UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

(MARK ONE)

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2018

OR

FOR THE TRANSITION PERIOD FROM                      TO                     

Commission File Number 001-36680

 

HubSpot, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

25 First Street

Cambridge, Massachusetts, 02141

(Address of principal executive offices)

(888) 482-7768

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

 

Securities registered pursuant to Section 12(g) of the Act: None.

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    YES   ☒     NO   ☐

Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    YES   ☐     NO   ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES   ☒     NO   ☐

Indicate by check mark whether the registrant has submitted every Interactive Data file required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    YES   ☒     NO   ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

 

 

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    YES   ☐     NO   ☒

The aggregate market value of common stock held by non-affiliates of the registrant, based on the closing price of the registrant’s common stock on June 30, 2018, as reported by the New York Stock Exchange on such date was approximately $4,536,600,064. Shares of the registrant’s common stock held by each executive officer, director and holder of 5% or more of the outstanding common stock have been excluded in that such persons may be deemed to be affiliates. This calculation does not reflect a determination that certain persons are affiliates of the registrant for any other purpose.

On February 11, 2019, the registrant had 39,613,020 shares of common stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s definitive Proxy Statement for its 2019 Annual Meeting of Stockholders are incorporated by reference in Part III of this Annual Report on Form 10-K. Such Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates. Except with respect to information specifically incorporated by reference in this Form 10-K, the Proxy Statement is not deemed to be filed as part of this Form 10-K.

 

 

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HUBSPOT, INC.

TABLE OF CONTENTS

 

 

 

 

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and these statements involve substantial risks and uncertainties. All statements other than statements of historical fact contained in this Annual Report on Form 10-K are forward-looking statements.  Forward-looking statements generally relate to future events or our future financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern our expectations, strategy, plans or intentions. Forward-looking statements contained in this Annual Report on Form 10-K include, but are not limited to, statements about:

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We caution you that the foregoing list may not contain all of the forward-looking statements made in this Annual Report on Form 10-K.

You should not rely upon forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Annual Report on Form 10-K primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, results of operations and prospects. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in “Risk Factors” and elsewhere in this Annual Report on Form 10-K. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Annual Report on Form 10-K. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

The forward-looking statements made in this Annual Report on Form 10-K relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Annual Report on Form 10-K to reflect events or circumstances after the date of this Annual Report on Form 10-K or to reflect new information or the occurrence of unanticipated events, except as required by law.

We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make.

In this Annual Report on Form 10-K, the terms “HubSpot,” “we,” “us,” and “our” refer to HubSpot, Inc. and its subsidiaries, unless the context indicates otherwise.

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PART 1

ITEM I. BUSINESS

Overview

 

We provide a cloud-based marketing, sales, and customer service software platform, which we refer to in this document as our Growth Platform, that enables businesses to grow better. At HubSpot, we’re committed to helping our customers grow better, which means helping them grow without compromise, always solving for the customer, and creating a better experience for customers and company alike. To that end, our Growth Platform, comprised of Marketing Hub, Sales Hub, Service Hub, and a free customer relationship management, or CRM system, features integrated applications and tools that enable businesses to create a relevant and cohesive customer experience throughout the customer lifecycle.

We focus on selling to mid-market business-to-business, or B2B, companies, which we define as companies that have between 2 and 2,000 employees.  We sell our Growth Platform on a subscription basis.  In 2018, our total revenue was $513.0 million, and we incurred net losses of $63.8 million.  As of December 31, 2018, we had 2,638 full-time employees and 56,628 total customers of varying sizes in more than 100 countries.  

Our company was formed as a limited liability company in Delaware on April 4, 2005. We converted to a Delaware corporation on June 7, 2007. Our principal executive offices are located at 25 First Street, Cambridge, Massachusetts, and our main telephone number is 888-482-7768.  Our website address is https://www.hubspot.com. Information contained on or that can be accessed through our website does not constitute part of this Annual Report on Form 10-K, and inclusions of our website address in this Annual Report on Form 10-K are inactive textual references only.  

The HubSpot Approach

We provide our Growth Platform to enable businesses to attract, engage, and delight customers throughout the customer lifecycle. Our Growth Platform features a central database of lead and customer interactions and integrated applications to help businesses attract visitors to their websites, convert visitors into leads, close leads into customers, and delight customers so they become promoters of those businesses.

Designed to Help Companies Grow Better. Our Growth Platform was architected from the ground up to enable businesses to transform their marketing, sales, and services playbook to meet the demands of today’s customers.  Our Growth Platform includes integrated applications and tools that help businesses efficiently attract more customers through search engine optimization, social media, blogging, marketing automation, and other useful content.  In addition, our Growth Platform is designed to help businesses personalize and optimize interactions with their customers through website content management, messaging, chatbots, landing pages, ticketing, knowledge base and emails.  

Ease of Use of an Expansible Platform. We provide a set of integrated applications on a common platform, which offers businesses ease of use and simplicity. Our Growth Platform has one login, one user interface, one inbound database, and one team for support. Our Growth Platform is designed to be used by people without technical training, does not require an expert or technical system administrator, and was built to make it easy to get started. In addition to being a comprehensive suite itself, our Growth Platform seamlessly integrates with hundreds of external applications, making it easy to extend the functionality of our Growth Platform and customize it for any business.  

Power of a Unified Customer View. At the core of our Growth Platform is a single CRM database for each business that captures its lead and customer activity throughout the customer lifecycle. Our Growth Platform creates a unified timeline incorporating all the interactions with a particular customer. With our Conversations tool, our Growth Platform also centralizes all conversations in  a universal inbox that gives sales, marketing, and customer service teams one place to view, manage, and reply to all conversations — regardless of the messaging channel they came from.

Scalability. Our Growth Platform was designed and built to serve a large number of customers and with demanding use cases. Our Growth Platform currently processes billions of data points each week, and we use leading global cloud infrastructure providers and our own automation technology to dynamically allocate capacity to handle processing workloads of all sizes. We have built our Growth Platform on modern technologies, including HBase, Kafka, and Elastic Search, which we believe are more scalable than traditional database technologies. Our scalability gives us flexibility for future growth and enables us to service a large variety of businesses of different sizes across different industries.

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Extendable and Open Architecture. Our Growth Platform features a variety of open APIs that allows easy integration of our platform with other applications. We enable our customers to connect our platform to their other applications, such as ecommerce, event management and videoconferencing applications. By connecting third-party applications, our customers can leverage our centralized inbound database to perform additional functions and analysis.

Our Competitive Strengths

We believe that our market leadership position is based on the following key strengths:

Leading Platform. We have designed and built a world-class Growth Platform. We believe our customers choose our Growth Platform over others because of its powerful, integrated, and easy-to-use applications.

Market Leadership and Strong Brand. We are a recognized thought leader in the cloud-based marketing, sales, and customer service software industry with a leading brand. Our founders, Brian Halligan and Dharmesh Shah, wrote the best-selling marketing book Inbound Marketing: Get Found Using Google, Social Media and Blogs. An inbound marketing, sales, and service experience attracts, engages, and delights customers by being more relevant, more helpful, more personalized, and less interruptive than traditional marketing and sales tactics. Our INBOUND conference is one of the largest inbound industry conference events with registered attendance increasing from 1,100 in 2011 to over 24,000 in 2018.

Large and Growing Partner Program.  Thousands of agencies and consultants worldwide, which we refer to as our Partners, promote our brand and offer our Growth Platform to their clients. Partners and customers referred to us by our Partners represented approximately 36% of our Total Customers, as defined in our Key Business Metrics in Item 7, as of December 31, 2018, and approximately 40% of our revenue for the year ended December 31, 2018. These Partners help us to promote the vision of the inbound experience, efficiently reach new mid-market businesses at scale, and provide our mutual customers with more diverse and higher-touch services.

Mid-Market Focus. We believe we have significant competitive advantages reaching mid-market businesses and efficiently reach this market at scale as a result of our inbound methodology, freemium pricing strategy, and our Partner channel. Through our freemium products, our customers are able to receive value from HubSpot before converting to a paid product or engaging with sales.

Powerful Network Effects. We have built a large and growing ecosystem around our Growth Platform and company.  Thousands of our customers integrate third-party applications with our Growth Platform.  We believe this ecosystem drives more businesses and professionals to embrace the inbound playbook. As our engaged audience grows, more Partners collaborate with us, more third-party developers integrate their applications with our Growth Platform, and more professionals complete our certification programs, all of which help to drive more businesses to adopt our Growth Platform.

Our Growth Strategy

The key elements to our growth strategy are:

Grow Our Customer Base. The market for our Growth Platform is large and underserved. Mid-market businesses are particularly underserved by existing point application vendors and often lack sufficient resources to implement complex solutions. Our all-in-one Growth Platform allows mid-market businesses to efficiently adopt and execute an effective inbound marketing, sales, and customer service strategy to help them expand and grow. We will continue to leverage our inbound go-to-market approach, freemium pricing strategy and our network of Partners to keep growing our business.

Increase Revenue from Existing Customers. With 56,628 Total Customers in more than 100 countries spanning many industries, we believe we have a significant opportunity to increase revenue from our existing customers. We plan to increase revenue from our existing customers by expanding their use of our Growth Platform by upselling additional offerings and features, adding additional users,  and cross-selling our marketing, sales, and service products to existing customers through touchless or low touch in-product purchases. Our scalable pricing model allows us to capture more spend as our customers grow, increase the number of their customers and prospects managed on our Growth Platform, and offer additional functionality available from our higher price tiers and add-ons, providing us with a substantial opportunity to increase the lifetime value of our customer relationships.

Keep Expanding Internationally. There is a significant opportunity for our Growth Platform outside of the United States. As of December 31, 2018, approximately 43% of our Total Customers were located outside of the United States and these customers generated approximately 37% of our total revenue for the year ended December 31, 2018. We sell to those international customers from our U.S., European, Asia Pacific, and South American based operations. We intend to grow our presence in international markets through additional investments in local sales, marketing and professional service capabilities, as well as by leveraging our Partner network. We have opened six international offices and plan to open additional international offices. We already have significant website traffic from regions outside the United States, and we believe that markets outside the United States represent a significant growth opportunity.

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Continue to Innovate and Expand Our Growth Platform. Mid-market businesses are increasingly realizing the value of having an integrated marketing, sales, and customer service platform. We believe we are well positioned to capitalize on this opportunity by introducing new products and applications to extend the functionality of our Growth Platform. For example, in 2018 we announced the availability of new Sales Hub Enterprise and Service Hub offerings, as well as numerous updates to our Marketing Hub Starter and Marketing Hub Enterprise products.

Selectively Pursue Acquisitions. We plan to selectively pursue acquisitions of complementary businesses, technologies and teams that would allow us to add new features and functionalities to our platform and accelerate the pace of our innovation.

Our Growth Platform

Our Growth Platform, comprised of Marketing Hub, Sales Hub, Service Hub, and a free CRM, features integrated applications and tools that enable companies to create a cohesive and adaptable customer experience.  Each Hub can be used standalone or in conjunction with the other Hubs. Our Hubs are available in both free and paid tiers (i.e., Starter, Professional and Enterprise) with gradually increasing levels of functionality that support the needs of our customers as they see success with our tools and their businesses grow.   

 

HubSpot CRM

The core of our Growth Platform, the HubSpot CRM, is a single database of lead and customer information that allows businesses to track their interactions with contacts and customers, manage their sales activities, and report on their pipeline and sales.  This allows a complete view of lead and customer interactions across all of our integrated applications, giving our Growth Platform substantial power. This integration makes it possible to personalize every aspect of the customer interaction across web content, social media engagement, and email messages across devices, including mobile. The integrated applications on our Growth Platform have a common user interface, are accessed through a single login, and are based on our CRM database.  HubSpot CRM is a free product that can be used standalone, or with any combination of Marketing Hub, Sales Hub, and/or Service Hub.

Marketing Hub

Marketing Hub is an all-in-one toolset for marketers to attract, engage, and nurture new leads towards sales readiness over the entire customer lifecycle. Marketing Hub is available in both free and paid tiers, and can be used standalone, with HubSpot CRM, and/or any version of Sales Hub or Service Hub. Features include: marketing automation and email, social media, search engine optimization (SEO), CRM Sync, and reporting and analytics.

 

Sales Hub

We designed Sales Hub to enhance the productivity and effectiveness of sales teams. Businesses can empower their teams with tools that deliver a personalized experience for prospects with less work for sales representatives. Sales Hub is available in both free and paid tiers, and can be used with HubSpot CRM, a third party CRM system, and/or any version of Marketing Hub or Service Hub.  Features include: email templates and tracking, conversations and live chat, meeting and call scheduling, lead and website visit alerts, sales automation, and lead scoring.

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Service Hub

Service Hub is our customer service software that is designed to help businesses manage and connect with customers. Service Hub is available in free and paid tiers, and can be used standalone, with HubSpot CRM Free, and/or any version of Marketing Hub or Sales Hub. Features include: conversations and live chat functionality, conversational bots, tickets and help desk, automation and routing, knowledge base, team emails, feedback and reporting tools, and customer goals.

 

HubSpot CMS

HubSpot CMS combines the power of content relationship management and a content management system into one integrated platform.  Our content tools enable businesses to create new and edit existing web content while also personalizing their websites for different visitors and optimizing their websites to convert more visitors into leads and customers.  HubSpot CMS can be purchased as a standalone product and/or with any version of Marketing Hub, Sales Hub, or Service Hub. Features include: website pages, business blogging, smart content, landing pages and forms, SEO tools, forms and lead flow, web analytics reporting, calls-to-action, and file manager.

Platform Partners

Businesses that use software outside of HubSpot can leverage our ecosystem of certified third-party integrations. We make it easy to find and install new or existing software solutions that complement our Growth Platform.  Over 200 certified integrations are available for our users, across a wide range of categories, including integrations with leading social media, email, sales, video, analytics, content and webinar tools.  

Our Services

We complement our product offerings with professional services and support. The majority of our services and support is offered over the phone and via web meeting technology rather than in-person, which is a more efficient business model for us and more cost-effective for our customers.

Professional Services. We offer professional services to educate and train customers on how to leverage our Growth Platform and inbound methodology to transform how their business attracts, engages and delights customers. Depending on which product plan and professional services a customer buys, they receive one-on-one training and advice from one of our implementation specialists by phone and web meeting and can purchase additional group training and education in online or in-person classes. Our professional services are also available to customers who need additional assistance on a one-time or ongoing basis for an additional fee.

Support. In addition to assistance provided by our online articles and customer discussion forums, we offer phone and/or email and chat based support, which is included in the cost of a subscription for our Marketing, Sales, and Service Hub products. Phone support is available starting at the Professional product level for each Hub. We strive to maintain an exceptional quality of customer service. We continuously monitor key customer service metrics such as phone hold time, ticket response time and ticket resolution rates, and we monitor the customer satisfaction of our customer support interactions. We believe our customer support is an important reason why businesses choose our Growth Platform and recommend it to their colleagues.

Our Total Customers

As of December 31, 2018, we had 56,628 Total Customers in more than 100 countries, representing many industries. No single customer represented more than one percent of our revenue in 2018, 2017 or 2016.

Our Technology

Our 56,628 Total Customers have chosen us as their marketing, sales, or customer service platform, which we architected and built to be secure, highly distributed and highly scalable. Since our founding, we have embraced rapid, iterative product development lifecycles, cloud automation and open-source technologies, including big data platforms, to power marketing, sales and service programs and provide insights not previously possible or available.

Our Growth Platform is a multi-tenant, single code-based, globally available software-as-a-service delivered through web browsers or mobile applications. Our commitment to a highly available, reliable, and scalable platform for businesses of all sizes is accomplished through the use of these technologies.

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Modern Database Architecture. We process billions of data points weekly across various channels, including social media, email, SEO and website visits, and continue to drive nearly real-time analytics across these channels. This is possible because we built our database from the ground up using distributed big data technologies such as HBase, Kafka, and Elastic Search to both process and analyze the large amounts of data we collect in our inbound database. Using modern database technologies, we can provide actionable insights across disparate data-sets in a manner not easily achievable or cost effective, at scale or efficiently, with traditional databases or platform architectures.

Agility. Our infrastructure and development and software release processes allow us to update our platform for specific groups of customers or our entire customer base at any time. This means we can rapidly innovate and deliver new functionality frequently, without waiting for quarterly or annual release cycles. We typically deploy updates to our software platform hundreds of times a week, enabling us to gather immediate customer feedback and improve our product quickly and continuously.

Cost leverage. Because our Growth Platform was built on an almost exclusive footprint of open-source software and designed to operate in cloud-based data-centers, we have benefited from large-scale price reductions by these cloud computing service providers as they continue to innovate and compete for market share. As our processing volume continues to grow, we continue to receive larger volume discounts on a per-unit basis for costs such as storage, bandwidth and computing capacity. We also believe that our extensive use of open-source software will provide additional leverage as we scale our Growth Platform and infrastructure.

Scalability. By leveraging leading cloud infrastructure providers along with our automated technology stack, we are able to scale workloads of varying sizes at any time. This allows us to handle customers of all sizes and demands without traditional operational limitations such as network bandwidth, computing cycles, or storage capacity as we can scale our platform on-demand.

Reliability. Customer data is distributed and processed across multiple data centers within a region to provide redundancy. We built our Growth Platform on a distributed computing architecture with no single points of failure and we operate across data-center boundaries daily. In addition to data-center level redundancy, this architecture supports multiple live copies of each data set along with snapshot capabilities for faster, point-in-time data recovery instead of traditional backup and restore methodologies.

Security. We leverage industry standard network and perimeter defense technologies, DDoS protection systems (including web application firewalls) and enterprise grade DNS services across multiple vendors. Our data-center providers operate and certify to high industry compliance levels. Due to the broad footprint of our customer base, we regularly test and evaluate our platform with trusted third-party vendors to ensure the security and integrity of our services.

Marketing and Sales

We believe we are a global leader in implementing an inbound experience in marketing and sales. We believe that our marketing and sales model provides us with a competitive advantage, especially when targeting mid-market businesses, because we can attract and engage these businesses efficiently and at scale.

Inbound Marketing. Our marketing team focuses on inbound marketing and attracts new leads per month through our industry-leading blog and other content, free tools, large social media following, high search engine rankings and personalized website and email content. In addition, we are generating leads for new and add-on product purchases through content and offers delivered through our Growth Platform to existing customers.

Inbound Direct Sales. Our sales representatives are based in our offices in Cambridge, Massachusetts, Dublin, Ireland, Sydney, Australia, Singapore, Tokyo, Japan,  Berlin, Germany, and Bogota, Columbia, and use phone, email, and web meetings to interact with prospects and customers. The majority of revenue generated by our sales representatives originates with inbound leads produced by our marketing efforts. In addition, through our recently launched freemium products and in-product cross-sell offerings, we are starting to close new business with little or no interaction by our sales representatives.

Inbound Channel Sales. In addition to our direct sales team, we have sales representatives that manage relationships with our worldwide network of Partners who both use our platform for their own businesses and also, on a commissioned basis, refer customers to us. These Partners collaborate with us not only to leverage our software platform and educational resources, but also to build their own business by offering new services and shifting their revenue mix to include more retainer-based business with a recurring revenue stream.

Culture and Employees

Transforming the business world to embrace the inbound experience requires a truly remarkable team. From the very beginning, our company was founded on a fundamental belief in radical transparency, individual autonomy, and enlightened empathy.

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We are passionate about creating an inclusive company culture where employees can do their best work. Our Culture Code shares our core values and beliefs, including HEART (Humility, Empathy, Adaptability, Remark-ability, and Transparency), an acronym we use to describe what we believe makes a great employee. By recruiting people with HEART, investing in their personal and professional growth, and making inclusive culture a business priority, we've been named a great place to work globally in 2018. This past year, HubSpot was named a Best Place to Work by Glassdoor, one of Boston Business Journal's Best Places to Work 2018, a Best Workplace for Women by Fortune, and a Best Workplace for Parents by Fortune. We were also honored in a number of categories by Comparably's workplace awards in 2018, including Best CEOs, Best Companies for Women, Best Companies for Diversity, Best Overall Company Culture, and the #1 Company for Employee Happiness.

As of December 31, 2018, we had 2,638 full-time employees, including 808 full-time employees located outside the United States. Although we have statutory employee representation obligations in certain countries, our U.S. employees are not represented by a labor union.  We have not experienced any work stoppages, and we consider our relations with our employees to be good.

Competition

Our market is evolving, highly competitive and fragmented, and we expect competition to increase in the future. We believe the principal competitive factors in our market are:

We believe we compete favorably with respect to all of these factors.

We face intense competition from other software companies that develop marketing, sales and service software and from marketing services companies that provide interactive marketing services. Our competitors offer various point applications that provide certain functions and features that we provide, including:

In addition, instead of using our Growth Platform, some prospective customers may elect to combine disparate point applications, such as content management, marketing automation, analytics, social media management, ticketing, and conversational bots. We expect that new will develop and introduce, or acquire, applications serving customer-facing and other front office functions.

Intellectual Property

Our ability to protect our intellectual property, including our technology, will be an important factor in the success and continued growth of our business. We protect our intellectual property through trade secrets law, copyrights, trademarks, patents, and contracts. Some of our technology relies upon third-party licensed intellectual property. We have no issued U.S. patents and eight U.S. patent applications pending; two are provisional and six are non-provisional. In addition, we have filed three applications with the Patent Cooperation Treaty, which are currently pending.  We intend to pursue additional patent protection to the extent we believe it would be beneficial and cost-effective.

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In addition to the foregoing, we have established business procedures designed to maintain the confidentiality of our proprietary information, including the use of confidentiality agreements and assignment of inventions agreements with employees, independent contractors, consultants, and companies with which we conduct business.

Despite our efforts to protect our intellectual property, unauthorized parties may still copy or otherwise obtain and use our technology. In addition, we intend to continue to expand our international operations, and effective intellectual property, copyright, trademark and trade secret protection may not be available or may be limited in foreign countries. Any significant impairment of our intellectual property rights could harm our business or our ability to compete.

Financial Information About Segments

We operate as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the chief operating decision makers or CODMs, which are our chief executive officer and chief operating officer, in deciding how to allocate resources and assess performance. The CODMs evaluate our financial information and resources and assess the performance of these resources on a consolidated basis. Since we operate in one operating segment, all required financial segment information can be found in the consolidated financial statements. See Footnote 7 within the consolidated financial statements for information by geographic area.

Available Information

Our website is located at http://www.hubspot.com, and our investor relations website is located at https://www.hubspot.com/investor-relations. Copies of our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, are available, free of charge, on our investor relations website as soon as reasonably practicable after such reports are filed with, or furnished to, the Securities and Exchange Commission, or the SEC. The SEC also maintains a website at http://www.sec.gov that contains our SEC filings and other information regarding issuers that file electronically with the SEC.

We webcast our earnings calls and certain events we participate in or host with members of the investment community on our investor relations website. Additionally, we provide notifications of news or announcements regarding our financial performance, including SEC filings, investor events, press and earnings releases, and blogs as part of our investor relations website. We have used, and intend to continue to use, our investor relations website as means of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD. Further corporate governance information, including our certificate of incorporation, bylaws, governance guidelines, board committee charters, and code of business conduct and ethics, is also available on our investor relations website under the heading “Corporate Governance.” The contents of our websites are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file with the SEC, and any references to our websites are intended to be inactive textual references only.

 

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below and the other information in this Annual Report on Form 10-Kand in our other public filings before making an investment decision. Our business, prospects, financial condition, or operating results could be harmed by any of these risks, as well as other risks not currently known to us or that we currently consider immaterial. If any of such risks and uncertainties actually occurs, our business, financial condition or operating results could differ materially from the plans, projections and other forward-looking statements included in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this report and in our other public filings. The trading price of our common stock could decline due to any of these risks, and, as a result, you may lose all or part of your investment.

 

Risks Related to Our Business and Strategy

We have a history of losses and may not achieve profitability in the future.

We generated net losses of $63.8 million in 2018, $39.7 million in 2017, and $45.6 million in 2016.  As of December 31, 2018, we had an accumulated deficit of $344.4 million. We will need to generate and sustain increased revenue levels in future periods to become profitable, and, even if we do, we may not be able to maintain or increase our level of profitability. We intend to continue to expend significant funds to grow our marketing, sales and customer service operations, develop and enhance our Growth Platform, scale our data center infrastructure and services capabilities and expand into new markets. Our efforts to grow our business may be more costly than we expect, and we may not be able to increase our revenue enough to offset our higher operating expenses. We may incur significant losses in the future for a number of reasons, including the other risks described in this Annual Report on Form 10-K, and unforeseen expenses, difficulties, complications and delays and other unknown events. If we are unable to achieve and sustain profitability, the market price of our common stock may significantly decrease.

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We are dependent upon customer renewals, the addition of new customers, increased revenue from existing customers and the continued growth of the market for a Growth Platform.

We derive, and expect to continue to derive, a substantial portion of our revenue from the sale of subscriptions to our Growth Platform. The market for inbound marketing, sales and customer service products is still evolving, and competitive dynamics may cause pricing levels to change as the market matures and as existing and new market participants introduce new types of point applications and different approaches to enable businesses to address their respective needs. As a result, we may be forced to reduce the prices we charge for our platform and may be unable to renew existing customer agreements or enter into new customer agreements at the same prices and upon the same terms that we have historically. In addition, our growth strategy involves a scalable pricing model (including “freemium” versions of our products) intended to provide us with an opportunity to increase the value of our customer relationships over time as we expand their use of our platform, sell to other parts of their organizations, cross-sell our sales products to existing marketing product customers and vice versa through touchless or low touch in product purchases, and upsell additional offerings and features. If our cross-selling efforts are unsuccessful or if our existing customers do not expand their use of our platform or adopt additional offerings and features, our operating results may suffer.

Our subscription renewal rates may decrease, and any decrease could harm our future revenue and operating results.

Our customers have no obligation to renew their subscriptions for our platform after the expiration of their subscription periods, substantially all of which are one year or less. In addition, our customers may seek to renew for lower subscription amounts or for shorter contract lengths. Also, customers may choose not to renew their subscriptions for a variety of reasons. Our renewal rates may decline or fluctuate as a result of a number of factors, including limited customer resources, pricing changes, the prices of services offered by our competitors, adoption and utilization of our platform and add-on applications by our customers, adoption of our new products, customer satisfaction with our platform, mergers and acquisitions affecting our customer base, reductions in our customers’ spending levels or declines in customer activity as a result of economic downturns or uncertainty in financial markets. If our customers do not renew their subscriptions for our platform or decrease the amount they spend with us, our revenue will decline and our business will suffer. In addition, a subscription model creates certain risks related to the timing of revenue recognition and potential reductions in cash flows. A portion of the subscription-based revenue we report each quarter results from the recognition of deferred revenue relating to subscription agreements entered into during previous quarters. A decline in new or renewed subscriptions in any period may not be immediately reflected in our reported financial results for that period, but may result in a decline in our revenue in future quarters. If we were to experience significant downturns in subscription sales and renewal rates, our reported financial results might not reflect such downturns until future periods.

We face significant competition from both established and new companies offering marketing, sales and customer service software and other related applications, as well as internally developed software, which may harm our ability to add new customers, retain existing customers and grow our business.

The marketing, sales and customer service software market is evolving, highly competitive and significantly fragmented. With the introduction of new technologies and the potential entry of new competitors into the market, we expect competition to persist and intensify in the future, which could harm our ability to increase sales, maintain or increase renewals and maintain our prices.

We face intense competition from other software companies that develop marketing, sales and customer service software and from marketing services companies that provide interactive marketing services. Competition could significantly impede our ability to sell subscriptions to our Growth Platform on terms favorable to us. Our current and potential competitors may develop and market new technologies that render our existing or future products less competitive, or obsolete. In addition, if these competitors develop products with similar or superior functionality to our platform, we may need to decrease the prices or accept less favorable terms for our platform subscriptions in order to remain competitive. If we are unable to maintain our pricing due to competitive pressures, our margins will be reduced and our operating results will be negatively affected.

Our competitors include:

In addition, instead of using our platform, some prospective customers may elect to combine disparate point applications, such as content management, marketing automation, CRM, analytics and social media management. We expect that new competitors, such as enterprise software vendors that have traditionally focused on enterprise resource planning or other applications supporting back office functions, will develop and introduce applications serving customer-facing and other front office functions. This development

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could have an adverse effect on our business, operating results and financial condition. In addition, sales force automation and CRM system vendors could acquire or develop applications that compete with our marketing software offerings. Some of these companies have acquired social media marketing and other marketing software providers to integrate with their broader offerings.

Our current and potential competitors may have significantly more financial, technical, marketing and other resources than we have, be able to devote greater resources to the development, promotion, sale and support of their products and services, may have more extensive customer bases and broader customer relationships than we have, and may have longer operating histories and greater name recognition than we have. As a result, these competitors may respond faster to new technologies and undertake more extensive marketing campaigns for their products. In a few cases, these vendors may also be able to offer marketing, sales and customer service software at little or no additional cost by bundling it with their existing suite of applications. To the extent any of our competitors has existing relationships with potential customers for either marketing software or other applications, those customers may be unwilling to purchase our platform because of their existing relationships with our competitor. If we are unable to compete with such companies, the demand for our Growth Platform could substantially decline.

In addition, if one or more of our competitors were to merge or partner with another of our competitors, our ability to compete effectively could be adversely affected. Our competitors may also establish or strengthen cooperative relationships with our current or future strategic distribution and technology partners or other parties with whom we have relationships, thereby limiting our ability to promote and implement our platform. We may not be able to compete successfully against current or future competitors, and competitive pressures may harm our business, operating results and financial condition.

We have experienced rapid growth and organizational change in recent periods and expect continued future growth. If we fail to manage our growth effectively, we may be unable to execute our business plan, maintain high levels of service or address competitive challenges adequately.

Our head count and operations have grown substantially. For example, we had 2,638 full-time employees as of December 31, 2018, as compared with 2,081 as of December 31, 2017 and we have opened 6 international offices since 2013. We also plan to open additional international offices in the future. This growth has placed, and will continue to place, a significant strain on our management, administrative, operational and financial infrastructure. We anticipate further growth will be required to address increases in our product offerings and continued expansion. Our success will depend in part upon our ability to recruit, hire, train, manage and integrate a significant number of qualified managers, technical personnel and employees in specialized roles within our company, including in technology, sales and marketing. If our new employees perform poorly, or if we are unsuccessful in recruiting, hiring, training, managing and integrating these new employees, or retaining these or our existing employees, our business may suffer.

In addition, to manage the expected continued growth of our head count, operations and geographic expansion, we will need to continue to improve our information technology infrastructure, operational, financial and management systems and procedures. Our anticipated additional head count and capital investments will increase our costs, which will make it more difficult for us to address any future revenue shortfalls by reducing expenses in the short term. If we fail to successfully manage our growth, we will be unable to successfully execute our business plan, which could have a negative impact on our business, results of operations or financial condition.

Failure to effectively develop and expand our marketing, sales and customer service capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our platform.

To increase total customers and achieve broader market acceptance of our Growth Platform, we will need to expand our marketing, sales and customer service operations, including our sales force and third-party channel partners. We will continue to dedicate significant resources to inbound sales and marketing programs. The effectiveness of our inbound sales and marketing and third-party channel partners has varied over time and may vary in the future and depends on our ability to maintain and improve our Growth Platform. All of these efforts will require us to invest significant financial and other resources. Our business will be seriously harmed if our efforts do not generate a correspondingly significant increase in revenue. We may not achieve anticipated revenue growth from expanding our sales force if we are unable to hire, develop and retain talented sales personnel, if our new sales personnel are unable to achieve desired productivity levels in a reasonable period of time or if our sales and marketing programs are not effective.

The rate of growth of our business depends on the continued participation and level of service of our marketing agency and sales partners.

We rely on our marketing agency and sales partners to provide certain services to our customers, as well as pursue sales of our Growth Platform to customers. To the extent we do not attract new marketing agency and sales partners, or existing or new marketing agency and sales partners do not refer a growing number of customers to us, our revenue and operating results would be harmed. In addition, if our marketing agency and sales partners do not continue to provide services to our customers, we would be required to provide such services ourselves either by expanding our internal team or engaging other third-party providers, which would increase our operating costs.

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If we cannot maintain our company culture as we grow, we could lose the innovation, teamwork, passion and focus on execution that we believe contribute to our success and our business may be harmed.

We believe that a critical component to our success has been our company culture, which is based on transparency and personal autonomy. We have invested substantial time and resources in building our team within this company culture. Any failure to preserve our culture could negatively affect our ability to retain and recruit personnel and to effectively focus on and pursue our corporate objectives. As we grow as and continue to develop the infrastructure of a public company, we may find it difficult to maintain these important aspects of our company culture. If we fail to maintain our company culture, our business may be adversely impacted.

If we fail to maintain our inbound thought leadership position, our business may suffer.

We believe that maintaining our thought leadership position in inbound marketing, sales and services is an important element in attracting new customers. We devote significant resources to develop and maintain our thought leadership position, with a focus on identifying and interpreting emerging trends in the inbound experience, shaping and guiding industry dialog and creating and sharing the best inbound practices. Our activities related to developing and maintaining our thought leadership may not yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incurred in such effort. We rely upon the continued services of our management and employees with domain expertise with inbound marketing, sales and services, and the loss of any key employees in this area could harm our competitive position and reputation. If we fail to successfully grow and maintain our thought leadership position, we may not attract enough new customers or retain our existing customers, and our business could suffer.

If we fail to further enhance our brand and maintain our existing strong brand awareness, our ability to expand our customer base will be impaired and our financial condition may suffer.

We believe that our development of the HubSpot brand is critical to achieving widespread awareness of our existing and future inbound experience solutions, and, as a result, is important to attracting new customers and maintaining existing customers. In the past, our efforts to build our brand have involved significant expenses, and we believe that this investment has resulted in strong brand recognition in the B2B market. Successful promotion and maintenance of our brands will depend largely on the effectiveness of our marketing efforts and on our ability to provide a reliable and useful Growth Platform at competitive prices. Brand promotion activities may not yield increased revenue, and even if they do, any increased revenue may not offset the expenses we incurred in building our brand. If we fail to successfully promote and maintain our brand, our business could suffer.

If we fail to adapt and respond effectively to rapidly changing technology, evolving industry standards and changing customer needs or requirements, our Growth Platform may become less competitive.

Our future success depends on our ability to adapt and innovate our Growth Platform. To attract new customers and increase revenue from existing customers, we need to continue to enhance and improve our offerings to meet customer needs at prices that our customers are willing to pay. Such efforts will require adding new functionality and responding to technological advancements, which will increase our research and development costs. If we are unable to develop new applications that address our customers’ needs, or to enhance and improve our platform in a timely manner, we may not be able to maintain or increase market acceptance of our platform. Our ability to grow is also subject to the risk of future disruptive technologies. Access and use of our Growth Platform is provided via the cloud, which, itself, was disruptive to the previous enterprise software model. If new technologies emerge that are able to deliver inbound marketing software and related applications at lower prices, more efficiently, more conveniently or more securely, such technologies could adversely affect our ability to compete.

We rely on our management team and other key employees, and the loss of one or more key employees could harm our business.

Our success and future growth depend upon the continued services of our management team, including our co-founders, Brian Halligan and Dharmesh Shah, and other key employees in the areas of research and development, marketing, sales, services and general and administrative functions. From time to time, there may be changes in our management team resulting from the hiring or departure of executives, which could disrupt our business. We also are dependent on the continued service of our existing software engineers and information technology personnel because of the complexity of our platform, technologies and infrastructure. We may terminate any employee’s employment at any time, with or without cause, and any employee may resign at any time, with or without cause. We do not have employment agreements with any of our key personnel. The loss of one or more of our key employees could harm our business.

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The failure to attract and retain additional qualified personnel could prevent us from executing our business strategy.

To execute our business strategy, we must attract and retain highly qualified personnel. In particular, we compete with many other companies for software developers with high levels of experience in designing, developing and managing cloud-based software, as well as for skilled information technology, marketing, sales and operations professionals, and we may not be successful in attracting and retaining the professionals we need. Also, inbound sales, marketing and services domain experts are very important to our success and are difficult to replace. We have from time to time in the past experienced, and we expect to continue to experience in the future, difficulty in hiring and difficulty in retaining highly skilled employees with appropriate qualifications. In particular, we have experienced a competitive hiring environment in the Greater Boston area, where we are headquartered. Many of the companies with which we compete for experienced personnel have greater resources than we do. In addition, in making employment decisions, particularly in the software industry, job candidates often consider the value of the stock options or other equity incentives they are to receive in connection with their employment. If the price of our stock declines, or experiences significant volatility, our ability to attract or retain key employees will be adversely affected. If we fail to attract new personnel or fail to retain and motivate our current personnel, our growth prospects could be severely harmed.

If we fail to offer high-quality customer support, our business and reputation may suffer.

High-quality education, training and customer support are important for the successful marketing, sale and use of our Growth Platform and for the renewal of existing customers. Providing this education, training and support requires that our personnel who manage our online training resource, HubSpot Academy, or provide customer support have specific inbound experience domain knowledge and expertise, making it more difficult for us to hire qualified personnel and to scale up our support operations. The importance of high-quality customer support will increase as we expand our business and pursue new customers. If we do not help our customers use multiple applications within our Growth Platform and provide effective ongoing support, our ability to sell additional functionality and services to, or to retain, existing customers may suffer and our reputation with existing or potential customers may be harmed.

We may not be able to scale our business quickly enough to meet our customers’ growing needs and if we are not able to grow efficiently, our operating results could be harmed.

As usage of our Growth Platform grows and as customers use our platform for additional inbound applications, such as sales and services, we will need to devote additional resources to improving our application architecture, integrating with third-party systems and maintaining infrastructure performance. In addition, we will need to appropriately scale our internal business systems and our services organization, including customer support and professional services, to serve our growing customer base, particularly as our customer demographics change over time. Any failure of or delay in these efforts could cause impaired system performance and reduced customer satisfaction. These issues could reduce the attractiveness of our Growth Platform to customers, resulting in decreased sales to new customers, lower renewal rates by existing customers, the issuance of service credits, or requested refunds, which could impede our revenue growth and harm our reputation. Even if we are able to upgrade our systems and expand our staff, any such expansion will be expensive and complex, requiring management’s time and attention. We could also face inefficiencies or operational failures as a result of our efforts to scale our infrastructure. Moreover, there are inherent risks associated with upgrading, improving and expanding our information technology systems. We cannot be sure that the expansion and improvements to our infrastructure and systems will be fully or effectively implemented on a timely basis, if at all. These efforts may reduce revenue and our margins and adversely affect our financial results.

Our ability to introduce new products and features is dependent on adequate research and development resources. If we do not adequately fund our research and development efforts, we may not be able to compete effectively and our business and operating results may be harmed.

To remain competitive, we must continue to develop new product offerings, applications, features and enhancements to our existing Growth Platform. Maintaining adequate research and development personnel and resources to meet the demands of the market is essential. If we are unable to develop our platform internally due to certain constraints, such as high employee turnover, lack of management ability or a lack of other research and development resources, we may miss market opportunities. Further, many of our competitors expend a considerably greater amount of funds on their research and development programs, and those that do not may be acquired by larger companies that would allocate greater resources to our competitors’ research and development programs. Our failure to maintain adequate research and development resources or to compete effectively with the research and development programs of our competitors could materially adversely affect our business.

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Changes in the sizes or types of businesses that purchase our platform or in the applications within our Growth Platform purchased or used by our customers could negatively affect our operating results.

Our strategy is to sell subscriptions to our Growth Platform to mid-sized businesses, but we have sold and will continue to sell to organizations ranging from small businesses to enterprises. Our gross margins can vary depending on numerous factors related to the implementation and use of our Growth Platform, including the sophistication and intensity of our customers’ use of our platform and the level of professional services and support required by a customer. Sales to enterprise customers may entail longer sales cycles and more significant selling efforts. Selling to small businesses may involve greater credit risk and uncertainty. If there are changes in the mix of businesses that purchase our platform or the mix of the product plans purchased by our customers, our gross margins could decrease and our operating results could be adversely affected.

We have in the past completed acquisitions and may acquire or invest in other companies or technologies in the future, which could divert management’s attention, fail to meet our expectations, result in additional dilution to our stockholders, increase expenses, disrupt our operations or harm our operating results.

We have in the past acquired, and we may in the future acquire or invest in, businesses, products or technologies that we believe could complement or expand our platform, enhance our technical capabilities or otherwise offer growth opportunities. We may not be able to fully realize the anticipated benefits of these or any future acquisitions. The pursuit of potential acquisitions may divert the attention of management and cause us to incur various expenses related to identifying, investigating and pursuing suitable acquisitions, whether or not they are consummated.

There are inherent risks in integrating and managing acquisitions. If we acquire additional businesses, we may not be able to assimilate or integrate the acquired personnel, operations and technologies successfully or effectively manage the combined business following the acquisition and our management may be distracted from operating our business. We also may not achieve the anticipated benefits from the acquired business due to a number of factors, including: unanticipated costs or liabilities associated with the acquisition; incurrence of acquisition-related costs, which would be recognized as a current period expense; inability to generate sufficient revenue to offset acquisition or investment costs; the inability to maintain relationships with customers and partners of the acquired business; the difficulty of incorporating acquired technology and rights into our platform and of maintaining quality and security standards consistent with our brand; delays in customer purchases due to uncertainty related to any acquisition; the need to integrate or implement additional controls, procedures and policies; challenges caused by distance, language and cultural differences; harm to our existing business relationships with business partners and customers as a result of the acquisition; the potential loss of key employees; use of resources that are needed in other parts of our business and diversion of management and employee resources; the inability to recognize acquired deferred revenue in accordance with our revenue recognition policies; and use of substantial portions of our available cash or the incurrence of debt to consummate the acquisition. Acquisitions also increase the risk of unforeseen legal liability, including for potential violations of applicable law or industry rules and regulations, arising from prior or ongoing acts or omissions by the acquired businesses which are not discovered by due diligence during the acquisition process. Generally, if an acquired business fails to meet our expectations, our operating results, business and financial condition may suffer. Acquisitions could also result in dilutive issuances of equity securities or the incurrence of debt, which could adversely affect our business, results of operations or financial condition.

In addition, a significant portion of the purchase price of companies we acquire may be allocated to goodwill and other intangible assets, which must be assessed for impairment at least annually. If our acquisitions do not ultimately yield expected returns, we may be required to make charges to our operating results based on our impairment assessment process, which could harm our results of operations.

Because our long-term growth strategy involves further expansion of our sales to customers outside the United States, our business will be susceptible to risks associated with international operations.

A component of our growth strategy involves the further expansion of our operations and customer base internationally. We have opened 6 international offices since 2013. We also plan to open additional offices in the future. These international offices focus primarily on sales, professional services and support. We also have a development team in Dublin, Ireland. Our current international operations and future initiatives will involve a variety of risks, including:

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Our limited experience in operating our business internationally increases the risk that any potential future expansion efforts that we may undertake will not be successful. If we invest substantial time and resources to expand our international operations and are unable to do so successfully and in a timely manner, our business and operating results will suffer. We continue to implement policies and procedures to facilitate our compliance with U.S. laws and regulations applicable to or arising from our international business. Inadequacies in our past or current compliance practices may increase the risk of inadvertent violations of such laws and regulations, which could lead to financial and other penalties that could damage our reputation and impose costs on us.

Interruptions or delays in service from our third-party data center providers could impair our ability to deliver our platform to our customers, resulting in customer dissatisfaction, damage to our reputation, loss of customers, limited growth and reduction in revenue.

We currently serve the majority of our platform functions from third-party data center hosting facilities operated by Amazon Web Services located in northern Virginia and Google Cloud Platform located in Frankfurt, Germany. In addition, we serve ancillary functions for our customers from third-party data center hosting facilities operated by Rackspace located in Dallas, Texas, with a backup facility in Chicago, Illinois. Our operations depend, in part, on our third-party facility providers’ abilities to protect these facilities against damage or interruption from natural disasters, such as earthquakes and hurricanes, power or telecommunications failures, criminal acts and similar events. In the event that any of our third-party facilities arrangements is terminated, or if there is a lapse of service or damage to a facility, we could experience interruptions in our platform as well as delays and additional expenses in arranging new facilities and services.

Any damage to, or failure of, the systems of our third-party providers could result in interruptions to our platform. Despite precautions taken at our data centers, the occurrence of spikes in usage volume, a natural disaster, such as earthquakes or hurricane, an act of terrorism, vandalism or sabotage, a decision to close a facility without adequate notice, or other unanticipated problems at a facility could result in lengthy interruptions in the availability of our on-demand software. Even with current and planned disaster recovery arrangements, our business could be harmed. Also, in the event of damage or interruption, our insurance policies may not adequately compensate us for any losses that we may incur. These factors in turn could further reduce our revenue, subject us to liability and cause us to issue credits or cause customers to fail to renew their subscriptions, any of which could materially adversely affect our business.

We are dependent on the continued availability of third-party data hosting and transmission services.

A significant portion of our operating cost is from our third-party data hosting and transmission services. If the costs for such services increase due to vendor consolidation, regulation, contract renegotiation, or otherwise, we may not be able to increase the fees for our Growth Platform or services to cover the changes. As a result, our operating results may be significantly worse than forecasted.

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If we do not or cannot maintain the compatibility of our Growth Platform with third-party applications that our customers use in their businesses, our revenue will decline.

A significant percentage of our customers choose to integrate our platform with certain capabilities provided by third-party application providers using application programming interfaces, or APIs, published by these providers. The functionality and popularity of our Growth Platform depends, in part, on our ability to integrate our platform with third-party applications and platforms, including CRM, CMS, e-commerce, call center, analytics and social media sites that our customers use and from which they obtain data. Third-party providers of applications and APIs may change the features of their applications and platforms, restrict our access to their applications and platforms or alter the terms governing use of their applications and APIs and access to those applications and platforms in an adverse manner. Such changes could functionally limit or terminate our ability to use these third-party applications and platforms in conjunction with our platform, which could negatively impact our offerings and harm our business. If we fail to integrate our platform with new third-party applications and platforms that our customers use for marketing, sales or services purposes, we may not be able to offer the functionality that our customers need, which would negatively impact our ability to generate revenue and adversely impact our business.

We rely on data provided by third parties, the loss of which could limit the functionality of our platform and disrupt our business.

Select functionality of our Growth Platform depends on our ability to deliver data, including search engine results and social media updates, provided by unaffiliated third parties, such as Facebook, Google, LinkedIn and Twitter. Some of this data is provided to us pursuant to third-party data sharing policies and terms of use, under data sharing agreements by third-party providers or by customer consent. In the future, any of these third parties could change its data sharing policies, including making them more restrictive, or alter its algorithms that determine the placement, display, and accessibility of search results and social media updates, any of which could result in the loss of, or significant impairment to, our ability to collect and provide useful data to our customers. These third parties could also interpret our, or our service providers’, data collection policies or practices as being inconsistent with their policies, which could result in the loss of our ability to collect this data for our customers. Any such changes could impair our ability to deliver data to our customers and could adversely impact select functionality of our platform, impairing the return on investment that our customers derive from using our solution, as well as adversely affecting our business and our ability to generate revenue.

Privacy concerns and end users’ acceptance of Internet behavior tracking may limit the applicability, use and adoption of our Growth Platform.

Privacy concerns may cause end users to resist providing the personal data necessary to allow our customers to use our platform effectively. We have implemented various features intended to enable our customers to better protect end user privacy, but these measures may not alleviate all potential privacy concerns and threats. Even the perception of privacy concerns, whether or not valid, may inhibit market adoption of our platform, especially in certain industries that rely on sensitive personal information. Privacy advocacy groups and the technology and other industries are considering various new, additional or different self-regulatory standards that may place additional burdens on us. The costs of compliance with, and other burdens imposed by these groups’ policies and actions may limit the use and adoption of our Growth Platform and reduce overall demand for it, or lead to significant fines, penalties or liabilities for any noncompliance or loss of any such action.

We are subject to governmental regulation and other legal obligations, particularly related to privacy, data protection and information security, and our actual or perceived failure to comply with such obligations could harm our business. Compliance with such laws could also impair our efforts to maintain and expand our customer base, and thereby decrease our revenue.

Our handling of data is subject to a variety of laws and regulations, including regulation by various government agencies, including the U.S. Federal Trade Commission, or FTC, and various state, local and foreign agencies. We collect personally identifiable information and other data from our customers and leads. We also handle personally identifiable information about our customers’ customers. We use this information to provide services to our customers, to support, expand and improve our business. We may also share customers’ personally identifiable information with third parties as authorized by the customer or as described in our privacy policy.

The U.S. federal and various state and foreign governments have adopted or proposed limitations on the collection, distribution, use and storage of personal information of individuals. In the United States, the FTC and many state attorneys general are applying federal and state consumer protection laws as imposing standards for the online collection, use and dissemination of data. However, these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other requirements or our practices. Any failure or perceived failure by us to comply with privacy or security laws, policies, legal obligations or industry standards or any security incident that results in the unauthorized release or transfer of personally identifiable information or other customer data may result in governmental enforcement actions, litigation, fines and penalties and/or adverse publicity, and could cause our customers to lose trust in us, which could have an adverse effect on our reputation and business.

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Laws and regulations concerning privacy, data protection and information security are evolving, and changes to such laws and regulations could require us to change features of our platform or restrict our customers’ ability to collect and use email addresses, page viewing data and personal information, which may reduce demand for our platform. Our failure to comply with federal, state and international data privacy laws and regulations could harm our ability to successfully operate our business and pursue our business goals.

In addition, several foreign countries and governmental bodies, including the European Union and Canada, have regulations dealing with the collection and use of personal information obtained from their residents, which are often more restrictive than those in the United States. Laws and regulations in these jurisdictions apply broadly to the collection, use, storage, disclosure and security of personal information that identifies or may be used to identify an individual. Within the European Union, legislators have adopted the General Data Protection Regulation, or GDPR, which became effective in May 2018 which may impose additional obligations and risk upon our business and which may increase substantially the penalties to which we could be subject in the event of any non-compliance. In addition, Brexit could also lead to further legislative and regulatory changes by the planned exit date of March 2019. It remains unclear how the United Kingdom data protection laws or regulations will develop in the medium to longer term and how data transfers to and from the United Kingdom will be regulated.  We may incur substantial expense in complying with the new obligations to be imposed by the GDPR and we may be required to make significant changes in our business operations, all of which may adversely affect our revenues and our business overall.

On May 23, 2016, the European Parliament adopted a resolution and on July 8, 2016 the European Member State representatives approved the final version of the EU-US Privacy Shield as a successor to the Safe Harbor framework. As of August 1, 2016, interested companies have been permitted to register for the program. We are currently certified to the EU-US Privacy Shield. There continue to be concerns about whether the EU-US Privacy Shield will face additional challenges. Until the remaining legal uncertainties regarding the future of the EU-US Privacy Shield are settled, we will continue to face uncertainty as to whether our efforts to comply with our obligations under European privacy laws will be sufficient. If we are investigated by a European data protection authority, we may face fines and other penalties. Any such investigation or charges by European data protection authorities could have a negative effect on our existing business and on our ability to attract and retain new customers.

We may also experience hesitancy, reluctance, or refusal by European or multi-national customers to continue to use our services due to the potential risk exposure to such customers as a result of the ECJ ruling in Case C-362/14 and the current data protection obligations imposed on them by certain data protection authorities. Such customers may also view any alternative approaches to compliance as being too costly, too burdensome, too legally uncertain or otherwise objectionable and therefore decide not to do business with us. For example, some of our customers or potential customers in the EU may require their vendors to host all personal data within the EU and may decide to do business with one of our competitors who hosts personal data within the EU instead of doing business with us.

We and our customers are at risk of enforcement actions taken by certain EU data protection authorities until such point in time that we may be able to ensure that all transfers of personal data to us from the EEA are conducted in compliance with all applicable regulatory obligations, the guidance of data protection authorities, and evolving best practices. We may find it necessary to establish systems to maintain personal data originating from the EU in the EEA, which may involve substantial expense and may cause us to need to divert resources from other aspects of our business, all of which may adversely affect our business.

In addition, if our privacy or data security measures fail to comply with current or future laws and regulations, we may be subject to claims, legal proceedings or other actions by individuals or governmental authorities based on privacy or data protection regulations and our commitments to customers or others, as well as negative publicity and a potential loss of business. Moreover, if future laws and regulations limit our subscribers’ ability to use and share personal information or our ability to store, process and share personal information, demand for our solutions could decrease, our costs could increase, and our business, results of operations and financial condition could be harmed.

If our or our customers’ security measures are compromised or unauthorized access to data of our customers or their customers is otherwise obtained, our Growth Platform may be perceived as not being secure, our customers may be harmed and may curtail or cease their use of our platform, our reputation may be damaged and we may incur significant liabilities.

Our operations involve the storage and transmission of data of our customers and their customers, including personally identifiable information. Our storage is typically the sole source of record for portions of our customers’ businesses and end user data, such as initial contact information and online interactions. Security incidents could result in unauthorized access to, loss of or unauthorized disclosure of this information, litigation, indemnity obligations and other possible liabilities, as well as negative publicity, which could damage our reputation, impair our sales and harm our customers and our business. Cyber-attacks and other malicious Internet-based activity continue to increase generally, and cloud-based platform providers of marketing services have been targeted. If our security measures are compromised as a result of third-party action, employee or customer error, malfeasance, stolen or fraudulently obtained log-in credentials or otherwise, our reputation could be damaged, our business may be harmed and we could incur significant liability. If third parties with whom we work, such as vendors or developers, violate applicable laws, our security policies or our acceptable use policy, such violations may also put our customers’ information at risk and could in turn have

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an adverse effect on our business. In addition, if the security measures of our customers are compromised, even without any actual compromise of our own systems, we may face negative publicity or reputational harm if our customers or anyone else incorrectly attributes the blame for such security breaches to us or our systems. We may be unable to anticipate or prevent techniques used to obtain unauthorized access or to sabotage systems because they change frequently and generally are not detected until after an incident has occurred. As we increase our customer base and our brand becomes more widely known and recognized, we may become more of a target for third parties seeking to compromise our security systems or gain unauthorized access to our customers’ data. Additionally, we provide extensive access to our database, which stores our customer data, to our development team to facilitate our rapid pace of product development. If such access or our own operations cause the loss, damage or destruction of our customers’ business data, their sales, lead generation, support and other business operations may be permanently harmed. As a result, our customers may bring claims against us for lost profits and other damages.

Many governments have enacted laws requiring companies to notify individuals of data security incidents or unauthorized transfers involving certain types of personal data. In addition, some of our customers contractually require notification of any data security compromise. Security compromises experienced by our competitors, by our customers or by us may lead to public disclosures, which may lead to widespread negative publicity. Any security compromise in our industry, whether actual or perceived, could harm our reputation, erode customer confidence in the effectiveness of our security measures, negatively impact our ability to attract new customers, cause existing customers to elect not to renew their subscriptions or subject us to third-party lawsuits, regulatory fines or other action or liability, which could materially and adversely affect our business and operating results.

There can be no assurance that any limitations of liability provisions in our contracts for a security breach would be enforceable or adequate or would otherwise protect us from any such liabilities or damages with respect to any particular claim. We also cannot be sure that our existing general liability insurance coverage and coverage for errors or omissions will continue to be available on acceptable terms or will be available in sufficient amounts to cover one or more large claims, or that the insurer will not deny coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage, or the occurrence of changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, financial condition and operating results.

If our Growth Platform fails due to defects or similar problems, and if we fail to correct any defect or other software problems, we could lose customers, become subject to service performance or warranty claims or incur significant costs.

Our platform and its underlying infrastructure are inherently complex and may contain material defects or errors. We release modifications, updates, bug fixes and other changes to our software several times per day, without traditional human-performed quality control reviews for each release. We have from time to time found defects in our software and may discover additional defects in the future. We may not be able to detect and correct defects or errors before customers begin to use our platform or its applications. Consequently, we or our customers may discover defects or errors after our platform has been implemented. These defects or errors could also cause inaccuracies in the data we collect and process for our customers, or even the loss, damage or inadvertent release of such confidential data. We implement bug fixes and upgrades as part of our regular system maintenance, which may lead to system downtime. Even if we are able to implement the bug fixes and upgrades in a timely manner, any history of defects or inaccuracies in the data we collect for our customers, or the loss, damage or inadvertent release of confidential data could cause our reputation to be harmed, and customers may elect not to purchase or renew their agreements with us and subject us to service performance credits, warranty claims or increased insurance costs. The costs associated with any material defects or errors in our platform or other performance problems may be substantial and could materially adversely affect our operating results.

Risks Related to Intellectual Property

Our business may suffer if it is alleged or determined that our technology infringes the intellectual property rights of others.

The software industry is characterized by the existence of a large number of patents, copyrights, trademarks, trade secrets and other intellectual and proprietary rights. Companies in the software industry, including those in marketing software, are often required to defend against litigation claims based on allegations of infringement or other violations of intellectual property rights. Many of our competitors and other industry participants have been issued patents and/or have filed patent applications and may assert patent or other intellectual property rights within the industry. Moreover, in recent years, individuals and groups that are non-practicing entities, commonly referred to as “patent trolls,” have purchased patents and other intellectual property assets for the purpose of making claims of infringement in order to extract settlements. From time to time, we may receive threatening letters or notices or may be the subject of claims that our services and/or platform and underlying technology infringe or violate the intellectual property rights of others. Responding to such claims, regardless of their merit, can be time consuming, costly to defend in litigation, divert management’s attention and resources, damage our reputation and brand and cause us to incur significant expenses. Our technologies may not be able to withstand any third-party claims or rights against their use. Claims of intellectual property infringement might require us to redesign our application, delay releases, enter into costly settlement or license agreements or pay costly damage awards, or face a temporary or permanent injunction prohibiting us from marketing or selling our platform. If we cannot or do not license the infringed technology on reasonable terms or at all, or substitute similar technology from another source, our revenue and operating results could be adversely impacted. Additionally, our customers may not purchase our Growth Platform if they are concerned that they may infringe third-party intellectual property rights. The occurrence of any of these events may have a material adverse effect on our business.

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In our subscription agreements with our customers, we generally do not agree to indemnify our customers against any losses or costs incurred in connection with claims by a third party alleging that a customer’s use of our services or platform infringes the intellectual property rights of the third party. There can be no assurance, however, that customers will not assert a common law indemnity claim or that any existing limitations of liability provisions in our contracts would be enforceable or adequate, or would otherwise protect us from any such liabilities or damages with respect to any particular claim. Our customers who are accused of intellectual property infringement may in the future seek indemnification from us under common law or other legal theories. If such claims are successful, or if we are required to indemnify or defend our customers from these or other claims, these matters could be disruptive to our business and management and have a material adverse effect on our business, operating results and financial condition.

If we fail to adequately protect our proprietary rights, in the United States and abroad, our competitive position could be impaired and we may lose valuable assets, experience reduced revenue and incur costly litigation to protect our rights.

Our success is dependent, in part, upon protecting our proprietary technology. We rely on a combination of copyrights, trademarks, service marks, trade secret laws and contractual restrictions to establish and protect our proprietary rights in our products and services. However, the steps we take to protect our intellectual property may be inadequate. We will not be able to protect our intellectual property if we are unable to enforce our rights or if we do not detect unauthorized use of our intellectual property. Any of our trademarks or other intellectual property rights may be challenged by others or invalidated through administrative process or litigation. Furthermore, legal standards relating to the validity, enforceability and scope of protection of intellectual property rights are uncertain. Despite our precautions, it may be possible for unauthorized third parties to copy our technology and use information that we regard as proprietary to create products and services that compete with ours. Some license provisions protecting against unauthorized use, copying, transfer and disclosure of our offerings may be unenforceable under the laws of certain jurisdictions and foreign countries. In addition, the laws of some countries do not protect proprietary rights to the same extent as the laws of the United States. To the extent we expand our international activities, our exposure to unauthorized copying and use of our technology and proprietary information may increase.

We enter into confidentiality and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with the parties with whom we have strategic relationships and business alliances. No assurance can be given that these agreements will be effective in controlling access to and distribution of our products and proprietary information. Further, these agreements may not prevent our competitors from independently developing technologies that are substantially equivalent or superior to our platform and offerings.

We may be required to spend significant resources to monitor and protect our intellectual property rights. Litigation may be necessary in the future to enforce our intellectual property rights and to protect our trade secrets. Such litigation could be costly, time consuming and distracting to management and could result in the impairment or loss of portions of our intellectual property. Furthermore, our efforts to enforce our intellectual property rights may be met with defenses, counterclaims and countersuits attacking the validity and enforceability of our intellectual property rights. Our inability to protect our proprietary technology against unauthorized copying or use, as well as any costly litigation, could delay further sales or the implementation of our platform and offerings, impair the functionality of our platform and offerings, delay introductions of new features or enhancements, result in our substituting inferior or more costly technologies into our platform and offerings, or injure our reputation.

Our use of “open source” software could negatively affect our ability to offer our platform and subject us to possible litigation.

A substantial portion of our cloud-based platform incorporates so-called “open source” software, and we may incorporate additional open source software in the future. Open source software is generally freely accessible, usable and modifiable. Certain open source licenses may, in certain circumstances, require us to offer the components of our platform that incorporate the open source software for no cost, that we make available source code for modifications or derivative works we create based upon, incorporating or using the open source software and that we license such modifications or derivative works under the terms of the particular open source license. If an author or other third party that distributes open source software we use were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal expenses defending against such allegations and could be subject to significant damages, including being enjoined from the offering of the components of our platform that contained the open source software and being required to comply with the foregoing conditions, which could disrupt our ability to offer the affected software. We could also be subject to suits by parties claiming ownership of what we believe to be open source software. Litigation could be costly for us to defend, have a negative effect on our operating results and financial condition and require us to devote additional research and development resources to change our products.

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Weakened global economic conditions may harm our industry, business and results of operations.

Our overall performance depends in part on worldwide economic conditions. Global financial developments and downturns seemingly unrelated to us or the software industry may harm us. The United States and other key international economies have been affected from time to time by falling demand for a variety of goods and services, restricted credit, poor liquidity, reduced corporate profitability, volatility in credit, equity and foreign exchange markets, bankruptcies, and overall uncertainty with respect to the economy, including with respect to tariff and trade issues. In particular, the economies of countries in Europe have been experiencing weakness associated with high sovereign debt levels, weakness in the banking sector and uncertainty over the future of the Euro zone, including instability surrounding Brexit. We have operations, as well as current and potential new customers, throughout most of Europe. If economic conditions in Europe and other key markets for our platform continue to remain uncertain or deteriorate further, it could adversely affect our customers’ ability or willingness to subscribe to our platform, delay prospective customers’ purchasing decisions, reduce the value or duration of their subscriptions or affect renewal rates, all of which could harm our operating results.

Risks Related to Government Regulation and Taxation

 

We could face liability, or our reputation might be harmed, as a result of the activities of our customers, the content of their websites or the data they store on our servers.

As a provider of a cloud-based inbound marketing, sales and customer service software platform, we may be subject to potential liability for the activities of our customers on or in connection with the data they store on our servers. Although our customer terms of use prohibit illegal use of our services by our customers and permit us to take down websites or take other appropriate actions for illegal use, customers may nonetheless engage in prohibited activities or upload or store content with us in violation of applicable law or the customer’s own policies, which could subject us to liability or harm our reputation. Furthermore, customers may upload, store, or use content on our Growth Platform that may be violate our policy on acceptable use which prohibits content that is threatening, abusive, harassing, deceptive, false, misleading, vulgar, obscene, or indecent. While such content may not be illegal, use of our Growth Platform for such content could harm our reputation resulting in a loss of business.

Several U.S. federal statutes may apply to us with respect to various customer activities:

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Although these statutes and case law in the United States have generally shielded us from liability for customer activities to date, court rulings in pending or future litigation may narrow the scope of protection afforded us under these laws. In addition, laws governing these activities are unsettled in many international jurisdictions, or may prove difficult or impossible for us to comply with in some international jurisdictions. Also, notwithstanding the exculpatory language of these bodies of law, we may become involved in complaints and lawsuits which, even if ultimately resolved in our favor, add cost to our doing business and may divert management’s time and attention. Finally, other existing bodies of law, including the criminal laws of various states, may be deemed to apply or new statutes or regulations may be adopted in the future, any of which could expose us to further liability and increase our costs of doing business.

We may be subject to additional obligations to collect and remit sales tax and other taxes, and we may be subject to tax liability for past sales, which could harm our business.

State, local and foreign jurisdictions have differing rules and regulations governing sales, use, value added and other taxes, and these rules and regulations are subject to varying interpretations that may change over time. In particular, the applicability of such taxes to our Growth Platform in various jurisdictions is unclear. Further, these jurisdictions’ rules regarding tax nexus are complex and vary significantly. As a result, we could face the possibility of tax assessments and audits, and our liability for these taxes and associated penalties could exceed our original estimates. A successful assertion that we should be collecting additional sales, use, value added or other taxes in those jurisdictions where we have not historically done so and do not accrue for such taxes could result in substantial tax liabilities and related penalties for past sales, discourage customers from purchasing our application or otherwise harm our business and operating results.

Changes in tax laws or regulations that are applied adversely to us or our customers could increase the costs of our Growth Platform and adversely impact our business.

New income, sales, use or other tax laws, statutes, rules, regulations or ordinances could be enacted at any time. Any new taxes could adversely affect our domestic and international business operations, and our business and financial performance. Further, existing tax laws, statutes, rules, regulations or ordinances could be interpreted, changed, modified or applied adversely to us. These events could require us or our customers to pay additional tax amounts on a prospective or retroactive basis, as well as require us or our customers to pay fines and/or penalties and interest for past amounts deemed to be due. If we raise our prices to offset the costs of these changes, existing and potential future customers may elect not to continue or purchase our Growth Platform in the future. Additionally, new, changed, modified or newly interpreted or applied tax laws could increase our customers’ and our compliance, operating and other costs, as well as the costs of our platform. Any or all of these events could adversely impact our business and financial performance.

We are a multinational organization faced with increasingly complex tax issues in many jurisdictions, and we could be obligated to pay additional taxes in various jurisdictions.

As a multinational organization, we may be subject to taxation in several jurisdictions around the world with increasingly complex tax laws, the application of which can be uncertain. The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents, which could have a material adverse effect on our liquidity and operating results. Changes in tax laws, such as tax reform in the United States or changes in tax laws resulting from the Organization for Economic Co-operation and Development’s multi-jurisdictional plan of action to address “base erosion and profit shifting,” could impact our effective tax rate. In addition, the authorities in these jurisdictions could review our tax returns and impose additional tax, interest and penalties, and the authorities could claim that various withholding requirements apply to us or our subsidiaries or assert that benefits of tax treaties are not available to us or our subsidiaries, any of which could have a material impact on us and the results of our operations.

Failure to comply with laws and regulations could harm our business.

Our business is subject to regulation by various federal, state, local and foreign governmental agencies, including agencies responsible for monitoring and enforcing employment and labor laws, workplace safety, environmental laws, consumer protection laws, anti-bribery laws, import/export controls, federal securities laws and tax laws and regulations. In certain jurisdictions, these regulatory requirements may be more stringent than those in the United States. Noncompliance with applicable regulations or requirements could subject us to investigations, sanctions, mandatory recalls, enforcement actions, disgorgement of profits, fines, damages, civil and criminal penalties or injunctions.

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We may not be able to utilize a significant portion of our net operating loss carryforwards, which could adversely affect our profitability.

As of December 31, 2018, we had federal and state net operating loss carryforwards due to prior period losses, which, if not utilized, will begin to expire in 2027 for federal purposes and begin to expire in 2023 for state purposes. These net operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities, which could adversely affect our profitability. In addition, under Section 382 of the Internal Revenue Code of 1986, as amended, which we refer to as the Code, our ability to utilize net operating loss carryforwards or other tax attributes, such as research tax credits, in any taxable year may be further limited if we experience an ownership change. A Section 382 ownership change generally occurs if one or more stockholders or groups of stockholders who own at least 5% of our stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. Future issuances of our stock could cause an ownership change. It is possible that an ownership change in connection with a future offering, or any future ownership change, could have a material effect on the use of our net operating loss carryforwards or other tax attributes, which could adversely affect our profitability. Net operating loss carryforwards incurred for periods beginning on or after January 1, 2018 would not expire unused as a result of these limitations because they can be carried forward indefinitely.

The standards that private entities use to regulate the use of email have in the past interfered with, and may in the future interfere with, the effectiveness of our Growth Platform and our ability to conduct business.

Our customers rely on email to communicate with their existing or prospective customers. Various private entities attempt to regulate the use of email for commercial solicitation. These entities often advocate standards of conduct or practice that significantly exceed current legal requirements and classify certain email solicitations that comply with current legal requirements as spam. Some of these entities maintain “blacklists” of companies and individuals, and the websites, internet service providers and internet protocol addresses associated with those entities or individuals that do not adhere to those standards of conduct or practices for commercial email solicitations that the blacklisting entity believes are appropriate. If a company’s internet protocol addresses are listed by a blacklisting entity, emails sent from those addresses may be blocked if they are sent to any internet domain or internet address that subscribes to the blacklisting entity’s service or purchases its blacklist.

From time to time, some of our internet protocol addresses may become listed with one or more blacklisting entities due to the messaging practices of our customers. There can be no guarantee that we will be able to successfully remove ourselves from those lists. Blacklisting of this type could interfere with our ability to market our Growth Platform and services and communicate with our customers and, because we fulfill email delivery on behalf of our customers, could undermine the effectiveness of our customers’ email marketing campaigns, all of which could have a material negative impact on our business and results of operations.

Existing federal, state and foreign laws regulate Internet tracking software, the senders of commercial emails and text messages, website owners and other activities, and could impact the use of our Growth Platform and potentially subject us to regulatory enforcement or private litigation.

Certain aspects of how our customers utilize our platform are subject to regulations in the United States, European Union and elsewhere. In recent years, U.S. and European lawmakers and regulators have expressed concern over the use of third-party cookies or web beacons for online behavioral advertising, and legislation adopted recently in the European Union requires informed consent for the placement of a cookie on a user’s device. Regulation of cookies and web beacons may lead to restrictions on our activities, such as efforts to understand users’ Internet usage. New and expanding “Do Not Track” regulations have recently been enacted or proposed that protect users’ right to choose whether or not to be tracked online. These regulations seek, among other things, to allow end users to have greater control over the use of private information collected online, to forbid the collection or use of online information, to demand a business to comply with their choice to opt out of such collection or use, and to place limits upon the disclosure of information to third party websites. These policies could have a significant impact on the operation of our Growth Platform and could impair our attractiveness to customers, which would harm our business.

Many of our customers and potential customers in the healthcare, financial services and other industries are subject to substantial regulation regarding their collection, use and protection of data and may be the subject of further regulation in the future. Accordingly, these laws or significant new laws or regulations or changes in, or repeals of, existing laws, regulations or governmental policy may change the way these customers do business and may require us to implement additional features or offer additional contractual terms to satisfy customer and regulatory requirements, or could cause the demand for and sales of our Growth Platform to decrease and adversely impact our financial results.

In addition, the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, or the CAN-SPAM Act, establishes certain requirements for commercial email messages and specifies penalties for the transmission of commercial email messages that are intended to deceive the recipient as to source or content. The CAN-SPAM Act, among other things, obligates the sender of commercial emails to provide recipients with the ability to opt out of receiving future commercial emails from the

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sender. The ability of our customers’ message recipients to opt out of receiving commercial emails may minimize the effectiveness of the email components of our Growth Platform. In addition, certain states and foreign jurisdictions, such as Australia, Canada and the European Union, have enacted laws that regulate sending email, and some of these laws are more restrictive than U.S. laws. For example, some foreign laws prohibit sending unsolicited email unless the recipient has provided the sender advance consent to receipt of such email, or in other words has “opted-in” to receiving it. A requirement that recipients opt into, or the ability of recipients to opt out of, receiving commercial emails may minimize the effectiveness of our platform.

While these laws and regulations generally govern our customers’ use of our platform, we may be subject to certain laws as a data processor on behalf of, or as a business associate of, our customers. For example, laws and regulations governing the collection, use and disclosure of personal information include, in the United States, rules and regulations promulgated under the authority of the Federal Trade Commission, the Health Insurance Portability and Accountability Act of 1996, the Gramm-Leach-Bliley Act of 1999 and state breach notification laws, and internationally, the Data Protection Directive in the European Union and the Federal Data Protection Act in Germany. If we were found to be in violation of any of these laws or regulations as a result of government enforcement or private litigation, we could be subjected to civil and criminal sanctions, including both monetary fines and injunctive action that could force us to change our business practices, all of which could adversely affect our financial performance and significantly harm our reputation and our business.

We are subject to governmental export controls and economic sanctions laws that could impair our ability to compete in international markets and subject us to liability if we are not in full compliance with applicable laws.

Our business activities are subject to various restrictions under U.S. export controls and trade and economic sanctions laws, including the U.S. Commerce Department’s Export Administration Regulations and economic and trade sanctions regulations maintained by the U.S. Treasury Department’s Office of Foreign Assets Control. If we fail to comply with these laws and regulations, we and certain of our employees could be subject to civil or criminal penalties and reputational harm. Obtaining the necessary authorizations, including any required license, for a particular transaction may be time-consuming, is not guaranteed, and may result in the delay or loss of sales opportunities. Furthermore, U.S. export control laws and economic sanctions laws prohibit certain transactions with U.S. embargoed or sanctioned countries, governments, persons and entities. Although we take precautions to prevent transactions with U.S. sanction targets, the possibility exists that we could inadvertently provide our solutions to persons prohibited by U.S. sanctions. This could result in negative consequences to us, including government investigations, penalties and reputational harm.

Risks Related to Our Operating Results and Financial Condition

We may experience quarterly fluctuations in our operating results due to a number of factors, which makes our future results difficult to predict and could cause our operating results to fall below expectations or our guidance.

Our quarterly operating results have fluctuated in the past and are expected to fluctuate in the future due to a variety of factors, many of which are outside of our control. As a result, our past results may not be indicative of our future performance, and comparing our operating results on a period-to-period basis may not be meaningful. In addition to the other risks described in this Annual Report on Form 10-K, factors that may affect our quarterly operating results include the following:

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We may not be able to accurately forecast the amount and mix of future subscriptions, revenue and expenses and, as a result, our operating results may fall below our estimates or the expectations of public market analysts and investors. If our revenue or operating results fall below the expectations of investors or securities analysts, or below any guidance we may provide, the price of our common stock could decline.

If we do not accurately predict subscription renewal rates or otherwise fail to forecast our revenue accurately, or if we fail to match our expenditures with corresponding revenue, our operating results could be adversely affected.

Because our recent growth has resulted in the rapid expansion of our business, we do not have a long history upon which to base forecasts of renewal rates with customers or future operating revenue. As a result, our operating results in future reporting periods may be significantly below the expectations of the public market, equity research analysts or investors, which could harm the price of our common stock.

Because we generally recognize revenue from subscriptions ratably over the term of the agreement, near term changes in sales may not be reflected immediately in our operating results.

We offer our Growth Platform primarily through a mix of monthly, quarterly and single-year subscription agreements and generally recognize revenue ratably over the related subscription period. As a result, much of the revenue we report in each quarter is derived from agreements entered into during prior months, quarters or years. In addition, we do not record deferred revenue beyond amounts invoiced as a liability on our balance sheet. A decline in new or renewed subscriptions or marketing solutions agreements in any one quarter is not likely to be reflected immediately in our revenue results for that quarter. Such declines, however, would negatively affect our revenue and deferred revenue balances in future periods, and the effect of significant downturns in sales and market acceptance of our platform, and potential changes in our rate of renewals, may not be fully reflected in our results of operations until future periods. Our subscription model also makes it difficult for us to rapidly increase our total revenue and deferred revenue balance through additional sales in any period, as revenue from new customers must be recognized over the applicable subscription term.

Servicing our debt may require a significant amount of cash.  We may not have sufficient cash flow from our business to pay our indebtedness, and we may not have the ability to raise the funds necessary to settle for cash conversions of the 2022 Notes or to repurchase the 2022 Notes for cash upon a fundamental change, which could adversely affect our business and results of operations.

We incurred indebtedness in the aggregate principal amount of $400.0 million in connection with the issuance of our 0.25% convertible senior notes due June 1, 2022 (the “2022 Notes”). Our ability to make scheduled payments of the principal of, to pay interest on or to refinance our indebtedness, including the 2022 Notes, depends on our future performance, which is subject to economic, financial, competitive and other factors beyond our control. Our business may not continue to generate cash flow from operations in the future sufficient to service our debt and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling assets, restructuring debt or obtaining additional debt financing or equity capital on terms that may be onerous or highly dilutive. Our ability to refinance any future indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. In addition, any of our future debt agreements may contain restrictive covenants that may prohibit us from adopting any of these alternatives. Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in the acceleration of our debt.

In addition, holders of the 2022 Notes have the right to require us to repurchase their 2022 Notes upon the occurrence of a fundamental change at a fundamental change repurchase price equal to 100% of the principal amount of the 2022 Notes to be repurchased, plus accrued and unpaid interest, if any.  Upon conversion of the 2022 Notes, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional share), we will be required to make cash payments in respect of the 2022 Notes being converted.  We may not have enough available cash or be able to obtain financing at the time we are required to make repurchases of 2022 Notes surrendered therefor or 2022 Notes being converted. In addition, our ability to repurchase the 2022 Notes or to pay cash upon conversions of the 2022 Notes may be limited by law, by

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regulatory authority or by agreements governing our future indebtedness. Our failure to repurchase 2022 Notes at a time when the repurchase is required by the indenture governing the notes or to pay any cash payable on future conversions of the 2022 Notes as required by such indenture would constitute a default under such indenture. A default under the indenture or the fundamental change itself could also lead to a default under agreements governing our future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and repurchase the 2022 Notes or make cash payments upon conversions thereof.

In addition, our indebtedness, combined with our other financial obligations and contractual commitments, could have other important consequences.  For example, it could:

Any of these factors could materially and adversely affect our business, financial condition and results of operations. In addition, if we incur additional indebtedness, the risks related to our business and our ability to service or repay our indebtedness would increase.

The conditional conversion feature of the 2022 Notes, if triggered, may adversely affect our financial condition and operating results.

In the event the conditional conversion feature of the 2022 Notes is triggered, holders of 2022 Notes will be entitled to convert the 2022 Notes at any time during specified periods at their option. Because the last reported sale price of our common stock for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the calendar quarter ended December 31, 2018 was equal to or greater than 130% of the applicable conversion price on each applicable trading day, the 2022 Notes are convertible at the option of the holders thereof during the calendar quarter ending March 31, 2019. As of February 8, 2019, no holders have converted or indicated their intention to convert the 2022 Notes. Whether the 2022 Notes will be convertible following such calendar quarter will depend on the continued satisfaction of this condition or another conversion condition in the future. If one or more holders elect to convert their 2022 Notes, unless we elect to satisfy our conversion obligation by delivering solely shares of our common stock (other than paying cash in lieu of delivering any fractional share), we would be required to settle a portion or all of our conversion obligation through the payment of cash, which could adversely affect our liquidity. In addition, even if holders do not elect to convert their 2022 Notes, we could be required under applicable accounting rules to reclassify all or a portion of the outstanding principal of the 2022 Notes as a current rather than long-term liability, which would result in a material reduction of our net working capital.

The accounting method for convertible debt securities that may be settled in cash, such as the 2022 Notes, could have a material effect on our reported financial results.

Under Financial Accounting Standards Board Accounting Standards Codification 470-20, Debt with Conversion and Other Options, which we refer to as ASC 470-20, an entity must separately account for the liability and equity components of convertible debt instruments (such as the 2022 Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. ASC 470-20 requires the value of the conversion option of the 2022 Notes, representing the equity component, to be recorded as additional paid-in capital within stockholders’ equity in our consolidated balance sheet and as a discount to the 2022 Notes, which reduces their initial carrying value. The carrying value of the 2022 Notes, net of the discount recorded, will be accreted up to the principal amount of the 2022 Notes from the issuance date until maturity, which will result in non-cash charges to interest expense in our consolidated statement of operations. Accordingly, we will report lower net income or higher net loss in our financial results because ASC 470-20 requires interest to include both the current period’s accretion of the debt discount and the instrument’s coupon interest, which could adversely affect our reported or future financial results, the trading price of our common stock and the trading price of the 2022 Notes.  

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In addition, under certain circumstances, convertible debt instruments (such as the 2022 Notes) that may be settled entirely or partly in cash are currently accounted for utilizing the treasury stock method, the effect of which is that the shares issuable upon conversion of the 2022 Notes are not included in the calculation of diluted earnings per share except to the extent that the conversion value of the 2022 Notes exceeds their principal amount. Under the treasury stock method, for diluted earnings per share purposes, the transaction is accounted for as if the number of shares of common stock that would be necessary to settle such excess, if we elected to settle such excess in shares, are issued. We cannot be sure that the accounting standards in the future will continue to permit the use of the treasury stock method. If we are unable to use the treasury stock method in accounting for the shares issuable upon conversion of the 2022 Notes, then our diluted earnings per share would be adversely affected.

We are exposed to fluctuations in currency exchange rates.

We face exposure to movements in currency exchange rates, which may cause our revenue and operating results to differ materially from expectations. As we have expanded our international operations our exposure exchange rate fluctuations has increased, in particular with respect to the Euro, British Pound Sterling, Australian Dollar, Singapore Dollar, Japanese Yen and Colombian Peso. As exchange rates vary, revenue, cost of revenue, operating expenses and other operating results, when re-measured, may differ materially from expectations. In addition, our operating results are subject to fluctuation if our mix of U.S. and foreign currency denominated transactions and expenses changes in the future. Furthermore, global political events, including Brexit and similar geopolitical developments, fluctuating commodity prices and trade tariff developments, have caused global economic uncertainty, which could amplify the volatility of currency fluctuations. Such volatility, even when it increases our revenues or decreases our expenses, impacts our ability to predict our future results and earnings accurately. Although we may apply certain strategies to mitigate foreign currency risk, these strategies might not eliminate our exposure to foreign exchange rate fluctuations and would involve costs and risks of their own, such as ongoing management time and expertise, external costs to implement the strategies and potential accounting implications. Additionally, as we anticipate growing our business further outside of the United States, the effects of movements in currency exchange rates will increase as our transaction volume outside of the United States increases.

Risks Related to Our Common Stock

Our stock price may be volatile and you may be unable to sell your shares at or above the price you purchased them.

The trading prices of the securities of technology companies, including providers of software via the cloud-based model, have been highly volatile. Since shares of our common stock were sold in our initial public offering in October 2014 at a price of $25.00 per share, our stock price has ranged from $25.79 to $162.20, through December 31, 2018. The market price of our common stock may fluctuate significantly in response to numerous factors, many of which are beyond our control, including:

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In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many technology companies. Stock prices of many technology companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies.

In the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and adversely affect our business.

If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired.

As a public company we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, and the rules and regulations of the New York Stock Exchange, or NYSE. We expect that compliance with these rules and regulations will continue to increase our legal, accounting and financial compliance costs, make some activities more difficult, time consuming and costly, and place significant strain on our personnel, systems and resources.

The Sarbanes-Oxley Act requires, among other things, that we assess the effectiveness of our internal control over financial reporting annually and the effectiveness of our disclosure controls and procedures quarterly. In particular, Section 404 of the Sarbanes-Oxley Act, or Section 404, requires us to perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on, and our independent registered public accounting firm to attest to, the effectiveness of our internal control over financial reporting. Our compliance with applicable provisions of Section 404 requires that we incur substantial accounting expense and expend significant management time on compliance-related issues as we implement additional corporate governance practices and comply with reporting requirements. Moreover, if we are not able to comply with the requirements of Section 404 applicable to us in a timely manner, or if we or our independent registered public accounting firm identifies deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.

Furthermore, investor perceptions of our company may suffer if deficiencies are found, and this could cause a decline in the market price of our stock. Irrespective of compliance with Section 404, any failure of our internal control over financial reporting could have a material adverse effect on our stated operating results and harm our reputation. If we are unable to implement these requirements effectively or efficiently, it could harm our operations, financial reporting, or financial results and could result in an adverse opinion on our internal controls from our independent registered public accounting firm.

Our ability to raise capital in the future may be limited, and our failure to raise capital when needed could prevent us from growing.

Our business and operations may consume resources faster than we anticipate. In the future, we may need to raise additional funds to invest in future growth opportunities. Additional financing may not be available on favorable terms, if at all. If adequate funds are not available on acceptable terms, we may be unable to invest in future growth opportunities, which could seriously harm our business and operating results. If we incur debt, the debt holders would have rights senior to common stockholders to make claims on our assets, and the terms of any debt could restrict our operations, including our ability to pay dividends on our common stock. Furthermore, if we issue equity securities, stockholders will experience dilution, and the new equity securities could have rights senior to those of our common stock. The 2022 Notes are and any additional equity or equity-linked financings would be dilutive to our stockholders. Because our decision to issue securities in any future offering will depend on market conditions and other factors beyond our control, we cannot predict or estimate the amount, timing or nature of our future offerings. As a result, our stockholders bear the risk of our future securities offerings reducing the market price of our common stock and diluting their interest.

Anti-takeover provisions in our charter documents and Delaware law may delay or prevent an acquisition of our company.

Our amended and restated certificate of incorporation, amended and restated bylaws and Delaware law contain provisions that may have the effect of delaying or preventing a change in control of us or changes in our management. Our amended and restated certificate of incorporation and bylaws include provisions that:

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These provisions, alone or together, could delay or prevent hostile takeovers and changes in control or changes in our management.

In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which limits the ability of stockholders owning in excess of 15% of our outstanding voting stock to merge or combine with us in certain circumstances.

Any provision of our amended and restated certificate of incorporation or amended and restated bylaws or Delaware law that has the effect of delaying or deterring a change in control could limit the opportunity for our stockholders to receive a premium for their shares of our common stock, and could also affect the price that some investors are willing to pay for our common stock.

None.

 

 

We occupy approximately 335,000 square feet of office space in Cambridge, Massachusetts pursuant to lease agreements that expire through 2029. We also maintain offices in Portsmouth, New Hampshire, Dublin, Ireland, Sydney, Australia, Singapore, Japan, and Berlin, Germany. We believe that our current facilities are suitable and adequate to meet our current needs. We intend to add new facilities or expand existing facilities as we add employees, and we believe that suitable additional or substitute space will be available as needed to accommodate any such expansion of our operations.

 

 

 

From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the ultimate costs to resolve any pending matter will not have a material adverse effect on our business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

 

Not Applicable.

 

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PART II

Market Information for Common Stock

Our common stock has been listed on the New York Stock Exchange under the symbol “HUBS” since October 9, 2014. Prior to that date, there was no public trading market for our common stock. Our initial public offering was priced at $25.00 per share on October 8, 2014.

As of February 7, 2019, we had 43 holders of record of our common stock. The actual number of shareholders is greater than this number of record holders, and includes shareholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees. This number of holders of record also does not include shareholders whose shares may be held in trust by other entities.

Dividends

We have never declared or paid any cash dividends on our common stock. We currently anticipate that we will retain future earnings to fund development and growth of our business, and do not anticipate declaring or paying cash dividends in the foreseeable future.  Any future determination to pay dividends will be, subject to applicable law, at the discretion of our board of directors and will depend upon, among other factors, our results of operations, financial condition, contractual restrictions, and capital requirements.

Performance Graph

The following performance graph shall not be deemed “soliciting material” or to be “filed” with the Securities and Exchange Commission for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any filing of the company under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act.

The following graph shows a comparison from October 9, 2014 (the date our common stock commenced trading on the NYSE) through December 31, 2018 of the cumulative total return for our common stock, the NASDAQ Computer Index and the S&P 500 Index. The graph assumes $100 was invested in each of the Company’s common stock, the NASDAQ Computer Index and the S&P 500 Index of the market close on October 9, 2014. Such returns are based on historical results and are not intended to suggest future performance.

 

 

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Recent Sales of Unregistered Securities

None.

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

None.

Securities Authorized for Issuance Under Equity Compensation Plans

See Item 12, “Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters,” for information regarding securities authorized for issuance.

Outstanding Convertible Senior Notes, Convertible Note Hedge, and Warrant

In May 2017, we issued $400.0 million aggregate principal amount of 0.25% convertible senior notes (the “2022 Notes”) due June 1, 2022. In connection with the offering of the 2022 Notes, the Company entered into convertible note hedge transactions (the “Convertible Note Hedges”) with certain counterparties in which the Company has the option to purchase (subject to adjustment for certain specified events) a total of approximately 4.2 million shares of the Company’s common stock at a price of approximately $94.77 per share. In addition, the Company sold warrants to certain bank counterparties whereby the holders of the warrants have the option to purchase initially (subject to adjustment for certain specified events) a total of approximately 4.2 million shares of the Company’s common stock at a price of $115.8 per share.  See Note 7 in the Notes to the Consolidated Financial Statements for more information.

You should read the selected consolidated financial data below in conjunction with “Management’s discussion and analysis of financial condition and results of operations” and the consolidated financial statements, related notes and other financial information included elsewhere in this Annual Report on Form 10-K. The selected consolidated financial data in this section are not intended to replace the consolidated financial statements and are qualified in their entirety by the consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

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The following selected consolidated statements of operations data for the years ended December 31, 2018, 2017, and 2016, and the consolidated balance sheet data as of December 31, 2018 and 2017, have been derived from our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. The consolidated statements of operations data for the years ended December 31, 2015 and 2014 and the consolidated balance sheet data as of December 31, 2016, 2015 and 2014 have been derived from our audited consolidated financial statements not included in this Annual Report on Form 10-K.

 

 

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The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes that appear elsewhere in this Annual Report on Form 10-K. As discussed in the section titled “Special Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove incorrect, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included under Part I, Item 1A within this Annual Report on Form 10-K.

Company Overview

We provide a cloud-based marketing, sales, and customer service software platform, which we refer to as our Growth Platform, that enables businesses to grow better. At HubSpot, to grow better means to help businesses grow without compromise, to always solve for the customer, and to create a better experience for customers and company alike.  To that end, our Growth Platform, comprised of Marketing Hub, Sales Hub, Service Hub, and a free customer relationship management, or CRM system, features integrated applications and tools that enable businesses to create a cohesive and adaptable customer experience.  

At the core of our Growth Platform is a CRM that our customers use which creates a single view of all interactions a prospective or existing customer has with their marketing, sales and customer service teams. The CRM shares data across every app in the Growth Platform, automatically informing more personalized emails, website content, ads, and conversations, and enables more accurate timing cues for our customer’s  internal teams. In addition the Growth Platform was built to easily and seamlessly integrate outside applications to further customize to an individual company’s industry or needs. We designed and built our Growth Platform to serve a broad range of customers globally. Our Growth Platform starts completely free and grows with our customers to meet their needs at different stages in their life-cycles.  It supports multiple languages and currencies and offers an array of sophisticated features, including content partitioning at the enterprise level for companies operating in or serving multiple countries.

While our Growth Platform was built to grow with any company we focus on selling to mid-market businesses because we believe we have significant competitive advantages attracting and serving this market segment. We efficiently reach these businesses at scale through our proven inbound methodology, freemium pricing strategy and thousands of Partners worldwide. Our Growth Platform is particularly suited to serving the needs of mid-market business-to-business, or B2B, companies. These mid-market businesses seek an integrated, easy-to-implement and easy-to-use solution to reach customers and compete with organizations that have larger marketing and sales budgets. As of December 31, 2018, we had 56,628 Total Customers of varying sizes in more than 100 countries, representing almost every industry.

Our Growth Platform is a multi-tenant, single code-based and globally available software-as-a-service product delivered through web browsers or mobile applications. We sell our Growth Platform on a subscription basis. Our total revenue increased to $513.0 million in 2018, from $375.6 million in 2017, and from $271.0 million in 2016, representing year-over-year increases of 37% in 2018 and 39% in 2017. We had net losses of $63.8 million in 2018, $39.7 million in 2017, and $45.6 million in 2016, primarily due to investments in our growth.  

We derive most of our revenue from subscriptions to our cloud-based Growth Platform and related professional services, which consist of customer on-boarding and training services. Subscription revenue accounted for 95% of our total revenue for the years ended December 31, 2018 and 2017 and 94% of our total revenue in the year ended December 31, 2016. We sell multiple product plans at different base prices on a subscription basis, each of which includes our core Growth Platform and integrated applications to meet the needs of the various customers we serve. Customers pay additional fees if the number of contacts stored and tracked in the customer’s database exceeds specified thresholds. We generate additional revenue based on the purchase of additional subscriptions, purchase of additional products, purchases of our add-on products and the number of account users, subdomains and website visits. Most of our customers’ subscriptions are one year or less in duration.

Subscriptions are non-cancelable and are billed in advance on various schedules. Because the mix of billing terms for orders can vary from period to period, the annualized value of the orders we enter into with our customers will not be completely reflected in deferred revenue at any single point in time. Accordingly, we do not believe that change in deferred revenue is an accurate indicator of future revenue for a given period of time.

Many of our customers purchase on-boarding and training services which are designed to help customers enhance their ability to attract, engage and delight their customers using our Growth Platform. Professional services and other revenue accounted for 5% of total revenue for the years ended December 31, 2018 and 2017 and 6% of our total revenue for the year ended December 31, 2016. We expect professional services and other margins to range from a moderate loss to breakeven for the foreseeable future.

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We have focused on rapidly growing our business and plan to continue to make investments to help us address some of the challenges facing us to support this growth, such as demand for our Growth Platform by existing and new customers, significant competition from other providers of marketing, sales and customer service software and related applications and rapid technological change in our industry. We believe that the growth of our business is dependent on many factors, including our ability to expand our customer base, increase adoption of our Growth Platform within existing customers, develop new products and applications to extend the functionality of our Growth Platform and provide a high level of customer service. We expect to increase our investment in sales and marketing as we continue to expand our sales teams, increase our marketing activities and grow our international operations. We also expect to increase our investment in research and development as we continue to introduce new products and applications to extend the functionality of our Growth Platform. We also intend to invest in maintaining a high level of customer service and support which we consider critical for our continued success. We plan to continue investing in our data center infrastructure and services capabilities in order to support continued future customer growth. We also expect to continue to incur additional general and administrative expenses as a result of both our growth and the infrastructure required to be a public company. We expect to use our cash flow from operations and the proceeds from our convertible debt and prior stock offerings to fund these growth strategies and do not expect to be profitable in the near term.

We believe that these investments will result in an increase in our subscription revenue base. This will result in revenue increasing faster than the increase in sales and marketing, research and development and general and administrative expenses, exclusive of stock-based compensation, as we reach economies of scale. With this increased operating leverage, we expect our operating margins to increase in the long term. However, we will incur losses in the short term. If we are unable to achieve our revenue growth objectives, including a high rate of renewals of our customer agreements, we may not be able to achieve profitability.

Key Business Metrics

The following key business metrics are presented in this Annual Report on Form 10-K or in our press releases announcing our financial results which are furnished on Form 8-K. We use these key business metrics to evaluate our business, measure our performance, identify trends affecting our business and results of operations, formulate financial projections and make strategic decisions. These key business metrics may be calculated in a manner different than similar key business metrics used by other companies.

 

 

 

 

Total Customers.  We believe that our ability to increase our customer base is an indicator of our market penetration and growth of our business as we continue to expand our sales force and invest in marketing efforts. We define our Total Customers at the end of a particular period as the number of business entities or individuals with one or more paid subscriptions to our Sales Hub Marketing Hub, or Service Hub products, either paid directly or through a Partner. We do not include in Total Customers business entities or individuals with one or more paid subscriptions solely for our legacy Sales Hub ($10) product. A single customer may have separate paid subscriptions for separate websites, sales licenses or seats, or our Sales Hub, Marketing Hub, or Service Hub products, but we count these as one customer if certain customer-provided information such as company name, URL, or email address indicate that these subscriptions are managed by the same business entity or individual.

Total Average Subscription Revenue per Customer. We believe that our ability to increase the Total Average Subscription Revenue per Customer is an indicator of our ability to grow the long-term value of our existing customer relationships. We define Total Average Subscription Revenue per Customer during a particular period as subscription revenue, excluding revenue from our legacy Sales Hub ($10) product, from our Total Customers during the period divided by the average Total Customers during the same period.

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Total Subscription Dollar Retention Rate. We believe that our ability to retain and expand a customer relationship is an indicator of the stability of our revenue base and the long-term value of our customers. We assess our performance in this area using a metric we refer to as our Total Subscription Dollar Retention Rate. We compare the aggregate Total Contractual Monthly Subscription Revenue of our Total Customer base as of the beginning of each month, which we refer to as Total Retention Base Revenue, to the aggregate Total Contractual Monthly Subscription Revenue of the same group of Total Customers at the end of that month, which we refer to as Total Retained Subscription Revenue. We define Total Contractual Monthly Subscription Revenue as the total amount of subscription fees contractually committed to be paid for a full month under all of our Total Customer agreements, excluding any commissions owed to our Partners. Our Total Subscription Dollar Retention Rate for a given period is calculated by first dividing Total Retained Subscription Revenue by Total Retention Base Revenue for each month in the period, calculating the weighted average of these rates using the Total Retention Base Revenue for each month in the period, and then annualizing the resulting rates.

 

Key Components of Consolidated Statements of Operations

Revenue

We derive our revenue from two major sources, revenue from subscriptions to our Growth Platform and professional services and other revenue consisting mainly of on-boarding and training services fees.

Subscription based revenue is derived from customers using our Growth Platform for their inbound marketing, sales and service needs. Our Growth Platform features integrated applications that create a cohesive and adaptable customer experience. These integrated applications include a CRM, search engine optimization, blogging, website content management, messaging, chatbots, social media, marketing automation, email, predictive lead scoring, sales productivity, ticketing and helpdesk tools, customer NPS surveys, analytics, and reporting. Subscriptions are non-cancelable and are billed in advance on various schedules. All subscription fees that are billed in advance of service are recorded in deferred revenue. Subscription based revenue is recognized net of consideration paid to Partners when a partner purchases a subscription to our Growth Platform (as opposed to an end-customer), because we are the agent and our customer is the partner and our remaining obligation is to the partner.

Professional services and other revenue are derived primarily from customer on-boarding and training services. The on-boarding and training services provided to customers typically involves an implementation specialist. An implementation specialist will typically work with our customers to enhance their understanding of how to attract leads and convert them into customers through search engine optimization, social media, blogging and other content. Training is generally sold in connection with a customer’s initial subscription and is billed in advance. The training is also available to be purchased separately following a customer’s purchase of its initial subscription and our Partners routinely provide the same training to customers. The Company recognizes revenue from on-boarding and training services as the services are provided.

Cost of Revenue and Operating Expenses

Cost of Revenue

Cost of subscription revenue consists primarily of managed hosting providers and other third-party service providers, employee-related costs including payroll, benefits and stock-based compensation expense for our customer support team, amortization of capitalized software development costs and acquired technology, and allocated overhead costs, which we define as rent, facilities and costs related to information technology, or IT.

Cost of professional services and other revenue consists primarily of personnel costs of our professional services organization, including salaries, benefits, bonuses and stock-based compensation, as well as allocated overhead costs.

We expect that cost of subscription and professional services and other revenue will increase in absolute dollars as we continue to invest in growing our business. Over time, we expect to gain benefits of scale associated with our costs of hosting our Growth Platform relative to subscription revenues, resulting in improved subscription gross margin. We expect professional services and other margins to range from a moderate loss to breakeven for the foreseeable future.

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Research and Development

Research and development expenses consist primarily of personnel costs of our development team, including payroll, benefits and stock-based compensation expense and allocated overhead costs. We capitalize certain software development costs that are attributable to developing new products and adding incremental functionality to our Growth Platform and amortize such costs as costs of subscription revenue over the estimated life of the new product or incremental functionality, which is generally two years. We also capitalize certain development costs that are attributable to developing our internally built software platforms and generally amortize such costs as sales and marketing or general and administrative expense over the estimated life of our internally developed software platforms, which is generally five years. We focus our research and development efforts on improving our products and developing new ones, delivering new functionality and enhancing the customer experience. We believe delivering new functionalities for our customers is an integral part of our solution and provides our customers with access to a broad array of options and information critical to their marketing, sales, and customer service efforts. We expect to continue to make investments in and expand our offerings to enhance our customers’ experience and satisfaction and attract new customers. We expect research and development expenses to increase in absolute dollars as we continue to increase the functionality of our Growth Platform.

Sales and Marketing

Sales and marketing expenses consist primarily of personnel costs of our sales and marketing employees, including sales commissions and incentives, benefits and stock-based compensation expense, marketing programs, including lead generation, costs of our annual INBOUND conference, other brand building expenses, amortization of capitalized software development costs associated with our internally built software platforms, and allocated overhead costs. We defer certain sales commissions related to acquiring new contracts and amortize them ratably over a period of benefit that we have determined to be approximately one to three years. Sales and marketing expenses also include commissions paid to our Partners in instances where the end customer purchases a subscription to our Growth Platform directly from us as we are the principal for providing the subscription that has been purchased.

We plan to continue to expand sales and marketing to grow our customer base and increase sales to existing customers. This growth will include adding sales personnel and expanding our marketing activities to continue to generate additional leads and build brand awareness. We expect sales and marketing expenses will increase as a result of hiring net new quota-carrying sales representatives in the United States and worldwide, adding to the marketing staff and expanding our annual INBOUND conference. Over time, we expect sales and marketing expenses will decline as a percentage of total revenue.

General and Administrative

General and administrative expenses consist of personnel costs and related expenses for executive, finance, legal, human resources, employee-related information technology, administrative personnel, including payroll, benefits and stock-based compensation expense; professional fees for external legal, accounting and other consulting services, amortization of capitalized software development costs associated with our internally built software platforms, and allocated overhead costs. We expect that general and administrative expenses will increase on an absolute dollar basis but decrease as a percentage of total revenue as we focus on processes, systems and controls to enable our internal support functions to scale with the growth of our business. We also anticipate continuing increases to general and administrative expenses as we incur the costs of compliance associated with being a publicly traded company, including audit and consulting fees.

Other Expense

Interest income primarily consists of interest earned on invested cash and cash equivalents balances and investments. Interest expense primarily consists of amortization of the debt discount and issuance costs related to the 2022 Notes that is recorded as interest expense, contractual interest expense on the 2022 Notes, and interest on capital leases. Other expense primarily consists of the impact of foreign currency transaction gains and losses associated with monetary assets and liabilities.

Income Tax (expense) benefit

The income tax (expense) benefit consists of current and deferred taxes for U.S. and foreign jurisdictions. We have historically had a taxable loss in our most significant jurisdiction, the U.S., and a full valuation allowance against the majority of our deferred tax assets. We expect this to continue in the near term.

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Results of Operations

The following tables set forth certain consolidated financial data in dollar amounts and as a percentage of total revenue.

 

 

 

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Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017

Revenue

 

 

Subscription revenue increased 37% during 2018 due to an increase throughout the year in Total Customers, which grew from 41,593 as of December 31, 2017 to 56,628 as of December 31, 2018. Total Average Subscription Revenue per Customer decreased from $10,180 for the year ended December 31, 2017 to $9,904 for the year ended December 31, 2018. The growth in Total Customers was primarily driven by our increased sales representative capacity to meet market demand. The decrease in Average Subscription Revenue per Customer was driven primarily by our continued adoption of our “freemium” model which allows us to add new customers through our lower cost products.

The 35% increase in professional services and other revenue resulted primarily from the increase in Total Customers and from delivery of on-boarding and training services for the additional subscriptions sold.

Total Cost of Revenue, Gross Profit and Gross Margin

 

 

Total cost of revenue increased 33% during 2018 primarily due to an increase in subscription and hosting costs, employee-related costs, amortization of capitalized software development costs, amortization of acquired technology, and allocated overhead expenses. Gross margins remained consistent year-over-year.

 

 

The increase in subscription cost of revenue for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due to the following:

 

 

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Subscription and hosting costs increased due to growth in our Total Customer base from 41,593 at December 31, 2017 to 56,628 at December 31, 2018. Employee-related costs increased as a result of increased headcount as we continue to grow our customer support organization to support our customer growth and improve service levels and offerings. Amortization of capitalized software development costs increased due to the increased number of developers working on our software platform as we continue to develop new products and increased functionality.  Amortization of acquired technology increased due to acquired technology being placed into service during the year ended December 31, 2018. Allocated overhead expenses increased due to expansion of our leased space and infrastructure as we continue to grow our business and expand headcount.

 

 

The increase in professional services and other cost of revenue for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due to the following:

 

 

Employee-related costs increased as a result of increased headcount as we continue to grow our professional services organization to support our customer growth. Allocated overhead expenses increased due to expansion of our leased space and infrastructure as we continue to grow our business and expand headcount.

Research and Development

 

 

The increase in research and development expense for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due to the following:

 

 

Employee-related costs increased as a result of increased headcount as we continue to grow our engineering organization to develop new products, increase functionality and to maintain our existing Growth Platform. Allocated overhead expense increased due to expanding our leased space and infrastructure as we continue to grow our business and expand headcount.

Sales and Marketing

 

 

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The increase in sales and marketing expense for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due to the following:

 

 

Employee-related costs increased as a result of increased headcount as we continue to expand our selling and marketing organizations to grow our customer base. The increase in employee-related costs was partially offset by lower sales commissions expense due to amortizing deferred commission expense over a longer period of time compared to 2017 as a result of our adoption of new guidance related to revenue recognition. Partner commissions increased as a result of increased revenue generated through our Partners. Allocated overhead expenses increased due to expanding our leased space and infrastructure as we continue to grow our business and expand headcount. Marketing programs increased as we continue to make investments in attracting new customers and increased the size of our annual INBOUND event.

General and Administrative

 

 

The increase in general and administrative expense for the year ended December 31, 2018 compared to the year ended December 31, 2017 was primarily due to the following:

 

 

Employee-related costs increased as a result of increased headcount as we continue to grow our business and require additional personnel to support our expanded operations. Allocated overhead expenses increased due to expanding our leased space and infrastructure as we continue to grow our business and expand headcount. Customer credit card fees increased due to increased customer transactions as we continue to grow our business. Professional fees increased due to increased accounting, legal and consulting costs due to growth in the business

 

Other Expense

 

 

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Interest income primarily consists of interest earned on invested cash and cash equivalents balances and investments. The increase is primarily due to increased investment holdings from the proceeds received from the 2022 Notes and an increase in yields on our investment balances.

Interest expense primarily consists of amortization of the debt discount and issuance costs related to the 2022 Notes that is recorded as interest expense, contractual interest expense on the 2022 Notes, and interest on capital leases. The increase was primarily due to the 2022 Notes being outstanding for the entire year in 2018 and the use of the effective-interest method to amortize the debt discount and issuance costs related to the 2022 Notes.

Other expense primarily consists of the impact of foreign currency transaction gains and losses associated with monetary assets and liabilities. The increase was primarily due to exchange rate fluctuations.  

Income Tax (expense) benefit

 

 

Income tax (expense) benefit consists of current and deferred taxes for U.S. and foreign income taxes. The decrease in the income tax benefit was primarily due to the deferred tax impact of the acquisition of a business and the issuance of the 2022 Notes in the year ended December 31, 2017.

 

Year Ended December 31, 2017 Compared to the Year Ended December 31, 2016

Revenue

 

 

Subscription revenue increased 40% during 2017 due to an increase throughout the year in Total Customers, which grew from 28,097 as of December 31, 2016 to 41,593 as of December 31, 2017. Total Average Subscription Revenue per Customer decreased from $10,689 for the three months ended December 31, 2016 to $10,255 for the three months ended December 31, 2017. The growth in Total Customers was primarily driven by our increased sales representative capacity to meet market demand. The decrease in average subscription revenue per customer was driven primarily by our continued adoption of our “freemium” model which allows us to add new customers through our lower cost sales and marketing products.

The 17% increase in professional services and other revenue resulted primarily from increased delivery of on-boarding and training services related to increase in new subscriptions sold.

Total Cost of Revenue, Gross Profit and Gross Margin

 

 

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Total cost of revenue increased 22% during 2017 primarily due to an increase in subscription and hosting costs, employee-related costs, amortization of developed technology, and allocated overhead expenses. The increase in gross margin was primarily driven by improved leverage of our hosting costs relative to growth in subscription revenue.

 

 

The increase in subscription cost of revenue for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to the following:

 

 

Subscription and hosting costs increased due to growth in our Total Customer base from 28,097 at December 31, 2016 to 41,593 at December 31, 2017. Employee-related costs increased as a result of increased headcount as we continue to grow our customer support organization to support our customer growth and improve service levels and offerings. Amortization of capitalized software development costs increased due to the increased number of developers working on our software platform as we continue to develop new products and increased functionality. Allocated overhead expenses increased due to expansion of our leased space and infrastructure as we continue to grow our business and expand headcount.

 

 

The increase in professional services and other cost of revenue for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to the following:

 

 

 

Employee-related costs increased as a result of increased headcount as we continue to grow our professional services organization to support our customer growth. Allocated overhead expenses increased due to expansion of our leased space and infrastructure as we continue to grow our business and expand headcount.

Research and Development

 

 

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The increase in research and development expense for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to the following:

 

 

 

Employee-related costs increased as a result of increased headcount as we continue to grow our engineering organization to develop new products, increase functionality and to maintain our existing platform. Allocated overhead expense increased due to expanding our leased space and infrastructure as we continue to grow our business and expand headcount.

Sales and Marketing

 

 

The increase in sales and marketing expense for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to the following:

 

 

Employee-related costs increased as a result of increased headcount as we continue to expand our selling and marketing organizations to grow our customer base. Partner commissions increased as a result of increased revenue generated through our Partners. Allocated overhead expenses increased due to expanding our leased space and infrastructure as we continue to grow our business and expand headcount. Marketing programs increased as we continue to make investments in attracting new customers, and increased the size of our annual INBOUND event.

General and Administrative

 

 

The increase in general and administrative expense for the year ended December 31, 2017 compared to the year ended December 31, 2016 was primarily due to the following:

 

 

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Employee-related costs increased as a result of increased headcount as we continue to grow our business and require additional personnel to support our expanded operations. Customer credit card fees increased due to increased customer transactions as we continue to grow our business. Professional fees increased due to increased accounting, legal and consulting costs due to growth in the business. Allocated overhead expenses increased due to expanding our leased space and infrastructure as we continue to grow our business and expand headcount.

Other (Expense) Income

 

 

Interest income primarily consists of interest earned on invested cash and cash equivalents balances and investments. The increase is primarily due to the increase in amount of investment holdings with the proceeds received from the 2022 Notes. Interest expense primarily consists of amortization of the debt discount and issuance costs related to the 2022 Notes that is recorded as interest expense, contractual interest expense on the 2022 Notes, and interest on capital leases. The increase was primarily due to amortization of the debt discount and issuance costs related to the 2022 Notes that were issued during 2017. Other expense primarily consists of the impact of foreign currency transaction gains and losses associated with monetary assets and liabilities. The decrease was primarily due to exchange rate fluctuations.  

Income Tax Expense

 

 

Income tax benefit (expense) consists of current and deferred taxes for U.S. and foreign income taxes. The increase in the income tax benefit was primarily due to the deferred tax impact of the acquisition of a business and the issuance of the 2022 Notes. For more information on the tax implications of the acquisition of a business and the 2022 Notes, refer to Notes 5 and 7 of the consolidated financial statements appearing elsewhere in this Annual Report Form 10-K. On December 22, 2017, tax legislation was enacted which included lowering the U.S. corporate income tax rate to 21% effective in 2018. We remeasured certain deferred tax assets and liabilities based on the tax rates at which they are expected to reverse in the future, which is generally 21%. As we have a full valuation allowance on US deferred assets, the allowance was adjusted accordingly based on the remeasured deferred tax asset and liability position.  As a result, the legislation had a limited impact on our income tax benefit (expense).

 

Liquidity and Capital Resources

Our principal sources of liquidity to date have been cash and cash equivalents, net accounts receivable, our common stock offerings, and our convertible notes offering.

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The following table shows cash and cash equivalents, working capital, net cash and cash equivalents provided by operating activities, net cash and cash equivalents used in investing activities, and net cash and cash equivalents provided by financing activities for the years ended December 31, 2018, 2017 and 2016:

 

 

Our cash and cash equivalents at December 31, 2018 was held for working capital purposes. We believe our working capital is sufficient to support our operations for at least the next 12 months. At December 31, 2018, $44.6 million of our cash and cash equivalents was held in accounts outside the United States. As of December 31, 2018 we completed our accounting for the US tax reform legislation and we determined that we will no longer assert indefinite reinvestment of our foreign earnings because these earnings have now been subject to United States Federal tax.  While we have concluded that any incremental tax incurred upon ultimate distribution of these earnings to be immaterial, our current plans do not demonstrate a need to repatriate undistributed earnings to fund our U.S. operations.

Net Cash and Cash Equivalents Provided by Operating Activities

Net cash and cash equivalents provided by operating activities consists primarily of net loss adjusted for certain non-cash items, including stock-based compensation, depreciation and amortization and other non-cash charges, net.

Net cash and cash equivalents provided by operating activities during the year ended December 31, 2018 primarily reflected our net loss of $63.8 million and accretion of bond discount of $6.8 million offset by non-cash expenses that included $23.4 million of depreciation and amortization, $76.3 million in stock-based compensation, $2.3 million of non-cash rent expense and $20.3 million of amortization of debt discount and issuance costs. Working capital sources of cash and cash equivalents primarily included a $49.3 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period and a $11.9 million increase in accrued expenses, a $5.8 million increase in deferred rent, a $3.9 million decrease in prepaid and other assets, and a $3.3 million increase in accounts payable related to timing of bill payments. These sources of cash and cash equivalents were offset by a $17.7 million increase in accounts receivable as a result of increased billings to customers consistent with the overall growth of the business, and a $23.9 million increase in deferred commissions.

Net cash and cash equivalents provided by operating activities during the year ended December 31, 2017 primarily reflected our net loss of $39.7 million, deferred income tax benefit of $11.5 million, and accretion of bond discount of $1.6 million offset by non-cash expenses that included $15.8 million of depreciation and amortization, $47.3 million in stock-based compensation, $5.0 million of non-cash rent expense and $12.4 million of amortization of debt discount and issuance costs. Working capital sources of cash and cash equivalents primarily included a $39.0 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period and a $8.2 million increase in accrued expenses, a $3.6 million increase in deferred rent related to a tenant improvement allowance received and a $1.1 million increase in accounts payable as a result of increased expense related to overall growth of the Company. These sources of cash and cash equivalents were offset by a $20.2 million increase in accounts receivable as a result of increased billings to customers consistent with the overall growth of the business, a $5.6 million increase in prepaid expenses and other assets, and a $4.0 million increase in deferred commissions.

Net cash and cash equivalents provided by operating activities during the year ended December 31, 2016 primarily reflected our net loss of $45.6 million, offset by non-cash expenses that included $11.2 million of depreciation and amortization, $32.7 million in stock-based compensation, $0.6 million of amortization of bond premium, and $4.0 million of non-cash rent expense. Working capital sources of cash and cash equivalents primarily included a $32.3 million increase in deferred revenue primarily resulting from the growth in the number of customers invoiced during the period and a $4.0 million increase in accrued expenses, and a $1.0 million increase in accounts payable as a result of increased expense related to overall growth of the Company. These sources of cash and cash equivalents were offset by a $14.1 million increase in accounts receivable as a result of increased billings to customers consistent with the overall growth of the business, and a $6.1 million increase in prepaid expense related to growth of the company.

 

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Net Cash and Cash Equivalents Used in Investing Activities

Our investing activities have consisted primarily of purchases and maturities of investments, property and equipment purchases, an acquisition of a business and purchase of technology, strategic investments, and capitalization of software development costs. Capitalized software development costs are related to new products or improvements to our existing software platform that expands the functionality for our customers.

Net cash and cash equivalents used in investing activities during the year ended December 31, 2018 consisted primarily of $681.6 million of purchases of investments, $22.3 million of purchased property and equipment, $11.2 million of capitalized software development costs and $0.5 million related to the purchase of strategic investments. These uses of cash were offset by $644.4 million received related to the maturity of investments.

Net cash and cash equivalents used in investing activities during the year ended December 31, 2017 consisted primarily of $890.0 million of purchases of investments, $20.3 million of purchased property and equipment, $7.1 million of capitalized software development costs, $9.4 million for the acquisition of a business and purchase of technology, and $3.5 million related to strategic investments. These uses of cash were offset by $533.7 million received from the maturity of investments.

Net cash and cash equivalents used in investing activities during the year ended December 31, 2016 consisted primarily of $52.1 million of purchases of investments, $15.8 million of purchased property and equipment, and $5.7 million of capitalized software development costs. These uses of cash were offset by $50.8 million related to maturities and sales of investments. In the year ended December 31, 2016, we continued to invest in improvements to our leased spaces.

Net Cash and Cash Equivalents Provided by Financing Activities

Our financing activities have consisted primarily of our stock offerings, the various components of our 2022 Notes offering, the issuance of common stock under our stock plans, payments of employee taxes related to the net share settlement of stock-based awards, and repayments of our capital lease obligations.

For the year ended December 31, 2018, cash and cash equivalents provided by financing activities consisted primarily of $21.6 million of proceeds related to issuance of common stock under stock plans. These sources of cash were offset by $8.0 million used for payment of employee taxes related to the net share settlement of stock-based awards and $0.7 million used for repayments of capital leases.

For the year ended December 31, 2017, cash and cash equivalents provided by financing activities consisted primarily $389.2 million of net proceeds from the issuance of the 2022 Notes, $58.9 million of proceeds from the issuance of warrants related to the 2022 Notes, and $13.1 million of proceeds related to issuance of common stock under stock plans. These sources of cash were offset by $78.9 million used for the purchase of a note hedge related to 2022 Notes, $4.4 million used for payment of employee taxes related to the net share settlement of stock-based awards and $1.1 million used for repayments of capital leases.

For the year ended December 31, 2016, cash and cash equivalents provided by financing activities consisted primarily $11.6 million of proceeds received from the issuance of common stock under stock plans. This source of cash was offset by $2.4 million used for payment of employee taxes related to the net share settlement of stock-based awards.

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America. In preparing our financial statements, we make estimates, assumptions and judgments that can have a significant impact on our reported revenues, results of operations and net income or loss, as well as on the value of certain assets and liabilities on our balance sheet during and as of the reporting periods. These estimates, assumptions and judgments are necessary because future events and their effects on our results and the value of our assets cannot be determined with certainty and are made based on our historical experience and on other assumptions that we believe to be reasonable under the circumstances. These estimates may change as new events occur or additional information is obtained, and we may periodically be faced with uncertainties, the outcomes of which are not within our control and may not be known for a prolonged period of time. Because the use of estimates is inherent in the financial reporting process, actual results could differ from those estimates.

 

Revenue Recognition

 

We generate revenue from arrangements with multiple performance obligations, which typically include subscriptions to our online software solutions and professional services which include on-boarding and training services. Our customers do not have the

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right to take possession of the online software products. Revenue from online software products is recognized ratably over the subscription period beginning on the date the online software product is made available to customers. We recognize revenue from on-boarding and training services as the services are provided. Amounts billed that have not yet met the applicable revenue recognition criteria are recorded as deferred revenue.

 

As part of accounting for arrangements with multiple performance obligations, we must assess whether each performance obligation we have with a customer is distinct. A good or service that is promised to a customer is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and a company’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract. We have determined that subscriptions for our online software products are distinct because, once a customer has access to the online software product it purchased, the online software product is fully functional and does not require any additional development, modification, or customization.  Professional services sold are distinct because the customer benefits from the on-boarding and training to make better use of the online software products it purchased.

 

We allocate the transaction price to each distinct performance obligation based on the standalone selling price (“SSP”) of each good or service. We calculate SSP for each type of online software product and professional service offering by averaging the selling price of all purchases within the trailing four calendar quarters. We use four quarters of transaction data to determine SSP as most of our customer arrangements are one year or less and pricing may be subject to change upon each customer’s renewal. In instances where there are not sufficient data points, or the average selling prices for a particular online software product or professional service offering are disparate, we estimate the SSP using other observable inputs, such as similar products or services.  If the actual selling price for the sale of an online software product or professional service offering within a multiple performance obligation arrangement substantially differs from the SSP of that offering, we use the relative SSP to allocate the transaction price to the performance obligations in the contract.

 

We pay our partners a commission based on the online software product sales price for sales to end-customers. The classification of the commission paid in our consolidated statements of operations depends on who purchases the online software product. In instances where the end-customer purchases the online software product from us, we are the principal and we record the commission paid to the partner as sales and marketing expense. When the partner purchases the online software product from us, we are the agent and we net the consideration paid to the partner against the associated revenue we recognize, as in these instances our customer is the partner and our remaining obligation is to the partner. We do not believe that we receive a tangible benefit from the commission payments to our partners.

 

 

Costs to Obtain a Contract with a Customer

 

Sales commissions earned by our sales force are considered incremental, recoverable costs of obtaining a contract with a customer. Sales commissions for initial contracts are deferred and then amortized on a straight-line basis over a period of benefit that we have determined to be approximately one to three years. The one to three-year period has been determined by taking into consideration the type of product sold, the commitment term of the customer contract, the nature of the Company’s technology development life-cycle, and an estimated customer relationship period. Sales commissions for upgrade contracts are deferred and amortized on a straight-line basis over the remaining estimated customer relationship period of the related customer. While we do not anticipate any significant changes to the one to three year amortization period, if a change did occur it could produce a material impact on our financial statements. For example, if the commitment term of our customer contracts significantly increased, our deferred commission expense asset would increase, and our amortization expense would decrease in the period in which the change occurs.

 

Capitalized Software Development Costs

Software development costs consist of certain payroll and stock compensation costs incurred to develop functionality for our Growth Platform and internally built software platforms, as well as certain upgrades and enhancements that are expected to result in enhanced functionality. We capitalize certain software development costs for new offerings as well as upgrades to our existing software platforms. We amortize these development costs over the estimated useful life of two to five years on a straight-line basis. We believe there are two key estimates within the capitalized software balance, which are the determination of the useful life of the software and the determination of the amounts to be capitalized.

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We determined that a two to five year life is appropriate for our internal-use software based on our best estimate of the useful life of the internally developed software after considering factors such as continuous developments in the technology, obsolescence and anticipated life of the service offering before significant upgrades. Based on our prior experience, internally generated software will generally remain in use for a minimum of two to five years before being significantly replaced or modified to keep up with evolving customer and company needs. While we do not anticipate any significant changes to this two to five year estimate, a change in this estimate could produce a material impact on our financial statements. For example, if we received information that indicated the useful life of all internally developed software was one year rather than two, our capitalized software balance would decrease by approximately 50% and our amortization expense would increase by 50% in the year of adoption of the change in estimate.

We determine the amount of internal software costs to be capitalized based on the amount of time spent by our developers on projects. Costs associated with building or significantly enhancing our Growth Platform and internally built software platforms are capitalized, while costs associated with planning new developments and maintaining our Growth Platform software and internally built software platforms are expensed as incurred. There is judgment involved in estimating the stage of development as well as estimating time allocated to a particular project. A significant change in the time spent on each project could have a material impact on the amount capitalized and related amortization expense in subsequent periods.

Stock-Based Compensation

We recognize compensation expense for option awards based on the fair value of the award and on a straight-line basis over the vesting period of the award based on the estimated portion of the award that is expected to vest.

Inherent in the valuation and recording of stock-based compensation for option awards, there are several estimates that we make in regard to valuation and expense that will be incurred. We use the Black-Scholes option pricing model to measure the fair value of our option awards when they are granted. For stock options and RSUs granted, our board of directors determines the fair value based on the closing price of our common stock as reported on the New York Stock Exchange on the date of grant. We use the daily historical volatility of companies we consider to be our peers. To determine our peer companies, we use the following criteria: software or software-as-a-service companies; similar histories and relatively comparable financial leverage; sufficient public company trading history; and in similar businesses and geographical markets. We use the peers’ stock price volatility over the expected life of our granted options to calculate the expected volatility. The expected term of employee option awards is determined using the average midpoint between vesting and the contractual term for outstanding awards, or the simplified method, because we do not yet have a sufficient history of option exercises. We consider this appropriate as we plan to see changes to our equity structure in the future and there is no other method that would be more indicative of exercise activity. The risk-free interest rate is based on the rate on U.S. Treasury securities with maturities consistent with the estimated expected term of the awards. We have not paid dividends and do not anticipate paying a cash dividend in the foreseeable future and, accordingly, use an expected dividend yield of zero.

The following table summarizes the assumptions, other than fair value of our common stock, relating to our stock options granted in the years ended December 31, 2018, 2017, and 2016:

 

 

We will continue to use judgment in evaluating the expected volatility and expected term utilized in our stock-based compensation expense calculations on a prospective basis. As we continue to accumulate additional data related to our common stock, we may refine our estimates of expected volatility and expected term, which could materially impact our future stock-based compensation expense.

Goodwill Impairment

Goodwill represents the excess of the cost of an acquired entity over the net fair value of the identifiable assets acquired and liabilities assumed. Goodwill is not amortized, but rather is assessed for impairment at least annually. We performed our annual impairment assessment on November 30, 2018. We operate under one reporting unit and as a result, evaluate goodwill impairment based on our fair value as a whole.

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To determine the number of operating segments and reporting units that are present, we analyzed whether there is any customer, product or geographic information that drives the chief operating decision makers (our chief executive and operating officers) decisions on how to allocate resources and whether any segment management exists. Management has concluded that operating decisions are made at the consolidated company level and there is no segment management in place that reviews results of operations with the chief operating decision maker.

In assessing goodwill for impairment, an entity has the option to assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If, after assessing the totality of events or circumstances, it is more likely than not that the fair value of the reporting unit is greater than its carrying value, then performing the two-step impairment test is unnecessary. An entity can choose not to perform a qualitative assessment for any of its reporting units and proceed directly to the use of the two-step impairment test.

When assessing goodwill for impairment for the year ended December 31, 2018, we first performed a qualitative assessment to determine whether it was necessary to perform the two-step quantitative analysis. Based on the qualitive assessment we determined it was unlikely that our reporting unit fair value was less than its carrying value and the two-step impairment test was not required. Based on the results of our most recent annual qualitive assessment performed on November 30, 2018, there was no impairment of goodwill recorded.

Strategic Investments

 

We hold strategic investments consisting of non-controlling equity investments in privately held companies. These investments without readily determinable fair values for which the Company does not have the ability to exercise significant influence are accounted for using the measurement alternative. Under the measurement alternative, the non-marketable securities are carried at cost less any impairments, plus or minus adjustments resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer. Fair value is not estimated for non-marketable equity securities if there are no identified events or changes in circumstances that may have an effect on the fair value of the investment.

 

Contractual Obligations and Commitments

 

Contractual obligations are cash that we are obligated to pay as part of certain contracts that we have entered during our course a business. Certain of our leases contain optional termination dates. The table below only includes payments up to the optional termination date. If we were to extended leases beyond the optional termination date the future commitments would increase by approximately $84.2 million. Below is a table that shows the projected outlays as of December 31, 2018:

 

 

In February 2019, we entered into a new 3 year property lease in Sydney, Australia. In conjunction with the new lease existing leases were amended. The new lease commences in April 2019 and we will pay an aggregate of approximately $1.7 million in incremental rent over the 3 year term.

 

Letters of Credit

 

As of December 31, 2018, we had a total of $5.6 million in letters of credit outstanding substantially in favor of certain landlords for office space. These irrevocable letters of credit, which are not included in the table of contractual obligations above, are secured by Certificate of Deposits and are expected to remain in effect, in some cases, until 2029.

 

 

Off Balance Sheet Arrangements

 

We have no material off-balance sheet arrangements at December 31, 2018 or 2017 exclusive of items described above and indemnifications of officers, directors and employees for certain events or occurrences while the officer, director or employee is, or was, serving at our request in such capacity.

 

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Recent Accounting Pronouncements

 

For information on recent accounting pronouncements, see Recent Accounting Pronouncements in the notes to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

 

 

Foreign Currency Exchange Risk

We have foreign currency risks related to our revenue and operating expenses denominated in currencies other than the U.S. dollar, primarily the Euro, British Pound Sterling, Australian dollar, Singaporean dollar, Japanese Yen, and Colombian Peso. Since we translate foreign currencies into U.S. dollars for financial reporting purposes, currency fluctuations can have an impact on our financial results.

We have experienced and will continue to experience fluctuations in our net loss as a result of transaction gains or losses related to revaluing certain current asset and current liability balances that are denominated in currencies other than the functional currency of the entities in which they are recorded. We recognized immaterial amounts of foreign currency gains and losses in each of the periods presented. We have not engaged in the hedging of our foreign currency transactions to date, we are evaluating the costs and benefits of initiating such a program and may in the future hedge selected significant transactions denominated in currencies other than the U.S. dollar as we expand our international operation and our risk grows.

Interest Rate Sensitivity

Our portfolio of cash and cash equivalents and short- and long-term investments is maintained in a variety of securities, including government agency obligations, corporate bonds and money market funds. Investments are classified as available-for-sale securities and carried at their fair market value with cumulative unrealized gains or losses recorded as a component of accumulated other comprehensive loss within stockholders' equity. A sharp rise in interest rates could have an adverse impact on the fair market value of certain securities in our portfolio. We do not currently hedge our interest rate exposure and do not enter into financial instruments for trading or speculative purposes.

Inflation Risk

We do not believe that inflation has had a material effect on our business. However, if our costs, in particular personnel, sales and marketing and hosting costs, were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, operating results and financial condition.

Market Risk and Market Interest Risk

In May 2017, we issued $400 million aggregate principal amount of 0.25% convertible senior notes due 2022. The fair value of our convertible senior notes is subject to interest rate risk, market risk and other factors due to the convertible feature.  The fair value of the convertible senior notes will generally increase as our common stock price increases and will generally decrease as our common stock price declines in value. The interest and market value changes affect the fair value of our convertible senior notes but do not impact our financial position, cash flows or results of operations due to the fixed nature of the debt obligation. Generally, the fair values of 2022 Notes will increase as interest rates fall and decrease as interest rates rise. Additionally, we carry the convertible senior notes at face value less unamortized discount on our balance sheet, and we present the fair value for required disclosure purposes only.

The table below provides a sensitivity analysis of hypothetical 10% changes of our stock price as of December 31, 2018 and the estimated impact on the fair value of the 2022 Notes. The selected scenarios are not predictions of future events, but rather are intended to illustrate the effect such event may have on the fair value of the 2022 Notes.

 

 

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

 

To the Board of Directors and Stockholders of HubSpot, Inc.

 

Opinions on the Financial Statements and Internal Control over Financial Reporting

 

We have audited the accompanying consolidated balance sheets of HubSpot, Inc. and its subsidiaries (the “Company”) as of December 31, 2018 and 2017, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended December 31, 2018, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).  

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2018 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2018, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

 

Change in Accounting Principle

 

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for revenues from contracts with customers in 2018.

 

Basis for Opinions

 

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.  

 

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

 

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Definition and Limitations of Internal Control over Financial Reporting

 

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

/s/ PricewaterhouseCoopers LLP

 

Boston, Massachusetts

February 12, 2019

 

We have served as the Company’s auditor since 2016.

 

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HUBSPOT, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

 

 

The accompanying notes are an integral part of the consolidated financial statements.

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HUBSPOT, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

 

 

The accompanying notes are an integral part of the consolidated financial statements.

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HUBSPOT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

 

 

The accompanying notes are an integral part of the consolidated financial statements.

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HUBSPOT, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands, except per share amounts)

 

The accompanying notes are an integral part of the consolidated financial statements.

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HUBSPOT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

 

 

The accompanying notes are an integral part of the consolidated financial statements

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HUBSPOT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

 

1. Organization and Operations

HubSpot, Inc. (the “Company”), provides a cloud-based inbound marketing and sales platform which features integrated applications to help businesses attract visitors to their websites, convert visitors into leads, close leads into customers and delight customers so they become promoters of those businesses. These integrated applications include a CRM, search engine optimization, blogging, website content management, messaging, chatbots, social media, marketing automation, email, predictive lead scoring, sales productivity, ticketing and helpdesk tools, customer NPS surveys, analytics, and reporting.

 

 

2. Summary of Significant Accounting Policies

Basis of Presentation —The consolidated financial statements have been prepared in U.S. dollars, in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany transactions have been eliminated in consolidation.

Use of Estimates —The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.

Operating Segments —The Company operates as one operating segment. Operating segments are defined as components of an enterprise for which separate financial information is regularly evaluated by the chief operating decision makers (“CODMs”), which are the Company’s chief executive officer and chief operating officer, in deciding how to allocate resources and assess performance. The Company’s CODMs evaluate the Company’s financial information and resources and assess the performance of these resources on a consolidated basis. Since the Company operates in one operating segment, all required financial segment information can be found in the consolidated financial statements.

Loss Per Share — Basic net loss per share is computed by dividing net loss by the weighted average number of common shares outstanding for the period. Diluted net loss per share is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation, options to purchase common stock, restricted stock units (“RSUs”), the shares issuable under the Employee Stock Purchase Plan (“ESPP”), common stock warrants, and the Conversion Option of the 2022 Notes are considered to be potential common stock equivalents.

A reconciliation of the denominator used in the calculation of basic and diluted loss per share is as follows:

 

 

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Since the Company incurred net losses for each of the periods presented, diluted net loss per share is the same as basic net loss per share. The Company’s outstanding stock options, RSUs, shares issuable under the ESPP, common stock warrants, and Conversion Option of the 2022 Notes were not included in the calculation of diluted net loss per share as the effect would be anti-dilutive. The following table contains all potentially dilutive common stock equivalents.

 

 

The Company expects to settle the principal amount of the 2022 Notes (Note 7) in cash, and therefore, the Company uses the treasury stock method for calculating any potential dilutive effect of the Conversion Option on diluted net income per share, if applicable. The Conversion Option will have a dilutive impact on net income per share when the average market price of the Company’s common stock for a given period exceeds the conversion price of the 2022 Notes of $94.77 per share. The common stock warrants will have a dilutive impact on net income per share when the average price of the Company’s common stock for a given period exceeds $115.83. Because the last reported sale price of the Company’s common stock for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the calendar quarter ended December 31, 2018 was equal to or greater than 130% of the applicable conversion price on each applicable trading day, the 2022 Notes are convertible at the option of the holders thereof during the calendar quarter ending March 31, 2019. As of  February 8, 2019, no holders have converted or indicated their intention to convert the 2022 Notes.

 

Cash and Cash Equivalents —The Company considers all highly liquid investments purchased with original maturity of three months or less to be cash equivalents. Cash and cash equivalents consist of cash held in bank deposit accounts and short-term, highly-liquid investments with remaining maturities of three months or less at the date of purchase, consisting of money-market funds.

Investments — Investments consist of corporate debt securities and U.S. Treasury securities. Securities having remaining maturities of more than three months at the date of purchase and less than one year from the date of the balance sheets are classified as short-term, and those with maturities of more than one year from the date of the balance sheet are classified as long-term in the consolidated balance sheets. The Company classifies its debt investments with readily determinable market values as available-for-sale. These investments are classified as investments on the consolidated balance sheets and are carried at fair market value, with unrealized gains and losses considered to be temporary in nature reported as accumulated other comprehensive loss, a separate component of stockholders’ equity. The Company reviews all investments for reductions in fair value that are other-than-temporary. When such reductions occur, the cost of the investment is adjusted to fair value through recording a loss on investments in the consolidated statements of operations. Gains and losses on investments are calculated on the basis of specific identification.

Investments are considered to be impaired when a decline in fair value below cost basis is determined to be other-than-temporary. The Company periodically evaluates whether a decline in fair value below cost basis is other-than-temporary by considering available evidence regarding these investments including, among other factors: the duration of the period that, and extent to which, the fair value is less than cost basis; the financial health of, and business outlook for the issuer, including industry and sector performance and operational and financing cash flow factors; overall market conditions and trends and the Company’s intent and ability to retain its investment in the security for a period of time sufficient to allow for an anticipated recovery in market value. Once a decline in fair value is determined to be other-than-temporary, a write-down is recorded and a new cost basis in the security is established.

Strategic investments — Strategic investments consist of non-controlling equity investments in privately held companies. These investments without readily determinable fair values for which the Company does not have the ability to exercise significant influence are accounted for using the measurement alternative. Under the measurement alternative, the non-marketable securities are carried at cost less any impairments, plus or minus adjustments resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

Accounts Receivable and Allowance for Doubtful Accounts —Accounts receivable are carried at the original invoiced amount less an allowance for doubtful accounts based on the probability of future collection. When management becomes aware of circumstances that may decrease the likelihood of collection to a point where a receivable is no longer probable of being collected, it records an allowance against amounts due, which reduces the receivable to the amount that management reasonably believes will be collected. For all other customers, management determines the adequacy of the allowance based on historical loss patterns, the number of days that billings are past due and an evaluation of the potential risk of loss associated with specific accounts. To date, losses resulting from uncollected receivables have not exceeded management’s expectations.

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The following is a roll forward of the Company’s allowance for doubtful accounts (in thousands):

 

 

Restricted Cash —The Company had restricted cash of $5.6 million at December 31, 2018 and $5.1 million at December 31, 2017 related to letters of credit for it leased facilities. The following table provides a reconciliation of the cash, cash equivalents and restricted cash within the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows for the year ended December 31, 2018 and 2017.

 

 

Property and Equipment —Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the related assets. Expenditures for maintenance and repairs are charged to expense as incurred, whereas major betterments are capitalized as additions to leasehold improvements. Depreciation is recorded over the following estimated useful lives:

 

 

Internal use software

The Company capitalizes certain payroll and stock compensation costs incurred to develop functionality for certain of the Company’s internally built software platforms. The costs incurred during the preliminary stages of development are expensed as incurred. Once a piece of incremental functionality has reached the development stage certain internal costs are capitalized until the functionality is ready for its intended use. Internal use software is included within property and equipment on the balance sheet. The costs are generally amortized on a straight-line basis over an estimated useful life of approximately five years.

 

Asset Retirement Obligations—The Company recognizes Assets Retirement Obligations (“AROs”) for any significant lease restoration obligation, if required by a lease agreement. The fair values of these AROs are recorded on a discounted basis, at the time the obligation is incurred, and accreted over time for the change in present value. Additionally, the Company capitalizes asset retirement costs by increasing the carrying amount of the related long-lived assets and depreciating these assets over their remaining useful life.

 

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The changes in these obligations during the year ending December 31, 2018 and December 31, 2017 are as follows:

 

 

Impairment of Long-Lived Assets —Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable or that the useful lives of those assets are no longer appropriate. Management considers the following potential indicators of impairment of its long-lived assets (asset group): a substantial decrease in the Company’s stock price, a significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used, a significant adverse change in legal factors or in the business climate that could affect the value of the long-lived asset (asset group), an accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group), and a current expectation that, more likely than not, a long lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously estimated useful life. When such events occur, the Company compares the carrying amounts of the assets to their undiscounted expected future cash flows. If this comparison indicates that there may be an impairment, the amount of the impairment is calculated as the difference between the carrying value and fair value. For the years presented, the Company did not recognize an impairment charge.

 

Intangible Assets — Intangible assets consist of acquired technology. We record acquired intangible assets at fair value on the date of acquisition. and amortize such assets using the straight-line method over the expected useful life of the asset. The estimated useful life of acquired technology is two to three years. The Company evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets. If the estimate of an intangible asset’s remaining useful life is changed, we amortize the remaining carrying value of the intangible asset prospectively over the revised remaining useful life.

 

Goodwill —Goodwill represents the excess of cost over the fair value of the net tangible and identifiable intangible assets acquired in a business combination. The Company has no other intangible assets with indefinite useful lives. Goodwill is not subject to amortization but is monitored annually for impairment or more frequently if there are indicators of impairment. Management considers the following potential indicators of impairment: significant underperformance relative to historical or projected future operating results, significant changes in the Company’s use of acquired assets or the strategy of the Company’s overall business, significant negative industry or economic trends and a significant decline in the Company’s stock price for a sustained period. The Company performs its annual impairment test on November 30. Currently, the Company’s goodwill is evaluated at the entity level as it is determined there is only one reporting unit. When assessing goodwill for impairment the Company first performs a qualitative assessment to determine whether it is necessary to perform the two-step quantitative analysis. If the Company determines it is unlikely that our reporting unit fair value was less than its carrying value then no two-step impairment test is performed. If the Company can not make a determination based on the qualitative assessment then the Company performs a two-step impairment test. Based on the qualitive assessment performed on November 30, 2018, the Company determined it was unlikely that our reporting unit fair value was less than its carrying value and no two-step impairment test was required. There were no indicators that the Company’s goodwill had become impaired since that date, and as such, there was no impairment of goodwill as of November 30, 2018 or December 31, 2018.

For the years ended December 31, 2018, 2017 and 2016, the Company did not recognize an impairment charge.

Advertising Expense —The Company expenses advertising as incurred, which is included in sales and marketing expense in the accompanying consolidated statements of operations. The Company incurred $8.4 million of advertising expense in 2018, $5.5 million in 2017, and $4.2 million in 2016.

Revenue Recognition — The Company generates revenue from arrangements with multiple performance obligations, which typically include subscriptions to its online software products and professional services which include on-boarding and training services. The Company’s customers do not have the right to take possession of the online software products.  The Company recognizes revenue from contracts with customers using a five-step model, which is described below:

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Identify the customer contract

A customer contract is generally identified when the Company and a customer have executed an arrangement that calls for the Company to grant access to its online software products and provide professional services in exchange for consideration from the customer.

Identify performance obligations that are distinct

A performance obligation is a promise to provide a distinct good or service or a series of distinct goods or services.  A good or service that is promised to a customer is distinct if the customer can benefit from the good or service either on its own or together with other resources that are readily available to the customer, and a company’s promise to transfer the good or service to the customer is separately identifiable from other promises in the contract.  The Company has determined that subscriptions for its online software products are distinct because, once a customer has access to the online software product that it purchased, the online software product is fully functional and does not require any additional development, modification, or customization.  Professional services sold are distinct because the customer benefits from the on-boarding and training to make better use of the online software products it purchased.

Determine the transaction price

The transaction price is the amount of consideration to which the Company expects to be entitled in exchange for transferring goods or services to a customer, excluding sales taxes that are collected on behalf of government agencies.  The Company estimates any variable consideration to which it will be entitled at contract inception, and reassesses at each reporting date, when determining the transaction price.  The Company does not include variable consideration to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will occur when any uncertainty associated with the variable consideration is resolved.

Allocate the transaction price to the distinct performance obligations

The transaction price is allocated to each performance obligation based on the relative standalone selling prices (“SSP”) of the goods or services being provided to the customer.  The Company determines the SSP of its goods and services based upon the average sales prices for each type of online software product and professional services sold.  In instances where there are not sufficient data points, or the selling prices for a particular online software product or professional service are disparate, the Company estimates the SSP using other observable inputs, such as similar products or services.

Recognize revenue as the performance obligations are satisfied

Revenues are recognized when or as control of the promised goods or services is transferred to customers.  Revenue from online software products is recognized ratably over the subscription period beginning on the date the Company’s online software products are made available to customers. Most subscription contracts are one year or less. The Company recognizes revenue from on-boarding and training services as the services are provided. 

Disaggregation of Revenue

 

The Company provides disaggregation of revenue based on geographic region (Note 8) and based on the subscription versus  professional services and other classification on the consolidated statements of operations as it believes these best depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors

Deferred Revenue, Deferred Commission Expense, and Accrued Expenses and Other Current Liabilities

 

Amounts that have been invoiced are recorded in accounts receivable and deferred revenue or revenue, depending on whether the revenue recognition criteria have been met. Deferred revenue represents amounts billed for which revenue has not yet been recognized. Deferred revenue that will be recognized during the succeeding 12-month period is recorded as current deferred revenue, and the remaining portion is recorded as long-term deferred revenue.

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Deferred revenue during the year ended December 31, 2018 increased by $46.3 million resulting from $559.3 million of additional invoicing and was offset by revenue recognized of $513.0 million during the same period. $138.1million of revenue was recognized during the year ended December 31, 2018 that was included in deferred revenue at the beginning of the period. As of December 31, 2018, approximately $126.4 million of revenue is expected to be recognized from remaining performance obligations for contracts with original performance obligations that exceed one year.  The Company expects to recognize revenue on approximately 94% of these remaining performance obligations over the next 24 months, with the balance recognized thereafter.  

 

Additional contract liabilities $1.6 million and $1.0 million were included in accrued expenses and other current liabilities on the consolidated balance sheet for the years ended December 31, 2018 and December 31, 2017.

 

The incremental direct costs of obtaining a contract, which primarily consist of sales commissions paid for new subscription contracts, are deferred and amortized on a straight-line basis over a period of approximately one to three years.  The one to three-year period has been determined by taking into consideration the type of product sold, the commitment term of the customer contract, the nature of the Company’s technology development life-cycle, and an estimated customer relationship period.  Sales commissions for upgrade contracts are deferred and amortized on a straight-line basis over the remaining estimated customer relationship period of the related customer.  Deferred commission expense that will be recorded as expense during the succeeding 12-month period is recorded as current deferred commission expense, and the remaining portion is recorded as long-term deferred commission expense. 

Deferred commission expense during the year ended December 31, 2018 increased by $22.9 million as a result of deferring incremental costs of obtaining a contract of $42.9  million and was offset by amortization of $20.0 million during the same period.

Partner Commissions

The Company pays its partners a commission based on the sales price for the subscription purchased. The classification of the commission paid on the Company’s consolidated statements of operations depends on who purchases the subscription. In instances where the end-customer purchases from the Company, the Company is the principal and it records the commission paid to the partner as sales and marketing expense. When the partner purchases directly from the Company (on behalf of an end-customer), the Company is the agent and it nets the consideration paid to the partner against the associated revenue it recognizes, as in these instances the Company’s customer is the partner and the Company’s remaining obligation is to the partner. The Company does not believe that it receives a tangible benefit from the commission payment to the partner.

Concentrations of Credit Risk and Significant Customers —Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash, investments and accounts receivable.

A significant portion of the Company’s cash and cash equivalents is held at four financial institutions that management believes to be of high credit quality. Although the Company deposits it cash and cash equivalents with multiple financial institutions, its deposits exceed federally insured limits.

The Company’s investments consist of highly rated corporate debt securities and U.S. Treasury securities. The Company limits the amount of investments in any single issuer, except U.S. Treasuries. The Company believes that, as of December 31, 2018, its concentration of credit risk related to investments was not significant.

The Company has no significant off-balance sheet risk such as foreign exchange contracts, option contracts, or other hedging arrangements.

The Company generally does not require collateral from its customers and generally requires payment 30 days from the invoice date. The Company maintains an allowance for doubtful accounts based on its assessment of the collectability of accounts receivable. Credit risk arising from accounts receivable is mitigated as a result of transacting with a large number of geographically dispersed customers spread across various industries.

At December 31, 2018 and 2017 there were no customers that represented more than 10% of the net accounts receivable balance. There were no customers that individually exceeded 10% of the Company’s revenue in any of the periods presented.

Foreign Currency —The functional currency of the Company’s foreign subsidiaries is the local currency. Assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the exchange rates in effect at the balance sheet dates; with the resulting translation adjustments directly recorded to a separate component of accumulated other comprehensive loss. Income and expense accounts are translated at the weighted-average exchange rates during the period. Foreign currency transaction gains and losses are recorded in other expense.

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Research and Development —Research and development expenses include payroll, employee benefits and other expenses associated with product development.

Capitalized Software Development Costs —Certain payroll and stock compensation costs incurred to develop functionality for the Company’s software and internally built software platforms, as well as certain upgrades and enhancements that are expected to result in increased functionality are capitalized. The costs incurred in the preliminary stages of development are expensed as incurred. Once an application has reached the development stage, certain internal costs are capitalized until the software is substantially complete and ready for its intended use. Capitalized software development costs are amortized on a straight-line basis over their estimated useful life of two to five years. Management evaluates the useful lives of these assets on a quarterly basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Capitalized software development costs, exclusive of those costs recorded within property and equipment, consisted of the following:

 

 

 

 

The Company capitalized software development costs, exclusive of costs recorded within property and equipment, of $12.8 million in 2018, $8.2 million in 2017, and $6.4 million in 2016. Stock-based compensation costs included in capitalized software were $2.4 million in 2018, $1.6 million in 2017, and $1.2 million in 2016.

Amortization of capitalized software development costs, exclusive of costs recorded within property and equipment, was $9.2 million in 2018, $6.3 million in 2017, and $5.1 million in 2016. Amortization expense is included in cost of revenue in the consolidated statements of operations.

Income Taxes —Deferred tax assets and liabilities are recognized for the differences between the financial statement carrying amounts and the tax bases of existing assets and liabilities using tax rates expected to be in effect in the years in which the differences are expected to reverse. Deferred tax assets are reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Accounting for uncertainty in income taxes recognized in the financial statements is in accordance with accounting authoritative guidance, which prescribes a two-step process to determine the amount of tax benefit to be recognized. First, the tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, the tax position is then assessed to determine the amount of benefit to recognize in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50 percent likelihood of being realized upon ultimate settlement.

 

Stock-Based Compensation — The Company accounts for all stock options and awards granted to employees and nonemployees using a fair value method. Stock-based compensation is recognized as an expense and is measured at the fair value of the award. The measurement date for awards is generally the date of the grant. Stock-based compensation costs are recognized as expense over the requisite service period, which is generally the vesting period for awards, on a straight-line basis for awards with only a service condition, and using the graded-method for awards with both a performance and service that were granted prior to our IPO, and on a straight-line basis for the awards that were granted following our IPO, which only have service conditions.

 

Recent Accounting Pronouncements— Recent accounting standards not included below are not expected to have a material impact on our consolidated financial position and results of operations.

 

Recent Accounting Pronouncements Adopted in 2018:

In November 2016, the Financial Accounting Standards Board  (“FASB”) issued guidance related to the presentation of restricted cash within the statement of cash flows. The guidance requires entities to show the changes in cash, cash equivalents, and restricted cash in the statement of cash flows. Entities will no longer present transfers between cash and cash equivalents and restricted cash in the statement of cash flows. The Company adopted the updated guidance as of January 1, 2018. As a result of adopting this guidance cash and cash equivalents used in investing activities increased by $521 thousand and net increase in cash, cash equivalents, and restricted cash also increased by $521 thousand for the year ended December 31, 2018. Cash and cash equivalents used in investing activities increased by $4.6 million and net increase in cash, cash equivalents, and restricted cash increased by $4.6 million

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for the year ended December 31, 2017 in the consolidated statements of cash flows. Cash and cash equivalents used in investing activities increased by $128 thousand and net increase in cash, cash equivalents, and restricted cash increased by $128 thousand for the year ended December 31, 2016 in the consolidated statements of cash flows.

In January 2016, the FASB issued guidance that requires entities to measure equity instruments at fair value and recognize changes in fair value within the statement of operations. The Company adopted the updated guidance as of January 1, 2018.  The guidance provides for electing a measurement alternative or defaulting to the fair value option for equity investments that do not have readily determinable fair values. The Company elected the measurement alternative for its equity investments in privately held companies, which are included in other assets in the accompanying consolidated balance sheets. These investments are measured at cost, less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer, which will be recorded within the statement of operations. The adoption of this guidance did not have a material impact on the consolidated financial statements.

In May 2014, the FASB issued updated guidance and disclosure requirements for recognizing revenue. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard also provides guidance on the recognition of costs related to obtaining customer contracts. The Company adopted the updated guidance as of January 1, 2018 using the modified retrospective transition method.

 

Adoption of Updated Revenue Guidance

 

On January 1, 2018, the Company adopted new revenue guidance using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after December 31, 2017 are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with historic revenue guidance.  The Company applied the new standard using practical expedients where:

 

The impact of applying the new guidance in 2018 versus the prior guidance resulted in a change to the period over which sales commissions are amortized to incorporate an estimated customer life and the amortization period over which internally developed new features and increased functionality for our software platform is recorded, in addition to the initial contract period. This resulted in a longer amortization period for deferred commission expense, which reduces expense compared to the application of the prior guidance.  There was also a change to the scope of sales commissions that are capitalized based on the definition of incremental costs of obtaining a contract. This increased the amount of commissions cost that was capitalized compared to the application of the prior guidance. In addition, there was a change in the timing of revenue recognition for certain sales contracts where free or discounted
services are bundled with subscription services due to the removal of the limitation on recording contingent revenue that existed in the prior guidance. Removing the limitation of recording contingent revenue resulted in an acceleration of revenue recognition on these contracts compared to the application of the prior guidance.

The Company recorded a net increase to opening retained earnings of $5.5 million as of January 1, 2018 due to the cumulative impact of adopting the new revenue guidance, with the impact primarily related to the recognition of costs associated with obtaining customer contracts.  The Company had previously recorded a net increase of $5.8 million to opening retained earnings as of January 1, 2018 to reflect the adoption of the new revenue guidance.  During the three months ended June 30, 2018, the Company recorded an immaterial $274 thousand adjustment to the initial opening retained earnings adjustment to account for the deferred tax impact of the adoption of the new revenue standard.

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The resulting impact to the consolidated statements of operations and comprehensive loss of applying the new guidance for the year ended December 31, 2018 versus the prior guidance was a decrease to subscription revenue of $613 thousand, an increase to professional services and other revenue of $372 thousand, a decrease to total revenues of $241 thousand, and a decrease to selling and marketing expense and total operating expenses of $16.7 million for the year ended December 31, 2018, and a decrease to income tax (expense) benefit of $168 thousand.  The resulting impact to loss from operations and loss before income tax (expense) benefit was $16.5 million. The resulting impact to net loss and comprehensive loss was $16.7 million.  The resulting impact on basic earnings per share was $0.43.  

The resulting impact to the consolidated balance sheet of applying the new guidance in 2018 versus the prior guidance was a increase to short-term deferred commissions and total current assets of $4.1 million, an increase to long-term deferred commissions of $18.1 million, a decrease to other assets of $98 thousand, an increase in total assets of $22.1 million, a decrease to short-term deferred revenue, and total current liabilities of $89 thousand, an increase to other liabilities of $8 thousand, a decrease to total liabilities of $81 thousand, a decrease to accumulated deficit and increase to total stockholders’ equity of $22.2 million, and an increase to total liabilities and stockholders’ equity of $22.1 million.  There was no impact to total cash flow from operations of applying the new guidance in 2018 versus the prior guidance because the decrease in net loss of $16.7 million, increase in the change in deferred commission expense of $16.7 million, increase in the change in deferred revenue  of $0.2 million, and decrease in deferred taxes of $0.2 million net to $0 within cash flows from operations.

Recent Accounting Pronouncements to be Adopted in 2019:

 

In June 2018, the FASB issued guidance to expand the guidance for stock-based compensation, to include share-based payment transactions for acquiring goods and services from nonemployees. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. The Company does not believe the adoption of this guidance will have a material impact on the consolidated financial statements.

 

In February 2016, the FASB issued guidance that requires lessees to recognize most leases on their balance sheets but record expenses on their income statements in a manner similar to current accounting. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. The guidance is effective in 2019 with early adoption permitted. The Company will adopt the standard on January 1, 2019. The guidance is required to be adopted using a modified retrospective approach. Upon adoption, the Company expects to elect the transition relief package, permitted within the new standard, in which the Company will not reassess the classification of existing leases, whether any expired or existing contracts contain a lease, and if existing leases have any initial direct costs. The standard will have a material impact on the Company’s consolidated balance sheet but will not have a material impact on the Company’s consolidated statement of operations, consolidated statement of comprehensive loss, or consolidated statement of cash flows. The most significant impact will be the recognition of right-of-use assets and lease liabilities for operating leases as the Company expects the obligations under existing operating leases, as disclosed in Note 9 to the consolidated financial statements, will be reported in the consolidated balance sheet upon adoption. The Company is currently evaluating the potential changes from this guidance to future financial reporting and disclosures and designing and implementing related processes and controls. The Company is still assessing the incremental borrowing rates to be used in determining the quantitative impact of adoption on the Company’s financial position.

Recent Accounting Pronouncements to be Adopted in 2020:

In January 2017, the FASB issued guidance simplifying the accounting for goodwill impairment by removing Step 2 of the goodwill impairment test. Under current guidance, Step 2 of the goodwill impairment test requires entities to calculate the implied fair value of goodwill in the same manner as the amount of goodwill recognized in a business combination by assigning the fair value of a reporting unit to all of the assets and liabilities of the reporting unit. The carrying value in excess of the implied fair value is recognized as goodwill impairment. Under the new standard, goodwill impairment is recognized based on Step 1 of the current guidance, which calculates the carrying value in excess of the reporting unit’s fair value. The new standard is effective beginning in January 2020, with early adoption permitted. The Company is currently evaluating the impact of this guidance on the consolidated financial statements.

In June 2016, the FASB issued guidance that introduces a new methodology for accounting for credit losses on financial instruments, including available-for-sale debt securities. The guidance establishes a new "expected loss model" that requires entities to estimate current expected credit losses on financial instruments by using all practical and relevant information. Any expected credit losses are to be reflected as allowances rather than reductions in the amortized cost of available-for-sale debt securities. This guidance will be effective for the Company on January 1, 2020. The Company is currently evaluating the impact of this guidance on the consolidated financial statements.

 

 

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3. Fair Value of Financial Instruments

The Company measures certain financial assets at fair value. Fair value is determined based upon the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as determined by either the principal market or the most advantageous market. Inputs used in the valuation techniques to derive fair values are classified based on a three-level hierarchy, as follows:

Level 1 — Quoted prices in active markets for identical assets or liabilities.

Level 2 — Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

The following table details the fair value measurements within the fair value hierarchy of the Company’s financial assets and liabilities at December 31, 2018 and December 31, 2017:

 

 

 

 

The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents. The fair value of the Company’s investments in certain money market funds is their face value and such instruments are classified as Level 1 and are included in cash and cash equivalents on the consolidated balance sheets. At December 31, 2018 and December 31, 2017, our Level 2 securities were priced by pricing vendors. These pricing vendors utilize the most recent observable market information in pricing these securities or, if specific prices are not available for these securities, use other observable inputs like market transactions involving identical or comparable securities.

 

As of December 31, 2018, the fair value of the 2022 Notes (Note 7) was $575.2 million.  The fair value was determined based on the quoted price of the 2022 Notes in an inactive market on the last trading day of the reporting period and has been classified as Level 2 within the fair value hierarchy.

 

For certain other financial instruments, including accounts receivable, accounts payable, capital leases and other current liabilities, the carrying amounts approximate their fair value due to the relatively short maturity of these balances.

 

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Restricted cash is comprised of certificates of deposit related to landlord guarantees for our leased facilities. These restricted cash balances have been excluded from our cash and cash equivalents balance on our consolidated balance sheets.

 

Strategic investments consist of non-controlling equity investments in privately held companies. The Company elected the measurement alternative for these investments without readily determinable fair values and for which the Company does not have the ability to exercise significant influence. These investments are accounted for under the cost method of accounting. Under the cost method of accounting, the non-marketable equity securities are carried at cost less any impairment, plus or minus adjustments resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer, which is recorded within the statement of operations. The Company holds $4.0 million of strategic investments without readily determinable fair values at December 31, 2018 and $3.5 million of strategic investments without readily determinable fair values at December 31, 2017. These investments are included in other assets on the consolidated balance sheets. There have been no adjustments to the carrying value of strategic investments resulting from impairments or observable price changes.

The following tables summarize the composition of our short- and long-term investments at December 31, 2018 and 2017:

 

 

 

 

For all of our securities for which the amortized cost basis was greater than the fair value at December 31, 2018 and 2017, the Company has concluded that there is no plan to sell the security nor is it more likely than not that the Company would be required to sell the security before its anticipated recovery. In making the determination as to whether the unrealized loss is other-than-temporary, the Company considered the length of time and extent the investment has been in an unrealized loss position, the financial condition and near-term prospects of the issuers, the issuers’ credit rating and the time to maturity.

Contractual Maturities

The contractual maturities of short-term and long-term investments held at December 31, 2018 and 2017 are as follows:

 

 

 

 

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4. Property and Equipment

Property and equipment as of December 31, 2018 and December 31, 2017 consists of the following:

 

 

Depreciation and amortization expense was $12.9 million in 2018, $9.4 million in 2017, and $5.9 million in 2016.

Accumulated depreciation for equipment under capital lease was $3.1 million as of December 31, 2018 and $2.4 million as of December 31, 2017.

The Company capitalized asset retirement costs of $1.3 million at December 31, 2018 and $1.1 million at December 31, 2017 within leasehold improvements on the consolidated balance sheets, and recorded the related liability to other long-term liabilities. These costs represent future lease restoration obligations as required by Company’s leases.

5. Business Acquisition and Purchase of Technology

 

On September 20, 2017, the Company acquired 100% of the equity interests of Motion AI, Inc., a Delaware technology corporation that allows users to scale one-to-one communications.  The acquisition strengthens the Company’s position in the one-to-one communication space. Under the terms of the purchase agreement, the Company paid $9.0 million. The excess of the purchase consideration over the fair value of net tangible and identifiable intangible assets and liabilities acquired was recorded as goodwill and is primarily attributable to expanded market opportunities. The goodwill recognized is not deductible for U.S. income tax purposes.  

 

The fair values assigned to tangible and identifiable intangible assets acquired and liabilities assumed as part of the business combination were determined based on the replacement costs and present value of expected after-tax cash flows attributable to the business which were derived from management’s estimates and assumptions. The sole intangible asset acquired in the business combination was developed technology and the estimate of fair value of the developed technology was determined using a replacement cost approach and the useful life of the technology was estimated to be two years.  The Company began amortizing the acquired technology in 2018 when the technology is placed in use. The acquired technology is being amortized over its useful life of two years as cost of subscription revenue in the consolidated statements of operations.

 

The allocation of the purchase price to the estimated fair value of acquired assets and assumed liabilities is $32 thousand of tangible assets, $6.0 million of acquired technology, and $5.2 million of goodwill. As part of the purchase price allocation, the Company recorded a deferred tax benefit of $2.2 million from a partial release of its deferred tax asset valuation allowance.  The net deferred tax liability from this acquisition provided a source of additional income to support the realizability of the Company’s pre-existing deferred tax assets and as a result, the Company released a portion of its valuation allowance. Lastly, there was approximately $4.0 million of potential consideration that was not included in the purchase price allocation as it is not associated with pre-combination services.  Through December 31, 2018, $3.8 million of this consideration had been earned and recorded as operating expense in the consolidated statements of operations. The remaining $0.2 million will be recorded as it is earned over a period of approximately 2 years.

 

The Company has included the operating results of the business combination in its consolidated financial statements since the date of the acquisition. The acquisition did not have a material effect on the revenue or earnings in the consolidated income statement for the reporting periods presented.  The pro forma results of the Company as if the acquisition had taken place on the first day of 2016 were not materially different from the amounts reflected in the accompanying consolidated financial statements.

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During the third quarter of 2017 the Company also acquired technology for $400 thousand.  The estimated useful life of the acquired technology is two years.

6. Intangible Assets

Intangible assets as of December 31, 2018 and 2017 consist of the following:

 

 

The estimated useful life of acquired technology is two to three years. The Company evaluates the useful lives of these assets on an annual basis and tests for impairment whenever events or changes in circumstances occur that could impact the recoverability of these assets.

Amortization expense related to intangible assets was $1.4 million in 2018, $103 thousand in 2017, and $84 thousand in 2016. Amortization expense of acquired technology is included in cost of subscription revenue in the consolidated statements of operations.

Estimated future amortization expense for intangible assets as of December 31, 2018 is as follows:

 

 

7. 0.25% Convertible Senior Notes, Convertible Note Hedge and Warrant

 

In May 2017, the Company issued $350 million aggregate principal amount of 0.25% convertible senior notes due June 1, 2022 (the “Maturity Date”) in a private offering and an additional $50 million aggregate principal amount of such notes pursuant to the exercise in full of the over-allotment options of the initial purchasers (the “2022 Notes”). The interest rates are fixed at 0.25% per annum and are payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2017.  The total net proceeds from the debt offering, after deducting initial purchase discounts and debt issuance costs, were approximately $389.2 million.

Each $1,000 principal amount of the 2022 Notes will initially be convertible into 10.5519 shares of the Company’s common stock (the “Conversion Option”), which is equivalent to an initial conversion price of approximately $94.77 per share, subject to adjustment upon the occurrence of specified events. The 2022 Notes will be convertible at the option of the holders at any time prior to the close of business on the business day immediately preceding February 1, 2022, only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on June 30, 2017, if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day; (2) during the five business day period after any five consecutive trading day period (the “Measurement Period”) in which the trading price per $1,000 principal amount of notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day; or (3) upon the occurrence of specified corporate events. At December 31, 2018 and 2017 the Company has reserved approximately 4.2 million shares of common stock for issuance upon conversion of the 2022 Notes. On or after February 1, 2022 until the close of business on the second scheduled trading day immediately preceding the Maturity Date, holders may convert their 2022 Notes at any time, regardless of the foregoing circumstances.  Upon conversion, the Company will pay or deliver, as the case may be, cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election.  If the Company undergoes a fundamental change prior to the maturity date, holders of the notes may require the Company to repurchase for cash all or any portion of their notes at a repurchase price equal to 100% of the principal amount of the

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notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if specific corporate events occur prior to the applicable maturity date, the Company will increase the conversion rate for a holder who elects to convert their notes in connection with such a corporate event in certain circumstances. Because the last reported sale price of the Company’s common stock for at least 20 trading days during the period of 30 consecutive trading days ending on the last trading day of the calendar quarter ended December 31, 2018 was equal to or greater than 130% of the applicable conversion price on each applicable trading day, the 2022 Notes are convertible at the option of the holders thereof during the calendar quarter ending March 31, 2019. As of  February 8, 2019, no holders have converted or indicated their intention to convert the 2022 Notes.

In accounting for the issuance of the convertible senior notes, the Company separated the 2022 Notes into liability and equity components.  The carrying amount of the liability component was calculated by measuring the fair value of a similar debt instrument that does not have an associated convertible feature. The carrying amount of the equity component representing the Conversion Option was $106 million and was determined by deducting the fair value of the liability component from the par value of the 2022 Notes. The equity component is not remeasured as long as it continues to meet the conditions for equity classification. The excess of the principal amount of the liability component over its carrying amount (the "Debt Discount") is amortized to interest expense over the term of the 2022 Notes expense at an effective interest rate of 6.95% over the contractual term of the 2022 Notes.

In accounting for the debt issuance costs of $10.8 million related to the 2022 Notes, the Company allocated the total amount incurred to the liability and equity components of the 2022 Notes based on their relative values. Issuance costs attributable to the liability component were $7.9 million and will be amortized to interest expense using the effective interest method over the contractual terms of the 2022 Notes.  Issuance costs attributable to the equity component were $2.9 million and are netted with the equity component in stockholders’ equity.

The net carrying amount of the liability component of the 2022 Notes is as follows:

 

 

The net carrying amount of the equity component of the 2022 Notes is as follows:

 

 

 

Interest expense related to the 2022 Notes is as follows:

 

 

 

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In connection with the offering of the 2022 Notes, the Company entered into convertible note hedge transactions (the “Convertible Note Hedges”) with certain counterparties in which the Company has the option to purchase (subject to adjustment for certain specified events) a total of approximately 4.2 million shares of the Company’s common stock at a price of approximately $94.77 per share.  The Convertible Note Hedges will be settled in cash or shares, or any combination thereof, in accordance with the settlement method of the 2022 Notes in excess of the par amount, and are expected to settle upon conversion of the 2022 Notes.  The total cost of the Convertible Note Hedges was $78.9 million.  In addition, the Company sold warrants to certain bank counterparties whereby the holders of the warrants have the option to purchase initially (subject to adjustment for certain specified events) a total of approximately 4.2 million shares of the Company’s common stock at a price of $115.8 per share.  The amount by which the settlement price exceeds the strike price may be settled in shares or cash at the Company’s election.  The warrants are expected to settle three business days from each trading day commencing on September 1, 2022 and ending on the 79th trading day thereafter.  The Company received $58.9 million in cash proceeds, net of issuance costs of $200 thousand, from the sale of these warrants.  Taken together, the purchase of the Convertible Note Hedges and the sale of warrants are intended to offset any actual dilution from the conversion of these notes and to effectively increase the overall conversion price from $94.77 to $115.83 per share. As these transactions meet certain accounting criteria, the Convertible Note Hedges and warrants are recorded in stockholders’ equity and are not accounted for as derivatives. The net cost of $20 million incurred in connection with the Convertible Note Hedges and warrant transactions was recorded as a reduction to additional paid-in capital on the consolidated balance sheet.

 

The number of shares of our common stock underlying the warrants is 4.2 million, the same number of shares originally underlying the 2022 Notes and the Convertible Note Hedge transactions.  The Company has reserved 4.2 million shares of common stock for the underlying warrants.  

 

The difference between the Debt Discount and the total cost of the Convertible Note Hedges, and the difference between the calculation of the book and tax allocation of debt issuance costs between the liability and equity components of the 2022 Notes, resulted in a difference between the carrying amount and tax basis of the 2022 Notes.  This taxable temporary difference resulted in the Company recognizing a $9.4 million deferred tax liability which was recorded as an adjustment to additional paid-in capital on the consolidated balance sheet.  The creation of the deferred tax liability is recognized as a component of equity and represents a source of future taxable income which supports realization of a portion of the income tax benefit associated with the 2017 loss from operations.  Therefore, the Company recorded a corresponding income tax benefit in its consolidated statement of operations in 2017. 

The net equity impact, included in additional paid-in capital, of the above components of the 2022 Notes is as follows:

 

 

 

8. Segment Information and Geographic Data

As more fully described in the Company’s Summary of Significant Accounting Policies, the Company operates in one operating segment. Revenue and long-lived assets by geographic region, based on physical location of the operations recording the sale or the assets are as follows:

Revenues by geographical region:

 

 

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Revenue derived from customers outside the United States (international) was approximately 37% of total revenue in 2018, 33% of total revenue in 2017 and 28% of total revenue in 2016.  

 

Total long-lived assets by geographical region:

 

 

 

9. Commitments and Contingencies

The Company leases its office facilities under non-cancelable operating leases that expire at various dates through May 2031. Rent expense for non-cancellable operating leases with free rental periods or scheduled rent increases is recognized on a straight-line basis over the terms of the leases. Certain leases contain optional termination dates. The table below only includes payments up to the optional termination date. If the Company were to extended leases beyond the optional termination date the future commitments would increase by approximately $84.2 million. Improvement reimbursements from landlords of $12.8 million are being amortized on a straight-line basis into rent expense over the terms of the leases. The difference between required lease payments and rent expense has been recorded as deferred rent.

Rent expense was $23.1 million in 2018, $18.9million in 2017, and $13.8 million in 2016. Deferred rent was $27.0 million as of December 31, 2018 and $19.0 million as of December 31, 2017.

 

 

Future minimum payments under all operating and capital lease agreements as of December 31, 2018, are as follows:

 

 

 

In February 2019,  the Company entered into a new 3 year property lease in Sydney, Australia. In conjunction with the new lease existing leases were amended. The new lease commences in April 2019 and the Company will pay an aggregate of approximately $1.7 million in incremental rent over the 3 year term.

 

The Company has entered into certain non-cancelable arrangements (“Vendor Commitments”), which require the future purchase of goods or services.

 

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Future minimum payments under all Vendor Commitments as of December 31, 2018, are as follows:

 

Legal Contingencies

From time to time the Company may become involved in legal proceedings or be subject to claims arising in the ordinary course of its business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on its business, operating results, financial condition or cash flows. Regardless of the outcome, litigation can have an adverse impact on the Company because of defense and settlement costs, diversion of management resources and other factors.

 

 

10. Changes in Accumulated Other Comprehensive Loss

The following table summarizes the changes in accumulated other comprehensive loss, which is reported as a component of stockholders’ equity, for the years ended December 31, 2018 and 2017:

 

 

 

11. Stockholders’ Equity and Stock-Based Compensation

Common Stock Reserved —As of December 31, 2018 and 2017, the Company has authorized 500 million shares of common stock. The number of shares of common stock reserved for the vesting of RSUs and exercise of common stock options are as follows (in thousands):

 

 

For shares reserved for issuance for the Conversion Option of the 2022 Notes and common stock warrants see Note 7.

 

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Equity Incentive Plan —The Company’s 2007 Equity Incentive Plan (the “2007 Plan”) was terminated in connection with the IPO, and accordingly, no shares are available for issuance under the 2007 Plan. The 2007 Plan will continue to govern outstanding awards granted thereunder, the 2007 Plan provided for the grant of qualified incentive stock options and nonqualified stock options or other awards such as RSUs to the Company’s employees, officers, directors and outside consultants. The term of each option is fixed by the Company’s compensation committee and may not exceed 10 years from the date of grant. As of December 31, 2018, 1.3 million options to purchase common stock and no RSUs remained outstanding under the 2007 Plan.

On September 25, 2014, the Company’s board of directors adopted and the Company’s stockholders approved the 2014 Stock Option and Incentive Plan (the “2014 Plan”). The 2014 Plan became effective upon the closing of the Company’s IPO in the fourth quarter of 2014. The Company initially reserved 1,973,551 shares of its common stock, or the Initial Limit, for the issuance of awards under the 2014 Plan. The 2014 Plan provides that the number of shares reserved and available for issuance under the plan automatically increases each January 1, beginning on January 1, 2015, by 5% of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31 or such lesser number of shares as determined by the compensation committee. This number is subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. The term of each option is fixed by the Company’s compensation committee and may not exceed 10 years from the date of grant. As of December 31, 2018,  563 thousand options to purchase common stock and 2.0 million RSUs remained outstanding under the 2014 Plan.

Equity Compensation Expense —The Company’s equity compensation expense is comprised of awards of options to purchase common stock, RSUs, and stock issued under the Company’s ESPP.

The following two tables show stock compensation expense by award type and where the stock compensation expense is recorded in the Company’s consolidated statements of operations:

 

 

 

Excluded from stock-based compensation expense is $2.4 million of capitalized software development costs in 2018, $1.6 million in 2017, and $1.2 million in 2016.

Stock Options —The fair value of employee options is estimated on the date of each grant using the Black-Scholes option-pricing model with the following assumptions:

 

 

The weighted-average grant-date fair value of options granted was $51.48  per share in 2018, $24.56 per share in 2017, and $16.97 per share in 2016.

The interest rate was based on the U.S. Treasury bond rate at the date of grant with a maturity approximately equal to the expected term. The expected term of options granted to employees was calculated using the simplified method, which represents the

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average of the contractual term of the option and the weighted-average vesting period of the option. The expected volatility for the Company’s common stock was based on an average of the historical volatility of a peer group of similar public companies. The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future. Forfeitures of share-based awards prior to vesting results in a reversal of previously recorded stock-compensation expense associated with such forfeited awards

Prior to the Company’s IPO, the fair value of the Company’s common stock was determined by the Board of Directors at each award grant date based upon a variety of factors, including the results obtained from independent third-party valuations, the Company’s financial position and historical financial performance, the status of technological developments within the Company’s products, the composition and ability of the engineering and management team, an evaluation of benchmark of the Company’s competition, the climate in the marketplace, the illiquid nature of the common stock, arm’s-length sales of the Company’s capital stock (including redeemable convertible preferred stock), the effect of the rights and preferences of the preferred stockholders and the prospects of a liquidity event, among others. After the Company’s IPO, the fair value of the Company’s common stock is the closing price of the stock on the date of grant.

The stock option activity for the year ended December 31, 2018 is as follows:

 

 

Total unrecognized compensation cost related to the nonvested options was $7.6 million at December 31, 2018. That cost is expected to be recognized over a weighted-average period of 2.7 years as of December 31, 2018.

Restricted Stock Units —RSUs vest upon achievement of a service condition and, prior to six months after the Company’s IPO, a performance condition. As soon as practicable following each vesting date, the Company will issue to the holder of the RSUs the number of shares of common stock equal to the aggregate number of RSUs that have vested. Notwithstanding the foregoing, the Company may, in its sole discretion, in lieu of issuing shares of common stock to the holder of the RSUs, pay the holder an amount in cash equal to the fair market value of such shares of common stock. The service condition is a time-based condition met over a period of four years, with 25% met after one year, and then in equal monthly or quarterly installments over the succeeding three years, or over a period of four years, with equal quarterly installments over those four years. The performance condition was met six months following the Company’s IPO. Upon completion of the Company’s IPO the Company began recording stock-based compensation expense based on the grant-date fair value of the RSUs using the accelerated attribution method for RSUs granted prior to its IPO and using the straight-line method for RSUs granted following its IPO. The total stock-based compensation expense expected to be recorded over the remaining life of outstanding RSUs is approximately $150.1 million at December 31, 2018. That cost is expected to be recognized over a weighted-average period of 2.7 years as of December 31, 2018. As of December 31, 2018, there are 2.0 million RSUs expected to vest with an aggregate intrinsic value of $248.9 million. The total fair value of RSUs vested was approximately $65.0 million in the year ended December 31, 2018, $ 48.6 million in the year ended December 31, 2017, and $24.0 million in the year ended December 31, 2016.

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The following table summarizes the activity related to RSUs for the year ended December 31, 2018:

 

 

Employee Stock Purchase Plan— On September 25, 2014, the Company’s board of directors adopted and the Company’s stockholders approved (the “ESPP”). The ESPP became effective upon the closing of the Company’s IPO. The ESPP authorizes the issuance of up to a total of 1,785,021 shares of common stock to participating employees and allows eligible employees to purchase shares of common stock at a 15% discount from the fair market value of the stock as determined on specific dates at six-month intervals. The offering periods for the ESPP commence on June 1 and November 1 of each year.

 

The following table summarizes the activity related to ESPP (in thousands, except the weighted average purchase price):

 

 

 

12. Income Taxes

(Loss) income before provision for income taxes was as follows:

 

 

The (provision) benefit for income taxes consists of the following:

 

 

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The following reconciles the differences between income taxes computed at the federal statutory rate of 21% for 2018 and 35% for 2017 and 2016 and the provision for income taxes:

 

 

On December 22, 2017, the United States of America signed tax legislation (the “2017 Act”) which enacts a wide range of changes to the U.S. corporate income tax system. The 2017 Act reduces the U.S. corporate tax rate from 35% to 21% effective January 1, 2018, broadens the tax base and changes rules for expensing and capitalizing business expenditures, establishes a territorial tax system for foreign earnings as well as a minimum tax on certain foreign earnings, provides for a one-time transition tax on previously undistributed foreign earnings, and introduces new rules for the treatment of certain export sales.. The Company recorded provisional estimates for the impact of the 2017 Act during period ended December 31, 2017.  The accounting for the 2017 Act is now complete and no significant adjustments were made to the provisional estimates.

 

Deferred Tax Assets and Liabilities —Deferred income taxes reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities were as follows:

 

 

The Company reviews all available evidence to evaluate its recovery of deferred tax assets, including its recent history of accumulated losses in all tax jurisdictions over the most recent three years as well as its ability to generate income in future periods. The Company has provided a valuation allowance against its U.S. net deferred tax assets as it is more likely than not that these assets will not be realized given the nature of the assets and the likelihood of future utilization.

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The valuation allowance increased by $36.1 million in 2018, $5.5 million in 2017 and $16.5 million in 2016, primarily due to the increase in the U.S. net operating loss deferred tax asset. The Company does not expect any significant changes in its valuation allowance positions within the next 12 months.

Prior to the 2017 Act, the Company had asserted that the earnings of its foreign subsidiaries were indefinitely reinvested in the operations of those subsidiaries. At December 31, 2018, the Company has completed its accounting for the impact of the 2017 Act and has determined that it will no longer assert indefinite reinvestment of its foreign earnings. Through December 31, 2017, these earnings have been subject to U.S. federal income tax via the one-time transition tax on previously undistributed foreign earnings. The foreign earnings for the year-ended December 31, 2018 have been subject to U.S. federal income tax via the newly enacted Global Intangible Low-Taxed Income (“GILTI”) provision. The Company has determined that any incremental tax incurred upon ultimate distribution of these earnings to the U.S. would not be material.

The Company had federal and state net operating loss carryforwards of $479.5 million and $301.4 million, respectively at December 31, 2018. As a result of the 2017 Act all federal net operating losses, created after January 1, 2018, have an indefinite carryforward period. All federal net operating losses, created before January 1, 2018, are subject to 20 year carryforward period and will expire at various dates through 2037. State net operating losses will expire at various dates through 2038. The Company had a federal interest expense carryforward of $10.0 million at December 31, 2018 which has an indefinite carryforward period.

The Company had federal research and development credit carryforwards of $6.8 million at December 31, 2018 that expire at various dates through 2038. The Company also has state research and investment credit carryforwards of $3.5 million and $932 thousand, respectively that expire at various dates through 2033.

Under Section 382 of the Internal Revenue Code of 1986, as amended, substantial changes in the Company's ownership may limit the amount of net operating loss carryforwards that could be utilized annually in the future to offset taxable income. Specifically, this limitation may arise in the event of a cumulative change in ownership of the Company of more than 50% within a three-year period. Any such annual limitation may significantly reduce the utilization of net operating loss carryforwards before they expire. The Company performed an analysis through December 31, 2017, and determined any potential ownership change under Section 382 during the year would not have a material impact on the future utilization of US net operating losses and tax credits. There was no material change to this conclusion in 2018. However, future transactions in the Company's common stock could trigger an ownership change for purposes of Section 382, which could limit the amount of net operating loss carryforwards and other attributes that could be utilized annually in the future to offset taxable income, if any. Any such limitation, whether as the result of sales of common stock by our existing stockholders or sales of common stock by the Company, could have a material adverse effect on results of operations in future years.

Uncertain Tax Positions —The Company accounts for uncertainty in income taxes using a two-step process. The Company first determines whether it is more likely than not that a tax position will be sustained upon examination by the tax authority, including resolutions of any related appeals or litigation processes, based on technical merit. If a tax position meets the more-likely-than-not recognition threshold it is then measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement.

The following summarizes activity related to unrecognized tax benefits:

 

 

All of the gross unrecognized tax benefits represent a reduction to the research and development tax credit carryforward.

All of the unrecognized tax benefits decrease deferred tax assets with a corresponding decrease to the valuation allowance. None of the unrecognized tax benefits would affect the Company’s effective tax rate if recognized in the future.

The Company has elected to recognize interest and penalties related to uncertain tax positions as a component of income tax expense. No interest or penalties have been recorded through December 31, 2018.

The Company does not expect any significant change in its unrecognized tax benefits within the next 12 months.

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The Company files tax returns in the United States, Ireland, Australia, Singapore, Japan, Germany, Colombia, Canada, Sweden and various state jurisdictions. All of the Company’s tax years remain open to examination in the United States, as carryforward attributes generated in past years may still be adjusted upon examination by the Internal Revenue Service or state tax authorities if they have or will be used in future periods.  The Company remains open to examination in Ireland for tax years 2014 through present.  The Company also remains open to examination for varying periods in the other foreign jurisdictions.  The Company is routinely examined by various taxing authorities. The IRS completed a federal income tax audit for the tax year 2013 during 2016. The completed federal income tax audit did not yield a material effect on the Company’s financial condition or results of operations.

 

 

13. Employee Benefit Plan

In July 2008, the Company established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pretax basis, subject to legal limitations. Total employer contributions were $4.0 million in 2018, $2.9 million in 2017, and $2.1 million in 2016.

 

 

14. Quarterly Financial Results (unaudited)

 

 

 

None.

 

 

 

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Exchange Act)), as of the end of the period covered by this Annual Report on Form 10-K. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2018, our disclosure controls and procedures were effective at the reasonable assurance level.

 

 

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the company's principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:

 

 

 

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Our management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2018. In making this assessment, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control — Integrated Framework (2013).

 

Based on our assessment, management, with the participation of our Chief Executive Officer and Chief Financial Officer, concluded that, as of December 31, 2018, our internal control over financial reporting was effective based on those criteria.

 

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2018 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in its report, which is included on under Item 8 of this annual report on Form 10-K

 

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations, misstatements due to error or fraud may occur and not be detected.

 

No change in our internal control over financial reporting occurred during the quarter ended December 31, 2018 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

 

None.

 

 

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PART III

 

 

The complete response to this Item regarding the backgrounds of our executive officers and directors and other information required by Items 401, 405 and 407 of Regulation S-K will be contained in our definitive proxy statement for our 2019 Annual Meeting of Stockholders.

Code of Business Conduct and Ethics

We have adopted a code of business conduct and ethics that is applicable to all of our employees, officers and directors including our chief executive officer and senior financial officers, which is available on our website under “Investor Relations—Leadership & Governance.”

 

 

The information required by this Item is incorporated by reference herein to our definitive proxy statement for our 2019 Annual Meeting of Stockholders.

 

 

The information required by this Item is incorporated by reference herein to our definitive proxy statement for our 2019 Annual Meeting of Stockholders.

 

 

The information required by this Item is incorporated by reference herein to our definitive proxy statement for our 2019 Annual Meeting of Stockholders.

 

 

The information required by this Item is incorporated by reference herein to our definitive proxy statement for our 2019 Annual Meeting of Stockholders.

 

 

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PART IV

 

 

Financial statements schedules are omitted as they are either not required or the information is otherwise included in the consolidated financial statements.

 

 

Not applicable.

 

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EXHIBIT LIST

 

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Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the city of Cambridge, Commonwealth of Massachusetts, on the 12th day of February 2019.

 

 

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POWER OF ATTORNEY

We, the undersigned directors and officers of HubSpot, Inc. (the “Company”), hereby and severally constitute and appoint Brian Halligan, J.D. Sherman and Kate Bueker and each of them singly, our true and lawful attorneys, with full power to them, and each of them singly, to sign for us and in our names in the capacities indicated below, and to file any and all amendments to this Annual Report on Form 10-K, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing, requisite and necessary to be done in connection therewith, as fully to all intents and purposes as each of us might or could do in person and hereby ratifying and confirming all that said attorneys and each of them, or their substitutes, shall do or cause to be done by virtue of this Power of Attorney.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

 

 

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Exhibit 10.1

25 FIRST STREET

THE DAVENPORT

CAMBRIDGE, MASSACHUSETTS

AMENDED AND RESTATED LEASE

FROM

JAMESTOWN PREMIER DAVENPORT, LLC

TO

HUBSPOT, INC.

 

 

 

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TABLE OF CONTENTS

 

 

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LIST OF EXHIBITS. The following Exhibits are a part of this Lease and are incorporated herein by reference.

 

 

 

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AMENDED AND RESTATED LEASE AGREEMENT

This Amended and Restated Lease Agreement (as amended and restated, this “Lease” or “Agreement” or “Amended and Restated Lease”) dated as of November 1, 2015 (the “Execution Date”) is hereby entered into by and between JAMESTOWN PREMIER DAVENPORT, LLC, a Delaware limited liability company, successor-in-interest to DWF III Davenport, LLC, the successor-in-interest to 25 First Street, LLC (hereinafter referred to as “Landlord”), and HUBSPOT, INC., a Delaware corporation (hereinafter referred to as “Tenant”). The Lease relates to space in the Building (as defined herein) known as The Davenport Building, having an address of 25 First Street, Cambridge, Massachusetts.

BACKGROUND

Reference is made to the following:

A. Tenant is currently leasing the Portion of the Premises referred to herein as the Existing Premises pursuant to a lease between Landlord and Tenant dated March 10, 2010, as amended by a First Amendment to Lease Agreement dated as of February 1, 2011, a Second Amendment to Lease Agreement dated as of September 20, 2012, a Third Amendment to Lease Agreement dated as of February 4, 2013, a Fourth Amendment to Lease Agreement dated as of April 1, 2013 (the “Prior Fourth Amendment”), a Fifth Amendment to Lease Agreement dated as of June 12, 2013, a Sixth Amendment to Lease dated as of November 9, 2013, and a Seventh Amendment to Lease dated as of October 22, 2015 (the “Prior Seventh Amendment”) (as amended, the “Prior Lease”) with respect to the Existing Premises (as hereinafter defined).

B. Pursuant to Section 16.44 hereof, the Prior Lease shall terminate effective as of 11:59 p.m. (ET) on the day immediately preceding the Lease Commencement Date.

C. The Existing Premises, the Delayed Portion of the Existing Premises, as well as each portion of the Expansion Premises (i.e., the Phase I Premises, Phase II Premises A, Phase II Premises B, Phase II Premises C, and Phase III Premises) and, in the event that, pursuant to Section 3.3 and/or Section 3.4 below, Tenant leases any portion of the Put Premises, each portion of the Put Premises, are sometimes referred to herein as a “Portion of the Premises.”

Landlord and Tenant hereby agree with each other as follows:

ARTICLE 1

BASIC LEASE PROVISIONS

 

 

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ARTICLE 2

PREMISES

(A) Landlord hereby leases the Existing Premises to Tenant, and Tenant hereby leases the Existing Premises from Landlord. Except as expressly set forth in Section 2.2 hereof, the Premises shall not include any Common Areas, as hereinafter defined. Effective as of the applicable Commencement Date for the Delayed Portion of the Existing Premises and each Portion of the Expansion Premises (as such Commencement Dates are defined in Section 1.1 above), Landlord shall demise and lease to Tenant, and Tenant shall hire and take from Landlord, the Delayed Portion of the Existing Premises and such Portion of the Expansion Premises for a term commencing as of the applicable Commencement Date for the Delayed Portion of the Existing Premises and such Portion of the Expansion Premises and terminating as of the expiration or earlier termination of the Lease Term. Said demise of the Delayed Portion of the Existing Premises and each such Portion of the Expansion Premises shall be upon all of the same terms and conditions of the Lease, except as set forth herein. From and after the Commencement Date for the Delayed Portion of the Existing Premises and each Portion of the Expansion Premises, (i) the term “Premises” as used in this Lease shall be deemed to include the Delayed Portion of the Existing Premises and such Portion of the Expansion Premises, as the case may be, and (ii) the Rentable Floor Area of the Premises shall be increased by an amount equal to the Rentable Floor Area of the Delayed Portion of the Existing Premises and such Portion of the Expansion Premises, as the case may be.

(B) Adjustments in Lease upon the Substantial Full Occupancy Commencement Date. The parties hereby expressly acknowledge and agree that if, pursuant to the provisions of this Lease or otherwise, the Substantial Full Occupancy Commencement Date (as hereinafter defined) has occurred, then the agreed upon Rentable Floor Area of each Portion of the Premises, as well as of the Building, shall be increased, and Tenant shall be entitled to certain additional rights, as follows:

(i)Increase in Rentable Areas.

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(A) Tenant shall have the non-exclusive right to use in common with others, subject to the terms of this Lease, the following areas (“Common Areas”): (a) the common lobbies, corridors, stairways, elevators and mechanical, janitorial and electrical rooms of the Building, and the pipes, ducts, shafts, conduits, wires and appurtenant meters and equipment serving the Premises in common with others, (b) the loading areas serving the Building and the common walkways and driveways necessary for access to the Building, (c) if the Premises include less than the entire rentable floor area of any floor, the common toilets, corridors and elevator lobby of such floor, and (d) the Building Amenities (as hereinafter defined). Subject to Tenant’s rights under this Lease, Landlord shall provide the following Building amenities to Tenant, its employees and guests throughout the Term (as it may be extended): (i) an enclosed common area atrium located on Floor 1 of the Building and shown as the “Atrium” on the floor plan attached hereto as Exhibit 1.1.2, Sheet 1 (the “Atrium”), (ii) an outdoor common area courtyard located on Floor 1 of the Building and shown as the “Courtyard” on the floor plan attached hereto as Exhibit 1.1.2, Sheet 1 (the “Courtyard”), (iii) an exposed brick and beam environment, (iv) a client service liaison, (v) a common conference room on the first floor of the Building and shown as “Conference” on the floor plan attached hereto as Exhibit 1.1.2, Sheet 1 (the “First Floor Conference Room”), and (vi) shower facilities (each a “Building Amenity” and collectively, the “Building Amenities”). Landlord agrees that the Atrium, the Courtyard and the First Floor Conference Room will remain a part of the Building throughout the Term hereof (subject to such modifications as Landlord may deem necessary or desirable from time to time, provided, however, that from and after the Substantial Full Occupancy Commencement Date, Landlord shall only be allowed to make modifications to such areas (i) if required by law or (ii) if Tenant consents to such modifications in accordance with Section 2.2(C) below) and that, subject to availability, Tenant may utilize the Courtyard, the Atrium and the First Floor Conference Room for functions and the like subject to

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there not being any Event of Default under this Lease and Tenant signing the Landlord’s standard form of license with regard to such usage, which license would include provisions regarding reimbursement to Landlord for out of pocket insurance, security and clean-up costs incurred by Landlord in connection with such use of the Courtyard, the Atrium or the First Floor Conference Room. In the event that Tenant enters into a license to concurrently use both the Atrium and the Courtyard, such license shall specify that Tenant’s use of such areas will not prohibit or unreasonably restrict any other tenant of the Building from accessing their premises. Tenant shall pay actual out-of-pocket costs incurred by Landlord in connection with Tenant’s use of the Courtyard, the Atrium and the First Floor Conference Room. Notwithstanding anything to the contrary herein contained, Landlord has no obligation to allow any particular telecommunication service provider to have access to the Building or to Tenant’s Premises, but Landlord shall not be unreasonable in denying such access and Tenant’s existing telecommunications provider shall be permitted access throughout the Term of this Lease. If Landlord permits such access and the provider serves other tenants in the Building, Landlord may condition such access upon the payment to Landlord by the service provider of fees assessed by Landlord in its reasonable discretion. There shall be no fees assessed for Tenant’s existing telecommunications provider or after the Substantial Full Occupancy Commencement Date.

(B) Landlord reserves the right, provided the same is done without unreasonable interference with Tenant’s use, to install, use, maintain, repair, replace and relocate pipes, ducts, conduits, wires and appurtenant fixtures, wherever located, so long as such items (i) are necessary to keep and operate the Building in good condition and repair consistent with Landlord’s obligations under this Lease, (ii) do not materially adversely affect the first class appearance or usefulness of the Premises, (iii) do not reduce the usable area of the Premises (other than to a de minimis extent), and, (iv) with respect to any such changes made within the Premises, (a) are required by law and (b) consented to by Tenant (which consent will not be unreasonably withheld). Notwithstanding the foregoing, Landlord shall not have the right to make such changes within the Premises after the Substantial Full Occupancy Commencement Date, unless either (x) such changes are required by law or (y) Tenant consents to such changes, which consent may be withheld in Tenant’s sole discretion. Installations, replacements and relocations referred to in this Section 2.2(B) shall be located so far as practicable in the central core area of the Building, above ceiling surfaces, below floor surfaces or within perimeter walls of the Premises. Except in the case of emergencies or for normal cleaning or maintenance, Landlord agrees to use reasonable efforts to coordinate with Tenant the scheduling of any of the foregoing which require work in the Premises. In connection with any such work, Landlord shall use reasonable efforts to minimize interference with Tenant’s use of the Premises.

(C) Subject to the terms of this Lease and Tenant’s rights hereunder, Landlord reserves all rights of ownership and use in all respects outside the Premises. Landlord shall have the right to change and rearrange the Common Areas, to change, relocate and eliminate facilities therein, to permit the use of or lease all or part thereof for exhibitions and displays and to sell, lease or dedicate all or part thereof to public use; and further to make changes in the Building and other structures and improvements on the Lot, except the Premises, as long as Tenant at all times has reasonable access to the Building and Premises and adequate use and enjoyment thereof pursuant to this Lease, and provided, however, that, (1) except as provided in Section 2.2(B), Landlord shall not exercise any of the foregoing rights with respect to any of the Tenant Controlled Common Areas (as hereinafter defined) that Tenant has the right to control and alter pursuant to Section 2.2(E) below without Tenant’s consent in Tenant’s sole discretion, (2) from and after the Substantial Full Occupancy Commencement Date, Landlord shall not make any material changes or modifications to the Common Areas, including the Building Amenities and entrances, doorways and corridors that except (i) as required by law or (ii) with Tenant’s prior written consent, which consent will not be unreasonably withheld:

(x) are not necessary to keep and operate the Building in good condition and repair consistent with Landlord’s obligations under this Lease, or

(y) materially adversely affect the first class appearance or usefulness of the Common Areas and/or Building Amenities, or

(z) reduce or alter the usable area or functionality of the Common Areas and/or Building Amenities (other than to a de minimis extent); and

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(3) from and after the Execution Date, Landlord shall not, except as expressly contemplated with respect to certain areas of the basement of the Building (i.e., the Basement Put Premises, the Basement Storage Premises, and the Swing Basement Space), or as may be requested by Tenant in writing, convert any portion of the Common Areas, or any other portion of the Building which is not, as of the Execution Date of this Lease used as rentable or leaseable space for the exclusive use of a tenant, to areas which can be leased, licensed or otherwise occupied by a third party for its exclusive use.

(D) From and after the Substantial Full Occupancy Commencement Date, Tenant shall have the right, at its election, to (i) share the use of the reception desk currently located on Floor 1 with Landlord’s security personnel, or (ii) relocate, at Tenant’s cost, such reception desk to an alternate location in the Common Areas of Floor 1, which new location shall be mutually agreed upon by Landlord and Tenant, and to install a new reception desk for Tenant’s exclusive use in the current location of the Building’s reception desk; provided, however: (x) Tenant acknowledges that if the existing reception desk is relocated by Tenant, until the 100% Lease Date (as hereinafter defined), at Tenant’s election, either Tenant’s use of the relocated reception desk will continue to be shared with Landlord’s security personnel or Landlord’s security personnel shall be stationed at another mutually acceptable location located on Floor 1, and (y) Landlord acknowledges that Tenant shall incur no obligation to provide security or other services to tenants of the Building due to its use of the shared reception desk.

(E) Tenant’s Rights to Control Common Areas.

(i) Definitions. It is agreed that the following terms used herein shall be defined as follows:

(1) “Tenant Controlled Common Areas” shall mean the portions of the Common Areas of the Building with respect to which Tenant may exercise the Common Area Control Rights, which portions of the Common Areas shall become “Tenant Controlled Common Areas” at the times set forth in this Section 2.2(E).

(2) “Common Area Control Rights” shall mean: (1) the right to require Landlord to impose on the tenants of the Building reasonable rules and regulations with respect to the use of the Tenant Controlled Common Areas; (2) the right to make alterations and installations to the Tenant Controlled Common Areas, provided that Tenant must (a) perform such work in accordance with the terms of this Lease and (b) obtain Landlord’s written approval of the final construction plans and specifications for such work pursuant to Section 9.2 below prior to making any such alterations; (3) the right to direct Landlord to exclude other tenants and occupants of the Building from accessing the Tenant Controlled Common Areas, including, to the extent applicable, the right to impose Elevator Lock Off Rights (as hereinafter defined) with respect to any elevator that opens directly into a Common Area that is then a Tenant Controlled Common Area; and (4) the right to use the Tenant Controlled Common Areas for the Permitted Use as if such Tenant Controlled Common Areas were the Premises; provided, however, that Tenant may not use any Tenant Controlled Common Areas for permanent population occupancy (e.g., the use of desks or other work stations where Tenant’s employees store their papers and belongings).

(3) “Elevator Lock Off Right” shall mean the right for Tenant, at Tenant’s sole cost and expense (subject to Tenant’s right to use Landlord’s Base Contribution to pay for such costs), to perform alterations to the elevators of the Building so that access to any floor (“Restricted Floor”) from such elevator may only be made through the use of card key or other reasonable means approved by Landlord (which approval shall not be unreasonably withheld, conditioned or delayed), provided that: (x) Tenant may only exercise its Elevator Lock Off Right for any elevator into which either: (1) the elevator lobby directly adjacent to such elevator for the Restricted Floor in question is then a Tenant Controlled Common Area, and (2) Tenant provides to Landlord the same means of access to the locked offer floors as Tenant provides to its employees so that Landlord may access such floors using such elevators in an emergency.

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(4) “Floor 2 Common Area A” shall mean the portion of Floor 2 shown on Exhibit 2.2.1, Sheet 1 as “Floor 2 Common Area A.”

(5) “Floor 2 Common Area B” shall mean the portion of Floor 2 shown on Exhibit 2.2.1, Sheet 1 as “Floor 2 Common Area B.”

(6) “Floor 3 Common Area A” shall mean the portion of Floor 3 shown on Exhibit 2.2.1, Sheet 2 as “Floor 3 Common Area A.”

(7) “Floor 3 Common Area B” shall mean the portion of Floor 3 shown on Exhibit 2.2.1, Sheet 2 as “Floor 3 Common Area B.”

(8) “Floor 4 Common Area A” shall mean the portion of Floor 4 shown on Exhibit 2.2.1, Sheet 3 as “Floor 4 Common Area A.”

(9) “Floor 4 Common Area B” shall mean the portion of Floor 4 shown on Exhibit 2.2.1, Sheet 3 as “Floor 4 Common Area B.”

(ii) Floor 2 Common Area Control Rights. From and after the Execution Date, Floor 2 Common Area A shall be deemed to be Tenant Controlled Common Area. In addition, at such time as, and for so long as, Tenant leases the entirety of the Rentable Floor Area of Floor 2, Floor 2 Common Area A and Floor 2 Common Area B shall both be deemed to be Tenant Controlled Common Area.

(iii) Floor 3 Common Area Control Rights. Effective as of the Phase III Premises Commencement Date, Floor 3 Common Area A shall be deemed to be Tenant Controlled Common Area. In addition, at such time as, and for so long as, Tenant leases the entirety of the Rentable Floor Area of Floor 3, Floor 3 Common Area A and Floor 3 Common Area B shall both be deemed to be Tenant Controlled Common Area.

(iv) Floor 4 Common Area Control Rights. Effective as of the Phase II Premises B Commencement Date, Floor 4 Common Area A shall be deemed to be Tenant Controlled Common Area. In addition, at such time as, and for so long as, Tenant leases the entirety of the Rentable Floor Area of Floor 4, Floor 4 Common Area A and Floor 4 Common Area B shall both be deemed to be Tenant Controlled Common Area.

(v) Floor 1 Common Area Control Rights. Upon the Substantial Full Occupancy Commencement Date, Tenant shall, subject to the provisions of this Section 2.2(E), have the following rights with respect to the portion of the Common Areas located on Floor 1 (including the Atrium and the Courtyard) and shown on Exhibit 2.2.1, Sheet 1 (the “Floor 1 Common Areas”): (a) the right to require Landlord to impose on the tenants of the Building reasonable rules and regulations with respect to the use of the Floor 1 Common Areas and (b) the right to make alterations and installations to the Floor 1 Common Areas, provided that Tenant must (a) perform such work in accordance with the terms of this Lease and (b) obtain Landlord’s written approval of the final construction plans and specifications for such work pursuant to Section 9.2 below prior to making any such alterations.

(vi) Tenant’s Common Area Rights as of the 100% Lease Date. Effective as of the first date as of which the percentage that the Rentable Floor Area of the Premises bears to the Rentable Floor Area of the Building reaches one hundred percent (100%) (the “100% Lease Date”), use of the Common Areas of the Building shall be exclusive to Tenant and Landlord shall have no rights to alter or change the same, except in the event that such alteration or change is required by Applicable Laws. As used herein, the “100% Lease Test” shall mean that the percentage that the Rentable Floor Area of the Premises bears to the Rentable Floor Area of the Building then equals one hundred percent (100%). For the avoidance of doubt, the 100% Lease Date shall be deemed to have occurred, and Tenant shall be deemed to have satisfied the 100% Lease Test, if Tenant is then leasing the Existing Premises, the Expansion Premises, the Currently-Committed Put Premises (i.e., Put Premises A, Put Premises B and Put Premises C, but not including the Basement Put Premises), and the Basement Storage Premises. In addition, upon the 100% Lease Date, and so long as Tenant continues to satisfy the 100% Lease Test, Tenant shall have the right to remove the existing artwork and scroll in the main lobby (the “Existing Artwork”) and replace the Existing Artwork with artwork selected by Tenant and/or with signage and branding identifying Tenant. Tenant shall provide the Existing Artwork to Landlord promptly after removing the same. In the event that, after the 100% Lease Date, Tenant no longer satisfies the 100% Lease Test, Tenant shall, at Landlord’s election and at Tenant’s sole cost and expense, either (i) restore the Existing Artwork to the location where it existed as of the Execution Date or (ii) install mutually acceptable new artwork provided by Landlord.

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(vii) Upon the Substantial Full Occupancy Commencement Date, Tenant shall have the right, so long as Tenant continues to satisfy either of the Substantial Full Occupancy Conditions, to perform the work associated with the Potential Common Area Projects (as hereinafter defined); provided, however that (i) Tenant must perform any work associated with a Potential Common Area Project in accordance with the terms of this Lease (including, without limitation, obtaining Landlord’s written approval of the final construction plans and specifications for such work pursuant to Section 9.2 below prior to performing such work), and (ii) Tenant acknowledges that Landlord will not be required to approve all of the Potential Common Area Projects. In the event that, after the Substantial Full Occupancy Commencement Date, Tenant no longer satisfies at least one of the Substantial Full Occupancy Conditions, Tenant shall, at Landlord’s election, be required to restore the portion of the Common Areas renovated in connection with any Potential Common Area Project to substantially the same condition in which the same existed as of the Execution Date. In addition, prior to the expiration or earlier termination of the Lease Term, Tenant shall, at Landlord’s election, be required to restore the portion of the Common Areas renovated in connection with any Potential Common Area Project to the condition in which the same existed as of the Execution Date. Each of the following shall be defined as a “Potential Common Area Project”: (a) interactive display and “Mediamesh” on exterior of the Building or the Building’s chimney or within the interior of the Premises behind windows facing the exterior of the Building; (b) rework of the interior lobby Atrium; (c) installation of a connection to Atrium or Courtyard; (d) built-in auditorium or Courtyard seating; and (e) additional Atrium circulation.

(viii) Notwithstanding anything to the contrary herein contained, Tenant’s rights under this Section 2.2(E) shall be subject to the following: (y) Landlord’s prior written approval of any such rule, regulation, and alteration, which approval shall not be unreasonably withheld, conditioned, or delayed, and (z) any such alterations and installations shall be performed in accordance with the provisions of this Lease (including, without limitation, Article 9). Nothing in this Section 2.2(E) shall limit or restrict Tenant’s signage rights set forth in Section 16.32 of this Lease.

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ARTICLE 3

LEASE TERM, EXTENSION OPTIONS, AND RIGHTS TO ADDITIONAL SPACE

(A) The Term of this Lease shall be the period specified in Section 1.1 hereof, unless sooner terminated or extended as herein provided. On request of either party, as soon as may be convenient after the Final Expansion Premises Rent Commencement Date has been determined, Landlord and Tenant agree to join with each other in the execution of a written Commencement Date Agreement in the form of Exhibit 3.1 to this Lease.

(B) Landlord shall use commercially reasonable efforts to cause the Phase II Premises A Commencement Date, the Phase II Premises B Commencement Date, the Phase II Premises C Commencement Date and the Phase III Premises Commencement Date to occur on or before the Estimated Phase II and Phase III Commencement Date, respectively; provided, however, that Landlord shall not be liable to Tenant for the failure of any such Commencement Date to occur on or before the Estimated Phase II and Phase III Commencement Date. Notwithstanding the foregoing, in the event that the Phase II Premises A Commencement Date, the Phase II Premises B Commencement Date, the Phase II Premises C Commencement Date or the Phase III Premises Commencement Date occur on or after February 1, 2017 (the “Phase II and Phase III Outside Date”), then Tenant shall be entitled to a credit against Annual Fixed Rent with respect to the Portion of the Phase II and Phase III Premises for which delivery has been so delayed (the “Holdover Premises”) in an amount equal to the product of (i) one (1) days’ Annual Fixed Rent with respect to such Holdover Premises, multiplied by (ii) the number of days that elapse after the Phase II and Phase III Outside Date until the Commencement Date of this Lease with respect to such Holdover Premises, and which credit will be applied following the Rent Commencement Date for such Holdover Premises.

(C) Landlord shall use commercially reasonable efforts to cause the Delayed Portion of the Existing Premises Commencement Date to occur on or before the Estimated Delayed Portion of the Existing Premises Commencement Date. Notwithstanding the foregoing, in the event that Landlord shall be unable to cause the Delayed Portion of the Existing Premises Commencement Date to occur on or before the Estimated Delayed Portion of the Existing Premises Commencement Date due to the failure of the current tenant in the Delayed Portion of the Existing Premises (the “Holdover Tenant”) to vacate the same on or before the Estimated Delayed Portion of the Existing Premises Commencement Date, then (i) Landlord shall have no liability to Tenant therefor, (ii) Tenant shall not have the right to terminate the Lease, (iii) Tenant shall accept delivery of the Delayed Portion of the Existing Premises when delivered by Landlord in the condition required by this Lease, (iv) Landlord shall promptly deliver to the Holdover Tenant a written demand to immediately vacate the Delayed Portion of the Existing Premises, and (v) if the Holdover Tenant shall fail to vacate the Delayed Portion of the Existing Premises within ninety (90) days after the Estimated Delayed Portion of the Existing Premises Commencement Date, Landlord shall commence summary process proceedings against the Holdover Tenant.

(A) First Extension Term. On the conditions (which conditions may be waived in Landlord’s sole discretion) that, both at the time of Tenant’s delivery of Tenant’s First Extension Notice and as of the commencement of the First Extension Term: (i) there exists no monetary or material non-monetary Event of Default, (ii) the Lease is still in full force and effect, and (iii) HubSpot, Inc., itself, a Permitted Tenant Successor, and/or a Tenant Affiliate (as hereinafter defined) occupies at least seventy-five percent (75%) of the Rentable Floor Area of the Premises then leased to Tenant as of the Extended Expiration Date (excepting only the subleasing by Tenant, if and to the extent permitted under the Lease, of up to 25% of the Premises in the aggregate to a party or parties other than a Permitted Tenant Successor or a Tenant Affiliate), then Tenant shall have the right to extend the Term for all but not just a portion of the then Premises for two (2) consecutive periods

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of five (5) years each (the “First Extension Term” commencing September 1, 2027, and expiring August 31, 2032; and, if Tenant timely and properly exercises its right to extend the Term for the First Extension Term, the “Second Extension Term” commencing September 1, 2032, and expiring August 31, 2037; each, an “Extension Term”). Each Extension Term shall be on all of the terms and conditions of the Lease, except that (a) the Annual Fixed Rent shall be equal to the Fair Market Rent, as determined below, as of the commencement of the applicable Extension Term, (b) Landlord shall have no obligation to provide any construction allowance or to perform any work to the Premises as a result of such extension, provided, however, the foregoing shall both be considered relevant factors in determining the Fair Market Rent for the applicable Extension Term, (c) Tenant shall have no right to further extend the Term beyond the Second Extension Term and (d) the alternative tax provisions contained in Section 6.1(D) below shall have no applicability with respect to either Extension Term (it being understood that such provisions shall only apply during the initial Lease Term).

(B) In order to exercise its extension option for the First Extension Term or the Second Extension Term, Tenant shall give notice thereof to Landlord (as applicable, “Tenant’s First Extension Notice” or “Tenant’s Second Extension Notice”) not earlier than twenty-one (21) months nor later than eighteen (18) months prior to the expiration of the then current Term, whereupon Landlord shall, within thirty (30) days thereafter, advise Tenant of the proposed Annual Fixed Rent for, as applicable, the First Extension Term or the Second Extension Term (“Landlord’s Quotation”). Each of Tenant’s First Extension Notice and Tenant’s Second Extension Notice shall be irrevocable.

(C) Within thirty (30) days after Landlord sends Landlord’s Quotation to Tenant (the “Negotiation Period”), Landlord and Tenant shall attempt to agree on the Annual Fixed Rent for, as applicable, the First Extension Term or the Second Extension Term. If Landlord and Tenant have not so agreed and executed a written instrument evidencing such agreement within the Negotiation Period, then Landlord and Tenant shall each, within seven (7) days from the expiration of the Negotiation Period, designate an independent, licensed real estate broker, who shall have at least ten (10) years’ experience as a licensed real estate broker specializing in commercial leasing and who shall be familiar with the commercial real estate market in which the Building is located. Said brokers shall each determine the Fair Market Rent for the Premises within fifteen (15) days of their designation. “Fair Market Rent” shall mean the market rental rates then being obtained for renewal leases for similar space in office buildings of similar quality, in similar locations taking into account the size of the Premises and other relevant factors, and that are of comparable age to the Building and are leased to first-class private sector tenants. All determinations of Fair Market Rent shall reflect market conditions expected to exist as of the date Annual Fixed Rent based on Fair Market Rent is to commence and shall take into consideration all then relevant factors, including the size of the premises and market tenant concession packages and the absence of any work allowance or Landlord work for the applicable Extension Term. If the lower of the two determinations is not less than ninety-five percent (95%) of the higher of the two determinations, then the Fair Market Rent shall be the average of the two determinations. If the lower of the two determinations is less than ninety-five percent (95%) of the higher of the two determinations, then the two brokers shall render separate written reports of their determinations of Fair Market Rent and within fifteen (15) days thereafter, the two brokers shall appoint a third broker with like qualifications. Such third broker shall be furnished the written reports of the first two brokers. Within fifteen (15) days after the appointment of the third broker, the third broker shall appraise the Fair Market Rent, and the Fair Market Rent shall equal the average of the two closest determinations; provided, however, that (a) if any one determination is agreed upon by any two of the brokers, then the Fair Market Rent shall be such determination, and (b) if any one determination is equidistant from the other two determinations, then the Fair Market Rent shall be such middle determination. Landlord and Tenant shall each bear the cost of its broker and shall share equally the cost of the third broker.

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(D) Upon the timely giving of Tenant’s First Extension Notice or Tenant’s Second Extension Notice, as applicable, the Term shall be automatically extended for, as applicable, the First Extension Term or the Second Extension Term without the execution of any additional documents, and all references to the Term shall mean the Term as so extended, unless the context clearly otherwise requires. Promptly upon determination of the Annual Fixed Rent for the First Extension Term or the Second Extension Term, as applicable, Landlord and Tenant shall enter into an agreement setting forth the same. If Tenant shall not timely give Tenant’s First Extension Notice, then Tenant’s option for the First Extension Term and the Second Extension Term shall be void and of no further force and effect. If Tenant shall not timely give Tenant’s Second Extension Notice, then Tenant’s option for the Second Extension Term shall be void and of no further force and effect.

(A) Background. Reference is made to the fact that the Currently-Committed Put Premises (as hereinafter defined) in the Building are presently leased to other tenants in the Building and may not become available for lease for Tenant during the Term of the Lease, as it may be extended. However, if any Portion of the Currently-Committed Put Premises becomes available for lease to Tenant during the Term of this Lease (either because Landlord enters into a Put Premises Termination Agreement, as hereinafter defined, or because of the expiration or prior termination of the Landlord’s lease with the Put Premises Tenant currently leasing such Portion of the Currently-Committed Put Premises), Tenant desires to lease such Portion of the Currently-Committed Put Premises from Landlord and Landlord desires to lease such Portion of the Currently-Committed Put Premises to Tenant on the terms and conditions hereinafter set forth.

(B) Landlord hereby represents to Tenant that Exhibit 3.3 accurately sets forth the information relating to the leases of the Put Premises Tenants. Following the Execution Date, Landlord agrees to enter into negotiations with the current tenants (“Put Premises Tenants”) of the Currently-Committed Put Premises to determine whether Landlord is able to enter into an agreement (“Put Premises Termination Agreement”) with each Put Premises Tenant effecting the early termination of Landlord’s lease with such Put Premises Tenant on terms acceptable to Landlord, in Landlord’s good faith judgment, as of a date not earlier than December 31, 2017. Landlord shall use good faith efforts to enter into a Put Premises Termination Agreement with each of the Put Premises Tenants (with respect to all of such Put Premises Tenants’ leased premises). If, for any reason, Landlord is not able to enter into a Put Premises Termination Agreement with respect to any Portion of the Currently-Committed Put Premises, then Landlord shall have no liability to Tenant, and Tenant shall have no claim against Landlord based upon such inability to enter into such a Put Premises Termination Agreement.

(C) Definition of Currently-Committed Put Premises. The “Currently-Committed Put Premises” consist of: (i) 16,451 square feet of Rentable Floor Area (“Put Premises A”) located on the third (3^rd) floor of the Building as shown on Exhibit 1.1.2, Sheet 3 attached hereto and incorporated herein, (ii) 2,223 square feet of Rentable Floor Area (“Put Premises B”) located on the fourth (4^th) floor of the Building as shown on Exhibit 1.1.2, Sheet 4 attached hereto and incorporated herein and (iii) 10,440 square feet of Rentable Floor Area (“Put Premises C”) located on the first (1^st) floor of the Building as shown on Exhibit 1.1.2, Sheet 1 attached hereto and incorporated herein.

(D) Terms of Tenant’s Demise of Currently-Committed Put Premises. Upon the expiration or earlier termination of an existing lease with respect to any portion of the Currently-Committed Put Premises (including, without limitation, Landlord entering into a Put Premises Termination Agreement with respect to such portion of the Currently-Committed Put Premises), Landlord shall promptly give Tenant written notice (the “Currently-Committed Put Premises Demise Notice”) advising Tenant of: (i) the Portion of the Currently-Committed Put Premises subject to the Put Premises Termination Agreement, (ii) the Rentable Floor Area of such Put Portion of the Currently-Committed Put Premises (taking into account the provisions of Section 2.1(B), Exhibit

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2.1 and Section 3.4(C)), and (iii) the estimated commencement date (“Estimated Currently-Committed Put Premises Commencement Date”) with respect to such Portion of the Currently-Committed Put Premises, which Estimated Currently-Committed Put Premises Commencement Date shall be not sooner than the later of (y) January 1, 2018, and (z) four (4) months following the Currently-Committed Put Premises Demise Notice. Tenant shall lease such Portion of the Currently-Committed Put Premises from Landlord, and Landlord shall lease such Portion of the Currently-Committed Put Premises to Tenant on all of the same terms and conditions of the Lease applicable to the demise of the other Portions of the Premises leased to Tenant, except as follows:

(1) Commencement Date: The Commencement Date with respect to such Portion of the Currently-Committed Put Premises shall be later of: (i) the Estimated Currently-Committed Put Premises Commencement Date set forth in the Currently-Committed Put Premises Demise Notice, and (ii) the date that Landlord delivers such Portion of the Currently-Committed Put Premises in its as-is condition and free and clear of all tenants and occupants.

(2) Annual Fixed Rent: The Annual Fixed Rent payable with respect to such Portion of the Currently-Committed Put Premises shall be the product of: (i) the Rentable Area of such Portion of the Currently-Committed Put Premises, taking into account the provisions Section 2.1(B) and Section 3.4(C), multiplied by the Annual Fixed Rent Rental Rate (as defined in Section 1.1), from time to time.

(3) Rent Commencement Date. Subject to Sections 3.3(D)(4) and Section 5.1(B) below, the Rent Commencement Date for such Portion of the Currently-Committed Put Premises shall be the date that is six (6) months after the Commencement Date for such Portion of the Currently-Committed Put Premises.

(4) Condition of Currently-Committed Put Premises. Subject to the provisions of this Section 3.3(D)(4) and Section 3.5, Tenant shall take such Portion of the Currently-Committed Put Premises in its “as-is” and “where is” condition, without any representations or warranties by Landlord or Landlord’s agents with respect to the Currently-Committed Put Premises or the Building. Landlord shall have no obligation to perform any work, supply any materials, incur any expense (except for providing the Currently-Committed Put Premises Allowance, as hereinafter defined) or make any alterations, additions or improvements to the Currently-Committed Put Premises to prepare any Portion of the Currently-Committed Put Premises for Tenant’s occupancy, provided, however, nothing herein contained shall in any way diminish or affect Landlord’s on-going repair, maintenance and/or replacement or service obligations under Article 7 of the Lease.

(5) Currently-Committed Put Premises Allowance. Landlord shall grant to Tenant a Tenant Improvement Allowance in the amount of $50.00 per rentable square foot of the applicable Portion of the Currently-Committed Put Premises, multiplied by a fraction, the numerator of which is the number of months remaining in the Term as of the applicable Rent Commencement Date for the applicable Portion of the Currently-Committed Put Premises and the denominator of which is 120 (the “Currently-Committed Put Premises Allowance”) for the purpose of defraying the cost of performing any leasehold improvements in such Portion of the Currently-Committed Put Premises (“Tenant’s Currently-Committed Put Premises Work”). Said Tenant Improvement Allowance shall be disbursed subject to the same terms, conditions and rights as are applicable to the disbursement of Landlord’s Base Contribution, as set forth in Section 3 of Exhibit 4.1, except that: (i) Tenant’s Currently-Committed Put Premises Work for each Portion of the Currently-Committed Put Premises shall be deemed to be a “Project”, and (ii) the Outside Requisition Date with respect to each Portion of the Currently-Committed Put Premises shall be the date that is eighteen (18) months after the Commencement Date with respect to such Portion of the Currently-Committed Put Premises.

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(6) Expansion Amendment. Notwithstanding the fact that Tenant’s lease of the any Portion of the Currently-Committed Put Premises shall be self-executing, as aforesaid, Tenant hereby agrees to execute a lease amendment accurately reflecting the applicable Portion of the Currently-Committed Put Premises within a reasonable time after it shall have received the same from Landlord, confirming the lease of such Portion of the Currently-Committed Put Premises to Tenant.

(A) Background. Reference is made to the fact that the Basement Put Premises (as hereinafter defined) are vacant as of the Execution Date. However, if Tenant leases Put Premises C (i.e., the portion of the Building currently leased to Nature Publishing Group), Tenant desires and agrees to lease the Basement Put Premises if Landlord elects pursuant to this Section 3.4 to make such Basement Put Premises available to lease to Tenant. The “Basement Put Premises” consists of approximately 6,078 usable square feet located on the basement floor of the Building as shown on Exhibit 3.4.1 attached hereto and incorporated herein. However, for the purposes of determining the amount of Annual Fixed Rent payable by Tenant with respect to the Basement Put Premises, the rentable area of the Basement Put Premises (subject to Section 3.4(C) below) shall be 6,078 usable square feet, less, with respect to the initial Term of the Lease only and not with respect to any Extension Term, 200% of the amount (if any) of any reduction (“Put Premises C Rentable Area Reduction”) in the rentable floor area of Put Premises C as the result of the performance of the Landlord’s Access/Egress Work. For the avoidance of doubt:

(x) the parties acknowledge that the provisions of this Section 3.4(A), 3.4(B), 3.4(C), and 3.4(D) shall only apply if Landlord timely exercises the Basement Put Premises Option, as set forth in this Section 3.4, it being agreed that (i) Landlord shall have no obligation to lease the Basement Put Premises to Tenant, (ii) Sections 3.4(A), 3.4(B), 3.4(C), and 3.4(D) shall be void and without force or effect if Landlord does not elect to lease the Basement Put Premises to Tenant, but (iii) for the avoidance of doubt, the provisions of Section 3.4(E) shall be in force and effect whether or not Landlord timely exercises the Basement Put Premises Option.

(y) Tenant’s obligation to pay Annual Fixed Rent and other charges with respect to Put Premises C during the initial Term of the Lease shall be determined as if there were no Put Premises C Rentable Area Reduction, but Tenant’s obligation to pay Annual Fixed Rent and other charges with respect to Put Premises C with respect to any Extension Term shall be determined based upon the actual rentable area of Put Premises C (i.e., taking into account any Put Premises C Rentable Area Reduction).

(B) Terms of Tenant’s Demise of the Basement Put Premises. Landlord shall have the option (“Basement Put Premises Option”), on or before the date (“Outside Basement Put Premises Option Exercise Date”) sixty (60) days after the expiration or earlier termination of the existing lease with respect to Put Premises C (including, without limitation, if Landlord enters into a Put Premises Termination Agreement with respect to the existing tenant of Put Premises C), to give Tenant written notice (the “Basement Put Premises Demise Notice”) advising Tenant: (i) that Landlord has elected to lease the Basement Put Premises to Tenant and (ii) of the estimated commencement date (“Estimated Basement Put Premises Commencement Date”) with respect to the Basement Put Premises, which Estimated Basement Put Premises Commencement Date shall not be sooner than the latest of (x) the Commencement Date with respect to Put Premises C, (y) January 1, 2018, and (z) four (4) months following the Basement Put Premises Demise Notice. In the event Landlord gives Tenant a Basement Put Premises Demise Notice, Tenant shall lease the Basement Put Premises from Landlord, and Landlord shall lease the Basement Put Premises to Tenant on all of the same terms and conditions of the Lease applicable to the demise of the other Portions of the Premises leased to Tenant, except as follows:

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(1) Commencement Date: The Commencement Date with respect to the Basement Put Premises (the “Basement Put Premises Commencement Date”) shall be later of: (i) the Estimated Basement Put Premises Commencement Date set forth in the Basement Put Premises Demise Notice, and (ii) the date that Landlord delivers the Basement Put Premises to Tenant in the Basement Put Premises Delivery Condition (as hereinafter defined). The “Basement Put Premises Delivery Condition” shall mean that (i) the Basement Put Premises are vacant, broom clean, free and clear of all tenants and occupants and (ii) Landlord shall have substantially completed Landlord’s Shell Condition Work (as hereinafter defined).

(2) Annual Fixed Rent: The Annual Fixed Rent payable with respect to the Basement Put Premises shall be the product of: (i) the Rentable Area of the Basement Put Premises, as determined in accordance with Sections 3.4(A) and 3.4(C), multiplied by the then-applicable Annual Fixed Rent rental rate applicable to the Basement Put Premises as set forth on the schedule attached hereto as Exhibit 3.4.2.

(3) Rent Commencement Date. Subject to Sections 3.4(B)(4) and Section 5.1(B) below, the Rent Commencement Date for the Basement Put Premises shall be the date that is six (6) months after the Basement Put Premises Commencement Date (the “Basement Put Premises Rent Commencement Date”).

(4) Condition of Basement Put Premises. Subject to the provisions of this Section 3.4(B)(4), Section 3.4(B)(1) and Section 3.5, Tenant shall take the Basement Put Premises in its “as-is” and “where is” condition, without any obligation on the part of Landlord to prepare or construct the Basement Put Premises for Tenant’s occupancy (except for Landlord’s Basement Put Premises Work (as hereinafter defined)), and without any representations or warranties by Landlord or Landlord’s agents with respect to the Basement Put Premises or the Building (except as set forth in Section 3.5); provided, however, nothing herein contained shall in any way diminish or affect Landlord’s on-going repair, maintenance and/or replacement or service obligations under Article 7 of the Lease. Landlord shall, at Landlord’s cost, perform the work (“Landlord’s Basement Put Premises Work”) in the Basement Put Premises necessary to (i) deliver the Basement Put Premises to Tenant in the condition described on Exhibit 3.4.3 (“Landlord’s Shell Condition Work”) and (ii) provide an elevator between the Basement Put Premises and the first (1^st) floor of the Building that is compliant with code and the Americans with Disabilities Act, including, subject to the next following sentence, installation of a second staircase if required by Applicable Laws to enable the Basement Put Premises to be used by Tenant for Tenant’s intended use (“Landlord’s Access/Egress Work”). Notwithstanding the foregoing, Tenant shall pay to Landlord the incremental cost, if any, required in connection with the installation of a second staircase to the extent that such additional cost is required by Applicable Laws as the result of the use of the Basement Put Premises for any use other than general business office use and uses accessory thereto. Landlord’s Access/Egress Work shall be: (x) in location(s) proposed by Landlord, subject to Tenant’s prior written approval, which approval shall not be unreasonably withheld, conditioned, or delayed, the parties hereby agreeing to use reasonable efforts to minimize any reduction in the rentable area of Put Premises C as the result of Landlord’s Access/Egress Work, and (y) performed in accordance with plans and specifications prepared by Landlord and approved by Tenant, which approval shall not be unreasonably withheld, conditioned, or delayed. Tenant acknowledges and agrees that, if Landlord enters into a Put Premises Termination Agreement with the Tenant of Put Premises C, Landlord may, subject to the provisions of Section 3.4(B) commence Landlord’s Access/Egress Work prior to January 1, 2018. Landlord shall use reasonable efforts and due diligence to substantially complete Landlord’s Access/Egress Work on or before the date that is thirty (30) days after the Basement Put Premises Commencement Date (the “Estimated Landlord’s Access/Egress Work Completion Date”); provided, however, that Landlord shall not be liable to Tenant for the failure to substantially complete Landlord’s Access/Egress Work on or before the Estimated Landlord’s Access/Egress Work Completion Date except that any delay beyond such date may be considered a “Landlord Delay Condition” which may extend the Basement Put Premises Rent Commencement Date pursuant to Section 5.1(B).

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(5) Basement Put Premises Allowance. Landlord shall disburse to Tenant a Tenant Improvement Allowance in the amount of $50.00 per rentable square foot of the Basement Put Premises, multiplied by a fraction, the numerator of which is the number of months remaining in the Term as of the Basement Put Premises Rent Commencement Date and the denominator of which is 120 (the “Basement Put Premises Allowance”) towards the cost of performing any leasehold improvements in the Basement Put Premises (“Tenant’s Basement Put Premises Work”). Said Basement Put Premises Allowance shall be disbursed subject to the same terms, conditions and rights as are applicable to the disbursement of Landlord’s Base Contribution, as set forth in Section 3 of Exhibit 4.1, except that: (i) Tenant’s Basement Put Premises Work shall be deemed to be a “Project”, and (ii) the Outside Requisition Date with respect to the Basement Put Premises shall be the date that is eighteen (18) months after the Basement Put Premises Rent Commencement Date.

(6) Operating Expenses and Taxes. Notwithstanding anything in this Lease to the contrary, during the Term and any extensions thereof: (i) the Annual Fixed Rent payable under this Section 3.4 with respect to the Basement Put Premises shall be a gross rent, (ii) Tenant shall not have any obligation to pay Operating Expenses Allocable to the Premises or Landlord’s Tax Expenses Allocable to the Premises with respect to the Basement Put Premises, and (iii) the Basement Put Space will not be included in the calculation of the Tenant’s Share for any purpose under this Lease.

(C) Determination of the Rentable Floor Area of the Basement Put Premises. The parties shall mutually agree upon the Rentable Floor Area of the Basement Put Premises, as defined in Section 3.4(A). However, if there is any dispute between the parties with respect to the Rentable Floor Area of the Basement Put Premises (i.e., either because the parties disagree as to the actual usable floor area of the Basement Put Premises or as to the actual reduction in the Rentable Floor Area of Put Premises C as the result of the performance of Landlord’s Access/Egress Work), then: (i) such dispute shall be submitted to arbitration pursuant to Section 16.33), (ii) Tenant shall commence paying Annual Fixed Rent with respect to the Basement Put Premises as if the Rentable Floor Area of the Basement Put Premises were 6,078 usable square feet less 200% of the Put Premises C Rentable Area Reduction, as designated by Landlord in a written notice to Tenant on or before the Basement Put Premises Rent Commencement Date, and (iii) in the event that it is finally agreed or determined that the Rentable Floor Area of the Basement Put Premises is different than the amount designated by Landlord, then either, Tenant shall, within thirty (30) days of such agreement or determination, pay any underpayment of Annual Fixed Rent with respect to the Basement Put Premises to Landlord, or Landlord shall credit the amount of any overpayment of Annual Fixed Rent with respect to the Basement Put Premises against the next installment of Annual Fixed Rent payable by Tenant under the Lease.

(D) Expansion Amendment. Notwithstanding the fact that Tenant’s lease of the Basement Put Premises shall be self-executing, as aforesaid, Tenant hereby agrees to execute a lease amendment confirming the lease of the Basement Put Premises to Tenant consistent with the provisions of this Section 3.4(D).

(E) Landlord’s Covenant Not to Lease Basement Put Premises to Third Parties. Landlord hereby covenants and agrees that, except as set forth in this Section 3.4(E), Landlord will not, during the Term of this Lease, as it may be extended pursuant to the provisions of this Lease, enter into a lease, license or other occupancy agreement of the Basement Put Premises, or any portion thereof, with a third party. Notwithstanding the foregoing, the parties expressly agree that:

(i) a lease, license or other occupancy agreement of the Basement Put Premises, or any portion thereof, entered into by Landlord with a third party prior to date (“Basement Put Premises Leasing Limitation Date”) which is the earlier of: (x) the Outside Basement Put Premises Option Exercise Date, and (y) the Substantial Full Occupancy Commencement Date, shall not be deemed to violate the provisions of this Section 3.4(E) so long as: (1) such lease, license or agreement contains a right by Landlord to terminate such lease, license or other occupancy agreement as of the Basement Put Premises Leasing Limitation Date and (2) Landlord exercises such termination right effective as of the Basement Put Premises Leasing Limitation Date, and

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(ii) the use of the Basement Put Premises by Landlord or Landlord’s managing agent as a management office or for other Building purposes (“Landlord Uses”) shall not be deemed to violate the provisions of this Section 3.4(E). For avoidance of doubt, if Landlord does not timely exercise the Basement Put Premises Option, Landlord: (i) shall not, during the Term of the Lease, as it may be extended, lease, license, or permit occupancy of the Basement Put Premises by any third party, and (ii) shall terminate any then existing leases, licenses, or other occupancy agreements in effect for the Basement Put Premises, provided that the provisions of this sentence shall not prohibit Landlord Uses, as defined above. 

(A) Landlord’s Put Premises Common Area Warranty. Notwithstanding anything to the contrary contained herein or in the Lease, as of the Commencement Date with respect to each Portion of the Put Premises (i.e., the Currently-Committed Put Premises and the Basement Put Premises), the Common Areas of the Building (including, without limitation, the roof and structure of the Building and the Building systems) shall be in good working order (“Landlord’s Put Premises Common Area Warranty”).

(B) Tenant’s Sole Remedies with respect to Breaches of Landlord’s Put Premises Common Area Warranty. In the event of any breach of Landlord’s Put Premises Common Area Warranty with respect to a Portion of the Put Premises, then, and as Tenant’s sole remedies, both in law and in equity:

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ARTICLE 4

USE OF PREMISES

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ARTICLE 5

ANNUAL FIXED RENT

(A) From and after the applicable Rent Commencement Date for the applicable Portion of the Premises and thereafter during the Lease Term, Tenant shall pay the Annual Fixed Rent specified in Section 1.1 for such applicable Portion of the Premises (except that the Annual Fixed Rent payable by Tenant with respect to the Basement Storage Premises is determined in accordance with Section 16.42(b) and Exhibit 16.42.2, and the Annual Fixed Rent payable by Tenant with respect to the Basement Put Premises is determined in accordance with Section 3.4(B)(2) and Exhibit 3.4.2). The Annual Fixed Rent shall be due and payable in equal monthly installments, without notice, demand, setoff or deduction (except as otherwise specifically provided herein), in advance on the first day of each month during each rental period. If the Rent Commencement Date with respect to any Portion of the Premises is not the first day of a month, then the Annual Fixed Rent payable with respect to such Portion of the Premises from such Rent Commencement Date until the first day of the following month shall be prorated on a per diem basis, and Tenant shall pay such prorated installment of the Annual Fixed Rent on such Rent Commencement Date.

(B) Notwithstanding anything in this Lease to the contrary, in the event that Tenant is denied a building permit or a certificate of occupancy for any Portion of the Premises (including, except as hereinafter noted, without limitation, the Basement Put Premises, but not including any portion of the Existing Premises other than the Delayed Portion of the Existing Premises) or is required to cease or postpone performance of its tenant improvements to any such Portion of the Premises (except any portion of the Existing Premises other than the Delayed Portion of the Existing Premises) due to any of the following conditions (“Landlord Delay Conditions”): (a) any portion of the Building (excluding the Premises) not being in compliance with Applicable Laws, (b) any portion of the Building systems that services such Portion of the Premises not being in good working order as of the Commencement Date for such Portion of the Premises, (c) the discovery of Hazardous Materials in the Premises requiring removal or remediation under Applicable Laws, (d) any breach of the Landlord’s Initially-Contemplated Premises Common Area Warranty, as defined in Section 5.1(C)(i), (e) any breach of the Landlord’s Put Premises Common Area Warranty, as defined in Section 3.5(A), (f) any Labor Harmony Delay, as defined in Section 1C of Exhibit 4.1, or (g) with respect to the Basement Put Premises only, Landlord’s failure to substantially complete Landlord’s Access/Egress Work on or before the Estimated Landlord’s Access/Egress Work Completion Date (as defined in Section 3.4), then, in addition to Section 5.1(C)(ii) with respect to breaches of Landlord’s Initially-Contemplated Premises Common Area Warranty and Section 3.5 with respect to breaches of Landlord’s Put Premises Common Area Warranty, the following shall be Tenant’s sole remedies (both in law and in equity): (x) Landlord, at Landlord’s sole expense, shall, as applicable, (i) correct such noncompliance with Applicable Laws pursuant to its obligations herein, (ii) cure such breach of Landlord’s Initially-Contemplated Premises Common Area Warranty pursuant to its obligations herein, (iii) cure such breach of Landlord’s Put Premises Common Area Warranty pursuant to its obligations herein; (iv) remove or remediate the Hazardous Materials as required by Applicable Law, and/or (v) eliminate such Labor Harmony Delay, and (y) the Rent Commencement Date applicable to the Portion of the Premises affected by Landlord Delay Condition shall be extended by the number of days that Tenant is actually delayed in achieving substantial completion of the tenant improvements for such Portion of the Premises beyond the scheduled Rent Commencement Date for such Portion of the Premises by reason of such Landlord Delay Condition (“Landlord Delay”). The parties hereby acknowledge that clause (y) of the immediately preceding sentence does not apply to any Common Area Projects (as defined in Section 3(A) of Exhibit 4.1). Subject to Section 5.1(C)(ii)(c) and 3.5(B), Landlord shall be solely responsible for the cost of curing any Landlord Delay Conditions. Notwithstanding the foregoing, Landlord shall not be charged with any period of Landlord Delay prior to the time Landlord receives written notice of such Landlord Delay from Tenant. With respect to the Phase I Premises, in the event that any Landlord Delay Conditions occurs during the performance of Tenant’s Expansion Area Work with respect to the Phase I Premises, then Tenant’s obligation to pay Annual Fixed Rent, Landlord’s Tax Expenses Allocable to the Phase I Premises, and Operating Expenses Allocable to the Phase I Premises shall be equitably abated to the extent that Tenant’s Expansion Area Work with respect to the Phase I Premises is actually delayed by reason of such Landlord Delay Condition.

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(C) Landlord’s Common Area Warranty with respect to the Initially-Contemplated Premises.

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ARTICLE 6

TAXES AND OPERATING EXPENSES

(A) DEFINITIONS. With reference to the real estate taxes referred to in this Article 6, it is agreed that terms used herein are defined as follows:

(B) TENANT’S PAYMENTS ON ACCOUNT OF LANDLORD’S TAX EXPENSES ALLOCABLE TO THE PREMISES. Commencing as of the Rent Commencement Date with respect to each Portion of the Premises (exclusive of the Basement Storage Premises and Basement Put Premises) and continuing thereafter throughout the Term of the Lease, as the same may be extended, but subject to the provisions of Section 6.1(D) below, Tenant shall, with respect to any full Tax Year or fraction of a Tax Year falling within the Lease Term, pay to Landlord, as Additional Rent, Landlord’s Tax Expenses Allocable to the Premises with respect to such Portion of the Premises. Except as otherwise provided in the immediately following paragraph, Tenant shall pay Landlord’s Tax Expenses Allocable to the Premises with respect to such Portion of the Premises at least thirty (30) days prior to the date or dates within any year during the Term hereof that the same, or any fractional share thereof, shall be due and payable to any governmental authority responsible for collection of same (as stated in a notice to Tenant given at least thirty (30) days prior to the date or dates any such payment shall be due, which notice shall set forth the manner of computation of Landlord’s Tax Expenses Allocable to the Premises with respect to such Portion of the Premises due from Tenant), except that such payment shall be made to Landlord not later than twenty (20) days after such notice to Tenant, if such notice is given subsequent to the date thirty (30) days prior to the date the same is due and payable as aforesaid.

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(C) ESTIMATED PAYMENTS. Monthly payments by Tenant on account of Landlord’s Tax Expenses Allocable to the Premises, as reasonably estimated by Landlord, shall be made at the time and in the fashion herein provided for the payment of Annual Fixed Rent. Following the end of each Tax Year, Landlord shall submit a statement showing (1) Landlord’s Tax Expenses Allocable to the Premises actually incurred during the preceding Tax Year, and (2) the aggregate amount of Tenant’s estimated payments during such year. If such statement indicates that the aggregate amount of such estimated payments exceeds Tenant’s actual liability, then Tenant shall deduct the net overpayment from its next monthly rental payment (or, if the Lease Term has expired, Landlord shall promptly reimburse to Tenant the amount of the overpayment). If such statement indicates that Tenant’s actual liability exceeds the aggregate amount of such estimated payments, then Tenant shall pay the amount of such excess within thirty (30) days following its receipt of Landlord’s statement. Landlord’s and Tenant’s obligations to make the payments described in the foregoing sentences shall survive the expiration or termination of this Lease. The statement of Real Estate Taxes submitted by Landlord under this Section 6.1(C) shall become binding and conclusive if not contested by Tenant within ninety (90) days after it is rendered. Landlord shall, within ten (10) business days’ written notice from Tenant, from time to time, deliver to Tenant: (i) copies of any tax bills which are the basis of Landlord’s Tax Expenses Allocable to the Premises payable by Tenant, and (ii) any documentation reasonably necessary for Tenant to verify Landlord’s computation of the Annual Tax Benefit.

(D) ALTERNATIVE TAX STRUCTURE.

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(E) REAL ESTATE TAX ABATEMENT. If, with respect to any fiscal tax year, Landlord does not, on or before the date thirty (30) days prior to the last date on which real estate tax abatement proceedings for such fiscal tax year may be commenced, then Tenant shall have the right (“Tenant’s Abatement Right”) to commence proceedings for an abatement of Landlord’s Tax Expenses for such fiscal tax year, provided that Tenant may only commence such proceedings if (i) there is no monetary or material non monetary Event of Default in existence and continuing, and (ii) Tenant provides Landlord with written notice of its intent to commence such abatement proceedings at least five (5) business days prior to Tenant actually commencing such proceedings. The following conditions shall apply to Tenant’s Abatement Right: (a) Tenant shall reasonably consult with Landlord concerning the manner and method of conducting such proceedings, (b) Tenant shall not settle any such proceedings without obtaining Landlord’s prior written approval, which approval shall not be unreasonably withheld, and (c) Tenant shall not cancel or withdraw any such proceedings unless Tenant shall, at least fifteen (15) days prior thereto, have notified Landlord of its intention to do so and Landlord shall have failed during such period to notify Tenant of its intention to continue such proceedings. If either party prosecutes an application for an abatement, the other party shall cooperate and promptly furnish any pertinent information reasonably required by the party prosecuting the application for an abatement. If Landlord fails to respond to Tenant’s request to settle any abatement proceedings within ten (10) business days, then Tenant may give Landlord another request therefor, which shall state in bold face, capital letters at the top thereof “WARNING: SECOND REQUEST. FAILURE TO RESPOND TO THIS REQUEST WITHIN THREE (3) BUSINESS DAYS SHALL RESULT IN DEEMED APPROVAL THEREOF.” If Landlord does not respond within three (3) business days after receipt of such second request, Landlord’s approval of such request to settle such abatement proceedings shall be deemed given.

(A) DEFINITIONS.

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(a) Current Payment System. As of the Execution Date of this Lease, “Electricity Costs” are equal to the total cost of providing electricity to the Building that is permitted to be included in Operating Expenses Allocable to the Premises, less the sum of: (i) the cost of Assumed Premises Electricity, as hereinafter defined, plus (ii) Excluded Electricity Costs, as hereinafter defined. Subject to subparagraph (b) below, “Assumed Premises Electricity” shall be $1.50 per Rentable Square Foot of the Building, or such higher per Rentable Square Foot charge as Landlord may impose on Tenant for Electricity Rent, from time to time, pursuant to Section 7.4(D). “Excluded Electricity Costs” are defined as: (x) the costs of providing electricity in connection with overtime HVAC (i.e., electricity provided to the premises of any tenant for HVAC service outside normal business hours), (y) the cost of any electricity in connection with above standard equipment used by any tenant which is separately submetered, and (z) a reasonable charge for electricity consumption to be imposed by Landlord on any tenant (including Tenant) in connection with the use of the Atrium or Courtyard for special events after business hours.

(b) Tenant Election to Require Landlord to Install Submeters Prior to Substantial Full Occupancy Commencement Date. Tenant shall have the right, at any time prior to the Substantial Full Occupancy Commencement Date, upon sixty (60) days prior notice to Landlord and at Tenant’s sole cost and expense, to require Landlord to install separate submeters measuring the consumption of electricity for plugs and lights and above-standard equipment in all tenanted areas of the Building other than the Premises then demised to Tenant. If Tenant exercises such right, then, subject to subparagraph (c) below, with respect to any period of time after from and after the date of installation of such submeters, Assumed Premises Electricity shall be equal to the sum of: (i) the amount of Electricity Rent payable by Tenant pursuant to Section 7.4(D), plus (ii) the cost of electricity measured by such submeters.

(c) From and After Substantial Full Occupancy Commencement Date. From and after Substantial Full Occupancy Commencement Date, Electricity Costs shall be excluded from Operating Expenses for the Building and Section 7.4(E) shall apply.

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(B) GROSS UP PROVISION. Notwithstanding the foregoing, in determining the amount of Operating Expenses for the Building for any calendar year or portion thereof falling within the Lease Term, if less than ninety-five percent (95%) of the Rentable Area of the Building shall have been occupied by tenants at any time during the period in question, then those elements of Operating Expenses which vary based upon occupancy for such period shall be adjusted to equal the amount such elements of Operating Expenses would have been for such period had occupancy been ninety-five percent (95%) throughout such period.

(C) TENANT’S SHARE OF OPERATING EXPENSES.

(D) When requested by Tenant and provided that such request is made in writing within one hundred twenty (120) days following the receipt by it of any Escalation Statement, Landlord shall: (i) furnish to Tenant such additional information as may be reasonably necessary for the verification of such Escalation Statement and of Landlord’s calculation as set forth herein and; (ii) permit the pertinent records to be examined by Tenant or its appointed agent provided such auditors engaged by Tenant are not so engaged on a contingency basis. Tenant shall provide Landlord within thirty (30) days of receipt or preparation, with a copy of such audit report. Such examination shall be confidential and may not be disclosed to any individual or entity without the express written consent of Landlord, other than the Tenant’s employees and professional advisors or except if required by Applicable Laws or in connection with any dispute related to this Lease. It is expressly understood that Landlord shall be under no duty to preserve any such records, or any data or material related thereto, for more than three (3) years after the end of each calendar year. If the aforesaid payments theretofore made for such period by Tenant exceed Operating Expenses Allocable to the Premises, such overpayment shall be credited against the next payments of Rent thereafter to be made by Tenant and, if such overpayments by Tenant were more than ten percent (10%) above Operating Expenses Allocable to the Premises, Landlord shall reimburse Tenant the reasonable cost of the audit; and if Operating Expenses Allocable to the Premises is greater than such payments theretofore made on account for such period, Tenant shall pay such deficiency to Landlord within thirty (30) days of demand therefor.

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ARTICLE 7

LANDLORD’S REPAIRS AND SERVICES

(A) Landlord will provide: air-conditioning and heating during the seasons in which they are required; electrical service to the Premises; water and sewer; passenger and freight elevator service; loading dock; exterior window-cleaning service; and janitorial service. The normal hours of operation of the Building will be 8 a.m. to 6 p.m. on Monday through Friday (except Federal holidays) and 9 a.m. to 1 p.m. on Saturday (except Federal holidays) and such additional hours, if any, as Landlord from time to time reasonably determines. Electricity, elevator service and water/sewer will be available at all times. If Tenant requires air-conditioning or heat beyond the normal hours of operation, then Landlord will furnish the same, provided Tenant gives Landlord notice of such requirement by noon of the prior business day. Tenant shall pay for such extra service at Landlord’s then-current rate for such extra service. Tenant shall have access to the Premises twenty-four (24) hours per day every day of the year. Except as otherwise specified herein, Landlord shall not be required to furnish services and utilities during hours other than the normal hours of operation of the Building

(B) The parties agree to comply with all mandatory energy or water conservation controls and requirements applicable to office buildings that are imposed or instituted by the Federal, state or local governments, including without limitation, controls on the permitted range of temperature settings in office buildings and requirements necessitating curtailment of the volume of energy or water consumption or the hours of operation of the Building. Any terms or conditions of this Lease that conflict or interfere with compliance with such mandatory controls or requirements shall be suspended for the duration of such controls or requirements. It is further agreed that compliance with such controls or requirements shall not be considered an eviction, actual or constructive, of the Tenant from the Premises and shall not entitle Tenant to terminate this Lease or to an abatement of any rent payable hereunder. Landlord shall not have any liability to Tenant whatsoever as a result of Landlord’s failure or inability to furnish any of the utilities or services to be furnished by Landlord hereunder, nor shall such failure or inability be considered an eviction, actual or constructive, of Tenant from the Premises. Should any of the Building equipment or machinery break down, or for any cause or reason cease to function properly, Landlord shall use all reasonable efforts to repair the same as soon as reasonable possible, but Tenant shall have no claim for abatement of rental or for any damages on account of any interruptions in service occasioned thereby or resulting therefrom; provided, however, that if such failure (i) is within Landlord’s reasonable control to remedy, (ii) is continuous for five (5) business days, and (iii) renders the Premises untenantable, then rent shall, subject to Section 16.19(B), abate from the sixth (6^th) business day of such failure until the Premises are tenantable again.

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(C) A “Service Provider Default” shall be defined as failure by the property management company, the security services contractor and/or the cleaning contractor retained by Landlord for the Building (each, a “Service Provider”) to consistently provide the applicable services contracted for with such provider in a manner consistent with how such services are provided at first-class office buildings in Cambridge, Massachusetts (the “Service Provider Standard”). From and after the Substantial Full Occupancy Commencement Date, and so long as Tenant continues to satisfy either of the Substantial Full Occupancy Conditions, in the event that Tenant believes that the Service Provider is failing to satisfy the Service Provider Standard, then Tenant shall give Landlord written notice thereof (the “Service Provider Default Notice”). The sixty (60) day period commencing as of the date Landlord receives the Service Provider Default Notice is referred to herein as the “Service Provider Test Period.” If Tenant does not believe that the Service Provider Standard with respect to the applicable Service Provider has been satisfied throughout the Service Provider Test Period, then Tenant may give Landlord another written notice (a “Service Provider Termination Request”) requesting that Landlord terminate its existing contract with the Service Provider with which Tenant has expressed dissatisfaction. If Landlord agrees that the Service Provider Standard has not been satisfied throughout the Service Provider Test Period, then Landlord shall, within sixty (60) days of Landlord’s receipt of the Service Provider Termination Request, terminate the existing contract with the applicable Service Provider. If Landlord believes the Service Provider Standard has been satisfied throughout the Service Provider Test Period, then Landlord shall, within ten (10) days after Landlord’s receipt of the Service Provider Termination Request, give Tenant written notice of its disagreement with such Service Provider Termination Request and such dispute shall be submitted to arbitration pursuant to Section 16.33 below. If the arbitrator determines that the Service Provider Standard has not been satisfied throughout the Service Provider Test Period, then Landlord shall terminate its existing contract with the applicable Service Provider within thirty (30) days after Landlord receives written notice of such determination. If the arbitrator determines that the Service Provider Standard has been satisfied by the Service Provider throughout the Service Provider Test Period, then Tenant’s Service Provider Default Notice and Service Provider Termination Request shall each be void and without force or effect and Tenant shall have no right to submit another Service Provider Default Notice with respect to such Service Provider earlier than the date one (1) year after the arbitrator issues such determination. In the event that a Service Provider has been terminated pursuant to this Section 7.3, then Landlord shall promptly transition such terminated services to a new service provider, which new service provider shall be subject to Tenant’s approval, which approval shall not be unreasonably withheld, conditioned or delayed.

(A) If Tenant requires electric current for use in the Premises in excess of the per square foot wattage that Tenant currently uses in the Existing Premises as of the Execution Date and if in Landlord’s reasonable judgment, (i) Landlord’s facilities are inadequate for such excess requirements or (ii) such excess use shall result in an additional burden on the Building air conditioning system and additional cost to Landlord on account thereof then, as the case may be, (x) Landlord, at Tenant’s sole cost and expense, will furnish and install such additional wire, conduits, feeders, switchboards and equipment as may be required to supply such additional requirements of Tenant, provided that the same shall be permitted by law and applicable insurance requirements and shall not cause damage to the Building or the Premises or cause or create a dangerous or hazardous condition, or (y) Tenant shall reimburse Landlord for such additional cost, as aforesaid.

(B) Tenant agrees that it will not make any material alteration or addition to the electrical equipment in the Premises without the prior written consent of Landlord, which consent will not be unreasonably withheld.

(C) Commencing as of the Commencement Date with respect to each Portion of the Premises, and continuing thereafter throughout the Term of the Lease, Landlord will furnish electricity to each Portion of the Premises through presently installed electrical facilities for Tenant’s reasonable use for lighting, electrical appliances and equipment.

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(D) On account of the electricity furnished to the Premises pursuant to Section 7.4(C), but subject to Section 6.2(A)(iii), Tenant shall pay, as Additional Rent, a sum (“Electricity Rent”) equal to $1.50 per rentable square foot of such Portion of the Premises per year, payable in equal monthly installments with Annual Fixed Rent, but in any event, beginning on the applicable Commencement Dates. Said Additional Rent shall be subject to proportionate increase(s), from time to time and at any time throughout the Term, to the extent that the rate charged to Landlord (without mark-up or administrative fee by Landlord except the management fee included in Operating Expenses for the Building) by the utility company providing electricity to the Building is increased. Tenant agrees that, at Landlord’s sole option, an electrical consultant, selected by Landlord, may make periodic surveys of the electrical equipment in the Premises. In the event such survey(s) indicate that Tenant’s use of electricity is greater than or less than $1.50 per rentable square foot, the electricity charge shall be adjusted accordingly.

(E) Upon the Substantial Full Occupancy Commencement Date, (i) the provisions of Section 7.4(D) above shall be null and void and of no further force and effect and (ii) Tenant shall pay Landlord, as Additional Rent and on a monthly basis, all electricity costs incurred by Landlord with respect to the Building and the Lot, excepting only those costs associated with furnishing electricity to any portions of the Building leased to other tenants including, in any event, Excluded Electricity Costs associated with such other third-party tenants (the “Third-Party Electrical Costs”). The Third-Party Electrical Costs shall be determined, at Landlord’s option, either (a) by a submeter(s) installed by Landlord, at Landlord’s cost, to measure the consumption of electricity in such portion(s) of the Building leased to other tenants or (b) Landlord’s reasonable engineering estimate of such Third-Party Electrical Costs based on prior historical usage to the extent such historical information is available.

(F) In the event that separate meters or submeters measuring the electrical service to the Premises are required by any new law or change in law, Landlord shall be responsible to install such meters or submeters as part of Operating Expenses.

(A) Landlord shall not be liable to Tenant for any compensation or reduction of rent by reason of inconvenience or annoyance or for loss of business arising from the necessity of Landlord or its agents entering the Premises for any purposes in this Lease authorized, or for repairing the Premises or any portion of the Building however the necessity may occur. In case Landlord is prevented or delayed from making any repairs, or furnishing any services or performing any other obligation hereunder, by reason of any cause reasonably beyond Landlord’s control, or for any cause due to any act or neglect of Tenant or any Tenant Party, Landlord shall not be liable to Tenant therefor, and except as expressly otherwise provided in this Lease, Tenant shall not be entitled to any abatement or reduction of rent by reason thereof, nor shall the same give rise to a claim in Tenant’s favor that such failure constitutes actual or constructive, total or partial, eviction from the Premises.

(B) Landlord reserves the right to temporarily stop any service or utility system, in case of accident or emergency, or until necessary repairs have been completed. Landlord shall exercise reasonable diligence to restore such service or utility. Except in case of emergency, Landlord will give Tenant reasonable advance notice of any contemplated stoppage and will use reasonable efforts to avoid unnecessary inconvenience to Tenant by reason of such stoppage.

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ARTICLE 8

TENANT’S REPAIRS

If repairs are required to be made by Tenant pursuant to the terms hereof, Landlord may demand that Tenant make the same forthwith, and, except in the case of an emergency, if Tenant refuses or neglects to commence such repairs and complete the same within applicable notice and cure periods, Landlord may (but shall not be required to) make or cause such repairs to be made and shall not be responsible to Tenant for any loss or damage that may accrue to Tenant’s stock or business by reason thereof. If Landlord makes or causes such repairs to be made, Tenant agrees that Tenant will forthwith on demand, pay to Landlord the cost thereof together with interest thereon at the Lease Interest Rate specified in Section 15.5, and if Tenant shall default in such payment, Landlord shall have the remedies provided for non-payment of rent or other charges payable hereunder.

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ARTICLE 9

ALTERATIONS

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ARTICLE 10

PARKING

(A) Tenant’s Maximum Parking Requirement. “Tenant’s Maximum Parking Requirement” shall mean the maximum amount of Parking Permits that Landlord will be required to make available to Tenant. Effective as of the Lease Commencement Date, Tenant’s Maximum Parking Requirement shall be 154 Parking Permits (based on the Premises containing 111,954 rentable square feet). Effective as of the Commencement Dates for the Delayed Portion of the Existing Premises, each Portion of the Expansion Premises, and each Portion of the Put Premises (if applicable), Tenant’s Maximum Parking Requirement shall increase in an amount equal to 0.9 Parking Permits per 1,000 rentable square feet of: (i) the Delayed Portion of the Existing Premises, (ii) each Portion of the Expansion Premises demised to Tenant, and (iii) each Portion of the Put Premises demised to Tenant other than the Basement Put Premises. For example, effective as of the Phase I Premises Commencement Date, Tenant’s Maximum Parking Requirement shall increase to 162 Parking Permits. Notwithstanding the immediately foregoing sentence, effective as of the 100% Lease Date and so long as Tenant continues to satisfy the 100% Lease Test, then Tenant’s Maximum Parking Requirement shall be 250 Parking Permits, the parties hereby agreeing that in no event shall Tenant’s Maximum Parking Requirement exceed 250 Parking Permits.

(B) Tenant’s Minimum Parking Requirement. “Tenant’s Minimum Parking Requirement” shall mean the minimum amount of Parking Permits that Tenant must maintain and pay the Parking Charge for throughout the Lease Term. Effective as of the Lease Commencement Date, Tenant’s Minimum Parking Requirement shall be 109 Parking Permits (based on the Premises containing 111,954 rentable square feet). Effective as of the Commencement Dates for the Delayed Portion of the Existing Premises, each Portion of the Expansion Premises, and each Portion of the Put Premises (if applicable), Tenant’s Minimum Parking Requirement shall increase in an amount equal to 0.9 Parking Permits per 1,000 rentable square feet of: (i) the Delayed Portion of the Existing Premises, (ii) each Portion of the Expansion Premises demised to Tenant, and (iii) each Portion of the Put Premises demised to Tenant other than the Basement Put Premises. For example, effective as of the Phase I Premises Rent Commencement Date, Tenant’s Minimum Parking Requirement shall increase to 117 Parking Permits. In the event that Tenant leases the entirety of the Initially-Contemplated Premises (but none of the Put Premises), then Tenant’s Minimum Parking Requirement shall be 176 Parking Permits. Effective as of the 100% Lease Date and so long as Tenant continues to lease the entirety of the Building (i.e., the Initially-Contemplated Premises and the Put Premises), then Tenant’s Minimum Parking Requirement would be 202 Parking Permits.

(C) PARKING CHARGES. Commencing as of the Lease Commencement Date, and continuing thereafter throughout the Term of the Lease, Tenant shall pay for the Parking Permits subscribed for by Tenant from time to time at the prevailing monthly rates from time to time charged to Landlord under the Garage License (the “Monthly Parking Charge”). Such Monthly Parking Charge shall constitute Additional Rent and shall be payable monthly as directed by Landlord upon billing therefor by Landlord. Tenant acknowledges that the Monthly Parking Charge to be paid under this Section is for the use by the Tenant of the Parking Permits referred to herein, and not for any other service.

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ARTICLE 11

ASSIGNMENT AND SUBLETTING

Upon and during the continuance of an Event of Default of Tenant under this Lease, Tenant authorizes each such subtenant or occupant to pay such rent directly to Landlord if such subtenant or occupant receives written notice from Landlord stating that an Event of Default exists under this Lease and specifying that such rent shall be paid directly to Landlord. Any such payments made by any subtenant or occupant shall be credited against the monthly amounts owed by Tenant under this Lease. Each sublease shall provide that, at Landlord’s election, the subtenant agrees to attorn to Landlord or enter into a direct lease with Landlord on the same terms as the sublease in the event this Lease is terminated by reason of an Event of Default by Tenant. Tenant shall not mortgage this Lease without Landlord’s consent, which consent may be granted or withheld in Landlord’s sole discretion. All restrictions and obligations imposed pursuant to this Lease on Tenant shall be deemed to extend to any subtenant, assignee or occupant of Tenant, and Tenant shall cause such persons to comply with all such restrictions and obligations.

Subject to Section 11.2, if Tenant is a partnership, then any dissolution of Tenant or a withdrawal or change, whether voluntary, involuntary, or by operation of law, of partners owning a controlling interest in Tenant shall be deemed a voluntary assignment of this Lease. If Tenant is a corporation, then any dissolution, merger, consolidation or other reorganization of Tenant, or any sale or transfer of a controlling interest in the capital stock of Tenant, shall be deemed a voluntary assignment of this Lease. Notwithstanding the foregoing, the transfer (by operation of law or otherwise) of the outstanding capital stock of Tenant or other interests in Tenant by persons or parties through the “over the counter market” or through any recognized stock exchange, shall not be deemed an assignment of this Lease.

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(1) Except with respect to (i) transfers permitted pursuant to Section 11.2, and (ii) any Exempt from Recapture Subleases, as hereinafter defined, in the event Tenant desires to assign this Lease or to sublet the whole or any part of the Premises Tenant shall, at any time the Recapture Condition exists, give Landlord a Recapture Offer, which Recapture Offer, at Tenant’s option, may be given to Landlord prior to advertising or marketing the Premises or any part thereof.

(2) For the purposes hereof a “Recapture Offer” shall be defined as a notice from Tenant to Landlord which:

(3) The “Recapture Condition” shall be either (i) that more than twenty-five percent (25%) of the Rentable Area of the Premises has been subleased for all or substantially all of the remaining Lease Term (exclusive of any Permitted Transfers or any subleases of the Basement Storage Premises and the Basement Put Premises) or (ii) that Tenant is then Occupying less than fifty-four percent (54%) of the Rentable Area of the Building.

(4) For the purposes hereof, “Exempt from Recapture Subleases” shall be defined as Short-Term Phase II Premises A and Phase III Premises Subleases (as hereinafter defined), (b) the Existing Tenant Put Premises C Sublease (as hereinafter defined), and (c) any sublease of the Basement Put Premises, or any portion thereof.

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(5) Landlord shall have forty-five (45) days (the “Acceptance Period”) from Landlord’s receipt of the Recapture Offer to accept it, in which case all obligations of Tenant to Landlord under the Lease with respect to the Recapture Premises for the Recapture Period shall cease and terminate and, if applicable, Landlord shall be obligated to physically separate the Recapture Premises from the remainder of the Premises at its expense; provided, however, that if Tenant desires to keep the Recapture Premises rather than allow Landlord to recapture same, Tenant may do so by written notice to Landlord given no more than seven (7) days after Tenant’s receipt of Landlord’s acceptance of the Recapture Offer (time being of the essence thereof). In the event that Landlord shall not exercise its termination or suspension rights as aforesaid, or shall fail to give any timely notice pursuant to this Section, the provisions of Sections 11.4 -11.7 shall be applicable. This Section 11.3 shall not be applicable to an assignment or sublease pursuant to Section 11.2.

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This Section 11.4 shall not be applicable to an assignment or sublease pursuant to Section 11.2.

If Landlord shall consent to the proposed assignment or subletting, then Tenant may thereafter sublease the whole or any part of the Premises or assign pursuant to the Proposed Transfer Notice; provided, however, that if such assignment or sublease shall not be executed and delivered to Landlord within ninety (90) days after the date of Landlord’s consent, the consent shall be deemed null and void and the provisions of Section 11.3 shall again be applicable.

(A) No assignment or subletting under this Article 11 shall be valid unless both Tenant and the assignee or subtenant agree directly with Landlord to be bound by all the obligations of the Tenant hereunder (including, without limitation, the obligation to pay the Annual Fixed Rent and Additional Rent and to comply with the provisions of this Article 11). Such agreement shall be in form reasonably satisfactory to Landlord. No such assignment or subletting shall relieve the Tenant named herein of any of its obligations under this Lease. The provisions hereof shall not constitute a recognition of the assignment or the assignee thereunder or the sublease or the subtenant thereunder, as the case may be, and at Landlord’s option, upon the termination of the Lease, the assignment or sublease shall be terminated.

(B) Tenant shall promptly reimburse Landlord for the reasonable expenses (including reasonable attorneys’ fees) incurred by Landlord in connection with Tenant’s request for Landlord to give its consent to any assignment, subletting or occupancy.

(C) No assignment or subletting under any of the provisions of Sections 11.2 or 11.4 shall in any way be construed to relieve Tenant from obtaining the express consent in writing of Landlord to any further assignment or subletting.

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ARTICLE 12

LIABILITY OF LANDLORD AND TENANT

(A) Tenant shall indemnify and hold Landlord, its employees and agents harmless from and against all costs, damages, claims, liabilities and expenses (including reasonable attorneys’ fees) suffered by or claimed against Landlord, directly or indirectly, based on or arising out of (a) Tenant’s use and occupancy of the Premises or the business conducted by Tenant therein, (b) any negligent or wrongful act or omission of Tenant or any Tenant Party, (c) any breach of Tenant’s obligations under this Lease, including failure to surrender the Premises upon the expiration or earlier termination of the Lease Term, or (d) any entry by Tenant or any Tenant Party upon the Lot prior to the Commencement Date, except in the case of (a), (c) and (d) to the extent caused by the negligent or wrongful act or omission of Landlord, its agents or employees. In the event Landlord and/or its managing agent shall, without fault on their part, be made a party(ies) to any litigation commenced by or against Tenant (other than a suit commenced by one party to this Lease against the other), then Tenant shall protect and hold them harmless, and shall pay all reasonable costs and expenses and reasonable attorneys’ fees incurred or paid by Landlord and/or its managing agent in connection with such litigation.

(B) Landlord shall indemnify and hold Tenant, its employees and agents harmless from and against all costs, damages, claims, liabilities and expenses (including reasonable attorneys’ fees) suffered by or claimed against Tenant, directly or indirectly, based on or arising out of any negligent or wrongful act or omission of Landlord or its agents, vendors, contractors or employees. In the event Tenant shall, without fault on its part, be made a party to any litigation commenced by or against Landlord (other than a suit commenced by one party to this Lease against the other), then Landlord shall protect and hold them harmless, and shall pay all costs, expenses and reasonable attorneys’ fees incurred or paid by Tenant in connection with such litigation.

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(A) In no event shall Landlord ever be liable to Tenant for any loss of business, loss of profits or the like or any other indirect, punitive or consequential damages suffered by Tenant from whatever cause.

(B) In no event shall Tenant ever be liable to Landlord for any loss of business, loss of profits or the like or any other indirect, punitive or consequential damages suffered by Landlord from whatever cause, except that nothing herein shall relieve Tenant from any liability or obligation which Tenant may have in the event of any breach by Tenant of its obligations under Section 16.20 and the third sentence of Section 4.1.

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ARTICLE 13

INSURANCE

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Tenant agrees to indemnify and hold harmless Landlord from and against any and all claims and any and all loss, cost, damage or expense relating to the serving of Alcoholic Beverages in and from the Premises, including, without limitation, any such claim arising from any fault or negligence of Tenant, or Tenant’s contractors, licensees, agents, employees or invitees, or from any accident, injury, or damage whatsoever caused to any person or to the property of any person occurring from and after the date hereof and until the end of the Term of the Lease, whether such claim arises or accident, injury or damages occurs within the Premises, within the Building but outside the Premises, or outside the Building. This indemnity and hold harmless agreement shall include indemnity against all costs, expenses and liabilities (including, without limitation, legal fees, court costs and other reasonable disbursements) incurred or made in connection with any such claim or proceeding brought thereon, and the defense thereof, and shall survive the termination of the Lease. It is understood that without this indemnification of Landlord by Tenant, Landlord would not permit Tenant to serve Alcoholic Beverages in or from the Premises, and Tenant covenants that Tenant’s liability insurance referred to in the Lease shall cover, indemnify and hold harmless the Landlord from all such matters and items mentioned in this indemnity.

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ARTICLE 14

FIRE OR CASUALTY AND TAKING

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(a) Landlord’s Share During Initial Term. If the Lease is terminated during the initial term of the Lease as the result of a fire or other casualty, then “Landlord’s Share” shall be a fraction, the numerator of which shall be the amount of Landlord’s Base Contribution actually paid by Landlord to Tenant and the denominator of which shall be the amount of Hard Costs actually incurred by Tenant between the Execution Date and the date of such damage or destruction.

(b) Landlord’s Share During Extension Term. If the Lease is terminated during an Extension Term, “Landlord’s Share” shall be a fraction, the numerator of which shall be the amount of any contribution or allowance paid by Landlord to Tenant during such Extension Term and the denominator of which shall be the amount of Hard Costs actually incurred by Tenant during such Extension Term; provided however, that (i) if Landlord does not provide a construction allowance during such Extension Term, then Tenant’s Share of TI Insurance Proceeds shall not exceed the actual amount of Hard Costs actually incurred by Tenant during such Extension Term, and Landlord’s Share of TI Insurance Proceeds shall be the total amount of TI Insurance Proceeds less Tenant’s Share of TI Insurance Proceeds, and (ii) if Tenant does not incur any Hard Costs during such Extension Term, then Landlord’s Share shall be 100%.

(c) Tenant’s Share. “Tenant’s Share of Casualty Insurance Proceeds” shall, except as provided in Section 14.5(b), be the total amount of TI Insurance Proceeds less Landlord’s Share of TI Insurance Proceeds.

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ARTICLE 15

DEFAULT

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ARTICLE 16

MISCELLANEOUS PROVISIONS

No payment by Tenant, or acceptance by Landlord, of a lesser amount than shall be due from Tenant to Landlord shall be treated otherwise than as a payment on account. The acceptance by Landlord of a check for a lesser amount with an endorsement or statement thereon, or upon any letter accompanying such check, that such lesser amount is payment in full, shall be given no effect, and Landlord may accept such check without prejudice to any other rights or remedies which Landlord may have against Tenant. Further, the acceptance by Landlord of Annual Fixed Rent or Additional Rent shall not be or be deemed to be a waiver by Landlord of any default by Tenant, whether or not Landlord knows of such default, except for such defaults as to which such payment relates.

(A) No act or thing done by Landlord during the Lease Term shall be deemed an acceptance of a surrender of the Premises, and no agreement to accept such surrender shall be valid, unless in writing signed by Landlord. No employee of Landlord or of Landlord’s agents shall have any power to accept the keys of the Premises as an acceptance of a surrender of the Premises prior to the termination of this Lease. The delivery of keys to any employee of Landlord or of Landlord’s agents shall not operate as a termination of the Lease or a surrender of the Premises.

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(B) Upon the expiration or earlier termination of the Lease Term, Tenant shall surrender the Premises to Landlord in the condition as required by Sections 8.1 and 9.3, first removing all goods and effects of Tenant and completing such other removals as may be permitted or required pursuant to Section 9.3.

(A) Tenant warrants and represents that Tenant has not dealt with any broker in connection with the consummation of this Lease other than the brokers designated in Section 1.1 hereof (the “Brokers”); and in the event any claim is made against the Landlord relative to Tenant’s dealings with brokers other than the Brokers, Tenant shall defend the claim and indemnify Landlord on account of loss, cost or damage which may arise by reason of such claim.

(B) Landlord warrants and represents that Landlord has not dealt with any broker in connection with the consummation of this Lease other than the Brokers; and in the event

any claim is made against the Tenant relative to Landlord’s dealings with brokers including the Brokers, Landlord shall defend the claim and indemnify Tenant on account of loss, cost or damage which may arise by reason of such claim.

(C) Landlord agrees that it shall be solely responsible for the payment of a brokerage commission to the Brokers pursuant to the terms of a separate written agreement.

If to Landlord:

Jamestown Premier Davenport, LLC

c/o Jamestown

One Overton Park, 12^th Floor

3625 Cumberland Boulevard

Atlanta, GA 30339

Attn: Managing Director/Asset Management

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And

Jamestown Premier Davenport, LLC

c/o Jamestown

Chelsea Market

75 Ninth Avenue, 5^th Floor

New York, NY 10011

Attn: Asset Manager/25 First Street, Cambridge, Massachusetts

With a copy to:

Goulston & Storrs PC

400 Atlantic Avenue

Boston, MA 02110-3333

Attn: Amy Moody McGrath, Esquire

and

The Mortgagee(s) listed on Exhibit 16.10 hereto

at the address(es) indicated thereon

If to Tenant:

25 First Street

Cambridge, MA. 02141

Attn: President

With a copy to:

Goodwin Procter LLP

Exchange Place

53 State Street

Boston, MA 02109

Attn: Katherine L. Murphy, Esquire

Except as otherwise provided herein, all such notices shall be effective when received; provided, that (i) if receipt is refused, notice shall be effective upon the first occasion that such receipt is refused or (ii) if the notice is unable to be delivered due to a change of address of which no notice was given, notice shall be effective upon the date such delivery was attempted.

Where provision is made for the attention of an individual or department, the notice shall be effective only if the wrapper in which such notice is sent is addressed to the attention of such individual or department.

Any notice given by an attorney on behalf of Tenant, Landlord or by Landlord’s managing agent shall be considered as given by Landlord and shall be fully effective.

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In addition, Tenant shall deliver to Landlord, or any Interested Party designated by Landlord, upon Landlord’s written request given not more than once in any 12-month period (except that Landlord may make two such requests if an Event of Default by Tenant occurs during such 12-month period or in connection with any sale or financing of the Building by Landlord), the most recent audited financial statements of Tenant or if Tenant, does not have its financials audited, Tenant shall provide financial statements certified by the appropriate accounting or finance officer of Tenant. Notwithstanding the foregoing, so long as Tenant’s stock is publicly traded on a national exchange (or publicly listed in an equivalent manner, such as on NASDAQ) that requires its financial statements to be publicly disclosed, Tenant shall have no obligation to deliver any financial statements of Tenant to Landlord or any Interested Party.

Any such status statement or financial statement delivered by Tenant pursuant to this Section 16.18 may be relied upon by any Interested Party.

(A) If Tenant fails to make any payment or perform any act which Tenant is obligated to do under this Lease and (except in the case of emergency) if the same continues unpaid or unperformed beyond applicable grace periods, then Landlord may, but shall not be obligated so to do, after fifteen (15) days’ notice to and demand upon Tenant, or without notice to or demand upon Tenant in the case of any emergency, make such payment or perform such act on Tenant’s behalf. Such action by Landlord shall not waive or release Tenant from any obligations of Tenant in this Lease. All sums paid by Landlord in connection with such action, and all reasonable and necessary costs and expenses of Landlord incidental thereto, together with interest thereon at the Lease Interest Rate, from the date of the making of such expenditures by Landlord, shall be payable to the Landlord on demand.

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(B) Effective as of the Final Expansion Premises Rent Commencement Date, in the event of a Landlord Self-Help Default (as hereinafter defined), if Landlord fails to cure such Landlord Self-Help Default on or before the date thirty (30) days (or such longer period time as is reasonably required to correct any such Landlord Self-Help Default so long as Landlord is diligently pursuing such cure) after Landlord’s receipt of written notice (“Tenant’s Self-Help Default Notice”) from Tenant advising Landlord of such Landlord Self-Help Default and Tenant’s intent to exercise its rights pursuant to this 16.19(B), then Tenant shall have the right to cure such Landlord Self-Help Default. Landlord shall reimburse Tenant for any out-of-pocket costs reasonably incurred by Tenant to cure such Landlord Self-Help Default pursuant to this Section 16.19(B) (the parties agreeing, however, that the amount so offset or paid by Landlord to Tenant may be included in Operating Expenses to the extent permitted under this Lease). If Landlord fails to timely reimburse Tenant any amount properly due to Tenant pursuant to the this Section 16.19(B), and if Landlord fails to cure such failure within ten (10) days after Landlord receives written notice of such failure from Tenant, then Tenant shall have the right to deduct such amount from the next installment(s) of Landlord’s Tax Expenses Allocable to the Premises and Operating Expenses Allocable to the Premises thereafter due under the Lease, provided that the amount of such deduction may not exceed ten percent (10%) of any the aggregate amount of any the installment of Landlord’s Tax Expenses Allocable to the Premises and Operating Expenses Allocable to the Premises payable by Tenant with respect to any month. Any dispute as to whether Landlord owes Tenant any amount pursuant to this Section 16.19(B) shall be submitted to arbitration pursuant to Section 16.33. A “Landlord’s Self-Help Default” shall, subject to the next following sentence, be defined as: (i) failure by Landlord to perform any of Landlord’s service, maintenance or repair obligations under the Lease within the Premises or in any Tenant Controlled Common Areas which, pursuant to Section 2.2(E), Tenant has the right to direct Landlord to exclude other tenants of the Building, (ii) failure by Landlord to maintain and repair any portion of any roof of the Building, the condition of which does not affect any other tenant of the Building (iii) any default by Landlord under the Garage License, after the giving of any applicable notice and the expiration of any cure periods under the Garage License and, (iv) upon the 100% Lease Date, failure by Landlord to maintain and repair the Building systems. In no event shall any Landlord’s Self-Help Default include any maintenance and repair obligations, the cure or performance of which would adversely affect any other tenant in the Building. If Tenant exercises its rights under this section 16.19(B), then any rent abatement pursuant to Section 7.3 shall cease as of the expiration of the time period within which Tenant should reasonably have cured such Landlord’s Self-Help Default.

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(A) Delivery of Security Deposit. Tenant shall, at the time that Tenant executes and delivers this Lease to Landlord, deliver to Landlord a security deposit (“Security Deposit”) in the amount of $3,457,523.98 in the form of a letter of credit. Reference is made to the fact that Landlord is presently holding a Security Deposit in the amount of $1,350,000.00 (the “Existing Letter of Credit”) in the form of a letter of credit for the Existing Premises under the Prior Lease. Therefore, Tenant shall, at the time that Tenant executes and delivers this Amended and Restated Lease to Landlord, deliver to Landlord either, at Tenant’s election: (i) a Letter of Credit in the amount of $2,107,523.98 complying with the provisions of this Section 16.28 in exchange for the Existing Letter of Credit (the “New Letter of Credit”), or (ii) an amendment to the Existing Letter of Credit, in form and substance reasonably acceptable to Landlord, which increases the amount of the Existing Letter of Credit to $3,457,523.98, and amends the draw requirements so that Landlord has the right draw upon the Existing Letter of Credit pursuant to the provisions of this Lease (i.e., rather than pursuant to the provisions of this Lease). If Tenant elects to exchange the Existing Letter of Credit, Landlord agrees to a simultaneous exchange of the Existing Letter of Credit for the New Letter of Credit, together with a letter from Landlord to the issuer thereof authorizing the immediate cancellation of the Existing Letter of Credit. The Security Deposit shall secure Tenant’s obligations under the Lease and shall be held by Landlord in accordance with this Section 16.28.

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(B) Form of Security Deposit. The Security Deposit shall be in the form of an unconditional, irrevocable standby letter of credit (the “Letter of Credit”) from a U.S. banking institution reasonably acceptable to Landlord, insured by a federal insurance agency and authorized to do business in the Commonwealth of Massachusetts (the “Issuer”). The Issuer must have long-term, unsecured and unsubordinated debt obligations rated in the highest category by at least two of Fitch Ratings Ltd. (“Fitch”, which highest rating currently is AAA), Moody’s Investors Service, Inc. (“Moody’s”, which highest rating currently is Aaa), and Standard & Poor’s Ratings Services (“S&P”, which highest rating currently is AAA), or their respective successors (collectively, the “Rating Agencies”), and must have a short term deposit rating in the highest category from at least two Rating Agencies (which currently would be Fl from Fitch, P-1 from Moody’s, and A-1 from S&P). The qualifications in the preceding sentence are collectively referred to as the “Issuer Qualifications.” Notwithstanding the foregoing, Landlord approves Comerica Bank as the issuer of the New Letter of Credit. The Letter of Credit shall (i) meet the requirements of the International Standby Practice ISP98, International Chamber of Commerce (ICC) Publication No. 590, (ii) name Landlord as beneficiary, (iii) be in the amount of the Security Deposit, (iv) be payable in full or partial draws against Landlord’s sight draft upon a statement by Landlord that, pursuant to the provisions of this Lease, Landlord is entitled to draw upon the Letter of Credit, (v) include an “evergreen” provision which provides that the Letter of Credit shall be renewed automatically on an annual basis unless the issuer delivers sixty (60) days prior written notice of cancellation to Landlord, (vi) have an initial expiration date no earlier than one year from the date of issue and an outside expiration date no earlier than sixty (60) days after the expiration of the initial Lease Term, provided, however, if the Letter of Credit outside expiration date is earlier than the foregoing, Tenant shall be responsible to deliver to Landlord a replacement letter of credit meeting the LC Requirements prior to the outside expiration date. If Tenant does not deliver such replacement letter of credit within sixty (60) days prior to the expiration or cancellation of the Letter of Credit then being held by Landlord then Landlord may fully draw upon the Letter of Credit and hold the cash as a replacement Security Deposit until Tenant delivers to Landlord such replacement letter of credit, (vii) be transferable, at no expense to Landlord, to any successor to Landlord as owner of the Building, and (viii) otherwise be in form and substance satisfactory to Landlord (items [i] through [viii] collectively the “LC Requirements”).

(C) In the event that, at any time, either (x) Landlord receives notice from any Issuer of such Issuer’s decision not to renew the Letter of Credit as required under this Section 16.28, (y) the Issuer Qualifications are not met by the then-current Issuer of a Letter of Credit held by Landlord, or (z) the financial condition of the Issuer changes in any other materially adverse way (as determined by Landlord), then Tenant shall, within five (5) days following written notice from Landlord, deliver to Landlord a replacement Letter of Credit that satisfies the LC Requirements and is issued by an Issuer that satisfies the Issuer Qualifications or a cash Security Deposit in lieu thereof. In the event that Tenant fails to timely deliver such substitute Letter of Credit or a cash Security Deposit in lieu thereof, such failure shall constitute an Event of Default for which there shall be no notice and cure period, and, in addition to the rights set forth in Article 15 hereof, Landlord shall have the right under such circumstances to immediately, and without further notice to Tenant, draw upon the then-extant Letter of Credit and hold the proceeds thereof as a cash Security Deposit.

(D) If an Event of Default by Tenant occurs in its obligations under the Lease, then the Landlord shall have the right, at any time after such event, without giving any further notice to Tenant, to draw down from said Letter of Credit: (a) the amount necessary to cure such default or (b) if such default cannot reasonably be cured by the expenditure of money, to exercise all rights and remedies Landlord may have on account of such default, the amount which, in Landlord’s reasonable opinion, is necessary to satisfy Tenant’s liability in five (5) business days of written demand therefor, deliver to Landlord an additional Letter of Credit satisfying the foregoing conditions (“Additional Letter of Credit”), except that the amount of such Additional Letter of Credit shall be the amount of such draw. In addition, in the event of a termination based upon the default of Tenant under the Lease, or a rejection of the Lease pursuant to the provisions of the Federal Bankruptcy Code, Landlord shall have the right to draw upon the Letter of Credit (from time to time, if necessary) to cover the full amount of damages and other amounts due from Tenant to Landlord under the Lease. Any amounts so drawn shall, at Landlord’s election, be applied first to any unpaid rent and other charges which were due prior to the filing of the petition for protection under the Federal Bankruptcy Code. Tenant hereby covenants and agrees not to

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oppose, contest or otherwise interfere with any attempt by Landlord to draw down from said Letter of Credit including, without limitation, by commencing an action seeking to enjoin or restrain Landlord from drawing upon said Letter of Credit. Tenant also hereby expressly waives any right or claim it may have to seek such equitable relief. In addition to whatever other rights and remedies it may have against Tenant if Tenant breaches its obligations under this paragraph, Tenant hereby acknowledges that it shall be liable for any and all damages which Landlord may suffer as a result of any such breach.

(E) If, at any time, all or part of the Security Deposit is held in cash, Landlord shall not be required to maintain the same in a separate account, and, except as may be required by law, Tenant shall not be entitled to interest on the Security Deposit. Within five (5) Business Days after Tenant’s receipt of written notice of Landlord’s use of the Security Deposit or portion thereof as a result of an Event of Default by Tenant under this Lease, Tenant shall deposit with Landlord cash in an amount sufficient to restore the Security Deposit to its amount prior to such use, and Tenant’s failure to do so shall constitute a default hereunder.

(F) Within approximately thirty (30) days after the later of (a) the expiration or earlier termination of the Lease Term, or (b) Tenant’s vacating the Premises, Landlord shall return the Security Deposit less (i) such portion thereof as Landlord shall have used to satisfy Tenant’s obligations under this Lease, and (ii) such portion thereof as Landlord reasonably determines will be sufficient to satisfy Tenant’s obligations concerning payment of Tenant’s Share of Taxes and Tenant’s Share of Operating Expenses which will not be finally determined until after the end of the calendar year in which the Lease Term ends.

(G) If Landlord transfers the Security Deposit to any transferee of the Building or Landlord’s interest therein, then such transferee shall be liable to Tenant for the return of the Security Deposit (which liability for the return of the Security Deposit shall be confirmed in writing to Tenant, upon Tenant’s request for such confirmation), and Landlord shall be released from all liability for the return of the Security Deposit. The holder of any Mortgage shall not be liable for the return of the Security Deposit unless such holder actually receives the Security Deposit.

(H) So long as there shall not have been a monetary or material non-monetary Event of Default by Tenant under the Lease (i) at any time in the twelve-(12)-month period preceding the Reduction Date, as hereinafter defined, and (ii) on the Reduction Date (as defined below) (the “Reduction Conditions”), Landlord shall reduce the amount of the Security Deposit to $2,593,142.99 effective as of the January 1, 2020 (the “Reduction Date”). The reduction in the Security Deposit shall be accomplished as follows: Tenant shall request such reduction in a written notice to Landlord, and if Landlord confirms that the Reduction Conditions have been satisfied, Landlord shall notify Tenant within ten (10) business days following Tenant’s request, whereupon either (x) Tenant shall provide Landlord with a substitute Letter of Credit in the reduced amount, or an amendment to the Letter of Credit, in form and substance reasonably acceptable to Landlord, reducing it to the reduced amount if the Security Deposit is then in the form of a Letter of Credit or (y) Landlord shall return the sum of $864,381.00 to Tenant if the Security Deposit is in the amount of cash. Notwithstanding anything to the contrary contained herein, if Tenant’s fails to satisfy the Reduction Conditions on the Reduction Date, Tenant shall be entitled to such reduction of the Security Deposit if Tenant subsequently cures all outstanding defaults and, at the time that it cures all such defaults, Tenant then satisfies both Reduction Conditions.

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(A) Directory Signage. Landlord shall provide building standard signage in the standard graphics for the Building listing Tenant, any permitted subtenant or assignee of Tenant on the directory(ies) for the Building. The initial listing of Tenant’s name shall be at Landlord’s expense. Any changes or additions to such directory(ies) shall be at Tenant’s cost and expense.

(B) New Tenant Signage. Effective as of the Execution Date, Tenant shall have the exclusive right to install signage (the “Atrium and Courtyard Signage”) in the Atrium and the Courtyard and the right to install other Tenant identification signage elsewhere in the Building (“Other New Tenant Signage”) in the locations shown on Exhibit 16.32, Sheet 1. Upon the Substantial Full Occupancy Commencement Date, Tenant shall have the right to install other new Tenant identification signage in the Atrium, the Courtyard, and elsewhere in the Building (“Substantial Full Occupancy Tenant Signage”) in the locations shown on Exhibit 16.32, Sheet 2. If Tenant ceases to satisfy at least one of the Substantial Full Occupancy Conditions, or if Tenant ceases to Occupy at least fifty-four (54%) of the Rentable Area of the Building, then Tenant shall, at Tenant’s sole cost and within fifteen (15) days after either such event, remove the Substantial Full Occupancy Tenant Signage. Notwithstanding anything to the contrary contained herein, Landlord reserves the right to install Building-related signage in the Atrium (e.g., and signage describing the history of the Building, informational, directional and branding signage which, as of the Final Expansion Premises Rent Commencement Date, shall be of a size and in locations reasonably approved by Tenant) and not identifying any other tenant, Tenant hereby acknowledging that any such Building signage which exists as of the Execution Date shall not be deemed to violate the provisions of this Section 16.32(B), subject to Section 16.32(C). All Atrium and Courtyard Signage, Other New Tenant Signage, and Substantial Full Occupancy Tenant Signage shall (i) be installed, maintained in good condition, and removed at Tenant’s sole cost and expense (with Tenant repairing any damage to the Building caused by the installation or removal of such signage), and (ii) be subject to Landlord’s prior review and written approval of Tenant’s plans and specifications therefor, which approval shall not be unreasonably withheld, conditioned or delayed. Upon the 100% Lease Date, and so long as Tenant continues to satisfy the 100% Lease Test, Tenant shall have the right to remove the Existing Artwork and replace the same with artwork selected by Tenant and/or with signage and branding identifying Tenant. Tenant shall provide the Existing Artwork to Landlord promptly after removing the same. In the event that, after the 100% Lease Date, Tenant no longer satisfies the 100% Lease Test, Tenant shall, at Landlord’s election and at Tenant’s sole cost and expense, either (i) restore the Existing Artwork to the location where it existed as of the Execution Date or (ii) install mutually acceptable new artwork provided by Landlord.

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(C) Exterior Building Signage.

(1) Effective as of the Execution Date, Tenant shall have the non-exclusive right to install exterior signage (the “Exterior Signage”) displaying Tenant’s name and/or logo on the exterior facade of the Building along First Street; however, effective as of the Execution Date, so long as HubSpot, Inc., itself, or a Permitted Tenant Successor, and/or a Tenant Affiliate is Occupying at least fifty-four percent (54%) of the Rentable Floor Area of the Building, Landlord hereby agrees that Landlord shall not grant any signage rights or install any new or additional signage for any current or future tenant of the Building on the Building’s Exterior. Effective as of the Substantial Full Occupancy Commencement Date, and continuing throughout the Lease Term so long as Tenant continues to satisfy both of the following conditions: (i) Tenant is leasing at least eighty-five percent (85%) of the Rentable Area of the Building (“Exclusive Signage Leasing Condition”) (exclusive of the Basement Put Premises), and (ii) HubSpot, Inc., itself, a Permitted Tenant Successor, and/or a Tenant Affiliate is Occupying at least fifty-four percent (54%) of the Rentable Floor Area of the Building (“Exclusive Signage Occupancy Condition”), the Exterior Signage right described in the immediately preceding sentence shall be exclusive to Tenant and, within a reasonable period of time after the Substantial Full Occupancy Commencement Date, Landlord shall remove any signage on the exterior of the Building identifying any other tenant, occupant or other party, provided that Landlord shall not be required to remove any signage from the monument or placard sign located on the exterior facade of the Building along First Street identifying any other tenant of the Building (as such signage may be modified (but not increased) from time to time pursuant to the provisions of such other tenant’s lease) that exists as of the Execution Date until thirty (30) days after such other tenant (or its successor under its lease with Landlord) is no longer occupying space within the Building. At any time when Tenant ceases to satisfy the Exclusive Signage Occupancy Condition, there shall be no limitations on Landlord’s right to permit tenant identification signage for other tenants and occupants of the Building on the exterior of the Building. At any time when Tenant satisfies the Exclusive Signage Occupancy Condition but does not satisfy the Exclusive Signage Leasing Condition, Landlord shall only have the right to permit other tenants and occupants of the Building to install monument or placard signs similar to the monument or placard signs existing on the exterior of the Building along First Street as of the Execution Date. Notwithstanding the exclusive signage rights described in the immediately preceding sentence, but subject to the provisions of Section 16.32(C)(2), Landlord reserves the right to install Building-related signage on the exterior of the Building (e.g., informational, directional and branding signage of a size and in locations reasonably approved by Tenant) (not in excess of what exists as of the Execution Date), Tenant specifically acknowledging that any such Building signage shall not violate Tenant’s exclusive signage rights contained in this Section 16.32(C). Subject to the following conditions (“Exterior Signage Conditions”), all Exterior Signage shall: (i) be installed, maintained in good condition, and removed at Tenant’s sole cost and expense, (ii) comply with all Applicable Laws, ordinances, rules and regulations, including the Cambridge Zoning Ordinance (including the “Signs and Illumination” provisions contained therein), (iii) be subject to Tenant’s receipt of all necessary governmental permits and/or approvals for such Exterior Signage, and (iv) be subject to Landlord’s prior review and written approval of Tenant’s plans and specifications therefor, which plans and specifications shall specify the type, size, installation method and location of such Exterior Signage, and which approval shall not be unreasonably withheld, conditioned or delayed. Effective as of the 100% Lease Date and so long as Tenant continues to lease the entirety of the Building, Landlord shall not change the name of the Building without Tenant’s prior written consent, which consent may not be unreasonably withheld, conditioned or delayed. Tenant’s right to the Exterior Signage in this Section 16.32(C) is in addition to Tenant’s right to install and maintain Tenant’s existing exterior signage on the Building which signage Tenant shall have the right to maintain (and replace) during the Term of this Lease (as the same may be extended).

(2) Banner Signs. Reference is hereby made to the two banner “Davenport” signs (“Banner Signs”) presently affixed to the Building and to the existing “Davenport” sign located over the main entrance door to the Building. Tenant shall have the right to replace one of the Banner Signs after the Execution Date with a comparable banner sign with Tenant’s name and/or logo, and, after the occurrence of the Substantial Full Occupancy Commencement Date, Tenant shall have the right, at Tenant’s sole cost, to replace the other Banner Sign (“Second Banner Sign”) identical to the initial Banner Sign installed by Tenant pursuant to this Section 16.32(C)(2), subject to the

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following: (i) Tenant’s compliance with the Exterior Signage Conditions with respect to each Banner Sign, (ii) Landlord shall, within fifteen (15) days after Tenant gives Landlord written notice that it has obtain all necessary permits and approvals for an approved Banner Sign in accordance with this Section 16.32(C)(2), Landlord shall remove the existing “Davenport” sign which is being replaced, and Tenant shall, within fifteen (15) days after Landlord removes such existing “Davenport” sign, install the approved Tenant identification Banner Sign, (iii) if Tenant ceases to satisfy both of the Substantial Full Occupancy Conditions, or if Tenant ceases to Occupy at least fifty-four (54%) of the Rentable Area of the Building, then Tenant shall, at Tenant’s sole cost and within fifteen (15) days after either such event, remove the Second Banner Sign (with Tenant repairing any damage to the Building caused by the installation or removal of such signage),, and (iv) if, for any reason, Tenant removes any Exterior Banner Sign, Landlord shall have the right to replace the removed Exterior Banner Sign with a Banner Sign identifying the then current name of the Building.

(D) Miscellaneous. The signage rights under this Section 16.32 are personal to the original Tenant hereunder and may not be assigned (except in connection with an assignment to a Permitted Tenant Successor pursuant to Section 11.2 above), including in connection with any subleasing by Tenant.

(A) Landlord grants to Tenant an exclusive license to access and use Landlord’s 230kw/480v diesel-powered standby generator located outside the rear of the Building and its associated automatic transfer switch located within the main switchgear room in the basement of the Building (the ‘Backup Power System’). The license granted under this Section 16.35 for the Backup Power System shall be referred to herein as the “Generator License”. Landlord represents and warrants that it has full power and authority and all necessary rights to grant the Generator License to Tenant. A drawing depicting the proposed location of Tenant’s Equipment and the connection to the Backup Power System is attached hereto as Exhibit 16.35.

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(B) The parties hereby acknowledge that Tenant has installed conduits, wire, panels and transformers (collectively, ‘Tenant’s Equipment’) connecting the Premises to the Backup Power System.

(C) At all times during the term of the Generator License, Tenant shall maintain and repair, at Tenant’s sole cost and expense, Tenant’s Equipment, and the Backup Power System in good, operational working order and condition and in compliance with all Applicable Laws, codes, ordinances, orders, directives, rules and regulations, all insurance requirements, and all reasonable rules and regulations which may be promulgated by Landlord and of which Tenant is notified in writing from time to time. If all or any part of the Backup Power System (including, without limitation, the generator) requires replacement prior to the end of the term of the Generator License, Tenant may elect to (i) replace the Backup Power System at Tenant’s sole cost and expense or (ii) discontinue its use of the Backup Power System and to terminate the Generator License. If Tenant elects to discontinue its use of the Backup Power System and to terminate the Generator License, then Tenant at its sole cost and expense shall remove the Backup Power System prior to the termination or expiration of this Lease and repair any and all damage to the Premises and the Building caused by such removal. If Tenant elects to replace the Backup Power System then Landlord shall have the option to either (i) require Tenant to remove the Backup Power System prior to the termination or expiration of this Lease or (ii) pay Tenant an amount equal to the product of (a) the reasonable out-of-pocket costs incurred by Tenant to replace the Backup Power System multiplied by (b) the percentage based upon the useful life of the Backup Power System that still remains as of the termination or expiration of this Lease as compared to the total useful life of the Backup Power System. Any such replacement shall be with a new or replacement item of similar or better quality and function. A replacement will only be considered required if the Backup Power System functions improperly and Tenant, or Tenant’s designated service provider, cannot remedy such improper function after making reasonable attempts to do so. If Tenant is using or operating the Backup Power System, Tenant shall also maintain a preventative maintenance service contract for the Backup Power System with a licensed generator maintenance contractor and shall provide Landlord with copies of such reports on an annual basis or within fifteen (15) days of Landlord’s request (but not more than twice per year) from time-to-time. Tenant shall also arrange for the testing of the Backup Power System at least once per year, and provide the results of such testing to Landlord within five (5) days of the date of Tenant’s receipt of such results.

(D) Tenant shall not be obligated to pay any license or other fee in connection with its use of the Generator Area. However, Tenant shall (i) pay directly to the applicable provider all fuel costs related to the operation of the Backup Power System and (ii) pay any ongoing legally required permitting costs relating to the use and operation of the Backup Power System.

(E) Tenant acknowledges that (i) Landlord makes no warranty or representation with respect to the Backup Power System or its suitability for Tenant’s use, and (ii) Landlord shall have no responsibility or liability to Tenant in connection with any failures, disruptions or malfunctions of such Backup Power System. Tenant hereby releases Landlord and its property manager and their respective agents and employees, and waives any and all claims for damage or injury to person or property or loss of business sustained by Tenant, in connection with or resulting from the Backup Power System becoming in disrepair, malfunctioning, or failing, all as further set forth in Section 12.1 of this Lease, which shall apply to the license granted pursuant to this Section 16.35.

(F) Tenant’s right to use the Backup Power System is exclusive to Tenant and granted solely to service the Premises, and Tenant shall not permit the use of the Backup Power System by any other party, except for its service providers, contractors or agents. Landlord shall have the right to inspect the Tenant’s Equipment and the Backup Power System, not more than twice per year (except in the case of an emergency), upon twenty-four (24) hours’ prior notice to Tenant (or without prior notice in the case of an emergency), to ensure compliance with the terms of this Lease. Landlord will not cause, or enter into any agreement that would cause, a material impediment to Tenant’s exercise of the Generator License or compliance with its obligations related thereto.

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(G) The Generator License shall terminate on the earlier of (i) the termination or expiration of this Lease, or (ii) upon ninety (90) days prior written notice of termination by Tenant to Landlord, which notice may be provided at any time during the Term of this Lease at Tenant’s option. In the event of termination, following the date of termination all of Tenant’s maintenance, service repair, replacement and payment obligations (if any) associated with the Generator License will cease (except as provided in the next sentence). The prior sentence, however, shall not affect Landlord’s rights to enforce any defaults by Tenant existing as of the date of the termination of the Generator License with respect to Tenant’s payment, repair or replacement obligations, nor affect Landlord’s right to enforce Tenant’s indemnification obligations with respect to Hazardous Materials described below, which enforcement rights shall survive the termination of the Generator License. Upon termination of the Generator License, unless otherwise specified by Landlord, Tenant shall return the Backup Power System to Landlord in good and operable condition, reasonable wear and tear excepted. Upon termination of the Generator License (but subject to the next paragraph), Tenant will provide to Landlord Tenant’s Equipment, which Landlord will accept with the Backup Power System. Landlord acknowledges that (a) Tenant makes no warranty or representation with respect to Tenant’s Equipment or its suitability for use, and (b) Tenant shall have no responsibility or liability to Landlord or any third party in connection with any failures, disruptions or malfunctions of Tenant’s Equipment. Landlord hereby releases Tenant and its respective agents and employees, and waives any and all claims, for damage or injury to person or property or loss of business sustained by Landlord (or another party) after the date of the termination of the Generator License in connection with Landlord’s or another party’s use of Tenant’s Equipment.

(H) Notwithstanding the provisions of the prior paragraph, if Tenant exercises its right to terminate the Generator License for Tenant’s convenience pursuant to clause (ii) of the first sentence of the prior paragraph or if the Lease is terminated by Landlord in accordance with Section 15.2 of the Lease due to an Event of Default, then upon Landlord’s written request pursuant to the next sentence, Tenant will remove, at Tenant’s sole cost and expense, all or a portion of Tenant’s Equipment installed in connection with the Backup Power System to the extent necessary to allow the Backup Power System to be reused by Landlord or another party. Landlord’s written request to remove Tenant’s Equipment in accordance with the prior sentence must be provided to Tenant within thirty (30) days from Landlord’s receipt of Tenant’s notice of termination or Tenant’s receipt of Landlord’s notice of termination (as applicable). Should Tenant require access to or use of the Backup Power System in order to remove Tenant’s Equipment after the termination of the Generator License, Landlord will permit Tenant the right to reasonably access and use the Backup Power System, to the extent reasonably necessary to remove Tenant’s Equipment.

(I) Tenant may not install any additional conduits or other related equipment (other than the Tenant’s Equipment) in connection with the Backup Power System without first obtaining Landlord’s prior written consent, which consent will not be unreasonably withheld.

(J) Subject to Section 13.4 of this Lease, Tenant shall indemnify, defend with counsel engaged in Tenant’s discretion and hold Landlord, Landlord’s managing agent and any mortgagee of the Building fully harmless from and against any and all liability, loss, suits, claims, actions, causes of action, proceedings, demands, costs, penalties, damages, fines and expenses, including, without limitation, attorneys fees, consultants’ fees, laboratory fees and clean up costs, and the costs and expenses of investigating and defending any claims or proceedings, resulting from, or attributable to (i) the release of any Hazardous Materials at, on, under or around the Building arising from the operation, repair, maintenance, replacement or removal by Tenant (or its officers, employees, contractors and agents) of the Backup Power System to the extent such Hazardous Materials were used by Tenant in connection with the operation of the Backup Power System or implanted, deposited or placed by Tenant (or its officers, employees, contractors or agents), and (ii) any violation(s) by Tenant (or its respective officers, employees, contractors, agents or invitees) of any applicable law (including under any ‘Environmental Laws’) regarding Hazardous Materials from or relating to the Backup Power System. This hold harmless and indemnity shall survive the termination of the Generator License.

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(K) For purposes of this Lease, “Hazardous Materials” shall mean any substance regulated under any Environmental Law, including those substances defined in 42 U.S.C. Sec. 9601(14) or any related or applicable federal, state or local statute, law, regulation, or ordinance, pollutants or contaminants (as defined in 42 U.S.C. Sec. 9601(33), petroleum (including crude oil or any fraction thereof), any form of natural or synthetic gas, sludge (as defined in 42 U.S.C. Sec. 6903(26A), radioactive substances, medical or biological hazard wastes, hazardous waste (as defined in 42 U.S.C. Sec. 6903(27)) and any other hazardous wastes, hazardous substances, contaminants, pollutants or materials as defined, regulated or described in any of the Environmental Laws. As used in this Lease, “Environmental Laws” means all applicable federal, state and local laws relating to the protection of the environment or health and safety and/or the disposition of Hazardous Materials, and any rule or regulation promulgated thereunder and any order, standard, interim regulation, moratorium, policy or guideline of or pertaining to any federal, state or local government, department or agency.

(A) Landlord and Tenant acknowledge that the following equipment (collectively, the “Existing Rooftop Equipment”) has been installed on the roof of the Building and connected to the interior of the Premises as of the date hereof: (i) thirteen (13) condenser units and (ii) one (1) antenna. Landlord hereby approves the Existing Rooftop Equipment. Tenant shall have the right (i) to install (in accordance with Section 9 of the Lease) the following additional equipment (collectively, the “Additional Rooftop Equipment”) on the roof of the Building: (a) up to three (3) dish/antenna or other communication device approved by Landlord (one (1) of which shall not exceed 6’ in diameter, and two (2) of which shall not exceed 3’ in diameter) and the equipment relating thereto (the “Dish/Antenna”), and (b) supplemental HVAC units, and (ii) to connect the Additional Rooftop Equipment to the interior of the Premises through the shafts of the Building and the Building Systems and Structure. The precise specifications and a general description of the Additional Rooftop Equipment, along with the manner in which the Additional Rooftop Equipment will be attached to the roof of the Building and connected to the Premises (the “Additional Rooftop Equipment Plans and Specifications”) shall be subject to the approval of Landlord, which approval shall not be unreasonably withheld, conditioned or delayed. The exact location of the Additional Rooftop Equipment on the roof shall be subject to the approval of Landlord, which approval shall not be unreasonably withheld, conditioned or delayed (taking into account that Landlord shall be required to provide a location which permits the proper orientation, line of sight and complete operation of each such Dish/Antenna). Such Additional Rooftop Equipment Plans and Specifications shall be submitted to Landlord, for Landlord’s written approval no later than twenty (20) days before Tenant commences to install the Additional Rooftop Equipment. Such location of the Additional Rooftop Equipment and the location of the Existing Rooftop Equipment shall be collectively referred to herein as the “Rooftop Equipment Space.” Any dispute as to the reasonableness of Landlord’s denial of consent to the location of any Additional Rooftop Equipment or the Additional Rooftop Equipment Plans and Specifications shall be determined by arbitration in accordance with Section 16.33 of the Lease. Landlord shall have the right, upon at least sixty (60) days’ notice to Tenant, to require Tenant to relocate the Rooftop Equipment Space to another area (“Relocation Rooftop Equipment Premises”) on the roof of the Building reasonably acceptable to Tenant and suitable for the use of the Rooftop Equipment. In such event, Tenant shall, at Landlord’s sole cost and expense, on or before the date

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set forth in Landlord’s notice, relocate its Rooftop Equipment from the Rooftop Equipment Space to the Relocation Rooftop Equipment Premises; provided, however that Landlord shall cooperate with Tenant in arranging and staging such relocation over a weekend or other times where there will be no interruption of service to Tenant. There shall be no rent or other payments due from Tenant, including, but not limited to, Operating Expenses or Taxes, for the Rooftop Equipment Space or Relocation Rooftop Equipment Premises occupied by the Rooftop Equipment but Tenant shall pay for all electricity used in the operation of the Rooftop Equipment. Tenant shall be solely responsible for obtaining all necessary governmental and regulatory approvals and for the cost of installing, operating, maintaining and removing the Rooftop Equipment. Tenant shall notify Landlord upon completion of the installation of the Additional Rooftop Equipment. If Landlord determines that the Additional Rooftop Equipment does not comply with the approved Additional Rooftop Equipment Plans and Specifications, that the Building has been damaged during installation of the Additional Rooftop Equipment or that the installation was defective, Landlord shall notify Tenant of any noncompliance or detected problems and Tenant shall cure the defects, within thirty (30) days thereof. If the Tenant fails to cure the defects within such time, then Landlord shall so notify Tenant thereof and Tenant shall pay to Landlord upon demand the actual third party cost of correcting any defects and repairing any damage to the Building caused by such installation. If at any time Landlord, in its reasonable discretion, deems it necessary, Tenant shall provide and install, at Tenant’s sole cost and expense, appropriate aesthetic screening, reasonably satisfactory to Landlord, for the Additional Rooftop Equipment (the “Rooftop Equipment Aesthetic Screening”).

(B) Landlord agrees that Tenant, upon reasonable prior written or oral notice to Landlord (except in case of emergencies, where simultaneous notice may be given), shall have access to the roof of the Building and the Rooftop Equipment Space for the purpose of installing, maintaining, repairing and removing the Rooftop Equipment, and the appurtenances all of which shall be performed by Tenant or Tenant’s authorized representative or contractors, which shall be approved by Landlord (which approval shall not be unreasonably withheld, conditioned or delayed, it being agreed that Landlord has approved Convergent (and its subcontractors) as its Dish/Antenna contractor), at Tenant’s sole cost and risk. It is agreed, however, that only authorized engineers, employees or properly authorized contractors of Tenant, FCC (defined below) inspectors, or persons under their direct supervision will be permitted to have access to the roof of the Building and the Rooftop Equipment Space. Landlord and Tenant further agree to exercise oversight over the people requiring access to the roof of the Building and the Rooftop Equipment Space in order to keep to a minimum the number of people having access to the roof of the Building and the Rooftop Equipment Space and the frequency of their visits.

(C) It is further understood and agreed that the installation, maintenance, operation and removal of the Rooftop Equipment, the appurtenances and the Rooftop Equipment Aesthetic Screening is not permitted to damage the Building or the roof thereof. Tenant agrees to be responsible for any damage caused to the roof or any other part of the Building, which may be caused by Tenant or any of its agents or representatives.

(D) Any Additional Rooftop Equipment installed by Tenant shall not interfere with the operation of any previously erected antenna(e) or satellite dish(es) on the Building (at the time of Tenant’s installation) (the “Existing Antenna Equipment”). If, in the reasonable judgment of Landlord, any electrical, electromagnetic, or radio frequency interference of the Existing Antenna Equipment shall result from the installation and operation of any of the Dish/Antenna, Tenant agrees that upon notice to Tenant, Tenant shall act immediately to remedy the situation and curtail such interference. Should Tenant fail to so remedy said interference within 72 hours of such notice, Tenant agrees to cease operations (except for intermittent testing on a schedule approved by Landlord) until the interference has been corrected to the reasonable satisfaction of Landlord. Similarly, Landlord shall prohibit, and shall use reasonable efforts (including litigation) to enforce the prohibition of, any other tenant of the Building from installing any telecommunications equipment that would interfere with any Additional Rooftop Equipment which is installed by Tenant prior to such installation by or for such other tenant.

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(E) Tenant shall, at its sole cost and expense, and at its sole risk, install, operate and maintain the Rooftop Equipment in a good and workmanlike manner, and in compliance with all Building, electric, communication, and safety codes, ordinances, standards, regulations and requirements, now in effect or hereafter promulgated, of the Federal Government, including, without limitation, the Federal Communications Commission (the “FCC”), the Federal Aviation Administration (“FAA”) or any successor agency of either the FCC or FAA having jurisdiction over radio or telecommunications, and of the state, city and county in which the Building is located. Tenant shall cooperate generally with Landlord to permit the Building’s rooftop to be and remain in compliance with all FCC and OSHA rules and regulations relating to radio frequency emission levels and maximum permissible exposure, including but not limited to the rules and regulations adopted in FCC document OET 65 (which rules and regulations have also been adopted by OSHA). To the extent the Rooftop Equipment or the operation thereof (or any changes thereto) causes the Building’s rooftop (or any section thereof) to not be in compliance with such rules and regulations, Tenant shall promptly remedy any such non-compliance in accordance with Landlord’s reasonable directions and at Tenant’s sole cost and expense. If Tenant believes that the Rooftop Equipment is excluded from coverage under FCC and OSHA rules and regulations, Tenant shall demonstrate to Landlord’s reasonable satisfaction that any such Rooftop Equipment is so excluded. Under this Lease, the Landlord and its agents assume no responsibility for the licensing, operation and/or maintenance of Tenant’s equipment, provided, however, Landlord shall cooperate with Tenant’s efforts to obtain any permit required or desirable in connection with the installation and operation of any Rooftop Equipment. The Rooftop Equipment shall be connected to Landlord’s power supply in compliance with all applicable Building, electrical, fire and safety codes. Neither Landlord nor its agents shall be liable to Tenant for any stoppages or shortages of electrical power furnished to the Rooftop Equipment or the Rooftop Equipment Space because of any act, omission or requirement of the public utility serving the Building, or the act or omission of any other tenant, invitee or licensee or their respective agents, employees or contractors, or for any other cause beyond the reasonable control of Landlord, and Tenant shall not be entitled to any rental abatement for any such stoppage or shortage of electrical power. Neither Landlord nor its agents shall have any responsibility or liability for the conduct or safety of any of Tenant’s representatives, repair, maintenance and engineering personnel while in or on any part of the Rooftop Equipment Space.

(F) The Rooftop Equipment, the appurtenances Rooftop Equipment Aesthetic Screening shall remain the personal property of Tenant, and shall be removed by Tenant at its own expense at the expiration or earlier termination of this Lease or Tenant’s right to possession hereunder. Tenant shall repair any damage caused by such removal. Tenant agrees to maintain all of the Tenant’s equipment placed on or about the roof or in any other part of the Building in proper operating condition and maintain same in satisfactory condition as to appearance and safety in Landlord’s reasonable discretion. Such maintenance and operation shall be performed in a manner to avoid any interference with any other Existing Antenna Equipment. Tenant agrees that at all times during the Term, it will keep the roof of the Building and the Rooftop Equipment Space free of all trash or waste materials produced by Tenant or Tenant’s agents, employees or contractors.

(G) In light of the specialized nature of the Rooftop Equipment, Tenant shall be permitted to utilize the services of its choice for installation, operation, removal and repair of the Rooftop Equipment, the appurtenances and the wiring related thereto, subject to the reasonable approval of Landlord as described above. Notwithstanding the foregoing, Tenant must provide Landlord with prior written notice of any such installation, removal or repair and coordinate such work with Landlord in order to avoid voiding or otherwise adversely affecting any warranties granted to Landlord with respect to the roof. If necessary, Tenant, at its sole cost and expense, shall retain any contractor having a then existing warranty in effect on the roof to perform such work (to the extent that it involves the roof), or, at Tenant’s option, to perform such work in conjunction with Tenant’s contractor. In the event Landlord contemplates roof repairs that could affect Tenant’s Rooftop Equipment, or which may result in an interruption of the Tenant’s telecommunication service, Landlord shall formally notify Tenant at least 30 days in advance (except in cases of an emergency) prior to the commencement of such contemplated work in order to allow Tenant to make other arrangements for such service.

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(H) Tenant may not use the Rooftop Equipment Space and/or Rooftop Equipment to provide telecommunication, video, data or related services (“Communication Services”) to an unaffiliated tenant, occupant or licensee of another building, or to facilitate the provision of Communication Services on behalf of a company that is otherwise a Communication Services provider to an unaffiliated tenant, occupant or licensee of the Building or any other building.

(I) Tenant specifically acknowledges and agrees that the terms and conditions of Article 13 of the Lease (Insurance) shall apply with full force and effect to the Rooftop Equipment Space and any other portions of the roof accessed or utilized by Tenant, its representatives, agents, employees or contractors.

(J) If Tenant defaults under any of the terms and conditions of this Section or the Lease, and Tenant fails to cure said default within the time allowed by Section 18 of the Lease, Landlord shall be permitted to exercise all remedies provided under the terms of the Lease (but Landlord may not separately remove the Rooftop Equipment as a result of an uncured default, unless permitted by law following the expiration or earlier termination of the Lease).

(A) During the Term, Tenant shall have the right to construct a rooftop deck on the roof of the Building (the “Roof Deck”) in the approximate location shown on Exhibit 16.40 attached hereto and incorporated herein. Subject to Force Majeure and closures for repair and maintenance, Tenant shall have the right to use the Roof Deck for Tenant’s exclusive use and at no additional rental or other charge and the Roof Deck will not be included in the area of the Premises for purposes of calculating Tenant’s Share and Tenant will not be required to pay a share of Operating Expenses or Taxes with respect to the Roof Deck, except that Tenant shall pay for any utilities consumed in connection with Tenant’s use of the Roof Deck. Tenant is responsible to obtain all required governmental permits, licenses, and authorizations necessary for the installation and operation of the Roof Deck (the “Roof Permits”). Landlord shall cooperate with Tenant in such manner as Tenant may reasonably require in connection with Tenant’s efforts to obtain the Roof Permits, provided that Landlord shall not be required to incur any third-party out-of-pocket costs or to incur any liability in providing such cooperation. Tenant shall not construct the Roof Deck until (i) Tenant has obtained and submitted to Landlord copies of the Roof Permits and (ii) Landlord has approved the size, design, plans, and specifications for the Roof Deck, which approval not to be unreasonably withheld, conditioned or delayed and provided that the size of the Roof Deck may not be reduced by Landlord from the size shown on Exhibit 16.40. Tenant hereby acknowledges that Landlord’s review of Tenant’s proposed Roof Deck plans and specifications

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may take into consideration the impact that Tenant’s proposed Roof Deck may, in Landlord’s reasonable judgment, have on (i) the operations of the Building and (ii) other tenants of the Building. Tenant’s rights under this Section 16.40 shall be subject to all of the terms and conditions of this Lease well as the following additional conditions. If any penetrations to the roof are required in connection with any work performed pursuant to this Section 16.40, such work shall be performed by a contractor designated by Landlord. If Tenant elects to construct the Roof Deck, Tenant shall complete such construction on or before December 31, 2020.

(B) Subject to Tenant’s right to use Landlord’s Base Contribution (including the limitations with respect to Landlord’s Base Contribution set forth in Exhibit 4.1, including the Outside Requisition Date) to install the Roof Deck, Tenant shall be solely and exclusively responsible for all costs, expenses and charges, of every kind, of construction, operating, maintaining, repairing and replacing, and the cost of repairing any damage to the Building, or the cost of any necessary improvements to the Building, caused by or as a result of the construction and/or replacement of the Roof Deck, and Landlord shall have no liability or obligation in connection therewith. In addition, Tenant shall comply with all reasonable construction rules and regulations promulgated by Landlord in connection with the construction, maintenance and operation of the Roof Deck. Landlord shall have no obligation to provide any services including, without limitation, electric current or gas service, to the Roof Deck or to provide any furniture, fixtures, or equipment in connection therewith, provided, however, Tenant shall have the right to extend the electrical service for the Premises to the Roof Deck and to install portable heaters subject to (i) Landlord’s construction rules and regulations and (ii) Tenant’s receipt of any required governmental approvals and permits. Landlord makes no warranties or representations to Tenant as to the suitability of the Rooftop Premises for the installation and operation of Tenant’s Rooftop Equipment. In the event that at any time during the Term, Landlord determines, in its reasonable business judgment, that Tenant’s use of the Roof Deck materially interferes with the operation of the Building or the business operations of any existing tenants or occupants of the Building, then Tenant shall, upon notice from Landlord, cease Tenant’s use of the Roof Deck until Tenant gives Landlord reasonable assurances that such interference will cease. In connection with Landlord’s review of the plans and specifications for the Roof Deck, Landlord may elect to require that Tenant remove the Roof Deck at the expiration or earlier termination of the Lease if either Landlord, in Landlord’s reasonable judgment, determines that upon the expiration of the term of the Lease there will be no material residual value of the Roof Deck. If so requested by Tenant, Landlord shall specify the reasons for requiring such removal, and Tenant may thereafter submit revised plans and specifications addressing Landlord’s concerns. Tenant shall not be required to remove the Roof Deck at the expiration or termination of the term of the Lease based upon Landlord’s review of such revised plans and specifications if, in Landlord’s reasonable judgment, Tenant has addressed Landlord’s reasons for requiring removal, as aforesaid. If such revised plans and specifications do not, in Landlord’s reasonable judgment, address Landlord’s reasons for removal, Landlord may again elect to require that Tenant remove the Roof Deck at the expiration or earlier termination of the Lease. Notwithstanding the immediately foregoing and regardless of whether Landlord elected at plan approval to require removal of the Roof Deck, Landlord may, by giving Tenant written notice of such requirement at least ninety (90) days prior to the expiration or earlier termination of the Lease, require Tenant to remove or repair the Roof Deck at the expiration or earlier termination of the Lease, if in Landlord’s reasonable business judgment the Roof Deck is then in deteriorated condition. If Landlord makes such election, then Tenant shall, on or before the expiration or termination of the term of the Lease, either, at Tenant’s option: (i) repair the Roof Deck, to Landlord’s reasonable satisfaction, or (ii) remove the Roof Deck and repair any damage to the Building or the roof caused by the installation or removal of the Roof Deck.

(C) So long as Tenant Occupies at least fifty four percent (54%) of the Rentable Area of the Building: (i) Landlord shall not grant any other tenants of the Building the right to have a roof deck or terrace on the roof of the Building and (ii) Landlord shall have no right to install any other roof deck or terrace as an amenity for any other tenant or occupant of the Building.

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Effective as of the Substantial Full Occupancy Commencement Date, Landlord shall demise the Basement Storage Premises, as hereinafter defined, to Tenant, and Tenant shall lease the Basement Storage Premises from Landlord. If the Substantial Full Occupancy Commencement Date does not occur during the Term of the Lease, then this Section 16.42 shall be void and without force or effect. The “Basement Storage Premises” are areas in the basement of the Building containing approximately 10,000 rentable square feet and are substantially as shown on Exhibit 16.42.1. For the avoidance of doubt, the parties acknowledge that the Basement Storage Premises do not include the Basement Put Premises (as defined in Section 3.4 and shown on Exhibit 16.42.1). The demise of the Basement Storage Premises shall be upon all of the same terms and conditions as are applicable to the Existing Premises, except that:

(A) The Commencement Date with respect to each portion of the Basement Storage Premises shall be the later of: (i) the Substantial Full Occupancy Commencement Date, or (ii) the date that Landlord delivers such portion of the Basement Storage Premises to Tenant, broom clean, free of personal property and equipment, and free and clear of tenants and occupants.

(B) The Rent Commencement Date with respect to each portion of the Basement Storage Premises shall be the Commencement Date with respect to such portion of the Basement Storage Premises.

(C) Rent payable in respect of each portion of the Basement Storage Premises (the “Annual Fixed Basement Rent”) shall be equal to the amount obtained by multiplying (i) the square footage of such portion of the Basement Storage Premises by (ii) the then-applicable Annual Fixed Basement Rent rental rate as set forth on the schedule attached hereto as Exhibit 16.42.2. Monthly payments by Tenant of Annual Fixed Basement Rent shall be made at the time and in the fashion herein provided for the payment of Annual Fixed Rent.

(D) Tenant shall have no obligation to pay Operating Expenses or Taxes with respect to the Basement Storage Premises and the Basement Storage Space will not be included in the calculation of the Tenant’s Share.

(E) Tenant shall take the Basement Storage Premises “as-is”, without any obligation on the part of Landlord to prepare or construct the Basement Storage Premises for Tenant’s occupancy, without any representation or warranty by Landlord, and without any obligation on the part of Landlord to provide any contribution or allowance toward the preparation of the Basement Storage Premises for Tenant’s use.

(F) The Basement Storage Premises shall be used only for the storage of personal property in connection with the office operations of Tenant in the Premises and for no other purpose or purposes.

(G) Landlord shall have no obligation to provide any services to the Basement Storage Premises other electricity for lights in the Basement Storage Premises.

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(A) Tenant shall have no obligation to pay Annual Fixed Rent with respect to the Swing Basement Space.

(B) Each “Swing Basement Space Term” shall commence on the date (“Swing Basement Space Commencement Date”) which is fifteen (15) days after Landlord’s receipt of a written notice from Tenant that Tenant desires to lease Swing Basement Space and shall expire three (3) months after such Swing Basement Space Commencement Date (the “Swing Basement Space Expiration Date”).

(C) On or before any Swing Basement Space Expiration Date, Tenant shall (i) surrender and yield-up the applicable Swing Basement Space in broom-clean condition, (ii) remove from the applicable Swing Basement Space all of its personal property, trade fixtures, furniture, and equipment and otherwise deliver the Swing Basement Space in the same condition in which it was in as of the commencement of the applicable Swing Basement Space Commencement Date.

(D) Landlord shall have no obligation to provide any services to the Swing Basement Space.

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EXECUTED as a sealed instrument by persons or officers hereunto duly authorized on the Date set forth in Section 1.1 above.

 

 

[Signature Page to Amended and Restated Lease Agreement]

 

 

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EXHIBIT 1.1.1

LEGAL DESCRIPTION

THE DAVENPORT

Beginning at a point, said point being the intersection of the westerly sideline of First Street, and the northerly sideline of Thorndike Street in the City of Cambridge, County of Middlesex, Commonwealth of Massachusetts, bounded and described as follows:

 

 

 

Exhibit 1.1.1

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EXHIBIT 1.1.2, SHEET 1

FLOOR PLAN OF EACH PORTION OF THE PREMISES, THE ATRIUM AND THE

COURTYARD

 

 

 

Exhibit 1.1.2

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EXHIBIT 1.1.2, SHEET 2

FLOOR PLAN OF EACH PORTION OF THE PREMISES, THE ATRIUM AND THE

COURTYARD

 

 

Exhibit 1.1.2

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EXHIBIT 1.1.2, SHEET 3

FLOOR PLAN OF EACH PORTION OF THE PREMISES, THE ATRIUM AND THE

COURTYARD

 

 

Exhibit 1.1.2

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EXHIBIT 1.1.2, SHEET 4

FLOOR PLAN OF EACH PORTION OF THE PREMISES, THE ATRIUM AND THE

COURTYARD

 

 

 

Exhibit 1.1.2

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EXHIBIT 1.1.3

ANNUAL FIXED RENT RENTAL RATE PER RENTABLE SQUARE FOOT

 

 

 

Exhibit 1.1.3

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EXHIBIT 1.1.4

SAMPLE RENT CHART

 

 

 

Exhibit 1.1.4

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EXHIBIT 1.1.5

ANNUAL FIXED RENT RENTAL RATE FOR THE EXISTING PREMISES

FROM NOVEMBER 1, 2015 THROUGH NOVEMBER 30, 2020

 

 

Exhibit 1.1.5

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Exhibit 1.1.5

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Exhibit 1.1.5

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EXHIBIT 2.1

REVISED RENTABLE AREA OF PREMISES AND PUT PREMISES BEFORE AND

AFTER THE SUBSTANTIAL FULL OCCUPANCY COMMENCEMENT DATE

 

 

*Subject to Sections 3.4(A) and 3.4(C) of the Lease

Exhibit 2.1

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EXHIBIT 2.2.1, SHEET 1

FLOOR PLAN OF CERTAIN COMMON AREAS ON FLOOR 2

 

 

 

 

Exhibit 2.2.1

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EXHIBIT 2.2.1, SHEET 2

FLOOR PLAN OF CERTAIN COMMON AREAS ON FLOOR 3

 

 

Exhibit 2.2.1

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EXHIBIT 2.2.1, SHEET 3

FLOOR PLAN OF CERTAIN COMMON AREAS ON FLOOR 4

 

 

 

Exhibit 2.2.1

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EXHIBIT 3.1

FORM OF COMMENCEMENT DATE AGREEMENT

Reference is made to that certain Lease dated             , 20    , by and between JAMESTOWN PREMIER DAVENPORT, LLC, a Delaware limited liability company (hereinafter referred to as “Landlord”), and HUBSPOT, INC., a Delaware corporation (hereinafter referred to as “Tenant”).

This Commencement Date Agreement is applicable to the following Portion of the Premises demised under said Lease:                    rentable square feet on the                    floor of the Building (i.e., Phase     ).

Landlord and Tenant hereby confirm and agree that: (i) the Commencement Date with respect to such Portion of the Premises is                     , and (ii) the Rent Commencement Date with respect to such Portion of the Premises is                     .

This Commencement Date Agreement is executed as a sealed instrument as of             , 20    .

 

 

 

Exhibit 3.1

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EXHIBIT 3.3

LEASES FOR THE PUT PREMISES TENANTS

 

 

 

Exhibit 3.3

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EXHIBIT 3.4.1

FLOOR PLAN OF THE BASEMENT PUT PREMISES

 

 

 

 

Exhibit 3.4.1

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EXHIBIT 3.4.2

BASEMENT PUT PREMISES ANNUAL FIXED RENT RENTAL RATE

 

 

Exhibit 3.4.2

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EXHIBIT 3.4.3

BASEMENT PUT PREMISES DELIVERY CONDITION

 

Existing Utility and Egress Conditions:

 

 

Exhibit 3.4.3

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EXHIBIT 4.1

WORK LETTER

This Exhibit is attached to and made a part of that certain Lease Agreement dated as of the 1^st day of November, 2015 (the “Amended and Restated Lease”), by and between JAMESTOWN PREMIER DAVENPORT, LLC, a Delaware limited liability company, (“Landlord”) and HUBSPOT, INC., a Delaware corporation (“Tenant”).

A. “As-is Condition”. Tenant confirms and acknowledges that Tenant is currently in possession of the Existing Premises and is operating its business therein pursuant to the provisions of the Lease. Tenant is aware of the existing condition of the Existing Premises and agrees that, subject to Section 5.1(C) of the Lease, as of the Execution Date (a) to take the Existing Premises on a strictly “as-is” and “where is” condition, provided, however, the foregoing shall not limit Landlord’s repair and other obligations under this Lease, (b) that neither Landlord nor Landlord’s agents have made any representations or warranties with respect to the Existing Premises or the Building except as expressly set forth herein, and (c) that Landlord has no obligation to perform any work, supply any materials, incur any expense (except for Landlord’s Base Contribution, as hereinafter defined) or make any alterations, additions or improvements to the Existing Premises. Nothing herein contained shall in any way diminish or affect Landlord’s on-going repair, maintenance and/or replacement or service obligations under Article 7 of the Lease.

B. Tenant’s Existing Premises Work. Tenant may perform the leasehold improvements to refurbish the Existing Premises (“Tenant’s Existing Premises Work”) in accordance with plans and specifications (“Tenant’s Existing Premises Plans”), which shall be submitted to Landlord for its approval, as hereinafter set forth. Tenant’s Existing Premises Work shall be performed in accordance with Article 9 of the Lease. Except for Landlord’s Base Contribution, Tenant’s Existing Premises Work shall be performed at Tenant’s sole cost and expense, using Building standard methods, materials, and finishes. Notwithstanding anything to the contrary contained in the Lease, Tenant shall be permitted to use its own general contractor and subcontractors to perform Tenant’s Existing Premises Work, which contractors and subcontractors shall be subject to Landlord’s prior approval, which approval shall not be unreasonably withheld, conditioned or delayed. Tenant shall not be required to use union labor for the Tenant’s Existing Premises Work unless required by law.

C. Labor Harmony Delay. Each party shall use reasonable efforts to cause its contractors and labor performing any work in or about the Building to work harmoniously together. However, if any Project (as hereinafter defined) performed, on or before February 1, 2018, by Tenant with respect to any Portion of the Premises is actually delayed by reason of labor disputes arising solely from contractors or labor engaged by or under Landlord (“Labor Harmony Delay”): (i) Landlord and Tenant shall each use reasonable, good faith efforts (including, without limitation, authorizing overtime work and other measures and, with respect to Landlord, postponing any work by Landlord which may reasonably overcome the delay in the performance of the Project arising from such Labor Harmony Delay), an (ii) so long as Tenant uses such reasonable efforts, any such Labor Harmony Delay shall be deemed to be a Landlord Delay with respect to such Project. For the avoidance of doubt, in no event shall there be any Landlord Delay arising from any Labor Harmony Delay with respect to any period of time when Landlord is not engaging any contractor or labor in or about the Building who is involved in a labor dispute or causing any labor disharmony. Landlord shall not designate the Building as a union building at any time prior to February 1, 2018.

A. Each Portion of the Expansion Premises shall be leased by Tenant “as-is” and “where is”, in the condition in which such Portion of the Expansion Premises is in as of the respective Commencement Date with respect to such Portion of the Expansion Premises but subject to Section 5.1(C), and without Landlord or Landlord’s agents having made any representations or warranties with respect to the Expansion Premises or the Building, provided, however, nothing herein contained shall in any way diminish or affect

Exhibit 4.1

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Landlord’s on-going repair, maintenance and/or replacement or service obligations under Article 7 of the Lease. Except as expressly set forth herein, Landlord has no obligation to perform any work, supply any materials, incur any expense (except for Landlord’s Base Contribution) or make any alterations, additions or improvements to the Expansion Premises.

B. Tenant’s Expansion Premises Work. Tenant shall perform the leasehold improvements to prepare the Delayed Portion of the Existing Premises and the Expansion Premises for Tenant’s occupancy (“Tenant’s Expansion Premises Work”) in accordance with plans and specifications (“Tenant’s Expansion Premises Plans”), which shall be submitted to Landlord for its approval, as hereinafter set forth. Tenant’s Expansion Premises Work shall be performed in accordance with Article 9 of the Lease. Except for Landlord’s Base Contribution, Tenant’s Expansion Premises Work shall be performed at Tenant’s sole cost and expense, using Building standard methods, materials, and finishes. Notwithstanding anything to the contrary contained in the Lease, Tenant shall be permitted to use its own general contractor and subcontractors to perform Tenant’s Expansion Premises Work, which contractors and subcontractors shall be subject to Landlord’s prior approval, which shall not be unreasonably withheld, conditioned or delayed. Tenant shall, as part of Tenant’s Expansion Premises Work, incur at least $40.00 per rentable square foot in Permitted Costs, as hereinafter defined, for leasehold improvements in each Portion of the Expansion Premises. Tenant shall not be required to use union labor for the Tenant’s Expansion Premises Work unless required by law.

A. Landlord’s Base Contribution. Landlord shall, in the manner hereinafter set forth, provide Tenant with Landlord’s Base Contribution to be used to pay for Permitted Costs, as hereinafter defined, incurred by Tenant in connection with Tenant’s Existing Premises Work and Tenant’s Expansion Premises Work. Landlord’s Base Contribution shall not exceed $7,758,706.83 (“Maximum Contribution”). “Permitted Costs” shall be defined as Hard Costs and Soft Costs, each as hereinafter defined. “Hard Costs” shall be defined as the cost of acquisition and installation of leasehold improvements, demolition, common area work, and building permits, construction management fees, the cost of relocating the reception desk pursuant to Section 2.2(D) of the Lease and the cost of constructing the Roof Deck and the Soda

Fountain. “Soft Costs” shall include the costs of furniture, fixtures and equipment installed by Tenant in the Existing Premises and/or Expansion Premises, architectural, engineering and design fees and data/telecom cabling. “Signage Costs” shall include any costs associated with the installation of signage pursuant to the signage rights granted to Tenant herein. “Landlord’s Base Contribution” shall be the lesser of (i) the actual Permitted Costs incurred by Tenant and (ii) the Maximum Contribution. Each of the following shall be defined as a “Project”: (a) the initial improvements constructed by Tenant in the Existing Premises (except the Delayed Portion of the Existing Premises) shall be deemed to be a single “Project” (the “Existing Premises Project”), (b) the initial improvements constructed by Tenant in the Delayed Portion of the Existing Premises shall be deemed to be a single “Project”, (c) the initial improvements constructed by Tenant in each of the five Portions of the Expansion Premises (i.e., Tenant’s Expansion Premises Work in each of the five Portions of the Expansion Premises) shall each be defined as a single “Project”, and (d) Tenant may designate, by written notice to Landlord up to ten (10) separate Common Area Projects (each, a “Common Area Project”), each of which shall consist of initial leasehold improvements made by Tenant to the Common Areas of the Building and the Lot, including the Roof Deck. Landlord shall receive a Construction Management Fee with respect to each Project, which Construction Management Fee shall, subject to the next following sentence, be equal to one percent (1%) of the sum of (i) Hard Costs plus (ii) any architectural, engineering and designs costs incurred with respect to any such Project. Such Construction Management Fee shall be deducted from Landlord’s Base Contribution. Tenant shall also reimburse Landlord for any reasonable third party fees (e.g., the cost of reviewing Tenant’s plans by a structural engineer, MEP engineer and/or security consultant, if Landlord reasonably deems that such review is necessary) incurred to review Tenant’s plans for each Project. Notwithstanding the foregoing, the amount of Construction Management Fee with respect to the Existing Premises Project shall be reduced by $4,308.12.

Exhibit 4.1

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B. Disbursement Procedures.

(1) Except in connection with disbursement of Soft Costs (see Section 3B(2) below), Tenant shall only have the right to submit Requisitions on account of Landlord’s Base Contribution upon final completion of each Project. Provided there shall then exist no monetary or material non-monetary default of Tenant under the Lease at the time that Tenant submits a requisition (“Requisition”) to reimbursed by Landlord from Landlord’s Base Contribution for Permitted Costs incurred by Tenant in performing a Project, Landlord shall pay the cost of the work shown on such Requisition within thirty (30) days of Landlord’s receipt of such Requisition. If requested by Tenant at the time of Tenant’s submission of such Requisition, Landlord shall make such payment directly to Tenant’s contractor(s). If Landlord declines to fund any Requisition on the basis of a default of Tenant under the Lease, provided that the Lease is in full force and effect and Tenant cures such default in accordance with the terms and conditions of the Lease, then, subject to the provisions set forth herein, Tenant shall have the right to resubmit such declined Requisition, and Landlord shall pay any amounts properly due under such resubmitted Requisition. Each Tenant Requisition shall be accompanied by the following: (i) a reasonably detailed breakdown of the Permitted Costs for the Project in question, (ii) copies of all Applications for Payment (substantially on the standard AIA form) from Tenant’s contractor for all contractor charges included in the Requisition, (iii) copies of invoices for any architectural fees and other costs not covered by a contractor’s Application for Payment that are included in the Tenant’s Requisition, (iv) a certification by an appropriate officer of Tenant or by Tenant’s architect that all of the construction work to be paid for Landlord’s Base Contribution has been completed in a good and workmanlike manner, in accordance plans and specifications approved by Landlord, (v) final executed waivers of mechanic’s or material supplier’s liens (in the form attached hereto at Schedule 1) waiving, releasing and relinquishing all liens, claims and rights to lien under Applicable Laws on account of any labor, materials and/or equipment furnished by any party with respect to the work shown on the Requisition, and (vi) a certification by an appropriate officer of Tenant that Tenant has made (or upon receipt of the amount requested in the Tenant’s Requisition shall make) full payment for all of the work and other costs in connection with such Project. Such Requisition shall also be accompanied by all items required to be delivered by Tenant in connection with such Project pursuant to Article 9 of the Lease.

(2) Soft Cost Requisitions. Notwithstanding the foregoing, after the commencement of the performance of leasehold improvements for any Project, Tenant may, in accordance with the provisions of this Section 3B(2), submit Soft Costs Requisitions, as hereinafter defined, to Landlord, for payment of Soft Costs incurred by Tenant in connection with such Project on a monthly basis. Soft Cost Requisitions may not be submitted more frequently than one time per calendar month. A “Soft Cost Requisition” shall consist of a written request for payment which is accompanied by (a) paid invoices with respect to evidencing the amount of Soft Costs sought to be reimbursed pursuant to such Soft Cost Requisition, and (b) if the architect, vendor or other service provider has the right to record mechanics liens based upon the service or item covered by such Soft Cost Requisition, written lien waivers, in form reasonably acceptable to Landlord, from such architect, vendor or other service provider. For the avoidance of doubt, Tenant’s right to submit monthly Soft Cost Requisitions shall be subject to the Soft Cost Cap (as such term is defined below). Provided there shall then exist no monetary or material non-monetary default of Tenant under the Lease at the time that Tenant submits a requisition to be reimbursed by Landlord from Landlord’s Base Contribution for Permitted Costs Landlord shall pay the cost of the work shown on such Soft Cost Requisition within thirty (30) days of Landlord’s receipt of such Soft Cost Requisition. If Landlord declines to fund any Soft Cost Requisition on the basis of a monetary or material non-monetary default of Tenant under the Lease, provided that the Lease is in full force and effect and Tenant cures such default in accordance with the terms and conditions of the Lease, then, subject to the provisions set forth herein, Tenant shall have the right to resubmit such declined Soft Cost Requisition, and Landlord shall pay any amounts properly due under such resubmitted Soft Cost Requisition.

(3) Tenant’s Right of Offset. If Landlord fails timely to pay any portion of Landlord’s Base Contribution properly due to Tenant pursuant to this Exhibit 4.1, and if Landlord fails to cure such failure within ten (10) days after Landlord receives written notice of such failure from Tenant, then Tenant shall have the right to deduct such amount from the next installment(s) of Annual Fixed Rent thereafter due under the Lease. Any dispute as to whether Landlord has properly withheld any payment of Landlord’s Base Contribution shall be resolved in accordance with the arbitration procedures set forth in Section 16.33.

 

Exhibit 4.1

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C. Conditions to Payment of Landlord’s Base Contribution. Notwithstanding anything to the contrary herein contained:

(1) Except with respect to work and/or materials previously paid for by Tenant, as evidenced by paid invoices and written lien waivers provided to Landlord, Landlord shall have the right with respect to any Tenant contractor or vendor that has filed a lien against the Property for work performed, or claimed to be performed, which has not been discharged or bonded over, to have Landlord’s Base Contribution paid to both Tenant and such contractor or vendor jointly, or directly to such contractor or vendor.

(2) Landlord shall have no obligation to pay Landlord’s Base Contribution in respect of any Requisition submitted after December 31, 2020 (the “Outside Requisition Date”).

(3) Tenant shall not be entitled to any unused portion of Landlord’s Base Contribution.

(4) Tenant may not use more than ten percent (10%) of Landlord’s Base Contribution to pay for Soft Costs (the “Soft Cost Cap”).

(5) Tenant may not use Landlord’s Base Contribution to pay for Signage Costs.

Landlord and Tenant shall cooperate with each other in the design process for each Project (collectively, “Tenant’s Work”). Tenant shall submit to Landlord for Landlord’s approval a full set of construction drawings for each Project (collectively “the Plans”), at least twenty one (21) days prior to Tenant’s anticipated work start date for such Project. The Plans shall contain at least the information required by, and shall conform to the requirements of, applicable law, and shall contain all information required for the issuance of a building permit for the work shown thereon. Landlord must approve or state the reasons for disapproval of the Plans within seven (7) business days of receipt of the Plans. Landlord’s approval of the Plans shall not be unreasonably withheld, conditioned or delayed. Landlord’s approval is solely given for the benefit of Landlord under this Section 5 and neither Tenant nor any third party shall have the right to rely upon Landlord’s approval of Tenant’s plans for any other purpose whatsoever. Tenant shall be responsible for all elements of the design of Tenant’s Plans (including, without limitation, compliance with law, functionality of design, the structural integrity of the design, the configuration of the Premises and the placement of Tenant’s furniture, appliances and equipment), and Landlord’s approval of Tenant’s Plans shall in no event relieve Tenant of the responsibility for such design.

(A) Quality of Work. All construction work required or permitted by this Lease shall be done in a good and workmanlike manner and in compliance with all Applicable Laws and all insurance requirements.

(B) Correction of Defects. Tenant warrants to Landlord that Tenant’s Work will be performed free from defects in workmanship and materials (“Tenant’s Warranty”). Tenant’s Warranty shall be subject to the exclusions which are set forth in Section 3.5.1 of the form A201

 

General Conditions published by the American Institute of Architects (1997 edition). Tenant’s obligations under this Section 8(B) shall only apply during the Warranty Period, as hereinafter defined. The “Warranty Period” shall be twelve (12) months after the applicable Commencement Dates; however, Tenant agrees to notify Landlord promptly after Tenant’s discovery of any alleged defect. The Warranty Period shall apply to any defect which Tenant either discovers or of which Landlord notifies Tenant during such Warranty Period. Tenant agrees to correct or repair, at Tenant’s expense, items which are in breach of Tenant’s Warranty or which do not conform materially to the work contemplated in Tenant’s Plans.

 

 

Exhibit 4.1

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SCHEDULE 1

FORMS OF

PARTIAL WAIVER OF LIEN

(Contractor)

 

 

 

The undersigned who has a contract with                                          for furnishing labor or materials or both labor and materials or rental equipment, appliances or tools for the erection, alteration, repair or removal of a building or structure or other improvement of real property known and identified as                      located in                      (city or town),                      County, Commonwealth of Massachusetts and owned by                     , upon receipt of                      ($        ) in payment of an invoice/requisition/application for payment dated                      does hereby:

(a) waive any and all liens and right of lien on such real property for labor or materials, or both labor and materials, or rental equipment, appliances or tools, performed or furnished through the following date:                      (“Application for Payment Date”), except for retainage, unpaid, agreed or pending change orders, and disputed claims (“Disputed Claims”) as stated above;

 

Schedule 1

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(b) release and forever discharge the Owner, and its subsidiaries, officers, directors, agents, attorneys, successors, and assigns of and from all debts, demands, actions, causes of action, liens, suits, accounts, covenants, contracts, bonds, claims, damages, and any and all claims, demands and liabilities whatsoever, of every name and nature, both in law and equity, which the undersigned now has, ever had or ever will have, whether known or unknown, arising from, in connection with, or in any way relating to any work or labor performed and any materials, machinery, equipment, services, insurance, bonds or supplies furnished in connection with the Project through the Application for Payment Date; and

(c) certify and warrant that all persons, parties, or entities that furnished materials and performed labor, or either, to, for or through the undersigned in connection with the Project have been paid in full and the undersigned further certifies and warrants that all taxes, benefits, assessments and bills of any other descriptive title for labor performed, materials furnished, and equipment supplied to, for or through the undersigned through the Application for Payment Date in connection with the Project have been paid in full.

The undersigned intends that this instrument shall be a recordable notice within the meaning of G.L.c.254, §10 partially dissolving any lien which the undersigned may now have or be entitled to have on account of work performed through Application for Payment Date to the extent payment is received, except for the Disputed Claims amount, if any.

Signed under the penalties of perjury this      day of         , 20    .

CONTRACTOR

 

COMMONWEALTH OF MASSACHUSETTS

 

On this      day of         , 201  , before me, the undersigned notary public, personally appeared                     who proved to me through satisfactory evidence of identification, which was                     , to be the person whose name is signed on the preceding or attached document, and acknowledged to me that he/she signed it voluntarily for its stated purpose as                     of                     .

 

 

 

 

Schedule 1

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SUBCONTRACTOR’S LIEN WAIVER

 

 

 

In consideration of the receipt of the amount of payment set forth above and any and all past payments received from the Contractor in connection with the Project, the undersigned acknowledges and agrees that it has been paid all sums due for all labor, materials and/or equipment furnished by the undersigned to or in connection with the Project and the undersigned hereby releases, discharges, relinquishes and waives any and all claims, suits, liens and rights under any Notice of Identification, Notice of Contract or statement of account with respect to the Owner, the Project and/or against the Contractor on account of any labor, materials and/or equipment furnished through the date hereof.

The undersigned individual represents and warrants that he is the duly authorized representative of the undersigned, empowered and authorized to execute and deliver this document on behalf of the undersigned and that this document binds the undersigned to the extent that the payment referred to herein is received.

The undersigned represents and warrants that it has paid in full each and every sub-subcontractor, laborer and labor and/or material supplier with whom undersigned has dealt in connection with the Project and the undersigned agrees at its sole cost and expense to defend, indemnify and hold harmless the Contractor against any claims, demands, suits, disputes, damages, costs, expenses (including attorneys’ fees), liens and/or claims of lien made by such sub-subcontractors, laborers and labor and/or material suppliers arising out of or in any way related to the Project.

 

Schedule 1

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Signed under the penalties of perjury as of this      day of              201  .

 

 

 

 

CONTRACTOR’S WAIVER OF CLAIMS AGAINST OWNER AND ACKNOWLEDGMENT OF

FINAL PAYMENT

 

 

 

The undersigned being duly sworn hereby attests that when the Final Payment Due as set forth above is paid in full by Owner, such payment shall constitute payment in full for all labor, materials, equipment and work in place furnished by the undersigned in connection with the aforesaid contract and that no further payment is or will be due to the undersigned.

Schedule 1

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The undersigned hereby attests that it has satisfied all claims against it for items, including by way of illustration but not by way of limitation, items of: labor, materials, insurance, taxes, union benefits, equipment, etc. employed in the prosecution of the work of said contract, and acknowledges that satisfaction of such claims serves as an inducement for the Owner to release the Final Payment Due.

The undersigned hereby agrees to indemnify and hold harmless the Owner from and against all claims arising in connection with its Contract with respect to claims for the furnishing of labor, materials and equipment by others. Said indemnification and hold harmless shall include the reimbursement of all actual attorney’s fees and all costs and expenses of every nature, and shall be to the fullest extent permitted by law.

The undersigned hereby irrevocably waives and releases any and all liens and right of lien on such real property and other property of the Owner for labor or materials, or both labor and materials, or rental equipment, appliances or tools, performed or furnished by the undersigned, and anyone claiming by, through, or under the undersigned, in connection with the Project.

The undersigned hereby releases, remises and discharges the Owner, any agent of the Owner and their respective predecessors, successors, assigns, employees, officers, shareholders, directors, and principals, whether disclosed or undisclosed (collectively “Releasees”) from and against any and all claims, losses, damages, actions and causes of action (collectively “Claims”) which the undersigned and anyone claiming by, through or under the undersigned has or may have against the Releasees, including, without limitation, any claims arising in connection with the Contract and the work performed thereunder.

 

Notwithstanding anything to the contrary herein, payment to the undersigned of the Final Payment Due sum as set forth above, shall not constitute a waiver by the Owner of any of its rights under the contract including by way of illustration but not by way of limitation guarantees and/or warranties. Payment will not be made until a signed waiver is returned to Owner.

The undersigned individual represents and warrants that he/she is the duly authorized representative of the undersigned, empowered and authorized to execute and deliver this document on behalf of the undersigned.

 

Signed under the penalties of perjury as of this      day of         ,         .

 

COMMONWEALTH OF MASSACHUSETTS

COUNTY OF SUFFOLK

On this      day of             , 201  , before me, the undersigned notary public, personally appeared                     , proved to me through satisfactory evidence of identification, to be the person whose name is signed on the preceding or attached document, and acknowledged to me that he/she signed it as                      for                     , a corporation/partnership voluntarily for its stated purpose.

 

 

Schedule 1

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SUBCONTRACTOR’S FINAL LIEN WAIVER, RELEASE AND INDEMNIFICATION

 

In consideration of the receipt of the amount of payment set forth above, which payment represents the final payment due to the undersigned in connection with the Project and the work performed by the Subcontractor in connection with the Project, the Subcontractor does hereby:

(a) acknowledge, warrant, represent, and agree that, upon receipt of the final payment referenced above, the undersigned will have been paid in full for all compensation due to the undersigned, and anyone claiming by, through, or under the undersigned, in connection with the Project;

(b) irrevocably waive and release any and all liens and right of lien on such real property and other property of the owner for labor or materials, or both labor and materials, or rental equipment, appliances or tools, performed or furnished by the undersigned, and anyone claiming by, through, or under the undersigned, in connection with the Project; and

(c) release, remise and discharge the Owner, any partner of Owner, any agent of the Owner, the Contractor, and their respective predecessors, successors, assigns, employees, officers, shareholders, directors, and principals, whether disclosed or undisclosed (collectively “Releasees”) from and against any and all claims, losses, damages, actions and causes of action (collectively “Claims”) which the undersigned and anyone claiming by, through or under the undersigned has or may have against the Releasees, including, without limitation, any claims arising in connection with the Contract and the work performed thereunder.

(d) warrants, represents and guarantees that all labor, services, materials, fixtures, apparatus and/or equipment covered by this or any previous application for payment have been incorporated into the Project and title has passed to the Owner or, in the case of materials, fixtures, apparatus and/or equipment stored at the site or at some other location previously agreed to by the Owner, title will pass to the Owner upon receipt of the Final Amount Due, free and clear of all liens, claims, security interests or encumbrances.

(e) warrants, represents and guarantees that no labor, services, materials, fixtures, apparatus and/or equipment provided by the Subcontractor, or any previous Application for Payment, have been acquired subject to an agreement under which any interest or encumbrance is retained by the seller or any other person.

 

Without limiting the foregoing, the undersigned acknowledges and agrees that it has been paid all sums due for all labor, materials and/or equipment furnished by the undersigned to or in connection with the Project and the undersigned hereby releases, discharges, relinquishes and waives any and all claims, suits, liens and rights under any Notice of Indemnification, Notice of Contract or statement of account with respect to the Contract, the Owner/Releasees, and/or the Project on account of any labor, materials and/or equipment furnished thereunder.

Schedule 1

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The undersigned individual represents and warrants that he/she is the duly authorized representative of the undersigned, empowered and authorized to execute and deliver this document on behalf of the undersigned.

The undersigned represents and warrants that it has paid through the date of the prior requisition, and it will pay in full, from the payment received from Contractor, each and every sub-subcontractor (of whatever tier), laborer and labor and/or materials supplier with whom undersigned has dealt in connection with the Project and all taxes and benefits on account thereof and the undersigned agrees at its sold cost and expenses to defend, indemnify and hold harmless the Owner/Releasees against any claims, demands, suits, disputes, damages, costs, expenses (including attorneys’ fees), liens and/or claims of lien made by such sub-subcontractors, laborers and labor and/or material suppliers arising out of or in any way related to the Project. This document is to take effect as a sealed document.

Signed under the penalties of perjury as of this      day of         , 201  .

 

 

COMMONWEALTH OF MASSACHUSETTS

 

On this      day of         , 201  , before me, the undersigned notary public, personally appeared                      who proved to me through satisfactory evidence of identification, which was                     , to be the person whose name is signed on the preceding or attached document, and acknowledged to me that he/she signed it voluntarily for its stated purpose as                                  of                                 .

 

 

Schedule 1

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EXHIBIT 16.10

LIST OF MORTGAGEES

 

 

 

Exhibit 16.10

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EXHIBIT 16.13

FORM OF SNDA WITH EXISTING MORTGAGEE

 

 

 

JPMORGAN CHASE BANK, N.A.

(Mortgagee)

- and -

HUBSPOT, INC.

(Tenant)

- and -

JAMESTOWN PREMIER DAVENPORT, LLC

(Landlord)

 

 

SUBORDINATION, NON-DISTURBANCE

AND ATTORNMENT AGREEMENT

 

 

 

 

 

 

Exhibit 16.13

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SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this “Agreement”) is made and entered into as of the 14th day of December, 2015, by and among JPMORGAN CHASE BANK, N.A., a national banking association (“Mortgagee”), HUBSPOT, INC., a Delaware corporation (“Tenant”), and JAMESTOWN Premier Davenport, LLC, a Delaware limited liability company (“Landlord”).

RECITALS:

A. Landlord owns, leases or controls the land (“Land”) described in Exhibit A attached hereto and the building and related improvements located thereon (the “Building”; the Land and Building are collectively referred to as the “Property”).

B. Under the terms of a certain Amended and Restated Lease (as the same has been, and may be further, amended, restated, assigned, supplemented or otherwise modified, the “Lease”) dated as of November 1, 2015, between Tenant and Landlord, Tenant has leased a portion of the Building, as more particularly described in the Lease (the “Demised Premises”).

C. Landlord has executed, or will be executing, a mortgage in favor of Mortgagee (the “Mortgage”) pursuant to which Landlord has encumbered or will encumber Landlord’s interest in the Land, Building and Lease to secure, among other things, the payment of certain indebtedness owing by Landlord to Mortgagee as described therein and in all other documents executed by Landlord and evidencing, securing or guaranteeing such indebtedness (collectively, the “Loan Documents”).

D. The parties hereto desire to have the Lease be subordinate to the Mortgage and the lien thereof, to establish certain rights of non-disturbance for the benefit of Tenant under the Lease, and further to define the terms, covenants and conditions precedent for such rights.

AGREEMENT:

NOW, THEREFORE, for good and valuable consideration, the parties hereto mutually agree as follows:

1. Subordination. The Lease, and all of the terms, covenants and provisions thereof and all rights, remedies and options of Tenant thereunder are and shall at all times continue to be subject and subordinate in all respects to the lien of the Mortgage, including without limitation, all renewals, increases, modifications, consolidations, extensions and amendments thereof with the same force and effect as if the Mortgage and the other Loan Documents had been executed, delivered and (in the case of the Mortgage) recorded prior to the execution and delivery of the Lease. Tenant acknowledges that it has been informed that Mortgagee has a right to collect insurance proceeds under the Loan Documents, and Tenant does not object to such right, provided that Landlord must comply with the terms of the Lease.

2. Non-Disturbance. In the event of foreclosure of the Mortgage or conveyance in lieu of foreclosure or the exercise of any similar rights under the Mortgage, which foreclosure or conveyance occurs prior to the expiration of the term of the Lease, including any extensions and renewals of such term now provided thereunder, and so long as Tenant is not in default under any of the terms, covenants and conditions of the Lease beyond any applicable notice and cure periods, Mortgagee agrees on behalf of itself, its successors and assigns, including any purchaser at such foreclosure (each being referred to herein as an “Acquiring Party”), that Tenant shall not be named as a party therein unless such joinder shall be required by law, provided, however, such joinder shall not result in the termination of the Lease or disturb the Tenant’s possession, quiet enjoyment or use of the Demised Premises, and the sale of the Property in any such action or proceeding and the exercise by Mortgagee of any of its other rights under the Mortgage

Exhibit 16.13

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shall be made subject to all rights of Tenant under the Lease (subject to the terms of this Agreement); provided, further, however, that Mortgagee and Tenant agree that the following provisions of the Lease (if any) shall not be binding on Mortgagee or Acquiring Party: any option to purchase or any right of first refusal to purchase with respect to the Property, and any provision regarding the use of insurance proceeds or condemnation proceeds with respect to the Property which is inconsistent with the terms of the Mortgage (but Tenant’s rights and Landlord’s obligations set forth in Sections 14.2 and 14.4 of the Lease shall not be affected by this proviso).

3. Attornment. In the event of foreclosure of the Mortgage or conveyance in lieu of foreclosure, which foreclosure or conveyance occurs prior to the expiration date of the term of the Lease, including any extensions and renewals of such term now provided thereunder, Tenant shall, at the election of the Acquiring Party, either: (i) attorn to and recognize the Acquiring Party as the new landlord under the Lease, which Lease shall thereupon become a direct lease between Tenant and the Acquiring Party for the remainder of the term of the Lease (including all extension periods which have been or are hereafter exercised) upon the same terms and conditions as are set forth in the Lease (subject to the terms of this Agreement); or (ii) if the Lease is terminated as a result of rejection in a bankruptcy or similar proceeding, then upon receiving the written request of the Acquiring Party, Tenant shall enter into a new lease of the Demised Premises with the Acquiring Party (a “New Lease”), which New Lease shall be upon the same terms, covenants and conditions as are set forth in the Lease (subject to the terms of this Agreement) for the remainder of the term of the Lease (including all extension periods which have been or are hereafter exercised). In either such event described in the preceding clauses (i) or (ii) of this Section 3 and subject to Tenant’s express rights under the Lease and the terms of this Agreement, Tenant hereby agrees to pay and perform all of the obligations of Tenant pursuant to the Lease (or the New Lease, as applicable) for the benefit of the Acquiring Party. Tenant’s only rights to terminate the Lease are described in Sections 14.2 and 14.4 of the Lease. For all purposes of this Agreement, the word “Lease” shall be deemed to mean the Lease or any such New Lease, as applicable.

4. Limitation of Liability. Notwithstanding anything to the contrary contained herein or in the Lease, in the event of foreclosure of the Mortgage or conveyance in lieu of foreclosure, which foreclosure or conveyance occurs prior to the expiration date of the term of the Lease, including any extensions and renewals of such term now provided thereunder, the liability of Mortgagee, its successors and assigns, or Acquiring Party, as the case may be, shall be limited to its interest in the Property; provided, however, that Mortgagee or Acquiring Party, as the case may be, and their respective successors and assigns, shall in no event and to no extent:

(a) be liable to Tenant for any past act, omission or default on the part of any prior landlord (including Landlord) other than for matters that continue in existence after Mortgagee or Acquiring Party succeeds to the interest of Landlord which are curable by Mortgagee or Acquiring Party, as applicable, and only for the period such act or omission continues after Mortgagee or Acquiring Party succeeds to the interest of Landlord, provided that the foregoing shall not limit Tenant’s express self-help rights set forth in Section 16.19 of the Lease so long as Mortgagee has received a copy of each Tenant’s Self-Help Default Notice;

(b) be liable for or subject to any offsets or defenses which Tenant might have against any prior landlord (including Landlord), except that (i) Tenant may exercise its offset and abatement rights expressly set forth in Sections 7.3(B), 16.19(B), and 3(B)(3) of Exhibit 4.1 of the Lease, and (ii) Mortgagee or Acquiring Party shall be liable only with respect to matters that continue in existence after Mortgagee or Acquiring Party succeeds to the interest of Landlord (which may include, to the extent applicable, the offset and abatement rights described in clause (i) of this paragraph) and only for the period after Mortgagee or Acquiring Party acquires title to the Property, and with respect to the offset right set forth in Section 16.19 so long as Mortgagee has received a copy of each Tenant’s Self-Help Default Notice;

(c) be liable for any payment of rent or additional rent which Tenant might have paid for more than one month in advance of the due date thereof or any deposit, rental security or any other sums deposited with any prior landlord (including Landlord), except to the extent such monies are actually received by Mortgagee or Acquiring Party, as applicable;

Exhibit 16.13

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(d) except with respect to a termination permitted in the Lease upon the occurrence of a casualty or condemnation or any amendment or modification expressly contemplated under the provisions of the Lease as in effect on the date hereof (such as documenting Tenant’s exercise of extension rights set forth in the Lease) or any consents or approvals made by Landlord in accordance with the terms of the Lease, be bound by any amendment, modification or termination of the lease or by any waiver or forbearance on the part of any prior landlord (including Landlord), in any case to the extent the same is made or given without the prior written consent of Mortgagee (unless the consent of the Mortgagee thereto is not required or is deemed granted under the Mortgage and/or any other Loan Document, in which event said consent shall not be required), provided that any termination shall be subject to the notice and cure provisions and the New Lease provisions of this Agreement;

(e) be bound by any warranty, representation or indemnity of any nature whatsoever made by any prior landlord (including Landlord) under the Lease including any warranties, representations or indemnities regarding any work required to be performed under the Lease, use, compliance with zoning, hazardous wastes or environmental laws, habitability, fitness for purpose, title or possession, except that the foregoing shall not relieve Acquiring Party of the obligation to perform the repair and maintenance obligations of Landlord under the Lease which accrue from and after the date on which Mortgagee or Acquiring Party acquires title to the Property; or

(f) be liable to Tenant for construction or restoration, or delays in construction or restoration, of the Building or the Demised Premises, or for the obligations of any prior landlord (including Landlord) to reimburse Tenant for or indemnify Tenant against any costs, expenses or damages arising from such construction or any delay in Tenant’s occupancy of the Demised Premises, provided, however, the foregoing shall not limit or postpone Tenant’s express offset right in Section 3(B)(3) of Exhibit 4.1 to the Lease (which shall remain subject to the other provisions of this Agreement) or Tenant’s express termination rights under the Lease for defaults by Landlord in connection with such restoration, provided that any termination right shall be subject to the notice and cure provisions and the New Lease provisions of this Agreement.

5. Rent. Tenant hereby agrees to and with Mortgagee that, upon receipt from Mortgagee of a notice of any default by Landlord under the Mortgage (and the expiration of any applicable notice and/or cure periods), Tenant will pay to Mortgagee directly all rents, additional rents and other sums then or thereafter due under the Lease. In the event of the foregoing, Landlord hereby authorizes Tenant to pay to Mortgagee directly all rents, additional rents and other sums then or thereafter due under the Lease and will credit such payments to Tenant’s obligations under the Lease.

6. No Amendment. Landlord and Tenant each agree not to amend, modify or terminate the Lease in any manner without the prior written consent of Mortgagee (unless the consent of the Mortgagee thereto is not required or is deemed granted under the Mortgage and/or any other Loan Document, in which event said consent shall not be required), except with respect to a termination permitted in the Lease upon the occurrence of a casualty or condemnation or any amendment or modification expressly contemplated under the provisions of the Lease as in effect on the date hereof (such as documenting Tenant’s exercise of extension or expansion rights set forth in the Lease), provided (i) that any termination shall be subject to the notice and cure provisions and the New Lease provisions of this Agreement, (ii) Mortgagee shall not unreasonably withhold or condition its consent to any amendment, modification or termination of the Lease, or any waiver or forbearance relating thereto, and (iii) Mortgagee shall respond to a request for its consent to any such amendment, modification, termination, waiver or forbearance within ten (10) business days after receipt, and Mortgagee’s consent shall be deemed granted in the event Mortgagee fails to respond within said ten (10) business day period.

7. Further Documents. The foregoing provisions shall be self-operative and effective without the execution of any further instruments on the part of any party hereto. Tenant agrees, however, to execute and deliver to Mortgagee or Acquiring Party, as the case may be, or such other person to whom Tenant herein agrees to attorn such other instruments as such party shall reasonably request in order to effectuate said provisions.

Exhibit 16.13

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8. Notice and Cure. Tenant agrees that if there occurs a default by Landlord under the Lease:

(a) A copy of each notice given by Tenant to Landlord pursuant to the Lease with respect to such default shall also be given simultaneously to Mortgagee, and no such notice shall be effective for any purpose under the Lease unless so given to Mortgagee; and

(b) If Landlord shall fail to cure any such default within the time prescribed by the Lease, Tenant shall give further notice of such fact to Mortgagee. Thereafter, Mortgagee shall have the right (but not the obligation) to remedy any such Landlord default under the Lease, or to cause any such default of Landlord under the Lease to be remedied and shall be allowed such additional time as may be reasonably necessary to cure such default or institute and complete foreclosure proceedings (or otherwise acquire title to the Property), so long as (i) in the event Mortgagee elects to cure, Mortgagee commences to cure such default within thirty (30) days after receipt of such further notice and completes such cure within 180 days from receipt of such further notice, and (ii) in the event Mortgagee pursues foreclosure proceedings or other acquisition of title to the Property, Mortgage commences proceedings within forty-five (45) days after such further notice and completes the foreclosure proceedings or otherwise acquires title to the Property within 180 days from receipt of such further notice to Mortgagee. The foregoing provisions of this paragraph shall not inhibit or delay Tenant’s right to exercise the offset, self-help and abatement rights set forth in Sections 7.3(B), 16.19(B), and 3(B)(3) of Exhibit 4.1 of the Lease in accordance with and subject to the other provisions of this Agreement.

9. Notices. All notices, demands, approvals and requests given or required to be given hereunder shall be in writing and shall be deemed to have been properly given upon receipt when personally served or sent by overnight delivery service or upon the third (3rd) business day after mailing if sent by U.S. registered or certified mail, postage prepaid, addressed as follows:

Mortgagee:

JPMorgan Chase Bank, N.A.

Commercial Real Estate Loan Administrator

700 N. Pearl Street, 13th Floor

Dallas, TX 75201

ATTN: CRELA Manager

with a copy to:

Locke Lord LLP

600 Travis, Suite 2800

Houston, Texas 77002

Attention: Brett Hamilton

Landlord:

c/o Jamestown Properties

Ponce City Market, 7^th Floor

675 Ponce de Leon Avenue, NE

Atlanta, Georgia 30308

Attn: Shak Presswala

with a copy to:

Goulston & Storrs PC

400 Atlantic Avenue

Boston, Massachusetts 02110

Attn: Raymond M. Kwasnick, Esq.

Exhibit 16.13

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Tenant:

Hubspot, Inc.

25 First Street

Cambridge, Massachusetts 02141

Attn: General Counsel

 

With a copy to:

Goodwin Procter LLP

Exchange Place

Boston, Massachusetts 02109

Attn: Katherine L. Murphy, Esq.

or to such other address in the United States as such party may from time to time designate by written notice to the other parties.

10. Binding Effect. The terms, covenants and conditions hereof shall be binding upon and inure to the benefit of Mortgagee, Landlord and Tenant and their respective successors and assigns.

11. No Oral Modifications. This Agreement may not be modified in any manner or terminated except by an instrument in writing executed by all the parties hereto or their respective successors in interest.

12. Governing Law. This Agreement shall be governed, construed, applied and enforced in accordance with the laws of the State where the Property is located.

13. Counterparts. This Agreement may be signed in counterparts, each of which shall be deemed an original and all of which together shall constitute one document.

14. Inapplicable Provisions. If any term, covenant or condition of this Agreement is held to be invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such provision shall be deemed modified to the extent necessary to be enforceable, or if such modification is not practicable, such provision shall be deemed deleted from this Agreement, and the other provisions of this Agreement shall remain in full force and effect.

15. Authority. Each of the undersigned parties further represents and warrants to the other parties hereto that the person executing this Agreement on behalf of each such party hereto has been duly authorized to so execute this Agreement and to cause this Agreement to be binding upon such party and its successors and assigns.

16. Tenant’s Personal Property. It is expressly agreed to among Mortgagee, Landlord and Tenant that in no event shall the Mortgage cover or encumber (and shall not be construed as subjecting in any manner to the lien thereof) any of Tenant’s moveable trade fixtures, inventory, business equipment, furniture, signs or other personal property at any time placed in, on or about the Property.

17. Subsequent Transfer. If any Acquiring Party, by succeeding to the interest of Landlord under the Lease, should become obligated to perform the covenants of Landlord thereunder, then, upon any transfer of Landlord’s interest in the Building by such Acquiring Party, all obligations shall terminate as to such Acquiring Party with respect to obligations arising after such transfer.

18. Waiver of Jury Trial. LANDLORD, TENANT AND MORTGAGEE HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATED TO THIS AGREEMENT.

19. Number and Gender; Terms. Whenever the context may require, any pronouns used herein shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural and vice versa. Capitalized terms used by not defined herein shall have the meanings ascribed in the Lease.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

Exhibit 16.13

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the date first above written.

 

[Signature Page to Subordination, Non-Disturbance and Attornment Agreement]

 

Exhibit 16.13

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ACKNOWLEDGMENTS

 

On             , 201  , before me,                     , a Notary Public in and for said State, personally appeared                     ,                      of JPMorgan Chase Bank, N.A., a national banking association, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, of the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal

 

 

Exhibit 16.13

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On             , 201  , before me,                     , a Notary Public in and for said State, personally appeared                     , the                      of HUBSPOT, INC., a Delaware corporation, personally known to me (or proved to me on the basis of satisfactory evidence) to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity, and that by his/her signature on the instrument the person, of the entity upon behalf of which the person acted, executed the instrument.

WITNESS my hand and official seal

 

 

Exhibit 16.13

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On this      day of             , 2015, before me,                     , as                      of JAMESTOWN Premier Davenport, LLC, a Delaware limited liability company, proved to me to be the person whose name is signed on the preceding document, through satisfactory evidence of identification, namely, personal knowledge of said individual, and acknowledged to me that he/she signed it voluntarily for its stated purpose.

 

 

 

Exhibit 16.13

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EXHIBIT A

LEGAL DESCRIPTION

Tract I - Fee Simple

Beginning at a point, said point being the intersection of the westerly sideline of First Street, and the northerly sideline of Thorndike Street in the City of Cambridge, County of Middlesex, Commonwealth of Massachusetts, bounded and described as follows:

 

For title see Deed from DWF III Davenport, LLC dated November 24, 2014, recorded with the Middlesex South Registry of Deeds in Book 64564, Page 258 (as to Tract One)

Tract II - Leasehold

The leased portion of the following parcels of land:

Parcel 1 (Registered Land):

A certain piece of land situated in Cambridge, County of Middlesex and Commonwealth of Massachusetts, bounded and described as follows:

Northeasterly by Thorndike Street, one hundred feet;

Southeasterly by First Street, one hundred two and 65/100 feet;

Southwesterly by land now or formerly of Charles M. Irving et al Trs., one hundred feet; and

Northwesterly by land now or formerly of Arthur T. Smith et al Trs., one hundred three and 50/100 feet.

Exhibit A

 

Exhibit 16.13

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All of said boundaries are determined by the Court to be located as shown on a plan, as modified and approved by the Court, filed in the Land Registration Office, a copy of a portion of which is filed in the Registry of Deeds for the South Registry District of Middlesex County in Registration Book 141, Page 333, with Certificate 21982 (Plan No. 11309A). See Certificate 177553.

Parcel 2

A certain piece or parcel of land situated in Cambridge, County of Middlesex and Commonwealth of Massachusetts, bounded and described as follows:

Beginning at a point on the southerly sideline of Thorndike Street at the most northeasterly corner of the parcel to be described, said point being N 80° 28’ 49” W and 100 feet from the southwesterly corner of Thorndike Street and First Street;

 

Parcel 3

A certain piece or parcel of land situated in Cambridge, County of Middlesex and Commonwealth of Massachusetts, bounded and described as follows:

Exhibit 16.13

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Beginning at the northwesterly corner of First Street and Spring Street at the most southeasterly corner of the parcel to be described as follows:

 

 

Parcel 4

A certain piece of land situated in Cambridge, County of Middlesex and Commonwealth of Massachusetts bounded and described as follows:

Beginning at the point on the northerly sideline of Spring Street at the most southeasterly corner of the parcel to be described; Said point being N 80° 17’ 19” W and 150.36 feet from the Northwesterly corner of Spring Street and First Street:

 

Parcel 5

A certain piece of land situated in Cambridge, County of Middlesex and Commonwealth of Massachusetts bounded and described as follows:

Exhibit 16.13

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Beginning at the northeasterly corner of Spring Street and Second Street at the most southwesterly corner of the parcel to be described:

 

 

 

Exhibit 16.13

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EXHIBIT 16.31

RULES AND REGULATIONS

1. The rights of tenants in the entrances, corridors, stairways and elevators in the Building are limited to ingress and egress from the tenant’s premises for the tenants and their employees, licensees and invitees. No tenant shall encumber or obstruct, or permit the encumbrance or obstruction of, or use, or permit the use of, such entrances, corridors, stairways or elevators for any purpose other than such ingress and egress. No tenant shall invite to the tenant’s premises, or permit the visit of, persons in such numbers or under such conditions as to interfere with the use and enjoyment of any of the entrances, corridors, stairways, elevators or other facilities in the Building by other tenants. Fire exits and stairways are for such uses that would not violate any Applicable Laws relating thereto. Landlord reserves the right to control and operate the public portions of the Building and the public facilities, as well as all facilities furnished for the common use of the tenants, in such manner as it deems best for the benefit of the tenants generally. The cost of repairing any damage to the public portions of the Building or the public facilities or to any facilities used in common with other tenants, caused by the negligence of a tenant or the employees, licensees or invitees of such tenant, shall unless covered by Landlord’s normal fire and extended coverage insurance be paid by such tenant.

2. Landlord may refuse admission to the Building before or after regular business hours to any person not known to the watchman or not having an identification card issued by or to the tenant or not properly identified, and may require all persons admitted to or leaving the Building except persons regularly admitted to or leaving the Building before or after regular business hours to register. Any person whose presence in the Building at any time might, in the judgment of Landlord, be prejudicial to the safety, character, reputation or interests of the Building or of its tenants may be denied access to the Building or may be ejected therefrom. In case of invasion, riot, public excitement or other commotion Landlord may prevent all access to the Building during the continuance of the same, by closing the doors or otherwise, for the safety of the tenants and protection of property in the Building. Landlord may require any person leaving the Building with any package or other object to exhibit a pass from the tenant from whose premises the package or object is being removed, but the establishment and enforcement of such requirement shall not impose any responsibility on Landlord for the protection of any tenant against the removal of property from the premises of such tenant. Landlord shall, in no way, be liable to any tenant for damages or loss arising from the admission, exclusion or ejection of any person to or from the tenant’s premises or the Building under the provisions of this rule. Canvassing, soliciting or peddling in the Building is prohibited and every tenant shall cooperate to prevent the same.

3. No tenant shall order or take deliveries of towels or other similar articles or obtain or accept the use of barbering, floor polishing, lighting maintenance, cleaning or other similar services, from any persons not approved by Landlord in writing to furnish such articles or services, which approval shall not be unreasonably withheld. Such articles shall be delivered or such services shall be furnished, when so approved, only at such hours, in such places within the tenant’s premises and under such rules as may be fixed by Landlord.

4. No lettering, sign, advertisement, notice or object shall be displayed in or on the windows or doors, or on the outside of any tenant’s premises, or at any point inside any tenant’s premises where the same might be visible outside of such premises, except that the name and logo of the tenant may be displayed on the entrance doors of, or in the elevator lobbies within, the tenant’s premises subject to the approval of Landlord as to the size, color and style of such display. The inscription of the name of the tenant on the doors of or in the elevator lobbies within the tenant’s premises shall be done at the Landlord’s expense. The original listing of the name of the tenant and its officers and executive personnel on the directory board in the Building shall be done by Landlord at its expense. No tenant shall be allowed in excess of its pro rata share of the space on such directory board for such listings.

Exhibit 16.31

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5. No tenant shall install awnings or other projections over or around the windows. Only such window blinds and shades as are supplied or permitted by Landlord shall be used in a tenant’s premises. Linoleum, tile or other floor covering shall be laid in a tenant’s premises only in a manner approved by Landlord.

6. Landlord shall have the right to prescribe the weight and position of safes and other objects of excessive weight and no safe or other object weighing more than the lawful load for the area upon which it would stand shall be brought into or kept upon a tenant’s premises. If, in the judgment of Landlord, it is necessary to distribute the concentrated weight of any safe or other heavy object, the work involved in such distribution shall be done at the tenant’s expense and in such manner as Landlord shall determine. The moving of safes and other heavy objects shall not take place during regular business hours and only with previous notice to Landlord and the persons employed to move the same in and out of the Building, shall be subject to the approval of Landlord. No machines of any kind, except typewriters, photocopy machines, office machines, terminals, vending machines and other similar equipment may be installed or operated in the premises without Landlord’s prior written consent and in no event shall any such machines be placed or operated so as to disturb other tenants. Freight, furniture, business equipment, merchandise and bulky matter, of any description shall be delivered to and removed from the tenant’s premises only in the freight elevators and through the service entrances and corridors and only during hours and in a manner approved by Landlord. Any tenant must make special arrangements with Landlord for moving large quantities of furniture and equipment into or out of the Building.

7. No noise, including the playing of musical instruments or the operation of radio, television or audio devices which, in the judgment of Landlord might disturb other tenants in the Building, shall be made or permitted by any tenant. No cooking shall be done in the tenant’s premises, except as expressly approved by Landlord and except for typical kitchenette appliances such as microwaves, toaster ovens and coffee makers. Nothing shall be done or permitted in any tenant’s premises, and nothing shall be brought into or kept in any tenant’s premises which might impair or interfere with any of the building services or the proper and economical heating, cleaning or other servicing of the Building or the tenant’s premises, or the use or enjoyment by any other tenant of any other premises. No tenant shall install any ventilating, air-conditioning, electrical or other equipment of any kind, which, in the judgment of Landlord, might cause any impairment or interference. No dangerous, inflammable, combustible or explosive object or material shall be brought into the Building by any tenant or with the permission of any tenant. Any containers or receptacles used in any tenant’s premises shall be cared for and cleaned by and at the tenant’s expense.

8. The water closets and other plumbing fixtures shall not be used for any purposes other than those for which they were constructed, and no sweepings, rubbish, rags, or other substances shall be thrown therein. The cost of repairing any damage done to such closets and fixtures resulting from any misuse thereof by a tenant or the employees, licensees or invitees of such tenant shall be paid by such tenant.

9. Landlord shall have the right to prohibit any advertising by any tenant, which in its judgment tends to impair the reputation of the Building or its desirability as a first-class office building.

10. No additional locks or bolts of any kind shall be placed upon any of the doors or windows in any tenant’s premises and no lock on any door therein shall be changed or altered in any respect. Duplicate keys for the tenant’s premises and toilet rooms shall be procured only from Landlord, which may make a reasonable charge therefor. Upon the termination of a tenant’s lease, all keys of the tenant’s premises and toilet rooms shall be delivered to Landlord.

11. All entrance doors in each tenant’s premises shall be kept closed at all times. All such doors should be kept locked when the tenant’s premises are not in use.

12. Hand trucks not equipped with rubber tires and side guards shall not be used within the Building.

13. All window blinds shall be lowered when and as required because of the position of the sun during the air conditioning season.

Exhibit 16.31

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14. Landlord reserves the right to rescind, alter or waive any building rule at any time when, in its judgment it deems it necessary, desirable or proper for its best interest and for the best interests of the tenants, and no alteration or waiver of any building rule in favor of one tenant shall operate as an alteration or waiver in favor of any other tenant. Landlord shall not be responsible to any tenant for the non-observance or violation by any other tenant of any of the Building Rules at any time, Landlord shall exercise its best efforts to see that all tenants comply with the Building Rules.

15. Tenants shall have the right to install canteen facilities and vending machines in their premises.

16. No bicycles, vehicles, or animals of any kind (except as expressly permitted in Section 16.36 of this Lease) shall be brought into or kept in or about the Premises. No space in the Building shall be used for manufacturing or for the sale of merchandise of any kind at auction or for storage thereof preliminary to such sale.

 

 

Exhibit 16.31

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EXHIBIT 16.32, SHEET 1

OTHER NEW TENANT SIGNAGE

 

 

 

 

Exhibit 16.32

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EXHIBIT 16.32, SHEET 2

SUBSTANTIAL FULL OCCUPANCY TENANT SIGNAGE

 

 

 

 

 

Exhibit 16.32

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EXHIBIT 16.35

LOCATION OF TENANT’S EQUIPMENT—GENERATOR

 

 

 

 

 

Exhibit 16.35

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EXHIBIT 16.36

BUILDING DOG POLICY

Tenant and its employees shall be permitted to bring fully domesticated and trained dogs provided and on condition that:

(a) There shall not be more than three (3) dogs in the Premises (max of 3 per tenant) at any one time; provided, however, as of the Substantial Full Occupancy Commencement Date, the foregoing maximum number of dogs in the Premises will be increased to fifteen (15) dogs.

(b) Any dog brought into the Building is owned by Tenant or its employees. Visiting guests may not be permitted to bring their dog into the building. Two or more failures to inform visiting guests of this policy Landlord may revoke Tenant’s rights under this Section, which shall be Landlord’s sole remedy.

(c) Any dog brought into and remaining in the Building shall be brought into the Building through the Courtyard or Otis St entrances only, using the adjacent stairwell to access the Premises. If needed, the only elevator that may be used when bringing a dog on site is the rear freight elevator located next to the loading dock. Dogs are strictly prohibited from the Atrium, Front Door off of First Street, and the Front/Main Lobby on the ground floor.

(d) All dogs shall be controlled on a leash at all times outside of the Premises and shall not be permitted to foul, damage or otherwise mar any part of the Building or cause any undue noise whether through prolonged barking, growling, or otherwise.

(e) Dogs shall not wander throughout the Building or otherwise be left unattended.

(f) While outside the Premises (i.e., in any common area of the Building), all dogs shall be kept on leashes.

(g) Upon Landlord’s request from time to time, Tenant shall provide Landlord with evidence of all current vaccinations for dogs having access to the Premises and the Building.

(h) No dog with (or suspected of having) fleas is to be brought into the Building.

(i) Tenant shall be responsible for any additional cleaning costs or other costs which may arise from the dogs’ presence in the Building.

(j) Tenant shall be liable for, and shall indemnify and hold Landlord and all Landlord Parties harmless from, any and all claims arising from any and all acts undertaken by (e.g., biting another tenant, occupant, licensee or invitee or an employee of Landlord or any Landlord Party) or the presence of any dog in or about the Premises, the Building or the Real Property.

(k) Tenant immediately removes any dog waste and excrement from the Premises, the Building and the Real Property. If Landlord reasonably determines that Landlord has incurred or is incurring increased janitorial (interior or exterior) maintenance costs as a result of the dogs’ presence, Tenant shall reimburse Landlord for such costs as Additional Rent within twenty (20) days of Landlord’s demand.

(l) If, at any time during the Term, (x) Landlord receives complaints from other tenants or occupants of, or invitees to, the Building regarding (i) the dogs’ activities, (ii) the dogs’ noise level within the Building or (iii) allergic reactions suffered as a result of the presence of any dog, and such complaints are not remedied by Tenant to Landlord’s reasonable satisfaction within five (5) business days following Landlord’s delivery of written notice to Tenant, or (y) Landlord reasonably determines that the presence of any and all dogs is materially disruptive to the maintenance and operation of the Building, Landlord shall notify Tenant thereof and, if such failure to comply with any of the provisions of this policy is not cured to Landlord’s reasonable satisfaction within five (5) days following Landlord’s delivery of written notice to Tenant, Landlord may revoke Tenant’s rights to bring dogs into the Premises other than guide dogs, which shall be Landlord’s sole remedy. The provisions of this paragraph (l) shall not apply following the 100% Lease Date and so long as Tenant continues to satisfy the 100% Lease Test.

Exhibit 16.36

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(m) Subject to the waiver of subrogation in the Lease, Tenant shall be responsible for, and indemnify, defend, protect and hold Landlord harmless from and against any and all costs to remedy any and all damages caused to the Building, the Real Property or any portion thereof by any dog.

(n) Tenant shall comply with all applicable Laws associated with or governing the presence of a dog within the Premises and/or the Building and such presence shall not violate the certificate of occupancy for the Building or the temporary certificate of occupancy for the Premises.

 

 

Exhibit 16.36

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EXHIBIT 16.40

LOCATION OF TENANT’S ROOF DECK

 

 

 

 

Exhibit 16.40

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EXHIBIT 16.42.1

LOCATION OF TENANT’S BASEMENT STORAGE PREMISES

 

 

 

Exhibit 16.42.1

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EXHIBIT 16.42.2

ANNUAL FIXED BASEMENT RENT

 

 

 

Exhibit 16.42.2

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EXHIBIT 16.43

LOCATION OF SWING BASEMENT PREMISES

 

 

 

 

 

Exhibit 16.43

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THE DAVENPORT

Cambridge, Massachusetts

First Amendment to Amended and Restated Lease

HubSpot, Inc.

THIS FIRST AMENDMENT TO AMENDED AND RESTATED LEASE (“First Amendment”) is made as of March 23, 2017 (the “Effective Date”) by and between DAVENPORT OWNER (DE) LLC, a Delaware limited liability company, having an office c/o Oxford I Asset Management USA Inc., 125 Summer Street, 16th Floor, Boston, Massachusetts 02110 (“Landlord”), and HUBSPOT, INC., a Delaware corporation (“Tenant”), having an office at 25 First Street, Cambridge, Massachusetts 02141.

Background

A. Pursuant to the provisions of that certain Amended and Restated Lease dated as of November 1, 2015 between Tenant and Landlord’s predecessor in interest, Jamestown Premier Davenport, LLC, dated as of  November 1, 2015 as affected by Commencement Letter dated September 29, 2016 (as so affected, the “Existing Lease”), Tenant leases premises located at 25 First Street, Cambridge Massachusetts more particularly described in the Lease (the “Premises”).  Capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Existing Lease.  The Existing Lease, as amended hereby, is hereinafter referred to as the “Lease.”  

B. In order to facilitate the leasing of Put Premises A and Put Premises B to Tenant, Landlord has agreed to (i) enter into an amendment to that certain lease with Accomplice Management, LLC, successor to Atlas Venture Advisors, Inc. (“Accomplice”) for Put Premises A and Put Premises B, under which Accomplice’s rights to extend the term of its lease will be eliminated and the initial term thereunder will be extended to December 31, 2017 and (ii) enter into that certain Consent to Sublease of even date herewith (the "Consent") concerning a sublease between Tenant and Accomplice, which sublease provides for the continued occupancy of Put Premises A by Accomplice for a period of time after December 31, 2017.

C. Pursuant to Section 3.3(D)(6)  of the Lease, Landlord and Tenant wish to enter into this First Amendment to memorialize Tenant’s agreement to lease from Landlord and Landlord’s agreement to lease to Tenant Put Premises A and Put Premises B, as set forth more fully below.  

Agreement

NOW, THEREFORE, in consideration of the foregoing and mutual covenants contained herein, Landlord and Tenant hereby agree as follows:

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(a) Sublease of Put Premises A.   Pursuant to the Consent, Landlord will consent to Tenant’s sublease of Put Premises A to Accomplice and Landlord agrees that in no event shall Landlord be entitled to (and Landlord expressly waives) any profit sharing under Section 11.6 of the Lease with respect to such Sublease provided that Tenant is not paid amounts that are not described in the Sublease attached to the Consent.  In addition, Tenant acknowledges and agrees that Landlord will not be providing invoices or statements for Landlord’s Tax Expenses or Operating Expenses Allocable to the Put Premises prior to the applicable Rent Commencement Date.

(b) Confirmatory Provisions.  As of the Effective Date, the terms set forth on Exhibit A attached to this First Amendment are hereby added to the Lease.

(c) Brokerage.  Landlord and Tenant each represent and warrant to the other that they have not dealt with any brokers in connection with this First Amendment, provided, however, the brokers identified in the Lease shall be paid a broker commission for Tenant’s lease of Put Premises A and Put Premises B in connection with the broker agreement executed between Landlord and such brokers in connection with the Lease.  Each party covenants to pay, hold harmless, and indemnify the other from and against any and all costs, expense, or liability for any compensation, commissions, or charges claimed by any other broker or agent with respect to this First Amendment or the negotiation thereof arising from its breach of the foregoing warranty.  

(c) Authority.  Landlord and Tenant each represent to the other party that it has the authority to enter into this First Amendment.    

(d) Ratification.   Except as expressly modified by this First Amendment, the Lease is hereby confirmed and shall remain in full force and effect.

(e) Counterparts.  This First Amendment may be executed in counterparts, and when both Landlord and Tenant have signed and delivered at least one such counterpart, each counterpart shall be deemed an original, and, when taken together with other signed counterparts, shall constitute one First Amendment, which shall be binding upon and effective as to Landlord and Tenant.

 

[signature page follows]

 

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IN WITNESS WHEREOF, Landlord and Tenant have entered into this First Amendment as of the date first set forth above.  

 

 

 

[Signature Page to First Amendment to Amended and Restated Lease]

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EXHIBIT A

 

Confirmatory REIT Provisions

 

(a)          Rents from Real Property.  Landlord and Tenant acknowledge and agree that all rental payable by Tenant to Landlord, which includes all sums, charges, or amounts of whatever nature to be paid by Tenant to Landlord in accordance with the provisions of the Lease, shall qualify as “rents from real property” within the meaning of both Sections 512(b)(3) and 856(d) of the Internal Revenue Code of 1986, as amended (the “Code”) and the U.S. Department of Treasury Regulations promulgated thereunder (the “Regulations”).  In the event that Landlord, in its sole discretion, determines that there is any risk that all or part of any rental shall not qualify as “rents from real property” for the purposes of Sections 512(b)(3) or 856(d) of the Code and the Regulations promulgated thereunder, Tenant agrees (x) to cooperate with Landlord by entering into such amendment or amendments as Landlord deems necessary to qualify all payments as “rents from real property,” (y) to permit an assignment of the Lease and (z) to allow Landlord to assign any and all obligations that Landlord has under the Lease to a third party; provided, however, that any adjustments required pursuant to this paragraph shall be made so as to produce the equivalent rental payments (in economic terms) payable prior to such adjustment.

 

(b)          Acknowledgements.  In furtherance of, and without limiting the generality of, the foregoing matters, Tenant acknowledges and agrees that (x) any payments due from Tenant on account of excess rent that may hereafter be received by Tenant in connection with any sublease or assignment under the Lease shall be made only if Landlord so elects such payments to be made, and (y) any parking spaces required to be provided to Tenant under the Lease or the Parking Addendum thereto shall be leased to Tenant by Landlord or the parking garage operator on the terms provided under the Lease or such Parking Addendum.

 

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THE DAVENPORT

Cambridge, Massachusetts

Second Amendment to Amended and Restated Lease

HubSpot, Inc.

THIS SECOND AMENDMENT TO AMENDED AND RESTATED LEASE (“Second Amendment”) is made as of August 31, 2018 (the “Effective Date”) by and between DAVENPORT OWNER (DE) LLC, a Delaware limited liability company, having an office c/o Oxford I Asset Management USA Inc., 125 Summer Street, 16^th Floor, Boston, Massachusetts 02110 (“Landlord”), and HUBSPOT, INC., a Delaware corporation (“Tenant”), having an office at 25 First Street, Cambridge, Massachusetts 02141.

Background

A.          Pursuant to the provisions of that certain Amended and Restated Lease dated as of November 1, 2015 between Tenant and Landlord’s predecessor in interest, Jamestown Premier Davenport, LLC, dated as of November 1, 2015, as affected by Commencement Letter dated September 29, 2016, and as amended by the First Amendment to Amended and Restated Lease dated as of March 23, 2017(the “Existing Lease”), Tenant leases premises located at 25 First Street, Cambridge Massachusetts more particularly described in the Lease (the “Premises”). Capitalized terms used and not defined herein shall have the respective meanings ascribed to them in the Existing Lease. The Existing Lease, as amended hereby, is hereinafter referred to as the “Lease.”

B.          Landlord sent the Currently-Committed Put Premises Demise Notice for Put Premises C under Section 3.3(D) of the Lease and the Basement Put Premises Demise Notice under Section 3.4(B) of the Lease to Tenant on April 30, 2018.

C.          Pursuant to Section 3.3(D)(6) and Section 3.4(B) of the Lease, Landlord and Tenant wish to enter into this Second Amendment to memorialize Tenant’s leasing from Landlord and Landlord's leasing to Tenant Put Premises C and the Basement Put Premises, as set forth more fully below.

Agreement

NOW, THEREFORE, in consideration of the foregoing and mutual covenants contained herein, Landlord and Tenant hereby agree as follows:

1.          Addition of Put Premises C. Commencing on the Commencement Date for Put Premises C, Put Premises C (consisting of 10,545 square feet of Rentable Floor Area) shall automatically be added to the Premises and Tenant will be leasing Put Premises C on all of the same terms and conditions of the Lease applicable to the demise of the other portions of the Premises leased to Tenant, except as described in Section 3.3(D)(1) – (6) of the Existing Lease, as amended hereby.

(a)          Notwithstanding anything in the Lease to the contrary, the Commencement Date with respect to Put Premises C is June 1, 2018.

(b)          The Annual Fixed Rent for Put Premises C in the initial Term shall be the product of 10,545 square feet of Rentable Floor Area multiplied by the Annual Fixed Rent Rental Rate from time to time. The initial Annual Fixed Rent for Put Premises C, assuming the Rent Commencement Date occurs on March 1, 2019, is $579,975 per annum ($48,331.25 per month; $55.00 per square foot of Rentable Floor Area per annum) with increases as set forth in the Lease.

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(c)          Notwithstanding anything in the Lease to the contrary, the Rent Commencement Date for Put Premises C shall be the earlier of March 1, 2019 and the date that is one hundred and eighty (180) days after the date Tenant enters into possession of all or any portion of Put Premises C for the conduct of its business; provided, however, if Landlord has not completed the portions of the Landlord’s Access/Egress Work necessary to permit Tenant to legally occupy a substantial portion of Put Premises C (the “Substantial Completion of Landlord’s Access/Egress Work in Put Premises C”) by October 15, 2018, unless due to the acts or omissions of Tenant (it being understood that Landlord anticipates that governmental inspections of the elevator installed as part of Landlord’s Access/Egress Work and any work required as a result of such inspections may occur after October 15, 2018, which shall not affect the Rent Commencement Date for Put Premises C so long as the Put Premises C may be legally occupied), then the Rent Commencement Date for Put Premises C shall be extended until the earlier of (i) Substantial Completion of Landlord’s Access/Egress Work in Put Premises C, and (ii) the date that is one hundred and eighty (180) days after the date Tenant enters into possession of all or any portion of Put Premises C for the conduct of its business. After the later of (x) October 15, 2018 and (y) the date Tenant commences occupancy of Put Premises C for the conduct of its business, if Tenant delivers to Landlord a written request, Landlord agrees not to perform any of Landlord’s Access/Egress Work in Put Premises C during normal business hours (i.e., 8 a.m. to 6 p.m. on weekdays other than Building holidays) and shall only perform such work within Put Premises C outside of normal business hours on nights, Building holidays and weekends (other than in the case of emergencies or with Tenant’s prior approval not to be unreasonably withheld, conditioned or delayed). Following the Rent Commencement Date for Put Premises C, on the request of either party, Landlord and Tenant agree to join with each other in the execution of a written Commencement Date Agreement substantially in the form attached to the Existing Lease as Exhibit 3.1.

(d)          Tenant shall take Put Premises C in its “as-is” and “where is” condition as more fully set forth in Section 3.3(D)(4) of the Lease and subject to Section 3.5 of the Lease.

(e)          Landlord shall grant to Tenant a Tenant Improvement Allowance as more fully set forth in Section 3.3(D)(5) of the Lease. The parties anticipate that the Tenant Improvement Allowance for Put Premises C, assuming the Rent Commencement Date occurs on March 1, 2019, will be $456,950.00. The Outside Requisition Date with respect to such Tenant Improvement Allowance for Put Premises C will be December 31, 20 19.

(f)          Subject to the following sentence, effective as of the Commencement Date for Put Premises C, Tenant’s Maximum Parking Requirement shall be increased by 10 Parking Permits (for a total Tenant’s Maximum Parking Requirement of 248 Parking Permits under Section 10.2(A) of the Lease and Tenant’s Minimum Parking Requirement shall be increased by 10 Parking Permits (for a total Tenant’s Minimum Parking Requirement of 203 Parking Permits under Section 10.2(B) of the Lease. Notwithstanding the foregoing, for so long as Tenant shall continue to satisfy the 100% Lease Test, effective as of the Commencement Date for Put Premises C, Tenant’s Maximum Parking Requirement shall be 250 Parking Permits pursuant to Section 10.2(A) of the Lease and Tenant's Minimum Parking Requirement shall be 202 Parking Permits pursuant to Section 10.2(B) of the Lease.

(g)          In accordance with Section 3.4(A)(y), the Annual Fixed Rent and other charges with respect to Put Premises C during any Extension Term shall be based on the actual rentable area of Put Premises C (which, as of the date of this Second Amendment, is 10,276 rentable square feet after taking into account the Put Premises C Rentable Area Reduction).

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2.          Addition of Basement Put Premises. Commencing on the Basement Put Premises Commencement Date (as defined in Section 3.4(B)(1) of the Existing Lease), the Basement Put Premises shall automatically be added to the Premises and Tenant will be leasing Basement Put Premises on all of the same terms and conditions of the Lease applicable to the demise of the other portions of the Premises leased to Tenant, except as described in Section 3.4(B)(1) – (6) of the Existing Lease, as amended hereby.

(a)          The Basement Put Premises consists of 4,127 useable square feet and 5,552 rentable square feet. Notwithstanding anything in the Lease to the contrary, Landlord and Tenant have agreed to use 5,552 rentable square feet for the purpose of calculating rent under Section 3.4(A) of the Lease and the Basement Put Premises Allowance under Section 3.4(B)(5). The Put Premises C Rentable Area Reduction as determined under Section 3.4(A) of the Lease is 269 square feet of Rentable Floor Area.

(b)          The Estimated Basement Put Premises Commencement Date is September 1, 2018. Following the Basement Put Premises Commencement Date, on the request of either party, Landlord and Tenant agree to join with each other in the execution of a written Commencement Date Agreement substantially in the form attached to the Existing Lease as Exhibit 3.1.

(c)          The Annual Fixed Rent for the Basement Put Premises in the initial Term shall be the product of 5,014 square feet (which is determined under Section 3.4(A) of the Lease by subtracting 538 square feet [i.e., 200% of the Put Premises C Rentable Area Reduction of 269 square feet] from 5,552 square feet) multiplied by the Annual Fixed Rent Rental Rate from time to time. The initial Annual Fixed Rent for the Basement Put Premises, assuming the Basement Put Premises Commencement Date occurs on the Estimated Basement Put Premises Commencement Date is $245,686.00 per annum ($20,473.83 per month; $49.00 per square foot of Rentable Floor Area per annum) with increases as set forth in the Lease.

(d)          As set forth in Section 3.4(B)(3), the Rent Commencement Date for the Basement Put Premises shall be the date that is six (6) months after the Basement Put Premises Commencement Date, as the same may be extended in accordance with Section 5.1 (B) of the Existing Lease. The Basement Put Premises Rent Commencement Date is currently anticipated by the parties to occur on March 1, 2019.

(e)          Tenant shall take the Basement Put Premises in its “as-is” and “where is” condition as more fully set forth in Section 3.4(B)(4) of the Lease. Landlord and Tenant have agreed upon the location of and plans and specifications for Landlord’s Access/Egress Work and the plans are listed on Exhibit 1 attached to this Second Amendment as contemplated by Section 3.4(B)(4) of the Lease. Assuming the Basement Put Premises Commencement Date is the Estimated Basement Put Premises Commencement Date, then the Estimated Landlord’s Access/Egress Work Completion Date will be October 1, 2018. Landlord and Tenant acknowledge that Tenant will use the Basement Put Premises for general business office use, that Landlord is not installing a second staircase as part of Landlord’s Access/Egress Work, and therefore, as contemplated under Section 3.4(B)(4) of the Lease, Landlord will not incur any costs in connection with the installation of a second staircase and Tenant will not be required to pay Landlord any costs in connection therewith.

(f)          Landlord shall disburse to Tenant a Tenant Improvement Allowance as more fully set forth in Section 3.4(B)(5) of the Lease. The parties anticipate that the Basement Put Premises Allowance, assuming the Rent Commencement Date occurs on March 1, 2019, will be $250,700.00. The parties anticipate that the Outside Requisition Date with respect to the Basement Put Premises Allowance will be August 1, 2020, assuming a Basement Put Premises Rent Commencement Date of March 1, 2019.

(g)          As set forth in Section 3.4(B)(6) of the Lease, Annual Fixed Rent for the Basement Put Premises shall be a gross rent and Tenant shall not be obligated to pay Operating Expenses Allocable to the Premises or Landlord’s Tax Expenses Allocable to the Premises with respect to the Basement Put Premises.

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3.          Tenant Alterations to Lobby. Subject to the terms and provisions of the Lease, as amended hereby, including without limitation Article 9 of the Lease, Tenant may at its sole cost construct the revolving door, smoothie bar and other improvements to the first floor lobby shown on the plan attached to this Second Amendment as Exhibit 2; provided, however, the parties agree that all such improvements constitute Above-Standard Alterations that must be removed by Tenant by expiration or earlier termination of the Lease Term (with Tenant repairing all damage resulting from the installation, operation and removal of such improvements), all in accordance with the provisions of the Lease. Without limiting the generality of the foregoing, Tenant shall not commence construction without obtaining Landlord’s approval of the plans and specifications therefor as required under the Lease and Tenant shall reimburse Landlord for its Third Party Costs and pay Landlord’s Construction Management Fee of 1% of Hard Costs plus design costs as set forth in Section 9.2 of the Lease.

4.          Dogs in Premises. Landlord hereby amends paragraph (a) of the Building Dog Policy attached to the Lease as Exhibit 16.36 by replacing the words, “increased to fifteen (15) dogs” with the words, “increased to six (6) dogs per floor on which the Premises is located (not to exceed twenty (20) dogs in total).”

5.          Miscellaneous.

(a)          Pursuant to Section 16.42 of the Lease, Landlord previously demised the Basement Storage Premises and Tenant is leasing the Basement Storage Premises pursuant to the terms and provisions of the Lease.

(b)          Brokerage. Landlord and Tenant each represent and warrant to the other that they have not dealt with any brokers in connection with this Second Amendment, provided, however, the brokers identified in the Lease shall be paid a broker commission for Tenant’s lease of Put Premises C and the Basement Put Premises in connection with the broker agreement executed between Landlord and such brokers in connection with the Lease. Each party covenants to pay, hold harmless, and indemnify the other from and against any and all costs, expense, or liability for any compensation, commissions, or charges claimed by any other broker or agent with respect to this Second Amendment or the negotiation thereof arising from its breach of the foregoing warranty.

(c)          Authority. Landlord and Tenant each represent to the other party that it has the authority to enter into this Second Amendment.

(d)          Ratification. Except as expressly modified by this Second Amendment, the Lease is hereby confirmed and shall remain in full force and effect.

(e)          Counterparts. This Second Amendment may be executed in counterparts, and when both Landlord and Tenant have signed and delivered at least one such counterpart, each counterpart shall be deemed an original, and, when taken together with other signed counterparts, shall constitute one Second Amendment, which shall be binding upon and effective as to Landlord and Tenant.

[signature page follows]

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IN WITNESS WHEREOF, Landlord and Tenant have entered into this Second Amendment as of the date first set forth above.

 

 

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Exhibit 1

List of Plans and Specifications for Landlord’s Access/Egress Work

(See Attached)

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Exhibit 1

List of Plans and Specifications for Landlord’s Access/Egress Work

 

 

 

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Exhibit 2

Plan of Tenant Alterations in Lobby

(See Attached)

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Exhibit 10.5

Dated 12 day of November 2018

 

 

 

 

AGREEMENT FOR LEASE

 

of

 

 

1 - 6 Sir John Rogerson’s Quay,

Dublin 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HI116/071/AC#29168263.13

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THIS AGREEMENT made the 12 day of November 2018

BETWEEN

WHEREAS:

NOW IT IS HEREBY AGREED as follows:-

In this Agreement the following expressions shall be deemed to have the following meanings:-

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Save as otherwise provided herein:-

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Subject to the Landlord having approved the proposed signage in accordance with this clause, the Landlord shall if requested, provide its written consent to the planning application addressed to the relevant planning authority.

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In complying with its obligations to deliver the Landlord’s Works substantially in accordance with the Specification,  it is agreed and confirmed that the Landlord may make any modifications to the details contained in the Specification that are required by any competent authority as a condition of the grant or continuance in force of any Necessary Consents, or that are reasonably required by the Landlord provided that no modification may be made pursuant to this clause that would substantially alter:-

substantially prejudice the use of the Demised Premises for the purpose specified in the Lease, save as may be agreed with the Tenant.

then the Contractor and/or the Landlord shall be entitled to a fair and reasonable extension of the time for completing the Landlord’s Works.  The Parties acknowledge and agree that nothing in this Agreement shall:-

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In carrying out the Tenant’s Works, the Tenant hereby agrees not to knowingly damage or cause to be damaged the Demised Premises or any part of the Estate or any adjoining premises or to obstruct the Landlord or its tenants or its nominated agents or contractors in the course of executing any works on the Estate, or the use or occupation of the Building or any part thereof and the Tenant or the person carrying out the Tenant’s Works shall make good, without undue delay, any damage thereby caused to the Demised Premises (subject to the Tenant’s entitlement to make a claim under the Landlord’s insurance on the occurrence of any of the risks listed in Clause 8.7 or any part of the Estate or any adjoining premises.

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PROVIDED THAT all such sums are to be paid to the Landlord’s Solicitor and held by the Landlord’s Solicitor in trust and to the account of the Tenant until such time as the Lease shall be formally granted pursuant to Clause 9.

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Upon taking possession of the Demised Premises the Tenant shall be deemed to take possession of the Demised Premises with full knowledge of the actual state and condition of the Demised Premises as to repair, finishes, means of access, enjoyment of light and air, party walls and otherwise, and subject to the terms hereof shall take the same as it stands.  The Tenant confirms that it has received and read the tenant information booklet (the “Tenant Information Booklet”) and takes possession of the Demised Premises on full notice of the contents of the Tenant Information Booklet.

The Tenant on behalf of itself, its servants and agents hereby further specifically agrees not to damage the Demised Premises (other than as may be necessary for the completion of the Tenant’s Works, PROVIDED THAT all such damage shall be made good by the Tenant) or any part of the Building or the Estate or any adjoining premises in the course of executing any works on the Demised Premises and if the Tenant, its servants or agents shall cause any damage as aforesaid, the Landlord in addition to any other remedy may make good all such damage where the Tenant fails to make good the damage following 20 Working Days’ notice to the Tenant and the Tenant hereby agrees to pay to the Landlord the sum equal to the reasonable and vouched costs and expenses of making good all such damage within fourteen days of such written demand having been made and if such sum is not paid within that period, the Tenant shall pay interest on such sum at the Prescribed Rate from the expiration of the said fourteen day period until payment is made PROVIDED ALWAYS that where the Tenant is entitled to make a claim against the Landlord’s insurance in relation to the damage, the Tenant shall not be required to make good the damage (and the Landlord shall not be entitled to exercise its remedies under this clause) until such time as the Landlord’s insurers authorise or agree that the damage can be made good without prejudice to the Tenant’s claim under the said insurance.

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The Tenant confirms that it has received prima facie evidence of the Landlord’s title to the Demised Premises, has been afforded a reasonable opportunity to raise all such pre-lease enquiries as it may have wished in relation to the Landlord’s title, is satisfied with the evidence of Landlord’s title furnished and shall not make any further objections or requisitions in respect of the Landlord’s title to the Demised Premises with the exception of the completion searches.

Nothing in this Agreement shall impliedly confer upon or grant to the Tenant any easement, right or privilege other than those expressly granted by this Agreement or the Lease.

Nothing contained in this Agreement shall imply or warrant that the Demised Premises may be used under the Planning Acts and the Public Health Acts for the purpose herein authorised or any purpose subsequently authorised and the Tenant hereby acknowledges and admits that the Landlord has not given or made at any time any representation or warranty that any such use is or will be or will remain a permitted use under the Planning Acts.

The Tenant acknowledges that this Agreement has not been entered into in reliance wholly or partly on any statement or representation made by or on behalf of the Landlord except any such statement or representation that is expressly set out in this Agreement and in open legal correspondence.

Termination by Landlord

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Breach by the Landlord

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The Tenant shall be responsible for and discharge to the Landlord on demand all stamp duty arising in respect of this Agreement, the Lease and Counterparts thereof.

The terms and conditions of this Agreement shall remain in full force and effect notwithstanding the grant of the Lease insofar as they remain to be observed and performed.

If any term or provision of this Agreement shall be held to be invalid or unenforceable in whole or in part for any reason then such term or provision shall to that extent be deemed not to form part of this Agreement and the validity and enforceability of the remainder of this Agreement shall not be affected.

The Guarantor jointly and severally covenants with the Landlord as a primary obligation that:

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The Landlord agrees that, as the Demised Premises consists of the entire office area of the Building, the Tenant shall, for so long as it has the entire interest under the Lease, have the right to name (and rename) the Building subject to Landlord consent which consent may only be refused on the grounds that the name is offensive or likely to upset public sentiment.  The Tenant shall be entitled to publish or otherwise publicise the name of the Building and subject to Clause 3, submit any planning application for any Landlord approved signage to display the Building name.

This Agreement shall be construed in accordance with the Laws of Ireland.

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Appendix 1

 

Form of Collateral Warranties

 

 

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---

 

 

 

 

PERMASTEELISA IRELAND LIMITED

 

 

 

 

and

 

 

●

 

 

 

 

 

 

 

 

COLLATERAL AGREEMENT

SUB-CONTRACTOR TO BENEFICIARY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HI116/071/AC#29246067.I

---

 

 

BETWEEN

WHEREAS:

NOW IT IS HEREBY AGREED between the Beneficiary and the Sub-Contractor that in consideration of the sum of €10.00 now paid by the Beneficiary to the Sub-Contractor (sufficiency and receipt of which is hereby acknowledged) the following warranties and agreements shall have effect:

 

---

 

 

---

 

IN WITNESS whereof the parties have caused their common seals to be affixed the day and year fust herein written.

 

 

 

---

 

 

 

PJ EDWARDS & COMPANY LIMITED

 

 

 

 

and

 

 

●

 

 

 

 

 

 

 

 

COLLATERAL AGREEMENT

SUB-CONTRACTOR TO BENEFICIARY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

H1116/071/AC#29245835.1

 

---

 

BETWEEN

WHEREAS:

NOW IT IS HEREBY AGREED between the Beneficiary and the Sub-Contractor that in consideration of the sum of €10.00 now paid by the Beneficiary to the Sub-Contractor (sufficiency and receipt of which is hereby acknowledged) the following warranties and agreements shall have effect:

 

---

 

 

---

 

 

---

 

IN WITNESS whereof the parties have caused their common seals to be affixed the day and year first herein written.

 

 

 

---

 

 

 

T. BOURKE & CO. LIMITED

 

 

 

 

and

 

 

●

 

 

 

 

 

 

 

 

COLLATERAL AGREEMENT

SUB-CONTRACTOR TO BENEFICIARY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

H1116/071/AC#29246030.1

 

---

 

BETWEEN

WHEREAS:

NOW IT IS HEREBY AGREED between the Beneficiary and the Sub-Contractor that in consideration of the sum of €10.00 now paid by the Beneficiary to the Sub-Contractor (sufficiency and receipt of which is hereby acknowledged) the following warranties and agreements shall have effect:

 

---

 

 

---

 

 

---

 

IN WITNESS whereof the parties have caused their common seals to be affixed the day and year first herein written.

 

 

 

 

---

 

 

 

KIERNAN STRUCTURAL STEEL LIMITED

 

 

 

 

and

 

 

●

 

 

 

 

 

 

 

 

COLLATERAL AGREEMENT

SUB-CONTRACTOR TO BENEFICIARY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

H1116/071/AC#29245995.l

 

 

---

 

BETWEEN

WHEREAS:

NOW IT IS HEREBY AGREED between the Beneficiary and the Sub-Contractor that in consideration of the sum of €10.00 now paid by the Beneficiary to the Sub-Contractor (sufficiency and receipt of which is hereby acknowledged) the following warranties and agreements shall have effect:

 

---

 

 

---

 

 

---

 

IN WITNESS whereof the parties have caused their common seals to be affixed the day and year first herein written.

 

 

 

---

 

 

 

DESIGNER GROUP ENGINEERING CONTRACTORS LIMITED

 

 

 

 

and

 

 

●

 

 

 

 

 

 

 

 

COLLATERAL AGREEMENT

SUB-CONTRACTOR TO BENEFICIARY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

H1116/071/AC#29245942.l

 

 

---

 

BETWEEN

WHEREAS:

NOW IT IS HEREBY AGREED between the Beneficiary and the Sub-Contractor that in consideration of the sum of €10.00 now paid by the Beneficiary to the Sub-Contractor (sufficiency and receipt of which is hereby acknowledged) the following warranties and agreements shall have effect:

 

---

 

 

---

 

 

---

 

IN WITNESS whereof the parties have caused their common seals to be affixed the day and year first herein written.

 

 

 

---

 

 

 

RASCOR IRELAND LIMITED

 

 

 

 

and

 

 

●

 

 

 

 

 

 

 

 

COLLATERAL AGREEMENT

SUB-CONTRACTOR TO BENEFICIARY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

H1116/071/AC#29245864.I

 

 

---

 

BETWEEN

WHEREAS:

NOW IT IS HEREBY AGREED between the Beneficiary and the Sub-Contractor that in consideration of the sum of €10.00 now paid by the Beneficiary to the Sub-Contractor (sufficiency and receipt of which is hereby acknowledged) the following warranties and agreements shall have effect:

 

---

 

 

---

 

 

---

 

IN WITNESS whereof the parties have caused their common seals to be affixed the day and year first herein written.

 

 

 

---

 

 

 

KONE (IRELAND) LIMITED

 

 

 

 

and

 

 

●

 

 

 

 

 

 

 

 

COLLATERAL AGREEMENT

SUB-CONTRACTOR TO BENEFICIARY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

H1116/071/AC#29245901.I

 

 

---

EXECUTION VERSION

BETWEEN

WHEREAS:

NOW IT IS HEREBY AGREED between the Beneficiary and the Sub-Contractor that in consideration of the sum of €10.00 now paid by the Beneficiary to the Sub-Contractor (sufficiency and receipt of which is hereby acknowledged) the following warranties and agreements shall have effect:

 

---

 

 

---

 

 

---

 

IN WITNESS whereof the parties have caused their common seals to be affixed the day and year first herein written.

 

 

 

---

 

 

 

J.V. TIERNEY & COMPANY (2002) LIMITED

 

 

 

 

and

 

 

●

 

 

 

 

 

 

 

 

COLLATERAL AGREEMENT

CONSULTANT TO BENEFICIARIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

---

 

BETWEEN:-

WHEREAS:-

NOW in consideration of the sum of €5 paid by the Beneficiary to the Consultant (receipt of which is acknowledged) IT IS HEREBY AGREED as follows:-

 

---

 

 

---

 

IN WITNESS whereof the parties have caused their common seals to be affixed the day and year first herein written.

 

 

 

---

 

 

 

H J LYONS (ARCHITECTS) LIMITED

 

 

 

 

and

 

 

●

 

 

 

 

 

 

 

 

COLLATERAL AGREEMENT

ARCHITECT TO BENEFICIARIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

---

 

BETWEEN:-

WHEREAS:-

NOW in consideration of the sum of €5 paid by the Beneficiary to the Architect (receipt of which is acknowledged) IT IS HEREBY AGREED as follows:-

 

---

 

 

---

 

IN WITNESS whereof the parties have caused their common seals to be affixed the day and year first herein written.

 

 

 

---

 

 

 

JOHN PAUL CONSTRUCTION LIMITED

 

 

 

 

and

 

 

●

 

 

 

 

 

 

COLLATERAL AGREEMENT

CONTRACTOR TO BENEFICIARY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

---

 

BETWEEN

WHEREAS:

NOW IT IS HEREBY AGREED between the Beneficiary and the Contractor that in consideration of the sum of €10.00 now paid by the Beneficiary to the Contractor (sufficiency and receipt of which is hereby acknowledged) the following warranties and agreements shall have effect:

 

---

 

 

---

 

At any such conference, each party shall be represented by a person having authority to agree to a resolution of the dispute.

 

---

 

IN WITNESS whereof the parties have caused their common seals to be affixed the day and year first herein written.

 

 

 

---

 

 

 

CASEY O'ROURKE ASSOCIATES LIMITED

 

 

 

 

and

 

 

●

 

 

 

 

 

 

 

 

COLLATERAL AGREEMENT

CONSULTANT TO BENEFICIARIES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

.

 

---

 

BETWEEN:-

WHEREAS:-

NOW in consideration of the sum of €5 paid by the Beneficiary to the Consultant (receipt of which is acknowledged) IT IS HEREBY AGREED as follows:-

 

---

 

 

---

 

IN WITNESS whereof the parties have caused their common seals to be affixed the day and year first herein written.

 

 

 

 

---

 

Appendix 2

 

Lease

 

 

 

---

EXECUTION VERSION

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LEASE

of

1 – 6 Sir John Rogerson's Quay, Windmill Quarter, Dublin 2

 

Term Commences:  

Length of Term:  20 years

Rent Reviews: Every Five Years

 

 

Initial Rent: €

 

 

 

 

 

 

 

Arthur Cox

Earlsfort Centre

Earlsfort Terrace

Dublin 2

 

 

 

---

EXECUTION VERSION

 

2

---

 

 

3

---

 

 

BETWEEN:

 

 

WITNESSETH as follows:-

In this Lease, unless the context otherwise requires the following expressions shall have the following meanings:-

4

---

 

5

---

 

6

---

 

7

---

 

fire, storm, tempest, flood, earthquake, subsidence, lightning, explosion, impact, aircraft and other aerial devices and articles dropped therefrom, riot, civil commotion and malicious damage, bursting or overflowing of water tanks, apparatus or pipes, impact by road vehicles and other perils, expenses, or losses as the party effecting the relevant insurance may deem reasonable and prudent to insure against from time to time;

8

---

 

9

---

 

2024, the first day of the eleventh year of the Term, being

2029 and the first day of the sixteenth year of the Term, being

2034;

10

---

 

11

---

 

water, soil, steam, air, gas, electricity, radio, television, telegraphic, telephonic and other communications, and other services and information (including any plant, machinery, apparatus, duct, tanks, systems, wireless, television, firefighting and fire prevention systems and equipment, burglar alarm systems, fibre optic cable and equipment to operate the same or required to be provided in or for the Estate or the Building) as may from time to time and in the opinion of the Management Company or the Landlord be desirable or necessary;

UNLESS there is something in the subject or context inconsistent therewith:

12

---

 

THE Landlord in consideration of the rents herein reserved (including the adjustments thereof following any Rent Review as hereinafter provided) and the covenants on the part of the Tenant and the Guarantor and the conditions hereinafter contained HEREBY DEMISES unto the Tenant the Demised Premises TOGETHER WITH the rights, easements and privileges specified in Schedule 2 EXCEPTING AND RESERVING the rights and easements specified in Schedule 3 TO HOLD the Demised Premises unto the Tenant from and including the Term Commencement Date for the Term YIELDING AND PAYING unto the Landlord or the Management Company (or any nominee of either in the case of any contribution to a sinking or reserve fund) as appropriate during the Term:-

13

---

 

The Tenant to the intent that the obligations shall continue throughout the Term HEREBY COVENANTS with the Landlord as follows:

To pay the rents or adjusted rents reserved by this Lease and referred to at paragraphs 3.1 to 3.3 inclusive and any additional sums payable herein at the times and in the manner herein prescribed for the payment of same without any deduction, set-off counter claim whatsoever, together with VAT, where applicable, following the receipt of a valid VAT invoice.

To pay the Tenant’s Service Charges in the manner prescribed for the payment of same in accordance with schedules 5 to 7 hereto.

 

Without prejudice to any other right, remedy or power herein contained or otherwise available to the Landlord, if any of the rents reserved by this Lease (in the case of Initial Rent whether formally demanded or not and in the case of all other payments the same having been formally demanded) or if any other sum of money payable to the Landlord (or the Management Company as the case maybe) by the Tenant under this Lease shall remain unpaid for fourteen (14) days after the date when payment was due to pay interest thereon at the Prescribed Rate from and including the date on which payment was due to the date of payment to the Landlord (or the Management Company as the case maybe) (both before and after any judgment).  Save where otherwise provided in this Lease all payments due by the Landlord to the Tenant shall be paid within fourteen (14) days of delivery of a valid invoice and otherwise such payment shall attract interest at the Prescribed Rate as aforesaid.

14

---

 

PROVIDED THAT for the avoidance of doubt the Tenant shall not be responsible for any arrears of outgoings, including electricity, gas (if any), water and other utilities, refuse charges, Local Authority charges, commercial rates and water rates arising on the Demised Premises in respect of any period prior to the Term Commencement Date.

15

---

 

16

---

 

 

In every Internal Decoration Year and also in the last six (6) months of the Term (whether determined by effluxion of time or otherwise) (but never more than twice in any three (3) year period) in a good and workmanlike manner to prepare and decorate (with two coats at least of good quality paint) or otherwise treat, as appropriate, all internal parts of the Demised Premises required to be so treated and, as often as may be reasonably necessary, to wash down all tiles, glazed bricks and similar washable surfaces; such decorations and treatment in the last year of the Term to be executed in such colours and materials as the Landlord may reasonably notify to the Tenant from time to time.

To keep the Demised Premises in a clean and tidy condition and free from deposits of refuse or rubbish AND as often as reasonably necessary to clean properly all windows and window frames (internally) and all other glass in the Demised Premises PROVIDED ALWAYS that the Tenant shall not be obliged to clean the Brise Soleil and external glass in the Demised Premises as it is acknowledged that that the cleaning (only) of the Brise Soleil and external glass of the Building are included in the Building Services.

 

17

---

 

PROVIDED THAT any dispute in relation to Clause 4.8 shall be referred by either the Landlord or the Tenant to an independent architect for determination.

Subject to compliance by the Landlord with the provisions of Clause 8.3, to permit the Landlord with all necessary materials and appliances at all reasonable times upon reasonable prior notice of at least 48 hours (except in cases of emergency) to enter and remain upon the Demised Premises for any of the following purposes:-

18

---

 

Whenever the Landlord shall give written notice to the Tenant of any defects, wants of repair or breaches of covenant, the Tenant shall within thirty (30) days of such notice, or sooner if requisite, make good and remedy the breach of covenant to the reasonable satisfaction of the Landlord and if the Tenant shall fail within forty (40) days of such notice, or as soon as reasonably possible in the case of emergency, to commence and then diligently and expeditiously to continue to comply with such notice, the Landlord may enter the Demised Premises and carry out or cause to be carried out all or any of the works referred to in such notice and all costs and expenses thereby incurred shall be paid by the Tenant to the Landlord on demand, and in default of payment shall be recoverable as rent in arrears including VAT invoices where applicable.

The Landlord may serve interim dilapidations schedules on the Tenant from time to time during the Term and the Tenant shall be obliged to reimburse the Landlord within fourteen (14) days of written demand for the reasonable vouched costs of the Landlord in preparing such schedules, and the Tenant must remedy within forty (40) days of such notice, all such dilapidations.

To comply and be bound by (and to procure compliance by any under tenant, licensee or their respective servants, agents, and all persons using the Demised Premises) of such reasonable written rules and regulations regarding the Building and the Estate, and the provision of Building Services, Basement Services and Estate Services (but excluding the Office Areas which are wholly operated and controlled by the Tenant) as may be made from time to time by the Landlord and / or the Management Company or their respective agents in the interest of good estate management and communicated to the Tenant with reasonable prior notice provided that in the event of any conflict between the terms of this Lease and such regulations, the terms of this Lease shall prevail.

 

19

---

 

in each case, taking into account the Demised Premises loading, weight and capacity limits as advised by the Landlord to the Tenant in writing.

Not to discharge into any Conduits any oil or grease or any noxious or deleterious effluent or substance whatsoever which may cause an obstruction or might be or become a source of danger, or which might injure the Conduits or the Adjoining Property.

Not to do anything in or about the Demised Premises which could reasonably be expected to become a nuisance, or which is likely to cause damage or disturbance to the Landlord or the owners, tenants or occupiers of the Adjoining Property, or which is likely to be injurious to the value, tone, amenity or character of the Demised Premises.

20

---

 

21

---

 

Not to erect or display on the exterior of the Demised Premises or in the windows thereof so as to be visible from the exterior, any pole, flag, aerial, advertisement poster, notice or other sign or thing whatsoever without the Landlord’s prior written consent (not to be unreasonably withheld or delayed provided that it shall not be unreasonable for the Landlord to withhold its consent for any signage application if the proposed signage is offensive or is substantially incompatible with the character of the Building) or which does not comply with the Tenant’s obligations under Clause 4.24 or any relevant planning permission.

Not to assign, transfer, underlet, or part with the possession or occupation of the Demised Premises or any part thereof or suffer any person to occupy the Demised Premises or any part thereof as a licensee BUT SO THAT NOTWITHSTANDING the foregoing the Landlord shall not unreasonably withhold or delay its consent to an assignment of the entire of the Demised Premises or an underletting of the entire or part of the Demised Premises to an assignee/underlessee that constitutes an institutionally acceptable covenant and that is of good and sufficient financial standing (and in the case of an assignment, is otherwise to the reasonable satisfaction of the Landlord) sufficient to meet its obligations as aforesaid subject always to the following provisions or such of them as may be appropriate, that is to say:

 

22

---

 

and PROVIDED FURTHER that the Tenant has obtained the necessary Fire Safety Certificate and Disability Access Certificate and any other consents or approvals for the sub-division of any floor.

In the case of such underlease the same shall be made without taking a fine or premium at the then full current open market rent and the under-lessee shall, if required by the Landlord, enter into a direct covenant with the Landlord to perform and observe all the covenants (other than that for payment of the rents hereby reserved) and conditions herein contained and every such under-lease shall also be subject to the following conditions, that is to say that it shall contain:-

23

---

 

In respect of the above, the Landlord agrees to furnish to the Tenant a calculation of any sums due (the “Statement”) signed by the Landlord’s auditors or tax advisors and such Statement shall (save in the case of manifest error) be final and binding on the parties. All amounts shall be paid in advance to the Landlord prior to issuing consent to any proposed alienation.

24

---

 

AND notwithstanding any such sharing of possession, the Tenant shall be and remains liable to the Landlord for any breach by either the Tenant or such Group Company of any of the covenants on the part of the Tenant contained in the Lease.

Within fourteen (14) days of every alienation, assignment, transfer, assent, under-lease, assignment of under-lease or any other disposition, whether mediate or immediate, of or relating to the Demised Premises or any part thereof, to produce to and leave with the Landlord or its solicitors a certified copy of the deed, instrument or other document evidencing or effecting such disposition and to pay to the Landlord’s solicitors their reasonable vouched legal costs and other expenses incurred in connection with such alienation.

25

---

 

Upon making any application or request in connection with the Demised Premises or this Lease, to disclose to the Landlord such information as the Landlord may reasonably require and, whenever the Landlord shall reasonably request, to supply full particulars;

To pay and indemnify the Landlord against all reasonable vouched costs, fees, charges, disbursements and expenses properly incurred by the Landlord, including, but not limited to, those payable to solicitors, counsel, architects, surveyors and sheriffs

26

---

 

PROVIDED ALWAYS for the avoidance of doubt the Tenant shall not be responsible for any breaches of any Acts, Statutory Instruments, Bye Laws and other regulations now in force arising prior to the Term Commencement Date.

27

---

 

Within seven (7) days of receipt of same (or sooner if requisite having regard to the requirements of the notice or order in question or the time limits stated therein) to produce to the Landlord a true copy and any further particulars required by the Landlord of any notice or order or proposal for the same given to the Tenant and relevant to the Demised Premises or the occupier thereof by any government department or local or public or statutory authority, and, without undue delay, to take all necessary steps to comply with the notice or order in so far as the same is the responsibility of the Tenant, and, at the request of the Landlord and (if the relevant notice solely impacts upon Demised Premises) at the joint cost of the Tenant and the Landlord, to make or join with the Landlord in making such objection or representation against or in respect of any such notice, order or proposal as the Landlord  shall deem expedient.

28

---

 

29

---

 

Not to stop up, darken or obstruct any of the windows or lights belonging to the Demised Premises and not to permit any new window, light, opening, doorway, passage, Conduits or other encroachment or easement to be made or acquired by any third party into, upon or over the Demised Premises or any part thereof, and in case any person shall attempt to make or acquire any encroachment or easement whatsoever, to give written notice thereof to the Landlord immediately the same shall come to the notice of the Tenant, and, at the request of the Landlord but at the cost of the Tenant, to adopt such means as may be reasonably required by the Landlord for preventing any such encroachment or the acquisition of any such easement.

30

---

 

31

---

 

32

---

 

Not to park or permit to be parked bicycles in any part of the Demised Premises or the Building other than in the designated bicycle racks provided in the Basement.

33

---

 

The Landlord HEREBY COVENANTS with the Tenant as follows:-

That the Tenant paying the rents reserved by this Lease and performing and observing the covenants on the part of the Tenant herein contained, shall and may peaceably hold and enjoy the Demised Premises during the Term without any interruption by the Landlord or any person lawfully claiming through, under, or in trust for it.

Subject to payment of the Tenant’s Proportion of the Estate Service Charge, to provide or cause to be provided the maintenance and services more particularly set forth in Schedule 5 in accordance with the principles of good estate management.  

Subject to payment of the Tenant’s Proportion of the Building Service Charge, to provide or cause to be provided the maintenance and services more particularly set forth in Schedule 6 in a good and workmanlike manner to Grade A Office Standards in accordance with the principles of good estate management.  

Subject to payment of the Tenant’s Proportion of the Basement Service Charge, to provide or cause to be provided the maintenance and services more particularly set forth in Schedule 7 in accordance with the principles of good estate management.  

To procure that the Management Company complies with its obligations pursuant to this Lease.

34

---

 

Subject to the Landlord being able to effect insurance against any one or more of the items referred to in this sub-clause being available in the market on market standard commercial terms and subject to reimbursement by the Tenant of the sums referred at Clause 3.2 hereof, the Landlord covenants with the Tenant to insure the following in the name of the Landlord:-

provided that the Landlord shall, at the request of the Tenant, procure that the Landlord’s insurance for the Building shall provide a waiver of all rights of subrogation against the Tenant, its’ contractor and the Tenant’s contractor’s sub-contractors (“Clause 26 Cover”) for any period during which the Tenant may undertake alterations in accordance with this Lease, subject only to (i) such cover being available in the Irish insurance market at reasonable rates; and (ii) the payment of any increase in the premium associated with the Clause 26 Cover and compliance by the Tenant with any requirements of the Landlord’s insurer associated therewith.

35

---

 

If the Building or any part thereof or the means of access thereto is destroyed or damaged by any of the Insured Risks so as to render the Demised Premises unfit for use and occupation or without suitable means of access then:-

the Landlord shall lay out the proceeds of such insurance, (other than any in respect of the loss of rent and service charge sums referred to in Clause 3 hereof), in the rebuilding and reinstating of the Demised Premises or the part or parts thereof  or the means of access thereto so destroyed or damaged, substantially as the same were prior to any such destruction or damage (but not so as to provide accommodation identical in layout and manner or method of construction if it would not be reasonably practical to do so).  For the avoidance of any doubt, the Tenant shall not be liable for any shortfall in insurance proceeds associated with rebuilding and reinstating the Demised Premises unless the shortfall in whole or in part has arisen by reason of any act neglect or default of the Tenant or the servants agents licensees or invitees of the Tenant or any under tenant or any person under its or their control.

If the Landlord is prevented (for whatever reason) from rebuilding or reinstating the Building (including the Demised Premises) the Landlord shall be relieved from such obligation and shall be solely entitled to all the insurance moneys and if such rebuilding and reinstating shall continue to be so prevented for the Loss of Rent Period after the date of the destruction or damage so that after the said Loss of Rent Period the rebuilding/reinstatement is not substantially complete (which shall include but is not limited to the Demised Premises being fit for normal business use and occupation and accessible but excluding any Tenant fit-out elements) and this Lease has not been terminated by frustration, the Landlord or the Tenant may at any time after the expiry of such Loss of Rent Period by written notice given to the other determine this Lease but without prejudice to any claim by either party against the other in respect of any antecedent breach of covenant.

In the event that the Building is destroyed or damaged by an Uninsured Risk which has not been caused by any act, neglect, default or omission of the Tenant or any under-tenant or its or their servants, agents, licensees or invitees so as to render the Demised Premises unfit for occupation and use by the Tenant or without suitable access then the Rent and service charges payable hereunder or a fair proportion thereof according to the nature and extent of the damage will be suspended until the Demised Premises has been rebuilt or reinstated so as to render the Building fit for occupation and use and with suitable access or for the Loss of Rent Period whichever is the shorter period and any dispute about the extent, proportion or period of such suspension is

36

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to be referred to a single arbitrator to be appointed, in default of agreement, upon the application of either party, by or on behalf of the President (or other officer endowed with the functions of such President) for the time being of the Society of Chartered Surveyors in accordance with the provisions of the Arbitration Act 2010.  If following on the destruction or damage from the Uninsured Risk as aforesaid, the Landlord has not served a notice on the Tenant of its intention to reinstate and repair the Building within a period of eighteen (18) months from the date of such destruction or damage (or if the Building has not been reinstated within the Loss of Rent Period from the date the service by the Landlord of a notice of its intention to rebuild or reinstate the Building) then the Tenant or the Landlord may terminate this lease at any time thereafter by at least two (2) months’ written notice served on the other and such termination shall be effective as of the date of the destruction or damage but without prejudice to any claim by either party against the other in respect of any antecedent breach of covenant PROVIDED ALWAYS THAT if the Landlord decides not to rebuild or reinstate the Building then it will immediately notify the Tenant in writing and on receipt by the Tenant of such notice either party can terminate this Lease by written notice to the other at any time but without prejudice to any claim by either party against the other in respect of any antecedent breach of covenant.  For the avoidance of any doubt, in the event that the Landlord elects to rebuild or reinstate the Building following damage or destruction by Uninsured Risks, the Tenant shall not be liable for any costs associated therewith.

In case the Building (including any access / egress to it) or any part or parts thereof shall be destroyed or damaged by any of the Insured Risks or Uninsured Risks (only for the purposes of the rent first reserved by this Lease) so as to render the Demised Premises unfit for use and occupation or without suitable access and the insurance shall not have been vitiated or payment of the policy moneys refused in whole or in part as a result of some act or default of the Tenant or any under-tenant or any person under its or their control, then the rent first reserved by this Lease and the service charges referred to in Clause 3.3 or a fair proportion thereof, according to the nature and extent of the damage sustained, shall be suspended until the Building or the part destroyed or damaged shall be again rendered fit for use and occupation and accessible and any dispute regarding the cesser of rent or service charges shall be referred to a single arbitrator to be appointed, in default of agreement, upon the application of either party, by or on behalf of the President (or other officer endowed with the functions of such President) for the time being of the Society of Chartered Surveyors in accordance with the provisions of the Arbitration Act 2010.  

 

The Tenant shall not do or omit to do anything that could cause any policy of insurance in respect of or covering the Demised Premises or such of any Adjoining Property as may be owned by the Landlord to become void or voidable wholly or in part nor do anything whereby any abnormal or loaded premium may become payable and the Tenant shall, on demand, pay to the Landlord all proper and reasonable expenses incurred by the Landlord in renewing any such policy.

The Tenant shall give notice to the Landlord forthwith upon the Tenant becoming aware of the happening of any event or thing which might affect any insurance policy relating to the Demised Premises.

The Landlord shall notify the Tenant as soon as reasonably practicable if it cannot insure against any Insured Risks or on the cancellation termination or lapse of any insurance cover which the Landlord is obliged to effect and maintain.

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The Landlord shall maintain the Safety File for the Building in accordance with its obligations under the Safety Health and Welfare at Work (Construction) Regulations 2013 and the Landlord acknowledges the right of the Tenant to production of the said Safety File and a copy of the application for any Fire Safety Certificate for the Building or the Building Common Areas and to delivery of copies thereof (at the Tenant’s cost) and hereby undertakes with the Tenant for safe custody of same.

The Tenant shall comply at all times with the LEED requirements set out in Schedule 10 of this Lease.

The Management Company HEREBY COVENANTS with the Landlord and Tenant as follows:-

Subject to the payment of the Tenant's Proportion of the Estate Service Charge and the Tenant’s Proportion of the Basement Service Charge, to provide or cause to be provided such of the maintenance and services more particularly set forth in Schedule 5 and Schedule 7.

PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED as follows:-

 

Without prejudice to any other right, remedy or power herein contained or otherwise available to the Landlord:-

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THEN, and in any such case, the Landlord may at any time thereafter re-enter the Demised Premises or any part thereof in the name of the whole and thereupon the Term shall absolutely cease and determine but without prejudice to any rights or remedies which may then have accrued to either party against the other in respect of any antecedent breach of any of the covenants or conditions contained in this Lease.

That, where it is otherwise unavoidable, it shall be lawful for the Management Company and /or Landlord at any time or times during the Term to temporarily or permanently close any part of the Estate Common Areas, Building Common Areas and / or the Basement or to erect obstructions or boundary marks or take such steps as the Landlord and / or the Management Company shall think necessary or as may be required or recommended by any local authority  PROVIDED ALWAYS that the Landlord and the Management Company shall use their reasonable endeavours to procure (insofar as it is within the control of the Landlord and/or the Management Company to do so), (i) that reasonable and adequate means of access to and egress from the Demised Premises are continuously available for the Tenant, (ii) that the use and enjoyment of the Demised Premises by the Tenant is not materially affected, and (iii) that all such parts as aforesaid are reopened as soon as circumstances may reasonably permit to re-open all such parts as aforesaid as soon as circumstances may reasonably permit.

In exercising any right or entitlement for the Landlord or the Management Company to enter or re-enter the Demised Premises for any purpose permitted by this Lease, the party exercising such rights (and the term “party” for the purposes of this clause shall mean the Landlord, the Management Company, any superior landlord or any others so permitted as the case may be) shall (save in cases of emergency, when such party shall nevertheless use its reasonable endeavours to comply with the following sub-paragraphs (a) to (f)):

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In performing any obligations under this Lease, the Landlord and /or  the Management Company (as appropriate) shall be entitled at its sole discretion to employ such reputable agents, contractors or other persons as the Landlord and/or Management Company may from time to time think fit;

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Neither the Management Company nor the Landlord shall be responsible for any unavoidable delay or stoppage in connection with the provision of the said maintenance and services including the Estate Services, Basement Services and Building Services or for any loss, injury or damage sustained by the Tenant as a result of the temporary failure of the Landlord and/or the Management Company or their agents to provide the same or for any temporary omission to perform the same if such temporary failure, delay, stoppage or omission shall be due to any shortage of labour or materials inclement weather or other cause not within the control of the Landlord and/or the Management Company PROVIDED THAT the  Landlord and/or the Management Company have taken reasonable steps to remedy or make good any such failure, delay, stoppage or omission as aforesaid as soon as may be practicable and within shorter time periods in case of emergency.

If the Management Company and or the Landlord shall fail to provide the maintenance and services as herein provided the Tenant’s sole remedy shall be an action to compel the Landlord and/or the Management Company to do so and the Landlord and/or the Management Company shall not be liable to the Tenant in respect of any loss, injury or damage which the Tenant shall sustain as a result of the failure of the Landlord and/or the Management Company to provide such maintenance or services or the failure of any member of the Landlord and/or the Management Company’s staff properly to carry out his duties unless the Tenant shall notify the Landlord and/or the Management Company in writing specifying the failure for which the Tenant complains and the Landlord and/or the Management Company shall after the expiration of 10 Working Days from the receipt of the said notice continue to neglect to provide said maintenance or services in respect of which notice has been given by the Tenant.

The Landlord and/or the Management Company shall be entitled not to or to cease to provide any maintenance and services set forth in Schedule 5 and/or Schedule 6 if any maintenance and services shall in the opinion of the Landlord and/or the Management Company having regard to the principles of good estate management cease to be for the benefit of the Building and / or the Estate and / or Basement or shall have become due to technological change or otherwise obsolete or redundant PROVIDED THAT before taking any such action the Landlord and / or Management Company shall have due regard to any reasonable representations made by the Tenant.  

Nothing herein contained shall impliedly confer upon or grant to the Tenant any easement, right or privilege other than those expressly granted by this Lease.

That the Demised Premises shall not include, by implication or otherwise, any part of the Building Common Areas, or the Estate Common Areas or any airspace thereover or thereunder or the subsoil ground thereunder.

Nothing contained in this Lease or in any consent granted by the Landlord under this Lease shall imply or warrant that the Demised Premises may be used under the Planning Acts or the Building Control Act and the Public Health Acts for the purpose herein authorised or any purpose subsequently authorised and the Tenant hereby acknowledges and admits that the Landlord has not given or made at any time any representation or warranty that any such use is or will be or will remain a permitted use under the Planning Acts.

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The Tenant acknowledges that this Lease has not been entered into in reliance wholly or partly on any statement or representation made by or on behalf of the Landlord, except any such statement or representation that is expressly set out in this Lease.

Nothing contained in or implied by this Lease shall give to the Tenant the benefit of or the right to enforce or to prevent the release or modification of any covenant, agreement or condition entered into by any tenant of the Landlord in respect of the Adjoining Property.

Each of the Tenant’s covenants shall remain in full force both at law and in equity notwithstanding that the Landlord shall have waived or released temporarily any such covenant, or waived or released temporarily or permanently, revocable or irrevocably a similar covenant or similar covenants affecting other property belonging to the Landlord.

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For the avoidance of doubt, the Tenant shall be entitled to use the Demised Premises for the Permitted User twenty-four (24) hours per day and three hundred and sixty-five (365) days per year for the duration of the Term and the Tenant shall be permitted access to the Building including the Basement during all such hours.

 

In consideration of this Lease having been entered into at its request, the Guarantor covenants and agrees with the Landlord, as a primary obligation, in the terms set out in Schedule 5.

IT IS HEREBY CERTIFIED for the purposes of Section 238 of the Companies Act 2014 that the Landlord and the Tenant are not bodies corporate connected with one another in a manner which would require this transaction to be ratified by resolution of either.

 

IN WITNESS whereof the parties hereto have executed this Lease in the manner following and on the day and year first herein WRITTEN.

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SCHEDULE 1

 

Demised Premises

 

ALL THAT the internal and non-structural parts of the Basement, ground, first, mezzanine, second, third, fourth and fifth floors of the Building and which said premises are for the purposes of identification only shown delineated on Plan No. 4, 6, 7, 8, 9, 10, 11 and 12 annexed hereto and thereon in lined red, together with any Landlord’s fixtures and fittings in or about the same and all other additions, alterations and improvements thereto which may be carried out during the Term and shall include without limitation the following:-

BUT EXCLUDING any structural parts of the Building that are not comprised or included within the items (a) to (h) above.

 

AND FURTHER EXCLUDING any part of the Retained Areas.

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SCHEDULE 2

Rights And Easements Granted  

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Schedule 3

Exceptions and Reservations

The following rights and easements are excepted and reserved out of the Demised Premises to the Landlord, the Management Company and the other tenants and occupiers of the Building and or the Adjoining Property and all other persons authorised by the Landlord or having the like rights and easements:-

PROVIDED THAT the Landlord or the person exercising the foregoing rights shall cause as little inconvenience as practicable to the Demised Premises and shall make good, without unreasonable delay, any damage thereby caused to the Demised Premises;

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Schedule 4

Rent Reviews

In this Schedule, the following expressions shall have the following meanings:-

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The rent first reserved by this Lease shall be reviewed at each Review Date in accordance with the provisions of this Schedule and, from and including each Review Date, the rent shall be the Open Market Rent on the Relevant Review Date, as agreed or determined pursuant to the provisions of this Schedule.

The Open Market Rent at any Review Date may be agreed in writing at any time between the Landlord and the Tenant but if, for any reason, they have not so agreed, either party may (not earlier than six months prior to and at any time after the Relevant Review Date) by notice in writing to the other require the Open Market Rent to be determined by the Surveyor.

In default of agreement between the Landlord and the Tenant on the appointment of the Surveyor, the Surveyor shall be appointed by the President on the written application of either party such appointment to be made by the President within 14 days of receipt of such notification.

The Surveyor shall:-

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The fees and expenses of the Surveyor including the costs of his nomination, shall be in the award of the Surveyor (but this shall not preclude the Surveyor from notifying both parties of his total fees and expenses notwithstanding the non-publication at that time of his award) and, failing such award, the same shall be payable by the Landlord and the Tenant in equal shares who shall each bear their own costs, fees and expenses.  Without prejudice to the foregoing, both the Landlord and the Tenant shall each be entitled to pay the entire fees and expenses, due to the Surveyor and thereafter recover as a simple contract debt the amount (if any) due from the party who failed or refused to pay same.

If the Surveyor fails to give notice of his determination within the time aforesaid, or if he dies, or is unwilling to act, or becomes incapable of acting, or if, for any other reason, he is unable to act, either party may request the President to discharge the Surveyor and appoint another surveyor in his place to act in the same capacity, which procedure may be repeated as many times as necessary.

In the event that by the Relevant Review Date the amount of the reviewed rent has not been agreed or determined as aforesaid (the date of agreement or determination being herein called “the Determination Date”) then, in respect of the period (herein called “the Interim Period”) beginning with the Relevant Review Date and ending on the day before the Quarterly Gale Day following the Determination Date, the Tenant shall pay to the Landlord rent at the yearly rate payable immediately before the Relevant Review Date, and on the Determination Date, the Tenant shall pay to the Landlord, on demand as arrears of rent, the amount (if any) by which the reviewed rent exceeds the rent actually paid during the Interim Period (apportioned on a daily basis) together with interest thereon at the Base Rate from the Relevant Review Date to the date of actual payment.  In the case of a rent reduction the Tenant shall be afforded a credit for any rent over paid (together with interest thereon at the Base Rate from the date of receipt of any such overpayment of rent to the Quarterly Gale Day following the Determination Date) against future rent payable under the Lease.

On each and every occasion during the Term that Rent Restrictions shall be in force, then and in each and every case:

AND until the Rent Restrictions shall be relaxed either partially or wholly the rent reserved by this Lease (which if previously reviewed shall be the rent payable under this Lease immediately prior to the imposition of the Rent Restrictions) shall (subject always to any provision to the contrary appearing in the Rent Restrictions) be the maximum Rent from time to time payable hereunder.

As soon as the amount of any reviewed rent has been agreed or determined, memoranda thereof shall be prepared by the Landlord or its solicitors and thereupon shall be signed by or on behalf of the Tenant and the Landlord, and the Tenant shall be responsible for and shall pay to the Landlord the stamp duty (if any) payable on such memoranda and any counterparts thereof but the parties shall each bear their own costs in respect thereof.

For the purpose of this Schedule, time shall not be of the essence.

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Schedule 5

Part I -Maintenance and Estate Services to be provided by the Management Company

Subject to the provisions of Part II of this Schedule 5, the services to be provided by the Management Company are:

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Part II

Tenant’s Liability to Contribute to the Estate Service Charge

The Management Company shall prepare the Estate Service Charge budget on an annual basis  and the  Management Company may from time to time at its discretion but acting reasonably and in the interests of good estate management, alter the percentages or fractions attributable to different parts of the Estate, where it deems this to be appropriate.

 

The Tenant's Proportion of the Estate Service Charge for each Service Charge Period shall be discharged by means of equal quarterly payments in advance to be made on each of the Instalment Days in each year or on such date on which a demand therefor is made (whichever shall be the later date) and by such additional payments as may be required under Clauses 3 and 7 of this Part II of Schedule 5.

For the purposes of this Part II of Schedule 5, “Service Charge Period” means the period of twelve months from 1^st January to 31^st December in each year (or such other period not exceeding 12 months as the Management Company may from time to time determine).

Subject as hereinafter set out, the amount of each advance payment of the Estate Service Charge shall be one quarter of the Tenant’s Proportion of such amount as the Management Company may reasonably estimate to be the Estate Service Charge for the relevant Service Charge Period and which is notified to the Tenant at least thirty (30) days or before the time when the demand for an advance payment is made.

The Estate Service Charge shall be deemed to accrue on a day-to-day basis in order to ascertain yearly rates and for the purposes of apportionment in relation to periods other than a Service Charge Period.  In the event that this Deed shall commence on a day which is not one of the Instalment Days, then the Estate Service Charge shall be the apportioned amount of the Tenant’s Proportion of the Estate Service Charge due up to the next Instalment Day and thereafter the provisions of Clause 4 of this Part II of Schedule 5 shall apply.

The Management Company as soon as practicable (but in any event within six (6) months) after the end of each Service Charge Period shall submit to the Tenant the Management Company’s financial statements relevant to the Estate Service Charge duly audited and certified by the Accountant.  Such financial statements shall be prepared on an accruals basis and shall inter alia disclose:-

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If the Tenant’s Proportion (expressed as a cash amount) of the Estate Service Charge as certified by the Accountant (the “Certificate”) shall be more or less than the total of the advance payments referred to in Clause 4 of this Part II of the Schedule 5 above then any sum due to or allowable by the Management Company in respect of the Tenant’s Proportion of the Estate Service Charge for the relevant Service Charge Period shall forthwith be paid (within thirty (30) days of written demand) or allowed as the case may be.  The Certificate (or a copy thereof duly certified  by the person by whom same is given) shall be conclusive evidence for the purposes hereof of the matters which it purports to certify and shall be final and binding on the parties hereto insofar as same relates to matters of fact save in the case of manifest error.

If so requested by the Tenant by not less than fourteen (14) days prior written notice, the Management Company shall make available for inspection by the Tenant or its duly authorised agent at a reasonably accessible location for a period of one (1) month following the delivery to the Tenant of the Certificate the books and other documents or records which are in the reasonable opinion of the Management Company relevant for the purpose of ascertaining or verifying the level of the Estate Service Charge and the Tenant or its duly authorised agent shall be entitled to take copies (at the expense of the Tenant) of the relevant documents.

In the event that the Management Company at any time during any Service Charge Period incur heavy exceptional expenditure (providing same is vouched) which forms part of the Estate Service Charge the Management Company shall be entitled to recover from the Tenant the Tenant’s proportion of such costs from the Estate Sinking Fund in accordance with the provisions of Clause 12 of this Part II of Schedule 5 of this Lease.

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The Tenant shall not be entitled to object to the Estate Service Charge or otherwise on any of the following grounds:-

In the event that a sinking fund is established pursuant to Clause 22 of Part I of this Schedule 5 the Management Company shall be entitled to include in the Estate Service Charge for any Service Charge Period an amount which the Management Company determines is appropriate in accordance with the principles of good estate management to build up and maintain such sinking fund for the upkeep and maintenance costs and all other potential capital outlay associated with the Estate Common Areas PROVIDED THAT should such sinking fund be provided or established by the Management Company then -

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PROVIDED ALWAYS THAT in providing the Estate Services listed in this Schedule, the Management Company shall act reasonably, in good faith, in accordance with the principles of good estate management and in a financially prudent manner AND where appropriate, the Management Company shall have due regard to the reasonable representations of the Tenant in the operation of the Estate Services.

PROVIDED FURTHER THAT notwithstanding anything contained in this Schedule, the Tenant hereby acknowledges that the Management Company shall be entitled to cease or not to provide any of the services itemised in this Schedule if any maintenance and services shall in the opinion of the Management Company (acting reasonably) not be for the benefit or cease to be for the benefit of the tenants and occupiers of the Estate or if any of the said services have become or shall have become obsolete or redundant due to technological change or otherwise.

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Schedule 6

Part I

 

Building Services

 

Subject to the provisions of Part II of this Schedule 6, the maintenance and services to be provided by the Landlord are:

 

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Part II

 

Provisos in respect of the Building Services

 

PROVIDED ALWAYS that the provision of the Building Services by the Landlord shall be subject to the following stipulations and conditions:

 

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PROVIDED ALWAYS THAT in providing the Building Services listed in this Schedule, the Landlord shall act reasonably, in good faith, in accordance with the principles of good estate management and in a financially prudent manner AND where appropriate, the Landlord shall have due regard to the reasonable representations of the Tenant in the operation of the Building Services.

PROVIDED FURTHER THAT notwithstanding anything contained in this Schedule, the Tenant hereby acknowledges that the Landlord shall be entitled to cease or not to provide any of the services itemised in this Schedule if any maintenance and services shall in the opinion of the Landlord (acting reasonably and in accordance with the principles of good estate management) not be for the benefit or cease to be for the benefit of the tenants and occupiers of the Building or if any of the said services have become or shall have become obsolete or redundant due to technological change or otherwise.

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Part III

 

Calculation and payment of Building Service Charge

 

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PROVIDED ALWAYS that notwithstanding anything contained in this Schedule, the Tenant hereby acknowledges that the Landlord shall be entitled to cease or not to provide any of the services itemised in this Schedule if any maintenance and services shall in the opinion of the Landlord (acting reasonably and in accordance with the principles of good estate management) not be for the benefit or cease to be for the benefit of the tenants and occupiers of the Building or if any of the said services have become or shall have become obsolete or redundant due to technological change or otherwise.

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Schedule 7

Part One – Basement Services

Subject to the provisions of Part Two of this Schedule 7, the services to be provided by the Management Company are:

Cleansing, repairing, renewing,  maintaining, overhauling, operating, painting and decorating and redecorating, resurfacing, and modernising and replacing the whole of the Basement Common Parts where necessary or to modernise and improve the Basement Common Parts for the benefit of the users thereof, including without prejudice to the generality of the foregoing the roof, foundations, structures, pillars, columns, walls, fascias, piers, windows and where necessary re-building and replacing the Basement Common Parts.

So far as may be necessary for the reasonable use and enjoyment by the Tenant of the Demised Premises to keep the Basement Common Parts in good repair and condition and to keep all the apparatus, equipment, plant and other items therein properly maintained, repaired and where necessary renewed and replaced.  

Provided that the Management Company shall not be liable under this clause for any repairs which are the liability of an occupational tenant of a Block or part of a Block pursuant to any letting or results from failure by the occupational tenant of the Premises to comply with its obligations under any occupational lease.  

Cleaning and maintaining in a proper manner, the Basement Common Parts and to keep the same adequately lighted including the maintenance and provision of the emergency lighting where appropriate, at such times as the Management Company shall reasonably determine.

Employing (either directly or by contract) such staff as the Management Company or its nominee may (acting reasonably) deem necessary to enable it to provide all or any of the Basement Services in the Basement Common Parts and for the general management, maintenance and cleaning and security of the Basement Common Parts, on such terms and conditions as the Management Company considers are appropriate.

The Management Company may from time to time provide such agent or agents and/or management personnel for the management of the Estate as it considers necessary on reasonable terms.

Maintaining and repairing operating, inspecting, servicing, overhauling, cleaning, lighting, (as and when necessary) and renewing and replacing the machinery, within the Basement Common Parts from time to time, including but not limited to, boilers and items relating to the ventilation, heating, air conditioning and hot and cold water systems, travelators and escalators, the lift and lift shafts and lift motor rooms, building management systems, compactors, building management systems, compactors, floor flow machines, music systems, automatic doors and all fuels and electricity and any necessary maintenance contract and insurance in respect thereof.

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Maintaining, repairing, operating and inspecting, servicing and overhauling, cleaning and (as and when necessary) repairing, renewing, modifying or replacing any security and emergency systems for the Basement Common Parts including, but not limited to, alarm systems, internal and Estate telephone and close circuit television systems, generators, emergency lighting, fire detection and prevention systems, any fire escapes for the Basement Common Parts and all firefighting and fire prevention equipment and appliances (other than those for which a tenant is responsible) and any traffic barriers and traffic control and security systems.  

Maintaining, updating and renewing name boards and signs in the Basement Common Parts and all directional signs and fire regulation notices and any flags, flag poles and television and radio aerials and any advertising boards or screens electronic or otherwise.  

Paying all existing and future rates, taxes, duties, charges, assessments, impositions and outgoings whatsoever (whether parliamentary, parochial, local or of any other description and whether or not of a capital or non-recurring nature or of a wholly novel character) payable by the Management Company in respect of the Basement Common Parts or any part thereof including but not limited to any security hut or site management office or other structure used exclusively for the management or required for the general benefit of the Basement Common Parts so far as same are not separately assessed by any competent statutory authority and all water rates attributable to the Basement Common Parts insofar as same shall not be separately assessed by any competent statutory authority.  

Taking any steps deemed desirable or expedient by the Management Company acting reasonably for complying with, any statute concerning any matters relating or alleged to relate to the Basement Common Parts or any part of it for which any owner of a Block or any occupational tenant is not directly responsible.  

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The Landlord or Management Company may at its sole option provide for a continuing sinking fund to be applied in and towards matters of a capital nature (subject to the provisions of Part II of this Schedule).

Value Added Tax at the rate for the time being in force chargeable in respect of any items of expenditure referred to in this part of this Schedule to the extent not otherwise recoverable by the Management Company or its nominee.  

The cost of periodic valuations and surveys of the Basement Common Parts for insurance purposes not more than once in every calendar year.

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Save and in respect of matters covered by the insurance policies maintained by the owner(s) for the Blocks, the cost of insurance for and against public, employers and other liability of the Management Company arising out of or in relation to the Basement Common Parts and the cost of insuring the Basement Common Parts against the Insured Risks and such other insurances as the Management Company acting reasonably, from time to time, deem necessary to effect including but without prejudice to the generality of the foregoing engineering insurances in respect of break-down and/or replacement of plant and the cost of insurance of building structures and equipment in the Basement Common Parts and insurance of any other risks which the Management Company deems prudent to insure against.  

Any amount which may be deducted or disallowed by the Management Company’s insurers pursuant to any excess provisions in the insurance policies upon settlement of any claim by the Management Company.  

Taking such steps as may be necessary for the control of pests and vermin and any other steps reasonably necessary to safeguard the health and safety of any persons using the Basement including but not limited to consultancy fees and other costs associated with the provision and review of health and safety management systems.

Collecting, storing and disposing of refuse including providing, hiring, maintaining, repairing and  replacing refuse compactors, waste processors or similar machinery, equipment or containers for the collection, storage and disposal of refuse in the Basement.

The Management Company shall from time to time provide and maintain such reasonable flood defences and take such reasonable flood protection measures in respect of the Building and the Basement that the Management Company considers desirable, appropriate and/or necessary.

Strictly provided that the Basement Service Charge shall not include any of the following:

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Part Two – The Tenant’s Liability to Contribute to the Basement Service Charge

 

The Tenant’s Proportion of the Basement Service Charge for each Service Charge Period shall be discharged by means of equal quarterly payments in advance to be made on each of the Instalment Days in each year or on such date on which a demand therefor is made (whichever shall be the later date) and by such additional payments as may be required under Clauses 3 and 7 of this Part Two of the Sixth Schedule.

For the purposes of this Part Two of the Sixth Schedule, “Service Charge Period” means the period of twelve months from 1 January to 31 December in each year (or such other period as the Management Company may from time to time determine).

Subject to Clause 4 below and subject also as hereinafter set out, the amount of each advance payment of the Basement Service Charge shall be one quarter of the Tenant’s Proportion of the Basement Service Charge of such amount as the Management Company may reasonably estimate to be the Basement Service Charge for the relevant Service Charge Period and which is notified to the Block Owner at least thirty (30) days before the time when the demand for an advance payment is made.

The Basement Service Charge shall be deemed to accrue on a day-to-day basis in order to ascertain yearly rates and for the purposes of apportionment in relation to periods other than a Service Charge Period. In the event that this Deed shall commence on a day which is not one of the Instalment Days then the Basement Service Charge shall be the apportioned amount of the Tenant’s Proportion of the Basement Service Charge due up to the next Instalment Day and thereafter the provisions of Clause 4 above shall apply.

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The Management Company as soon as practicable (but in any event within six (6) months) after the end of each Service Charge Period shall submit to the Tenant the Management Company’s financial statements relevant to the Basement Service Charge duly audited and certified by the Accountant.  Such financial statements shall be prepared on an accruals basis and shall inter alia disclose:-

If the Tenant’s Proportion (expressed as a cash amount) of the Basement Service Charge as certified by the Accountant (the “Certificate”) shall be more or less than the total of the advance payments referred to in Clause 3 above then any sum due to or allowable by the Management Company in respect of the Tenant’s Proportion of the Basement Service Charge for the relevant Service Charge Period shall forthwith (within fourteen (14) days of written demand) be paid or allowed as the case may be.  The Certificate (or a copy thereof duly certified by the person by whom same is given) shall be conclusive evidence for the purposes hereof of the matters which it purports to certify and shall be final and binding on the parties hereto insofar as same relates to matters of fact save in the case of manifest error.

If so requested by the Tenant by not less than fourteen (14) days prior written notice, the Management Company shall make available for inspection by the Tenant or its duly authorised agent at a reasonably accessible location for a period of one (1) month following the delivery to the Tenant of the Certificate the books and other documents or records which are in the reasonable opinion of the Management Company relevant for the purpose of ascertaining or verifying the level of the Basement Service Charge and the Tenant or its duly authorised agent shall be entitled to take copies (at the expense of the Tenant) of the relevant documents.

In the event that the Management Company shall at any time during any Service Charge Period incur heavy exceptional expenditure which forms part of the Basement Service Charge the Management Company shall be entitled to recover from the Tenant the Tenant’s Proportion of the Basement Service Charge representing the whole of that expenditure on the Instalment Day next following (provided that at least thirty (30) days’ notice is provided to the Tenant.

The Management Company shall be entitled to include in the Basement Service Charge any payments properly made to third parties in settlement of any claims by such third parties in respect of any loss or damage sustained by the same in or about the Basement other than where caused by the negligence of the Management Company or its agents, to the extent that such claims are not recovered under any policy of insurance effected by the Management Company on either of the following grounds:-

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The Tenant shall not be entitled to object to the Basement Service Charge or otherwise on any of the following grounds:-

In the event that a sinking fund is established pursuant to Clause 12 of Part One of Schedule 7 the Management Company (or Landlord) shall be entitled to make annual provision in the Basement Service Charge for any Service Charge Period for an amount which the Management Company or Landlord reasonably determine for the repair, replacement or renewal of the Landlord’s plant, machinery, equipment, apparatus, fixtures and fittings and things forming part of the Basement or used in the operation and maintenance of the Basement (and not otherwise discharged through any other sinking fund contribution) PROVIDED THAT should such sinking fund be provided or established then

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In the event of the transfer by the Management Company of its interest in the Basement the Management Company shall ensure that the balance (inclusive of net interest) standing to the credit of the account is transferred to or otherwise taken over by the transferee on the same terms and conditions as herein contained.

The Basement Service Charge shall include a reasonable and appropriate contribution towards the costs of maintaining and repairing any structural parts (including structural columns and the foundations of such columns) which support the podium of the Estate (the roof of the Basement) and are not otherwise demised as part of any Block, Residential Unit or Retail Units as are located in the Basement.

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PROVIDED ALWAYS THAT in providing the Basement Services listed in this Schedule, the Management Company shall act reasonably, in good faith, in accordance with the principles of good estate management and in a financially prudent manner AND where appropriate, the Management Company shall have due regard to the reasonable representations of the Tenant in the operation of the Basement Services.

PROVIDED ALWAYS THAT notwithstanding anything contained in this Schedule, the Tenant hereby acknowledges that the Management Company shall be entitled to cease or not to provide any of the services itemised in this Schedule if any maintenance and services shall in the opinion of the Management Company (acting reasonably) not be for the benefit or cease to be for the benefit of the tenants and occupiers or of the Basement or if any of the said services have become or shall have become obsolete or redundant due to technological change or otherwise.

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Schedule 8

Guarantor covenants

 

The Guarantor hereby covenants with the Landlord, as a primary obligation, as follows:

That the Tenant or the Guarantor shall at all times during the Term (including any continuation or renewal of this Lease and whether before or after the expiration or termination of the Term) duly perform and observe all the covenants on the part of the Tenant contained in this Lease, including for the avoidance of doubt the payment of the rents and all other sums payable under this Lease (or any continuation or renewal of it)  in the manner and at the times herein specified and all sums which may be due to the Landlord for mesne rates or as payment for the use and occupation of the Demised Premises, and the Guarantor hereby indemnifies the Landlord against all claims, demands, losses, damages, liability, costs, fees and expenses whatsoever sustained by the Landlord by reason of or arising out of any default by the Tenant in the performance and observance of any of its obligations or the payment of any rent and other sums arising before or after the expiration or termination of this Lease or any continuation or renewal of it.

That the Guarantor is jointly and severally liable with the Tenant (whether before or after any disclaimer by a liquidator, official assignee, trustee in bankruptcy or other persons administering the assets of the Tenant or whether before or after any repudiation by an examiner or other persons administering the assets of the Tenant) for the fulfilment of all the obligations of the Tenant under this Lease and agrees that the Landlord, in the enforcement of its rights hereunder, may proceed against the Guarantor as if the Guarantor was named as the Tenant in this Lease.

That the Guarantor hereby waives any right to require the Landlord to proceed against the Tenant or to pursue any other remedy whatsoever which may be available to the Landlord before proceeding against the Guarantor and the Guarantor further acknowledges that these provisions are in addition to and not in substitution for any other rights which the Landlord may have and which may be enforced against the Guarantor whether or not recourse has been had to any such rights and whether or not any steps or proceedings have been taken against the Tenants.

That the Guarantor will not claim in any liquidation, examinership, bankruptcy, composition or arrangement of the Tenant in competition with the Landlord and will remit to the Landlord so much of the proceeds of any judgments and any distributions it may receive from any liquidator, examiner, official assignee, trustee in bankruptcy or other persons administering the assets of the Tenant as is due and owing to the Landlord and will hold for the benefit of the Landlord all security and rights the Guarantor may have over assets of the Tenant whilst any liabilities of the Tenant or the Guarantor to the Landlord remain outstanding.

That the Guarantor shall not be entitled to participate in any security held by the Landlord in respect of the Tenant's obligations to the Landlord under this Lease or to stand in the place of the Landlord in respect of any such security until all the obligations of the Tenant or the Guarantor to the Landlord under this Lease have been performed or discharged.

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That none of the following, or any combination thereof, releases, determines, discharges or in any way lessens or affects the liability of the Guarantor as principal debtor under this Lease or otherwise prejudices or affects the right of the Landlord to recover from the Guarantor to the full extent of this guarantee:

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THEN the Guarantor shall, if the Landlord by notice in writing given to the Guarantor within twelve months after such disclaimer or other event so requires, accept from and execute and deliver to the Landlord a new lease of the Demised Premises subject to and with the benefit of this Lease (if the same shall still be deemed to be extant at such time) for a term commencing on the date of the disclaimer or other event and continuing for the residue then remaining unexpired of the Term, such new lease to be at the cost of the Guarantor (which, for the avoidance of doubt, shall include the Landlord’s costs properly incurred in granting such new lease) and to be at the same rents and other sums payable in this Lease and subject to the same covenants, conditions and provisions as are contained in this Lease in so far as they are still applicable at the time and subject to the rights of any third party existing at the date of the grant;

or if the Landlord does not require the Guarantor to take a new lease, the Guarantor shall nevertheless upon demand pay to the Landlord the costs properly incurred by the Landlord in granting a lease of the Demised Premises or any part of it to a third party (or any attempted granting of such a lease which may for whatsoever reason prove unsuccessful) and a sum equal to the rents and other sums that would have been payable under this Lease (or any continuation or renewal of it) but for the disclaimer, repudiation, forfeiture or other event, such sums to be paid on the same dates and in the same manner as they would have been payable by the Tenant in respect of the period from and including the date of such disclaimer, repudiation, forfeiture or other event until the expiration of 6 months therefrom or until the Landlord has granted a lease of the Demised Premises to a third party (whichever shall first occur).

That this guarantee shall ensure for the benefit of the successors and assigns of the Landlord under the Lease without the necessity for any assignment thereof.

That the Guarantor will submit to the jurisdiction of the Irish courts in relation to any proceedings taken against the Guarantor or in relation to any new lease granted as aforesaid.

Where the Guarantor or the Tenant are bodies corporate that the Guarantor will comply with all statutory requirements necessary to ensure that the Tenant and/or the Guarantor remains on the register of companies.

In the event that the Guarantor as named in this Lease enters into liquidation, whether compulsory or voluntary, or passes a resolution for winding-up while solvent, except where the liquidation or winding-up resolution is for the purposes of reconstruction or amalgamation while the Tenant or the Guarantor (as the case may be) remains solvent, the Tenant will ensure that the Guarantor as named in this Lease is replaced with another entity acceptable to the Landlord (acting reasonably).

This Guarantee shall automatically cease and determine and be of no further force or effect upon the assignment of this Lease by the Tenant to a third party with the Landlord’s written consent, or on assignment following determination by a court of appropriate jurisdiction that the Landlord has unreasonably withheld consent.  

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Schedule 9

Landlord’s Specification for delivery of Demised Premises

 

INTRODUCTION

 

1-6 SJRQ is a new office building over 6 stories with a single level basement.  The office reception is positioned at the main building entrance facing Sir John Rogerson’s Quay within a full height glazed atrium.   The reception is designed to service a single occupant or multiple tenants and provides direct access to the vertical circulation in the central core.  A second entry point is provided through No. 6 Sir John Rogerson’s Quay and a service set-down point and entry point from Creighton Street.

The typical office floors are arranged around a central core for vertical circulation and ancillary services.  Structural columns are arranged at the perimeter of the floor plates to maximize open space and to provide flexible and substantially column free floor plates.

The refurbishment of the existing protected structures at number 4 and 5 Sir John Rogerson’s Quay connect with the new building at all levels to also provide office accommodation.

The new building consists of:

Ground Floor:

Basement:

Roof Level:

1^st-5^th Floors:

Building Dimensions:

 

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Design Standards/References:

The building is required to comply inter-alia with the following Acts and Regulations.

Design Criteria:

The building is designed to the following criteria:

Occupancy rate for Sanitary Provision: WC design density - 1 Person / 8m2, 60:60 Male:Female (based on total building provision). Disabled WC provision in accordance with TGD M2010.

Car Parking Provision: 31no. spaces including 2no. spaces for disabled drivers.

Sub-Division:

The building and the arrangement of services is designed for a single tenant occupancy or a multi-tenancy arrangement. From 1st to Fifth Floor the floor plates can be sub-divided into two self-contained tenancies.

 

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Outline Electrical Specification

 

 

Outline Mechanical Specification

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OUTLINE SPECIFICATION OF EXTERNAL ENVELOPE

 

A bespoke glazed façade system to the North and West Façade on Sir John Rogerson’s Quay and Creighton Street:  Glazing spanning full height (4.0m) and shuffle-glazed into proprietary thermally broken framing at floor and ceiling level with the glazing flush internally. The vertical façade glass to be double glazed with laminate safety glass to both internal and external leafs and incorporates a solar neutral coating.

 

Fire stopping is incorporated within ceiling header adjacent to glass with in tumescent seal to back of glass face.  Blind box provision integrated within the perimeter bulkhead detail. Laminated vertical glass fins, are positioned externally spanning full height and are restrained at top and bottom with bespoke anchors disappearing into to a slender aluminium toe detail located horizontally at each office floor level. The top and bottom anchors allow a visible gap between it and the façade glass. Lighting is incorporated into the facade system to illuminate the glass fins.  

 

The South West façade to Creighton Street and Windmill Lane at the typical office floor level is a unitised curtain walling system with aluminium framing, anodised finish, nominally 1.5/3.0m wide x 4m high.

The system is thermally broken, pressure equalized, ventilated, self-draining, flush-glazed with externally mounted horizontal glass brise soleil system. The horizontal glass brise soleil with incorporated frit pattern providing solar shading spanning 1.5/3.0mm and restrained via bespoke stainless steel cantilever arms which are affixed to the main unitised framing.

The vertical façade glass is double glazed with laminate safety glass to both internal and external leafs.  Fire stopping is incorporated within ceiling header adjacent to glass with in tumescent seal to back of glass face. Blind box provision integrated within the perimeter bulkhead detail.

The South West  and South Façade to Creighton Street and Windmill Lane at the upper office floor levels is a unitized curtain walling system with aluminum framing, anodized finish,  nominally 1.5/3.0m (w) x 4.0m (h) units. Vertical anodised aluminium fins span 4.0mm and are restrained via bespoke stainless steel fixings which attach to the main horizontal unitised framing.

 

The anodised aluminium fins are of varying profile/angle (on plan) to create a variated effect. Fire stopping to be incorporated within ceiling header adjacent to glass with in tumescent seal to back of glass face.  Blind box provision integrated within the perimeter bulkhead detail.

 

Courtyard Facades facing The Observatory Building:

The glazed system is a factory fabricated unitised aluminium curtain walling system – nominally 1.5m (w) x 4.0m (h) units with anodised aluminium framing– thermally broken, pressure equalized, ventilated, self-draining, flush-glazed SG bonded.

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The vertical façade glass to be double glazed with laminate safety glass to both internal and external leafs and to incorporate solar neutral coating to face 4.  Fire stopping to be incorporated within ceiling header adjacent to glass with intumescent seal to back of glass face. Blind box provision integrated within the perimeter bulkhead detail.

Ground Floor Retail Facades facing Creighton Street and Windmill Lane:

The retail units are to be a fully glazed glass fin curtain walling system.  High performance double glazing is mounted via a pressure equalized toggle fixed proprietary modified SG curtain walling system solution. The glazing is performance coated, clear double-glazed units and laminated Class A safety glass to both internal and external leaf’s.

Thermally broken, pressure equalized, discretely self-draining, silicone jointed, stick system polyester powder-coated, structurally bonded to a vertical spanning laminated glass fin. Curtain walling mullion to be either proprietary glass-fin add-on solution or modified slim-line mullion, machined to fit glass fin thickness. Glass fins to be clear reduced iron laminated with fully polished edges.

North, West and South Facades:

Vertical and horizontal stone fins and projecting stone to north, west and south elevations. Stone cladding panels to the East façade stair. Stone cladding panels to the ground floor columns, ESB substation and plinth.  Stone cladding panels fixes to steel cladding rail system.

All the curtain wall systems will comply as a minimum, with the relevant and current forms of all local national codes and standards and Building Regulations, British Standards, Euronorms (including harmonised Euronorms), DIN Standards, ASTM Standards, CWCT Guidelines and Technical Notes.

 

The glass replacement strategy includes for external replacement with a local internal access requirement to facilitate the safe removal and replacement.

 

EXTERNAL LANDSCAPING

 

 

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Schedule 10

LEED requirements

 

 

 

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Schedule 11

Yield Up Specification (including the enclosed USB detailing the Tenant Information Booklet)

1-3 and 6 SJRQ

The CAT A fit out for the main floor plates includes the following: -

Raised Access Floors – Supplied and fitted by the Landlord.

Credit in lieu of: -

The 4 and 5 SJRQ CAT A Works for which the €27,000 credit allows for: -

4 and 5 SJRQ will be left in the manner detailed in the Lease, to include generally: -

See Tenant Information Booklet furnished for further detail.

General

Ground Floor:

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Basement:

Roof Level:

1^st-5^th Floors:

 

 

Design Standards/References:

The building is required to comply inter-alia with the following Acts and Regulations.

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Design Criteria:

The building is designed to the following criteria:

Occupancy rate for Sanitary Provision: WC design density - 1 Person / 8m2, 60:60 Male:Female (based on total building provision). Disabled WC provision in accordance with TGD M2010.

Car Parking Provision: 31no. spaces including 2no. spaces for disabled drivers.

Sub-Division:

 

The building and the arrangement of services is designed for a single tenant occupancy or a multi-tenancy arrangement. From 1st to Fifth Floor the floor plates can be sub-divided into two self-contained tenancies.

 

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Outline Electrical Specification

Outline Mechanical Specification

 

OUTLINE SPECIFICATION OF EXTERNAL ENVELOPE

 

A bespoke glazed façade system to the North and West Façade on Sir John Rogerson’s Quay and Creighton Street:  Glazing spanning full height (4.0m) and shuffle-glazed into proprietary thermally broken framing at floor and ceiling level with the glazing flush internally. The vertical façade glass to be double glazed with laminate safety glass to both internal and external leafs and incorporates a solar neutral coating.

 

Fire stopping is incorporated within ceiling header adjacent to glass with in tumescent seal to back of glass face.  Blind box provision integrated within the perimeter bulkhead detail. Laminated vertical glass fins, are positioned externally spanning full height and are restrained at top and bottom with bespoke anchors disappearing into to a slender aluminium toe detail located horizontally at each office floor level. The top and bottom anchors allow a visible gap between it and the façade glass. Lighting is incorporated into the facade system to illuminate the glass fins.  

 

The South West façade to Creighton Street and Windmill Lane at the typical office floor level is a unitised curtain walling system with aluminium framing, anodised finish, nominally 1.5/3.0m wide x 4m high.

 

The system is thermally broken, pressure equalized, ventilated, self-draining, flush-glazed with externally mounted horizontal glass brise soleil system. The horizontal glass brise soleil with incorporated frit pattern providing solar shading spanning 1.5/3.0mm and restrained via bespoke stainless steel cantilever arms which are affixed to the main unitised framing.

 

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The vertical façade glass is double glazed with laminate safety glass to both internal and external leafs.  Fire stopping is incorporated within ceiling header adjacent to glass with in tumescent seal to back of glass face. Blind box provision integrated within the perimeter bulkhead detail.

 

The South West  and South Façade to Creighton Street and Windmill Lane at the upper office floor levels is a unitized curtain walling system with aluminum framing, anodized finish,  nominally 1.5/3.0m (w) x 4.0m (h) units. Vertical anodised aluminium fins span 4.0mm and are restrained via bespoke stainless steel fixings which attach to the main horizontal unitised framing.

 

The anodised aluminium fins are of varying profile/angle (on plan) to create a variated effect. Fire stopping to be incorporated within ceiling header adjacent to glass with in tumescent seal to back of glass face.  Blind box provision integrated within the perimeter bulkhead detail.

 

Courtyard Facades facing The Observatory Building:

 

The glazed system is a factory fabricated unitised aluminium curtain walling system – nominally 1.5m (w) x 4.0m (h) units with anodised aluminium framing– thermally broken, pressure equalized, ventilated, self-draining, flush-glazed SG bonded.

 

The vertical façade glass to be double glazed with laminate safety glass to both internal and external leafs and to incorporate solar neutral coating to face 4.  Fire stopping to be incorporated within ceiling header adjacent to glass with intumescent seal to back of glass face. Blind box provision integrated within the perimeter bulkhead detail.

 

Ground Floor Retail Facades facing Creighton Street and Windmill Lane:

 

The retail units are to be a fully glazed glass fin curtain walling system.  High performance double glazing is mounted via a pressure equalized toggle fixed proprietary modified SG curtain walling system solution. The glazing is performance coated, clear double-glazed units and laminated Class A safety glass to both internal and external leaf’s.

 

Thermally broken, pressure equalized, discretely self-draining, silicone jointed, stick system polyester powder-coated, structurally bonded to a vertical spanning laminated glass fin. Curtain walling mullion to be either proprietary glass-fin add-on solution or modified slim-line mullion, machined to fit glass fin thickness. Glass fins to be clear reduced iron laminated with fully polished edges.

 

North, West and South Facades:

 

Vertical and horizontal stone fins and projecting stone to north, west and south elevations. Stone cladding panels to the East façade stair. Stone cladding panels to the ground floor columns, ESB substation and plinth.  Stone cladding panels fixes to steel cladding rail system.

 

All the curtain wall systems will comply as a minimum, with the relevant and current forms of all local national codes and standards and Building Regulations, British Standards, Euronorms (including harmonised Euronorms), DIN Standards, ASTM Standards, CWCT Guidelines and Technical Notes.

 

The glass replacement strategy includes for external replacement with a local internal access requirement to facilitate the safe removal and replacement.

 

EXTERNAL LANDSCAPING

 

 

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Schedule 12

M & E Plant Schedule

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SCHEDULE 13

Employers Information Requirements

 

 

 

 

 

 

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LEASE

of

1SJRQ, WINDMILL QUARTER, DUBLIN 2

Arthur Cox

Ten Earlsfort Terrace

Dublin 2

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EXECUTION VERSION

Appendix 3

Form of Licence for Works

 

 

 

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BETWEEN:

BACKGROUND:

THIS LICENCE PROVIDES:

“Ancillary Certificates” has the meaning ascribed to it in the BCR Code;

“BIM” means building information modelling (in accordance with the Construction Industry Council Building Information Model Protocol (first edition 2013));

“BCR Code” means the Code of Practice for Inspecting and Certifying Buildings and Works issued by the Minister for the Environment, Community and Local Government pursuant to Article 20G of the Building Control (Amendment) Regulations 2014;

 

 

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“Building” means the building located at 1 – 6 Sir John Rogerson’s Quay, Windmill Quarter, Dublin 2 and more particularly outlined in blue on Plan No. 2 attached to the Lease including part of the areas at basement level shown coloured green on Plan No. 3 attached to the Lease and shall be deemed to include any extensions or alterations to or any reductions or variations of it now or in the future respectively made within the Term the Lease;

“Building Control Act” means the Building Control Acts, 1990 to 2014;

“Building Control Authority” means a Local Authority to which Section 2 of the Building Control Act applies;

“Building Control Regulations” means the Building Control Acts 1990- 2014, the Building Control Regulations 1997-2015 and any amendments thereto and all regulations made under those Acts;

“Certificate of Compliance on Completion” means a certificate of compliance in respect of the Works to be lodged with the Building Control Authority in accordance with the Building Control Regulations;

"DCC Protocol” means the demolition and construction protocol for the Dublin Docklands Area provided by Dublin City Council and appended at Appendix 1 hereto;

“Estate” means the Windmill Quarter, Dublin 2, as shown for identification purposes only coloured blue on Plan No. 1 attached to the Lease and the extent of which Estate may be expanded or retracted from time to time by the Landlord and / or the Management Company;

“Fit-Out Protocol” means the tenant fit-out protocol appended at Appendix 2 hereto;

“Independent Architect” means Brian Murphy of MCA Architects or in the event of him being unwilling or unable to act such other architect (who shall have at least ten (10) years standing as an architect and experience in the design of office space in Ireland) as may be agreed between the parties and in default of agreement to be nominated upon the application of either party by the President for the time being of the Royal Institute of Architects of Ireland;

“Landlord’s Architect” means Henry J. Lyons Architects or such other suitably qualified Architect as the Landlord shall appoint therefor following notice to the Tenant;

“Law” means every Act of Parliament and of the Oireachtas, law of the European Union and every instrument, directive, regulation, requirement, action and bye law made by any government department, competent authority, officer or court which now or may hereafter have force of law in Ireland;

“Planning Acts” means the Local Government (Planning and Development) Acts 1963 to 1998 and the Planning and Development Acts 2000 to 2016 and any statutory extension, modification, amendment or re-enactment of any such Act or Acts for the time being in force and any statutory instruments, regulations or orders made or issued under any such Act or Acts;

“Premises” means the premises more particularly described in the Schedule 1 to the Lease;

“Safety Regulations” means the Safety, Health and Welfare at Work Act 2005 to 2014 and any and all legislation pursuant thereto (including but not limited to the Safety, Health and Welfare at Work (Construction) Regulations 2013) as may be modified, amended or extended from time to time;

“Tenant’s Architect” means Conor McCabe of Henry J Lyons, or such other suitably qualified Architect as the Tenant shall appoint in substitution therefor following notice to the Landlord;

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“Tenant Consents” means any planning permission, fire safety certificate, disability access certificate or other consents, approvals or licences of an from any competent and Statutory Authorities in relation to the Works; and

“Validated Certificate of Compliance on Completion” means the Certificate of Compliance on Completion validated by the Building Control Authority with the relevant particulars of the said certificate included on the register maintained by the Building Control Authority together with certified copies of all certificates (including Ancillary Certificates) created for the purpose of procuring the validation of the Certificate of Compliance on Completion from the Building Control Authority.

In consideration of the covenants on the part of the Tenant contained in this Licence, the Landlord hereby consents to the carrying out of the Works by the Tenant at the Tenant’s own cost and expense subject to the covenants and conditions contained in this Licence. This Licence shall not permit any further or different works or alterations to the Premises or any part thereof.

In consideration of the Landlord’s consent contained in this Licence, the Tenant hereby covenants with the Landlord:

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For the avoidance of doubt, each party shall be responsible for its own costs in respect of the Works and this Licence for Works, and without prejudice to the generality of the foregoing (and notwithstanding any provision to the contrary in the Lease), the Tenant shall not be responsible for the following costs and expenses that may be incurred by the Landlord:

To furnish to the Landlord:

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and such insurances shall, if required, by the Landlord, be extended to include the Landlord with an indemnity to principals clause with the Landlord specifically noted as principal or as joint insured.

The Landlord shall, subject to the discharge by the Tenant of any increased or additional premium associated with same (“Clause 26 Cover”), procure that the Landlord’s insurance for the Building maintained under the Lease shall provide for a waiver of all rights of subrogation against the Tenant in relation to any of the following risks:-

Upon the expiration or earlier termination of the Lease to remove the Works if so required to do so under the terms of the Lease but not otherwise and to carry out such works as may be required to reinstate the Premises in compliance with the terms of the Lease.

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The Tenant agrees that:

If at any time during the continuance of this Licence the Tenant shall, in the opinion of the Landlord (acting reasonably), be in material breach of any of the covenants on its part or conditions contained herein (having been notified of such breach and having failed to remedy the breach within a period of ten (10) Working Days (or such longer period as may be reasonable in light of the nature of the breach)), the Landlord may at any time thereafter by notice to the Tenant determine this Licence whereupon this Licence shall determine but without prejudice to any claim by the Landlord in respect of any antecedent breach of any covenant or condition herein contained.

The Works shall not be considered as improvements for the purposes of the Landlord and Tenant (Amendment) Act 1980 as they shall be carried out to suit the Tenant’s own requirements.  Neither the Tenant nor its assignees shall be entitled to any compensation in respect of the Works at the expiry or sooner determination of the Lease or at any other time.

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and unless it is returned through the post office undelivered a notice sent by pre-paid registered or recorded delivery post is to be treated as served on the second working day (being a day other than a Saturday or Sunday or public holiday in Ireland on which clearing banks are generally open for business in Ireland) after posting whenever and whether or not it is received.  

The Works are carried out without any liability on the part of the Landlord or its surveyors, consultants or agents and imply no responsibility on the part of the Landlord or its surveyors, consultants or agents for the Works, their design or execution.

IN WITNESS WHEREOF the parties hereto have executed these presents in the manner hereinafter appearing the day and year first herein WRITTEN

 

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SCHEDULE 1

(the “Premises”)

ALL THAT part of the Building more particularly described in Schedule 1 of the Lease as follows:

“ALL THAT the internal and non-structural parts of the Basement, ground, first, mezzanine, second, third, fourth and fifth floors of the Building and which said premises are for the purposes of identification only shown delineated on Plan No. 4, 6, 7, 8, 9, 10, 11 and 12 annexed hereto and thereon in lined red, together with any Landlord’s fixtures and fittings in or about the same and all other additions, alterations and improvements thereto which may be carried out during the Term and shall include without limitation the following:-

BUT EXCLUDING any structural parts of the Building that are not comprised or included within the items (a) to (h) above.

AND FURTHER EXCLUDING any part of the Retained Areas.”

 

 

 

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SCHEDULE 2

(the “Tenant Specifications”)

 

 

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APPENDIX 1

DCC Protocol

Following the receipt of multiple complaints relating to large scale commercial development sites in or adjacent to the Dublin Docklands Area relating to;

The following updated draft protocol has been produced (with reference to the London Good Practice Guide: Noise and Vibration Control for Demolition and Construction produced by the London Authorities Noise Action Forum, July 2016) to alleviate/mitigate some of the issues that are being raised by existing residents in or adjacent to the Docklands Area.

 

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APPENDIX 2

1 SJRQ FIT OUT PROTOCOL

The principle Landlord contacts for the 1SJRQ project are as follows;

 

 

The tenant’s fit out contractor (the contractor) will provide a list of personnel and their contacts for the project.

The Landlord understands that the following statutory consents are in place by the Tenant;

The Landlord understands that the Tenant has their own Assigned Certifier to lodge the appropriate commencement notice and certify compliance with BC(A)R upon completion of the Tenant fit out works.

All details of same to be forwarded to the Landlord by the contractor.

The working hours on site are covered under condition 7 in the planning permission 2836/15, ABP Reg. Ref. PL 29S.245313. The permitted site hours are;

Prior to commencement on site the contractor will arrange for the undertaking of a detailed photographic condition survey in all areas requiring a contractor/Landlord interface.

Access to the basement will be permitted via the vehicular ramp of The Observatory Building, off Windmill Lane. The contractor must provide a stationary security guard at the basement access and on the Creighton Street goods lift entrance who will be responsible for security access into the Basement and goods lift.  This stationary security guard must be present at all times while contractors are on site.  The contractor should note that this is a shared basement with an existing fully occupied building.  

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The contractor will be responsible for all traffic management in and out of the basement during the fit-out.  The contractor will submit a list of vehicles for approval that will be allowed to park in the building’s car-park.  The contractor will be responsible for ensuring that a proper dilapidation survey of the basement is carried out prior to fit-out and is responsible for ensuring that is returned to the Landlord as it was received.   The contractor will be responsible for traffic management on Creighton street & Windmill Lane around all deliveries to the site.  Trucks or vans are not permitted to park on the footpaths at any time. The maximum head height on the basement ramp is 2.1m.

The Landlord will allow access to all floors via the goods lift, from the basement goods lift lobby and the Creighton Street loading bay only. This lift and its surrounds will require careful protection to avoid any damage to it during fit out works and the fit-out contractor’s RAMS should note specifically what items it is intended to transport in this lift. This lift has a SWL of 1600kg and the door opening will not facilitate standard 2.4m x 1.2m sheets of plasterboard or plywood.

The contractor will be permitted to access the 4^th and 5^th floors of the building via a goods hoist on to the balconies of these floors subject to the contractor securing all necessary permits from the relevant authorities and satisfying all necessary traffic management conditions.

The contractor will not be permitted to remove any of the glazing or brise soleil from any façade of the building under any circumstances.

The contractor will be issued with 50 access cards all of which will be returned on completion. The contractor will be charged for cards which are not returned.

The contractor will be required to co-operate with the Landlord if they need access to any floor to undertake any minor post commissioning checking or snagging to Landlord riser shafts. The contractor should note that they will not have exclusive access to, or control of the building during their fit-out period as other fit outs may be under way concurrently.

All lights must be switched off at the end of each working day. The contractor will be responsibility for the security of the building.

The site supervisor must sign out with the building’s security at the end of each day when all contractors have left the floors.

Fit out contractors will be permitted to use the toilets on the ground floor only following a detailed dilapidation survey and the fitting of appropriate levels of protection.

Fit out contractors will be fully responsible for the cleaning and maintaining of the toilets.  

Use of the disabled toilet and adjacent cleaners store is prohibited.

The provision of a compound in the basement will be permitted. Every effort should be made to transfer materials to their respective floors from the outset to help minimise the area required at basement level. Clarification is required from the contractor as to how they will protect the newly painted basement floor from damage.

On the day of the handover of the tenant floors a joint meter reading will be taken and the Landlord’s electrical account for the building will be transferred into the contractor’s name.

All tenant distribution boards supplying power to the building floors have been tested and commissioned and left isolated as per RECI guidelines. The provision of temporary power will be a contractor responsibility.

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19

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20

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Appendix 4

 

Form of Side Letter

 

 

 

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EXECUTION VERSION

 

Hibernia REIT PLC

 

Hubspot Ireland Limited

One Dockland Central

Guild Street

Dublin 1

 

and

 

Hubspot, Inc.

25 First Street

2nd Floor

Cambridge

MA 02141

 

Dear Sirs

 

In consideration of the Tenant entering into the Agreement for Lease, we confirm that:

 

Defined terms in this Side Letter shall have the same meanings as those ascribed to them in the Lease and the provisions as to interpretation set out in Clause 2 of the Lease shall also apply to this Side Letter.

With effect from the date of the grant of the Lease, and notwithstanding its provisions:

“Inherent Defects” means a structural defect (which term shall refer to the entire structure (ie, all of the Building) and not only load bearing elements) arising during the first twelve (12) years of the Term in the Building which is attributable to a defect in the design, workmanship or materials used in the initial construction of the Demised Premises or the Building but excluding any structural defect arising from (i) works carried out by or on behalf of the Tenant and (ii) subsidence, heave or landslip.

 

 

 

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EXECUTION VERSION

The Tenant shall be entitled to a rent free period of four (4) months commencing on the Term Commencement Date. For the avoidance of doubt this rent free period shall apply to the Initial Rent only and the Tenant shall discharge all other sums payable in accordance with the Lease as they fall due.

The Tenant may allow employees to bring pets onto the Demised Premises, PROVIDED ALWAYS that such access does not become a nuisance or cause damage or disturbance to the Landlord or the owners, tenants or occupiers of the Building or any part of the Estate.  Such pet access is strictly subject to the reasonable written rules or regulations regarding pet access made by the Landlord and / or the Management Company for the benefit of the Building and/or the Estate from time to time acting reasonably and in accordance with the principles of good estate management.

The Landlord acknowledges that, subject to the Tenant obtaining any necessary planning permissions and compliance with Clause 4.24 of the Lease, the Tenant may from time to time hold catered, promotional and entertainment events at the Premises to which employees, customers, service provider, agents, business partners and members of the public will be invited.

The Tenant may provide food and beverages (including alcoholic beverages) at the Premises, subject to compliance with all relevant laws.

The Landlord agrees to notify the Tenant in advance of advertising if intending to advertise all and any available office space located within the Estate and then owned by the Landlord (or any related entity) and giving the Tenant a reasonable opportunity to take up that space on reasonable commercial terms.

PROVIDED ALWAYS that the Landlord shall not be obliged to notify the Tenant of any available space in the event that the Tenant is in notified and material breach of any of the covenants and conditions of the Lease at the relevant time.

The Landlord acknowledges that use by the Tenant of the townhall event space located in the adjoining building known as 1 WML shall be permitted SUBJECT TO: (i) the Tenant discharging all fees associated with such use; and (ii) the Tenant complying with all and any rules and regulations required by the Landlord (or by any statutory authority) in connection with such use including compliance with the Planning Acts and any permissions granted thereunder.

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The provisions of this Side Letter are provided for the benefit of Hubspot Ireland Limited, Hubspot, Inc. and any Group Company thereof occupying the Demised Premises without the need for any assignment of its terms.

This Side Letter shall be binding on and for the benefit of the successors in title of the Landlord without the need for any assignment hereof.

For the avoidance of doubt, the Tenant shall be liable for all other obligations under the Lease.

This Side Letter may be executed in any number of counterparts and by the parties to this Side Letter on separate counterparts, each of which, when executed and delivered, shall constitute an original but all the counterparts together constitute but one and the same instrument.

By signing the counterpart of this Side Letter you confirm that you acknowledge and accept the above terms.

Yours faithfully

 

______________________________

For and on behalf of

Hibernia REIT PLC

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We hereby agree to be bound by the terms of this Side Letter.

 

_____________________________

Signed for and on behalf of

HUBSPOT IRELAND LIMITED

4

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We hereby agree to be bound by the terms of this Side Letter.

 

_____________________________

Signed for and on behalf of

HUBSPOT, INC.

 

 

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EXECUTION VERSION

Appendix 5

 

DCC Protocol

 

 

Following the receipt of multiple complaints relating to large scale commercial development sites in or adjacent to the Dublin Docklands Area relating to;

 

 

 

The following updated draft protocol has been produced (with reference to the London Good Practice Guide: Noise and Vibration Control for Demolition and Construction produced by the London Authorities Noise Action Forum, July 2016) to alleviate/mitigate some of the issues that are being raised by existing residents in or adjacent to the Docklands Area.

 

 

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Appendix 6

 

Fit Out Protocol

 

1 SJRQ

 

 

The principle Landlord contacts for the 1SJRQ project are as follows;

 

 

The tenant’s fit out contractor (the contractor) will provide a list of personnel and their contacts for the project.

 

The Landlord understands that the following statutory consents are in place by the Tenant;

 

The Landlord understands that the Tenant has their own Assigned Certifier to lodge the appropriate commencement notice and certify compliance with BC(A)R upon completion of the Tenant fit out works.

All details of same to be forwarded to the Landlord by the contractor.

 

The working hours on site are covered under condition 7 in the planning permission 2836/15, ABP Reg. Ref. PL 29S.245313. The permitted site hours are;

 

Prior to commencement on site the contractor will arrange for the undertaking of a detailed photographic condition survey in all areas requiring a contractor/Landlord interface.

 

Access to the basement will be permitted via the vehicular ramp of The Observatory Building, off Windmill Lane. The contractor must provide a stationary security guard at the basement access and on the Creighton Street goods lift entrance who will be responsible for security access into the Basement and goods lift.  This stationary security guard must be present at all times while contractors are on site.  The contractor should note that this is a shared basement with an existing fully occupied building.  

 

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The contractor will be responsible for all traffic management in and out of the basement during the fit-out.  The contractor will submit a list of vehicles for approval that will be allowed to park in the building’s car-park.  The contractor will be responsible for ensuring that a proper dilapidation survey of the basement is carried out prior to fit-out and is responsible for ensuring that is returned to the Landlord as it was received.   The contractor will be responsible for traffic management on Creighton street & Windmill Lane around all deliveries to the site.  Trucks or vans are not permitted to park on the footpaths at any time. The maximum head height on the basement ramp is 2.1m.

 

The Landlord will allow access to all floors via the goods lift, from the basement goods lift lobby and the Creighton Street loading bay only. This lift and its surrounds will require careful protection to avoid any damage to it during fit out works and the fit-out contractor’s RAMS should note specifically what items it is intended to transport in this lift. This lift has a SWL of 1600kg and the door opening will not facilitate standard 2.4m x 1.2m sheets of plasterboard or plywood.

 

The contractor will be permitted to access the 4^th and 5^th floors of the building via a goods hoist on to the balconies of these floors subject to the contractor securing all necessary permits from the relevant authorities and satisfying all necessary traffic management conditions.

 

The contractor will not be permitted to remove any of the glazing or brise soleil from any façade of the building under any circumstances.

 

The contractor will be issued with 50 access cards all of which will be returned on completion. The contractor will be charged for cards which are not returned.

 

The contractor will be required to co-operate with the Landlord if they need access to any floor to undertake any minor post commissioning checking or snagging to Landlord riser shafts. The contractor should note that they will not have exclusive access to, or control of the building during their fit-out period as other fit outs may be under way concurrently.

 

All lights must be switched off at the end of each working day. The contractor will be responsibility for the security of the building.

 

The site supervisor must sign out with the building’s security at the end of each day when all contractors have left the floors.

 

Fit out contractors will be permitted to use the toilets on the ground floor only following a detailed dilapidation survey and the fitting of appropriate levels of protection.

 

Fit out contractors will be fully responsible for the cleaning and maintaining of the toilets.  

 

Use of the disabled toilet and adjacent cleaners store is prohibited.

 

The provision of a compound in the basement will be permitted. Every effort should be made to transfer materials to their respective floors from the outset to help minimise the area required at basement level. Clarification is required from the contractor as to how they will protect the newly painted basement floor from damage.

 

On the day of the handover of the tenant floors a joint meter reading will be taken and the Landlord’s electrical account for the building will be transferred into the contractor’s name.

 

All tenant distribution boards supplying power to the building floors have been tested and commissioned and left isolated as per RECI guidelines. The provision of temporary power will be a contractor responsibility.

 

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7

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Appendix 7

 

CAT A Works

 

1-3 and 6 SJRQ

 

The CAT A fit out for the main floor plates includes the following: -

 

Raised Access Floors – Supplied and fitted by the Landlord.

Credit in lieu of: -

 

4-5 SJRQ

 

The 4 and 5 SJRQ CAT A Works for which the €27,000 credit allows for: -

 

4 and 5 SJRQ will be left in the manner detailed in the Lease, to include generally: -

 

See also the 1SJRQ technical pack

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Appendix 8

 

Tenant’s Works Design Intent

 

The project consists of the full fit out of 111,796ft2 of office space at 1SJRQ.  The Tenant’s Works will consist of the following core elements: 

GENERAL BUILDING WORKS

M&E WORKS

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10

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Appendix 9

Landlord’s Outline Specification for delivery of Demised Premises

 

OUTLINE SPECIFICATION

 

1-6 Sir John Rogerson’s Quay

October 2018

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INTRODUCTION

 

1-6 SJRQ is a new office building over 6 stories with a single level basement.  The office reception is positioned at the main building entrance facing Sir John Rogerson’s Quay within a full height glazed atrium.   The reception is designed to service a single occupant or multiple tenants and provides direct access to the vertical circulation in the central core.  A second entry point is provided through No. 6 Sir John Rogerson’s Quay and a service set-down point and entry point from Creighton Street.

 

The typical office floors are arranged around a central core for vertical circulation and ancillary services.  Structural columns are arranged at the perimeter of the floor plates to maximize open space and to provide flexible and substantially column free floor plates.

 

The refurbishment of the existing protected structures at number 4 and 5 Sir John Rogerson’s Quay connect with the new building at all levels to also provide office accommodation.

 

The new building consists of:

 

Ground Floor:

 

Basement:

 

Roof Level:

 

1^st-5^th Floors:

 

Building Dimensions:

 

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Design Standards/References:

 

The building is required to comply inter-alia with the following Acts and Regulations.

 

Design Criteria:

 

The building is designed to the following criteria:

 

Occupancy rate for Sanitary Provision: WC design density - 1 Person / 8m2, 60:60 Male:Female (based on total building provision). Disabled WC provision in accordance with TGD M2010.

 

Car Parking Provision: 31no. spaces including 2no. spaces for disabled drivers.

 

Sub-Division:

 

The building and the arrangement of services is designed for a single tenant occupancy or a multi-tenancy arrangement. From 1st to Fifth Floor the floor plates can be sub-divided into two self-contained tenancies.

 

LANDLORD SPECIFICATION

RECEPTION AND LIFT LOBBIES

 

Reception/ Atrium:

 

 

Lift Lobbies:

 

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Passenger Lifts:

 

 

Toilets:

 

 

LANDLORD SPECIFICATION

OFFICE AREAS

 

 

STAIRS

 

Main Stairs

 

 

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Secondary Stairs

 

 

Showers, Changing & Locker Rooms

 

Space is provided at basement level for shower and changing facilities, lockers and a tenant amenity space.

 

 

Car Park Area

 

 

Outline Electrical Specification

 

 

Outline Mechanical Specification

 

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OUTLINE SPECIFICATION OF EXTERNAL ENVELOPE

 

A bespoke glazed façade system to the North and West Façade on Sir John Rogerson’s Quay and Creighton Street:  Glazing spanning full height (4.0m) and shuffle-glazed into proprietary thermally broken framing at floor and ceiling level with the glazing flush internally. The vertical façade glass to be double glazed with laminate safety glass to both internal and external leafs and incorporates a solar neutral coating.

 

Fire stopping is incorporated within ceiling header adjacent to glass with in tumescent seal to back of glass face.  Blind box provision integrated within the perimeter bulkhead detail. Laminated vertical glass fins, are positioned externally spanning full height and are restrained at top and bottom with bespoke anchors disappearing into to a slender aluminium toe detail located horizontally at each office floor level. The top and bottom anchors allow a visible gap between it and the façade glass. Lighting is incorporated into the facade system to illuminate the glass fins.  

 

The South West façade to Creighton Street and Windmill Lane at the typical office floor level is a unitised curtain walling system with aluminium framing, anodised finish, nominally 1.5/3.0m wide x 4m high.

The system is thermally broken, pressure equalized, ventilated, self-draining, flush-glazed with externally mounted horizontal glass brise soleil system. The horizontal glass brise soleil with incorporated frit pattern providing solar shading spanning 1.5/3.0mm and restrained via bespoke stainless steel cantilever arms which are affixed to the main unitised framing.

The vertical façade glass is double glazed with laminate safety glass to both internal and external leafs.  Fire stopping is incorporated within ceiling header adjacent to glass with in tumescent seal to back of glass face. Blind box provision integrated within the perimeter bulkhead detail.

The South West  and South Façade to Creighton Street and Windmill Lane at the upper office floor levels is a unitized curtain walling system with aluminum framing, anodized finish,  nominally 1.5/3.0m (w) x 4.0m (h) units. Vertical anodised aluminium fins span 4.0mm and are restrained via bespoke stainless steel fixings which attach to the main horizontal unitised framing.

 

The anodised aluminium fins are of varying profile/angle (on plan) to create a variated effect. Fire stopping to be incorporated within ceiling header adjacent to glass with in tumescent seal to back of glass face.  Blind box provision integrated within the perimeter bulkhead detail.

 

Courtyard Facades facing The Observatory Building:

The glazed system is a factory fabricated unitised aluminium curtain walling system – nominally 1.5m (w) x 4.0m (h) units with anodised aluminium framing– thermally broken, pressure equalized, ventilated, self-draining, flush-glazed SG bonded.

The vertical façade glass to be double glazed with laminate safety glass to both internal and external leafs and to incorporate solar neutral coating to face 4.  Fire stopping to be incorporated within ceiling header adjacent to glass with intumescent seal to back of glass face. Blind box provision integrated within the perimeter bulkhead detail.

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Ground Floor Retail Facades facing Creighton Street and Windmill Lane:

The retail units are to be a fully glazed glass fin curtain walling system.  High performance double glazing is mounted via a pressure equalized toggle fixed proprietary modified SG curtain walling system solution. The glazing is performance coated, clear double-glazed units and laminated Class A safety glass to both internal and external leaf’s.

Thermally broken, pressure equalized, discretely self-draining, silicone jointed, stick system polyester powder-coated, structurally bonded to a vertical spanning laminated glass fin. Curtain walling mullion to be either proprietary glass-fin add-on solution or modified slim-line mullion, machined to fit glass fin thickness. Glass fins to be clear reduced iron laminated with fully polished edges.

 

North, West and South Facades:

Vertical and horizontal stone fins and projecting stone to north, west and south elevations. Stone cladding panels to the East façade stair. Stone cladding panels to the ground floor columns, ESB substation and plinth.  Stone cladding panels fixes to steel cladding rail system.

All the curtain wall systems will comply as a minimum, with the relevant and current forms of all local national codes and standards and Building Regulations, British Standards, Euronorms (including harmonised Euronorms), DIN Standards, ASTM Standards, CWCT Guidelines and Technical Notes.

 

The glass replacement strategy includes for external replacement with a local internal access requirement to facilitate the safe removal and replacement.

 

EXTERNAL LANDSCAPING

 

 

 

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Appendix 10

BIM Specification

The Hibernia REIT plc asset information model will deliver to the client a digital 3D model of the as built project. The Asset Information Model will be delivered as an intergrade system with the digital safety file using the DFM system. This will comprise of a fully federated 3D model with all assets / objects fully linked back to the digital safety file. Information will be readily accessible from either the 3D model or via the digital safety file data base with detailed searchable meta data. Together with the DFM user interface we will be delivering the native model files in a number of industry standard file formats along with COBie spreadsheet information. Hibernia REIT plc Construction and DFM will engage with the Hiebernia Reit Facility management team to identify the critical information that is important to them and will proved value during the facility management stage of the building.

 

The asset information model can be easily interrogated by designers and contractors using drafting tools. After Construction handover, this model can go on to assist in further design alterations and coordination of tenant fit out. The Asset model is a federation of multiple models derived from various disciplines at construction stage. Each modelled element will be modelled in it as-built position and contain data regarding its properties. The Sir John Rogerson Quay Asset model will be built from the following models:

 

 

 

 

 

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» The Architectural Model. Originated from Designer Henry J Lyons, The as-builts verified by Hibernia REIT plc, Place holds the design intent, ie diffusers/grill locations where information lies in the mechanical model.

 

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» The Architectural Model_Federation Model. Originated from Designer Henry J Lyons, The as- builts verified by Hibernia REIT plc and populated with product specific information. This model will be the federation model in which all the other models will be linked into.

 

Experience has shown that service life lost due to poor maintenance is irreversible and, so we will put a lot of care and attention into ensuring that we delivered a fully populated Asset Information Model

(AIM), complete with a schedule of all warranties and maintenance tasks for everything in the building and not just the main plant items (managed assets). This included an integrated 3D model of the building which allows the maintenance team to view areas of the building or items of plant in a virtual model and see all information needed about the area or item such as O&M manuals, service records, spare parts lists etc – it will even tell them the colour of the paint on the wall if that is what they are interested in. Model information includes both relevant text data and geometry data.

Geometry data refers to the objects in the model being dimensionally accurate to the physical asset, it will show connections such as electric/water/air inlets/outlets. Product materials will be captured within the model element.

 

 

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Example: Below image of Virtual hand dryer and sample of actual hand dryer that will be used on the 1SJRQ project. The model is scaled to the same dimensions as physical hand dryer and shows where the electrical connection point (Green Target) is without having to review data sheet or investigate onsite.

 

 

Fig 2.1 SJRQ Hand drier unit. Model and Sample

 

Asset information shall be tracked and managed with the use of master asset registers, product data sheets, and COBie Spreadsheets. Uniclass codes and codes will be used to classify all assets and relevant product sheets will be collated using the NBS tool Kit. Information will be collected throughout the course of the project as assets pass through the technical approval process. The development of asset information will be tracked on a master asset register and will be audited on regular intervals to ensure quality of the information is maintained.

 

HIBERNIA REIT PLC will carry out monthly meetings to review the development of asset information, LOI within the 3D models and conduct monthly audits to validate and check the information as it is received. Various BIM Tools will be utilised to validate and check asset information and 3D models such as Revit Model Checker, Solibre model checker and other COBie validating software tools.

 

Our procurement process for the engagement of subcontractors and suppliers will also include BIM level 2 clauses to ensure the requirements for BIM and issuing of product information forms part of their scope of works and contractual requirements. We ensure that BIM requirements and mind set is nurtured throughout the entire process.

HIBERNIA REIT PLC will provided a minimum of the following parameters populated with information where the information is available.

 

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General information relating to the model is included in the project information. This includes: description of the project, project coordinates, details of model originators, project units and classifications as well as a list of suppliers.

 

 

The product and project information supplied in the model will be mapped/populated to COBie parameters fields and exported to a Microsoft excel format. These COBie spreadsheet makes it possible for the model information to be shared to other software.

The DFM system can also be utilised to federate the COBie information derived from each of the various discipline models this will then be imported into the DFM digital system and the associated linked documents to all of the assets will be synchronised and imported into the federated COBie information. This is unique to this system and greatly increases the value and level of information contained with the COBie spread sheets

The DFM Safety file features Life Cycle Asset Information module which can be used to produce forecasts and reports on the maintenance and capital replacement costs of the facility over the next 20 or 25 years – this information can even be made available prior to handover.

 

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Fig 2.2 SJRQ Sample product information populated in model

 

 

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Arthur Cox Comments – 16 October 2018

On handover Hibernia REIT plc will present the client with a USB which will contain zipped folders with the model structure in 3 file formats. We will deliver Revit, Navisworks and IFC files and the COBie Spread sheets in excel format.

 

 

Folder Structure Example:

SJRQ-HIBERNIA REIT PLC-01-XX-DB-W-0001

 

 

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Appendix 11

Intended Signage Plans

 

 

 

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Arthur Cox Comments – 16 October 2018

 

Henry J Lyons HubSpot 1-6 SJRQ Building Signage Submission ^7thNovember 2018 SONICA

 

 

 

 

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1-6 SIR JOHN ROGERSON’S QUAY Overall Signage Proposal Henry J Lyons SONICA

 

 

 

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1-6 SIR JOHN ROGERSON'S QUAY Signage Proposal One - Creighton Street HALO ILLUMINATED STAINLESS STEEL HUBSPOT SIGN SIZED 1000MM X 6326MM SPROCKET POWDER COATED IN HUBSPOT ORANCE 1-6 SJRQ – BUILDING AXO CREIGHTON STREET SIGN DIMENSIONS CREIGHTON STREET SIGN DIMENSIONS Henry J Lyons SONICA

 

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1-6 SIR JOHN ROGERSON'S QUAY Signage Proposal Two - Courtyard Living Wall LIVING WALL - OPTION1 HubSpot 'Crow Better' slogan to be mounted Into living wall, back lit brushed stainless steeltext. LIVING WALL - OPTION 2 HubSpot 'Grow Better' slogan to be mounted into living wall, white perspex text with light box effect. Henry J Lyons SONICA

 

 

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1-6 SIR JOHN ROGERSON'S QUAY Signage Proposal Three - Building Entrance 3M HIGHSPROCKET LOGO MOUNTED INPLANTER BEDINENTRANCE COURTYARD - TO BE POWDERCOATED HUBSPOT ORANGE 1-6 SJRQ - BUILDING AXO COURTYARD VIEW 01 REFERENCE IMAGES COURTYARD VIEW 02 Henry J Lyons SONICA

 

 

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1-6 SIR JOHN ROGERSON'S QUAY Signage Proposal Four - Main Building Sign HALO ILLUMINATED STAINLESS STEEL HUBSPOT LOGO SIZED 1800MM X 9330MM LEDILLUMINATED SPROCKET (FACE LIT) IN HUBSPOT ORANCE SIGNAGE TO BE EXTERNALLY FIXED IN FACADE RECESS 1-6 SJRQ - BUILDING AXO MAIN BUILDING SIGN DIMENSIONS MAINBUILDING SIGN VIEW 01 Henry J Lyons SONICA

 

 

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1-6 SIR JOHN ROGERSON'S QUAY Signage Proposal Four - Main Building Sign VERTICAL FRAME SYSTEM IN THE SAME COLOUR AS EXISTING MULLIONS, FIXED FROM THE OVERHANG ABOVE. THIS WILL REQUIRE SOME OF THE BASE BUILD STONE TO BE REMOVED AND THE FRAME FIXED BACK TO THE STEELWORK, SUBJECT TO STRUCTURAL ENGINEERS APPROVAL. (We may even need to add supporting steel, If the existing structure is not strong enough. Vertical support should not be wider than the mullions, to blend in to the elevation). SECONDARY, HORIZONTAL, STAINLESS STEEL SUPPORT FRAME (FINISH TO BE AGREED WITH BASE BUILD ARCHITECT AND LANDLORD). PLEASE NOTE, A CONDUIT IS REQUIRED TO COME DOWN FOR THE LIT SPROCKET. NOTES: PLEASE NOTE THAT THE MULLIONS CANNOT BE PENETRATED. TO FURTHER THE DESICN WE WOULD NEED THE APPROXIMATE WEIGHT OF THE SIGNAGE, AS IT WILL BE SUBJECT TO DEAD LOAD AND WIND LOAD. THE ABOVE IS SUBJECT TO ARCHITECT, LANDLORD AND STRUCTURAL ENGINEER'S APPROVAL. MAIN BUILDING SIGN VIEW 02 Henry J Lyons SONICA

 

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1-6 SIR JOHN ROGERSON'S QUAY Signage Proposal Five - Building Name BUILDING NAME FORMED IN GRANITE ON THE LOWER LEVEL FACADE - EXACT BUILDINC NAME TO BE CONFIRMED BY HUBSPOT 1-6 SJRQ - BUILDING AXO REFERENCE IMAGE MAIN BUILDING SIGN VIEW 01 Henry J Lyons SONICA

 

 

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1-6 SIR JOHN ROGERSON'S QUAY Feature Lighting - Proposed Areas 1-6 SJRQ - BUILDING AXO FEATURE LIGHTING - PROPOSAL ONE Architectural LED coloured lighting visible externally to the front facade of Level 5. Light to be fixed to set colour (HubSpot orange) and fixed internally. Additional feature lighting to be allowed for in stack to the front of the building. A mix offeature fittings visible from the exterior to create interest in this part of the building, with the possibility for additional coloured films on external glazing and coloured LED strip lighting around curved bulkheads Henry J Lyons SONICA

 

 

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1-6 SIR JOHN ROCERSON'S QUAY Feature Lighting - Proposed Areas 1-6 SJRQ - BUILDING AXO FEATURE UCHTINC - PROPOSAL TWO Suspended linear pendant fittings hung at a variety of angles in the building's atrium. All set to the same colour - orange. In addition, coloured sculptural element (see reference image) to be hung in gradient colours design TBC Henry J Lyons SONICA

 

 

 

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Henry J  Lyons THANK YOU SONICA

 

 

 

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PLANS

 

 

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WINDMILL LANE THE WINDMILL APTS WINDMILL LANE APTS CRIGHTON STREET EXISTING SITE LOCATION PLAN@ 1:500 1SRJQ – SITE BOUNDARY WINDMILL QUARTER LEASE HENRY J LYONS ARCHITECTS HIBERNIA REIT DEVELOPMENT AT SIR JOHN ROGERSON’S QUAY CREIGHTON STREET / WINDMILL LANE SITE LOCATION PLAN L0001A PLAN 1

 

 

 

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RIVER LIFFEY SITE LOCATION PLAN @ 1:500 SITE BOUNDARY LEASE HENRY J LYONS ARCHITECTS HIBERNIA REIT DEVELOPMENT AT SIR JOHN ROGERSON’S QUAY CREIGHTON STREET / WINDMILL LANE SITE LAYOUT PLAN L0001B PLAN 2

 

 

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KEYPLAN: EXTENTS OF 1SJRQ BASEMENT LEASE HENY J LYONS ARCHITECTS BASEMENT GA PLAN L1009-1 HENRY J LYONS ARCHITECTS HIBERNIA REIT BASEMENT GA PLAN – LEASE L1009_1 PLAN 3

 

 

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DEMISED PREMISES BASEMENT STORAGE FACILITIES EXCLUSIVE BASEMENT SERV1CE AREAS PLAN 4 LEASE HENRY J LYONS ARCHITECTS BASMEHTGA PLAN CEMISED PREMISES LD1009D-1

 

 

 

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KEYPLAN: OFFICE BIKE PARKING OFFICE SHOWER FACILITIES LEASE HENRY J LYONS ARCHITECTS HIBERNIA REIT BASEMENT GA PLAN - BIKE PARKING - SHOWER FACILITIES L1009_2 PLAN 5

 

 

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Plan 6 DEMISED PREMISES COMMON SERVICES ACCESS lease HENRY J LYONS ARCHTIECTS HIRERNIA REIT GROUND FLOOR GA PLAN PREMSES LD1010_D0

 

 

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PLAN 7 DEMISED PREMISES LEASE HENRY J LYONS lease HENRY J LYONS ARCHTIECTS HIRERNIA REIT MEZZANNE GA PLAN DEMISED PREMISES LD010M_DM

 

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PLAN 8 DEMISED PREMISES lease HENRY J LYONS ARCHTIECTS HIRERNIA REIT FIRST FLOOR GA PLAN - DEMISED PREMISES LD1011_D1

 

 

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PLAN 9 DEMISED PREMISES LEASE HENRY J LIONS ARCHITECTS SECOND FLOOR GA PLAN DEMISED PREMISES LD1012-D2

 

 

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PLAN 10 DEMISED PREMISES BALCONIES LEASE HENRY J LYONS ARCHITFCTS THIRD FLOOR GA PLAN DEMISED PREMISES LD1013-03

 

 

 

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PLAN 11 DEMISED PREMISES lease HENRY J LYONS ARCHTIECTS HIRERNIA REIT fourth floor ga PLAN - DEMISED PREMISES LD1014_D4

 

 

 

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Plan 12 DEMISED PREMISES lease HENRY J LYONS ARCHTIECTS HIRERNIA REIT FIFTH FLOOR GA PLAN DEMISED PREMISES LD1015-D5

 

 

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PLAN 13 BALCONIES LEASE HENRY J LYONS A.RCMITECTS HIBERNIA REIT THIRD FLOOR GA PLAN L1013-LB

 

 

 

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PLAN 14 lease HENRY J LYONS ARCHTIECTS HIRERNIA REIT BALCONIES LEASE FOURTH FLOOR GA PLAN BALCONIES L1014_LB

 

 

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PLAN 15 BALCONIES lease HENRY J LYONS ARCHTIECTS HIRERNIA REIT FIFTH FLOOR GA PLAN BALCONIES L1015-LB

 

 

 

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PLAN 16 lease HENRY J LYONS ARCHTIECTS HIRERNIA REIT VERTICAL BRISE SOLEIL HORIZONTAL BRISE SOLEIL FIRTH FLOOR GA PLAN L1011-LB

 

 

 

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PLAN 17 lease HENRY J LYONS ARCHTIECTS HIRERNIA REIT VERTICAL BRISE SOLEIL HORIZONTAL BRISE SOLEIL SECOND FLOOR GA PLAN BRISE SOLEJL L1012L

 

 

 

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PLAN 18 lease HENRY J LYONS ARCHTIECTS HIRERNIA REIT VERTICAL BRISE SOLEIL HORIZONTAL BRISE SOLEIL THIRD FLOOR GA PLAN - BRISE SOLEIL L1013_L_B

 

 

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PLAN 19 lease HENRY J LYONS ARCHTIECTS HIRERNIA REIT VERTICAL BRISE SOLEIL HORIZONTAL BRISE SOLEIL FOURTH FLOOR GA PLAN - BRISE SOLEIL L1014_L_B

 

 

 

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PLAN 20 lease HENRY J LYONS ARCHTIECTS HIRERNIA REIT VERTICAL BRISE SOLEIL HORIZONTAL BRISE SOLEIL FOURTH FLOOR GA PLAN - BRISE SOLEIL L1015_L_B

 

 

 

 

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IN WITNESS whereof the parties hereto have either caused their Common Seals to be affixed hereto or have signed or caused to have signed on this Agreement on their behalf the day and year first herein written.

 

 

 

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Exhibit 10.8

HUBSPOT, INC.
2014 STOCK OPTION AND INCENTIVE PLAN

SECTION 1.  GENERAL PURPOSE OF THE PLAN; DEFINITIONS

The name of the plan is the HubSpot, Inc. 2014 Stock Option and Incentive Plan (the “Plan”).  The purpose of the Plan is to encourage and enable the officers, employees, Non-Employee Directors and Consultants of HubSpot, Inc. (the “Company”) and its Subsidiaries upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its businesses to acquire a proprietary interest in the Company.  It is anticipated that providing such persons with a direct stake in the Company’s welfare will assure a closer identification of their interests with those of the Company and its stockholders, thereby stimulating their efforts on the Company’s behalf and strengthening their desire to remain with the Company.

The following terms shall be defined as set forth below:

“Act” means the Securities Act of 1933, as amended, and the rules and regulations thereunder.

“Administrator” means either the Board or the compensation committee of the Board or a similar committee performing the functions of the compensation committee and which is comprised of not less than two Non‑Employee Directors who are independent.

“Award” or “Awards,” except where referring to a particular category of grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Units, Restricted Stock Awards, Unrestricted Stock Awards, Cash-Based Awards, Performance Share Awards and Dividend Equivalent Rights.

“Award Certificate” means a written or electronic document setting forth the terms and provisions applicable to an Award granted under the Plan.  Each Award Certificate is subject to the terms and conditions of the Plan.

“Board” means the Board of Directors of the Company.

“Cash-Based Award” means an Award entitling the recipient to receive a cash-denominated payment.

“Code” means the Internal Revenue Code of 1986, as amended, and any successor Code, and related rules, regulations and interpretations.

“Consultant” means any natural person that provides bona fide services to the Company, and such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company’s securities.

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“Covered Employee” means an employee who is a “Covered Employee” within the meaning of Section 162(m) of the Code.

“Dividend Equivalent Right” means an Award entitling the grantee to receive credits based on cash dividends that would have been paid on the shares of Stock specified in the Dividend Equivalent Right (or other award to which it relates) if such shares had been issued to and held by the grantee.

“Effective Date” means the date on which the Plan is approved by stockholders as set forth in Section 21.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder.

“Fair Market Value” of the Stock on any given date means the fair market value of the Stock determined in good faith by the Administrator; provided, however, that if the Stock is admitted to quotation on the National Association of Securities Dealers Automated Quotation System (“NASDAQ”), NASDAQ Global Market or another national securities exchange, the determination shall be made by reference to the closing price.  If there is no closing price for such date, the determination shall be made by reference to the last date preceding such date for which there was a closing price; provided further, however, that if the date for which Fair Market Value is determined is the first day when trading prices for the Stock are reported on a national securities exchange, the Fair Market Value shall be the “Price to the Public” (or equivalent) set forth on the cover page for the final prospectus relating to the Company’s Initial Public Offering.

“Incentive Stock Option” means any Stock Option designated and qualified as an “incentive stock option” as defined in Section 422 of the Code.

“Initial Public Offering” means the consummation of the first underwritten, firm commitment public offering pursuant to an effective registration statement under the Act covering the offer and sale by the Company of its equity securities, or such other event as a result of or following which the Stock shall be publicly held.

“Non-Employee Director” means a member of the Board who is not also an employee of the Company or any Subsidiary.

“Non-Qualified Stock Option” means any Stock Option that is not an Incentive Stock Option.

“Option” or “Stock Option” means any option to purchase shares of Stock granted pursuant to Section 5.

“Performance-Based Award” means any Restricted Stock Award, Restricted Stock Units, Performance Share Award or Cash-Based Award granted to a Covered Employee that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code and the regulations promulgated thereunder.

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“Performance Criteria” means the criteria that the Administrator selects for purposes of establishing the Performance Goal or Performance Goals for an individual for a Performance Cycle.  The Performance Criteria (which shall be applicable to the organizational level specified by the Administrator, including, but not limited to, the Company or a unit, division, group, or Subsidiary of the Company) that will be used to establish Performance Goals are limited to the following:  total shareholder return, earnings before interest, taxes, depreciation and amortization, net income (loss) (either before or after interest, taxes, depreciation and/or amortization), changes in the market price of the Stock, economic value-added, funds from operations or similar measure, sales or revenue, acquisitions or strategic transactions, operating income (loss), cash flow (including, but not limited to, operating cash flow and free cash flow), return on capital, assets, equity, or investment, return on sales, gross or net profit levels, productivity, expense, margins, operating efficiency, customer satisfaction, working capital, earnings (loss) per share of Stock, sales or market shares and number of customers, any of which may be measured either in absolute terms or as compared to any incremental increase or as compared to results of a peer group.  The Administrator may appropriately adjust any evaluation performance under a Performance Criterion to exclude any of the following events that occurs during a Performance Cycle:  (i) asset write-downs or impairments, (ii) litigation or claim judgments or settlements, (iii) the effect of changes in tax law, accounting principles or other such laws or provisions affecting reporting results, (iv) accruals for reorganizations and restructuring programs. (v) any extraordinary non-recurring items, including those described in the Financial Accounting Standards Board’s authoritative guidance and/or in management’s discussion and analysis of financial condition of operations appearing the Company’s annual report to stockholders for the applicable year, and (vi) any other extraordinary items adjusted from the Company U.S. GAAP results.

“Performance Cycle” means one or more periods of time, which may be of varying and overlapping durations, as the Administrator may select, over which the attainment of one or more Performance Criteria will be measured for the purpose of determining a grantee’s right to and the payment of a Restricted Stock Award, Restricted Stock Units, Performance Share Award or Cash-Based Award, the vesting and/or payment of which is subject to the attainment of one or more Performance Goals.  Each such period shall not be less than 12 months.

“Performance Goals” means, for a Performance Cycle, the specific goals established in writing by the Administrator for a Performance Cycle based upon the Performance Criteria.  

“Performance Share Award” means an Award entitling the recipient to acquire shares of Stock upon the attainment of specified Performance Goals.

“Restricted Shares” means the shares of Stock underlying a Restricted Stock Award that remain subject to a risk of forfeiture or the Company’s right of repurchase.

“Restricted Stock Award” means an Award of Restricted Shares subject to such restrictions and conditions as the Administrator may determine at the time of grant.

“Restricted Stock Units” means an Award of stock units subject to such restrictions and conditions as the Administrator may determine at the time of grant.

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“Sale Event” shall mean (i) the sale of all or substantially all of the assets of the Company on a consolidated basis to an unrelated person or entity, (ii) a merger, reorganization or consolidation pursuant to which the holders of the Company’s outstanding voting power and outstanding stock immediately prior to such transaction do not own a majority of the outstanding voting power and outstanding stock or other equity interests of the resulting or successor entity (or its ultimate parent, if applicable) immediately upon completion of such transaction, (iii) the sale of all of the Stock of the Company to an unrelated person, entity or group thereof acting in concert, or (iv) any other transaction in which the owners of the Company’s outstanding voting power immediately prior to such transaction do not own at least a majority of the outstanding voting power of the Company or any successor entity immediately upon completion of the transaction other than as a result of the acquisition of securities directly from the Company.

“Sale Price” means the value as determined by the Administrator of the consideration payable, or otherwise to be received by stockholders, per share of Stock pursuant to a Sale Event.

“Section 409A” means Section 409A of the Code and the regulations and other guidance promulgated thereunder.

“Stock” means the Common Stock, par value $0.001 per share, of the Company, subject to adjustments pursuant to Section 3.

“Stock Appreciation Right” means an Award entitling the recipient to receive shares of Stock having a value equal to the excess of the Fair Market Value of the Stock on the date of exercise over the exercise price of the Stock Appreciation Right multiplied by the number of shares of Stock with respect to which the Stock Appreciation Right shall have been exercised.

“Subsidiary” means any corporation or other entity (other than the Company) in which the Company has at least a 50 percent interest, either directly or indirectly.

“Ten Percent Owner” means an employee who owns or is deemed to own (by reason of the attribution rules of Section 424(d) of the Code) more than 10 percent of the combined voting power of all classes of stock of the Company or any parent or subsidiary corporation.

“Unrestricted Stock Award” means an Award of shares of Stock free of any restrictions.

SECTION 2.  ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES AND DETERMINE AWARDS

(a)Administration of Plan.  The Plan shall be administered by the Administrator.

(b)Powers of Administrator.  The Administrator shall have the power and authority to grant Awards consistent with the terms of the Plan, including the power and authority:

(i)to select the individuals to whom Awards may from time to time be granted;

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(ii)to determine the time or times of grant, and the extent, if any, of Incentive Stock Options, Non-Qualified Stock Options, Stock Appreciation Rights, Restricted Stock Awards, Restricted Stock Units, Unrestricted Stock Awards, Cash-Based Awards, Performance Share Awards and Dividend Equivalent Rights, or any combination of the foregoing, granted to any one or more grantees;

(iii)to determine the number of shares of Stock to be covered by any Award;

(iv)to determine and modify from time to time the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Award, which terms and conditions may differ among individual Awards and grantees, and to approve the forms of Award Certificates;

(v)to accelerate at any time the exercisability or vesting of all or any portion of any Award in circumstances involving the grantee’s death, disability, retirement, or a change in control (including a Sale Event);

(vi)subject to the provisions of Section 5(b), to extend at any time the period in which Stock Options may be exercised; and

(vii)at any time to adopt, alter and repeal such rules, guidelines and practices for administration of the Plan and for its own acts and proceedings as it shall deem advisable; to interpret the terms and provisions of the Plan and any Award (including related written instruments); to make all determinations it deems advisable for the administration of the Plan; to decide all disputes arising in connection with the Plan; and to otherwise supervise the administration of the Plan.

All decisions and interpretations of the Administrator shall be binding on all persons, including the Company and Plan grantees.

(c)Delegation of Authority to Grant Options and Restricted Stock Units.  Subject to applicable law, the Administrator, in its discretion, may delegate to the Chief Executive Officer or the Chief Financial Officer of the Company all or part of the Administrator’s authority and duties with respect to the granting of Options and Restricted Stock Units to individuals who are (i) not subject to the reporting and other provisions of Section 16 of the Exchange Act and (ii) not Covered Employees.  Any such delegation by the Administrator shall include a limitation as to the amount of Options and Restricted Stock Units that may be granted during the period of the delegation and shall contain guidelines as to the determination of the exercise price and the vesting criteria.  The Administrator may revoke or amend the terms of a delegation at any time but such action shall not invalidate any prior actions of the Administrator’s delegate or delegates that were consistent with the terms of the Plan.

(d)Award Certificate.  Awards under the Plan shall be evidenced by Award Certificates that set forth the terms, conditions and limitations for each Award which may include, without limitation, the term of an Award and the provisions applicable in the event employment or service terminates.

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(e)Indemnification.  Neither the Board nor the Administrator, nor any member of either or any delegate thereof, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with the Plan, and the members of the Board and the Administrator (and any delegate thereof) shall be entitled in all cases to indemnification and reimbursement by the Company in respect of any claim, loss, damage or expense (including, without limitation, reasonable attorneys’ fees) arising or resulting therefrom to the fullest extent permitted by law and/or under the Company’s articles or bylaws or any directors’ and officers’ liability insurance coverage which may be in effect from time to time and/or any indemnification agreement between such individual and the Company.

(f)Foreign Award Recipients.  Notwithstanding any provision of the Plan to the contrary, in order to comply with the laws in other countries in which the Company and its Subsidiaries operate or have employees or other individuals eligible for Awards, the Administrator, in its sole discretion, shall have the power and authority to:  (i) determine which Subsidiaries shall be covered by the Plan; (ii) determine which individuals outside the United States are eligible to participate in the Plan; (iii) modify the terms and conditions of any Award granted to individuals outside the United States to comply with applicable foreign laws; (iv) establish subplans and modify exercise procedures and other terms and procedures, to the extent the Administrator determines such actions to be necessary or advisable (and such subplans and/or modifications shall be attached to this Plan as appendices); provided, however, that no such subplans and/or modifications shall increase the share limitations contained in Section 3(a) hereof; and (v) take any action, before or after an Award is made, that the Administrator determines to be necessary or advisable to obtain approval or comply with any local governmental regulatory exemptions or approvals.  Notwithstanding the foregoing, the Administrator may not take any actions hereunder, and no Awards shall be granted, that would violate the Exchange Act or any other applicable United States securities law, the Code, or any other applicable United States governing statute or law.

SECTION 3.  STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION

(a)Stock Issuable.  The maximum number of shares of Stock reserved and available for issuance under the Plan shall be 1,973,551 shares (the “Initial Limit”), subject to adjustment as provided in Section 3(c), plus on January 1, 2015 and each January 1 thereafter, the number of shares of Stock reserved and available for issuance under the Plan shall be cumulatively increased by 5 percent of the number of shares of Stock issued and outstanding on the immediately preceding December 31 or such lesser number of shares of Stock as determined by the Administrator (the “Annual Increase”).  Subject to such overall limitation, the maximum aggregate number of shares of Stock that may be issued in the form of Incentive Stock Options shall not exceed the Initial Limit cumulatively increased on January 1, 2015 and on each January 1 thereafter by the lesser of the Annual Increase for such year or 1,000,000 shares of Stock, subject in all cases to adjustment as provided in Section 3(c).  The shares of Stock underlying any Awards under the Plan and under the Company’s 2007 Equity Incentive Plan that are forfeited, canceled, held back upon exercise of an Option or settlement of an Award to cover the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of Stock or otherwise terminated (other than by exercise) shall be added back to the shares of Stock available for issuance under the Plan.  In the event the Company repurchases shares of Stock on the open market, such shares shall not be added to the shares of Stock

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available for issuance under the Plan.  Subject to such overall limitations, shares of Stock may be issued up to such maximum number pursuant to any type or types of Award; provided, however, that Stock Options or Stock Appreciation Rights with respect to no more than 1,000,000 shares of Stock may be granted to any one individual grantee during any one calendar year period.  The shares available for issuance under the Plan may be authorized but unissued shares of Stock or shares of Stock reacquired by the Company.

(b)[Reserved.]

(c)Changes in Stock.  Subject to Section 3(d) hereof, if, as a result of any reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or other similar change in the Company’s capital stock, the outstanding shares of Stock are increased or decreased or are exchanged for a different number or kind of shares or other securities of the Company, or additional shares or new or different shares or other securities of the Company or other non-cash assets are distributed with respect to such shares of Stock or other securities, or, if, as a result of any merger or consolidation, sale of all or substantially all of the assets of the Company, the outstanding shares of Stock are converted into or exchanged for securities of the Company or any successor entity (or a parent or subsidiary thereof), the Administrator shall make an appropriate or proportionate adjustment in (i) the maximum number of shares reserved for issuance under the Plan, including the maximum number of shares that may be issued in the form of Incentive Stock Options, (ii) the number of Stock Options or Stock Appreciation Rights that can be granted to any one individual grantee and the maximum number of shares that may be granted under a Performance-Based Award, (iii) the number and kind of shares or other securities subject to any then outstanding Awards under the Plan, (iv) the repurchase price, if any, per share subject to each outstanding Restricted Stock Award, and (v) the exercise price for each share subject to any then outstanding Stock Options and Stock Appreciation Rights under the Plan, without changing the aggregate exercise price (i.e., the exercise price multiplied by the number of Stock Options and Stock Appreciation Rights) as to which such Stock Options and Stock Appreciation Rights remain exercisable.  The Administrator shall also make equitable or proportionate adjustments in the number of shares subject to outstanding Awards and the exercise price and the terms of outstanding Awards to take into consideration cash dividends paid other than in the ordinary course or any other extraordinary corporate event.  The adjustment by the Administrator shall be final, binding and conclusive.  No fractional shares of Stock shall be issued under the Plan resulting from any such adjustment, but the Administrator in its discretion may make a cash payment in lieu of fractional shares.

(d)Mergers and Other Transactions.  In the case of and subject to the consummation of a Sale Event, the parties thereto may cause the assumption or continuation of Awards theretofore granted by the successor entity, or the substitution of such Awards with new Awards of the successor entity or parent thereof, with appropriate adjustment as to the number and kind of shares and, if appropriate, the per share exercise prices, as such parties shall agree.  To the extent the parties to such Sale Event do not provide for the assumption, continuation or substitution of Awards, upon the effective time of the Sale Event, the Plan and all outstanding Awards granted hereunder shall terminate.  In such case except as may be otherwise provided in the relevant Award Certificate, all Options and Stock Appreciation Rights that are not exercisable immediately prior to the effective time of the Sale Event shall become fully exercisable as of the effective time of the Sale Event, all other Awards with time-based vesting,

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conditions or restrictions shall become fully vested and nonforfeitable as of the effective time of the Sale Event and all Awards with conditions and restrictions relating to the attainment of performance goals may become vested and nonforfeitable in connection with a Sale Event in the Administrator’s discretion or to the extent specified in the relevant Award Certificate.  In the event of such termination, (i) the Company shall have the option (in its sole discretion) to make or provide for a cash payment to the grantees holding Options and Stock Appreciation Rights, in exchange for the cancellation thereof, in an amount equal to the difference between (A) the Sale Price multiplied by the number of shares of Stock subject to outstanding Options and Stock Appreciation Rights (to the extent then exercisable  at prices not in excess of the Sale Price) and (B) the aggregate exercise price of all such outstanding Options and Stock Appreciation Rights; or (ii) each grantee shall be permitted, within a specified period of time prior to the consummation of the Sale Event as determined by the Administrator, to exercise all outstanding Options and Stock Appreciation Rights (to the extent then exercisable) held by such grantee.

(e)Substitute Awards.  The Administrator may grant Awards under the Plan in substitution for stock and stock based awards held by employees, directors or other key persons of another corporation in connection with the merger or consolidation of the employing corporation with the Company or a Subsidiary or the acquisition by the Company or a Subsidiary of property or stock of the employing corporation.  The Administrator may direct that the substitute awards be granted on such terms and conditions as the Administrator considers appropriate in the circumstances.  Any substitute Awards granted under the Plan shall not count against the share limitation set forth in Section 3(a).

SECTION 4.  ELIGIBILITY

Grantees under the Plan will be such full or part-time officers and other employees, Non-Employee Directors and Consultants of the Company and its Subsidiaries as are selected from time to time by the Administrator in its sole discretion.

SECTION 5.  STOCK OPTIONS

(a)Award of Stock Options.  The Administrator may grant Stock Options under the Plan.  Any Stock Option granted under the Plan shall be in such form as the Administrator may from time to time approve.

Stock Options granted under the Plan may be either Incentive Stock Options or Non-Qualified Stock Options.  Incentive Stock Options may be granted only to employees of the Company or any Subsidiary that is a “subsidiary corporation” within the meaning of Section 424(f) of the Code.  To the extent that any Option does not qualify as an Incentive Stock Option, it shall be deemed a Non-Qualified Stock Option.

Stock Options granted pursuant to this Section 5 shall be subject to the following terms and conditions and shall contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Administrator shall deem desirable.  If the Administrator so determines, Stock Options may be granted in lieu of cash compensation at the optionee’s election, subject to such terms and conditions as the Administrator may establish.

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(b)Exercise Price.  The exercise price per share for the Stock covered by a Stock Option granted pursuant to this Section 5 shall be determined by the Administrator at the time of grant but shall not be less than 100 percent of the Fair Market Value on the date of grant.  In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the option price of such Incentive Stock Option shall be not less than 110 percent of the Fair Market Value on the grant date.

(c)Option Term.  The term of each Stock Option shall be fixed by the Administrator, but no Stock Option shall be exercisable more than ten years after the date the Stock Option is granted.  In the case of an Incentive Stock Option that is granted to a Ten Percent Owner, the term of such Stock Option shall be no more than five years from the date of grant.

(d)Exercisability; Rights of a Stockholder.  Stock Options shall become exercisable at such time or times, whether or not in installments, as shall be determined by the Administrator at or after the grant date.  The Administrator may at any time accelerate the exercisability of all or any portion of any Stock Option.  An optionee shall have the rights of a stockholder only as to shares acquired upon the exercise of a Stock Option and not as to unexercised Stock Options.

(e)Method of Exercise.  Stock Options may be exercised in whole or in part, by giving written or electronic notice of exercise to the Company, specifying the number of shares to be purchased.  Payment of the purchase price may be made by one or more of the following methods except to the extent otherwise provided in the Option Award Certificate:

(i)In cash, by certified or bank check or other instrument acceptable to the Administrator;

(ii)Through the delivery (or attestation to the ownership following such procedures as the Company may prescribe) of shares of Stock that are not then subject to restrictions under any Company plan.  Such surrendered shares shall be valued at Fair Market Value on the exercise date;

(iii)By the optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company for the purchase price; provided that in the event the optionee chooses to pay the purchase price as so provided, the optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Company shall prescribe as a condition of such payment procedure; or

(iv)With respect to Stock Options that are not Incentive Stock Options, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price.

Payment instruments will be received subject to collection.  The transfer to the optionee on the records of the Company or of the transfer agent of the shares of Stock to be purchased pursuant to the exercise of a Stock Option will be contingent upon receipt from the optionee (or a purchaser acting in his stead in accordance with the provisions of the Stock Option) by the Company of the full purchase price for such shares and the fulfillment of any other requirements

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contained in the Option Award Certificate or applicable provisions of laws (including the satisfaction of any withholding taxes that the Company is obligated to withhold with respect to the optionee).  In the event an optionee chooses to pay the purchase price by previously-owned shares of Stock through the attestation method, the number of shares of Stock transferred to the optionee upon the exercise of the Stock Option shall be net of the number of attested shares.  In the event that the Company establishes, for itself or using the services of a third party, an automated system for the exercise of Stock Options, such as a system using an internet website or interactive voice response, then the paperless exercise of Stock Options may be permitted through the use of such an automated system.

(f)Annual Limit on Incentive Stock Options.  To the extent required for “incentive stock option” treatment under Section 422 of the Code, the aggregate Fair Market Value (determined as of the time of grant) of the shares of Stock with respect to which Incentive Stock Options granted under this Plan and any other plan of the Company or its parent and subsidiary corporations become exercisable for the first time by an optionee during any calendar year shall not exceed $100,000.  To the extent that any Stock Option exceeds this limit, it shall constitute a Non-Qualified Stock Option.

SECTION 6.  STOCK APPRECIATION RIGHTS

(a)Award of Stock Appreciation Rights.  The Administrator may grant Stock Appreciation Rights under the Plan.  A Stock Appreciation right is an award entitling the recipient to receive shares of Stock having a value equal to the excess of the Fair Market Value of a share of Stock on the date of exercise over the exercise price of the Stock Appreciation Right multiplied by the number of shares of Stock with respect to which the Stock Appreciation Right shall have been exercised.

(b)Exercise Price of Stock Appreciation Rights.  The exercise price of a Stock Appreciation Right shall not be less than 100 percent of the Fair Market Value of the Stock on the date of grant.

(c)Grant and Exercise of Stock Appreciation Rights.  Stock Appreciation Rights may be granted by the Administrator independently of any Stock Option granted pursuant to Section 5 of the Plan.

(d)Terms and Conditions of Stock Appreciation Rights.  Stock Appreciation Rights shall be subject to such terms and conditions as shall be determined from time to time by the Administrator.  The term of a Stock Appreciation Right may not exceed ten years.

SECTION 7.  RESTRICTED STOCK AWARDS

(a)Nature of Restricted Stock Awards.  The Administrator may grant Restricted Stock awards under the Plan. A Restricted Stock Award is any Award of Restricted Shares subject to such restrictions and conditions as the Administrator may determine at the time of grant.  Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives.  The terms and conditions of each such Award Certificate shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees.

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(b)Rights as a Stockholder.  Upon the grant of the Restricted Stock Award and payment of any applicable purchase price, a grantee shall have the rights of a stockholder with respect to the voting of the Restricted Shares and receipt of dividends; provided that if the lapse of restrictions with respect to the Restricted Stock Award is tied to the attainment of performance goals, any dividends paid by the Company during the performance period shall accrue and shall not be paid to the grantee until and to the extent the performance goals are met with respect to the Restricted Stock Award.  Unless the Administrator shall otherwise determine, (i) uncertificated Restricted Shares shall be accompanied by a notation on the records of the Company or the transfer agent to the effect that they are subject to forfeiture until such Restricted Shares are vested as provided in Section 7(d) below, and (ii) certificated Restricted Shares shall remain in the possession of the Company until such Restricted Shares are vested as provided in Section 7(d) below, and the grantee shall be required, as a condition of the grant, to deliver to the Company such instruments of transfer as the Administrator may prescribe.

(c)Restrictions.  Restricted Shares may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of except as specifically provided herein or in the Restricted Stock Award Certificate.  Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 18 below, in writing after the Award is issued, if a grantee’s employment (or other service relationship) with the Company and its Subsidiaries terminates for any reason, any Restricted Shares that have not vested at the time of termination shall automatically and without any requirement of notice to such grantee from or other action by or on behalf of, the Company be deemed to have been reacquired by the Company at its original purchase price (if any) from such grantee or such grantee’s legal representative simultaneously with such termination of employment (or other service relationship), and thereafter shall cease to represent any ownership of the Company by the grantee or rights of the grantee as a stockholder.  Following such deemed reacquisition of Restricted Shares that are represented by physical certificates, a grantee shall surrender such certificates to the Company upon request without consideration.

(d)Vesting of Restricted Shares.  The Administrator at the time of grant shall specify the date or dates and/or the attainment of pre-established performance goals, objectives and other conditions on which the non-transferability of the Restricted Shares and the Company’s right of repurchase or forfeiture shall lapse.  Subsequent to such date or dates and/or the attainment of such pre-established performance goals, objectives and other conditions, the shares on which all restrictions have lapsed shall no longer be Restricted Stock and shall be deemed “vested.”  Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 18 below, in writing after the Award is issued, a grantee’s rights in any Restricted Shares that have not vested shall automatically terminate upon the grantee’s termination of employment (or other service relationship) with the Company and its Subsidiaries and such shares shall be subject to the provisions of Section 7(c) above.

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SECTION 8.  RESTRICTED STOCK UNITS

(a)Nature of Restricted Stock Units.   The Administrator may grant Restricted Stock Units under the Plan.  A Restricted Stock Unit is an Award of stock units that may be settled in shares of Stock upon the satisfaction of such restrictions and conditions at the time of grant.  Conditions may be based on continuing employment (or other service relationship) and/or achievement of pre-established performance goals and objectives.  The terms and conditions of each such Award Certificate shall be determined by the Administrator, and such terms and conditions may differ among individual Awards and grantees.  Except in the case of Restricted Stock Units with a deferred settlement date that complies with Section 409A, at the end of the vesting period, vested Restricted Stock Units shall be settled in the form of shares of Stock.  Restricted Stock Units with deferred settlement dates are subject to Section 409A, and shall contain such additional terms and conditions as the Administrator shall determine in its sole discretion in order to comply with the requirements of Section 409A.

(b)Election to Receive Restricted Stock Units in Lieu of Compensation.  The Administrator may, in its sole discretion, permit a grantee to elect to receive a portion of future cash compensation otherwise due to such grantee in the form of an award of Restricted Stock Units.  Any such election shall be made in writing and shall be delivered to the Company no later than the date specified by the Administrator and in accordance with Section 409A and such other rules and procedures established by the Administrator.  Any such future cash compensation that the grantee elects to defer shall be converted to a fixed number of Restricted Stock Units based on the Fair Market Value of Stock on the date the compensation would otherwise have been paid to the grantee if such payment had not been deferred as provided herein.  The Administrator shall have the sole right to determine whether and under what circumstances to permit such elections and to impose such limitations and other terms and conditions thereon as the Administrator deems appropriate.  Any Restricted Stock Units that are elected to be received in lieu of cash compensation shall be fully vested, unless otherwise provided in the Award Certificate.

(c)Rights as a Stockholder.  A grantee shall have the rights as a stockholder only as to shares of Stock acquired by the grantee upon settlement of Restricted Stock Units; provided, however, that the grantee may be credited with Dividend Equivalent Rights with respect to the stock units underlying his Restricted Stock Units, subject to the provisions of Section 11 and such terms and conditions as the Administrator may determine.  

(d)Termination.  Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 18 below, in writing after the Award is issued, a grantee’s right in all Restricted Stock Units that have not vested shall automatically terminate upon the grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.

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SECTION 9.  UNRESTRICTED STOCK AWARDS

Grant or Sale of Unrestricted Stock.  The Administrator may grant (or sell at par value or such higher purchase price determined by the Administrator) an Unrestricted Stock Award under the Plan.  An Unrestricted Stock Award is an Award pursuant to which the grantee may receive shares of Stock free of any restrictions under the Plan.  Unrestricted Stock Awards may be granted in respect of past services or other valid consideration, or in lieu of cash compensation due to such grantee.

SECTION 10.  CASH-BASED AWARDS

Grant of Cash-Based Awards.  The Administrator may grant Cash-Based Awards under the Plan.  A Cash-Based Award is an award that entitles the grantee to a payment in cash upon the attainment of specified Performance Goals.  The Administrator shall determine the maximum duration of the Cash-Based Award, the amount of cash to which the Cash-Based Award pertains, the conditions upon which the Cash-Based Award shall become vested or payable, and such other provisions as the Administrator shall determine.  Each Cash-Based Award shall specify a cash-denominated payment amount, formula or payment ranges as determined by the Administrator.  Payment, if any, with respect to a Cash-Based Award shall be made in accordance with the terms of the Award and may be made in cash.  

SECTION 11.  PERFORMANCE SHARE AWARDS

(a)Nature of Performance Share Awards.  The Administrator may grant Performance Share Awards under the Plan.  A Performance Share Award is an Award entitling the grantee to receive shares of stock upon the attainment of performance goals.  The Administrator shall determine whether and to whom Performance Share Awards shall be granted, the Performance Goals, the periods during which performance is to be measured, which may not be less than one year except in the case of a Sale Event, and such other limitations and conditions as the Administrator shall determine.

(b)Rights as a Stockholder.  A grantee receiving a Performance Share Award shall have the rights of a stockholder only as to shares of Stock actually received by the grantee under the Plan and not with respect to shares subject to the Award but not actually received by the grantee.  A grantee shall be entitled to receive shares of Stock under a Performance Share Award only upon satisfaction of all conditions specified in the Performance Share Award Certificate (or in a performance plan adopted by the Administrator).

(c)Termination.  Except as may otherwise be provided by the Administrator either in the Award agreement or, subject to Section 18 below, in writing after the Award is issued, a grantee’s rights in all Performance Share Awards shall automatically terminate upon the grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.

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SECTION 12.  PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES

(a)Performance-Based Awards.  The Administrator may grant one or more Performance-Based Awards in the form of a Restricted Stock Award, Restricted Stock Units, Performance Share Awards or Cash-Based Award payable upon the attainment of Performance Goals that are established by the Administrator and relate to one or more of the Performance Criteria, in each case on a specified date or dates or over any period or periods determined by the Administrator.  The Administrator shall define in an objective fashion the manner of calculating the Performance Criteria it selects to use for any Performance Cycle.  Depending on the Performance Criteria used to establish such Performance Goals, the Performance Goals may be expressed in terms of overall Company performance or the performance of a division, business unit, or an individual.  Each Performance-Based Award shall comply with the provisions set forth below.

(b)Grant of Performance-Based Awards.  With respect to each Performance-Based Award granted to a Covered Employee (or any other eligible individual that the Administrator determines is reasonably likely to become a Covered Employee), the Administrator shall select, within the first 90 days of a Performance Cycle (or, if shorter, within the maximum period allowed under Section 162(m) of the Code) the Performance Criteria for such grant, and the Performance Goals with respect to each Performance Criterion (including a threshold level of performance below which no amount will become payable with respect to such Award).  Each Performance-Based Award will specify the amount payable, or the formula for determining the amount payable, upon achievement of the various applicable performance targets.  The Performance Criteria established by the Administrator may be (but need not be) different for each Performance Cycle and different Performance Goals may be applicable to Performance-Based Awards to different Covered Employees.

(c)Payment of Performance-Based Awards.  Following the completion of a Performance Cycle, the Administrator shall meet to review and certify in writing whether, and to what extent, the Performance Goals for the Performance Cycle have been achieved and, if so, to also calculate and certify in writing the amount of the Performance-Based Awards earned for the Performance Cycle.  The Administrator shall then determine the actual size of each Covered Employee’s Performance-Based Award, and, in doing so, may reduce or eliminate the amount of the Performance-Based Award for a Covered Employee if, in its sole judgment, such reduction or elimination is appropriate.

(d)Maximum Award Payable.  The maximum Performance-Based Award payable to any one Covered Employee under the Plan for a Performance Cycle is 1,000,000 shares of Stock (subject to adjustment as provided in Section 3(c) hereof) or $2,000,000 in the case of a Performance-Based Award that is a Cash-Based Award.

SECTION 13.  DIVIDEND EQUIVALENT RIGHTS

(a)Dividend Equivalent Rights.  The Administrator may grant Dividend Equivalent Rights under the Plan.  A Dividend Equivalent Right is an Award entitling the grantee to receive credits based on cash dividends that would have been paid on the shares of Stock specified in the Dividend Equivalent Right (or other Award to which it relates) if such shares had been issued to the grantee.  A Dividend Equivalent Right may be granted hereunder to any grantee as a

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component of an award of Restricted Stock Units, Restricted Stock Award or Performance Share Award or as a freestanding award.  The terms and conditions of Dividend Equivalent Rights shall be specified in the Award Certificate.  Dividend equivalents credited to the holder of a Dividend Equivalent Right may be paid currently or may be deemed to be reinvested in additional shares of Stock, which may thereafter accrue additional equivalents.  Any such reinvestment shall be at Fair Market Value on the date of reinvestment or such other price as may then apply under a dividend reinvestment plan sponsored by the Company, if any.  Dividend Equivalent Rights may be settled in cash or shares of Stock or a combination thereof, in a single installment or installments.  A Dividend Equivalent Right granted as a component of an award of Restricted Stock Units or Restricted Stock Award with performance vesting or Performance Share Award shall provide that such Dividend Equivalent Right shall be settled only upon settlement or payment of, or lapse of restrictions on, such other Award, and that such Dividend Equivalent Right shall expire or be forfeited or annulled under the same conditions as such other Award.

(b) Termination.  Except as may otherwise be provided by the Administrator either in the Award Certificate or, subject to Section 18 below, in writing after the Award is issued, a grantee’s rights in all Dividend Equivalent Rights shall automatically terminate upon the grantee’s termination of employment (or cessation of service relationship) with the Company and its Subsidiaries for any reason.

SECTION 14.  Transferability of Awards

(a)Transferability.  Except as provided in Section 14(b) below, during a grantee’s lifetime, his or her Awards shall be exercisable only by the grantee, or by the grantee’s legal representative or guardian in the event of the grantee’s incapacity.  No Awards shall be sold, assigned, transferred or otherwise encumbered or disposed of by a grantee other than by will or by the laws of descent and distribution or pursuant to a domestic relations order.  No Awards shall be subject, in whole or in part, to attachment, execution, or levy of any kind, and any purported transfer in violation hereof shall be null and void.

(b)Administrator Action.  Notwithstanding Section 14(a), the Administrator, in its discretion, may provide either in the Award Certificate regarding a given Award or by subsequent written approval that the grantee (who is an employee or director) may transfer his or her Non-Qualified Options to his or her immediate family members, to trusts for the benefit of such family members, or to partnerships in which such family members are the only partners, provided that the transferee agrees in writing with the Company to be bound by all of the terms and conditions of this Plan and the applicable Award.  In no event may an Award be transferred by a grantee for value.

(c)Family Member.  For purposes of Section 14(b), “family member” shall mean a grantee’s child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the grantee’s household (other than a tenant of the grantee), a trust in which these persons (or the grantee) have more than 50 percent of the beneficial interest, a foundation in which these persons (or the grantee) control the management of assets, and any other entity in which these persons (or the grantee) own more than 50 percent of the voting interests.

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(d)Designation of Beneficiary.  To the extent permitted by the Company, each grantee to whom an Award has been made under the Plan may designate a beneficiary or beneficiaries to exercise any Award or receive any payment under any Award payable on or after the grantee’s death.  Any such designation shall be on a form provided for that purpose by the Administrator and shall not be effective until received by the Administrator.  If no beneficiary has been designated by a deceased grantee, or if the designated beneficiaries have predeceased the grantee, the beneficiary shall be the grantee’s estate.

SECTION 15.  TAX WITHHOLDING

(a)Payment by Grantee.  Each grantee shall, no later than the date as of which the value of an Award or of any Stock or other amounts received thereunder first becomes includable in the gross income of the grantee for Federal income tax purposes, pay to the Company, or make arrangements satisfactory to the Administrator regarding payment of, any Federal, state, or local taxes of any kind required by law to be withheld by the Company with respect to such income.  The Company and its Subsidiaries shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the grantee.  The Company’s obligation to deliver evidence of book entry (or stock certificates) to any grantee is subject to and conditioned on tax withholding obligations being satisfied by the grantee.

(b)Payment in Stock.  Subject to approval by the Administrator, the Company’s minimum required tax withholding obligation may be satisfied, in whole or in part, by the Company withholding from shares of Stock to be issued pursuant to any Award a number of shares with an aggregate Fair Market Value (as of the date the withholding is effected) that would satisfy the withholding amount due.  The Administrator may also require Awards to be subject to mandatory share withholding up to the required withholding amount.  For purposes of share withholding, the Fair Market Value of withheld shares shall be determined in the same manner as the value of Stock includible in income of the grantee.

SECTION 16.  Section 409A awards

To the extent that any Award is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A (a “409A Award”), the Award shall be subject to such additional rules and requirements as specified by the Administrator from time to time in order to comply with Section 409A.  In this regard, if any amount under a 409A Award is payable upon a “separation from service” (within the meaning of Section 409A) to a grantee who is then considered a “specified employee” (within the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the grantee’s separation from service, or (ii) the grantee’s death, but only to the extent such delay is necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A.  Further, the settlement of any such Award may not be accelerated except to the extent permitted by Section 409A.

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SECTION 17.  Termination of employment. TRANSFER, LEAVE OF ABSENCE, ETC.

(a)Termination of Employment.  If the grantee’s employer ceases to be a Subsidiary, the grantee shall be deemed to have terminated employment for the purposes of the Plan.

For purposes of the Plan, the following events shall not be deemed a termination of employment:

(b)a transfer to the employment of the Company from a Subsidiary or from the Company to a Subsidiary, or from one Subsidiary to another; or

(c)an approved leave of absence for military service or sickness, or for any other purpose approved by the Company, if the employee’s right to re-employment is guaranteed either by a statute or by contract or under the policy pursuant to which the leave of absence was granted or if the Administrator otherwise so provides in writing.

Unless the Administrator provides otherwise or as required by law, vesting of Awards granted hereunder shall be suspended during any unpaid leave of absence of such grantee that exceeds a period of seven (7) days.    

SECTION 18.  AMENDMENTS AND TERMINATION

The Board may, at any time, amend or discontinue the Plan and the Administrator may, at any time, amend or cancel any outstanding Award for the purpose of satisfying changes in law or for any other lawful purpose, but no such action shall adversely affect rights under any outstanding Award without the holder’s consent.  Except as provided in Section 3(c) or 3(d), without prior stockholder approval, in no event may the Administrator exercise its discretion to reduce the exercise price of outstanding Stock Options or Stock Appreciation Rights or effect repricing through cancellation and re-grants or cancellation of Stock Options or Stock Appreciation Rights in exchange for cash.  To the extent required under the rules of any securities exchange or market system on which the Stock is listed, to the extent determined by the Administrator to be required by the Code to ensure that Incentive Stock Options granted under the Plan are qualified under Section 422 of the Code, or to ensure that compensation earned under Awards qualifies as performance-based compensation under Section 162(m) of the Code, Plan amendments shall be subject to approval by the Company stockholders entitled to vote at a meeting of stockholders.  Nothing in this Section 18 shall limit the Administrator’s authority to take any action permitted pursuant to Section 3(c) or 3(d).

SECTION 19.  STATUS OF PLAN

With respect to the portion of any Award that has not been exercised and any payments in cash, Stock or other consideration not received by a grantee, a grantee shall have no rights greater than those of a general creditor of the Company unless the Administrator shall otherwise expressly determine in connection with any Award or Awards.  In its sole discretion, the Administrator may authorize the creation of trusts or other arrangements to meet the Company’s obligations to deliver Stock or make payments with respect to Awards hereunder, provided that the existence of such trusts or other arrangements is consistent with the foregoing sentence.

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SECTION 20.  GENERAL PROVISIONS

(a)No Distribution.  The Administrator may require each person acquiring Stock pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the shares without a view to distribution thereof.

(b)Delivery of Stock Certificates.  Stock certificates to grantees under this Plan shall be deemed delivered for all purposes when the Company or a stock transfer agent of the Company shall have mailed such certificates in the United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company.  Uncertificated Stock shall be deemed delivered for all purposes when the Company or a Stock transfer agent of the Company shall have given to the grantee by electronic mail (with proof of receipt) or by United States mail, addressed to the grantee, at the grantee’s last known address on file with the Company, notice of issuance and recorded the issuance in its records (which may include electronic “book entry” records).  Notwithstanding anything herein to the contrary, the Company shall not be required to issue or deliver any certificates evidencing shares of Stock pursuant to the exercise of any Award, unless and until the Administrator has determined, with advice of counsel (to the extent the Administrator deems such advice necessary or advisable), that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authorities and, if applicable, the requirements of any exchange on which the shares of Stock are listed, quoted or traded.  All Stock certificates delivered pursuant to the Plan shall be subject to any stop-transfer orders and other restrictions as the Administrator deems necessary or advisable to comply with federal, state or foreign jurisdiction, securities or other laws, rules and quotation system on which the Stock is listed, quoted or traded.  The Administrator may place legends on any Stock certificate to reference restrictions applicable to the Stock.  In addition to the terms and conditions provided herein, the Administrator may require that an individual make such reasonable covenants, agreements, and representations as the Administrator, in its discretion, deems necessary or advisable in order to comply with any such laws, regulations, or requirements.  The Administrator shall have the right to require any individual to comply with any timing or other restrictions with respect to the settlement or exercise of any Award, including a window-period limitation, as may be imposed in the discretion of the Administrator.  

(c)Stockholder Rights.  Until Stock is deemed delivered in accordance with Section 20(b), no right to vote or receive dividends or any other rights of a stockholder will exist with respect to shares of Stock to be issued in connection with an Award, notwithstanding the exercise of a Stock Option or any other action by the grantee with respect to an Award.

(d)Other Compensation Arrangements; No Employment Rights.  Nothing contained in this Plan shall prevent the Board from adopting other or additional compensation arrangements, including trusts, and such arrangements may be either generally applicable or applicable only in specific cases.  The adoption of this Plan and the grant of Awards do not confer upon any employee any right to continued employment with the Company or any Subsidiary.

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(e)Trading Policy Restrictions.  Option exercises and other Awards under the Plan shall be subject to the Company’s insider trading policies and procedures, as in effect from time to time.

(f)Clawback Policy.  Awards under the Plan shall be subject to the Company’s clawback policy, as may be adopted and as in effect from time to time.

SECTION 21.  EFFECTIVE DATE OF PLAN

This Plan shall become effective immediately prior to the Company’s Initial Public Offering, following stockholder approval of the Plan in accordance with applicable state law, the Company’s bylaws and articles of incorporation, and applicable stock exchange rules or pursuant to written consent.  No grants of Stock Options and other Awards may be made hereunder after the tenth anniversary of the Effective Date and no grants of Incentive Stock Options may be made hereunder after the tenth anniversary of the date the Plan is approved by the Board.

SECTION 22.  GOVERNING LAW

This Plan and all Awards and actions taken thereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware, applied without regard to conflict of law principles.

DATE APPROVED BY BOARD OF DIRECTORS: September 25, 2014

DATE APPROVED BY STOCKHOLDERS: September 25, 2014

 

 

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GLOBAL INCENTIVE STOCK OPTION AGREEMENT
UNDER THE HUBSPOT, INC.
2014 STOCK OPTION AND INCENTIVE PLAN

Pursuant to the HubSpot, Inc. 2014 Stock Option and Incentive Plan as amended through the date hereof (the “Plan”), and this Global Incentive Stock Option Award Agreement, including any special terms and conditions for the Optionee’s country set forth in the appendix attached hereto (the “Appendix” and together with the Global Incentive Stock Option Agreement, the “Agreement”), HubSpot, Inc. (the “Company”) hereby grants to the Optionee named above an option (the “Stock Option”) to purchase on or prior to the Expiration Date specified above all or part of the number of shares of Common Stock, par value $0.001 per share (the “Stock”), of the Company specified above at the Option Exercise Price per Share specified above subject to the terms and conditions set forth herein and in the Plan.

1.         Vesting Schedule.  No portion of this Stock Option may be exercised until such portion shall have become vested and exercisable.  Except as set forth below, and subject to the discretion of the Administrator (as defined in Section 2 of the Plan) to accelerate the vesting schedule hereunder, the Option Shares shall vest and become exercisable [in [   ] installments] following the Vesting Commencement Date, provided the Optionee remains an employee of the Company or a Subsidiary on each such date.  Notwithstanding the foregoing, in the event that the Optionee’s employment with the Company and any Subsidiary terminates due to the Optionee’s death, then the Option Shares shall be deemed fully vested and exercisable upon the date of the Optionee’s death. Once vested and exercisable, this Stock Option shall continue to be exercisable at any time or times prior to the close of business on the Expiration Date, subject to the provisions hereof and of the Plan. This Agreement is subject to the terms and conditions of any policies of the Company regarding vesting during leaves of absence.

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Notwithstanding the foregoing, in the event of a Sale Event (as defined in the Plan) in which this Stock Option is continued or assumed by a successor to the Company, this Stock Option shall be deemed vested and exercisable upon the date on which the Optionee’s employment relationship with the Company and any Subsidiary or successor entity, as the case may be, terminates if such termination occurs (i) within 12 months after such Sale Event or 90 days prior to such Sale Event, and (ii) such termination is by the Company or any Subsidiary or successor entity without Cause or by the Optionee for Good Reason.  

The following definitions shall apply:

“Cause” shall mean (i) the Optionee’s dishonest statements or acts with respect to the Company or any affiliate of the Company, or any current or prospective customers, suppliers vendors or other third parties with which such entity does business; (ii) the Optionee’s commission of (A) a felony (or crime of similar magnitude under non-U.S. laws, as determined by the Administrator) or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (iii) the Optionee’s failure to perform his assigned duties and responsibilities to the reasonable satisfaction of the Company or a Subsidiary which failure continues, in the reasonable judgment of the Company or a Subsidiary, after written notice given to the Optionee by the Company or a Subsidiary; (iv) the Optionee’s gross negligence, willful misconduct or insubordination with respect to the Company or any Subsidiary (including, but not limited to, any violation of the Company’s code of conduct, insider trading, willful accounting improprieties or failure to cooperate with investigations); or (v) the Optionee’s material violation of any provision of any agreement(s) between the Optionee and the Company or any Subsidiary relating to noncompetition, nonsolicitation, nondisclosure and/or assignment of inventions.

“Good Reason” shall mean (i) a material diminution in the Optionee’s base salary except for across-the-board salary reductions similarly affecting all or substantially all similarly situated employees of the Company or a Subsidiary or (ii) a change of more than 50 miles in the geographic location at which the Optionee provides services to the Company or a Subsidiary, so long as the Optionee provides notice to the Company or the Subsidiary within at least 90 days following the initial occurrence of any such event and the Company or the Subsidiary fails to cure such event within 30 days of such notice.

2.         Manner of Exercise.

(a)The Optionee may exercise this Stock Option only in the following manner:  from time to time on or prior to the Expiration Date of this Stock Option, the Optionee may give written notice to the Administrator of his or her election to purchase some or all of the Option Shares purchasable at the time of such notice.  This notice shall specify the number of Option Shares to be purchased.

Payment of the purchase price for the Option Shares may be made by one or more of the following methods:  (i) in cash, by certified or bank check or other instrument acceptable to the Administrator; (ii) if permitted by the Administrator, through the delivery (or attestation to the ownership) of shares of Stock that have been purchased by the Optionee on the open market or that are beneficially owned by the Optionee and are not then subject to any restrictions under any Company plan and that otherwise satisfy any holding periods as may be required by the

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Administrator; (iii) by the Optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the option purchase price, provided that in the event the Optionee chooses to pay the option purchase price as so provided, the Optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment procedure; (iv) if permitted by the Administrator, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; or (v) a combination of (i), (ii), (iii) and (iv) above. Payment instruments will be received subject to collection.

The transfer to the Optionee on the records of the Company or of the transfer agent of the Option Shares will be contingent upon (i) the Company’s receipt from the Optionee of the full purchase price for the Option Shares, as set forth above, (ii) the fulfillment of any other requirements contained herein or in the Plan or in any other agreement or provision of laws, and (iii) the receipt by the Company of any agreement, statement or other evidence that the Company may require to satisfy itself that the issuance of Stock to be purchased pursuant to the exercise of Stock Options under the Plan and any subsequent resale of the shares of Stock will be in compliance with applicable laws and regulations.  In the event the Optionee chooses (and the Administrator permits to) pay the purchase price by previously-owned shares of Stock through the attestation method, the number of shares of Stock transferred to the Optionee upon the exercise of the Stock Option shall be net of the Shares attested to.

(b)The shares of Stock purchased upon exercise of this Stock Option shall be transferred to the Optionee on the records of the Company or of the transfer agent upon compliance to the satisfaction of the Administrator with all requirements under applicable laws or regulations in connection with such transfer and with the requirements hereof and of the Plan.  The determination of the Administrator as to such compliance shall be final and binding on the Optionee.  The Optionee shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Stock subject to this Stock Option unless and until this Stock Option shall have been exercised pursuant to the terms hereof, the Company or the transfer agent shall have transferred the shares to the Optionee, and the Optionee’s name shall have been entered as the stockholder of record on the books of the Company.  Thereupon, the Optionee shall have full voting, dividend and other ownership rights with respect to such shares of Stock.

(c)The minimum number of shares with respect to which this Stock Option may be exercised at any one time shall be 100 shares, unless the number of shares with respect to which this Stock Option is being exercised is the total number of shares subject to exercise under this Stock Option at the time.

(d)Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option shall be exercisable after the Expiration Date hereof.

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3.         Termination of Employment.  If the Optionee’s employment by the Company or a Subsidiary is terminated, the period within which to exercise the Stock Option may be subject to earlier termination as set forth below.

(a)Termination Due to Death.  If the Optionee’s employment terminates by reason of the Optionee’s death, any portion of this Stock Option outstanding on such date, to the extent exercisable on the date of death, may thereafter be exercised by the Optionee’s legal representative or legatee for a period of 12 months from the date of death or until the Expiration Date, if earlier.  

(b)Termination Due to Disability.  If the Optionee’s employment terminates by reason of the Optionee’s disability (as determined by the Administrator), any portion of this Stock Option outstanding on such date, to the extent vested and exercisable on the date of such disability, may thereafter be exercised by the Optionee for a period of 12 months from the date of disability or until the Expiration Date, if earlier.  Any portion of this Stock Option that is not vested and exercisable on the date of disability shall terminate immediately and be of no further force or effect.

(c)Termination for Cause.  If the Optionee’s employment terminates for Cause, any portion of this Stock Option outstanding on such date shall terminate immediately and be of no further force and effect.  For purposes hereof, “Cause” shall mean, unless otherwise provided in an employment agreement between the Company and the Optionee, a determination by the Administrator that the Optionee shall be dismissed as a result of (i) any material breach by the Optionee of any agreement between the Optionee and the Company or a Subsidiary; (ii) the conviction of, indictment for or plea of nolo contendere by the Optionee to a felony (or crime of similar magnitude under non-U.S. laws, as determined by the Administrator) or a crime involving moral turpitude; or (iii) any material misconduct or willful and deliberate non-performance (other than by reason of disability) by the Optionee of the Optionee’s duties to the Company or a Subsidiary.

(d)Other Termination.  If the Optionee’s employment terminates for any reason other than the Optionee’s death, the Optionee’s disability, or Cause, and unless otherwise determined by the Administrator, any portion of this Stock Option outstanding on such date may be exercised, to the extent vested and exercisable on the date of termination (after giving effect to any accelerated vesting in Section 1 above), for a period of three months from the date of termination or until the Expiration Date, if earlier.  Any portion of this Stock Option that is not vested and exercisable on the date of termination shall terminate immediately and be of no further force or effect.

The Administrator’s determination of the reason for termination of the Optionee’s employment shall be conclusive and binding on the Optionee and his or her representatives or legatees.

4.         Incorporation of Plan.  Notwithstanding anything herein to the contrary, this Stock Option shall be subject to and governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in Section 2(b) of the Plan.  Capitalized terms in this Agreement shall have the meaning specified in the Plan, unless a different meaning is specified herein.

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5.         Transferability.  This Agreement is personal to the Optionee, is non-assignable and is not transferable in any manner, by operation of law or otherwise, other than by will or the laws of descent and distribution.  This Stock Option is exercisable, during the Optionee’s lifetime, only by the Optionee, and thereafter, only by the Optionee’s legal representative or legatee.

6.         Status of the Stock Option.  This Stock Option is intended to qualify as an “incentive stock option” under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), but the Company does not represent or warrant that this Stock Option qualifies as such.  The Optionee should consult with his or her own tax advisors regarding the tax effects of this Stock Option and the requirements necessary to obtain favorable income tax treatment under Section 422 of the Code, including, but not limited to, holding period requirements.  To the extent any portion of this Stock Option does not so qualify as an “incentive stock option,” such portion shall be deemed to be a non-qualified stock option.  If the Optionee intends to dispose or does dispose (whether by sale, gift, transfer or otherwise) of any Option Shares within the one-year period beginning on the date after the transfer of such shares to him or her, or within the two-year period beginning on the day after the grant of this Stock Option, he or she will so notify the Company within 30 days after such disposition.

7.         Responsibility for Taxes.

(a)The Optionee acknowledges that, regardless of any action taken by the Company or, if different, the Subsidiary employing the Optionee (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax‑related items related to the Optionee’s participation in the Plan and legally applicable to the Optionee (“Tax-Related Items”) is and remains the Optionee’s responsibility and may exceed the amount, if any, actually withheld by the Company or the Employer.  The Optionee further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Stock Option, including, but not limited to, the grant, vesting or exercise of this Stock Option, the subsequent sale of shares of Stock acquired pursuant to such exercise and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of this Stock Option to reduce or eliminate the Optionee’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Optionee is subject to Tax-Related Items in more than one jurisdiction, the Optionee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

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(b)Prior to any relevant taxable or tax withholding event, as applicable, the Optionee agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items.  In this regard, the Optionee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any applicable withholding obligations with regard to all Tax-Related Items by one or a combination of the following:  (i) withholding from the Optionee’s wages or other cash compensation paid to the Optionee by the Company and/or the Employer; (ii) allowing or requiring the Optionee to make a cash payment to cover the Tax-Related Items; (iii) withholding from proceeds of the sale of shares of Stock acquired upon exercise of this Stock Option either through a voluntary sale or through a mandatory sale arranged by the Company (on the Optionee’s behalf pursuant to this authorization without further consent); (iv) withholding from the shares of Stock to be issued to the Optionee upon exercise of this Stock Option; or (v) any other method of withholding determined by the Company and permitted by applicable law; provided, however, that that if the Optionee is a Section 16 officer of the Company under the Exchange Act, in which case, the obligation for Tax-Related Items may be satisfied only by one or a combination of methods (i), (ii) and (iii) above.

(c)Depending on the withholding method, the Company and/or the Employer may withhold or account for Tax-Related Items by considering applicable statutory withholding amounts or other applicable withholding rates, including maximum rates applicable in the Optionee’s jurisdiction, in which case the Optionee may receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent amount in shares of Stock.  If the obligation for Tax-Related Items is satisfied by withholding in shares of Stock, for tax purposes, the Optionee is deemed to have been issued the full number of shares of Stock subject to the exercised  Stock Option, notwithstanding that a number of the shares of Stock is held back solely for the purpose of paying the Tax-Related Items.

(d)The Optionee agrees to pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Optionee’s participation in the Plan that cannot be satisfied by the means previously described.  The Company may refuse to issue or deliver the shares of Stock, or the proceeds of the sale of shares of Stock, if the Optionee fails to comply with his or her obligations in connection with the Tax-Related Items.

8.         No Obligation to Continue Employment.  The grant of this Stock Option shall not be interpreted as forming or amending an employment contract with the Company or any Subsidiary (including the Employer), and shall not be construed as giving the Optionee the right to be retained in the employ of the Employer.  Neither the Plan nor this Agreement shall interfere in any way with the right of the Employer to terminate the employment of the Optionee at any time.

9.         Integration.  This Agreement constitutes the entire agreement between the parties with respect to this Stock Option and supersedes all prior agreements and discussions between the parties concerning such subject matter.

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10.         Nature of Grant.  In accepting this Stock Option, the Optionee acknowledges, understands and agrees that:

(a)the Plan is established voluntarily by the Company, it is discretionary in nature, and may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;

(b)the grant of this Stock Option is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of stock options, or benefits in lieu of stock options, even if stock options have been granted in the past;

(c)all decisions with respect to future stock option or other grants, if any, will be at the sole discretion of the Company;

(d)the Optionee is voluntarily participating in the Plan;

(e)this Stock Option and the Shares subject to this Stock Option, and the income from and value of same, are not intended to replace any pension rights or compensation;

(f)unless otherwise agreed with the Company, this Stock Option and the shares of Stock subject to this Stock Option, and the income from and value of same, are not granted as consideration for, or in connection with, the service the Optionee may provide as a director of a Subsidiary;

(g)this Stock Option and the Shares subject to this Stock Option, and the income from and value of same, are not part of normal or expected compensation for purposes of, including, without limitation, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday-pay, long-service awards, pension or retirement or welfare benefits or similar payments;

(h)the future value of the Shares subject to this Stock Option is unknown, indeterminable, and cannot be predicted with certainty;

(i)if the Shares subject to this Stock Option do not increase in value, this Stock Option will have no value;

(j)if the Optionee exercises this Stock Option and acquires Shares, the value of such Shares may increase or decrease in value, even below the Option Exercise Price;

(k)no claim or entitlement to compensation or damages shall arise from forfeiture of this Stock Option resulting from the termination of the Optionee’s employment (for any reason whatsoever, whether or not later found to be invalid or in breach of employment or other laws in the jurisdiction where the Optionee is employed or the terms of the Optionee’s employment agreement, if any);

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(l)unless otherwise provided in the Plan or by the Company in its discretion, this Stock Option and the benefits evidenced by this Agreement do not create any entitlement to have this Stock Option or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the shares of Stock; and

(m)if the Optionee resides and/or works in a country outside the United States, the following shall apply:

(i)this Stock Option and any shares of Stock subject to this Stock Option, and the income from and value of same, are not part of normal or expected compensation for any purpose;

(ii)neither the Company, the Employer nor any other Subsidiary shall be liable for any foreign exchange rate fluctuation between the Optionee’s local currency and the United States Dollar that may affect the value of this Stock Option or of any amounts due to the Optionee pursuant to the exercise of this Stock Option or the subsequent sale of any shares of Stock acquired upon exercise.

11.         Appendix.  Notwithstanding any provision of this Global Incentive Stock Option Agreement, if the Optionee resides in a country outside the United States or is otherwise subject to the laws of a country other than the United States, this Stock Option shall be subject to the special terms and conditions set forth in the Appendix to this Global Incentive Stock Option Agreement for the Optionee’s country, if any.  Moreover, if the Optionee relocates to one of the countries included in the Appendix during the term of the Stock Option, the terms and conditions for such country shall apply to the Optionee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons.  The Appendix forms part of this Global Incentive Stock Option Agreement.

12.         Language.  The Optionee acknowledges that he or she is proficient in the English language and understands the terms of this Agreement. If the Optionee has received this Agreement, or any other documents related to this Stock Option and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

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13.         Notices.  Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall be mailed or delivered to the Optionee at the address on file with the Company or, in either case, at such other address as one party may subsequently furnish to the other party in writing.

2.         Waivers.  The Optionee acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Optionee or any other Optionee.  

3.         Choice of Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, applied without regard to conflict of law principles.

4.         Venue.  For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of Massachusetts and agree that such litigation shall be conducted only in the courts of Middlesex  County, Massachusetts, or the federal courts for the Commonwealth of Massachusetts, where this grant is made and/or to be performed, and no other courts.

5.         Severability.  The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

6.         Imposition of Other Requirements.  The Company reserves the right to impose other requirements on this Stock Option and the shares of Stock acquired upon exercise of this Stock Option, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Optionee to accept any additional agreements or undertakings that may be necessary to accomplish the foregoing.

7.         Electronic Delivery and Acceptance of Documents.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means.  The Optionee hereby consents to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

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8.         Compliance with Law.  Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Stock, the Company shall not be required to permit the exercise of this Stock Option and/or deliver any shares of Stock prior to the completion of any registration or qualification of the shares of Stock under any U.S. or non-U.S. local, state or federal securities or other applicable law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any U.S. or non-U.S. local, state or federal governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable.  The Optionee understands that the Company is under no obligation to register or qualify the shares of Stock with the SEC or any state or non-U.S. securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the shares of Stock subject to this Stock Option.  Further, the Optionee agrees that the Company shall have unilateral authority to amend this Agreement without the Optionee’s consent to the extent necessary to comply with securities or other laws applicable to issuance of the shares of Stock subject to this Stock Option.

9.         Insider Trading Restrictions / Market Abuse Laws.  By accepting this Stock Option, the Optionee acknowledges that he or she is bound by all the terms and conditions of any Company’s insider trading policy as may be in effect from time to time.  The Optionee further acknowledges that, depending on the Optionee’s country, the broker's country or the country in which the shares of Stock are listed, the Optionee may be or may become subject to insider trading restrictions and/or market abuse laws which may affect the Optionee’s ability to accept, acquire, sell or otherwise dispose of shares of Stock, rights to shares of Stock (e.g., Stock Options) or rights linked to the value of shares of Stock under the Plan during such times as the Optionee is considered to have “inside information” regarding the Company (as defined by the laws in the applicable jurisdictions).  Local insider trading laws and regulations may prohibit the cancellation or amendment of orders the Optionee placed before the Optionee possessed inside information.  Furthermore, the Optionee could be prohibited from (i) disclosing the inside information to any third party, which may include fellow employees and (ii) “tipping” third parties or causing them otherwise to buy or sell securities.  Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any Company’s insider trading policy as may be in effect from time to time.  The Optionee acknowledges that it is the Optionee’s responsibility to comply with any applicable restrictions, and the Optionee should speak to his or her personal advisor on this matter.

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10.         Foreign Asset/Account, Exchange Control and Tax Reporting.  Depending on the Optionee’s country, the Optionee may be subject to foreign asset/account, exchange control, tax reporting or other requirements which may affect the Optionee’s ability acquire or hold Stock Options or shares of Stock under the Plan or cash received from participating in the Plan (including dividends and the proceeds arising from the sale of shares of Stock) in a brokerage/bank account outside the Optionee’s country.  The applicable laws of the Optionee’s country may require that he or she report such Stock Options, shares of Stock, accounts, assets or transactions to the applicable authorities in such country and/or repatriate funds received in connection with the Plan to the Optionee’s country within a certain time period or according to certain procedures.  The Optionee acknowledges that he or she is responsible for ensuring compliance with any applicable requirements and should consult his or her personal legal advisor to ensure compliance with applicable laws.

11.          [Incorporation of Policy for Recoupment of Incentive Compensation. Notwithstanding anything herein to the contrary, this Stock Option shall be subject to and governed by all the terms and conditions of the Company’s Policy for Recoupment of Incentive Compensation, including the powers of the Company to recoup incentive compensation stated therein.]

 

 

The foregoing Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned.  Electronic acceptance of this Agreement pursuant to the Company’s instructions to the Optionee (including through an online acceptance process) is acceptable.

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APPENDIX

GLOBAL INCENTIVE STOCK OPTION AGREEMENT
FOR COMPANY EMPLOYEES
UNDER THE HUBSPOT, INC.
2014 STOCK OPTION AND INCENTIVE PLAN

Capitalized terms used but not defined in this Appendix shall have the same meanings assigned to them in the Plan and/or the Global Incentive Stock Option Agreement (the "Option Agreement").

Terms and Conditions

This Appendix includes additional terms and conditions that govern the Optionee’s Stock Option if the Optionee works and/or resides in one of the countries listed below.  If the Optionee is a citizen or resident of a country other than the one in which the Optionee is currently working and/or residing (or is considered as such for local law purposes), or the Optionee transfers employment and/or residency to a different country after the grant of this Stock Option, the Company will, in its discretion, determine the extent to which the terms and conditions contained herein will apply to the Optionee.

Notifications

This Appendix also includes information regarding certain other issues of which the Optionee should be aware with respect to the Optionee’s participation in the Plan.  The information is based on the securities, exchange control and other laws in effect in the respective countries as of January 2019.  Such laws are often complex and change frequently.  As a result, the Company strongly recommends that the Optionee not rely on the information noted herein as the only source of information relating to the consequences of participation in the Plan because the information may be out-of-date at the time the Optionee exercises the Stock Option or sells any shares of Stock acquired under the Plan.  

In addition, the information contained herein is general in nature and may not apply to the Optionee’s particular situation.  As a result, the Company is not in a position to assure the Optionee of any particular result.  Accordingly, the Optionee is strongly advised to seek appropriate professional advice as to how the relevant laws in the Optionee’s country may apply to the Optionee’s individual situation.

If the Optionee is a citizen or resident of a country other than the one in which the Optionee is currently working and/or residing (or is considered as such for local law purposes), or if the Optionee transfers employment and/or residency to a different country after the Stock Option is granted, the notifications contained in this Appendix may not be applicable to the Optionee in the same manner.

 

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ALL NON-U.S./NON-EUROPEAN UNION/NON-EUROPEAN ECONOMIC AREA COUNTRIES

Data Privacy Notification and Consent

(a)By accepting the Stock Option, the Optionee explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Optionee’s personal data as described in the Agreement by and among, as applicable, the Employer, the Company and its other Subsidiaries for the exclusive purpose of implementing, administering and managing the Optionee’s participation in the Plan.

(b)The Optionee understands that the Company, the Employer and other Subsidiaries may hold certain personal information about the Optionee, including, but not limited to, the Optionee's name, home address and telephone number, email address, date of birth, social security number, passport or other identification number (e.g., resident registration number), salary, nationality, job title, any shares of Stock or directorships held in the Company, details of all Stock Options or any other entitlement to shares awarded, canceled, vested, unvested or outstanding in the Optionee's favor (“Data”), for the purpose of implementing, administering and managing the Plan

(c)The Optionee understands that Data will be transferred to Fidelity Stock Plan Services LLC, or such other stock plan service provider as may be selected by the Company in the future, which assist in the implementation, administration and management of the Plan.  The Optionee understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipient's country (e.g. the United States) may have different data privacy laws and protections than the Optionee's country.  The Optionee understands that if he or she resides outside the United States, the Optionee may request a list with the names and addresses of any potential recipients of the Data by contacting the Optionee's local human resources representative.  The Optionee authorizes the Company, Fidelity Stock Plan Services LLC and other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Optionee's participation in the Plan, including any requisite transfer of such Data as may be required to a broker, escrow agent or other third party with whom the shares of Stock received upon exercise of the Stock Option may be deposited.  The Optionee understands that Data will be held only as long as is necessary to implement, administer and manage the Optionee's participation in the Plan.  The Optionee understands that if the Optionee resides outside the United States, he or she may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting the Optionee's local human resources representative.  Further, the Optionee understands that he or she is providing the consents herein on a purely voluntary basis.  If the Optionee does not consent, or if the Optionee later seeks to revoke his or her consent, the Optionee's employment status with the Employer will not be affected; the only consequence of refusing or withdrawing consent is that the Company would not be able to grant Stock Options or other equity awards to the Optionee or administer or maintain such awards.  Therefore, the Optionee understands that refusing or withdrawing the Optionee’s consent may affect his or

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her ability to participate in the Plan.  For more information on the consequences of the Optionee’s refusal to consent or withdrawal of consent, the Optionee understands that he or she may contact his or her local human resources representative.

(d)Upon request of the Company or the Employer, the Optionee agrees to provide a separate executed data privacy consent form (or any other agreements or consents that may be required by the Company and/or the Employer) that the Company and/or the Employer may deem necessary to obtain from the Optionee for the purpose of administering the Optionee's participation in the Plan in compliance with the data privacy laws in the Optionee's country, either now or in the future.  The Optionee understands and agrees that he or she will not be able to participate in the Plan if the Optionee fails to provide any such consent or agreement requested by the Company and/or the Employer.

CANADA

Terms and Conditions

Method of Exercise. Notwithstanding any provision of the Plan or the Option Agreement, the Optionee may not pay the Option Exercise Price by using the methods of exercise set forth in Section 2(a)(ii) of the Option Agreement or the corresponding provisions of the Plan.

The following terms and conditions apply to employees resident in Quebec:

 

Language.  The parties acknowledge that it is their express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.

 

Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.

Data Privacy.  The following provision supplements the Data Privacy Notification and Consent provision above in this Appendix:

 

The Optionee hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information from all personnel, professional or non-professional, involved in the administration and operation of the Plan.  The Optionee further authorizes the Company and any Subsidiary and the Administrator to disclose and discuss the Plan with their advisors and to record all relevant information and keep such information in the Optionee’s employee file.

 

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Notifications

 

Securities Law Information.  The Optionee is permitted to sell shares of Stock acquired under the Plan through the designated broker appointed under the Plan, if any, provided the resale of shares of Stock acquired under the Plan takes place outside Canada through the facilities of a stock exchange on which the shares of Stock are listed.  The shares of Stock are currently listed on the New York Stock Exchange under the symbol “HUBS.”

IRELAND

Notifications

Director Notification Information.  Directors, shadow directors and secretaries of an Irish Subsidiary  must notify such Subsidiary in writing upon (i) receiving or disposing of an interest in the Company (e.g., the Stock Option, shares of Stock, etc.), (ii) becoming aware of the event giving rise to the notification requirement, or (iii) becoming a director or secretary if such an interest exists at the time, in each case if the interest represents more than 1% of the Company.  This notification requirement also applies with respect to the interests of any spouse or children under the age of 18 of the director, shadow director or secretary (whose interests will be attributed to the director, shadow director or secretary).  The Optionee should consult with his or her personal legal advisor as to whether or not this notification requirement applies.

 

 

 

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GLOBAL NON-QUALIFIED STOCK OPTION AGREEMENT
FOR COMPANY EMPLOYEES
UNDER THE HUBSPOT, INC.
2014 STOCK OPTION AND INCENTIVE PLAN

Pursuant to the HubSpot, Inc. 2014 Stock Option and Incentive Plan as amended through the date hereof (the “Plan”), and this Global Non-Qualified Stock Option Award Agreement, including any special terms and conditions for the Optionee’s country set forth in the appendix attached hereto (the “Appendix” and together with the Global Non-Qualified Stock Option Agreement, the “Agreement”), HubSpot, Inc. (the “Company”) hereby grants to the Optionee named above an option (the “Stock Option”) to purchase on or prior to the Expiration Date specified above all or part of the number of shares of Common Stock, par value $0.001 per share (the “Stock”) of the Company specified above at the Option Exercise Price per Share specified above subject to the terms and conditions set forth herein and in the Plan.  This Stock Option is not intended to be an “incentive stock option” under Section 422 of the U.S. Internal Revenue Code of 1986, as amended.

SECTION 1.  Vesting Schedule.  No portion of this Stock Option may be exercised until such portion shall have become vested and exercisable.  Except as set forth below, and subject to the discretion of the Administrator (as defined in Section 2 of the Plan) to accelerate the vesting schedule hereunder, the Option Shares shall vest and become exercisable [in [   ] installments] following the Vesting Commencement Date, provided the Optionee remains an employee of the Company or a Subsidiary on each such date.  Notwithstanding the foregoing, in the event that the Optionee’s employment with the Company and any Subsidiary terminates due to the Optionee’s death, then the Option Shares shall be deemed fully vested and exercisable upon the date of the Optionee’s death. Once vested and exercisable, this Stock Option shall continue to be exercisable at any time or times prior to the close of business on the Expiration Date, subject to the provisions hereof and of the Plan. This Agreement is subject to the terms and conditions of any policies of the Company regarding vesting during leaves of absence.

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Notwithstanding the foregoing, in the event of a Sale Event (as defined in the Plan) in which this Stock Option is continued or assumed by a successor to the Company, this Stock Option shall be deemed vested and exercisable upon the date on which the Optionee’s employment relationship with the Company and any Subsidiary or successor entity, as the case may be, terminates if such termination occurs (i) within 12 months after such Sale Event or 90 days prior to such Sale Event, and (ii) such termination is by the Company or any Subsidiary or successor entity without Cause or by the Optionee for Good Reason.  

The following definitions shall apply:

“Cause” shall mean (i) the Optionee’s dishonest statements or acts with respect to the Company or any affiliate of the Company, or any current or prospective customers, suppliers vendors or other third parties with which such entity does business; (ii) the Optionee’s commission of (A) a felony (or crime of similar magnitude under non-U.S. laws, as determined by the Administrator) or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (iii) the Optionee’s failure to perform his assigned duties and responsibilities to the reasonable satisfaction of the Company or a Subsidiary which failure continues, in the reasonable judgment of the Company or a Subsidiary, after written notice given to the Optionee by the Company or a Subsidiary; (iv) the Optionee’s gross negligence, willful misconduct or insubordination with respect to the Company or any Subsidiary (including, but not limited to, any violation of the Company’s code of conduct, insider trading, willful accounting improprieties or failure to cooperate with investigations); or (v) the Optionee’s material violation of any provision of any agreement(s) between the Optionee and the Company or any Subsidiary relating to noncompetition, nonsolicitation, nondisclosure and/or assignment of inventions.

“Good Reason” shall mean (i) a material diminution in the Optionee’s base salary except for across-the-board salary reductions similarly affecting all or substantially all similarly situated employees of the Company or a Subsidiary or (ii) a change of more than 50 miles in the geographic location at which the Optionee provides services to the Company or a Subsidiary, so long as the Optionee provides notice to the Company or the Subsidiary within at least 90 days following the initial occurrence of any such event and the Company or the Subsidiary fails to cure such event within 30 days of such notice.

SECTION 2.  Manner of Exercise.

(a)The Optionee may exercise this Stock Option only in the following manner:  from time to time on or prior to the Expiration Date of this Stock Option, the Optionee may give written notice to the Administrator of his or her election to purchase some or all of the Option Shares purchasable at the time of such notice.  This notice shall specify the number of Option Shares to be purchased.

Payment of the purchase price for the Option Shares may be made by one or more of the following methods:  (i) in cash, by certified or bank check or other instrument acceptable to the Administrator; (ii) if permitted by the Administrator, through the delivery (or attestation to the ownership) of shares of Stock that have been purchased by the Optionee on the open market or that are beneficially owned by the Optionee and are not then subject to any restrictions under any Company plan and that otherwise satisfy any holding periods as may be required by the

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Administrator; (iii) by the Optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the option purchase price, provided that in the event the Optionee chooses to pay the option purchase price as so provided, the Optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment procedure; (iv) if permitted by the Administrator, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; or (v) a combination of (i), (ii), (iii) and (iv) above.  Payment instruments will be received subject to collection.

The transfer to the Optionee on the records of the Company or of the transfer agent of the Option Shares will be contingent upon (i) the Company’s receipt from the Optionee of the full purchase price for the Option Shares, as set forth above, (ii) the fulfillment of any other requirements contained herein or in the Plan or in any other agreement or provision of laws, and (iii) the receipt by the Company of any agreement, statement or other evidence that the Company may require to satisfy itself that the issuance of Stock to be purchased pursuant to the exercise of Stock Options under the Plan and any subsequent resale of the shares of Stock will be in compliance with applicable laws and regulations.  In the event the Optionee chooses to (and the Administrator permits to) pay the purchase price by previously-owned shares of Stock through the attestation method, the number of shares of Stock transferred to the Optionee upon the exercise of the Stock Option shall be net of the Shares attested to.

(b)The shares of Stock purchased upon exercise of this Stock Option shall be transferred to the Optionee on the records of the Company or of the transfer agent upon compliance to the satisfaction of the Administrator with all requirements under applicable laws or regulations in connection with such transfer and with the requirements hereof and of the Plan.  The determination of the Administrator as to such compliance shall be final and binding on the Optionee.  The Optionee shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Stock subject to this Stock Option unless and until this Stock Option shall have been exercised pursuant to the terms hereof, the Company or the transfer agent shall have transferred the shares to the Optionee, and the Optionee’s name shall have been entered as the stockholder of record on the books of the Company.  Thereupon, the Optionee shall have full voting, dividend and other ownership rights with respect to such shares of Stock.

(c)The minimum number of shares with respect to which this Stock Option may be exercised at any one time shall be 100 shares, unless the number of shares with respect to which this Stock Option is being exercised is the total number of shares subject to exercise under this Stock Option at the time.

(d)Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option shall be exercisable after the Expiration Date hereof.

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SECTION 3.  Termination of Employment.  If the Optionee’s employment by the Company or a Subsidiary is terminated, the period within which to exercise the Stock Option may be subject to earlier termination as set forth below.

(a)Termination Due to Death.  If the Optionee’s employment terminates by reason of the Optionee’s death, any portion of this Stock Option outstanding on such date, to the extent exercisable on the date of death, may thereafter be exercised by the Optionee’s legal representative or legatee for a period of 12 months from the date of death or until the Expiration Date, if earlier.  

(b)Termination Due to Disability.  If the Optionee’s employment terminates by reason of the Optionee’s disability (as determined by the Administrator), any portion of this Stock Option outstanding on such date, to the extent vested and exercisable on the date of such disability, may thereafter be exercised by the Optionee for a period of 12 months from the date of disability or until the Expiration Date, if earlier.  Any portion of this Stock Option that is not vested and exercisable on the date of disability shall terminate immediately and be of no further force or effect.

(c)Termination for Cause.  If the Optionee’s employment terminates for Cause, any portion of this Stock Option outstanding on such date shall terminate immediately and be of no further force and effect.  For purposes hereof, “Cause” shall mean, unless otherwise provided in an employment agreement between the Company and the Optionee, a determination by the Administrator that the Optionee shall be dismissed as a result of (i) any material breach by the Optionee of any agreement between the Optionee and the Company or a Subsidiary; (ii) the conviction of, indictment for or plea of nolo contendere by the Optionee to a felony (or crime of similar magnitude under non-U.S. laws, as determined by the Administrator) or a crime involving moral turpitude; or (iii) any material misconduct or willful and deliberate non-performance (other than by reason of disability) by the Optionee of the Optionee’s duties to the Company or a Subsidiary.

(d)Other Termination.  If the Optionee’s employment terminates for any reason other than the Optionee’s death, the Optionee’s disability, or Cause, and unless otherwise determined by the Administrator, any portion of this Stock Option outstanding on such date may be exercised, to the extent vested and exercisable on the date of termination (after giving effect to any accelerated vesting in Section 1 above), for a period of three months from the date of termination or until the Expiration Date, if earlier.  Any portion of this Stock Option that is not vested and exercisable on the date of termination shall terminate immediately and be of no further force or effect.

The Administrator’s determination of the reason for termination of the Optionee’s employment shall be conclusive and binding on the Optionee and his or her representatives or legatees.

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SECTION 4.  Incorporation of Plan.  Notwithstanding anything herein to the contrary, this Stock Option shall be subject to and governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in  Section 2(b) of the Plan.  Capitalized terms in this Agreement shall have the meaning specified in the Plan, unless a different meaning is specified herein.

SECTION 5.  Transferability.  This Agreement is personal to the Optionee, is non-assignable and is not transferable in any manner, by operation of law or otherwise, other than by will or the laws of descent and distribution.  This Stock Option is exercisable, during the Optionee’s lifetime, only by the Optionee, and thereafter, only by the Optionee’s legal representative or legatee.

SECTION 6.  Responsibility for Taxes.

(a)The Optionee acknowledges that, regardless of any action taken by the Company or, if different, the Subsidiary employing the Optionee (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax‑related items related to the Optionee’s participation in the Plan and legally applicable to the Optionee (“Tax-Related Items”) is and remains the Optionee’s responsibility and may exceed the amount, if any, actually withheld by the Company or the Employer.  The Optionee further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of this Stock Option, including, but not limited to, the grant, vesting or exercise of this Stock Option, the subsequent sale of shares of Stock acquired pursuant to such exercise and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of this Stock Option to reduce or eliminate the Optionee’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Optionee is subject to Tax-Related Items in more than one jurisdiction, the Optionee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b)Prior to any relevant taxable or tax withholding event, as applicable, the Optionee agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items.  In this regard, the Optionee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any applicable withholding obligations with regard to all Tax-Related Items by one or a combination of the following:  (i) withholding from the Optionee’s wages or other cash compensation paid to the Optionee by the Company and/or the Employer; (ii) allowing or requiring the Optionee to make a cash payment to cover the Tax-Related Items; (iii) withholding from proceeds of the sale of shares of Stock acquired upon exercise of this Stock Option either through a voluntary sale or through a mandatory sale arranged by the Company (on the Optionee’s behalf pursuant to this authorization without further consent); (iv) withholding from the shares of Stock to be issued to the Optionee upon exercise of this Stock Option; or (v) any other method of withholding determined by the Company and permitted by applicable law; provided, however, that that if the Optionee is a Section 16 officer of the Company under the Exchange Act, in which case, the obligation for Tax-Related Items may be satisfied only by one or a combination of methods (i), (ii) and (iii) above.

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(c)Depending on the withholding method, the Company and/or the Employer may withhold or account for Tax-Related Items by considering applicable statutory withholding amounts or other applicable withholding rates, including maximum rates applicable in the Optionee’s jurisdiction, in which case the Optionee may receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent amount in shares of Stock.  If the obligation for Tax-Related Items is satisfied by withholding in shares of Stock, for tax purposes, the Optionee is deemed to have been issued the full number of shares of Stock subject to the exercised Stock Option, notwithstanding that a number of the shares of Stock is held back solely for the purpose of paying the Tax-Related Items.

(d)The Optionee agrees to pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Optionee’s participation in the Plan that cannot be satisfied by the means previously described.  The Company may refuse to issue or deliver the shares of Stock, or the proceeds of the sale of shares of Stock, if the Optionee fails to comply with his or her obligations in connection with the Tax-Related Items.

SECTION 7.  No Obligation to Continue Employment.  The grant of this Stock Option shall not be interpreted as forming or amending an employment contract with the Company or any Subsidiary (including the Employer), and shall not be construed as giving the Optionee the right to be retained in the employ of the Employer.  Neither the Plan nor this Agreement shall interfere in any way with the right of the Employer to terminate the employment of the Optionee at any time.

SECTION 8.  Integration.  This Agreement constitutes the entire agreement between the parties with respect to this Stock Option and supersedes all prior agreements and discussions between the parties concerning such subject matter.

SECTION 9.  Nature of Grant.  In accepting this Stock Option, the Optionee acknowledges, understands and agrees that:

(n)the Plan is established voluntarily by the Company, it is discretionary in nature, and may be modified, amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;

(o)the grant of this Stock Option is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of stock options, or benefits in lieu of stock options, even if stock options have been granted in the past;

(p)all decisions with respect to future stock option or other grants, if any, will be at the sole discretion of the Company;

(q)the Optionee is voluntarily participating in the Plan;

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(r)this Stock Option and the Shares subject to this Stock Option, and the income from and value of same, are not intended to replace any pension rights or compensation;

(s)unless otherwise agreed with the Company, this Stock Option and the shares of Stock subject to this Stock Option, and the income from and value of same, are not granted as consideration for, or in connection with, the service the Optionee may provide as a director of a Subsidiary;

(t)this Stock Option and the Shares subject to this Stock Option, and the income from and value of same, are not part of normal or expected compensation for purposes of, including, without limitation, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, holiday-pay, long-service awards, pension or retirement or welfare benefits or similar payments;

(u)the future value of the Shares subject to this Stock Option is unknown, indeterminable, and cannot be predicted with certainty;

(v)if the Shares subject to this Stock Option do not increase in value, this Stock Option will have no value;

(w)if the Optionee exercises this Stock Option and acquires Shares, the value of such Shares may increase or decrease in value, even below the Option Exercise Price;

(x)no claim or entitlement to compensation or damages shall arise from forfeiture of this Stock Option resulting from the termination of the Optionee’s employment (for any reason whatsoever, whether or not later found to be invalid or in breach of employment or other laws in the jurisdiction where the Optionee is employed or the terms of the Optionee’s employment agreement, if any);

(y)unless otherwise provided in the Plan or by the Company in its discretion, this Stock Option and the benefits evidenced by this Agreement do not create any entitlement to have this Stock Option or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the shares of Stock; and

(z)if the Optionee resides and/or works in a country outside the United States, the following shall apply:

(i)this Stock Option and any shares of Stock subject to this Stock Option, and the income from and value of same, are not part of normal or expected compensation for any purpose;

(ii)neither the Company, the Employer nor any other Subsidiary shall be liable for any foreign exchange rate fluctuation between the Optionee’s local currency and the United States Dollar that may affect the value of this Stock Option or of any amounts due to the Optionee pursuant to the exercise of this Stock Option or the subsequent sale of any shares of Stock acquired upon exercise.

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SECTION 10.  Appendix.  Notwithstanding any provision of this Global Non-Qualified Stock Option Agreement, if the Optionee resides in a country outside the United States or is otherwise subject to the laws of a country other than the United States, this Stock Option shall be subject to the special terms and conditions set forth in the Appendix to this Global Non-Qualified Stock Option Agreement for the Optionee’s country, if any.  Moreover, if the Optionee relocates to one of the countries included in the Appendix during the term of the Stock Option, the terms and conditions for such country shall apply to the Optionee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons.  The Appendix forms part of this Global Non-Qualified Stock Option Agreement.  

SECTION 11.  Language.  The Optionee acknowledges that he or she is proficient in the English language and understands the terms of this Agreement. If the Optionee has received this Agreement, or any other documents related to this Stock Option and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

SECTION 12.  Notices.  Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall be mailed or delivered to the Optionee at the address on file with the Company or, in either case, at such other address as one party may subsequently furnish to the other party in writing.

SECTION 13.  Waivers.  The Optionee acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Optionee or any other Optionee.  

SECTION 14.  Choice of Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, applied without regard to conflict of law principles.

SECTION 15.  Venue.  For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of Massachusetts and agree that such litigation shall be conducted only in the courts of Middlesex  County, Massachusetts, or the federal courts for the Commonwealth of Massachusetts, where this grant is made and/or to be performed, and no other courts.

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SECTION 16.  Severability.  The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

SECTION 17.  Imposition of Other Requirements.  The Company reserves the right to impose other requirements on this Stock Option and the shares of Stock acquired upon exercise of this Stock Option, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Optionee to accept any additional agreements or undertakings that may be necessary to accomplish the foregoing.

SECTION 18.  Electronic Delivery and Acceptance of Documents.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means.  The Optionee hereby consents to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

SECTION 19.  Compliance with Law.  Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Stock, the Company shall not be required to permit the exercise of this Stock Option and/or deliver any shares of Stock prior to the completion of any registration or qualification of the shares of Stock under any U.S. or non-U.S. local, state or federal securities or other applicable law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any U.S. or non-U.S. local, state or federal governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable.  The Optionee understands that the Company is under no obligation to register or qualify the shares of Stock with the SEC or any state or non-U.S. securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the shares of Stock subject to this Stock Option.  Further, the Optionee agrees that the Company shall have unilateral authority to amend this Agreement without the Optionee’s consent to the extent necessary to comply with securities or other laws applicable to issuance of the shares of Stock subject to this Stock Option.

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SECTION 20.  Insider Trading Restrictions / Market Abuse Laws.  By accepting this Stock Option, the Optionee acknowledges that he or she is bound by all the terms and conditions of any Company’s insider trading policy as may be in effect from time to time.  The Optionee further acknowledges that, depending on the Optionee’s country, the broker's country or the country in which the shares of Stock are listed, the Optionee may be or may become subject to insider trading restrictions and/or market abuse laws which may affect the Optionee’s ability to accept, acquire, sell or otherwise dispose of shares of Stock, rights to shares of Stock (e.g., Stock Options) or rights linked to the value of shares of Stock under the Plan during such times as the Optionee is considered to have “inside information” regarding the Company (as defined by the laws in the applicable jurisdictions).  Local insider trading laws and regulations may prohibit the cancellation or amendment of orders the Optionee placed before the Optionee possessed inside information.  Furthermore, the Optionee could be prohibited from (i) disclosing the inside information to any third party, which may include fellow employees and (ii) “tipping” third parties or causing them otherwise to buy or sell securities.  Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any Company’s insider trading policy as may be in effect from time to time.  The Optionee acknowledges that it is the Optionee’s responsibility to comply with any applicable restrictions, and the Optionee should speak to his or her personal advisor on this matter.

SECTION 21.  Foreign Asset/Account, Exchange Control and Tax Reporting.  Depending on the Optionee’s country, the Optionee may be subject to foreign asset/account, exchange control, tax reporting or other requirements which may affect the Optionee’s ability acquire or hold Stock Options or shares of Stock under the Plan or cash received from participating in the Plan (including dividends and the proceeds arising from the sale of shares of Stock) in a brokerage/bank account outside the Optionee’s country.  The applicable laws of the Optionee’s country may require that he or she report such Stock Options, shares of Stock, accounts, assets or transactions to the applicable authorities in such country and/or repatriate funds received in connection with the Plan to the Optionee’s country within a certain time period or according to certain procedures.  The Optionee acknowledges that he or she is responsible for ensuring compliance with any applicable requirements and should consult his or her personal legal advisor to ensure compliance with applicable laws.

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SECTION 22.  [Incorporation of Policy for Recoupment of Incentive Compensation. Notwithstanding anything herein to the contrary, this Stock Option shall be subject to and governed by all the terms and conditions of the Company’s Policy for Recoupment of Incentive Compensation, including the powers of the Company to recoup incentive compensation stated therein.]

 

 

The foregoing Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned.  Electronic acceptance of this Agreement pursuant to the Company’s instructions to the Optionee (including through an online acceptance process) is acceptable.

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APPENDIX

GLOBAL NON-QUALIFIED STOCK OPTION AGREEMENT
FOR COMPANY EMPLOYEES
UNDER THE HUBSPOT, INC.
2014 STOCK OPTION AND INCENTIVE PLAN

Capitalized terms used but not defined in this Appendix shall have the same meanings assigned to them in the Plan and/or the Global Non-Qualified Stock Option Agreement (the "Option Agreement").

Terms and Conditions

This Appendix includes additional terms and conditions that govern the Optionee’s Stock Option if the Optionee works and/or resides in one of the countries listed below.  If the Optionee is a citizen or resident of a country other than the one in which the Optionee is currently working and/or residing (or is considered as such for local law purposes), or the Optionee transfers employment and/or residency to a different country after the grant of this Stock Option, the Company will, in its discretion, determine the extent to which the terms and conditions contained herein will apply to the Optionee.

Notifications

This Appendix also includes information regarding certain other issues of which the Optionee should be aware with respect to the Optionee’s participation in the Plan.  The information is based on the securities, exchange control and other laws in effect in the respective countries as of January 2019.  Such laws are often complex and change frequently.  As a result, the Company strongly recommends that the Optionee not rely on the information noted herein as the only source of information relating to the consequences of participation in the Plan because the information may be out-of-date at the time the Optionee exercises the Stock Option or sells any shares of Stock acquired under the Plan.  

In addition, the information contained herein is general in nature and may not apply to the Optionee’s particular situation.  As a result, the Company is not in a position to assure the Optionee of any particular result.  Accordingly, the Optionee is strongly advised to seek appropriate professional advice as to how the relevant laws in the Optionee’s country may apply to the Optionee’s individual situation.

If the Optionee is a citizen or resident of a country other than the one in which the Optionee is currently working and/or residing (or is considered as such for local law purposes), or if the Optionee transfers employment and/or residency to a different country after the Stock Option is granted, the notifications contained in this Appendix may not be applicable to the Optionee in the same manner.

 

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ALL NON-U.S./NON-EUROPEAN UNION/NON-EUROPEAN ECONOMIC AREA COUNTRIES

Data Privacy Notification and Consent

(e)By accepting the Stock Option, the Optionee explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Optionee’s personal data as described in the Agreement by and among, as applicable, the Employer, the Company and its other Subsidiaries for the exclusive purpose of implementing, administering and managing the Optionee’s participation in the Plan.

(f)The Optionee understands that the Company, the Employer and other Subsidiaries may hold certain personal information about the Optionee, including, but not limited to, the Optionee's name, home address and telephone number, email address, date of birth, social security number, passport or other identification number (e.g., resident registration number), salary, nationality, job title, any shares of Stock or directorships held in the Company, details of all Stock Options or any other entitlement to shares awarded, canceled, vested, unvested or outstanding in the Optionee's favor (“Data”), for the purpose of implementing, administering and managing the Plan

(g)The Optionee understands that Data will be transferred to Fidelity Stock Plan Services LLC, or such other stock plan service provider as may be selected by the Company in the future, which assist in the implementation, administration and management of the Plan.  The Optionee understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipient's country (e.g. the United States) may have different data privacy laws and protections than the Optionee's country.  The Optionee understands that if he or she resides outside the United States, the Optionee may request a list with the names and addresses of any potential recipients of the Data by contacting the Optionee's local human resources representative.  The Optionee authorizes the Company, Fidelity Stock Plan Services LLC and other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Optionee's participation in the Plan, including any requisite transfer of such Data as may be required to a broker, escrow agent or other third party with whom the shares of Stock received upon exercise of the Stock Option may be deposited.  The Optionee understands that Data will be held only as long as is necessary to implement, administer and manage the Optionee's participation in the Plan.  The Optionee understands that if the Optionee resides outside the United States, he or she may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting the Optionee's local human resources representative.  Further, the Optionee understands that he or she is providing the consents herein on a purely voluntary basis.  If the Optionee does not consent, or if the Optionee later seeks to revoke his or her consent, the Optionee's employment status with the Employer will not be affected; the only consequence of refusing or withdrawing consent is that the Company would not be able to grant Stock Options or other equity awards to the Optionee or administer or maintain such awards.  Therefore, the Optionee understands that refusing or withdrawing the Optionee’s consent may affect his or

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her ability to participate in the Plan.  For more information on the consequences of the Optionee’s refusal to consent or withdrawal of consent, the Optionee understands that he or she may contact his or her local human resources representative.

(h)Upon request of the Company or the Employer, the Optionee agrees to provide a separate executed data privacy consent form (or any other agreements or consents that may be required by the Company and/or the Employer) that the Company and/or the Employer may deem necessary to obtain from the Optionee for the purpose of administering the Optionee's participation in the Plan in compliance with the data privacy laws in the Optionee's country, either now or in the future.  The Optionee understands and agrees that he or she will not be able to participate in the Plan if the Optionee fails to provide any such consent or agreement requested by the Company and/or the Employer.

CANADA

Terms and Conditions

Method of Exercise. Notwithstanding any provision of the Plan or the Option Agreement, the Optionee may not pay the Option Exercise Price by using the methods of exercise set forth in Section 2(a)(ii) and (iv) of the Option Agreement or the corresponding provisions of the Plan.

The following terms and conditions apply to employees resident in Quebec:

 

Language.  The parties acknowledge that it is their express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.

 

Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.

Data Privacy.  The following provision supplements the Data Privacy Notification and Consent provision above in this Appendix:

 

The Optionee hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information from all personnel, professional or non-professional, involved in the administration and operation of the Plan.  The Optionee further authorizes the Company and any Subsidiary and the Administrator to disclose and discuss the Plan with their advisors and to record all relevant information and keep such information in the Optionee’s employee file.

 

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Notifications

 

Securities Law Information.  The Optionee is permitted to sell shares of Stock acquired under the Plan through the designated broker appointed under the Plan, if any, provided the resale of shares of Stock acquired under the Plan takes place outside Canada through the facilities of a stock exchange on which the shares of Stock are listed.  The shares of Stock are currently listed on the New York Stock Exchange under the symbol “HUBS.”

IRELAND

Notifications

Director Notification Information.  Directors, shadow directors and secretaries of an Irish Subsidiary  must notify such Subsidiary in writing upon (i) receiving or disposing of an interest in the Company (e.g., the Stock Option, shares of Stock, etc.), (ii) becoming aware of the event giving rise to the notification requirement, or (iii) becoming a director or secretary if such an interest exists at the time, in each case if the interest represents more than 1% of the Company.  This notification requirement also applies with respect to the interests of any spouse or children under the age of 18 of the director, shadow director or secretary (whose interests will be attributed to the director, shadow director or secretary).  The Optionee should consult with his or her personal legal advisor as to whether or not this notification requirement applies.

 

 

 

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GLOBAL RESTRICTED STOCK UNIT AWARD AGREEMENT
FOR COMPANY EMPLOYEES
UNDER THE HUBSPOT, INC.
2014 STOCK OPTION AND INCENTIVE PLAN

Pursuant to the HubSpot, Inc. 2014 Stock Option and Incentive Plan, as amended through the date hereof (the “Plan”), and this Global Restricted Stock Unit Award Agreement, including any special terms and conditions for the Grantee's country set forth in the appendix attached hereto (the "Appendix" and together with the Global Restricted Stock Unit Award Agreement, the “Agreement”), HubSpot, Inc. (the “Company”) hereby grants an award of the number of Restricted Stock Units listed above (an “Award”) to the Grantee named above.  Each Restricted Stock Unit shall relate to one share of Common Stock, par value $0.001 per share (the “Stock”) of the Company.

SECTION 1.  Restrictions on Transfer of Award.  This Award may not be sold, transferred, pledged, assigned or otherwise encumbered or disposed of by the Grantee, and any shares of Stock issuable with respect to the Award may not be sold, transferred, pledged, assigned or otherwise encumbered or disposed of until (i) the Restricted Stock Units have vested as provided in Paragraph 2 of this Agreement and (ii) shares of Stock have been issued to the Grantee in accordance with the terms of the Plan and this Agreement.

SECTION 2.  Vesting of Restricted Stock Units.  The restrictions and conditions of Paragraph 1 of this Agreement shall lapse and the Restricted Stock Units shall vest [in [  ] installments] following the Vesting Commencement Date; provided that the Grantee remains an employee of the Company or a Subsidiary on such dates.  The Administrator may at any time accelerate the vesting schedule specified in this Paragraph 2. This Agreement is subject to the terms and conditions of any policies of the Company regarding vesting during leaves of absence.

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In the event that the Grantee’s employment with the Company and any Subsidiary terminates due to the Grantee’s death, then the Restricted Stock Units shall be deemed vested upon the date of the Grantee’s death.

Notwithstanding the foregoing, in the event of a Sale Event (as defined in the Plan) in which this Award is continued or assumed by a successor to the Company, the Restricted Stock Units shall be deemed vested upon the date on which the Grantee’s employment with the Company and any Subsidiary or successor entity, as the case may be, terminates if such termination occurs (i) within 12 months after such Sale Event or 90 days prior to such Sale Event, and (ii) such termination is by the Company or any Subsidiary or successor entity without Cause or by the Grantee for Good Reason.

The following definitions shall apply:

“Cause” shall mean (i) the Grantee’s dishonest statements or acts with respect to the Company or any Subsidiary, or any current or prospective customers, suppliers vendors or other third parties with which such entity does business; (ii) the Grantee’s commission of (A) a felony (or crime of similar magnitude under non-U.S. laws, as determined by the Administrator) or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (iii) the Grantee’s failure to perform his assigned duties and responsibilities to the reasonable satisfaction of the Company which failure continues, in the reasonable judgment of the Company, after written notice given to the Grantee by the Company or a Subsidiary; (iv) the Grantee’s gross negligence, willful misconduct or insubordination with respect to the Company or any Subsidiary (including, but not limited to, any violation of the Company’s code of conduct, insider trading, willful accounting improprieties or failure to cooperate with investigations); or (v) the Grantee’s material violation of any provision of any agreement(s) between the Grantee and the Company or any Subsidiary relating to noncompetition, nonsolicitation, nondisclosure and/or assignment of inventions.

“Good Reason” shall mean (i) a material diminution in the Grantee’s base salary except for across-the-board salary reductions similarly affecting all or substantially all similarly situated employees of the Company or any Subsidiary or (ii) a change of more than 50 miles in the geographic location at which the Grantee provides services to the Company or a Subsidiary, so long as the Grantee provides notice to the Company or a Subsidiary within at least 90 days following the initial occurrence of any such event and the Company or a Subsidiary fails to cure such event within 30 days of such notice.

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SECTION 3.  Termination of Employment.  If the Grantee’s employment with the Company and its Subsidiaries terminates for any reason (including disability) prior to the satisfaction of the vesting and acceleration conditions set forth in Paragraph 2 above, any Restricted Stock Units that have not vested as of such date shall automatically and without notice terminate and be forfeited, and neither the Grantee nor any of his or her successors, heirs, assigns, or personal representatives will thereafter have any further rights or interests in such unvested Restricted Stock Units.

SECTION 4.  Issuance of Shares of Stock.  As soon as practicable following each vesting date specified in Paragraph 2 (each such date, a “Vesting Date”) (but in no event later than two and one-half months after the end of the year in which the Vesting Date occurs), the Company shall issue to the Grantee (or in the event of the Grantee’s death, his or her designated beneficiary or his or her estate if the Grantee has not designated a beneficiary) the number of shares of Stock equal to the aggregate number of Restricted Stock Units that have vested pursuant to Paragraph 2 of this Agreement on such date and the Grantee (or the Grantee’s designated beneficiary or estate, as applicable) shall thereafter have all the rights of a stockholder of the Company with respect to such shares.

SECTION 5.  Incorporation of Plan.  Notwithstanding anything herein to the contrary, this Agreement shall be subject to and governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in Section 2(b) of the Plan.  Capitalized terms in this Agreement shall have the meaning specified in the Plan, unless a different meaning is specified herein.

SECTION 6.  Responsibility for Taxes.

(a)The Grantee acknowledges that, regardless of any action taken by the Company or, if different, the Subsidiary employing or otherwise retaining the Grantee (the “Employer”), the ultimate liability for all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax‑related items related to the Grantee’s participation in the Plan and legally applicable to the Grantee (“Tax-Related Items”) is and remains the Grantee’s responsibility and may exceed the amount, if any, actually withheld by the Company or the Employer.  The Grantee further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including, but not limited to, the grant, vesting or settlement of the Restricted Stock Units, the subsequent sale of shares of Stock acquired pursuant to such settlement and the receipt of any dividends; and (ii) do not commit to and are under no obligation to structure the terms of the grant or any aspect of the Restricted Stock Units to reduce or eliminate the Grantee’s liability for Tax-Related Items or achieve any

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particular tax result.  Further, if the Grantee is subject to Tax-Related Items in more than one jurisdiction, the Grantee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b)Prior to any relevant taxable or tax withholding event, as applicable, the Grantee agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items.  In this regard, the Grantee authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy any applicable withholding obligations with regard to all Tax-Related Items by one or a combination of the following:  (i) withholding from the Grantee’s wages or other cash compensation paid to the Grantee by the Company and/or the Employer; (ii) withholding from proceeds of the sale of shares of Stock acquired upon settlement of the Restricted Stock Units either through a voluntary sale or through a mandatory sale arranged by the Company (on the Grantee’s behalf pursuant to this authorization without further consent); (iii) withholding from shares of Stock to be issued to the Grantee upon settlement of the Restricted Stock Units; or (iv) any other method of withholding determined by the Company and permitted by applicable law; provided, however, that that if the Grantee is a Section 16 officer of the Company under the Exchange Act, then any Tax-Related Items shall be withheld only by using alternative (iii).

(c)Depending on the withholding method, the Company and/or the Employer may withhold or account for Tax-Related Items by considering applicable statutory withholding amounts or other applicable withholding rates, including maximum rates applicable in the Grantee’s jurisdiction, in which case the Grantee may receive a refund of any over-withheld amount in cash and will have no entitlement to the equivalent amount in shares of Stock.  If the obligation for Tax-Related Items is satisfied by withholding in shares of Stock, for tax purposes, the Grantee is deemed to have been issued the full number of shares of Stock subject to the vested Restricted Stock Units, notwithstanding that a number of the shares of Stock is held back solely for the purpose of paying the Tax-Related Items.

(d)The Grantee agrees to pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Grantee’s participation in the Plan that cannot be satisfied by the means previously described.  The Company may refuse to issue or deliver the shares of Stock, or the proceeds of the sale of shares of Stock, if the Grantee fails to comply with his or her obligations in connection with the Tax-Related Items.

SECTION 7.  Section 409A of the Code.  This Agreement shall be interpreted in such a manner that all provisions relating to the settlement of the Award are exempt from the requirements of Section 409A of the Code as “short-term deferrals” as described in Section 409A of the Code.

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SECTION 8.  No Obligation to Continue Employment.  The grant of the Restricted Stock Units shall not be interpreted as forming or amending an employment contract with the Company or any Subsidiary (including the Employer), and shall not be construed as giving the Grantee the right to be retained in the employ of, the Employer.  Neither the Plan nor this Agreement shall interfere in any way with the right of the Employer to terminate the employment of the Grantee at any time.

SECTION 9.  Integration.  This Agreement constitutes the entire agreement between the parties with respect to this Award and supersedes all prior agreements and discussions between the parties concerning such subject matter.

SECTION 10.  Nature of Grant.  In accepting the Award, the Grantee acknowledges, understands and agrees that:

(a)the Plan is established voluntarily by the Company, it is discretionary in nature, and may be amended, suspended or terminated by the Company at any time, to the extent permitted by the Plan;

(b)the grant of the Restricted Stock Units is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of Restricted Stock Units, or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units have been granted in the past;

(c)all decisions with respect to future Restricted Stock Units or other grants, if any, will be at the sole discretion of the Company;

(d)the Grantee is voluntarily participating in the Plan;

(e)the Restricted Stock Units and any shares of Stock subject to the Restricted Stock Units, and the income from and value of same, are not intended to replace any pension rights or compensation;

(f)unless otherwise agreed with the Company, the Restricted Stock Units and the shares of Stock subject to the Restricted Stock Units, and the income from and value of same, are not granted as consideration for, or in connection with, the service the Grantee may provide as a director of a Subsidiary;

(g)the Restricted Stock Units and any shares of Stock subject to the Restricted Stock Units, and the income from and value of same, are not part of normal or expected compensation for purposes of, including, without limitation, calculating any severance, resignation, termination, redundancy, dismissal, end-of-service payments, bonuses, long-service awards, holiday pay, pension or retirement or welfare benefits or similar mandatory payments;

(h)the future value of the shares of Stock underlying the Restricted Stock Units is unknown, indeterminable, and cannot be predicted with certainty;

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(i)no claim or entitlement to compensation or damages shall arise from forfeiture of the Restricted Stock Units resulting from the termination of the Grantee’s employment (for any reason whatsoever, whether or not later found to be invalid or in breach of labor laws in the jurisdiction where the Grantee is employed or the terms of the Grantee’s employment agreement, if any);

(j)unless otherwise provided in the Plan or by the Company in its discretion, the Restricted Stock Units and the benefits evidenced by this Agreement do not create any entitlement to have the Restricted Stock Units or any such benefits transferred to, or assumed by, another company nor to be exchanged, cashed out or substituted for, in connection with any corporate transaction affecting the shares of Stock; and

(k)if the Grantee resides and/or works in a country outside the United States, the following shall apply:

(i)the Restricted Stock Units and any shares of Stock subject to the Restricted Stock Units, and the income from and value of same, are not part of normal or expected compensation for any purpose;

(ii)neither the Company, the Employer nor any other Subsidiary shall be liable for any foreign exchange rate fluctuation between the Grantee’s local currency and the United States Dollar that may affect the value of the Restricted Stock Units or of any amounts due to the Grantee pursuant to the settlement of the Restricted Stock Units or the subsequent sale of any shares of Stock acquired upon settlement.

SECTION 11.  Appendix.  Notwithstanding any provision of this Global Restricted Stock Unit Award Agreement, if the Grantee resides in a country outside the United States or is otherwise subject to the laws of a country other than the United States, the Restricted Stock Units shall be subject to the special terms and conditions set forth in the Appendix to this Global Restricted Stock Unit Award Agreement for the Grantee’s country, if any.  Moreover, if the Grantee relocates to one of the countries included in the Appendix during the term of the Restricted Stock Units, the terms and conditions for such country shall apply to the Grantee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons.  The Appendix forms part of this Global Restricted Stock Unit Award Agreement.  

SECTION 12.  Language.  The Grantee acknowledges that he or she is proficient in the English language and understands the terms of this Agreement. If the Grantee has received this Agreement, or any other documents related to the Restricted Stock Units and/or the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.

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SECTION 13.  Notices.  Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall be mailed or delivered to the Grantee at the address on file with the Company or, in either case, at such other address as one party may subsequently furnish to the other party in writing.

SECTION 14.  Waivers.  The Grantee acknowledges that a waiver by the Company of breach of any provision of this Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by the Grantee or any other Grantee.  

SECTION 15.  Choice of Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, applied without regard to conflict of law principles.

SECTION 16.  Venue.  For purposes of litigating any dispute that arises directly or indirectly from the relationship of the parties evidenced by this Agreement, the parties hereby submit to and consent to the exclusive jurisdiction of the State of Massachusetts and agree that such litigation shall be conducted only in the courts of Middlesex  County, Massachusetts, or the federal courts for the Commonwealth of Massachusetts, where this grant is made and/or to be performed, and no other courts.

SECTION 17.  Severability.  The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

SECTION 18.  Imposition of Other Requirements.  The Company reserves the right to impose other requirements on the Restricted Stock Units and the shares of Stock acquired upon settlement of the Restricted Stock Units, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require the Grantee to accept any additional agreements or undertakings that may be necessary to accomplish the foregoing.

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SECTION 19.  Electronic Delivery and Acceptance of Documents.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means.  The Grantee hereby consents to receive such documents by electronic delivery and agree to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

SECTION 20.  Compliance with Law.  Notwithstanding any other provision of the Plan or this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Stock, the Company shall not be required to permit the vesting of the Restricted Stock Units and/or deliver any shares of Stock prior to the completion of any registration or qualification of the shares of Stock under any U.S. or non-U.S. local, state or federal securities or other applicable law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or of any other governmental regulatory body, or prior to obtaining any approval or other clearance from any U.S. or non-U.S. local, state or federal governmental agency, which registration, qualification or approval the Company shall, in its absolute discretion, deem necessary or advisable.  The Grantee understands that the Company is under no obligation to register or qualify the Stock with the SEC or any state or non-U.S. securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the shares of Stock subject to the Restricted Stock Units.  Further, the Grantee agrees that the Company shall have unilateral authority to amend this Agreement without the Grantee’s consent to the extent necessary to comply with securities or other laws applicable to issuance of the shares of Stock subject to the Restricted Stock Units.

SECTION 21.  Insider Trading Restrictions / Market Abuse Laws.  By accepting the Restricted Stock Units, the Grantee acknowledges that he or she is bound by all the terms and conditions of any Company’s insider trading policy as may be in effect from time to time.  The Grantee further acknowledges that, depending on the Grantee’s country, the broker's country or the country in which the shares of Stock are listed, the Grantee may be or may become subject to insider trading restrictions and/or market abuse laws which may affect the Grantee’s ability to accept, acquire, sell or otherwise dispose of shares of Stock, rights to shares of Stock (e.g., Restricted Stock Units) or rights linked to the value of shares of Stock under the Plan during such times as the Grantee is considered to have “inside information” regarding the Company (as defined by

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the laws in the applicable jurisdictions).  Local insider trading laws and regulations may prohibit the cancellation or amendment of orders the Grantee placed before the Grantee possessed inside information.  Furthermore, the Grantee could be prohibited from (i) disclosing the inside information to any third party, which may include fellow employees and (ii) “tipping” third parties or causing them otherwise to buy or sell securities.  Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any Company’s insider trading policy as may be in effect from time to time.  The Grantee acknowledges that it is the Grantee’s responsibility to comply with any applicable restrictions, and the Grantee should speak to his or her personal advisor on this matter.

SECTION 22.  Foreign Asset/Account, Exchange Control and Tax Reporting.  Depending on the Grantee’s country, the Grantee may be subject to foreign asset/account, exchange control, tax reporting or other requirements which may affect the Grantee’s ability acquire or hold Restricted Stock Units or shares of Stock under the Plan or cash received from participating in the Plan (including dividends and the proceeds arising from the sale of shares of Stock) in a brokerage/bank account outside the Grantee’s country.  The applicable laws of the Grantee’s country may require that he or she report such Restricted Stock Units, shares of Stock, accounts, assets or transactions to the applicable authorities in such country and/or repatriate funds received in connection with the Plan to the Grantee’s country within a certain time period or according to certain procedures.  The Grantee acknowledges that he or she is responsible for ensuring compliance with any applicable requirements and should consult his or her personal legal advisor to ensure compliance with applicable laws.

SECTION 23.  [Incorporation of Policy for Recoupment of Incentive Compensation. Notwithstanding anything herein to the contrary, this Award of Restricted Stock Units shall be subject to and governed by all the terms and conditions of the Company’s Policy for Recoupment of Incentive Compensation, including the powers of the Company to recoup incentive compensation stated therein.]

 

 

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The foregoing Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned.  Electronic acceptance of this Agreement pursuant to the Company’s instructions to the Grantee (including through an online acceptance process) is acceptable.

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APPENDIX

GLOBAL RESTRICTED STOCK UNIT AWARD AGREEMENT
FOR COMPANY EMPLOYEES
UNDER THE HUBSPOT, INC.
2014 STOCK OPTION AND INCENTIVE PLAN

Capitalized terms used but not defined in this Appendix shall have the same meanings assigned to them in the Plan and/or the Global Restricted Stock Unit Award Agreement.

Terms and Conditions

This Appendix includes additional terms and conditions that govern the Restricted Stock Units if the Grantee works and/or resides in one of the countries listed below.  If the Grantee is a citizen or resident of a country other than the one in which the Grantee is currently working and/or residing (or is considered as such for local law purposes), or the Grantee transfers employment and/or residency to a different country after the Restricted Stock Units are granted, the Company will, in its discretion, determine the extent to which the terms and conditions contained herein will apply to the Grantee.

Notifications

This Appendix also includes information regarding certain other issues of which the Grantee should be aware with respect to the Grantee’s participation in the Plan.  The information is based on the securities, exchange control and other laws in effect in the respective countries as of January 2019.  Such laws are often complex and change frequently.  As a result, the Company strongly recommends that the Grantee not rely on the information noted herein as the only source of information relating to the consequences of participation in the Plan because the information may be out-of-date at the time the Grantee vests in the Restricted Stock Units or sells any shares of Stock acquired under the Plan.  

In addition, the information contained herein is general in nature and may not apply to the Grantee’s particular situation.  As a result, the Company is not in a position to assure the Grantee of any particular result.  Accordingly, the Grantee is strongly advised to seek appropriate professional advice as to how the relevant laws in the Grantee’s country may apply to the Grantee’s individual situation.

If the Grantee is a citizen or resident of a country other than the one in which the Grantee is currently working and/or residing (or is considered as such for local law purposes), or if the Grantee transfers employment and/or residency to a different country after the Restricted Stock Units are granted, the notifications contained in this Appendix may not be applicable to the Grantee in the same manner.

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ALL NON-U.S./NON-EUROPEAN UNION/NON-EUROPEAN ECONOMIC AREA COUNTRIES

Data Privacy Notification and Consent

(i)By accepting the Award, the Grantee explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Grantee's personal data as described in the Agreement by and among, as applicable, the Employer, the Company and its other Subsidiaries for the exclusive purpose of implementing, administering and managing the Grantee's participation in the Plan.

(j)The Grantee understands that the Company, the Employer and other Subsidiaries may hold certain personal information about the Grantee, including, but not limited to, the Grantee's name, home address and telephone number, email address, date of birth, social security number, passport or other identification number (e.g., resident registration number), salary, nationality, job title, any shares of Stock or directorships held in the Company, details of all Restricted Stock Units or any other entitlement to shares awarded, canceled, vested, unvested or outstanding in the Grantee's favor (“Data”), for the purpose of implementing, administering and managing the Plan

(k)The Grantee understands that Data will be transferred to Fidelity Stock Plan Services LLC, or such other stock plan service provider as may be selected by the Company in the future, which assist in the implementation, administration and management of the Plan.  The Grantee understands that the recipients of the Data may be located in the United States or elsewhere, and that the recipient's country (e.g. the United States) may have different data privacy laws and protections than the Grantee's country.  The Grantee understands that if he or she resides outside the United States, the Grantee may request a list with the names and addresses of any potential recipients of the Data by contacting the Grantee's local human resources representative.  The Grantee authorizes the Company, Fidelity Stock Plan Services LLC and other possible recipients which may assist the Company (presently or in the future) with implementing, administering and managing the Plan to receive, possess, use, retain and transfer the Data, in electronic or other form, for the sole purpose of implementing, administering and managing the Grantee's participation in the Plan, including any requisite transfer of such Data as may be required to a broker, escrow agent or other third party with whom the shares of Stock received upon vesting of the Restricted Stock Units may be deposited.  The Grantee understands that Data will be held only as long as is necessary to implement, administer and manage the Grantee's participation in the Plan.  The Grantee understands that if the Grantee resides outside the United States, he or she may, at any time, view Data, request information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting the Grantee's local human resources representative.  Further, the Grantee understands that he or she is providing the consents herein on a purely voluntary basis.  If the Grantee does not consent, or if the Grantee later seeks to revoke his or her consent, the Grantee's employment status with the Employer will not be affected; the only consequence of refusing or withdrawing consent is that the Company would not be able to grant Restricted Stock Units or other equity awards to the Grantee or administer or maintain such awards.  Therefore, the Grantee understands that refusing or withdrawing the Grantee's consent may

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affect his or her ability to participate in the Plan.  For more information on the consequences of the Grantee's refusal to consent or withdrawal of consent, the Grantee understands that he or she may contact his or her local human resources representative.

(l)Upon request of the Company or the Employer, the Grantee agrees to provide a separate executed data privacy consent form (or any other agreements or consents that may be required by the Company and/or the Employer) that the Company and/or the Employer may deem necessary to obtain from the Grantee for the purpose of administering the Grantee's participation in the Plan in compliance with the data privacy laws in the Grantee's country, either now or in the future.  The Grantee understands and agrees that he or she will not be able to participate in the Plan if the Grantee fails to provide any such consent or agreement requested by the Company and/or the Employer.

AUSTRALIA

Notifications

Australia Offer Document.  The offer of the Restricted Stock Units is intended to comply with the provisions of the Corporations Act 2001, Australia Securities and Investments Commission (“ASIC”) Regulatory Guide 49 and ASIC Class Order CO 14/1000.  Additional details are set forth in the Offer Document for the offer of the Restricted Stock Units to Australia resident employees, which will be provided to the Grantee with the Agreement.

Tax Notification.  Subdivision 83A-C of the Income Tax Assessment Act, 1997 applies to the Restricted Stock Units granted under the Plan, such that the Restricted Stock Units are intended to be subject to deferred taxation.

Exchange Control Information.  If the Grantee is an Australian resident, exchange control reporting is required for cash transactions exceeding A$10,000 and international fund transfers.  If an Australian bank is assisting with the transaction, the bank will file the report on the Grantee’s behalf.  If there is no Australian bank involved with the transfer, the Grantee will be required to file the report.

CANADA

 

Terms and Conditions

 

Award Payable Only in Shares.  The Restricted Stock Units shall be paid in shares of Stock only and do not provide the Grantee with any right to receive a cash payment.

 

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The following terms and conditions apply to employees resident in Quebec:

 

Language.  The parties acknowledge that it is their express wish that this Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.

 

Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.

Data Privacy.  The following provision supplements the Data Privacy Notification and Consent provision above in this Appendix:

 

The Grantee hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information from all personnel, professional or non-professional, involved in the administration and operation of the Plan.  The Grantee further authorizes the Company and any Subsidiary and the Administrator to disclose and discuss the Plan with their advisors and to record all relevant information and keep such information in the Grantee’s employee file.

 

Notifications

 

Securities Law Information.  The Grantee is permitted to sell shares of Stock acquired under the Plan through the designated broker appointed under the Plan, if any, provided the resale of shares of Stock acquired under the Plan takes place outside Canada through the facilities of a stock exchange on which the shares of Stock are listed.  The shares of Stock are currently listed on the New York Stock Exchange under the symbol “HUBS.”

COLOMBIA

Terms and Conditions

Nature of Grant.  The following provision supplements Paragraph 10 of the Global Restricted Stock Unit Award Agreement:

The Grantee acknowledges that, pursuant to Article 128 of the Colombian Labor Code, the Restricted Stock Units and related benefits do not constitute a component of the Grantee’s “salary” for any legal purpose.  Therefore, the Restricted Stock Units and related benefits will not be included and/or considered for purposes of calculating any and all labor benefits, such as legal/fringe benefits, vacations, indemnities, payroll taxes, social insurance contributions and/or any other labor-related amount which may be payable.

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Notifications

Securities Law Information.  The shares of Stock are not and will not be registered in the Colombian registry of publicly traded securities (Registro Nacional de Valores y Emisores) and, therefore, the shares of Stock may not be offered to the public in Colombia.  Nothing in the Plan, the Agreement or any other document evidencing the grant of the Restricted Stock Units shall be construed as the making of a public offer of securities in Colombia.

Exchange Control Information.  The Grantee is responsible for complying with any and all Colombian foreign exchange restrictions, approvals and reporting requirements in connection with the Restricted Stock Units and any shares of Stock acquired or funds received under the Plan.  This may include reporting obligations to the Central Bank (Banco de la República).  If applicable, the Grantee will be required to register his or her investment with the Central Bank, regardless of the value of his or her investment.  The Grantee should consult with his or her personal legal advisor regarding any obligations in connection with this reporting requirement.  

 

FRANCE

Terms and Conditions

Type of Grant.  The Restricted Stock Units are not granted as “French-qualified” awards and are not intended to qualify for the special tax and social security treatment applicable to shares granted for no consideration under Sections L. 225-197 and seq. of the French Commercial Code, as amended.

 

Language.  By accepting the Restricted Stock Units, the Grantee confirms having read and understood the documents relating to the Restricted Stock Units which were provided to the Grantee in English.

 

En acceptant l'attribution d’actions gratuites « Restricted Stock Units », le Grantee confirme avoir lu et compris les documents relatifs aux Restricted Stock Units qui ont été communiqués au Grantee en langue anglaise.

 

GERMANY

Notifications

 

Exchange Control Information.  German residents must electronically report cross-border payments in excess of €12,500 to the German Federal Bank (Bundesbank) on a monthly basis. In case of payments in connection with securities (including any proceeds realized upon the sale of shares of Stock or the receipt of any dividends), the report must be made by the 5th day of the month following the month in which the payment was received.  The form of report (“Allgemeines Meldeportal Statistik”) can be accessed via the Bundesbank’s website (www.bundesbank.de).  The Grantee should consult his or her personal advisor to ensure compliance with applicable reporting obligations.

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IRELAND

Notifications

Director Notification Information.  Directors, shadow directors and secretaries of an Irish Subsidiary or Affiliate must notify such Subsidiary in writing upon (i) receiving or disposing of an interest in the Company (e.g., the Restricted Stock Units, shares of Stock, etc.), (ii) becoming aware of the event giving rise to the notification requirement, or (iii) becoming a director or secretary if such an interest exists at the time, in each case if the interest represents more than 1% of the Company.  This notification requirement also applies with respect to the interests of any spouse or children under the age of 18 of the director, shadow director or secretary (whose interests will be attributed to the director, shadow director or secretary).  The Grantee should consult with his or her personal legal advisor as to whether or not this notification requirement applies.

JAPAN

There are no country-specific provisions.

SINGAPORE

Terms and Conditions

Restrictions on Sale and Transferability.  The Grantee hereby agrees that any shares of Stock acquired pursuant to the Restricted Stock Units will not be offered for sale in Singapore prior to the six (6) month anniversary of the Grant Date, unless such sale or offer is made: (1) after six (6) months of the Grant Date or (2) pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the Securities and Futures Act (Chapter 289, 1006 Ed.) (“SFA”).

Notifications

 

Securities Law Information.  The grant of the Restricted Stock Units is being made in reliance on section 273(1)(f) of the SFA of the Securities and Futures Act (Chapter 289, 2006 Ed.) (“SFA”) and is not made with a view to the shares of Stock being subsequently offered for sale to any other party.  The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore.  The Grantee should note that the Award is subject to section 257 of the SFA and the Grantee will not be able to make (i) any subsequent sale of shares of Stock in Singapore or (ii) any offer of subsequent sale of shares of Stock subject to the Award in Singapore, unless such sale or offer is made (a) more than six (6) months after the Grant Date or (b) pursuant to the exemptions under Part XIII Division (1)  Subdivision (4) (other than Section 280) of the SFA (Chapter 289, 2006 Ed.) or pursuant to, and in accordance with the conditions of, any other applicable provisions of the SFA.  

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Chief Executive Officer and Director Notification Obligation.  The Chief Executive Officer (“CEO”) and the directors (including alternative directors, substitute directors and shadow directors¹) of a Singaporean Subsidiary are subject to certain notification requirements under the Singapore Companies Act.  The CEO and the directors must notify the Singaporean Subsidiary in writing of an interest (e.g., the Award or shares of Stock) in the Company within two (2) business days of (i) its acquisition or disposal, (ii) any change in a previously-disclosed interest (e.g., upon vesting of the Restricted Stock Units or when shares of Stock acquired under the Plan are subsequently sold), or (iii) becoming the CEO or a director.

 

SWEDEN

There are no country-specific provisions.

UNITED KINGDOM

Terms and Conditions

 

Responsibility for Taxes.  The following provisions supplement Paragraph 6 of the Global Restricted Stock Unit Award Agreement:

 

Without limitation to Paragraph 6 of the Global Restricted Stock Unit Award Agreement, the Grantee agrees that the Grantee is liable for all Tax-Related Items and hereby covenants to pay all such Tax-Related Items as and when requested by the Company or the Employer or by Her Majesty’s Revenue and Customs (“HMRC”) (or any other tax authority or any other relevant authority).  The Grantee also agrees to indemnify and keep indemnified the Company or the Employer against any Tax-Related Items that they are required to pay or withhold or have paid or will pay to HMRC (or any other tax authority or any other relevant authority) on the Grantee’s behalf.  

 

Notwithstanding the foregoing, if the Grantee is a director or executive officer of the Company (within the meaning of Section 13(k) of the Exchange Act), the terms of the immediately foregoing provision will not apply if the indemnification can be viewed as a loan.  In such case, if the amount of any income tax due is not collected from or paid by the Grantee within 90 days of the end of the U.K. tax year in which an event giving rise to the indemnification described above occurs, the amount of any uncollected income taxes may constitute a benefit to the Grantee on which additional income tax and national insurance contributions (“NICs”) may be payable.  The Grantee will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime and for paying to the Company or the Employer, as applicable, any employee NICs due on this additional benefit, which the Company or the Employer may recover from the Grantee by any of the means referred to in Paragraph 6 of the Global Restricted Stock Unit Award Agreement.

 

 

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NON-QUALIFIED STOCK OPTION AGREEMENT
FOR NON-EMPLOYEE DIRECTORS
UNDER THE hubspot, Inc.
2014 STOCK option and INCENTIVE PLAN

 

[FMV on Grant Date]

 

 

[No more than 10 years]

Pursuant to the HubSpot, Inc. 2014 Stock Option and Incentive Plan as amended through the date hereof (the “Plan”), HubSpot, Inc. (the “Company”) hereby grants to the Optionee named above, who is a Director of the Company but is not an employee of the Company, an option (the “Stock Option”) to purchase on or prior to the Expiration Date specified above all or part of the number of shares of Common Stock, par value $0.001 per share (the “Stock”), of the Company specified above at the Option Exercise Price per Share specified above subject to the terms and conditions set forth herein and in the Plan.  This Stock Option is not intended to be an “incentive stock option” under Section 422 of the Internal Revenue Code of 1986, as amended.

1.Vesting Schedule.  No portion of this Stock Option may be exercised until such portion shall have become vested and exercisable.  Except as set forth below, and subject to the discretion of the Administrator (as defined in Section 2 of the Plan) to accelerate the vesting schedule hereunder, [   ] of the Option Shares shall vest and become exercisable on [   ].  Once vested and exercisable, this Stock Option shall continue to be exercisable at any time or times prior to the close of business on the Expiration Date, subject to the provisions hereof and of the Plan.  

Notwithstanding the foregoing, in the event of a Sale Event (as defined in the Plan), this Stock Option shall be deemed vested and exercisable upon the date on which the Optionee’s service relationship with the Company and any subsidiary or successor entity, as the case may be, ends if the end of such service relationship occurs within 12 months after such Sale Event or 90 days prior to such Sale Event.

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2.Manner of Exercise.

(a)The Optionee may exercise this Stock Option only in the following manner:  from time to time on or prior to the Expiration Date of this Stock Option, the Optionee may give written notice to the Administrator of his or her election to purchase some or all of the Option Shares purchasable at the time of such notice.  This notice shall specify the number of Option Shares to be purchased.

Payment of the purchase price for the Option Shares may be made by one or more of the following methods:  (i) in cash, by certified or bank check or other instrument acceptable to the Administrator; (ii) through the delivery (or attestation to the ownership) of shares of Stock that have been purchased by the Optionee on the open market or that are beneficially owned by the Optionee and are not then subject to any restrictions under any Company plan and that otherwise satisfy any holding periods as may be required by the Administrator; (iii) by the Optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the option purchase price, provided that in the event the Optionee chooses to pay the option purchase price as so provided, the Optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment procedure; (iv) by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; or (v) a combination of (i), (ii), (iii) and (iv) above.  Payment instruments will be received subject to collection.

The transfer to the Optionee on the records of the Company or of the transfer agent of the Option Shares will be contingent upon (i) the Company’s receipt from the Optionee of the full purchase price for the Option Shares, as set forth above, (ii) the fulfillment of any other requirements contained herein or in the Plan or in any other agreement or provision of laws, and (iii) the receipt by the Company of any agreement, statement or other evidence that the Company may require to satisfy itself that the issuance of Stock to be purchased pursuant to the exercise of Stock Options under the Plan and any subsequent resale of the shares of Stock will be in compliance with applicable laws and regulations.  In the event the Optionee chooses to pay the purchase price by previously-owned shares of Stock through the attestation method, the number of shares of Stock transferred to the Optionee upon the exercise of the Stock Option shall be net of the Shares attested to.

(b)The shares of Stock purchased upon exercise of this Stock Option shall be transferred to the Optionee on the records of the Company or of the transfer agent upon compliance to the satisfaction of the Administrator with all requirements under applicable laws or regulations in connection with such transfer and with the requirements hereof and of the Plan.  The determination of the Administrator as to such compliance shall be final and binding on the Optionee.  The Optionee shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Stock subject to this Stock Option unless and until this Stock Option shall have been exercised pursuant to the terms hereof, the Company or the transfer agent shall have transferred the shares to the Optionee, and the Optionee’s name shall have been entered as the stockholder of record on the books of the Company.  Thereupon, the Optionee shall have full voting, dividend and other ownership rights with respect to such shares of Stock.

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(c)The minimum number of shares with respect to which this Stock Option may be exercised at any one time shall be 100 shares, unless the number of shares with respect to which this Stock Option is being exercised is the total number of shares subject to exercise under this Stock Option at the time.

(d)Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option shall be exercisable after the Expiration Date hereof.

3.Termination as Director. If the Optionee ceases to be a Director of the Company, the period within which to exercise the Stock Option may be subject to earlier termination as set forth below.

(a)Termination Due to Death.  If the Optionee’s service as a Director terminates by reason of the Optionee’s death, any portion of this Stock Option outstanding on such date, to the extent exercisable on the date of death, may thereafter be exercised by the Optionee’s legal representative or legatee for a period of 12 months from the date of death or until the Expiration Date, if earlier.  Any portion of this Stock Option that is not exercisable on the date of death shall terminate immediately and be of no further force or effect.

(b)Other Termination.  If the Optionee ceases to be a Director for any reason other than the Optionee’s death, any portion of this Stock Option outstanding on such date may be exercised, to the extent exercisable on the date the Optionee ceased to be a Director, for a period of six months from the date the Optionee ceased to be a Director or until the Expiration Date, if earlier.  Any portion of this Stock Option that is not exercisable on the date the Optionee ceases to be a Director shall terminate immediately and be of no further force or effect.

The Administrator’s determination of the reason for termination of the Optionee’s service as a Director shall be conclusive and binding on the Optionee and his or her representatives or legatees.

4.Incorporation of Plan.  Notwithstanding anything herein to the contrary, this Stock Option shall be subject to and governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in Section 2(b) of the Plan.  Capitalized terms in this Agreement shall have the meaning specified in the Plan, unless a different meaning is specified herein.

5.Transferability.  This Agreement is personal to the Optionee, is non-assignable and is not transferable in any manner, by operation of law or otherwise, other than by will or the laws of descent and distribution.  This Stock Option is exercisable, during the Optionee’s lifetime, only by the Optionee, and thereafter, only by the Optionee’s legal representative or legatee.

6.No Obligation to Continue as a Director.  Neither the Plan nor this Stock Option confers upon the Optionee any rights with respect to continuance as a Director.  

7.Integration.  This Agreement constitutes the entire agreement between the parties with respect to this Stock Option and supersedes all prior agreements and discussions between the parties concerning such subject matter.

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8.Data Privacy Consent.  In order to administer the Plan and this Agreement and to implement or structure future equity grants, the Company, its subsidiaries and affiliates and certain agents thereof (together, the “Relevant Companies”) may process any and all personal or professional data, including but not limited to Social Security or other identification number, home address and telephone number, date of birth and other information that is necessary or desirable for the administration of the Plan and/or this Agreement (the “Relevant Information”).  By entering into this Agreement, the Optionee (i) authorizes the Company to collect, process, register and transfer to the Relevant Companies all Relevant Information; (ii) waives any privacy rights the Optionee may have with respect to the Relevant Information; (iii) authorizes the Relevant Companies to store and transmit such information in electronic form; and (iv) authorizes the transfer of the Relevant Information to any jurisdiction in which the Relevant Companies consider appropriate.  The Optionee shall have access to, and the right to change, the Relevant Information.  Relevant Information will only be used in accordance with applicable law.

9.Notices.  Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall be mailed or delivered to the Optionee at the address on file with the Company or, in either case, at such other address as one party may subsequently furnish to the other party in writing.

 

 

The foregoing Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned.  Electronic acceptance of this Agreement pursuant to the Company’s instructions to the Grantee (including through an online acceptance process) is acceptable.

 

 

 

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RESTRICTED STOCK UNIT AWARD AGREEMENT
FOR NON-EMPLOYEE DIRECTORS
UNDER THE hubspot, Inc.
2014 STOCK option and INCENTIVE PLAN

Pursuant to the HubSpot, Inc. 2014 Stock Option and Incentive Plan as amended through the date hereof (the “Plan”), HubSpot, Inc. (the “Company”) hereby grants an award of the number of Restricted Stock Units listed above (an “Award”) to the Grantee named above.  Each Restricted Stock Unit shall relate to one share of Common Stock, par value $0.001 per share (the “Stock”) of the Company.

1.Restrictions on Transfer of Award.  This Award may not be sold, transferred, pledged, assigned or otherwise encumbered or disposed of by the Grantee, and any shares of Stock issuable with respect to the Award may not be sold, transferred, pledged, assigned or otherwise encumbered or disposed of until (i) the Restricted Stock Units have vested as provided in Paragraph 2 of this Agreement and (ii) shares of Stock have been issued to the Grantee in accordance with the terms of the Plan and this Agreement.

2.Vesting of Restricted Stock Units.  Except as set forth below, and subject to the discretion of the Administrator (as defined in Section 2 of the Plan) to accelerate the vesting schedule hereunder, the restrictions and conditions of Paragraph 1 of this Agreement shall lapse and such Restricted Stock Units shall vest on [  ].  The Administrator may at any time accelerate the vesting schedule specified in this Paragraph 2.

Notwithstanding the foregoing, in the event of a Sale Event (as defined in the Plan), the Restricted Stock Units shall be deemed vested and nonforfeitable upon the date on which the Grantee’s service relationship with the Company and any subsidiary or successor entity, as the case may be, ends if the end of such service relationship occurs within 12 months after such Sale Event or 90 days prior to such Sale Event.

3.Termination of Service.  If the Grantee’s service with the Company and its Subsidiaries terminates for any reason (including death or disability) prior to the satisfaction of the vesting conditions set forth in Paragraph 2 above, any Restricted Stock Units that have not vested as of such date shall automatically and without notice terminate and be forfeited, and neither the Grantee nor any of his or her successors, heirs, assigns, or personal representatives will thereafter have any further rights or interests in such unvested Restricted Stock Units.

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4.Issuance of Shares of Stock.  As soon as practicable following each vesting date specified in Paragraph 2 (each such date, a “Vesting Date”) (but in no event later than two and one-half months after the end of the year in which the Vesting Date occurs), the Company shall issue to the Grantee the number of shares of Stock equal to the aggregate number of Restricted Stock Units that have vested pursuant to Paragraph 2 of this Agreement on such date and the Grantee shall thereafter have all the rights of a stockholder of the Company with respect to such shares.

5.Incorporation of Plan.  Notwithstanding anything herein to the contrary, this Agreement shall be subject to and governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in Section 2(b) of the Plan.  Capitalized terms in this Agreement shall have the meaning specified in the Plan, unless a different meaning is specified herein.

6.Section 409A of the Code.  This Agreement shall be interpreted in such a manner that all provisions relating to the settlement of the Award are exempt from the requirements of Section 409A of the Code as “short-term deferrals” as described in Section 409A of the Code.

7.No Obligation to Continue as a Director.  Neither the Plan nor this Award confers upon the Grantee any rights with respect to continuance as a Director.

8.Integration.  This Agreement constitutes the entire agreement between the parties with respect to this Award and supersedes all prior agreements and discussions between the parties concerning such subject matter.

9.Data Privacy Consent.  In order to administer the Plan and this Agreement and to implement or structure future equity grants, the Company, its subsidiaries and affiliates and certain agents thereof (together, the “Relevant Companies”) may process any and all personal or professional data, including but not limited to Social Security or other identification number, home address and telephone number, date of birth and other information that is necessary or desirable for the administration of the Plan and/or this Agreement (the “Relevant Information”).  By entering into this Agreement, the Grantee (i) authorizes the Company to collect, process, register and transfer to the Relevant Companies all Relevant Information; (ii) waives any privacy rights the Grantee may have with respect to the Relevant Information; (iii) authorizes the Relevant Companies to store and transmit such information in electronic form; and (iv) authorizes the transfer of the Relevant Information to any jurisdiction in which the Relevant Companies consider appropriate.  The Grantee shall have access to, and the right to change, the Relevant Information.  Relevant Information will only be used in accordance with applicable law.

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10.Notices.  Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall be mailed or delivered to the Grantee at the address on file with the Company or, in either case, at such other address as one party may subsequently furnish to the other party in writing.

 

 

The foregoing Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned.  Electronic acceptance of this Agreement pursuant to the Company’s instructions to the Grantee (including through an online acceptance process) is acceptable.

 

 

 

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RESTRICTED STOCK AWARD AGREEMENT
UNDER THE HUBSPOT, INC.
2014 STOCK OPTION AND INCENTIVE PLAN

Pursuant to the HubSpot, Inc. 2014 Stock Option and Incentive Plan (the “Plan”) as amended through the date hereof, HubSpot, Inc. (the “Company”) hereby grants a Restricted Stock Award (an “Award”) to the Grantee named above.  Upon acceptance of this Award, the Grantee shall receive the number of shares of Common Stock, par value $0.001 per share (the “Stock”) of the Company specified above, subject to the restrictions and conditions set forth herein and in the Plan.  The Company acknowledges the receipt from the Grantee of consideration with respect to the par value of the Stock in the form of cash, past or future services rendered to the Company by the Grantee or such other form of consideration as is acceptable to the Administrator.

1.Award.  The shares of Restricted Stock awarded hereunder shall be issued and held by the Company’s transfer agent in book entry form, and the Grantee’s name shall be entered as the stockholder of record on the books of the Company.  Thereupon, the Grantee shall have all the rights of a stockholder with respect to such shares, including voting and dividend rights, subject, however, to the restrictions and conditions specified in Paragraph 2 below.  The Grantee shall (i) sign and deliver to the Company a copy of this Award Agreement and (ii) deliver to the Company a stock power endorsed in blank.

2.Restrictions and Conditions.

(a)Any book entries for the shares of Restricted Stock granted herein shall bear an appropriate legend, as determined by the Administrator in its sole discretion, to the effect that such shares are subject to restrictions as set forth herein and in the Plan.

(b)Shares of Restricted Stock granted herein may not be sold, assigned, transferred, pledged or otherwise encumbered or disposed of by the Grantee prior to vesting.

(c)If the Grantee’s employment with the Company and its Subsidiaries is voluntarily or involuntarily terminated for any reason (including death) prior to vesting of shares of Restricted Stock granted herein (after giving effect to any accelerated vesting in Section 3 below), all shares of Restricted Stock shall immediately and automatically be forfeited and returned to the Company.

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3.Vesting of Restricted Stock.  The restrictions and conditions in Paragraph 2 of this Agreement shall lapse as to the Shares and such Shares shall vest [in [  ] installments] following the Vesting Commencement Date, provided that the Grantee remains an employee of the Company or a Subsidiary on such dates.  Subsequent to such vesting date or dates, the shares of Stock on which all restrictions and conditions have lapsed shall no longer be deemed Restricted Stock.  The Administrator may at any time accelerate the vesting schedule specified in this Paragraph 3.

Notwithstanding the foregoing, in the event of a Sale Event (as defined in the Plan) in which this Award is continued or assumed by a successor to the Company, the Restricted Stock shall be deemed vested and exercisable upon the date on which the Grantee’s employment or service relationship with the Company and any subsidiary or successor entity, as the case may be, terminates if such termination occurs (i) within 12 months after such Sale Event or 90 days prior to such Sale Event, and (ii) such termination is by the Company or any subsidiary or successor entity without Cause or by the Grantee for Good Reason.  

The following definitions shall apply:

“Cause” shall mean (i) the Grantee’s dishonest statements or acts with respect to the Company or any affiliate of the Company, or any current or prospective customers, suppliers vendors or other third parties with which such entity does business; (ii) the Grantee’s commission of (A) a felony or (B) any misdemeanor involving moral turpitude, deceit, dishonesty or fraud; (iii) the Grantee’s failure to perform his assigned duties and responsibilities to the reasonable satisfaction of the Company which failure continues, in the reasonable judgment of the Company, after written notice given to the Grantee by the Company; (iv) the Grantee’s gross negligence, willful misconduct or insubordination with respect to the Company or any Affiliate of the Company (including, but not limited to, any violation of the Company’s code of conduct, insider trading, willful accounting improprieties or failure to cooperate with investigations); or (v) the Grantee’s material violation of any provision of any agreement(s) between the Grantee and the Company relating to noncompetition, nonsolicitation, nondisclosure and/or assignment of inventions.

“Good Reason” shall mean (i) a material diminution in the Grantee’s base salary except for across-the-board salary reductions similarly affecting all or substantially all similarly situated employees of the Company or (ii) a change of more than 50 miles in the geographic location at which the Grantee provides services to the Company, so long as the Grantee provides notice to the Company within at least 90 days following the initial occurrence of any such event and the Company fails to cure such event within 30 days of such notice.

4.Dividends.  Dividends on shares of Restricted Stock shall be paid currently to the Grantee.

5.Incorporation of Plan.  Notwithstanding anything herein to the contrary, this Award shall be subject to and governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in Section 2(b) of the Plan.  Capitalized terms in this Agreement shall have the meaning specified in the Plan, unless a different meaning is specified herein.

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6.Transferability.  This Agreement is personal to the Grantee, is non-assignable and is not transferable in any manner, by operation of law or otherwise, other than by will or the laws of descent and distribution.

7.Tax Withholding.  The Grantee shall, not later than the date as of which the receipt of this Award becomes a taxable event for Federal income tax purposes, pay to the Company or make arrangements satisfactory to the Administrator for payment of any Federal, state, and local taxes required by law to be withheld on account of such taxable event.  Except in the case where an election is made pursuant to Paragraph 8 below, the Company shall have the authority to cause the required minimum tax withholding obligation to be satisfied, in whole or in part, by withholding from shares of Stock to be issued or released by the transfer agent a number of shares of Stock with an aggregate Fair Market Value that would satisfy the minimum withholding amount due.

8.Election Under Section 83(b).  The Grantee and the Company hereby agree that the Grantee may, within 30 days following the Grant Date of this Award, file with the Internal Revenue Service and the Company an election under Section 83(b) of the Internal Revenue Code.  In the event the Grantee makes such an election, he or she agrees to provide a copy of the election to the Company.  The Grantee acknowledges that he or she is responsible for obtaining the advice of his or her tax advisors with regard to the Section 83(b) election and that he or she is relying solely on such advisors and not on any statements or representations of the Company or any of its agents with regard to such election.

9.No Obligation to Continue Employment.  Neither the Company nor any Subsidiary is obligated by or as a result of the Plan or this Agreement to continue the Grantee in employment and neither the Plan nor this Agreement shall interfere in any way with the right of the Company or any Subsidiary to terminate the employment of the Grantee at any time.

10.Integration.  This Agreement constitutes the entire agreement between the parties with respect to this Award and supersedes all prior agreements and discussions between the parties concerning such subject matter.

11.Data Privacy Consent.  In order to administer the Plan and this Agreement and to implement or structure future equity grants, the Company, its subsidiaries and affiliates and certain agents thereof (together, the “Relevant Companies”) may process any and all personal or professional data, including but not limited to Social Security or other identification number, home address and telephone number, date of birth and other information that is necessary or desirable for the administration of the Plan and/or this Agreement (the “Relevant Information”).  By entering into this Agreement, the Grantee (i) authorizes the Company to collect, process, register and transfer to the Relevant Companies all Relevant Information; (ii) waives any privacy rights the Grantee may have with respect to the Relevant Information; (iii) authorizes the Relevant Companies to store and transmit such information in electronic form; and (iv) authorizes the transfer of the Relevant Information to any jurisdiction in which the Relevant Companies consider appropriate.  The Grantee shall have access to, and the right to change, the Relevant Information.  Relevant Information will only be used in accordance with applicable law.

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12.[Incorporation of Policy for Recoupment of Incentive Compensation.  Notwithstanding anything herein to the contrary, this Restricted Stock Award shall be subject to and governed by all the terms and conditions of the Company’s Policy for Recoupment of Incentive Compensation, including the powers of the Company to recoup incentive compensation stated therein.]

13.Notices.  Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall be mailed or delivered to the Grantee at the address on file with the Company or, in either case, at such other address as one party may subsequently furnish to the other party in writing.

 

 

The foregoing Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned.  Electronic acceptance of this Agreement pursuant to the Company’s instructions to the Grantee (including through an online acceptance process) is acceptable.

 

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Exhibit 10.13

HUBSPOT, INC.

NON-EMPLOYEE DIRECTOR COMPENSATION POLICY

The purpose of this Director Compensation Policy of HubSpot, Inc. (the “Company”), is to provide a total compensation package that enables the Company to attract and retain, on a long-term basis, high-caliber directors who are not employees or officers of the Company or its subsidiaries. In furtherance of the purpose stated above, all non-employee directors shall be paid compensation for services provided to the Company as set forth below:

Cash Retainers

Annual Retainer for Board Membership: $33,500 for general availability and participation in meetings and conference calls of the Board of Directors, to be paid quarterly in advance.

Annual Retainer for Lead Independent Director: $17,800 to be paid quarterly, in advance.

Additional Retainers for Committee Membership to be paid quarterly, in advance:

 

 

Note: Chairperson retainers are in addition to member retainers. No equity retainers shall be paid as compensation for committee membership.

Directors shall be entitled to retain any retainer fees paid in advance with respect to the quarter in which he or she ceases to be a director or ceases to serve on a committee, as committee chair or as Lead Independent Director.

Equity Retainers

Annual equity grants: Each non-employee member of the Board will receive an annual equity grant (the “Annual Grant”) following the annual meeting of stockholders of $200,000 of equity awards in the form of stock options and/or restricted stock units, as determined by the Compensation Committee of the Board, that vest upon the first anniversary of such grant date (or, if earlier, immediately prior to the annual meeting of stockholders that is closest to the one year anniversary), provided, however, that all vesting ceases if the director resigns from the Board of Directors or otherwise ceases to serve as a director, unless the Board of Directors determines that the circumstances warrant continuation of vesting. The number of shares issued in connection with the Annual Grant shall be based on the 30 trading day trailing average NYSE stock price as of market close on the date of grant and in the case of options, shall be based on the 30 trading day trailing average fair value (Black-Scholes value) as of the date of grant. Newly elected non-employee directors will receive a pro-rated equity grant in connection with their appointment or election to the Board.

Acceleration of Equity Awards: All unvested equity awards held by non-employee directors will accelerate and immediately vest if the non-employee director’s service relationship ends within three months prior to or twelve months following a Sale Event (as defined in the Company’s 2014 Stock Option and Incentive Plan).

 

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Directors Affiliated with Company Investors: Directors affiliated with an investor in the Company (“Investor Directors”) that holds one percent or more of our capital stock are not eligible to receive cash retainer fees or equity compensation under this policy. Directors affiliated with an investor who falls below the 1% threshold will become eligible to receive cash retainer fees beginning in the calendar quarter following the date in which the Company is notified that such investors’ holdings have fallen below 1% and will become eligible to receive an annual equity grant at the next annual meeting following such date.

Expenses

The Company will reimburse all reasonable out-of-pocket expenses incurred by non-employee directors in attending meetings of the Board or any Committee.

Effective Date: January 1, 2019

ADOPTED: January 29, 2019

 

 

Exhibit 21.1

Subsidiaries of HubSpot, Inc.

 

 

 

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-223018, 333-216104, 333-209689, 333-202532, and 333-199225) of HubSpot, Inc. of our report dated February 12, 2019 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

 

/s/ PricewaterhouseCoopers LLP

 

Boston, Massachusetts

February 12, 2019

 

EXHIBIT 31.1

Certification of Chief Executive Officer

Pursuant to

Exchange Act Rules 13a-14(a) and 15d-14(a),

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Brian Halligan, certify that:

 

 

EXHIBIT 31.2

Certification of Chief Financial Officer

Pursuant to

Exchange Act Rules 13a-14(a) and 15d-14(a),

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Kate Bueker, certify that:

 

 

EXHIBIT 32.1

Certifications of Chief Executive Officer and Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350

As Adopted Pursuant to

Section 906 of the Sarbanes-Oxley Act of 2002

I, Brian Halligan, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the Annual Report on Form 10-K of HubSpot, Inc. for the period ended December 31, 2018 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of HubSpot, Inc.

 

 

I, Kate Bueker, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, the Annual Report on Form 10-K of HubSpot, Inc. for the period ended December 31, 2018 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of HubSpot, Inc.

 

 

The foregoing certifications are not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (Exchange Act), and are not to be incorporated by reference into any filing of HubSpot, Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.