ELLIE MAE INC (Form: 10-Q, Received: 11/06/2014 06:04:22)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_____________________________

FORM 10-Q

_____________________________

(Mark One)



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2014



¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-35140

_____________________________

ELLIE MAE, INC.

(Exact name of registrant as specified in its charter)

_____________________________



Delaware		94-3288780
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4155 Hopyard Road, Suite 200 Pleasanton, California		94588
(Address of principal executive offices)		(Zip Code)

(925) 227-7000

(Registrant’s telephone number, including area code)

_____________________________

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 x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes x No ¨

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



Large accelerated filer	¨	Accelerated filer	x

Non-accelerated filer	o (Do not check if smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ¨ No x

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date:

As of October 31, 2014 :



Class		Number of Shares
Common Stock, $0.0001 par value		28,744,899

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TABLE OF CONTENTS




	Page
PART I—FINANCIAL INFORMATION

ITEM 1—Condensed Consolidated Financial Statements (Unaudited):	1
Condensed Consolidated Balance Sheets as of September 30, 2014 and December 31, 2013	1
Condensed Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2014 and 2013	2
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2014 and 2013	3
Notes to Condensed Consolidated Financial Statements	4

ITEM 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

ITEM 3—Quantitative and Qualitative Disclosures About Market Risk	28

ITEM 4—Controls and Procedures	28

PART II—OTHER INFORMATION

ITEM 1—Legal Proceedings	29

ITEM 1A—Risk Factors	29

ITEM 6—Exhibits	40

Signatures	41

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PART I—FINANCIAL INFORMATION

ITEM 1—CONDENSED CONSOLIDATED FINANCIAL STATEMENTS



Ellie Mae, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in thousands, except share and per share amounts)

	September 30, 2014			December 31, 2013
Assets
Current assets:
Cash and cash equivalents	$	43,859		$	33,462
Short-term investments	42,093			46,325
Accounts receivable, net of allowances for doubtful accounts of $80 and $81 as of September 30, 2014 and December 31, 2013, respectively	17,868			12,024
Prepaid expenses and other current assets	5,681			6,473
Total current assets	109,501			98,284
Property and equipment, net	23,122			12,751
Long-term investments	66,239			56,285
Other intangible assets, net	7,126			5,089
Goodwill	52,460			51,051
Deposits and other assets	5,878			5,112
Total assets	$	264,326		$	228,572
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	4,734		$	3,783
Accrued and other current liabilities	12,253			10,224
Acquisition holdback, net of discount	521			1,965
Deferred revenue	4,690			4,752
Total current liabilities	22,198			20,724
Leases payable, net of current portion	521			175
Other long-term liabilities	1,714			777
Total liabilities	24,433			21,676
Commitments and contingencies (Note 8)
Stockholders' equity:
Common stock, $0.0001 par value per share; 140,000,000 authorized shares, 28,589,869 and 27,624,025 shares issued and outstanding as of September 30, 2014 and December 31, 2013, respectively	3			3
Additional paid-in capital	235,850			212,043
Accumulated other comprehensive loss	(37		)	(34		)
Retained earnings (accumulated deficit)	4,077			(5,116		)
Total stockholders' equity	239,893			206,896
Total liabilities and stockholders' equity	$	264,326		$	228,572

See accompanying notes to these condensed consolidated financial statements (unaudited).

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Ellie Mae, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(in thousands, except share and per share amounts)

	Three Months ended September 30,					Nine Months ended September 30,
	2014			2013		2014			2013
Revenues	$	42,798		$	33,006	$	114,960		$	98,131
Cost of revenues	11,669			8,332		31,445			24,550
Gross profit	31,129			24,674		83,515			73,581
Operating expenses:
Sales and marketing	6,521			5,163		19,067			15,233
Research and development	6,456			6,573		19,348			18,651
General and administrative	9,556			7,547		28,100			23,108
Total operating expenses	22,533			19,283		66,515			56,992
Income from operations	8,596			5,391		17,000			16,589
Other income, net	134			83		343			355
Income before income taxes	8,730			5,474		17,343			16,944
Income tax provision	4,675			2,114		8,150			5,986
Net income	$	4,055		$	3,360	$	9,193		$	10,958
Net income per share of common stock:
Basic	$	0.14		$	0.13	$	0.33		$	0.41
Diluted	$	0.14		$	0.12	$	0.31		$	0.39
Weighted average common shares used in computing net income per share of common stock:
Basic	28,007,770			26,681,974		27,657,217			26,407,572
Diluted	29,661,211			28,623,092		29,332,162			28,330,521

Net income	$	4,055		$	3,360	$	9,193		$	10,958
Other comprehensive income, net of taxes:
Unrealized gain (loss) on investments	(75		)	137		(3		)	13
Comprehensive income	$	3,980		$	3,497	$	9,190		$	10,971

See accompanying notes to these condensed consolidated financial statements (unaudited).

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Ellie Mae, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(in thousands)

	Nine Months ended September 30,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	9,193		$	10,958
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	3,815			3,515
Provision for uncollectible accounts receivable	12			81
Amortization of other intangible assets	1,575			1,081
Amortization of discount related to acquisition holdback	36			93
Stock-based compensation	10,816			10,894
Excess tax benefit from exercise of stock options	(5,306		)	(6,187		)
Deferred income taxes	(37		)	(679		)
Amortization of investment premium	972			1,232
Changes in operating assets and liabilities:
Accounts receivable	(5,856		)	(1,605		)
Prepaid expenses and other current assets	580			1,800
Deposits and other assets	(632		)	(1,195		)
Accounts payable	1,172			(849		)
Accrued, other current and other liabilities	8,494			2,564
Deferred revenue	(54		)	(725		)
Net cash provided by operating activities	24,780			20,978
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment	(12,839		)	(5,034		)
Purchases of investments	(49,662		)	(91,297		)
Maturities of investments	42,965			44,971
Acquisitions	(6,500		)	(3,000		)
Net cash used in investing activities	(26,036		)	(54,360		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payment of capital lease obligations	(987		)	(509		)
Proceeds from issuance of common stock under employee stock plans	8,002			5,342
Tax payments related to shares withheld for vested restricted stock units	(668		)	(101		)
Excess tax benefit from exercise of stock options	5,306			6,187
Net cash provided by financing activities	11,653			10,919
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	10,397			(22,463		)
CASH AND CASH EQUIVALENTS, Beginning of period	33,462			44,114
CASH AND CASH EQUIVALENTS, End of period	$	43,859		$	21,651
Supplemental disclosure of cash flow information:
Cash paid for interest	$	41		$	241
Cash paid for income taxes	$	43		$	3,324
Supplemental disclosure of non-cash investing and financing activities:
Fixed asset purchases not yet paid	$	664		$	522
Stock-based compensation capitalized to property and equipment	$	350		$	91
Acquisition of property and equipment under capital leases	$	1,269		$	1,336

See accompanying notes to these condensed consolidated financial statements (unaudited).

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Ellie Mae, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1 — Description of Business

Ellie Mae, Inc. (“Ellie Mae,” “the Company,” “we,” “our” or “us”) is a leading provider of innovative on-demand software solutions and services for the residential mortgage industry in the United States . The Company’s end-to-end Encompass mortgage management solution provides one system of record that allows banks, credit unions and mortgage lenders to originate and fund mortgages and improve compliance, loan quality and efficiency .

NOTE 2 — Basis of Presentation and Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“ GAAP ”) and applicable rules and regulations of the Securities and Exchange Commission (“ SEC ”) regarding interim financial reporting. Certain information and note disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. Therefore, these condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in our Annual Report on Form 10-K for the year ended December 31, 2013, which was filed with the SEC on March 13, 2014 (“ 2013 Form 10-K ”).

The condensed consolidated balance sheet as of December 31, 2013 , included herein, was derived from the audited financial statements as of that date but does not include all disclosures, including notes required by GAAP .

In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to present fairly the financial positions, results of operations and cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full year 2014 or any future period.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated.

Certain reclassifications have been made to prior period amounts to conform to current period presentation. Such reclassifications have no effect on revenues, income from operations or net income as previously reported.

Use of Estimates

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

Significant Accounting Policies

Our significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements in our 2013 Form 10-K . There have been no significant changes to these policies.

Other Income, Net

Other income, net consisted of the following:



	Three Months ended September 30,						Nine Months ended September 30,
	2014			2013			2014			2013
	(in thousands)
Interest income	$	146		$	113		$	412		$	528
Net realized loss on investments	—			—			(7		)	(60		)
Interest expense	(12		)	(30		)	(62		)	(113		)
Total other income, net	$	134		$	83		$	343		$	355

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Comprehensive Income

Comprehensive income consists of net income and other comprehensive income . Other comprehensive income includes certain changes in equity that are excluded from net income, specifically unrealized gains (losses) on available-for-sale investments. Except for net realized loss on investments which was not significant, there were no reclassifications out of accumulated other comprehensive income that affected net income during the three and nine months ended September 30, 2014 and 2013 .

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board (“ FASB ”) issued Accounting Standards Update (“ ASU ”) No. 2014-09, Revenue from Contracts with Customers (“ ASU 2014-09 ”), which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 also requires significantly expanded disclosures about revenue recognition. ASU 2014-09 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. We are currently evaluating the impact that adoption will have on our consolidated financial statements.

In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ ASU 2014-15 ”), which provides guidance on determining when and how reporting entities must disclose going-concern uncertainties in their financial statements. ASU 2014-15 requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date of issuance of the entity’s financial statements (or within one year after the date on which the financial statements are available to be issued, when applicable). Further, an entity must provide certain disclosures if there is “substantial doubt about the entity’s ability to continue as a going concern.” ASU 2014-15 is effective for annual periods ending after December 15, 2016, and interim periods thereafter; early adoption is permitted. We do not believe that adoption of ASU 2014-15 will have a material impact on our consolidated financial statements.

NOTE 3 — Net Income Per Share of Common Stock

Net income per share of common stock is calculated by dividing net income by the weighted average shares of common stock outstanding during the period. Diluted net income per share of common stock is calculated by dividing net income by the weighted average shares of common stock outstanding and potential shares of common stock during the period. Potential shares of common stock include shares attributable to the assumed exercise of stock options, restricted stock unit awards (“ RSU s”), performance share awards (“ Performance Awards ”) and Employee Stock Purchase Plan (“ ESPP ”) shares using the treasury stock method, if dilutive.

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The components of net income per share of common stock were as follows:



	Three Months ended September 30,				Nine Months ended September 30,
	2014		2013		2014		2013
	(in thousands, except share and per share amounts)
Net income	$	4,055	$	3,360	$	9,193	$	10,958
Basic shares:
Weighted average common shares outstanding	28,007,770		26,681,974		27,657,217		26,407,572
Diluted shares:
Weighted average shares used to compute basic net income per share	28,007,770		26,681,974		27,657,217		26,407,572
Effect of potentially dilutive securities:
Employee stock options, RSUs, Performance Awards and ESPP shares	1,653,441		1,941,118		1,674,945		1,922,949
Weighted average shares used to compute diluted net income per share	29,661,211		28,623,092		29,332,162		28,330,521
Net income per share:
Basic	$	0.14	$	0.13	$	0.33	$	0.41
Diluted	$	0.14	$	0.12	$	0.31	$	0.39

The following potential common shares were excluded from the computation of diluted net income per share, as their effect would have been anti-dilutive:



	Three Months ended September 30,		Nine Months ended September 30,
	2014	2013	2014	2013
Employee stock options and awards	840,161	826,879	914,197	681,394

Performance Awards are included in the diluted shares outstanding for each period if the established performance criteria have been met at the end of the respective periods. However, if none of the required performance criteria have been met for such awards, we include the number of shares that would be issuable if the end of the reporting period were the end of the contingency period. Accordingly, in addition to the employee stock options and awards noted above, 106,250 and 124,300 shares underlying Performance Awards have been excluded from the dilutive shares outstanding for each of the three and nine months ended September 30, 2014 and 2013 , respectively.

NOTE 4 — Financial Instruments and Fair Value Measurements

Fair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified and disclosed in one of the following three categories:

Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities.

Level 2 — Valuations based on other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 — Valuations based on inputs that are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the assets or liabilities.

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The following tables set forth by level within the fair value hierarchy the Company’s financial assets that were accounted for at fair value on a recurring basis, according to the valuation techniques the Company used to determine their values:



	Fair value at		Fair value measurements using inputs considered as
	September 30, 2014		Level 1		Level 2		Level 3
	(in thousands)
Money market funds	$	3,177	$	3,177	$	—	$	—
Certificates of deposit	14,369		—		14,369		—
Corporate notes and obligations	29,463		—		29,463		—
Municipal obligations	3,418		—		3,418		—
U.S. government and government agency obligations	61,082		16,946		44,136		—
	$	111,509	$	20,123	$	91,386	$	—

	Fair value at		Fair value measurements using inputs considered as
	December 31, 2013		Level 1		Level 2		Level 3
	(in thousands)
Money market funds	$	16,431	$	16,431	$	—	$	—
Certificates of deposit	14,920		—		14,920		—
Corporate notes and obligations	26,774		—		26,774		—
Municipal obligations	3,830		—		3,830		—
U.S. government and government agency obligations	60,018		11,428		48,590		—
	$	121,973	$	27,859	$	94,114	$	—

Financial instruments include cash, cash equivalents and investments including investment-grade interest-bearing securities such as money market accounts, certificates of deposit, commercial paper, corporate bonds, municipal and government agency obligations and guaranteed obligations of the U.S. government . We classify our money market funds and U.S. government obligations as Level 1 instruments due to the use of observable market prices for identical securities that are traded in active markets .

When the Company uses observable market prices for identical securities that are traded in less active markets , the Company classifies its marketable financial instruments as Level 2. When observable market prices for identical securities are not available , the Company prices its marketable financial instruments using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments; or pricing models with all significant inputs derived from or corroborated with observable market data. Non-binding market consensus prices are based on the proprietary valuation models of pricing providers. These valuation models incorporate a number of inputs, including non-binding and binding broker quotes; observable market prices for identical or similar securities; and the internal assumptions of pricing providers or brokers that use observable market inputs and, to a lesser degree, unobservable market inputs . The Company corroborates non-binding market consensus prices with observable market data as such data exists .

At September 30, 2014 and December 31, 2013 , the Company did not have any assets or liabilities that were valued using Level 3 inputs. For the three and nine months ended September 30, 2014 and 2013 , there were no transfers of financial instruments among Level 1, Level 2 or Level 3 classifications.

For the three and nine months ended September 30, 2014 the Company recognized interest income from financial instruments of $0.1 million and $0.4 million , respectively. For the three and nine months ended September 30, 2013 the Company recognized interest income from financial instruments of $0.1 million and $0.5 million , respectively. Gross realized gains and gross realized losses from the sale of investments were not significant during the three and nine months ended September 30, 2014 and 2013 .

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The carrying amounts, gross unrealized gains and losses and estimated fair value of cash and cash equivalents and both short and long-term investments consisted of the following:



	September 30, 2014
	Amortized cost		Unrealized gains		Unrealized losses			Carrying or fair value
	(in thousands)
Cash and cash equivalents:
Cash	$	40,682	$	—	$	—		$	40,682
Money market funds	3,177		—		—			3,177
	$	43,859	$	—	$	—		$	43,859
Investments:
Corporate notes and obligations	$	29,472	$	16	$	(25	)	$	29,463
Certificates of deposit	14,372		12		(15		)	14,369
Municipal obligations	3,410		8		—			3,418
U.S. government and government agency obligations	61,115		29		(62		)	61,082
	$	108,369	$	65	$	(102	)	$	108,332

	December 31, 2013
	Amortized cost		Unrealized gains		Unrealized losses			Carrying or fair value
	(in thousands)
Cash and cash equivalents:
Cash	$	14,092	$	—	$	—		$	14,092
Money market funds	16,431		—		—			16,431
U.S. government agency securities	2,939		—		—			2,939
	$	33,462	$	—	$	—		$	33,462
Investments:
Corporate notes and obligations	$	26,770	$	17	$	(13	)	$	26,774
Certificates of deposit	14,945		1		(26		)	14,920
Municipal obligations	3,827		5		(2		)	3,830
U.S. government and government agency obligations	57,102		15		(31		)	57,086
	$	102,644	$	38	$	(72	)	$	102,610

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The following table shows the gross unrealized losses and the related fair values of our investments that have been in a continuous unrealized loss position:



	September 30, 2014
	Less than 12 Months					12 Months or Greater				Total
	Fair Value		Unrealized losses			Fair Value		Unrealized losses		Fair Value		Unrealized losses
	(in thousands)
Corporate notes and obligations	$	11,821	$	(25	)	$	—	$	—	$	11,821	$	(25	)
Certificates of deposit	4,803		(15		)	—		—		4,803		(15		)
U.S. government and government agency obligations	26,509		(62		)	—		—		26,509		(62		)
	$	43,133	$	(102	)	$	—	$	—	$	43,133	$	(102	)

	December 31, 2013
	Less than 12 Months					12 Months or Greater				Total
	Fair Value		Unrealized losses			Fair Value		Unrealized losses		Fair Value		Unrealized losses
	(in thousands)
Corporate notes and obligations	$	6,403	$	(13	)	$	—	$	—	$	6,403	$	(13	)
Certificates of deposit	12,714		(26		)	—		—		12,714		(26		)
Municipal obligations	552		(2		)	—		—		552		(2		)
U.S. government and government agency obligations	24,975		(31		)	—		—		24,975		(31		)
	$	44,644	$	(72	)	$	—	$	—	$	44,644	$	(72	)

The following table summarizes the maturities of the Company’s investments at September 30, 2014 :



	Carrying or fair value
	(in thousands)
Remainder of 2014	$	11,281
2015	46,926
2016	34,700
2017	15,425
Total	$	108,332

Actual maturities may differ from the contractual maturities because borrowers may have the right to call or prepay certain obligations.

NOTE 5 — Acquisitions

MortgageCEO

On January 15, 2014, the Company acquired substantially all the assets of ARG Interactive, LLC (dba MortgageCEO ), a software as a service (“ SaaS ”) company specializing in customer relationship management and marketing solutions for the residential mortgage industry . The Company acquired the MortgageCEO business in order to add functionality to its product offerings. The transaction was accounted for as a business combination and, accordingly, the total purchase price was allocated to the assets acquired based on their respective fair values. The Company expensed all transactions costs, which were insignificant, in the period in which they were incurred.

The total purchase price was $5.0 million , of which $4.5 million was paid at the time of closing. The remaining $0.5 million (the “holdback funds”) has been retained from the purchase price to cover working capital adjustments and any indemnity claims. Any unused portion of the holdback funds will be paid on July 15, 2015. The liability associated with the holdback funds is recorded to Acquisition holdback, net of discount in the Balance Sheet.

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The allocation of the consideration of $5.0 million to the identifiable tangible and intangible assets acquired and liabilities assumed under the purchase method of accounting, based on their estimated fair values as of the acquisition date, is summarized in the following table (in thousands):



Amortizable intangible assets:
Developed technology	$	2,927
Customer relationships	643
Trade name	41
Goodwill	1,409
Total purchase price	$	5,020

Developed technology consists of the technology underlying MortgageCEO ’s existing products. The value of the developed technology was determined by discounting the estimated net future cash flows of these products. The Company is amortizing the developed technology on a straight-line basis over an estimated life of 5 years .

Customer relationships relate to the Company’s ability to sell existing and future versions of the Company’s products and services to existing MortgageCEO customers. The fair value of the customer relationships was determined by discounting the estimated future net cash flows from future sales to existing customers. The Company is amortizing customer relationships on a straight-line basis over an estimated life of 5 years .

Trade name represents the right to use the MortgageCEO name. The fair value of the trade name was determined by estimating a benefit from owning the asset rather than paying a royalty to a third party for the use of the asset. The Company is amortizing the asset on a straight-line basis over an estimated life of 2 years .

Goodwill represents the excess of the purchase price over the fair value of the identifiable assets acquired. Among the factors that contributed to a purchase price in excess of the fair value of the identifiable assets was the acquisition of an assembled workforce and synergies between the Company’s products and MortgageCEO ’s products.

MortgageCEO ’s results of operations since the closing date of January 15, 2014 have been included in the Company’s condensed consolidated statements of comprehensive income for the three and nine months ended September 30, 2014 . If the acquisition had occurred as of January 1, 2014, the revenue and earnings of the combined entity for the current reporting period would have been approximately the same. MortgageCEO ’s revenues and earnings for the three and nine months ended September 30, 2014 and 2013 were not significant.

AllRegs

On October 1, 2014 , the Company acquired substantially all the assets of Mortgage Resource Center, Inc. (dba AllRegs ), a provider of investor guideline and federal and state statute and regulation compliance information, forms, content and business intelligence for the mortgage lending industry . The Company paid $28.2 million in cash, of which $3.0 million has been placed in escrow to cover closing capital settlement adjustments and any indemnity claims. Any amount remaining in escrow 18 months after the date of acquisition will be paid to the seller. The transaction will be accounted for as a business combination and the total purchase price will be allocated to the assets acquired and liabilities assumed based on their respective fair values.

NOTE 6 — Goodwill and Other Intangible Assets

The changes in the carrying value of goodwill during the nine months ended September 30, 2014 were as follows (in thousands):



Balance at January 1, 2014	$	51,051
Addition: MortgageCEO acquisition	1,409
Balance at September 30, 2014	$	52,460

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Other intangible assets, net, consisted of the following:



	September 30, 2014
	Gross carrying amount		Accumulated amortization			Net intangibles		Weighted Average Remaining Useful Life
	(in thousands)							(in years)
Developed technology	$	4,801	$	(2,161	)	$	2,640	4.2
Customer relationships	7,943		(3,501		)	4,442		4.5
Trade names	301		(257		)	44		0.9
	$	13,045	$	(5,919	)	$	7,126	4.3


	December 31, 2013
	Gross carrying amount		Accumulated amortization			Net intangibles		Weighted Average Remaining Useful Life
	(in thousands)							(in years)
Developed technology	$	1,874	$	(1,500	)	$	374	1.2
Customer relationships	7,300		(2,653		)	4,647		5.1
Trade names	260		(192		)	68		1.0
	$	9,434	$	(4,345	)	$	5,089	4.8

Amortization expense associated with other intangible assets was $0.5 million and $1.6 million for the three and nine months ended September 30, 2014 , respectively, and $0.4 million and $1.1 million for the three and nine months ended September 30, 2013 , respectively. There was no impairment of intangible assets during the three and nine months ended September 30, 2014 and 2013 .

Minimum future amortization expense for other intangible assets at September 30, 2014 was as follows:



	Amortization
	(in thousands)
Remainder of fiscal 2014	$	535
2015	1,767
2016	1,642
2017	1,641
2018	980
2019	295
Thereafter	266
	$	7,126

NOTE 7 — Income Taxes

We compute our interim provision for income taxes by applying the estimated annual effective tax rate to the year-to-date income from recurring operations and adjust the provision for discrete tax items recorded in the period. We evaluate and update our estimated annual effective income tax rate on a quarterly basis. The estimated annual effective tax rate as of September 30, 2014 and 2013 was 47.0% and 35.3% , respectively.

The difference between the federal statutory rate of 35% and our estimated effective tax rate for the three and nine months ended September 30, 2014 was primarily due to our state income tax provision and non-deductible stock-based compensation expenses and limitations of tax deductions under Internal Revenue Code (“ IRC ”) Section 162(m) for executive compensation, offset by the domestic production activities deduction under IRC Section 199. Our annual estimated effective tax rate fluctuates quarterly due to the impact of stock based compensation deductions on the IRC Section 199 deduction.

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The Company accounts for stock-based compensation pursuant to ASC 718 and uses ASC 740 ordering when determining when excess tax benefits have been realized. The Company realized a tax benefit of $3.1 million and $5.3 million million for the three and nine months ended September 30, 2014 related to the exercise of employee stock options and the vesting of RSUs and Performance Awards. The net income tax benefit in excess of the expenses recorded for financial reporting purposes has been recorded as an increase to additional paid-in capital and is reflected as a financing cash inflow in the condensed consolidated statements of cash flows.

Our tax positions are subject to income tax audits by multiple tax jurisdictions. We account for uncertain tax positions and believe that we have provided adequate reserves for our unrecognized tax benefits for all tax years still open for assessment. We also believe that we do not have any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months.

We have a policy to classify accrued interest and penalties associated with uncertain tax positions together with the related liability in the balance sheet, and to include the expenses incurred related to such accruals in the provision for income taxes. During the nine months ended September 30, 2014 , we included interest and penalties of $63,000 in the provision for income taxes. There were no interest or penalties included in the provision for income taxes during the nine months ended September 30, 2013 .

NOTE 8 — Commitments and Contingencies

Leases

In January 2014, we entered into a lease agreement to finance the purchase of computer equipment with payments of $50,000 per month over the 36 month term of the agreement. In April 2014, the Company entered into an agreement to lease office space in Parsippany, New Jersey, with payments ranging from $2,000 per month to $5,000 per month over the 66 month term of the lease agreement. In May 2014, we entered into an agreement to lease office space in San Diego, California, with payments ranging from $11,000 per month to $12,000 per month over the 39 month term of the lease agreement. In May 2014, we entered into an amendment to our existing lease of office space in Calabasas, California, in which we will make payments of $2,000 per month over the five month term of the lease arrangement in return for expanded office space. In July 2014, we entered into a lease agreement for office space in Pleasanton, California that will serve as our future corporate headquarters. The term of the lease commences on April 1, 2015 and has an initial term of 117 months ending December 31, 2024, with payments ranging from $264,000 per month to $344,000 per month.

Legal Proceedings

On March 25, 2011, Industry Access Incorporated (“Industry Access”) filed a patent infringement lawsuit against the Company and another defendant in the U.S. District Court for the Central District of California, alleging, among other things, that certain aspects of our Encompass loan management software system and related operations infringe U.S. Patent No. 7,769,681. On March 19, 2013, Industry Access filed a second patent infringement lawsuit against the Company in the U.S. District Court for the Central District of California, alleging, among other things, that our Encompass loan management software system, including the Encompass software, the Ellie Mae Network, Encompass Originator, Encompass Compliance Service, Encompass CenterWise, Encompass Electronic Document Management, Encompass Docs Solution and Encompass Product and Pricing Service, infringes U.S. Patent Nos. 8,117,120 and 8,145,563, which are continuations of U.S. Patent No. 7,769,681. In both matters, Industry Access sought unspecified damages, including enhanced damages for willful infringement and reasonable attorneys’ fees.

On September 12, 2013, we filed a motion to relate and consolidate the two Industry Access lawsuits, which the court granted on October 31, 2013. The Court held a claim construction hearing on June 2, 2014, and issued a claim construction order on July 9, 2014. On September 29, 2014, we settled all related matters with Industry Access, which settlement is reflected in our financial results for the three and nine months ended September 30, 2014 .

We are also subject to various other legal proceedings and claims arising in the ordinary course of business. With respect to these matters, we cannot predict the ultimate outcome of these legal proceedings and the amounts and ranges of potential damages associated with such proceedings cannot be estimated or assessed. An unfavorable outcome of these could materially adversely affect our business, financial condition and results of operations.

NOTE 9 — Stock Incentive Plans

We recognize stock-based compensation related to awards granted under our 2009 Stock Option and Incentive Plan (the “ 2009 Plan ”), 2011 Equity Incentive Award Plan (the “ 2011 Plan ”) and ESPP .

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Total stock-based compensation expense recognized consisted of:



	Three Months ended September 30,				Nine Months ended September 30,
	2014		2013		2014		2013
	(in thousands)
Cost of revenues	$	441	$	215	$	1,065	$	485
Sales and marketing	523		322		1,403		709
Research and development	1,038		948		2,610		2,575
General and administrative	1,326		1,902		5,738		7,125
	$	3,328	$	3,387	$	10,816	$	10,894

Capitalized stock-based compensation for the three and nine months ended September 30, 2014 was $140,000 and $350,000 , respectively. Capitalized stock-based compensation for the three and nine months ended September 30, 2013 was $52,000 and $91,000 , respectively.

2009 Stock Option and Incentive Plan and 2011 Equity Incentive Award Plan

Stock Options

The following table summarizes our stock option activity under the 2009 Plan and 2011 Plan :



	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
					(in years)	(in thousands)
Outstanding at January 1, 2014	3,284,672		$	11.17
Granted	730,019		$	26.24
Exercised	(742,467	)	$	7.24
Forfeited or expired	(69,184	)	$	22.20
Outstanding at September 30, 2014	3,203,040		$	15.27	7.23	$	55,544
Ending vested and expected to vest at September 30, 2014	3,045,438		$	14.86	7.14	$	54,076
Exercisable at September 30, 2014	1,629,483		$	10.00	5.92	$	36,827

Stock options granted during the nine months ended September 30, 2014 were made under the 2011 Plan. There were no grants under the 2009 Plan during the nine months ended September 30, 2014 .

Intrinsic value of an option is the difference between the fair value of our common stock at the time of exercise and the exercise price to be paid. The aggregate intrinsic value for options outstanding at September 30, 2014 in the table above represents the total intrinsic value, based on our closing stock price of $32.60 as of September 30, 2014 , which would have been received by option holders had all option holders exercised their in-the-money options as of that date. Options outstanding that are expected to vest are net of estimated future option forfeitures.

Following is additional information pertaining to our stock option activity:



	Three Months ended September 30,				Nine Months ended September 30,
	2014		2013		2014		2013
	(in thousands, except per option amounts)
Weighted average fair value per option granted	$	16.82	$	14.15	$	13.29	$	11.50
Grant-date fair value of options vested	$	1,400	$	1,290	$	4,846	$	3,328
Intrinsic value of options exercised	$	6,996	$	8,471	$	17,058	$	14,867
Proceeds received from options exercised	$	2,505	$	2,378	$	5,378	$	3,420

As of September 30, 2014 , total unrecognized stock-based compensation expense related to unvested stock options, adjusted for estimated forfeitures, was $13.4 million and is expected to be recognized over a weighted average period of 2.5 years.

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Restricted Stock Units and Performance Awards

In August 2012 , the Company granted 147,000 Performance Awards (“ 2012 Performance Award s”) to designated participants under the 2011 Plan . The 2012 Performance Award s represented the right to receive shares of the Company’s common stock upon achievement of certain performance goals during the performance period of July 1, 2012 through June 30, 2013. In August 2013 , after the Company filed with the SEC its Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, the Compensation Committee determined the level of achievement of the performance goals (the “ Determination Date ”), at which time the designated participants earned an aggregate of 588,000 shares of common stock. The earned shares were issued in August 2013, with 25% of the shares vested upon issuance and the remaining shares to vest 25% on each of the first three anniversaries of the Determination Date , subject to the continuous employment of the participant through such dates.

In February 2013 , the Company granted 113,000 Performance Awards (“ 2013 Performance Award s”) to designated participants under the 2011 Plan . The 2013 Performance Award s represent the right to receive shares of the Company’s common stock upon achievement of certain performance goals during the performance period of January 1, 2013 through December 31, 2013. In March 2014 , after the Company filed with the SEC its Annual Report on Form 10-K for the year ended December 31, 2013, the Compensation Committee determined the level of achievement of the performance goals (the “ 2013 Award Determination Date ”), at which time it was determined that the designated participants had earned an aggregate of 124,300 shares of common stock. The earned shares were issued in April 2014 , with 25% of the shares vested upon issuance and the remaining shares to vest 25% on each of the first three anniversaries of the 2013 Award Determination Date , subject to the continuous employment of the participant through such dates.

In February 2014 , the Company granted 62,500 Performance Awards (“ 2014 Performance Award s”) to designated participants under the 2011 Plan . The 2014 Performance Award s represent the right to receive shares of the Company’s common stock upon achievement of certain performance goals during the performance period of January 1, 2014 through December 31, 2014. After the Company files with the SEC its Annual Report on Form 10-K for the year ending December 31, 2014, the Compensation Committee will determine the level of achievement of the performance goals (the “ 2014 Award Determination Date ”), at which time the designated participants may earn between zero and 2.5 shares of common stock for each 2014 Performance Award . Shares of common stock earned, if any, will be issued after the 2014 Award Determination Date with 25% of the shares to vest upon issuance and the remaining shares to vest 25% on each of the first three anniversaries of the 2014 Award Determination Date , subject to the continuous employment of the participant through such dates. As of September 30, 2014 , we expect that each award will convert to 1.7 shares of common stock on the 2014 Award Determination Date .

The following table summarizes our RSU and Performance Award activity:



	RSUs				Performance Awards
	Number of Shares		Weighted Average Grant Date Fair Value Per Share		Number of Shares		Weighted Average Grant Date Fair Value Per Share

Outstanding at January 1, 2014	257,378		$	23.10	565,300		$	24.43
Granted	449,948		26.82		106,250		24.93
Released	(67,118	)	22.76		(178,076	)	24.71
Forfeited or expired	(34,193	)	25.57		(56,800	)	25.00
Outstanding at September 30, 2014	606,015		$	25.76	436,674		$	26.14
Ending vested and expected to vest at September 30, 2014	506,642				436,674

RSU s and Performance Awards that are expected to vest are net of estimated future forfeitures. RSU s released during the nine months ended September 30, 2014 and 2013 had an aggregate intrinsic value of $1.9 million and $0.3 million , respectively and had an aggregate grant-date fair value of $1.5 million and $175 thousand , respectively. Performance Awards released during the nine months ended September 30, 2014 and 2013 had an aggregate intrinsic value of $5.9 million and $4.5 million , respectively and had an aggregate grant-date fair value of $4.4 million and $3.8 million , respectively. The number of RSU s released includes shares that we withheld on behalf of employees to satisfy the minimum statutory tax withholding requirements.

As of September 30, 2014 , total unrecognized compensation expense related to unvested RSU s and Performance Awards was $16.5 million and is expected to be recognized over a weighted average period of 3.1 years.

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Employee Stock Purchase Plan

For the nine months ended September 30, 2014 and 2013 , employees purchased 102,111 shares and 109,270 shares, respectively, under the ESPP for a total of $2.6 million and $1.9 million , respectively. As of September 30, 2014 , unrecognized compensation expense related to the current ESPP period, which ends on February 27, 2014 , was $0.4 million and is expected to be recognized over five months.

Valuation Information

The fair value of stock options and stock purchase rights granted under the 2009 Plan , the 2011 Plan and the ESPP were estimated at the date of grant using the Black-Scholes option valuation model with the following weighted average assumptions:



	Three Months ended September 30,				Nine Months ended September 30,
	2014		2013		2014		2013
Stock option plans:
Risk-free interest rate	1.96	%	1.72	%	1.88	%	1.08	%
Expected life of options (in years)	6.08		6.08		5.97		6.08
Expected dividend yield	—	%	—	%	—	%	—	%
Volatility	52	%	52	%	52	%	52	%
Employee Stock Purchase Plan:
Risk-free interest rate	0.05	%	0.13	%	0.05	%	0.13	%
Expected life of options (in years)	0.50		0.50		0.50		0.50
Expected dividend yield	—	%	—	%	—	%	—	%
Volatility	38	%	36	%	38	%	37	%

Common Stock

The following numbers of shares of common stock were reserved and available for future issuance at September 30, 2014 :



	Reserved Shares
Options and awards outstanding under stock incentive plans	4,245,729
Shares available for future grant under the stock incentive plan	2,412,952
Shares available under the Employee Stock Purchase Plan	1,026,521
Total	7,685,202

In February 2014 , 276,240 additional shares were reserved under the ESPP and 1,381,201 additional shares were reserved under the 2011 Plan , pursuant to the automatic increase provisions in each plan.

NOTE 10 — Segment Information

We operate in one industry—mortgage-related software and services. Our chief operating decision makers are our chief executive officer and president and chief operating officer, who make decisions about resource allocation and review financial information presented on a consolidated basis. Accordingly, we have determined that we have a single reporting segment and operating unit structure, specifically technology-enabled solutions to help streamline and automate the residential mortgage origination process for our network participants.

We are organized primarily on the basis of service lines. Supplemental disclosure of revenues by type is as follows:



	Three Months ended September 30,				Nine Months ended September 30,
	2014		2013		2014		2013
	(in thousands)
On-demand revenues	$	41,131	$	30,924	$	109,373	$	90,244
On-premise revenues	1,667		2,082		5,587		7,887
	$	42,798	$	33,006	$	114,960	$	98,131

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In the notes to our condensed consolidated financial statements on our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2013 , we included all revenues from professional services in on-premise revenues in our disclosure related to revenues by type. For the quarterly period ended September 30, 2014 , we included professional services revenues in either on-demand revenues or on-premise revenues as determined by the related service or software license revenue . We have retrospectively reclassified our disclosure of on-demand and on-premise revenues for the three and nine months ended September 30, 2013 in order to conform to the current presentation .

ITEM 2—MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Quarterly Report on Form 10-Q, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These statements relate to future events or our future financial performance. Forward-looking statements may include words such as “may,” “will,” “should,” “expect,” “plan,” “intend,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue” or other wording indicating future results or expectations. Forward-looking statements are subject to risks and uncertainties and actual events or results may differ materially. Factors that could cause our actual results to differ materially include, but are not limited to, those discussed under “Risk Factors” in this report. We also face risks and uncertainties relating to our business including: outages and other system interruptions in the Ellie Mae Network service, our hosted Encompass software and any related impact on our reputation; fluctuations in mortgage lending volume; the volume of mortgages originated by our Encompass users; the impact of changes in mortgage interest rates; changes in mortgage originator, lender, investor or service provider behavior and any related impact on the residential mortgage industry; our ability to accurately forecast revenues and appropriately plan our expenses; the number of Encompass users, including contracted SaaS Encompass users; the effectiveness of our marketing and sales efforts to attract new and retain existing SaaS Encompass users and Ellie Mae Network participants; transaction volume on the Ellie Mae Network; the level of demand for our Encompass Docs Solution and other services we offer; the level of adoption of our Total Quality Loan, or TQL, program; the timing of the introduction and acceptance of new Ellie Mae Network offerings and new on-demand services; our ability to protect the confidential information of our Encompass users, Ellie Mae Network participants and their respective customers; customer renewal and upgrade rates; the increased time, cost and complexity that may be required to successfully target larger customers; our ability to scale our operations and increase productivity to support our existing and growing customer base; our ability to successfully manage our growth and any future acquisitions of businesses, solutions or technologies; the risk that the anticipated benefits and growth prospects expected from the AllRegs acquisition may not be fully realized or may take longer to realize than expected; the timing of future acquisitions of businesses, solutions or technologies and new product launches; the impact of uncertain domestic and worldwide economic conditions, including the resulting effect on residential mortgage volumes; changes in government regulation affecting Ellie Mae Network participants or our business, and potential structural changes in the U.S. residential mortgage industry; the attraction and retention of qualified employees and key personnel; our ability to compete effectively in a highly competitive market and adapt to technological changes; our ability to enhance the features and functionality of our Encompass software and the Ellie Mae Network; our ability to protect our intellectual property, including our proprietary Encompass software; costs associated with defending intellectual property infringement and other claims; our ability to maintain effective internal controls and the risk of natural and man-made catastrophic interruptions to our business. We undertake no obligation to revise or update any forward-looking statements to reflect any event or circumstance that arises after the date of this report, or to conform such statements to actual results or changes in our expectations.

This discussion should be read in conjunction with the condensed consolidated financial statements and notes presented in this Quarterly Report on Form 10-Q and the consolidated financial statements and notes in our Annual Report on Form 10-K for the year ended December 31, 2013 , or 2013 Form 10-K .

Overview

We are a leading provider of innovative on-demand software solutions and services for the residential mortgage industry in the United States . Our end-to-end Encompass mortgage management solution provides one system of record that allows banks, credit unions and mortgage lenders to originate and fund mortgages and improve compliance, loan quality and efficiency .

Mortgage originators use our Encompass software, a comprehensive operating system that handles key business and management functions involved in running a mortgage origination business. Mortgage originators use Encompass as a single tool for loan processing, marketing, customer communication and to interact electronically with lenders, investors and service providers over the Ellie Mae Network. Our software also enables enforcement of rules and business practices designed to ensure loan quality, adherence to processing standards and regulatory compliance.

We also offer Encompass users a variety of other on-demand software services, including: Encompass Docs Solution , which automatically prepares the disclosure and closing documents necessary to fund a mortgage; Encompass CenterWise , a bundled

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offering of electronic document management, or EDM , and websites used for customer relationship management; TQL , which offers a suite of fraud detection, valuation, validation and risk analysis services using streamlined workflows and processing rules; Encompass Compliance Service , which automatically checks for compliance with federal, state and local regulations throughout the origination process; tax transcript services which provide income verification capability to our customers; Encompass Product and Pricing Service, which allows Encompass users to compare loans offered by different lenders and investors to determine appropriate mortgage programs available to a particular borrower, Encompass Flood Service, which allows Encompass users to order and transfer flood zone certifications, Encompass CRM , which offers a suite of sales and marketing tools that allows users to manage contacts, leads and marketing campaigns and Encompass Consumer Direct , a web-based tool that allows borrowers to complete a loan application online. By the nature of our on-demand service, even with our robust security monitoring and detection systems, we cannot guarantee that our security measures will prevent security breaches and we may need to expend significant resources to protect against and remedy any potential security breaches and their consequences.

The Ellie Mae Network electronically connects the approximately 104,000 mortgage professionals using Encompass to the broad array of mortgage lenders, investors and third-party service providers integral to the origination and funding of residential mortgages. During the mortgage origination process, mortgage originators may order various services through the Ellie Mae Network , including credit reports, product eligibility and pricing services, automated underwriting services, appraisals, title reports, insurance, flood certifications and flood insurance, compliance reviews, fraud detection, document preparation and verification of income, identity and employment. Mortgage originators can also initiate secure data transmission to and from lenders and investors.

On October 1, 2014 , we acquired substantially all the assets of AllRegs , a provider of investor guideline and federal and state statute and regulation compliance information, forms, content and business intelligence for the mortgage lending industry . AllRegs product offerings include education and training, loan product and guideline data and analytics, and an online reference library that includes investor underwriting and insuring guidelines, federal and state statutes and regulations, Mortgage Mentor “how to” guides and plain language interpretation and analysis. We intend to include the financial results of AllRegs in our financial results starting in the fourth quarter of 2014. The write-down of acquired deferred revenue in accordance with applicable purchase accounting rules will result in lower revenues from the AllRegs business over the next three quarters. The assumption of AllRegs operating costs and the amortization of acquired intangible assets will contribute to our operating expenses for the foreseeable future.

We were formed as a California corporation in 1997 and reincorporated in Delaware in November 2009. From inception through 2000, we developed consumer-facing websites and initial versions of our network. We launched our first transaction platform in late 2000, the present version of which is the Ellie Mae Network .

Our revenues consist of on-demand and on-premise revenues. On-demand revenues are generated primarily from software subscriptions we host that customers access through the Internet, including customers who pay fees based on the number of loans they fund, or success basis, subject to monthly base fees, which we refer to as Success-Based Pricing , and related professional services such as consulting, implementation and training services. On-demand revenues also include software services that are sold transactionally and Ellie Mae Network transaction fees paid by lender-investors, service providers and certain government-sponsored entities participating on the Ellie Mae Network . On-premise revenues are generated from customer-hosted software licenses and related professional services and maintenance services.

Our on-demand revenues typically, but not always, track the seasonality of the residential mortgage industry, with increased activity in the second and third quarters and reduced activity in the first and fourth quarters as home buyers tend to purchase their homes during the spring and summer in order to move to a new home before the start of the school year. Mortgage volumes are also impacted by other factors such as interest rate fluctuations, home sale activity and general economic conditions, which can lead to departures from the typical seasonal pattern. For example, increases in mortgage interest rates could reduce the volume of new mortgages originated and, in particular, the volume of mortgage refinancings. We currently estimate that approximately 30% to 40% of our revenues have some sensitivity to volume .

We are investing aggressively in initiatives that we believe will help us continue to grow our business, improve our products and services and strengthen our competitive advantage while bringing sustainable, long-term value to our customers. During 2014, we increased our investments in our sales and client services capabilities, in research and development and in technology infrastructure to support our user additions and overall business growth. These investments include expanding our talent across the organization by hiring additional personnel. We expect these costs will be incurred throughout the remainder of 2014 and beyond.

On March 31, 2014, we experienced a system outage that prevented some of our customers from being able to access certain of our services until the system was restored on April 1, 2014. In responding to this outage, we engaged forensics experts and other consultants, resulting in significant forensics and consulting fees incurred in the second and third quarters of 2014. We have increased our investments to bolster our infrastructure and enhance our system capacity, reliability and security , which costs we expect will be incurred throughout the remainder of 2014 and beyond.

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In addition to our internal initiatives, our business strategy has evolved to address recent industry trends, including:


•	expected lower lending volume;


•	increased quality standards imposed by regulators, lenders and investors;


•	increased regulation affecting lenders and investors;


•	greater focus by our customers on operational efficiencies; and


•	customers adopting multi-channel strategies

We are responding to these trends as follows:

Expected lower lending volume. Mortgage lending volume has been significantly lower in 2014 than in 2013 and is expected to stay relatively flat during 2015, as forecasted by Fannie Mae, Freddie Mac and the Mortgage Bankers Association. Since late 2009, we have focused our marketing and sales efforts on our on-demand SaaS Encompass offering, and particularly our SaaS Encompass Success-Based Pricing model, in contrast to our on-premise license model. In our on-demand SaaS Encompass offering, the customer does not pay the significant up-front licensing fee associated with our license model, which we believe is particularly attractive in the present climate of the residential mortgage origination market. Our SaaS Encompass Success-Based Pricing model builds on this value proposition by aligning customers’ payments for our software solutions with their own receipts of revenues . Our focus on our SaaS Encompass offering is important in light of lower lending volumes because we typically generate greater revenues per user through our on-demand SaaS Encompass offering than through our on-premise license offering.

We are also focusing on increasing use of our Ellie Mae Network offerings and our other services, which were introduced from late 2009 through late 2011. These offerings include our TQL program, Encompass Compliance Service , Encompass Product and Pricing Service , Encompass Docs Solution , Encompass 4506-T Service , Encompass CRM and the service offerings obtained in the AllRegs acquisition. During the nine months ended September 30, 2014 and 2013 , Encompass users employed the Ellie Mae Network to process on average approximately six transactions per loan file. By continuing to enhance our service offerings and encouraging providers of settlement services to deliver their services electronically through the Ellie Mae Network , we will continue to build value for our customers while increasing the number of transactions for which the Ellie Mae Network is used.

Increased quality standards imposed by regulators, lenders and investors. Encompass is designed to automate and streamline the process of originating mortgages to, among other things, satisfy increased quality requirements of investors. Relevant features of Encompass include enabling customers’ management to impose processing rules and formats, and providing milestone and process reminders, automated population of forms with accurate data, and accurate and automated transmission of loan files and data from originators to investors and lenders. Our TQL program is designed to further enhance the quality, compliance and saleability of loans that are originated through Encompass. Additionally, TQL is intended to reduce the opportunities for errors in the process of transferring information from originator to investor and give investors confidence in the accuracy and regulatory compliance of the information that is underlying loan files.

In response to the increased quality standards and compliance mandates affecting the industry , we expect an increased number of mortgage lenders to assess new platform options and replace their legacy systems . We have increased the size of our customer acquisition, implementation and support teams by approximately 69% from 154 employees on December 31, 2012 to 261 employees on September 30, 2014 in order to address anticipated demand for our software solutions .

Increased regulation affecting lenders and investors. Regulatory reforms have significantly increased the complexity and importance of regulatory compliance. We devote considerable resources to continually upgrading software to help customers address regulatory changes. We offer Encompass Compliance Service, which automatically checks loan files for compliance with the myriad of federal, state and local regulations and alerts users to possible violations of these regulations. In addition, we have a staff of attorneys and work with compliance experts who help assure that documents prepared using our software and the processes recommended by the Encompass workflow comply with applicable rules and regulations. We believe we are well-positioned to help our customers meet additional requirements from the Dodd-Frank Wall Street Reform and Consumer Protection Act, or Dodd-Frank Act, that became effective in January 2014. Our Ability-to-Repay, or ATR , / Qualified Mortgage, or QM , functionality is designed to allow our customers to document their compliance with the Consumer Financial Protection Bureau, or CFPB ’s ATR / QM Final Rule that applies to the majority of residential mortgage loan originations in the United States. In addition, we will be making updates to certain of our products to comply with the TILA-RESPA Integrated Disclosure rule changes which take effect in August 2015 . We believe we are also well-positioned to help our customers meet future Dodd-Frank Act requirements as they are published and become effective.

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Greater focus on operational efficiencies. Mortgage originators experienced a $2,263 increase in the average total production cost per loan, from $3,685 in 2009 to $5,948 in 2013 ¹ . During the second quarter of 2014, the average total production cost per loan was $6,932, ² and we expect costs to continue to be a significant consideration for mortgage originators due to continued increased regulation and heightened quality standards. By automating many of the functions of mortgage origination, we enable our users to comply with regulations and process quality loans more efficiently and effectively. This reduces the cost of originating a loan and lowers the risk of buy back demands from investors resulting from poorly originated or documented loans and/or loans that fail to comply with applicable regulations. We continually address the changing needs of our customers by developing and enhancing tools to allow for simplified regulatory compliance, increased availability of information, and enhanced system functionality and performance.

With an eye towards providing customers with ever-greater tools to enhance efficiency, we will continue to develop new service offerings through the Ellie Mae Network and pursue adoption of our services through initiatives such as our TQL program. By integrating and expanding our current and new services, we will provide a more comprehensive benefit to our users.

In addition to providing efficiency-enhancing solutions, delivery of our Encompass software in an on-demand SaaS environment provides customers with the added benefits of lower up front implementation costs and reduced need for an infrastructure of servers, storage and network devices as well as providing access to the most current release of an application, periodic upgrades and regulatory updates.

Customers adopting multi-channel strategies. Customers are developing multi-channel strategies beyond a single retail, correspondent or wholesale mortgage lending channel in order to grow their businesses. The requirements of these different channels vary and in order to maintain a single operating system, customers must use a robust system with customizable functionality. Encompass includes support for multi-channel workflows, allowing our customers to drive efficiencies and boost productivity by creating distinct workflows for each channel that map to our customers’ business needs. Encompass users can customize workflows based on channel, loan purpose or specific loan criteria - all of which can vary between lending channels. Additionally, Encompass Consumer Direct gives our customers the ability to originate loans directly from borrowers by offering an online loan application that can be accessed by anyone with a web browser.

Acquisition Strategy

Our industry is highly fragmented, and we believe there are strategic opportunities available to acquire competing software companies or software providers that offer related mortgage origination functionality that will complement and increase the attractiveness of Encompass . For example, in October 1, 2014 , we acquired substantially all the assets of Mortgage Resource Center, Inc. (dba AllRegs ), or AllRegs , a provider of investor guideline and federal and state statute and regulation compliance information, forms, content and business intelligence for the mortgage lending industry . In January 2014 , we acquired substantially all the assets of ARG Interactive, LLC (dba MortgageCEO ), or MortgageCEO , a SaaS company specializing in customer relationship management and marketing solutions for the residential mortgage industry . We intend to continue pursuing additional strategic acquisitions .

Operating Metrics

We use certain operational metrics to evaluate our business, determine allocation of our resources and make decisions regarding corporate strategy. We focus on these metrics to determine our success in leveraging our user base to increase our revenues and to gauge the degree of our market penetration.

These metrics are defined below.

Contracted revenues . Contracted revenues are those revenues that are fixed by the terms of a contract and are not affected by fluctuations in mortgage origination volume. These revenues consist of the base fee portion of success-based SaaS Encompass revenues, monthly per-user subscription SaaS Encompass revenues, professional services revenues, on-premise revenues, and subscription revenues paid for products other than Encompass.

SaaS Encompass revenues . SaaS Encompass revenues are those revenues earned from the customer’s usage of the SaaS version of Encompass. These revenues consist of success-based SaaS Encompass revenues and subscription-based SaaS Encompass revenues.

________________



1		Mortgage Bankers Association, Annual Mortgage Bankers Performance Report 2013 Data, Net Loan Production Income and Expense, $ per loan, Copyright May 2014.
2		Mortgage Bankers Association, Independent Mortgage Bankers Profitable in the Second Quarter of 2014 , August 26, 2014

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Active Encompass users. An active Encompass user is a mortgage origination professional who has used Encompass at least once within a 90-day period preceding the measurement date. An Encompass user is a mortgage origination professional working at an Encompass mortgage lender, such as a mortgage bank, commercial bank, thrift or credit union, which sources and funds loans and generally sells these funded loans to investors; or a mortgage brokerage, which typically processes and submits loan files to a mortgage lender or mega lender that funds the loan.

Contracted SaaS users . A contracted SaaS user is a mortgage origination professional who has a license to use SaaS Encompass and has an obligation to pay for this license, but who is not necessarily an active user.

Active SaaS Encompass users. An active SaaS Encompass user is a mortgage origination professional who has used SaaS Encompass at least once within a 90-day period preceding the measurement date.

Average active Encompass users. A verage active Encompass users during a period is calculated by averaging the monthly active Encompass users during a period.

Average active SaaS Encompass users. Average active SaaS Encompass users during a period is calculated by averaging the monthly active SaaS Encompass users during a period.

Revenue per average active Encompass user . Revenue per average active Encompass user is calculated by dividing total revenues by average active Encompass users during a period.

The following table shows these operating metrics as of and for the three and nine months ended September 30, 2014 and 2013 :



	Three Months ended September 30,						Nine Months ended September 30,
	2014			2013			2014			2013
Revenues (in thousands):
Total revenues	$	42,798		$	33,006		$	114,960		$	98,131
Total contracted revenues	$	25,820		$	18,424		$	72,654		$	50,602
Total SaaS Encompass revenues	$	26,470		$	20,784		$	70,245		$	56,827
Users at end of period:
Contracted SaaS users	116,405			87,294			116,405			87,294
Active Encompass users	104,146			93,577			104,146			93,577
Active SaaS Encompass users	78,847			61,156			78,847			61,156
Active SaaS Encompass users as a percentage of active Encompass users	76		%	65		%	76		%	65		%
Active SaaS Encompass users as a percentage of contracted SaaS users	68		%	70		%	68		%	70		%
Average users during period:
Active Encompass users	102,249			92,064			97,807			85,450
Active SaaS Encompass users	76,520			59,560			71,041			52,935
Active SaaS Encompass users as a percentage of active Encompass users	75		%	65		%	73		%	62		%
Revenue per average user during period:
Revenue per average active Encompass user	$	419		$	359		$	1,175		$	1,148

Basis of Presentation

General

Our consolidated financial statements include the accounts of Ellie Mae, Inc. and our wholly owned subsidiaries. All significant intercompany accounts and transactions have been eliminated upon consolidation.

Revenue Recognition

We generate revenue primarily from transaction-based fees and fees for software and related services. Our software can be accessed either through a company-hosted subscription or a customer-hosted license. Accordingly, our revenues are described as on-demand and on-premise revenues. Sales taxes assessed by governmental authorities are excluded from revenue.

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On-demand Revenues

On-demand revenues are revenues generated from company-hosted software subscriptions that customers access through the Internet, revenues from a small number of customers that have opted to self-host a portion of the software but pay fees based on a per closed loan, or success, basis subject to monthly base fees, which we refer to as Success-Based Pricing, and related professional services which include consulting, implementation and training services. On-demand revenues are also comprised of software services sold transactionally and Ellie Mae Network transaction fees.

On-premise Revenues

On-premise revenues are revenues generated from maintenance services, sales of customer-hosted software licenses (except for customer-hosted Success-Based Pricing revenues, which are included in on-demand revenues described above), and related professional services which include consulting, implementation and training services.

Cost of Revenues and Operating Expenses

Cost of Revenues

Our cost of revenues consists primarily of: salaries and benefits, including stock-based compensation expense, expenses for document preparation, income verification and compliance services, customer support, data centers, depreciation on computer equipment used in supporting the Ellie Mae Network , SaaS Encompass and Encompass CenterWise offerings, amortization of acquired intangible assets such as developed technology and trade names, professional services associated with implementation of our software, and allocated facilities costs. We expect that our cost of revenues will continue to increase in absolute dollars as our revenues increase, as we pursue additional strategic acquisitions, if any , and as we continue to hire additional personnel in our implementation and customer support departments to support new customers.

Sales and Marketing

Our sales and marketing expenses consist primarily of: salaries, benefits and incentive compensation, including stock-based compensation expense and commissions; allocated facilities costs; expenses for trade shows, public relations and other promotional and marketing activities; expenses for travel and entertainment; and amortization of acquired intangible assets such as customer relationships. We expect that our sales and marketing expense will continue to increase as we continue to hire additional sales personnel in order to address anticipated demand for our software solutions and as we pursue additional strategic acquisitions, if any . We also intend to increase marketing activities focused on SaaS Encompass, our Ellie Mae Network offerings and our other Encompass services.

Research and Development

Our research and development expenses consist primarily of: salaries and benefits, including bonuses and stock-based compensation expense; fees to contractors engaged in the development and support of the Ellie Mae Network , Encompass software and other products; and allocated facilities costs. We expect that our research and development expenses will continue to increase in absolute dollars as we continue to invest in our products and services and related next-generation enhancements, including hiring additional engineering and product development personnel and as we pursue additional strategic acquisitions, if any .

General and Administrative

Our general and administrative expenses consist primarily of: salaries and benefits, including bonuses and stock-based compensation expense for employees involved in finance, accounting, human resources, administrative, information technology and legal roles; consulting, legal, accounting and other professional services by third-party providers; and allocated facilities costs. General and administrative expenses recognized during the second and third quarters of 2014 also included forensic and consulting fees incurred in response to the service outage and legal expenses in connection with the settlement of a legal claim. We expect general and administrative expenses to continue to increase in absolute dollars as we make additional and accelerated investments to bolster our infrastructure and enhance our system capacity, reliability and security . We also expect increases to general and

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administrative expenses as we hire additional personnel and grant stock-based awards to attract and retain the employees needed to continue to grow our business and as we pursue additional strategic acquisitions, if any .

Other Income, Net

Other income, net consists of interest income earned on investments, cash accounts and notes receivable, offset by investment discount amortization and imputed interest expense related to our acquisition holdback payments and interest expense paid on equipment and software leases.

Income Taxes

On a quarterly basis, we evaluate our expected income tax expense or benefit based on our year-to-date operations, and we record an adjustment in the current quarter. The net tax provision is the result of the mix of profits earned by us and our subsidiaries in tax jurisdictions with a broad range of income tax rates. We are required to estimate deferred tax assets and liabilities based on the differences between the financial reporting and tax bases of assets and liabilities measured using the enacted tax rates that will be in effect when the differences are expected to reverse. In general, deferred tax assets represent future tax benefits to be received when certain expenses previously recognized in our consolidated statements of operations become deductible expenses under applicable income tax laws or loss or credit carry forwards are utilized. Accordingly, realization of our deferred tax assets is dependent on future taxable income against which these deductions, losses and credits can be utilized. We use management judgment to assess the likelihood that our deferred tax assets will be recovered from future taxable income and to the extent we believe that recovery is not more likely than not, we must establish a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized.

Critical Accounting Policies and Estimates

There have been no material changes during the three and nine months ended September 30, 2014 to our critical accounting policies and estimates previously disclosed in our 2013 Form 10-K .

Results of Operations

The following tables set forth our results of operations for the periods presented and as a percentage of our revenues for those periods. The period-to-period comparison of financial results is not necessarily indicative of future results.



	Three Months ended September 30,				Nine Months ended September 30,
	2014		2013		2014		2013
	(in thousands)
Revenues	$	42,798	$	33,006	$	114,960	$	98,131
Cost of revenues (1)	11,669		8,332		31,445		24,550
Gross profit	31,129		24,674		83,515		73,581
Operating expenses:
Sales and marketing (1)	6,521		5,163		19,067		15,233
Research and development (1)	6,456		6,573		19,348		18,651
General and administrative (1)	9,556		7,547		28,100		23,108
Total operating expenses	22,533		19,283		66,515		56,992
Income from operations	8,596		5,391		17,000		16,589
Other income, net	134		83		343		355
Income before income taxes	8,730		5,474		17,343		16,944
Income tax provision	4,675		2,114		8,150		5,986
Net income	$	4,055	$	3,360	$	9,193	$	10,958

________

(1) Stock-based compensation included in the above line items:

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	Three Months ended September 30,				Nine Months ended September 30,
	2014		2013		2014		2013
	(in thousands)
Cost of revenues	$	441	$	215	$	1,065	$	485
Sales and marketing	523		322		1,403		709
Research and development	1,038		948		2,610		2,575
General and administrative	1,326		1,902		5,738		7,125
	$	3,328	$	3,387	$	10,816	$	10,894



	Three Months ended September 30,				Nine Months ended September 30,
	2014		2013		2014		2013

Revenues	100.0	%	100.0	%	100.0	%	100.0	%
Cost of revenues	27.3		25.2		27.4		25.0
Gross margin	72.7		74.8		72.6		75.0
Operating expenses:
Sales and marketing	15.2		15.6		16.6		15.5
Research and development	15.1		19.9		16.8		19.0
General and administrative	22.3		22.9		24.4		23.5
Total operating expenses	52.6		58.4		57.8		58.0
Income from operations	20.1		16.4		14.8		17.0
Other income, net	0.3		0.3		0.3		0.4
Income before income taxes	20.4		16.7		15.1		17.4
Income tax provision	10.9		6.4		7.1		6.1
Net income	9.5	%	10.3	%	8.0	%	11.3	%

Comparison of the Three and Nine Months Ended September 30, 2014 and 2013

Revenues

The following table sets forth our revenues by type for the periods presented:



	Three Months ended September 30,						Nine Months ended September 30,
	2014			2013			2014			2013
	(dollars in thousands)
Revenue by type:
On-demand	$	41,131		$	30,924		$	109,373		$	90,244
On-premise	1,667			2,082			5,587			7,887
Total	$	42,798		$	33,006		$	114,960		$	98,131

	Three Months ended September 30,						Nine Months ended September 30,
	2014			2013			2014			2013
Revenue by type:
On-demand	96.1		%	93.7		%	95.1		%	92.0		%
On-premise	3.9		%	6.3		%	4.9		%	8.0		%
Total	100.0		%	100.0		%	100.0		%	100.0		%

Three months ended September 30, 2014 . Total revenues increase d $9.8 million , or 29.7% , for the three months ended September 30, 2014 as compared to the same period of 2013 .

On-demand revenues increase d by $10.2 million during the three months ended September 30, 2014 , consisting primarily of a $5.7 million increase in SaaS Encompass revenues, of which $5.2 million related to our Success-Based Pricing model. The increase in SaaS Encompass revenues resulted from the addition of new SaaS Encompass users and from upgrades of existing on-

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premise customers to our SaaS platform. The number of a verage active Encompass users increased by 28.5% from 59,560 for the three months ended September 30, 2013 to 76,520 for the three months ended September 30, 2014 .

Contributing to the increase in on-demand revenues was a $1.7 million increase in revenues from professional services, driven primarily by training and implementation services provided to new customers and to customers that upgraded from on-premise users to SaaS users, and a $2.0 million increase in Ellie Mae Network, TQL and other transactional revenues driven primarily by transaction volume increases.

On-premise revenues decrease d by $0.4 million for the three months ended September 30, 2014 compared to the same period of 2013 , primarily due to decrease s in software license and maintenance fees arising in part from upgrades of existing on-premise customers to our SaaS platform.

Contracted revenues, which are not sensitive to mortgage origination volume, increased from $18.4 million for the three months ended September 30, 2013 to $25.8 million for the three months ended September 30, 2014 , driven by an increase in monthly base fees due to an increase in contracted SaaS users. The number of contracted SaaS user s increased by 33.3% from 87,294 at September 30, 2013 to 116,405 at September 30, 2014 .

Nine months ended September 30, 2014 . Total revenues increase d $16.8 million , or 17% , for the nine months ended September 30, 2014 as compared to the same period of 2013 .

On-demand revenues increase d by $19.1 million during the nine months ended September 30, 2014 , consisting primarily of a $13.4 million increase in SaaS Encompass revenues, of which $11.8 million related to our Success-Based Pricing model. The increase in SaaS Encompass revenues resulted from the addition of new SaaS Encompass users and from upgrades of existing on-premise customers to our SaaS platform. The number of average active SaaS Encompass users increase d by 14.5% from 52,935 for the nine months ended September 30, 2013 to 71,041 for the nine months ended September 30, 2014 .

The revenue increase from additional users was offset in part by a reduction in revenue generated from closed loans, which we believe was due to customers delaying the implementation of Encompass as they focused on preparing for ATR/QM rules, as well as an overall estimated 43% decline in mortgage origination volume for the nine months ended September 30, 2014 compared to the same period of 2013 .

Contributing to the increase in on-demand revenues was a $4.3 million increase in revenues from professional services driven primarily by training and implementation services provided to new customers and to customers that upgraded from on-premise users to SaaS users, $0.7 million of sales of Encompass CRM which was introduced in the first quarter of 2014 and a $0.7 million increase in revenues from the standalone version of Encompass Compliance Service due to increases in subscriptions and transactions.

On-premise revenues decrease d by $2.3 million for the nine months ended September 30, 2014 compared to the same period of 2013 , primarily due to decrease s in software license and maintenance fees and on-premise professional services fees, arising in part from upgrades of existing on-premise customers to our SaaS platform.

Contracted revenues, which are not sensitive to mortgage origination volume, increased from $50.6 million for the nine months ended September 30, 2013 to $72.7 million for the nine months ended September 30, 2014 , driven by an increase in monthly base fees due to an increase in contracted SaaS users. The number of contracted SaaS user s increased by 33.3% from 87,294 as of September 30, 2013 to 116,405 as of September 30, 2014 .

Gross Profit



	Three Months ended September 30,						Nine Months ended September 30,
	2014			2013			2014			2013
	(dollars in thousands)
Gross profit	$	31,129		$	24,674		$	83,515		$	73,581
Gross margin	72.7		%	74.8		%	72.6		%	75.0		%

Gross profit increase d by $6.5 million and gross margin percentage decreased by 2.1 percentage points during the three months ended September 30, 2014 as compared to the same period of 2013 as revenues increase d by $9.8 million and cost of revenues increase d by $3.3 million . The increase in cost of revenues was primarily due to a $1.6 million increase in salary, employee benefit and stock-based compensation expenses associated with headcount added to our professional services and customer support organizations in anticipation of continued increasing demand for our software solutions and a $1.3 million increase in third-party royalty expenses arising from the increased revenues.

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Gross profit increase d by $9.9 million and gross margin percentage decreased by 2.4 percentage points during the nine months ended September 30, 2014 as compared to the same period of 2013 as revenues increase d by $16.8 million and cost of revenues increase d by $6.9 million . The increase in cost of revenues was primarily due to a $5.1 million increase in salary, employee benefit and stock-based compensation expenses associated with headcount added to our professional services and customer support organizations in anticipation of continued increasing demand for our software solutions and a $1.5 million increase in third-party royalty expenses arising from the increased revenues.

Sales and Marketing



	Three Months ended September 30,						Nine Months ended September 30,
	2014			2013			2014			2013
	(dollars in thousands)
Sales and marketing	$	6,521		$	5,163		$	19,067		$	15,233
Sales and marketing as % of revenues	15.2		%	15.6		%	16.6		%	15.5		%

Sales and marketing expenses increase d by $1.4 million , or 26.3% , for the three months ended September 30, 2014 as compared to the same period of 2013 . Sales and marketing expenses as a percentage of revenues decrease d by 0.4% of revenues. These changes were primarily due to a $1.0 million increase in salary, employee benefit and stock-based compensation expenses related to increased headcount as we continued to grow our sales and marketing departments in an effort to increase our market share and address anticipated demand for our software solutions.

Sales and marketing expenses increase d by $3.8 million , or 25.2% , for the nine months ended September 30, 2014 as compared to the same period of 2013 . Sales and marketing expenses as a percentage of revenues increase d by 1.1% of revenues. These increases were primarily due to a $3.3 million increase in salary, employee benefit and stock-based compensation expenses related to increased headcount as we continued to grow our sales and marketing departments in an effort to increase our market share and address anticipated demand for our software solutions. Additionally, marketing expenses increase d by $0.6 million as a result of our continued efforts to grow our brand and generate demand for our products.

Research and Development



	Three Months ended September 30,						Nine Months ended September 30,
	2014			2013			2014			2013
	(dollars in thousands)
Research and development	$	6,456		$	6,573		$	19,348		$	18,651
Research and development as % of revenues	15.1		%	19.9		%	16.8		%	19.0		%

Research and development expenses decrease d by $0.1 million , or 1.8% , in the three months ended September 30, 2014 compared to the same period of 2013 . Research and development expenses as a percentage of revenues decrease d by 4.8% of revenues. These decreases were due to a $2.1 million increase in total research and development costs, primarily driven by salary, benefits, and stock compensation costs from additions to headcount as we continued to invest in our products and services, offset by a $2.2 million decrease from costs that were capitalized to property and equipment rather than expensed because they were associated with the development of new products.

Research and development expenses increase d by $0.7 million , or 3.7% , in the nine months ended September 30, 2014 compared to the same period of 2013 . Research and development expenses as a percentage of revenues decrease d by 2.2% of revenues. These changes were due to a $6.1 million increase in total research and development costs, primarily driven by salary, benefits, and stock compensation costs from additions to headcount as we continued to invest in our products and services and a $5.4 million decrease from costs that were capitalized to property and equipment rather than expensed because they were associated with the development of new products.

General and Administrative



	Three Months ended September 30,						Nine Months ended September 30,
	2014			2013			2014			2013
	(dollars in thousands)
General and administrative	$	9,556		$	7,547		$	28,100		$	23,108
General and administrative as % of revenues	22.3		%	22.9		%	24.4		%	23.5		%

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General and administrative expenses increase d by $2.0 million , or 26.6% , in the three months ended September 30, 2014 as compared to the same period of 2013 . General and administrative expenses as a percentage of revenues decrease d by 0.6% of revenues. These changes were primarily due to a $1.3 million increase in salaries and employee benefits related to increased headcount, a $1.1 million increase in professional fees and legal expenses in connection with the settlement of a legal claim and our outage earlier in the year, partially offset by a $0.6 million decrease in stock-based compensation expense primarily resulting from changes to the estimated shares of stock-based awards that are expected to vest.

General and administrative expenses increase d by $5.0 million , or 21.6% , in the nine months ended September 30, 2014 as compared to the same period of 2013 . General and administrative expenses as a percentage of revenues increase d by 0.9% of revenues. These increases were primarily due to a $3.2 million increase in salaries and employee benefits related to increased headcount, a $1.7 million increase in professional fees and legal expenses in connection with the settlement of a legal claim and our outage earlier in the year and a $0.6 million increase in the use of consultants and temporary contractors, offset in part by a $1.4 million decrease in stock-based compensation expense primarily resulting from a decrease in expense relating to Performance Awards for which expense is recognized on an accelerated basis over the vesting period, as well as changes to the estimated shares of stock-based awards that are expected to vest.

Income Tax Provision

Income tax provision was $4.7 million for the three months ended September 30, 2014 , compared to $2.1 million for the three months ended September 30, 2013 . The increase in income tax provision was primarily due to the increase of pre-tax income from $5.5 million for the three months ended September 30, 2013 to $8.7 million for the three months ended September 30, 2014 , an increase in nondeductible compensation and the suspension of federal R&D credits for 2014.

Income tax provision was $8.2 million for the nine months ended September 30, 2014 , compared to $6.0 million for the nine months ended September 30, 2013 . The increase in income tax provision was primarily due to an increase in nondeductible compensation and the suspension of federal R&D credits for 2014.

Liquidity and Capital Resources

At September 30, 2014 , we had cash, cash equivalents and short-term investments of $86.0 million and long-term investments of $66.2 million . Cash and cash equivalents consist of cash and money market accounts. Both short and long-term investments consist of corporate bonds and obligations, certificates of deposit, municipal obligations, U.S. government notes and U.S. government agency securities.

We believe that our existing cash, cash equivalents and short-term investments will be sufficient to fund capital expenditures, operating expenses and other cash requirements for at least the next 12 months. We may enter into acquisitions in the future, which could require us to seek additional equity or debt financing. Additional funds may not be available on terms favorable to us or at all.

The following table sets forth our statement of cash flows data for the periods presented:



	Nine Months ended September 30,						Net
	2014			2013			Change
	(in thousands)
Net cash provided by operating activities	$	24,780		$	20,978		$	3,802
Net cash used in investing activities	(26,036		)	(54,360		)	28,324
Net cash provided by financing activities	11,653			10,919			734
Net increase (decrease) in cash and cash equivalents	$	10,397		$	(22,463	)	$	32,860

Operating Activities

Cash provided by operating activities increased by $3.8 million from $21.0 million in 2013 to $24.8 million in 2014 . In the condensed consolidated statements of cash flows, cash provided by operating activities is presented as net income adjusted for non-cash items and changes in operating assets and liabilities. Net income decreased by $1.8 million for the nine months ended September 30, 2014 as compared to the same period of 2013 . The net contribution of non-cash items to cash provided by operating activities increased by $1.9 million for the nine months ended September 30, 2014 as compared to the same period of 2013 . The net contribution of changes in operating assets and liabilities to cash provided by operating activities increased by $3.7 million for the nine months ended September 30, 2014 as compared to the same period of 2013 .

The $1.9 million increase in the net contribution of non-cash items to cash provided by operating activities was primarily due to a $0.6 million increase to cash from the realization of deferred taxes, a $0.9 million decrease in excess tax benefits from the exercise of stock options that were reclassified from operating activities to financing activities, a $0.1 million decrease in

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stock-based compensation expense and a $0.5 million increase in amortization of intangible assets as a result of the acquisition of MortgageCEO.

Changes in operating assets and liabilities resulted in a net increase of $3.7 million to cash provided by operating activities in the nine months ended September 30, 2014 as compared to the same period in 2013 . Our net accounts receivable balance fluctuates from period to period, depending on the amount and timing of sales and billing activity, our customers’ payment method, and cash collections. The change in prepaid expenses and other current assets was primarily due to the timing of payments for computer software licenses. The change in deposits and other assets was due to deferred commission expenses and timing of the payment for software licenses. The change in accounts payable and accrued and other liabilities was due to the timing of additional liabilities and payments in general, and does not reflect any significant change in the nature of accrued liabilities. The change in deferred revenue is the result of timing differences in the recognition of revenues from professional services and maintenance services.

Investing Activities

Our primary investing activities have consisted of purchases and maturities of investments, purchases of property and equipment (including costs incurred to develop internal-use software) and payments for acquisitions (including holdback payments). Purchases of property and equipment may vary from period to period due to the timing of the expansion of our operations and the timing of our software development projects subject to capitalization. We plan to continue to invest in hardware and software to support our growth and corporate infrastructure. In October 2014, we paid $28.2 million in cash for the AllRegs acquisition. We intend to continue pursuing additional strategic acquisitions.

Cash used in investing activities of $26.0 million for the nine months ended September 30, 2014 was primarily the result of $12.8 million for purchases of property and equipment and costs incurred to develop internal-use software and website applications, $6.7 million in net purchases of investments, $4.5 million cash paid for the acquisition of MortgageCEO and the final $2.0 million in scheduled payments of the holdback from the acquisition of Del Mar Datatrac, Inc.

Cash used in investing activities of $54.4 million for the nine months ended September 30, 2013 was the result of $46.3 million in net purchases of investments, $5.0 million for purchases of property and equipment and costs incurred to develop internal-use software and website applications and $3.0 million in scheduled payments of the holdback from the 2011 acquisition of Del Mar Datatrac, Inc.

Financing Activities

Financing activities have consisted primarily of cash provided from the exercise of stock options, excess tax benefits from employee exercises of stock options , payments related to capital lease obligations and tax payments related to shares withheld for vested restricted stock units (RSUs). In May 2014, our board of directors approved a stock repurchase program under which we are authorized to repurchase up to $75.0 million of our common stock over a 36-month period, all of which remains available as of September 30, 2014 . Under the program, purchases may be made from time to time on the open market, and will be funded from available working capital. There were no repurchases under the program during the nine months ended September 30, 2014 .

Cash provided by financing activities of $11.7 million for the nine months ended September 30, 2014 consisted primarily of $8.0 million in proceeds from the exercise of stock options and $5.3 million in excess tax benefits from employee exercises of stock options , offset in part by tax payments of $0.7 million related to shares withheld for vested RSUs and payments on capital leases of $1.0 million .

Cash provided by financing activities of $10.9 million for the nine months ended September 30, 2013 consisted primarily of $5.3 million in proceeds from the exercise of stock options, and $6.2 million in excess tax benefits from employee exercises of stock options .

Off Balance Sheet Arrangements

As of September 30, 2014 , we had no off-balance sheet arrangements and operating leases were the only financing arrangements not reported on our condensed consolidated financial statements.

Contractual Obligations

During the nine months ended September 30, 2014 , other than as discussed below, there have been no material changes to our contractual obligations outside the ordinary course of business from those specified in the 2013 Form 10-K .

In July 2014, we entered into a lease agreement for office space in Pleasanton, California that will serve as our future corporate headquarters. The lease commences on April 1, 2015 and has an initial term of 117 months ending December 31, 2024.

Under the terms of the lease, we are obligated to make payments ranging from $264,000 per month to $344,000 per month.

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ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

W e believe that there have been no significant changes in our market risk exposures for the three and nine months ended September 30, 2014 , as compared with those discussed in our 2013 Form 10-K .

ITEM 4 — CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of September 30, 2014 . The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of September 30, 2014 , our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS

For a description of the material legal proceedings, please see Note 8 of the Notes to Condensed Consolidated Financial Statements.



ITEM 1A.	RISK FACTORS

You should carefully consider the risks described below and the other information in this report. If any of the following risks materialize, our business could be materially harmed, and our financial condition and results of operations could be materially and adversely affected. The risks described below are not the only ones facing us. Additional risks not currently known to us or that we currently believe are immaterial may also impair our business, results of operations, financial condition and liquidity.

We experienced a system outage in March 2014 that prevented some of our customers from being able to access certain of our services . This system interruption and future system interruptions that impair access to the Ellie Mae Network or SaaS Encompass could damage our reputation and brand and may substantially harm our business.

The satisfactory performance, reliability and availability of SaaS Encompass, the Ellie Mae Network , our website, our services, including our Encompass Compliance Service, and our network infrastructure are critical to our reputation and our ability to attract and retain Ellie Mae Network participants and Encompass users. Because our service is complex and incorporates a variety of hardware and proprietary and third-party software, our service may have errors or defects that could result in unanticipated downtime for our subscribers. Internet-based services frequently contain undetected errors when first introduced or when new versions or enhancements are released, and we have from time to time found defects in our service and new errors in our service may be detected in the future. In addition, our customers may use our service in unanticipated ways that may cause a disruption in service for other customers attempting to access their data.

Moreover, we have experienced and may in the future continue to experience temporary system interruptions, either to the Ellie Mae Network or to SaaS Encompass hosting locations, for a variety of reasons, including network failures, power failures, software errors, problems with Encompass and other third-party firmware updates, as well as an overwhelming number of Ellie Mae Network participants and Encompass users trying to access our network during periods of strong demand. For example, on March 31, 2014, we experienced a system outage that prevented some of our customers from being able to access certain of our services until the system was restored on April 1, 2014. Since our customers use our service for important aspects of their business, any errors, defects, disruptions in service or other performance problems could result in negative publicity, damage our reputation and brand, reduce our revenue, increase our operating expenses, negatively impact our ability to run our business, hinder our ability to enroll new customers and cause us to lose current customers, all of which could substantially harm our business and operating results.

In addition, our two primary data centers, located in Santa Clara, California and Chicago, Illinois, are hosted by a third-party service provider over which we maintain regular oversight but have little direct control. We depend on this third-party service provider to provide continuous and uninterrupted access to the Ellie Mae Network and SaaS Encompass. If for any reason our relationship with this third party were to end unexpectedly, it could require a significant amount of time to transition the hosting of our data centers to a new third-party service provider. We are also subject to interruptions beyond our and our third party service provider’s control, such as disruptions or congestion in the portions of the internet linking us to our customers. Since we are dependent on third parties for the implementation and maintenance of certain aspects of our systems and because some of the causes of system interruptions may be outside of our control, we may not be able to remedy such interruptions in a timely manner.

Our future performance will be highly dependent on our ability to continue to attract SaaS Encompass customers and to grow revenues from new on-demand services.

To maintain or increase our revenues, we must increase the number of users of our software and percentage of our software users who choose our on-demand SaaS Encompass offering, from which we generate greater revenues than from our on-premise license offering. We cannot guarantee our Success-Based Pricing strategy will continue to be successful. If it is not successful, or if we are unable to identify an alternate strategy and successfully increase the number of SaaS Encompass customers, our business may be materially adversely affected.

Our success will also depend, to a large extent, on the willingness of mortgage lenders to continue to accept the SaaS model for delivering software applications that they view as critical to the success of their business. Our success will substantially depend on our ability to convince enterprises using on-premise enterprise software solutions to invest significant personnel and financial resources to migrate to our SaaS offering. It is difficult to predict customer adoption rates and demand for our services, the future growth rate and size of the SaaS market or the entry of competitive applications. The growth of the SaaS market depends on a

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number of factors, including the cost, performance and perceived value associated with SaaS offerings, as well as the ability of SaaS companies to address security and privacy concerns. If other SaaS providers experience security incidents, loss of customer data, disruptions in delivery or other problems, the market for SaaS applications as a whole, including our own products and services, may be negatively affected. If there is a reduction in demand for SaaS caused by technological challenges, weakening economic conditions, security or privacy concerns, competing technologies and products, decreases in corporate spending or otherwise, it could result in decreased revenues and our business could be adversely affected.

In order to grow our business, we must expand the use of settlement services on, and increase the number of transactions effected through, the Ellie Mae Network .

To grow our base of Ellie Mae Network participants, we and settlement service providers must continue to enhance the features and functionality of offerings to them. In addition, increasing the number of settlement service transactions effected through the Ellie Mae Network will depend, in part, on settlement service providers enhancing their technical capabilities, which is largely beyond our control.

We must also convince a variety of potential Ellie Mae Network participants, including mortgage lenders, originators, settlement service providers and mega lenders, of the benefits of electronic origination and network participation as compared to traditional mortgage origination methods including paper, facsimile, courier, mail and email.

We cannot guarantee that our Ellie Mae Network and other service offerings will achieve market acceptance. In the event these efforts are not successful, our business and growth prospects would be adversely affected.

Our failure to protect the confidential information of our Encompass users, our Ellie Mae Network participants and their respective customers could damage our reputation and brand and substantially harm our business.

Certain confidential information relating to certain of our Encompass users, our Ellie Mae Network participants and their respective customers resides on our third-party hosted data center servers and is transmitted over our network. We rely on encryption and authentication technology licensed from third parties to effect secure transmission of confidential information, including personal information and credit card numbers. These security measures may be breached as a result of third-party action, including intentional misconduct by computer hackers, service provider error, malfeasance or otherwise. These servers may also be vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering with our computer systems, which could result in someone obtaining unauthorized access to our customers’ data or our data, including our intellectual property and other confidential business information, or our IT systems. Because the techniques used to obtain unauthorized access to, or to sabotage, systems change frequently and generally are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. The possession and use of personal information in conducting our business subject us to legislative and regulatory burdens that may require notification to customers of a security breach, restrict our use of personal information and hinder our ability to acquire new customers or market to existing customers.

We cannot guarantee that our security measures will prevent security breaches. Any such compromise of our security could damage our reputation and brand and expose us to a risk of loss or litigation and potential liability, which would substantially harm our business and operating results. We may need to expend significant resources to protect against and remedy any potential security breaches and their consequences.

We cannot accurately predict subscription renewal or upgrade rates and the impact these rates may have on our future revenues and operating results.

Our customers have no obligation to renew their subscriptions for our service after the expiration of their initial subscription period, which ranges from one to five years . They may also choose to renew their subscriptions at lower levels. In addition, in the first year of a subscription, customers often purchase a higher level of professional services than they do in renewal years. As a result, our ability to grow is dependent in part on customers purchasing additional subscriptions and services after the initial subscription term. We cannot accurately predict renewal rates given our varied customer base and the number of multi-year subscription contracts. Our customers’ renewal rates may decline or fluctuate because of several factors, including their satisfaction or dissatisfaction with our services, the prices of our services, the prices of services offered by our competitors or reductions in our customers’ spending levels due to the macroeconomic environment or other factors. If our customers do not renew their subscriptions for our services, renew on less favorable terms or do not purchase additional subscriptions or services, our revenues may grow more slowly than expected or decline and our profitability and gross margin may be harmed.

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Mortgage lending volume was lower in 2013 than in 2012, and has been significantly lower in 2014 than in 2013 due to various factors which could adversely affect our business.

Mortgage lending volume was lower in 2013 than in 2012, and has been significantly lower in 2014 than in 2013 . Factors that adversely impact mortgage lending volumes include increasing mortgage interest rates, reduced consumer and investor demand for mortgages, more stringent underwriting guidelines, decreased liquidity in the secondary mortgage market, high levels of unemployment, high levels of consumer debt, lower consumer confidence, changes in tax and other regulatory policies, the number of existing mortgages eligible for refinancing and other macroeconomic factors.

In addition, mortgage interest rates were at historic lows and recently have been rising. Mortgage interest rates are influenced by a number of factors, including monetary policy. The Federal Reserve Bank may raise the federal funds rate, which would likely cause mortgage interest rates to rise. Increases in mortgage interest rates could reduce the volume of new mortgages originated, in particular the volume of mortgage refinancings. Additionally, because the ratio of applications to closed loans typically is greater with refinancings than with purchase loans, a continued decrease in refinancings would result in fewer mortgage applications per funded loan. Since we generate some Ellie Mae Network revenues during the application process, regardless of whether the loan is eventually funded, this may continue to negatively impact our transaction based revenue.

We currently estimate that approximately 30% to 40% of our revenues have some sensitivity to volume . To the extent there is an additional decrease in residential mortgage volumes in 2015 compared to 2014, we would need to increase our user base and/or our revenue per loan processed by our customers in order to maintain our financial performance. We cannot guarantee we will be successful in these efforts, which could materially adversely affect our business.

A significant decline in mortgage origination volume, such as the significant drop in mortgage volume anticipated in 2014, could also negatively impact our customers, resulting in a reduction of their Encompass users, consolidation with other lenders or cessation of operations. If any of these occurs, it could materially adversely affect our business.

We expect a number of factors to cause our operating results to fluctuate on a quarterly and annual basis, which may make it difficult to predict our future performance.

Our revenues and operating results have in the past varied and could in the future vary significantly from quarter-to-quarter and year-to-year because of a variety of factors, many of which are outside of our control. As a result, comparing our operating results on a period-to-period basis may not be indicative of future operating results. In addition to other risk factors discussed in this section, factors that may contribute to the variability of our quarterly and annual results include:


•	the number of Encompass users;


•	the volume of mortgages originated by Encompass users, especially users on our Success-Based Pricing model;


•	transaction volume on the Ellie Mae Network ;


•	fluctuations in mortgage lending volume;


•	the relative mix of purchase and refinance volume handled by Encompass users;


•	the level of demand for our services;


•	the timing of the introduction and acceptance of Ellie Mae Network offerings and new on-demand services;


•	costs associated with defending intellectual property infringement and other claims; and


•	changes in government regulation affecting Ellie Mae Network participants or our business.

Due to these and other factors, our future results may not reach our internal projections. In addition, our operating results in future periods may not meet the expectations of investors or public market analysts who follow our company, which could cause our stock price to decline rapidly and significantly. The results of any prior quarterly or annual periods should not be relied upon as indications of our future operating performance.

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Since part of our sales efforts are targeted at larger customers, our sales cycle may become longer and more expensive, we may encounter pricing pressure and implementation and customization challenges, and we may have to delay revenue recognition for some complex transactions, all of which could harm our business and operating results.

Part of our business strategy is to target larger mortgage lenders that handle greater volumes of loans. As we target more of our sales efforts at larger customers, we could face greater costs, longer sales cycles and less predictability in completing some of our sales. In this market, the customer’s decision to use our products and services may be an enterprise-wide decision and, if so, this type of sale could require us to provide greater levels of education regarding the use and benefits of our products and services. In addition, larger customers may demand more customization, implementation services and features. As a result of these factors, these sales opportunities may require us to devote greater sales support and professional services resources to individual customers, driving up costs and time required to complete sales and diverting our own sales and professional services resources to a smaller number of larger transactions, while potentially requiring us to delay revenue recognition on some of these transactions until the technical or implementation requirements have been met.

Supporting our existing and growing customer base could strain our personnel resources, and if we are unable to scale our operations and increase productivity, we may not be able to successfully implement our business plan.

We continue to experience significant growth in our customer base, which has placed a strain on our management and administrative, operational and financial infrastructure. We anticipate that additional investments in our implementation capabilities and research and development and general and administrative spending will be required to scale our operations and increase productivity, address the needs of our customers, further develop and enhance our products and services and scale with the overall growth of our company.

In addition, professional services, such as implementation services, are a key aspect of on-boarding new customers. The implementation process is complicated and we will need to scale our capabilities in this area to meet future revenue targets. If a customer is not satisfied with the quality of work performed by us or with the type of services or solutions delivered, then we could incur additional costs to address the situation, the profitability of that work might be impaired, and the customer’s dissatisfaction with our products and services could damage our ability to obtain additional work from that customer. In addition, negative publicity related to our customer relationships, regardless of its accuracy, may further damage our business by affecting our ability to compete for new business with current and prospective customers.

Continued growth may place significant demands on our management and our infrastructure and require significant expenditures and resources.

Our growth has placed and may continue to place significant demands on our management and our administrative, operational and financial infrastructure. As our operations grow in size, scope and complexity, we will need to improve and upgrade our systems and infrastructure, including our data centers and financial reporting systems. These upgrades and improvements are necessary in order to offer an increasing number of customers enhanced solutions, features and functionality and to ensure continued adequate controls over financial reporting.

In addition, the expansion of our systems and infrastructure will require us to commit substantial financial, operational and technical resources in advance of any anticipated increase in the volume of business, with no assurance that the volume of business will actually increase. Continued growth could also strain our ability to maintain reliable service levels for our customers, develop and improve our operational, financial and management controls, enhance our reporting systems and procedures and recruit, train and retain highly skilled personnel.

Managing our growth will require significant expenditures and allocation of valuable management resources. We have been aggressively hiring talent in all areas of our business, which has significantly increased our expenses. If we fail to achieve the necessary level of efficiency in our organization as it grows, our business would be harmed. We are also in the process of upgrading and/or replacing various software systems including our new enterprise resource planning, or ERP, system, which we began using during the fourth quarter of 2013. The implementation of an ERP system entails certain risks, including difficulties with changes in business processes that could disrupt our company’s operations, such as our ability to process orders, provide services and customer support, fulfill contractual obligations and aggregate financial and operational data, and the ERP providers to deliver the functionality we require and in a timely manner. Unanticipated problems impacting the implementation of these systems could significantly increase the expenditures and resources allocated to this project, divert the attention of management and harm our business. If the implementations of these new applications are delayed, or if we encounter unforeseen problem with our new systems or in migrating away from our existing applications and systems, our operations and our ability to manage our business could be negatively impacted.

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Integrating future acquisitions could disrupt our business, harm our financial condition and operating results or dilute or adversely affect the price of our common stock.

Our success will depend in part on our ability to expand our solutions and services and to grow our business in response to changing technologies, customer demands and competitive pressures. In some circumstances, we may pursue growth through the acquisition of complementary businesses, solutions or technologies rather than through internal development. For example, in October 1, 2014 , we acquired substantially all the assets of Mortgage Resource Center, Inc. (dba AllRegs ), a provider of investor guideline and federal and state statute and regulation compliance information, forms, content and business intelligence for the mortgage lending industry . In January 2014 , we acquired substantially all the assets of ARG Interactive, LLC (dba MortgageCEO ), a SaaS company specializing in customer relationship management and marketing solutions for the residential mortgage industry .

The identification of suitable acquisition candidates can be difficult, time-consuming and costly, and we may not be able to complete acquisitions successfully. Moreover, if such acquisitions require us to seek additional debt or equity financing, we may not be able to obtain such financing on terms favorable to us or at all. Acquisitions and investments involve numerous risks which may have a negative impact on our results of operations, including:


•	write-offs of acquired assets or investments;


•	potential financial and credit risks associated with acquired customers;


•	unknown liabilities associated with the acquired businesses;


•	unanticipated expenses related to acquired technology and its integration into existing technology;


•	limitations to our ability to recognize revenue from acquired deferred revenue;


•	depreciation and amortization of amounts related to acquired intangible assets, fixed assets and deferred compensation; and


•	adverse tax consequences of any such acquisitions.

Even if we successfully complete an acquisition, we may not be able to assimilate and integrate effectively the acquired business, technologies, solutions, assets, personnel or operations, particularly if key personnel of an acquired company decide not to work for us. We may encounter difficulty in incorporating acquired technologies into our service and maintaining the quality standards that are consistent with our brand and reputation. In addition, we may issue debt or equity securities to complete an acquisition, which could dilute our stockholders’ ownership and adversely affect the price of our common stock.

Events similar to the extreme turmoil in the residential mortgage industry that occurred from 2007 to 2009 could adversely affect our business.

From 2007 to 2009, the worldwide credit market was severely disrupted by the global financial crisis due to the precipitous rise of sub-prime mortgage delinquencies and resulting failure of securities backed by mortgages, including these sub-prime mortgages. This crisis resulted in extreme turmoil in the residential mortgage industry and caused many mortgage originators and other mortgage industry participants to go out of business. If the residential mortgage industry were to experience another similar disruptive event, our business could be materially adversely affected.

The residential mortgage industry is heavily regulated and changes in current legislation or new legislation could adversely affect our business.

Changes in the regulations that govern our customers could adversely affect our business.

The U.S. mortgage industry is heavily regulated. Federal and state governments and agencies could enact legislation or other policies that could negatively impact the business of our Encompass users and other Ellie Mae Network participants. Any changes to existing laws or regulations or adoption of new laws or regulations that increase restrictions on the residential mortgage industry may decrease residential mortgage volume or otherwise limit the ability of our Encompass users and Ellie Mae Network participants to operate their businesses, resulting in decreased usage of our solutions.

Changes in current legislation or new legislation may increase our costs by requiring us to update our products and services.

Changes to existing laws or regulations or adoption of new laws or regulations relating to the residential mortgage industry could require us to incur significant costs to update our products and services. Our Encompass Compliance Service analyzes mortgage loan data for compliance with consumer protection laws and institutionally mandated compliance policies and must continually be updated to incorporate changes to such laws and policies. The Dodd-Frank Act has caused and will continue to

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cause us to make similar updates to Encompass, Encompass Product and Pricing Service , Encompass Docs Solution , TQL and the Ellie Mae Network to address, among other things, regulations that protect consumers against unfair, deceptive and abusive practices by lenders. For example, additional tools and product updates were recently required to address the Ability-to-Repay, or ATR , / Qualified Mortgage, or QM , and Federal and State High Cost rules effective in January 2014. In addition, we will be making updates to certain of our products to comply with the TILA-RESPA Integrated Disclosure rule changes which take effect in August 2015 . These additions and updates have caused us to incur significant expense, and future updates will likely similarly cause us to incur significant expense.

Potential structural changes in the U.S. residential mortgage industry, in particular plans to diminish the role of Fannie Mae and Freddie Mac, could disrupt the residential mortgage market and have a material adverse effect on our business.

Fannie Mae and Freddie Mac play a very important role in providing liquidity, stability and affordability in the current U.S. residential mortgage market. In particular, they participate in the secondary mortgage market by purchasing mortgage loans and mortgage-related securities for investment and by issuing guaranteed mortgage-related securities. In February 2011, the Obama administration delivered a report to Congress which proposed the winding down of Fannie Mae and Freddie Mac and shrinking the federal government’s role in the housing market. This proposal includes the withdrawal of government guarantees currently available for certain residential loans and increasing the down payment requirements for borrowers, both of which could reduce mortgage lending volume. In February 2012, the Federal Housing Finance Agency sent Congress a strategic plan to wind down Fannie Mae and Freddie Mac over the next several years. This proposal includes building a new infrastructure for the secondary mortgage market, continuing to shrink Fannie Mae’s and Freddie Mac’s operations by eliminating the direct funding of mortgages and shifting mortgage credit risk to private investors and maintaining foreclosure prevention activities and credit availability. In August 2012, the U.S. Department of the Treasury announced it would require Fannie Mae and Freddie Mac to reduce their investment portfolios more quickly, at an annual rate of 15% versus the previous rate of 10%. In June 2013, the U.S. Senate introduced a bill to wind down Fannie Mae and Freddie Mac over five years. This legislation would replace Fannie Mae and Freddie Mac with a new Federal Mortgage Insurance Corporation that would continue to guarantee mortgages, but only after private capital absorbs the first 10% of any losses. In July 2013, the U.S. House of Representatives also unveiled draft legislation to similarly wind down Fannie Mae and Freddie Mac over a five year period. In 2014, four Fannie Mae and Freddie Mac reform measures were active in Congress: the Senate’s Johnson-Crapo and Corker-Warner, and the House’s PATH Act and HOME Forward Act. The effects of these proposals, the passage of either of these bills into law or any significant structural change to the U.S. residential mortgage industry may cause significant disruption to the residential mortgage market. If we are unable to react effectively and quickly to changes in the residential mortgage industry, our business could be harmed.

We may be limited in the way in which we market our business or generate revenue by U.S. federal law prohibiting referral fees in real estate transactions, and if we are found to be in violation of such laws we would be subject to significant liability.

RESPA generally prohibits the payment or receipt of fees or any other thing of value for the referral of business related to a residential real estate settlement service and prohibits fee shares or splits or unearned fees in connection with the provision of such services. Encompass software and services and the Ellie Mae Network were designed with payment methods that are not currently prohibited by the restrictions under RESPA. Nonetheless, RESPA may restrict our ability to enter into marketing and distribution arrangements with third parties for existing or newly developed products and services, particularly to the extent that such arrangements may be characterized as involving payments for the referral of residential real estate settlement service business. Additionally, any amendments to RESPA or court opinions interpreting the provisions of RESPA that result in restrictions on our current payment methods, or any determination that our payment methods have been and currently are subject to the restrictions under RESPA, could have a material adverse effect on our business. If we were found to be in violation of RESPA rules, we would be exposed to significant potential liability that could have a material adverse effect on our reputation and business.

We depend on key and highly skilled personnel to operate our business, and if we are unable to retain our current or hire additional personnel, our ability to develop and successfully market our business could be harmed.

We believe our future success will depend in large part upon our ability to attract and retain highly skilled managerial, technical, finance, creative and sales and marketing personnel. Moreover, we believe that our future success is highly dependent on the contributions of our named executive officers. All of our officers and other employees are at-will employees, which means they may terminate their employment relationship with us at any time, and their knowledge of our business and industry would be extremely difficult to replace. In addition, the loss of any key employees or the inability to attract or retain qualified personnel could delay the development and introduction of, and harm our ability to sell, our solutions and harm the market’s perception of us. Competition for qualified personnel is particularly intense in the San Francisco Bay Area, where our headquarters are located. Qualified individuals are in high demand, and we may incur significant costs to attract them. We may be unable to attract and retain suitably qualified individuals who are capable of meeting our growing sales, operational and managerial requirements, or may be required to pay increased compensation in order to do so. If we are unable to attract and retain the qualified personnel we need to succeed, our business will suffer.

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Volatility or lack of performance in our stock price may also affect our ability to attract and retain our key employees. Our named executive officers are vested in a substantial amount of stock options and performance share awards . Employees may be more likely to leave us if the shares they own or the shares underlying their vested options have significantly appreciated in value relative to the original purchase prices of the shares or the exercise prices of the vested options, or if the exercise prices of the options that they hold are significantly above the market price of our common stock. If we are unable to retain our named executive officers or other key employees, our business will be harmed.

We operate in a highly competitive market, which could make it difficult for us to attract and retain Encompass users and Ellie Mae Network participants.

The mortgage origination software market is highly competitive. There are many software providers, such as: Byte Software Inc., a subsidiary of CBCInnovis ; Calyx Technology, Inc. ; Harland Financial Solutions (which owns Mortgagebot LLC and Avista Solutions, Inc.), a subsidiary of Davis + Henderson Corporation ; PCLender.com, Inc., a subsidiary of Fidelity National Financial, Inc. , Mortgage Builder Software, Inc., a subsidiary of Altisource Portfolio Solutions SA ; Mortgage Cadence LLC, a subsidiary of Accenture PLC; and Wipro Gallagher Solutions, which is owned by Wipro, Ltd., that compete with us by offering loan origination software to mortgage originators. Some software providers, including Calyx Technology, Inc. , also provide connectivity between their software users and lenders and service providers. Other connectivity alternatives are provided by services such as RealEC Technologies, Inc., a subsidiary of Fidelity National Financial, Inc. We also compete with compliance and document preparation service providers that are much larger and more established than us. There is vigorous competition among providers of these services and we may not succeed in convincing potential customers using other services to switch to ours. Many service providers connect directly to mortgage originators without using any loan origination software. Some of our competitors also offer services on a per closed loan basis, which could adversely impact the effectiveness of our Success-Based Pricing strategy for increasing the number of SaaS Encompass customers. If we are unsuccessful in competing effectively by providing attractive functionality, customer service or value, we could lose existing Encompass users to our competitors and our ability to attract new Encompass users could be harmed.

We only offer our Encompass services to Encompass users. There are many other service providers that offer our Encompass users competing services, including borrower-facing websites, document preparation services, compliance services and EDM . We may be unsuccessful in continuing to differentiate our Encompass service offerings to the extent necessary to effectively compete in some or all of these markets.

The Ellie Mae Network is only available to mortgage originators using Encompass. The principal alternative to the use of the Ellie Mae Network by Encompass users remains traditional methods of exchanging data and documents among mortgage industry participants by email, facsimile, phone, courier and mail. In addition, mortgage originators may use standalone web browsers to go individually to each investor, lender or service provider’s website and then manually upload loan data or enter information into the website. Mortgage originators may continue to use these methods due to habit, personal business relationships or otherwise. The success of the Ellie Mae Network depends on our ability to achieve and offer access to both the critical mass of investors, lenders and service providers necessary to attract and retain mortgage originators using Encompass on the Ellie Mae Network and the critical mass of active mortgage originators necessary to attract and retain investors, lenders and service providers on our network.

Some of our actual and potential competitors have longer operating histories and significantly greater financial, technical, marketing and other resources than we do and, as a result, these companies may be able to respond more quickly to changes in regulations, new technologies or customer demands, or devote greater resources to the development, promotion and sale of their software and services than we can. In addition, we may face increased competition as a result of continuing industry consolidation, such as: Altisource Portfolio Solutions SA’s acquisition of Mortgage Builder Software, Inc. in July 2014; Accenture PLC’s acquisition of Mortgage Cadence LLC in August 2013; Davis + Henderson Corporation’s acquisitions of Harland Financial Solutions in August 2013, Mortgagebot LLC in April 2011 and Avista Solutions, Inc. in May 2012; Optimal Blue, Inc.’s acquisition of LoanSifter, Inc. in December 2013 and Fidelity National Financial, Inc.’s acquisition of Lender Processing Services, Inc. in January 2014. We expect the mortgage origination market to continue to attract new competitors and there can be no assurance that we will be able to compete successfully against current or future competitors or that competitive pressures we face will not materially adversely affect our business.

Failure to adapt to technological changes may render our technology obsolete or decrease the attractiveness of our solutions to our customers.

If new industry standards and practices emerge, or if competitors introduce new solutions embodying new services or technologies, Encompass and the Ellie Mae Network technology may become obsolete. Our future success will depend on our ability to:


•	enhance our existing solutions;

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•	develop and potentially license new solutions and technologies that address the needs of our prospective customers; and


•	respond to changes in industry standards and practices on a cost-effective and timely basis.

We must continue to enhance the features and functionality of Encompass, other Encompass services and the Ellie Mae Network . The effective performance, reliability and availability of Encompass, Encompass services and the Ellie Mae Network infrastructure are critical to our reputation and our ability to attract and retain Encompass users and Ellie Mae Network participants. If we do not continue to make investments in product development and, as a result, or due to other reasons, fail to attract new and retain existing mortgage originators, lenders, investors and service providers, we may lose existing Ellie Mae Network participants, which could significantly decrease the value of the Ellie Mae Network to all participants and materially adversely affect our business.

Failure to adequately protect our intellectual property could harm our business.

The protection of our intellectual property rights, including our proprietary Encompass software and Ellie Mae Network technology, is crucial to the success of our business. We rely on a combination of patent, copyright, trademark and trade secret law and contractual restrictions to protect our intellectual property. Our present and future patents may provide only limited protection for our technology and may not be sufficient to provide competitive advantage to us. Furthermore, we cannot guarantee any patents will be issued to us as a result of our patent applications. We also rely in part on confidentiality and invention assignment agreements with our employees, independent contractors and consultants. Despite our efforts to protect our proprietary rights, unauthorized parties may attempt to copy aspects of our Ellie Mae Network and Encompass features and functionality or obtain and use information that we consider proprietary. Enforcing our proprietary rights is difficult and may not always be effective.

We have registered “Ellie Mae” and “Encompass” and certain of our other trademarks as trademarks in the United States. Competitors may adopt service names similar to ours, thereby impeding our ability to build brand identity and possibly leading to customer confusion. In addition, there could be potential trade name or trademark infringement claims brought by owners of other registered trademarks or trademarks that incorporate variations of the terms Ellie Mae, Encompass or our other trademarks.

Litigation or proceedings before the U.S. Patent and Trademark Office or other governmental authorities and administrative bodies in the United States and abroad may be necessary in the future to enforce our intellectual property rights, protect our patent and copyright rights, trade secrets and domain names and determine the validity and scope of the proprietary rights of others. Our efforts to enforce or protect our proprietary rights may be ineffective and could result in substantial costs and diversion of resources and could harm our business.

Assertions that we infringe third-party intellectual property rights could result in significant costs and substantially harm our business.

Other parties have asserted, and may in the future assert, that we have infringed their intellectual property rights. For example, on March 25, 2011, we were named a defendant in a patent infringement lawsuit filed by Industry Access Incorporated alleging that our Encompass loan management software system and related operations infringes a patent and on March 19, 2013, Industry Access filed a second patent infringement lawsuit against us alleging that our products and services infringe two additional patents. We settled this matter in the third quarter of 2014. See Note 8 of the Notes to Condensed Consolidated Financial Statements. In addition, we generally agree to indemnify our customers against legal claims that our software products infringe intellectual property rights of third parties and, in the event of an infringement, to modify or replace the infringing product or, if those options are not reasonably possible, to refund the cost of the software, as pro-rated over a period of years. We cannot predict whether assertions of third-party intellectual property rights or claims arising from such assertions will substantially harm our business and operating results. If we are forced to defend against any infringement claims, whether they are with or without merit or are determined in our favor, we may face costly litigation and diversion of technical and management personnel. Furthermore, an adverse outcome of a dispute may require us to: pay damages, potentially including treble damages and attorneys’ fees if the infringement were found to be willful; cease providing solutions that allegedly incorporate the intellectual property of others; expend additional development resources to redesign or re-engineer our solutions and products, if feasible; and enter into potentially unfavorable royalty or license agreements in order to obtain the right to use necessary technologies. We cannot be certain of the outcome of any litigation. Any royalty or licensing agreement, if required, may not be available to us on acceptable terms or at all. Our failure to obtain the necessary licenses or other rights could prevent the sale or distribution of some of our products and services and, therefore, could have a material adverse effect on our business.

Current or future litigation could substantially harm our business.

We have been and continue to be involved in legal proceedings, claims and other litigation. For more on legal proceedings, see Note 8 of the Notes to Condensed Consolidated Financial Statements, which is hereby incorporated by reference.

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We are also subject to various other legal proceedings and claims arising out of the ordinary course of business. While we do not expect the outcome of any such pending litigation to have a material adverse effect on our financial position, litigation is unpredictable and excessive verdicts, both in the form of monetary damages and injunctions, could occur. In the future, litigation could result in substantial costs and diversion of resources and we could incur judgments or enter into settlements of claims that could have a material adverse effect on our business.

If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements could be impaired, which could result in a loss of investor confidence in our financial reports, significant expenses to remediate any internal control deficiencies and ultimately have an adverse effect on the market price of our common stock.

As a publicly-traded company, we are subject to compliance with, among other regulations, Section 404 of the Sarbanes-Oxley Act of 2002, or SOX, which requires that we test our internal control over financial reporting and disclosure controls and procedures. Ensuring that we have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. Our compliance with SOX requires that we incur substantial expense and expend significant management time on compliance-related issues. If we fail to achieve and maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could harm our operating results and lead to a decline in our stock price. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the New York Stock Exchange, regulatory investigations, civil or criminal sanctions and class action litigation.

As a third-party technology service provider of mission-critical products and services to many financial institutions that are regulated by one or more member agencies of the Federal Financial Institutions Examination Council, or FFIEC, we are subject to an IT examination by the member agencies of the FFIEC. As a result, the FFIEC conducts recurring IT Examinations in order to identify existing or potential risks associated with our operations that could adversely affect the financial institutions to whom we provide products and services, evaluate our risk management systems and controls and determine our compliance with applicable laws that affect the products and services we provide to financial institutions. In addition to examining areas such as our management of technology, data integrity, information confidentiality and service availability, the reviews also assess our financial stability. In June 2014 the FDIC, a member agency of the FFIEC, completed its IT examination, and found that, while the services we provide to our client banks are satisfactory, several matters required further attention, some of which were repeat findings and recommendations from the FDIC’s 2012 examination. Although management has developed a plan for addressing these matters, we cannot be assured that the plan will satisfy the FDIC or applicable law. A sufficiently unfavorable review from the FFIEC in the future could have a material adverse effect on our business and financial condition.

If one or more U.S. states or local jurisdictions successfully assert that we should have collected or in the future should collect additional sales or use taxes on our fees, we could be subject to additional liability with respect to past or future sales, and the results of our operations could be adversely affected.

We do not collect state and local sales and use taxes in all jurisdictions in which our customers are located, based on our belief that such taxes are not applicable. Sales and use tax laws and rates vary by jurisdiction and such laws are subject to interpretation. Jurisdictions in which we do not collect sales and use taxes may assert that such taxes are applicable, which could result in the assessment of such taxes, interest and penalties, and we could be required to collect such taxes in the future. This additional sales and use tax liability could adversely affect the results of our operations.

Our business is subject to the risks of earthquakes, fires, floods and other natural catastrophic events and to interruption by man-made problems such as terrorism.

Our systems and operations are vulnerable to damage or interruption from earthquakes, fires, floods, power losses, telecommunications failures, terrorist attacks, acts of war and similar events. For example, a significant natural disaster, such as an earthquake, fire or flood, could have a material adverse impact on our business, operating results and financial condition, and our insurance coverage may be insufficient to compensate us for losses that may occur. Our corporate offices and one of the facilities we lease to house our computer and telecommunications equipment are located in the San Francisco Bay Area, a region known for seismic activity. In addition, acts of terrorism, which may be targeted at metropolitan areas with higher population density than rural areas, could cause disruptions in our or our customers’ businesses or the economy as a whole. We may not have sufficient protection or recovery plans in certain circumstances, such as natural disasters affecting the San Francisco Bay Area, and our business interruption insurance may be insufficient to compensate us for losses that may occur.

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Our stock price is volatile and purchasers of our common stock could incur substantial losses.

The trading price of our common stock may be subject to wide fluctuations in response to various factors, some of which are beyond our control. In addition to the factors discussed in this “Risk Factors” section and elsewhere in our filings with the Securities and Exchange Commission, these factors include:


•	our operating performance and the operating performance of similar companies;


•	the overall performance of the equity markets;


•	the number of shares our common stock publicly owned and available for trading;


•	threatened or actual litigation;


•	changes in laws or regulations relating to our solutions;


•	any major change in our board of directors or management;


•	publication of research reports about us or our industry or positive or negative recommendations or withdrawal of research coverage by securities analysts;


•	large volumes of sales of our shares of common stock by existing stockholders; and


•	general political and economic conditions.

In addition, the stock market in general has experienced extreme price and volume fluctuations. Securities class action litigation has often been instituted against companies following periods of volatility in the overall market and in the market price of a company’s securities. This litigation, if instituted against us, could result in very substantial costs, divert our management’s attention and resources and harm our business.

Our stock repurchase program may be suspended or terminated at any time, which may result in a decrease in the trading price of our common stock.

Our board of directors previously approved a stock repurchase program under which we are authorized to repurchase up to $75.0 million of our common stock over a 36-month period, all of which remains available as of September 30, 2014 . Such stock repurchases may be limited, suspended, or terminated at any time without prior notice. There can be no assurance that we will repurchase additional shares of our common stock under our stock repurchase program or that any future repurchases will have a positive impact on the trading price of our common stock or earnings per share. Important factors that could cause us to limit, suspend or terminate our stock repurchase program include, among others, unfavorable market conditions, the trading price of our common stock, the nature of other investment or strategic opportunities presented to us from time to time, the rate of dilution of our equity compensation programs, the availability of adequate funds, and our ability to make appropriate, timely, and beneficial decisions as to when, how, and whether to purchase shares under the stock repurchase program. If we limit, suspend or terminate our stock repurchase program, our stock price may be negatively affected.

If securities or industry analysts discontinue publishing research or publish inaccurate or unfavorable research about our business, our stock price and trading volume could decline.

The trading market for our common stock depends in part on the research and reports that securities or industry analysts publish about us or our business. If one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline.

Certain provisions in our charter documents and Delaware law could discourage takeover attempts and lead to management entrenchment.

Our amended and restated certificate of incorporation and amended and restated bylaws contain provisions that could have the effect of delaying or preventing changes in control or changes in our board of directors. These provisions include:


•	a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors;


•	no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;


•	the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;

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•	the ability of our board of directors to determine to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer;


•	a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders;


•	the requirement that a special meeting of stockholders may be called only by the chairman of the board of directors, the chief executive officer, the president or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and


•	advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.

We are also subject to certain anti-takeover provisions under Delaware law. Under Delaware law, a corporation may not, in general, engage in a business combination with any holder of 15% or more of its capital stock unless the holder has held the stock for three years or, among other things, the board of directors has approved the transaction.

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ITEM 6—EXHIBITS



Exhibit Number	Description of Document

10.1	Asset Purchase Agreement, dated as of August 7, 2014, by and among Ellie Mae, Inc., Mortgage Resource Center, Inc. (d/b/a AllRegs) and Glenn Ford.

10.2	Lease, dated July 17, 2014, between SFI PLEASANTON, LLC and Ellie Mae, Inc.

10.3#	Non-Employee Director Equity Compensation Policy

10.4	Amended and Restated Bylaws of Ellie Mae, Inc.

10.5	Board of Directors Offer Letter with Marina Levinson, dated August 22, 2014

31.1	Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934 as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2*	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS	XBRL Instance Document

101.SCH	XBRL Taxonomy Extension Schema Document

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	XBRL Taxonomy Extension Label Linkbase Document

101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document

_________________



*	Exhibits 32.1 and 32.2 are being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall such exhibits be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing.



#	Indicates management contract or compensatory plan.

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SIGNATURES

Pursuant to the requirements 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.



		ELLIE MAE, INC.

Date:	November 5, 2014	By:	/s/ Edgar A. Luce
			Edgar A. Luce
			Executive Vice President, Finance and Administration and Chief Financial Officer (Principal Financial and Accounting Officer and duly authorized signatory)

Exhibit 10.1

EXECUTION COPY

ASSET PURCHASE AGREEMENT

by and among

MORTGAGE RESOURCE CENTER, INC. (D/B/A ALLREGS),

GLENN FORD

AND

ELLIE MAE, INC.,

dated as of August 7, 2014

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ARTICLE I PURCHASE AND SALE


Section 1.1	Transfer of Purchased Assets


Section 1.2	Excluded Assets


Section 1.3	Assumed Liabilities


Section 1.4	Excluded Liabilities


Section 1.5	Transfer of Omitted Assets


Section 1.6	Purchase Price Proceeds; Certain Directed Payments


Section 1.7	Adjustment to Initial Purchase Price Proceeds


Section 1.8	Escrow Funds


Section 1.9	Allocation of Purchase Price Proceeds for Purchased Assets


Section 1.10	Withholding

ARTICLE II CLOSING


Section 2.1	Closing


Section 2.2	Closing Deliveries

ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDER


Section 3.1	Authority and Binding Effect


Section 3.2	Organization; Capitalization


Section 3.3	Subsidiaries


Section 3.4	No Violations


Section 3.5	Consents and Approvals


Section 3.6	Financial Statements; Books and Records


Section 3.7	Absence of Changes. Except as otherwise disclosed to Purchaser on the Company Disclosure Schedule:


Section 3.8	Title to Assets; Leased Property and Related Matters


Section 3.9	[ Reserved ]


Section 3.10	Litigation


Section 3.11	Compliance With Laws; Foreign Corrupt Practices Act


Section 3.12	Permits


Section 3.13	Environmental Matters


Section 3.14	Material Contracts


Section 3.15	Intellectual Property


Section 3.16	Information Technology.


Section 3.17	Privacy and Personal Data.


Section 3.18	Tax Matters


Section 3.19	Employee Benefit Plans


Section 3.20	Insurance


Section 3.21	Transactions with Directors, Officers and Affiliates


Section 3.22	Labor and Employment


Section 3.23	Customers and Suppliers


Section 3.24	Brokers


Section 3.25	Full Disclosure

ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PURCHASER


Section 4.1	Authority and Binding Effect


Section 4.2	Organization


Section 4.3	No Violations


Section 4.4	Consents and Approvals


Section 4.5	Litigation


Section 4.6	Brokers.


Section 4.7	Sufficiency of Funds..


Section 4.8	Independent Investigation..

ARTICLE V GENERAL COVENANTS


Section 5.1	Access to Information


Section 5.2	Operation of the Business


Section 5.3	Confidentiality


Section 5.4	Consents and Approvals


Section 5.5	Further Action


Section 5.6	Press Releases


Section 5.7	Tax Matters


Section 5.8	Employee Matters


Section 5.9	Non-Compete; Non-Solicitation


Section 5.10	Post-Closing Consents; Nonassignable Contracts


Section 5.11	Reserved


Section 5.12	Name Change


Section 5.13	Supplement to Company Disclosure Schedule.

ARTICLE VI CLOSING CONDITIONS


Section 6.1	Conditions to Purchaser’s Obligations.


Section 6.2	Conditions to Obligations of the Company and the Stockholder.

ARTICLE VII INDEMNIFICATION


Section 7.1	Survival of Representations and Warranties and Covenants


Section 7.2	Obligation to Indemnify


Section 7.3	Satisfaction of Claims.


Section 7.4	Indemnification Procedures


Section 7.5	Subrogation


Section 7.6	Indemnification Payments


Section 7.7	Remedies Exclusive

ARTICLE VIII TERMINATION


Section 8.1	Right of Termination


Section 8.2	Effect of Termination

ARTICLE IX MISCELLANEOUS


Section 9.1	Notices


Section 9.2	Fees and Expenses


Section 9.3	Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury


Section 9.4	Attorneys’ Fees


Section 9.5	Entire Agreement


Section 9.6	Waivers and Amendments; Non Contractual Remedies; Preservation of Remedies


Section 9.7	Severability


Section 9.8	Binding Effect; Assignment


Section 9.9	Interpretation


Section 9.10	No Third Party Beneficiaries


Section 9.11	Counterparts


Section 9.12	Headings


Section 9.13	Further Assurances

Annexes

Annex A Definitions; Cross References

Exhibits

Exhibit A Sample Closing Net Working Capital Calculation

Exhibit B Forms of Assignment and Assumption Agreement

Exhibit C Form of Escrow Agreement

Exhibit D Form Bill of Sale

Exhibit E Form Third Party Consent

Schedules

Schedule 1.1(a) – Assigned Contracts

Schedule 1.1(b) – Equipment

Schedule 1.1(c)(i) – Assigned Intellectual Property

Schedule 1.1(c)(ii) – Licensed Intellectual Property

Schedule 1.1(f) – Leased Real Property

Schedule 1.1(g) – Personal Property Leases

Schedule 1.1(i) – Prepaid Expenses

Schedule 1.1(l) – Permits

Schedule 1.2(f) – Certain Excluded Assets

Schedule 1.6(a)(i) – Company’s Allocation of Purchase Price Proceeds

Company Disclosure Schedule

Schedule 1.9(a) – Allocation of Purchase Price

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT (this “ Agreement ”), dated as of August 7, 2014, is made by and among MORTGAGE RESOURCE CENTER, INC. (D/B/A ALLREGS), a Minnesota corporation (the “ Company ”), Glenn Ford, in his individual capacity (the “ Stockholder ”), and Ellie Mae, Inc., a Delaware corporation (the “ Purchaser ”). Purchaser, the Company and the Stockholder are each referred to herein as a “ Party ” and collectively as the “ Parties .” Capitalized terms used herein without definition shall have the meanings specified in Annex A below.

WHEREAS, subject to the terms and conditions of this Agreement, the Company wishes to sell the Purchased Assets and transfer the Assumed Liabilities to Purchaser, and Purchaser wishes to purchase the Purchased Assets and assume the Assumed Liabilities from the Company; and

WHEREAS, the board of directors of the Company has unanimously approved and declared advisable this Agreement and the transactions contemplated herein upon the terms and subject to the terms and conditions of this Agreement;

NOW, THEREFORE, in consideration of the premises and of the mutual representations, warranties, and covenants contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged and intending to be legally bound hereby, the Parties hereby covenant and agree as follows:

ARTICLE I

PURCHASE AND SALE

Section 1.1 Transfer of Purchased Assets . Subject to the terms and conditions of this Agreement, at the Closing, the Company shall sell, transfer, convey, assign and deliver to Purchaser, and Purchaser shall purchase, accept and acquire from the Company, all of the Company’s right, title, and interest in, to and under all of the assets, rights, claims and contracts related to the Business (collectively, the “ Purchased Assets ”), free and clear of all Liens (other than Permitted Liens), including without limitation, the following:

(a) Subject to Section 5.10 , all Assigned Contracts, including without limitation as set forth on Schedule 1.1(a) , including all rights to assert claims and take other actions in respect of breaches or other violations of such Assigned Contracts;

(b) all Equipment, including without limitation as set forth on Schedule 1.1(b) ;

(c) all Intellectual Property Rights and Technology owned by the Company and related to or used in the Business, including without limitation as set forth on Schedule 1.1(c)(i) , and all goodwill associated with any of the foregoing, together with the right to sue or otherwise recover for any past, present, or future infringements, dilutions, misappropriations or other violations thereof (collectively, the “ Assigned Intellectual Property ”) and all rights under the Assigned Contracts relating to Intellectual Property Rights and Technology licensed to the Company and related to or used in the operation of the Business, including without limitation as set forth on Schedule 1.1(c)(ii) (collectively, “ Licensed Intellectual Property ”);

(d) all goodwill associated with the Business;

(e) all Accounts Receivable;

(f) the Real Property Lease and tenant improvements related to the Leased Real Property, as set forth on Schedule 1.1(f) ;

(g) the personal property leases, if any, set forth on Schedule 1.1(g) (the “ Personal Property Leases ” and together with the Real Property Lease, the “ Leases ”);

(h) all Books and Records (except as set forth in Section 1.2(d) , below);

(i) all prepaid expenses, security deposits and advance payments related to the Business (other than Excluded Assets), except for prepaid insurance and as specifically set forth on Schedule 1.1(i) (the “ Prepaid Expenses ”);

(j) except to the extent relating solely to the Excluded Assets or Excluded Liabilities, all of the Company’s rights, claims, causes of action, rights of indemnity, warranty rights, rights of contribution, rights of recovery and any

other similar rights against employees, third parties or other Persons, in each case possessed by the Company and related to the Business;

(k) intentionally omitted;

(l) to the extent transferable, all Permits held by the Company that are required or necessary for the lawful ownership or operation of the Business or the Purchased Assets (other than Retained Permits), including without limitation as set forth on Schedule 1.1(l) ; and

(m) all other rights and assets not described above which are used or held for use in the Business, which are not an Excluded Asset.

Section 1.2 Excluded Assets . Notwithstanding the provisions of Section 1.1 , the Company is not selling, transferring, conveying, assigning or delivering to Purchaser, and Purchaser is not purchasing, accepting or acquiring from the Company, any right, title, or interest of the Company in, to or under any asset, right, claim or contract set forth below (collectively, the “ Excluded Assets ”):

(a) all cash (including, cash deposits), petty cash and cash equivalents;

(b) any outstanding loans made to a director or officer of the Company;

(c) all rights of the Company arising under this Agreement (including the Purchase Price Proceeds), the Other Agreements or from the consummation of the Transactions contemplated hereby or thereby;

(d) Retained Permits;

(e) all minute books and other corporate or comparable records having to do with the organization and capitalization of the Company;

(f) all Benefits Plans; and

(g) all insurance policies and rights to recovery under such insurance policies and rights to refunds for prepaid insurance.

Section 1.3 Assumed Liabilities . Subject to the terms and conditions of this Agreement, at the Closing, Purchaser shall assume, and shall pay, perform, satisfy and discharge (or cause to be paid, performed, satisfied and discharged) when due, the following Liabilities of the Company related to the Purchased Assets, but excluding the Excluded Liabilities (collectively, the “ Assumed Liabilities ”):

(a) all Liabilities to be paid, performed, satisfied or discharged under the Assigned Contracts arising after the Closing Date (other than with respect to any Assigned Contract not assigned at Closing, for which Purchaser shall assume, if and when assigned, all Liabilities to be paid, performed, satisfied or discharged under such Assigned Contract after the date such Assigned Contract is transferred pursuant to Section 5.10 ), and excluding such Liabilities that were otherwise required to have been paid, performed, satisfied or discharged prior to the Closing Date (or in the case of any Assigned Contract not assigned at Closing, on or prior to the date such Assigned Contract is transferred pursuant to Section 5.10 );

(b) all trade accounts payable, accrued operating expenses and deferred revenues related solely to the Business accrued in the ordinary course of business consistent with past practice, and in the case of trade accounts payable and accrued operating expenses, to the extent incorporated into Closing Net Working Capital (the “ Accounts Payable and Accrued Expenses ”);

(c) all Liabilities with respect to the employment of Transferred Employees by Purchaser incurred after the Closing Date, excluding any Liabilities to Transferred Employees which become due and payable solely as a result of the transactions contemplated hereby; and

(d) all other Liabilities arising out of Purchaser’s ownership or operation of the Business and Purchased Assets on or after the Closing Date, except to the extent such Liabilities would otherwise constitute Excluded Liabilities

( provided, that this Section 1.3(d) shall not preclude or limit Purchaser’s right to indemnification arising out of any breach of a representation or warranty of the Company or the Stockholder hereunder).

Section 1.4 Excluded Liabilities . Notwithstanding anything to the contrary in this Agreement, the Assumed Liabilities will exclude any other Liability whatsoever not expressly assumed by Purchaser under Section 1.3 , including, but not limited to, the following Liabilities (collectively, the “ Excluded Liabilities ”):

(a) all Liabilities of the Company arising under this Agreement, the Other Agreements or from the consummation of the Transactions contemplated hereby or thereby, including, without limitation any Transaction Expenses of the Company;

(b) all Liabilities required to be paid, performed, satisfied or discharged under the Assigned Contracts prior to the Closing Date (or with respect to any Assigned Contracts not assigned at Closing, all Liabilities required to be paid, performed, satisfied or discharged under such Assigned Contract prior to the date such Assigned Contract is transferred pursuant to Section 5.10 ), and any Liability for the Company’s failure to so perform or satisfy such Liabilities, including any breach of such Assigned Contract with respect to an event or period on or prior to the Closing Date (or in the case of any Assigned Contracts not assigned at Closing, on or prior to the date such Assigned Contract is transferred pursuant to Section 5.10 );

(c) all Liabilities arising out of or related to the Excluded Assets, and unless specifically assumed as Purchased Assets or Assumed Liabilities, all Liabilities resulting from or arising out of the conduct of the Business prior to the Closing;

(d) all Liabilities arising out of or related to or in respect of any employment or services performed by any individual (i) for periods on or prior to the Closing Date, (ii) which become due and payable solely as a result of the transactions contemplated hereby (including any change of control or similar bonus), and (iii) with respect to employees or other persons who do not continue employment or service with Purchaser following the Closing Date, for periods on or after the Closing Date, including but not limited to, workers compensation claims, except to the extent such Liabilities are included in Accounts Payable and Accrued Expenses included in Closing Net Working Capital;

(e) any Liabilities for unused vacation time to which any Transferred Employee is entitled as of immediately prior to the Closing Date unless such amount is reflected as a liability in the Closing Net Working Capital Amount;

(f) except as provided in Section 5.7 , any Liabilities of the Company or the Stockholder, or otherwise imposed on the Purchased Assets or with respect to the Business, for any Pre-Closing Tax Period in respect of any Tax, including without limitation (i) any Liability of the Company or the Stockholder for the Taxes of any other Person under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local or foreign law), as a transferee or successor, by contract or otherwise and (ii) any Transfer Taxes;

(g) all Existing Environmental Liabilities;

(h) all Liabilities arising out of or related to the ownership or other interests of any security holder of any the Company, including with respect to any operating agreement, voting agreement, tax sharing agreement, option or rights agreement, or other arrangement or agreement among such persons and/or their Affiliates; and


(i)	all Indebtedness of the Company.

Section 1.5 Transfer of Omitted Assets . Except as otherwise provided in Section 5.10 , following the Closing, to the extent not previously sold, transferred, conveyed, assigned or otherwise delivered to Purchaser at Closing pursuant to Section 1.1 , the Company shall, upon request from Purchaser, sell, transfer, convey, assign and deliver to Purchaser, and Purchaser shall purchase (for no additional consideration), accept and acquire from the Company all of the Company’s right, title and interest in, to and under any asset related to the Business (other than the Excluded Assets) (without the requirement that the asset in question be scheduled, if applicable) and all associated Liabilities arising after the date of such transfer (collectively, the “ Omitted Assets ”). The Parties acknowledge and agree that any Omitted Asset required by this Section 1.5 to be transferred by the Company, on the one hand, and acquired by Purchaser, on the other hand, shall for all purposes of this Agreement be deemed to have been an “Assigned Contract” or asset subject to such other applicable category described in Section 1.1 , as applicable (without regard to the schedule referred to in such definition, if applicable) and a “Purchased Asset”, and shall be deemed to have been included in the applicable schedule as of the date hereof for purposes of Article III or Article VII .

Section 1.6 Purchase Price Proceeds; Certain Directed Payments . Upon the terms and subject to the conditions of this Agreement, in consideration for the transfer of the Purchased Assets to Purchaser, in each case pursuant to this Article I , Purchaser shall:

(a) pay to the Company, as allocated pursuant to Schedule 1.6(a) , the “ Initial Purchase Price Proceeds ” of (i) Thirty Million Dollars ($30,000,000) in cash, minus (ii) the Estimated Net Working Capital Deficit, if applicable, plus (iii) the Estimated Net Working Capital Excess, if applicable, minus (iv) Three Million Dollars ($3,000,000) in cash to be held by the Escrow Agent as the Escrow Funds (as defined below), minus (v) the Estimated Closing Debt Amount, if any, to be repaid at Closing, and minus (vi) the Estimated Subscription Amount. Any adjustments to the Initial Purchase Price Proceeds shall be made in accordance with Section 1.7 below (the Initial Purchase Price Proceeds, as so adjusted the “ Purchase Price Proceeds ”). All payments to the Company will be paid by wire transfer of immediately available funds to the applicable account set forth on Schedule 1.6(a) ;

In calculating the Initial Purchase Price Proceeds, “ Estimated Net Working Capital Deficit ” means the amount by which Estimated Closing Net Working Capital is less than the Base Net Working Capital, if applicable, and “ Estimated Net Working Capital Excess ” means the amount by which Estimated Closing Net Working Capital is greater than the Base Net Working Capital, if applicable.

Section 1.7 Adjustment to Initial Purchase Price Proceeds .

(a) No later than ninety (90) Business Days following the Closing Date, Purchaser shall prepare and deliver to the Company its calculation of the Purchase Price Proceeds, including the Closing Net Working Capital, Closing Debt Amount and Subscription Amount, such calculation to be based on the Books and Records and other Business information then available, and with respect to Closing Net Working Capital, consistent with the example calculation set forth on Exhibit A (the “ Closing Date Schedule ”). The Company shall provide reasonable assistance to Purchaser in connection with preparation of the Closing Date Schedule, including by providing reasonable access to books and records of the Company. Purchaser shall deliver to the Company all reasonably requested relevant backup materials, in detail reasonably requested by the Company, together with a certification, signed by Purchaser’s chief financial officer, and confirming that such calculations have been prepared in good faith consistent with the example set forth on Exhibit A , concurrently with the delivery of such calculation. As provided in Section 1.6 hereof, purchase price payable hereunder shall be adjusted, dollar for dollar, up or down, as appropriate, to the extent that Purchase Price Proceeds, as finally determined pursuant to this Section 1.7 either (x) exceeds the Initial Purchase Price Proceeds, or (y) is less than the Initial Purchase Price Proceeds, as applicable.

(b) If the Company disputes the calculation of any component of the Purchase Price Proceeds set forth in the Closing Date Schedule, then the Company may deliver a written notice (a “ Dispute Notice ”) to Purchaser at any time during the thirty (30) calendar day period commencing upon receipt by the Company of the Closing Date Schedule (the “ Review Period ”). The Dispute Notice shall set forth in reasonable detail the basis for any dispute as well as the Company’s calculation of the disputed component, which shall be done in good faith consistent, in the case of Closing Net Working Capital, with the example calculation set forth on Exhibit A . If the Company does not deliver a Dispute Notice prior to the expiration of the Review Period, then Purchaser’s determination of the Purchase Price Proceeds set forth in the Closing Date Schedule shall be deemed final and binding on the Company and Purchaser for all purposes of this Agreement.

(c) If the Company delivers a Dispute Notice to Purchaser prior to the expiration of the Review Period, then the Company and Purchaser shall use commercially reasonable efforts to reach agreement on each component of Purchase Price Proceeds that is in dispute. If the Company and Purchaser are unable to reach agreement on the final resolution of each component of Purchase Price Proceeds that is in dispute within thirty (30) calendar days after the end of the Review Period, then either Party shall have the right to refer such dispute to a mutually agreed independent accountant of nationally recognized reputation for resolution (the “ Neutral Party ”). In connection with the resolution of any such dispute by the Neutral Party: (i) the Company and Purchaser shall have a reasonable opportunity to meet with the Neutral Party to provide their views as to any issues with respect to the calculation of any component of Purchase Price Proceeds that are unresolved from the Dispute Notice; (ii) the Neutral Party, acting as an expert and not as an arbitrator, shall determine Purchase Price Proceeds consistent with the example set forth on Exhibit A (and perform any necessary calculations in connection therewith) within thirty (30) calendar days of such referral, and upon reaching such determination shall deliver a copy of its calculations (the “ Expert Calculations ”) to the Company and Purchaser; and (iii) Purchase Price Proceeds, as determined by the Neutral Party shall, absent fraud or manifest error, be binding upon the Parties. In performing the Expert Calculations, the Neutral Party (i) shall be limited to addressing any particular disputes referred to in the Dispute Notice and (ii) such calculation shall, with respect to any disputed item, be no greater than the higher amount calculated by the Company or Purchaser, and no less than the lower amount calculated by the Company or Purchaser, as the case may be. The Expert Calculations shall reflect in detail the differences, if any, between Purchase Price

Proceeds reflected therein and Purchase Price Proceeds set forth in the Closing Date Schedule. If such a review is conducted, then the Party (i.e., Purchaser, on the one hand, or the Company, on the other hand) whose last proposed offer for the settlement of the items in dispute, taken as a whole, was farther away from the final determination by the Neutral Party pursuant to the preceding sentence, shall pay all fees and expenses associated with such review.

(d) No later than twenty (20) Business Days following the final determination of Purchase Price Proceeds pursuant to Sections 1.7(b) and 1.7(c) (the “ Adjustment Payment Date ”):

(i) if the Purchase Price Proceeds, as finally determined pursuant to Sections 1.7(b) and 1.7(c) , exceeds the Initial Purchase Price Proceeds, then Purchaser shall, on or prior to the Adjustment Payment Date, pay to the Company the amount of such difference; and

(ii) if the Purchase Price Proceeds, as finally determined pursuant to Sections 1.7(b) and 1.7(c) , is less than the Initial Purchase Price Proceeds, then either the Company or the Stockholder shall, on or prior to the Adjustment Payment Date, pay to Purchaser, the amount of such difference.

(e) All payments described in this Section 1.7 shall be made by wire transfer of immediately available funds to the account or accounts previously specified in writing by the recipient Party.

Section 1.8 Escrow Funds At the Closing, Purchaser shall deposit Three Million Dollars ($3,000,000) (the “ Escrow Funds ”) from the Purchase Price to be held by the Escrow Agent for a period of eighteen (18) months from the Closing Date (the “ Escrow Expiration Date ”) with the Escrow Agent pursuant to the Escrow Agreement in order to efficiently administer certain matters contemplated hereby following the Closing, including but not limited to the defense or settlement of any claims for which the Purchaser Indemnitees (as defined below) may be entitled to indemnification pursuant to Article VII.

Section 1.9 Allocation of Purchase Price Proceeds for Purchased Assets .

(a) The Purchase Price Proceeds (plus Assumed Liabilities, to the extent properly taken into account for federal income tax purposes) shall be allocated among the Purchased Assets and the covenant not to compete contained in this Agreement in accordance with Section 1060 of the Code and the Treasury Regulations thereunder (and any similar provisions of state, local or foreign law, as appropriate) (the “ Allocation ”). The Allocation shall be delivered by Purchaser to the Company within ninety (90) calendar days after the final determination of Purchase Price Proceeds pursuant to Sections 1.7(b) and 1.7(c) for the Company’s approval, which approval shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, the Allocation should be prepared in accordance with the principles set forth on Schedule 1.9(a) (the “ Allocation ”).

(b) The Allocation shall be revised to appropriately take into account any payments made pursuant to Section 1.7 (to the extent necessary), Article VII or any other provisions of the Agreement, and Purchaser shall deliver to the Company an amended Allocation reflecting such revision.

(c) The Company and Purchaser (each a “ Tax Filing Party ”) shall file all Tax Returns (including IRS Form 8594) consistent with the Allocation (as may be amended pursuant to Section 1.9(b) ). Each Tax Filing Party shall prepare and file its Tax Returns consistently with the Allocation; provided , however, that nothing contained herein shall prevent a Tax Filing Party from settling any proposed deficiency or adjustment by any Governmental Authority based upon or arising out of the Allocation, and no Tax Filing Party shall be required to litigate before any court any proposed deficiency or adjustment by any Governmental Authority challenging such Allocation.

Section 1.1 Withholding . Purchaser shall be entitled to deduct and withhold from any consideration otherwise payable pursuant to this Agreement such amounts as Purchaser may be required to deduct and withhold with respect to the making of such payment under the Code, or any provision of applicable Tax law. To the extent that amounts are so withheld, such amounts shall be treated for all purposes of this Agreement as having been paid to the applicable Person in respect of which such deduction and withholding was made.

ARTICLE II

CLOSING

Section 2.1 Closing . The closing (the “ Closing ”) of the transactions contemplated by this Agreement and the other Documents (the “ Transactions ”) shall take place as soon as practicable hereafter, but in any event within five (5) Business Days, upon the satisfaction or (or to the extent permitted) waiver of the latest to occur of the conditions to the Closing set forth in

Article VI hereof (other than the conditions to be satisfied at the Closing) or such other date as shall be mutually agreeable to the Parties hereto (the “ Closing Date ”).

Section 2.2 Closing Deliveries . At the Closing, unless waived (to the extent such conditions can be waived), each Party hereto shall deliver to the appropriate Persons each of the documents, certificates, instruments or evidences of satisfaction of conditions required to be delivered by such Party as a condition to the Closing pursuant to Article VI.

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE STOCKHOLDER

Each of the Company and the Stockholder hereby jointly and severally represent and warrant to Purchaser that the statements contained in this Article III are true and correct, except as set forth in the schedules provided by the Company to Purchaser (the “ Company Disclosure Schedule ”), in each case as of the date of this Agreement and as of the Closing.

Section 3.1 Authority and Binding Effect . The Company and the Stockholder have all requisite power and authority to execute and deliver this Agreement and the Other Agreements to be executed and delivered by, or on behalf of, such Party, and to consummate the Transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the Other Agreements have been, at a meeting duly called and held (or pursuant to a unanimous written consent in lieu thereof), duly and validly unanimously approved by the board of directors of the Company, and this Agreement and the transactions contemplated hereby have been unanimously adopted and approved by all of the voting stockholders of the Company. No additional other corporate proceedings on the part of the Company is necessary in connection with the execution, delivery and performance of this Agreement or the Other Agreements. This Agreement has been duly executed and delivered by each of the Company and the Stockholder and this Agreement is (and the Other Agreements when executed and delivered will be) a legal, valid and binding obligation of each of the Company and the Stockholder enforceable against such Party in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally and to general principles of equity.

Section 3.2 Organization; Capitalization .

(a) The Company is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Minnesota and has all requisite corporate power and authority to own its properties and carry on the Business as it is now being conducted, and, in each case, is duly licensed or qualified to do business and is in good standing as a corporation in each jurisdiction in which the nature of the Business or ownership of its properties makes such qualification necessary, except where any failure to be so qualified and in good standing could not reasonably be expected to have or result in a Material Adverse Effect. The Company has made available to Purchaser correct and complete copies of its Organization Documents, which documents reflect all amendments made thereto at any time on or prior to the date hereof. The Company is not in material default under or in violation of any material provision of its Organization Documents.

(b) The authorized capital stock of the Company consists of (i) 500,000 shares of Class A Voting Common Stock, of which 500 shares are issued and outstanding as of the date hereof, and 500,000 shares of Class B Non-Voting Common Stock, of which 5,000 shares are issued and outstanding as of the date hereof (the “ Company Common Stock ”). As of the date hereof, the Company Common Stock is held by the Persons listed in Schedule 3.2(b) of the Company Disclosure Schedule, which further sets forth for each such Person the number of shares of Company Common Stock held by such Person and the number of the applicable stock certificates representing such shares. All outstanding shares of Company Common Stock are duly authorized, validly issued, fully paid and non-assessable and are not subject to preemptive rights created by statute, the Company’s Organizational Documents, or any agreement to which the Company is a party or by which it is bound. All outstanding shares of Company Common Stock were issued in compliance with Applicable Law, including federal and state securities laws. There are no outstanding shares of Company Common Stock that constitute unvested restricted stock or that are otherwise subject to a repurchase or redemption right. There are no declared or accrued but unpaid dividends with respect to any shares of Company Common Stock. The Company has no other capital stock authorized, issued or outstanding, and no options, warrants or other securities convertible into or exercisable for shares of Company Common Stock.

Section 3.3 Subsidiaries . The Company does not own or has not owned any Subsidiary (currently in existence or otherwise), or any other interest or right to any interest in any other Person.

Section 3.4 No Violations . Except as set forth on Schedule 3.4 , the execution and delivery of this Agreement and the Other Agreements by each of the Company and the Stockholder, and the performance and consummation of the Transactions contemplated hereby and thereby by the Company and the Stockholder, does not (a) conflict with or violate any provision of the

Company’s Organizational Documents, (b) conflict with, or result in the breach of, or constitute a violation of or default under, or result in the termination, cancellation or acceleration (whether after the giving of notice or the lapse of time or both) of any right or obligation of the Company or the Business under, any Contract or the loss of any benefit to which the Company is entitled under any Contract, (c) violate or result in a breach of or constitute a default under any Applicable Law to which the Company or the assets or operation of the Business is subject or (d) give rise to any preferential purchase right, right of first refusal, Lien of any nature, or similar rights upon or with respect to any of the property or other assets now or hereafter owned by the Company.

Section 3.5 Consents and Approvals . Except as set forth on Schedule 3.4 , no notice to, declaration or filing with, or Consent of any Person is required by or with respect to the Company or the Business in connection with the execution and delivery by the Company and the Stockholder of this Agreement, and the consummation of the Transactions contemplated hereby in accordance with the terms hereof or the assignment of the Assigned Contracts to Purchaser.

Section 3.6 Financial Statements; Books and Records .

(a) The Company has delivered to Purchaser true and complete copies of the following financial statements, copies of which are attached in Schedule 3.6(a) of the Company Disclosure Schedule: (i) the audited balance sheet of the Company as of December 31, 2012 and December 31, 2013, and the related audited statements of income, retained earnings and cash flows of the Company for the twelve (12) months then ended, and (ii) the unaudited balance sheet of the Company as of June 30, 2014, and the related unaudited statements of income, retained earnings and cash flows for the six (6)] months then ended (together, the “ Financial Statements ”). The Financial Statements are true, accurate and correct in all material respects, have been prepared in accordance with GAAP consistently applied and consistent with the books and records of the Company and present fairly in all material respects the financial condition of the Business and results of the operations and cash flows of the Business at and for the periods presented.

(b) The books of account and other financial records of the Company have been kept accurately in the ordinary course of business consistent with past practice and Applicable Law in all material respects, the transactions entered therein represent bona fide transactions, and the revenues, expenses, assets and liabilities of the Company have been properly recorded therein in all material respects. The Company has established and maintains a system of internal accounting controls suitable for a privately held company of its size and sufficient to provide reasonable assurance, in all material respects (i) that receipts and expenditures of the Company are being executed and made only in accordance with appropriate authorizations of management and the board of directors of the Company, (ii) that transactions are recorded as necessary to permit preparation of financial statements for external purposes in conformity with GAAP, (iii) regarding prevention or timely detection of unauthorized acquisition, use or disposition of the assets of the Company that could reasonably be expected to be material to the Company, (iv) that the amount recorded for assets on the books and records of the Company are compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any difference and (v) accounts, notes and other receivables and inventory are recorded accurately, and proper and adequate procedures are implemented to effect the collection thereof on a current and timely basis.

(c) Since December 31, 2011, there has been no material change in any accounting controls, policies, principles, methods or practices, including any change with respect to reserves (whether for bad debts, contingent liabilities or otherwise), of the Company, other than (i) write-downs or write-offs in the value of assets as required under GAAP or (ii) such adjustments as may be required by under GAAP as a result of the consummation of the Transactions contemplated by this Agreement.

(d) The Company does not have any liability or obligation of any kind whatsoever relating to the Business, whether accrued, contingent, absolute, determined, determinable or otherwise, other than Liabilities of the Business that have been incurred by the Company after December 31, 2013 in the ordinary course of business consistent with past practice and that have not been incurred as a result of the breach of any Contract, the violation of any Applicable Law or the commission of any tort.

(e) The Accounts Receivable represent bona fide claims against debtors for sales, services performed or other charges arising on or before the respective dates of recording thereof. All Accounts Receivable have been billed in accordance with the past practice and custom of the Company consistently applied and are collectible in the ordinary course of business consistent with past practice.

(f) The Company has paid all trade accounts payables related to the Business (which, pursuant to their stated terms, were required to be paid in the ordinary course of business prior to the Closing Date).

Section 3.7 Absence of Changes . Except as otherwise disclosed to Purchaser on the Company Disclosure Schedule:

(d) Since December 31, 2013, the Company has conducted the Business in all material respects in the ordinary course of business consistent with past practice.

(e) From December 31, 2013 through the date of this Agreement, there has not been any Material Adverse Effect or any events, changes, effects or developments that have had or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(f) From December 31, 2013 through the date of this Agreement, the Company has not taken any action to (nor has there occurred any action to):

(i) amend the Organizational Documents (whether by merger, consolidation or otherwise) of the Company;

(ii) split, combine or reclassify any capital stock of the Company, or declare, set aside or pay any dividend or other distribution (other than cash dividends or cash distributions) in respect of any securities of the Company, or redeem, repurchase or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any such securities (other than redemptions of non-voting securities for cash);

(iii) issue, deliver or sell, or authorize the issuance, delivery or sale of, any shares of capital stock or any other security the Company, or amend any term of any security of the Company (whether by merger, consolidation or otherwise);

(iv) acquire (by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, any assets, securities, properties, interests or businesses related to the Business, other than acquisitions in the ordinary course of business consistent with past practice;

(v) sell, lease, license or otherwise transfer, or create or incur any Liens (other than Permitted Liens) on, any of the Purchased Assets, other than sales or licenses of products or services in the ordinary course of business consistent with past practice;

(vi) except in the ordinary course of business consistent with past practice and except for distributions to stockholders, make any payment in respect of any obligation to any officer, director, stockholder, Affiliate or Related Person of any amount;

(vii) (A) enter into any Contract that would be a Material Contract (other than Contracts entered into in the standard form(s) made available to Purchaser), (B) modify, amend or terminate any Material Contract in any material respect (other than completion, non-renewal, or expiration of any Material Contract in accordance with its existing terms) or (C) waive, release or assign any of the material rights or claims of the Company thereunder;

(viii) enter into any Contract that limits or otherwise restricts in any material respect the Business or any of the Purchased Assets or that would reasonably be expected to, after the Closing Date, limit or restrict in any material respect Purchaser or any of its Affiliates, from engaging or competing in any line of business, at any location or with any Person;

(ix) materially change the accounting policies or procedures related to the Business or the Company;

(x) other than in the ordinary course of business under agreements, or written policies which have been made available to Purchaser: (A) grant or increase any severance or termination pay to (or amend any existing arrangement with) any Business Employee, (B) pay any bonuses or increase the rates of base compensation, bonus compensation, commissions or other compensation or benefits payable or to become payable to any Business Employee, (C) increase benefits payable to any Business Employee under any existing severance or termination pay policies or employment agreements, (D) enter into any employment, deferred compensation or other agreement or offer (or amend any such existing agreement or offer) with any Business Employee or (E) establish, adopt or amend (except as required by Applicable Law) any collective bargaining, bonus, commission, profit-sharing, thrift, pension, retirement, deferred

compensation, compensation, option, restricted unit or interest or other benefit plan or arrangement covering any Business Employee;

(xi) commence, settle, or offer or propose to settle, any Proceeding involving the Business, Purchased Assets or Assumed Liabilities;

(i) make, change or revoke any Tax election; change an annual accounting period; adopt or change any accounting method with respect to Taxes; file any amended Tax Return; enter into any tax allocation agreement, tax sharing agreement, tax indemnity agreement or closing agreement relating to any Tax; settle or compromise any claim, notice, audit report or assessment in respect of Taxes; or consent to any extension or waiver of the limitation period applicable to any claim or assessment with respect to Taxes; in each case to the extent such action could affect the conduct of the Business or otherwise affect Purchaser;

(ii) make any capital expenditure related to the Business in excess of $250,000 individually;

(iii) take any action that would, individually or in conjunction with any other action, require notice to any current or former employee under the WARN Act or any Other WARN Laws;

(iv) enter into any arrangement the result of which is the loss, expiration or termination of any license or right under or to any Licensed Intellectual Property, except in the ordinary course of business consistent with past practice which is not material to the Business; or

(v) agree or commit to any of the foregoing.

Section 3.8 Title to Assets; Leased Property and Related Matters .

(a) The Company has good and valid title to, or, in the case solely of the Leased Real Property and Personal Property Leases, the Company has a valid right to use such Leased Real Property and Personal Property Leases, all of the Purchased Assets, free and clear of all Liens, except for Permitted Liens. The Stockholder does not have any right, title, and interest in (other than solely in his capacity as a stockholder of the Company), to or under any assets, rights, claims and contracts related to the Business, including any assets which would constitute Purchased Assets pursuant to Section 1.1 if the Stockholder were substituted for the Company therein.

(b) The Purchased Assets constitute all of the properties, rights and interests necessary to conduct the Business in substantially the same manner as conducted by the Company prior to the Closing.

(d) Schedule 3.8(d) of the Company Disclosure Schedule sets forth a list of all real property leased by the Company (the “ Leased Real Property ”). Accurate and complete copies of all leases relating to Leased Real Property (the “ Real Property Leases ”) have been made available to Purchaser. With respect to each Real Property Lease:

(i) The Company has a valid and enforceable leasehold interest to the leasehold estate in the Leased Real Property granted to the Company pursuant to such Real Property Lease, subject to applicable bankruptcy, insolvency, moratorium or other similar laws relating to creditors’ rights and general principles of equity;

(ii) such Real Property Lease has been authorized and executed by the Company, and represent the entire agreement with each landlord with respect to each parcel of Leased Real Property leased thereby;

(iii) the Company is not in material default under such Real Property Lease, nor, to the Company’s knowledge, has any event occurred which, with notice or the passage of time, or both, would give rise to such a default by the Company;

(iv) to the Company’s knowledge, the landlord identified in such Real Property Lease is not in material default under such Real Property Lease, nor, to the Company’s knowledge, has any event occurred which, with notice or the passage of time, or both, would give rise to such a default by such landlord; and

(v) the Company has not assigned, transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in such Real Property Lease.

(e) The Company has not received any written notice from any Person that it is in violation of any zoning, use, health, traffic, fire safety, occupancy, building, regulation, ordinance or other Applicable Law relating to the Leased Real Property.

(f) To the Company’s knowledge, there are no pending or threatened condemnation proceedings, lawsuits, administrative actions or investigations, or other legal proceedings with respect to any Leased Real Property and/or impacting the operations thereon.

(g) Except with respect to leased personal property held pursuant to a Personal Property Lease, the Company has good title to all of its tangible personal property and assets, free and clear of any Liens, other than Permitted Liens.

Section 3.9 [ Reserved ]

Section 3.10 Litigation . Except as set forth on Schedule 3.10 of the Company Disclosure Schedule, there has not been since December 31, 2010, nor is there presently, any pending Proceeding, or to the Company’s knowledge, threatened Proceeding, that: (a) relates to the Business, Purchased Assets, Assumed Liabilities or any Person whose liability the Company has or may have retained or assumed, either contractually or by operation of law; or (b) challenges, or may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the Transactions contemplated by this Agreement. To the Company’s knowledge, no event has occurred, and no claim, dispute or other condition or circumstance exists, that will, or that would reasonably be expected to, give rise to or serve as a basis for the commencement of any such Proceeding. Neither the Company nor any of the Purchased Assets or Assumed Liabilities is subject to any outstanding writ, order, judgment, injunction or decree of any Governmental Authority relating to the Business or any of the Purchased Assets. To the Company’s knowledge, no officer of the Company and no employee of the Company is subject to any writ, order, writ, judgment, injunction or decree that prohibits such officer or employee from engaging in or continuing any conduct, activity or practice relating to the Business.

Section 3.11 Compliance With Laws; Foreign Corrupt Practices Act . The Company is not (and never has been) in default or violation of, or to the Company’s knowledge, under investigation with respect to or threatened to be charged with, or given notice of any violation of, in any material respect, any Applicable Law applicable to the Business or by which any of the Purchased Assets is bound. The Company has not, and to Company’s knowledge, no officer, agent, employee or other Person acting on behalf of the Company or the Business has, directly or indirectly: (a) made any unlawful contributions, gifts, entertainment or other unlawful expenses relating to political activity and related in any way to the Business; (b) made any unlawful payment to any foreign or domestic government official or employee, foreign or domestic political parties or campaigns, official of any public international organization, or official of any state-owned enterprise; (c) violated any provision of the Foreign Corrupt Practices Act of 1977, as amended; or (d) made any bribe, payoff, influence payment, kickback or other similar unlawful payment.

Section 3.12 Permits . Schedule 3.12 of the Company Disclosure Schedule sets forth an accurate and complete list of all Permits which have been issued to the Company related to the Business and are currently in effect (the “ Company Permits ”). Each Company Permit is valid and in full force and effect, and the Company is not in default in any material respect thereunder. There is no investigation or proceeding pending or, to the Company’s knowledge, threatened that would reasonably be expected to result in the termination, revocation, suspension or restriction of, or the loss of any benefit to which the Company would obtain from, any Company Permit or the imposition of any fine, penalty or other sanctions for violation of any Applicable Law relating to any Company Permit, and none of the Company Permits will be terminated or impaired or become terminable or impaired, in whole or in part, as a result of the Transactions contemplated by this Agreement. The Company Permits constitute all of the Permits required to conduct the Business as presently conducted by the Company.

Section 3.13 Environmental Matters .

(a) The Company is and, for the previous five (5) years, has been in material compliance with all Environmental Laws as to the Business and the Purchased Assets

(b) To the Company’s knowledge, no Hazardous Materials have been Released or have otherwise come to be located at or under the Leased Real Property in a quantity or manner that has resulted in contamination of the soil, groundwater, surface water or structures that requires investigation, removal, remediation or other response action under

applicable Environmental Laws or could reasonably be expected to result in the assertion of an Environmental Claim against the Company.

(c) The Company has not generated, treated, stored, Released, transported or arranged for transportation or disposal of any Hazardous Material at any Leased Real Property or otherwise in connection with the Business except in material compliance with Environmental Laws, in a manner and quantity reasonably necessary for the conduct of the Business, and in a manner that would not reasonably be expected to result in the assertion of an Environmental Claim against the Company or the Business.

(d) The Company has not received any written notice of alleged, actual or potential responsibility or liability for, or any inquiry or investigation regarding: (i) the violation of any Environmental Laws or Environmental Permits; (ii) the presence, Release or threatened Release, generation, transportation, or disposal of any Hazardous Materials at the Real Property, or any other location; or (iii) injury or damage to any Person, property, or natural resource as a result of exposure to or the presence, Release, threatened Release, or discharge of any Hazardous Materials. To the Company’s knowledge, no Environmental Claim regarding any such matters is pending or threatened.

Section 3.14 Material Contracts .

(a) Except as listed on Schedule 3.14(a) of the Company Disclosure Schedule, with respect to the Business or any of the Purchased Assets or Assumed Liabilities, the Company is not a party to (each, a “ Material Contract ”):

(i) any Contract that involves the purchase or sale of goods or services with a value, or involving payments by or to the Company, of more than $50,000 per year;

(ii) any employment agreement with a Person providing services to the Company or the Business;

(iii) any note, mortgage, indenture or other obligation or agreement or other instrument for or relating to Indebtedness (other than capitalized lease obligations entered into in the ordinary course with aggregate obligations of not less than $25,000), or any guarantee of third party obligations, or any lien securing such indebtedness or obligations;

(iv) any collective bargaining agreement with any labor unions or associations representing employees;

(v) any Contract pursuant to which any Intellectual Property Rights or Technology that is currently being used by the Company is or has been licensed, sold, assigned or otherwise conveyed or provided to the Company (other than license terms for Open Source Software and Contracts for non-customized software that (A) is so licensed solely in executable or object code form pursuant to a nonexclusive, internal use software license, (B) is not incorporated into, or used directly in the development, manufacturing or distribution of, the Company’s products or services and (C) is generally available on standard terms for either (y) annual payments by the Business of $25,000 or less or (z) aggregate payments by the Business of $50,000 or less (“ Standard Software ”));

(vi) any Contract pursuant to which any Assigned Intellectual Property or Licensed Intellectual Property is or has been licensed (whether or not such license is currently exercisable), sold, assigned or otherwise conveyed or provided to a third party by the Company or pursuant to which the Company has agreed not to enforce any Intellectual Property Right owned by or exclusively licensed to the Company against any third party, in each case, except for Contracts granting non-exclusive licenses entered into in the ordinary course of business consistent with past practice;

(vii) any material distributor, original equipment manufacturer, reseller, value added reseller, sales, agency or manufacturer’s representative Contract;

(viii) any material limited liability company, joint venture or partnership agreement, or any sharing of revenues, profits, losses, costs or liabilities or any other similar Contract;

(ix) except Contracts related to Open Source Software, any Contract imposing any restriction on the Company’s right or ability, or, after the Closing Date, the right or ability of Purchaser or any of its Affiliates (A) to compete in any line of business or with any Person, to offer or sell any products or services, or to partner with any third

party, in any area or which would so limit the freedom of Purchaser or any of its Affiliates after the Closing Date (including granting exclusive rights or rights of first refusal to license, market, sell or deliver any of the products or services offered by the Company or any related Technology or Intellectual Property Right), (B) to acquire any product or other asset or any services from any other Person, to sell any product or other asset to or perform any services for any other Person or to transact business or deal in any other manner with any other Person or (C) develop or distribute any Technology;

(x) any Contract providing for “most favored nation” terms, including such terms for pricing;

(xi) any Contract in which the Company has the exclusive right to publish content of a third party;

(xii) any Contract which provides for an outstanding loan or advance (excluding advances for travel and entertainment expenses made in accordance with customary policies for such advances), in any amount and to any manager, officer, director or employee of the Company or any trustee, beneficiary, or Affiliate of the Company;

(xiii) any settlement or release agreement or other agreement, except Open Source Software contracts, pursuant to which the Company has relinquished or agreed not to enforce the rights of the Company or which imposes any obligations or liabilities on the Company in a Proceeding, pending or threatened;

(xiv) any Personal Property Lease;

(xv) any Contract relating to cleanup, abatement, monitoring or other actions in connection with any Liability related to Environmental Laws;

(xvi) any Contract with a Governmental Authority; or

(xvii) any other Contract not made in the ordinary course of business that is material to the Business.

(b) The Company has made available to Purchaser accurate and complete copies of all written Contracts identified in Schedule 3.14(a) of the Company Disclosure Schedule, including all amendments thereto, but excluding those customer Contracts that were entered into by the customer accepting one or more of Company’s standard click-through agreements in the form made available to Purchaser, which Contracts are valid and binding on the applicable customer. Schedule 3.14(a) of the Company Disclosure Schedule provides an accurate description of the terms of each Contract identified in Schedule 3.14(a) of the Company Disclosure Schedule that is not in written form. Except as set forth on Schedule 3.14(b) , all of the Material Contracts are in full force and effect and constitute legal and binding obligations of the Company and the party thereto, as the case may be. Neither the Company nor, to the Company’s knowledge, any other party is in breach of or default under, and no event has occurred which with notice or lapse of time, or both, would become a breach of or default under, any Material Contract. Except as set forth on Schedule 3.14(b) , neither the Company, nor to the Company’s knowledge, any other party, has received notice from any party of its or any other party’s intention to cancel, not renew or otherwise terminate any Material Contract, and there are no facts or circumstances that would reasonably be expected to result in an violation of any provision of, or the failure to perform any act which would constitute a breach of, or default under, any Material Contract.

Section 3.15 Intellectual Property .

(a) Schedule 3.15(a) of the Company Disclosure Schedule accurately identifies and describes as of the date of this Agreement each product and service developed, marketed, licensed, sold, performed, distributed or otherwise made available as part of the conduct of the Business, including any product or service currently under development by the Company for the Business.

(b) Schedule 3.15(b) of the Company Disclosure Schedule accurately identifies as of the date of this Agreement (i) each item of Registered IP in which the Company has or purports to have an ownership interest of any nature (whether exclusively, jointly with another Person, or otherwise), (ii) the jurisdiction in which such item of Registered IP has been registered or filed and the applicable application, registration, or serial or other similar identification number, (iii) any other Person that has an ownership interest in such item of Registered IP and the nature of such ownership interest and (iv) all unregistered trademarks used in connection with the Business. The Company has provided Purchaser with complete and accurate copies of all applications, correspondence, and other material, non-privileged documents related to each such item of Registered IP.

(c) Schedule 3.15(c) of the Company Disclosure Schedule accurately identifies as of the date of this Agreement (i) all Intellectual Property Rights or Technology licensed, sold, assigned or otherwise conveyed or provided to the Company and used in the Business (other than Standard Software and licenses received from customers in the ordinary course of business in connection with the Company providing services to such customers under agreements which do not deviate materially from the Company’s standard form customer agreements), (ii) the corresponding Contract or Contracts pursuant to which any such Licensed Intellectual Property is licensed to the Company, and (iii) whether such license or licenses granted to the Company is or are, as the case may be, exclusive or nonexclusive. No Person who has licensed Licensed Intellectual Property to the Company has any ownership rights or exclusive license rights to derivative works or improvements made by the Company related to such Licensed Intellectual Property.

(d) Schedule 3.15(d) of the Company Disclosure Schedule accurately identifies as of the date of this Agreement each Contract pursuant to which any Person has been granted any license under, or otherwise has received or acquired any right (whether or not currently exercisable) or interest in, any Company IP, except licenses granted to the Company’s customers in the ordinary course of business under agreements which do not materially deviate from the Company’s standard form customer agreements. Except for those Contracts identified on Schedule 3.15(d) , the Company is not bound by, and no Company IP is subject to, any Contract containing any covenant or other provision that in any way limits or restricts the ability of the Company to use, assert, enforce, or otherwise exploit any Company IP anywhere in the world. The Company has not transferred ownership of (whether a whole or partial interest), or granted any exclusive right to use, any Technology or Intellectual Property Right to any Person.

(e) The Company has made available to Purchaser an accurate and complete copy of each of the following standard forms of Company IP Contract used by the Company at any time and when such form was used (if such form is no longer used as of the date of this Agreement) (other than forms of Company IP Contracts (1) where all such Company IP Contracts on such form have been terminated and under which the Company has no further financial or other material obligations, except for indemnification obligations that may survive such termination but that do not materially deviate from the current Company forms which have been made available to Purchaser, or (2) under which the Company’s material rights and obligations do not materially deviate from the current Company forms which have been made available to Purchaser and which do not contain restrictions on the ability of the Company to compete in any line of business): (i) end user or sales agreement or purchase order acknowledgement form, (ii) terms of service (if applicable), (iii) development, consulting or independent contractor agreement containing any assignment or license of Technology or Intellectual Property Rights, or (iv) content publishing agreements. The Company has made available to the Purchaser a complete and accurate copy of any such Company IP Contract that deviates in any material respect from the corresponding standard form agreement provided to Purchaser.

(f) The Company exclusively owns all right, title, and interest to and in the Company IP free and clear of any lien (statutory or other) or security interest.

(g) Schedule 3.15(g) of the Company Disclosure Schedule contains a complete and accurate list of all Contracts pursuant to which the Company is obligated to pay royalties, fees, commissions, and other amounts (other than sales commissions paid to employees according to any of the Company’s standard commissions plan) for the manufacture, sale, or distribution of any Company Product or the use of any Company IP or Licensed Intellectual Property.

(h) To the Company’s knowledge, all Company IP is valid and enforceable. The Company has made all filings and payments and taken all other actions required to be made or taken to maintain Registered IP in full force and effect by the applicable deadline and otherwise in accordance with all Applicable Laws. No interference, opposition, reissue, reexamination, or other Proceeding is or since December 31, 2009, has been pending or, to the Company’s knowledge, threatened, in which the scope, validity, or enforceability of any Company IP is being, has been, or could reasonably be expected to be contested or challenged. Each item of Registered IP is in compliance with all legal requirements and all filings, payments, and other actions required to be made or taken to maintain such item of Registered IP in full force and effect have been made by the applicable deadline. No application for a patent or a material copyright, mask work, or trademark registration or any other type of material Registered IP filed by or on behalf of the Company at any time since December 31, 2009, has been abandoned, allowed to lapse, or rejected, except to the extent such Registered IP is no longer used in or otherwise material to the Business. The Company has not engaged in patent or copyright misuse or any fraud or inequitable conduct in connection with any Company IP. To the Company’s knowledge, no trademark or trade name owned, used, or applied for the Company and related to the Business conflicts or interferes with any trademark or trade name owned, used, and applied for by any other Person. To the Company’s knowledge, no event or circumstance (including a failure to exercise adequate quality controls and an assignment in gross without the accompanying goodwill) has occurred or exists that has resulted in, or could reasonably be expected to result in, the abandonment of any material trademark related to the Business (whether registered or unregistered) owned, used, or applied for by the Company. Schedule 3.15(h) of the Company Disclosure Schedule sets forth a detailed listing with respect to each item of Registered IP and all actions, filings and payment obligations due to be made to any Governmental Body within twelve (12) months following the Effective Date.

(i) To the Company’s Knowledge, except as set forth on Schedule 3.15(i) , no Person has infringed, misappropriated, or otherwise violated, and no Person is currently infringing, misappropriating, or otherwise violating, any Company IP. Schedule 3.15(i) of the Company Disclosure Schedule accurately provides a brief description of the current status of any actual, alleged, or suspected infringement or misappropriation of any Company IP.

(j) Neither the execution, delivery, or performance of this Agreement nor the consummation of any of the Transactions or agreements contemplated by this Agreement will, with or without notice or the lapse of time, result in, or give any other Person the right or option to cause or declare: (i) a loss of, or Lien on, any Company IP; (ii) a breach of, termination of, or acceleration or modification of any right or obligation under any Contract listed or required to be listed in Schedules 3.15(c) or 3.15(d) of the Company Disclosure Schedule; (iii) the release, disclosure, or delivery of any Company IP by or to any escrow agent or other Person; or (iv) the grant, assignment, or transfer to any other Person of any license or other right or interest under, to, or in any Company IP.

(k) The Company IP and the Licensed Intellectual Property constitute all Intellectual Property Rights and Technology used in or necessary for the conduct of the Business as presently conducted, including the design, manufacture, license and sale of all products and services currently under development or in production.

(l) The Company has not infringed, misappropriated, or otherwise violated any Intellectual Property Right of any other Person. No infringement, misappropriation, or similar claim or Proceeding related to the Business is pending or threatened in writing against the Company or, to the Company’s knowledge, against any Person who may be entitled to be indemnified or reimbursed by the Company with respect to such claim or Proceeding. The Company has not received any notice or other communication (in writing or otherwise) relating to any actual, alleged, or suspected infringement, misappropriation or violation of any Intellectual Property Right of another Person.

(m) None of the software related to the Business, and owned or developed by the Company, that is marketed, distributed, licensed, sold, or otherwise made available to any Person by the Company (collectively, “ Company Software ”) nor, to the Company’s knowledge, any third party software that the Company uses in the Business and that is marketed, distributed, licensed, sold, or otherwise made available to any Person by the Company, (i) contains any bug, defect, or error that materially and adversely affects the use, functionality, or performance of the Company Software or any product or system containing or used in conjunction with the Company Software or (ii) fails to comply in any material respect with any applicable warranty or other contractual commitment to third parties relating to the use, functionality, or performance of such Company Software or any product or system containing or used in conjunction with such Company Software.

(n) No Company Software contains any “back door,” “drop dead device,” “time bomb,” “Trojan horse,” “virus,” “worm,” “spyware” or “adware” (as such terms are commonly understood in the software industry) or any other code designed or intended to have, or capable of performing or facilitating, any of the following functions: (i) disrupting, disabling, harming, or otherwise impeding in any manner the operation of, or providing unauthorized access to, a computer system or network or other device on which such code is stored or installed or (ii) compromising the privacy or data security of a user or

damaging or destroying any data or file without the user’s consent (collectively, “ Malicious Code ”). The Company implements industry standard measures designed to prevent the introduction of Malicious Code into Company Software, including firewall protections and regular virus scans.

(o) No source code for any Company Software has been delivered, licensed, or made available to any escrow agent or other Person who (i) is not, as of the date of this Agreement, an employee of the Company, or (ii) was not at the time of such access either an employee or a contractor with a contract providing for such contractor to keep Company information confidential and acknowledging that all work developed would be owned by the Company. The Company does not have any duty or obligation (whether present, contingent, or otherwise) to deliver, license, or make available the source code for any Company Software to any escrow agent or other Person. No event has occurred, and no circumstance or condition exists, that (with or without notice or lapse of time) will, or could reasonably be expected to, result in the delivery, license, or disclosure of any source code for any Company Software to any other Person who is not, as of the date of this Agreement, an employee of the Company.

(p) Each Person who is or was an employee of the Company and who is or was involved in the creation or development of any Company IP has received a copy of Seller’s Employee Handbook and signed an Acknowledgement Form as provided therein substantially in the form which has been made available to the Purchaser. No current or former stockholder, officer, director, employee or contractor of the Company has any claim, right (whether or not currently exercisable), or ownership interest in any Company IP. To the Company’s knowledge, no employee of the Company is (i) bound by or otherwise subject to any Contract restricting him or her from performing his duties for the Company or (ii) in breach of any Contract with any former employer or other Person concerning Intellectual Property Rights or confidentiality due to his or her activities as an employee of the Company.

(q) Except to the extent required in connection with the use of the open source software set forth in Schedule 3.15(q), no Company Software is subject to any “copyleft” or other obligation or condition (including any obligation or condition under any “open source” license such as the GNU Public License, Lesser GNU Public License, or Mozilla Public License) that (i) requires, or conditions the use or distribution of such Company Software or portion thereof on, (A) the disclosure, licensing, or distribution of any source code for any portion of such Company Software or (B) the granting to licensees of the right to make derivative works or other modifications to such Company Software or portions thereof or (ii) otherwise imposes any limitation, restriction, or condition on the right or ability of the Company to use, distribute or charge for any Company Software. The Company’s representations in this Section 3.15(q) are the only representations and warranties the Company is making with respect to the existence of rights and obligations imposed by licenses for open source software used by the Company (“ Open Source Software ”) and all other representations and warranties in this Section 3.15 and in Sections 3.4, 3.5, and 3.14, shall be deemed to expressly exclude Open Source Software.

(r) No funding, facilities, or personnel of any Governmental Authority or any public or private university, college, or other educational or research institution were used, directly or indirectly, to develop or create, in whole or in part, any Company IP.

(s) The Company is not and has never been a member or promoter of, or a contributor to, any industry standards body or similar organization that could require or obligate the Company to grant or offer to any other Person any license or right to any Company IP.

(t) The Company has not received or logged any product warranty claims regarding any Company Product since December 31, 2009.

Section 3.16 Information Technology .

(a) All devices, software, computers and network systems and their configuration that are used to access, create, update, delete, read, view, transform, transfer, store and communicate information used by the Company in the conduct of the Business as well as the information itself (“ IT Systems ”) are owned by, or licensed or leased to, the Company. Copies or details of all material licenses and leases relating to the IT Systems have been made available to Purchaser. The Company is the legal and beneficial owner of, or has a contractual right to use the IT Systems free from Liens, except for Permitted Liens, and has not, in the twelve (12) months prior to the date of this Agreement, received written notice from a third party alleging that the Company is in default under licenses or leases relating to the IT Systems.

(a) The IT Systems have been satisfactorily maintained and supported and the Company has reasonable and appropriate maintenance and support agreements in respect of the IT Systems, and none of them will be terminable as a result of the execution or completion of this Agreement.

(b) The IT Systems will have adequate capability and capacity for all of the processing and other functions required by the Company immediately following the Closing Date.

(c) The Company has in effect disaster recovery plans which are reasonable for the Business and which have been made available to Purchaser, procedures and facilities for its business and has taken all reasonable steps to safeguard the security and the integrity of its IT Systems. To the Company’s knowledge, in the past twenty four months there have been no unauthorized intrusions or breaches of the security with respect to the IT Systems. The Company has implemented those security patches or upgrades that are generally available for the IT Systems which are material to the IT Systems and the Business.

(d) The Company implements industry standard measures designed to prevent the introduction of Malicious Code into its IT Systems, including firewall protections and regular virus scans and for taking and storing on-site and off-site back-up copies of Software, Customer Data and Personal Data.

Section 3.17 Privacy and Personal Data .

(a) The Company is, and has at all times since December 31, 2009, been, in material compliance with (i) all Applicable Laws and industry standards; and (ii) all Contracts (or portions thereof) related to the Business between the Company and vendors, marketing affiliates, and other customers and business partners, that are applicable to the use and disclosure of Personal Data (such Contracts being hereinafter referred to as “ Privacy Agreements ”). The Company has delivered to Purchaser accurate and complete copies of all of the Privacy Agreements of the Company.

(b) The Privacy Agreements and all publicly posted privacy statements or notices do not require the delivery of any notice to or consent from any Person, or prohibit the transfer of Personal Data collected and in the possession or control of the Company to Purchaser, in connection with the execution, delivery, or performance of this Agreement or the consummation of any of the Transactions contemplated by this Agreement.

(c) The Company has confidentiality agreements in place with all Affiliates, vendors or other Persons whose relationship with the Company involves the collection, use, disclosure, storage, or processing of Personal Data on behalf of the Company, which agreements require such Persons to protect such Personal Data in a manner consistent with the Company’s obligations in the Privacy Agreements and in compliance with Applicable Laws.

(d) Neither the execution, delivery or performance of this Agreement, nor the consummation of any of the Transactions contemplated by this Agreement will result in any violation of any Privacy Agreements or any Applicable Law pertaining to privacy, or Personal Data.

(e) The Company has reasonable safeguards in place to protect Personal Data in the Company’s possession or control from unauthorized access by third Persons, including the Company’s employees and contractors.

(f) To the Company’s knowledge, no Person has made any illegal or unauthorized use of Personal Data that was collected by or on behalf of the Company and is in the possession or control of the Company.

(g) Except as set forth on Schedule 3.17(g) , the Company is not bound by any Contract or other obligation than prohibits the Company from using Personal Data, or other information if such information has been de-identified.

Section 3.18 Tax Matters .

(a) The Company is a validly electing S corporation for U.S. federal income tax purposes. The Company has timely filed (taking into account any extensions of time for such filings that have been properly and timely requested by the Company) all Tax Returns that were required to be filed. All such Tax Returns are complete and accurate in all material respects. All Taxes owed by the Company (whether or not shown on any Tax Return) have been paid. All Taxes that the Company has been required to collect or withhold have been collected or withheld and, to the extent required by law, have been timely paid to the proper Governmental Authority. Except as set forth on Schedule 3.18(a) , no written claim has ever been made by a Governmental Authority in a jurisdiction in which the Company does not file Tax Returns that the Company is or may be subject to taxation by that jurisdiction.

(b) There are no Liens on any of the Purchased Assets for Taxes (other than statutory liens for current Taxes not yet due and payable).

(c) No deficiencies for Taxes of the Company has been claimed, proposed or assessed by any Governmental Authority which deficiencies remain unpaid or unresolved. There are no pending or, to Company’s knowledge, threatened audits, investigations, disputes, notices of deficiency, claims or other Proceedings for or relating to any liability for Taxes of the Company. There have been no audits of the Company’s Tax Returns by the relevant Governmental Authorities at any time during the last three (3) tax years. The Company has not been notified in writing that any Governmental Authority intends to audit the Company’s Tax Returns for any other period. No waiver or extension of a statute of limitations relating to Taxes is in effect with respect to the Company.

(d) Since December 31, 2013, the Company has not incurred any liability for Taxes outside the ordinary course of business or otherwise inconsistent with past practice.

(e) No Purchased Asset (i) is property required to be treated as owned by another person pursuant to the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended and in effect immediately prior to the enactment of the Tax Reform Act of 1986, (ii) constitutes “tax-exempt use property” within the meaning of Section 168(h) of the Code, (iii) is “tax-exempt bond financed property” within the meaning of Section 168(g) of the Code, (iv) secures any debt the interest of which is tax-exempt under Section 103(a) of the Code or (v) is subject to a 467 rental agreement as defined in Section 467 of the Code.

(f) The Company is not a party to any Tax sharing, indemnity, allocation, or similar agreements.

Section 3.19 Employee Benefit Plans .

(a) Schedule 3.19(a)(i) of the Company Disclosure Schedule identifies each “employee benefit plan” (as defined in Section 3(3) of ERISA) which covers any Business Employee and any bonus, deferred or incentive compensation, retirement, profit sharing, equity-based, Code Section 125 cafeteria plan or flexible benefit arrangement, employment, consulting, change in control or severance plan, arrangement, agreement or program, and material fringe benefit plan, arrangement, agreement or program, whether or not subject to ERISA, whether formal or informal, oral or written, legally binding or not, maintained or contributed to for the benefit of any Business Employee by the Company or any ERISA Affiliate or under which the Company or any ERISA Affiliate has any present or future Liability with respect to any Business Employee (collectively, the “ Benefit Plans ”). Schedule 3.19(a)(ii) of the Company Disclosure Schedule sets forth a list of each Business Employee as of the date hereof, and such Business Employee’s leave, sick pay or vacation benefit (earned or unearned).

(b) The Company (i) has complied in all material respects with all applicable laws and regulations relating to the Benefit Plans, including but not limited to ERISA, and (ii) have administered each Benefit Plan in all material respects in compliance with Applicable Laws in accordance with its terms. The Company has not made any commitments to increase benefits under any Benefit Plan or to otherwise amend any Benefit Plan.

(c) Except as set forth on Schedule 3.19(c) of the Company Disclosure Schedule, no leased employee (within the meaning of Section 414(n ) or ( o ) of the Code) as of the date hereof performs any material services for the Company with respect to the Business.

(d) Each Benefit Plan that is an employee pension benefit plan (as defined in Section 3(2) of ERISA) and which is intended to be qualified under Code Section 401(a) (a “ Pension Plan ”) has received from the IRS a favorable determination letter or may rely upon any opinion letter for a prototype or volume submitter plan. To the Company’s knowledge, no event has occurred since the date of the most recent determination or opinion letter (other than the effective date of certain amendments to the Code the remedial amendment period for which has not expired) that would reasonably be expected to adversely affect the qualified status of any such Benefit Plan. No Benefit Plan is a “defined benefit plan” as defined in Section 3(35) of ERISA.

(e) The Company nor any ERISA Affiliate or any trustee or agent of any Benefit Plan has been or is currently engaged in any prohibited transactions as defined by Section 406 of ERISA or Section 4975 of the Code for which an exemption is not applicable which could subject the Company, any ERISA Affiliate or any trustee or agent of any Benefit Plan to the Tax or penalty imposed by Section 4975 of the Code or Section 502 of ERISA.

(f) The Company nor any ERISA Affiliate has been or is currently party to any (A) “multi‑employer plan,” as that term is defined in Section 3(37) of ERISA, (B) “multiple employer plan” (within the meaning of Section 413(c) of the Code), (C) “pension plan” within the meaning of Section 3(2) of ERISA that is subject to Title IV or Section 302 of ERISA or Section 412 of the Code, or (D) multiple employer welfare arrangement (within the meaning of Section 3(40) of ERISA.

(g) With respect to each Benefit Plan, there are no actions, suits or claims (other than routine claims for benefits in the ordinary course) pending or, to Company’s knowledge, threatened against any Benefit Plan, the Company, any ERISA Affiliate or any trustee or agent of any Benefit Plan.

(h) With respect to each Benefit Plan to which the Company or any ERISA Affiliate is a party which constitutes a group health plan subject to Section 4980B of the Code, each such Benefit Plan complies, and in each case has complied, in all material respects, with all applicable requirements of Section 4980B of the Code.

(i) Full payment has been made of all amounts which the Company or any ERISA Affiliate was required to have paid as a contribution to any Benefit Plan as of the last day of the most recent fiscal year of each of the Benefit Plans ended prior to the date of this Agreement.

(j) No Benefit Plan other than a Pension Plan provides benefits to any individual after termination of employment, other than as required by Applicable Law.

(k) Except as set forth on Schedule 3.19(k) of the Company Disclosure Schedule, the consummation of the Transactions contemplated by this Agreement will not (i) entitle any current or former director, employee, contractor or consultant of the Business to severance pay, unemployment compensation or any other payment, (ii) accelerate the time of payment or vesting, or increase the amount of, compensation due to any such director, employee, contractor or consultant, or result in the payment of any other benefits to any Person or the forgiveness of any Indebtedness of any Person, (iii) result in any prohibited transaction described in Section 406 of ERISA or Section 4975 of the Code for which an exemption is not available or (iv) result (either alone or in conjunction with any other event) in the payment or series of payments by the Company or any of its Affiliates to any Person of an “excess parachute payment” within the meaning of Section 280G of the Code.

(l) Schedule 3.19(l) of the Company Disclosure Schedule sets forth each Benefit Plan that is a “nonqualified deferred compensation plan” (as defined under Section 409A(d)(1) of the Code). Except as set forth on Schedule 3.19(l) , each Benefit Plan that is a “nonqualified deferred compensation plan” (as defined under Section 409A(d)(1) of the Code) has at all times been operated, administered and documented in compliance with Section 409A of the Code.

Section 3.20 Insurance . The Company maintains policies of fire and casualty, liability and other forms of insurance in such amounts, with such deductibles and against such risks and losses, as set forth in Schedule 3.20 of the Company Disclosure Schedule. All policies described or required to be set forth in Schedule 3.20 of the Company Disclosure Schedule are in full force and effect, and the Company is not in default, whether as to payment of premium or otherwise, in any material respect under the terms of any such policy. Excluding insurance policies that have expired and been replaced in the ordinary course of business consistent with past practice, no insurance policy has been cancelled within the last three (3) years and no threat has been made to cancel any insurance policy of the Company during such period. Since January 1, 2009, there has been no claim by the Company in excess of $25,000 under any of such policies or bonds as to which coverage has been questioned, denied or disputed by the underwriters of such policies or bonds or in respect of which such underwriters have reserved their rights.

Section 3.21 Transactions with Directors, Officers and Affiliates . No Affiliate, employee, officer, director or any of their “immediate family” (as such terms are respectively defined in Rule 12b-2 and Rule 16a-1 of the Securities Exchange Act of 1934, as amended) of the Company (each of the foregoing, a “ Related Person ”), other than in its capacity as an officer, director or employee of the Company (a) is involved, directly or indirectly, in any material business arrangement or other material relationship with the Company (whether written or oral) related to the Business or the Purchased Assets or (b) directly or indirectly owns, or otherwise has any right, title, interest in, to or under, any material property or right, tangible or intangible, that is used in the Business.

Section 3.22 Labor and Employment .

(a) Schedule 3.22(a)(i ) of the Company Disclosure Schedule lists each Business Employee as of the date hereof and such Business Employee’s (i) employment status (i.e., full time, part time, temporary, casual, seasonal, etc.), (ii) employment authorization or work visa status, to the extent required for employment authorization and/or verification purposes in the applicable jurisdiction and permitted by applicable laws, (iii) date of hire and service dates, (iv) current wages, salaries or hourly rate of pay, benefits (both statutory and nonstatutory), vacation entitlement, commissions and bonus opportunity (whether monetary or otherwise), (v) other material compensation paid or payable since the beginning of the most recently completed fiscal year, (vi) for any benefit that takes into account length of service to the Company, the date upon which each such term of employment with the Company became effective and (vii) location of current employment. The Company has made available to Purchaser copies of all written agreements between the Company and any employee of the Company. The employment of all

employees of the Company is terminable at will. Except as otherwise indicated in Schedule 3.22(a)(ii ) of the Company Disclosure Schedule, no Business Employee has indicated in writing (including electronic mail) to the Company that he or she will cancel or otherwise terminate their relationship with the Company and none of the Business Employees set forth on Schedule 3.22(a)(i ) of the Company Disclosure Schedule has otherwise indicated to the Company that he or she will cancel or otherwise terminate their relationship with the Company.

(b) The Company is not party or subject to a labor union or collective bargaining agreement in connection with the Business, and no such labor union or collective bargaining agreement is being negotiated. The Company has no obligation to negotiate any such labor union or collective bargaining agreement. To Company’s knowledge, there is no activity involving any current or former employee seeking to certify a collective bargaining unit or engaging in any other labor organizational activity.

(c) No labor dispute, request for representation, picket, work slow-down, strike, work stoppage or any action or arbitration has occurred or is occurring or, to Company’s knowledge, has been threatened that involve any current or former employee within three years prior to the date hereof. No event has occurred or circumstance exists that may provide the basis of any work stoppage or other labor dispute in connection with the Business.

(d) The Company is not the subject of any claim which is pending or, to Company’s knowledge, threatened, asserting that the Company has, in connection with the Business, committed an unfair labor practice (within the meaning of the National Labor Relations Act or applicable state or foreign statutes) or seeking to compel the Company to bargain with any labor organization as to wages with conditions of employment.

(e) The Company has complied with each, and is not in violation of any, law relating to anti-discrimination and equal employment opportunities in connection with the Business. There are, and have been within the last five years, no violations of any other law respecting the hiring, hours, wages, occupational safety and health, employment, promotion, termination or benefits of any current or former employee or other Person in connection with the Business. The Company has filed all reports, information and notices required within the last five years under any law respecting the hiring, hours, wages, occupational safety and health, employment, promotion, termination or benefits of any current or former employee or other Person in connection with the Business, and will timely file prior to Closing all such reports, information and notices required by any law to be given prior to Closing.

(f) The Company has paid or properly accrued all wages and compensation due to current or former employees, including all vacations or vacation pay, holidays or holiday pay, sick days or sick pay, and bonuses.

(g) The Company is not a party to any Contract which restricts the Company from relocating, closing or terminating any of its operations or facilities or any portion thereof. The Company has not since January 1, 2010 effectuated a “plant closing” (as defined in the WARN Act) or a “mass lay-off” (as defined in the WARN Act), in either case affecting any site of employment or facility of the Company, except in accordance with the WARN Act. The consummation of the Transactions contemplated by this Agreement will not create liability for any act by the Company on or prior to the Closing under the WARN Act or any other law respecting reductions in force or the impact on employees of plant closings or sales of businesses.

(h) The Company has complied and is in compliance with the requirements of the Immigration Reform and Control Act of 1986. The Company Disclosure Schedule sets forth a true and complete list of all Business Employees working in the United States who are not U.S. citizens and a description of the legal status under which each such Business Employee is permitted to work in the United States. All Business Employees who are performing services for the Company in the United States are legally able to work in the United States and will be able to continue to work in the Business in the United States following the consummation of the Transactions contemplated by this Agreement.

(i) Each Person providing services to the Company that has been characterized as a consultant or independent contractor and not as an employee has been properly characterized as such and the Company does not have any liability or obligations, including under or on account of any Benefit Plan, arising out of the hiring or retention of Persons to provide services to the Company and treating such Persons as consultants or independent contractors and not as employees of the Company.

Section 3.23 Customers and Suppliers . Schedule 3.23 of the Company Disclosure Schedule sets forth, with respect to the Business during the last full fiscal year, a list of (a) the dollar amount derived from each of the 20 largest (based on dollar amounts purchased) customers of the Company, (b) the dollar amount purchased from the 20 largest (based on dollar amounts purchased or revenue shared) suppliers of the Company, including suppliers of Intellectual Property Rights or Technology that is

currently being used by, or incorporated into products or services of, the Company, and (c) any third parties from whom the Company licenses content to publish as part of the Company’s products and services on an exclusive basis (“ Exclusive Content Providers ”). The Company has provided Purchaser with complete and accurate copies of each contract pursuant to which the Company licenses content from a third party to publish as part of the Company’s products and services (“ Content Providers ”). Except as set forth on Schedule 3.23 , the Company has no knowledge of, and has not received written notice of the intention of: (i) any of such customers, suppliers or Exclusive Content Providers (or other material Content Providers) to cease doing business or reduce in any material respect the business transacted with the Company or to terminate or modify any agreements with the Company (whether upon consummation of the Transactions contemplated hereby or otherwise); or (ii) any Governmental Authority, customer, supplier or Exclusive Content Providers (or other material Content Providers) to cease doing business or reduce in any material respect the business transacted between such parties or modify any agreement between such parties, which may adversely impact the Business or Purchased Assets.

Section 3.24 Brokers . Except for Berkery Noyes & Co., LLC (for which the Company is obligated to pay and which is an Excluded Liability), there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of, or is entitled to any fee or commission from the Company in connection with the Transactions contemplated by this Agreement.

Section 3.25 Full Disclosure . This Agreement, including the Company Disclosure Schedule, and any certificate, instrument or other document required to be delivered pursuant to this Agreement by the Company or the Stockholder, does not contain, on the part of the Company or the Stockholder, any untrue statement of a material fact, and does not omit, on the part of the Company or the Stockholder, to state any material fact necessary to make the statements contained herein or therein not misleading.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

Purchaser represents and warrants to the Company and the Stockholder that the statements contained in this Article IV are true and correct as of the date of this Agreement.

Section 4.1 Authority and Binding Effect . Purchaser has the corporate power and authority to execute and deliver this Agreement and each agreement, document and instrument to be executed and delivered by or on behalf of Purchaser, pursuant to this Agreement and to carry out the Transactions contemplated hereby and thereby. The execution, delivery and performance of this Agreement and the Other Agreements have been duly and validly authorized by the board of directors of Purchaser, and no additional other corporate proceedings on the part of either Purchaser is necessary in connection with the execution, delivery and performance of this Agreement or the Other Agreements. This Agreement has been duly executed and delivered by Purchaser and, assuming the due authorization, execution and delivery of this Agreement by the Company and the Stockholder, this Agreement constitutes a legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally and by general equitable principles.

Section 4.2 Organization . Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware. Purchaser is duly licensed or qualified to do business as a foreign corporation under the laws of any other jurisdiction in which the character of its properties or in which the transaction of its business makes such qualification necessary, except where the failure to be so licensed or qualified would not, individually or in the aggregate, have a material adverse effect on the ability on either Purchaser to perform its obligations under this Agreement.

Section 4.3 No Violations . The execution and delivery of this Agreement and the Other Agreements and the performance and consummation of the Transactions contemplated hereby and thereby by Purchaser will not (a) conflict with or violate any provision of the certificate of incorporation, by-laws or other organizational documents of Purchaser, (b) conflict with, or result in the breach of, or constitute a violation of or default under, or result in the termination, cancellation or acceleration (whether after the giving of notice or the lapse of time or both) of any right or obligation of Purchaser under, any material Contract to which Purchaser is party or to which any of its assets is subject or (c) to the knowledge of Purchaser, violate or result in a breach of or constitute a default under any Applicable Law to which Purchaser is subject or by which Purchaser or any of their assets is bound or affected, except for any conflict, breach, default, termination, cancellation, acceleration, loss or violation which, individually or in the aggregate, would not materially impair Purchaser’s ability to perform its obligations hereunder and is not reasonably likely to prohibit or materially delay the performance of this Agreement by Purchaser.

Section 4.4 Consents and Approvals . The execution, delivery and performance of this Agreement by Purchaser and the consummation by Purchaser of the Transactions contemplated hereby in accordance with the terms hereof will not require Purchaser to make any filing with, or notification to or obtain any Consent from any Person, except (a) where failure to obtain such Consent, or to make such filing or notification, would not have a material adverse effect on the ability of Purchaser to perform their obligations under this Agreement and (b) as may be necessary as a result of any facts or circumstances relating solely to the Company.

Section 4.5 Litigation . There is no Proceeding pending or, to the knowledge of Purchaser, threatened in writing, against Purchaser, and Purchaser is not subject to any outstanding order, writ, judgment, injunction or decree of any Governmental Authority that, in either case, would, individually or in the aggregate, (a) delay, hinder or prevent the consummation of the Transactions contemplated by this Agreement by Purchaser or (b) have a material adverse effect on the ability of either Purchaser to perform their obligations under this Agreement.

Section 4.6 Brokers . There is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of, or is entitled to any fee or commission from Purchaser or its Affiliates in connection with the Transactions contemplated by this Agreement.

Section 4.7 Sufficiency of Funds . Purchaser has sufficient cash on hand or other sources of available funds to enable it to make payment of the Purchase Price and consummate the transactions contemplated by this Agreement.

Section 4.8 Independent Investigation. Purchaser acknowledges that, except as expressly set forth herein or as set forth in any certificate, instrument or other document required to be delivered by Company or the Stockholder hereunder, the Company and the Stockholder have not made, and hereby expressly disclaims and negates, any projections, representation or warranty, express or implied and relating to the Company, the Business or Purchased Assets, including any representation or warranty regarding any information, data, or other materials (written or oral) furnished to Purchaser by or on behalf of the Company including those documents in the Company’s electronic datasite. Notwithstanding the foregoing, nothing in this Section 4.8 shall limit Purchaser’s ability to recover Losses resulting from or arising out of fraud or intentional misrepresentation of the Company, the Stockholder or their Representatives or Affiliates on their behalf.

ARTICLE V

GENERAL COVENANTS

Section 5.1 Access to Information . From and after the date hereof until the earlier to occur of the proper termination of this Agreement pursuant to Section 8.1 and the Closing (the “ Pre-Closing Period ”), the Company shall, and shall cause its Representatives to, (i) afford to the Purchaser and its Representatives access, upon reasonable notice during normal business hours, to the offices, properties, books and records, employees, customers, suppliers, accountants and other advisors of the Company and the Business, and (ii) furnish to the Representatives of the Purchaser the financial statements and reports regularly prepared for the management of the Business and such additional information regarding the Business as the Purchaser may from time to time reasonably request. Without limiting the generality of anything contained in this Section 5.1 , during the Pre-Closing Period, the Company shall ensure that the Company’s officers confer and consult regularly with the Purchaser and the Purchaser’s Representatives concerning operational and financial matters and otherwise report regularly to the Purchaser concerning the status of the Business. The Company and the Stockholder agree that no investigation by the Purchaser or its Representatives shall affect or limit the scope of the representations and warranties of the Company and the Stockholder or limit the liability of the Company or the Stockholder for any breach of such representations and warranties.

Section 5.2 Operation of the Business . Unless the Company obtains the prior written consent of the Purchaser, which consent will not be unreasonably withheld, and except for the matters set forth on Schedule 5.2 of the Company Disclosure Schedule attached hereto or for any matter which is expressly required or permitted by any Document, during the Pre-Closing Period, the Company shall:

(a) conduct the Business in all material respects only in the ordinary course of business consistent with past practices;

(b) use commercially reasonable efforts to preserve intact the current business operation, keep available the services of the current officers, consultants and employees and maintain relations and good will with all suppliers, customers, landlords, creditors, employees and other Persons having business relationships with the Company and the Business;

(c) not dispose of any assets used in the Business except for the sale of inventory in the ordinary course of business consistent with past practices;

(d) not form any Subsidiary or acquire any equity interest or other interest in any Person;

(e) (i) other than in the ordinary course of business consistent with past practice, enter into any Contract that is or would constitute a Material Contract, or (ii) amend or prematurely terminate, or waive any material right or remedy under, any Material Contract;

(f) not take any action inconsistent with the terms of this Agreement;

(g) other than in the ordinary course of business and consistent with past practices, not acquire, lease or license any right or other asset from any other Person;

(h) except for payments related to the development of the new version of Market Clarity consistent with the budget that has been made available to Purchaser, not make any capital expenditure which, when added to all other capital expenditures made on behalf of the Business since the Balance Sheet Date, exceeds $25,000 in the aggregate;

(i) not (A) lend money to any Person, (B) incur or guarantee any Indebtedness (except that the Company may make routine borrowings in the ordinary course of business consistent with past practices under the Company’s existing lines of credit), or (C) grant or suffer the imposition of any Encumbrance on any asset of used in the Business, other than Permitted Encumbrances;

(j) not (A) establish, adopt or amend any Benefit Plan, employee agreement or consulting agreement, (B) pay any bonus or make any profit sharing payment, cash incentive payment or similar payment to, or increase the amount of the wages, salary, commissions, fringe benefits or other compensation or remuneration payable to, any of its directors, officers, consultants or employees, or (C) hire any new employee, except for any new employee hired in the ordinary course of business whose aggregate annual compensation is not expected to exceed $100,000;

(k) not change any method of accounting or accounting practice in any material respect;

(l) not, except as otherwise permitted by Section 5.7 , make or change any material Tax election, settle or compromise any claim, notice, audit report or assessment in respect of Taxes, change any annual Tax accounting period, adopt or change any method of Tax accounting, file any amended Tax Return, enter into any tax allocation agreement, tax sharing agreement, tax indemnity agreement or closing agreement relating to any Tax, surrender any right to claim a Tax refund, or consent to any extension or waiver of the statute of limitations period applicable to any Tax claim or assessment;

(m) not commence or settle any Proceeding related to the Business in which the Company seeks injunctive relief, specific performance or damages in excess of $10,000;

(n) not settle any Proceeding related to the Business which may require a payment by the Company in excess of $10,000, or impose any limitations on the Company’s ability to conduct its business, or admit any violation of Applicable Law;

(o) not, other than as contemplated by this Agreement, enter into any Contract with a related party;

(p) not enter into any material transaction or take any other material action outside the ordinary course of business consistent with past practices, except for the Transactions; and

(q) not authorize, or enter into any legally binding commitment to take, any action with respect to any of the foregoing

Section 5.3 Confidentiality .

(a) Each Receiving Party (as defined below) acknowledges the confidential and proprietary nature of the Confidential Information of the Disclosing Party (as defined below) and shall hold, and shall cause their respective Affiliates and respective past, present and future directors, managers, officers, employees, independent contractors, agents, advisors or consultants (collectively, “ Representatives ”) to hold, in confidence and not disclose or release such Confidential Information

without the prior written consent of the Disclosing Party; provided that the Disclosing Party may disclose, or may permit disclosure of, Confidential Information (i) to its respective Representatives who have a need to know such information and are informed of their obligation to hold such information confidential to the same extent as is applicable to the Disclosing Party and in respect of whose failure to comply with such obligations, the Disclosing Party will be responsible or (ii) if the Disclosing Party or any of its respective Affiliates or Representatives are compelled to disclose any such Confidential Information by judicial or administrative process or, in the opinion of independent legal counsel, by other requirements of Applicable Law.

(b) As used in this Agreement, the term “ Confidential Information ” includes all secret, confidential or proprietary technical, economic, environmental, operational, financial, and/or other business information, data or material, whether provided in written, oral, graphic, video, computer, electronic or other form, including, provided pursuant to this Agreement or generated pursuant to this Agreement by one Party (the “ Disclosing Party ”) to the other Party (the “ Receiving Party ”), including but not limited to, information relating to the Disclosing Party’s existing or proposed business, and without limitation, all notes, analyses, compilations, studies, interpretations or other documents whether in tangible form or on electronic or other data storage media, prepared by the Receiving Party and its Representatives, which contain, reflect or are based on, in whole or in part, Confidential Information furnished to the Receiving Party or its Representatives by the Disclosing Party or any to its Representatives, and any other materials that have not been made available by the Disclosing Party to the general public. For purposes of this Section 5.3 , all information related to the Business and the Purchased Assets that is known to the Company and constitutes Confidential Information prior to Closing, shall, following the Closing in all events, be deemed to be Confidential Information of Purchaser provided to the Company, including: (i) ideas and concepts for existing products, processes and services; (ii) specifications for products, equipment and processes; (iii) engineering drawings and graphs; (iv) technical, research and engineering data; (v) service and operation manuals; (vi) quality assurance policies, procedures and specifications; (vii) evaluation and/or validation studies; (viii) pending patent applications; (ix) all other know-how, methodology, procedures, techniques and trade secrets related to research, engineering, development and manufacturing; and (x) business information, including marketing and development plans, forecasts, research and development agreements, and customer and vendor information. Notwithstanding the foregoing sentence, Confidential Information shall not include any information or materials that:

(i) were already known to the Receiving Party (other than under an obligation of confidentiality), at the time of disclosure by the Disclosing Party;

(ii) were generally available to the public or otherwise part of the public domain at the time of disclosure thereof to the Receiving Party; or

(iii) became generally available to the public or otherwise part of the public domain after disclosure or development thereof, as the case may be, and other than through any act or omission of the Receiving Party in breach of the Receiving Party’s confidentiality obligations under this Agreement.

Section 5.4 Consents and Approvals . During the Pre-Closing Period, subject to the terms and conditions herein provided, the Company and the Stockholder, on the one hand, and the Purchaser, on the other hand, shall use commercially reasonable efforts to consummate and make effective as promptly as practicable after the date hereof the Transactions, and shall cooperate with the other in connection with the foregoing, including using commercially reasonable efforts (i) to give all notices and obtain all waivers, consents and approvals from third parties to Material Contracts necessary for the consummation of the Transactions, (ii) to obtain all consents, approvals and authorizations that are required to be obtained under any Applicable Law and to effect all necessary registrations, filings, notices, and submissions of information requested or required by any Governmental Authority in connection with the Transactions, (iii) to provide such information and communications to any Governmental Authority as it may request, (iv) to lift, rescind or prevent the enactment of any Order or Law adversely affecting the ability of the parties hereto to consummate the Transactions, (v) to effect all necessary registrations and filings and submissions of information required or requested by Governmental Authorities (“ Governmental Filings ”), and (vi) to fulfill all conditions to this Agreement.

Section 5.5 Further Action . Each of the Parties hereto shall execute and deliver such documents and other papers, as may be required to carry out the provisions of this Agreement and consummate and make effective the Transactions contemplated by this Agreement.

Section 5.6 Press Releases . Each of the Parties will, and will cause each of their Affiliates and Representatives to, maintain the confidentiality of this Agreement and will not, and will cause each of their Affiliates and Representatives not to, issue or cause the publication of any press release or other public announcement with respect to this Agreement or the Transactions contemplated hereby without the prior written consent of the other Party, not to be unreasonably withheld.

Notwithstanding the foregoing, either Party may, without the prior consent of the other Party, issue or cause publication of any such press release or public announcement to the extent that it reasonably determines, after consultation with outside legal counsel, such action to be required by Applicable Law or by the rules of any applicable securities exchange or self-regulatory organization, in which event such Party will use its commercially reasonable efforts to allow the other Party reasonable time to comment on such press release or public announcement in advance of its issuance. In addition, this Section 5.6 shall not prevent Purchaser from issuing any statement or communication that is reasonably necessary in response to a public statement or announcement made by any third Person with respect to the transactions contemplated by this Agreement.

Section 5.7 Tax Matters .

(a) The Company shall pay all Transfer Taxes and shall timely file or cause to be filed all necessary Tax Returns with respect to Transfer Taxes, if any. Purchaser shall cooperate with the Company as reasonably necessary in preparing and filing all Tax Returns and other documentation relating to such Transfer Taxes as may be required by Applicable Law.

(b) Following the Closing, Purchaser, on the one hand, and the Company and the Stockholder, on the other hand, agree to furnish or cause to be furnished to the other, upon request, as promptly as practicable, such information and assistance relating to the Purchased Assets, including, without limitation, access to books and records, as is reasonably necessary for the filing of all Tax Returns by Purchaser, the Company or the Stockholder, the making of any election relating to Taxes, the preparation for any audit by any Governmental Authority and the prosecution or defense of any claim, suit or Proceeding relating to any Tax. Each of Purchaser, on the one hand, and the Company and the Stockholder, on the other hand, shall retain all books and records with respect to Taxes pertaining to the Purchased Assets for a period of at least seven (7) years following the Closing Date. Purchaser and the Company and the Stockholder shall cooperate fully with each other in the conduct of any audit, litigation or other proceeding relating to Taxes.

(c) Each of the Company and the Stockholder shall promptly notify Purchaser in writing upon receipt by them of notice of any pending or threatened Tax audits or assessments relating to the income, properties, sales or operations of the Company.

Section 5.8 Employee Matters .

(a) Offers of Employment . Prior to or on the Closing Date, Purchaser shall offer employment commencing on the Closing Date to substantially all of the Business Employees. Business Employees to whom Purchaser has offered employment, who accept such offer and who commence employment with Purchaser on the Closing Date are referred to hereunder as “ Transferred Employees .” Prior to and following the Closing Date, Purchaser and the Company will reasonably cooperate to coordinate the transfer of Transferred Employees and the termination of employment of the Transferred Employees with the Company or its Affiliates.

(b) Service Credit . With respect to any employee benefit plan maintained by Purchaser or an Affiliate of Purchaser for the benefit of any Transferred Employee, effective as of the Closing, Purchaser shall, or shall cause its Affiliate to, waive any waiting periods or actively at work requirements and recognize all service of the Transferred Employees with the Company, as if such service were with Purchaser, for vesting, eligibility and accrual purposes; provided, however, such service shall not be recognized for benefit accrual purposes with respect to any defined benefit plan or equity plan (including, for the avoidance of doubt, in connection with any employer-match program under Purchaser’s 401(k) Plan) or to the extent that (x) such recognition would result in a duplication of benefits or (y) such service was not recognized under the corresponding Benefit Plan.

(c) 401(k) Plan . The Company shall take all necessary actions to allow Transferred Employees to (i) roll over any associated loan notes to the extent permitted under the 401(k) plan maintained by the Company (the “ Company 401(k) Plan ”) and the 401(k) plan maintained by Purchaser (the “ Purchaser 401(k) Plan ”) and (ii) permit Transferred Employees to continue to make loan repayments to the Company 401(k) Plan for at least 60 days following the Closing Date. Purchaser shall use commercially reasonable efforts to permit each such Transferred Employee who has received an eligible rollover distribution (as defined in Section 402(c)(4) of the Code) from the Company 401(k) Plan to roll such eligible rollover distribution (including within a reasonable period of time following the Closing Date an opportunity to roll over any associated loans, if applicable), into an account under a 401(k) plan maintained by Purchaser or an Affiliate of Purchaser.

(d) Benefit Plans . Effective as of the Closing, the Transferred Employees shall cease active participation in the Benefit Plans and the Purchaser shall coordinate the enrollment of all Transferred Employees into benefit plans of Purchaser. Purchaser will or will cause its Affiliate, as applicable, to (1) waive all limitations as to preexisting conditions, exclusions and waiting periods with respect to participation and coverage requirements applicable to Transferred Employees

under Purchasers medical plan (Aetna) that such employees may be eligible to participate in after the Closing Date and (2) to the extent that a Transferred Employee can provide to Purchaser or its medical plan provider (Aetna) evidence sufficient to demonstrate he or she has paid deductibles prior to the Closing Date under the Company’s medical plan, provide each Transferred Employee with credit for such deductibles paid prior to the Closing Date in satisfying any applicable deductible or out-of-pocket requirements for the plan year during which the Closing Date occurs under Purchasers medical plan that such employees are eligible to participate in after the Closing Date. The Company shall remain liable for all eligible claims for benefits under the Benefit Plans that are incurred by the Employees prior to the Closing Date. For purposes of this Agreement, the following claims shall be deemed to be incurred as follows: (i) life, accidental death and dismemberment, short-term disability, and workers’ compensation insurance benefits, on the event giving rise to such benefits; (ii) medical, vision, dental, and prescription drug benefits, on the date the applicable services, materials or supplies were provided; and (iii) long-term disability benefits, on the eligibility date determined by the long-term disability insurance carrier for the plan in which the applicable Employee participates.

(e) Continuous Employment . Purchaser and the Company intend that the transactions contemplated by this Agreement should not constitute a separation, termination or severance of employment of any Employee who accepts an employment offer by Purchaser that is consistent with the requirements herein, and that each such Employee will have continuous employment immediately before and immediately after the Closing. Notwithstanding the foregoing, the Company shall be liable and hold Purchaser harmless for any claims relating to the employment of any Transferred Employee incurred prior to or in connection with the Closing other than any unlawful hiring practices of Purchaser. The Company shall be liable for and shall pay all accrued retirement and sale of company bonuses payable to Employees under existing agreements with such Employees. Purchaser shall be liable and hold the Company harmless for any claims relating to the employment of any Transferred Employee incurred following the Closing.

(f) Vacation . Each Transferred Employee shall have the option of: (i) receiving credit or rolling over their accrued but unused vacation time to Purchaser, in which case Purchaser shall assume liability for all accrued but unused vacation time to which such Transferred Employee is entitled as of immediately prior to the Closing Date to the extent permitted by Law or otherwise consented to by the Transferred Employee and each such Transferred Employee shall be entitled to use such accrued vacation in accordance with the terms of Purchaser’s vacation or paid time off policy, or (ii) being paid in cash (by the Company) an amount equal to the accrued but unused vacation time to which such Transferred Employee is entitled pursuant to the Company’s vacation time policy immediately prior to the Closing Date. Notwithstanding the above, the Accrued Vacation Amount assumed by Purchaser under subsection (i) above shall be a component of the Closing Net Working Capital.

(g) Bonus, Incentive and Other Compensation . The Company agrees that it shall be responsible for paying all amounts of salaries, commissions, bonuses, incentive and other cash compensation that are earned prior to the Closing Date or as a result of the transactions contemplated hereby and that such amounts shall be paid by the Company to Business Employees on or after the Closing Date. Notwithstanding the foregoing, any retention payments to Business Employees to be made by the Company shall be made pursuant to the terms of the agreements between the Company and each such Business Employee with respect to such retention payments.

(h) COBRA Coverage . Notwithstanding any other provision of this Agreement, Purchaser acknowledges that it will be considered a successor employer to the Company with respect to the obligation to provide continuation of health care coverage under the federal law commonly known as COBRA to those qualified beneficiaries (including covered employees) formerly covered under the Company’s group health plans whose rights to obtain COBRA coverage arose on or before the Closing Date, but only if the Company (including all employers treated as employed by a single employer with the Company under Section 414(t) of the Code) terminates all group health plan coverage on or after the Closing Date and before the COBRA continuation period expires with respect to such qualified beneficiaries. Purchaser’s obligation to provide such coverage shall arise at the termination of the last group health plan offered by the Company and all employers treated as employed by a single employer with the Company. The Company expects to terminate all group health plans on or before the last day of the month in which the Closing Date occurs. Purchaser acknowledges that its COBRA obligations include providing notice to all qualified beneficiaries whose loss of coverage is associated with the termination of employment of covered employees in connection with the transaction contemplated by this Agreement.

(i) WARN Act . The Company agrees to provide any required notice under the WARN Act, and any similar statute, and otherwise to comply with any such statute with respect to any “plant closing” or “mass layoff” (as defined in the WARN Act) or similar event (including as a result of the consummation of the Transactions contemplated by this Agreement or this Agreement) affecting current or former employees and occurring at or prior to the Closing. In the event as a result of actions or inactions of the Company, Purchaser incurs liabilities and obligations under the WARN Act or any other similar state

laws, including, without limitation, penalties, fines and other costs, the Company shall fully indemnify Purchaser for such liabilities and obligations with respect thereto.

(j) No Rights Conferred on Personnel . Nothing in this Section 5.8 , expressed or implied, shall confer upon any partner, principal, employee, director, officer or former partner, principal, employee, officer or director of the Company or its Affiliates or related entities (including, without limitation, the Transferred Employees and Business Employees) any rights or remedies (including, without limitation, any right to employment or continued employment for any specified period) of any nature or kind whatsoever, under or by reason of this Section 5.8 . It is expressly agreed that the provisions of this Section 5.8 are not intended to be for the benefit of or otherwise be enforceable by, any third party, including, without limitation, any Transferred Employees or Business Employees. No provision of this Section 5.8 shall create any rights in any such persons in respect of any benefits that may be provided under any Benefit Plan or any plan or arrangement which may be established or maintained by Purchaser, shall be construed to establish, amend, or modify an Benefit Plan or any other benefit plan, program, agreement or arrangement nor shall require the Company, Purchaser or any Affiliate of the Company or Purchaser to continue or amend any particular benefit plan and any such plan may be amended or terminated in accordance with its terms and applicable law.

Section 5.9 Non-Compete; Non-Solicitation .

(a) Each of the Company and the Stockholder acknowledge and agree on behalf of itself, or himself, and its, or his, Affiliates (each a “ Restricted Party ” and, collectively, the “ Restricted Parties ”) as follows:

(vi) the covenants in this Section 5.9 , including the scope of the covenants as to time, geography and activity, are reasonable and necessary to protect and preserve Purchaser’s and its Affiliates’ legitimate business interests and are not broader than necessary to protect Purchaser’s and its Affiliates’ interests;

(vii) Purchaser and/or its Affiliates would be irreparably damaged if any Restricted Party were to breach its obligations under this Section 5.9 ;

(viii) Purchaser has been materially induced by the Restricted Parties to enter into this Agreement by the covenants set forth in this Section 5.9 , and Purchaser would not have taken such action if the Restricted Parties had not covenanted as provided in this Section 5.9 ;

(ix) the covenants in this Section 5.9 constitute independent covenants that shall not be affected by performance or nonperformance of any other provision of this Agreement by Purchaser; and

(x) as part of the Transactions contemplated herein, Purchaser is purchasing the goodwill related to the Business, will carry on the Business conducted by the Company prior to the Closing, and in order to protect the value of the goodwill related to the Business, and as a condition to entering into this Agreement, the Restricted Parties have agreed to the restrictive covenants set forth in this Section 5.9 .

(b) For a period of five (5) years after the Closing Date, each Restricted Party will not, and will cause its current and future Affiliates not to, directly or indirectly, whether by itself or through an agent, employee or otherwise, or in association with any Person or entity, own, share in the earnings of, invest in the stock, bonds or other securities of, manage, operate, finance (whether as a lender, investor or otherwise), control, participate in the ownership, management, operation, or control of, be employed by, associated with, or in any manner be connected with, lend money to, render services or advice to, be engaged or employed by, or take part in, or, consult or advise, any other Person or entity that is engaged in the marketing, distribution or selling of any products or provisions of services that constitute any aspect of the Business (each, a “ Competing Activity ”) or in the development of any such products or capabilities which constitute a Competing Activity anywhere in the Territory.

(c) No Restricted Party will be in violation of this Section 5.9 : solely by reason of investing in stock, bonds or other securities of any Person or entity engaged in a Competing Activity (but without otherwise participating in such Competing Activity), if: (i) such stock, bonds or other securities are listed on any national securities exchange or have been registered under Section 12(g) of the Securities Exchange Act of 1934 or any successor law; and (ii) such investment does not exceed, in the case of any class of the capital stock of any one issuer, one percent (1.0%) of the issued and outstanding shares or such capital stock, or, in the case of bonds or other securities, one percent (1.0%) of the aggregate principal amount thereof issued and outstanding.

(d) For a period of five (5) years from the Closing Date:

(i) Each Restricted Party will not (and shall not permit any of its Affiliates to), directly or indirectly, solicit or otherwise attempt to induce any employee or independent contractor of Purchaser or its Affiliates (including, without limitation, the Transferred Employees) to terminate his or her employment or relationship, as applicable, with Purchaser or its Affiliates, to work with or for the Company or the Stockholder or their Affiliates in competition with the Business; provided , however, that this Section 5.9 shall not (A) prohibit general solicitations of or advertisement for employment by the Company or the Stockholder or their Affiliates if they are not specifically directed at employees or independent contractors of Purchaser or its Affiliates, or (B) prevent any Restricted Party from interviewing or hiring any employee or independent contractor of Purchaser who responds to such general solicitation of or advertisement for employment; and

(ii) Each Restricted Party will not, and will cause its current and future Affiliates not to, directly or indirectly cause or induce, or attempt to cause or induce, any then-existing customer, supplier, licensee, licensor, or franchisee or other business relation of Purchaser or its Affiliates, to cease doing business with Purchaser or its Affiliates, or in any way interfere with the relationship between Purchaser and its Affiliates and their customers, suppliers, licensees, licensors, franchisees or other business relations.

(e) If a final judgment of a court or tribunal of competent jurisdiction determines that any term or provision contained in Section 5.9 is invalid or unenforceable, then the court or tribunal will have the power to reduce the scope, duration, or geographic area of the term or provision, to delete specific words or phrases, or to replace any invalid or unenforceable term or provision with a term or provision that is valid and enforceable and that comes closest to expressing the intention of the invalid or unenforceable term or provision, and this Agreement will be enforceable as so modified after the expiration of the time within which the judgment may be appealed.

(f) If any Restricted Party breaches any of its covenants, duties or obligations set forth in this Section 5.9 , Purchaser and its Affiliates would encounter extreme difficulty in attempting to prove the actual amount of damages suffered by them as a result of such breach and would not be reasonably or adequately compensated in damages in any action at law. In addition to any other remedy Purchaser or its Affiliates may have at law, in equity, by statute or otherwise, if any Restricted Party breaches this Section 5.9 , then Purchaser and its Affiliates will be entitled to seek and receive temporary, preliminary and permanent injunctive and other equitable relief from any governmental body of competent jurisdiction to enforce any of their rights under this Section 5.9 or otherwise to prevent violation of this Section 5.9 , without the necessity of proving the amount of any actual damage resulting therefrom. No remedy conferred by any of the specific provisions of this Section 5.9 is intended to be exclusive of any other remedy that is otherwise available at law, in equity, by statute or otherwise. In any action, suit or other proceeding instituted, concerning or arising out of this Section 5.9 , the prevailing Party will recover all of such Party’s costs and reasonable attorneys’ fees.

Section 5.10 Post-Closing Consents; Nonassignable Contracts .

(a) Notwithstanding anything to the contrary in this Agreement, to the extent that any Assigned Contract is not capable of being transferred by the Company to Purchaser pursuant to this Agreement without the consent, approval or authorization of a third party, and such consent, approval or authorization is not obtained prior to the Closing, or if such transfer or attempted transfer would constitute a breach or a violation of the Assigned Contract or any Applicable Law (each a “ Specified Consent ”), nothing in this Agreement shall constitute an assignment or transfer or an attempted assignment or transfer thereof; provided, however, that, subject to the satisfaction or waiver of the closing conditions contained in Article VI and Purchaser’s election to close notwithstanding that a specific third party consent set forth on Schedule 3.4 has not been obtained by the Company, Purchaser waives all recourse against the Company including, without limitation, any adjustment to the Purchase Price on account thereof, solely resulting from the failure of the Company to obtain such specific third party consent.

(b) In the event that any such Specified Consent is not obtained on or prior to the Closing Date, each of the Company, the Stockholder and Purchaser shall use commercially reasonable efforts to: (i) obtain the Specified Consent (in a form which is acceptable to Purchaser); (ii) provide Purchaser all of the benefits of the applicable Assigned Contract; (iii) cooperate in any reasonable and lawful arrangement designed to provide such benefit to Purchaser, including accepting direction as Purchaser shall request of the Company and the Stockholder; (iv) keep Purchaser fully informed in a timely manner as to all developments regarding the Specified Consent and Assigned Contract, including promptly providing with copies of all material correspondence, drafts and other material communications regarding same; and (v) enforce at the request of Purchaser at Purchaser’s sole cost and expense, any rights of the Company arising from any such Assigned Contract. Notwithstanding the foregoing, the Parties acknowledge and agree that in connection with obtaining the Specified Consent Purchaser shall not be required to: (i) divest any of its respective businesses or assets, including any part of the Purchased Assets acquired pursuant to the terms and conditions of this Agreement and the Other Agreements; (ii) take or agree to take any other action or agree to any

limitation that could reasonably be expected to have an adverse effect on the business, operations, assets, liabilities, condition (financial or otherwise), results of operations or prospects of Purchaser or its Affiliates; or (iii) pay any funds or accept any material modification to the Assigned Contract.

(c) Once a Specified Consent is obtained, the applicable Assigned Contract shall be deemed to have been automatically assigned and transferred to Purchaser on the terms set forth in this Agreement, as specified in Article I .

Section 5.11 Reserved .

Section 5.12 Name Change . Immediately upon the Closing, the Company agrees to cease using, and transfer to Purchaser all of its rights to use, “AllRegs”, “Mortgage Resource Center, Inc.” or any other name which is confusingly similar thereto, or which would prevent or interfere with the Purchaser qualifying to do business in the any jurisdiction under such names.

Section 5.13 Supplement to Company Disclosure Schedule . From time to time prior to the Closing, the Company shall have the right, but not the obligation, to supplement or amend the Company Disclosure Schedule hereto with respect to any matter hereafter arising or of which it becomes aware after the date hereof (each a “ Schedule Supplement ”). Any disclosure in any such Schedule Supplement shall not be deemed to have cured any inaccuracy in or breach of any representation or warranty contained in this Agreement, including for purposes of the indemnification or termination rights contained in this Agreement or of determining whether or not the conditions set forth in Section 6.1(b) have been satisfied; provided, however , that if the Company discloses in a Schedule Supplement that, following the date hereof, the Company first learned, or was first given notice, that a material customer, supplier or Content Provider wishes to cease doing business or reduce in any material respect, or otherwise terminate or modify its relationship, with the Company (a “ Partner Disclosure ”), Purchaser shall have until the earlier of ten (10) days following the receipt of such Partner Disclosure to either accept or reject the Partner Disclosure. If Purchaser fails to act within such period, it shall be deemed to have accepted such Partner Disclosure, and such Partner Disclosure shall be deemed to have cured any breach of any representation or warranty made in this Agreement relating to such Partner Disclosure (but not, for purposes of clarification, any breach of any representation or warranty relating to the underlying cause of such customer, supplier or Content Provider electing to modify its relationship with the Company) . If Purchaser rejects the Partner Disclosure, the Agreement shall be terminable at the option of Company or Purchaser.

Section 5.14 No Solicitation . From the date hereof until the earlier of the termination of this Agreement pursuant to its terms and the Closing Date, the Company and the Stockholder will not, and will cause their officers, directors, employees, financial advisors, representatives, agents and Affiliates, as applicable, not to, directly or indirectly, take any action to solicit, initiate, seek, entertain, encourage, support, assist, participate in any negotiations or communications regarding, or cooperate with any inquiry, proposal or offer from, or furnish any information to, any third party regarding any merger, recapitalization or consolidation with or involving the Company or any acquisition of stock or right to acquire stock (including any conversion right) or acquisition or exclusive license of any assets of the Company or any financing transaction (including the filing of a registration statement with the SEC) or any other similar transaction the consummation of which would interfere with the Company’s ability to consummate the transactions contemplated hereby (an “ Acquisition Transaction ”). Upon execution of this Agreement, the Company and the Stockholder will, and will cause their officers, directors, employees, financial advisors, representatives, agents and Affiliates, as applicable, to, immediately cease and cause to be terminated any existing direct or indirect discussions with any Person (other than Purchaser) that are in respect of an Acquisition Transaction. From the date hereof until the earlier of the termination of this Agreement pursuant to its terms and the Closing Date, the Company and the Stockholder will, and will cause their officers, directors, employees, financial advisors, representatives, agents and Affiliates, as applicable, to, promptly (and in no event later than 24 hours after receipt thereof) notify Purchaser orally and in writing of any proposal for, or inquiry respecting, any Acquisition Transaction or any request for nonpublic information in connection with such proposal or inquiry, or for access to the properties, books, or records of the Company by any person or entity that informs the Company that it is considering making, or has made, such a proposal or inquiry. Such notice will indicate the identity of the person or entity making the proposal or inquiry and the terms and conditions of such proposal or inquiry in reasonable detail. The Company will keep Purchaser informed on a reasonably current basis (and, in any event, within 24 hours) of the status and details of any material modifications to any such proposal, offer or request.

ARTICLE VI

CLOSING CONDITIONS

Section 6.1 Conditions to Purchaser’s Obligations . The obligation of the Purchaser to consummate the Transactions to be consummated at the Closing is subject to the satisfaction of the following conditions unless waived in writing (to the extent such conditions can be waived) by the Purchaser:

(r) Performance of Obligations of the Company and the Stockholder . The Company and the Stockholder shall have performed and complied in all material respects with all agreements and obligations to be performed and complied with by it under this Agreement prior to or at the Closing, and the Company shall have supplied the Purchaser with certificate(s), dated as of the Closing Date, signed by an authorized officer of the Company to such effect.

(s) Representations and Warranties . The representations and warranties of the Company and the Stockholder set forth in this Agreement and the Disclosure Schedule that are qualified by reference to materiality or Material Adverse Effect shall be true and correct, and each of the other representations and warranties made by the Company and the Stockholder set forth in this Agreement will be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except in any case that representations and warranties that expressly speak as of a specified date or time need only be true and correct or true and correct in all material respects, as applicable, as of such specified date or time).

(t) Closing Documents . The Purchaser shall have received copies of each of the following documents to which the Company or the Stockholder is a party, duly executed by the Company or the Stockholder, and each such document shall be in full force and effect:

(i) executed counterparts to the Escrow Agreement and each of the Other Agreements to which the Company is a party, duly executed by the Company or the Stockholder, as the case may be;

(ii) a certificate, dated as of the Closing Date, duly executed by an authorized officer of the Company, certifying that (A) the Organizational Documents of the Company attached to the certificate are true and complete, (B) such Organizational Documents have been in full force and effect in the form attached from and after the date of the adoption of the resolutions referred to in clause (C) below and no amendment to such Organizational Documents has occurred since the date of the last amendment annexed thereto, if any, (C) the resolutions adopted by the board of directors and all of the voting Stockholders of the Company authorizing the execution, delivery and performance of this Agreement, attached to the certificate, were duly adopted at a duly convened meeting thereof, at which a quorum was present and acting throughout or by unanimous written consent, remain in full force and effect, and have not been amended, rescinded or modified, except to the extent attached thereto, and; (D) the closing conditions in Section 6.1(a) and (b) have been satisfied;

(iii) At least three (3) Business Days prior to the Closing, a certificate, duly executed by an authorized officer of the Company, setting forth a good faith estimate (including calculations with reasonable detail) of the amount of (i) Closing Net Working Capital (the “ Estimated Closing Net Working Capital ”), (ii) Closing Debt Amount (the “ Estimated Closing Debt Amount ”), and (iii) Subscription Amount (the “ Estimated Subscription Amount ”). The Estimated Subscription Amount set forth a complete itemization of (i) each customer Contract providing for a subscription renewal or anniversary date following the Closing for which cash has been received relating to the renewal by the Company prior to Closing (each, a “ Renewing Contract ”), (ii) the amount of such cash received by the Company for each Renewing Contract, and (iii) any Contracts between the Company and a customer for the provision by the Company of educational and/or business practices professional services which are ongoing as of the Closing Date (“ Existing Professional Service Contracts ”), together with calculations showing (A) the aggregate amount collected from customers to deliver all obligations under such Existing Professional Service Contracts following the Closing where the cash payment relating to such Existing Professional Service Contract was collected by the Company prior to the Closing, (B) the sales commission already paid out by the Company in connection with such Existing Professional Service Contract, (C) the total hours to be performed under such Existing Professional Service Contract, and (D) the number of hours remaining to be performed after the Closing pursuant to such Existing Professional Service Contract.

(iv) a signed offer letter regarding employment from (i) each of the Key Employees in the forms agreed to between Purchaser and Seller as of the date hereof, and (ii) at least 90% of all other employees of the Company in a form satisfactory to Purchaser;

(v) a signed non-compete agreement from each of the Key Employees in the forms agreed to between Purchaser and Seller as of the date hereof;

(vi) UCC-3 termination statements and any other documents necessary to terminate any Lien (other than Permitted Liens) on any of the Purchased Assets (to the extent necessary);

(vii) a certificate of good standing in respect of the Company, dated as of a date that is not more than three (3) Business Days prior to the Closing Date;

(viii) a duly executed certificate prepared in accordance with Treasury Regulation Section 1.1445-2(b)(2) certifying the Company’s non-foreign status;

(ix) subject to Section 5.10 , assignment and assumption agreements, solely to the extent applicable, in substantially the form(s) attached hereto as Exhibit B (the “ Assignment and Assumption Agreements ”), as are necessary to effect the assignment to Purchaser of all rights of the Company in and to the Assigned Contracts (including without limitation the Licensed Intellectual Property), Leases and Assigned Intellectual Property; and

(x) such other documents and instruments as Purchaser may reasonably request to effect or evidence the Transactions contemplated by this Agreement, including any conveyance documents that are necessary to vest in Purchaser good and valid title or ownership rights to the Purchased Assets and valid contract or other rights in the Purchased Assets that are contractual rights.

(u) No Material Adverse Effect . Since the date of this Agreement, there shall not have occurred any Material Adverse Effect with respect to the Business, and no event, change, development or worsening thereof shall have occurred or circumstance or condition shall exist that, in combination with any other event, change, development or worsening thereof or circumstance or condition, has had or would reasonably be expected to have a Material Adverse Effect with respect to the Business.

(v) No Proceedings . No Person shall have commenced or threatened to commence any Proceeding challenging or seeking the recovery of any damages in connection with the Transactions.

(w) Required Consents . Purchaser shall have received written consents to assignment of certain Assigned Contracts from the Company to Purchaser, in the form attached as Exhibit E , from all of the third parties listed on Schedule 6.1(g) .

(x) Financial Statements . The Company shall have produced and delivered to Purchaser accurate monthly financial statements for the Business (i) for the month of July 2014 by August 15, 2014, and (ii) for the month of August 2014 by September 9, 2014, and in each case Purchaser shall have confirmed in its reasonable discretion that such financial statements were prepared in accordance with GAAP applied on a consistent basis.

Section 6.2 Conditions to Obligations of the Company and the Stockholder. The obligation of the Company and the Stockholder to consummate the Transactions to be consummated at the Closing is subject to the satisfaction of the following conditions unless waived in writing (to the extent such conditions can be waived) by the Company:

(c) Performance of Obligations of the Purchaser . The Purchaser shall have performed and complied in all material respects with all agreements and obligations to be performed and complied with by it under this Agreement prior to or at the Closing, and the Purchaser shall have supplied the Company with a certificate, dated as of the Closing Date, signed by an officer of the Purchaser, to such effect.

(d) Officer’s Certificate of the Purchaser . The Company shall have received a certificate dated as of the Closing Date, signed by an officer of the Purchaser and certifying:

(i) as to the genuineness of the resolutions of the board of directors of the Purchaser authorizing the execution, delivery and performance by the Purchaser of each of the Documents to which the Purchaser is a party; and

(ii) such other matters as the Company may reasonably request.

(e) Representations and Warranties .

(i) The representations and warranties of the Purchaser set forth in this Agreement and the Disclosure Schedule that are qualified by reference to materiality or Material Adverse Effect shall be true and correct, and each of the other representations and warranties made by Purchaser set forth in this Agreement will be true and correct in all material respects, in each case as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date (except in any case that representations and warranties that expressly speak as of a specified date or time need only be true and correct or true and correct in all material respects, as applicable, as of such specified date or time); and

(ii) the Company shall have received a certificate dated as of the Closing Date, signed by an authorized officer of the Purchaser, as to the satisfaction of the condition set forth in clause (i).

(f) Closing Documents . The Company shall have each received copies of each of the following documents to which it is a party duly executed by the Purchaser, and each such documents shall be in full force and effect:

(i) the Initial Purchase Price Proceeds to the Company in accordance with Section 1.6(a) ;

(ii) executed counterparts to the Escrow Agreement and each of the Other Agreements to which Purchaser is a party, duly executed by Purchaser; and

(iii) such other documents and instruments as may be reasonably necessary to effect or evidence the Transactions contemplated by this Agreement.

ARTICLE VII

INDEMNIFICATION

Section 7.1 Survival of Representations and Warranties and Covenants . The representations, warranties and covenants of the Parties contained in this Agreement shall survive the Closing for the applicable period set forth in this Section 7.1 , and any and all claims and causes of action for indemnification under this Article VII arising out of the inaccuracy or breach of any representation, warranty or covenant of a Party must be made prior to the termination of the applicable survival period. The Parties agree that all of the representations, warranties and covenants of the Parties contained in this Agreement and any and all claims and causes of action for indemnification under this Article VII shall survive as follows:

(g) The respective representations and warranties of the Parties set forth in Sections 3.1 (Authority and Binding Effect), 3.2 (Organization), 3.8(a) and (g) (Title to Assets), 3.13 (Environmental Matters), 3.25 (Brokers) (together, the “ Company Fundamental Representations ”), and 4.1 (Authority and Binding Effect), 4.2 (Organization), and 4.6 (Brokers) shall survive the Closing indefinitely;

(h) The representations and warranties of the Company and the Stockholder set forth in Section 3.18 (Tax Matters) and Section 3.19 (Employee Benefit Plans) shall survive until sixty (60) calendar days after the expiration of the applicable statute of limitations;

(i) The representations and warranties of the Company and the Stockholder set forth in Section 3.15 (Intellectual Property), Section 3.16 (Information Technology) and Section 3.17 (Privacy and Personal Data) shall survive until December 15, 2016;

(j) All other representations and warranties of the Parties shall survive until the eighteenth (18 ^th ) month anniversary of the Closing Date;

(k) All covenants, agreements and obligations shall survive indefinitely; and

(l) In the event of any fraudulent, intentional misrepresentation or willful breach of any representations or warranties of the Company or the Stockholder set forth in this Agreement, or in any agreement, document, certificate or other instrument delivered by the Company or the Stockholder under or pursuant to this Agreement or in connection with the transactions contemplated hereby, such representations and warranties shall survive the Closing and shall remain in full force and effect in perpetuity and without limitation, regardless of any investigation or disclosure made by or on behalf of any of the parties hereto.

(m) In the event of any fraudulent, intentional misrepresentation or willful breach of any representations or warranties of the Purchaser set forth in this Agreement, or in any agreement, document, certificate or other instrument delivered by Purchaser under or pursuant to this Agreement or in connection with the transactions contemplated hereby, such representations and warranties shall survive the Closing and shall remain in full force and effect in perpetuity and without limitation, regardless of any investigation or disclosure made by or on behalf of any of the parties hereto.

Notwithstanding the foregoing (i) any obligation to indemnify, defend and hold harmless pursuant to Section 7.2 shall not terminate with respect to any item as to which the Indemnified Party shall have, before the expiration of the applicable survival period, previously made a claim by delivering a written notice of such claim (stating in reasonable detail the basis of such claim) to the Indemnifying Party in accordance with Section 7.6 and (ii) this Section 7.1 shall not limit any covenant or agreement of the Parties which contemplates performance after the Closing.

Section 7.2 Obligation to Indemnify

(g) Indemnification by the Company and the Stockholder . Subject to the limitations set forth in this Article VII , each of the Company and the Stockholder agree to jointly and severally indemnify, defend and hold harmless Purchaser and its directors, managers officers, employees, Affiliates, successors, permitted assigns, agents and representatives (collectively, the “ Purchaser Indemnitees ”), from and against all Losses resulting from or related to:

(vi) any breach or inaccuracy of any of the representations and warranties of the Company and the Stockholder contained in this Agreement, any Other Agreement or in any certificate delivered herein;

(vii) any non-compliance with or breach of any covenant or agreement of the Company and the Stockholder contained in this Agreement or any Other Agreement;

(viii) any Excluded Assets or Excluded Liability; and

(ix) any reasonable costs and expenses of enforcement to recover Losses due to the Purchaser Indemnitees under this Article VII.

(h) Company Basket . Except for Losses resulting from or related to: (i) fraud, intentional misrepresentation or willful breach, (ii) breach or inaccuracy of any of the Company Fundamental Representations, or (iii) the matters set forth in Sections 7.2(a)(ii)-(iv) , as applicable, which, in each such case shall be indemnified in its entirety , the Purchaser Indemnitees shall not be entitled to recover for any Losses arising under this Agreement unless and until the aggregate amount of all Losses for which Purchaser Indemnitees are otherwise entitled to indemnification pursuant to this Agreement exceeds an amount equal to $125,000 (the “ Company Basket ”). If, at any time, the aggregate amount for which the Purchaser Indemnitees are entitled to indemnification pursuant to this Agreement exceeds the Company Basket, then the Purchaser Indemnitees shall be entitled to recover the amount in its entirety from the first dollar of Loss, regardless of such Company Basket.

(i) Indemnification Cap . The maximum liability for indemnification for Losses pursuant to this Article VII shall equal $3,000,000 (the “ Cap ”), except that if total Losses pursuant to this Article VII exceed $3,000,000 and such excess Losses result from the breach or inaccuracy of the representations and warranties set forth in Section 3.15 (Intellectual Property) (“ IP Losses ”), then the Cap shall increase to a total of $5,500,000, with the additional $2,500,000 being available solely to cover liability for indemnification for such IP Losses. Notwithstanding the above, the Cap shall not apply to Losses resulting from (i) fraud, intentional misrepresentation or willful breach, (ii) breach or inaccuracy of any of the Company Fundamental Representations, or (iii) the matters set forth in Sections 7.2(a)(ii)-(iv) , as applicable, which Losses shall be indemnified in their entirety up to the Purchase Price.

(j) Indemnification by Purchaser . Subject to the limitations set forth in this Article VII, Purchaser agrees to indemnify, defend and hold harmless the Company, the Stockholder and their directors, managers officers, employees, Affiliates, successors, permitted assigns, agents and representatives (collectively, the “ Company Indemnitees ”), from and against all Losses resulting from or related to:

(i) any breach or inaccuracy of any of the representations and warranties of Purchaser contained in this Agreement, any Other Agreement or in any certificate delivered herein;

(ii) any non-compliance with or breach of any covenant or agreement of Purchaser contained in this Agreement or any Other Agreement;

(iii) any Assumed Liability; and

(iv) any reasonable costs and expenses of enforcement to recover Losses due to the Purchaser Indemnitees under this Article VII.

(k) Other Limitations:

(i) Payments by an Indemnifying Party pursuant to this Article VII in respect of any Loss shall be limited to the amount of any Losses that remain after deducting therefrom any insurance proceeds actually received and directly related to such Losses, net of the cost of recovery and any premium increases relating to or resulting from such claim. The Indemnified Party shall use its commercially reasonable efforts to recover under applicable insurance policies for any Losses.

(ii) Payments by an Indemnifying Party in respect of any Loss shall be reduced by an amount equal to any Tax benefit actually realized in the year in which the Loss was incurred as a direct result of such Loss by the Indemnified Party, net of any income taxes payable by Purchaser as a result of payments by the Indemnifying Party.

Section 7.3 Satisfaction of Claims . Except for Losses resulting from or arising out of: (i) fraud, intentional misrepresentation or willful breach, or (ii) any Excluded Liability, claims made by the Purchaser Indemnitees for indemnification under this Article VII shall be satisfied first from any Escrow Funds held by Escrow Agent and, only if applicable pursuant to Section 7.2(c), then directly from the Company and the Stockholder, jointly and severally.

Section 7.4 Indemnification Procedures . Any Purchaser Indemnitee making a claim for indemnification pursuant to this Article VII (an “ Indemnified Party ”) must give the other Party or Parties from whom indemnification is sought (an “ Indemnifying Party ”) written notice of such claim (a “ Claim Notice ”) promptly after the Indemnified Party receives any written notice of any Proceeding against or involving the Indemnified Party by a Governmental Authority or other third party, or otherwise discovers the liability, obligation or facts giving rise to such claim for indemnification (“ Claim ”); provided that the failure to notify or delay in notifying an Indemnifying Party will not relieve the Indemnifying Party of its obligations pursuant to this Article VII , except to the extent (and only to the extent) that such failure actually harms the Indemnifying Party. Such Claim Notice must contain a description of the Claim and the nature and amount of such Loss (to the extent that the nature and amount of such Loss is known or reasonably ascertainable at such time; provided that such amount or estimated amount shall not be conclusive of the final amount, if any, of such Claim). Notwithstanding the foregoing, any claim for a breach of a representation or warranty or covenant must be delivered prior to the expiration of the applicable survival term. The Company shall have thirty (30) days after receipt of a Claim to deliver to Purchaser a written objection to the Claim specifying, in reasonable detail, any objections to the Claim or the amount of Losses set forth therein. If the Company fails to deliver such written objection within thirty (30) days after receipt of the Claim, then the Company and the Stockholder shall be deemed to agree that the Indemnified Party is entitled to receive all of the Losses specified in such Claim (which deemed agreement shall be deemed final, binding and conclusive with respect to all of the Indemnifying Parties).

(h) With respect to the defense of any Claim against or involving an Indemnified Party in which a Governmental Authority or other third party (“ Third Party Claim ”) in question seeks recovery of a sum of money or other remedy for which a Claim Notice is provided (i) the Indemnifying Party shall have the right to participate in, and subject to Section 7.4(c) , control the defense of each Claim at the Indemnifying Party’s cost and expense, and (ii) the Indemnified Party shall fully cooperate with the Indemnifying Party and provide access to any and all applicable documents and other information and Persons reasonably requested by the Indemnifying Party; provided that the Indemnified Party shall have no obligation to disclose any documents or other information to the extent such disclosure in the Indemnified Party’s reasonable judgment may adversely affect the attorney-client privilege or work product protections related to such documents or other information.

(i) Notwithstanding Section 7.4(b) , if the Indemnifying Party assumes the defense of the Claim, the Indemnified Party will be entitled to participate in the defense of such Claim and to employ counsel of its choice for such purpose at its own expense; provided that the Indemnifying Party will bear the reasonable fees and expenses of such separate counsel incurred prior to the date upon which the Indemnifying Party assumes control of such defense; provided , further, that the Indemnifying Party will not be entitled to assume control of the defense of such claim, if:

(iii) the Indemnifying Party fails to elect in writing to assume the defense of the Claim pursuant to Section 7.4(b) within twenty (20) calendar days of receipt of the applicable Claim Notice;

(iv) a conflict of interest exists or could reasonably be expected to arise which, under applicable principles of legal ethics, could reasonably be expected to prohibit a single legal counsel from representing both the Indemnified Party and the Indemnifying Party in such Proceeding;

(v) a court of competent jurisdiction rules that the Indemnifying Party has failed or is failing to prosecute or defend vigorously such claim;

(vi) such claim relates to a monetary amount greater than the Cap; and

(vii) such claim relates to Taxes of the Indemnified Party;

provided , further, that, in each case, if the Indemnified Party compromises or settles any such Claim without the prior written consent of the Indemnifying Party (which may not be unreasonably withheld or delayed), then such compromise or settlement shall not be deemed to be conclusive evidence of the amount of Losses suffered by the Indemnified Parties relating to such claim.

(j) In the event that the Indemnifying Party assumes the defense of such claim, the Indemnified Party will cooperate with and make available to the Indemnifying Party such assistance, personnel, witnesses and materials as the Indemnifying Party may reasonably request. Regardless of which Party defends such claim, the other Party shall have the right at its expense to participate in the defense assisted by counsel of its own choosing.

(k) Without the prior written consent of the Indemnified Party (which shall not be unreasonably withheld or delayed), the Indemnifying Party shall not enter into any settlement of any Claim for which the Indemnifying Party has assumed the defense pursuant to Section 7.4 hereof if (i) pursuant to or as a result of such settlement, such settlement would result in any liability on the part of the Indemnified Party for which the Indemnified Party is not entitled to indemnification hereunder, (ii) the settlement involves anything other than monetary damages, or (iii) the settlement would reasonable be expected to have an adverse impact on the business or reputation of Purchaser or any of its Affiliates. If a firm offer is made to settle such claim where such settlement involves only monetary payment and a full release of Purchaser, which offer the Indemnifying Party is permitted to settle under this Section 7.4 , and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to the Indemnified Party to that effect. If the Indemnified Party objects to such firm offer within ten (10) calendar days after its receipt of such notice, the Indemnified Party may continue to contest or defend such claim and, in such event, the maximum liability of the Indemnifying Party as to such claim shall not exceed such amount of such settlement offer payable by the Indemnifying Party hereunder, plus other Losses paid or incurred by the Indemnified Party up to the point such notice had been delivered to the Indemnified Party.

Section 7.5 Subrogation . After any indemnification payment is made to the Indemnified Party pursuant to this Article VII (whether by offset or otherwise), the Indemnifying Party shall, to the extent of such payment, be subrogated to all rights (if any) of the Indemnified Party against any third party in connection with the Losses to which such payment relates. Without limiting the generality of the preceding sentence, any Indemnified Party receiving an indemnification payment pursuant to the preceding sentence (whether by offset or otherwise) shall execute, upon the written request of the Indemnifying Party, any instrument reasonably necessary to evidence such subrogation rights.

Section 7.6 Indemnification Payments . Any payment under this Article VII shall be treated as an adjustment to the Purchase Price Proceeds for all Tax purposes and reported as such by Purchaser and the Company and the Stockholder on their respective Tax Returns (except to the extent otherwise required by Applicable Law) and shall be made by wire transfer of immediately available funds to such account or accounts as the Indemnified Party shall designate to the Indemnifying Party in writing.

Section 7.7 Remedies Exclusive . From and after the Closing, absent fraud, intentional misrepresentation or willful breach, the rights of the Parties to indemnification under this Article VII shall be the exclusive remedies of the Parties subsequent to the Closing Date with respect to the recovery of any money damages any Purchaser Indemnitee may incur arising from or relating to this Agreement or the Transactions contemplated hereby (it being understood that nothing in this Section 7.7 or elsewhere in this Agreement shall limit the Parties’ rights to specific performance or other equitable remedies with respect to the covenants referred to in this Agreement or to be performed after the Closing). Subject to the preceding sentence, to the maximum extent permitted by Applicable Law, the Parties hereby waive all other rights and remedies with respect to the recovery of money

damages in any way relating to this Agreement or arising in connection herewith, whether under any laws, at common law or otherwise.

Section 7.8 Investigation . The right to indemnification based on representations, warranties, covenants and obligations in this Agreement will not be affected by any investigation conducted with respect to, or any knowledge acquired (or capable of being acquired) at any time, whether before or after the execution and delivery of this Agreement, with respect to the accuracy or inaccuracy of or compliance with, any such representation, warranty, covenant or obligation. The waiver of any condition based on the accuracy of any representation or warranty, or on the performance of or compliance with any covenant or obligation, will not affect the right to indemnification based on such representations, warranties, covenants and obligations.

ARTICLE VIII

TERMINATION

Section 8.1 Right of Termination . This Agreement may be terminated at any time prior to the Closing by:

(l) the mutual written consent of the Purchaser and the Company;

(m) the Purchaser if (i) any of the Company and the Stockholder’s representations and warranties contained in this Agreement shall be inaccurate as of the date of this Agreement, or shall have become inaccurate as of a date subsequent to the date of this Agreement (as if made on such subsequent date), such that the condition set forth in Section 6.1(b) would not be satisfied, or (ii) any of the Company and the Stockholder’s covenants contained in this Agreement to be performed on or prior to the Closing shall have been breached such that the condition set forth in Section 6.1(a) would not be satisfied; provided , however , that if an inaccuracy in any of the Company and the Stockholder’s representations and warranties as of a date subsequent to the date of this Agreement or a breach of a covenant by the Company or the Stockholder is curable by such Party, and such Party is continuing to exercise commercially reasonable efforts to cure such inaccuracy or breach, then the Purchaser may not terminate this Agreement under this Section 8.1(b) on account of such inaccuracy or breach unless such inaccuracy or breach is not cured within thirty (30) days of the date upon which the Purchaser notifies the Company of the Purchaser’s intention to terminate this Agreement under this Section 8.1(b) ; provided further , however , that the Purchaser shall not have the right to terminate this Agreement pursuant to this Section 8.1(b) if the Purchaser is then in material breach of its covenants or agreements in this Agreement;

(n) the Company if (i) any of the Purchaser’s representations and warranties contained in this Agreement shall be inaccurate as of the date of this Agreement, or shall have become inaccurate as of a date subsequent to the date of this Agreement (as if made on such subsequent date), such that the condition set forth in Section 6.2(c) would not be satisfied, or (ii) any of the Purchaser’s covenants contained in this Agreement shall have been breached such that the condition set forth in Section 6.2(a) would not be satisfied; provided , however , that if an inaccuracy in any of the Purchaser’s representations and warranties as of a date subsequent to the date of this Agreement or a breach of a covenant by the Purchaser is curable by the Purchaser, and the Purchaser is continuing to exercise commercially reasonable efforts to cure such inaccuracy or breach, then the Company may not terminate this Agreement under this Section 8.1(c) on account of such inaccuracy or breach unless such inaccuracy or breach is not cured within thirty (30) days of the date upon which the Company notifies the Purchaser of the Company’s intention to terminate this Agreement under this Section 8.1(c) ; provided further , however , that the Company shall not have the right to terminate this Agreement pursuant to this Section 8.1(c) if the Company or the Stockholder is then in material breach of its covenants or agreements in this Agreement;

(o) the Company or the Purchaser if the Closing shall not have been consummated within ninety (90) days from the date of this Agreement (or such later date as the Parties may agree in writing) (the “ Outside Closing Date ”); provided , however , that no Party shall be entitled to terminate this Agreement pursuant to this Section 8.1(d) if such Party’s breach of this Agreement has been the cause of, or resulted in, the failure of the Closing to occur on or before the Outside Closing Date; and

(p) Any termination pursuant to this Section 8.1 shall be effected by written notice from the Party or Parties so terminating to the other Parties hereto, which notice shall specify the Section of this Agreement pursuant to which this Agreement is being terminated.

Section 8.2 Effect of Termination . In the event of termination of this Agreement pursuant to Section 8.1 : (i) the provisions of Section 5.3 (Confidentiality), Section 5.6 (Press Releases), Article VIII (Termination) and Article IX (Miscellaneous) shall continue in full force and effect; and (ii) no Party hereto or any of its shareholders, members, partners, officers, directors, employees or Representatives shall have any liability or obligation to any other Party to this Agreement, except

for any losses arising by reason of or resulting from any material breach of any representation, warranty, covenant or agreement contained in this Agreement occurring prior to the proper termination of this Agreement.

ARTICLE IX

MISCELLANEOUS

Section 9.1 Notices . Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally (by courier, overnight mail or otherwise), telegraphed, telexed, sent by facsimile transmission or e-mail or sent by certified or registered mail, postage prepaid and return receipt requested, or by express mail. Any such notice shall be deemed given when so delivered personally, telegraphed, telexed or sent by facsimile transmission or e-mail (which is confirmed) or, if mailed, three (3) Business Days after the date of deposit in the United States mails, as follows:

If to the Company and/or to the Stockholder:

Mortgage Resource Center, Inc.

2600 Eagan Woods Drive, Suite 220

Eagan, MN 55121

Attn: Jeffrey H. Hoerster

Email: jhoerster@allregs.com

And to:

Glenn Ford

20953 Negril Ct

Lutz, FL 33558-5120

Email: gford@allregs.com

With a concurrent copy to:

Stinson Leonard Street LLP

150 South 5 ^th Street, Suite 2300

Minneapolis, MN 55402

Email: david.ezrilov@stinsonleonard.com

If to Purchaser:

Ellie Mae, Inc.

4155 Hopyard Road, Suite 200

Pleasanton, CA 94588

Attn: President & COO

Email: jonathan.corr@elliemae.com

With a concurrent copy to:

Ellie Mae, Inc.

4155 Hopyard Road, Suite 200

Pleasanton, CA 94588

Attn: General Counsel

Email: elisa.lee@elliemae.com

Any Party may, by notice given in accordance with this Section 9.1 to the other Parties, designate another address or person for receipt of notices hereunder; provided that notice of such a change shall be effective upon receipt.

Section 9.2 Fees and Expenses . Purchaser, on one hand, and the Company, on the other hand, shall pay the costs, fees and expenses incident to their respective negotiation, preparation, execution, delivery and performance of this Agreement and the Transactions contemplated hereby, including the fees and expenses of its counsel, accountants and other Representatives (“ Transaction Expenses ”).

Section 9.3 Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury .

(d) This Agreement (including any claim or controversy arising out of or relating to this Agreement) shall be governed by, and construed in accordance with, the laws of the State of Delaware, without giving effect to conflicts of laws principles that would result in the application of the law of any other state.

(e) Each of the Parties hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any Delaware State court located in Delaware, or, if no such state court has proper jurisdiction, the Federal court of the United States of America, sitting in Delaware and any appellate court from any thereof, in any actions arising out of or relating to this Agreement and any Transactions contemplated hereby for recognition or enforcement of any judgment relating thereto, and each of them hereby irrevocably and unconditionally (i) agrees not to commence any such action except in such courts, (ii) agrees that any claim in respect of any such action may be heard and determined in the Court of Chancery of the State of Delaware, and the appellate courts thereof or the United States District Court for the District of Delaware, (iii) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any action in the state or federal courts located in any such Court of Chancery of the State of Delaware or Federal court and (iv) waives, to the fullest extent permitted by Applicable Law, the defense of an inconvenient forum to the maintenance of such action in the state or federal courts located in any such Court of Chancery of the State of Delaware or Federal court. Each of the Parties hereto agrees that a final judgment in any such action shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each Party irrevocably consents to service of process in the manner provided for notices in Section 9.1 . Nothing in this Agreement will affect the right of any Party to this Agreement to serve process in any other manner permitted by Applicable Law.

(f) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY OR THE COMPANY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE EITHER OF SUCH WAIVERS, (II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVERS, (III) IT MAKES SUCH WAIVERS VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 9.3 .

Section 9.4 Attorneys’ Fees . If any Proceeding is brought by one Party against another Party, the Party succeeding or prevailing in whole shall be entitled to recover its reasonable attorneys’ fees and other costs incurred in that action or Proceeding, in addition to any other relief to which it may be entitled. In all other Proceedings, each Party shall pay its own fees and expenses.

Section 9.5 Entire Agreement . This Agreement and the Other Agreements (including any additional agreements contemplated hereby or thereby and the Company Disclosure Schedule) contain the entire agreement among the Parties with respect to the subject matter hereof and supersede all prior agreements, written or oral, with respect thereto other than the Confidentiality Agreement, which shall survive and remain in full force and effect according to its terms.

Section 9.6 Waivers and Amendments; Non Contractual Remedies; Preservation of Remedies . This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by each of the Company and Purchaser or, in the case of a waiver, by the Party waiving compliance. No delay on the part of any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any waiver on the part of any Party of any right, power or privilege, or any single or partial exercise of any such right, power or privilege, preclude any further exercise thereof or the exercise of any other such right, power or privilege. Subject to Section 7.7 (Remedies Exclusive), the rights and remedies herein provided are cumulative and are not exclusive of any rights or remedies that any Party may otherwise have at law or in equity.

Section 9.7 Severability . If any provision of this Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any Person or circumstance shall be held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision hereof (or the

remaining portion thereof) or the application of such provision to any other Persons or circumstances. Upon such determination that any provision of this Agreement (or any portion thereof) or the application of any such provision (or any portion thereof) to any Person or circumstance is invalid, illegal or unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the Transactions contemplated hereby are fulfilled to the extent possible.

Section 9.8 Binding Effect; Assignment . This Agreement shall be binding upon and inure to the benefit of the Parties and its successors, permitted assigns and legal representatives. Neither this Agreement, nor any right hereunder, may be assigned by the Company (in whole or in part) without the prior written consent of the other Party. Notwithstanding the foregoing, Purchaser may, without the consent of the Company, assign this Agreement or any portion of its rights, interests or obligations hereunder to any wholly-owned (directly or indirectly) Subsidiary of Purchaser or any other third party, provided that no such assignment shall release Purchaser from its obligations hereunder.

Section 9.9 Interpretation . For purposes of this Agreement, the words “ hereof ,” “ herein ,” “ hereby ” and other words of similar import refer to this Agreement as a whole unless otherwise indicated. Whenever the singular is used herein, the same shall include the plural, and whenever the plural is used herein, the same shall include the singular, where appropriate. All terms defined herein in the singular shall have the same meaning when used in the plural; all terms defined herein in the plural shall have the same meaning when used in the singular. With regard to each and every term and condition of this Agreement, the Parties understand and agree that the same have or has been mutually negotiated, prepared and drafted, and that if at any time the Parties desire or are required to interpret or construe any such term or condition or any agreement or instrument subject hereto, no consideration shall be given to the issue of which Party actually prepared, drafted or requested any term or condition of this Agreement. All references herein to Annexes, Exhibits, Articles, Sections, subsections, paragraphs, subparagraphs and clauses shall be deemed references to such parts of this Agreement, unless the context shall otherwise require. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require. The words “ include ” and “ including ” and variations thereof shall not be deemed terms of limitation, but rather shall be deemed to be followed by the words “ without limitation .” The term “ or ” has, except where otherwise indicated, the inclusive meaning represented by the phrase “ and/or ”. All financial accounting terms not specifically defined herein shall be construed in accordance with GAAP. The term “ dollars ” and “ $ ” means United States dollars.

Section 9.10 No Third Party Beneficiaries . Nothing in this Agreement is intended or shall be construed to give any Person, other than the Parties, their successors and permitted assigns, any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision contained herein.

Section 9.11 Counterparts . This Agreement may be executed in one or more counterparts, and by the different Parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement. The exchange of a fully executed Agreement (in counterparts or otherwise) by facsimile or by electronic delivery in .pdf format shall be sufficient to bind the Parties to the terms and conditions of this Agreement.

Section 9.12 Headings . The headings in this Agreement are for reference only, and shall not affect the interpretation of this Agreement.

Section 9.13 Further Assurances . From time to time, as and when requested by any Party, each of the Parties hereto shall, and shall cause its respective Affiliates to, at such Party’s expense except as otherwise expressly provided in this Agreement, execute such documents and other instruments and take such further actions as may be reasonably required to carry out the provisions hereof and the Other Agreements and consummate and evidence the Transactions contemplated hereby and thereby, including executing and delivering or causing to be executed and delivered to the other Party such assignments, deeds, bills of sale, assumption agreements, consents and other instruments of transfer or assumption as the other Party or its counsel may reasonably request as necessary for such purpose (it being understood that any such assignment, deed, bill of sale, assumption agreement, consent or other instrument of transfer or assumption shall not provide for any representations, warranties, liabilities that are not provided for in this Agreement).

[Signature Pages Follow]

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date first written above.



	THE COMPANY : MORTGAGE RESOURCE CENTER, INC. (DBA ALLREGS) By: /s/ Jeffrey Hoerster Name: Jeffrey Hoerster Title: President
	THE STOCKHOLDER : Glenn Ford, in his individual capacity By: /s/ Glenn Ford



	PURCHASER : ELLIE MAE, INC. By: /s/ Sigmund Anderman Name: Sigmund Anderman Title: Chief Executive Officer

[ SIGNATURE PAGE TO ASSET PURCHASE AGREEMENT ]

ANNEX A

DEFINITIONS; CROSS REFERENCES

A.1 Definitions . When used in this Agreement, the following terms have the meanings set forth below:

“ Accounts Receivable ” means all indebtedness or other obligations owed to the Company arising in connection with the sale of goods or the rendering of services by the Company related to the Business, including, without limitation, any indebtedness, obligation or interest constituting an account, chattel paper or general intangible or any promissory notes relating thereto.

“ Affiliate ” or “ Affiliates ” of any particular Person means any other Person or Persons controlling, controlled by, or under common control with such particular Person, where “ control ” means the possession, directly or indirectly, of the power to direct the management and policies of a Person whether through the ownership of voting securities, contract or otherwise.

“ Applicable Law ” means any applicable decree, final determination, injunction, judgment, law, order, ordinance, regulation, rule, statute or writ of any Governmental Authority.

“ Assigned Contracts ” means all Contracts related to the Business, including but not limited to the Material Contracts and Leases.

“ Assumed Vacation Amount ” shall mean an amount equal to the aggregate liability for accrued but unused vacation time of the Transferred Employees assumed by Purchaser pursuant to Section 5.8(h) .

“ Base Net Working Capital ” means $0.00.

“ Bill of Sale ” means the Bill of Sale, in a form attached hereto as Exhibit D .

“ Books and Records ” means: (i) all current customer or current client lists related to the Business; (ii) all current customer and current client records related to the Business; (iii) all current pricing lists related to the Business; (iv) all current inventory costs support data related to the Business; and (v) all books and records or documents relating to Taxes imposed on the Purchased Assets or with respect to the Business; (vi) any other books of accounts, general, financial, tax and personnel records, files, invoices and correspondence related to the Business; provided , however, that the Company may retain (a) a copy of any such books and records to the extent necessary for Tax, regulatory, accounting or litigation; (b) a copy of any such books and records to the extent such books and records relate, but not exclusively, to the Business.

“ Business ” means the business and operations, as conducted by the Company, of the provision of: mortgage industry solutions for underwriting guidelines, FHA guidelines, mortgage training and education, federal and state compliance, policies and procedures and related or similar products and services.

“ Business Day ” means any day other than a Saturday or a Sunday or a day on which banks located in New York, New York generally are authorized or required by Applicable Law to close.

“ Business Employee ” means any individual employed (either directly or indirectly) by the Company whose primary responsibilities are related to the performance of services relating to the Purchased Assets or Assumed Liabilities.

“ Business Employee Expenses ” shall mean all salary, wages, overtime, employee benefits, sick pay, vacation pay, severance pay, bonuses, profit sharing and any other expenses related to any Business Employee.

“ Closing Debt Amount ” means the aggregate amount of Indebtedness of the Company outstanding as of the close of business on the Closing Date.

“ Closing Net Working Capital ” means (i) the aggregate amount, without duplication, of all current assets of the Company, as of the Closing, as determined in accordance with GAAP, minus (ii) all current liabilities of the Company (including the Accrued Vacation Amount and all Liabilities arising in connection with the transactions contemplated hereby), as of the Closing, as determined in accordance with GAAP; provided, however , that current assets shall not include any cash or cash equivalents, and current liabilities shall not include any deferred revenue. For the avoidance of doubt, Closing Net Working Capital shall be calculated consistent with the example calculation set forth on Exhibit A .

“ COBRA ” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

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

“ Company IP ” means all Intellectual Property Rights and Technology owned or purported to be owned by the Company and related to the Business, including without limitation all Assigned Intellectual Property.

“ Company IP Contract ” means any Contract related to the Business to which the Company is party, or by which the Company is bound, that contains any assignment or license of, or covenant not to assert or enforce, any Intellectual Property Right, or that otherwise relates to, any Company IP, or Intellectual Property Rights developed by, with, or for the Company.

“ Company Product ” means any product or service related to the Business and owned, developed, marketed, distributed, licensed, or otherwise made available to any Person by the Company prior to or as of the date hereof.

“ Confidentiality Agreement ” means the letter agreement, dated April 25, 2014, between Purchaser and Mortgage Resource Center, Inc. (dba AllRegs).

“ Consent ” means any consent, approval, license, permit, waiver, order or authorization of, or registration, declaration or filing with, any Person.

“ Contract ” means any written contract, commitment, agreement, arrangement, note, bond, mortgage, lease or other agreement legally binding on any Party.

“ Environmental Claim ” means any investigation, notice, demand, allegation, action, suit, injunction, judgment, order, consent decree, penalty, fine, lien, Proceeding, or claim (whether administrative, judicial, quasi-judicial or private in nature) arising (i) pursuant to or in connection with any actual or alleged violation of the Company, or liability of the Company under, any Environmental Law or (ii) in connection with any abatement, removal, remedial, corrective, or other response action involving a Hazardous Material, Environmental Law, or any actual damage, injury, threat or harm to health, safety, property, natural resources, or the environment.

“ Environmental Laws ” means all Applicable Laws (including all Permits, licenses or other authorizations issued pursuant thereto and the common law) with respect to the environment, including all Applicable Laws concerning pollution, or protection of human health, the environment and natural resources and those Applicable Laws relating to the presence, use, production, generation, handling, transportation, treatment, storage, disposal, distribution, testing, processing, discharge, Release, or cleanup of or exposure to Hazardous Materials, pollutants, contaminants, substances or wastes.

“ Equipment ” means all personal property of the Company used in connection with the Business, including without limitation all machinery, equipment, replacement and component parts, spare parts, furniture, fixtures, office and other supplies, data processing equipment and peripheral equipment, vehicles, any advertising, promotional and media materials, training materials, trade show materials and videos and other similar personal property.

“ ERISA ” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations issued thereunder.

“ ERISA Affiliate ” means any trade or business which is or has been treated as a single employer with the Company within the meaning of Section 414(b), (c), (m) or (o) of the Code.

“ Escrow Agen t” means U.S. Bank, National Association.

“ Escrow Agreement ” means that certain Escrow Agreement by and among Escrow Agent, Purchaser and the Company in the form attached hereto as Exhibit C .

“ Existing Environmental Liability ” shall mean any Liability arising out of or relating to: (i) any violation of any Environmental Law or any Permit, order or other binding requirement issued thereunder; (ii) any Release, threatened Release, or exposure to any Hazardous Materials; (iii) any environmental investigation, remediation, removal, clean-up or monitoring required under Environmental Laws (whether conducted by the Purchaser, a Governmental Authority, or other Person) or (iv) the use, generation, storage, transportation, treatment, sale or other off-site disposal of Hazardous Materials, in each case, to the extent arising out of or relating to the ownership or operation of the Business, the Purchased Assets, the Real Property, or any

property current or formerly owned or leased by the Company or used or occupied in connection with the Business, at any time prior to the Closing Date.

“ GAAP ” means generally accepted accounting principles of the United States, as applied from time to time.

“ Governmental Authority ” means any federal, state, provincial or local governmental body or administrative agency, or any court of competent jurisdiction, department, political subdivision or other governmental authority or instrumentality, in each case, whether domestic or foreign.

“ Hazardous Materials ” means any material, substance or waste that is listed, classified, regulated, characterized or otherwise defined as “hazardous,” “toxic,” “radioactive,” a “pollutant,” or “contaminant,” (or words of similar intent or meaning) under applicable Environmental Law, including but not limited to petroleum, petroleum products or by-products, asbestos or asbestos-containing material, urea formaldehyde insulation, toxic mold, polychlorinated biphenyls, flammable or explosive substances, or pesticides.

“ Indebtedness ” means the following liabilities and obligations of the Company (without duplication): (i) any indebtedness, (and any PIK or deferred interest and any prepayment premiums with respect thereto) for money borrowed or advances, including that evidenced by notes, bonds, indentures, debentures or other instruments; (ii) any outstanding obligations under capital leases and purchase money obligations; (iii) any amounts owed with respect to drawn letters of credit; (iv) any reimbursement obligations, foreign exchange contracts and arrangements designed to provide protection against fluctuations in interest or currency exchange rates, including amounts payable to unwind such contracts or arrangements; (v) any termination or break fee related to a swap agreement; (vi) accrued but unpaid interest on any obligation described in clauses (i) through (iv) above; (vii) any outstanding guarantees of obligations of the type described in clauses (i) through (vi) above; and (viii) any liabilities and obligations related to termination fees, prepayment penalties, break fees and the like in connection on any obligation described in clauses (i) through (v) above.

“ Intellectual Property Rights ” means and includes all (a) United States and foreign patents and patent applications and disclosures relating thereto (and any patents that issue as a result of those patent applications), and any renewals, reissues, reexaminations, extensions, continuations, continuations-in-part, divisions and substitutions relating to any of the patents and patent applications, as well as all related foreign patent and patent applications that are counterparts to such patents and patent applications, (b) United States and foreign trademarks, trade names, service marks, service names, trade dress, logos, slogans, 800 numbers and corporate names, whether registered or unregistered, and the goodwill associated therewith, together with any registrations and applications for registration thereof, (c) rights in works of authorship including any United States and foreign copyrights and rights under copyrights, whether registered or unregistered, including moral rights, and any registrations and applications for registration thereof, (d) rights in databases and data collections (including knowledge databases, customer lists and customer databases) under the laws of the United States or any other jurisdiction, whether registered or unregistered, and any applications for registration therefor; (e) trade secrets and other rights in know-how and confidential or proprietary information (including any business plans, designs, technical data, customer data, financial information, pricing and cost information, bills of material, or other similar information), (f) URL and domain name registrations, (g) inventions (whether or not patentable) and improvements thereto, (h) all claims and causes of action arising out of or related to infringement or misappropriation of any of the foregoing and (i) other proprietary or intellectual property rights now known or hereafter recognized in any jurisdiction worldwide.

“ Key Employees ” means Jeff Hoerster, Dan Thoms, Frank Preese and Anita Burke.

“ knowledge ” with respect to the Company, means the knowledge of Glenn Ford and each of the Key Employees and Tony Fu, after reasonable or due inquiry.

“ Liability ” or “ Liabilities ” means any indebtedness, or direct or indirect liability, commitment or other obligation, whether fixed or unfixed, known or unknown, asserted or unasserted, secured or unsecured, matured or unmatured, accrued, incurred, absolute, contingent or otherwise.

“ Liens ” means any security interest, mortgage, pledge, conditional sale agreement, security title, claim, right of first refusal, right of first offer, preemptive right, equity, covenant, condition, restriction, right, reservation, declaration, lease, sublease, tenancy, concession, license, occupancy agreement, other right to occupy of any kind, option, easement, right of way or other matter of any nature whatsoever (including matters shown on a survey) affecting any Real Property (or portion thereof) or title thereto, whether or not of record or other encumbrance, restriction or charge of any nature, lien (including any lien for Taxes other

than statutory liens for current Taxes not yet due and payable), or charge of any kind (including, any conditional sale or other title retention agreement or lease in the nature thereof).

“ Loss ” or “ Losses ” means, with respect to any Person, any Liability, demand, claim, action, cause of action, cost, damage, loss of value, deficiency, Tax, penalty, fine or other loss or expense, whether or not arising out of a Third Party Claim, including, without limitation, all interest, penalties, reasonable attorneys’ fees and expenses and reasonable amounts paid or incurred in connection with any action, demand, Proceeding, investigation or claim and any amounts paid in settlement thereof, against or affecting such Person; provided, however, the term Loss or Losses shall exclude any punitive damages (except to the extent awarded to a third party).

“ made available ” shall mean posted to the IntraLinks virtual dataroom for the transaction at least three (3) Business Days prior to the date of this Agreement.

“ Material Adverse Effect ” means any change, event, effect, condition, circumstance, state of facts or development that (i) has had or could reasonably be expected to have a material adverse effect on the business, properties, assets, condition (financial or otherwise), liabilities or results of operations of the Company or the Business or (ii) would be reasonably expected to prevent or materially delay the ability of the Company or the Stockholder to complete the Transactions contemplated by this Agreement or perform its obligations under this Agreement; provided, however, that “Material Adverse Effect” shall not include any event, occurrence, fact, condition or change, to the extent resulting from: (i) general economic or political conditions; (ii) conditions generally affecting the industries in which the Business operates; (iii) any changes in financial, banking or securities markets in general, including any disruption thereof or any change in prevailing interest rates; (iv) acts of war (whether or not declared), armed hostilities or terrorism, or the escalation or worsening thereof; (v) any action required by this Agreement; (vi) any changes in applicable Laws; (vii) the announcement, pendency or completion of the transactions contemplated by this Agreement, including losses or threatened losses of employees, customers, suppliers, distributors or others having relationships with the Seller; (viii) any natural or man-made disaster or acts of God; provided, that any condition or change set forth in (i), (ii), (iii), (vi) and (vi) above shall not be excluded from the definition of Material Adverse Effect if it materially and disproportionately affects the Business; and provided, further that the failure to meet any internal or published projections, forecasts or revenue or earnings predictions (but not the underlying cause of such failure) shall not alone constitute a Material Adverse Effect.

“ Organizational Documents ” means the articles of incorporation and bylaws (or equivalent governing document) of the Company, as amended.

“ Other Agreements ” means the Bill of Sale and Assignment and Assumption Agreements and any other certificates, agreements, and other documents and instruments required to be delivered hereunder or thereunder, including the Company Disclosure Schedule.

“ Permits ” means all permits, licenses, franchises, certificates, approvals and other authorizations issued by any Governmental Authority.

“ Permitted Liens ” means: (i) liens for Taxes, assessments and other governmental fees or other charges that are being disputed in good faith by appropriate proceedings as of the Closing Date (and for which an adequate reserve has been established in accordance with GAAP); (ii) mechanics, workers, subcontractors, materialmen, warehousemen, carriers and other similar inchoate statutory Liens arising or incurred in the ordinary course of business consistent with past practice for amounts which are not delinquent or that are being disputed in good faith; (iii) zoning, entitlement, building and other land use and similar laws or regulations imposed by any Governmental Authority having jurisdiction over such parcel which are not violated by the current use and operation thereof; (iv) easements, covenants, conditions, restrictions and other similar matters of record with respect to any parcel or real property that would not materially impair the use or occupancy of such parcel in the operation of the Business; (v) non-exclusive licenses of Intellectual Property Rights entered into in the ordinary course of business consistent with past practice; and (vi) statutory landlord Liens of the lessor under the Leases.

“ Person ” means and includes an individual, a partnership, a joint venture, a limited liability company, a corporation, a trust, an unincorporated organization, a group, or any Governmental Authority, or any other entity.

“ Personal Data ” means a natural person’s name, street address, telephone number, e-mail address, photograph, social security number or tax identification number, driver’s license number, passport number, credit card number, bank account information and other financial information, customer or account numbers, account access codes and passwords, or any other piece of information that allows the identification of such natural person or enables access to such person’s financial information.

“ Proceeding ” means any action, suit, litigation, arbitration, proceeding (including any civil, criminal, administrative or appellate proceeding), hearing or audit commenced, brought, conducted or heard by, or otherwise before any court or other Governmental Authority or any other Person.

“ Real Property ” means, collectively, the Owned Real Property and the Leased Real Property.

“ Registered IP ” means Company IP that is registered, filed, or issued under the authority of any Governmental Authority, including all patents, registered copyrights, registered trademarks, and domain names, and all applications for any of the foregoing.

“ Release ” means any release, spill, emission, leaking, pumping, pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal, leaching, exhausting or migration into or through the indoor or outdoor environment, including into or through soil, ground water or surface water.

“ Retained Permits ” means all Permits held by the Company that are required or necessary for the lawful ownership or operation of the Business or the Purchased Assets, but are also required or necessary for the lawful ownership or operation of the Business post-Closing, as set forth on Schedule 3.12 .

“ Subscription Amount ” means an amount equal to the sum of (i) any subscription revenue received prior to the Closing relating to any Renewing Contract, plus (ii) the following formula: (A) the aggregate amount collected from customers to deliver obligations for Existing Professional Service Contract following the Closing where the cash payment relating to such Existing Professional Service Contract Obligations was collected by the Company prior to the Closing, less (B) the sales commission already paid out by the Company in connection with such obligations, divided by (C) the total hours to be performed under such Existing Professional Service Contracts, multiplied by (D) the number of hours remaining to be performed after the Closing pursuant to such Existing Professional Service Contracts.

“ Subsidiary ” or “ Subsidiaries ” of the Parties or of any Person means any corporation, partnership, limited liability company, association, trust, joint venture or other entity or organization of which such Person, either alone or through or together with any other Subsidiary, owns, directly or indirectly, more than 25% of the stock or other equity interests, the holder of which is generally entitled to vote for the election of the board of directors or other governing body of such corporation, partnership, limited liability company, association, trust, joint venture or other entity or organization.

“ Tax ” or “ Taxes ” means any and all taxes, charges, fees, levies, tariffs, duties, liabilities, impositions or other assessments in the nature of a tax (together with any and all interest, penalties, additions to tax and additional amounts imposed with respect thereto) imposed by any Governmental Authority, including, without limitation, any federal, state, local or foreign income, gross receipts, branch profits, license, payroll, employment, excise, severance, stamp, occupation, premium, windfall profits, net worth, escheat, environmental, customs duties, capital stock, franchise, profits, withholding, social security, unemployment, disability, real property, personal property, sales, use, transfer, recording, registration, ad valorem, value added, alternative or add-on minimum or estimated tax or other tax of any kind whatsoever, including any interest, penalty or addition thereto, whether disputed or not and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person, including under Treasury Regulation Section 1.1502-6 (or any similar provision of state, local, or foreign Tax Law), or as a transferee or successor, by contract, or otherwise.

“ Tax Return ” shall mean any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

“ Technology ” means and includes diagrams, inventions (whether or not patentable), invention disclosures, know-how, methods, network configurations and architectures, proprietary information, protocols, schematics, design information, build instructions, tooling requirements, manufacturing processes, specifications, technical data, software code (in any form, including source code and executable or object code, binaries and library files), build scripts, test scripts, algorithms, APIs, subroutines, techniques, user interfaces, URLs, domain names, web sites, works of authorship, documentation (including instruction manuals, samples, studies, and summaries), databases and data collections, any other forms of technology, in each case whether or not embodied in any tangible form and including all tangible embodiments of any of the foregoing.

“ Territory ” means each state of the United States of America and its territories, including but not limited to Puerto Rico.

“ Transfer Taxes ” means any and all transfer, documentary, sales, use, gross receipts, stamp, registration, value added, recording and other similar Taxes and fees (including any penalties and interest) incurred in connection with the purchase and sale

of the Purchased Assets (including any real property or leasehold interest transfer or gains tax and any similar Tax) or any other transaction contemplated by this Agreement.

“ Treasury Regulation ” means the regulations promulgated under the Code.

“ WARN Act ” means the Worker Adjustment and Retraining Notification Act of 1988.

A.2 Cross References . The following terms are defined in the following Sections of this Agreement:



Term	Section
Accounts Payable and Accrued Expenses	1.3(b)
Adjustment Payment Date	1.7(d)
Agreement	Preamble
Allocation	1.9(a)
Assigned Intellectual Property	1.1(c)
Assignment and Assumption Agreements	6.1(c)(xi)
Assumed Liabilities	1.3
Base Net Working Capital	1.6(a)
Benefit Plans	3.19(a)
Claim	7.5(a)
Claim Notice	7.5(a)
Closing	2.1
Closing Date	2.1
Closing Date Schedule	1.7(a)
Company Basket	7.3
Company Disclosure Schedule	Article III
Company Permits	3.12
Company Software	3.15(m)
Competing Activity	5.9(b)
Confidential Information	5.3(b)
Continuation Coverage	5.8(c)
Disclosing Party	5.3(b)
Dispute Notice	1.7(b)
Environmental Permits	3.13(a)
Excluded Assets	1.2
Excluded Liabilities	1.4
Existing Professional Service Contracts	3.6(f)
Existing Professional Service Contract Obligations	3.6(f)
Renewing Contract	3.6(f)
Escrow Expiration Date	1.8(a)
Escrow Funds	1.8(a)
Expert Calculations	1.7(c)
Governmental Filings	5.4
Indemnifying Party	7.5(a)
Initial Purchase Price Proceeds	1.6(a)



Term	Section
IT Systems	3.16
Leased Real Property	3.8(e)
Leases	1.1(h)
Licensed Intellectual Property	1.1(c)
Malicious Code	3.15(n)
Material Contract	3.14(a)
Net Working Capital Deficiency Amount	1.7(d)(ii)
Neutral Party	1.7(c)
Omitted Assets	1.5
Outside Closing Date	8.1(d)
Owned Real Property	3.8(c)
Party/Parties	Preamble
Pension Plan	3.19(d)
Personal Property Leases	1.1(h)
Pre-Closing Period	5.1
Prepaid Expenses	1.1(k)
Privacy Agreements	3.17(a)
Purchase Price Proceeds	1.6(a)
Purchased Assets	1.1
Purchaser	Preamble
Purchaser Indemnitees	7.2(a)
Real Property Leases	3.8(e)
Receiving Party	5.3(b)
Related Person	3.21
Renewing Contract	3.6(f)
Representatives	5.3(a)
Restricted Party/Parties	5.9(a)
Review Period	1.7(b)
Specified Consent	5.10(a)
Standard Software	3.14(a)(v)
Tax Filing Party	1.9(c)
Third Party Claim	7.5(b)
Transactions	2.1
Transferred Employees	5.8(a)

Exhibit A

SAMPLE CLOSING NET WORKING CAPITAL CALCULATION

Exhibit B

FORMS OF ASSIGNMENT AND ASSUMPTION AGREEMENT

Exhibit C

FORM OF ESCROW AGREEMENT

Exhibit D

FORM BILL OF SALE

Exhibit E

FORM THIRD PARTY CONSENT

Exhibit 10.2

LEASE

SFI PLEASANTON, LLC,
a Delaware limited liability company

Landlord,

and

ELLIE MAE, INC.,
a Delaware corporation,

Tenant

TABLE OF CONTENTS


1.	USE AND RESTRICTIONS ON USE


2.	TERM


3.	RENT


4.	RENT ADJUSTMENTS


5.	SECURITY DEPOSIT


6.	ALTERATIONS


7.	REPAIR.


8.	LIENS


9.	ASSIGNMENT AND SUBLETTING


10.	INDEMNIFICATION


11.	INSURANCE


12.	WAIVER OF SUBROGATION


13.	SERVICES AND UTILITIES


14.	HOLDING OVER


15.	SUBORDINATION


16.	RULES AND REGULATIONS


17.	REENTRY BY LANDLORD


18.	DEFAULT


19.	REMEDIES


20.	TENANT’S BANKRUPTCY OR INSOLVENCY


21.	QUIET ENJOYMENT


22.	CASUALTY


23.	EMINENT DOMAIN


24.	SALE BY LANDLORD


25.	ESTOPPEL CERTIFICATES


26.	SURRENDER OF PREMISES


27.	NOTICES


28.	TAXES PAYABLE BY TENANT


29.	RELOCATION OF TENANT


30.	PARKING


31.	DEFINED TERMS AND HEADINGS


32.	AUTHORITY


33.	FINANCIAL STATEMENTS AND CREDIT REPORTS


34.	COMMISSIONS


35.	TIME AND APPLICABLE LAW


36.	SUCCESSORS AND ASSIGNS


37.	ENTIRE AGREEMENT


38.	EXAMINATION NOT OPTION


39.	RECORDATION


40.	FITNESS CENTER


41.	PROJECT AMENITIES


42.	BUILDING SIGNAGE


43.	MONUMENT SIGNAGE


44.	OPTION TO RENEW


45.	TEMPORARY SPACE


46.	RIGHT OF FIRST OFFER


47.	ROOF SPACE FOR DISH/ANTENNA


48.	CONFIDENTIALITY


49.	LIMITATION OF LANDLORD’S LIABILITY


50.	GROUND FLOOR LOBBY RENOVATION AND BUILDING RENOVATIONS GENERALLY

TABLE OF CONTENTS

EXHIBIT A – FLOOR PLAN DEPICTING THE PREMISES

EXHIBIT A-1 – SITE PLAN

EXHIBIT B – INITIAL ALTERATIONS AND LANDLORD WORK

EXHIBIT C – COMMENCEMENT DATE MEMORANDUM

EXHIBIT D – RULES AND REGULATIONS

EXHIBIT E – FORM OF EARLY POSSESSION AGREEMENT

EXHIBIT F – APPROXIMATE LOCATION OF PARAPET SIGN

EXHIBIT G – TEMPORARY SPACE

EXHIBIT H – FORM OF CURRENT LENDER SNDA

REFERENCE PAGES



BUILDING:	4420 Rosewood Drive Pleasanton, California 94588
PROJECT:	That certain office project commonly known as “California Center” located in Pleasanton, California and consisting of certain buildings located at the following addresses and the common areas appurtenant to such buildings (collectively, the “Project”): 4400 Rosewood Drive (the “Conference Center”) 4410 Rosewood Drive 4420 Rosewood Drive 4430 Rosewood Drive 4432 Rosewood Drive 4440 Rosewood Drive 4450 Rosewood Drive 4460 Rosewood Drive
LANDLORD:	SFI PLEASANTON, LLC, a Delaware limited liability company
LANDLORD’S ADDRESS:	SFI Pleasanton, LLC c/o Swift Realty Partners 260 California Street, Suite 300 San Francisco, California 94111 Attention: Craig Firpo and SFI Pleasanton, LLC 4432 Rosewood Drive, Suite 100 Pleasanton, California 94588 Attn: Property Management with copies to: Allen Matkins Leck Gamble Mallory & Natsis LLP 1901 Avenue of the Stars, Suite 1800 Los Angeles, California 90067 Attention: Anton N. Natsis, Esq.
ADDRESS FOR RENT PAYMENT:	SFI Pleasanton, LLC c/o Swift Realty Partners 4432 Rosewood Drive, Suite 100 Pleasanton, California 94588 Attention: Property Management
LEASE REFERENCE DATE:	July __, 2014
TENANT:	ELLIE MAE, INC., a Delaware corporation
TENANT’S NOTICE ADDRESS: (a) As of beginning of Term: (b) Prior to beginning of Term (if different):	The Premises Ellie Mae, Inc. 4155 Hopyard Road, Suite 200 Pleasanton, California 94588
PREMISES ADDRESS:	4420 Rosewood Drive, Floors 3, 4 and 5 Pleasanton, California 94588
PREMISES RENTABLE AREA:	Approximately 105,452 sq. ft. (for outline of Premises see Exhibit A ) comprising the entire third (3 ^rd ), fourth (4 ^th ) and fifth (5 ^th ) floors of the Building
COMMENCEMENT DATE:	April 1, 2015
TERM OF LEASE:	One hundred seventeen (117) months beginning on the Commencement Date and ending on the Termination Date.
TERMINATION DATE:	December 31, 2024
ANNUAL RENT and MONTHLY INSTALLMENT OF RENT (Article 3):



Period During Lease Term	Annual Rent	Monthly Installment of Rent	Approximate Monthly Rental Rate Per Rentable Square Foot
4/1/2015 – 3/31/2016	$3,163,560.00	$263,630.00	$2.50*
4/1/2016 – 3/31/2017	$3,258,466.80	$271,538.90	$2.58
4/1/2017 – 3/31/2018	$3,356,220.84	$279,685.07	$2.65
4/1/2018 – 3/31/2019	$3,456,907.44	$288,075.62	$2.73
4/1/2019 – 3/31/2020	$3,560,614.68	$296,717.89	$2.81
4/1/2020 – 3/31/2021	$3,667,433.04	$305,619.42	$2.90
4/1/2021 – 3/31/2022	$3,777,456.12	$314,788.01	$2.99
4/1/2022 – 3/31/2023	$3,890,779.80	$324,231.65	$3.07
4/1/2023 – 3/31/2024	$4,007,503.20	$333,958.60	$3.17
4/1/2024 – 12/31/2024	$4,127,728.20	$343,977.35	$3.26

*Monthly Installment of Rent for the first nine (9) full calendar months of the initial Term is subject to abatement pursuant to Section 3.3 of the Lease.



BASE YEAR (EXPENSES):	2015
BASE YEAR (TAXES):	2015
BASE YEAR (INSURANCE):	2015
TENANT’S PROPORTIONATE SHARE:	60.49% of the Building and 10.21% of Project
SECURITY DEPOSIT:	None
ASSIGNMENT/SUBLETTING FEE:	$1,000.00
AFTER-HOURS HVAC COST:	$35.00 per hour per half floor of the Building, subject to the terms of Section 13.2 of the Lease
PARKING:	3.9 unreserved parking spaces per 1,000 rentable square feet of the Premises (which is equal to 411 spaces as of the date hereof) at no charge during the Term, subject to the terms of Article 30 of the Lease
REAL ESTATE BROKERS:	Cornish & Carey Commercial Newmark Knight Frank, representing Landlord, and Cushman & Wakefield, representing Tenant
BUILDING BUSINESS HOURS:	6:00 a.m. through 6:00 p.m., Monday through Friday, excluding holidays
AMORTIZATION RATE	N/A

The Reference Pages information is incorporated into and made a part of the Lease. In the event of any conflict between any Reference Pages information and the Lease, the Lease shall control. The Lease includes Exhibits A through H, all of which are made a part of the Lease.

IN WITNESS WHEREOF, Landlord and Tenant have executed the Lease as of the Lease Reference Date set forth above.

LANDLORD: TENANT:

SFI PLEASANTON, LLC, ELLIE MAE, INC.,
a Delaware limited liability company a Delaware corporation


By:	SFI Mezz Pleasanton, LLC, a Delaware limited liability company, its member


By:	Swift Fund I GP, LLC, a Delaware limited liability company, its manager

By: /s/ Craig Firpo By: /s/ Sigmund Anderman

Name: Craig Firpo Name: Sigmund Anderman

Title: Vice President Title: CEO

Dated: July 17, 2014 Dated: July 14, 2014

LEASE

By this Lease Landlord leases to Tenant and Tenant leases from Landlord the Premises in the Building as set forth and described on the Reference Pages. The Premises are depicted on the floor plan attached hereto as Exhibit A , and the Building is depicted on the site plan attached hereto as Exhibit A-1 . The Reference Pages, including all terms defined thereon, are incorporated as part of this Lease.

1. USE AND RESTRICTIONS ON USE .

1.1 The Premises are to be used solely for general office purposes and other ancillary uses related thereto to the extent permitted by applicable Regulations. Tenant shall not do or permit anything to be done in or about the Premises which will in any way obstruct or interfere with the rights of other tenants or occupants of the Building or injure, annoy, or disturb them, or allow the Premises to be used for any improper, immoral, unlawful, or objectionable purpose, or commit any waste. Tenant shall not do, permit or suffer in, on, or about the Premises the sale of any alcoholic liquor without the written consent of Landlord first obtained. Tenant shall comply with all federal, state and city laws, codes, ordinances, rules and regulations and all conditions, covenants and restrictions and easements recorded against the Building or Project (collectively, “Regulations”) applicable to the use of the Premises and its occupancy(provided that, from and after the Lease Reference Date, except as required by Regulations, Landlord shall not voluntarily record any conditions, covenants and restrictions, or easements that would have a material, adverse effect upon the rights and obligations of Tenant under this Lease), and shall promptly comply with all governmental orders and directions for the correction, prevention and abatement of any violations in the Building or appurtenant land, caused or permitted by, or resulting from the specific use (other than general office use) by Tenant, or in or upon, or in connection with, the Premises, all at Tenant’s sole expense. Tenant shall not do or permit anything to be done on or about the Premises or bring or keep anything into the Premises which will in any way increase the rate of, invalidate or prevent the procuring of any insurance protecting against loss or damage to the Building or any of its contents by fire or other casualty or against liability for damage to property or injury to persons in or about the Building or any part thereof. Pursuant to Civil Code Section 1938, Landlord states that, as of the Lease Reference Date, the Premises has not undergone inspection by a “Certified Access Specialist” (CASp) to determine whether the Premises meet all applicable construction-related accessibility standards under California Civil Code Section 55.53.

1.2 Tenant shall not, and shall not direct, suffer or permit any of its agents, contractors, employees, licensees or invitees (individually, a “Tenant Entity”, and collectively, the “Tenant Entities”) to at any time handle, use, manufacture, store or dispose of in or about the Premises or the Building any (collectively, “Hazardous Materials”) flammables, explosives, radioactive materials, hazardous wastes or materials, toxic wastes or materials, or other similar substances, petroleum products or derivatives or any substance subject to regulation by or under any federal, state and local laws and ordinances relating to the protection of the environment or the keeping, use or disposition of environmentally hazardous materials, substances, or wastes, presently in effect or hereafter adopted, all amendments to any of them, and all rules and regulations issued pursuant to any of such laws or ordinances (collectively, “Environmental Laws”), nor shall Tenant suffer or permit any Hazardous Materials to be used in any manner not fully in compliance with all Environmental Laws, in the Premises or the Building and appurtenant land or allow the environment to become contaminated with any Hazardous Materials. Notwithstanding the foregoing, Tenant may handle, store, use or dispose of products containing small quantities of Hazardous Materials (such as aerosol cans containing insecticides, toner for copiers, paints, paint remover and the like) to the extent customary and necessary for the use of the Premises for general office purposes; provided that Tenant shall always handle, store, use, and dispose of any such Hazardous Materials in a safe and lawful manner and never allow such Hazardous Materials to contaminate the Premises, Building and appurtenant land or the environment. Tenant shall protect, defend, indemnify and hold each and all of the Landlord Entities (as defined in Article 31) harmless from and against any and all loss, claims, liability or costs (including court costs and attorney’s fees) incurred by reason of any actual or asserted failure of Tenant to fully comply with all applicable Environmental Laws, or the presence, handling, use or disposition in or from the Premises of any Hazardous Materials by Tenant or any Tenant Entity (even though permissible under all applicable Environmental Laws or the provisions of this Lease), or by reason of any actual or asserted failure of Tenant to keep, observe, or perform any provision of this Section 1.2. As of the date hereof, Landlord has not received written notice from any governmental agencies that the Building or the Project is in violation of any Environmental Laws. Further, to Landlord’s actual knowledge, there are no Hazardous Materials at the Building in violation of Environmental Laws. For purposes of this Section, “Landlord’s actual knowledge” shall be deemed to mean and be limited to the current actual knowledge of Michael J. Walker, Asset Manager for the Building, at the time of execution of this Lease and not any implied, imputed, or constructive knowledge of said individual or of Landlord or any parties related to or comprising Landlord and without any independent investigation or inquiry having been made or any implied duty to investigate or make any inquiries; it being understood and agreed that such individual shall have no personal liability in any manner whatsoever hereunder or otherwise related to the transactions contemplated hereby.

1.3 Tenant and the Tenant Entities will be entitled to the non-exclusive use of the common areas of the Building as they exist from time to time during the Term, including the parking facilities, subject to Landlord’s rules and regulations regarding such use. However, in no event will Tenant or the Tenant Entities park more vehicles in the parking facilities than Tenant’s Proportionate Share of the total parking spaces available for common use. Subject to this Section 1.3, the foregoing shall not be deemed to provide Tenant with an exclusive right to any parking spaces or any guaranty of the availability of any particular parking spaces. Landlord shall operate the Project and Building in a manner consistent with the manner in which comparable buildings located in the Pleasanton, Dublin and Bishop Ranch areas are operated. Tenant shall have access to the Building and the Premises for Tenant and its employees 24 hours per day/7 days per week, subject to the terms of this Lease and such security or monitoring systems as Landlord may reasonably impose, including, without limitation, sign-in procedures and/or presentation of identification cards to the extent applicable. Except as provided in Articles 22 and 23, Landlord shall not reduce the parking ratio of parking spaces allocated to Tenant below 3.9 parking spaces per 1,000 rentable square feet of the Premises during the Term, except to the extent required by applicable Regulations. Landlord shall designate carpool and handicap parking spaces as required by Regulations and the Hacienda Business Park Owner’s Association. Landlord shall designate at least four (4) parking spaces in the Parking Facility in close proximity to the Building as “visitor” spaces and Tenant’s visitors may use such visitor spaces on a non-exclusive basis in common with other visitors of the Building and one parking space reserved for Tenant’s “employee of the month”, provided that in no event shall (a) Landlord be obligated to monitor use of such visitor spaces or reserved space, and (b) the foregoing be deemed to permit Tenant to use more than the total parking spaces allocated to Tenant, as set forth herein. In addition, if permitted by Regulations, Landlord shall install at least one (1) electric car charging station(s) within the Project and shall further use commercially reasonable efforts to cause at least one (1) electric car charging station to be located reasonably near 4420 Rosewood Drive, Pleasanton, California, for the use of Tenant on a non-exclusive basis.

2. TERM .

2.1 The Term of this Lease shall begin on the date (“Commencement Date”) as shown on the Reference Pages as the Commencement Date, and shall terminate on the date (“Termination Date”) as shown on the Reference Pages as the Termination Date, unless sooner terminated by the provisions of this Lease. Tenant shall, at Landlord’s request, execute and deliver a memorandum agreement provided by Landlord in the form of Exhibit C attached hereto, setting forth the actual Commencement Date, Termination Date and, if necessary, a revised rent schedule. Should Tenant fail to do so within thirty (30) days after Landlord’s request, the information set forth in such memorandum provided by Landlord shall be conclusively presumed to be agreed and correct. This Lease shall be a binding contractual obligation effective upon execution hereof by Landlord and Tenant notwithstanding the later commencement of the Term.

2.2 Tenant agrees that in the event of the inability of Landlord to deliver possession of the Premises on the Commencement Date set forth on the Reference Pages for any reason, Landlord shall not be liable for any damage resulting from such inability, but except to the extent such delay is the result of the acts or omissions of Tenant or any Tenant Entity, Tenant shall not be liable for any rent until the time when Landlord delivers possession of the Premises to Tenant. No such failure to give possession on the Commencement Date set forth on the Reference Pages shall affect the other obligations of Tenant under this Lease, except that the actual Commencement Date shall be postponed until the date that Landlord delivers possession of the Premises to Tenant unless such delay is caused by the acts or omissions of Tenant or any Tenant Entities. If any delay is the result of the acts or omissions of Tenant or any Tenant Entities, the Commencement Date and the payment of rent under this Lease shall be accelerated by the number of days of such delay.

2.3 Notwithstanding the foregoing, upon full execution and delivery of this Lease, and through September 30, 2014, Landlord shall provide Tenant and its architects, builders, contractors, and similar parties access to the Premises, from time to time, at Tenant’s sole risk, solely for the purpose of Tenant’s space planning. Furthermore, commencing on October 1, 2014, Tenant’s access to the Premises shall also permit constructing the Initial Alterations described on Exhibit B attached hereto and installing telecommunications and data cabling, equipment, furnishings and other personal property. The date on which Landlord delivers possession of the Premises to Tenant pursuant to the terms of this Section 2.3 shall be referred to hereunder as the “Delivery Date” and shall occur no earlier than October 1, 2014. Such access prior to the Commencement Date shall be subject to all of the terms and conditions of this Lease, except that Tenant shall not be required to pay Monthly Installment of Rent or Tenant’s Proportionate Share of Expenses, Taxes or Insurance Costs for the Premises or for the cost of any Building standard utilities (other than after-hours or excess usage) or freight elevator usage with respect to the period of time prior to the Commencement Date during which Tenant occupies the Premises solely for such purposes. However, Tenant shall be liable for all other additional rent, including the cost of any special services requested by Tenant and provided to Tenant during such period. In addition, Tenant shall have the right to occupy the Premises for the conduct of Tenant’s business prior to the Commencement Date, provided that (i) Tenant shall give Landlord at least thirty (30) days’ prior notice of any such occupancy of the Premises, (ii) a certificate of occupancy, temporary certificate of occupancy, or its legal equivalent shall have been issued by the appropriate governmental authorities for the Premises, and (iii) all of the terms and conditions of this Lease shall apply, other than Tenant’s obligation to pay Monthly Installment of Rent or Tenant’s Proportionate Share of Expenses, Taxes or Insurance Costs for the Premises attributable to the Premises, as though the Commencement Date had occurred (although the Commencement Date shall not actually occur until the occurrence of the same pursuant to the terms of Section 2.1, above) upon such occupancy of the Premises by Tenant. Said early possession shall not advance the Termination Date. As a condition to any early entry by Tenant pursuant to this Section 2.3, Tenant shall execute and deliver to Landlord an early possession agreement (the “Early Possession Agreement”) in the form attached hereto as Exhibit E , provided by Landlord, setting forth the actual date for early possession and the date for the commencement of payment of Monthly Installment of Rent and Tenant’s Proportionate Share of Expenses, Taxes and Insurance Costs, and Tenant shall have delivered the prepaid rental as required by Section 3.1, below, and any and all insurance certificates required hereunder.

3. RENT .

3.1 Tenant agrees to pay to Landlord the Annual Rent in effect from time to time by paying the Monthly Installment of Rent then in effect on or before the first day of each full calendar month during the Term, except that the twelfth full month’s rent (subject to the Abated Monthly Installment of Rent pursuant to Section 3.3 below) shall be paid upon the execution of this Lease. The Monthly Installment of Rent in effect at any time shall be one-twelfth (1/12) of the Annual Rent in effect at such time. Rent for any period during the Term which is less than a full month shall be a prorated portion of the Monthly Installment of Rent based upon the number of days in such month. Said rent shall be paid to Landlord, without deduction or offset and without notice or demand, at the Rent Payment Address, as set forth on the Reference Pages, or to such other person or at such other place as Landlord may from time to time designate in writing. Unless specified in this Lease to the contrary, all amounts and sums (other than Monthly Installment of Rent) payable by Tenant to Landlord pursuant to this Lease shall be deemed additional rent.

3.2 Tenant recognizes that late payment of any rent or other sum due under this Lease will result in administrative expense to Landlord, the extent of which additional expense is extremely difficult and economically impractical to ascertain. Tenant therefore agrees that if rent or any other sum is not paid when due and payable pursuant to this Lease, a late charge shall be imposed in an amount equal to the greater of: (a) Fifty Dollars ($50.00), or (b) five percent (5%) of the unpaid rent or other payment; provided, however, that Tenant shall be entitled to a grace period of five (5) days for the first late payment in any twelve (12) month period. The provisions of this Section 3.2 in no way relieve Tenant of the obligation to pay rent or other payments on or before the date on which they are due, nor do the terms of this Section 3.2 in any way affect Landlord’s remedies pursuant to Article 19 of this Lease in the event said rent or other payment is unpaid after date due.

3.3 Notwithstanding anything in this Lease, but subject to Section 3.4 below, to the contrary, so long as there exists no uncured monetary or material non-monetary Event of Default (as defined in Article 18), Tenant shall be entitled to an abatement of Monthly Installment of Rent with respect to the Premises, as originally described in this Lease, in the amount of $263,630.00 per month for the period commencing on April 1, 2015 and continuing through December 31, 2015 (the “Rent Abatement Period”). The maximum total amount of Monthly Installment of Rent abated with respect to the Premises in accordance with the foregoing shall equal $2,372,670.00 (the “Abated Monthly Installment of Rent”). If Landlord terminates this Lease following the occurrence of an Event of Default, then all unamortized Abated Monthly Installment of Rent (i.e. based upon the amortization of the Abated Monthly Installment of Rent in equal monthly amounts, without interest, during the period commencing on the Commencement Date and ending on the original Termination Date) shall immediately become due and payable. Only Monthly Installment of Rent shall be abated pursuant to this Section, as more particularly described herein, and Tenant’s Proportionate Share of Expenses, Insurance Costs and Taxes and all other rent and other costs and charges specified in this Lease shall remain as due and payable pursuant to the provisions of this Lease. If there exists any uncured monetary or material non-monetary Event of Default at any time during the Rent Abatement Period, then Tenant’s right to receive the Abatement Monthly Installment of Rent shall toll (and Tenant shall be required to pay Monthly Installment of Rent during such period of uncured Event of Default) until Tenant has cured such Event of Default in accordance with this Lease.

4. RENT ADJUSTMENTS .

4.1 For the purpose of this Article 4, the following terms are defined as follows:

4.1.1 Lease Year : Each fiscal year (as determined by Landlord from time to time) falling partly or wholly within the Term.

4.1.2 Expenses : All costs of operation, maintenance, repair, replacement and management of the Building (including the amount of any credits which Landlord may grant to particular tenants of the Building in lieu of providing any standard services or paying any standard costs described in this Section 4.1.2 for similar tenants), as determined in accordance with generally accepted accounting principles, including the following costs by way of illustration, but not limitation: water and sewer charges; utility costs, including, but not limited to, the cost of heat, light, power, steam, gas and energy for the Building; waste disposal; recycling costs; the cost of janitorial services; the cost of security and alarm services (including any central station signaling system); costs of cleaning, repairing, replacing and maintaining the common areas, including parking and landscaping, window cleaning costs; labor costs; costs and expenses of managing the Building including management and/or administrative fees; air conditioning maintenance costs; elevator maintenance fees and supplies; material costs; equipment costs including the cost of maintenance, repair and service agreements and rental and leasing costs; purchase costs of equipment; current rental and leasing costs of items which would be capital items if purchased; tool costs; licenses, permits and inspection fees; wages and salaries; employee benefits and payroll taxes for personnel at or below the level of senior property manager that are involved with the operation, maintenance, repair and management of the Building; accounting and legal fees; any sales, use or service taxes incurred in connection therewith. In addition, Landlord shall be entitled to recover, as additional rent (which, along with any other capital expenditures constituting Expenses, Landlord may either include in Expenses or cause to be billed to Tenant along with Expenses and Taxes but as a separate item), Tenant’s Proportionate Share of: (i) an allocable portion of the cost of capital improvement items which are intended to effect economies in the operation or maintenance of the Project, to the extent of cost savings reasonably anticipated by Landlord (based on reasonable and customary engineering or comparable studies materially consistent with applicable industry standards performed by reputable, qualified persons using reasonable industry standard methods) at the time of such expenditure to be incurred in connection therewith; (ii) the cost of fire sprinklers and suppression systems and other life safety systems; (iii) the cost of resurfacing the parking areas of the Project; and (iv) other capital expenses which are required under any Regulations which were not applicable to the Building as of the Lease Reference Date; but the costs described in this sentence shall be amortized over the reasonable life of such expenditures in accordance with such reasonable life and amortization schedules as shall be determined by Landlord in accordance with generally accepted accounting principles, with interest on the unamortized amount at one percent (1%) in excess of the Wall Street Journal prime lending rate announced from time to time. Landlord agrees to act in a commercially reasonable manner in incurring Expenses and allocating Expenses for the Building and for the Project, taking into consideration the class and the quality of the Building. Expenses shall not include Taxes, Insurance Costs, depreciation or amortization of the Building or equipment in the Building except as provided herein, loan principal payments, costs of alterations of tenants’ premises, leasing commissions, interest expenses on long-term borrowings or advertising costs.

The following are also excluded from Expenses:

(a)

Sums (other than management fees, it being agreed that the management fees included in Expenses are as described in Section 4.1.2 above) paid to subsidiaries or other affiliates of Landlord for services on or to the Building and/or Premises, but only to the extent that the costs of such services exceed the competitive cost for such services rendered by unrelated persons or entities of similar skill, competence and experience.


(b)	Any expenses for which Landlord has received actual reimbursement (other than through Expenses).


(c)	Attorney’s fees and other expenses incurred in connection with negotiations or disputes with prospective tenants or tenants or other occupants of the Building.


(d)	Costs in connection with leasing space in the Building, including brokerage commissions, brochures and marketing supplies, architectural and legal fees in negotiating and preparing lease documents.


(e)	The cost or expense of any services or benefits provided to other tenants in the Building and not provided or available to Tenant.


(f)	Fines, costs or penalties incurred as a result and to the extent of a violation by Landlord of any applicable Regulations or due dates.


(g)	Costs incurred by Landlord for the repair of damage to the Building, to the extent that Landlord is reimbursed for such costs by insurance proceeds, contractor warranties, guarantees, judgments or other third party sources (other than through Expenses).


(h)	Reserves.


(i)	All bad debt loss, rent loss, or reserves for bad debt or rent loss.


(j)	Landlord’s charitable and political contributions.


(k)	All costs of purchasing or leasing major sculptures, paintings or other major works or objects of art (as opposed to decorations purchased or leased by Landlord for display in the common areas of the Building).


(l)	Depreciation; principal payments of mortgage and other non operating debts of Landlord.


(m)	Ground lease rental.


(n)	Executive salaries and other compensation for personnel above the level of senior building manager (as such title is commonly understood in the property management industry).

(o)

Any cost or expense related to assessment, monitoring, removal, cleaning, abatement or remediation of Hazardous Materials in or about the Building, common areas or Project except to the extent such removal, cleaning, abatement or remediation is routine (e.g., disposal of minor amounts of Hazardous Materials used in Building and Project operations) and related to the general repair and maintenance of the Building and Project.


(p)	Capital expenditures not provided in Section 4.1.2.

(q)

Any cost incurred by Landlord to satisfy Landlord’s deductible under its earthquake insurance policy, if any, in excess of $1.00 per rentable square feet of the Premises in the aggregate for any particular earthquake (including related aftershocks), provided that such cap shall not apply to such costs that are otherwise includable in Expenses as a permitted capital expenditure in accordance with Section 4.1.2 above or are to comply with Applicable Laws. Notwithstanding the foregoing, Tenant shall have no liability for any cost incurred by Landlord relating to a deductible under its earthquake insurance policy if Tenant elects to terminate this Lease as provided in Section 22.2 as a result of the corresponding earthquake.

4.1.3 Taxes : Real estate taxes and any other taxes, charges and assessments which are levied with respect to the Building or the land appurtenant to the Building, or with respect to any improvements, fixtures and equipment or other property of Landlord, real or personal, located in the Building and used in connection with the operation of the Building and said land, any payments to any ground lessor in reimbursement of tax payments made by such lessor; and all fees, expenses and costs incurred by Landlord in investigating, protesting, contesting or in any way seeking to reduce or avoid increase in any assessments, levies or the tax rate pertaining to any Taxes to be paid by Landlord in any Lease Year. Taxes shall be determined without regard to any “green building” credit and shall not include any corporate franchise capital stock, profits, gift, or estate, inheritance or net income tax, or tax imposed upon any transfer by Landlord of its interest in this Lease or the Building or any taxes to be paid by Tenant pursuant to Article 28, interest, penalties or late charges attributable to the late payment of any Taxes by Landlord (unless such late payment is a result of Tenant’s failure to timely pay any such Taxes hereunder). Taxes shall not include any taxes for which Landlord has received actual reimbursement from another tenant of the Project (other than through such tenant’s payment of Taxes). In addition, if Landlord directly charges the tenants of the Project for any taxes imposed upon above building standard improvements installed by or on behalf of such tenants, then such taxes shall be excluded from Taxes.

4.1.4 Insurance Costs : Except as expressly set forth in Section 4.1.2(q), above, any and all insurance charges of or relating to all insurance policies and endorsements deemed by Landlord to be reasonably necessary or desirable and relating in any manner to the protection, preservation, or operation of the Building or any part thereof.

4.2 If in any Lease Year, (i) Expenses paid or incurred shall exceed Expenses paid or incurred in the Base Year (Expenses) and/or (ii) Taxes paid or incurred by Landlord in any Lease Year shall exceed the amount of such Taxes which became due and payable in the Base Year (Taxes), and/or (iii) Insurance Costs paid or incurred by Landlord in any Lease Year shall exceed the amount of such Insurance Costs which became due and payable in the Base Year (Insurance), Tenant shall pay as additional rent for such Lease Year Tenant’s Proportionate Share of each such excess amount. Notwithstanding the foregoing, for purposes of computing Tenant’s Proportionate Share of Expenses, the Controllable Expenses (hereinafter defined) shall not increase by more than five percent (5%) per calendar year on a compounding and cumulative basis over the course of the initial Term. In other words, Controllable Expenses for the first Lease Year of the initial Term after the Base Year shall not exceed one hundred five percent (105%) of the Controllable Expenses for the Base Year. Controllable Expenses for the Lease Year after the Base Year shall not exceed one hundred five percent (105%) of the limit on Controllable Expenses for the first Lease Year after the Base Year, etc. By way of illustration, if Controllable Expenses were $10.00 per rentable square foot for the Base Year, then Controllable Expenses for the first Lease Year following the Base Year shall not exceed $10.50 per rentable square foot, and Controllable Expenses for the second Lease Year following the Base Year shall not exceed $11.03 per rentable square foot. “Controllable Expenses” shall mean all Expenses exclusive of the cost of utilities, Taxes, Insurance Costs, capital improvements (subject to the limitations described in Section 4.1.2 above), associations dues and assessments, refuse removal, and lawn maintenance and costs imposed any covenants, and conditions and agreements recorded against Building or Project.

4.3 The annual determination of Expenses and Insurance Costs shall be made by Landlord and shall be binding upon Landlord and Tenant, subject to the provisions of this Section 4.3. Landlord may deliver such annual determination to Tenant via regular U.S. mail. During the Term, Tenant may review, at Tenant’s sole cost and expense, the books and records supporting such determination in an office of Landlord, or Landlord’s agent, during normal business hours, upon giving Landlord five (5) days advance written notice within ninety (90) days after receipt of such determination, but in no event more often than once in any one (1) year period, subject to execution of a confidentiality agreement acceptable to Landlord, and provided that if Tenant utilizes an independent accountant to perform such review it shall be one of national standing which is reasonably acceptable to Landlord, is not compensated on a contingency basis and is also subject to such confidentiality agreement. If Tenant fails to object to Landlord’s determination of Expenses and Insurance Costs within one hundred twenty (120) days after receipt, or if any such objection fails to state with specificity the reason for the objection, Tenant shall be deemed to have approved such determination and shall have no further right to object to or contest such determination. In the event that during all or any portion of any Lease Year or Base Year, the Building is not fully rented and occupied Landlord shall make an appropriate adjustment in occupancy-related Expenses for such year for the purpose of avoiding distortion of the amount of such Expenses to be attributed to Tenant by reason of variation in total occupancy of the Building, by employing consistent and sound accounting and management principles to determine Expenses that would have been paid or incurred by Landlord had the Building been at least ninety-five percent (95%) rented and occupied, and the amount so determined shall be deemed to have been Expenses for such Lease Year. If Landlord fails to furnish Tenant a statement of the actual Expenses for a given calendar year within twelve (12) months after the end of said calendar year and such failure continues for an additional thirty (30) days after Landlord’s receipt of a written request from Tenant that such statement of the actual Expenses be furnished or if Landlord fails to modify such statement of actual Expenses for a given calendar year if new, additional or different information relating to such statement of actual costs is discovered or otherwise determined within such twelve (12) month period, Landlord shall be deemed to have waived any rights to recover any underpayment of Expenses from Tenant applicable to said calendar year (except to the extent such underpayment is attributable to a default by Tenant in its obligation to make estimated payments of Expenses); provided that such twelve (12) month time limit shall not apply to supplemental bills for Taxes or costs incurred for utilities. Any Expense erroneously omitted from any Landlord’s determination of Expenses and Insurance Costs shall be deemed waived by Landlord unless corrected within twelve (12) months after delivery of the applicable Landlord’s determination.

4.4 Prior to the actual determination thereof for a Lease Year, Landlord may from time to time estimate Tenant’s liability for Expenses, Insurance Costs and/or Taxes under Section 4.2, Article 6 and Article 28 for the Lease Year or portion thereof. Landlord will give Tenant written notification of the amount of such estimate and Tenant agrees that it will pay, by increase of its Monthly Installments of Rent due in such Lease Year, additional rent in the amount of such estimate. Any such increased rate of Monthly Installments of Rent pursuant to this Section 4.4 shall remain in effect until further written notification to Tenant pursuant hereto.

4.5 When the above mentioned actual determination of Tenant’s liability for Expenses, Insurance Costs and/or Taxes is made for any Lease Year and when Tenant is so notified in writing, then:

4.5.1 If the total additional rent Tenant actually paid pursuant to Section 4.3 on account of Expenses, Insurance Costs and/or Taxes for the Lease Year is less than Tenant’s liability for Expenses, Insurance Costs and/or Taxes, then Tenant shall pay such deficiency to Landlord as additional rent in one lump sum within thirty (30) days of receipt of Landlord’s bill therefor; and

4.5.2 If the total additional rent Tenant actually paid pursuant to Section 4.3 on account of Expenses, Insurance Costs and/or Taxes for the Lease Year is more than Tenant’s liability for Expenses, Insurance Costs and/or Taxes, then Landlord shall credit the difference against the then next due payments to be made by Tenant under this Article 4, or, if this Lease has terminated, refund the difference in cash. Tenant shall not be entitled to a credit by reason of actual Expenses and/or Taxes and/or Insurance Costs in any Lease Year being less than Expenses and/or Taxes and/or Insurance Costs in the Base Year (Expenses and/or Taxes and/or Insurance Costs).

4.6 If the Commencement Date is other than January 1 or if the Termination Date is other than December 31, Tenant’s liability for Expenses, Insurance Costs and Taxes for the Lease Year in which said Date occurs shall be prorated based upon a three hundred sixty-five (365) day year.

4.7 If during any calendar year of the Term after the Base Year a line item category is included in Expenses that was not included in the Base Year (a “New Line Item”), Expenses for the Base Year shall be increased by the amount of such New Line Item as if such New Line Item been included in the Base Year, as reasonably determined by Landlord (and, in the event that the New Line Item is initially incurred for only a partial calendar year, the cost of such New Line Item shall be grossed up to represent a full calendar year for both the Base Year and the calendar year in which the New Line Item first is incurred) and, following the expiration of the calendar year during which the New Line Item initially occurs, Tenant shall be liable for Tenant’s Share of increases in Expenses over the adjusted amount of Expenses for the Base Year; provided, however, that any Expenses that are renamed or recategorized (by applicable Regulations or otherwise) or that otherwise in substance were included in the Base Year shall not be included in or treated as a New Line Item for purposes of this Section. Notwithstanding the foregoing, in no event shall any Expenses for any calendar year following the Base Year in excess of the amount incurred in the Base Year but preceding the calendar year in which the New Line Item occurs be retroactively adjusted as a result of such increase in Expenses for the Base Year, and in no event shall Tenant be entitled to a credit as a result of such increase. Further, in the event that during the Term or any extension thereto, a category of Expenses is removed from the Base Year (as opposed to shifted or combined with another category), and is omitted from Expenses, Expenses for the Base Year shall be reduced to reflect what Expenses would have been in the Base Year had such category not been included in the Base Year.

5. SECURITY DEPOSIT . [Intentionally Omitted]

6. ALTERATIONS .

6.1 Except for those, if any, specifically provided for in Exhibit B to this Lease, Tenant shall not make or suffer to be made any alterations, additions, or improvements, including, but not limited to, the attachment of any fixtures or equipment in, on, or to the Premises or any part thereof or the making of any improvements as required by Article 7, without the prior written consent of Landlord. When applying for such consent, Tenant shall, if requested by Landlord, furnish complete plans and specifications for such alterations, additions and improvements. Landlord’s consent shall not be unreasonably withheld with respect to alterations which (i) are not structural in nature, (ii) are not visible from the exterior of the Building, and (iii) do not adversely affect or require material modification of the Building’s core electrical, mechanical, plumbing, HVAC or other systems. In addition, Tenant shall have the right to perform, with prior written notice to but without Landlord’s consent, any alteration, addition, or improvement that satisfies all of the following criteria (a “Cosmetic Alteration”): (1) is of a cosmetic nature such as painting, hanging pictures and installing carpeting; (2) is not visible from the exterior of the Premises or Building; (3) will not affect the systems or structure of the Building; (4) costs less than $25,000.00 in the aggregate during any twelve (12) month period of the Term of this Lease, and (5) does not require work to be performed inside the walls or above the ceiling of the Premises. However, even though consent is not required, the performance of Cosmetic Alterations shall be subject to all of the other provisions of this Article 6.

6.2 In the event Landlord consents to the making of any such alteration, addition or improvement by Tenant, the same shall be made by using either Landlord’s contractor or a contractor reasonably approved by Landlord, in either event at Tenant’s sole cost and expense. If Tenant shall employ any contractor other than Landlord’s contractor and such other contractor or any subcontractor of such other contractor shall employ any non-union labor or supplier, Tenant shall be responsible for and hold Landlord harmless from any and all delays, damages and extra costs suffered by Landlord as a result of any dispute with any labor unions concerning the wage, hours, terms or conditions of the employment of any such labor. In any event, except with respect to the Initial Improvements or any Cosmetic Alterations, Landlord may charge Tenant a construction management fee not to exceed one percent (1%) of the cost of such work to cover its overhead as it relates to such proposed work, plus third-party costs actually incurred by Landlord in connection with the proposed work and the design thereof, with all such amounts being due five (5) days after Landlord’s demand.

6.3 All alterations, additions or improvements proposed by Tenant shall be constructed in accordance with all Regulations, and with Landlord’s Building construction standards (if any) from time to time to the extent applicable (which standards shall be made available to Tenant by Landlord’s Building manager upon request. Tenant shall use Building standard materials where applicable, and Tenant shall, prior to construction, provide the additional insurance required under Article 11 in such case, and also all such assurances to Landlord as Landlord shall reasonably require to assure payment of the costs thereof, including but not limited to, notices of non-responsibility, waivers of lien, surety company performance bonds and funded construction escrows and to protect Landlord and the Building and appurtenant land against any loss from any mechanic’s, materialmen’s or other liens. Tenant shall pay in addition to any sums due pursuant to Article 4, any increase in real estate taxes attributable to any such alteration, addition or improvement for so long, during the Term, as such increase is ascertainable; at Landlord’s election said sums shall be paid in the same way as sums due under Article 4. Landlord may, as a condition to its consent to any particular alterations or improvements, require Tenant to deposit with Landlord the amount reasonably estimated by Landlord as sufficient to cover the cost of removing such alterations or improvements and restoring the Premises, to the extent required under Section 26.2.

6.4 Notwithstanding anything to the contrary contained herein, at the time Landlord gives its consent for any alterations or improvements, if it so does, Tenant shall also be notified whether or not Landlord will require that such alterations or improvements be removed upon the expiration or earlier termination of this Lease. If Landlord fails to so notify Tenant within a reasonable period (not to exceed thirty (30) days) after the date Landlord provides consent to the proposed alterations or improvements, it shall be assumed that Landlord shall not require the removal of the subject alterations or improvements. Notwithstanding anything to the contrary set forth herein, Tenant shall have no obligation to remove any Cosmetic Alterations other than wiring and cabling installed in connection therewith. Landlord shall have the right to determine Tenant’s removal and restoration obligations with respect to the Initial Alterations following Landlord’s review of the plans for the Initial Alterations pursuant to Exhibit B to the extent such Initial Alterations, in Landlord’s reasonable judgment, are of a nature that would require removal and repair costs that are materially in excess of the removal and repair costs associated with Building standard office improvements (collectively are referred to as “Required Removables”); provided that Tenant shall be obligated to remove all wiring and cabling installed in connection with the Initial Alterations. Required Removables shall be limited to internal stairways, raised floors, personal baths and showers, vaults, special cooling systems, rolling file systems and major, non-standard structural alterations or modifications. Landlord shall, at the time it gives its approval of Tenant’s final plans for the Initial Alterations, notify Tenant in writing of any determination that the Initial Alterations include any Required Removables. Notwithstanding anything to the contrary herein or in Exhibit B attached hereto, Landlord shall have the right to withhold consent to the Initial Alterations in its sole discretion to the extent all or any portion of the same do not constitute normal and customary business office improvements, as determined by Landlord in its reasonable discretion, and do not otherwise constitute Required Removables.

7. REPAIR.

7.1 Landlord shall have no obligation to alter, remodel, improve, repair, decorate or paint the Premises, except as specified in Exhibit B if attached to this Lease and except that Landlord shall repair and maintain the structural portions of the Building, including the basic plumbing, air conditioning, heating and electrical systems installed or furnished by Landlord. By taking possession of the Premises, Tenant accepts them as being in good order, condition and repair and in the condition in which Landlord is obligated to deliver them. However, notwithstanding the foregoing, Landlord agrees that the base Building electrical, mechanical, heating, ventilation and air conditioning, and plumbing systems located in the Premises shall be in good condition and working order as of the Delivery Date. Except to the extent caused by the acts or omissions of Tenant or any Tenant Entities or by any alterations or improvements performed by or on behalf of Tenant, if such systems are not in good working order as of the Delivery Date and Tenant provides Landlord with notice of the same within one hundred eighty (180) days following the Delivery Date, Landlord shall be responsible for repairing or restoring the same; provided that the foregoing shall not be construed to limit Landlord express repair and maintenance obligations otherwise set forth in this Section 7.1. It is hereby understood and agreed that no representations respecting the condition of the Premises or the Building have been made by Landlord to Tenant, except as specifically set forth in this Lease.

7.2 Tenant shall, at all times during the Term, keep the Premises in good condition and repair excepting damage by fire, or other casualty, and in compliance with all applicable governmental laws, ordinances and regulations, promptly complying with all governmental orders and directives for the correction, prevention and abatement of any violations or nuisances in or upon, or connected with, the Premises, all at Tenant’s sole expense. Repair and maintenance work shall be undertaken in compliance with Landlord’s reasonable Building construction standards (if any) from time to time to the extent applicable (which standards shall be made available to Tenant by Landlord’s Building manager upon request).

7.3 Except as expressly provided in Section 13.1, Landlord shall not be liable for any failure to make any repairs or to perform any maintenance unless such failure shall persist for an unreasonable time after written notice of the need of such repairs or maintenance is given to Landlord by Tenant. Landlord shall use commercially reasonable efforts to commence any repairs and maintenance obligations of Landlord hereunder within a reasonable time (based on the nature of the repairs or maintenance required) not to exceed thirty (30) days following such written notice, subject to Articles 22 and 23 and strikes, acts of God, shortages of labor or materials, war, terrorist acts, civil disturbances and other causes beyond the reasonable control of Landlord (provided that if such failure cannot reasonably be cured within said cure period, Landlord shall be in default hereunder only if Landlord fails to commence the cure of said failure within said cure period, or having commenced the curative action within said cure period, fails to diligently pursue same).

7.4 Except as provided in Section 13.1 and Article 22, there shall be no abatement of rent and no liability of Landlord by reason of any injury to or interference with Tenant’s business arising from the making of any repairs, alterations or improvements in or to any portion of the Building or the Premises or to fixtures, appurtenances and equipment in the Building. Tenant hereby waives any and all rights under and benefits of subsection 1 of Section 1932 and Sections 1941 and 1942 of the California Civil Code, or any similar or successor Regulations or other laws now or hereinafter in effect. Except in the case of any emergency, as determined by Landlord, Landlord shall use commercially reasonable efforts not to unreasonably interfere with the operation of Tenant’s business at the Premises when performing any repairs or maintenance.

8. LIENS . Tenant shall keep the Premises, the Building and appurtenant land and Tenant’s leasehold interest in the Premises free from any liens arising out of any services, work or materials performed, furnished, or contracted for by Tenant, or obligations incurred by Tenant. In the event that Tenant fails, within ten (10) business days following the imposition of any such lien, to either cause the same to be released of record or provide Landlord with insurance against the same issued by a major title insurance company or such other protection against the same as Landlord shall accept (such failure to constitute an Event of Default), Landlord shall have the right to cause the same to be released by such means as it shall deem proper, including payment of the claim giving rise to such lien. All such sums paid by Landlord and all expenses incurred by it in connection therewith shall be payable to it by Tenant within five (5) days of Landlord’s demand.

9. ASSIGNMENT AND SUBLETTING .

9.1 Except in connection with a Permitted Transfer (defined in Section 9.8 below), Tenant shall not have the right to assign or pledge this Lease or to sublet the whole or any part of the Premises whether voluntarily or by operation of law, or permit the use or occupancy of the Premises by anyone other than Tenant, and shall not make, suffer or permit such assignment, subleasing or occupancy without the prior written consent of Landlord, such consent not to be unreasonably withheld, and said restrictions shall be binding upon any and all assignees of this Lease and subtenants of the Premises. In the event Tenant desires to sublet, or permit such occupancy of, the Premises, or any portion thereof, or assign this Lease, Tenant shall give written notice thereof to Landlord at least thirty (30) days prior to the proposed commencement date of such subletting or assignment, which notice shall set forth the name of the proposed subtenant or assignee, the relevant terms of any sublease or assignment and copies of financial reports and other relevant financial information of the proposed subtenant or assignee. Subject to Section 9.3 below, Landlord shall respond to Tenant’s request for consent within thirty (30) days following Landlord’s receipt of Tenant’s written request for consent, accompanied by copies of the proposed sublease or assignment documents, financial statements of the proposed transferee and any other information reasonably requested by Landlord within five (5) business days following Landlord’s receipt of Tenant’s request for consent.

9.2 Notwithstanding any assignment or subletting, permitted or otherwise, Tenant shall at all times remain directly, primarily and fully responsible and liable for the payment of the rent specified in this Lease and for compliance with all of its other obligations under the terms, provisions and covenants of this Lease. Upon the occurrence of an uncured monetary or material non-monetary Event of Default, if the Premises or any part of them are then assigned or sublet, Landlord, in addition to any other remedies provided in this Lease or provided by law, may, at its option, collect directly from such assignee or subtenant all rents due and becoming due to Tenant under such assignment or sublease and apply such rent against any sums due to Landlord from Tenant under this Lease, and no such collection shall be construed to constitute a novation or release of Tenant from the further performance of Tenant’s obligations under this Lease.

9.3 Except in connection with a Permitted Transfer, in addition to Landlord’s right to approve any subtenant or assignee, Landlord shall have the option, in its sole discretion, in the event of any proposed sublease of 100% of the Premises or an assignment of this Lease to terminate this Lease effective as of the date the proposed assignment or subletting is to be effective and, in the case of a sublease that would result in fifty percent (50%) or more of the Premises being subject to the sublease, to recapture the portion of the Premises to be sublet effective as of the date the proposed subletting is to be effective. The option shall be exercised, if at all, by Landlord giving Tenant written notice given by Landlord to Tenant within thirty (30) days following Landlord’s receipt of Tenant’s written notice as required above. However, if Tenant notifies Landlord, within five (5) business days after receipt of Landlord’s termination notice, that Tenant is rescinding its proposed assignment or sublease, the termination notice shall be void and this Lease shall continue in full force and effect. If this Lease shall be terminated with respect to the entire Premises pursuant to this Section, the Term of this Lease shall end on the date stated in Tenant’s notice as the effective date of the sublease or assignment as if that date had been originally fixed in this Lease for the expiration of the Term. If Landlord recaptures under this Section only a portion of the Premises, the rent to be paid from time to time during the unexpired Term shall abate proportionately based on the proportion by which the approximate square footage of the remaining portion of the Premises shall be less than that of the Premises as of the date immediately prior to such recapture.

9.4 In the event that Tenant sells, sublets, assigns or transfers this Lease, Tenant shall pay to Landlord as additional rent an amount equal to fifty percent (50%) of any Increased Rent (as defined below), less the Costs Component (as defined below), when and as such Increased Rent is received by Tenant. As used in this Section, “Increased Rent” shall mean the excess of (i) all rent and other consideration which Tenant is entitled to receive by reason of any sale, sublease, assignment or other transfer of this Lease, over (ii) the rent otherwise payable by Tenant under this Lease at such time. For purposes of the foregoing, any consideration received by Tenant in form other than cash shall be valued at its fair market value as determined by Landlord in good faith. The “Costs Component” is that amount which, if paid monthly, would fully amortize on a straight-line basis, over the entire period for which Tenant is to receive Increased Rent, the reasonable costs incurred by Tenant for leasing commissions, attorneys’ fees and tenant improvements in connection with such sublease, assignment or other transfer.

9.5 Notwithstanding any other provision hereof and without limiting other reasonable grounds for withholding consent, it shall be considered reasonable for Landlord to withhold its consent to any assignment of this Lease or sublease of any portion of the Premises if at the time of either Tenant’s notice of the proposed assignment or sublease or the proposed commencement date thereof, there shall exist an uncured monetary or material non-monetary Event of Default, or if the proposed assignee or sublessee: (a) is an entity with which Landlord is already in negotiation (unless Landlord does not have space available for lease in the Building that is comparable to the space Tenant desires to sublet or assign; provided, however, Landlord shall be deemed to have comparable space if it has, or will have, space available on any floor of the Building that is approximately the same size as the space Tenant desires to sublet or assign within four (4) months, in the aggregate, of the proposed commencement of the proposed sublease or assignment, and for a comparable term); (b) is already an occupant of the Building unless Landlord is unable to provide the amount of space required by such occupant; (c) is a governmental agency; (d) is incompatible with the character of occupancy of the Building; (e) with which the payment for the sublease or assignment is determined in whole or in part based upon its net income or profits; or (f) would subject the Premises to a use which would: (i) involve materially increased personnel or wear upon the Building; (ii) violate any exclusive right granted to another tenant of the Building; (iii) require any structural or material addition to or modification of the Premises or the Building in order to comply with building code or other governmental requirements other than non-structural or non-material modifications that do not materially or adversely affect the base Building systems for which Tenant pays all costs related thereto; or, (iv) involve a violation of Section 1.2.

9.6 Upon any request to assign or sublet, Tenant will pay to Landlord the Assignment/Subletting Fee plus, on demand, a sum equal to all of Landlord’s costs, including reasonable attorney’s fees, incurred in investigating and considering any proposed or purported assignment or pledge of this Lease or sublease of any of the Premises, regardless of whether Landlord shall consent to, refuse consent, or determine that Landlord’s consent is not required for, such assignment, pledge or sublease. Notwithstanding the foregoing, provided that neither Tenant nor the proposed transferee requests any changes to this Lease or Landlord’s standard, commercially reasonable form of consent (other than minor and immaterial changes) in connection with the proposed transfer, the Review Reimbursement payable by Tenant pursuant to this Section 9.6 shall not exceed (a) $2,500 for any proposed Permitted Transfer for which Tenant requests from Landlord any written consent or acknowledgement that no consent is required, or (b) $5,000 for a proposed assignment, sublease or other transfer that does not constitute a Permitted Transfer. Any purported sale, assignment, mortgage, transfer of this Lease or subletting which does not comply with the provisions of this Article 9 shall be void.

9.7 If Tenant is a corporation, limited liability company, partnership or trust, any transfer or transfers of or change or changes within any twelve (12) month period in the number of the outstanding voting shares of the corporation or limited liability company, the general partnership interests in the partnership or the identity of the persons or entities controlling the activities of such partnership or trust resulting in the persons or entities owning or controlling a majority of such shares, partnership interests or activities of such partnership or trust at the beginning of such period no longer having such ownership or control shall be regarded as equivalent to an assignment of this Lease to the persons or entities acquiring such ownership or control and shall be subject to all the provisions of this Article 9 to the same extent and for all intents and purposes as though such an assignment. The provisions of this Section shall not apply so long as Tenant is an entity whose outstanding stock is listed on a recognized security exchange, or if at least eighty percent (80%) of its voting stock is owned by another entity, the voting stock of which is so listed. In addition, if Tenant is a corporation, so long as Tenant is publicly traded on a major over-the-counter stock exchange, the ordinary transfer of shares over the counter shall be deemed not to be a Transfer for purposes of this Section.

9.8 So long as Tenant is not entering into the Permitted Transfer (as defined below) for the purpose of avoiding or otherwise circumventing the remaining terms of this Article 9, Tenant may assign its entire interest under this Lease, without the consent of Landlord, to (a) an affiliate, subsidiary, or parent of Tenant, or a corporation, partnership or other legal entity wholly owned by Tenant (collectively, an “Affiliated Party”), or (b) a successor to Tenant by purchase, merger, consolidation or reorganization, provided that all of the following conditions are satisfied (each such transfer a “Permitted Transfer” and any such assignee or sublessee of a Permitted Transfer, a “Permitted Transferee”): (i) Tenant is not in default under this Lease; (ii) the Permitted Use does not allow the Premises to be used for retail purposes; (iii) Tenant shall give Landlord written notice at least thirty (30) days prior to the effective date of the proposed Permitted Transfer (provided that, if prohibited by confidentiality in connection with a proposed purchase, merger, consolidation or reorganization, then Tenant shall give Landlord written notice within thirty (30) days after the effective date of the proposed Permitted Transfer); (iv) with respect to a proposed Permitted Transfer to an Affiliated Party, Tenant continues to have a net worth equal to or greater than Tenant’s net worth at the date of this Lease; and (v) with respect to a purchase, merger, consolidation or reorganization or any Permitted Transfer which results in Tenant ceasing to exist as a separate legal entity, (A) Tenant’s successor shall own all or substantially all of the assets of Tenant, and (B) Tenant’s successor shall have a net worth which is at least equal to the greater of Tenant’s net worth at the date of this Lease or Tenant’s net worth as of the day prior to the proposed purchase, merger, consolidation or reorganization. Tenant’s notice to Landlord shall include information and documentation showing that each of the above conditions has been satisfied. If requested by Landlord, Tenant’s successor shall sign a commercially reasonable form of assumption agreement. As used herein, (1) “parent” shall mean a company which owns a majority of Tenant’s voting equity; (2) “subsidiary” shall mean an entity wholly owned by Tenant or at least fifty-one percent (51%) of whose voting equity is owned by Tenant; and (3) “affiliate” shall mean an entity controlled, controlling or under common control with Tenant.

10. INDEMNIFICATION . None of the Landlord Entities shall be liable and Tenant hereby waives all claims against them for any damage to any property or any injury to any person in or about the Premises or the Building by or from any cause whatsoever (including without limiting the foregoing, rain or water leakage of any character from the roof, windows, walls, basement, pipes, plumbing works or appliances, the Building not being in good condition or repair, gas, fire, oil, electricity or theft), except to the extent caused by or arising from the gross negligence or willful misconduct of Landlord or its agents, employees or contractors. Except to the extent caused by or arising from the gross negligence or willful misconduct of Landlord or its agents or employees, Tenant shall protect, indemnify and hold the Landlord Entities harmless from and against any and all loss, claims, liability or costs (including court costs and attorney’s fees) incurred by reason of (a) any damage to any property (including but not limited to property of any Landlord Entity) or any injury (including but not limited to death) to any person occurring in, on or about the Premises or the Building to the extent that such injury or damage shall be caused by or arise from any actual or alleged act, neglect, fault, or omission by or of Tenant or any Tenant Entity to meet any standards imposed by any duty with respect to the injury or damage; (b) the conduct or management of any work or thing whatsoever done by the Tenant in or about the Premises or from transactions of the Tenant concerning the Premises; (c) Tenant’s actual or asserted failure to comply with any and all Regulations applicable to the condition or use of the Premises or its occupancy; or (d) any breach or default on the part of Tenant in the performance of any covenant or agreement on the part of the Tenant to be performed pursuant to this Lease. Landlord shall protect, indemnify and hold Tenant harmless from and against any and all loss, claims, liability or costs (including court costs and attorney’s fees) incurred by reason of any damage to any property (including but not limited to property of Tenant) or any injury (including but not limited to death) to any person occurring in, on or about the common areas of the Building to the extent that such injury or damage shall be caused by or arise from the gross negligence or willful misconduct of Landlord or any of Landlord’s agents or employees or from any breach or default on the part of Landlord in the performance of any covenant or agreement on the part of Landlord to be performed pursuant to this Lease. The provisions of this Article shall survive the termination of this Lease with respect to any claims or liability accruing prior to such termination.

11. INSURANCE .

11.1 Tenant shall keep in force throughout the Term: (a) a Commercial General Liability insurance policy or policies to protect the Landlord Entities against any liability to the public or to any invitee of Tenant or a Landlord Entity incidental to the use of or resulting from any accident occurring in or upon the Premises with a limit of not less than $1,000,000 per occurrence and not less than $2,000,000 in the annual aggregate, or such larger amount as Landlord may prudently require from time to time (provided that except to the extent reasonably required by Landlord’s lender, Landlord shall only require any such increase in the amount of existing insurance required pursuant to this Section once during any five (5) year period of the Term and only in the event that (i) Landlord reasonably determines that the amount of insurance carried by Tenant hereunder is materially less than the amount or type of insurance coverage typically carried by tenants of the Building and owners or tenants of buildings comparable to the Building and located in the geographical area in which the Premises are located which are operated for similar purposes as the Premises), covering bodily injury and property damage liability and $1,000,000 products/completed operations aggregate; (b) Business Auto Liability covering owned, non-owned and hired vehicles with a limit of not less than $1,000,000 per accident; (c) Worker’s Compensation Insurance with limits as required by statute with Employers Liability and limits of $500,000 each accident, $500,000 disease policy limit, $500,000 disease--each employee; (d) All Risk or Special Form coverage protecting Tenant against loss of or damage to Tenant’s alterations, additions, improvements, carpeting, floor coverings, panelings, decorations, fixtures, inventory and other business personal property situated in or about the Premises to the full replacement value of the property so insured; and, (e) Business Interruption Insurance with limit of liability representing loss of at least approximately six (6) months of income.

11.2 The aforesaid policies shall (a) be provided at Tenant’s expense; (b) name the Landlord Entities as additional insureds (General Liability) and loss payee (Property—Special Form); (c) be issued by an insurance company with a minimum Best’s rating of “A-:VII” during the Term; and (d) provide that said insurance shall not be canceled unless thirty (30) days prior written notice (ten days for non-payment of premium) shall have been given to Landlord; a certificate of Liability insurance on ACORD Form 25 and a certificate of Property insurance on ACORD Form 28 (or such other form reasonably acceptable to Landlord) shall be delivered to Landlord by Tenant upon the Commencement Date and at least thirty (30) days prior to each renewal of said insurance.

11.3 Whenever Tenant shall undertake any alterations, additions or improvements in, to or about the Premises (“Work”) the aforesaid insurance protection must extend to and include injuries to persons and damage to property arising in connection with such Work, without limitation including liability under any applicable structural work act, and such other insurance as Landlord shall require; and the policies of or certificates evidencing such insurance must be delivered to Landlord prior to the commencement of any such Work.

12. WAIVER OF SUBROGATION . Tenant and Landlord hereby mutually waive their respective rights of recovery against each other for any loss insured (or required to be insured pursuant to this Lease) by fire, extended coverage, All Risks or other insurance now or hereafter existing for the benefit of the respective party but only to the extent of the net insurance proceeds payable under such policies. Each party shall obtain any special endorsements required by their insurer to evidence compliance with the aforementioned waiver.

13. SERVICES AND UTILITIES .

13.1 Subject to the other provisions of this Lease, Landlord agrees to furnish to the Premises during Building Business Hours (specified on the Reference Pages) on generally recognized business days (but exclusive in any event of Sundays and national and local legal holidays) and during other such days and such times as may be specified below, the following services and utilities subject to the rules and regulations of the Building prescribed from time to time: (a) water suitable for normal office use of the Premises; (b) heat and air conditioning required in Landlord’s judgment for the use and occupation of the Premises during Building Business Hours (and after Building Business Hours, subject to Section 13.2 below); (c) cleaning and janitorial service; (d) elevator service by nonattended automatic elevators, if applicable (provided that, subject to Article 35, at least one (1) passenger elevator servicing the Premises shall be available for the use of Tenant, in common with other occupants of the Building, 24 hours a day, 365/6 days per year); and, (e) equipment to bring to the Premises electricity for lighting, convenience outlets and other normal office use; provided that electricity and water shall be provided after the Building Business Hours at no additional charge for Building standard usage of such water and electricity but subject to the remaining terms of this Article 13 regarding excess usage. To the extent that Tenant is not billed directly by a public utility, Tenant shall pay, within five (5) days of Landlord’s demand, for all electricity used by Tenant in the Premises. The charge shall be at the rates charged for such services by the local public utility. Alternatively, Landlord may elect to include electricity costs in Expenses. In the absence of Landlord’s gross negligence or willful misconduct, Landlord shall not be liable for, and Tenant shall not be entitled to, any abatement or reduction of rental by reason of Landlord’s failure to furnish any of the foregoing, unless such failure shall persist for an unreasonable time after written notice of such failure is given to Landlord by Tenant and provided further that Landlord shall not be liable when such failure is caused by accident, breakage, repairs, labor disputes of any character, energy usage restrictions or by any other cause, similar or dissimilar, beyond the reasonable control of Landlord. Landlord shall use reasonable efforts to remedy any interruption in the furnishing of services and utilities. Notwithstanding the foregoing, if the Premises, or a material portion of the Premises, are made untenantable (i.e., Tenant is prevented from using, and does not use, the Premises or such portion thereof) solely as a result of (i) an interruption, diminishment or termination of services that is within the reasonable control of Landlord, its agents or employees to avoid or correct (and not as a result in whole or in part of any action or inaction of Tenant), or (ii) any repair, maintenance or alteration performed by Landlord, or which Landlord failed to perform, after the Commencement Date and required by this Lease, which substantially interferes with Tenant’s use of the Premises (an “Abatement Event”), then Tenant shall give Landlord notice of such Abatement Event, and if such Abatement Event continues for five (5) consecutive business days after Landlord’s receipt of any such notice (the “Eligibility Period”), then Tenant, as its sole remedy, shall be entitled to receive an abatement of the Monthly Installment of Rent and Tenant’s Proportionate Share of Expenses and Taxes payable hereunder during the period beginning on the sixth (6th) consecutive business day of the Abatement Event and continuing for such time that Tenant continues to be so prevented from using, and does not use for the normal conduct of Tenant’s business, the Premises or a portion thereof, in the proportion that the rentable area of the portion of the Premises that Tenant is prevented from using, and does not use, bears to the total rentable area of the Premises; provided, however, in the event that Tenant is prevented from using, and does not use, a portion of the Premises for a period of time in excess of the Eligibility Period and the remaining portion of the Premises is not sufficient to allow Tenant to effectively conduct its business therein, and if Tenant does not conduct its business from such remaining portion, then for such time after expiration of the Eligibility Period during which Tenant is so prevented from effectively conducting its business therein, the Monthly Installment of Rent and Tenant’s Proportionate Share of Expenses and Taxes for the entire Premises for such time as Tenant continues to be so prevented from using, and does not use, the Premises. If, however, Tenant reoccupies any portion of the Premises during such period, the Monthly Installment of Rent and Tenant’s Proportionate Share of Expenses and Taxes allocable to such reoccupied portion, based on the proportion that the rentable area of such reoccupied portion of the Premises bears to the total rentable area of the Premises, shall be payable by Tenant from the date Tenant reoccupies such portion of the Premises. Any Abatement Event related to a casualty or eminent domain shall be governed by the terms of Articles 22 and 23, respectively, and the rent abatement set forth herein shall not apply. Such right to abate Monthly Installment of Rent and Tenant’s Proportionate Share of Expenses and Taxes shall be Tenant’s sole and exclusive remedy for rent abatement at law or in equity for an Abatement Event. Except as provided in this Section 13.1, nothing contained herein shall be interpreted to mean that Tenant is excused from paying the Monthly Installment of Rent and Tenant’s Proportionate Share of Expenses and Taxes due hereunder.

13.2 Should Tenant require any additional work or service, as described above, including services furnished outside ordinary business hours specified above, Landlord may (and shall, with respect to Building standard amounts of electricity and water required after Building Business Hours), upon reasonable advance notice by Tenant, furnish such additional service and Tenant agrees to pay Landlord such charges as may be agreed upon, including any tax imposed thereon, but in no event at a charge less or greater than Landlord’s actual cost plus overhead for such additional service and, where appropriate, a reasonable allowance for depreciation of any systems being used to provide such service. The current charge for after-hours HVAC service, which is subject to change at any time, is specified on the Reference Pages.

13.3 Wherever heat-generating machines or equipment are used by Tenant in the Premises which affect the temperature otherwise maintained by the air conditioning system or Tenant allows occupancy of the Premises by more persons than the heating and air conditioning system is designed to accommodate (which is an occupancy density in the Premises in excess of five (5) persons per one thousand (1,000) rentable square feet of the Premises (“Building Standard Occupancy Density”)), in either event whether with or without Landlord’s approval, Landlord reserves the right to install supplementary heating and/or air conditioning units in or for the benefit of the Premises and the cost thereof, including the cost of installation and the cost of operations and maintenance, shall be paid by Tenant to Landlord within five (5) days of Landlord’s demand. Tenant shall not be in default of the Lease if Tenant’s density is greater than Building Standard Occupancy Density from time to time (“Excess Density”), provided that (i) such Excess Density is permitted by Regulations, (ii) Landlord shall have the right, at Tenant’s cost, to make those certain installations referenced in this Section 13.3 regarding supplementary heating and/or air condition units and separate meters or submeters, (iii) any other costs incurred by Landlord resulting from such Building Standard Occupancy Density (including, without limitation, costs relating to additional maintenance and stocking of the restrooms, excess utilities consumption and increased wear and tear on Building systems) shall be paid by Tenant to Landlord within five (5) days of Landlord’s demand, and (iv) Tenant shall otherwise be responsible to comply with all Regulations with respect to such Excess Density (including, without limitation, the making of any necessary alterations or improvements with respect thereto). In addition, Landlord may install and shall have access to the Premises to monitor a separate meter (or submeter) to determine the actual use of any utility in the Premises or any shared common area and may make available and share actual whole-project energy and water usage data as necessary to maintain the Building’s “green building” certification, if any. If there is no meter or submeter in the Premises or if Tenant is billed directly by a public utility, then, upon request, Tenant shall provide monthly utility usage to Landlord in electronic or paper format or provide permission for Landlord to request information regarding Tenant’s utility usage directly from the utility company. If Tenant is billed directly by a public utility with respect to Tenant’s energy usage at the Premises, then, upon request, Tenant shall provide monthly energy utility usage for the Premises to Landlord for the period of time requested by Landlord (in electronic or paper format) or, at Landlord’s option, provide any written authorization or other documentation required for Landlord to request information regarding Tenant’s energy usage with respect to the Premises directly from the applicable utility company.

13.4 Tenant will not, without the written consent of Landlord, use any apparatus or device in the Premises, including but not limited to, electronic data processing machines and machines using current in excess of 2000 watts and/or 20 amps or 120 volts, which will in any way increase the amount of electricity or water usually furnished or supplied for use of the Premises for normal office use, nor connect with electric current, except through existing electrical outlets in the Premises, or water pipes, any apparatus or device for the purposes of using electrical current or water. If Tenant shall require water or electric current in excess of that usually furnished or supplied for use of the Premises as normal office use, Tenant shall procure the prior written consent of Landlord for the use thereof, which Landlord may refuse, and if Landlord does consent, Landlord may cause a water meter or electric current meter to be installed so as to measure the amount of such excess water and electric current. The cost of any such meters shall be paid for by Tenant. Tenant agrees to pay to Landlord within five (5) days of Landlord’s demand, the cost of all such excess water and electric current consumed (as shown by said meters, if any, or, if none, as reasonably estimated by Landlord) at the rates charged for such services by the local public utility or agency, as the case may be, furnishing the same, plus any additional expense incurred in keeping account of the water and electric current so consumed.

13.5 Tenant will not, without the written consent of Landlord, contract with a utility provider to service the Premises with any utility, including, but not limited to, telecommunications, electricity, water, sewer or gas, which is not previously providing such service to other tenants in the Building. Subject to Landlord’s reasonable rules and regulations and the provisions of Articles 6 and 26, Tenant shall be entitled to the use of wiring (“Communications Wiring”) from the existing telecommunications nexus in the Building to the Premises, sufficient for normal general office use of the Premises. Tenant shall not install any additional Communications Wiring, nor remove any Communications Wiring, without in each instance obtaining the prior written consent of Landlord, which consent may be withheld in Landlord’s sole and absolute discretion. Landlord shall in no event be liable for disruption in any service obtained by Tenant pursuant to this paragraph.

14. HOLDING OVER . Tenant shall pay Landlord for each day Tenant retains possession of the Premises or part of them after termination of this Lease by lapse of time or otherwise at the rate (“Holdover Rate”) which shall be One Hundred Fifty Percent (150%) of the amount of the Annual Rent for the last period prior to the date of such termination plus Tenant’s Proportionate Share of Expenses, Taxes and Insurance Costs under Article 4 and also pay all damages sustained by Landlord by reason of such retention. In the case of any such holdover, a tenancy at sufferance at the Holdover Rate shall be deemed to have been created. In any event, no provision of this Article 14 shall be deemed to waive Landlord’s right of reentry or any other right under this Lease or at law.

15. SUBORDINATION . Without the necessity of any additional document being executed by Tenant for the purpose of effecting a subordination, this Lease shall be subject and subordinate at all times to ground or underlying leases and to the lien of any mortgages or deeds of trust now or hereafter placed on, against or affecting the Building, Landlord’s interest or estate in the Building, or any ground or underlying lease; provided, however, that if the lessor, mortgagee, trustee, or holder of any such mortgage or deed of trust elects to have Tenant’s interest in this Lease be superior to any such instrument, then, by notice to Tenant, this Lease shall be deemed superior, whether this Lease was executed before or after said instrument. Notwithstanding anything in this Article 15 to the contrary, as a condition precedent to the future subordination of this Lease to a future mortgage or deed of trust, Landlord shall be required to provide Tenant with a non-disturbance, subordination, and attornment agreement in favor of Tenant from the party having the benefit of such mortgage or deed of trust (a “Mortgagee”) who comes into existence after the Commencement Date. Such non-disturbance, subordination, and attornment agreement in favor of Tenant shall provide that, so long as Tenant is paying the rent due under this Lease and is not otherwise in default under this Lease beyond any applicable cure period, its right to possession and the other terms of this Lease shall remain in full force and effect. Such non-disturbance, subordination, and attornment agreement may include other commercially reasonable provisions in favor of the Mortgagee, including, without limitation, additional time on behalf of the Mortgagee to cure defaults of the Landlord and provide that (a) neither Mortgagee nor any successor-in-interest shall be bound by (i) any payment of the Monthly Installment of Rent or any Tenant’s Proportionate Share of Expenses and Taxes or other sum due under this Lease for more than one (1) month in advance or (ii) any amendment or modification of this Lease made without the express written consent of mortgagee or any successor-in-interest; (b) neither Mortgagee nor any successor-in-interest will be liable for (i) any act or omission or warranties of any prior landlord (including Landlord), (ii) the breach of any warranties or obligations relating to construction of improvements on the property or any tenant finish work performed or to have been performed by any prior landlord (including Landlord), or (iii) the return of any Security Deposit, except to the extent such deposits have been received by Mortgagee; and (c) neither Mortgagee nor any successor-in-interest shall be subject to any offsets or defenses which Tenant might have against any prior landlord (including Landlord). Notwithstanding the foregoing, Tenant covenants and agrees to execute and deliver within ten (10) days of Landlord’s request such further commercially reasonable instruments evidencing such subordination or superiority of this Lease as may be required by Landlord. Notwithstanding the foregoing, concurrently with the parties’ execution and delivery of this Lease, Landlord shall deliver, and the parties shall execute, a non-disturbance, subordination and attornment agreement from Landlord’s current mortgagee (“Current Lender”) in the form attached hereto as Exhibit H. Tenant shall be responsible for any fee or review costs charged by such mortgagee. The parties hereby acknowledge and agree that Landlord’s delivery of such non-disturbance, subordination and attornment agreement from the Current Lender shall be a condition precedent to the effectiveness of this Lease.

16. RULES AND REGULATIONS . Tenant shall faithfully observe and comply with all the rules and regulations as set forth in Exhibit D to this Lease and all reasonable and non-discriminatory modifications of and additions to them from time to time put into effect by Landlord. Landlord shall not be responsible to Tenant for the non-performance by any other tenant or occupant of the Building of any such rules and regulations. Landlord hereby agrees to use commercially reasonable efforts to generally enforce the rules and regulations in a nondiscriminatory manner. In the event of any conflict between any of the rules and regulations set forth in Exhibit D hereto and this Lease, the terms of this Lease shall control.

17. REENTRY BY LANDLORD .

17.1 Landlord reserves and shall at all times have the right to re-enter the Premises to inspect the same, to supply janitor service and any other service to be provided by Landlord to Tenant under this Lease, to show said Premises to prospective purchasers, mortgagees or tenants (subject to the limitations set forth below), and to alter, improve or repair the Premises and any portion of the Building, without abatement of rent, and may for that purpose erect, use and maintain scaffolding, pipes, conduits and other necessary structures and open any wall, ceiling or floor in and through the Building and Premises where reasonably required by the character of the work to be performed, provided entrance to the Premises shall not be blocked thereby, and further provided that the business of Tenant shall not be interfered with unreasonably. Landlord agrees that except in the event (a) Tenant is in monetary or material non-monetary default under this Lease, which may result in a termination of this Lease, (b) Landlord and Tenant are negotiating for or have agreed to an early termination of this Lease, or (c) Landlord and Tenant otherwise mutually agree to the contrary, Landlord shall not show the Premises to prospective tenants except during the last twelve (12) months of the Term of this Lease. Notwithstanding the foregoing, except (i) to the extent requested by Tenant, (ii) in connection with scheduled maintenance programs, and/or (iii) in the event of an emergency, Landlord shall provide to Tenant not less than twenty-four (24) hours’ prior notice (either written or oral) before Landlord enters the Premises to perform any repairs therein. Landlord shall have the right at any time to change the arrangement and/or locations of entrances, or passageways, doors and doorways, and corridors, windows, elevators, stairs, toilets or other public parts of the Building and to change the name, number or designation by which the Building is commonly known. In the event that Landlord damages any portion of any wall or wall covering, ceiling, or floor or floor covering within the Premises, Landlord shall repair or replace the damaged portion to match the original as nearly as commercially reasonable but shall not be required to repair or replace more than the portion actually damaged. Landlord may make any such entries without the abatement of Rent (except as specifically set forth in Section 13.1 of this Lease) and may take such reasonable steps as required to accomplish the stated purposes. Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant’s business and/or lost profits occasioned thereby, provided that the foregoing shall not limit Landlord’s liability, if any, pursuant to applicable law for personal injury and property damage to the extent caused by the gross negligence or willful misconduct of Landlord, its agents, employees or contractors. Provided that Landlord employs commercially reasonable efforts to minimize interference with the conduct of Tenant’s business in connection with entries into the Premises, Tenant hereby waives any claims for any loss of occupancy or quiet enjoyment of the Premises in connection with such entries. Except in emergency situations, as determined by Landlord, Landlord shall exercise reasonable efforts to perform any entry into the Premises in a manner that is reasonably designed to minimize interference with the operation of Tenant’s business in the Premises.

17.2 For each of the aforesaid purposes, Landlord shall at all times have and retain a key with which to unlock all of the doors in the Premises, excluding Tenant’s vaults and safes or special security areas (designated in advance), and Landlord shall have the right to use any and all means which Landlord may deem proper to open said doors in an emergency to obtain entry to any portion of the Premises. As to any portion to which access cannot be had by means of a key or keys in Landlord’s possession, Landlord is authorized to gain access by such means as Landlord shall elect and, if such entry is necessitated by an emergency or if Tenant fails to cooperate with such entry by Landlord, the cost of repairing any damage occurring in doing so shall be borne by Tenant and paid to Landlord within five (5) days of Landlord’s demand.

18. DEFAULT .

18.1 Except as otherwise provided in Article 20, the following events shall be deemed to be Events of Default under this Lease:

18.1.1 Tenant shall fail to pay when due any sum of money becoming due to be paid to Landlord under this Lease, whether such sum be any installment of the rent reserved by this Lease, any other amount treated as additional rent under this Lease, or any other payment or reimbursement to Landlord required by this Lease, whether or not treated as additional rent under this Lease, and such failure shall continue for a period of five (5) business days after written notice that such payment was not made when due, but if any such notice shall be given during the twelve (12) month period commencing with the date of such notice, the failure to pay within five (5) business days after due any additional sum of money becoming due to be paid to Landlord under this Lease during such period shall be an Event of Default, without notice. The notice required pursuant to this Section 18.1.1 shall replace rather than supplement any statutory notice required under California Code of Civil Procedure Section 1161 or any similar or successor statute.

18.1.2 Tenant shall fail to comply with any term, provision or covenant of this Lease which is not provided for in another Section of this Article and shall not cure such failure within twenty (20) days (forthwith, if the failure involves the existence of a hazardous situation or imminent threat to health or safety due to the acts, omissions or operations of Tenant or any Tenant Entity) after written notice of such failure to Tenant provided, however, that such failure shall not be an Event of Default if such failure could not reasonably be cured during such twenty (20) day period, Tenant has commenced the cure within such twenty (20) day period and thereafter is diligently pursuing such cure to completion, but the total aggregate cure period shall not exceed one hundred twenty (120) days.

18.1.3 Tenant shall fail to vacate the Premises immediately upon termination of this Lease, by lapse of time or otherwise, or upon termination of Tenant’s right to possession only.

18.1.4 Tenant shall become insolvent, admit in writing its inability to pay its debts generally as they become due, file a petition in bankruptcy or a petition to take advantage of any insolvency statute, make an assignment for the benefit of creditors, make a transfer in fraud of creditors, apply for or consent to the appointment of a receiver of itself or of the whole or any substantial part of its property, or file a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws, as now in effect or hereafter amended, or any other applicable law or statute of the United States or any state thereof.

18.1.5 A court of competent jurisdiction shall enter an order, judgment or decree adjudicating Tenant bankrupt, or appointing a receiver of Tenant, or of the whole or any substantial part of its property, without the consent of Tenant, or approving a petition filed against Tenant seeking reorganization or arrangement of Tenant under the bankruptcy laws of the United States, as now in effect or hereafter amended, or any state thereof, and such order, judgment or decree shall not be vacated or set aside or stayed within sixty (60) days from the date of entry thereof.

18.1.6 Any other event, act or omission which any other provision of this Lease expressly identifies as an Event of Default.

19. REMEDIES .

19.1 Upon the occurrence of any Event or Events of Default under this Lease, Landlord shall have the option to pursue any one or more of the following remedies without any notice (except as expressly prescribed herein) or demand whatsoever (and without limiting the generality of the foregoing, Tenant hereby specifically waives notice and demand for payment of rent or other obligations and waives any and all other notices or demand requirements imposed by applicable law):

19.1.1 Terminate this Lease and Tenant’s right to possession of the Premises and recover from Tenant an award of damages equal to the sum of the following:

19.1.1.1 The Worth at the Time of Award of the unpaid rent which had been earned at the time of termination;

19.1.1.2 The Worth at the Time of Award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rent loss that Tenant affirmatively proves could have been reasonably avoided;

19.1.1.3 The Worth at the Time of Award of the amount by which the unpaid rent for the balance of the Term after the time of award exceeds the amount of such rent loss that Tenant affirmatively proves could be reasonably avoided;

19.1.1.4 Any other amount necessary to compensate Landlord for all the detriment either proximately caused by Tenant’s failure to perform Tenant’s obligations under this Lease or which in the ordinary course of things would be likely to result therefrom; and

19.1.1.5 All such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time under applicable law.

The “Worth at the Time of Award” of the amounts referred to in parts 19.1.1.1 and 19.1.1.2 above, shall be computed by allowing interest at the lesser of a per annum rate equal to: (i) the greatest per annum rate of interest permitted from time to time under applicable law, or (ii) the Prime Rate plus 5%. For purposes hereof, the “Prime Rate” shall be the per annum interest rate publicly announced as its prime or base rate by a federally insured bank selected by Landlord in the State of California. The “Worth at the Time of Award” of the amount referred to in part 19.1.1.3, above, shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus 1%;

19.1.2 Employ the remedy described in California Civil Code § 1951.4 (Landlord may continue this Lease in effect after Tenant’s breach and abandonment and recover rent as it becomes due, if Tenant has the right to sublet or assign, subject only to reasonable limitations); or

19.1.3 Notwithstanding Landlord’s exercise of the remedy described in California Civil Code § 1951.4 in respect of an Event or Events of Default, at such time thereafter as Landlord may elect in writing, to terminate this Lease and Tenant’s right to possession of the Premises and recover an award of damages as provided above in Section 19.1.1.

19.2 The subsequent acceptance of rent hereunder by Landlord shall not be deemed to be a waiver of any preceding breach by Tenant of any term, covenant or condition of this Lease, other than the failure of Tenant to pay the particular rent so accepted, regardless of Landlord’s knowledge of such preceding breach at the time of acceptance of such rent. No waiver by Landlord of any breach hereof shall be effective unless such waiver is in writing and signed by Landlord.

19.3 TENANT HEREBY WAIVES ANY AND ALL RIGHTS CONFERRED BY SECTION 3275 OF THE CIVIL CODE OF CALIFORNIA AND BY SECTIONS 1174 (c) AND 1179 OF THE CODE OF CIVIL PROCEDURE OF CALIFORNIA AND ANY AND ALL OTHER REGULATIONS AND RULES OF LAW FROM TIME TO TIME IN EFFECT DURING THE TERM PROVIDING THAT TENANT SHALL HAVE ANY RIGHT TO REDEEM, REINSTATE OR RESTORE THIS LEASE FOLLOWING ITS TERMINATION BY REASON OF TENANT’S BREACH. TENANT ALSO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY LITIGATION ARISING OUT OF OR RELATING TO THIS LEASE.

19.4 No right or remedy herein conferred upon or reserved to Landlord is intended to be exclusive of any other right or remedy, and each and every right and remedy shall be cumulative and in addition to any other right or remedy given hereunder or now or hereafter existing by agreement, applicable law or in equity. In addition to other remedies provided in this Lease, Landlord shall be entitled, to the extent permitted by applicable law, to injunctive relief, or to a decree compelling performance of any of the covenants, agreements, conditions or provisions of this Lease, or to any other remedy allowed to Landlord at law or in equity. Forbearance by Landlord to enforce one or more of the remedies herein provided upon an Event of Default shall not be deemed or construed to constitute a waiver of such Event of Default.

19.5 This Article 19 shall be enforceable to the maximum extent such enforcement is not prohibited by applicable law, and the unenforceability of any portion thereof shall not thereby render unenforceable any other portion.

19.6 Intentionally Omitted.

19.7 If, on account of any breach or default by Tenant in Tenant’s obligations under the terms and conditions of this Lease, it shall become necessary or appropriate for Landlord to employ or consult with an attorney or collection agency concerning or to enforce or defend any of Landlord’s rights or remedies arising under this Lease or to collect any sums due from Tenant, Tenant agrees to pay all costs and fees so incurred by Landlord, including, without limitation, reasonable attorneys’ fees and costs. If either party participates in an action against the other party arising out of or in connection with this Lease or any covenants or obligations hereunder, then the prevailing party shall be entitled to have or recover from the other party, upon demand, all reasonable attorneys’ fees and costs incurred in connection therewith. Tenant hereby specifically also waives notice and demand for payment of rent or other obligations, except for those notices specifically required pursuant to the terms of this Lease and notices which may be required under California Code of Civil Procedure Section 1161, as described in Section 18.1.1 above.

19.8 Upon the occurrence of an uncured Event of Default, Landlord may (but shall not be obligated to) cure such default at Tenant’s sole expense and Landlord may, at Landlord’s option, enter into and upon the Premises to perform such obligations, subject to Article 17 above, without being deemed in any manner guilty of trespass, eviction or forcible entry and detainer and without incurring any liability for any damage or interruption of Tenant’s business resulting therefrom and Tenant agrees to reimburse Landlord within five (5) days of Landlord’s demand as additional rent, for any expenses which Landlord may incur in thus effecting compliance with Tenant’s obligations under this Lease, plus interest from the date of expenditure by Landlord at the Wall Street Journal prime rate.

20. TENANT’S BANKRUPTCY OR INSOLVENCY .

20.1 If at any time and for so long as Tenant shall be subjected to the provisions of the United States Bankruptcy Code or other law of the United States or any state thereof for the protection of debtors as in effect at such time (each a “Debtor’s Law”):

20.1.1 Tenant, Tenant as debtor-in-possession, and any trustee or receiver of Tenant’s assets (each a “Tenant’s Representative”) shall have no greater right to assume or assign this Lease or any interest in this Lease, or to sublease any of the Premises than accorded to Tenant in Article 9, except to the extent Landlord shall be required to permit such assumption, assignment or sublease by the provisions of such Debtor’s Law. Without limitation of the generality of the foregoing, any right of any Tenant’s Representative to assume or assign this Lease or to sublease any of the Premises shall be subject to the conditions that:

20.1.1.1 Such Debtor’s Law shall provide to Tenant’s Representative a right of assumption of this Lease which Tenant’s Representative shall have timely exercised and Tenant’s Representative shall have fully cured any default of Tenant under this Lease.

20.1.1.2 Tenant’s Representative or the proposed assignee, as the case shall be, shall have deposited with Landlord as security for the timely payment of rent an amount equal to the larger of: (a) three (3) months’ rent and other monetary charges accruing under this Lease; and (b) any sum specified in Article 5; and shall have provided Landlord with adequate other assurance of the future performance of the obligations of the Tenant under this Lease. Without limitation, such assurances shall include, at least, in the case of assumption of this Lease, demonstration to the satisfaction of the Landlord that Tenant’s Representative has and will continue to have sufficient unencumbered assets after the payment of all secured obligations and administrative expenses to assure Landlord that Tenant’s Representative will have sufficient funds to fulfill the obligations of Tenant under this Lease; and, in the case of assignment, submission of current financial statements of the proposed assignee, audited by an independent certified public accountant reasonably acceptable to Landlord and showing a net worth and working capital in amounts determined by Landlord to be sufficient to assure the future performance by such assignee of all of the Tenant’s obligations under this Lease.

20.1.1.3 The assumption or any contemplated assignment of this Lease or subleasing any part of the Premises, as shall be the case, will not breach any provision in any other lease, mortgage, financing agreement or other agreement by which Landlord is bound.

20.1.1.4 Landlord shall have, or would have had absent the Debtor’s Law, no right under Article 9 to refuse consent to the proposed assignment or sublease by reason of the identity or nature of the proposed assignee or sublessee or the proposed use of the Premises concerned.

21. QUIET ENJOYMENT . Landlord represents and warrants that it has full right and authority to enter into this Lease and that Tenant, while paying the rental and performing its other covenants and agreements contained in this Lease, shall peaceably and quietly have, hold and enjoy the Premises for the Term without hindrance or molestation from Landlord subject to the terms and provisions of this Lease. Landlord shall not be liable for any interference or disturbance by other tenants or third persons not claiming by, through or under Landlord, nor shall Tenant be released from any of the obligations of this Lease because of such interference or disturbance. Landlord shall use commercially reasonable efforts to end or minimize interference or disturbance by other tenants or such third persons after Tenant has requested Landlord to do so in writing, provided that in any event Landlord shall not be liable for such interference or disturbance, nor shall Tenant be released from any of the obligations of this Lease because of such interference or disturbance. Landlord shall operate the Project in a first class manner; provided that the foregoing shall not, however, require Landlord to upgrade any existing Building or Project systems to keep pace with the latest technology for new developments or to provide any new or additional services.

22. CASUALTY .

22.1 In the event the Premises or the Building are damaged by fire or other cause and in Landlord’s reasonable estimation such damage can be materially restored within two hundred ten (210) days following the date of the casualty, Landlord shall forthwith repair the same and this Lease shall remain in full force and effect, except that Tenant shall be entitled to a proportionate abatement in rent from the date of such damage. Such abatement of rent shall be made pro rata in accordance with the extent to which the damage and the making of such repairs shall interfere with the use and occupancy by Tenant of the Premises from time to time. Within a commercially reasonable time not to exceed forty-five (45) days from the date of such damage, Landlord shall notify Tenant, in writing, of Landlord’s reasonable estimation of the length of time within which material restoration can be made, and Landlord’s determination shall be binding on Tenant. For purposes of this Lease, the Building or Premises shall be deemed “materially restored” if they are in such condition as would not prevent or materially interfere with Tenant’s use of the Premises for the purpose for which it was being used immediately before such damage.

22.2 If such repairs cannot, in Landlord’s reasonable estimation, be made within two hundred ten (210) days following the date of the casualty, Landlord and Tenant shall each have the option of giving the other, at any time within thirty (30) days after Landlord’s notice of estimated restoration time, notice terminating this Lease as of the date of such damage. In the event of the giving of such notice, this Lease shall expire and all interest of the Tenant in the Premises shall terminate as of the date of such damage as if such date had been originally fixed in this Lease for the expiration of the Term. In the event that neither Landlord nor Tenant exercises its option to terminate this Lease, then Landlord shall repair or restore such damage, this Lease continuing in full force and effect, and the rent hereunder shall be proportionately abated as provided in Section 22.1.

22.3 Landlord shall not be required to repair or replace any damage or loss by or from fire or other cause to any panelings, decorations, partitions, additions, railings, ceilings, floor coverings, office fixtures or any other property or improvements installed on the Premises by, or belonging to, Tenant. Any insurance which may be carried by Landlord or Tenant against loss or damage to the Building or Premises shall be for the sole benefit of the party carrying such insurance and under its sole control.

22.4 In the event that Landlord should fail to complete such repairs and material restoration within sixty (60) days after the date estimated by Landlord therefor as extended by this Section 22.4, Tenant may at its option and as its sole remedy terminate this Lease by delivering written notice to Landlord, within fifteen (15) days after the expiration of said period of time, whereupon this Lease shall end on the date of such notice or such later date fixed in such notice as if the date of such notice was the date originally fixed in this Lease for the expiration of the Term; provided, however, that if construction is delayed because of changes, deletions or additions in construction requested by Tenant, strikes, lockouts, casualties, Acts of God, war, material or labor shortages, government regulation or control or other causes beyond the reasonable control of Landlord, the period for restoration, repair or rebuilding shall be extended for the amount of time Landlord is so delayed.

22.5 Notwithstanding anything to the contrary contained in this Article: (a) Landlord shall not have any obligation whatsoever to repair, reconstruct, or restore the Premises when the damages resulting from any casualty covered by the provisions of this Article 22 occur during the last twelve (12) months of the Term or any extension thereof, or for which sufficient insurance proceeds to fully cover the repair and restoration are not received by Landlord, but if Landlord determines not to repair such damages Landlord shall notify Tenant and if such damages shall render any material portion of the Premises untenantable Tenant shall have the right to terminate this Lease by notice to Landlord within fifteen (15) days after receipt of Landlord’s notice; and (b) in the event the holder of any indebtedness secured by a mortgage or deed of trust covering the Premises or Building requires that any insurance proceeds be applied to such indebtedness, then Landlord shall have the right to terminate this Lease by delivering written notice of termination to Tenant within fifteen (15) days after such requirement is made by any such holder, whereupon this Lease shall end on the date of such damage as if the date of such damage were the date originally fixed in this Lease for the expiration of the Term.

22.6 In the event of any damage or destruction to the Building or Premises by any peril covered by the provisions of this Article 22, it shall be Tenant’s responsibility to properly secure the Premises and upon notice from Landlord to remove forthwith, at its sole cost and expense, such portion of all of the property belonging to Tenant or its licensees from such portion or all of the Building or Premises as Landlord shall request.

22.7 Tenant hereby waives any and all rights under and benefits of Sections 1932(2) and 1933(4) of the California Civil Code, or any similar or successor Regulations or other laws now or hereinafter in effect.

23. EMINENT DOMAIN . If all or any substantial part of the Premises shall be taken or appropriated by any public or quasi-public authority under the power of eminent domain, or conveyance in lieu of such appropriation, either party to this Lease shall have the right, at its option, of giving the other, at any time within thirty (30) days after such taking, notice terminating this Lease, except that Tenant may only terminate this Lease by reason of taking or appropriation, if such taking or appropriation shall be so substantial as to materially interfere with Tenant’s use and occupancy of the Premises. If neither party to this Lease shall so elect to terminate this Lease, the rental thereafter to be paid shall be adjusted on a fair and equitable basis under the circumstances. In addition to the rights of Landlord above, if any substantial part of the Building shall be taken or appropriated by any public or quasi-public authority under the power of eminent domain or conveyance in lieu thereof, and regardless of whether the Premises or any part thereof are so taken or appropriated, Landlord shall have the right, at its sole option, to terminate this Lease. Landlord shall be entitled to any and all income, rent, award, or any interest whatsoever in or upon any such sum, which may be paid or made in connection with any such public or quasi-public use or purpose, and Tenant hereby assigns to Landlord any interest it may have in or claim to all or any part of such sums, other than any separate award which may be made with respect to Tenant’s trade fixtures and moving expenses; Tenant shall make no claim for the value of any unexpired Term. Tenant hereby waives any and all rights under and benefits of Section 1265.130 of the California Code of Civil Procedure, or any similar or successor Regulations or other laws now or hereinafter in effect.

24. SALE BY LANDLORD . In event of a sale or conveyance by Landlord of the Building, the same shall operate to release Landlord from any future liability upon any of the covenants or conditions, expressed or implied, contained in this Lease in favor of Tenant (provided that any successor pursuant to a voluntary, third-party transfer (but not as part of an involuntary transfer resulting from a foreclosure or deed in lieu thereof) shall have assumed Landlord’s obligations under this Lease either by contractual obligation, assumption agreement or by operation of law), and upon such sale or conveyance, Tenant agrees to look solely to the responsibility of the successor in interest of Landlord in and to this Lease. Except as set forth in this Article 24, this Lease shall not be affected by any such sale and Tenant agrees to attorn to the purchaser or assignee. If any security has been given by Tenant to secure the faithful performance of any of the covenants of this Lease, Landlord may transfer or deliver said security, as such, to Landlord’s successor in interest and thereupon Landlord shall be discharged from any further liability with regard to said security.

25. ESTOPPEL CERTIFICATES . Within ten (10) days following any written request which Landlord may make from time to time, Tenant shall execute and deliver to Landlord or mortgagee or prospective mortgagee a sworn statement certifying: (a) the date of commencement of this Lease; (b) the fact that this Lease is unmodified and in full force and effect (or, if there have been modifications to this Lease, that this Lease is in full force and effect, as modified, and stating the date and nature of such modifications); (c) the date to which the rent and other sums payable under this Lease have been paid; (d) the fact that to Tenant’s then current actual knowledge, there are no current defaults under this Lease by either Landlord or Tenant except as specified in Tenant’s statement; and (e) such other matters as may be reasonably requested by Landlord. Landlord and Tenant intend that any statement delivered pursuant to this Article 25 may be relied upon by any mortgagee, beneficiary or purchaser. If Tenant fails to execute and deliver such certificate within such ten (10) day period, Landlord may provide to Tenant a second written request with respect to such estoppel certificate. Tenant irrevocably agrees that if Tenant fails to execute and deliver such certificate within a five (5) day period following the date of Landlord’s second written request therefor, Landlord or Landlord’s beneficiary or agent may execute and deliver such certificate on Tenant’s behalf, and that such certificate shall be fully binding on Tenant. Landlord shall, within ten (10) business days after receipt of a written request from Tenant, but not more than once during any calendar year of the Term, execute and deliver Landlord’s standard form of estoppel certificate to Tenant’s lender, approved assignee or approved subtenant. Such estoppel certificate shall provide a certification solely as to (i) the status of this Lease, (ii) Landlord’s then-current actual knowledge of the existence of any defaults hereunder, and (iii) the amount of rent that is due and payable under this Lease.

26. SURRENDER OF PREMISES .

26.1 Tenant and Landlord shall meet for two (2) joint inspections of the Premises at a time reasonably and mutually acceptable to both Landlord and Tenant, the first to occur at least thirty (30) days (but no more than sixty (60) days) before the last day of the Term, and the second to occur not later than forty-eight (48) hours after Tenant has vacated the Premises.

26.2 All alterations, additions, and improvements in, on, or to the Premises made or installed by or for Tenant, including, without limitation, carpeting (collectively, “Alterations”), shall be and remain the property of Tenant during the Term. Upon the expiration or sooner termination of the Term, all Alterations shall become a part of the realty and shall belong to Landlord without compensation, and title shall pass to Landlord under this Lease as by a bill of sale. At the end of the Term or any renewal of the Term or other sooner termination of this Lease, Tenant will peaceably deliver up to Landlord possession of the Premises, together with all Alterations by whomsoever made, in the same conditions received or first installed, broom clean and free of all debris, excepting only ordinary wear and tear and damage by fire or other casualty. Notwithstanding the foregoing, but subject to the terms of Section 6.4 above, if Landlord elects by notice given to Tenant at least thirty (30) days prior to expiration of the Term, Tenant shall, at Tenant’s sole cost, remove any Alterations (other than Cosmetic Alterations, except to the extent provided in Section 6.4, and Initial Alterations which Landlord determines, pursuant to Section 6.4, above, do not have to be removed), so designated by Landlord’s notice, and repair any damage caused by such removal. Tenant must, at Tenant’s sole cost, remove upon termination of this Lease, any and all of Tenant’s furniture, furnishings, equipment, movable partitions of less than full height from floor to ceiling and other trade fixtures and personal property, as well as all data/telecommunications cabling and wiring installed by or on behalf of Tenant, whether inside walls, under any raised floor or above any ceiling (collectively, “Personalty”). Personalty not so removed shall be deemed abandoned by the Tenant and title to the same shall thereupon pass to Landlord under this Lease as by a bill of sale, but Tenant shall remain responsible for the cost of removal and disposal of such Personalty, as well as any damage caused by such removal.

26.3 All of Tenant’s surrender removal, repair and restoration obligations under this Lease not fully performed as of the expiration or earlier termination of the Term shall survive the expiration or earlier termination of the Term. Upon the expiration or earlier termination of the Term, if Tenant fails to perform its obligations pursuant to this Article 26, Tenant shall pay to Landlord the amount, as reasonably estimated by Landlord, necessary to repair and restore the Premises as provided in this Lease and/or to discharge an uncured Event of Default. All such amounts shall be used and held by Landlord for payment of such obligations of Tenant, with Tenant being liable for any additional costs upon demand by Landlord, or with any excess to be returned to Tenant after all such obligations have been determined and satisfied.

27. NOTICES . Any notice or document required or permitted to be delivered under this Lease shall be addressed to the intended recipient, by fully prepaid registered or certified United States Mail return receipt requested, or by reputable independent contract delivery service furnishing a written record of attempted or actual delivery, and shall be deemed to be delivered and received when tendered for delivery to the addressee at its address set forth on the Reference Pages, or at such other address as it has then last specified by written notice delivered in accordance with this Article 27. Any such notice or document may also be personally delivered if a receipt is signed by and received from, the individual, if any, named in Tenant’s Notice Address.

28. TAXES PAYABLE BY TENANT . In addition to rent and other charges to be paid by Tenant under this Lease, Tenant shall reimburse to Landlord, upon demand, any and all taxes (other than Taxes payable by Tenant pursuant to Article 4) payable by Landlord (other than net income taxes) whether or not now customary or within the contemplation of the parties to this Lease: (a) upon, allocable to, or measured by or on the gross or net rent payable under this Lease, including without limitation any gross income tax or excise tax levied by the State, any political subdivision thereof, or the Federal Government with respect to the receipt of such rent; (b) upon or with respect to the possession, leasing, operation, management, maintenance, alteration, repair, use or occupancy of the Premises or any portion thereof, including any sales, use or service tax imposed as a result thereof; (c) upon or measured by the Tenant’s gross receipts or payroll or the value of Tenant’s equipment, furniture, fixtures and other personal property of Tenant or leasehold improvements, alterations or additions located in the Premises; or (d) upon this transaction or any document to which Tenant is a party creating or transferring any interest of Tenant in this Lease or the Premises. In addition to the foregoing, Tenant agrees to pay, before delinquency, any and all taxes levied or assessed against Tenant and which become payable during the term hereof upon Tenant’s equipment, furniture, fixtures and other personal property of Tenant located in the Premises.

29. RELOCATION OF TENANT . [Intentionally Omitted]

30. PARKING .

30.1 During the Term of this Lease, Tenant agrees to lease from Landlord and Landlord agrees to lease to Tenant, the number and type of parking passes as set forth on the Reference Page of this Lease and pursuant to Section 1.3. This right to park in the Building’s parking facilities (the “Parking Facility”) shall be on an unreserved, nonexclusive, first come, first served basis, for passenger-size automobiles and is subject to the following terms and conditions:

30.1.1 Tenant shall at all times abide by and shall cause each of Tenant’s employees, agents, customers, visitors, invitees, licensees, contractors, assignees and subtenants (collectively, “Tenant’s Parties”) to abide by any reasonable rules and regulations (“Rules”) for use of the Parking Facility that Landlord or Landlord’s garage operator reasonably establishes from time to time, and otherwise agrees to use the Parking Facility in a safe and lawful manner. Landlord reserves the right to adopt, modify and enforce the Rules governing the use of the Parking Facility from time to time including any key-card, sticker or other identification or entrance system and hours of operation. The Rules shall be generally applicable, and generally applied in the same manner, to all tenants of the Building. Landlord may refuse to permit any person who commits repeated violations of such Rules to park in the Parking Facility, and any repeated violation of the Rules shall subject the car to removal from the Parking Facility.

30.1.2 Unless specified to the contrary above, the parking spaces hereunder shall be provided on a non-designated “first-come, first-served” basis. Landlord reserves the right to assign specific spaces, and to reserve spaces for visitors, small cars, disabled persons or for other tenants or guests, and Tenant shall not park and shall not allow Tenant’s Parties to park in any such assigned or reserved spaces. Tenant may validate visitor parking by such method as Landlord may approve, at the validation rate from time to time generally applicable to visitor parking. Tenant acknowledges that the Parking Facility may be closed entirely or in part in order to make repairs or perform maintenance services, or to alter, modify, re-stripe or renovate the Parking Facility, or if required by casualty, strike, condemnation, act of God, governmental law or requirement or other reason beyond the operator’s reasonable control.

30.1.3 Tenant acknowledges that to the fullest extent permitted by law, Landlord shall have no liability for any damage to property or other items located in the parking areas of the Building (including without limitation, any loss or damage to tenant’s automobile or the contents thereof due to theft, vandalism or accident), nor for any personal injuries or death arising out of the use of the Parking Facility by Tenant or any Tenant’s Parties, whether or not such loss or damage results from Landlord’s active negligence or negligent omission. The limitation on Landlord’s liability under the preceding sentence shall not apply however to loss or damage arising directly from Landlord’s gross negligence or willful misconduct. Without limiting the foregoing, if Landlord arranges for the parking areas to be operated by an independent contractor not affiliated with Landlord, Tenant acknowledges that Landlord shall have no liability for claims arising through acts or omissions of such independent contractor. Tenant and Tenant’s Parties each hereby voluntarily releases, discharges, waives and relinquishes any and all actions or causes of action for personal injury or property damage occurring to Tenant or any of Tenant’s Parties arising as a result of parking in the Parking Facility, or any activities incidental thereto, wherever or however the same may occur, and further agrees that Tenant will not prosecute any claim for personal injury or property damage against Landlord or any of its officers, agents, servants or employees for any said causes of action and in all events, Tenant agrees to look first to its insurance carrier and to require that Tenant’s Parties look first to their respective insurance carriers for payment of any losses sustained in connection with any use of the Parking Facility. Tenant hereby waives on behalf of its insurance carriers all rights of subrogation against Landlord or any Landlord Entities.

30.1.4 Tenant’s right to park as described in this Article and this Lease shall not be transferable to any assignee or sublessee, except in connection with an assignment of this Lease or subletting of the Premises pursuant to Article 9 above. Such consent as to any transfer of Tenant’s parking rights hereunder that is not otherwise in connection with an assignment of this Lease or subletting of the Premises in accordance with Article 9 may be withheld by Landlord in its sole discretion.

30.1.5 Tenant’s parking passes shall be without charge during the Term, except to the extent set forth in the immediately following sentence. In the event any surcharge or regulatory fee is at any time imposed by any governmental authority with reference to parking, Tenant shall (commencing after two (2) weeks’ notice to Tenant) pay, per parking pass, such surcharge or regulatory fee to Landlord in advance on the first day of each calendar month concurrently with the month installment of rent due under this Lease. Landlord will enforce any surcharge or fee in an equitable manner amongst the Building tenants.

30.1.6 In the event that Tenant or the Tenant Entities repeatedly park more vehicles in the parking facilities than Tenant’s Proportionate Share of the total parking spaces available for common use (as set forth on the Reference Page of this Lease), then Landlord may elect, in its sole discretion, to (i) notify Tenant that it is prohibited from such excess parking and demand the immediate cessation of such excess parking by Tenant or the Tenant Entities, and/or (ii) designate an on-site parking area in which Tenant and the Tenant Entities will be required to park, and implement an assisted parking program (including, without limitation, valet, valet assist and/or stack or block parking), and Tenant shall be solely responsible for all costs and expenses of any such program.

30.2 If Tenant violates any of the terms and conditions of this Article, the operator of the Parking Facility shall have the right to remove from the Parking Facility any vehicles hereunder which shall have been involved or shall have been owned or driven by parties involved in causing such violation, without liability therefor whatsoever. If Landlord notifies Tenant that there have been substantial, repeated and ongoing breaches of any of the provisions of this Article 30, as determined by Landlord in its good faith discretion, Tenant shall deliver to Landlord within ten (10) days following the date of Landlord’s notice a formal written program that includes all actions and provisions necessary to eliminate the breaches referred to in Landlord’s notice (the “Remedial Program”). Landlord and Tenant shall cooperate in all reasonable respects during such ten (10) day period in order to ensure that Landlord and Tenant agree on the form and content of the Remedial Plan. Tenant shall promptly, diligently and continuously implement and administer the Remedial Plan, with such updates or changes from time to time as may be necessary to ensure compliance with the provisions of this Article 30.

31. DEFINED TERMS AND HEADINGS . The Article headings shown in this Lease are for convenience of reference and shall in no way define, increase, limit or describe the scope or intent of any provision of this Lease. Any indemnification or insurance of Landlord shall apply to and inure to the benefit of all the following “Landlord Entities”, being Landlord, Landlord’s investment manager, and the trustees, boards of directors, officers, general partners, beneficiaries, stockholders, employees and agents of each of them. Any option granted to Landlord shall also include or be exercisable by Landlord’s trustee, beneficiary, agents and employees, as the case may be. In any case where this Lease is signed by more than one person, the obligations under this Lease shall be joint and several. The terms “Tenant” and “Landlord” or any pronoun used in place thereof shall indicate and include the masculine or feminine, the singular or plural number, individuals, firms or corporations, and their and each of their respective successors, executors, administrators and permitted assigns, according to the context hereof. The term “rentable area” shall mean the rentable area of the Premises or the Building as calculated by the Landlord on the basis of the plans and specifications of the Building including a proportionate share of any common areas. Tenant hereby accepts and agrees to be bound by the figures for the rentable square footage of the Premises and Tenant’s Proportionate Share shown on the Reference Pages; however, Landlord may adjust either or both figures if there is manifest error, addition or subtraction to the Building or any business park or complex of which the Building is a part, remeasurement or other circumstance reasonably justifying adjustment. The term “Building” refers to the structure in which the Premises are located and the common areas (parking lots, sidewalks, landscaping, etc.) appurtenant thereto. Except for purposes of determining Tenant’s Proportionate Share of the Building and the Project, as set forth on the Reference Pages, if the Building is part of a larger complex of building structures, the term “Building” may include the entire complex (other than any residential or retail structures (excluding Project Amenities or amenity retail within any particular Building in the Project)), where appropriate (such as shared Expenses, Insurance Costs or Taxes) and subject to Landlord’s reasonable discretion.

32. AUTHORITY .

32.1 If Tenant signs as a corporation, partnership, trust or other legal entity each of the persons executing this Lease on behalf of Tenant represents and warrants that Tenant has been and is qualified to do business in the state in which the Building is located, that the entity has full right and authority to enter into this Lease, and that all persons signing on behalf of the entity were authorized to do so by appropriate actions. Tenant agrees to deliver to Landlord, simultaneously with the delivery of this Lease, a corporate resolution, proof of due authorization by partners, opinion of counsel or other appropriate documentation reasonably acceptable to Landlord evidencing the due authorization of Tenant to enter into this Lease. Landlord represents and warrants that it has full right and authority to enter into this Lease and to perform all of Landlord’s obligations hereunder and that all persons signing this Lease on its behalf are authorized to do so.

32.2 Tenant hereby represents and warrants that neither Tenant, nor any persons or entities holding any legal or beneficial interest whatsoever in Tenant, are (i) the target of any sanctions program that is established by Executive Order of the President or published by the Office of Foreign Assets Control, U.S. Department of the Treasury (“OFAC”); (ii) designated by the President or OFAC pursuant to the Trading with the Enemy Act, 50 U.S.C. App. § 5, the International Emergency Economic Powers Act, 50 U.S.C. §§ 1701-06, the Patriot Act, Public Law 107-56, Executive Order 13224 (September 23, 2001) or any Executive Order of the President issued pursuant to such statutes; or (iii) named on the following list that is published by OFAC: “List of Specially Designated Nationals and Blocked Persons.” If the foregoing representation is untrue at any time during the Term, an Event of Default will be deemed to have occurred, without the necessity of notice to Tenant.

33. FINANCIAL STATEMENTS AND CREDIT REPORTS . At Landlord’s request, Tenant shall deliver to Landlord a copy, certified by an officer of Tenant as being a true and correct copy, of Tenant’s most recent audited financial statement, or, if unaudited, certified by Tenant’s chief financial officer as being true, complete and correct in all material respects. Tenant hereby authorizes Landlord to obtain one or more credit reports on Tenant at any time, and shall execute such further authorizations as Landlord may reasonably require in order to obtain a credit report. Notwithstanding the foregoing, so long as Tenant is a publicly traded company on an “over-the-counter” market or any recognized national or international securities exchange, the foregoing shall not apply so long as Tenant’s current public annual report (in compliance with applicable securities laws) for such applicable year is available to Landlord in the public domain.

34. COMMISSIONS . Each of the parties represents and warrants to the other that it has not dealt with any broker or finder in connection with this Lease, except as described on the Reference Pages.

35. TIME AND APPLICABLE LAW . Time is of the essence of this Lease and all of its provisions. This Lease shall in all respects be governed by the laws of the state in which the Building is located. Whenever a period of time is prescribed for the taking of an action by Landlord or Tenant (other than the payment of rent by Tenant), the period of time for the performance of such action shall be extended by the number of days that the performance is actually delayed due to strikes, acts of God, shortages of labor or materials, war, terrorist acts, pandemics, civil disturbances and other causes beyond the reasonable control of the performing party; provided, however, that this Article 35 shall not (a) permit Tenant to hold over in the Premises after the expiration or earlier termination hereof, or (b) excuse any of Tenant’s payment obligations or any of its obligations under Articles 1, 3 or 4.

36. SUCCESSORS AND ASSIGNS . Subject to the provisions of Article 9, the terms, covenants and conditions contained in this Lease shall be binding upon and inure to the benefit of the heirs, successors, executors, administrators and assigns of the parties to this Lease.

37. ENTIRE AGREEMENT . This Lease, together with its exhibits, contains all agreements of the parties to this Lease and supersedes any previous negotiations. There have been no representations made by the Landlord or any of its representatives or understandings made between the parties other than those set forth in this Lease and its exhibits. This Lease may not be modified except by a written instrument duly executed by the parties to this Lease.

38. EXAMINATION NOT OPTION . Submission of this Lease shall not be deemed to be a reservation of the Premises. Landlord shall not be bound by this Lease until it has received a copy of this Lease duly executed by Tenant and has delivered to Tenant a copy of this Lease duly executed by Landlord, and until such delivery Landlord reserves the right to exhibit and lease the Premises to other prospective tenants.

39. RECORDATION . Tenant shall not record or register this Lease or a short form memorandum hereof without the prior written consent of Landlord, and then shall pay all charges and taxes incident such recording or registration.

40. FITNESS CENTER . From and after the mutual execution and delivery of this Lease, subject to the terms of this Article 40 and Article 41 below, and provided Tenant’s employees execute Landlord’s standard waiver of liability form, then Tenant’s employees (the “Fitness Center Users”) shall be entitled to use, without a membership fee or similar charge directly to such employees, the fitness center (the “Fitness Center”) located at the Project and made available for non-exclusive use by the tenants of the Project until the expiration or earlier termination of this Lease. The use of the Fitness Center shall be subject to the reasonable rules and regulations (including rules regarding hours of use) established from time to time by Landlord for the Fitness Center. The Fitness Center Users shall only include Tenant’s employees who work primarily at the Premises. Landlord and Tenant acknowledge that the use of the Fitness Center by the Fitness Center Users shall be at their own risk and that the terms and provisions of Article 10 of this Lease shall apply to such use of the Fitness Center. In no event shall Tenant permit or suffer any Tenant Entity other than the Fitness Center Users to use the Fitness Center. The costs of operating, maintaining and repairing the Fitness Center shall be included as part of Expenses. Tenant acknowledges and agrees that Tenant’s and any Tenant Entity’s use of the Fitness Center is voluntary and shall be undertaken by Tenant’s and Tenant’s employees’ sole risk. Neither Landlord nor any Landlord Entities (collectively, the “Released Parties”) shall be liable for any claims, demands, injuries, damages, actions or causes of action whatsoever arising out of or connected with any use of the Fitness Center and TENANT DOES HEREBY EXPRESSLY FOREVER WAIVE, RELEASE AND DISCHARGE THE RELEASED PARTIES FROM ANY AND ALL LIABILITY ARISING FROM ALL SUCH CLAIMS, DEMANDS, INJURIES, DAMAGES, ACTIONS AND/OR CAUSES OF ACTION, INCLUDING LIABILITY FROM ALL ACTS OF ACTIVE OR PASSIVE NEGLIGENCE, INCLUDING SOLE NEGLIGENCE, ON THE PART OF THE RELEASED PARTIES . The waivers and releases contained in this Article shall survive the expiration or earlier termination of this Lease.

41. PROJECT AMENITIES .

41.1 From and after the mutual execution and delivery of this Lease, subject to the terms of this Article 41, Tenant and its employees shall have the non-exclusive right, in common with Landlord and other tenants of the Project, to access and use certain common area amenities provided by Landlord from time to time to tenants of the Project on a non-exclusive basis, which currently consists of a cafeteria (the “Cafeteria”) and various conference rooms (the “Conference Rooms”), and the Fitness Center (collectively, the “Project Amenities”) until the expiration or earlier termination of the Lease but subject to the terms of this Article 41. For the avoidance of doubt, all costs and expenses incurred by Landlord or Landlord’s affiliate to operate, maintain, clean and manage the Project Amenities shall be included in Expenses. Such use by Tenant shall be without separate monthly rental charge to Tenant, save and except for the cost of any specific services provided and sold by the Project Amenities, including the cost of any food, beverages and other items sold at the Cafeteria, the standard charges for use of the Conference Rooms and related services, all at the applicable rates for such services established by Landlord for tenants of the Project from time to time; provided, however, that during the initial Term, Tenant shall be provided, subject to availability, up to twelve (12) hours of usage time in the Conference Rooms per month at no additional charge, on a non-cumulative basis, of which up to four (4) hours per month may be allocated for the Conference Room commonly known as the “Tassajara Room” and up to eight (8) hours per month may be allocated for the Conference Room commonly known as the “Diablo Room”) (provided that any unused hours for a calendar month shall in no event be credited to other time periods).

41.2 Subject to tenant demand (as determined by Landlord in its good faith discretion) and Landlord’s ability to secure a vendor with respect to the Cafeteria, Landlord shall use commercially reasonable efforts to maintain the Project Amenities during the Term of this Lease; provided that Tenant acknowledges that Landlord shall have the right, at Landlord’s sole but good faith discretion, to expand, contract, relocate or otherwise reasonably modify the Project Amenities and the equipment and other facilities located therein , and no such expansion, contraction, relocation or modification of the Project Amenities shall entitle Tenant to an abatement or reduction in Rent, or constitute a constructive eviction, or result in a default by Landlord under this Lease; provided that, with respect to the Conference Rooms, Landlord shall use commercially reasonable efforts to either reasonably accommodate Tenant’s right to use the Conference Rooms as set forth in the proviso in the last sentence of Section 41.1, above or provide alternate conference room space (comparable in size and amenities to the Tassajara Room or the Diablo Room) at the Project. Tenant acknowledges and agrees that Tenant’s and any of Tenant’s employee’s use of the Project Amenities is voluntary and, in consideration of the use of the Project Amenities, shall be undertaken by Tenant and such Tenant Entity’s sole risk. Neither Landlord nor any Landlord Entities (collectively, the “Released Parties”) shall be liable for any claims, demands, injuries, damages, actions or causes of action whatsoever arising out of or connected with Tenant’s and any Tenant Entity’s use of the Project Amenities and their facilities and services. TENANT DOES HEREBY EXPRESSLY FOREVER WAIVE, RELEASE AND DISCHARGE THE RELEASED PARTIES FROM ANY AND ALL LIABILITY ARISING FROM ALL SUCH CLAIMS, DEMANDS, INJURIES, DAMAGES, ACTIONS AND/OR CAUSES OF ACTION, INCLUDING LIABILITY FROM ALL ACTS OF ACTIVE OR PASSIVE NEGLIGENCE, INCLUDING SOLE NEGLIGENCE, ON THE PART OF THE RELEASED PARTIES . The waivers contained in this Section shall survive the expiration or earlier termination of this Lease.

42. BUILDING SIGNAGE .

42.1 Tenant shall be entitled to one (1) identification parapet sign on the freeway side of the Building (the “Parapet Sign”) and one (1) freeway pylon sign (the “Pylon Sign”, and, together with the Parapet Sign, the “Building Signage”). The Parapet Sign is in the approximate location shown on Exhibit F attached hereto. The exact location of the Building Signage shall further be subject to Section 42.3 below, all applicable Regulations and Landlord’s prior written approval, all applicable governmental authorities, including the City of Pleasanton and any applicable owner’s association (“Owner’s Association”), including the Hacienda Business Park Owner’s Association (collectively, the “Required Approvals”), which approval of Landlord shall not be unreasonably withheld, conditioned or delayed. Such right to the Building Signage is subject to the following terms and conditions: (a) Tenant shall submit plans and drawings for the Building Signage to Landlord, any applicable Owner’s Association and the City of Pleasanton and to any other parties that must provide the Required Approvals for the Building Signage and shall obtain written approval from Landlord and each such jurisdiction prior to installation, and shall fully comply with all applicable Regulations; (b) Tenant shall, at Tenant’s sole cost and expense, design, construct and install the Building Signage; (c) the size, color and design of the Building Signage shall be subject to Landlord’s prior written approval; and (d) Tenant shall maintain the Building Signage in good condition and repair, and all costs of maintenance and repair shall be borne by Tenant. Maintenance shall include, without limitation, cleaning. Notwithstanding the foregoing, Tenant shall not be liable for any fee in connection with Tenant’s right to display the Building Signage in accordance with this Lease. At Landlord’s option, Tenant’s right to the Building Signage may be revoked and terminated upon occurrence of any of the following events: (i) Tenant occupies less than fifty percent (50%) of the Premises; or (ii) this Lease or Tenant’s right to occupancy of the Premises shall terminate or otherwise no longer be in effect. Notwithstanding anything to the contrary contained in this Article 42, in the event Tenant fails to install the Building Signage within twelve (12) months following the Commencement Date, Tenant’s signage rights under this Article 42 shall be terminated and Tenant shall have no further right to install the Building Signage hereunder.

42.2 Upon the expiration or earlier termination of this Lease or at such other time that Tenant’s signage rights are terminated pursuant to the terms hereof, if Tenant fails to remove the Building Signage and repair the Building in accordance with the terms of this Lease, Landlord shall cause the Building Signage to be removed from the Building and the Building to be repaired and restored to the condition which existed prior to the installation of the Building Signage (including, if necessary, the replacement of any precast concrete panels), all at the sole cost and expense of Tenant and otherwise in accordance with this Lease, without further notice from Landlord. Notwithstanding anything to the contrary contained in this Lease, Tenant shall pay all costs and expenses for such removal and restoration within five (5) business days following delivery of an invoice therefor. The rights provided in this Article 42 shall be non-transferable except in the case of a Permitted Transfer or assignment of this Lease approved by Landlord pursuant to Article 9.

42.3 So long as Tenant’s signage rights have not terminated pursuant to Section 42.1, then Tenant shall be entitled to an ongoing right of signage position at the top of the Pylon Sign, except as otherwise provided in this Section 42.3. The initial installation of Tenant’s signage in such top position on the Pylon Sign shall be at Tenant’s sole cost and expense. In the event that Landlord executes a lease with another tenant in the Project from time to time and said new tenant leases more than one hundred and ten percent (110%) of the rentable square footage then leased by Tenant, then Landlord shall have the right to relocate Tenant’s signage from the top position, upon not less than ten (10) days prior written notice to Tenant; provided, however, that any such relocation of Tenant’s signage on the Pylon Sign shall take into account the amount of space leased by Tenant in the Project vis-à-vis the other tenant’s with rights to install signage on the Pylon Sign. In addition, if Landlord sells a portion of the Project to a new owner, and such portion contains more than one hundred and ten percent (110%) of the rentable square footage then leased by Tenant, then Landlord shall have the right to relocate Tenant’s signage from the top position, upon not less than ten (10) days prior written notice to Tenant. If at any time there is no other tenant in the Project (or portion thereof then owned by Landlord) which leases more than one hundred and ten percent (110%) of the rentable square footage then leased by Tenant, and Landlord has not otherwise sold a portion of the Project to a new owner which owns more than one hundred and ten percent (110%) of the rentable square footage then leased by Tenant, Tenant shall again have the right to the top position on the Pylon Sign. The cost of such foregoing relocations shall be at the cost and expense of Landlord. The rights set forth in this Section are subject and subordinate to the rights of any tenant in the Building or Project existing on the date hereof.

43. MONUMENT SIGNAGE .

43.1 So long as Tenant occupies at least fifty percent (50%) of the Premises, Tenant shall have the right to have its name listed on the shared monument sign in front of the Building (collectively, the “Monument Sign”) so long as such Monument Sign remains in place, subject to the terms of this Article 43; provided that nothing in this Article 43 shall obligate Landlord to continuously maintain the Monument Sign during the Term. The design, size and color of Tenant’s signage with Tenant’s name to be included on the Monument Sign, and the manner in which it is attached to the Monument Sign, shall comply with all applicable Regulations and shall be subject to the approval of Landlord and any applicable governmental authorities. Landlord reserves the right to withhold consent to any sign that, in the reasonable judgment of Landlord, is not harmonious with the design standards of the Building and Monument Sign. Landlord shall have the right to require that all names on the Monument Sign be of the same size and style. Tenant must obtain Landlord’s written consent to any proposed signage and lettering prior to its fabrication and installation. Tenant’s right to place its name on the Monument Sign, and the location of Tenant’s name on the Monument Sign, shall be subject to Landlord’s reasonable approval, subject to Section 43.4 below. To obtain Landlord’s consent, Tenant shall submit design drawings to Landlord showing the type and sizes of all lettering; the colors, finishes and types of materials used; and (if applicable and Landlord consents in its sole discretion) any provisions for illumination. Although the Monument Sign will be maintained by Landlord, Tenant shall pay its proportionate share of the cost of any maintenance and repair associated with the Monument Sign. In the event that additional names are listed on the Monument Sign, all future costs of maintenance and repair shall be prorated between Tenant and the other parties that are listed on such Monument Sign.

43.2 Tenant’s name on the Monument Sign shall be designed, constructed, installed, insured, maintained, repaired and removed from the Monument Sign all at Tenant’s sole risk, cost and expense (subject to application of the Allowance). Tenant, at its cost, shall be responsible for the maintenance, repair or replacement of Tenant’s signage on the Monument Sign, which shall be maintained in a manner reasonably satisfactory to Landlord.

43.3 If during the Term (and any extensions thereof) Tenant leases and occupies less than one full floor in the Building, and upon the expiration or earlier termination of this Lease, Tenant’s rights granted herein will terminate and Landlord may remove Tenant’s name from the Monument Sign at Tenant’s sole cost and expense and restore the Monument Sign to the condition it was in prior to installation of Tenant’s signage thereon, ordinary wear and tear excepted. The cost of such removal and restoration shall be payable as additional rent within five (5) days of Landlord’s demand.

43.4 So long as there exists no uncured monetary or material non-monetary Event of Default under this Lease and Tenant is the tenant occupying the largest rentable square footage in the Building, then Tenant shall be entitled to signage at the top of the Monument Sign. In the event Tenant no longer occupies the largest rentable square footage in the Building, then Landlord may, upon not less than ten (10) days prior written notice to Tenant, relocate the position of Tenant’s name on the Monument Sign at Landlord’s cost.

44. OPTION TO RENEW . Provided this Lease is in full force and effect and there exists no monetary or material non-monetary Event of Default at the time of notification or commencement and there has not previously been a monetary or material non-monetary Event of Default under this Lease beyond applicable notice and cure periods expressly set forth in this Lease more than twice in the immediately preceding twenty-four (24) month period, Tenant shall have one (1) option to renew (the “Renewal Option”) this Lease for a term of five (5) years (the “Renewal Term”), for the portion of the Premises being leased by Tenant as of the date the Renewal Term is to commence, on the same terms and conditions set forth in this Lease, except as modified by the terms, covenants and conditions as set forth below: Upon the proper exercise of such Renewal Option, and provided that, at Landlord’s option, as of the end of the Term, there exists no monetary or material non-monetary Event of Default under this Lease, and, at Landlord’s option, there has not previously been a monetary or material non-monetary Event of Default under this Lease beyond applicable notice and cure periods expressly set forth in this Lease more than twice in the immediately preceding twenty-four (24) month period, the Term, as it applies to the Premises, shall be extended for a period of five (5) years.

44.1 If Tenant elects to exercise the Renewal Option, then Tenant shall provide Landlord with written notice (the “Renewal Notice”) no earlier than the date which is four hundred fifty (450) days prior to the expiration of the Term of this Lease but no later than the date which is three hundred sixty-five (365) days prior to the expiration of the Term of this Lease. If Tenant fails to provide the Renewal Notice, Tenant shall have no further or additional right to extend or renew the Term of this Lease.

44.2 The Annual Rent and Monthly Installment of Rent in effect at the expiration of the Term of this Lease shall be adjusted to reflect the Prevailing Market (as defined in Section 44.9) rate and the Base Year for the Renewal Term shall be amended to be the calendar year in which the Renewal Term commences. Landlord shall advise Tenant of the new Annual Rent and Monthly Installment of Rent for the Premises no later than thirty (30) days after receipt of Tenant’s written request therefor. Said request shall be made no earlier than thirty (30) days prior to the first date on which Tenant may exercise its Renewal Option under this Article 44.

44.3 If Tenant and Landlord are unable to agree on a mutually acceptable Annual Rent and Monthly Installment of Rent for the Renewal Term not later than sixty (60) days prior to the expiration of the initial Term, then Landlord and Tenant, within five (5) days after such date, shall each simultaneously submit to the other, in a sealed envelope, its good faith estimate of the Prevailing Market rate for the Premises during the Renewal Term (collectively referred to as the “Estimates”). If the higher of such Estimates is not more than one hundred five percent (105%) of the lower of such Estimates, then the Prevailing Market rate shall be the average of the two Estimates. If the Prevailing Market rate is not established by the exchange of Estimates, then, within seven (7) days after the exchange of Estimates, Landlord and Tenant shall each select an appraiser to determine which of the two Estimates most closely reflects the Prevailing Market rate for the Premises during the Renewal Term. Each appraiser so selected shall be certified as an MAI appraiser or as an ASA appraiser and shall have had at least five (5) years experience within the previous ten (10) years as a real estate appraiser working in Pleasanton, California, with working knowledge of current rental rates and practices. For purposes hereof, an “MAI” appraiser means an individual who holds an MAI designation conferred by, and is an independent member of, the American Institute of Real Estate Appraisers (or its successor organization, or in the event there is no successor organization, the organization and designation most similar), and an “ASA” appraiser means an individual who holds the Senior Member designation conferred by, and is an independent member of, the American Society of Appraisers (or its successor organization, or, in the event there is no successor organization, the organization and designation most similar).

44.4 Upon selection, Landlord’s and Tenant’s appraisers shall work together in good faith to agree upon which of the two Estimates most closely reflects the Prevailing Market rate for the Premises. The Estimates chosen by such appraisers shall be binding on both Landlord and Tenant. If either Landlord or Tenant fails to appoint an appraiser within the seven (7) day period referred to above, the appraiser appointed by the other party shall be the sole appraiser for the purposes hereof. If the two appraisers cannot agree upon which of the two Estimates most closely reflects the Prevailing Market rate within twenty (20) days after their appointment, then, within ten (10) days after the expiration of such twenty (20) day period, the two appraisers shall select a third appraiser meeting the aforementioned criteria. Once the third appraiser (i.e., the arbitrator) has been selected as provided for above, then, as soon thereafter as practicable but in any case within fourteen (14) days, the arbitrator shall make his or her determination of which of the two Estimates most closely reflects the Prevailing Market rate and such Estimate shall be binding on both Landlord and Tenant as the Prevailing Market rate for the Premises. If the arbitrator believes that expert advice would materially assist him or her, he or she may retain one or more qualified persons to provide such expert advice. The parties shall share equally in the costs of the arbitrator and of any experts retained by the arbitrator. Any fees of any appraiser, counsel or experts engaged directly by Landlord or Tenant, however, shall be borne by the party retaining such appraiser, counsel or expert.

44.5 If the Prevailing Market rate has not been determined by the commencement date of the Renewal Term, Tenant shall pay Monthly Installments of Rent upon the terms and conditions in effect during the last month of the initial Term until such time as the Prevailing Market rate has been determined. Upon such determination, the Annual Rent and Monthly Installments of Rent for the Premises shall be retroactively adjusted to the commencement of such Renewal Term for the Premises.

44.6 This Renewal Option is not transferable other than pursuant to a Permitted Transfer or other assignment of Lease in accordance with Article 9; the parties hereto acknowledge and agree that they intend that the aforesaid option to renew this Lease shall be “personal” to Tenant as set forth above and that in no event will any other assignee or any sublessee have any rights to exercise this Renewal Option.

44.7 If Tenant validly exercises or fails to exercise this Renewal Option, Tenant shall have no further right to extend the Term of this Lease.

44.8 For purposes of this Renewal Option, “Prevailing Market” shall mean the arms length fair market annual rental rate per rentable square foot under renewal leases and amendments entered into on or about the date on which the Prevailing Market is being determined hereunder for space comparable to the Premises in the Building and buildings comparable to the Building in the same rental market in the North Pleasanton, Dublin and Bishop Ranch, California areas as of the date the Renewal Term is to commence, taking into account the specific provisions of this Lease which will remain constant. The determination of Prevailing Market shall take into account any material economic differences between the terms of this Lease and any comparison lease or amendment, such as rent abatements, construction costs and other concessions, the revised Base Year and the manner, if any, in which the landlord under any such lease is reimbursed for operating expenses and taxes. The determination of Prevailing Market shall also take into consideration any reasonably anticipated changes in the Prevailing Market rate from the time such Prevailing Market rate is being determined and the time such Prevailing Market rate will become effective under this Lease.

45. TEMPORARY SPACE .

45.1 During the period beginning on the date which Tenant has delivered all prepaid rental and initial certificates of insurance required by this Lease (which certificates of insurance shall specifically cover both the Temporary Space during the Temporary Space Term, as hereinafter defined, and the Premises), and ending on the date that is the earlier to occur of: (i) the date on which the Initial Alterations are substantially complete; and (ii) March 31, 2015 (such period being referred to herein as the “Temporary Space Term”), Landlord shall allow Tenant to use approximately 15,000 rentable square feet of space on the ground floor of the Building as shown on Exhibit G attached hereto (the “Temporary Space”) for the use permitted by the terms of this Lease. During the Temporary Space Term, the Temporary Space shall be deemed the “Premises” for purposes of Article 10 (Indemnification) of this Lease. Such Temporary Space shall be accepted by Tenant in its “as-is” condition and configuration, it being agreed that Landlord shall be under no obligation to perform any work in the Temporary Space or to incur any costs in connection with Tenant’s move in, move out or occupancy of the Temporary Space or any Replacement Temporary Space. Tenant acknowledges that it shall be entitled to use and occupy the Temporary Space at its sole cost, expense and risk. Tenant shall not construct any improvements or make any alterations of any type to the Temporary Space without the prior written consent of Landlord, which shall not be unreasonably withheld or delayed with respect to Cosmetic Alterations. All costs in connection with making the Temporary Space ready for occupancy by Tenant shall be the sole responsibility of Tenant.

45.2 The Temporary Space shall be subject to all the terms and conditions of the Lease except as expressly modified herein, provided that Tenant shall not be required to pay any Monthly Installment of Rent for the Temporary Space during the Temporary Space Term. Tenant shall not be required to pay Tenant’s Proportionate Share of Expenses, Insurance Costs or Taxes for the Temporary Space during the Temporary Space Term but shall pay all other additional rent and sums payable under this lease with respect to the Temporary Space. Tenant shall not be entitled to receive any allowances, abatement or other financial concession in connection with the Temporary Space which was granted with respect to the Premises unless such concessions are expressly provided for herein with respect to the Temporary Space, and the Temporary Space shall not be subject to any renewal or expansion rights of Tenant under the Lease.

45.3 Upon termination of the Temporary Space Term, Tenant shall vacate the Temporary Space and deliver the same to Landlord in the same condition that the Temporary Space was delivered to Tenant, ordinary wear and tear excepted. At the expiration or earlier termination of the Temporary Space Term, Tenant shall remove all debris, all items of Tenant’s Personalty, and any trade fixtures of Tenant from the Temporary Space. Tenant shall be fully liable for all damage Tenant or Tenant’s agents, employees, contractors, or subcontractors cause to the Temporary Space. Tenant shall have no right to hold over or otherwise occupy the Temporary Space at any time following the expiration or earlier termination of the Temporary Space Term, and in the event of such holdover, Landlord shall immediately be entitled to institute dispossessory proceedings to recover possession of the Temporary Space, without first providing notice thereof to Tenant. In the event of holding over by Tenant after expiration or termination of the Temporary Space Term without the written authorization of Landlord, Tenant shall pay, for such holding over, $85,590.12, per month, for each month or partial month of holdover, plus all damages that Landlord incurs as a result of the Tenant’s hold over. During any such holdover, Tenant’s occupancy of the Temporary Space shall be deemed that of a tenant at sufferance, and in no event, either during the Temporary Space Term or during any holdover by Tenant, shall Tenant be determined to be a tenant-at-will under applicable law. While Tenant is occupying the Temporary Space, Landlord or Landlord’s authorized agents shall be entitled to enter the Temporary Space, upon reasonable notice, to display the Temporary Space to prospective tenants.

46. RIGHT OF FIRST OFFER .

46.1 Right of First Offer . Landlord hereby grants to the originally named Tenant herein (“Original Tenant”) and any Permitted Transferee a right of first offer with respect to the space located on the first (1 ^st ) (the “First Floor Offer Space”) and second (2 ^nd ) (the “Second Floor Offer Space”) floors of the Building (collectively, the “First Offer Space”). Notwithstanding the foregoing, (i) with respect to the First Floor Offer Space, such first offer right of Tenant shall commence only following the Commencement Date (provided that Landlord shall not market the First Floor Offer Space until the occurrence of the Commencement Date), except as specifically set forth in Section 46.2.2, below, and (ii) with respect to the Second Floor First Offer Space, such first offer right of Tenant shall commence only following the expiration or earlier termination of the initial lease(s) (including renewals and extensions, whether pursuant to rights existing in such initial lease(s) or thereafter granted) of the Second Floor Offer Space, which initial lease(s) arise from a letter of intent executed by such tenant as of the Lease Reference Date, and such right of first offer shall be subordinate to all rights of tenants under such initial lease(s) of the First Offer Space, regardless of whether such rights are executed strictly in accordance with their respective terms or pursuant to lease amendments or new leases (all such tenants, collectively, the “Superior Right Holders”). As of the Lease Reference Date, the only existing Superior Right Holder is a prospective tenant who has executed a letter of intent to lease the entire second (2nd) floor of the Building. In addition, if Tenant, following its receipt of a “First Offer Notice,” as that term is defined in Section 46.4 of this Lease, below, fails to exercise its right to lease the First Offer Space, then Landlord shall have a right to enter into an “Interim Lease,” as that term is defined in Section 46.3, below, with respect to such space (i.e., the space set forth in the First Offer Notice), and Tenant’s right of first offer as set forth in this Section 46 shall be subordinate the all rights of the tenant under the Interim Lease and such tenant shall be deemed a Superior Right Holder. Tenant’s right of first offer shall be on the terms and conditions set forth in this Section 46.

46.2 Procedure for Offer .

46.2.1 Landlord shall notify Tenant (a “First Offer Notice”) from time to time when the First Offer Space or any portion thereof becomes available for lease to third parties, provided that no Superior Right Holder wishes to lease such space; provided, however, notwithstanding the foregoing, with respect to the initial availability of the First Floor Offer Space, except in response to a “Request Notice,” as that term is defined in Section 46.2.2, below, Landlord shall not be obligated to notify Tenant until such time as Landlord has received a written expression of interest from a prospective third party tenant regarding all or a portion of such First Offer Space. Specifically, the parties hereto acknowledge that Tenant will be occupying a portion of the First Floor Offer Space until the Commencement Date as the Temporary Space hereunder and the remaining portion is presently vacant, such entire First Floor Offer Space will immediately thereafter be vacant, and, except in response to a Request Notice, Landlord shall not be obligated to deliver the initial First Offer Notice with respect to the First Floor Offer Space until such time as Landlord has received a written expression of interest from a prospective third party tenant regarding all or a portion of such First Floor Offer Space. Pursuant to the First Offer Notice, Landlord shall offer to lease to Tenant the then available First Offer Space. A First Offer Notice shall describe the space so offered to Tenant and shall set forth the “First Offer Rent,” as that term is defined in Section 46.4, below, and the other economic terms upon which Landlord is willing to lease such space to Tenant.

46.2.2 Notwithstanding anything to the contrary in this Section 46.2, during the period from and after the Lease Reference Date until and including March 31, 2016, Tenant may also inform Landlord (the “Request Notice”) that Tenant desires to lease additional space which is First Offer Space (including the desired approximate square footage, which shall consist of at least half a floor of First Offer Space) (the “Requested First Offer Space”) by delivering such Request Notice to Landlord pursuant to the terms of Article 27 of this Lease. Within ten (10) business days following receipt of a Request Notice, Landlord shall deliver to Tenant a First Offer Notice, which First Offer Notice shall describe, in addition to the terms set forth in this Section 46.2, above, the exact configuration and size of the Requested First Offer Space which is “Available Space” (as that term is defined in below). Pursuant to such First Offer Notice, Landlord shall offer to lease to Tenant the First Offer Space. For purposes of this Section 46.2.2, “Available Space” means space which (i) is not part of the Premises, (ii) is not then subject to a lease, and (iii) is not then subject to negotiations between Landlord and a prospective tenant or an existing tenant as evidenced by a letter of intent, lease proposal, or a specifically prepared and tailored lease document.

46.3 Procedure for Acceptance . If Tenant wishes to exercise Tenant’s right of first offer with respect to the space described in a First Offer Notice, then within ten (10) days of delivery of such First Offer Notice to Tenant, Tenant shall deliver notice to Landlord (the “First Offer Exercise Notice”) of Tenant’s election to exercise its right of first offer with respect to the entire space described in such First Offer Notice on the terms contained therein (which terms shall be the terms of this Lease except as expressly provided in this Section 46 ). If Tenant does not so notify Landlord within the ten (10) day period, then Landlord shall be free for six (6) months thereafter (with Tenant’s right of first offer as set forth in this Section 46 to recommence following the expiration or earlier termination of such six (6) month period provided that Landlord does not enter into an Interim Lease, and further provided that Tenant shall have only five (5) business days, instead of ten (10) days, in which to exercise Tenant’s right of first offer) to lease (an “Interim Lease”) the space described in such First Offer Notice to anyone to whom Landlord desires on any terms Landlord desires. Notwithstanding anything to the contrary contained herein, Tenant must elect to exercise its right of first offer, if at all, with respect to all of the space offered by Landlord to Tenant at any particular time, and Tenant may not elect to lease only a portion thereof. If Tenant does not exercise its right of first offer with respect to any space described in a First Offer Notice or if Tenant fails to respond to a First Offer Notice within ten (10) days (or five (5) business days, as applicable) of delivery thereof and Landlord thereafter enters into an Interim Lease pursuant to this Section 46.3 , then Tenant’s right of first offer as set forth in this Section 46 shall terminate with respect to the particular space described in the First Offer Notice, until such time as such space becomes available again following expiration or the earlier termination of the Interim Lease entered into by Landlord.

46.4 First Offer Space Rent .

46.4.1 In the event that Tenant delivers the First Offer Exercise Notice or, if the procedure for offer occurs pursuant to Section 46.2.2, above, the Request Notice, prior to April 1, 2016, then the rent payable by Tenant for the First Offer Space (the “First Offer Rent”) shall be as follows: (i) Tenant shall pay the Monthly Installment Rent for the First Offer Space at the same rate per rentable square foot payable by Tenant from time to time for the Premises, and (ii) Tenant shall pay Tenant’s Proportionate Share of Expenses, Taxes and Insurance Costs in accordance with the terms of the Lease, provided that Tenant’s Proportionate Share with respect to the First Offer Space shall be calculated by dividing the rentable square footage of the First Offer Space by the rentable square footage of the Building. In addition, Tenant shall be entitled to an abatement of Monthly Installment of Rent prorated appropriately to take into account a lease term for the First Offer Space which is shorter in length than the Term hereunder.

46.4.2 In the event Tenant delivers the First Offer Exercise Notice on or after April 1, 2016, then the rent payable by Tenant for the First Offer Space (which shall also be known herein as the “First Offer Rent”) shall be equal to the “Prevailing Market,” as that term is defined in this Section 46.4.2 below, for the First Offer Space. For purposes of this Section 46, “Prevailing Market” shall mean the annual rental rate per square foot for space comparable to the First Offer Space in the Building under leases and renewal and expansion amendments being entered into at or about the time that Prevailing Market is being determined, giving appropriate consideration to tenant concessions, brokerage commissions, tenant improvement allowances, existing improvements in the space in question, and the method of allocating operating expenses, insurance costs and taxes. Notwithstanding the foregoing, space leased under any of the following circumstances shall not be considered to be comparable for purposes hereof: (a) the lease term is for less than the lease term of the subject First Offer Space, (b) the space is encumbered by the option rights of another tenant, or (c) the space has a lack of windows and/or an awkward or unusual shape or configuration. The foregoing is not intended to be an exclusive list of space that will not be considered to be comparable.

46.5 Construction In First Offer Space . Tenant shall accept the First Offer Space in its then existing “as is” condition. The construction of improvements in the First Offer Space shall comply with the terms of Article 6 of this Lease.

46.5.1 In the event Tenant delivers the First Offer Exercise Notice or, if the procedure for offer occurs pursuant to Section 46.2.2, above, the Request Notice, prior to April 1, 2016, then Tenant shall be entitled to a tenant improvement allowance (“First Offer Allowance”) for the construction of improvements that are permanently affixed to the First Offer Space in the amount equal to the product of (i) the rentable square footage of the First Offer Space, (ii) $45.00, and (iii) a fraction (the “First Offer Proration Fraction”), the numerator of which equals the number of full calendar months remaining in the lease Term following the First Offer Commencement Date, and the denominator of which equals 117. In no event shall the Proration Fraction be more than one.

46.5.2 In the event Tenant delivers the First Offer Exercise Notice on or after April 1, 2016, then any tenant improvement allowance (which shall also be referred to herein as the “First Offer Allowance”) to which Tenant is entitled in connection with its lease of the First Offer Space shall be determined as part of the First Offer Rent.

46.6 Amendment to Lease . If Tenant timely exercises Tenant’s right to lease First Offer Space as set forth herein, then, within thirty (30) days thereafter, Landlord and Tenant shall execute a lease amendment for such First Offer Space upon the terms and conditions as set forth in the First Offer Notice therefor and this Section 46. Notwithstanding the foregoing, the failure of Tenant to execute and deliver such amendment to Landlord shall not affect an otherwise valid exercise of Tenant’s expansion rights or the parties’ rights and responsibilities in respect thereof. Tenant shall commence payment of Annual Rent for such First Offer Space, and the term of such First Offer Space shall commence, upon the date of delivery of such First Offer Space to Tenant (the “First Offer Commencement Date”) and shall terminate concurrently with Tenant’s lease of the Premises.

46.7 Termination of Right of First Offer . The rights contained in this Section 46 shall be personal to Original Tenant and any Permitted Transferee, and may only be exercised by Original Tenant or a Permitted Transferee (and not by any other assignee, sublessee or transferee of Tenant’s interest in this Lease) if Original Tenant or such Permitted Transferee occupies the entire Premises. The right of first offer granted herein shall terminate as to particular First Offer Space upon the failure by Tenant to exercise its right of first offer with respect to such First Offer Space as offered by Landlord and Landlord’s subsequent entry into an Interim Lease pursuant to Section 46.3 , above, until such time as such space becomes available again following expiration or the earlier termination of the Interim Lease entered into by Landlord. Tenant shall not have the right to lease First Offer Space, as provided in this Section 46, if, as of the date of the attempted exercise of any right of first offer by Tenant, or as of the scheduled date of delivery of such First Offer Space to Tenant, there is an uncured monetary or material non-monetary Event of Default under this Lease or there has previously been a monetary or non-monetary Event of Default under this Lease which remained uncured past any applicable notice and cure period more than once in the immediately preceding twelve (12) month period. Notwithstanding anything set forth herein to the contrary, Tenant shall not have the right to exercise its right of first offer granted herein if the First Offer Commencement Date will occur during or following the last five (5) years of the Term unless Tenant exercises its right to extend the Term pursuant to Article 44 of this Lease (or the Term is otherwise extended so that Tenant’s lease of the First Offer Space is not less than a five (5) year term and is coterminous with Tenant’s lease of the Premises) concurrently with, or prior to, which Landlord agrees that Tenant shall have the right to do notwithstanding the otherwise applicable dates for such exercise set forth in Article 44 , below, Tenant’s exercise of the applicable right of first offer. If Tenant exercises such foregoing right to extend the Term on an earlier basis, the parties agree that Tenant’s right to request Landlord’s determination of the new Annual Rent and Monthly Installment of Rent for the Premises shall continue to be based on the dates on which Tenant may exercise its Renewal Option under Article 44, and not earlier despite Tenant’s right in this Section 46.7 to exercise such Renewal Option early. In addition to the foregoing, the right of first offer granted herein shall not apply during the Renewal Term.

47. ROOF SPACE FOR DISH/ANTENNA .

47.1 During the initial Term and any extension thereof, Tenant shall have the right to lease space on the roof of the Building for the purpose of installing (in accordance with Article 6 of this Lease), operating and maintaining a dish/antenna or other communication device (the “Dish/Antenna”) to be approved by Landlord. The location of the space on the roof designated by Landlord to be leased by Tenant is referred to herein as the “Roof Space”. Landlord reserves the right to relocate the Roof Space as reasonably necessary during the Term. Landlord’s designation shall take into account Tenant’s use of the Dish/Antenna. Notwithstanding the foregoing, Tenant’s right to install the Dish/Antenna shall be subject to the approval rights of Landlord and Landlord’s architect and/or engineer with respect to the plans and specifications of the Dish/Antenna, the size of the Dish/Antenna, the manner in which the Dish/Antenna is attached to the roof of the Building and the manner in which any cables are run to and from the Dish/Antenna. The precise specifications and a general description of the Dish/Antenna, or any replacements thereof, along with all documents Landlord reasonably requires to review the installation of the Dish/Antenna (the “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 Dish/Antenna. Tenant shall be solely responsible for obtaining and maintaining all necessary governmental and regulatory approvals and for the cost of installing, operating, maintaining and removing the Dish/Antenna. Tenant shall notify Landlord upon completion of the installation of the Dish/Antenna. If Landlord determines that the Dish/Antenna equipment does not comply with the approved Plans and Specifications, that the Building has been damaged during installation of the Dish/Antenna or that the installation was defective, Landlord shall notify Tenant of any noncompliance or detected problems and Tenant immediately shall cure the defects. If the Tenant fails to immediately cure the defects, Tenant shall pay to Landlord upon demand the cost, as reasonably determined by Landlord, of correcting any defects and repairing any damage to the Building caused by such installation. If at any time Landlord, in its sole 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 Dish/Antenna (the “Aesthetic Screening”).

47.2 Landlord agrees that Tenant, upon reasonable prior written notice to Landlord, shall have access to the roof of the Building and the Roof Space for the purpose of installing, maintaining, repairing and removing the Dish/Antenna, the appurtenances and the Aesthetic Screening, if any, all of which shall be performed by Tenant or Tenant’s authorized representative or contractors, which shall be approved by Landlord, 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 Roof Space. Tenant further agrees to exercise firm control over the people requiring access to the roof of the Building and the Roof Space in order to keep to a minimum the number of people having access to the roof of the Building and the Roof Space and the frequency of their visits. It is further understood and agreed that the installation, maintenance, operation and removal of the Dish/Antenna, the appurtenances and the Aesthetic Screening, if any, is not permitted to damage the Building or the roof thereof, or interfere with the use of the Building and roof by Landlord. 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 Tenant Entity.

47.3 Tenant agrees to install and maintain only equipment of types and frequencies which will not cause unreasonable interference to Landlord or any other tenant of the Building. In the event Tenant’s equipment causes such interference, Tenant will change the frequency on which it transmits and/or receives and take any other steps necessary to eliminate the interference. If said interference cannot be eliminated within a reasonable period of time, in the judgment of Landlord, then Tenant agrees to remove the Dish/Antenna from the Roof Space. Landlord shall make commercially reasonable efforts to ensure that any new equipment installed on the roofs by other tenants or users does not have frequencies which causes unreasonable interference to Tenant’s Dish/Antenna. Tenant shall, at its sole cost and expense, and at its sole risk, install, operate and maintain the Dish/Antenna 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. Under this Lease, the Landlord and its agents assume no responsibility for the licensing, operation and/or maintenance of Tenant’s equipment. Tenant has the responsibility of carrying out the terms of its FCC license in all respects. The Dish/Antenna shall be connected to Landlord’s power supply in strict compliance with all applicable Building, electrical, fire and safety codes. Neither Landlord nor any Landlord Entity shall be liable to Tenant for any stoppages or shortages of electrical power furnished to the Dish/Antenna or the Roof 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 any Landlord Entity 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 Building or the Roof Space.

47.4 The Dish/Antenna, the appurtenances and the Aesthetic Screening, if any, 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, including the patching of any holes to match, as closely as possible, the color surrounding the area where the equipment and appurtenances were attached. 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 sole discretion. Such maintenance and operation shall be performed in a manner to avoid any interference with any other tenants or Landlord. Tenant agrees that at all times during the Term, it will keep the roof of the Building and the Roof Space free of all trash or waste materials produced by Tenant or the Tenant Entities.

47.5 In light of the specialized nature of the Dish/Antenna, Tenant shall be permitted to utilize the services of its choice for installation, operation, removal and repair of the Dish/Antenna, the appurtenances and the Aesthetic Screening, if any, subject to the reasonable approval of Landlord. 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 the Landlord contemplates roof repairs that could affect Tenant’s Dish/Antenna, or which may result in an interruption of the Tenant’s telecommunication service, Landlord shall formally notify Tenant at least thirty (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.

47.6 Tenant shall not allow any provider of telecommunication, video, data or related services (“Communication Services”) to locate any equipment on the roof of the Building or in the Roof Space for any purpose whatsoever, nor may Tenant use the Roof Space and/or Dish/Antenna to provide Communication Services to an unaffiliated tenant, occupant or licensee of another building, or to facilitate the provision of Communication Services on behalf of another Communication Services provider to an unaffiliated tenant, occupant or licensee of the Building or any other building. Tenant acknowledges that Landlord may at some time establish a standard license agreement (the “License Agreement”) with respect to the use of roof space by tenants of the Building. Tenant, upon request of Landlord, shall enter into such License Agreement with Landlord provided that such agreement does not materially or adversely alter the rights of Tenant hereunder with respect to the Roof Space. Tenant specifically acknowledges and agrees that the terms and conditions of Article 10 of this Lease shall apply with full force and effect to the Roof Space and any other portions of the roof accessed or utilized by Tenant, its representatives, agents, employees or contractors.

47.7 If there exists any uncured monetary or material non-monetary Event of Default under this Lease, Landlord shall be permitted to exercise all remedies provided under the terms of this Lease, including upon at not less than five (5) business days’ prior written notice to Tenant, removing the Dish/Antenna, the appurtenances and the Aesthetic Screening, if any, and restoring the Building and the Roof Space to the condition that existed prior to the installation of the Dish/Antenna, the appurtenances and the Aesthetic Screening, if any. If Landlord removes the Dish/Antenna, the appurtenances and the Aesthetic Screening, if any, as a result of an uncured monetary or material non-monetary Event of Default, Tenant shall be liable for all costs and expenses Landlord incurs in removing the Dish/Antenna, the appurtenances and the Aesthetic Screening, if any, and repairing any damage to the Building, the roof of the Building and the Roof Space caused by the installation, operation or maintenance of the Dish/Antenna, the appurtenances, and the Aesthetic Screening, if any. Tenant’s rights pursuant to this Article 47 are personal to the named Tenant under this Lease, its Permitted Transferee and any other assignees or subtenant consented to by Landlord pursuant to Article 9 above, and are not otherwise transferable.

48. CONFIDENTIALITY . Except as otherwise required by applicable Regulations, including, without limitation, U.S. securities laws and regulations and stock exchange rules, Tenant agrees that neither Tenant nor any Tenant Entity or any other parties acting on behalf of Tenant shall disclose any matters set forth in this Lease or disseminate or distribute any information concerning the terms, details or conditions hereof to any person, firm or entity without obtaining the express written consent of Landlord.

49. LIMITATION OF LANDLORD’S LIABILITY . Redress for any claim against Landlord under this Lease shall be limited to and enforceable only against and to the extent of Landlord’s interest in the Building in which the Premises is located. The obligations of Landlord under this Lease are not intended to be and shall not be personally binding on, nor shall any resort be had to the private properties of, any of its or its investment manager’s trustees, directors, officers, partners, beneficiaries, members, stockholders, employees, or agents, and in no case shall Landlord be liable to Tenant hereunder for any lost profits, damage to business, or any form of special, indirect or consequential damages.

50. GROUND FLOOR LOBBY RENOVATION AND BUILDING RENOVATIONS GENERALLY . Landlord and Tenant acknowledge and agree that Landlord shall complete the construction of renovations (“Initial Renovations”) to the ground floor and lobby areas of the Building as determined by Landlord in its sole discretion. All costs incurred by Landlord in connection with the construction of the Initial Renovations shall be at Landlord’s sole cost and expense. Landlord agrees that once the Initial Renovations are commenced, Landlord shall thereafter complete the construction of the Initial Renovations using commercially reasonable diligence, and shall in any event complete the Initial Renovations (which shall mean substantial completion of the same, as determined by Landlord in Landlord’s sole discretion) by not later than April 1, 2015. Except as specifically set forth herein or in Exhibit B attached hereto, it is specifically understood and agreed that Landlord has no obligation and has made no promises to alter, remodel, improve, renovate, repair or decorate the Premises, Building, or any part thereof and that no representations respecting the condition of the Premises or the Building have been made by Landlord to Tenant. However, Tenant hereby acknowledges that Landlord is currently renovating or may during the Lease Term renovate, improve, alter, or modify (collectively, together with the Initial Renovations, the “Renovations”) the Project, the Building and/or the Premises. Landlord shall use commercially reasonable efforts to complete any Renovations in a manner which does not materially, adversely affect Tenant’s use of or access to the Premises (including the Temporary Space). Notwithstanding the foregoing, Tenant hereby agrees that such Renovations shall in no way constitute a constructive eviction of Tenant nor entitle Tenant to any abatement of Rent. Landlord shall have no responsibility and shall not be liable to Tenant for any injury to or interference with Tenant’s business arising from the Renovations, nor shall Tenant be entitled to any compensation or damages from Landlord for loss of the use of the whole or any part of the Premises (or Temporary Space) or of Tenant’s personal property or improvements resulting from the Renovations, or for any inconvenience or annoyance occasioned by such Renovations, provided that the foregoing shall not limit Landlord’s liability, if any, pursuant to applicable law for personal injury and property damage to the extent caused by the gross negligence or willful misconduct of Landlord, its agents, employees or contractors.

IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the Lease Reference Date set forth in the Reference Pages of this Lease.

LANDLORD: TENANT:

SFI PLEASANTON, LLC, ELLIE MAE, INC.,
a Delaware limited liability company a Delaware corporation


By:	SFI Mezz Pleasanton, LLC, a Delaware limited liability company, its member


By:	Swift Fund I GP, LLC, a Delaware limited liability company, its manager

By: By:

Name: Name:

Title: Title:

Dated: Dated:

EXHIBIT A – FLOOR PLAN DEPICTING THE PREMISES

attached to and made a part of the Lease bearing the
Lease Reference Date of July __, 2014 between
SFI PLEASANTON, LLC, a Delaware limited liability company, as Landlord and
ELLIE MAE, INC., a Delaware corporation, as Tenant

Exhibit A is intended only to show the general layout of the Premises as of the beginning of the Term of the Lease. It does not in any way supersede any of Landlord’s rights set forth in Article 17 of the Lease with respect to arrangements and/or locations of public parts of the Building and changes in such arrangements and/or locations. It is not to be scaled; any measurements or distances shown should be taken as approximate.

FLOOR 3

FLOOR 4

FLOOR 5

EXHIBIT A-1 – SITE PLAN

Exhibit A-1 is intended only to show the general location of the Building and/or the project of which the Building is a part as of the beginning of the Term of the Lease. It does not in any way supersede any of Landlord’s rights set forth in Article 17 of the Lease with respect to arrangements and/or locations of public parts of the Building and changes in such arrangements and/or locations. It is not to be scaled; any measurements or distances shown should be taken as approximate.

EXHIBIT B – INITIAL ALTERATIONS AND LANDLORD WORK

A. Tenant’s Alterations .

1. Tenant, following the delivery of the Premises by Landlord and the full and final execution and delivery of the Lease to which this Exhibit B is attached and all prepaid rental (pursuant to Section 3.1 of the Lease) and insurance certificates required under the Lease, shall have the right to perform alterations and improvements in the Premises (the “Initial Alterations”). Notwithstanding the foregoing, Tenant and its contractors shall not have the right to perform the Initial Alterations in the Premises unless and until Tenant has complied with all of the terms and conditions of Article 6 of the Lease, including, without limitation, approval by Landlord of the final plans for the Initial Alterations (provided that Landlord shall advise Tenant within ten (10) business days after Landlord’s receipt of Tenant’s final plans for the Initial Alterations of its approval or disapproval thereof, and, if Landlord so disapproves, Landlord shall return the same to Tenant with requested revisions, and Tenant shall immediately revise the same in accordance with such review and any disapproval of Landlord in connection therewith) and the contractors to be retained by Tenant to perform such Initial Alterations. 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. Landlord’s approval of the contractors to perform the Initial Alterations shall not be unreasonably withheld or delayed. The parties agree that Landlord’s approval of the general contractor to perform the Initial Alterations shall not be considered to be unreasonably withheld if any such general contractor (a) does not have trade references reasonably acceptable to Landlord, (b) does not maintain insurance as required pursuant to the terms of the Lease, (c) does not have the ability to be bonded for the work in an amount of no less than one hundred fifty percent (150%) of the total estimated cost of the Initial Alterations, (d) does not provide current financial statements reasonably acceptable to Landlord, (e) does not execute the Responsible Contractor Policy Statement provided by Landlord, or (f) is not licensed as a contractor in the state/municipality in which the Premises is located. Tenant acknowledges the foregoing is not intended to be an exclusive list of the reasons why Landlord may reasonably withhold its consent to a general contractor.

2. Landlord agrees to contribute the sum of $4,745,340.00 (i.e. $45.00 per rentable square foot of the initial Premises) (the “Allowance”) toward the cost of performing the Initial Alterations in preparation of Tenant’s occupancy of the Premises. The Allowance may only be used for the cost of obtaining permits, preparing design and construction documents and mechanical and electrical plans for the Initial Alterations and for hard costs in connection with the Initial Alterations. In addition, Tenant may use the Allowance for the cost of constructing and installing the Building Signage and the Monument Sign. So long as no uncured monetary or material non-monetary Event of Default exists, the Allowance shall be disbursed by Landlord in accordance with the procedures set forth below. Not more frequently than once per calendar month, Tenant may deliver to Landlord: (i) a request for payment of Tenant’s contractor, approved by Tenant, in AIA G-702/G-703 format or another format reasonably requested by Landlord, showing the schedule of values, by trade, of percentage of completion of the Initial Alterations, detailing the portion of the work completed and the portion not completed (which approved request shall be deemed Tenant’s approval and acceptance of the work and materials described therein); (ii) invoices from all parties providing labor or materials to the Premises; (iii) executed conditional mechanic’s lien releases from all parties providing labor or materials to the Premises (along with unconditional mechanic’s lien releases for any prior payments made pursuant to this paragraph) satisfying applicable Regulations, including, without limitation, California Civil Code §§8132 – 8138, as applicable; (iv) copies of all construction contracts for the Initial Alterations, together with copies of all change orders, if any; and (v) all other information reasonably requested by Landlord, which shall be requested by Landlord within five (5) days following Landlord’s receipt of a request for payment from Tenant. Tenant’s request for payment shall not be reduced by any retention amount (as such amount shall be accounted for in Landlord’s payment to Tenant, as set forth immediately below). Within thirty (30) days after receiving such materials, Landlord shall deliver a check to Tenant, payable to Tenant, in the amount of the lesser of (a) the amount requested by Tenant pursuant to the preceding sentence, less a 10% retention (the aggregate amount of such retentions shall be referred to in this Exhibit B as the “Final Retention”), or (b) the amount of any remaining portion of the Allowance (not including the Final Retention). Landlord’s payment of such amounts shall not be deemed Landlord’s approval or acceptance of the work or materials described in Tenant’s payment request. Subject to the terms hereof, Landlord shall deliver to Tenant a check for the Final Retention within thirty (30) days after the latest of (A) the completion of the Initial Alterations in accordance with the approved plans and specifications; (B) Landlord’s receipt of (1) paid invoices from all parties providing labor or materials to the Premises; (2) executed unconditional mechanic’s lien releases satisfying applicable Regulations, including, without limitation, California Civil Code §§8132 – 8138, as applicable; (3) a certificate from Tenant’s architect, in a form reasonably acceptable to Landlord, certifying that the Initial Alterations have been substantially completed; (4) evidence that all governmental approvals required for Tenant to legally occupy the Premises have been obtained; and (5) any other information reasonably requested by Landlord; (C) Tenant’s delivery to Landlord of “as built” drawings (in CAD format, if requested by Landlord); or (D) Tenant’s compliance with Landlord’s standard “close out” requirements regarding city approvals, closeout tasks, Tenant’s contractor, financial close-out matters, and Tenant’s vendors. Landlord’s payment of the Final Retention shall not be deemed Landlord’s approval or acceptance of the work or materials described in Tenant’s payment requests. If the estimated cost of the Initial Alterations exceeds the Allowance, Tenant shall be entitled to the Allowance in accordance with the terms hereof, but each individual disbursement of the Allowance shall be disbursed in the proportion that the Allowance bears to the total cost for the Initial Alterations, less the ten percent (10%) retainage referenced above. Notwithstanding anything herein to the contrary, Landlord shall not be obligated to disburse any portion of the Allowance during the continuance of a monetary or material non-monetary Event of Default, and Landlord’s obligation to disburse shall only resume when and if such Event of Default is cured.

3. In no event shall the Allowance be used for the purchase of equipment, furniture or other items of personal property of Tenant. If Tenant does not submit a request for payment of the entire Allowance to Landlord in accordance with the provisions contained in this Exhibit B by December 31, 2015, any unused amount shall accrue to the sole benefit of Landlord, it being understood that Tenant shall not be entitled to any credit, abatement or other concession in connection therewith. Tenant shall be responsible for all applicable state sales or use taxes, if any, payable in connection with the Initial Alterations and/or Allowance.

4. Except as otherwise set forth in the Lease, Tenant agrees to accept the Premises in its “as-is” condition and configuration, it being agreed that Landlord shall not be required to perform any work or, except as provided above with respect to the Allowance, and as otherwise provided in this Section 4, incur any costs in connection with the construction or demolition of any improvements in the Premises. Notwithstanding the foregoing or anything to the contrary set forth in Section 1.1 of the Lease, Landlord shall be responsible for the cost of performing the modifications to the Building described on Schedule 1 attached hereto to the extent that (a) such modifications are required by Regulations, including Title III of the Americans with Disabilities Act, in order for Tenant to obtain a building permit for the Initial Alterations or a certificate of occupancy for Tenant’s occupancy of the Premises for general office use and (b) the need for any such modifications is not required as a result of the particular design, configuration or nature of the Initial Alterations being performed by or on behalf of Tenant (other than normal and customary Building standard office improvements) or any above-Building Standard Occupancy (defined below) level (each, a “Required Upgrades”). In addition, Landlord shall be responsible for the cost of correcting any other violations of Regulations with respect to the Premises existing as of the date Landlord delivers possession of the Premises to Tenant (provided that the Initial Alterations are typical of standard office improvements) to the extent that (a) such modifications are required by Regulations, including Title III of the Americans with Disabilities Act, in order for Tenant to obtain a building permit for the Initial Alterations or a certificate of occupancy for Tenant’s occupancy of the Premises for general office use and (b) the need for any such modifications is not as a result of the particular design, configuration or nature of the Initial Alterations being performed by or on behalf of Tenant (other than normal and customary Building standard office improvements) or any above-Building Standard Occupancy level (each, an “Additional Required Upgrade”). In the event that Tenant becomes aware of the requirement to perform any Required Upgrades or Additional Required Upgrades, Tenant shall provide Landlord with prompt written notice thereof (an “Upgrade Notice”), which Upgrade Notice shall include (i) reasonable evidence that such Required Upgrades and/or Additional Required Upgrade must be performed by Tenant in order for Tenant to obtain a building permit for the Initial Alteration or certificate of occupancy for the Premises as described above, (ii) a reasonably detailed scope of work, and specifications of such Required Upgrade or Additional Required Upgrade, (iii) the estimated total cost of the work (the “Upgrade Cost Estimate”), and (iv) the proposed time frame for the performance of the proposed work (collectively, the “Work Proposal”). To the extent that any Required Upgrades or Additional Required Upgrades must be made by Tenant pursuant to this Section, such work shall be performed by Tenant in accordance with plans and specifications for such Required Upgrade(s) and/or Additional Required Upgrade(s) prepared by Landlord’s architect at Landlord’s cost and provided to Tenant, as a part of the Initial Alterations and otherwise in accordance with the terms of this Exhibit B using Building standard methods, materials and finishes. In addition to the Allowance, Landlord shall pay for the cost of any Required Upgrades for which Landlord is responsible pursuant to this Section in an amount not to exceed the Upgrade Cost Estimate for such Required Upgrades set forth in the Work Proposal submitted to Landlord plus any increases in such Upgrade Cost Estimate that are reasonably approved in advance by Landlord. If Tenant’s Upgrade Notice requires any Additional Upgrade to be performed, then within five (5) business days following the date of Tenant’s Upgrade Notice, Landlord shall notify Tenant whether Landlord shall perform the Additional Required Upgrade or whether Tenant will perform the Additional Required Upgrade in conjunction with the Initial Alterations. In the event Landlord elects to perform the Additional Required Upgrade, Landlord shall use commercially reasonable efforts, subject to Landlord’s right to dispute or appeal the Additional Required Upgrade as set forth below, to complete the Additional Required Upgrade as soon as practicable following the date of receipt of Tenant’s Upgrade Notice. If Tenant is required to perform such Additional Required Upgrade, Landlord shall pay the cost for such work in an amount not to exceed the Upgrade Cost Estimate for such Additional Required Upgrade set forth in the Work Proposal submitted to Landlord plus any increases in such Upgrade Cost Estimate that are reasonably approved in advance by Landlord. Provided that Landlord’s failure to complete the Required Additional Upgrade will not prohibit Tenant from obtaining a certificate of occupancy for the Premises by no later than the Commencement Date, or unreasonably and materially affect the safety of Tenant’s employees or create a material health hazard for Tenant’s employees, or materially and adversely affect Tenant’s access to or use of the Premises, Landlord shall have the right to contest any alleged Additional Required Upgrades in good faith, including, without limitation, the right to apply for and obtain a waiver or deferment of compliance, the right to assert any and all defenses allowed by Regulations and the right to appeal any decisions, judgments or rulings to the fullest extent permitted by Regulations.

5. Any amounts payable by Landlord to Tenant pursuant to Section 4 above for any Required Upgrades or Additional Required Upgrades is collectively referred to herein as the “Upgrade Reimbursement”. The Upgrade Reimbursement shall be disbursed in the same manner and subject to the same terms and conditions for the disbursement of the Allowance set forth in Section 2 above. Notwithstanding anything to the contrary set forth herein, Tenant, not Landlord, shall be responsible for correcting any violations of Regulations relating in any manner to the Premises or made applicable to the Premises, the Building or the common areas by (a) Tenant’s specific use of the Premises (other than general office use) or occupancy of the Premises in excess of the Building Standard Occupancy Density, (b) the particular design, configuration or nature of the alterations, additions or improvements being performed by or on behalf of Tenant that are not consistent with Building standard office improvements, (c) the negligent acts or omissions of Tenant or any Tenant Entities, (d) Tenant’s arrangement of any furniture, equipment or other property in the Premises and (e) and any changes in Regulations after the date hereof that are applicable to the Premises. Any such corrections that are Tenant’s responsibility hereunder shall not constitute Required Upgrades or Additional Required Upgrades and shall be performed by Tenant at its sole cost and expense as a part of the Initial Alterations (subject to application of the Allowance to such costs pursuant to Section 2 above). Nothing herein shall require Tenant, with respect to the common areas or the Premises, to comply with Regulations which require alterations, capital improvements or the installation of new or additional mechanical, electrical, plumbing or fire/life safety systems on a Building-wide basis without reference to Tenant’s specific use (other than general office use) or occupancy of the Premises in excess of the Building Standard Occupancy, the negligent acts or omissions of Tenant or any Tenant Entity, or the particular design or configuration of any alterations, additions or improvements performed by or on behalf of Tenant.

B. Landlord Work .

1. Landlord, at its sole cost and expense (subject to the terms and provisions of Section 2 below) shall perform improvements to the Premises in accordance with the following work list (the “Work List”) using Building standard methods, materials and finishes. The improvements to be performed in accordance with the Work List are hereinafter referred to as the “Landlord Work”. Landlord shall enter into a direct contract for the Landlord Work with a general contractor selected by Landlord. In addition, Landlord shall have the right to select and/or approve of any subcontractors used in connection with the Landlord Work.

WORK LIST

A. Upgrade the restrooms located on the third (3 ^rd ), fourth (4 ^th ) and fifth (5 ^th ) floors of the Building as determined by Landlord and otherwise in a manner which is approved by the City of Pleasanton.

2. All other work and upgrades, subject to Landlord’s approval, shall be performed by Tenant at Tenant’s sole cost and expense, plus any applicable state sales or use tax thereon in accordance with Section A above. In addition to the Landlord Work set forth in Section B1, above, Landlord, at its expense (except to the extent properly included in Expenses pursuant to Article 4), shall be responsible for correcting any violations of applicable Regulations (including, without limitation, Title III of the Americans with Disabilities Act), as interpreted and enforced as of the date of the Lease and as may be required as a result of the Initial Alterations, including but not limited to architectural drawings required to be submitted by Tenant in connection with its Initial Alterations building permit, with respect to the common areas of the Building and the Project to the extent that (a) such correction is necessary for Tenant to use the Premises for general office use in a normal and customary manner and for Tenant, its employees, independent contractors and visitors to have reasonably safe access to and from the Premises, or (b) Landlord’s failure to perform such correction would impose liability upon Tenant under Regulations; provided, however, that Landlord shall not be required to correct any violation that (i) is triggered by the negligent acts or omissions of Tenant or any Tenant Entity, including without limitation as a result of any matter that is Tenant’s responsibility to perform under Article 1 or, Article 6 of the Lease or Section A above; or (ii) arises under any provision of the ADA other than Title III thereof. Landlord may contest any alleged violation in good faith, including by applying for and obtaining a waiver or deferment of compliance, asserting any defense allowed by Regulations, and appealing any order or judgment to the extent permitted by Regulations so long as such contest or appeal will not prohibit Tenant from obtaining a certificate of occupancy for the Premises by the Commencement Date, or unreasonably and materially affect the safety of Tenant’s employees or create a material health hazard for Tenant’s employees, or materially and adversely affect Tenant’s access to or use of the Premises; provided, however, that, after exhausting any rights to contest or appeal, Landlord shall perform any work necessary to comply with any final order or judgment.

3. Tenant acknowledges that any work to be performed by Landlord may be performed by Landlord in the Premises during normal business hours for the Building. Landlord and Tenant agree to cooperate with each other in order to enable any work to be performed by Landlord to be performed in a timely manner. Notwithstanding anything herein to the contrary, any delay in the completion of any work to be performed by Landlord or inconvenience suffered by Tenant during the performance of the same shall not delay the Commencement Date nor shall it subject Landlord to any liability for any loss or damage resulting therefrom or entitle Tenant to any credit, abatement or adjustment of rent or other sums payable under the Lease.

C. Miscellaneous .

1. This Exhibit B shall not be deemed applicable to any additional space added to the Premises at any time or from time to time, whether by any options under the Lease or otherwise, or to any portion of the original Premises or any additions to the Premises in the event of a renewal or extension of the original Term of the Lease, whether by any options under the Lease or otherwise, unless expressly so provided in the Lease or any amendment or supplement to the Lease.

SCHEDULE 1 TO EXHIBIT B – REQUIRED UPGRADES

All base Building systems within the Premises shall be in good condition and working order as of the Delivery Date, as provided in Section 7.1.

EXHIBIT C – COMMENCEMENT DATE MEMORANDUM

COMMENCEMENT DATE MEMORANDUM

THIS MEMORANDUM, made as of ______, 20___, by and between SFI PLEASANTON, LLC, a Delaware limited liability company (“Landlord”) and ELLIE MAE, INC., a Delaware corporation (“Tenant”).

Recitals :

A. Landlord and Tenant are parties to that certain Lease, dated for reference December __, 2013 (the “Lease”) for certain premises (the “Premises”) consisting of approximately 105,451 square feet in the building located at 4420 Rosewood Drive, Pleasanton, California 94588.

B. Tenant is in possession of the Premises and the Term of the Lease has commenced.

C. Landlord and Tenant desire to enter into this Memorandum confirming the Commencement Date, the Termination Date and other matters under the Lease.

NOW, THEREFORE, Landlord and Tenant agree as follows:

1. The actual Commencement Date is ______.

2. The actual Termination Date is ______.

3. The schedule of the Annual Rent and the Monthly Installment of Rent set forth on the Reference Pages is deleted in its entirety, and the following is substituted therefor:

[insert rent schedule]

4. Capitalized terms not defined herein shall have the same meaning as set forth in the Lease.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date and year first above written.

LANDLORD: TENANT:

SFI PLEASANTON, LLC, ELLIE MAE, INC.,
a Delaware limited liability company a Delaware corporation


By:	SFI Mezz Pleasanton, LLC, a Delaware limited liability company, its member


By:	Swift Fund I GP, LLC, a Delaware limited liability company, its manager

By: DO NOT SIGN By: DO NOT SIGN

Name: Name:

Title: Title:

Dated: Dated:

EXHIBIT D – RULES AND REGULATIONS

1. No sign, placard, picture, advertisement, name or notice shall be installed or displayed on any part of the outside or inside of the Building without the prior written consent of the Landlord. Landlord shall have the right to remove, at Tenant’s expense and without notice, any sign installed or displayed in violation of this rule. All approved signs or lettering on doors and walls shall be printed, painted, affixed or inscribed at Tenant’s expense by a vendor designated or approved by Landlord. In addition, Landlord reserves the right to change from time to time the format of the signs or lettering and to require previously approved signs or lettering to be appropriately altered.

2. If Landlord objects in writing to any curtains, blinds, shades or screens attached to or hung in or used in connection with any window or door of the Premises, Tenant shall immediately discontinue such use. No awning shall be permitted on any part of the Premises. Tenant shall not place anything or allow anything to be placed against or near any glass partitions or doors or windows which may appear unsightly, in the opinion of Landlord, from outside the Premises.

3. Tenant shall not obstruct any sidewalks, halls, passages, exits, entrances, elevators, or stairways of the Building. No tenant and no employee or invitee of any tenant shall go upon the roof of the Building.

4. Any directory of the Building, if provided, will be exclusively for the display of the name and location of tenants only and Landlord reserves the right to exclude any other names. Landlord reserves the right to charge for Tenant’s directory listing.

5. All cleaning and janitorial services for the Building and the Premises shall be provided exclusively through Landlord. Tenant shall not cause any unnecessary labor by carelessness or indifference to the good order and cleanliness of the Premises. Landlord shall not in any way be responsible to any Tenant for any loss of property on the Premises, however occurring, or for any damage to any Tenant’s property by the janitor or any other employee or any other person.

6. The toilet rooms, toilets, urinals, wash bowls and other apparatus shall not be used for any purpose other than that for which they were constructed. No foreign substance of any kind whatsoever shall be thrown into any of them, and the expense of any breakage, stoppage or damage resulting from the violation of this rule shall be borne by the Tenant who, or whose employees or invitees, shall have caused it.

7. Tenant shall store all its trash and garbage within its Premises. Tenant shall not place in any trash box or receptacle any material which cannot be disposed of in the ordinary and customary manner of trash and garbage disposal. All garbage and refuse disposal shall be made in accordance with directions issued from time to time by Landlord. Tenant will comply with any and all recycling and composting procedures designated by Landlord.

8. Landlord will furnish Tenant two (2) keys free of charge to each door in the Premises that has a passage way lock. Landlord may charge Tenant a reasonable amount for any additional keys, and Tenant shall not make or have made additional keys on its own. Tenant shall not alter any lock or install a new or additional lock or bolt on any door of its Premises. Tenant, upon the termination of its tenancy, shall deliver to Landlord the keys of all doors which have been furnished to Tenant, and in the event of loss of any keys so furnished, shall pay Landlord therefor.

9. If Tenant requires telephone, data, burglar alarm or similar service, the cost of purchasing, installing and maintaining such service shall be borne solely by Tenant. No boring or cutting for wires will be allowed without the prior written consent of Landlord.

10. No equipment, materials, furniture, packages, bulk supplies, merchandise or other property will be received in the Building or carried in the elevators except between such hours and in such elevators as may be designated by Landlord. The persons employed to move such equipment or materials in or out of the Building must be acceptable to Landlord.

11. Tenant shall not place a load upon any floor which exceeds the load per square foot which such floor was designed to carry and which is allowed by law. Heavy objects shall stand on such platforms as determined by Landlord to be necessary to properly distribute the weight. Business machines and mechanical equipment belonging to Tenant which cause noise or vibration that may be transmitted to the structure of the Building or to any space in the Building to such a degree as to be objectionable to Landlord or to any tenants shall be placed and maintained by Tenant, at Tenant’s expense, on vibration eliminators or other devices sufficient to eliminate the noise or vibration. Landlord will not be responsible for loss of or damage to any such equipment or other property from any cause, and all damage done to the Building by maintaining or moving such equipment or other property shall be repaired at the expense of Tenant.

12. Landlord shall in all cases retain the right to control and prevent access to the Building of all persons whose presence in the judgment of Landlord would be prejudicial to the safety, character, reputation or interests of the Building and its tenants, provided that nothing contained in this rule shall be construed to prevent such access to persons with whom any tenant normally deals in the ordinary course of its business, unless such persons are engaged in illegal activities. Landlord reserves the right to exclude from the Building between the hours of 6 p.m. and 7 a.m. the following day, or such other hours as may be established from time to time by Landlord, and on Sundays and legal holidays, any person unless that person is known to the person or employee in charge of the Building and has a pass or is properly identified. Tenant shall be responsible for all persons for whom it requests passes and shall be liable to Landlord for all acts of such persons. Landlord shall not be liable for damages for any error with regard to the admission to or exclusion from the Building of any person.

13. Tenant shall not use any method of heating or air conditioning other than that supplied or approved in writing by Landlord. Tenant shall not use space heaters in the Premises.

14. Tenant shall not waste electricity, water or air conditioning. Tenant shall keep corridor doors closed. Tenant shall close and lock the doors of its Premises and entirely shut off all water faucets or other water apparatus and electricity, gas or air outlets before Tenant and its employees leave the Premises. Tenant shall be responsible for any damage or injuries sustained by other tenants or occupants of the Building or by Landlord for noncompliance with this rule.

15. Tenant shall not install any radio or television antenna, satellite dish, loudspeaker or other device on the roof or exterior walls of the Building without Landlord’s prior written consent, which consent may be withheld in Landlord’s sole discretion, and which consent may in any event be conditioned upon Tenant’s execution of Landlord’s standard form of license agreement. Tenant shall be responsible for any interference caused by such installation.

16. Tenant shall not mark, drive nails, screw or drill into the partitions, woodwork, plaster, or drywall (except for pictures, tackboards and similar office uses) or in any way deface the Premises. Tenant shall not cut or bore holes for wires. Tenant shall not affix any floor covering to the floor of the Premises in any manner except as approved by Landlord. Tenant shall repair any damage resulting from noncompliance with this rule.

17. Tenant shall not install, maintain or operate upon the Premises any vending machine without Landlord’s prior written consent, except that Tenant may install food and drink vending machines solely for the convenience of its employees.

18. No cooking shall be done or permitted by any tenant on the Premises, except that Underwriters’ Laboratory approved microwave ovens or equipment for brewing coffee, tea, hot chocolate and similar beverages shall be permitted provided that such equipment and use is in accordance with all applicable Regulations.

19. Tenant shall not use in any space or in the public halls of the Building any hand trucks except those equipped with the rubber tires and side guards or such other material-handling equipment as Landlord may approve. Tenant shall not bring any other vehicles (including bicycles) of any kind into the Building.

20. Tenant shall not permit any motor vehicles to be washed or mechanical work or maintenance of motor vehicles to be performed in any parking lot.

21. Tenant shall not use the name of the Building or any photograph or likeness of the Building in connection with or in promoting or advertising Tenant’s business, except that Tenant may include the Building name in Tenant’s address. Landlord shall have the right, exercisable without notice and without liability to any tenant, to change the name and address of the Building.

22. Tenant requests for services must be submitted to the Building office by an authorized individual. Employees of Landlord shall not perform any work or do anything outside of their regular duties unless under special instruction from Landlord, and no employee of Landlord will admit any person (Tenant or otherwise) to any office without specific instructions from Landlord.

23. Tenant shall not permit smoking or carrying of lighted cigarettes or cigars other than in areas designated by Landlord as smoking areas.

24. Canvassing, soliciting, distribution of handbills or any other written material in the Building is prohibited and each tenant shall cooperate to prevent the same. No tenant shall solicit business from other tenants or permit the sale of any good or merchandise in the Building without the written consent of Landlord.

25. Tenant shall reasonably comply with Landlord’s recycle policy for the Building, including, without limitation, Tenant shall sort and separate its trash into separate recycling containers as required by law or which may be furnished by Landlord and located in the Premises. Tenant shall comply with all Regulations regarding the collection, sorting, separation, and recycling of garbage, waste products, trash and other refuse at the Building. Landlord reserves the right to refuse to collect or accept from Tenant any trash that is not separated and sorted as required by law or pursuant to Landlord’s recycling policy, and to require Tenant to arrange for such collection at Tenant’s cost, utilizing a contractor reasonably satisfactory to Landlord.

26. Tenant acknowledges that the Building, at Landlord’s option, may be operated in accordance with standards for the certification of environmentally sustainable, high performance buildings or aspects of their performance, including the U.S. EPA’s Energy Star® rating and, U.S. Green Building Council’s Leadership in Energy and Environmental Design program’s standards, as the same are amended or replaced from time to time and similar “green building” standards (hereinafter collectively referred to as “Green Building Standards”). To support Landlord’s sustainability practices, Tenant is encouraged to use reasonable efforts to use proven energy, water carbon reduction, and other sustainable measures, such as for example using energy efficient bulbs in task lighting, installing lighting controls, such as automatic sensors; turning off lights at the end of the work day; and utilizing water filtration systems to avoid the use of bottled water.

27. Tenant shall not permit any animals (including birds and other fowl), reptiles, amphibians or fish (including fish tanks), other than service animals, e.g. seeing-eye dogs, to be brought or kept in or about the Premises or any common area of the Building.

28. These Rules and Regulations are in addition to, and shall not be construed to in any way modify or amend, in whole or in part, the terms, covenants, agreements and conditions of any lease of any premises in the Building. Landlord may waive any one or more of these Rules and Regulations for the benefit of any particular tenant or tenants, but no such waiver by Landlord shall be construed as a waiver of such Rules and Regulations in favor of any other tenant or tenants, nor prevent Landlord from thereafter enforcing any such Rules and Regulations against any or all of the tenants of the Building.

29. Landlord reserves the right to make such other and reasonable rules and regulations as in its judgment may from time to time be needed for safety and security, for care and cleanliness of the Building, and for the preservation of good order in and about the Building. Tenant agrees to abide by all such rules and regulations herein stated and any additional rules and regulations which are adopted. Tenant shall be responsible for the observance of all of the foregoing rules by Tenant’s employees, agents, clients, customers, invitees and guests.

EXHIBIT E – FORM OF EARLY POSSESSION AGREEMENT

EARLY POSSESSION AGREEMENT

Reference is made to that certain lease dated July __, 2014, between SFI PLEASANTON, LLC, a Delaware limited liability company (“Landlord”) and ELLIE MAE, INC., a Delaware corporation (“Tenant”), for the premises located at 4420 Rosewood Drive, Pleasanton, California 94588.

It is hereby agreed that, notwithstanding anything to the contrary contained in the Lease but subject to the terms of Section 2.3 of the Lease, Tenant may occupy the Premises on _______, 2014. The first Monthly Installment of Rent is due on _______, 20___ and the first Tenant’s Proportionate Share of Expenses, Taxes and Insurance Costs is due on _______, 20___.

Landlord and Tenant agree that all the terms and conditions of the above referenced Lease are in full force and effect as of the date of Tenant’s possession of the Premises prior to the Commencement Date pursuant to Section 2.3 other than the payment of rent.

LANDLORD: TENANT:

SFI PLEASANTON, LLC, ELLIE MAE, INC.,
a Delaware limited liability company a Delaware corporation


By:	SFI Mezz Pleasanton, LLC, a Delaware limited liability company, its member


By:	Swift Fund I GP, LLC, a Delaware limited liability company, its manager

By: DO NOT SIGN By: DO NOT SIGN

Name: Name:

Title: Title:

Dated: Dated:

EXHIBIT F - BUILDING SIGNAGE

attached to and made a part of the Lease bearing the
Lease Reference Date of July , 2014 between
SFI PLEASANTON, LLC, a Delaware limited liability company, as Landlord and
ELLIE MAE, INC., a Delaware corporation, as Tenant

EXHIBIT G — TEMPORARY SPACE

EXHIBIT H – SNDA

SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT

THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (this “ Agreement ”) is entered into as of July 17, 2014 (the “ Effective Date ”) by and between SPT CA Fundings 2, LLC, a Delaware limited liability company (together with its successors and assigns, the “ Lender ”), and Ellie Mae, Inc., a Delaware corporation (together with its permitted successors and assigns, the “ Tenant ”), with reference to the following facts:

A. SFI Pleasanton, LLC, a Delaware limited liability company, whose address is 260 California Street, Suite 300, San Francisco, CA 94111 (the “ Landlord ”) owns fee simple title or a leasehold interest in the real property described in Exhibit “A” attached hereto (the “ Property ”).

B. Lender is the current holder of a loan to Landlord in the original principal amount of One Hundred Fourteen Million Dollars ($114,000,000) (the “ Loan ”).

C. The Loan is secured by, among other things, that certain Deed of Trust, Assignment of Leases and Rents, Security Agreement, and Fixture Filing dated May 28, 2014 in favor of Lender, recorded on May 28, 2014 in the Alameda County Clerk’s Office as Instrument Number 2014129061 (as may be further amended, increased, renewed, extended, spread, consolidated, severed, restated, or otherwise changed from time to time, the “ Mortgage ”).

D. Pursuant to that certain [Lease] effective July 17, 2014 (the “ Lease ”), Landlord demised to Tenant a portion of the Property consisting of the following (the “ Leased Premises ”): 4420 Rosewood Drive, Floors 3, 4 and 5, Pleasanton, CA 94588.

E. Tenant and Lender desire to agree upon the relative priorities of their interests in the Property and their rights and obligations if certain events occur.

NOW, THEREFORE, for good and sufficient consideration, Tenant and Lender agree:

1. Definitions . The following terms shall have the following meanings for purposes of this Agreement.

a. Foreclosure Event . A “ Foreclosure Event ” means: (i) foreclosure under the Mortgage; (ii) any other exercise by Lender of rights and remedies (whether under the Mortgage or under applicable law, including bankruptcy law) as holder of the Loan and/or the Mortgage, as a result of which a Successor Landlord becomes owner of the Property; or (iii) delivery by Landlord to Lender (or its designee or nominee) of a deed or other conveyance of Landlord’s interest in the Property in lieu of any of the foregoing.

b. Former Landlord . A “ Former Landlord ” means Landlord and any other party that was landlord under the Lease at any time before the occurrence of any attornment under this Agreement.

c. Offset Right . An “ Offset Right ” means any right or alleged right of Tenant to any offset, defense (other than one arising from actual payment and performance, which payment and performance would bind a Successor Landlord pursuant to this Agreement), claim, counterclaim, reduction, deduction, or abatement against Tenant’s payment of Rent or performance of Tenant’s other obligations under the Lease, arising (whether under the Lease or under applicable law) from Landlord’s breach or default under the Lease.

d. Rent . The “ Rent ” means any fixed rent, base rent or additional rent under the Lease.

e. Successor Landlord . A “ Successor Landlord ” means any party that becomes owner of the Property as the result of a Foreclosure Event.

f. Termination Right . A “ Termination Right ” means any right of Tenant to cancel or terminate the Lease or to claim a partial or total eviction arising (whether under the Lease or under applicable law) from Landlord’s breach or default under the Lease.

g. Other Capitalized Terms . If any capitalized term is used in this Agreement and no separate definition is contained in this Agreement, then such term shall have the same respective definition as set forth in the Lease.

2. Subordination . The Lease, as the same may hereafter be modified, amended or extended, shall be, and shall at all times remain, subject and subordinate to the terms conditions and provisions of the Mortgage, , the lien imposed by the Mortgage, and all advances made under the Mortgage.

3. Nondisturbance, Recognition and Attornment .

a. No Exercise of Mortgage Remedies Against Tenant . So long as the Tenant is not in default under this Agreement or under the Lease beyond any applicable grace or cure periods (an “ Event of Default ”), Lender (i) shall not terminate or disturb Tenant’s possession of the Leased Premises under the Lease, except in accordance with the terms of the Lease and this Agreement and (ii) shall not name or join Tenant as a defendant in any exercise of Lender’s rights and remedies arising upon a default under the Mortgage unless applicable law requires Tenant to be made a party thereto as a condition to proceeding against Landlord or prosecuting such rights and remedies. In the latter case, Lender may join Tenant as a defendant in such action only for such purpose and not to terminate the Lease or otherwise adversely affect Tenant’s rights under the Lease or this Agreement in such action.

b. Recognition and Attornment . Upon Successor Landlord taking title to the Property (i) Successor Landlord shall be bound to Tenant under all the terms and conditions of the Lease (except as provided in this Agreement); (ii) Tenant shall recognize and attorn to Successor Landlord as Tenant’s direct landlord under the Lease as affected by this Agreement; and (iii) the Lease shall continue in full force and effect as a direct lease, in accordance with its terms (except as provided in this Agreement), between Successor Landlord and Tenant. Tenant hereby acknowledges notice that pursuant to the Mortgage and assignment of rents, leases and profits, Landlord has granted to the Lender an absolute, present assignment of the Lease and Rents which provides that Tenant continue making payments of Rents and other amounts owed by Tenant under the Lease to or at the direction of the Landlord and to recognize the rights of Landlord under the Lease until notified otherwise in writing by the Lender. After receipt of such notice from Lender, the Tenant shall thereafter make all such payments directly to the Lender or as the Lender may otherwise direct, without any further inquiry on the part of the Tenant. Landlord consents to the foregoing and waives any right, claim or demand which Landlord may have against Tenant by reason of such payments to Lender or as Lender directs.

c. Further Documentation . The provisions of this Article 3 shall be effective and self-operative without any need for Successor Landlord or Tenant to execute any further documents. Tenant and Successor Landlord shall, however, confirm the provisions of this Article 3 in writing upon request by either of them within ten (10) days of such request.

4. Protection of Successor Landlord . Notwithstanding anything to the contrary in the Lease or the Mortgage, Successor Landlord shall not be liable for or bound by any of the following matters:

a. Claims Against Former Landlord . Any Offset Right that Tenant may have against any Former Landlord relating to any event or occurrence before the date of attornment, including any claim for damages of any kind whatsoever as the result of any breach by Former Landlord that occurred before the date of attornment. The foregoing shall not limit either (i) Tenant’s right to exercise against Successor Landlord any Offset Right otherwise available to Tenant because of events occurring after the date of attornment or (ii) Successor Landlord’s obligation to correct any conditions that existed as of the date of attornment and violate Successor Landlord’s continuing obligations as landlord under the Lease.

b. Prepayments . Any payment of Rent that Tenant may have made to Former Landlord more than thirty (30) days before the date such Rent was first due and payable under the Lease with respect to any period after the date of attornment other than, and only to the extent that, the Lease expressly required such a prepayment.

c. Payment; Security Deposit; Work . Any obligation: (i) to pay Tenant any sum(s) that any Former Landlord owed to Tenant unless such sums, if any, shall have been actually delivered to Lender by way of an assumption of escrow accounts or otherwise; (ii) with respect to any security deposited with Former Landlord, unless such security deposit was actually delivered to Lender; (iii) to commence or complete any initial construction of improvements in the Leased Premises or any expansion or rehabilitation of existing improvements thereon; (iv) to reconstruct or repair improvements following a fire, casualty or condemnation; or (v) arising from representations and warranties related to Former Landlord.

d. Modification, Amendment or Waiver . Any modification or amendment of the Lease, or any waiver of the terms of the Lease, made without Lender’s prior written consent.

e. Surrender, Etc . Any consensual or negotiated surrender, cancellation, or termination of the Lease, in whole or in part, agreed upon between Landlord and Tenant, unless effected unilaterally by Tenant pursuant to the express terms of the Lease.

5. Exculpation of Successor Landlord . Notwithstanding anything to the contrary in this Agreement or the Lease, Successor Landlord’s obligations and liability under the Lease shall never extend beyond Successor Landlord’s (or its successors’ or assigns’) interest, if any, in the Leased Premises from time to time, including insurance and condemnation proceeds, security deposits, escrows, Successor Landlord’s interest in the Lease, and the proceeds from any sale, lease or other disposition of the Property (or any portion thereof) by Successor Landlord (collectively, the “ Successor Landlord’s Interest ”). Tenant shall look exclusively to Successor Landlord’s Interest (or that of its successors and assigns) for payment or discharge of any obligations of Successor Landlord under the Lease as affected by this Agreement. If Tenant obtains any money judgment against Successor Landlord with respect to the Lease or the relationship between Successor Landlord and Tenant, then Tenant shall look solely to Successor Landlord’s Interest (or that of its successors and assigns) to collect such judgment. Tenant shall not collect or attempt to collect any such judgment out of any other assets of Successor Landlord.

6. Lender’s Right to Cure . Notwithstanding anything to the contrary in the Lease or this Agreement, before exercising any Offset Right or Termination Right:

a. Notice to Lender . Tenant shall provide Lender with notice of the breach or default by Landlord giving rise to same (the “ Default Notice ”) and, thereafter, the opportunity to cure such breach or default as provided for below.

b. Lender’s Cure Period . After Lender receives a Default Notice, Lender shall have a period of thirty (30) days beyond the time available to Landlord under the Lease in which to cure the breach or default by Landlord. Lender shall have no obligation to cure (and shall have no liability or obligation for not curing) any breach or default by Landlord, except to the extent that Lender agrees or undertakes otherwise in writing. In addition, as to any breach or default by Landlord the cure of which requires possession and control of the Property, provided that Lender undertakes by written notice to Tenant to exercise reasonable efforts to cure or cause to be cured by a receiver such breach or default within the period permitted by this paragraph, Lender’s cure period shall continue for thirty (30) days (the “Extended Cure Period”) after Lender has (i) obtained possession and control of the Property; or (ii) obtained the appointment of a receiver.

7. Miscellaneous .

a. Notices . Any notice or request given or demand made under this Agreement by one party to the other shall be in writing, and may be given or served by hand-delivered personal service, or by depositing the same with a reliable overnight courier service or by deposit in the United States mail, postpaid, registered or certified mail, and addressed to the party to be notified, with return receipt requested. Notice deposited in the mail in the manner hereinabove described shall be effective from and after the expiration of three (3) days after it is so deposited; provided , however , delivery by overnight courier service shall be deemed effective on the next succeeding business day after it is so deposited and notice by personal service shall be deemed effective when delivered to its addressee. For purposes of notice, the addresses and telefax number of the parties shall, until changed as herein provided, be as follows:



i.	If to the Lender, at:
	SPT CA Fundings, LLC c/o Starwood Property Trust, Inc. 591 W. Putnam Avenue Greenwich, Connecticut 06830 Attention: General Counsel Email: asossen@starwood.com
with a copy to:	Starwood Property Trust, Inc. 1601 Washington Avenue Miami Beach, Florida 33139 Attention: Asset Management Email: dkerr@starwood.com
ii.	If to the Tenant prior to April 1, 2015: 4155 Hopyard Road, Suite 200 Pleasanton, California 94588 From April 1, 2015: 4420 Rosewood Drive, Floors 3, 4 and 5 Pleasanton, CA 94588

b. Successors and Assigns . This Agreement shall bind and benefit the parties, their successors and assigns, any Successor Landlord, and its successors and assigns. If Lender assigns the Mortgage, then upon delivery to Tenant of written notice thereof accompanied by the assignee’s written assumption of all obligations under this Agreement, all liability of the assignor shall terminate.

c. Entire Agreement . This Agreement constitutes the entire agreement between Lender and Tenant regarding the subordination of the Lease to the Mortgage and the rights and obligations of Tenant and Lender as to the subject matter of this Agreement.

d. Interaction with Lease and with Mortgage . If this Agreement conflicts with the Lease, then this Agreement shall govern as between the parties and any Successor Landlord, including upon any attornment pursuant to this Agreement. This Agreement supersedes, and constitutes full compliance with, any provisions in the Lease that provide for subordination of the Lease to, or for delivery of nondisturbance agreements by the holder of, the Mortgage.

e. Lender’s Rights and Obligations . Except as expressly provided for in this Agreement, Lender shall have no obligations to Tenant with respect to the Lease. If an attornment occurs pursuant to this Agreement, then all rights and obligations of Lender under this Agreement shall terminate, without thereby affecting in any way the rights and obligations of Successor Landlord provided for in this Agreement.

f. Interpretation; Governing Law . The interpretation, validity and enforcement of this Agreement shall be governed by and construed under the internal laws of the State in which the Leased Premises are located, excluding such State’s principles of conflict of laws.

g. Amendments . This Agreement may be amended, discharged or terminated, or any of its provisions waived, only by a written instrument executed by the party to be charged.

h. Due Authorization . Tenant represents to Lender that it has full authority to enter into this Agreement, which has been duly authorized by all necessary actions. Lender represents to Tenant that it has full authority to enter into this Agreement, which has been duly authorized by all necessary actions.

i. Execution . This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

IN WITNESS WHEREOF, Lender and Tenant have caused this Agreement to be executed as of the date first above written.

LENDER :

SPT CA FUNDINGS, LLC, a Delaware limited liability company


By:	Name: Title:

TENANT:

ELLIE MAE, INC.
a Delaware corporation


By:	Name: Title:

LANDLORD’S CONSENT

Landlord consents and agrees to the foregoing Agreement, which was entered into at Landlord’s request. The foregoing Agreement shall not alter, waive or diminish any of Landlord’s obligations under the Mortgage or the Lease. The above Agreement discharges any obligations of Lender under the Mortgage and related loan documents to enter into a nondisturbance agreement with Tenant. Landlord is not a party to the above Agreement.

LANDLORD :

SFI Pleasanton LLC


By:	Name: Title:

Dated: __________, 201__

LENDER’S ACKNOWLEDGMENT

STATE OF __________ )

) ss.

COUNTY OF ________ )

On the ___ day of _______ in the year _______ before me, the undersigned, a Notary Public in and for said state, personally appeared __________, proved to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the within instrument and acknowledged to me that he executed the same in his capacity, and that by his signature on the instrument, the individual, or the person upon behalf of which the individual acted, executed the instrument.

Signature of Notary Public

TENANT’S ACKNOWLEDGMENT

STATE OF __________ )

) ss.

COUNTY OF ________ )

Signature of Notary Public

LANDLORD’S ACKNOWLEDGMENT

STATE OF __________ )

) ss.

COUNTY OF ________ )

Signature of Notary Public

LIST OF EXHIBITS

If any exhibit is not attached hereto at the time of execution of this Agreement, it may thereafter be attached by written agreement of the parties, evidenced by initialing said exhibit.

Exhibit “A” - Legal Description of the Land

All that certain real property located in the City of Pleasanton, County of Alameda, State of

California, and is described as follows:

LOT 59, AS SHOWN ON PARCEL MAP 3863, FILED MAY 22, 1986, BOOK 161 OF PARCEL

MAPS, AT PAGES 15 THROUGH 30, INCLUSIVE, ALAMEDA COUNTY RECORDS AND AS

AMENDED BY AMENDED PARCEL MAP 3863, FILED DECEMBER 22, 1988, BOOK 180 OF

PARCEL MAPS, AT PAGES 82 THROUGH 86, INCLUSIVE, ALAMEDA COUNTY RECORDS.

EXCEPTING THEREFROM THAT PORTION LYING BELOW A DEPTH OF 500 FEET,

MEASURED VERTICALLY, FROM THE CONTOUR OF THE SURFACE OF SAID PROPERTY,

WITHOUT THE RIGHT OF SURFACE ENTRY, AS RESERVED IN THE DEED FROM SOUTHERN

PACIFIC INDUSTRIAL DEVELOPMENT COMPANY, A TEXAS CORPORATION, RECORDED

AUGUST 14, 1981, AS SERIES NO. 81-138446, OFFICIAL RECORDS OF ALAMEDA COUNTY,

AND ALSO RECORDED JUNE 04, 1984, SERIES NO. 84-108001, OFFICIAL RECORDS OF

ALAMEDA COUNTY.

APN(S): 941-2780-016, 941-2780-017 and 941-2780-019-01

Exhibit 10.3

ELLIE MAE, INC.

Non-Employee Director Equity Compensation Policy

Amended July 11, 2014

1. General . This Non-Employee Director Equity Compensation Policy (the “ Policy ”) is adopted by the Board of Directors (the “ Board ”) in accordance with Section 12 of the Ellie Mae, Inc. 2011 Equity Incentive Award Plan (as amended from time to time, the “ Plan ”). Capitalized but undefined terms used herein shall have the meanings provided for in the Plan.

2. Board Authority . Pursuant to Section 12 of the Plan, the Board may adopt a written policy for the grant of Awards under the Plan to Non-Employee Directors, which policy is to specify, with respect to any such Awards, the type of Award(s) to be granted Non-Employee Directors, the number of Shares to be subject to Non-Employee Director Awards, the conditions on which such Awards shall be granted, become exercisable and/or payable and expire, and such other terms and conditions as the Board determines in its discretion.

3. Initial Option Grants to Non-Employee Directors . Each person who is initially elected to the Board as a Non-Employee Director shall be granted, automatically and without necessity of any action by the Board or any committee thereof, on the date of such initial election ten thousand five hundred (10,500) Restricted Stock Units (subject to adjustment as provided in Section 14.2 of the Plan) (“ Initial Director RSUs ”). Notwithstanding the foregoing, members of the Board who are employees of the Company and who subsequently terminate employment with the Company and remain members of the Board shall not receive Initial Director RSUs.

4. Subsequent Option Grants to Non-Employee Directors . Each person who is a Non-Employee Director immediately following an annual meeting of stockholders ( provided that, on such date, he or she shall have served on the Board for at least six (6) months prior to the date of such annual meeting) shall be granted, automatically and without necessity of any action by the Board or any committee thereof, on the date of such annual meeting a Nonstatutory Stock Option to purchase twelve thousand (12,000) shares of Common Stock (subject to adjustment as provided in Section 14.2 of the Plan) (“ Annual Director Options ”). Members of the Board who are employees of the Company and who subsequently terminate employment with the Company and remain on the Board, to the extent that they are otherwise eligible, shall receive, after termination of employment with the Company, Annual Director Options pursuant to this Section 4 (with the date of his or her termination of employment being deemed to be his or her date of initial election to the Board).

5. Terms of Options and RSUs Granted to Non-Employee Directors . The per share exercise price of each Option granted to a Non-Employee Director shall equal one hundred percent (100%) of the Fair Market Value of a share of Common Stock on the date the Option is granted. Each award of Initial Director RSUs shall vest and the shares subject thereto distributed based upon a Non-Employee Director’s continued service to the Company as follows: 1/3rd of the shares of Common Stock subject to the award of Initial Director RSUs shall vest on each anniversary of the date of grant of such award of Initial Director RSUs, such that the Initial Director RSUs shall be one hundred percent (100%) vested on the third (3 ^rd ) anniversary of the date of grant of such Initial Director RSUs. Each Annual Director Option shall vest and become exercisable based upon a Non-Employee Director’s continued service to the Company as follows: 1/12th of the shares of Common Stock subject to the Annual Director Option shall vest on each monthly anniversary of the date of grant of such Annual Director Option, such that the Annual Director Option shall be one hundred percent (100%) vested on the first (1 ^st ) anniversary of the date of grant of such Annual Director Option. Subject to Section 14.2 of the Plan, the term of each Option

granted to a Non-Employee Director shall be ten (10) years from the date the Option is granted. No portion of an Option which is unexercisable at the time of a Non-Employee Director’s Termination of Service shall thereafter become exercisable.

6. Effect of Acquisition . Upon a Change in Control of the Company, all Options and all other stock options, restricted stock units and other equity awards with respect to the Common Stock that are held by a Non-Employee Director shall become fully vested and/or exercisable.

7. Effect of Other Plan Provisions . The other provisions of the Plan shall apply to the Options granted automatically pursuant to this Policy, except to the extent such other provisions are inconsistent with this Policy.

8. Incorporation of the Plan . All applicable terms of the Plan apply to this Policy as if fully set forth herein, and all grants of Awards hereby are subject in all respect to the terms of such Plan.

9. Written Grant Agreement . The grant of any Option under this Policy shall be made solely by and subject to the terms set forth in a written agreement in a form to be approved by the Board and duly executed by an executive officer of the Company.

10. Policy Subject to Amendment, Modification and Termination . This Policy may be amended, modified or terminated by the Board in the future at its sole discretion. No Non-Employee Director shall have any rights hereunder unless and until an Option is actually granted. Without limiting the generality of the foregoing, the Board hereby expressly reserves the authority to terminate this Policy during any year up and until the election of directors at a given annual meeting of stockholders.

11. Effectiveness . This amended policy shall become effective as of July 11, 2014.

* * * * *

Exhibit 10.4

AMENDED AND RESTATED BYLAWS OF

ELLIE MAE, INC.

(a Delaware corporation)

(as of July 11, 2014)

TABLE OF CONTENTS

ARTICLE I - CORPORATE OFFICES

1.1 REGISTERED OFFICE

1.2 OTHER OFFICES

ARTICLE II - MEETINGS OF STOCKHOLDERS

2.1 PLACE OF MEETINGS

2.2 ANNUAL MEETING

2.3 SPECIAL MEETING

2.4 ADVANCE NOTICE PROCEDURES FOR BUSINESS BROUGHT BEFORE A MEETING

2.5 ADVANCE NOTICE PROCEDURES FOR NOMINATIONS OF DIRECTORS.

2.6 NOTICE OF STOCKHOLDERS’ MEETINGS.

2.7 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE

2.8 QUORUM

2.9 ADJOURNED MEETING; NOTICE

2.10 CONDUCT OF BUSINESS

2.11 VOTING

2.12 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING

2.13 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS

2.14 PROXIES

2.15 LIST OF STOCKHOLDERS ENTITLED TO VOTE

2.16 INSPECTORS OF ELECTION.

ARTICLE III - DIRECTORS

3.1 POWERS

3.2 NUMBER OF DIRECTORS

3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS

3.4 RESIGNATION AND VACANCIES

3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE

3.6 REGULAR MEETINGS

3.7 SPECIAL MEETINGS; NOTICE

3.8 QUORUM

3.9 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING

3.10 FEES AND COMPENSATION OF DIRECTORS

3.11 REMOVAL OF DIRECTORS

ARTICLE IV - COMMITTEES

4.1 COMMITTEES OF DIRECTORS

4.2 COMMITTEE MINUTES

4.3 MEETINGS AND ACTION OF COMMITTEES

ARTICLE V - OFFICERS

5.1 OFFICERS

5.2 APPOINTMENT OF OFFICERS

5.3 SUBORDINATE OFFICERS

5.4 REMOVAL AND RESIGNATION OF OFFICERS

5.5 VACANCIES IN OFFICES

5.6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS

5.7 AUTHORITY AND DUTIES OF OFFICERS

5.8 LIMITATIONS ON NON-CITIZENS AS OFFICERS

ARTICLE VI - RECORDS AND REPORTS

6.1 MAINTENANCE AND INSPECTION OF RECORDS

6.2 INSPECTION BY DIRECTORS

ARTICLE VII - GENERAL MATTERS

7.1 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS

7.2 TRANSFER AGENT AND REGISTRARS.

7.3 STOCK CERTIFICATES; PARTLY PAID SHARES

7.4 SPECIAL DESIGNATION ON CERTIFICATES

7.5 LOST CERTIFICATES

7.6 CONSTRUCTION; DEFINITIONS

7.7 DIVIDENDS

7.8 FISCAL YEAR

7.9 SEAL

7.10 TRANSFER OF STOCK

7.11 STOCK TRANSFER AGREEMENTS

7.12 REGISTERED STOCKHOLDERS

7.13 WAIVER OF NOTICE

ARTICLE VIII - NOTICE BY ELECTRONIC TRANSMISSION

8.1 NOTICE BY ELECTRONIC TRANSMISSION

8.2 DEFINITION OF ELECTRONIC TRANSMISSION

ARTICLE IX - INDEMNIFICATION

9.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS.

9.2 INDEMNIFICATION OF OTHERS.

9.3 PREPAYMENT OF EXPENSES.

9.4 DETERMINATION; CLAIM.

9.5 NON-EXCLUSIVITY OF RIGHTS.

9.6 INSURANCE.

9.7 OTHER INDEMNIFICATION.

9.8 CONTINUATION OF INDEMNIFICATION.

9.9 AMENDMENT OR REPEAL.

ARTICLE X - LIMITATIONS OF OWNERSHIP BY NON-CITIZENS

10.1 DEFINITIONS

10.2 LIMITATIONS ON OWNERSHIP

10.3 FOREIGN STOCK RECORD

10.4 SUSPENSION OF VOTING RIGHTS

10.5 CERTIFICATION OF CITIZENSHIP

ARTICLE XI - AMENDMENTS

AMENDED AND RESTATED
BYLAWS OF ELLIE MAE, INC.

ARTICLE I - CORPORATE OFFICES

1.1 REGISTERED OFFICE.

The registered office of Ellie Mae, Inc. (the “ Corporation ”) shall be fixed in the Corporation’s Certificate of Incorporation, as the same may be amended from time to time.

1.2 OTHER OFFICES.

The Corporation’s board of directors (the “ Board ”) may at any time establish other offices at any place or places where the Corporation is qualified to do business.

ARTICLE II - MEETINGS OF STOCKHOLDERS

2.1 PLACE OF MEETINGS.

Meetings of stockholders shall be held at any place, within or outside the State of Delaware, designated by the Board. The Board may, in its sole discretion, determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication as authorized by Section 211(a)(2) of the Delaware General Corporation Law (the “ DGCL ”). In the absence of any such designation or determination, stockholders’ meetings shall be held at the Corporation’s principal executive office.

2.2 ANNUAL MEETING.

The annual meeting of stockholders shall be held each year. The Board shall designate the date and time of the annual meeting, taking into account that the annual meeting shall be held as closely as practicable in the same month of each year so as to ensure that the terms of the office of directors shall approximate a complete year in length. At the annual meeting, directors shall be elected and other proper business properly brought before the meeting in accordance with Section 2.4 of this Article II may be transacted.

2.3 SPECIAL MEETING.

A special meeting of the stockholders may be called at any time by the Chairman of the Board or by the Secretary of the Corporation upon direction of the Board pursuant to a resolution adopted by a majority of the entire Board, but such special meetings may not be called by any other person or persons.

No business may be transacted at such special meeting other than the business specified in such notice to stockholders. Nothing contained in this paragraph of this Section 2.3 shall be construed as limiting, fixing, or affecting the time when a meeting of stockholders called by action of the Board may be held.

2.4 ADVANCE NOTICE PROCEDURES FOR BUSINESS BROUGHT BEFORE A MEETING.

(a) At an annual meeting of the stockholders, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (i) brought before the meeting by the Corporation and specified in the notice of meeting given by or at the direction of the Board, (ii) brought before the meeting by or at the direction of the Board, or (iii) otherwise properly brought before the meeting by a stockholder who (A) was a stockholder of record of the Corporation (and, with respect to any beneficial owner, if different, on whose behalf such business is proposed, only if such beneficial owner was the beneficial owner of shares of the Corporation) both at the time of giving the notice provided for in this Section 2.4 and at the time of the meeting, (B) is entitled to vote at the meeting, and (C) has complied with all of the notice procedures set forth in this Section 2.4 as to such business. Except for proposals made in accordance with Rule 14a-8 under the Securities Exchange Act of 1934, as amended (including such rules and regulations promulgated thereunder, the “ Exchange Act ”), and included in the notice of meeting given by or at the direction of the Board, the foregoing clause (iii) shall be the exclusive means for a stockholder to propose business to be brought before an annual meeting of the stockholders. Stockholders shall not be permitted to propose business to be brought before a special meeting of the stockholders, and the only matters that may be brought before a special meeting are the matters specified in the notice of meeting given by or at the direction of the person properly calling the meeting pursuant to Article II, Section 2.3 of these Bylaws. Stockholders seeking to nominate persons for election to the Board must comply with the notice procedures set forth in Article II, Section 2.5 of these Bylaws, and this Section 2.4 shall not be applicable to nominations except as expressly provided in Article II, Section 2.5 of these Bylaws.

(b) For business to be properly brought before an annual meeting by a stockholder, the stockholder must (i) provide Timely Notice (as defined below) thereof in writing and in proper form to the Secretary of the Corporation and (ii) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.4. To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than ninety (90) days nor more than one hundred twenty (120) days prior to the first anniversary of the preceding year’s annual meeting; provided , however , that in the event that the date of the annual meeting is more than thirty (30) days before or more than sixty (60) days after such anniversary date, notice by the stockholder to be timely must be so delivered, or mailed and received, not earlier than the one hundred twentieth (120 ^th ) day prior to such annual meeting and not later than the ninetieth (90 ^th ) day prior to such annual meeting or, if later, the tenth (10 ^th ) day following the day on which public disclosure of the date of such annual meeting was first made (such notice within such time periods, “ Timely Notice ”). In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of Timely Notice as described above.

(c) To be in proper form for purposes of this Section 2.4, a stockholder’s notice to the Secretary pursuant to this Section 2.4 shall be required to set forth:

(i) As to each Proposing Person (as defined below), (A) the name and address of such Proposing Person (including, if applicable, the name and address that appear on the Corporation’s books and records) and (B) the class or series and number of shares of the capital stock of the Corporation that are, directly or indirectly, owned of record or beneficially owned (within the meaning of Rule 13d-3 under the Exchange Act) by such Proposing Person, except that such Proposing Person shall in all events be deemed to beneficially own any shares of any class or series of capital stock of the Corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future (the disclosures to be made pursuant to the foregoing clauses (A) and (B) are referred to as “ Stockholder Information ”);

(ii) As to each Proposing Person, (A) any derivative, swap or other transaction or series of transactions engaged in, directly or indirectly, by such Proposing Person, the purpose or effect of which is to give such Proposing Person economic risk similar to ownership of shares of any class or series of the capital stock of the Corporation, including due to the fact that the value of such derivative, swap or other transactions are determined by reference to the price, value or volatility of any shares of any class or series of the capital stock of the Corporation, or which derivative, swap or other transactions provide, directly or indirectly, the opportunity to profit from any increase in the price or value of shares of any class or series of the capital stock of the Corporation (“ Synthetic Equity Interests ”), which Synthetic Equity Interests shall be disclosed without regard to whether (x) the derivative, swap or other transactions convey any voting rights in such shares to such Proposing Person, (y) the derivative, swap or other transactions are required to be, or are capable of being, settled through delivery of such shares or (z) such Proposing Person may have entered into other transactions that hedge or mitigate the economic effect of such derivative, swap or other transactions, (B) any proxy (other than a revocable proxy or consent given in response to a solicitation made pursuant to, and in accordance with, Section 14(a) of the Exchange Act by way of a solicitation statement filed on Schedule 14A), agreement, arrangement, understanding or relationship pursuant to which such Proposing Person has or shares a right to vote any shares of any class or series of the capital stock of the Corporation, (C) any agreement, arrangement, understanding or relationship, including any repurchase or similar so-called “stock borrowing” agreement or arrangement, engaged in, directly or indirectly, by such Proposing Person, the purpose or effect of which is to mitigate loss to, reduce the economic risk (of ownership or otherwise) of shares of any class or series of the capital stock of the Corporation to, manage the risk of share price changes for, or increase or decrease the voting power of, such Proposing Person with respect to the shares of any class or series of the capital stock of the Corporation, or which provides, directly or indirectly, the opportunity to profit from any decrease in the price or value of the shares of any class or series of capital stock of the Corporation (“ Short Interests ”), (D) any rights to dividends on the shares of any class or series of the capital stock of the Corporation owned beneficially by such Proposing Person that are separated or separable from the underlying shares of the Corporation, (E) any performance related fees (other than an asset-based fee) that such Proposing Person is entitled to based on any increase or decrease in the price or value of shares of any class or series of the capital stock of the Corporation, or any Synthetic Equity Interests or Short Interests, if any, (F)(x) if such Proposing Person is not a natural person, the identity of the natural person or persons associated with such Proposing Person responsible for the formulation of and decision to propose the business to be brought before the meeting (such person or persons, the “ Responsible Person ”), the manner in which such Responsible Person was selected, any fiduciary duties owed by such Responsible Person to the equity holders or other beneficiaries of such Proposing Person, the qualifications and background of such Responsible Person and any material interests or relationships of such Responsible Person that are not shared generally by any other record or beneficial holder of the shares of any class or series of the capital stock of the Corporation and that reasonably could have influenced the decision of such Proposing Person to propose such business to be brought before the meeting, and (y) if such Proposing Person is a natural person, the qualifications and background of such natural person and any material interests or relationships of such natural person that are not shared generally by any other record or beneficial holder of the shares of any class or series of the capital stock of the Corporation and that reasonably could have influenced the decision of such Proposing Person to propose such business to be brought before the meeting, (G) any significant equity interests or any Synthetic Equity Interests or Short Interests in any principal competitor of the Corporation held by such Proposing Persons, (H) any direct or indirect interest of such Proposing Person in any contract with the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement), (I) any pending or threatened litigation in which such Proposing Person is a party or material participant involving the Corporation or any of its officers or directors, or any affiliate of the Corporation, (J) any material transaction occurring during the prior twelve months between such Proposing Person, on the one hand, and the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation, on the other hand, (K) a summary of any material discussions regarding the business proposed to be brought before the meeting (x) between or among any of the Proposing Persons or (y) between or among any Proposing Person and any other record or beneficial holder of the shares of any class or series of the capital stock of the Corporation (including their names) and (L) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) of the Exchange Act (the disclosures to be made pursuant to the foregoing clauses (A) through (L) are referred to as “ Disclosable Interests ”); provided , however , that Disclosable Interests shall not include any such disclosures with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these Bylaws on behalf of a beneficial owner; and

(iii) As to each item of business that the stockholder proposes to bring before the annual meeting, (A) a reasonably brief description of the business desired to be brought before the annual meeting, the reasons for conducting such business at the annual meeting and any material interest in such business of each Proposing Person, (B) the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend these Bylaws, the language of the proposed amendment) and (C) a reasonably detailed description of all agreements, arrangements and understandings between or among any of the Proposing Persons or between or among any Proposing Person and any other person or entity (including their names) in connection with the proposal of such business by such stockholder.

(d) For purposes of this Section 2.4, the term “ Proposing Person ” shall mean (i) the stockholder providing the notice of business proposed to be brought before an annual meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the business proposed to be brought before the annual meeting is made, (iii) any affiliate or associate (each within the meaning of Rule 12b-2 under the Exchange Act for the purposes of these Bylaws) of such stockholder or beneficial owner and (iv) any other person with whom such stockholder or beneficial owner (or any of their respective affiliates or associates) is Acting in Concert (as defined below).

(e) A person shall be deemed to be “ Acting in Concert ” with another person for purposes of these Bylaws if such person knowingly acts (whether or not pursuant to an express agreement, arrangement or understanding) in concert with, or towards a common goal relating to the management, governance or control of the Corporation in parallel with, such other person where (i) each person is conscious of the other person’s conduct or intent and this awareness is an element in their decision-making processes and (ii) at least one additional factor suggests that such persons intend to act in concert or in parallel, which such additional factors may include, without limitation, exchanging information (whether publicly or privately), attending meetings, conducting discussions, or making or soliciting invitations to act in concert or in parallel; provided , however , that a person shall not be deemed to be Acting in Concert with any other person solely as a result of the solicitation or receipt of revocable proxies or consents from such other person in response to a solicitation made pursuant to, and in accordance with, the Section 14(a) of the Exchange Act by way of a proxy or consent solicitation statement filed on Schedule 14A. A person Acting in Concert with another person shall be deemed to be Acting in Concert with any third party who is also Acting in Concert with such other person.

(f) A stockholder providing notice of business proposed to be brought before an annual meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.4 shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof).

(g) Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at an annual meeting except in accordance with this Section 2.4. The presiding officer of an annual meeting shall determine that the business was not properly brought before the meeting in accordance with this Section 2.4, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

(h) This Section 2.4 is expressly intended to apply to any business proposed to be brought before an annual meeting of stockholders. In addition to the requirements of this Section 2.4 with respect to any business proposed to be brought before an annual meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such business. Nothing in this Section 2.4 shall be deemed to affect the rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act.

(i) For purposes of these Bylaws, “public disclosure” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act.

2.5 ADVANCE NOTICE PROCEDURES FOR NOMINATIONS OF DIRECTORS.

(a) Nominations of any person for election to the Board at an annual meeting or at a special meeting (but only if the election of directors is a matter specified in the notice of meeting given by or at the direction of the person properly calling such special meeting) may be made at such meeting only (i) by or at the direction of the Board, including by any committee or persons appointed by the Board, or (ii) by a stockholder who (A) was a stockholder of record of the Corporation (and, with respect to any beneficial owner, if different, on whose behalf such nomination is proposed to be made, only if such beneficial owner was the beneficial owner of shares of the Corporation) both at the time of giving the notice provided for in this Section 2.5 and at the time of the meeting, (B) is entitled to vote at the meeting and (C) has complied with this Section 2.5 as to such nomination. The foregoing clause (ii) shall be the exclusive means for a stockholder to make any nomination of a person or persons for election to the Board to be considered by the stockholders at an annual meeting or special meeting.

(b) For a stockholder to make any nomination of a person or persons for election to the Board at an annual meeting, the stockholder must (i) provide Timely Notice (as defined in these Bylaws) thereof in writing and in proper form to the Secretary of the Corporation and (ii) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5. If the election of directors is a matter specified in the notice of meeting given by or at the direction of the person properly calling such special meeting, then for a stockholder to make any nomination of a person or persons for election to the Board at a special meeting, the stockholder must (i) provide Timely Notice thereof in writing and in proper form to the Secretary of the Corporation at the principal executive offices of the Corporation and (ii) provide any updates or supplements to such notice at the times and in the forms required by this Section 2.5. To be timely, a stockholder’s notice for nominations to be made at a special meeting must be delivered to, or mailed and received at, the principal executive offices of the Corporation not earlier than the one hundred twentieth (120 ^th ) day prior to such special meeting and not later than the ninetieth (90 ^th ) day prior to such special meeting or, if later, the tenth (10 ^th ) day following the day on which public disclosure (as defined in these Bylaws) of the date of such special meeting was first made. In no event shall any adjournment or postponement of an annual meeting or special meeting or the announcement thereof commence a new time period for the giving of a stockholder’s notice as described above.

(i) As to each Nominating Person (as defined below), the Stockholder Information (as defined these Bylaws) except that for purposes of this Section 2.5, the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(c)(i);

(ii) As to each Nominating Person, any Disclosable Interests (as defined in these Bylaws), except that for purposes of this Section 2.5 the term “Nominating Person” shall be substituted for the term “Proposing Person” in all places it appears in Section 2.4(c)(ii) and the disclosure in clause (L) of Section 2.4(c)(ii) shall be made with respect to the election of directors at the meeting);

(iii) As to each person whom a Nominating Person proposes to nominate for election as a director, (A) all information with respect to such proposed nominee that would be required to be set forth in a stockholder’s notice pursuant to this Section 2.5 if such proposed nominee were a Nominating Person, (B) all information relating to such proposed nominee that is required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14(a) under the Exchange Act (including such proposed nominee’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected), (C) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three (3) years, and any other material relationships, between or among any Nominating Person, on the one hand, and each proposed nominee, his or her respective affiliates and associates and any other persons with whom such proposed nominee (or any of his or her respective affiliates and associates) is Acting in Concert (as defined in these Bylaws), on the other hand, including, without limitation, all information that would be required to be disclosed pursuant to Item 404 under Regulation S-K if such Nominating Person were the “registrant” for purposes of such rule and the proposed nominee were a director or executive officer of such registrant (the disclosures to be made pursuant to the foregoing clauses (A) through (C) are referred to as “ Nominee Information ”), and (D) a completed and signed questionnaire, representation and agreement as provided in Section 2.5(g); and

(iv) The Corporation may require any proposed nominee to furnish such other information (A) as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation in accordance with the Corporation’s Corporate Governance Guidelines or (B) that could be material to a reasonable stockholder’s understanding of the independence or lack of independence of such proposed nominee.

(d) For purposes of this Section 2.5, the term “ Nominating Person ” shall mean (i) the stockholder providing the notice of the nomination proposed to be made at the meeting, (ii) the beneficial owner or beneficial owners, if different, on whose behalf the notice of the nomination proposed to be made at the meeting is made, (iii) any affiliate or associate of such stockholder or beneficial owner and (iv) any other person with whom such stockholder or such beneficial owner (or any of their respective affiliates or associates) is Acting in Concert.

(e) A stockholder providing notice of any nomination proposed to be made at a meeting shall further update and supplement such notice, if necessary, so that the information provided or required to be provided in such notice pursuant to this Section 2.5 shall be true and correct as of the record date for the meeting and as of the date that is ten (10) business days prior to the meeting or any adjournment or postponement thereof, and such update and supplement shall be delivered to, or mailed and received by, the Secretary at the principal executive offices of the Corporation not later than five (5) business days after the record date for the meeting (in the case of the update and supplement required to be made as of the record date), and not later than eight (8) business days prior to the date for the meeting or, if practicable, any adjournment or postponement thereof (and, if not practicable, on the first practicable date prior to the date to which the meeting has been adjourned or postponed) (in the case of the update and supplement required to be made as of ten (10) business days prior to the meeting or any adjournment or postponement thereof).

(f) Notwithstanding anything in these Bylaws to the contrary, no person shall be eligible for election as a director of the Corporation unless nominated in accordance with this Section 2.5. The presiding officer at the meeting shall, if the facts warrant, determine that a nomination was not properly made in accordance with this Section 2.5, and if he or she should so determine, he or she shall so declare such determination to the meeting and the defective nomination shall be disregarded.

(g) To be eligible to be a nominee for election as a director of the Corporation, the proposed nominee must deliver (in accordance with the time periods prescribed for delivery of notice under this Section 2.5) to the Secretary at the principal executive offices of the Corporation a written questionnaire with respect to the background and qualification of such proposed nominee (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in form provided by the Secretary upon written request) that such proposed nominee (i) is not and will not become a party to (x) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such proposed nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “ Voting Commitment ”) that has not been disclosed to the Corporation or (y) any Voting Commitment that could limit or interfere with such proposed nominee’s ability to comply, if elected as a director of the Corporation, with such proposed nominee’s fiduciary duties under applicable law, (ii) is not, and will not become a party to, any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed to the Corporation and (iii) in such proposed nominee’s individual capacity and on behalf of the stockholder (or the beneficial owner, if different) on whose behalf the nomination is made, would be in compliance, if elected as a director of the Corporation, and will comply with applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

(h) In addition to the requirements of this Section 2.5 with respect to any nomination proposed to be made at a meeting, each Proposing Person shall comply with all applicable requirements of the Exchange Act with respect to any such nominations.

2.6 NOTICE OF STOCKHOLDERS’ MEETINGS.

Unless otherwise provided by law, the Certificate of Incorporation or these Bylaws, the notice of any meeting of stockholders shall be sent or otherwise given in accordance with either Section 2.7 or Section 8.1 of these Bylaws not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting. The notice shall specify the place, if any, date and hour of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which the meeting is called.

2.7 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE.

Notice of any meeting of stockholders shall be deemed given:

(a) if mailed, when deposited in the United States mail, postage prepaid, directed to the stockholder at his or her address as it appears on the Corporation’s records; or

(b) if electronically transmitted as provided in Section 8.1 of these Bylaws.

An affidavit of the Secretary or an Assistant Secretary of the Corporation or of the transfer agent or any other agent of the Corporation that the notice has been given by mail or by a form of electronic transmission, as applicable, shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

2.8 QUORUM.

Unless otherwise provided by law, the Certificate of Incorporation or these Bylaws, the holders of a majority in voting power of the stock issued and outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders. If, however, such quorum is not present or represented at any meeting of the stockholders, then either (a) the chairperson of the meeting or (b) a majority in voting power of the stockholders entitled to vote at the meeting, present in person or represented by proxy, shall have power to adjourn the meeting from time to time in the manner provided in Section 2.9 of these Bylaws until a quorum is present or represented. At such adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally noticed.

2.9 ADJOURNED MEETING; NOTICE.

Notwithstanding Section 2.8 of these Bylaws, (a) the chairperson of the meeting or (b) the Secretary of the Corporation upon direction of the Board pursuant to a resolution adopted by a majority of the entire Board may adjourn a meeting from time to time for any reason in accordance with this Section 2.9. When a meeting is adjourned to another time or place, unless these Bylaws otherwise require, notice need not be given of the adjourned meeting if the time, place, if any, thereof, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

2.10 CONDUCT OF BUSINESS.

The chairperson of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including regulation of the manner of voting and the conduct of business.

2.11 VOTING.

The stockholders entitled to vote at any meeting of stockholders shall be determined in accordance with the provisions of Section 2.13 of these Bylaws, subject to Section 217 (relating to voting rights of fiduciaries, pledgors` and joint owners of stock) and Section 218 (relating to voting trusts and other voting agreements) of the DGCL.

Except as may be otherwise provided in the Certificate of Incorporation or these Bylaws in respect of any class or series of non-voting stock, each stockholder shall be entitled to one (1) vote for each share of capital stock held by such stockholder.

At all meetings of stockholders for the election of directors at which a quorum is present a plurality of the votes cast shall be sufficient to elect a director. All other elections and questions presented to the stockholders at a meeting at which a quorum is present shall, unless otherwise provided by the Certificate of Incorporation, these Bylaws, the rules or regulations of any stock exchange applicable to the Corporation, or applicable law or pursuant to any regulation applicable to the Corporation or its securities, be decided by the affirmative vote of the holders of a majority in voting power of the shares of stock of the Corporation which are present in person or by proxy and entitled to vote thereon.

2.12 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.

Subject to the rights of the holders of the shares of any series of Preferred Stock, any action required or permitted to be taken by the stockholders of the Corporation must be effected only at a duly called annual or special meeting of such stockholders and may not be effected by any written consent in lieu of a meeting by such stockholders.

2.13 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS.

In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which record date shall not precede the date on which the resolution fixing the record date is adopted and which shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than sixty (60) days prior to any other such action.

If the Board does not so fix a record date:

(i) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.

(ii) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided , however , that the Board may fix a new record date for the adjourned meeting.

2.14 PROXIES.

Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy authorized by an instrument in writing or by a transmission permitted by law filed in accordance with the procedure established for the meeting, but no such proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. The revocability of a proxy that states on its face that it is irrevocable shall be governed by the provisions of Section 212 of the DGCL. A proxy may be in the form of a telegram, cablegram or other means of electronic transmission which sets forth or is submitted with information from which it can be determined that the telegram, cablegram or other means of electronic transmission was authorized by the stockholder.

2.15 LIST OF STOCKHOLDERS ENTITLED TO VOTE.

The officer who has charge of the stock ledger of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. The Corporation shall not be required to include electronic mail addresses or other electronic contact information on such list. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting for a period of at least ten (10) days prior to the meeting: (i) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (ii) during ordinary business hours, at the Corporation’s principal executive office. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. If the meeting is to be held at a place, then the list shall be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to access such list shall be provided with the notice of the meeting. Such list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

2.16 INSPECTORS OF ELECTION.

Before any meeting of stockholders, the Board shall appoint an inspector or inspectors of election to act at the meeting or its adjournment and make a written report thereof. The number of inspectors shall be either one (1) or three (3). If any person appointed as inspector fails to appear or fails or refuses to act, then the chairperson of the meeting may, and upon the request of any stockholder or a stockholder’s proxy shall, appoint a person to fill that vacancy.

Such inspectors shall:

(a) determine the number of shares outstanding and the voting power of each, the number of shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies;

(b) receive votes or ballots;

(d) count and tabulate all votes;

(e) determine the result; and

(f) do any other acts that may be proper to conduct the election or vote with fairness to all stockholders.

The inspectors of election shall perform their duties impartially, in good faith, to the best of their ability and as expeditiously as is practical. If there are three (3) inspectors of election, the decision, act or certificate of a majority is effective in all respects as the decision, act or certificate of all. Any report or certificate made by the inspectors of election is prima facie evidence of the facts stated therein.

ARTICLE III - DIRECTORS

3.1 POWERS.

Subject to the provisions of the DGCL and any limitations in the Certificate of Incorporation or these Bylaws relating to action required to be approved by the stockholders or by the outstanding shares, the business and affairs of the Corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board. A Lead Director (as defined below) may be selected by the independent directors from among the directors who are not current or former executive officers of the Corporation and are otherwise independent. The “ Lead Director ” shall perform such duties as may be assigned to the Lead Director by the Board of Directors and not inconsistent with these Bylaws.

3.2 NUMBER OF DIRECTORS.

The authorized number of directors shall be determined from time to time by resolution of the Board; provided , however , that the Board shall consist of at least one (1) member. No reduction of the authorized number of directors shall have the effect of removing any director before that director’s term of office expires.

3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS.

Except as provided in Section 3.4 of these Bylaws, each director, including a director elected to fill a vacancy, shall hold office until the expiration of the term for which elected and until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal. Directors need not be stockholders unless so required by the Certificate of Incorporation or these Bylaws. Notwithstanding anything to the contrary in these Bylaws, the number of Non-Citizens (as defined in Article X below) who can hold office shall at no time exceed the limitations provided under Act (as defined in Article X below) (which, as of the effective time of these Bylaws and for informational purposes only, is one-third ( ¹ / ₃ ) of the total number of members then holding office). The Certificate of Incorporation or these Bylaws may prescribe other qualifications for directors.

As provided in the Certificate of Incorporation, the directors of the Corporation shall be divided into three (3) classes.

3.4 RESIGNATION AND VACANCIES.

Any director may resign at any time upon notice given in writing or by electronic transmission to the Corporation. Unless otherwise provided in the Certificate of Incorporation or these Bylaws, vacancies and newly created directorships resulting from any increase in the authorized number of directors shall, unless the Board determines by resolution that any such vacancies or newly created directorships shall be filled by stockholders, be filled only by a majority of the directors then in office, although less than a quorum, or by a sole remaining director. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director’s successor shall have been elected and qualified. A vacancy in the Board of Directors shall be deemed to exist under these Bylaws in the case of the death, removal or resignation of any director.

3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE.

The Board may hold meetings, both regular and special, either within or outside the State of Delaware.

Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, members of the Board, or any committee designated by the Board, may participate in a meeting of the Board, or any committee, by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting pursuant to this Bylaw shall constitute presence in person at the meeting.

3.6 REGULAR MEETINGS.

Regular meetings of the Board may be held without notice at such time and at such place as shall from time to time be determined by the Board.

3.7 SPECIAL MEETINGS; NOTICE.

Special meetings of the Board for any purpose or purposes may be called at any time by the chairperson of the Board, the chief executive officer, the president, the secretary or a majority of the authorized number of directors.

Notice of the time and place of special meetings shall be:

(a) delivered personally by hand, by courier or by telephone;

(b) sent by United States first-class mail, postage prepaid;

(d) sent by electronic mail,

directed to each director at that director’s address, telephone number, facsimile number or electronic mail address, as the case may be, as shown on the Corporation’s records.

If the notice is (a) delivered personally by hand, by courier or by telephone, (b) sent by facsimile or (c) sent by electronic mail, it shall be delivered or sent at least twenty-four (24) hours before the time of the holding of the meeting. If the notice is sent by United States mail, it shall be deposited in the United States mail at least four (4) days before the time of the holding of the meeting. The notice need not specify the purpose of the meeting.

3.8 QUORUM.

At all meetings of the Board, a majority of the authorized number of directors shall constitute a quorum for the transaction of business. The vote of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board, except as may be otherwise specifically provided by statute, the Certificate of Incorporation or these Bylaws. If a quorum is not present at any meeting of the Board, then the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum is present.

A meeting at which a quorum is initially present may continue to transact business notwithstanding the withdrawal of directors, if any action taken is approved by at least a majority of the required quorum for that meeting.

3.9 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING.

Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or committee, as the case may be, consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

3.10 FEES AND COMPENSATION OF DIRECTORS.

Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, the Board shall have the authority to fix the compensation of directors.

3.11 REMOVAL OF DIRECTORS.

Except as otherwise provided by the DGCL, the Board of Directors or any individual director may be removed from office at any time with cause by the affirmative vote of the holders of a majority of the voting power of all the then outstanding shares of voting stock of the Corporation entitled to vote at an election of directors (the “ Voting Stock ”).

No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of such director’s term of office.

ARTICLE IV - COMMITTEES

4.1 COMMITTEES OF DIRECTORS.

The Board may designate one (1) or more committees, each committee to consist of one (1) or more of the directors of the Corporation. The Board may designate one (1) or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board or in these Bylaws, shall have and may exercise all the powers and authority of the Board in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers that may require it; but no such committee shall have the power or authority to (i) approve or adopt, or recommend to the stockholders, any action or matter expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopt, amend or repeal any Bylaw of the Corporation. At least two-thirds (2/3) of the members of each committee of the Board shall be comprised of individuals who meet the definition of “a citizen of the United States,” as defined by the Transportation Act 49 U.S.C § 40102 or as subsequently amended or interpreted by the Department of Transportation; provided , however , that if a committee of the Board has one (1) member, such member shall be a “a citizen of the United States,” as defined immediately above.

4.2 COMMITTEE MINUTES.

Each committee shall keep regular minutes of its meetings and report the same to the Board when required.

4.3 MEETINGS AND ACTION OF COMMITTEES.

Meetings and actions of committees shall be governed by, and held and taken in accordance with, the provisions of:

(a) Section 3.5 (place of meetings and meetings by telephone);

(b) Section 3.6 (regular meetings);

(d) Section 3.8 (quorum);

(e) Section 3.9 (action without a meeting); and

(f) Section 7.13 (waiver of notice).

with such changes in the context of those Bylaws as are necessary to substitute the committee and its members for the Board and its members. However :

(i) the time of regular meetings of committees may be determined either by resolution of the Board or by resolution of the committee;

(ii) special meetings of committees may also be called by resolution of the Board; and

(iii) notice of special meetings of committees shall also be given to all alternate members, who shall have the right to attend all meetings of the committee. The Board may adopt rules for the government of any committee not inconsistent with the provisions of these Bylaws.

ARTICLE V - OFFICERS

5.1 OFFICERS.

The officers of the Corporation shall be a president and a secretary. The Corporation may also have, at the discretion of the Board, a chairperson of the Board, a vice chairperson of the Board, a chief executive officer, a chief financial officer or treasurer, one (1) or more vice presidents, one (1) or more assistant vice presidents, one (1) or more assistant treasurers, one (1) or more assistant secretaries, and any such other officers as may be appointed in accordance with the provisions of these Bylaws. Any number of offices may be held by the same person.

5.2 APPOINTMENT OF OFFICERS.

The Board shall appoint the officers of the Corporation, except such officers as may be appointed in accordance with the provisions of Section 5.3 of these Bylaws, subject to the rights, if any, of an officer under any contract of employment.

5.3 SUBORDINATE OFFICERS.

The Board may appoint, or empower the chief executive officer or, in the absence of a chief executive officer, the president, to appoint, such other officers and agents as the business of the Corporation may require. Each of such officers and agents shall hold office for such period, have such authority, and perform such duties as are provided in these Bylaws or as the Board may from time to time determine.

5.4 REMOVAL AND RESIGNATION OF OFFICERS.

Any officer may be removed, either with or without cause, by an affirmative vote of the majority of the Board at any regular or special meeting of the Board or, except in the case of an officer chosen by the Board, by any officer upon whom such power of removal may be conferred by the Board.

Any officer may resign at any time by giving written notice to the Corporation. Any resignation shall take effect at the date of the receipt of that notice or at any later time specified in that notice. Any resignation is without prejudice to the rights, if any, of the Corporation or the officer under any contract to which the officer is a party.

Any removal or resignation of an officer pursuant to this Section 5.4 shall be without prejudice to any rights of the Corporation or such officer pursuant to any contract of employment of such officer.

5.5 VACANCIES IN OFFICES.

Any vacancy occurring in any office of the Corporation shall be filled by the Board or as provided in Section 5.2.

5.6 REPRESENTATION OF SHARES OF OTHER CORPORATIONS.

The chairperson of the Board, the president, any vice president, the treasurer, the secretary or assistant secretary of this Corporation, or any other person authorized by the Board or the president or a vice president, is authorized to vote, represent and exercise on behalf of this Corporation all rights incident to any and all shares of any other corporation or corporations standing in the name of this Corporation. The authority granted herein may be exercised either by such person directly or by any other person authorized to do so by proxy or power of attorney duly executed by such person having the authority.

5.7 AUTHORITY AND DUTIES OF OFFICERS.

All officers of the Corporation shall respectively have such authority and perform such duties in the management of the business of the Corporation as may be designated from time to time by the Board or the stockholders and, to the extent not so provided, as generally pertain to their respective offices, subject to the control of the Board.

5.8 LIMITATIONS ON NON-CITIZENS AS OFFICERS.

Notwithstanding anything to the contrary in these Bylaws, (a) number of Non-Citizens who can serve as officers shall at no time exceed the limitations provided under the Act (as defined in Article X below) (which, as of the effective time of these Bylaws and for informational purposes only, is one-third ( ¹ / ₃ ) of the total number of officers then holding office) and (b) the President shall not be a Non-Citizen for so long as proscribed by the Act (as defined in Article X below).

ARTICLE VI - RECORDS AND REPORTS

6.1 MAINTENANCE AND INSPECTION OF RECORDS.

The Corporation shall, either at its principal executive office or at such place or places as designated by the Board, keep a record of its stockholders listing their names and addresses and the number and class of shares held by each stockholder, a copy of these Bylaws as amended to date, accounting books and other records. Notwithstanding anything to the contrary in these Bylaws, any stockholder of record shall be entitled to all rights to which such stockholder is entitled pursuant to Section 220 of the DGCL.

6.2 INSPECTION BY DIRECTORS.

Any director shall have the right to examine the Corporation’s stock ledger, a list of its stockholders, and its other books and records for a purpose reasonably related to his or her position as a director. The Court of Chancery is hereby vested with the exclusive jurisdiction to determine whether a director is entitled to the inspection sought. The Court may summarily order the Corporation to permit the director to inspect any and all books and records, the stock ledger, and the stock list and to make copies or extracts therefrom. The Court may, in its discretion, prescribe any limitations or conditions with reference to the inspection, or award such other and further relief as the Court may deem just and proper.

ARTICLE VII - GENERAL MATTERS

7.1 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS.

The Board, except as otherwise provided in these Bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the Corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

7.2 TRANSFER AGENT AND REGISTRARS.

The Board may appoint a transfer agent or agents and a registrar or registrars of transfer (other than the Corporation itself or an employee thereof) for the issuance of shares of stock of the Corporation and may require that all stock certificates bear the signature of such transfer agent and registrar. In the event a share certificate is authenticated by both the transfer agent and registrar, any share certificate may be signed by the facsimile of the signature of either or both of the Chief Executive Officer or President and Chief Financial Officer printed thereon. If the same is countersigned by the transfer agent and registrar of the Corporation, the certificates bearing the facsimile of the signatures of such officers shall be valid in all respects as if such person or persons were still in office even though such person or persons shall have died or otherwise ceased to be officers.

7.3 STOCK CERTIFICATES; PARTLY PAID SHARES.

The shares of the Corporation shall be represented by certificates, provided that the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board, every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the Corporation by the chairperson or vice-chairperson of the Board, or the president or vice-president, and by the treasurer or an assistant treasurer, or the secretary or an assistant secretary of the Corporation representing the number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate has ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

The Corporation may issue the whole or any part of its shares as partly paid and subject to call for the remainder of the consideration to be paid therefor. Upon the face or back of each stock certificate issued to represent any such partly paid shares, upon the books and records of the Corporation in the case of uncertificated partly paid shares, the total amount of the consideration to be paid therefor and the amount paid thereon shall be stated. Upon the declaration of any dividend on fully paid shares, the Corporation shall declare a dividend upon partly paid shares of the same class, but only upon the basis of the percentage of the consideration actually paid thereon.

7.4 SPECIAL DESIGNATION ON CERTIFICATES.

If the Corporation is authorized to issue more than one class of stock or more than one series of any class, then the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock; provided , however , that, except as otherwise provided in Section 202 of the DGCL, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate that the Corporation shall issue to represent such class or series of stock a statement that the Corporation will furnish without charge to each stockholder who so requests the powers, the designations, the preferences and the relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

7.5 LOST CERTIFICATES.

Except as provided in this Section 7.5, no new certificates for shares shall be issued to replace a previously issued certificate unless the latter is surrendered to the Corporation and cancelled at the same time. The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate theretofore issued by it, alleged to have been lost, stolen or destroyed, and the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to give the Corporation a bond sufficient to indemnify it against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

7.6 CONSTRUCTION; DEFINITIONS.

Unless the context requires otherwise, the general provisions, rules of construction and definitions in the DGCL shall govern the construction of these Bylaws. Without limiting the generality of this provision, the singular number includes the plural, the plural number includes the singular, and the term “person” includes both a corporation and a natural person.

7.7 DIVIDENDS.

The Board, subject to any restrictions contained in either (i) the DGCL or (ii) the Certificate of Incorporation, may declare and pay dividends upon the shares of its capital stock. Dividends may be paid in cash, in property or in shares of the Corporation’s capital stock.

The Board may set apart out of any of the funds of the Corporation available for dividends a reserve or reserves for any proper purpose and may abolish any such reserve. Such purposes shall include but not be limited to equalizing dividends, repairing or maintaining any property of the Corporation, and meeting contingencies.

7.8 FISCAL YEAR.

The fiscal year of the Corporation shall be fixed by resolution of the Board and may be changed by the Board.

7.9 SEAL.

The Corporation may adopt a corporate seal, which shall be adopted and which may be altered by the Board. The Corporation may use the corporate seal by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

7.10 TRANSFER OF STOCK.

Shares of the Corporation shall be transferable in the manner prescribed by law and in these Bylaws. Shares of stock of the Corporation shall be transferred on the books of the Corporation only by the holder of record thereof or by such holder’s attorney duly authorized in writing, upon surrender to the Corporation of the certificate or certificates representing such shares endorsed by the appropriate person or persons (or by delivery of duly executed instructions with respect to uncertificated shares), with such evidence of the authenticity of such endorsement or execution, transfer, authorization and other matters as the Corporation may reasonably require, and accompanied by all necessary stock transfer stamps. No transfer of stock shall be valid as against the Corporation for any purpose until it shall have been entered in the stock records of the Corporation by an entry showing the names of the persons from and to whom it was transferred.

7.11 STOCK TRANSFER AGREEMENTS.

The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL.

7.12 REGISTERED STOCKHOLDERS.

The Corporation:

(i) shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends and to vote as such owner;

(ii) shall be entitled to hold liable for calls and assessments the person registered on its books as the owner of shares; and

(iii) shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of another person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

7.13 WAIVER OF NOTICE.

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

ARTICLE VIII - NOTICE BY ELECTRONIC TRANSMISSION

8.1 NOTICE BY ELECTRONIC TRANSMISSION.

Without limiting the manner by which notice otherwise may be given effectively to stockholders pursuant to the DGCL, the Certificate of Incorporation or these Bylaws, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate of Incorporation or these Bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed revoked if:

(i) the Corporation is unable to deliver by electronic transmission two (2) consecutive notices given by the Corporation in accordance with such consent; and

(ii) such inability becomes known to the secretary or an assistant secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice.

However, the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action.

Any notice given pursuant to the preceding paragraph shall be deemed given:

if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice;

if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice;

if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of (A) such posting and (B) the giving of such separate notice; and

if by any other form of electronic transmission, when directed to the stockholder.

An affidavit of the secretary or an assistant secretary or of the transfer agent or other agent of the Corporation that the notice has been given by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

8.2 DEFINITION OF ELECTRONIC TRANSMISSION.

An “electronic transmission” means any form of communication, not directly involving the physical transmission of paper, that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.

ARTICLE IX - INDEMNIFICATION

9.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Corporation shall indemnify and hold harmless, to the fullest extent permitted by the DGCL as it presently exists or may hereafter be amended, any director or officer of the Corporation who was or is made or is threatened to be made a party or is otherwise involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (a “ Proceeding ”) by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses (including attorneys’ fees) reasonably incurred by such person in connection with any such Proceeding. Notwithstanding the preceding sentence, except as otherwise provided in Section 9.4, the Corporation shall be required to indemnify a person in connection with a Proceeding initiated by such person only if the Proceeding was authorized in the specific case by the Board.

9.2 INDEMNIFICATION OF OTHERS.

The Corporation shall have the power to indemnify and hold harmless, to the extent permitted by applicable law as it presently exists or may hereafter be amended, any employee or agent of the Corporation who was or is made or is threatened to be made a party or is otherwise involved in any Proceeding by reason of the fact that he or she, or a person for whom he or she is the legal representative, is or was an employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, enterprise or non-profit entity, including service with respect to employee benefit plans, against all liability and loss suffered and expenses reasonably incurred by such person in connection with any such Proceeding.

9.3 PREPAYMENT OF EXPENSES.

The Corporation shall to the fullest extent not prohibited by applicable law pay the expenses (including attorneys’ fees) incurred by any officer or director of the Corporation, and may pay the expenses incurred by any employee or agent of the Corporation, in defending any Proceeding in advance of its final disposition; provided , however , that, to the extent required by law, such payment of expenses in advance of the final disposition of the Proceeding shall be made only upon receipt of an undertaking by the person to repay all amounts advanced if it should be ultimately determined that the person is not entitled to be indemnified under this Article IX or otherwise.

9.4 DETERMINATION; CLAIM.

If a claim for indemnification (following the final disposition of such Proceeding) or advancement of expenses under this Article IX is not paid in full within sixty (60) days after a written claim therefor has been received by the Corporation the claimant may file suit to recover the unpaid amount of such claim and, if successful in whole or in part, shall be entitled to be paid the expense of prosecuting such claim to the fullest extent permitted by law. In any such action the Corporation shall have the burden of proving that the claimant was not entitled to the requested indemnification or payment of expenses under applicable law.

9.5 NON-EXCLUSIVITY OF RIGHTS.

The rights conferred on any person by this Article IX shall not be exclusive of any other rights which such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, these Bylaws, agreement, vote of stockholders or disinterested directors or otherwise.

9.6 INSURANCE.

The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust enterprise or non-profit entity against any liability asserted against him or her and incurred by him or her in any such capacity, or arising out of his or her status as such, whether or not the Corporation would have the power to indemnify him or her against such liability under the provisions of the DGCL.

9.7 OTHER INDEMNIFICATION.

The Corporation’s obligation, if any, to indemnify or advance expenses to any person who was or is serving at its request as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, enterprise or non-profit entity shall be reduced by any amount such person may collect as indemnification or advancement of expenses from such other corporation, partnership, joint venture, trust, enterprise or non-profit enterprise.

9.8 CONTINUATION OF INDEMNIFICATION.

The rights to indemnification and to prepayment of expenses provided by, or granted pursuant to, this Article IX shall continue notwithstanding that the person has ceased to be a director or officer of the Corporation and shall inure to the benefit of the estate, heirs, executors, administrators, legatees and distributees of such person.

9.9 AMENDMENT OR REPEAL.

The provisions of this Article IX shall constitute a contract between the Corporation, on the one hand, and, on the other hand, each individual who serves or has served as a director or officer of the Corporation (whether before or after the adoption of these Bylaws), in consideration of such person’s performance of such services, and pursuant to this Article IX the Corporation intends to be legally bound to each such current or former director or officer of the Corporation. With respect to current and former directors and officers of the Corporation, the rights conferred under this Article IX are present contractual rights and such rights are fully vested, and shall be deemed to have vested fully, immediately upon adoption of theses Bylaws. With respect to any directors or officers of the Corporation who commence service following adoption of these Bylaws, the rights conferred under this provision shall be present contractual rights and such rights shall fully vest, and be deemed to have vested fully, immediately upon such director or officer commencing service as a director or officer of the Corporation. Any repeal or modification of the foregoing provisions of this Article IX shall not adversely affect any right or protection (i) hereunder of any person in respect of any act or omission occurring prior to the time of such repeal or modification or (ii) under any agreement providing for indemnification or advancement of expenses to an officer or director of the Corporation in effect prior to the time of such repeal or modification.

ARTICLE X - LIMITATIONS OF OWNERSHIP BY NON-CITIZENS

10.1 DEFINITIONS

For purposes of this Article X, the following definitions shall apply:

(a) “ Act ” shall mean Subtitle VII of Title 49 of the United States Code, as amended, or as the same may be from time to time amended.

(b) “ Beneficial Ownership ,” “ Beneficially Owned ” or “ Owned Beneficially ” refers to beneficial ownership as defined in Rule 13d-3 (without regard to the 60-day provision in paragraph (d)(1)(i) thereof) under the Securities Exchange Act of 1934, as amended.

(d) “ Non-Citizen ” shall mean any person or entity who is not a “citizen of the United States” (as defined in Section 41102 of the Act and administrative interpretations issued by the Department of Transportation, its predecessors and successors, from time to time), including any agent, trustee or representative of a Non-Citizen.

(e) “ Own or Control ” or “ Owned or Controlled ” shall mean (x) ownership of record, (y) beneficial ownership or (z) the power to direct, by agreement, agency or in any other manner, the voting of Stock. Any determination by the Board of Directors as to whether Stock is Owned or Controlled by a Non-Citizen shall be final.

(f) “ Permitted Percentage ” shall mean 25% of the voting power of the Stock.

(g) “ Stock ” shall mean the outstanding capital stock of the Corporation entitled to vote; provided , however , that for the purpose of determining the voting power of Stock that shall at any time constitute the Permitted Percentage, the voting power of Stock outstanding shall not be adjusted downward solely because shares of Stock may not be entitled to vote by reason of any provision of this Article X.

10.2 LIMITATIONS ON OWNERSHIP

It is the policy of the Corporation that, consistent with the requirements of the Act, Non-Citizens shall not Own and/or Control more than the Permitted Percentage and, if Non-Citizens nonetheless at any time Own and/or Control more than the Permitted Percentage, the voting rights of the Stock in excess of the Permitted Percentage shall be automatically suspended in accordance with Sections 10.3 and 10.4.

10.3 FOREIGN STOCK RECORD

The Corporation or its transfer agent shall maintain a separate stock record (the “ Foreign Stock Record ”) in which shall be registered Stock known to the Corporation to be Owned and/or Controlled by Non-Citizens. It shall be the duty of each stockholder to register his, her or its Stock if such stockholder is a Non-Citizen. A Non-Citizen may, at its option, register any Stock to be purchased pursuant to an agreement entered into with the Corporation, as if Owned or Controlled by it, upon execution of a definitive agreement. Such Non-Citizen shall register his, her or its Stock by sending a written request to the Corporation, noting both the execution of a definitive agreement for the purchase of Stock and the anticipated closing date of such transaction. Within ten days of the closing, the Non-Citizen shall send to the Corporation a written notice confirming that the closing occurred. Failure to send such confirmatory notice shall result in the removal of such Stock from the Foreign Stock Record. For the sake of clarity, any Stock registered as a result of execution of a definitive agreement shall not have any voting or other ownership rights until the closing of that transaction. In the event that the sale pursuant to such definitive agreement is not consummated in accordance with such agreement (as may be amended), such Stock shall be removed from the Foreign Stock Record without further action by the Corporation. The Foreign Stock Record shall include (i) the name and nationality of each such Non-Citizen and (ii) the date of registration of such shares in the Foreign Stock Record. In no event shall shares in excess of the Permitted Percentage be entered on the Foreign Stock Record. In the event that the Corporation shall determine that Stock registered on the Foreign Stock Record exceeds the Permitted Percentage, sufficient shares shall be removed from the Foreign Stock Record so that the number of shares entered therein does not exceed the Permitted Percentage. Stock shall be removed from the Foreign Stock Record in reverse chronological order based upon the date of registration therein.

10.4 SUSPENSION OF VOTING RIGHTS

If at any time the number of shares of Stock known to the Corporation to be Owned and/or Controlled by Non-Citizens exceeds the Permitted Percentage, the voting rights of Stock Owned and/or Controlled by Non-Citizens and not registered on the Foreign Stock Record at the time of any vote or action of the stockholders of the Corporation shall, without further action by the Corporation, be suspended. Such suspension of voting rights shall automatically terminate upon the earlier of the (i) transfer of such shares to a person or entity who is not a Non-Citizen, or (ii) registration of such shares on the Foreign Stock Record, subject to the last two sentences of Section 10.3.

10.5 CERTIFICATION OF CITIZENSHIP

(a) The Corporation may by notice in writing (which may be included in the form of proxy or ballot distributed to stockholders in connection with the annual meeting or any special meeting of the stockholders of the Corporation, or otherwise) require a person that is a holder of record of Stock or that the Corporation knows to have, or has reasonable cause to believe has, Beneficial Ownership of Stock to certify in such manner as the Corporation shall deem appropriate (including by way of execution of any form of proxy or ballot of such person) that, to the knowledge of such person:

(i) all Stock as to which such person has record ownership or Beneficial Ownership is Owned and Controlled only by citizens of the United States; or

(ii) the number and class or series of Stock owned of record or Beneficially Owned by such person that is Owned and/or Controlled by Non-Citizens is as set forth in such certificate.

(b) With respect to any Stock identified in response to clause (i)(b) above, the Corporation may require such person to provide such further information as the Corporation may reasonably require in order to implement the provisions of this Article X.

(c) For purposes of applying the provisions of this Article X with respect to any Stock, in the event of the failure of any person to provide the certificate or other information to which the Corporation is entitled pursuant to this Section 10.5, the Corporation shall presume that the Stock in question is Owned and/or Controlled by Non-Citizens.

ARTICLE XI - AMENDMENTS

Subject to the limitations set forth in Section 9.9 of these Bylaws or the provisions of the Corporation’s Certificate of Incorporation, the Board is expressly empowered to adopt, amend or repeal these Bylaws. Any adoption, amendment or repeal of these Bylaws by the Board shall require the approval of a majority of the authorized number of directors. The stockholders also shall have power to adopt, amend or repeal these Bylaws; provided , however , that, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by the Corporation’s Certificate of Incorporation, such action by stockholders shall require the affirmative vote of the holders of at least a majority of the Voting Stock.

* * * * *

Exhibit 10.5

August 22, 2014

Ms. Marina Levinson

Re: Board of Directors of Ellie Mae, Inc.

Dear Marina:

On behalf of the Board of Directors (the “ Board ”) of Ellie Mae, Inc. (the “ Company ”), we are pleased to set forth the terms and conditions pursuant to which you are being offered an opportunity to serve as a member of the Board. We anticipate that you would be appointed as a member of the Board effective as of Friday, August 22, 2014 (the “ Effective Date ”), as a Class II director to serve until the annual meeting to be held in 2016 and otherwise in accordance with the Company’s charter documents.

Board Responsibilities . The Company’s current schedule includes approximately four regular in-person meetings of the Board per year in Pleasanton, California, plus additional special meetings as called by the Board from time to time which usually take place via teleconference. In addition to your attendance at Board meetings, we expect to take advantage of your expertise by reaching out to you for advice and counsel between meetings. We also anticipate that you will initially be made a member of the Company’s Audit Committee. The Audit Committee will meet at least quarterly. Of course, we may ask that you consider serving on other committees of the Board from time to time. All of this is subject to the Board’s discretion.

As a member of the Board, you will owe fiduciary duties to the Company and its stockholders, such as the duty of care, duty of loyalty and the duty of disclosure, which include protecting Company proprietary information from unauthorized use or disclosure. Additionally, we intend to enter into the Company’s standard form of indemnification agreement with you. If you would like to learn more about your fiduciary duties as a director or the indemnification agreement, I would be happy to arrange a meeting for you with our outside counsel, Kit Kaufman, a senior partner of Latham & Watkins LLP.

Retainer . During the term of your service as a director, you shall receive an annual cash retainer of $32,000, plus an annual cash retainer of $9,000 for your membership on the Audit Committee. The Compensation Committee will periodically review the compensation of the Company’s non-employee directors, and, of course, if you later serve on any other committee of the Board, you would receive an additional retainer consistent with that provided to other members of such committee.

Initial Grant (RSUs) . Subject to compliance with applicable state and federal securities laws, on the Effective Date you will be automatically granted 8,585 Restricted Stock Units (the “ Initial Grant ”), which is calculated as $275,000 divided by the volume-weighted average closing trading price for the Company’s common stock for the thirty (30) trading days prior to the date of this offer letter. The Initial Grant will be subject to the terms of the Company’s equity incentive plan, as may be in effect from time to time (the “ Plan ”), and a Restricted Stock Unit award agreement to be entered into between you and the Company. Subject to your continued service to the Company, the Initial Grant shall vest, and the shares subject thereto distributed, as follows: 1/3rd of the shares will vest on each anniversary of the grant date, such that the Initial Grant shall be fully vested on the third (3 ^rd ) anniversary of the grant date.

Subsequent Grants (Stock Options) . Under the policies adopted by the Board, you will be eligible for future grants of non-statutory stock options and RSUs (“ Subsequent Grants ”) to be granted automatically on the date of the Company’s annual meeting provided that, on such date, you have served on the Board for at least six (6) months prior to such date. We anticipate that all Subsequent Grants will, in accordance with the policies adopted by the Board, provide for the following:

Stock options granted pursuant to the Subsequent Grant will be exercisable at a price per share equal to the fair market value of the Common Stock on the grant date as then determined by the Board and will be subject to the terms of the Plan and a stock option agreement to be entered into between you and the Company. RSUs granted pursuant to the Subsequent Grant will be issued pursuant to a Restricted Stock Unit award agreement to be entered into between you and the Company.

Subject to your continued service to the Company, the Subsequent Grant will vest as follows: 1/12th of the shares of Common Stock subject to the Subsequent Grant shall vest on each monthly anniversary of the grant date, such that the Subsequent Grant will be fully vested on the first (1 ^st ) anniversary of the grant date.

The grant of any Subsequent Grants and the terms thereof are subject to the policies adopted by the Board, which may change.

Vesting Acceleration . Upon a Change in Control of the Company (as defined in the Plan), your stock options, RSUs and other equity awards with respect to the Common Stock will become fully vested and/or exercisable.

Termination of Technology Advisory Board Membership . Effective as of your acceptance of, and agreement to, this letter: (i) you shall no longer be a member of the Company’s Technology Advisory Board; (ii) the Advisory Board Membership Agreement effective as of May 1, 2014, by and between you and the Company shall terminate, effective immediately; and (iii) you will not be entitled to further compensation by virtue of your service on the Technology Advisory Board, except for amounts earned but not yet paid. Any partially or wholly unvested equity awards granted to you in connection with your service on the Technology Advisory Board, including but not limited to your initial award of 3,953 Restricted Stock Units granted on May 6, 2014, will terminate immediately as to any unvested portion.

Business Expense Reimbursements . You will be authorized to incur on behalf and for the benefit of, and will be reimbursed by, the Company for reasonable documented expenses related to your service on the Board, provided such expenses are in accordance with Company policies.

At-Will Relationship . You are free to end your relationship as a member of the Board at any time and for any reason. In addition, your right to serve as a member of the Board is subject to the provisions of the Company’s charter documents.

Entire Agreement . The terms in this letter agreement supersede any other agreements or promises made to you by anyone, whether oral or written, and comprise the final, complete and exclusive agreement between you and the Company regarding your service on the Board.

[Signature Page Follows]

Assuming that you find the foregoing acceptable, we welcome you to the Board and look forward to your participation as a director. Please call Craig Davis at 949-350-0552 if you have any questions or comments regarding the terms described above.

Sincerely,

Ellie Mae, Inc.

_ /s/ Craig Davis

By: Craig Davis

Lead Independent Director

/s/ Sigmund Anderman

By: Sigmund Anderman

Chief Executive Officer

Accepted and Agreed:

/s/ Marina Levinson

Marina Levinson

Date: August 22, 2014

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Sigmund Anderman, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Ellie Mae, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Sigmund Anderman

Sigmund Anderman

Chief Executive Officer

Date: November 5, 2014

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Edgar A. Luce, certify that:


1.	I have reviewed this Quarterly Report on Form 10-Q of Ellie Mae, Inc.;


2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:


(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;


(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.	The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Edgar A. Luce

Edgar A. Luce

Chief Financial Officer

Date: November 5, 2014

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Sigmund Anderman, Chief Executive Officer of Ellie Mae, Inc. (the “Company”), hereby certifies that, to the best of his knowledge:


1.	The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2014 , to which this Certification is attached as Exhibit 32.1 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and


2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Sigmund Anderman

Sigmund Anderman

Chief Executive Officer

(Principal Executive Officer)

Date: November 5, 2014

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Edgar A. Luce, Chief Financial Officer of Ellie Mae, Inc. (the “Company”), hereby certifies that, to the best of his knowledge:


1.	The Company’s Quarterly Report on Form 10-Q for the period ended September 30, 2014 , to which this Certification is attached as Exhibit 32.2 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and


2.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Edgar A. Luce

Edgar A. Luce

Chief Financial Officer

(Principal Financial Officer)

Date: November 5, 2014