Document:

akao-ex101_551.htm

Exhibit 10.1

ACHAOGEN, INC.
2014 EMPLOYMENT COMMENCEMENT INCENTIVE PLAN

(as amended by the Board on September 13, 2017)

ARTICLE 1.

PURPOSE

The purpose of the Achaogen, Inc. 2014 Employment Commencement Incentive Plan (as it may be amended from time to time, the “Plan”) is to promote the success and enhance the value of Achaogen, Inc. (the “Company”) by linking the individual interests of the members of the Eligible Participants to those of the Company’s stockholders and by providing such individuals with an incentive for outstanding performance to generate superior returns to the Company’s stockholders.  The Plan is further intended to provide flexibility to the Company in its ability to motivate, attract, and retain the services of members of the Board, Employees, and Consultants upon whose judgment, interest, and special effort the successful conduct of the Company’s operation is largely dependent.  Only Eligible Participants may receive awards under the Plan.

ARTICLE 2.

DEFINITIONS AND CONSTRUCTION

Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise.  The singular pronoun shall include the plural where the context so indicates.

2.1“Administrator” shall mean the entity that conducts the general administration of the Plan as provided in Article 12 hereof.  With reference to the duties of the Administrator under the Plan which have been delegated to one or more persons pursuant to Section 12.6 hereof, or as to which the Board has assumed, the term “Administrator” shall refer to such person(s) unless the Committee or the Board has revoked such delegation or the Board has terminated the assumption of such duties.  For the avoidance of doubt, only the Committee or the Board may grant Awards under the Plan.

2.2“Affiliate” shall mean any Parent or Subsidiary.

2.3“Applicable Accounting Standards” shall mean Generally Accepted Accounting Principles in the United States, International Financial Reporting Standards or such other accounting principles or standards as may apply to the Company’s financial statements under United States federal securities laws from time to time.

2.4“Applicable Law” shall mean any applicable law, including without limitation, (i) provisions of the Code, the Securities Act, the Exchange Act and any rules or regulations thereunder; (ii) corporate, securities, tax or other laws, statutes, rules, requirements or regulations, 

 

 

 

US-DOCS\94177721.2

whether federal, state, local or foreign; and (iii) rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded.

2.5“Award” shall mean an Option, a Restricted Stock award, a Restricted Stock Unit award, a Performance Award, a Dividend Equivalents award, a Deferred Stock award, a Deferred Stock Unit award, a Stock Payment award or a Stock Appreciation Right, which may be awarded or granted under the Plan (collectively, “Awards”).

2.6“Award Agreement” shall mean any written notice, agreement, terms and conditions, contract or other instrument or document evidencing an Award, including through electronic medium, which shall contain such terms and conditions with respect to an Award as the Administrator shall determine consistent with the Plan.

2.7“Board” shall mean the Board of Directors of the Company.

2.8“Cause” shall mean, unless such term or an equivalent term is otherwise defined by the applicable Award Agreement or other written agreement between a Participant and the Company applicable to an Award, the occurrence of any of the following events:  (i) an act of dishonesty made by the Participant in connection with his or her responsibilities as a Service Provider, (ii) the Participant’s conviction of, or plea of nolo contendere to, a felony, (iii) the Participant’s gross misconduct, or (iv) the Participant’s continued substantial violations of his or her duties as a Service Provider after such Participant has received a written demand for performance from the Company which specifically sets forth the factual basis for the Company’s belief that such Participant has not substantially performed his or her duties. The determination that a Participant’s Termination of Service is either for Cause or without Cause shall be made by the Company in its sole discretion.  Any determination by the Company that a Participant experienced a Termination of Service by reason of dismissal without Cause for the purposes of outstanding Awards held by such Participant shall have no effect upon any determination of the rights or obligations of the Company or such Participant for any other purpose.

2.9“Change in Control” shall mean the occurrence, in a single transaction or in a series of related transactions, of any one or more of the following events: 

(a)A transaction or series of transactions (other than an offering of Common Stock to the general public through a registration statement filed with the Securities and Exchange Commission) whereby any “person” or related “group” of “persons” (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) (other than the Company, any of its subsidiaries, an employee benefit plan maintained by the Company or any of its subsidiaries or a “person” that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company possessing more than 50% of the total combined voting power of the Company’s securities outstanding immediately after such acquisition; or

(b)During any period of two consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new Director(s) (other than a Director designated by a person who shall have entered into an agreement with the Company to 

effect a transaction described in Section 2.9(a) or 2.9(c)) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors at the beginning of the two-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or

(c)The consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination or (y) a sale or other disposition of all or substantially all of the Company’s assets in any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:

(i)which results in the Company’s voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Company’s assets or otherwise succeeds to the business of the Company (the Company or such person, the “Successor Entity”)) directly or indirectly, at least a majority of the combined voting power of the Successor Entity’s outstanding voting securities immediately after the transaction, and

(ii)after which no person or group beneficially owns voting securities representing 50% or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this Section 2.9(c)(ii) as beneficially owning 50% or more of the combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction;  or

(d)The Company’s stockholders approve a liquidation or dissolution of the Company. 

Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any portion of an Award that provides for the deferral of compensation and is subject to Section 409A of the Code, the transaction or event described in subsection (a), (b), (c) or (d) with respect to such Award (or portion thereof) must also constitute a “change in control event,” as defined in Treasury Regulation Section 1.409A-3(i)(5) to the extent required by Section 409A.

The Committee shall have full and final authority, which shall be exercised in its discretion, to determine conclusively whether a Change in Control of the Company has occurred pursuant to the above definition, and the date of the occurrence of such Change in Control and any incidental matters relating thereto.

2.10“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, together with the regulations and official guidance promulgated thereunder, whether issued prior or subsequent to the grant of any Award.

2.11“Committee” shall mean the Compensation Committee of the Board.

2.12“Common Stock” shall mean the common stock of the Company, par value $0.001 per share.

2.13“Company” shall have the meaning set forth in Article 1 hereof.

2.14“Deferred Stock” shall mean a right to receive Shares awarded under Section 9.4 hereof.

2.15“Deferred Stock Unit” shall mean a right to receive Shares awarded under Section 9.5 hereof.   

2.16“Director” shall mean a member of the Board, as constituted from time to time.

2.17“Dividend Equivalent” shall mean a right to receive the equivalent value (in cash or Shares) of dividends paid on Shares, awarded under Section 9.2 hereof.

2.18“DRO” shall mean a “domestic relations order” as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended from time to time, or the rules thereunder. 

2.19“Effective Date” shall mean the date on which the Board has adopted the Plan.

2.20“Eligible Participant” shall mean any Employee who has not previously been an Employee or Director of the Company or a Subsidiary, or is commencing employment with the Company or a Subsidiary following a bona fide period of non-employment by the Company or a Subsidiary, if he or she is granted an Award in connection with his or her commencement of employment with the Company or a Subsidiary and such grant is an inducement material to his or her entering into employment with the Company or a Subsidiary.  The Board may in its discretion adopt procedures from time to time to ensure that an Employee is eligible to participate in the Plan prior to the granting of any Awards to such Employee under the Plan (including, without limitation, a requirement, that each such Employee certify to the Company prior to the receipt of an Award under the Plan that he or she has not been previously employed by the Company or a Subsidiary, or if previously employed, has had a bona fide period of non-employment, and that the grant of Awards under the Plan is an inducement material to his or her agreement to enter into employment with the Company or a Subsidiary).

2.21“Employee” shall mean any officer or other employee (as determined in accordance with Section 3401(c) of the Code and the Treasury Regulations thereunder) of the Company or any Affiliate.

2.22“Equity Restructuring” shall mean a nonreciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off, rights offering or recapitalization through a large, nonrecurring cash dividend, that affects the number or kind of Shares (or other securities of the Company) or the share price of Common Stock (or other securities) and causes a change in the per share value of the Common Stock underlying outstanding stock-based Awards.

2.23“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

2.24“Fair Market Value” shall mean, as of any given date, the value of a Share determined as follows:

(a)If the Common Stock is (i) listed on any established securities exchange (such as the New York Stock Exchange, the NASDAQ Global Market and the NASDAQ Global Select Market), (ii) listed on any national market system or (iii) listed, quoted or traded on any automated quotation system, its Fair Market Value shall be the closing sales price for a Share as quoted on such exchange or system for such date or, if there is no closing sales price for a Share on the date in question, the closing sales price for a Share on the last preceding date for which such quotation exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(b)If the Common Stock is not listed on an established securities exchange, national market system or automated quotation system, but the Common Stock is regularly quoted by a recognized securities dealer, its Fair Market Value shall be the mean of the high bid and low asked prices for such date or, if there are no high bid and low asked prices for a Share on such date, the high bid and low asked prices for a Share on the last preceding date for which such information exists, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

(c)If the Common Stock is neither listed on an established securities exchange, national market system or automated quotation system nor regularly quoted by a recognized securities dealer, its Fair Market Value shall be established by the Administrator in good faith.

2.25“Good Reason” shall mean, unless such term or an equivalent term is otherwise defined by the applicable Award Agreement or other written agreement between a Participant and the Company applicable to an Award, with respect to any particular Participant, the Participant’s resignation from all positions he or she then-holds with the Company if (A) without Participant’s written consent (I) there is a material reduction of the Participant’s base salary; provided, however, that a material reduction in the Participant’s base salary pursuant to a salary reduction program affecting all or substantially all of the employees of the Company and that does not adversely affect Participant to a greater extent than other similarly situated employees shall not constitute Good Reason; or (II) the Participant is required to relocate his or her primary work location to a facility or location that would increase the Participant’s one way commute distance by more than fifty (50) miles from the Participant’s primary work location as of immediately prior to such change, (B) the Participant provides written notice outlining such conditions, acts or omissions to the Company’s General Counsel within thirty (30) days immediately following such material change or reduction, (C) such material change or reduction is not remedied by the Company within thirty (30) days following the Company’s receipt of such written notice and (D) the Participant’s resignation is effective not later than thirty (30) days after the expiration of such thirty (30) day cure period.

2.26“Holder” shall mean an Eligible Participant who has been granted an Award.

2.27“Incentive Stock Option” shall mean an Option that is intended to qualify as an incentive stock option and conforms to the applicable provisions of Section 422 of the Code.  Incentive Stock Options may not be granted under the Plan.

2.28 “Non-Employee Director” shall mean a Director of the Company who is not an Employee of the Company and who qualifies as “independent” within the meaning of Nasdaq Stock Market Rule 5605(a)(2), or any successor rule, if the Company’s securities are traded on the Nasdaq Stock Market, or the requirements of any other established stock exchange on which the Company’s securities are traded, as such rules or requirements may be amended from time to time.

2.29“Non-Qualified Stock Option” shall mean an Option that is not an Incentive Stock Option.

2.30“Option” shall mean a right to purchase Shares at a specified exercise price, granted under Article 5 hereof.  Any Option granted under this Plan shall be a Non-Qualified Stock Option.

2.31“Option Term” shall have the meaning set forth in Section 5.4 hereof.

2.32“Parent” shall mean any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities ending with the Company if each of the entities other than the Company beneficially owns, at the time of the determination, securities or interests representing more than fifty percent (50%) of the total combined voting power of all classes of securities or interests in one of the other entities in such chain.

2.33“Performance Award” shall mean a cash bonus award, stock bonus award, performance award or incentive award that is paid in cash, Shares or a combination of both, awarded under Section 9.1 hereof.

2.34“Performance Stock Unit” shall mean a Performance Award awarded under Section 9.1 hereof which is denominated in units of value including dollar value of shares of Common Stock.

2.35“Permitted Transferee” shall mean, with respect to a Holder, any “family member” of the Holder, as defined under the General Instructions to Form S-8 Registration Statement under the Securities Act or any successor Form thereto, or any other transferee specifically approved by the Administrator, after taking into account Applicable Law.

2.36“Plan” shall have the meaning set forth in Article 1 hereof.

2.37“Program” shall mean any program adopted by the Administrator pursuant to the Plan containing the terms and conditions intended to govern a specified type of Award granted under the Plan and pursuant to which such type of Award may be granted under the Plan.

2.38“Restricted Stock” shall mean an award of Shares made under Article 7 hereof that is subject to certain restrictions and may be subject to risk of forfeiture or repurchase.

2.39“Restricted Stock Unit” shall mean a contractual right awarded under Article 8 hereof to receive in the future a Share or the Fair Market Value of a Share in cash.

2.40“Securities Act” shall mean the Securities Act of 1933, as amended.

2.41“Shares” shall mean shares of Common Stock.

2.42“Stock Appreciation Right” shall mean a stock appreciation right granted under Article 10 hereof.

2.43“Stock Appreciation Right Term” shall have the meaning set forth in Section 10.4 hereof.

2.44“Stock Payment” shall mean (a) a payment in the form of Shares, or (b) an option or other right to purchase Shares, as part of a bonus, deferred compensation or other arrangement, awarded under Section 9.3 hereof.

2.45“Subsidiary” shall mean any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities beginning with the Company if each of the entities other than the last entity in the unbroken chain beneficially owns, at the time of the determination, securities or interests representing more than fifty percent (50%) of the total combined voting power of all classes of securities or interests in one of the other entities in such chain.

2.46“Substitute Award” shall mean an Award granted under the Plan upon the assumption of, or in substitution for, outstanding equity awards previously granted by a company or other entity in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock; provided, however, that in no event shall the term “Substitute Award” be construed to refer to an award made in connection with the cancellation and repricing of an Option or Stock Appreciation Right.

2.47“Termination of Service” shall mean the time when the employee-employer relationship between a Holder and the Company or any Affiliate is terminated for any reason, including, without limitation, a termination by resignation, discharge, death, disability or retirement; but excluding terminations where the Holder simultaneously commences or remains in employment or service with the Company or any Affiliate.  

The Administrator, in its sole discretion, shall determine the effect of all matters and questions relating to Terminations of Service, including, without limitation, the question of whether a Termination of Service resulted from a discharge for cause and all questions of whether particular leaves of absence constitute a Termination of Service.  For purposes of the Plan, a Holder’s employee-employer relationship or consultancy relations shall be deemed to be terminated in the event that the Affiliate employing or contracting with such Holder ceases to remain an Affiliate following any merger, sale of stock or other corporate transaction or event (including, without limitation, a spin-off).

ARTICLE 3.

SHARES SUBJECT TO THE PLAN

3.1Number of Shares.

(a)Subject to Sections 13.1, 13.2 and 3.1(b) hereof, the aggregate number of Shares which may be issued or transferred pursuant to Awards under the Plan shall be 2,050,000 Shares.  Notwithstanding the foregoing, to the extent permitted under Applicable Law, Awards that provide for the delivery of Shares subsequent to the applicable grant date may be granted in excess of the Share Limit if such Awards provide for the forfeiture or cash settlement of such Awards to the extent that insufficient Shares remain under the share limit in this Section 3.1 at the time that Shares would otherwise be issued in respect of such Award.  

(b)If any Shares subject to an Award are forfeited or expire or such Award is settled for cash (in whole or in part), the Shares subject to such Award shall, to the extent of such forfeiture, expiration or cash settlement, again be available for future grants of Awards under the Plan.  Notwithstanding anything to the contrary contained herein, the following Shares shall not be added to the Shares authorized for grant under Section 3.1(a) hereof and will not be available for future grants of Awards:  (i) Shares tendered by a Holder or withheld by the Company in payment of the exercise price of an Option; (ii) Shares tendered by the Holder or withheld by the Company to satisfy any tax withholding obligation with respect to an Award; (iii) Shares subject to a Stock Appreciation Right that are not issued in connection with the stock settlement of the Stock Appreciation Right on exercise thereof; and (iv) Shares purchased on the open market with the cash proceeds from the exercise of Options.  Any Shares repurchased by the Company under Section 7.4 hereof at the same price paid by the Holder or a lower price so that such Shares are returned to the Company will again be available for Awards.  The payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not be counted against the shares available for issuance under the Plan. 

(c)Substitute Awards shall not reduce the Shares authorized for grant under the Plan.  Additionally, in the event that a company acquired by the Company or any Affiliate or with which the Company or any Affiliate combines has shares available under a pre-existing plan approved by its stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not reduce the Shares authorized for grant under the Plan; provided that Awards using such available shares shall not be made after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not employed by or providing services to the Company or its Affiliates immediately prior to such acquisition or combination.

3.2Stock Distributed.  Any Shares distributed pursuant to an Award may consist, in whole or in part, of authorized and unissued Common Stock, treasury Common Stock or Common Stock purchased on the open market.

ARTICLE 4.

GRANTING OF AWARDs

4.1Participation.  The Committee and the Board may, from time to time, select from among all Eligible Participants, those to whom an Award shall be granted and shall determine the nature and amount of each Award, which shall not be inconsistent with the requirements of the Plan.  No Eligible Individual shall have any right to be granted an Award pursuant to the Plan.

4.2Award Agreement.  Each Award shall be evidenced by an Award Agreement that sets forth the terms, conditions and limitations for such Award, which may include the term of the Award, the provisions applicable in the event of the Holder’s Termination of Service, and the Company’s authority to unilaterally or bilaterally amend, modify, suspend, cancel or rescind an Award.

4.3Limitations Applicable to Section 16 Persons.  Notwithstanding any other provision of the Plan, the Plan, and any Award granted or awarded to any individual who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including Rule 16b‐3 of the Exchange Act and any amendments thereto) that are requirements for the application of such exemptive rule.  To the extent permitted by Applicable Law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.

4.4At-Will Employment; Voluntary Participation.  Nothing in the Plan or in any Program or Award Agreement hereunder shall confer upon any Holder any right to continue in the employ of the Company or any Affiliate, or shall interfere with or restrict in any way the rights of the Company and any Affiliate, which rights are hereby expressly reserved, to discharge any Holder at any time for any reason whatsoever, with or without cause, and with or without notice, or to terminate or change all other terms and conditions of employment, except to the extent expressly provided otherwise in a written agreement between the Holder and the Company or any Affiliate.  Participation by each Holder in the Plan shall be voluntary and nothing in the Plan shall be construed as mandating that any Eligible Individual shall participate in the Plan.  

4.5Foreign Holders.  Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in countries other than the United States in which the Company and its Affiliates operate or have Employees, or in order to comply with the requirements of any foreign securities exchange, the Administrator, in its sole discretion, shall have the power and authority to: (a) determine which Affiliates shall be covered by the Plan; (b) determine which Eligible Participants outside the United States are eligible to participate in the Plan; (c) modify the terms and conditions of any Award granted to Eligible Participants outside the United States to comply with applicable foreign laws or listing requirements of any such foreign securities exchange; (d) establish subplans and modify exercise procedures and other terms and procedures, to the extent such actions may be necessary or advisable (any such subplans and/or modifications shall be attached to the Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Section 3.1 hereof; and (e) take any action, before 

or after an Award is made, that it deems advisable to obtain approval or comply with any necessary local governmental regulatory exemptions or approvals or listing requirements of any such foreign securities exchange.  Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate the Code, the Exchange Act, the Securities Act, any other securities law or governing statute, the rules of the securities exchange or automated quotation system on which the Shares are listed, quoted or traded or any other Applicable Law.  For purposes of the Plan, all references to foreign laws, rules, regulations or taxes shall be references to the laws, rules, regulations and taxes of any applicable jurisdiction other than the United States or a political subdivision thereof.  

4.6Stand-Alone and Tandem Awards  Awards granted pursuant to the Plan may, in the sole discretion of the Administrator, be granted either alone, in addition to, or in tandem with, any other Award granted pursuant to the Plan.  Awards granted in addition to or in tandem with other Awards may be granted either at the same time as or at a different time from the grant of such other Awards.

ARTICLE 5.

granting OF OPTIONS

5.1Granting of Options to Eligible Participants.  Each of the Committee and the Board is authorized to grant Options to Eligible Participants from time to time, in its sole discretion, on such terms and conditions as it may determine which shall not be inconsistent with the Plan.

5.2Option Exercise Price.  Except as provided in Article 13 hereof, the exercise price per Share subject to each Option shall be set by the Committee or the Board, but shall not be less than one hundred percent (100%) of the Fair Market Value of a Share on the date the Option is granted.

5.3Option Term.  The term of each Option (the “Option Term”) shall be set by the Administrator in its sole discretion; provided, however, that the Option Term shall not be more than ten (10) years from the date the Option is granted.  The Administrator shall determine the time period, including the time period following a Termination of Service, during which the Holder has the right to exercise the vested Options, which time period may not extend beyond the last day of the Option Term.  The Administrator may extend the Option Term of any outstanding Option, may extend the time period during which vested Options may be exercised following any Termination of Service of the Holder, and may amend any other term or condition of such Option relating to such a Termination of Service.

5.4Option Vesting.

(a)The period during which the right to exercise, in whole or in part, an Option vests in the Holder shall be set by the Administrator and the Administrator may determine that an Option may not be exercised in whole or in part for a specified period after it is granted.  Such vesting may be based on service with the Company or any Affiliate, any of performance criteria, or any other criteria selected by the Administrator.  At any time after the grant of an Option, the 

Administrator may, in its sole discretion and subject to whatever terms and conditions it selects, accelerate the vesting of the Option, including following a Termination of Service; provided, that in no event shall an Option become exercisable following its expiration, termination or forfeiture.

(b)No portion of an Option which is unexercisable at a Holder’s Termination of Service shall thereafter become exercisable, except as may be otherwise provided by the Administrator either in the Program, the Award Agreement or by action of the Administrator following the grant of the Option.

5.5Substitute Awards.  Notwithstanding the foregoing provisions of this Article 5 to the contrary, in the case of an Option that is a Substitute Award, the price per share of the shares subject to such Option may be less than the Fair Market Value per share on the date of grant; provided that the excess of:  (a) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the shares subject to the Substitute Award, over (b) the aggregate exercise price thereof does not exceed the excess of:  (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the Administrator) of the shares of the predecessor entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate exercise price of such shares.

5.6Substitution of Stock Appreciation Rights.  The Administrator may provide in the applicable Program or the Award Agreement evidencing the grant of an Option that the Administrator, in its sole discretion, shall have the right to substitute a Stock Appreciation Right for such Option at any time prior to or upon exercise of such Option; provided that such Stock Appreciation Right shall be exercisable with respect to the same number of Shares for which such substituted Option would have been exercisable, and shall also have the same exercise price, vesting schedule and remaining Option Term as the substituted Option.

ARTICLE 6.

EXERCISE OF OPTIONS

6.1Partial Exercise.  An exercisable Option may be exercised in whole or in part.  However, an Option shall not be exercisable with respect to fractional shares and the Administrator may require that, by the terms of the Option, a partial exercise must be with respect to a minimum number of Shares.

6.2Manner of Exercise.  All or a portion of an exercisable Option shall be deemed exercised upon delivery of all of the following to the Secretary of the Company, or such other person or entity designated by the Administrator, or his, her or its office, as applicable:

(a)A written or electronic notice complying with the applicable rules established by the Administrator stating that the Option, or a portion thereof, is exercised.  The notice shall be signed by the Holder or other person then entitled to exercise the Option or such portion of the Option;

(b)Such representations and documents as the Administrator, in its sole discretion, deems necessary or advisable to effect compliance with all Applicable Law.  The 

Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing stop-transfer notices to agents and registrars;

(c)In the event that the Option shall be exercised pursuant to Section 11.3 hereof by any person or persons other than the Holder, appropriate proof of the right of such person or persons to exercise the Option, as determined in the sole discretion of the Administrator; and

(d)Full payment of the exercise price and applicable withholding taxes to the stock administrator of the Company for the shares with respect to which the Option, or portion thereof, is exercised, in a manner permitted by Section 11.1 and 11.2 hereof.

ARTICLE 7.

AWARD OF RESTRICTED STOCK

7.1Award of Restricted Stock.

(a)Each of the Committee and the Board is authorized to grant Restricted Stock to Eligible Participants, and shall determine the terms and conditions, including the restrictions applicable to each award of Restricted Stock, which terms and conditions shall not be inconsistent with the Plan, and may impose such conditions on the issuance of such Restricted Stock as it deems appropriate.

(b)The Administrator shall establish the purchase price, if any, and form of payment for Restricted Stock; provided, however, that if a purchase price is charged, such purchase price shall be no less than the par value, if any, of the Shares to be purchased, unless otherwise permitted by Applicable Law.  In all cases, legal consideration shall be required for each issuance of Restricted Stock to the extent required by Applicable Law.

7.2Rights as Stockholders.  Subject to Section 7.4 hereof, upon issuance of Restricted Stock, the Holder shall have, unless otherwise provided by the Administrator, all the rights of a stockholder with respect to said shares, subject to the restrictions in the applicable Program or in each individual Award Agreement, including the right to receive all dividends and other distributions paid or made with respect to the shares; provided, however, that, in the sole discretion of the Administrator, any extraordinary distributions with respect to the Shares shall be subject to the restrictions set forth in Section 7.3 hereof.  

7.3Restrictions.  All shares of Restricted Stock (including any shares received by Holders thereof with respect to shares of Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization) shall, in the terms of the applicable Program or in each individual Award Agreement, be subject to such restrictions and vesting requirements as the Administrator shall provide.  Such restrictions may include, without limitation, restrictions concerning voting rights and transferability and such restrictions may lapse separately or in combination at such times and pursuant to such circumstances or based on such criteria as selected by the Administrator, including, without limitation, criteria based on the Holder’s duration of employment with the Company, Company or Affiliate performance, individual performance or other criteria selected by the Administrator.  By action taken after the Restricted Stock is issued, 

the Administrator may, on such terms and conditions as it may determine to be appropriate, accelerate the vesting of such Restricted Stock by removing any or all of the restrictions imposed by the terms of the Program and/or the Award Agreement.  Restricted Stock may not be sold or encumbered until all restrictions are terminated or expire. 

7.4Repurchase or Forfeiture of Restricted Stock.  Except as otherwise determined by the Administrator at the time of the grant of the Award or thereafter, if no price was paid by the Holder for the Restricted Stock, upon a Termination of Service during the applicable restriction period, the Holder’s rights in unvested Restricted Stock then subject to restrictions shall lapse, and such Restricted Stock shall be surrendered to the Company and cancelled without consideration.  If a price was paid by the Holder for the Restricted Stock, upon a Termination of Service during the applicable restriction period, the Company shall have the right to repurchase from the Holder the unvested Restricted Stock then subject to restrictions at a cash price per share equal to the price paid by the Holder for such Restricted Stock or such other amount as may be specified in the Program or the Award Agreement.  Notwithstanding the foregoing, the Administrator in its sole discretion may provide that in the event of certain events, including a Change in Control, the Holder’s death, retirement or disability or any other specified Termination of Service or any other event, the Holder’s rights in unvested Restricted Stock shall not lapse, such Restricted Stock shall vest and, if applicable, the Company shall not have a right of repurchase.

7.5Certificates for Restricted Stock.  Restricted Stock granted pursuant to the Plan may be evidenced in such manner as the Administrator shall determine.  Certificates or book entries evidencing shares of Restricted Stock must include an appropriate legend referring to the terms, conditions, and restrictions applicable to such Restricted Stock.  The Company may, in its sole discretion, (a) retain physical possession of any stock certificate evidencing shares of Restricted Stock until the restrictions thereon shall have lapsed and/or (b) require that the stock certificates evidencing shares of Restricted Stock be held in custody by a designated escrow agent (which may but need not be the Company) until the restrictions thereon shall have lapsed, and that the Holder deliver a stock power, endorsed in blank, relating to such Restricted Stock.

7.6Section 83(b) Election.  If a Holder makes an election under Section 83(b) of the Code to be taxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the Holder would otherwise be taxable under Section 83(a) of the Code, the Holder shall be required to deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service.

ARTICLE 8.
Award of restricted stock units

8.1Grant of Restricted Stock Units.  Each of the Committee and the Board is authorized to grant Awards of Restricted Stock Units to any Eligible Participant selected by the Administrator in such amounts and subject to such terms and conditions as determined by the Administrator.  

8.2Term.  Except as otherwise provided herein, the term of a Restricted Stock Unit award shall be set by the Administrator in its sole discretion.

8.3Purchase Price.  The Administrator shall specify the purchase price, if any, to be paid by the Holder to the Company with respect to any Restricted Stock Unit award; provided, however, that value of the consideration shall not be less than the par value of a Share, unless otherwise permitted by Applicable Law.

8.4Vesting of Restricted Stock Units.  At the time of grant, the Administrator shall specify the date or dates on which the Restricted Stock Units shall become fully vested and nonforfeitable, and may specify such conditions to vesting as it deems appropriate, including, without limitation, vesting based upon the Holder’s duration of service to the Company or any Affiliate, Company performance, individual performance or other specific criteria, in each case on a specified date or dates or over any period or periods, as determined by the Administrator.  

8.5Maturity and Payment.  At the time of grant, the Administrator shall specify the maturity date applicable to each grant of Restricted Stock Units which shall be no earlier than the vesting date or dates of the Award and may be determined at the election of the Holder (if permitted by the applicable Award Agreement); provided that, except as otherwise determined by the Administrator, set forth in any applicable Award Agreement, and subject to compliance with Section 409A of the Code, in no event shall the maturity date relating to each Restricted Stock Unit occur following the later of (a) the fifteenth (15th) day of the third (3rd) month following the end of calendar year in which the Restricted Stock Unit vests; or (b) the fifteenth (15th) day of the third (3rd) month following the end of the Company’s fiscal year in which the Restricted Stock Unit vests.  On the maturity date, the Company shall, subject to Section 11.4(e) hereof, transfer to the Holder one unrestricted, fully transferable Share for each Restricted Stock Unit scheduled to be paid out on such date and not previously forfeited, or, in the sole discretion of the Administrator, an amount in cash equal to the Fair Market Value of such shares on the maturity date or a combination of cash and Common Stock as determined by the Administrator.  

8.6Payment upon Termination of Service.  An Award of Restricted Stock Units shall only be payable while the Holder is an Employee; provided, however, that the Administrator, in its sole and absolute discretion may provide (in an Award Agreement or otherwise) that a Restricted Stock Unit award may be paid subsequent to a Termination of Service in certain events, including a Change in Control, the Holder’s death, retirement or disability or any other specified Termination of Service.

8.7No Rights as a Stockholder.  Unless otherwise determined by the Administrator,  a Holder who is awarded Restricted Stock Units shall possess no incidents of ownership with respect to the Shares represented by such Restricted Stock Units, unless and until the same are transferred to the Holder pursuant to the terms of this Plan and the Award Agreement.  

8.8Dividend Equivalents.  Subject to Section 9.2 hereof, the Administrator may, in its sole discretion, provide that Dividend Equivalents shall be earned by a Holder of Restricted Stock Units based on dividends declared on the Common Stock, to be credited as of dividend payment dates during the period between the date an Award of Restricted Stock Units is granted to a Holder and the maturity date of such Award.  

ARTICLE 9.

award of PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, STOCK PAYMENTS, DEFERRED STOCK, DEFERRED STOCK UNITS

9.1Performance Awards.

(a)Each of the Board and the Committee is authorized to grant Performance Awards, including Awards of Performance Stock Units, to any Eligible Participant.  The value of Performance Awards, including Performance Stock Units, may be linked to any one or more performance criteria or other specific criteria determined by the Administrator, in each case on a specified date or dates or over any period or periods determined by the Administrator.  Performance Awards, including Performance Stock Unit awards may be paid in cash, Shares, or a combination of cash and Shares, as determined by the Administrator.

(b)Without limiting Section 9.1(a) hereof, each of the Board and the Committee may grant Performance Awards to any Eligible Participant in the form of a cash bonus payable upon the attainment of objective performance criteria or such other criteria, whether or not objective, which are established by the Administrator, in each case on a specified date or dates or over any period or periods determined by the Administrator.  

9.2Dividend Equivalents.

(a)Dividend Equivalents may be granted by each of the Board and the Committee based on dividends declared on the Common Stock, to be credited as of dividend payment dates during the period between the date an Award is granted to a Holder and the date such Award vests, is exercised, is distributed or expires, as determined by the Administrator.  Such Dividend Equivalents shall be converted to cash or additional shares of Common Stock by such formula and at such time and subject to such limitations as may be determined by the Administrator.  

(b)Notwithstanding the foregoing, no Dividend Equivalents shall be payable with respect to Options or Stock Appreciation Rights.

9.3Stock Payments.  Each of the Board and the Committee is authorized to make Stock Payments to any Eligible Participant.  The number or value of Shares of any Stock Payment shall be determined by the Administrator and may be based upon performance criteria or any other specific criteria, including service to the Company or any Affiliate, determined by the Administrator.  Shares underlying a Stock Payment which is subject to a vesting schedule or other conditions or criteria set by the Administrator will not be issued until those conditions have been satisfied.  Unless otherwise provided by the Administrator, a Holder of a Stock Payment shall have no rights as a Company stockholder with respect to such Stock Payment until such time as the Stock Payment has vested and the Shares underlying the Award have been issued to the Holder.  Stock Payments may, but are not required to, be made in lieu of base salary, bonus, fees or other cash compensation otherwise payable to such Eligible Individual.

9.4Deferred Stock.  Each of the Board and the Committee is authorized to grant Deferred Stock to any Eligible Participant.  The number of shares of Deferred Stock shall be 

determined by the Administrator and may (but is not required to) be based on performance criteria or other specific criteria, including service to the Company or any Affiliate, as the Administrator determines, in each case on a specified date or dates or over any period or periods determined by the Administrator.  Shares underlying a Deferred Stock award which is subject to a vesting schedule or other conditions or criteria set by the Administrator will be issued on the vesting date(s) or date(s) that those conditions and criteria have been satisfied, as applicable.  Unless otherwise provided by the Administrator, a Holder of Deferred Stock shall have no rights as a Company stockholder with respect to such Deferred Stock until such time as the Award has vested and any other applicable conditions and/or criteria have been satisfied and the Shares underlying the Award have been issued to the Holder.

9.5Deferred Stock Units.  Each of the Board and the Committee is authorized to grant Deferred Stock Units to any Eligible Participant.  The number of Deferred Stock Units shall be determined by the Administrator and may (but is not required to) be based on performance criteria or other specific criteria, including service to the Company or any Affiliate, as the Administrator determines, in each case on a specified date or dates or over any period or periods determined by the Administrator.  Each Deferred Stock Unit shall entitle the Holder thereof to receive one share of Common Stock on the date the Deferred Stock Unit becomes vested or upon a specified settlement date thereafter (which settlement date may (but is not required to) be the date of the Holder’s Termination of Service).  Shares underlying a Deferred Stock Unit award which is subject to a vesting schedule or other conditions or criteria set by the Administrator will not be issued until on or following the date that those conditions and criteria have been satisfied.  Unless otherwise provided by the Administrator, a Holder of Deferred Stock Units shall have no rights as a Company stockholder with respect to such Deferred Stock Units until such time as the Award has vested and any other applicable conditions and/or criteria have been satisfied and the Shares underlying the Award have been issued to the Holder.

9.6Term.  The term of a Performance Award, Dividend Equivalent award, Stock Payment award, Deferred Stock award and/or Deferred Stock Unit award shall be set by the Administrator in its sole discretion.

9.7Purchase Price.  The Administrator may establish the purchase price of a Performance Award, shares distributed as a Stock Payment award, shares of Deferred Stock or shares distributed pursuant to a Deferred Stock Unit award; provided, however, that value of the consideration shall not be less than the par value of a Share, unless otherwise permitted by Applicable Law.

9.8Termination of Service.  A Performance Award, Stock Payment award, Dividend Equivalent award, Deferred Stock award and/or Deferred Stock Unit award is distributable only while the Holder is an Employee.  The Administrator, however, in its sole discretion may provide that the Performance Award, Dividend Equivalent award, Stock Payment award, Deferred Stock award and/or Deferred Stock Unit award may be distributed subsequent to a Termination of Service in certain events, including a Change in Control, the Holder’s death, retirement or disability or any other specified Termination of Service.

ARTICLE 10.

award of STOCK APPRECIATION RIGHTS

10.1Grant of Stock Appreciation Rights.

(a)Each of the Board and the Committee is authorized to grant Stock Appreciation Rights to Eligible Participants from time to time, in its sole discretion, on such terms and conditions as it may determine consistent with the Plan.

(b)A Stock Appreciation Right shall entitle the Holder (or other person entitled to exercise the Stock Appreciation Right pursuant to the Plan) to exercise all or a specified portion of the Stock Appreciation Right (to the extent then exercisable pursuant to its terms) and to receive from the Company an amount determined by multiplying the difference obtained by subtracting the exercise price per Share of the Stock Appreciation Right from the Fair Market Value on the date of exercise of the Stock Appreciation Right by the number of Shares with respect to which the Stock Appreciation Right shall have been exercised, subject to any limitations the Administrator may impose.  Except as described in (c) below or in Section 13.2 hereof, the exercise price per Share subject to each Stock Appreciation Right shall be set by the Administrator, but shall not be less than one hundred percent (100%) of the Fair Market Value on the date the Stock Appreciation Right is granted.

(c)Notwithstanding the foregoing provisions of Section 10.1(b) hereof to the contrary, in the case of an Stock Appreciation Right that is a Substitute Award, the price per Share of the Shares subject to such Stock Appreciation Right may be less than one hundred percent (100%) of the Fair Market Value per share on the date of grant; provided that the excess of:  (i) the aggregate Fair Market Value (as of the date such Substitute Award is granted) of the shares subject to the Substitute Award, over (ii) the aggregate exercise price thereof does not exceed the excess of:  (x) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Award, such fair market value to be determined by the Administrator) of the shares of the predecessor entity that were subject to the grant assumed or substituted for by the Company, over (y) the aggregate exercise price of such shares.

10.2Stock Appreciation Right Vesting.

(a)The period during which the right to exercise, in whole or in part, a Stock Appreciation Right vests in the Holder shall be set by the Administrator and the Administrator may determine that a Stock Appreciation Right may not be exercised in whole or in part for a specified period after it is granted.  Such vesting may be based on service with the Company or any Affiliate, any performance criteria or any other criteria selected by the Administrator.  At any time after grant of a Stock Appreciation Right, the Administrator may, in its sole discretion and subject to whatever terms and conditions it selects, accelerate the period during which a Stock Appreciation Right vests.

(b)No portion of a Stock Appreciation Right which is unexercisable at Termination of Service shall thereafter become exercisable, except as may be otherwise provided by the Administrator either in the applicable Program or Award Agreement or by action of the Administrator following the grant of the Stock Appreciation Right, including following a 

Termination of Service; provided, that in no event shall a Stock Appreciation Right become exercisable following its expiration, termination or forfeiture.

10.3Manner of Exercise.  All or a portion of an exercisable Stock Appreciation Right shall be deemed exercised upon delivery of all of the following to the stock administrator of the Company, or such other person or entity designated by the Administrator, or his, her or its office, as applicable:

(a)A written or electronic notice complying with the applicable rules established by the Administrator stating that the Stock Appreciation Right, or a portion thereof, is exercised.  The notice shall be signed by the Holder or other person then entitled to exercise the Stock Appreciation Right or such portion of the Stock Appreciation Right;

(b)Such representations and documents as the Administrator, in its sole discretion, deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act and any other federal, state or foreign securities laws or regulations.  The Administrator may, in its sole discretion, also take whatever additional actions it deems appropriate to effect such compliance; and

(c)In the event that the Stock Appreciation Right shall be exercised pursuant to this Section 10.3 hereof by any person or persons other than the Holder, appropriate proof of the right of such person or persons to exercise the Stock Appreciation Right.

10.4Stock Appreciation Right Term.  The term of each Stock Appreciation Right (the “Stock Appreciation Right Term”) shall be set by the Administrator in its sole discretion; provided, however, that the term shall not be more than ten (10) years from the date the Stock Appreciation Right is granted.  The Administrator shall determine the time period, including the time period following a Termination of Service, during which the Holder has the right to exercise the vested Stock Appreciation Rights, which time period may not extend beyond the expiration date of the Stock Appreciation Right Term.  Except as limited by the requirements of Section 409A of the Code and regulations and rulings thereunder, the Administrator may extend the Stock Appreciation Right Term of any outstanding Stock Appreciation Right, may extend the time period during which vested Stock Appreciation Rights may be exercised following any Termination of Service of the Holder, and may amend any other term or condition of such Stock Appreciation Right relating to such a Termination of Service.

10.5Payment.  Payment of the amounts payable with respect to Stock Appreciation Rights pursuant to this Article 10 shall be in cash, Shares (based on its Fair Market Value as of the date the  Stock Appreciation Right is exercised), or a combination of both, as determined by the Administrator.

ARTICLE 11.

ADditional terms of awards

11.1Payment.  The Administrator shall determine the methods by which payments by any Holder with respect to any Awards granted under the Plan shall be made, including, without limitation: (a) cash or check, (b) Shares (including, in the case of payment of the exercise price of 

an Award, Shares issuable pursuant to the exercise of the Award) or Shares held for such period of time as may be required by the Administrator in order to avoid adverse accounting consequences, in each case, having a Fair Market Value on the date of delivery equal to the aggregate payments required, (c) delivery of a written or electronic notice that the Holder has placed a market sell order with a broker with respect to Shares then issuable upon exercise or vesting of an Award, and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale to the Company in satisfaction of the aggregate payments required; provided that payment of such proceeds is then made to the Company upon settlement of such sale, or (d) other form of legal consideration acceptable to the Administrator.  The Administrator shall also determine the methods by which Shares shall be delivered or deemed to be delivered to Holders.  Notwithstanding any other provision of the Plan to the contrary, no Holder who is a Director or an “executive officer” of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to make payment with respect to any Awards granted under the Plan, or continue any extension of credit with respect to such payment, with a loan from the Company or a loan arranged by the Company in violation of Section 13(k) of the Exchange Act.

11.2Tax Withholding.  The Company or any Affiliate shall have the authority and the right to deduct or withhold, or require a Holder to remit to the Company, an amount sufficient to satisfy federal, state, local and foreign taxes (including the Holder’s FICA or employment tax obligation) required by law to be withheld with respect to any taxable event concerning a Holder arising as a result of the Plan.  The Administrator may in its sole discretion and in satisfaction of the foregoing requirement allow a Holder to satisfy such obligations by any payment means described in Section 11.1 hereof, including without limitation, by allowing such Holder to elect to have the Company withhold Shares otherwise issuable under an Award (or allow the surrender of Shares).  The number of Shares which may be so withheld or surrendered shall be limited to the number of Shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such supplemental taxable income.  The Administrator shall determine the fair market value of the Shares, consistent with applicable provisions of the Code, for tax withholding obligations due in connection with a broker-assisted cashless Option or Stock Appreciation Right exercise involving the sale of Shares to pay the Option or Stock Appreciation Right exercise price or any tax withholding obligation.

11.3Transferability of Awards.

(a)Except as otherwise provided in Section 11.3(b) hereof:

(i)No Award under the Plan may be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution or, subject to the consent of the Administrator, pursuant to a DRO, unless and until such Award has been exercised, or the Shares underlying such Award have been issued, and all restrictions applicable to such Shares have lapsed;

(ii)No Award or interest or right therein shall be liable for the debts, contracts or engagements of the Holder or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, hypothecation, encumbrance, assignment 

or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy) unless and until such Award has been exercised, or the Shares underlying such Award have been issued, and all restrictions applicable to such Shares have lapsed, and any attempted disposition of an Award prior to the satisfaction of these conditions shall be null and void and of no effect, except to the extent that such disposition is permitted by clause (i) of this provision; and

(iii)During the lifetime of the Holder, only the Holder may exercise an Award (or any portion thereof) granted to him under the Plan, unless it has been disposed of pursuant to a DRO; after the death of the Holder, any exercisable portion of an Award may, prior to the time when such portion becomes unexercisable under the Plan or the applicable Program or Award Agreement, be exercised by his personal representative or by any person empowered to do so under the deceased Holder’s will or under the then applicable laws of descent and distribution.

(b)Notwithstanding Section 11.3(a) hereof, the Administrator, in its sole discretion, may determine to permit a Holder or a Permitted Transferee of such Holder to transfer an Award to any one or more Permitted Transferees, subject to the following terms and conditions:  (i) an Award transferred to a Permitted Transferee shall not be assignable or transferable by the Permitted Transferee (other than to another Permitted Transferee of the applicable Holder) other than by will or the laws of descent and distribution; (ii) an Award transferred to a Permitted Transferee shall continue to be subject to all the terms and conditions of the Award as applicable to the original Holder (other than the ability to further transfer the Award); and (iii) the Holder (or transferring Permitted Transferee) and the Permitted Transferee shall execute any and all documents requested by the Administrator, including, without limitation documents to (A) confirm the status of the transferee as a Permitted Transferee, (B) satisfy any requirements for an exemption for the transfer under applicable federal, state and foreign securities laws and (C) evidence the transfer.  

(c)Notwithstanding Section 11.3(a) hereof, a Holder may, in the manner determined by the Administrator, designate a beneficiary to exercise the rights of the Holder and to receive any distribution with respect to any Award upon the Holder’s death.  A beneficiary, legal guardian, legal representative, or other person claiming any rights pursuant to the Plan is subject to all terms and conditions of the Plan and any Program or Award Agreement applicable to the Holder, except to the extent the Plan, the Program and the Award Agreement otherwise provide, and to any additional restrictions deemed necessary or appropriate by the Administrator.  If the Holder is married or a domestic partner in a domestic partnership qualified under Applicable Law and resides in a community property state, a designation of a person other than the Holder’s spouse or domestic partner, as applicable, as his or her beneficiary with respect to more than fifty percent (50%) of the Holder’s interest in the Award shall not be effective without the prior written or electronic consent of the Holder’s spouse or domestic partner, as applicable.  If no beneficiary has been designated or survives the Holder, payment shall be made to the person entitled thereto pursuant to the Holder’s will or the laws of descent and distribution.  Subject to the foregoing, a beneficiary designation may be changed or revoked by a Holder at any time; provided that the change or revocation is filed with the Administrator prior to the Holder’s death.

11.4Conditions to Issuance of Shares.

(a)Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates or make any book entries evidencing Shares pursuant to the exercise of any Award, unless and until the Board or the Committee has determined, with advice of counsel, that the issuance of such shares is in compliance with all Applicable Laws, and the Shares are covered by an effective registration statement or applicable exemption from registration.  In addition to the terms and conditions provided herein, the Board or the Committee may require that a Holder make such reasonable covenants, agreements, and representations as the Board or the Committee, in its discretion, deems advisable in order to comply with any such laws, regulations, or requirements.

(b)All Share certificates delivered pursuant to the Plan and all Shares issued pursuant to book entry procedures are subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with Applicable Law.  The Administrator may place legends on any Share certificate or book entry to reference restrictions applicable to the Shares.

(c)The Administrator shall have the right to require any Holder to comply with any timing or other restrictions with respect to the settlement, distribution or exercise of any Award, including a window-period limitation, as may be imposed in the sole discretion of the Administrator.

(d)No fractional Shares shall be issued and the Administrator shall determine, in its sole discretion, whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding down.

(e)Notwithstanding any other provision of the Plan, unless otherwise determined by the Administrator or required by any Applicable Law, the Company shall not deliver to any Holder certificates evidencing Shares issued in connection with any Award and instead such Shares shall be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan administrator).

11.5Forfeiture and Claw-Back Provisions.  Pursuant to its general authority to determine the terms and conditions applicable to Awards under the Plan, the Administrator shall have the right to provide, in an Award Agreement or otherwise, or to require a Holder to agree by separate written or electronic instrument, that:  

(a)(i) Any proceeds, gains or other economic benefit actually or constructively received by the Holder upon any receipt or exercise of the Award, or upon the receipt or resale of any Shares underlying the Award, must be paid to the Company, and (ii) the Award shall terminate and any unexercised portion of the Award (whether or not vested) shall be forfeited, if (x) a Termination of Service occurs prior to a specified date, or within a specified time period following receipt or exercise of the Award, or (y) the Holder at any time, or during a specified time period, engages in any activity in competition with the Company, or which is inimical, contrary or harmful to the interests of the Company, as further defined by the Administrator or (z) the Holder incurs a Termination of Service for “cause” (as such term is defined in the sole discretion of the 

Administrator, or as set forth in a written agreement relating to such Award between the Company and the Holder); and

(b)All Awards (including any proceeds, gains or other economic benefit actually or constructively received by the Holder upon any receipt or exercise of any Award or upon the receipt or resale of any Shares underlying the Award) shall be subject to the provisions of any claw-back policy implemented by the Company, including, without limitation, any claw-back policy adopted to comply with the requirements of Applicable Law, including, without limitation, the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder, to the extent set forth in such claw-back policy and/or in the applicable Award Agreement.

11.6Prohibition on Repricing.  Subject to Section 13.2 hereof, the Administrator shall not, without the approval of the stockholders of the Company, (i) authorize the amendment of any outstanding Option or Stock Appreciation Right to reduce its price per Share, or (ii) cancel any Option or Stock Appreciation Right in exchange for cash or another Award when the Option or Stock Appreciation Right price per Share exceeds the Fair Market Value of the underlying Shares.  Subject to Section 13.2 hereof, the Administrator shall have the authority, without the approval of the stockholders of the Company, to amend any outstanding Award to increase the price per Share or to cancel and replace an Award with the grant of an Award having a price per Share that is greater than or equal to the price per Share of the original Award.

11.7Leave of Absence.  Unless the Administrator provides otherwise, vesting of Awards granted hereunder shall be suspended during any unpaid leave of absence.  A Holder shall not cease to be considered an Employee in the case of any (a) leave of absence approved by the Company or (b) transfer between locations of the Company or between the Company and any of its Affiliates or any successor thereof.

ARTICLE 12.

ADMINISTRATION

12.1Administrator.  The Committee and the Board shall administer the Plan (except as otherwise permitted herein).  Any action taken by the Board in connection with the administration of the Plan shall not be deemed approved by the Board unless such actions are approved by a majority of the Non-Employee Directors.  Except as may otherwise be provided in any charter of the Committee or the Board, appointment of Committee and Board members shall be effective upon acceptance of appointment.  Committee and Board members may resign at any time by delivering written or electronic notice to the Board.  Vacancies in the Committee and the Board may only be filled by the Board.  

12.2Duties and Powers of Administrator.  It shall be the duty of the Administrator to conduct the general administration of the Plan in accordance with its provisions.  The Administrator shall have the power to interpret the Plan, the Program and the Award Agreement, and to adopt such rules for the administration, interpretation and application of the Plan as are not inconsistent therewith, to interpret, amend or revoke any such rules and to amend any Program or Award Agreement; provided that the rights or obligations of the Holder of the Award that is the 

subject of any such Program or Award Agreement are not affected materially and adversely by such amendment, unless the consent of the Holder is obtained or such amendment is otherwise permitted under Section 13.10 hereof.  Any such grant or award under the Plan need not be the same with respect to each Holder.  In its sole discretion, the Board may at any time and from time to time exercise any and all rights and duties of the Committee under the Plan except as described in Section 12.1 above and with respect to matters which under Rule 16b‐3 under the Exchange Act or any successor rule, or the rules of any securities exchange or automated quotation system on which the Shares are listed, quoted or traded are required to be determined in the sole discretion of the Committee.  

12.3Action by the Committee.  Unless otherwise established by the Board or in any charter of the Committee, a majority of the Committee shall constitute a quorum and the acts of a majority of the members present at any meeting at which a quorum is present, and acts approved in writing by all members of the Committee in lieu of a meeting, shall be deemed the acts of the Committee.  Each member of the Committee is entitled to, in good faith, rely or act upon any report or other information furnished to that member by any officer or other employee of the Company or any Affiliate, the Company’s independent certified public accountants, or any executive compensation consultant or other professional retained by the Company to assist in the administration of the Plan.

12.4Authority of Administrator.  Subject to the Company’s Bylaws, the Committee’s Charter and any specific designation in the Plan, the Administrator has the exclusive power, authority and sole discretion to:

(a)Adopt procedures from time to time in the Administrator’s discretion to ensure that an Employee is eligible to participate in the Plan prior to the granting of any Awards to such Employee under the Plan (including, without limitation, a requirement, if any, that each such Employee certify to the Company prior to the receipt of an Award under the Plan that he or she has not been previously employed by the Company or a Subsidiary, or if previously employed, has had a bona fide period of non-employment, and that the grant of Awards under the Plan is an inducement material to his or her agreement to enter into employment with the Company or a Subsidiary);

(b)Designate Eligible Participants to receive Awards;

(c)Determine the type or types of Awards to be granted to each Eligible Participant;

(d)Determine the number of Awards to be granted and the number of Shares to which an Award will relate;

(e)Determine the terms and conditions of any Award granted pursuant to the Plan, including, but not limited to, the exercise price, grant price, or purchase price, any performance criteria, any restrictions or limitations on the Award, any schedule for vesting, lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof, and any provisions related to non-competition and recapture of gain on an Award, based in each case on such considerations as the Administrator in its sole discretion determines;

(f)Determine whether, to what extent, and pursuant to what circumstances an Award may be settled in, or the exercise price of an Award may be paid in cash, Shares, other Awards, or other property, or an Award may be canceled, forfeited, or surrendered;

(g)Prescribe the form of each Award Agreement, which need not be identical for each Holder;

(h)Decide all other matters that must be determined in connection with an Award;

(i)Establish, adopt, or revise any rules and regulations as it may deem necessary or advisable to administer the Plan;

(j)Interpret the terms of, and any matter arising pursuant to, the Plan, any Program or any Award Agreement; 

(k)Make all other decisions and determinations that may be required pursuant to the Plan or as the Administrator deems necessary or advisable to administer the Plan; and

(l)Accelerate wholly or partially the vesting or lapse of restrictions of any Award or portion thereof at any time after the grant of an Award, subject to whatever terms and conditions it selects and Sections 3.4 and 13.2(d) hereof.

12.5Decisions Binding.  The Administrator’s interpretation of the Plan, any Awards granted pursuant to the Plan, any Program, any Award Agreement and all decisions and determinations by the Administrator with respect to the Plan are final, binding, and conclusive on all parties.

12.6Delegation of Authority.  To the extent permitted by Applicable Law, the Board or Committee may from time to time delegate to a committee of one or more Non-Employee Directors or officers of the Company the authority to amend Awards or to take other administrative actions pursuant to Article 12.  Notwithstanding the foregoing, only the Committee and the Board, acting in accordance with this Article 12, may grant Awards hereunder.  Any delegation hereunder shall be subject to the restrictions and limits that the Board or Committee specifies at the time of such delegation, and the Board may at any time rescind the authority so delegated or appoint a new delegatee.  At all times, the delegatee appointed under this Section 12.6 shall serve in such capacity at the pleasure of the Board and the Committee.

ARTICLE 13.

MISCELLANEOUS PROVISIONS

13.1Amendment, Suspension or Termination of the Plan.  Except as otherwise provided in this Section 13.1, the Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board or the Committee.  However, without approval of the Company’s stockholders given within twelve (12) months before or after the action by the Administrator, no action of the Administrator may, except as provided in Section 13.2 hereof, (a) reduce the price per share of any outstanding Option or Stock 

Appreciation Right granted under the Plan, or (b) cancel any Option or Stock Appreciation Right in exchange for cash or another Award when the Option or Stock Appreciation Right price per share exceeds the Fair Market Value of the underlying Shares.  Except as provided in Section 14.10 hereof, no amendment, suspension or termination of the Plan shall, without the consent of the Holder, materially and adversely affect any rights or obligations under any Award theretofore granted or awarded, unless the Award itself otherwise expressly so provides.  

13.2Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events.

(a)In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the shares of the Company’s stock or the share price of the Company’s stock other than an Equity Restructuring, the Administrator may make equitable adjustments, if any, to reflect such change with respect to (i) the aggregate number and kind of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 3.1 hereof on the maximum number and kind of shares which may be issued under the Plan); (ii) the number and kind of shares of Common Stock (or other securities or property) subject to outstanding Awards; (iii) the terms and conditions of any outstanding Awards (including, without limitation, any applicable performance targets or criteria with respect thereto); and (iv) the grant or exercise price per share for any outstanding Awards under the Plan.  

(b)In the event of any transaction or event described in Section 13.2(a) hereof or any unusual or nonrecurring transactions or events affecting the Company, any Affiliate of the Company, or the financial statements of the Company or any Affiliate, or of changes in Applicable Law, the Administrator, in its sole discretion, and on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or event and either automatically or upon the Holder’s request, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Award under the Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles:

(i)To provide for either (A) termination of any such Award in exchange for an amount of cash and/or other property, if any, equal to the amount that would have been attained upon the exercise of such Award or realization of the Holder’s rights (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction or event described in this Section 13.2 the Administrator determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Holder’s rights, then such Award may be terminated by the Company without payment) or (B) the replacement of such Award with other rights or property selected by the Administrator in its sole discretion having an aggregate value not exceeding the amount that could have been attained upon the exercise of such Award or realization of the Holder’s rights had such Award been currently exercisable or payable or fully vested;

(ii)To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;

(iii)To make adjustments in the number and type of shares of the Company’s stock (or other securities or property) subject to outstanding Awards, and in the number and kind of outstanding Restricted Stock or Deferred Stock and/or in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding Awards and Awards which may be granted in the future; 

(iv)To provide that such Award shall be exercisable or payable or fully vested with respect to all shares covered thereby, notwithstanding anything to the contrary in the Plan or the applicable Program or Award Agreement; and

(v)To provide that the Award cannot vest, be exercised or become payable after such event.

(c)In connection with the occurrence of any Equity Restructuring, and notwithstanding anything to the contrary in Sections 13.2(a) and 13.2(b) hereof:

(i)The number and type of securities subject to each outstanding Award and the exercise price or grant price thereof, if applicable, shall be equitably adjusted; and/or

(ii)The Administrator shall make such equitable adjustments, if any, as the Administrator in its discretion may deem appropriate to reflect such Equity Restructuring with respect to the aggregate number and kind of shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations in Section 3.1 hereof on the maximum number and kind of shares which may be issued under the Plan).  The adjustments provided under this Section 13.2(c) shall be nondiscretionary and shall be final and binding on the affected Holder and the Company.

The adjustments provided under this Section 13.2(c) shall be nondiscretionary and shall be final and binding on the affected Holder and the Company.

(d)Change in Control.

(i)Notwithstanding any other provision of the Plan, in the event of a Change in Control, each outstanding Award shall be assumed or an equivalent Award substituted by the successor corporation or a parent or subsidiary of the successor corporation, in each case, as determined by the Administrator. 

(ii)In the event that the successor corporation in a Change in Control and its parents and subsidiaries refuse to assume or substitute for any Award in accordance with Section 13.2(d)(i) hereof, each such non-assumed/substituted Award, except for any Performance Awards, shall become fully vested and, as applicable, exercisable and shall be deemed exercised, immediately prior to the consummation of such transaction, and all forfeiture restrictions on any 

or all such Awards shall lapse at such time.  For the avoidance of doubt, the vesting of any Performance Awards not assumed in a Change in Control will not be automatically accelerated pursuant to this Section 13.2(d)(ii) and will instead vest pursuant to the terms and conditions of the applicable Award Agreement upon a Change in Control where the successor corporation and its parents and subsidiaries refuse to assume or substitute for any Award in accordance with Section 13.2(d)(i) hereof.  If an Award vests and, as applicable, is exercised in lieu of assumption or substitution in connection with a Change in Control, the Administrator shall notify the Holder of such vesting and any applicable exercise period, and the Award shall terminate upon the Change in Control.  For the avoidance of doubt, if the value of an Award that is terminated in connection with this Section 13.2(d)(ii) is zero or negative at the time of such Change in Control, such Award shall be terminated upon the Change in Control without payment of consideration therefor.

(iii)Notwithstanding anything to the contrary, in the event that, within the twelve (12) month period immediately following a Change in Control, a Holder experiences a Termination of Service by the Company for other than Cause or by a Holder for Good Reason, then the vesting and, if applicable, exercisability of that number of Shares equal to one hundred percent (100%) of the then-unvested Shares subject to the outstanding Awards held by such Holder shall accelerate upon the date of such Termination of Service.

(e)The Administrator may, in its sole discretion, include such further provisions and limitations in any Award, agreement or certificate, as it may deem equitable and in the best interests of the Company that are not inconsistent with the provisions of the Plan.

(f)The existence of the Plan, the Program, the Award Agreement and the Awards granted hereunder shall not affect or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company’s capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

(g)In the event of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other change affecting the Shares or the share price of the Common Stock including any Equity Restructuring, for reasons of administrative convenience, the Company in its sole discretion may refuse to permit the exercise of any Award during a period of thirty (30) days prior to the consummation of any such transaction.

13.3Stockholder Approval of the Plan not Required.  It is expressly intended that approval of the Company’s stockholders not be required as a condition of the effectiveness of the Plan, and the Plan’s provisions shall be interpreted in a manner consistent with such intent for all purposes.  Specifically, Nasdaq Stock Market Rule 5635(c) generally requires stockholder approval for stock option plans or other equity compensation arrangements adopted by companies whose securities are listed on the Nasdaq Stock Market pursuant to which stock awards or stock 

may be acquired by officers, directors, employees, or consultants of such companies.  Nasdaq Stock Market Rule 5635(c)(4) provides an exception to this requirement for issuances of securities to a person not previously an employee or director of the issuer, or following a bona fide period of non-employment, as an inducement material to the individual’s entering into employment with the issuer; provided, such issuances are approved by either the issuer’s compensation committee comprised of a majority of independent directors or a majority of the issuer’s independent directors.  Notwithstanding anything to the contrary herein, Awards under the Plan may only be made to Employees who have not previously been an Employee or Director of the Company or a Subsidiary, or following a bona fide period of non-employment by the Company or a Subsidiary, as an inducement material to the Employee’s entering into employment with the Company or a Subsidiary.  Awards under the Plan will be approved by (i) the Company’s Compensation Committee comprised of a majority of the Company’s Non-Employee Directors or (ii) a majority of the Company’s Non-Employee Directors. Accordingly, pursuant to Nasdaq Stock Market Rule 5635(c)(4), the issuance of Awards and the Shares issuable upon exercise or vesting of such Awards pursuant to the Plan are not subject to the approval of the Company’s stockholders.

13.4No Stockholders Rights.  Except as otherwise provided herein, a Holder shall have none of the rights of a stockholder with respect to Shares covered by any Award until the Holder becomes the record owner of such Shares.

13.5Paperless Administration.  In the event that the Company establishes, for itself or using the services of a third party, an automated system for the documentation, granting or exercise of Awards, such as a system using an internet website or interactive voice response, then the paperless documentation, granting or exercise of Awards by a Holder may be permitted through the use of such an automated system.

13.6Effect of Plan upon Other Compensation Plans.  The adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company or any Affiliate.  Nothing in the Plan shall be construed to limit the right of the Company or any Affiliate:  (a) to establish any other forms of incentives or compensation for Employees or other service providers of the Company or any Affiliate, or (b) to grant or assume options or other rights or awards otherwise than under the Plan in connection with any proper corporate purpose including without limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, partnership, limited liability company, firm or association.

13.7Compliance with Laws.  The Plan, the granting and vesting of Awards under the Plan and the issuance and delivery of Shares and the payment of money under the Plan or under Awards granted or awarded hereunder are subject to compliance with all Applicable Law, and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith.  Any securities delivered under the Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all Applicable Law.  To the extent permitted by Applicable Law, the Plan and Awards granted or awarded hereunder shall be deemed amended to the extent necessary to conform to such Applicable Law.

13.8Titles and Headings, References to Sections of the Code or Exchange Act.  The titles and headings of the Sections in the Plan are for convenience of reference only and, in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control. References to sections of the Code or the Exchange Act shall include any amendment or successor thereto.

13.9Governing Law.  The Plan and any agreements hereunder shall be administered, interpreted and enforced under the internal laws of the State of Delaware without regard to conflicts of laws thereof or of any other jurisdiction.

13.10Section 409A.  To the extent that the Administrator determines that any Award granted under the Plan is subject to Section 409A of the Code, the Program pursuant to which such Award is granted and the Award Agreement evidencing such Award shall incorporate the terms and conditions required by Section 409A of the Code.  To the extent applicable, the Plan, the Program and any Award Agreements shall be interpreted in accordance with Section 409A of the Code and Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date.  Notwithstanding any provision of the Plan to the contrary, in the event that following the Effective Date the Administrator determines that any Award may be subject to Section 409A of the Code and related Department of Treasury guidance (including such Department of Treasury guidance as may be issued after the Effective Date), the Administrator may adopt such amendments to the Plan and the applicable Program and Award Agreement or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect), or take any other actions, that the Administrator determines are necessary or appropriate to (a) exempt the Award from Section 409A of the Code and/or preserve the intended tax treatment of the benefits provided with respect to the Award, or (b) comply with the requirements of Section 409A of the Code and related Department of Treasury guidance and thereby avoid the application of any penalty taxes under such Section.  

13.11No Rights to Awards.  No Eligible Participant or other person shall have any claim to be granted any Award pursuant to the Plan, and neither the Company nor the Administrator is obligated to treat Eligible Participants, Holders or any other persons uniformly.

13.12Unfunded Status of Awards.  The Plan is intended to be an “unfunded” plan for incentive compensation.  With respect to any payments not yet made to a Holder pursuant to an Award, nothing contained in the Plan or any Program or Award Agreement shall give the Holder any rights that are greater than those of a general creditor of the Company or any Affiliate.

13.13Indemnification.  To the extent allowable pursuant to Applicable Law, each member of the Committee or of the Board and any officer or other employee to whom authority to administer any component of the Plan is delegated shall be indemnified and held harmless by the Company from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by such member in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act pursuant to the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in such action, suit, or proceeding against him or her; provided he or she gives the Company an opportunity, at its own expense, to handle and defend 

the same before he or she undertakes to handle and defend it on his or her own behalf.  The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled pursuant to the Company’s Certificate of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

13.14Relationship to other Benefits.  No payment pursuant to the Plan shall be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Affiliate except to the extent otherwise expressly provided in writing in such other plan or an agreement thereunder.

13.15Expenses.  The expenses of administering the Plan shall be borne by the Company and its Affiliates.akao-ex102_304.htm

Exhibit 10.2

SECOND AMENDMENT TO LEASE

(One Tower Place) 

THIS SECOND AMENDMENT TO LEASE ("Second Amendment") is made and entered into as of the 20th day of July, 2017, by and between AP3-SF2 CT SOUTH, LLC, a Delaware limited liability company ("Landlord") and ACHAOGEN, INC., a Delaware corporation ("Tenant").

R E C I T A L S:

	
A.
	
Landlord and Tenant entered into that certain Lease dated as of August 12, 2016 (the "Original Lease"), as modified by that certain First Amendment to Lease dated as of April 7, 2017 by and between Landlord and Tenant ("First Amendment"), whereby Landlord leases to Tenant and Tenant leases from Landlord, certain space in the building (the "Building") located at One Tower Place, South San Francisco, California 94080.  The Original Lease, as modified by the First Amendment, may be referred to herein as the "Lease." 

	
B.
	
By this Second Amendment, Landlord and Tenant desire to expand the Existing Premises (defined below) and to otherwise modify the Lease as provided herein.

	
C.
	
Unless otherwise defined herein, capitalized terms as used herein shall have the same meanings as given thereto in the Lease.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

A G R E M E N T:

1.Existing Premises.  Landlord and Tenant hereby agree that pursuant to the Lease, Landlord currently leases to Tenant and Tenant currently leases from Landlord that certain space in the Building containing approximately 47,118 rentable square feet square feet of space consisting of (i) 32,909 rentable square feet located on the third (3rd) floor of the Building and commonly known as Suite 300, and (ii) approximately 14,209 rentable square feet located on the fourth (4th) floor of the Building and commonly known as Suite 400 (the "Existing Premises"), all as more particularly described in the Lease.

2.Expansion of the Existing Premises; Expansion Commencement Date; Landlord's Delivery of Expansion Space.  

2.1.Expansion Space.  That certain space commonly known as Suite 450 and comprised of 18,888 rentable square feet located on the fourth (4th) floor of the Building (the "Suite 450 Expansion Space"), and (ii) that certain space commonly known as Suite 500 and comprised of 32,978 rentable square feet located on the entirety of the fifth (5th) floor of the Building (the "Suite 500 Expansion Space"), each as outlined on the floor plans attached hereto as Exhibit "A" and made a part hereof, may be collectively referred to herein as the "Expansion Space."  Effective 

			
	
 
	
 
	
 

 

as of the date hereof, Sections 1.4 and 1.5 of the Original Lease are hereby deemed deleted in their entirety and are of no further force or effect.

2.2.Expansion Commencement Dates.  Effective as of the earlier of (i) August 1, 2017 or (ii) the date Tenant commences business operations in all or any portion of the Suite 450 Expansion Space  ("Suite 450 Expansion Commencement Date"), Tenant shall lease from Landlord and Landlord shall lease to Tenant, the Suite 450 Expansion Space.  Effective as of the earlier of (i) June 1, 2018 or (ii) the date Tenant commences business operations in all or any portion of the Suite 500 Expansion Space ("Suite 500 Expansion Commencement Date"), Tenant shall lease from Landlord and Landlord shall lease to Tenant, the Suite 500 Expansion Space; provided, however, that in no event shall the Suite 500 Expansion Commencement Date be earlier than January 1, 2018.  Accordingly, effective upon the Suite 450 Expansion Commencement Date, the Existing Premises shall be increased to include the Suite 450 Expansion Space and that upon the Suite 500 Expansion Commencement Date, the Existing Premises shall be increased to include the Suite 500 Expansion Space.  Effective as of the applicable Expansion Commencement Date, all references to the "Premises" shall mean and refer to the Existing Premises as expanded by the applicable Expansion Space.

2.3.Landlord's Delivery of Expansion Space to Tenant.  Landlord shall deliver the Expansion Space to Tenant on the date of the full execution and delivery of this Second Amendment by Landlord and Tenant ("Delivery Date") in order for Tenant to commence the design and construction of the Tenant Improvements (as defined in the Work Letter) pursuant to the Tenant Work Letter attached hereto as Exhibit B (the “Work Letter”) and to install any of Tenant’s furniture, fixtures and equipment.  Such occupancy by Tenant during the period from the Delivery Date until the Suite 450 Expansion Commencement Date and the Suite 500 Expansion Commencement Date, as applicable, shall be subject to all of the terms and conditions of the Lease including, but not limited to, the provisions of Articles 8, 9 and 10 of the Original Lease (including Tenant's obligation to provide Landlord with evidence of insurance) except that Tenant will not be obligated to pay Base Rent nor Tenant's Share of Operating Expenses, Tax Expenses and Utilities Costs during such period of time until the occurrence of the actual Suite 450 Expansion Commencement Date and the Suite 500 Expansion Commencement Date with respect to the Suite 450 Expansion Space and the Suite 500 Expansion Space, respectively.  Tenant acknowledges and agrees that Landlord will be constructing the Vertical Exhaust (as defined in the First Amendment) in the Building and that Tenant agrees to use commercially reasonable efforts to minimize interference with such Vertical Exhaust work in the Building.  Landlord and Tenant agree to work in good faith to coordinate each party's respective work in the Building.

3.Existing Lease Term and Expansion Space Term.  Landlord and Tenant acknowledge and agree that the Lease Commencement Date for the Existing Premises occurred on March 23, 2017, and that, as of the date hereof, the current Lease Expiration Date is September 30, 2027.  The Term of Tenant's lease of the Suite 450 Expansion Space and the Term of Tenant's lease of the Suite 500 Expansion Space shall commence on the Suite 450 Expansion Commencement Date and Suite 500 Expansion Commencement Date, respectively, and shall expire on January 31, 2028 ("New Expiration Date"), subject to Tenant's extension rights in the Lease.  The Term of Tenant's Lease of the Existing Premises shall be extended until the January 31, 2028 New Expiration Date, which shall be the Lease Expiration Date for all purposes under the Lease.  Landlord may deliver to Tenant a confirmation memorandum in the form of Exhibit C 

			
	
 
	
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(modified as necessary for this Second Amendment) of the Original Lease (confirming the Suite 450 Expansion Commencement Date and Suite 500 Expansion Commencement Date), which amendment or confirmation memorandum Tenant shall execute and return to Landlord within ten (10) business days of receipt thereof, unless Tenant believes that such confirmation memorandum is incorrect, in which case Tenant shall inform Landlord within such ten (10) business day period.

4.Base Rent.  

4.1.Base Rent for Suite 450 Expansion Space.  Notwithstanding anything to the contrary in the Lease, commencing on the Suite 450 Expansion Commencement Date, Tenant shall pay, in accordance with the provisions of this Section 4.1 but subject to abatement as provided in Section 5 below, Base Rent for the Suite 450 Expansion Space as follows:

				
	
Period
	
Annual Base Rent
	
**Monthly Installment of Base Rent
	
***Monthly Rental Rate per Rentable Square Foot

	
*Suite 450 Expansion Commencement Date – 03/22/18
	
 

 

$1,087,948.80
	
 

 

$90,662.40
	
$4.80

	
*03/23/18 – 03/22/19
	
$1,126,026.90
	
$93,835.58
	
$4.97

	
03/23/19 – 03/22/20
	
$1,165,437.80
	
$97,119.82
	
$5.14

	
03/23/20 – 03/22/21
	
$1,206,228.10
	
$100,519.01
	
$5.32

	
03/23/21 – 03/22/22
	
$1,248,446.00
	
$104,037.17
	
$5.51

	
03/33/22 – 03/22/23
	
$1,292,141.60
	
$107,678.47
	
$5.70

	
03/23/23 – 03/23/24
	
$1,337,366.50
	
$111,447.21
	
$5.90

	
03/23/24 – 03/23/25
	
$1,384,174.30
	
$115,347.86
	
$6.10

	
03/23/25 – 03/22/26
	
$1,432,620.30
	
$119,385.03
	
$6.31

	
03/23/26 – 03/22/27
	
$1,482,762.00
	
$123,563.50
	
$6.53

	
03/23/27 – 01/31/28
	
$1,534,658.60
	
$127,888.22
	
$6.76

*Subject to abatement as provided in Section 5 below.

**The initial monthly installment of Base Rent amount was calculated by multiplying the initial monthly Base Rent rate per rentable square foot amount by the number of rentable square feet of space in the Suite 450 Expansion Space.  In all subsequent Base Rent payment periods, the 

			
	
 
	
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calculation of each monthly installment of Base Rent amount reflects an annual increase of three and one-half percent (3.50%).

***The amounts identified in the column entitled "Monthly Rental Rate per Rentable Square Foot" are rounded amounts provided for informational purposes only. 

4.2.Base Rent for Suite 500 Expansion Space.  Notwithstanding anything to the contrary in the Lease, commencing on the Suite 500 Expansion Commencement Date, Tenant shall pay, in accordance with the provisions of this Section 4.2 but subject to abatement as provided in Section 5 below, Base Rent for the Suite 500 Expansion Space as follows:

				
	
Period
	
Annual Base Rent
	
**Monthly Installment of

Base Rent 
	
***Monthly Rental Rate per Rentable Square Foot

	
*Suite 500 Expansion Commencement Date – 03/22/18
	
 

 

$1,899,532.80
	
 

 

$158,294.40
	
$4.80

	
*03/23/18 – 03/22/19
	
$1,966,016.40
	
$163,834.70
	
$4.97

	
03/23/19 – 03/22/20
	
$2,034,826.90
	
$169,568.91
	
$5.14

	
03/23/20 – 03/22/21
	
$2,106,045.80
	
$175,503.82
	
$5.32

	
03/23/21 – 03/22/22
	
$2,179,757.40
	
$181,646.45
	
$5.51

	
03/33/22 – 03/22/23
	
$2,256,048.80
	
$188,004.07
	
$5.70

	
03/23/23 – 03/23/24
	
$2,335,010.50
	
$194,584.21
	
$5.90

	
03/23/24 – 03/23/25
	
$2,416,735.80
	
$201,394.65
	
$6.10

	
03/23/25 – 03/22/26
	
$2,501,321.50
	
$208,443.46
	
$6.31

	
03/23/26 – 03/22/27
	
$2,588,867.70
	
$215,738.98
	
$6.53

	
03/23/27 – 01/31/28
	
$2,679,478.00
	
$223,289.84
	
$6.76

*Subject to abatement as provided in Section 5 below.

**The initial monthly installment of Base Rent amount was calculated by multiplying the initial monthly Base Rent rate per rentable square foot amount by the number of rentable square feet of space in the Suite 500 Expansion Space.  In all subsequent Base Rent payment periods during the Term, the calculation of each monthly installment of Base Rent amount reflects an annual increase of three and one-half percent (3.50%).

			
	
 
	
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***The amounts identified in the column entitled "Monthly Rental Rate per Rentable Square Foot" are rounded amounts provided for informational purposes only.

5.Monthly Base Rent Abatement.  Notwithstanding anything to the contrary contained in the Lease or in this Second Amendment, and so long as Tenant is not then in default under the Lease (as modified by this Second Amendment) beyond the expiration of all applicable notice and cure periods, Landlord hereby agrees to abate (i) Tenant's obligation to pay Tenant's monthly Base Rent for the Suite 450 Expansion Space for the first eight (8) full months following the Suite 450 Expansion Commencement Date, and (ii) Tenant's obligation to pay monthly Base Rent for the Suite 500 Expansion Space until September 1, 2018 (collectively, the "Abated Rent").  During such abatement periods, Tenant shall still be responsible for the payment of all of its other monetary obligations under the Lease, as amended by this Second Amendment.  In the event of a default by Tenant under the terms of the Lease, as amended by this Second Amendment, that results in early termination pursuant to the provisions of Article 19 of the Original Lease, then as part of the recovery set forth in Article 19 of the Original Lease, Landlord shall be entitled to the recovery of the unamortized amount of the Abated Rent that was abated under the provisions of this Section 5.

6.Condition of Premises.  Tenant hereby agrees to accept the Expansion Space in its "as-is" condition and Tenant hereby acknowledges that Landlord, except as otherwise provided in this Second Amendment, shall not be obligated to pay for any improvement work or services related to the improvement of the Expansion Space.  Except as set forth in this Second Amendment, Tenant also acknowledges that Landlord has made no representation or warranty regarding the condition of the Expansion Space; provided, however, in the event that, after Landlord's delivery of the Expansion Space, the Base, Shell and Core of the Building (as defined in Section 1 of the Work Letter), which includes the Systems and Equipment, the base building HVAC, plumbing, life safety and electrical systems of the Building as well as the roof and roof membrane, (A) does not comply with applicable laws, seismic, fire and life safety codes, and the ADA (to the extent applicable), in effect as of the date of this Second Amendment, or (B) contains latent defects, then Landlord shall be responsible, at its sole cost and expense which shall not be included in Operating Expenses (except as otherwise permitted in Section 4.2 of the Original Lease), for correcting any such non-compliance to the extent required by such applicable laws, codes and the ADA as soon as reasonably possible after receiving notice thereof from the applicable governmental authority or Tenant, and/or correcting such latent defects as soon as reasonably possible after receiving notice thereof from Tenant.  Notwithstanding the foregoing, if Tenant fails to give Landlord written notice of any such latent defects in clause (B) hereinabove within six (6) months after the Suite 500 Expansion Commencement Date, then the correction of any such latent defects shall, subject to Landlord's repair obligations in Section 7.2 of the Original Lease (and to the extent such correction is a responsibility of Tenant pursuant to Section 7.1 of the Original Lease), be Tenant's responsibility at Tenant's sole cost and expense.

7.Parking.  Commencing as of the Suite 450 Expansion Commencement Date, Tenant shall be entitled to forty-five (45) additional unreserved parking spaces.  Commencing as of the Suite 500 Expansion Commencement Date, Tenant shall be entitled to an additional one hundred five (105) additional unreserved parking spaces.  Tenant's use of all such additional parking spaces shall be subject to the terms and conditions of the Lease.

			
	
 
	
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8.Tenant's Share of Operating Expenses, Tax Expenses and Utilities Costs.  Notwithstanding anything to the contrary in the Lease, (i) commencing as of the Suite 450 Expansion Commencement Date, Tenant's Share of Operating Expenses, Tax Expenses and Utilities Costs shall be deemed increased to 19.42% (based on (i) the addition of the Suite 450 Expansion Space (18,888 rentable square feet) to the Existing Premises for a total of 66,006 rentable square feet and (ii) the Building rentable square footage of 339,791), and (ii) commencing as of the Suite 500 Expansion Commencement Date, Tenant's Share of Operating Expenses, Tax Expenses and Utilities Costs shall be deemed increased to 29.10% (based on (i) the addition of the Suite 500 Expansion Space (32,978 rentable square feet) to the Existing Premises for a total of 98,884 rentable square feet and (ii) the Building rentable square footage of 339,791). 

9.Brokers.  Each party represents and warrants to the other that, except for Savills Studley ("Tenant's Broker"), no broker, agent or finder negotiated or was instrumental in negotiating or consummating this Second Amendment.  Each party further agrees to defend, indemnify and hold harmless the other party from and against any claim for commission or finder's fee by any person or entity (other than Tenant's Broker) who claims or alleges that they were retained or engaged by the first party or at the request of such party in connection with this Second Amendment.  Landlord shall pay the commission due to Tenant’s Broker in connection with this Second Amendment pursuant to a separate agreement.

10.Monument Sign and Conditional Building Exterior Signage.  

10.1.Monument Sign.  Subject to the approval of all applicable governmental authorities, and compliance with all applicable laws and any CC&Rs which have been provided to Tenant, and the terms of this Section 10.1, Tenant shall have the non-exclusive right to install, at Tenant's sole discretion, cost and expense, one (1) identification sign on the existing signage monument for the Building located near Airport Boulevard and depicted on Exhibit D attached hereto (the "Monument"), which identification sign shall display the name, "Achaogen" only, unless otherwise approved by Landlord, which approval shall not be unreasonably withheld.  Tenant's identification sign on the Monument shall be referred to herein as "Tenant's Monument Sign".  The graphics, materials, color, design, lettering, lighting, size, specifications, manner of affixing and exact location of Tenant's Monument Sign shall be subject to Landlord's reasonable approval.  Tenant shall pay for all costs and expenses related to Tenant's Monument Sign, including, without limitation, costs of the design, construction, installation, maintenance, insurance, utilities, repair and replacement thereof; provided, however, Tenant shall only pay a pro-rata portion (as reasonably determined by Landlord) of the costs of maintenance, insurance, utilities and repairs with respect to the Monument Sign.  Tenant shall install and maintain the Monument Sign in compliance with all laws and CC&Rs which are provided to Tenant and subject to the applicable provisions the Lease.  Notwithstanding the foregoing, Landlord shall be responsible for maintenance of the Monument as well as any associated lighting and landscaping.

10.2.Conditional Building Exterior Signage.  Landlord has informed Tenant that an existing tenant ("Existing Tenant") of the Building has exclusive rights to exterior signage on the Building (the "Existing Tenant Exterior Signage Rights").  Upon the expiration or sooner termination of the lease of such Existing Tenant or the expiration of such Existing Tenant Exterior Sign Rights, then Tenant shall, subject to the approval of all applicable governmental authorities and compliance with all applicable laws, any CC&Rs that are provided to Tenant and the terms of 

			
	
 
	
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this Section 10.2, have a right of first refusal to install, on an exclusive basis, its name on the exterior of the Building ("Conditional Exterior Signage"), such right to be exercised, if at all, by Tenant providing written notice to Landlord of Tenant's exercise of such right no later than thirty (30) days after the date Landlord provides Tenant with written notice that such exterior signage is available or is expected to become available, which Landlord shall provide promptly once it is aware that such exterior signage is available or is expected to become available.  The graphics, materials, color, design, lettering, lighting, size, specifications, manner of affixing and exact location of Tenant's Conditional Exterior Signage shall be subject to Landlord's reasonable approval.  Tenant shall pay for all costs and expenses related to Tenant's Conditional Exterior Signage, including, without limitation, costs of the design, construction, installation, maintenance, insurance, utilities, repair and replacement thereof; provided, however, that Landlord shall install, maintain and repair the Conditional Exterior Signage.  Landlord shall not provide the right to any exterior signage on the Building to any other tenant at the Building or any other person or entity that would be effective at any time when Tenant's exterior signage rights under this Section 10.2 are effective (but Landlord shall have the right to provide conditional Building exterior signage rights to a tenant which would only be effective once Tenant's Exterior Signage rights are no longer in effect).

11.CASp.  For purposes of Section 1938(a) of the California Civil Code, Landlord hereby discloses to Tenant, and Tenant hereby acknowledges, that the Premises and the Expansion Space have not undergone inspection by a Certified Access Specialist (CASp).  In addition, the following notice is hereby provided pursuant to Section 1938(e) of the California Civil Code:  "A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law.  Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant.  The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises."  In furtherance of and in connection with such notice:  (i) Tenant, having read such notice and understanding Tenant's right to request and obtain a CASp inspection and with advice of counsel, hereby elects not to obtain such CASp inspection and forever waives its rights to obtain a CASp inspection with respect to the Existing Premises, the Expansion Space, the Building, and/or the Project to the extent permitted by applicable laws now or hereafter in effect; and (ii) if the waiver set forth in clause (i) hereinabove is not enforceable pursuant to applicable laws now or hereafter in effect, then Landlord and Tenant hereby agree as follows (which constitute the mutual agreement of the parties as to the matters described in the last sentence of the foregoing notice):  (A) Tenant shall have the one-time right to request for and obtain a CASp inspection, which request must be made, if at all, in a written notice delivered by Tenant to Landlord on or before the Suite 500 Expansion Commencement Date; (B) any CASp inspection timely requested by Tenant shall be conducted (1) between the hours of 9:00 a.m. and 5:00 p.m. on any business day, (2) only after ten (10) days' prior written notice to Landlord of the date of such CASp inspection, (3) in a professional manner by a CASp designated by Landlord and without any testing that would damage the Existing Premises, the Expansion Space, the Building or the Project in any way, (4) in accordance with all of the provisions of the Lease applicable to Tenant contracts for construction, and (5) at Tenant's sole cost and expense, 

			
	
 
	
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including, without limitation, Tenant's payment of the fee for such CASp inspection, the fee for any reports and/or certificates prepared by the CASp in connection with such CASp inspection (collectively, the "CASp Reports") and all other costs and expenses in connection therewith; (C) Landlord shall be an express third party beneficiary of Tenant's contract with the CASp, and any CASp Reports shall be addressed to both Landlord and Tenant; (D) Tenant shall deliver a copy of any CASp Reports to Landlord within two (2) business days after Tenant's receipt thereof; (E) any information generated by the CASp inspection and/or contained in the CASp Reports shall not be disclosed by Tenant to anyone other than (I) contractors, subcontractors and/or consultants of Tenant, in each instance who have a need to know such information and who agree in writing not to further disclose such information, or (II) any governmental entity, agency or other person, in each instance to whom disclosure is required by law or by regulatory or judicial process; (F) Tenant, at its sole cost and expense, shall be responsible for making any improvements, alterations, modifications and/or repairs to or within the Existing Premises or the Expansion Space to correct violations of construction-related accessibility standards, including, without limitation, any violations disclosed by such CASp inspection; and (G) if such CASp inspection identifies any improvements, alterations, modifications and/or repairs necessary to correct violations of construction-related accessibility standards relating to those items of the Building and/or the Project located outside the Existing Premises or the Expansion Space that are Landlord's obligation to repair as set forth in the Lease, then Landlord shall perform such improvements, alterations, modifications and/or repairs as and to the extent required by applicable laws to correct such violations, and Tenant shall reimburse Landlord for the cost of such improvements, alterations, modifications and/or repairs within ten (10) business days after Tenant's receipt of an invoice therefor from Landlord.

12.Security Deposit.  Concurrently with Tenant's execution of the Original Lease (and pursuant to Article 20 of the Original Lease), Tenant provided Landlord with a Letter of Credit in the amount of Two Hundred Fifty Thousand Dollars ($250,000.00) (the "Existing LC").  Concurrently with Tenant's execution and delivery of this Second Amendment to Landlord, Tenant shall deliver to Landlord an additional Letter of Credit in the amount of Two Hundred Eighty Thousand Dollars ($280,000.00) in accordance with (and pursuant to) the terms and conditions of Article 20 of the Original Lease.

13.Tenant's Use of Fire Stairwell.  Tenant shall have the right to use the Building's fire stairwell between floors 3, 4 and 5 of the Building for ingress and egress from the Premises and, subject to approval by all governmental authorities, shall have the right to install, at Tenant's sole cost, a security access system (pursuant to plans and specifications reasonably approved by Landlord) for access to the Premises from such fire stairwell.

14.Additional Control Area and Hazmat Storage Spaces.  Effective as of the date hereof, Tenant shall be entitled to use Tenant Storage Area "3" depicted on Exhibit C and Hazmat Storage Spaces "2.1A", "2.1B" and "2.2" depicted on Exhibit C (all in addition to Tenant's existing Control Areas and Hazmat Storage Spaces). 

15.Existing Furniture.  Tenant shall have the right to use certain furniture existing in the Expansion Space as of the date hereof (the “iLabs Furniture”), which iLabs Furniture is depicted on Exhibit “A” attached hereto.  Tenant’s use of such iLabs Furniture is  on an as-is basis and Landlord makes no representation or warranty regarding the same.  Landlord will remove all 

			
	
 
	
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existing furniture from the Expansion Space other than the iLabs Furniture prior to the Suite 450 Expansion Commencement Date and Suite 500 Expansion Commencement Date, as applicable.

16.Permitted Alterations.  Clause (i) of the second sentence of Section 8.1 of the Existing Lease is hereby amended by replacing “One Hundred Thousand Dollars ($100,000)” with “One Hundred Twenty-Five Thousand Dollars ($125,000)”.

17.Recapture.  Section 14.4 of the Original Lease is hereby amended and restated in its entirety as follows:

“14.4Landlord’s Option as to Subject Space.  Notwithstanding anything to the contrary contained in this Article 14, except as provided below, Landlord shall have the option, by giving written notice to Tenant within twenty (20) days after receipt of any Transfer Notice that proposes a Transfer that is an assignment of this Lease or a sublease of over seventy-five percent (75%) of the Premises for a term that expires within three (3) months of the Lease Expiration Date, to terminate this Lease.  Such notice shall terminate this Lease as of the date stated in the Transfer Notice as the effective date of the proposed Transfer.  If Landlord declines, or fails to elect in a timely manner to terminate the Lease under this Section 14.4, then, provided Landlord has consented to the proposed Transfer, Tenant shall be entitled to proceed to transfer the Subject Space to the proposed Transferee, subject to provisions of the last paragraph of Section 14.2 above.” 

18.SNDA.  Landlord shall cause Landlord's existing lender with a deed of trust encumbering the Building to provide Tenant with either an amendment to the existing SNDA (as defined in the Original Lease) or a new SNDA which covers this Second Amendment.  In the event that Landlord does not provide the SNDA amendment or new SNDA from Landlord's existing lender within fifteen (15) business days after the date of this Second Amendment, then Tenant shall be entitled to one (1) day of Base Rent abatement for the Expansion Space for each day of delay beyond such fifteen (15) business day period in Landlord providing Tenant with the SNDA Amendment or new SNDA; such Base Rent abatement (if any) shall be applied toward the Base Rent for the Expansion Space first coming due hereunder..

19.No Removal Obligation.  Notwithstanding anything in the Lease or this Second Amendment to the contrary, Tenant shall have no obligation to remove any of the Tenant Improvements (as defined in the Original Lease) or the Tenant Improvements (as defined in the Work Letter) at the end of the Lease Term or otherwise unless, with respect to the Tenant Improvements described in the Work Letter, Landlord informs Tenant at the time Landlord approves the Construction Drawings for the Tenant Improvements that Landlord will require removal of all or any portion of the same; provided, however, that Landlord will be reasonable in making such removal determination and Landlord shall not require removal of Tenant Improvements which are substantially similar to, or substantially compatible with, the Tenant Improvements in the Existing Premises.

20.Escalation of Additional Allowances.  For avoidance of doubt, Landlord and Tenant acknowledge and agree that the Additional Allowance described in Section 2.1 of the Tenant Work Letter attached to the Original Lease and the Additional Allowance described in Section 2.1 of the attached Tenant Work Letter (collectively, the "Additional Allowances") and the Amortization 

			
	
 
	
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Rent based on amortization of the Additional Allowances escalates as Base Rent escalates in the Lease such that the Base Rent payable by Tenant shall be increased based on the amount of the Amortization Rent for the Additional Allowances (and such amount shall be subject to annual escalations consistent with the annual escalations in Base Rent set forth in Section 8 of the Summary).

21.Signing Authority.  Each individual executing this Second Amendment on behalf of Landlord and Tenant hereby represents and warrants that each person signing on behalf of Landlord and Tenant, respectively, is authorized to do so.  Each of Landlord and Tenant represents and warrants that it is a duly formed and existing entity qualified to do business in the State of California and has full right and authority to execute and deliver this Second Amendment.

22.No Further Modification.  Except as set forth in this Second Amendment, all of the terms and provisions of the Lease shall remain unmodified and in full force and effect.

 

			
	
 
	
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IN WITNESS WHEREOF, this Second Amendment has been executed as of the day and year first above written.

		
	
"LANDLORD"
	
AP3 SF2 CT SOUTH, LLC, 

a Delaware limited liability company

By:  /s/ Michael Gerrity

Name:  Michael Gerrity

Its:  President

	
"TENANT"
	
ACHAOGEN, INC.,

a Delaware corporation

By:  /s/ Blake Wise

Name:  Blake Wise

Its:  President and COO

 

 

 

			
	
 
	
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EXHIBIT A

EXPANSION SPACE

 

			
	
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EXHIBIT B

TENANT WORK LETTER

This Tenant Work Letter ("Tenant Work Letter" or "Work Letter") shall set forth the terms and conditions relating to the construction of the Expansion Space.  All references in this Tenant Work Letter to the "Second Amendment" shall mean the relevant portions of the Second Amendment to which this Tenant Work Letter is attached as Exhibit B.

SECTION 1

BASE, SHELL AND CORE

Landlord has previously constructed the base, shell and core (i) of the Expansion Space and (ii) of the floor(s) of the Building on which the Expansion Space are located (collectively, the "Base, Shell and Core"), and Tenant shall, subject to Section 6 of the Second Amendment, accept the Base, Shell and Core in its current "As-Is" condition existing as of the date of the Second Amendment and the applicable Expansion Commencement Date.  Except for the Tenant Improvement Allowance (and the Additional Allowance, if applicable) set forth below, Landlord shall not be obligated to make or pay for any alterations or improvements to the Existing Premises, the Expansion Space, the Building or the Project.  

SECTION 2

TENANT IMPROVEMENTS

	
2.1
	
Tenant Improvement Allowance.  Tenant shall be entitled to a one-time tenant improvement allowance (the "Tenant Improvement Allowance") in the amount of up to, but not exceeding, Nine Hundred Eighty-Nine Thousand Eight Hundred Thirty Dollars ($989,830.00) to help Tenant pay for the costs of the design, permitting and construction of Tenant's initial improvements which are permanently affixed to the Existing Premises and the Expansion Space (collectively, the "Tenant Improvements"); provided, however, that Landlord shall have no obligation to disburse all or any portion of the Tenant Improvement Allowance (nor the Additional Allowance, if applicable) to Tenant unless Tenant makes a request for disbursement pursuant to the terms and conditions of Section 2.2 below prior to that date which is one hundred eighty (180) days after the Suite 500 Expansion Commencement Date.  Notwithstanding anything in this Tenant Work Letter to the contrary, an amount not to exceed Two Hundred Fifty-Nine Thousand Three Hundred Thirty Dollars ($259,330.00) of any unused amount of the Tenant Improvement Allowance shall be made available to Tenant to help Tenant pay for the actual and documented costs incurred by Tenant for the purchase of and installation of furniture, fixtures and equipment for the Expansion Space (the "FF&E Costs").  Landlord shall disburse from the Tenant Improvement Allowance the available portion thereof to help Tenant pay for the FF&E Costs actually incurred by Tenant within thirty (30) days after Landlord has received Tenant's written request for disbursement together with copies of paid invoices from third parties evidencing the amount of such FF&E Costs to be paid by Landlord; such disbursement request shall be delivered (if at all) no later than sixty (60) days after the Suite 500 Expansion Commencement Date.  In no event shall Landlord be obligated to make disbursements pursuant to this Tenant Work Letter in a total amount which exceeds the Tenant Improvement Allowance (nor the Additional Allowance 

			
	
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(if applicable)).  In the event that there exists an "Over-Allowance Amount" under Section 4.3.1 of Tenant Work Letter of the Original Lease after application of the Tenant Improvement Allowance and Additional Allowance elected by Tenant to be applied for improvements under the Original Lease, then Tenant shall have the right to have Landlord apply the Tenant Improvement Allowance and Additional Allowance hereunder for any such Over-Allowance Amount under the Original Lease; provided, however, that Tenant shall not have the right to apply the Tenant Improvement Allowance nor the Additional Allowance described herein for costs which the Additional Allowance described in the Original Lease is to be used (i.e., the Tenant Improvement Allowance and Additional Allowance under this Tenant Work Letter may only be applied to cover costs (i.e., the Over-Allowance Amount) under the Original Lease existing after application of the allowances under the Original Lease and may not be applied against the allowances under the Original Lease).  Tenant shall not be entitled to receive any cash payment or credit against Rent or otherwise for any unused portion of the Tenant Improvement Allowance (nor the Additional Allowance, if applicable) which is not used to pay for the Tenant Improvement Allowance Items (as defined below).  Notwithstanding anything above to the contrary, in the event there exists an Over-Allowance Amount (as defined in Section 4.2.1 below), Tenant shall have the option, exercisable upon written notice to Landlord, to require Landlord to provide a one-time additional improvement allowance (the "Additional Allowance") in the amount not to exceed One Million Four Hundred Eighty-Four Thousand Seven Hundred Forty-Five Dollars ($1,484,745.00).  In the event Tenant exercises such option and as consideration for Landlord providing such Additional Allowance to Tenant, the Base Rent payable by Tenant throughout the entire Term of Tenant's lease of the Suite 500 Expansion Space ("Amortization Period") shall be increased by an amount sufficient to fully amortize such Additional Allowance throughout said period based upon equal monthly payments of principal and interest, with interest imputed on the outstanding principal balance at the rate of nine percent (9%) per annum (the "Amortization Rent"), subject to the following provisions regarding Tenant's right to pay off the Additional Allowance early.  By way of illustration, if Tenant utilizes the entire Additional Allowance and if the Suite 500 Expansion Commencement Date occurs on January 1, 2018 (for a one hundred twenty-one (121) month term) then the initial Base Rent payable by Tenant for the Suite 500 Expansion Space under this Second Amendment shall be increased by $0.57 per rentable square feet (with an initial start rate of $5.37 per rentable square foot and the Base Rent schedule set forth in Section 4.2 of this Second Amendment shall be revised to reflect such increased Base Rent for all time periods under this Lease.  Such revised Base Rent schedule shall be memorialized in an amendment to this Lease to be executed by Landlord and Tenant.  The Tenant Improvement Allowance and the Additional Allowance may collectively be referred to herein as the "Allowances".  Notwithstanding anything above to the contrary, Tenant shall have the right, to be exercised by written notice to Landlord at any time prior to March 31, 2020, to pay to Landlord the entirety of the Additional Allowance utilized by Tenant.  In the event that Tenant makes such election, then Landlord shall provide Tenant with a calculation of the Additional Allowance amount that is owed (less any reduction of the same based on the Amortization Rent component of Base Rent previously paid by Tenant (if any) ("Landlord's Cost Calculation").  Tenant shall pay the amount set forth in Landlord's Cost Calculation (provided it is not in error) within ten (10) days after Tenant's receipt thereof and Landlord and Tenant shall promptly execute an amendment which will reflect such payment of the Additional Allowance, shall include a revised Base Rent schedule to reflect that Tenant is no longer obligated to pay Amortization Rent, and shall confirm that no interest shall accrue on the Additional Allowance after the date of payment.

			
	
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2.2
	
Disbursement of the Tenant Improvement Allowance.

	
2.2.1
	
Tenant Improvement Allowance Items.  Except as otherwise set forth in this Tenant Work Letter, the Tenant Improvement Allowance shall be disbursed by Landlord only for the following items and costs (collectively, the "Tenant Improvement Allowance Items"):

2.2.1.1Payment of (i) the fees of the Architect and the Engineers (as such terms are defined below), (ii) the fees incurred by, and the cost of documents and materials supplied by, Landlord and Landlord's consultants in connection with the preparation and review of the Construction Drawings (as defined below), and (iii) the costs of Tenant's construction manager but in no event shall more than two percent (2%) of the Allowances be used to pay for the cost and fees of Tenant's construction manager;

2.2.1.2The payment of plan check, permit and license fees relating to construction of the Tenant Improvements;

2.2.1.3The cost of construction of the Tenant Improvements, including, without limitation, contractors' fees and general conditions, testing and inspection costs, costs of utilities, trash removal, parking and hoists, and the costs of after-hours freight elevator usage.

2.2.1.4The cost of any changes in the Base, Shell and Core work when such changes are required by the Construction Drawings (including if such changes are due to the fact that such work is prepared on an unoccupied basis), such cost to include all direct architectural and/or engineering fees and expenses incurred in connection therewith;

2.2.1.5The cost of any changes to the Construction Drawings or Tenant Improvements required by applicable laws;

2.2.1.6Sales and use taxes and Title 24 fees; and

2.2.1.7The Coordination Fee (as defined below).

 

	
2.2.2
	
Disbursement of Tenant Improvement Allowance.  Subject to Section 2.1 above, during the construction of the Tenant Improvements, Landlord shall make monthly disbursements of the Tenant Improvement Allowance (and the Additional Allowance if applicable) or Tenant Improvement Allowance Items for the benefit of Tenant and shall authorize the release of monies for the benefit of Tenant as follows:

2.2.2.1Monthly Disbursements.  From time to time during the construction of the Tenant Improvements (but no more frequently than monthly), Tenant shall deliver to Landlord:  (i) a request for payment of the Contractor (as defined below) or Tenant (if it has previously paid the Contractor), approved by Tenant, in a reasonable form to be provided by Landlord, showing the schedule, by trade, of percentage of completion of the Tenant Improvements in the Expansion Space (and Existing Premises, if applicable), detailing the portion of the work completed and the portion not completed, and demonstrating that the relationship 

			
	
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between the cost of the work completed and the cost of the work to be completed complies with the terms of the Construction Budget (as defined below); (ii) invoices from all of Tenant's Agents (as defined below), for labor rendered and materials delivered to the Expansion Space and Existing Space, if applicable; (iii) executed mechanic's lien releases from all of Tenant's Agents which shall comply with the appropriate provisions, as reasonably determined by Landlord, of California Civil Code Section 8134 and 8132; and (iv) if requested by Landlord, the construction back-up items described on Schedule 2 attached hereto to the extent otherwise not covered above.  Following Landlord's receipt of a completed disbursement request submission, Landlord shall deliver a check to Tenant made jointly payable to the Tenant and Tenant's Agent (which is the payee for such work or portion thereof) in payment of the lesser of (A) the amounts so requested by Tenant, as set forth in this Section 2.2.2.1, above, less a ten percent (10%) retention (the aggregate amount of such retentions to be known as the "Final Retention") and (B) the balance of any remaining available portion of the Tenant Improvement Allowance (not including the Final Retention), provided that Landlord does not reasonably dispute any request for payment based on non-compliance of any work with the Approved Working Drawings (as defined below).  Landlord's payment of such amounts shall not be deemed Landlord's approval or acceptance of the work furnished or materials supplied as set forth in Tenant's payment request.  If, at the time of any request for payment, there are unpaid amounts relating to prior requests, Landlord shall provide Tenant with the status of such unpaid amounts, including any additional information required for payment.  In the event Tenant has paid Tenant's Agent directly for certain Tenant Improvement Allowance Items and if Tenant's Agent has provided an unconditional lien release with respect to such paid Tenant Improvement Allowance Item, then Landlord shall make such disbursement check payable solely to Tenant for such Tenant Improvement Allowance Item disbursement.

2.2.2.2Final Retention.  Subject to the provisions of this Tenant Work Letter, a check for the Final Retention payable jointly to Tenant and the Tenant's Agent (which is the payee for such work or portion thereof) shall be delivered by Landlord to Tenant following the completion of construction of the Expansion Space, provided that (i) Landlord has determined that no substandard work exists which adversely affects the mechanical, electrical, plumbing, HVAC, life-safety or other systems of the Building, the curtain wall of the Building, the structure or exterior appearance of the Building, or any other tenant's use of such other tenant's leased Expansion Space in the Building; and (ii) Tenant has delivered to Landlord:  (A) properly executed and final unconditional mechanics lien releases in compliance with applicable California law or conditional mechanics lien releases for amounts to be paid by the Final Retention; (B) a certificate of occupancy or permit cards signed off by the City of South San Francisco (the "City") with respect to the Expansion Space; (C) as-built plans and City-permitted plans for the Tenant Improvements; (D) operation manuals and warranties for equipment included within the Tenant Improvements, if applicable; (E) copy of the contract with the Contractor; (F) copy of the Contractor's certificate of insurance, including Additional Insured endorsement naming Landlord (and any other party requested by Landlord) as additional insureds; and (G) the Contractor's schedule of values, showing total contract value.  In the event Tenant has paid Tenant's Agent directly for certain Tenant Improvement Allowance Items and if Tenant's Agent has provided an unconditional lien release with respect to such paid Tenant Improvement Allowance Item, then Landlord shall make such disbursement check payable solely to Tenant for such Tenant Improvement Allowance Item disbursement.

			
	
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2.2.2.3Other Terms.  Landlord shall only be obligated to make disbursements from the Tenant Improvement Allowance (and, if applicable, the Additional Allowance) to the extent costs are incurred by Tenant for Tenant Improvement Allowance Items.

	
2.2.3
	
Specifications for Building Standard Components.  Landlord has established specifications (the "Specifications") for the Building standard components to be used in the construction of the Tenant Improvements in the Expansion Space which Specifications are attached hereto as Schedule 1.  Unless otherwise agreed to by Landlord, the Tenant Improvements shall comply with the Specifications.  Landlord’s approval with respect to any commercially reasonable changes to the Specifications requested by Tenant shall not be unreasonably withheld.  Landlord may make changes to the Specifications from time to time, provided such changes are not applied retroactively.

SECTION 3

CONSTRUCTION DRAWINGS

	
3.1
	
Selection of Architect/Construction Drawings.  Tenant shall retain an architect/space planner (the "Architect") approved by Landlord, which approval shall not be unreasonably withheld, to prepare the Construction Drawings.  Tenant shall retain engineering consultants (the "Engineers") approved by Landlord, which approval shall not be unreasonably withheld, to prepare all plans and engineering working drawings relating to the structural, mechanical, electrical, plumbing, HVAC, lifesafety, and sprinkler work in the Expansion Space. If Landlord fails to either approve or disapprove any proposed Architect or Engineers within five (5) business days after written request, such Architects and Engineers shall be deemed approved.  The plans and drawings to be prepared by Architect and the Engineers hereunder shall be known collectively as the "Construction Drawings."  As part of Tenant's Tenant Improvement work, Tenant shall have the right to install an internal stairwell between floors 3, 4 and 5 in the Building, subject, however, to the approval of all governmental authorities and Landlord's reasonable approval of the Construction Drawings pertaining to such stairwell improvements.  All Construction Drawings shall comply with the drawing format and specifications reasonably determined by Landlord, and shall be subject to Landlord's reasonable approval, which shall not be unreasonably withheld and in any case of Landlord disapproval, Landlord shall set forth with specificity the particular aspects of the Construction Drawings that are disapproved and describe the code-compliant changes necessary.  Landlord shall have a period of ten (10) business days to approve or disapprove the Construction Drawings.  If Landlord fails to either approve or disapprove any Construction Drawings within ten (10) business days after delivery, such Construction Drawings shall be deemed approved.  Once Landlord has approved the Construction Drawings, then Landlord shall have five (5) business days after Landlord receives any Tenant proposed modifications to such Construction Drawings to approve or disapprove the same.  If Landlord fails to either approve or disapprove any such modifications within five (5) business days after delivery, such modifications shall be deemed approved.  Tenant and Architect shall verify, in the field, the dimensions and conditions as shown on the relevant portions of the base building plans, and Tenant and Architect shall be solely responsible for the same, and Landlord shall have no responsibility in connection therewith.  Landlord's review of the Construction Drawings as set forth in this Section 3, shall be for its sole purpose and shall not imply Landlord's review of the same, or obligate Landlord to review the same, for quality, design, code compliance or other like 

			
	
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matters.  Accordingly, notwithstanding that any Construction Drawings are reviewed by Landlord or its space planner, architect, engineers and consultants, and notwithstanding any advice or assistance which may be rendered to Tenant by Landlord or Landlord's space planner, architect, engineers, and consultants, Landlord shall have no liability whatsoever in connection therewith and shall not be responsible for any omissions or errors contained in the Construction Drawings.

	
3.2
	
Final Space Plan.  Tenant shall supply Landlord with four (4) copies signed by Tenant of its final space plan for the Expansion Space before any architectural working drawings or engineering drawings have been commenced.  The final space plan (the "Final Space Plan") shall include a layout and designation of all offices, rooms and other partitioning, their intended use, and equipment to be contained therein.  Landlord may request clarification or more specific drawings for special use items not included in the Final Space Plan.  Landlord shall advise Tenant within five (5) business days after Landlord's receipt of the Final Space Plan for the Expansion Space if the same is unsatisfactory or incomplete in any reasonable respect, and failure of Landlord to so advise during such period shall be deemed Landlord’s approval of the Final Space Plan.  If Tenant is so advised, Tenant shall promptly (i) cause the Final Space Plan to be revised to correct any deficiencies or other matters Landlord may reasonably require, and (ii) deliver such revised Final Space Plan to Landlord.

	
3.3
	
Final Working Drawings.  After the Final Space Plan has been approved by Landlord and Tenant, Tenant shall promptly cause the Architect and the Engineers to complete the architectural and engineering drawings for the Expansion Space, and cause the Architect to compile a fully coordinated set of architectural, structural, mechanical, electrical and plumbing working drawings in a form which is complete to allow subcontractors to bid on the work and to obtain all applicable permits for the Tenant Improvements (collectively, the "Final Working Drawings"), and shall submit the same to Landlord for Landlord's approval, which shall not be unreasonably withheld.  Tenant shall supply Landlord with four (4) copies signed by Tenant of such Final Working Drawings.  Landlord shall advise Tenant within five (5) business days after Landlord's receipt of the Final Working Drawings for the Expansion Space if the same is unsatisfactory or incomplete in any reasonable respect, and failure of Landlord to so advise during such period shall be deemed Landlord’s approval of the Final Working Drawings.  If Tenant is so advised, Tenant shall promptly (i) revise the Final Working Drawings in accordance with such review and any reasonable disapproval of Landlord in connection therewith, so long as Landlord sets forth with specificity the particular aspects of the Final Working Drawings that are disapproved and describes the code-compliant changes necessary, and (ii) deliver such revised Final Working Drawings to Landlord.

	
3.4
	
Approved Working Drawings.  The Final Working Drawings shall be approved by Landlord (the "Approved Working Drawings") prior to the commencement of construction of the Expansion Space by Tenant.  After approval by Landlord of the Final Working Drawings (or concurrently with submission of the same to Landlord for approval), Tenant shall promptly submit the same to the appropriate governmental authorities for all applicable building permits.  Tenant hereby agrees that neither Landlord nor Landlord's consultants shall be responsible for obtaining any building permit or certificate of occupancy for the Expansion Space and that obtaining the same shall be Tenant's responsibility; provided, however, that Landlord shall cooperate with Tenant in executing permit applications and performing other ministerial acts reasonably necessary to enable Tenant to obtain any such permit or certificate of occupancy.  No material changes, 

			
	
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modifications or alterations in the Approved Working Drawings may be made without the prior written consent of Landlord, which consent shall not be unreasonably withheld.

SECTION 4

CONSTRUCTION OF THE TENANT IMPROVEMENTS

	
4.1
	
Tenant's Selection of Contractor and Tenant's Agents.

	
4.1.1
	
The Contractor.  Tenant shall select and retain a general contractor to construct the Tenant Improvements that is reasonably approved by Landlord, which contractor shall thereafter be the "Contractor" hereunder.  If Landlord fails to either approve or disapprove any proposed contractor within five (5) business days after delivery of request for approval, such contractor shall be deemed approved.  

	
4.1.2
	
Tenant's Agents.  Tenant shall provide Landlord with a list of all subcontractors, laborers, materialmen, and suppliers used by Tenant (such subcontractors, laborers, materialmen, and suppliers, and the Contractor to be known collectively as "Tenant's Agents").  Tenant's Agents shall be union labor to the extent necessary to ensure compliance with the master labor agreements existing between trade unions and the local chapter of the Associated General Contractors of America.  In any event, Landlord shall have the right to approve any subcontractors for any mechanical, electrical, plumbing, life safety, structural, and HVAC work in the Expansion Space, which approval shall not be unreasonably withheld.  If Landlord fails to either approve or disapprove any proposed subcontractors within five (5) business days after written request, such subcontractors shall be deemed approved. 

	
4.2
	
Construction of Tenant Improvements by Tenant's Agents.

	
4.2.1
	
Construction Contract; Cost Budget.  Prior to Tenant's execution of the construction contract and general conditions with Contractor (the "Contract"), Tenant shall provide a copy of the Contract to Landlord.  Prior to the commencement of the construction of the Tenant Improvements, and after Tenant has accepted all bids for the Tenant Improvements, Tenant shall provide Landlord with a written detailed cost breakdown (the "Final Costs Statement"), by trade, of the final costs to be incurred, or which have been incurred, as set forth more particularly in Section 2.2.1.1 through 2.2.1.8 above, in connection with the design, permitting and construction of the Tenant Improvements to be performed by or at the direction of Tenant or the Contractor (which costs form a basis for the amount of the Contract, if any (the "Final Costs").  As used herein, the term "Over-Allowance Amount" shall mean that amount by which the Final Costs exceed the Tenant Improvement Allowance.

	
4.2.2
	
Tenant's Agents.

4.2.2.1Landlord's General Conditions for Tenant's Agents and Tenant Improvement Work.  Tenant's and Tenant's Agents' construction of the Tenant Improvements shall comply with the following:  (i) the Tenant Improvements shall be constructed in accordance with the Approved Working Drawings; (ii) Tenant's Agents shall submit schedules of all work relating to the Tenant's Improvements to Contractor and Contractor shall, within five (5) business days after Tenant's receipt thereof, inform Tenant's Agents of any changes which are necessary thereto, 

			
	
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and Tenant's Agents shall adhere to such corrected schedule; and (iii) Tenant shall abide by all reasonable rules made by Landlord's Building contractor or Landlord's Building manager, and provided to Tenant, with respect to the use of freight, loading dock and service elevators, storage of materials, coordination of work with the contractors of other tenants, and any other matter in connection with this Tenant Work Letter, including, without limitation, the construction of the Tenant Improvements.  Tenant acknowledges and agrees that Landlord will be constructing the Vertical Exhaust in the Building during Tenant's construction of the Tenant Improvements.  Tenant and Tenant's Agents shall use commercially reasonable efforts to not interfere with, obstruct, or delay the work of Landlord's base building contractor and subcontractors with respect to such Vertical Exhaust work.

4.2.2.2Coordination Fee.  Tenant shall pay a logistical coordination fee (the "Coordination Fee") to Landlord in an amount equal to the product of (i) one percent (1%), and (ii) the sum of the Allowances actually disbursed by Landlord under this Tenant Work Letter, which Coordination Fee shall be for services relating to the coordination of the construction of the Tenant Improvements and shall be deducted by Landlord from the Allowances.  

4.2.2.3Indemnity.  Tenant's indemnity of Landlord as set forth in the Lease shall also apply with respect to any and all costs, losses, damages, injuries and liabilities related in any way to any act or omission of Tenant or Tenant's Agents, or anyone directly or indirectly employed by any of them, or in connection with Tenant's non-payment of any amount arising out of the Tenant Improvements.

4.2.2.4Insurance Requirements. 

4.2.2.4.1General Coverages.  All of Tenant's Agents shall carry worker's compensation insurance covering all of their respective employees, and shall also carry public liability insurance, including property damage, all with limits, in form and with companies as are required to be carried by Tenant as set forth in the Lease except that the Commercial General Liability Insurance limits shall be as follows:  

		
	
Bodily Injury and
Property Damage Liability
	
$2,000,000 each occurrence
$2,000,000 annual aggregate

	
Personal Injury Liability
	
$2,000,000 each occurrence
$2,000,000 annual aggregate
0% Insured's participation

 

4.2.2.4.2Special Coverages.  Tenant shall carry "Builder's All Risk" insurance in an amount equal to the full replacement cost of the improvements being constructed by Tenant, and such other insurance as Landlord may reasonably require, it being understood and agreed that the Tenant Improvements shall be insured by Tenant pursuant to the Lease immediately upon completion thereof.  Such insurance shall be in amounts and shall include such extended coverage endorsements as may be reasonably required by Landlord, and in form and with companies as are required to be carried by Tenant as set forth in the Lease.

			
	
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4.2.2.4.3General Terms.  Certificates for all insurance carried pursuant to this Section 4.2.2.4 shall be delivered to Landlord before the commencement of construction of the Tenant Improvements and before the Contractor's equipment is moved onto the site.  All such policies of insurance must contain a provision that the company writing said policy will give Landlord thirty (30) days prior written notice of any cancellation or lapse of the effective date or any reduction in the amounts of such insurance.  If the Tenant Improvements are damaged by any cause during the course of the construction thereof, Tenant shall immediately repair the same at Tenant's sole cost and expense.  All policies carried under this Section 4.2.2.4 shall insure Landlord and Tenant, as their interests may appear, as well as Contractor and Tenant's Agents, and shall name as additional insureds Landlord's property manager, Landlord's asset manager, and all mortgagees and ground lessors of the Building and any other parties, all to the extend specified by Landlord in writing.  All insurance, except Workers' Compensation, maintained by Tenant's Agents shall preclude subrogation claims by the insurer against anyone insured thereunder.  Such insurance shall provide that it is primary insurance as respects the owner and that any other insurance maintained by owner is excess and noncontributing with the insurance required hereunder.  The requirements for the foregoing insurance shall not derogate from the provisions for indemnification of Landlord by Tenant under Section 4.2.2.3 of this Tenant Work Letter.

	
4.2.3
	
Governmental Compliance.  The Tenant Improvements shall comply in all respects with the following:  (i) applicable state, federal, city or quasi-governmental laws, codes, ordinances and regulations, as each may apply according to the rulings of the controlling public official, agent or other person; (ii) applicable standards of the American Insurance Association (formerly, the National Board of Fire Underwriters) and the National Electrical Code; and (iii) building material manufacturer's specifications.

	
4.2.4
	
Inspection by Landlord.  Upon at least one (1) business days’ notice to Tenant, Landlord shall have the right to inspect the Tenant Improvements during regular business hours, provided however, that Landlord's failure to inspect the Tenant Improvements shall in no event constitute a waiver of any of Landlord's rights hereunder nor shall Landlord's inspection of the Tenant Improvements constitute Landlord's approval of the same.  Should Landlord determine that any portion of the Tenant Improvements is in breach of the terms of this Tenant Work Letter, Landlord shall notify Tenant in writing of such breach and shall specify the relevant items.  Any such breaches shall be rectified by Tenant at no expense to Landlord, provided however, that if Landlord reasonably determines that a breach exists in connection with any portion of the Tenant Improvements and such breach might adversely affect the mechanical, electrical, plumbing, HVAC or life-safety systems of the Building, the structure or exterior appearance of the Building or any other tenant's use of such other tenant's leased premises, Landlord may take such action as Landlord deems reasonably necessary, at Tenant's expense and without incurring any liability on Landlord's part, to correct any such breach, including, without limitation, causing the cessation of performance of the construction of the Tenant Improvements until such time as the breach is corrected.

	
4.2.5
	
Meetings.  Tenant shall provide Landlord with prior written notice of any regularly scheduled meetings Tenant will have with the Architect and the Contractor regarding the progress of the preparation of Construction Drawings and the construction of the Tenant Improvements and Landlord shall have the right to attend all such regularly scheduled meetings.  

			
	
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In addition, minutes shall be taken at all such regularly scheduled meetings, a copy of which minutes shall be promptly delivered to Landlord.  

	
4.3
	
Notice of Completion; Copy of "As Built" Plans.  Within ten (10) days after completion of construction of the Tenant Improvements, Tenant shall cause a Notice of Completion to be recorded in the office of the Recorder of the County in which the Building is located in accordance with Section 3093 of the Civil Code of the State of California or any successor statute, and shall furnish a copy thereof to Landlord upon such recordation.  If Tenant fails to do so, Landlord may execute and file the same on behalf of Tenant as Tenant's agent for such purpose, at Tenant's sole cost and expense.  At the conclusion of construction, (i) Tenant shall cause the Architect and Contractor (A) to update the Approved Working Drawings as necessary to reflect all changes made to the Approved Working Drawings during the course of construction, (B) to certify to the best of their knowledge that the "record-set" of as-built drawings are true and correct, which certification shall survive the expiration or termination of the Lease, (C) to deliver to Landlord two (2) sets of sepias of such as-built drawings within ninety (90) days following issuance of a certificate of occupancy for the Expansion Space, and (D) to deliver to Landlord a computer disk containing the Approved Working Drawings in AutoCAD format, and (ii) Tenant shall deliver to Landlord a copy of all warranties, guaranties, and operating manuals and information relating to the improvements, equipment, and systems in the Expansion Space.

	
4.4
	
Coordination by Tenant's Agents with Landlord.  Upon Tenant's delivery of the Contract to Landlord under Section 4.2.1 of this Tenant Work Letter, Tenant shall furnish Landlord with a schedule setting forth the projected date of the completion of the Tenant Improvements and showing the critical time deadlines for each phase, item or trade relating to the construction of the Tenant Improvements.

SECTION 5

MISCELLANEOUS

	
5.1
	
Tenant's Representative.  Tenant has designated Tobin Schilke as its sole representative with respect to the matters set forth in this Tenant Work Letter, who, until further written notice from Tenant, shall have full authority and responsibility to act on behalf of the Tenant as required in this Tenant Work Letter.

	
5.2
	
Landlord's Representative.  Landlord has designated Evan Gutenberg as its sole representative with respect to the matters set forth in this Tenant Work Letter, who, until further notice to Tenant, shall have full authority and responsibility to act on behalf of the Landlord as required in this Tenant Work Letter.

	
5.3
	
Time of the Essence in This Tenant Work Letter.  Unless otherwise indicated, all references herein to a "number of days" shall mean and refer to calendar days.  If any item requiring approval is timely disapproved by Landlord, the procedure for preparation of the document and approval thereof shall be repeated until the document is approved by Landlord.

	
5.4
	
Tenant's Lease Default.  Notwithstanding any provision to the contrary contained in the Lease, if an Event of Default by Tenant under this Tenant Work Letter or the Lease has occurred at any time on or before the substantial completion of the Expansion Space, then (i) in 

			
	
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addition to all other rights and remedies granted to Landlord pursuant to the Lease, at law and/or in equity, Landlord shall have the right to withhold payment of all or any portion of the Allowances, and (ii) all other obligations of Landlord to provide the Tenant Improvement Allowance (and the Additional Allowance, if applicable) under the terms of this Tenant Work Letter shall be forgiven until such time as such default is cured pursuant to the terms of the Lease.  In addition, if the Lease is terminated prior to the applicable Expansion Commencement Date, for any reason due to an Event of Default by Tenant as described in Section 19.1 of the Original Lease or under this Tenant Work Letter, in addition to any other remedies available to Landlord under the Lease, at law and/or in equity, Tenant shall pay to Landlord, as Additional Rent under the Lease, within five (5) business days after Tenant's receipt of a statement therefor, any and all costs (if any) incurred by Landlord (including any portion of the Allowances disbursed by Landlord) and not reimbursed or otherwise paid by Tenant through the date of such termination in connection with the Tenant Improvements to the extent planned, installed and/or constructed as of such date of termination, including, but not limited to, any costs related to the removal of all or any portion of the Tenant Improvements and restoration costs related thereto.

 

 

			
	
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SCHEDULE 1

SPECIFICATIONS

 

 

 

	
1.0
	
PARTITIONS

 

	
 
	
1.1
	
DEMISING WALL - ONE HOUR FIRE RESISTIVE CONSTRUCTION

 

One Hour Fire Resistive Wall will be constructed to demise tenant spaces with 3 5/8" x 20 gauge metal studs at 16" O.C.  Wall is to extend full height from floor to underside of structure above with 5/8" Type "X" gypsum wallboard on each side of studs.  Gypsum wallboard shall be taped and finished with joint compound to a Level 4 finish, with the stud cavity filled with sound attenuation insulation to achieve a minimum STC of 49.

 

	
 
	
1.2
	
INTERIOR PARTITIONS

 

Interior partitions will be constructed with 3 5/8" x 20 gauge metal studs at 16" O.C. Walls are to extend 6" above adjacent ceilings with 5/8" gypsum wallboard placed on each side of studs. Gypsum wallboard shall be taped and finished with joint compound to a Level 4 finish, with the stud cavity being filled with sound attenuation insulation in partitions between offices and conference rooms. Where no ceilings occur, partitions to extend full height to underside of structure above.  

 

	
2.0
	
WOOD DOORS AND FRAMES

	
 
	
2.1
	
SUITE ENTRY DOORS

 

	
 
	
2.1.1
	
Main suite entry doors (if main entry is from elev. lobby) are to be 60 minute rated, 1 3⁄4" x 3'-0" x 8'-0" Solid core, plain sliced walnut, finish: Marshfield Doors clear 0-95 or equivalent.

 

	
 
	
2.1.2
	
Other suite entry doors are to be 60 minute rated, 1 3⁄4" x 3'-0" x 8'-0" Solid core, plain sliced walnut, finish: Marshfield Doors clear 0-95 or equivalent.

 

	
 
	
2.2
	
INTERIOR DOORS

 

	
 
	
2.2.1
	
Office and Conference Room Doors are to be 1 3⁄4" x 3'-0" x 8'-0" solid core, plain sliced walnut, finish: Marshfield Doors clear 0-95 or equivalent.

 

			
	
 
	
SCHEDULE 1

-1-
	
 

 

 

	
 
	
2.2.2
	
Common Area and Support Room Doors are to be 1 3⁄4" x 3'-0" x 8'-0" solid core, plain sliced walnut, finish: Marshfield Doors clear 0-95 or equivalent.

 

	
 
	
2.2.3
	
Laboratory Doors are to be 60 minute rated where required, non-rated elsewhere, 1 3⁄4" x 3'-0" x 8'-0". Solid core, plain sliced walnut, finish: Marshfield Doors clear 0-95 or equivalent. Each lab will have a pair of doors for large equipment access. Doors are to be a half-lite vision panel consisting of 1⁄4" thick tempered safety glass.  Armor plates and kick plates will be provided on Lab doors at appropriate locations.

 

	
 
	
2.2.4
	
Lab Support Doors, where provided, are to be 60 minute rated as required, non-rated elsewhere, 1 3⁄4" x 3'-6" x 8'-0". Solid core, plain sliced walnut, finish: Marshfield Doors clear 0-95 or equivalent. Doors are to be a half-lite vision panel consisting of 1⁄4" thick tempered safety glass. Armor plates and kick plates will be provided on Lab Support Doors at appropriate locations.

	
 
	
2.3
	
DOOR/WINDOW FRAMES

 

	
 
	
2.3.1
	
Door frames will be extruded aluminum alloy as manufactured by Western Integrated Materials Inc. Frames will be pre-punched for factory installed 14-gauge butt reinforcement, door strike, and closer hardware.  Prefinished frame color to be: Clear anodized aluminum.

 

	
 
	
2.3.2
	
Rated doors and frames shall be as required by code, with label ratings for smoke and fire resistance meeting the requirements established by the Underwriters Laboratory (UL).  Doors will include smoke seals.  Door frames will be extruded aluminum alloy as manufactured by Western Integrated Materials Inc. Frames will be pre-punched for factory installed 14-gauge butt reinforcement, door strike, and closer hardware.  Prefinished frame color to be: Clear anodized aluminum.

	
 
	
2.4
	
FINISH HARDWARE

 

	
 
	
2.4.1
	
SUITE ENTRY

 

For solid core wood doors:

Hinges: 4-1/2" X 4-1/2" Hager AB700 Full Mortise Hinge, Finish: ANSI A8112 steel with steel pin.

Office entry lock set: Mortise Lever Schlage L Series, L9453 03A, Finish: 625 

Closers: Yale

One wall bumper: Hager 236W, Finish: US26D Chromium plated, dull.

			
	
 
	
SCHEDULE 1

-2-
	
 

 

 

 

	
 
	
2.4.2
	
INTERIOR DOORS

 

For solid core wood doors:

Hinges: 4-1/2" X 4-1/2" Hagar AB700 Full Mortise Hinge, Finish: ANSI A8112 Steel with steel pin 

Passage Set: Schlage L Series Mortise L9010 03A    Finish: 625 

One wall bumper: Hager 236W, Finish: US26D Chromium plated dull

	
3.0
	
CEILINGS

 

	
 
	
3.1
	
ACOUSTICAL CEILINGS

Ceilings will be 2" x 2" x 3⁄4" Armstrong, Ultima Tegular Fine Texture, Color: White.  Glass-fiber based panels to be Type IV mineral based with membrane-faced overlay; form 2, water felted with vinyl overlay on face and back of panel.  Performance characteristics to meet the following:

	
 
	
a.
	
LR:  Not less than 0.90.

	
 
	
b.
	
NRC:  Not less than 0.70.

 

Acoustical panels are treated with manufacturer's standard antimicrobial formulation that inhibits fungus, mold, mildew, and gram-positive and gram-negative bacteria.

 

Suspension system: Armstrong Silhouette Narrow 9/16" with 1⁄4" reveal; Color: White.

 

	
 
	
3.2
	
VINYL-FACED CEILINGS

Ceilings will be 2" x 4" x 1⁄2" Certainteed Saint-Gobain, Vinylrock (#1140 CRF-1), Color: White.  Vinyl-faced panels shall be Type XX; high density, ceramic and mineral base panels with scrubbable finish, resistant to heat, moisture, and corrosive fumes.

 

Suspension system:  Certainteed Saint-Gobain 15/16" trim edge (square); Color: White

 

	
 
	
3.3
	
GYPSUM WALLBOARD SOFFITS-SUITE LOBBY AND BREAK AREA

	
 
	

	
Gypsum wallboard soffits will be constructed with 3 5/8" x 20 gauge metal studs at 16" O.C., with 5/8" gypsum wallboard placed on exterior side of studs. Gypsum wallboard shall be taped and finished with joint compound to a Level 4 finish. Soffits

			
	
 
	
SCHEDULE 1

-3-
	
 

 

 

 

	
4.0
	
LIGHTING FIXTURES

 

	
 
	
4.1
	
Office and Lab area light fixtures shall be min. 6" wide recessed linear LED type by Finelite or equivalent. 

 

	
 
	
4.2
	
Lab Support rooms shall have recessed 2'x4' LED troffers. 

 

	
 
	
4.3
	
All lighting shall have Title 24 compliant lighting controls and sensors.

	
5.0
	
ELECTRICAL SWITCHES AND OUTLET COVER PLATES

 

	
 
	
5.1
	
Electrical cover plates shall be Decora Leviton #5325, Color: white.

 

	
 
	
5.2
	
Motion sensor Light switch and cover plates shall be Advanced Central Technologies Color: White.

 

	
 
	
5.3
	
Light Switch Decora Leviton #5601 

	
6.0
	
FINISHES

 

	
 
	
6.1
	
CARPET

	
 
	
a.
	
Manufacturers: Tandus-Centiva or architect's approved equivalent

	
 
	
b.
	
Product Size: 6' Roll Power-bond or 24" x 24" carpet tile

	
 
	
c.
	
Backing: Per manufacturer's recommendation

	
 
	
d.
	
Face Weight: 20 oz./sq. yd.

	
 
	
e.
	
Pile Height Average: 0.187 inch

	
 
	
f.
	
Fiber System: Dynex SD Nylon (Permanent Stain Resistance)

	
 
	
g.
	
Soil/Stain Protection: Ensure

 

	
 
	
6.2
	
CERAMIC TILE

	
 
	
a.
	
Manufacturers:

	
 
	
1.
	
Fiandre 

	
 
	
2.
	
Ergon

	
 
	
3.
	
Emil Ceramica

	
 
	
4.
	
American Olean

	
 
	
5.
	
Or architect approved equivalent

	
 
	
b.
	
Composition:  Vitreous or impervious natural clay or porcelain

	
 
	
c.
	
Face Size:  Per Drawings

	
 
	
d.
	
Face Size Variation:  Calibrated or rectified

	
 
	
e.
	
Thickness:  Manufacturers standard

	
 
	
f.
	
Dynamic Coefficient of Friction: Not less than 0.42.

			
	
 
	
SCHEDULE 1

-4-
	
 

 

 

	
 
	
g.
	
Trim Units: Coordinated with sizes and coursing of adjoining flat tile where applicable and matching characteristics of adjoining flat tile. Architect to select from manufacturer's full range.

 

	
 
	
6.3
	
VINYL COMPOSITION TILE

	
 
	
a.
	
Manufacturers: 

	
 
	
1.
	
Armstrong World Industries, Inc.

	
 
	
2.
	
Johnsonite (Tarkett Group)

	
 
	
3.
	
Mannington Commercial

	
 
	
b.
	
Tile Standard: ASTM F 1066, Class 1, solid-color

	
 
	
c.
	
Thickness:  0.125 inches

	
 
	
d.
	
Size: 12 by 12 inches 

 

	
 
	
6.4
	
LUXURY VINYL TILE

	
 
	
a.
	
Manufacturers: 

	
 
	
1.
	
Tandus-Centiva

	
 
	
2.
	
Johnsonite (Tarkett Group)

	
 
	
3.
	
Mannington Commercial

	
 
	
b.
	
Tile Standard: ASTM F  1700, Class 3, Type B

	
 
	
c.
	
Thickness:  0.100 to 0.120 inches

	
 
	
d.
	
Size: As indicated on drawings

 

	
 
	
6.5
	
BASE

	
 
	
a.
	
Manufacturers: 

	
 
	
1.
	
Armstrong World Industries, Inc.

	
 
	
2.
	
Johnsonite (Tarkett Group)

	
 
	
3.
	
VPI Corporation

	
 
	
b.
	
Product Standard: ASTM F 1861, Type TP (rubber, thermoplastic).

	
 
	
1.
	
Group:  I (solid, homogeneous).

	
 
	
2.
	
Style and Location: As indicated.

	
 
	
c.
	
Thickness:  0.125 inch 

	
 
	
d.
	
Height:  4" high

	
 
	
e.
	
Lengths:  Coils in manufacturer's standard length. Pre-cut lengths are not acceptable.

	
 
	
f.
	
Outside Corners:  Job formed or preformed.

	
 
	
g.
	
Inside Corners:  Job formed or preformed.

 

	
 
	
6.6
	
PAINT

 

All walls will receive (2) coats of Sherwin Williams, Eggshell Finish; Color: As indicated on drawings.  Designated walls shall receive accent paints, choice of Sherwin Williams, Eggshell Finish, Color: As indicated on drawings.  

 

All ceilings and open to structure areas to receive (2) coats of Sherwin Williams, Flat Finish; Color: As indicated on drawings.  

	
7.0
	
WINDOW TREATMENT 

			
	
 
	
SCHEDULE 1

-5-
	
 

 

 

	
 
	
7.1
	
Exterior Window Shades, where provided, will be manual-type roller shades by Mechoshade in recessed factory housing. Shade Material shall be Thermoveil 1500, Color: 1504 Black/Brown; Density: 3% Open.

	
8.0
	
MISCELLANEOUS 

 

	
 
	
8.1
	
SIGNAGE 

 

One building standard suite number and name plaque per entry door. Restroom signage.

 

	
 
	
8.2
	
ILLUMINATED EXIT SIGNS

 

Lithonia (or Isolite equal) ceiling mounted illuminated Edge Lit Series with single face universal mount, with universal arrows & green letters.

	
9.0
	
ELECTRICAL 

 

	
 
	
9.1
	
Tenant shall receive building standard 120V 20 amp electrical distribution to office areas of the suite from the building's main electrical room.  Each office will have (2) duplex electrical outlets and (2) mud box with ring and string for tenants own tel/data installation. Labs will receive standards 120V power and specialty voltage power as required for lab equipment.

	
10.0
	
HVAC 

 

	
 
	
10.1
	
Heating and Cooling will be provided by a heating hot water boiler and a cooling tower, all placed on the roof.

 

	
 
	
10.2
	
Air Handling to the labs will be provided by new packaged units supplying 100% outside air with new VAV supply and exhaust boxes with minimum of 8 air changes per hour.

 

	
 
	
10.3
	
Air handling to the office areas will be provided by existing packaged units with new VAV supply boxes.

	
11.0
	
BREAKROOM CABINETRY WITH PLUMBING

 

	
 
	
11.1
	
Tenant allowance is 6 lineal feet of plastic laminate base cabinet with 6" drawers and doors, with 6 lineal feet of 12" deep by 36" high upper cabinets with doors.  Sink is to be single bowl stainless steel, top mount, 6 1⁄2 "max deep, 20 gauge, with a single lever faucet Moen Chateau 7425.  Plastic laminated base and uppers: Wilsonart, Designer white #D354-01 (gloss finish). Provide PVC edge banding (0.018 to match plastic laminate) Solid surface counter tops and splash: Livingstone L104 Brisk. 

 

			
	
 
	
SCHEDULE 1

-6-
	
 

 

 

	
12.0
	
LABORATORY CASEWORK AND FUME HOODS

 

	
 
	
12.1
	
Casework: Labs will be furnished with modular, mobile metal laboratory casework manufactured by iLab, Inc. Countertops will be chemical resistant epoxy/phenolic resin. Island benches shall be pre-piped for Compressed Air and Lab Vacuum with quick disconnect connections located above the ceiling. Benches with sinks will have a single basin epoxy sink (21" x 15" x 10" deep). Sink cabinets shall have a hot and cold water mixing faucet with a counter mounted eyewash. Sinks at island benches will have a stainless steel glassware pegboard with drip tray and drain hose. Benches will be pre-wired with factory installed single channel raceways for power. Receptacles will be GFI and color coded for normal (grey) and emergency (red) power uses.

 

	
 
	
12.2
	
Fume Hoods: Fume Hoods will be 6' wide, bench top hoods with a combination sash. Hoods will be factory pre-piped and pre-wired for Vacuum, Compressed Air and normal power with all services on each fume hood post. Hoods shall be UL 1805 listed and provide a minimum of 100 FPM exhaust with the sash in any position. Hoods will also be provided with self-closing acid and flammable storage cabinet bases. 

 

NOTES: 

 

	
 
	
1.
	
Each prospective build-out, including but not limited to electrical, mechanical and plumbing design shall be reviewed and verified prior to commencement of Construction Documents and is subject to Landlord's review and approval.

 

	
 
	
2.
	
Upgraded items beyond Building Standards include, but are not limited to, the following:

 

	
 
	
1.
	
Cabinetry beyond 6 lineal feet standard

	
 
	
2.
	
Upgraded Carpet.

	
 
	
3.
	
Interior Windows (beyond approved side light window)

	
 
	
4.
	
Gypsum Board Ceilings

	
 
	
5.
	
Plumbing, beyond single bowl standard 

	
 
	
6.
	
Architectural Features (i.e. Light Soffit, Curved Walls, etc., not shown on spec plan)

	
 
	
7.
	
Wallcoverings

	
 
	
8.
	
Dedicated or Higher Voltage Electrical Outlets

	
 
	
9.
	
24 Hour Cooling

	
 
	
10.
	
Interior design and drawings for above noted upgrades

	
 
	
11.
	
Customized lab design

 

	
 
	
3.
	
The following items are responsibility of the Tenant and are excluded from the Owner's scope of work to be provided:

 

			
	
 
	
SCHEDULE 1

-7-
	
 

 

 

	
 
	
1.
	
Security/Access Control within the Tenant Suite.

	
 
	
2.
	
Signage beyond Code required egress signage.

	
 
	
3.
	
Audio/Visual systems

	
 
	
4.
	
Data distribution within the Tenant Suite

	
 
	
5.
	
Server Room HVAC / Dedicated system

	
 
	
6.
	
UPS systems for Tenant Equipment.

 

 

 

			
	
 
	
SCHEDULE 1

-8-
	
 

 

 

SCHEDULE 2

ADDITIONAL DISBURSEMENT BACKUP INFORMATION TO BE PROVIDED BY TENANT

 

	
 
	
–
	
General Contractor G702/703 - original signed and notarized

	
 
	
–
	

	
 
	
–
	
Subcontractor G702/703 or equivalent for each sub  (Copies of signed & notarized)

	
 
	
–
	

	
 
	
–
	
Copies of executed Change Orders or executed Schedule of Values ("SOV") change authorizations (pre GMP)

 

	
 
	
–
	
Unconditional Lien Releases from GC and Subs for prior payment (Civil Code § 8134)

	
 
	
–
	

	
 
	
–
	
Conditional Lien Releases from GC and Subs for payment request (Civil Code § 8132)

	
 
	
–
	

	
 
	
–
	
Releases from suppliers of materials or equipment of any purchase money security interests

	
 
	
–
	

	
 
	
–
	
Stored Material Inventory with appropriate backup (bills of sale, evidence of insurance {with Owner as Certificate Holder and standard additional insureds}, confirmation of location, Affidavit, etc.)

	
 
	
–
	

	
 
	
–
	
Change Order Log (need to include all pending change orders and status tracking)

 

–Clarification of self-performed vs. subcontracted work 

	
 
	
–
	
Job Cost Activity or similar tracking of GC general conditions costs

	
 
	
–
	

	
 
	
–
	
List of all subcontractors 

	
 
	
–
	

	
 
	
–
	
List of contracts/subcontracts entered into since the last request

	
 
	
–
	

	
 
	
–
	
Changes to SOV Values must be authorized by Owner either through an executed Change Order or an executed letter of authorization (pre GMP).  Payapps submitted with unauthorized SOV changes on G703’s will not be accepted. 

 

The General Contractor shall provide all items to Landlord's Representative directly.

 

 

 

			
	
 
	
SCHEDULE 2

-1-
	
 

 

 

EXHIBIT C

 

ADDITIONAL CONTROL AREA AND HAZMAT STORAGE SPACES

 

			
	
 
	

-1-
	
 

 

 

 

 

			
	
 
	

-2-
	
 

 

 

EXHIBIT D

MONUMENT SIGN LOCATION

			
	
 
	
EXHIBIT D

-1-

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