below.

1.1.224 Tenant Subsidiaries. The term “Tenant Subsidiaries” shall have the meaning set forth in Section 26.6.2 below.

1.1.225 Tenant’s Additional Signs. The term “Tenant’s Additional Signs” shall have the meaning set forth in Section 44.3.4 below.

1.1.226 Tenant’s Address Sign. The term “Tenant’s Address Sign” shall have the meaning set forth in Section 44.3.2 below.

1.1.227 Tenant’s Exterior Signs. The term “Tenant’s Exterior Signs” shall have the meaning set forth in Section 44.4 below

1.1.228 Tenant’s Construction Representative. The term “Tenant’s Construction Representative” shall have the meaning set forth in Section 3.2 below.

1.1.229 Tenant’s CPA. The term “Tenant’s CPA” shall have the meaning set forth in Section 5.8.1 below.

1.1.230 Tenant’s Expansion FF&E. The term “Tenant’s Expansion FF&E” shall have the meaning set forth in Section 33.1.3 below.

1.1.231 Tenant’s First Refusal Rejection. The term “Tenant’s First Refusal Rejection” shall have the meaning set forth in Section 34.2 below.

1.1.232 Tenant’s Fixturing Work. The term “Tenant’s Fixturing Work” shall have the meaning set forth in Section 3.2 below.

1.1.233 Tenant’s Percentage Share. The term “Tenant’s Percentage Share” means the percentage stated in the Basic Lease Information as Tenant’s Percentage Share, which may be adjusted pursuant to the terms of this Lease.

1.1.234 Tenant’s Review. The term “Tenant’s Review” shall have the meaning set forth in Section 5.8.1 below.

1.1.235 Tenant’s ROFO Rejection. The term “Tenant’s ROFO Rejection” shall have the meaning set forth in Section 35.3.3 below.

1.1.236 Tenant’s Security Equipment. The term “Tenant’s Security Equipment” shall have the meaning set forth in Section 8.9 below.

1.1.237 Termination Date. The term “Termination Date” shall have the meaning set forth in Section 3.3.1 below.

 

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1.1.238 Termination Fee. The term “Termination Fee” shall have the meaning set forth in Section 3.3.1 below.

1.1.239 Termination Notice. The term “Termination Notice” shall have the meaning set forth in Section 3.3.1 below.

1.1.240 Termination Space. The term “Termination Space” shall have the meaning set forth in Section 3.3.1 below.

1.1.241 Third Party Hazardous Materials. The term “Third Part Hazardous Materials” shall have the meaning set forth in Section 7.5.4 below.

1.1.242 Third Party Purchaser. The term “Third Party Purchaser” shall have the meaning set forth in Section 36.4 below.

1.1.243 Townsend Street Signage. The term “Townsend Street Signage” shall have the meaning set forth in Section 44.3.4 below.

1.1.244 Transfer. The term “Transfer” shall have the meaning set forth in Section 17.1 below.

1.1.245 Transfer Premium. The term “Transfer Premium” shall have the meaning set forth in Section 17.4 below.

1.1.246 Transferee. The term “Transferee” shall have the meaning set forth in Section 17.1 below.

1.1.247 Unused Parking Spaces. The term “Unused Parking Spaces” shall have the meaning set forth in Section 30.1 below.

1.1.248 USA Patriot Act. The term “USA Patriot Act” means the “Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001” (Public Law 107-56), as may be amended from time to time.

1.1.249 Wattage Allowance. The term “Wattage Allowance” for electricity (demand load for general office, light and convenience power and for office equipment and supplemental air conditioning) means the product obtained by multiplying the Adjusted Rentable Square Feet of the Premises by eight (8) watts.

1.1.250 Weighted Average Abatement Period. The term “Weighted Average Abatement Period” means the average number of days in each Abatement Period for each Phase of the Premises delivered to Tenant taking into account and giving proportional relevance to each Abatement Period for each Phase based on the Adjusted Rentable Square Feet delivered in such Phase. An example of the calculation of the Weighted Average Abatement Period is attached hereto as Exhibit H.

1.1.251 Work Letter. The term “Work Letter” means the agreement attached hereto as Exhibit C and incorporated herein by reference.

1.2 Basic Lease Information. The Basic Lease Information is incorporated into and made a part of this Lease. Each reference in this Lease to any Basic Lease Information shall mean the

 

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applicable information set forth in the Basic Lease Information, except that in the event of any conflict between an item in the Basic Lease Information and this Lease, this Lease shall control.

2. Premises.

2.1 Lease of Premises. Landlord hereby leases to Tenant, and Tenant hereby leases from Landlord, the premises described in the Basic Lease Information (the “Premises”). The parties acknowledge that Exhibit A-1 is intended only to show the approximate location of the Premises in the Building, and not to constitute an agreement, representation or warranty as to the construction or precise area of the Premises or as to the specific location or elements of the Common Areas or of the accessways to the Premises or the Project. The parties hereby stipulate that the Premises and the Project contain the number of Adjusted Rentable Square Feet set forth in the Basic Lease Information. The Adjusted Rentable Square Feet of the Building shall not be decreased at any time during the Term. If the Premises include an entire floor, all elevator lobbies, corridors and restroom facilities located on such floor shall be considered part of the Premises. All the outside walls and windows of the Premises and any space in the Premises used for shafts, stacks, pipes, conduits, ducts, electric or other utilities, or other Building facilities or equipment, and the use thereof and, subject to the restrictions set forth in Section 19.1 below, access thereto through the Premises for the purposes of operation, maintenance, improvements and repairs, are reserved to Landlord.

2.2 Delivery of Premises.

2.2.1 Delivery. Landlord shall deliver the Premises in two phases (each a “Phase”). Landlord shall use commercially reasonable efforts to cause (a) the Phase 1 Substantial Completion to occur on or before the Target Phase 1 Completion Date and (b) the Phase 2 Substantial Completion to occur on or before the Target Phase 2 Completion Date (each of the Target Phase 1 Completion Date and the Target Phase 2 Completion Date being referred to herein as a “Target Completion Date”); provided, however, that (i) a Target Completion Date shall be extended by the number of days that the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date, as applicable, is delayed due to Force Majeure Events and (ii) notwithstanding anything to the contrary set forth in this Lease or in the Work Letter and regardless of the actual Phase 1 Substantial Completion Date or the actual Phase 2 Substantial Completion Date hereunder, the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date, as applicable, shall be deemed to be the date the Phase 1 Substantial Completion Date or Phase 2 Substantial Completion Date would have occurred but for any Tenant Delay as determined in accordance with the Work Letter.

2.2.2 Phasing of Occupancy. Subject to the provisions of this Section 2.2.2, Tenant may elect (each such election, an “Early Phase 2 Occupancy”), in its sole and absolute discretion, prior to Phase 2 Substantial Completion with respect to the Phase 2 Premises only to occupy any portion of the Phase 2 Premises (each occupied portion of the Phase 2 Premises being an “Early Phase 2 Occupancy Space”) for which Landlord and its construction manager, in consultation with Tenant and Tenant’s Architect, mutually agree that the Tenant Improvement Work in such Early Phase 2 Occupancy Space has been completed in accordance with the Approved Working Drawings and any Change Orders, except for Punch-List Items (as such terms are defined in the Work Letter) and for which Tenant is legally permitted to occupy (as evidenced by a temporary or final certificate of occupancy, or final inspection and sign-off on the job card for the Tenant Improvement Work, or reasonable equivalent), provided that no Early Phase 2 Occupancy Space shall consist of less than an entire suite as shown on Exhibit A-1. Tenant shall provide Landlord reasonable prior notice before commencing any Early Phase 2 Occupancy. Tenant’s Early Phase 2 Occupancy shall be conditioned upon Landlord’s reasonable determination that such Early Phase 2 Occupancy is not likely to interfere with or delay the construction of the Ancillary Tenant Improvements, the Tenant Improvements or any other work in the Building. Any

 

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Early Phase 2 Occupancy shall be subject to all of the terms, covenants and conditions of this Lease, including, but not limited to, Tenant’s insurance obligations contained in Article 14 below and Tenant’s indemnity obligations contained in Section 16.1.1 below. Tenant shall pay Base Rent applicable to any Early Phase 2 Occupancy Space at the rate of $19.60 per Adjusted Rentable Square Foot per year from the period commencing on the date Tenant commences business operations in the applicable Early Phase 2 Occupancy Space until the Phase 2 Rent Commencement Date.

2.3 Delay Rent Credits. If the Phase 1 Substantial Completion Date has not occurred (or is not deemed to have occurred pursuant to Section 2.2 above due to any Tenant Delay) on or before the date that is forty five (45) days after the Target Phase 1 Completion Date (as such date may be extended pursuant to Section 2.2 above for any Force Majeure Event), then Tenant shall be entitled to a credit against Base Rent hereunder in addition to the Rent Abatement (as defined in Section 4.5 below) in the amount of one and one-half (1.5) days of Base Rent for every day that the Phase 1 Substantial Completion Date is actually delayed beyond the date that is forty-five (45) days after the Target Phase 1 Completion Date (the “Delay Rent Credits”). If the Phase 1 Substantial Completion Date does not occur (or is not deemed to have occurred) within one hundred fifty (150) days after the Target Phase 1 Completion Date, Tenant shall be entitled to no additional Delay Rent Credits with respect to the Phase 1 Premises, provided that the foregoing shall not limit Tenant’s rights or remedies pursuant to Sections 2.4 or 2.8 hereof. The parties agree that the actual damages to be suffered by Tenant in the event of a delay in the Phase 1 Substantial Completion Date would be extremely difficult if not impossible to ascertain and that the amount of Delay Rent Credits set forth in this Section 2.3 is a reasonable estimate of the actual damages to be suffered by Tenant if Tenant does not exercise its termination rights under Section 2.4 hereof and that such sum represents liquidated damages and not a penalty. By executing this provision where indicated below, each party specifically confirms the accuracy of the statements made above and the fact that each party fully understood the consequences of these liquidated damages provisions at the time this Lease was made.

Landlord’s Initials: MAC                         Tenant’s Initials: MV

2.4 Termination for Delay in Completion.

2.4.1 In the event that (a) the Phase 1 Substantial Completion Date has not occurred (or is not deemed to have occurred) on or before the date that is one hundred fifty (150) days after the Target Phase 1 Completion Date (the Outside Phase 1 Premises Delivery Date) or (b) the Phase 2 Substantial Completion Date has not occurred (or is not deemed to have occurred) on or before the date that is one hundred fifty (150) days after the Target Phase 2 Completion Date (the Outside Phase 2 Premises Delivery Date), then Tenant shall have the right to terminate this Lease either (i) in its entirety if the Phase 1 Substantial Completion Date has not occurred (or is not deemed to have occurred) on or before the Outside Phase 1 Premises Delivery Date (a Complete Termination) or (ii) with respect to the Phase 2 Premises only if the Phase 2 Substantial Completion Date has not occurred (or be deemed to have occurred) on or before the Outside Phase 2 Premises Delivery Date (a Phase 2 Termination), in each case by giving written notice of such termination to Landlord at any time (A) after the Outside Phase 1 Premises Delivery Date and prior to delivery of the Phase 1 Premises or (B) after the Outside Phase 2 Premises Delivery Date and prior to delivery of the Phase 2 Premises, as applicable; provided, however, that (x) the Outside Phase 1 Premises Delivery Date and the Outside Phase 2 Premises Delivery Date shall each be extended by the number of days that the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date, as applicable, is delayed due to Force Majeure Events and (y) notwithstanding anything to the contrary set forth in this Lease or in the Work Letter and regardless of the actual Phase 1 Substantial Completion Date or the actual Phase 2 Substantial Completion Date hereunder, the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date, as applicable, shall be deemed to be the date the Phase 1 Substantial Completion Date

 

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or Phase 2 Substantial Completion Date would have occurred but for any Tenant Delay as determined in accordance with the Work Letter. Tenant’s right to terminate this Lease with respect to the Phase 2 Premises pursuant to clause (ii) above shall automatically terminate and be of no further force or effect upon Tenant’s election under Section 2.2.2 to occupy any Early Phase 2 Occupancy.

2.4.2 In the event of a Complete Termination or a Phase 2 Termination, Tenant shall be entitled to seek payment from Landlord of such losses, costs, expenses or damages incurred by Tenant as a result of the termination of the Lease and exercise any other rights or remedies available to Tenant under Applicable Laws, in each case subject to the provisions set forth in Section 22.2 of the Lease.

2.5 Acceptance of the Premises. Tenant agrees to accept possession of (i) the Phase 1 Premises upon the Phase 1 Substantial Completion Date and (ii) the Phase 2 Premises on the Phase 2 Substantial Completion Date, without representation or warranty by Landlord, except as expressly provided herein, and with no obligation of Landlord to repaint, remodel, repair, improve or alter the Premises, or to perform any construction, remodeling or other work of improvement upon the Premises, or contribute to the cost of any of the foregoing, except as expressly set forth in this Lease (including the Work Letter). Without limiting the generality of the foregoing, Tenant acknowledges that neither Landlord nor any agent of Landlord has made any representation or warranty regarding the condition of the Premises, the Building, or the Project, the suitability of the Premises for Tenant’s use, the condition, capacity or performance of the Tenant Improvements or the Ancillary Tenant Improvements or Building Systems, or the identity of other tenants or potential tenants of the Project, except as expressly set forth in this Lease.

2.6 Conditions of Delivery of Certain Premises.

2.6.1 Relocation of Existing Tenants. Portions of the Premises as depicted on the floor plans attached hereto as Exhibit A-4 are currently leased to other tenants (“Existing Tenants”). Landlord has executed agreements prior to or concurrent with the date hereof (each a “Relocation Agreement”) to (a) relocate Existing Tenants to other premises in the Building or (b) terminate the leases with such Existing Tenants (each a “Relocation”). Each Relocation shall be at the sole cost and expense of Landlord, except as otherwise provided in Section 2.6.2 below. If Landlord is unable to cause the Relocation of any Existing Tenant on or before the date set forth in the Construction Schedule, except due to a default by Landlord under any applicable Relocation Agreement, then the Target Phase 2 Completion Date with respect solely to the Phase 2 Premises leased by such Existing Tenant (the “Delayed Delivery Premises”) shall be extended by the number of days that the Phase 2 Substantial Completion Date with respect to the Delayed Delivery Premises is actually delayed due to the lease or occupancy by the applicable Existing Tenant. If any portion of the Second Floor Premises becomes Delayed Delivery Premises, Landlord, at Tenant’s option, shall substantially complete (in accordance with the Work Letter) and deliver possession of those portions of the Second Floor Premises that are not Delayed Delivery Premises, but Tenant’s obligation to pay Base Rent with respect to any portion of the Second Floor Premises shall not commence until the Phase 2 Substantial Completion Date (as defined in the Work Letter). In no event shall Landlord be in default or liable to Tenant for any loss or damage resulting solely from any Existing Tenant’s default under any Relocation Agreement, provided that Landlord shall use commercially reasonable efforts to enforce the terms of such Relocation Agreements and shall use commercially reasonable efforts to cause the Phase 2 Substantial Completion Date to occur on or before the Target Phase 2 Commencement Date for those portions of the Second Floor Premises which are not Delayed Delivery Premises.

2.6.2 Suite 375 Premises. With respect to the Suite 375 Premises and notwithstanding anything to the contrary contained in Section 2.6.1 above, Tenant shall pay the Suite 375

 

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Relocation Expenses to Landlord as set forth in this Section 2.6.2. As used herein, the term “Suite 375 Relocation Expenses” means the difference between (i) the base rent payable by the Existing Tenant under the current lease for the Suite 375 Premises for the remaining term of such lease less (ii) the base rent payable by the Existing Tenant under a new lease or amended lease for the premises within the Building to which the Existing Tenant is relocated (the “Suite 375 Tenant’s New Premises”) for the equivalent term. The calculation of Suite 375 Relocation Expenses is subject to the following: (1) the annual base rent payable by Existing Tenant under the current lease is $33.70 (net of electrical) multiplied by 14,163 Adjusted Rentable Square Feet for the period from the Lease Date until February 3, 2011, $34.70 (net of electrical) multiplied by 14,163 Adjusted Rentable Square Feet for the period from February 4, 2011 to February 3, 2012, and $35.70 (net of electrical) multiplied by 14,163 Adjusted Rentable Square Feet for the period from February 4, 2012 to February 3, 2013; (2) the remaining term and the equivalent term shall mean the period from the effective date of the Relocation to February 3, 2013; (3) notwithstanding the actual base rent payable by the Existing Tenant under the new or amended lease, the base rent for purposes of calculating the Suite 375 Relocation Expenses shall not be less than $20.91 (net of electrical) multiplied by the Adjusted Rentable Square Feet of the Suite 375 Tenant’s New Premises; and (4) if Suite 375 Tenant’s New Premises is less than 14,163, the Suite 375 Relocation Expenses shall be calculated assuming that the Adjusted Rentable Square Feet of the Suite 375 Tenant’s New Premises is 14,163. Landlord shall provide to Tenant the amount of the Suite 375 Relocation Expenses on or prior to the effective date of the Relocation (along with reasonable supporting backup documentation). Subject to the application of any Delay Rent Credits or other offset rights of Tenant hereunder, Tenant shall pay the Suite 375 Relocation Expenses as the same accrue, in advance, on or before the first day of each successive calendar month during the Term and otherwise in accordance with Article 4 hereof; provided, however, that Tenant may elect at any time to pay the net present value of the Suite 375 Relocation Expenses, discounted at the Interest Rate.

2.7 Lease of Temporary Premises.

2.7.1 Temporary Lease of Suite 225 Premises. During the period commencing on the date which is ten (10) days after this Lease is executed and delivered by Landlord and Tenant and ending on the Phase 2 Rent Commencement Date (the “Temporary Premises Term”), Tenant shall lease from Landlord certain temporary premises commonly referred to as Suite 225, located on the second floor of the Building, containing approximately 16,257 Adjusted Rentable Square Feet and shown on the floor plans attached hereto as Exhibit A-2 (the “Temporary Premises”). Tenant’s lease of the Temporary Premises shall be on all of the terms and conditions of this Lease, except as modified by this Section 2.7. Landlord shall deliver the Temporary Premises broom-clean, free of furniture and equipment. Except as set forth in the immediately preceding sentence, Tenant acknowledges and agrees that Tenant accepts the Temporary Premises in its “as-is” condition, without any representations or warranties by Landlord, and with no obligation of Landlord to make any alterations or improvements to the Temporary Premises or to provide any tenant improvement allowance. Notwithstanding anything to the contrary contained herein, Tenant’s occupancy of the Temporary Premises during the Temporary Premises Term shall be subject to all of the terms, covenants and conditions of this Lease, including Tenant’s insurance obligations contained in Article 14 and Tenant’s indemnity obligations contained in Article 16; provided, however, that (a) Tenant shall not be obligated to pay Base Rent or Escalation Rent for the Temporary Premises during the Temporary Premises Term, (b) Tenant shall be obligated to pay the pro rata share (which is a fraction, the numerator of which is the Adjusted Rentable Square Feet of the Temporary Premises and the denominator of which is the Adjusted Rentable Square Feet of the Building) of all Operating Expenses and Real Property Taxes allocable to the pro rata portion of the calendar year and tax year, as applicable, during the Temporary Premises Term (the “Temporary OpEx Pass Through Payment”), (c) Tenant shall pay all costs of electrical consumption that is separately metered to the Temporary Premises, (d) Tenant shall have the right but not the obligation to perform the obligations set forth in Section 9.3 below with respect to the Temporary Premises, provided, that, Tenant shall repair any damage to the Temporary

 

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Premises resulting from the acts or omissions of Tenant, (e) at the end of the Temporary Premises Term, Tenant shall surrender the Temporary Premises broom-clean and free from furniture and equipment but shall have no other restoration obligations, (f) Tenant shall have the right to terminate the lease of the Temporary Premises with notice thereof after any casualty or condemnation materially affecting the Temporary Premises and (g) Landlord shall provide janitorial service to the Temporary Premises in accordance with the Standard Janitorial Services (as defined in Section 8.8). Landlord shall cause the entity providing janitorial services to the Temporary Premises to execute a confidentiality agreement in connection with the provision of such services in the form attached hereto as Exhibit R, but the individual employees of such service provider shall not be obligated to sign any confidentiality agreement. As of the date hereof, the Temporary OpEx Pass Through Payment is Eight Dollars and 81/100 ($8.81) per Adjusted Rentable Square Foot. On the first day of each month of the Temporary Premises Term, Tenant shall pay to Landlord the monthly estimate of Tenant’s pro rata share of Operating Expenses and Real Property Taxes as provided by Landlord. Within ninety (90) days after the termination of the Temporary Premises Term, Landlord shall provide Tenant a statement of the actual pro rata share of Operating Expenses and Real Property Taxes and adjustments with respect to the estimated pro rata share of Operating Expenses and Real Property Taxes paid by Tenant under this Section and appropriate credits and payments shall be made in the same manner as provided in Section 5.2 above. Notwithstanding anything to the contrary contained herein, beginning on the date that is three (3) months after the Phase 1 Rent Commencement Date, Tenant’s obligation to make the Temporary OpEx Pass Through Payments shall cease, but such cessation shall not prevent Tenant’s continued use and occupancy of the Temporary Premises for the duration of the Temporary Premises Term. Tenant shall bear all costs related to furnishing, equipping, and moving into and out of the Temporary Premises, including, without limitation, the installation of Lines. During the Temporary Premises Term, Tenant shall have the right, but not the obligation, to lease seventeen (17) Parking Spaces (as hereinafter defined) at the initial Parking Charge and otherwise in accordance with Article 30 hereof. Except as expressly provided above with respect to repair, restoration and maintenance obligations, on or before the expiration or earlier termination of the Temporary Premises Term, Tenant shall surrender the Temporary Premises in accordance with Section 32.13 of this Lease. If Tenant remains in possession of the Temporary Premises after the expiration of the Temporary Premises Term, Article 25 hereof shall apply. For purposes of calculating Base Rent payable with respect to the Temporary Premises after the Temporary Premises Term under Article 25, Tenant shall be deemed to have paid Base Rent during the Temporary Premises Term at the rate of $19.60 per Adjusted Rentable Square Foot. Notwithstanding the rights granted under Article 42, Tenant shall not be permitted to have dogs in the Temporary Premises.

2.7.2 Option to Temporarily Lease the Suite 460 Premises. Subject to the Superior Rights and the terms and conditions of this Section 2.7.2, Tenant shall have the right, in its sole discretion, to expand the Temporary Premises by leasing the Suite 460 Premises (“Temporary Premises Expansion Option”). Tenant may exercise the Temporary Expansion Option, if at all, by giving Landlord an unconditional, irrevocable written notice of such election (the “Temporary Premises Expansion Notice”) on or before December 31, 2010, the time of such exercise being of the essence. The Temporary Expansion Notice shall specify the date upon which Landlord shall deliver the Suite 460 Premises, which date shall be not less than fifteen (15) days and not more than forty five (45) days after the date of Tenant’s delivery of the Temporary Premises Expansion Notice. If Tenant delivers the Temporary Premises Expansion Notice, Landlord shall deliver the Suite 460 Premises on such date specified in the Temporary Premises Expansion Notice and Tenant shall lease the Suite 460 Premises on the same terms and conditions as set forth in Section 2.7.1 effective as of the delivery of the Suite 460 Premises until the expiration of the Temporary Premises Term, provided, however, that there shall be no cessation of the obligation to pay the Temporary OpEx Pass Through Payments at any time.

2.8 Tenant Construction.

 

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(a) Change in Terms. If Tenant elects to manage construction of the Ancillary Tenant Improvements and/or Tenant Improvements pursuant to Section 7.4.3 of the Work Letter, then the following shall apply: (i) all of Tenant’s termination rights as set forth in Section 2.4 above shall lapse and be of no further force and effect, (ii) notwithstanding that either the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date has not occurred (or is not deemed to have occurred), Landlord shall be deemed without further action to have immediately delivered possession of the Premises to Tenant as of the occurrence of such election, (iii) the Phase 1 Tenant Completion Date and the Phase 2 Tenant Completion Date (as defined in Section 2.8(b) below) shall each be determined in accordance with Section 2.8(b) below, (iv) the “Expiration Date” shall mean the last day of the eighty-fourth (84th) month after the Phase 1 Tenant Completion Date (or, if the Phase 1 Tenant Completion Date occurs on a date other than the first day of a calendar month, after the first day of the first full month occurring after the Phase 1 Tenant Completion Date), (v) all references to “Commencement Date” shall mean the Phase 1 Tenant Completion Date, (vi) subject to Sections 2.2.2, 4.1 and 4.5, Tenant shall commence paying Base Rent for the Phase 1 Premises as of the Phase 1 Tenant Completion Date and for the Phase 2 Premises as of the Phase 2 Tenant Completion Date, and (vii) Delay Rent Credits shall remain in effect and shall be determined assuming the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date occurred on the applicable Construction Completion Date (hereinafter defined).

(b) Tenant Completion Date; Delay Days. If Tenant elects to manage construction of the Ancillary Tenant Improvements and/or Tenant Improvements pursuant to Section 7.4.3 of the Work Letter, then within thirty (30) days thereafter, Tenant’s Architect, the General Contractor and Landlord’s construction manager shall reasonably determine the date construction of the Ancillary Tenant Improvements and/or Tenant Improvements with respect to each of the Phase 1 Premises and the Phase 2 Premises, as applicable, would likely be completed by Tenant using commercially reasonable efforts (without payment of overtime or premium time wages) as of the date Tenant elects the remedy set forth in Section 7.4.3 of the Work Letter (as applicable to either the Phase 1 Premises or the Phase 2 Premises, the “Construction Completion Date”). The “Phase 1 Tenant Completion Date” shall mean the earlier to occur of (i) the date which is thirty (30) days after the applicable Construction Completion Date for the Phase 1 Premises and (ii) the date Tenant commences business operations in at least one hundred nineteen thousand (119,000) Adjusted Rentable Square Feet of the Phase 1 Premises (provided, however, that the Phase 1 Tenant Completion Date shall be extended for delays resulting from Force Majeure Events and Landlord Delays). The “Phase 2 Tenant Completion Date” shall mean the earlier to occur of (A) the date which is thirty (30) days after the applicable Construction Completion Date for the Phase 2 Premises and (B) the date Tenant commences business operations in the entire Phase 2 Premises (provided, however, that the Phase 2 Tenant Completion Date shall be extended for delays resulting from Force Majeure Events and Landlord Delays). Any dispute between Landlord and Tenant regarding any Construction Completion Date shall be submitted to binding arbitration in accordance with Article 45 below; provided that, (x) until such arbitration is concluded, the “Construction Completion Date” as reasonably determined by Tenant’s Architect shall be deemed to be the Construction Completion Date for purposes of this Lease and (y) following the completion of such arbitration, the “Construction Completion Date” shall be the date determined by the Arbitrator. Except for any Landlord Delay resulting from Landlord’s failure to take any action prior to any deadline for taking such action, no Landlord Delay shall be deemed to have occurred unless Tenant gives Landlord prior written notice or written notice within five (5) business days of the occurrence, as may be reasonable under the circumstances, specifying the claimed reasons for such Landlord Delay, and Landlord shall fail to correct or cure such Landlord Delay within one (1) business day. There shall be excluded from the number of days of any Landlord Delay any days of delay which are primarily caused by Force Majeure Events. If any Construction Completion Date is actually delayed due to Landlord Delay, then Tenant and Tenant’s Architect shall reasonably determine in consultation with Landlord and Landlord’s construction

 

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manager the date on which the Tenant Improvements would have been completed but for such Landlord Delay and such certified date shall be the Construction Completion Date.

3. Term.

3.1 Term of Lease. The Term of this Lease shall commence as of the Lease Date and shall expire on the Expiration Date, unless sooner terminated or extended pursuant to the provisions of this Lease. After the Commencement Date and Expiration Date have been established, then within ten (10) business days following request by either party, the other party agrees to execute and deliver to the requesting party a Confirmation of Lease Term (“Confirmation”) in the form of Exhibit D attached hereto. This Lease shall be a binding contractual obligation effective upon execution and delivery hereof by Landlord and Tenant.

3.2 Early Access. Subject to the provisions of this Section 3.2, Landlord shall allow Tenant access to the Premises prior to the Commencement Date for purposes of installing Tenant’s furniture, fixtures, equipment, millwork and telephone/data cabling (“Tenant’s Fixturing Work”). Tenant and Tenant’s employees, agents, contractors, subcontractors, suppliers or any other person requiring access to the Premises in connection with the performance of Tenant Fixturing Work (each, “Tenant’s Construction Representative” and collectively, “Tenant’s Construction Representatives”) shall be subject to reasonable approval by Landlord prior to the commencement of their work, and Tenant shall cause Tenant’s Construction Representatives to engage only labor that is harmonious and compatible with other labor working in the Building. Tenant and Tenant’s Construction Representatives shall work cooperatively with Landlord to coordinate the scheduling and performance of Tenant’s Fixturing Work so as not to delay the Phase 1 Substantial Completion Date or the Phase 2 Substantial Completion Date. As a condition to entering the Building, each of Tenant’s Construction Representatives shall provide Landlord with satisfactory evidence of such commercially reasonable insurance as Landlord may reasonably require. Tenant’s Construction Representatives shall comply with Landlord’s current contractor rules and regulations, while in the Premises or elsewhere in the Project. Tenant’s Construction Representatives shall not interfere with or delay the construction of the Tenant Improvements or any other work in the Building. If at any time any of Tenant’s Construction Representatives hinders or delays construction of the Tenant Improvements or any other work in the Building or performs any work that impairs the quality, integrity or performance of the Tenant Improvements or other work in any portion of the Building, upon written notice from Landlord, Tenant shall promptly cause such Tenant’s Construction Representative to leave the Building and remove all of its tools, equipment and materials. Tenant shall reimburse Landlord for the cost of any repairs to the Premises or other portions of the Building or Common Areas to the extent necessitated by the acts or omissions of Tenant’s Construction Representatives. All entries into the Premises by Tenant or Tenant’s Construction Representatives prior to the Commencement Date shall be subject to all of the terms, covenants and conditions of this Lease, including, but not limited to, Tenant’s insurance obligations contained in Article 14 and Tenant’s indemnity obligations contained in Article 16, but excluding the obligation to pay Base Rent. In addition, Tenant shall not be charged for utilities or HVAC services, the use of freight elevators or loading docks, or security services during the periods of time that Tenant has access to the Premises solely for purposes of performing Tenant’s Fixturing Work or in connection with Tenant’s move into the Premises.

3.3 Tenant’s Early Termination Options.

3.3.1 Options; Exercise. Subject to the terms and conditions contained herein, Tenant shall have a one (1) time option to terminate the Lease as to each of the following portions of the Premises on the following dates: (a) the Sixth Floor Premises as of the last day of the sixtieth (60th) full calendar month after the Commencement Date, (b) the Fifth Floor Premises as of the last day of the seventy-second (72nd) full calendar month after the Commencement Date, and (c) the Third Floor

 

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Premises as of the last day of the seventy-second (72nd) full calendar month after the Commencement Date (each such option, a “Early Termination Option,” each such portion of the Premises, a “Termination Space,” and each such date a “Early Termination Date”). Each Termination Option shall be exercisable only by giving Landlord unconditional and irrevocable written notice (“Termination Notice”) thereof no earlier than three hundred sixty (360) days prior to, and no later than two hundred seventy (270) days prior to, the applicable Early Termination Date, time being of the essence. If Tenant elects to so terminate this Lease as to any Termination Space, Tenant shall pay to Landlord, concurrently with Tenant’s delivery to Landlord of any Termination Notice, a termination fee (the “Termination Fee”) equal to the unamortized amount, as of the applicable Early Termination Date, of Landlord’s Lease Expenses (as defined below) (such unamortized amount to be computed by amortizing such amounts over the initial Term, with interest at the rate of six percent (6%) per annum on a straight line basis from the Commencement Date) allocated to the applicable Termination Space. As used herein, “Landlord’s Lease Expenses” means the following: (A) all brokerage commissions paid by Landlord in connection with this Lease, plus (B) the amount of the Tenant Improvement Allowance paid by Landlord pursuant to the Work Letter, plus (C) the cost of the Ancillary Tenant Improvements plus (D) the amount of the Rent Abatement for the Weighted Average Abatement Period minus (E) the sum of the portions of the costs of the Ancillary Tenant Improvements funded by Tenant and the portions of the costs of improvements to restrooms that are funded by Tenant. An example of the calculation of the Termination Fee is set forth on Exhibit S attached hereto. For purposes of calculating the Termination Fee, Landlord’s Lease Expenses shall be allocated to a Termination Space by multiplying the Landlord’s Lease Expense by a fraction, the numerator of which is the Adjusted Rentable Square Feet of such Termination Space and the denominator of which is the Adjusted Rentable Square Feet of the Premises. Landlord shall provide to Tenant the total amount of Landlord’s Lease Expenses (along with reasonable supporting backup documentation) within thirty (30) days following Tenant’s request therefor; and if Landlord has not provided such amount and documentation prior to Tenant’s delivery of a Termination Notice hereunder, then, notwithstanding the foregoing, the Termination Fee shall be payable to Landlord within thirty (30) days following Tenant’s receipt of such amount and documentation. Effective on an Early Termination Date, this Lease shall terminate as though the Term of the Lease had expired as to the applicable Termination Space and all provisions herein applicable to the expiration of the Term of the Lease and the surrender of the Premises shall be applicable to such Termination Space. If Tenant fails to timely exercise the Termination Option, or fails to pay the Termination Fee as required herein, then, at Landlord’s sole option, Tenant’s exercise of the Termination Option shall be null and void and this Lease shall continue in full force and effect as to the entirety of the Premises.

3.3.2 Conditions. The following provisions apply to Tenant’s Termination Option:

(a) Surrender of Termination Space. If Tenant exercises a Termination Option and pays the applicable Termination Fee as provided above, Tenant shall surrender the applicable Termination Space to Landlord as required pursuant to Section 32.13 below on or before the applicable Early Termination Date. If Tenant fails to so vacate and surrender possession of the Termination Space on the Early Termination Date, then the provisions of Article 25 hereof shall apply to Tenant’s continued occupancy.

(b) Amendment. Within thirty (30) days after the date of a Termination Notice, Landlord and Tenant shall enter into modifications to this Lease which are necessary to (i) amend the schedule of Base Rent set forth in the Basic Lease Information to reduce the Base Rent applicable to the Termination Space, (ii) cause the separation and securing of the Termination Space from the remaining Premises and (iii) amend other provisions of the Lease (such as Tenant’s Percentage Share and the Letter of Credit Amount) to account for the reduced Adjusted Rentable Square Footage of the remaining Premises. The Letter of Credit Amount shall be reduced by multiplying the then current Letter

 

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of Credit Amount (as may have been previously increased in accordance with Articles 33, 34 and/or 35) by a fraction, the numerator of which shall be the Adjusted Rentable Square Feet of the applicable Termination Space and the denominator of which shall be the Adjusted Rentable Square Feet of the Premises immediately prior to the applicable Early Termination Date.

(c) No Subtenant Exercise. No subtenant shall have any right to exercise the Early Termination Option on behalf of Tenant.

3.4 Option to Extend.

3.4.1 Option to Extend Term. Landlord hereby grants to Tenant two (2) successive options (each a “Extension Option” and collectively, the “Extension Options” ) to extend the initial Term for additional periods of five (5) years each (each an “Extension Term” and collectively, the “Extension Terms”) commencing on the first day following the Expiration Date on the terms and subject to the conditions set forth in this Section 3.4; provided, however, that (a) Tenant may exercise each Extension Option with respect to all or a portion of the Premises then leased by Tenant hereunder, provided that (i) in the event Tenant exercises an Extension Option as to any of the Concourse Premises, the First Floor Premises or the Second Floor Premises, Tenant must exercise such Extension Option as to all of the Concourse Premises, the First Floor Premises and the Second Floor Premises and (ii) in all events Tenant must exercise an Extension Option with respect to a minimum of 100,000 Adjusted Rentable Square Feet that is contiguous and, if located on more than one floor, on adjacent floors and (b) the second Extension Option may be exercised only if the first Extension Option has been duly exercised.

3.4.2 Exercise. Tenant shall exercise an Extension Option, if at all, by giving Landlord unconditional, irrevocable written notice of such election no earlier than twelve (12) months and no later than nine (9) months prior to the scheduled Expiration Date, the time of such exercise being of the essence. Tenant’s notice shall specify the portions of the Premises which Tenant intends to exercise the Extension Option (the “Renewal Premises”). Subject to the provisions of this Section 3.4, upon the giving of such notice (which must specify the portion of the Premises to which the Extension Option shall apply), this Lease and the Term shall be extended without execution or delivery of any other or further documents, with the same force and effect as if the applicable Extension Term had originally been included in the initial Term.

3.4.3 Conditions. If Tenant exercises an Extension Option pursuant to Section 3.4.2 above, all of the terms, covenants and conditions of this Lease shall continue in full force and effect during the applicable Extension Term, except that: (a) the Base Rent during the applicable Extension Term shall be determined as set forth below; (b) the Base Year during the applicable Extension Term shall be the calendar year during which such Extension Term commences, provided that Tenant shall have no obligation to pay any Escalation Rent whatsoever during the first (1st) twelve (12) months of the applicable Extension Term; (c) Tenant shall continue to possess and occupy the Renewal Premises in their existing condition, “as is”, as of the commencement of the applicable Extension Term, and Landlord shall have no obligation to repair, remodel, improve or alter the Renewal Premises, to perform any other construction or other work of improvement upon the Renewal Premises, or to provide Tenant with any construction or refurbishing allowance whatsoever; (d) Tenant shall have no further rights to extend the Lease Term after the expiration of the second Extension Term; (e) the Parking Charge per the Parking Space shall be determined as provided in Section 3.4.4 below; (f) the term “Premises” as used in this Lease shall refer to the Renewal Premises; (g) the term “Tenant’s Percentage Share” shall mean the ratio of the Adjusted Rentable Square Feet of the Renewal Premises to the Adjusted Rentable Square Feet of the Project.

 

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3.4.4 Fair Market Rent. The Base Rent payable by Tenant for the Renewal Premises during the first Extension Term shall be ninety-five percent (95%) of the Fair Market Rent (as defined below) for the Renewal Premises, valued as of the commencement of the first Extension Term, determined in the manner set forth below. The Base Rent payable by Tenant for the Renewal Premises during the second Extension Term shall be ninety-five percent (95%) of the Fair Market Rent for the Renewal Premises, valued as of the commencement of the second Extension Term, determined in the manner set forth below. The Parking Charge payable by Tenant for the Parking Spaces during the first Extension Term shall be the lesser of Two Hundred Dollars ($200.00) per Parking Space per month and one hundred percent (100%) of the Fair Market Rent for the Parking Spaces, valued as of the commencement of the first Extension Term, determined in the manner set forth below. The Parking Charges payable by Tenant for the Parking Spaces during the second Extension Term shall be the lesser of Two Hundred Fifty Dollars ($250.00) per Parking Space per month and one hundred percent (100%) of the Fair Market Rent for the Parking Spaces, valued as of the commencement of the second Extension Term, determined in the manner set forth below. As used herein, the term “Fair Market Rent” means the annual Base Rent and Parking Charges that a willing tenant would pay, and that a willing landlord would accept, at arm’s length, as of the commencement of the applicable Extension Term, for space comparable to the Renewal Premises in Comparable Buildings and parking comparable to the Parking Spaces in Comparable Buildings, respectively, based upon binding lease transactions for tenants in the Building and Comparable Buildings that, where possible, commence or are to commence within six (6) months prior to or within six (6) months after the commencement of the applicable Extension Term (“Comparison Leases”) excluding the rental value attributable to any Alterations (but not the Tenant Improvements or Ancillary Tenant Improvements) paid for by Tenant. Comparison Leases shall include renewal and new non-renewal tenancies, but shall exclude subleases and leases of space subject to another tenant’s expansion rights. Rent rates payable under Comparison Leases shall be adjusted to account for variations between this Lease and the Comparison Leases with respect to, among other things: (a) the length of the applicable Extension Term compared to the lease term of the Comparison Leases; (b) rental structure, including, without limitation, rental rates per rentable square foot (including type, gross or net, and if gross, adjusting for the base year or expense stop), and escalation provisions, (c) the size of the Renewal Premises compared to the size of the premises of the Comparison Leases; (d) location, floor levels, efficiencies and outlook of the floor(s) of the Renewal Premises compared to the premises of the Comparison Leases; (e) free rent, moving allowances and other cash payments affecting the rental rate; (f) the age and quality of construction of the Building (including compliance with applicable codes on the applicable floors) compared to the Comparable Buildings; (g) leasehold improvements and/or allowances, including the amounts thereof in renewal leases, and taking into account, in the case of renewal leases (including this Lease), the value of existing leasehold improvements to the renewal tenant; (h) access to public transit and the availability of parking; (i) the amenities available to tenants in the Building compared to amenities available to tenants in Comparable Buildings; (j) the energy efficiencies and environmental elements of the Building compared to Comparable Buildings, including current LEED certification; (k) the uses of the Comparison Leases as compared to the use of the Renewal Premises; (l) the type and quality of any base building work in the Comparable Buildings compared to the Building; (m) the type and quality of tenant improvements in the Renewal Premises as compared to Comparable Buildings; and (n) the fact that landlords are or are not paying real estate brokerage commissions in connection with such Comparison Leases. In determining the Market Rate, the most weight shall be given to Comparison Leases in the Building. The Fair Market Rent may include annual or other periodic increases and may be less or may be more than the Base Rent existing as of the exercise of the applicable Extension Option. The Fair Market Rent for (i) the Renewal Premises and (ii) for the Parking Charge per Parking Space (as defined below) shall be determined separately.

3.4.5 Determination of Base Rent and Parking Charges.

 

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(a) Without limiting any provision of Section 3.4.2 above, within thirty (30) days following Tenant’s written request, which may be given no earlier than thirteen (13) months and no later than ten (10) months prior to the scheduled Expiration Date, Landlord shall provide Tenant in writing with a good faith written proposal of the Fair Market Rent for the Renewal Premises and the Parking Spaces for the applicable Extension Term (“Landlord’s Initial Proposal”). Provided that Tenant subsequently give valid notice of exercise of the applicable Extension Option, Landlord agrees that neither Landlord’s Market Rent Proposal given pursuant to Section 3.4.5(b) below or Landlord’s Determination of the Fair Market Rent for the applicable Extension Term pursuant to Section 3.4.6(a) below shall be higher than Landlord’s Initial Proposal.

(b) Not later than six (6) months prior to the commencement of the applicable Extension Term, provided Tenant has given valid notice of exercise of the Extension Option, Landlord shall deliver to Tenant a good faith written proposal of the Fair Market Rent for the Renewal Premises and for the Parking Spaces for the applicable Extension Term (“Landlord’s Market Rate Proposal”), provided that in no event shall Landlord’s Market Rate Proposal be higher than Landlord’s Initial Proposal given pursuant to Section 3.4.5(a) above. Within thirty (30) days after receipt of Landlord’s Market Rate Proposal, Tenant shall notify Landlord in writing that Tenant accepts Landlord’s Market Rate Proposal or disputes Landlord’s Market Rate Proposal. If Tenant does not give Landlord a timely notice in response to Landlord’s proposal, Landlord’s Market Rate Proposal shall be binding upon Tenant.

3.4.6 Arbitration.

(a) If Tenant timely disputes Landlord’s Market Rate Proposal, the parties shall first negotiate in good faith to reach agreement upon the Fair Market Rent for the applicable Extension Term. If Landlord and Tenant are able to agree upon the Fair Market Rent within thirty (30) days after Tenant’s notice to Landlord disputing Landlord’s Market Rate Proposal (“Impasse Date”), then such agreement shall constitute a final determination of Fair Market Rent. If Landlord and Tenant are unable to agree upon the Fair Market Rent prior to the Impasse Date, then within fifteen (15) days after the Impasse Date, the parties shall meet and concurrently deliver to each other their respective written estimates of the Fair Market Rent for the applicable Extension Term, supported by the reasons therefor (each, a “Determination”). Landlord’s Determination may be more or less than Landlord’s Market Rent Proposal (but may be no more than Landlord’s Initial Proposal). If either party fails to deliver its Determination in a timely manner, then the Fair Market Rent shall be the Determination by the other party. If the higher Determination is no more than one hundred five percent (105%) of the lower Determination, then the Fair Market Rent shall be the average of the two. In every other case, the Fair Market Rent shall be determined as set forth below.

(b) Within ten (10) days after the parties exchange their respective Determinations, the parties shall each appoint an arbitrator who shall be a licensed California real estate broker with at least ten (10) years’ experience in leasing commercial office space similar to the Building in the San Francisco market immediately prior to his or her appointment, and be familiar with the rentals then being charged in the Building and in the Comparable Buildings. The parties may appoint the real estate brokers who assisted them in making their Determinations as their respective arbitrators. If either Landlord or Tenant fails to timely appoint an arbitrator, then the Fair Market Rent for the applicable Extension Term shall be the Determination of the other party.

(c) Within twenty (20) days following appointment of the second arbitrator to be appointed, the two arbitrators appointed by the parties shall appoint a third, similarly qualified, independent arbitrator (the “Independent Arbitrator”), and notify Landlord and Tenant of the identity of the Independent Arbitrator. If an Independent Arbitrator has not been so appointed by the end

 

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of such twenty (20) day period, then either party, on behalf of both, may request such appointment by the San Francisco office of the American Arbitration Association (or any successor thereto), or in the absence, failure, refusal or inability of such entity to act, then either party may apply to the presiding judge of the San Francisco Superior Court, for the appointment of such an Independent Arbitrator, and the other party shall not raise any question as to the court’s full power and jurisdiction to make the appointment.

(d) Within five (5) days following notification of the identity of the Independent Arbitrator, Landlord and Tenant shall submit copies of Landlord’s Determination and Tenant’s Determination to the three arbitrators (the “Arbitration Panel”). The Arbitration Panel, by majority vote, shall select either Landlord’s Determination or Tenant’s Determination as the Base Rent for the Extension Term, and shall have no right to propose a middle ground or to modify either of the two Determinations or the provisions of this Lease. The Arbitration Panel shall attempt to render a decision within thirty (30) days after appointment of the Independent Arbitrator. In any case, the Arbitration Panel shall render a decision within forty five (45) days after appointment of the Independent Arbitrator.

(e) The decision of the Arbitration Panel shall be final and binding upon the parties, and may be enforced in accordance with the provisions of California law. In the event of the failure, refusal or inability of any member of the Arbitration Panel to act, a successor shall be appointed in the manner that applied to the selection of the member being replaced. Each party shall pay the fees and expenses of the arbitrator designated by such party, and one half of the fees and expenses of the Independent Arbitrator and the expenses incident to the proceedings (excluding attorneys’ fees and similar expenses of the parties which shall be borne separately by each of the parties).

(f) Each party may submit any written materials to the Arbitration Panel within five (5) business days of selection of the Independent Arbitrator. No witnesses or oral testimony (i.e. no hearing) shall be permitted in connection with the Arbitration Panel’s decision unless agreed to by both parties. No ex parte communications shall be permitted between any member of the Arbitration Panel and either Landlord or Tenant following appointment of the Arbitrator Panel until conclusion of the arbitration process. The members of the Arbitration Panel are authorized to walk both the Renewal Premises and any comparable space (to the extent access is made available).

3.4.7 Rent Payment Pending Resolution. Until the matter is resolved by agreement between the parties or a decision is rendered in any arbitration commenced pursuant to this Section 3.4, Tenant’s monthly payments of Base Rent for the Renewal Premises and the Parking Charge for the Parking Spaces as of the commencement of the Extension Term shall be in an amount equal to one hundred five percent (105%) of the monthly Base Rent and Parking Charge payable by Tenant immediately prior to the scheduled expiration of the Term on a per Adjusted Rentable Square Foot basis. Within thirty (30) business days following determination of the Fair Market Rent by agreement by the parties or the decision of the arbitrators, as applicable, Tenant shall pay to Landlord, or Landlord shall pay to Tenant, the amount of any deficiency or excess, as the case may be, in the Base Rent and Parking Charges previously paid.

3.4.8 General Provisions. The following general provisions shall apply to each Extension Option:

(a) Assignment. Tenant’s right to exercise each Extension Option is personal to, and may be exercised only by, the original named Tenant under this Lease (or a Permitted Assignee). If Tenant shall assign this Lease (other than to a Permitted Assignee), then immediately upon such assignment, Tenant’s right to exercise the Extension Option shall automatically terminate and be of

 

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no further force or effect. No assignee (other than to a Permitted Assignee) or subtenant shall have any right to exercise the Extension Option granted herein.

(b) Amendment to Lease. After the Base Rent payable during the applicable Extension Term is determined, the parties shall promptly execute an amendment to this Lease in a form reasonably acceptable to both parties extending the Term and stating the amount of the Base Rent payable during the applicable Extension Term. The Letter of Credit Amount shall be reduced by multiplying the then current Letter of Credit Amount (as may have been previously increased in accordance with Articles 33, 34 and/or 35) by a fraction, the numerator of which shall equal (i) the Adjusted Rentable Square Feet of the Premises immediately prior to the commencement of the applicable Extension Term minus (ii) the Adjusted Rentable Square Feet of the Renewal Premises and the denominator of which shall be the Adjusted Rentable Square Feet of the Premises immediately prior to the commencement of the applicable Extension Term.

(c) References to Term. Subject to the provisions of this Section 3.4, after exercise of an Extension Option, all references in this Lease to the Term shall be deemed to refer to the Term as extended, unless the context clearly provides to the contrary.

(d) Additional Condition. Notwithstanding anything to the contrary contained herein, Tenant’s exercise of an Extension Option shall, at Landlord’s election, be null and void if an Event of Default exists at the time of exercise of the applicable Extension Option.

(e) Impact of Lease Termination. If Tenant shall fail to properly exercise an Extension Option, the Extension Option shall terminate and be of no further force and effect. If this Lease shall terminate for any reason, then immediately upon such termination, the Extension Options shall automatically terminate and become null and void.

4. Rent.

4.1 Obligation to Pay Base Rent. Tenant agrees to pay to Landlord as “Base Rent” for the Premises, the sums specified in the Basic Lease Information. Base Rent shall be paid to Landlord, in advance, on or before the first day of each and every successive calendar month during the Term after the Phase 1 Rent Commencement Date; provided, however, that upon signing this Lease, Tenant shall pay to Landlord an amount equal to the Base Rent for the first full month of the Term, which amount shall be applied to the Base Rent owing for the first month of the Term after the Rent Abatement Period. If the Phase 1 Rent Commencement Date is other than the first day of a calendar month, the installment of prepaid Base Rent for the first month of the Term for which Base Rent is payable shall be prorated on the basis of a 360-day year consisting of twelve 30-day months, and the balance shall be credited to Base Rent owing for the following month of the Term. If the Expiration Date is other than the last day of a calendar month, or if this Lease shall be terminated as of a day other than the last day of a calendar month, the installment of Base Rent for the last fractional month of the Term shall be prorated on the basis of a 360-day year consisting of twelve 30-day months.

4.2 Manner of Rent Payment. All Rent shall be paid by Tenant without notice, demand, abatement, deduction or offset (except as expressly set forth in the Lease), in lawful money of the United States of America, that at the time of payment shall be legal tender for the payment of all obligations, in immediately available funds or by good check as described below, and if payable to Landlord, at Landlord’s Address for Payments in the Basic Lease Information, or to such other person or at such other place as Landlord may from time to time designate by notice to Tenant.

 

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4.3 Additional Rent. All Rent not characterized as Base Rent, Escalation Rent or Parking Charges shall constitute additional rent, and if payable to Landlord shall, unless otherwise specified in this Lease, be due and payable thirty (30) days after Tenant’s receipt of Landlord’s invoice therefor.

4.4 Late Payment of Rent; Interest. All amounts of Rent, if not paid within five (5) business days after the due date, shall bear interest from the due date until paid at the Interest Rate. In addition, Tenant acknowledges that late payment by Tenant to Landlord of Rent will cause Landlord to incur costs not contemplated by this Lease, the exact amount of such costs being extremely difficult to fix. Such costs include, without limitation, processing and accounting charges, and late charges that may be imposed on Landlord under the terms of its loan documents. Therefore, if any installment of Rent is not received within five (5) business days after the due date, Tenant shall pay to Landlord an additional one-time sum of two percent (2%) of the delinquent Rent as a late charge. A late charge shall not be imposed more than once with respect to any particular payment not paid by Tenant when due. The parties agree that this late charge represents a fair and reasonable estimate of the costs that Landlord will incur by reason of late payment of Rent by Tenant. Acceptance of any late charge shall not constitute a waiver of Tenant’s default with respect to the overdue amount, or prevent Landlord from exercising any of the other rights and remedies available to Landlord. Notwithstanding anything to the contrary set forth herein, Tenant shall not be liable for the late charge set forth in this Section 4.4 with respect to the first delinquency by Tenant in any calendar year, provided that Tenant shall pay any such delinquent amount within five (5) business days after receipt of notice of such delinquency from Landlord.

4.5 Abatement of Base Rent. Notwithstanding the provisions of the Basic Lease Information and Tenant’s obligation to pay monthly Base Rent pursuant to Section 4.1 above, Tenant shall be entitled to an abatement of Base Rent (the “Rent Abatement”) for the following periods after the Commencement Date (each a “Rent Abatement Period”) with respect to the following portions of the Premises: (a) from the Commencement Date to the date which is nine (9) months after the Commencement Date with respect to the Concourse Premises, (b) from the Commencement Date to the date which is fifteen (15) months after the Commencement Date with respect to the Sixth Floor Premises, (c) from the Commencement Date to the date which is twenty one (21) months after the Commencement Date with respect to the Fifth Floor Premises, (d) from the Commencement Date to the date which is twenty five (25) months after the Commencement Date with respect to the Second Floor Corridor Space; (e) from the Commencement Date to the date which is twenty seven (27) months after the Commencement Date with respect to the First Floor Premises and Third Floor Premises (other than the Suite 375 Premises), (f) from the Commencement Date to the date which is twenty nine (29) months after the Commencement Date with respect to the Second Floor Premises (other than the Second Floor Corridor Space), and (g) from the Commencement Date to the date which is twenty nine (29) months after the Commencement Date with respect to the Suite 375 Premises.

5. Calculation and Payments of Escalation Rent. Tenant shall pay to Landlord Escalation Rent in accordance with the following procedures:

5.1 Payment of Estimated Escalation Rent. During December of each calendar year, Landlord shall give Tenant notice of its commercially reasonable estimate of Escalation Rent due for the succeeding calendar year. On or before the first day of each month during the succeeding calendar year, Tenant shall pay to Landlord, as additional rent, one twelfth (1/12) of such estimated amounts. If Landlord fails to deliver such notice to Tenant in December, Tenant shall continue to pay Escalation Rent on the basis of the prior year’s estimate until the first day of the next calendar month after such notice is given, provided that within thirty (30) days after receipt of Landlord’s estimate, Tenant shall pay to Landlord the amount of such estimated adjustment payable to Landlord for prior months during the year in question, less any portion thereof previously paid by Tenant. If it reasonably appears to Landlord that