SUBTENANT OR ASSIGNEE OF TENANT (OTHER THAN ASSIGNEES
UNDER EXEMPT ASSIGNMENT AS PERMITTED BY SECTION 16.3).
8
3.7
Security Deposit.
3.7.1
TENANT SHALL NOT BE REQUIRED TO POST ANY SECURITY DEPOSIT WITH THE
LANDLORD PRIOR TO THE TERM COMMENCEMENT DATE.
IN ADDITION, DURING THE LEASE
TERM TENANT SHALL NOT INITIALLY BE REQUIRED TO POST ANY SECURITY DEPOSIT WITH
THE LANDLORD; PROVIDED, HOWEVER, THAT IN THE EVENT THAT, AT ANY TIME DURING THE
LEASE TERM, TENANT'S BALANCE SHEET REFLECTS A VALUE OF CASH, CASH EQUIVALENTS
AND SHORT TERM INVESTMENTS EQUAL TO LESS THAN ONE HUNDRED MILLION DOLLARS
($100,000,000) (EACH SUCH OCCURRENCE, A "SECURITY DEPOSIT TRIGGER EVENT"), THEN
TENANT SHALL BE REQUIRED TO PROVIDE LANDLORD WITH A SECURITY DEPOSIT (THE
"SECURITY DEPOSIT") IN THE FORM OF AN UNCONDITIONAL, IRREVOCABLE, STANDBY LETTER
OF CREDIT IN THE AMOUNT OF FIVE MILLION DOLLARS ($5,000,000), WHICH LETTER OF
CREDIT SHALL (I) BE IN A FORM REASONABLY ACCEPTABLE TO LANDLORD, (II) BE ISSUED
BY A FINANCIAL INSTITUTION SELECTED BY TENANT AND REASONABLY ACCEPTABLE TO
LANDLORD, (III) BE FOR THE BENEFIT OF LANDLORD, BUT SHALL BE TRANSFERABLE AT
TENANT'S SOLE COST AND EXPENSE BY LANDLORD TO ANY SUBSEQUENT PURCHASER OR
ENCUMBRANCER OF THE PREMISES OR ANY PORTION THEREOF, (IV) BE AUTOMATICALLY
RENEWABLE FROM YEAR TO YEAR THROUGHOUT THE LEASE TERM, (V) BE PAYABLE BY DRAFT
SIGHT IN A LOCATION REASONABLY ACCEPTABLE TO LANDLORD UPON PRESENTATION OF A
CERTIFICATION SIGNED BY AN OFFICER OF LANDLORD WHICH STATES THAT TENANT HAS
FAILED TO PERFORM ANY OF ITS MONETARY OR NON-MONETARY OBLIGATIONS, AND (VI) BE
PAYABLE IN THE EVENT SUCH LETTER OF CREDIT IS NOT RENEWED ON OR BEFORE THE DATE
WHICH IS THIRTY (30) DAYS PRIOR TO ITS EXPIRATION.
SUCH SECURITY DEPOSIT SHALL
REMAIN IN PLACE UNTIL TENANT PROVIDES LANDLORD WITH EVIDENCE SATISFACTORY TO
LANDLORD THAT TENANT'S BALANCE SHEET REFLECTS A VALUE OF CASH, CASH EQUIVALENTS
AND SHORT TERM INVESTMENTS EQUAL TO OR GREATER THAN THREE HUNDRED MILLION
DOLLARS ($300,000,000); PROVIDED, HOWEVER, THAT ANY SUCH RETURN OF THE SECURITY
DEPOSIT SHALL NOT RELIEVE TENANT OF ITS OBLIGATION TO THEREAFTER AGAIN PROVIDE A
SECURITY DEPOSIT FOLLOWING ANY SUBSEQUENT SECURITY DEPOSIT TRIGGERING EVENT(S).
FOR PURPOSES OF CLARITY, IF A SECURITY DEPOSIT TRIGGER EVENT OCCURS PRIOR TO THE
TERM COMMENCEMENT DATE, TENANT WILL PROVIDE THE SECURITY DEPOSIT TO LANDLORD ON
(BUT NOT BEFORE) THE TERM COMMENCEMENT DATE.
3.7.2
IF TENANT FAILS TO PAY RENT WHEN REQUIRED OR FAILS TO PERFORM ANY
OTHER COVENANT CONTAINED HEREIN, LANDLORD MAY DRAW, USE OR RETAIN ALL OR ANY
PART OF THE SECURITY DEPOSIT FOR THE PAYMENT OF ANY SUM NOT SO PAID, OR FOR THE
PAYMENT OF ANY AMOUNT WHICH LANDLORD MAY SPEND OR BECOME OBLIGATED TO SPEND BY
REASON OF TENANT'S DEFAULT.
IF ANY PORTION OF SAID SECURITY DEPOSIT IS SO
APPLIED OR USED, THEN TENANT SHALL, WITHIN FIVE (5) DAYS AFTER WRITTEN NOTICE
THEREOF, DEPOSIT AN ADDITIONAL AMOUNT WITH LANDLORD SUFFICIENT TO RESTORE SAID
SECURITY DEPOSIT TO THE AMOUNT SET FORTH ABOVE, AND TENANT'S FAILURE TO DO SO
SHALL CONSTITUTE A BREACH UNDER THIS