Common use of Security Deposit Letter of Credit Clause in Contracts

Security Deposit Letter of Credit. a. As of the date of this First Amendment, Landlord is holding a letter of credit in the amount of Two Hundred Forty-seven Thousand and 00/100 Dollars ($247,000.00), and Tenant shall otherwise extend the expiration date of such letter of credit in accordance with the provisions of Section 11 of the Lease through October 31, 2019, following which such letter of credit shall expire and not be required to be renewed. b. Contemporaneously with the execution of this First Amendment, Section 11 of the Lease shall be modified by inserting the following language as the second and third textual paragraphs of Section 11: “Exhibit D sets forth Landlord’s projected costs (which may change from time to time) related to the Ascend Termination Fee, the Tenant Allowance and brokerage commissions to be paid as set forth in the Lease. Upon execution of this First Amendment, Tenant shall deliver to Landlord a Letter of Credit in the form specified in the first paragraph of Section 11 of the Lease in an amount equal to Eight Hundred Sixty-two Thousand Five Hundred and 00/100 Dollars ($862,500.00). In addition, not less than fifteen (15) days prior to the date Landlord funds (a) the first tranche of the Tenant Allowance to Tenant or makes the first brokerage commission payment, and (b) any subsequent tranche of the Tenant Allowance to Tenant or makes any subsequent brokerage commission payment, Tenant shall obtain and deliver to Landlord a new or amended Letter of Credit in the form specified in the first paragraph of Section 11 of the Lease in an amount equal to 75% of the total Exhibit D amounts to be disbursed. Except for the Letter of Credit described in Section 11(a) of this First Amendment, all Letters of Credit provided by Tenant hereunder shall expire not less than sixty (60) days after the Lease Expiration Date. When Tenant’s financial statements (beginning with the 2020 calendar year) reflect positive adjusted non-GAAP operating income of more than $8,000,000 per year for any two (2) consecutive fiscal years, Tenant may reduce the Letter of Credit amount to $3,000,000. When Tenant’s financial statements (beginning with the 2020 calendar year) reflect positive adjusted non-GAAP operating income of more than $10,000,000 per year for at least two (2) consecutive fiscal years, Tenant may reduce the Letter of Credit amount to $2,000,000. When Tenant’s financial statements (beginning with the 2017 calendar year) reflect positive adjusted non-GAAP operating income of more than $10,000,000 per year for at least five (5) consecutive fiscal years, Tenant may reduce the Letter of Credit amount to $1,029,520, which shall remain in place for the duration of the lease. Additionally, with respect to the first reduction only, it shall be a condition that Tenant’s balance sheet reflects a minimum cash balance of at least $25 million. In no event shall the Letter of Credit be required to be increased following a reduction thereof. Adjusted non-GAAP operating income shall be defined as: non-GAAP operating income (as defined in the Tenant’s quarterly earnings press release) minus 50% of any contingent compensation expense related to acquisitions as disclosed in the quarterly earnings press release, for the applicable period. By way of example for the year ended December 31, 2015, reported non-GAAP operating income was $10.9 million and contingent compensation was $12 million. The adjusted non-GAAP operating income for the year ended December 31, 2015 would have been $4.9 million. If the foregoing reductions are to be accomplished through an amendment or replacement of the Letter of Credit, Landlord shall reasonably cooperate with Tenant to accomplish the same. In the event Tenant is no longer a publicly traded company, Tenant may satisfy the foregoing requirements by providing comparable financial statements and a certification of such statements by Tenant’s chief financial officer. Notwithstanding the foregoing provisions of this Section 11.b, in the event that Tenant attains an S&P rating of BBB or better, and provides written confirmation of same to Landlord, Tenant shall have no further obligation to provide a Letter of Credit to Landlord pursuant to this subsection, and Landlord will return all existing Letters of Credit within ten (10) business days after Landlord receives such confirmation.”

Security Deposit Letter of Credit. a. As of (a) On or before the date of this First AmendmentConsent Date, Landlord is holding Sub-Subtenant shall deliver to Sub-Sublandlord a letter of credit security deposit (the “Security Deposit”) in the amount of Two One Million, Five Hundred Forty-seven Thousand and 00/100 Dollars ($247,000.00), 1,500,000) to assure the full and Tenant faithful performance by Sub-Subtenant of its obligations under this Sub-Sublease. The Security Deposit shall otherwise extend be in the expiration date form of such an irrevocable stand-by letter of credit (the “Letter of Credit”) in the initial amount of One Million, Five Hundred Thousand Dollars ($1,500,000). If, at any time, all or any part of the Security Deposit is at any time in the form of cash (including any Deposited Funds as hereinafter defined and any amounts drawn under any Letter of Credit), Sub-Sublandlord agrees that such funds shall be the property of Sub-Subtenant, subject, however, to the right of the Sub-Sublandlord to hold, draw upon, use and/or apply such funds in accordance with this Sub-Sublease. If all or any portion of the Security Deposit is in the form of cash, Sub-Subtenant shall use its commercially reasonable efforts to cause a new or revised Letter or Letters of Credit to be issued within fifteen (15) days from any draw such that the full amount of the Security Deposit required hereunder is posted by Letter of Credit, but failure to cause such Letter(s) of Credit to be issued, after such efforts, shall not constitute a default under this Sub-Sublease. Any interest which shall accrue each year on the Security Deposit (if in the form of cash), shall not constitute a part of the Security Deposit, shall be the property of Sub-Subtenant and shall be paid to Sub-Subtenant annually on the last day of each year during the Sub-Sublease, and on termination of this Sub-Sublease, and until paid over to Sub-Subtenant, Sub-Sublandlord shall hold such interest in trust for the benefit of Sub-Subtenant. Except as provided below, the Security Deposit (whether temporarily in the form of cash or a Letter of Credit) shall be maintained in effect until the date (the “SD Expiration Date”) which is thirty (30) days after the expiration or termination this Sub-Sublease. The Security Deposit held by Sub-Sublandlord shall be returned to Sub-Subtenant on the date which is thirty (30) days after the expiration or termination of this Sub-Sublease, less any portion of the Security Deposit which Sub-Sublandlord has drawn upon and/or utilized in accordance with the provisions of Section 11 of the Lease through October 31, 2019, following which such letter of credit shall expire and not be required to be renewed. b. Contemporaneously with the execution of this First Amendment, Section 11 of the Lease shall be modified by inserting the following language as the second and third textual paragraphs of Section 11: “Exhibit D sets forth Landlord’s projected costs (which may change from time to time) related 6. Notwithstanding anything to the Ascend Termination Feecontrary in this Section 6, the Tenant Allowance and brokerage commissions to be paid as set forth in the Lease. Upon execution of this First Amendment, Tenant Sub-Sublandlord shall deliver to Landlord accept a Letter of Credit from Xxxxx Fargo Bank substantially in the form specified of Exhibit D attached hereto. (b) The Letter of Credit shall be issued by a national banking association or other federally insured commercial banking institution that is a member of the New York Clearing House Association selected by Sub-Subtenant and approved by Sub-Sublandlord. The Letter of Credit will be “callable” by Sub-Sublandlord by presentation of a sight-draft without the presentation of any other documents, statements or authorizations, and payable through a branch office of the bank located in the first paragraph cities of Section 11 San Francisco, California or New York, New York. The Letter of Credit shall be assignable and transferable by Sub-Sublandlord and the assignee or transferee shall comply with the terms of this Sub-Sublease concerning the Security Deposit, Letter of Credit and Deposited Funds (and by acceptance of such assignment or transfer the assignee or transferee shall automatically be deemed to have agreed to the foregoing without the need for any written acknowledgement or agreement to that effect), and provided further that such assignment or transfer shall not relieve the Sub-Sublandlord or the assignor or transferor of any of their obligations concerning the Security Deposit, Letter of Credit or Deposited Funds. The premium or purchase price of, or any other Bank fees associated with, such Letter of Credit shall be paid by Sub-Subtenant. The Letter of Credit shall be (i) at sight, unconditional and irrevocable, (ii) maintained in effect, by automatic annual renewal or extension thereafter, until the SD Expiration Date, and Sub-Subtenant shall deliver a new Letter of Credit or certificates or amendments of such renewal or extension to Sub-Sublandlord at least sixty (60) days prior to the expiration of the Lease Letter of Credit or such other evidence satisfactory to Sub-Sublandlord to show that the Letter of Credit has been timely renewed without any other action whatsoever on the part of Sub-Sublandlord, (iii) permit partial draws, and (iv) shall be fully transferable. Should Sub-Subtenant fail to renew the Letter of Credit at least sixty (60) days prior to its expiration, Sub-Sublandlord may draw upon all or a portion of the Letter of Credit and the proceeds thereof shall be cash (the “Deposited Funds”) to be held and applied by Sub-Sublandlord in the same manner as if Sub-Sublandlord held such amount as part, or all, of the Security Deposit, as the case may be, which Deposited Funds shall be deposited by Sub-Sublandlord into an account in the name of the Sub-Sublandlord, with a federal savings and loan association, national banking association or other federally insured banking institution, and such account shall be in the following name: “Magma Design Automation, Inc. Restricted Security Deposit Account” (the “Restricted Deposit Account”). The Restricted Deposit Account shall be restricted and funds in the account may be withdrawn only in accordance with and subject to the terms and conditions of this Sub-Sublease. Within fifteen (15) days of such a draw due to a failure to renew the Letter of Credit, Sub-Subtenant shall use commercially reasonable efforts to cause a replacement letter of credit in the total required amount of the Security Deposit to be issued, but Sub-Subtenant’s failure to cause such Letter of Credit to be issued, after such efforts, shall not constitute a default under the Sub-Sublease. Nothing herein shall be construed to affect Sub-Sublandlord’s right to retain any portion of the Deposited Funds upon a default under this Sub-Sublease. Nothing herein shall be construed to affect Sub-Sublandlord’s right to retain any portion of the Deposited Funds upon a default under this Sub-Sublease. Sub-Subtenant shall not have the right to exercise control or dominion over the Deposited Funds. (c) The holder of the Letter of Credit shall have the right, in addition to any other rights held by Sub-Sublandlord under this Sub-Sublease, to draw down an amount due hereunder (up to the face amount of the Letter of Credit) upon the presentation to the issuing bank of the Letter of Credit and a written statement (the “Draw Certificate”) that such amount is due to Sub-Sublandlord under the terms and conditions of this Sub-Sublease, it being understood that if Sub-Sublandlord be a corporation, partnership or other entity, then such statement shall be signed by an officer (if a corporation), a general partner (if a partnership), or any authorized party (if another entity). The Sub-Sublandlord shall certify in the Draw Certificate that one of the following events or conditions exists (the “Draw Conditions”): (i) Sub-Subtenant is in default of this Sub-Sublease and all applicable notice, grace and/or cure periods have expired without cure by Sub-Subtenant, and Sub-Sublandlord is entitled to the amount requested under the terms and conditions of this Sub-Sublease, (ii) Sub-Subtenant, in Sub-Sublandlord’s reasonable opinion as provided in this Sub-Sublease, is insolvent or (iii) the Letter of Credit will expire in sixty (60) days or less and Sub-Subtenant has failed to renew such Letter of Credit. Sub-Sublandlord agrees not to draw upon the Security Deposit unless one of the Draw Conditions exists, and if Sub-Sublandlord does effect such a “draw,” such “draw” amount shall only be to the extent expressly permitted under this Section 6. (d) In the event of a transfer of Sub-Sublandlord’s interest in the Magma Premises, Sub-Sublandlord shall transfer the Security Deposit (whether in the form of cash or a Letter of Credit) (or request Sub-Subtenant to arrange for the issuance of a substitute letter of credit, in which case Sub-Subtenant will provide such substitute letter of credit within thirty (30) days of Sub-Sublandlord’s request for Sub-Sublandlord to deliver, if applicable) to the transferee, and it is agreed that the provisions hereof shall apply to every transfer of the Security Deposit to a new Sub-Sublandlord. (e) If, as a result of any application or use by Sub-Sublandlord of all or any part of the proceeds from the Security Deposit (whether in the form of Deposited Funds or a Letter of Credit), the amount of the Security Deposit and Deposited Funds shall collectively be less than the amount of the Security Deposit then required hereunder, Sub-Subtenant shall, within fifteen (15) days of its receipt of written notice from Sub-Sublandlord of such deficiency, provide Sub-Sublandlord with additional letter(s) of credit or cash in an amount equal to Eight Hundred Sixty-two Thousand Five Hundred and 00/100 Dollars ($862,500.00). In addition, not less than fifteen (15) days prior to the date Landlord funds (a) deficiency in the first tranche required amount of the Tenant Allowance to Tenant Security Deposit (or makes a replacement letter of credit in the first brokerage commission paymenttotal required amount of the Security Deposit), and any such additional (bor replacement) any subsequent tranche letter of credit shall comply with all of the Tenant Allowance provisions of this Section. Deposited Funds shall also include any funds drawn by Sub-Sublandlord from the Security Deposit which have not been applied to Tenant or makes any subsequent brokerage commission payment, Tenant shall obtain and deliver drawn upon to Landlord a new or amended Letter of Credit in satisfy the form specified in Sub-Subtenant’s obligations hereunder. Without limiting the first paragraph of Section 11 generality of the Lease in an amount equal to 75% of the total Exhibit D amounts to be disbursed. Except for foregoing, if the Letter of Credit described is due to expire earlier than the SD Expiration Date, Sub-Sublandlord will accept Deposited Funds, a renewal letter of credit (or amendment renewing the same) or substitute letter of credit (such renewal or amendment or substitute letter of credit or Deposited Funds to be in Section 11(a) of this First Amendmenteffect and delivered to Sub-Sublandlord, all Letters of Credit provided by Tenant hereunder shall expire as applicable, not less later than sixty (60) days after the Lease Expiration Date. When Tenant’s financial statements (beginning with the 2020 calendar year) reflect positive adjusted non-GAAP operating income of more than $8,000,000 per year for any two (2) consecutive fiscal years, Tenant may reduce the Letter of Credit amount to $3,000,000. When Tenant’s financial statements (beginning with the 2020 calendar year) reflect positive adjusted non-GAAP operating income of more than $10,000,000 per year for at least two (2) consecutive fiscal years, Tenant may reduce the Letter of Credit amount to $2,000,000. When Tenant’s financial statements (beginning with the 2017 calendar year) reflect positive adjusted non-GAAP operating income of more than $10,000,000 per year for at least five (5) consecutive fiscal years, Tenant may reduce the Letter of Credit amount to $1,029,520, which shall remain in place for the duration of the lease. Additionally, with respect prior to the first reduction only, it shall be a condition that Tenant’s balance sheet reflects a minimum cash balance of at least $25 million. In no event shall the Letter of Credit be required to be increased following a reduction thereof. Adjusted non-GAAP operating income shall be defined as: non-GAAP operating income (as defined in the Tenant’s quarterly earnings press release) minus 50% of any contingent compensation expense related to acquisitions as disclosed in the quarterly earnings press release, for the applicable period. By way of example for the year ended December 31, 2015, reported non-GAAP operating income was $10.9 million and contingent compensation was $12 million. The adjusted non-GAAP operating income for the year ended December 31, 2015 would have been $4.9 million. If the foregoing reductions are to be accomplished through an amendment or replacement expiration of the Letter of Credit), Landlord which with respect to any letter of credit shall reasonably cooperate with Tenant be irrevocable and automatically renewable as above provided through the SD Expiration Date upon the same terms as the expiring Letter of Credit or such other terms as may be acceptable to accomplish Sub-Sublandlord in its reasonable discretion. (f) If there shall occur an event of default (after applicable notice and cure periods) under this Sub-Sublease, Sub-Sublandlord may, but without obligation to do so, in addition to any other rights and remedies held by Sub-Sublandlord, draw upon, use and/or apply the sameSecurity Deposit, Letter of Credit or Deposited Funds, in part or in whole, to the extent necessary to satisfy the Sub-Subtenant’s obligations hereunder, including application to damages which may be suffered by Sub-Sublandlord as a result of such default. Any draw, use or application of the Security Deposit, Letter of Credit or Deposited Funds by Sub-Sublandlord as aforesaid, including any successor or assignee of Sub-Sublandlord or Sub-Sublandlord’s lender, shall be deemed applied to the obligations of Sub-Subtenant under this Sub-Sublease regardless of the disposition of the funds drawn, used or applied. In the event Tenant is no longer a publicly traded companySub-Sublandlord, Tenant may satisfy its successors or assigns, including Sub-Sublandlord’s mortgagee, draws from or under or uses or applies the foregoing requirements by providing comparable financial statements and a certification of such statements by Tenant’s chief financial officer. Notwithstanding the foregoing provisions of this Section 11.bSecurity Deposit, in the event that Tenant attains an S&P rating of BBB or better, and provides written confirmation of same to Landlord, Tenant shall have no further obligation to provide a Letter of Credit or Deposited Funds in violation of the terms of this Sub-Sublease, then all funds so drawn shall be held in trust for the benefit of Sub-Subtenant and, in addition to Landlord pursuant any other rights and remedies available to Sub-Subtenant under this subsectionSub-Sublease or at law or in equity, Sub-Sublandlord shall immediately pay over to the Sub-Subtenant all funds so drawn, used or applied, together with interest thereon from the date of the draw, use or application, until the date paid to Sub-Subtenant at two percent (2%) per annum above the prime rate published from time to time by the Wall Street Journal, and Landlord will any bank fees, interest and charges incurred by Sub-Subtenant as a result thereof. The preceding sentences does not, nor should it be construed to, impose a trust with respect to the Deposited Funds except to the extent such funds have been drawn in violation of the terms of this Sub-Sublease. Sub-Subtenant shall also have the right to set-off against any base rent, additional rent or any other payments required of Sub-Subtenant under this Sub-Sublease, any amounts required to be paid by Sub-Sublandlord to Sub-Subtenant under this paragraph. (g) Sub-Subtenant hereby waives the provisions of Section 1950.7 of the California Civil Code, and all other provisions of any Regulations, now or hereinafter in force, which restricts the amount or types of claims that a landlord may make upon a security deposit or imposes upon a landlord (or its successors) any obligation with respect to the handling or return all existing Letters of Credit within ten (10) business days after Landlord receives such confirmationsecurity deposits.”

Security Deposit Letter of Credit. a. As of (a) On or before the date of this First AmendmentConsent Date, Landlord is holding Sub-Subtenant shall deliver to Sub-Sublandlord a letter of credit security deposit (the “Security Deposit”) in the amount of Two One Million, Five Hundred Forty-seven Thousand and 00/100 Dollars ($247,000.00), 1,500,000) to assure the full and Tenant faithful performance by Sub-Subtenant of its obligations under this Sub-Sublease. The Security Deposit shall otherwise extend be in the expiration date form of such an irrevocable stand-by letter of credit (the “Letter of Credit”) in the initial amount of One Million, Five Hundred Thousand Dollars ($1,500,000). If, at any time, all or any part of the Security Deposit is at any time in the form of cash (including any Deposited Funds as hereinafter defined and any amounts drawn under any Letter of Credit), Sub-Sublandlord agrees that such funds shall be the property of Sub-Subtenant, subject, however, to the right of the Sub-Sublandlord to hold, draw upon, use and/or apply such funds in accordance with this Sub-Sublease. If all or any portion of the Security Deposit is in the form of cash, Sub-Subtenant shall use its commercially reasonable efforts to cause a new or revised Letter or Letters of Credit to be issued within fifteen (15) days from any draw such that the full amount of the Security Deposit required hereunder is posted by Letter of Credit, but failure to cause such Letter(s) of Credit to be issued, after such efforts, shall not constitute a default under this Sub-Sublease. Any interest which shall accrue each year on the Security Deposit (if in the form of cash), shall not constitute a part of the Security Deposit, shall be the property of Sub-Subtenant and shall be paid to Sub-Subtenant annually on the last day of each year during the Sub-Sublease, and on termination of this Sub-Sublease, and until paid over to Sub-Subtenant, Sub-Sublandlord shall hold such interest in trust for the benefit of Sub-Subtenant. Except as provided below, the Security Deposit (whether temporarily in the form of cash or a Letter of Credit) shall be maintained in effect until the date (the “SD Expiration Date”) which is thirty (30) days after the expiration or termination this Sub-Sublease. The Security Deposit held by Sub-Sublandlord shall be returned to Sub-Subtenant on the date which is thirty (30) days after the expiration or termination of this Sub-Sublease, less any portion of the Security Deposit which Sub-Sublandlord has drawn upon and/or utilized in accordance with the provisions of Section 11 of the Lease through October 31, 2019, following which such letter of credit shall expire and not be required to be renewed. b. Contemporaneously with the execution of this First Amendment, Section 11 of the Lease shall be modified by inserting the following language as the second and third textual paragraphs of Section 11: “Exhibit D sets forth Landlord’s projected costs (which may change from time to time) related 6. Notwithstanding anything to the Ascend Termination Feecontrary in this Section 6, the Tenant Allowance and brokerage commissions to be paid as set forth in the Lease. Upon execution of this First Amendment, Tenant Sub-Sublandlord shall deliver to Landlord accept a Letter of Credit from Xxxxx Fargo Bank substantially in the form specified of Exhibit D attached hereto. (b) The Letter of Credit shall be issued by a national banking association or other federally insured commercial banking institution that is a member of the New York Clearing House Association selected by Sub-Subtenant and approved by Sub-Sublandlord. The Letter of Credit will be “callable” by Sub-Sublandlord by presentation of a sight-draft without the presentation of any other documents, statements or authorizations, and payable through a branch office of the bank located in the first paragraph cities of Section 11 San Francisco, California or New York, New York. The Letter of Credit shall be assignable and transferable by Sub-Sublandlord and the assignee or transferee shall comply with the terms of this Sub-Sublease concerning the Security Deposit, Letter of Credit and Deposited Funds (and by acceptance of such assignment or transfer the assignee or transferee shall automatically be deemed to have agreed to the foregoing without the need for any written acknowledgement or agreement to that effect), and provided further that such assignment or transfer shall not relieve the Sub-Sublandlord or the assignor or transferor of any of their obligations concerning the Security Deposit, Letter of Credit or Deposited Funds. The premium or purchase price of, or any other Bank fees associated with, such Letter of Credit shall be paid by Sub-Subtenant. The Letter of Credit shall be (i) at sight, unconditional and irrevocable, (ii) maintained in effect, by automatic annual renewal or extension thereafter, until the SD Expiration Date, and Sub-Subtenant shall deliver a new Letter of Credit or certificates or amendments of such renewal or extension to Sub-Sublandlord at least sixty (60) days prior to the expiration of the Lease Letter of Credit or such other evidence satisfactory to Sub-Sublandlord to show that the Letter of Credit has been timely renewed without any other action whatsoever on the part of Sub-Sublandlord, (iii) permit partial draws, and (iv) shall be fully transferable. Should Sub-Subtenant fail to renew the Letter of Credit at least sixty (60) days prior to its expiration, Sub-Sublandlord may draw upon all or a portion of the Letter of Credit and the proceeds thereof shall be cash (the “Deposited Funds”) to be held and applied by Sub-Sublandlord in the same manner as if Sub-Sublandlord held such amount as part, or all, of the Security Deposit, as the case may be, which Deposited Funds shall be deposited by Sub-Sublandlord into an account in the name of the Sub-Sublandlord, with a federal savings and loan association, national banking association or other federally insured banking institution, and such account shall be in the following name: “Magma Design Automation, Inc. Restricted Security Deposit Account” (the “Restricted Deposit Account”). The Restricted Deposit Account shall be restricted and funds in the account may be withdrawn only in accordance with and subject to the terms and conditions of this Sub-Sublease. Within fifteen (15) days of such a draw due to a failure to renew the Letter of Credit, Sub-Subtenant shall use commercially reasonable efforts to cause a replacement letter of credit in the total required amount of the Security Deposit to be issued, but Sub-Subtenant’s failure to cause such Letter of Credit to be issued, after such efforts, shall not constitute a default under the Sub-Sublease. Nothing herein shall be construed to affect Sub-Sublandlord’s right to retain any portion of the Deposited Funds upon a default under this Sub-Sublease. Nothing herein shall be construed to affect Sub-Sublandlord’s right to retain any portion of the Deposited Funds upon a default under this Sub-Sublease. Sub-Subtenant shall not have the right to exercise control or dominion over the Deposited Funds. (c) The holder of the Letter of Credit shall have the right, in addition to any other rights held by Sub-Sublandlord under this Sub-Sublease, to draw down an amount due hereunder (up to the face amount of the Letter of Credit) upon the presentation to the issuing bank of the Letter of Credit and a written statement (the “Draw Certificate”) that such amount is due to Sub-Sublandlord under the terms and conditions of this Sub-Sublease, it being understood that if Sub-Sublandlord be a corporation, partnership or other entity, then such statement shall be signed by an officer (if a corporation), a general partner (if a partnership), or any authorized party (if another entity). The Sub-Sublandlord shall certify in the Draw Certificate that one of the following events or conditions exists (the “Draw Conditions”): (i) Sub-Subtenant is in default of this Sub-Sublease and all applicable notice, grace and/or cure periods have expired without cure by Sub-Subtenant, and Sub-Sublandlord is entitled to the amount requested under the terms and conditions of this Sub-Sublease, (ii) Sub-Subtenant, in Sub-Sublandlord’s reasonable opinion as provided in this Sub-Sublease, is insolvent or (iii) the Letter of Credit will expire in sixty (60) days or less and Sub-Subtenant has failed to renew such Letter of Credit. Sub-Sublandlord agrees not to draw upon the Security Deposit unless one of the Draw Conditions exists, and if Sub-Sublandlord does effect such a “draw,” such “draw” amount shall only be to the extent expressly permitted under this Section 6. (d) In the event of a transfer of Sub-Sublandlord’s interest in the Magma Premises, Sub-Sublandlord shall transfer the Security Deposit (whether in the form of cash or a Letter of Credit) (or request Sub-Subtenant to arrange for the issuance of a substitute letter of credit, in which case Sub-Subtenant will provide such substitute letter of credit within thirty (30) days of Sub-Sublandlord’s request for Sub-Sublandlord to deliver, if applicable) to the transferee, and it is agreed that the provisions hereof shall apply to every transfer of the Security Deposit to a new Sub-Sublandlord. (e) If, as a result of any application or use by Sub-Sublandlord of all or any part of the proceeds from the Security Deposit (whether in the form of Deposited Funds or a Letter of Credit), the amount of the Security Deposit and Deposited Funds shall collectively be less than the amount of the Security Deposit then required hereunder, Sub-Subtenant shall, within fifteen (15) days of its receipt of written notice from Sub-Sublandlord of such deficiency, provide Sub-Sublandlord with additional letter(s) of credit or cash in an amount equal to Eight Hundred Sixty-two Thousand Five Hundred and 00/100 Dollars ($862,500.00). In addition, not less than fifteen (15) days prior to the date Landlord funds (a) deficiency in the first tranche required amount of the Tenant Allowance to Tenant Security Deposit (or makes a replacement letter of credit in the first brokerage commission paymenttotal required amount of the Security Deposit), and any such additional (bor replacement) any subsequent tranche letter of credit shall comply with all of the Tenant Allowance provisions of this Section. Deposited Funds shall also include any funds drawn by Sub-Sublandlord from the Security Deposit which have not been applied to Tenant or makes any subsequent brokerage commission payment, Tenant shall obtain and deliver drawn upon to Landlord a new or amended Letter of Credit in satisfy the form specified in Sub-Subtenant’s obligations hereunder. Without limiting the first paragraph of Section 11 generality of the Lease in an amount equal to 75% of the total Exhibit D amounts to be disbursed. Except for foregoing, if the Letter of Credit described is due to expire earlier than the SD Expiration Date, Sub-Sublandlord will accept Deposited Funds, a renewal letter of credit (or amendment renewing the same) or substitute letter of credit (such renewal or amendment or substitute letter of credit or Deposited Funds to be in Section 11(a) of this First Amendmenteffect and delivered to Sub-Sublandlord, all Letters of Credit provided by Tenant hereunder shall expire as applicable, not less later than sixty (60) days after the Lease Expiration Date. When Tenant’s financial statements (beginning with the 2020 calendar year) reflect positive adjusted non-GAAP operating income of more than $8,000,000 per year for any two (2) consecutive fiscal years, Tenant may reduce the Letter of Credit amount to $3,000,000. When Tenant’s financial statements (beginning with the 2020 calendar year) reflect positive adjusted non-GAAP operating income of more than $10,000,000 per year for at least two (2) consecutive fiscal years, Tenant may reduce the Letter of Credit amount to $2,000,000. When Tenant’s financial statements (beginning with the 2017 calendar year) reflect positive adjusted non-GAAP operating income of more than $10,000,000 per year for at least five (5) consecutive fiscal years, Tenant may reduce the Letter of Credit amount to $1,029,520, which shall remain in place for the duration of the lease. Additionally, with respect prior to the first reduction only, it shall be a condition that Tenant’s balance sheet reflects a minimum cash balance of at least $25 million. In no event shall the Letter of Credit be required to be increased following a reduction thereof. Adjusted non-GAAP operating income shall be defined as: non-GAAP operating income (as defined in the Tenant’s quarterly earnings press release) minus 50% of any contingent compensation expense related to acquisitions as disclosed in the quarterly earnings press release, for the applicable period. By way of example for the year ended December 31, 2015, reported non-GAAP operating income was $10.9 million and contingent compensation was $12 million. The adjusted non-GAAP operating income for the year ended December 31, 2015 would have been $4.9 million. If the foregoing reductions are to be accomplished through an amendment or replacement expiration of the Letter of Credit), Landlord which with respect to any letter of credit shall reasonably cooperate with Tenant be irrevocable and automatically renewable as above provided through the SD Expiration Date upon the same terms as the expiring Letter of Credit or such other terms as may be acceptable to accomplish Sub-Sublandlord in its reasonable discretion. (f) If there shall occur an event of default (after applicable notice and cure periods) under this Sub-Sublease, Sub-Sublandlord may, but without obligation to do so, in addition to any other rights and remedies held by Sub-Sublandlord, draw upon, use and/or apply the sameSecurity Deposit, Letter of Credit or Deposited Funds, in part or in whole, to the extent necessary to satisfy the Sub-Subtenant’s obligations hereunder, including application to damages which may be suffered by Sub-Sublandlord as a result of such default. Any draw, use or application of the Security Deposit, Letter of Credit or Deposited Funds by Sub-Sublandlord as aforesaid, including any successor or assignee of Sub-Sublandlord or Sub-Sublandlord’s lender, shall be deemed applied to the obligations of Sub-Subtenant under this Sub-Sublease regardless of the disposition of the funds drawn, used or applied. In the event Tenant is no longer a publicly traded companySub-Sublandlord, Tenant may satisfy its successors or assigns, including Sub-Sublandlord’s mortgagee, draws from or under or uses or applies the foregoing requirements by providing comparable financial statements and a certification of such statements by Tenant’s chief financial officer. Notwithstanding the foregoing provisions of this Section 11.bSecurity Deposit, in the event that Tenant attains an S&P rating of BBB or better, and provides written confirmation of same to Landlord, Tenant shall have no further obligation to provide a Letter of Credit or Deposited Funds in violation of the terms of this Sub-Sublease, then all funds so drawn shall be held in trust for the benefit of Sub-Subtenant and, in addition to Landlord pursuant any other rights and remedies available to Sub-Subtenant under this subsectionSub-Sublease or at law or in equity, Sub-Sublandlord shall immediately pay over to the Sub-Subtenant all funds so drawn, used or applied, together with interest thereon from the date of the draw, use or application, until the date paid to Sub-Subtenant at two percent (2%) per annum above the prime rate published from time to time by the Wall Street Journal, and Landlord will return all existing Letters any bank fees, interest and charges incurred by Sub-Subtenant as a result thereof. The preceding sentences does not, nor should it be construed to, impose a trust with respect to the Deposited Funds except to the extent such funds have been drawn in violation of Credit within ten (10) business days after Landlord receives such confirmationthe terms of this Sub-Sublease. Sub-Subtenant shall also have the right to set-off against any base rent, additional rent or any other payments required of Sub-Subtenant under this Sub-Sublease, any amounts required to be paid by Sub-Sublandlord to Sub-Subtenant under this paragraph.”

Security Deposit Letter of Credit. a. As To secure both the performance of all obligations set forth herein and the date payment of this First Amendmentall amounts due hereunder throughout the Term, Landlord is holding including any Renewal Term, Licensee shall maintain in full force and effect and deliver to Navy Pier Inc., in a form acceptable to Navy Pier Inc., either a cash Security Deposit or an unconditional, irrevocable, direct pay letter of credit in the face amount of Two Hundred Forty-seven Twenty Five Thousand and 00/100 Dollars ($247,000.0025,000.00) (“Letter of Credit”), and Tenant . Licensor shall otherwise extend determine whether the expiration date of such letter of credit in accordance with the provisions of Section 11 of the Lease through October 31, 2019, following which such letter of credit shall expire and not be required to be renewed. b. Contemporaneously with the execution of this First Amendment, Section 11 of the Lease Securitization shall be modified by inserting the following language as the second and third textual paragraphs of Section 11: “Exhibit D sets forth Landlord’s projected costs (which may change from time to time) related to the Ascend Termination Fee, the Tenant Allowance and brokerage commissions to be paid as set forth in the Leaseform of a cash Security Deposit or Letter of Credit. Upon execution of this First Amendment, Tenant shall deliver to Landlord If a Letter of Credit in the form specified in the first paragraph of Section 11 of the Lease in an amount equal to Eight Hundred Sixty-two Thousand Five Hundred and 00/100 Dollars ($862,500.00). In additionis used, not less than fifteen (15) days prior it shall conform to the date Landlord funds following requirements: (a) The Letter of Credit shall be issued by a commercial banking institution which is located in the first tranche United States with a commercial paper rating of the Tenant Allowance to Tenant A-3 or makes the first brokerage commission payment, better by Standard and Poor’s Corporation or P-3 or better by Mxxxx’x Investors Service. (b) any subsequent tranche of the Tenant Allowance to Tenant or makes any subsequent brokerage commission payment, Tenant shall obtain and deliver to Landlord a new or amended The Letter of Credit in shall expire no sooner than twelve (12) months after its effective date and shall automatically renew for additional twelve (12) month periods until the form specified in the first paragraph of Section 11 term of the Lease in an amount equal last Affiliate Agreement has expired. (c) The Letter of Credit shall require the issuer to 75% of furnish the total Exhibit D amounts Licensor with no less than forty five (45) days’ advance written notice if issuer intends not to be disbursed. Except for renew the Letter of Credit described in Section 11(a) of this First Amendment, all Letters of Credit provided by Tenant hereunder shall expire not less than sixty (60) days after the Lease Expiration Date. When Tenant’s financial statements (beginning with the 2020 calendar year) reflect positive adjusted non-GAAP operating income of more than $8,000,000 per year for any two (2) consecutive fiscal years, Tenant may reduce the Letter of Credit amount to $3,000,000. When Tenant’s financial statements (beginning with the 2020 calendar year) reflect positive adjusted non-GAAP operating income of more than $10,000,000 per year for at least two (2) consecutive fiscal years, Tenant may reduce the Letter of Credit amount to $2,000,000. When Tenant’s financial statements (beginning with the 2017 calendar year) reflect positive adjusted non-GAAP operating income of more than $10,000,000 per year for at least five (5) consecutive fiscal years, Tenant may reduce the Letter of Credit amount to $1,029,520, which shall remain in place for the duration of the lease. Additionally, with respect to the first reduction only, it shall be a condition that Tenant’s balance sheet reflects a minimum cash balance of at least $25 million. In no event shall the Letter of Credit be required to be increased following a reduction thereof. Adjusted non-GAAP operating income shall be defined as: non-GAAP operating income (as defined in the Tenant’s quarterly earnings press release) minus 50% of any contingent compensation expense related to acquisitions as disclosed in the quarterly earnings press release, for the applicable period. By way of example for the year ended December 31, 2015, reported non-GAAP operating income was $10.9 million and contingent compensation was $12 million. The adjusted non-GAAP operating income for the year ended December 31, 2015 would have been $4.9 millionCredit. If the foregoing reductions are Licensor receives issuer’s notice of intent not to be accomplished through an amendment or replacement renew and if Licensee fails to furnish the Licensor with a substitute unconditional, irrevocable, direct pay letter of credit as set forth herein at least twenty (20) days before the expiration date of the Letter of Credit, Landlord shall reasonably cooperate with Tenant to accomplish the same. In the event Tenant is no longer a publicly traded company, Tenant may satisfy the foregoing requirements by providing comparable financial statements and a certification of such statements by Tenant’s chief financial officer. Notwithstanding the foregoing provisions of this Section 11.b, in the event that Tenant attains an S&P rating of BBB or better, and provides written confirmation of same to Landlord, Tenant Licensor shall have no further obligation to provide a the right at any time during the last twenty (20) days of the expiring Letter of Credit to Landlord pursuant draw on it up to this subsectionthe full amount of One Hundred Thousand Dollars ($100,000). (d) If the Licensor draws upon the Letter of Credit, and Landlord will return all existing Letters Licensee shall reinstate the Letter of Credit to the full amount required hereunder within ten five (105) business days of the date of the draw. (e) The Letter of Credit shall be for the benefit of the Licensor and its successors and assigns and shall entitle the Licensor and its successors and assigns to draw from time to time up to the full amount of the Letter of Credit in portion or in whole upon presentation a sight draft. (f) Any payment to the Licensor pursuant to the Letter of Credit shall not relieve Licensee of any liability, deficiencies, expenses or damages beyond what is paid under the Letter of Credit for Licensee’s failure to perform the obligations contained herein or to pay any amounts due hereunder. Licensee shall continue to be liable for any liabilities, deficiencies, expenses or damages in excess of the Letter of Credit amount. (g) The Letter of Credit will be drawn upon by the Licensor only in the event of default by the Licensee and after Landlord receives such confirmationany applicable notice period has expired.”

Security Deposit Letter of Credit. a. As 2.5.1 Within three (3) Business Days of the date Tenant’s execution of this First AmendmentLease, Landlord is holding and in lieu of a cash security deposit, Tenant shall provide a letter of credit (the “Letter of Credit”) in the amount set forth as the “Security Deposit/Letter of Two Hundred Forty-seven Thousand Credit” in the Basic Lease Information. Any cash security deposit drawn from the Letter of Credit may be mingled with other funds of Landlord and 00/100 Dollars ($247,000.00)no fiduciary relationship shall be created with respect to such deposit, nor shall Landlord be liable to pay Tenant interest thereon. The initial amount of the Letter of Credit shall be determined using Landlord’s reasonable estimate of the Base Rent at the time of the execution of the Lease, and within thirty (30) days after delivery of the Final Calculation Notice the Letter of Credit shall be modified or reissued in the required amount as determined using the Base Rent set forth in the Final Calculation Notice. Provided that Tenant shall otherwise extend has not assigned its interest in this Lease (other than with respect to a Permitted Transfer) and there is no uncured Event of Default, on each of (i) the expiration second (2nd) anniversary of the Commencement Date, and (ii) the fourth (4th) anniversary of the Commencement Date, and (iii) the date of such letter of credit when Tenant has either commenced the Tenant Improvements for the Day 2 Space in accordance with the provisions of Section 11 Work Letter or the parties have otherwise entered into a mutually agreeable modification to this Lease that eliminates Tenant’s phasing of the Lease through October 31Tenant Improvements such that the entire Premises is fit-out in one phase, 2019, following which such letter of credit shall expire Tenant may notify Landlord in writing (the “Reduction Request”) and not be required to be renewed. b. Contemporaneously with request the execution of this First Amendment, Section 11 reduction of the Lease shall be modified by inserting Letter of Credit. The amount of reduction of the following language as the second and third textual paragraphs of Section 11: “Exhibit D sets forth Landlord’s projected costs (which may change from time to time) related to the Ascend Termination Fee, the Tenant Allowance and brokerage commissions to be paid as set forth in the Lease. Upon execution of this First Amendment, Tenant shall deliver to Landlord a Letter of Credit shall be (A) equal to two (2) months of the initial Base Rent for each of the conditions described in clauses (i) and (ii) in the form specified in the first paragraph of Section 11 of the Lease in foregoing sentence, and (B) an amount equal to Eight Hundred Sixty-two Thousand Five Hundred and 00/100 Dollars the Day 2 Improvements Security for the condition described in clause ($862,500.00iii) of the foregoing sentence (in each case, the “Reduction Amount”). In additionProvided that the applicable conditions above have been satisfied at the time Landlord receives a Reduction Request, not less than fifteen (15) days prior to Landlord shall instruct the date Landlord funds (a) the first tranche of the Tenant Allowance to Tenant or makes the first brokerage commission paymentBank, and (b) any subsequent tranche of the Tenant Allowance to Tenant or makes any subsequent brokerage commission payment, Tenant shall obtain and deliver to Landlord a new or amended Letter of Credit in the form specified in the first paragraph of Section 11 of the Lease in an amount equal to 75% of the total Exhibit D amounts to be disbursed. Except for the Letter of Credit described in Section 11(a) of this First Amendment, all Letters of Credit provided by Tenant hereunder shall expire not less than within sixty (60) days after Landlord’s receipt of the Lease Expiration Date. When Tenant’s financial statements (beginning with the 2020 calendar year) reflect positive adjusted non-GAAP operating income of more than $8,000,000 per year for any two (2) consecutive fiscal yearsReduction Request, Tenant may reduce that the Letter of Credit amount to $3,000,000. When Tenant’s financial statements (beginning with may be reduced by the 2020 calendar year) reflect positive adjusted non-GAAP operating income of more than $10,000,000 per year for at least two (2) consecutive fiscal years, Tenant may reduce the Letter of Credit amount to $2,000,000. When Tenant’s financial statements (beginning with the 2017 calendar year) reflect positive adjusted non-GAAP operating income of more than $10,000,000 per year for at least five (5) consecutive fiscal years, Tenant may reduce the Letter of Credit amount to $1,029,520, which shall remain in place for the duration of the lease. Additionally, with respect to the first reduction only, it shall be a condition that Tenant’s balance sheet reflects a minimum cash balance of at least $25 millionapplicable Reduction Amount. In no event shall the Letter of Credit be required reduced to be increased following a reduction thereof. Adjusted non-GAAP operating income an amount less than six (6) months of the initial Base Rent. 2.5.2 The Letter of Credit (i) shall be defined as: non-GAAP operating income irrevocable and shall be issued by a commercial bank that has a financial condition reasonably acceptable to Landlord and that is otherwise an Eligible Bank (as defined below) and has an office in San Francisco, California that accepts requests for draws on the Tenant’s quarterly earnings press release) minus 50% Letter of any contingent compensation expense related to acquisitions as disclosed in the quarterly earnings press releaseCredit; provided, for the applicable period. By way of example for the year ended December 31, 2015, reported non-GAAP operating income was $10.9 million and contingent compensation was $12 million. The adjusted non-GAAP operating income for the year ended December 31, 2015 would have been $4.9 million. If the foregoing reductions are to Silicon Valley Bank shall be accomplished through deemed an amendment or replacement approved issuer of the Letter of CreditCredit so long as Silicon Valley Bank remains an Eligible Bank, (ii) shall require only the presentation to the issuer (which may be in a location other than San Francisco if permitted on the basis of a fax or electronic submittal only) a certificate of the holder of the Letter of Credit stating that Landlord is entitled to draw on the Letter of Credit pursuant to the terms of the Lease, (iii) shall be payable to Landlord or its successors in interest as the Landlord and shall be freely transferable without cost to any such successor or any lender holding a collateral assignment of Landlord’s interest in the Lease, (iv) shall be for an initial term of not less than one year and contain a provision that such term shall be automatically renewed for successive one-year periods unless the issuer shall, at least forty five (45) days prior to the scheduled expiration date, give Landlord notice of such nonrenewal, (v) shall be transferrable by Landlord without any cost to Landlord or the transferee (or, if there is a transfer fee, Tenant shall pay such fee and such transfer shall not be conditioned upon payment of such fee), and (vi) shall otherwise be in form and substance reasonably cooperate with Tenant acceptable to accomplish Landlord. Notwithstanding the sameforegoing, the term of the Letter of Credit for the final period shall be for a term ending not earlier than the date forty-five (45) days after the last day of the Term. In the event that the issuer ceases to be reasonably acceptable to Landlord, due to a deterioration in its financial condition or change in status that threatens to compromise Landlord’s ability to draw on the Letter of Credit as determined in good faith by Landlord or otherwise by its failure to be an Eligible Bank, then Tenant is no longer shall provide a publicly traded company, Tenant may satisfy replacement Letter of Credit from an issuer satisfying the foregoing requirements by providing comparable financial statements and a certification of such statements by Tenant’s chief financial officer. Notwithstanding the foregoing provisions terms of this Section 11.b, 2.5.2 within thirty (30) days after Xxxxxxxx’s notice of such event. “Eligible Bank” shall mean shall mean a commercial or savings bank organized under the laws of the United States or any state thereof or the District of Columbia and having total assets in the event excess of $1,000,000,000.00 that Tenant attains an S&P shall be a financial institution having a rating of not less than BBB or its equivalent by Standard and Poors Corporation and subject to a Xxxxxxxx Watch Rating of C or better, and provides written confirmation of same to Landlord, Tenant shall have no further obligation to provide a Letter of Credit to Landlord pursuant to this subsection, and Landlord will return all existing Letters of Credit within ten (10) business days after Landlord receives such confirmation.”